I‘ve been approached by a major US book publisher to write a book on New Collaborative Enterprises, with the rather unwieldy working title shown above, and also by several universities to develop a Distance Learning program on the same subject, based on my experience advising over 100 entrepreneurial businesses. Given my new priorities, I don’t know when, or even if, this will get done, but in the meantime, I’m going to blog on the subject from time to time. Recently I’ve written about Avoiding Landmines and about Innovation, two of the 15 steps in ‘The Process’. Today’s article is an overview of Viral Marketing, the principal way that successful entrepreneurs find new customers.

With every additional business scandal, the public becomes more cynical about advertising, PR and product claims. The concept of viral marketing is not new: Seven years ago Jeff Rayport of Fast Company introduced its six fundamental principles: Use stealth and subtlety to convey your message, give stuff away free up-front, exploit peer-to-peer networks to spread the message, make the message memorable and ‘sticky’, exploit the strength of weak ties, and work to reach a ‘tipping point’. But last year Rayport’s message caught fire when Malcolm Gladwell’s book The Tipping Point became a best seller, provided more detailed evidence of how well and how broadly these six principles work, and gave detailed instructions on how to employ them. These two factors — the increased distrust of corporate messages and the new recipe for ‘doing’ viral marketing, are taking viral marketing mainstream — it’s no longer just a technique for those that can’t afford advertising, but a technique to replace advertising.

Using these principles isn’t difficult, risky, expensive or demanding of great patience or energy. In my earlier posts I explained that one of the biggest landmines for entrepreneurs is getting into ‘copycat’ businesses where it is next to impossible to differentiate your product or service from the next guy’s, and also explained that the innovation process starts with listening to the (current or prospective) customer. So if you’ve done your research, and you have a small group of customers who agree that your product or service is innovative — better or cheaper or faster or in some way significantly distinguishable from everyone else’s, then all you need to do is to deliver to that group of customers, and let them be your marketing team. As Gladwell’s Tipping Point describes, some of the most successful books and records, some of the most infectious ideas, and some of the fastest growing new products, like TiVo, basically found their market without a penny spent on advertising or promotion.

Let’s look at an example. I know two people who went into the same business — plastic decking products — one successfully and the other unsuccessfully. The unsuccessful guy started the business in the 1980s. He brought the technology from Europe, where it had been used in specialized military and other niche market applications, and knew that it had enormous potential in the consumer marketplace. But because he was an engineer, and more comfortable with the manufacturing process, he started with the product instead of the customer. He spent a lot of money perfecting the process and then tried to sell it to major hardware and home stores. He had no customers, no leverage to persuade the stores there was a market for the product. In fact, in those days plastic was considered a shoddy material, his product’s light weight and simple assembly was a disadvantage in the minds of the purchasing managers he spoke to. The business never got off the ground.

Now flash forward a few years. The successful guy started the business in the 1990s. He didn’t know anything about how to engineer the product. What he did know was that there was now a need. The cost of wood products was soaring. People didn’t have time to maintain wood fences any more. And there was a new scare: Creosote, the chemical mix wood was soaked in to preserve its life and reduce maintenance, was now considered a carcinogen, and was starting to be banned in children’s playgrounds, so there was a new acceptance of the newer, more durable plastics in swing sets and other outdoor furniture for children. So our successful entrepreneur brought in from Europe small quantities of a new plastic decking material, and went and visited contractors, not retail stores. He resold the material at cost to the contractors, who were able to offer it to their customers at the same price as their heavier, higher-maintenance, carcinogenic products. Not surprisingly, they were a great success. Our entrepreneur brought in some larger quantities, and began talking with the European manufacturer about setting a plant in North America. He didn’t make a single sales call — the contractors spread the word for him, among themselves, and the end-customers also showed off their slick and unique new decks to their neighbours. By the time our intrepid entrepreneur went to visit the big hardware and home stores, they had already been besieged with requests for the product and no selling effort was needed. The European manufacturer helped the entrepreneur build the North American plant, the banks, already aware of the demand for the product, offered very low-cost financing for its construction, and all the entrepreneur had to pay was a small royalty on sales to the European company.

This success is due entirely to innovation focused on recognizing and responding to a customer need, and on viral marketing. There was virtually no risk, no selling effort, and no out-of-pocket traditional marketing (advertising).

Although you can get the impression from browsing the Internet that viral marketing is a Web-based advertising process, or even that it involves mass e-mailing. This is a misrepresentation of what viral marketing, as described by Jeff Rayport and Malcolm Gladwell, is all about. It is nothing more than spreading the word about your product or service by customer word-of-mouth. Talk to the most successful contractors you know, and you’ll likely find they turn away excess business, and do no advertising or stuffing of mailboxes. Their new customers come entirely from referrals from existing satisfied customers. They do no selling and no marketing.

This brings us to the most critical precondition for successful viral marketing: Reputation. Nothing will sabotage and choke off viral marketing success faster than a sudden reputation for poor quality or poor service. If our decking entrepreneur had used poor contractors to do the work, or had failed to correct any early product quality issues quickly, he would not have succeeded.

Probably the most important of Rayport’s six principles is the fourth one: making your ‘message’ memorable and ‘sticky’. Viral marketing requires your product or service to come up in your customers’ conversations with others. That means, like TiVo, there needs to be something about it that people will want to talk about. And a picture is worth a thousand words. That’s why those amateur photos at Abu Ghraib have done so much more to turn public opinion against Bush’s war than the much more dangerous Patriot Act, the abrogation of the Geneva Conventions, and all of the other more profound but less visceral evidence of executive deceit and abuse. And why the decks set up at the home shows, and on display in your neighbour’s yard, are so much more compelling than the glossy brochures that tell you about the low maintenance and the safety of the product’s composition. 

Assess congruence between what you do best and what your employer needs most. Understand the drivers, needs, and priorities of your employer, and assess where your personal strengths, skills and current activities contribute to them. Learn as much as possible about what your employer does, well beyond your own area of responsibility and department. How could you change or expand your work activities, emphasis, visibility and role to increase this congruence, and how it is perceived by your employer?

Assess your relationship with your employer as if you were a supplier, not an employee. What do you have to sell, and how could you improve your ‘product’ to better meet your employer’s needs? Are you taking for granted that your employer values and cares about your ‘offering’, or do you need to remarket yourself, both to your immediate ‘buyer’ (your direct report) and to others in the company? Is your ‘offering’ over- or under-priced? Is the department you work in, and the company you work for, the best ‘customer’ for your most valuable ‘products’?

Assess what motivates you. Talk to people (inside and outside the company) about what you think, and what they think, are your strengths and weaknesses, and what you like to do and hate doing. What can you change, in your existing relationship with your employer, that would improve your motivation, lessen the aggravations and the impediments to performance, and exercise and emphasize your strengths better?

Assess how you’re doing the little things that count. Are you spending enough time with your networks, helping subordinates, explaining things and bringing creative ideas and solutions to more senior people? Is your written communication clear, concise, professional and relevant? In one-on-one meetings, group meetings, and formal presentations, do you make a good impression? Are you a good listener, a good explainer, a good persuader? Do you have the qualities that those in your networks appreciate and value: patience, aggressiveness, energy, enthusiasm, creativity, attention to detail, articulateness, fairness, teamwork, orderliness, promptness, problem-solving acumen, presence?

Assess what you’ve done that is memorable. Most people have short memories and their impressions of people are often (and unfairly) based on one or two especially memorable events. That’s what makes career-limiting moves so disastrous, and unexpected, positive events where you shine, so powerful. Focus maximum effort and attention into creating two or three especially memorable activities each year. Be imaginative in doing this — they may not be events on your regular agenda, but volunteer or even extra-curricular activities.

Assess your image. Pick three adjectives that you think co-workers would use to describe you to someone you hadn’t met. Are they positive or negative, assets or liabilities in the organization you work for? If someone used those three adjectives to describe someone you had never met, would you be inclined to want to work with that person, or interview them for a job working for you? Dress a little above your level in the organization, but not too conspicuously.

Assess your employer by what they do, not by what they say. The company Strategic Plan may be interesting, but its behaviour is much more important. Who is getting hired, promoted, fired, and what does that tell you about their values? How much do you ‘resemble’ the people who are getting ahead fastest?

Assess the strength of your network. Who you know, both inside and outside the organization, is far more important than what you know. Are you ‘working’ your network, investing time and energy in giving and getting useful value from members, building strong relationships? Are the right people in your networks to be valuable to you, or are they clogged with complainers, hangers-on, and the disenfranchised? Do you have the right mix of people inside and outside the company in your networks?

Assess your long-range career plan. Don’t expect to get ahead just by doing what you’re told competently. Seize control of your own career path and plan it, flexibly, as far ahead as you can imagine. Don’t get discouraged by setbacks — learn from them and persevere. What do you need to learn, who do you need to get to know, to get to the next step, and the step after that? Start working on acquiring that knowledge and those contacts now.

Working in a medium or large organization isn’t for everyone. But if you’re there, and expect to stay in that environment, these self-assessment steps should help you be happier and more successful. And if you decide to (or already do) run your own business, you can use these same nine assessment criteria to evaluate and improve your relationships with your customers.

(Thanks to fellow Torontonian Jen at Circadian Shift for the link to John’s article)