Why do competitors open their stores next to one another? And other related musings.

​I stumbled across this great animated video detailing why competitors open their stores next to one another. The TED video got my attention by asking a simple question: "Ever wondered why similar stores are found near each other? Why restaurants are often found in clusters?" 

​I hadn't thought about this before, and in my experience - restaurants are clustered together. Is this to make it more convenient for customers? To prey off of a competitors existing customer base by giving those customers an easy alternative option? I know, for example, that when Vida e Cafe embarked on an aggressive growth strategy, they opened their cafes right next to all the established Seattle Coffee houses and other competing coffee shops. They did this to hijack their competitors' customers by offering  a superior product (including the overall customer experience) in close proximity to these competitors.

​Or is there some other business dynamic at play here that encourages similar businesses to group together in close proximity?

The TED ED video below describes this phenomenon with reference to two principles of Game Theory.

Socially Optimal Solutions: this is what would happen if businesses cooperated to offer the best solution for society at large. In practice, this doesn't happen.

The Nash Equilibrium: businesses will iteratively position themselves until their is no further utility to be gained from further positioning moves. In practice, this is at the heart of competition.

​And once Nash Equilibrium has been established, businesses use other tools, such as marketing and advertising, to compete further.

For purely online businesses, ​where physical space is a non issue, I wonder if the Nash Equilibrium translates to other competitive behaviour. My only experience of this is when online companies compete via online marketing channels and outbid one another for advertising space. And so one of the ways to compete with an incumbent is to match their marketing spend and/or execute more effective marketing campaigns and thereby exceed their marketing ROI.

Whatever the drivers, I think this adds a new meaning to the saying "Keep your friends close, and your enemies closer".​

Here's the TED ED video I mentioned above. It's a great example of a short narrated video, with engaging visuals to confirm the teacher's lessons. I'd argue this format of video is representative of one of the most effective teaching tools available to us today:

An intrinsic motivation for learning is the new insurance policy

I love learning. So it's fortunate that I find myself in an education business because there is a plethora of opportunities to learn in an industry that is changing so quickly. 

One of these opportunities has been to work through Prabhu Subramanian's thesis entitled "Towards a massive online education: A Business Model Innovation for Elite Universities in the UK".

I suspect i'll find inspiration for several blog posts from Prabhu's thesis, but for the moment I have one i'd like to share.

I'm a marketer at heart, and so i've always been interested in what motivates people to study. In articulating the main need that we, at GetSmarter, satisfy for our customers we've settled on this statement: we help people advance their careers.

How do we do that? We work with prestigious University brands to put together high-quality online courses, and make certificates of completion available to students who pass. Students then use these certificates, which are basically a credible statement of their new knowledge, to advance their careers. This either happens through vertical advancement at their existing places of work, or horizontal advancement where they move to another place of work for a better / higher paying job. What's key here is that a significant portion of their motivation to study comes from the need to obtain a University certificate, which they can then use to advance their careers. So it is the desire to advance their careers that motivates them to learn. That's quite different from someone who just wants to become a better Project Manager, enhance their writing skills or put together a killer internet marketing strategy because it interests them to do so.

In reading Prabhu's thesis, he explains that there are two main forms of motivation for learning: intrinsic and extrinsic.

Intrinsic motivation is a strong interest to develop deeper knowledge. This type of motivation is internally focussed and, in it's purest form, speaks for people who want to improve their knowledge without concern for external pressures. I recognise now that when I was at school, kids who had strong intrinsic motivation to learn were labelled as nerds or geeks.

Extrinsic motivation speaks to external factors such as career prospects, or pressure from family or society. This is the reason most young people go to University, and it's the reason many people complete MBAs and other executive-level courses. People perceive a direct link between learning and advancing their careers - if I study this, I will stand a good chance of being employed or getting that promotion.

I don't think the question of motivation is binary. Everyone's motivation to learn is probably made up of a combination of both intrinsic and extrinsic factors. But I do believe there is a bias towards extrinsic motivation for learning throughout society at large. In other words, we are more motivated to learn by external influences than we are by internal influences.

So, after reading this excerpt from Prabhu's thesis, I began thinking about the future of learning, and specifically if extrinsic motivation will continue to dominate as the primary type of motivation for people to learn.

​I don't believe it will.

In a knowledge economy, where increasingly what separates us from the person next to us is our competencies and skills, intrinsic motivation has to be the smart approach to our personal learning journey. And it's not that extrinsic motivation is inherently bad. It's just that it feels to me like if we rely on extrinsic motivation for learning that we're outsourcing our responsibility for learning to something outside of ourselves. Whether it be our career, our family or greater society, it's not coming from within us. Whereas intrinsic motivation speaks to a desire to develop ourselves from within, and it has us taking personal responsibility for our learning every day. This is hugely powerful as a tool to effect our personal development.

There are two further drivers worth considering:

1. People are becoming more empowered through the increased availability of knowledge tools and the ongoing democratisation of knowledge.
2. Employers are increasingly employing people for their demonstrable competencies and ability to learn instead of their school-related credentials.

​1 makes it easier for us to execute on our interest in learning. Don't know something? Google it! Want to discuss your views on a subject and get input from others? Engage in a niche social network, write blog posts and invite feedback.

And 2 places the responsibility for learning on us instead of our employers or other external factors. Learning is just like any other competency - it can be improved with practice, and our ability to learn is going to be high up on employers' criteria for hiring.

This brings me to what I think is a key insight:​ If going to University used to be the equivalent of taking out an insurance policy against slipping through society's cracks, the new insurance policy is to adopt an intrinsic motivation for learning. ​It's easier to do now than ever before, and it's available to anyone who has access to the internet and it's knowledge tools. And it's no longer enough to outsource responsibility for our learning.

Perhaps a test of whether intrinsic motivation for learning begins to dominate is when kids abandon the idea of geeks and think it's cool to learn new things and get smarter. I suspect it's happening already.

Investing in the moment

I watched Srikumar Rao's talk entitled "Plug into your hard-wired happiness" (embedded below) for the 3rd time last night. 

​He covers a lot in his talk, and although I found myself confused at points where he made significant leaps of logic, I came away with a valuable lesson:

Most of us invest ourselves in the outcomes we want to achieve. If I do or get this, then I will be happy. And what most of us miss is that these outcomes are often beyond our control because of external influences that we can't control. Therefore, if we continue to invest ourselves in outcomes, we will continue to be regularly disappointed as these outcomes are not achieved because of factors beyond our control.

But there is a different approach that we can take. We can continue to chart our lives by striving for specific outcomes (planning and goal setting are good things, right!), but we need to invest ourselves not in these outcomes, but rather in the process of getting there.

I've heard many people say things like we should "live in the moment", or "be fully present all the time". But this is the first time i've realised that this sentiment speaks to a specific mental model that has us investing ourselves in actions that we can control, as opposed to outcomes that we can't control. And when we invest in actions that we can control, we're more than likely going to feel a sense of accomplishment every day as we carry out these actions successfully. I mean, we only have ourselves to blame if we don't succeed at something that is entirely within our control right? But so many of us are stuck in a mental model that drives us to achieve outcomes that are beyond our control, and as we fail at these outcomes due to factors beyond our control, we think we're failing generally.

This speaks to a broader Buddhist philosophy that i'm not familiar with, but I really like the principle of investing in the process as a way to achieve more happiness in our lives. I like to think of this as investing in the moment. And the question i'm going to be asking myself as I think on this in the future is "am I investing emotional time and energy into something that I can fully control?" and "am i doing the best I can do right now?"

I articulate this differently to the way Srikumar does, so i've embedded his talk below and included a summary of the talk below that.

Srikumar proposes that we've spent our lives learning to be unhappy. And the way we've done this by subscribing to a particular mental model - which is a notion that this is the way the world works. And this particular mental model is that we need to get something, so we can do something, so we can be something. For example, we need to get lots of money, so that we can go travelling, so that we can be happy. 

There are loads of examples we can all relate to in our lives, and they all come down to this "if-then" model. If this happens, then we will be happy. And the only difference between all of us is our particular "if" that we are focussing on. In fact, the difference between us now and in the past is the particular "if" we focussed on then and the one we are focussed on now.

But if we take a look at our past, we've achieved many of the "ifs" that we were focussed on, and yet where does this leave us? In a pretty similar place to where we were originally, and not in the eternal state of happiness that Srikumar describes is possible. 

I disagree with Srikumar's view that it's possible to be happy all the time, but I think he's using the superlative for emphasis, so i'll let this slide.

But I think the important thing to note here is our insatiable needs. When we get what we want, we suddenly want more. 

He goes on to explain that it is our "if-then" mental model that is flawed. But that we don't recognise that the model is flawed, so we fixate on changing the "if". And as this plays out, the "if" simply grows.

The road to recovery is as follows:

1. Understand that our actions are within our control.

2. Accept that the outcome is completely outside of our control.

And with the if-then model, we invest ourselves in the outcome. This is problematic. If we achieve the outcome, life is wonderful. If we fail to achieve the outcome, life sucks. The more we don't achieve the outcome, the more our life sucks. And this is the case with so many people who employ this mental model.

What we need to be doing instead is investing in the process, and he explains what it means to invest in the process with reference to John Wooden and what he used to say to his new basketball recruits: http://en.wikipedia.org/wiki/John_Wooden "When it's over and you look in the mirror, ask yourself the question: did you do the best you were capable of. If you did, then the score doesn't matter. But I suspect that if you did your best, you'll find the score to your liking."

There's nothing wrong with focussing on an outcome. And in business I know this to be a powerful tool to guide decision making. But it is investing in the outcome that makes people unhappy, and this is what Srikumar guards against.

So in terms of making progress in our lives, we continue to assess where we are and where we want to be. We can then focus on where we want to be, and use this as a guide, but we need to be careful to only invest ourselves in the process and not in the outcome. We then put everything into the process - we do the best we possibly can. And if we succeed, wonderful! And if we don't, that's still wonderful. Because we now have a new starting point, and from that starting point we select another outcome to focus on, and invest ourselves in the process again.

And when we embrace this new mental model, we'll find that every day is a blast. Because we're investing our emotional energy into processes that we can control, and that we can succeed at.​

Six pillars of Commerce

Slideshare.com have started sending me weekly emails listing their top content from the previous week. I have to admit that i've only ever used Slideshare when individual slide decks have appeared in Google search results, but now that i'm receiving weekly emailers, with only high-quality content included, i'm seeing the value of content presented in slide/presentation format and will probably start searching through their top content more regularly when I have a spare 20 minutes to learn something new. 

This morning I read the Official Slideshare for What's the future of Business as it appeared at the top of my weekly email from Slideshare. In it the author, Brian Solis, describes the 6 pillars of social commerce. I've read a lot about each of these pillars before, but this is the first time i've seen these concepts describes so succinctly. I copied the bits I thought were relevant and include them below for easy reference.

1. Social Proof

When uncertain, look at what other people are doing. We look at what others are doing or have done to resolve personal insecurity when making a decision. 

2. Authority

Authority rules. Specialists' findings are highly regarded due to their expertise and authority.

3. Scarcity

Less is more. We instinctively assign greater value to resources as they become less available due to fear of potential loss. 

4. Like

Follow those you like. We emulate and agree with people we like, admire and find attractive because it helps build social bond and trust. 

5. Consistency

Stay consistent. When faced with uncertainty, we prefer options that are consistent with our beliefs and past behaviours. 

6. Reciprocity

Pay it forward. We have an innate desire to repay favours in order to maintain social fairness whether those favours were invited or not. 

The correlation between success and like-ability

In Sheryl Sandberg's TED talk ​on "why we have too few woman leaders", she explains that the correlation between success and like-ability is positive for men, and generally negative for women. In other words, when men succeed they are liked more. And when women succeed, they are liked less. This works against you if you are a women who is aiming to succeed in the workplace, because you don't receive the support of the people around - both men and women.

While this wasn't her main point (see full talk below), it was the one that got me thinking the most. And now I want to depart from the context of women and touch on the issue of success and like-ability in groups of people generally. 

I think this principle applies to many groupings of people - and by 'group' I mean people who identify with one another and would see themselves as part of the same group, however they may define this. As part of a group, we're happy for other group individuals to succeed to an extent, but the less secure we are in ourselves and in the group itself, the less we're likely to support individuals success beyond a certain threshold. I'd hazard a guess that this threshold is where we start to feel uncomfortable about our own relative success and/or we become insecure about the future of the group itself, i.e. that an individual's success somehow impacts negatively on the group. And for these reasons, and probably many more that I haven't thought through (success does make some people behave badly!), so many of us stop supporting our peers when they succeed.

I realise this issue of group dynamics is much more complex than I make it out to be, but it got me thinking about my role in the groupings of people I identify with. Here are some of my thoughts:

• I acknowledge that i'm part of groups of people who don't always support each others' success, and i'm going to strive to actively support people who succeed. It's important for them and for me.
• I'm going to try identify with people who aren't threatened by the changing nature of the group. I'm thinking about the opposite of "clicky" Cape Town social groups specifically. If you've lived in Cape Town, you'll know what I mean.
• ​As I strive to succeed, i'm going to be sensitive to friends' challenges.

Right, it's time to get back to work with the awesome group of people at GetSmarter Head Quarters!