A couple of years ago, I read Phil Rosenzweig's seminal The Halo Effect about how we idolize certain companies, brands or phenomena to the point of blindness. I can't help thinking of this syndrome as I read yet another article showing the murky, previously unseen part of Dubai (or "The Emirates" as they like to call themselves nowadays that Abu Dhabi has bailed them out). From UK's The Independent:
"A major property development firm with links to the ruling family of the UAE city-state, and the firm’s marketing agency, are accused by investors, many of whom are UK citizens, of obtaining millions of pounds through the use of false construction photographs."
The Economist last week reported that living abroad gives people a creative edge. This made me think that instead of using the sloppy collectivist word "immigrants", we should call people who live in country they weren't born in "Creatives". This will bring an interesting edge to currently meaningless political discussions about "How to reach out to immigrants" or "Are there too many immigrants?". How do you reach The Creatives? Are there too many Creatives?
Trouble making your mind up about what to do with your money in the turmoil we're in? Let your outlook on the future guide you.
This fall, Singularity University will be launched with the mission to "assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the development of exponentially advancing technologies and apply, focus and guide these tools to address humanity’s grand challenges."
Google has an interesting approach to HR. According to UK's Daily Telegraph, Google are using algorithms to find what employees are most prone to leave the company:
"The online search giant has developed an algorithm which analyses data from the personnel files of its 20,000 staff to establish which are most likely to want to quit. The algorithm sorts data including appraisals, salary and promotion history, and works out – to the best of its ability – which staff are most unhappy."
This makes me think of a quote by Juan Enriquez. When asked what people should be study in order to be best prepared for a future job, he replied: "It doesn't matter. Everything you study will be obsolete by the time you graduate.".
The diagram below shows real interest rate (yellow), inflation (grey) and risk premium (black) in the US from 1871-2008 (European statistics start later and are patchy - like the European market itself).
What we can see above is that risk-taking has been very cheap in the past 20 years. The kind of risk people tend to take when risk premiums are low is the easy accessible one: borrowing money. Look at how corporate wealth and value has been created in the past decade: By leveraging companies and optimizing the present (cut down on long-term R&D expenditure and focus on present income statements). Instead of organic growth (fueled by new ideas), we've seen a boom in M&A's. Instead of vision, we've seen short-term gains in order to maximize shareholder value (for the all-important exit/ IPO). 2008 changed all this. We now see risk premiums rising for the first time in over 20 years. This is the number that will change everything. When risk premiums are dear, we see less borrowing, less optimization and more long-term focus. Microsoft, Apple, Nike and many others were founded in the early-mid 70's when risk was very expensive. Had they been founded in 1996, they'd probably be in the hands of their 45th owner (surely a holding company) by now. When risk premiums are dear, consumers learn to save. Saving isn't just putting money in a bank; it's about establishing a vision of tomorrow. Where do I want to be? What do I want to do/own? Expensive risk premiums will create a surge of new ideas in the coming decade. Ideas that are given room and time to grow...because the alternative is just too expensive.
Here are the key points from my speech at ICMA in Tallinn last Friday. The audience were primarily people with a vested interest in classified advertising.
- Lowered barriers to entry: To quote Yochai Benkler: "Strangers working together - that is the real transformative power of the Internet." Media is being transformed into an arena where anyone can play and most newcomers are finding a narrow, specialized niche with which to compete. Generalists newspapers are suffering accordingly. I remember studying Journalism in 2002 and I kept asking my professors what a journalist is. They never gave me a satisfying response.
- OmniMedia: What we've seen in the past fifteen years isn't just a shift from analogue to digital media but an explosion of all kinds of media. From free newspapers to a myriad of new screens in the strangest places, the media consumer has never had it better than now. Most of this stuff is even available for free. A subscription to a morning newspaper in Sweden will cost you nearly €50 per month!
- SuperSpecialization: With this massive proliferation of new channels and brands, we see an increased specialization. The Classified pages used to be a cornucopia of all kinds of products and services. These days you have single players offering everything within a certain area of interest.
- Share Everything: Remember in 1999 when everyone was talking about creating a "sticky" website. These days, we embed stuff. We take widgets, articles and YouTube clips and put on our blogs or Digg's or Facebook pages. Remember that the Internet wasn't born from businessmen but from hippies and academics - known for their share everything credo - and poor business acumen.
- The Path of Least Resistance: Advertising on Times.co.uk takes about 12 clicks. Advertising on Blocket, Sweden's eBay, is a two-click affair. Where do you think the average lazy consumer will put his click time and classified fees?
- The Interface is the value: Friendster disappeared but Facebook is still going strong. Twitter exploded from out of nowhere and is, in essence, just a mix of SMS and the Facebook status box. What we see online is that the interface - how you interact - is what's valuable whereas the underlying technology, or the basic business idea or the information that people access tend to be somewhat generic and easy to copy.
- Games and Gaming: "We are a gaming species" as somebody once said. EBay, one of the big challengers to newspaper classifieds, is more like a game than it is like other classified advertisers. We compete in an auction, formulating strategies for when to place the winning bet, hoping for higher bids if we're selling and so on. Games is changing the way we interact online.
- Advertising Revolution: We used to have advertising agencies run by chubby, middle aged men who used to throw around adages like: "Products are becoming more and more alike - advertising differentiates." Half of this business is being taken over by algorithm's. Google didn't become the world's biggest advertising agencies by hiring better creatives or account executives. The other half is being taken over by designers. To quote Yves Behar: "Advertising is the price you pay for being unoriginal."
- Slow Media Virtues: All values that people place on slow media like newspapers tend to be highly compatible with premium values ("It gives me time to reflect", "The good thing about a newspaper is that it ends", and so on). This is seldom reflected. I am a perfect customer for most morning newspapers and I probably pay too little when I pay €50 per month - I could pay a lot more for the right kind of product. Furthermore, people seem to want to advertise their weddings and newborns in a paper context. All you can choose when doing that today is size of ad and whether it should be in color or not. Where's the optional art direction? The creative placement? The reminder to advertise our first anniversary? Talk about squandering an opportunity.
- Cultural Revolution: Technology needs a new kind of corporate culture to thrive. Look at Bonnier, they all moved in under the same roof and centralized R&D to increase the speed and flexibility in their product development. Microsoft's Ray Ozzie gives us all excellent advice when he claimed that his company's most important challenge currently is to start thinking and acting like an upstart again.
There are two groups that are more extensively addressed collectively than others: immigrants and teenagers. Ever since the 1950's when kids stopped imitating their parents and started breaking out doing their own things, we've had frequent attempts at grouping anyone aged 13 and older into some kind of bracket - boomers, Gen X'ers and the latest darling Generation Y or Millennials or Generation Why? or whatever...
My old maths teacher used to say that as soon as you group things together, you lose information. Anyone referring to "Africa" comes across as rather ignorant but when generalizations are made about millions of people who happen to be born in the early 1990's, people view it as profound insights. There are plenty of examples of junk science within trendspotting but the best example of it has to the infatutation with Millenial surveys or panel debates. In the past week, I've listened to two of them and it emphasized this point. The first debate was hosted by Atex, a media technology company in the south of Sweden (it also happened to be moderated by me...put it this way, my client's wish is my command). The second one was hosted by ICMA in Tallinn. Both of them concerned the media habits of these strange creatures. Whereas the ICMA moderator shot straight for tired clichés
like "You put everything online...do you ever think about privacy?" or "What role does technology play in your life?", I tried to get a more generalized discussion going where I asked them about what questions engaged them in society, what mainstream media might miss in terms of issues and what their feelings and thoughts were about the upcoming EU elections. Both panels were quite amusing. Many people I spoke to at ICMA were raving about what a great debate it had been. Not just great but useful and that's what I consider to be the main concern with these kinds of exercises - people see them not as a source of amusement but of knowledge and insights. They may even base future decisions on some random remark they heard in the debate. Let's think about how far removed from any kind of science this is. You take five random people that happened to be sharing birth year, decide they belong to the same age-based, value-driven group and put them on a stage (or hand them a questionnaire full of leading questions) and decide that because they've never seen an Atari console or remember a time before the mobile phone, they're all geniuses and future power players worthy of adapting your business models for. As if we still live in a world where habits are formed young and then stays with us for the rest of our life. I find the idea of grouping people along demographic lines shameful and belittling of the individual. I wish all future conference organizers would rub their creative neurons a bit harder and think about groundbreaking ways of amusing and, if they're lucky, enlighting their attendants.
