Veiled Viral Marketing

Now that I follow some really informed companies, consultants, and trendwatchers, it is rare that a new business strategy hits me over the head with surprise. I may not be able to take advantage of new business ideas that are bouncing around the innovation and entrepreneurship domains, but I usually hear about them pretty early.

 
OK that said, here is a new one that is just being experimented with. I think it has potential, but definitely needs some work.  

The best names I have heard for this strategy so far is "veiled viral marketing" or "anonymous friend recommendations". I am sure all of you have received typical commercial recommendations. Based on all the tracking that companies like Facebook and Google do, they can show you ads for something that you are more likely to be interested in than something totally random. Sometimes they are on target and sometimes they are way way off. But on average, it is better to use targeting than most of the other options out there.  "People like you have rated this movie 5 stars."  "Your friends have given this book a thumbs up."  You have also received the more direct social recommendations. "John Franken just bought a new pair of Nikes."  "Sally Stansfield the NYT article “Romney wins Super Tuesday.” 

The idea behind this new strategy is to come in somewhere in the middle. Lets say you want to make a recommendation to a friend but don’t want them to know the recommendation comes from you. What if Facebook tells you “A friend who prefers to remain anonymous recommends to you personally the movie “The Lorax."

I am pushing the envelope with a movie because there are few reasons someone would want to remain anonymous there. But one application is for sensitive information. What if you received a private message in Facebook that says “One of your friends who would prefer to remain anonymous would like you to visit the site “How to talk to a gay friend.” And of course there would be a link to the site. Perhaps a friend isn’t ready to come out of the closet yet and wants to make sure you can handle it before telling you. The same service would work for serious diseases as well - “One of your friends, who would prefer to remain anonymous, would like you to visit the site “How to talk to a friend with cancer.”

The other example I have seen I am less sure of, but maybe it could work if it were designed a little more friendly. What if you received a private message on Facebook that said “One of your friends, who prefers to remain anonymous, thinks you would look great in a J Crew navy blue rugby shirt.” And of course has the embedded link to the J Crew site. 

The one that I saw was for a support bra, but that one is over the line if you ask me. Hey, you can’t fault them for thinking outside the box. How many times have you really wanted to make that kind of recommendation but didn’t have the chutzpah?  But I am not sure the receiver would appreciate it very much.

Fast Follower or Infringement??

(Note - I have to give credit for finding this to Business Week, but you have to be a subscriber to see the article online, so I can't link to it).

Here is a business model that is right on the gray line between intellectual property infringement and fast follower. There is a German company called Bamarang that is a pure fast follower. A few months after a company called Fab.com launched in New York City (it is a flash deal site for vintage accessories like vinyl records, Bauhaus posters, etc), Bamarang came out with an identical business in Germany. And as a web company, it is just as accessible to customers all over the world. What makes their "cloning" a little over the top is that the color scheme of the site, the layout, typeface, and even the photos on the home page look exactly the same as Fab. There was once a lawsuit between Apple and Microsoft over the similar look and feel of their Office products. But apparently Bamarang knows how to skirt these laws by registering only in Germany.

They cloned EBay in 1999. Since then, they have cloned eHarmony, Groupon, Facebook, Zappos, Airbnb, Pinterest, and 100 other web-based companies. They don’t need to spend a penny on R&D, just copy and paste. They create the company, build up some sales, and then sell it off to VCs for hundreds of millions of euros. For example, their Groupon clone was the top deal of the day site in half of Europe. Because they know how to get around international copyright and trademark laws (they don’t register in the US – the home country of the companies they are cloning), there is little the US companies can do. Groupon threw in the towel by buying the clone for shares currently worth about $1 billion.  Not bad for a simple copy and paste action. 

One last note – would you believe that the founders are brothers whose parents are corporate lawyers?

Innovation in Social Recommendation Systems

Do you know anyone who has so much expertise in a particular domain that you would trust their recommendations without feeling any need to do research of your own? In fashion? In music? Phones/tablets? Cars?

Here is the business model (article in Entrepreneur magazine March 2012 edition will be available online March 17). The trusted experts create an online portfolio of products that they can continually curate depending on how fast the domain changes. If they are a music expert, they might keep adding to their "music collection". If they are smart phone experts, they might delete the old ones as the add the new ones. For cars, perhaps they have specific recommendations for different kinds of friends (families, singles, price ranges, etc). The idea is that they create this portfolio on a special web site designed for this purpose (StyleOwner.com) and each item is linked to the company that sells it. They can link through Facebook, Twitter, or LinkedIn so that their connections can see their “clothes closet” or “driveway.” They don’t actually have to own the product, just find it worthy of their personal recommendation. If any of their friends purchases the item, the friend-expert gets a cut, StyleOwner gets a cut, and the store gets the rest. 

This business model relies on the friend-friend relationship. It takes trust because if they see the recommendation, do independent research, and then go directly to the store, StyleOwner gets zilch and the friend-expert just gets a thank you. The trust has to be so strong that you are willing to buy it just because of the recommendation and do it right there and then. Are there friends you trust that much? For wine? Movies? Restaurant reservations? The possibilities are endless, but only if there are product categories where trust is all that you need.  Having a central location to put them all is helpful, but no guarantee of success.

Ethical consequences of Augmented Cognition

A very hot topic today in the Human Factors discipline is augmented cognition.  There are so many ways we can enhance the sensation, perception, memory, attention, decision making, psychomotor coordination, etc.  The military is the biggest and was the original customer of this kind of technology.  But now the mobile web is enabling an incredible assortment of "augcog".

I recently read an article in the Atlantic on military uses of augcog that got me thinking.  This article was about the ethics of augmenting soldiers.  Right now, it is against the Geneva conventions to keep military prisoners awake for extended periods.  But if we can manipulate soldiers not to need sleep (using the genes that dolphins use to sleep just one half of their brain at a time so the other half can make sure they go up for air) does it then become ethical to do it?  If we engineer them not to feel fear (by manipulating the genes in the amygdala), would waterboarding become ethical because the only real consequence of that is making them think they are going to drown?  What if we engineer them not to feel pain by dulling the pain receptors in the brain?  Are other kinds of torture now ethical? 

And then there are the ethics of extending the digital divide.  What if high end smart phones become so powerful that they enable their owners to get all kinds of benefits not available to others?  They can use these benefits to increase the income gap that is already too big. 

Does our discipline have a duty to put an equal amount of time and resources into designing significant benefits into low end technology to mitigate the widening of the digital divide?  We can't guarantee equal outcomes, but should we at least try for equal opportunities?  Technology can be a powerful source of differentiation, but it can also be a powerful equalizer.  Is there an ethical duty that if we do the former, we also do the latter?

What are you buying for that lottery ticket?

­Most economists, conservative and liberal, are in complete agreement that lotteries are a bad gamble.  You pay $2 for the ticket and your expected return is $1 on average.  Yes there is the powerball $200 million prize.  But then there are millions of people who get nothing.  Or who get a free ticket that gets them nothing.  And yet somehow, lotteries are the biggest form of gambling in the country.  What gives?

It turns out, that you are getting more than the expected financial return for your $2.  You have three days to dream.  You can look at the ticket and imagine what you would do if you won the $200 million.  After all, it IS possible.  And since most people can’t really perceive the difference between 1 in 300 million odds or 1 in a million, it doesn’t seem like such a bad gamble.  Look at how jubilant those winners are when they are showcased on the news.  They are not fake reality show millionaires.  They are scrubs just like you who really really won.  And they can live the high life for the rest of their life. 

That dream is what is worth the $2.  You pay $9 to go to a movie (plus popcorn) and that only puts you in dreamland for a few hours.  The lottery is a much better deal than that.  Lotteries are a form of entertainment, not a form of income.  Seen from that perspective, it doesn’t sound so bad.

But there is an even better solution (thanks to Freakonomics for the tip).  One of the big problems with lotteries is that most of the customers are low-income people who spend more than they can really afford.  OK, they get a great dream.  But then they can’t make the rent.  This sucks.

So imagine something called a no-lose lottery.  When you put your money in a savings account at a bank, it earns interest.  Right now that is very low but it is usually a couple of percent.  Let’s say we take a smidge of the interest from everyone’s bank account.  That would be millions.  Just as much as in a powerball ticket.  And we could turn that money into prizes.  So instead of using your rent money to buy the dream, you get the dream for a smidge of your savings that you don’t even notice is missing.  It would also encourage people to save.

The administrative costs would be minimal.  The bank could send you your lottery numbers every month in your statement.  No extra mailing (email or snail) and a computer could automatically generate the numbers.  They could still do the drawings on the local news and publish them in the local papers.  And you could have posters up in the bank to promote the program. Just as much hype if you want.

We can debate over whether it should be part of every savings account (like a tax) or an opt-in for certain accounts.  We can debate over whether to have one big $200 million prize or have 200 $1 million prizes.  We can debate how to define a smidge and how much can be spent on administrative fees.  But I would guess that whatever we decide, liberal, conservative or otherwise, it is better than the lottery.

Motivated Reasoning and Federalism

As you know, motivated reasoning is my primary interest.  It is what I do my research in, teach in, consult in, blog about, and dream about.  I find ways to apply it to just about everything.   But I realized that there is a huge area where just about everyone uses motivated reasoning and it impacts our lives more than we know.  It is in policy.  Federalism v localism.  That sounds boring, but really it is not.

We have many beliefs.  We want to tax the rich or leave them free to create jobs.  We want same sex marriage to be legal or leave it to the churches.  We want to legalize marijuana, decriminalize it, or keep it the way it is. And on and on.  In some of these cases, we have strong logical arguments for or against.  But in many of these cases, what we think is a strong logical argument is being skewed by motivated reasoning with regard to the federalist/localist dimension.

Here is what I mean.  Let’s say that an otherwise liberally minded person doesn’t believe in same sex marriage.  Don’t worry about why for now – this kind of belief exists.  But they can’t admit it, even to themselves, that they are against it because it causes cognitive dissonance to themselves and social embarrassment in public.  It goes against their more general belief to support minority rights.  So instead of being against it, they can say they just don’t think the government should be involved.  This way, they can vote against it without admitting why.  It sounds better (to themselves and their friends) that they don’t think the government should force an otherwise religious belief on the population.  I see this happening a lot in the current debate about mandating insurance coverage of birth control.  I see people who want to be against it, don’t know why, so they become against the “mandate” on religious institutions.  And they can still feel liberal.

Same thing with going the other way.  Let’s say an otherwise conservatively minded person does believe in same sex marriage.  But they can’t admit it to themselves because it causes cognitive dissonance to themselves and social embarrassment in public.  So instead of being for it, they can say they just don’t think government should be involved.  So they can vote for it without admitting why.  It sounds better (to themselves and their friends) that they don’t think government should be involved in defining such a private issue like marriage.  Again, I see it in the birth control debate.  They want to be for it, but don’t know why, so they become for liberty of the employee who follows a different religion.  And they can still feel conservative.

I bring this up today because I would suggest that you make a list of all your policy positions and see where you have been saying they should be regulated.  If you see inconsistencies, it just might be motivated reasoning showing its all too common face.  I found some in mine.  I need to think deeply to see if I really think they should be regulated at different levels or if I am just thinking that to make myself feel better about having inconsistent beliefs.

Free Will (yeah, again !!!)

In an interview with Marcel Brass (a very knowledgeable cognitive neuroscientist), Dr. Brass was describing studies that he has done and others have done regarding understanding free will through brain scans,  The interviewer first asked about the famous Libet study (well, famous to us free-will-o-philes) that seemed to show that free will is a false impression that evolved to help us explain our own behavior.  But there were some methodological flaws in the original study, so Brass describes a lot of follow up studies that have looked in more detail in different ways to try to overcome the flaws.  

In each case, the results show that our feeling of free will is really just a reconstruction of what we have already done in a way that explains it rationally.  In other words, if unconscious processes cause us to do something, our conscious brain then explains it by concluding that we did it “because we wanted to” and therefore we believe we have free will.  But these neuroscience studies show that this decision that we “wanted to” occurs AFTER we already did it. So it is a memory phenomenon, not a decision phenomenon.  We do it, then we decide we wanted to (past tense)  – rather than we decide we want to do it (present tense) and then do it.   

Some of the studies showed that the experimenter could change whether we perceived that we “wanted” do something AFTER we finished actually doing it.  So our perception of the intention (the free will) is bogus.  This doesn’t mean we don’t have free will; it just proves that the fact that we feel like we have free will is not evidence for it.  We need to look elsewhere.

Another great study is that the more you believe you have free will, the more control you exert on your behavior.  So if we don’t believe in free will, we don’t worry so much about what we do and are more likely to just accept whatever is happening around us.  Believing in free will makes us better people.  So don’t believe anything I just wrote about!!!

These studies use some very cool methods that are too hard to explain in such a short space.  So you either need to take my word for it, read the original papers (if you have access to a university library) or listen to the interview and take Dr. Brass’ word for it.

Acoustic Human Factors

You know how when you open a new jar or bottle you get that suction sound that proves to you that it has never been opened before?  Some of them even have a warning message that if you don’t hear that sound the product may have been tampered with.  I think most of you know that this is a highly engineered design that marketing and engineering got together and created.  They play with the amount of air in the jar, the tightness of the seal, and then test all these combinations to see which one sounds the “safest” – gives customers the most confidence that it was really sealed.

The same thing goes on with the sound of a car door closing.  The marketing and engineering teams get together and figure out the design that makes the customer the most confident that it is a tight seal (even if it has no basis in reality). 

So I just found a new one (or maybe it is actually real, who knows).  I have a new sports water bottle.  Every time I open it, I get that suction sound that you usually only get when you open a new bottle. I am not sure if the bottle is really re-sealing or if it is a designed artifact.  But even though I am suspicious, I love this bottle.  It makes me feel good just to pretend that I am getting a better protected drink inside.  Especially when it is something other than water or when I leave it filled for a week. 

I know this is probably motivated reasoning on my part, and now with all my research on motivated reasoning it is pretty sad that I would knowingly fall for it.  But I can feel it working inside my head anyway.  I love this bottle. Why give up that pleasure for a little truth and logic ???

understanding is not the same as compassion

Wow, I didn’t even know this kind of research was possible, but it blew my mind.  I read through the methods pretty carefully to make sure that it was legit.  It was published in a very reputable journal by brain researchers from MIT, so they have the credibility.  Here is a summary of what they found.

They had Israelis, Arabs, and South Americans read different stories about individuals from all three groups.  All of the stories involved either the person experiencing physical pain (stepping on a thumbtack) or emotional pain (not getting an expected raise at work).  They did fMRI on three areas of the brain.  The area that we use to predict the physical experience of another person, the area that we use to predict the emotional thoughts of another person, and the area where we feel compassion.  They also asked the people to verbally rate how much physical or emotional pain they thought the person in the story was feeling, and compassion they felt for the person in the story.

So here is what shocked me.  What matters when modeling both the physical and emotional pain of the other person is based on experience and knowledge.  So Israelis could accurately predict how much pain the Israelis in the story felt.  They could also accurately predict the pain felt by the Arabs, who they know pretty well.  But they were less accurate at predicting the pain of the South Americans, who they don’t have as much experience/knowledge of (on average).  The same thing was true of the Arabs.  They could accurately predict their own pain and the Israelis’ pain, but were less accurate for the South Americans.  This was true of the fMRI areas and the verbal reports. So it wasn’t any kind of unconscious self-deception.

But the bias appeared with the feelings of compassion.  The conflict groups (Arabs to Israelis and Israelis to Arabs) were lower in the fMRI and the verbal reports than either the self-group or the distant unknown out-group.  So Arabs felt the Israeli's pain, they just didn't care.  And vice versa.  But both groups did care for their own group and for the South Americans.  Somewhere in between actual prediction of the pain and compassion for the pain, the conflict group goes down and the distant unknown group goes up.  Again, it was true of both the fMRI and the verbal reports.  So it is not self-deception, it is something really electronic in the way the brain is wired.  Whether it is conscious or unconscious, our brains electrically add compassion to distant groups when we think it is deserved, but it decreases compassion to the conflict group because we think it is not deserved. 

Not a good finding when it comes to hoping for eventual peace.  Facts don’t seem to matter. A better understanding of the other person’s situation won’t help, because that group doesn’t “deserve” compassion, even if their pain is real.

The next paper in this journal is by University of Michigan researchers on political candidates. Can’t wait to read that one.