Low Cost is Socially Responsible

Wal-Mart has the best reputation. Wal-Mart has the best reputation? Huh? Following Do the Smug Thing on Techcrunch, I found this post on do the right thing.

Interesting article in Forbes that discusses a survey in which people
were asked to nominate the most socially responsible companies”¦it seems
despite all the crap that is piled on Walmart”¦people still think (by a
big margin!) that they are the most socially responsible company out
there.
Maybe you can buy social responsibility (at least a reputation)
with bargain basement prices. (ed: emphasis and link added)

Pricing clearly play into social responsibility. Yet we do not talk about it that way. While the industrial revolution hurt many, it also enabled millions to afford a better lifestyle. From the forbes article itself

the   Reputation Institute,
which surveyed 30,000 consumers worldwide about their perceptions of
social responsibility. “But low prices are an element of social
responsibility. Consumers think, “˜They’re doing right by me.’ “

The free global report is here but you do have to register.

As someone running a business I have noticed an entire force of consultants that call on us regularly. Offering business advice. Process development. Other big words. They look at everything and then sit down. Look at you. Have this serious look on their face. And then suggest an across the board price increase. “Ed, if you have 300 clients and you raise prices by x amount each you would have x*300. Would that help increase profits?” Ya thunk?

Continue reading “Low Cost is Socially Responsible”

Cell Phones are Power in a Flat World

A truly great economics post on the influence of technology on fishermen. In this case the humble cell phone demonstrates the power of transparency in economics.

Washingtonpostindiafishermencellphones
For India’s Traditional Fishermen, Cellphones Deliver a Sea Change

from the article….

"When I have a big catch, the phone rings 60 or 70 times before I get to port," he said.

The
cellphone is bringing new economic clout, profit and productivity to
Rajan and millions of other poor laborers in India, the world’s
fastest-growing cellphone market.

At the beginning of 2000, India
had 1.6 million cellphone subscribers; today there are 125 million —
three times the number of land lines in the country. With 6 million new
cellphone subscribers each month, industry analysts predict that in
four years nearly half of India’s 1.1 billion people will be connected
by cellphone.

That explosive growth has meant greater access to
markets, more information about prices and new customers for tens of
millions of Indian farmers and fishermen.

This brings up several points we discuss at NetSquared such as the role of technology in social change. In this case the cell phone providers provide cell phones for one reason; profit. And that helps the fishermen. Economics are complicated. Profit is frequently the best motive for social change even if social change is an ancillary benefit.

Via Conversations with Dina.

rocking back and forth, wanting that money

I just finished reading the blog post One Guaranteed Instant Cast Iron Indisputable Success Factor? "Doing it" by Chris Garrett. To be successful start by just DOING IT!

Example: There is a TON of time to read, just cut out TV. And reading blogs doesn’t count. There is something amazing about reading a book that someone organized and put together with an editor. Yet there are people who spend more on DVDs and CDs than books. Which is fine, as long as they are at their own income comfort level.

A wise man once said:

‘It’s easy to sit there and say you’d like to have more money. And I guess that’s what I like about it. It’s easy. Just sitting there, rocking back and forth, wanting that money.’ – ‘Deeper Thoughts’ – by Jack Handy

Today is Labor Day here in the states. Start by just doing it.

Eclipse Aviation E500 Passes FAA Hurdle

Eclipseaviatione500oshkosh
This is one of those things that seems small on CNN, but will alter the economics of business. Eclipse Aviation’s E500, a couple years late if my memory is correct, has passed the next level of FAA certification. It is the leader in a new category of very-ligh-jets.

Old jets 1m used. New very light jets – 500k new – ish.

They may not get to that price initially, but any time you see an advance in technology that reduces costs by 50% you have to pay attention. Expect Boing to buy out Eclipse in a few months. Just kidding….

See also The World is Flat and for the historians there was the original MegaTrends.

Hezbollah and Freakonomics Observations

Watching Anderson Coooper on CNN tonight on the war between Israel and Hezbollah in southern Lebanon. This particular segment was on a tour of the war zone for the cameras led by Hezbollah. In particular Anderson mentioned "volunteers on scooters" who told them where they could, and could not, point their cameras.

Think about that. Volunteers? On scooters in southern Lebanon? During a war? WFT? So why?

Which made me think of the (again, different animals, just similar economics) section in Freakonomics on Crack Dealers. The premise was it was a pyramid. You participate at the lower levels for a shot at the top. A shot at the big time. A shot at the NBA. A shot at five houses and "the life" if you win the reality television show.

In fact those at the top were obligated to live the life or those at the lower levels lost incentive to compete. A competitive pyramid. McDonalds pays more than the lower level crack dealer makes. And entry level positions actually PAY to be guardians. Why would you PAY to be a thug with the greatest chance of being arrested and the lowest income level, or even a negative income level to participate? That is the part of Freakonomics that twists reality by explaining economic reality with no alternatives.

The economics are known. Create an alternative. You don’t have to agree or disagree, but I do suggest reading Freakonomics before commenting.

5 Picks from The Wired 40; NVIDIA helps us visualize….

Wired each year posts a top 40 list of businesses. Called The Wired Top 40 of course. The criteria is:

We start by looking for the basics: strategic vision, global reach, killer technology. But that’s not enough.
To land a spot on our annual Wired 40 list,
a business also needs the X-factor ““ a hunger for new ideas and
an impatience to put them into practice.

The top 3 companies for 2006 are Google, Apple and Samsung in that order. I wanted to highlight 5 others on the list that seem like good things will happen for them based on societal trends. This is my top 5 wired subset list from a NON investor.

  1. NVIDIA – Wired Rank 21 – These folks make graphics cards. Really good graphics cards. With the growing importance of visualization of information. Open source usually lags in innovation behind private companies (oh shoot me). We all need dual monitors with great graphics. Betting on NVIDIA is easy.
  2. GENENTECH – Wired Rank 04 – how can you go wrong with customized drugs for specific patient groups. Marketing teaches us that markets diverge, not converge. So we need drugs for divergent humans. Evolution, eh?
  3. MONSANTO – Wired Rank 25 – Frankenfood meets Ethanol. Corn number 2 is not the be-all. Monsanto in my opinion will benefit from the world’s energy demand. And we benefit because ethanol is a cap on the price of oil as it can only grow to the point of being higher than the price of ethanol and people switch (energy companies do this with feed stock versus natural gas in flex plants)
  4. LI & FUNG – Wired Rank 32 – outsource production of clothes for major brands. If there is anything I learned from reading on marketing and then Jane Jacobs it is that first you outsource, then innovate, then export. They either grow through the brands themselves, or innovate and become the brand. Either way it sounds like they are in the driver’s seat.
  5. CISCO – Wired Rank 12 – I
    thought they were goners a few years ago with the horrible user
    interface (command line, hello?). Then they bought Linksys and seem
    ready to continue to route our world. The market will grow and it is up
    to them to mess it up. I don’t think they will.

Now we just need to figure out the nanotech battery companies that power the dewalt drills. 18 VOLTS! Put that in your hybrid.

And just to repeat – I am not an investor. For all I know these are the
next Enron. But the business models sound good without looking at the
balance sheet.

Digital Cameras – “Value Equivalence Line” Economics of Price and Quality

EconomicvelvaluemapWe do a decent amount of internal training, including the basics of economics.  I don’t think you can really grasp branding and positioning without also understanding the concept of a Value Equivalence Line.  I have always used digital cameras as my example with megapixels going up, price going down, and the VEL moving to the right over time to demonstrate the economics of technology.

Well, I guess I can’t do that anymore…  From David Pogue at the NYT with emphasis added by me.

* Another InfoTrends analyst reported, surprisingly, that digital camera sales have actually peaked, and has declined since last year. Meanwhile, the manufacturers are feeling the pain: Konica Minolta has exited the Canadian market, Sony and Olympus have cut camera production and workforces, and the Kyocera/Yashica/Contax corporation has exited the digital camera market entirely.

The VEL image (above) is from The Price Advantage, by Marn, Roegner and Zawada – definitely worth the $70 USD if you are in marketing given the importance of price in communicating brand value and moving products and services "off the shelf".

Freakonomics post on bad news for real estate agents

I finally added a category for economics.  Mostly based on this post on Freakonomics:

Jeff Bailey reports
in the The New York Times today
about how an internet site that cuts out
real estate agents has grabbed 20% of the market in Madison, Wisconsin. (I think
you may need a NY Times password to read the
article.)

For $150, this site lists your home. The article suggests that real estate
agents have missed out on $17 million in commissions because of transactions
done through this site.

Being involved in the Houston Creative Community I have heard the debates (battles?) on agents versus talent versus unions.  I reserve the right to change my mind later, but at the moment what I see is unions adding value (yes, I said it and typed it so strike me dead)