Immersion Active presents Ageless Marketing

WalMart's Sustainability Campaign

P.S. to yesterday's post:

See this piece http://tinyurl.com/ygxdoz4 from today's Fast Company Now Daily email report -- which if you don't get you should. Check out the hot link items as well.

The Maturation of Walmart

Who am I – now that I’m not who I was? As indicated in my last post those words form the title of a new book by a friend. Everyone reading this can aptly ask their selves that question because we are indeed never who we were at any point in life. However, certain milestones in our developmental journey through life that stands out more prominently than others.  The onset of the midlife quest for self-realization is one such milestone.

I have proposed that brands as well as people experience developmental milestones. To survive, brand personalities must evolve over time to stay in sync with changes in the zeitgeist – the spirit of the times.

From the world’s most recognized brand Coca-Cola to P & G’s Tide, successful brands continuously change. Sometimes changes are superficial, like they are when the only New and Improved! is a revised container design. In other cases, changes are systemic and of such magnitude that few aspects of the company behind the brand are unaffected. Walmart is a case in point.

Walmart began life as a value-based brand: Everyday low prices everyday! It remains committed to that brand promise. However, Walmart appears to be transitioning to a more mature-minded and socially responsible brand. Some colleagues of mine are more cynical. They believe that Walmart has joined the green marketing brigade strictly for bottom line reasons.

That response raises an issue that marketers need to be careful about in changing a brand’s image. Unless changes are consistent with the market’s past perceptions of the brand’s personality consumers may consider the changes to be inauthentic. Walmart certainly faces a big challenge in that regard as it steers toward a more socially responsible path. Its history is checkered with charges of unfair labor practices, worker exploitation, sex discrimination and other alleged sins against society.

Nevertheless I do believe that Walmart’s more mature self is genuinely concerned about social issues. Walmart surprised many when it was one of the first major companies to endorse the idea of healthcare reform. It has dramatically changed its practices regarding worker benefits. It is having a large and growing impact on the green movement. For example, it took the lead in negotiating with Phillips and GE, the world’s largest makers of incandescent lights bulbs, to phase them out over time. This was a huge accomplishment given the annuity value of a product that has to be continuously replaced over short periods of time.

In a sense, Walmart (in my judgment) is transitioning from its brash, arrogant, ambitious youthhood into a  more reserved, respectful and balanced personality of the kind associated with people well along the Jungian path to self-realization. It has long been one of the world’s most admired brands in the business world because of its astonishing record of success. However, it has also from suffered intensely antagonistic attitudes in communities foresworn to block them from setting up shop within their boundaries. Even many customers have had strongly negative feelings about Walmart even as they could not resist shopping at a Walmart because of its pricing.

As I see it, Walmart is maturing as a brand personality in a manner that is in sync with the zeitgeist. It stands as a model that marketers of other brands would do well to study.  Again, Who am I – now that I’m not who I was? Walmart appears to know the answer for itself.  What about any brands you’re associated with?

 

Dissolving a Brand’s Persona to Reveal its Authentic Essence

A good bit of our youthful psychic energy is spent trying to look better than we really think we are. Call it the marketing of the self. In societies modern and primitive this timeless ritual plays a crucial role in perpetuating the species. Randy males compete with each other to wrest away the affections of comely lasses who are just as much consumed with marketing themselves. 

Humans, of course, are not the only members of the animal kingdom who devote a huge amount of effort trying to find the most desirable mate. It comes with the territory, as they say. Every spring the world is awash in hormones serving the cause of  continuity for millions of species from the tiniest insects to the mightiest of mammals.  Wild and often buffoonish dances, shameless preening, and the music of a million voices attend this massive cosmic annual ritual.

Freud has been bitterly criticized for seeing human behavior primarily through the lens of a worldview rich in sexual hues. But a serious review of modern advertising will reveal the fact that the worldview through which marketers view consumer behavior is not all that far out of sync with Freud’s perspective.

Carl Jung, who started his professional life deeply enamored with Freud’s ideas ultimately broke away from Freud in a famously bitter estrangement because long before feminists took on Freud he though the good Austrian head doctor attributed too much credit to sex for human behavior. In contrast with Freud’s sex-drenched definition of the libido,

Jung saw the libido in more cosmic terms representing the irrepressible desire of people to recreate themselves in all they do. In the first half of life this desire has a strong biological foundation instilled in our genes by nature to ensure continuation of the species. However, in the second half of life, the libido expresses desires to recreate the self in less materialistic, more symbolic ways, such as in one’s good works or “giving back” to others as part of one’s legacy. This is one way people know they can live on, even if it's only in the minds of others.

After the chases of our youthful selves are but memories, we still need to market ourselves, though we do it in much different fashion. Most of us become inclined to look down on the streaks of artifice that marbled our lives when we were young.  We are now on a path toward self-realization. this is the Holy Grail in human personality development. At long last  we may find the answer to the biggest question that ever arises in our minds: "Who am I?"

Getting the answer to that question is frighteningly difficult when we are in hot pursuit of careers, intimate partners and social status. A big hurdle is that we tend to see ourselves as we present our masked selves to the outside world. Affectations become an admixture in our self-images. Only when we begin to explore the gaps between our social self and our real self can we begin to get close to the answer to “Who am I.” In this process authenticity comes to replace artifice in the long the long road to self-realization.

Brands can be managed to follow a similar path away from the artifice of an undeveloped persona toward a more authentic brand self.

Marketers earn consumers’ sustained attention and loyalty by connecting the dots between a brand and worldviews, self-images, values and aspirations of consumers. But a big problem today is that much of marketing remains rooted in the more narcissistic and materialistic (sex-enriched) tonalities of youth. Many brands still sport personas that become increasingly irrelevant as the mind of the market continues growing older and more mature.

It is well known by those with a well-grounded understanding of brand management that changing a brand's personality is rarely successful. Just recall the “It’s not your father’s Oldsmobile” campaign, for a classic example of a failed effort to change a brand’s personality.

However, like people, brands can and indeed should evolve along a path of maturation. This retains their relevance to the ever-changing mind of the market. It enables them to reach ever higher levels of expression – the same objective of Jung’s self-realization and Maslow’s self-actualization.

Keeping in mind that a brand’ is an anthropomorphic representation of consumers’ values, managing the dissolution of its persona to reveal the brand’s authentic self requires a deft hand. The marketer must have keen awareness of the difference between style and substance. On that point, take note: The persona of youth is about style; the quest for the answer to the question, "Who am I?" is about substance.

A dear friend of mine, former NPR reporter Connie Goldman, just wrote a book about the quest for the real self in midlife, Who Am I - Now That I'm Not Who I Was?  A whole lot of brands don't know the answer to that question. They need to get with the program and find the answer that is better suited to the mind of the  market today..

NEXT: Several examples of companies that are doing a good job dissolving brand personas.

Worldviews: Key to Understanding the Difference Between Brand Persona and Brand Personality

Paraphrasing George Burns’ famous witticism about sincerity, authenticity is everything in marketing. If you can fake that, you've got it made. My good friend Joe Pine and his partner Jim Gilmore, authors of The Experience Economy recently came out with a new book on the growing importance of authenticity in business entitled simply Authenticity.

From the earliest snake oil salesmen, authenticity has been a high priority in marketing and sales. But two recent events are making that disposition dangerous to the health of a company and its brands. The Internet is of course one of those events. The second emerged about the same time the Internet entered mainstream culture. It was the seismic demographic shift that turned people 40 and older into the adult majority.

Today, adults in the second half of life outnumber younger adults by 140 million to 91 million – and the gap is still widening. This has produced profound changes in the zeitgeist – the spirit of the times. It now reflects the more seasoned worldviews and values typical of people in the second half of life.

The annals of adult development psychology are richly laden with clues for understanding the mind of the market today. However, because few people in marketing and sales have any grounding in developmental changes that take place in the second half of life, consumer behavior is less well understood today than it was before the emergence of the New Adult Majority.

A person’s perceptions, thoughts and decisions are processed through the lens of his or her worldview. Famed science writer Danah Zohar defines worldview as

A theme which integrates the sense of self, the sense of self and others, and the sense of how these relate to the wider world – to Nature and other creatures, to the environment as a whole, to the planet, the universe, and ultimately to God – to some overall purpose and direction. A successful worldview must, in the end, draw all these levels – the person, the social, and the spiritual – into one coherent whole.  If it does so, the individual has access to some sense of who he is, why he is here, how he relates to others, and how it is valuable to behave.

No one would argue that dramatic changes in worldview take place as a person moves from childhood into adolescence and from there into adulthood. Less well grasped are the equally dramatic changes that take place as a person moves into and through the second half of life. Mostly, as actors in our own stories, we mostly see these changes only in retrospect, often years after they have altered our course in life.

Carl Jung chose the term persona to represent the image we want to represent our personality in the outside world. Persona is Latin for mask. Following childhood in the first half of life, we devote considerable attention to conforming our mask to what we believe will gain us the most fortuitous outcomes in our relations with our peers and others. Knowledge of this has been the mainstay of marketing ever since N. W. Ayer & Son opened as the U.S.’s first advertising agency in Philadelphia in 1859.

Since then, marketing has dominated by an ethos steeped in the narcissistic, materialistic values of the youthful self. Sex has been the armature around which the threads of most marketing messages have been wound – including much children’s advertising as demonstrated by Barbie since 1959.  

Much of traditional advertising approaches are out of sync with the worldviews that are dominant in today’s middle age and older person dominated consumer population. But not a lot of evidence exists indicating much awareness of this crucial fact.

In Jungian theory, the onset of midlife is accompanied by internal forces that incline a person toward a more introspective, individuated and more autonomous self. People begin examining their lives less in terms of “Me” and more in terms of “We.” Questions arise about one’s life purpose and the meaning of life itself. Men tend to peel back layers of the persona to get more in touch with the feminine aspects of their personality. Women do the same thing, revealing the inner masculine of their real personality.

Uncovering the real personality is the main developmental task in the second half of life. Accomplishing this task, which Jung referred to as self-realization, requires dissolving the persona, no easy task. And marketers aren’t helping these days.

Marketing messages to the middle age and older population remain saturated with narcissistic and materialistic values. In larger part this is because most marketing messages are created by people who are not far enough along in their own personal development to understand the difference between persona and personality. However, understanding this difference is crucial in a marketplace dominated by a very different worldview than marketers were accustomed to before the emergence of the New Adult Majority.

NEXT: Dissolving a brand’s persona to reveal an authentic essence.

Branding: How Many in Marketing Really Understand What Branding Is About?

Perhaps nothing is more misunderstood in marketing than brand husbandry – what Margaret Marks and Carol Pearson in The Hero and the Outlaw incisively call “meaning management. “  Indeed, more than a few marketers have disdained the value of managing the meaning of products.

Don Peppers and Martha Rogers declared 15 years ago in a Marketing Tools article, “Once any marketer takes over the customer relationship, the consumer will have very little need for a mass-marketed name brand.”  Of course Peppers, with a background in direct marketing reflects the traditional inattention to branding in the world of direct marketing.

The advent of the Internet delivered the coup de grace to branding in the minds of many marketers.  But like one-to-one marketing gurus Peppers and Rogers, those who believe that way don’t understand the dynamics of branding, and indeed the contribution that branding can make to a balance sheet.  Of Coca-Cola’s $127 billion market cap, $66 billion is attributed to brand equity. As such, Coke is the most valuable brand in the world, beating out such formidable behemoths as IBM, Microsoft, General Electric and Toyota.

Those who denigrate the importance of branding would do well to read Margaret Mark and Carol Pearson’s The Hero and the Outlaw (at the left under “Must Reads”).

Drawing on extensive quantitative analysis, Mark and Pearson illuminate the qualitative aspects of brand personalities. They infer from their research results that brands fall within 12 archetypal personalities ranging from Pepsi’s and Harley-Davidson’s Rebel archetype to Hallmark’s and Victoria’s Secret’ Lover archetype.

Consumers evaluate brands through human personality traits, whether or not the marketer has imputed human traits to the brand. The brain unconsciously makes anthropomorphic readings of products as part of its efforts to make sense of what it is processing – which brings us to a critically important but much overlooked fact: according to cognitive scientists, 95 percent of the mental activity that goes into forming our perceptions, thoughts and decisions takes place outside of consciousness.

So what do most marketers and market researchers focus most of their attention on? The five percent zone. To truly appreciate the value of branding it  helps to understand the neurological side of the branding picture that lies outside the boundaries of consciousness.

A Duke University study found that brands, somewhat unique among proper nouns, are processed primarily in the emotional, sensuous right brain. That and other research indicate that brand loyalty depends on emotional arousal. As with humans, we will reject brands that lack attractive and consistent personality characteristics.

One researcher who commented on the Duke study opined, “This is very intriguing indeed. It supports our instinctive belief that brands are a special class of word - they are like a poem all in one word in their ability to evoke and express ideas."

In recent study in which subjects’ responses in a Coke vs. Pepsi blind taste test were tracked by fMRI technology, researchers found that brain responses indicated a somewhat even split in beverage preference. However, matters changed dramatically when researchers told people which cola they were drinking. Coke was preferred by 75% to 25%. The fMRI scans showed that when people knew they were drinking Coke, the dorsolateral prefrontal cortex and the hippocampus, which are related to memory and cognitive control, both got excited. In most cases Pepsi did not have the same effect.

People’s brains appear to process Coke with greater animation in regions of the brain associated with archetypal imagery than Pepsi does. People’s imagery of Pepsi does not appear to be as deeply rooted. It’s all a matter of crucial differences in brand personality that Pepsi will never be able to resolve regardless of money spent in marketing or the creative talents of marketing creatives. Coke long ago took possession of the deeper recesses of  most cola drinkers’ brains, and the odds of being booted out are virtually nil.

Next: Brand persona vs. brand personality.

How the Subjective Voice in Market Messaging Differs from the Objective Voice

 

“I’m being logical, damn it!” shouted the CFO in a client company as he slammed his fist on the conference room table. This man of numbers never brought emotions into his decision-making, or so he would have me believe.  

Ever since French philosopher Rene Descartes postulated the foundations of modern scientific methodology, emotions have been viewed as a kind of cerebral funhouse mirror that distorts truth.  

The irony of that view is that logic can outdo emotions when it comes to producing distorted pictures of reality. In fact, emotions tend to be better in capturing the essence of reality. Consider, for example, intuition. It is an insight derived from emotion, not rationale processes.     How would you define emotions? The correct answer makes it clearer why emotions can more faithfully represent reality minds than analysis and reason often does.

Simply defined, emotions are changes in body states. They are comprised of electrochemical responses to a matter that generate changes in heart rate, blood pressure, respiration, adrenalin flow and among other body states. As such, emotions are analogs of reality. Like the a fuel gauge’s needle, emotions move in direct proportion to that which activates their movement..

So how is it that people often distort reality when they are upset? Because they view a matter through a cognitive lens that distorts reality. Any representation of truth can be justified through impeccably drawn analysis and reasoning that nevertheless distorts reality. This accounts for difference between people in a wide spectrum of beliefs ranging from politics and culture to science and religion.

Another factor in distortion of reality is the role played by feelings. Contrary to custom, feelings and emotions are not synonymous. Emotions are changes in body states. Feelings represent our interpretation of why body states have changed. Those interpretations turn out to be distortions of reality.

Emotions originate in two places in the brain. The primary source is an organ in the midbrain called the amygdala. This where instinctual emotions, sometime jokingly referred to as the Four Fs arise:  fighting, fleeing, feeding and reproducing.  The second source is the right prefrontal cortex, which gives rise to cognitive emotions. Road rage arises in the amygdala. The ability to control it arises in the prefrontal cortex.

Cognitive emotions turn us from cavemen into civilized human beings. They are the mental tool that gave us to keep raw nature in our behavior in check. So the next time someone blasts you with their horn while giving you the finger, you may want to yell out at them , “Caveman!” Of course if you do that you are behaving like a caveman (or cavewoman). With that bit of neuroanatomy we can now address the issue raised the previous post, the subjective voice in market messaging versus the objective voice.

The subjective voice is rooted in emotions and reflects a right brain bias. It is a voice that gives expression to emotions, instinctual behavior, intuition and it revels on discovery. It conveys a keen sense of the whole picture, the forest if you will, and parses reality more in terms of relationships than categories.

The left brain-biased objective voice gives expression to rationality, analysis, logic and a sense of caution. It projects reality more in terms of categories than relationships. The objective voice expresses its view of reality in linear fashion with a greater focus on details than on the whole picture. The accompanying chart summarizes the definitive properties of subjective and objective voices. Keep in mind that no one operates exclusively in one voice or another. In fact, because the right brain is kind of gate keeper to the left brain, to reach even the most rational, logic-driven, left brain mind requires passage through the right brain. The right brain is the issuer of landing rights to the left brain, without which the marketer cannot get a message into the mills of left brain processing.

The young adult brain finds safety in anchoring its worldviews to the detailed, linear, analytic approach to parsing reality that reflects the objective voice. Successful social integration depends on a person’s ability to integrate with a group’s consensus on core issues that define it. The young person must learn and adapt to a group’s social codes, whether a group be for professional or private membership. This is the neuropsychological source of a phenomenon that marketers love: the herd mentality that prominently marks young people’s social behavior.  

It is far easier to divine the group mind underlying her behavior than to do so for individual minds on a mass basis. This presents marketers a critical challenge in middle age and older markets because the herd mentality has usually lost most of its influence by the time people are well into midlife. Further complicating matters, developmental changes in the brain incline a person toward less black-and-white certainty about life than he or she experienced as a young adult. A plethora of disappointments, personal hurts, and abandoned dreams has conditioned the older adult to accept reality as a game of chance. This increases a person’s skepticism about when others purport to have the best answers. It also increases the older person’s confidence in his or her take on matters. The become “more resist to enculturation,” in the words of Abraham Maslow.

To conclude, then, a very big reason that marketing appears by many measures to be less effective now than in the pre-Internet, less media-saturated past has less to do with the Internet and an over-abundance of media than commonly claimed. The mind of the market has changed dramatically toward a more subjective foundation, yet marketers are still overwhelmingly speaking with an objective voice.

A Big Reason Advertising Effectiveness Is Falling That You’ve Probably Never Heard About

You never wake up with quite the same brain you woke up with yesterday. The brain, the theater in which your reality plays out in your mind, is in a constant state of change. This never-ending process began in utero when new neurons formed in your fetal brain at the lightning speed of 250,000 cells a minute.

Ultimately you ended up with about 100 billion neurons. Neurons are very social beings. They connect with and talk with each other via vast numbers of dendrites, root-like structures that form in response to the brain’s experiences. Each neuron has between 5,000 and 50,000 links with other neurons. Incredibly, those neuronal connections exceed in number all the atoms in the universe.

The brain is a complex adaptive system without equal. That term refers to complex systems that are capable of learning and changing in response to experience. From infancy through old age the brain’s number one objective is to promote a safe, comfortable and pleasurable existence for its owner. To stay ahead of the curve and keep its owner whole it must constantly change in order to adapt to changing conditions, both internally and externally.

What it takes to secure a safe, comfortable and pleasurable existence differs by season of life.  Different measures are required to assure a satisfying life for a teen than required for a toddler. And what it takes to yield a satisfying life for a twentysomething is quite different from what it takes for a newly minted middle-ager.

Many changes in the brain’s structure and operations over time are developmental rather than circumstantial. A critically important category of developmental change that scarcely gets any attention in the marketing community is how we think. Marketers easily see that teens think differently than toddlers do, but few appear to recognize differences between adults of varying ages in their thinking styles.

Question: Who is likelier to have the better mind for detail? A fortysomething who has gained in patience over the years or a twentysomething whose energy and multi-tasking makes him or her seem poorly suited to concentrating on detail?

Answer: The highly energetic twentysomething.

The human brain reaches its peak capacity for parsing reality into fine detail in the twenties. It processes information through differentiated thinking, a term referring to reducing reality to absolute definitions and categorically organizing matters by their defining properties. This is the cognitive foundation of certainty that is commonly heard in the conversations of young adults. Black-and-white certainty is less a matter of experience than commonly claimed and more a matter of how the brain works during the young adult years. This thinking style not well-suited to getting the whole picture, but its ability to get the details can be awesomely impressive.

Differentiated thinking largely accounts for the fact that twentysomethings are disproportionately represented among people making great breakthroughs in science. Isaac Newton was 24 when he invented differential calculus. Einstein published his seminal paper on special relativity at 26. Michael Faraday was only 20 when he laid the foundation for the modern study of electromagnetism and built the world’s first electric motor.  Darwin was in his early twenties as he began developing his first ideas on the evolutionary origins of species.

In very later 20s and early 30s, our thinking processes begin evolving toward a de-differentiated style. We begin to parse reality less in terms of categories and more in terms of relationships. Our ability to see how things are connected to one another gets better. The whole picture becomes more complete.

The fact that great breakthroughs in the humanities are made disproportionately by people in the second half of life is largely due to advancing skills in dedifferentiated thinking. Artists, musicians, philosophers, architects, statesmen, etc., generally reach their peak performance well after their twenties.

Ponder thinking styles in terms of left brain and right brain thinking. Differentiated thinking is strongly dominated by left brain processes involving reason, logic, categorization and quantitative analysis. Dedifferentiated thinking brings more emotional, relational and qualitative input from the right brain into the total thinking process.

The strong left brain bias of the young mind leads toward a worldview that is more deeply rooted in consensus and objective in orientation. In contrast, the older person’s dedifferentiated thinking supports more right brain input leads toward a more subjective worldview that is deeply connected to one’s own experiences.

Whether a person’s preferred thinking style is objectively grounded or subjectively grounded matters a great deal from a marketing perspective: each position represents a different voice. Despite this, however, there is little awareness of this in the marketing community. As a result, marketing messages intended for people over 40 often fail to connect because they are delivered in a more objective voice than a subjective voice.

This is a matter of overarching importance to consumer business companies. The fact that 142 million adults are 40 and older versus 91 million under 40 means the mind of the market today shows a decided bias toward the subjective voice. Failure to reflect this in marketing messages will automatically reduce message effectiveness.

Thus, while everyone blames falling advertising effectiveness on the Internet and on the steady flood of ads consumers see everywhere on daily basis, one of the biggest reasons of all is totally ignored: few marketers are aware of the voice they must speak in to restore effectiveness to market messages.

Next: How the Subjective Voice in Market Messaging Differs from the Objective Voice

 

 

Why Almost Everything You Thought You Knew About Marketing Is Wrong

Whether a marketer should bone up on the brain is passing beyond optional. Not that surveys and focus groups were ever as goof for divining truths about consumers as those conducting them claim, those research methods are now OUT. In marketing matters, neuroscience, along with ethnography, is IN.

Advances in neuroscience over the 25 years I’ve been an avid reader in the subject are astonishing. As I’ve written before, the shift in our views of the human brain and mind are no less epochal than the shift centuries ago from a flat earth to a round earth perspective. Much of what we have believed about how the human mind works has turned out to be as much an illusion as the earth’s flatness is.

Research into the human brain is taking marketing into new dimensions of human behavior that are far beyond the reach of traditional consumer research methods. One of the most intriguing dimensions is the aging brain – a matter of considerable concern to marketers since changes associated with aging begin around the late 30s and early 40s. These changes significantly compromise traditional consumer research methods.

In his illuminating book The Mature Mind psychiatrist and geriatrician Gene Cohen does a splendid job describing in accessible language changes in brain functioning that take place as we age. He uses few five-dollar terms from brain science to get his points across. Importantly, especially for those of us who have left the early years of midlife far behind, Cohen documents how the aging brain is in some important ways a better brain.

In Serving the Ageless Market (McGraw-Hill, 1990), I proposed that some changes in mental functioning associated with age were improperly regarded as handicaps. I proposed that some of these changes were developmental changes that took older minds to higher levels of mental functioning. In The Mature Mind, Dr. Cohen provides new information that supports that idea. In fact, he coined the expression developmental intelligence to stand for that idea.

The idea of developmental intelligence reaching its zenith in the last quarter of life would not be very surprising but for the deep-seated antagonism toward aging our society harbors. That darkly woven bias obscures much of the truth about older minds.

While great breakthroughs in science are most commonly accomplished by people in their 20s, the very best in the humanities has generally flowed from older minds. Twenty-five-year-olds capable of such mental feats as formulating the Special Theory of Relativity are unlikely to produce an equivalent result in philosophy, literature or other branch of the humanities.

We’re seeing far more media attention to aging consumers than we ever had in the past. Corporate America is finally recognizing that overwhelmingly, the greatest number of consumers and the lion’s share of consumer spending is now found in the middle age and older population. What Corporate America has yet to wake up to, however, is the fact that changes in the mind/brain complex that take place in the second half of life make much of what we thought we knew about marketing obsolete.

I'm reminded of the words of Valentine In Tom Stoppard's play Arcadia when reflecting on the scale of change in today's world: The future is disorder. A door like this has cracked open five or six times since we got up on our hind legs. It's the best possible time to be alive when almost everything you thought you knew is wrong.

In my next post I will review some of the changes that take place in the mind/brain complex that marketers need to know about and accommodate.

The Emerging Importance of Behavioral Science in Economics and Marketing

I bet not many of my readers can't wait till the next book on economics comes out. Well, rarely having any interest myself in such books, I   have been quite surprised by the extent to which two recent books from high priests of the dismal science held my attention.

The first book I read was Dan Ariely’s Predictably Irrational: The Hidden Forces That Shape Our Decisions. Ariely is a pioneer thinker in the new branch of economics called “behavioral economics.” Amazingly, over 235 years after Adam Smith famously claimed that the movement of markets was caused by an “invisible hand” that reflected people’s rational decisions taken on their own behalf, mainstream economics mainstream economists are beginning to suspect that the “rational” part of people’s decisions has been overplayed.

Dan Kenneth Arrow, Nobel Prize laureate in economics commented, “"Dan Ariely's ingenious experiments explore deeply how our economic behavior is influenced by irrational forces and social norms. In a charmingly informal style that makes it accessible to a wide audience, Predictably Irrational provides a standing criticism to the explanatory power of rational egotistic choice."

I next read George Akerlof and Robert Shiller’s Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism. Akerlof is another Nobel laureate in economics. Shiller is a prominent Yale economist and the Shiller of the widely followed Case-Shiller Home Price Index. Akerlof and Shiller honor John Maynard Keynes, one of the most influential economists in modern times whose 1936 magnum opus, General Theory of Employment, Interest and Money, by titling their book after Keynes term to signify irrational behavior in the marketplace, “animal spirits.”

I was fascinated to learn that when mainstream economists took to Keynesian economics they conveniently left out Keynes’ thinking about how rational behavior was not as prominent in the marketplace as classical economics held. It seems that mainstream economists have a left brain view of the world, one in which everything that happens ultimately has a predictable cause. The idea that some things just happen is an anathema to left brain constructs of reality.

But the esteemed John Maynard Keynes knew that the Newtonian-inspired idea that left brain based reason underlies the comings and goings of markets was wrong-minded in its exclusivity. In the first place, were all human behavior predictable the case would be closed on the ancient quandary of philosophers about whether or not free will exists. The notion that determinism shapes human, hence market behavior forecloses the possibility of free will.

Sadly, the denizens of the marketing profession have by and large had the same mechanistic view of markets. Rather than become in-depth students of human behavior, most marketers have depended on anecdotal and statistical renderings of behavior. To the extent that behavioral science has been part of marketing tradition, it has been pretty much focused on social psychology, a field that is not very concerned with individual behavior independent of social contexts.

But a new dawn appears on the horizon – in marketing as well as in economics. As behavioral economics is beginning to chip away at flawed assumptions about markets from an economic perspective, behavioral marketing is doing the same from a marketing perspective. At long last there is growing recognition among marketers that human behavior cannot be totally reduced to numbers.

Animal Spirits does a superb job of undercutting economists traditional obeisance to numbers – to the reduction of market forces including human behavior to mere statistical constructs. For that reason, I heartily recommend the book (as well as Ariely’s Predictably Irrational) to marketers as well as to all others involved in any aspect of business. Few of us will not be able to read Predictably Irrational without seeing ourselves in some of the experiments Ariely has conducted that show how de minimus the role of rational behavior is in our marketplace behavior.

And aside from supporting Ariely’s thesis, Animal Spirits tells why, as nothing else I’ve read does, the Financial Crash of 2008 occurred. Contrary to the view of many it was not due so much to regulatory failures and greed in corporate executive suites as to the failure of analysts and other investment p

Do yourself a very large favor and get both of these books. You'll gain a better understanding of why economists and markets get it wrong so often.

A Millennial's Guide to Millennial Guides

 

Regular readers will immediately notice the new look of this blog’s banner. The  Ageless Marketing Blog is now sponsored by Immersion Active of Frederick, Maryland, the only marketing agency in the U.S. specializing exclusively in online marketing to 40+ markets. Immersion Active’s founders, David Weigelt and Jonathan Boehman, have recently authored Dot Boom, a book that builds on the principles of ageless marketing that I have articulated. They expand the concept of ageless marketing, adapting it to the challenges the Internet poses to marketers. Their chapter, “A Model for Meaningful Online Engagement” alone is worth the price of the book and then some by a goodly margin.

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Fast Company ran an article last week entitled A Millennial's Guide to Millennial Guides.  It was written by Dan Macsai, a Millennial who reflects on various claims made by sundry authors about Millennial attitudes and behavior. Millennials are generally regarded as those born between 1982 and 2001.

Macsai regards a number of claims made about the attitudes and behavior of Millennials as “half-truths.” Interestingly, however, many of the same claims were made about boomers decades ago. Remember for example when boomers were being called the most selfish generation in history? Macsai talks about Jean M. Twenge’s claim in her book Generation Me that Millennials are absurdly self-involved. “GenMe takes for granted that the self comes first," she says. Forty years or so earlier boomers were first described as the “Me Generation.” The claim was made with the clear implication that boomers were the first generation of youth in history to be consummately self-absorbed.

Macsai sarcastically cites a litany of claims that various authors say distinguish his and his fellow Millennials’ behavior in the marketplace, workplace and play place. But substitute "boomer" for "Millennial" and you come up with how marketers saw boomers decades ago.

For sure there are stylistic differences between boomers in their earlier years and today's Millennials. However; to a remarkable degree the substantive elements of Millennials’ attitudes and behavior mirror the attitudes and behavior of boomers in their youthful years.

I modestly regard myself as something of a “homegrown” expert on generational behavior. I have a 24-year-old daughter named Stephanie who is a Millennial. My oldest is 50-year-old Sabrina who is a boomer. The next two kids, Laura and Karen are boomers, too. Then came my two Gen X-ers, Brian and Michelle. In short, I have sired children in each of marketer's current three favorite generations.

While each of my children have distinct markers of their individuality, like babies crawling across the floor together, all six kids have developed in a more or less predictable fashion. Their development has been consistent with the observations of Carl Jung, Abraham Maslow, Erik Erikson, and other luminaries in the field of human development. Even into their middle age years they continue developing in somewhat predictable fashion, all without sacrificing their distinctive individualities.

A focus on consumers in the context of generational positions began in the early 1960s with a landmark agreement between the television ratings organization Nielson and the ABC television network. ABC was running third in the three-network television industry when it came up with an idea for more effectively competing against NBC and CBS.

ABC's audience was somewhat younger than NBC and CBS audiences. ABC sold Nielson on adding to their reports on household viewership reports on viewers by age. This was the foundation of generational marketing. This change in viewership reporting made it possible for ABC to sell advertisers on the idea of getting young people into their brands before they made lifetime decisions. Though research has shown that few consumers make lifetime brand commitments in their youth, claiming such in the early 1960s proved to be a winning marketing ploy for ABC in its quest for increasing the inflow of advertising dollars.

In eschewing sweeping generalizations made about the attitudes and behavior of Millennials in his Fast Company  article Dan Macsai has put marketers on notice that they invite disappointing results in their campaigns if they take much of what self-styled experts say on Millennials at face value.

 

From Hucksterism to Healing

(This post first appeared here on June 18, 2004)

When I first introduce an audience to the idea that marketing is morphing from hucksterism to healing, I often see in some people's faces their suspicion that I’m preaching from some New Age gospel.

Most of those faces relax to reflect greater openess to my claims after I display logos of a few companies that have taken on the role of healer and are performing spectacularly. Anthoplogie is one, REI another and Chico’s yet a third. Each brand appears genuinely more interested in solving their customers' problems than in making a sale at any cost in customer relationships.

Each company has abandoned the 20th century marketing paradigm base on bending customers' wills to the marketer's will in order to move more product. They have adopted the 21st century marketing paradigm which is based on building empathetic connections with customers so as to better help them in solving their problems.

For example, Chico's has made size a less self-consious matter in apparel choices by creating its own size metrics: Size 3 sounds a lot better than size 14 to many women.

New Balance is another brand that has taken on the role of healer. It eschews the testosterone-driven messages of Nike and other sneaker makers to focus on the perennial midlife search for life meaning and balance. It makes it O.K. to be introspective and nonagressive in a kinder and gentler way of life.

Melinda Davis explores the moral shift in marketing from hucksterism to healing in her book, The Culture of Desire.

Kevin Roberts’ new book, Lovemarks: The Future Beyond Brands also explores the theme of marketer as healer, dubbing companies that practice empathetic healing instead of dispassionate huckstering lovemarks.

Roberts advocates infusing brands with three fundamental lovemark elements: Mystery, Sensuality, and Intimacy. Mystery enters by drawing on the past, present, and future; the value of myths and icons; and the powers of inspiration; and by tapping into dreams. Sensuality and the five senses can be used to locate touch-points with consumers. Intimacy is created through commitment, empathy, and passion.

Davis and Roberts understand that shifting from a product centric to a customer centric platform for doing business is not about increasing share of wallet as Don Peppers and Martha Rogers advocate via their 1:1 marketing gospel. It’s about increasing share of heart.

Traditional Consumer Research Can't Do the Job

As far as the laws of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality.

Albert Einstein

What in the world was Einstein on when he, the 20th Century’s greatest scientist, made that statement? Imagine him telling some corporate suit after reading a company financial statement or a numbers-studded proposal for a new marketing campaign, “Your numbers do not refer to reality.”

Numbers are only symbols, and the pictures they add up to are made-up pictures, not real pictures. A numbers-rendered picture inevitably omits important details.

Quant research draws statistical pictures of consumers based on what they tell researchers. Often, focus groups are used to confirm what the numbers say. However, the primary assumption underlying each type of research is deeply flawed.

Famed neurologist Richard Restak indicates why when he says, “We have reason to doubt that full awareness of our motives and other mental activities may be possible.”

Brain scan technology supports Restak’s observation about the incompleteness of our knowledge of our motivations. More often than we’re inclined to admit, the reasons we give for doing something better fit the category of speculation than reality.

Yet researchers confidently present clients with statistical renderings of what consumers have told them, unmindful of the fact that motivations initially take root outside the realm of consciousness.

These thoughts are not grainy opinions. They are solidly grounded in new research into the workings of the brain and mind that should inspire us to rely less on the laws of mathematics and more on the laws of behavioral science to divine and forecast consumer behavior.

The problem is, there is too much economic interest in keeping to the old ways in the $6 billion research industry for change to happen overnight. This is one reason why the neurorevolution I talked about in the previous post is moving more slowly than it might. Few traditional researchers have figured out how to make money from this revolution or otherwise compensate for decaying confidence in their practice of reducing human behavior to numbers while ignoring all the evidence that human behavior like the weather defies absolute prediction.

The Neurorevolution in Marketing

Reader Tony Kirton, a specialist in brand management and former marketing executive in BMW, Audi and Volkswagen has brought to my attention an engaging podcast series on the brain. He believes that new insights into the workings of our brains are certain to lead to a transformation in how we organize and run companies and market our products.  I agree with him without reservation.

I read my first book about the brain in 1979: The Brain – The Last Frontier by neurologist Richard Restak. Restak’s book changed the direction of an unending curiosity about human behavior that grew out of my desire as a landscape architect early in my adult life to better understand the behavior of end users of my park, playground and community designs.

By 1985, I had become fully immersed in marketing. The foundation of my evolving views on marketing was brain science. Serving the Ageless Market, which I wrote in the late 1980s, was the first business book to discuss connections between marketing and brain science.

For the better part of two decades I was nearly alone in calling for a new vision of marketing that was grounded in brain science because it was radically changing our understanding of free will, consciousness, memory, motivations and indeed, connections between the mind and the brain.

Now, at long last, such a vision is gaining traction. There is even a new branch of marketing called neuromarketing. Not to be outdone by marketers, practitioners of the dismal science have spawned a new branch of economics called neuroeconomics. Then, covering both fields – and others as well that deal with brain matters – is the new field called neuroethics.

In a Los Angeles Times article , “Searching for the Why of Buy” Robert Lee Hotz talks about the revolutionizing insights into the human brain’s workings made possible by new scanning technology. He wrote,  “Much of what was traditionally considered the product of logic and deliberation is actually driven by primitive brain systems responsible for emotional responses — automatic processes that evolved to manage conflicts between sex, hunger, thirst and the other elemental appetites of survival.”

New ways of looking at human (consumer) behavior through the lens of brain science are as radical a departure from past beliefs about behavior as was the shift from seeing the earth as flat to seeing it as round some five centuries ago.

Individuals and companies that ignore how brain research is changing our notions about human behavior are in great danger of being vanquished by competitors who have studied the matter and learned how to put their new knowledge to work.

 

Does Progress in Marketing Depend on Professors' Deaths?

Next week I am to deliver a talk on an historical moral shift taking place in marketing. My audience will be composed mostly of academics. The occasion is a conference at Bentley University, “Conceptualizing Conscious Capitalism,” May 28-29.

Conscious capitalism is a term coined by Nobel Peace Prize laureate Mohammad Yunus to describe the practice of business enterprises to consciously fulfill social needs.

My talk will describe how marketing is slowly but inexorably being transformed from a huckstering game to a healing art. I discussed this five years ago in this space. 

I am eager to see the response my talk because the moral shift I will talk about nullifies a substantial portion of the books business school students use to learn how to market. Despite lofty expressions on how marketing is about serving customers’ needs, the philosophy of marketing reflects a predator-prey ethos perspective.  Compensation systems based on sales quotas have broadly solidified that perspective.

The emergence of Web 2.0 (see here and here)has made the predator-prey model obsolete. Marketing has become a “conversation” to quote Clue Train co-author Doc Searles. Marketer and customer collaborate to determine and meet the customer’s needs. Marketing is no longer about striving to bend the customer’s will to the marketer’s will.

Traditional marketing – the kind taught in B schools – is a power game based on numbers. New marketing is a game of influence based on an understanding of human behavior. This is posing a challenge to those who teach marketing. Few have a deep footing in behavioral science and few books taught from offer students any better footing.

So minimal is the marketing community’s interest in gaining a deep understanding of human behavior, it is possible in business schools across the nation to earn an MBA in marketing without a single course in behavior. Rather than developing an understanding of behavior, most marketers depend more on views taken through the lens of statistics than through the lens of behavioral science.  

For those in my audience who think that looking at marketing as a healing art is a bit of New Age fluff, I will offer examples of household name companies that have successfully transformed themselves from hucksters to healers. I cited some of these companies in my first post on this topic five years ago.

 As I reflect ahead on my talk I am reminded of Max Planck's famous dictum about how science progresses and wonder how much the same idea applies to marketing. Planck said, "Science progresses with each funeral."

 

The End of a Myth: The Rational Man Theory of Markplace Behavior

Objective reality is more illusion than substantive. Every magician knows that how we perceive something is often determined less by what we see and otherwise sense than by what goes on in our brains. Neurologist V.S.   Ramachandran’s engaging book Phantoms in the Brain brilliantly supports that claim. He cites numerous examples showing how the brain generates illusory renderings of reality.

One of the most common examples of illusory reality is the phantom limb problem that amputees experience. When a legless person feels an itch on an ankle he no longer has it’s because certain neurons in the brain devoted to the missing limb haven’t noticed its absence.

Ramachandran tells of one patient whose brain injury from an auto accident prevents him from recognizing his parents even though he has no trouble remembering and recognizing anyone else.

Another patient does who suffered a right brain stroke denies the paralysis of the left side of her body caused by the stroke.  When asked to raise her left arm resting inertly in her lap she said it wasn’t her arm. It belonged to mother who left it in the hospital years ago. Oddly, however, when several drops of cold water were deposited in her left ear, she became fully aware of her paralysis: “Doctor, I can’t raise my left arm because I had a stroke,” she protests when asked to raise it. She remains fully aware of her paralysis for two to 30 minutes after receiving the water drops. Then, she loses all awareness of her paralysis as well as the brief interlude of awareness after the cold water was deposited in her ear.

 So you might say that such cases bear no relationship to how you or any other normal person internalizes reality.  However, those cases are merely extreme  examples in support of the proposition that normal or otherwise our perceptions are fundamentally subjective, meaning our brains ultimately determine what we see.

Take the optical illusion shown here. You perceive the inner circle in the cluster of small circles as larger than the inner circle in the cluster of large circles. The reality is that the inner circles are equal in size. But because the brain relies on comparisons for much of its work, it reckons the size of the inner circle as a proportion of the size of the individual circles in the cluster that surrounds it. 

We can draw from this visual illusion an important principle:  The brain’s rendering of an object, condition, concept or idea is influenced by comparisons it makes as part of its efforts to understand what it processes. 

This principle has been demonstrated in countless research studies. Economist Dan Ariely tells of a number of such studies he has conducted. In one study Lindt chocolate truffles were sharply discounted from 35 cents to 15 cents and Hershey kisses were more modestly discounted to   one cent in reflection of significant qualitative differences between the two candies. About 73 percent of the study’s participants chose the heavily discounted higher quality Lindt. But when the Hershey kisses were offered for FREE! against the Lindt truffle now priced at 14 cents, 69 percent of participants chose the qualitatively less impressive Hershey kisses. They apparently figured that FREE! was a better deal than a 14 cent Lindt truffle despite the fact that the effective price difference was no different than when they had the option of a 15 cent Lindt truffle or a one cent Hershey kiss.

This experiment and many more are discussed in Ariely’s provocative new book, Predictably Irrational: The Hidden Forces that Shape Our Decisions. I enthusiastically recommend Ariely’s book to anyone involved in product pricing in any category. You will likely come away from this read with a better handle on how to price products.

Classical economics has rested on a premise that Ariely shatters to smithereens. For well over two hundred years economists have based their thinking on the premise that marketplace trends are determined by the rational behavior of people acting in their own interests. This in fact is the keystone of Adam Smith’s book The Wealth of Nations, the Old Testament of capitalism.

Ariely is not the first to challenge the rational man premise of classical economics.  A whole new subfield called behavioral economics has taken root because some brave-minded stalwarts in the dismal science decided the emperor was stark naked. The notion that marketplace trends reflect the outcome of human reasoning in an objectively fathomable world is every bit as illusory as the appearance that the earth is more or less flat.

Michael Mandel, writing in BusinessWeek, says about another book debunking the rational man theory of classical economics, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by Nobel laureate George Akerlof and Yale economist Robert Shiller who is well-known for the Case-Shiller Home-price Index:

“The two superstars have produced a truly innovative and bold work that attempts to show how psychological factors explain the origins of the current mess and offer clues for possible solutions. At a time when plummeting confidence is dragging down the market and the economy, the authors' focus on the psychological aspect of economics is incredibly important.”

The cat is out of the bag, so to speak. I would expect to start seeing more accurate economic projections in the future now that such prominent  economists as those who wrote the books I’ve cited in this post have revealed just how naked the rational man theory is.

Embracing a New Consciousness

 

Before Newton made his larger than life mark on history, people in western societies viewed life largely through the lens of a cognitive platform laid down by the Church. Of course its representations of reality were grounded in faith rather than in science. The laity was expected to accept these representations without questioning their validity. But Newtonian science changed that. It altered how people both inside and outside of science cognitively connected to the world. Faith may have remained a major influence in many people’s lives, but reason and logic, however imperfectly executed, came to generally have the larger influence on people’s worldviews. 

This has been the case for over three centuries. Never mind that a person is untutored in the ways of science. Faith is not enough for most of us. We still want proof of merit before we vote, buy, or accept someone else’s word about what is true and what is not. It matters little that the proof we accept as golden is often fool’s gold. Our reasoning is not always as fastidious as we would like to believe.

Now, much as happened in the 18th century when an ecclesiastically shaped consciousness gave way to a new consciousness rooted in Newtonian science, a new consciousness is emerging. It is better suited to our times. The diversity, speed and scale of challenges that confront us require a wider field of vision than Newtonian consciousness affords.

As never before, business managers need a consciousness that is more conducive to innovative thinking than Newtonian consciousness is. Newtonian consciousness reflects a bias toward the status quo that can work against finding the best solutions.  It favors the tried and proven over the novel and speculative. But ever since the Internet went mainstream in the 1990s, many great breakthroughs in business have flowed from novel and speculative ventures in the marketplace. And many companies have failed to capitalize on opportunities opened up by the Internet because they viewed it through the narrowly focused lens of Newtonian consciousness.

The present tenuous status of many newspapers across the country testifies to the dangers inherent in applying Newtonian consciousness to contemporary challenges. Who would have imagined just a few years back that that a mostly free classified advertising service could so undermine the economic viability of newspapers as craigslist has?  

The music industry is another industry whose myopic clinging to the status quo has cost it dearly. In fact, well before the Crash of 2008, countless companies in numerous industries were facing their demise because of continuing to view the world in terms of the past. One study showed that about 20 percent of regional malls were failing.

The truth that many companies have yet to successfully grapple with is that the Internet has deeply and forever changed the rules of marketplace engagement. Everyone has heard by now insanity defined as doing the same thing over and over while hoping for different results. But lacking a clear vision of what they face, that is just what many companies are doing. Failing to follow Einstein’s dictum that a problem can’t be solved in the same consciousness in which it was created, they keep applying old ways.  

These hapless companies need liberation from Newtonian consciousness. They need a cognitive platform that facilitates innovative thinking, not more ways of applying old solutions to solving problems. In neurological terms, they need a more holistic cognitive platform that integrates the output of left brain (quantitative) and right brain (qualitative) thinking. I refer to this as organic consciousness because it reflects more accurately the natural disposition of the brain to assess matters intuitively (mainly in the right brain) before putting them under the scrutiny of the analytic left brain.

Left brain or Newtonian consciousness discounts the value of qualitative thinking. In so doing, it severely inhibits creativity which relies heavily on intuitive processes. This can prove fatal to a company facing unfamiliar challenges that call for innovative “outside-the-box” thinking. People who view matters through Newtonian consciousness dread going outside the box. They cling to the status quo like a toddler does her blanky. 

In my next post I will cite several examples of companies that benefit from organic consciousness and draw clear comparisons between organic consciousness and Newtonian Consciousness.

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Liberating Management from Newtonian Consciousness

      There has been little argument about the cause of the 2008 Crash: collapse of the U.S. housing bubble, followed by an implosion of financial markets. But those explanations fall short of accounting fully for what precipitated the worst financial crisis 80 years. A solid case can be made that the root cause of the 2008 Crash lies in how we organize and run our businesses, governments and personal lives.

       In negotiating our professional and private we work primarily from a mode of consciousness better suited to the horse and buggy age – perhaps because it originated then. In those days, life unfolded at a slower pace, with less complexity and little change from one year to the next. There was about life a certain mechanistic predictability. The seasons came and went, with little happening to distinguish one year from the next except for experiences that have been part of human life for thousands of years. 

The times we now live in are radically different. They unfold at a pace bewildering to a brain that evolved to accommodate a slower moving and less complex world. These sometimes numbingly challenging times call for a consciousness that heeds Einstein’s wise observation that at times problems arise that cannot be solved in the same consciousness that created them.

       It is not too much to say that human survival could ultimately depend on our ability to enter a new consciousness, one that liberates the human imagination from old, outdated ways of approaching life’s challenges.

For more than two centuries, we have carried on life mainly as seen through the lens of a consciousness drawn from Newtonian science. This consciousness promotes worldviews that are simple and unambiguous. It is rooted in a materialistic conception of life in which nearly everything that happens has a clear-cut cause whose effects can be anticipated. In this way of looking at the world, what cannot be measured is unworthy of attention. Reality is tangible. Nuance and uncertainty exist only in people’s minds, not in how reality unfolds. There are no surprises in Newton’s clockwork universe. When we fail to anticipate an event it is either because we lacked enough information to anticipate it, or it didn’t matter much to us in the first place.

From falling apples to heavenly bodies hurtling through space, Newton believed all motion in inorganic nature occurs in predictable ways. This has inspired scholars for more than two centuries to seek out the Holy Grail of the social sciences: the equivalent of Newton’s three laws of motion that would make people as predictable as comets. No field of study has been more obsessed in this pursuit than economics.

To this day, Newton’s mechanistic view of the universe still influences those who try to divine the twists and turns of markets But alas, no one has yet discovered the basic laws of economics – or more fundamentally and necessary to the task –  the basic laws of human behavior. Lately, however, it seems a growing number of minds are realizing that humans really are unpredictable in any kind of Newtonian sense. We are not stimulus-response organisms whose every act has a direct cause that makes every act predictable. Were it otherwise, free will would be an illusion.

So what drives scholars, analysts and others to strive fruitlessly for over two centuries, doing the same thing over and over, hoping for a testable unified theory of markets? Some wags have joked, “It’s physics envy. Economists want the certainty that physicists can count on.” 

But maybe that’s not much of a joke, after all. We often hear in newscasts after a surprisingly bad day in stocks, “Wall Street hates surprises.” There are no surprises in a Newtonian universe. Natural events in the inorganic world are knowable in advance.  But think about this: if the same were true on Wall Street, there would be no Wall Street. Stock markets are games of chance; surprise is part of the deal.

So there you have it. Untold numbers of very smart people, some of whom have won Nobel prizes for their brilliant output, devoting professional lifetimes to an unobtainable goal: removal of surprises from scenarios involving human behavior in the marketplace and elsewhere.

We would all be served better were more effort spent in figuring better ways to deal with unpredictable events than is common in business. Companies need to liberate themselves from the constraints of linear Newtonian consciousness. They will stand a better chance of surviving by reorganizing themselves to better cope with emergent events – events that cannot be predicted. Professor Jeffrey Goldstein of Adelphi University’s School of Business defines emergence as "the arising of novel and coherent structures, patterns and properties during the process of self-organization in complex systems." Emergent events seem to come from out of nowhere, sometimes with great disruptive power. They do not appear and unfold in linear Newtonian fashion as a consequence of a singular system of causes.

Take the Internet – the most disruptive emergent event perhaps in all of human history. No one anticipated its awe-striking power to transform virtually every facet of  our lives before it began breaking over the shorelines of civilization the world over.  When World Wide Web inventor Tim Berners-Lee executed the first successful communication between an HTTP client and server via the Internet in 1990 no one anticipated that by the end of the decade over a billion people would be doing the same thing.  

The Internet has led to the failure of countless businesses, reshaped entire industries, and radically changed the rules of marketplace engagement. And yet, many businesses, from the very largest to the smallest, remain ill-prepared to survive the effects the Internet is having on their business models and in industries. These companies are frozen in their tracks by the bias of Newtonian consciousness toward the status quo – toward always returning to the way things were successfully done in the past.

Next: Embracing a New consciousness

 

 

The Case Against Newtonian Consciousness

The remarkable story of her own stroke told by Jill Bolte Taylor at a TED conference helps us better understand the global shift taking place in human consciousness. Her story provides a rare, even possibly never before seen view into the workings of the human brain. If you haven’t watched this extraordinary video and can spare 18 minutes click through to the TED site now. Then come back to this post and read on.

As difficult as it may be to imagine how it might have been different in the past, human consciousness today is not the same as it has always been. By human consciousness I’m referring to the cognitive framework and processes that guide our conscious mental activities. How we see reality is as much influenced by how our minds and brains work as by what stimulates them into action. Jill Taylor’s story poignantly supports this observation.

The reality she perceived when a massive hemorrhagic stroke shut down her left brain was different from any she had ever before experienced. In describing the change in her perception of reality, she wrote in her book My Stroke of Insight, “… my perception was released from its attachment to categorization and detail … In the absence of my left hemisphere’s analytical judgment, I was completely entranced by feelings of tranquility, safety, blessedness, euphoria, and omniscience. .. .I think the Buddhists would say I entered the mode of existence they call Nirvana.”

Taylor’s story brings to mind the oft-expressed idea that “perception is reality.” Yet, how many of us really believe that – especially with respect to our own perceptions of reality. Most of us would argue that there is an objective reality regardless of how individual minds may distort it.  The tree that falls in the woods does make a sound regardless of whether it is within the reach of a human ear.

In classical Newtonian science, objective existence is independent of human perception.  Nothing has so influenced the worldviews of common folk as Newtonian science.  Never mind that most of us are untutored in science. When we make our decisions we still think, however imperfectly, like scientists seeking proof of a proposition before accepting it as truth. The ultimate proof of truth is established when different experimenters, using the same methods, get the same outcome.

Newtonian science dramatically transformed human consciousness. Before Newton’s reduction of motion in nature to three basic laws, the Church commanded the greatest influence on how people saw the world. Under the Church, faith, not objective proof, was the foundation of content in most minds.  Newtonian science changed that. It offered a more secure platform for determining truth because unlike propositions rooted in faith, propositions rooted in science can be quantitatively assayed.

Philosophers around Newton’s times coveted the certainties obtainable through a platform of Newtonian consciousness. If all events in nature can be expressed in cause-and-effect equations, why cannot human behavior be so parsed?  Much of the intellectual agenda during the Age of Reason revolved around the idea that as products of nature humans are subject to the same laws as inorganic nature. Belief in this idea led to the foundation of economics, and ultimately to Adam Smith’s ideas about how markets work in a capitalistic society.  Indeed all the social sciences, including economics are descended directly from Newtonian science.

Lately, however, the value of Newtonian consciousness is undergoing sharp questioning.  This is in some sense an ironic turn of events given how physicists and engineers came out of their ivory towers armed with massive computer power promising near fail-safe predictions of investment markets.

A recent article in BusinessWeek, which placed much of the blame for the 2008 Crash on exotic software applications that were supposedly superior in judgment to  human  beings, wryly observed, “With any luck, the physicists and engineers who flocked to trading floors in recent years will head back to science labs to create things.”

Emanuel Derman and Paul Wilmott, experts in financial modeling, took measure of the limitations of Newtonian consciousness in predicting outcomes in financial markets in another BusinessWeek article:

 “The complex financial models that got us into this mess too often mask human nature behind false limitations of risk…

“As modelers, we see the fantasy of perfection as the fatal flaw seducing both developers and users. The invisible worm of financial modeling is a dark love of theoretical elegance and excessive precision…

“There are no fundamental laws in finance. And even if there were, there is no way to run repeatable experiments to verify them. Financial theories written in mathematical notation—aka models—imply a false sense of precision. Good modelers know that.”

There you have it. The emperor has no clothes. Two prominent modelers and authors of several books on the subject have revealed some of the most serious limitations of Newtonian consciousness, limitations that played a huge role in precipitating the biggest financial crisis in 70 years. We recommend reading more of their observations.

Albert Einstein famously said, “A problem cannot be solved by the same consciousness that created it.” Following his counsel, a more advanced cognitive platform than Newtonian consciousness is required to save the day as it were. Even before the global financial crash of 2008 companies the world over were trying to get a clearer vision of what lies ahead than Newtonian consciousness can render. The mechanistic and linear cause-cause-and-effect constructs of Newtonian consciousness are too simplistic for taking on the challenges in operating environments that are so filled with paradoxes, ambiguities, uncertainties and ephemeral conditions as they are now. 

Next:  Liberating Management from Newtonian Consciousness

 

A Global Shift in Human Consciousness That Will Affect Us All

This being the last day of the first month of this year, with no postings thus far in January, I started this day feeling a bit guilty for giving my devoted readers so little to chew on in recent months. Google is going to find out about this and demote me. Currently Google gives Ageless Marketing a 6/10 ranking which is pretty good. But I must do more postings to keep from slipping into a ranking of “who cares?”

In my own defense I spent the last quarter of 2008 dealing with a bit of a health issue. It’s still with me, but I’m truckin’ on.

I have been working on a white paper for a client in south Africa, elements of which I plan to share with my readers. The white paper makes a case that an epochal change is taking place on a global scale in human consciousness. It has inspired a number of recent books, countless articles and significant changes in some large, important companies.

This new consciousness is also reflected in the perspective that Barack Obama has brought to the political stage.

One of the observations I make in the white paper is that the U.S. automobile industry is beyond salvation. This is not a new view in this space. I ran a post  three years ago authored by auto industry expert John Keilly who was quite pessimistic about the future of the U.S. auto industry. The U.S. auto industry is beyond saving in my view because it seeks the solutions it needs to survive from the vantage point of a consciousness that is not able to render a clear picture of either the challenges to its existence or what is necessary to surmount those challenges.

At first, talking about transitioning from one consciousness to another may sound New Agey. However, the white paper describes the emergent shift in consciousness from a historical perspective, beginning with society-wide change in consciousness catalyzed by the Gutenberg movable type press, then the huge shift fomented by the emergence of Newtonian science and finally the one we’re entering now that is rooted in quantum science.

The new consciousness, which I have termed quantum consciousness, is being catalyzed by three major forces. First, the aging of industrial societies, which is producing a more seasoned, experienced group mind that is taking us from an ethos that is strongly egocentric to one that is more “We” oriented.  Second, the group mind, as it were, that is developing from and on the Internet. Third, remarkable developments in brain science that are giving a new and much expanded understanding of how the physical brain and intangible mind depend on each other and work together.

A good place to start in this new thread is by viewing an extraordinary account of a stroke by a brain scientist who experienced the stroke. Some of my readers have no doubt see the videoed account  but it’s still worthwhile seeing again. I will begin my next post with a discussion of the deeper meanings of what the brain scientist who experienced the stroke, Jill Bolte Taylor, shares with us.

Season's Greetings from the World’s Largest Plant

(This is a reprint of an essay I have run before, usually at this time of year. As we leave the Winter Holiday Season and head off into a new year, I think this essay has special significance for what we face in 2009. The year is beginning amid the most unsettled conditions in generations. Many are predicting further decline in equity markets and consumer confidence is at its lowest recorded level. Despite those and other dark clouds on the horizon, signs are beginning to appear indicating that the worst of the 2008 Crash is behind us.  But turning things around will take a lot of effort at all levels of government and business, as well as in our every day lives. All are connected. No sector of society stands apart from any other sector. This essay presents a metaphorical look at why we really have no other rational choice than to pull together regardless of our place in society or our political label if we are to quickly recover from the ravages of 2008.)

Several years ago a great discovery was announced. The largest known plant in the world had been found in Michigan. It was a single mushroom plant covering more than 100 acres.

Looking over its vast surface in full flower, one sees thousands upon thousands of mushroom caps looking like a multitudinous crowd of individual tiny people huddled together under little white umbrellas. But below ground every stem is connected to every other stem. This amazing plant seems a marvelous metaphor for us human beings – individuals on the surface, but one organism deep down.

Developmental psychologist Dan McAdams writes in Stories We Live By about two “fundamental modalities” that organize human needs, desires and goals: agency and communion. He describes agency as “the individual’s striving to separate from others, to master the environment, to assert, protect and expand the self. The aim is to become a powerful and autonomous ‘agent.’” He describes communion as “the individual’s striving to lose his or her self by merging with others, participating in something larger than self, and relating to others in warm, close and loving ways.”

Thinking about that giant mushroom, if each cap had a mind of its own, how much mental energy might each cap devote to asserting its self while losing sight of its connection to the whole? But on further thought I realize that in spite of each cap’s illusion of distinctiveness and autonomy, the will of the whole 100-acre plant works ceaselessly below the surface to help organize the needs, desires and goals of each individual cap.

Readers may recall my previous discussions of the “psychological center of gravity” hypothesis. People within five years of the adult median age make up the PCG and have a disproportionate influence on cultural themes and trends. With an adult median age of 45, today’s PCG is bracketed by the ages of 40 and 50, making it the oldest PCG in U.S. history.

Several years ago the Wall Street Journal carried an article that reflected today’s middle age PCG’s influence on teens. It told of an unprecedented flocking of teenagers to churches and synagogues in search of meaning in life – a quest traditionally more typical of people in midlife.

In many instances, teens are following a course that runs counter to parental atheism. The WSJ article viewed this as a form of rebellion, observing, “It doesn’t hurt, of course, that spiritualism and ritual permeate today’s popular culture.” The article noted Madonna’s study of Jewish mysticism, Alanis Morrisette and Puff Daddy’s references to spirituality in their music, teen clothing lines devoted to the dark, mystical-looking “Goth” fashion, and Chicken Soup for the Teenage Soul’s long-running position on bestseller lists.

But is the unprecedented number of teenagers pouring into houses of worship merely an act of mass rebellion? Is growing teen attraction to ancient rites of mysticism simply another fad that will soon pass? The ROI of untold product promotional dollars rides on the answer.

If the PCG hypothesis is valid, increased adolescent interest in spirituality will not be short-lived. It will remain in force over the next decade as the PCG ages more. The subterranean workings of the collective whole, influenced by the PCG, will continue to help organize the values, needs and goals of teens.

Ironically for a nation that has long exalted the values of the young, marketers to teens can gain keen insights into the values and behavior of today’ teens by learning more about the values and behavior of the middle-aged consumers who make up the PCG.

None of this is to say that teens are developmentally entering midlife decades ahead of Nature’s schedule. They simply are tapping into midlife themes, although they experience those themes in the context of their untested adolescent worldviews.

Today’s middle-aged PCG presents marketers with an extraordinary challenge: weaving the themes of midlife values into messages for the young in ways that feel comfortable and cool to them.

The PCG’s influence on teens supports the idea that below the surface we are one, just like myriad white buttons that belong to the world’s largest plant. Much of who we are as well as what we need and desire flows from that oneness regardless of our age.

In these days of overly expressed agency, it seems to me that giving more attention to the communion that binds us together as one would help extend the feelings of togetherness that we feel so strongly at this time of year throughout the rest of the year.

May 2009 unfold for you one an all as a truly great year!

(This is a reprint of an essay I have run before, usually at this time of year. As we leave the Winter Holiday Season and head off into a new year, I think this essay has special significance for what we face in 2009. The year is beginning amid the most unsettled conditions in generations. Many are predicting further decline in equity markets and consumer confidence is at its lowest recorded level. Despite those and other dark clouds on the horizon, signs are beginning to appear indicating that the worst of the 2008 Crash is behind us.  But turning things around will take a lot of effort at all levels of government and business, as well as in our every day lives. All are connected. No sector of society stands apart from any other sector. This essay presents a metaphorical look at why we really have no other rational choice than to pull together regardless of our place in society or our political label if we are to quickly recover from the ravages of 2008.)

Several years ago a great discovery was announced. The largest known plant in the world had been found in Michigan. It was a single mushroom plant covering more than 100 acres.

Looking over its vast surface in full flower, one sees thousands upon thousands of mushroom caps looking like a multitudinous crowd of individual tiny people huddled together under little white umbrellas. But below ground every stem is connected to every other stem. This amazing plant seems a marvelous metaphor for us human beings – individuals on the surface, but one organism deep down.

Developmental psychologist Dan McAdams writes in Stories We Live By about two “fundamental modalities” that organize human needs, desires and goals: agency and communion. He describes agency as “the individual’s striving to separate from others, to master the environment, to assert, protect and expand the self. The aim is to become a powerful and autonomous ‘agent.’” He describes communion as “the individual’s striving to lose his or her self by merging with others, participating in something larger than self, and relating to others in warm, close and loving ways.”

Thinking about that giant mushroom, if each cap had a mind of its own, how much mental energy might each cap devote to asserting its self while losing sight of its connection to the whole? But on further thought I realize that in spite of each cap’s illusion of distinctiveness and autonomy, the will of the whole 100-acre plant works ceaselessly below the surface to help organize the needs, desires and goals of each individual cap.

Readers may recall my previous discussions of the “psychological center of gravity” hypothesis. People within five years of the adult median age make up the PCG and have a disproportionate influence on cultural themes and trends. With an adult median age of 45, today’s PCG is bracketed by the ages of 40 and 50, making it the oldest PCG in U.S. history.

Several years ago the Wall Street Journal carried an article that reflected today’s middle age PCG’s influence on teens. It told of an unprecedented flocking of teenagers to churches and synagogues in search of meaning in life – a quest traditionally more typical of people in midlife.

In many instances, teens are following a course that runs counter to parental atheism. The WSJ article viewed this as a form of rebellion, observing, “It doesn’t hurt, of course, that spiritualism and ritual permeate today’s popular culture.” The article noted Madonna’s study of Jewish mysticism, Alanis Morrisette and Puff Daddy’s references to spirituality in their music, teen clothing lines devoted to the dark, mystical-looking “Goth” fashion, and Chicken Soup for the Teenage Soul’s long-running position on bestseller lists.

But is the unprecedented number of teenagers pouring into houses of worship merely an act of mass rebellion? Is growing teen attraction to ancient rites of mysticism simply another fad that will soon pass? The ROI of untold product promotional dollars rides on the answer.

If the PCG hypothesis is valid, increased adolescent interest in spirituality will not be short-lived. It will remain in force over the next decade as the PCG ages more. The subterranean workings of the collective whole, influenced by the PCG, will continue to help organize the values, needs and goals of teens.

Ironically for a nation that has long exalted the values of the young, marketers to teens can gain keen insights into the values and behavior of today’ teens by learning more about the values and behavior of the middle-aged consumers who make up the PCG.

None of this is to say that teens are developmentally entering midlife decades ahead of Nature’s schedule. They simply are tapping into midlife themes, although they experience those themes in the context of their untested adolescent worldviews.

Today’s middle-aged PCG presents marketers with an extraordinary challenge: weaving the themes of midlife values into messages for the young in ways that feel comfortable and cool to them.

The PCG’s influence on teens supports the idea that below the surface we are one, just like myriad white buttons that belong to the world’s largest plant. Much of who we are as well as what we need and desire flows from that oneness regardless of our age.

In these days of overly expressed agency, it seems to me that giving more attention to the communion that binds us together as one would help extend the feelings of togetherness that we feel so strongly at this time of year throughout the rest of the year.

May 2009 unfold for you one an all as a truly great year!

How Japanese Marketers Aim to Increase Sales in Older Markets by Changing Human Nature

While America’s economic wizards try to figure out how to extricate us from the worst economic downturn in seventy years, their Japanese counterparts are trying to change human nature in an attempt to restore vigorous health to the Japanese economy.

According to an article in the Washington Post this week, a push is on in Japan to reverse the buying behavior of “elder boys.” For a dozen consecutive years Japanese department store sales have fallen. Population shrinkage among the under-50 crowd is the reason.

To counter the negative effects of this demographic trend, Japanese business is looking to older people, especially men. The hope is that elders can be persuaded to return to return to the narcissistic and materialistically grounded behaviors of youth that cause cash registers to ring.

One can safely assume that sooner or later marketers in the U.S will pursue a similar strategy. But it work any better here than it will in Japan. Proponents of such a strategy appear totally unmindful of decades of research in adult development showing that the later life shift away from narcissistic and materialistic behaviors is developmental. It is a natural consequence of growing out of the years when focus on self and on materialistic metaphors of one’s self-image is important to social and vocational success.

Older people frequently complain about all the “stuff” in their lives. Later life is welcomed by many as a time for simplicity. It is also a time when self-centeredness typically gives way to others-centeredness.

Washington Post article on an amusing example of how many – shall we dare to say most? – marketers see older markets through the lens of their own worldviews rather than in terms of the older person’s worldview.

Seen through my eyes, most marketing to older people appears to be created by people who think of an older person as mainly an older version of their younger selves. However, that older person is likely so different from his or her younger self that they find it difficult to relate to the values of youth -- or even remember how much they once embraced them.

Those Japanese marketers are not likely to reverse the developmental changes that take place in the later years. Their efforts will be more fruitfully pursued in search of later life needs that can be more profitably catered to.

 

The Roots of My Optimism

Nature endowed our frontal lobes with the ability to look beyond the present moment into time ahead. However the farther cognitively removed we are from the present, the more likely our predictions about the future will prove wrong. This is especially true when some disruptive event explodes in our midst to nullify our customary way of seeing things.  The printing press did this over five centuries ago. The Internet did this less than two decades ago.

The Internet has altered in measurable ways virtually every aspect of human life. It has radically changed how business operates. Even the most astute science fiction writer could not have anticipated the magnitude of the Internet on business.  For instance who in 1990 would have predicted the emergence of a new business model in which company’s most important consumer products are free – such as they are on craigslist.com, Google and an assortment of social media sites.   

Ponder how Amazon’s has transformed the book selling business.  Think about Wikipedia’s radical disruption of the encyclopedia business. Overnight, a $1,400 set of Encyclopedia Britannica lost virtually all its value to most people. Free Wikipedia was not only a hundred times larger, but according to a study by the British journal Nature, just about as accurate.

Customers talking to each other reveal the pros and cons of products and companies on a daily basis.  People now trade stocks on line at a fraction of the cost in pre-Internet times.   Homebuyers go around the close-knit, incestuous Realtor ® community in search for new homes.  Thanks to Skype and other voice over Internet protocols, you can talk to anyone, anywhere in the world without a long distance charge.

The list of technological, economic, social and cultural disruptions in our lives due to the Internet since 1990 or so is astonishingly long. But, the Internet is only one source of life-changing, world-changing disruptive forces that are radically changing the human experience in virtually every way conceivable.

An aging population is radically changing the dynamics of supply and demand.  With most adults now over 45, big houses, full closets and years of materialistic fulfillment are resulting in falling per capita spending in dozens of categories.  Exacerbating this trend is the shrinking number of people under 45 in developed nations around the world – the result of over 35 years of too few births annually to replace the population.

Advancements in science in portend enormous disruptions – many for the betterment of the human condition. For example, genomic and medical research has caused scientists to cautiously predict the end of diabetes, many cancers (if not all) and a long list of inherited diseases like Huntington’s.

Even the dismal science is seeing benign disruptive developments. Muhammad Yunus, founder of the Grameen Bank and 2006 Nobel Peace Prize Laureate for his work in using microloans to bail millions of families out of abject poverty has plans that he claims will eliminate poverty worldwide by 2025 – just 13 years from now. This from a man thought by traditional bankers to be more than a bit unrealistic when he proposed to them using microloans to life people out of poverty. Microlending for this purpose has now become a sizeable industry.

Think back 14 years to 1994 and reflect on all of the unpredicted breakthroughs that have occurred in field after field.  The Internet browser, Netscape appeared in 1994. When asked his opinion of its importance, Bill Gates replied, “It’s a trivial thing.”  Yet, the browser transformed the world in ways that no other communications artifact ever has.

Also in 1994, teams at the University of Innsbruck and the US National Institute of Standards and Technology executed the first successful teleportation task. Granted, their accomplishment was far from the impressive actions of Scottie’s teleportation device aboard the Starship Enterprise. But it still was enough even at the quantum scale to confirm its possibility (though I wouldn’t recommending shorting airline stocks just yet.

And here’s another Starship Enterprise technology just beginning to emerge: remember the replicator that Enterprise crew members used to make ham and cheese sandwiches from assorted atoms and molecules? A primitive semblance of the enterprise’s replicator has reached the marketplace in the past decade – only it’s called a “3-d fax machine.” It is yet to reproduce the organic stuff in a ham and cheese sandwich, but

We are in a period of bifurcation – a “crossroads between death and transformation,” as Margaret Wheatley says, when a system is at maximum instability. The Soviet Union entered a state of bifurcation in 1985, fated to reach maximum instability in 1990 and collapse into separate states in 1991. Many in the U.S. smirked and proclaimed absolute victory over socialism. Yet today, the U.S. economic system has been massively disrupted by actions of the most doctrinaire conservative administration in U.S. history. Several weeks ago it blinked during a moment of “maximum instability” and nationalized much of America’s leading financial organizations.

 Living through times like these is a scary, and for many, a deeply painful experience. In such moments it is hard to see far beyond the present. Yet, I am full of optimism about the future. I feel throughout my entire being the winds of change that are blowing away the detritus of worn-out ideas and ways of managing our governments, our companies and indeed our own lives.  Once more, as Tom Stoppard reminds us in his play Arcadia, “The future is disorder. A door like this has opened up five or six times since we got up on our hind legs.  It is the best possible time to be alive, when almost everything you thought you k new is wrong.”

The political, economic, cultural storms we are living through are precedent to the most extraordinary age of comfort and plenty in the history of humankind. Deconstruction has always preceded reconstruction in the long journey of human progress from the days of the first hand-wrought tools.

 

 

 

The Financial Meltdown We're In Was Made Inevitable 35 Years Ago

“As the percentage of the older population increases, and especially as young adults decline in absolute numbers, fewer, not more, dollars will flow into the economy.

“For the first time since the end of World War II, residential real estate will begin to depreciate on a national basis – a phenomenon which might come to be called the Great Real Estate Recession. (A study by the National Bureau of Economic Research projects a 47 percent decline in real dollars.)

“Loan-to-value ratio will obviously fall, weakening the entire mortgage finance industry as loan defaults inevitably increase.

“These predictions about the future of the U.S. economy apply to the economies of all developed nations.”

I made those predictions 20 years ago in my book, Serving the Ageless Market. Today, as we survey the carnage along Wall Street, there is no lack of explanations offered by politicians, economists, academicians and pundits. But thus far, I’ve not seen a single reference to the root cause – to the Big Bang trigger of the most calamitous financial meltdown since the Great Depression.

First, I don’t deny that greed, wanton deregulation, weird financial products that few understand, irrational exuberance and a flood of easy money all contributed to the financial mess we’re in. However, it was all predictable far longer ago than 1988, when I first predicted that the U.S. and probably all developed nations were headed for a cosmic scale economic meltdown. 

The seeds of today’s economic travails were planted in 1972 when the fertility rate fell below the level need to replace the population. In 1964, the last year of the baby boom, the fertility rate was 3.65 per woman of child-bearing age. In 1972 it was 2.01. Population replacement requires a fertility rate of 2.1. Through 2007 – 35 years after the U.S. has failed to have enough births to replace the population.

Negative growth fertility rates have adversely impacted the auto, housing, furnishings and a long litany of other product lines. And the effects of dropping below population replacement rates is far from over, as Japan’s experience can testify to.  Many seem to forget that the single biggest driver of economic growth is population growth. Increases in consumer populations have traditionally depended on on increases in the number of babies born. 

On my first lecture tour of Japan in 1990 I told my hosts that Japan was about to fall into a deep and long-term economic contraction due to two factors: a negative growth fertility rate and an aging population that was contributing to a falling rate of consumer spending.  At the time of that lecture tour some U.S. economists were predicting that the Japanese economy would surpass the U.S. economy by 2000. Of course that never happened. As I had predicted to my Japanese hosts who politely cut off my discussions, Japan fell into an economic contraction 18 months later that stripped over 50 percent of the value from real estate throughout the country – in some cases, as much as 80%. Today, a 750 square foot condo in Tokyo is selling at about 42 percent of its 1992 price.

When I share these thoughts with people, almost inevitably I’m told not to worry – immigration will certainly keep us from falling into the abyss of deflation that Japan fell into. However, while immigration – legal and otherwise – may keep the U.S. from as deep and as persistent and economic downturn as Japan has suffered, don’t count on it. The rest of the developed world is facing population shrinkage and aging populations.  This will slow economic growth worldwide. Population contraction will not support the kind of growth we’ve been accustomed to. Even China and India are experiencing economic deceleration. The post world-War II economic boom is over.

But as Tom Stoppard optimistically tells us in his play, Arcadia, though “The future is disorder... a door like this has opened up five or six times since we got up on our hind legs. It’s the best possible time to be alive, when almost everything you thought you knew is wrong.”

In my next post I will share some of my brighter thoughts about where we are heading. But in the meantime, don’t expect any sharp turn-around in the economy anytime soon – not in 2009 and not in 2010 in my view. But, again, I believe there are reasons to not fall into despair. I’ll explain why, next.

 

 

 

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The The Hobgoblin of Lazy Marketing and Research Minds

For those who don’t click through to comments on yesterday’s post, I feel I must repeat here Ronni Bennett’s comment about the use (and misuse) of generational labels:

This is a topic that irritates me at the other end of the generational divide. Elders - by which I mean anyone older than Boomers - have been erased from existence by the media which have been using "boomer" as a synonym for "old" for several years. But elders' needs and interests differ dramatically from all but the very oldest boomers as you have pointed out here in the past in your posts on Carl Jung's seven tasks of aging, among others. And boomers too can hardly be lumped together. The youngest are still raising families, saving for their kids' college educations and beginning to hit the peaks of the their careers - a very different life-outlook from the oldest boomers just now reaching the age of eligibility for early Social Security. Generational naming and references seem to me to be the hobgoblin of lazy marketing - and research - minds.

Ronni’s second sentence bears deep reflection. In it she calls attention to the fact that people older than boomers are being marginalized. For years, I’ve heard an endless stream of complaints from those working in older markets about everyone dying at age 50 according to Madison Avenue. Until recently, reports on media consumption did not cover media usage by people 50 and older. AARP mockingly derided this fact with a controversial add showing people turning 50 being stuffed into body bags.

Now, many of those who long criticized Madison Avenue for ignoring consumers 50 and older are doing the same thing by writing off people who are older than boomers. Ronni is squarely on target with her protest of this development. Now re-read her last sentence:

Generational naming and references seem to me to be the hobgoblin of lazy marketing - and research - minds.

Neither she nor I claim that differences between generations don’t exist. They do. But those differences tend to be more a matter of style than of substance. Sixty-two-year-old boomers today have the same core needs as their 62-year-old grandparents had. The former simply have more options in seeking satisfaction of those needs.

I can rightfully claim to be well-read in adult development psychology. I have never come across any developmental psychologist who claimed that generational differences exist at comparable ages. Now, we have brain scientists fortifying this idea. Experience shapes brains in a number of somewhat predictable ways. The more years of experience a person has, the more different his or her brain is from people half as old. But the differences fade when comparisons are made with age peers.

Changes in the brain’s architecture generate changes in the brain’s cognitive processes as well as in the worldviews, order of values and strategies for needs satisfaction that emerge from brain processes. These are not generation specific. They are developmental stage specific.

Today, countless companies are basing marketing decisions on poorly grounded claims about generational attributes. Yesterday, I read an article talking about the demise of the Sigrid Olsen fashion brand. The articles said:

"It is a curious development in the fickle business of fashion that clothing labels like Ms. Olsen’s, made by and for the baby boomer generation, are among those being hardest hit by the current economic turmoil and retail retrenchment."

 It is not curious in the least – that labels by boomers ... “are among those hardest hit by the current economic turmoil and retail entrenchment.”

Few in the fashion game have come to terms with the twin facts that population growth under 50 is basically nada and that consumer spending reaches its peak around age 47 – interestingly, the average age a woman becomes a grandmother for the first time.

Boomers are at a different place in their existential evolution. Boomer women over 50 tend to be less consumed with fashion concerns than women of fewer years. That obviously has a suppressing effect on cash register ring-ups. The current economic downturn will of course adversely affect sales results. However, that is a short term phenomenon. Longer term is the effect of a steadily rising median age and close to zero population growth in the under-50 adult population. The answer to the challenges posed by this cannot be fruitfully addressed by basing analysis on attributes that supposedly distinguish a generation as being the only generation like it in all history.

As Ronni says, “Generational naming and references seem to me to be the hobgoblin of lazy marketing - and research - minds.”

______________

Ronni Bennett has two blogs, the longer sustaining of which is As Time Goes By: http://ronnibennett.typepad.com/ If you have any interest in middle age and older markets from any perspective you owe it to yourself to become a regular reader of this blog. Her second blog is mesmerizing. It’s called The Elder Storytelling Place: http://www.ronnibennett.typepad.com/elderstorytelling/

I promise you that over time you will learn more about the worldviews, values and behavior of older people – boomers or otherwise – by reading these two blogs on a regular basis than by reading, shall we say, 90 percent of the research executed in the name of boomers, Generation X or whatever.

 

The Mythology of Millennials

I just finished reading a posting on the corporate blog of a research firm that I really respect. But this posting did nothing to extend that respect. It was more drivel about Millennials, surely the most confusedly-defined generation of all.

Before getting into the details of why this posting was so disappointing, it’s worth sampling the wide variations in how Millennials are defined. On the first page of a Google search, eight out of the first 20 postings disagreed on how many Millennials there are. The population count ranged from 70 million to 100 million.

As to the calendrical bookends indicated in another Google search, the lack of consistency was astonishing. Wikipedia says Millennials were born “between the early 1980s to the early 1990s.” That would yield a Millennial population of around 48 to 58 million – notwithstanding the research company blog’s claim that “Millennials account for the largest generation in U.S.history. (Boomers, you’ll remember, are generally sized at around 78 million.)

A sampling of the calendrical bookends of the Millennial cohort as indicated by the first 20 Google listings:

1984 – 1993: 9 years

1982- 1998: 16 years

1982 – 2001: 19 years

1982 – 2003: 21 years

One “expert” in the Google listings thinks Millennials are still being born.

Now this is what I want to know: How can we trust generalities about Millennials when there isn’t even any consensus about when they were born and how many there are?

By my lights, whether a discussion is about boomers, Gen X’ers or Millennials, the subject of generations is riddled with intellectual slovenliness. That is the deeper problem I have with the blog that inspired this post.

The author of the research companies post on Millennials held up the 16-year-old high schooler in the recent movie Juno as the quintessential Millennial:

“Upon finding herself pregnant, (Juno) demonstrates remarkably little agony or angst in her decision to move forward with her pregnancy and give the baby up for adoption. She considers her situation, briefly weighs the options, and proceeds with far more poise and peace of mind than most couples at the altar …we never find Juno rethinking or otherwise agonizing over her decision.”

The implication is that Millennials are preternaturally mature for teenagers. Supposedly, according to the blog writer, Millennials quickly size up a matter, take decisive action on it and move on without looking back. But perhaps Juno is more like teenagers in every generation in recorded history: unable to assess the full consequences of situations as dramatically framed as sexual intercourse that just happened because she was bored when a boy friend came over to her house after school. Handing off the baby that resulted was not proof of maturity but of a desire to avoid responsibility for a life carelessly conceived.

Recent brain scan research shows the 16-year-old mind to be far less developed than once believed. It has another decade or so of development ahead before scientists are comfortable saying a person’s brain has fully developed. Brain scans show remarkable indifference to subtle distinctions between conditions and objects. One study showed teens to be poor readers of facial expressions, unable to determine expressions of anger from expressions of sadness in photos shown them while they were in a fMRI scanning process. Adults seeing the same pictures had no such difficulty.

The blog writer seems unaware of the processes and states of adolescent development, yet unabashedly makes claims about Millennials’ developmental states with the voice of authority.

The writer states with no hint of equivocation:

Today's Millennials are coming of age in a postmodern world which encourages consumption with playful, reckless abandon — it's likely they will be consuming at levels relatively higher than their predecessors. Believe it or not, in the future we'll all likely be buying more stuff and our youth will lead the charge.

Now, he/she purports that statement to be supported by a report you can buy for $500.00. However, I have seen much research that falls victim to what a friend calls “specious correlations.” By that he means something like this: A man about to enter his office building one day sees a bedraggled figure on the street corner rapidly snapping his fingers over a box at his feet with a few coins in it. Overcome with curiosity the office worker walks over to the fidgeting vagrant to ask him what he’s doing.

“Keeping tigers away.”

“But there are no tigers here.”

“Yep. That’s right. I’m keeping them away.”

I presume that the basic findings in the report on Millennials’ behavior are accurate abstractions of reality, but I suspect that a number of conclusions drawn are based more on specious correlations.

As I have said before in this space, I have fathered 3 boomers, 2 Gen X’ers and 1 Millennial. As expected, they are all different, but at the same time, they all went through the same stages, with pretty much the same worldviews and very much the same needs. And as I have also said in this space, the partitioning of the population into generational groupings is fraught with peril. Yes, generations do differ in style, but not in substance. Changes in technology, culture and opportunities for self expression have been a constant fact of life since the Dark Ages. But the underlying needs of people are the same today as they were in Elizabethan England. It would do you well to keep that in mind the next time someone tells you about how _______ (fill in the generation name) are different – really different!

Why Lemmings Drown Themselves and Companies Go Bankrupt

Everyone knows that overpopulation turns lemmings toward the sea to correct the problem. That’s kind of  what happens in  stock markes from time to time. When irrational exuberance lifts stocks to unsustainable levels, investors destroy value by dumping stocks so fast that supply far outpaces demand and prices precipitously plummet. Too much of anything triggers correction in due course. It must be a law of nature.

No one would attribute the action lemmings take to correct their population problem to rational decision-making. So why should we regard matters on Wall Street any differently when investors sell off stocks in a frenzied rush to correct the Street’s valuation problems?

Wall Street’s behavior fascinates me endlessly. One company sneezes and a big sell-off involving hundreds if notm thousands of stocks occur. Often the opposite happens. One company reports quarterly earnings that beat analysts’ expectations and the whole category it is a part of rises. The next day, a competitor’s earnings report fails to meet analysts’ expectations and the whole category falls.

Remember when the Wall Street Journal ran a quarterly contest between two teams on picking stocks? The first team had four star analysts who named their top stock picks for the quarter. The second team had just one lonely soul.  He was a Journal reporter with four darts. The darts won an amazingly number of times.

It seems to me that we often amuse ourselves by contriving reasons for actions we take when all the while little of what we are examining reflects much involvement of our conscious selves, aka, our egos.

The ego is a wonderful thing. Without one, we wouldn’t know who we were. It is our conscious self. We also have an unconscious self. Freud called it the id. The id contains all our basic drives associated with the four F’s: fight, flight, feeding and reproduction.

Then there’s our super ego. It mediates information that flows back and forth between the unconscious self and the conscious self and tries to get us to do the right thing from a moral perspective. Thank God for the super ego. It puts the brakes on destructive behavior that we might be tempted into by drives welling up in the primitive, amoral id. The superego is the seat of our conscience.

A big problem with the ego is that it tends to get too full of itself. It wants full credit plus compounded interest on successes it believes it has caused to happen and full absolution for all errors in judgment, none of which it thinks it was responsible for in the first place. The ego is the generator of defensiveness.

So, if we can agree that our conscious self is only one of several actors in our decision-making scenarios – and often off stage at that – then we can move on to why colonies of lemmings and stock market investors (and companies they buy stock in) often act in self-destructive ways. It all has to do with the behavior that takes place in complex adaptive systems.

Complex adaptive systems are complex in that they are diverse and made up of multiple interconnected elements. They are adaptive in that they have the capacity to change and learn from experience. Everyone knows from the story of the dinosaurs that a specie's failure to adapt to humongous environmental changes is usually sentenced to extinction.

Every unit of organic life is a complex adaptive system. But complex adaptive systems may also be inorganic, though they can be as dynamic in their adaptive behavior as lifeforms. An ecosystem is an example of an inorganic complex adaptive system. The biosphere is another.

So why should any of us in marketing or any other sector of business be interested in complex adaptive systems? For starters, markets are complex adaptive systems. Consider the stock market. It continuously adapts to environmental changes: changes in the CPI, unemployment rate, currency exchange rates, consumer confidence and even the weather.

Companies are also complex adaptive systems, although one might add that failure to learn and adapt in the face of major changes in the operating environment is not unusual among business organizations. Dinosaurs were complex adaptive systems, but they failed to learn and change in response to cosmic changes in their environments. That happens to a lot of companies. Halicrafter (radios), Ipana (toothpaste), Teal (liquid teeth wash), Oldsmobile (cars) Pan American Airlines and Dumont (televisions) are examples of companies that ended up like dinosaurs in museums .

The human ego is one of the biggest factors behind corporate extinctions. The identities of chief ego officers often get so wrapped up with set ways of doing business they are unable to learn and adapt to new rules for survival imposed by the disruptive forces of major environmental changes.

Since I’m at the limit of my self-imposed word count for my posts, I’ll stop now and resume the discussion of complex adaptive systems in my next post.

We Know Less about Our Motivations than Consumer Research Commonly Supposes

We’ve seen some strange ideas about the sources of human behavior coming out in the mainstream press over the past few years. More and more it seems, our hallowed concepts of volition and self-awareness are appearing to be as much an illusion as the apparent flatness of Mother Earth.

Gary Klein’s provocative Sources of Power destroyed the Defense Department’s illusion that people under fire in the battlefield reason through their decisions. A far more insightful book on intuition than Malcolm Gladwell’s Blink, Klein’s research clearly showed that when matters are urgent, the rational mind bows out while intuition takes over. But typically, after an event that was mediated by intuitive processes people will weave a scenario showing how they reasoned through their response to teh urgent matter. Retrospective rationalization, you might call it.

Klein did his research with firemen and acute care neonatal nurses, both of which are intimately familiar with urgent events. He tells of a fireground commander, we’ll call Jake, who was noted for his ESP. Time and again Jake saw things before they happened. This enabled him to give commands that more than a few times saved lives.

In one case, Jake entered a kitchen and immediately yelled to his crew to get out. Just about the time the last firemen’s legs crossed the threshold, the kitchen floor collapsed. Once more Jake’s crew was amazed at his ESP. The flames in the kitchen seemed too small to suggest a floor cave-in was imminent. However, Jake unconsciously recognized that the heat in the kitchen was much greater than it should have been for such a small fire. It could only mean that a roaring inferno in the basement was eating away at the floor structure. It was not ESP that saved the day. It was intuition that was developed from years of experience fight fires.

Klein’s research led to major changes in military training as well as in training programs for firemen and nurses. Apparently through mental imaging and other brain training techniques people’s intuition can be developed without actually living through real events.

Our egos demand obeisance to the illusion that we have full knowledge of the sources of our behavior. Most consumer research presumes that to be the case. However, brain researchers and cognitive scientists estimate that we are consciously aware of only about five percent of the mental activity that goes into our perceptions, thinking and decision-making.

I once had a woman scream at me from an audience I w2as taking through sales training, “Mr. Wolfe, you may not know why you do everything you do, but I know why I do everything I do!” That was her ego demanding full acknowledgment of her conscious autonomy. Incidentally, her sales manager called a coffee break, took her aside in the hall and relieved her of her position. Her behavior was inconsistent with what it takes to have productive team behavior, he told me.

People influence each others in teams. But they influence each other even beyond personal interaction. Research has indicated that people can influence each other out to at least three degrees of separation.

Everybody knows the 100 monkeys story. To recall: Monkeys on an island off the coast of Japan began washing sweet potatoes before eating them. After awhile, monkeys on other nearby islands began washing their tubers even though no contact appeared to have taken place between the first tuber washers and the group that later took up the practice. The researchers proposed that after a certain critical mass of users had been achieved (about when the 100^th monkey took up the practice) through some unknown means all monkeys within some range would suddenly begin washing their tubers.

While that story has been discredited, a mystery still remains over how information reaches animals – including us humans – over great distances in short bursts of time. Malcolm Gladwell examines this mystery in The Tipping Point – a much better book that his Blink.

It is truly amazing how people can self-organize around an idea or action without being told to and with no one in the group really knowing why they are doing what they are doing in participating in the organizing effort. Of course, everyone would have an answer for a researcher who asked why they were participating. But research shows that neither conscious intent nor leadership is necessary to get people on the same wavelength. Why do fads take off? When does a fad turn into a trend and why? How much is conscious intent involved in fomenting fads and trends? Those are questions Gladwell tackles in The Turning Point.

I want to talk about these sorts of things in my next post because I have been spending a great amount of time lately reading about complex adaptive systems. More and more I see in literature on that subject answers marketers have always coveted for why consumers do what they do, and how to predict their behavior.

 

Say It Ain't So, Dove

I am stunned. I feel cheated. I am mad. Damn mad!

For several years I have been touting Dove’s Real Beauty campaign as a high-minded example of authenticity in consumer marketing. Imagine my dismay, then, when I discovered in the May 12 issue of The New Yorker that the real beauties in Dove’s Real Beauty campaign are not real.

The success of the Real Beauty campaign still validates my original points:

• Being honest in today’s markets can pay off big
• The zeitgeist has shifted from an emphasis on idealization to an emphasis on reality

No need existed for Dove to hire the world’s reputed best pixalist, Pascal Dangin, to digitally turn “ordinary” women into – well – ordinary women. There is no lack of doughy-fleshed women.

Remember Jamie Lee Curtis’s famous full-page pose in the September 2002 issue of More? She agreed to be that issue’s cover story subject if More would show her as she is in a sports halter and shorts shot – billowing love handles and all, with no makeup, no special photographer’s lighting and no air brushing or its contemporary equivalent, pixel manipulation.

Thankfully, More had the good sense to agree with Ms. Curtis. It was rewarded for its wisdom by the greatest positive reader reaction in the history of the magazine that translated into a huge bump in audited readership.

For the most part, the mind of the market today wants the unvarnished truth. It is beyond the contrived world of youth where appearances count for more than substance. Be honest or be gone, it says. Because Dove doesn’t understand this I now have to spend a good chunk of my valuable time changing a series of PowerPoint slides and altering a heretofore important slice of content in many of my presentations on today’s markets.

 

The Silent Generation Revisited

Reader Anita Landis of the GlynnDevins ad agency in Overland Park, Kansas sent me the URL to an article on the Silent Generation that ran in the June 29, 1970 issue of Time. I found the article by Time Associate Editor Gerald Clarke fascinating from several perspectives.

First, it was written by a member of the Silent Generation who had bought into the idea that it was every bit as different as the first article on the subject claimed. That was Time’s cover story on November 5, 1951.

Second, the 1970 article cited a number of ways in which the Silent Generation was different contained a number of that are also being used today to show how Generation Y or Millenials are different from previous generations.

For example, Clarke who was 32 (three years year older than I was then) at the time wrote:

• We were incapable of hero worship. Those we most admired, in fact, were not real heroes but the anti-heroes of fiction or film: the Jake Barnes of The Sun Also Rises or the Humphrey Bogart of Casablanca.
• For us, coolness was all. Like Holden Caulfield, the confused but knowing teen-age protagonist of J.D. Salinger's Catcher in the Rye —the novel that became the decade's literary touchstone — we detested anything that we felt was phony.
• Only today, in our 30s, do we know that we were different—fundamentally different. When the generation lines began to form, we discovered, to our own surprise, that we did not automatically side with our parents.
• We may be the only ones left in American society who can see what's great and what's bull," says Frank Conroy, 34, the author of Stop-Time.

Cannot those descriptions be applied to Gen Y’ers?

Yes, the so-called Silent Generation was different. But is was also the same. When doing a comparative analysis of generational differences, it is wise to separate true differences from apparent differences which aren’t differences after all.

Aside from citing apparent differences as real differences, Clarke did do a worthy job of capturing the behavioral essence of the last generation to come of age before television became a ubiquitous fact of life in America. I know. I was there as a fellow Silent Generation type trying to resolve the great moral gap between my parent’s generation and the incoming boomer generation.

Interesting read, Clarke’s piece, when you get a moment.

 

 

 

 

On Sloppy Scholarship and the Silent Generation

Sloppy scholarship sometimes makes me mad. I especially get upset when it shows up in a widely esteemed newspaper like the New York Times. Why? Because many people in important positions will take on faith claims made in the great gray lady of U.S. journalism irrespective of their accuracy or lack thereof.

Last Sunday’s editorial section carried such piece. It was titled, “When the Time Make the Man."

In it, editorial page editor Sam Tanenhaus poses the possibility that “Americans born in the 1930s lack the particular qualities we look for in our national leaders.”

I guess that pretty much takes care of presidential candidate John McCain's hopes. He was born in 1936.

McCain is a member of the Silent Generation – so called because it has failed to distinguish itself in the political life of America.

Full disclosure: I was born in 1933.

The problem with the Silents, says Tanenhaus, is that they were collectively disengaged from politics and distrustful of ideology. Just look at Edward Kennedy and Michael Dukakis Tanenhaus offers up as Exhibit A in making his claim about the congenitally weak leadership that marks those born in the 1930s.

If the reputation of the boomer generation has been hyperinflated, then the reputation of the Silent Generation has been as flat as yesterday’s beer. Tanenhaus completely disregards such nationally prominent – indeed, globally prominent in many cases – leaders as Martin Luther King (a fellow Silent, though born in 1929), Ralph Nader (1934), Tom Hayden (1939), Jerry Rubin (1938), Jane Fonda (1937), Abby Hoffman (1936), and Gloria Steinem (1934). In fact, nearly all the national leaders in the feminist movement of the 1960s and ‘70s were born in the 1930s.

You might not have liked the politics of those figures were you around and involved in the 1960s and ‘70s, but you can’t deny their status as national leaders. Collectively, they reshaped the politics and morals of the nation.

From the other end of the spectrum come such national leaders as James Baker (1930), Colin Powell (1937), and Donald Rumsfeld (1932).

A Wikipedia entry on has this to say about the Silent Generation:

In the book Boom Bust and Echo, Canadian author David Foot takes a different perspective on this group arguing that those born in the 1930s and early 1940s are the most successful generation. He argues that because so few people were born during the depression and the war that employment opportunities were abundant and this group quickly rose to the top and became the management and superiors of the great mass of baby boomers that came after them. Using economic indicators he finds that 1938 was the best year to be born in North America, in terms of economic success. The impact of the generation was also great culturally, as the musicians and thinkers such as Paul McCartney, John Lennon and Bob Dylan who shaped the fashions of the boomers and were often associated with the pop culture of the 1960s and 1970s.

In sum, Sam Tanenhaus’s take on the Silent Generation is unpardonable balderdash. But unfortunately, it reflects the sort of sloppy scholarship seen in the gross generalizations we suffer about boomers, and subsequent generations. Interestingly, no broadly accepted definition of how many years add up to a generation exists. Some references to Generation X mark its bookends as 1965 to 1976 – just 11 years.

Lack of consistency in how many years mark a generation doesn’t seem to bother those who insist on comparing generations in terms of buying power, worldviews and behavior.

The key take-away point of this post is beware of generational generalities. They have about as much utility in analyzing, planning and making marketing decisions as a fork has for eating soup.

For another critique of Sam Tanenhaus’s article see the Boston Globe’s Brainiac entry.