Philip Sugai, Author of The Value Plan: The essential guide for developing a winning value proposition and marketing strategy

Len: Hi, I'm Len Epp from Leanpub and in this Frontmatter podcast I'll be interviewing Philip Sugai.

Philip is Professor of Marketing at Doshisha University in Kyoto, previously a marketing executive at companies including American Express and Muze. Philip's work focuses on marketing, marketing research, and sustainable and responsible marketing, which he teaches to his global MBA students.

Philip is the author of a recently released book The Value Plan: The essential guide for developing a winning value proposition and marketing strategy. In the book, Philip provides a practical guide - and a theoretical guide, I should say - to help entrepreneurs create great products and services that will provide genuine long-term value to consumers. And there's a lot more going on in the book, which we'll address later on in the interview.

In this interview, we're also going to talk about Philip's background and career and his professional interests, and at the end, we'll talk a little bit about his experience as an author.

So, thank you Philip for being on the Frontmatter podcast.

Philip: Thanks for having me, Len.

Len: I should mention - if you're hearing a little bit of noise in the background, that's the air conditioner where Philip is in Kyoto, on a balmy 100 degree morning. It's only going to get warmer, I imagine, as the day goes on. So thank you for taking the time to do this.

I always like to start these interviews by asking people for their origin story. So, I was wondering if you could talk a little bit about where you grew up, and how you found your way to a career in marketing?

Philip: I'll give you the short version on that one. I was actually born and raised in Rhode Island. I grew up in East Greenwich, Rhode Island. And I actually went to Tufts University in the Boston area. Right out of school, I had found this old vaudeville theatre that I wanted to renovate. And so we created a non-profit to restore this old vaudeville theatre. It's called Greenwich Odeum. And one of the things I'm proud of, is it's still up and running today.

But so - about three years into that venture, I decided that I didn't like begging for money, and I wanted to be more in a position that I could support businesses, rather than be the one that was always asking for support. So I went to NYU, and I got my MBA at New York University. That was right at the dawn of the internet era. Actually pre-World Wide Web. I ran out of all of my savings from my theatre days, and so I had to do part-time work.

And one of the companies that was looking for part time sort of intern or worker was American Express. They'd just launched this online service called "Express Net." I was learning marketing in business school, and I the ability to actually learn real-time how people were acting in a two-way internet-based environment - right from the dawn of the internet. This was the old AOL days. So I sort of went through my career working in things related to online business, online marketing.

Worked through American Express, and then - you said in the introduction, I was the head of marketing for a company called Muze, which is an entertainment database company. And then on vacation from Muze, I met my wife, who is Japanese. Well, she was my girlfriend at the time, and we decided to move to Japan. I found a company called Lightningcast, that was doing streaming media advertising insertion, that was interested in opening up offices in Asia Pacific. So I came here as the Representative Director.

And then the internet bubble burst. They asked me to come back to the US. I had a young family at the time, so I wasn't interested in that. I found this university in Niigata that was looking for a part-time internet marketing professor. And just magically the stars aligned, where the students liked what I had to teach, and I liked being in front of a group of students. And so I magically transitioned into being a professor and getting my PhD at the same time.

It all evolved from here. I've seen marketing the birth of the internet, and how that's changed how we actually interact with human beings, to working with companies around the world, so -

Len: Thanks very much for sharing that story. I was specifically looking for the answer to the question - how did you end up moving from the corporate side of things, to the academic side of things?

Just to get to know you a little bit more, I saw on LinkedIn. I believe, that you studied drama -

Philip: Yeah.

Len: In part at university. I gather that's part of a lifelong interest you've had, that also led you to the theatre non-profit work as well?

Philip: I had this very strange - I started as pre-med, and from there, after failing chemistry twice, I realized that that wasn't in my future. So I decided I wanted to be an actor. I grew up acting in high school. One of my small claims to fame is that Debra Messing from Will and Grace fame was my leading lady during my high school days.

Len: Wow.

Philip: But anyway, from there I wanted to be an actor, plus do some type of business thing. So my Tufts degree is actually economics and drama. I don't think my parents would've let me go through Tufts just for the drama degree, so - yeah, I ended up with economics and drama, and the Greenwich Odeum story is that I wanted to be a producer - sort of enable all different types of theatre and events to happen.

Len: While I was researching for this interview, I saw you've got a few introductory videos to your books in various places. And in one of them you mentioned - so there you were, I believe working for American Express in Manhattan at the time, and you were writing marketing reports.

And time after time, you found that only a fraction of your ideas were really making it to the final presentation. And you went for a long walk around the city, engaging in some reflection. I was wondering if you could talk a little bit about that experience? Maybe just start by talking about what a marketing report is, or was at the time, and how much work they really took?

Philip: Honestly from what I see going on today even, I don't think so much has changed in what a typical marketing plan actually is. There's a formula for creating a marketing plan. And it's very intensively focused on - you do market research, you may do some surveys. You're trying to understand trends and the future directions of where a market's going, and then you match that with the capabilities of your company and what it is that you're actually producing for that company.

But what I talk about in the video - the problem with the way that marketing is taught and it's understood, is that it's taught like a science. Like you can just do this on a computer. You don't need to actually go and speak with real human beings face to face, or really go out and interact with people. And so the understanding of what marketing is, in terms of a marketing plan, and the actual act of marketing, is different. And I think that long walk in Manhattan was sort of a series of talks with my cell phone. "Okay, really what am I doing?"

Because I mean, you just look at the news every day - marketing has a bad name. The way that it's actually talked about. It's used like, "That's just marketing," right? And so there's a misunderstanding of actually what it is, what this practice is that many people just equate it with sales or advertising - and it's not. Those are pieces of what marketing is, but marketing is actually much more fundamental. And because folks don't understand that - there's things like trash in the oceans, and people doing bad things in their communities. We've got peole taking advantage of employees or trying to take advantage of partners.

There's all different things that happen, because people are trying to sell more stuff - and maybe use psychological tricks to do it, rather than thinking about, really fundamentally, what we're actually trying to do as a business, or as just individuals.

Len: I've got a lot more to talk to you about on that subject - about, specifically, at the beginning of your book you actually talk about the history of the formal definition of the term "marketing," by the the American Marketing Association.

Philip: Right.

Len: So we'll get to that. But it's interesting - you brought up how sales and advertising aren't marketing. It reminds me of - I don't know very much about marketing and I haven't read a great deal about it. But one of the things I find that seems to be true is that, when it comes to a company, there's a lot of things that aren't marketing. But at the same time, everything is.

Philip: Right, yeah.

Len: And it's very curious. Because what it's about is so fundamental, kind of any interaction that someone might have with the brand itself even can be a subset of something managed by the marketing group.

Philip: That's exactly right. And it's something that I typically say - like, from the beginning of any lecture or presentation that I give - there's a difference between marketing and marketers. And so I can't speak for marketers, right? Marketers are the people that understand or try their best to understand what marketing is, and try to apply it. But my experience is people don't understand what marketing is so deeply. And so what they do ends up turning into tricks.

Marketing itself, fundamentally, it's built on value. And that means there's a human element to this, that we really need to understand and embrace, before we even start thinking about selling stuff to people. I've gotten into the position now where I've been teaching at the MBA level, I've been consulting for many companies around the world. And I've gotten to the point where a lot of the things that I have to do from the beginning is help people unlearn - or just sort of stop wherever they are with whatever they understood marketing was, and just take a step back, and start at the beginning. And say, "Wait a second - what you've learned might not be right, and let’s start at this human level first."

Len: And amongst the things I gather that people may have learned, is that, although the word "marketing" has the world "market" in it, you like to make the point - and I think it was in a recent post on LinkedIn actually? That markets don't exist...

Philip: Yeah.

Len: ...in the way that people often think they do. I was very sympathetic to that argument, and I was wondering if you could break that down a little bit? What you mean when you say, somewhat tongue in cheek, "Markets don't exist"?

Philip: I think that people, I mean, from the CEO and the board, all the way down to the person starting work on the first day - is that people would like things to be simple. They'd like to understand, or they'd like to think that, "Hey, we've got this market. So if I look online right now, I can see that there were this many hundreds of thousands of visitors into the New York Airport this morning," right? Or over the last few days. "And so that's my market."

So you can see statistically that there's a group of people. And then for simplicity's sake, we want to believe that we have the ability to actually talk to and interact with those people. But the reality is - I mean, I'm sure in your position and many other folks do too, who are listening, that you probably hear other people trying to talk to you or get your attention, more than you have the attention span to actually focus in on what it is they're saying. And so even if you've got those 100,000 people on your computer screen, that they exist as a market - in reality, you're kidding yourself.

And so the article I wrote on LinkedIn about markets not existing, it's a little more complex than that. It's not hard if you understand what marketing is all about. It's actually a lot of fun, but what I'm trying to help people understand is, you shouldn't get caught up with this idea that - because your market exists today, or your customers exist today, that doesn't mean that they're going to be there tomorrow. The minute you start getting lazy, the minute you start feeling like, "Of course they're going to be here, and of course they need my stuff," is the day that you're in trouble as a business.

Len: And you use this video of a murmuration, I believe?

Philip: Yeah.

Len: Can you talk a little bit about that? I've seen some of those videos before, and they're always fascinating. I was wondering if you could talk a little bit about that and what the metaphors in there mean to you?

Philip: I love that video, and I wish I could take credit for coming up with the idea of using that video. But a very good friend of mine actually, Eugene Hashimoto - who's now at a company called CheetahMail - he actually brought that into one of his guest lectures for my classes, and I just fell in love with it. If you've never seen a video of starling murmuration - for folks who are listening, just take a minute and look. Because - one, it's beautiful. And what's fascinating about it is that you've got all these birds coming together at one point in time, in one place.

But then over the course of time, they're constantly moving and evolving, right? And so if you think about your market that way, or your customers that way, your job as a company is actually to be able to fly in and sort of fly with them. If you become one of those starlings, you actually can start to understand how they're moving, and you can actually start to see, "Ah, the wind's going to blow this way." Or, "That guy over there's going this way." Or, "This woman over there's going that way." You can start to adjust to the way that folks are moving.

Another thing I really like about that video is that there's a group that forms, and then it stays together for a while. And then there's a shift and it goes away. If you think about your market that way, and innovation in your company or your organisation that way too, it's the same thing - that time goes on, life changes, things change. And if you're not watching out for the next wind change or the next thing that's coming, your market's just going to fly away from you. And so for me, that's a very powerful message about constantly being in touch with the people that you're serving.

Len: That's really interesting, the way the murmuration captures the ephemerality. But also to some extent, you can't help but when you see these videos - like you can't help but get the uncanny sense that the murmuration is to some extent a creation of our way of observing things, right? That the birds themselves aren't aware of this higher order pattern that we've named a murmurration, that we can see.

I don't want to start talking about your book directly just yet, but there was a great section in there where you talk about markets not existing, and you qualify it by saying, "Markets do not naturally exist." And then you quote the philosopher John Searle, who talks about "institutional facts". That really spoke to me, that's actually something - that's a part of philosophy that I'm a little bit familiar with myself.

And one of the ways, to anyone listening who might not be aware of this sort of line of thinking - one way of explaining it is to say that, for example, ownership is does not naturally exist. Let's say it's very important to you that you own your house. But if it weren't important to other people that you were the owner of that house, it's importance to you would be meaningless. The idea that you own the home is an institutional fact that exists only because the rest of us all agree that it's true, and that it has the meaning that it does.

I think it's one of the things that you really need to understand in order to see why - let's say explanations of markets that go to two decimal places, like, "The book publishing market will increase by 3.2% over the next five years," are complete rubbish, even though they're everywhere, and even though people love them - the really interesting question there is, why is it so important to people that there's a type of reality to things like markets and things like ownership that they actually don't possess? Why is it so important to people to find a science behind something that really, I mean - you can use scientific approaches to understand things about markets and economies. But they're not dismal sciences, they're not soft sciences - they're something completely other.

What's your explanation for why it's so important, let's say in the C-suite, to have numbers assigned to things that make them seem like they have a reality that they don't?

Philip: Right, so I think you're nailing it, you're spot on. And in the C-suite, there's a need for command and control, right? Especially if you're managing a public company. Again, in terms of ownership, that company is owned by it's shareholders. And so your fiduciary responsibility as the leader - you are mandated to optimise the value for those shareholders. And the way that those shareholders perceive value is stock price, most often. There's a shift now obviously towards different types of investment strategies, and those types of things. But at the end of the day, the financial world focuses on profits and returns, right? Profitability and all of those things.

We're in a world where those quantitative measures are fundamental. But the mistake is that we believe that that's what our business is about. And so, that humanizing of business - and we've got so many examples today that the winds are definitely changing. But at this point because publicly traded companies are really the backbone of global economy right now - we need to have those quantitative measures on markets, and stock prices will move if an analyst actually says that this market is going to grow or this market is going to expand. Markets will move based on that.

So it's something that we have to respect. We can't throw it away. But - and I think this is where one of my mentors, and one of the people that I've learned the most from - is a gentleman named Steve Vargo, who teaches out at University of Hawaiʻi at Mānoa. He's created with his colleague, Bob Lush - who unfortunately passed away - this idea of a service-dominant logic - the idea that the purpose of a company, it's to serve itself by serving others. This idea that there's a service element to the things that we do - that also has had just an impact on my thinking.

Because, as a marketer - the strangeness about me as a marketing professor, is that I've got a significant amount of experience actually leading marketing teams and doing marketing. And it's easy for a marketer to forget about their market and the people that they're serving, and to turn them into numbers, to turn them into eyeballs, to turn them into seats.

I think that was one of the things that jumped out at me from Cluetrain manifesto, back - from a long time ago. It's like, "Hey wait a second guys, we're not seats, we're not eyeballs - we're human beings and you have to deal with it." That approach to thinking about people as people, I think is actually gaining a lot of traction now. But the numbers, I think, will never go away.

Len: Thanks for that really great answer. There's a couple of things that I'd like to talk to you a little bit about - especially about the sort of changes that you're perceiving happening, and moving more towards what you termed - or your colleague termed - service-dominant logic.

But before going there, one of the pleasures of this podcast is that I get to interview authors who have various levels of expertise in very different domains. And often they have expertise in domains that the rest of us encounter all the time in the headlines, but don't really often get to talk to an expert about. And so, you mentioned earlier that your career got off the ground around the time when the World Wide Web became a way that people interacted.

Now, lots of things have changed with respect to that type of thing, over the last 25 years, in ways that have had very profound impacts on the way companies communicate with customers, and the way customers understand companies and talk about them. And of course, one of the things that is often in the news nowadays - including news about the news - is boycotting, in a way that seems to be different - boycotts are nothing new, but someone can say something on say a Fox News program, and then within seconds there's a Twitter explosion of people like @-mentioning specific companies, saying, "You can't support Tucker Carlson's show anymore," and things like that. I wanted to ask you as a marketing book practitioner and professor - how do you see companies responding to this new situation?

Philip: Again I think this is where my key word on this is "value." That's why the title of this book is Value Plan, and not Marketing Plans Done Better, or something. I think we need to move the discussion away from marketing plans. I think we're done with those. And the reason is, things like boycotts. Because what you're seeing is a very impassioned sub-group of people, or maybe large group of people who are really caught up in this idea that the company itself is doing something wrong. And if that company is staying behind its computer screens - if it's not actively going out and building real relationships with people, talking to people - then they're going to suffer from these massive swings, or these massive movements.

That's where that starling murmuration video comes in. When the market starts to shift and you're still talking about the same stuff you were talking about yesterday - you're going to lose. And so I think that those types of things are actually making it very clear that the old way of doing marketing is dead. We have to let it rest in peace. It had a very nice run, but the world needs a value-based way of thinking about how it deals with these types of things now.

Len: As a non-expert and just someone who's experienced it from the, more or less, I mean Leanpub and other things I've done aside - but, experienced these things from the consumer side of things, it seems to me that one of the things companies can't get away with now - and I think you talk about this, is cheating people.

Philip: Right.

Len: Well, let's not go so far as to say "cheating," but tricking people. Or just shoving people out the door. One example I like to bring up in discussing the way corporate business practices have changed in a way that combines the business practice with the marketing and the branding, is returning stuff. Our younger listeners might not know, but back in the day, when you tried to return a physical product to a shop - you often had to stand in a returns line, which would be deliberately very long and understaffed on the company’s side.

And then you'd have to literally fill out paper forms and submit an application for a refund. And you would even often be subject to a kind of interrogation, an accusatory interrogation. All of which was designed in a time when products were much more prone to failure, to make you feel bad about trying to get a refund. Not just in itself, but like just bad about even having to go through the process.

That's not true anymore. And one of the reasons it's not true anymore, is if you don't provide consumers with a positive experience, that has behind it the intention to give you a positive experience, people are going to leave like the birds in that murmuration, they'll fly away. But as they're flying away, they'll be tweeting to each other.

Philip: They'll be dropping some things as they go.

Len: Yeah. And in particular, and sorry to go on so long, but it really is a profound revolution. Services - like I mean, Yelp! has problems. But one of the things that has come as a consequence of services like Yelp! is that, if you're an asshole waiter, you won't be a waiter very long, because someone will put a review out about it - and if it seems honest, people will believe it. And then that business probably will find out right away, and you won't be employed there anymore. Although you don't want people sort of shit-talking other human beings that much - there's a certain type of cruelty that you just can't get away with anymore as a company.

Philip: I think this goes both ways too. I think we may be shifting a little too far in the other direction as well, where we're over-sensitised to things too. Again, this is where that murmuration video goes. So right now, that company - the restaurant that has a waiter that gave bad service, right? That restaurant owner has the decision how to deal with that employee. Pre-world wide web, pre-mobile phone and all of these things, we didn't even have that insight unless we really got an angry customer. But now even the smaller things that are going on, we've got clear insights as to where people are making mistakes.

But there's more responsibility for the people who have that information to really come out to say, "Am I supporting my waiter, or am I supporting my customers?" This is where the value equation that I talk about in the book, this is where we really need some thinking. Because that knee-jerk reaction to fire the waiter - maybe there was a reason that that person didn't talk about in their post, right? I think we're coming to a 360 degree view of situations as they unfold around us. We never used to have the voice of a customer inside of that view. And it's coming in, but it doesn't mean that we have to listen completely, that everything the customer said is true from the overall situational perspective.

I don't know if that makes sense or not, but if I am in a situation where I feel that I've been taken advantage of, or somebody has treated me poorly - that doesn't mean that that's the only perspective in the discussion, right? I think that's one of the issues related to social media and the things that are happening right now, that we're still missing that cool, calm voice of, "Okay, yes this did happen, but this also happened." And my job as the restaurant owner here, is to figure out the optimal solution. Because I want to optimize value for both of you, both parties.

With the launch of this crowdfunding campaign for The Value Plan, I'm a little more active in terms of my social media. And I'm also noticing - if I post something, there's some people who really have some very clear messages that they want to promote that are only tangentially related to the thing that I'm trying to talk about. And so I don't disagree that that person has that opinion, but how does that play into the larger discussion or the larger context?

I think that's something that - as a manager of a business, whether you're a sole proprietor, you're a single entrepreneur, or whether you're CEO of a multinational corporation - to understand that you've got multiple perspectives to look at, and that your job is to take a value focused - you have to weigh which voices are most important to you and why, and then be able to communicate that in a way that actually is principle-based. And that really is a big challenge for today's leaders. And again, it's not just the corporate CEOs. It could be the part-time dog walking business that your teenager has, right?

Len: It's really interesting, when you mentioned having sort of, let's say, a value plan that is principle-based. I'd like to talk a little bit more about that. One of the interesting things that - and I think most people listening are probably aware of what we're kind of talking about here, is - it's easy to get sarcastic about seeing companies make claims about being principle-based, and I say this as the co-founder of a company myself. One of the terms that one sees is "greenwashing," for example. I think I may have seen a mention of that in your Twitter feed just before, as I was scrolling through it before this interview, to get a sense of its voice.

One of the questions I'd like to ask you is - is there a way to tell the difference between a company that's genuinely acting on its principles, and one that's doing it only in the pejorative marketing sense? And does it matter if what the company is materially doing in the end is, in one's own opinion, principle-based?

Philip: That's such a great question and to unpack - that's going to take a couple of minutes. But really, this is fundamental. I actually have an article that's going to be coming out either today or soon through Campaign Asia on "value washing." So beyond greenwashing, which is just environment-focused - there's other ways the companies can say they're doing really good stuff, when in actuality they're not. And in the article, I'm trying to explain to advertising agencies, that they've got a critical choice. Are you going to enable the fake stories, or are you going to take a principles-based approach here, and help people really focus on value creation?

I think there is going to be a real split between the people who are embracing a responsible way of doing business, and the people who are trying to take advantage of the system. So for me - again, one of the people who I deeply respect is Yvon Chouinard from Patagonia. He's got a book called The Responsible Company. He doesn't call it, The Sustainable Company, because he said, "To be sustainable means that we actually take less than we give back, or at least there's a net zero. We are not there yet, so we can't call ourselves a sustainable company. But instead we call ourselves a responsible company, because we're doing our best to get there."

I really respected that honesty, and I think that's at the heart of - the answer to your question is that if you are trying to pull one over on your customers, if you're trying to make a quick buck, if you're just trying to milk the system in way to get ahead - that's nice, but eventually people are going to find out. And the question is - are you able, financially, as a company, to deal with it once people really find out?

The whole greenwashing thing also - I teach a class on sustainable and responsible marketing. There's ways to see that people are greenwashing. But again, I just gave a post on something that Nestlé Japan did here in Japan with their KITKAT packaging. They've made an honest commitment - Nestlé as a whole has made an honest commitment to reducing it's plastic waste by 2025, I think? And so Nestlé Japan in line with that is switching to paper packaging, or - until they can get to that zero waste level, biodegradable plastics.

Having interviewed people who work at the company, and I've got a case study on it too - at least in my interactions with them, they're very serious. I don't see any trying to game the system approach. They're seriously concerned about the impact that they're having, and responsibly trying to take action on it.

But from a different view point, and you can see in some of the posts that are coming up, or the comments that are coming up on my post - people are still calling it greenwashing. And so, again - we're no longer in a position where we can mandate. We can say, "This is the message, and this is what everybody's going to say about our company."

If you do something, you have to be prepared that people are going to misunderstand. And I mean, I teach in English, and I teach people from all over the world in English. I teach native English speakers in English, and even in that situation, people will misunderstand what I say. I'm not saying anything against people who are not native English speakers, but I'm saying people who even share your same language, maybe even sharing same culture, maybe people that grew up in Rhode Island with me, right? I could say the same thing, but there still could be misunderstanding.

The reality of doing business today is that people will misunderstand you. And if you are honestly coming from a principles-based approach, then you at least had an argument, you at least have an answer to say, "Hey we're trying, thanks for the feedback - and teach me how to do better," right?

Len: That actually reminds me - I think we're now fully in the realm of your book. We went there without either of us really announcing it. But that's perfect, that's exactly where I was hoping we would go. I just jumped in there because there's a quote I'm looking at here, where you talk about "co-creating value with our customers, employees, shareholders, partners, community, and planet is required more now than ever before." It was that co-creating thing that seemed to me to be - I was curious if that was one of the lynchpins of authenticity. That when something goes wrong, let's say there's the inevitable miscommunication or misunderstanding - you can kind of tell if a company is co-operating with people - or if it's just acting in a one way direction, when things go wrong.

Philip: Right. I think that's part of the beauty and part of the danger of focusing on value, in that you need at least two parties for value to be created, right? That's why that co-creation discussion is critical. In this discussion, it's just the two of us right now. Obviously though - hopefully the folks listening, will be giving feedback as we go. But in-between this discussion, there's a value exchange that's going on.

And if I only take my perspective, if I'm just like, "Hey, I want people to buy my book, and I want people to do the value plan framework." If I'm just talking from that perspective, I'm not respecting at all the position that you're coming from. You've got a different value equation working on your end. And if I can't understand that, or if you can't understand that - then we're not in business, we're not in relationship. And so that understanding that you are in relationship whether you like it or not - you have customers, right?

Even if you're a government office, you have customers. Even if you are a librarian, you have customers. You may not call them customers, but they are. Because you're delivering some type of service to people that people are spending something of value to get. And so across the board, you're in relationship not only with customers, but you've got people who are your employees - people that are aligning with you to deliver that service that you're delivering. You've got owners of that business that you have to pay attention to - shareholders or bond holders, or whatever you want to call them. You've got partners that are helping you. You've got a planet that you have to pay attention to. You've got society you've got to pay attention to.

If you start thinking about that two way street, rather than the one way bullet train communication path, you're onto something really important. And, again - I've been giving this message now - I've been talking for 15 years about value and why it's important. But honestly, over the last couple of years, I believe that people are waking up to this now. With the troubles that are going on, with the rhetoric that's going on out there. I think this much more human approach to the business that we do is getting more and more important.

Len: I think that's a great place for us to switch to a discussion of value itself, and what it means and how you see its meaning perhaps changing in the current context. You mentioned actually just a few moments ago, "value equations." You go into some detail about some of these, like the seven pillars of value, in your book. Or, the sum of all benefits minus the sum of all costs. But I was wondering - as someone who has been working on this for 15 years or more now - could you talk a little bit about, what is value?

Philip: That's a great question. I talk about it a little bit in the book too. I spent basically a very long summer, and it turned into a very long year - going into philosophy on value. It's a really slippery slope to get into. Because the minute that this switches over into values, the minute we add an "s" into it - and human values - good and evil, right and wrong, we, I just get overwhelmed with all the things that are out there on that.

So the thing that I want to start off with in this explanation, is that I'm not talking about values. I'm talking about value without the "s." And I've seen a number of different equations for it. The one that I personally like the best is the one that you actually just said, that it's all the benefits that you give, or that you experience - minus all of the costs that you experience.

I'm sorry - I have misspoken there. It's all of the benefits that you experience, minus all of the costs that you experience. And that net as a customer, is the value that you're receiving from a product or service. Again it's two-way. Each actor is experiencing that. And the reason that I do sum of benefits minus sum of costs, and not do some strange like fraction or other more complicated equation - is that value can also be negative, so you can also hurt people. Wven if you're trying to do the best thing, the costs could outweigh the benefits.

And so thinking about value that way - is it customer satisfaction that you're thinking about? Is it loyalty? Is it employee satisfaction? Is it employee engagement? Is it - whatever? Educational levels within the community around you. The metrics that you're using are still within your control. We don't have a global standard for measuring value. And I think we probably won't ever get there. But if you're look at the sum of benefits minus the sum of costs of all of those different stakeholders, you're starting to understand the net value that you're creating. And you as a company or organisation, or it can even be for you personally as a human being and just as an individual, in the relationships that you have, are you adding value or you're subtracting value? Are you helping people, are you hurting people?

And the research on this - the whole prospect theory foundation, is that, if you hurt people, even if you hurt people at the same level that you're helping others, the people that are getting hurt are experiencing it twice as hard as the people who are getting benefit. So you have to double basically, when you think about the total cost that you're inflicting on folks or communities or the planet. You really have to think much more about putting your weight on the positive side. So, that's my very brief overview. And I could go on forever on this.

Len: Well that's why people should buy the book. But thank you very much for that.

So you talked about value, and one of the reasons you made that careful distinction between value and values, is because you actually do talk about both separately in your book. Your section two in your book is about 12 building blocks, and but number one is core values - with an "s."

Philip: Right.

Len: I know that you've worked with big companies, you've worked with people who are in startups and entrepreneurs. Let's say there's a couple of entrepreneurs listening to this podcast who just got a startup going, nd they've thought a great deal about value, they're certain they know what problems that they're solving for consumers. Maybe they've got a few early adopters? I think you maybe used the term "lightning rods" or something like that?

Philip: Yes, yes.

Len: But let's say you haven't really thought about what your values are. And not because you're not a couple of thoughtful people, but you've just been so busy and so excited by the value that you're creating, that you haven't maybe taken time to formulate values. How would you recommend that people just starting a company go about having the discussion about what their values are and how they should formulate them?

Philip: If anybody listening can get one message from this entire discussion, it's that you have to start with your core values. Period. And if you don't know why it is you're in business, if you don't know when the complaints start to happen, or you start to get issues with creditors or like real trouble starts to happen - and you don't know what it is that you stand for, you're going to make decisions that will be detrimental for the long term future, and maybe to yourself personally. So fundamentally, we have to start with why it is you're in business.

There's a great exercise. There's a book that I love and have taught from many, many times when I used to teach brand management - is, it's called United We Brand, by Mike Moser. He was a long term advertising agency executive. He would walk people through something called a "tombstone exercise." Basically, if your company dies today, what would people write on it's tombstone? What are the things that your company or your work really stands for, enables? Again, if you take that from multiple perspectives, what do your employees miss most? What do your partners miss most? What would the planet miss most? Or what would your shareholders miss most?

If you look at that across all of those different stakeholders, the seven value actors - you'll get some really interesting insights on what it is that really makes you unique. I've seen people go through this, and like, "Oh yeah, it's just another exercise. MBAs do this, but we don't have time." I think that is the fundamental miss of an entrepreneur - or even just anybody in business. If you're working in a big company and you don't know why your company is there or why your department is there - to focus in on what it is you're all about. Because when you get to the points that people are passionate about, you will resonate with people.

I think that - this is another key word that I use a lot, is this idea of resonance. We are bombarded with so much negative stuff. We're bombarded with so many, like, "This person said this, and this person does this," and whatever. But fundamentally, we have a group of people who we go home to, or go out with or whatever - who we can have resonating relationships with, like deep human level relationships with. And so when you're talking about stuff you're passionate about - other people will resonate with that. "Hey, that matches with what it is that I want to do or what I want to say. And so I will gladly pay money to your company if you can help me amplify things that I am passionate about too."

Then, when all the bad things happen, if you post something and you've got a boycott going on or whatever - if you've got an equal, if not greater number of people, who are willing to stand up and say, "Wait a second, we hear you - but you're missing something." And again, it's not you that's saying it, it's your fans saying it. Then you're in a discussion that actually starts to be important. It's a values-based discussion. And it's not about the things you do based on that.

Again, values - for me - Steve Blank, in his book and his work from Stanford - it's his step zero. Before you even get to step one, you have to start at core values - and I couldn't agree more. It's critical.

Len: Moving on to the next part of the interview, I'd like to talk to you about your experience writing this book. You said, in one sense or another, you've been working on it for 15 years, and it's been quite a journey. I guess the first point of contact that we had with you, was - I believe, in 2015?

Philip: Yeah.

Len: When you put up the first early version of the book. I know you've got big plans for the book. But it started there on little Leanpub, and I was wondering if you could talk a little bit about what you were doing at the beginning there, and why you chose Leanpub as a platform at that time?

Philip: Okay, so for me - and maybe for better or for worse - I don't believe that I am the world's leading expert on marketing. There's so many incredibly intelligent people out there doing so many great things that, for me - I've put this through my own lenses, right? I've read a lot, I've worked a lot, I've interacted with a lot of people. But I haven't been really confident that this works across industries. What I'm talking about will work in like a developing economy - I've got students from developing economies, I've got students from developed countries, I've worked with governments and coffee growers and hospitals. So all different perspectives, I wanted to get in. I wasn't at the point where I was ready to publish a hard copy and say, "This is my work." I needed a platform where I could actually publish something, get people to read it seriously - and then get serious feedback, so that I could edit and upload it again and get more feedback and keep going.

And so for me, when I saw Leanpub - and I think you'd done a presentation somewhere that I had seen online, and I was like, "Oh, this is exactly right." I needed a platform that would allow me to keep iterating. And I'm a fan of lean start-up too. So the whole lean start-up philosophy of launching something, and constantly working on it until you can get it right. What you created with Leanpub was a perfect solution for me, especially being a professor in a classroom - that I could train a group of people, and then get immediate feedback.

And then the next week, I could have a new version ready to go and say, "Okay, thanks for the feedback on that, I know that didn't work, but let's try it this way." And so it was a great way of getting constant feedback, and allowing me to iterate. And also to get clear evidence back that people would pay money, that it wasn't just something that was for me and my classroom. But there were people out there who could actually pay something and say it's valuable enough.

Luckily, I think over the course of working on Leanpub, I may have had maybe two or three refund requests, but other than that, nobody has asked for a refund. So that platform or facility also that you offer is - it was a good feeling to know, "Okay, I passed the 45 day deadline, and basically people are okay to have paid that money." That was also a nice confidence boost for me.

Len: Thanks for that explanation. It's interesting what you were talking about. Just for those listening, Leanpub has a 45 day no friction refund policy. We call it our "100% Happiness Guarantee." And one of the reasons this is so important to us, is that Leanpub books are often written in-progress. And that's not just in the sense of like serial fiction, which - Leanpub would be totally suited for that - but actually, Chapter 1 that you bought might get rewritten next month, often in response to feedback from people. But people will publish books chapter by chapter, and 45 days gives someone long enough to probably see you make some changes to your book in that time. So that, if it is an in-progress book, they know that it's being worked on, and they get that validation and confirmation from that - and they may even interact with the author a little bit through our website.

So although we make it very easy to get refunds, our refund rate is actually quite low. We're also a bit funny in the way that, because we pay such a high royalty - I don't mean to be boosting Leanpub here, but actually, because we pay such a high royalty rate, when people go to get a refund, we show a little funny message, which is like, "Here's how much money you're depriving the author of." So that might help keep refunds down as well.

But, not everything though has been smooth in your journey so far. You wrote a post recently called Hard lessons in getting a book published I was wondering if you could talk a little bit about that? This is something that's come up a few times on this podcast. People who've had not only positive experiences in their author journeys, but also some negative ones. I was wondering if you could talk a little bit about what you were writing about in that post?

Philip: It was early this year where I'd just finished - I think it was the 6th year through with The Value Plan in my courses here at Doshisha. I'd finally tested it enough, with enough companies. And the students had all done - in terms of their work with the project sponsors, they'd done enough at a level that I felt was beyond what a brand manager or assistant brand manager would do. And they actually are working out of an MBA program. So I felt confident that I had finally gotten it up to the point where it was a real ready to be published work.

And right at that time, I started reaching out to different publishers. I got a very nice email from one major global publisher that wanted to work with me. I've gotten a number of rejections along the way too. Because honestly in this space, there's so many marketing books that have been written. And I think people don't want to give up their old ideas about what marketing is - that the space to break in for a value-focused book is still a little tough.

So for me getting that email was like, "Wow, this is great," right? So I rewrote my proposal. I targeted it specifically to this big publisher. And for me as an academic - more than money that comes from publishing, it's actually the publishing credit that matters. So to have a big, global publisher publishing my work is much more valuable to me than the money that actually comes in. Because honestly, academics don't make so much money with their books. But we're going for accreditation here. There's all these types of things where - just at university level, having a publishing deal with a global publisher makes sense.

So I was all the way into it, I was at the final stages, they sent me a contract. I was like, "This looks great, I'm ready to go." And then luckily I had a good friend who's a book agent. And I'm like, "You know what? Maybe I should just send this to him? There's a couple of places in here that don't seem quite right, let me get his feedback." And he sent me - he was actually on a business trip, and he's like, "Philip, I'm not in the office, but here's some points you need to really focus on."

And so with that, I was like, "Okay, well I need to go back and argue about a couple of points." And some of the points that might be interesting to your listeners - one, in this contract, I would give away copyright - without the ability for the book to go out of print. So basically what that means, is I'm giving my work to this publisher until I die - and even after. So if the book doesn't go out of print, then I can't reclaim the rights at any time or whatever.

Len: Yeah, just to jump in there - sorry, I can't help but mention also. One of the problems with that kind of contract also that authors often have, is if the company - if the publisher stops promoting your book, you're in big trouble if you can't get the rights back.

Philip: Right. So basically that was one big red flag. But honestly - because it was such a big publisher and a famous publisher, I was actually willing to go along with that. And if there's any publishers listening, I'm not okay with that now. But at that point, I was okay.

And then there were a couple of other things related to like how they would pay. They were paying on profits, not net receipts. Which was a little bit in the favour of that publisher. So that was not in my favour at all.

And then the real kicker was that - so, you talked about my big plans for The Value Plan. I'm only one professor, and I've only got classes going on here. I want to be training other faculty around the world to teach The Value Plan. And so I've created an online course, and I'm working on certifications for this, and trying to get a process where this becomes a movement, where we've got faculty around the world who are teaching and consulting on this idea of a value-focused marketing approach.

And so, this publisher would not allow me to replicate more than 10% of what's written in the book in any other media. They would view an online course not as an asset or not as a benefit, but as taking money away from their publishing capacity. And so basically what they are saying is, "We're going to take your work until you die, and we're going to pay you in net receipts. So after all our costs are taken out, then we're going to pay you whatever is left - that includes all translations in all languages around the world. Plus you can't do anything beyond this printed book to get revenue from the ideas that are here, to spread the ideas that are here."

And so for me, literally I was depressed. It's just like, "I can't believe this. I've got this great publisher and it's a great deal - but I can't do it." And so I sent the email saying, "Thank you very much, but unfortunately we can't work together." That was the end of the road with at least that publisher.

Len: And you maybe were depressed for a while, but you moved on and you came up with a new plan. And you actually just launched the other day, through this service called Publishizer, a campaignhttps://www.publishizer.com/the-value-plan/. I was wondering if you could talk a little bit about how that works, and what you're trying to achieve there?

Philip: So I was depressed for the exact 30 minutes that it took me to write that email, and then I bounced back. I got a little angry, because for me, this has been my own passion to work on, and when I see people - We didn't talk about one of the key things in the book. I focus on lightning rod target customers, and getting out the ideas that you get out. You find that lightning rod group, and you go out and you speak to them. Like not just find them on a computer, you go and you speak with them. You get their feedback on your ideas for the problems that they're actually suffering from, you actually get immediate feedback, before you even begin the product development process.

And every group that I've taught - whether it's students or executives or whatever, there's a real barrier to get people over that. Like, "Oh, we can't go talk to people, it's really hard to talk to people. It's going to cost money," or, "It's going to take time, and we don't have time." But once people actually go out and speak with their lightning rod target customer group, the people that they think are their best possible advocates and customers, that interaction unleashes all sorts of learning and insights that would never happen without them.

I've atched people literally transform. "Professor, I fought against you from doing this, but you know what? You were so right. After we did this, we learned this, this, this and this - and now we're going to do this." I've watched people go from not understanding how to interact with a customer group, to actually building products and services that resonate hugely with people. And so for me, I put all that time and energy in getting a process that I think is the best.

And again, the reason I worked with Leanpub and I still will - is that I constantly want to upgrade and change until I can get it better and better. But for me, getting that type of message - like, "We're going to take all this work and just take advantage of it," it got me upset.

So I went out and I looked online. I did a number of internet searches, and I found I was deciding to actually self-publish. But the thing for me with self-publishing is - I don't get that publishing credit. So it looks like I'm just trying to make a little money, and I'm not a real academic, basically. That's my last path that I'd like to go down.

But in my internet search for how you actually self-publish books, there's obviously going through Kindle and IngramSpark and maybe I make my own imprint, or maybe I work with a small imprint or whatever? But this Publishizer came up as something where they're a crowdfunded literary agency. If you can prove that you've got an audience, if you can prove that you've got enough people interested in pre-ordering your book - then they'll come on board and help represent you to a different group of publishers.

And so for me, I've noticed in sending my proposals out many times, if Philip in this office in Kyoto sends out a proposal to a big, huge global publisher - they get hundreds, if not thousands of those in their mailboxes all the time. So there's no way for me to really differentiate myself.

I do believe in the power of a literary agent. I think that they have a very important role to play in this ecosystem. And the literary agents that I know, at least in my network - weren't willing to represent a book like this. They're interested in other things. Rhis type of very focused, practical guide is not what they represent.

And so, for me, it's like, "Okay, how do I get an agent, or how do I publish?" Finding this Publishizer was like, "Okay, this looks like it could give exactly what I need. I need a different power dynamic. I need a different structure of the relationship with these publishers. And I'm not yet willing to self-publish by myself."

Len: And since this is an interview partly about assessing value and benefits minus costs - as I understand it, the cost to using Publishizer - they're very, just straightforward financial cost - Leanpub - for example, pays an 80% royalty rate. That's the way we like to describe it. Another way of saying is, "We take 20% of all revenue." And I believe Publishizer takes 30% of the sales?

Philip: They do. And there's a number of other things that I've seen people in the self-publishing community fairly upset about. But, again, this is just one person's perspective - from my perspective, I need an agent. I need somebody who will help me in these relationships. And I also am best served if I do have a publishing partner that's a global publisher, a recognisable name. Because that just helps with every assessment that I go through as a individual professor. So that 30%, for me - is the rate that I'm paying. But if I publish it, if I self-publish a book through Amazon or Ingram or whatever - there's all these percentages that get taken anyway.

And the thing that I like about Publishizer - and again, I'm midway through the campaign, so I don't know the end result - I'm a little nervous. Honestly I've woken up a couple of nights, like, "Oh my God, what happens if this happens?" Or, "How do I deal with this?" So I'm in the middle of this campaign right now. But with that 30%, they don't take a percentage of the downstream deal that happens with that publisher. And so with the publishing agreement that I turned down a couple of months ago now, I'm still stinging from that lifetime until you die type of relationship. So this peeling off after you've gotten the publisher, just appealed to my sense of, "Okay, well, at least they're not trying to go in long term on that side too." I've had other experiences where agents will take money in perpetuity for a number of things, so not all agents are fantastic either.

Len: Thanks very much for sharing all those details, and for being willing to go into the weeds. That kind of stuff is really gold for people who haven't gone through the experience themselves before. Not only for being prepared when these kinds of things happen, but for understanding that you're not alone in history experiencing these kinds of things.

Before I go on to ask my last question, I just wanted to apologise for mispronouncing Doshisha at the beginning of this interview. You very politely let me get away with that.

Philip: Yeah no, it's okay.

Len: Okay, okay. And so, the last question I always like to ask on this podcast is - if there was one thing we could improve - speaking of Steve Blank, getting out of the building, and the lightning rod customers and stuff like that - if there was one thing we could improve for you, or one thing we could fix for you - what would you ask us to do?

Philip: I think it would be this connection from going - so, you're incredibly powerful. You've created - honestly, I'm a fan for life. You've created a platform that really helps an author get up to the point that they're ready to publish a print version. And my experience after getting to this level, is that there's so many options after you've got that book already. And there's so many pitfalls. You can find it on Publishizer too. There's not all nice things being said about Publishizer. I don't know if this is the right choice or not.

And there's also different publishers out there that have all these different things. So I think having some type of graduation experience out of Leanpub, into the next phase of publishing. Because honestly, as an author - my focus - and as a professor and a consultant and all of that - my focus is on my content, on the stuff that I'm working on and creating. And what I've learned in the publishing industry is - it's not built to support me. Until you get to a level that you are a bestselling author, like really top level sale, and maybe with my next book, I can get there - or maybe with this one? I don't know, but I'm not at that level yet.

But, what I liked about Leanpub is, I've never felt bad about that 20% ever. That's money that I'm happy to pay you. Because I wouldn't have gotten that other 80% without you. So you're sharing that 80% with me, is wonderful. And you've helped guide the process. You've done amazing work in sort of - this is how you work with the system. And I've watched you improve over the years. It just keeps getting better and better.

But having that friend or ally to take your hand after you've gone through the process of getting through the ebook publication - and getting the audience, and getting your message and getting your story right - would be incredibly helpful for me. Because I don't know who to trust, right? I still don't know who to trust.

Len: Thank you very much for sharing that - and of course for the kind words about Leanpub. What we do provide people with is, when they're ready to make a print version, is a print-ready PDF that you can just - if you're using Leanpub's workflow, then you can click a button and get the type of files that you need to take to a company like Kindle or Lulu or IngramSpark, to publish your book and sell it.

But yes, because we're not in print sales ourselves, there is actually a bit of a fall-off that you're describing there. And it is definitely something we could try to address. Because even though we're not on that side of the business, it is something that we do probably understand better than most people who are publishing their book for the first time do. And there's definitely advice and things we can share there.

One thing I should note is that we do have an author's forum. I don't know if you're a part of that? But it's a typical forum with threads and things like tha,t that people can create. And so we do have a community of authors who do have quite a bit of experience themselves. They're writers and they're talkers. They wouldn't have written books if they weren't. And they're often very happy to share some of their experiences.

The other thing about this environment as well, is that it's - particularly the self-publishing environment, but just book publishing generally, has been a very rapidly changing industry for the last - let's say 20 years. It's just been undergoing revolutionary change. It's not just that keeping abreast of it is hard, but it's that keeping abreast of it is something you have to do. Because it is changing so much. And for us to offer a resource to authors who've now graduated - as you say, to that next level - is definitely something where we can provide our own advice, but also draw upon our community as well. So that's definitely something that we'll give a thought to doing.

Well thank you Philip, very much for taking the time out of a Kyoto morning to talk to me and to talk to all of us. And thanks for being a Leanpub author.

Philip: Thank you so much, it's been great.

Len: Thanks. And thanks as always to all of you for listening to this episode of the Frontmatter podcast. If you like what you heard, please rate and review it wherever you found it. And if you'd like to be a Leanpub author yourself, please go to our home page at leanpub.com. Thanks.