Trend Blend

I found Trend Blend last year. It looks at trends in business, society, government, technology, science and environment. The graph shows the opportunities and risks related to each. Below are the issues related to 2009.



Check out the website to see the 2010 map.

Is social media a fad?

This is an adaptation of the Did you know 3.0 conference in Rome last year.

Some interesting figures.



I'm not sure how many of these numbers are accurate.... but regardless, it's worth thinking about the impact social media has on business today.

Net natives, or "net" so much?

In today's post I'm going to take a quick look at our digitally savvy generation, examine how we use social networks, and explore a few of the common misconceptions about Generation Y. Upon starting the MBA program back in September, the curriculum was launched with a Communication Management course. Part of the class was focused on resume building, and managing your personal "brand" online (ie. facebook, linkedin, twitter, etc). The professor asked the class who used facebook, and nearly everyone raised their hand. He then asked about linkedin, slightly less raised their hand; and then about blogging, and even less students raised their hand. Finally, he inquired about twitter, and I was the only one to raise my hand. It was shocking to me not only because of all the hype twitter has received over the past year and a half, but also because being in an MBA course, I assumed that every student was as "plugged in" as I was.

I am going to make the argument that despite the fact I'm surrounded by an intelligent group of young individuals who were raised simultaneously with the advent of the computer and internet, there is only truly a small percent of this circle that actually understand and are interested in digital technology. Because we have grown up on the internet, it's assumed that the computer has transformed our approach to work, politics, and education. Now I'm not saying that I am the most computer savvy person - to be honest, writing code and understanding the back end of my computer really doesn't interest me. What does interest me, however, is this whole revolution of social networks, and how those networks are changing the way we communicate and do business. What about the fact that Iran election protests ran rampant across twitter and remained a trending topic for weeks? Or how Dell had increased their profit by $3m last year from twitter deals? Or, what about Zappo's, or Ford, or Starbucks, or Virgin? All of these companies are following suit to engage in conversations with their customers. Is all of this not a social media revolution?


Marketing is no longer sending out the single message that you want the consumer to receive, but rather it's shifted to an open innovation paradigm. Instead of the company deriving products and services, third parties and customers are now making recommendations to companies about what they want -- and companies are listening. As these social networks continue to grow, the level of your engagement is key. Yes, this does pose questions about transparency, but the model has changed and being transparent is part of the evolution. The benefits include thought leadership, market presence, CRM, brand building, and becoming a source of authority.

So, you just need to sign up for twitter and facebook, right? Wrong! Setting up twitter and facebook accounts for your business is yesterday's news. Many companies who were early adopters of these mediums paved the way for social media strategies, by taking chances, making mistakes, and also making landmarks in establishing customer relationships. While there's still a lot of debate about the 'right way' of marketing your brand across these mediums, there's no disagreement that companies have to be involved in the conversation. What it ultimately boils down to is pushing beyond typical boundaries and having a genuine interest in customer engagement. Companies need to engage in order to establish an online presences and to have a 'voice'. Consumers care about what brands they buy, and what they're brands have to say.

Not engaged yet? Jump on it, because you're customers are waiting to talk.

Mobiles to Fight Poverty

In another incredible video on TED, Iqbal Quadir discusses his bottom-up business model that empowers communities. Small loans and technologies can spur the GNP of emerging nations.

Check out the video below.

Microfinance Club Launch!

After months of planning and work, the Microfinance Club at USF is finally getting launched! Tom, Neha, Jacob, Wilhelmina, David and I have come together to start this group for USF MBA's. Here's a little bit more about us:

Vision and Mission
The USF Microfinance Club (MFC) is a student association at the University of San Francisco dedicated to promoting prosperity in the developing world. The founding board of what would become the Microfinance Club decided to pursue an ambitious project in the field of microfinance.

The endeavor began as a curricular service project in an MBA leadership class. By raising and strategically donating funds through a portfolio of microfinance institutions (MFIs), the MFC makes otherwise elusive capital (microloans) available for creating and maintaining businesses that provide essential goods and services in low-income communities in developing nations. While the principal of each loan is ultimately repaid into the Microfinance Fund, the MFC uses part of the repaid principal to help support the MFIs. As a result, the Fund must be continually replenished by support from the local community.

The MFC not only raises capital – it raises awareness. Just as our activities empower entrepreneurs on the ground in our target communities, they simultaneously empower the MBA students charged with using their business and leadership skills to cultivate and manage the Fund for future generations. In addition to fundraising and fund-management activities, the MFC helps to educate young leaders about the growing field of microfinance and how it can be used to change lives and communities for the better. Our members help us to research and evaluate MFIs, write blogs and articles, and reach out to the community for support.

Our vision for a world where credit is available to anyone who needs it embodies USF’s Core Values of “social responsibility in fulfilling the University’s mission to create, communicate and apply knowledge to a world shared by all people and held in trust for future generations.”

Future events
Tuesday, April 20th - Kiva speaker at USF @5:15pm Malloy Hall LL4
Friday, April 30th - First Annual Microfinance Club Casino Night, 330 Main Street, 6pm-10pm

Donations
Contact me if you're interested in donating to our group. We are looking to raise funds to start investing in a portfolio of microfinance entities this year.

We appreciate all of the support from USF and from fellow students! Come support us at our group launch party on the 30th!!

Facebook's developer platform

Back in 2006, Facebook launched their developer platform, and with the app craze, it looks like Facebook continues to rev up their business with the platform/ application business model. The F8 Conference is on Wednesday, and will be a networking conference for developers and entrepreneurs in the bay area.

A few things they will focus on:
- Growth: how Facebook grew to 400 million users in less than 2 years
- Moving quickly: the techniques for maximizing the performance of Facebook applications and websites
- Industry news and trends: developers discuss the future of mobile, and challenges of cross-platform development
- Social games: the gaming world and the future of Facebook games


But the main question I have been exploring is how Facebook markets applications and retain usership?

1. Facebook has developed three ways of marketing their applications. The first is through joining the app and then sending an invitation to friends. Although Facebook has limited this to 10 people (it used to be 100), it is still an effective marketing tool that spreads an app's success virally.
2. The second is through the mini-feed or news feed. As users play the game and reach higher levels, their success is posted on this feed - a great way to remind people of successful applications.
3. The third way is through the badges on a person's profile. Upon seeing this badge on a friend's profile, you can click the application and add it to your profile too. Even with these tools, many applications do not get substantial visibility.

Facebook’s application development platform is one way to promote the long-term success of good applications.

The iPad Launch

Two weeks ago, the iPad became available for the many anxious Apple fanatics. However, the iPad has some features that are not perfect, such as not supporting Flash, no USB port, and not supporting video chat. Other manufacturers, such as HP and Dell are about to launch their own table and slate PCs, and the market for tablet PCs, e-readers and netbooks will soon be crowded. Various functionality, features and price points will be factors that determine consumer behavior in the market place for these variety of products. Some manufacturers may engage in price wars and thus margins will suffer.

Below I have assumed I am the Product Manager (PM) of the iPad, and am called to Apple’s boardroom to explain your decision about the iPad features & functionality, cost & price, accessories and its evolution.

The release of the iPad this weekend has a lot of hype. Not only are we thrilled about our product, but we are confident that this ground breaking product will create a new market of tablet PC’s/ e-readers. Below we have outlined the features, pricing, and future evolution of the product.

In today’s computing market there appear to be three new types of products that are similar, yet slightly different. These are: the simple e-reader (such as the Kindle), the tablet PC, and netbooks. Consumers overwhelmingly want smaller, more portable computers. After Amazon launched the Kindle in 2008, many companies have eagerly jumped into this e-reader market with different types of products in 2009. With e-reader functions becoming more diverse, computing in the future will no longer be solely used for reading, which has become apparent with the emergence of tablet PC’s and netbooks. This analysis will examine the iPad against the current products in the market, and will look at future developments in order to hols the market share.

In terms of market evolution, the iPad Product Development Team believes that it will take 2 full years before the iPad has moved from the Innovators and Early Adopters to becoming adopted by the Early Majority. This is displayed in the graph below. Early Adopters will have purchased the product upon the release. These Innovators and Early Adopters are Apple fanatics already. They most likely have several Apple products, and believe that we will pave the way in the e-reader market. However, the team knows that most Early Majority adopters will wait until the second version of the iPad is released in 2011. Because there are several disadvantages to the product (which will be outlined below), the iPad Product Development Team will look to improve these aspects with the release of version 2 of the iPad. However, despite any “disadvantages” that might be seen initially, we believe the product is truly ground breaking and will pave the way for e-readers and tablet PC’s.

Features

The primary benefit that we see with the iPad is the fact that it's a product between the monumental iPhone and hugely successful MacBook line. The iPad Team thinks that the product will take over the netbook and tablet PC market, thus changing the entire personal computer market as we know it today. Below we have outlined some of the main features that will attract consumers to our product.

Physical Features

• 9.7-inch LED backlit IPS display – true and deep colors
• fantastic battery life: almost 11 hours
• 16GB, 32GB, or 64GB
• a volume rocker
• screen position lock (which forces the device to remain in landscape or portrait mode)
• a power / sleep button and headphone jack on either side of its top edge
• Apple's famous 30-pin dock connector alongside a single thin speaker on the bottom of the unit
• photo application - fast scrolling, high resolution
• renders webpages quickly
• the hugely successful app platform

One of the disadvantages that the iPad has received already has been in terms of handling a flat slab. Consumers seem to be concerned about typing on a flat surface and the fact that the iPad is heavier than the iPhone. Either consumers will find themselves typing on a flat surface, typing with one hand and holding the device with the other, or typing with two hands using the dock. Early reports have revealed that typing on a flat surface is actually nice. The way our team has designed the product is that the virtual keypad is actually quite big. Although there will be a learning curve in using this product, iPhone users will be adept, and the others will either learn to either type on a flat surface or using the dock. Although typing with one hand will be difficult for some users, we believe the other two options are sufficient for using the product.

However, the touch screen features that consumers love are still included in the product. We have mirrored some of the functions from the iPhone such as the tap and hold function (although we have improved it). Additionally, the iPad has the ability to do split screen, contextual menus and menu bars, and the hover over feature for popup windows. These touch features will be highly appealing to iPad users.

Price

In terms of competitors, we are competing against three other types of products, as mentioned previously. The graph below analyzes the pricing point of the iPad to its competitors.

Product	Price
iPad	$499
HP Slate	$540*
Kindle	$259**
Dell Mini	$299
Aluratek e-reader	$179

* The HP Slate has not yet been released, but early estimate prices say that it will be around the $540 range.

**Kindle recently slashed this price when the XD was released, and upon the release of other tablets like the iPad and expected HP Slate. Clearly the Kindle knew that the only way to stay competitive was to drop prices.

Although we are in the higher end of the price range, Apple must remember that we have produced a sleek, well-designed product that we believe will be the best on the market. In terms of pricing, we believe this is ideal since it is not the highest priced product, but it is near the top end. Apple users know that we produce premium products, and when looking at the list of above products, the iPad stands out because of all of the functions (games, iCal, email, videos, photos, etc). The iPad’s functionality will blow the e-readers functionality out of the water, yet it will simultaneously be different than other netbooks.

Additionally, the strategy of paid content must be included. Apple’s App Store will be a major component in bringing in revenue for the product. Because the company has partnered with many providers, the Apple strategy going forward will be similar to the iPhone. Currently, the average prices of applications are $3.13; however, many applications come for free.

Product placement

As mentioned above the iPad Team believes that we are reaching a market segment that hasn’t been reached yet. The graph below looks at the price and quality of products.

*The quality of the products go from high to low. We believe we have the highest quality product in a price range that isn’t met. Most e-reader products are in the $150 to $260 price range, while netbooks are in the $300 range, and new tablet PC’s will be in the $500+ range.

Despite the few "disadvantages" pointed out by Early Adopters, the iPad's attractive design, multi-touch capability, and application platform will offset the initial omission of Adobe Flash, according to preliminary forecasts from iSuppli Corp. Based on current forecasts, the iPad is expected to sell 7.1 million units in 2010, 14.4 million in 2011, and nearly triple to 20.1 million sales in 2012. These promising statistics have reaffirmed our decision regarding price point.

Evolution

Being the iPad Team, it is of course expected that we will launch new and better versions. Improvements in the second generation will include:

• 4G network: data/ network capability improvements from the current 3G
  
• OLED screen: Organic Light Emitting Diode screen which will provide truer color, and more dynamic ranges of contrast.
• USB 3.0 port: It will be much faster than the current USB 2.0
  
• better battery life: Although the battery life is already impressive, we will look to continually improve it.
  
• faster processor: As with each Apple product, we will continue to improve the speed and efficiency of the processor.
  
• thinner and lighter: Similar to the MacBook Air coming out, we will also aim to make the iPad lighter.
  
• camera's: Cameras will enable video chat function, and other fun photo features that users are looking forward to.
  

The final reason why we are sure of the product's success is due to the fact that the iPad Team is focused on launching a product that is the best, and not necessarily the first to market. We believe we've developed a truly revolutionary product, and we anxiously await the future!

The Clean Energy Race

The clean energy movement has been gaining speed and a lot of attention in the global arena. As hybrid cars, green buildings and other clean technologies continue to emerge, countries are outbidding each other in the investment in clean energy technology, which will threaten the balance of energy security and power among key regions around the world. The primary question will be: How will the energy map being redrawn, and what are the key implications? By evaluating the access to renewable resources and re-assessing established alliances, the race for clean energy will continue to drive competition. Bremner and Keat state that “the world’s energy supply increasingly comes from parts of the world that are politically unstable. The world’s growth is increasingly driven by emerging markets” (Bremner & Keat, 2009). The race for energy is exactly this, and this paper hopes to examine some of the intricacies, and political and economic risks.

The investment race

Taking a glance back in history, energy transitions take time. It took approximately 100 years for coal to go from being 10% of the world’s energy source to 60% currently. After that it took 60 years after the introduction of oil as fuel to provide 50% of the world’s energy (Hodum, 2010). Green technology or renewable energy is no different than coal or oil, and although the adoption of new technology has been slow, there is a large appetite for innovation, and research and development.

In terms of top investors, the biggest have been China, the United States, South Korea, and the European Union, although Europe severely lags compared to the Asian nations. Over the last five years, total global annual investment in clean energy has grown from $36 billion to $145 billion, with total transactions amounting to over $200 billion in 2009 (Swezey & Norris, 2009). Capital investment is going primarily to energy efficiency, mass transit, and renewable energy deployment. The Breakthrough Blog claims that China, Japan and South Korean “governments will invest $519 billion in clean technology between 2009 and 2013, compared to $172 billion by the U.S. government. Climate and energy legislation, which passed the House in June, would contribute $28.7 billion of the $172 billion five year total. China alone will spend $440 billion to $660 billion over the next ten years on clean tech.” (Breakthrough, 2009) See Graph 1 in the Appendix for a depiction of foreign and US investment in clean technology.

What does this investment in the public sector mean for the US? It means that the US must take swift actions in order to remain competitive. In 2009, the US House of Representatives passed a new clean energy policy known as the American Clean Energy and Security Act. While this looked like a good attempt for the US to stay viable, many Americans thought that it was too radical. However, when looking at this policy on the international scale, the policy did not include enough proactive policy, and the funding for research and development, commercialization and production of clean technology was rather low, when compared to Chinese investment. The issue is that if this investment gap continues to exist, the US will continue to become tremendously reliant upon importing these technologies.

Key players and real examples

The United States and China rank first and second in deploying clean energy and creating a policy environment for growth and investment. Let’s look at the G2. The bilateral relationship with the US and China is an example, where clean energy has been elevated to a priority issue between both governments. The G2 is steadily beginning to address trade pressures related to clean energy deployment.

Looking at wind energy for example, there is a rare earth element called neodymium that is required for the magnets in the wind turbine. The world’s largest earth deposits are currently located in China, and China recently made it public that they intended to strengthen control over these elements. Additionally, the report Rising Tigers Sleeping Giant states that, “the United States relies on foreign-owned companies to manufacture the majority of its wind turbines, produces less than 10 percent of the world’s solar cells, and is losing ground on hybrid and electric vehicle technology and manufacturing” (Rob Atkinson, 2009). This statistic is scary when considering that most Americans assume that they lead the way in green technology.

Moreover, when looking at hybrid vehicles, the rare earth element known as lanthanum is a primary component that is part of the nickel-metal hydrate battery in Toyota’s Prius. While the Prius also requires neodymium, the increasing dependence upon these rare earth elements has prompted companies like Toyota to search for other alternatives outside of China (Hsu, 2010). In addition, the Chinese company, BYD, introduced the world’s first plug-in hybrid car at the end of 2008, which was at least one full year ahead of the competition in Japan and the US. The bottom line is that the US is becoming heavily dependent upon importing these materials in order to stay in the race, and doesn’t even lead the race for new technologies.

It’s not just investment

Not only is investment an integral part of this race, but economic policy is also key. China has paid attention to this. In 2001, it cut value-added taxes in half on wind power production, and between October 2007 and June 2008, the government provided $205 million in financial subsidies to companies in wind power. It is important to note that the US suffers in this area also. Because the US does not have economic policies that incentivize companies to pursue and to compete with Chinese companies, there is little private investment.

An authoritarian globalizer or a resource nationalist?

Bremner and Keat refer to China as an authoritarian globalizer. They state that while China has accepted the necessity of foreign presence in their financial system and market, an authoritarian globalize state has small elites that hold a monopoly on political power. Because foreign exposure places pressure on this type of government, there is a constant balance between foreign influence and the elites in politics.

However, due to the nature of China’s investment in renewable energy, I would make the argument that they could also be seen as a resource nationalist. Bremner and Keat describe these nations as leveraging their “energy wealth to consolidate power at home and to flex their muscles abroad… [They] have changed the rules for foreign investment in what they consider to be ‘strategic sectors’ of their economies – especially natural resources” (Bremner & Keat, 2009). China seems to exude many of these qualities especially when considering the fact that they hold many of the resources necessary for renewable energy, both investment and resources.

However, it is also important to remember that the relationship between the US and China is very important. The Yuan is pegged to the dollar, and China is reliant upon the US for exports. Although it’s suspected that the Yuan is undervalued, China does not want the value to go up, because then the value of the exports would go down. Similarly, throughout the Great Recession, China has not wanted the US economy to hurt, because if the US economy hurts, then so do Chinese exports.

Implications

What do the above mentioned changes mean? They both reflect the accelerating shift of global power from America to Asia, which some claim to have been caused by poor US economic policy. While it may be possible for some US companies to benefit from joint ventures abroad (jobs, innovation, tax benefits, etc.), it is apparent that Asian nations are the clear winners, specifically China. The Rising Tiger Sleeping Giant report claims “If the United States hopes to compete for new clean energy industries it must close the widening gap between government investments in the United States and Asia’s clean tech tigers and provide more robust support for U.S. clean tech research and innovation, manufacturing, and domestic market demand” (Rob Atkinson, 2009).

As a result, one primary concern in the transition to clean energy is that the United States is only developing a new dependence on China. While the goal has been to move away from the dependence of Middle Eastern oil, some of the new technologies are dependent upon China, and as previously discussed, it is clear that China’s investment in renewable technology poses an enormous threat to the US.

Although the US clearly faces some new challenges, there are also opportunities. It is evident that the US is losing the clean technology race. If the US does not want to become dependent upon imports, they must implement new policies that encourage domestic investment and an appetite for innovation, research and development, and producing clean technologies on American soil. The US has always succeeded in innovation, especially when looking at Silicon Valley and the culture of start-ups and venture capitalists. Although China is dependent upon the US for exporting goods, the US and Chinese governments need to support policies that fosters collaboration, instead of protectionist competition. Managing these relationships and policies will ensure that the US remains competitive in the race for renewable energy.

A Pegged Currency

I know this isn't marketing focused, but in my Financial Case Analysis class we are examining the benefits and disadvantages of the Yuan being pegged to the dollar. Below are some thoughts and analysis on the current situation, and how China is benefiting.

The current Chinese policy of pegging the Yuan currency to the US Dollar at artificially low rates is beneficial to the Chinese economy as a whole. Lower exchange rates with trade partners lower the demand for imported goods as they become more expensive to Chinese consumers. In addition this makes Chinese exports cheaper than they would be if the Yuan was traded freely without government manipulation of their currency. This benefits Chinese industry at the expense of Chinese consumers in the short run, but long term growth of domestic industry is seen as having many benefits to Chinese society.

By distorting their currency China has become the world’s supplier of cheap unskilled labor and a place that investors can get value for their investments. American companies cannot compete with a Chinese company who has equal capitalization, technology advancement, and human capital of labor due to the current conditions. However, China is currently undercapitalized as a county. They lack the incorporation of technology into their production methods and they lack human capital in many types of industries. To remedy this issue, China has created the opportunity for foreign investors to look towards China as a great investment. Also, investing outside of China is more expensive for domestic investors, thus forcing China to infuse industries with capital to incorporate more technology. To marginalize the effect a lack of initial human capital would have on enterprise, China can compete with overall lower wages offered in labor. Training costs may exceed their foreign competitors, but training costs can be marginalized with low turn-over within a company and can only occur once per employee while a lower wage is always going to benefit the company in terms of lowering costs.

While a simplistic economic model, a Production Possibilities Curve graph can easily depict the reason China has adopted this currency policy to address the issues described above. To infuse capital into their economy they have decided to make it more enticing for investors to invest in China. This is why outsourcing to China at the expense of our other trade partners has occurred over the past two decades. In order to speed up this process of increasing the capacity of production within China, a devalued currency would help foster domestic industries that in the long run will be able to compete against foreign companies which are currently more productive and profitable due to proper capitalization and human capital.

If China were to change their policy and let the Yuan float against other currencies in a free market it is likely that the Yuan would appreciate in relation to these foreign currencies. This can have societal effects that could lead to a dangerous internal political climate. It would be expected that as the Yuan increased in value exports would be reduced. This reduction in exports from an export based economy like China would render it with high unemployment as their labor intensive export based businesses like the garment industry would be rendered uncompetitive against foreign competitors.

While China’s currency policy has hurt American companies attempting to compete directly with artificially cheap Chinese exports it has benefited the American consumer and all companies that do not directly compete with Chinese exports. Every time an American buys a Chinese good that is cheaper than alternatives due to currency “manipulation” it increases the buying power of that American consumer. This increased purchasing power allows American consumers the chance to purchase other goods and services they normally would not have been able to afford. A perfect American company that is an example of this would be Walmart. Walmart has benefited greatly by being a large buyer of Chinese exports and providing American consumers the opportunity to purchase these goods at lower prices than domestic providers can produce them at.

Although one could make the argument that with greater purchasing power we are hurting in terms of reducing the ability to export goods. The question then becomes: Is the benefit greater than the cost? In this case the answer is an emphatic yes. Most of our economy is not subject to Chinese competition. China does not sell us a house in Orange County, a meal in New York or health care in Chicago. On top of that we do not purchase any of their cars or airplanes. Therefore, only a small segment (i.e. clothing and furniture) is harmed, but at the same time this segment becomes more efficient as a result. China has given itself a competitive advantage and competition is good for capitalism.

Being able to purchase Chinese and other foreign products at the lowest possible price makes American companies more competitive. It allows them to sell more products and hire more American workers. Therefore, as some of us would like to render the devaluation of the Yuan as “manipulation” of Chinese currency, we have made the argument that it actually saves and create jobs here in the United States.