Monthly Archive for April, 2009

Some thoughts on social media and popular delusions

“In reading… history… we find that… individuals…have their whims and their peculiarities; their seasons of excitement and recklessness, when they care not what they do. We find that… communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.”

Sound familiar? Like Dot Com Mania? Or maybe the sub-prime mortgage meltdown? Actually, it’s a passage from the 1841 classic, Extraordinary Popular Delusions, and the Madness of Crowds, by Charles MacKay, republished in 1999 with a foreword by Sir John Templeton.

McKay was talking about the psychology of crowds and their tendencies for creating mass mania. He had on his mind the Tulipomania (17th Century), The Mississippi Scheme (18thCentury), and The South Sea Bubble (18th Century). But he could have been talking about sub-prime scandal and associated economic meltdown (Early 21st century). Could we one day say that it also sounds like the social media craze, also of the early 21st century?

When a fad comes along, like Beanie Babies, cigar bars, or buying groceries on-line, there is opportunity to be had - no question. But this is typically only for an existing business, which, along with its perennial products, adds the “new folly” product to its line - not for a new business based solely on the “new folly.” In terms of adopting social media for your small business, this means creating a strategy that is compatible with your traditional marketing strategy.

There is tremendous pressure on small businesses to take advantage of social media these days: peer pressure, fear of missing an opportunity pressure, fear of becoming uncompetitive pressure, and, yes, greed pressure. Truth is, none of these are unworthy motivators. The problem comes when the manifestations of these pressures are misapplied in the form of mania.

By all means, develop and execute a social media strategy that helps your small business gain and maintain a competitive advantage. But make these applications complement your current business model, rather than merely getting caught up in “some new folly.”

The last thing we want to happen, when you read Mr. MacKay’s book on popular delusions and the madness of crowds, is for you to see yourself there.

What if the climate change zealots are wrong?

So what if they’re wrong?

I’m talking about the climate change zealots pushing government policies that would tax, regulate and/or commoditize carbon emissions. These folks want any or all of these government strictures on the carbon emissions of American power producers, businesses and, ultimately consumers.

They’re not wrong about climate change. Since Genesis Chapter One, Earth’s climate has been changing. Ten thousand years ago, at the end of the last Ice Age, Kentucky was buried under 5,000 feet of ice. And they’re probably not wrong about whether humans are contributing to the changes.

But what if they’re wrong about how much of an impact imposing an accelerated carbon clampdown on the U.S. economy would have on global climate change? What if we take U.S. carbon emissions back to the proposed pre-1990 levels – when the U.S. economy was half of current GDP – and then discover that, because China and India did nothing to cut their emissions, we still have “climate change”?

Of course, standing here in 2009 we don’t know if they will be wrong. But there is one thing that is knowable right now: Years before the climate change zealots are proven right or wrong we will know that their policies, if enacted, will have wreaked havoc on the U.S. economy and significantly diminished our global competitiveness, especially against those two emerging economic giants, China and India.

Speaking of China, its economy is one-fifth the size of the U.S. but currently has the same level of carbon emissions. It is becoming an economic giant but is already a carbon emissions behemoth. So it’s not unreasonable to project that the majority of units of production taken from the U.S. economy by cap-and-trade., et al, will be replaced with units from China. Since 1990, U.S. businesses have, mostly unheralded, done a great job of increasing production while decreasing energy consumption per dollar of GDP. Meanwhile, China’s carbon footprint is growing per unit of GDP. So by regulating carbon only in the U.S., it can be argued that global carbon emissions will actually increase.

The United States could dominate the global economy for the remainder of the 21st century by merely unleashing its entrepreneurial and scientific minds to create alternative, greener energy – multiple sources and thousands of related applications – to export and license around the world. But the unleashing needs to be done in an atmosphere of promoting innovation, not punishing consumption. Cap and trade, carbon tax and commoditizing CO2 not only punishes the marketplace, but simultaneously puts government in charge of regulating carbon. This is the same government that was supposed to regulate Bernie Maddoff, Fannie Mae and Freddie Mac. ’Nuff said.

I am absolutely in favor of taking action to diminish the negative impact humans have on the environment. But let’s remember that Americans aren’t the only humans with a carbon footprint. Let’s solve this problem with market solutions that create, not by government fiat that destroys.

Recently, in celebration of Earth Day, I talked about these ideas on my small business radio program, The Small Business Advocate Show. In addition to my individual thoughts, I also interviewed an environmental expert, Dennis Dimick, Senior Editor for Environment for National Geographic magazine. Dennis is an honest debater and I think you’ll enjoy our conversation. Take a few minutes to listen to our thoughts and, as always, I welcome your comments, even if – especially if – you disagree with me.

For my individual comments, click here:
For my interview with Dennis Dimick, click here:

Entrepreneurs and bumblebees are not supposed to fly!

Observing wildlife has always been important to me. All kinds: mammals, reptiles, birds, fish, bugs, teenagers. Birds of prey are my favorite group, but I have to say that the critter I admire most is the lowly bumblebee. The reason is because bumblebees are not supposed to fly. All of the experts, plus the laws of physics, aerodynamics and gravity, point to the impossibility of this fat little guy leaving the ground with such inadequate wings. And yet, it flies.

Entrepreneurs are like bumblebees: Against all odds, largely by their wits, entrepreneurs create successful businesses from absolutely nothing. All of the experts, plus the rules of business, finance and the marketplace, often point to the impossibility of such an upstart carving out a niche and flourishing there. And yet, they flourish.

I don’t know how many times I have heard a small business owner say, “When I started my business, I didn’t know I wasn’t supposed to be able to do this.”

Here’s a handy quote from Bill O’Hanlon, “Most of the progress that’s been made in human history has been by people who did not accept that something was impossible.”

The experts and the rules have spoken: It’s impossible! Entrepreneurs and bumblebees are NOT supposed to fly.


The visionary metallurgy of entrepreneurs

Iron becomes steel and, therefore, more useful when most of the carbon, phosphorous, and sulfur are removed and just the right amounts of chromium, manganese and nickel are added for hardening and durability. But it’s an intense and disagreeable process that is pretty rough on the iron.

Entrepreneurial vision becomes clearer, and more likely to become reality, when myths and misinformation are removed and just the right amount of research and critique are added for hardening and durability. But it’s an intense and disagreeable process that is pretty rough on the entrepreneur.

Wise entrepreneurs know that the best plans are actually visionary alloys, forged in our mind from our vision and the critique of those on whom we road test our ideas. But one of the greatest challenges we face as entrepreneurs, as we transform our vision into reality, is in knowing which imperfections of our vision to remove and which parts of the new information and critique to put in.

The reason this is such a challenge is because entrepreneurial vision is not passive: An entrepreneur’s vision is that rare “every fiber of my being” kind of thing that has been hardening in the crucible of our mind, and anyone or anything which dares to disagree with that vision is often dismissed as being without vision. During the alloying stage, the most common and unfortunate words to come out of an entrepreneur’s mouth are, “Yes, but…” and, “You don’t understand, see…”

In Visionary Business, by my friend, Marc Allen, I found this manganese wisdom from Mark Twain, “Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can somehow become great.”

If you want to forge the highest quality visionary alloy, you must include just the right amount of input from others - but it has to be the right “others.” Don’t blend your vision with the prattle of “small people.” Find the “really great” and ask them to participate in helping you purify your visionary alloy, which will allow you to “somehow become great.”

Can social media be dangerous to your small business?

Social media for individuals is as easy as falling off of a log. But for a business, could social media actually be dangerous? In my opinion, absolutely.

“Blasphemy!” you cry. “Heretic!” you say. Guilty as charged. Remember, Martin Luther was a heretic with a blasphemous message. But today’s heretic may be tomorrow’s prophet.

For a business like mine, which creates content for the consumption of an audience, social networking is pretty logical. But for a Main Street business, like a restaurant, dry cleaners, contractor, etc., these folks struggle to create an effective social media strategy, if they even try at all. And by effective, I mean one that brings in business without shifting too many resources – especially time – from classic strategies that have worked. And that’s where the problem arises.

Sometimes I fear that some business owners, especially start-ups, get caught up in the social media whirlwind and, since it’s all the rage, actually believe that spending time “connecting” will cause the sales dollars to roll in. Connecting is a good plan; connecting at the expense of executing tried-and-true marketing practices – not so much.

Even so, social media as we know it, with all the attendant sites and applications, may be a craze, but it’s not a fad. It is real, and it will last. And just like the evolution of websites, in time we will use social media less as entertainment and more as a tool. But for the time being, the social media phenomenon is pretty obnoxious and yet to be a universally beneficial tool for every small business.

So the rest of the answer to my blasphemous question is this: To prevent your social media marketing strategy from being dangerous – or almost as bad, not having one – practice the concept of both/and rather than either/or. This means that while you continue to develop and execute on your traditional marketing strategy, simultaneously get involved in and learn about life and business in the 21st century social media universe. Get a LinkedIn page and use it, but don’t live there. Acquire a Twitter address and do some following, but don’t get sucked into the time drain.

Nevertheless, to demonstrate that I am an equal opportunity heretic, consider this: With every year that goes by, social media will become a bigger part of the marketing strategy of your business, while traditional marketing strategies will become less.

Recently, on my small business radio program, The Small Business Advocate Show, I talked with one of my favorite heretics, marketing expert, Ilise Benun, author of The Designer’s Guide to Marketing and Pricing. Ilise is even more skeptical of the immediate benefits of social media for Main Street small businesses than I am. Don’t miss this opportunity to hear a couple of heretics/prophets. And, of course, I would love for you to post your own blasphemy right next to mine.

Don’t forsake your small business marketing strategy

It’s virtually automatic, sadly, that when the economy softens, businesses cut marketing first. And like many reactions, this one is almost always the wrong thing to do.

Marketing shouldn’t be an expense. When properly created and executed, marketing should result in more dollars in than dollars out. But before you get the idea that I’m some kind of Ivory Tower egghead, believe me, I understand how difficult it is to commit marketing dollars when dollar availability is declining due to a recession.

That’s why marketing in the 21st century is so exciting. Small businesses have sooo many more ways to penetrate the market including, and especially, on-line marketing. This universe has many characteristics that are perfect for a small business’ need to be efficient and flexible. For example:

1. Virtually all activity can be monitored – very close to real time.
2. Testing is easy – making adjustments is easier.
3. There is no marketing activity that is less expensive per unit of opportunity.

One of the most recent improvements to on-line marketing is the increased effectiveness of local search. Now a dry cleaner, restaurant, auto mechanic or any other business that serves a local market with traditional store-front products and services can use pay-per-click strategies that they only pay for when someone is looking to buy what the marketer sell in that market area.

Every small business should be investing in some level of local search key word marketing. It could be the difference between failing and surviving, or surviving and thriving.

Recently, on my small business radio program, The Small Business Advocate Show, I interviewed a couple of my Brain Trust members who know all about the power of on-line marketing. First, Robert Bly, author of Fool-Proof Marketing, and then Carolyn Rhinebarger, Chief Brainstormer at Strategic Guru, Inc. Don’t miss this opportunity to hear what these world-class experts have to say. And, of course, be sure to leave your thoughts.

For Bob Bly

For Carolyn Rhinebarger

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