Consumer Insight - Alcohol Consumption and its Future Regulation

Dr. Ayesha Haroon sends along an article "Alcohol link to one in 25 deaths" here, discussing a study conducted at the University of Toronto.  Dr. Haroon highlighted that with the release of further details, the surgeon generals of the developed countries will have to reconsider their alcohol regulations while their governments will have to review policy towards alcohol sales and consumption.  Interesting fact about Europe in the article:

"Worldwide, average alcohol consumption is around 12 units a week - but in Europe that soars to 21.5. "

Alcohol in the form of consumer products have provided capitalism with exceptional wealth creation.  Perhaps too much of anything is bound to raise an eyebrow or two!

Food and Farms

""According to our laws and our policy, foreigners or foreign companies are not allowed to rent or buy land to grow rice or any kind of food, including raising any livestock in Thailand," Deputy Commerce Minister Alonkorn Pollabutr told reporters."

Reports Maktoob Business here.  I have written previously about the consumer choices for farm commodities and products in regions where the ability to produce either is minimal or difficult, and the results of it.  Collectively, the GCC states currently lead the world in land acquisition and/or leasing of farms.  Yet the above may be a small set back for now.

The Economist writes an excellent article on the subject here.  The article states:

"It is not just Gulf states that are buying up farms. China secured the right to grow palm oil for biofuel on 2.8m hectares of Congo, which would be the world’s largest palm-oil plantation. It is negotiating to grow biofuels on 2m hectares in Zambia, a country where Chinese farms are said to produce a quarter of the eggs sold in the capital, Lusaka. According to one estimate, 1m Chinese farm labourers will be working in Africa this year, a number one African leader called “catastrophic”."

Below is a revealing data diagram highlighting investment and deal structure from the Economist.

(Click to enlarge)

A bit of hype and herd (crowd) mentality is shown in the following statistics followed by of course pullback - "Between the start of 2007 and the middle of 2008, The Economist index of food prices rose 78%; soyabeans and rice both soared more than 130%. Meanwhile, food stocks slumped. In the five largest grain exporters, the ratio of stocks to consumption-plus-exports fell to 11% in 2009, below its ten-year average of over 15%."

Yet, all this activity is termed as "neocolonialist" as the article states - "The head of the UN’s Food and Agriculture Organisation, Jacques Diouf, dubs some projects “neocolonialist”."

As the need continues to grow for food, the agri-focused economics will gain from it.  Will the results be similar to oil economics?

US Gov.'s Consumer - The Citizen - Insight

The Economist discusses "Americans have grown slightly more receptive to the idea of an activist government."  Read complete article here.

The US citizen is the consumer of the US government.  From the consumer insight perspective, I found this graph of value.

Changes in Consumer Decision Making

The McKinsey Quarterly publishes a thought provoking look at the "consumer decision journey" here.  The article developed the new approach to the decision journey:

"... by examining the purchase decisions of almost 20,000 consumers across five industries and three continents. Our research showed that the proliferation of media and products requires marketers to find new ways to get their brands included in the initial-consideration set that consumers develop as they begin their decision journey. We also found that because of the shift away from one-way communication—from marketers to consumers—toward a two-way conversation, marketers need a more systematic way to satisfy customer demands and manage word-of-mouth. In addition, the research identified two different types of customer loyalty, challenging companies to reinvigorate their loyalty programs and the way they manage the customer experience."

There is a link to a good interactive animation titled "The consumer decision journey" with audio that discusses the changes today's consumer has incorporated vs. the traditional funnel used by marketers to define touch points for their messaging.

Asian Airports Delight Their Customers

Six of the top 10 airports in the world are Asian - according to Skytrax's study using 8.6m passengers reviewing 196 airports worldwide. These are 1. Incheon (Seoul) 2. Hong Kong 3. Singapore Changi 4. Zurich 5. Munich 6. Kansai 7. Kuala Lumpur 8. Amsterdam 9. Centrair Nagoya 10. Auckland.

Incheon International Airport, Seoul, South Korea

Comments from a user on the Economist's website discussing the top 10 airports here is particularly good:

"If you look at the airports listed in the top ten and analyze their success, you will find that in most cases they are planned to provide convenience for the travelling public and that making a buck is not their raison d'etre."

See details on here.

See my post on the world's best airlines here.

Power of Communities of Choice

I continue here with sharing examples of what communities of choice are capable of versus the mystifying term called - wisdom of the crowds.  Please see various examples in my blog on this subject.

The Wired just published an article in their Danger Room that shares methods for internet users who are interested in speaking and acting against the current Iranian regime.  The user can employ simple methods to attack the Iranian governments websites.  See details here.

I find this fascinating - at the same time I see the self organization of such communities of choice to be driving us towards new paradigms of "choice", refining the perception versus reality debate of marketing.  In a perfect world... one would not have to choose!

Punctuated Equilibrium and Economic Disasters?

During a long and lengthy conversation a few years back with brilliant colleague Mr. Franz Dill, we delved into examples of the replication of the theory of Punctuated Equilibrium in commerce and trade, see details on the theory here. For example, why does a soap suddenly stop selling completely in a certain region while two double in volume?

The McKinsey Quarterly just published an article - "‘Power curves’: What natural and economic disasters have in common - Parallels between the failures of man-made systems, such as the economy, and of similarly complex natural ones offer fascinating food for thought" documenting the pattern discovering aptitude of humans to map the above through statistical analysis. See complete article here.

Chinese Smart Phone Consumer's Options

"China Unicom, while negotiating with Apple for the distribution of iPhone 3G in China, is expected to launch an Android-powered smartphone, the Uphone, which is built using its in-house developed UniPlus platform"

It will be interesting to watch the pricing and Chinese smart phone user's choice from the above two options.

Innovation in Manufacturing

Good friend Mr. Tony Tsai passes along "The Manufacturing Institute – Accenture: Innovation Roundtable Report" here. Practices called out as common among the participants of the roundtable for the report:

• Focus on more structure, less serendipity
• Evaluate multiple innovation dimensions
• Bring greater discipline to managing innovation portfolios
• Cultivate innovation in people

It is a good report for tenured and seasoned corporate managers now assigned the task of running innovation organizations. Lots of good material in the survey conducted for direct application to their strategies.

I have stated before that - "Satiated people do not innovate". For me, the report seems to have focused more on corporate innovation organizations and associated portfolios. Breakthrough innovation remains the domain of the entrepreneur while incremental innovation is the approach of the corporate, something that has to be converted to a process for measurement. Both have to exist, neither should try to act as the other!

Breakthrough Health Care Consumer Innovation in India

I am excited to showcase India Institute of Technology at Kharagpur, India here on my blog yet again (see previous entry here). The Economist has published an article "On the pulse" here regarding development of an artificial heart at IIT-KGP that will be going into human trials in a matter of a year or so. The cost will be 1/30th of the average cost of one developed in the USA with much less failure rates. Please click through to the article for detials.

I like to share the trend I have been observing - South Asian educated mind's movement from memorization of best practices and replication to challenging the learned behaviors and "creating" the next breakthrough.

"A new, low-cost design for an artificial heart takes its inspiration from an unusual source—the cockroach."

My congratulations to IIT-KGP! Brilliant.

US Utility Consumer Managing Their Electricity

The utility companies run one of the oldest infrastructures in the USA. A friend working in mesh networks for Smart Grids highlighted the fact that an industry where change may occur once in 20 years is being driven to incorporate and integrate technology whose pace of change is substantially faster. Challenges abound!

The Economist in their recent Technology Quarterly have an excellent article on the subject, "Building the smart grid" here. The article highlights my point above further:

"Even though the demands being placed on national electricity grids are changing rapidly, the grids themselves have changed very little since they were first developed more than a century ago. The first grids were built as one-way streets, consisting of power stations at one end supplying power when needed to customers at the other end. That approach worked well for many years, and helped drive the growth of industrial nations by making electricity ubiquitous, but it is now showing its age."

From speed of growth, lack of transparency on the transmission and distribution side of the grid to the consumer's habits of obliquity to their electricity usage, the opportunities abound. Having lived and traveled overseas extensively, the USA lags in one key aspect that the article touches on some what - the US consumer has never been given an incentive to save electricity. The utility companies must grow their revenue and bringing smartness to the electric grid will cut into their top-lines. The article discusses this aspect:

"One problem is that power companies are understandably reluctant to invest in technologies that will reduce consumption of the product they sell, even if there are other benefits. One way to realign the public interest with that of the utilities is through a process called “decoupling” which breaks the direct relationship between electricity sales and profits, a measure that has been successfully employed in California. Energy use per person has remained largely flat over the past 30 years in California, but it has increased by roughly 50% for the rest of America. But in some instances the business case is straightforward. Enel (utility in Italy)spent around €2.1 billion ($3 billion) installing its 30m smart meters in Italy, but now saves around €500m a year as a result, so its investment paid for itself within five years."

I am reminded of Bill Bryson's article "The Waste Generation" on the US consumers' habits in his book "I am a stranger here myself". The author writes that when he used to live in England, the utility offered an off-peak energy plan resulting in value back to the customers. He used to run his washing machine on a timers at night to receive the benefits using timers.

Is the pain or perhaps the desire to manage utilities strong enough for the consumer to adopt the new changes or are the stimulus funds would be used enforce a new regime for the unwilling customer?

"The American government is spending some $4 billion from its economic-stimulus package on smart-grid initiatives, but providing a smart meter for every American home would cost far more: California’s investor-owned utilities alone are spending about $4.5 billion on deploying smart meters over the next few years. That implies that a nationwide implementation could cost around $50 billion. But PNNL estimates that $450 billion would have to be poured into conventional grid infrastructure to meet America’s expected growth over the next decade anyway. Mr Carlson, who now works for GridPoint, argues that a bit of thought is called for if the aim is to move to a new energy-management model, “as opposed to building more of what we’ve already got.”"

One thing is for certain, once the grid gets tapped, the invention driven entrepreneurial opportunities for revenue generation through fulfillment of user needs will be endless!

Consumer Focus: Social Media Organizations

"Social media isn't a box to be ticked or a department to be manned or even a campaign to be launched. It's about thinking differently about marketing, customer service, the entire company. It's about realizing that consumers are running the biggest recommendation service in the world and that, as has been tiresomely often repeated, they define the brand (no, this is not new; yes, this is becoming more obvious and important by the day). All thinking about product, customers and communications, needs to take this into account -- it cannot sit in a silo."

Above is an excerpt from AdvertisingAge - "Dedicated Social Media Silos? That's the Last Thing We Need" here by Jonah Bloom.

I enjoyed the article.  The tone was perhaps a bit professorial, yet, I have to agree with the statement above.  Unfortunately, silos will develop, organizations have to develop silos, Clayton Christensen's "The Innovator's Dilemma" documents the reasons in detail.

Good article overall about what is happening in the social media creation, management and monetization market place.

Health Care Consumers Winning in India

"America's spending on health care is soaring, yet its medical outcomes remain mediocre."

So states "Lessons from a frugal innovator" in the Economist here. The article begins with the description of a complex heart bypass surgery, while the patient is having a chat. This approach has been pioneered by Dr. Vivek Jawali at Wockhardt, an Indian hospital chain. According to the article this is just one of the many innovation in health care in India. The article goes on to share other innovation-in-practice examples like the one above.

The article highlights how the Western prowess in the medicine perhaps may be detrimental to itself:

"Dr. Jawali is feted today as a pioneer, but he remembers how Western colleagues ridiculed him for years for advocating his inventive “awake surgery”. He thinks that snub reflects an innate cultural advantage enjoyed by India.

Unlike the hidebound health systems of the rich world, he says, “in our country’s patient-centric health system you must innovate.” This does not mean adopting every fancy new piece of equipment. Over the years he has rejected surgical robots and “keyhole surgery” kit because the costs did not justify the benefits. Instead, he has looked for tools and techniques that spare resources and improve outcomes."

Interestingly, I experienced this first hand at a seminar discussing changes in health care in the USA. An Indian student tried to highlight some of the advantages stated in the article and the presenter proceeded to slight him that this may not be the case on this particular planet.

Yet, as the article shows, the Western organizations themselves are tired of their own system.

"Columbia Asia, a privately held American firm with over a dozen hospitals across Asia, is also making a big push into India. Rick Evans, its boss, says his investors left America to escape over-regulation and the political power of the medical lobby."

India is offering another advantage to the breakthrough innovators, faster improvements at speeds unparalleled in any other part of the world.

"[Aravind, the world’s biggest eye-hospital chain] staff screen over 2.7m patients a year via clinics in remote areas, referring 285,000 of them for surgery at its hospitals. International experts vouch that the care is good, not least because Aravind’s doctors perform so many more operations than they would in the West that they become expert."

Perhaps, this is an approach to perfection through practice, as the old adage goes! The article closes with:

"[Tim Brown, head of Ideo] says, "In health care, as in life, there is need for both Ferraris and Tata Nanos."