The term “markets are conversations” – originally coined by Doc Searls in the Cluetrain Manifesto (1999) – exemplifies the power of today’s digital world. The influence of connected consumers, collectively and globally vetting the intentions of every brand and person.
Understanding The Because Effects
The Internet operates both as a science and art because of the effect of trillions of daily iterative human interactions globally. These interactions are continually shaping what we know as the “because effect” – better known as cause and effect.
This “because effect” is a lot different from what you learned in the old marketing class at college. Doc Searls writes in The Intention Economy (2012):
“In a deep and abiding way, Google gets the Net and what the Net does for the connected world. Google and the Net do this to obtain because effects. Rather than make money with Android, Google wants to make money because of it. And it doesn’t mind lots of other companies making money because of it, too. In fact, that’s exactly what Google wants. So, like Apple, Google wants to fix slow, damaged, or broken markets. But unlike Apple, Google wants to fix those markets by making them freer and more open for everybody— and therefore much larger as well. That is, to grow markets horizontally. Google also likes to explore and demonstrate what can be done with a new idea, new code, new hardware technologies, new apps, new forms of infrastructure, and new ways of doing business. Google is also committed to open source and understands in its bones how open source works, which is horizontally rather than vertically.”
But We Are Not Google
So how does the “because effect” relate to your product or your company?
Just for a moment, step away from the traditional marketing mindset. Instead of marketing, think in terms of value creation – and value creation in a collaborative sense , where you are shaking hands with the customers and working together to create more value. Consider this a continuous process, an open invitational forum, where the objective is learning rather than creating a trick aimed at a transaction or a piece of the market.
Understanding the “because effect” gives you the insights and subsequent foresight to create more value and expand the market. The intention is simply because it is the right thing to do, and the right way to do it, until technology and the market reveals a better way.
Now, don’t over-intellectualize the process, over-analyze it, or worse yet – make it part of your “executive teams mantra” – until you get two things right. Two critical things are needed for the “because effect” to work, a) the right culture and b) the right business model. Just remember your intentions are transparent.
The Cost Of The Wrong Culture And Wrong Business Model
When broadly defined, value creation starts because of the effect of having the right culture and finishes because of the effect of having the right business model. One without the other sub-optimizes value creation and getting them both wrong is a disaster looking for a place to happen.
Allow me to give you an example. Yelp.
The company’s business model is very questionable. Many small-business owners (Yelp’s primary revenue source) feel extorted, paying people to rate business good or bad, so they in turn pay Yelp.
The culture is driven by bottom line results, period. A lot of new college grads, desperate for a job, are expected to work 65 to 70 hours a week – the 12-hour days don’t end at work either. People are expected to work after hours at home, sending out emails during off-peak times, among other things – and constantly calling the same people to buy Yelp subscription dues to influence.
The “market of conversations” claims that paying Yelp monthly dues positively influenced their reviews. And business owners who didn’t pay suffered the consequences – including “fake” reviews from competitors or people who actually write negative reviews for a fee (whom you can find on Craigslist).
In addition, while Yelp is currently operating within the law, one business owner in the Washington, D.C. area is taking action. Asking the courts to force Yelp to turn over the information of its anonymous reviewers, so he can essentially sue them for defamation. The lower courts ordered Yelp to turn over the information – which would be a disaster for the company. After all, how many negative reviews would users give if they knew they could be liable for defamation?
That day, shares fell nearly 25% on lackluster earnings. Yelp management cited slowing growth and reported earnings that fell short of analyst expectations. Then they announced a possible sale of the company. Shares then plunged again more than 13% in a single trading session, after the company said the sale process had “stalled.”
Following that news, Yelp reported another round of dismal earnings and the stock crashed another 25%. The company lost $1.3 million in the second quarter of 2015, down from a profit of $2.7 million in the same period a year ago. Revenue grew at its slowest pace in nearly five years.
Management noted it was having trouble hiring staff and said it would phase out its display advertising by the end of the year. It also cut its earnings forecast for the remainder of the year. Chairman Max Levchin announced his resignation to focus on a new startup company.
As a result, analysts at investment bank Deutsche Bank downgraded Yelp from “buy” to “hold”. Lowering their price target from $56 to $31, citing the company’s “deteriorating fundamentals.” As of September 4th, 2015 the share price was $24.20 down from $84 a year prior.
Yelp shares are in a serious downtrend… and it’s just the latest example of why any company with a questionable business model and the wrong culture, isn’t a good bet for employees or customers. The “because effect” in this case is evident. The heart of this brand wasn’t “connected” humanly speaking.
The Heart Of A Brand Creates The Because Effects
So now consider the “because effect” of your brand in the hearts and minds of buyers and the general public. What actions will the market take because of your actions, your words and, of course, your transparent intents? The word intent means the thing that you plan to do or achieve: an aim or purpose. The heart of a brand reveals its intent.
You can try to grow revenue by selling with slick messages, detached social campaigns, and even deception. The related “because effect” will not deliver lasting value that soothes the human heart. Creating sustainable revenue growth is the result of the value you bring to others, because of the effects of what you create, by the things you enable people to do for themselves and others.
Read that last sentence again, slowly.
The intangible things of the heart create human bonds that last a lifetime. Such things create immense value that expands naturally. The heart of any brand has to be human in order to understand how the “because effect” works in the Digital Era.