October 2010 - Global Economic Watch

Protecting Good Ideas from Attack

10-29-2010 9:49 AM with no comments

There's little so demoralizing as knowing you have a good idea, only to have people shoot it down.  It's even worse when the people shooting down your ideas are your colleagues.  In his new book, Buy In: Saving your good idea from getting shot down, John Kotter, chief innovation officer at Kotter International and emeritus professor at Harvard Business School, identifies four basic ways that people attack bad ideas.  And in order to get your idea through, he argues, you need to prepare for the possible attacks.  He recently discussed the ideas in his book with Sarah Green of the Harvard Business Review:

Posted by Graham Griffith

Seth Godin on Spreading Ideas

10-28-2010 10:45 AM with no comments

In the information age, ideas may be seen as fuel for the digital economy.  But only when they spread.  And we need people to spread our ideas.  The singular Seth Godin has listed 20 reasons people spread ideas.  Here are a few choice selections:

#4...because I have no choice. Every time I use your product, I spread the idea (Hotmail, iPad, a tattoo).

#5...because there's a financial benefit directly to me (Amazon affiliates, mlm).

#9...because both my friend and I will benefit if I share the idea (Groupon).

#12...because your service works better if all my friends use it (email, Facebook).

and #18...because the tribe needs to know about this if we're going to maintain internal order.

Read the full list here.  

Posted by Graham Griffith

Age Wave Co-Founder Defends Her Innovative Generation

10-28-2010 10:18 AM with no comments

Maddy Dychtwald, co-founder of Age Wave, is a Baby Boomer.  And she feels her generation gets  a "bum rap," as being self-centered and narcissistic.  She believes Boomers should be recognized for how they shook up the world, for the better, with their entrepreneurial spirit and their push for innovation.  Here she is speaking with Big Think about the contributions of Boomers to business and society:

Watch the full interview here.  

Posted by Graham Griffith

Macroeconomic Advisers on the Jobless Recovery

10-28-2010 10:02 AM with no comments

The analysts at Macroeconomic Advisers are forecasting that employment in the US will return to pre-Great Recession levels...in 2013.  Yes, jobs are being created (at least in the private sector), they say, but at a very slow pace.  And they anticipate that pace to remain slow.  Here's a look at their forecast, compared to previous recessions:

During the first two years following recessions in the 1970’s and 1980’s, output in the nonfarm business sector rose on average at a robust annual rate of 7.1%, but during the most recent three recoveries, output growth averaged a much more tepid 3.4%. This is comparable to the differences in private payroll employment, which rose at an average annual rate of 3.5% during the earlier recoveries, but at only a 0.1% (!) average annual rate during the last three recoveries. The difference in these two growth rates — a reduction of 3.5 percentage points — is comparable to the reduction in the rate of output growth of 3.7 percentage points.

Read Macro Musing: Are We in Another Jobless Recovery? here.  

Posted by Graham Griffith

Dow Jones's Mattich on Dangers of Quantitative Easing

10-27-2010 12:45 AM with no comments

Alen Mattich, senior reporter for Dow Jones Markets, does not foresee good results from the Fed employing Quantitative Easing to help boost the economy.  He says that equities prices are already inflated, and that QE is another case of the Fed "blowing bubbles":

Posted by Graham Griffith

Bizo CEO Says Beware the Dangers of Using Click Through Rate to Measure Advertising Reach

10-27-2010 12:29 AM with no comments

We're always interested in any coverage of the migration of ad dollars from traditional print and broadcast media to online media.  Russell Glass, CEO of the B2B marketing firm Bizo, has been watching as well, and he says that while billions of dollars a year (somewhere between 3 and 5 billion is his rough estimate), marketers are making one very big, and increasingly costly, mistake: they are using outdated metrics.  He writes at MarketingProfs that some marketers remain wedded to using "click" and "click through rates" (CTR) to measure success in part because they are easy to measure and in part because, well, old habits die hard.  Glass:

However, the click's days are numbered. There is an increasing awareness of some "cracks" in the click's validity, and recent studies by comScore, Microsoft, and others have effectively invalidated the click as an important measure for display advertising.

Bizo's recent study of hundreds of B2B advertising campaigns that ran from January through June of 2010 revealed some interesting findings.

Among campaigns that were being measured and optimized to actions (conversions, downloads, etc.), the CTR was approximately 10% lower than that of campaigns that were being optimized to clicks. In short, campaigns with actions as their goals drive 10% fewer clicks.

The data also shows that of the top 25 inventory sources based on CTR, only six of them fall in the top 25 from a conversion-rate perspective. That means that sites that have great CTRs typically do not offer great conversion rates. Thus, using CTR as a meaningful metric on publisher sites is just as big a mistake as doing so on ad networks, as it would lead a campaign astray almost 80% of the time.

Considering that the goal of any advertising investment is to drive a prospect to a conversion action (e.g., purchase, engagement, a user filling out a form, etc.), the fact that the click-through rate is lower when optimizing to the end action has a profound and clear implication: Optimizing to the click harms a campaign's success.

Read How to Avoid Online Advertising's $1 Billion Mistake here.

Posted by Graham Griffith

Kauffman Foundation's Fourth Quarter Survey of Economics Bloggers

10-26-2010 8:32 AM with no comments

Each quarter the Kauffman Foundation surveys leading economics bloggers to gauge their collective view of the state of the US economy.  The survey results have been rather bleak, and the fourth quarter survey is no exception.  Only 1% of the bloggers surveyed expressed belief that the economy is "strong with uncertain growth" (no respondents said the economy was "strong and growing"), while 34% believe we are either "facing recession" or "weak and recessing."  As for the near-future outlook, respondents were bullish on global output, but not at all optimistic that we will see a decline in poverty or the federal deficit.

Projecting three years ahead, economics bloggers expect global output to rise faster than anything else. A gloomy tone remains with expectations of higher poverty and inequality levels in the United States, and no change to the trade deficit, and opinion is evenly split regarding U.S. competitiveness. The number of panelists expecting more rapid inflation exceed by a seven-to-one margin those predicting disinflation. Sixty-two percent of the panel anticipate higher budget deficits, which is consistent with the strong majority (six to one) anticipating higher real interest rates. The outlooks for employment and GDP per capita growth are net positive, but muted with one-third expecting stagnation for both variables.

Read the full survey results here.  

(H/t Mark Thoma)

Posted by Graham Griffith

Mankiw v. Colbert

10-26-2010 8:17 AM with no comments

First, Greg Mankiw writes in his New York Times column that he will have less incentive to work if Democrats in Washington raise taxes.  Read I Can Afford Higher Taxes. But They’ll Make Me Work Less here. Then he finds himself called mantioned on The Colbert Report: 

 And now, some Harvard students have responded by striking back at Colbert:

Seems the ball is in Colbert's court now.  

Posted by Graham Griffith

Melinda French Gates on the Coca-Cola Example

10-25-2010 8:15 AM with no comments

We posted earlier on Coca-Cola's success in marketing with a sharp eye on the consumer experience.  Melinda French Gates needs no convincing.  She recognizes Coca-Cola's ability to reach all parts of the world, and she's envious.  If we can get a Coke to the most remote villages, she wonders, why can we not get clean water, vaccinations, condoms?  In this Ted Talk, Gates calls on the nonprofit sector to look closely at how companies like Coca-Cola have found global success, and emulate their practices:

Posted by Graham Griffith

Romer: It is Not Yet Time for Austerity Measures

10-25-2010 8:03 AM with no comments

Christina Romer, chair of President Obama's Council of Economic Advisers until last month, is back at her post in the University of California-Berkeley's economics department.  And she will be writing a column for the New York Times (in the Sunday Business section).  Her first column hit newsstands (wherever there are still newsstands) yesterday.  In it, Romer argues that, while cutting the federal deficit is important, "now is not the time."

Some advocates of austerity argue that, contrary to the conventional view, fiscal tightening now would lower long-term interest rates and improve confidence so much that the impact could be positive. But an ambitious new study in the World Economic Outlook of the International Monetary Fund confirms that fiscal consolidations — that is, deliberate deficit reductions — typically reduce growth substantially.

The study considers a wide range of advanced economies over the last three decades, so it doesn’t put too much weight on unusual episodes or focus on examples supporting particular conclusions. It also breaks new ground by looking specifically at times when governments changed taxes or spending with the aim of reducing deficits. Previous studies looked at summary measures of the budget situation, and likely included cases when strong economic performance caused lower deficits, not the other way around.

The recent experience of countries already carrying out austerity measures is consistent with the central finding of the I.M.F. study. Ireland, Greece and Spain have all had rising unemployment after moving to cut deficits.

Taking budget actions now that would further increase unemployment would be not only cruel, but also short-sighted. The longer unemployment remains high, the more likely it is to become permanent as workers’ skills deteriorate and they gradually drop out of the labor force.

Such a situation would be terrible for both the affected workers and the long-run budget situation. Imagine a patient with a slow-growing tumor who is also recovering from pneumonia. The outcome is likely to be worse if the patient is not given time to recover before undergoing surgery. 

Read Now Isn’t the Time to Cut the Deficit here. 

Posted by Graham Griffith

For Coca-Cola, Marketing Success is all About the Consumer Experience

10-22-2010 12:35 PM with 1 comment(s)

Joe Tripodi, Chief Marketing Officer for Coca-Cola, doesn't much care about ad impressions or ad views.  He's much more in "experiential branding opportunities."  He explains what he means by that, and shares some recent successes for Coca-Cola in this short interview from Advertising Age:

Posted by Graham Griffith

Social Media Truths for Small Business

10-22-2010 8:30 AM with no comments

While attending the Blogworld conference, Lisa Barone realized that most small business owners have come to accept some key truths about using social media.  And she shares them at Small Business Trends:

1. You can't be everywhere.

2. You can't always be "on."

3. You can't please everyone.

4. You're in social media to sell.

Do these seem obvious?  Maybe.  Barone:

While the four statements listed above may not seem like anything new, I actually think they represent a growing shift in social media. In the past, we were told to focus on connections, to answer every e-mail, to respond to every blog comment, to be present on every platform possible. However, now that we’re watching these sites mature and our own energy deplete, we’re re-learning that it’s OK to say no.  We’re here to run a business, and sometimes our best has to be good enough. We’ve long been told that what attracts customers in social media is our ability to be human. Sometimes we have to remember that we are only human.

Read 4 Social Media Truths SMBs Can Finally Admit here.

Posted by Graham Griffith

Making the Case for a Value Added Tax

10-21-2010 10:51 AM with no comments

In a speech last week at the Hudson Institute, Indiana Governor Mitch Daniels, director of the Office of Management and Budget under George W. Bush, talked about redesigning the tax system in the US,  Politico's James Hohman reports.  One of the ideas he put forward was to introduce a value added tax (VAT).  And Isabel Sawhill, senior fellow in Economic Studies at Brookings, welcomed the public discussion of a VAT, which she says "would make our tax systems more pro-growth, simpler, and broader-based."

Read more of Sawhill's tax policy analysis here.  

Posted by Graham Griffith

Visualization: The Ups and Downs of October

10-21-2010 10:37 AM with no comments

The latest chart from Catherine Mulbrandon of Visualizing Economics is a striking display of the volatility of the stock market--especially during October.  As she shows, this is the month of some really bad days for the market--8 of the 22 worst days ever, in fact.  But there have been some historically good days in October as well.  Take a look:

For the full size chart, go to Visualizing Economics.  

Posted by Graham Griffith

Three Questions to Ask When Starting a Business

10-21-2010 10:24 AM with no comments

How does one know it is time to jump in the deep end and start a business?  Brad Sugars, founder of the business coaching franchise ActionCOACH, says that the "more you know about your market and your numbers going in, the better off you'll be in the long run."  And, in a helpful post at Entrepreneur, he shares three questions to help determine preparedness.  

1) Is there really a market for my product or service?

2) Do I have enough capital?

and

3) Do I really know my numbers?

Numbers are the language of business, and you need to know and be able to measure your numbers to succeed and survive.

What do I mean?

If you look at your projections and see limited positive cash flow and marginal profit on paper, there is little chance you will see anything different in the market.

You can rationalize all you want about what a great salesperson you are, or tell yourself that “if you build it, they will come," but you need brutal honesty about the viability of a business that doesn't show cash flow and profit in the planning stages.

Simply put, how much of your product or service do you need to sell every day to break even? How much to profit? How much does it cost you to get a new customer? How much will that customer buy the first time around? When will that customer buy again (knowing that repeat business is really where your profits lie)? 

Read  Are You Ready to Launch here.   

Posted by Graham Griffith