For the past several weeks, I have been travelling – first to Cartagena, Colombia for Tendencias 2013 and then to Asheville, North Carolina for Engage! 13: Biltmore Estate.
Engage! first. As I have spoken of many times before, Engage! is a bi-annual summit for luxury wedding professionals. It just keeps getting better. So much wonderful takeaways – from the state of the state when it comes to technology from Carley Roney and Abby and Tait Larson – folks who know more than a thing or two about the subject – to solid business and structural advice from the likes of Todd Fiscus and Colin Cowie to name but two of the awesome wedding pros I had the privilege of listening and speaking to. I hosted a panel with Harmony Walton, Anne Chertoff and Xochitl Gonzalez – three women who have each been in the wedding business for about ten years – and we spoke about transition ala my last blog post.
At Tendencias, I spoke about the importance of presentation and how the world is fundamentally shifting away from the value of production to the value of the idea. I first discussed my ideas with the wedding professionals who attended Tendencias, but then had the awesome opportunity to talk to small business owners in Cartagena on behalf of Camara Oficial de Comercio, the Chamber of Commerce for Cartagena. Each business owner grasped how much it is about honoring a future where effective, meaningful communication is the only thing that matters. I could see the shift happening as each group contemplated what that meant.
For me though, the most profound moments come in relating each to the other and the very notion of what it means and will mean to live in a global economy. As much as we like to contemplate it in the United States, creative business is not yet confronted daily with the consequences of a fully integrated global economy. South America is.
The resources in South America are vast, skilled labor is still quite inexpensive (although I hope less so in the near future) and quality of production stellar. And yet, as borders open, perception problems remain. Brazil knows what Brazilians can do, but have not yet come to fully value what Colombians can. The work going on now is solving that problem so that the best artist is the one that wins the work. In almost every sense, the essence of the art, the culture, the fabric of the message meant to be delivered is what is being sold, far more than the cost of the item. The perversity is the cheaper the cost of production, the larger the perception problem.
Think about it. If you could buy the exact same Hermes Birkin Bag for a third the price, but without the Hermes logo, you probably would not. More to the point, even if the bag was better made than the Hermes bag, you probably would not buy it. Such is the power of a brand and perception of value. This is what South America faces as borders start to blur and they are, in so many ways, better at it than their counter-parts in the United States. Simply, if you solve the perception problem the world opens to you. Easier said than done, of course, but inevitably where we are all heading.
Social considerations aside, think about what Apple has done to shift the perception of quality coming from China. Chinese technology is now not just cheap, but cheap and equally as good, if not better.
So go with me here. If all that separates South American countries from each other is perception, then it is just a matter of time until that perception is blown up and the best provider of the art will be the one who wins, regardless of whether it is a third the price. With the perception problem solved, the cost of production will continue to decrease – exponentially. I say it all the time, but it will entirely stop being about the stuff and only about the art and artistry. Quite an issue if you have built your whole creative business on the notion of marking up your cost of production. Why? You still need to make absolute dollars to sustain your business.
Say you are a florist/rental company/lighting company/caterer and you charge a typical 100% mark-up to make your money. If your cost is $50, you charge $100 and make $50 in profit. What happens when your costs go to $16.67? How are you going to make $50 now? To get to a price of $66.67, you would have to mark up your stuff by 400%. Do you really think your clients are going to let you do that? Not a chance. You are going to have to figure out how to make your money another way. That way has to be about subjective value and the intrinsic value of your artistry separate and apart from the stuff you provide. In a very real way, South America (and Latin America too) understands this and is moving further and faster to make the shift than those in the United States.
Rebecca Grinnals (founder of Engage! and all-around brilliant) is very fond of saying that your competition is no longer next door, but on the next continent. I do not think even she contemplates how deep that goes for creative businesses.
The choice is profound. Creative businesses in the United States can ignore the pressure on cost of production as the world and technology advances. Ask any photographer how that has worked out. Creative business owners can also live in the idea that their clients will always value their stuff over the cheaper foreign stuff (i.e., consider the misperception problem to be permanent). They might be right, but I would not want to be wrong if I were them.
Or U.S. creative businesses can see the largest opportunity of all – solving the misperception problem. Teaching your clients that, so long as you are the generator of the idea, the steward of the process, the Colombian lighting company is the best you have ever seen and a no brainer to have at your event for a third of the cost.
Better to be the leader at bringing the world to your client’s doorstep than the other way around. Just ask Duncan Hines how powerful the first position can be.
