Five ingredients of smart online commerce

While it might be more fun to rant about broken online forms and systems, we can learn a lot from sites that aren’t broken as well.

Consider the Ibex store. Here are five things they do that make them successful online:

They sell a product you can’t buy at the local store. This is easily overlooked and critically important. Because it’s unique, it’s worth seeking out and talking about. Just because you built a site doesn’t mean I care. At all. But if you build a product I love, I’ll help you.
They understand that online pictures are free. Unlike a print catalog, extra pictures don’t cost much. Make them big. Let me see the nubbiness or the zipper or the way you make things.
They use smart copy (but not too much).
They are obsessed with permission. Once you sign up, you’ll get really good coupons and discounts by email. Not too often, but often enough that my guess is that they make most of their sales this way. 25% discount on a product just like a product you love–just before Valentine’s day? Sign me up.
They aren’t afraid to post reviews. Even critical ones.
No site is perfect, of course, and I hesitate to tell you that this one is. I’m sure there are glitches and your mileage may vary. But the checkout is simple and the customer service, while not trying to be Zappos, is pretty good too.

Penguin Magic, I just realized, follows all five of these rules as well. While the site is very different in look and feel (and has a different audience), they’re using the same principles.

The amazing thing to me is that none of this is particularly difficult to do, yet it’s rare. The state of the art of online retailing is moving very very slowly.

Seth Godin

Bad Is Stronger Than Good: Why Good Bosses Eliminate the Negative First

Of all the tunes in the Johnny Mercer songbook, the most generally beloved must be “Accentuate the Positive” — whether your favorite cover is Bing Crosby’s, Willie Nelson’s, or someone else’s. Chances are that you yourself could summon up the chorus word for word (and click here if you want accompaniment).

You’ve got to accentuate the positive
Eliminate the negative
Latch on to the affirmative
Don’t mess with Mister In-Between

It trips off the tongue so easily that you might not even notice that Mercer is telling you to do two things, not just one. Eliminating the negative, as any skilled leader can tell you, is not just the flipside of accentuating the positive. It’s a whole different set of activities. For someone with people to manage, accentuating the positive means recognizing productive and constructive effort, for example, and helping people discover and build on their strengths. Eliminating the negative, for the same boss, might mean tearing down maddening obstacles and shielding people from abuse.

Certainly, every leader should try to do both. Yet, given that every boss has limited time, attention, and resources, an interesting question is: which should take priority? A growing body of behavioral science research provides a pretty clear answer here: It’s more important to eliminate the negative.

The seminal academic paper here is called “Bad is Stronger Than Good” [pdf]. Roy Baumeister and his colleagues draw on a huge pile of peer-reviewed studies to show that negative information, experiences, and people have far deeper impacts than positive ones. In the context of romantic relationships and marriages, for example, the truth is stark: unless positive interactions outnumber negative interactions by five to one, odds are that the relationship will fail.

Scary, isn’t it? Yet it was confirmed by several studies that, among relationships where the proportion of negativeinteractions exceeds this one-in-five rule, divorce rates go way up and marital satisfaction goes way down. The implication for all of us in long-term relationships is both instructive and daunting: If you have a bad interaction with your partner, following up with a positive one (or apparently two, three, or four) won’t be enough to dig out of that hole. Average five or more and you might stay in his or her good graces.

Studies on workplaces suggest, along similar lines, that bosses and companies will get more bang for the buck if they focus on eliminating the negative rather than accentuating the positive. For some time, I’ve been campaigning for a certain form of this, urging companies to eliminate the worst kind of colleagues from their workplaces. Research by Will Felps and his colleagues on “bad apples” is instructive. (You can hear him talk about it on This American Life). Felps decided to look at the effect of toxic colleagues on work groups, including what I would call deadbeats (“withholders of effort”), downers (who “express pessimism, anxiety, insecurity, and irritation,” a toxic breed of de-energizers), and assholes (who violate “interpersonal norms of respect”). His estimates that a team with just one person in any of these categories suffers a performance disadvantage of 30% to 40% compared to teams that have no bad apples.

Similarly, another study by Andrew Miner and his colleagues tracked employees’ moods, and found that the impact on an employee’s feelings of a negative interaction with the boss or a coworker was five times stronger than that of a positive interaction.

So, negative interactions (and the bad apples that provoke them) pack a real wallop in relationships at work and elsewhere. They are distracting, emotionally draining, and deflating. When a group does interdependent work, rotten apples drag down and infect everyone else. Unfortunately, grumpiness, nastiness, laziness, and stupidity are remarkably contagious.

My chapter in Good Boss, Bad Boss on “Stars and Rotten Apples” opens with the story of how I got to know a CEO named Paul Purcell. It was after his company, Baird, had landed on Fortune magazine’s list of the “100 Best Places to Work”. Fortune briefly explained, “What makes it so great? They tout the “no-a**hole rule” at this financial services firm; candidates are interviewed extensively, even by assistants who will be working with them.” Having written an entire bookon that topic, I immediately contacted Leslie Dixon, their HR chief, and she introduced me to Paul Purcell. As I wrote inGood Boss, Bad Boss:

Paul told me that he had seen and suffered destructive assholes in past jobs, so when he got to Baird, he vowed to build a jerk-free workplace. When I asked how he enforced the rule, Paul said that most jerks were screened-out via background checks and interviews before they met him. But he did his own filtering too, ‘During the interview, I look them in the eye, and tell them, “If I discover that you are an asshole, I am going to fire you.”‘ He added, “Most candidates aren’t fazed by this, but every now and then, one turns pale, and we never see them again — they find some reason to back out of the search.” When I asked Paul what kinds of jerks are most poisonous, he said: “The worst assholes consistently do two things: 1.Put their self-interest ahead of co-workers and 2. Put their self-interest ahead of the company.”

Clearly this is someone who didn’t need any research to tell him that “bad is stronger than good.” By refusing to tolerate selfish jerks, Paul Purcell gives us a great model of eliminating the negative. And the fact that he doesn’t seem to procrastinate when it comes to doing the unpleasant work of dealing with destructive people and poor performers is another benefit backed up by research. Consider a classic study [pdf] by Charles O’Reilly and Barton Weitz on how supervisors handled “problematic” sales employees (in which category they placed salespeople guilty of bad attitudes as well as other problems like low productivity and lack of punctuality). Bosses of the most productive groups confronted problems directly and quickly, issued more warnings and formal punishments, and promptly fired employees when warnings failed. The words and deeds of these no-nonsense bosses inspired performance because they made crystal clear that they would not tolerate crummy work. Related studies of punishment in the workplace show that employees respect bosses more when they punish destructive characters more swiftly and intensely – so long as they are fair and consistent.

The upshot is, if you are the boss, doing such “dirty work” is part of your job — and although you might not enjoy playing the heavy, doing it doesn’t make you the jerk. If you can’t or won’t do it, either you ought to be in another line of work or, at least, you ought to team up with someone who can.

With further apologies to Johnny Mercer, sure, as boss you should spread joy up to the maximum, but your main task is to bring gloom down to the minimum. Get that priority straight, and set the stage for your people to do their best work. Or pandemonium is liable to walk upon the scene.

Note: I originally posted this over at as number 10 of my list of 12 Things Good Bosses Believe. Some of the comments over there are from people who don’t quite buy this perspective, and think that accentuating the positive is job one for a boss.  And part of my agrees with these concerns, as in some ways, asking what is more important — accentuating the positive or eliminating the negative — is a silly question.  It is akin to asking “what is more important, your heart or your brain?”  But an evidence-based perspective suggests, at the least, that step 1 for leading a great team is getting rid of (or repairing) bad actions, procedures, and people and step 2 is amplifying and importing “good” stuff.

Robert Sutton is Professor of Management Science and Engineering at Stanford University. He studies and writes about management, innovation, and the nitty-gritty of organizational life.

Getting smart about the hierarchy of smart

Don’t talk to all your employees, all your users or all your prospects the same way, because they’re not the same.

The Dreyfus model of skill acquisition posits that there are five stages people go through:

1. Novice
–wants to be given a manual, told what to do, with no decisions possible

2. Advanced beginner
–needs a bit of freedom, but is unable to quickly describe a hierarchy of which parts are more important than others

3. Competent
–wants the ability to make plans, create routines and choose among activities

4. Proficient
–the more freedom you offer, the more you expect, the more you’ll get

5. Expert
–writes the manual, doesn’t follow it.

If you treat an expert like a novice, you’ll fail.

Seth Godin

What does ‘pro-business’ mean?

What makes a policy or a politician pro business? Some would tell you it includes:

  • Lower or eliminate the minimum wage
  • Eviscerate OSHA and other safety and pollution inspections
  • Make it difficult for workers to easily switch jobs from one company or another
  • Educate the public just enough for them to be compliant cogs in the factory system
  • Fight transparency to employees, the public and investors
  • Cut corporate taxes

I think these are certainly pro-factory policies. All of them make it easier for the factory to be more efficient, to have more power over workers and to generate short-term profits.

But “business” is no longer the same as “factory”. (Aside: Factories don’t have to make stuff… they’re any business that focuses on doing what it did yesterday, but cheaper and faster.) It turns out that factory thinking is part of a race to the bottom, to be the cheapest, the easiest place to pollute, the workforce that will take what it can get.

It’s not surprising that there’s tension here. If you are working hard to cut prices and improve productivity, you might view labor as a cost, not an asset, and you might want as little hindrance as possible in the impact you have on the community. On the other hand, a business based on connection and innovation and flexibility may very well have a different take on it.

I grew up not too far from the Love Canal. It’s a world famous toxic waste dump. While it helped the short tem profits of Hooker, the chemical company that dumped there, it’s not clear that looking the other way was a pro-business strategy. At some point, a healthy and fairly paid community is essential if you want to sell them something.

The oil sands project in Alberta Canada is a factory-friendly effort. So was the lead excavation in Picher, OK. Creating systems that leverage the factory can often lead to financial success (in the short run). The problem is that the future doesn’t belong to efficient factories, because as we train people to look for the cheap, we race to the bottom–and someone else, somewhere else, will win that race.

Perhaps we could see pro-business strategies looking more like this:

  • Investing in training the workforce to solve interesting problems, so they can work at just about any job.
  • Maintaining infrastructure, safety and civil rights so we can create a community where talented people and the entrepreneurs who hire them (two groups that can live wherever they choose) would choose to live there.
  • Reward and celebrate the scientific process that leads to scalable breakthroughs, productivity and a stable path to the future.
  • Spend community (our) money on services and infrastructure that help successful organizations and families thrive.

Once you’ve seen how difficult it is to start a thriving business in a place without clean water, fast internet connections and a stable government of rational laws, it’s a lot harder to take what we’ve built for granted.

Capital is selfish and it often seeks the highest possible short-term results. But capital isn’t driving our economy any longer, innovation by unique people is. And people aren’t so predictable.

Linchpins are scarce. They can live where they choose, hire whom they want and build organizations filled with other linchpins. The race to the top will belong to communities that figure out how to avoid being the dumping ground for the organizational, social and physical pollution that factories create.

Seth Godin

IBM Social Network Analytics for Banking and Finance

The banking and financial industry needs to focus on the customer experience as a differentiator. This includes optimizing key operational processes to improve marketing intelligence effectiveness; identifying opportunities through analytics, and gain an enterprise-wide customer view across a range of channels; act on cross-channel customer activity by using detailed rules-based intelligence linked to process and data models; and improving staff productivity and efficiency for better client care.

IBM Business Analytics and Optimization (BAO) offers social network analytics. This solution can help deliver predictive tools to identify opinion leaders and social connections from telephone call behavior patterns and social networking forums. The solution leverages this information for churn prediction, customer clustering, advertisement matching, campaign management, next best action and fraud detection.

Here is the link to the original post.

A post-industrial A to Z digital battledore

New times demand new words, because the old words don’t help us see the world differently.

Along the way, I’ve invented a few, and it occurs to me that sometimes I use them as if you know what I’m talking about. Here, with plenty of links, are 26 of my favorite neologisms (the longest post of the year, probably):

A is for Artist: An artist is someone who brings humanity to a problem, who changes someone else for the better, who does work that can’t be written down in a manual. Art is not about oil painting, it’s about bringing creativity and insight to work, instead of choosing to be a compliant cog. (from Linchpin).

B is for Bootstrapper: A bootstrapper is someone who starts a business with no money and funds growth through growth. The internet has made bootstrapping much easier than ever, because the costs of creating and marketing remarkable things are cheaper than ever. It’s really important not to act like you’re well-funded if you’re intent on bootstrapping (and vice versa). You can read the Bootstrapper’s Bible for free.

C is for Choice: I didn’t coin the term the Long Tail, but I wish I had. It describes a simple law: given the choice, people will take the choice. That means that digital commerce enables niches. Aggregating and enabling the long tail accounts for the success of eBay, iTunes, Amazon, Craigslist, Google and even

D is for Darwin: Things evolve. But evolution is speeding up (and yes, evolving). While it used to take a hundred thousand years for significant changes to happen to our physical culture, the nature of information and a connected society means that ‘everything’ might change in just a few months. Ideas that spread, win and organizations that learn from their mistakes lead the rest of us. (from Survival is Not Enough)

E is for Edgecraft: Brainstorming doesn’t work so well, because most people are bad at it. They’re bad at it because their lizard brain takes over moments before a big idea is uttered. “Oh no!” it says, “I better not say that because if I do, then I’ll have to do it.” And so brainstorming quickly becomes clever stalling and timewasting. Far better is to practice edgegraft. Someone announces a direction (“we’ll be really convenient, we’ll offer our menu by fax,”) and then the next person goes closer to that edge, topping it, (“we’ll offer it by email!”) and so on, each topping the other in any particular direction. (from the book Free Prize Inside)

F is for the Free Prize: People often don’t buy the obvious or measured solution to their problem, they buy the extra, the bonus, the feeling and the story. The free prize is the layout of Google–the search results are the same, but the way the search feels is why you choose to search there. If engineers thought more about the free prize, we’d need fewer marketers.

G is for Go go go™: I just trademarked this one, but you have my permission to use it all you like. Go go go is the mantra of someone who has committed to defeating their anxiety and ignoring their lizard brain. Not a good strategy for airline pilots, but for the rest of us, a little Go go go might be just the ticket.

H is for broken: Isn’t it just like a marketer to compromise when he should have organized better in the first place? There’s a lot in our consumer society that’s broken, but try to avoid getting obsessed with it. Far better to ship your own stuff that’s not broken instead.

I is for Ideavirus: A decade ago a wrote a book that was free. It still is. It argues that ideas that spread win, and you can architect and arrange and manipulate your ideas to make them more likely to spread. Note that I’m not saying you can add gimmicks and spam and networking to spread your idea. I’m saying the idea itself is more or less likely to spread based on how you design it.

J is for just looking: When there’s plenty of choice and everything is a click away, I’m very unlikely to take action, certainly unlikely to actually buy something from you. I’ll do it tomorrow. Or the day after. Which means the only way you create action is to produce an emergency. Why now? Why not later…

K is for kindle: No, not the ebook reader. Kindle as in patiently starting a fire. The TV era demanded blockbuster launches of blockbuster products aimed at the masses. The internet responds better to bonfires that are kindled over time, to ideas that spread because the idea itself is the engine, not the hype or the promotion. First, ten.

L is for Lizard Brain: This is a huge impediment to getting what you want, finding your calling and satisfying your customers. The lizard brain is near your brain stem, including your amygdala. It’s the part of your brain responsible for anger, revenge, fear, anxiety and reproduction. It’s the original brain, the one that wild animals possess. Steve Pressfield has named the voice of the lizard: it’s the resistance. The resistance rationalizes, hides and sabotages your best work.

M is for Meatball Sundae: This is the unfortunate combination of traditional products and services (designed for low price and good quality) with the high-growth nature of the idea-driven internet. When your boss tells you to build a viral campaign about some lame product gathering dust in the warehouse, she’s asking you to build a meatball sundae and you should flee.

N is for NOBS: Otherwise known as the new order business school. My rant about this points out that for most people, a traditional MBA is a waste of both time and money. The two biggest benefits–the selection process of getting in, and the social process of networking–could be accomplished, in a Swiftian fashion, without any classes at all.

O is for Orangutan: I could have used the word ‘monkey’, but I already had an M listing, plus I love the way you spell Orangutan. Anyway, the primate is the best way to think about how people interact with websites. They’re like monkeys in a psychology experiment, looking for the banana. Where’s the banana, they ask? Of course, I don’t know the monkey word for banana, so I’m paraphrasing. If your website offers a banana, people are going to click on it. If they don’t, they’ll leave. My argument for banana design is in The Big Red Fez.

P is for Permission: Anticipated, personal and relevant messages will always outperform spam. Obvious, but true. So then why do you persist in spamming people? Billboards, TV ads, phone calls–they all are defeated soundly by delivering your offers with permission. In fact, the biggest asset a company can build online is this privilege, the list of people who would miss you if you didn’t show up. Here’s the original interview (12 years ago!) in Fast Company.

Q is for Quitting: Sticking things out is overrated, particularly if you stick out the wrong things. In fact, I think you’d be much better off quitting most of what you do so you have the resources to get through the hard slog I call the Dip… The challenge, then is to not quit in the Dip, but instead to quit everything else so you have the focus to get through the slog of what matters.

R is for Remarkable: A purple cow is remarkable, because it’s worth talking about. Not because you, the marketer said it was, but because I the consumer did. And in a world without effective, scalable advertising, remarkable products and services are the single best way to succeed. Here’s a long essay from seven years ago.

S is for Sneezer: What do we call someone who spreads an idea the way some people spread a virus? Seek them out, cater to them, organize them.

T is for Tribe: Human beings evolved to be attracted to tribes. Groups of like-minded people who share a culture, a connection and perhaps a goal. And each of these tribes seeks leadership. The opportunity for marketers today isn’t to sell more average stuff to more average people. The opportunity is to find and connect and lead tribes of people, taking them somewhere they want to go.

U is for Ululate: Not because it’s relevant, just because it’s the single best word in the English language. Can I sneak an extra C? The cliff business.

V is for Very good: No one cares about very good. I can get very good from just about anyone, and certainly cheaper than I can get it from you. We don’t have a competence shortage, not any more. No, I’m only going to pay extra for the personal, the magical, the artistic and the work of the linchpin.

W is for Worldview: I first encountered this term via George Lakoff. Your worldview is the set of expectations and biases you bring to a situation before any new data appears. Some people hear a politician say something and hate it, while others are thrilled by it. Is it the thing that was said or the person who said it? Some people hear that Apple is about to launch a new product and they get out their wallets, others flee–before they even know what it is. If you don’t understand the worldview of the people you’re selling to, you will fail.

X is for Xebec: I hate it when A-to-Z listmakers cheap out on the X. Hey, a xebec is a three-masted schooner. And they’re obsolete. Just like CDs, newspapers and a whole host of interesting but dated business models. Sorry. Imagine someone saying: “He’s a nice guy, but that company he works for is a xebec.”

Y is for You. You the artist. You the one who makes a difference. You the one who stands for something and now has the leverage (and access to the market) to actually ship. Go go go.™

Z is for Zoometry: Originally a term from zoology (pronounced zo-ology, in case you were curious), zoometry is the science of instigating and learning from change. This is the revolution of our time, the biggest one in history, and it’s not just about silly videos on Youtube. One by one, industry by industry, the world is being remade again and again, and the agents of change are the winners.

Seth Godin

Information about information

The first revolution hit when people who made stuff started to discover that information was often as valuable as the stuff itself. Knowing where something was or how it performed or how it interacted with you can be worth more than the item itself.

Frito Lay dominates the snack business because of the information infrastructure they built on top of their delivery model. 7 Eleven in Japan dominated for a decade or more because they used information to change their inventory. Zara in Europe is an information business that happens to sell clothes.

You’ve probably already guessed what’s now: information about information. That’s what Facebook and Google and Bloomberg do for a living. They create a meta-layer, a world of information about the information itself.

And why is this so valuable? Because it compounds. A tiny head start in access to this information gives you a huge advantage in the stock market. Or in marketing. Or in fundraising.

Many people and organizations are contributing to this mass of data, but few are taking advantage of the opportunity to collate it and present it to people who desperately need it. Think about how much needs to be sorted, compared, updated and presented to people who want to choose or learn or trade on it.

The race to deliver this essential scalable asset isn’t over, it’s just beginning.

Seth Godin