Once upon a time, there was a market controlled by supply and demand. Consumers acted in self-interest, buying products that were better or cheaper, and prices had to be set accordingly. Workers were simply another market; they were bought by businesses if they were better or cheaper. Natural resources were inputs, and the cheaper they were, the better — if no one was charged for them, they weren’t even considered part of the economic formula at all.
Lately things have been changing. Organic food (which, to the purely self-interested consumer, is merely more expensive) is the fastest growing segment of the US food market. The iPod (whose functionality was barely any different from a myriad of other mp3 players) created a frenzy of consumer buying. Google seems capable of creating better apps for free than a dozen software companies (while paying their employees more, too).
A great article by Umair Haque epitomizes a new tone in business theory: the Awesomeness Manifesto. His recommended business model is to create insanely great stuff that makes your customers authentically better off, have employees who love what they do, and run your business ethically. Is advice like this worth following? Is it just a fad with a cute name, or is there real economics behind it? Let’s take it point by awesome point.
The Awesomeness Manifesto has four pillars:
Insanely great stuff. Umair describes this as products that delight, inspire, and enlighten. Putting this as one of his four core values reflects our society’s recent discovery of great user interface. We’re waking up from a long, cold winter where the usefulness of a product was measured by its “functionality,” and we’re finally realizing the importance of enjoyment. Our lives are filled with mundane tasks, with things we must do even if we’d rather not. Many products have helped us make those chores go by more quickly, but few have made them more fun. Products like the iPod (Umair’s example) have only scratched the surface…after all, listening to music was always mostly fun. How clean would your house be if your vacuum cleaner were also a great dance partner? How much more often would you cook if your fridge displayed your friends’ recipes? …based on what food you had in the fridge? All of our checkbooks would be balanced if the software that balanced them were more like a video game…you get the picture. We are only just entering the Era of Great UI Design.
Thick value. “Thick value is real, meaningful, and sustainable. It happens by making people authentically better off.” This follows many, many articles written lately on how to succeed in business. They are insistent: do something you genuinely believe will help people. Choose something you are passionate about. Be of service. Offer more than you get in return. This business model isn’t just about the product a business offers, it’s about the relationship between the business owner and the core of their business. Most economic models provide dry logic for business planning, and are unconcerned with how the business owner feels. In the old model, business is about making money, not about fulfillment, not about doing something you love. The old model is the venture-capitalist model: find an investment that will increase your capital.
The new model, the Awesomeness model, is the entrepreneur’s way. I’ve known a lot of serial entrepreneurs, and very often they will have six “failed” businesses before they succeed; or they will “fail” at the same business for ten years before succeeding; or sometimes, they have only “failures” to their credit. But these entrepreneurs are driven to start another business, and are happier than most of the people I know who have more money but work for someone else. These businesses, these projects, are not just attempts to make money — they are love affairs. They are children that grow and have lives of their own, and the tiny possibility that one of them could become a wildly popular meme in our society is enough to keep an entrepreneur going for a very, very long and frugal time.
Thick value is what indie entrepreneurs do naturally, and it is becoming popular because we now live in a world where indie entrepreneurs can (and do) become rich and famous. And that is a wonderful place to be, whether you’re in the business-business or the consumer-business.
Love. Now we’ve moved from the business owner to the employees. Are they automatons, doing what they are told? Are they there only for the paycheck? Or do they love what they do? Workers are a market, and the new wisdom holds true here as well: provide them with more than they expect. Create a workspace that inspires and delights them. Why? Because engineers who love their company and feel that their job fulfills their purpose in life create insanely great stuff! Because sales people who think their company is the cat’s meow will have enthusiasm that is infectious. Because workers who are there for more than the paycheck will provide more to your business than the amount you pay them. Love your employees, provide them with fulfilling work, make your office more cozy than their living room, and they will be worth their weight in gold.
Ethical production. Why do so many people pay more for local or organic food? Why is Starbucks offering fair trade coffee? Why do oil and pharmaceutical companies spend millions to advertise how “green” they are?
Game theory has always been ahead of economics on this one. Plenty of research shows that people aren’t motivated purely by self-interest. Other strong motivating factors include delayed benefit, thin altruism, thick altruism, and social pressure. Delayed benefit is the idea of good will — if you do something nice for me, I’ll do something nice for you in return. It’s about brand loyalty and repeat customers, and is why good customer service is important. Thin altruism is the desire to see someone else be happy. It’s why we buy our friend’s nephew’s cd, or shop at the same local bakery year after year. Thick altruism is about doing the right thing. Social pressure is about doing what other people are doing, and about being seen to do what others are doing. Thick altruism and social pressure have really been pushing this change lately, and it’s due to the tight-weave of the internet.
Not so long ago, we got our information about products primarily from one source: mass media, which was controlled by The Powerful (an all-encompassing term for big company executives and others who tend to be extremely wealthy). But now, due to the accessibility of the web (bless you, net neutrality) with its blogs, videos, tweets, rss feeds, etc, we can hear the opinions of just about anyone and affect the opinions of tens of millions of consumers. This lets people who are passionate about something (like the environment or social justice, or even just a great UI) promote the products or companies they like. And here’s a little tidbit about human nature: people with overactive consciences tend to be passionate about changing consumer behavior. So it’s no surprise to me that we are entering a period where social justice and being green have become trendy.
From a business perspective, it’s important to realize that nowadays people do consider the larger effect of their purchases, so play to their consciences as well as their pocket-books.
Awesome Economics is here, and it’s not going away. We’ll only see more of this type of advice, and companies big and small are already on board. Will you be a part of the Awesomeness Economy, or will you be left behind, running a company that you don’t love and that no one else loves either?
Really, what have you got to lose?