I’ve been a bit quiet

I’ve been a bit quiet due to work and life intervening.  Alongside my work in looking at strategy through a data-centric lens I have also taken on a content strategy role on a project.  This isn’t about:

  • Coming up with a few social ideas
  • Editorial direction

But a much wider approach that takes a systems approach to content. What it is, where should it be and how it should be refreshed. With this in in mind I can thoroughly recommend The Content Strategy Toolkit: Methods, Guidelines, and Templates for Getting Content Right by Meghan Casey.

Meghan also provides a set of downloadable template to make your life even easier. I found the book relatively easy to digest but still have it about as a reference book on my current project.

I can also recommend the current British Museum exhibition: The American Dream – pop to the present. I really liked the works from the NASA art programme by Robert Rauschenberg that celebrated the Apollo programme.

Every Day Carry (EDC): the digital edition

Every Day Carry (EDC) is a movement that’s sprung out over the past few years. It fetishes the artefacts of everyday life and often features over-engineered products.

It covers a wide range of analogue real world items that people (usually men) bring with them when they leave the house (and it might include a bag). There is a whole other post on why its real world products, but thats for another time.

If the concept of every day carry was brought over to the smartphone what would it look like?

What would be the ten must have apps on your phone beyond the default installed apps?

Mine, in no particular order:

  • Accuweather – pinpoint weather information that’s a step up from BBC weather or the default weather app on the iPhone
  • Buffer – app for social media publishing
  • CamScanner + – a document scanner for your iPhone
  • Citymapper – better for getting around London than Google (or Apple) Maps
  • Newsblur – a subscription based RSS reader by Samuel Clay. It learns what you like over time
  • Pinner – a client for Pinboard.in social bookmarking service
  • TravelWise Ireland – The Irish foreign ministry has an app providing background, safety information and emergency contact details for countries around the world

 

Richard Edelman is wrong, PR isn’t at a crossroads…

I recommend that readers check out Richard’s PR is at a Crossroads post. Edelman cites changes at PR agencies owned by marketing conglomerates as indicators. He thinks this due to a lack of confidence in the PR industry. There may be some truth in it; 2016 had the lowest annual growth in seven years for Edelman. As for the industry sitting at a crossroads, on the cusp of transformation. It is already being transformed.

Richard Edelman, head of Edelman PR

Public relations has already crossed the Rubicon. The Rubicon crossing happened years ago. Richard noticed the signs back in April 2011:

…as PR continues to expand, encompassing digital, research, media planning and content creation, should we consider rebranding ourselves as communications firms?

At the time the question was prompted from London colleagues. Richard disagreed with the premise.

By 2012 Edelman was in the AdAge Agency A-list in the US. In March 2015, Edelman’s boiler plate changed from:

Edelman is the world’s largest public relations firm…

to

Edelman is a leading global communications marketing firm

Edelman hasn’t been a PR agency for the past 2-5 years. The transformation in the industry has been going on for at least a decade.

Why this has happened is down to six factors:

  • Mature research and academic thinking on effective marketing
  • Technology-driven marketing strategy
  • CMO perspectives shaped by marketing thinking
  • Talent
  • Advertising changes
  • Media landscape changes

 

Mature research and academic thinking on effective marketing

Lets break things down a bit, some bits of PR are about the corporate parts of a company.
Corporate PR covers a large area including:

  • Public affairs
  • Educating investors
  • Shoring up shareholder confidence
  • Internal communications
  • Community affairs

Some corporate and social responsibility actitivities could fall under PR. When we’re talking about who is responsible for organisation moral purpose /meaning. This should come from the CEO down.

Thinking about marketing communications the situation changes a lot. It depends on the sector and the audience that you are communicating to. For consumer marketing; the role that PR plays as part is a subordinated part with the marketing mix. Byron Sharp’s works How Brands Grow (parts 1&2) outline PR’s small, but intricate role with clarity.

For mature consumer brands, engagement (and by extension PR) is less important. Instead the focus would be on efficient reach and frequency of repetition. Being top of mind is more important. The only way for marketing communications-orientated PR teams to grow their billings is service expansion.

Technology-driven marketing strategy

Many business-to-business marketers are using content marketing as a key channel. The content shaped by analysis from marketing automation software.

In marketing automation, strategy is outsourced. Rules embedded in the software platform dictate approach. PR becomes a source of content to feed the machine. The idea is to determine an effective approach. Then optimise to reduce the price of engagement over time. I could write a blog post or two about the problems with this approach, but it is tangental to PR. Content creation is an opportunity for PRs, all be it one with perpetually squeezed margins.

Mature research and academic thinking on effective marketing

In B2C marketing there are large research projects on what works. These include Ehrenberg-Bass Institute and the IPA. In marketing mature consumer brands, we know that reach, frequency and recency matters. Engagement is less important. Public relations then becomes an afterthought at best. Taking an integrated media planning led approach makes sense.

There isn’t a comparable set of research for the PR industry like IPA or Ehrenberg-Bass. Outside the US public relations generally doesn’t have budgets for tools and data. Clients tend to be more action-orientated. Media agencies tend to have the best insights – which aids planning and creative.

The benefits of an integrated advertising-led approach goes back decades. Edelman cites Y&R’s ‘whole egg’ concept. Dentsu’s ‘Cross Switch Marketing’ is similar with roots going back to the 1960s. The PR industry mistook integrated thinking for a primitive view of PR practice. The reality lies somewhere between communications myopia and macro marketing thinking.

From a CMO perspective

  • PR spend is a small part of their budget. It may not even sit in their budget if there is a CCO (chief communications officer) role in the company
  • PR isn’t supported by good quality secondary insights like the IPA or Ehrenberg-Bass
  • Advertising works
  • Advertising agencies foster high trust through visualisation of ideas backed by insights
  • Media relations is low cost, low efficiency but can be high engagement
  • Integrated simplifies the client/ agency dynamic (one ass to kick)
  • Successful integrated agency engagements. Examples include Red Fuse (Colgate), GTB (Ford, Purina) and TBWA Media Arts Lab (Apple)
  • The memory of Enfatico has disappeared

Talent

Edelman has done a better job than most agencies in getting digital and paid media talent. I’ve worked as an in-house marketer. I have worked as a PR person. I’ve also worked in PR agencies doing digital and paid media. I now work as a strategy director in a creative ad agency and the difference is huge.

For most specialists working in a PR agency can be thankless task:

  • PR agency leaders don’t get other disciplines. This is particularly true outside North America
  • I’ve worked with too many agency leaders who think digital is an infographic or a video
  • The briefing process in PR agencies is awful. ‘We’ve got a video, make it viral’ was the worst brief I had
  • Outside North America budgets are very tight
  • You can get better working conditions elsewhere. Tools, people you can learn from, research and ambience. Real conversation at a PR agency: “can you wear a shirt and suit?” “Why?” “We’d just like it” “Can I quadruple my day rate?” “No, why?” “That’s my inconvenience of wearing a suit fee”
  • PR agencies don’t win the awards that matter to us. PR publications wring their hands about the lack of PR wins at the Cannes Lions. This matters for your career

If you have capability built up in the ad agency, creative shop or media agency; use it. Publicis, WPP and Interpublic have deep expertise they can draw on. Publicis talks about this as ‘The Power of One’. It is much easier than recruiting more technical, creative and planning talent into a PR shop.

Advertising changes

As PR has changes so has advertising. There is a far greater understanding of what efficient and effective looks like. While I lament the the decline of advertising’s golden age; multichannel storytelling has improved. Advertising agencies have learned how to combine earned and paid media. Earned media is an incremental revenue increase.

By comparison creative represents a big budget bump for your PR agency. That causes the client to pause and think.

Media landscape changes

As advertising has changed so has the media landscape. The online environment is shaping out with two winners around the world. The pattern of online advertsing spend is clear. Everywhere outside China online advertising is static; only Facebook and Google see increases. In China, is is Tencent due to WeChat that wins. Sina benefits from Weibo. Baidu would have been an obvious winner due to it being a Google analogue. Instead Baidu’s earnings have been static.

This decline in media fortunes adversely affects editorial space. This impacts the efficiency of media relations. By some accounts in the UK there are now 3 PR people for every journalist. PR agencies need to expand beyond media relations. This means trying to get more involved in owned and paid media. The challenge is that advertising agencies are also in that space – extending their storytelling.

More information
PR not communications | 6am blog – yeah I called bullshit on this one. I could afford to be right; Richard had a global family business to defend
Whole Egg Theory Finally Fits The Bill For Y&R Clients: Global Agency Network Of The Year: Team Space System A Winner For Citibank, Others Set To Follow | AdvertisingAge
The Dentsu Way – a great book, right up there with Ogilvy on Advertising in my estimation

The crowdfunded product problem with PopSlate as an unfortunate case study

I’ve go in involved in a few crowdfunded products and some of them have worked out but the majority haven’t. The latest example was the high profile e-ink phone cover PopSlate. PopSlate got over $1 million dollars of funding and was widely covered by the media.

“popSLATE 2 is E-Ink for your iPhone done right.” – Slashgear

“It’s an evolution, not merely refinement.” – Wired

Generally I’ve found that they tend to fail for three (non-criminal) reasons:

  • They underestimated the cost or complexity for batch manufacture of items. They have problems with getting tooling moulds to work and have to go through iterations that burn up cash
  • They get gazzumped; their product is sufficiently easy to make that Chinese manufacturers who go through Indiegogo and Kickstarter for ideas get the product into market faster
  • The engineering is just too hard. This seems to have been the problem for PopSlate who couldn’t innovate and get their product into market as fast as new phones came out

On the face of it its a great idea, bringing the kind of dual screen technology to the iPhone that had been in the Yota phone for a number of years. Huawei had a similar snap-on e-ink back available for the the P9 handset in limited quantities.

popSLATE – The smart second screen on the back of your phone

PopSlate had already launched a mark I version of their product.  With the mark II version of their product PopSlate tried to do too much: they tried to make it a battery case but still ridiculously thin.  The following email was sent out on Saturday morning UK time:

Critical Company Update

This update provides serious and unwelcome news.

Based upon your support, we have spent the last year continuing to develop our vision for “always-on” mobile solutions. Our goal was to solve three fundamental issues with today’s smartphones: we wanted to simplify access to information, increase battery performance, and improve readability. Unfortunately, the significant development hurdles that we have encountered have completely depleted our finances, and we have been unable to raise additional funds in the current market. As a result, popSLATE does not have a viable business path forward.

This marks the end of a 5-year journey for our team, which started with a seed of an idea in 2012 and led to our quitting our jobs to start the company. Although we are very disappointed by the ultimate outcome and its implications for you as our backers, we are proud of our team, who worked tirelessly over the years to commercialize the first plastic ePaper display, globally ship thousands of popSLATE 1 devices as a first-in-category product, and re-imagine & further extend the platform with the second generation product. Despite a strong vision, high hopes, and very hard work, we find ourselves at the end of the journey.

We are out of money at this juncture for two key reasons. First, we have spent heavily into extensive development and preparation for manufacturing;  as you are aware, we hit some critical issues that multiplied the required spend, as described in previous updates.

Most recently, we learned that the fix for the Apple OTA issues would involve more significant redesign. While we initially suspected that the Lightning circuit was the culprit, it turned out that it was a much more fundamental issue.  Namely, our housing material is not compatible with Apple OTA requirements. You may think, “Wait, isn’t it just plastic?  Why would that be a problem?” While the housing is indeed largely plastic, we used a very special custom blend of materials that included glass fibers. The glass fibers were used to solve two issues, both of which were related to making the device super-thin: a) they enabled uniform, non-distortional cooling of the housing mold around our metal stiffener plate (the key component that makes popSLATE 2 thin but very strong) and b) they added tensile strength to the very compact form factor. Unfortunately, we have concluded that these added fibers are attenuating the RF signal and that we would have to spend additional cycles to tune a new blend with required modifications to the tooling. This is an expensive and timely process.

Second, we have been unsuccessful at raising additional financing, despite having vigorously pursued all available avenues since the close of our March Indiegogo campaign (including angels, VCs, Shark Tank and equity crowdfunding, both in the US and abroad). Many in our network of fellow hardware innovators have encountered this difficult new reality. You may have also seen the very public financial struggles of big-name consumer hardware companies—GoPro, Fitbit, Pebble, Nest and others—as highlighted in this recent New York Times article [link]. The most dramatic example of this phenomenon is the recent and sudden shutting down of Pebble, paragon of past crowdfunding success.

There is no way to sugarcoat what this all means:

  • popSLATE has entered into the legal process for dissolution of the company
  • Your popSLATE 2 will not be fulfilled
  • There is no money available for refunds
  • This will be our final update

While this is a very tough moment professionally and emotionally for us, it is obviously extremely disappointing for all of you who had believed in the popSLATE vision. Many of you have been with us since the March campaign, and a smaller set helped found the popSLATE community back in 2012. To you—our family, friends, and other unwavering backers—we are incredibly grateful for your enthusiasm, ideas, and support throughout the years. Just as importantly,  we deeply regret letting you down and not being able to deliver on our promise to you. We truly wish there were a viable path forward for product fulfillment and the broader popSLATE vision, but sadly we have exhausted all available options.

Sincerely yours,
Yashar & Greg
Co-founders, popSLATE

The problem as a consumer you have for much of these gadget is this:

If a product can be easily made in Shenzhen, it will be so you should be able to get it cheaper on lightinthebox or similar sites

If it can’t be turned out in a reasonable time, it has a low likelihood of succeeding

There have been successes of more hobby based products; I have a replica of Roland’s TB-303 synthesiser. It’s the kind of product that can be assembled whilst not relying a China-based supply chain. It also is based on well understood technology and there weren’t issues of with designing for very tight places or Apple’s requirements (in the case of iPhone’s accessories).

What about the poster child of Pebble? Pebble managed to go for longer with a sophisticated product but couldn’t withstand the gravity of declining sales in the wearables sector.

The mobile and telecoms industry and it’s progress

Just over 11 years ago I watched Charles Dunstone talk about Carphone Warehouse and the state of the industry at the LSE.

Sir Charles Dunstone at Huawei Ascend P6 launch

I came across the post by accident the other evening and wondered how well Dunstone’s view held up over the past decade or so.

On VoIP (voice over Internet Protocol)…

I think that the difference between Europe (particularly the UK) and the US is that VoIP will be very big in businesses, in residential homes you can’t have broadband without having an exchange line: that’s the way the regulator has decided it wanted to make sure that BT can make a living. If you’ve got broadband, if if you don’t want it, if you pick your phone up you’re going to get a dial tone that you can make a phone call from. Once you’ve got broadband unbundling, once you’ve got a connection from the exchange to the home it doesn’t cost you anything to connect a call whether its over broadband or you pick the normal phone up.

So suddenly a normal phone has the exact same economics as Skype, so I think what will happen, what you will see people like us do is offer VoIP-priced services on your normal phone at home without you having to put a headset in your PC or mess around and do all that kind of stuff. There are some people who will find reasons to do it and things that they want to do within it. The majority of people with a fixed-line are people with a family, over 30 years old, 50 per cent of it is there home alarm and ring people, 50 per cent of it is that they want to be able to ring the fire brigade if the house catches fire in the middle of the night. You won’t get them to use their mobile or use VoIP as they want to sit by their bed, get a dial tone and dial 999.

So I think in residential its not going to have a massive impact, in businesses its a different thing, with VoIP you can have multiple lines over one exchange line and that’s going to completely revolutionise business telephony.

Vonage is already more expensive than we are for your phone service and we’re not even using an unbundled broadband line on it. The economic difference is very different here than it is in the US.

Dunstone clearly didn’t have an idea about rise of wi-fi and devices using Skype as a client, though he clearly saw the business case of Skype for business. This made sense as by the late 1990s UK call centres were using VoIP complete with integration with customer records. Just under just over a year later 3 launched its dedicated Skype handset and Skype became available on the Symbian mobile operating system for download. There was resistance to OTT VoIP from T-Mobile in particular.

Now FaceTime, Skype, WeChat voice-and-video and Google Hangouts are ubiquitous. The voice call has been replaced by visual and text messaging on OTT services similar to the instant messaging clients of yore.

On where mobile phones are going…

I don’t have a clue where things will be in ten years. A few predictions on mobile phones, it is a unique device because the last 15 years have changed the world, more than it had changed for 500 years before that. 15 years ago, no one left their home without their money and their keys, now no one leaves home without their keys money and mobile phone and its taken a part in peoples lives that no other product has for hundreds and hundreds of years.

That relationship is so powerful that if a producer wants to gets content to you, they can guarantee it if they can get it to a mobile phone, so that’s why we see cameras, now everyone carries a camera and a mobile phone. Soon everyone will be an iPod and a camera and they’ll keep getting better and better. By next Christmas you’ll be able to buy cameras with flashes, zoom all this kind of stuff. I think that video is going on mobile phones, I think that payment is coming, payment systems is coming onto them and Carphone Warehouse is the largest retailer of digital cameras in the UK by accident. We didn’t mean to sell one of them, they just come in the products that we sell as standard and its just that everyone else’s business is morphing into ours because of the unique relationship the product has.

My final prediction on phones on the next year to two is that fashion is about to become a big thing in phones, at the moment they are driven by technology. We had an extraordinary experience this Christmas with a pink V3 we brought out. We’ve done some analysis that absolutely blew us a way, you’re starting to see the manufacturers talk to the big brands about putting things into phones and people spend stupid money on pens and watches and shoes and clothes. I think that all that madness is also going to end up in mobile phones as its such a public personal accessory.

Dunstone smartly limited his predictions to the next few years rather than looking forward a decade and his view of the camera as a key function driving purchase is still proved right. At the moment the intra-Android handset feature battle on premium handsets is fought on camera technology. Huawei and its Leica partnership, LG and Samsung with their respective double cameras and Sony with their powerful sensors.

The iPhone 7 is also sold in a similar way as Apple’s Shot on an iPhone marketing campaign shows.

Dunstone also saw the smartphone as a media device and for many years  content has been side loaded on to phones. Sony Ericsson had launched the Walkman-braned W800 the previous year. As SD card capacity increased, it wasn’t too much of a leap to assume that the mobile phone could replace lower end flash memory MP3 devices.

Nokia would be launching its multimedia focused N-series phones just a month after this talk. I remember seeing Christian Lindholm in the lift at Yahoo! with a Nokia N93. The phone looked like a chimera between a flip phone and camcorder.

Ten years later and video recording and editing technology is available across both Android and iOS handsets. One of the last projects I was involved in at Yahoo! was co-launching the N73 with Nokia which featured the Flickr photo app on the phone as standard. 11 years later and my iPhone still has flickr on it.

Dunstone believed that the phone would become a fashion item. At the time LG had partnered with Prada.  Vertu had been established seven years previously by Nokia. Today premium handsets have established themselves as as fashion items. TAG Heuer has experimented with its own smartphone, Porsche Design worked with BlackBerry.

On the flip side smartphones have become commoditised; Android manufacturers have seen their margins hollowed out. Huawei made a big push into the premium space with its P series phones yet sees declining handset prices as the medium tier handset segment eats into premium sector sales.

Dunstone’s predictions about mobile payments were too optimistic. There were various technology options explored by mobile carriers. Handset mobile payments did take-off in Japan. SMS based payments took off in East Africa. Smartphone hosted wallets have developed slowly however. Card payments are still pre-eminent in the western world at the moment.

On the competiton…

I’ve basically got two types of competition: people like Phones4U and The Link who are trying to do what we do and we just get up early and try and do it better and try and beat them up every day. And we have a team, we meet at 8 am every single morning and look at everybody else’s prices and reprice based on what happened that day its that brutal. We fight, fight, fight.

My other competition is the network stores which is a combination of wanting to have some direct impact with customers and a certain amount of vanity about wanting their brand on the hight street. They don’t compete with us in terms of the volumes of sales that they do, as the market gets more fragmented I think that its less likely that the customer is going to say I just want to go and see the world according to Orange today, rather than even going to one of my normal competitors. In reality it will be let me go and compare Orange with everybody. I think that its going to change but there’s not a very strong economic rationale for them in the first place.

Dunstone didn’t seem to realise how precarious the independent mobile phone shop was as a business. Network shops are now showrooms and service centres for when things go wrong as consumers go to the web. Carphone Warehouse adapted by becoming a triple play carrier in its own right as well as selling other networks mobile plans. Dunstone’s peer John Caudwell had the good sense / luck to sell Phones4U on to private equity providers just six months after this interview.

The mobile carriers didn’t have it a lot easier; O2 was spun out of BT in 2002 and bought by Telefonica of Spain just prior to this interview. T-Mobile and Orange merged their UK operations to form EE. EE was then acquired by BT, some 12 years after BT had spun out O2. 3UK has made an unsuccessful bid for O2, the UK competition authority shut the bid down.

On the transition of phones to computers…

Absolutely they’re changing into computers, they start to have bugs, they start to have all kinds of usability issues. Our job is very simple and I think the worst thing that could have happened for me is that there could have been one mobile phone network and one really simple phone and the people understand it so that they did not need anyone to help them set it up and work out which one to buy. So we absolutely love complex markets as this gives us something to offer and something to do we have to keep changing. I just watch in delight as Microsoft come into the marketplace because that’s not going to work is it? Its going to have lots of bugs and crash and do all these sorts of things that needs tons of support. Lots of competing systems Symbian and others, so its another level of complexity alongside all the complexity of the operators, all the complexity of the tarrifs – Bring it on.

Dunstone realised that smartphones would bring complexity to the mobile phone industry. He seemed to think it would be closer to the PC industry in terms of complexity. He saw what I suspect was a different opportunity in that – particularly building client relationships. In retrospect, he underestimated this disruption.

More information
Dunstone on…. | renaissance chambara
Nokia debuts N series trio | The Register

Louis Vuitton, Supreme and the tangled relationship between streetwear and luxury brands

The recent collaboration between New York’s Supreme and Louis Vuitton seems like a natural fit.  The reality is that luxury and streetwear have been dancing around each other for a good while.

Snide started it all

Snide was slang in the 1980s for fake or counterfeit. Hip Hop and the Caribbean-influenced Buffalo movement in the UK each used counterfeit and real luxury in their own way.

Daniel Day, better known as Dapper Dan was a was a Harlem-based craftsman and business man who dressed a lot of New York based artists from the golden age of hip hop. Dan’s first hip hop client was LL Cool J back in 1985. Dan’s style was luxe, the finest silks and furs were standard issue – think Puff Daddy before Puff Daddy. They went for customised outfits with their branding on which Dan provided. As the scene took off Dan incorporated suit lining material (which replicated the likes of the Fendi, Bally  or MCM brands) and Gucci or Louis Vuitton branded vinyl to make one-off products.

He customised trainers, clothing and even car interiors. Dan’s own Jeep Wrangler had an interior retrimmed in MCM branded vinyl.

Much of the luxury branding Dan used was coming in from Korean factories which at that time supplied the fake trade. Now similar products would have come out of China. I took a trip to the South China City complex in 2010 where fabric suppliers would offer Louis Vuitton labels and Supreme tags side-by-side.  I can only imagine that the Korean suppliers of the 1980s  had similar markets in textile industry centres like Deagu. Outside of hip hop, Dan was the go-to tailor for all the hustlers in Harlem – so you can see how he could have got the hook-up into the counterfeit suppliers.

At the time hip hop culture was not in a relationship with brands who where concerned about how it might affect them. LL Cool J was the first artist to get a deal with Le Coq Sportif. Run DMC got a long term deal with Adidas after their single ‘My Adidas’ became successful. But these were the exceptions to the rule.  So with Dan’s help they co-opted the brands to try and demonstrate success.

Over in the UK, the Buffalo collective of stylists, artists and photographers including Ray Petri, Jamie Morgan, Barry Kamen (who modelled for Petri), Mark Lebon and Cameron McVey. Buffalo was known as an attitude, which threw contrasting styles together and filtered into fashion shoots and influenced the collections of major designers including Yohji Yamamoto, Jean Paul Gaultier and Comme des Garçons. Even if you didn’t know what Buffalo was, you would have recognised the aesthetic from the likes of i-D, Blitz, New Musical Express and Arena. 

Buffalo mixed Armani jackets with Doctor Martens work boots, or a Puma bobble hat. Petri used music to sound track his process and this was pretty similar to the kind of stuff that influenced street wear pioneer Shawn Stussy over in California. Motown and hip-hop to dub reggae was the sound which explains the Feeling Irie t-shirts created by the white surfboard maker.

If you thought Bros looked cool in their MA-1 bomber jackets and stone washed Levi’s 501 jeans – there was a direct stylistic line back to Buffalo – rehabilitating the items from their link to skinhead culture.

Buffalo permeated into the street style of the decade; influencing the likes of Soul II Soul. Meanwhile over in Bristol The Wild Bunch were yet to morph into Massive Attack. Two members headed to London; producer Nelle Hooper and Miles Johnson (aka DJ Milo who went on to work in New York and Japan). A shoot was organised by i-D magazine and they turned up wearing their street clothes alongside DJ Dave Dorrell and model / stylist Barnsley. At the time, it was considered to be ‘very Buffalo’ in feel, but Dave Dorrell admitted in an interview that they had just came as they were. Dorrell wore his t-shirt as ‘advertising’ for it.

buffalo

The Hermes t-shirt and belt were snide, the Chanel Number 5 t-shirt sported by Dave Dorrell were being knocked out by a group of friends. Young people in London co-opted brands just like the hip-hop artists heading to Dapper Dan’s in Harlem.

Homage

From 1980, surfer Shawn Stussy had been growing an clothing empire of what we would now recognise as streetwear. Stussy had originally came up with the t-shirts as an adjunct and advertisement of his main business – selling surfboards. But the clothing hit emerging culture: skating, punk, hip-hop and took on a life of its own. It went global through Stussy’s ‘tribe’ of friends that he made along the way.

Stussy is known for his eclectic influences and mixing media: old photographs alongside his own typography. In a way that was unheard of in brand circles at the time, Stussy manifested his brands in lots of different ways. The back to back SS logo inside a circle was a straight rip from Chanel; the repeating logo motif that appeared in other designs was a nod to MCM and Louis Vuitton.

All of this went into the cultural melting pot of world cities like Tokyo, New York, London and Los Angeles. Stussy went on to do collaborations from a specially designed party t-shirt for i-D magazine’s birthday party to the cover art of Malcolm Maclaren records. Collaboration with mundane and high-end brands is backed into streetwear’s DNA.

Coke Zero x Neighborhood limited edition cans

(Neighborhood x Coke Zero was something I was involved with during my time in Hong Kong.)

Japan with its engrained sense of quality and wabisabi took the Buffalo mix-and-match approach to the next level. Japan’s own streetwear labels like Visivim, Neighborhood, W-Taps, The Real McCoy and A Bathing Ape (BAPE) took streetwear product quality, exclusivity and price points into luxury brand territory. That didn’t stop BAPE from making a snide versions of various Rolex models under the ‘Bapex’ brand.

Bapex

Some two decades later Supreme came up in New York. The brand takes design appropriation and homage to a new level. Every piece Supreme seems to do is a reference to something else. The famous box logo rips from Barbara Kruger’s piece ‘I shop therefore I am’. From taking a snide swipe at consumerism to ending up in the belly of the beast took Supreme a relatively short time. This heritage of appropriation didn’t stop Supreme from using legal means against people it felt had appropriated its ‘look’.

In an ironic twist of fate, Supreme was sued by Louis Vuitton in 2000 and yet the 2017 collaboration looks exceptionally similar to the offending items…

The last time I shared this story the page was just at 2k followers. With the collaboration officially announced today- and the page having 40k more followers since then- I figure it’s time to re-share. The year was 2000, and a 6 year old Supreme took their hands at referencing a high fashion brand as they did early on (Burberry, Gucci,) this time with Louis Vuitton. Box Logo tees (and stickers), beanies, 5 panels, bucket hats, and skateboard decks all featured the Supreme Monogram logo (pictured right). Within two weeks, Vuitton sends in a cease and desist and apparently, ordered Supreme to burn the remaining available stock. Clearly, many of the products from 2000 are still in the resell market, circulating today. Now we arrive at today’s FW Louis Vuitton fashion show. As most everyone is aware by now, Supreme is in fact collaborating with the luxury brand for a July- into fall collection. I’ve seen quite a few pieces from the collaboration (20+, check @supreme__hustle @supreme_access and @supreme_leaks_news for more pics) and it’s panning out to be Supremes largest collaboration to date. It’s interesting to see the references of both brands within the collaboration- from old Dapper Dan bootleg Louis pieces, to authentic ones, to Supremes monogram box logo and skateboard desks (pictured left). 17 years later and @mrkimjones proves that time can mend all wounds (amongst other things). Excited to see what all will release alongside this legendary collaboration. #supremeforsale #supreme4sale

A photo posted by Supreme (@supreme_copies) on

The new customers

North East Asia’s fast growing economies had been borne out of learning from developed market expertise, state directed focus on exports and ruthless weeding out of weaker businesses. Intellectual property was cast aside at various points. Korea, Hong Kong, Japan and China went from making knock-off products to displacing Europe and the US as the leading luxury markets.

Asian luxury consumers, particularly those second generation rich in China were younger than the typical customer luxury brands cater too. These consumers bought product as they travelled taking in style influences as they went. First from nearby markets like Japan, Hong Kong and Singapore and then Korea. This drew from a melange of hip hop, streetwear, Buffalo styling and contemporary western designers like Vivienne Westwood – as well as the more matronly styles of the traditional European luxury houses.

The luxury brands had to adapt. They brought in new designers who themselves were drawing from similar influences.  These designers also collaborated with sportswear brands like Alexander McQueen and Puma or Jeremy Scott and Raf Simons for Adidas.

Luxury brands got seriously into new product categories making luxe versions of training shoes that could be charitably called a homage to the like of Nike’s Air Force 1.

Bringing things full circle

As the supreme_copies Instagram account notes the collaboration with Supreme and Louis Vuitton brings things full circle with the pieces having a nod to Dapper Dan’s custom work as well as Supreme’s own ‘homage’.  Luxury brand MCM (Michael Cromer München), which Dan borrowed from extensively in the 1980s was restructured in 1997 with shops and brand being sold separately. The brand was eventually acquired eight years later by the Korean Sungjoo Group. Korea now has its own fast developing luxury fashion and cosmetics brand industry. Textile city Deagu which was the likely source of Dapper Dan’s fabric is now a fashion and luxury business hub in its own right. The Korean entertainment industry is a trend setter throughout Asia. For instance, Hallyu drama My Love From A Star drove breakout sales for the Jimmy Choo ‘Abel’ shoe.

The only question I still have is why did a move like Louis Vuitton’s collaboration with Supreme take so long? The luxury brands spend a lot on customer insight, they were using social listening far longer than they had been on social media. They know that a customer wearing their jacket could have a Visivim backpack slung over the shoulder and a pair of Adidas Stan Smiths on their feet. Customers mix-and-match Buffalo style for all but the most formal occasions. For streetwear brands, collaboration is in their DNA and they get an additional leg-up in the quality stakes.

More information
Ray Petri
How Buffalo shaped the landscape of 80s fashion – Dazed
Dave Dorrell interview part one | Test Pressing
Dapper Dan
Barbara Kruger Responds to Supreme’s Lawsuit: ‘A Ridiculous Clusterf**k of Totally Uncool Jokers’ | Complex
Volume and wealth make Chinese millennials a lucrative target market: GfK | Luxury Daily
Just why are Louis Vuitton and other high-end retailers abandoning China? | South China Morning Post – although Chinese shoppers consumed 46 per cent of luxury goods around the world, their purchases in their home market accounted for only 10 per cent of global sales, falling from 11 per cent in 2012 and 13 per cent in 2013
How a Jimmy Choo Shoe Became a Global Best Seller – WSJ

Living with the Casio GWF -D1000 Frogman watch

When you typically look at reviews of products, there are usually reviewed over a short time when they are new-and-shiny. Often a products features and character come out over time – a symbiotic process between product and user.

I picked up a GWF-D1000 soon after it went on sale for considerably less than the £800 that it is the current street price. Up until I bought the GWF-D1000 (which I will call the D1000 through the rest of the copy for brevity), I had owned its predecessor the GWF-1000 (which I will call the 1000 from here on in).

So what is the GWF-D1000 anyway?

The D1000 is the latest in an a series of G-Shock watches aimed at scuba divers. The first Frogman came out in 1993. The overall design has largely been the same with an asymmetric case and a large display to make operation easier. The positioning of the watches and price points changed over time – some of the previous models had titanium cases and came under the Mr-G sub-brand. The last few models have a stainless steel core case with a DLC (diamond like coating) to protect the surface.

Over time it has picked up features as the technology improved. It became illuminated by a small green bulb, then electro-luminescent material. It moved from relying purely on battery power to having solar cells and a rechargeable battery. The watch became more accurate by picking up time signals via radio from six locations around the world that are calibrated with an atomic clock (precursors to the NTP services around the world that keep your computer and smartphone bang on time.)

The key technology gains over the 1000 include:

  • A dive computer rather than a dive timer (neither matter to me), it has the same basic functionality that dive computers used to have 20 years ago (minus PC connectivity). No big shakes until you remember that it is doing this all from a solar-powered rechargeable watch battery
  • Digital compass which is surprisingly handy, it is very forgiving of the way you hold it, expect this in other Casio watches soon.
  • Temperature reading (again more for the diver) or when you are running a bath
  • The display has been rearranged and a bit easier to read
  • Much better display light and crisper to read at night

The real benefits for me were in the build quality:

  • You get a sapphire crystal rather than the usual hardened mineral glass. This isn’t the first time that Casio has used a sapphire crystal on a watch, but they are harder to manufacture and more expensive than the usual mineral glass face
  • The manner in which the strap is secured to the case has been completely revised. There is are new Allen key screws and a carbon fibre rod to secure the strap to the case
  • The strap is made of polyurethane resin reinforced with carbon fibre. The loop that holds the excess strap length is now a section of stainless steel which has been bent around the strap

How do I use it?

It makes sense to tell a little bit around why I wear a Frogman. I want an accurate watch (who doesn’t?). I want a reliable watch (again, probably a hygiene factor for most people; but one that hints at why the G-Shock has replaced Rolex as the default watch I have seen on Hong Kongers over the past 10 years or so. G-Shock offers robustness that 20 years ago would have come from fine Swiss engineering – at a much lower price point.

I love my Swiss dive watches but there is a time and place for everything.  The knockabout case and its water resistance means that you can forget about the watch. You don’t have to coddle it or worry that it will pick up undue attention. You don’t have to worry if you get a bang on an elevator (lift) door, dropped on the bathroom floor or going for a swim.

The G-Shock is an everyman watch – unless its got a lurid colour scheme it isn’t likely to attract the attention of your average petty criminal. I’ve often taken it off in the office so that I can type in greater comfort and left it there by accident when going home. I’ve never had a G-Shock go missing.

It is relatively easy to use, despite the modal nature of its interface design. To change settings, use functions or see recorded information you have to cycle through a series of text menus – it has more in common with a 1980s vintage video cassette recorder or a DEC VAX. Quite how this goes down with consumers more used to iPads and SnapChat is interesting. Casio seems to do alright by attracting them with bright plastic cases reminiscent of Lego -based colour schemes.

I haven’t dived seriously in a long time, I took up scuba diving while working in the oil industry and have never got back into it since moving to London.  PADI diving at resorts is tame compared to British diving club scene I had been used to.

My work environment is creative which means that t-shirts, flannel shirts,  jeans and suede hiking boots make the G-Shock an ideal accessory. I work in the London office of an American digital marketing agency, owned by a French multinational and my clients are scattered in the different offices around the world of pharmaceutical companies. The functions I tend to use most are the world time, date/time and the night light. My iPhone is now my alarm clock.

The reality is that most of these watches will end up on the wrists of people like me rather than people who dive for a living.

What’s it like to live to live with the D1000

The D1000 is only incrementally heavier than the 1000, it felt a bit strange to wear for about 30 minutes after swapping over to the newer model. But in some ways the D1000 doesn’t yet feel like its my watch.

The 1000 strap became shiny in places over time and more pliable, it felt like it became adjusted to me. Give the D1000 a rub over and it still looks box fresh. The downside is that the strap feels stiff and I still feel its edges on occasion – this isn’t about discomfort, but about the watch not feeling like part of you. There are no shiny parts of wear – it feels less like a ‘personal item”. It lacks what a designer friend calls authenticity; unlike distressed jeans, customised flight jackets or combat Zippos.

Zippo Lighters

This sounds great for the resale value, but I feel that it provides a worse experience for the wearer of the watch.

The reinforced strap does have one bonus, it holds securely to the case. Look at these pictures of my two year old 1000

Casio GWF 1000 Frogman

You can see how the retaining screw that held the strap to the case came undone and disappeared over time. You don’t have these kind of problems with the D1000.

The screen on the D1000 uses its real estate in a different way to the 1000.

Here is the 1000

Casio GWF 1000 Frogman

Here is the D1000

Casio GWF D1000 Frogman

At first the differences aren’t obvious. If you look at the top right side of the screen, the tide and moon segments are replaced by a multi-use screen on the D1000. The small icons for alarms and hourly alerts are moved to the bottom and left of the screen on the D1000, the moon icon now moves to the left of the main screen down from the top right. This probably marginally increases the screen real estate and helps make legibility a bit clearer at night.

GWF 1000

The biggest 1000 feature that I miss is the ability to toggle with one press of the top left button from showing the date on the screen to showing a second time zone; it was extremely handy for work. And having come from the 1000 to the D1000 it was a real ‘what the fuck’ moment.

By comparison I have to press six times to get to the world time screen. Instead, it now toggles between a tide table and the day. Even giving it a two press option would be a better fix than what the D1000 currently has. It’s a small gripe, but it annoyed the heck out of me.

My work around has been to keep the watch in world time mode and if I need to know the day or date, I find myself reaching for my iPhone.

If you are really that worried about tide tables, you will be likely using a specialist service as they vary a good deal over relatively short distances.

If the D1000 still sounds like the kind of watch you want, you can get it here.

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.

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)

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.

2016: crystal ball gazing, how did I do?

Here are the predictions made at the top of the year

I expect Uber will continue to funnel money into China and still get sand in its face. Quite what this means for Lyft I am not so sure.

Uber raised more money, realised that things still weren’t improving and then got a face saving exit from the Chinese market. I’ll call that a win.

Twitter gets a change of management, but that doesn’t do any good… All of this would be bad news for potential advertisers and their intermediaries in the advertising and PR world.

God, where do we start with Twitter. It has had extensive management churn and a big staff lay-off. I don’t think that my own view about a change of management is correct though. I envisaged this as a strategic proactive more by the board rather than the current rotating door. I have been impressed by how well Twitter advertising has held up. Twitter might look like the Yahoo! of social media, but it still holds a lot of weight with the mainstream media which still counts for something.

Fintech bubble that will take good ideas and bad ones down together. Banks are currently considered to be ripe for disruption. One of the key problems with this is that technologists think it will be easy to sweep aside regulations that banks operate under.

This one is still percolating out. Banks are looking particularly at Blockchain as the basis of a better transaction ledger/database. Informally, I have heard that VC funding has largely dried up on fintech start-ups; but the other shoe has yet to drop.  Zopa applying for a bank licence and becoming a bank felt like a watershed moment.

The internet in the EU will become increasingly regulated. At the moment the European Union is succumbing to The Fear. 

The fear has grown beyond terrorism to being overrun by immigrants (some of whom will be terrorists). The UK is well on its way to putting into law some of the most Draconian web laws in the western world from porn filtering to sharing citizen web history access with a wide range of government agencies.

Overall this has made less progress than I expected because Brexit became the existential challenge that the EU members will seek to vanquish.

We will have reached peak smartphone and tablet. China has now reached replacement rate for devices, there is a corresponding lack of paradigm shifts in the pipelines for smartphone design and software. Tablets have shown themselves to be nice devices for data consumption but not requiring regular upgrades like the smartphone or replacement for the PC.

We’ve certainly reached peak tablet. Smartphones are taking a longer while to shake out. What we are seeing is declining margins in smartphones. Apple increased its industry share of profits to 90% despite:

  • Making a weak update to the iPhone 6S
  • Having a declining market share
  • Having a higher cost in terms of bill of materials

There were some one-off factors such as the Samsung Note 7 recall and the collapse of Hanjin Shipping which curtailed the supply of some handsets.

VR in 2016 will be all about finding the right content. VR won’t work in gaming unless it provides e-gaming athletes with some sort of competitive advantage, if it does then gaming will blow things up massively. Gaming will not be the only content vehicle for VR, it needs an Avatar-like moment to drive adoption into the early mainstream.

There were two things that surprised me about VR in 2016.

  • It look Sony so long to get VR on to the PlayStation, it will be a while for us to see the impact of gaming on the use of VR. It certainly provides immersive experiences, but does it provide e-athletes with competitive advantage?
  • China blew the amount of VR headsets available out of the water, but there has been a corresponding dearth of content. The stuff on YouTube is nice demo-ware, but where is the ‘Breaking Bad’ of VR

One thing that people aren’t talking about is the role of VR googles as a replacement for a large TV set. I have heard that some of the most used apps for VR is Netflix.

Older predictions
2016: just where is it all going? | renaissance chambara
2015: crystal ball gazing, how did I do? | renaissance chambara
2015: just where is it all going? | renaissance chambara
2014: crystal ball gazing, how did I do?
2014: just where is it all going? | renaissance chambara 
Crystal ball-gazing: 2013 how did I do?
2013: just where is it all going?
Crystal ball-gazing: 2012 how did I do?
2012: just where is digital going?
Crystal ball-gazing: 2011 how did I do?
2010: How did I do?
2010: just where is digital going?

Just one more thing: Apple’s unpleasant surprise of a MacBook Pro

My initial reaction to Apple’s MacBook Pro wasn’t overwhelmingly positive. Now that I’ve tried one very briefly, I was even more unimpressed than I was at the launch.

Thin

I didn’t feel that much of a weight different between my current machine and the new model MacBook Pro. Who gives a flying fuck about the laptop being even thinner than the current MacBook Pro? You have to wonder if Apple really believes customers are gagging for a thin incompatible clamshell of mediocrity? I’d be more interested in power density of the battery – more charge and better performance from the laptop. Some connectors that I actually use would be great as well.

Display

If you already have a retina display laptop this is exactly the same.  The touchpad display is interesting, but it seems to take no account of finger span in the way the controls work on a couple of the default apps that I tried from the perspective of a touch typer.  I suspect that the 11″ MacBook Air was killed because Apple is desperately hoping sales will go to the iPad Pro.

Tactile experience

Apple made a big deal of the keyboard, but the truth of it is that it was wasted. The real effort was not about user experience and more about making things thinner. It isn’t the improvement on the previous MacBook Pro keyboard experience despite the clever engineering involved.

Real world performance

I’m a bit spoiled from a tech point of view. I am working on an early 2015 model MacBook Pro (Retina) 3.1GHz Intel Core i7 with 16GB of RAM and 1TB of solid state storage. I have an attached SuperDrive by USB and two Apple Thunderbolt displays.  The graphics performance is adequate with an Intel Iris Graphics 6100.
about this mac
Having had a quick play with the new MacBook Pro there didn’t seem to be a real world performance difference. You probably would need a machine that is five years old or more to get a speed bump.

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

China is making a product that Apple should have done

Trawling eBay gives access to a cottage industry of predominantly China-based suppliers. They take iPod Classics and remanufacture them. They get new cases and new batteries.

Real trick is in the new component put in the device. Out goes the Toshiba micro-hard drive of 120GB or 160GB and in goes a 256GB SSD. Apple had abandoned production of the iPod Classic because it couldn’t get the right parts any more. Technology had moved on and flash memory had replaced micro hard drive’s as storage technology of choice for portable consumer devices.
iPod ClassicSwapping out the hard drive for an SSD provides an iPod with a number of advantages:

  • Its a third lighter than Apple’s version of the iPod Classic. This changes dynamics in usage. It no longer has the same heft, you feel less conscious of it in a pocket or jacket
  • The battery lasts longer. I now get about 30 hours of listening from the iPod. By comparison I get 18 hours out of my smartphone. If I used the smartphone as a music player as well, that battery time would drop further. If I used a streaming service, that would sound worse, hammer the battery life and mobile phone bill even further
  • It holds more music. At 256GB up from 160GB in the last model of iPod Classic it makes the difference between being able to hold all of my music library with me or not. You don’t have Spotify when you have 15,000+ tracks to choose from
  • The same great iPod experience. iTunes still syncs with the device. It has a good quality DAC (digital-to-analogue convertor) chip. With the right headphones and a sufficiently high sample rate it is indistinguishable from CDs. Under normal circumstances it sounds better your typical smartphone – which is trying to do lots of job well
  • It is quieter than the original iPod Classic. There is no longer the noise of a hard drive spinning up and reading the music data from the disk
  • Vigorous movement is not a problem. Apple had done a good job with the original iPod Classic songs were cached in RAM to iron out temporary stoppages due to movement affecting the hard disk. An SSD had no moving parts so it isn’t an issue any more

What becomes apparent is that Apple wouldn’t have had to make that much effort to make the product itself, but for no known reason it didn’t want to.

I suspect that part of this is down to:

  • The law of big numbers. The iPod Classic revamped in this way would be a decent business for most companies, but just isn’t as big as Apple is used to
  • A modified iPod probably too simple a design solution. Apple likes to take a big step forward (even when it doesn’t) – there are no plaudits or design awards in an iPod Classic with a solid state drive

The reimagined iPod is a development in sharp contrast to Apple’s new product developments:

  • Loved products bought by key Apple advocates have not been updated or ignored: the Mac Pro and the Apple Display (which Apple has abandoned)
  • Moving out of entry level products. With the MacBook Pro and MacBook line-ups, the entry device is now a secondhand laptop rather than the 11″ MacBook Air or the non-Retina MacBook Pro
  • Big bets that aren’t resonating with the marketplace: the Apple Watch has been a best selling smart watch; but is in a category which lacks a compelling reason to purchase. The iPad is a passive content consumption device for most consumers. It has a replacement cycle that would be more familiar to television manufacturers than a computer company