Perception and Your Career – COVID-19 series

Perception is a powerful thing: What we do, where we live, which school we went to, which company we work for and who our clients are paint a picture of where we belong in people’s minds. Rightly or wrongly, perception is reality. Perception also informs finance.

A thought experiment: You meet someone at a function and ask the obligatory question of what they do for a living. You get the following answers:

  • I work for a large warehousing and logistics firm
  • I work in the energy industry, primarily focused on electricity
  • I work in consumer electronics sales
  • I work for a large taxi services firm
  • I work at a very large information indexing firm.

Some people (not us) nod politely and move onto the next conversation. But of course, the above statements could also read like this:

  • I work at Amazon
  • I work for Tesla
  • I work at Apple
  • I work at Uber
  • I work for Google.

Same job, different description, entirely different perception.

If someone works at a ‘hot’ company, surely they must be smarter, better, more competent. A possibility few people consider is that they might just be lucky to have ‘a seat on a rocket ship’ – simply riding the success of what happened before they got there. Maybe the more competent person is working damn hard and smart in a failing firm with fewer resources and a worse brand perception. Reality is rarely as it seems.

The economics of perception: Perception doesn’t only change minds – it also influences the economic value we assign to something. People, careers and especially corporations. If a firm seems ‘futuristic’ enough, the market can be incredibly irrational. Uber has lost $38 billion since 2013 and yet still has a market valuation of around $60 billion. As I discussed on The World on ABC News, I don’t believe Uber will ever recoup investors’ money and I still stand by this. But the reason Uber is valued so highly has little to do with reality and more to do with perception. In the short run, perception is more profitable than reality.

Now let’s compare Tesla with its closest competitors. The figures below represent the market capitalisation of the biggest car companies in the world, divided by how many cars they sell per year.

– Tesla $ valuation per car sold = $302k
– GM $ valuation per car = $5k
– Ford $ valuation per car sold = $17k
– Toyota $ valuation per car sold = $15k

Even though Tesla makes terrific cars (and has a wider portfolio) – its valuation is seriously inflated. Tesla plans to make 500,000 cars this year, while Toyota will ship around 10 million. Even if Tesla sold 5 million cars (10 times more than it does today), it would then have a valuation of $30,000 per car sold, which is still double that of Toyota. It just doesn’t add up. We must also remember that Tesla’s advantage in electric cars is quickly being eroded. You don’t have to be a maths major to understand that the economics of this will eventually drag their share price down. Likewise, it’s a lesson in the importance of brands, and being seen as technologically competent and future-centric. It’s one of the things our economy values most highly today.

Here’s the kicker – this isn’t just important for companies, it’s vital for you.

The Economic Perception of You: Being seen as future-focused and technologically literate in your career is a bankable asset. In uncertain times, people want to back those who have a handle on the future. It gives them confidence in you and gives you outsized opportunities. Being good at what you do today isn’t enough. People need to believe you’ll be good at whatever they’ll need tomorrow. This is a perception game – a matter of personal brand. How ‘Elon Musk’ are you? Our work lives used be based on qualifications, experience and competence. Increasingly, having a personal brand is becoming a core competence for everyone.

The World Just Got Flatter: Twitter, Facebook and other large technology firms have just announced their staff can work from home ‘forever’. Once we start to work from home, employers can hire staff from anywhere globally. It’ll be harder to build relationships, so having a personal brand will be even more vital. What we know from consumer culture and technology is that the most impressive brands command the highest price, not the most functional ones. This means that the marketing we do for ourselves might even be more important than the marketing do we do for an employer.

Keep thinking,

Steve. 

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P.S – My Post-Covid-Economics briefing is getting rave reviews. I’ve now done with Fortune 50 firms and Governments in the USA, India, China, Singapore & the UK. I have a few corporate slots left for the month of June. Details here.

Why aliens have never made contact with humans

Aliens

The reason that aliens have never made contact with humans is that they don’t think we’re in charge.

I go jogging every other day, and I always see humans walking behind dogs. The dogs are leading the humans along a path, with a rope attached to the human. The humans are following the dog with a plastic bag. If the dog happens to do a poo, then the human stops, picks it up, and keeps on walking behind the dog while carrying the poo. If aliens ever happened to drop into our fair planet, I’m pretty sure they’ll think the dogs are running the show. Any conversation aliens have with a life form on earth would be directed at the dogs, not us.

So what would the aliens think of your startup based on what they see? Would the product tell the story you want? Our customers might as well be aliens, as they can only judge us based on what they see.

What we do, and others observe, is where reality lives. While we might talk a good game, the way we actually play it is far more important.

You should totally read my book – The Great Fragmentation.

Starting from

A regular marketing tool is to let potential customers know what the entry price point of a product or service is. I was driving into car park in the city when I was exposed to this method of marketing.

Park from $5

I was there for 3 hours and it cost me $38. Which is quite a distance from the initial promise. It turns out that pretty much every retail offer in market use the prices start from premise. Cars, insurance, concert tickets, airline flights, they all do it. And because they all do it, we all know we need to be suspicious that it does not represent the truth. In fact, we know it’s a bare bones offer, a best case scenario for pricing, in which the probability of that serving our needs is very low. In short it’s a trick to gain attention, it’s inauthentic and often misleading. But now that the trick has been used for such a long period of time, people with a level of intelligence simply ignore the message. We know better than to believe it, let alone act on it.

Every now and again we need to flip the way we go to market. Often because the people that came before us ruined it for everyone. Maybe it is time to flip the ‘starting from‘, to become ‘ending at‘?

What if we told consumers what the most expensive version of the product or service was, the one with all the bells and whistles? Yes, the thing we actually want. While this might sound crazy, it would have an important impact on the perceptions of what we are selling. The experience could only get better than the promise, not worse. And instead of generating negative word of mouth or brand associations, it would probably generate some positive ones. Not just from the authenticity and respect we are providing our customers, but also due to the positive sentiment that comes when we realize something is better value than we expected.

It comes down to a simple principal, do we want to create disappointment, or inspire unexpected delight?

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