Brexit Max

Teresa May’s speech this afternoon was neatly lampooned by the Financial Times on Instagram

Mobile payment mania

I use my Apple Pay as a stopgap measure for when I have left my wallet on my desk rather than as a main form of payment. I use PayPal mainly because eBay doesn’t allow other options.
London
So I find it puzzling that the likes of Tesco really thinks that this payment app (and others like it) would stand a chance of succeeding. The reason why Visa, MasterCard and Amex work is because of their near universal acceptance.

The Brexit post part two: a guide to what on earth is Brexit for people outside the UK?

I was prompted to write this post based on the many questions from friends living outside the UK – who are trying to make sense of what is going on.

Brexit is a portmanteau of ‘Britain’ and ‘exit’. The exit being from the European Union. In 2013, David Cameron announced that a conservative government would hold an in-out referendum. The referendum would take place before 2017.

Cameron is campaigning to stay in why did he call for a referendum?

David Cameron had two main reasons for calling the referendum.

The Conservative party has members in both camps. This has been a fault line in the party for a long while. The reasons for this split in the party boils down to two factors.

In order for the EU to be more powerful on the world stage, it has to speak with one voice. The process of consensus that it uses to get there means the UK is part of the consensus not a lone actor on many issues. This has an impact on how sovereignty is perceived. The full name of the Conservative party is actually the Conservative and Unionist party. It has members who view that sovereignty argument is an attack on the sanctity of the state. The second argument is having a completely deregulated market will benefit business. This would annul workers rights and make government much smaller. Taxes would be lower since the government would be responsible for much less activity.

The economic argument for remaining in the EU is that it provides access to an internal market. This has some ancillary benefits: as an English speaking country the UK is ideal for international investment. The EU provides a wider pool of workers to draw on. In knowledge economy work this is important. It is easier to do business across Europe with common laws and regulations.

The second reason is that before 2009 if you wanted a right-of-centre party you only had one choice. Under the leadership of Nicholas Farage the UK Independence Party (UKIP) rose. This was down to his personality and right-wing populist policies. On the surface of it the Conservative party had to adapt to the reality of competition.

Calling a referendum at a time of Mr Cameron’s choosing was a way of dealing with the bleed of support to UKIP and the split within his own party. I think it would be fair to speculate that Mr Cameron’s team underestimated the Leave campaign and the sentiment of the general public.

 What are the key issues for the electorate?
The issues break down into what I will term surface issues and shadow issues. The surface issues are those issues that connect to the referendum in a rational, logical way. The shadow issues are issues that aren’t connected to the referendum. It is a bit like having an argument with a loved one, often the subject is an excuse to raise everything else that has led to this moment. Essentially the surface issues are rational, the shadow issues are emotive in nature.

The Surface issues

For leaving:

  • The UK would get to save the money that it currently contributes to the EU. The numbers talked about this vary. Much of the money that is sent to the EU is spent in the UK. Many leave campaigners argue that this notional pot of money would be better spent on the NHS. There is no guarantee that this would take place and it assumes that the economy performs at least as well in the future.
  • The UK is the fifth biggest economy in the world, people would still want to trade with the country. The UK could do a better job negotiating trade unencumbered by the EU. At the present time, the UK is part of a trading bloc of 26 countries. The EU is the world’s largest trading bloc and that gives it a helpful position in negotiations. The other EU states remain the UK’s largest trading partner. For political and business reasons the UK may not get particularly good trading terms out of the EU, beyond what it already has. It is speculative and we just don’t know.
  • The UK can take back control of its borders to limit immigration. There is some evidence to suggest that uncontrolled migration from the European Union affected wages. This impact was biggest on wages in unskilled or semi-skilled work. Whilst this impact is considered to be small, it affects voters living hand to mouth. They will perceive this impact as big. The government data on net EU migration has contrasting sets of figures which can give rise to concerns of under-accounting or a cover-up depending on your paranoia level.
  • Britain can take back control of its laws, cut red tape and become more competitive. This is largely conjecture. Once the vote goes through Britain’s position won’t change until it negotiates its exit from the EU. It’s not like dropping your subscription to Netflix. Future legislation would depend on the kind of trade deals that Britain negotiates. Depending who you believe, a reduction in EU legislation would stop further erosion of workers rights or remove restrictive workers rights from businesses.

For staying:

  • Better the devil you know. At the present time, the UK economy is ok. It is part of the EU trading bloc. Leaving the EU brings with it uncertainty. How will the country trade? Will the UK have free access to the markets of its largest trading partners? How will this affect UK ex-pats currently living in other EU countries like pensioners in Spain? There would be uncertainty whilst the UK negotiates trading agreements around the world. The government hasn’t outlined a clear plan B for life after Brexit.
  • UK residents also have rights to freedom of movement in the EU. If you have your passport, a British citizen can go to work freely in any EU country. For young people and professionals, that is an attractive proposition. Leave campaigners would argue that Norway has managed to negotiate similar freedoms for its citizens and isn’t an EU member.
  • The impact of the UK leaving the EU is likely to be felt beyond the UK. This is based on conjecture, but a Brexit vote may trigger similar votes elsewhere in the EU. The EU has been something that has bound European countries together. Prior to the EU, mainland Europe was responsible for two world wars. Since all economies have a high degree of interconnection, the effects will reverberate around Europe and the UK for a long time. A leave campaign response would be to think about Britain first and focus on higher growth non-EU markets.
  • The UK outside the EU is likely to have a negative economic impact on the country. Economic predictions aren’t certain to happen but make sobering reading. The following international organisations think that it will be bad for Britain including: OECD, the US government, IMF, The World Bank and the Chinese government. This is probably the area that the leave campaigner have been least effective in countering.
  • British consumers will lose out from participation in the EU. A wide range of benefits such as anti-terrorism security co-operation, having their holiday mobile phone bill reduced through EU regulation or being able to study abroad. However, these issues won’t matter to many of the poorest voters who are behind the leave campaign.
  • A vote for Brexit may increase pressures for a break-up of the United Kingdom. A Scottish referendum on independence was recently defeated, but Brexit would re-open the debate in a pro-Europe Scotland. Northern Ireland currently benefits from the EU, Brexit could ramp up simmering tensions and possible bring a return to The Troubles. The Good Friday agreement currently revolves around an open border and North-South economic codependency. Leaving the EU would break this and require a more heavily regulated border to keep out immigrants and smuggling.  A leave campaigner would argue that this is speculation and nothing more.

The Shadow Issues: a working class insurrection through the ballot box?

Modern Britain as an economic power house has left behind wide swathes of the country outside London and the Southeast of England. These left-behind people are the engine driving the vote to leave.

The UK was the industrial beating heart of the world in 19th century and it began a long slow decline due to a number of factors:

  • Much of the manufacturing was in relatively low value products
  • Much of the manufacturing base didn’t have a hard-to-replicate core competence. By contrast German industry is built around high value specialisation and niches
  • Favourable trading environments in former colonies dried up
  • Globalisation brought more competitors to the table. Though many of those competitors like Toyota and Nissan then went on to build factories in the UK
  • Structural issues: a national banking and business finance system based on short-termism rather than the regional banking system with a longer term focus that drove German competitiveness. An adversarial worker – management relationship rather than the German worker-management councils
  • A short term attitude to the dividend of North Sea oil (by comparison, the Norwegian government have invested part of this money for the future)
  • A decision by the government to ‘bet the farm’ on financial services in the 1980s
  • A succession of debt fuelled consumer boom and bust cycles
  • Poor decisions made on worker training. UK apprenticeship schemes have lagged the quality of similar schemes in Germany and other European countries
  • Unfettered worker migration from Eastern Europe, which the Labour party has admitted was a mistake

This has left Britain in a curious state:

  • For a country with a famous education system, you have unskilled workers who need to be supplemented by better skilled migrants
  • Their wages are stagnant or may have dropped in real terms due to increased job competition due to short-term or temporary migrant workers
  • A large amount of working poor who have an uncertain future
  • Large of consumer debt, often tied up in home ownership and distorted prices for rental and home purchase. When you can barely make the rent, an economic depression and housing crash looks quite attractive
  • Social mobility is in decline for many
  • University education is no longer a guaranteed entry ticket into the middle class – but it now comes with a vast amount of consumer debt

The elephant in the room for Brexit is the rise of the poorest people in society as an important voter bloc. The UK political system is comprised of major parties who have not reflected the views of poorer people for the past 30 years. You have generations of frustrated angry people and the Brexit referendum gives them an outlet. Many of them know that life will not improve; but it gives them the opportunity to screw the people who haven’t listened over the decades.

Their concern and anger is not new but has lacked focus. Prior to Brexit, it drew some of these people to the likes of the English Defence League and Britain First – alongside the usual collection of people with racially motivated agendas. The UK Independence Party tapped into that zeitgeist and the referendum has brought it to the fore.
Both the main parties have been ill-equipped to deal with it. Immigration is a loaded term as it has been a historic touchstone for racial hatred and intolerance. My Dad faced the classic attitude of landlords with signs saying ‘No blacks, no Irish, no dogs‘.

The impact isn’t only economic, older residents are seeing their neighbourhoods change beyond their comprehension.

Voter concern about immigration is not bounded by race, creed or colour in the UK – which moves it away from being ‘politically incorrect’ to a subject of legitimate debate.

In some respects, it is easy to understand why immigration was such a difficult issue for politicians. Enoch Powell was famous for a speech given in Birmingham in 1968 regarding immigration from Commonwealth countries. Powell’s speech touched on immigration issues that many would recognise now: strain on resources, the degree of change in neighbourhoods and society, issues with societal integration. His speech was also tied to anti-discrimation laws. In a country that had only recently recovered from the second world war, Powell objected to a law advocated by writers from newspapers which had been soft on the rise of Hitler, yet now wanted to impinge on the freedoms of the native British. He quoted from the latin epic poem Aeneid as a graphic way of illustrating his concern about possible conflict.

Like the Roman, I seem to see “the River Tiber foaming with much blood”.

This was allusion to his own foreboding about the future of Britain, partly driven by the riots that had racked US cities including in the 1960s including Watts (Los Angeles), Hough (Cleveland), Detroit, Chicago, Washington DC and Baltimore.

From then on Powell was forever linked to his ‘river of blood’ speech. He lost his seat in Edward Heath’s shadow cabinet and his speech was roundly criticised as racist. Powell did seem to have his finger on the pulse of voter sentiment at the time. Just two weeks after the speech The Gallup Organisation released poll results showing 74% of respondents agreed with Powell’s speech versus 15% who disagreed. Powell was the unacceptable face of right wing populism.

It was only with the rise of UKIP in 2009 that immigration was put on the ‘serious’ political agenda of the mainland UK again.

The main political party members campaigning of remain don’t have easy answers for the intractable problems facing these people. Trying to control immigration is only a small part of any realistic solution. Back in 1981, members of Margaret Thatcher’s government talked about the difficulty in dealing with the economic issues:

“I fear that Merseyside is going to be much the hardest nut to crack,” he cautioned. “We do not want to find ourselves concentrating all the limited cash that may have to be made available into Liverpool and having nothing left for possibly more promising areas such as the West Midlands or, even, the North East.

“It would be even more regrettable if some of the brighter ideas for renewing economic activity were to be sown only on relatively stony ground on the banks of the Mersey.

“I cannot help feeling that the option of managed decline is one which we should not forget altogether. We must not expend all our limited resources in trying to make water flow uphill.”

The referendum has highlighted the distance between working class people and the Labour Party. This is especially striking; working class people are Labour’s traditional natural constituency.

Will Britain Leave The EU?

I don’t know, but at the time of writing the FT’s poll of polls gives the leave camp a 4% lead over remain, with just 10% of respondents undecided. If the polling data reflects voter turnout accurately then Brexit is likely.  We don’t know what the voter turnout will be, it could be affected by a number of factors:

  • Wet weather adversely affects voter turnout
  • Young people, who are generally more favourable towards remaining in the EU; but tend to do a worse job at getting along to the polling station. This referendum may change that dynamic
  • People in lower socio-economic groups tend to have lower voter turnout
  • Older people tend to be more diligent. For senior citizens, if either side of the debate has a better grassroots machine for giving their supporters to the polling booth that could make a difference

Despite much of the fuss about getting eligible ex-pats to vote, they are likely to consist of only 1% of the electorate.

The Euro 2016 football tournament has no matches on June 23 – a major game would have adversely affected voter turnout.

More information
UK government documents on Brexit
UK Independence Party – Wikipedia
Conservative Party – Wikipedia
The knowledge economy is a myth. We don’t need more universities to feed it | The Guardian
Britain is in the midst of a working-class revolt | The Guardian
Working-class Britons feel Brexity and betrayed – Labour must win them over | The Guardian
EU position in world trade | European Commission
The Great British trade-off The impact of leaving the EU on the UK’s trade and investment | The Campaign for European Reform – PDF
The impact of immigration on occupational wages: evidence from Britain | Bank of England – PDF
EU migration — the effects on UK jobs and wages | FT – Paywall
The Economic Consequences of Brexit: A Taxing Decision – OECD
Europe and Central Asia: Growth Struggles in the West, Volatility Increases in the East – The World Bank
Remarks by the President Obama and Prime Minister Cameron in Joint Press Conference | White House
Uncertainty Clouds the United Kingdom’s Economic Prospects | IMF
China: Brexit Threatens to Tip Scale in Favor of U.S. | Money Morning
The Brexit Index: a who’s who of Remain and Leave supporters | Populous
1981 files: Lord Howe rejects ‘inconsiderate’ comments on decline of Liverpool | Daily Telegraph
Analysis: the impact of turnout on the EU Referendum | YouGov
FT – Poll of Polls on Brexit

Books
Heffer, Simon (1999). Like the Roman: The Life of Enoch Powell. London

Oprah Time: The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

It’s been nine years since Taleb wrote The Black Swan. Like Francis Fukuyama’s The End of History and the Last Man before it, The Black Swan is widely cited and paid lip service to.

The timing of publication for Taleb was particularly pertinent as the book became popular as the financial system broke down in 2008. Some eight years later, the economy has limped along as financial issues were punted into the future, rather like a child kicking a can down an alley. Like the can, the financial issues are still here to be ran into. I thought it was time to re-read Taleb’s book.

Taleb’s work is philosophical rather than scientific in its method. Although he avoids the talk show friendly cliches of Malcolm Gladwell or Seth Godin. Much of our world is based around the normal distribution, it is used by insurance companies and pension funds to access risk and longevity. Taleb points out that the really big changes that rock the boat often don’t fit neatly within these models.

Taleb’s solution boils down to two things

  1. A defensive skepticism that would encourage the average person to question common wisdom and ask ‘what if’
  2. For those that can afford it, an offensive posture that asks ‘what if’ and has a mix of savings or investments most of which is put in very safe vehicles and 15 per cent or so on high risk speculative investments to take advantage of change

Taleb’s work doesn’t seem to have had the impact that one would have expected just five years ago when it was quoted as a touchstone to modern life.

Much of the excess and risk that had happened previously is happening again, despite a plethora of disruptive forces laid out in the media.

Audiences are paying too much attention to listicles that go something along the line of ‘5 habits you need have to be like Bill Gates’. Where is the critical filter?

More information
McMansions Are Back And Are Bigger Than Ever – There was a small ray of hope just after the Lehman collapse that one of the most lamentable characteristics of US society – the relentless urge to build massive McMansions (funding questions aside) would have subsided
The market’s most crowded trades could be causing dangerous bubbles – Business Insider
Many Middle-Class Americans Are Living Paycheck to Paycheck – The Atlantic
Economic Conditions Snapshot, March 2016: McKinsey Global Survey results | McKinsey & Company
Andy Grove’s Warning to Silicon Valley – The New York Times – Mr. Grove contrasted the start-up phase of a business, when uses for new technologies are identified, with the scale-up phase, when technology goes from prototype to mass production. Both are important. But only scale-up is an engine for job growth — and scale-up, in general, no longer occurs in the United States. “Without scaling,” he wrote, “we don’t just lose jobs — we lose our hold on new technologies” and “ultimately damage our capacity to innovate.
Crap IT means stats crew don’t really know how UK economy’s doing • The Register – and people make accusations about Chinese economic data…
Return of ‘100% mortgages’ ease burden on Bank of Mum and Dad | FT

June 2016 online marketing and technology research slides

Here is a copy of the slides that I pull together (when I have the time) each month of publicly available data that would be of use.

This month I have some new data around search which came from disclosures at Google I/O in terms of search volumes. We talk about social as if search has gone out of style but its growth is still staggering, driven by mobile device penetration.
Google global search volume
Looking at global search revenue over time, Google’s monopoly position becomes immediately apparent.
Global Search Revenues
More details about me here.
Slide20
Full presentation available for download as a PDF on Slideshare

Oprah time: Heaven’s Bankers – inside the hidden world of Islamic finance by Harris Irfan

I was given Heaven’s Bankers to read as a friend. I can’t say I had thought that much about Islamic finance before. I knew that it had a couple of patches of ‘heat’ behind it in the banking sector. One was in the late 1990s. It then took a back seat post-911 and took off again as Dubai boomed.

It helps that Harris was not only an insider, but passionate about banking in its widest sense. He’s also sickening polymath who is a top flight racing driver.

History never repeats itself, but the Kaleidoscopic combinations of the pictured present often seem to be constructed out of the broken fragments of antique legends. – Mark Twain and Charles Dudley Warner

Irfan delves into the intricacies of how modern Islamic finance grew and contracted. The industry he provides us an inside view of is now worth a trilliion dollars.  The start of history like most things were pretty straight forward. As the industry grew more arcane and complex financial instruments became the norm. This reminded me of a lot of Mark Lewis’ Liar’s Poker. Lewis dealt with bonds and modern derivatives became so complex customers didn’t understand them. The Savings and Loans debacle of 1985-1996 foreshadowed subprime mortgages.

Where Irfan really excels for the non-banker as reader is in his ability to break down the basics. He takes the concepts many of us learned in business or economics classes back into pre-medieval history. He provides a historical perspective on modern capitalism as we know it. So the book becomes invaluable regardless of how you feel about the current economic system. The background gives you a more informed perspective.

Andreessen Horowitz on network effects and services

Andreessen Horowitz are a venture capital company based in Silicon Valley. They’ve put together this presentation which does a good job at providing a taxonomy on different products. It comes in handy when thinking about platform utility from a media planning point of view and also evaluating start-up ideas.

If it isn’t clear where they fall within these networks, it’s a warning flag.

Oprah time: China’s Coming War With Asia by Jonathan Holslag

Where do I start with a book title this inflammatory? I went to the trouble of reading the book twice before starting this review. In the end, the only conclusion I can come to is ‘Policy Faultlines in East Asia’ doesn’t have the same ring to it.
Untitled
Holsag marshals a huge range of facts and opinions within the book. If you want to have a basic understanding of modern Chinese state, the book is a good primer.

He provides insight into the Chinese Communist’s Party’s policy cornerstone of territory maximisation. They were happy to put off their agenda for tactical advantage, but never gave up on their goals. China’s neighbours have similar inflexible policy goals. There is is no win-win solution.

Time has brought increased pressures. A fight for resources to fuel further growth and water rights conflicts. Relative declines in economic growth also fuels nationalistic politics. In China, nationalistic sentiments in citizens grew with prosperity. It has become convenient for politicians to tap into nationalistic sentiments.

Holsag doesn’t attempt to provide a solution for de-escalation of these edges. His book only provides a macro-level understanding of the countries involved. For the reader who wants to understand Asia, Holsag’s book is an excellent primer.  More on China’s Coming War With Asia by Jonathan Holsag.

Edelman’s trust barometer 2016

Edelman’s Trust Barometer has become a kind of zeitgeist meter for the kind of people who go to the World Economic Forum at Davos.

This year Edelman talks about the Grand Illusion, that everyday people will follow the global elites. Income inequality and a growing realisation that the future won’t get better has gradually changed perceptions. It is yet another data point that signals the death of the American Dream and according to Citi the end of Pax Americana.

It is also worthwhile looking at BAV Consulting research on ‘the best countries in the world’ to see how country brand equity are now perceived.

More information
Prepare for the Post Pax-Americana era, says Citi – FT (paywall)
2016 Trust Barometer: Divide Opens Up Between Global Elite And Public | Holmes Report
U.S. News & World Report, WPP’s BAV Consulting & The Wharton School on best countries in the world | PR Newswire

Barbarians in the valley

Over the space of one life time the below San Francisco around the Santa Clara valley went from apricot farms and orchards to urban development based around hardware (the silicon in silicon valley) and then on to campus design sites preferred by software companies.

At the time of the PC revolution was kicking in, which gave use the consumer side of consumer technology we live with today like iPhones and the MacBook Pro this post is written on.

Over the space of this time, it wasn’t only the landscape that changed but the way we work and entrepreneurship was rewarded. There were decades of unparalleled economic growth driven by companies firstly in hardware, then software and finally in networking and communications – the internet.
Reagan_et_Thatcher
During the early 1980s, America had Ronald Reagan as president. The manufacturing industry that had driven post-war prosperity in the country was suffering from global competition and businesses were under attack. This was the golden age of the corporate raider who destroyed businesses in the name of shareholder value. Carl Icahn was considered responsible for the bankruptcy of Trans-World Airlines (TWA).

By comparison Silicon Valley was in a spate of explosive growth. Computers and software were changing the way business operated. Spreadsheet software enabled the kind of models required for corporate raids on main street. Apple, Adobe and Aldus came up with the different components required for desktop publishing revolutionising design in the process.
The fall of the Berlin Wall - November 1989
The cold war ended and the Berlin Wall came down, corporate raiding ran out of steam as corporate lawyers began to construct effective barriers on behalf of besieged companies. Silicon Valley started a move away from ‘hard’ innovation to the soft innovation of gadgets, software and services. But that was fine, there where other places in the world who wanted to make the hardware components because of the jobs and wealth it created. The modern internet started to be built on Sun and Silicon Graphics servers connected with Cisco routers. The web was designed on the same Apple Macs that designed brochures.  Technology companies became media companies, retailers and super-fast courier companies. Wired magazine talked about the ‘new economy’.

The industry was also riding on a one-time offer. Older computers that now ran the modern world had a ‘millennium’ or Y2K bug, which was a bonanza for business IT companies. A dot com bust dampened enthusiasm, cleared out some of the more egregious business models.  Out of the fire sales of Aeron chairs and Cisco Catalyst series routers paired with cheaper broadband came web 2.0 – where the web became a platform rather than just a catalogue.

For many of the previous businesses in Silicon Valley growth slowed. Most business software looked like a solution looking for a problem. High-performance hardware could be cheaply replaced with more commodity priced boxes. Eventually for many people’s needs, hardware became a service that could be rented according to need. Business models were disrupted, sales dried up, licences weren’t renewed and advertising sales dried up.

Enterprise software companies were hoovered up by private equity firms eager to leverage their steady cashflows to service debt from further transactions.

Businesses like IBM and Nokia look like the TWA or Goodyear Tire and Rubber Company in the 1980s. The story of Yahoo! over the past six years looks like one corporate raider greenmail scam after another. Jerry Yang who has recently started to see his reputation rehabilitated was turned out of the company he founded by shareholders influenced by Microsoft and Carl Icahn. The subsequent replacement Carol Bartz supervised over a spectacular desstruction in value at the company. Current CEO Marissa Mayer, like her peers at Apple and IBM faces constant corporate raideresque behaviour to leverage up and return money to shareholders as part of a share buyback.

Microsoft who seemed to have used corporate raiders against its foes like Yahoo! now has activist shareholders on its board and is being forced to rejig its own business.

Just what is going on?

I think it it down to a confluence of different factors:

  • Technology has had a spectacular growth spurt in Silicon Valley but the growth has spread beyond the valley. Huawei is arguably one of the most important companies in telecommunications and internet infrastructure now. Just over two decades ago it was a small business selling secondhand company switchboards to the new businesses springing up in Shenzhen. Zhengfei Ren moved from selling equipment he sourced in Hong Kong to manufacturing it himself. Now the company makes everything from core network switches and submarine cables to smartphones, tablets and wearables. Shenzhen is full of companies like Huawei – some more successful than others. The most powerful names in silicon are also Asian companies TSMC and Samsung Electronics play a key role in the manufacture of non-PC style computers: phones, tablets and even televisions. It is often easier to name products that aren’t becoming ‘smart’ in some way
  • There isn’t the same willingness in the US to fund start-ups looking at smart innovation, instead the focus is on areas like social applications. Technology industry veteran Judy Estrin identified this as a key problem in her 2008 book Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy. There are serious technology challenges available that need to be addressed: the break down of Moore’s Law in semiconductor manufacture, commercially viable nuclear power and quantum computing to name but three
  • The technology has been demystified and is yet another industry. There isn’t that much difference between LVMH and Apple or Caterpillar and Oracle. Software as a service moved the buying decision on a number of products from the IT manager to the marketing manager or department head. Cheaper smartphones saw the rise of bring your own device (BYOD) policies. I sat in an old warehouse turned conference centre last week when Will.i.am announced off the stage that ‘Designing hardware isn’t hard, filling Wembley stadium, that’s hard’. Eco-systems from OEMs to Kickstarter have democratised and demystified technology businesses. And with this familiarity has come at least some contempt

More information
Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy
Finding Alibaba: How Jerry Yang Made The Most Lucrative Bet In Silicon Valley History | Forbes
Yahoo Stock Crashes As Alibaba IPOs – Business Insider
Marissa Mayer’s day of reckoning at Yahoo is rapidly approaching | Quartz
BlockBuster: Lyme Regis Sues Icahn, Accuses Sabotage – Barrons.com
Carl Icahn 2.0: an icon of ’80s greed is back to shake up Silicon Valley | The Verge – 2 words: TWA, Yahoo!

America looks to 2024 – research

Consumers in general aren’t the greatest predictors of the future but this research by pollsters PSB makes for interesting reading. An America that sees itself declining in economic and infrastructure terms over the next ten years, but sees the country taking a more progressive stance on moral issues.

The country poses opportunities for lobbyists with a disenfranchised electorate that has no expectations of their politicians achieving anything – leaving them free to pursue the agendas they are lobbied about.

It is an America resigned to low-or-no growth and children who expect to do worse than their parents – something unheralded in modern American history.

Eight trends for the future: Prosumption realised

The idea of consumers being the producers, or at least being part of the process within a modern industrial context was envisioned back in 1970 with Alvin Toffler’s book Future Shock. Toffler was influence by technological  as consumers started to be more involved in the delivery of their own services and products.

The first ATM machine appeared at the beginning of the 1960s and  started to be rolled out seriously in the late 1960s, this revolutionised access to money which previously relied on counter service to access their money.

The ability to make phone calls without operator intervention was technically possible since the early 1900s but it was a leap forward in electronics that saw a surge in the widespread adoption of automatic telephone switches by the likes of Western Electric, Northern Telecom and Ericsson.

The internet has extended it further, from companies delegating services to us:

  • Printing your own bill
  • Arranging you own payments to other people
  • Answering customer service questions on a brand’s behalf (Get Satisfaction, GiffGaff)

Even the job of product manager and financier has been moved over to the consumer.  Businesses like Threadless used consumer votes to decide which t-shirt designs they then manufactured and sold to those who showed interest.

Crowdsourcing platforms built on top of Salesforce are used by major corporates like Dell and Starbucks to filter new product ideas and service improvements. Crowdsourcing has been taken further with the likes of Kickstarter, Indiegogo and Demohour which allow the consumer to fund the manufacture of their product upfront. Something that Jolla copied on its own website when it launched it’s first handset.

Even marketing has been outsourced services like Buddy Bounce have the potential for fans to be a largely self-organising marketing organisation. At the moment you can see the way One Direction fans use social media to rally around their band.

More information
Eight trends for the future
Eight trends for the future: digital interruption
Eight trends: Immersive as well as interactive experiences
Eight trends for the future: Social hygiene
Eight trends for the future: contextual technology
Eight trends for the future: Brands as online tribes
Eight trends for the future | Divergence

Flash data on UK online Christmas portends poor numbers?

Earlier in the month I saw numbers that indicated that the savings of UK consumers dipped to their lowest level in forty years.
UK-Christmas-Graph-2013-Computop
So I found this information about smaller e-commerce sales in the UK during December. The smaller volume but better basket value could be indicative of a professional e-tailing marketers. What if, those savings weren’t spent on material goods but instead Christmas groceries? It indicates things are worse than the economic figures make out.

More information
UK Online Sales Slowdown For Christmas Whilst Eurozone Sees Significant Expansion According to Computop

Observations from the UK: austere Christmas advertisements

I must be one of the very few people who didn’t pay much attention to this year’s John Lewis advert until I had a chat with my friend Ian Wood. Ian pointed out that lack of overt consumerism in terms of the number of presents shown in the advert and considered it to be in-tune with a more austere consumer environment, the underlying form being you’re only going to get one present this year, make it a decent one. I had a look at economic indicators versus consumerism in John Lewis adverts pretty soon after I had that discussion with Ian.

Food and family appeared in spade in the adverts, but presents not so much. The closest you had to it was Cadbury’s who wrapped an entire street and the people who lived there then enjoyed each others company and the joy of tearing the wrapping off. When Christmas does come it seems that it will be at a high cost to the economic health of the British consumer; disconcertingly there were reports that savings had hit their lowest point in 40 years for the UK in November as consumers dipped in to fund Christmas.

Other posts in this series
Observations from the UK: Pay-day loans, pay-day backlash