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The Case for Being Disruptively Good

It’s the trillion dollar question. Justin Fox, in a recent post here, put it this way: “I don’t think anyone has come up with an argument for or description of better business behavior that has anything like the elegance and power of the economists’ ‘incentives matter.’ As long as it remains possible to get rich via less-than-upstanding behavior, and enjoy those riches, a lot of people in business will choose that path.”

I call it the egocentric question: “Why is doing good in our self-interest?”

Here’s my answer — and, yes, it’s all about incentives. In my writing, I’ve discussed good and evil a great deal — but in many places, and often in arcane terms. So let me take a moment to try and answer the egocentric question as simply as possible.

Consider for a second, the parable of the rug merchant. He’ll never see the tourist he’s chasing again. He’s got a local monopoly in his corner of the bazaar. His suppliers are poor, starving, and stuck in the hinterlands, cut off and isolated. The result: rugs are made in sweatshops by kids and sold at massively inflated prices.

The lesson: “In a disconnected world, the costs of evil are minimal.”

That’s the flipside of what the eminent Jeff Jarvis, in What Would Google Do, kindly named “Haque’s Law”: “In a hyperconnected world, the costs of evil explode.” Why is that the case?

What’s different, immediately, about a hyperconnected world is that information flows much faster and more freely. So it’s less costly to ascertain who’s really evil — and who’s really good. So the first force is information.

Cheap information lays the foundations for more collective action. It’s less costly to punish those who are evil. Equally important, it’s less costly to reward those who are good.Discipline is the second force.

With better collective action comes an enhanced incentive for competitors to provide what incumbents can’t; to do good where there’s evil. After all, both punishments and rewards are magnified. The third force is competition: competitive pressure by rivals to do more good, and less bad.

With greater competition comes greater probability of high-level innovation — new business models, strategies, and institutions that reinvent the deep economics of an industry, market, or sector. And so, thanks to the fourth force, disruption, the threat of fatality for incumbents grows.

With more innovation comes a greater emphasis on rule-making: the fifth force. As new disruptive innovations proliferate, regulators take a more active interest in assessing the social costs and benefits of each, and selecting for the most productive ones. Conversely, visionary organizations make new rules in their own ecosystems that alter the incentives for their buyers and suppliers to do more good, and less evil.

Ultimately, after a given threshold of connectivity, good is self-correcting, a dynamic equilibrium. Think about it this way. Wall Street banks sold the next guy toxic junk. But the next guy was selling their toxic junk right back to them. It’s the golden rule of network strategy: what goes around, comes around. When an industry or market’s connected tightly enough, doing good becomes the only game in town — unless, of course, you want to melt down catastrophically, like Wall Street did. Self-correction is the final force.

Wall Street banks thought they were in the rug sellers’ world. But they were hyperconnected to the hilt.

Let’s flip the rug seller’s world on it’s head, to drive it home. If he faced repeat business tomorrow from the same customers, if his suppliers worked in the next corner of the bazaar, if his corner of the bazaar was chock full of rival rug sellers, the incentives for evil would decline, swiftly and severely replaced by incentives for good. That world is what the economics of the 21st century are, slowly but surely, approaching.

Today’s organizations are subject to a new range of forces that amplify the costs of evil and the benefits of good. Think of this set of forces as a ladder that people, communities, and society across the global economy are building. It’s this ladder that next-generation organizations must climb.

Pepsi’s on the first rung, information. The Refresh project hopes to build a stronger brand by doing a marginal bit of good, but it doesn’t essentially changing the fact that it sells unhealthy sugar water.

Nestle’s on the second rung, discipline. It’s reaching out to people and communities, hoping to form deeper, more meaningful relationships. Sometimes, it succeeds — and sometimes, it gets a little bit of a black eye.

Google’s just climbed back up to the third rung, competition — by leaving China, it is once again competing not just to gain more share, but to do more good, by offering higher quality services, instead of compromised ones (in turn, amplifying pressure on rivals like Microsoft).

Apple’s on the fourth rung, disruption. It is utilizing radical new building blocks, markets — the Apps Store, iAds — and their great promise is to reinvent the deep economics of media and advertising. Will they live up to it? Only time will tell whether Jobs’ insistence on heavy-handed control is hubris — or whether it really does radically rewrite the balance of good and bad. If the former, Apple will likely stumble back down the ladder of next-gen strategy.

Wal-Mart’s on the fifth rung, rule-making: its Sustainability Index lays down new rules for every single supplier in its vast, globe-spanning ecosystem. Wal-Mart is the world’s biggest company (by a long way) — and its radical new rules are a more powerful force for good than any law most countries could hope to pass, much less enforce.

No one’s on the last rung, self-correction. The climb to the apex is especially steep. But whoever gets there first will undoubtedly transform the landscape of their industry.

So why don’t more businesses see these forces?

It’s the wrong question.

The right one is: because there will be some organizations that are quicker to get it than others, what do the forces above mean for the economy? Well, they suggest that businesses who can do more good will survive, thrive, and prosper — and those who do more bad will stumble, falter, and fall.

That conclusion may sound revolutionary. It’s about as radical as cup of lukewarm tea. In the short run, focused on the here and now, it can be hard to see that there are selection effects for businesses that can do more good, and less bad. Yet, looking across the slow, steady sweep of history, it’s as clear as day. Yesterday, the global economy was built on debtors’ prisons, usury, expropriation, colonialism, and slavery. Today, it isn’t.

The numbers support the case for better. According to a forthcoming analysis from CSR Magazine, “being a good guy pays. The best corporate citizens list, which includes Hewlett-Packard, Intel, General Mills, I.B.M. and Kimberly-Clark, had a total return on shareholder value of 2.37 percent over three years. But the 30 worst had a negative 7.38 percent return”. Surprising? Far from. At the Lab, our portfolio of Constructive Capitalists, built on a tighter, tougher set of criteria for “good guys,” has shown even more dramatic outperformance.

Here’s a historical example. Around the turn of the 20th century, farmers in a newly prosperous America had to buy from manufacturers’ agents, who charged steep interest rates and earned fat commissions, or general stores, where limited supplies meant mega-prices, or a dizzying array of fly-by-night mail order schemes. Along came two revolutionaries — dangerously idealistic radicals, vehemently opposed to yesterday’s status quo, seeking to topple it — hell-bent on maximizing good, and minimizing evil.

How?

They offered lower interest rates, trustworthy marketing instead of hype, higher quality products at fairer prices, and, most radical of all, money-back guarantees. One even pioneered viral effects, giving people a share of revenues if their neighbors placed an order with him.

Their names?

Montgomery Ward and Richard W. Sears.

Seen in that light, economic (r)evolution has always been about doing more good, and less bad. Which leads me to a hunch. The economic historians of the 23rd century will look back on today the same way we look back on yesterday: with astonishment that we allowed so much bad, and so strove for so little good.

Yet even 200 years from now, I’m sure incumbents will ask — what, you want us to do moregood? And then, as ever, from under their patrician noses, revolutionaries who can do better will disrupt them.

Umair Haque is Director of the Havas Media Lab. He also founded Bubblegeneration, an agenda-setting advisory boutique that shaped strategies across media and consumer industries.

http://blogs.hbr.org/haque/2010/04/the_case_for_being_disruptivel.html

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Do the Marketing So the Technology Works

At a major conference at which I was speaking, a man interrupted my fundraising session with a confession: “I have a DonateNow button from your organization [Network for Good], but it doesn’t work.”

Very concerned and hoping to reassure him that our service team would make sure his page could receive donations properly, the man clarified his predicament: “No, the page works fine. The problem is that no one is clicking on our donate button.”

That is a problem indeed.

Donate pages and Facebook fan sites don’t work without great messaging, compelling engagement, and marketing savvy. This year, make sure that all the online outreach you are performing has the necessary thinking behind it. To encourage donors to give online – or anywhere for that matter – you need to always answer four questions for them:

Why me? Show your audience why what you’re doing is personally relevant to them. They need to connect with your organization on a human level. Use pictures, tell stories, and do anything else that can help your audience relate.

Why now? Aside from year-end and post-crisis giving, you have to work to impart urgency and immediacy to your donors.

What for? People know you’re a nonprofit organization and you need donations to help your cause, but where exactly is a donor’s money going? Don’t just focus on need; explain the impact a donation will make. (More on this in Part Two of this series.)

Who says? Use trustworthy messengers – people you’ve actually helped or other donors – instead of just your staff and board (more on this in Part Three). In studies people report friends and family are the most influential in determining where they give money.

Nonprofits have been neglecting these key messages for too long online, as if technology can do the hard work of convincing for us. It can’t! The time is now to fix any weak messaging or engagement strategies.

by Katya Andresen

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The Engineering of Consent

Suggested by Sacha:

Edward Bernays

“One of the central concepts Bernays proposes is not to sell a product, but instead to sell the need for a product. When discussing selling pianos, for example, he writes that a successful propagandist should “endeavor to develop public acceptance of the idea of a music room in the home.”[1] In this way, a consumer’s decision to buy a piano will be a result of enlightened self-interest; because the propagandist has inspired the consumer to set up a piano room, the consumer will desire a piano as a means to fulfill the promise of that space.”

“The engineering of consent is the very essence of the democratic process, the freedom to persuade and suggest.”

The idea of “Engineering of Consent” was motivated by Freud’s idea that humans are irrational beings and are motivated primarily by inner desires hidden in their unconscious. If one understood what those unconscious desires were, then one could use this to one’s advantage to sell products and increase sales.

The techniques applied developing the “consumer lifestyle” were also later applied to developing theories in cultural commodification; which has proven successful in the later 20th century (with diffusion of cultures throughout North America) to sell ethnic foods and style in popular mainstream culture by removing them from geography and ethnic histories and sanitizing them for a general public.

Ernest Dichter applied what he dubbed “the strategy of desire” for building a “stable society,” by creating for the public a common identity through the products they consumed; again, much like with Cultural Commodification, where culture has no “identity,” “meaning,” or “history” inherited from previous generations, but rather, is created by the attitudes which are introduced by consumer behaviors and social patterns of the period. According to Dichter: “To understand a stable citizen, you have to know that modern man quite often tries to work off his frustrations by spending on self-sought gratification. Modern man is internally ready to fulfill his self-image, by purchasing products which compliment it.”

(All from Wikipedia)

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Perception, not intent, is the only reality on the internet.

People like to take things out of context. A communications director of all people should know this – so why even risk posting tweets mentioning knives etc, joke or not? I just don’t buy the argument that Twitter is a personal forum and therefore his comments should be seen as such. It is broadcast for the whole world to see. It’s exactly the sort of thing that will be picked up and exploited by those who don’t see eye to eye with you. Perception, not intent, is the only reality on the internet.

Leo Hickman, The Guardian, 06.04.2010
In response to a comment.
http://www.guardian.co.uk/environment/blog/2010/apr/06/greenpeace-gene-hashmi-climate-sceptics

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Enhance Donor Identity & Involvement

If ever there were a time to invest in enhancing donor experience, now would be it. As people start to reassemble themselves after the apocalyptic economic crisis, and begin to rebuild trust in institutions (nonprofits included), there is an opportunity to create an experience that yields a refreshed, stronger, more engaged donor base.

The good news is that nonprofits have more tools at their disposal than they probably realize, and I’d like to help them identify a few. In essence, the road to successful donor engagement starts with creating a brand that is honest and comprehensive. This is a bit trickier done than said. Often the truth of your brand is hard to identify and even harder to communicate. But let’s start with the most crucial point: Transparency. This is the first step toward authenticity, and the only characteristic that eventually builds trust. And let’s face it, people only donate to (let alone associate with) organizations that they trust.

I work for a nonprofit branding and design studio called Empax, and if there is one thing I’ve heard consistently since the day I started, it’s that branding must stem from a place of truth. A brand that is not honest might as well be actively sabotaging itself, and it certainly doesn’t stand a chance of passing as genuine to your target audience (a.k.a. donors). Donor experience is a direct bi-product of brand experience, and is a potent tool that can be intentionally engineered to meet your organizations’ goals when executed properly. 

Let’s take a tip from the (eek!) advertising world on how to engage audiences. Advertising as we know it today evolved in roughly three stages. Initially, companies simply listed off the features of whatever product they were trying to sell. For example, this car has a V6 engine, four doors, is painted shiny silver and costs “only” this much. After a while advertisers began promoting the benefits of their products. This car will get you from A to Z faster than any other car, and will draw looks of envy from everyone on the street. Not long after, the market is flooded with ads for shiny silver cars that go fast and create envy, and advertisers were grasping for a way to make their product stand out in the crowd. Enter identity. Instead of selling the product or its benefits, ad companies were selling us new identities we could magically adopt just by buying the products. Nike was no longer about shoes or even about speed. It was about being a winner. Marlboro was about being an independent, authentic American (cancer, what cancer?). This final, and least tangible, approach to advertising sealed the proverbial deal.

Nonprofits seem to be communicating mostly on the first two channels. You hear appeals to donate based on features: “because we have a program that serves this many people” or “because our organization can successfully change the law on this issue”. And you hear appeals that are somewhat more effective, based on benefits: “Help this child get the education she needs, so she can become a productive and empowered adult”. But you hardly ever hear appeals based on identity. That’s due to their abstract and mostly visual nature. Nike never asks you to consider their shoes “because they’ll help you win”. The Marlboro Man never asks you to buy cigarettes “because you’ll be independent like me”. In fact, he never says anything at all. There is no “because” in identity (or lifestyle) marketing. There is only “become.” Be a winner. Be independent. What do your donors want to become by helping you?

What advertisers tapped in to – and what nonprofits have the same ability to do – is the power of designing an environment, a feeling, that is enticing and inviting to your users. In other words, build a brand that your stakeholders can identify with. As the recent article Homer Simpson for Nonprofits brilliantly pointed out, peer pressure still exists. The desire to be part of a club (let’s be optimistic and call it a community) drives a lot of the decisions we make. We all acknowledge that overlap is abundant throughout the nonprofit landscape. But there is a reason that someone supports the Sierra Club, for example, over the NRDC or the Environmental Defense Fund. It’s because of what being Sierra Club members says about them. They feel that they are connected to the mission because it speaks to them in a language they understand, from a culture that they align with and in a voice that’s familiar. They know they will find like-minded people that “belong to” the Sierra Club, and also own it at the same time. It’s not just who they donate to or volunteer for, it’s who they are. And it’s also about who they are not. An NRDC supporter, for example, may care just as much about the planet, but something just won’t fit right.

I will not lie and say that creating an enticing, successful brand is just as easy as being aware that you need one. While it’s true that having a third party help your organization reevaluate its brand, there are things your organization can start examining internally. I recently wrote a post on differentiation, which discusses tactics and trends. I’ve come up with a condensed list to get you started here:

  • Identify your position. A SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) can start you off, and get you thinking about your organization and what you offer. Don’t be afraid to recognize your shortcomings – they probably highlight what your strong points are and why you are different than your competition.
  • Master the art of Storytelling. All organizations have an abundance of stories to tell about their work. The trick is finding a way to tell them creatively, visually and succinctly.
  • Look-and-feel. This goes beyond a logo, color scheme and website design. What do you want your donors to feel when they come into contact with you? Are you trying to be the Sierra Club or the NRDC? Define your character, and own it.
  • Consistency. Through a simple communications audit you can get a sense of how cohesive your organizational image is. Go ahead, pull out all the brochures, reports, mailings, annual reports, e-newsletters, etc. that you’ve produced in the last few years. Do they look like they all came from the same place? Do they tell a unified story, or are they mere anecdotes, related only by name.

If you can gather some of this information, and create a strategy for how to communicate it all, you’re off to a good start. Remember that donors decisions are heavily influenced by the emotional brain (as opposed to the rational one) so don’t hesitate to appeal to this.

When you arrive at a place where your nonprofit is presenting an honest, consistent brand, donors will notice. The authenticity of your communications won’t need explanation, and you will have created an opportunity for donors to interface with your organization in a deep and meaningful way. When they start to feel that they’re a part of your community and you are part of their identity, you will be at the top of their list when they become comfortable writing checks again. And you’ll be the first nonprofit they tell their friends about. So let’s use this opportunity, as a sector, to up the ante, deepen our commitment to donors, and strive to create the most genuine, truthful experiences for everyone involved.

*Veronica Wilson is the VP of External Communications at Empax, a nonprofit branding, design and web studio in New York, where our clients are our causes and we believe that nonprofits deserve access to the same (if not better) communications tools that flood the commercial market.

http://www.frogloop.com/care2blog/2010/3/23/donors-need-engagement-leveraging-brand-experience-to-enhanc.html