Institutional stress test

Philip Morgan

Coronavirus is stress-testing institutions.

I think it's fair to say that the relationship between people and institutions won't emerge from this pandemic unscathed. I think formal institutions will suffer long term damage. It will be possible to explain this using either "a fatal blow they couldn't recover from" or "an acceleration of decline that was already ongoing" narratives.

This is interesting because brand marketing tends to rely on institutional platforms. Or at least it integrates with institutional platforms.

What's especially interesting is the way direct response marketing bypasses institutions. I mean, it's right there in the name: direct.

Now, there is a wide range of stuff out there we might think of as institutions. Not all of them have marble columns in front of the building. Some go by names like Dreamforce, Inbound, WWDC, and so on. These are more fluid institutions than ones with names like The Fed, The New York Times, The Wall Street Journal, and so on.

If you wanted to get a message about your expertise to an audience of let's say 20,000 people, there are many ways you could do that. Here are two:

  1. Build an email list of 80,000 subscribers and use that self-built platform to get your message out. (The ~25% open rate you'd probably have means your message reaches closer to 20k, not 80k).
  2. Get yourself on stage at Inbound, a conference with an attendance of about 25,000 people, in a capacity where you can address the entire audience.

Neither of these methods is easy. The first one uses direct response tools, and the second one is an example of integrating with an institutional platform, which looks more like brand marketing.

It's easy to see the immediate way in which coronavirus is stressing institutions. If the institution relies on IRL gatherings, those just aren't happening right now. A critical ingredient of some institutions' relevance has been 86'd.

If there's an obvious recipe for resilience, it's this: genuine value + optionality in delivery of that value.

To stick with the restaurant analogy, the recipe for resilience is being a great chef and being good at ingredient substitution.

The "Darwinian" view is this: over the next year or two we'll find out which institutions are based on genuine value creation, and which are (to pick on IRL conferences for a moment) merely an opportunity to expense some travel and eating out. Of course, it's not that simple. Even the most extravagant junket to an IRL event creates some kind of value. But just like business tend to cut spending during volatile times, the stress that coronavirus is placing on institutions will reveal which institutions best combine essential value with optionality in their delivery of that value.

Keep building; keep investing, y'all,