Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

Never going to let you go – the failing businesses clinging desperately to baby boomers
Probably the driving factor of the consumerist society’s development was the baby boomers’ growing up.

Through the last fifty years everything from Coca-Cola to baby products and hair loss treatments has been aimed at the cohort born between 1945 and 65.

For many businesses and marketers this group has been so profitable it’s been hard to let them go.

The US motor industry is a good example of this with Bloomberg reporting the over 55 age groups are dominating domestic car sales as younger folk turn away from car ownership.

A similar thing is happening in Australia as TV executives decide that competing with the internet for millennials is too difficult so sticking with the over 50s market is safer.

“We’d go out of business if we stayed with our traditional demographic of 16-39.” Channel Ten CEO Hamish McLennan told the Mumbrella360 conference in Sydney earlier this year.

The problem for both the US motor manufacturers and Australian TV stations is the trends are against them.

For TV stations trying to compete against the internet, the older age groups are following their kids across to the web at the same time that they are beginning to save for retirement.

That need to save is also working against the car dealers, while many boomers fawn over new cars a large number simply aren’t going to be able to afford these indulgences. It’s not a good prospect for the motor industry.

In the meantime, younger people are turning away from the motor car, Bloomberg quotes University of Michigan Transportation Research Institute s researcher Michael Sivak who penned a report on generational shifts in the US motor industry.

“I have a son who lives in San Francisco; when I get a new car and I tell him what I got, he couldn’t care less,” Sivak said. “To him, it’s a means of getting from A to B. He goes into great lengths about taking a BART or bus, even though it takes him an hour longer. He does have a car, but uses it very rarely.”

The movement away from the motor car indicates something much more profound about western society — if the baby boomer represented the age of consumerism, the entire Twentieth Century was defined by the automobile.

For politicians and town planners wedded to a 1950s view of economic development, it may be they are making terrible and expensive mistakes in pushing freeway and other road projects.

While aging baby boomers purr over their expensive cars, the forces of history may be passing them by. Those businesses pandering to those older groups might just want to consider whether they want to be left behind as the economy, and the kids, move on.

It’s comfortable to cling onto what has worked for the last fifty years, but sometimes the lowest risk lies in letting go.

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August 6, 2013
Downward trends and demographics mark the end of consumerism
One of the features of the late Twentieth Century economy was how consumer spending came to dominate the economy – as manufacturing moved offshore, mines closed down and agriculture became largely automated, many developed nations’ growth came from retail spending.

Today’s release of retail spending figures by the Australian Bureau of statistics shows how that economic model too has come to an end. A post on the Macrobusiness blog illustrates the steady, structural decline of retail spending in Australia.

Since 2000, the rate of growth has been declining, only low interest rate policies over the last two years has kept retail sales at a steady level.

Those businesses whose business models are built on the assumption of high growth rates have a big problem – its no coincidence it’s the department and clothing stores are among the loudest complainers about taxes, labour costs and rents as they see their sales and profits shrinking.

Basically the Twentieth Century era of consumption has come to an end as households have maxed out their credit cards. Now that many of those households are now older, they simply don’t need to spend as much anyway.

With the demographic, economic and cultural changes now happening in society it’s a bad time to be planning on massive expansions in household spending and debt as we say in most western countries from the 1960s onward.

It’s time to think different, and be a lot smarter about getting consumers to buy your products. The era of the 72-month interest free deal is over.

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August 5, 2013
Realising value from the internet of everything
How much opportunity does connecting all our machines to the internet really offer businesses and society?

Cisco’s Internet of Everything index released last week looks at one of the great opportunities facing today’s managers in realising business value in these new technologies .

On Cisco’s calculations, the internet of everything is worth over $14.4 trillion to the world economy and nearly half the business benefits are going wasted.

Germany and Japan lead the pack and, as discussed yesterday, Australia wallows between China and Russia.

Cisco comparison of countries

Despite German businesses being the leaders, Cisco estimates $33bn, or nearly 40% of the potential gains, isn’t being realised even in that country.

How different industries are using the internet of machines is notable as well, with Cisco claiming the biggest benefits currently being realised by the IT industry while the greatest potential lies in the service, logistics and manufacturing industries.

Internet of everything value by industry

If anything, these projections could be on the conservative side with Cisco estimating fifty billion devices connected to the net by 2020. Given the rate of smartphone being sold and everything from vending machines to clothing being online, it may well be ten or even a hundred times that number.

The real challenge for businesses in all these projections is how individual organisations can realise this value in their operations.

For some businesses, there’s plenty of existing opportunities with well established services in areas like field services and logistics tracking the locations of staff and packages. These are relatively simple to incorporate into existing operations.

In other applications, businesses will find things more complex as the connected devices will tie into analytics and Big Data plays. These won’t be simple.

One particularly important area for the workforce as a whole in business process automation where many tasks currently done by humans can be carried out by machines talking to each other.

This is already happening in fields like fast moving consumer goods and hospitality where stock levels can be automatically monitored and replacement stock ordered in without staff being involved. As the technology becomes more widespread this will threaten the roles of many previously well paid managers.

Many of those managers though will be challenged anyway unless they’re prepared to deal with the changes that internet of things is bringing to their businesses.

How do you think the internet of everything will change your business?

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August 4, 2013
Is Australia falling behind on the internet of everything?
Last Friday Cisco Systems presented their Internet of Everything index in Sydney looking at how connected machines are changing business and society.

Cisco Australia CEO Ken Boal gave the company’s vision of how a connected society might work in the near future with alarm clocks synchronising with calendars, traffic lights adapting to weather and road conditions while the local coffee shop has your favourite brew waiting for as the barista knows exactly when you will arrive.

While that vision is somewhat spooky, Boal had some important points for business, primarily that in Cisco’s view there is $14 trillion dollars in value to be realised from utilising the internet of machines.

Much of that value is “being left on the table” in Boal’s words with nearly 50% of businesses not taking advantage of the new technologies.

Boal was particularly worried about Australian businesses with Cisco lumping the country into ‘beginner’ status in adopting internet of everything technologies along with Mexico and Russia, with all three lagging far behind Germany, Japan and France.

In Boal’s view, Australian management’s failure is due to “the focus on streamlining costs has come at the cost of innovation.”

This something worth thinking about; in a business environment where most industries only have two dominant players and the corporate mindset is focused on maximising profits and staying a percentage point or two ahead of the other incumbent, being an innovator itsn’t a priority – it might even be a disadvantage.

For Australian business, and society, that complacency is a threat which leaves the nation exposed to the massive changes our world is undergoing.

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August 3, 2013
What happens when the power goes out?
Cisco gave a media and analyst briefing earlier today on the Internet of everything looking at how various technologies can help with tasks ranging from reducing traffic accidents to improving productivity which I’ll write up later.

One of the analyst’s questions though is worth pondering – “what happens when the power goes out?”

For most of the industrial processes discussed by Cisco and the panellists, this would be a hassle but most of the systems would, or should, be designed to fall back to a default position should the power fail.

On a much bigger scale though this is something we don’t really think through.

In modern Western societyour affluent lifestyle is based upon complex supply chains that get the food to our supermarkets, fuel to our petrol pumps, water to our taps and electricity to our homes.

Those chains are far more fragile than we think and few of us give any thought to how we’d survive if the power was off for more than a few hours or if the shop didn’t have any milk and bread for days.

It’s one of the fascinating thing with the end of the world movies. When the meteorite hits or aliens take over then our power and food supplies probably have only 72 hours before they dry up.

After that, you’ve probably got more to worry about your neighbours trying to steal your hoard than being ripped to pieces by zombies.

Most of us probably wouldn’t cope without the safe, comfortable certainties which we’ve become used to.

One thing is for sure — if the power does fail, then most of us will have more to worry about than whether our smartphones are working or whether our geolocating, internet connected fridge is tweeting our wine consumption.

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August 2, 2013