Consumer Behavior Changes due to Technology.

Are there some "behavioral ecosystems" (driven by technology, or otherwise) and "contexts" that are simply "better" for human behavior? Are there "contexts" that "stretch" human behavior?

Executive Summary: A quick three pronged approach- a question to start us thinking about the impact technology has on the world we live in, a thought experiment to help us think through this impact, and then some quick thoughts as a check, and as an inflamatory contrast, to throw our own thinking in sharp relief. From the desk of Three-Pointers-Aren't-Just-All-Basketball.

The Question

A conversation with some bright digital media folks bubbled up this question: how has technology changed consumer behavior?

To each of us, the answer may be obvious, however, it is well worth stepping back and taking a moment to think through this as an exercise. This helps us become more aware of technology's impact on consumer behavior.

A Thought Experiment

Here is a visualization thought experiment, with apologies to the GEICO Caveman- The Neanderthal cave paintings were a "Gossip Girl" of the age.

Some Quick Answers

A wise, experienced response:
Within the framework of behavior in a country, nothing much has really changed. The context? As far back as the 80's and across the pond, folks were leveraging consumer analytics to sell financial products (Hats off, Ritesh).

Another view: Technology impact consumer behavior by 

1. aggregating numerous individual decisions,
2. making consumers aware of these aggregations, and,
3. allowing game theory to have a field day via exchange of, or lack of exchange of, information.

The underlying theme across these points is the development of markets- either intra or inter country- and the development of context for human behavior.

I know, your first reaction here would be- do you really think Facebook, Twitter, and Groupon have not changed how we live? Sure, they have helped "cultures"/ "markets" evolve, by changing their context. However, have these forces of technology changed fundamental human behavior?

The Twist in The Tale

This leads a different line of thought:

1. How is technology changing the context we live in?
2. How does human behavior adapt to changed context?
3. Are there really new contexts that have not existed before?
4. Are there some contexts that are simply "better ecosystems" for human behavior than others?

What do you think?

Aiding Economic Recovery in a Recession- The "I" of the Tiger

Aiding Economic Recovery in a Recession, a.k.a. The "I" of the Tiger, from the desk of Bengal-Tiger-Crackling-With-Ideas.

Executive Summary: There are various ideas and approaches being thrown about to help economic recovery out of this recession. Below is a recently published WSJ article by M. Zuckerman****. He suggests budgetary control, but also spending in "regeneration" programs focused on technology and infrastructure. We look at these through the lens of the GDP. We will expand on this and finally tie this in with Innovation and Animal Spirits.

The Background- Aiding Recovery
There are two broad streams of thought when it comes to aiding recovery. One focuses on cutting all cost and bailout toward balancing a budget, with "let it (a company) fail" as the mantra. The other focuses on providing large doses of temporary stimulus that would be followed by an extended period of belt tightening.

Below is a recently published WSJ article by M. Zuckerman**** that seems to belong to the second stream of thought. He suggests budgetary control, but also spending in "regeneration" programs focused on technology (tied in some way to innovation) and infrastructure.
The Article:
http://online.wsj.com/article/SB10001424052748703837004575013592466508822.html?mod=loomia&loomia_si=t0:a16:g2:r2:c0.133655:b29954458

Proposed Solution: The GDP Lens
Looking at it in terms of the GDP, where GDP = C + I + G + (X - M), the article can be summarized as:
 Big C (Consumption) goes down, G (government investment) goes up to assist in increasing I (private investment), and eventually "I" will limp back to normal, finally leading to a ratcheting down of G. Note that I am not talking about X - M right now.

I will admit that investing in infrastructure and technology via government regeneration sounds great. That's supposed to be the "soft", "behind the scenes" aspect of government spending led recovery in this equation. We can also look as some background on debt and economies below:
http://randomjunkyramblings.blogspot.com/2009/12/debt-and-economies.html


Proposed Solution: South Korean Precedent?
Now, South Korea seems to have pulled off something similar to become an OECD economy. South Korea racheted up debt to support imports of technology and machinery, which led to an increase in exports, and kickstarted private investment. The Chaebols, in this case, were instrumental in this maneuver.

* However, can this maneuver by South Korea be called a precedent?
* Was it, and is it now, easy to pull off?
* Could you call the Chaebols in South Korea a strong government-industry partnership?
* Is a very tight government- private industry partnership feasible in the US?
* Does the tight partnership help in managing and spurring innovation? If yes, is the spurring of innovation, and eventual reovery, quicker or slower than in other approaches?
* Can an increase in G truly substitute, or directly lead to, for an increase in "I"?
* Does an increase in G, at best, keeps the social fabric together, and provide a base on which "I" can rebuild? If yes, is there a minimum and a maximum turnaround time for "I", coming out of economic shock?

Perspectives on how economic recovery would assets itself globally are linked below:
http://randomjunkyramblings.blogspot.com/2010/01/economic-recovery-patterns-and-globally.html
Now, lets focus on the "I" of the Tiger.

The "I" of the Tiger- Funding the Recovery
How do we bring "I" back into business? The government could directly hand money to individuals and businesses, or it could hand it to banks and cajole the banks to make the right lending decisions. As we know, too much liquidity brought us to the real estate bubble. So, lenders/ investors/ government/ banks- whatsinaname? - must exercise "good judgement" in their practices.

* Do we have enough "good judgement" to go around for the massive influx of funds bottlenecked in the financial system/ sitting with the government?
* How do we prevent another bubble?
* On the flip side, how do we ensure that the distribution system works, makes money and hence leads to economic activity?

I am reminded of a conversation at a solar energy panel in 2008, where some folks were of the opinion that funds for solar energy projects were available, but they were tied up with the government (DoE?). The government had a poor track record of investing and ideas floating around including getting investment bankers to the party.

Since we are thinking about the what and the how of aiding economic activity, lets talk about innovation.


Technology and Innovation
Now, I have previously talked about innovation- an example is the link below.
http://randomjunkyramblings.blogspot.com/2010/01/innovations-impact-on-economy.html

However, lets get into some detail.
* Do good, fundable ideas arrive in some sort of random manner, or can we increase them by just waving money (and tweaking some more factors, if you like. E.g. increasing unemployment, etc.)?
* The VC industry is currently undergoing some sort of contraction as well.
* Research states that MITIE's (an arm of the Japanese government) investments in the electronics industry did not have a significant impact on it.


Animal Spirits
This is where "Animal Spirits" comes into play. You could call it the natural ability of a people to take risk, to innovate and/ or to build. Naive optimism, if you like. Some previous thought on Animal Spirits can be found here:
http://randomjunkyramblings.blogspot.com/2009/07/art-of-stimulus-and-economics.html

Are people taking risks to build something they believe in? I recently stumbled across a little cocoa shop in the city- the team had taken up an empty store for their venture while the real estate company looked to fill the space. Very enterprising, and they had a good product too! I really hope that company does well. More about it here:
http://randomjunkyramblings.blogspot.com/2010/01/entrepreneurs-corner-organicoa-and.html


Conclusion
The cocoa shop example tells me that the US is still a great place to turn good ideas into great engines for growth. I am keeping my fingers crossed for all the good, bright folks out there who have found/ are about to find a great idea.


What do you think?


Some more thoughts on aiding economic recovery can be found here:

http://randomjunkyramblings.blogspot.com/2009/07/economic-crisis-and-art-of-stimulus-to.html


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*****Note: The article was posted on a macroeconomics forum by Prof. Rosensweig to kick of a debate on approaches to recovery. The ideas here were posted in a condensed form at the form on January 24, 2010.

Consumer Electronics Show ( CES 2010 ): The CE Ecosystem and Opportunity I

Executive Summary: A perspective of the ecosystem behind CES 2010, to help you manage the complexity of change it would deliver at your doorstep, and to help YOU find opportunity- for new products, or for expanding the reach of existing products- in this ecosystem.

Introduction: The Who.

Who would be you, a.k.a. the target audience, here?  You are interested in CES 2010 for various reasons. Here a spectrum:
1. The Consumer- "Should I buy that 37 inch 120Mhz 1080p LCD TV in Spring?"
2. The Product Guru- "So what's out there that I should watch out for?"
3. The Marketing Guru- "Mobile ads for my ad dollars?"
4. The Finance Guru- "Productivity for the company dollars?"
5. The IT Guru-"I have cloud on my mind... um... what could this lead to?"

Granted, this is a little bit of overkill for The Consumer, but don't discount the Gadget Gurus among us.

Introduction: The What and The How.

The Consumer Electronics Show / CES 2010 promises to be as exciting as ever.With over 2800 exhibitors and about 20,000 new products, it can be a dizzying experience. You may have a priority list structured by companies, products, target consumers, sectors, etc., to manage the scale, but the complexity can be mind boggling.

Why are we interested in it? In terms of innovation and externalities, the aggregate impact of CES could well be similar to NASA's moon landing effort in the 1960s. (Note to self- research the innovation parallels :-)) Consumer, consumer oriented businesses, and even intra-business and B2B structures may be impacted.

Framework Overview: The How.

Below is an ecosystem view of the players at CES. Industry veterans with broad experience across the consumer and technology space may find this familiar and similar to approaches they have developed over time- for the rest of us, its and interesting tool to snapshot this evolving industry.

The Strata
The picture can be broken down into the following strata:
1. Consumer
2. Applications + Content
3. Platforms
4. Core Infrastructure

So What?
For the snapshot, or even as a first pass, each strata can be structured as a linear ecosystem with its supply chain. The fun begins when you map it out and start seeing the interconnectedness, even a cliched convergence, across the board.
The next "order" of approach would be to note the elements outside the ecosystem. However, that's for later.

Content for an Electric Toothbrush?
Yes. In this case, content is all the MindShareWorks (TM) that goes into getting a consumer to buy and sustain usage of the mighty electric toothbrush.

As Easy As 1-2-3-...?
Yes... and No. You still have to do the hard work to optimize this tool for your objectives. If you are, say, an investment analyst, you still have to put in the hard work to learn and leverage this approach in the sector.

The Strata Attributes
We could use standard market mapping tools like
1. Competitiveness,
2. Number of Market Participants, etc.

The Devil's Advocate
Hello! This reminds me of the Five Forces Framework: Well, hang in there- there is value in getting specific and structuring it this way. The So What? should have sold you on this already.

Stay Tuned! More to come in the mapping.

What do you think... so far?

Web Analytics: Social Network Analysis Tools for Ad Targeting.

Executive Summary: Are you looking at social network based ad serving analytics tools? How do they stack up on the measures below?:
1. Are they mature enough to provide "error" analysis (say Type I/ Type II) on the targeting?
2. Can you compare the "error" from social network based analytics tools against the error using non social network based analytics tools?
3. Can you utilize the social network based targeting tools in conjunction with non social network based predictive analysis tools to minimize errors or optimize marketing spend?

Why is there no focus on cost above? Apply cost factor weights to the results from the questions above and you have your ROI!

How To Develop Criteria For Evaluating Social Network Analysis Tools
From the Blueprint-for-winning-Social-Network-Analytics-Orders Dept., the How-Do-I-Start-a-Competitive-Analysis-of-the-Marketplace desk.

What About Social Network/ Graph Analysis for Marketing?
I have tinkered with various "traditional" analytical tools, like applying predictive modeling for web analytics, to looking at web server log files to analyze "eyeball" trends during the early days of the Internet boom, so, a recent post below reignited my interest in social network analysis for serving targeted ads:
http://www.marketersstudio.com/2009/08/the-social-graph-ad-targeting-buyers-guide.html

The post referred to a Knowledge@Wharton article on Network Based Marketing:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1637

This article had some interesting insights:
Insight 1: Social Networks Help Us Find Like Minded Buyers
Another possibility is that because people often tend to talk to people like themselves, their buying tastes would be similar regardless of whether they ever discuss the product. "Social theory tells us that people who communicate with each other are more likely to be similar to each other, a concept called homophily," the researchers point out. "...Linked consumers probably are like-minded, and like-minded consumers tend to buy the same products."

Insight 2: Social Networks Help Target Buyers More Effectively
"In addition, analyzing the network allows the firm to acquire new customers who otherwise would have fallen through the cracks, because they would not have been identified based on traditional attributes."

The Power of Non Social Network Analysis Tools
I can attest to the fact that with non network based- a.k.a. traditional analytics- tools provide you incredible ways of reaching out to your target audience. If you have the data- various demographic, psychographic or geographic attributes- some of these tools can help you:
1. Target your audience effectively,
2. Give you a sense of the targeting errors (Type I/ Type II) with the model,
3. Help you rank order your targeting efforts by efficacy, and hence optimize your marketing dollar.

Comparing Social Network Based Marketing Tools vs. Existing, Non Social Network Tools
The first thought at comes to mind is whether social networking based ad targeting tools have matured to provide these features. Specifically:
1. Are they mature enough to provide "error" analysis (say Type I/ Type II) on the targeting?
2. Can you compare their "error" against the error using non social network based analytics tools?
3. Can you utilize the social network based targeting tools in conjunction with non social network based predictive analysis tools to minimize errors or optimize marketing spend?

Don't Forget Data: The Root of All Analytics
While it is easy to get lost in the tools and their trade-offs, don't forget the data. Your data- what attributes are available, access, usability and quality- may dictate the choice of tools.

In the Future Shock section of my previous post below:
http://randomjunkyramblings.blogspot.com/2009/08/sustaining-brand-conversation-behavior.html
The ability to develop customized brand metrics "will hinge on the data collection capabilities of social media platforms, and their ability to share it in a cheap, safe, anonymized manner with third parties for further analysis. Additional factors that come into play- quality of data, privacy concerns and analytics capabilities."

Data privacy currently remains an important factor- more in a later post.

Aren't You Forgetting Computing Power?
I am discounting computing power as a factor. I will not tell you why. :-)

Conclusions For Social Network Based Ad Targeting
Non social network based marketing tools are pretty powerful. The questions above give you some insight into decisions related with integrating your existing analytics capabilities with social network based analytics. For the service providers, this is your blueprint for winning orders.

What do you think?

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Private Equity Case: Dialogic Carve Out from Intel

Given my own experience with a Citigroup company that underwent a carve-out and an acquisition, I was looking forward to insights from this panel of heavyweights.

The Investment Rationale, Diligence and Terms
The comprehensive discussion started off by covering the rationale for a carve-out. One could be the impact of the technology inflexion curve, which forces revenue contraction. The challenges lie in the due diligence- the new entity requires an operating infrastructure to be built around the business- and venture capital like agreements on the term sheet conditions around downside protection- like redemption rights. Factors like restructuring management also need to be considered as they impact investment risk. In the Intel- Dialogic deal, intellectual property discussions were also critical.

Exit Strategy
Given this context, the exit strategy pitch to the investment committee is also critical. The right expectations need to be set, from whom to sell to- IPO vs. general sale- to sale value. This is especially important when the investor would like flexibility on freeing up cash if necessary.

This raises interesting investing questions:
1> Investment Failure Rates
There are various ways to slice and dice the investment portfolio: have firms considered “failure” rates of different types of deals, e.g. a carve out vs. a public company acquisition, as a factor in their decision making?

2> Portfolio Synergies
Do investment committees consider synergies across their investment portfolio as a factor in deal making? If so, what kind of policy should govern such a process? Note: Dealmakers sometime tend to think of synergy as finding efficiencies by acquiring competitors and consolidating market share. There is more to synergies- it pays to think like an investment professional here.


What do you think?


The Usual Disclaimer: This is purely a knowledge sharing resource and I have been careful to protect panelist/ speaker interests. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Music Industry, Technology, IP and Piracy: Is there anything in common? Really?

Multiplicity of Approaches.

News articles on the music industry below, indicate a mutiplicity of approaches (could it be serendipity?) being followed by firms to deal with flagging "old media" revenues:
1> http://www.nytimes.com/2008/04/04/technology/04myspace.html?_r=1&ei=5087&em=&en=7e63eb66cebb344e&ex=1207454400&pagewanted=print&oref=slogin
2> http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/06/cncarphone106.xml&CMP=ILC-mostviewedbox
3> http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/06/ccemi106.xml

The article, and my own experience in Technology Intellectual Property (IP), got me thinking again about the music industry's woes.

My contention is that any firm considering developing IP in emerging markets must think of the markets as hypercompetitive, where they compete with their own shadows. This might dovetail with the experience of some Venture Capital firms in Asia and Africa.

Allocate resources toward making money.

As some one who has created IP, in technology, in an emerging market, my generic stand (and I know this is likely to spark controversy) in that context is that protecting IP is subservient to growth- marketshare, ramping up revenues quickly, etc. Marketing muscle- either the company's own distribution strength, or the company's ability to create a network of stakeholders in its success- is critical towards finding a defensible niche where the company can build customer relationships/ stick. Allocate resources toward making money, instead of fighting a losing battle.

So What? How does this apply?

While the developed economy context is not the same, the first two articles seem to be a sign of parts of the value chain seeking to control the supply chain.
The third article seems to indicate a deepening of a pragmatic approach in the industry. An approach that focuses on developing models for making money off an economic reality, as opposed to fighting an (apparently) losing battle. For project management, I tend to advocate a multiplicity of approaches toward a more robust critical path. However, there are times when a multiplicity of approaches only serves to muddy waters.

Over the past few years, I have faced some flak for flatly advocating the pragmatic approach. What do you think?

Investments in alternative energy technologies and models of innovation.

A perspective that seeks to put news on investments in solar energy in context of an array of alternative energy technologies. This perspective has underlying simplistic assumptions to keep this post brief and to provoke discussion- you are welcome to challenge specific points, ideas and flow of thought.

How do we cut through the hype in the varied landscape of alternative energy technologies? From time to time, there is a lot of excitement about a particular technology connected with alternative energy sources.

A recent article on a particular technology for Solar Power:
http://www.nytimes.com/2007/12/18/technology/18solar.html?ex=1355634000&en=091b06819623f9d0&ei=5088&partner=rssnyt&emc=rss

Here’s Vinod Khosla’s talk on the topic:
http://www.technologyreview.com/player/08/01/MagBiofuels/3.aspx

Observations on all similar articles on Nanosolar:

1. The good news: Germany has placed huge bets on coal energy. Its dependence on coal fire plants is similar to that of the US. A serious investment like that in Germany could correlate to investments in the US.

2. The articles miss a point that folks live and die by in technology- TCO. $1 per watt sounds like zero TCO- $1 seems to fail to account for the entire value chain or the "Total Cost of Ownership". Energy storage is a critical component of the value chain too. For now, lets assume distribution is zero. This is further based the assumption that Solar energy is not the only energy source we are going to rely on; i.e. "regular" power is still paying for the distribution infrastructure. The good news? Khosla’s talk covers this point of view. So someone has that figured out to a degree.

3. Of course, just as investments in solar power are improving cost and efficiency, investments in (recent bad boy) ethanol and coal technologies are improving the cost and efficiency of those sources of energy. Non polluting coal power plants have 35% efficiency on coal. Solar energy based approaches of the type mentioned in the article hope to get there by 2011. Anyone betting on breakthroughs (safety, TCO, etc.) in nuclear power?

While multiple approaches to the energy crisis are the only way forward, it is really going to boil down to models of innovation. Or is it?

While simplistically comparing the various bets being laid on energy technologies, the fundamental question that pops up is: Would monolithic firms making delta changes to existing energy cash cows do a better job than a set of entrepreneurs hacking away at the problem in their own manner? Rephrasing, does the cathedral work better than the bazaar on this problem?

1. Nuclear energy has peculiar regulatory issues. It requires massive upfront capital investments to make a dent into the existing theoretical and engineering frameworks. With a rarified, closed community engaged in this industry and its ancillaries, the prospects of a mad scientist and an entrepreneur coming together to pursue an idea are dim.

2. Solar energy approaches, at the other extreme, are oscillating closer to their tipping points. Tipping points here would be breakthroughs that encorage early adoption and reduce cash flow uncertainty.

The one insight that stands out from the points above:
1. Both models are funneling resources toward an ever narrowing focus of problem solving.
2. Neither of the two cases are pursuing a large set of hugely diverse approaches being pursued at the same time.
3. Large, disruptive innovation might impact both models.

However, this is where I would lay my bets on solar power and biofuels. Eventually, increased attention:
1. Helps accelerate a technology's thrust towards its tipping point and,
2. Increases the odds of maverick, disruptive innovation arising out of risk-taking.
I see little chance of nuclear power breakthroughs anytime soon.

Between solar power and biofuels, solar power has the edge in terms of being closer to its tipping point. We have to thank an inconvenient truth for that- CA (one of the US innovation diamonds) is likely to become a dust bowl.