China Requesting US Technology Export Deregulation

Via Mr. Tony Tsai, CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co.:

"Ministry of Commerce urges US to recognize China's market economy status as soon as possible
Dec. 15, Yao Jian, spokesman for the Ministry of Commerce, says that the 21st Sino-US Joint Commission on Commerce and Trade (JCCT) is a good opportunity to promote cooperation between China and the US. China is urging the US to recognize China's market economy status as soon as possible. The US should deregulate the export of new and advanced technologies and products to China."

Google: The Democratization Engine

Google is the "Democratization Engine" for the world's shoppers and consumers.  Let's talk Android - 

I am leaving the charms of the iPhone and the Apple!  If a few decades in the technology industry has taught me anything, it is that closed systems have revenue spikes when they deliver on the unmet need, though quickly lose it as competitors emerge with more standardized and open systems.  It is more so at speed now as the consumer is empowered.  Sounds cliche because marketers have used "we are empowering the shopper/consumer to make intelligent choices", yet today, the marketer has a tough battle on had.  The shopper/consumer are empowering themselves.

My foray into Apple's world was with the Lisa... then came the standardization driven through the IBM PC compatible running DOS and Apple products took their niche spot in the market while a somewhat open and driven towards standardization system of the IBM compatible allowed a world of inventions to become innovations, from hardware, firmware to software.

Can history repeat itself? Yes, it can and will.  It is not a claim but reality that the Android based smartphones will trump the iPhone in growth and market share.  Unless - Apple decides to change "some" thing(s) in its approach.  Its differentiation is diminishing due to competitor offerings, while its lock on distribution through AT&T will be ending in the USA.  Its partnership with AT&T perhaps will add to iPhone's decline as Consumer Report recently rated AT&T as the worst wireless service provider, see here.  Also, the Consumer Report has declined to recommend the iPhone as well, details at Consumer Reports here.

The activations of Android based devices is growing at 110 million, 5X what they were 10 months ago.

Andy Rubin, head of Google's mobile software recently said, "We are web-centric."  This is the reason to believe that Google will be successful against Apple and Microsoft.  He further added, "We really understand distributed computing - and I think Apple really understands desktop computing."

For those who may have forgotten or don't know, Google quietly acquired Android, Inc. back in 2005, see Business Week article here.

Core to this transformation in the market will be, as Financial Times quotes Andy Rubin "Leaving developers free to create new versions of their apps, rather than forcing them to "jump through hoops" to seek approval each time, as Apple does, echoes the web's approach to rapid iteration and improvement."

See FT article here.

Next on Google's democratization list, my guess - The SmartGrid!!!  I will write more how it can accomplish it soon.

Organizational Transformation in the Financial Sector Due to HFT

"The rapid-fire growth of high-frequency trading, HFT, has spawned a new breed of market mavens whose backgrounds are far different than the traditional suit-clad Wall Street titans.  Their resumes are rich in rocket science and other non-financial fields and they may never have traded a stock, read an earnings report or scrutinized a balance sheet.  They are engineers, mathematicians and computer scientists—armed with cutting-edge technology and often located hundreds of miles from New York City."

Mr. Dharm Kapadia forwards an excellent article on a trend that is rapidly becoming mainstream in the financial sector holistically, see "Man Vs. Machine: The New Kings Of Wall Street" at CNBC here.  Please see my previous post on high frequency trading "Dis-ruptive Innovations - Technology in Retail Investment Sector" here.

Dis-ruptive Innovations - Technology in Retail Investment Sector

The Financial Times published a well thought through analysis on high-frequency trading and its impact on traditional and retail investors here... William Gibson's quote could be used to summarize the essence of HFT: "the future is already here, it's just not very evenly distributed".

Wikipedia defines HFT as - "High-frequency trading is the execution of computerized trading strategies characterized by extremely short position-holding periods".  Computerized strategies implies simple to complex algorithms and extremely short positions can mean micro seconds to ones that are never executed but are noise generators.

A quote from Kevin Cronin, Head of Equity Trading at Invesco stated: "Because of the predatory nature of some participants we have no incentive to post liquidity,” ... “There are 40 places where stocks are transacted and none of us has clarity of supply and demand on most [equity] issues. These are fundamental issues as to what the value of a securities market is".

Mr. Dharm Kapadia, who has advised The RBR Group (my company) on technology in the financial sector explained that:

"Inexpensive co-location has facilitated the growth of high-frequency trading (HFT) and will continue to support it in the future as computers and networks will only get faster. The individuals participating in HFT not only take on, and beat the big players, but also evade the regulatory agencies. All you can see is their "vapor trails" in the historical trade and quote data. The retail investor is miles behind the HFT participant; they're not normally going to get the best execution in this type of environment. Ubiquitous technology will allow the HFT trader to be faster, more nimble, and hard to trace."

Of course, within this macro-trend of explosive growth of HFT - the democratization of technology, and its power and speed will enable the astute fund management companies in retail investments to begin constructing a premier service that will become consumer grade in this coming decade.  And the first one of these services to market will generate aggressive premiums prior to the arrival of competition.

Interestingly today the Financial Times front page includes the article "High-frequency trades earn fine" here.  Excerpt from the article:

"US regulators are to fine a high-frequency trading firm, signalling sharper scrutiny of this type of activity, amid a broader crackdown on market abuse following the May 6 “flash crash”.

The enforcement action, brought against a small New York firm for “layering”, will be settled on Monday with the payment of about $2.3m in fines and disgorgement penalties, according to people familiar with the situation.

Layering involves traders entering multiple fictitious orders, which are then cancelled within seconds. The strategy is used to drive a stock price up or down, before using a real order to profit from the artificially inflated or depressed price.

It is one of the high-frequency trading techniques – alongside “spoofing”, in which traders feign interest in stocks to drive the price up or down – that some believe may have played a part in the 20-minute period of wild price gyrations on May 6 known as the “flash crash”."

China Update

Good friend Mr. Tony Tsai, CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co. forwards key China updates:

"Five future development trends of China's foreign trade. Five future development trends of China's foreign trade are analyzed by Liu Jingdong, a researcher at the International Law Research Institute at the China Academy of Social Sciences. The five trends are as follows: 1) China will maintain its leading position in worldwide foreign trade for a long period of time; 2) the structure of China's imports and exports will change and energy and resources trade will play important roles in China's foreign trade; 3) legislation and policies regarding the environment will have a significant affect on China's foreign trade; 4) the renminbi will become the main currency for China's foreign trade settlement; and 5) trade protectionism against China will exist for a long period of time and trade friction between China and its major trade partners will increase."

"Three big mountains" for Chinese economy: housing vacancies, the trade surplus and foreign exchange reserves. Chinese decision-makers will lie awake all night thinking of three numbers. The first is 65.4m, the number of vacant houses in China. Second is $28.7b, the estimated value of China's trade surplus in July. The third is $2.45tr, China's foreign exchange reserves. The three numbers reflect the distorted part of the Chinese economy. China is encouraging investment by suppressing the cost of capital and other factors. The cost to get this investment is the sacrifice of the interests of consumers. Low salaries and low deposit interest rates have suppressed the purchasing ability of consumers."

"Vice governor of People's Bank of China: China to gradually deregulate restrictions on cross-border use of renminbi. Aug. 31, Hu Xiaolian, vice governor of the People's Bank of China, says in an interview with foreign media that China will gradually deregulate restrictions on cross-border use of the renminbi. However, variation in the exchange rate will not solve the China-US trade imbalance. China is also considering allowing enterprises to invest in overseas markets with the renminbi."

"China expands scope of property tax pilot program; evaluation technologies become mature. The Ministry of Finance and State Administration of Taxation has expanded the property tax pilot program across the country. Each province can select one city to take part in the pilot program. In addition, the State Administration of Taxation has accelerated technical training of local tax officials in property tax evaluation."

"China creates new regional economic structure; breaking regional economic development imbalance problems. From May to Dec. 2009, nine plans for regional development were upgraded and made strategic national plans. This indicates China is trying to reverse the imbalance in regional economic development across the country and transforming its export-oriented economic development model, which depends excessively on external demand, as well as exploring an overall way to combine energy-conservation, environmental protection, ecology and civilization."

"China to accelerate construction of credit system in rural areas. Du Jinfu, deputy governor of the People's Bank of China, says China will accelerate the construction of the credit system in rural areas, further supporting agriculture through financial measures."

Pakistan - Flood Donation

A large number of folks have asked me to suggest a trusted source where they can donate for the Pakistan flood relief efforts.

I am an Advisor to Ms. Sarah Hashwani, Chariman of Board of Directors of the Hashoo Foundation and the Foundation itself, a family philanthropic organization that has been working in Pakistan for quite a few years, see website here. The foundation has UK and USA (501c3) offices and conducts philanthropic efforts in the two countries as well.

I have worked with the organization and have been impressed with the excellent recipient services the foundation offers. I have met many individuals whose lives have been transformed through the foundation's work. One of the breakthrough recipient service innovations the foundation delivered "Plan Bee" won the BBC World Challenge Award, see detail here.

As you review the Foundation's site, you will notice that it has both a current support focus and long-term rehabilitation plan as well. Rehabilitation will be key to the recovery of the country.

Thank you for choosing to donate whether through the Hashoo Foundation or another source.

Pakistan Flood Relief Donation - here.
Note that you can send a check to the US based organization along with being able to donate through PayPal.

Pricing

I previously blogged about pricing here regarding behaviors and pricing, and academic studies providing insights to develop strategies from.  Recently from McKinsey Quarterly on "Building a Better Pricing Structure" here, average review though:

"A pricing infrastructure can be difficult and costly to create. It requires investing appropriately, empowering the right people, articulating clear targets and goals, and managing risk. Yet the benefits of realizing true pricing excellence are worthwhile: a one-percentage-point improvement in average price of goods and services leads to an 8.7 percent increase in operating profits for the typical Global 1200 company.1 Since a well-executed pricing-improvement program often yields price increases of two to four percentage points or more, sustaining a long-term price advantage may represent roughly 15 to 25 percent of a typical company’s total profits."

Lateral Innovation - Network Problem Solution from Nature

I analyze "adjacencies" and "lateralities" in innovation to discover solutions from industries a sector specific or vertical expert perhaps may not choose to.  Here is an excellent example of engineering solutions for network problems validated in natural organisms through the research of Atsushi Tero at PRESTO, Japan Science and Technology Agency in his recently published paper in the Science, "Rules for Biologically Inspired Adaptive Network Design".  The abstract:

"Transport networks are ubiquitous in both social and biological systems. Robust network performance involves a complex trade-off involving cost, transport efficiency, and fault tolerance. Biological networks have been honed by many cycles of evolutionary selection pressure and are likely to yield reasonable solutions to such combinatorial optimization problems. Furthermore, they develop without centralized control and may represent a readily scalable solution for growing networks in general. We show that the slime mold Physarum polycephalum forms networks with comparable efficiency, fault tolerance, and cost to those of real-world infrastructure networks—in this case, the Tokyo rail system. The core mechanisms needed for adaptive network formation can be captured in a biologically inspired mathematical model that may be useful to guide network construction in other domains."

The researchers grew the slime mold using 36 oat flake template representing cities around Tokyo, while they placed the mold itself on Tokyo.  The paper states:

"Overall, we conclude that the Physarum networks showed characteristics similar to those of the rail network in terms of cost, transport efficiency, and fault tolerance.  However, the Physarum networks self-organized without centralized control or explicit global information by a process of selective reinforcement of preferred routes and simultaneous removal of redundant connections."

Open publication - Free publishing - More network

Power's Impact on Behavior

For CPG companies such as P&G and Unilever, whose shopper is mostly a woman, the concept of empowerment to purchase for the household is an important topic.  Also, retailers large and small look at the buying "power" of the geo- and demo- graphics to price in their locale, for example.  So, what is the impact of "power" on the individual.

Here are a few strategic insights from the work of Adam Galinsky, Kellogg School of Management at Northwestern University (details here) and Joris Lammers, Tilburg University (details here) in their work "Illegitimacy Moderates the Effects of Power on Approach", download here.

"“Power activates a person’s behavioral approach system and underlies our motivation to act, while powerlessness activates our behavioral inhibition system to restrict action and risk-taking,” said Galinsky.

“But, in illegitimate power scenarios, the powerless are more likely to act without direction in an attempt to change the situation, and the powerful may inhibit their actions for fear of losing their undeserved seat at the top.”"

Another study from them published in the Psychological Science here, "Power Increases Hypocrisy, Moralizing in Reasoning, Immorality in Behavior" sheds light on a few interesting conclusions.  Following are excerpts from a review in the Economist:

"...powerful people who have been caught out often show little sign of contrition. It is not just that they abuse the system; they also seem to feel entitled to abuse it."

Dr. Lammers and Dr. Galinsky introduce a new term "hypercrisy":

"...an intriguing characteristic emerged among participants in high-power states who felt they did not deserve their elevated positions. These people showed a similar tendency to that found in low-power individuals—to be harsh on themselves and less harsh on others—but the effect was considerably more dramatic. They felt that others warranted a lenient 6.0 on the morality scale when stealing a bike but assigned a highly immoral 3.9 if they took it themselves."

The research linked above and the Economist's conclusion paint a bleak picture though:

"Perhaps the lesson, then, is that corruption and hypocrisy are the price that societies pay for being led by alpha males (and, in some cases, alpha females). The alternative, though cleaner, is leadership by wimps."

Publishing and Piracy

From the Financial Times article "Publishers fear threat of digital piracy as sales of e-books grow" here:

"Tom Weldon, deputy chief executive of Penguin (part of Pearson, which owns the Financial Times), said: “The only way to fight piracy is to publish digital content across as many formats as possible, through as many channels, at a fair price. If we go for exclusive or proprietary formats, we’re completely screwed.”

At the same event, Shriti Vadera, who helped negotiate the UK government’s last anti-piracy deal with record companies and internet service providers, said the book industry was way ahead of the record companies, which “didn’t see [the piracy threat] because they weren’t listening to their consumer”."

Africa - Business Growth, New Consumers

Boston Consulting Group recently published a thought provoking report "The African Challengers: Global Competitors Emerge from the Overlooked Continent".  The report calls the perspective that a continent with only 4% of the world's GDP is "out of date".  The report states:

"Between 2000 and 2008, Africa's annual GDP grew by 5.3% (adjusted for PPP), compared with 4% globally.  The rise in commodity prices partly explains this performance, but exports and local demand also played strong roles."

As always, the BCG report is thorough, with explanation and data to back up claims, and visuals and graphs to explain the information.  Download the complete report here.

List of the top global challengers according to the report:

This growth has the affect of opening up the markets for imports of consumer goods, and new services as the shopper/consumer strength grows with the PPP.  Exciting times!  And with the FIFA World Cup 2010 providing a showcase opportunity, BCG's timing is apropos and perhaps African markets are moving from Frontier to Emerging.

Consumer Behavior and Pricing

I was first educated on the art of pricing by a good friend Mr. Dennis J. Crane of the Business Navigation Group, details here.  Thanks Dennis!

A recent and an excellent report from UK's Office of Fair Trading, "The impact of price frames on consumer decision making" here, defines the various pricing strategies of retailers into price frames.  These are:

"A baseline treatment in which consumers see straight per-unit prices.

Drip pricing where the consumers see only part of the full price up front and price increments are dripped through the buying process.

Sales in which a sale price is given and a pre-sale price is also given as a reference to the consumer, 'was £2 is now £1' (actual pricesare identical to the baseline treatment).

Complex pricing where the unit price requires some computations, '3 for the price of 2'.

Baiting in which sellers may promote a special price but there is only a limited number of goods actually available at that price.

Time limited offers where the special price is only available for a pre-defined short period of time."

The report is extensive in its details on the process used.  Tabular formats break down the complexity of the analysis and the results.  Couple of key conclusions from the report are:

"The evidence from the controlled experiment shows that, in contrast to the predictions of standard economic theory, price frames do matter for consumer decision making and welfare. Consumers make more mistakes and achieve lower consumer welfare under the price frames we investigate as compared to straight unit pricing (the baseline)."

"The ranking of the price frames, starting with the worst – that which causes the greatest welfare loss - is as follows:
(1) drip pricing
(2) time limited offers
(3) baiting
(4) sales, and
(5) complex pricing."

If you are interested in a quick review of the report, please see the Economist article "You've been framed" here.  The Economist concludes that:

"Although consumers clearly lost out there were no corresponding overall gains for retailers. Sales volumes were virtually the same whichever way prices were presented. The main effect was on the distribution of sales. The first shop to lure shoppers sold many more goods, as consumers grabbed at poor deals. That made some firms better off but others (which would have offered better deals) were worse off. Most price frames made for lousy matches between shoppers and retailers, a bad result all around."

Do the manufacturers become the winners in the end?  Should manufacturers remain with the business they know?  Is a combination of an organization that is a manufacturer and a retailer work best?  That is, WalMart, Tesco, etc. with private labels or P&G with its eStore.  Questions abound, experiments continue...

Consumer Long-Haul Airline Travel

How fundamental a shift is to occur in long haul airline consumer travel, the Economist describes the growth of Emirates, Qatar Airlines and Etihad Airlines here.  Interestingly, the Economist dissects the complaints of the European carriers, disqualifies them and only offers that continued success is to follow.

The impact on the "business" of airlines in the West will be fundamental and foundational.  In the Air Transport World article here.  Note that the comments at the end of this article are particularly poignant:

"Pointing to that order, CAPA commented that the eventual size of Emirates will be "significant enough to make irreversible the airline industry's transformation from a heavily regulated, nationalistic anachronism to something approaching a real business. No longer can traditional competitors hope to stave off this threat to the status quo, as they have been hoping in recent years while the airline expanded threateningly. This order marks a genuine turning point in that process of change. It is so large in fact that competitors' business plans will be reshaped by it.""

The Economist's Adam Barns (Gulliver here) provides both business and consumer insights in the audio below:

Global Consumer Data - Telecommunications

From the Economist

Consumer Insight - Razors

Previously, I linked Dan Ariely's take on consumer, shaving and razors here.  Here is a video on an emerging trend from Wall Street Journal in razors and blades.  I agree as I am a part of this trend since one year ago.

Consumer Insight - Behavior of "Addiction"

Excellent insights on human behavior in "Gambling Severity Predicts Midbrain Response to Near-Miss Outcomes" by Henry W. Chase and Luke Clark in The Journal of Neuroscience here.

"During gambling, players experience a range of cognitive distortions that promote an overestimation of the chances of winning. Near-miss outcomes are thought to fuel these distortions."

This applies to all activities that are competitive, yet for the astute, this applies to activities where some sort of fulfillment is desired as well.

If you do not have access to the above article, see a recap here at the Economist - "IT IS not the thrill of winning, but the thrill of almost winning that sets a problem gambler apart from those who just fancy a flutter. A strong reaction in the brain in response to “near misses” is correlated with a greater tendency to compulsive gambling, according to new research."

Gaming the Social Web

Good article by Eliot Van Buskirk, "Gaming the  System: How Marketers Rig the Social Media Machine" here. "If clout is the new currency, in other words, it already has its share of counterfeiters."

Biggest IPOs in History

Education Statistics in the Poorest Countries of the World

I have been consulting in the development sector for the past few years.  I found the data above of great value representing extremes in education in some of the poorest countries in the world.

South Asian Consumer Insight - Jaipur Literature Festival

"As the [India's] economy has boomed, and its middle class has grown, book sales have shot up.  Most books in India are still sold in small family-run shops, but book chains are moving into malls and airports.  Keen to exploit this growth, several foreign publishers, including Hachette, and HarperCollins have launched in India in recent years."

States the Economist article here.  While consumer products, luxury brands, etc. remains aspirational goods, anything related to educational is imbued int he psyche of the culture.  This perhaps is yet another avenue for democratization of the "class" structure in India.

"Room was also made for a group of writers who are little known, even in India: Dalits, formerly known as “untouchables” at the bottom of Hinduism’s caste system. Omprakash Valmiki, whose Hindi autobiography, “Joothan: A Dalit’s Life”, has been translated into English, read poems about the routine wretchedness of the lives of poor Indians. Another Dalit, Ajay Navaria, surprised some of his listeners with his expletive-peppered verses."

See the festival's website here.

Culture and Consumer Choices

The article "Cultural research tour reveals who likes what" in the Financial Times discusses the disparities in consumer behavior when it comes to jewelery here.  For the astute, this also provides insights in luxury and aspirational consumer goods and services as well.  In emerging markets of China and South Asia (India, Pakistan, Bangladesh), jewelery provides the deepest insights as it represents social standing as well as continuation to brand loyalty as it can be a significant both monetarily and as an emotive purchase.

"In the US today, the average price of a piece of diamond jewellery is $199, while in China it is $1,000 - David Rudlin, Japan-based global marketing director for De Beers’ Forevermark"

The article did not highlight though whether the jewelery industry is a follower or a predecessor to overall consumer markets trend?  Or does it stay constant?  That would be valuable information.

Few more interesting trends, for example, the difference in American and Japanese consumers overall are highlighted simply:

"In the US, 80 per cent of diamonds sold are for the bridal market. The American market is more ready than the Japanese to sacrifice quality for size... “The Japanese reject anything with even invisible flaws,” says Mr Rudlin."

"The biggest jewellery chain in the world, Chow Tai Fook, has 1,000 stores in China and will have 2000 by 2020. In China, 70 per cent of the market is made up of solitaire wedding rings, which are relatively easy to design and manufacture."

"“India, with its jewellery culture inspired by maharajas, is unlike anywhere else in the world,” says Mr Rudlin. “The demand is skewed to elaborate multi-stone pieces, with a focus on necklaces, earrings, bracelets and bindis and hair jewels.”"

Innovation in Emerging Market: New Business Models

In Economist's recent report on innovation in emerging markets here, the article "Here be dragons" talks about three specific business models that - "are not only important innovations in their own right but have serious implications for the way that Western companies run their affairs".

The three business models discussed and shared below are designed for the culture and society that is under pressure of growth and has a deep desire to fulfill its aspirational goals. The West cannot copy and paste these. It can only succeed if the society is willing and driving its own transformation. Will it? In another article from the report, "The power to disrupt":

"Anand Mahindra, vice-chairman of the eponymous family firm, says that these days when Indians go to bed at night their dreams about their country’s future “are not just colourful but steroidal”. His compatriots are at last beginning to believe that “the sandcastles we build in our minds are not going to be simply washed away by the morning tide.” The same is true across the emerging world, whose “sandcastles” are now being built on the solid foundations of business innovation. They will endure, changing not just emerging markets but the rest of the world as well."

Business Models -

The first business model is "scaling out, which means involving a wider range of people in the process of production and distribution, something that has been made much easier by mobile phones and the internet. The most successful examples of this are clinics on wheels, but there are plenty of others. Nutriset, a French manufacturer of fortified food for malnourished children, has outsourced production to local franchises in Africa. The company maintains quality control and the franchises are close enough to the children to make distribution quick and easy." This is in comparison to "scaling up".

The second business model is "“pull” model ..., designed to help companies mobilise resources when the need arises. Hong Kong’s Li & Fung or China’s Chingquing Lifan Group can use their huge supply chains to produce fashion items or motorcycles in response to demand. Taiwan’s Quanta and Compel can produce cheap computers and digital cameras for a fashion-conscious digital marketplace." this is in comparison to the "push" model.

The third business model is "the application of mass-production techniques to sophisticated services. This started with India’s outsourcing firms, which demonstrated that economies of scale and scope could be reaped from services that used to be highly fragmented and geographically rooted. These outsourcers are still expanding and moving upmarket. Indian consultancies are now challenging Western ones in complex services, not just dealing with customer complaints."

And it is the third model that is creating impact beyond the traditional information technology driven growth: "[Indian entrepreneurs] see a huge market for legal services requiring a high level of expertise. Dr Shetty is only one of many Indians who are applying Henry Ford’s principles to health care. LifeSpring has reduced the cost of giving birth in a private hospital to $40 by looking after many more mothers. Aravind, the world’s biggest eye-hospital chain, performs some 200,000 eye operations a year. It takes the assembly-line principle literally: four operating tables are laid side by side and two doctors operate on adjacent tables. When the first operation is done, the second patient is already in place."

Innovation in Emerging Market: Consumer Spending

"To flourish in this atmosphere, it helps to have the spirit of a frontier settler, not a corporate bureaucrat." states the article "Grow, grow, grow" in Economist's recent report on innovation in emerging markets here.

Innovation in Emerging Market: Universal and Apsirational Brands

From the Economist's recent report on innovation in emerging markets here, the article "Easier said than done" showcases pyramid-straddling - the concept where a brand is able to win across all socio-economic market segments.

"... the masters of pyramid-straddling are mobile-handset makers. Nokia produces phones for every market, from rural models designed to cope with monsoons to fashion accessories that will look cool in a Shanghai nightclub. The cheap phones are sold through a vast network of local outlets, such as mom-and-pop stores and rural markets, and the upmarket models through shops in fashionable city centres. The aim is to create a brand that is at once universal and aspirational."

Innovation in Emerging Market: Dilemma Managent vs. Problem Solving

In Economist's recent report on innovation in emerging markets here, the article "Easier said than done" talks about differentiated and unique approaches to putting economically profitable business ideas into practice. An exceptional example is from Kenya:

"East African Breweries, a division of Diageo, launched a cut-price beer, Senator Keg, to help reduce demand for illicit alcohol, which is cheap but is frequently contaminated with methanol, fertilisers and battery acid. The company reduced the cost of the beer by negotiating a tax waiver with the government and by distributing it in kegs rather than bottles. The company made use of the shadow economy to get the beer delivered to the outlets. It also trained bar staff to understand the importance of rotating kegs to make sure the beer was fresh, and of washing glasses. Senator Keg is now ubiquitous in Kenya, sold in every makeshift roadside bar, and is affectionately known as “Obama”."

This is 21st Century Dilemma management vs. 20th Century Problem Solving. Thinking beyond maximizing the shareholder value on a quarterly basis yields the above innovative solution.

Innovation in Emerging Market: Data Points

"The engineering gap" in the January Economist states:

"According to the [Aspiring Minds, India], only 4.2% of India’s engineers are fit to work in a software product firm, and just 17.8% are employable by an IT services company, even with up to six months’ training. A larger share could cope in business-process outsourcing (call centres and the like). These findings are even gloomier than the 25% figure for employability that has been bandied about since 2005, when McKinsey released the results of a survey of international companies."

Download the complete report here.

The article "Grow, grow, grow", in Economist's recent report on innovation in emerging markets here, states: "McKinsey reckons that only 25% of India’s engineering graduates, 15% of its finance and accounting professionals and 10% of those with degrees of any kind are qualified to work for a multinational company."

The emerging market growth is fantastic, yet reviewing the thorough report from the Aspiring Minds raises or should raise questions for the multinationals. Also, curious if this level of employability applies to the Indian scientists as well?

In the report on innovation in emerging markets, the following statistics provide food for thought:

"The number of companies from Brazil, India, China or Russia on the Financial Times 500 list more than quadrupled in 2006-08, from 15 to 62. Brazilian top 20 multinationals more than doubled their foreign assets in a single year, 2006...

Multinationals expect about 70% of the world’s growth over the next few years to come from emerging markets, with 40% coming from just two countries, China and India...

Fortune 500 [companies] have 98 R&D facilities in China and 63 in India. ... General Electric’s health-care arm has spent more than $50m in the past few years to build a vast R&D centre in India’s Bangalore... Cisco is splashing out more than $1 billion on a second global headquarters—Cisco East—in Bangalore... Microsoft’s R&D centre in Beijing is its largest outside its American headquarters in Redmond... a quarter of Accenture’s workforce is in India."

Canon: Approach to Innovation

This is in contrast to Samsung in my previous posting, from the Financial Times regarding Canon:

"Technology has become too complex for Canon to develop everything in-house and it is expected to make more acquisitions... the company’s chief financial officer said in an interview with the Financial Times.

“We can no longer cover everything with our own technology so we need alliances and tie-ups,” said Toshizo Tanaka.

His comments highlight how the traditional model for Japanese electronics companies of relying solely on internal research and development has broken down.

Canon is likely to make acquisitions rather than license technology, however, in order to differentiate its products.

“If [technology] is not closed then others can make similar devices,” Mr Tanaka said."

This is still a traditional model.  Opportunities remain in the areas of customer/consumer driven innovation, driving supplier/partners to invest in R&D and/or introduce new invention into existing products, academic research tie-ups, etc.

Samsung: Investment on R&D

From the Financial Times:

"Samsung Electronics yesterday unveiled a Won26,000bn ($23bn) investment plan, its biggest to date, as the world’s largest technology company by sales looks to cement its leadership in semiconductors and flat panel displays.

The total investment for this year, which includes Won8,000bn (~$7bn) for research and development, ...

Samsung’s spending this year will be bigger than the combined investments of Intel, IBM and Sony, according to Bloomberg data."

Development Sector

Having been engaged in the development sector for the past two years, I have discovered the difficulty the sector and people working in it face... i.e. their inability to move at speed, though they are tremendously dedicated and do not lack initiative.  In the Financial Times report on the sector:

"...as multilateral institutions and government development agencies work more closely with business, the non-profit sector faces the challenge of moving at the same fast pace as its private-sector partners."

"“Businesses take decisions faster than UN agencies,” says Ms Roman [director of communications, private partnerships and public policy at the UN World Food Programme]. “Right now, we’re partnering with Kraft and Unilever in Bangladesh. They’re eager to move tomorrow, and I’m eager too, but the system on our side doesn’t move that quickly.”"

Yet, public and private partnerships are enabling solutions to reach places where the needs are extreme, from medicine to shelter, clean water to education, self sufficiency to economic development.

Desertec: Solar and Wind Energy

A project to generate energy for Europe from North Africa is being initiated by Desertec, see here.  Financial Times writes:

"... the most ambitious solar project is in north Africa. The Desertec Industrial Initiative is a plan to build a vast network of solar power plants and wind farms, covering the desert and stretching for hundreds of miles, and connected to an advanced electricity grid that will carry power generated round or under the Mediterranean sea to feed Europe’s appetite for energy.

Desertec – backed by a coalition of more than 10 big name companies, including Munich Re, the German insurer, Deutsche Bank, utilities RWE and Eon and Siemens – is likely to cost about $400bn (€302bn, £262bn). If successful, the project could supply as much as 15 per cent of Europe’s electricity needs by 2050."

What I found interesting is Desertec's request for donations for the project via the web, see here.  Desertec is empowering the individual to act through a validated message of need, yet the value needs to be made clear for the "call to action" to be advocated.

Naomi Klein on NPR

In the "On Point" program on NPR Tom Ashbrook talks to Naomi Klein, listen here.  Watch Naomi on Comedy Central here.

Shoppers Reality at the Shelf

Having been the Architecture Leader at Procter & Gamble on the shopper and consumer virtualization platforms, I am thrilled to see that the statistics still hold true when you and I stand in front of the shelf to make the buy or not to buy decision.  My work was covered in AG Lafley's book "Game Changer" blogged here by friend and colleague Franz Dill.  Franz was instrumental in setting up the P&G Innovation Centers, now enabling P&G to be the leader in shopper and consumer insights to impact product development at the concept stage:

"In the Bases research, the biggest driver of new-product awareness in store was simply seeing the product on the shelf -- accounting for product awareness in 71% of cases where people cited the store. All the other tools marketers and retailers use to drive in-store awareness -- including off-shelf displays, retailer circulars, product demos, in-store media and samples, accounted for awareness in only 2% to 18% of those cases. In-store media and product demos both scored in the low single digits. That helps drive home the importance of packaging and signage, Mr. Twitty said."

States the article "This Upfront, P&G May Want to Boost Spend on Piggly Wiggly" here. 

Though AdAge's graph here from Nielsen showcases the impact of shopper based design, shopper driven marketing communication, shopper based package design, etc. see below a video from the Economist on the impact of TV on the shopper and the consumer.

Introspection on "Pain of Paying" by Dr. Dan Ariely

Dr. Dan Ariely provides introspection on daily consumer products like razors (specifically Gillette).  And of course, if this interests you then Dan's book "Predictably Irrational" provides deep insights on consumer behavior and associated economics.

Frugal and Bandit Innovation

I have believed that one of the key ways disruptions in products and services get developed is when the environment creates pressures and the creative thinkers deliver game changing and apropos to the need innovation.  I have been argued against that places like Silicon Valley are not being pushed yet continue to lead... and always an interesting debate ensues!

Here is an excellent video on how the developing and frontier markets are innovating on top of what is considered breakthrough for the developed countries.  I like having the Economist on my side in this debate.

World Perspective / Photo - 7 [Bull vs. Bear]

Excerpt from a letter in Financial Times:

"[Mehmet Aksoy's] monolithic stone sculpture is before the Istanbul stock exchange represents more closely the reality of the market.  The brawny bull is arrested on the cantilevered upward slope by the snarling maw of an angry bear.

The bull's stance is one of cautious respect, the bear's on the other hand forms a volatile cloud with a clawed paw carved as a concave negative shape at the apex of the bull's upward path."

World Perspective / Photo - 6 [Saudi Arabia]

From various news sources:

"Saudi newspapers ran front page pictures on Friday of King Abdullah and Crown Prince Sultan bin Abdul Aziz in a crowd of women with their faces bared, adding fuel to the growing fight over mixing in the kingdom."

The picture is several weeks old though.

King Abdullah continues to lead with changes across all aspects of Saudi life, an example is:

"[King Abdullah] opened a new science university named after himself that permits the international body of students and faculty to freely mix together."

World Retailing: Retail via eCommerce

In the Financial Times World Retailing this month, "Seamless service from clicks and bricks" talks about the growth of eCommerce driven retail, moving of luxury goods sales to the internet and their success, and a combination of clicks and bricks.

"Deloitte and Forrester, the technology and market research group, found that 40 per cent of retail sales in the US last year were influenced by the internet, with consumers either shopping online or using the internet to gather information on potential purchases."

Now the fun begins!  The five senses to be influenced available to a retailer in the retail store disappear on the web.  How does one create the right experience for the diversified, from the affluent to the lower middle class, to engage and convert them?  This is where pure analysis fails... for example, if a web shopper is recognized as liking red because they bought a red pen, does that imply they would also buy a red car, and a red shirt, and so on.  Insights into behaviors through aggregation can result in misfires and loosing the online shopper all together.  eCommerce retailers will need to move towards personalization - the market does not have but one true personalization player, one that can comprehend astronomically large coincidence points of the shopper and instantly connect the semantics to it, while providing this information at instantaneous speeds.

Current solutions can collect all the dots yet, as the article states, "But joining the dots takes time."  Most of the time the shopper has moved on or has been influenced by a different solution to their need.

eCommerce is also going to enable new entrants in the global market place as the "virtual shopper" can do shopping on the eCommerce "virtual shelf" from anywhere.  Like I said, now the fun begins!  Will the shopper and consumers be the winners in the end?

"As retailers rush to provide even better online shopping experiences for their core customers, they are also using the internet to procure new ones.

The next step for many is to use the internet to give them exposure overseas.

Next, the UK-based clothing chain, said last month that it was pulling back from expanding overseas through its own stores in favour of growth via the internet.

It has expanded its online operation to 36 countries and has been selling into the US via the internet since the middle of last year.

“Internationalising sales is a smart strategy,” says Mr Fitz- gerald. “With the internet, you can go into 20 new countries within a year. It is remarkable and you really can achieve that kind of scale if you prioritise and focus.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: It's all in the Data!

In the Financial Times World Retailing this month, "Good analysis and use of data can make all the difference" highlights the role of information technology from product manufacturing to in-market to consumption.

"“But what has changed since is that there is now a renewed focus on looking at where retailers make money, and that is in the store,” [Andy Park, industry leader for retail and consumer products for northern Europe at IBM] says."

What is interesting to note is "Retailers are still investing to improve the way they handle the last 50 metres of the logistics chain, from the stock room to the shelf."

The article does not fully touch on one of the most important piece, shopper data... data that has been collected for close on a decade, loyalty cards, credit cards, POS, etc.  Coarse grain segmentation with 10% to 90% hit or miss margins and marketing budget wastage may finally begin to be managed through not only statistical analysis, but making "sense" of the shopper decisions, i.e. the semantics of the shoppers actions or not.

"“There is a shift in focus to insight and not just measurement analytics, but to insights into the shoppers themselves,” says Renee Sang, who runs Accenture’s Customer Innovation Network.

“Price transparency is now a given, so retailers want to identify which customers are most likely to convert [to buyers]. Not all customers convert in the same way. For some it’s price, for others assortment, others service.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Consumerism and The West

In the Financial Times World Retailing this month, "Consumption starts to shift to China, India and Brazil" discusses that the average shopper and consumers balance sheets are in better shape than they were a year ago.  Yet, the article states:

"But if the consumer is coming back to malls and high streets, their attitudes are changing, according to recent research.

Consumers around the world are reining back spending on non-essential items, according to Datamonitor.
Half of shoppers say they would cut back on buying new clothes and shoes, while 41 per cent say they will be reducing the amount they spent on cosmetics and fragrances.

Meanwhile, ostentatious consumerism is out, as shoppers are uncomfortable about flaunting wealth in more austere times. As a result, retailers are beginning to replace branded handbags and other high end goods with more subtle items."

I am tempted to ask if this is temporary or here to stay?  The outcome that the article highlights is "...that spending in the US, which currently accounts for 72 per cent of gross domestic product, should move back to its historical level of 66 per cent."

The more likely scenario that is emerging is that the consumerism begun through the design innovation of Raymond Loewy may merge into socially responsible products being the pull from the shopper and consumer.  This seems to be the case as stated multiple times else where in the "World Retailing", specifically in the article "Green moves make savings".  Another one is the growth of eCommerce creating a completely new sector rather than a sales channel.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Circumspect

In the Financial Times World Retailing this month, "More circumspect attitude prevails" provides some intriguing highlights into the GCC market place - "Mirdif’s developers, Majid Al Futtaim Properties, insist the Dh3bn ($820m) project makes sense. Like businesses in other sectors, they are betting on recovery in an oil rich region that has a reputation for rampant consumerism and the emergence of a “mall culture” whereby shopping is a primary source of entertainment."

As an example, here is a list of Malls in Dubai with links to the stores in the malls and shopper comments where the mall culture is alive and thriving

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Indian Shoppers Promise the Highest Growth

In the Financial Times World Retailing this month, "Traditional vendors still dominate" discusses how India remains the "world's most attractive developing country for retail investments."  The article states that "large foreign players such as Wal-Mart, Tesco and Carrefour, have been kept on the margins by New Delhi’s ban on foreign direct investment in so-called “multi-brand retail.”" but believes that it will and has to change in the near future - "“I think all the domestic players have burnt up a lot more cash than they thought they would,” says Mr Mukherjee [an AT Kearney principal in New Delhi]."

Today, Trent (Tata group's retail arm) operates Westside department store.  In groceries, Tata gets technical support from Tesco for their HFS Star Bazaar.  Similarly, Bharti Enterprises has Easy Day with technical support Wal-Mart.

India, a nation whose primary language is English, has a shopper whose behavioral patterns are more desirous of Western culture does seem like the ideal candidate for retail investment.  Question is if it will end up inventing solutions designed specifically for its shopper and consumer and create a new market place for shopping?  For example, the HFS format is an Asian invention adopted and improved upon by the rest of the world.  A version of "dhaba-walas" has always existed throughout the developing coutnries.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: China's Wild West

In the Financial Times World Retailing this month, "The Wild West with razor-thin margins" documents the complications associated with exponential growth opportunities associated with open markets.  Specifically, the case of "Huang Guangyu, founder of the giant Chinese electronics retail chain Gome, was named China's richest man two years ago... But in February, he cele- brated his second Chinese New Year behind bars, awaiting trial on vague charges of bribery and stock manipulation."

Chinese retailers ramped up their growth fast... more importantly, as good friend and colleague Mr. Tony Tsai, CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co. highlights, the Chinese retailers have adopted methods of understanding their shopper and consumer as well.  China is a place where the behavioral change of the shopper and consumer is simply very fast in comparison to the developed markets because "people who were at subsistence level a few years ago are becoming consumers."

The article states:

“Retailing in China is still highly regional, highly frac- tured and overpopulated,” says Paul French, manag- ing director of retail consul- tancy Access Asia.

For example, in the western city of Chengdu, half a dozen high-end mega-malls are scheduled to open in the coming months. A giant statue of the late Communist leader Mao Zedong now points towards a Cartier store crowded in next to a Starbucks.

The wild west environment in which Mr Huang carried out his ambitious consolidation and which ultimately saw him toppled has spawned a cut-throat model that has been widely replicated."

Yet, China may also be developing its own in-store shopper engagement and conversion models:

"Companies such as Gome and Suning, its biggest competitor in the electronics sector, rely on product agents instead of inhouse salespeople as a way of con- trolling costs.

This means that when customers enter most Chinese appliance stores, the only people directly employed by the retailer are the cashiers, the security guards and the warehouse staff."

One thing is for certain, China has a ways to go in its experimentation as the shopper and the consumer remain an evolving base from needs vs. desires to affordability vs. affluence.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Fight for the Shopper and Buyer in the US

In the Financial Times World Retailing this month, "Stores prepare to fight for every last customer" covers the retailers approach in the US to convert their shoppers to buyer and loyal customers.

"Glenn Murphy, chief executive of Gap, ... has a hard-nosed view of what to expect this year from US retailers, as their customers gradually emerge from last year’s slump in spending.

“It is going to be mano a mano,” he told a recent investors meeting. Success will not be “based on square footage and capital. It is based on execution, differentiation, knowing your target customer . . . and fighting for every one of them”."

Interestingly where the square footage was the measure for retailer growth now:

"Most US retailers have slowed or stopped square footage growth. Notable exceptions include those that have benefited from the frugal consumer mood. Dollar General, the discount store, is planning to add 600 out- lets to its 8,700 network, and TJX Companies, the end-of-line retailer, is increasing its square footage growth rate from 3 per cent in 2009 to 5 per cent.

In contrast, Wal-Mart, the largest US retailer, is slowing its square-footage growth rate to less than 2 per cent, compared with more than 7 per cent in 2006."

So how does this conclude?

"“They’re all saying they will win the market share fight. But they can’t all win a bigger slice of the pie,” [Emanuel Weintraub, a veteran retail consultant] says."

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Sustainability

In the Financial Times World Retailing this month, "Green moves make savings" discusses the influence of the shopper on pushing the retailer towards "green".

"Joanne Denney-Finch, chief executive of the IGD, says she is not seeing strong evidence of retailers opting for the schemes that save most money, partly driven by consumers.

“The shopper has been very clear [that] it’s not price at the expense of all the other things on their wishlist,” she says."

Interestingly, during a seminar in Pakistan to some of the top non-profits and philanthropic organizations in the development sector, I put up a slide with three large alphabets only - CSR.  I found a bit of education in the discussion that followed on how the development sector views for-profit organizations of the world using CSR (Corporate Social Responsibility) in marketing and perception value.

I am thrilled to have worked at Procter & Gamble where social responsibility is inherent in all business.  Have a look at a "Sustainability Report" here from nine years ago.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Operations and Retail Staff Matter

In the Financial Times World Retailing this month, "Global view with a local focus" highlights the shift in emphasis on optimization of retail operations and engaging the retail staff to convert the shopper into a buyer/consumer.

"Don Williams, head of retail at BDO, says that if businesses have underlying operational issues, these will be thrown into sharp relief: “Tough operational conditions magnify issues mercilessly. You are going to be exposed if you have an operational flaw,” he says.

But Mr Hyman points out that retailing is not just about strategic vision. Having the right staff in stores will be a key weapon.

“One of the things that is really going to sort the men from the boys is store managers,” he says. “More and more, this battle is going to be fought on the sales floor, not in the boardroom.

“So having a brilliant strategy that is articulated in a compel- ling way in the boardroom is academic, unless it can actually be executed, which means . . your regional and store management, and staff loyalty, never mind cus- tomer loyalty, will play a much bigger part.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

Mohamed El-Erian

Mr. Mohamed El-Erian, CEO of PIMCO is someone I have listened to closely when it comes to understanding investments in global markets.

"As a group emerging markets have become stabilizers in the system, old days we thought of them a disruptor."

See the video here.

Economics is not Science

Excerpt from a letter in the Financial Times written by P. A. Stahl of American Astronomical Society, here:

"Sir, I appreciate Katy Delay’s effort (Letters, April 21) to portray economics as a science, but let’s be clear it is not. Economics has never been a science, it only adopts some scientific window dressing, a few of the methods (mostly statistics) and some jargon. But no serious empiricist would regard it as “science”.

For example, economics has no true objects of inquiry, say like physics, nor does it offer any consistent, theoretical models that don’t rely on statistical artefacts. Nor does economics make quality predictions based on said models, like atomic physics. If it had such capabilities, it would have foreseen the 2008 meltdown well in advance and warned everyone!

Even the most rudimentary student of statistics understands that regression models (even multiple) don’t show causality. The quants’ correlation factor (“gamma”) in their Gaussian Copula formula, in fact, helped precipitate the 2008 financial meltdown because they had zero insight into what they were really quantifying! Meanwhile, the illustrious economists – in their naive and incomplete statistical “modelling” – are prepared to ignore an entire raft of variables associated with what they call “externalities”. How very convenient!"

21st Century Dilemma Management

A report from the Brookings Institution and the Center on International Co-operation at New York University, "Confronting the Long Crisis of Globalization", download here, discusses that the sort of problems governments will face in the 21st century will be unpredictable versus those faced during old great power rivalries.  Concerns related to demography, climate change and shifts in economic power build up quietly for a long time and finally trigger sudden, disruptive shifts.

The authors suggest institutional level changes and changes in the frame of mind in solving the needs or crisis.  They recommend risk mitigation and resilience to shocks - "Resilient systems are those that can absorb disturbance and reorganize while undergoing change, so as to retain or enhance effective function, structure, identity and feedbacks."

The days of narrow focused, blinders on, problem solving are over as the deeply interconnected world continues to grow to be more so.  This is the century of the "butterfly effects".

Carrefour - Turned Around?

The Financial Times reviews Carrefour's CEO Lars Olofsson's progress over the past fifteen months in returning the retail giant to its revenue growth.  "Mr. Olofsson says he has diagnosed the problem, which is basically the underperformance of non-food sales at the hypermarkets..."  See article here.  

Hypermarkets are an interesting retail environment, where the shopper and consumer merge, or can swap roles.  Similar to eCommerce environments.

A French Entrepreneur in Tennessee

The Financial Times profiles Bruno Durant of Silver Bait LLC - "...the owner of what must be the world's only vertically integrated worm factory."  It is a refreshing look at what the USA continues to represent for the willing and hard working entrepreneur.  See article here.

iPad for superior consumer experience, win for retailer

Good article on Ad Age here, discussing how the brands can now connect directly with their consumers via the iPad. Yet, one comment highlights that smartphones could still be the in-store connection point for the retailer to the consumer for the near future.

Ad Age Disappoints - iPhone OS 4 Multi-tasks

Ad Age writes in Apple Brings Multitasking, Skype Support to iPhone Update here, "The new software answers many developers' and consumers' requests, especially with features like some multitasking support, a unified e-mail inbox, better VoIP calling, and a social-gaming network. It's cool that you'll be able to listen to Pandora radio and make Skype calls while reading e-mail and surfing the Web."

The statement in the article "These are fine features, but nothing revolutionary" shows that Ad Age has to go a ways to comprehend technology.  Multi-tasking implies that emergency messaging can get through, automated email updates, superior use of bandwidth when available, continuous consumer engagement solutions, continuous monitoring solutions in healthcare, etc. etc.

I'm disappointed in Ad Age!

CK Prahalad - RIP

CK Prahalad passed away in San Diego recently.  The top fundamental and foundational business trans-formative concepts he developed that any management executive knows are - analysis of how multinationals operate in "The Multinational Mission" - concept of "core competencies" in "Competing for the Future" - co-creation with customers and consumers in an interconnected world in "The Future of Competition" - challenge to businesses to serve billions of people earning a few dollars a day in "The Fortune at the Bottom of the Pyramid".

CK Prahalad was a Global Charter Member of The Indus Entrepreneurs - the world's largest non-profit organization promoting entrepreneurship through mentoring, networking and education.  I am a Charter Member of TIE and President elect (TIE-Carolinas) as well and find the group to be an exceptional wealth of superb minds.

CK Prahalad will be missed.

Best Buy Going for Mobile Technology HFS!

"Brian Dunn, chief executive, told the Financial Times that the retailer expects eventually to have "a number somewhere between here and 1000" of Best Buy Mobile stores in shopping malls across the US, on top of the 77 it has already opened."

Read a related article at The Street here, see current Best Buy Mobile across the NE USA here.

Such stores will end up being similar to gas stations as the iPad driven convergence of internet communication, wireless telecom, content creation and management escalates.  Hence my reason to call them what they really ought to be - High Frequency Stores.  Something to invest in now?

Neuromarketing - Yay or Nay?

Dr. Michael Polster, SVP at National Analysts Worldwide writes in the Financial Times here regarding neuromarketing, "At the moment, then, marketers - not consumers - are at risk of being seduced by a fledgling idea that is neither fully validated nor fully understood, rather than relying on tested market research techniques that have helped launch and sustain virtually every mega-brand in existence today."

Friend and colleague Franz Dill is engaged at Buyology, folks driving neuromarketing based on Martin Lindstorm's book "Buyology: Truth and Lies About Why We Buy".  See company here.  See Franz's blogs on neuromarketing here.

Energy through Nuclear Power in the GCC

Saudi Arabia is planning to develop a civilian nuclear and renewable energy center, see an article in Arabian Business here.  Interesting to note that Saudi Arabia uses 1.25m barrels of oil each day where the price of a barrel is $5, see Financial Times article "Saudi Arabia announces nuclear centre" here.

On the nuclear technology acquisition front, Saudi Arabia is in talks with France, while Kuwait has already signed a deal with France on developing a nuclear energy project, see here.  And UAE recently signed a $20b nuclear deal with South Korea, see here.

Nuclear remains the cheapest (~6c/kwh), green and most available on-demand alternative energy today... yet the technology improvements are going to bring solar down further from (~20c/kwh) in the next few years.

The fun begins when mass energy stores become available!

Update: Areva, the French owned nuclear group, will be doing fund raising of ~$4b through mostly Middle Eastern and Asian investors. 

Digital Life is Permanent

During a seminar titled Digital Life, I stated to the audience that "Digital Life is Permanent" and gave a few examples.  Now I have one more to add:  Mr. Fabrice Tourre, the 31-year old Goldman Sachs vice president at the center of the SEC's case wrote in an email to his girlfriend that he is a "Survivor... of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implication of those monstruosities [sic]!!!" (quote from ft.com)

The danger is digital life can be duplicated, tampered with...!  How often can one change the passwords.

Jeremy Grantham on Financial Bubbles - Excellent!

Jeremy Grantham states - "Bernake has happily picked up the mantle, and seems totally unconcerned about creating another bubble.  He has got interest rates so low, banks can't possibly not make a fortune, savers are being penalized, anyone who wants to buy cash faces a painful experience... so we are all tempted into speculating, which is apparently what he wants and we have just had one of the great speculative rallies in history second only to 1932-33."  Watch the complete interview here.

US High Tech Areas and Rankings

This is couple of years old but worth having a look at again to see how ll these places have fared in the past two years - see Milken Institute's interactive 2007 rankings here.

Shin-kansen: Japanese High-Speed Trains!

"The oldest and busiest Shinkansen corridor - Central Japan Railway's 550km Tokaido line, which connects Tokyo with the western city of Osaka - carries 400,000 passengers a day and has run since 1964 without a fatal accident. The average delay last year was 36 seconds, with most of that caused by typhoons."

The Financial Times talks about the Japanese Shin-kansen in "Tokyo bites hte bullet on Shinkansen" here becoming available to the world after close to five decades in use.  Great competition for the likes of Chinese and German train manufacturers.

Trend In-Motion: Future of Transportation

Excellent articles in the Financial Times today on high-speed rail. In "China on track to be world's biggest network" here, the newspaper writes about the future being bleak for the Chinese airline industry while China continues to spend on building new and redo existing airports. Yet, the thing the Chinese airline industry has to focus on is the consumer aspects and why they would choose rail over air:

"Flights in China are almost always delayed and passengers must arrive early so that they can pass through rigorous security checks.

Once on the aircraft, the service is perfunctory, the toilets often filthy and the food barely edible.

In contrast, China's shiny new high-speed trains are clean, fast, smooth and almost always on time. There are no excess baggage fees for heavy luggage, security checks are perfunctory and passengers can use their mobile phones."

I believe, if the US ends up being serious about high-speed rail, it will face the same concern as above.

No Secrets Anymore

Behram Mistree talks about his data mining and analytics experiment using Facebook while he was at MIT, transcript from CNN interview on CNN Newsroom below:

See video here. Note that the highlighted information below was removed from the video.

---

VELSHI: Let's talk more about how your personal information can be used to find out things about you, particularly on a social networking site. Let's bring in the co-author from a M.I.T. study, getting his Ph.D at Stanford right now. And Carter Jurnegean (ph) is from Boston. Same study. He is now a software developer.

OK, guys, you -- used your study. Just let me know if this is clear. You went on Facebook, and basically from people's information on there, figured out their sexual orientation. Is that basically it?

BEHRAM MISTREE, M.I.T. STUDY AUTHOR: Yes, sir. Absolutely. In essence, what we were trying to test is the age-old adage, birds of a feather flock together and have it apply it to the digital age. And is our research showed that based on your friends online, we could infer information about you, whether you disclosed that information about yourself or not.

VELSHI: Carter, is that particularly scientific? Because I guess you could sort of figure it out when you look at things like that or figure out where somebody is from, based on where their largest concentration of friends is, or where they went to college, even if they didn't put that on. Were your findings sort of a mystery to you?

CARTER JERNIGAN, M.I.T. STUDY AUTHOR: Well, I mean, I think what was novel about our research is that we've really shown that this birds-of-a-feather phenomenon applies in online communities, even when people don't publicly disclose information. So, if your profile had basically no information and it was very bare bones, just by seeing who you're associated with, we could still learn certain significant information about you.

VELSHI: Let's take it beyond sexual orientation. Where else could you be vulnerable about people learning things you didn't feel like you wanted to have known on Facebook, for instance?

JERNIGAN: That's a great question --

MISTREE: Go ahead.

There's emerging work that's suggesting that similar information could be found based on -- about political affiliations, religious affiliations, income bracket, those kinds of things. So, there's nothing to suggest that this work is just specific to sexual orientation. In reality, for this type of network data, you could have lots of privacy risks associated across a gamut of different traits.

VELSHI: Carter, if I were gay, I may not want to say that on Facebook, but it may not matter to me if that information was out there. If I live in Atlanta, I may not say I'm from Atlanta, it may not matter that it gets there.

Where do you draw the line as to protect information you don't want out there? Should I be on Facebook if I don't want people to know where I live, where I shop, who my friends are or what my sexual orientation is? Is it just too much information to be able to protect yourself?

JERNIGAN: Right. And it's -- become very difficult to keep all of that information private. And so as part of our research, we were very interested in raising awareness in these sort of surprising risks with online privacy. So as I said, again, a lot of people think oh, well, our research doesn't apply, because, you know, I don't have any information on my own profile.

VELSHI: Right.

JERNIGAN: But again, we were really interested in raising awareness, even if you think you have done the best job you can do to keep information private, that may not be the case.

VELSHI: Behram, there's a quote in your study from Scott Abrams, the creator of Dilbert. I just want to share this with you. It says, "Let's say that someday, technology will allow anyone to find out every possible thing about my life. I can compensate by being so uninteresting to that nobody could survive the process of snooping on me without lapsing into a coma."

Is that really going to be the solution?

MISTREE: Perhaps it is. But just so that you know, even if you're very uninteresting to the average person, you're very interesting to different companies. So, there's a real financial incentive for these -- for lots of large companies to have information about for marketing and other types of purposes. So, whether or not you're very uninteresting to the average person, you're very interesting to, say, an advertiser.

VELSHI: Carter, any conclusions here about how we should behave online?

JERNIGAN: I think, really, being aware of the fact that any actions you take online, you know, can have unintended privacy consequences. And so, again, it's this awareness that we think is really important.

VELSHI: But you're not advocating that people don't put information in, you're just saying they should know what it is.

JURNIGAN: I mean, I think it's going to be up to each person's own decision. I think disconnecting yourself entirely from technology is going to have its own consequences, just as well as connecting yourself with technology has consequences. And so, you know, full disclosure and being fully aware is definitely a very good first step.

VELSHI: Great study, guys. We were chopping off little bits of this technology, privacy issue to try and understand it better. Thanks for helping us. Behran Mistree is one of the co-authors of the study and the other Carter Jernigan, joining me from Boston. Thanks, guys.

MISTREE: Thank you.

India's National Institute of Design

I am always inspired by some excellent work at the Young Designers website of National Institute of Design in India, see various examples related to communication, interdisciplinary, industrial, textile and IT here.

Congratulations to the faculty, administration and the students on bringing the institute through to its 50 years this year.  I hope to visit in person one day!

See the NID's website here.