Since June 2014, the world has assisted to a dramatic fall in the price of oil, which reached approximately half of its previous value.

While this turn of events has hurt producers of oil, like Mexico, it has – or should have – benefitted consumers and companies that use oil as a main input of production. Like airline companies.

It would be natural to expect airline companies to transfer parts of these benefits to consumers in the form of lower travel fares. But those of you who tried to travel in the past year have probably noticed that airplane tickets have not gotten any lower: over some U.S. routes the average fare has even increased by 10USD. What is happening to the industry? Could travelers expect cheaper fares any time soon?

Some representative of the industry has commented that because airline companies are working with long-term oil contracts they are still paying old prices. But these arguments have been dismissed after other exponents admitted that the industry was enjoying a period of unprecedented savings (jet fuel is an airline company’s major expense).

In a competitive environment companies who set prices should fight with discounts until they fill all their seats, cutting their ticket prices down to their marginal costs. And the airline industry has shown in different occasions to be very competitive, bringing notoriously low returns to its shareholders. How is it possible that such a competitive industry has failed to transfer its cost savings to the customers?

One might argue that at end ticket fares depend on travelers’ willingness to pay, and data show that not only are travelers willing to pay these high prices, but airplanes are also flying at almost full capacity! This seems to suggest that actual fares are somehow “fair”.

They key of the puzzle lies in that “capacity”. For an airplane, capacity is given by the number of seats that the company makes available in each category. When companies set a large capacity, customers can find seats more easily or they can delay their purchases with less fear of potentially losing an offer. Also, from the company’s perspective, large capacity would likely bring more empty seats that could only be filled with aggressive discounts. Following these examples, we can begin to understand how large capacity usually leads to lower prices. Analogously, high prices can be usually connected to small capacity. Therefore, when industry representatives state that airplanes are already flying at full capacity they are only presenting one side of the problem. Airplanes are flying at full capacity because the companies have reduced the number of seats available per airplane.

For instance, in a recent trip to Europe I noticed that Lufthansa has introduced a new seat-category called Economy Plus on its flights. While being located in the Economy part of the airplane, this category offers more space in exchange for a higher fare. Apart from allowing for better market segmentation – and therefore higher revenues through price discrimination- the introduction of this category has allowed the company to further reduce the total number of seats available on an airplane, stealing space to the Economy class. Next time you praise an airline company for the good space between seats, remember that you are paying a hidden fee for this space!

Concerns for consumers’ welfare have recently moved the American Antitrust authority to put the industry under investigation. The accusation is that airline companies have tacitly colluded in keeping capacity low.

What are the factors that have contributed to the relaxation of competitive pressure in the last few years? First, the emergence of code sharing alliances has reduced the number of independent players, promoting instead large and coordinated groups. Second, in the U.S. there have been some major mergers (see for instance U.S. Airways and American Airlines) that consolidated the industry, making tacit coordination among rivals easier.

Should we expect to see lower ticket prices anytime soon? Travelers should not be too hopeful. The Antitrust investigation is bound to take some time, and it may be difficult to prove airline companies guilty. Moreover, even if airline companies wanted to add capacity to their flights, they would not be able to do so in the short run. In addition, by the time they could accomplish that, the global oil prices might have returned to historical highs.

This lesson showed the role of capacity in preserving profitability in aggressive markets: capacity moves strategy away from quick and reciprocally dangerous price reactions, into a realm of slow quantity adjustments that stop the erosion of profits.

For a company, moving from a price-setting to a capacity-setting strategy is a way to avoid the harms of price wars and creating a friendlier competitive environment. As a strategic variable, capacity is more rigid to adjust than price is, and therefore is not the optimal tool to react fast and aggressively to a rival’s move. When all companies in the industry adopt this strategy, aggressive play slows down and competitive pressure in the industry will become low. Returns skyrocket and prices stay high.

When McKinsey & Company published its report, “The War for Talent,” in the early years of the 21st century, several forward thinking organizations redoubled their efforts and adopted initiatives in anticipation to the implications that were announced in that document. The lack of talent with diverse skills would remain a key inhibitor to the development of organizations, especially in the knowledge economy.

In the United States, Deloitte, the professional services firm, decided to make a significant investment in 2007 to address these forecasts as an innovative leader. Professional services firms flourish by acquiring the best talent that their employee value proposition enables them to recruit The great dilemma was whether to invest in a cutting-edge technology initiative, given the desire and intuitive technological knowledge that new generations of professionals bring as part of their lifestyle, or to invest in a space that would become a model for culture and dialogue on the company’s raison d’être. The decision was made in the latter direction and a multimillion-dollar investment was allocated to create Deloitte University.

Today, eight years after that decision was made, Deloitte University has exceeded all initial expectations. The first business case was justified by the savings from learning expenses derived from external learning venues rent, e.g. classrooms. However, the substantial return on such investment has emerged from the differentiation in the delivery of quality service, in comparative advantage in our employee value proposition, which has positively impacted the firm’s attraction and retention of talent, and in the dissemination and engagement of the professionals with the Deloitte culture. Based on this experience, new centers have been opened in Brussels and Singapore, and at this time centers connected to the DU network are being developed in Brazil, Canada, Colombia and Mexico. In addition, there are plans for expansion of the original center site in the United States.

On one occasion, a client asked how a school concept could be so successful? DU is far from being an ordinary school. First, one must examine the training and learning model of the big-four professional services firms. For years they have offered cutting-edge technical courses to all their professionals. However, despite their value, these have never been decisive factors when clients choose the advisory services of one or the other.

A lesson learned is that a corporate university is much more than the reconditioned learning center where a company’s collection of explicit knowledge is shared. The corporate university must be fully aligned with the strategy and the ultimate goal of the organization and in its way of boosting the value creation capabilities of its clients.

A frequent problem of business advisors is that they recur to be are advertised as the best creators of value. This is a myth. Recent theories of marketing, such as Service Dominant Logic or Service Logic, posit that the customer is the only one who creates value and that the advisor only facilitates that creation. Recently, value has also been discussed as an experience that can only be determined by the client.

However, knowledge itself has no commercial value until it is implemented, that is, until a business entity decides to integrate the knowledge into his value chain that creates products or services, such that a customer is willing to pay for them a price that allows for a profit margin in top of their cost.

Organizations take knowledge to their processes of value creation through the skills of their employees, that is, through sets of knowledge resources that are both implicit, in the mind and behavior of people, and explicit. What we should be interested in, is in the development of specific skills that enhance the raison d’être of our business, that is, skills that enable value creation of our customers, i.e. value facilitation.

Everything Is About Our Customers and our Collaborators
If a company does not depend heavily on the skills of its collaborators to transfer value to its customers, it is hard to justify an investment in a sustainable corporate university, steeped in corporate culture committed to excellence in service. Each exposed object, each corridor, interior, classroom, and garden, etc. of DU transmits an experience to its participants. DU has been carefully planned to communicate a powerful message: “This is what it means to be Deloitte and this is the level of service and experience that I hope you will transmit to our customers.”

The idea is for the corporate university not to be a pure learning experience directed internally, but that it should have an outgoing perspective, enticing a culture of quality service to customers, and ready to communicate and interact with them.

The Environment to Encourage Talent Dialogue
Much has been written about the tactics of training and retaining talent. In our experience, there is nothing like hearing viva voce from the great business leaders on the meaning of a program to transcend and influence the business sectors and the public sector that we serve.

Organizations that are heavily based on the knowledge economy have strong organizational cultures. These cultures tend to develop a resistance to learning from external professionals. It is certainly not a resistance to the technical concepts – a field in which the universities have produced state-of-the-art knowledge – but to the great value of the training offered by other leaders, which consists mainly of second cycle or even higher order learning. It has something to do with the formation of abilities to perform technical tasks, but much more with professional reflection on how to use these technical skills to enhance customer value creation.

Only a leader trains another leader. The corporate university should not be directed by pure academics, but by business leaders. An investment in a building, without the leaders who lead and give encouragement, will turn out to be an investment with questionable objectives.

Adults Do Not Learn In the Same Format as Young People
School learning styles (for example, “sit while I talk you through 60 Power Point slides”) have proved to be unproductive in corporate environments, having experientially observed their further poor transfer into the workplace. A public sector client told me that he spent millions each year on training, and the only noticeable result he obtained was having trained a team of “professional students”. In effect, a large percentage of the money that organizations spend on learning is money wasted.

Adult learning, especially if it is to develop abilities (mixture of explicit knowledge with implicit skills) depends on (1) the environment of sensory and spatial experiences during the teaching, (2) achieving small personal successes through learning by doing, (3) the intense, deep and focused practice accompanied immediately by comments and advice from experts, and (4) the social context (social and professional groups) in which learning occurs, which is one of the key ingredients we have observed in adult learning.

References

Argyris, C. 1976. Single-Loop and Double-Loop Models in Research on Decision Making. Administrative Science Quarterly, Johnson Graduate School of Management, Cornell University, 21 (3): 363-375.

Coyle, D. 2010. The Talent Code: Greatness Isn’t Born, It’s Grown, Random House.

Day, G. S. 1994. The Capabilities of Market-Driven Organizations. Journal of Marketing, 58 (4): 37-52.

Grönroos, C. 2011. A Service Perspective on Business Relationships: The Value Creation, Interaction and Marketing Interface. Industrial Marketing Management, 40 (2): 240-247.

Helkkula, A., Kelleher, C. y Pihlström, M. 2012. “Characterizing Value as an Experience: Implications for Service Researchers and Managers”. Journal of Service Research: JSR, 15 (1): 59.

Michaels, E., Handfield-Jones, H. y Axelrod, B. 2001. The war for talent, Harvard Business Press.

Nonaka, I. 1995. The Knowledge-Creating Company., Nueva York, Oxford University Press.

Vargo, S. L. y Lusch, R. F. 2008. “Service-Dominant Logic: Continuing the Evolution”. Journal of the Academy of Marketing Science, 36 (1): 1-10.

In April 2013, the regulatory marketing body in the United States (SEC, Securities and Exchange Commission), taking as its precedent the Regulation Fair Disclosure, accepted social media communications as “perfectly acceptable methods” to disclose company information. The disclosure must meet two conditions: first, companies must give advance notice to investors as to the social media the business news will be disclosed; and second, access cannot be restricted to a particular group.

Introduction
The article “Facebook and Twitter: How to Use Them to Make Good Investment Decisions?” published in Dirección Estratégica (May 2014) analyzed the increasingly widespread use of social media among companies to communicate with the public and in particular with investors. In April 2013, the regulatory marketing body in the United States (SEC, Securities and Exchange Commission), taking as its precedent the Regulation Fair Disclosure, accepted social media communications as “perfectly acceptable methods” to disclose company information. The disclosure must meet two conditions: first, companies must give advance notice to investors as to the social media the business news will be disclosed; and second, access cannot be restricted to a particular group. Therefore, the CEO of the company and senior management, provided they meet these requirements, may disclose company information in a regulated manner through Facebook, Twitter, Tumblr, and other electronic media. Although companies already communicated by these means, the practice was not regulated.

Video (live or recorded) is among the different social media communications. This article reviews the accounting literature that evaluates the use of online video by companies and its impact on investor confidence. It examines in particular the effect that the use of video can have on the restatement disclosure of financial statements. The “restatement of financial statements” is the issuance of corrected financial statements that replace previous ones. The restatement has a serious effect on investors, as decisions were made based on information that is not valid. When reissued financial statements reflect lower results than previous ones, investor confidence in the company deteriorates. Therefore, companies are interested in disclosing the restatement of financial statements in a way that minimizes the damage.

To mitigate the impact, companies can make the restatement of financial statements announcement via online video, rather than the traditional way, with a text in a press release. However, the use of video may not be effective or even damage the relationship with investors if used improperly.

Impact of corporate video online
In late 2010, Kellaway (2010) predicted that the basic unit of corporate communication would change from the written word to video. Companies understand that corporate messages transmitted by way of written messages are weak. Video is a much better way to communicate with employees, customers, investors, and in general with society. In just three years (between 2008 and 2010), video went from being practically non-existent to making up nearly half of the Internet traffic. According to Kellaway, the change in the way companies communicate from the written word to video will have three main effects: (1) it will change the kind of person who makes the announcements; now the new leader must be charismatic, likeable, with an attractive face, a good story teller and performer; 2) it will change the management style of companies; numbers and facts will be replaced by emotional appeals, even when the emotions are false; large and costly strategies will disappear as performance and results dominate, and 3) it will change the place that the company occupies in society. A positive consequence of this change is that with the use of video, companies will have greater clarity in the way of viewing their businesses and think more rigorously in what they are trying to say and do.

For Elliot et al. (2011), video is a channel of communication with a high degree of social presence that provides much sensory information to those who see it. In particular, video transmits the physical presence and personal characteristics of the communicator (leadership, strength, character, among others). This sensory experience captures the attention of observers and awakens emotions that influence the processing and discernment of the transmitted information.

It is said that communication via videos has an effect on investor confidence. However, there is no single definition of confidence, rather it depends on the area of study (psychology, economy, organizational sciences and others). However, in most definitions vulnerability is included as a key element of trust. For example, Bhattacharya et al. (1998) developed a formal model of trust in social relations and define it as “an expectation of positive (or negative) results that one can receive based on the expected action of another party in an interaction characterized by uncertainty.” For Flores and Solomon (1997), trust is influenced both by affection (feelings) and by knowledge (beliefs), although they recognize that it is not easy to separate the individual and interactive effect that these components have in the assessment of trust.

Positive expectations of others in these two dimensions (feelings and beliefs) are the basis for generating the initial trust. The confidence that comes later grows over time when the behavior of others confirms the positive expectations. It has been said that having positive expectations is like a perception or belief that the behavior or intentions of another shall be consistent with the expectations (Bhattacharya et al., 1998). When the behavior of the other is inconsistent with the positive expectations, trust is damaged and it is difficult to restore.

When public companies reissue financial information to correct material errors in previous financial statements, investor confidence in the company is put at risk. Traditionally, public companies have announced through texts (in the formats established by regulatory authorities, such as the SEC or the National Banking and Securities Commission) the nature of the reissue and its effect on financial statements. In addition, companies use more and more online video to try to reduce the damage that a restatement causes in the trust that investors had placed in the financial information, and therefore, in the management of the company (Elliot et al., 2011). This damage may have important consequences on the share price, in the value of market capitalization of the company and in the permanence of the CEO, among other things.

To determine whether the use of video for restatement disclosure can mitigate the damage in the investors’ confidence, Elliot et al. (2011) conducted a new study that compared the effects on the investment recommendations (and, therefore, on investor confidence) when the company discloses the restatement online via video instead of a printed text online. According to Elliot et al. (2011) a restatement is not consistent with the positive expectations that investors had of the company management, which damages their trust.

Another important factor is the disclosure of the cause of the restatement. That is, the message must report who is responsible for the mistakes that led to the restatement. Thus, Elliot et al. manipulated in their study the way to disclose the restatement (online video or text online) and the attribution of responsibility for the restatement. In the experiment, the CEO of a fictitious company accepts the responsibility for the restatement (he attributes the responsibility for the error to himself) or blames a third party (he attributes the responsibility for the error to an external party).

The results of the study show that both variables have an effect on the confidence assessments of the participants and in their investment recommendations. Elliot et al. conclude that when a restatement of the financial statements is announced in which the CEO accepts responsibility, the online video has a positive influence on investors. In these cases, the investors recommend investing in the company more than if they had been informed of the restatement with a text online. In other words, it is better to announce the restatement via an online video than with a text online. However, if the CEO denies his responsibility when announcing the restatement and attributes the error to external factors, investors recommend investing less in the company when the restatement is done via online video than with a text online. That is to say, it would be better to announce the restatement with a text online than via an online video.

These conclusions are outlined in the following figure:

Fuente: Elaboración propia

The use of videos to disclose corporate information is not limited to the restatement of financial statements. Companies can use online video to try to reduce the negative effects of other types of announcements. Such is the case of the Volkswagen Group, which recently caused the financial scandal known in social networks as “#VWGate.”

The Financial Scandal of Volkswagen
On September 21, 2015, the Volkswagen Group accepted having placed software in some of its diesel engines (11 million cars worldwide) to change the performance when subjected to emissions tests. The software falsely indicated a lower amount of emissions than those permitted by the authorities (in fact, these cars emitted 10 to 40 times more pollutants than what is tolerated in the United States). CEO Martin Winterkorn made this announcement via an online video. He apologized and accepted responsibility for the scandal: “Millions of people worldwide trusted our brand, our cars and our technology,” he said. “I am infinitely sorry that we have betrayed that trust.” (Reforma, 2015). As a result of this news, that same day the share price fell 17.10% in the United States (which meant a loss of market value of 9.263 billion dollars) and 34.2% from September 11 to 25 (Reforma, 2015).

Conclusion
The use of online video as a means of social communication has grown exponentially in recent years and is increasingly being used. Companies must adapt to rapid technological changes and take advantage of the use of online video to communicate with society and especially with investors. The accounting literature reviewed in this article suggests the use of online video instead of text online to increase investor confidence and minimize the effect of a negative announcement that could affect it. Due to the sensory nature of video, executives today need not only to have knowledge, but also a face, charisma and leadership, and above all a thorough understanding of the effects that online videos can have on investors.

References

Elliot Brooke W., F. Hodge and L. Sedor. 2012. Using Online Video to Announce a Restatement: Influences on Investment Decisions and the Mediating Role of Trust. The Accounting Review 87 (2): 513 – 531.

Flores, F, and C. Solomon. 1997. Rethinking trust. Business and Professional Ethics Journal 16 (1-3): 47-76

Kellaway,L. 2010. Words fail them. Economist (November 22), recuperado el OCtober 8, 2015, at http:/www.economist.com/node/17493438

Rajeev Bhattacharya, T. Devinney and M. Pillutla. 1998. A formal model of trust based on outcomes. Academic of Management Review 23 (3): 459 – 472

Reforma (2015), Jefe de VW en la cuerda floja, Reforma, recuperado el October 8, 2015 at: http:/www.reforma.com.mx

Reforma (2015), Lo que debe saber sobre el escándalo VW, Reforma, recuperado el October 8, 2015 at: http:/www.reforma.com.mx

Decision making is a daily and natural activity. The act of buying is one of the many decisions a person faces in life. There is the idea that this decision is rational. To explain this rationality, marketing gurus, like Kotler and Hawkins, among others, have described this process as a sequence of stages an individual goes through when deciding what, where and when to buy.

However, there is evidence that many buying decisions do not follow this logical, reflective and sequential process, but are more irrational than one might think.

Buying Decision Process
Buying behavior consists of making a decision about the purchase of a product or service that is needed or desired and which involves having a preference. The act of buying follows the steps below:

1. Situation of purchase. The buying process starts with a favorable situation. For example, a craving stimulates buying a soda at the movies; the nearly empty gas tank of a car incites the act of going to the gas station; or having a vacation triggers the search for options for relaxation.
2. Information. Before deciding on a purchase, one seeks information on alternatives to make an informed and reasoned decision. One of the characteristics of the markets today is that more and more information is obtained on the Internet. Moreover, among the most important sources of information are the activities of marketing and advertising companies, recommendations by word of mouth, previous experiences, and opinions of experts on specialized sites.
3. Alternatives. Once aware of the situation, the consumer will define alternatives that satisfy this need: In the case of a craving in the cinema, one might think of a soda, popcorn, sandwich or other food. In the case of gasoline (what to buy), there are not many options. Perhaps one might think of nearby gas stations (where), while the time (when) is as soon as possible. Finally, in the example of vacations – a decision that can be programmed – the alternatives might be a beach, a cruise or a trip to an archeological site.
4. Decision factors. In this step one should determine what factors are important in making a buying decision. In the case of vacations, they may be the price, the number of days off, the distance and travel time, tiredness and need for relaxation. With regard to the cinema, one will look at the price, the quantity of the product, if there is a discount or a package deal, or perhaps the previous experiences may be crucial and a selection may be repeated. For the gas station, one will think of the one that is on the way to the office or the one closest to home, although in this case the decision will be almost automatic and most likely based on habit.
5. Evaluation of alternatives. Each individual is influenced by different factors, which have meaning and importance when evaluating alternatives and selecting the most appropriate or most attractive.
6. Purchase. Once the buying decision is made, the actual purchase of the product or service occurs.
7. Post-Purchase Experience. Finally, after having the experience of the product or service, the buyer is either satisfied or not satisfied with his/her decision, which will influence if the purchase is repeated given the same stimuli.

Irrationality in the Purchase
Strictly speaking, the decision-making process explains how people buy. However, in reality there are many distractors or cravings that limit the rationality of a purchase. Distractors are situations, also known as “blind spots,” that affect one or more steps of the process and make the consumer buy with a limited perspective. The process is also truncated by cravings, such as heuristic methods, habits or impulses. Figure 1 shows the process and the influence of the distractors and cravings.

Figure 1. Buying decision process.

The figure shows how irrationality pervades consumer behavior. It can happen in trivial or important situations, as we shall see in the following four examples.

To show some irrationality in a trivial purchase, let us take the case of the craving for a soft drink in two scenarios that show how a buying decision can be influenced. In Scenario 1, two sizes of soft drinks are offered at the refreshment stand of the theater. The small size costs 20 pesos and the sales person offers the large size, which is more than twice the size, for only 60 pesos. Given the price difference, few people are interested in the large size, because they think that the price is very high and the amount excessive. The justification for this seems rational. In Scenario 2, three sizes are offered – small, medium and large – with a cost of 20, 55 and 60 pesos. Now the sales person offers the large size with the argument that the difference of 5 pesos between the medium and large size is negligible for the additional amount. This time, the vast majority of customers purchased the large size. Was it a rational decision? It was the same product, the same consumers and the same environment. What was the difference? It was the introduction of the medium size as a point of comparison with the large one. Were the customers rational, following a buying process? No, their decision was an impulsive act triggered by apparent convenience.

In the case of a larger purchase, let us take the example of a new car that an individual wants to replace because he will no longer be able to circulate on a daily basis in a few months. If the consumer feels rational, he asks the opinion of his acquaintances and makes a list of several cars that meet his price range, design and model, that is, cars A, B, C and D. After gathering information from the dealers, he sees the cars, tests them, reads the brochures and instructions. Afterwards, he makes comparisons using the factors he considers important, such as price, performance and comfort. He compares all the data until he decides which is the best choice: car B. Did he buy that car? No, because he suddenly thought about the J model and wanted to go see the dealer. At the end, he bought car Z of the model J. It cost more than the winning option (B), the performance level was lower, and the insurance and services were more expensive. What happened? He had an inspiration, a strong desire, to own a car of the model J, and loved the idea of the image of having it. Was it a rational decision? No. Emotional? Definitely. Irrational? Totally. The heuristic method did not influence his decision. Instead there was a distractor in the last step of the buying decision, which we could call a whim or instinct, that is, a reaction that is difficult to explain rationally.

The third example relates to a situation in which a person makes a rational decision to lose weight. He looks for alternatives (types of diets, exercise at home or in a gym); he gets information on the Internet; he asks his family and visits three gyms. After weighing these alternatives, using criteria such as ease, speed and cost, he decides to follow the diet prescribed by the dietician. A few days later he is in a restaurant with friends and when he chooses whether to eat a salad or a hamburger and fries, he decides on the latter. This situation is known as the dilemma between what one wants and what one should do. Rational or irrational? The decision had a distractor called “craving.”

Finally, the last example has to do with the idea of seizing an opportunity. Take for example seasonal discounts, such as night sales, black Friday and now in Mexico the Buen Fin. It is the same product and the same price, but in a different promotional context. The stimulus is the possibility of taking advantage of an opportunity that is presented in a given and limited time.

Figure 2. Shopping in moments of opportunity.

Conclusion
We have seen that consumers do not always follow a rational process in their purchases because distractors may interfere or a decision may be made out of habit, impulse or a heuristic method. For the marketer, more than understanding buyers’ needs it is important to know the distractors and cravings to identify business strategies that consider the irrationality of consumers at the moment they make their decisions. Thus, at the time of purchase, the decision could be more irrational than one might think.

References

Hawkins, Del (2013), Consumer Behavior. Nueva York: McGraw-Hill Irwin

Factors such as facial symmetry increase the attractiveness of a person when compared with faces that are less symmetrical. But when we explain the reasons why we are attracted to a person, an element of this type will hardly come to mind.

Look at the photograph. Do you like it? Why?

Most likely there will be agreement among the majority of responses – the model’s beauty, her personality, style or talent, etc. All of the answers will be as real as they are valid. If we persist in asking the question, surely we will compile more attributes.

However, no matter how much we keep at it, there are reasons why we are attracted to Scarlett Johansson and it will be hard to enumerate them if we are asked. It is not because we deliberately refuse to share the information, but because we are unaware that these reasons exist and that they influence our perception.

Continuing with this example, factors such as facial symmetry increase the attractiveness of a person when compared with faces that are less symmetrical. But when we explain the reasons why we are attracted to a person, an element of this type will hardly come to mind.

Of course, at any time we can all learn that the effect of facial symmetry has an impact on the attractiveness of a person and it is even possible to incorporate it from then on in our repertoire of responses – and it will surely be right. But it would also be a response based on something learned from an external source, not on something that is perceived from our experience of observing someone and assessing what impression that person causes in us. In fact, as we know the effect of facial symmetry, we also know that it is a widespread pattern and that we are unaware of the impact it has on us. Therefore, its inclusion in the answers becomes superfluous and useless (unless you actually want to measure to what extent this knowledge is assimilated by our target audience).

A phenomenon, such as the impact of facial symmetry on our preferences, helps us to demonstrate the blind spots of our conscious thought: those factors that we do not detect or recognize directly but that play a role in our thinking, attitudes and behavior.

Have these blind spots been assimilated and understood by market research? Has there been an attempt to incorporate them into the methods developed decades ago? We will try to answer these questions in the following paragraphs.

If throughout the greater part of history knowledge was accumulated gradually, our period of time stands out, among other things, by the exponential rate at which learning occurs. With the surge of new information, key themes may be found that change the rules of the game in different fields. There are also fields whose repercussions impact many others. One example is the research on the human brain which, being an important topic, has implications for virtually any area of human activity. Indeed, by learning more about the operation of the brain, the applications extend to disciplines as diverse as pedagogy, job performance, psychology, and even consumer behavior.

Michael Gazzaniga conducted an experiment that forced the paradigms of market research to be redefined. In the study, the left hemisphere of the participants, which specializes in interpreting the environment and giving it meaning, among other things, received no information. This was achieved through two mechanisms: The participants’ right eye, which transmits information to the left hemisphere, was covered, and the functioning of the corpus callosum, a tissue that connects the two hemispheres and serves as a transfer channel, was inhibited.

The regions of the brain – where thinking about why things happen – were isolated from all other areas, which were exposed to different stimuli.

Some of the stimuli were verbs that called for action. The participant (or more precisely, the right hemisphere of the participant’s brain) saw a sign with the word “walk” and immediately stood up to walk. When the researchers asked him why he suddenly rose from his seat, he replied that he was thirsty and needed a drink or gave another equivalent explanation. He never referred to the instruction to walk. Although the word stimulated a behavior, at no time was he aware of its influence on it.

The distinct stimuli were of a different nature and some required a verbal response, more than an action. In all, the constant was the same: People responded in a way that had nothing to do with the explanation of their actions or verbalizations. Furthermore, at no time did they say they did not know the reasons for their actions. The conclusion is fascinating: Even when we do not have the slightest idea why we do what we do, we say what we say or choose what we choose, this poses no impediment for us to go ahead and explain our behavior, although in reality we are dealing with rationalizations developed a posteriori and not an observation of what moves us.

Of course, the consumer is not confronted with the conditions of the experiment in real life. Generally, we see reality with both eyes and the corpus callosum that connects our hemispheres is active. That is, we have more tools to understand the world and ourselves as agents. But even so, our behavior shows grey or black areas that we do not see, and therefore the key word is access.

We have access to certain levels of our psyche, but not to all of them. To return to the example at the beginning, we have no problem understanding the features of Scarlett Johansson that we like. We have access to this and other elements that help to explain the attraction that she exerts over us. It is worth asking about these factors because they are real, we are aware of them, and they fulfill a function. But we are not aware what effects such as facial symmetry influence us. We cannot measure these factors from questions, but they are also real and play a role. We have access to the result of the internal processes that we experience, but not necessarily to the processes themselves, and it is easy to make erroneous attributions between one and the other.

In ideal circumstances, the recognition of these situations should be followed by solutions to resolve and minimize or eliminate the degree of uncertainty that derives from that we cannot understand by asking. The practice is uneven, probably as a result of finding ourselves in a moment of transition, in which market research is beginning to recognize and understand these new angles, unpublished until recently.

The implementation of solutions is uneven. We find a wide range of positions in the market – from ignoring new learning and continuing as in the past decades, to the position of discarding the former to replace it with practices based only on the latest findings, passing over more balanced attitudes that seek to complement the two extremes.

In any case, at this point market research is full of possibilities and risks, being a practice modeled according to recent assumptions, but distant because of its difference in the knowledge these assumptions shed about consumers and their level of access to information about their own actions and attitudes.

We could say that at its worse, market research has a school of thought taken from the 1990s, applies solutions and processes from the early 21st century and is faced with challenges of the mid 2010s. To remain a useful tool, it is essential to reconcile these aspects.

Bibliography

Gazzaniga, Michael (2012), Who’s in charge, free will and the science of the brain, Ecco

Etcoff, Nancy (2000), Survival of the prettiest: the science of beauty, Anchor

To understand what happens in Mexico when speaking of “entrepreneurship” – in addition to defining who are entrepreneurs – it is important to learn what the entrepreneurial ecosystem is and what elements comprise it.The entrepreneur is part of a system, like a leaf of a tree, or a tree in a forest. The panorama is filled with those who work, those who are the innovators and those who are dedicated to offering goods and services: the companies.

But behind those companies, behind these entrepreneurs, there are individuals and institutions that contribute so that a business idea can be carried out. All those people and parts of a whole are known as actors in the entrepreneurial ecosystem. In this ecosystem there are incubators, accelerators, investors and even universities or the government – all with the goal of adding value depending on their function, their experience and their links with the other participants, which enriches the end result and benefits all the participants. More than a term, it already forms part of the public domain.

According to the IMEF 2013 working paper, “A Mexico of Entrepreneurs” (a team to provide ideas and proposals to the financial community and the country), the high impact ventures do no exist in isolation nor do they happen by chance. For new business ventures to have a substantial effect on the economic activity of a country or a city, it is necessary to create an entrepreneurial ecosystem (Casas Alatriste, 2013).

If one starts from scratch, at the emergence of an idea, what actors of the ecosystem are involved in this stage? When the entrepreneur aims to consolidate his business model through commercial and financial validations that support the existence of a market interested in its offer of value, the incubators act as specialized agencies that contribute to examining the idea in order to be a part of the formal economy.

Incubators work in particular with start-up companies that have high growth potential. They are non-traditional innovating business models with a high technological component. In recent years, these new companies have increased in the country, which has favored the entrepreneurial ecosystem.

High impact incubators are a key element, which meet two main objectives: 1) to promote the creation of businesses with institutional bases; and 2) to contribute to the development of new products and services that address the needs and social problems of the region. Incubators focus on the core ideas of a citizen governance: governance, security and civil protection; sustainable economic development; habitability and services, public space and infrastructure; effectiveness, accountability and combating corruption.

In Mexico City, the National Entrepreneurship Institute (INADEM) recognizes only seven high impact incubators: Angel Ventures México, Wayra, Venture Institute, Jardín de Innovación, InnovaUnam, Tecnológico de Monterrey campus Santa Fe and Startup Mexico.

Normally during the incubation, entrepreneurs are offered different services, such as a shared space, with a telephone line and Internet, to operate with other ecosystem participants, development of deliverables (business plans and financial models), mentoring and customized consultancies on business models and even specific advice with financial models and commercial feasibility studies.

Incubators have different incubation programs. It depends entirely on entrepreneurs to decide which incubator offers greater added value in accordance with their interests and vision of their company. In general, incubators try to create the largest number of formal jobs, incorporate cutting-edge technologies or new uses of existing technology and prepare tools to compete in national and international markets. The result is a well-structured business model and a survival rate higher than the other companies in their industrial sector.

Accelerators are found in consolidated companies with a greater degree of progress. Originally, the accelerator programs were created to support the gazelle companies. According to the Economy Secretariat, gazelle companies are those with growth rates above average in the sector to which they belong and, as a result, are also those that contribute most to the development of the economy. Among the accelerators recognized by the INADEM are PwC México, Endeavor, New Ventures, NETBA AND Victoria 147, although there are many others, each with its particular acceleration methodology and dedication to different industries.

Through the INADEM, which is a decentralized body of the Economy Secretariat, the government promotes the ecosystem with a variety of tactics. Also, in the National Development Plan 2013-2018, strategy 4.2.4 is established as one of the National Goals for a Prosperous Mexico. This strategy sets as an objective to expand access to credit and other financial services. This means that through the development bank and with funds approved in the budget of expenditures of the Federation, there is an economic section to consolidate a support fund for micro, small and medium-sized enterprises.

The INADEM also drives the ecosystem with its rallying power in the Entrepreneur Support Network, which is defined as a strategy for coordination and linkage of the policies and support programs for entrepreneurs and MSMEs of the various levels of government and the private sector. This project is unprecedented and means that the communication between stakeholders will be smooth and the activities will be aligned in similar ways, instead of being isolated efforts whose results are not transformed into common benefits.

The government is not expected to be the primary motivator, but to facilitate the use of the resources that they already have and that previously the MSME Fund distributed. Now there is a clear strategy that includes the other actors and helps them to collaborate.

There are other resources, apart from those from the government. If the company has already validated its business model and wants to raise capital to move to the next stage, it is recommended that it approach a private equity fund. Funds that operate and invest in Mexico include LIV Capital, Alta Growth, Ventures Capital, AVM I, IGNIA, Adobe, and others. They differ in the average investment per company, the sectors in which they invest, and their investment thesis.

It is the responsibility of the entrepreneur to verify that his project meets the requirements of the fund before requesting a meeting with their officials. Otherwise, it is likely that the fund managers will have the impression that the entrepreneur did no research and they will not consider him among their first investment options. Another important factor of the meeting is that it provides the first opportunity to impress the investor and attract his interest in a project.

There are still other, less recognized actors, who are mentors. They do not play a formal role, but they are a key element for the performance of entrepreneurs.

Recently, Richard Branson, founder and president of Virgin Mobile, said, “No matter how smart an entrepreneur is or how brilliant or innovative his business concept is, he needs a good mentor. The difference between an entrepreneur who seems competent and one who already enjoys success is the mentoring.”

Although the positive impact of mentoring in companies has been demonstrated, less than half of the entrepreneurs seek a mentor. There may be several reasons: a culture in which presenting problems or challenges projects an image of failure; a distrust in presenting ideas for fear that someone is going to steal them; or simply ignorance of this resource and its advantages.

However, there are more important reasons to trust mentoring than not to trust it. In Mexico, the mortality rate of the micro, small and medium-sized enterprises is considerably high, almost 80% during the first year. Many entrepreneurs who start a business do not have the tools or knowledge to manage it. Added to that is a legal and fiscal environment that makes it very difficult to establish and consolidate enterprises. At this point, mentoring is more important because it communicates to entrepreneurs the experience and skills of someone who can meet the challenges.

Mentoring has good results in the survival rate and the generation of income and employment, plus it fosters motivation and entrepreneurial confidence. It is essential that entrepreneurs find the right mentor to grow their business and that they build a trusting relationship so that they hold meetings of intellectual enrichment for all.

Here are some tips to find the ideal mentor:

1. Define the problem or challenge well. The clearer and more specific the request for assistance by the entrepreneur is, the easier it will be to find the proper support.
2. Have initiative. Search, find and keep looking. Locate people who have the skills and knowledge that the entrepreneur needs, in addition to the time needed to support him. The entrepreneur must speak with several close candidates and preferably experts in his field in order to decide who is the best for his particular case.
3. Be ready to learn. The entrepreneur must recognize that he does not know everything and he can learn from others. He should also be open to listening to the advice of his mentor and to positive criticism.
4. Be honest and transparent. The more the mentor knows the business and the challenges it faces, the better he will help the entrepreneur to solve them.

On the other hand, there is a need for more mentors, experts who are willing to put their skills and experience at the service of others. Whoever has a career in the business world would do well to share with others what he has learned.

The IMEF 2013 working paper reads as follows:

Models are simplifications of reality that help to understand it better. In this sense, having a model, an outline or a graphic representation improves the understanding of the social phenomena. In many cases, these graphics follow a geometric, rigid and hierarchical logic, which is not an accurate representation of these new realities that are being experienced. Therefore, we looked for a figure in nature that could be used to represent and help understand these ecosystems. We thought of a neuronal cut, of atoms or of galaxies and, finally, we found something that is more simple and accessible: a flower. In both its structure and its reproduction function, there are important similarities with these entrepreneurial communities [Casas Alatriste, 2013].

Source: Taken from Casas Alatriste, 2013.

In everyday practice, professionals are immersed in their own activities and possibly do not notice they are already part of the ecosystem.

The richness of the entrepreneurial ecosystem lies in the influence of each of the components and in its ability to connect in order to exchange the resources they possess. These resources are human capital, intellectual or economic relationships. The result of adding isolated efforts will prove the theory that 1 + 1 can be 3, or more.

Just as the human being is a witness to the diversity of natural habitats, each with its own context, in a similar way the ecosystem of the entrepreneur in Mexico is unique and unrepeatable. To try to create a copy of models of developed countries would be an irrational endeavor that would interfere with our country’s own, natural evolution. Of course it is always possible to learn from better practices, but without forgetting the basic principle to which the country should advance: conceived, designed, patented and produced in Mexico.