The Internet Cloud and Telecom angle: Global IT spending to reach $3.6 trillion

Global IT spending is to reach $3.6 trillion in 2012 up from $3.5 trillion in 2011 according to Gartner that is about a 2.86%  growth. Here are some things to consider in these numbers:

  • Cloud means Internet : Following the previous post about what jobs cannot be outsourced from the USA, the cloud means that the data or material is available on the Internet via a password as in Dropbox, Carbonite and other Internet backup services. So what you put up can be worked on from India,Poland or Russia.Think about all the specific tasks you can get done at low cost from overseas. This apart from your own people being able to access a common database. Here Salesforce.com comes to mind as an example, every member of the sales team can acces the status of every sales lead no matter where they are in the world.
  • IT spending is 23% of US Debt: The US Debt is estimated at $15.88  trillion  as of writing this post. Somehow trillion is a unit that reminds one of  the  US debt. Thus, IT spending in the world is over a fifth of US debt and means that global organizations, both public and private, are thinking cost and efficiencies as they spend this kind of money. All the more reason to think about the Internet and what it means for your profession.
  • Telecom is $2 Trillion: A full 2/3 of the expenditures are are on telecom and services and that is great news for telecom companies.  It is likely that a lot of this money is being spent outside the US.Wireless and mobile is going to be huge, further improving communication and making the world flatter. Embracing this trend worldwide is a huge opportunity for the US entrepreneur and innovator. You can look up the time at another world location on your smart phone and can connect almost free with a partner almost anywhere in the world. In fact, Skype allows you to have video calls for free from your smart phone.

All in all an exciting forecast, full of global opportunities for US business. Contact StratoServe.

What jobs are not outsourceable in the US? Going global in Agriculture,Manufacturing and Services

What jobs are not outsourceable in the US will be a question on top of mind as the Presidential election campaigns gather steam.This as globalization and technology moves forward at an ever faster pace.  A useful way to think about the challenge for young and mid-career Americans is as follows:

  • Agriculture: Only a tiny 0.7% are involved directly in Agriculture (CIA Factbook) and there is a larger percentage of folks involved in different managerial,research and other activities, for whom there is the great opportunity of Africa and Latin America. Agriculture related activities in Africa are underdeveloped and the increasing world population needs to be fed and it is a good time for folks in Agriculture and allied professions (say you sell seeds,fertilizer) to look at overseas opportunities. Also great opportunity exists in Latin America.
  • Manufacturing : Manufacturing seems to be at the center of the  current outsourcing debate and angst as it fuelled the American middle class in post World War-II USA.There is no way that American manufacturing of mid skill items like a plastic torch will compete globally.  Two examples come to mind both from the Eastern USA. A factory owner mentioned that the only plastic product made in their industrial park  are garbage cans because they are expensive to transport from China. Similarly, a detergent manufacturing manager said that detergents, particularly concentrated ones are viably manufactured in the USA.  Thus you have the iPhone made in China along with solar panels. Thus Americans must develop the skills for inventing the iPhone as explained in the Smiley Curve of Innovation, through an active interest in the science and technology in the classroom and global marketing skills. The latter is really possible because there are always students and immigrants from any country that you are interested in reaching. These folks are always delighted to tell you stuff that even Google does’nt know!
  • Services:  About  80 % of the population is in service related activities and here only tasks that require personal contact cannot be outsourced. Within services you have a variety of professions that are under seige due to technology. Take healthcare, a nurse’s job cannot be outsourced but a radiologists job can be. More challenging is the outsourcing to technology as has happened for tax preparation and travel agents. Coping with changes requires an active interest in the Internet and all the great opportunities it can offer. No matter what your profession, there is an Internet angle to it that you must understand and develop. You’ll find global opportunities to leverage your skills and and expertise no matter what that Internet angle is.

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Aircraft Marketing:understanding supply chains and global job creation

Aircraft marketing requires an understanding of  global supply chains and global job creation and Ray Conner of Boeing  is right when he says that buyers do not care where the product is made. This  in response to the general jubilation among competitor  Airbus folks at opening up a plant in Mobile Alabama that will create 1,00 jobs in nearby Mississippi. While B2B buyers do not care about where the airplane is made, Governments do care about jobs and political leaders in every country, and states withing countries, do want jobs to come their way. Just consider that three of the four gulf states governors attended the Airbus- Mobile Alabama celebration at the Farnborough Air Show according to the Seattle Times report.

Seattle Times is also reporting that Ray Conner the new CEO of Boeing is a "born salesman". And there is a lot of selling to do given that Boeing has 474 orders for the new 737MAX compared to competitor Airbus has 1300 orders for A320Neo. Ray Conner is a Boeing veteran having started as a mechanic on the 727 in 1977 so he knows how exactly aircrafts work and has for several years been involved in supplier management and headed up the  commercial supply chain. Obviously Conner understands that countries like China and India love to have jobs created as they buy thousands of airplanes.

The connection between commercial and military  aircraft markets is also interesting because in most countries political and government leaders want jobs for their own people. As Mississippi Governor Phil Bryant said " it is a circle of influence," when Airbus was trying to win the US Congress support to get  the 2008 Airforce tanker contract when all the Gulf  State got together. The next contract went to Boeing in 2011 given the US jobs crisis.

While global sourcing creates jobs in the country of sourcing, assembly creates an industrial base with opportunities for local suppliers that lead to jobs in that location.Understanding global supply chains and job creationare  great skills to have if you are involved in aircraft marketing. Contract StratoServe.

The Smiley Curve of Innovation-celebrating the American spirit 4th of July

This is the July 4th weekend in America and celebrations are  underway – and it's a great time to think about the Smiley Curve of Innovation. The Smiley Curve came to my attention reading Fareed Zakaria's great book "The Post-American World," and here are some thoughts on "The Smiley Curve of  Innovation " this American holiday weekend:

  • The Smiley Curve model popularized by Stan Shih of the Acer computer company in 1992 says that starting with a powerful brand, the New Product Development (NPD) process can be seen to create and capture value at both upper ends of the mouth on the smiley face. The owner of the brand needs to come up with great concepts,design, drawings and detailed specifications at one end of the smile and manage great marketing through a great launch including advertising,sales promotion,distribution. The lowest point of the smile is manufacturing activity where the margins are the least but employment for routine assembly line tasks is high.
  • Popularity of the smiley model is very high among Chinese manufacturers who understand that as outsourced manufacturers they make a very small margin on manufacturing. Think of the Apple iPhone where the design and marketing is managed from Apple California and Chinese manufacturers make low single digit profits while Apple makes at least 70% margin and is able to capture the real value of innovation.Similarly at the low tech end,as a brass item maker from India mentioned, that US retailers pay cents and Indian workers put on the price labels of $4.99 and up. No secrets here!
  • American opportunity is therefore more on the two high value ends of the smile, i.e. in idea generation,concept development, design and specifications that require a great deal of higher order science and math skills. And at the branding and marketing end that Americans are best at.
  • Smiles within smiles for services is the flat world effect. Here, for example, if you ask Indian firms to do engineering drawings , they'll do it at a fraction of cost.
  • Big retailers and brands have outsourcing advantage. According to research in the highly regarded American Economic Review by Basker and Pham, big retailers import more stuff from developing countries due to better supply negotiations and brand power that impresses the overseas supplier. But guess what ?  The growth of Dollar stores in the US during the recession indicates that the lower end of the retail market is wising up. And the difference in quality and crowds between Wal Mart and the Dollar Store is not as high as it used to be!

The age of the American Entrepreneur is now because while the rest of the world gets intimidated by Big Brands the American Entrepreneur does not. And certainly the American consumer is far more receptive to new brands and new categories from new entrepreneurs than anywhere else. Digital marketing does level the global market for the American entrepreneurs as well. Happy 4th of  July weekebd! Contact StratoServe.

GlaxoSmithKline 3B$ fine – balancing innovation and ethical marketing

GlaxoSmithKline is to pay a 3B$ fine, the largest ever for healthcare fraud in the US. In the past, numerous big pharma companies including Abbott, Pfizer have been fined and this is something the industry seems accustomed to. It’s important to understand why pharma marketing becomes unethical, if the unethical sales practices are to stop while innovation continues. Here is  how the pharma NPD (New Product Development) process plays out:

  1. Drug discovery and patent – no sooner than an invention occurs patent applications are submitted. The patent is good for 20 years when competitors cannot produce the same drug.
  2. Drug development, testing and FDA approval can take upto 10-12 years involving several phases including testing with animals,healthy subjects, patients etc.
  3. Euphoria with FDA approval:The pharmaceutical drug development is so difficult,expensive and uncertain that it is common to find scientists who have worked 20 years and yet not seen a single product make it to market. Naturally when FDA approves a drug there is euphoria amiong shareholders and the stock market, expectation and hope among patients and their doctors. But by now only 8-10 years remain on the patent, by which time the pharma company must earn what it can.
  4. Prescription drugs paid by insurance: Once prescribed insurance companies including Government programs like Medicare and Medicaid pay for the medicine. Generally over the counter (OTC) drugs are not covered. Between a generic and  a branded, under patent drug- patients,doctors and insurance companies prefer the less expensive generic.
  5. Off Label use– expanding the  use of a drug involves using it for applications other than what it is approved for. Think of the many uses of baking soda beyond baking. Not a huge problem in medicine  if you think about using a body pain medicine for a headache and doctors do keep trying out drugs for different ailments. But this can be a big problem when a psychiatric drug for adults is used on children without FDA approval as in the GSK case. Apparently  the pressure to sell on the sales force is very high.

Beyond off label use there were numerous instances of trying to influence doctors to prescribe particular drugs through inducements such as free holidays,golf, expensive gifts etc. The sales force behavior is consistent with the pressures of pharmaceutical marketing where the pharma sales force is chasing large sales quotas against rapidly expiring patents.

Ideally pharma NPD should involve much more focus at the early stages of the NPD  process so that the FDA approvals are quicker and as off label applications become known, the FDA process to include off label use  should be made easier. The balance between high speed innovation—–> safety and efficacy by FDA—–> earning money by the company within patent periods is a tough task. Doing so is essential if innovation is to continue for big pharma.

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Keeping professional contacts updated needs one more step : Tweets no longer automatic to LinkedIn contacts

Keeping professional contacts updated needs one more step as Tweets are no longer automatic to LinkedIn contacts .You need to specifically share blog posts,Tweets or any other material through the LinkedIn share option. So till Friday June 29, the distribution channel was Blog Post—>Twitter—> LinkedIn. Now it is Blog Post—>Twitter.

It was just after a blog post on the CPSMBlog on Saturday, the weekend delinking of Twittter  to LinkedIn sort of started sinking in. Suddenly the CPSM Blog post or StratoServe posts were  not visible to LinkedIn contacts- why ? Because Twitter has decided that it needs to manage the interface between Tweets and the audience without digital distributors like LinkedIn. This to allow advertising as people read Tweets and so better  monetize Twitter.

But what exactly is the difference between one's Twitter audience and LinkedIn contacts? Those who Tweet put out 140 character messages without unduly thinking about them. Followers like the Tweets and the topics covered.

On the other hand LinkedIn contacts are typically those who are interested in professionally engaging with each other and also help each other with opportunities. These professional 'friends' are different from your Facebook friends who may have no professional common interests.  But if anyone follows you on Twitter, they don't know you necessarily but like your ideas. Its not entirely clear how a Twitter follower and the person being followed can help each other with opportunities. And that is where LinkedIn comes in.

In an earlier post the power of LinkedIn to leverage weak professional ties for opportunities was discussed. The point being that you already know your friends (frequently contacted via email) but the real opportunities are from friends of friends that LinkedIn and to some extent Facebook allows.

Now if you want your Tweets to go to your LinkedIn contacts,it appears,  you would have to start by sharing at LinkedIn and checking the Tweet box so that the LinkedIn—-> Twitter channel starts off. You cannot do vice versa and to avoid confusion it is probably best to Tweet separately and push out LinkedIn stuff to your LinkedIn contacts separately, and not check the Twitter box, within LinkedIn.

This is just initial thoughts over the weekend since the LinkedIn-Twitter split. More as things get clarified. Contact StratoServe.

Innovation needed: Healthcare Exchanges that make people want to buy

The Affordable Care Act  (also Healthcare Reform, Obamacare) was upheld  yesterday by the US Supreme Court and now the focus for the Insurance Industry, States, Federal Government and the Healthcare supply chain should be to make it all work. Easier said than done if you see the enormous material that exists on the FAQ pages of the CCIIO or Center for Consumer Information and Insurance Oversight. And this is when most folks had doubts about the Supreme Court allowing the law to stand. Chief Justice Roberts has provided a great  marketing clue in his brilliant summary of the majority opinion. Justice Roberts said that the Government does not have the right to force people to buy something by imposing a fine if they do not. However, the Government can impose a tax on those who do not buy. If people don't want to buy then they are slapped with  a  fine (now a tax) that neither insurance companies, healthcare providers or Federal and State Governments really want. What all organizations, healthcare B2B and B2G want is that everyone buys insurance. Here are some suggestions to make this happen:

  • Think early stage Insurance market:  The insurance market (including life, property or health insurance) at early stages needs a lot of effort,explaining and US Insurance marketers went through this launch experience  at least two generations ago. Ask the sales folks in developing country insurance markets for ideas that work and explore how insurance pioneers sold insurance products initially in the US.
  • Segment through big data: Data exists on all the 30 Million who are un-insured. Make it easy for them to get insurance. Remember at least 6 million (20%) of these uninsured do not have Internet access. This estimate given that Internet penetration in the US is about 80% and the less affluent is unlikely to have Internet access. Something different from an Internet portal for this segment needs to happen.
  • Exciting Sales Promotions and Point of Sale: Reaching and communicating with the uninsured is a challenge and exciting sales promotions might help. Those using only emergency rooms can be provided with free insurance  sign-up so that some costs shift to the less expensive primary care stage.
  • Insurance as Risk Cover for BOP :  Insurance covers risk and risk is felt least at the bottom of the pyramid (BOP), because there is so little to lose. To motivate the young healthy but poor to buy insurance will need some novel marketing ideas that are being used in multiple categories in the developing world. Small packages of offerings at very low cost works well and gets the market primed to buy more as they can afford it.
  • Keeping  it simple for the consumer is essential despite the huge length of this law and its complications. Think iPhone!

All in all , exciting times for all folks involved in making the Healthcare Exchanges work. Contact StratoServe.

Innovation: finding Lead Users from the Internet using forums,blogs and social media

One of the neatest innovation sources is the concept of “Lead User” introduced by Eric von Hippel of MIT in 1986. Finding Lead Users on the Internet using forums,blogs and social media is a great possibility , but first about the concept of lead users.

[ Note last update January 23, 2021- links and some text]

The video above explains the concept in von Hippel’s own words. To explain further: if you have a problem and your existing suppliers are unable or unwilling to help and you are really interested in finding a solution; something incredible can happen. This happens when you are an enterprising type and the problem bugs (i.e. troubles) you enough to find a solution. . A famous example is of scientists finding lab equipment that does not perform all they want the equipment to do. So the scientists try to ask the sales folks of the supply company and they are friendly but clueless as they are just trying to sell what they have ( remember this is the 1970’s… ). So the scientists devise the solution and it works! So they scale up and modify all the equipment they have. The next time the equipment salesperson visits, they proudly explain their significant innovation. Sales folks understand solutions and customer excitement when they see it. So they bring back the innovation  and prototype to their own manufacturing and R&D. This product is now something that is already proven to work at the customer’s site: a sure recipe for new product success !

The trouble was finding the lead user in any category. A huge amount of legwork or at least phonecalling was involved. Following a snowball type of technique you had to call all sorts of people who might have vague connections to the the type of problem you were trying to solve in your industry. Such “solutioneers,” could be from a different industry as ABS brakes from the aerospace industry that reached the automobile industry.

Today however, with the Internet, lead users are very open to sharing their success online via forums,blogs, YouTube and social media. This sharing is mostly for  for non-confidential information from the point of view of the lead user. Thus a scientist who studies microbes and diseases  and modifies a microscope is not talking about the science surrounding the microbe ( a secret)  but rather about the modification of the microscope that will help other scientists who are not getting solutions from the microscope suppliers.

Given that identifying lead users has become so much easier and cheaper today, it does seem to be an innovation idea to pursue vigorously, no matter what your industry.

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Why and how does Orbitz steer Mac users to upscale hotel rooms?

Orbitz the travel website is being criticized for segmenting the market between those who arrive at their website via Macs compared to PC's. The question is why and how does Orbitz do so? But first the marketing logic of "why" for this segmentation.

The Mac user is distinctly different from the PC user in that they spend at least $500 more for a computer particularly if they are not using the Mac for its highly acclaimed design abilities. And if you think about it the Mac user values usability,elegance and all other things being equal – will be able and willing to pay more for a better hotel room. So it makes sense for Orbitz to show Mac users hotel rooms that are upto 30% pricier than what the supposedly less affluent PC user sees. There is one snag though, and that is that a large segment of Mac users are not tech savvy enough to try and sort the hotel room prices from "low to high." And for this segment it does seem a bit unfair to show them the pricier hotels first. Because in the Internet world the expectation is that the seller will be completely transparent and fair even when it is possible to sell a more expensive value added product that the buyer might actually appreciate.

To clarify, recall the neighborhood travel agent we all used to go and meet before much of the travel business moved online. If you wore Armani and arrived in a Ferrari it is very unlikely that your human travel agent will talk about economy tickets and cheap motel rooms! Instead it might be entirely appropriate to offer charter flights and palace resorts. OK the Ferrari parallel with the Mac user is extreme but just to make the point that in the offline sales world, salespeople always look for cues to offer and tailor appropriate products and services….. so too with the online world.

Web analytics allows you to segment your web visitors by device ( iPad, Mac,PC) and operating system (Windows 7, OS X). So when a visitor arrives from a particular device/operating system a more appropriate bunch of products are shown. Is it possible to exactly predict the personality,preferences of an individual from what operating system they use? Not entirely- but it does give some marketing insight. And it is free to the marketer, so long as the marketer is willing to look at the web analytic data.

The consumer though, needs to become much more aware. Unlike the offline world where one would be self-conscious in a designer suit or high end luxury car, consumers tend to forget that as web analytics gets better they are being extensively profiled that can seem creepy at times. For starters though consumers need to shop around  and sort prices from "low to high." All this convenience of comparison Internet shopping does come at the price of cosumer privacy. Contact StratoServe.

How does your off-line marketing and sales fit in with your digital marketing?

CEO's and CMO's are trying to figure out how to integrate their off-line marketing and sales with their digital marketing efforts. Since digital marketing gets too techie/nerdy the creative right brained folks in marketing,sales and advertising seem to avoid getting into the possibilities that digital marketing and web analytics offers. By doing so the more techie folks involved with analytics do get paid but do not feel that they are making a difference to the marketing efforts of the organization. Bad for morale and worse for the great things that are possible from free web analytics like Google Analytics.

Here are three things that CEO's/CMO's should ask their analytics staff:

  • Where do our customers come from? This question is very easy to answer and you might be amazed that you have upto 40% web visits from markets and countries that you do not serve i.e. you do not have a distributor and do not ship to.  Think of these countries as potential markets. A whole host of opportunities from JV's, distributors and agents are possible. Explore,…
  • What happens before sales conversion? The sales conversion may be an e-commerce order or a contact form that you want leads to fill up. Analytics data tells you exactly how many other touchpoints (called multi-channel funnels in Google Analytics)  on the web let to the prospect coming in to that form and deciding to fill it up. Shockingly, the digital touchpoints alone can be 15-17 including arrival at your site from different search engines like Google,Bing and Yahoo; Social Media like Facebook and Pinterest or simply being refered from an AdWords PPC campaign. This does not even account for all the good work you do off-line including the massive hoarding you have on the highway or the direct mail campaign that you have got going.
  • How many visits from mobile? And you'll be surprised at how this number is growing for your own website. Does your website show up well on a cell phone screen or tablet? Given the projected growth in the mobile web– it might be a good idea to ask your web design folks to make sure that the website is nicely visible on mobile. 

Just these things will give you huge pointers to what you can do more effectively in the off-line world. For example, is your merchandising, sales force and distribution responsive to the geography that has a large number of web visitors?…. is just one of the questions that will pop up. Such questions will help you align your off-line marketing and sales to your digital marketing efforts. Contact StratoServe.