Water shortages may be the next big global commodity squeeze, but in Asia the jockeying for position has already begun. Riparian rights have long been a special aspect of European and American law, but in other parts of the world the conflict has been joined by a combination of need and opportunity. The Asian water situation may provide useful insights into other potential areas of conflict on this issue like the Middle East, US-Mexico and South America. Denis Gray reports in HuffPost:
"The wall of water raced through narrow Himalayan gorges in northeast India, gathering speed as it raked the banks of towering trees and boulders. When the torrent struck their island in the Brahmaputra river, the villagers remember, it took only moments to obliterate their houses, possessions and livestock.
No one knows exactly how the disaster happened, but everyone knows whom to blame: neighboring China.
"We don't trust the Chinese," says fisherman Akshay Sarkar at the resettlement site where he has lived since the 2000 flood. "They gave us no warning. They may do it again."
About 800 kilometers (500 miles) east, in northern Thailand, Chamlong Saengphet stands in the Mekong river, in water that comes only up to her shins. She is collecting edible river weeds from dwindling beds. A neighbor has hung up his fishing nets, his catches now too meager.
Using words bordering on curses, they point upstream, toward China.
The blame game, voiced in vulnerable river towns and Asian capitals from Pakistan to Vietnam, is rooted in fear that China's accelerating program of damming every major river flowing from the Tibetan plateau will trigger natural disasters, degrade fragile ecologies, divert vital water supplies.
A few analysts and environmental advocates even speak of water as a future trigger for war or diplomatic strong-arming, though others strongly doubt it will come to that. Still, the remapping of the water flow in the world's most heavily populated and thirstiest region is happening on a gigantic scale, with potentially strategic implications.
On the eight great Tibetan rivers alone, almost 20 dams have been built or are under construction while some 40 more are planned or proposed.
China is hardly alone in disrupting the region's water flows. Others are doing it with potentially even worse consequences. But China's vast thirst for power and water, its control over the sources of the rivers and its ever-growing political clout make it a singular target of criticism and suspicion.
"Whether China intends to use water as a political weapon or not, it is acquiring the capability to turn off the tap if it wants to – a leverage it can use to keep any riparian neighbors on good behavior," says Brahma Chellaney, an analyst at New Delhi's Center for Policy Research and author of the forthcoming "Water: Asia's New Battlefield."
Analyst Neil Padukone calls it "the biggest potential point of contention between the two Asian giants," China and India. But the stakes may be even higher since those eight Tibetan rivers serve a vast west-east arc of 1.8 billion people stretching from Pakistan to Vietnam's Mekong river delta.
Suspicions are heightened by Beijing's lack of transparency and refusal to share most hydrological and other data. Only China, along with Turkey, has refused to sign a key 1997 U.N. convention on transnational rivers.
Beijing gave no notice when it began building three dams on the Mekong – the first completed in 1993 – or the $1.2 billion Zangmu dam, the first on the mainstream of the 2,880-kilometer (1,790-mile) Brahmaputra which was started last November and hailed in official media as "a landmark priority project."
The 2000 flood that hit Sarkar's village, is widely believed to have been caused by the burst of an earthen dam wall on a Brahmaputra tributary. But China has kept silent.
"Until today, the Indian government has no clue about what happened," says Ravindranath, who heads the Rural Volunteer Center. He uses only one name.
Tibet's spiritual leader, the Dalai Lama, has also warned of looming dangers stemming from the Tibetan plateau.
"It's something very, very essential. So, since millions of Indians use water coming from the Himalayan glaciers... I think you (India) should express more serious concern. This is nothing to do with politics, just everybody's interests, including Chinese people," he said in New Delhi last month.
Beijing normally counters such censure by pointing out that the bulk of water from the Tibetan rivers springs from downstream tributaries, with only 13-16 percent originating in China.
Officials also say that the dams can benefit their neighbors, easing droughts and floods by regulating flow, and that hydroelectric power reduces China's carbon footprint.
China "will fully consider impacts to downstream countries," Chinese Foreign Ministry spokeswoman Jiang Yu recently told The Associated Press. "We have clarified several times that the dam being built on the Brahmaputra River has a small storage capacity. It will not have large impact on water flow or the ecological environment of downstream."
For some of China's neighbors, the problem is that they too are building controversial dams and may look hypocritical if they criticize China too loudly.
The four-nation Mekong River Commission has expressed concerns not just about the Chinese dams but about a host of others built or planned in downstream countries.
In northeast India, a broad-based movement is fighting central government plans to erect more than 160 dams in the region, and Laos and Cambodia have proposed plans for 11 Mekong dams, sparking environmental protest.
Indian and other governments play down any threats from the Asian colossus. "I was reassured that (the Zangmu dam) was not a project designed to divert water and affect the welfare and availability of water to countries in the lower reaches," India's Foreign Secretary Nirupama Rao said after talks with her Chinese counterpart late last year.
But at the grass roots, and among activists and even some government technocrats, criticism is expressed more readily.
"Everyone knows what China is doing, but won't talk about it. China has real power now. If it says something, everyone follows," says Somkiat Khuengchiangsa, a Thai environmental advocate.
Neither the Indian nor Chinese government responded to specific questions from the AP about the dams, but Beijing is signaling that it will relaunch mega-projects after a break of several years in efforts to meet skyrocketing demands for energy and water, reduce dependence on coal and lift some 300 million people out of poverty.
Official media recently said China was poised to put up dams on the still pristine Nu River, known as the Salween downstream. Seven years ago as many as 13 dams were set to go up until Chinese Premier Wen Jiabao ordered a moratorium.
That ban is regarded as the first and perhaps biggest victory of China's nascent green movement.
"An improper exploitation of water resources by countries on the upper reaches is going to bring about environmental, social and geological risks," Yu Xiaogang, director of the Yunnan Green Watershed, told The Associated Press. "Countries along the rivers have already formed their own way of using water resources. Water shortages could easily ignite extreme nationalist sentiment and escalate into a regional war."
But there is little chance the activists will prevail.
"There is no alternative to dams in sight in China," says Ed Grumbine, an American author on Chinese dams. Grumbine, currently with the Chinese Academy of Sciences in Yunnan province, notes that under its last five-year state plan, China failed to meet its hydroelectric targets and is now playing catch-up in its 2011-2015 plan as it strives to derive 15 percent of energy needs from non-fossil sources, mainly hydroelectric and nuclear.
The arithmetic pointing to more dam-building is clear: China would need 140 gigawatts of extra hydroelectric power to meet its goal. Even if all the dams on the Nu go up, they would provide only 21 gigawatts.
The demand for water region-wide will also escalate, sparking perhaps that greatest anxieties – that China will divert large quantities from the Tibetan plateau for domestic use.
Noting that Himalayan glaciers which feed the rivers are melting due to global warming, India's Strategic Foresight Group last year estimated that in the coming 20 years India, China, Nepal and Bangladesh will face a depletion of almost 275 billion cubic meters (360 billion cubic yards) of annual renewable water.
Padukone expects China will have to divert water from Tibet to its dry eastern provinces. One plan for rerouting the Brahmaputra was outlined in an officially sanctioned 2005 book by a Chinese former army officer, Li Ling. Its title: "Tibet's Waters Will Save China,"
Analyst Chellaney believes "the issue is not whether China will reroute the Brahmaputra, but when." He cites Chinese researchers and officials as saying that after 2014 work will begin on tapping rivers flowing from the Tibetan plateau to neighboring countries Such a move, he says, would be tantamount to a declaration of war on India.
Others are skeptical. Tashi Tsering, a Tibetan environmentalist at the University of British Columbia who is otherwise critical of China's policies, calls a Brahmaputra diversion "a pipe dream of some Chinese planners."
Grumbine shares the skepticism. "The situation would have to be very dire for China to turn off the taps because the consequences would be huge," he said. "China would alienate every one of its neighbors and historically the Chinese have been very sensitive about maintaining secure borders."
Whatever else may happen, riverside inhabitants along the Mekong and Brahmaputra say the future shock is now.
A fisherman from his youth, Boonrian Chinnarat says the Mekong giant catfish, the world's largest freshwater fish, has all but vanished from the vicinity of Thailand's Had Krai village, other once bountiful species have been depleted, and he and fellow fishermen have sold their nets. He blames the Chinese dams.
Phumee Boontom, headman of nearby Pak Ing village, warns that "If the Chinese keep the water and continue to build more dams, life along the Mekong will change forever." Already, he says, he has seen drastic variations in water levels following dam constructions, "like the tides of the ocean — low and high in one day."
Jeremy Bird, who heads the Mekong commission, an intergovernmental body of Laos, Cambodia, Thailand and Laos, sees a tendency to blame China for water-related troubles even when they are purely the result of nature. He says diplomacy is needed, and believes "engagement with China is improving."
Grumbine agrees. "Given the enormous demand for water in China, India and Southeast Asia, if you maintain the attitude of sovereign state, we are lost," he says. "Scarcity in a zero sum situation can lead to conflict but it can also goad countries into more cooperative behavior. It's a bleak picture, but I'm not without hope."
Apr 16, 2011
Unilever Friends Social Media: But Do Consumers Really Want A Conversation With Their Deodorant?
Okay, we're all in favor of experimentation. And figuring out how to effectively harness the latent power of social media is a really important question that lots of smart people are trying answer. We even agree that many brands have media attributes that ought to be creatively developed. There is, alas, a limit. Brands are not people and they are not pets. That some brands can establish an on-line presence is not statistically significant evidence that all brands can do so. Making that assumption is like Hollywood assuming that since 'Avatar' did boffo box office numbers, any 3-D movie can. So let's celebrate imagination, creativity and innovation. But let's also do some research, test some theories and use our common sense. Blind 'Digivangelism' wastes money, abuses peoples' time and scares clients. Preserve credibility; think long and hard before declaring that social is the answer to every marketing question. Jonathan Salem Baskin hits it in the Dim Bulb:
"You're probably familiar with a number of Unilever's various consumer products brands, from food names like Hellmann's mayonnaise, Lipton tea, and Slim-Fast diet drinks, to its major presence in personal care (Dove, Axe, Pond's). It's kinda like Procter & Gamble only it grew up in Europe and built its empire on an aggregation of locally powerful brand names in each of the countries in which it operates versus P&G's classic topdown strategy of building its global brand names in many of the same countries.
Its CMO made headlines last week at the American Association of Advertising Agency's annual meeting when he declared that Unilever's brands must be made into "media properties" and that they would experiment with creating entertainment and gaming content. He reportedly took 20 company executives on a tour of Silicon Valley technology platforms last spring and plans another visit this month, and has already cut new deals with Facebook and Apple.
Clearly, this guy is lost, and his brands are in dire need of outside help.
I've often remarked that nobody wakes up in the morning hoping to have a conversation with their toothpaste brand, and I think that extends to underarm deodorant and sandwich spread, too. Social media represent the greatest challenge to brands because they allow consumers to talk with one another, not to the imaginary constructs of brands -- which really don't exist the way people do -- and few consumer products companies have come to terms with how this blows up their old thinking about branding. They need to change the what they talk about, not just hope that the how of delivering the same old creative fantasies will make marketing more effective. It won't, and Unilever need look no further than P&G to see evidence that lots of social noise doesn't replace the branding qualities that old media used to deliver (the Old Spice YouTube campaign that has entered industry canon didn't do anything for sales, and the arguments that it promoted the brand are as weak as the company's ability to maintain premium pricing for any of its similar-promoted brand names).
So Weed's team will produce lots of wonderfully experimental campaigns (remember that it's more important to dive into social media than necessarily have a clear idea of the size of the pool, water temperature, or your own ability to swim). He'll get lots of nice headlines in trade magazine, and his agencies might win awards for the stuff. But I'd wager that the noise won’t sell any Unilever products.
What should the company consider instead if it wants to actually sell products and have loyal consumers instead of followers? Here are three thought-starter ideas:
•Redefine & Strengthen the Chinese Walls -- The fact that Unilever could support women with its Dove campaign while simultaneously supporting their objectification as sex objects with its Axe brand revealed the emptiness of both brand positions. Why not be the first big consumer products company that really figures it out and can make the case that its brands are authentic (on whatever positions they take)? This isn't just a marketing challenge; could there be a different way to operationally structure its brand management, so instead of "home" and "consumer" products it grouped them by, say, buyers and/or regions? Could that let it embrace more authentic claims? Might it sell more thereby?
•Don't Stop at Internal Structure by User -- There's no benefit to buying mayo and soap from the same company because they're different brands, only why couldn't there be an incentive and/or payoff for doing so? Maybe certain brands belong together when they share the same target consumers? Why not invent the industry's first cross-brand marketing and relationship strategies? I have no idea how they'd to it (if it were easy it would have happened long ago) and it would have to be much more than a cross-selling plan. Are there reasons why we should care that one company owns a number of brands we could buy?
•Adapt Everything around Marketing -- Ultimately, there's a limit to what you can say about soap. No creative idea or interactive campaign can overcome that fact; there's just no enough there there with which to play, and lurking just behind every consumer product brand is the fact that the world really wouldn't really miss all the choices that brands create for us. So could Unilever's brands play with other variables -- performance, packaging, distribution, replenishment, pricing -- to establish unique relationships with its consumers? These are the oldest tools in the marketing toolkit but they're also the most effective. They're just harder to figure out than buying some high-falutin new media package from some startup or creative agency.
Like I said, that was just a start. But wouldn't it be cool if Weed and his braintrust were approaching Unilever's challenge with less babble about new media this-or-that, and instead talked more about redefining the fundamentals of the company’s operations? Seems like better business ideas would be easy to communicate on social platforms, and they'd come across as far more legitimate than any of the made-up content that might come out of the marketing department.
"You're probably familiar with a number of Unilever's various consumer products brands, from food names like Hellmann's mayonnaise, Lipton tea, and Slim-Fast diet drinks, to its major presence in personal care (Dove, Axe, Pond's). It's kinda like Procter & Gamble only it grew up in Europe and built its empire on an aggregation of locally powerful brand names in each of the countries in which it operates versus P&G's classic topdown strategy of building its global brand names in many of the same countries.
Its CMO made headlines last week at the American Association of Advertising Agency's annual meeting when he declared that Unilever's brands must be made into "media properties" and that they would experiment with creating entertainment and gaming content. He reportedly took 20 company executives on a tour of Silicon Valley technology platforms last spring and plans another visit this month, and has already cut new deals with Facebook and Apple.
Clearly, this guy is lost, and his brands are in dire need of outside help.
I've often remarked that nobody wakes up in the morning hoping to have a conversation with their toothpaste brand, and I think that extends to underarm deodorant and sandwich spread, too. Social media represent the greatest challenge to brands because they allow consumers to talk with one another, not to the imaginary constructs of brands -- which really don't exist the way people do -- and few consumer products companies have come to terms with how this blows up their old thinking about branding. They need to change the what they talk about, not just hope that the how of delivering the same old creative fantasies will make marketing more effective. It won't, and Unilever need look no further than P&G to see evidence that lots of social noise doesn't replace the branding qualities that old media used to deliver (the Old Spice YouTube campaign that has entered industry canon didn't do anything for sales, and the arguments that it promoted the brand are as weak as the company's ability to maintain premium pricing for any of its similar-promoted brand names).
So Weed's team will produce lots of wonderfully experimental campaigns (remember that it's more important to dive into social media than necessarily have a clear idea of the size of the pool, water temperature, or your own ability to swim). He'll get lots of nice headlines in trade magazine, and his agencies might win awards for the stuff. But I'd wager that the noise won’t sell any Unilever products.
What should the company consider instead if it wants to actually sell products and have loyal consumers instead of followers? Here are three thought-starter ideas:
•Redefine & Strengthen the Chinese Walls -- The fact that Unilever could support women with its Dove campaign while simultaneously supporting their objectification as sex objects with its Axe brand revealed the emptiness of both brand positions. Why not be the first big consumer products company that really figures it out and can make the case that its brands are authentic (on whatever positions they take)? This isn't just a marketing challenge; could there be a different way to operationally structure its brand management, so instead of "home" and "consumer" products it grouped them by, say, buyers and/or regions? Could that let it embrace more authentic claims? Might it sell more thereby?
•Don't Stop at Internal Structure by User -- There's no benefit to buying mayo and soap from the same company because they're different brands, only why couldn't there be an incentive and/or payoff for doing so? Maybe certain brands belong together when they share the same target consumers? Why not invent the industry's first cross-brand marketing and relationship strategies? I have no idea how they'd to it (if it were easy it would have happened long ago) and it would have to be much more than a cross-selling plan. Are there reasons why we should care that one company owns a number of brands we could buy?
•Adapt Everything around Marketing -- Ultimately, there's a limit to what you can say about soap. No creative idea or interactive campaign can overcome that fact; there's just no enough there there with which to play, and lurking just behind every consumer product brand is the fact that the world really wouldn't really miss all the choices that brands create for us. So could Unilever's brands play with other variables -- performance, packaging, distribution, replenishment, pricing -- to establish unique relationships with its consumers? These are the oldest tools in the marketing toolkit but they're also the most effective. They're just harder to figure out than buying some high-falutin new media package from some startup or creative agency.
Like I said, that was just a start. But wouldn't it be cool if Weed and his braintrust were approaching Unilever's challenge with less babble about new media this-or-that, and instead talked more about redefining the fundamentals of the company’s operations? Seems like better business ideas would be easy to communicate on social platforms, and they'd come across as far more legitimate than any of the made-up content that might come out of the marketing department.
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The Future of Distribution From A Platform Agnostic
As music distribution has migrated largely on-line - to the extent that groups may now release their tunes online rather than in tangible formats, film is facing a similar challenge. It is not that online distribution is a threat so much as doing it profitably without destroying the lucrative movie-going franchise while doing so. The movie companies have learned from the music industry's experience but the model for the future is still hazy. Howard Gertler comments in Paid Content:
The Future of Film Blog, launched as part of the Tribeca (Online) Film Festival, features filmmakers and other experts in the film industry sharing their thoughts on film, technology and the future of media. Below, film producer Howard Gertler discusses how digital technology has impacted the kinds of movies that are made.
Theatrical distribution used to be the primary way in which you’d see narrative films that were different, transgressive, innovative, and feature-length. But now you can see these kinds of visual stories on almost any screen, including the one in your pocket. Filmmakers can no longer take for granted that audiences want a feature-length experience when the latest online viral sensation is competing for their eyeballs.
As a film producer, I’m platform-agnostic. Wherever and whenever a viewer can watch a movie I’ve produced is fine by me. But I still believe in the importance of theatrical releases. Moreso than in the past, you need to defend a project’s theatrical merits rigorously starting at the development stage. Why is the story worth seeing larger-than-life? Why would an audience want to experience it communally? What’s the story about the film beyond the film itself? How does the film differentiate itself from everything else in the marketplace?
I think the glut of independent films that fell off the recessionary cliff suggested that we, as a cohort, weren’t always asking ourselves these questions. Or answering them well. The reset button has been pushed, and we need to take advantage of what we’ve learned. For all the talk of DIY production and distribution, if we can’t honestly justify the content — more than justify, fight passionately for it — then all of the Red cameras in the world won’t save us.
For me, the key benefit of the internet has been accessibility. It keeps us connected in real-time as an industry and community, forming an immense knowledge-base at our fingertips. It’s an instantaneous and accessible way for audiences to explore, find and see the different, transgressive and innovative — and every new viewer who gets a taste and becomes hooked helps grow our audience in ways that theatrical and bricks-and-mortar home video never could.
On the other hand, the key challenge of the web is its sheer volume. With the immense amount of choice amongst content and platforms, differentiation is even harder online than in the theaters. Facebook pages and Twitter feeds promoting movies start to feel like nothing but static. Cultivating your audience online requires innovative strategic thinking, not blitzing out messages.
From a development angle, I think myself and other filmmakers will be even more adventurous as the technology advances and the costs continue to decline. I’m part of a team that’s currently producing an animated feature from graphic novelist Dash Shaw, and the tech scale and learning curve are manageable for someone like myself who’s new to the medium. We’ll be able to create a movie of scope and unusual beauty with a modicum of means.
And yet, I do think the digivangelism can sometimes get a bit out of hand. I moderated a panel at SXSW last month about adapting graphic novels and comics into movies. Afterwards, an audience member chastened me for being “very 20th century” in my approach to the panel for not discussing anything “digital.” The focus, stated and discussed, was on the decision-making processes undertaken by directors, screenwriters, studios and the comics creators themselves. We haven’t given that part over to the machines…Yet
The Future of Film Blog, launched as part of the Tribeca (Online) Film Festival, features filmmakers and other experts in the film industry sharing their thoughts on film, technology and the future of media. Below, film producer Howard Gertler discusses how digital technology has impacted the kinds of movies that are made.
Theatrical distribution used to be the primary way in which you’d see narrative films that were different, transgressive, innovative, and feature-length. But now you can see these kinds of visual stories on almost any screen, including the one in your pocket. Filmmakers can no longer take for granted that audiences want a feature-length experience when the latest online viral sensation is competing for their eyeballs.
As a film producer, I’m platform-agnostic. Wherever and whenever a viewer can watch a movie I’ve produced is fine by me. But I still believe in the importance of theatrical releases. Moreso than in the past, you need to defend a project’s theatrical merits rigorously starting at the development stage. Why is the story worth seeing larger-than-life? Why would an audience want to experience it communally? What’s the story about the film beyond the film itself? How does the film differentiate itself from everything else in the marketplace?
I think the glut of independent films that fell off the recessionary cliff suggested that we, as a cohort, weren’t always asking ourselves these questions. Or answering them well. The reset button has been pushed, and we need to take advantage of what we’ve learned. For all the talk of DIY production and distribution, if we can’t honestly justify the content — more than justify, fight passionately for it — then all of the Red cameras in the world won’t save us.
For me, the key benefit of the internet has been accessibility. It keeps us connected in real-time as an industry and community, forming an immense knowledge-base at our fingertips. It’s an instantaneous and accessible way for audiences to explore, find and see the different, transgressive and innovative — and every new viewer who gets a taste and becomes hooked helps grow our audience in ways that theatrical and bricks-and-mortar home video never could.
On the other hand, the key challenge of the web is its sheer volume. With the immense amount of choice amongst content and platforms, differentiation is even harder online than in the theaters. Facebook pages and Twitter feeds promoting movies start to feel like nothing but static. Cultivating your audience online requires innovative strategic thinking, not blitzing out messages.
From a development angle, I think myself and other filmmakers will be even more adventurous as the technology advances and the costs continue to decline. I’m part of a team that’s currently producing an animated feature from graphic novelist Dash Shaw, and the tech scale and learning curve are manageable for someone like myself who’s new to the medium. We’ll be able to create a movie of scope and unusual beauty with a modicum of means.
And yet, I do think the digivangelism can sometimes get a bit out of hand. I moderated a panel at SXSW last month about adapting graphic novels and comics into movies. Afterwards, an audience member chastened me for being “very 20th century” in my approach to the panel for not discussing anything “digital.” The focus, stated and discussed, was on the decision-making processes undertaken by directors, screenwriters, studios and the comics creators themselves. We haven’t given that part over to the machines…Yet
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Cultural Roadblocks to Networking
Alliances, partnerships, networks. In a technologically denominated global economy no one individual or company can go it alone. It therefore stands to reason that the ability to build and maintain a network has become a crucial business skill. And yet. Many companies and their executives do not know how to do it. This could be the difference between success and failure. Stefan Lindgaard comments in Blogging Innovation on the primary roadblocks he has seen to building a network:
"In working with companies that are trying to build a networking culture, here are some reasons I’ve identified for why such efforts can fail or not reach the hoped-for degree of success.
1. Lack of Time
Many of us simply do not have the time to network and build relationships. It is necessary to develop a strategy and initiate projects, but you also need to give your people time to invest in initiating and maintaining both internal and external relationships.
2. Lack of Skills
Some people are natural-born networkers; many others are not. But the basics of effective networking can be learned, just like any other business skill. With appropriate instruction and motivation, wallflowers can learn to work a room. By providing your people with this type of training you will give them a skill that will be invaluable throughout their careers.
3. Lack of Focus
A community or a network will only work if it connects people who share a common experience, passion, interest, affiliation, or goal. Your people need to have ways to find and join groups that are right for them and right for your company. In other words, you and your employees should only network when there is a good reason to do so. Random networking rarely results in anything but wasted time, which devalues networking in people’s minds and makes it harder to encourage them to try it again.
4. Lack of Commitment and Structure
The networking-will-take-care-of-itself-and-you-do-not-need-to-work-at-it attitude is not the approach to take toward building what increasingly is a core innovation skill. Building a networking culture requires commitment and structure to support it
"In working with companies that are trying to build a networking culture, here are some reasons I’ve identified for why such efforts can fail or not reach the hoped-for degree of success.
1. Lack of Time
Many of us simply do not have the time to network and build relationships. It is necessary to develop a strategy and initiate projects, but you also need to give your people time to invest in initiating and maintaining both internal and external relationships.
2. Lack of Skills
Some people are natural-born networkers; many others are not. But the basics of effective networking can be learned, just like any other business skill. With appropriate instruction and motivation, wallflowers can learn to work a room. By providing your people with this type of training you will give them a skill that will be invaluable throughout their careers.
3. Lack of Focus
A community or a network will only work if it connects people who share a common experience, passion, interest, affiliation, or goal. Your people need to have ways to find and join groups that are right for them and right for your company. In other words, you and your employees should only network when there is a good reason to do so. Random networking rarely results in anything but wasted time, which devalues networking in people’s minds and makes it harder to encourage them to try it again.
4. Lack of Commitment and Structure
The networking-will-take-care-of-itself-and-you-do-not-need-to-work-at-it attitude is not the approach to take toward building what increasingly is a core innovation skill. Building a networking culture requires commitment and structure to support it
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Companies Can Benefit From Failure - Provided They Learn From It And Manage The Outcome
The Economist comments:
"BUSINESS writers have always worshipped at the altar of success. Tom Peters turned himself into a superstar with “In Search of Excellence”. Stephen Covey has sold more than 15m copies of “The 7 Habits of Highly Effective People”. Malcolm Gladwell cleverly subtitled his third book, “Outliers”, “The Story of Success”. This success-fetish makes the latest management fashion all the more remarkable. The April issue of the Harvard Business Review is devoted to failure, featuring among other contributors A.G. Lafley, a successful ex-boss of Procter & Gamble (P&G), proclaiming that “we learn much more from failure than we do from success.” The current British edition of Wired magazine has “Fail! Fast. Then succeed. What European business needs to learn from Silicon Valley” on its cover. IDEO, a consultancy, has coined the slogan “Fail often in order to succeed sooner”.
There are good reasons for the failure fashion. Success and failure are not polar opposites: you often need to endure the second to enjoy the first. Failure can indeed be a better teacher than success. It can also be a sign of creativity. The best way to avoid short-term failure is to keep churning out the same old products, though in the long term this may spell your doom. Businesses cannot invent the future—their own future—without taking risks.
Entrepreneurs have always understood this. Thomas Edison performed 9,000 experiments before coming up with a successful version of the light bulb. Students of entrepreneurship talk about the J-curve of returns: the failures come early and often and the successes take time. America has proved to be more entrepreneurial than Europe in large part because it has embraced a culture of “failing forward” as a common tech-industry phrase puts it: in Germany bankruptcy can end your business career whereas in Silicon Valley it is almost a badge of honour.
A more tolerant attitude to failure can also help companies to avoid destruction. When Alan Mulally became boss of an ailing Ford Motor Company in 2006 one of the first things he did was demand that his executives own up to their failures. He asked managers to colour-code their progress reports—ranging from green for good to red for trouble. At one early meeting he expressed astonishment at being confronted by a sea of green, even though the company had lost several billion dollars in the previous year. Ford’s recovery began only when he got his managers to admit that things weren’t entirely green.
Failure is also becoming more common. John Hagel, of Deloitte’s Centre for the Edge (which advises bosses on technology), calculates that the average time a company spends in the S&P 500 index has declined from 75 years in 1937 to about 15 years today. Up to 90% of new businesses fail shortly after being founded. Venture-capital firms are lucky if 20% of their investments pay off. Pharmaceutical companies research hundreds of molecular groups before coming up with a marketable drug. Less than 2% of films account for 80% of box-office returns.
But simply “embracing” failure would be as silly as ignoring it. Companies need to learn how to manage it. Amy Edmondson of Harvard Business School argues that the first thing they must do is distinguish between productive and unproductive failures. There is nothing to be gained from tolerating defects on the production line or mistakes in the operating theatre.
This might sound like an obvious distinction. But it is one that some of the best minds in business have failed to make. James McNerney, a former boss of 3M, a manufacturer, damaged the company’s innovation engine by trying to apply six-sigma principles (which are intended to reduce errors on production lines) to the entire company, including the research laboratories. It is only a matter of time before a boss, hypnotised by all the current talk of “rampant experimentation”, makes the opposite mistake.
Companies must also recognise the virtues of failing small and failing fast. Peter Sims likens this to placing “Little Bets”, in a new book of that title. Chris Rock, one of the world’s most successful comedians, tries out his ideas in small venues, often bombing and always junking more material than he saves. Jeff Bezos, the boss of Amazon, compares his company’s strategy to planting seeds, or “going down blind alleys”. One of those blind alleys, letting small shops sell books on the company’s website, now accounts for a third of its sales.
Damage limitation
Placing small bets is one of several ways that companies can limit the downside of failure. Mr Sims emphasises the importance of testing ideas on consumers using rough-and-ready prototypes: they will be more willing to give honest opinions on something that is clearly an early-stage mock-up than on something that looks like the finished product. Chris Zook, of Bain & Company, a consultancy, urges companies to keep potential failures close to their core business—perhaps by introducing existing products into new markets or new products into familiar markets. Rita Gunther McGrath of Columbia Business School suggests that companies should guard against “confirmation bias” by giving one team member the job of looking for flaws.
But there is no point in failing fast if you fail to learn from your mistakes. Companies are trying hard to get better at this. India’s Tata group awards an annual prize for the best failed idea. Intuit, in software, and Eli Lilly, in pharmaceuticals, have both taken to holding “failure parties”. P&G encourages employees to talk about their failures as well as their successes during performance reviews. But the higher up in the company, the bigger the egos and the greater the reluctance to admit to really big failings rather than minor ones. Bosses should remember how often failure paves the way for success: Henry Ford got nowhere with his first two attempts to start a car company, but that did not stop him.
"BUSINESS writers have always worshipped at the altar of success. Tom Peters turned himself into a superstar with “In Search of Excellence”. Stephen Covey has sold more than 15m copies of “The 7 Habits of Highly Effective People”. Malcolm Gladwell cleverly subtitled his third book, “Outliers”, “The Story of Success”. This success-fetish makes the latest management fashion all the more remarkable. The April issue of the Harvard Business Review is devoted to failure, featuring among other contributors A.G. Lafley, a successful ex-boss of Procter & Gamble (P&G), proclaiming that “we learn much more from failure than we do from success.” The current British edition of Wired magazine has “Fail! Fast. Then succeed. What European business needs to learn from Silicon Valley” on its cover. IDEO, a consultancy, has coined the slogan “Fail often in order to succeed sooner”.
There are good reasons for the failure fashion. Success and failure are not polar opposites: you often need to endure the second to enjoy the first. Failure can indeed be a better teacher than success. It can also be a sign of creativity. The best way to avoid short-term failure is to keep churning out the same old products, though in the long term this may spell your doom. Businesses cannot invent the future—their own future—without taking risks.
Entrepreneurs have always understood this. Thomas Edison performed 9,000 experiments before coming up with a successful version of the light bulb. Students of entrepreneurship talk about the J-curve of returns: the failures come early and often and the successes take time. America has proved to be more entrepreneurial than Europe in large part because it has embraced a culture of “failing forward” as a common tech-industry phrase puts it: in Germany bankruptcy can end your business career whereas in Silicon Valley it is almost a badge of honour.
A more tolerant attitude to failure can also help companies to avoid destruction. When Alan Mulally became boss of an ailing Ford Motor Company in 2006 one of the first things he did was demand that his executives own up to their failures. He asked managers to colour-code their progress reports—ranging from green for good to red for trouble. At one early meeting he expressed astonishment at being confronted by a sea of green, even though the company had lost several billion dollars in the previous year. Ford’s recovery began only when he got his managers to admit that things weren’t entirely green.
Failure is also becoming more common. John Hagel, of Deloitte’s Centre for the Edge (which advises bosses on technology), calculates that the average time a company spends in the S&P 500 index has declined from 75 years in 1937 to about 15 years today. Up to 90% of new businesses fail shortly after being founded. Venture-capital firms are lucky if 20% of their investments pay off. Pharmaceutical companies research hundreds of molecular groups before coming up with a marketable drug. Less than 2% of films account for 80% of box-office returns.
But simply “embracing” failure would be as silly as ignoring it. Companies need to learn how to manage it. Amy Edmondson of Harvard Business School argues that the first thing they must do is distinguish between productive and unproductive failures. There is nothing to be gained from tolerating defects on the production line or mistakes in the operating theatre.
This might sound like an obvious distinction. But it is one that some of the best minds in business have failed to make. James McNerney, a former boss of 3M, a manufacturer, damaged the company’s innovation engine by trying to apply six-sigma principles (which are intended to reduce errors on production lines) to the entire company, including the research laboratories. It is only a matter of time before a boss, hypnotised by all the current talk of “rampant experimentation”, makes the opposite mistake.
Companies must also recognise the virtues of failing small and failing fast. Peter Sims likens this to placing “Little Bets”, in a new book of that title. Chris Rock, one of the world’s most successful comedians, tries out his ideas in small venues, often bombing and always junking more material than he saves. Jeff Bezos, the boss of Amazon, compares his company’s strategy to planting seeds, or “going down blind alleys”. One of those blind alleys, letting small shops sell books on the company’s website, now accounts for a third of its sales.
Damage limitation
Placing small bets is one of several ways that companies can limit the downside of failure. Mr Sims emphasises the importance of testing ideas on consumers using rough-and-ready prototypes: they will be more willing to give honest opinions on something that is clearly an early-stage mock-up than on something that looks like the finished product. Chris Zook, of Bain & Company, a consultancy, urges companies to keep potential failures close to their core business—perhaps by introducing existing products into new markets or new products into familiar markets. Rita Gunther McGrath of Columbia Business School suggests that companies should guard against “confirmation bias” by giving one team member the job of looking for flaws.
But there is no point in failing fast if you fail to learn from your mistakes. Companies are trying hard to get better at this. India’s Tata group awards an annual prize for the best failed idea. Intuit, in software, and Eli Lilly, in pharmaceuticals, have both taken to holding “failure parties”. P&G encourages employees to talk about their failures as well as their successes during performance reviews. But the higher up in the company, the bigger the egos and the greater the reluctance to admit to really big failings rather than minor ones. Bosses should remember how often failure paves the way for success: Henry Ford got nowhere with his first two attempts to start a car company, but that did not stop him.
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The Anatomy of A Great Ad
Mark Bilfield comments in Brand Channel on the components of a great advertisement and cites a recent example from Chrysler:
"While most TV spots are relegated to 30 or 60 seconds, it is quite rare to have the time and budget to tell a poignant story while simultaneously “breaking through the clutter”.
One of the reasons why some ads may be more effective than others has to do with the audience who views the ad. Is the person in the market for the product or service being sold? On one hand it shouldn’t matter. If the idea is big enough and it is executed well, it will likely get a response from those who may be influenced to consider the product later.
The key components of a successful TV spot should include:
•1. Does the advertising educate or entertain the customer in a unique way to be memorable?
•2. Does the medium persuade the viewer that the product or service is the best choice?
•3. Is the product or service going to make me a better person or make my life easier/more productive?
•4. Does the advertising tell me where to get more information to purchase your product? (Is there a clear call to action?)
I have always believed that “the consumer is King”. The past few years have re-defined and elevated this notion, due in great part to Facebook, Twitter, and other social media platforms. As marketers we can develop the best possible communications, yet we have no real control of where and when a consumer chooses to receive the messages we create or in what order; TV, print, web, social, or is it the other way around? When I see a TV spot, I also want to see the idea leveraged in a variety of media as this is an integral part of branding as well as the retail and advertising marketing environment.
When analyzing an ad or ad campaign, I certainly understand the need to interrupt, engage/ entertain and persuade. One of my criticisms is that part of the purpose of the TV spots is to persuade someone to take action. With so much freedom, to create a great spot I was disappointed that they didn’t allocate more emphasis to the phone number or web address. By doing so, the consumer can actually make a decision to visit the web, call right now or go to a social media site. Although this might be considered heresy in certain creative circles, I believe that we must not forget the true purpose of an ad from its inception as a creative vehicle that when successful is to result in the viewer doing something, feeling something, or going somewhere. In the 10 TED ads I veiwed recently, there was a total of about 50 seconds (most ads allocated about 2-4 seconds) devoted to a website address vs. about 30 minutes total of story. Is that really the right proportion of time for someone to act? And, if I do go to the web or a Facebook page, shouldn’t I see the continuity of the idea, just in a different media format?
From a “consumer’s” perspective of the TV spot as well as whether the idea could have been more integrated, I have broken down the line-up to highlight the use of the most effective elements.
Chrysler 200
This is an American Auto Industry ad as much as it is an ad for the new Chrysler. From an emotional perspective, it touches you and gives you a reason to believe that America is back and that Motor City, Detroit should not be ignored; especially when you really don’t know much about the soul of the city. The ad inspired me to believe that Chrysler can build a luxury product that we can all be proud to own.
Using Eminem as the Voiceover presenter is brilliant. We have previously known Eminem as a one of the best Rap Artists. Now we have an opportunity to know Eminem as an Ambassador to Detroit with genuine “Street Cred”. Therefore, the TV spot works from many perspectives.
Going to the website, the look and feel is there. If I never saw the TV spot, I think, nice site. Nice car. However, it’s just another car and another car company with product info and testimonials. What if I saw the TV spot first before going to the website? The first picture I see is the Chrysler 200 in front of Disney Hall. After becoming emotionally connected to Detroit and Chrysler through the TV spot, I would have expected that the backdrop be in a location in Detroit vs. in LA. There was no Eminem to be found either. I missed the leveraging of the idea on the website.
Exploring the site a bit more, I went to the Social & Media section of the site and clicked on the first article discussing provocative designs. There I learned about “the American style - along with Lancia vehicles (for Lancia brand information visit www.lanciapress.com). For the first time the two brands are displayed in one exhibition area designed to move away from more traditional motor show stand, favoring a symbolic representation of the future convergence of both brands.” This was disappointing in that I wanted to continue with hearing about the story of how the car and company is making a comeback in Detroit.
The TV spot was great from an emotional and sales perspective. It persuaded me to consider a Chrysler if I were in the market for a new car. The connection fell off a bit since I was set up to expect more and was not completely satisfied. All of a sudden, I felt the commercial message coming through vs. the emotional hook. For me, the campaign was not as fully integrated as it could have been
"While most TV spots are relegated to 30 or 60 seconds, it is quite rare to have the time and budget to tell a poignant story while simultaneously “breaking through the clutter”.
One of the reasons why some ads may be more effective than others has to do with the audience who views the ad. Is the person in the market for the product or service being sold? On one hand it shouldn’t matter. If the idea is big enough and it is executed well, it will likely get a response from those who may be influenced to consider the product later.
The key components of a successful TV spot should include:
•1. Does the advertising educate or entertain the customer in a unique way to be memorable?
•2. Does the medium persuade the viewer that the product or service is the best choice?
•3. Is the product or service going to make me a better person or make my life easier/more productive?
•4. Does the advertising tell me where to get more information to purchase your product? (Is there a clear call to action?)
I have always believed that “the consumer is King”. The past few years have re-defined and elevated this notion, due in great part to Facebook, Twitter, and other social media platforms. As marketers we can develop the best possible communications, yet we have no real control of where and when a consumer chooses to receive the messages we create or in what order; TV, print, web, social, or is it the other way around? When I see a TV spot, I also want to see the idea leveraged in a variety of media as this is an integral part of branding as well as the retail and advertising marketing environment.
When analyzing an ad or ad campaign, I certainly understand the need to interrupt, engage/ entertain and persuade. One of my criticisms is that part of the purpose of the TV spots is to persuade someone to take action. With so much freedom, to create a great spot I was disappointed that they didn’t allocate more emphasis to the phone number or web address. By doing so, the consumer can actually make a decision to visit the web, call right now or go to a social media site. Although this might be considered heresy in certain creative circles, I believe that we must not forget the true purpose of an ad from its inception as a creative vehicle that when successful is to result in the viewer doing something, feeling something, or going somewhere. In the 10 TED ads I veiwed recently, there was a total of about 50 seconds (most ads allocated about 2-4 seconds) devoted to a website address vs. about 30 minutes total of story. Is that really the right proportion of time for someone to act? And, if I do go to the web or a Facebook page, shouldn’t I see the continuity of the idea, just in a different media format?
From a “consumer’s” perspective of the TV spot as well as whether the idea could have been more integrated, I have broken down the line-up to highlight the use of the most effective elements.
Chrysler 200
This is an American Auto Industry ad as much as it is an ad for the new Chrysler. From an emotional perspective, it touches you and gives you a reason to believe that America is back and that Motor City, Detroit should not be ignored; especially when you really don’t know much about the soul of the city. The ad inspired me to believe that Chrysler can build a luxury product that we can all be proud to own.
Using Eminem as the Voiceover presenter is brilliant. We have previously known Eminem as a one of the best Rap Artists. Now we have an opportunity to know Eminem as an Ambassador to Detroit with genuine “Street Cred”. Therefore, the TV spot works from many perspectives.
Going to the website, the look and feel is there. If I never saw the TV spot, I think, nice site. Nice car. However, it’s just another car and another car company with product info and testimonials. What if I saw the TV spot first before going to the website? The first picture I see is the Chrysler 200 in front of Disney Hall. After becoming emotionally connected to Detroit and Chrysler through the TV spot, I would have expected that the backdrop be in a location in Detroit vs. in LA. There was no Eminem to be found either. I missed the leveraging of the idea on the website.
Exploring the site a bit more, I went to the Social & Media section of the site and clicked on the first article discussing provocative designs. There I learned about “the American style - along with Lancia vehicles (for Lancia brand information visit www.lanciapress.com). For the first time the two brands are displayed in one exhibition area designed to move away from more traditional motor show stand, favoring a symbolic representation of the future convergence of both brands.” This was disappointing in that I wanted to continue with hearing about the story of how the car and company is making a comeback in Detroit.
The TV spot was great from an emotional and sales perspective. It persuaded me to consider a Chrysler if I were in the market for a new car. The connection fell off a bit since I was set up to expect more and was not completely satisfied. All of a sudden, I felt the commercial message coming through vs. the emotional hook. For me, the campaign was not as fully integrated as it could have been
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Confirmation Bias: Why Economists Stubbornly Stick To Their Guns
Overcoming predispositions is the most difficult of human endeavors. As John Kay comments in the Financial Times all too many economists and business observers have decided that when it comes to lessons from the financial crisis, they were right all along:
"Last week, a group of eminent economists gathered in Bretton Woods, New Hampshire, to review responses to the financial crisis at a conference organised by the Institute for New Economic Thinking, a group founded by financier George Soros. The event led me to reflect on the phenomenon of confirmation bias, or the tendency to find evidence to support what one already believes.
Three years after it began, enemies of modern capitalism look back and perceive egregious instances of the failure of the market that they had always deplored. President Nicolas Sarkozy and Chancellor Angela Merkel see new flaws in an Anglo-American economic hegemony that they had long detested. Others on the right deplore the mistakes of inept regulation, lax monetary policy and poor policy responses.
The crash challenges established views, people will tell you, but this seems to be a recommendation to others, rather than a personal statement. Lessons have been learnt, they will say, but the lesson most people have learnt is that they were right all along.
This bias receives organisational reinforcement, too. In politics and corporate life there is strong competition to support the opinions of the great leader, be it the head of the International Monetary Fund, or a major bank. Media developments also make it all-too-easy today to find information only from sources that reflect one’s existing opinions; think Fox News or the blogosphere.
In economics, the academic realm ought to be the home of pluralist discourse but the growth of peer review and journal publication has undermined this. University economists, of the sort gathered at Bretton Woods, are now under relentless pressure to conform to a narrow, established paradigm. Inexplicably most supporters of that paradigm also feel that the crisis confirmed its validity.
All these factors played a part in the origins of the crisis. Within financial institutions, there was no incentive to challenge practices that appeared to be profitable. States saw little reason to question these same activities, which also contributed mightily to tax revenues. CNBC told everyone they were getting richer and the academic theory of finance reassured that all was for the best in the best of all possible worlds.
If this self-confidence was to take a knock in 2007-08, it was not for long. Alan Greenspan appeared then to partially recant when he told Congress in 2009 that he now doubted the models of rational behaviour on which he had long relied. But a recent article in this paper, criticising the Dodd-Frank Act, suggests that he has now recovered his composure. Mr Greenspan will no doubt be an enthusiastic viewer of Atlas Shrugged, the film of the novel by his mentor Ayn Rand, which is released in America this week. Many libertarians will go to cheer; a few on the left to jeer. But again no minds will be changed.
Britain’s Gordon Brown did stun the audience at Bretton Woods by seeming to admit an error in not having recognised the degree of interdependence in the global financial system. It may be churlish to criticise a man so relaxed now that the terrible burden of office has been torn from him. But his admission was but preliminary to a reminder that such interdependence reinforced the need for the much more extensive global financial regulation he had always advocated.
Mr Brown’s call will be well received at the impending annual meetings of the IMF and World Bank, as it was no doubt intended to be. If IMF head Dominique Strauss-Kahn runs for France’s presidency, there will be a vacancy to be filled by a European statesman. It is the custom at these global conclaves to conclude that the financial crisis requires that the institutions that host them should be strengthened.
In similar vein, the European Union discovered that the crisis demanded that its institutions should be proliferated and their powers enhanced. The Basel committees – which spent two decades devising complex rules on bank capital adequacy that proved perfectly useless before the crisis and damaging afterwards – quickly urged a still more extensive set of capital adequacy controls; and so on.
It was perhaps harder for banks to argue that the crisis proved how right they had been. But, as it turns out, not impossible. Here their revisionist view shifts responsibility firmly on to government – and even the public, which was guilty of robbing banks of money they never wanted to lend. “We were just the waiters at the party,” I heard one executive explain, clearly in ignorance of how much waiters are paid, or that most waiters do not get to determine their own tips.
Not everyone suffers from confirmation bias. If I eschew a visit to Atlas Shrugged, it will be because the plot is silly and the prose turgid, not because of its message. I also believe, on a dispassionate view of the evidence, that the crisis shows tougher regulation of the banking industry is preferable to supervision of its conduct – a view I have always shared with Sir John Vickers. I did misinterpret some elements of the crisis, believing that the securitisation bubble would create mayhem in the hedge fund sector rather than, as it did, in the major banks. But the outcome still provides strong support for the notion, a view I have long had, that risk capital is best provided by smaller institutions in close touch with investors, not the banks to which we entrust our savings. Funny, isn’t it, how even one’s errors confirm the power of one’s ideas?
"Last week, a group of eminent economists gathered in Bretton Woods, New Hampshire, to review responses to the financial crisis at a conference organised by the Institute for New Economic Thinking, a group founded by financier George Soros. The event led me to reflect on the phenomenon of confirmation bias, or the tendency to find evidence to support what one already believes.
Three years after it began, enemies of modern capitalism look back and perceive egregious instances of the failure of the market that they had always deplored. President Nicolas Sarkozy and Chancellor Angela Merkel see new flaws in an Anglo-American economic hegemony that they had long detested. Others on the right deplore the mistakes of inept regulation, lax monetary policy and poor policy responses.
The crash challenges established views, people will tell you, but this seems to be a recommendation to others, rather than a personal statement. Lessons have been learnt, they will say, but the lesson most people have learnt is that they were right all along.
This bias receives organisational reinforcement, too. In politics and corporate life there is strong competition to support the opinions of the great leader, be it the head of the International Monetary Fund, or a major bank. Media developments also make it all-too-easy today to find information only from sources that reflect one’s existing opinions; think Fox News or the blogosphere.
In economics, the academic realm ought to be the home of pluralist discourse but the growth of peer review and journal publication has undermined this. University economists, of the sort gathered at Bretton Woods, are now under relentless pressure to conform to a narrow, established paradigm. Inexplicably most supporters of that paradigm also feel that the crisis confirmed its validity.
All these factors played a part in the origins of the crisis. Within financial institutions, there was no incentive to challenge practices that appeared to be profitable. States saw little reason to question these same activities, which also contributed mightily to tax revenues. CNBC told everyone they were getting richer and the academic theory of finance reassured that all was for the best in the best of all possible worlds.
If this self-confidence was to take a knock in 2007-08, it was not for long. Alan Greenspan appeared then to partially recant when he told Congress in 2009 that he now doubted the models of rational behaviour on which he had long relied. But a recent article in this paper, criticising the Dodd-Frank Act, suggests that he has now recovered his composure. Mr Greenspan will no doubt be an enthusiastic viewer of Atlas Shrugged, the film of the novel by his mentor Ayn Rand, which is released in America this week. Many libertarians will go to cheer; a few on the left to jeer. But again no minds will be changed.
Britain’s Gordon Brown did stun the audience at Bretton Woods by seeming to admit an error in not having recognised the degree of interdependence in the global financial system. It may be churlish to criticise a man so relaxed now that the terrible burden of office has been torn from him. But his admission was but preliminary to a reminder that such interdependence reinforced the need for the much more extensive global financial regulation he had always advocated.
Mr Brown’s call will be well received at the impending annual meetings of the IMF and World Bank, as it was no doubt intended to be. If IMF head Dominique Strauss-Kahn runs for France’s presidency, there will be a vacancy to be filled by a European statesman. It is the custom at these global conclaves to conclude that the financial crisis requires that the institutions that host them should be strengthened.
In similar vein, the European Union discovered that the crisis demanded that its institutions should be proliferated and their powers enhanced. The Basel committees – which spent two decades devising complex rules on bank capital adequacy that proved perfectly useless before the crisis and damaging afterwards – quickly urged a still more extensive set of capital adequacy controls; and so on.
It was perhaps harder for banks to argue that the crisis proved how right they had been. But, as it turns out, not impossible. Here their revisionist view shifts responsibility firmly on to government – and even the public, which was guilty of robbing banks of money they never wanted to lend. “We were just the waiters at the party,” I heard one executive explain, clearly in ignorance of how much waiters are paid, or that most waiters do not get to determine their own tips.
Not everyone suffers from confirmation bias. If I eschew a visit to Atlas Shrugged, it will be because the plot is silly and the prose turgid, not because of its message. I also believe, on a dispassionate view of the evidence, that the crisis shows tougher regulation of the banking industry is preferable to supervision of its conduct – a view I have always shared with Sir John Vickers. I did misinterpret some elements of the crisis, believing that the securitisation bubble would create mayhem in the hedge fund sector rather than, as it did, in the major banks. But the outcome still provides strong support for the notion, a view I have long had, that risk capital is best provided by smaller institutions in close touch with investors, not the banks to which we entrust our savings. Funny, isn’t it, how even one’s errors confirm the power of one’s ideas?
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Budget-strapped Governments Selling Ads on Public Property Including Schools
Some may applaud the move towards self-sufficiency but as this article by Catherine Rampell in the New York Times points out, that means implicit government endorsement, whether intended or not, of unhealthy snack foods and questionable services. The larger point is that by underfunding government, citizens are inviting scandal which further undermines the effectiveness of government and their faith in public services at a time when the ageing population in most developed countries means more of such services will be needed in coming years:
"Cash-hungry states and municipalities, in pursuit of even the smallest amounts of revenue, have begun to exploit one market that they have exclusive control over: their own property.
With the help of a few eager marketing consultants, many governments are peddling the rights to place advertisements in public school cafeterias, on the sides of yellow school buses, in prison holding areas and in the waiting rooms of welfare offices and the Department of Motor Vehicles.
The revenue generated by these ads is just a drop in the bucket for states and counties with deficits in the millions or billions of dollars. But supporters say every penny helps.
Still, critics question whether the modest sums are worth further exposing citizens — especially children — to even more commercial pitches.
“I have a 5-year-old who doesn’t understand what ads are,” says Megan Keller, 30, of Provo, Utah, who says her son Collin, a kindergartner, sees seductive posters for sugary cereals every day in the lunchroom of his public school. “I don’t like that he thinks, ‘Oh, this is good because it comes from my school,’ and I’m having to explain to him why that’s not true.”
Because Utah will soon start selling ads on the sides of school buses, Ms. Keller has decided to transfer Collin to a nearby charter school that has sworn off commercialism.
Utah became the latest state to allow school bus advertising when its governor signed a law last month authorizing the practice. The strategy began in the 1990s in Colorado, then spread to Texas, Arizona, Tennessee and Massachusetts. In the last year, at least eight other states have considered similar legislation.
One of them, New Jersey, approved school bus advertising in January, and the state’s Board of Education is now writing guidelines for size and sponsorship restrictions. So far, four districts have expressed interest in participating, according to Frank Belluscio, a spokesman for the New Jersey School Boards Association. Idaho’s Legislature rejected a similar proposal earlier this month.
Districts with 250 buses can expect to generate about $1 million over four years by selling some yellow space, according to Michael Beauchamp, president of Alpha Media, a company based in Dallas that manages advertising on 3,000 school buses in Texas and Arizona.
Officials say that the revenue, while small, can still make the difference between having new textbooks — or a music teacher or a volleyball team — and not having them.
“If the alternative is huge classroom sizes and losing teachers and losing qualified personnel, yes, this seems like something we should consider,” said Valery Lynch, 48, a fourth-grade teacher in The Woodlands, Tex., north of Houston. “But I know that it’s a bag of worms, and people are going to ask ‘What’s next? An ad on the classroom clock?’ “
Some schools have been selling advertising space on their school Web sites and in campus parking lots, in addition to the lunchroom and the school buses. An online ad usually generates about $100 a month for a school, according to Jim O’Connell, the president of Media Advertising in Motion, a company in Scottsdale, Ariz., that sells advertising for school districts.
Critics say exposing impressionable young children to ads that appear to be endorsed by their educators is problematic.
“Mandatory education laws are based on the idea that education is good for society, and is good for kids,” said Josh Golin, associate director of Campaign for a Commercial-Free Childhood, a nonprofit organization. “That argument falls apart when you’re talking about mandatory exposure to advertising.”
The companies that help place the ads say that children are exposed to advertising just about everywhere they look anyway, including — for many decades — in their high school yearbooks and sports stadiums. They say that the primary audience for ads on the outside of school buses is adults, not children, and that much of the space is being purchased by dentists, banks and insurance companies.
“School bus advertising is not for the kids in the bus, but for the cars around the bus that see the advertising when they’re at a stop sign or driving down the highway,” said Bryan Nelson, a Republican state representative from Florida’s 38th District, outside of Orlando. Mr. Nelson is sponsoring legislation that would allow school bus ads and direct much of the revenue toward defraying the buses’ fuel costs. “When you think about how many people are going to see those ads, you get a lot of exposure, so we can charge a premium price,” he said.
Some states, including Florida, already allow advertising inside the bus. And while many states have prohibited school bus advertising for alcohol, tobacco and sexual content, none have ruled out displaying ads for junk food, Mr. Golin said. Pizza parlors and pizza chains are among the businesses that have purchased advertising on school buses.
“When concern about childhood obesity is at an all-time high, and there’s a focus on taking junk foods out of schools, it’s still possible to see ads for those very same products on the sides of school buses,” said Mr. Golin. “It makes no sense.”
In addition to schools and school buses, jails are also getting ads in some states and counties. Who would want to advertise to criminals? Defense lawyers and bail bondsmen.
Next week, Erie County Holding Center in Buffalo will begin displaying ads on new high-definition television screens that defendants see immediately after arrest. The spots, which run on a loop along with the informational messages from the holding center, sell for $40 a week and have nearly sold out for the rest of the year.
Anthony Diina, president and owner of Metrodata Services, the private company hired to run the new system, said he expected the program to bring the county $8,000 to $15,000 a year. The governments of Alaska, San Francisco and Orlando, Fla., have also contacted his company about setting up advertising programs in their jails. A jail in southwestern Florida started a similar program in 2009.
Last year, Mr. Diina’s company set up television screens for advertising at the Erie County offices of the state Department of Motor Vehicles, a pilot program that he expects to bring the county revenue of “six figures over the course of five years.” He says that the reaction so far has been positive.
“These ads provide distraction and amusement that lessens the perceived waiting time,” Mr. Diina said. “And it doesn’t hurt that they bring in some money, too.”
"Cash-hungry states and municipalities, in pursuit of even the smallest amounts of revenue, have begun to exploit one market that they have exclusive control over: their own property.
With the help of a few eager marketing consultants, many governments are peddling the rights to place advertisements in public school cafeterias, on the sides of yellow school buses, in prison holding areas and in the waiting rooms of welfare offices and the Department of Motor Vehicles.
The revenue generated by these ads is just a drop in the bucket for states and counties with deficits in the millions or billions of dollars. But supporters say every penny helps.
Still, critics question whether the modest sums are worth further exposing citizens — especially children — to even more commercial pitches.
“I have a 5-year-old who doesn’t understand what ads are,” says Megan Keller, 30, of Provo, Utah, who says her son Collin, a kindergartner, sees seductive posters for sugary cereals every day in the lunchroom of his public school. “I don’t like that he thinks, ‘Oh, this is good because it comes from my school,’ and I’m having to explain to him why that’s not true.”
Because Utah will soon start selling ads on the sides of school buses, Ms. Keller has decided to transfer Collin to a nearby charter school that has sworn off commercialism.
Utah became the latest state to allow school bus advertising when its governor signed a law last month authorizing the practice. The strategy began in the 1990s in Colorado, then spread to Texas, Arizona, Tennessee and Massachusetts. In the last year, at least eight other states have considered similar legislation.
One of them, New Jersey, approved school bus advertising in January, and the state’s Board of Education is now writing guidelines for size and sponsorship restrictions. So far, four districts have expressed interest in participating, according to Frank Belluscio, a spokesman for the New Jersey School Boards Association. Idaho’s Legislature rejected a similar proposal earlier this month.
Districts with 250 buses can expect to generate about $1 million over four years by selling some yellow space, according to Michael Beauchamp, president of Alpha Media, a company based in Dallas that manages advertising on 3,000 school buses in Texas and Arizona.
Officials say that the revenue, while small, can still make the difference between having new textbooks — or a music teacher or a volleyball team — and not having them.
“If the alternative is huge classroom sizes and losing teachers and losing qualified personnel, yes, this seems like something we should consider,” said Valery Lynch, 48, a fourth-grade teacher in The Woodlands, Tex., north of Houston. “But I know that it’s a bag of worms, and people are going to ask ‘What’s next? An ad on the classroom clock?’ “
Some schools have been selling advertising space on their school Web sites and in campus parking lots, in addition to the lunchroom and the school buses. An online ad usually generates about $100 a month for a school, according to Jim O’Connell, the president of Media Advertising in Motion, a company in Scottsdale, Ariz., that sells advertising for school districts.
Critics say exposing impressionable young children to ads that appear to be endorsed by their educators is problematic.
“Mandatory education laws are based on the idea that education is good for society, and is good for kids,” said Josh Golin, associate director of Campaign for a Commercial-Free Childhood, a nonprofit organization. “That argument falls apart when you’re talking about mandatory exposure to advertising.”
The companies that help place the ads say that children are exposed to advertising just about everywhere they look anyway, including — for many decades — in their high school yearbooks and sports stadiums. They say that the primary audience for ads on the outside of school buses is adults, not children, and that much of the space is being purchased by dentists, banks and insurance companies.
“School bus advertising is not for the kids in the bus, but for the cars around the bus that see the advertising when they’re at a stop sign or driving down the highway,” said Bryan Nelson, a Republican state representative from Florida’s 38th District, outside of Orlando. Mr. Nelson is sponsoring legislation that would allow school bus ads and direct much of the revenue toward defraying the buses’ fuel costs. “When you think about how many people are going to see those ads, you get a lot of exposure, so we can charge a premium price,” he said.
Some states, including Florida, already allow advertising inside the bus. And while many states have prohibited school bus advertising for alcohol, tobacco and sexual content, none have ruled out displaying ads for junk food, Mr. Golin said. Pizza parlors and pizza chains are among the businesses that have purchased advertising on school buses.
“When concern about childhood obesity is at an all-time high, and there’s a focus on taking junk foods out of schools, it’s still possible to see ads for those very same products on the sides of school buses,” said Mr. Golin. “It makes no sense.”
In addition to schools and school buses, jails are also getting ads in some states and counties. Who would want to advertise to criminals? Defense lawyers and bail bondsmen.
Next week, Erie County Holding Center in Buffalo will begin displaying ads on new high-definition television screens that defendants see immediately after arrest. The spots, which run on a loop along with the informational messages from the holding center, sell for $40 a week and have nearly sold out for the rest of the year.
Anthony Diina, president and owner of Metrodata Services, the private company hired to run the new system, said he expected the program to bring the county $8,000 to $15,000 a year. The governments of Alaska, San Francisco and Orlando, Fla., have also contacted his company about setting up advertising programs in their jails. A jail in southwestern Florida started a similar program in 2009.
Last year, Mr. Diina’s company set up television screens for advertising at the Erie County offices of the state Department of Motor Vehicles, a pilot program that he expects to bring the county revenue of “six figures over the course of five years.” He says that the reaction so far has been positive.
“These ads provide distraction and amusement that lessens the perceived waiting time,” Mr. Diina said. “And it doesn’t hurt that they bring in some money, too.”
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Apr 15, 2011
Are Women Really Less Competitive Than Men? In a Word, No.
Recent mainstream media reports have jumped on National Bureau of Economic Research data to claim that it proves women are not as competitivley oriented as men. Alexandra Harwin explains in Slate why this interpretation is not only misleading but downright wrong:
"In recent years lab experiments have shored up evidence for the nostalgic notion that women just aren’t as competitive as men are. A new study from the National Bureau of Economic Research finally steps out of the lab and into the workplace to test these claims. Economists posted want ads in 16 cities, randomizing pay schemes to see if offering compensation contingent on work product impacts how many men and women apply. Whenever workers had to outperform their colleagues to obtain the maximum salary advertised, fewer women applied than men.
Media outlets like ABC News jumped on the study as proof that "[w]omen shy away from competitive workplaces whereas men covet, and even thrive in, competitive environments." Or, as a Time blog, put it: "The conclusion: Women don't like competition." In fact, the study explicitly rejects these oversimplifications. As the authors, Jeffrey A. Flory of the University of Maryland and Andreas Leibbrandt and John List from the University of Chicago explain, "This gap is not driven by men opting to compete and women opting not to compete." In fact, "women and men both prefer non-competitive workplaces," it’s just that women prefer them more.
And here’s the important part: According to the study, women will apply for competitive jobs as long as they pay more, on average, than the fixed salaries they can get elsewhere. That finding strongly undercuts the claim, often advanced by employers, that women simply don’t want competitive jobs. What lawyers call the "lack of interest defense" might explain why women don’t go for competitive jobs that are mediocre, but it doesn’t justify their underrepresentation in the really remunerative ones.
"In recent years lab experiments have shored up evidence for the nostalgic notion that women just aren’t as competitive as men are. A new study from the National Bureau of Economic Research finally steps out of the lab and into the workplace to test these claims. Economists posted want ads in 16 cities, randomizing pay schemes to see if offering compensation contingent on work product impacts how many men and women apply. Whenever workers had to outperform their colleagues to obtain the maximum salary advertised, fewer women applied than men.
Media outlets like ABC News jumped on the study as proof that "[w]omen shy away from competitive workplaces whereas men covet, and even thrive in, competitive environments." Or, as a Time blog, put it: "The conclusion: Women don't like competition." In fact, the study explicitly rejects these oversimplifications. As the authors, Jeffrey A. Flory of the University of Maryland and Andreas Leibbrandt and John List from the University of Chicago explain, "This gap is not driven by men opting to compete and women opting not to compete." In fact, "women and men both prefer non-competitive workplaces," it’s just that women prefer them more.
And here’s the important part: According to the study, women will apply for competitive jobs as long as they pay more, on average, than the fixed salaries they can get elsewhere. That finding strongly undercuts the claim, often advanced by employers, that women simply don’t want competitive jobs. What lawyers call the "lack of interest defense" might explain why women don’t go for competitive jobs that are mediocre, but it doesn’t justify their underrepresentation in the really remunerative ones.
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Middle Class Miasma:
Successive studies detailing falling employment opportunities and declining life styles for the middle class are becoming a common theme in western economic circles. They key point in the study cited below by Chrystia Freeland in Reuters is that the 'gales of creative destruction,' often cited as the theoretical silver cloud of job loss, do not appear to be leading to economic rebirth for most:
"Global capitalism isn’t working for the American middle class. That isn’t a headline from the left-leaning Huffington Post, or a comment on Glenn Beck’s right-wing populist blackboard. It is, instead, the conclusion of a rigorous analysis bearing the imprimatur of the U.S. establishment: the paper’s lead author is Michael Spence, recipient of the Nobel Prize in economic sciences, and it was published by the Council on Foreign Relations.
Spence and his co-author, Sandile Hlatshwayo, examined the changes in the structure of the U.S. economy, particularly employment trends, over the past 20 years. They found that value added per U.S. worker increased sharply during that period – 21 per cent for the economy as a whole, and 44 per cent in the “tradable” sector, which is geek-speak for those businesses integrated into the global economy. But even as productivity soared, wages and job opportunities stagnated.
The take-away is this: Globalization is making U.S. companies more productive, but the benefits are mostly being enjoyed by the C-suite. The middle class, meanwhile, is struggling to find work, and many of the jobs available are poorly paid.
Here’s how Spence and Hlatshwayo put it: “The most educated, who work in the highly compensated jobs of the tradable and non-tradable sectors, have high and rising incomes and interesting and challenging employment opportunities, domestically and abroad. Many of the middle-income group, however, are seeing employment options narrow and incomes stagnate.”
Spence is neither a protectionist nor a Luddite. He prominently notes the benefit to consumers of globalization: “Many goods and services are less expensive than they would be if the economy were walled off from the global economy, and the benefits of lower prices are widespread.” He also points to the positive impact of globalization on much of what we used to call the Third World, particularly in China and India: “Poverty reduction has been tremendous, and more is yet to come.”
Spence’s paper should be read alongside the work that David Autor, an economist at the Massachusetts Institute of Technology, has been doing on the impact of the technology revolution on U.S. jobs. In an echo of Spence, Autor finds that technology has had a “polarizing” impact on the U.S. work force – it has made people at the top more productive and better paid and hasn’t had much effect on the “hands-on” jobs at the bottom of the labor force. But opportunities and salaries in the middle have been hollowed out.
Taken together, here’s the big story Spence and Autor tell about the U.S. and world economies: Globalization and the technology revolution are increasing productivity and prosperity. But those rewards are unevenly shared – they are going to the people at the top in the United States, and enriching emerging economies over all. But the American middle class is losing out.
To Americans in the middle, it may seem surprising that it takes a Nobel laureate and sheaves of economic data to reach this unremarkable conclusion. But the analysis and its impeccable provenance matter, because this basic truth about how the world economy is working today is being ignored by most of the politicians in the United States and denied by many of its leading business people.
Consider a recent breakfast at the Council on Foreign Relations that I moderated. The speaker was Randall Stephenson, chief executive officer of AT&T. Mr. Stephenson enthused that the technology revolution was the most transformative shift in the world economy since the invention of the combustion engine and electrification, leading to a huge increase in “the velocity of commerce” and therefore in productivity.
One of the Council of Foreign Relations members in the audience that morning was Farooq Kathwari, CEO of Ethan Allen, the furniture manufacturer and retailer. Kathwari is a storybook American entrepreneur. He arrived in New York from Kashmir with $37 in his pocket and got his start in the retail trade selling goods sent to him from home by his grandfather.
Here’s the question he asked Stephenson: “Over the last 10 years, with the help of technology and other things, we today are doing about the same business with 50 per cent less people. We’re talking of jobs. I would just like to get your perspectives on this great technology. How is it going to over all affect the job markets in the next five years?”
Mr. Stephenson said not to worry. “While technology allows companies like yours to do more with less, I don’t think that necessarily means that there is less employment opportunities available. It’s just a redeployment of those employment opportunities. And those employees you have, my expectation was, with your productivity, their standard of living has actually gotten better.”
Spence’s work tells us that simply isn’t happening. “One possible response to these trends would be to assert that market outcomes, especially efficient ones, always make everyone better off in the long run,” he wrote. “That seems clearly incorrect and is supported by neither theory nor experience.”
Spence says that as he was doing his research, he was often asked what “market failure” was responsible for these outcomes: Where were the skewed incentives, flawed regulations or missing information that led to this poor result? That question, Spence says, misses the point. “Multinational companies,” he said, “are doing exactly what one would expect them to do. The resulting efficiency of the global system is high and rising. So there is no market failure.”
This conclusion is a very big deal – Spence is telling us that global capitalism is working the way it should, but that the American middle class is losing out anyway. Since global capitalism is the best way we’ve come up with so far to run our economy, that creates quite a dilemma.
Spence is honest enough to admit that he has no easy answers. But he has posed the right question. American politicians in both parties are focused on a budget debate that is superficial, premature and ultimately about something pretty easy to figure out. Instead, we should all be working on the much bigger problem of how to make capitalism work for the American middle class.
"Global capitalism isn’t working for the American middle class. That isn’t a headline from the left-leaning Huffington Post, or a comment on Glenn Beck’s right-wing populist blackboard. It is, instead, the conclusion of a rigorous analysis bearing the imprimatur of the U.S. establishment: the paper’s lead author is Michael Spence, recipient of the Nobel Prize in economic sciences, and it was published by the Council on Foreign Relations.
Spence and his co-author, Sandile Hlatshwayo, examined the changes in the structure of the U.S. economy, particularly employment trends, over the past 20 years. They found that value added per U.S. worker increased sharply during that period – 21 per cent for the economy as a whole, and 44 per cent in the “tradable” sector, which is geek-speak for those businesses integrated into the global economy. But even as productivity soared, wages and job opportunities stagnated.
The take-away is this: Globalization is making U.S. companies more productive, but the benefits are mostly being enjoyed by the C-suite. The middle class, meanwhile, is struggling to find work, and many of the jobs available are poorly paid.
Here’s how Spence and Hlatshwayo put it: “The most educated, who work in the highly compensated jobs of the tradable and non-tradable sectors, have high and rising incomes and interesting and challenging employment opportunities, domestically and abroad. Many of the middle-income group, however, are seeing employment options narrow and incomes stagnate.”
Spence is neither a protectionist nor a Luddite. He prominently notes the benefit to consumers of globalization: “Many goods and services are less expensive than they would be if the economy were walled off from the global economy, and the benefits of lower prices are widespread.” He also points to the positive impact of globalization on much of what we used to call the Third World, particularly in China and India: “Poverty reduction has been tremendous, and more is yet to come.”
Spence’s paper should be read alongside the work that David Autor, an economist at the Massachusetts Institute of Technology, has been doing on the impact of the technology revolution on U.S. jobs. In an echo of Spence, Autor finds that technology has had a “polarizing” impact on the U.S. work force – it has made people at the top more productive and better paid and hasn’t had much effect on the “hands-on” jobs at the bottom of the labor force. But opportunities and salaries in the middle have been hollowed out.
Taken together, here’s the big story Spence and Autor tell about the U.S. and world economies: Globalization and the technology revolution are increasing productivity and prosperity. But those rewards are unevenly shared – they are going to the people at the top in the United States, and enriching emerging economies over all. But the American middle class is losing out.
To Americans in the middle, it may seem surprising that it takes a Nobel laureate and sheaves of economic data to reach this unremarkable conclusion. But the analysis and its impeccable provenance matter, because this basic truth about how the world economy is working today is being ignored by most of the politicians in the United States and denied by many of its leading business people.
Consider a recent breakfast at the Council on Foreign Relations that I moderated. The speaker was Randall Stephenson, chief executive officer of AT&T. Mr. Stephenson enthused that the technology revolution was the most transformative shift in the world economy since the invention of the combustion engine and electrification, leading to a huge increase in “the velocity of commerce” and therefore in productivity.
One of the Council of Foreign Relations members in the audience that morning was Farooq Kathwari, CEO of Ethan Allen, the furniture manufacturer and retailer. Kathwari is a storybook American entrepreneur. He arrived in New York from Kashmir with $37 in his pocket and got his start in the retail trade selling goods sent to him from home by his grandfather.
Here’s the question he asked Stephenson: “Over the last 10 years, with the help of technology and other things, we today are doing about the same business with 50 per cent less people. We’re talking of jobs. I would just like to get your perspectives on this great technology. How is it going to over all affect the job markets in the next five years?”
Mr. Stephenson said not to worry. “While technology allows companies like yours to do more with less, I don’t think that necessarily means that there is less employment opportunities available. It’s just a redeployment of those employment opportunities. And those employees you have, my expectation was, with your productivity, their standard of living has actually gotten better.”
Spence’s work tells us that simply isn’t happening. “One possible response to these trends would be to assert that market outcomes, especially efficient ones, always make everyone better off in the long run,” he wrote. “That seems clearly incorrect and is supported by neither theory nor experience.”
Spence says that as he was doing his research, he was often asked what “market failure” was responsible for these outcomes: Where were the skewed incentives, flawed regulations or missing information that led to this poor result? That question, Spence says, misses the point. “Multinational companies,” he said, “are doing exactly what one would expect them to do. The resulting efficiency of the global system is high and rising. So there is no market failure.”
This conclusion is a very big deal – Spence is telling us that global capitalism is working the way it should, but that the American middle class is losing out anyway. Since global capitalism is the best way we’ve come up with so far to run our economy, that creates quite a dilemma.
Spence is honest enough to admit that he has no easy answers. But he has posed the right question. American politicians in both parties are focused on a budget debate that is superficial, premature and ultimately about something pretty easy to figure out. Instead, we should all be working on the much bigger problem of how to make capitalism work for the American middle class.
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Interactive Advertising: Artificial and Intelligent
The weather, the time of day, the day of the week, the volume of traffic. All of these can now be factored into advertising decision-making -by the ad itself. The goal is heightened efficiency and effectiveness for the advertiser, but a by-product may be increased customer satisfaction as consumers learn from ads in ways that stimulate their own thinking about needs and wants. Sheila Shayon reports in Brand Channel:
"Last year we wrote about interactive billboards in Japan that recalled the interactive ads featured in the Tom Cruise thriller, Minority Report. Today we bring you Immersive Labs, a New York-based advertising technology startup that produces dynamically tailored ad messages to passerby.
The anonymous facial detection is nuanced enough to parse ads by gender, age, distance, attention time and gaze, weather, time of day, and day of week. The technology is invisible to the viewer and works one-on-one or with crowds.
"The real focus is artificial intelligence, so that ads can learn and improve over time," says Immersive Labs CEO Jason Sosa, whose freshly-hatched digital signage firm was one of 11 chosen from the TechStars accelerator program. "The software may learn that it's better to play a Coca-Cola ad at this time of day, or when the weather's like this."
Brands, in-store retail and digital screen ad networks can leverage Immersive Lab’s software, which changes content dynamically, in real-time, by adding a low-cost web camera that lets them optimize ad displays for each impression opportunity. Anonymous audience measurement reports and analytics are accessible via a web-based dashboard.
Immersive's technology doesn't identify individuals, but gathers "anonymous" information to dynamically serve content based on external data. A young male passerby may see a Bud Lite ad, while a younger woman may get served a Victoria’s Secret ad.
"It takes away the noise. You're not going to get irrelevant ads any more. You're going to get ads you actually want to see," adds Sosa.
Electronics giant NEC has deployed smart billboards with embedded facial-recognition technology in Japan, and in Germany, a Foursquare check-in on a GranataPet billboard triggers an offering of dog food, as seen in this video:
According to David Jones, global CEO of ad agency Havas and Euro RSCG Worldwide, "What we're going to see is the boring world of retail and the sexy world of digital will come together, and it'll be an unbelievable change. The biggest single revolution that we'll see in digital is all around location based" advertising.
In another interesting test in New York, a digital billboard near the entrance to the Holland Tunnel displays "feelings" and interacts with onlookers via a GPS-based augmented reality app from GoldRun:
"Last year we wrote about interactive billboards in Japan that recalled the interactive ads featured in the Tom Cruise thriller, Minority Report. Today we bring you Immersive Labs, a New York-based advertising technology startup that produces dynamically tailored ad messages to passerby.
The anonymous facial detection is nuanced enough to parse ads by gender, age, distance, attention time and gaze, weather, time of day, and day of week. The technology is invisible to the viewer and works one-on-one or with crowds.
"The real focus is artificial intelligence, so that ads can learn and improve over time," says Immersive Labs CEO Jason Sosa, whose freshly-hatched digital signage firm was one of 11 chosen from the TechStars accelerator program. "The software may learn that it's better to play a Coca-Cola ad at this time of day, or when the weather's like this."
Brands, in-store retail and digital screen ad networks can leverage Immersive Lab’s software, which changes content dynamically, in real-time, by adding a low-cost web camera that lets them optimize ad displays for each impression opportunity. Anonymous audience measurement reports and analytics are accessible via a web-based dashboard.
Immersive's technology doesn't identify individuals, but gathers "anonymous" information to dynamically serve content based on external data. A young male passerby may see a Bud Lite ad, while a younger woman may get served a Victoria’s Secret ad.
"It takes away the noise. You're not going to get irrelevant ads any more. You're going to get ads you actually want to see," adds Sosa.
Electronics giant NEC has deployed smart billboards with embedded facial-recognition technology in Japan, and in Germany, a Foursquare check-in on a GranataPet billboard triggers an offering of dog food, as seen in this video:
According to David Jones, global CEO of ad agency Havas and Euro RSCG Worldwide, "What we're going to see is the boring world of retail and the sexy world of digital will come together, and it'll be an unbelievable change. The biggest single revolution that we'll see in digital is all around location based" advertising.
In another interesting test in New York, a digital billboard near the entrance to the Holland Tunnel displays "feelings" and interacts with onlookers via a GPS-based augmented reality app from GoldRun:
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Human Language Ability Originated In Africa: All Dialects Spring From Same Source
Controversial new research suggests that language began in southern Africa - as did man - and that there was one point of origination. There are interesting scentific implications here, particularly with regard to research on the evolutionary developments tied to new ways of communicating on the web. One source with many variants presents a different set of challenges than does many sources with many variants for those attempting to capture natural development and re-seed what they learn on the web. Nicholas Wade reports in the New York Times:
"A researcher analyzing the sounds in languages spoken around the world has detected an ancient signal that points to southern Africa as the place where modern human language originated. The finding fits well with the evidence from fossil skulls and DNA that modern humans originated in Africa. It also implies, though does not prove, that modern language originated only once, an issue of considerable controversy among linguists.
The detection of such an ancient signal in language is surprising. Because words change so rapidly, many linguists think that languages cannot be traced very far back in time. The oldest language tree so far reconstructed, that of the Indo-European family, which includes English, goes back 9,000 years at most.
Quentin D. Atkinson, a biologist at the University of Auckland in New Zealand, has shattered this time barrier, if his claim is correct, by looking not at words but at phonemes — the consonants, vowels and tones that are the simplest elements of language. Dr. Atkinson, an expert at applying mathematical methods to linguistics, has found a simple but striking pattern in some 500 languages spoken throughout the world: A language area uses fewer phonemes the farther that early humans had to travel from Africa to reach it.
Some of the click-using languages of Africa have more than 100 phonemes, whereas Hawaiian, toward the far end of the human migration route out of Africa, has only 13. English has about 45 phonemes.
This pattern of decreasing diversity with distance, similar to the well-established decrease in genetic diversity with distance from Africa, implies that the origin of modern human language is in the region of southwestern Africa, Dr. Atkinson says in an article published on Thursday in the journal Science.
Language is at least 50,000 years old, the date that modern humans dispersed from Africa, and some experts say it is at least 100,000 years old. Dr. Atkinson, if his work is correct, is picking up a distant echo from this far back in time.
Linguists tend to dismiss any claims to have found traces of language older than 10,000 years, “but this paper comes closest to convincing me that this type of research is possible,” said Martin Haspelmath, a linguist at the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany.
Dr. Atkinson is one of several biologists who have started applying to historical linguistics the sophisticated statistical methods developed for constructing genetic trees based on DNA sequences. These efforts have been regarded with suspicion by some linguists.
In 2003 Dr. Atkinson and Russell Gray, another biologist at the University of Auckland, reconstructed the tree of Indo-European languages with a DNA tree-drawing method called Bayesian phylogeny. The tree indicated that Indo-European was much older than historical linguists had estimated and hence favored the theory that the language family had diversified with the spread of agriculture some 10,000 years ago, not with a military invasion by steppe people some 6,000 years ago, the idea favored by most historical linguists.
“We’re uneasy about mathematical modeling that we don’t understand juxtaposed to philological modeling that we do understand,” Brian D. Joseph, a linguist at Ohio State University, said about the Indo-European tree. But he thinks that linguists may be more willing to accept Dr. Atkinson’s new article because it does not conflict with any established area of linguistic scholarship.
“I think we ought to take this seriously, although there are some who will dismiss it out of hand,” Dr. Joseph said.
Another linguist, Donald A. Ringe of the University of Pennsylvania, said, “It’s too early to tell if Atkinson’s idea is correct, but if so, it’s one of the most interesting articles in historical linguistics that I’ve seen in a decade.”
Dr. Atkinson’s finding fits with other evidence about the origins of language. The Bushmen of the Kalahari Desert belong to one of the earliest branches of the genetic tree based on human mitochondrial DNA. Their languages belong to a family known as Khoisan and include many click sounds, which seem to be a very ancient feature of language. And they live in southern Africa, which Dr. Atkinson’s calculations point to as the origin of language. But whether Khoisan is closest to some ancestral form of language “is not something my method can speak to,” Dr. Atkinson said.
His study was prompted by a recent finding that the number of phonemes in a language increases with the number of people who speak it. This gave him the idea that phoneme diversity would increase as a population grew, but would fall again when a small group split off and migrated away from the parent group.
Such a continual budding process, which is the way the first modern humans expanded around the world, is known to produce what biologists call a serial founder effect. Each time a smaller group moves away, there is a reduction in its genetic diversity. The reduction in phonemic diversity over increasing distances from Africa, as seen by Dr. Atkinson, parallels the reduction in genetic diversity already recorded by biologists.
For either kind of reduction in diversity to occur, the population budding process must be rapid, or diversity will build up again. This implies that the human expansion out of Africa was very rapid at each stage. The acquisition of modern language, or the technology it made possible, may have prompted the expansion, Dr. Atkinson said.
“What’s so remarkable about this work is that it shows language doesn’t change all that fast — it retains a signal of its ancestry over tens of thousands of years,” said Mark Pagel, a biologist at the University of Reading in England who advised Dr. Atkinson.
Dr. Pagel sees language as central to human expansion across the globe.
“Language was our secret weapon, and as soon we got language we became a really dangerous species,” he said.
In the wake of modern human expansion, archaic human species like the Neanderthals were wiped out and large species of game, fossil evidence shows, fell into extinction on every continent shortly after the arrival of modern humans.
"A researcher analyzing the sounds in languages spoken around the world has detected an ancient signal that points to southern Africa as the place where modern human language originated. The finding fits well with the evidence from fossil skulls and DNA that modern humans originated in Africa. It also implies, though does not prove, that modern language originated only once, an issue of considerable controversy among linguists.
The detection of such an ancient signal in language is surprising. Because words change so rapidly, many linguists think that languages cannot be traced very far back in time. The oldest language tree so far reconstructed, that of the Indo-European family, which includes English, goes back 9,000 years at most.
Quentin D. Atkinson, a biologist at the University of Auckland in New Zealand, has shattered this time barrier, if his claim is correct, by looking not at words but at phonemes — the consonants, vowels and tones that are the simplest elements of language. Dr. Atkinson, an expert at applying mathematical methods to linguistics, has found a simple but striking pattern in some 500 languages spoken throughout the world: A language area uses fewer phonemes the farther that early humans had to travel from Africa to reach it.
Some of the click-using languages of Africa have more than 100 phonemes, whereas Hawaiian, toward the far end of the human migration route out of Africa, has only 13. English has about 45 phonemes.
This pattern of decreasing diversity with distance, similar to the well-established decrease in genetic diversity with distance from Africa, implies that the origin of modern human language is in the region of southwestern Africa, Dr. Atkinson says in an article published on Thursday in the journal Science.
Language is at least 50,000 years old, the date that modern humans dispersed from Africa, and some experts say it is at least 100,000 years old. Dr. Atkinson, if his work is correct, is picking up a distant echo from this far back in time.
Linguists tend to dismiss any claims to have found traces of language older than 10,000 years, “but this paper comes closest to convincing me that this type of research is possible,” said Martin Haspelmath, a linguist at the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany.
Dr. Atkinson is one of several biologists who have started applying to historical linguistics the sophisticated statistical methods developed for constructing genetic trees based on DNA sequences. These efforts have been regarded with suspicion by some linguists.
In 2003 Dr. Atkinson and Russell Gray, another biologist at the University of Auckland, reconstructed the tree of Indo-European languages with a DNA tree-drawing method called Bayesian phylogeny. The tree indicated that Indo-European was much older than historical linguists had estimated and hence favored the theory that the language family had diversified with the spread of agriculture some 10,000 years ago, not with a military invasion by steppe people some 6,000 years ago, the idea favored by most historical linguists.
“We’re uneasy about mathematical modeling that we don’t understand juxtaposed to philological modeling that we do understand,” Brian D. Joseph, a linguist at Ohio State University, said about the Indo-European tree. But he thinks that linguists may be more willing to accept Dr. Atkinson’s new article because it does not conflict with any established area of linguistic scholarship.
“I think we ought to take this seriously, although there are some who will dismiss it out of hand,” Dr. Joseph said.
Another linguist, Donald A. Ringe of the University of Pennsylvania, said, “It’s too early to tell if Atkinson’s idea is correct, but if so, it’s one of the most interesting articles in historical linguistics that I’ve seen in a decade.”
Dr. Atkinson’s finding fits with other evidence about the origins of language. The Bushmen of the Kalahari Desert belong to one of the earliest branches of the genetic tree based on human mitochondrial DNA. Their languages belong to a family known as Khoisan and include many click sounds, which seem to be a very ancient feature of language. And they live in southern Africa, which Dr. Atkinson’s calculations point to as the origin of language. But whether Khoisan is closest to some ancestral form of language “is not something my method can speak to,” Dr. Atkinson said.
His study was prompted by a recent finding that the number of phonemes in a language increases with the number of people who speak it. This gave him the idea that phoneme diversity would increase as a population grew, but would fall again when a small group split off and migrated away from the parent group.
Such a continual budding process, which is the way the first modern humans expanded around the world, is known to produce what biologists call a serial founder effect. Each time a smaller group moves away, there is a reduction in its genetic diversity. The reduction in phonemic diversity over increasing distances from Africa, as seen by Dr. Atkinson, parallels the reduction in genetic diversity already recorded by biologists.
For either kind of reduction in diversity to occur, the population budding process must be rapid, or diversity will build up again. This implies that the human expansion out of Africa was very rapid at each stage. The acquisition of modern language, or the technology it made possible, may have prompted the expansion, Dr. Atkinson said.
“What’s so remarkable about this work is that it shows language doesn’t change all that fast — it retains a signal of its ancestry over tens of thousands of years,” said Mark Pagel, a biologist at the University of Reading in England who advised Dr. Atkinson.
Dr. Pagel sees language as central to human expansion across the globe.
“Language was our secret weapon, and as soon we got language we became a really dangerous species,” he said.
In the wake of modern human expansion, archaic human species like the Neanderthals were wiped out and large species of game, fossil evidence shows, fell into extinction on every continent shortly after the arrival of modern humans.
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Risky Business: Reputation Matters
A reasonable person might think the financial crisis was warning enough about the perils of a bad corporate reputation. Not so. Businesses and their executives continue to make astounding mistakes and then, in ham-handed attempts to clean up after themselves pile on with gaffes that leave the public breathless at the cluelessness in evidence. Nell Minow explains in BNet why this matters to boards and to the public(NB - yours truly is quoted extensively in this piece):
"No, most corporate CEOs aren’t Joan Jett. But somehow many of them keep acting as though they’d like to be.
Executives at Transocean (RIG), forever associated with the death of eleven employees and the biggest oil spill in American history from its Deepwater Horizon facility, continued to cement their reputation for poor judgment and overall cluelessness. After awarding themselves bonuses for the “best year in safety performance in our company’s history,” the executives belatedly announced that they were “voluntarily” donating the safety bonuses to the Deepwater Horizons Memorial Fund “because we believe it is the right thing to do.” (All that criticism had nothing to do with it, of course.)
Berkshire Hathaway did much better when it had to answer some pointed questions after the abrupt departure of the likely successor for the legendary Warren Buffett. Target (TGT) customers must walk past protesters who object to the company’s contributions to an anti-gay politician. Johnson & Johnson (JNJ), once the gold standard for reputation protection following the Tylenol poisoning of 1982, found a story about its “quality catastrophe” on the cover of Business Week earlier this month.
Your reputation is your biggest asset — and also your most fragile
Every week there’s another example of a company scrambling to prevent a catastrophic loss of its most important asset — its reputation — whether the problem is financial, strategic, operational, or ethical. Maureen Errity, co-chair of the Deloitte Center for Corporate Governance at Deloitte Services, says, “Managing reputational risk does not fit into any category; it is ingrained in each of them.”
I recently had the opportunity to chat with Jonathan Low of Predictiv Consulting to learn more about managing this kind of reputational risk. Here’s an edited transcript of our discussion.
How should boards of directors evaluate reputational risk?
"Boards must address reputational risk as they would any other threat to shareholder value that could result in loss of the institution’s license to operate. When one looks at the loss of shareholder value suffered by major global public companies such as Toyota (TY), BP, Goldman Sachs (GS) and AIG in the past year, all largely due to loss of confidence based on management performance, it becomes apparent that reputational risk is significant.
It is so closely intertwined with enterprise risk that for boards to ignore it or worse, to dismiss it as a public relations matter, will simply cause additional pain as hedge funds, journalists and others probe for additional weaknesses.
Paying for a good rep
How can incentive compensation be designed to minimize reputational risk?
"The litany of “pay for performance” based problems, most recently with the financial and mortgage crises, ought to instruct us as to the difficulties of using compensation to minimize any sort of risky managerial behavior. Any compensation system will be gamed the minute it is announced as those affected try to manage to influence the outcome in their favor.
Tying compensation to longer term (years, not quarters) objectives is the best solution, but reputational metrics should be part of a comprehensive set of measures that cover multiple, intertwined goals aligned with corporate strategy.
What’s the difference between reputational risk and branding?
"Brand is a promise to the consumer. Inherent in that promise are fundamental notions of quality, safety, ethical behavior, fair pricing and management credibility. Reputation is tied more specifically to familiarity and favorability. Reputational failures impact brand value and can reduce brand equity.
Given the investment in major brands and the impact of those brands on market value, diminution of brand value through an increase in reputational risk represents a potentially significant financial cost. Conversely, brand problems can have an impact on reputation; Coca-Cola’s problems with a small batch of CO2 a decade ago are a good example of that because they implied that management was not paying attention to details.
Similarly, Toyota’s recent brake problems conveyed the same message. One might also argue that Goldman Sachs’ designing and selling investment products that hurt some clients but not others were a type of ‘brand’ problem since the GS brand AND reputation were damaged.
What to do, what not to do
Can you give good and bad examples of the way corporate mangers have responded to reputational hits?
"Good — Southwest Airlines’ response to the roof of a plane in flight tearing open. SWA was open with the press and public, cancelled dozens of flights at great expense and called in outside experts. When it became apparent the problem was Boeing’s, that was a relief, but even if it had been a maintenance issues, SWA showed that they would spare no expense to identify the problem and fix it.
Bad — BP’s handling of the Gulf oil spill is the poster child for poor response to a crisis. They tried from the outset to minimize the seriousness of the issue which affected their credibility. As the problems became more and more complex, their initial craftiness diminished their effectiveness as communicators and they were never able to get ahead of the story again. Their ability to remain independent is now being questioned
Guard your integrity
Which is more difficult to respond to, a reputational hit regarding a product (recall, contamination, safety issue) or an investor issue (accounting fraud, CEO dismissal for cause)?
"Investor issues are harder. Products can be recalled, reformulated or withdrawn. Most people recognize that there are technical issues involved, so if the company is transparent about its methods, consumers and analysts will give generally them another chance.
Issues of trust and integrity can not be “recalled and reformulated.” When an organizations’ most fundamental values are called into question, the impact is more dramatic, less tangible and harder to contain. The public will rightly demand evidence of a change over time before granting such companies another chance.
The on-going problems at HP (HPQ) are an example; the company under Carly Fiorina contravened much of what the founders stood for. The ongoing leadership problems suggest that the board has not figured out how to catch up with competitors strategically and keeps betting on quick leadership fixes to make it right.
It’s good to be the king… but not easy
How do you set the tone at the top?
"Recognize that the CEO lives in a fishbowl. He/she has no privacy, will be given no mercy -– and based on the compensation at stake, should expect neither. If you can not live the values the company espouses, don’t take the job. If you are not willing to part with subordinates who violate company rules, now matter how impressive a salesperson or manager, you should not take the job.
In sum, if done properly the job is difficult because the tone at the top must be austere and ethically faultless. That has to be wearying and is clearly not for everyone. If the company’s reputation is as important to the board as it should be, then truly exceptional people must be sought to lead and no compromises can be brooked.
The ultimate demonstration of concern about reputation requires that the CEO and other top executives must have tough but achievable long and short term reputational metrics built into their compensation packages — and if they fail to meet those goals, the board can not bail them out.
"No, most corporate CEOs aren’t Joan Jett. But somehow many of them keep acting as though they’d like to be.
Executives at Transocean (RIG), forever associated with the death of eleven employees and the biggest oil spill in American history from its Deepwater Horizon facility, continued to cement their reputation for poor judgment and overall cluelessness. After awarding themselves bonuses for the “best year in safety performance in our company’s history,” the executives belatedly announced that they were “voluntarily” donating the safety bonuses to the Deepwater Horizons Memorial Fund “because we believe it is the right thing to do.” (All that criticism had nothing to do with it, of course.)
Berkshire Hathaway did much better when it had to answer some pointed questions after the abrupt departure of the likely successor for the legendary Warren Buffett. Target (TGT) customers must walk past protesters who object to the company’s contributions to an anti-gay politician. Johnson & Johnson (JNJ), once the gold standard for reputation protection following the Tylenol poisoning of 1982, found a story about its “quality catastrophe” on the cover of Business Week earlier this month.
Your reputation is your biggest asset — and also your most fragile
Every week there’s another example of a company scrambling to prevent a catastrophic loss of its most important asset — its reputation — whether the problem is financial, strategic, operational, or ethical. Maureen Errity, co-chair of the Deloitte Center for Corporate Governance at Deloitte Services, says, “Managing reputational risk does not fit into any category; it is ingrained in each of them.”
I recently had the opportunity to chat with Jonathan Low of Predictiv Consulting to learn more about managing this kind of reputational risk. Here’s an edited transcript of our discussion.
How should boards of directors evaluate reputational risk?
"Boards must address reputational risk as they would any other threat to shareholder value that could result in loss of the institution’s license to operate. When one looks at the loss of shareholder value suffered by major global public companies such as Toyota (TY), BP, Goldman Sachs (GS) and AIG in the past year, all largely due to loss of confidence based on management performance, it becomes apparent that reputational risk is significant.
It is so closely intertwined with enterprise risk that for boards to ignore it or worse, to dismiss it as a public relations matter, will simply cause additional pain as hedge funds, journalists and others probe for additional weaknesses.
Paying for a good rep
How can incentive compensation be designed to minimize reputational risk?
"The litany of “pay for performance” based problems, most recently with the financial and mortgage crises, ought to instruct us as to the difficulties of using compensation to minimize any sort of risky managerial behavior. Any compensation system will be gamed the minute it is announced as those affected try to manage to influence the outcome in their favor.
Tying compensation to longer term (years, not quarters) objectives is the best solution, but reputational metrics should be part of a comprehensive set of measures that cover multiple, intertwined goals aligned with corporate strategy.
What’s the difference between reputational risk and branding?
"Brand is a promise to the consumer. Inherent in that promise are fundamental notions of quality, safety, ethical behavior, fair pricing and management credibility. Reputation is tied more specifically to familiarity and favorability. Reputational failures impact brand value and can reduce brand equity.
Given the investment in major brands and the impact of those brands on market value, diminution of brand value through an increase in reputational risk represents a potentially significant financial cost. Conversely, brand problems can have an impact on reputation; Coca-Cola’s problems with a small batch of CO2 a decade ago are a good example of that because they implied that management was not paying attention to details.
Similarly, Toyota’s recent brake problems conveyed the same message. One might also argue that Goldman Sachs’ designing and selling investment products that hurt some clients but not others were a type of ‘brand’ problem since the GS brand AND reputation were damaged.
What to do, what not to do
Can you give good and bad examples of the way corporate mangers have responded to reputational hits?
"Good — Southwest Airlines’ response to the roof of a plane in flight tearing open. SWA was open with the press and public, cancelled dozens of flights at great expense and called in outside experts. When it became apparent the problem was Boeing’s, that was a relief, but even if it had been a maintenance issues, SWA showed that they would spare no expense to identify the problem and fix it.
Bad — BP’s handling of the Gulf oil spill is the poster child for poor response to a crisis. They tried from the outset to minimize the seriousness of the issue which affected their credibility. As the problems became more and more complex, their initial craftiness diminished their effectiveness as communicators and they were never able to get ahead of the story again. Their ability to remain independent is now being questioned
Guard your integrity
Which is more difficult to respond to, a reputational hit regarding a product (recall, contamination, safety issue) or an investor issue (accounting fraud, CEO dismissal for cause)?
"Investor issues are harder. Products can be recalled, reformulated or withdrawn. Most people recognize that there are technical issues involved, so if the company is transparent about its methods, consumers and analysts will give generally them another chance.
Issues of trust and integrity can not be “recalled and reformulated.” When an organizations’ most fundamental values are called into question, the impact is more dramatic, less tangible and harder to contain. The public will rightly demand evidence of a change over time before granting such companies another chance.
The on-going problems at HP (HPQ) are an example; the company under Carly Fiorina contravened much of what the founders stood for. The ongoing leadership problems suggest that the board has not figured out how to catch up with competitors strategically and keeps betting on quick leadership fixes to make it right.
It’s good to be the king… but not easy
How do you set the tone at the top?
"Recognize that the CEO lives in a fishbowl. He/she has no privacy, will be given no mercy -– and based on the compensation at stake, should expect neither. If you can not live the values the company espouses, don’t take the job. If you are not willing to part with subordinates who violate company rules, now matter how impressive a salesperson or manager, you should not take the job.
In sum, if done properly the job is difficult because the tone at the top must be austere and ethically faultless. That has to be wearying and is clearly not for everyone. If the company’s reputation is as important to the board as it should be, then truly exceptional people must be sought to lead and no compromises can be brooked.
The ultimate demonstration of concern about reputation requires that the CEO and other top executives must have tough but achievable long and short term reputational metrics built into their compensation packages — and if they fail to meet those goals, the board can not bail them out.
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The Business Market Plays Cloud Computing Catch-Up
Consumers have frequently been on the minds of those developing new technology applications even though business and government are the big spenders. It is, perhaps, easier to conceive of how an individual will use something and impressing one's friends and colleagues has always been a significant motivation. It is also harder to break into the business market where scale demands increase innovation costs. When it comes to cloud computing, businesses are again belatedly waking up to the opportunities. Steve Lohr reports in the New York Times:
"The big spenders on technology are businesses and government agencies. They buy about 75 percent of the computing goods and services sold worldwide. Yet it is increasingly evident they are not driving the new ideas, excitement and powerhouse technology companies in ascent these days.
“The cutting edge of innovation is on the consumer side — digital technologies for consumption activity, play, entertainment and social-networked communication — and not in corporations anymore,” observed Timothy F. Bresnahan, an economist at Stanford.
Nowhere is that more apparent than in cloud computing, the technology industry’s buzz term for customers’ accessing information held in big data centers remotely over the Internet from anywhere, as if the services were in a cloud.
In the early days of computers, technology advanced because of government-financed research projects and work in corporate laboratories. Hobbyists developed the first personal computers, but it was only when I.B.M. entered the field in 1981, lending its seal of approval, that the PC industry really took off. Selling to businesses paved the way for the leading PC software and chip suppliers, Microsoft and Intel, to become giant corporations.
But marquee companies of the Internet era have made their names and fortunes mainly in the consumer market — both the first-generation Web winners like Amazon and Google, and the second-generation successes like Facebook and Twitter. And they have grown big and grown fast by offering search, shopping and social-networking services in the cloud.
Cloud computing, though, is more than a hyper-efficient means of distributing digital services. The cloud model is animated by a set of Internet technologies for juggling computing workloads in data centers far more efficiently than in the past — potentially reducing costs by about half, analysts say.
Yet to date, the large, established technology companies — and their businesses and government customers — have trailed in cloud computing. The marketing of the cloud, analysts say, is way ahead of real offerings by suppliers and its adoption by business customers.
But there are some recent signs of change. Last week, I.B.M. introduced a range of cloud services, including paying for computing resources like processing and storage on a metered pay-for-use formula, almost as if modeled on an electric utility. I.B.M. will offer customers an à la carte menu, in which they pay for different levels of guaranteed security, support and availability.
I.B.M., a bellwether in the corporate technology market, forecasts that it will have $7 billion in cloud revenue by 2015. Of the total, $4 billion will be customers shifting to cloud delivery from the company’s traditional software and services, and $3 billion is expected to be entirely new business.
“We’re moving to where the puck is going in this industry,” said Steven A. Mills, I.B.M.’s senior vice president for software and hardware. “And we’re more than willing to make this transition.”
In another industry move announced last week, Dell said that it would invest $1 billion over the next two years to build 10 new data centers and expand customer support, largely for cloud offerings.
The largest single customer for computing goods and services, the United States government, endorsed the cloud model this year. Vivek Kundra, the White House chief information officer, wrote a “Federal Cloud Computing Strategy” report, and identified $20 billion, or one quarter of the government’s total spending on information technology, as “a potential target” for migration to the cloud.
That document has certainly caught the attention of the government’s technology suppliers, like Lockheed Martin, the largest. “We’re keenly focused on cloud computing,” said Melvin Greer, a senior fellow at Lockheed Martin.
Still, the outlook is for an evolutionary shift toward the new technology spanning several years, even a decade or more, analysts say. People set the pace of technology adoption, and corporate data centers are filled with people whose skills and livelihoods are based on older technology and ways of doing things.
But technology managers, surveys show, are also genuinely concerned about security, reliability and liability if confidential corporate data resides on another company’s computers — and getting locked into proprietary clouds, controlled by one company. Standards groups are moving to set technical rules for sharing data across different clouds, including a working group established last week by the IEEE, a professional electronic and computer engineering organization.
“Cloud computing will become the new foundation for corporate information technology — it’s inevitable,” said Frank Gens, chief analyst for IDC, a technology research firm. “But there are a lot of concerns, challenges and inertia that will slow things down.”
There are also insurgents, like Amazon, that could speed things up in corporate cloud computing. Five years ago, the online bookseller and retailer decided to start a side business, offering computing resources to businesses from its network of sophisticated data centers. It called the new unit Amazon Web Services. It is a pay-for-use utility model, with customers paying from pennies to millions of dollars a month, says Adam Selipsky, vice president for product management.
Today, the customer ranks include Netflix, NASA, drug companies and major banks, which use Amazon’s data centers to remotely run Web applications that do tasks like tracking customer movie requests or running credit-risk simulations.
The Amazon cloud strategy, Mr. Selipsky says, mirrors its tactics in online retailing: build scale and efficiency, then cut costs and prices to gain market share. Amazon Web Services, he said, has reduced prices a dozen times in the last three years. “Most of that has been in the absence of competition,” Mr. Selipsky said, “because competitors have been so slow to emerge.”
Yet competition in the cloud market is intensifying. And that competition is taking shape across a number of fronts. It includes vendors offering basic computing resources like Amazon and Rackspace, joined by telecommunications giants like AT&T and Verizon that have entered the cloud business; companies offering ready-to-use applications tailored for businesses like Google’s online e-mail, document and collaboration services; Microsoft’s online version of its Office and collaboration tools; and Salesforce.com’s online customer management and collaboration tools.
Several companies also have built development environments on which programmers can build cloud software applications. Google has App Engine, Amazon has BeanStalk, Microsoft has Azure, Salesforce.com has Force.com, and VMware has Cloud Foundry, which was introduced on Tuesday. By 2014, IDC estimates that 30 percent of total spending on software applications in the corporate market will be for cloud applications.
Revenue from business cloud services — infrastructure resources, software applications and developer tools — was $22.2 billion last year, less than 2 percent of total technology spending, IDC estimates. But cloud revenue is growing at more than 25 percent a year, and will reach $55.5 billion by 2014, the research firm estimates.
Salesforce.com, founded in 1999, began selling customer-relationship software to businesses as an Internet service long before the industry began talking of cloud computing. Things built slowly at first, but Marc Benioff, founder and chief executive of Salesforce.com, says the turning point has come.
“What’s being called the cloud now is the future of enterprise software, but when I started in 1999 no one believed that,” said Mr. Benioff, who recently raised the company’s revenue forecast by 25 percent. “Sometimes you do have to wait them out.”
"The big spenders on technology are businesses and government agencies. They buy about 75 percent of the computing goods and services sold worldwide. Yet it is increasingly evident they are not driving the new ideas, excitement and powerhouse technology companies in ascent these days.
“The cutting edge of innovation is on the consumer side — digital technologies for consumption activity, play, entertainment and social-networked communication — and not in corporations anymore,” observed Timothy F. Bresnahan, an economist at Stanford.
Nowhere is that more apparent than in cloud computing, the technology industry’s buzz term for customers’ accessing information held in big data centers remotely over the Internet from anywhere, as if the services were in a cloud.
In the early days of computers, technology advanced because of government-financed research projects and work in corporate laboratories. Hobbyists developed the first personal computers, but it was only when I.B.M. entered the field in 1981, lending its seal of approval, that the PC industry really took off. Selling to businesses paved the way for the leading PC software and chip suppliers, Microsoft and Intel, to become giant corporations.
But marquee companies of the Internet era have made their names and fortunes mainly in the consumer market — both the first-generation Web winners like Amazon and Google, and the second-generation successes like Facebook and Twitter. And they have grown big and grown fast by offering search, shopping and social-networking services in the cloud.
Cloud computing, though, is more than a hyper-efficient means of distributing digital services. The cloud model is animated by a set of Internet technologies for juggling computing workloads in data centers far more efficiently than in the past — potentially reducing costs by about half, analysts say.
Yet to date, the large, established technology companies — and their businesses and government customers — have trailed in cloud computing. The marketing of the cloud, analysts say, is way ahead of real offerings by suppliers and its adoption by business customers.
But there are some recent signs of change. Last week, I.B.M. introduced a range of cloud services, including paying for computing resources like processing and storage on a metered pay-for-use formula, almost as if modeled on an electric utility. I.B.M. will offer customers an à la carte menu, in which they pay for different levels of guaranteed security, support and availability.
I.B.M., a bellwether in the corporate technology market, forecasts that it will have $7 billion in cloud revenue by 2015. Of the total, $4 billion will be customers shifting to cloud delivery from the company’s traditional software and services, and $3 billion is expected to be entirely new business.
“We’re moving to where the puck is going in this industry,” said Steven A. Mills, I.B.M.’s senior vice president for software and hardware. “And we’re more than willing to make this transition.”
In another industry move announced last week, Dell said that it would invest $1 billion over the next two years to build 10 new data centers and expand customer support, largely for cloud offerings.
The largest single customer for computing goods and services, the United States government, endorsed the cloud model this year. Vivek Kundra, the White House chief information officer, wrote a “Federal Cloud Computing Strategy” report, and identified $20 billion, or one quarter of the government’s total spending on information technology, as “a potential target” for migration to the cloud.
That document has certainly caught the attention of the government’s technology suppliers, like Lockheed Martin, the largest. “We’re keenly focused on cloud computing,” said Melvin Greer, a senior fellow at Lockheed Martin.
Still, the outlook is for an evolutionary shift toward the new technology spanning several years, even a decade or more, analysts say. People set the pace of technology adoption, and corporate data centers are filled with people whose skills and livelihoods are based on older technology and ways of doing things.
But technology managers, surveys show, are also genuinely concerned about security, reliability and liability if confidential corporate data resides on another company’s computers — and getting locked into proprietary clouds, controlled by one company. Standards groups are moving to set technical rules for sharing data across different clouds, including a working group established last week by the IEEE, a professional electronic and computer engineering organization.
“Cloud computing will become the new foundation for corporate information technology — it’s inevitable,” said Frank Gens, chief analyst for IDC, a technology research firm. “But there are a lot of concerns, challenges and inertia that will slow things down.”
There are also insurgents, like Amazon, that could speed things up in corporate cloud computing. Five years ago, the online bookseller and retailer decided to start a side business, offering computing resources to businesses from its network of sophisticated data centers. It called the new unit Amazon Web Services. It is a pay-for-use utility model, with customers paying from pennies to millions of dollars a month, says Adam Selipsky, vice president for product management.
Today, the customer ranks include Netflix, NASA, drug companies and major banks, which use Amazon’s data centers to remotely run Web applications that do tasks like tracking customer movie requests or running credit-risk simulations.
The Amazon cloud strategy, Mr. Selipsky says, mirrors its tactics in online retailing: build scale and efficiency, then cut costs and prices to gain market share. Amazon Web Services, he said, has reduced prices a dozen times in the last three years. “Most of that has been in the absence of competition,” Mr. Selipsky said, “because competitors have been so slow to emerge.”
Yet competition in the cloud market is intensifying. And that competition is taking shape across a number of fronts. It includes vendors offering basic computing resources like Amazon and Rackspace, joined by telecommunications giants like AT&T and Verizon that have entered the cloud business; companies offering ready-to-use applications tailored for businesses like Google’s online e-mail, document and collaboration services; Microsoft’s online version of its Office and collaboration tools; and Salesforce.com’s online customer management and collaboration tools.
Several companies also have built development environments on which programmers can build cloud software applications. Google has App Engine, Amazon has BeanStalk, Microsoft has Azure, Salesforce.com has Force.com, and VMware has Cloud Foundry, which was introduced on Tuesday. By 2014, IDC estimates that 30 percent of total spending on software applications in the corporate market will be for cloud applications.
Revenue from business cloud services — infrastructure resources, software applications and developer tools — was $22.2 billion last year, less than 2 percent of total technology spending, IDC estimates. But cloud revenue is growing at more than 25 percent a year, and will reach $55.5 billion by 2014, the research firm estimates.
Salesforce.com, founded in 1999, began selling customer-relationship software to businesses as an Internet service long before the industry began talking of cloud computing. Things built slowly at first, but Marc Benioff, founder and chief executive of Salesforce.com, says the turning point has come.
“What’s being called the cloud now is the future of enterprise software, but when I started in 1999 no one believed that,” said Mr. Benioff, who recently raised the company’s revenue forecast by 25 percent. “Sometimes you do have to wait them out.”
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Passion vs Accountability: The Great Social Media Divide
One of the bipolar aspects of the growing social media phenomenon is the divide between those who believe that organizations should proceed on faith in the justness of the social idea versus those who believe that withouth measurement there can be no real progress because too many false leads and leaders will be followed. This is a battle that has been fought in related realms; advertising, public relations, entertainment, newspapers, magazines, radio...It reflects, in part, the right brain-left brain human discomfort with either quantitative precision or philosophical ambiguity. It also confronts a budget-constrained business environment in which the entities expected to pay for the experimentation are themselves vulnerable and uncertain. Amber Naslund comments in Brass Tack Thinking (hat tip Thierry de Baillon)on both the debate and the possibility of compromise:
"This is a really pivotal time for us. If we’re ever to hope that social will find its way to the respected core of business and realize the potential that we know it has, we have to get clear on something very, very important.
We are lacking temperance. We are lacking balance. We are lacking perspective.
In the quest for laying claim to a purpose and mission in our work, we are blindly taking up arms in favor of one cause and against another. We are fighting ourselves in a desperate land grab to be seen, known, and heard as the person that “gets it”, and be sure that we can count ourselves among the legitimate practitioners, and not the clueless, the naive, the charlatans.
On one hand, we have those whose mission statements are rooted in “passion”, in “people”, in “conversations” and the intrinsic value of open communication and connection. They eschew the notion that we should attach numbers, dollars, or hard measurement to things that cannot and should not be quantified, like the value of a human relationship. And they are quick to label those that ask for justification as rigid, out of touch, or those that simply “don’t get it”.
On the other, we have those whose battle cry is for “accountability”, for “metrics”, for the elusive “Return on Investment” of social media. For them, there *is* no value in anything that cannot be captured, quantified, or reported upon. Discussions of human connections, of affinity, of intangibles are considered to be lacking substance, or naive, or of negligible value when viewing social media’s role in a business context. And they are quick to dismiss theoretical or emotional discussions as “fluff”.
Our collective credibility depends on our ability to find and value middle ground.
We can have accountability and intangible value. We can feel good about doing something and prove that it has concrete worth. We can be excited about what we do and still apply discipline to make it operational and scalable. We can value passion at the same time that we value data.
The worst damage we’re doing to ourselves is that we are dividing our own. We’re preaching collaboration and openness in business but we’re demonstrating that poorly in and among ourselves. As a result, we’re practically demanding that the businesses and people we work with choose a side rather than committing to simply exploring all possible paths and choosing the one that’s most fitting for them. When viewed from a distance, that infighting and labeling, that relentless focus on what the other guy is doing or not doing and how or why we’re better, are the obvious signs of an immature industry.
"This is a really pivotal time for us. If we’re ever to hope that social will find its way to the respected core of business and realize the potential that we know it has, we have to get clear on something very, very important.
We are lacking temperance. We are lacking balance. We are lacking perspective.
In the quest for laying claim to a purpose and mission in our work, we are blindly taking up arms in favor of one cause and against another. We are fighting ourselves in a desperate land grab to be seen, known, and heard as the person that “gets it”, and be sure that we can count ourselves among the legitimate practitioners, and not the clueless, the naive, the charlatans.
On one hand, we have those whose mission statements are rooted in “passion”, in “people”, in “conversations” and the intrinsic value of open communication and connection. They eschew the notion that we should attach numbers, dollars, or hard measurement to things that cannot and should not be quantified, like the value of a human relationship. And they are quick to label those that ask for justification as rigid, out of touch, or those that simply “don’t get it”.
On the other, we have those whose battle cry is for “accountability”, for “metrics”, for the elusive “Return on Investment” of social media. For them, there *is* no value in anything that cannot be captured, quantified, or reported upon. Discussions of human connections, of affinity, of intangibles are considered to be lacking substance, or naive, or of negligible value when viewing social media’s role in a business context. And they are quick to dismiss theoretical or emotional discussions as “fluff”.
Our collective credibility depends on our ability to find and value middle ground.
We can have accountability and intangible value. We can feel good about doing something and prove that it has concrete worth. We can be excited about what we do and still apply discipline to make it operational and scalable. We can value passion at the same time that we value data.
The worst damage we’re doing to ourselves is that we are dividing our own. We’re preaching collaboration and openness in business but we’re demonstrating that poorly in and among ourselves. As a result, we’re practically demanding that the businesses and people we work with choose a side rather than committing to simply exploring all possible paths and choosing the one that’s most fitting for them. When viewed from a distance, that infighting and labeling, that relentless focus on what the other guy is doing or not doing and how or why we’re better, are the obvious signs of an immature industry.
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Freezer Frenzy: Frozen Foods Fastest Growing Grocery Segment
So much for organic and slow food. As Ross Boettcher reports in the World-Herald via Brand Amplitude, speed, ease of preparation and cost are driving consumers to the frozen food aisle of the supermarket despite medical warnings about increasing obesity and health. How to explain the equally strong sales growth in the premium foods category? Income levels:
"Plucking a microwave dinner from the freezer section can be a chilly proposition. Just ask Beth Blackburn, who has a frozen meal nearly every day for lunch. On a recent afternoon trip to the grocery store, Blackburn, an administrator in the Nebraska Medical Center's regulatory affairs office, walked up and down the freezer aisle looking for lunch. She spent more than five minutes looking for a single-serve frozen meal, scanning the options, brand by brand. She couldn't decide.
“They give you too many choices,” she said before settling on a box of pizza bites.
The abundance of different brands and choices are a reflection of food manufacturers vying for sales and market share in one of the fastest-growing and most profitable areas of the grocery store: the freezer. Today, more consumers than ever before are turning to frozen foods for a quick, convenient meal, or as an affordable solution to help feed their busy families.
“I like the packaged meals because then I don't have to cut everything into individual servings,” said Pamela Hespien, 57, of Omaha. “I would rather just warm up one meal that's one serving. It's easy. It's convenient.”
On any given night in the United States, about 16 percent of all main dinner entrees come from the grocery freezer case. That's up from 9 percent in 1984, according to the market research firm NPD Group.
Frozen food also is taking up more of the store. The frozen food aisle now often is more than one aisle, with the average length doubling since 1990 to about 400 feet today, according to grocery consulting firm Willard Bishop.
That's because food makers like Omaha-based ConAgra Foods have responded to increased demand by adding things like steamer trays and bags, modern flavor profiles and items that can be marketed as natural or wholesome.
Those kinds of innovations, and the way companies are able to market them, are increasingly important because the frozen food section of the grocery store is second only to dairy in terms of profitability. Those dynamics have created a battle for space in the freezer case that is as fierce as ever, said Jim Hertel, a managing partner at Willard Bishop, a food retail consultant.
“It's a Darwinian part of the store,” Hertel said. “Innovation is at a premium across the store, but the frozen department is really on point right now because there are so many people interested in convenience.”
Most moms would rather cook from scratch but are busier than ever, often balancing jobs with home life, said Stacy DeBroff, chief executive of Mom Central, a Newton, Mass., agency that specializes in marketing to mothers.
Even many women who decide to be stay-at-home mothers do it to spend time with their children, not “to start working on dinner at 4 o'clock,” said Virginia Lee, an analyst with Euromonitor International.”
NPD has tracked a decline in cooking from scratch — from 72 percent of dinner entrees in 1984 to a low of 58 percent in 2007 and 59 percent in 2010.
Cost also has been a factor. American demand for frozen food, which often is cheaper than making a meal from scratch, has grown constantly over the last decade because the average household income hasn't grown, said Harry Balzer, NPD Group's chief industry analyst who has been tracking trends in food consumption since 1984. The frozen food boom grew even more during the recession, a period when ConAgra's sales thrived. But it wasn't a cause of the weakened economy.
“The trend precedes the recession,” he said. “The recession just illuminated it.”
Packaged Facts, a market research firm that follows consumer goods, estimates that retail sales of frozen foods and beverages through all retail channels was about $56 billion in 2010. The figure is projected to near $70 billion by 2015.
According to figures from NPD, vegetables, red meat, pizza and potatoes were the most-often consumed frozen foods last year. The area where ConAgra has its largest stake — single and multi-serve frozen entrees and dinners — is fifth. And nearly a third of Americans ate a packaged frozen meal every two weeks during the 12 months ending February 2010, NPD said.
ConAgra, which sells about 3 million packages of frozen food every day, wants that number to grow, said Corey Berends, ConAgra's vice president of research and development
“We want the [frozen meal] category to grow, and we want more people using frozen foods,” said Berends. “As more innovation comes to the freezer, its going to bring more news and draw more people to the category.” But now, with consumers still pinched by the economy, fewer people have been heading to the grocery store and stocking up on single serve meals. “The category hasn't grown as much as we'd like to see it,” Berends said.
Instead, people are making smaller grocery hauls and purchasing family-oriented offerings that can feed the whole family. A ConAgra competitor, Nestlé, which owns Stouffer's, Lean Cuisine and DiGiorno, is marketing the idea of gathering the family around the table, even citing research on how family dinners can improve children's grades.
In that multi-serve meal category, ConAgra has invested a larger chunk of money on research and marketing in recent years on products like its Marie Callender's bakes. The company views those meals as a place where it can grow sales.
Over the last year, comparing March to March, the company increased sales almost 25 percent in that area to $75.3 million. It also grew its market share from 4.6 percent to 5.3 percent in the $1.46 billion category, according to data from the SymphonyIRI Group, a Chicago-based market research firm.
In another part of the freezer, sales of single-serving frozen dinners as of March 20 had declined 4 percent to $3.48 billion during the last year, SymphonyIRI said.
ConAgra, which owns about 31 percent of that market with brands that include Healthy Choice, Banquet, Marie Callender's and Kid Cuisine, saw its sales decrease at about the same clip as the overall marketplace, but held its own in terms of market share with about $1.07 billion in sales.
Those figures don't include sales from Walmart and Sam's Club, where ConAgra does a good deal of sales, a company spokeswoman said.
The company has had to raise prices because of bloated commodity prices. Now, for example, instead of getting Healthy Choice meals deals like three for $5, consumers will get only two for $5, said Becky Niiya, the ConAgra spokeswoman.
The company also is facing more competition from major competitors that have jumped on the “innovation” bandwagon.
In a recent conference call with industry analysts, Gary Rodkin, ConAgra's chief executive, said having more innovation and increases in marketing dollars directed toward the frozen entree section by competitors like Nestlé and HJ Heinz and Co. is a good thing. In fact, he welcomes it.
“We like when we see that kind of activity in the freezer case because we believe that's a platform that we can compete very well on, and we welcome it,” Rodkin said in response to an analyst question. “That's the right way to compete in this segment, with innovation and product quality and marketing.”
ConAgra's Berends said grocery shoppers should expect foods in the freezer to keep changing. More meals in the Healthy Choice and Marie Callender's brands will be cooked with steam, and new packaging will be applied to more meals in ConAgra's frozen portfolio, “where it's appropriate,” Berends said.
ConAgra and its competitors also are striving to gear their products toward nutrition-minded consumers. In the last year, ConAgra like many other food giants, pledged to reduce sodium in its food by 20 percent by 2015. Nestlé, which last year acquired Kraft's frozen pizza business, is working to introduce healthier pizza options.
By improving the nutrition of their foods, foodmakers are expanding the customer pool that would consider purchasing their products.
“It's going to continue to be a slow, steady, structural movement towards using more frozen food,” Balzer, the NPD analyst, said. “We are using more and more frozen foods not just because of the recession, but because it's easy.”
"Plucking a microwave dinner from the freezer section can be a chilly proposition. Just ask Beth Blackburn, who has a frozen meal nearly every day for lunch. On a recent afternoon trip to the grocery store, Blackburn, an administrator in the Nebraska Medical Center's regulatory affairs office, walked up and down the freezer aisle looking for lunch. She spent more than five minutes looking for a single-serve frozen meal, scanning the options, brand by brand. She couldn't decide.
“They give you too many choices,” she said before settling on a box of pizza bites.
The abundance of different brands and choices are a reflection of food manufacturers vying for sales and market share in one of the fastest-growing and most profitable areas of the grocery store: the freezer. Today, more consumers than ever before are turning to frozen foods for a quick, convenient meal, or as an affordable solution to help feed their busy families.
“I like the packaged meals because then I don't have to cut everything into individual servings,” said Pamela Hespien, 57, of Omaha. “I would rather just warm up one meal that's one serving. It's easy. It's convenient.”
On any given night in the United States, about 16 percent of all main dinner entrees come from the grocery freezer case. That's up from 9 percent in 1984, according to the market research firm NPD Group.
Frozen food also is taking up more of the store. The frozen food aisle now often is more than one aisle, with the average length doubling since 1990 to about 400 feet today, according to grocery consulting firm Willard Bishop.
That's because food makers like Omaha-based ConAgra Foods have responded to increased demand by adding things like steamer trays and bags, modern flavor profiles and items that can be marketed as natural or wholesome.
Those kinds of innovations, and the way companies are able to market them, are increasingly important because the frozen food section of the grocery store is second only to dairy in terms of profitability. Those dynamics have created a battle for space in the freezer case that is as fierce as ever, said Jim Hertel, a managing partner at Willard Bishop, a food retail consultant.
“It's a Darwinian part of the store,” Hertel said. “Innovation is at a premium across the store, but the frozen department is really on point right now because there are so many people interested in convenience.”
Most moms would rather cook from scratch but are busier than ever, often balancing jobs with home life, said Stacy DeBroff, chief executive of Mom Central, a Newton, Mass., agency that specializes in marketing to mothers.
Even many women who decide to be stay-at-home mothers do it to spend time with their children, not “to start working on dinner at 4 o'clock,” said Virginia Lee, an analyst with Euromonitor International.”
NPD has tracked a decline in cooking from scratch — from 72 percent of dinner entrees in 1984 to a low of 58 percent in 2007 and 59 percent in 2010.
Cost also has been a factor. American demand for frozen food, which often is cheaper than making a meal from scratch, has grown constantly over the last decade because the average household income hasn't grown, said Harry Balzer, NPD Group's chief industry analyst who has been tracking trends in food consumption since 1984. The frozen food boom grew even more during the recession, a period when ConAgra's sales thrived. But it wasn't a cause of the weakened economy.
“The trend precedes the recession,” he said. “The recession just illuminated it.”
Packaged Facts, a market research firm that follows consumer goods, estimates that retail sales of frozen foods and beverages through all retail channels was about $56 billion in 2010. The figure is projected to near $70 billion by 2015.
According to figures from NPD, vegetables, red meat, pizza and potatoes were the most-often consumed frozen foods last year. The area where ConAgra has its largest stake — single and multi-serve frozen entrees and dinners — is fifth. And nearly a third of Americans ate a packaged frozen meal every two weeks during the 12 months ending February 2010, NPD said.
ConAgra, which sells about 3 million packages of frozen food every day, wants that number to grow, said Corey Berends, ConAgra's vice president of research and development
“We want the [frozen meal] category to grow, and we want more people using frozen foods,” said Berends. “As more innovation comes to the freezer, its going to bring more news and draw more people to the category.” But now, with consumers still pinched by the economy, fewer people have been heading to the grocery store and stocking up on single serve meals. “The category hasn't grown as much as we'd like to see it,” Berends said.
Instead, people are making smaller grocery hauls and purchasing family-oriented offerings that can feed the whole family. A ConAgra competitor, Nestlé, which owns Stouffer's, Lean Cuisine and DiGiorno, is marketing the idea of gathering the family around the table, even citing research on how family dinners can improve children's grades.
In that multi-serve meal category, ConAgra has invested a larger chunk of money on research and marketing in recent years on products like its Marie Callender's bakes. The company views those meals as a place where it can grow sales.
Over the last year, comparing March to March, the company increased sales almost 25 percent in that area to $75.3 million. It also grew its market share from 4.6 percent to 5.3 percent in the $1.46 billion category, according to data from the SymphonyIRI Group, a Chicago-based market research firm.
In another part of the freezer, sales of single-serving frozen dinners as of March 20 had declined 4 percent to $3.48 billion during the last year, SymphonyIRI said.
ConAgra, which owns about 31 percent of that market with brands that include Healthy Choice, Banquet, Marie Callender's and Kid Cuisine, saw its sales decrease at about the same clip as the overall marketplace, but held its own in terms of market share with about $1.07 billion in sales.
Those figures don't include sales from Walmart and Sam's Club, where ConAgra does a good deal of sales, a company spokeswoman said.
The company has had to raise prices because of bloated commodity prices. Now, for example, instead of getting Healthy Choice meals deals like three for $5, consumers will get only two for $5, said Becky Niiya, the ConAgra spokeswoman.
The company also is facing more competition from major competitors that have jumped on the “innovation” bandwagon.
In a recent conference call with industry analysts, Gary Rodkin, ConAgra's chief executive, said having more innovation and increases in marketing dollars directed toward the frozen entree section by competitors like Nestlé and HJ Heinz and Co. is a good thing. In fact, he welcomes it.
“We like when we see that kind of activity in the freezer case because we believe that's a platform that we can compete very well on, and we welcome it,” Rodkin said in response to an analyst question. “That's the right way to compete in this segment, with innovation and product quality and marketing.”
ConAgra's Berends said grocery shoppers should expect foods in the freezer to keep changing. More meals in the Healthy Choice and Marie Callender's brands will be cooked with steam, and new packaging will be applied to more meals in ConAgra's frozen portfolio, “where it's appropriate,” Berends said.
ConAgra and its competitors also are striving to gear their products toward nutrition-minded consumers. In the last year, ConAgra like many other food giants, pledged to reduce sodium in its food by 20 percent by 2015. Nestlé, which last year acquired Kraft's frozen pizza business, is working to introduce healthier pizza options.
By improving the nutrition of their foods, foodmakers are expanding the customer pool that would consider purchasing their products.
“It's going to continue to be a slow, steady, structural movement towards using more frozen food,” Balzer, the NPD analyst, said. “We are using more and more frozen foods not just because of the recession, but because it's easy.”
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P&G Tracking Eyeballs Online (Literally) To Test Ad Effectiveness
Based on the use of eyeballs for security clearance this does not seem far-fetched. It is another commercial application of a technology development that may contribute to the on-going demand for increased rates of sell-through success. Early indications are that it improves effectiveness. The next question - how can it be gamed? - has yet to be answered. Jack Neff reports in Advertising Age:
"Procter & Gamble Co. has signed with a company that uses webcams to literally track eyeballs online, and the results so far look pretty good at least for one of its brands, Pampers -- in Scandanavia.
An online ad for Pampers showed up as the most effective among 100 online ads from various marketers in a study among 400 participants viewing the ads at home in Sweden, Norway, Denmark and Finland. The study was conducted by Stockholm-based MRC Online EyeTracking, which uses webcams and software developed by Tobii Technology to follow viewers' gaze. MRC defined effectiveness based on where and how long people looked at elements of the advertising.
P&G has signed on as a customer of MRC's EyeTrackShop service for the Nordic region, said Matthias Plank, CEO of MRC International. MRC also has an office in China and recently opened a U.S. office in New York, but P&G is not working with the company in the U.S. at this point, he said.
Mr. Plank said MRC is working with P&G on pre-tests of online ads and with some in-store marketing materials. Overall, he said MRC tests about 100 ads a week and has done tests in 30 countries. It promises to turn around tests in 48 hours.
MRC's webcam-based eye tracking has the advantage of not requiring headsets and needs only webcams that can be used at home, making it easier and cheaper than conducting tests in laboratory conditions used by some other companies in biometric and neuromarketing research.
"We are extremely happy that Pampers was recognized as the most effective ad [in the MRC study]," Krister Karjalainen, head of digital for P&G in the Nordic region and a former web manager for Ikea, said in a statement. "As P&G is driving digital innovation to better serve consumers, we are also looking into improving online measurement methods. Eye-tracking technology is an interesting technology that could help."
Other biometric and neuromarketing research firms also use eye tracking as part of their approach, but Bill Stephenson, senior VP-client service at Innerscope, said in an email, "We do have reservations around assuming eye tracking technology alone can answer the most relevant questions in home. Eye tracking can tell you how your creative works functionally (how the colors and movement draws the eye) but is unable to measure an audience's emotional response."
For example, he said Innerscope has studied a Google TV ad on two completely different audiences -- VP-level media executives and what he described as "low-income 'Average Joes'" -- that show "tremendous emotional differences but the eye tracking is nearly identical."
Innerscope uses lab research that also includes monitoring people's pupil dilation, heartbeat, breathing, motion and skin conductivity to gauge emotional reaction to ads. Another recent Innerscope study with Yahoo found, not surprisingly, that contextual and personal relevancy of online ads increased attention and positive emotional response.
"Procter & Gamble Co. has signed with a company that uses webcams to literally track eyeballs online, and the results so far look pretty good at least for one of its brands, Pampers -- in Scandanavia.
An online ad for Pampers showed up as the most effective among 100 online ads from various marketers in a study among 400 participants viewing the ads at home in Sweden, Norway, Denmark and Finland. The study was conducted by Stockholm-based MRC Online EyeTracking, which uses webcams and software developed by Tobii Technology to follow viewers' gaze. MRC defined effectiveness based on where and how long people looked at elements of the advertising.
P&G has signed on as a customer of MRC's EyeTrackShop service for the Nordic region, said Matthias Plank, CEO of MRC International. MRC also has an office in China and recently opened a U.S. office in New York, but P&G is not working with the company in the U.S. at this point, he said.
Mr. Plank said MRC is working with P&G on pre-tests of online ads and with some in-store marketing materials. Overall, he said MRC tests about 100 ads a week and has done tests in 30 countries. It promises to turn around tests in 48 hours.
MRC's webcam-based eye tracking has the advantage of not requiring headsets and needs only webcams that can be used at home, making it easier and cheaper than conducting tests in laboratory conditions used by some other companies in biometric and neuromarketing research.
"We are extremely happy that Pampers was recognized as the most effective ad [in the MRC study]," Krister Karjalainen, head of digital for P&G in the Nordic region and a former web manager for Ikea, said in a statement. "As P&G is driving digital innovation to better serve consumers, we are also looking into improving online measurement methods. Eye-tracking technology is an interesting technology that could help."
Other biometric and neuromarketing research firms also use eye tracking as part of their approach, but Bill Stephenson, senior VP-client service at Innerscope, said in an email, "We do have reservations around assuming eye tracking technology alone can answer the most relevant questions in home. Eye tracking can tell you how your creative works functionally (how the colors and movement draws the eye) but is unable to measure an audience's emotional response."
For example, he said Innerscope has studied a Google TV ad on two completely different audiences -- VP-level media executives and what he described as "low-income 'Average Joes'" -- that show "tremendous emotional differences but the eye tracking is nearly identical."
Innerscope uses lab research that also includes monitoring people's pupil dilation, heartbeat, breathing, motion and skin conductivity to gauge emotional reaction to ads. Another recent Innerscope study with Yahoo found, not surprisingly, that contextual and personal relevancy of online ads increased attention and positive emotional response.
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