Category Archives: economics

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

Looking at the retail sector outlook through John Lewis Christmas adverts

I met up with Ian Wood earlier on in the week and he pointed out that this year’s John Lewis adverts are about giving a single present and by implication – don’t make it a crap one. So I decided to go back and have a look at previous years.

Year Title Amount of presents that the hero of the advert receives/gives based on the particular storyline Q3 UK GDP numbers – as a predictor for the Q4 growth – via Office for National Statistics Q4 UK GDP numbers as an indicator of how the economy performed in the Christmas period Delta on the GDP values
2013 Bear and the hare 1 0.8% ? ?
2012 The Journey 3 0.7% -0.2 -0.9%
2011 Christmas advert 2011 5* looking at boy’s room 0.5% -0.1% -0.6%
2010 Christmas Advert 2010 1 0.6% -0.4% -1.0%
2009 2009 Christmas Advert 1 0.4% 0.4% 0.0%
2008 From Me To You 1 -1.8% -2.1% -0.3%
2007 Shadows 2* brought in by each person 1.2 0.2% -1.0%

More information
The Bear & The Hare
The Journey
Christmas advert 2011
Christmas Advert 2010
2009 Christmas Advert
From me to you
Shadows
Guardian data dump of UK GDP data from Office of National Statistics (ONS)

George Packer on The Unwinding

The Unwinding describes the shifting fortunes of the post-war middle classes in the US, which mirrors the decline of the middle classes throughout the western world.

One tends to forget that whilst the middle classes are considered to be a measure of the health of a country, it has always been unstable and in the past a destabiliser: hippies and 19th century anarchists were both the children of the middle classes on the up. Now globalisation, technological change, changes in the nature of conservative politics and changes in global financial structures have dramatically changed things over the past 50 years. Nostalgia for a golden age of the middle class was part of the reason The Wonder Years was so popular.

China’s economic analysis

The Wall Street Journal’s Andy Brown on China’s economy. It is an interesting interview. As to the main question about whether China’s economy is about to stall or not, have a read around and make up your own mind.

The video is the Wall Street Journal’s own player so not sure if all readers will be able to see it.

The Margaret Thatcher post

This isn’t a post about what I think about Margaret Thatcher, beyond my amazement at the body politic and their inability to make appropriate decisions related to the telecoms, media and technology sectors it has never been that much of interest to me and viewed it with a lot of my cynicism fueled by legislation like part V of the Criminal Justice and Public Order Act 1994 or the Digital Economy Act 2010.

I cited those two acts in particular, as they are empirical evidence that stupidity doesn’t run along party lines. I’ve also met some really smart politically active people who I am happy to consider my friends including Nick Osborne and Will Heald.

Instead this post is more about trying to make sense of what happened after Margaret Thatcher died and try and contextualise it for the wider world.

On the pro-Margaret Thatcher side of things the narrative is relatively easy. Mrs Thatcher was responsible for clearly differentiating against the Labour Party. The Conservatives came to power with a raft of ideas that they thought would reinvigorate the UK; socially and economically. Under Mrs Thatcher, the government took on and won conflicts against strong interest groups including the trade union movement – which never recovered.

Mrs Thatcher’s administration was considered to have played a strong game abroad; from the Falklands Islands to negotiating with the European Community. She is also lauded as being a partner to Ronald Reagan on foreign policy.

Mrs Thatcher is not President Reagan

Whilst many American media saw an analogue between Ronald Reagan and Margaret Thatcher; I think that a closer comparison would be Lyndon B. Johnson. Johnson became president at a troubled time. The politics of Thatcher and Johnson were very different but some of the factors of their administrations were very similar. America was going through economic and social change. His part in that change, in particular the civil rights movement divided voters – Johnson took decisions that were unpopular and sowed the seeds of the current bipartisanship in the US government.

Mrs Thatcher faced similar troubled times in the UK:

  • UK industry was struggling – UK industry had suffered decades of poor investment and poor stakeholder relationships. It no longer had many of the advantages of its first mover status in the industrial age. In addition, the rebuild of mainland Europe after the war and US foreign policy towards the British Empire had accelerated the UK’s decline due to a lack of captive markets and increasing competition. Globalisation had come on stream as Korean shipyards, Japanese consumer goods and cheap Indian textiles demolished industry in the North of England. The interesting thing was that lots of foreign-run businesses in the UK were doing much better than their British counterparts so it couldn’t have been all about the workers
  • It is hard for anyone under the age of 25 to imagine it, but the Cold War promised imminent destruction which changed the relationship between western and eastern Europe. Deployment of US nuclear weapons on UK soil was emotive
  • Society generally wasn’t as liberal as it is now, being PC didn’t happen. Discrimination was rampant as the UK hadn’t addressed the changing racial and ethic mix of the country from descendants of the Windrush immigrants, the Irish and the South Asian immigrant communities. Enoch Powell had made his famous rivers of blood speech a few years before. Society wasn’t as accepting of the LGBT elements of the community
  • Foreign policy had to deal with a diminished role for the UK in the world. From trying to manage that the UK was outmaneuvered on Hong Kong by China to the unequal partnership with the US

The conflict points

  • Monetary policy to reduce inflation – this drove up interest rates and sent many UK manufacturing businesses to the wall. Since the North of England was dependent on these businesses an economic gulf opened up between the South East and the rest of the country. Subsequent economic progress widened the gap further
  • Miners Strike – The Thatcher administration sought to go head-to-head with the NUM which had brought down the Heath administration. Admittedly, the miners weren’t helped by Arthur Scargill’s leadership
  • Privatisation – took assets out of state control. It is controversial every time there is a train crash or electricity price hike as it allowed strategic assets to be owned by foreign companies the debate wages on about appropriate returns and a lack of investment
  • The big bang – deregulated banking and fueled further growth in the city. Along with the move to home ownership, new-fangled financial instruments created the conditions of the current economic crisis. The lack of a portfolio of industries in the UK economy meant the the country took a harder hit than other European countries with a similar balance sheet
  • Poll tax – the community charge or poll tax was a replacement for the property rates which used to fund council services. Since it was a flat charge on the individual it had been considered as far back as 1981 and viewed in a Green Paper to be unfair. It was eventually implemented first in Scotland and then in England and Wales in 1990. Riots ensued as the tax was considered to be unfair by many
  • Northern Ireland – the Thatcher administration had reasons to be disliked by both sides. Republicans due to the  way in which the Thatcher administration handled the Hunger Strikes in the Maze prison and the shoot-to-kill policy; Unionists due to the Anglo-Irish agreement that gave the Irish government a say in Northern Ireland’s affairs

All of this has made the Conservatives almost unelectable in many parts of the UK; Scotland only has one Conservative MP. This is closer to the Lyndon B. Johnson analogy for Margaret Thatcher echoing Lyndon B. Johnson’s comments about losing the South for generations when he legislated on equal rights.

Under-discussed aspects of the Thatcher administration

  • The Advisory Council on the Misuse of Drugs was allowed to shape and direct day-to-day policy on drug use which was at odds with Mrs Thatcher’s conviction (rather than evidence)-based approach to policy
  • Launching campaigns promoting safe sex and the dangers of AIDS. Again this sat against Mrs Thatcher’s personal beliefs in terms of family values
  • Taking climate change seriously. Prior to her career as a politician Mrs Thatcher has been a research chemist, which probably helped her understand the issue
  • Mrs Thatcher ironically signed the UK up to the Single European Act to create one European market
  • Abolished corporal punishment in state schools back in 1986. No more going to the headmaster’s office to be caned
  • Rupert Murdoch – Margaret Thatcher’s close relationship with Murdoch was a mutually beneficial relationship; however it set the template that led to the current news media debacle in the UK that lead to the Leveson Report

What I can’t really explain is the amount of energy that has gone into the debate some 20 years after she left office.

I suspect that Margaret Thatcher’s death is a point where the wider political agenda shaped by her administration has taken the UK since the mid-1990s is being debated.  This debate isn’t split along current party lines as Ed Milliband’s Labour Party is still similar to the New Labour of Tony Blair – just a bit jaded and suffering from a creative bankruptcy of new ideas.

Secondly, when one looks at the like of the English Defence League, Casuals United and UKIP there seems to be at least part of the country who don’t feel as if mainstream politics represents them.

Finally, there is an underlying anger in the poorer members of society for which the 2011 were a pressure valve letting off steam. Throw in some industrial action into the mix and it would all start to feel like 1979 again…

What baristas tell us about the power of marketing (and PR)

The Guardian ran a piece on why over 1,700 people applied for eight roles as baristas with Costa Coffee in Nottingham. The article delves into how the coffee industry has grown and how a generally poorly paid service job has acquired a certain cache. What the article neglected to say was that this is as much about the power of marketing. Coffee culture as made mass-market by Starbucks managed to move the consumer away from the diner (or Dunkin Donuts) cup of joe in the US into a more refined experience. The third space is a sign of being middle class or a ‘creative’ in fast developing economies like China. It is amazing how in the space of a few years in London the modern coffee shop became an embedded part of my own life.

Being attached to this phenomena has also given the workers in these stores a bit of cache rather than being seen as a ‘mcjob’ the term coined to deride fast food restaurant work. This couldn’t have been possible without the businesses involved carefully managing their reputations, Starbucks current media woes over tax non-withstanding.

More information
Why did 1,701 people apply for just eight barista jobs? | Guardian

Archived from blog posts I wrote for PR Week

Never mind the Olympics, here comes the doldrums

The FT featured an interesting article that talked about how US and western consumers are downshifting in their purchasing patterns:

  • Working to a strict shopping list
  • Buying smaller amounts of products
  • Taking a more rational approach to decision making with an extra focus on cost

One respondent talked about western markets taking on developing world characteristics. Innovation has moved from new product development to enhance margins to working smarter to follow consumers down the price point. Consumer packaged goods companies are currently working through product offerings and packaging to meet these new consumer realities, how long will it be before it starts looking at marketing?

Archived from blog posts I wrote for PR Week

Facebook’s share price decline

One thing that has surprised me about the Facebook share price and trading around it is the relatively low volumes involved; part of the reason why the share price is moving downward is because the market is relatively illiquid.
Facebook
You can see from this chart that I got from Google Finance, huge volumes at first when trading opened and then relatively speaking nothing.

According to pwc the future looks uncertain

The pwc US Trendsetter Business Outlook April – May 2012 report has one diagram that I thought was interest. You can see how quarter on quarter respondents had a higher degree about the world economy over the coming 12 months.
pwc Trendsetter Business Outlook April - May 2012
More information
pwc US Trendsetter Business Outlook April – May 2012 (PDF)

Will employee relations be a thing of the past?

According to Time magazine Canon is considering moving to robot-only production for its cameras. This follows on from news stories last year that gadget manufacturer Foxconn was considering a similar move. Both are motivated by the need to reduce costs, whilst I was excited that the science fiction future of my youth seemed to be coming a step further to reality I was concerned by two things:

  • Would this move to having robot workers turn out products as bad as the Italian car manufacturer who promoted robot made cars in the late 1970s?
  • What would happen to all those PR people involved in employee relations? Would they be made redundant in the face of a drastically reduced work force, or would they be saved by a HR department revolt to banish robots ruining their own power structure?

Archived from a blog that I used write at PR Week.

Jargon Watch: malemployed

Urban Dictionary has turned into a kind of Wikipedia for slang and the latest rude words or crude acts. But it is also a great zeitegist metre providing a language for how people are thinking or feeling. In a time when the global middle class is challenged by changing corporate structures and an economic reset workplace anxiety is building up. Urban Dictionary had a word for it – Malemployed:

When what you do for a living makes you want to kill yourself.
For example: I re-edit text that has already been edited in India; I am so malemployed.

It sounds like life inside a Dilbert cartoon, but having tried to edit an analyst newsletter written by an agency’s Indian office into something useable a number of years ago, I can relate to the example provided REALLY well.

More information
Urban Dictionary

Oprah Time: The Greatest Trade Ever: How One Man Bet Against the Markets and Made $20 Billion by Geoffrey Zuckerman

I wanted some light reading as I traveled and Zuckerman’s account of how John Paulson bet against the US housing market seemed as good a read as any. As a non-financial person I found some if it very illuminating:

  • Like innovations such as the the light bulb there were a number of people trying to make this trade work, some of them like Michael Burry had the trade messed up by his own investors who were withdrawing funds as he was making money killing the trade in the water. Quite why Burry was a zero and Paulson was a hero wasn’t clearly articulated
  • The banks not only packed toxic investments that drove the market but also developed the interests that could hedge against it in a cost-effective manner, with many of them screwing themselves
  • Banks actively screwed their customers, even when they were being paid for advice. If I did that as an agency person I would leave myself open legally and would also likely get censured by the CIPR
  • There was generally a lack of critical thinking and what-if scenario planning at the banks involved. On the one hand some of the most numerate people I have known come from an investment banking background. On the other hand investment models are often kludged together with massive Excel spreadsheets and macros – which I imagine plays hell with trying to get a helicopter view of an institution’s financial position
  • The key problem was one of timing, with investors essentially continually betting on black until the roulette wheel swung in their favour. They had no sense of the when beyond a vague ‘soon’

Zuckerman managed to make the subject matter accessible and understandable. One gets the sense that Paulson was fortunate rather than immensely talented as there didn’t seem to be a lot separating him from other people making the same bet until he rolled the dice one last time.