Madoff Unleashes the Counter-Veblen Effect

I seldom bother to read the Sunday Times, but today I had little choice but to learn how the Madoff scam has rocked the exclusive world of the super-rich.

We can skip the lecture on supply and demand, save to say that all the featured sob-stories suggest that Madoff targeted the mega-wealthy private investor on a personal level, triggering a snob effect and/or bandwagon effect. In other words, the mugs confused either exclusivity itself or popularity amongst their "circle", with the quality of the investment. According to the FT, even "Union Bancaire Privée, the Swiss bank that is one of the world’s biggest hedge fund investors, told clients in a letter this week that it had spotted potential dangers but had been reassured by Mr Madoff’s reputation and clean regulatory record." More snobs on the bandwagon.

Of course, appealing to investors on this basis was especially insidious, as it robbed them of any interest in transparency. Whereas concern at the lack of it kept more rational institutions and professional investors safely at bay. Even the publication of Michael Ocrant's article in May 2001 ("Madoff tops charts: sceptics ask how") strongly suggesting a scam, failed to restrain the rampant enthusiasm amongst the wealthy elite for the long social climb ahead.

Well, they're all down from the mountain now, of course, claiming they should've been warned by the SEC and raging round their lawyers' offices spouting the whole sorry history of restaurant names and lunch dates while litigators take notes. But once they've ridden the whole length of the change curve, I have little doubt they'll get their own back without any help from the lawyers or regulators.

In fact, the backlash could well unleash what has been termed the "counter-Veblen effect: preferences for goods increasing as their price falls, over and above the traditional supply and demand effect, due to a conspicuous thrift amongst some consumers."

This will be more than merely an austerity measure. Like investing with Madoff, the counter-Veblen effect will be the product of a lifestyle choice. So, while it's interesting to see how it fits with the ways in which we are tightening our belts as a tactical response to the credit crunch, the counter-Veblen effect might actually chime better with, say, the actions of prominent people driven by environmental concern - like Darcey Bussell leaving for Australia to become an "eco-Mum", the committment of the entrepreneurs behind the Tesla electric car, and ultimately the Bill & Melinda Gates Foundation - as well as the authenticity demanded by the Web 2.0 community that clashed with "gut instinct" politics during the recent US Presidential campaign. Like these trends, the counter-Veblen effect could well turn out to be real and lasting.

So welcome, I suggest, to a new world of battered Bentleys, frayed collars and housecoats in Knightsbridge, where cheaper is better and champagne is for wimps.

Are You Dealing With Introverts or Extroverts?

Interesting piece on Mashable recently, suggesting that most social networkers are in fact introverts. That means they are driven by their own thoughts and feelings, whereas extroverts are driven by external interaction (I think you could be neither - i.e. somewhere in between on the continuum - but not simply "both", as the Mashable poll suggested).

For any online service provider this begs the question whether your customers are introverts, extroverts or neither, and how you should manage your marketing and communications for each type. However, assuming your objective is to generate passion and connection amongst your customers as a community, then perhaps its better to view your staff and customers as a team comprising all types who need to get along.

Further, as Idea points out, the introvert/extrovert dichotomy is but one aspect of personality and how personalities interact in a team scenario:

"In the Myers-Briggs assessment, personality characteristics are categorized along four continuums: Introvert/Extrovert; Sensing/Intuition; Thinking/Feeling; and Judging/Perceiving....

Whereas introverted team members need extroverts to initiate spontaneous verbal discussions, extroverts value an introvert’s capability for problem solving based on careful reflection and consideration of all ideas....

intuitive members need sensing personalities to remind them of facts and limitations. Conversely, sensing individuals need intuitive members to remind them to think outside of the box....

As team members, thinkers are effective in articulating logical reasons behind decisions, while feelers can bring people together....

A team needs the right mix of judging and perceiving personalities to ensure adaptability as well as adherence to project boundaries and deadlines."

Now I don't want to stifle debate, but some takeaways might be:

1. An extrovert staffer could be asked to initiate discussions and debates, but might need to take some care to leave the discussion and conclusion open to engage the introverts;
2. Provide opportunities for people to think outside the box;
3. Articulate not only the reasons for decisions but also acknowledge how the decisions make people feel;
   
4. Demonstrate flexibility, but set expectations about any constraints on flexibility, like resources and deadlines.

Discuss?

Politicians@LinkedIn

I was slightly taken abarack just now to see that someone in my LinkedIn network had added Mr Obama to their network. Having viewed the candidate's profile, I also see that other US politicians have created profiles. I was somewhat comforted not to have found profiles for Gordo or Dave, but concluded that this may be more to do with their own arrogance than any desire to spare people the dilemma of whether or not to add them to their networks.

I don't know about you, but I can't see myself adding a politician to my social network, unless they happened to be a trusted, real-world friend. And that's just it. As far as I know, none of my trusted, real-world friends are politicians (other than perhaps in the sense that they cope with daily cut and thrust of office politics).

I also reckon that to add a Politician to your social network is tantamount to drinking the Kool-Aid - it's never going to end well.

SmartPhones, the Internet and Dinner Party Etiquette

Gone are the days when dinner party conversations drifted along, unchecked for factual accuracy, against a background of music from a CD on repeat that no one could be arsed to change.

Today, hosts and guests alike punctuate the discourse with Google-searches, songs and YouTube clips from their smartphones. If you're really lucky, a large flat screen and broadband connection will be made available on or near the dinner table for those particularly graphic clips or complex Wikipedia entries.

Is the art of conversation lost, or are these digitally-supported conversations actually more informative and rewarding than their analogue forbears? Should digital devices be hung up at the door like six guns in a Wild West saloon?

I have the feeling that I'd know the answer if I drank a lot less. By 9 o'clock it's all Mandarin to me.

Even I Now Have a Crackberry

Yes, even I have finally succumbed - a decade of Nokia loyalty overturned. With my Nokia E61 forlornly relegated to back-up status, my life's data is now on the dreaded Crackberry.

This Seismic Shift was caused by the internal communications etiquette of my current client. The company generally requires employees and staff to have their own mobile phones. So, to avoid the undue use/cost of mobiles, the preferred modes of communication are email or calls on the company's internal telephone system. Most requests that someone call your mobile seem to go unheeded in favour of email, as everyone assumes that your mobile is a Crackberry - you'll see the email anyway.

Ironically, I can't get email on my new Crackberry as the relevant server isn't responding to my password yet. So, the only way to communicate effectively would be to throw it at the next person I see...

Worse still, I remain deskbound, since approval for remote email access via my company-issued laptop is yet to reach the Guardian of the VPN.

Woe betide the next person who passes my office door!