Blog on Monetizing Storytelling

How Business is About Breaking the Rules March 23, 2011

I was recently reading an article from last August in Wired magazine by Chris Anderson and Michael Woff titled ‘The Web is Dead. Long Live the Internet’. The authors present how the internet paradoxically has two faces. Fundamentally, it is open and breaks down traditional business and power structures in industries. However, there is an on-going struggle leading to consolidation of markets as we have witnessed in society and business before.  The less powerful are overtaken by the better resourced, organized and efficient. This cycle of capitalism is an inevitable course according to the authors.

Certainly we can question how open a system dominated by Google (Search and Ads), Facebook (Social relationships and activity), Apple (Online content delivery), eBay (Auctions) and Amazon (Online retail) is?

This is not to say that these companies are monopolies, as Matthew Ingram argues on gigaom.com when analyzing the book ‘The Master Switch: The Rise and Fall of Information Empires’ by Tim Wu, the Columbia Law Professor. Certainly these companies have been able to gain a dominant position in the market thanks to network effects, where products or service become more valuable to each individual user as the total number of users rises. However, as we have seen with MySpace and AOL, the network effects work both ways. And certainly Google is making a brave effort in the mobile space with the Android operating system

This duality where we have a struggle between two extremes reminds me of three pieces of academic research I have encountered for my PhD:

1. Marketing to Postmodern Consumers by Geoff Simmons
2. The marketing code: unlocking the secrets of Dan Brown’s success by Stephen Brown
3. Balancing between growth and profitability in product and brand management

In the first example, Geoff Simmons writes about how contemporary consumers are seeking both individualistic and communal experiences. Consumption is a manifestation of individual values and a tool for self-expression. But with limitless alternatives for how to make oneself unique, people are turning especially to social media to find belonging in different groups and sub-cultures.

I have personally witnessed this living in Japan. If you think of the amazing and wacky fashion there, kids seem to be crazy in a way that conforms to the rules of some sub-culture. (See for example FRUiTS magazine.)

The second piece of research by Stephen Brown is a wonderful example of publishing some interesting analysis on a major phenomena in popular culture. His analysis of the Da Vinci Code by Dan Brown proposes that the success of the book is based on a) the shock value of the topic, b) the author’s determination to try over and over again to create a bestseller, and c) the fact that the book plays with a basic human need to solve puzzles.

One of the most intriguing things about the Da Vinci Code was the fact that it was able to appeal

Standing out in business may be possible by combining business propositions considered traditionally extreme (Photo by ilco on sxc.hu)

to such a broad audience. This goes against traditional marketing logic where competitive advantage is gained by serving smaller markets through segmentation, positioning and differentiation. We now have animated movies by Pixar that appeal to both kids and adults. Social gaming takes this even further by basically being segmented for all, if you consider hits like FrontierVille.

The last example came from lecturing the Product and Brand Management course for the Aalto University School of Economics. Looking at the textbook we had, traditional business logic says that on the short-term (less than a year) you can go for either growth or improved profitability in your marketing strategy. However, when companies are applying digital marketing and social networking logic to their business, it may be possible to achieve both! As customer take the role of advocates, the virality of their word-of-mouth can grow your business without increasing the cost of acquiring new customers.

So perhaps we should not take existing business structures and business logic for granted. As academics and practitioners we must strive to create business propositions that break rules rather than conform to them.