A while back, we mentioned this book and promised to review it.
Well, we did order it right away, and read it right away, but there isn’t really much to say about the book. It’s short, and pretty much is focused on a single point.
That point is:
You don’t get good loyal customers these days just by having a good product and talking about it. The way you get them is to tell them a good story about your product and your customers that lets enough customers think, “Hmmmm, this is my kind of place/company.” Then you have to live up to that story as if it were all true, to “live the lie,” as the author puts it.
The author has a bad habit of using a few keywords differently than they are commonly used, especially the word “lie,” so a lot of reviewers have misinterpreted what he says.
He’s not saying that a good story will make up for a bad product, for instance, or that you can promise anything and not deliver. You still have to do those things, you just need to have a good story on top of that.
Let’s take a simple example of this: premium bread. You’ll see people who’ll offer all-organic bread and give you the impression rural farmwives are busy making this bread the old-fashioned country way, and this is much better than regular bread.
The reality almost certainly is that the bread is mass-produced using methods not unlike those used to make Wonder Bread, or that there is little nutritional difference between the two, so the story told or implied isn’t true. That’s the kind of “lie” the author says is OK.
However, people are very likely to overlook those kinds of lies if they like the bread, and it is different than Wonder Bread in ways they like. They’ll continue to pay rather more for the bread, and like doing so.
On the other hand, they would not overlook somebody who just made the equivalent of Wonder Bread and put it in a folksy plastic bag. You have to give people something real on which they can hang your story.
Another example can be found in cars. These days, luxury cars often use exactly the same functional parts found in mid-priced models. Companies need to do that to get economy of scale and to control costs. The real actual differences between mid-priced and high-priced cars these days are better, more luxurious design and service. While these certainly add costs to the high-priced models, the extra costs are usually nowhere near the amount of the increased price tag. People pay lots for those relatively small extras, plus for the enhanced image and prestige they think paying more will give them.
This concept can be applied a lot of different ways, but the key is to come up with a story that people really identify with, and then deliver the product/company in observable ways that correspond to the story. If the story says or implies, “Unlike big impersonal multinational corporations, we’re home folks who really care about you,” the fact that you’re actually owned by a multinational corporation can be overlooked by your customers, but you’d better take really good care of them.
How Does This Apply To The Tech Industry
With one big exception (and you can probably guess who that is), tech companies are generally not as aggressive with this approach as others. They’re more likely to associate a product with a lifestyle, not so much the company. A good example of this are video card companies. They will try to sell a gamer lifestyle along with their high-priced product.
An excellent example of both the effort and a case where it was bought hook, line and sinker can be found in a previous book review where the author said:
“Hope came for ATI in the form of its Radeon. Not only did the name signify a departure from its previous failures [named Rage], but it also embodied the type of culture that the online gamer was raised in.”
This is precisely the kind of story-telling and “lying” the book talks about, and how someone (who should have known better) found that it fit into his worldview and bought into it. ATI’s video cards themselves didn’t radically change design philosophy when they went from Rage to Radeon (it wasn’t like Rage was meant to be strictly a corporate video card like Matrox cards). Their marketing changed.
However, most tech companies don’t comprehensively tell stories about themselves as well as their products, and when they do, they tend to be low-keyed.
Intel and Dell are good examples of this for business customers. The message in the business-oriented ads for both companies is usually, “We’re here to give you the tools and support you need to succeed.” Intel emphasizea, soberly, the great efforts and expense they go through to do this; Dell will emphasize their business-oriented services.
The consumer market is a somewhat different beast, and while Intel has never come up with a really effective story for consumers; Dell has a much different story and personality for the home boys and girls, “Good products at great prices!”
The real champ at selling the company and products as a lifestyle choice is of course Apple. That’s been true during the entire Mac era. Mac users believe all kinds of things about their machines that simply aren’t literally true. Sometimes Apple encourages that belief overtly (i.e., their infamous “benchmarks”), sometimes covertly (saying how great certain new features or components are without giving any idea what the PC competition has or is doing).
The story of Apple fits the theme of this book to a T. Nonetheless, Apple only has 3% marketshare, so obviously this approach has its limits, and this is a point the author stresses. He says that story telling works very well in businesses where you can be quite profitable with a small share of the overall business, and where you don’t or can’t expect to dominate. For instance, if you own a restaurant in a city, you hardly need or would even want everyone in the city to eat there all the time. You just want enough dedicated customers to keep coming to keep your tables filled close to all the time.
The author suggests that narrow-casting in the form of story-telling is a much better idea in these situations than trying to get everybody, especially if you can appeal to a small but big-enough-for-your-purposes group that will happily pay more for whatever uniqueness you have to offer them.
Such narrow-casting doesn’t necessarily work too well for component manufacturers (though it certainly would in other tech areas like websites), though that doesn’t prevent one company projecting multiple personalities to different groups the way Dell does.
Let’s see how this concept applies to a story that is in the process of being told . . . .
Coming Up With A Better Story
The author points out that even if a company doesn’t overtly tell a story about itself, people will make one up about it for themselves. A short story is easier to remember than encyclopedic knowledge of the company.
Sometimes that story isn’t too good, at least for the company.
AMD is a very good case of a company that has a lot of bad stories attached to it. As you’ll see, even the good stories are bad for the company.
In many cases, the stories people have created about AMD are pretty negative: the CPUs are no good, or at least not as good as Intel’s, the platforms are unstable, even that they’re not terribly compatible with software.
Most of these stories are pretty old. Many weren’t terribly true or true at all even way back when. A few may have been somewhat true a long time ago, but aren’t today. Nonetheless, they still exist, and for practical purposes, they are true for those who believe them.
Others negatively rate the company as being unreliable or unbusinesslike compared to Intel. That certainly is a bad story in the business world.
Even the people who like, even love, AMD often have attached a bad story (at least from AMD’s perspective) to it. That story at least used to be “As good as Intel, but a lot cheaper.” Those telling the story think it’s a very positive one, and it is for those telling it, but not for AMD. For them, the “a lot cheaper” part is BAD news.
If you look at the public efforts of Hector Ruiz since he became head of AMD, it would be fair to say that his major effort has been to change AMD’s stories from bad to good. The man talks. God, does he talk.
Some of the talk is no doubt meant to lay bad old stories to rest, some of the talk (and price actions) is to get rid of the “cheap” label. Yhe rest, though seems to be more story-telling, with actions meant to make the story come true (or at least true enough) someday.
The new story is “AMD is as good as/better than Intel, and only the unjust, evil practices of Intel have kept us from our just rewards.” AMD has been saying the first half of the story for some time now, but the complaint launching the lawsuit provides the second-half punchline to it. The complaint is more story than lawsuit, and if you asked the author of this book about it, he’d probably say it’s an awfully good one. So far, it’s rung a lot of people’s chimes.
Some will say AMD isn’t quite saying that, but that’s certainly the impression it leaves those who want to hear something like it.
Folks like myself get ticked at the story not because we don’t think Intel has tried to freeze AMD out or that AMD has been hurt by this or that AMD has at least some legitimate beef. No, we get ticked because we know it isn’t the whole story and that AMD has many self-inflicted wounds, too. We don’t have a problem with the facts, but the story the facts have been fixed around, that it’s just Intel that’s keeping AMD down.
But it’s a good story, indeed, it fits the typical fairy tale mode perfectly. Good, deserving unfairly-treated hero goes through many challenges, and finally triumphs over evil. People like this story a lot; they like it so much that they don’t want to hear that the hero also often gets into trouble by doing stupid thing. They prefer the story to the reality.
In the meantime, in anticipation of a win, and to ensure the aftermath of this tale ends up being “they all lived happily every after,” AMD wants to beg and borrow whatever it needs to become a “match Intel CPU for CPU” company.
So, at least in the views of those like myself, we’re seeing the first acts of a spectacle that is supposed to jump-start an also-ran to prominence largely on the basis of an adult fairy story. It’s not impossible that the story will end happily, but let’s face it, it’s kind of flimsy.
Yet when you bring up some reasons why this tale could well end up not having a happy ending, the reaction from some is like that of a little one after you tell him or her that the bears really ate Goldilocks.
Now I see it’s for the same reason.
I don’t know how many people reading this could get immediate enough benefit to justify the hardcover cost of the book, but it’s probably worth a read at paperback or remainder prices just so you’re aware of how people are trying to influence. It’s probably a better idea for those who want to do some influencing (i.e., start or improve their own businesses) to buy this book as food for thought.