Category: Observations

Observations, Prediction

The Sick Man of the West?

pollywannamath

The Ottoman Empire’s best days were behind it as World War I broke out in Europe. It remained largely agrarian while Europe mechanized. It lost critical territories through the 1800s. Political thinkers through the 19th century predicted the Ottoman demise. Financially the country was in ruin. By 1873, it could only meet half of its annual debt obligation. Even after a 1908 reform, the military of the Ottoman empire lagged behind its more modern European counterparts, and relied heavily on arms suppliers from other countries (mostly Germany).

The Ottoman decline is not obvious only in retrospect. Ostensibly, Czar Nicholas I described the Ottoman empire as “a sick man” as early as 1853. Cartoonists from the mid-19th century through the end of WWI had a field day with the Ottoman Empire:

. National representations of the Great Powers of Europe, “heal” a subdued Crete, dressed in Turkish garb the ruling power on the island at the time, in the aftermath of the Cretan Uprising in 1898.
Political cartoon referencing French aid to the Church and Ottoman Empire ca. 1860.
1915 satirical publication remarking on the end of the Ottoman Empire.

If a global war were to strike today, would the US be the “sick man”? The US has not proven particularly successful in recent military engagements (even if the cause is not due to limitations in military might). US national debt continues to skyrocket. The US government seems bloated, wayward, and without executive direction.

Certainly though, the US has advantages over the Ottoman empire. The US military is without dispute the most well equipped in the world and in a total war scenario is likely to fare better than most countries globally. But what if the next crisis, the one that exposes the sick man is not war?

If the crisis is humanitarian, climate change, pandemic, or technological, is the United States better off than the Ottoman Empire was at the onset of WWI? I think that is a harder question to answer. The US has been slow to enact policy change, even when the majority of its citizens desire the change. On a global stage US “soft power” appears to be waning, although we may find that US corporations had more “soft power” than any US governmental entity for a long time. With the current level of polarization, distrust in government, and special interest influence, will the US be able to keep up with the thought leaders in the next crisis? Or will we see the comics above–with the US as the sick man of the West?

*Author’s note: A comparison between the Ottoman Empire during WWI and the US will never be accurate. I don’t mean to imply that the US will carry out genocide in its decline, nor do I want to minimize the Armenian genocide by not referencing it in this post. I recommend that all readers familiarize themselves with that terrible period of time.

Business, Innovation, Observations

Has the internet destroyed brand loyalty?

pollywannamath

Recently, I was fortunate to have the opportunity to learn a little about  brand loyalty for my job. The results are depressing. Most articles that consider Brand Loyalty forecast its its death. Consumers are increasingly willing to consider a new product or brand, in favor of sticking with a tried-or-true solution. Prior to the internet age, when information was relatively hard to come by, daily items cost more of our income, and brands had regional footprints, brand loyalty made sense. The risks associated with a product change were relatively high.

The internet brought extreme price competition, product availability, and increased information, to the average buyer. A purchaser in Wisconsin can now compare 250 retailers for glass cleaner based on price, average review, or active ingredient without leaving her house. It is now riskier for her to blindly purchase the brand her father used, especially if it is the more expensive option, than to purchase a well-reviewed, cheaper option. Consumers rejoice, brands despair.

Obviously then the answer to the title question is yes, right? Don’t forget Betteridge’s law. I find it more likely that loyalty has shifted to a new entity, rather than decreasing in an absolute fashion. Building on Ben Thompson’s work on Aggregation Theory, I posit that brand loyalty shifted from individual producers to retail aggregators. Aggregation theory focuses on how consumer technology companies that aggregate modularized suppliers — which they often don’t pay for — to consumers/users with whom they have an exclusive relationship at scale changed the profit landscape of retail competition globally.

One lesser explored impact, of a world where aggregators reign supreme, is how consumer trust and loyalty changes with the market shift toward aggregators. In an aggregator-driven market, consumer trust and experience shifts from the product to the marketplace entire. Brand loyalty may shift from the product to the aggregator as well. Consumers frequently choose to buy a more expensive option on Amazon over a cheaper price on eBay due to the differentiated perceived consumer and brand experience. Consumers are loyal to Amazon over eBay, even when the reviews on eBay are more honest and recent improvements in the return policy, and shipping practices bring the purchase process into line with Amazon. I google items using Chrome, I don’t Bing items using Edge; as a consequence Google recommends many of the items I buy. I am loyal to Google, even when its competitors offer better browsers and may recommend better items for purchase. Thompson argues that this loyalty and the market dominance it brings may cement the current tech giants as the preeminent companies of this century.

How does this impact traditional retailers? Brick-and-mortar retail brands that understand the aggregator economy and cultivate a strong brand image, independent of a particular product, are set to succeed in this new economy. After facing revenue loss in 2016, Target outlined a new retail strategy focused on reimagining their stores and building better employee and brand experiences. That strategy is working. The company is thriving in a market destroyed by digital competition.

The portfolio of Urban Outfitters is another successful example of building a brick-and mortar-store that leverages aggregator strategy. The stores within Urban Outfitters umbrella (Urban, Anthropologie, Free People, etc.) each cultivate a list of in-house “brands” making each store resemble a retailer of highly curated clothing from different suppliers. The strategy seems to have insulated Urban Outfitters from online competition; Urban has a strong digital presence and differentiated in-store experience. If Urban appeared to only supply a single house brand, its revenue curve may more closely resemble Gap’s, a primary competitor. The key differentiator of Urban Outfitters, is the strength of store brand perception; consumers are not loyal to any of the individual “brands” that each Urban Outfitters store has.

Traditional retail brick-and-mortar shops were left behind by more than just a shift to cheaper options, and the convenience of online shopping. They missed the boat on building a perception of a differentiated brand, opposed to a brand housing differentiated products (à la Nordstrom). To succeed in a highly competitive industry within the aggregator economy is to build a perception that your store, online or brick-and-mortar, will compile the best options and provide an experience with consumer choice.

In future research, I plan to identify how companies within traditional industries maintain brand loyalty in the internet age. These strategies center around extreme urgency to buy, creating an ecosystem, and creating barriers to switch through incentives.

Observations, words words words

Words About Immaturity

pollywannamath

I generally dislike the word immature. Not when used in a scientific sense or to describe a stage of development. But in normal conversation, I find few words more grating.

The problem is that the word immature has a number of definitions and connotations that come with each. Oxford identifies two definitions:

  • Not fully developed. (neutral connotation)
  • Having or showing an emotional or intellectual development appropriate to someone younger. (negative connotation)

Mariam-Webster rephrases the second definition as:

  • exhibiting less than an expected degree of maturity

This definition begins to embody the issue I generally have with the word. Circular definitions are definitionally terrible, but what is meant by the word maturity in the Mariam-Webster definition? Fully developed, or a desired end state?

Generally when I hear that someone is “immature,” I take it to mean that they don’t handle responsibility well, lack judgement, or love sophomoric humor. At worst, I may think the person being described, is just not a good person.

Bojack Horseman continually hurts those around him with narcissistic actions of self-loathing; is he immature? When a 70-year-old man makes an inappropriate joke is it a sign of immaturity? In both examples the person obviously completed maturation through adulthood. It is exceedingly unlikely that additional development as a part of the aging process will lead to positive character development.

Using the word immature to describe bad behavior leads to two harms:

  • It removes agency from bad actors. “Oh, he’s just immature”–No, he is probably a jerk and time won’t change that.
  • It imparts a negative connotation to a helpful descriptor, especially for children through young adults.

Immaturity is not necessary bad. A 70 year old with an adaptable mind that tries to learn new schools of thought might be immature. A 13 year old that is struggling to keep up with classmates physically and emotionally is immature.

Similarly the word “mature” has been bastardized with a positive connotation when describing people. I won’t spend time reviewing this, because the harms aren’t as bad. But, I feel bad for children that are trying to be “mature” because adults tell them it is something to strive for.

For my part, I hope to mature at a normal rate until I am middle aged and spend my latter years in immaturity.

Observations

Rational Actors, Iranian Strike Explanation

pollywannamath

On January 8, Iran launched a missile strike against US airbases in Iraq. The attack followed escalatory behavior from both sides.  Much of the early commentary that I’ve seen from from US sources seems to fear both imminent retaliation and a declaration of war from President Trump and increasingly damaging attacks from or sponsored by Iran.

If the bombing of a US base in Iraq did not result in any US casualties, I argue that the strike by Iran should be viewed as a rational de-escalatory move. The US killed Iranian Major General Soleimani; Iran’s Supreme Leader was faced with a crises of sovereignty and public relations. Doing nothing would have resulted in a major loss of face for an authoritarian regime that is currently dealing with political unrest.

Striking a base that houses US troops without causing casualties provides Iran the ability to show striking propaganda film of a burning US airbase as retaliation for General Soleimani’s death without provoking the US in to further action. The Supreme Leader will tell his citizens that  President Trump will be able to use this event to distance himself from past Republicans by not furthering action in the Middle East after an attack; he should focus on the lack of casualties as a reason to prove his commitment to reduce US troops in the Middle East.

Politically the strike on a US airbase serves both Iran and the US, as long as their leaders perform as rational actors. I expect to see cooler minds prevail and for no further warlike action between either leader.

Observations, Prediction, Technology

Posts I wish I had the vocabulary to write

pollywannamath

I’ve had a few recurring thoughts this year that I haven’t been able to materialize into ideas and write about. I’m posting introductions to each in the hopes that I will be able to write more concretely about each in the coming year.

  • A societal need for religion— I firmly believe it is important for a society to have a number of anchors that oppose each other to maintain the right amount of societal tension necessary for growth and to hedge against extreme thoughts. In this worldview, organizations that no longer appear beneficial to society perform key functions and are necessary to hold the collective together. We should hold unions, children’s clubs, and organized religions in far greater esteem than we do. Once an anchor is dislodged, it is much harder to reestablish and crucial elements of society will be destabilized.
    • What’s holding me back:
      • I can’t identify the production function that argues for trade unions and organized religion at the expense of secular neoliberal policies and improves outcomes.
      • Viewing organized religion as a pacifying and necessary force is a hard position to defend currently. I have true ideas on how a move toward spiritualism destabilized the religious anchor, but those deserve their own post.
      • What are the links and harms? Destabilization captures the essence of my concern, but it isn’t a tangible fear. How do we get to the bad place?

        The Bad Place

 

  • Data Privacy falls far too low on the societal priority stack–We lost the war for our data with big corporations; trying to live without Google or Amazon would be lunacy. However, we are lucky that the corporations currently mining data have been relatively responsible to date. Even the instances where companies have faced public outcry for data privacy violations (e.g.Cambridge Analytica) have been relatively minor compared to the potential data privacy violations that are possible. A mix of policy updates, public behavior changes, corporate incentive shifts, and technological advancements are needed to usher in a safer connected world.
    • What’s holding me back:
      • Links to harms. It’s really easy to look at health data companies like 23andMe and identify risks that come from selling health and consumer data. I can imagine a snake oil company targeting populations at increased risk of cancer with high mortality rates based on data purchased from a company like 23andMe. It’s much harder to identify a likely harm to the average healthy 25-year-old that could come from her Facebook data without inventing a terrible conspiracy.
      • Policies have too many unintended consequences. Sound policies like GDPR might not be so sound in practice. Without a good sense for a better path forward, its hard to formulate an idea for why the status quo isn’t good.

 

  • We shouldn’t conflate self-driving and alternative fuel cars– Okay, so this one has an idea, but I can’ t vocalize why it matters. There are a few items that are clear:
    • Alternative fuels are a net benefit and should be pursued.
      • It isn’t clear that electricity will be the best source, but it is probably the most flexible alternative source.
      • Combustion engines will be the most flexible fuel option for a long time to come.
      • There is probably a link between alternative fuel and aggressive copywrite legislation that prevents home and mechanic repair (similar to the farming industry’s relationship with new tech).
    • Self-driving cars will benefit society when adoption is high. Self driving technology should be pursued.
      • The link between self-driving cars and car ownership rates is not obvious (deserves its own post).
      • Self-driving technology will see widespread adoption much faster in commercial fleets than with the public-at-large.
      • The implementation requires as much policy change as it does technological change. Not enough attention is paid to the policy implications.
      •  Self-driving cars may increase congestion and urban sprawl in the short to medium term. Self-driving technology is not, at its core, green technology.
    • Wide adoption of self-driving technology in new cars that use internal combustion energy presents a worse ecological future.
    • What’s holding me back:
      • Too many competing thoughts–There is, somewhere in my thoughts, a unifying theory of the suburbs, automotive advancement, and societal good. I haven’t found it.
      • Competing visions of self-driving cars–In a world where every car is self-driving are there a greater or fewer number of cars on the road? If there are many more, do the efficiency gains outweigh the additional cars? Are parking lots an orderly place? What is the role of public transit? What do the cars do during the workday?
      • Timeline–If pervasive green technology is 25 years away, and self-driving tech is 5 years away, then its likely that green tech and self-driving policy will be in sync. It isn’t clear to me where we are in the development of either technology; it is clear that we have not started on the necessary policy changes.