Why You Need To Understand The Nature Of Demand And If You Can Control It

Wednesday, 6.29pm

Sheffield, U.K.

I, myself, only want one advantage and, if you will give it to me, I will (when it comes to selling burgers) whip the pants off all of you!” “What advantage do you want?” they ask. A Starving Crowd!” – Gary Halbert

I want to spend some time discussing demand – making sense of demand and how it works.

The goal for this section is to help you figure out why someone will be interested in what you have to offer.

The difference between supply and demand

When most people hear the words “supply” and “demand” they think of it as terms that people who understand economics use.

You have supply and demand curves and price is set by where they intersect, for example.

But this kind of dry formulation misses much of the nuance that exists in the real world – and we’re going to try and uncover that here.

First of all, what is supply?

Supply has to do with anything you have that you can give someone else.

Sometimes they are real things – like oil and grapes and chocolate teapots.

Sometimes they’re less real, like ideas and opinions and analysis.

Supply has to be something you can give away.

For example, you have experience, but you can’t just give that to someone else.

You have to put it in a container that the other person can take – like a book or a course.

Or you can use that experience to do something that the other person wants doing.

As a copywriter, for example, you use your experience to create the words and the product is the document you email to your client.

But, just because you can do it or make it or teach it – it doesn’t mean that someone wants it.

That depends on demand – on someone else and what they want or need.

It’s all too easy to think that supply is what’s important – what can you do, what can you make?

But what’s worth doing or worth making depends on demand – especially if your project is supposed to operate as a business rather than as a hobby.

The two main types of demand

The academic and consultant John Seddon came up the idea that there are different types of demand.

But before we dig into that we need to back up and look at what “work” means to us.

Look at your to-do list – the tasks you’ve got to do.

These tasks are your work – they’re the actionable elements of your day-to-day practice.

But why are those tasks on your list – how did they come into existence in the first place?

The chances are that they’ve been created for one of two reasons – and Seddon calls these value demand and failure demand.

Understanding value demand

The way to make sense of value demand is to think of it as something you or someone else wants doing.

Create a brochure, paint a wall, design an extension.

The person who wants this doing – the prospective customer – is going to get something they want if you do your job right – if you satisfy their value demands.

Now, this is where you have to be careful that you don’t fool yourself into thinking that because you can supply something you’re meeting someone’s value demands.

Sometimes people just don’t want your peanut powered mousetrap.

In fact, they don’t want mousetraps at all – they want a humane way of getting rid of their pest problem.

People change, and that means what they want also changes.

Value demand is not a fixed, unchanging thing – you understand it by understanding what your customers want.

Understanding failure demand

There’s another kind of work that needs doing which results from things going wrong.

Copy being grammatically incorrect, the paint not quite applied right, a wall in the wrong place in your extension.

This is failure demand – fixing things that have gone wrong in the process.

It looks like work but it’s not value adding work – it adds costs for everyone.

The supplier is spending more fixing the problem and the customer is spending more sorting out the problem.

Now what happens if you build a business around failure demand?

It might be a cost recovery service – going after people for things that have gone wrong.

Being an amulance chaser, for example.

Failure demand can be a lucrative business – as long as you aren’t the one creating the failures in the first place.

In that case it can be an expensive mistake.

What you want to do is design your own business to reduce failure demand.

Don’t add controls and checks if things go wrong – fix the things that made them go wrong in the first place.

That frees you up to do more work that meets value demand – what customers wanted all along.

The importance of positioning in controlling demand

What’s clear is that you can build a business around value demand or failure demand – as long as you’re delivering value or fixing someone else’s failures.

Either way, however, what matters is that you can come across the demand in the first place.

And you can only do that if you’re positioned at the place where demand makes itself visible.

We’ll look at that positioning in some more detail in the next post.

Cheers,

Karthik Suresh