Monthly Archives: July 2008

Does your team suffer from the Nash Equilibrium?

Ever argue over a contract? Feel caught in a Mexican stand-off? Have a harsh debate with your spouse? You’re probably caught in the Nash Equilibrium.

John Nash was a mathematician who went mad, as immortalized in the film A Beautiful Mind, and he created the game-theory concept. The idea is obvious, once you think of it — there are occasions when individuals who compete, if they stick to their own strategies, end up with a lesser outcome than if they had cooperated.

A classic example is men competing over women in a bar (bear with the ownership construct, female readers, we don’t mean to offend and you must admit, men compete). Say three men walk into a nightclub and see four women; three of the four women are moderately cute, and one is a stunning model.

If each man follows his “individual best strategy,” he will likely try to win a date with the model, ignoring the other three women. This of course will mean (a) only one man can possibly get the model, and (b) if the girls are friends, the guys’ ogreish behavior may alienate all of the women. Ending: No one gets a date.

Now, rewind. If the three men change their strategies, they could each flirt with one of the three cute women, and ignore the beautiful model. The probable outcome in this scenario is each man will find a woman as a date, six people walk home happy holding hands (and the model struts off in a huff).

Trouble is, Nash wrote, the latter scenario — with a more optimal outcome — is not an equilibrium. All parties pursuing their selfish interests are more likely to use selfish strategies, so the “equilibrium,” or balance of opposing forces, will probably be chaos. Men get selfish. Individuals fight at odds with each other. People grab for resources. Everyone neglects the big picture, and the greater good is lost.

Hey, we just explained much of human history.

Which brings us to marketing. Many campaigns today require cooperation among multiple parties, and success usually hinges on the parties all working together. Unfortunately, multi-dimensional cooperation is often hampered by disputing interests — as suppliers and advisors and producers and creative shops and a host of other groups negotiate back and forth with each other. This turmoil is exacerbated by the economy of the 2000s, in which small business groups band and disband efficiently to achieve goals (vs. the old models of giant corporations like GE and IBM controlling all levers). As the global economy has become more networked and fluid to form groups to meet short-term project demand, the competing interests often make goals hard to achieve — if each party follows its individual strategy without evaluating the best possible group outcome.

There is one recent positive example of competing parties overcoming the Nash Equilibrium. The United States and Soviet Union somehow managed to avoid nuking the Earth in the Cold War of the 1940s-1980s. Both nations had a strong individual incentive to strike the other first, in hopes they would knock out missiles, achieve victory, and then rule the planet … but sanity prevailed.

Such sanity is rare. Optimal success, not just individual success, requires a level of cooperation that individuals usually cannot muster. In the absence of the big picture, small teams will follow their own incentives … into the failure of the Nash Equilibrium.

Microsoft’s Mojave campaign: See, we don’t stink!

Microsoft’s Vista operating system has a bad rap. Word is machines can’t handle it, even though it comes in five flavors. It’s slow. It crashes. It tries to cram 10 pounds of GUI into a 5 pound laptop. Installing Vista is like having dental surgery performed by your proctologist.

To counter these perceptions, Microsoft has launched a microsite that unveils a “new” operating system called Mojave to consumers, who are delighted and then surprised that it’s really Vista. A brave move, to take the heat head on. Also a great case study in how once brands go sour, it’s tough to bounce back.

Tx Matt Hunsberger.

Your cell phone, the seed of revolution

Sydney-based futurist Mark Pesce offers a mind-spinning take on mobile networks in this presentation at the Personal Democracy Forum in NYC. The upshot: social media is not tech toys and texting phones, but instead a revolution in human consciousness.

1. There is always a lag between the emergence of technology and humans discovering how to use it. The printing press was invented in the 1400s, centuries before it led to liberty. The internet emerged in the mid-1990s and we are just now leveraging its network and platform. Our human bodies themselves have had the technology — muscles, big brains and opposable thumbs — to build cities for 3,000 generations, but it took a while for our mental software to know what to do. When technology arrives, the outcome is always delayed and usually unexpected.

2. The next big wave is the mobile phone, and this new tool will once again shift human culture.
Half the world’s population now has cell phones, and by 2011, 5 billion people will be able to communicate anywhere by voice, video or text. This doesn’t mean people will play with iPhones. It means human minds will finally have a group connectivity to act as giant, viral pieces of software.

3. The new hyper-connected human software leads to a world where groups, not individuals, are empowered.
And this is where the futurism gets trippy. Most Westerners view democracy, or at least liberty, as the highest plane of social existence, where capital, labor and people can move at will. But Mark suggests the new networked world of humanity will make groups rise up with their own collective incentives and consciousness, even if those are at odds with individuals or the governments individuals have voted for.

Mobile communications will become the ultimate lever for small groups to move the world. The question is whether that will be for good or evil, and how in the world anyone can stop this genie now that it is out of the bottle.

Our inability to see trends

Business managers usually have two requests: forecast and then measure results. Marketing directors and media planners happily comply. Trouble is, the measurement approach usually looks at tiny intervals of time — a few weeks, a month, a quarter at best. Quant jocks are like ants crawling through the cracks of massive momentum, trying to predict inclines without seeing the real hills ahead.

What macro trends are you missing? Are you really paying attention?

Seth vs. Scrabulous: The hell with freedom

Today was a bad day to be free. It all began when marketing guru Seth Godin announced on his blog he was opening a special “tribe” club only for people who spend $14 on his next book. Seth’s move drew cries of outrage from social media intellectuals offended at the idea of a new pay-for-access walled garden.

Next up, toymaker Hasbro finally twisted Facebook’s arm into shutting down the hyperpopular online game Scrabulous in the U.S. and Canada. Scrabulous, which now attracts 500,000 users daily, is a free knockoff of Scrabble created by two Indian brothers and has become a flashpoint in the debate over fair use and trademark protection in the wild world of the web. Hasbro is hoping to lure users to its own version of online Scrabble, now in beta.

Let’s pause and consider this. Both Seth and Hasbro have a point. Seth creates ideas, has to make a living, and so wants to charge money to attract a fan base of loyalists … for whom he’ll provide more access and special content. Hasbro owns the rights to Scrabble in North America and had a legitimate claim that Scrabulous is an unfair copy.

So why the turmoil? Don’t you expect to get paid for your work? Would you be happy if someone stole your idea?

Consumers in just a few years have grown accustomed to getting everything for free. The challenge for content producers who hope to profit is this groundswell of “free hunting” is almost unstoppable. If a newspaper web site charges admission, users flow around the barrier to find it free elsewhere. If Seth charges for access, odds are his blog readership will decline and intellectuals will flap to another bright candle. (Bloggers seemed most upset over Seth’s move, assuming that someone who writes about building communities would understand that communities no longer want to pay admission.)

Today’s reality is almost comic: People get upset if they can’t get knowledge, content, or transactions for free. Seth and Scrabble have rights. The entire economy is based on expending energy to create something in exchange for assurance you will get paid. But that old model is starting to slip, perhaps driven by the easy access the internet and Google have provided to all the world’s information. Seeing a bar that low, humans now resent any higher barriers.

And it’s a test for your business as well. What will you do when your competition gives it away?

McDonald’s, just the stop for interplanetary road trips

Someone has cut an eerie crop circle in Nebraska that looks an awful lot like a McDonald’s ad. At first glance, this “media placement” is downright silly, since only 0.58% of the U.S. population lives in Nebraska, you can’t see it without a plane, and surely participants walking in the maze pack a picnic.

Yet all this goofiness points out the new media strategy of seeding a viral campaign — using lever A to set off a cascade of people talking B. Someone at McDonald’s, we bet, was willing to invest a few thousand dollars in cutting up a cornfield in hopes that web sites would pass along the message. The cost of creating corn mazes has fallen in recent years as companies such as The Maize give farmers GPS-guided tools to design paths that resemble almost anything.

Or perhaps space aliens just get hungry.

Via Marta Kagan and Brandcurve.

The randomness of success

We’ve been thinking of the book Positioning recently, which explains that for each brand category only a few names can fit in the mental ladder within consumers’ heads, and have begun to wonder if some success is simply random.

This doesn’t mean the brands that win don’t have smart leaders or brilliant marketing or killer benefits. We think, though, that in any crowd of human ideas — and the human crowd is vast — there may be thousands of concepts qualified to make it to the top. The photo of Rio, above, shows the lights of just one city on the planet. Imagine the millions of people in that photo, and how many might have the brains and talent and ideas to create a leading politician, celebrity, religion or product.

If there are just a few slots for success, and many qualified candidates, are the winners merely random? Is the highest rung of any marketing ladder open to those who are accomplished and who also happen to win some lottery of fate? This dynamic — random success — would be fueled by word of mouth. Marketing, no matter how strong, can only create impressions; as consumers listen they begin to tip toward one or two leaders in each category, amplifying the message within their communication networks, until an Obama, McCain, Twitter, Brad Pitt, Facebook, Tiger Woods, Rolex, or Apple gain a far greater share of mind than their human/component parts truly merit.

One thing is true: No matter how smart your marketing, you’ll never be certain of winning. The odds are many, many others just as qualified as you are vying for success.

Photo from Dear God.

The German Obama

We’re constantly interested in the nuances other nations/cultures bring to marketing communications; like those little logos that always pop up in the lower right of European magazine ads. Consumers in each culture are trained to look for clues — hey, bottom right, that’s the brand!

Which brings us to this Obama poster for his speech in Berlin. Politics aside, there is something about the angular design that is mesmerizing. The Bad Banana blog says it’s an ode to the Bauhaus design school in Germany from 1919 to 1933, which left an imprint on a lot of other posters that created strange vibes after World War II.

If you work in design (and we don’t), this poster is worth a second look. What is it with the graphics that evokes such energy?