Saturday, July 23, 2011

Social Media Maturity Model

We have been working closely with PRTM (now a part of PwC) to analyze our experience in working with clients on Social Media implementations and combining them with the results of a survey we recently completed on global enterprise adoption of a wide array of social technologies. Attached is a presentation providing a quick overview of our results:

Friday, July 01, 2011

All About Gemz Loyalty Program

One of the most exciting projects we have undertaken during my time as a consultant with Open-First was to work with Bryan Pearson, CEO of Loyalty One, on thinking through the future of loyalty programs. For 30 years Loyalty One has run a program in Canada called Air Miles Rewards. The question we began to wrestle with was whether the coalition model that Loyalty One had pioneered could be applied to local neighborhoods.

To try and answer this question we have launched the Gemz Loyalty Program. Focusing on locally owned businesses in neighborhood shopping districts, we have designed the program to be easy for shoppers and merchants to connect in a mutually beneficial relationship that encourages people to spend more money in their own local neighborhood.

Put simply -- every neighborhood wants main street to be successful. And yet, every day we find ourselves spending money online or at a chain store where we might get a slightly better price or more convenience, but we lose the benefits inherent in supporting local merchants. What are these benefits you ask? Civic Economics is one organization that has studied this question extensively and has conclusive evidence from multiple cities that shows the enormous economic impact that locally owned businesses have on local communities.

If our local merchants are more successful, we will have more vibrant cities, with higher sales tax revenues, leading to more city services and thus higher property values. The perceived savings of buying online or at a chain comes at a huge local cost.

Gemz aims to change all this by giving local neighborhoods a tangible benefit from shopping at local merchants on their own main street. By using the Gemz Application on a mobile phone (currently only Apple's iPhone) while shopping, customers of local stores can accumulate loyalty points (or Gemz) each time they shop at participating merchants. Think of it just like the airlines where every mile you fly earns points -- in a Gemz neighborhood every dollar you spend earns points. Shoppers save up for rewards, that are also offered in the local neighborhood.

For a merchant interested in offering the Gemz Loyalty Program, signing up is very easy. Any merchant can offer points to local shoppers through a printed coupon or from a mobile device.

Merchants can also elect to offer rewards to Gemz shoppers which can be in the form of free or discounted products or services. When local merchants accept Gemz from a customer though, they can redeem the points for cash -- making this a sale for the merchant even though it may be a free offer to the shopper.

In the months ahead we expect to launch dozens of neighborhoods but we have started in the Elmwood shopping district of Berkeley CA. Our second neighborhood is Menlo Park and we are expanding every few weeks. We know there is a lot for us to learn still about the loyalty business and how to help local merchants succeed, but what started out as a small experiment is now thriving and producing exciting results for everyone involved.

Sunday, April 24, 2011

Zero Labor

Back in January I wrote of the difference between "silicon valley" and Detroit and compared two different visions of a resurgent US economy -- one in which we "get back" the manufacturing jobs we have lost and the other where we recognize that the real driver of 21st century economies is innovation. This morning I saw two articles from Seth Godin (care of my friend Brett Bullington via Facebook) that made me want to revisit this conversation.

In the first, The realization is Now Seth writes:
...we're realizing that the industrial revolution is fading. The 80 year long run that brought ever-increasing productivity (and along with it, well-paying jobs for an ever-expanding middle class) is ending.
In part 2 Seth talks about how The opportunity is here:
The exchange of information creates ever more value, while commodity products are ever cheaper. It takes fewer employees to generate more value, make more noise and impact more people.
This is of little consolation to someone hoping to have a good job using their muscles to create value. But we can understand what is happening to the industrial economy by examining what has happened in the agricultural economy over the past 100 years. In these graphs (from this site) the decline of employment in agriculture in the US can be seen in the context of the simultaneous increase in farm productivity:
At the same time that employment was plummeting, farm productivity was exploding, resulting in enormous growth in output from US farms.

The underlying transition was a technological one -- from the physical labor of man and beast to the technical "labor" of tractors and chemicals (fertilizers, insecticides, etc). And fortunately for the health of the human species these advances continue and are being replicated throughout the world -- without this productivity improvement we would not have the means to support our global population of 7 billion people.

The same productivity enhancements that have transformed agriculture have also, for the past 100 years, been transforming manufacturing. Machines are increasingly more sophisticated and are informed by computation, not just mechanization. While the trend in the last few decades of the 20th century was to move manufacturing to economies with low labor costs, the trend in the next few decades will be to eliminate labor altogether.

An example of the sophistication of computation applied to tasks traditionally requiring human labor can be seen in this IEEE Sprectrum video on warehouse automation:

Kiva's robotic warehouse pushes human labor to the edges, and isolates their contribution to just that portion which requires the most intellect -- visually confirming that the selected objects are correct and match the customer's order.

In this same way we will increasingly see manufacturing coming BACK to the US, but with ZERO LABOR as the core model for making things profitably. We have exhausted the "cheap labor force" model - mechanization, automation, computation, and robotics are the chain that progresses manufacturing productivity into the next few decades. And where does that leave human beings in the new economy? Back to Seth Godin:
Right before your eyes, a fundamentally different economy, with different players and different ways to add value is being built. What used to be an essential asset (for a person or for a company) is worth far less, while new attributes are both scarce and valuable.
What are these new attributes? "Art and novelty and innovation." Seth writes. That is going to require education, engaged thinkers, and a new set of disciplines (and structures) for our society. This is the world we need to be investing in and the US can be a leader once again if we seize the opportunity provided to us by the computation economy.

Monday, January 03, 2011

Silicon Valley Vs. Detroit

There are two very different ideas in the USA about where value is created in our economy. I frequently hear what I will call the "Detroit" perspective that we need manufacturing jobs in the US because, gosh darn it, everything is being "made" in China (or some other country). When Barack Obama was running for his current job I attended a fundraising dinner (in Silicon Valley) for him and he defended Detroit, the auto industry, and all of the jobs there when a question came up about his commitment to the environment (and anticipated policies toward electric cars). So it was nice late last year to hear Barack Obama say that "Steve Jobs is living the American Dream."

Which is somewhat short of understanding that the driving factor for the US economy (and job creation, Mr. President) is NOT manufacturing jobs, but instead is intellectual property.

First lets take manufacturing. Atoms. What differentiated value is there in the labor component of manufacturing?

Virtually nothing.

Therefore labor will first move to the lowest cost provider and second be eliminated (eventually altogether).

What you say? Eliminated?

Yes - the history of the industrial revolution (and the agricultural revolution) has been to replace the need for human beings by automating and mechanizing production. Produce more with fewer hours of human labor. Eventually robotics will eliminate 100% of human labor and routine and repetitive tasks will be done by machines so much more cheaply than humans can perform them that our children's children will wonder what we were thinking when we talked about manufacturing jobs (just as our generation has no idea what people on farms do anymore).

Designed by Apple in California

Furthermore, and now let us switch to intellectual property (bits), the majority of the value in the goods we consume in the developed world comes from the BITS and not the ATOMS. We pay a lot to Apple for the DESIGN of the iPhone, not for the physical atoms used to construct the phone. We pay more for blueberries prepared in a smoothie than in a bag from the freezer aisle. We pay to see Sandra Bullock win an oscar for her performance in Blind Side and not for some physical medium delivering the movie.

We need to understand how to build an economy that does a better job of promoting the creation of (and appropriate protection for) intellectual property. This is the 21st century imperative -- not manufacturing jobs. We need more products DESIGNED in the United States -- wherever they may be manufactured.

If you really want more things MADE in the US (as opposed to designed here) then one of the things we should be designing (and investing in as a country) is the fully automated manufacturing technology that brings production back to local markets - with zero labor.

But Detroit is not going to lift our economy to the next level. Silicon Valley will.