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The Value Creators Podcast Episode #29. Raushan Gross on Entrepreneurial Value Creation in the AI Economy

Professor Raushan Gross, who teaches Business Management And Leadership at Pfeiffer University, has focused his most recent research on the impact and influence of A.I. on entrepreneurship. He published some of this research in a series of articles at mises.org. One of them links A.I. to The Wealth Of Nations, and, of course, the wealth of nations is driven by entrepreneurship. From this vantage point, Professor Gross identifies the multifaceted impact of AI on society, economics, and business strategies, advocating for a paradigm shift in management thinking to adapt to technological advancements.

Resources:

The Fate or Wealth of Nations: AI, Robotics and Automation

Will AI Learn to Become a Better Entrepreneur than You?

Prices, Food, Employment: AI and Robotics Are for Regular Folks, Not Just the Elite

Would You Hire an AI-powered McRobot or a Human Employee?

Artificial Intelligence Enhances Consumer Sovereignty

Artificial Intelligence Can Serve Entrepreneurs and Markets

The Fear of Mass Unemployment Due to Artificial Intelligence and Robotics Is Unfounded

Show Notes:

0:00 | Intro
2:27 | Exploring AI’s Impact on Entrepreneurship
7:18 | Can AI Surpass Human Entrepreneurship?
8:48 | Exploring AI as a Service and AI Stacking
12:08 | AI as a Team Member in Entrepreneurship
15:10 | Small and Medium Businesses Can Embrace AI for Strategic Advantage
17:13 | Transition to Autonomous Decision-Making with AI
21:13 | Concerns on AI Centralization and Oligopoly
25:15 | Adam Smith: Global Scale AI is the Wealth of Nations
26:40 | Elon Musk on Value Creation: the Value Meter
29:14 | Does AI Redefine Management by Value Metrics?
32:14 | Wrap-Up: Rethinking Management in the Digital Age

Knowledge capsule

AI changes how individuals and entrepreneurial firms interact with the market.

  • We can’t be sure of the form the interaction will take.
  • But we know that we are using AI in every market transaction
  • While some individuals have doomsday visions of AI, entrepreneurs ask, “How can I use this to improve my business and how I serve customers?”

Human ingenuity will always be a critical and irreplaceable part of entrepreneurship.

  • AI is an active tool for entrepreneurs.
  • It will be a competitive factor in servingand delighting customers.
  • It’s a service to entrepreneurs to help them succeed.

Entrepreneurs can assemble and combine bundles or stacks of AI services into complete business models.

  • Austrian economics explains how entrepreneurial business consists of combining and recombining value-facilitating assets.
  • This is precisely how entrepreneurs utilize AI.
  • There’s no need to own the assets, just to control them and their value direction, and this is the business service that today’s AI tools offer.

AI can be a team member in value creation teams recruited by entrepreneurs.

  • Most productive work is done in teams.
  • AI can be a team member, bringing new knowledge, querying and challenging existing knowledge, and helping to advance knowledge-building at speed.
  • AI can also automate a lot of implementation processes, freeing entrepreneurs to focus on creativity and innovation.

AI will also play a role in technological deflation.

  • While governmental monetary and fiscal policy creates inflation, the role of the entrepreneur and technology is deflationary: making production faster and lower cost with improved quality.
  • AI will contribute by lowering the costs of doing business.
  • Entrepreneurs will be more empowered and the general level of well-being will rise.

Any risks lie in the danger of centralization of AI.

  • Will governments centralize AI under their singular control?
  • WIll the massive investments required in building AI server farms and databases and LLM’s result in a few corporations controlling AI for the whole economy?
  • It’s more likely that entrepreneurs will be able to build their own models using base LLM as a platform.

One of Elon Musk’s innovations points to AI as a “value meter”.

  • Algorithmic management at Tesla includes the ability of AI to assess the real time value creation product resulting from a team’s work with the resources at its disposal.
  • The AI can simultaneously scan all the other value creation opportunities available at the same time and reallocate teams and resources to higher value uses.
  • In this way, AI acts as a “value meter” for the productive activities of a work force and factory.

Global Competition in AI:

  • There will be a global race for AI dominance among nations.
  • Those nations that are most  energetic and innovative will shape the future landscape of AI development.

The Value Creators Podcast Episode #28. Chet Richards: Certain To Win

Chet Richards discusses the intersection of military strategy and business leadership, offering valuable insights for navigating complex environments. Emphasizing the importance of agility and adaptability, Chet explores Colonel John Boyd’s OODA Loop concept, highlighting the need for continuous observation, orientation, decision-making, and action. 

He underscores the role of leadership in shaping organizational culture, driving innovation, and maintaining an external focus for sustained success. The idea of being “certain to win” is derived from Sun Tzu’s teachings, emphasizing the importance of constant self-evaluation and continuous self-improvement, conducted from an external perspective.

Resources: 

Chet Richards on LinkedIn

Certain To Win: The Strategy of John Boyd Applied To Business

Zen Mind: Beginner’s Mind: 50th Anniversary Edition

Show Notes:

0:00 | Intro
3:00 | Chet’s Perspective of Strategy: Strategy is about people
09:22 | Vision: Attraction and Uplifting Spirit
17:08 | Centrality of Time in General
25:14 | Helping Companies with Reorientation: Many-Sided Implicit Cross-Referencing
29:15 | Old and New Experiments and Allocating Resources for Success
33:34 | Ambi Dexterousness: Chaos Theory, It’s Called Explore and Exploit
41:52 | Culture as Opposed to Organization
42:24 | Wrap-Up: Culture as Developing External Focus and Acting on It

Knowledge Capsule

Strategy is about people.

  • It’s an error to think about strategy in terms of numbers (like market size and shares), spreadsheets, or plans and analyze competitive strengths and construct competitive advantages. 
  • Strategy is entirely about people and how they work together.

People should be “stoked up” and in harmony.

  • Ask if the people in your firm are “stoked up” – inspired by a shared vision, energized by a shared mission, and excited about what can be achieved.
  • And are they in harmony – fully aligned and all pulling in the same direction?

The harmonious team maintains an External Focus and an Open System:

  • Leaders emphasize the significance of maintaining an external focus in business.
  • Leaders operate as open systems, avoiding internal entropies.
  • Stress the importance of adapting to external changes for organizational success.

If these conditions are met, the externally-focused firm can move forward towards success, whatever the chaos of the world.

  • Unexpected events, surprises, setbacks, and unplanned opportunities represent the natural state of the world.
  • Different people within the firm will react differently, but if they are all pointed in the same direction towards a shared goal, a creative shared response to the changing environment will emerge.

Challenges in Maintaining External Focus:

  • It’s hard to maintain an external focus over time.
  • Highlights the role of leadership, particularly the CEO, in initiating and maintaining external orientation.
  • Emphasizes the need for tangible actions, mechanisms, and a culture encouraging an external focus.

Bureaucratic Challenges:

  • Internal bureaucratic hierarchies represent a challenge for the externally oriented firm.
  • There’s an inevitable tendency for individuals to prioritize internal career advancement.
  • This has a negative impact on innovation when internal orientation prevails over external market dynamics.

Cultural Strategy:

  • Think of “culture” and “strategy” interchangeably.
  • Culture plays a critical role in organizational success.
  • Culture aligns with the principles of harmony and orientation, essential for an effective strategy.

Portfolio of Experiments:

  • A business is a portfolio of experiments.
  • Discusses Lockheed’s skunkworks approach as an example.
  • Notes the challenge of maintaining viability for experimental endeavors alongside established operations.

Certain to Win Philosophy:

  • Chet Richards derives the concept of Certain To WIn from Sun Tzu’s teachings.
  • Focuses on constant self-improvement and self-evaluation.
  • Advises leaders to concentrate on fundamental aspects, harmonize efforts, and remain open to creativity.
  • Winning consists of passing one’s tests, not those of others.

Economic Life After The Corporation.

Corporations are a major protagonist in the capitalist system. We think of them as the source of the goods and services we accumulate and combine to power our businesses, furnish our homes, enable our communication and mobility, aid our productivity, entertain us, clothe us, protect us, and generally provision us both as businesspeople and consumers. 

When we think of individual items that make up the categories of these goods and services, we often think in terms of innovation: the new iPhone that didn’t exist 20 years ago, or AI chatbots and electric cars, or new clothing styles and fabrics, online shopping with same day delivery, fiber optic cable and cloud computing, streaming video and CRM systems and Quickbooks and run-flat tires. Innovation is the output of corporations.

But corporations themselves have not always been a part of the economy, or central to economic functioning. They were, in fact, a capitalist innovation. Prior to their introduction, in the second half of the 19th century, the more usual form of economics organization was the partnership. This was generally an arrangement of two individuals, sometimes a few more, who came together to collaborate temporarily on a single-purpose business undertaking. The partners typically invested their own money, and did so at one time, since they would expect to finance any future expansion out of the positive cash flow from the business. Mostly, these were small, local businesses although some proved able to generate broader appeal. 

A great example is Josiah Wedgwood, who, along with his partner Thomas Bentley, established his company as a leader in pottery, producing innovations such as creamware and Jasperware (often in the distinctive shade of Wedgwood Blue). The company had an international clientele, including Catherine the Great of Russia and the Queen of England, as well as a large base of affluent households as customers. But the partnership was not a corporation and it was never a big business. 

With the introduction of the limited liability corporation, new vistas of scale and scope emerged. Indeed, the mass production, mass distribution, mass marketing businesses of the late nineteenth and early twentieth century required the new corporate structure to make them possible. The new corporations could recruit investors widely when investors knew that their liability was limited to the amount of their investment. Eventually, stock exchanges, funds and investment clubs would become institutional supports for the growth of large corporations. The emerging corporations could contract with each other for scale implementations never before dreamed of – Standard Oil contracting with railroads to bring affordable illumination in the form of kerosene to every household in America, and Carnegie Steel (and eventually US Steel) contracting for ever more technologically advanced steelmaking equipment to raise the quality and lower of the price of steel for the construction boom across the US. The corporation was an emerging benefit for customers and consumers throughout the world economy.

But all systems can decay. Science calls the process entropy – the leakage of productive work in the form of waste and the loss of clear direction and defined purpose. In the case of corporations, we can detect several forms of entropy. The first is found in their management systems. The corporations were founded by entrepreneurs, purpose-driven individuals aiming to serve the needs of customers and receive the market’s rewards for doing so. These entrepreneurs found that the new scale and scope of operations they had brought into being required a lot of co-ordination that they could not oversee entirely on their own, so they invented management (e.g. supervisors to oversee workers) and specialized departments (e.g. for construction, operations, marketing and sales, accounting, and so on – individuals focused on specialized tasks via division of labor).

After the entrepreneurs passed on and the managers took over the reins, they transformed management systems into command-and control systems. The goals became prediction (planning and projecting business outcomes in advance), precision (no surprises), and power (coercive and administrative sway over the behaviors of employees). These command-and-control systems were dominant in corporate management in the twentieth century.

These systems, in turn, bred three more distortions of the corporate form. The first is bureaucracy, the mechanism for corporate control. Bureaucracy is not externally focused on production for customer value, but internally on control via compliance and procedures, accounting, regulations, and process management. One of the outcomes is that bureaucracies spawn more and more of the jobs and methods of control, to the point where researcher David Graeber (a professor of anthropology at London School of Economics) coined the term “bullshit jobs” to describe them: jobs that have no point implemented by individuals who recognize them as pointless and totally lacking meaning and purpose.

The second distortion takes the form of entanglement with government. This phenomenon was greatly accelerated by the war economies of the First World War and the Second World War. In these periods, government took it upon itself to allocate resources in the economy to serve war purposes rather than customer needs. One of their methods was to appoint “czars” for munitions production and the production and distribution of supplies for the armed forces, and to import CEO’s and senior executives from the private sector to put them in the czar role with command power over the productive firms in the economy. After the wars, the executives returned to the private sector, but their relationship, and that of the corporations they managed, with government had been irreversibly changed. Corporations now found that they could benefit from government protection via regulations, tariffs and laws, and actively sought them in return for considerations such as political donations, subsidized research and construction contracts, and mutually designed policies. Companies like Amazon, Microsoft and Palantir are entangled with government via their contracts for developing government IT and security and AI systems. Banks accept government subsidies and bail-outs. GM was another that accepted government funds and conceded greater compliance. The separation between the private and public sectors is no longer clear.

The third distortion can be encapsulated in the concept of financialization: the financial sector of the economy (what Americans often call “Wall Street”), which corporations initially utilized productively to fund R&D, internal investment and innovation, becomes an extractive, counter-productive and quite dominant influence, eclipsing the productive sector. Corporate priorities shift to financial quantification and away from the purpose of fulfilling the qualitative needs of customers. The financial sector demands predictable, consistent earnings on a quarterly horizon, compromising the investment firms must make in longer-term projects that may not have a pay-off for years rather than this quarter. Firms use stock buybacks to transfer their profits to hedge funds and institutional shareholders rather than fund current innovation projects. Financial markets prefer cost-cutting and budget control to meet quarterly earnings targets over creative innovation. 

These three distortions of the corporate form will lead to a much different economic landscape in the future. Today’s landscape is dominated by the major global corporate entities and their supply chains, and the financial structures that support them including not only stock markets but megabanks, giant pension funds, hedge funds and corporate finance behemoths like Goldman Sachs. Here are three vectors of change.

  1. The ascendancy of the dynamically flexible network.

Customers drive markets. They identify their own needs and then evaluate all the alternative ways of meeting them, ultimately selecting one or more as the best alternative(s) while continuously remaining open to the next new alternative that emerges from the churn of market dynamics. Increasingly today, customers have the option and ability to sort through all the possible business connections to find the suppliers and partners they prefer. They can close off one connection and switch to another and build a customized, dynamic network. Some of the connections may be to big business, but, increasingly, they will be able to connect to innovative new small and emerging firms with novel solutions. They’ll be able to shape these novel solutions to meet their own distinctive needs. The result will be a flatter network of small to medium-sized firms, highly specialized in serving customer needs, interspersed with a few big businesses providing relatively undifferentiated utility services.

  1. A new relationship with financial markets.

The conceptual size of the statistically dominant corporations today is inflated by their relationship with stock markets. It’s convenient for investors and money managers and CFO’s to bundle multiple businesses together in a single stock. Berkshire Hathaway is the poster child. According to Liberated Stock Trade Berkshire Hathaway owns 65 distinct companies divided into a complex web of over 260 subsidiaries. Why? So as to trade Berkshire Hathaway as a single stock. Amazon, Google, and Microsoft are, to a large degree, similarly structured: they operate multiple businesses under a single brand and stock umbrella. They are financial brands rather than operating brands.

Yet stock markets are no longer fundamental for the capital needs of the largest companies. Investors are trading the stock, but the companies are not raising new capital there. They’re actually pumping capital out of the corporation into the coffers of investors via dividends and stock buybacks. Stock markets are drains on the economy’s productive investment in innovation. They serve the interests of the financial sector not the productive sector. Over time, they’ll become less relevant as corporations fund R&D from free cash flow or from private sources other than stock market investors.

  1. A rise in entrepreneurship

Bureaucratization and financialization exert a significant brake on innovation in large corporations. The cost of innovation has gone up for corporations – the cost in time and administrative burden, as well as the sheer deadweight of size that compels the undertaking of larger and larger projects to move the behemoth’s needle. The opposite is true for entrepreneurial projects in smaller and more nimble companies. The cost of entrepreneurship is coming down in small and medium size businesses. Without the bureaucratic overhead, small and medium businesses can quickly experiment with new value propositions, test and explore with real customers, respond to feedback and expand and grow agile new businesses and brands quickly. The cost of operations is greatly reduced by the advent of AI and plug-in supply chains from the Internet. A new business can be tested, launched, expanded and made profitable before the large corporations have completed their budget meeting.

These three shifts will not herald the end of the presence of the corporation in the economy, but will relegate corporations to a subsidiary, residual role.

The Value Creators Podcast Episode #27. Mark McGrath on Entrepreneurship Versus Managerialism

Adaptive entrepreneurship refers to a dynamic approach to business leadership and business practice that embraces continuous learning, rapid adaptation, and the creation of novel ideas. Mark McGrath and Hunter Hastings discuss the critical aspects of adaptiveness in dynamic environments. They explore the aftermath of failure to adapt to nonlinear external change. The conversation emphasizes the importance of the shift from traditional management to adaptive leadership, as defined by a fusion of entrepreneurial economics and John Boyd’s unique approach to “the whirl of reorientation”, and focusing on the importance of influencing and inspiring collaboration, as contrasted with managerial control.

Mark McGrath highlights the role of appreciation leadership, recognizing the worth of ideas, and fostering human interaction. He advocates for continuous reinvention and the active creation of mismatches to outpace competitors. Entrepreneurs need to embrace adaptive systems, prioritize human-centric leadership, and leverage novel ideas for sustained success in ever-changing business landscapes.

Resources: 

AGLX – Consulting & Coaching Group:

aglx.com

The Adaptive Entrepreneurial Business Model Graphic:

Mark McGrath on LinkedIn:

https://www.linkedin.com/in/markjmcgrath1/

Show Notes:

0:00 | Intro

01:50 | Rethinking Management Amid Uncertainty

04:23 | Entrepreneurship: Navigating Uncertainty for Value Creation

06:38 | Entrepreneurship as a Continuous, Never-Ending Process

08:50 | Massive Mismatch: Preserving vs. Exploring New Futures

14:16 | Disruptive Innovation

15:19 | Entrepreneurial Method as Continuous Ongoing Loop of Value Creation

20:21 | Idea of Entrepreneurial Intent

22:42 | Positive and Negative Feedback: Feedback Loop

25:12 | Organizational Structure and Empowerment in Business and the Military

34:56 | Quantification VS Qualitative Analysis

38:02 | Rethinking Management VS Embracing Adaptive Systems

39:20 | Wrap-Up: Mark McGrath’s Concept of Leadership

Knowledge Capsule:

Defeating Linear Thinking::

  • Failure in business often stems from an inability to adapt to nonlinear external change.
  • Possessing resources is insufficient without the right frame of thinking.
  • Success requires constant adaptation to unpredictable challenges.

Boyd’s Leadership Philosophy:

  • Emphasis on leadership quality over command and control.
  • Leadership is defined as the art of influencing and inspiring collaboration.
  • Appreciation leadership focuses on recognizing worth and understanding how things work.

Reinventing Management:

  • Hunter Hastings proposes to replace the term “management” with an adaptive system.
  • Mark’s response: we don’t use the term “management” and don’t think about it. Leadership quality, not a title in a hierarchy, is crucial for success.
  • Advocacy for a mindset shift away from traditional management approaches.

Continuous Adaptation:

  • Organizations must continually reinvent themselves for sustained success.
  • Industry leaders like Steve Jobs and Warren Buffett exemplify the importance of creating novel ideas.
  • The ability to adapt to changing landscapes is paramount for thriving in dynamic environments.

Human-Centric Leadership:

  • Appreciation leadership promotes human-to-human interactions.
  • Recognition of worth and understanding of how things work are crucial.
  • Contrasts with isolating command and control approaches.

Creating Mismatches for Success:

  • Mark McGrath encourages the cultivation of mismatches or novel ideas. 
  • Adaptive systems recognizing value and fostering continuous learning are keys to success.
  • Gaining a competitive edge involves disrupting the status quo with innovative thinking.

Customers don’t have problems to solve. They have imagined futures that are better than today.

One view of how businesses succeed is that they solve the problems that people need solving. That’s the “jobs to be done” school of thought, popularized by Clayton Christensen and embraced by many others. This school of thought pictures people’s lives as being full of problems, and the role of entrepreneurship and innovation as fixing them.

Do consumers buy a subscription to Netflix because they have the problem of being bored or repulsed by alternative content? Do startup companies buy cloud services from AWS because they have a computing problem to solve? Does Mom buy frozen dinners to solve the problem of what to feed the kids?

No. It’s the wrong mental model – the wrong way to think about the demand side of economics and the role of businesses in our lives. The energy of economic growth derives not from the negativity of thinking about problems but the positivity of thinking about opportunities for betterment. The capitalist business system is powered by customers’ imaginations. They see the possibility of a better future, a set of circumstances that is different from and preferred to the current state. They imagine this desired state, not so much as a set of features, but as to how they will feel in it. Today’s circumstances may be fine, but there’s always that inner voice that thinks, “Things could be better.” When it’s really important, “Things that matter to me could be better.”

It’s purely an act of creativity. It’s what social scientists call “counterfactual”. People are imagining a future that doesn’t yet exist, yet they can conjure up the future feeling in their mind. There might not even be the possibility of it existing today, because it requires an innovation to bring it about. How brilliant is that? It’s the same level of imagination that Einstein employed to think about relativity and  Niels Bohr used to think through quantum physics, when relativity and quantum theory didn’t yet exist.

It is cognitive acts of counterfactual imagination that drive civilizational advance, the unrelenting seeking of human progress. And the same counterfactual imagination drives commercial innovation, from the iPhone to new flavors of breakfast cereal. Things could be better. Our phones could cease to be tethered so that we can talk on them while walking. They could cease to be clunky so that we can enjoy the elegance of design. They could help us do multiple tasks so that we can carry one device instead of many. Users didn’t invent these functions. Users made them possible by imagining the world as a better place – more convenient, more amenable to our preferences for convenience and speed and aesthetics. By being open to new value propositions, users bring new value into being. 

The other face of the customer’s imagination of future value that’s better than today’s is entrepreneurship. Entrepreneurship is the business function that turns the customer’s imagined future into commercial new reality. Entrepreneurship is the second stage of innovative genius, the stage that responds to the customer’s initiation. Entrepreneurship is the imagination of not just the future feeling of satisfaction that the customer feels, but also of the product or service or proposition that delivers the satisfaction. Entrepreneurial imagination becomes more and more substantive over time. It starts with an idea – “what if we were able to….” – that’s framed in an incentive: there could be a significant economic reward from the customer if we are successful in realizing the idea as a deliverable product or service. The process moves from idea to concept to some kind of early-stage artifact (the sketch on the back of a napkin) to prototype and MVP and test market. At every stage there’s a check-in with the customer who is imagining a better future: is this idea / concept / artifact / prototype / MVP aligned with your imagination? Is this what you were thinking? (Because, of course, they don’t “know” what they were thinking. What they had in mind was an abstract desired state. But when prompted with an artifact, they can respond – yes, that sorta/kinda points in the right direction. Such encouragement is sufficient to fuel the entrepreneurial development process.)

There’s an ultimate test of the alignment of the new value proposition with the imagined future state. It’s willingness to pay. If the customer is willing to make an exchange of something valuable to them – usually money or some derivative of money like a credit card payment, but also their time and effort – in return for the new product or service, it must, by definition, feel to them like it will bring about their imagined future state, or at least part of it, or, at the very least, provide a useful test of the viability of reaching that desired state through commerce.

People buy Tesla EV’s. Businesses buy AWS cloud computing services and harness Microsoft’s AI tools to help them succeed. These are all innovations that stimulate the customer’s imagination of a better world – an emissions-free transportation system that counters the trend towards climate change; a world of easy access for all businesses to the most advanced and robust computing power; a world of new learning and experimentation. These are all imagined first by customers – “these things that matter to me could be better” – and then by entrepreneurs in response. It’s not a linear progression, of course. Perhaps the first act of imagination that ultimately led to EV’s was the thought that air pollution from tailpipe emissions is unpleasant. That meme becomes a vector in a complex system where EV’s emerge from an unfathomable number of interactions and consequences and further interactions and new experiments and news cycles and conferences and scientific advances. We can’t untangle it. Reductionism no longer applies. There’s no cause and effect. But EV’s wouldn’t happen without customers imagining a better world in the future.

The Value Creators Podcast Episode #25. Jacqueline Porter on The Power of Visual Design

Visual design is an important element in value creation, especially in telling a brand’s or a business’s story in a way that engages with customers and communicates shared values. Visual designers are multi-talented artists and storytellers with an acute understanding of customers and their emotional responses to visual cues. Our guest this week is Jacqueline Porter, an accomplished professional in her field and a very successful business owner in her own right.

We explored the business of design and creativity from the challenges within design education, and the drawbacks of rigid design frameworks and the value of subjective, creative approaches. A notable reference to a transitional figure in design Steve Jobs shows how simplicity and creativity – rules and no-rules – can work together.

The conversation moves to the realm of implementation in branding, exploring the delicate and shifting balance between fixed and flexible elements. Jacqueline advocates for constant evolution, telling a story with a dynamic interplay between exploration and exploitation for sustained success. Consistency is achieved with creativity, empathy, and adaptability.

Resources: https://www.jacquelineportercreative.com/

Shownotes:

0:00 | Intro

02:28 | Jacqueline’s Defines Visual Design: Inclusions, Exclusions and Importance

03:54 | Nike Example: What Represents a Good Design?

05:32 | Jacqueline on Branding: Advertising’s Impact

06:54 | Professional Approach: Visual and Wood Synergy in Business

09:28 | Clients Don’t Know What They Want: Process VS magic

11:02 | Lum Spirits Story

15:51 | Color Palette: First Step for Visual Representation of Lum Brand

20:09 | Visual Design Mastery: Empathy, Psychology and Branding

21:23 | History of Rules VS No Rules

22:54 | Newtonian Economic Thinking and Bauhaus Analogies

24:42 | Steve Jobs Simplicity is a Transitional Example

26:27 | Designer Examples: Getting Outside of the Box

29:05 | Crack is Wack

32:22 | Implementation of Design

34:50 | Wrap Up: Fixed and Flexible Idea

Knowledge Capsule:

We can all think of excellent elements of great visual design:

  • They become an important part of our lives, our thinking, and our engagement with the world.
  • Jacqueline chose the Nike swoosh to illustrate.

Subjectivity in Design:

  • Design is a field where the subjectivism we advocate in value creation is uniquely valuable.
  • Every customer will respond personally and idiosyncratically to visual design stimulus. It will mean something different to different people.
  • Understanding the psychology of subjective value is a skill for designers.
  • Breaking traditional rules can generate more acute emotional responses..

There was a 20th century movement to make design obey objective rules: “good design”.

  • Bauhaus is associated with the “good design” concept, with prescriptive rules about function, simplicity and order.
  • When these rules were taught in design schools, it raised concerns about students becoming replaceable, like interchangeable parts, due to strict design boundaries.
  • New approaches like the Stanford D School approach left these rigidities behind, introducing the same empathic process for design as we use for value creation: understanding customer emotions, preferences and contexts comes first.

Steve Jobs as a Transitional Example:

  • Steve Jobs, despite being rules-oriented, broke conventions creatively.
  • Achieving simplicity in design while incorporating complexity in technology.

Examples of Breaking Design Rules:

  • David Carson’s defiance of good design ideals led to influential graphic design in Ray Gun.
  • Exploration of unconventional layouts, upside-down pages, layered typography, reflecting punk culture.

Great design can have huge social impact:

  • “Crack is Wack” : Keith Haring’s appeal from the heart about the crack cocaine epidemic..
  • The powerful impact of design in raising awareness and creating a call to action.

Empathy and Emotional Storytelling:

  • Hunter and Jacqueline discuss the recurring theme of empathy in effective design.
  • Emotional storytelling through research and understanding user experiences.
  • Jacqueline described the storytelling journey of Lum vodka seltzer from “illuminating the night” to “illuminating life” led to a major visual rebranding.

Brand Design and Implementation:

  • Discussion on the balance between fixed and flexible elements in branding.
  • The need for consistency in brand recognition while allowing for creative evolution.
  • Embracing constant change and evolution in design.
  • The balance between exploration and exploitation for sustained brand success.

Visual design parallels value creation in its leverage of creativity, rule-breaking, empathy, and constant evolution in the field of design and branding.