Author Archive
Growing in a slow-growth marketplace
J Walker Smith writes:
It’s dangerous to take the news of late at face value. While a Greek deal appears to be in place and the Council of Economic Advisors, headed by Alan Krueger, is opining that the US recovery is stronger and faster than expected, there is some way to go.
To put it bluntly, the developed West is in for a long slog. Slow growth is the new normal for Western developed economies.
The implications of this slow-growth West for brand marketers and business strategists are explored in our latest Future Perspective, Quickening the Pace. For most business leaders, it’s a new situation. They came of age during the ‘Great Moderation’, a period of relative stability, greater predictability and virtually uninterrupted growth. What marketers and strategists learned as they began their careers offers little guidance for the marketplace they face today.
The Great Recession has left the marketplace smaller and more polarized than ever. Consumer confidence has reset at a lower baseline and frustration and anger have boiled over into the street. Every corner of the world is on edge about the trade implications of weak, stagnant demand in the developed West.
There are still growth opportunities for smart companies. But only the smart companies will grow, for there is no longer a rising tide to lift all boats. Quickening the Pace reviews seven ways in which brands can revive their value propositions for economically challenged consumers. Three are worth special mention.
First, consumer reference points have changed from high to low. Aspiration now seems risky, even out of reach. Worse, the prospect of losing it all seems closer than ever. As a result, consumers no longer compare themselves to those with more; instead, they worry about winding up like those with less.
Surrounded by so many who have hit the bottom, consumers are worried that they might wind up there themselves. So rather than being attracted by those with more, consumers now live in fear over those with less. While this is different for brands, it is not impossible for brands able to take the risk out of buying.
Second, debt has become a more important marker of financial well-being than income. It is a better targeting criterion. It is a more predictive of spending. It is more strongly correlated with confidence. The overhang of debt is keeping consumer spending in check, so contrary to conventional wisdom, growth opportunities are to be found by analyzing what people owe, not what they earn.
Finally, lifestage assumptions are being turned on their head. The traditional focus of marketers on young people and their lifestage transitions has been undercut. A suffocating job market has kept younger consumers from even getting started.
But the same economy that has made young people less attractive to marketers has made older consumers more attractive. Battered by economic losses, many older consumers have changed their retirement plans and are planning now to work longer, which will extend their peak consumption years. Marketers will have to change, too.
The brands which lrearn these new rules – and adapt to them – could have breakout success. Not every ship is grounded by an ebbing tide. Some brands will find the enduring pockets of dynamic spending potential. There is less spending to go around, and not all brands will succeed. The battle for share will go to the savviest, those best able to take advantage of the principles for success in a slow-growth West discussed in Quickening the Pace.
The image at the top of the post is from 123RF.com, and is used with thanks. Quickening the pace, and another economics report, The future of the eurozone, also published this week, can be downloaded from our website.
Beyond the eurozone crisis
Andrew Curry and Matthew Lynn write:
As the Greek financial crisis plays out on the streets and in the council chambers of Europe, it’s hard to look beyond the day-to-day drama to the longer term. But that’s what we’ve tried to do in our new Future Perspectives report, which we have published this week. And the results are surprising. The crisis will end, because ecomnomies don’t continue is a state of permanent crisis. To do that, Germany will have to export less, and the peripheral economies will have to export more – and there’s a lot of opportunity in that economic re-balancing.
The report has developed five scenarios for the future of the eurozone, ranging from its survival in its present form to a return to national currencies. From this it forecasts three big changes, looking out to 2020.
One: New powerhouses will emerge. Italy will be one of the big winners of the pos-euro crisis economy, just as it was in the ‘dolce vita’ economy of post-war Europe. If it leaves the euro, it will renege on its debts, and massively devalue. That will massively boost the economy, enabling it to rapidly catch-up with its more prosperous Northern neighbours. Meanwhile, countries such as Poland – with big populations, low debts, and strong growth – will emerge as the powerhouses of Europe.
Two: Germany will have become a consumer society – and rely less on exports. That will mean boosting retail and leisure spending, property development, and industries such as financial services, where it has not been very innovative. Paradoxically, while the UK is trying to re-balance its economy to become more like Germany, Germany will need to become more like the UK.
Three: There will be huge opportunities for companies that read these trends right. New markets will open up in Germany as retail, leisure and property grow – all areas where domestic German companies are not very strong. In Spain, youth unemployment will come down dramatically, meaning that young people will start spending. In Italy, a growing economy will see a huge rise in female participation in the workforce – changing the shape of consumer demand. We’ve done some analysis of the impact of that change on the Italian economy, and reckon that it’s worth around €48 billion a year – or 3% of Italian GDP.
Four: Europe’s banks will be the big losers. Debt will be written off, sooner or later, and as a result, most will end up in public control.
In short, businesses will have to redraw their mental maps of what the European economies look like, and where the opportunities will be found.
Andrew Curry is a Director of the Futures Company in London, Matthew Lynn runs Strategy Economics. The report, The future of the eurozone, is published as part of The Futures Company’s thought leadership programme, Future Perspectives. We are also publishing this week a report on doing business in slow-growth economies, called Quickening the pace, which will also be available from the website. The picture at the top of tjhis post is published by Wikimedia Commons.
Library futures
Andrew Curry and Victoria Ward write:
Last week Francine Houben of Mecanoo Architecten talked about their design of Birmingham’s future library as a “living room for the city”. More than just storage, a dynamic space for movement, openness and exchange. In a blog she calls libraries “the cathedrals of our millennia”, which seemed a useful precursor to Saturday’s National Libraries Day
The future of the library is, in some ways, a paradox. So many long term trends are running against it that it is easy to assume that is an anachronism of the 19th and 20th centuries. Such trends include the rise of digital technologies, and the accompanying rise of audio-visual culture; the long wave of individualism since the late 1960s; the shift from public provision to personal provision; the pressures on public expenditure; the emergence of the e-book and the digitisation of books generally. It seems only a matter of time before the library withers away.
But look again, and some other, emerging, trends come into focus. Rising oil prices and greater work flexibility increase the value of the local; the rise of digital rights management fuels campaigns around openness; the number of books published every year continues to rise; issues of access and equity – and affordability – come into sharper focus as one austere year rolls into another; the relationship between the tangible and the digital object becomes increasingly complex; new attitudes to ownership (using, not having) make the library appear as a pioneer.
Look again, and you can start to think that if libraries did not exist, it would be necessary to invent them. But what sort of library would we invent?
The new 5Ps of marketing
Fran Walton writes:
Earlier this week, we presented our latest research on the post-recessiom UK consumer, Feeling The Pinch 6, to clients in London. The overall message is one of gloom: 43% of consumers think the UK economy will get worse in 2012, and 46% plan to spend less. But that doesn’t mean that there’s nothing that brands can do.
So here are our new 5Ps for marketers:
- Protection. How can you reduce the risks of purchase, or help consumers manage risk in other parts of their lives? 63% of consumers now agree, ‘ I find myself thinking twice before making even the smallest purchase’. An interesting example is the German peer-to-peer insurance company, Friendsurance, which reduces insurance costs (and fraudulent claims) by letting people create groups of 15 people to help cover an insurance claim.
- Practical. How can you empower people and help them to be self-reliant? 58% of UK consumers agree that ‘Since the recession I feel a greater need to be as self-sufficient as possible’. One response, from the Spanish food company Gallina Blanca: if you send them a a list of the ingredients you happen to have at home, they’ll suggest a recipe.
- Purpose. How can you help consumers make new connections or make living with less a positive experience? 53% of UK consumers now agree that ‘since the recession I have learnt how many things I can do without and still be happy’. Sainsbury’s ‘living well for less’ campaign captures this well. It’s not just about the food. It also means making the most of the good things in life, sharing moments or maybe cooking memorable meals together. And without paying the earth.
- Permission. How can you help consumers feel like they are achieving something worthwhile? Perhaps depressingly, 53% agree that ‘some of the goals I had before the recession are now probably out of reach’. Say it ain’t so! The French business Onefeat has a model where you set some goals, or ‘missions’, and get support from your friends to help you achieve them.
- Pride. How can you help people take pride in small things or help people to be proud to be part of their community? In our qual research for Feeling The Pinch 6, one of our respondents observed that ‘the value of working with your hands seems to have been forgotten about’, also a theme of Matthew Crawford’s surprise best-seller. Transform Your Patch, launched in January. in which Pepsico and Britvic have teamed up with the charity Groundwork, is an ambitious scheme to create new parks and playgrounds and football pitches from waste land across the UK.
Of course, a lot of these are small things, but one of the lessons of the recession is that small things matter. The other lesson is that it’s more important than ever to be able to stand in the shoes of your customers and see the world through their eyes.
The picture at the top of this post is from the Swedish co-operative Lantmannen, which has a scheme which pairs singles to share leftover food. It is used with thanks. To find out more about Feeling The Pinch, and our research on consumer attitudes to the economy in Britain and Ireland, please contact Fran Walton.
Copyright wars
Andrew Curry writes:
Watching the SOPA/PIPA saga unfold from the other side of the Atlantic, it was difficult not to see it as a ‘wave war’, in which companies which grew up in different technology waves compete to set the frame of economic and policy discussion. On the one side, the media companies, creatures of the mass production era that dominated much of the 20th century; on the other, the technology companies that have grown up in the digital wave that followed it. (We wrote about these waves in our Futures Perspective report, Technology 2020).
The technology companies seem to be on the right side of the generational wave. As we noted last week in Futures Five, our fortnightly US newsletter for MONITOR clients,
most [Millennials] see far more nuance in pirated content-sharing than other generations: According to the 2011 Yankelovich MONITOR, 70% of Millennials indicate it’s “sometimes forgivable” if a person “views or downloads pirated content online (such as movies, television shows, music or shows),” almost double the 34% of Baby Boomers who feel the same way.
Of course, this is not a uniquely American issue. The proposed international treaty ACTA has the same intent as SOPA, as do sections of the UK’s Digital Economy Act. My view on this was shaped by James Boyle, the Duke University scholar who wrote The Public Domain, and his view was shaped by Thomas Jefferson, the first policy-maker to think seriously about copyright (yes, that Thomas Jefferson).
In a nutshell, we need copyright to reward creators, but in creating this legal privilege, we need to balance it so we don’t kill off the social, cultural, and economic gains from the free flow of knowledge, which let creators and innovators stand on the shoulders of others. The hugely extended copyright periods we now have in the USA and the UK are a grotesque tribute to the lobbying powers of media owners and old rock stars.
There’s another point here, too, about the way in which the mental landscapes of politicians shift only slowly. It’s been said that American politicians were surprised by the strength of opposition to the SOPA and PIPA bills, and more surprised to discover that their media industries were small fry, in economic terms, when compared to the tech industries.
The UK had a similar problem, in a very different sector, a decade ago. In response to an outbreak of foot and mouth disease, the government closed off large swathes of the countryside, only to discover that rural tourism and leisure were worth far more to the economy than farming. The policy-makers understood this. The politicians didn’t, because they’d got used to the farmers’ lobby. But, as with SOPA, the noise of the lobbyists had drowned out the quiet shifts of long-term change.
The image at the top is from the Bangstyle blog, where you will also find a perspective from the independent music sector. It is used with thanks.
Trending @CES 2012
Last week, we and 150,000 of our closest gearhead friends attended CES, the consumer electronics industry’s largest trade event – and with a few days’ distance from the Las Vegas hype and glitter, we’ve been able to identify some of the show’s most interesting trends.
1. The Center of the CE World Is Shifting
While the big Japan brands – Sony, Panasonic, Toshiba – still dominate the show floor, it’s never been more obvious that Korea’s tech titans, Samsung and LG, now represent the front line of consumer electronics innovation. Or at least the innovation on display at CES. The biggest U.S. gadget players – HP, Google and especially Apple – are conspicuous by their absence; Microsoft has announced that next year, it too will exit the show, selling the rights to its coveted exhibit space to Dish Networks and China’s Hisense electronics. The latter is also a sign of the times: While Chinese brands are still quietly building market share rather than trying to technologically leapfrog, it’s only a matter of time before the biggest China players – Lenovo, Haier and TCL in particular – make a move for mindshare as well.
2. Say Hello to the Internet of Things
As of 2010, there was an average of one net-connected device per human being on Earth; by 2015, there will be an average of two. This reflects the reality that more and more information is being exchanged between intelligent devices, independent of human agency. In fact, networking giant Cisco recently estimated that the single fastest-growing category for Internet traffic is “machine-to-machine,” with the amount of data flowing between M2M modules now soaring at a rate of 258% per year.
Several brands at CES pushed the curve on the thing-based Internet. LG showed off the second generation of its “Thinq-enabled” home appliances line – e.g. a smart refrigerator that’s capable of tracking grocery purchases and ordering favorites when they run low, as well as transferring recipe suggestions to a connected smart stove.
Not to be outdone, Samsung unveiled its own plans for a household ecosystem of connected intelligent devices, with the Smart TV at its center. Will the television go from digital hearth to digital hub? Samsung – the world’s number-one seller of TVs – is banking on it.
3. Rise of the Intuitive, Immersive Interface
For obvious reasons, traditional devices are awkward input and control tools for an Internet of Things. (A microwave with a keyboard? No thanks.) This year’s CES showed dozens of ways that manufacturers are attempting to solve for this problem: Wall-sized multitouch surfaces (including a massive 82-inch capacitive display from Perceptive Pixel, whose technology powers the “smart walls” used on CNN), face recognition, and, of course, natural-language voice control.
Behind closed doors, Nuance – the developers of the speech recognition technology used in the iPhone 4S’s Siri intelligent agent – showed off their new DragonTV voice-based television interface, and it was impressive; Nuance says the software will power the smart TV offerings of “all the major manufacturers” (including, perhaps, Apple’s hypothetical new iTV?).
Meanwhile, startup Tobii unveiled an eye-tracking system that senses what you want to select next based on the position of your pupils. And PrimeSense, developers of the technology used in Microsoft’s Xbox Kinect peripheral, demonstrated the next-generation version of their motion recognition system, which uses a 3D camera to allow users to control devices with typical touchscreen gestures (swipe, pinch to zoom, and so on) – in thin air, from up to ten feet away.
4. What’s Next
Though some have questioned CES’s continued relevance in an era of instant communications and social networks, the show remains one of the few opportunities to watch the dynamics of the technology marketplace up close – allowing active observers to spot new technologies, track the uptake of trends, and identify emerging standards in real time. We’ll be following up on the phenomena we saw this year, so watch this space.
From Chaos to Collaboration
Andy Stubbings writes:
Have you ever asked yourself what the travel guidebook of the future might look like, or why when it is arguably easier than ever to visit anywhere you like, it’s also more hassle to actually get there?
Andrew Curry and myself spent Wednesday this week with the global travel distribution company Amadeus, talking to journalists about the report, “From chaos to collaboration” we’d written for the company on the future of travel, and specifically how technology will change travel in the years to 2020.
In a nutshell: the report argues that over the next decade, thanks to a range of technologies as well as changes in social and economic contexts, there is great potential for travel to be enhanced at every stage of the journey by greater and more fluid interaction with other travellers and travel providers. The main benefits for travellers will be making the experience of getting to and from their destination less chaotic and stressful, and once they get somewhere else, they will be able to have a deeper experience of the place by accessing other people’s collective experience. Most of the data that’s needed to do this already exists; the challenge is putting it together.
Sounds intriguing? The full report can be downloaded for free from here (opens pdf), and our friends at Kwittken, Amadeus’s international PR agency who worked with us on the report, have put together this infographic with some stats taken from the quantitative research done for the report.
A shareable version can be found here.
The picture is published here by The Futures Company under a Creative Commons licence: some rights reserved.
Doing Strategic Futures
Andrew Curry writes:
Just before Christmas, The Futures Company re-published a report which it wrote (as The Henley Centre) a decade ago, for the British government’s Cabinet Office, on understanding best practice in strategic futures work. It’s stood up well over the last ten years, because it focusses on organisational context and culture and on principles, rather than on methods. We were able to republish the work, which has been in the public domain, because of the generous copyright provisions of the UK’s Open Government Licence, which makes most Creative Commons licences look positively restrictive.
The report was based on an extensive benchmarking study, together with a literature review and a range of expert interviews. Without trying to summarise the whole thing here, one section has a set of methodological guidelines which are worth capturing:
- Ensure there is clarity about the resource requirements of the work
- Ensure that the process is inclusive
- Ensure that people understand and trust the processes being used
- Understand the limitations as well as the opportunities afforded by strategic futures thinking (there is no magic bullet)
- Understand that the process will take time to deliver benefits to the organisation
The full report, published as part of our Future Perspectives thought leadership series, can be downloaded from the website (free, but registration required).
Holiday collection #3
Joe Ballantyne Lightning Field
This October, I spent 24 hours with Walter de Maria’s Lightning Field artwork. It’s miles from anywhere, in the high desert of New Mexico about 3 hours outside of Albuquerque: a one mile by one kilometre grid of 400 stainless steel rods, averaging 20ft in height, which attract lightning. You have to stay the night (a little cabin sleeps six) which is just as well because when you first get there, there’s not a lot going on. In the early afternoon when the sun is high, the rods are almost invisible and so spread out it seems there’s little to see or do. And then, gradually, as the light changes, you realise you’re in the grip of an experience which needs time as well as space. I highly recommend it.
Andre Furstenberg, on untranslatable words
The Oxford English Dictionary claims there are at least a quarter of a million distinct English words in use. It estimates that English probably has more words than any other comparable world language. So, it struck me that when it comes to the most personal, our closest interactions with others, English still sometimes fail us.
How many times have we experienced Mamihlapinatapei, but failed to verbalise it? Nor have we one word for that hesitating look when you both know you want to initiate something but are reluctant to take the first step. Or cafune; tenderly running our fingers through someone’s hair?
It’s good to be reminded that in our media swamped world, our languages still sometimes come up short.
Andrew Curry, Don Paterson’s Rain
Sometimes consultancy has its privileges. So it was for me this year, when, delivering a keynote to the UK Independent Publishers’ Guild, the IPG, I was also able to hear their after-dinner speaker, the Scottish poet Don Paterson. Most of it was a light affair, as custom dictates, and he started with the conceit that he had forgotten which organisation he was speaking to, reminiscing about the chequered history of the fictitious International Paintballing Group. But Paterson is one of Britain’s finest poets, and this was an audience of publishers, so we were also treated to a reading of ‘Rain‘, the title poem of his best collection. It is dark and cinematographic, as this extract conveys:
I love all films that start with rain:
rain, braiding a windowpane
or darkening a hung-out dress
or streaming down her upturned face;
His reading sent me back to the collection. As it should.
Holiday collection #2
Andy Stubbings, The Toaster Project
I’ve been thinking a lot about technology this year, with the writing of our Technology 2020 report amongst other things, and more specifically about the amount of technology embedded in everyday objects. So I was delighted when I heard about The Toaster Project, a short description of an attempt (originally an MA project) to construct a toaster, from scratch, without recourse to industrial technologies. There seems to be a tradition of using toasters as the archetypical everyday object that appears simple but is in fact tremendously complex when unpacked and deconstructed: from Harvey Moloch’s tremendous study of the design of everyday objects Where Stuff Comes From, to the story this year of toaster patent trolling in an episode of This American Life, to the character of Arthur Dent in Douglas Adams’ Mostly Harmless, who, when stranded on a prehistoric alien planet “left to his own devices..couldn’t build a toaster” (he can make sandwiches though). The Toaster Project doesn’t disappoint, and is cutely pieced together as a kind of cento of email exchanges with professors and oil company executives, with travelogue and photos. It’s more of a study of materials by way of metallurgy than electronics or computing technology per se, but no less entertaining for that. I guarantee that you won’t look the same way at a toaster again after reading it.
Eleanor Cooksey, Turner Contemporary, Margate
I was brought up in Kent, not the wealthy commuter-belt part, but the more depressed heel of Canterbury and the Isle of Thanet. The arrival of the Turner Contemporary this year in Margate had the opportunity to be very exciting. We now expect architecture to be spectacular – new buildings should be strange, wonderful, otherworldly, possibly distracting us far too much from thinking about what they are meant to house. Turner Contemporary isn’t one of those; it is a modest affair, probably linked to its pretty modest budget. Having visited it, I was ready to head back to London singing its praises, but for a small hitch. It is a habit of mine to get a postcard wbever I visit a gallery – and the Turner Contemporary failed the ‘postcard test’. The building doesn’t lend itself to the iconic view by which it can impress itself upon our memories. Instead, we have a view of what looks like some big warehouses on the seafront. Other angles were no better. David Chipperfield (he’s the architect) – don’t forget the postcard shot!
The image of Turner Contemporary comes from ArtRabbit, the picture of the toaster from The Toaster Project. Both are used with thanks.
