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29 January 2011
At first, it seemed that the machine had tilted, its levers, bells and flippers having hit some kind of glitch, causing us to lose the ball and the bonus points.
 As the curtain rises on the second decade of the twenty-first century, we will see that the machine is actually fine, but it’s become a different game. Quite entirely. To put it mildly, “the economy” is proving to be quite a drama, its pungence largely dependent on where your company or career is wired into it. Although it is quite frowned upon in the U.S. to admit despair, some pundits have even flirted with the moniker, “The Great Recession” to describe the crisis, a faint nod to the Great Depression of the 1930s, but this comparison is off-base. As I have argued for some time, the 2007-2010 “financial crisis” has played a mere overture to the real story, a transformation of the global “economic architecture.” I first heard this deft phrase from His Excellency Shri Kamal Nath, India’s very diplomatic Minister of Commerce in 2008 (coverage here).
2 January 2010
Relationships on Demand Are Changing Economics—The Emergence of the Web as Creative Destroyer of the Industrial Economy
 We need to upgrade the turntable again! When I emerged from undergrad in the eighties, the economy was rotating at 16rpm, which we doubled in the nineties with Web 1.0 to 33rpm. The 2000s had us grooving at 78rpm. Even though one part of me says that this metaphor is poorly chosen because it’s retro, it also reflects another key trend: atomization and mashing up.
The Web is a communications revolution that speeds the consumption of novelty and its economic value, so it is destroying the Industrial Economy’s main value mechanism: value via efficiency and long product life cycles. During the 21st century’s first decade, the overriding trend is that society and markets in which executives have interest saw extensive disruption and change. That meant volatility. As I’ll discuss, this volatility will continue to accelerate because the transaction costs of communication are plummeting, which drives rapid iteration and change in all areas of human society. At the risk of sounding subjective, I believe this will probably be regarded as one of the most disruptive eras in history.
Continue reading Decade in Review 2000-2009/The Rise of Web 2.0, the New Pervasive Human Space
8 April 2008
Process Excellence Can Inject New Vitality into Ailing Manufacturers
 Picture this: you are the CEO of a venerable manufacturer that has been besieged by price pressure, increased imports and high capital costs. Revenue has been barely edging up, and profits have been negative three of the last five years. You have had to lay off a significant portion of manufacturing personnel, many of whom had been with you more than a generation.Your ship is still taking on water despite best efforts, and you do not know where to turn.
This was precisely the situation of several U.S. firms that took the unusual route of selling themselves to Indian firms that turned the companies around very quickly by applying sophisticated process and management expertise. In many cases, local employment increased because the companies became much more competitive. Here are two examples:
Continue reading Noodle VI: New from the Unorthodox Exit Strategy Department—Acquisition by an Asian Firm
22 February 2008
New Global Economic Architecture Presages Economic Realignment—Thinking Beyond the Obvious to Tap Emerging Opportunities
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 Illinois leaders were addressed by His Excellency Shri Kamal Nath, Minister of Commerce and Industry, Republic of India. True to form, His Excellency struck chords of transformation, partnership, common interests and harmony at the lunch held in his honor at the University Club on 19 February 2008. Attending were Chicago Mayor Richard M. Daley, Mr. Rajinder Bedi, Managing Director of the Illinois Office of Trade and Investment, The Honorable Susan Schwab, U.S. Trade Representative, Craig S. Donohue, Chief Executive Officer, CME Group and John Estey, President & Chief Executive Officer, SC Electric Company.
Reading between the lines, the U.S. and India stand at a significant turning point: India’s impressive economic growth is a significant element of the ongoing redistribution of global economic power—which holds excellent opportunities for U.S. businesses and workers that are looking for it.
Continue reading India Trade Minister Draws Chicago-India Transformation Parallels at Executives’ Club
3 January 2008
Editor’s Choice of the Global Human Capital Journal
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 As I reflect on 2007 and create strategy for 2008, several macro-trends come into sharp relief, and I believe that some of them might be helpful to you as you conduct your own planning. As always, I focus on emerging phenomena because they are areas in which disruption and discontinuous change are acting on markets, thereby elevating threats and opportunities. Helping leaders to create strategy to manage the risk of unusual market developments is the focus of my consulting practice.
In 2007 it became clear to me that we were entering a profound social transformation that would produce an unimaginable degree of change. Unlike the technology-precipitated change that I’ve been helping people with since the 1990s, technology is shifting to the background now, and pervasive social change is taking the stage. Look for disruption in all areas affected by how people connect, communicate, purchase and collaborate: business, politics, community and leisure. Moreover, these changes are completely global with all the variations that engenders.
I can’t tell you how many acts this opera has, but 2007′s themes can provide you enough clarity, at a minimum, to notice that the water is getting warmer. I have also included among the links some prescriptive market advisories I wrote this year. They give explicit advice and action steps to maneuver your organization so that you can become stronger as these changes unfold.
 Thank you for your readership and support, and best regards as the curtain rises on the first act!
31 December 2007
“Emerging” Market Companies Rapidly Becoming Global Players—New Owners for Jaguar and Land Rover
 Emerging countries have long been regarded by globalizers as targets for exploitation, but 21st century market forces are turning legacy thinking on its head, which produces disruption and its sibling, opportunity.
The conventional thinking goes that emerging countries like Brazil, Russia, India and China (BRIC) have talented knowledge/human capital resources that can be tapped in outsourcing and offshoring arrangements. Moreover, these workers’ employment in high value knowledge jobs creates a new consumer class among large populations. Emerging countries’ rapidly growing consumer markets stand in sharp contrast to developed countries’, which are flat or shrinking. China and India have been relaxing restrictions on foreign ownership, which has increased FDI, especially in China, enabling foreign companies to invest in and buy BRIC companies.
However, the big story in 2007 was the opposite:
Continue reading Globalization’s 21st Century Makeover
2 November 2007
Geeky Session Explains How a Potent Mix of “People Like Me” Navigation and Digital Leverage Can Drive Sales and Profits
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The Secret to Emerging Markets?
 The Global Human Capital Journal’s coverage of the Forrester Consumer Forum 2007 continues with this session on social tagging. Before your eyes glaze over, bear with me and learn how this simple, revolutionary social technology can help your customers to help your business. Forrester’s Sarah Rotman Epps moderated a discussion with Brian Rosenblat, Online Retail Industry Lead, Endeca Technologies and Jay Shaffer, Vice President Marketing, PowerReviews, who represented companies that offer social tagging solutions, and they all shared numerous examples.
This was one of the most “actionable opportunity” sessions of the conference: tagging is a relatively unknown, simple, yet transformational Web 2.0 phenomenon that will gain traction in 2008 and explode in 2009. If you aren’t doing it, you will be at a significant disadvantage to your competitors who do.
The Global Human Capital Journal published the overall conference wrap as well as in-depth coverage of several sessions. Access all through the link to the conference logo (right).
Social Tagging: What It Is and How It Works
- Tags are digital “post-its” that users put on all elements of content: articles, pictures, videos. These post-its are searchable by the person who “tagged” the content as well as by everyone else (unless the tagger makes it private).
- Many people compare tags to bookmarks, but this underrates tags in two ways: 1) one page has one bookmark, while you can put as many tags as you want on a page, or on part of a page; 2) browser bookmarks live in folders, but tags are far more accessible because they live in clouds, and tagging systems have superior search and browse capabilities.
- Users tag things to make them easier to find (again think of post-its or highlighting in a book or magazine). When you install a tagging solution, users can tag pages, pictures, videos, podcasts with a combination of existing tags and their own tags. Creating or using a tag is a one-click process, so it’s easy. People do it.
- Search engines use software algorithms, but they are limited in “seeing the forest for the trees.” They have no sense. There were some humorous examples of search result gaffes, like Marriott’s number one suggestion to a North American user for a “romantic hotel” was in—Yerevan, Armenia. With tagging, real people have viewed the content, reacted to it and categorized it for other people. Notably, customers do this on their own time, at
no minimal marginal cost to the Website.
- 22 million of online consumers self-identify as taggers, but they fit the model of typical technology early adopters (technology enthusiasts, entertainment-oriented, male). This probably indicates that tagging will probably become much more mainstream in the coming years.
- Some major sites that use social tagging are: ACE Hardware, Amazon.com, Brookstone, RadioShack, Sheraton, Staples, Toys “R” Us, Walgreens and Yahoo! Travel.
How Social Tagging Relates to Selling Online
Social tagging is of high interest to e-commerce sites because it can help to increase average sale by better matching the right product with the right customer and increase profitability by decreasing returns. Tagging is currently used for two main purposes: 1) to support alternative categorization and navigation and 2) to organize and monetize user-generated content. Tagging is especially powerful when it is seamlessly combined with customer reviews. Brian’s and Jay’s companies often work together to provide such an offering.
 Social tagging is especially useful when selling a vast array of products, when choice is overwhelming for customers (think amazon.com or an office supply site). - Yahoo! Trips recently added tagging as a way to make its one million user-created Trip Plans more organized and accessible. It recommends destinations based on Trip Plan tags, combined with user profiles and behavior. Prior to user tagging, the trips were not very accessible and added little value to the site.
- Tags supplement Website navigation. They can lead people to find exactly what they want more quickly, and this increases the average sale because customers can search “in their own language” (because tags are customers’ language).
- Tags let users find products in new ways: user-generated tags are searchable: for example, “chick lit” is a tag that has been used for many products on amazon.com. People can tag in their own language, and the combinations of tags are powerful digital breadcrumbs.
- Users will often share what they use products or services for, and what they like/don’t. Companies can use tags for real-time customer surveys (i.e. “I use this product for a, b, c or d” where these are tags). Companies can use this information to significantly impact sales by tweaking descriptions. The Web, unlike other marketing, enables companies to experiment quickly.
- Companies use social tagging to increase customer insight and set customer expectations (through customer reviews) to decrease returns. Because customers have a better idea of a product’s strengths/weaknesses, they are less likely to buy and return and they are more willing to buy because they feel more confident.
- Additionally, solutions like Endeca analyze tags on the fly and offer alterative navigation that appears as a type of sub-navigation. This is revolutionary because it enables emergent navigation that it partially guided by other customers’ tags. Moreover, it is all digital and very inexpensive for the company.
- Here are some examples: Buzzillions.com,
Analysis and Conclusions
- Tagging is an elegant, powerful way to let customers guide other customers—asynchronously. Customers offer free advice to their customers.
- In many categories, user-generated content (UGC) is increasing significantly. As the Yahoo! Travel example showed, UGC can be difficult for companies to work with because they didn’t create it and may not understand it. Other customers are often very willing to organize it and categorize it for companies.
- Tagging is a technique to standardize communication: tags are interchangeable, reusable building blocks that people combine to express their opinions. Since they are digital, software can analyze and infer conclusions via sophisticated algorithms.
- Although tags are standardized, they are infinitely extensible: people create their own tags on the fly.
- In many cases, customers are far better qualified than company employees to help other customers—because they are necessarily customer-focused. A customer who tags a cell phone will use tags to describe the phone in a much more realistic way than a product manager will.
- Tagging is inherently social, and it undoubtedly increases website stickiness. It is a simple way to let customers give something of themselves, thereby investing in a site and developing a stronger bond with it. When combined with reviews, shopping becomes much more social. Customers’ voices make Websites more human and enjoyable and effective.
- If this weren’t enough, think about the killer app: social tagging is the way to enter emerging markets. Product introduction teams conduct expensive studies but cultural differences and gaffes increase risks tremendously. Tagging enables your customers to help each other. Moreover, in emerging markets, new middle classes are primarily knowledge workers and are online and excited about the online world by default.
- To learn more, get into the act by tagging this article in del.icio.us; here are my del.icio.us tags for Social Tagging; or email me. Also notice that blogs, wikis and all social Websites have tagging functionality built in. In Global Human Capital Journal, for example, each article is tagged, and you can search articles by clicking on tags; moreover, you can subscribe to tags via RSS, but that’s another geeky discussion. If you want to learn more about how that works, see the GHCJ’s Tools page.
28 October 2007
Examining the Environmental Fallout of the Chinese Economic Supernova—Sibling Rivalry Rears Its Ugly Head
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 In 2007, nary an RSS feed or the page of a newspaper (for those still inclined ,^) does not mention China’s exploding impact on the global stage: China is truly an economic supernova, and it is breaking almost any record for development that is laid before it. However, China’s breakneck development is accompanied by grave environmental fallout: for example, as the host of the Beijing 2008 Olympic Games, the city is designing extreme measures to ensure that the air is clean enough for the athletes to breathe. The chief culprit is coal, a key source for China’s insatiable need for electric power, and a resource that the country has in abundance. For key facts on China, I suggest The Economist’s Country Briefing or Global Human Capital’s China category (in depth) or China tag (mentions).
The Economist and WBEZ 91.5 FM presented an Oxford-style debate on the effect that China’s rise would have on the environment at Millennium Park’s Harris Theater on 24 October 2007. National Public Radio’s Worldview host, Jerome McDonnell, moderated the session in which two debate teams argued their cases in front of the audience, which then voted on the debate winner. As a baseline, McDonnell polled the several hundred member audience prior to the debate, and we were evenly split and “too close to call.”
25 October 2007
U.S. at Turning Point with Global Economy in the Balance—A Lack of Courage?
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 James W. Owens, Chairman & Chief Executive Officer of Caterpillar Inc., beseeched U.S. business and government leaders to find the courage to save free trade. The speaker at the Executives’ Club of Chicago’s Global Leaders Series, Owens addressed a packed house at the Hilton Chicago on 16 October 2007. His speech was immediately followed by the Club’s Technology Conference at which CIOs advised their peers on the emerging role of the CIO in the “networked economy 2.0.”
A Ph.D. economist with extensive global management experience, Owens made a very convincing argument that the U.S. and the global economy are at a turning point. It is time for the U.S. to lead by example to assure the continuance of the free trade juggernaut that has produced so much wealth in the world. If it fails, the world stands before the prospect of sharply curtailed trade.
Following a summary of his remarks, I will offer conclusions and analysis of related market developments. Although he limited his remarks to business leadership, I will also argue that the U.S.’s lack of resolve and leadership is multidimensional, notably with respect to the environment. Moreover, economic and social forces are going to confront the definition of the sovereignty of the nation state due to the collective destiny of all nations due to trade and the environment. In other words, Owens’ remarks may be far more applicable than he suggested.
23 January 2007
2007 Pockets of Opportunity Revealed—Plus Political Handicapping
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 The Executives’ Club of Chicago assembled an all-star panel to give Midwest business leaders their guidance for various aspects of the U.S. economy in 2007. Diane Swonk, Chief Economist of Mesirow Financial, Alan Murray, Assistant Managing Editor of The Wall Street Journal and Robert “Bob” Froehlich, Chairman of the Investment Strategy Committee, Deutsche Asset Management broke out their respective crystal balls for 2007, and the audience was not disappointed for lack of insight or wit. The session was scintillatingly moderated by Terry Savage, Financial Columnist of the Chicago Sun-Times.
The consensus was that the U.S. economy would have a relatively benign year in 2007. All panelists predicted a higher Dow, and their predictions concurred with Wall Street’s most accurate ,^) indicator, the Super Bowl Predictor. Little of import will happen on the political front, the U.S. economy will grow at a slower pace, and investment returns will be generally highest outside the U.S. Elsewhere, consumer empowerment reared its head in the executive pay issue, Apple will remain an enigma for investors who don’t understand customer experience, and the U.S. will have to get over itself in order to realize its potential in the Knowledge Economy.
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Social Business Resources
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As the curtain rises on the second decade of the twenty-first century, we will see that the machine is actually fine, but it’s become a different game. Quite entirely. To put it mildly, “the economy” is proving to be quite a drama, its pungence largely dependent on where your company or career is wired into it. Although it is quite frowned upon in the U.S. to admit despair, some pundits have even flirted with the moniker, “The Great Recession” to describe the crisis, a faint nod to the Great Depression of the 1930s, but this comparison is off-base. As I have argued for some time, the 2007-2010 “financial crisis” has played a mere overture to the real story, a transformation of the global “economic architecture.” I first heard this deft phrase from His Excellency Shri Kamal Nath, India’s very diplomatic Minister of Commerce in 2008 (coverage here).
