Strategy. Innovation. Brand.
From Bitcoin to MintChip?
The present.
I first wrote about Bitcoin almost a year ago. At the time, they were selling for $105 each. I didn’t buy any because they had just surged in value and it seemed like a bubble that would surely burst. Today, they’re selling for $664. So much for my ability to forecast the world’s first virtual currency.
There’s a lot that I like about Bitcoins. Their value is based on supply and demand, not government fiat. They’re anonymous like cash but they’re easier to manage and harder to lose. I thought maybe they were theft-proof but I was wrong about that.
On the other hand, there are a lot of things not to like about Bitcoin. Like the fact that so much of the infrastructure is run by shady characters and incompetent (or malevolent) twenty somethings. One of the leading Bitcoin users went by the name Dread Pirate Roberts before he got busted. Bitcoin exchanges – including the largest, Mt. Gox — have been plundered, apparently through sheer incompetence. Just the other day, the Financial Times reported on the first “unnatural death” associated with the Bitcoin universe.
Yet, the price holds steady and shows no signs of returning to where it was a year ago. To be fair, the price skyrocketed to $1,151 in December and has fallen back since – so it was a bit of a bubble. But I would still be happy if I had bought a few Bitcoins at the time I wrote my first article.
And now – apparently – the originator of Bitcoin has been identified. The original Bitcoin manifesto and block of code was published by someone using the name Satoshi Nakamoto. The world assumed that this was a pseudonym and spent many sleepless hours trying to figure out who the “real” author was. Who could write such compact, elegant, and brilliant code? Now Newsweek claims to have found the author. His name is Satoshi Nakamoto, a toy train enthusiast who lives near Los Angeles. (Late breaking news — maybe he’s not the real guy after all).
So, what’s next? Bitcoin has whetted our appetites for a currency that’s not controlled by governments or banks. We seem to like a currency that’s transparent and based on the laws of supply and demand rather than politics. Now if we could just get rid of the crooks and fools.
So where to turn? Perhaps Canada. In 2012, the Royal Canadian Mint announced the MintChip project – a digital
The future?
currency that’s not quite the same as Bitcoin but similar. MintChip got a lot of press when the Canadian government launched the MintChip challenge to create an ecosystem of MintChip apps. The publicity died out quickly but as recently as September 2013, Marc Brûlé, the head of the project, said MintChip is still moving forward and hinted at a MintChip 2.0.
For me, the big differences between Bitcoin and MintChip are that MintChip is run by grownups and backed by a credible government. It has many of the advantages of Bitcoin but few of the disadvantages. After all, we all trust Canada don’t we?
Beauty and Success
Who’s fastest?
Let’s say you interview a candidate for a managerial position in your company. She’s incredibly smart, with an IQ in the 95th percentile. Because she’s so smart, you conclude that she’ll make a great manager. You hire her.
What mistake have you just made? I usually call it the halo effect, a term coined by the psychologist Edward Thorndike. You form a favorable impression about a person – because she’s smart – and therefore assume that she would have other positive attributes – like being a good manager. It’s as if she were wearing a halo. The fallacy is that the attribute you observe may not be related to the attribute you assume. In our example, just being smart doesn’t necessarily mean the candidate will be a good manager – it takes a lot more than intelligence.
We often see the halo effect with physical attractiveness. (The technical term is the physical attractiveness stereotype). There’s been a wealth of research that shows that attractive people are generally more successful than less attractive people. You might expect this in the fashion industry, but it also seems to be true in politics, law, business, and medicine – fields where physical beauty wouldn’t seem to be related to performance. (For a general overview of such research, click here).
Until recently, I’ve assumed that the physical attractiveness stereotype is just a special case of the halo effect. People assume that an attractive person is also good at other (often unrelated) activities. Because observers make that assumption, the attractive person may get more opportunities to advance than a less attractive person. It’s not the beautiful person’s fault. It’s a cognitive bias from observers.
But what if it’s not? What if the genes that make a person attractive also make him or her more athletic, more competent, and more intelligent? What if beautiful people really are more capable than us average shmoes?
Erik Postma’s recent research seems to point in exactly that direction. Postma studied the relationship between attractiveness and success in the Tour de France bicycle race. If physical attractiveness separates the winners from the losers in such a grueling event, it would strongly suggest that the underlying mechanism that causes attractiveness also provides other advantages as well. Maybe beautiful people really are more capable.
And that’s exactly what Postma found. Postma asked 816 people (72% female) to rate the attractiveness of 80 riders in the 2012 Tour de France. He then correlated attractiveness to success in the race. After a lot of statistical manipulation, he found that “the top 10% of cyclists in the race were reckoned 25% more attractive than the bottom 10%.” (Postma’s original article is here. Popular summaries are here, here, and here. For an interview with Postman about his article, click here.)
As always, there’s still a lot to learn. For one thing, only men were rated. Does the same effect apply to women? Who knows? Additionally, women rated attractiveness somewhat differently than men. The riders rated most attractive by women were among the top cyclists in terms of overall endurance. The riders rated most attractive by men tended to be stronger at sprint events, where speed is more important than endurance. Why the difference? Again, who knows?
What does it all mean? It’s not completely clear but attractive people may just be more capable than less attractive people. The evidence is not strong but it’s enough to make me think that I should get a facelift before my next bike race.
Should You Listen To Customers?
An elegant solution.
I used to teach a research methods class for social sciences students. I emphasized that there’s a big difference between researching animal behavior and human behavior. Animals can’t talk so you have to observe them. The more closely you observe, the more you’ll discover.
People, of course, can talk. So we often listen to them. That can be a big mistake because what we say often doesn’t correspond to what we do. For instance, we overestimate our contribution to a team project. If we remember something vividly, we assume that it happens more frequently than it really does. If a task is enjoyable, we underestimate how long it lasted. If a task is onerous, we overestimate the time it takes. (It’s the theory of relativity: time moves slower when you’re with your relatives.)
By listening to customers, we’ll collect many of these distorted views of reality. If we bake these distortions into our product strategy, we’ll develop products that don’t match what people really do or even what they really want.
Steve Jobs famously said, “It’s not the customer’s job to know what they want.” I’ve always interpreted this to mean, “Customers can’t tell you what they want. They probably don’t know. But if you observe them closely, you can figure it out before they do.” Many people see Jobs as a great technologist. I see him as a great observer of human behavior.
I thought of this the other day when my car informed me that I needed to add windshield washing fluid. That meant I needed to open the hood. I open the hood so rarely that I forget how to do it. That meant that I had to find the owner’s manual to figure out how to open the hood to add the fluid.
For most of my life, I would have accepted that this is just the way things are. I wouldn’t have questioned it. I certainly wouldn’t have thought to tell a market researcher that what I really wanted was to add windshield fluid without opening the hood. Like Steve Jobs said, that’s not my job.
Now that I’m older and grumpier, though, I asked myself if there weren’t a simpler way to add windshield fluid. With a little research, I found that Volvo had already designed such a car. In 2004, Volvo presented a concept car designed by women. The designers observed human behavior and noticed that people open their car’s hood only to replace the windshield fluid.
So why, they asked themselves, design a car with a hood that opens? Volvo could build a simpler, less expensive, and stronger car by eliminating the hood opening. They could easily design a different way to add the windshield fluid (as in the picture). Owners could drive a safer, less costly car and meet their window washing needs more easily. It’s a win-win-win. (By the way, a mechanic can easily remove the entire front end of the car at the shop).
If you listen to customers, you may get incremental improvements to products that you already offer. If you want breakthroughs – and radical new products – you need to observe customers. It’s time to treat customers like animals and stop listening to them.
Happiness, Brand, and Innovation
World leaders.
Are Finland, Sweden, and Switzerland the three best countries in the world? You might think so based on the latest rounds of research.
In the past, I’ve reported on the World Happiness Report (WHR) and the Global Innovation Index (GII). Both studies are produced regularly and measure a country’s ability to promote specific outcomes. The WHR measures how happy a country’s citizens are and why. The GII measures how effectively a country promotes and protects innovation, especially in regards to scientific and technical innovation.
In a previous article, I compared happiness and innovation. There seems to be a connection, though it’s difficult to say whether happiness promotes innovation or vice versa. Or perhaps some hidden, third variable promotes both. (By the way, I’ve also written about how happiness is measured).
This year, in addition to the updated versions of WHR and GII, I’ve added another — FutureBrand’s Country Brand Index (CBI) — that measures the strength of a country’s brand. Now in its eighth edition, CBI asks citizens of many countries to judge the most attractive countries to produce “future-positive predictions”. WHR and GII aim to measure the actual phenomenon — either happiness or innovation. CBI measures perceptions; how is a country perceived by citizens of other countries.
Putting together the three studies reveals a great deal of overlap. In the table below, I’ve listed the top ten countries in each report. Countries that make the top ten in all three studies are in red. Countries that reach the top ten in two studies are in blue. Countries that make the list in one study are in purple.
Switzerland is ranked number one in the CBI and GII studies and number three in the WHR study. It’s happy and innovative and has a positive reputation.
All of the Nordic countries — Denmark, Finland, Iceland, Norway, and Sweden — make at least one of the top ten lists. Sweden and Finland make all three. Denmark and Norway make two. Tiny Iceland makes one.
The USA makes the top ten in brand and innovation but ranks only 17th in happiness.
The lists are dominated by European Protestant countries or their offspring. Asia is represented by only three countries — Hong Kong, Japan, and Singapore. African and Latin American countries don’t make any of the top ten lists. The degree of overlap makes me wonder exactly what we’re measuring in these studies. It could be that happiness, innovation, and brand power are intimately related and that these studies measure the strength of the relationship. On the other hand, this could be an example of cultural bias. Or it could be a halo effect. Countries that are successful in one area may be viewed as successful in other areas as well. Of course, the reverse may also be true.
I plan to delve into each of these studies more closely in the future. In the meantime, please review the table below and help me sort out the relationship between the variables and the countries. What causes what?
| WHR 2013 | CBI 2013 | GII 2013 | ||
| 1 | Denmark | Switzerland | Switzerland | |
| 2 | Norway | Canada | Sweden | |
| 3 | Switzerland | Japan | UK | |
| 4 | Netherlands | Sweden | Netherlands | |
| 5 | Sweden | New Zealand | USA | |
| 6 | Canada | Australia | Finland | |
| 7 | Finland | Germany | Hong Kong | |
| 8 | Austria | USA | Singapore | |
| 9 | Iceland | Finland | Denmark | |
| 10 | Australia | Norway | Ireland |
The Curse of Knowledge
You know too much.
Long ago, when I was a product manager at NBI, I gave a speech on local area networks (LANs) at a customer conference. LANs were just becoming popular at the time and industry analysts were debating which standards would prevail.
NBI was betting on a standard called CSMA/CD. IBM was betting on token ring. The objective of my speech was to persuade the audience that CSMA/CD was the better choice and, therefore, more likely to prevail in the long run. Token ring, on the other hand, was risky and might become a dead end product – much like IBM’s OS/2 operating system.
I knew the technology cold and I gave a great speech if I do say so myself. I highlighted the technology advantages of CSMA/CD. I set criteria around the key functions that CSMA/CD could perform and token ring couldn’t. I know that most audiences admire IBM so I didn’t take any cheap shots at Big Blue. A cheap shot would weaken my credibility, not theirs.
At the end of the speech, I was busy patting myself on the back when a very nice woman came up and asked a simple question: “What’s a LAN?” Throughout my speech, I had defined an array of advanced technical concepts but had forgotten to define the basics. My face turned red as I realized that I had just made the rookiest of rookie mistakes. I had asked the audience to come to my house rather than going to their house.
In the trade, this is known as the curse of knowledge. I knew the audience wouldn’t know the finer points of CSMA/CD but I assumed – erroneously – that they grasped the basics. I didn’t need to explain them. I never even thought about it.
In Made To Stick, the Brothers Heath tell the story of “tappers” and “listeners” which was the subject of Elizabeth Newton’s dissertation in psychology. Tappers received a list of popular songs and were asked to tap out the song on a tabletop. No whistling or humming allowed; just tap on the table. Listeners were supposed to guess the song.
Tappers were confident that they could convey the song successfully at least 50 percent of the time. But, in fact, listeners guessed the song correctly only 2.5 percent of the time.
Why were the tappers so confident? Because they could hear the song in their head. They heard the taps but they also heard so much more. As the Heaths point out, “Once we know something, we find it hard to imagine what it was like not to know it. Our knowledge has ‘cursed’ us. And it becomes difficult for us to share our knowledge with others, because we can’t readily re-create our listeners’ state of mind.”
When I gave my speech on LANs, I could hear the entire song in my head. I knew how it sounded. I knew how to orchestrate it. I knew where to pause. I knew where to put in jokes. I knew it cold.
The only thing I didn’t know was what was in my audience’s head. That’s the curse.
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