Can entrepreneurs create demand?

I was reading about entrepreneurs last weekend and was struck by a simple yet powerful notion. Some entrepreneurs set out to fill demand while others aim to create demand. But what exactly is the difference?

It wasn’t the first time I had this thought, but this time I decided to ponder it. (It helped that I was sitting on the patio of a little cafe enjoying perfect weather with no schedule to speak of.)

So, I wondered, can you really create demand?

Let’s start with an easier question: who is filling demand? Well, most entrepreneurs. They see a market, usually a big and growing one, and throw their hat in the ring with the other players in the hopes of getting a piece of the pie. If they can turn a profit it’s usually because their offering is cheaper or differentiated or both. And if they build a sustainable business then they’ve figured out a way to protect their earnings with a difficult to replicate competitive advantage. There’s nothing easy about any of that, but at least the path is clear.

But what if there is no existing market for your product? Are you creating demand then?

When Cisco co-founder Len Bosack was asked how he priced his invention, the world’s first fully functional network routers, he replied simply: “we guessed.” That’s because they didn’t have any direct competitors. Cisco was the first. Things turned out well – very well in fact – for Cisco. But did they truly create demand, or was the demand already there? Didn’t companies want their networks to talk to each other? Of course they did, but they didn’t have a good way to do it before Cisco came along.

Thus, Cisco wasn’t creating demand, they were simply revealing it.

Then it hit me.

In order to create demand, you’ve got to offer something that is not only new, but also solves a problem people never knew they had. Even if you were the first to articulate the solution (as was Cisco), you can only claim to have gone so far as to reveal the latent demand.

It is only when you articulate the problem as well as the solution that you can be said to be creating demand. In the language of this blog’s central theme: you’ve got to transform people’s thoughts before you can transform their actions.

Al Gore, for example, is certainly on a mission to create demand. His slideshow is attemping to awaken people to the problem of climate change. If he succeeds, he will have helped to create demand for green products (and green policy).

But it’s certainly not just social entrepreneurs who play this game. Steve Wozniak invented the PC, but it was Steve Jobs who created the demand for it. You could argue Jobs was only revealing latent demand for productivity, but that’s splitting hairs; no one knew they needed their own personal computer before Jobs came along.

Demand creators take a risk that demand fillers (or even revealers) never do. They have to have the conviction to believe that demand will emerge once people “wake up.” They have to be thought leaders as well as innovators. Motivators as well as inventors. Mentors as well as managers. And if it is about ego (i.e., “I know what’s best”) instead of a genuine attempt to guide people to a new beneficial perspective, then they’re likely to fail.

That’s why I believe creating demand is the pinnacle of entrepreneurship. John Schaar sums it up eloquently:

The future is not the result of choices among alternative paths offered by the present, but a place that is created – created first in the mind and will, created next in activity. The future is not some place we are going to, but one we are creating. The paths are not to be found, but made, and the activity of making them changes both the maker and the destination.

Light and Darkness

“Were it not for the cold, how would the heat of Thy words prevail, O Expounder of the worlds?  Were it not for calamity, how would the sun of Thy patience shine, O Light of the worlds?

Thank you Sholeh for the thoughtful questions you raised about maintaining optimism in pessimistic times. It got me thinking about the subject of “Light and Darkness”.

It seems with all forward motion, there is always resistance, and often wherever there is light, there is shadow.

So it is natural in times when the forces of progress are at work for there to also be forces of resistance.

This is one more dimension to this “mental framework” we are trying to test and evolve through this online dialogue.

If we can see many of the depressing events that occur around us as a reaction to the forces of integration that are in fact operating in the world, it should help us to maintain optimism.

This still doesn’t mean any of this will ever be easy. I think about what it took to form the League of Nations and the United Nations — both basically a collective reaction to the two worst wars in human history. And we still haven’t come anywhere near a functioning system of reasonably united world! Gulp.

But then again, if we all collectively threw in the towel, we would still be living in caves, so something must be working somewhere to have gotten us this far, and we can only trust we will ultimately keep going in the right direction

 

 

 

 

Thinking about the ultimate direction of change

“The times never remain the same, for change is a necessary quality and an essential attribute of this world, and of time and place.”

In reflecting further on the question of how we choose what “change” to consciously devote our all-too limited time and energy toward, it seems an interesting thought exercise to conduct is to step way, way outside of our average daily thinking patterns (unless we are a professional historiographer or something) and to think about the grand sweep of human history. Where is all this “change” heading? Finding the answer to this question, it seems, can help us make more intelligent choices about where we will fit in with our tiny, but nevertheless very real, contribution to the unfoldment of human history.

So where is everything headed?

Well, lets look back. Over tens of thousands of years, we have moved toward progressively larger groups of social organization and cohesion, starting with familes, moving to tribes, to villages, to city-states, and then to nations, and over the last century, varying degress of cooperation among groups of nations. One factor that has run parallel with this progression has been the steady development of technology, which has facilitated these increasing levels of social development. Where are we going then? Following this train of thought, it becomes clear that we live in an age whose primary task is to move further toward the unity of the world. Just saying it is the easy part! Of course, it will take more decades and centuries to eventually achieve (assuming the human race doesn’t destroy itself along the way, which I am confident it wont). But knowing the ultimate goal then helps in making intelligent choices toward the outcome. Is the change I am spending my time and energy on contributing toward this ultimate goal, or detracting from it? If it is detracting from it, I should ask myself, why am I trying to fight the clear flow of history?

What would be an example of each? Fighting for a cause that promotes one race as being superior to others seems like one example of going against the flow of history. Racial groups knocking each other down is a clear example of going against traffic on the one-way road to the eventual unity of the human race. What about supporting multicultural day at a child’s school? That would seem to be in line with the flow of history … however insignificant it might seem, that one small event is planting the seeds in a lot of young minds of an idea whose time has come, and will in some way shape the rest of their lives.

This is just a framework to think about. Let us know your thoughts, is this framework useful? If not, what ideas do you have of other frameworks to consider? Look forward to your comments

Group Dynamics

I’m lucky enough that I’ve been afforded the opportunity to attend some fascinating conferences over the last month. The TED Conference was the most expensive simulcast I’ve ever attended and the SXSW Conference was the geekiest conference intersected with the most intense music experience I’ve had in a long time. It got me thinking about group dynamics and what they are affected by. Though not scientific, here are my observations:

TED :: It’s an expensive invite-only conference that smells of exclusivity. It seems that exclusivity breeds a sort of brotherhood amongst people though I might just be cynical. It feels the same as the few times I’ve been lucky enough to get upgraded to business class on a flight. “Champagne? Oh no thank you. These seats are lovely aren’t they? Shame about Darfur isn’t it? Ooh, cashews, yes please.”
SXSW :: I was there for the Interactive Conference but because I have friends in places that matter in such things, I was afforded access to parts of the music conference that were hidden to me in years past. Without getting into too much detail look out for the MTV documentary on The Wombats to see some of the antics. This conference is a mix of creatives types at all level and locals who are lucky enough to score wristbands that get them into the music venues where the likes of R.E.M., Billy Bragg, Vampire Weekend, The Ting Tings, The Cools Kids, and Kid Sister are playing. At any given time there are over 50 bands gigging within a two-mile radius. People spill into the middle of 6th street and it’s so loud you can’t even talk to your wife while standing in the middle of it.This conference makes me think about the power of music. There’s plenty of debauchery typical of a rock n’ roll lifestyle but despite that, in my observation, there is much more calm than I would expect given the mix of mass and mescaline.

I’m interested to hear from others and their experiences with conferences attended and the dynamics. What contributes to these dynamics? Can an individual affect these dynamics?

Action Figures from the album “The Bake Sale ” by The Cool Kids

Technorati Tags: music, sxsw, ted

How do we choose?

When I was a student at Berkeley I would often grab lunch on Telegraph Avenue. This usually meant walking through Sproul Plaza and contending with at least a dozen pamphlet-pushing students pleading for my support for an environmental cause or ballot issue or sport’s team or you-name-it.

I didn’t mind so much – after all, it was Berkeley and it was part of the exictement of the place and of college in general. But I often asked “how.” That is, how did these students choose – out of all of the noise – what issue, what approach, and what people with which to engage? Why was this girl handing me a flyer for an upcoming political rally while that guy wanted me to attend his interfaith forum? With so little time in college, or life, how do we decide where we put our energy? Are we rational about it? Do passions move us? Is it a combination or something else entirely?

Earlier this week Natalie Angier wrote about Change Blindness for the New York Times, and I think it provides clues to the mechanism our minds employ to focus on one thing or another:

The mechanisms that succeed in seizing our sightline fall into two basic classes: bottom up and top down. Bottom-up attentiveness originates with the stimulus, with something in our visual field that is the optical equivalent of a shout: a wildly waving hand, a bright red object against a green field. Bottom-up stimuli seem to head straight for the brainstem and are almost impossible to ignore, said Nancy Kanwisher, a vision researcher at M.I.T., and thus they are popular in Internet ads.

Top-down attentiveness, by comparison, is a volitional act, the decision by the viewer that an item, even in the absence of flapping parts or strobe lights, is nonetheless a sight to behold. When you are looking for a specific object — say, your black suitcase on a moving baggage carousel occupied largely by black suitcases — you apply a top-down approach, the bouncing searchlights configured to specific parameters, like a smallish, scuffed black suitcase with one broken wheel.

This leads me to believe that, at least in part, we are either attracted to movements in a bottom-up fashion because they are the loudest, most popular, most frightening or most interesting OR in a top-down fashion, where we ignore the flashing lights and shouting pundits and pressure from friends and instead search within ourselves, think critically about what the world truly needs and what we can best offer, and then go and search for that cause. And we don’t become dismayed even if, when we find it, the thing we’re looking for is a bit scuffed and has a broken wheel.

The NY Times article concludes:

“Our spotlight of attention is grabbing objects at such a fast rate that introspectively it feels like you’re recognizing many things at once,” Dr. Wolfe said. “But the reality is that you are only accurately representing the state of one or a few objects at any given moment.” As for the rest of our visual experience, he said, it has been aptly called “a grand illusion.”

If we can only truly focus on one thing at a time – one perspective, if you will – then what a pity if our calling exists outside our current frame of reference, and when it asks for a moment of our time on Sproul we dismiss it as nothing more than a grand illusion.

What is Elemental Change?

We live in a unique period of history. Change is happening everywhere. The rate of change is accelerating.

If we want to be instruments for positive change, where should we concentrate our efforts? Which movements are ephemeral and which are important? Which forces represent undercurrents and which are nothing but flippant waves on the surface of a turbulent age?

This blog is a forum to examine these questions.

The starting hypothesis – which could change – is that answering these questions about the world around us requires first examining the world within us: our perceptions, our beliefs, our assumptions about reality. Ghandi said we should “be the change we wish to see in the world” and Abdu’l-Baha said “the reality of man is his thought.”

This isn’t a call to stop moving. On the contrary, we should redouble our efforts to make the world a better place, only with a feedback loop. A period for reflection. Are we being deliberate in our action? What are we truly advocating? Why?

This blog will strive to stimulate thinking about these questions.

Thanks for visiting.