Sunday, March 15, 2015

The Authenticity Advantage

I recall sitting in the Café Mediterranean in Berkeley, struggling to make sense of Das Kapital. The upstairs seating area was good for such study, and for the occasional erudite discussion. A quirky intellectual commented on my choice of reading, and the conversation was easy. He was interesting – a physician who had majored in philosophy. I did not know that was possible; pre-meds stay focused on grades, and you don’t do that writing essays on epistemology. And then he muffed, mispronouncing Wittgenstein. Why do you major in philosophy, if not to learn how to pronounce Wittgenstein? Clearly he was not a philosophy major. Probably he was not a doctor. Maybe he was not even a guy. The conversation was over; he was a poser.

Posers work hard to conform, because they know that people are well-tuned to detect fakes. Think Frank Abagnale, the notorious serial impostor who successfully carried on in a number of false careers - including as an airline pilot, lawyer, and doctor. Criminal though he was, we are in awe of Abagnale in no small part because most of us suffer from the opposite problem: impostor syndrome. Psychologists note that many people have trouble fully embracing their own accomplishments. So the posers of the world, repulsive though they are, have to be admired for their ability to embrace playing a part in the play of life.

Growing up in San Diego, you knew the tourists because they were too perfect: Heishi beads, surfboard wax, hair just so. We locals spent a lot of time on the beach, but had not thought enough about the outfit. In my case: cutoffs that I actually cut off, no board, bad hair. Idiosyncrasy implies authenticity, since posers pay so much attention to form.

In competition, posing can be effective. We concentrate on how we dress when we apply for a job, because we’re posing and want to be seen as an appropriate choice. Those who compete in mating contests work hard at how they present themselves on Facebook. (Does he really prefer romantic comedies?) Of course companies do this too – and sometimes to great effect. You may remember when you found out that Sam Adams beer was not even brewed by the company that posed as its “brewer,” or when you realized that Häagen-Dazs ice cream was not from Europe. But it must be admitted that these brands, posers though they may be, fool enough people to be strong competitors.

The downside of posing is that most anybody can do it. In 2004 eBay declared it would dominate China, and entered by acquiring the then-leading Chinese firm EachNet. By 2008 they had failed utterly – overtaken by authentic rival TaoBao.  What happened? eBay “became Chinese” overnight through an acquisition, while TaoBao built something idiosyncratic from the ground up. I was developing case studies in China back then, and recall that there was nothing distinctive about eBay’s China operation. In fact, it was run out of Seoul! The problem with posing is that you may end up competing with the real thing.

Those who stick to their authentic identity are difficult to imitate. If you go into any part of NetApp, a leading data storage company with operations worldwide, you will see the same organizational culture in action anywhere on earth: little regard for formal titles, open exchange of information, a shared sense of concern for the customer, and respect for well-intended action. These norms are widespread at NetApp because the company hires and promotes with that culture in mind – a habit formed by its founders in its early days, and reinforced to this day by its leaders. (Check out Tom Mendoza’s talks on this subject.) Of course, that means the company’s growth needed to be mostly organic, rather than by acquisition. Such growth can be painful at times, and certainly slower than the sudden growth that comes with acquisition. But most of us would prefer to grow steadily than to acquire and then fail.

Authentic companies fail too, of course. A firm’s idiosyncratic approach to doing business may be dead wrong, in which case they will fail. But to paraphrase Jeff Miller, they may be wrong, but at least they are not confused. So a difficult choice needs to be made if you are growing a business. Do you conform to the established recipes you see around you, or do you build on what makes your company authentic? Posing is likely to be less risky – at least until you encounter the real thing.


For the research on authenticity and competition is the book by Hannan, Pólos, and Carroll.