How about that Land of Oz? First it weathered the Asian Crisis of the late 90s. Now it seems to have come through the Global Economic Crisis as strongly as any developed economy. It is tempting to say that Australia's success is good fortune, a case of an economy not quite large enough, or simply too rich in mineral wealth, to fall victim to the plight of Western trading partners. But as The Economist's John Grimold points out, starting in 1983, governments from both the left and right put forward important economic reforms that appear to have strengthened the foundation of one of the world's wealthiest nations:
The incoming government in 1983 led by Bob Hawke, a former trade unionist, was the first to take serious remedial action. With the popular, politically astute Mr Hawke presiding, and the coruscating, aggressive Mr Keating doing most of the pushing, this Labor government floated the Australian dollar, deregulated the financial system, abolished import quotas and cut tariffs. The reforms were continued by Mr Keating when he took over as prime minister in 1991, and then by the Liberal-led (which in Australia means conservative-led) coalition government of John Howard and his treasurer, Peter Costello, after 1996.
By 2003 the effective rate of protection in manufacturing had fallen from about 35% in the 1970s to 5%. Foreign banks had been allowed to compete. Airlines, shipping and telecoms had been deregulated. The labour market had been largely freed, with centralised wage-fixing replaced by enterprise bargaining. State-owned firms had been privatised. A capital-gains tax and a valued-added tax had been brought in, and the double taxation of dividends ended. Corporate and income taxes had both been cut.
These reforms have done much more to transform the Australian economy than the recent improvement in the terms of trade. They have also transformed the country.
Still, the question is whether Australia will continue to be a model economy. The Economist offers this short video primer on the Australian economy and potential challenges ahead:
Read the full Economist article here.
And listen to an interview with Grimold here.
For a Memorial Day weekend post, Don Taylor of the Incidental Economist took a break from posts on major national economic and health care policy discussions to analyze something closer and dearer to our hearts (and stomachs): barbecue. Or more specifically, the economics of barbecue:
I can vividly remember two pig pickins at the home of my grandparents: one to celebrate the wedding of my mom to my step father, and the other to celebrate the life of my grandfather, the afternoon after he was buried. The menu for the two events was exactly the same, but the purpose for the gathering was not. Why the pig pickin?I think it has to do with the economics of the ‘cull hog.’ A cull hog is a pig that develops a problem that decreases its desirability as it is being ‘topped out’ or grown to a size to take to market to be sold for slaughter (about 180-200 pounds is optimal). When something is wrong with such an animal, such as having an injured foot that would cause a noticeable limp, or having a bulging hernia, it greatly reduces the price that an animal can be sold for at auction. I can remember my grandfather pointing out a hog with a hernia one day when we were loading animals to take to sell at market and saying we would save that one for a pig pickin he was going to hold to celebrate my grandmother’s birthday in a few weeks time. Because the price that could be gotten for such an animal was so low, it made it much easier for people to have large feast celebrations on momentous occasions. And if you raise many pigs, some of them will be such cull hogs, so there will be a steady supply of such cheap animals. And access to such pigs was relatively easy in the past, so many people could get and afford to buy such a pig because the price that could otherwise be obtained for them was so low. Even 30 years ago, there were few people who lived in this general area who didn’t have some connection to a farm, and 100 years ago this would have been even truer. And one 200 pound hog would yield a dressed carcass that weighed ~ 140 pounds that would yield around 45-50 pounds of edible meat, easily feeding 100 people or more. If even 1 in 5 of the 100 attendees brought a side dish or a dessert to share, you had a feast, for a relatively low cost.
Read The economics of barbecue here.
Not many years ago, the only businesses that needed content editors were in the media business. Now, most companies are essentially content creators in some capacity. As Ann Handley, chief content officer for MarketingProfs, writes, "everyone doing business online is a de facto 'site publisher.'" With Chief Content Officer becoming an essential management position, Handley offers this list of "11 key traits" to look for when hiring:
1. Training as a Print or Broadcast Journalist2. Nose for a Story3. Digital Intuition
4. Business Acumen
5. An Amateur Passion
6. A Community Leader
7. Social DNA
8. An Open Mind
9. Knowledge of the Industry... or Not
10. A Winning Personality
11. Editorial Skills
Read Handley's elaboration on these traits here.
The BBC informs us that the first 3D ad for the iPad has gone public. Cooliris developed the ad (for a new Weather Channel series). We're on the lookout for the ad itself (let us know if you have seen it, and share your impressions). But thanks to MarketingVox, we were able to track down this demo from Cooliris on their platform for 3D ads:
It seems, as the BBC story points out, that the near future of 3D ads depends a lot on getting the cost for producing a 3D campaign down. But given how quickly production costs have dropped for other new developments in the digital realm, it appears it is time to start paying attention to 3D and getting a sense for how this technology might be helpful in connecting with consumers.
Writing Forbes's Work in Progress: Career Talk for Women blog, Holly Green advocates an end to strategic planning. Instead, she argues that "strategic thinking" is the proper approach in today's business climate. The old approach is static, but the new approach is based on developing a system that allows a company to respond on the fly in an ever-changing environment. Green writes:
Strategic planning has a beginning and an end. It is typically conducted by senior management, and usually results in a formal written plan. Strategic thinking never ends. It becomes an integral part of how the organization conducts its business, and needs to be practiced by employees at all levels.
Green argues that successful managers will develop strategic thinking in their organizations by doing the following:
Focus on a target. Ask the right questions. Balance the big picture and the details along the way. Explore new channels.
Teach strategic thinking skills. Stage your field of vision.
Read Shifting From Strategic Planning to Strategic Agility here.
We spend a lot of time here at The Watch looking for analysis of the latest innovations in digital media and how they are changing the way people do business in the world today. And much of that is focused on business in the developed world. But it is important to also recognize that digital innovation can make even more of an impact in the developing world. London Business School professor Kamalini Ramdas addresses the power of social innovation on business and life in Bangladesh in this Wall Street Journal interview:
Mark Thoma is no pessimist. He believes that the economy will recover, just as it has
after past recessions, and even the Great Depression. He even points out that the US economy is now recovering at
"trend rate"-matching the long, long term rate of growth of GDP from
1870-2008. BUT, Thoma points out
that this recovery is still going to take a good bit of time. He shares this
projection in his CBS Moneywatch column:
Read Does This Ease Your
Worries?: US GDP from 1870-2008 here.
While some media experts have become skeptical of the future
of blogging, and wonder if it hasn't already jumped the shark, the power of
blogs in the small business world seems to keep gaining steam. Martina Iring, small business marketing consultant and blogger
at Small Business Bliss, is a true believer. And she offers up five reasons all small business owners
should be blogging.
SEO (Search Engine Optimization, or Google "juice")
Email marketing content
A new communications channel
A quick and easy way to post updates
Food for social media
Read 5 reasons blogging rocks for small business here.
(H/t Small Business Trends)
As Dean of Harvard Business School, Nitin Nohria is charged with leading the development of some of the top business leaders of the future. This includes teaching students about business ethics. Nohria rejects the notion that there are simply bad people who do bad things. Rather, he argues that overconfidence in one's own "moral capacity" is often the key problem in ethical failures in the business world (and in life, in general, we presume). Nohria recently addressed this "capacity for moral failure" in an interview at Big Think:
The latest Thomson Reuters/University of Michigan consumer
survey shows that American households are becoming more wary of inflation. While the survey showed consumers'
anticipating 3% inflation back in December, now they are expecting inflation to
Bharat Trehan, a research advisor at the Federal Reserve Bank of San Francisco, warns us not to put too
much stock in this forecast (largely because of how energy prices affect inflation expectations). He
shares the following graph in an Economic Letter for the San Francisco Fed:
Figure 2 shows the results of a regression, a statistical
exercise that allows us to estimate how much attention consumers pay to recent
core and noncore inflation in setting their inflation expectations for the year
ahead. Importantly, the statistical procedure allows for the possibility that
the amount of attention consumers pay to either measure of inflation can vary
The black line in the top panel of Figure 2 plots the
estimated response of household inflation expectations to recent core
inflation. To take one example, the estimate for the fourth quarter of 2000
shows that, if recent core inflation had been one percentage point higher than
it was, households would have expected 0.4 percentage point more inflation over
2001. As the figure indicates, the estimated response of consumer expectations
to core inflation was unchanged for much of the subsequent decade, though it
did rise a bit in 2007 and 2008. Perhaps more noticeable is the decline since
2008, which brought the black line to about 0.1 by the first quarter of 2011,
the end of our sample. The two blue lines are error bands that provide a
measure of the uncertainty around the estimated response. Two-thirds of the
time, the true response should lie between the blue lines. The lower blue line
fell below zero beginning in 2010. Once the lower blue line falls below zero,
statistically speaking we can no longer distinguish the estimated response from
zero. In other words, we can no longer be sure that households are paying attention
to the core inflation rate when forming inflation expectations.
The bottom panel of Figure 2 presents the relationship
between household inflation expectations and noncore inflation. Household
response to noncore inflation seems more variable than household response to
core inflation. It is high at the beginning of the sample and falls toward the
middle. In the past few years, household expectations seem to have become more
sensitive to noncore inflation-at about the same time that household sensitivity
to core inflation has gone down.
Read Household Inflation Expectations and the Price of
It's Déjà Vu All Over Again here.
Six years ago Paul Graham launched Y Combinator, and created a new process for funding and developing startups. Y Combinator brings selected entrepreneurs to Silicon Valley for a few months, and gives them some, but not a lot of, funding ($18,000). The conceit is that the money is not so much the key to getting a successful business off the ground. Rather, it is the training that matters. And that training is hard to come by in traditional educational institutions.
So the question then is "who is Y Combinator looking to tap for this training?" That`s the question that Charlie Rose asked Graham at the TechCrunch Disrupt Conference. And Graham`s answers might surprise you. He`s not looking for simply the "best and brightest."
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While many people focus on exciting new developments in social media, email remains an essential tool for marketers. In looking for advice on how marketers can get more out of email outreach, Adam T. Sutton, Senior Reporter for Marketing Sherpa, turned to Gaby Paez, Associate Director of Research for the Conversion Group at
MECLABS. Sutton used a recent campaign by Slow Food, a global nonprofit organization, as a case study. But Paez offered advice that is applicable to a variety of organizations. Here are the five "tweaks" Paez recommended:
Tweak #1. Emphasize the sender's brand
Tweak #2. Gradually increase subscribers' commitment
Tweak #3. Over-clarify all confusing topics
Tactic #4. Clearly connect emails and landing pages
Tweak #5. Prioritize a single call-to-action
Read Campaign Analysis: Optimization expert lists 5 tweaks to boost an email campaign's conversions here.
The Global Economic Crisis was particularly difficult on many cultural institutions. With patrons, foundations, and public institutions all going through needed belt-tightening, museums and arts organizations have seen funding drop significantly. So the efforts of Jack Meyer, chairman of the Boston Ballet, provide some interesting lessons--and not just for leaders of not-for-profit organizations but for all managers. Meyer took over the Boston Ballet in 2009. He spoke about managing the ballet's financial recovery during the downturn in this Harvard Business Review interview:
Citing data from the e-tailing group, eMarketer argues that tablets appear to be better shopping devices than smartphones. So while fewer people own tablets--eMarketer estimates that just 7.6% of the population will own tablets in 2011, compared to 23.4% of the population for smartphones--marketers might be wise to focus attention on the iPad and its competitors.
Those who do have a tablet are eager to use them for shopping, according to the e-tailing group. One in 10 tablet owners reported using their device for browsing or buying online every day, vs. 6% of smartphone owners. They also made more purchases. Nearly one in four had made at least six purchases in the past six months, compared with 15% of smartphone users who had done they same. They were also much less likely to never use tablets for online buying.
Read Tablets Beat Smartphones for Online Shopping, Buying here.
Back in October, we told you about the Planet Money folks buying a small bit of gold. It was a bit of an experiment, designed at figuring out why gold remains so important, and why it becomes valued in times of economic uncertainty. Last week, they sold their gold. And they were left with a big question: "What is the fundamental value of gold?" They shared a little of what they learned about that value in a report on NPR's Morning Edition.
Take a listen.
Read and listen to Planet Money's series on gold and the meaning of money here.
The professional social media site LinkedIn went public late last week, and there were plenty of critics who argued that investors should be wary of the real value of stock that quickly doubled from the initial offering of $45 per share. But long term, the success of LinkedIn as a business, and as an investment, depends largely on whether the site remains the site of choice for business-based social networking, as argued in this short piece from the New York Times DealBook editors:
Barry Ritholtz's blog The Big Picture is one of the most popular--and frankly one of the best--in the econo-business blogosphere. But he's not above making an appearance in old media every now and then. He has a column in today's Washington Post that is worth a read. In it, Ritholtz muses on what it takes to be a great investor. He argues that an investor wears many hats. At times, an investor is an Historian:
Knowing what has happened in the past (and how often) is an enormous advantage when it comes to investing. It informs you of the range of possibilities, allows you to conceptualize possible outcomes to various scenarios and provides a framework for thinking about market cycles.Heading into the market bottom in 2003, some market historians warned about a secular bear market. These are the decade-plus long periods of huge rallies and great collapses. Some warned that investors should not be surprised if after a decade, the markets were essentially unchanged, which is exactly what happened.Think back to the market lows in March 2009. After about a 20 percent bounce off the bottom, quite a few commentators expressed fears that the markets had gone “too far, too fast.” Market historians knew that the median bounce after a drop of 50 percent or more was 75 percent. With that information, you might not have been scared away from equities just before they gained 80 percent in value over 18 months.
At other times he/she may be a Psychiatrist, a Trial Lawyer, a Mathematician, or an Accountant. Read the full column here.
Karen Talavera of Synchronicity Marketing says that marketers should be eagerly awaiting the release of all the 2010 Census data, scheduled for this summer. From early previews, Talavera sees two main takeaways: 1) the United States keeps becoming more diverse in race, ethnicity, and family makeup; and 2) with more people living longer, we are a more "multigenerational society." This may make the work of marketers a bit more difficult, as there is no "Average American" target.
Writing at Marketing Profs, Talavera recommends the following three approaches in marketing efforts across digital platforms:
1. Demographic segmentation matters and should be tested
2. Recognize, identify, and reach influencers
3. Don't assume: Analyze and ask instead
Read further explanation of these approaches here.
Japan's economy was slumping at the end of 2010, but the first quarter of 2011 was much worse. "The economy shrank more than expected", according to Reuters, between January and March, when Japan was hit with the earthquake/tsunami/nuclear crisis. Japan has been lagging for some time now, as neighbors in Asia fared much better through the global economic crisis. But a recession in Japan is sure to be felt throughout economies around the globe, and interruptions in the supply chain in Japan hurt businesses elsewhere.
The Wall Street Journal's Mariko Sanchanta and Jake Schlesinger discussed the state of Japan's economy on Asia Today. Schlesinger did find some room for optimism moving forward, and he expects to see better economic numbers from Japan later this year:
Michael Greenstone and Adam Looney, authors of the just released Hamilton Project report, A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs, argue that assessing the true cost of energy is a key step in developing any long term energy policy. While we think of the cost of energy as the price of gas, coal, electricity, etc., the true cost must take into account key issues like "shorter lives, higher health care expenses, a changing climate, and weakened national security."
Unfortunately, the sources of energy we have grown to rely on are more expensive than we once thought. The true cost of energy includes not just the price we pay at the gas pump or what shows up on the electric bill, but also the less obvious impact of energy use on health, the environment, and national security. Economists refer to this more holistic accounting as the “social costs” of energy consumption. Recent events like the Deepwater Horizon oil spill, the death of twenty-nine West Virginia coal miners in the worst mining disaster in twenty-five years, and the crisis at Japan’s Fukushima Daiichi nuclear plant are particularly salient examples of the health and environmental costs, and economic risks, of our current energy sources. While these tragic disasters are the most obvious symbols of these costs, they are by no means the largest.
Our primary sources of energy impose significant health costs on our citizens—particularly among infants and the elderly, our most vulnerable. For instance, even though many air pollutants are regulated under the Clean Air Act, fine particle pollution, or “soot,” is estimated to still contribute to roughly one out of every twenty premature deaths in the United States (EPA 2010b). Indeed, soot from coal power plants alone is estimated to cause thousands of premature deaths and hundreds of thousands of cases of illness each year (Abt Associates 2004). The resulting economic damages include costs from days missed at work and school due to illness, increases in emergency room and hospital visits, and other economic losses associated with premature deaths. In other countries the costs are still greater; recent research suggests that life expectancies in Northern China are about five years shorter than in Southern China due to the higher pollution levels in the north (Chen, Ebenstein, Greenstone, and Li 2011).
Download the paper here.
(Thanks to the Brookings Institution for making this paper available.)
We are learning more and more about how people use their smartphones, and savvy marketers are making sure they connect in the right ways and places. Marketing Vox has compiled some useful stats on how consumers use shopping apps. For example, those in-store coupons for smartphones appear to be working for a lot of users. Nearly a third of smartphone owners frequently use their mobile devices to access coupons, according to Marketing Vox:
Mobile check-in does not appear to be as big yet, and there is some distressing findings about the popularity of downloading shopping apps. Take a look at Marketing Vox's collection of smartphone shopping data here.
The US has hit the debt ceiling. So what does that mean exactly? The Daily Ticker breaks it down:
The iPad has been on a nice run. It--and, to a certain extent, tablets in general--have begun to open the door to new ways of presenting media, news, and are even changing the advertising experience. But soon we may see a change in the way books are developed. Mike Matas is one of the engineers who helped bring us the innovative user interfaces for the iPhone and iPad. now he is working on developing the software that will allow books to be more interactive. Take a look at this demonstration:
Federal Reserve Chair Ben Bernanke made the case for government support for research and development yesterday. Speaking at The Conference Board's New Building Blocks for Jobs and Economic Growth conference, Bernanke said that "innovation and technological change are undoubtedly central" to economic growth and widening prosperity. And he argued that government has a key role in sparking innovation:
Governments in many countries directly support scientific and technical research, for example, through grant-providing agencies (like the National Science Foundation in the United States) or through tax incentives (like the R&D tax credit). In addition, the governments of the United States and many other countries run their own research facilities, including facilities focused on nonmilitary applications such as health. The primary economic rationale for a government role in R&D is that, absent such intervention, the private market would not adequately supply certain types of research.3 The argument, which applies particularly strongly to basic or fundamental research, is that the full economic value of a scientific advance is unlikely to accrue to its discoverer, especially if the new knowledge can be replicated or disseminated at low cost. For example, James Watson and Francis Crick received a minute fraction of the economic benefits that have flowed from their discovery of the structure of DNA. If many people are able to exploit, or otherwise benefit from, research done by others, then the total or social return to research may be higher on average than the private return to those who bear the costs and risks of innovation. As a result, market forces will lead to underinvestment in R&D from society's perspective, providing a rationale for government intervention.
Read the full speech here.
Michael Mandel is having a hard time believing the recent articles that suggest American manufacturing is experiencing a significant recovery. At his blog, Mandel on Innovation and Growth, he breaks down some of the more recent data:
Newly-released data suggest that the manufacturing recession was deeper than previously thought, and the factory recovery has been weaker. On May 13 the Census Bureau issued revised numbers for factory shipments, incorporating the results of the 2009 Annual Survey of Manufacturers. The chart below shows the comparison between the original data and the revised data (three-month moving averages):
The decline in shipments from the second quarter of 2008 to the second quarter of 2009 is now 25%, rather than 22%. And the current level of shipments in the first quarter of 2011 is now 9% below the second quarter of 2008, rather than only 5%. In other words, the new data shows that factory shipments, in dollars, are still well below their peak level.
Read New Manufacturing Data Show Weaker Factory Recovery, Deeper Recession here.