The Fairness Trap: When Perceptions of What's Right Cloud Judgments of What's Possible

We are so consumed with what is 'fair' and 'right' that we forget one person's payout is another person's debt. Most of the major economic battles consuming Europe and the US are centered on notions of fairness. Who should or should not do what for whom.

Germans resent supporting profligate Greeks. Greeks resent supporting greedy Germans. Chinese bureaucrats grab what they can to get ahead, thinking their hard work means they deserve the spoils. Those who bought into the notion of a flat society feel advantage is being taken. In the US, banks resent mortgage settlements that might cost them some profit, but revive the economy and thereby promising them more. Mortgage defaulters resent supporting banks who do not acknowledge the unrealistically bad deal they were sold on to begin with. And so on.

There are two problems with this unwillingness to compromise. Firstly, lack of perspective clouds our judgment. Researchers call it 'self-serving bias.' Or where you sit determines where you stand. We choose not to see the other sides' point of view because it might render our own insupportable. The second problem is that the lack of objectivity causes us to focus more on the other person's potential gain and less on our own resultant loss than on what a rational compromise might deliver for both.

This is part of a larger societal problem. These arguments tend to happen at times of resource deprivation. There is less to go around. Previously held assumptions about what the future would hold have been shattered. Everyone feels threatened. There is no mood of compromise. And we have acquiesced to a 'winner-take-all' social arrangement. We may be forced by the strength of these resentments, hurts and lost hopes, to endure more suffering than necessary. But that may be the only 'fair' way to get the point across that splitting the difference is, for the majority, the logical outcome. JL

James Surowiecki comments in The New Yorker:

The basic problem is that we care so much about fairness that we are often willing to sacrifice economic well-being to enforce it. Behavioral economists have shown that a sizable percentage of people are willing to pay real money to punish people who are taking from a common pot but not contributing to it. Just to insure that shirkers get what they deserve, we are prepared to make ourselves poorer.

How the Chicken Conquered the World

The universal answer to every question about an unfamiliar taste is: like chicken.

How our global civilization became so reliant, even dependent on this bird is a tale of economics, science and communications.

There is simply no significant culinary culture on earth today in which the chicken does not have a major role. Europe, North America, Asia, India, South America, Africa. Its very adaptability to taste enhancement or suppression contributes to its ubiquity.

The chicken has at various times been worshipped, ogled and feared. But the dominance of this one species may be due to its ruthless efficiency as a vessel for converting inexpensive raw materials into relatively valuable protein. Far more profitable than beef - and healthier in the bargain. The story of its rise to universal mastery is a template for the unappreciated in all societies. JL

Jerry Adler and Andrew Lawler report in Smithsonian:

The chickens that saved Western civilization were discovered, according to legend, by the side of a road in Greece in the first decade of the fifth century B.C. The Athenian general Themistocles, on his way to confront the invading Persian forces, stopped to watch two cocks fighting and summoned his troops, saying: “Behold, these do not fight for their household gods, for the monuments of their ancestors, for glory, for liberty or the safety of their children, but only because one will not give way to the other.”

The tale does not describe what happened to the loser, nor explain why the soldiers found this display of instinctive aggression inspirational rather than pointless and depressing. But history records that the Greeks, thus heartened, went on to repel the invaders, preserving the civilization that today honors those same creatures by breading, frying and dipping them into one’s choice of sauce.

Do We Expect More From Technology But Less From Each Other?

Human interaction is just so damned messy.

Technology brings us together in many ways. But most of them give us greater control of the manner in which we interact. And that usually involves creating distance rather than closeness.

Telecom companies report that phone usage for conversation is down so dramatically that they are contemplating bundling voice and text services with data to make up the lost revenue. The image of couples sitting together at a restaurant table but texting someone else not present has become so common it is a contemporary cliche.

So what's with this need for distance and control? Are we really under so much more pressure than our parents or ancestors that we can not handle it. Or are we simply more educated, more cerebral and more selfish. The guess here is some of each.

The pressure comes from the volume of communications we receive through our multitudinous platforms: smartphone, iPad, eReader, laptop - to say nothing of TV, radio and the human voice. We need time to think and to sort them all out. Put them in context so we can respond intelligently - or decide not to respond at all. You could look out the peephole and refuse to open up for a door-to-door salesman. Unwanted messages have to be deleted.

In addition, we live in a time of uncertainty. Certainly not greater than that of the WWII generation, or westward bound pioneers, or medieval serfs or hunter-gatherers who couldn't be sure where their next meal was coming from - and whether they would be someone else's next meal. But jobs, incomes and human relationships may indeed have a more transitory quality than we were led to believe was our due.

But we have chosen to contribute to both the cacophony - and the withdrawl from closer contact. In the US, for a nation built on cooperation and group endeavor, we now lionize, let alone celebrate our 'right' to be left alone. To do what we want when we want. Though in the selfish calculus of the age, we tend, as former Chief Justice Earl Warren once said, to believe that what government does for us is social progress while what it does for others is socialism.

As so often happens with powerful forces, we let services designed to serve, instead rule. We surrender to what's easiest to preserve what we believe to be our prerogatives, only to find that in doing so, we inadvertently threw them into the pot as well. Human history teaches us that we will, eventually, regain some semblance of perspective and balance. The question is how much we will have lost along the way that can not be regained. JL

Sherry Turkle comments in CNN:

We want technology to step in as we invite people to step back. It used to be that we imagined that our mobile phones would be for us to talk to each other. Now, our mobile phones are there to talk to us.

Fanning the Flame: Secret US Cyberwar Against Iran Revealed

The New York Times story about President Obama's authorization of a series of cyber attacks on Iran, in concert with Israel has inspired global notice. For two reasons.

First, because it confirms what many had suspected about the Stuxnet virus that disabled Iran's nuclear centrifuges and about rumors of a newer virus called Flame. But just as intriguing is the conjecture that the article was leaked by the Obama Administration to bolster its military credentials in an election year as the US economy continues to falter and his campaign grasps for stories to enhance his reputation as a leader.

There is a long and rich historical tradition of using such leaks around the world. There will no doubt be a debate about whether secrets have been compromised for political purposes or danger increased by release of this knowledge. But the larger question - with Chinese cyber attacks on Europe and US becoming routine - is whether this signals broader acknowledgment of the fact that cyberspace, the internet, electronic and electrically connected entities are now fair game for anyone for any reason. The absence of international agreement and the nature of the subterfuge involved suggests that this is the beginning of a new phase in this era of global competition. JL

David Sanger reports in the New York Times:

From his first months in office, President Obama secretly ordered increasingly sophisticated attacks on the computer systems that run Iran’s main nuclear enrichment facilities, significantly expanding America’s first sustained use of cyberweapons, according to participants in the program.

We're All Data Now: ATT CEO Predicts 2014 End of Call and Text Plans

Inevitable?

That is what the CEO of the largest US telecom company called the end of mobile plans that separate call-and-text services from data. In the future, the options will be data, data and data. Which is to say, that all phone services will be considered data. Prices will rise as a result.

The reason for this is that people are using their mobile devices less and less for talking, which delivers fat profits. So to offset the revenue loss - and goose earnings a bit, the providers will simply withdraw the option of not buying a data plan. If voice and text are treated like data, they will cost the average consumer more.

The change will be cloaked in the red-white-and-blue rhetoric of patriotism, competitiveness and job growth. But this is a price hike, pure and simple. JL

Peter Svensson reports in the Huffington Post:

The CEO of AT&T Inc. said that cellphone plans that count only data usage are likely to come in the next two years. In such a scenario, phone calls and texts would be considered as just another form of data.

Randall Stephenson didn't say AT&T has such a plan in mind, but he suggested that someone in the industry will likely offer one.

Plateau or Plunge? Twitter's Slowing Growth

Hey, any growth is good.

The problem is that we have come to expect such extraordinary performance, particularly from social media, that anything less than mind-boggling gets termed a calamity.

The user engagement issue has dogged Twitter since its inception. Initially people signed up, but then activated their accounts at much lower rates than other social media. Now, the accounts are activated, but usage is infrequent. Is it that those of us who can not afford to hire PR people to craft our 140 character tweets aren't clever enough to think of anything to say? That the 'I am now waiting on the security line at the airport' messaging is so inane that it has descended from ridicule to self-parody?

The lack of engagement is a management problem, not a technology problem. Users have to be encouraged, prodded, inspired and, yes, maybe, bribed, er incentivized to use it more frequently and, perhaps, more creatively. For instance, it is not clear that teens use it as much as they use texting and Facebook. And they are the future.

There is an argument that says Twitter's founders have been too busy high-fiving each other and taking tech conference victory laps. That building solid, long-term growth takes more effort than they and their backers may have realized. Just ask the folks at Myspace.

Whatever the numbers mean, they are a gift. Because they could be a warning sign that attention must be paid. And in this life, we are rarely given the opportunity to fix something before it goes really bad. Twitter has that chance and it will be instructive to see what they do with it. JL

Jeff Bercovici reports in Forbes:

Twitter is growing in all sorts of ways: in the number of tweets sent per day, in the ad revenue it’s taking in, in the number of celebrities and brands using it in ways they quickly come to regret.

But in terms of the overall proportion of the population engaging with the social messenging service, it might be in a bit of a lull.

World's Best Supply Chain? Apple Turns Over Its Entire Inventory Every Five Days

Ruthless efficiency.

If you are searching for a definition of that term, a graphic of Apple's supply chain may appear.

What this means is that Apple, with its world-beating sales volume, is able to reduce costs and increase profits by manufacturing, transporting, storing and then selling so quickly and efficiently that it basically keeps the stuff just long enough for customers to buy it.

So, not only is Apple designing products that people want, it has also figured out how to get it to them quicker than anyone else in the world. Which means its costs are lower, profits higher. It's stock price reflects this capability, which means the company therefore has more money to invent new stuff that it can then sell even faster.

The business world - and the mainstream media - tend to focus on The Big Story: the impending Facebook IPO. The disappointment of the Facebook IPO. Who's to blame for the disappointment. The banking scandal-du-jour. But for those interested in how money gets made day-to-day and year-to-year, the real action is in seemingly boring and routine process improvements and management capability. The intangibles that drive business growth but are not captured on a balance sheet or income statement. They may not be audited, but they sure do count. And Apple has the numbers to prove it. JL

Alex Madrigal reports in The Atlantic:

Apple turns over its inventory once every five days.

That's part of why a new report from the technology research firm, Gartner, ranked Apple's supply chain the best in the world. And it's pretty amazing when you think about it

Blame Game: Are There Too Few Good Applicants - or Has Business Software Created the Impossible Screen?

Supply or demand?

Employers complain chronically about the shortage of capable, skilled applicants for job openings. Researchers, however, are beginning to find that the issue may not be with the labor pool, but with the software that companies employ to save costs and make their task easier. The problem is that hiring managers may have surrendered good judgment in favor of tech-oriented screening mechanisms created by engineers who are good at building categorization software but not as skilled at figuring out what actually works in the real world of the office or factory.

The results are potentially ruinous. Competitive advantage could go to a business more willing to invest in training and personnel development while technologically dependent screeners search for the perfect candidate. That person may exist on paper, or within an algorithm, but his or her existence on planet earth could be debatable.

This is not to say that all software screening is bad. It is just that abdicating all responsibility to a computer program is no more sensible in hiring than it is in any other management endeavor. A bit more flexibility in defining skills and requirements, along with a tad more willingness to accept learning on the job, and employers struggling to fill empty slots may find that their needs can be met. And they may well find that the extra investment in training and development will be more than made up for by the sales or profits from previously unfilled orders. JL

David Wessel comments in the Wall Street Journal:

In an essay in this newspaper last fall, Peter Cappelli, a professor of management and human resources at the University of Pennsylvania's Wharton School, challenged the oft-heard complaint from employers that they can't find good workers with the right skills. "The real culprits are the employers themselves," he asserted.

RIM, Research in (Reverse) Motion: Are the Pieces Worth More Than the Whole?

The jewels in the crown may have to be sold off piecemeal. Either in a last-ditch attempt to save the enterprise - or as a way to harvest maximum value for creditors and, should there be anything left, investors.

There are assets to be sure: the network, patents, service agreements, talent (that which remains), cash, the Blackberry trademark and brand. And each will have value to potential acquirers, especially the cash-rich tech growth-now club who are battling for supremacy; Google, Facebook, Microsoft, Samsung, Oracle, even HP. All of have made significant acquisitions in the past few years. All have adequate resources as the betting is that the total price could be in the $5 billion range. Not exactly chump change, but hardly an obstacle for any of the above.

There are those who would like to see the company stay together by selling off a piece here or there as AOL just did. The patents being the most common object of fascination for that scenario. Whenever bankers are hired by management a deal is in the offing. Financial advisers reap the richest rewards for initiating a transaction. Their instinct and will is to follow the money. Advising clients to sit tight and work their way out of it may be the right thing to do, but it is not the most profitable option. Lucre leads logic.

Each of the component pieces has a value. Articles all over the web are already positing their putative worth. But what this speculation throws into sharp relief is the missing piece that could have added value and failed to do so: management. In looking at each of the potential acquirers, executive leadership contributed to creation of value far beyond what the disassembled assets held on a stand-alone basis. In RIM's case, management's missteps subtracted value from the overall enterprise, leaving the bits and pieces to be pawed over like junk-yard scrap.

Management and leadership are the missing pieces and their absence should be valued as well. JL

Peter Svensson reports in AP via Yahoo!:

Research In Motion Ltd., the maker of the BlackBerry, is in steep decline. The company, once the crown jewel of the Canadian technology industry, is now worth 1 percent of Apple's market capitalization. One way for RIM to stop the downward tailspin: It could sell itself to a competitor or financial firm. But who would step up to buy RIM —and why?

This May Hurt a Little: Doctors, Hospitals Offering Cash Discounts for Medical Bills

Gas stations are one thing.

We have become inured to billboards advertising 'cash only' prices. In small print, of course.

But to learn that medical procedures and doctors' office time is also being discounted to favor cash customers is troubling to many observers - and to some in the medical world. The professional and ethical implications are significant. Despite the injunction to 'first, do no harm,' the danger is that an even more skewed multi-tiered system will begin to emerge. The top tier being patients who can afford to pay cash - lots of it - in order to buy their way to the front of the line, presumably for faster action and possibly, better service.

The discounts are being offered routinely by providers as a way to get around the high cost and bureaucratic administrivia of the health care insurance oligopoly. Just as consumers complain about challenges to coverage they thought they had paid for, so doctors and hospitals are finding they are being nickeled-and-dimed to the point of early retirement by the ceaseless efforts of the financial middle-men.

Insurance was built on the supposition that shared risk and expense would offer lower costs for the majority. But as experience with investment firms has demonstrated, financial entities tend to follow the ineluctable logic the markets, morphing from service to gatekeeper in order to capture more of the economic benefits for their executives and investors.

The danger with any cash business is record keeping and measurement. The history of such enterprises, is, unfortunately, replete with corruption, to which such unrecorded transactions are prone. That this threat would now infect the health care industry, is worrisome because of its size and the emotional component in medical decision making. There is a reason why the majority of many people's lifetime heath care expenditures come in the last six weeks of life. An emphasis on cash payments may exacerbate the pressures of a necessity already unaffordable to many.

Fortunately, the push for electronic record-keeping will drive greater transparency with regard to both costs and payments. The challenge will be to assure that those records accurately reflect the reality of the current system so that the public and the industry can then determine whether it is - or should be - sustainable. JL

Chad Terhune reports in the Los Angeles Times:

A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336.

Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn't used her insurance, her bill would have been even lower, just $1,054.

Profitable Promenades: Walkability Status Driving Up Real Estate Values

Skinny ties. Curves. Cocktails. Meat. Cities. Walking?

New research is showing that the most valuable residential and commercial real estate is no longer in the suburbs, but in urban areas with 'walkable' access to work, entertainment and other people. In addition, the more walkability a neighborhood possesses, the more affluent its denizens are likely to be.

The real estate value mantra has long been 'location, location, location,' but the meaning has changed. Suburban school districts and curb appeal still have their place, but the shifting demographics of aging populations, the expense - and hassle - of owning and driving a car, as well as a growing awareness of the connection between exercise and longevity are part of the mega-trend pushing up values in formerly outre areas.

The forces at work represent a generational squeeze; aging Boomers looking to downsize and reduce costs based on potentially insufficient retirement incomes are joined by Xers and Yers whose notion of domestic bliss no longer necessarily embraces the charming Colonial with a white picket fence, miles and hours from work, friends or entertainment. Urbanization is a global trend; London, Rio, Capetown and Beijing have seen their status and populations enhanced. So the socio-economic currents powering this development are strong and probably sustainable in every sense. JL

Christopher Leinberger reports in the New York Times:

Walking isn’t just good for you. It has become an indicator of your socioeconomic status.

Until the 1990s, exclusive suburban homes that were accessible only by car cost more, per square foot, than other kinds of American housing. Now, however, these suburbs have become overbuilt, and housing values have fallen. Today, the most valuable real estate lies in walkable urban locations. Many of these now pricey places were slums just 30 years ago.

Prime Age Workers, 25-54, Face Lowest Employment Since Mid-1980s

The US is a consumer driven economy.

When the workforce members in their prime earning years face record unemployment and lower income, the rest of the economy will suffer. Since the US remains the world's largest economy, the impact will be felt globally.

The implications are not simply economic. They are political and social as well. Most incumbent senior government leaders in Europe have been defeated for re-election or seen their majorities wither. The Chinese leadership is wracked by turmoil rarely felt, let alone seen in recent memory. Even in Russia, where democracy is less robust and strong-arm tactics tolerated, there has been an unprecedented amount of protest. In the US recent data show that nowhere in the US can someone earning the minimum wage and working a 40 four week afford to rent a two bedroom apartment.

A significant part of the problem is ideological. Those favoring austerity as a means for bringing public budgets in line with revenues hoped that this fiscal responsibility would encourage corporate investment. What they failed to realize was that, free market rhetoric to the contrary, the capital markets and the corporations they serve were as expectant of and reliant on public expenditures as the indigent. As a result, the markets have been uncertain, job growth is negligible and incomes remain stagnant.

Some of these factors are driven by redistribution of resources and production in the global economy. It has been a traditional role of government to help businesses and the people they employ manage the inevitable cycles. By denying the public sector that ability, the forces who have advocated that position may have unwittingly undermined the very sector they had hoped to promote. JL

Peter Whoriskey reports in the Washington Post:

The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics, reflecting the profound and lasting effects that the downturn has had on the nation’s economic prospects.

By this measure, the jobs situation has improved little in recent years. The percentage of workers between the ages of 25 and 54 who have jobs now stands at 75.7 percent, just a percentage point over what it was at the downturn’s worst, according to federal statistics.

Why IPO Means 'It's Probably Overpriced'

Don't take it personally.

FB crashed through the $30 floor yesterday and may have some more room to fall. Having gone public at the unsupportable number of $38, it is down over 20%.

But the company did not betray investors. Neither did the stock market. Most IPOs fail. Many disappoint. Google, LinkedIn and Groupon, to name some other recent supernovas,, also crashed in the first month of trading. This is what IPOs do.

So let's be clear about what happened. A bunch of people made money. Early employees. Early investors. Big investors. Investment bankers and some institutional investors. They were rewarded for the risk they took and the effort they expended to create something phenomenal from an idea. That's actually pretty cool. That they did not share their largesse with you and the rest of the investing community? Dont say you werent warned.

A decision was made. Some might argue that it was cynical and selfish and the way it was handled was borderline immoral if not illegal. Everyone involved knew that the investing universe expected a 'pop,' on the first day of trading. The exponential increase in share price that the world came to expect in the glory days of the dotcom delusion. Why no one remembers that there have been a financial crisis and two recessions since then boggles the mind as one of them is the worst since the Great Depression. That pop in price is not guaranteed. It is not in the Constitution, the Bill of Rights or the Magna Carta. No economist on the ideological spectrum from von Mises to Keynes will weep - or draw a chart - in sympathy for those who thought this IPO was a sure thing.

The decision that the company's executives, board and bankers made was that the staff and early investors would get paid. Everyone else would have to take some risk and wait. That is why so many shares were offered and why the price was set so high. Those who had waited seven years since the company's founding wanted some reward. The warnings about the risk the IPO posed was manifest - not the least because of the frothy overhyping that started months in advance.

But as we have reported before, the history of IPO performance is available for all to see: and it is not pretty. Long on risk, short on reward. Consistently. Over decades. So yes, this was disappointing and deflating. The bankers who managed the offering have done additional damage to the already shaky foundations of the capital markets. Trading volume is down significantly since the crisis. People don't trust the markets or the market makers. And this event confirmed their fears. But this happened in plain sight. The markets have signaled that they intend to run by and for themselves and their favored clients. They have lobbied, testified, spoken, written and made vast political contributions to protect their option to do so. They are not hiding any of it. It is not about you. It is about them. Those who are serious about wanting it to change are also going to have to invest their time and treasure to do so. Just like the last week's winners did. JL

Chuck Jaffe reports in Marketwatch:

In the past few days, thanks to the initial public offering of Facebook, investors have learned what the letters IPO really stand for: “It’s probably overpriced.”

Truthfully, the initial public offering process is built and managed to give a predictable pop on opening day, which results in an equally predictable fallback later, which is why chasing after any initial public offering is the Stupid Investment of the Week.

Food Expiration Dates: When Bad Things Happen to Good Grub. Maybe.

What do they mean?

Sell-by. Use-by. Best-if-used-by. Expiration.

The bottom line for most consumers is, 'Am I gonna die if I eat this?' Or for the more adventurous, 'how sick can I possibly get from stale nacho chips?'

The problem is that no one is exactly certain. In a litigious society, taking precautions is just good sense. But storage conditions, type of food, temperature, humidity and a host of other factors all influence whether food that has hit its published date is still edible or not.

The financial implications are huge. The USDA (Department of Agriculture) estimates that Americans throw out approximately 14% of the food they buy annually. With annual sales in the $800 billion range, that's over $100 billion in waste. And surveys show that most Americans believe - incorrectly in most cases - food that has exceeded its expiration date is unsafe to eat. This is particularly worrisome in a lingering recession which have stretched many household budgets to the breaking point.

The issue is one of measurement and meaning. Food producers have lobbied for this welter of warning signs in order to keep their wastage costs down. As often happens with regulatory definitions, ambiguity is a provider's best friend. JL

Beth Teitel reports in the Boston Globe:

Boston City Councilor John R. Connolly set off an uproar when he went into public school kitchens and snapped photos of frozen meat and cheese dated as far back as 2009. Food past the stamped expiration date packs an emotional punch, and not just when schoolchildren are involved.

Not Your Grandpa's Cadillac: Linux Does Detroit

BMW, Mercedes and Lexus have owned the US luxury car segment for so long that consumers would be forgiven for thinking the American auto manufacturers had given up.

But Detroit's been down so long that to a new generation of car-buyers it may be looking like up to them.

With edgy campaigns like Chrysler's 'Imported from Detroit' and the buzz about the Motor City's hipster comeback leading the way, US auto companies are embracing some home-grown assets to speed their re-emergence as serious competitors.

Technology is arguably the most easily identified - and arguably most underutilized advantage Detroit can leverage to reconnect with the American market. And Cadillac, of all brands, may be the avatar.

Having established some street cred through rappers' embrace of the Escalade - the brand has now embraced Linux to power the entertainment system in its newest model. This is clever from several perspectives. First, the notion of an open-source platform sends a message that the Cadillac brand is identifying with a younger, forward-thinking demographic. It purposely did not partner with another well-known 'safe' tech brand. Secondly, the Linux imprimatur buys some credibility with both urban and West Coast cogniscenti who have money, style - and serve as tastemakers for many others. Finally, the open-source concept appeals to the plug-and-play mentality, which conveys a sense of experimentation and adaptation that establishes its futuristic - rather than traditional - aspirations.

In short, this is a strategic marketing and technological coup that could return this once-dominant brand to most favored status. JL

Damon Lavrinc reports in Wired:

The brand once known as the “Standard of the World” has fully embraced the Standard of Geeks for its latest play for the hearts, minds and cash of the upwardly mobile. This is the all-new 2013 Cadillac XTS, and while it certainly isn’t your great-great (great) grandfather’s Cadillac, it’s designed to appeal to everyone from octogenarians to their baby-boomer spawn, and maybe — just maybe — even you….

While the XTS’ spate of processors and controllers isn’t running the open source offspring of Linus Torvalds, the game-changing infotainment intender known as the Cadillac User Experience (CUE) is.

Do Consumers Really Want a Relationship with Brands They Buy? Myths and Fantasies

Relationships are hard enough with other humans.

It is not clear that any sentient being wants to engage in that way with a brand or logo or mascot.

Much of the relationship building between consumers and brands is based on hope. Which is, usually, a strange brew of desire and faith, rarely freighted with much in the way of credible data. One problem is that this is all so new; Facebook, for example, is barely seven years old. A lifetime in internet terms, you say? Perhaps, but in terms of product adoption cycles and comparable data that might shed quantifiable light on the enduring strength of such situations, not so much. Another is that this point of view presumes more contact means more positive response. Whatever happened to too much of a good thing? It is not at all clear that the more consumers engage, the happier and more committed they will be with what they find.

The basic premise on which many of these cloud castles are built is that 23% of consumers believe they have a relationship with their brand. Putting aside, for a moment, that this means 77% are not on such intimate terms, the question remains as to what that relationship comprises. Marriage? Dating? Hooking up? Hanging out? Not yet clear.

The larger point is that neither marketers nor customers have much to go on - yet. Drawing conclusions during times of uncertainty is usually a mug's game. It will take a while to sort out whether people really yearn for a 'relationship' or are just hoping to score some discounts and better service. Whichever it may be, the lesson to business is the same as to lovers: if you want it to last, you had better treat the opposite number with respect and affection. JL

Ron Shevlin comments in his blog Snarketing 2.0 (hat tip Greg Satell):

The HBR Blog Network recently published an article titled Three Myths About What Customers Want. The authors defined the following myths:

1. Most consumers want to have relationships with your brand.
2. Interactions build relationships.
3. The more interaction the better.

According to the authors, “Most marketers think that the best way to hold onto customers is through ‘engagement’ — interacting as much as possible with them and building relationships.”

My take: The authors’ are spot-on in their identification of the myths, but misinterpret what engagement is — or, rather, what it should be.

Tasting Forbidden Fruit: Behind Chinese Consumers' Fascination With US Brands

We are inclined to warn against generalizing. But how else to analyze the interaction of over a billion people with another 300 million across the globe?

American brands sell well in China. Despite the economic and diplomatic tensions between the two countries, the mutual fascination is real. And deep. They are both familiar and far apart. American cultural imports overwhelm even the largest population on earth. Chinese hosts are frequently surprised at visiting Americans' dexterity with chopsticks, not realizing that even the smallest rural US towns may have a Chinese restaurant.

But as Chinese household incomes increase, American brands enjoy pride of place. This seems counterintuitive to some, but further reflection suggests that the two systems may be more alike than not. While Americans tout individualism, life can be an extension of high school: they desperately want to fit in. Chinese are steeped in Confucian traditions with a Maoist overlay; but they respect success and leadership. Just as in post-industrial western economies (and China's is now @50% service-based) brand associations for Chinese consumers are an expression of values. Of ambition, materialism, filial piety, worldliness - or not.

Buying American brands is a safe way for Chinese to express feelings or beliefs not comfortably articulated in the political or social arena. They exemplify yearnings and are statements of individuality that do not threaten the familial hierarchy. As the Chinese economy becomes more engaged and intertwined with global commerce, the value of these values may morph or, simply fall away. But for now, US brands stand for something - whether the parent company intended it or not. And they would be wise to learn from such customer insights as they may provide meaning that could sustain and propel the brand in ways managers could never have imagined themselves. JL

Tom Doctoroff reports in The Atlantic:

Americans can often carry a somewhat simplistic view of China and the Chinese people. Although apprehensive about the rise of this economic juggernaut and its impact on the American way of life, the images China casts are rooted in the past: dusty, robotic, gray, and ultraconformist.

The Chinese, on the other hand, are fascinated by America, although often perplexed by its inherent contradictions.

How Music Changes Your Brain

Chemistry. Biology. Musicology.

The more we learn about the brain, the more we learn about how we think, learn, create and adapt (or not). The implications for human development are significant. Not always in a positive way, of course, as the potential for abuse is manifest. Concerns about subliminal messaging have been aired but the additional impact of musical influence expands the consideration set.

The positives will probably outweigh the negatives. The use of music to enhance retention, understanding and emotional meaning have numerous therapeutic and marketing uses. Especially in an age for which the welter of incoming signals distorts and diffuses, music may provide a means of channeling and focusing.

The broader issue is that given how much pleasure and cultural support music has provided humanity over the millenia, understanding how to both enhance and extend those influences to the social, political and economic realms is hopeful. JL

Elizabeth Landau reports in CNN:

Michael Jackson was on to something when he sang that "A-B-C" is "simple as 'Do Re Mi.'" Music helps kids remember basic facts such as the order of letters in the alphabet, partly because songs tap into fundamental systems in our brains that are sensitive to melody and beat.

That's not all: when you play music, you are exercising your brain in a unique way.

Innovation Fatigue

If everyone says they are doing it, can it really be innovative?

Perhaps more to the point, does it really matter? Or make a difference?

Innovation has had an amazing run. From the 1980s when it was identified as the secret sauce missing from US and European businesses (and responsible for Japanese success)to the present, when every CEO of every company, no matter how hidebound, declares that every new widget or process represents the latest in innovative whatever. And that the markets KNOW the company's commitment to innovation is what defines them. If only.

Research done by my colleagues and me almost a decade ago began to identify innovation as a term that had begun to lose meaning as a strategic differentiator with any financial impact. The problem is similar to that with any over-used and under-proven statement; credibility declines as the term becomes a meaningless cliche meant to convey that management 'gets it,' whatever 'it' may be. Quality and Knowledge suffered similar parabolic arcs over time.

Our statistical analyses began to show that innovation as a term was failing to demonstrate any significant impact on outcomes that mattered to business; reputational, operational or financial. It had simply ceased to have meaning because it was being applied so ubiquitously - and haphazardly. Slapping a term on any new development long enough and the intended audience just tunes it out. It becomes background noise.

Innovation can be important. But whoever is doing it has to make a convincing case for why that it is innovative - and why that innovation matters to clients. Really matters, in detail. Doing so creates risk because it requires sharing competitively sensitive information. But experience has shown that demonstrating the ability to execute on information received is more important than simply possessing it. Having the knowledge and the confidence to share that with customers can make a difference. And that would be truly innovative. JL

Leslie Kwoh reports in the Wall Street Journal:

Got innovation? Just about every company says it does.

Businesses throw around the term to show they're on the cutting edge of everything from technology and medicine to snacks and cosmetics. Companies are touting chief innovation officers, innovation teams, innovation strategies and even innovation days. But that doesn't mean the companies are actually doing any innovating.

Digital Word of Mouth: Doing the Social Media Math

This is the future.

A company that is transparent about the importance of customer tracking and its impact on their business.

Privacy concerns have stymied some sites like Facebook because they started as something more personal; a place to share experiences and semi-intimate info that might, as a sideline, offer some stuff for sale. Newer companies have neither the legacy nor the hang-up. Their purpose is to make money by selling and to do so by identifying, managing and measuring the impact of what one calls their 'viral coefficient.'

Free of the artifice that this is all about fun, friends and family, such companies can focus on what matters, which is figuring out sources and uses of influence that drive sales. While some may argue that this gives away competitively sensitive data, the reality is that the ability to execute based on the insights such data provides is a much more challenging differentiator than the mere availability of the data itself.

In the long run, capturing the right information and acting on it will provide business advantage. Sharing the sources of such information (presumably without names and addresses) will reduce some of the opposition to its use and perhaps even enhance the quality of the services being provided. Which is exactly why people started to permit strangers to gather so much about themselves in the first place. JL

Natasha Singer reports in the New York Times:

Fab.com is a pioneer in social retailing, the kind of e-commerce site that encourages shoppers to discover and select products through crowd-sourcing. It sends out e-mails daily, alerting design mavens to flash sales of whimsical, limited-edition items — like candy-colored typewriters or clear plastic coasters embedded with gummi bears — and offering a variety of ways to share their favorites with friends. Founded last June, Fab has already racked up more than 4.5 million members, who collectively shell out about $400,000 on a typical day, the company said.

But behind that fast success is a new social media math

Attention Discount Shoppers: The Year That Changed Retailing Forever

50 years.

John Kennedy was President, Vietnam was a faraway problem, not a war, Russia was the biggest threat most westerners could think of and the Beatles were still perfecting their music in small clubs.

It's hard to believe there was life before discounting. For a relatively new phenomenon, it has come to dominate consumers' view of the shopping experience.

The impact on jobs, wages, prices, globalization, competition - to say nothing of store layout and design - has been extraordinary. By making higher quality goods available to mass market consumers at prices they believed the could afford, the discounting concept changed how business is conducted. It helped break down age-old barriers, enhanced communications and encouraged the spread of the chains that have come to rule the retailing landscape.

These forces were set loose by the realization that consumers would demand better goods - and fight for their right to get them. From the lunch-counter at Woolworth's where the civil rights movement found its emotional touchstone to the wonders of Chinese production, discounting has fostered both economic and social change of a global scale.

There will be debate about the net positive or negative impact of this approach to production and pricing. The environmental and human costs have been fearsome. But the quality of life improvements for many can not be gainsaid. Ultimately, it is simply a fact to be dealt with. Society will have to continue to adapt in order derive what measure of accomodation it can from this reality. JL

Marc Levinson reports in Bloomberg:

Attention, discount shoppers! It's time for a celebration. This spring, Americans mark half a century of discount retailing -- or would mark it, if they weren't so busy shopping.

Discounting doesn't really have a birth date; the idea that a store can move more goods by knocking down the price is as old as retailing itself. But this spring marks the 50th anniversary of a discounting revolution that helped shape modern retailing.

Unprotected Sects

Everyone is getting into the game. Anyone with an idea, an attitude or an itch is online letting the world know and looking for validation.

But in the web's very universality lies its danger. Like that old 'Urban Cowboy' standard, they're 'lookin' for love in all the wrong places.'

And the latest research suggests that religious institutions may be both the most vulnerable as well as among the most contagious. The problem is not one of intent. Just the opposite. The desire to reach out and share their joy and conviction, coupled with lack of knowledge about malware and, due to budgetary constraints, reliance on volunteers or well-meaning vendors with imperfect training and limited skills has led to the creation of new sites notably bereft of common protections. There is also, perhaps, a certain naivete based on the assumption that the worthy nature of their cause - and its lack of, ahem, sex appeal - makes them immune to the attention of scammers.

As such they are prey to the very forces they hope to change. Ironically, the porn sites that initially brought the web into some disrepute are now usually run by knowledgable businesses with access to the latest technological defenses - as well as the cash flow to keep them updated. In fact, Symantec, one of the leading cyber-defense companies reports that religious and ideological sites are a far greater source of malware infection than the adult entertainment industry.

We are certain that this, too, shall pass. But probably not without more attention to self-help and good works. JL

Will Oremus reports in Slate:

As with herpes, one of the peripheral embarrassments of contracting a computer virus is that everyone has a pretty good idea of what you were up to when you got it.

Oh sure, it’s possible you just chastely pecked a misleading email link. But odds are you picked it up because you were dallying on one of those shady, fly-by-night websites that people visit when they’re seeking fulfillment. You know—religious sites.