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536 posts categorized "Globalization"

November 01, 2013

SAP Discusses the Future of Business, Part 2

In Part 1 of this two-part series, I indicated that I divided the facts presented in an interesting SAP slideshow entitled "99 Facts on the Future of Business" into thirteen separate categories. In that post, I discussed the first five categories: Big Data; Business Leadership; Customer Service/Experience; and Education. In this post, I'll discuss the remaining eight categories, namely: Emerging Markets; Innovate or Perish; the Internet of Things; Risk Management; the Supply Chain; Targeted Marketing; Urban Growth; and a Miscellaneous category. SAP introduced the presentation by explaining:

"Business Innovation is the key ingredient for growth in the future of business. Changes in technology, new customer expectations, a re-defined contract between employees and employers, strained resources, and business and social networks are requiring businesses to become insight-driven businesses. In this presentation, we have gathered 99 facts that represent the changes taking place in the world today. Each fact represents a key insight and suggests where we need to focus and change to become viable, sustainable and growing future businesses."

As noted in Part 1, I placed these facts into thirteen categories to help paint a more coherent picture of the future as seen by the analysts at SAP. In the first post, I included the first five categories: Big Data; Business Leadership; Customer Service/Experience; and Education. In this post, I'll discuss the remaining eight categories, namely: Emerging Markets; Innovate or Perish; the Internet of Things; Risk Management; the Supply Chain; Targeted Marketing; Urban Growth; and a Miscellaneous category.

99 Facts

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October 31, 2013

SAP Discusses the Future of Business, Part 1

In an interesting slideshow entitled "99 Facts on the Future of Business," the folks at SAP paint a picture of the future to which businesses should pay attention. The company introduces the presentation by explaining: "Business Innovation is the key ingredient for growth in the future of business. Changes in technology, new customer expectations, a re-defined contract between employees and employers, strained resources, and business and social networks are requiring businesses to become insight-driven businesses. In this presentation, we have gathered 99 facts that represent the changes taking place in the world today. Each fact represents a key insight and suggests where we need to focus and change to become viable, sustainable and growing future businesses." I've placed these facts into thirteen categories to help paint a more coherent picture of the future as seen by the analysts at SAP. In this post, I'll include the first five categories in this post. They are: Big Data; Business Leadership; Customer Service/Experience; and Education. The remaining eight categories will be provided in the next post.

99 Facts

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October 23, 2013

Globalization and the Supply Chain

Although globalization isn't quite the hot topic it used to be, the subject is still a vital one. Historically, discussions about globalization involved the movement of three things: capital, people, and resources. Nowadays, some pundits like to add a fourth item to that list: ideas. Recently, an article in The Economist stated, "'Globalisation' has become the buzzword of the last two decades. The sudden increase in the exchange of knowledge, trade and capital around the world, driven by technological innovation, from the internet to shipping containers, thrust the term into the limelight." I suspect that the article left out the movement of people either because so many countries have become xenophobic or because jobs now move to people rather than people moving to jobs (i.e., outsourcing) – or maybe the article omitted the movement of people for both reasons. ["When did globalisation start?" 23 September 2013] Globalization has both supporters and critics. The article explains:

Globalization"Some see globalisation as a good thing. According to Amartya Sen, a Nobel-Prize winning economist, globalisation 'has enriched the world scientifically and culturally, and benefited many people economically as well'. The United Nations has even predicted that the forces of globalisation may have the power to eradicate poverty in the 21st century. Others disagree. Globalisation has been attacked by critics of free market economics, like the economists Joseph Stiglitz and Ha-Joon Chang, for perpetuating inequality in the world rather than reducing it. Some agree that they may have a point. The International Monetary Fund admitted in 2007 that inequality levels may have been increased by the introduction of new technology and the investment of foreign capital in developing countries."

As with most debates, there is truth on both sides; but, there is no denying that the billions of new middle class consumers are better off thanks to globalization. The article, however, insists, "It is impossible to say how much of a 'good thing' a process is in history without first defining for how long it has been going on." So the staff at The Economist asks, "When did globalisation start?" Taking the long view, the article argues, globalization began when labor became divided between hunters and shepherds, which led to further labor specialization (e.g., merchants, armorers, etc.). Of course, the "world" in which these specialized laborers lived and interacted was fairly limited in size. It was traders and merchants who really spawned what we now think of globalization. The article concludes:

"It is clear that globalisation is not simply a process that started in the last two decades or even the last two centuries. It has a history that stretches thousands of years, starting with ... primitive hunter-gatherers trading with the next village, and eventually developing into the globally interconnected societies of today. Whether you think globalisation is a 'good thing' or not, it appears to be an essential element of the economic history of mankind."

Throughout most of history, the primary movements of goods, people, and capital have been fairly regionalized. I have argued in previous posts, that regionalization within the broader framework of globalization, is going to characterize much of the trading and other supply chain activities in the future. There is growing evidence of this. For example, Jonathan Webb reports, "The preliminary data from [Procurement Leaders'] CPO planning survey currently finds relatively little evidence for globalisation. In this study, we asked procurement leaders from where the goods and services for each region were sourced. As it turns out, most of the goods for each region were sourced internally." ["The world isn’t globalising – it’s regionalising," Procurement Leaders, 9 July 2013] There's nothing sinister about regionalization. It simply makes economic sense to reduce the length of supply chains.

Regionalization, however, isn't sounding the death knell for globalization. Most multi-national corporations understand that their best opportunities for growth are going to be found in emerging markets among new global middle class consumers. Robert J. Bowman, Managing Editor of SupplyChainBrain, cites an Ernst & Young study that concludes "the biggest opportunity for merchandisers in years to come is the emerging consumer in China, India, Brazil, Eastern Europe and other places far from U.S. shores." ["Forging the 21st-Century Supply Chain," 23 January 2013] Bowman also quotes Josh Green, Co-Founder and Chief Executive Officer of Panjiva, who stated: "To me, the defining economic event of the 20th Century was the rise of the American middle class. For the 21st Century, it's the rise of the global middle class." In other words, what regionalization means is that global corporations are going to have to learn to think globally but find a way to act locally (or regionally). Bowman states, "Manufacturers will still need to be in China – but to serve the Chinese market. The same goes for growing demand in those other emerging economies."

Let me state the obvious: Globalization and regionalization both depend on good supply chains. Getting products to new members of the global middle class or do those still struggling to get out of poverty (the so-called "bottom billion"), is a challenge with which all manufacturers and retailers are struggling. An organization called D-Prize, which "is dedicated toward expanding access to poverty-alleviation solutions in the developing world," also believes that "distribution equals development." Its website explains: "Many solutions to poverty already exist; the challenge is distributing these solutions to the people who need [them] most. We tackle this by challenging social entrepreneurs to develop better ways to distribute proven life-enhancing technologies, and funding early-stage startups that deliver the best results." The distribution challenges faced in getting poverty-reducing solutions to the bottom billion are the same challenges that manufacturers face in getting their products to the same group. Nicolas Fusso writes:

"A massive global toolbox, filled with highly effective tools for solving poverty, continues to expand. Inside you'll find relatively recent additions, such as portable solar lanterns. Other tools, like childhood immunizations, have been dependable for generations. Unfortunately, this toolbox is not open to everyone; it seems someone forgot to unlock it for those most in need of access. In fact there are many proven paths toward development. The past decades have observed a wide range of advancements – including new health and medical interventions, development-focused technologies, and proven financial services. Yet millions in the developing world still lack access to basic poverty solutions. Why is that? Today's greatest need is not for scientists and engineers to create new tools. The real need is for better distribution of solutions that already work." ["Distribution, the Key to Unlocking the Development Toolbox," Next Billion, 25 April 2013]

Fusso notes that D-Prize is offering a prize of up to $20,000 for good ideas about how best to distribute poverty-reducing solutions to those who need them. To large multi-national corporations, that sum is a pittance, but the solutions that could emerge from offering that sum could help everyone. Solving the distribution of goods and services challenge to poverty-stricken areas should be a win-win for both humanitarian and commercial ventures. One would assume that humanitarian efforts could piggy-back on commercial distribution systems serving the bottom billion. Certainly multi-national corporations could use the good public relations that would be created by such a venture. As I wrote in a previous post, "For years, people made the bad assumption that impoverished populations wanted nothing more than the very basics -- food, housing, and water. Yet business people clever enough to package goods in sizes that the poor could afford (like single-wash packages of detergent or a minute of cellphone time) found that the poor could be consumers and profits could be made. We shouldn't be surprised; 'Apple Marys' in the U.S. survived the great depression using this economic model."

The future of globalization and supply chains may very well be characterized by how well companies learn to overcome the "last mile" challenges associated with the bottom billion consumers. Solve that problem and other distribution problems will naturally be solved as well. For more about how globalization and supply chains can help solve poverty, see my post entitled Can Supply Chains Save the World?

October 17, 2013

Working on Top of the World: The Arctic Opens Up

A couple of years ago, Andrew E. Kramer wrote a story in the New York Times about an "an ice-free passage" across the stretch of Arctic Ocean that borders Russia's northern border. ["Warming Revives Dream of Sea Route in Russian Arctic," 17 October 2011] Kramer reported that a decade earlier "an ice-free passage, even at the peak of summer, was exceptionally rare." He goes on to report that, as a result of the shrinking Arctic ice pack, "companies in Russia and other countries around the Arctic Ocean are mining that dark cloud's silver lining by finding new opportunities for commerce and trade." Kramer quotes Vladimir V. Putin, who declared, "The Arctic is the shortcut between the largest markets of Europe and the Asia-Pacific region. It is an excellent opportunity to optimize costs."

Arctic Ocean 03China would certainly like to take advantage of the Arctic passage which is called the Northeast Passage if you head east across Canada and the Northwest Passage if you head west across Russia. Tom Mitchell and Richard Milne report that "the journey via the Bering Strait could shave as much as 15 days off the traditional route through the Suez Canal and Mediterranean Sea." ["Chinese cargo ship sets sail for Arctic short-cut," Financial Times, 11 August 2013] They reported, "The Yong Sheng, a 19,000-tonne vessel operated by state-owned Cosco Group, set sail on August 8 from Dalian, a port in northeastern China, bound for Rotterdam." The ship arrived in The Netherlands on 10 September. In a later article about the Yong Sheng's voyage, Mitchell and Milne reported, "Another benefit of regular shipping services through the Northeast Passage was dramatically illustrated halfway through the Yong Sheng's voyage. As she sailed across the East Siberian Sea on August 31, one of her sister vessels, the Cosco Asia, was attacked in the Suez Canal." ["First Chinese cargo ship nears end of Northeast Passage transit," Financial Times, 6 September 2013] Despite Putin's endorsement of the route, Mitchell and Milne report that not everyone is as sanguine about the passage's future as he is. They explain:

"Despite the passage's allure, most shipping executives and analysts remain sceptical about the dream of an industry transformed by regular summer services across the top of Russia. While the number of 'polar transit permissions' granted by Russian authorities has grown dramatically since 2010 – to more than 370 this year – only about 20 per cent of them were for full transits of the 5,400km route."

The latest news concerning the passage involves a Danish ship, the bulk carrier Nordic Orion, which was "the first commercial bulk carrier to traverse the route since the SS Manhattan broke through in 1969." ["Danish firm seeks to be first to bring bulk carrier through Northwest Passage," by Wendy Stueck, The Globe and Mail, 19 September 2013] Stueck reports that the "Nordic Orion was loaded with coal at a Vancouver terminal. From there, it headed to Finland" where it pulled into port in early October. The staff at The Maritime Executive reports:

"The North West Passage across the Arctic is shorter than the traditional route through the Panama Canal and thereby has the potential to generate important saving in both time, fuel and CO2 emissions. Christian Bonfils, [Managing director in Nordic Bulk Carriers A/S], explains. 'The North West Passage shortens the distance with 1.000 nautical miles. This results in a reduction in fuel consumption and transportation time – and it also means lower CO2 emissions. The fuel savings alone add up to approximately USD 80,000.' In addition this new route allows full utilisation of the ships capacity and thereby carries 25% more cargo than through the Panama Canal. It takes more than an average ship to sail the North West Passage. The trip across the Arctic is a challenging task that requires great experience, navigational skills and modern world class ships. In fact, there are only a few vessels which can handle the task." ["Historic Sea Route Opens Through Canadian Arctic Waters," 25 September 2013]

Per-Ola Karlsson and Laurence C. Smith report that it is not only shipping companies that are planning to take advantage of the shrinking Arctic icecap. "As the ice recedes in the Arctic," they write, "talk of industry entering the region to take advantage of its economic opportunities is on the rise. The territories contain significant natural resources, including conventional hydrocarbons (natural gas, condensate, and oil), metals, fish, high-value minerals such as diamonds and rare earths, and fresh water." ["Is the Arctic the Next Emerging Market?" Strategy + Business, 27 August 2013] They continue:

"But many of those who wish to develop the region overlook the primary truth about it: It is an emerging market. To be sure, as one of the last of the true wildernesses remaining in our world, the Arctic is a uniquely challenging environment. But it is not empty. It is home to some 4 million people comprising a broad range of cultures — and an economy worth about US$230 billion annually. The land is inhabited by more than 40 ethnic groups, such as the Sámi of northern Scandinavia, the Evenki of Russia, and the Inuit of Canada. In Canada, Greenland, and the United States, in particular, local control by aboriginal communities and regional business corporations can be substantial. Most of the Arctic region is governed under existing national structures and international frameworks similar to those in other areas of the world. It’s not the northernmost equivalent of the next frontier, waiting to be conquered by big business or governments desperate for resources. Adding to the complexity, the interested parties don't yet possess the technology or know-how to access the Arctic’s resources in a sustainable way. "

If you want to read more about the resources in the Arctic and who's going after them, read my posts Search for Resources at the Top of the World and Attention to the Cold Arctic Heats Up. Karlsson and Smith conclude, "The Arctic region will require novel, cooperative solutions to overcome these challenges to sustainable economic development. The time to act is now: The resources locked in the Arctic could shift the balance of energy supply and demand in the world in important ways." I certainly won't argue with that conclusion.

October 04, 2013

Getting to Know Emerging Markets, Part 2

In Part 1 of this two-part series, I noted that many respected analysts believe that the future of the global economy (and, therefore, the fortunes of many businesses) depends on emerging market countries and the consumers who live there. Many of those same analysts noted, however, that companies that believe they can use a one-size-fits-all strategy for emerging markets are going to be disappointed. Not only do emerging markets have peculiarities that make them unique, consumers living in those markets also have varying taste and lifestyle preferences. The only way to discover those variations and respond correctly to them is through the collection and analysis of Big Data. In this post, I'll discuss recommended strategies for getting to know the consumers in emerging markets and the conditions in which they live.

Emerging marketsBoston Consulting Group analysts conclude that "multinational companies have the right priorities — emerging markets are the growth spots of the future — but have not fully put in place winning practices." ["Playing to Win in Emerging Markets," by Amitabh Mall, David C. Michael, Lori Spivey, Andrew Tratz, Bernd Waltermann, and Jeff Walters, bcg.perspectives, 13 September 2013] That's because they don't fully understand the consumers living in areas in which they hope to expand. Mark Harrington, the Chief Marketing Officer at ListenLogic, asserts that Big Data now provides the opportunity to obtain that understanding. ["How Marketers Are Finally Getting to Know Their Customers," Direct Marketing News, 24 July 2013] he writes:

"Having the ability to visualize millions of consumers based on their needs, attitudes, actions, and experiences delivers multidimensional insight to drive critical marketing components, ranging from promotions to product innovation. Marketers can gain deep understanding of what prospects and customers want, need, like, and dislike without ever asking a question. And they can do this on a continual basis to track markets shift in the always-on world."

One of the tools he suggests using is ethnography. Jessica Weber and John Cheng explain that ethnography involves "studying the customs of individuals and cultures." ["Making the Most of Ethnographic Research," UX Magazine, 5 August 2013] They continue:

"Ethnographic research offers several key benefits for defining a long term, multi-channel [user experience] strategy, including:

  • Identifying user needs that have yet to be met
  • Testing market demand for products that do not exist
  • Providing a holistic view of a problem space
  • Exposing opportunities for competitive differentiation

"The principal advantage of ethnographic methods is the ability to see the impact of the physical world on factors that could drive digital design. Ethnographic research is all about discovery of the unknown — disproving assumptions about user behavior and uncovering unexpected insights. Whenever you're in the field, something you see is going to surprise you, and those surprises are almost always at the root of innovation."

In previous posts, I've noted that providing a positive user experience at every touchpoint in a consumer's digital path to purchase is important because it is so easy to opt out of a purchase decision at any given moment. Weber and Cheng add:

"The user experience can be thought of as a composite of the user, the interface, and the context; context being an amalgamation of environment and situation. In ethnography, research is conducted in the field, where users' real-world behaviors and interactions with products and services take place, so that researchers can gain insight into how context impacts the user experiences."

Ethnographic research can also take advantage of Big Data and the refined segmentation that it can provide. Weber and Cheng conclude, "To design and develop optimal user experiences, companies must answer the right questions at the right time." Big Data that is analyzed by a cognitive computer system can actually help discover some pertinent questions that might have been overlooked and test hypotheses about them. Jodie Sangster, CEO of the Association for Data-Driven Marketing and Advertising in Australia, believes that global marketing in the future is going to be data driven. ["Where Is Global Marketing Going?" Direct Marketing News, 26 August 2013] "The future of all marketing and advertising around the globe is data-driven," she writes, "and at last, the value of measurable, accountable, customer-centric marketing has been realized." Nevertheless, Sangster agrees with Boston Consulting Group analysts that companies are still grappling with winning strategies. She explains:

"As organizations prepare themselves to ride the Big Data wave, most businesses are still struggling to centralize, analyse, and commercialize their own small data sets. It's not a local issue and it's not a new one, either: The IBM Global CMO Study first identified this struggle as the number one issue keeping CMOs worldwide awake at night in 2011. Another study released in Asia Pacific last year 2012 noted that Down Under, more than 50% of organizations felt ill equipped to grapple with the challenge of how to retrieve the value that's locked away in their data. This will continue to be the case for many more years."

Erin Haselkorn reminds us that "collecting data and analyzing it to find meaningful conclusions has always been part of how marketers go about connecting with consumers." However, with the advent of Big Data technologies, "their strategies have improved dramatically over time." ["Data helps marketers move beyond general stereotypes," Marketing Forward, 10 September 2013] As a result, he writes, marketing teams have been able to "transition away from broad stereotyping toward better targeted forms of data mining. ... We now have the capability to zoom in on the specific customer."

Although most new global middle class consumers are found in Asia, "the middle class in Latin America and the Caribbean region grew by 50 percent over the past decade." ["World Bank: Middle class grows by 50 percent in Latin America, Caribbean region," Fox News, 13 November 2013] It doesn't take a data scientist to know that tastes and lifestyles vary greatly in Latin American, Asia, and Africa — the three areas experiencing the greatest middle class growth. Regardless of where consumers are located, local conditions and culture will play a major role in their purchasing behavior. McKinsey analysts Maria Valdeviesa de Uster, Jon Vander Ark, and Wesley Walden assert that unless companies learn how to "act like a local" they will never succeed in emerging markets. ["Act like a local: How to sell in emerging markets," McKinsey & Company, September 2012] They offer three "imperatives" that will help companies "accelerate growth in emerging markets." They are:

  1. "Get on the ground. Information on customers and the market is often hard to obtain. Successful companies invest in all the data sources and expert information available, but nothing beats getting a firsthand sense of how the market works by visiting local areas and resellers. This ground-level view also gives sales leaders a clear read of where the market is heading and lets them plan for it.

  2. "Overinvest in the right partners. In developed markets, a company may have many capable potential partners. In emerging markets, finding a partner is a much more strategic endeavor. With limited choice, partnerships are for the long haul, which means companies must find the right capabilities and partners that share their values.

  3. "Build talent for the long term. Annual growth in emerging markets can exceed 10 percent. That pace requires sales leaders to think creatively about how they will attract and retain the talent they will need to keep up."

Although I don't disagree with the "boots on the ground" imperative, I can't help but observe that the emerging world's embrace of mobile technologies means that every day more data becomes available for analysis. That data doesn't necessarily need to be analyzed in-country. And, I as noted in Part 1 of this series, emerging markets are likely to have large virtual marketplaces to accommodate this phenomenon. In addition to the fact that smartphone use is increasing, another reason that the number of virtual marketplaces is growing is that infrastructure in many emerging market countries is lacking or sub-standard. That makes building and supplying brick-and-mortar stores more challenging. Lack of infrastructure is one of the many challenges identified by McKinsey analysts. They conclude:

"Emerging-market infrastructure is often less developed, channels are fragmented, and cultural preferences often more complex and varied. Demand can be unpredictable, making the near-term return on sales investment uncertain, even if long-term growth prospects are extremely attractive."

Some of that uncertainty can be reduced by good data collection and analysis. One thing that most analysts can probably agree upon is that companies that get a late start in getting to know emerging markets are going to have a tougher time cracking those markets in the years ahead.

October 03, 2013

Getting to Know Emerging Markets, Part 1

Emerging markets"Emerging markets are more important than ever," according to Boston Consulting Group analysts, "and they make up a large share of many multinational companies' revenues and growth." Despite the importance of emerging markets, the analysts conclude that "multinationals have not mastered these markets." They reach this assessment based on a BCG survey that included "more than 150 top executives in multinational companies." Seventy-eight percent of the executives "expect to gain share in these markets"; but, by their own admission, "only 13 percent are confident that they can take on local competitors." ["Playing to Win in Emerging Markets," by Amitabh Mall, David C. Michael, Lori Spivey, Andrew Tratz, Bernd Waltermann, and Jeff Walters, bcg.perspectives, 13 September 2013] Trepidation about being able to take on local competitors likely comes from the fact that they understand that local competitors know a lot more about their consumers than the multinationals. The analysts note, for example: "On average, multinationals told us that only 9 percent of their top 20 executives are based in emerging markets; the vast majority of them are still located in mature markets far away."

McKinsey & Company analysts believe that any company that doesn't understand local conditions should be concerned about its ability to succeed in that market. "Emerging markets can be fertile ground for enormous sales growth," they write, "but each market has its own unique hurdles. Without a deep understanding of the local customer you are likely to trip over those obstacles — or abandon the market prematurely. ... To break into emerging markets and capture the potential, the best sales leaders have realized they have to think like a local." ["Act like a local: How to sell in emerging markets," by Maria Valdeviesa de Uster, Jon Vander Ark, and Wesley Walden, McKinsey & Company, September 2012] Understanding local conditions, culture, tastes, lifestyles, and preferences is obviously important for businesses; but, "deep understanding" can only be achieved through the use of Big Data analytics.

To make their point, the McKinsey analysts relate an apocryphal story about two sales people from a multinational apparel company who were sent into an emerging market to determine local conditions. "After scouting a few villages, the first salesman rang the head office. 'I'm returning on the next flight,' he said. 'We can't sell shoes here. Everybody goes barefoot.' Meanwhile, the second salesman was busy e-mailing the head of sales: 'The prospects are unlimited. Nobody wears shoes here!'" Which salesperson was correct in his assessment? Obviously, a lot more research and analysis was required to make that call.

The McKinsey analysts note: "Multinational corporations often make the mistake of importing approaches that work at home without making any adjustments." That could be a fatal mistake. On the other hand, they note: "Local players often underestimate both the resources and speed required to match market needs and compete with global players." In other words, both risks and opportunities are available in emerging markets. Only good analytics are going to help you turn a risk into an opportunity. In the past, only a "boots on the ground" approach was available to companies wanting to learn more about consumers in emerging markets. Recently, however, emerging market consumers have embraced mobile technologies, particularly smartphones, as their way to connect to the world. This connectivity means that mounds of data is now available for analysis. Mark Harrington, the Chief Marketing Officer at ListenLogic, writes:

"Knowing the customer' has been a battle cry for marketing for the past few decades. The difference today is that marketers can actually know their customers, without guessing, simply by leveraging digital ethnography to listen to what they're saying." ["How Marketers Are Finally Getting to Know Their Customers," Direct Marketing News, 24 July 2013]

That is true for both mature and emerging market consumers. Harrington continues:

"As social media expands exponentially, the massive volumes, incredible variety, and never-ending velocity of billions of daily discussions have become a textbook example of Big Data. As such, to harness the wealth of understanding from it — ranging from consumer insights to competitive intelligence — marketing, product, and brand teams are turning to advanced processing technology and complex concept models in place of first-generation monitoring tools and keyword lists. Brands are also relying on social media command centers to instantly distill relevant information and discover genuine insight within the mass of useless noise."

Jessica Weber and John Cheng agree with Harrington that leveraging ethnography is becoming an increasingly important tool in understanding customers. For a company going into an emerging market, I daresay it's an essential tool. Weber and Cheng write:

"Business stakeholders who are accountable for digital product innovation, strategic roadmaps, or multi-channel user experience are increasingly looking to ethnographic research. Although this research tool has its origins in 18th century anthropology — studying the customs of individuals and cultures — its application to technology innovation has never been more relevant. Applying ethnographic methods to digital experiences can yield myriad benefits that go beyond simply validating that something works or identifying opportunities for improvement." ["Making the Most of Ethnographic Research," UX Magazine, 5 August 2013]

Even though each emerging market has characteristics that make it unique, Jodie Sangster, CEO of the Association for Data-Driven Marketing and Advertising in Australia, asserts, "No matter where you are in the world, all marketers face the same issues to one degree or another." ["Where Is Global Marketing Going?" Direct Marketing News, 26 August 2013] She concludes:

"The future of all marketing and advertising around the globe is data-driven and at last, the value of measurable, accountable, customer-centric marketing has been realized. Although in the developing world there is still a focus on mainstream advertising, but with the advent of social media, increasing adoption of smartphones, and a developing multiscreen culture has resulted in a monumental shift in both thinking and marketing spend towards data-driven channels and techniques."

If you want a peek at where emerging markets are heading, look at a China. McKinsey analysts Elsie Chang, Yougang Chen, and Richard Dobbs, report, "Almost overnight, China has become the world's second-largest e-tail market, with estimates as high as $210 billion for revenues in 2012 and a compound annual growth rate of 120 percent since 2003." ["China’s e-tail revolution," McKinsey & Company, March 2013] They continue:

"Some 90 percent of Chinese electronic retailing occurs on virtual marketplaces — sprawling e-commerce platforms where manufacturers, large and small retailers, and individuals offer products and services to consumers through online storefronts on megasites analogous to eBay or Amazon Marketplace."

I believe that other emerging markets will follow this pattern because the infrastructure to support brick-and-mortar stores is expensive to build and infrastructure isn't exactly a strong suit in most emerging market countries. The good news is that all that digital activity means that there is going to be more and more data to analyze and more opportunities to get to know emerging market consumers better. If Pascal Lamy, Director-General of the World Trade Organization, is correct, emerging markets are going to be the future's movers and shakers. ["Emerging economies: 'shapers and makers' in changing landscape, Lamy tells Turkish University," World Trade Organization, 14 March 2013] He also made another interesting point. He stated:

"We are also seeing new trends in the way that goods and services are produced and traded. In essence there is a new narrative developing on trade which governments and businesses have to take notice of, and align their policies and priorities to. In WTO jargon, we have termed this 'Made in the World'. Increasingly, countries are trading in intermediates not final products. The concept of 'Made in Country X' is becoming obsolete. The old mercantalist adage of 'imports are bad and exports are good' is made irrelevant when we look at the evidence — today almost 60% of trade in goods is in intermediates and the average import content of exports is around 40%."

Although I have painted a rather rosy picture of emerging markets, there are challenges (in some cases, significant challenges) that must be addressed in emerging markets. Big Data analytics can help companies assess the risks associated with those challenges. In the second part of this series, I'll discuss how Big Data analytics can help companies gain the insights they need to be successful in emerging markets.

September 05, 2013

The Growing Influence of the Digital Path to Purchase

Jeremy Hanks reports that when Jessops, Britain's largest camera chain, went out of business, "the staff at one specific store posted a sign that was both sweet and sardonic: 'Thank you to all our loyal customers and to everyone else, thank you for shopping at Amazon.com.' ["Evolving The Supply Chain in the Ecommerce Age," Multichannel Merchant, 12 August 2013] "There is no way around it," Hanks continues, "on this and that side of the pond, Amazon is a disruptive force that is upending both retailers and ecommerce companies." Louis Columbus, a Product Marketing Manager for Plex Systems, asserts that, if businesses are going to compete in the e-commerce arena, they must understand the factors that are re-shaping that sector. ["Getting A Head Start On Five Factors Reshaping E-Commerce," Forbes, 23 March 2013] As the headline of his article declares, Columbus believes there are five driving forces affecting the future of e-commerce. They are: mobile, social, globalization, cloud, and legacy order management systems. Columbus claims that the "highest-performing e-commerce businesses" integrate these factors in order to "delight the customer and earn their trust."

Path-to-Purchase
Source: "Organizing Teams To Support Effective Content Delivery," by John Harris, Location3, 16 May 2012

Although Columbus focuses on e-commerce, the fact of the matter is that most retailers have multi-channel operations and can't afford to concentrate all of their efforts on e-commerce. That's why Jim Dougherty stresses that retailers need to have touchpoints across a multitude of channels with which consumers can engage. ["Why You Need Touchpoints Across Multiple Marketing Channels," The Vocus Blog, 25 February 2013] Columbus' point about integrating activities to make the customer experience better is no less important in a multi-channel situation than it is in the e-commerce arena. He writes, "Tying all of these together ... deliver[s] gains not just in customer satisfaction but the ability of any company to stay in step with customers over the long-term." He goes on to assert, "Any business reliant on e-commerce as part of their revenue stream needs to pay attention to these trends and get ahead of them to stay competitive."

I want to concentrate on the first three of those trends – mobile, social, and globalization. Consumers in both mature and emerging markets use increasingly using mobile devices. Gillian Tett notes:

"These days, there are about 2.5 billion people in emerging markets countries who own a mobile phone. In places such as the Philippines, Mexico and South Africa, mobile phone coverage is nearly 100 per cent of the population, while in Uganda it is 85 per cent. That has not only left people better connected than before – which has big political and commercial implications – it has also made their movements, habits and ideas far more transparent. And that is significant, given that it has often been extremely hard to monitor poor societies in the past, particularly when they are scattered over large regions." ["Big data is watching you," Financial Times, 10 August 2012]

"Retail is going through a revolution right now," writes Columbus, "with social and mobile completely redefining their multichannel selling strategies." Brian Solis, a principal at the Altimeter Group, agrees with Columbus that mobile and social technologies are revolutionizing the consumer path to purchase. He also agrees with Dougherty that companies need consumer touchpoints in all potential sales channels. ["From Social to Digital Engagement: The Shift Is Coming," Social Media Today, 30 April 2013] He explains:

"No matter how you define it, engagement is something that we most likely underestimate. Engagement symbolizes the touches that occur in various moments of truth and this should completely change not only how you engage someone in each moment but also how the inside of your company works with one another to make it frictionless and experiential. Whether a customer stands on the stage of awareness, consideration, purchase, or post purchase, touch points open and close. And it is in those moments that engagement, regardless of source or shape, affects the next steps and impressions of customers. These moments of truth however are not limited to any one channel. Whether customers are navigating social, mobile, web or IRL (in real life), they approach each stage of the journey with different needs, in varying stages of decision making, and with one of several frames of mind depending on the context of engagement and also the screen (smartphone, PC, tablet, TV, etc.) they're using in each moment. It's becoming increasingly complex, but then again so is the path of consumer decision-making."

Because the consumer path to purchase is getting more complex, Solis agrees with Columbus that corporate silos need to be broken down and corporate alignment needs to be increased. "It's the age-old argument of bringing down silos and opening doors between departments and groups that just don't talk to each other right now," Solis writes. "But, that's just what needs to happen and the more progressive companies are already taking note." Dougherty notes that silos can also pop up within departments as well as between them. Marketing is a good example. "Despite the desire to silo marketing channels," he writes, "they are far more effectively used together than individually."

Continuing the discussion of how mobile, social, and globalization trends are affecting business, Columbus reports, "Gartner sees mobile, social and globalization being the three compelling reasons why e-commerce product strategies need to be re-evaluated today." A new study from the Advertising Research Foundation (ARF) entitled "Digital & Social Media in the Purchase Decision Process", reported that "nearly one-third of shoppers surveyed say social media:

  • Introduced them to a brand or product they were previously unfamiliar with, or
  • Helped change their opinion of a brand during the buying decision process. ...
  • [Played] an increasingly important role in the buying decision process, with more than a fifth of respondents (22%) agreeing that social media was 'important in my final purchase decision.' ...
  • [Expanded] the range of consumers' trust, with decision influencers growing beyond traditional trusted sources, such as family, friends and colleagues to include others on Facebook, Twitter and other social media outlets, as well as blogs, online forums, and other digital sources.
["The Growing Role of Social Media in the Purchasing Decision," Print in the Mix, January 2013]

Results from a Nielsen survey that involved "more than 29,000 respondents with Internet access from 58 countries" and asked participants "about new product awareness" supported the conclusion of the ARF study that digital and social technologies are becoming powerful global influences. The survey concluded, "[The] Internet is an important factor to influence greatly on consumer's purchase decision on buying new products." ["Internet And Social Media Are The key Factors To Influence New Product Purchase," by Shilpa Shree, Dazeinfo, 20 February 2013] Shree continues:

"The new products include: electronics (81%), appliances (77%), books (70%) and music (69%). This new trend is hooking up with consumption categories also, like  food and beverages (62%), personal hygiene (62%), personal health/over-the-counter medicines (61%) and hair care (60%). Respondents in Asia-Pacific, Latin America and Middle East/Africa are most engaged in online decision-making before they purchase any product."

The survey also indicated that social media plays a growing role in consumer decisions. "Social media is also an integral decision-making tool for consumers who are hunting for new products," Shree writes. "Respondents also said they were much more or somewhat likely to purchase a new product after learning about the product through social media (30%), Web ad (29%) or a video posted on a video-sharing website (27%)." Referring to the survey, Rob Wengel, senior vice president at Nielsen Innovation Analytics, stated, "Consumers are increasingly finding the Internet and mobile vehicles just as compelling as other more traditional advertising. Social media can also be an effective soundboard to hear about potential issues or to identify future innovation opportunities. As reliance on social media continues to broaden for CPG products, it is especially impactful when used in combination with TV to enhance recall, facilitate one-on-one consumer engagement and dialogue, and listen to what consumers are saying."

Brian Solis concludes, "The digital lifestyle is just a way of life now and businesses that don't think beyond social or traditional will miss the greater opportunity to lead desirable customer journeys, experiences and outcomes." Jim Dougherty adds, "There are more customer touchpoints than there have ever been. Businesses need effective tools to manage them, automate them (to an extent) and to make them more meaningful." Amazon may be the 600-pound gorilla in the e-commerce sector, but no business can afford to cede the space to Amazon. Over the next two decades up to three billion new consumers will join the global middle class and most of them will use mobile and social technologies in their digital path to purchase.

August 20, 2013

Additive Manufacturing and the Future of the Supply Chain

Sweeping statements are rarely true. That's why a headline that declared "Today’s complex global supply chains are poised to be dismantled" caught my eye. The summary of the article, which was written by Paul Brody, states, "Thanks to the growth of 3D printing, intelligent robots, and open-source hardware, tomorrow's supply chains will be faster, smaller, cheaper, and local." [Gigaom, 21 July 2013] There is certainly a kernel of truth in that statement, but I'm certain that not all global supply chains are going to be dismantled. The question really is: How disruptive is additive manufacturing going to be to supply chains? Noted MIT professor Yossi Sheffi, writes, "The additive manufacturing revolution is underway, and product supply chains lie directly in its path of creative destruction. Which ones, if any, will survive?" ["Does 3D Printing Doom the Supply Chain?" Supply Chain @ MIT, 18 July 2013] Brody continues:

3d Supply chain"Supply chains today are big, complex and global. Keeping them humming is an enormous challenge. But does it have to be that way? We think the world is entering the era of small, simple and local supply chains, powered by a new generation of manufacturing technologies such as 3D printing, intelligent assembly robotics and open-source hardware – also known as the Software Defined Supply Chain."

Clearly, all of those advances are going to affect supply chains as well as manufacturing. Professor Sheffi provides a glimpse of how some of the changes could play out. He writes:

"Some supply chains will become obsolete as a result of this flexibility. For example, 3D printers in auto repair shops and retail outlets could make certain auto components on site, eliminating the need for these items to be delivered by suppliers. Many expedited shipments will not be necessary as the technology matures. When a production line goes down, for instance, the part needed to fix the problem might have to be shipped from a faraway supplier using expensive same-day delivery services. Simply printing the part in situ avoids this costly transportation option. Scenarios like these do not auger well for express delivery companies. But the news is not all bad because alternative business opportunities will open up. Delivering the raw materials that feed 3D printers is such a possibility."

Unlike many forecasts about what the future holds, Brody claims that his predictions are going to become reality in the near-term "The 3D printing revolution is not a decade or more away," he explains, "it's going to start showing up in mass production within the next five years. Despite skepticism, research demonstrates 3D manufacturing improvements combined with the expiration of key patents will lead to a 79 percent reduction in average cost to print objects in five years, and a total of nearly 90 percent over the next 10 years." Brody's mention of patents raises the real fly in the ointment when it comes to additive manufacturing. Michael Weinberg, Senior Staff Attorney and Innovation Evangelist at Public Knowledge, explains:

"3D Printing has all the makings of a great disruptive technology. ... It also raises some interesting legal issues. As we have seen from the rise of the internet, the ability to easily create and share goes hand-in-hand with the ability to copy and distribute. ... Copyright is historically used to protect creatively conceived works that serve no functional purpose. That means that while many objects that come out of a 3D Printer — the sculptures and decorative baubles — will be protected by copyright, many more will not. As a result, copying those useful objects will not infringe on anyone's copyright. ... That does not mean that there is no way to protect these useful objects. Patent gives protection to many of the useful articles that are beyond the scope of copyright. ... While copyright protects creative expression the moment that it is fixed, someone with a patentable idea needs to make an affirmative decision to apply for a patent. That takes both time and money, and requires a showing of novelty and usefulness. ... If 3D Printing does gain wide adoption, the real secret will be to consider intellectual property concerns with an open mind and to ask a few simple questions. Is this really a new problem? Can the existing intellectual property regime cope with this problem? If not, what is the specific shortcoming? What are the wider effects of addressing that shortcoming? These questions should help us focus on what is truly new about 3D Printing, and what is just the status quo wrapped up in a fancy new technology."

The editors at Bloomberg report, "3-D printing is already having a demonstrable effect on the economy." ["How 3-D Printing Could Disrupt the Economy of the Future," 14 May 2013] They point out that additive manufacturing has historically been used to produce prototypes; but, last year, "28.3 percent of the $2.2 billion global 3-D printing market was tied to the production of parts for final products rather than prototypes." They agree with most other pundits that additive manufacturing represents a disruptive technology. They conclude, "Disruption can be dangerous and scary. It can also lead to wondrous new businesses and ways of life. Perhaps more importantly, it's inevitable -- so get in front of it while you can." That's really the same message that Brody and Sheffi are trying to get across. Perhaps the biggest change that additive manufacturing will introduce is mass customization. While that may sound a bit oxymoronic, what it really means is that the average consumer will have access to affordable customized products. Sheffi explains:

"Customization offers another example of how the technology will close some doors and open others in the supply chain domain. 3D printing makes it much easier to tailor products to customer needs, even down to the individual level. By tweaking the computerized blueprint and maybe altering the mix of materials, manufacturers can produce a limitless number of design variations. This newfound versatility is likely to trigger a dramatic increase in the number of product SKUs, which adds complexity and hence cost to supply chains. The proliferation of SKUs will pose a major challenge for companies. On the other hand, 3D printers are smaller and more compact than traditional manufacturing installations, and require fewer and less skilled operators. As a result, they can be located closer to consumer locations. This close proximity to markets, coupled with the short lead times made possible by 3D technology, shortens supply chains and reduces the need for large inventories. Service levels can be improved since additive manufacturing is ideally suited to just-in-time operations. These are only the possibilities that we can imagine in this early stage of the technology’s evolution."

Ken Cottrill, a Global Communications Consultant at MIT's Center for Transportation & Logistics, believes that hype over additive manufacturing could be creating a false dawn. "3D printing is being hailed as a breakthrough technology that will revolutionize manufacturing and supply chain management," he writes. "This may be the case, but we should avoid repeating the mistake of relying on hype to judge its value." ["3D Printing: Let’s Not Manufacture False Dawns," Supply Chain @ MIT, 23 May 2013] He notes there are still a lot of questions that need to be answered about additive manufacturing. In addition to intellectual property rights concerns mentioned earlier, he indicates that questions remain about subjects such as quality, life cycles, and trust. He concludes, "Posing questions like these does not discredit a potentially paradigm-shifting technology; it helps us to take a step back and evaluate its evolutionary track dispassionately." Professor Sheffi probably agrees with his colleague; but, he still believes that it is important to envision what could be possible. He concludes:

"Imagine global networks of additive manufacturing machines that are attuned to local markets and can be reconfigured in real time as demand patterns change. Such a network would take supply chain agility to new levels. Or distribution centers that store and supply product blueprints rather than physical products, located 'in the cloud' or in server farms. Of course the world can be altered further if home-based 3D printing becomes the norm. In this world, every home is equipped with a printer capable of making most of the products it needs. Supply chains that support the flow of products and parts to consumers will vanish, to be replaced by supply chains of raw material. It's a compelling vision, but a long way off. Even assuming that consumers want to become micro manufacturing centers, the technology is many years away from such mass market applications. Meantime, 3D printing is a disruptive technology that will destroy many traditional manufacturing models. But reports that the concept of a supply chain will die at the hands of additive manufacturing are exaggerated."

We may well be at the dawn of new age of manufacturing. Nevertheless, it is too soon to draw sweeping conclusions about how this new age will affect supply chains.

August 19, 2013

The Next Billion Consumers

Bain & Company analysts Wlademir Gomes, Louis Lim, Robert Schaus, and David Cooper, report, "The global marketplace is minting a new set of consumers that's bigger than the current shopping base of the US and Europe combined." ["Getting ready to profit from the 'next billion' consumers," Insights, 14 September 2012] Who are these billion new consumers and where do you find them? They explain:

144280944"They're younger. They're literate. They've got increasing access to the Internet. They're in Ukraine. They're in the Philippines. They're in Algeria. They're in China and India. They're the 30-year-old Brazilian woman living with her mother in a favela, who owns a TV and a cell phone with prepaid service but has never traveled by air. They're the Russian retiree who opts for cheaper Western durable goods over new domestic brands. They're the 23-year-old Indonesian woman with low brand loyalty who buys cosmetics in small amounts but buys them frequently, and sees a TV as her next big purchase. Meet the 1.2 billion people who will move out of subsistence poverty by the year 2020. They're the world’s newest consumers, those living in households where annual disposable incomes will surpass $5,000 for the first time. It will be their initial experience with discretionary income and they'll have distinct ideas about how they want to spend it. These new consumers are already starting to develop tastes and demonstrate preferences in some categories."

Robert J. Bowman, managing editor of SupplyChainBrain, reports that there are even more emerging market consumers ready to follow the lead of the next billion. "According to Ernst & Young," he writes, "the global middle class is set to burgeon from its current level of 1.8 billion to nearly 5 billion by the year 2030." ["Tomorrow's Global Consumer: Smack Dab in the Middle," 16 January 2012] Bowman indicates that the Ernst & Young report "locates what it calls 'the next three billion' members of the middle class in India, Brazil, Indonesia, Turkey, Eastern Europe and even parts of Africa." Like the Bain analysts, the Ernst & Young analysts see the majority of these new consumers as younger than today's consumers. "One key driver is the high percentage of young people in those developing countries, says Maria Pinelli, global vice-chair of strategic growth markets for Ernst & Young. As they enter consumption age, these citizens will be demanding good, steady paychecks, which will translate into disposable income."

Billions of new consumers represent a spectacular opportunity for many businesses. The Bain analysts warn, however, "consumer products companies that don't act quickly enough will risk losing out to faster global or local competitors." They claim that even for companies that sell products that "consumers won't develop a taste for ... for years ... now may be the time to set the stage for attracting them when they're ready." To attract them, however, businesses must understand them as well as the circumstances in which they live. Only big data analytics will be powerful enough to provide the kinds of insights necessary to sell to consumers living in specific neighborhoods in urban environments in emerging markets. Simply knowing macrotrends will not be good enough.

Macrotrends do provide a good place to begin understanding the next billion or so consumers. An earlier Bain report, for example, concluded that the "new middle class will be considerably poorer than today's middle class in the advanced economies. In China, for example, peak income will average about $18,000 per year in current dollars — more like a giant Poland than another US." ["The next billion consumers," by Karen Harris, Austin Kim, and Andrew Schwedel, 9 September 2011] Among their conclusions about what this means for business, they wrote:

• "This is a large market but at a much lower price point for many purchases. Due to the new consumers' relatively lower incomes, the overall basket of goods and services will differ from what consumers in advanced economies purchase.

• "Companies will need to target emerging markets with a different cost structure. Expect price points to remain at a lower level rather than assuming migration upwards across all products.

• "Marketers will have a transient opportunity to impact the tastes of those moving into the middle class."

Most everyone knows that China and India (two of world's most populous countries) will see their share of new consumers enter the market. But the latest Bain report claims to have "found two important insights that can help companies as they pursue the next billion consumers." They are:

"First, the next billion opportunity extends beyond China and India. While China and India still will be the major developing markets, an army of about 350 million new consumers will come from more than 50 other countries, everywhere from Peru to Nigeria to Uzbekistan. That's a population as big as the US. Companies not yet on the path to leadership in China and India can consider going straight to these markets. Not only are the consumer populations on the verge of expansion, but there also are attractive opportunities to acquire local players. Second, our research found that in more product categories than anticipated, consumers behaved in a similar fashion across very disparate countries. ... That isn't the case for all categories, however, so companies need to look at their portfolio and determine which categories can be rolled out with the same strategies and which require different strategies from country to country. Understanding how shopping baskets differ across countries and income brackets can help prioritize when and how to reach the next billion."

The report goes on to stress the importance of data analysis because "each country is unique when it comes to the profile of its emerging consumer class." In addition, analysis needs to include "three dimensions: country, category and a company's own capabilities." The analysts point out, for example, that life expectancy could play a major role when companies are deciding where to invest as well as the types of products they might want to consider offering. They explain:

"Lifetime purchasing per individual among members of the next billion in Mexico and Ukraine is expected to be twice as long as it is for their counterparts in Indonesia and Vietnam — and more than three times longer than that of Nigeria. While most consumer goods firms are aware that their core market is, on average, getting older or younger, few fully quantify this by determining how many years of remaining spending there are for the average consumer. More spending years are certainly better."

The Bain analysts also report that the next billion consumers are going to be more technically savvy and literate than their current emerging market consumers. "There's no question," they write, "that consumer goods companies will have unprecedented access to the next billion as Internet penetration is booming and adult literacy rates are accelerating in most places, making it easier to establish a brand or win a loyal following than it has ever been in a developing market. But in prioritizing countries, companies are carefully evaluating how access to mind share (and thus commercial opportunity) varies, market by market." They maintain that understanding similarities and differences is important if companies are going to enter emerging markets successfully. They offer four recommendations: 1) Get in Early; 2) Look Ahead; 3) Earn Your Premium; and 4) Know What's Different.

Ernst & Young's Maria Pinelli agrees that a good understanding of local conditions is essential. "It's local production, with an intimate knowledge of consumer needs, that will have the upper hand," she told Bowman. The Ernst & Young report also emphasized that companies should be open to new opportunities. They may find that current offerings really aren't a good fit with emerging market preferences, tastes, or incomes. As a result, "a concerted effort to serve specific emerging markets is just as likely to lead to an entirely new product or service, boosting a manufacturer's total revenues."

Clearly, most analysts see the greatest opportunities in Asian and Latin American markets. But, as I noted in a post entitled The African Continent: Emerging Markets Full of Potential and Challenges, African countries shouldn't be overlooked. A Boston Consulting Group report concluded, "A new consumer class is emerging across Africa — one with increasing purchasing power and a hunger for products and services that once seemed unattainable." ["Marketing to the Emerging Consuming Class of Africa," SupplyChainBrain, 30 January 2013] The message here is simple: Companies that want to attract their share of emerging market consumers need to start their efforts quickly. Although 2020 or 2030 may seem to provide a long lead-time until these new consumers emerge, the analysts cited above agree that waiting to move is a bad strategy.

August 16, 2013

Saving the World with Big Data, Part 2

Save the worldIn the first part of this discussion about how Big Data can help save the world, I cited a number of experts who explained why they see great potential in Big Data analytics for tackling big global problems. The areas in which they saw the most potential included: agriculture, finance and poverty reduction, healthcare, and disaster response. Let's take a brief look at how Big Data can help in each of those areas beginning with Agriculture.

Agriculture

"Farmers today produce three times as much food as they did 50 years ago using just 12 percent more land, thanks to new technologies and better farming practices," reports Prachi Patel. "But the global playing field isn't level. In Africa, farmers produce a fraction of what they could, according to the Forum for Agricultural Research in Africa, and most barely get by, struggling against infertile soil, drought, and diseases." ["Feeding the World With Big Data," IEEE Spectrum, 14 May 2013] It's clear from the title of his article that Patel believes Big Data has a role to play in solving the growing challenge of feeding the world's burgeoning population. This is important, he explains, because "helping farmers—in Africa and elsewhere — produce more will be key to lifting millions out of poverty and sustainably feeding a world population of 9 billion in 2050." He continues:

"Food-policy experts believe that a crucial step toward that goal is to give farmers, scientists, and entrepreneurs unhindered access to agricultural data which is generated at research centers worldwide. ... If these data sets are made freely available, the possibilities for their use are endless, says Piers Bocock of the CGIAR Consortium of International Agricultural Research Centers, in Montpellier, France. At [a] conference [held earlier this year], experts from universities and research institutions presented apps they've developed using data that's already publicly available. These included MyFarm, an Android-based country-specific multilingual app that helps train farmers to give agricultural advice to other small farmers, and Aqueduct, an interactive tool that provides high-resolution maps of water-related risks. In Africa, where even the poorest farmer carries a cellphone, open-data evangelists envision an incredible — and not completely improbable — scenario. 'Imagine this,' Bocock says. 'A woman standing in a field in Malawi has just borrowed money to start her own farm. What if an app on her mobile phone geo-locates her and then, from this ever-growing data ecosystem of knowledge, is able to identify the soil type and needs of that specific field, and then tell her where, locally, she can buy the seeds she needs and when to plant, harvest, et cetera?' Making such 'what if' scenarios a reality will require increasing amounts of free, accessible agricultural research data that's easy to use — not just by humans but also by machines."

Finance and Poverty Reduction

Gillian Tett discusses how Big Data can be used to make societies more resilient. For example, it can be used to "spot economic trends and predict looming problems in a beneficial way." ["Big data is watching you," Financial Times, 10 August 2012] She explains:

"Aid groups are not just tracking ... physical phones; they are also starting to watch levels of mobile phone usage and patterns of bill payment, too. If this suddenly changes, it can indicate rising levels of economic distress, far more accurately than, say, GDP data. ... [If any organisation] spots a sudden increase in certain keywords, this can also provide an early warning of distress."

Tett also sees a darker side to gathering financial information. She notes that "companies can use the data ... to develop credit scores for the poor." She believes such scores would lead to less access to credit than the poor already have. Mark van Rijmenam reports, "Cignifi, a Brazilian startup, for example developed a technology to recognize patterns in the usages of mobile devices. The system recognizes phone-calls, text messages and data usage and based on this information it can recognize someone's lifestyle and his/her corresponding credit risk profile." ["How Big Data Can Help the Developing World Beat Poverty," SmartData Collective, 2 August 2013] How that information is used will determine whether the poor will be helped or hindered in their efforts to escape poverty.

Healthcare

Several references in the first post in this two-part series touched on how healthcare can be improved through the use of Big Data. For example, van Rijmenam discussed how using Call Detail Records could be used to map changes in the slum population and, as a result, "direct latrine and water pipe building efforts for the benefit of the slums residents." As I've pointed out in previous posts, providing the poor with better sanitation facilities can dramatically improve their health. Tett provided an example how Big Data was used during the Haitian earthquake a few years back to prevent epidemics. She wrote:

"The population scattered when the tremors hit, leaving aid agencies scrambling to work out where to send help. Traditionally, they could only have done this by flying over the affected areas, or travelling on the ground. But some researchers at Columbia University and the Karolinska Institute took a different tack: they started tracking the Sim cards inside mobile phones owned by Haitians, to work out where their owners were located or moving. That helped them to 'accurately analyse the destination of more than 600,000 people who were displaced from Port au Prince”, as a UN report says. Then, when a cholera epidemic hit Haiti later, the same researchers tracked the Sim cards again, to put medicine in the correct locations – and prevent the disease from spreading. ... Medical researchers have learnt in the past couple of years that social media references to infection area are powerful early warning signal of epidemics – and more timely than official alerts from government doctors."

Mike Wheatley agrees, "'Spying' on people's public data can actually help medical professionals to save lives." ["Big Data’s Still On Track To Save The World," SiliconANGLE, 9 July 2013] He explains:

"Researchers at Johns Hopkins University have been ... downloading tweets at random and sifting through this data to flag any and all mentions of flu or cold-like symptoms. Because the tweets are geo-tagged, the researchers can then figure out where the sickness reports are coming from, cross-referencing this with flu data from the Center for Disease Control to build up a picture of how the virus spreads, and more importantly predict where it might spread to next. Of course, there are many countries where Twitter isn't all that popular and so researchers are forced to use more creative methods to track disease. One way of doing so, pioneered in Kenya, is through using the so-called metadata from cell phone calls to try and predict the spread of malaria. Now you might think that's an impossible task if you're not actually listening into people's calls, but you'd be wrong. Caroline Buckee, a professor at Harvard University's Center for Communicable Disease, hit upon the idea of assigning specific cell phone users to an 'area' based on the location their calls and SMS messages originated from. These areas where then rated according to the level of malaria risk, which was calculated according to reported cases of the disease. Using a mathematical model, the researchers were able to accurately predict someone's probability of becoming infected in each 'area'."

As the old medical adage goes, prevention is always better than cure – and a lot cheaper as well.

Disaster Response

The final area I want to discuss is disaster response. Just like in healthcare, prevention of disasters is the best course of action. Unfortunately, preventing natural disasters isn't possible. For that reason, mitigation is often best the course to follow. Early warning can sometimes help prevent natural disasters from taking an even larger toll in life and destruction. Wheatley explains:

"Saving lives is a worthy cause, but the motivation to save money can be just as powerful (if not more so), and once again Big Data is helping us to do so. ... We can't stop the forces of nature, but by preparing for the coming onslaught we can certainly minimize the damage it'll cause."

The onslaught of disasters can only be detected and mitigated if data is collected and analyzed quickly enough to make a difference. Tett notes that applications like Twitter and Facebook can often provide the necessary early warning. "References to food or ethnic strife," she writes, "may indicate the onset of famine or civil unrest." Earlier she noted that Big Data can be used to track displaced populations so that response organizations know both the extent of the problem and where they need to be to assist. Tett continues:

"Robert Kirkpatrick, a former IT expert who now runs the UN's Global Pulse unit, ... dreams of using these data to create the social media equivalent of 'metereological stations', which can test the winds of public debate, spot economic trends and predict looming problems in a beneficial way. Even if this idea sounds far-fetched, economists can already use this information to track how economies are developing in poor regions of the world with much more precision and timeliness than ever before. That mobile phone in my pocket, in other words, does not just connect me to my friends. It is now part of a shared human experience – and database – that spans the globe, and which is growing in depth and power each day. And that has implications most of us have barely begun to understand. It is both a sobering and exciting thought, whether you are now sitting on a holiday beach, in a humdrum office – or anywhere else in the world."

Big Data may not be able to save the world on its own; but it certainly is a good tool to have in the kit of organizations and governments that can help solve global challenges.