[Part 1] Power Is Shifting: Understanding Power And Influence
Early in 2015, legendary marketer and author Seth Godin was giving a speech to 30 book publishing professionals, when he paused and decided to ask them a few questions...
"How many of you have heard of Thomas Piketty's book - Capital?", Godin asked.
All of them raised their hands.
Their response to his next question shocked him.
Godin continues, "Ok, well how many of you read it?", and to his dismay, not a single person raised their hand.
In Godin's words, Capital (750 pages long) was one of the most important books of 2014. Every intelligent publisher, like the group he was talking to, would have known about this book and how great it was ...
The fact that no one read the book bothered Godin and forced him to reconsider how he might distribute his next book, What To Do When its Your Turn.
Seth Godin has written 18 bestsellers that have been translated into 35 languages and What To Do When its Your Turn sold more copies than most of his famed books in just 10 weeks.
How did he do it? Why was this book more successful than his other bestsellers?
We will share how but first we must begin to understand the world-changing transformation that is happening as it relates to power and influence.
This is the first part of a three-part series on power and influence.
The market leaders of tomorrow won't operate like traditional corporate behemoths but more like agile, nimble startups. Slow, bureaucratic systems will be tested by activists, movements and social networks. Top-level executives won't be in corner offices but on the floor with the front-line employees.
Understanding how to acquire, use, maintain and lose, power and influence is crucial to becoming a great innovator.
Kodak Moments gave way to "The Gram"...
When the economy was first forming in the US, large, hierarchical organizations like, Kodak, AT&T, Coca-Cola, Pepsi, and General Motors, became the dominant players through which power was exercised.
In fact by 1904, 78 corporations controlled more than 50% of the production in their particular industry and 28 firms controlled more than 80%.
Nearly 100 years later, in an ironic set of events that took place in 2012, we began our shift from an industrial economy to a Kickstarter economy, where suddenly, influence not inventory, ideas not IP, mattered more to the market.
In 2012, Eastman Kodak, the 131-year-old film pioneer filed for bankruptcy.
The company reported a loss of $1.3 billion on revenue of $4.11 billion, a near 80% decline from its best-ever annual report in 1991.
Since 2003, the company has tried to stop the hemorrhaging by reducing its workforce by nearly 50,000 people, shutting down 130 processing labs and 13 manufacturing plants.
During that same year, Instagram was acquired by Facebook for $1 billion dollars. They gave their app away for free and had just 13 employees at the time.
In 2015, Instagram earned more revenue than the market cap of Kodak, had 30 million monthly active users and those users are sharing over 70 million photos per day.
Ok. Back To The Godin Story...
Like Instagram, Godin realized that power was shifting and decided to market his book differently.
After Godin had the meeting with the publishers, he realized that people do, in fact, still read books. However, they usually only read them if someone tells them it's worth reading. This leads us to our first point.
Power is Shifting To The Influencers.
Godin has decided to let his fans be his distributors instead of a traditional publisher. To Godin, the recommendation of one influencer is far more valuable than the reach of a traditional publisher's marketing funnel.
Seth Godin calls this model, the Domino Effect.
If you buy one copy he sends you two. If you buy three he sends you five. If you buy eight he sends you twelve. His biggest fans usually end up buying eight copies which means that Godin is able to acquire 11 new readers for every influencer that buys a book, which leads us to the next point...
Viral Coefficient Matters.
Your viral coefficient is the number of additional users you can get for each user you bring in. Seth Godin's book has a high viral coefficient because of it's ability to attract multiple new readers for every one reader that purchases a book.
A great example of this in the software world is Evernote. From the success of it's powerful, note-taking and storage app, Evernote was able to amass 100 million users in six years. They went from 0 to 1 million users in 446 days and then from 1 to 2 million in just 222 days. Their next million took 133 days, then 108, then 83, and then the company need just 52 days to go from 5 to 6 million users.
Evernote has grown to become one of the most successful software companies because of their ability to acquire new users from their existing ones.
We must recognize that every user is a potential influencer and that the traditional marketing funnel has been flipped upside-down - narrow at the top and wide at the bottom.
Messaging must be focused on a specific user, with the goal of delighting them and reaching many more users like them at the bottom of the funnel. Disruption happens one person at a time.
The ability to influence the next adopter is critical in garnering power and influence.
We are borderless. Digital has dissolved boundaries and democratized distribution.
Everyone is a publisher. Everybody has a platform. Every person is a printing press.
The internet has lowered the barriers-of-entry to many different markets and provides global reach to virtually anyone with access to it.
YouTube propelled a Canadian kid with internet and a dream of becoming of a singer to international fame and unparalleled success. That kid was Justin Beiber by the way...
Size No Longer Matters
After Facebook acquired WhatsApp for $19 billion, the company was instantly worth more than American Airlines even though it spent $0 on marketing. The messaging titan processes 50 billion messages/day and they only have 55 employees.
Airbnb and Uber are valued at $25 - $60 billion respectively and neither of them own property or cars.
Now, there is little correlation between the size of a company and it's value in the market.
Adaptability, Agility, And Cohesion...
These three characteristics are better indicators of predicting an organization's success in today's economy than the size, systems, or structures that marked the most powerful organizations in the past.
Top-down approaches, where information flowed through different silos and departments have been torn down in favor of decentralized decision making and transparent information sharing.
We will share how the flow of information affects influence and power in part 2 of our series!
This is part of our Greatest Innovators Series. If you enjoyed today's post, be sure to subscribe to the series to have the posts delivered straight to your inbox.
If you'd like to listen to the podcast with Seth Godin that we reference, you can check it out here.