OPEN's Marcy Shinder and Seth Godin discuss how entrepreneurs are reacting to the changing economy and how these times may represent a golden opportunity for savvy business owners.
Marcy Shinder: Seth, there’s no doubt these can be trying times for companies on a growth track – the complexity of business is continuing to increase, and business owners are forced to make some tough decisions like raising prices or cutting staff. What would your advice be to OPEN Cardmembers who may be looking to start new ventures or expand their business, given the current economic climate?
Seth Godin: Here’s the way I look at it: when you’re watching competitive swimming, the commentators always emphasize how deep the pool is. But, actually, your swimming speed has very little to do with that; there are so many issues you need to get right before you even get to the pool that its depth is irrelevant. In a booming economy, mistakes can be covered up because there’s so much money going around. During tougher financial times, a higher premium is placed on people who “get it” – those who’ve got all their bases covered and can focus real energy on their business plan. There’s nothing like a recession for focusing the business mindset. Many will give up, leaving the field clearer.
Marcy Shinder: Entrepreneurs today are wondering how, and whether, to get involved in the social media revolution. Do you forsee opportunities for business owners using Facebook, Twitter, MySpace, LinkedIn and the like, to help build their businesses?
Seth Godin: The great thing about sites like Facebook is that they don’t represent a hundred bazillion people in one community – they’re made up of lots and lots and lots of micro-communities. So a small business is totally free to reach the 400 people in its town that, say, love cat-gut on their tennis rackets or something. And the idea that those people want to talk to each other and you’re the ringleader – the mayor – is where you can thrive. Because someone needs to own that conversation, and the person who does is the person who profits.
Marcy Shinder: There’s a lot of talk about advancements in digital infrastructure coming at the expense of more traditional growth models. Do you think cyber-innovation is imperative to the success of a business these days?
Seth Godin: Social media is obviously important, but I see the whole cyber-scape as an enabler rather than a destination. To me, access is key. The fact that you have free, on-demand, universal, unlimited email, the fact that you can now run a top web company without a single server, the fact that every business can have a presence in the blogosphere – those things were inconceivable five years ago, and they mean that small businesses can increasingly kick above their weight.
Marcy Shinder: Another movement that has swept the business landscape recently is sustainability. Many of our Cardmembers have seized on the opportunities afforded by green business practices and localization, or are wondering what measures they can take to reduce their carbon footprint. What are your thoughts on adopting plans that emphasize green policies and practices and what opportunities might this represent for today’s entrepreneurs?
Seth Godin: I think the next few months will determine whether people’s professed commitment to these issues will remain as strong when money is tighter. I hope it does, because what people will discover, as with so many things that change the world for the better, is that this actually ends up paying for itself. Not only that, but you can actually make money from doing it.
Marcy Shinder: We are also noticing a return to the production of specialized goods – hand-crafted, one of a kind, or artisan-made objects. Do you see a redefinition of what was once considered “luxury,” or the way these types of unique specialty goods are marketed, emerging from the current consumer mindset?
Seth Godin: This trend is also being spurred by the web. The premium for being the best in the world at what you do, or at least above the level of your peers, is so much greater than it used to be, because the world will find you over the internet. So your business model can be as tiny and arcane as you like, but still exert a massive gravitational pull. There was a piece in a magazine not long ago about a guy who makes the best chef’s knives in the world. I went online to try and buy one, and he was so sold out that he’d closed down his waiting list. It’s all bound up with this sense of quality – the rare or hand-tailored piece as opposed to the mass-produced product – which can be spread virally on the web. I can go direct to a potter online and make a purchase, cutting out all the middlemen, and making me part of a small network that gives that purchase a sense of meaning, belonging and connection. It becomes an emotional thing.
Marcy Shinder: Do you think these trends might be harbingers of a wholesale reshaping of the small business environment? If so, where do you think we’re headed?
Seth Godin: I think we’re starting to see a fundamental shift in the way small businesses are started and the way that they’ll succeed. I’m hoping future small business owners will ask themselves what part their business will play in wider society – what impact will they have, socially and environmentally? What can they offer and what can they give back to the community in which they’re rooted? I’m convinced that those kinds of questions will assume increasing importance. And I’m wildly optimistic about their prospects for success. To me, entrepreneurs have always represented change. As an entrepreneur myself, what I’ve discovered through the years is, seeking those people out, listening to them, amplifying their encouragement, and sort of turning a deaf ear to the people who are defending the status quo, is a lot more fun and an easier way to spend your day.
Marcy Shinder: Over the more than 20 years that OPEN has been serving business owners, we’ve seen the resilience of entrepreneurs to adapt to changing times. But are you now forecasting a change as profound as that which precipitated the industrial and digital revolutions? Are you saying that there’s going to be a radical difference in the way that future business models are formulated?
Seth Godin: I think so. The biggest single difference is that the whole factory model is dead – the mindset that says that the purpose of the corporation is to raise money and build a factory, and the purpose of the factory is to make lots of stuff that people will buy. That’s gone, it’s over. The way we train, the people we hire, the products we make, the way we sell them – is approached in a different way now. The new paradigm is two or three guys, setting up a couple of desks and laptops in their garage, conquering their own corner of the web, and maybe making $1 million or more in their first year. All the brains and emotion are migrating to service-related businesses that stress their horizontality rather than verticality. It’s a mass-customization, high-bandwidth connectivity kind of paradigm.
Marcy Shinder: Given that, what do you think are the buzzwords for any of our Cardmembers who might be entering a new marketplace?
Seth Godin: Cheap, fast, flexible. Those are the crucial things. Stay close to your customers. Implement decisions quickly, while retaining the flexibility to adapt. Take some risks. And most importantly: enjoy the ride.
SETH GODIN: AUTHOR, LEADING BUSINESS BLOGGER & TRENDS VISIONARY According to American Way magazine, Seth Godin – leading business blogger and trends visionary – is “America’s Greatest Marketer.” A fixture on the business conference speaking circuit, Godin has made appearances at Google and TED (Technology, Entertainment, Design), a forum for the world’s leading thinkers to share ideas. Godin is the author of more than 10 books, including Permission Marketing, Purple Cow and his most recent, Tribes: We Need You to Lead Us. In addition to writing and speaking, Godin is the founder of the advice and recommendation site Squidoo and a frequent moderator on OPENForum.com.
MARCY SHINDER: VICE-PRESIDENT, BRAND MANAGEMENT Marcy Shinder oversees OPEN’s focus on social media marketing, brand strategy, product marketing, events and advocacy designed to ensure that American Express OPEN delivers on its promise to be the Card that connects its customers to the best in business. Shinder was among BtoB Magazine’s Top Marketers for 2007 and 2008, has been featured in Pink Magazine, The New York Times, Direct Marketers News and has appeared as a guest on Fox Business Network’s Money for Breakfast. For more articles and profiles on the trends shaping today's business landscape, download OPEN Book: A Practical Guide to Essential Trends.