By Anthony Tjan via harvardbusiness.org.

I recently sat down with my BlackBerry voice recorder and Mats Lederhausen to ask him to share his philosophy of “purpose bigger than product.” Mats is a great entrepreneur and also had one of the most successful careers at McDonald’s where he was a driving force for its turnaround. He currently runs his private investment vehicle Be-Cause and is a Special Partner at our firm, Cue Ball.

What is your philosophy of “purpose bigger than product” all about?

At its core, it is about being real and idea-driven. Trust is perhaps the most important currency in business, and big ideas may be the only true source of competitive advantage. Lack of trust is a form of tax. And that tax rate has increased in the past number of years. Customers simply don’t trust institutions as much today. Particularly large businesses. The main reason is that we now live in an “information everywhere” and more transparent world. Every customer has a camera in their cell phone, a Facebook in their pocket and Twitter at their fingertips. This means we hear and see evidence of businesses not walking their talk. Their products don’t match their promise. In order to regain this trust you must simply make sure that all your products, your merchandising, your advertising, your people and the totality of your touch points with consumers sing from the same hymn. And that hymn is what I call purpose. Some people call it vision. Others call it focus. It is the same thing. It is source of your promise. It answers the question: Why are you here?

Talk a little more on the notion of “big ideas.”

I often talk about “altitude creates attitude”. When you meet people that have a big idea it is almost impossible to be unaffected. It is like a perfume. You can smell it miles away. I firmly believe that the source of human energy and creativity can be found in the distance between where we are and where we’d like to be. It is that creative dissonance that is the entrepreneurial rocket fuel. If human beings could have walked everywhere on the planet I don’t believe we would have invented trains, planes and automobiles. So, if you really want to build great companies you need big ideas.

Certainly, not all big ideas may be viable in all incarnations. What about the reality of these ideas?

Of course they have to be believable. They can’t be pipedreams. Or as John Naisbitt once said: You can’t get so far ahead of the parade that no one knows you’re in it.

From an execution perspective, you have to think big, start small, and scale fast. You can’t think big and start big, that’s almost impossible. You need miniature versions of your grand idea so you can validate its parts, and then iterate and tweak constantly. There’s nothing wrong with having a really big idea and launching only aspects of that idea. Rome wasn’t built in a day. Take Chipotle, for example. Steve Ells had a very big idea about food, but he didn’t start by executing 100% of his vision; he gradually did what he could towards that theme.

It is also important to remember that your purpose is not what you “tell” customers, but what you do. The best way to disappoint everyone is to over-promise and under-deliver. Therefore you must be humble AND committed at the same time. In fact, customers are more forgiving when you make mistakes if those mistakes are honest efforts in trying to improve towards a known and worthwhile direction.

How can a purpose be instrumental in leading an organization?

I look at purpose as the guiding star. The compass. The soul. Steve Jobs once said “Design is the fundamental soul of a man-made creation”. And everything we do is design in one form or the other. And if you have a fuzzy idea of your own soul, your design will suffer. On the other hand, like Steve Jobs does, if you have a sharp idea of your soul and what footprints you want to leave, all your design will complement and reinforce that soul of yours.

How did you come to have this philosophy?

There are a few parts of the answer. First, to be honest, it’s hard to know the answers to the bigger questions in life, like why we believe what we believe. To a certain extent it’s the result of the sum of all of our experiences since birth. Second, I’ve been influenced by seeing what really works. I think strong conviction and a sense of purpose enables focus, and the biggest culprit of bad performance in a company is lack of focus. It’s hard to set direction if you don’t know who you are. Thirdly, I’ve decided that I only want to work with companies that are trying to do something important. It’s about human progress and adding value to society.

What do mean when you say “important?”

While we have significant global issues to be concerned about, an important business doesn’t have to be grandiose or socially driven in order to be important. General contribution to the well-being of another human being is worthwhile. It could be a restaurant that’s creating jobs and leaving customers just a tad bit happier than when they arrived. Or a concept such as MiniLuxe, our Cue Ball investment that is trying to “Starbuck” the nail salon, which has innovated a lot around hygiene and customer experience. It is an example of a business with a clear purpose that is trying to do something remarkably better than the industry norm.

What companies really celebrate this philosophy?

Nike is a company that understands it. They have always had this idea that it’s more than a sneaker. They are about getting into the game, being more than a spectator in life, and embracing activity. In their words, “Just do it.” If you go to their headquarters in Oregon, it’s like being in a gym: it breathes “active lifestyle.” That’s what they’re about and they have consistently executed around it.

Southwest Airlines is about giving people the freedom to fly. They are about seeking and loving freedom, and they enjoy being a bit nutty about celebrating that notion. And there are many others as well. Apple, Berkshire Hathaway, Microsoft, Google, Patagonia, IKEA, and a host of others. There is one thing that is interesting to me to note about all these companies. They are very different in so many ways. But they are also very similar in one way. They all have their founders alive and kicking. When the source of the original idea is still around it is harder to lose why you came to this world in the first place.

ANTHONY TJAN

Customer research tends to be demographically-biased in its design. But it is time for us to go a little psycho on customers — psychographic, that is.

When it comes to purchasing behavior, it is obvious that personalities matter. So why is it that we so often look at detailed website usage or customer data along impersonal demographic dimensions like age and gender? While useful, those characteristics don’t describe attitudinal trends which may be more important — and need to be a critical complement to other data.

Psychographics are the data points that describe a user’s values, opinions and lifestyle. Think of psychographics as the kind of data a psychologist or anthropologist would use to profile someone, as opposed to the demographic data that a census surveyor wants to collect.

Or consider what information you might want to collect for a blind date. Demographics may be useful to narrow the pool down to, say 30-year old males in Chicago, but would that be enough? To choose your partner, you likely want to consider personality, interests, and values. Similarly, for customers to fall in love with your product or brand, you need to understand their personality and passions and see how those connect with your product or service.

While there’s no standard psychographic profile, we can borrow some ideas from psychology. A psychographic profile should tell us about how a person interacts with the world (are they extroverted or introverted? analytical or emotional?) and what they value most (security? family? the environment?). You can combine more “classical” survey methods with questions that are personality or association-based. For example, ask the question: If you (or this product, or this service) were a car, what kind of car would it be? A Mini, a Mercedes, a Range Rover, or a Prius? Each of these cars connotes a different personality and you can use such responses to infer desired personality traits.

In the pre-digital world, gleaning sufficient information to constitute a psychographic profile would often require prohibitively expensive customer anthropology. Imagine researchers observing and following customers as they interact with a product. Now, however, as consumers spend increasingly more time online, a level of digital anthropology is more feasible because consumer data can be better aggregated and analyzed — cheaply.

Cameras within stores can also share tremendous insight. Video anthropologist and consumer researcher Paco Underhill has filmed thousands of hours in retail settings. One discovery: customers buy less when their arms are full of products; shopping baskets in the middle of the store can help increase sales. In an intense retail customer research assignment I once did, we discovered that new mothers were significant purchasers of both diapers and digital cameras — placing these two seemingly disparate product categories closer together helped drive cross-selling.

So, how can you use psychographic data? Suppose you wanted to market a new brand of organic, flaxseed-infused cereal. While there is no clear demographic group for that product, there may be a well-defined pyschographic one. You could target anyone who identified Whole Foods and Eastern Mountain Sports as favorite brands, expressed a concern about health and fitness, and is environmentally conscious. You can also use psychographics to inform how you market to a particular group. You could market to “analytical and research-oriented” folks by talking about the cereal’s unique formula, while you could reference case studies and endorsements when marketing to people who value expert opinion.

The task for next-generation online audience measurement and sentiment tools, then, is to start understanding traffic along psychographic axes. There are a few ways to do this.

First, members of an audience measurement firm’s user panels could complete a psychographic questionnaire: What are their three favorite brands? What kind of car would they like to be? On a Friday night, would they rather stay in and watch a movie or go out on the town?

The second way is to understand what your users are doing before and after they interact with your company and profile the content and audience of those sites. In my HBR piece on customer strategy, we discuss a technique we used at Thomson Reuters called the three-minute rule; we observed what users were doing three minutes before and three minutes after each interaction with the product.

Lastly, so-called “single sign on” services will make associating user behavior on different sites much easier. Google, Microsoft, and Yahoo! all participate in the OpenID project, and Facebook has a competing platform called Connect, which allows a user to log into many sites with one set of credentials. A central database could contain everything from blog comments and self-descriptions on social networking sites to purchasing data and search history.

Pyschographics offer us an ability to understand current and potential customers in terms of the beliefs and values that drive their purchasing behavior. In our more voyeuristic and measurable digital world, psychographics will increasingly drive customer understanding.

Original article can be found here.

So recently I was browsing through my Twitter followings and from @phemey I found a really interesting (and entertaining) perspective on the education system as we know it now and it’s effect on “creativity”. I will be the first to say that I do not have an in depth knowledge of the educational system as it exists today nor is this post meant to be a critique of the current educational system, it is instead, an interesting point of view that I hope sparks some conversation.