How the Handover Begins

Today’s New York Times features an article that pulls back the curtain on how the AI handover is getting underway, how Google, Meta, X, et al are changing their privacy policies to allow their respective AI models to ingest and use all our activity and information.

Admittedly, I’m on high alert after reading The Handover by David Runciman, a provocative book showing how AI is not the first time we handed our decision-making to machines; it started centuries ago when we built nation-states and corporations, immensely powerful artificial entities with capacities far beyond the that of the individual.

According the Runciman, the handover starts silently and slowly. Which perhaps frames a question we must discuss and solve:  

Is it a good thing to feed AI with the near totality of human thought and behavior? 

Might doing so create a more humanistic entity that serves us, or does it create an entity that makes obsolete human imagination, creativity, and agency?

What is your brand's "Fast Car?"

 

If you watched the Grammy Awards last Sunday, you saw an audience moved by Tracy Chapman and Luke Combs performing a duet of "Fast Car." Or dial up the YouTube and watch her 1988 performance at Wembley Stadium where the unknown artist was asked to fill time when Stevie Wonder's set was delayed by a technical malfunction, and watch that song quiet a massive and restless crowd.

Why? Because "Fast Car" touches the marrow of our universal human experiences and needs. It's an example of the power of truly understanding people, and the risk of not.

Recently, pundits and politicians have been scratching their heads, puzzled why people don't agree with the data that shows the strength and resilience of the economy. To me, this is just another example of not seeing the people behind the data (in this case, the daily reality of working-class people and towns that Tracy Chapman wrote about).

Empathy is a powerful tool for marketers to better understand people. There are many research methodologies we can use to understand human context by exploring attitudes, values, and mindsets.

There is also the unparalleled value of first-hand observation — venturing into the customer’s world, standing in their shoes, seeing life through their eyes to find authentic ways to demonstrate how your brand sees and hears them. (When I worked with Ford at WPP, I admired the commitment of the Ford Truck team to spend time at rodeos, races, job sites talking with people, getting to know them and their needs. It is little surprise that the F-150 is America’s top selling vehicle.)

Each time I teach the Rehumanize brand growth system at UC Irvine and Loyola Marymount, or in workshops at companies such as Genesis Bank or Bastion, one of my first declarations is that empathy is a squishy sounding growth strategy — a way to form tighter bonds with loyal customers; inspire new products and services; understand an increasingly diverse marketplace.

Which brings me back to Tracy Chapman’s song.  Is your brand strategy grounded in an honest and empathetic insight? Can you describe your customer's world as intimately as you could that of your oldest friend? Does it tap into their hopes while also understanding the barriers they confront?

What is your brand's "Fast Car"?

Can Marketing Save Humanity?

In 2003, the philosopher Nick Bostrom proposed a thought experiment called The Paperclip Maximizer, a provocation designed to show the risks associated with AI that is not in tune with human values.

An AI is programmed to maximize the production of paperclips, producing as many as possible, optimizing procurement of all raw materials needed to achieve its goal, over time converting the entire planet into paperclip manufacturing facilities, before identifying and solving the final obstacle standing in its way — humans.

Can AI be engineered to integrate fundamental human values in its decisioning, giving weight to our sense of fairness, of right and wrong?

But what are these values, and who defines them for the world?  Judeo-Christian or Islamic values? Eastern or Western?  Those of G20 Nations or developing countries?  Generational values? 

As AI optimizes trade-offs to achieve its task, how will it know the decisions that are best for society?

I believe marketers will soon begin confronting small-scale versions of the Paperclip Maximizer. Will the company’s AI maximize decisions for shareholder returns, for environmental impact, or for customer satisfaction?

We may be entering a time when those lofty corporate purpose statements matter more than ever.  Marketers cannot solve society’s existential dilemma but they can ensure the AI in their tech stack will make decisions guided by the company’s stated brand values. 

Twenty years after Bostrom put forward the Paperclip Maximizer, the EU last week agreed to a sweeping law to regulate artificial intelligence, which the New York Times called “one of the world’s first comprehensive attempts to limit the use of a rapidly evolving technology.”

I would’ve been reassured by this had the New York Times article not mentioned that the regulators’ initial draft in 2021 was scrapped the day ChatGPT emerged because they were blindsided by sudden and unforeseen development.

This technology is developing fast.  Companies also must move fast, because we know government regulators are not born with the speed gene. 

So until wiser people sort this out, I think I’ll get a head start on my paperclip manufacturing skills. 

What Marketers Can Learn from "The Big Short."

The Big Short is more than a story about the 2007 mortgage crisis - it’s a cautionary tale about the peril of not understanding the human context behind data.  

Mark Baum, the investor played by Steve Carell, had his team gather first-hand insights to uncover what the raw data was hiding from others. They went out and talked to people on the front lines — the shady mortgage brokers; the compromised ratings agencies; the “nightclub” worker who owned five homes; the father who had dutifully paid his bill yet was about to lose his home — before deciding to short the Collateralized Debt Obligations that would soon turn toxic.  They invested the time to understand the human context — behaviors, motivations, beliefs.

What purely data-derived assumptions do we have about customers.  Do we understand how they feel and why they do what they do? 

This is the question I’ll be posing to students as I share the Rehumanize platform during my upcoming university lectures at California State-Fullerton, Loyola Marymount University, and the University of California-Irvine’s Merage School of Business. 

With empathy at its core, Rehumanize is a brand growth system modeled on the four dynamics of human relationships. Its “4Es” framework connects insights, goals, tactics, data and enterprise-wide collaboration to form a human-centered growth strategy.

Rehumanizing Artificial Intelligence

The news media has been abuzz with hand-wringing reports about how ChatGPT will undermine academic integrity. 

However, the Artificial Intelligence genie is out of the bottle. AI is happening. It will scale. Its applications will extend to many aspects of daily life, including education. (Microsoft is banking on this, having just invested $10B in OpenAI, the red-hot AI lab behind ChatGPT.) 

Every minute we spend romanticizing how things used to be is time we’re not designing ways to harness change. 

We heard similar laments years ago when students started using Google Search instead of the encyclopedia; when parents began tethering their kids with mobile phones; when social media became an addictive currency. Over time, we learned to harness something positive from each – access to knowledge; safety; a generation of creators – while remaining vigilant about their dark sides. 

Even before ChatGPT, the quality of writing seems to have been deteriorating for decades, at least within the context of the workplace. Many recent graduates struggle writing a succinct, well-punctuated email let alone a compelling presentation. 

ChatGPT is not a threat to the quality of writing; what’s at stake is the quality of thinking. 

The central question isn’t how to stop students from using ChatGPT – rather, how might educators use AI to teach valuable skills? 

For example, what if an educator designed an assignment to demonstrate the most important aspect of ChatGPT – i.e., the role of the questions posed by humans:

• Ask students to choose a subject and prompt to get an AI-written essay; 
• Then have students slightly modify the prompt and get a second output;
• Most importantly, have students write an argument comparing the two AI-scribed essays and how the different prompts altered the outcomes. 

Now we’re using AI to teach critical thinking; the relationship between inputs and outputs; forming better questions. 

What if an educator used ChatGPT to teach better writing skills by demonstrating the value of proper editing? 

• Require students to use ChatGPT to get their first draft.
• Then ask students to edit by half, requiring them to prioritize information; identify unnecessary words; learn that less is more. 

These are two small examples. Professional educators will think of better ones. 

By the way, I asked ChatGPT how an educator might use it as a teaching tool. Here is its response: 

Let’s fast-froward to ideas that harness AI to help sharpen the uniquely human skills that students, and all of us, need to succeed in life.

PS: I created the illustration for this article using DALL-E – ChatGPT’s AI graphics sibling – by inputting this prompt: "Painting of a university professor arguing with a student in the style of Johannes Vermeer."

Let's rehumanize marketing!

Every new marketing model seems to move farther from a fundamental truth – there’s a human on the other side of the screen.

We can sense this growing chasm in marketing's increasingly de-humanized vocabulary – addressable markets, cohorts, targets, segments; we can sense it in blunt, one-size-fits-all multicultural definitions and generational tags.

Despite being awash in data and analytics that tell us what customers did, most companies don’t fully understand why their customers behave the way they do.   

A Harvard Business Review Analytical Services study found that just 23% of executives believe their organization understands their customers’ motivations. (Even if this has doubled since 2019 that's still not great.)

Customer Experience, or CX, comes closest to embracing a human-centered truth. Yet here we are in 2023 and CX remains siloed in many organizations. 

Being human-centered is not about going analog. Far from it! Data and marketing technologies have given us superpowers in our ability to be more relevant and personalized.

This is about shifting our mindset – making empathy a core skill; designing more human-centered ways to organize teams; truly understanding what it means to have a relationship with a customer.

Being Human: 101

In my recent university lectures, I speak to students about human behavior and the power of empathy. With a clear nod to Abraham Maslow, here’s how I summarize for them our basic human motivations:

We create relationships as a way to help satisfy these needs, and the strongest begin are sustained through empathy – the ability to see through the eyes of another, without judgement. Empathy helps form meaningful relationships because it builds trust.

If this is true in life, why isn’t this consistently true in marketing?

Prioritizing the “R” in CRM

Several years ago I realized the mistake I had long been making.

While giving a presentation I noticed I was repeating the word relationship on slide after power-pointy slide, e.g., customer relationship, brand relationship, CRM. I hadn't yet invested time to unpack this simple word to understand the dynamics of real relationships.

That “ah-ha moment” helped crystalize a simple truth: what’s true in life should be true in marketing – how we form personal relationships should guide how we form customer relationships.

And that truth ultimately inspired Rehumanize, a marketing consultancy that helps organizations and people grow by harnessing the power of empathy and human relationships.

Rehumanize organizes goals, metrics, and teams around the four dynamics of human relationships – empathy, experiences, endorsement, and energy – aka, "The 4Es."

Connecting the Dots

Rehumanize's 4E Loyalty Model represents System Thinking – i.e., a way to make sense of complexity by viewing a problem in terms of wholes and relationships rather than its parts. In this case, the "whole" is the dynamics of human relationships.

This is what differentiates the 4E model from CX and CRM. Unlike those strategies, 4E integrates the contributions of other disciplines such as media communications, social media, event marketing, influencer strategies, product development, etc.

4E connects the dots across the enterprise – the benefit of systems thinking – to create a human-centered model to organize and analyze data, plan and prioritize strategies, and foster collaboration across teams.

Designing a human-centered organization sounds daunting, yet the necessary data, resources and skills likely already exist in your company but are disconnected from each other.

The 4E Loyalty Model is underpinned by the metrics we use every day, but live in different organizational silos, scattered across disparate reports, discussed in separate meetings.

When seen through the 4Es, these metrics realign to paint a clear picture of the opportunities, progress, and work to be done.

Teams in Marketing, Behavioral Analytics, UX/CX, Customer Care, Product and Corporate Comms all contribute. 4E creates a common vocabulary, shared planning model, and aligned KPIs.

Empathy is a business strategy

Empathy may sound soft, but 4E is a measurable, outcome-oriented system that align goals, analytics and action.

Empathy helps accelerate progress on DEI initiatives; it can build authentic cultural relevance and growth among diverse customers; it can strengthen the effectiveness of a company’s CRM investments; it helps inspire new product development.

Spiderman and Maya Angelou agree.

While it’s true that Big Data and Martech have given us marketing superpowers, it’s also true that “with great power comes great responsibility” (as Uncle Ben advised Peter Parker, aka Spiderman).

Our responsibility is to use human insights, data and technology to better serve customers – to help organizations and people grow by harnessing the power of empathy and human relationships.

Marketing leaders have always had to hold in their mind two seemingly contradictory ideas: Marketing is about customer empathy; marketing is about profitable growth.

Each statement is true. Each is less effective without the other.

And here, I step aside and let Maya Angelou summarize my 29 paragraphs in 22 words.

Will this be your first recession rodeo?

In a previous article I referenced Mark Twain’s quote, “history doesn’t repeat itself, but it often rhymes.”  If true, then this is a poem about marketing in a recession by reflecting on lessons which I will attempt to freshen...Ok, no more poetry.

I recently revisited the WikiBranding articles I wrote during the 2008-2009 meltdown that spotlighted best practices from a range of marketers.  It struck me that those of us who guided businesses through The Great Recession can share lessons we learned with managers for whom this downturn might be their first.  (Bob Barrie, Stuart D’Rozario and I had just co-founded BD’M; learning how to navigate the recession was not a choice!) 

 

Who decides if we’re in a recession? 

 

Spoiler alert:  the consumer decides.

 

News stories about the economy lead us believe we’re in a recession – the “R-word” is having its moment.  

 

Economists might say otherwise, based on their often used definition of a recession, i.e., two consecutive quarters of falling GDP.  Other economists take a more holistic view to define a recession, e.g., labor market, consumer and business spending, industrial production, and income. 

 

Taking that wider view, payrolls increased in June, as did hourly wages, both growing faster than expected, as well as consumer spending.  

All good, right?  Hardly.

 

These broader data points miss a deeper point.  Consumer spending accounts for 70% of GDP, therefore when consumers feel we’re in a recession, their behaviors follow suit.

 

And that seems to be what’s happening.  

New polls show 58% of Americans believe the country is in a recession, up from 48% in May.  Unsurprisingly, consumer confidence has declined for three consecutive months.  And all this is happening in an environment where inflation is at a 40 year high and the average 401k is taking a beating.  It’s easy to understand why consumers feel anxious.

 

Lessons from the Great Recession

 

It’s worth taking stock of the present day and see how the forces that caused the Great Recession differ from what we are currently experiencing.

   

The 2008 recession was caused in large part by greed.  Lenders knowingly dealt toxic subprime mortgages and consumers gorged on easy credit to borrow and buy more than they should.  Financial regulators were asleep at the wheel, or worse yet, complicit.  (I’m dusting off “The Big Short,” Michael Lewis’ epic recount of that economic wildfire.)

 

This slowdown is different; it was caused largely by the pandemic.  In 2020 companies worldwide shut down, reduced output, and laid off workers.  Fast forward to 2022 and we see how this crippled the global supply chain which cannot keep pace with the post-pandemic spike in demand (i.e, “pleasure revenge”), leading to inflationary prices.  

 

So here are some lessons from the Great Recession that today’s marketing leaders may want to consider. 

 

Fear was the enemy:  

In 2008, in an environment of layoffs and home foreclosures, the vast majority of consumers were not at risk of losing their income or home, yet began cutting back on spending because they were uncertain about the future.  Back then, most automotive marketers defined affordability as the problem and set out to solve that through cut rate financing and lease rates.  

Hyundai did something different.  The company correctly diagnosed fear as the problem to be solved – the consumer’s uncertainty about might happen – and launched its successful Assurance program, allowing consumers to return their new car within a year if they lost their job. 

 

Discounting didn’t differentiate:  

Marketers in many categories attacked the affordability problem through unsustainable price cuts that eroded long-term pricing power.  Circuit City filed for bankruptcy, proving discounting alone was a race to the bottom.

Best Buy, a client of BD'M that was facing the risk of becoming Amazon’s showroom, took action on two fronts by matching online pricing while also adding unique value (and customer reassurance) through its in-store Blue Shirts and in-home Geek Squad.  Both actions helped Best Buy beat online retailers by offering something they could not – service and support.  

 

Customers have long memories:  

Many B2B companies slashed support budgets – e.g., downsized sales force, training, and customer service – as a way to cut costs, leaving their customers to dangle in the economic wind.  

Other companies found unique ways to get closer to their customers.  American Express launched Small Business Saturdays to support main street merchants hammered by the downturn.  Ford Dealers still recall how Ford Motor Credit was their lifeline during the Great Recession, extending much-needed lines of credit.  Allergan ran outreach programs to train physicians to run a more profitable medical practice.

 

Don’t let a good crisis go to waste:  

If necessity is the mother of invention, then a recession is the father of cool objectivity.  A recession creates a rare opportunity to reevaluate strategies that worked in good times; a time to think how you might refocus and reprioritize your product portfolio, marketing and media mix for the road ahead.

BD'M worked with United Airlines to develop Travel Options – an a la carte pricing program that enable flyers to design and pay for the experiences they valued – a merchandising strategy United still uses today.

 

Don’t put innovation on pause:  

Customer, marketplace and competitive dynamics move too fast to make standing still anything less than a corporate death-wish.  Even in a recession, consumers have needs that remain unmet by the competition.  

Remember, Apple waved its magic wand and lifted our spirts (and opened our wallets) during the Great Recession with must-have iPhones and MacBooks.

 

We are the supply chain problem.

We can’t go a day without hearing, or sharing our own story, about a seemingly simple purchase that is taking eons to arrive, an impatience that has heightened in a next-day culture.

In casual conversations we hear people cite the cause as having something to do with lazy workers, politicians, Russia’s aggression in Ukraine, or myriad other heard-then-repeated explanations.

Turns out, we are the problem: Our business models, our disconnected systems, our labor practices, our personal shopping choices. We are the forces straining the system.

That’s why this WSJ video is so fascinating. It starts with the sobering truth, that global demand is greater than what supply chains can handle. From there it unpacks the thorny thicket of disconnected problems raging through the system – i.e., through factories, ocean shipping, ports, trucking, and distribution centers – all made worse by rapid changes in DTC business models and the resulting shift in consumer shopping behavior.

And, spoiler alert, this story might not have a happy ending. Our supply chains may be forever strained without a massive rethink of how we solve – and connect– the problems.

For those of us who don't have time to binge a 54 minute video, here are some key highlights:

Supply Chains scaled down when Covid hit (e.g., capacity, inventories, labor, etc), expecting that global consumer demand would contract.  It didn’t. 

Shipping ports are a fragile point of failure.  Our ports, most notably the Port of Long Beach here in the US), represent a singular intersection of the problems spanning ocean shipping, trucking, labor and consumer demand. 

We don’t have enough truckers in the US.  Nearly 10M people have a CDL license yet only 3.5M are driving. Why? They are poorly paid (new drivers barely earn minimum wage), are seldom home, and work 14+ hour days. 

Seismic changes in consumer behavior, acclerated by eCommerce and DTC models, are further straining supply chains, which must now deliver more products to specific addresses instead of mass deliveries to fewer big box stores. And as we know, more and more consumers embraced online shopping during the pandemic 

Distribution centers experience high employee burn-out. People working at these fast-paced, always-on distribution centers experience work-related injuries at a rate that’s nearly double coal mining, construction, and most manufacturing industries. (Turnover at many of Amazon’s distribution centers exceeds 100%.) 

We have a shortage of last-mile delivery drivers.  These are the drivers that more often than not are working for delivery partners subcontracted by Amazon and others. (This is why Amazon started its own package delivery company, which will in time be the largest parcel delivery company in the US.)