We’ve all heard the talk of how the Internet changes everything, but most of the time that’s not what it feels like. Although a few start-ups managed to reach the top, many are still treading water. Meanwhile, the big companies from good ol’ brick-and-mortar store chains and TV commercials seem to be doing fine. Maybe this whole Interwebs deal doesn’t make that much of a difference for my business… or does it?
Personally, I see the emergence of the Internet to be as important as the invention of the wheel, or the discovery of fire. The Internet is Wheel 2.0, but nobody gets it just yet.
Although all this tech has balanced a game that was unfair, the basics of the game of business still hold. I think about this in analogy to variations of Poker: the flushes are the same across variations, but the game flow isn’t. Back to business, the pieces that make a company successful remain very much the same. The inner workings of each of these pieces, however, have been drastically altered by the Internet.
Oh, and I guess one little disclaimer isn’t out of place: we’re still very much at ground-level. I’m focusing on the Internet as an amazing tool, because I am deeply aware of its unfulfilled potential. The fact that the Internet drastically changes the landscape for business won’t go away anytime soon. However, from this point on this article shifts toward specific, time-stamped technology talk, and that technology might as well be dated in a few months.
Enough with the Sci-Fi talk. What are the battlefields where the big bad Goliath can be taken out by little David me?
One of my favorite books in marketing is called Scientific Advertising, and it revolves around direct mail marketing. You had to have quite a bit of expendable money to run such a campaign. The main benefit of the old age was that people would actually stop and listen even to the silliest lines and pitches. A pretty picture with clever wording on the side of an ice-cream car would convert clients. Their eyes and ears would be eager to absorb advertisement messages.
What has progressively happened since the 1950s is that more and more companies have taken advantage of this. More messages, more commercials. The TV was invented, and became the primary medium to showcase products. As time went by, more companies saw the upside, and this led people to become increasingly callous, judgmental and unresponsive to this particular flavor of marketing.
What was the big companies’ counter-strike? Shout louder. As one can guess, this only accelerated the process of callous-ification of markets.
Alongside this decline in the return-on-investment of old forms of marketing, the Internet plopped into existence, and started to percolate through humanity. This is an interesting point to make: the old skool marketing had started to go down under its own weight regardless of the Internet. Might be comfortable to try and blame the erosion of the old solely on the new, but that just wouldn’t be accurate.
Today, it’s stupid to shout louder. Counter-productive. A waste of money.
People react to the bombardment of products in the most predictable way. They become insensitive to mass marketing, and then gradually stop relying on their promises. Instead, they learn to look for themselves. If marketing that shouts louder and louder is hard marketing, what caters to information-saturated consumers is soft marketing.
Hard marketing is clearly the domain of big companies. You need big money, you reach big audiences, you expected big returns. Soft marketing, conversely, is where local beats global, and small companies look just as attractive as big companies. They stand shoulder to shoulder, and the prospect customer then makes a choice based the connection he feels with the brand, or maybe just with the guy talking to him across the counter.
Google is all about supporting businesses that want to do soft marketing. This is clear from their take on SEO, their renaming it to SEM, and how they usually refrain from manually taking action against content farms. AdWords is a platform built to deliver highly targeted ads with low-cost, and its bid and CPC system are a tremendous boon for small businesses. Now AdWords can also be used to deploy online video campaigns, and the reach of these campaigns is much larger than TV campaigns. The tables have turned.
Furthermore, it can be argued that Google achieved its current financial prowess precisely because it greatly helps small businesses.
The primary advantage of big companies is that they have large sums of money to invest on whatever is urgently necessary. Need to open a new factory in Brazil? Sure. Manufacture and ship an entire boat’s worth of razor blades? No problemo. Got issues creating a bottleneck in production or office work? Just shift employee’s priorities and move some work hours around.
Ok, I make it sound simpler than it is, but that’s exactly what the small business owner does.
What the Internet did for scalability was that it created frictionless ways to scale your business with little overhead. As long as you have business coming in, the busywork can and should be outsourced: manufacturing, logistics, and office work. In fact, being small is an advantage here, so that not owning that factory in Brazil is a good thing. No need to bear the worries of ownership, but you can still enjoy pretty much all of the benefits.
Another perk of this frictionless approach is that negative cash flow is virtually impossible.
This is, arguably, the main point where the Internet totally changes the game. Most everyone is connected most the time, and this means big companies can no longer count on blind consumers and workers. The old approach is one where large organizations rely on the fact that they’re large in order to remain large. This happens in all sorts of levels, and it will become less and less relevant in a world of zero-cost communication.
In the disconnected world, big was synonymous with trustworthy. “My dad worked in this firm, so I should work here, and buy from here”, was how the rationale behind this. Was this ever true? Arguably, yes. Recent crises in our financial system have made it more than clear that this logic is no longer valid.
The reason why communication via Internet breaks this illusion is that people can’t help but to talk to each other. They hear of a friend of a friend that works for a company in another state. Their best friend gets fired from her corporate job, but then gets hired as a creative designer by a firm in Japan. These stories get passed around, much like in a game of Operator. Mindsets change, and people learn the navigation skills needed in a connected world.
That customer trust that was overlooked by big companies in favor of a few extra bucks is lost, never to be recovered. Virtual offices and live chat become the bread and butter of customer support. Manufacture, shipping and many other activities that were the sole domain of large companies become readily available for the small guy. Building trust becomes equivalent to doing business.
Remember a movie called Lawnmower Man? It was about a dumb lawnmower man who gets access to what then was seen as a super virtual reality machine. He starts to live in the virtual world, learns to navigate it and to create a new identity. Of course, the movie makes him turn super smart, and then go bonkers, but let’s hope you won’t do that.
A huge thing in the Internet, even more so than in real life, is that appearances can be deceiving. Just like the lawnmower guy, this can madden you, or be an amazing tool.
With a couple thousand bucks worth of web design, any company can look like it belongs among the Inc 500. Hey, some 15-year-old that has enough free time could even manage to build something like that by himself. Before you freak out, take a second to really consider this. If you look Inc 500 and you deliver Inc 500, you can build an awesome Internet business and actually make money, Inc 500 style. Not only that, but you can instantly tweak your website, and even do a total rebrand whenever you have to.
No wonder the big guys were shaking.
Final 2 cents
One reason why old business models still hold is that minds need time to adapt to new realities. Technology has changed the game, but we don’t yet see the inevitability of this change, and how far it reaches. Another very real reason is that the basics of business didn’t change. The men running old school factory-style business still make bank because they know the principles deep in their bones. This is the part that can’t be faked.
For small business owners, all this tech is an immense pool of opportunity. A huge, unexplored sandbox that can generate business unheard of. What does this all mean to you, to your specific business? It means you have no more excuses. No more whining and crying about the big bad wolves. The whole world really is just one huge market waiting to be seized.
About the Author
This post was written by guest blogger Nick D’Alleva. Nicolas owns a website design business called Spotted Frog Design and an outsourced customer service and call center company called Specialty Answering Service.