The ultimate level of cannibalization

Being in demand forecasting, I am quite used to dealing with intra category and cross category cannibalizations esp. in consumer electronics industry (eg. Smartphones vs compact cameras; tablets vs netbooks; TVs vs mobile computers). But still the main reason for this cannibalization was over lapping features. 

However, the more I am studying consumer industry, the more interesting it’s getting. Ultimately people have limited resources (to begin with money (given this current economic situation for sure that’s not growing), but it doesn’t stop there as we can also argue over limitations on time and mental capabilities;) and they cannot have everything.

Recently I was reading one paper that took cannibalization to another level………… socio economic factors

Smartphones vs CARS (really cars!!)

Youth culture was once car culture. Cars were Friday night. Cars were Hollywood.

Yet these days, they can't even compete with a smartphone. Young adults are in fact buying fewer cars today than in the past. According to CNW Marketing Research, Americans between the ages of 21 to 34 purchased just 27 percent of new cars in 2010, down from 38 percent in 1985.

Is it really reasonable to blame that drop on Gen Y's love of technology? No, not entirely. But it is fair to think that our preoccupation with smartphones and laptops might be contributing to the fall. Here's why.

First, Gen Y is strapped for cash. Badly. Thanks to the recession and slow recovery, it's been slammed with high rates of joblessness

Second, young Americans aren't simply turning their back on buying cars. They're also turning their backs on driving. The percentage of teens and twenty-somethings with licenses has dropped dramatically over the past thirty years, which may be the sign that Gen Y's indifference towards autos is a cultural shift as much as an economic one.

Finally, this all might be part of a global pattern. There's a vivid, albeit anecdotal, evidence from Japan, where in 2008, the Wall Street Journal reported that the country's tech-obsessed youth had all but forgotten about cars:

“Unlike their parents' generation, which viewed cars as the passport to freedom and higher social status, the Internet-connected Japanese youths today look to cars with indifference, according to market research by the Japan Automobile Manufacturers Association and Nissan. Having grown up with the Internet, they (young Generation) no longer depend on a car for shopping, entertainment and socializing and prefer to spend their money in other ways.”

Sound familiar? As youth culture becomes tech culture, it may be be that cars just tend to get pushed out of the way. No matter where you are in the world.

Leaders need to "go to the source"

Having grown from being an analyst to a forecast team lead, I always used to think where to draw a line between micromanagement and delegation; then I came across the following article from WSJ and it cleared the mist

‘On April 30, associates who were gathered in a conference room handed Mr. Dimon summaries and analyses of the losses. But there were no details about the trades themselves. "I want to see the positions!" he barked, throwing down the papers, according to attendees. "Now! I want to see everything!"

When Mr. Dimon saw the numbers, these people say, he couldn't breathe.’

Seeing the data raw in addition to prechewed analysis can have enormous impact on perceptions. That's not to minimize the importance of analysis and interpretation. But when discontinuities defies the logic, nothing creates situational awareness faster than seeing with your own eyes what your experts are trying to synthesize. The raw ingredients are critical to success.

BUT is this micromanagement? You bet! There's difference between this kind of micromanagement and being a control freak. In the former, leaders want to see — and feel — what's going on with their own eyes and gut; they want to draw upon their own experiences and expertise. In the latter, they want a greater command of detail in order to tell people what to do. The best micromanagers go to the source, so they can see, listen, and understand better; the control freaks do it to remind people that they run the whole show.

Yes, there's something vaguely mistrustful and distrustful about insisting on a diet of raw data rather than a richly prepared presentation of analytics. The core message — that you want/need to see for yourself — may feel disempowering to some. But there's a fundamental difference between trusting your people and trusting their data.

May be there is a reason why great chefs visit the farms and markets that source their restaurants!!!

Sustainability and the meaning of life

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If confidence is the gasoline, then trust is the oil in the engine of Capitalism!

Being able to trust people might seem like a pleasant comfort, but economists are starting to believe that it’s rather more important than that. Trust is about more than whether you can leave your house unlocked; it is responsible for the difference between the richest countries and the poorest.

“If you take a broad enough definition of trust, then it would explain basically all the difference between the per capita income of the United States and Somalia,” ventures Steve Knack, a senior economist at the World Bank who has been studying the economics of trust for over a decade. (Any prices for computing - it’s 99% of the US economy!!)

“Virtually every commercial transaction has within itself an element of trust,” writes economist Kenneth Arrow, a Nobel laureate. When we deposit money in a bank, we trust that it’s safe. When a company orders goods, it trusts its counterpart to deliver them in good faith. Trust facilitates transactions because it saves the costs of monitoring and screening; it is an essential lubricant that greases the wheels of the economic system.

Since last two years, world clearly don’t trust the big banks and financial companies.

Trust is gone: there is no longer trust between counterparties in the financial system. The Fed has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that uncertainty that the balance sheets of financial firms are credible. So even though the Fed has flooded the credit markets with cash, spreads haven’t budged because banks don’t know who is still solvent and who is not.

Bank lending won’t get going again until trust in the markets can be restored. Fighting a Great Depression era problem probably won’t help. More transparency, which means more write-downs and failures, is probably necessary if we’re going to get through this. Unfortunately, we’re still sailing in the opposite direction.

Importance of the feel good factor

I hope this explains why we might have a bumpy road to recovery ahead!!