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A book written by an economist, that attempts to use economic theories to explain pretty much everything in life, probably sounds more like a cure for insomnia—perhaps even masochism—than a page-turner. But in The Logic of Life: The Rational Economics of an Irrational World, author Tim Harford, writer of the Undercover Economist column for the Financial Times, pulls off a truly amazing feat, making economics not merely interesting, but fascinating.

Just to make sure he’s got your attention, Harford begins his book with discursions on the economic rationales underlying teen sex, Mexican prostitutes, and the world of professional poker. In this last topic, Harford introduces us to Chris “Jesus” Ferguson, a doctoral student at UCLA who used John von Neumann’s game theory to become one of the top professional poker players in the world:

“By the late 1990s Ferguson was one of the most recognizable sights in poker, earning the nickname `Jesus’ as he hid his face behind a long beard and hair that cascaded over his shoulders, buttressed by wraparound mirror shades and a big cowboy hat. He never spoke during play, trying to remove any sign of human emotion; he didn’t pay much attention to other players’ nervous tics either. He drew his information only from the cards, like a computer—or like von Neumann himself.”

After these first few sections, Harford gets more serious, but no less engrossing. He addresses a wide range of topics, demonstrating in each case how rational economic theories explain seemingly irrational human behavior: nuclear war, cigarette smoking, our choice of snacks, speed dating, marriage, divorce, and why young women are often attracted to older men (and vice versa, though economics seems superfluous in that case).

He devotes significant space in the book to the problem of racism, particularly in relation to blacks in America, showing that while racism is reprehensible, it is also, unfortunately, rational. The contention is that blacks, as a group, have under-invested in their own education and skills development, believing that white racism prevented them from getting a fair shot at economic opportunities. In response, employers (of many colors, not only white) have preemptively denied opportunities to blacks. The result is a tragic downward spiral.

The problem is vexing. Obviously, blacks have faced significant discrimination in America, unfairly and in many cases maliciously. On the other hand, the problem can’t be reduced to “white people don’t like people with dark skin.” Look at southeast Asians as an example of a group that has had a very different experience in America (and elsewhere), that of a virtuous upward spiral. While an employer may invite Mary in for interview before Latoya, Krishna may very well get the interview before Mary. Sterotypes can be unfairly positive as well as negative.

The solution, therefore, is going to require changes in behavior, and beliefs, on the part of both blacks and whites. Not an easy task, but possible.

Along the way, Harford explains why your office, dysfunctional though it likely seems, is perfectly rational: with a relatively small number of exceptions (sales, windshield replacement, pole vaulting), most professions are either hard to measure, or easy to measure but nevertheless difficult to compensate on that basis: “In most jobs, there are more than two variables at play and some are very hard to pin down. For those jobs, managers need a more holistic, all-encompassing measure of performance.” This leads to a discussion of “tournament theory”—paying employers based on their performance relative to each other, as in a tennis tournament. The trick to applying tournament theory to employee pay, of course, is to make sure bonuses incent employees to do great work, not merely to undermine and backstab each other.

While Harford’s book is very, very good, it does have three minor weaknesses. First, the author approvingly and at length quotes from Freakonomics, a book which had an unfortunate tendency to extrapolate from the specific to the general among other logical fallacies. John Lott’s Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don’t, though lesser known, is a far superior work.

Second, while Harford does an outstanding job of demonstrating how various economic theories can be used to explain particular decision processes or types of behavior, he ignores the possibility of other causes. In other words, while he does a fine job of showing how A causes B, he fails to even acknowledge that C, D or Z might provide a much better explanation. On various topics, religious faith, patriotism, family ties, environmental concerns or a one of a host of other factors may be more important that economics, but Harford simply ignores that possibility. A very strong case can be made, for example, that Brits would be better off economically with the Tories in charge, yet the majority don’t vote that way.

Finally, Harford at times ignores his own conclusions. After demonstrating convincingly that human prosperity is directly correlated with two factors—freedom and innovation—he expresses concern over pseudo-problems like global warming. If he believes his own research, and he should, he would realize that global warming cannot be a problem. When the incentives to change behavior become significant enough, people will change them. And even if the most dire theories of global warming are accurate, and human burning of hydrocarbon fuels is a significant cause, then only the innovation of free economic actors—not the regulation preferred by those on the left—can ultimately solve the problem.

These quibbles aside, The Logic of Life is a fascinating and enlightening book that deserves a wide audience.

*****

Contact Tom Pick: tomATwebmarketcentralDOTcom

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Book Review: The Logic of Life

In writing Marketing That Matters, authors Chip Conley and Eric Friedenwald-Fishman, not content merely to provide an above-average book on marketing strategy, instead wrote an impressive book on marketing strategy—with a point of view.

The book combines guidance on marketing strategy and tactics with a “socially responsible” orientation. The result is best described as an avocado of a book: a solid core of marketing strategy surrounded by a thick layer of politically liberal messaging. As with an avocado, some readers will find this outer layer delightfully tasty, while others will consider it disgusting green mush.

“Socially responsible” has become a charged term. It perhaps shouldn’t be; first off, who would want to run a “socially irresponsible” business? (According to the authors, Wal-Mart executives, of course.) Second, many of the management practices that the authors attribute to social responsibility—minimizing energy use, creating a positive work environment for employees, purchasing from local suppliers when possible—would simply be called good business by most entrepreneurs and managers. Keeping energy costs under control and employees happy is good for the bottom line, regardless of broader societal or political ramifications.

But, social responsibility or irresponsibility aside, the authors do provide an excellent treatise on marketing strategy. Some examples:

- Getting it: “Marketing is about creating relationships…people don’t want to be marketed to—they want to build a relationship with…New-school marketing is based upon satisfying needs. Pushing product doesn’t work anymore, especially in the era of the Internet, when savvy customers can connect with each other and trade stories about your product—and your company—and can easily find alternative choices.” This is precisely the message of The Cluetrain Manifesto, and it’s always refreshing to read authors who get this.

- Strategy starts with customer understanding: “Strategic marketing is acquiring a deep understanding of the needs and desires of your existing and potential customers and designing your business (products, services, delivery mechanisms, customer experience, branding, outreach, etc.) to meet and exceed their needs and desires. When energy bar leader Clif Bar developed the Luna bar, the core idea for creating the product—active women need an energy bar and have different nutritional needs than men—was a demonstration of the pure definition of strategic marketing. The strategic marketing decision to design an energy bar specifically for active women then led to many other strategic and tactical choices, regarding product design, branding and packaging, product distribution, community partnerships, and, ultimately, promotional and sales strategies.”

- Affinity matters: “Consider gathering your leadership team in a room and looking at…a particularly compelling customer experience that can be articulated to the world. Ask each person to talk to two loyal customers about how they describe the company, brand, product, or service to their friends. See what’s consistent in their messaging and start to build a story that you can use in all of your communications with the world: on your Web site, in your brochures, in your press releases, in your company orientation with new employees…In Lovemarks: The Future Beyond Brands, Kevin Roberts asks a provocative question: ‘How do you get intimate with customers without being invasive or insincere?’ This is such a refreshing question in today’s world of commoditized brands, where everything feels standardized, distant, and lacking in personal touch. Get this question right and you’ll build a fiercely loyal customer base.” The challenge of aligning your definition of affinity with that of your customer has been addressed here before.

- Build a community: “Building a community of believers is one of the best pieces of marketing advice we can give to any businessperson…According to consulting giant McKinsey & Company (a company which does virtually no advertising, by the way; the company has an almost 100% referral and reputation-based business), about two-thirds of all economic activity in the U.S. is influenced by people’s shared opinions about a product, brand or service…What if you had to tell your story nine times before your best friend acknowledged what you were saying? For one, you’d probably pick a new best friend. But that’s a good way of looking at the inherent flaws in traditional advertising. Conventional wisdom suggests that it take nine impressions for a potential customer to retain the information in an ad. One good story from a friend far outweighs the potential of nine expensive ads…The Internet is the perfect medium for furthering the conversation between companies and their most enthusiastic customers. Check out any marketing-savvy…company’s eb site and we bet you’ll find many ways to engage with the community that orbits around that company or brand.”

There is much, much more lucid and valuable strategic advice on topics such as branding, customer-centricity, empowering employees to spread your brand message, the role of emotion in decision making, and the importance of capturing and properly utilizing marketing metrics.

Again, however, these morsels of strategic marketing wisdom are drenched here in copious amounts of social responsibility sauce which won’t appeal to all tastes. For example:

- Would you really want to work with people who have no sense of humor (or worse, no sense period)? “We’ve seen SRBs (socially responsible businesses) with poor marketing campaigns that came about as a result of choosing process over impact. What we mean by this is that they were so tied to their do’s (always include all the facts and details, spend your advertising dollars only in publications that support your politics and point of view, only market products and services that are critical to human survival, etc.) and don’ts (never print in full color, never use humor in your marketing, etc.) that they forgot to ask, ‘Does this marketing approach have an impact on our customer?’”

- Strange watercoolers. “In media stories, comments on blogs, and discussions at office watercoolers, it’s not uncommon to read or hear comments like ‘Why wouldn’t you pay twenty-five cents more per pound to know that farmers are making a living, that your food is healthy, and that yhour tomato didn’t contribute to global warming by flying across the world?’ All good questions.” First, such conversations are far less common in most of the country that the authors may realize. And second, many readers are likely to feel that anyone who seriously believes that flying tomatoes cause global warming really needs to be reading Bjorn Lomborg, not Conley and Friedenwald-Fishman.

- Government good, markets bad. Considering that marketing is the subject of the book, the authors are at times bizarrely anti-markets. “In fact, when we think of companies taking a stand, we usually think of industry-funded campaigns or individual company-sponsored ads, in which business voice has been used to fight health-care reform, limit tougher air and water quality standards, fight living wage laws…or limit liability for products such as guns.”

Again, the authors seem to ignore the likelihood that many business people (the audience for this book) legitimately believe that more competition and less regulation is a better path to reducing health care costs and improving quality than a government takeover and exclusion of the private sector would be; that environmental standards should pass reasonable cost/benefits analysis before implementation; that raising costs on small business owners and reducing employment opportunities for entry level and marginally skilled workers isn’t a great idea; and that we’re better off without laws designed to enrich trial lawyers while making self defense more difficult and expensive.

- Confusing community involvement with controversy. The authors advise putting “philanthropy at the center of your value/values proposition,” and highlight companies that support causes such as finding a cure for breast cancer, helping women escape the international sex trade, and keeping kids safe—all worthy and non-controversial causes.

But when the authors praise the work of groups like the Sierra Club, they are going to alienate readers who place affordable food for developing nations, American jobs, and relief for families from record-high gas prices above enriching thugocratic Middle Eastern despots and avoiding any inconvenience to Alaskan caribou. Even the writers’ own local newspaper has picked up on the folly of substituting biofuels for petroleum, noting that “the road to hell is paved with good intentions.”

Conley and Friedenwald-Fishman are from San Francisco, and their city’s offbeat, left-of-center leanings are clearly on display here. While this book is likely to sell well in a line from Los Angeles to Seattle, its prospects anywhere to the right of the left coast—geographically or politically—are less clear. Perhaps the authors don’t care. But it does seem incongruous to write a book about marketing (which is the art of persuasion) while being so enamored with government regulation (pure brute force).

It’s unfortunate that the authors have chosen to imply that anyone who believes strongly in supporting philanthropic causes or sensible environmental protection must also be enamored with gun control and socialized healthcare. In placing so much emphasis on controversial political positions, the book needlessly alienates (at least) half of its potential audience. If your political leanings are left of center, you’ll like (most of) this book. But if not, you’ll have decide if getting to the solid core of worthwhile marketing strategy here is worth the effort of mentally scraping away the thick coating of green mush.

*****

Contact Tom Pick: tomATwebmarketcentralDOTcom

See more here:
Book Review: Marketing That Matters

Web forms are the one thing that consistently stand between the customer and the product, as well as between companies and their profits. If the web form proves successful, the customer receives his product and the company, their money. Yet, if the form isn’t successful, the company can bet that they have not only lost revenue, but a customer as well.

Thanks to a new book published by Rosenfeld Media, Web Form Design: Filling in the Blanks, author and Senior Principal of Product Ideation & Design at Yahoo! Inc. Luke Wroblewski lays out the basic principles needed to apply toward the right design solutions for your web forms.

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Book Review: Web Form Design

We told you at the beginning of April of the upcoming release of Andrew Connell’s book on SharePoint. Well we finally found it available at almost all book retailers.

Called Professional SharePoint 2007 Web Content Management Development: Building Publishing Sites with Office SharePoint Server 2007, the 456 page book published by John Wiley and Sons is the only book known to cover the Web Content Management aspects of SharePoint in detail.

Andrew is a big proponent of SharePoint’s ability to create highly engaging web content management sites and this book is his attempt to sell us all on it’s potential.

Chapters in the book cover everything from master pages and page layouts, to content types, navigation, accessibility, workflow, content deployment and a lot more.

Oddly enough, the book comes at a time when we hear more about SharePoint’s collaboration capabilities than it’s content management. It seems like lately we don’t talk too much about what SharePoint can do from a web content management standpoint. Now that’s either because we’ve finally all settled on the fact that it isn’t quite there yet, or we are just way too caught up in this whole social computing discussion where Microsoft seems determined that SharePoint is a leader.

In either case, this is a book I would personally like to read, especially considering it’s coming from someone who has dedicated his career to learning and understanding how SharePoint works from a web content management perspective.

If a book isn’t enough for you, Andrew is set to teach some WCM courses — both online and in person over the next couple of months on SharePoint and Web Content Management.

Released: Building Publishing Sites SharePoint 2007

It’s critical, when starting work on a new website, to develop a list of the most productive keywords and phrases to work into the content and structure of the site. It can also be a useful exercise for existing sites from time to time; content changes, search patterns change, and a minor content and SEO face lift may be just the thing to reinvigorate traffic growth.

Start by jotting down a list of the obvious search phrases for the site. Try to think like a prospective customer—what phrases would they likely use to try to find the product, service or information you offer?—rather than your internal company jargon. The list doesn’t need to be long; 15-25 phrases is sufficient unless you are working with a very large website.

Next, run your initial list of phrases through a keyword tool in order to 1) determine the relative search volume of the terms on your initial list, and 2) identify high-potential related search phrases. Trellian’s Keyword Discovery is an excellent tool if you can justify the cost; if not, Google Suggest (and the AdWords keyword tool if you have an existing AdWords account), the SEO Book Keyword Suggestion Tool and Yooter are helpful, free tools. In Reader Poll: Best Keyword Research Tools, search guru Lee Odden reports on the popularity of 15 keyword tools.

Finally, the most important step of all: after combining all of your original and the tool-suggested terms and sorting the phrases by search popularity, apply human intelligence to reduce the list to a final, manageable list of terms to SEO the site for. Not all of the terms that a keyword suggestion tool identifies as “related” to your initial list will really apply to your product, service or information. In addition, some terms will be too broad for SEO but may be use for a search engine marketing (SEM) program (SEO vs. SEM terms will be the topic of a future post).

The final list of terms can then be worked into page URLs, titles, meta tags and content to help the search engine spiders figure out that your site should show up well for these search phrases.

*****

Contact Tom Pick: tomATwebmarketcentralDOTcom

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How to Develop an SEO Keyword List