What to expect in 2009?

The year MMIX is here. While we are keen and happy to leave 2008 behind as an unpleasant memory, the events of the year will have a profound effect on our lives in 2009. One thing is certain. Everyone – even, or perhaps that should be especially, Bernard Madoff’s investors – begins 2009 a bit poorer and more motivated than we began 2008. Here is what to expect this year.

Technology: innovate-and-monetise or bust

With everyone from car manufacturers to biotechnology industry expecting handouts in their begging bowls, there simply isn’t enough money to go around. Governments of developed nations are leveraged to the hilt, ignoring their own fiscal rules while emerging nations like China are begging off investments in western economies. 

Car manufacturers in America have for years ignored innovation. Their direct and indirect influence on public policy is wide-ranging, their role in catalysing America’s oil dependence second to none. Apart from the huge numbers employed, the industry needs a root and branch overhaul. Some are already taking advantage of the opportunity. Expect that advantage to grow – in their continued favour.

The biotechnology industry’s case for a bailout is even weaker. Private patenting of publicly funded academic research outcomes is seen as a hindrance to innovation. Research suggests that the patent system has failed to deliver actual benefits in the form of better health or reduced hunger. Gary Pisano expresses bafflement at how the biotech industry remains in existence despite its sustained unprofitability. Arthur Levinson, Genentech’s CEO, once described biotechnology as “one of the biggest money-losing industries in the history of mankind”. Governments have however provided continued support to the industry through research funding, subsidies, tax cuts, and helpful regulation, such as the Orphan Drugs Act which some see as being ‘co-opted by the biotech industry’. How long should public money prop up an industry which is all promise but no delivery? 

Then there are the creative players in the Web 2.0 world who are yet to find a profit-making business model.

In MMIX, as money remains in short supply, there will be essential weeding – and possible consolidation but valuations will remain low – in nearly all business sectors. In other words, the choice for businesses is stark: innovate-and-monetise or bust. 

Regulation: I am here from the Government and I am here to help, well, some of you 

Amid the NINJAs, the credit crunch and the Madoff scandal where the SEC has admitted not being too alert, regulation and enforcement in the financial services sector is ripe for an overhaul. However, first, the regulatory agencies need to come to grips with the, um, innovations in the sector they regulate. So expect this overhaul not to be any time soon, even as the proverbial revolving door between industry and regulatory agencies swings into action again. 

Regulation of other sectors will change too, but instead of becoming harsher, it will become friendlier to innovation and business so that new jobs can be created for those seeking refuge from retail and manufacturing, and so that smarter spending can be kick-started.  

I expect both pensions and public health provision systems to start a process of reinvention, creating both investment opportunities and social gains.

Investment: Where’s the party? 

Smart investors and companies will manage market access through maintaining a good understanding of not just regulation but also regulatory trajectories and futures.   

As valuations drop and businesses go bust, there will be opportunities to purchase valuable assets cheaply. Some smart people may be up for grabs too but not for long, as regulatory agencies seek to beef up their commercial nous by upping pay packets to attract good talent. While closing-down-sales can hardly be classified as an innovative offering, new businesses will emerge in their place. They will offer value and quality, over random posturing and stylised nothingness. More Tom’s Kitchen than Tom Aikens if you will.

Consumer conversation will grow in 2009 as they seek information and demand better customer service in return for their spending. We can happily bid good-bye to the nail-filing shop assistant this year!  

For businesses and investors, these changes will mean the need to understand consumer conversations better. They will therefore seek to get actively and visibly engaged in social networks and communities, and the smarter ones will ask for help in bridging the gaps

Here’s wishing you a productive, creative and bullish 2009!

On classifications and typologies (1)

Humans classify things, people and behaviours. Into types. Typologies have found use in a diverse range of disciplines from psychology to anthropology and linguistics.

Classifications enable pattern recognition – or generalisations – within homogeneous groups; they also help make extrapolations. So they can be quite useful.

For businesses, typologies and classifications have great value. Market segmentation is all about recognising potentially profitable segments froma large, non-homogeneous population and then targetting one’s marketing campaigns to gain the attention, interest and spend of the specific, profitable subset.

But typologies have shortcomings hence potential for abuse. For instance, racial or gender classifications can deteriorate into unhelpful shorthand that enables easy discrimination. Not everyone is a fan of Carleton S Coon‘s work on races and evolution. Look up ‘women childbearing age discrimination‘ and you will find much evidence to see how easy it is. A sobering experiment conducted by Bertrand and Mullainathan asked that vital question: “Are Emily and Greg more employable than Lakisha and Jamal?” about whether racial discrimination on the basis of black versus white names is real in hiring situations.

There are disagreements on the validity of some generalisations. For instance, Penelope Trunk, a business blogger, is a fan of generational generalisations, while Ben Casnocha, entrepreneur, student and blogger, believes collective consciousness is over-rated, particularly in context of generations. Both of them are right in their own way and both lines of arguments have limitations.

Generalisations – and stereotypes – work mainly because they are statistically significant when vast swathes of data are considered. Which means they talk about the vast bulge of the Bell Curve, not the leading and trailing edges. As that great sage of all things wise, Homer Simpson said: “Never underestimate the power of stupid people in large numbers”. My wry view is that generalisations are mainly meant as warnings.

So what of the internet? Do we know various types of web users, or social media users, or bloggers? The answer is both ‘yes’, and ‘no’. ‘Yes’ because many typologies have been proposed. ‘No’ because there is no universal consensus.

A post later this week will delve into web user typologies, so do come back.

Types of writing instruments (copyrights reserved)
Types of writing instruments (copyright reserved)

Obese Britannia

With our love of junk food of both the fish-and-chips and McDonald’s varieties and our loathing of exercise, and despite our best intents, we in Britain are slip-sliding our way to Obese Britannia.

Want to know our secrets? Click to read today’s post on my Obesity blog.