Throwback gadget: shareware

Back before the internet became ubiquitous, software was distributed by bulletin boards. It was expensive to dial into a board, so magazines uses to have storage media pre-loaded with applications on the front of them.

For much of the late 1990s and early 2000s my parents used to use MacFormat magazine CDs and floppy disks as coffee coasters. One disk may come with bloatware such as the installation software for AOL, Demon or Claranet. The other disk would be full of free or paid for software.

The paid for software was often written by a single developer. It was a labour of love / cottage industry hybrid. Often the developers wrote the software to deal with a real need that they had, it was then passed on as they thought others would benefit as well.

Open source software the way we understand it now was only in its infancy in terms of public awareness. Packaged software was big money. As recent as 2000, Microsoft Office for the Mac would have cost you £235. Quark Xpress – the Adobe Indesign of its day would have cost in the region of £700+ VAT.

Into the gap sprung two types of software: freeware and shareware.

Freeware was usually provided as is, there was little expectation of application support. It would become orphaned when the developer moved on to other things

ChocoFlop Shareware Style

 

Shareware usually had different mechanisms to allow you to try it, if you could see the benefit then you paid a fee. This unlocked new features, or got rid of nag screens (like the one from image editing app Chocoflop).

In return you also got support if there was any problems with the app. Shareware hasn’t died out, but has become less visible in the world of app stores. One that I have been using on and off for over 20 years is GraphicConvertor by Lemke Software. It handles any kind of arcane graphic file you can throw at it and converts it into something useable.

Kagi Software were one of the first people to provide programmers with a way of handling payments and software activation. Kagi provided an onscreen form to fill out, print, and mail along with their payment. it was pre-internet e-commerce.

I can’t remember exactly what utility programme I first bought for my college PowerBook, but I do remember that I sent the printed form and cheque to a developer in Glasgow. I got a letter back with an activation code and a postcard (I’ve now lost) from the Kelvingrove Art Gallery and Museum.

Later on, Kagi were one of the first online payment processors.

From the late 1990s FTP sites and the likes of download.com began to replace the magazine disk mount covers. Last year Kagi died, making life a little more difficult for the worldwide cottage industry of small software developers. it was inconvenient, but now with PayPal developers have an easy way to process payments and there are various key management options.

It’s time that we talk about micro-influencers

Much of the social marketing today for consumer brand is done through what is called influencer marketing. For a number of these influencers who have a large social following, working with brand has become very lucrative. But one of the hottest tickets at the moment within communications agencies are ‘micro-influencers’; Edelman Digital lists it as a key area in Digital Trends Report . There is widely cited research by Marketly that claims there is an engagement ceiling (at least on Instagram). Once a follower count gets beyond that, engagement rates decline. This micro-influencer sweet spot is apparently 1,000 – 100,000 followers.

What are micro-influencers?

Brown & Fiorella (2013) described micro influencers

Adequately identifying prospective customers, and further segmenting them based on situations and situational factors enables us to identify the people and businesses – or technologies an channels that are closest to them in each scenario. We call these micro-influencers and see them as the business’s opportunity to exert true influence over the customer’s decision-making process as opposed to macro-influencers who simply broadcast to a wider, more general audience.

Brown & Fiorella wanted to focus on formal prospect detail capture and conversion. It sounds like an adjunct to integrating marketing automation from the likes of Hubspot and Marketo into a public relations campaign.

This approach is more likely to work in certain circumstances:

  • Low barrier to conversion (e-tailing)
  • Business-to-business marketing – for instance Quocirca did some interesting research back in 2006 that showed endorsements by a finance directors peers at other companies was likely to have a positive effect on a prospective supplier

Brown & Fiorella’s thinking tends to fall down, when you deploy their approach to:

  • Consumer marketing
  • Mature product sectors
  • Mature brands

Brand preference and purchase is much more dependent on reach and repetition to build familiarity and being ‘top-of-mind’ as a product.

Most money in influence marketing is spent in the consumer space as B2B marketing tends to struggle with:

  • Reach
  • Volume of conversation interaction

(At least outside of the US).

Brown and Fiorella are 180 degrees away from the approach of consumer marketing maven Byron Sharp and his ‘smart’ mass marketing approach. This means that PR and social agencies are often out-of-step with the thinking of marketing clients, their media planners and other agency partners.

Engagement matters less than reach or repetition of brand message for mature sectors or brands. For many consumer brands the drop off in engagement amongst macro-influencers is a non-issue, a red herring.

The only part of the engagement measure that I would be concerned about in that case would be content propagation amongst my defined target audience – how widely had it been repeatedly shared as this would affect total reach.

If the client and planner are using Sharp’s thinking then this audience would be wide, but a certain amount of the propagation would be wasted – for instance outside targeted geographies.

From the perspective of communications agencies I can understand the obsession with engagement being part of their DNA. These businesses are in the offline world are engagement agencies; whether its politicians, regulators, fashion stylists, movie set designers, editors, journalists, TV producers or DJs.

Why are micro-influencers a hot topic now?

The most obvious reason is that more popular ‘macro-influencers’ are well informed about their commercial value which has been driven up to a point where they look expensive in terms of cost, even if you charitably look at it on a ‘per follower’ basis.

On the supply side of the equation influencer representation benefit from having more ‘inventory’ that can be sold at various price points to marketers.

Challenges in influencer marketing

From a marketing perspective there are a number of issues in influencer marketing – these factors are either unknown data points or represent an issue with the brand experience

  • Quality of brand placement
  • Cost per reach
  • Consistency of reach (how confident is the media planner that the influencer will achieve a certain level of reach)
  • Message repetition amongst the audience that I want to reach

Which makes it harder to factor into an econometric model that would help justify the investment in influencer marketing as a contribution to sales.

Let’s have a look at data around a campaign for a smartphone manufacturer that has been touted as successful by the agency involved. We don’t know the cost as its likely to be client confidential.

  • 2 million YouTube views (we don’t know how many of these were driven by advertising)

  • 75,000 likes

  • 13,587,159 impressions driven by 6 influencers

  • 10,689 clicks from 90 posts

  • 10 million impressions for the promotion of a colour variant of the smartphone model and 92,320 engaged

  • 4.6% engagement rate (which we’re assured is 41% higher than the industry average for branded content)

What this doesn’t tell us:

  • Reach amongst target audience
  • Repetition amongst target audience

Which could then be used to provide an estimate of its contributory factor to sales if you had an econometrics model. You can’t access how it works next to other tactics and there are limited outtakes for the learning marketing organisation.

Quality of brand placement

Many brands have struggled to get their brand in the influencers content in a way that:

  • Represents it in a meaningful way (for example beyond unboxing videos, one smartphone looks rather like another)
  • Doesn’t feel ad-hoc or awkward

Some luxury brands have managed to get around this by keeping control of the content; a good example of this is De Grisogono – a family-run high jewellery and luxury watch brand. They work with fashion bloggers that meet their high standards and invite them to events. (It’s obviously an oversight on their part that I haven’t had an invite yet.)

De Grisogono provides them with high-quality photography of its pieces and the event. They get the best of both worlds: influencer marketing but with a high standard of brand presentation which raises the quality of the achieved reach.

There is a school of thought that micro-influencers will be easier to manage in order to assure quality of brand placement. However, micro-influencers are likely to be aspiring macro-influencers and each will have a clear line of demarcation in their own head that they won’t cross. The reality is one of complexity dependent on:

  • Brand power
  • Relationships
  • Credibility of proposed idea
  • Impact on aspirations – could they get more followers by taking a stand and strategically burning a brand?

Cost per reach

Influencers tend to talk about themselves in terms of the number of followers that they have. However many followers seldom engage with the influencers content. This happens for a number of reasons:

  • The follow button is often used as a book mark or a like button
  • Algorithmic changes to social platforms and the volume of the social firehouse itself drown out brands (and these influencers are all about the brand of ‘me’). Whatley and Manson’s research at Ogilvy on the decline of organic reach in Facebook pages  is worthwhile having a look at

Followers as a data point is not the straight analogue of reach that the industry and influencers would have you believe based on how they present their data.

Reach numbers that are presented are often not that much more useful:

follower

(Data via Golin, TapInfluence and Marriott)

Consistency of reach

So influencers may give us follower numbers or ‘total reach’ calculations but how do we know what reach their brand placement content is likely to achieve? At the moment, I don’t know how consistent influencers are, I have a ‘personal time’ data project currently in progress on it. More on that hopefully in a later post. There isn’t off-the-peg data that I know of, so I am pulling together a data set.

Message repetition

Until we understand the ‘quality of brand placement’ we wouldn’t be able to understand whether a piece of influencer content was a point of content delivery. We’d also need to know do audiences of influencer A also look at media channels or other influencers that we have in our overall media plan. There often isn’t an overall media plan and there often isn’t sufficient quality of audience data for influencers.

More information
Edelman Digital Trends Report – (PDF) makes some interesting reading
Instagram Marketing: Does Influencer Size Matter? | Markerly Blog
Influence Marketing: How to Create, Manage and Measure Brand Influencers in Social Media Marketing by Danny Brown & Sam Fiorella ISBN-13: 978-0789751041 (2013)
Facebook Zero: Considering Life After the Demise of Organic Reach

Jargon watch: lights out production lines

If you are of a certain age, ‘hand made by robots’ brings to mind the Fiat Strada / Ritmo a thirtysomething year old hatchback design that was built in a factory with a high degree of automation for the time.

Fiat subsidiary Comau created Robogate, a highly automated system that speeds up body assembly. Robogate was eventually replaced in 2000. The reality is that ‘hand made by robots’ had a liberal amount of creative licence. Also it didn’t enable Fiat to shake off its rust bucket image. Beneath the skin, the car was essentially a Fiat 127. Car factories still aren’t fully automated.

Foxconn is looking to automate its own production lines and create products that truly are ‘hand-built by robots’. Like Fiat it has its own robots firm which is manufacturing 10,000 robots per year.

Foxconn has so far focused on production lines for larger product final assembly (like televisions) and workflow on automated machine lines: many consumer products use CNC (computer numeric control) machines. That’s how Apple iPhone and Macs chassis’ are made. These totally automated lines are called ‘lights out production lines’ by Foxconn.

Foxconn is looking to automate production because China is undergoing a labour shortfall as the population getting older. Foxconn uses a lot of manual workers for final assembly of devices Apple’s iPhone because the components are tightly packed together. It will be a while before Foxconn manages to automate this as robotic motor control isn’t fine enough to achieve this yet.

More information
Foxconn boosting automated production in China | DigiTimes – (paywall)

Belated Christmas Gift: updated set of marketing data slides

I started pulling together and publishing different data sets focused on online marketing from social platforms to the size of mobile screens. I think that it might be useful for strategists and planners. Feel free to use. If you do find them useful drop me a note. You can scroll through the embedded version below and download the PowerPoint version here.

Opportunities for PR and brand communications from 2017 onwards

2016 has been a watershed year in the western world. Political forces that were simmering, but previously untapped manifested themselves in populist victories. Political norms that were common currency for the past two decades have been brought into question and there will be societal impacts and changes in consumer tastes.

Businesses are being buffeted by these changes. In the case of the UK; supply chains will be re-engineered over the next two years to address the country’s departure from the European economic bloc. Most companies that I have spoken to are working on the assumption of the hardest Brexit:

  • No trade agreement with the EU
  • No customs union with the EU
  • No passporting for services such as banking
  • No agreement on storage of EU or US personal data in the UK
  • No free movement of EU talent
  • Problems with the WTO as countries look to settle scores like ownership of the Falkland Islands and Gibraltar

This presents communications teams with opportunities and challenges:

  • There will be new regulatory and legal environments for companies to navigate
  • Corporate and social responsibility programmes will need to be recalibrated
  • There will be change management as jobs are moved abroad and facilities closed
  • Brands will have to work smarter with less
  • Consumer data based systems will need to be redesigned to meet the new legal and country boundaries imposed upon it
  • UK businesses will need to prepare for permanent handicap on their profits

There is also a wave of change for consumer businesses. Whole categories of products – carbonated drinks, cereals and spreads are losing market share to substitute products. This is hitting the large FMCG (fast-moving consumer goods) brands including:

  • Unilever
  • Coca-Cola
  • General Mills
  • Nestle
  • Kelloggs

Consumer brands have looked to counteract this in a number of ways:

  • Putting their spend where it will do the best work by using zero-based budgeting (ZBB)
  • Restructuring brand architectures – moving away from preventing brand damage through brand extension to brand consolidation to maximise the benefit of marketing spend. Coca-Cola is a prime example of this
  • Brand architecture will create a tension in the organisation. On the one hand the societal norm will be for local brands rather than global, on the other you have the corporate desire to cut and simplify to maintain margins. Whilst some companies may kill brands, others may sell them on to local companies, which will then try to squeeze as much value out of the brand equity as they can
  • Move away from micro-targeting to ‘smart’ mass-marketing – the key exponent of this is Byron Sharp at the Ehrenberg-Bass Institute at the University of South Australia

Opportunities in terms of new products that communications agencies can offer

  • Internal communications programme – site shutdown or company shutdown as a product
  • CSR audit as product
  • CRM (customer relationship management) audit as product

Focus on clients based on their strategic intent if they are implementing ZBB, here’s a quick guide I did earlier this year.

Businesses have six paths to growth
Zero-Based Budgeting

Path versus agency discipline
Zero-Based Budgeting

If your client programme lies in parts of the spectrum where you won’t benefit, then as an agency you have a few choices:

  • Identify and grow your business within other brands of a clients business
  • Look at rivals for opportunities
  • Treat the current business as a cash cow

A second aspect of risk analysis is brand consolidation. There is not much that an agency can do with the change in brand architecture like Coca-Cola. The clients are likely to cut costs.

A clearer source of risk will be ‘local gems’ this is a consumer brand that is only sold in one country (it may be known under a different name in other countries). These brands are likely to be closed down or sold on, particularly if they are in declining growth sectors such as margarine spreads, cereals or carbonated drinks.

If you have only started planning about looking for replacement brands in your portfolio, it may already be too late. Best case scenario is that the brand is bought by a local FMCG company.

Looking at previous brand sales like Radion washing powder as an example the acquirers will not support it with significant marketing spend. Instead, they will look to maximise their investment by mining existing brand loyalty and awareness.  Depending on the product category and the target audience will depend on how fast inevitable brand decline will be.

Either way it is not a particularly attractive piece of business or large or medium-sized agencies. An incumbent agency will have to repitch for the work as it will fall outside the purview of existing contracts and business relationships.

Advertising agencies have a head start in terms of their planners having a clear grip on what Sharp’s concept of smart mass marketing means for their discipline. PR agencies need to articulate this and reflect it in their account planning. They are still struggling to get to grips with social and are championing concepts like ‘micro-influencers’; that don’t fit into Sharp’s world view. They are effectively burning client respect.

PR agencies need to think much more in terms of programme audience reach and repetition for audiences, rather than the current focus on influence.

2017: just where is it all going?

We are entering a period of turbulence in much of the world and I suspect that there are going to be more changes over the coming years.

Smart watches still won’t be as big as fitness trackers. Fitness trackers will peak.

  • Smart watches are struggling for a reason to purchase. Apple’s Watch 2 was the product that they should have realised the first time around. It was fixing the bugs in the first version. But there is still no reason to purchase
  • Android Wear supporters seem to have laid off on development. Huawei Watches are now available for half the list price. Lenovo has laid its Android Wear ambitions aside.
  • Fitness trackers seem to have done a very good job at reaching health fanatics. However the market will soon become driven by replacement devices. There is a constant tension between buying a cheap device which requires low amounts of purchase consideration versus moderately expensive devices that competes agains the smartphone doing the job. It is interesting that Jawbone could not find a buyer and Pebble was sold to Fitbit

If there is a common content format and a rise in content (beyond brand marketing) then VR could take off (and hammer TV sales in the process – at least in single user situations. I still think that VR googles could act as a TV substitute for single person households, shared living and student dorms. When content is time-shifted or binge streamed you can get by without a TV tuner.

The key driver would be the high cost of housing. If you are a hipster living in a small bedsit, having a large TV is a waste of your precious space.

The ‘next billion’ smartphone users in the developing world won’t get their handsets as fast as everyone thinks. Why?

  • Much of the supply will come from small no-name brands. These brands currently are on razor thin margins. Smartphone manufacturers are being shaken out
  • Razor thin margins are crushing key component manufacturers, those that are left will prioritise big customers first
  • The Hanjin Shipping meltdown will hit small suppliers with valuable cashflow tied up in containers that can’t move. Hanjin is expected to precipitate failure in other shipping businesses as the industry still has massive over-capacity and financial institutions will be less interested in helping out distressed businesses. Mearsk’s acquisition of Hamburg Sud is a further sign of this
  • Increasing nationalism in key markets like Indonesia and India is requiring local investment in production lines and component sourcing. This will take the focus away from addressing other markets and likely temporarily rise manufacturing costs
  • Declining economic outlook in mature markets including China, the US and EU will affect the capital available to fund speedy expansion

Leaks about Uber’s finances and rising interest rates are likely to drive increased scrutiny of Silicon Valley businesses. Uber’s finances sound eerily like the investment money pits prevalent.

Media investment is going to pour into the Alt-Right at a VC level. Its been a void that they’ve left up to now. Given that many of the markets that they’ve tried to disrupt are going nowhere, expect Breitbart and Co. to start seeing VC funded competition.

Working class truths, populism and dark futures

Following president Trump’s election and the British plebiscite on European Union membership there has been lots of hand wringing about workers who traditionally participated in legacy industries being outside society.
We won't pay for their crisis - Mancunian protest sticker
Here is what we have to deal with:

  • The ‘traditional’ jobs aren’t coming back
  • Middle-class roles are already being disrupted
  • There is a declining  return on investment in further education, yet lifelong learning is a compulsory requirement
  • Globalisation is working at an aggregate level, but isn’t working at a local level
  • Western society has fractured. It will become more fractious once the realisation takes hold that:
  1. It can’t be resolved by simple measures, populists might listen – but can’t solve anything. Jobs are governed by a multiple factors that affect both cost and demand considerations
  2. It can’t be solved in a relatively short time frame. You can’t build the necessary eco-system and supporting industries to bring the jobs back; even if the economics made sense
  3. Governments don’t have their hands on the levers of control, the best governments can do is actively manage decline. Technological disruption puts the levers of control with a smaller group of people
  4. There is a lack of willingness by those with the money and the power to solve it – primarily due to the pressures that drive their behaviour
  5. Existing social welfare safety nets aren’t sustainable

The realisation that populism doesn’t deliver is likely to cause a further visible outburst of anger. Which should be good news for the private security industry. This could result in civil or international conflict. It has already happened. Factors that contributed to the Arab spring and the Syrian civil war included a large under-employed population living in stagnant economic conditions with no hope in sight. This probably sounds familiar.

I am ruling out some sort of positive ‘black swan’ event which changes the game completely and provides meaningful work with great wages across societal boundaries. If I could reliably predict these, I would be writing this from my private Airbus A380.

Instead I can see four broad categories of outcomes, all of which are ugly:

  • Carry on – carrying on isn’t likely to be sustainable as societal pressures go to breaking point
  • Managed decline – from a rational point-of-view the most ‘possible’ solution. Unpalatable from a voter perspective. It begs the question at what point would the UK economy bottom out? Managed decline makes the most sense as an interim measure whilst a country works out what its new place in the world is and charts a path towards it based on careful strategic investments with limited capital
  • Massive investment – presents a number of challenges that make it nearly impossible for western countries. It would require a long term view – unlikely without consensus driven politics with a high level of comity, huge access to credit – again unlikely with highly indebted economy and a slowly declining credit rating like the UK. Would take too long to satisfy angry voters
  • Massive disruption – the dice is thrown in the air as society tears itself apart and the strong gain control – think China’s Cultural Revolution. Wages and worker rights may drop to make them more cost competitive for low skilled manufacturing allowing for an employed but disgruntled workforce. Power is unlikely to shift too much, the corresponding upheaval in population numbers may provide some supply side pressure on wages when its all over. In all likelihood, it would just reduce pressure for change, increased willingness to work together on a longer term solution, but not provide much medium term economic benefit

Disruption

Here is a chart of numerous successful business, some of them are over a century old. AT&T and Verizon can trace their history back to 1877 and the Bell Telephone Company set up by Alexander Graham Bell’s father-in-law. General Electric goes back to work by Thomas Edison in 1880. These companies took from 117 – 137 years to become $200 billion businesses. Facebook took ten years requiring only 3% of the people AT&T needed.

It would be reasonable to assume that the future is going to create less jobs with given investments rather than more.

Company #Employees Year its market capitalisation became US$200 billion
Facebook 9,199 2014
Microsoft 27,000 1998
Apple 46,600 2010
Alphabet (Google) 46,600 2012
Amazon 165,000 2015
Verizon 176,800 2014
General Electric 239,000 1997
AT&T 302,000 2007

So large private enterprises will:

  • Employ less people which means less ancillary demand for services in the locale. Less restaurants, shops, artisanal coffee shops, micro breweries, nail bars, car valets, hotels and hair salons
  • Employ even less unskilled people – what unskilled labour is required will be employed on a flexible basis. Their roles will be competing on ‘total price’ with a global workforce and robotics

This hypothesis is supported by data from the MIT Technology review which showed that modern US manufacturing managed to increase productivity by 250% whilst reducing staff numbers by over 40%.

Win-Win to Winner Takes All

Technological progress and globalisation has resulted in a decline in the middle class in western countries. Pew Research claims that the US middle class declined from 61 per cent of the population in 1970 to 50 per cent by 2015.

Corresponding average ‘real wages’ for US ‘good producing’ workers peaked by the mid-1970s and have been broadly stagnant since. A pattern mirrored in other developed economies. Hong Kong saw a similar peak from 1967 riots through to the early 1990s until factories moved across the border.

Manufacturing productivity had grown steadily over that time. You can argue over the data points but the overall trend seems to hold true.

Owners of capital have enjoyed increased returns versus the providers of labour. Knowledge work, a key part of middle class roles could be easier to export than production lines. A classic example is the bank back office roles that have been exported to India.

Supply chain

At the moment UK manufacturing jobs operate as part of a complex supply chain that primarily addresses the European Union as a market. The supply chain is built around a number of factors:

  • The value of the product
  • The weight of the product
  • The volume of the product
  • The cost of shipping versus the cost of production
  • How well the product travels
  • Distribution of product demand
  • Proximity to suppliers
  • Proximity to talent

This is why companies may package a product in one country and manufacturer in others. Washing powder is a classic example of this. Chocolate travels well, so Cadbury could move production lines of internationally popular products to Poland. There is a greater incentive to move low skilled work out of areas that aren’t geographically central to a given supply chain.  European freedom of movement may have kept jobs in the UK by allowing low and semi-skilled workers to move rather than the factories. This would be of little consolation to UK workers, but would benefit UK tax coffers.

This complex formula is the reason why jobs move in and out of the UK.

Cutting the UK out of this supply chain with a hard Brexit ensures that suppliers have to make complex choices. BMW will probably be wondering what UK presence it needs to maintain in order to keep the Mini brand values. It may decide its easier to evolve the quirky Britishness out of the brand over time and just keep it quirky. The Audi TT hasn’t been harmed by actually being assembled in Hungary.

The majority of components in the supply chain for the Mini production line is based in Germany.

A post-Brexit UK could be in the position of importing more rather than less products once companies take into account the bigger picture of the supply chains and the EU single market.

Role of eco-systems

Richard Florida is a Canadian professor who has spent much of his time looking at urban studies from the perspective of prosperity. He is known for is work around the creative class and urban regeneration (or gentrification). His work is controversial. One key concept he has of relevance to working-class communities is one of ‘clusters’ where eco-systems exist.  When you apply it to traditional working class industries one can see how the jobs aren’t just going to come back. The UK has a series of traditional clusters that are in overall decline, this is best illustrated by the state of chemical, oil refinery and coal sectors which underpin a wide range of manufacturing industries.

Where new clusters spring up (Silicon Roundabout and the FinTech businesses within the Square Mile) they create employment that much of the UK population is ill-equipped to fulfil.

Let’s look in greater depth at traditional manufacturing industries.

Factories build on suppliers, who build on raw materials processors, who build on utilities and extractive industries. Take for example industrial revolution era Stoke-on-Trent which was close to high quality clay pits and coal that could be cheaply shipped in from mines in Lancashire or South Yorkshire.

Unfortunately for Stoke-on-Trent; clay is readily available around the world, opening up the possibility of production in areas with cheap labour. Automation raised the quality of production and fashion can quickly dictate whether an ‘area’ brand is in demand.

If we look at the industrial landscape of the United Kingdom, the manufacturing industry has been hollowed away during the 1980s and 1990s. The UK lost 18% of its manufacturing capacity in the space of 18 months during the conservative government of Margaret Thatcher.

There has been a corresponding (likely terminal) decline in the necessary facilities to support an industrial economy. Now let’s look in-depth at three essential types of facilities that underpin manufacturing:

  • Oil refineries
  • Coal mines
  • Chemical plants

This base of the UK industrial eco-system is running on ‘life support’ in critical areas.

I was fortunate to have a great science teacher at school, he once said to me that you could measure the size and health of an industrial economy by the amount of sulphuric and hydrochloric acid it manufactured and consumed. In order to manufacture hydrochloric acid you need a chlorine gas plant – neither chemical is something you want to transport over long distances. The side effects of a leak would be catastrophic.

The UK currently has one plant to make chlorine gas that is government subsidised because there isn’t a sufficiently large industrial base to support continued profitable production. What industrial capacity is in the UK is perilously close to being snuffed out.

What is left of the UK chemical industry has consolidated in the North East of England Process Industry Cluster (NEEPIC). Some of the products created are intermediary chemicals for use elsewhere in the European Union. Brexit is likely to have a disruptive effect on some of these manufacturers. The cluster is a key reason why Nissan decided to build a manufacturing plant in Sunderland. NEEPIC is dependent on oil refining capacity for key chemical building blocks (feedstock).

Oil refineries are considered by the public as providers of petrol (gasoline), diesel and jet fuel. The reality is that they provide feedstock (chemical building blocks) for most things in everyday life:

  • Foods
  • Medicines (or we can go back to leeches and blood letting)
  • Paints (containers, large manufactured goods, civil engineering)
  • Plastics (the modern world as we know it) – structural plastics, coatings, fibres including clothing textiles

As I write this is, it is easier to look around my desk and count the products that don’t have an oil-derived input – one item, the desk itself which is unpainted. Though I would put good money on it that the trees it was made from were felled with petrol chain saw and transported on a diesel powered lorry to the saw mill.

Yet the UK has lost a huge amount of oil refining capacity. From 1974 – 2012 refining capacity almost halved from 148 million tonnes to 77 million tonnes (Energy Institute). This decline happened despite start of UK North sea oil production in 1975.

Peak production on North Sea oil occurring in 1985 and 1999 (two peaks due to technological innovation). There were 22 active oil refineries in 1974, at the time of writing there are now seven.

Part of this was driven by changing energy consumption such as the decline of home heating oil and more fuel efficient cars. But a good deal would be due to reduced ability to compete against foreign petro-chemical feedstocks and reduced industrial capacity.

Oil refining capacity has moved to closer to where the industry is.

Belgium and the Netherlands have oil refining capacity beyond their internal needs because of their ease of access to continental European markets. Germany as Europe’s industrial powerhouse has the largest refining capacity in the European Union – which matches its industrial economy.

Much of the capacity to provide chemical feedstocks for industrial use has moved to the Far East; notably Singapore, Japan, Korea, Jamnagar in India and China. Overall industrial production has moved to East and Southeast Asia.

Coal production in the UK is roughly 10 percent of what it was in 1980. There are no deep coal mines active in the UK, only a handful of open cast mines. Coal is not only useful as a fuel but also a alternative supplier of feedstock for a diverse range of products including fertilisers, plastics and medicines. Even if coal comes back to prominence as oil reserves run out it would take a lot of effort to get UK production going again – perhaps too much effort.

Managed decline

The purpose of managed decline would be to concentrate efforts where they can make the most impact. London would draw in more people from the hinterlands. Cities like Liverpool would continue to decline in population. Low quality housing (think trailer parks or shanty towns) would cater for the internally displaced workers and there would be a likely increase in casual or gig economy roles.

So what would managed decline look like? We have a clue from government discussions after the 1981 Toxteth riots. Lord Geoffrey Howe wrote a letter which was considered too controversial at the time

“I fear that Merseyside is going to be much the hardest nut to crack,”

“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.”

Howe realised that even discussing the concept at the time would be explosive.

In practical terms, it would mean:

  • Re-centralising government departments
  • Not spending on infrastructure beyond critical maintenance
  • Rationalising government support infrastructure: police, hospitals, social services
  • Re-zoning areas from a planning perspective to encourage development only in future clusters
  • Allowing local government to go into bankruptcy protection and under go US-style emergency management
  • Once population decline hits a critical mass, turning off the last services, rather like the city of Detroit has done
  • Focus infrastructure investment on ‘clusters’
  • Connecting benefits to re-location

This process would then give time for western countries; in particular the UK, to re-invent themselves and think about their economic purpose in the world beyond consumption.

The Chinese government have already started on this process whilst their economy is still in a high state of growth – looking to move up the manufacturing value chain, moving into the professional and financial services sectors that the west currently occupy. On the flip side they have not flinched from closing down excess capacity in the steel industry and low value industries. This is causing economic hardship amongst unskilled workers in Guongzhou and the steel towns of Hubei province.

Former clothing factories are being bulldozed to make way for corporate campuses. Small electronics factories in Shenzhen are making way for a financial services centre including a stock exchange.

If one thinks about the Chinese experience and their migration to higher value work, where would the UK go next?

More information
The Current Moment | Poverty, Inequality and Productivity
Manufacturing Jobs Aren’t Coming Back | MIT Technology Review
The American Middle Class Is Losing Ground | Pew Research Center
Toxteth riots: Howe proposed ‘managed decline’ for city | BBC
Detroit’s Least Bad Option | The New Republic

Idea generation

I’ve found myself using paper much more for ideation. A project that I am currently working on uses a triage board on a wall and tasks that are moved across it on Post-It notes.
Untitled
I have technology up the wazoo but artefacts work better. I love this book I was given for ideation; a mix of post-it notes that work in interesting ways.

Oprah time: Democracy in Decline by Philip Kotler

When I was in college Philip Kotler was a constant part of my life. His Principles of Marketing was a core text for my degree. It is a bit weird reading another book by Professor Kotler; especially one on such a dramatically different topic.
Democracy in Decline
In Democracy in Decline Kotler addresses what are commonly cited as weaknesses in the political system of the United States. He provides an easy to understand guide to the US political system.  Kotler then gets into what he identifies as the key points of failure in the American political system.

  1. Low voter literacy, turnout and engagement
  2. Shortage of highly qualified and visionary candidates
  3. Blind belief in American exceptionalism
  4. Growing public antipathy towards government
  5. Two-party gridlock preventing needed legislation
  6. Growing role of money in politics
  7. Gerrymandering empowering incumbents to get re-elected forever
  8. Caucuses and primaries leading candidates to adopt more extreme positions
  9. Continuous conflict between the President and Congress
  10. Continuous conflict between the federal and state governments
  11. The supreme court’s readiness to revise legislative actions
  12. The difficulty of passing new amendments
  13. The difficulty of developing a sound foreign policy
  14. Making government agencies more accountable

Kotler’s viewpoint is unashamedly liberal and supportive of collegiate rivalry underpinned by compromise in politics. The White House he envisions is more like the Barlett administration in The West Wing or Star Trek’s United Federation of Planets rather than Hilary Clinton. The flaws he has identified are so big in scale that they would likely require a major re-engineering of American society. From the electoral system, the relationship between federal and state government, public policy and public service.

That kind of re-engineering would require widespread societal approval. That wouldn’t happen in the riven, polarised society of America today. The books measures would be completely against the interests of the conservative movement.

For the European reader, Kotler offers an interesting engaged analysis of the American condition, however there is little to no reflection on the commonalities of national populism in European politics. This book will only provide an understanding of the United States; and that’s ok.

Kotler has a sub-header in the tile of the book ‘Rebuilding the future’. In reality Kotler provides an effective diagnosis, but an not anything that points to an effective solution beyond hoping for the best.

Throwback gadget: Danger Hiptop

Years ago I read an article which talked about the collective memory of London’s financial district being about eight years or so. Financiers with beautifully crafted models in Excel would be doomed to make the same mistake as their predecessors.
Hiptop
Marketers make the same mistakes, not being able to draw on the lines of universal human behaviour when it meets technology. Today’s obsession with the ‘dark social’ of OTT messaging platforms is very reminiscent of the culture that grew up around the Danger Hiptop. The  Hiptop drove a use of instant messaging platforms (Yahoo!, Aol and MSN) in a similar way to today’s use of Kik, Facebook Messenger and WhatsApp by young people.

Heritage

Danger was started back in 1999, by veterans from Apple, Philips and WebTV.

Back then mobile data was very primitive, email was slow and the only people I knew who used mobile phones on a regular basis were press photographers, sending images back from early digital SLRs using a laptop connected up to their phone. At this time it was still sometimes easier to bike images over. 3G wireless was on the horizon, but there wasn’t a clear use case.

Apple was not the force it is now, but recovering from a near death experience. The iMac, blue and white G3 tower units and ‘Wall Street’ laptops reignited belief in core customers. Mac OSX Server 1.0 was released in March that year and pointed to the potential that future Macs would have.

WebTV at the time was a company that felt like it was at the apex of things. Before the internet took off, companies like Oracle and BT had tried providing interactive TV services including CD ROM type experiences and e-commerce in a walled garden environment. This was based on having a thin client connected to a TV as monitor. WebTV took that idea and built upon the internet of the mid-1990s. It wasn’t appreciated how commoditised the PC market would become over time. They were acquired by Microsoft in 1997,  later that year they would also buy Hotmail.

At the time, Philips was a force to be reckoned with in consumer electronics and product design. The company had a diverse portfolio of products and a reputation for unrewarded innovation including the compact cassette, interactive CD media and audio compact discs. Philips was the company that the Japanese wanted to beat and Samsung still made third-rate televisions.

Some of them were veterans of a failed start-up called General Magic that had spun out of Apple. A technology super-team of engineers and developers came up with a wireless communicator device that failed in the market place.  It’s name became a byword for a failed start-up years later.  Talent was no predictor of success. General Magic was the silicon valley equivalent of Manchester United getting relegated and going bankrupt in a single season. So it is understandable that they may have been leery of making yet another wireless device.

The device

The Hiptop was unapologetically a data first device. It was a thick device with a sliding screen which revealed a full keyboard and four-way directional button to move the cursor. On later devices this became a trackball. The screen was a then giant 240 x 160 pixels in size. It became available in colour during the device’s second iteration, later devices had a screen that was 854 pixels wide.

I was large enough provide a half decent browsing experience, read and write messages and email. It was held in landscape arrangement and the chunky frame worked well in a two handed hold not that different from a games console controller, with thumb based typing which worked better than the BlackBerry keyboard for me.  Early devices allowed you to move around the screen with four-way rocker switch. Later devices had a trackball. This keyboard rather than touchscreen orientation made sense for two reasons:

  • Touchscreen were much less responsive than they are now
  • It enabled quick fire communication in comparison to today’s virtual smartphone keyboard

Once the device went colour it also started to have LEDs that lit up for ringing and notifications, providing the kind of visual cues enjoyed by Palm and BlackBerry owners.

The Hiptop had a small (even by Symbian standards) amount of apps, but these were held in an app store. At the time, Symbian had signed apps as a precaution against malware, but you would usually download the apps from the maker’s website or the likes of download.com or TUCOWS and then side load on to the device from a Mac or PC.

The Hiptop didn’t need the mediation of a computer, in this respect it mirrored the smartphones of today.

Product life

When Danger was launched in 2002, carriers had much more sway over consumers. The user experience of devices was largely governed by carriers who usually made a mess of it. They decided what the default applications on a device and even the colour scheme of the default appearance theme.

Danger’s slow rise to popularity was because it had a limited amount of channels per market. In the UK it was only available via T-Mobile (now EE).

In the US, the Hiptop became a cult item primarily because IM had grown in the US in a similar way to SMS usage in Europe.

Many carriers viewed Hiptop as a competitor to BlackBerry and refused to carry it in case it would cannibalise sales.

Danger was acquired in 2008 and that is pretty much when the death of the Hiptop set in as Microsoft acquired the team to build something different. An incident with the Danger data centres losing consumers data and taking two months to restore full service from a month-old back-up didn’t help things. It was a forewarning of how dependent on cloud services that users would become.

Danger held much user data and functionality in the cloud, at the time it made sense as it kept the hardware cheaper. Danger devices came with a maximum of 2GB internal memory.

Even if Microsoft hadn’t acquired Danger it would have been challenged by the rise of both Android and iOS. Social platforms like Facebook would have offered both an opportunity and a challenge to existing messenger relationships. Finally the commoditisation of hardware would have made it harder for the Hiptop to differentiate on value for its millennial target market.

 

 

 

Oprah Time: The Three Body Problem by Cixin Liu

The Three Body Problem like all the best science fiction is multi-layered. It has a complex story which gradually weaves together a large set of characters across time as the story is told in a non-linear manner. It is also multi-layered in terms of genres:

  • It is a space opera as rich as Asimov’s Foundation books, except it is the aliens who will be doing the interstellar travel
  • It has a conspiracy at the heart of it that reminded me of James Bond novels and John Buchan’s The Thirty-Nine Steps
  • It is the tail of of hard-bitten detective work as if Raymond Chandler had been in Beijing; complete with film noir levels of smoking and drinking

But most interesting of all is the mirror it offers on the modern China from the cultural revolution onwards. Liu is unflinching in his depiction of Cultural Revolution excesses.

Like all good authors there are hints of Liu’s early life in a rural part of Henan province during the cultural revolution. He has managed to spin the complex web of a story. The Three Body Problem is the first book in a trilogy – I am looking forward to reading The Dark Forest – the second book.

Currently reading….

I have a couple of books on the go at the moment:

  • Smartphones and beyond: Lessons from the remarkable rise and fall of Symbian by David Wood. Wood was a senior executive at Psion and Symbian. A combination of an extensive email archive and electronic diary allowed him to produce a blow-by-blow account. Much of it is in the weeds, interesting, but tough to tease definitive answers out. I keep reading it in spurts and then going away. A more details review will come once I work my way through this.
  • The Three-Body Problem – Liu Cixin’s book has been applauded as a science fiction classic in both Chinese and Western circles. Liu has won a Hugo award for this book and is the recipient of the Galaxy award (China’s Hugo award, but with a better name) on nine occasions. I have just started on the book but it seems to have contrasting narratives, the first of which is a shocking portrayal of how intellectuals suffered during the cultural revolution. This is my go to book for commuting, expect a full review soon(ish).

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

The Brexit post (part 1)

Generally I find politics a bit too grubby and dirty for this blog and have only touched it when I absolutely, positively didn’t have a choice.

On June 23, 2016 the UK goes to the polls to vote on whether the country should stay in or leave the European Union.

Over the next few days I will be writing two posts (this is the first one). The first of which is about how it has all been presented. The second post will be a guide for my non-UK based friends on what the hell it all means.

Political marketing generally isn’t the most amazing work, though there have been iconic campaigns. Given the momentous decision ahead of voters you would think that there would be a creative advertising campaign.

The US has led the way in iconic political campaigns. My favourites being the ‘Daisy’ ad used by Lyndon B. Johnson against Barry Goldwater.

Ronald Reagan’s ‘It’s morning in America again’ which is curiously soothing yet exceptionally emotive

Barack Obama’s simple messages of ‘Hope’, ‘Change You Can Believe In’ and ‘Yes We Can’ together with a focus on repetition and reach brought out the vote in his favour.

The UK has come up with good campaigns too; the Saatchi brothers ‘Britain Isn’t Working’ that helped get Margaret Thatcher the first time around. Ironically the poster doesn’t contain real unemployed people, but 20 Conservative party members shot over and over again to create the ‘conga line’.
Labour isn't working
It is such an iconic poster that the Labour party still has to jump over the hurdle of proving it wrong 30 years after its publication.

By comparison Vote In’s adverts lack… creativity and any sort of emotion to pull the audience in. It is like they are selling machine parts to procurement professionals, not a life-changing decision.

Ryanair’s campaign discounted flights for expats to come back to the UK and vote to remain has more engaging creative. WTF.
ryanair

Vote Leave isn’t much better. Let’s start off with their domain strategy ‘voteleavetakecontrol.org’ – Google’s Adwords team must have been rubbing their hands with joy. For a campaign the ideal URL would have been voteleave.co.uk (which is a rick roll link) or brexit.com. According to redirect on brexit.com

www.Brexit.com & www.Brexit.co.uk were offered to the various national Out campaign groups for no charge.
After no contact was offered in response it is now up for sale.
£3500

School boy error. If you look at their content, they have managed to latch on to emotive themes, but the production values of the material look as it has been done by Dave in Doncaster who does wedding videos on the weekend.

And as we have less than a week to go to the polls the quality of the marketing isn’t likely to get any better.
Around London
In fact, the best piece of advertising for either side that I have seen was in Whitechapel. It is simple, snappy, emotive and likely done by an art student given the lack of declaration of campaign affiliation (i.e. a call to action to visit strongerin.co.uk or a claim that it was done on behalf of ‘Stronger In’ or ‘The In Campaign Limited’).

One last thought to ponder in this post

WPP in particular has a reputation for hiring marketing talent from political campaigns, and these people are sold on to clients as fresh thinkers and doers for their brands. Positive examples of this would be Obama campaign veterans Thomas Gensemer and Amy Gershkoff, or my old colleague Pat Ford who worked on Ronald Reagan’s campaign.

There will be marketers getting jobs with serious salaries on the back of this work and the designer of ‘Brits Don’t Quit’ will be working in an intern farm somewhere if they’re lucky. Life just isn’t fair.

More Information
Campaign on Labour Isn’t Working.
Ryanair’s EU referendum ad investigated by police | The Guardian – it might be illegal, but at least it has a pulse.
Thomas Gensemer LinkedIn profile
Amy Gershkoff LinkedIn profile
Patrick Ford LinkedIn profile