June 8th, 2020
*A NOTE: This was written prior to the killing of George Floyd. But I feel it important to distinguish three things. First, we make it a point to not capitalize on tragedy to advance our agenda. Second, that the concept below is as relevant in taking action on uncomfortable cultural issues such as racism as they are talking about economic issues. Third, that the insights we hope to illuminate are tools to create sustainable and lasting change. In any time of uncertainty and upheaval, it is natural to want to react in the immediate.
As we enter our third month of quarantine and begin the inevitable restlessness I can’t help but reflect on a powerful psychological concept we utilize when positioning a brand, framing. This concept was developed by Amos Tversky and Danial Kahneman as part of the larger Prospect Theory which would go on to win the latter the Nobel Prize in economics. At its most basic, the concept states that when presented with identical choices of outcomes people will become risk-averse when that outcome is framed positively and risk-seeking when framed negatively.
The reason this comes to mind is two-fold. First, a genuine desire to read the news and not a constructed narrative; at some point, I want to decide for myself whether or not this truly is the ultimate recipe for chocolate chip cookies. Second, the downright spooky similarity between the example taught by Tversky and Kahneman to illustrate framing (below) and how our leaders are presenting their political agendas surrounding the handling of Covid-19.
The example is as follows: A plague hits a small community and you, as governor, have to choose between Treatment A and Treatment B.
What this illustrates is that when presented with the positively framed decision most of us become risk-averse; choosing Treatment A and the guaranty of saving lives. When presented with the same options framed negatively most of us become risk-seeking, choosing Treatment B trying to save more lives.
So why is this relevant to our times and to an organization?
For one, there is an emerging trend towards getting away from metrics that favor short-term growth and moving towards the prioritization of long-term sustainability. This should be music to everyone’s ears, especially when we are predicting 23M people unemployed and 75% of bars and restaurants expected to close for good.
April 29, 2020
A Post-Pandemic Thought Exercise:
Let’s imagine a world, not too distant in the future when the quarantine lifts but life as we know it has fundamentally changed. A ‘work from home’ startup is the next Silicon Valley unicorn, influencers begin hocking virtual experiences and home workouts. Hugs and handshakes have gone the way of the pistachio dance and while strangers glare and often verbally shame others for being too close to others regardless of context. In short, a new cultural stigma arises.
Keep going. People stop commuting and buying gas, they take fewer vacations. They shop less in almost every category. And the initial count of 20 Million unemployed doubles with corporate layoffs in retail, farming, transportation, and hospitality industries. No more brunch.
Keep going. Imagine in this world nearly 75% of restaurants have closed. The ones that do survive have increased fixed costs and fewer tables due to social distancing. The experience is less efficient and, in turn, more expensive. No more brunch.
What are the long term consequences of this scenario?
How will this affect the economy, your business, and your life?
Now let’s change the way we are framing this.
Imagine a similar world in the not so distant future where quarantine is lifted and life as we know it has fundamentally changed. Employers collectively decide to implement WFH orders leading to the fall of unnecessary commuting, air travel, and a drastic reduction in carbon emissions. An emerging new business ecosystem arises around the WFH Industry. In place of wanderlust, influencers now peddle austerity and community involvement. Hugs and handshakes are still a thing, but consent becomes a more deliberate and less confounding concept to grasp.
Let’s keep going. New restaurants pop up with increased quality standards, higher wages, and paid healthcare for their staff. New supply chains focussed on delivering same-day, farm-to-table produce is established reconnecting local suppliers to increasing populations of home chefs. We see a reduction in monoculture farming in favor of perennial polyculture farming for more productive yields and to reduce reliance on expensive chemicals. The supply chain becomes deconsolidated leading to an increase in smaller businesses to address the change.
Keep going. With travel reduced cultural escapism is eclipsed by stronger community and family initiatives. Businesses start prioritizing Cost-Per-Use metrics rather than Frequency of Purchase. The average lifespan increases for the working class, especially amongst minority communities. And, in place of the jobs we lost, industries emerge around our new norms. The adjustment is slow but strong. We cut brunch out and cook from home.
What are the long term consequences of this scenario?
How will this affect the economy, your business, and your life?
Which of these scenarios would you choose?
The intent of this post was not to devalue endless-mimosa culture. My underlying concern was discovering a topic that would be poignant enough to capture our general zeitgeist while not being burdening the idea with semantics. I wanted to bring to light the concept and consequences of framing. And how we can empower ourselves to utilize unanticipated shocks, no matter how tragic, to affect meaningful change. If you have the time to listen to the podcast that inspired the title, it is enjoyable (here).
March 30, 2020
The first advice I give anyone when approaching work on their brand is honesty. There is nuance to this but it’s a truism that cannot be overemphasized. The truth always catches up to you in the end, especially in business.
This brings me to an observation made, by myself and my colleagues, during the weeks leading up and through our current pandemic. Something we now call “tactical empathy”. Tactical empathy is the strategy to gain market advantage through the utilization of the consumer’s propensity for moral and ethical action; especially during crises. On the one hand, you have businesses who were founded with the intent to help people in times of crisis and create awareness around their availability. On the other, you have essentially scam artists; looking to take advantage of the uncertainty through nefarious dealings. Between these extremes, purely altruistic or purely nefarious, there are the organizations and individuals who requisitely use the crisis strategically to their advantage. Fundamentally, I believe that most are trying to help their people and community reconcile with the change in one way or another. But, it’s also true that most businesses identify the potential upside to this action, a cost-benefit analysis if you will. Further, they can and often do coexist. Too often we create the false dichotomy of either/or; you either agree with me or you’re wrong.
Back to honesty. Or, in this case, self-awareness and how it relates to the perception of your brand. When evaluating your best course of action it is important that you set aside self-interest and consider how your audience will weigh this against their lives. We break this down into Signals, Perspective, Value. What signals will you put out, what perspective will your customer see this from, and what values will they then attribute to those signals.
The current situation surrounding the spread of the COVID-19 virus is a telling story of tactical empathy in action. We have observed businesses take an initially conservative approach to cautionary measures only to be lambasted for their inaction by the general community and then take a hardline stance in the opposite direction. This, while the same community simultaneously criticize businesses and government institutions for layoffs, lack of preparedness and transparency. In general, this behavior is understandable. In the face of uncertainty, we naturally act out in the face of fear and anxiety in search of answers.
One CEO we observed took a heavy-handed public stance against the insensitivity of marketing agencies continuing to pursue business, only to announce a week later a temporary cut in their pay to preserve jobs. But how can a CEO criticize an entire sector of the economy for trying to keep their lights on while simultaneously making a public stance about trying to do the same? Especially when it equates to their own salary being so disproportionate to contribute significantly to the continued employment of many workers?
This signaled a few things to us. First, that this leader was utilizing tactical empathy. Second, that this organization was being hit harder than most. Third, that they were being reactive and not considering the SPV of their messaging. For individuals, it is fundamentally easier to take a stance and act reactively without the need for concern over how this will come off. For businesses and their representatives, however, we must consider the long term effects of our messaging.
- Perspective: What are the current frustrations your audience is experience?
- Value: What is their vision for a solution? How would they measure this?
- Signals: How can you, the business, design a solution for them that still makes sense to your mission?
A great article in Forbes about the “rules of making money during the time of COVID”: HERE
March 30, 2020
This morning brought news of a longer, if not expected, recommendations for quarantine from our government. While we should all take solace in our progress away from further exacerbating the spread of COVID-19, it begs the question, what’s next? I’m not referring to the further spread or preventative measures. Rather, what is next for us socially and economically? At some point we are going to have to come out of quarantine; restaurants and retail will reopen, we will gather socially, and we will need to stomach the risk. So what happens then if this becomes seasonal? Even in the best scenarios, our world will be forever changed.
Looking at this through the lens of my profession there are a few things we can be certain of:
- We are going to recover
- Business and consumer behavior will be changed
- These changes bring shift supply and demand curves
- In turn, there is more opportunity for new entrants
- Proactive organizations will be better off than competitors in both the short and long-term
Without a crystal ball, it’s improbable for us to predict the specifics of these shifts. But then again, it’s not about the specifics, it’s about positioning your organization as a solution to the frustrations that people already experienced and giving them every opportunity to get value from you. People can be made to believe only what they already ‘know’.
March 22, 2020
Can we improve company culture in hard times?
While consumer behavior shifts during a recession we must take active measures to understand and address their needs. Just as critical, yet persistently overlooked, is the shift in culture and the needs of your people and their families. Put most simply, it’s about treating your employees like customers. It is imperative that leaders understand the effects this situation has on their employees beyond what it means to the balance sheet. How can an organization address and, possibly, improve its culture during an economic downturn?
A few elements critical points to remember when thinking about your company’s culture during these times:
- Disarm Uncertainty: Be proactive, transparent, and act with urgency providing information to employees on the status of the organization.
- Connectivity Roadmap: Establish a roadmap and nominate team leaders to establish frequent virtual in-persons to reestablish communication during remote work situations.
- Take A Pulse: Actively survey and monitor employee progress and moral.
- Collaborative Benchmarking: Structure performance metrics and incentive programs that reinforce a collaborative culture and mutual benefit of teams.
- Transitional Assistance: Find ways to assist the transition for those affected by cost-cutting through job placement and other assistance. These are the friends and colleagues
The most crippling part for cultures during economic downturns is the anxiety developed around uncertainty. We become myopic, putting our heads down to manage the crisis and make presumptions about the welfare of our people. With sober eyes, we can see that hard choices will be made. People will lose their jobs and businesses will stumble. We can also see that a recovery will happen and business will go back to usual. The organizations that treat their employees, even the ones they had to cut, with respect and empathy will gain the long-term advantage.
March 22, 2020
It has been wonderful to see how many people within our community are coming together to assist each other. Still, a great deal of the advice is open-ended and without context. All of this can add to the confusion and paralyze businesses in these hard times. I want to make sure that we provide simple, easy to follow concepts for people.
In general, we can summarize our best advice as follows.
Steps to Take:
- Assess your organization’s current market position and financial health.
- Manage your costs by cutting lower-value processes and reducing complexity.
- Prepare for your next move by managing cash, divesting non-core assets, and investing in technologies that create efficiencies.
- And, most importantly, go on an early offense by realigning sales and outreach to priority accounts and prospects while maintaining marketing efforts while your competitors’ cut-back.
Your best bet is to work with an expert to identify what is best for your business specifically. At Amprsnd we are offering remote consultations and workshops for businesses that need perspective and guidance. We have made available deferred payment schedules to help you alleviate cost concerns when your working capital is needed most.
March 19, 2020
Trust & Value
During economic downturns, consumers increasingly become mercurial; loyalty drops along with their willingness to pay. So, how can an organization with higher price-points appeal to consumers during times like these?
One of the primary drivers of value is trust. As consumers’ willingness-to-pay (WTP) drops, cost factors are weighed against perceived value. One way to increase perceived value is to provide solutions that directly address customer purchasing circumstances. In context, brands would be best served in the current economy by performing customer outreach focusing on their most loyal customers. Brands should address the current climate and survey customers on what this means for their lives and businesses. They should communicate transparently what it means them, and find ways to work proactively in finding mutually beneficial solutions.
Methods Growing Perceived Value & Building Trust:
- Be proactive in communication
- Gain customer perspective
- Act with transparency
- Find mutual solutions
While it might be difficult to see past the current state of uncertainty it is essential to act now. We can say with certainty that the majority of organizations that invest the time and effort now will see exponential returns when the market takes a turn for the better. I will be posting more thoughts and statistics about the other factors to address in upcoming posts.
March 19, 2020
Consumer behavior changes drastically during a recession; at the center of this change is uncertainty. It is essential for your business to recognize this shift in consumer priorities and to pivot your solutions in a way that helps simplify decision making. Consumers become more risk-averse, willingness-to-pay falls and, with it, perceived values shift to prioritize the fundamental aspects of products and services.
The fundamental markers of simplicity:
- Trust: Build trust with your customers while they need it most.
- Value: Find ways to add value for your customers and, in turn, your brand.
- Choice: Simplify the choices your customers have to make and avoid instigating decision paralysis
- Service: Focus on providing great customer service and become known for it.
- Communication: It is better to over-communicate and be transparent.
It’s important to remember that this goes for your employees as well, as they are consumers in their own right. The best move you can make is to be proactive in your understanding of people’s uncertainty and to shift services toward providing value to customers and employees. We have seen some great examples of this. In the restaurant industry, for example, some restaurants have taken it upon themselves to shift services from fine dining to drive-up family meal prep. Addressing shifts in consumer dining behavior while finding a way to provide essential services to an expanded market and further support employees.
My Advice: Reach out to your customers and employees, let them know where things lay for you and be proactive in finding ways for your business to add value.
March 18, 2020
As the saying goes, necessity is the mother of invention. As we reprioritize our lives around the safety of our communities this is also an opportunity to refocus our work lives and organizations. To become more effective, efficient, and more proactive in deciding what creates value for us and for all of the people who rely on us.
If there is a silver lining, it is that the past we can look to past recessions and learn how to come out of this stronger. A considerable amount of my time, over these last few days, have been spent researching consumers and business behaviors during and post-recession. I will be sharing insight over the next few weeks in the hopes of providing perspective to organizations. We will be sending emails, aggregating information on our site, and featuring highlights on our social channels.
A few subjects that we will feature:
- Qualities & trade-offs of consumers desire during and after recessions
- The effects and changes of perceived value (PV) and willingness-to-pay (WTP)
- Trends & methods for addressing change
Before insight can be turned into positive action we have to gain an honest perspective of our own businesses. We like to perform thought exercises to prompt our clients into this process. Work through the questions below and try to think about your customers in the same situation you are in now.
- Was your business as healthy as it could have been? Think of this both in terms of your bottom-line and your culture.
- What value did your customer gain from your product/service? Try to assess this through the lens of your customer. Then, do the same exercise from the perspective of your employees, suppliers, and other critical people in and around your org.
My hope from all of this is that the people that read this will insight into how you can both survive and come out of this stronger.