“The alchemy of this book’s title is the science of knowing what economists are wrong about”.
Littered with marvellous citations, charm and insights into his love of behavioural economics.
I select here seven bullets which relate to a keen niche of my knowledge; the B2B selling of a new product.
“Nearly always when you launch a product you find your target audience is not who you thought it was”. Always like to see this point reinforced. Back in 2013 I blogged on a pioneering UK coffee shop chain autobiography (in separate context of business plans & Props). They’d found the same, almost too late. Nearly shutting their first store six months in. Yet over that first Easter weekend, they realised they’d managed to hit upon their sustainable, loyal customer profile. Nothing like the one imagined at the outset.
‘Signalling is more important in the early stages of a company’. With no pre-existing custom, signalling matters more. Sub in ‘service’, ‘offering’ or ‘product’ for ‘company’ above. An example given; having a bad website for an interior designer is like being a bad designer. Even more so, when your words can’t be matched with outcomes, all actions and messages that surround you must convey what you’re about. Focused signalling from economics as intended to reduce buyer uncertainty.
Rory refers frequently to ergodicity. Decisions that are made on the basis of running the numbers alone are flawed. You must look beyond them and to the customer view for optimal decision making. In new product development meetings I have seen this destructive imbalance stymie success before you’ve even begun to ‘sell’. Pre-release partnerships, from development customers, live beta testing and soft launch programs remain vital.
Are you subconsciously homogenising or is your innovation making you distinct? Rory rightly bemoans laptops and phones that now all ape Apple. Mid-market cars are looking the same. His example of the disappearance of individuality such as from last mid-century Citroen or Renault was a cracker. You can pick any sector, and an eerie similarity unnecessarily infects most offerings. I agree that your innovation – which encompasses how you sell as well as what – must be genuinely distinct.
Okay, so that’s my own word. Disintermediation being the infamous term for what the internet has proved highly adept at; removing the middle-man. Yet have we so spoke too soon? In reference to his latest book, he says “arbitrage trust is a form of Alchemy“. A middleman can be a much valued “trust aggregator”. He loves the analogy of the hotel concierge. Someone pivotal to everyone wrapped up in the hotel’s economy prospering. From guests to local tourist services. Surely making the vaunted ‘trusted adviser’, reseller ‘best of breed’ curator and even user groups now ripe for a comeback?
Not enough of this goes on. “People are terrified of experimentation because when you experiment with different models it brings with it the inherent risk of destroying your old model”. And getting fired maybe too. I always remember in my cubrep days being told be an old pro, “experiment on deals whenever you can, but not on mine”. Salespeople and the need to experiment with a new pitch need a lot of care. Make sure you give it and that it is not palliative.
He used the term de novo. Which I’d always viewed as starting ‘from scratch’. Without any prior knowledge or from a a totally new perspective. I think he uses it in a more general, ‘from the beginning’ sense. As he’s the classicist perhaps I’ve learnt it slightly wrong. But a firm point still follows. How often do you design anything truly de novo? Whether it be a product or the way to sell it? It is rare. A jumping off point is usually somewhere to build from. Yet I often end upon having long conversations with sellers who mistakenly jeopardise their launches by focusing on the totally new elements, at the expense of the gently so.