Thought Starters: innovation, intellectual capital & circular economy

Thought Starters provides me with a chance to review and highlight the more important or interesting research and opinions that I’ve read over the last week or so. This edition looks at questions over the pace of innovation, the growing portability of intellectual capital, the American presidential nominations and the circular economy among other things, all making for great weekend reading.

David Rotman profiles the work of economist Robert J. Gordon who takes a relatively dim view of the productivity gains over the last ten years. A valuable perspective although one focusing on economic gains doesn’t necessarily encompass other benefits enabled by new technologies and innovations:

Peak innovation

An interesting complement to the Rotman’s article is Prashant Gandhi, Somesh Khanna and Sree Ramaswamy’s review of the levels of digitisation across different parts of the US economy. Information technology inevitably leads the charge but it’s more valuable to look at the laggards where we’re likely to see considerable changes and innovations in the coming years:

How Digitally Advanced is your Sector?

One area that we have seen substantial advances recently is technologies that enable remote teams to more readily collaborate (eg Slack). Samuel Hammond points to a world where intellectual capital is increasingly portable even if immigration barriers mean that this mobility is more virtual than actual:

Consistent with the premature futurism thesis, smart writers have been predicting large and looming social implications from telecommuting and remote work for decades, only to have their visions stymied by some unforeseen technical or psychological barrier. While hiring international freelancers has gotten a lot easier, for many jobs people just prefer face to face contact. Yet we seem to be finally reaching a critical point where video streaming, virtual reality, and collaboration tools are converging to make even the most complex team production viable across borders.

Uber is one of the shining stars of the startup sector with its growth and funding leading many entrepreneurs to pitch their business as ‘Uber for ____’. Farhad Manjoo points out that we should be wary of trying to draw direct parallels between Uber and other business use cases given the particular characteristics the ridesharing:

But Uber’s success was in many ways unique. For one thing, it was attacking a vulnerable market. In many cities, the taxi business was a customer-unfriendly protectionist racket that artificially inflated prices and cared little about customer service. The opportunity for Uber to become a regular part of people’s lives was huge. Many people take cars every day, so hook them once and you have repeat customers. Finally, cars are the second-most-expensive things people buy, and the most frequent thing we do with them is park. That monumental inefficiency left Uber ample room to extract a profit even after undercutting what we now pay for cars.

But how many other markets are there like that? Not many. Some services were used frequently by consumers, but weren’t that valuable — things related to food, for instance, offered low margins. Other businesses funded in low-frequency and low-value areas “were a trap,” Mr. Walk said.

Dan Lyons’ rather humourous account of joining HubSpot provides a valuable antidote to some of the overinflated hubris sometimes associated with startups:

The truth is that we’re selling software that lets companies, most of them small businesses like pool installers and flower shops, sell more stuff. The world of online marketing, where HubSpot operates, though, has a reputation for being kind of grubby. Our customers include people who make a living bombarding people with email offers, or gaming Google’s search algorithm, or figuring out which kind of misleading subject line is most likely to trick someone into opening a message. Online marketing is not quite as sleazy as Internet porn, but it’s not much better either.

A lot of noise has been made about younger consumers fleeing Facebook for the newer social media platforms but comScore data from the US points to the platform maintaining its appeal among millennials – suggest we’d  see teenage audiences telling a rather different story:

Age 18-34 Digital Audience Penetration vs Engagement of Leading Social Networks

Snapchat updated its mobile messaging platform recently providing a richer range of features for users as well as changing its privacy policy which is likely to see a broader array of targeting options for Snapchat advertisers. It’s worth reading Ben Thompson’s piece on Snapchat if you want to take a broader look at how the platform has evolved since its launch in 2011.

Virtual reality is now well and truly out in the open with Oculus Rift now available to the general public. Brian X. Chen’s review of the headset suggests that in its current state, it’s one for the early adopters:

The Rift’s graphics, sound and head tracking, which is the device’s ability to follow where the viewer looks, do feel like something out of science fiction. While the system’s setup is somewhat complex, the smoothness of the graphics and the high-quality design of the headgear make virtual reality feel ready for prime time.

And yet there may be a higher reward for those who wait to buy the Rift.

Soundcloud Go launched on the 29th of March in the US, adding to the list of streaming providers that are offering a subscription service for music consumers. Another route to monetise content might sound great for musicians but Dave Wiskus’ review of the service suggests something much more insidious:

You can slice it, package it, or spin it however you like, but the bare fact is that you’re making money off of songs you aren’t paying for. Worse, you’re doing it while perpetuating an air of exclusivity around the concept of making money. All while you’re pretending to be a friend to the little guy. There’s nothing artist-friendly about this approach.

Sven Skafisk’s overlaying of smartphone sales on top of traditional camera sales illustrates how much mobile phones have come to dominate how the majority of consumers experience photography – click through for the full length chart which really puts things in perspective:

CIPA camera production

The success of Amazon’s Alexa highlights the significant market opportunity for user friendly smart home solutions, which has even led to religious authorities offering advice on its use during Shabbos. What consumers may be less aware of is that in many cases they are buying into a service rather than a piece of hardware with the demise of Revolv leaving consumers in the lurch (although it looks like Nest may be stepping in to address some of these concerns now).

With the release of the Panama Papers, it’s worth revisiting which countries enable financial secrecy. One of the interesting insights to come out of the reports is the relatively limited number of Americans caught up in reports reflecting relatively lax controls in some states. The US falls in third place in the Tax Justice Network’s Financial Secrecy Index.

NPR’s Planet Money (well worth subscribing to their podcast) has looked at the changing structure of employment in the US where you can see changes both in terms of the number of jobs and as percent of the total. No huge surprises but it will be interesting to see how the chart changes as machine learning and artificial intelligence make inroads into white collar professions which have traditionally proven more immune to automation:

The Decline of Farming and the Rise of Everything Else

Another podcast worth recommending is Vox’s The Weeds, providing a valuable window into American politics and policy. A recent episode looks at the tax implications of Donald Trump, Ted Cruz, Hillary Clinton and Bernie Sanders’ policies (from 34:20). One of the interesting conclusions is how comparatively robust both Democratic candidates proposals are compared to the leading Republican candidates despite Clinton and Sanders taking rather different policy approaches:

One area where Bernie Sanders and Donald Trump do seem to have something in common is their relatively protectionist approach to trade. Whilst I am all for ensuring employees gets appropriate protection around the world, it could put a real dampener on emerging markets’ economies as Jordan Weissmann points out:

With those last few words, Sanders has effectively written off trade with any country that is not already rich and prosperous—which is simply inhumane.

Encouraging the circular economy is likely to be a more appropriate way of encouraging local employment. Walter R. Stahel profiles this closed loop approach to production which offers benefits in terms of reduced emissions, increasing in employment and reduction in waste:

Closing Loops

As UK fast approaches the Brexit referendum, immigration and the country’s health system lead concerns facing Briton’s – issues not unrelated given the reliance Britain’s NHS has on foreign born staff:

What do you see as the most important issues facing Britain

Potentially allaying the concerns of immigration opponents is research from Mette Foged and Giovanni Peri in Denmark which points to the benefits of immigration, even for the low skilled populations:

Instead of a small negative effect on the local native-born — as most studies in the U.S. tend to find — Foged and Peri found a positive effect. That’s right — low-skilled immigrants actually raised the wages of their less-educated native-born counterparts in the surrounding area. The data followed the native-born workers for a long time, letting the authors confirm that the change was durable.

The featured image is a Nelio mural made for the Marion gallery in Panama.

Thought Starters

A mixed collection of materials looking at societal trends and the impact of technology on the way we live.

Despite the growth of the internet, television continues to retain a strong hold on our media habits, but what is changing is how we watch it. Figures from GlobalWebIndex point to younger cohorts moving towards online viewing, something that’s even more prevalent in developing markets:

Traditional vs Online TV

Statistics from Britain’s Office of National Statistics point to continuing growth in broadband, mobile internet and provide information on what consumers are doing online:

Internet Activities

Ethan Zuckerman takes a critical look at the growth of the advertising funded internet. He points to consumers’ loss of privacy as businesses look to capture more elaborate collections of data to enable the more sophisticated targeting of online advertising:

Once we’ve assumed that advertising is the default model to support the Internet, the next step is obvious: We need more data so we can make our targeted ads appear to be more effective. Cegłowski explains, “We’re addicted to ‘big data’ not because it’s effective now, but because we need it to tell better stories.” So we build businesses that promise investors that advertising will be more invasive, ubiquitous, and targeted and that we will collect more data about our users and their behavior.

The mobile app industry has seen rapid growth over the last five years, but commentators and analysts are pointing to a maturing of the sector with the Financial Times taking a more detailed look:

Yet amid the apparent wealth, the mood is gloomy among the independent coders and small businesses that make most of the apps now available for Apple and Google devices.

Luc Vandal, founder of Montreal app shop Edovia, sums up the feeling of many: “Let’s face it, the app gold rush is over.”

Smartphones have traditionally provided  a more secure environment aided by the more restricted environment that software works in when compared to the traditional PC. Unfortunately this may not be enough with John McAfee warning that security is becoming increasingly threatened by mobile apps which carry malicious payloads.

The open source nature of the Android ecosystem has fostered a broader array of devices when compared to the more closed environment of Apple’s iOS. OpenSignal have updated their report looking at the fragmentation within the Android ecosystem profiling both the range of devices as well as the operating system versions employed:

Android FragmentationAnother interesting chart from OpenSignal’s presentation looks at the growing array of sensors in Samsung’s Galaxy smartphone, confirming the devices role as more than just a phone (loss of temperature and barometer sensors presumably  to enable S5’s water resistance):

Sensor Fragmentation

eMarketer’s forecast for the UK market point to  Android and iOS continuing to dominate with BlackBerry and Symbian falling off rapidly and WindowsPhone coming up a distant third:

MobileOS Market Share

Amazon has moved into the mobile payments market with its Amazon Local Register offering with pricing that is designed to grab marketshare from Square and PayPal Here. Whether we’ll see this being a big money earner for Amazon remains to be seen although the company is well known for taking a long term view when it comes to new market opportunities:

I’ve spent many hours listening to Soundcloud with favourite contributors including 99% Invisible, Andreessen Horowitz and The Fader among many others.  So it’s with interest and concern that I’ve greeted Soundcloud’s latest announcement to commercialise it’s streaming audio service:

Now SoundCloud has decided it is time to grow up. On Thursday, as part of a new licensing deal with entertainment companies, SoundCloud will begin incorporating advertising and for the first time let artists and record labels collect royalties. Eventually, it plans to introduce a paid subscription that will let listeners skip those ads, as they can with Spotify and other licensed services.

As consumers spend more time on their smartphones, Facebook has provided a growing array of services for consumers to spend their time either through acquisition (eg Instagram) or in house development (eg Poke, Slingshot). Mark Milian charts Facebook’s mixed results in developing its own solutions but goes on to suggests that they may be on to a winner with Bolt:

Bolt

Facebook provide a great means of establishing maintaining ties with friends irrespective of location. A contrasting approach is the social network Nextdoor which looks to foster networks among local communities with The Verge describing it as the ‘anti Facebook.’

nextdoorThere’s been some pointed commentary lately contrasting the Twitter and Facebook’s approach to their respective newsfeeds. Facebook’s algorithmically  driven newsfeed has been criticised for the  ducking of harder news (eg Ferguson) whilst focusing its coverage on more light hearted viral content (eg Ice Bucket Challenge) .

Twitter’s approach is often characterised as being great for more advanced users with its unedited stream of content,  but the onboarding process has long been criticised as bewildering for newer users. Twitter is experimenting with a move that will see it injecting  content into the newsfeeds of users that it believes they will like, a move that hasn’t been welcomed by some users:

Twitter pollutes

Consumers are spending time on a broadening array of media with newspapers and online news portals no longer monopolising consumer’s attention when it comes to news coverage. Mathew Ingram looks at how news media are using a growing array of channels to reach consumers with NowThisNews’ Snapchat on Ferguson given as an example of where things might be heading:

As ridiculous as the updates posted to Snapchat may look, with poorly handwritten text superimposed on newsy images, NowThis News has gotten something right that many media outlets continue to struggle with: namely, that if it is to be effective, news needs to reach people where they are, not sit on a home page somewhere waiting for people to show up.

Technology report Chris O’Brien’s departure from Silicon Valley has prompted him to look at the region’s ups and downs. Among the greatest opportunities he sees is the Maker movement which PSFK have recently launched a profile of:

Another tech hub which is growing in international prominence is Shenzen in China. The  city provides an important incubator for hardware innovations with Joichi Ito  of MIT’s Media Lab writing a fascinating profile of this exotic ecosystem for LinkedIn.

Much has been made of the way that new technologies and processes have enabled consumers to escape the confines of a traditional 9 to 5 employment. But the benefits are not equally distributed. The New York Times points to the burden that scheduling software is placing on families and  David Mayer criticising the lack of protection for participants in the on demand workplace.

The Brookings Institute takes a closer look at inequality and social mobility, highlighting the effect that education, marital status and race have on people’s attempts to move up the socioeconomic ladder:

The featured image is of a Hannah Stouffer creation for Sea Walls: Murals for Oceans – Mexico Expedition in Isla Mujeres, Mexico and reported in Arrested Motion.

 

 

Thought Starters

A mixed collection of materials looking at societal trends, the role of technology and other content that has resonated with me.

The World Bank has combined population and GDP per capita statistics in a graph, providing an indication of current spending power as well as an indication of future opportunity.

Real GDP Per Capita and Share of Global Population

Gartner has updated its Hype Cycle which gives an indication of maturity and adoption of different technology platforms around the world.

Gartner Hype Cycle

American consumers are now faced with a growing array of video content through a range of platforms but consumer spending has actually decreased according to analysis from Liam Boluk.  In a world of all you can eat subscriptions such as Netflix and Amazon Prime, consumers are arguably choosing to spend their money elsewhere.

Entertainment Industry Ecosystem

Andreessen Horowitz has announced a $50 million investment in BuzzFeed, gaining mixed reactions from the news media.  Felix Salmon warns that comparing BuzzFeed to traditional media sources risks missing the business’ true potential.

The best way to think of BuzzFeed’s various products, then, is probably as a proof of concept: it’s a way to show advertisers that the company is able to reach a large, young, mobile, social audience in a multitude of different ways. The ability to reach those people is something of a holy grail for advertisers, who are therefore very willing to pay top dollar to anybody who can help them achieve their goal. The idea is that if BuzzFeed can reach a broad audience with its various editorial products, it can then sell that secret sauce to advertisers, and help them reach the same audience, using the same tools.

There’s been a lot of noise lately about the unbundling of mobile apps in Western markets with the launch of Foursquare’s Swarm and the splitting out of Facebook Messenger. Taylor Davidson warns against seeing this as a natural conclusion with app extensions, deep linking and notifications providing a countervailing force to this trend.

And as the platforms, hardware, and operating systems in mobile continue to change how people use their devices, don’t be surprised if the rationale behind unbundling shifts as well.

I think we think of unbundling as the end-state, but instead, it’s a process that leads to it’s reversal. Unbundling creates the incentives for rebundling.

The constant, as usual, is change.

We’ve seen strong growth from shared economy based enterprises such as Uber and Airbnb which use rating systems as a means of engendering trust on the part of consumers. Danny Crichton in an article for TechCrunch warns of the corrosive effect of these computational trust systems on wider society.

Our growing need to feel connected is confirmed by research from the US which found that 60% of US internet users were almost always connected.

Three in five internet users are almost always connected

British communications marker regulator Ofcom’s report The Communications Market 2014 is a treasure trove of insights into the UK market. Find below some key insights.

Reinforcing the earlier message of the always on lifestyle is the following graph looking at consumers engagement with media and communications during their waking hours.

Media Consumption Activity

Looking at how media and communications time is spent across different age cohorts provides clues as to how we can expect media to move in the future.

Media by Time

A similar analysis of internet consumption by device type points to the importance of smartphones for younger audiences.

Device usage internet

Providing further data on the UK market in the 4GEE Media Living Index which provides figures on mobile data usage from EE customers. Among the interesting data points are the following which point to the strong presence of Tango in the mobile messaging space and Soundcloud in audio streaming.

Instant Messaging Audio Analysis from Comscore points to Snapchat moving from outsider to well established member of the communications space in the US having long passed what Comscore considers critical mass in the 18-24 aged audience segment.

Snapchat PenetrationPew Research Center’s analysis of Twitter traffic provides an interesting breakdown of social communities and how they interact, converge and/or diverge. Something well worth considering when we see issues emerge that have the potential to bring us together or divide us.

Twitter CommunitiesMalcolm Gladwell’s look at organised crime among immigrant groups in the US point to this ‘career’ as being seen as an important enabler of upward mobility in what makes for an enjoyable read.

The point of the crooked-ladder argument and “A Family Business” was that criminal activity, under those circumstances, was not rebellion; it wasn’t a rejection of legitimate society. It was an attempt to join in.

If you find yourself in London between now and the end of August, do check out Lucy Sparrow’s The Cornershop in the Columbia Road area recreating various household goods in felt. You can find an interview with the artist over at Folksy.

felt-food

The featured image is Beautiful Bridge #1 by Sabina Lang & Daniel Baumann in Recoleta, Buenos Aires.