By now I’m sure you’ve seen that, in a tersely-worded blog post, Reed Hastings of Netflix today rolled back the controversial decision to split the company into two separate services: a DVD-by-mail service that would have been named Qwikster and the on-demand streaming service that would have retained the Netflix name.
You may have also seen the announcement that Apple pre-sold 1 million units of its new iPhone 4S on the first day it was available, blowing away previous records. This positive news comes after many people (especially those in the media), expecting a completely new iPhone 5, greeted last week’s iPhone 4S announcement with disappointment.
Meanwhile, over at Facebook, privacy concerns continue to mount as the latest site enhancements caused some to question the addition of cookies that would supposedly allow Facebook to track users’ movements even once they log off the service.
I put these three events together because they showcase how three of the most successful and powerful brands of our time interact with their brand communities as they innovate quickly and aggressively.
What do all three companies share? First, confidence. They can see their destiny, they have a plan in place to control it, and no one—not even their customers—is allowed to slow their innovation engines down. What else do all three share? They all also have passionate communities of people who care deeply about them and watch every move they make closely.
In each case, these two forces—the company’s own self confidence and the pressure and expectations that a deeply engaged and passionate brand community brings—can lead to highly-charged, high-risk announcements, communications, and interactions.
So why is Apple so successful at keeping the relationship with its brand community healthy? Why is Netflix stumbling so badly? And why is Facebook in a dangerous spot?
In my view it comes down to a difference in the way each company approaches the give and take transactions with their brand community, the way they manage their community karma.
Creating a healthy brand community is a lot like managing a bank account. In order to remain in good standing, you must make more deposits in the karma bank than withdrawals. And this is where Apple, Facebook, and Netflix begin to differ.
On one end of the spectrum is Apple. The company showers us with delightful new products and innovations. Apple surprises us. Apple entertains us. But most of all, we’ve come to expect that almost every product Apple makes is going to fundamentally change the way we work and play. By creating great, impactful stuff that really does improve our lives in meaningful ways (I haven’t used a computer that runs Microsoft Windows in more than a decade… but I still remember EXACTLY how it felt), Apple is constantly making deposits in the community karma bank.
And while many folks were upset that Apple didn’t launch an iPhone 5 last week, I’ll point out that it was a stronger karma decision to launch an upgraded version of the iPhone 4 and call it a 4S than to launch an upgraded iPhone 4 and call it an iPhone 5 (as many other companies would have done). When an iPhone 5 is ready, we will know it, I’m sure.
That’s not to say that Apple doesn’t make karma withdrawals too. It does. Apple, you annoy me with your crappy restrictions on what I can do with music I download from you. I dislike your anti-competitive app store practices, and you scare me every time I have to click through a new version of your license agreement.
But when it comes right down to it, you give me more than you take, Apple, so I must admit I still love you.
On the other end of the spectrum we have our friends at Netflix. For years, Netflix was a dutiful investor in the karma bank. The company made their site elegant and easy to use, the social functionality and ratings were helpful, and, when streaming came along, it was like Christmas.
Personally, I loved Netflix. I loved it so much that I even bought a new TV last year on the strength of one feature—I could seamlessly stream Netflix movies directly to it.
But something changed. Over the last six months, I’ve noticed that Netflix has started making more karma withdrawals than deposits.
First, the Netflix site quit getting better. I don’t know about you, but I found it harder and harder to search for new movies. Netflix has always tried to push you toward the backlist titles and older movies, and I get why that made sense with the DVD-by-mail system. But why not make it easy for me to find your newest on-demand titles? I got frustrated and quit using it as much because it seemed like the site was actually losing searching/browsing functionality rather than getting better (was that my imagination?).
Then Netflix hit me with the price increase. Now I don’t mind paying more when I’m getting more, but at the time the price increase was announced it had become clear that Netflix’s agreements with distributors were souring and that they might even lose access to many on-demand films. This on top of my frustrations with the site, created my first negative Netflix experiences.
Still, Netflix had enough positive karma with me, built up over years, that we remained buddies.
Then, on September 19th, Reed Hastings sent me an email (under cover of night, at 3:31 AM, mind you) that started as an apology and quickly turned from mea culpa into double down. If you got the email, you were likely either A) angry or B) wondering if Reed might soon have an opening to hire you to help with his communications strategy.
Not only was Netflix going to keep the price increase, they were going to significantly degrade the customer experience by splitting the business in two and forcing their customers to log in to two completely different sites if they wanted to stay a customer of both the streaming and DVD-by-mail businesses. I understood the business strategy and why it made sense… but the communications strategy and the way the whole thing was positioned was just plain terrible. As someone in the communications business myself, I felt the need to look away.
And that was the moment Netflix made one more karma withdrawal than I could take. In the weeks since I received that email I have 1) bought a Roku box so I can stream on my TV from someone other than Netflix if I want to 2) started using the free streaming I get as a member of Amazon Prime and 3) made the decision to go on a break from Netflix until it gets its karma account back in order.
Apparently, I’m not alone. Since the announcement, the Netflix stock has fallen off a cliff, down from just over $200 to around $110 a share (and it was at $300 a share this summer). The announcement today may not have come soon enough, only time will tell.
Netflix, I still think we might have a future together, but man do you have some work to do.
Which brings us to Facebook. Now Facebook is a very interesting case to look at because of one thing that makes it very different than the other two companies: it doesn’t charge me any real money.
Facebook is a free service, and typically our expectations of a free service are very low. Investments in the karma bank add up quickly when the service is free. For years, Facebook has earned our love by helping us reconnect with long lost friends and relatives, while allowing us to actively keep in touch with more people at once than we ever could with a pen, phone, or email.
The real price of using Facebook—our privacy and personal data—was one that was originally only too high for a fringe group of digital conspiracy theorists. But over the past year, Facebook has become more and more intrusive, less respectful of what little privacy it still allows us, and has at the same time claimed more ownership of our personal data, using it in ways that are less clearly in our own interests.
The double whammy is that at the same time, the service is becoming incrementally less valuable to many people. Now that you are connected to all of these folks that you haven’t seen in 20 years and know what their kids are having for breakfast… then what?
I’ve noticed more and more of my friends on Facebook are going largely silent. It is good to have the network there when you need it and want to reach out to someone. But my perception is that the regular updates are decreasing, the number of times I’m tempted to click the “like” buttons has gone way down as I wonder how Facebook intends to exploit my click, and I’m unlikely to upload any personal photos or videos until I am 100% positive they aren’t going to show up in some banner ad for deodorant.
I wonder if Facebook is nearing a critical juncture. Because the service is free, I think Facebook will likely be able to avoid the rapid depletion of the karma reserve that Netflix has seen over the past few months. But as more people become aware of the true costs of using Facebook—in terms of loss of control of our privacy and personal data—and the incremental value of Facebook begins to level off, could the karma bank for Facebook go negative, even as a free service?
I don’t know. But if I were at Facebook, I’d certainly be starting to worry about it. Especially if I had a competitor like Google (with its own karma stumbles, but an overall better track record of respecting personal data) lurking, waiting for Facebook to make one too many withdrawals.
I’m sure many of you have strong views about these three brands. If you do, and either agree or disagree with my analysis, I’d love to hear your thoughts.
Organizations have a lot more to offer the communities they interact with than the products they sell. When these organizations unselfishly offer assistance to the communities around them, they can build powerful relationships based on trust and shared value rather than just on transactions.
Sure, building this foundation will often mean that people in these communities would be more likely to consider buying products or services from you down the road (in case the marketing types ask). But if that is central to your thinking, community members will smell a rat. It is not enough to simply seem selfless while remaining selfishly motivated by your own bottom line.
You must actually care what happens to these communities. You must want to help them be more successful at achieving their own goals. Although this approach seems so obvious, my experience of working in the business world for the last 20 years indicates that it’s not.
Usually when I begin to talk about helping the communities that surround a brand, people immediately assume I’m just referring to typical organizational philanthropy or corporate citizenship work. While in some cases, a community-based brand strategy will dovetail nicely with these efforts, they have very different end purposes.
By carefully considering how you can help the communities of customers, partners, prospects, friends, neighbors, and others that interact with your brand every day, you can not only create value for these communities, you can develop deeper non-transactional relationships that will also benefit your organization in the long run.
If you need help shifting your thinking to a community-based approach, consider the following types of things your organization might do to help the communities around your brand:
Consider investing money in projects that help the community achieve its goals. Bonus points if the investment will also help your organization achieve its goals or further your brand positioning. Red Hat and other open source software companies have done this extremely well, investing in projects that later become the heart of products they sell while also creating value for community members at the same time.
Many communities are in need of assets that individuals can’t buy on their own. Are there assets you already own or could buy and then give to the community as a gift? Red Hat bought many companies over the years with useful proprietary source code and then gave away the code for free. The community was able to innovate more quickly, and everyone—including Red Hat—reaped the benefits.
Your organization might have other assets that would be of value, such as a conference facility that could be used or land you haven’t developed. You could donate your products, services, web server space, or other supplies and materials that might otherwise go to waste.
Your organization probably has knowledgeable people who might have a lot to offer. Consider allowing employees to spend on-the clock time helping on projects that further community goals and support the brand positioning.
Who do you and others in your organization know, and how might these relationships be of value to others in the brand community? Perhaps you can make connections that not only help the brand community, but also help your organization at the same time.
Could you use the power of your brand to shine the light on important community efforts, drawing more attention and help to the cause?
The bottom line…
When organizations begin thinking like members of communities—when they are of the community, not above the community—and bring value in the same ways individuals do, they can fundamentally alter the relationships they have with members of the community.
This means that organizations have to stop thinking selfishly about what they want to get the communities to buy from or do for them (what I call Tom Sawyer thinking) and start thinking about what assets they bring to the table that could create real value for community members.
Faking it will get you nowhere, but when you really bring some tangible value to a community and the community becomes better for it, your brand will reap the benefits down the road.
This is the ninth in a series of posts drawn from The Ad-Free Brand.
Last weekend we stopped into Quail Ridge Books, a wonderful independent book store just down the street from where we live in Raleigh, NC. After browsing for a while and finding a few things, we went up to the cash register to buy them.
I have to admit, I always experience a little ounce of dread when I walk up to the counter at a bookstore. Most of this comes from my experiences at Barnes & Noble, where each time I approach the counter I’m alerted that I could save from 10-40% on my purchase just by joining their membership program and whatever else is in their rehearsed speech that has probably been tested to ensure each word helps optimize their chances of getting you to sign up so they can “capture” you.
I’m sure Barnes & Noble keeps detailed monthly metrics at their corporate office highlighting how many people sign up at each location due to this point-of-sale promotional technique. I’m also confident that there are incentives (either carrot or stick-based) that 100% guarantee that I’m going to not only have to listen to that speech each time I approach the counter, but also turn them down when they ask me to join. (By the way, I don’t have anything against these sort of programs, I just don’t need to join one for every single store I shop in.)
So I’m standing there at Quail Ridge Books, and I see the cashier reach for a yellow bookmark that I’m positive is going to be the entry point to Quail Ridge’s version of the membership club speech. Instead, the cashier simply says, “We have a membership program called the Reader’s Club. I’m going to put this bookmark in your book and if you like, you can look at the benefits there.”
Whoa. No speech, no sales pressure forcing me to say no. It was like a breath of fresh air.
I’m sure if the folks at the Barnes & Noble corporate office had seen this performance at one of their stores, they would have hit the ceiling. Multiply that approach all across the country at every Barnes & Noble and their point of sale membership spreadsheet would look atrocious. People would get fired.
The problem is, Barnes & Noble is only tracking the data they can see. They have no way of tracking the dark matter–the impact their membership strategy has on the experience of people like me, who now go out of their way to avoid shopping there.
I don’t expect I am the only person out there who is annoyed–not just at Barnes & Noble, mind you–but at every store that forces me to say no to a point-of-sale sales pitch… to give a dollar to this cause, or to join this program, or whatever.
Because the spreadsheets only track the revenue impact that come from these promotions and not the negative brand impact, they probably look stunning on paper. What’s the downside, right?
Well, the downside is people like me not wanting to ever set foot in a Barnes & Noble store.
Stores like Quail Ridge Books that don’t sacrifice the health of their brand community for the sake of hard numbers on a spreadsheet understand the importance of the customer experience in establishing brand reputation, loyalty, and even recommendation.
So next time, before you implement a strategy that is guaranteed to make the numbers look good, make sure you are also studying the dark matter impact to your brand experience and reputation at the same time.
Just because these impacts are harder to measure doesn’t make them any less powerful.
It has become a truism in marketing that you should stay focused on your customers. In most of our organizations, we are attempting to sell something to make a profit. We need customers.
But I often use the word community in places where most people would use the word customer. Why? Am I just being naive about what pays the bills for our organizations to continue to thrive? Am I committing heresy by not staying focused on just customers?
I don’t think so.
I believe that the dogged focus on marketing to customers alone has created a myopic view that makes us ignore many of the important people who interact with our brands.
Customers are important; most organizations couldn’t exist without them. So what is the issue?
Customers are not just listening to us anymore.
When organizations focus on only interacting with customers rather than taking a holistic view of the entire brand community, they forget that in the twenty-first century, the version of the brand represented by the organization might only be a small percentage of the brand the customer sees. Where is the rest of the story coming from?
Everyone else who interacts with the brand: the brand community.
When rolling out brand positioning, ad-free brands understand that it matters what everyone thinks about the brand—not just the customers. By understanding and planning your interactions with all of the communities around your brand, you have a chance to impact the customers’ views of who you are in a much deeper way than if you were just speaking to customers directly through marketing and advertising.
And that’s just if you are only concerned with the success of your business itself. If you are a nonprofit or a member of the growing breed of socially responsible businesses interested in benefitting the communities they serve while remaining for-profit, you’ll see even greater benefits from this approach.
So should you be focused on customers? Absolutely. But just remember that you aren’t the only folks talking to your customers about your brand. When you build a brand strategy that ensures the positioning resonates with all the people around your brand and not just customers, you’ll be on the path to much deeper, more fulfilling relationships with the communities surrounding your brand–and you’ll probably be heard by potential customers who would have never given you the time of day otherwise.
This is the eighth in a series of posts drawn from The Ad-Free Brand.
Over the past couple of weeks, I’ve had a few people ask me why my blog is called Dark Matter Matters, and since I haven’t told that story in a while, I thought I’d share an excerpt from The Ad-Free Brand explaining it (and appending some more recent information). Here goes:
In late 2008, I was struggling mightily with the question of how you measure and quantify the value of brand-related activities. As someone whose father is an amateur astronomer, I’d long been intrigued by the concept of dark matter in the universe. If dark matter is new to you, Wikipedia describes it as “matter that neither emits nor scatters light or other electromagnetic radiation, and so cannot be directly detected via optical or radio astronomy.”
In other words, it is matter out there in the universe that is incredibly difficult to see, basically invisible, but that has a large gravitational effect. What’s particularly interesting about dark matter is that, apparently, there is a lot of it. Again according to Wikipedia:
“Dark matter accounts for 23% of the mass-energy density of the observable universe. In comparison, ordinary matter accounts for only 4.6% of the mass-energy density of the observable universe, with the remainder being attributable to dark energy. From these figures, dark matter constitutes 83% of the matter in the universe, whereas ordinary matter makes up only 17%.”
I find this fascinating.
And dark matter is still a theoretical concept. Again from the Wikipedia entry: “As important as dark matter is believed to be in the cosmos, direct evidence of its existence and a concrete understanding of its nature have remained elusive.”
But it was actually reading about all the problems with the Large Hadron Collider in 2008 (at the very same time I was having my own problems figuring out how to measure the value of brand-related work) that helped me make the connection between what I do for a living and this concept of dark matter.
The Large Hadron Collider is the world’s largest particle accelerator. It was built on the border of France and Switzerland and is about 17 miles wide. One of the things that particle physicists hope to prove with this enormous project is the existence of dark matter.
I’m no physicist, but as I understand it, the accelerator shoots protons at super-high speeds around the collider, and, if these scientists are lucky, the collisions eventually might produce a few particles that will exist for only a few milliseconds and then disappear again. And these particles might prove that dark matter isn’t just a theory.
Might being the key word. In fact, noted physicist Stephen Hawking bet $100 that they won’t find anything (a bet which he may soon win). The cost of building a collider to maybe prove the existence of dark matter? About $9 billion dollars. (And as of this post, written in September 2011, three years since its was first fired up, we are still looking for evidence.)
Another attempt to prove the existence of dark matter used the Hubble Space Telescope. This image below (which I also used for the header of the blog) was taken by Hubble and first shown by NASA in May, 2007.
In this picture, you are looking at many galaxies a really, really long way away. But you can also see fuzzy gray areas all over that look like clouds. When the astronomers first looked at this photo, they thought the fuzzy areas were a problem with the image. But after analyzing it for over a year, they realized that the fuzziness might actually be evidence of dark matter.
Their reasoning? The fuzziness is actually a gravitational distortion of the light rays from distant galaxies that are being bent by dark matter on their way to Earth. The effect you see is kind of like looking at the bottom of a pond that is being distorted by ripples on the surface.
So finally, scientists had discovered some real visual evidence of dark matter.
I believe the type of activities I talk about in the book and on this blog—those related to building brand, culture, and community—are the dark matter within organizations. Often brand, culture, and community are extremely difficult to measure well, and sometimes accurate measurement is simply impossible.
That’s not to say we don’t try anyway. I’ve seen and even tried many formulas, processes, and products that attempt to measure the value of brand, community, and culture-related efforts. Some of them can provide valuable information.
Others, not so much.
Yet here’s the kicker: brand, community, and culture are having a huge impact on your organization, whether you can effectively and cost-effectively measure that impact or not.
Just as dark matter is a strong gravitational force within the universe even though it is notoriously hard to see and measure, so are many of the things that will lead to the long-term success of ad-free brands.
So that’s how the blog got the name.
One last thing: I’ve been toying with the idea of changing the name at some point down the road, perhaps re-naming it The Ad-Free Brand and simplifying things. If you have any thoughts on that, or if you like the dark matter analogy and think I should keep it, I’d love your opinion. Feel free to comment below or send me an email at chris(at)newkind.com.
My theme this week is organizational openness and transparency and today I’d like to highlight a fantastic example of an organization that has built a culture with openness at its core: Mozilla.
Most of you probably know Mozilla as the organization famous for its open source Firefox web browser. But what you may not know is that open source is more than just a technology decision for Mozilla; the open source way is deeply ingrained in every aspect of its culture.
Last week, Mozilla Technology Evangelist Paul Rouget wrote a post on his blog entitled Mozilla Openness Facts. In it, he attempts to capture as many examples of openness in action at Mozilla as he can.
Here are just a few of the examples Paul shares (read his post if you want to see the rest):
1. An open door office policy: open source contributors are welcome to drop by Mozilla offices and hang out. In fact, Paul notes that he first met current Mozilla CEO Gary Kovacs (before he joined Mozilla) when Gary visited the Paris office where Paul works.
2. Transparent financials: Sure, many companies publish their financial results publicly… because they are public companies. Mozilla isn’t, but still does.
3. Open meetings: No strategy behind closed doors here. Not only are many of Mozilla’s meetings open to the public, they often post the phone numbers (and even video conference URLs) on their wiki.
4. Public product roadmap: Want to know Mozilla’s future technology direction? No need to hire a private investigator, you can find the product roadmap on the wiki too.
Not all of these examples are unique to Mozilla and some of them are simply a part of being a responsible member of the open source movement. But what is unique is that someone took the time to catalog the openness examples.
It’s a fantastic idea, and perhaps something that every company that bills itself as open should attempt to do in a public forum.
I reached out to Paul to ask him a few questions about openness and what motivated him to compile the list of examples. Here are some highlights from our conversation:
First, I asked him about some of the challenges that come with openness and transparency. One of the points he made that resonated most with me is that “being open is not a passive task.” It isn’t enough just to make information open—you must be active about helping people find it.
“Open meetings are meetings where anybody can come. But you have to promote these meetings. Make sure the contributors hear about them. Same for mailing lists and IRC channels, open channels, but you need to find them… Just keeping the doors open is not enough,” says Paul.
Paul also pointed out another crucial lesson of organizational openness, that being open doesn’t mean everyone has the right to vote on everything.
“Being transparent and open doesn’t mean we are a democracy. We listen to everybody, but we believe that the most skilled people should make the most important decisions. And you don’t have to be an employee to be a decision-maker.”
Finally, I asked him why he took the approach of “showing vs. telling” in writing the post (which I loved, very esse quam videri). Here was his response.
“I was trying to define openness. I failed. Much easier to show. Everybody is talking about how transparent and open they are. Even big and closed companies. I say b$%^&*!t, they are not. They just use openness as a new buzz word and a new marketing thing. If you are open, show me your meeting notes, show me your source code, let me be part of your team conference calls, let me look at your metrics, and let me work with you.
I wanted to show that being open is much more than just being open source.”
Well shoot, that sounds a lot like what we are trying to show with opensource.com:)
Nicely done, Paul. Nicely done, Mozilla.
[This post originally appeared on opensource.com]
My publisher recently filmed a series of short video interviews where I discuss my new book The Ad-Free Brand. This is the third in a series of tips from the book, entitled “The Community is More Than Just Customers.”
My publisher recently filmed a series of short video interviews where I discuss my new book The Ad-Free Brand. This is the second in a series of tips from the book, entitled “Don’t Think Like Tom Sawyer.”
My publisher recently filmed a series of short video interviews where I discuss my new book The Ad-Free Brand. This is the first in a series of tips from the book, entitled “To get the brand out, get the community in.”
After working with Eugene on the story of Wikimedia’s open strategic planning process, I’d remarked to him that the Wikimedia effort was one of the most successful, large-scale collaborative exercises I’d ever seen. Eugene replied that if I thought their project was big, I should read Power and Love to get a sense for the types of large-scale collaborative projects Adam tackles, often on the scale of nations.
It’s really a wonderful, introspective book, filled not just with successes but failures as well, and is probably one of the better-reviewed books I’ve seen on Amazon.
Adam is perhaps best known for his work facilitating the Mont Fleur Scenario Project in South Africa in the early 1990s. In an incredibly difficult, post-apartheid environment, Adam brought a diverse group of people together to collaborate on ways to smooth the country’s transition to democracy. He has since led collaborative projects in India, Guatemala, and Israel, among other places around the world, and describes many of these projects in the book.
As I read, I couldn’t help but notice one thematic appearing over and over. In many of Adam’s projects, there was little hope of getting everyone involved to rally around a shared purpose, something I view as a pre-requisite for building a successful community of passion. In fact, even when a fragile collaboration was pieced together in a workshop, it often would fall apart again quickly once the session was over.
In the open source world, we are usually lucky enough to be working with opt-in communities. Meaning, people are participating of their own free will, and have almost always joined the project because they share a common belief about what it might accomplish.
But reading Adam’s book has made me wonder, do the principles we regularly discuss here on opensource.com apply in communities where passion is strong, but not everyone shares a common purpose? Can open collaboration be successful in places where competing agendas are flourishing and not everyone has opted-in to the same project?
My experiences tell me that in communities without a shared purpose, productive open collaboration is usually incredibly difficult. Our current political environment here in the United States is certainly case study #1.
In the open source world, we don’t know how lucky we have it.
Do you think an open, collaborative approach can really succeed in environments where not everyone shares a common purpose and has joined of their own free will?
I’d love to hear what you think.
[This post originally appeared on opensource.com]