Social Commentary

Getting Bunky with Retail Marketing

Phillip Nones Advertising, Branding, Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , , , , , , , , , , ,

digital circularsAre the days of the lowly printed sales circular numbered?

Judging from the flurry of newfangled activity by key retail marketers, it would seem so.

This past week, CVS Pharmacy announced a complete makeover of its weekly circular.  The new digital version, dubbed myWeekly Ad, incorporates customized promotions focused on the products that are deemed of greatest interest to individual consumers.

The personalized sale items are determined from scanning the trove of customer buying behavior information housed in CVS’s ExtraCare Rewards database, which now numbers more than 70 million active users.

The myWeekly Ad circular determines which items to feature based on the products that each targeted consumer buys most frequently, along with showcasing deals on other products in related categories that may also be of interest based on the purchase history of each customer.

CVS’s digital circular provides other user-friendly options as well:

  • Consumers can scan the savings and rewards currently available to them, and print coupons or digitally send special offers to their card before visiting a CVS store. 
  • Shopping lists can be created, shared and sent to mobile devices. 
  • Shoppers can view their own purchase history showing all products bought at CVS previously going back 18 months.

And CVS is hardly alone in digitizing its MarComm materials.  Thanks to the continuing evolution of rewards cards and the voluminous customer data they can collect, new personalized circular announcements are coming with regularity now.

Here are some of the latest new developments:

  • Shoplocal is a Gannett-owned print and digital circular publisher.  It has gotten together with personalized video firm Eyeview to create a new digital ad promo piece known as V-circular.  This vehicle allows retailers and major brands to target customers on a local level based on geographic, demographic and behavioral data – along with factoring in “real-time” conditions like the weather.
  • National coupon clearinghouse Valpak has introduced a novel “augmented reality” feature for its digital circulars.  Simply pointing a smartphone toward the horizon will enable shoppers to see which nearby businesses are offering coupons.
  • Direct mail media and marketing services firm Valassis has unveiled Geo-Commerce Retail Zone, a new ad-targeting capability that applies transaction and behavior data from consumers to local store trading areas, enabling targeted advertising to be delivered cross-platform.

No one questions the fact that more and more information on individual consumers is being collected, archived and applied on an individualized basis.  Anonymity is fast becoming a quaint notion of the past.

Of course, this couldn’t happen without the cooperation and willing engagement of consumers. 

Considering the benefits – special discounts and even freebies on goods and services – is it any wonder that these programs have been able to grow in size and comprehensiveness over time?

What are your thoughts about the tradeoffs?  Feel free to add your thoughts to the discussion.

The sober reflection on the healthcare.gov website is … really sobering.

Phillip Nones Government, Human Resources, Social Commentary, Uncategorized

superman brandBy now, nearly everyone has read or heard news reports about the “slow-motion train wreck” that is the newly minted Federal healthcare exchange.

It’s not only late-night comedians who are piling on.  It’s people like a senior technology officer at one of the major social media sites who texted, “It was a uniquely incompetent team that worked on their website.”

“Uniquely incompetent”:  Now there’s a sound-bite for you.

Those two words may do more to bury the notion that government-managed healthcare is a good thing than all of the political opposiion’s ideological arguments put together.

But as I often do with domestic policy challenges, I turn to my brother, Nelson Nones, who has lived and worked overseas for years – for an outsider’s perspective.

Here’s what Nelson wrote to me:

healthcare.gov landing pageFrom what I’m seeing, it’s going to be a long, long time before the Federal healthcare exchange website (healthcare.gov) works properly.

To see why, take a look at this article just published by Forbes magazine: http://www.forbes.com/sites/anthonykosner/2013/10/21/obamacares-website-is-crashing-because-backend-was-doomed-in-the-requirements-stage/.

If the article’s diagnosis is true, then the entire back-end may need to be re-architected.

That’s not something one can do quickly with a “tech surge” of “the best and brightest from both inside and outside government to scrub in with the team and help improve healthcare.gov,” as the Department of Health & Human Services put it on Sunday and President Obama reiterated on Monday.

According to the various news articles I’ve seen, the cost of designing and developing the website was initially estimated at $94 million and had risen to $292 million by last May. This seems like a lot of money, but you have to put things in perspective.

A personal observation:  I was recently involved in the testing of an enterprise resources planning (ERP) and manufacturing execution system implementation for a large multinational manufacturing company.  The total cost of this project was slightly north of $200 million.  This was the price-tag for an application used by about 6,000 people at a single manufacturing site (albeit a large one).

It, too, was plagued with problems when we went live, and it took almost a year to fix the problems – in fact these problems and their impact on supply chain performance warranted a note in the company’s annual report.  

Just like in what the Forbes article reported, the great majority of the problems traced back to the requirements stage – as I warned the senior management at this company (repeatedly) during the design phase.

For the healthcare.gov website, it seems to me that even $292 million is a low-ball figure considering the site has to support tens of millions of users (not 6,000) in a whole country (not just a single manufacturing site).  The Forbes article suggests that the $292 million was invested primarily on the front end, without attempting to consolidate the databases that sit on the back end.

This implies that the back-end design and development were woefully shortchanged — and as a result the front end doesn’t work.

Perhaps things would have gone better if $1 billion had been invested properly the first time around.

Unfortunately, from (painful) experience I can tell you that it’s almost impossible to invest wisely in architectural improvements while you’re in the middle of a crisis, so I’d bet the final price tag is likelier to hit $2 billion.

And … because that $2 billion won’t be invested wisely either, the problems will take longer to fix.

My prediction?  Two years.

In distilling all of this down to its essence, you can’t do much better than the famous words of Michael Dukakis, former governor of Massachusetts and one-time presidential candidate:

“It’s not about ideology.  It’s about competence.”

Is AdTrap the answer to our prayers when it comes to blocking online advertising?

Phillip Nones Advertising, Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , , , , , ,

ad blocking deviceYou may have heard of AdTrap … or maybe you haven’t.

AdTrap is a newly developed device that intercepts online ads before they reach any devices that access a person’s Internet connection.

That basic action means that people are able to surf the web – including viewing videos – without the onslaught of online advertisements that seem to become more and more pervasive with every passing month.

The fundamental promise that the developers of AdTrap are making is a return to the “good ol’ days” of web surfing.

You know, back when most web pages you downloaded contained text and pictures – and virtually no advertising.

AdTrap’s motto is a simple and powerful one:  “The Internet is yours again.”

Not surprisingly, there’s a good deal of excitement surrounding this new product.  In fact, interest has been so great that the invention attracted more than $200,000 in funding — raised in a 30-day Kickstarter campaign in early 2013.

Those funds are now being used to manufacture the first AdTrap units for shipment to “early adopter” consumers across the country.

How New an Idea Is This?

advertisingIn actuality, there have been a plethora of (often-free) software and browser plug-ins offered to consumers that can block online advertisements. 

But most of them have significant limitations because they’ve been designed to work only with specific browsers or on specific devices.

Free is good, of course.  But the developers of AdTrap are banking on the willingness of consumers to shell out $139 for their product – a rectangular box that looks a lot like a wireless router and that intercepts advertisements before they reach a laptop, tablet or mobile device.

The beauty of AdTrap is that it will work on every device connected to a person’s network.  Situated between the modem and router, it takes just a few minutes to set up.  

CNN technology correspondent Dan Simon reports that AdTrap does an effective job blocking advertising content.  But not perfectly; ads still appear on Hulu content, for example. 

But the developers of AdTrap report that they’re working on ways to block even more content going forward, including ads on Hulu.

Is this Bigger than Merely Blocking Ads?

Beyond the collective sigh of relief you’re likely hearing from those reading this blog post … what are the larger implications if AdTrap and similar devices are adopted by consumers on a large scale?

One not-so-positive implication may be that websites will no longer offer be able to offer content without charge, since so many publishers’ business models rely on advertising content to help pay most of the bills.

If advertising isn’t appearing thanks to AdTrap, people aren’t getting paid.

So let’s think about this for a minute:  It’s true that the Internet was blissfully free of wall-to-wall advertising 15 years ago compared to today. 

But cyberspace was also far less robust in terms of the quantity and quality of the informational and entertainment content available to us.

So yes … having a device to block 80% or more of the ads served to us is a very attractive proposition.  But if it means that some of our favorite sites move to pay-walls as a result, it might be that making a $139 investment in an AdTrap device isn’t such a “no-brainer” choice in the final analysis.

What do you think of this development — pro or con?  Please share your thoughts with other readers here.

“Public pronouncements” versus “private predilections”: What we say isn’t always what we actually believe.

Phillip Nones Advertising, Branding, Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , , ,

Public versus private thinkingThere’s an intriguing new research report out from Young & Rubicam that lays bare the contradictions of what people say they like and want … and what they secretly think.

The findings are outlined in a new research study Y&R has dubbed Secrets & Lies … and it’s based on research conducted in September 2013 among adults over age 18 in the United States, Brazil and China.

The bottom line?  The Y&R research finds that many people hold views that are diametrically opposed to what they reveal to others publicly.

That kind of a result would be difficult to measure using traditional survey research.  So Y&R chose to meld the conventional survey approach with a second methodology known as “Implicit Association Testing.”

IAT helps reveal sub-conscious or unconscious motivations that lie outside of our standard awareness.

So, what contradictions and correlations did the research uncover? 

Let’s start with the study’s global findings.  When asked to rank-order a group of 16 “values,” here’s a listing of the top five values as cited by the survey respondents in all three countries:

  • #1.  Finding meaning in life
  • #2.  Choosing my own path
  • #3.  Helpfulness
  • #4.  Environmentalism
  • #5.  Success

Now … compare that to the “Top 5” list that was revealed with these same respondents were evaluated using implicit association:

  • #1.  Sexual fulfillment
  • #2.  Respect for tradition
  • #3.  Maintaining security
  • #4.  Environmentalism
  • #5.  Building wealth

Wow.

We  see just one value appearing on both lists … and there are some pretty big differences in the values that reside on each of them.

Did American respondents differ from their counterparts in China and Brazil?  Like the global results, the values were quite different between conscious responses and implicit association. 

U.S. respondents named helpfulness as their highest-ranked value, followed by choosing my own path and finding meaning in life.

But what did the implicit association testing reveal among these same American respondents?

Far from being at the top of the list, “helpfulness” came in dead last:  16th place out of 16 values rated.  Instead, the top three “subconscious” values are actually these:

  • #1.  Maintaining security
  • #2.  Sexual fulfillment
  • #3.  Honoring tradition

As the Y&R study pointedly opines, America’s top conscious values sound like political correctness reminiscent of the Oprah Show … whereas our unconscious values sound more like a return to the Eisenhower era.

These seeming disconnects between “public pronouncements” and “private predilections” manifest themselves in brand image as well.

As it turns out, consumers say they like the “popular kids” on the branding block a lot more than they actually do subconsciously.

Here’s a list of top brands researched and how they come out in conscious rating versus IAT evaluation:

  • Alignment between public and secret likes:  Amazon, Target, Whole Foods
  • Alignment between public and secret dislikes:  AT&T, K-Mart, Playboy
  • Liked less in secret:  Google, Microsoft, Starbucks
  • Liked more in secret:  Exxon, Facebook, National Inquirer

When I scan this list, it’s pretty evident what’s going on.  Certain brands are popular whipping boys in the “popular media” and on certain cable news channels, where one rarely hears positive word uttered about them. 

Not surprisingly, it’s precisely those brands that get a “public thumbs-down” from the respondents.

But in secret — away from the klieg lights and the admonitions of the culture’s PC denizens — it’s quite a different ballgame.

Of course, no one would want their brand to be in AT&T’s or K-Mart’s unenviable position – because that’s where people dislike those companies publicly as well as in their private thoughts!

Sprawl & Crawl: Are work commutes actually worse than you think?

Phillip Nones Business, Employment, Human Resources, Social Commentary, Uncategorized , , , , , , , , ,
DC traffic
It turns out politics isn’t the only kind of gridlock in Washington, DC. It also has more traffic gridlock than anywhere else in the country.

This past weekend, The Wall Street Journal published a feature story in its “Personal Journal” section that profiled how businesspeople cope with their daily work commutes. 

It turns out that the average daily work commute in the United States takes about 25 minutes. 

Another interesting statistic from the article is the amount of time car commuters in larger cities spend stuck in traffic:  52 hours annually, or about an extra hour per week.

The WSJ story profiled several people who access mass transportation for their work commutes, as well as one businessman who relocated from the Washington, DC Metropolitan area to Metro Cincinnati, substantially reducing his daily commute time and hassle in the process.

As someone who lives not far from the DC Metro area and who contemplates any drive through the region with a mixture of disdain and dread, this got me to wondering:  Just what is the worst geographic market for commuting?

Helpfully, there’s a recently completed study that answers this very question.  The Transportation Institute at Texas A&M University has applied a calculation tool called the Planning Time Index (PTI) to compare drive times in heavy traffic (i.e., rush hour) against travel times when the same highways are clear.

The way the PTI calculation works is this:  A PTI of 2.00 means that a “normal” drive will take twice as long in heavy traffic. 

Using that PTI=2.00 example, a drive that may ordinarily take ~20 minutes will take ~40 minutes instead.

My suspicions about the DC Metro area turned out to be right on the money.  Here are the most “challenging” metro markets for work commutes based on their PTI indices:

  • Washington DC:  5.72 PTI index
  • Los Angeles:  4.95
  • New York-Newark:  4.44
  • Boston:  4.25
  • Dallas-Ft. Worth-Arlington:  4.00
  • Seattle:  3.99
  • Chicago:  3.95
  • San Francisco-Oakland:  3.74
  • Atlanta:  3.71
  • Houston:  3.67

How do these PTI indices translate into actual drive times?  Shockingly, a DC-area commute that ordinarily takes 20 minutes translates into almost two hours in heavy traffic. 

And among all of the other “top ten” worst markets, that normally 20-minute commute  will take 1.2 hours or longer in rush-hour traffic.

Interestingly, when one scans the “Top Ten” list, the only Midwest urban area that shows up on it is Chicagoland.  So if you wish to avoid the hassle of long commutes, consider relocating to urban markets in the Midwest like St. Louis, Minneapolis-St. Paul, Cleveland, Milwaukee or Kansas City.

But what’s the absolutely easiest metro market for commuting?  According to the Texas A&M study, it would be Pensacola in Florida.  It has a PTI of just 1.31. 

… Which means only about six extra minutes in rush traffic compared to the ordinary 20-minute commute.

Come to think of it … Pensacola has great beaches and nice sea breezes as well.  Perhaps dealing with the occasional hurricane is worth it, all hassles considered!

The Continuing Evolution of Consumer Healthcare Information-Gathering Practices

Phillip Nones Social Commentary, Uncategorized , , , , , , , , , , ,

health informationWith the interminable discussion and disagreement about the (so-called) Affordable Care Act we’ve been having lately, it’s easy to lose sight of some of the other important developments in health care and related behavioral trends.

One of them is how people are evolving in the way they obtain their health information.  A new consumer survey helps provide insights.

The survey, conducted among nearly 1,100 Americans age 18 or older by healthcare communications consulting firms Makovsky Health and Kelton Global, shows that U.S. adults visit a physician three times per year, on average.  That’s not much different from what previous research shows.

At the same time, however, American consumers now spend an average of over 50 hours per year researching health information on the Internet.  And they’re accessing such information all over the place – from health-oriented websites to social media. 

WebMD continues to have pride of place among healthcare online resources:

  • WebMD:  ~53% of adults access during the year
  • Wikipedia:  ~22%
  • Health magazine websites:  ~19%
  • Advocacy group websites:  ~16%
  • YouTube videos:  ~10%
  • Facebook:  ~10%
  • Blogs:  ~10%
  • Pharmaceutical company websites:  ~9%

Because health subject matters can be rather complicated or detailed, one would suspect that most people might do their research using a PC rather than devices with less screen-viewing or printing capabilities.  And this research bears that out:

  • ~83% use PCs the most to find health information online
  • ~11% use tablets the most
  • ~6% use smartphones the most

[However, tablet usage has grown from just 4% in the 2012 survey, while PCs have declined by a similar margin.]

The influence of consumers’ own doctors remains as strong as ever.  When asked what would motivate consumers to visit a pharmaceutical company’s website for information, the survey respondents cited physicians over any other motivational influence:

  • Physicians:  ~42% of respondents would be motivated by this source
  • News articles:  ~33% would be motivated
  • TV advertising:  ~25%
  • Drug discount card:  ~14%
  • Magazine advertising:  ~13%
  • Web/online advertising:  ~11%
  • Newspaper advertising:  ~9%
  • Radio advertising:  ~9%

… All of which leads one to wonder if most of the dollars being spent by pharma companies on radio, TV, magazine and web advertising are simply wasted. 

Really, this type of pharmaceutical advertising would appear to be “spray and pray” … on steroids.

Here’s a final piece of information from the Makovsky/Kelton survey that was quite revealing — perhaps even startling:  With all of the talk about the Affordable Care Act, as of the time of this survey a few months back, one-third of respondents reported that they had never spent any time researching the reforms and how they might affect them. 

… And another third indicated that they had spent less than one hour total researching the topic.

What’s wrong with that picture?

Here’s a Big Book on Big Data

Phillip Nones Advertising, Business, Government, Marketing Communications, Social Commentary, Uncategorized , , , , , , , , , ,

Big Data: A Revolution that will Transform how we Live, Work and Think by Mayer-Schonberger and Cukier“Big data” is definitely one of the more commonly heard business buzz terms these days.

But beyond the general impression that “big data” represents the ability to collect and analyze lots and lots of information in some efficient manner, most people have a difficult time explaining with any specificity what the term really means.

Moreover, for some people “big data” isn’t very far removed from “big brother” – and for that reason, there’s some real ambivalence about the concept.  Consider these recent “man on the street” comments about big data found online:

  • “Big data:  Now they can crawl all the way up your *ss.”
  • “The scary thing about big data is knowing [that] Big Brother can know every single thing you do – and realizing your life is too unimportant for Big Brother to even bother.”
  • “Big data is what you get after you take a big laxative.”

But now we have a recently-published book that attempts to demystify the concept.  It’s titled Big Data:  A Revolution that will Transform How We Live, Work and Think, and it’s authored by two leading business specialists – Viktor Mayer-Schönberger, a professor of internet governance and regulation at Oxford University and Kenneth Cukier, a data editor at The Economist magazine.

The book explores the potential for creating, mining and analyzing massive information sets while also pointing out the potential pitfalls and dangers, which the authors characterize as the “dark side of big data.”

The book also exposes the limitations of “sampling” as we’ve come understand it and work with it over the past decades.

Authors Viktor Mayer-Schonberger (l) and Kenneth Cukier (r).
Authors Viktor Mayer-Schonberger (l) and Kenneth Cukier (r).

Cukier and Mayer note that sampling works is fine for basic questions, but is far less reliable or useful for more “granular” evaluation of behavioral intent.  That’s where “big data” comes into play big-time.

The authors are quick to note that advancements in data collection tend to come along, shake things up, and then quickly become routine.

Mayer calls this “datafication,” and describes how it works in practice:

“At first, we think it is impossible to render something in data form.  Then somebody comes up with a nifty and cost-efficient idea to do so, and we are amazed by the applications that this will enable – and then we come to accept it as the ‘new normal.’  A few years ago, this happened with geo-location, and before it was with web browsing data gleaned through ‘cookies.’  It is a sign of the continuing progress of datafication.”

Causality is another aspect that may be changing how we go about treating the data we collect.

According to Cukier and Mayer, making the most of big data means “shedding some of the obsession for causality in exchange for simple correlations: not knowing why but only what.”

So then, we may have less instances when we come up with a hypothesis and then test it … but rather just use the data to determine what is important and act on whatever information is revealed in the process.

Retail DisplayOne example of this practice that’s cited in the book is how Wal-Mart determined that Kellogg’s® Pop-Tarts® should be positioned at the front of the store in selected regions of the country during hurricane season to stimulate product sales.

It wasn’t something anyone had thought about in advance and then decided to verify; it was something the retailer discovered by mining product purchase data and simply “connecting the dots.”

Author Mayer explains further:

“There is a value in having conveniently placed Pop-Tarts, and it isn’t just that Wal-Mart is making more money.  It is also that shoppers find faster what they are likely looking for.  Sometimes ‘big data’ gets badly mischaracterized as just a tool to create more targeted advertising … but UPS uses ‘big data’ to save millions of gallons of fuel – and thus improve both its bottom line and the environment.”

One area of concern covered by the authors is the potential for using “big data predictions” to single out people based on their propensity to commit certain behaviors, rather than after-the-fact.  In other words, to treat all sorts of conditions or possibilities in the same manner we treat sex offender lists today.

Author Kenneth Cukier believes that the implications of a practice like this – focusing on the use of data as much as the collection of the data – is “sadly missing from the debate.”

This book fills a yawning gap in the business literature.  And for that, we should give Dr. Mayer-Schönberger and Mr. Cukier fair dues.  If any readers have become acquainted with the book and would care to weigh in with observations, please share your thoughts here.

Smartphones and Tablets have Doubled Our Time Spent Online

Phillip Nones Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , ,

screenjumpersWhat a difference a few years makes.

Back in February 2010, Americans over the age of 18 spent a total of ~451 billion minutes’ time on the Internet, according to comScore’s Media Metrix research.

By comparison, in February 2013, the total time spent online had nearly doubled to ~890 minutes.

The vast majority of the increase is attributable to tablet computers and smartphones rather than PCs:

  • PC minutes rose from ~388 billion to ~467 billion (+24%).
  • Smartphone minutes grew from ~63 billion to a whopping ~208 billion (+230%).
  • Tablet minutes grew from zero to 115 billion (tablets didn’t exist in 2010).

In fact, taken together, smartphones and tablets now account for nearly 60% of the time online spent by people age 18 to 24.  On the other hand, smartphones account for a relatively small 25% of time spent online by Americans age 50 or older.

This age divide is also clearly evident in comScore’s estimated breakdown of platform adoption:

All American Adults

  • PC only:  ~30%
  • “Screen jumpers” (PC + mobile):  ~63%
  • Mobile platforms only:  ~7%

Young Adults (age 18-24)

  • PC only:  ~22%
  • Screen jumpers:  ~65%
  • Mobile only:  ~13%

Older Adults (age 50+)

  • PC only:  ~48%
  • Screen jumpers:  ~51%
  • Mobile only:  ~1%

The comScore analysis also provides some interesting stats pertaining to online share of minutes by the type of content being accessed.

Most online time spent on PCs:

  • Business/Finance (~68%)
  • TV (~68%)
  • News/Information (~62%)
  • Sports (~62%)
  • Retail (~49%)
  • Health (~54%)

Most online time spent on smartphones:

  • Radio (~77%)
  • Social Media (~58%)
  • Weather (~55%)
  • Games (~48%)

Tablets don’t lead in any single category, but score particularly well in these two:

  • Games (~34% of time online is spent on tablets)
  • TV (~20% of time online is spent on tablets)

More details and insights from the comScore report can be found here.

In the drive towards self-driving cars … How do we get there from here?

Phillip Nones Social Commentary, Uncategorized , , , , , , , , ,

car crash in semi-rural marylandA few weeks ago, I was driving to work on the main two-lane state highway here in our semi-rural corner of Maryland.  It was the Friday before Labor Day weekend, so traffic was lighter than usual.  It was also a clear day, with no wet roads or fog.

In other words, a perfect day for driving.

All of a sudden, an oncoming car drifted into our lane.  In fact, it appeared as if it was purposefully targeting the vehicle about four or five car lengths in front of me.

In the inevitable collision that occurred (thankfully not completely head-on but sickening enough at 55 mph), there were injuries and ambulances … a closed road for 90 minutes … statements to the police required of myself and others … and two wrecks to be towed.

The cause of this accident had to be a case of distracted driving – perhaps reaching for a smartphone, checking a text message or some other action that took eyes off the road just long enough to cause a serious accident.

self-driving carsIt got me to thinking about recent news reports touting “self-driving” cars of the future.

Certainly in a case like this accident, self-driving features like nudging the vehicle back into the correct lane could have easily prevented this accident from ever occurring.

Self-driving vehicles seem like a very nice idea in theory, and in practice they’re not very far off — at least if the news reports are to be believed.

Nissan, Volvo, Daimler-Benz and other leading car companies are predicting that commercial models will be a common sight on the road by about 2020 … and by about 2035, a majority of cars operating will have this technology.

But in order to get there from where we are now, we’re going to have to deal with numerous challenges.  Here are a few that seem particularly nettlesome:

  • Will operators of self-driving cars require a different kind of vehicle training?
  • How will highways accommodate vehicles with and without drivers?
  • Will self-driving cars perform equally well in different road environments – ordinary roads in addition to super-highways?
  • Insurers will need to figure out who is at fault if a self-driving car crashes – the car or the driver?
  • How will automotive manufacturers ensure that cars’ onboard computers can’t be hacked?

And here’s another technology challenge:  What sort of back-end servers will be required to process the huge amounts of vehicular data … as well as secure ways for cars to communicate in real-time with the cloud and other vehicles?  (Daimler has reported that its self-driving test vehicle produces 300 gigabytes of data every hour from its stereo camera alone.)

And lest you become really anxious, don’t think very hard about the kind of data that’s being captured, chronicled and saved on each and every self-driving car’s trip – including  “where it’s been when” and “how fast it got there.”

I also wonder about the transition period when there will be a mix of self-driving cars and traditional vehicles sharing the road.

If self-driving cars “react” to other vehicles so easily, won’t it be really tempting for driver-operated vehicles to make end-runs around self-driving cars or otherwise cut them off, knowing that those cars are programmed to move out of the way to prevent a collision?

Roy Goudy, a senior engineer at Nissan, has commented that since “autonomous” cars can react more quickly to potential hazards than can cars driven by people, it will be difficult to have both on the road at the same time.

“What are the rules in that environment, and what do we do to enforce those rules?” Goudy asks.

I think the future of driving is a very intriguing subject.  Self-driving vehicles could mean far fewer traffic-related injuries and deaths … and it could bring more mobility and independence to disabled people and the elderly.

We just need to figure out a way to get there.

Manufacturing in America: It is poised for a comeback?

Phillip Nones Business, Employment, Human Resources, Manufacturing, Social Commentary, Uncategorized , , , , , , , , , , , , , ,

American Made Movie (Documentary)On Labor Day weekend, the documentary film American Made Movie opened in theatres in key cities across the country.  And for a change, this film doesn’t chronicle the decline of American manufacturing, but instead its potential for rebirth.

Directors Vincent Vittorio and Nathan McGill have produced a film that’s both realistic and optimistic – two words that aren’t often used in conjunction with one another when the topic is manufacturing.

The directors don’t shy away from the facts:  U.S. manufacturing jobs shrinking from ~$17 million to just ~$12 million in the past 20 years due to technology, global competitiveness and outsourcing.

But there are signs of recovery.  At least the anectodal evidence for it is strong.

In August, Wal-Mart organized a manufacturers’ summit which was attended by ~1,500 people including U.S. and foreign-based companies, Department of Commerce and Federal Reserve officials, and eight state governors.

At this meeting, Wal-Mart affirmed its commitment to buy $50 billion in additional American-made products over the next 10 years.  GE, Element and other companies also announced plans to boost domestic manufacturing activities.

These developments aren’t merely patriotic or altruistic — although there may be some of that factoring into the decision.

In fact, with Chinese labor costs rising 15% to 20% each year, that country’s labor cost advantage is narrowing compared to the United Sates.

Harold Sirkin of Boston Consulting Group points out that factoring in raw materials and other costs, China maintains only a ~3% lead on product costs.  Add in transportation costs from Asia, and the “Made in America” alternative takes on new validity.

“We are at an inflection point,” Sirkin has stated, noting that the United States is now competitive with China.

GE’s chief executive officer Jeff Immelt echoes these sentiments, contending that on a relative basis, America has never been more competitive thanks to technology and improved productivity.

“High transportation costs mean you want to be closer.  It’s not just pure labor arbitrage,” Immelt notes.

As for productivity, the mere three hours it takes to assemble a GE refrigerator in America makes its total cost lower than a similar Chinese or Mexican-made models destined for the American market, according to Immelt.

I like what I’m hearing about the coming resurgence in American manufacturing … but I think we’ve heard this prediction before. 

The film directors discovered this inconvenient issue when traveling the United States and visiting manufacturing plants from large cities to small towns:  There’s a sizable gap between what manufacturers need in human capital, and the ability of the labor force to meet those requirements – whether it be older workers, or young workers right out of school.

Vincent Vittorio and Nathaniel McGill, movie directors
“American Made Movie” documentary film directors Vittorio and McGill.

“We need to provide the apprenticeship training necessary for a new generation of American workers to grow as fast as our technology is changing,” the documentary movie directors contend.

That may be happening at some technical colleges and a few community colleges across America.  But it’s not happening nearly enough if, like me, you hear constant complaints from manufacturing execs about the disconnect between the lack of (even basic) job skills and (increasingly sophisticated) job requirements on the manufacturing line.

Maybe it’s time to look harder at appropriating pieces of the German/Austrian apprenticeship model, wherein talented students are plucked from high school and placed with manufacturing firms for on-the-job training in lieu of college.

In such environments, a structured program of learning and training provides the roadmap for successful transition and integration into the job force.

An apprenticeship may not seem as “classy” an accomplishment as a college diploma.  But a college diploma doesn’t mean nearly as much these days.

What once was a sure-fire ticket to a career has given way to an environment in which half of all new college graduates are unemployed, underemployed, or working jobs for which their degree is irrelevant or unnecessary.

To that half of the young labor force, the near-100% placement/success rate for apprenticeships must seem awfully attractive now.

What are your thoughts about a coming manufacturing renaissance in America?  Please share your comments here.