76. S-E-R-V-I-C-E Warriors and the Individual Economy, with Jeff Saperstein

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Entrepreneurship is the new strategy – for companies big and small, new and old, for individuals and particularly for regulation-compromised institutions like education and healthcare. Is the language of entrepreneurship adequate to communicate its powerful effect on driving economic growth, creating betterment for all, raising productivity and escaping bureaucratic sclerosis?

We worry about finding the right language to stimulate the newest generation to a life of entrepreneurship, and we experiment with some options.

Key Takeaways

There is a group of innovative thinkers in economics calling themselves i4j: innovation for jobs. They focus on an economic theme they refer to as the People-Centered Economy. When many innovators are exploring how to automate jobs and replace human with technology — especially the software called A.I. — they are exploring how to design the structures and incentives to make people even more engaged in the economic process of wealth creation, rather than less.

When thinking about the future of jobs and the people centered economy, we should think of entrepreneurs. In the future, everyone will be an entrepreneur. Entrepreneurship is the people-centered economy, or what we call practical economic humanism.

Is our language right?

Entrepreneurship is a tough word for young people to deal with. What does it mean? What exactly is entrepreneurship? What might be more inspiring for them is to focus on the ethic of entrepreneurship. That ethic is service to one’s fellow man — service that is designed to improve their lives. Customers indicate whether or not the entrepreneur is successful in improving their lives by buying or not buying. And it is through the lens of ethical service that they can understand the role of profit. Profit is not the reason people become entrepreneurs — it’s the emergent result. Profit is the signal that society judges that the entrepreneur is allocating scarce resources well. Without profit, the entrepreneur does not continue the service. Service without profit is unsustainable. The ethic of service to others and the emergence of profit as an outcome — a signal of approval — go hand in hand.

In this podcast, we experimented with a new language of entrepreneurship via the acronym S-E-R-V-I-C-E.

S stands for Service: practical economic humanism is entrepreneurs serving others and doing so for profit. It’s the Austrian version of service: I serve you because it is good for me, in every way (purpose, meaning and autonomy). Profit is the signal from the marketplace that the act of serving is positively viewed by customers.

E stands for Empathy. In order to serve, one needs to understand the subjective needs of others and to understand how to meet those needs on the user’s terms. Subjective preferences are idiosyncratic, inconsistent and emotionally based. Empathy recognizes this, and treats everyone’s preferences with respect. Empathy is the number one skill of the entrepreneur.

R stands for Resourcefulness — to meet others’ needs in ways that are new, different and better, the entrepreneur assembles resources and persuades others to contribute to the initiative — financiers, employees, partners, vendors. An assembler of scarce resources must convince others that this is the best use that could be made of them — make a business case. There’s a self-reliant resourcefulness in the virtuous character of the entrepreneur.

V stands for Value — creating value and facilitating a valuable experience for customers is the point of entrepreneurship. Value is in the mind of the person who experiences it — it’s a feeling, a satisfaction, the kind you get when a promise is kept. Taken together, all the people whom the entrepreneur serves constitute the market and the market is the judge of what is valuable. Firms and entrepreneurs don’t create value or add value, they make it possible for customers to experience value.

I = Investment, the action of sacrificing in the current time period in order to produce greater value in the next time period. Investment is the opposite of hedonism. It requires the long term view — if I make this sacrifice now, or this investment now, I am giving up alternative current uses of that money or those resources, but I am willing to do so because I see the possibility of a return in the future. Society needs entrepreneur-investors to create the future.

C = Collaborativeness; entrepreneurship requires the assembly and molding of a team, and synthesis of team ideas and contributions; finding the right way to collaborate by maximizing individual talents and perspectives. A supply chain is a collaboration. A factory is a collaboration. A beauty salon is a collaboration. A construction site is a collaboration. Man is naturally collaborative in bringing value experiences to others.

E = Ethical: successful entrepreneurship is moral action, with pure intentions. Any other approach will fail. The idea of exploitation in capitalism is so far wrong and it doesn’t withstand scrutiny. The entrepreneur needs the approval of customers and markets, including the market for labor and for partners. It makes no commercial sense to be unethical.

Perhaps we could communicate the acronym S-E-R-V-I-C-E and the cogent set of ideas behind it, the integrated concept of what entrepreneurs do and what entrepreneurship is.

The mental model is that of SERVICE WARRIORS. Energetic committed people, combating need and want and dissatisfaction. Organizing people and resources in the fight to establish new improved value, to raise standards, to lead the way to a better place.

Models to Graphically Communicate Complex Ideas and Concepts

Another part of my discussion with Jeff Saperstein concerned the design of simple visual models to clarify complex processes and concepts. One example to which we referred was that of the Individual Economy. With today’s technology, any individual can become a Service Warrior entrepreneur, integrated into the larger ecosystem of economic services through interconnectivity, networks and global exchanges and supply chains. The idea of the individual economy is explained in Chapter 2 of our book, The Interconnected Individual: Seizing Opportunity in the Era of AI, Platforms, Apps, and Global Exchanges (Check it out on Amazon). See also the action model of “The Individual Economy”. It identifies a process and a journey, with a starting point, key structural elements, relationships and dynamics. That’s a complex system about which authors could write white papers and books — but a simple graphic can capture its essence in one page.

Each week at Economics For Entrepreneurs, we offer such knowledge graphics and models as free downloads. Recently, for example, Dr. Mark Packard offered his groundbreaking theory of marketing for the 2020s in a series of five podcast lessons. We captured the essence of his “Value Learning Process” in one process map: View/Download PDF.

Trini Amador presented the essence of three decades of learning about how to build and nurture powerful and effective brands for any kind of business: Listen Here. We captured this expertise in our “Brand Uniqueness Blueprint” – View/Download PDF.

The Genius Of The Consumer

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Entrepreneurship is the intentional pursuit of value. This pursuit fuels the engine of economic growth. The entrepreneurs who achieve the realization of value become folk heroes, and the great firms that create value at scale – Apple, Microsoft, Amazon, Facebook, Google – are stock market heroes.

All of this is acceptable wisdom. However, it’s the wisdom of outcomes, of recording the score after the play has been completed. Who drew up the play? Don’t we concede some genius to the coach and the offensive co-ordinator as well as the quarterback and the wide receiver?

Who Is Pursuing Value?

In order to understand cause and effect, we have to start at the input, not the outcome. Who is actually pursuing value? How did the entrepreneur – or Apple – know that something new was needed? That some improvement was required to retain the role of stock market hero?

Henry Ford is often quoted as saying (although he probably didn’t), “If I had asked people what they wanted, they would have said faster horses.” The implication is that he placed no faith in the identification of consumer needs. His preferred method was invention (coming up with something new through his own genius) followed by innovation (translating the invention into something that could be produced, and then sold on the market).

In fact, Ford’s attitude, according to Harvard Business Review, “had a very costly and negative impact on the Ford Motor Company’s investors, employees, and customers”. Because it turned out that, once consumers had Model T’s, they quickly decided that what they wanted was better cars. General Motors developed a response in the form of their “A Car for Every Purse and Purpose,” strategy which aimed to produce cars for distinct market segments aided by installment selling, used car trade-ins, closed car models, and annual model changes. The Ford Motor Company was quickly relegated to a minor, small-share role in the American automobile market.

Think of this as the genius of the consumer. One minute, they don’t have cars. Next minute they are demanding not only better cars, but also better ways to buy them, better aesthetics, greater variety and frequent upgrades. Such boldness, such expansive thinking, such imagination! Edison brought them lightbulbs, and they imagined a world of devices attached to an electricity grid providing on-call productivity services of all kinds. Steve Jobs brought them the iPhone and they interconnected themselves to each other and to sources of knowledge and to global supply chains.

The double genius of the consumer.

What is this genius? It is twofold. 

First, it is consumers who actually create value. How so? Because they are the ones pursuing it.  Entrepreneurs and the innovators put resources – such as cars and refined gasoline and silicon chips and touchscreens and internet connections – into consumers’ hands, and then the consumers roar into action, their creativity unleashed by new affordances. They try to create as much value as they can with the new resources. They drive to work and drive to school and drive across America and put grocery and tools in the backs of their cars (Hey, Henry! Make me a pick-up truck!), and maybe sleep in the car (Hey, Henry! Make me an RV!) and maybe make music in the car by singing and whistling to themselves or to their kids in the back seat (Hey, Henry! Where is the radio?), and maybe find themselves wishing they could call home to say when they’ll be home for dinner (Hey, Henry! How about a carphone?). Value occurs entirely in the consumer’s domain (or the customer’s if you are in B2B). Value is a feeling of satisfaction in the consumer’s mind.

Which brings us to the second aspect of the consumer’s genius. It’s their dissatisfaction. Henry Ford wanted to accuse them of lacking imagination. He got it all wrong. Anyone can imagine the future (flying cars for example). Not many can get it right. Consumers don’t waste their time on such high error rate activities. They concentrate on a subject where they are always right: their own feelings of dissatisfaction. “Henry, we get wet driving your car in the rain!” “Henry, it’s really hard to change the tires.” “Henry, I can’t afford to pay you that amount of money all at once. Give me some time, won’t you?” “You said it only comes in black, but blue is my favorite color.”  “Henry, your Model T looks the same this year as it did last year.” “Henry, can you speed this thing up?” “Henry, I need to work remotely. Can you make my F150 like a mobile office?”

The consumer has big dreams.

How genius is this? Dissatisfaction indicates that the consumer is able to dream bigger than the producer. Every new invention that becomes an innovation and is introduced to the market is immediately scrutinized under the lens of dissatisfaction, critiqued and criticized. No matter how many millions or billions of development dollars went into it, no matter how many Ph.D. engineers and Harvard MBA’s brought it to market, it can not survive the consumer’s examination unimproved. Because the consumer has big dreams.

The genius of the consumer outstrips that of the entrepreneur. Economists see the entrepreneurial process as one of trial and error, with the emphasis on error – a lot of mistakes before arriving (with the help of consumer feedback, of course) at a salable proposition, which is defined as one that generates less dissatisfaction than some alternative on which the consumer could spend their money.

Entrepreneurs are still heroes of course. If they weren’t willing to invest time, money and ego into the process of trying to please consumers, despite all the rejections, then there would be no progress. We might still be driving Model T’s, because no entrepreneur was willing to suffer the wrath of dissatisfied customers. We love our entrepreneurs. And we especially love those with more empathy – more ability to listen to consumers’ complaints to stimulate their imaginations for future betterment.

But let’s not err in identifying the locus of genius in this market process. Let’s help consumers achieve their dreams (before those of the entrepreneur).

A Values-Driven Entrepreneur Shares Ten Principles For Success In The Highly Competitive World Of Sports Content.

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There are many kinds of entrepreneurs. They are all instigators of win-win arrangements in which customers are served in innovative ways by enterprising individuals and firms. Lives are improved for consumers and producers.

Recently, I was able to learn the path to success of an individual who chose the crowded and highly contested field of sports content production, navigated a way to the top, and then broke out in a new entrepreneurial distribution initiative. Jason Whitlock, the famed sports journalist and occasionally outspoken opinion commentator, shared many principles of his success;  here is a summary.

 Choose a field that fits your personality and interests.

Entrepreneurs talk about assembling a unique and competitively advantaged set of resources. Jason’s unique resources are a love of sports, some original thinking, and a distinctive personality that he was able to express in writing. He wasn’t deeply technically trained for his first profession (journalism) beyond writing for his college newspaper. That wasn’t the point. His commitment to the pathway – starting at the very lowest point in the climb – was the point. This is what the textbooks and white papers call effectual entrepreneurship.

Choose your path based on vocation, and not purely for financial reasons.

Don’t choose entrepreneurship to “get rich” or “make a killing”. Choose it because it’s your vocation. Jason wanted to stay in the world of sports, one he’d joined by playing football in college. If he could spend the rest of his life writing about and talking about sports, he felt he’d be happy – he’d have life licked, as he put it. Would he make money? An adequate salary probably, but money was not his goal.

Credentials are nice but hard work and experience advance you.

Jason has won a number of prestigious awards over his time on the path to success. He was delighted to receive them. But he stressed that advancement comes not from the credentials but from the hard work and experience-gathering of which they are a reflection. Experience is the most important: learning from others, learning from circumstances and events, learning from setbacks, learning from observing industry trends and what happens to others. Experienced entrepreneurs are the most successful in business even if they have made mistakes along the way – because they are able to glean from their experiences what is most important for the success of a business and what is merely incidental or actually detrimental.

Let your values guide you the whole way – define them, write them down, adhere to them.

Jason has thought deeply about – and codified – his own values. He includes them in his personal profile on his entrepreneurial distribution platform, Outkick. He cites Booker T. Washington as one of his guides. The entrepreneurial life is a values-driven life.

Study your field – know its history and role models.

It dawned on Jason why they teach you history in school – in order to learn about trends and the consequences of actions and the role of change and the nature of competition in ideas, institutions, nations and firms. Having chosen sports journalism as his field, he studied it deeply, to get a sense of how it changed over time, with technology, and in the culture. He tried to imagine – even though no-one can forecast – how it might evolve over time, and to equip himself for a new and different future.

Your intuition and innate ability to read people are your best tools for managing the future.

We discussed the entrepreneurial act of embracing change and trying to “stay ahead of it”, in Jason’s words. How do you do that? He elevates the role of intuition and empathy over data gathering and predictive analytics. At Mises University 2020, Professor Peter Klein spoke of the elevated role Austrian economics allocates to those two cognitive skills, and even cited academic studies about the entrepreneurial advantages of intuition (“smart intuitors”) among cognitive skills.

Be yourself! Emphasize your own uniqueness, personality and talents.

 Many of the assets Jason brings to the business of sports are personal and individual – a sense of humor, a jaunty outspokenness, a willingness to delve below the surface in defiance of conventional wisdom. In a corporate world, these traits can be viewed through a clouded lens; in the entrepreneurial world, they can be great strengths and differentiators if applied for customer benefit, information, and entertainment. Be yourself, and on your vocational path, your individual attributes will support you in your journey.

Always keep building a bigger and bigger platform for yourself and your content.

Jason started his career at the bottom of the ladder, covering minor college sports for a local newspaper as a part-time reporter. That’s a platform – a small one. He kept ascending on to bigger platforms – a major city newspaper, then a national reporting and opinion platform (ESPN), and now an independent internet platform (Outkick). There is always the opportunity to expand and grow.

Embrace change; try to stay ahead of it by always reinventing yourself.

By studying change in his industry and attempting to understand it and chart it, or at least acknowledge it, Jason was able to avoid being caught out by unexpected disruption, and to embrace the wave. If it is impossible to predict and master change, it is feasible to be the kind of economic actor who can self-reinvent, whether that is by learning, moving from platform to platform, adding new skills and capabilities, or finding new audiences. Never get locked in to one persona or set of capabilities.

Your intuition and innate ability to read people are your best tools for managing the future.

 I asked Jason how he predicts the future. Of course, he acknowledged, you can’t do that. But you do have tools, and intuition and what he called an “innate ability to read people and situations” are the most important. This is consistent with scientific research into the cognitive attributes of successful entrepreneurs. They have highly developed intuitive skills as well as more formal cognitive abilities, and it is a highly developed intuition that gives them the confidence to make quick decisions without waiting for all the data.

Always, always put your customer first. Be honest with them, be objective, and serve them distinctively.

It is the first principle of economics for business that the consumer is sovereign and that a successful business puts the customer in first role in everything that they do. Jason Whitlock confirmed the same principle. For a sports content producer, the customer is the reader, viewer or listener. Jason characterizes his audience as the intelligent sports fan who can appreciate an original take and distinctive reporting on subjects that many other content producers are covering in a more conventional fashion.

He commented on how athletes today don’t understand the principle. The customers are fans who attend the events and enjoy the performance. Athletes sometimes misunderstand and think that “their twitter feeds are their fans” and often go to the point of ridiculing or rejecting or offending their customers. We’d call that a failure to demonstrate empathy, and disrespecting consumer sovereignty. Successful entrepreneurs don’t make that mistake.

 

You can listen to Jason on the Economics For Entrepreneurs podcast #75.

 

 

75. Jason Whitlock: A Values-Driven Entrepreneur Shares Ten Principles for Success in the Highly Competitive World of Sports Content

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Key Takeaways and Actionable Insights

There are many kinds of entrepreneurs. They are all instigators of win-win arrangements in which customers are served in innovative ways by enterprising individuals and firms. Lives are improved for consumers and producers.

On this week’s Economics For Entrepreneurs podcast we dissect the path to success of an individual who chose the crowded and highly contested field of sports content production, navigated a way to the top, and then broke out in a new entrepreneurial distribution initiative.

Jason Whitlock shares with us many principles of his success. We highlight just a few of them here to whet your appetite for the podcast.

Jason Whitlock's 10 Steps to Business Success

Choose a field that fits your personality and interests.

We have talked a lot with our contributing economics professors about assembling a unique and competitively advantaged set of resources. Jason’s unique resources were a love of sports, some original thinking, and a distinctive personality that he was able to express in writing. He wasn’t deeply technically trained for his first profession (journalism) beyond writing for his college newspaper. That wasn’t the point. His commitment to the pathway — starting at the very lowest point in the climb — was the point. This is what the textbooks and white papers call effectual entrepreneurship.

Credentials are nice but hard work and experience advance you.

Jason has won a number of prestigious awards over his time on the path to success. He was delighted to receive them. But he stressed that advancement comes not from the credentials but from the hard work and experience-gathering of which they are a reflection. Experience is the most important: learning from others, learning from circumstances and events, learning from setbacks, learning from observing industry trends and what happens to others. At Mises University 2020, Dr. Per Bylund told us that experienced entrepreneurs are the most Austrian (Mises.org/E4E_75_Bylund) — and therefore the most successful in business — because they are able to glean from their experiences what is most important for the success of a business and what is merely incidental or actually detrimental.

Let your values guide you the whole way — define them, write them down, adhere to them.

Jason has thought deeply about — and codified — his own values. He includes them in his personal profile (Outkick.com/Jason-Whitlock) on his entrepreneurial distribution platform, Outkick.com. The entrepreneurial life is a values-driven life.

Your intuition and innate ability to read people are your best tools for managing the future.

We discussed the entrepreneurial act of embracing change and trying to “stay ahead of it,” in Jason’s words. How do you do that? He elevates the role of intuition and empathy over data gathering and predictive analytics. Again, at Mises University 2020, Professor Peter Klein spoke of the elevated role Austrian economics allocates to those two cognitive skills, and even cited academic studies about the entrepreneurial advantages of intuition (“smart intuitors”) among cognitive skills (Mises.org/E4E_75_Klein).

Always, always put your customer first. Be honest with them, be objective, and serve them distinctively.

It is the first principle of Austrian economics in business that the consumer is sovereign and that an Austrian business puts the customer in first role in everything that they do. Jason Whitlock confirmed the same principle without any prompting. For a sports content producer, the customer is the reader, viewer or listener. Jason characterizes his audience as the intelligent sports fan who can appreciate an original take and distinctive reporting on subjects that many other content producers are covering.

He commented on how athletes today don’t understand the principle. The customers are fans who attend the events and enjoy the performance. Athletes sometimes misunderstand and think that “their twitter feeds are their fans” and often go to the point of ridiculing or rejecting or offending their customers. We’d call that a failure to demonstrate empathy, and disrespecting consumer sovereignty. Successful entrepreneurs don’t make that mistake.

These are just a few of the incisive and instinctively Austrian insights from Economics For Entrepreneurs podcast #75 with Jason Whitlock.

Free Downloads & Extras From The Episode

“Jason Whitlock’s 10 Steps to Entrepreneurial Success” (PDF): Click to Download

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

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74. Raushan Gross on The Inspiring Life and Beneficial Impact of Entrepreneurs

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Raushan Gross is one of the outstanding writers on the subject of entrepreneurship. In his latest e-book, The Inspiring Life and Beneficial Impact of Entrepreneurs, he establishes the ground rules of the complex system of entrepreneurial innovation in seven principles.

Key Takeaways & Actionable Insights

1) Consumer dissatisfaction is transformed into innovation by alert entrepreneurs.

The fuel that powers the engine of innovative progress is consumer dissatisfaction. The creativity of entrepreneurs transforms the fuel into the energy of innovative ideas, positive change and economic growth.

2) The engine keeps running because entrepreneurs continuously compete for customer approval.

Consumers and customers accept the latest innovation and keep seeking the next one. This relentless search inspires entrepreneurs to out-do each other in trying to bring the next improvement to market. We call it competition, but it’s really the entrepreneurial engine that never stops.

3) Entrepreneurs are empowered by their continuous learning from a constantly changing marketplace.

Some call the entrepreneurial process “trial and error”. Error should not be viewed as a negative concept — it’s learning. The entrepreneur gets smarter with every learning occasion. Learning is continuous because the market is constantly changing.

4) Entrepreneurship is the foundation of a productive society.

A productive and progressing society is the result of consumers seeking betterment and entrepreneurs seeking to serve them via innovation and improvement. There’s no alternative, if what we want is progress. All regulation and intervention impede the system. The worst kind of intervention — socialism — destroys it entirely.

5) Entrepreneurship flourishes most where there is a supportive history and culture.

To preserve and encourage entrepreneurship and to avoid the descent into a sclerotic interventionist economy, we need to weave recognition of the role of the entrepreneur into our culture and institutions. We need to teach it in our K-12 schools and discuss it around the family dinner table.

6) A world without entrepreneurs would be pretty grim.

Economics often sheds light via thought experiments. Here’s one: imagine a world without entrepreneurs. No innovation. No progress. No automobiles and no iPhones. It doesn’t take long to realize the losses we would suffer and the quality of life we would lose.

7) The post-pandemic world is the perfect time to observe the impact of spontaneous agility and adaptiveness.

There is a tendency for us to focus on the destruction that resulted from the pandemic and the politicians’ misguided imposition of lockdowns. Raushan Gross looks in the other direction: what an opportunity to marvel at entrepreneurial adaptiveness at work in the economic recovery.

Free Downloads & Extras From The Episode

To download Raushan’s latest ebook, The Inspiring Life and Beneficial Impact of Entrepreneurs, visit E4EPod.com/Raushan.

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

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73. Mark Packard on the Right Decision Logic for the Customer’s Learning Process

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In E4E episode #73 with Mark Packard, we review three elements of new product / new service launching decision making.

  • Identifying the appropriate decision logic.
  • Maximizing information marketing.
  • Calculating target customers’ opportunity cost.

Key Takeaways and Actionable Insights

At the time of the introduction of any innovation, new product, new service, upgrade or improvement to a current offering — any change, in other words — there is uncertainty for both the customer and the entrepreneur. The customer does not know how to assess the value of the new offering, and the entrepreneur does not know if the customer will decide in favor of choosing the new offering. That’s a lot of complexity to deal with.

Uncertainty can’t be eliminated from business, and, for the entrepreneur, it’s an anxious state of mind when knowledge is absent. Happily, there are tools to help bolster confidence in facing knowledge absences. Mark Packard introduced several in our E4E podcast #73.

1) Use the most appropriate decision logic.

All knowledge absences are not the same. There are some unknowns that are knowable — such as costs of goods or market size. And there are some unknowns that are unknowable — such as the future behavior of individuals making choices in a changing and competitive marketplace.

There is also a cost of obtaining more data or more knowledge to fill gaps even when they are fill-able. If the cost of knowledge is high, and the risk of loss from not having the knowledge is low, then it might not be worth pursuing additional knowledge.

There are two types of strategies available to the entrepreneur. There’s a choice between “predictive logic” in which the entrepreneur undergoes more cost to get better data to make a prediction about the future, or “adaptive logic” in which the entrepreneur decides to stick with the amount of information currently available and proceed anyway, being sure to be doing so only when the risk of loss is limited, i.e. going with the gut but not betting the farm.

For example, a very high-risk factor in an entrepreneurial judgment would be how much the production inputs will cost. But collecting that information is typically pretty low cost, and it may be easy enough to get a price guarantee. So, while predictively estimating total costs is ‘uncertain’ or unpredictable in a strict sense, an adaptive strategy in dealing with uncertain costs is not worth the trouble. A predictive strategy is probably better.

A counterexample would be whether consumers would be more drawn to an orange logo or a red one. You can get that data, but it would cost a bit to do enough market research to get a definitive answer. But it’s such a low-risk factor that it’s probably better to just (predictively) pick one.

Mark has provided us with a decision logic tool (PDF): Mises.org/E4E_73_PDF_1

2) Information marketing.

Customers choose goods and services for emotional reasons — their feelings about whether or not the new offering will improve their lives and give them satisfaction. But before they can make the emotional decision, they want to make sure they have all the functional information they need to even make the consideration. Will it work? Will it work for me?

Consequently, the customer’s uncertainty about how to choose varies with the amount of information they feel they have versus how much they need to make a decision.

The entrepreneur may believe that they have provided all the information possible or required. But customers don’t always absorb it, aren’t always paying attention, or can’t always remember it, or receive the information in the wrong context.

Wise entrepreneurs continuously monitor the target customer’s level of information. A simple who-what-how-why tool will suffice (and you can add when and where if they’re relevant to your market).

Who? — Is it for me? What — what benefit does it deliver? How — how does it work? Why? — Why should I believe the claims.

Make sure customers can answer these functional questions before working on their emotional acceptance.

Here’s Mark’s checklist for Information Marketing (PDF): Mises.org/E4E_73_PDF_2

3) Opportunity Cost Calculator

Economics tells us that the cost of choice for a customer is opportunity cost — what does the customer give up by choosing in favor of the new offering? Opportunity cost calculation may not always be a conscious process for customers (although sometimes it is, such as in comparison shopping for a new car), but it is always an active one.

The entrepreneur should therefore calculate the opportunity cost that’s in the customer’s mind. What alternatives are they considering? How dissatisfied are they with alternatives? How do they feel about the capability of the new offering to resolve their dissatisfaction? How do they relate that to price and exchange value? What adjustments can entrepreneurs make to change the calculation in their favor?

Every customer’s calculation is different, so the entrepreneur should collect the data from individuals rather than in survey data. We provide a calculating mechanism you can use: Mises.org/E4E_73_PDF_3

The Value Learning Process

This is the final installment in Mark Packard’s value-dominant marketing series on the Value Learning Process. Check out previous episodes and the tools Mark provided to complete the picture of the value cycle and how to manage it.

#44 Value Learning Process: Introduction and Overview with Process Map: Click Here

#55 High-Knowledge Customer Tool and Mindfulness Tool: Click Here

#62 City-of-From, City-of-To Tool: Click Here

#69 The Two Kinds of Knowledge Entrepreneurs Must Have, and How to Compound Them: Click Here

Free Downloads & Extras From The Episode

“Dr. Mark Packard’s Decision Logic Model” (PDF): Mises.org/E4E_73_PDF_1

“Information Marketing To Target Customers For New Products” (PDF): Mises.org/E4E_73_PDF_2

“Customer Opportunity Cost Calculator” (PDF): Mises.org/E4E_73_PDF_3

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

Apple Podcasts, Google Play, Stitcher, Spotify