It’s fun to talk about the death of advertising (or anything perceived to be old, unchanging and stodgy), and everybody seems to be doing it. It’s true that advertising faces serious challenges. And yet, advertising’s not going away any time soon, if at all, though it is going through pretty interesting changes. Some of these are driven by technology, and others driven by the changed habits of consumers… which may also be driven by technology. But isn’t everything right now? It would seem that creative destruction has been unleashed on a broad range of industries for a dizzying diverse number of reasons. A common and consistent reason for this, though, is forgetting who your customer is and what they want. This would be despite the array of incredible tools now at our disposal to make this an incredibly easy thing to do, to stay connected to our customers. This is doubly true for advertising, and the cartoon above from Hugh McLeod (a favorite of mine), sums this up rather nicely. Add to this the very interesting presentation below from Futurelab:

From the slides above, a prescient quote from Jim Stengal, Global Marketing Officer at P&G, from last year:

“Today’s marketing model is broken. We’re applying antiquated thinking and work systems to a new world of possibilities.”

Actually, Tim Brunelle, CEO of Hello Viking, just wrote a nice article for AdWeek, Conversation is The New Advertising, that gets to the heart of this. In it, Tim says:

“There will, of course, continue to be times and places where iconic, one-way messaging make sense — like bringing out the fine china for a special meal. But these instances (e.g., the Super Bowl), are increasingly rare and increasingly expensive. The real challenge facing one-way, brand-centric, non-conversational advertising is its focus on making the perfect presentation. The perfection model benefitted from very limited media outlets. Advertisers essentially spent money to guarantee craft, which theoretically helped a message stand out amidst the clutter. That formula had limits. Until now, marketing tools have existed in just two dimensions — words and images — sometimes in motion, sometimes with audio, always focused in a singular direction at the consumer.

Then someone invented the Internet. And Search. Quite suddenly, brands were no longer solely in power. The audience is in control. Media fragments. Most important, words and images are joined by a third dimension — technology — and now the marketplace flows in two directions instead of one.”

I happen to know of more than a few marketing/advertising firms that understand the terrain on which they navigate. As a result they happen to be doing quite well.

That headline is a quote from a 14 year old girl asked her perspective on television from this really interesting video clip of interviews with a group of 14 year old girls. They provide us a brutally direct take on the future of television, and it’s not pretty. They are absolutely right, though, as broadcast television is going through incredible challenges, and what comes out the other end of navigating these challenges will be something completely different, and perhaps a business model that these 14 year old girls can get behind. Personally, I’m with them.

Found this clip at Fred Wilson’s blog A VC.

The Ten Laws of Constructive Capitalism

1. Strategy is a commodity
2. Competition is obsolete
3. There is nothing more asymmetrical than an ideal
4. Tomorrow is today
5. Connections not transactions
6. People, not product
7. Creativity, not productivity
8. Outcomes not incomes
9. Advantage is in the DNA
10. The next revolution is institutional

He goes into detail on what is behind each of these, but I believe they are incredibly self-explanatory. Either way, you should definitely free up an hour to hear what Haque has to say on this, his presentation is excellent:

Umair Haque @ Daytona Sessions vol. 2 – Constructive Capitalism from Daytona Sessions on Vimeo.

Ahhhh… Optimism! The Future is Shiny.

Siting a recent McKinsey Quarterly survey, John Baldoni at HarvardBusiness.org optimistically offers that we may be close to the “bottom” of this economic crisis, and that we should prepare for the upturn. The operative word there is “may”. Actually, he qualifies this by saying whether or not we are approaching bottom, now is the best time to begin planning for an eventual upturn:

“Living through a downturn is not a process of grinning and bearing it; it is a matter of working the objectives toward your goals as well as planning for the good times that will occur someday. And if your organization does succumb, you will have learned valuable lessons that can be applied to future leadership roles.”

John Baldoni

Bottom? There’s No Bottom.

Then there’s the harsh reality offered by George Soros, that in the best case is merely the opposite end of optimism. Soros proclaims that the global economic crisis we are immersed in likely has no “bottom”, and therefore no signpost for signaling a return to happy times, and that this crisis is actually more severe than that experienced during the Great Depression, and analogous to the demise of the Soviet Union. He also offers this cheer:

“We witnessed the collapse of the financial system. It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”

George Soros

Collapse 2.0

Soros went there, drawing a connection between our situation and the demise of the Soviet Union. In a massively interesting presentation from way back in 2006, “Closing The Collapse Gap”, Dmitry Orlov tries to make the case that this is so, and recommends that we look to the unwinding of the Soviet Union for insights into the imminent collapse of the United States. Orlov’s perspective on this analogy:

“I anticipate that some people will react rather badly to having their country compared to the USSR. I would like to assure you that the Soviet people would have reacted similarly, had the United States collapsed first. Feelings aside, here are two 20th century superpowers, who wanted more or less the same things – things like technological progress, economic growth, full employment, and world domination – but they disagreed about the methods. And they obtained similar results – each had a good run, intimidated the whole planet, and kept the other scared. Each eventually went bankrupt.”

And this dark insight:

“Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.”

Dmitry Orlov

Nothing like predictions of nervous breakdowns, rampant alcoholism, and mass suicide to instill confidence in us as we face these challenges. Given the range and diversity in opinions regarding the financial crisis I think it would be a safe bet to assume that everyone is both right, and wrong, and that nobody has a clear idea on how exactly to fix this mess. My advice?  Get busy and plan for both the bad and the good.

Thanks to @andrewkorf for pointing me to the Soros and Orlov articles.

Over the past couple weeks I’ve been pointed several times to check out the perspective of Umair Haque, pictured above, on his blog at Harvard Business Publishing (a big thanks to doctype.cx). Umair is Director of the Havas Media Lab, as well as founder of Bubblegeneration Strategy Lab, both worth checking out. He’s written several articles that are required reading, but it was his piece, The Smart Growth Manifesto, that was a kick in the head for me. This is because it wraps together so many of the changes we are seeing in our society, culture, economy, and business in ways that relate these changes to each other, and their relevance to our own business and the economy at large. Umair makes the point that the situation we confront today demands a rebooting of capitalism, and a departure from the now irrelevant capitalist growth principles of the post-WWII economy. He calls the post-WWII economy “capitalsim 1.0″, and you know where that’s gotten us.  So, we face a rebooting of capitalism, and this reboot is itself being driven by the reality that interaction, and subsequently community formation, has exploded in exponential ways and fundamentally changed the way we form institutions, and in the ways we exert influence and can inform growth. Despite the efforts of governments, companies, media, and everybody, there will not be a return to situation normal as we knew it before, to capitalism 1.0. Whether we know it or not we’ve just jumped off a cliff together, and some get this and others don’t. This is the chasm that now exists between relevancy and irrelevancy in the global economy today, explained simply as the difference between old ways of thinking and new ways of thinking. New principles have changed capitalism and how we compete, and are themselves formed from this revolution in interaction. Think about your own business, and how the concepts of strategy, competition, and creativity have altered the ways in which you work, compete, and engage. This has happened in a very short period of time. Haque refers to this change, to capitalism 2.0, as Constructive Capitalism, and provides more detail in a talk he gave recently.

It’s from these principles we get Haque’s four pillars for smart growth, concepts that any company desiring relevancy in the modern marketplace should give serious consideration to (I edited down Haque’s explanations for each one, so please refer to his article for full text). Together, these are a paradigmatic shift in how we look at business:

1. Outcomes, not Income: Dumb growth is about income. Smart growth is about people and how better or worse off they are. Smart growth measures people’s outcomes. Economics that measure financial numbers, we’ve learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.
2. Connections, not Transactions: Dumb growth looks at what’s flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections. The goal isn’t just to trade, but to co-create and collaborate.
3. People, not product. Smart growth isn’t driven by pushing product, but by the skill, dedication, and creativity of people. People not product means a renewed focus on labor mobility, human capital investment, labor market standards, and labor market efficiency. Smart growth isn’t powered by capital dully seeking the lowest-cost labor — but by giving labor the power to seek the capital with they can create, invent, and innovate the most.
4. Creativity, not productivity. Smart growth focuses on economic creativity – because creativity is what let us know that competition is creating new value, instead of just shifting old value around. What is economic creativity? How many new industries, markets, categories, and segments an economy can consistently create. Think China’s gonna save the world? Think again: it’s economically productive, but it’s far from economically creative. Smart growth is creative — not merely productive.

This is all pulled together quite well, touching on so many things we face as we think about the sustainability of our businesses and our relevance to the markets we operate in, by this quote from Haque:

“Smart economies are driven by smart growth. The four pillars of smart growth are design principles for next-generation economies. 20th century economies are limited to unsustainable, unfair, brittle, dumb growth. Smart growth is more sustainable, equitable, and resilient.

Capitalism 2.0 cannot be powered by growth.1.0: that’s why the race for smart growth is inevitable. The economic pressure — the potential for value creation, in a world being ripped apart by value destruction — is simply too great.”

Umair Haque

To Haque’s point, getting smart is indeed a preferred option to staying dumb.

I was pointed to a pretty incredible survey, The Innovators: How Successful Companies Drive Business Transformation. It was conducted last March by the Economist Intelligence Unit, a business intelligence and research group within the Economist, and it engaged 261 executives around the world with questions regarding their challenges in the adoption and execution of new ideas, and how they drive innovation in their organizations. You can get the full report here. Here’s a few interesting insights from the survey:

• 60% of respondents report a shortfall of ideas, but only 14% report that this is a challenging part of the innovation process.
• There is much agreement on the need for a “culture of innovation” for innovation to succeed, but there was little agreement on what constitutes this culture.
• North American executives were twice as likely to find employees resisting newly introduced tools and technology as those in Asia, where employees are generally considered more tech savvy.
• 80% of executives surveyed believe their firms will be adversely affected by the economic crisis in the U.S., but 60% believe that increasing top-line growth and sales is more important than cutting costs.
• The companies that innovate most successfully have made it a top corporate priority.
• Successful companies use innovation to respond to trends that affect consumer behavior and buying patterns.
• 52% report the biggest obstacle to innovation being the cultural resistance to change, while 36% see the biggest obstacle being shifting strategic priorities. 29% say that it is a lack of project ownership.
• 64% said that leadership commitment is the most important element in creating a culture of innovation.
• Those surveyed said they plan on significantly increasing their collaboration with research institutes and universities and reducing their teaming with consultants in the near future.

Via PSFK

I will be voting for Barack Obama tomorrow. That’s because I believe he is the best choice for putting this nation back together. The best choice for ending the divisive partisan politics that have dominated the last eight years. The best choice for creating a future that is positive, inclusive, and in line with how this country really thinks about itself. The best choice for the change we need right now, in the face of real challenges and hardship, and the change that I believe my daughter’s generation requires of us for their future. I am optimistic that this change will make a difference, and that with Barack Obama’s leadership we can all feel good about being Americans. Again. Finally.

I am enormously encouraged by the number of historically republican voters that I know, both publicly and privately, who have voiced support for Barack Obama. This is because they understand what is at stake, and they are willing to set aside party allegiance for what we collectively believe is in the best interest of the entire nation. For all of us. This is a choice that they are making for the long term good of the nation, and I applaud the thoughtfulness and maturity that a decision of this nature requires.

This really is a pivotal moment for the United States. I am excited to be a part of it.

The video above was shared with me by a colleague with whom I discussed this post, which I have been mulling over for about a month. The video is from a project by professor Michael Wesch and 200 of his students at Kansas State University. A few weeks ago I attended a board meeting at which the president of a local university gave a presentation on “getting” generation Y, or millennials. The board of directors is mostly comprised of individuals between the ages of 45-70 (and 90% male), I am by far the youngest person on the board being just outside that age range by a few years (and a gen X’er myself). As the presentation was announced there was a lot of murmuring, nodding of heads, and apparent agreement that this group definitely does not understand this new generation of young people, the generation that is beginning to and will fill the ranks of each of their companies. There is a lot of pressure on millennials. There are over 80 million baby boomers on the verge of retirement with only just over 40 million gen X’ers behind them. This reality is going to mean that the millennials, estimated at around 75 million, will need to step up and fill the very important talent and leadership void left by all the retiring boomers. What was presented by the university president made me very uncomfortable. This is because her presentation seemed to be incredibly general, and largely critical of this generation. She focused on broad, strange statements like:

• Millennials do not read newspapers
• They do not read books
• They do not use libraries
• They would rather communicate via instant message than in person
• They cannot relate to older generations (????)
• They do not understand the Cold War (????)
• They grew up on video games
• They like to be entertained (????)

I added the question marks above to emphasize my own bewilderment with those statements. All of these are actual points offered in the presentation. I was shocked as none of these statements is meaningful in creating an understanding of the millennial generation, or of anything. They seem to be observations made in the context of contrasting the observation against a different experience, as if that experience is qualitatively better, when in reality it is becoming increasingly irrelevant. With regards to the reading of books, magazines, and newspapers I believe it is true that everybody is reading the printed manifestations of these less and less, hence the ongoing demise of printing and publishing as industries. Excuse me as I speak from my own experience, that of a gen X’er, when I say that I cannot remember the last time I actually held a paper newspaper, and yet I subscribe to the RSS feeds and hit the websites of probably no less than 4-5 newspapers daily. Add to this the websites and blogs of magazines and that number jumps to 10-15 per day. I would consider myself a moderate user. The university president attempts to make the case that millennials do not read. I would counter that they read, and that they probably read more than previous generations. They’re not reading the formats that previous generations grew up with, they’re taking advantage of this new information technology called the “internet”. Yes, the internet offers exponential ways to entertain, but it is also an incredibly efficient connection to information and the world around us. Does that even need to be said anymore? The university president does not talk about how millennials are using technology like RSS feeds (I subscribe to over 200 sites presently via RSS), or how they strengthen their connections and networks with instant messaging, or how they have essentially grown up with incredible technologies as commonplace. I doubt that she actually knows what an RSS feed is, which is frightening because at some level this university president is informing the curriculum for her school, and determining how students are going to be activated through education at her institution. As I was listening to this presentation I could not help but think that the standard being communicated and on which this analysis of a generation was being made, was completely and totally baseless and irrelevant to reality, to modernity, and to the way things have changed. This is dangerous, and to paint a generation with critique based on experiences that pre-date the information age is useless to all of us, but especially to an entire generation that is connected to information in ways that were inconceivable a decade ago.

It might help for people like this university president to watch this video, also by Michael Wesch:

Click on the image above to enlarge the graph to make it more readable. It paints a picture that is probably not that surprising, but definitely attention grabbing. The United States faces a very different reality in the world today than it did toward the end of the 1990’s. Today we face a diverse spectrum of new players who are incredibly competitive, players who are in some cases much more disciplined, ambitious, and intensely focused on innovation. The elephant in the room is China which, again, is no surprise. China has been nothing but resurgent over the last decade and nothing tells that story as well as the graph above. China’s rise over the other 33 nations in the survey demonstrates a much changed world economic landscape in technology. Note also the ascendancy of Mexico, South Korea, India, Singapore, and Taiwan. We all owe Thomas L. Friedman of the NYT’s a small bit of deference on this matter.

The graph is the result of a study conducted bi-annually by the Georgia Institute of Technology that measures the technology standing of 33 countries based upon four key technology focused factors:

1. National orientation toward technological competitiveness
2. Socioeconomic infrastructure
3. Technological infrastructure
4. Productive capacity

From the intro to the Georgia Tech report on the study findings:

“…China may soon rival the United States as the principal driver of the world’s economy – a position the U.S. has held since the end of World War II. If that happens, it will mark the first time in nearly a century that two nations have competed for leadership as equals”

The graph above and the recent editorial by Thomas Friedman intersect with some grim realities. The steadily rising price of oil has created petro-authoritarian states that no longer see the United States as a nexus of power in the world. In fact, they actively work to counter American interests globally, and do so fairly effectively right now. Huge amounts of money is flowing into states like Venezuela, Russia and Iran, and power and influence follow money. Energy and security expert Gal Luft testified to Congress last week and pointed out that as oil approaches $200 a barrel, OPEC will have amassed the wealth to:

“…potentially buy Bank of America in one month worth of production, Apple computers in a week and General Motors in just three days.”

Gal Luft

In his editorial, Thomas Friedman points out that the really startling issue here is that despite the confluence of so many negative catalysts around oil for our nation, and catalysts that will have long term socio-economic implications for us as individuals AND globally as a nation, we still do not have an effective energy policy in place that moves us past this desperate reliance on oil. What is it going to take?