Monthly Archive for December, 2012

Opportunity Amid the Tumult: Part 2

As this space previously anticipated, 2012 produced disruptions, dislocations and crises in a slow growth world. China slowed as it changed its leadership in a totally opaque manner. India slowed, amid the usual chaos and corruption, but with citizens demanding improvement. The European Union endures its slow-motion public debt crisis, the result of indecision coupled with bad decisions. And then there is the United States.

The only modestly positive event was the re-election of Mr. Obama. This was helpful to America solely because the alternative candidate was so wrong-headed about so many issues, when he was not being totally vacuous. The difficulty is that Mr. Obama remains, what we have long noted, a president devoid of strategic vision or a killer instinct. As a result, he now presides over a fully dysfunctional government. The largest economy on earth dances on the edge of disaster, without any coherent economic policy, never mind actual budget. As with the previous debt ceiling fiasco, the debate over the “fiscal cliff” is incoherently stupid, ignore of the facts unless it is denying them. All the while, Mr. Obama pleads for compromise and good will as if he were teaching a civics class in high school. He is still incapable of saying that compromise is impossible because the other side are fools. So America proves itself incapable even of managing its short term finances; all its long term problems, like the erosion of its educational system and its unfunded health and social system, are unaddressed.

Let us remember that Mr. Obama barely won against an inept opponent and with America’s changing demographics on his side. The Senate and House of Representatives remain as before, with the idiots in charge in the House and the no-ideas-at-all Democrats barely able to run the Senate. Mr. Obama failed to defeat his enemies in the House, and there is no sign that he really tried. His highly accomplished financing and campaign machinery is rolled out only in presidential elections and only for him. Notice that the media barely covers any of Mr. Obama’s initiatives to regain the House and strengthen his hand in the Senate; that was because there was not much to cover.  But he cannot bring himself to do so since he would have to shed his bipartisan identity. Unfortunately, America needs a political street fighter.

So the world’s future is its immediate past, as the pressures of the global economy cause political indecision abetted by a confused and misinformed public.  Canada retains its better than normal situation, the result of a handful of sensible decisions made years ago, but still struggles not to get swamped in the churning waters of planetary pressures.

So what is an individual to do in such an environment?  Bet on the consequences of stupidity.

The economic environment continues to become harsher. The usual consequences of more competitors is the need to work more effectively and innovate faster, even as profits inevitably shrink and worker compensation falls. This result of the global economy would have been challenging enough with rapid growth.  But slow growth removes the lubrication of the rising output, making adaptation even more painful. Bet on this.

Serious advantage awaits those whose products and services offer either edge or escape.

Edge in the competitive wars means either a powerful productivity tool, or a commanding marketing facility.  Be a innovator who develops them. Or an entrepreneur who introduces them. Or an investor who supports those who do.

But many companies offering productivity or marketing tools seem not to be thriving.  And this just adds to the opportunity since it is being poorly exploited by some of those who claim to see the opportunity.  The problem is that they are fighting yesterday’s economic wars, with tools too modest to achieve much advantage.  They look for quick and obvious answers, ones that do not take too much rigorous thought, that do not require challenging conventional wisdom, that do not require uncertain experimentation and that do not march into spooky realms of creative thought.

So we are swamped with analytics of all kinds. But the world does not need more data; it needs answers, solutions and decisions. So where is the software that tells managers what to do, directly and exactly? Impossible? Too complicated? Are you so sure?

[A few companies know that “decision” software  scares people; so they call it analytics when it is something quite beyond. Know who?]

Escape is also a sure bet. In a fiercely demanding world, escape from its pressures is highly valued today, and will be more highly valued tomorrow.  And as with edge products, much opportunity abounds, left by those who look for the obvious and easy. The world of escape products is wildy uneven, producing handsome profits one minute and punishing losses the next.  The classic problem is that an escape product [game, song, movie etc] quickly loses its appeal since diminishing benefit sets in quickly.  So social media booms since it is the newest escape product.  But what happens when its appeal fades, as it will. Or what strategy might help it evolve into an ever morphing seductive environment? It does not have that attribute yet.

So you think that the users, so many unique people together, will find ways to entertain themselves forever? Really? Then why is YouTube, which used to be sure user-generated content was all it needed, looks to other sources?

Why does the movie and game industry produce such erratic profits? Too many sequels? Too much imitation? Too little creativity? Too little risk taking? What is really wrong with this picture?

Further discussion involving opportunity will be provided in subsequent postings.

May 2013 be a year of success and conquest.

[Why was there such a long interruption between postings? Larry was thinking.]