Markets are Conversations

Baldwin Louie — Mon, 24 Jan 2000 17:00:00 -0500

The first markets were markets. Not bulls, bears or invisible hands. Not battlefields, targets or arenas. Not demographics, eyeballs or seats. Most of all, not consumers.

The first markets were filled with people, not abstractions or statistical aggregates. They were the places where supply met demand with a firm handshake. Buyers and sellers met, looked each other in the eye and connected. The first markets were places where people came to buy what others had to sell, to exchange - and to talk.

The first markets were filled with talk. Some of it was about goods and products. Some was news, opinion and gossip. Little of it mattered to everyone; all of it engaged someone.

Often there were conversations about the work of hands: "Feel this knife. See how it fits your palm." "The cotton in this shirt, where did it come from?" "Taste this apple. We won't have them next week. If you like it you should take some today." Some of these conversations ended in a sale, but don't let that fool you. The sale was merely the exclamation mark at the end of the sentence.

Market leaders were men and women whose hands were worn by the work they did. Their work was their life, and their brands were the names by which they were known: Miller, Weaver, Hunter, Skinner, Farmer, Brewer, Fisher, Shoemaker, Smith. For thousands of years, we knew exactly what markets were: conversations between people who sought out others who shared the same interests. The buyers had as much to say as the sellers. They spoke directly to each other without the filter of media, the artifice of positioning statements, the arrogance of advertising or the shading of public relations.

These were the kinds of conversations people have been having since they started to talk: They were social, based on intersecting interests. Open to many resolutions. Essentially unpredictable. Spoken from the center of the self.

"Markets were conversations" doesn't mean "markets were noisy." It means markets were places where people met and talked about work. Conversation is a profound act of humanity. So are markets.

THE INDUSTRIAL INTERRUPTION

The advent of the Industrial Age did more than just enable industry to produce products much more efficiently. Management's approach to production and its workers was quickly echoed in its approach to the market and its customers. The economies of scale they were gaining in the factory demanded economies of scale in the market. By the time it was over, we had forgotten the true meaning of the market, and replaced it with industrial substitutes. In The Third Wave, Alvin Toffler wrote that the rise of industry drove an "invisible wedge" between production and consumption, a fact Friedrich Engels had noticed 100 years earlier. As production was ramped up to unheard-of rates, the clay pot of craft work was broken into shards of repetitive tasks that maximized efficiency by minimizing difference: interchangeable workers creating interchangeable products.

In the market, consumption also needed to be ramped up - not only to absorb the increased production of goods, but also to promote people's willingness to buy the one-size-fits-all products that rolled off mass-production lines.

And management wasted little time noticing the parallels in efficiencies that could be achieved all along the production-consumption chain. If products and workers were interchangeable, then interchangeable consumers began to look pretty good, too.

The goal was simple: Customers had to be convinced to covet the same thing - the same Model T in any color, so long as it was black. And if workers could be better organized through the repetitive nature of their tasks, so too were customers more easily defined by the collective nature of their tastes. As management developed a new organizational model to enhance economies of scale in production, it developed techniques for mass marketing to do the same for consumption.

So the customer who once looked you in the eye while hefting your wares in the market was transformed into a consumer. In the words of industry analyst Jerry Michalski, a consumer was no more than "a gullet whose only purpose in life is to gulp products and crap cash." Power swung so decisively to the supply side that market became a verb: something you do to customers.

In the 20th century, the rise of mass communications media enhanced industry's ability to address even larger markets with no loss of shoe leather, and mass marketing came into its own. With larger markets came larger rewards, and larger rewards had to be protected. More bureaucracy, more hierarchy, and more command and control meant the customer who looked you in the eye was promptly escorted out of the building by security.

The product of mass marketing was the message, delivered in as many forms as there were media and in as many guises as there were marketers to invent them. Delivered locally, shipped globally, repeated inescapably, the business of marketing devoted itself to delivering the message. Unfortunately, the customer never wanted to take delivery.

THE SHIPPING VIEW

During the Industrial Age, the movement of materials from production to consumption - from flax to linen, from ore to musket - was a long and complicated process. Potentially vast markets had potentially vast distribution needs. The development of new transportation systems eased the burden, and global systems flourished. Even huge distances could be spanned so products could be delivered efficiently.

Inexorably, business began to understand itself through a peculiar new metaphor: Business is shipping. In this shipping metaphor - still the heart and soul of business-as-usual - producers package content and move it through a channel, addressed for delivery down a distribution system.

The metaphor was effectively applied not only to the movement of physical goods, but also quickly applied to the packaging and delivery of marketing content. It's no surprise that business came to think of marketing as simply the delivery of a different type of content to consumers. It was efficient to manage, one size could fit many, and the distribution channel - the new world of broadcast media - was more than ready to deliver.

The symmetry was perfect. The production side of business ships interchangeable products and the marketing side ships interchangeable messages, both to the same market - the bigger and more homogeneous, the better.

One problem: There's no demand for messages. The customer doesn't want to hear from business, thank you very much. The message that gets broadcast to you, me and the rest of the earth's population has nothing to do with me in particular. It's worse than noise. It's an interruption, the Anti-Conversation.

That's the awful truth about marketing. It broadcasts messages to people who don't want to listen. Every advertisement, press release, publicity stunt and giveaway engineered by a marketing department is colored by the fact that it's going to a public that doesn't ask to hear it.

Marketers felt this truth in their bones and learned to cloak their messages, to disguise them as entertainment, to repackage the content just as business learned to vary this year's product line. Commercials disguise themselves as one-act plays, press releases play the part of important stories and advertising masquerades as education.

Marketing became an elaborate game between business and the consumer, but the outcome remained fixed. As sophisticated as marketing became, it has not overcome the ability of people to smell the bull behind all the marketing perfume.

It is not hard to understand, then, that "business is shipping" at times felt more like "business is war," another pervasive metaphor. We launch marketing campaigns based on strategies that target markets; we bombard people with messages in order to penetrate markets (and the sexual overtones here shouldn't be dismissed either). Business-as-usual is in a constant state of war with the market, with marketing manning the front lines.

Consider the distance we've come. Markets once were places where producers and customers met face-to-face and engaged in conversations based on shared interests. Now business-as-usual is engaged in a grinding war of attrition with its markets.

No wonder marketing fails.

NETWORKED MARKETS

The long silence - the industrial interruption of the human conversation - is coming to an end. On the Internet, markets are getting more connected and more powerfully vocal every day. These markets want to talk, just as they did for the thousands of years that passed before market became a verb with us as its object.

The Internet is a place. We buy books and tickets on the Web. Not over, through or beside it. To call it a "platform" belies its hospitality. What happens on the Net is more than commerce, more than content, more than push and pull and clicks and traffic and e-anything.

The Internet is a real place where people can go to learn, to talk to each other and to do business together. It is a bazaar where customers look for wares, merchants present goods for display and people gather around topics that interest them. It is a conversation.

In this new place, every product you can name, from fashion to office supplies, can be discussed, argued over, researched and bought as part of a vast conversation among the people interested in it. "I'm in the market for a new computer," someone says, and she's off to the Dell (DELL) site. But she probably won't buy that cool new laptop right away. She'll ask around first - on Web pages, on newsgroups, via e-mail: "What do you think? Is this a good one? Has anybody checked it out? What's the real battery life? How's the customer support? Recommendations? Horror stories?"

These conversations are most often about value, of products and of the businesses that sell them. Not just prices, but the market currencies of reputation, location, position and every other quality that is subject to rising, or falling, opinion.

It's nothing new, in one sense. The only advertising that was ever truly effective was word of mouth, which is nothing more than conversation. Now word of mouth has gone global. The one-to-many scope that technology brought to mass production and then to mass marketing, which producers have enjoyed for 200 years, is now available to customers. And they're eager to make up for lost time.

KAFFEEKLATSCH.COM

More ominous for marketing-as-usual is the fact that the connection of customers in the market doesn't enable them just to learn the truth behind product claims. The very sound of the Web conversation throws into stark relief the monotonous, lifeless, self-centered drone emanating from marketing departments around the world. "Word of Web" offers people the pure sound of the human voice, not the elevated, empty speech of the corporate hierarchy.

Further, these voices are telling one another the truth based on their real experiences, unlike the corporate messages that aim at presenting what we can generously call a best-case scenario. Not only can the market discover the truth in the time it takes to do a search at a discussion archive, but the tinny, self-absorbed voices of business-as-usual sound especially empty in contrast to the rich conversations emanating from the Web.

What's more, networked markets get smart fast. Metcalfe's Law, an axiom of the computer industry, states that the value of a network increases as the square of the number of users connected to it - connections multiply value exponentially. This is also true for conversations on networked markets. In fact, as the network gets larger it also gets smarter.

The Cluetrain Corollary is this: The level of knowledge on a network increases as the square of the number of users times the volume of conversation. So in market conversations it's far easier to learn the truth about the products being pumped, about the promises being made and about the people making those promises. Networked markets are not only smart markets; they're also equipped to get much smarter, much faster, than business-as-usual.

Business-as-usual doesn't realize this because it continues to conceptualize markets as distant abstractions - battlefields, targets, demographics - and the Net as simply another conduit down which companies can broadcast messages. But the Net isn't a conduit, a pipeline or another television channel. The Net invites your customers in to talk, to laugh with each other and to learn from each other. Connected, they reclaim their voice in the market, but now with more reach and wider influence.

ASSUME THE POSITION

Public relations, advertising and marketing communications all reflect the company's "position." Positioning is darned important, then - strategic, even. And if you're a marketing consultant, positioning is where the big bucks are. You're right there at the top of the marketing totem pole.

Positioning is not only lucrative for its practitioners, it's also fun since it's usually done on a blank piece of paper. "Who do we want to be?" asks the positioning expert. "Are we the maker of the world's finest timepieces? No, maybe we're the people who keep business on time. Ooh, maybe we're the company that's making punctuality into a fashion accessory!" Undoubtedly, someone will trump these suggestions by saying, "We're not really about watches at all," and then, in a solemn voice: "We're the Time Company."

Often, "positioning exercises" become expensive sojourns into corporate psychology. The consultant gets to spend time with one group leader after another, performing the role of corporate shrink.

The resulting data is impossible to connect, but that doesn't matter, because the goal is only to come up with a "statement." And all that statement has to be is marginally different from every other company's faked-up statement. Never mind that nobody in the marketplace cares about any company's positioning statement. It matters only that this statement will drive the strategy, which will be yet another advertising and PR bombing campaign.

Can it get even more arrogant? Indeed, it actually can.

BUT WAIT, THERE'S MORE Positioning wasn't even an issue until 1972, when Al Ries and Jack Trout wrote a series of articles for Advertising Age and then authored one of the top-selling business books of all time, Positioning: The Battle for Your Mind. The goal of positioning, Trout says, is to own one word in your customer's mind. For evidence, you don't even need to leave your own skull.

Take a look: You'll find FedEx in the "overnight" position, Crest in the "cavities" position and Volvo in the "safety" position, even if you have never bought those products. In the battlefield of your mind, those companies are entrenched in those positions.

Why one word? Because to Trout and Ries, the human mind is as closed as a clam and just as roomy. Witness Jack Trout's Five Basic Principles of the Mind, from his 1997 sequel, The New Positioning:

1. Minds are limited.
2. Minds hate confusion.
3. Minds are insecure.
4. Minds don't change.
5. Minds lose focus.

In short, minds are so pathetic that they desperately need help, even if it comes in the form of an axe. That's what positioning is about.

Too bad, because positioning is about something much more important, something that gets trivialized by those who reduce it to generating a catchy tag line. Positioning is about discovering who you, as a business, are - discovering your identity, not inventing a new one willy-nilly. Positioning should help a company become what it is, not something it's not (no matter how cool it would be).

A company can certainly try to be what it's not. But the market conversation will expose the fakery. One clue is any attempt by a company to deny its history, because history is one of those things that can't be changed. General Motors (GM) will always be the product of Alfred Sloan's preference for implementation over innovation; Apple (AOIXQ) will always be the product of Steve Jobs' artistic temperament; Hewlett-Packard (HWP) will always be the product of its founders' obsession with quality products for niche technical markets; Nordstrom (JWN) will always be the product of the family's original shoe business.

Of course, companies and products can change their identities (and even their natures) over time. Volkswagen (VLKAY) no longer bears (for most of us) the history stated in its very name: Hitler's car for the proud German people. Kellogg (K)'s Razzle Dazzle Rice Krispies no longer bears much connection to the obsessive health concerns of the company's founder.

But such changes generally are gradual and often painful. In fact, if they are too rapid and too easy, the market conversation will be merciless in exposing the phoniness it sniffs.

If a company is genuinely confused about what it is, there's an easy way to find out: Listen to what your market says you are. If it's not to your liking, think long and hard before assuming that the market is wrong, that it's composed of a lot of people who are too dumb or blind to understand the Inner You.

If you've been claiming to be the Time Company for two years but the market still thinks of you as the Overpriced Executive Trophy Watchmaker, then, sorry, that's your position. If you don't like what you're hearing, the marketing task is not to change the market's idea of who you are but actually to change who you are. And that can take as long as a generation: Look at Volkswagen.

THE MARKETING CRAFT

The market started out as a place where people talked about what they cared about, in voices as individual as the craft goods on the table between them. As the distance between producer and consumer lengthened, so did the gap between our business voice and our authentic voice. Marketing became a profession, an applied science, the engineering of desirable responses through the application of calibrated stimuli - including the occasional axe in the head.

Marketing isn't going to go away, nor should it. But it needs to evolve, rapidlyand thoroughly, for markets have become networked and now know more than business, learn faster than business, are more honest than business and are a hell of a lot more fun than business. The voices are back, and voice brings craft: work by unique individuals motivated by passion.

What's happening to the market is precisely what should - and will - happen to marketing. Marketing needs to become a craft. Recall that craft workers listen to the material they're forming - shaping the pot to the feel of the clay, designing the house to fit with and reveal the landscape. The stuff of marketing is the market itself. Marketing can't become a craft until it is able to hear the new - and old - sound of its markets.

By listening, marketing will relearn how to talk.

Doc Searles is senior editor of Linux Journal and editor of the Reality 2.0 Web zine (www.searls.com/r2.html). David Weinberger is a regular commentator on NPR and publisher of the Journal of the Hyperlinked Organization (www.hyperorg.com). They are coauthors of The Cluetrain Manifesto: The End of Business as Usual, to be published in February by Perseus Books. Copyright © 2000 by Frederick Levine, Chris Locke, David Searls and David Weinberger. Reprinted by permission of Perseus Books. All rights reserved.

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Markets are Conversations