Thriving in the face of change: 3 business lessons from Pokémon Go

Pokémon Go is a free-to-play location-based mobile game available on iPhones and Android devices.

The game allows players to capture, battle, and train virtual creatures, called Pokémon, who appear on device screens as though in the real world. It makes use of GPS and the camera of compatible devices.

The game’s been out a week, and it’s a huge hit. But, a lot of people – including business people – seem downright hostile to the game. Big mistake!

The unexpected success of this game provides three lessons for businesses faced with change and innovation.

Lesson #1 – Accept. It’s natural to have a gut reaction to new things. Often that gut reaction begins with “I don’t understand it.” The next gut reaction is, “I don’t like it.” My Facebook feed is filled with grumpy folks telling Pokémon hunters to go home, get a life, or get a job (or all three).

It doesn’t matter if you like Pokémon Go. It’s here. And it’s here to stay. It might be a summer fling, or it might be around for a while. Bell bottom trousers were a fad, but they were a fad that lasted a decade. May as well accept the fact that millions of people are playing a game that gets them out of the house and walking around the community.

Lesson #2 – Understand. How does this thing work? When an innovation hits the scene, don’t ignore it – understand it. Learn how it works, how it works for users, and how it can work for you.

Facebook was built for college students. When it first came out, most older folks didn’t understand it and couldn’t understand why anyone would use Facebook.

Today, the average Facebook user is about 35 years old. More than 1-in-4 Facebook users are age 50 or older. Almost two-thirds of Americans get their news from Facebook. Facebook has grown from a quirky website that no one understands (what the heck is a “poke?”) to a massive piece of Internet real estate that almost everyone uses.

Pokémon Go gets people out and about. People go where Pokémon go. People hang out where Pokémon hang out. “Lures” are goodies that attract Pokémon to a site for 30 minutes. Lures can be purchased for 99 cents. Think about it. Now think about it as a business wondering how to attract new customers.

Lesson #3 – Adapt. How can I profit from it?

Look at these signs seen in front of businesses once the Pokémon Go rage took off. Who do you think is making money off of this new innovation?

One business is turning away customers with a nasty message: “Pokémon are for paying customers only.” That’s another way of saying, “We don’t want your business.”

The other business has adapted and embraced a source of new customers by offering a discount. “This place seems cool, let’s take a break and have a drink.”

Still other businesses have found entirely new opportunities. For less than $2 an hour they can drop a lure at their business and get dozens of potential new customers. That’s pretty cheap marketing. And, yes, a lot of businesses like bars, restaurants, and coffee shops have used the game to lure new customers.

In Oregon, an Uber driver turned to Craigslist advertising $30 for a two hour ride during which he would “drive you around Portland Metro area while you play Pokemon Go.” The fee includes snacks and beverages along with stops along a route that includes “all the PokeStops and Gym Trainers.” This entrepreneur saw an opportunity and jumped on it. (Note: He’s probably not charging enough.)

Everyday, we’re faced with change. With change comes risk and opportunity. Accept, understand, and adapt and you may be able to profit.

Economics On Demand

The world is facing rapid change and increasing uncertainty. Every change presents an opportunity and risks can be managed.

If you need a set of fresh eyes and an open mind to review your business, Dr. Fruits will spend a half day or more learning your business and your markets and make himself available for consultation and research. It’s Economics On Demand.

For a monthly fee, Dr. Fruits will be on-call to answer your questions, dig up research, crunch numbers, run workshops, or give speeches. Discount for up-front annual payment. It’s designed to be flexible, so you can pick anEconomics On Demand plan that’s right for your business. Emailfruits@econinternational.com or call 503-928-6635 and we can discuss your needs.

Some things in life are free: Learn economics from one of the best

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This summer Stanford will be offering an open online version of John Taylor’s on-campus course Principles of Economics.  Professor is considered one of the most influential economists today and is likely in line for a Nobel prize.

People can find out more and register for the course, Economics 1, on Stanford’s free open on-line platform. The course starts on Monday (June 22). The  first week’s lecture and study materials are now posted.

Basic economics

The course covers all of economics at a basic level. It stresses the key idea that economics is about making purposeful choice with limited resources and about people interacting with other people as they make these choices. Most of those interactions occur in markets, and this course is mainly about markets, including the market for bikes on campus, or labor markets, or capital markets.  The course will show why free competitive markets work well to improve people’s lives and how they have removed millions from people from poverty around the world, with many more, we hope, still to come.

For more information, visit John Taylor’s blog.

Bad troll, good troll

 

First there’s this story about Putin’s “Troll House,” a secretive group of dozens of online “trolls” based in Russia who propagate lies and misinformation aimed at the U.S., Ukraine, and other supposed enemies of Russia.

For example, last September 11, this “news” broke on Twitter: “A powerful explosion heard miles away happened at a chemical plant in Centerville, La., #ColumbianChemicals.” Another tweet linked to a screenshot purporting to show the story featured on CNN. Another pointed to a YouTube video of ISIS claiming responsibility.

It took two hours for Columbian Chemicals to catch up and put out the truth: There was no explosion and the “news” was fabricated. It took months to figure out that “news” came from the Troll House.

The trolls also take jabs at President Obama. The Guardian provides this example:

Speech balloons read as follows: Hmm, need to think of a password … I’m going to make it “my dick” … Click OK … What? “Error: too short?!”

 

On the one hand, if you put together Putin’s Troll House and the China’s hacking of government servers (the latest hack got personal information on 4 million federal workers, or 1.25 percent of the U.S. population), it’s pretty clear that the cyberwar is on.

On the other hand, Putin’s trolls don’t seem to have any real or lasting impact.

Then there’s this story … Maybe trolling works.

The Sunday Oregonian newspaper recently published the following letter. The letter hit on some major themes that have been frustrating and angering residents and visitors for years: vagrancy, filth, crime, open drug use, and a deteriorating downtown.

 

andre-marcel

 

Turns out, there is no “Andre Marcel.”

The letter was troll. But it was effective—it’s one of the most read and comment-on letters on the Oregonian’s website.

It was effective because it touched a nerve, a nerve that was already exposed. While Andre Marcel is a false name, his letter spoke troubling truths that got a city thinking and talking.

Confessions of an Uber economist: Politicians and their crazy contradictions on crime and safety

Portland, Oregon is a contradiction wrapped in a mystery inside an enigma.

We are transportation innovators. We began the streetcar revival that has infected cities throughout the US. But, we still can’t pump our own gas—too dangerous, you know.

We have mandatory minimum sentences for certain crimes. But, if certain legislators and city commissioners have their way, it will be illegal for employers to ask job applicants if they’ve been convicted of a crime.

We are a high tech hub—the self-proclaimed home of the Silicon Forest. We bent over backward to get Google Fiber in our city. We even made our own Google Fiber beer. But, until a week or so ago, we couldn’t use the Uber or Lyft ridesharing services, because several city commissioners admitted that they didn’t understand the technology. (And, it’s well known that one commissioner still doesn’t have a smartphone.)

All these contradictions played out in the small space of one week. Last week, in fact.

Monday of last week I applied to be an Uber driver. The first step was to submit my background check. I also had to submit a copy of my driver’s license, my vehicle registration, my insurance information, and my City of Portland business license.

Oh, and I had to get my vehicle inspected to make sure it was safe and that there was no visible damage.

Now the background check is important, or so it seems. In fact, one of Portland’s city commissioners explained her fear of ridesharing by remarking that her mother always told her not to take a ride from a stranger. Yes, she really said that.

The car inspection was a snap. In fact, it took about 30 minutes and Uber paid for it.

The background check happened to be the biggest bottleneck. Turns out that the third party vendor Uber uses has a bit of a backlog from all the people who want to drive.

Nevertheless, just after noon on Friday of that week, I received text message from Uber saying that I was approved. Yes … a text message.

Fifteen minutes later, I picked up my first fare, which I detailed earlier on the Econ Minute blog.

That same day, a community activist and one of my former students was thrown off the Portland Streetcar for complaining that a vent in the streetcar was leaking water and smelled of smoke.

After complaining a few more times, the rider was thrown off the streetcar for making a disturbance and issued a citation.

Streetcar management dismissed the rider’s complaint as a disturbance to the driver and other riders. They explained that the leak was due to the aging car, which gets smoky and leaks when it’s hot outside. But streetcar management said even their smoky leaky cars are safe to ride in.

Keep in mind that the oldest car in the fleet is about 15 years old. (By the way, the average age of the planes used by Southwest Airlines is 19 years.) Also keep in mind that it wasn’t that hot outside. The high that day was 73 degrees. If that’s “hot,” then Portland’s streetcar would be expected to smoke and leak about five months out of the year.

Now let’s get to the contradictions.

We have a city commissioner who is afraid that Uber drivers might commit some sort of violence against their passengers.

At the same time, the city commission and the state legislature are pushing “ban the box” laws that would make it illegal for a business like Uber to ask whether their drivers have ever been convicted of a crime.

We have rules that require all rideshare car to pass a safety inspection. Yet the city runs streetcars that would fail the same sort of inspection to which Uber cars are subjected.

And we have a city in which African Americans complain that they can’t get a cab or get thrown off the streetcar, yet my first two Uber customers were young African American men—both Five Star riders.

And that is this week’s visit to the contradiction wrapped in a mystery inside an enigma that is Portland, Oregon.

Secret, Pixar, Schumpeter, and Louis CK: The world’s shortest economics lesson

Flash-in-the-pan smartphone app Secret, has announced it’s shutting down after just 16 months and after raising $35 million from investors.

Secret allows users to post anonymous comments and read anonymous comments by others. Add in location services, and users can post and read comments to other people near them. Yes, it’s a bit creepy, but Secret is not alone in the creepy secret business.

Co-founder, David Byttow, made the announcement in a blog post:

Secret, Inc. still has a significant amount of invested capital, but our investors funded the team and the product, and I believe the right thing to do is to return the money rather than attempt to pivot. Innovation requires failure, and I believe in failing fast in order to go on and make only new and different mistakes.

In a world where hi-tech investors are treated as easy marks for fast-talking Millennials, Byttow shows a bit of class with his promise to return the money (although, one wonders if he’ll keep his Ferrari).

More important is Byttow’s acknowledgement that innovation requires failure. Pixar’s John Lasseter puts it best:

Be wrong as fast as you can. Mistakes are an inevitable part of the creative process, so get right down to it and start making them. Even great ideas are wrecked on the road to fruition and then have to be painstakingly reconstructed.

Lasseter’s wisdom is a version of economist Joseph Schumpeter’s concept of creative destruction in which the creation of new technologies destroys older technologies. While some may regret the loss of older technologies, the creation of new technologies pulls the economy forward in ever increasing prosperity.

And, if you don’t want to believe an economist, you can trust a comedian.