Nicholas de Wolff

#MeetTheCustomers – How Brands Fail To Engage

Oh, and one more thing…social engagement brings humanity and humor back in to the mix. That’s never a bad thing.

Kumbaya Redux

With economies crumbling, politicians posturing, nations in upheaval, and “Wizards of Waverly Place” canceled, one can’t be blamed for thinking humanity has lost its bearings, and all is lost. However, I believe that nothing could be further from the truth.

After decades of conspicuous consumption, corporate and personal greed, and upended priorities, the double-dip depression (that’s what I’ve been calling it, and I’m sticking by it) is forcing many of us to review our lifestyles, and reconsider what is really important. Statistics suggest that the undeniable financial stresses of late are not increasing divorce rates, but rather reversing the trend (divorce rates are down year-on-year since 2008YE), and families are growing closer, with adults moving back in with parents, resulting in shared costs and shared burdens. The high cost of oil (regardless of recent gimmicky dips) is accelerating the drive toward alternative fuel vehicles (here’s hoping that we blast through the not-so-green hybrid and electric cars currently on offer, and really get it right with 2014 models). Citizens of cities around the world are increasingly clamoring for alternative modes of urban transportation (bicycle, pedestrian, public transport), leading to the exciting redesign of urban landscapes – incorporating  complete streets, more green spaces, pedestrian safety, increased access to local retail businesses, air quality improvements, mitigation of obesity rates, and reduction of urban heat island effects.  The process is slow, sometimes painfully so, but it is at least progressive, and I believe accelerated by the pressures brought to bear by our collective and individual financial woes.

The struggles faced by our society are reinvigorating our awareness of the communities within which we live, work, and play. More to the point, they are humanizing an existence that seemed to be losing itself in an entropic vortex of “technology for the sake of it”, rampant consumerism, and material one-upmanship. Individuals are becoming more aware of the truth of our shared reality. Nobody is in this alone, and this noble cliché seems to be reawakening an almost instinctual urge to share what little we have with those around us. The amount of dollars being given to charity may be down, but the number of people making donations  is up. This drive is manifesting itself in some wonderfully strange ways, a few cherry-picked examples offered her below, as evidence:

Airbnb is trying, with varying degrees of success, to connect private homeowners with regular travelers, for mutual benefit. Have an extra room (or whole residence) sitting empty at any particular time of the year? Offer it up for rental, and airbnb will help find a tenant.  As soon as the service manages to work out how to minimize vandalism and theft, and refine the availability calendaring (hopeless at present), it’s going to be fantastic.

Meanwhile, one wonders what the point of grassroots lodging is, if one doesn’t have a clue what to do in the city one is visiting. MyGuidie to the rescue! This service, still in alpha mode, is building a database of professional tour guides offering their professional services to travelers seeking to explore a destination properly. However, the real clincher about this site is the fact that it is ALSO registering volunteer locals willing to offer up a little guide time in return for a cold brew or friendly meal! Salacious potential aside, this is civic pride in action.

Don’t rely solely on your guide, however, when you consider that restaurants, museums, and many other places to see and be seen are actively pursuing ways to connect with their customers, fans, and clients. The obvious Foursquare and Facebook check-in mechanisms are but the proverbial tip of the iceberg, marking the spot in an ocean of opportunity. Underneath these well documented landmarks in communications and interconnectivity lie some very compelling niche programs worth checking out, such as – to give but one example among an increasing horde – the Connections program from the Metropolitan Museum of Art, where staff are sharing their personal histories and perspectives on art, and overlaying these worldviews on the more specific  touchpoints offered in the museum’s collections.

While on the subject of taking people out to lunch, or visiting a place of interest, it’s intriguing to note that We&Co, a Foursquare outcrop app, is providing users the ability to leverage the increasingly ubiquitous “check-in” to recognize and thank the people who make a particular moment in our day a pleasant one, be it our waiter, retail clerk, dentist, or tour guide.

These are but a few of the apps, sites, and services cropping up (and growing fast) to accelerate this healthy compulsion many of us are experiencing: now that we have less money, perhaps we’ll focus a little less on building or buying more, and  instead take a little more time to show some interest in those things that truly make life worth living: the people and places that comprise our world. As my close personal friend, Henry David Thoreau, once said: What is the use of a house if you haven’t got a tolerable planet to put it on?

Image via Wikipedia

NFFTY 2011

This year’s National Film Festival for Talented Youth is shaping up to be more exciting and rewarding than ever before!  225 films will be screened in Seattle April 28 – May 1, culled from a record breaking avalanche of global submissions (from 25 countries and 40 States). In addition to the films, NFFTY is partnering with Microsoft to present two very compelling events: a Film-making Masterclass session, featuring Oscar-winning filmmakers (more details coming soon on the NFFTY site), and a Keynote Panel, moderated by yours truly, and featuring some exciting leaders in filmed entertainment (panelists are being announced each week on the NFFTY Facebook Page). The panel is entitled “Sharing Your Vision in the Digital Age”, and tickets are selling fast!

For now, here’s the Festival trailer, giving you a little taste of what will hit Seattle in one month:

Fragile China – Treat With Care

How many of you were aware that China and the US almost went to war recently (according to Chinese mainland media and other sources)? Did you know that China had rebuffed Obama’s request for Secretary Gates to come visit his military counterparts in China (to discuss North Korea situation), refusing to allow the US to meet with military leaders in Beijing; that the US parked several fleets around the nation as a show of indignant force; and that people in China were being prepared by their leaders to rise up and fight “the evil Americans”? I have friends in China who had their bags packed, ready to flee. Yet we heard precious little about this over here.

We are also hearing precious little about China’s enormous investment in the African continent, helping almost every nation therein build up their infrastructure, and investing heavily in natural resources. Just as many see the US as having helped to rebuild Europe in the post-war years, China is building a reputation through the African nations as the benevolent partner…

How are US corporations and administrations responding to the inescapable growth of this Asian culture? We cannot seek to slow down or arrest the development of this economic and cultural force. Attempts to crush evolutionary movement tend to hurt the instigator (see RIAA attempts to stop digital file downloads, as a smaller scale example).

China is bigger than most people seem to consciously calculate, and their business and social culture is very different to the aggressive, fast-moving instant gratification, individualistic culture manifest in US business and society. Are we SO arrogant to think WE can change THEM?..

I wonder how long it will take us to learn how to interface truly effectively with Chinese leaders (government and business), and whether that learning curve will prove simply too long to save us from painful decline as a leading global influencer of policy…when our Secretary of Defense is told to go fly a kite by a foreign nation, you know that more than icebergs are shifting…

Proud Men Dressed in a Little Brief Authority

Extant the fact that free market capitalism is perhaps the wrong term to use here, this is still another mesmerizing animation from the RSA folks!

Then again, there are several other flawed arguments in the animation above (capital does not equal paper money; Marxism is not the answer to 21st Century realization of long-brewing economic imbalances; you cannot collect $200 unless you actually pass GO)

Investment advisor, Peter Schiff has become famous in the past few years for his 2006-07 predictions, in the face of much scorn and derision at the time:

Of course, retroactive editing is a marvelous thing for one’s reputation, but the argument holds: our nature as modern consumers prevents us from being able to invent new models for social and business welfare. Are “Capitalist” and “Marxist” the only two options? We scoff at the idea that we might be wrong while the opportunity still remains to learn and course correct. We paint our situations, our challenges, and our solutions with bold strokes, but always tend to use the same colors…

Shakespeare’s Isabella put it well, when she said:

“…man, proud man,
Dress’d in a little brief authority,
Most ignorant of what he’s most assur’d—
His glassy essence—like an angry ape
Plays such fantastic tricks before high heaven
As makes the angels weep; who, with our spleens,
Would all themselves laugh mortal”.

William Shakespeare – Measure For Measure Act 2, scene 2

Will more stimulus be our salvation or our death knell? Are we in a recession, or entering a Depression? I’m no economist, but I do know that tens of thousands of Californians who would love nothing more than to be gainfully employed just fell of the unemployment benefit rolls, with no job in sight…

This is the Time of Empiricism

A fascinating, if somewhat random, interview with Stephen Fry. What do you agree with, and what do you contest? There is so much in here; it took me two viewings to begin to synthesize the content.

“The real heroism of people who think of others should be rewarded…and it usually is”

Mr. Fry, explores – among other things – his belief that experience, expertise and fulfillment come via interaction and generosity.

“Sharing the benefits of life IS the benefit of life”

It behooves today’s business leaders, perhaps, to see how some of these philosophies might be applied to their sector(s). While the commentary is more on a social scale, the applications have bearing on businesses seeking to maintain and enhance their validity in the new social marketplace.

The Secret Powers of Time

The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) is a multi-disciplinary, politically independent enterprise that combines cutting edge research and policy development with practical action. They now have a YouTube channel. I found this presentation both visually impressive, and thought provoking: In it, Professor Philip Zimbardo conveys how our individual perspectives of time affect our work, health and well-being. Time influences who we are as a person, how we view relationships and how we act in the world.

(thanks to Doug Campbell for the link)

Plus ça Change…

Our resident political opinionator, Jeremy McGuire offers the following book review:

In the middle of a recession there are invariably questions about how we got into it and what we can do to get out of it.  Politically, it quickly devolves into a conflict between the market driven laissez faire economists and the interventionist Keynesian ones.  Television and radio infotainers yammer on, using their own peculiar jargon that leaves the rest of us – who are not economists – as much in the dark as we were before.

I wanted to know more, so I picked up Liaquat Ahamed’s detailed history of how the world stumbled into the Great Depression, “Lords of Finance.”  Ahamed is a twenty-year veteran of investment banking and some paragraphs have to be read over a few times, but generally it’s written for the layman.  It comes in at 508 pages, without notes, but it reads like a well-crafted novel.

The main characters – the “Lords” themselves – are Montague Norman of the Bank of England, Hjalmar Schacht of the Reischsbank in Germany, Benjamin Strong of  the N.Y. Federal Reserve Bank, and Emile Moreau of the Banque de France. all of whom were well intentioned but ultimately flawed men who were not immune from the kind of gross miscalculations and unwarranted fears that led to the financial disaster of the Great Depression.  While a great deal of information may be gleaned from their stories that is applicable to the present one must be cautious: 2010 is not 1929.

Some of the miscalculations early twentieth century central bankers made were over the conduct and financing of World War I.  No one in financial circles believed the war would outlast the various governments’ ability to pay for it. They were all on the Gold Standard, you see, and the financial resources of each country were tied to their reserves of gold.  It was hard to imagine Germany, France and Britain would be so foolish as to burden their countries with massive debt just to keep a war going.

These top-hatted and stiff-collared expert prognosticators, mired as they were in centuries-old financial traditions based on the availability of precious metals, completely overlooked the proclivity of wars (particularly wars between monarchies, empires and single-party republics) to be self-sustaining and self-fulfilling.  If wartime governments run out of money, they borrow it, mostly from foreign banks incurring massive debt.  If they don’t have enough currency, they print it, all to keep the war going toward ultimate victory, at which time all debts will be easily repaid.  Or so they thought.

The incipient catastrophes that resulted from financing the First World War in so unsustainable a fashion were exacerbated by the enmeshment of world financial interests.  In the introduction, Ahmed explains, “Because financial institutions were so interconnected, borrowing large amounts of money from one another even in the nineteenth century, difficulties in one area would transmit themselves throughout the entire system.”

Ahamed stops way short, however, of ascribing this financial entanglement to any conspiracy of central banking institutions.  In retrospect it may read like a Dan Brown novel, but conspiracies require agreement, and the central bankers in the 1920’s could agree on almost nothing.  Scrambling to force some post-war order on the economies of their respective countries, they formed alliances, made enemies, forced concessions, engaged in blackmail and all manner of intrigues eventually stumbling into Great Depression through incompetence, a too rigid loyalty to ideological principles, and misguided policy.

The biggest blunder on the road to the Great Depression was the New York Fed’s decision to lower interest rates.  It may have helped Germany’s cash-flow, but it caused massive speculation on Wall Street, as investors borrowed more and more money to purchase stocks, further inflating the bubble that burst on October 29, 1929 – “Black Tuesday.”

Ahamed writes, “Their goal is a strong economy and stable prices. This is, however, the very environment that breeds the sort of over-optimism and speculation that eventually ends up destabilizing the economy.  In the United States during the second half of the 1920s, the destabilizing force was to be the stock market.” (p.280)

We are put in mind of the economic situation in America before the current recession: Overspeculation, easy credit, artificially inflated prices, and a protracted military campaign resulting in massive “bad debt,”* much of which is held by foreign banks, principally China.

In the Depression, as well as today, the main conflict on the road to recovery was,

“Between those who believed that governments could be trusted with discretionary power to manage the economy and those who insisted that government was fallible and therefore had to be circumscribed with strict rules.” (p.230)

Traditionalists said Government should keep its hands off the economy and allow the “invisible hand” of the market to determine its course as proposed by eighteenth century economist Adam Smith.  Others, principally twentieth century economist Maynard Keynes, said the government must have control over the economy to keep market pressure from destabilizing it.

“The real issue for the [Federal Reserve] governors was that many of the banks closing their doors…had sustained such large losses on their loans that they were … insolvent, [the governors] made it a principle to let them go under.  They failed to recognize that by doing so they were undermining public confidence in banks as a repository of savings and were causing the U.S. credit system to freeze up.” (p. 391)

What government aid did come was too late.  By that time, Ahamed writes, “Banks, shaken by the previous two years, instead of lending out the money, used the capital so injected to build up their own reserves.”

Ahamed seems to say that when a crisis looms, the injection of funds to shore up failing banks should come sooner rather than later and in sufficient quantity to capitalize the banks and allow them to begin lending.  When Adam Smith’s “invisible hand” goes arthritic, Maynard Keynes is there to take over the heavy lifting.

Amid the chorus of our own contemporary “know-nothings” who spout partisan absurdities about the government not getting involved in economic policy, or how deficit spending to get the economy out of crises is tantamount to cultural Armegeddon, Ahamed’s analysis is a voice of reason. “The Great Depression was caused by a failure of intellectual will, a lack of understanding about how the economy operated.  No one struggled harder … than Maynard Keynes.  He believed that … economists are the “trustees, not of civilization but of the possibility of civilization.” (p. 504)

That’s something even an artist like me can understand.

(*Bad debt is, according to Robert Kiyosaki, debt that does not put money in your pocket).

Jeremy Mcguire is an author/illustrator, humorist and social commentator. His weekly articles appear in a variety of publications, and are archived on the blog, Baloney & Blarney.

Innovation and Globalization

Indiana-based strategic consultant David Virag sent me the following commentary today, partly in response to my recent posting on the Nature of Innovation. Virag is well-placed to speak on issues relating to technology and innovation, with more than 20 years of experience in consumer electronics and high tech managing business and technology strategies.

With the current mortgage crisis and high unemployment rates, there is a general feeling of uneasiness among most people regarding the U.S. economy and future prospects.  Current efforts by the Federal government to kick-start the economy with subsidies and low-interest rates have yet to take hold.   With the unemployment rate sticking at 10%, many economists are predicting a jobless recovery.  However, without a strong labor force, it’s unclear how much recovery can ever take place.  An AP analysis published this week found very little job creation from public road construction programs.   Perhaps a jobless recovery is one where the economy merely stabilizes.

Government policy notwithstanding, one thing that does have the ability to recharge the economy is good old-fashioned innovation.  The US has been a global leader in innovation over the past century.   This innovation is one of the critical elements that propelled our standard of living to be the highest in the world.   Looking back through the past 50 years or so, the U.S. has been at the forefront of virtually every major technological change in the world.  We played key roles in the research and development, manufacturing, and sales of radio, television, automobiles, airplanes, computers, cellular phones, and the Internet.  Each of these technologies changed the way people live and businesses work and with it millions of jobs were created.   If one looks at just the last century, mankind has literally progressed from driving a horse and buggy to walking on the moon.  Only 95 years ago, we celebrated the first coast-to-coast telephone line.

Just as in the study of the stock market, past performance does not guarantee future results.  As technology has changed so has the global landscape.  Some of the very inventions created in the U.S. now enable global competition.   The Internet allows for nearly instantaneous access to data and information from anywhere around the world.  Low-cost computers and networks give everyone access to what was equivalent to a super computer only a decade or two ago.   Transportation allows for manufacturing of goods at the lowest cost location.  The U.S. university system is still the best in the world.  The best foreign students come to school in the United States; however, it is now easier (and perhaps more profitable) to return home and put new found skills to use in competition.

Statistics from the U.S. Patent office illuminate these trends.   In 1963, a total of just over 45,000 patents were granted to U.S. and non-U.S. inventors.  By 2008 this number jumped to over 157,000 patents, a change of nearly 250%.  The decade of the ‘90s represented a 56% increase over the 1980’s demonstrating the innovation linked to the emergence of computers, cell phones, and the internet.  The first 9 years of the new millennium provided over 1.45 million patents granted, or a 31% increase over the 1990’s.

While the past 9 years have been bountiful, it is worth highlighting a couple of things.  First, the number of grants to U.S. inventors peaked in 2006 with declines in both 2007 and 2008.   While two data points don’t make a trend and declines have prevailed in the past, it is highlighted by the second trend of note, the rise in patents issued to foreign inventors.  In fact, 2008 represents the first year in which a majority of the patents granted at the U.S. Patent Office were granted to foreign inventors (50.8%).   By comparison, patents granted of U.S. origin represented 81% of the total patents granted in 1963.  Since 2000, 51.7% of the patents granted are to U.S. inventors.  For the decade from 1970-79 this number was 66.7%.   The U.S. Patent Office determines origin by the residence of the first named inventor.

Globalization is here.  Competition is good.  Through innovation, competition, and collaboration, the surest way to return to prosperity is through invention.  We need the next Microsoft and Intel, the Qualcomm of the 21^st century.  We need not just evolutionary thinking but a revolutionary mindset.  Tough times can make for outside the box thinking.  When that next leap in innovation does come, odds are it will be more of a global effort than in the past.

David E. Virag has extensive expertise in developing new technologies and applications, business valuation, leadership, and strategy.  He holds an MBA from the Booth School of Business at the University of Chicago, and is currently a Principal consultant with New Era Strategies.  To learn more about David, please go to www.techonomicstoday.com