The Blueprint

The Rise of China and India

I have my concerns about how content we are becoming as Western society.  I have spent time in Asia and there is no doubt in my mind they are hungry.  They are missing some basic skills and building blocks, but they are quickly figuring out what they are missing and learning or importing.  We have a Chinese au pair that looks after our children.  When she gets off of work she reads books on how to be successful.  She will go to the library and lookup "success" and read as many books as she can.  She will often ask me if I have read the books.  They are not books that I have ever heard as I seek knowledge differently (and I believe more efficiently).  I don't believe this is the best way to learn how to be successful, but it illustrates the aggressive drive I have witnessed throughout Asia.

If you have never heard of TED, which stands for Technology Entertainment and Design, I highly recommend you plug into this stream.  The organization organizes a series of events where they bring together some amazing speakers.  They then selectively choose which speakers to release as videos on the Internet.  They reserve or delay some of the best speakers to create demand to attend their conferences in person.  I saw this video yesterday from Hans Rosling which was quite amazing.  It illustrates how fast China and Asia is catching up with the US and Europe.  He shows income per capital and life expectancy on a graph and then puts the graphs in motion.  

 
He is quite humorous in his description as you get the sense that he is describing a horse race.   Here is a link to the point of the video that is eye opening.  I'd suggest watching the whole video as it is very informative and entertaining.  He tries to predict when India and China will catch up to the U.S.  I wonder what will happen at this point.  When this intersection occurs will they surpass us and leave us behind or as he demonstrates with Japan will they become more like us (and Europe) and we all get on the same trajectory? 

Don't Be The Turkey

Nassim Talem makes the point in his popular book, The Black Swan, that it is human nature to predict the future based on the results of the recent past, no matter how much evidence exists that the recent past may not be a good indicator of what the future holds.  The illustration he gives is a turkey on a farm thats wakes everyday to to be fed by the farmer.  He comes to believe that the farmer is benevolent and that humans are "looking out for its best interests".  He believes this until the day before thanksgiving when he comes to the rapid and startling revelation that his belief system may have wrong.

A recent example is the earthquake in Haiti.  It was well known that Haiti was susceptible to earthquakes.   Since Haiti had did not have a major earthquake in the recent past its government and citizens planned their lives as if an earthquake wouldn't occur.  There is also the question "what could they do about it?".  This is a related but different and more grim discussion.  For example scientist estimate based on past data that a large asteroid will strike the earth about every 100 million years.  The last impact was 65.4 million years ago and wiped out most life on the planet.  A smaller asteroid would be pretty darn devastating and these impacts have happen much more frequently (about every 10,000 years).  What are we doing to prepare for this?  What can we do?

Another recent example is the recent financial crisis.  This is probably the reason Nassim's book became so popular.  Wall street firms, many business and individuals were making so much money due to the increasing value of housing assets.  They thought it would never end.  The recent past was a prediction of the future.  They used the positive affirmation they received from the paper value of the properties and ignored (and often ridiculed) the contrarian feedback that this growth wasn't sustainable.

There are cases of this every day, and a many of these situations are within our control.  There is a personal example that hits home.  I was leading a team of consultant for some departments of transportation in the 90's.  We saw huge bid set distributions being created and distributed to contractors and subcontractors.  When we followed the sets we found that a majority of the documents (whole sets or partial sets) were thrown in the garbage when they arrived.  I thought to myself "this is not sustainable".  

As the market changes rapidly we need to be looking for clues as to what will be more or less valuable in the future and what are we doing today that might not be sustainable in the future.  We need to maximize the profits we make out of the services we have but not come to believe that these profits will continue for ever.

Obsolescence of Music CD's

I met some friends at O'Connells, an Irish Bar in Old Town Alexandria, last Friday for a belated St. Patrick's day celebration.  One of my friends had also invited a friend who was in his 70's.  As we were getting ready to leave this gentleman said he was looking to by a good music CD and saw that Olsson's, the music and book store around the corner, had gone out of business.  He asked us if we knew where else he could find some CD's.  Another friend promptly responded "the museum"!

No More Meals in Coach...or Free Deliveries

Continental is the last major U.S. air carrier to stop serving meals in coach class.  Traveling by air used to be a luxury.  People expected frills.  If you are paying that much money you should get treated well and a good meal was expected no matter how short the flight was.  Airplanes have become buses in the sky.  You don't get a meal on a bus.  Air travel is no longer a luxury.  It is a commodity.  Companies like Southwest or Ryanair set out to compete with travel by car.  As a market becomes commoditized and profits race towards zero there is little room to "throw in" additional services.  The irony is I'm sure many people in the airline industry resisted this change.  "If we don't provide meals we will loose customers."  I'm sure there were people at Continental who said "This is one of our competitive advantages.  If we take this away we will lose customers."  I don't think so.  Its also not just a matter of taking things away.  It is an opportunity to change the service.  They take away the "free" meals in exchange for a better meal as an option at a reasonable price.  I prefer to have a decent meal before or after the flight.  If I choose to buy a meal on the fight I expect to get something good rather than the mystery "meat stick" I was tossed on a United flight two years ago.

Printing services are being commoditized.  Just like the airline industry can't afford to offer all the frills, some of the services that have been offered in this industry cannot be offered for free anymore.  Examples of these are free pickup, free delivery, unreasonable turn around times, and unlimited file preparation.  Changing your pricing and service offerings is not something to be done whimsically.  You need to think through how it is presented and received by your customers, but the alternative to not addressing this is declining profits.  I have found that somewhere in most companies you can find a reasonable ear that understands that their vendors must run profitable businesses.  As I heard from Cameron Herold at BackPocket COO.  "You need to look at other industries to see how they dealt with challenges you are facing.  More than often other companies or other industries have experienced similar issues.  Engage in R&D (Rip-off & Duplicate)."