Latent assets

Appearing in In the Black, March 2017

 

Payoff

By Dan Ariely

TED Books, $20, 128 pages, ISBN 9781471156076

This book asks a simple question: why do we work? Ariely has been thinking about this for a long time, and Payoff reiterates and consolidates many of the ideas he put forward in his previous books Predictably Irrational and The Upside of Irrationality. The simple answer to the question is that people need meaning, because the people with the most meaningful lives tend to be happiest.

This raises as many issues as it solves, and Ariely carefully unpacks them through the book. While Payoff would be helpful for managers seeking to motivate their employees the real value is motivation of oneself, not just in the workplace but in the broader pattern of life.

Ariely notes that when young he suffered a terrible burning accident, and endured a long period of recovery. When he was asked to counsel another burn victim he was at first reluctant but eventually agreed, and found that the experience added a new dimension to his life. Meaning, he realised, can often be found where you chose to find it. Even apparently mundane jobs, such as hospital cleaner (one of the cases Ariely examines), can contain motivation if set within a larger value system.

Drawing on tests and research, Ariely concludes that money (such as bonuses) is not much of a motivator. Engagement in creative work is extremely important, especially if it links to a visible, significant project. Recognition, which Ariely describes as “a kind of human magic” and can also go far in keeping employees engaged.

Payoff is a short but pithy book, a good combination of anecdotes and insights. It is also an enjoyable read, with flashes of humour. It delivers a solid investment return.

 

 

Thank You For Being Late

By Thomas Friedman

Penguin, $35, 496 pages, ISBN 9780241301449

thank-you-for-being-lateFriedman, a New York Times columnist, has written a series of worried books about social change. Here he continues the theme, although he claims to find reasons for optimism. He believes over the past decade globalisation, technology and climate change have intersected to kick the world into a faster gear. The assets needed for the “Age of Accelerations” are resilience and adaptability, extending to the redesign of workplaces, politics, ethics, and communities. He suggests 18 steps for sustainable growth, ranging from corporate tax cuts to a sugar ban to tighter border controls. Unfortunately, Friedman cannot resist the temptation for nasty sniping at Donald Trump, a pettiness which undercuts the historical reach and tone of Thank You For Being Late. A pity, because otherwise there is good food for thought in the book, on how we got to here and where we are going.

 

 

Superconsumers

By Eddie Yoon

Harvard Business Review Press, $45, 240 pages, ISBN 9781633692077

Many companies have a latent asset hidden in their customer base: superconsumers. These are eclectic diehards with a deep attachment – sometimes to the point of obsession – to a specific brand or product. It can be pork, shoes, software or dolls, but the pattern is the same.

Yoon, a principal with respected consulting group Cambridge, has access to a huge amount of data, and he notes that superconsumers usually represent only ten per cent of customers but account for between 30 and 70 per cent of sales. They are easy to locate, showing up clearly in the figures, and willing to respond. In fact, they love to talk to the company that produces the object of their affection.

And therein lies the key. Yoon provides case studies where superconsumers have offered important advice on product improvement and extension, as well as aspects they dislike. Even more, they encourage other possible customers, and Yoon shows how sales improve in an area where superconsumers are present.

Superconsumers are not only defined by the amount of stuff they buy but by their attitude to the product. They regard the things they consume as answers to strong emotional impulses. This is extremely useful to companies that have tapped into superconsumers, such as Nike, Google and Netflix. Giving superconsumers special recognition, such as invitations to product launches, can yield strong returns. If they sometimes seem a bit weird, well, that is simply in their nature.

The danger of all this is that companies may get trapped in their existing business model and neglect innovation. But Yoon believes that the benefits outweigh the risks. The book is fun but there are serious strategic messages here as well.

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