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SMB Impossible, Part II

In last month’s post, we got into a meditation on business turnaround principles, as demonstrated by the philosopher Robert Irvine (the host of Restaurant: Impossible). Restaurant: Impossible is my guilty pleasure, my Keeping Up With The Kardashians. And I thought it might be beneficial to try and divine real-world business lessons from a staged, pseudo-realistic makeover show. This is roughly like learning about culture and teamwork from Survivor.

Here is a brief review of the three turnaround principles from last month’s article:

1) Who You Are Is Meaningless; What The Market Wants is Everything

This means that you should get over yourself and your original concept, and make what the market will buy from you at high margins.

2) Knock On The F*#@ing Doors

This means that you should stop pretending that you instinctively know your customer’s mind, and show some hustle with phone calls, surveys, meet-and-greets, and other opportunities that force you to come out from behind your desk to engage the customer.

3) Simplify! Cut Down The Menu and Make Everything Delicious

This means that if you are working your ass of but not profitable, you’re most likely stretched too thin, with too many unprofitable and probably low quality offerings.

And now, let’s pick the conversation back up, and learn what else the great Robert Irvine has to tell us. For the remainder of this article, I consulted heavily with Gary Sutton’s insanely practical turnaround handbook, The Six-Month Fix.

 

4) You Are Ignorant, So Fix Your Ignorance

At the beginning of a standard episode of Restaurant: Impossible, Irvine typically asks the restaurant owner how they started the restaurant. The story usually goes something like this: “Well, I spent 15 years in the manufacturing / software / live bait / other completely unrelated industry, and wasn’t fulfilled. So I took my child’s college fund and all other life’s savings, and went into a business I knew nothing about with a person whose relationship with me I would never want to damage. We are no longer on speaking terms, and I am $25k/$50/$100k/$3M in debt.

The follow-up is always, “What knowledge or experience about the restaurant industry did you have when you started?” Invariably, the answer is, “None.”

Then, “Do you know what your average daily/weekly/monthly food cost is?” –“No.”

–“Do you know what your current food inventory is, and how fresh it is?” –“No.”

There are some businesses that people romanticize. They say, someday I’ll quit the rat race and own a restaurant/bed-and-breakfast/art gallery/eBusiness/really-popular-blog. As if with any of these endeavors, simply hanging the “Open” sign rings the cash register. Restaurants and hospitality businesses are difficult on a good day. The costs are high, the staff typically young and inexperienced, the patrons ungrateful, the economy flaccid, the kitchen chaotic, yada yada yada. Even people who’ve spent years in this industry have a tough time because certain elements like tastes change quickly.

Accept that you are ignorant. Even if you’ve been in your industry for your entire career, accept the philosophical stance that at any point in time, “I know nothing.” Then, get on top of the basics. What are my costs (fixed vs variable)? What’s my breakeven point? What are my product margins? That’s it. Start with your costs and your profitability. Knowing that makes everything easier.

 

5) Forget The Grand Plan, and Stop the Negative Cash Flow

The Six-Month Fix, by Gary Sutton

Once you fix your ignorance, you can proceed to fix your loses. Those managers who are aware of their costs and still losing money are usually under one of the many common illusions in business. These are illusions like, “We’re shooting to acquire this one massive contract, and once it comes in things will get better.” Another is, “We’re just holding together until our game-changer product comes out later this year/next year/in five years.” I’m cribbing heavily from Sutton here.

The illusion in the restaurant business is usually, “We are the only authentically Italian/Lithuanian/Madagascarian/Martian restaurant in at least three miles, so if we can just wait until the economy picks up…” Just as an FYI, the economy is a great scapegoat. I’ve made this mistake too, blaming the economy for the lackluster effects of poor execution. The list of companies that created their greatest profits in the middle of, nay because of, an economic downturn is large and humbling.

This is not the time for holding tight to illusions, egos, misguided concepts or unrealistic assessments of the future. This is the time for adaptation.

There is one caveat: I am not saying that we mortgage our future by killing off investment in future products, or anything like that. Cash is king, but it is not God. We all have to be actively figuring out how our offerings are going to be better tomorrow. That’s what a business is. But we will be judicious about it.

So rank all your current products or services by profit margin, and kill the bottom half of the list. Or see if prices can be raised on low-margin products without affecting sales too dearly. Rethink costly expenses like travel. Find out where your employees hours are being wasted (too many meetings, anyone?). Be open to all options that will save you from having to lay off employees.

 

6) Figure Out Your Core

As Tim Ferriss would council, focus on the 20% of your offerings responsible for 80% of your revenue, and make them outstanding.

In the last section, we discussed one side of the Coin of Delusion: hanging onto an outdated identity or long-shot possibility as a justification for not taking action. Like, “The economy will bounce next quarter.”

The flip side of that delusional coin is the notion of being everything to everyone. The restaurant that promotes itself as a bistro AND pizza joint. And they sell sushi. And coffee drinks. And they’re a music venue…

Diversifying your product (profitably) is fine if it doesn’t interfere with your core business identity. Sutton tells the story of a manager at Home Depot who, as a test, let a vendor sell pantyhose at a kiosk that was near the cash register. The test ended up being wildly profitable, and could be more so if it was expanded. The manager took this idea to his superiors, expecting to be instantly promoted and given a medal for original thought.

The idea was axed, and the manager was asked to remove that profitable kiosk. But why?? Because it’s Home Depot. What home improvement problem is solved by pantyhose, other than the potential attractiveness of the occupants? Their executive management said, correctly, “Fuzzy direction kills more businesses than competition or dying markets.”

There are some very general businesses, but most successful ones find success by distinguishing their product and their customer better than their competition does. This is like a pub that says, “We have many things on the menu but we are famous for how good our hamburgers are, and we tailor our business to the after-work crowd from our working-class neighborhood.”

In any business, you have to be able to do something better than all the other guys, and that something has to heavily influence the purchase decision in your favor. What do you do better than anyone else?

 

7) By the Time You Become Aware of Employee or Culture Problems, It’s Too Late

Of all the elements of Restaurant: Impossible, the one that adds the real umph is the human drama. The owner has their whole livelihood on the line, usually mortgaged many times over. They are typically desperate to turn around their failing business through long hours and pressure on the staff. In every case where Irvine finds business dysfunction, he also finds dysfunction on a managerial, which is to say a basic human, level.

This typically plays out as a Come to Jesus meeting between the manager and the staff. You can tell that it’s the first honest conversation that’s they’ve all had in a while. The manager is resentful that the staff acts lazily and unprofessionally, leaving him/her to clean up the mess and put in all the extra hours. The staff tries to articulate as best they can that they’ve never been properly trained, that there are no established procedures for anything, and that their personal boundaries are violated by the manager’s step-in-an-do-it-myself attitude. Crying is usually involved.

Trust is a tricky subject. Managers can screw up trust very unintentionally. I’ve known very well-meaning managers who put a lot of time and effort into developing a specific company culture, who then inadvertently screw up that trust by stepping in an controlling a process that they’re supposed to have delegated. They can’t help themselves.

Fight opaqueness and politics. Healthy culture does not begin with Foosball tables in the office (although there’s a lot to be said for that). Healthy culture starts with transparent conversations and honest assessments about collective strengths and weaknesses. The moment you feel you need to “puff up” or in any way massage or sugarcoat a communication “to the troops” (I hate that pejorative term), your culture is already dying.

Actually I’m wrong about that. Healthy culture starts with the manager being able to hear criticism of his/her performance voiced by his employees, value it, absorb it dispassionately, and fix it. Some would argue that should be a two-way street, but I disagree. The manager is setting themselves up as a leader. They set the example of how to take the criticism of a transparent conversation and use it to make improvements. “The troops” will do likewise if they have the good example to follow.

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The Psychology of Social Media In a Crisis

One of the large parts of professional Social Media management is the role of a crisis. When something urgent and negative happens, people feel emotionally compelled to share information without necessarily evaluating the truth of that information. This is particularly so when someone is 1) physically or effectively close to the disaster, 2) tending to think about themselves rather than thinking of others, and 3) experiencing negative emotions from reading the information. It may seem obvious, but it’s still important that it’s been studied and proven, that our tendency to share information during a crisis is based on self-centered emotional release rather than the benefit of others.

Earlier this year, my colleague at Social Media Beast wrote an article for businesses dealing with Social Media crises. These are truly perilous situations if handled incorrectly. Whatever legitimate negative publicity kicked the mess off is bad enough without the additional Social Media wildfire of rumor, speculation and trolling.

Though it’s hard for many to see it this way, these times of emotional frenzy can also be opportunities to test and strengthen your brand and place you top-of-mind if handled authentically and deftly.

 

Here are some key points from my colleague Katie’s article:

1) Have a plan. Obvious, but yet everyone gets caught flat-footed and plan-less.

2) Already have a structure in place that allows for consistent monitoring and rapid response.

3) Move quickly, but without defensiveness or any other attitude that would inflame the situation. Remember that, as we said above, triggering readers’ emotions will only cause more tweeting-sans-thinking.

4) Become a go-to resource for the kind of information and service that defuses tension.

5) Keep learning. Revise your plan so the next one is handled smoother.

 

After spending over 10 years in marketing, I’ve been personally involved in a number of situations where an angry customer became a product evangelist when the responsiveness and customer service were truly worthy.

Testimonials: The Right Way and the Wrong Way

February 28, 2015 Leave a comment

Nothing supercharges lead generation and sales quite like social proof. One study published in the Wall Street Journal noted that social proof was more influential in changing behavior than the prospect of saving money.

Content Marketing Leaders Spill on Using Testimonials Effectively

Tim Paige of LeadPages.net produces a fascinating podcast about digital marketing effectiveness called Conversion Cast. Earlier this month, he interviewed the Strategic Director of Orbit Media, Andy Crestodina. The subject of the episode was testimonials. Andy talked about a small business case study where the proper implementation of testimonials resulted in a 97% boost in leads.

Tim Paige, Producer of Conversion Cast

First, the wrong way (and what everybody tends to screw up). Whatever you do, do not put your testimonials on a dedicated testimonials page. It’s tantamount to hiding your best credibility indicators in a section of the site where no one ever visits. Think about it: when was the last time you ever clicked on a testimonials page?

Testimonials belong on the main pages of your site (products, about us, etc.). They should be woven into the content. As Crestodina puts it, they should be “pixels away from the claims” they justify.

Think about testimonials as the sources that you’re citing to back up your claims, like footnotes. Except that you don’t want to put them at the bottom. Better to place them along the side of the page, as well as in-line (block quotes), and also at the bottom. Just so long as they are visually tied the the claims that they back up.

Andy Crestodina, co-founder of Orbit Media

Crestodina also makes a point that you want to use a variety of formats. He refers to video testimonials in particular as the “atomic bomb of marketing.” They convey passion and sincerity through body language and inflection. So don’t simply settle for a bland quotation or a logo array.

KissMetrics Schools Us On the Psychology of Social Proof

In a blog article on social proof, KissMetrics offers some fascinating wisdom on implementing testimonials and social proof.

First, and maybe most interesting, testimonials can backfire if they’re phrased in a way that suggests that many people are doing something incorrectly. We refer to this as negative social proof. They site the example of the signage used in the Arizona Petrified Forest to reduce theft. Here’s what happened, in their own words:

Their findings were shocking. The sign with the negative social proof was not only unable to reduce theft, it actually increased the likelihood that people would steal the petrified wood from the forest! In this case, the sign read:

“Many past visitors have removed the petrified wood from the park, destroying the natural state of the Petrified Forest.”

The researchers found that this sort of sign encouraged more stealing (it tripled the amount of theft) because it was evidence that many other people were already stealing from the forest. Instead of discouraging people, it made them more confident that stealing was “okay.”

In our case, an example of a testimonial that would case the same problem would read like this:

“Like so many others, I have been writing testimonials incorrectly for years until I read this article.” –John Q. Wrongness

Here are some KissMetrics pointers for getting the most out of your social proof (testimonials in our case):

1. Include pictures next to your quotations.

This is based on a recent study published in the Psychonometric Bulletin and Review stating that pictures next to examples of social proof tend to inflate the subjective measure of truth.

2. Include testimonials from people who demographically match your buyer personas.

More research, this time from Current Directions is Psychological Science, that shows people tend to gravitate to, and be influenced by, people similar to themselves (duh).

3. Go for status.

All things being equal, we will tend to value the opinions of the more notable and influential people. Titles matter. The words of recognized industry leaders matter. So concentrate your efforts on gathering some marquee testimonials.

Marketing Psychology: Price Framing

January 30, 2015 2 comments

Price framing is one of those topics that everyone seems to have heard of, but every person you ask will give you a different definition of what it is and how it works. Yet if you’re managing a web store with thousands of products, for example, understanding how to present prices and products in the most optimal way can make an enormous revenue difference.

Let’s take a moment to talk about how price framing works and why it has an effect on consumers.

First of all, when we talk about price framing, we’re talking about changing the context of a price presentation – without substantially changing the price itself – in order to encourage more purchases. This is the reason you’re charged $39.99 rather than $40.00 for iPhone earbuds. But that’s just the tip of the iceberg.

What Do You Mean I’m Not Being Rational?!

One of the most amazing things about how price framing works is that it shouldn’t work at all. Up until a few decades ago, economic theory took utilitarianism as a given. When making a choice whether or not to buy an iPhone, both economists and psychologists assumed that you made a rational calculation of the pros and cons of the choice, and selected the outcome that, to the best of your knowledge, would be most useful or advantageous to you.

So it shouldn’t matter at all how a price is presented to you. The price is the price, and you should make the same calculation of advantages regardless of context.

Except that the rational action theory of economics turns out to be mostly bullshit.

If rational action theory were true, your tendency to purchase a $39.99 item (when you would not have purchased a $40 item) would be based solely on the utility of the one-cent savings. I think we can all agree that something else is at work here. This is an example of how marketers have always been decades ahead of economists.

The first people who noticed that people don’t make explicitly rational outcome choices were psychologists Daniel Kahneman and the late Amos Tversky. They are the grandfathers of what’s now called behavioral economics. They discovered through controlled experiments that people use cognitive shortcuts, called biases, to help make choices. These shortcuts don’t always produce rational decisions.

For example, Kahneman and Tversky discovered that, when people are given a choice of losing $10 for sure, or having a 50-50 chance of losing $25, they tend to avoid the certain loss even though rationally speaking it’s the worse choice.

Other pioneers have significantly advanced the study of these cognitive shortcuts. Two of the most prominent are Richard Thaler (author of Nudge), and Dan Ariely (author of Predictably Irrational).

So, what affect can these biases have on consumer behavior (and specific to us, on price presentation)?

Here are three major principles that may be helpful:

1. People evaluate prices relative to a reference point

Up until recently we believed that, when evaluating a potential purchase, people made comparisons to absolutes. Is this iPhone worth the 400 units of currency that I will part with?

Well, it turns out that we evaluate purchases on relative terms. We’re looking for the value that’s reasonable. But what’s reasonable can be determined by many things.

In a Psychology Today article called “Pricing and Framing: When Are We Likely to Pay More For Products,” Dr. Gizem Saka gives us the scenario of the bread maker:

…You have two options. A standard quality break maker is for sale for $80; and a higher quality bread maker is sold at $120. You compare and contrast the two machines. You tell yourself you are not an expert maker, and you go with the $80 one.

[…]

Now when you go to the shop, you have 3 options. You can spend $80, or $120 or $475. Rationally speaking, adding an irrelevant option should not change your decision between the $80 and the $120 ones. The pros and cons did not change; quality of the bread makers remained the same, and you are making the same salary. You know that you are never going to spend $475 on a break maker…

But the thing is, now you do would feel more comfortable buying the $120 one. After all, you are not buying the most expensive alternative. You have found the middle ground, and you are probably happier, compared to someone who buys the cheaper version with only two options.

This is a form of psychological anchoring that Saka describes is widely known as the irrelevant third option, or in business terms, the loss leader. It is a super-premium product that may not be profitable in its own right but makes the next option down seem more attractive.

This is the most famous use of the principle that the attractiveness of an option will change depending on what’s presented with it. But this is only one example of the effect one can have by introducing or removing options.

2. People evaluate price differences relative to the level of the initial price.

The scientific name for this is the Weber-Fechner Law, if you want to Google it.

You will tend to be more motivated if a $20 price is lowered to $10, than if a $120 price were lowered to $110. Again, there’s no good reason for this. The economic advantage to you is the same in both scenarios.

Ernst Weber was a 19th century scientists who discovered that the stronger a stimulus is, the more change you have to make to it before we can perceive the change. If you’re carrying three pounds of stuff and I add a pound, you will notice the change much more easily than if you’re carrying 30 lbs and I add one.

Fechner improved on this idea by figuring out the mathematical relationship between intensity and perceived change (it’s a simple logarithm, if you care).

The Weber-Fechner law is why you have a hard time paying $5.00 for a Starbucks Sugar-coma Mocha, but you have an easier time coming down $5,000 on the asking price for the house you’re selling. This is especially important when studying price elasticity – the variation in dollar amount that people are willing to pay for the same item.

3. Losses hurt more than gains give pleasure.

This is part of what’s called the Endowment Effect, for you Googlers. People tend to ascribe more value to that which they own. Therefore people try to avoid losses more than achieve gains. People want to avoid late fees more than they care to take advantage of early-bird discounts, even if the value is the same.

One working paper from a USM student described how this effect was studied on the “discount for cash” gasoline consumers in the 80’s.

It’s illegal to do so now, but it used to be that gas stations would charge you a special surcharge if you wanted to pay with a credit card (trying to recoup their extra processing fees). The credit card companies, fearing backlash insisted that any such price difference had to be termed a “cash discount” rather than a “credit surcharge.”

It turns out they were right to fear: those paying for gas by credit card had a significantly more negative reaction to the transaction if they “paid a surcharge” rather than simply missing out on a “discount.”

Further Research

Research is still young in this field, fleshing out the details of principles like these. The results are fascinating. For example, one working paper from the Harvard Business School found that it makes a big difference in preference depending on whether a price is “all-inclusive” or “partitioned.”

If you split out a price into line items, the way budget airlines are more prone to do, people will tend to prefer the deal if the secondary item is top-notch for the price (incredible in-flight service, full-service meal, etc), and oppose the deal if the secondary item is lackluster (one movie option, snackbox, etc.).

Why is this? because the secondary item is easier to evaluate compared to its price than the primary item (the plane trip itself). It’s easier to see if you’re getting a deal or not. So if your secondary items aren’t that high-quality for the money, all-inclusive is the way to go.

I’m excited to see what new principles we’ll be able to add to these three as research develops. If you have some to add (and can cite your source), please use the comments to let people know!

 

Applying the 80/20 Rule to Marketing: A First Look

December 31, 2014 Leave a comment

One of the many great lessons I’ve taken from Tim Ferriss is the active application of the 80/20 rule to projects and endeavors.

The 80/20 rule, known more formally as the Pareto Principle, states that 80% of your effects are usually generated by 20% of your inputs. For example, in B2B sales it’s often the case that 80% of the revenue comes from 20% of the customers. If you’re running a PPC campaign right now, it’s highly likely that 80% of your traffic comes from 20% of your bidded keywords. The ratios are not always exact, but the point of the principle is that in any given situation, the vast majority of our effort may not be achieving substantial returns.

This is why analytics have become so important to marketing over the last ten years, and why CMO’s have become obsessed with ROI tracking. The moment that companies could finally calculate the direct effect of advertising, most senior executives had a heart attack at the inefficiencies they saw (there’s a reason they call is “spray-and-pray”). The last decade of marketing has been about reallocating resources to where they demonstrate measurable results.

Pareto 101: Baby and the Bathwater

It’s easy to assume that just because you find an 80/20 dynamic somewhere, it’s always a problem that must be fixed. It’s not. The 80/20 dynamic will always tend to exist, even in optimized systems. It’s part of what happens when a system finds equilibrium. Sometimes expending effort on the lower 80% is absolutely necessary to maintain the top 20%.

Here’s an example: if you sell technology, you may decide that you only want to offer technical support to your top 20% of customers (let’s say “enterprise” customers). They are, after all, the ones who are supplying the majority of the revenue. You can do that, but your brand will be damaged by the refusal of support to the other 80%. So that may not be the world’s best idea.

Now, it’s tempting to apply the 80/20 rule only from a monetary perspective.  But because many marketing departments in the SMB world are staffed by only a handful of people, it may be more interesting to apply it from a time perspective instead. What tactics – hacks – can you apply to marketing that will have the highest gains compared to the amount of time it takes to implement and sustain them?

Where do we face this challenge at its most stark? Digital content marketing.

Content marketing – including blogging, social media, case studies, whitepapers, etc. – is a hugely important part of the digital marketing world. If you produce enough informative, interesting, trust-inspiring content, people will come to your website looking for more of your sage wisdom. They will trust you and your products, because of your authoritative works. They will share your content with their friends and colleagues, who will in turn link to your site and establish those all-important backlinks that are necessary for organic rankings…and then you’ll rule the world…

…in theory…

Content marketing is also incredibly labor intensive, even when content is actively repackaged and repurposed. Marketing Directors tend to fall in love with it because the only expense is salary – a sunk cost. But without an audience actively sharing your content, linking to it, or using it in a specific evaluation of whether or not to buy, it consumes more value in time than the results it generates.

Try This At Home

You want a fun activity? Select an SEO agency at random (these are the agencies who are supposedly the best at using tactics like content generation to foster backlinks and organic search results). Take a look at how much content they’re generating on their own behalf (it’s typically a lot). Then, go to the Moz website and enter their main URL into the search tool. Look at their Domain Authority score (this is how much authority the domain has achieved based on backlinks, social shares, age of domain, etc. – this is the necessary prerequisite to high search rankings). Anything under 50 is pathetic. An agency that knows anything about SEO should have an authority in the 80s or 90s. How did yours score?

Most companies, including the SEO agencies who should know better, produce a ton of original content that no one reads, no one shares, and has no effect on trust, authority or ranking. This is a ripe area for the 80/20 rule to be applied.

Looking to Apply the 80/20 Rule To Marketing

Andy Crestodina, the Strategic Director of Orbit Media, is one of the most successful appliers of Content Marketing for the purpose of search optimization. His book, Content Chemistry, discusses the concept of “atomizing” content. That is, creating one large unit of content that can be broken down and repurposed through many different media. For example, an eBook that also serves as a blog series, the basis for an infographic, the outline for multiple webinars, etc.

This is an example of applying the 80/20 rule to content marketing: creating content that can be atomized and repurposed with minimal extra labor. But this is just one example. Imagine how we could apply this principle to other channels like database marketing, telemarketing, and even traditional channels.

Time to open up the floor. Where in your experience can marketers pick up the most true gains with the least amount of implementation time and effort?

These could be ideas at the tactical level, like headline-writing, simple web forms, or building your influencer network. But I’m really looking for the subtle, couterintuitive ideas that on one’s talking about. Did you ever try a marketing experiment that made no logical sense and have it pay dividends, the way some people increase the fat content of their diet in order to lose weight?

What’s your best marketing time-hack?

Everything You’ve Been Taught About Public Speaking is a Myth

November 30, 2014 6 comments

Let me clarify the title a bit: everything you’ve been taught about public speaking can only get you to a certain level of proficiency. Then, like in every other area of mastery, you have to re-think everything you’ve learned because it’s time to make finer distinctions. As Marshall Goldsmith says, What Got You Here Won’t Get You There.

Nine out of every ten sources of advice for public speaking are designed for one purpose: to get beginners over their fears. They say things like “know your audience,” “know your venue,” and “know your material.” The thing is, there are many professionals out there for whom this advice is an insult to their intelligence. They speak regularly, and want to become masterful. But what examples and advice do they have to work from?

This is a list of 10 truisms about public speaking that, once you gain some proficiency, will not serve you anymore. Don’t be the speaker or performer who is still using the same bag of tricks that got them through high school and college. Break out of old thoughts!

Myth #1: The Main Focus of Learning to Be a Speaker is to Get Over Nervousness

Most books and advice sites on public speaking imply that once you get over your fears, you’re pretty much good to go. To this end, they advise basic strategies like knowing your material, knowing your audience, practicing, and gaining experience.

Two issues here. First, there is no getting-over-the-nervousness. There is only executing-well-while-being-nervous. You think nervousness ever goes away for skydivers? Why would they want it to? The nervousness is the whole point. Without nervousness, skydiving is just five minutes of a rather nice view. Likewise, people become speaking and performance masters because of the rush. They embrace it and look forward to it.

Second issue: once you can speak to an audience despite being nervous, you’re not at the end of your journey. You’re at the beginning. The main focus of learning to be a speaker is to help your audience change their lives for the better. This is true no matter the topic. You want them to see something differently and behave differently after you’re done. It’s not about your nervousness, it’s about mastering the art of helping and serving others en masse.

Myth #2: I’m Ready to Go Once I’ve Run it a Few Times and Feel Comfortable

I can count on the fingers of one hand the number of people I’ve met in my life who could deliver a masterful speech after only having run it a couple of times. And they were all well-trained performers from an early age.

What’s more, most people don’t rehearse their speeches or presentations out loud. They sit in a chair and flip through their PowerPoint deck a couple of times, and then bore their audience to death by reading off the slides. Again, “feeling comfortable” is not the standard. It’s only a slight reassurance that you won’t publicly soil yourself. I know speaking trainers who advocate an hour of rehearsal for every minute of speaking time. Whatever you’re doing no only isn’t enough…it probably isn’t in the ballpark.

Myth #3: Top Speakers Are All High Energy Performers

I want you to, right now, Google “Public Speaking Champion” and then look at some of the YouTube videos. Go ahead, I’ll wait.

Most of them are cringe-worthy. Some are full of high-energy schtick. Others are more subdued, but full of very contrived pacing and performance-art moments. They seem like they should be powerful and captivating, but something feels inauthentic, like a Rolex from a sidewalk vendor.

That which is touted as “great speaking” today is stuff that is hacked together from a tool kit taught at the high-school and college levels. It is choreographed and paced within an inch of its life. All authenticity is squeezed out.

Really great speaking is that which the speakers manage to find renewed emotional connection to thoughts they’ve already had, as if they were experiencing them for the first time. The rest is decoration.

Myth #4: Nervousness Goes Away With Helpful Mental Tricks and Visualizations

See Myth #1. Nervousness does not go away. You know what compounds the problem? Taking your mind off your message and your audience in order to do something stupid like visualize them in their underwear. I have no idea why this old chestnut is still around.

Now, can meditation, guided visualization and/or a consistent warm-up routine help you before you speak? Absolutely. Most stage actors in fact tend to be rigorous bordering on superstitious about how they prepare for a performance. But do not expect this to make everything magically easy.

Myth #5: It’s Important to Preplan and Choreograph Your Gestures

I’ve coached high-school and college level performers to choreograph gestures before, but it was because the stylized nature of that competitive environment demands it. When speaking coaches focus on gestures, it’s usually because they’re dealing with a beginner who’s hands are frozen by nervousness.

Once you get to the intermediate level, your hands will start talking for you. Sometimes out of nervousness or learned bad habits, a speaker will use their hands too much or to little, and a good speaking coach will catch that and tell you that you can tone it up or tone it down. But choreographed gesturing always comes off inauthentically. You know why? It’s not authentic.

Myth #6: Whatever You Do, Be Sure to Memorize / Not Memorize Your Speech

I’ve heard people say both of these. Most people say “don’t memorize,” because they’re working with beginners who can’t pull off a memorized speech. On the other hand, it takes a performer with pretty significant chops to memorize a speech completely and then deliver it with that first-time authenticity. Most pros I’ve seen can’t even do that.

When I deliver a speech, I’ve run it so many times that I know my word choice pretty well, like maybe 90%. The remaining 10% is just sentence formation flexibility. I don’t want to throw myself because I meant to say, “one and two” but I end up saying “one and also two”. The really short speeches (2-3 minutes) I’ll memorize unless I’m introducing someone. I’ll read introductions right off the card because the biggest sin is forgetting to mention something. Most people do the opposite: they have no idea what words they’re going to use and end up jabbering on five times as long as they should.

There is no one rule about memorization that covers every circumstance, but don’t use that as an excuse for lack of preparation. Know what you’re going to say, whatever that means to you.

Myth #7: Whatever You Do, Be Sure To / Please Don’t Try to Add Humor

I’ve heard this one both ways as well. Most advice blogs say to add some humor, especially at the beginning. Most coaches of beginners say not to try to be funny because you’ll never pull it off.

There is no right answer to this. Yes, speeches work better with some humor to connect to, especially in the beginning. Most speakers, when they hear this, go about it by writing a speech or presentation with no humor and then try to shoehorn jokes into the writing after the fact. Masterful speakers aren’t necessarily joke-writers, but they are so comfortable in their own voice that they can let their natural sense of humor come through in their writing.

If you take the risk and it bombs, it’s not the end of the world if you keep your energy going and move right on. I’ve done this. I usually bomb when I misjudge my audience. If the crowd is really all-business or you’re getting them at a time when they’re tense and not warmed up, it’s an uphill battle to make the humor work. If it’s a close call, I would advise you to work humor into the speech even at the risk of bombing, because you want to gain the experience.

Myth #8: Don’t Acknowledge Your Mistakes

I can see why this myth exists. When you’re a beginner and you’re all caught up in your nerves, mistakes can really throw you off your game. You haven’t yet gained experience on how to handle them.

First of all, what is a mistake? Some students that I’ve coached would get bent out of shape about accidentally leaving out two sentences somewhere, when their delivery and room chemistry was truly energizing. Other students would pat themselves on the back for making it through with no technical mistakes, when their delivery was flat and unconnected.

I know it’s hard to see mistakes as gifts, because up in front of people they can feel mortifying. That’s fine. We all make them. Pros make them. The panache is in the handling, which comes with the experience of having screwed up. If you trip over the mic cord and try to not acknowledge it, that will read as goofy. It happened. The pro keeps her composure and says, “Well, that happened.”

Don’t worry about mistakes. Don’t even worry about acknowledging them, if they’re obvious. Just keep your composure.

Myth #9: The Speech’s Length Should Be Under 20 min / 30 min / 40 min / However Long It Needs to Be.

There are a lot of differing opinions on how long you should go. Some coaches say to keep it under 30 minutes because of the average listener’s attention span. Peggy Noonan says to keep it under 20 minutes because Ronald Reagan never went over 20 minutes. I kid you not.

My point in this section is that the actual minute count is not the big deal (within reason). The big deal is that your speech, however long it is, is about twice as long as it needs to be.

We’ve become accustomed to writing for the filling of time, and it’s gotten us used to bloated speaking. It’s no wonder that people start pulling out their smartphones while we’re talking. Did you write a pitch presentation for a piece of creative business that goes for 30 minutes? It probably should be 15. Did you write a 20 minute graduation speech? It would probably be a better speech at 10 minutes. And your six minute Best Man speech will be much more effective at three minutes.

Don’t write to fill time. However much material you believe is appropriate, do enough refining to take out at least half. This is hard, time consuming work and absolutely necessary to mastery.

Myth #10: Start With Small Audiences and Work Up to Big Ones

I’m a big believer in gaining progressive experience. But remember that speaking for a small group of people whom you know and whose faces you can see might be more freaky that speaking in front of an auditorium full of strangers.

Progressive experience doesn’t necessarily mean increasing the audience size. It means increasing the stakes. You start in an environment where you feel safe. Maybe one-on-one with a coach. And then you bring in more relatively safe people. You should progress in a way where you feel scared, but not prohibitively so.

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Do you find this subject interesting? If so, then please leave a comment. I’m trying to determine if there’s enough interest in public speaking mastery to expand further on it. I’ll make that determination based on the comments that you leave here, and the questions you have. Happy Speaking!

Swarm Intelligence and Capitalism

July 31, 2014 1 comment

Recently I revisited an article that I posted once upon a time on Swarm Theory (Decentralized Problem-Solving). This is the notion that a self-governed network of entities operating on simple heuristics (e.g. bees in a hive, ants in a colony) can solve certain problems more effectively than central authority. I received a comment from the CEO of a software company in Finland that harnesses Swarm Theory within specially designed social networks to solve problems.

As I was searching around for more information on Swarm Theory, I came across this quote on a blog: “SWARM OR HIVE INTELLIGENCE: Communism Without The Corruption! […] Individual Capitalism Vs. The Collective! One Thing Is Certain: Capitalism Cannot Be The End Result For Humanity Or We And Very Likely Earth Itself Are Doomed!”

Interesting perspective.

But at the same time, there’s an interesting point to be made: this quote has its logic exactly backwards. Sure, a leaderless structure like an ant colony brings to mind the visual idea of a commune. But Communism as we’ve experienced it (and Socialism for that matter) are associated with central planning, which is the opposite of Swarm Theory. If you want to look at the economic system that bears the closest resemblance to Swarm Theory, you’ll be looking at good old Capitalism.

The Invisible Hand = Early Crowdsourcing

 

Since Adam Smith described the “Invisible Hand” in 1776, arch-capitalists have ascribed a magic, almost religious quality to the economic distributions within a free market. As supply lowers, prices rise. How does the system know? How does wealth accumulate with those who are meeting a strong demand? How is investment capital finding its way to the most promising opportunities? Is it God’s will that it be so?

The “invisible hand” is an instance of Swarm Theory, nothing more. The motivation to provide value in exchange for monetary reward is a simple heuristic and economic participants (workers, owners, investors, etc) are the automatons who follow it. Therefore the strengths and weaknesses of the various Capitalist systems of the world can be understood by how effectively they replicate a basic swarm system.

In his book Business Stripped Bare, Richard Branson coins the term Gaia Capitalism to describe the more environmentally and globally aware form of Capitalism to which he subscribes. This promotes the idea that there are many manifestations of Capitalism that have varying degrees of concern for long-term thinking or preservation of common goods. Should a Capitalist system have rules? Should it be transparent? Should it reward individual actors? Do regulations always make it less efficient? We can understand these questions by understanding how they apply to swarm systems.

So let’s revisit the characteristics of an effective swarm system:

  1. It is self-organized
  2. Its actors follow simple heuristics, though different classes of actors may follow different instruction sets (foragers vs patrollers, etc.)
  3. Actors must act in a diverse fashion (i.e. bees don’t search for a new home be all flying in the same direction)
  4. There is a communication mechanism by which information is shared with all actors
  5. Actions must be self determined, without imitation, cohesion or fad-following

It also must be understood that the collective result will not be perfect, but it will be ever-improving. Just because bees agree on a location for a new hive doesn’t mean that the resulting location is perfect. The quality of the new location depends on the terrain that was explored (i.e. luck), and the system that has evolved to determine consensus. Notice that it does depend on the outsized reconnaissance skills of any one super-star bee.

Notice also that Swarm Theory works to solve the problems of the collective, e.g. how to propagate and defend an ant colony, or how to allocate wealth to the providers of value and quality investment. They do not exist for the purpose of enriching individual actors at the expense of others. To be sure, there are often status hierarchies within swarm systems, and individual actors are motivated to act by their own survival, but the nature and essence of the system is to propagate the entire community.

Answering Hard Questions on Capitalism

 

Now, assuming the analogy between a swarm system and a Capitalist one, and also that our goal is to make the most productive system that we can, lets draw some conclusions.

Should Capitalist systems have anti-trust laws, and how vehemently should those laws be enforced? Well, are swarms more effective when actors are acting diversely or in concert? Diversely. Acting in concert through collusion or anti-competitive measures weakens the system by limiting the diversity of opportunity. The dynamic becomes indistinguishable from central planning.

In healthy Capitalist systems, should all trades take place on transparent exchanges (i.e. removing the dark pools of investment banks). Well, are swarms more effective or less effective with transparent communication? They’re more effective. In fact, they depend on the systemic aggregation of collective information so all actors can make informed decisions. Keeping information secret for private advantage weakens the system by disallowing all the actors from making effective decisions.

Do central regulations always make a Capitalist system less efficient? This one is harder to demonstrate with analogy, and it also depends on the time frame that one is talking about. I interpret “regulations” as rules and safeguards. As part of its heuristic logic, a forager ant will not leave the colony to forage for food unless it come into contact with at least four patroller ants within the space of ten seconds. This lets the ant know that it’s safe to forage. It might be more efficient for the colony in the short term if the forager ant would search for food immediately, without this safety procedure. In the short term, the chances of running into food might be higher then the chances of running into an anteater. But the colony will pay a heavier cost (population count) every time this gamble doesn’t work out.

Yet, this procedure evolved organically. It was not enforced from a central authority. It’s hard to find analogies to central rule enforcement within natural swarm systems. These systems, by definition, have no central authorities. Instead, this might be a question for digital automatons in labs.

Still, we can see from this demonstration that the strongest, most effective Capitalist systems are not necessarily the ones that provide the greatest enrichment to individual members. They will more likely be the ones to harvest most effectively the wisdom of the swarm.