Cities Shifting Global Economic Power– New Growth Engines of 21st Century: Changing World Order to Create Wealth…

Cities (urban centers) are main creators of economic wealth, generating over 70% of world’s Gross Domestic Product (GDP) according to United Nations Report. Most industries and businesses are located in or within immediate vicinity of urban areas… Urban regions are the engines of national economies; in U.S., eight out of ten people live in one of 330 urban areas and more than half live in 39 areas with populations of one million or more…

Urban economies account for 83% of national income and virtually all employment in the advanced technical and service sectors… Cities are great democratizers of society, where people of different cultures, languages, religions… meet, mix, work together. Urban areas provide the energy where creativity and intellectual ferment develops, they are the foundation– where science and technology, art and fashion, banks and finance, music and entertainment, research and higher education… can flourish.

However, in order to harness the economic benefits of urbanization, policy-makers and private sector must do more effective planning and attract sustained investment in infrastructures, e.g.; railroads, highways, bridges, airports, ports, water, power, communications, energy… Urban centers face critical challenges, and it’s essential that government and business form partnerships to make urban areas more competitive, sustainable, resilient…

In the article Competitive Cities by John S. Ratcliffe writes: There is general recognition that 21st century is the century of cities. Cities are moving center stage, and both commercial and cultural worlds increasingly are characterized by cities rather than by countries… Cities are fast coming to function as the basic motors of the global economy… Indeed, it’s argued that there is a new form of global ‘city-centric’ capitalism where cities operate as territorial platforms for much of contemporary economic activity, and as important staging posts for the operations of multi-national corporations.

Urban centers (cities) thrive on creativity, productivity, innovation, and as multifaceted urban milieu that are simultaneously embedded in worldwide business networks… And a common challenge for cities across the world is competitiveness and the key to competitiveness is entrepreneurship. Successful cities engender an environment in which creative and innovative individuals and organizations can gather, grow, thrive… According to Jane Jacobs; the basic idea is to use whatever commercial, political strengths, resources that a locality (urban center) already has, but which it may have neglected, wasted, overlooked…

In the article Hyper-Connected Cities Are Taking Over the World by Tanvi Misra writes: We are moving toward a new era where insular, political boundaries are no longer as relevant. More people are identifying as ‘global citizens’, and that’s because more people are more connected than ever before… According to Parag Khanna; change is taking place in the world today in which cities– not nations– are the key global players… where the new maxim is ‘connectivity is destiny’… 

Urban areas are building physical and institutional connectivity among each other, and growing demographic and economic power; they are the drivers of new world order. They are power centers of global commerce,  social, environmental… engagements. Urban areas are key element in the evolution of world change for many reasons:

First, the world is urban; if you want to understand where people are, people are in urban areas… Second, most of the world’s economic power is concentrated in urban areas, and therefore they become the pivotal entities you need to analyze to understand the new world economy. Third, urban areas are increasingly connecting to each other; they are forging their own diplomatic networks….

According to McKinsey Global Institute: The urban world is shifting. Today only 600 urban centers generate about 60% of global GDP. While 600 urban centers  will continue to account for the same share of global GDP in 2025, this group of 600 will evolve into a very different membership. Over the next 15 years, the center of gravity of the urban world will move South and, even more decisively, East… Today major urban areas in developed-regions are without doubt economic giants:

Half of global GDP in 2007 came from 380 urban areas in developed-regions, with more than 20% of global GDP coming from 190 North American cities alone. The 220 largest urban areas in developing-regions contributed another 10%… But by 2025, one-third of these developed-market urban areas will no longer make the top 600; and one out of every 20 cities in emerging-markets is likely to see its rank drop out of the top 600. By 2025, 136 new urban areas are expected to enter the top 600, all of them overwhelmingly from developing world, e.g.; 100 new urban areas from China

Urbanization is essential part of a nation’s economic development towards a stronger and more stable future…  Most of the world’s largest cities are in the world’s largest economies, which is further evidence of this link between economic wealth and cities. Cities and towns have important roles in social transformation. They are the centers of artistic, scientific and technology innovations, of culture and education…

The history of cities and towns is inexorably linked to that of civilization in general… They attract talents and skilled labor that allow specialization in knowledge, skills, and management capabilities possible, and they can achieve economies of scale, agglomeration and urbanization… Cities are the driving force for economic development, and economic growth also stimulates urbanization… These positive and evolving relationships are a reality in most countries…

Throughout the world, the integration of the global marketplace is causing a fundamental shift in the way nations think about urban economies. The global economies are increasingly system of urban-centered regional economies that transcend municipal boundaries. We used to think of countries as homogeneous with all of its regions rising or falling together with the national economic tide…

But no longer;  today it makes more sense to think of ‘common markets’ of urban area economies… These urban area regions, although strongly interdependent, compete with one another and other urban centers throughout the world. Hence the ability of nations to prosper in today’s highly competitive global economy is highly dependent upon economic performance of its urban regions, and upon the health and vitality of the cities at their core…

The Death of Big Ideas– Greatest Threat to Any Organization: Old Ways of Thinking That Don’t Work Any More…

The big idea is dead; long live the big idea: For over 50 years, delivering the ‘big idea’ has been ultimate goal for creative business. According to David Ogilvy; you will never win fame and fortune unless you invent big ideas... Big ideas are omnipresent innovation that redefined an industry, disrupt markets, changed popular culture…

According to Nicholas Bester; some of the most memorable big ideas are the foundation of great companies that are built on, e.g.;  Apple challenged to ‘Think Different’ and won the hearts and imagination of the creatively inclined… Nike told us to ‘Just do it’, then Michael Jordan did it, and as a result so did we… The California Milk Board asked us to ‘Got Milk?’ so we went out and got it…

The big idea is a tag-line, a story or singular concept which servers many purposes. It captures universal human truth or inspiration… It shocks its audience and delivers memorable images and one-liners. Big ideas have never been easy to uncover, but it was certainly easier for an idea to become ‘big’ in an era with limited media and limited access to information and content: A pre-Internet and pre-social media era…

So the question: In today’s digital age are big ideas still achievable? Has the proliferation of media channels and consumer advocacy debunked the notion of homogeneous truths, concepts, images that big ideas are built on… According to Megan Garber; the big idea is becoming, steadily, less big… in the age of the Internet and social media there are more choice for consumers, which means that it’s a fractured environment for everyone, and a more idea-hostile environment for the culture at large...

According to Kevin Roberts; the big idea is dead. There are no more big ideas and leaders should go for getting many small ideas… According to Edward Boches; perhaps it’s not so much that the big idea is no longer needed, it’s that we need many more different kinds of ideas because we can’t reach the masses with just one…

According to Bradley Moore; due to the rise of digital age, the big idea is becoming a thing of the past. At the very least, it’s time to rethink this notion of the big idea and embrace the era of the ‘long’ idea… We need small ideas built around a long idea that deliver value in the form of utility, education, entertainment, community…

Success in digital age won’t be measured by a big idea’s ability to be all things to everyone, but rather by how they allow business to do more, and be more for consumers and societies within which they exist. Big ideas need to be creative and engaging as they have always been, but now they also must be interactive and accountable…

In the book Tyranny of Dead Ideas by Matt Miller writes: What’s the greatest threat to the economic future? There the things we think we know, but don’t… Three facts are now poised to shape the economic life for a generation:

  • First; due to global competition and rapid technological change, the world economy is about to face its most severe test in nearly a century…
  • Second; political and business leaders are doing next to nothing to prepare to cope with what lies ahead…
  • Third; the reason for inaction is that the entire economic and political culture remains in thrall to a set of ‘dead ideas’ about how a modern economy should work…

The trouble is we’re not doing what we need to do because of the ‘tyranny of dead ideas’. By this is meant the tacit assumptions and ingrained instincts broadly shared by business executives, policy makers, media observers, and other opinion leaders regarding the way a wealthy and advanced economy should work. And therein lies the dilemma; from the halls of government to the executive suite, from the corner store to the factory floor, many leaders are in the grip of a set of traditional ideas that are not only dubious but dead wrong…

The persistence of traditional dead ideas generally involves a failure to adapt to new circumstances, a recurring feature of human thought and behavior…  In this anxious environment, when traditional alternatives seem exhausted, we need a new way of thinking. In that sense, these outworn concepts are part of a broader phenomenon that afflicts every organization and each of us as individuals…

It’s the blind spots bred by complacency or arrogance or certitude or habit that fill the obituaries of civilizations, organizations, businesses that didn’t make it… It’s the things we think we know (but don’t) that are the chief obstacles to success in nearly every endeavor… However, the true measure of a person, an organization, or a society isn’t the dead ideas we fall prey to; it’s whether we can summon the perspective and imagination to recognize the dead ideas in our midst, and bury them before real damage, or more damage, is done…

In the article Size Still Matters Big Ideas Aren’t Dead by Martin Weigel writes: It’s become fashionable in some quarters to sneer at the notion of the ‘big idea’… The ‘big idea Is dead’ argument is borne of the careless use of language; indeed as some businesses start talking about ideas, you can be fairly guaranteed that some half-baked befuddled nonsense is going to follow... It’s an argument that looks at the world solely through the lens of execution and expenditure. It assumes that ‘big-ness’ lies solely in high cost execution or big investment…

Whatever some might say, big ideas are not dead– because we still benefit from them. Even if they’re not necessarily brought to life through epic execution and media… Big ideas connect with what matters to people. If you want people to notice you, care about you, have strong feelings about you, if you want to stir people’s hearts and minds, be impervious to the offers of competitors, and keep coming back to you, week-in-week-out, or year-in-year-out, then it helps to connect with something pretty compelling… Big ideas create mental monopolies, they are the competition for memory and preference… big ideas push aside competitors.

Big ideas ensure that we are not continuously reinventing the wheel, that we don’t constantly reset the clock to zero, and just think about the continuous improvement theory– that each action is build on each other… Big Ideas ensure that however diverse actions might be, they are coherent enough to build long-term associations in memory… Big ideas ensure that we don’t merely limp from tactic-to-tactics… Sustainable value is created by bid ideas that ensure the creation of long-term economic success…

Big-ness is first and foremost an imperative for a successful business strategy. Without a powerful, organizing idea that drives the business forward deliberately; a world of chaos and pain awaits us. The rhetoric of small risks reduces ourselves to a bunch of illiterates and short-term tacticians, denying ourselves opportunities to be anything more valuable or influential…

So ignore all the chatter about ‘big being dead’… Find an idea that connects with what matters to people. One that has real resonance and inspiration, then bring it to life in the most appropriate and imaginative way. Whether that’s through big execution or small steps. According  to Mark Twain; the rumors of my death are greatly exaggerated…

Global Wealth Reports: You (Yes You) Might Be Among World’s Richest Top 10% , and Not Even Realize It…

You are probably much higher on the global wealth pyramid than you think: If you have only US$2,222 (add together bank deposits, financial investments, property holdings, and subtract debts) you are wealthier than 50% of world’s adult population… If you have over US$71,560, you are in the top 10%... Or if you have over US$744,400, then you are member of the global elite 1%… That’s according to the Global Wealth Report by Credit Suisse Research Institute…

Unlike many studies of prosperity and inequality the Credit Suisse Institute Report counts household ‘assets’ rather than just income. And according to the Institute calculations the world’s households own property and net financial assets worth almost US$256-trillion, in mid-2016. That is about 3.4 times the world’s annual GDP. If this wealth were divided equally it would come to US$52,819 per adult; but in reality the top 10% own 89% of it…

The top 10%ers include about 44-million Chinese (over 4.0%) and about 21-million of Americans (over 5.0%) of the countries’ adult populations… also over 18-million Americans are 1%ers– these are many of the same people who complain about the global elite, and probably don’t even know they belong to it… Also, the global bottom 10% have peculiar mix, including; many of poorest countries and a surprising number of Americans (over 2-million) whose debts outweigh their assets…

Credit Suisse Wealth Report 2016: The term wealth is defined as the value of financial assets plus real estate (housing) owned by the households, less their debts… The study focuses on the wealth held by adult populations across more than 200 countries, including; the billionaires at the top of the wealth pyramid, to the middle and the bottom sections of the pyramid. The analysis comprised the wealth holdings of 4.8 billion adults…

According to the report; in past 12 months global wealth has risen by US$3.5-trillion to US$256-trillion, which represents increase of 1.4%. However wealth creation has merely kept pace with population growth. The report further suggests that wealth inequality– measured by share of wealthiest 1% and wealthiest 10% of adults as compared to the rest of the world’s adult population continues to rise…

While the bottom half collectively own less than 1% of total wealth, the wealthiest top 10% own 89% of all global assets… Currently an estimated 9% of adults, globally, are net debtors… Also, half of all adults in the world own less than US$2,222, and the bottom 20% of adults own no more than US$248… The richest nations with wealth per adult over US$100,000, are found in North America, Western Europe, and among rich Asia-Pacific and Middle Eastern countries…

BCG Global Wealth Report 2016: Global private financial wealth grew by 5.2% in 2015 to US$168 trillion. The rise is less than previous year, when global wealth rose by more than 7%… Significant slow-down was seen in North America (2% in 2015 versus 6% in 2014), Eastern Europe (6% versus 11%), and Western Europe (4% versus 6%), with North America posting the lowest growth rate of any region. In Western Europe, uncertainty about the future of European Union and continued low commodity prices weighed on equity and bond markets despite a generally promising start to the year.

Some developing regions experienced significant slowdown because of political unrest, international sanctions, and general economic tension. As in recent years, the highest growth in private wealth was seen in the Asia-Pacific region (13% in 2015, versus 14% in 2014), while lowest growth in the developing markets occurred in Middle East and Africa (3% in 2015, versus 4% in 2014), where low commodity prices and political instability led to lower equity and bond markets…

Wealth-X World Ultra Wealth Report 2015-2016: This report reveals that there are 212,615 ‘Ultra High Net Worth’ (UHNW) individuals globally, holding a combined wealth of US$30-trillion in net assets… The world’s ultra wealthy population shows almost flat growth in 2015 as the number of individuals with US$30-million or more in net assets grew just 0.6% and total UHNW wealth increased by 0.8%. Despite this meager growth UHNW individuals who account for just 0.004% of the world’s adult population, still control 12% of its wealth…

In Europe, Middle East and Africa UHNW wealth fell 2.4% as equity markets, local currencies and gross domestic product collectively experienced negative net returns. By contrast, Asia-Pacific had 3.9% increase as the ultra wealthy in certain markets benefit from dynamic business expansion and economic growth. In the Americas, it was Latin America rather than North America that helped the region achieve a modest 1.5% growth in ultra wealth value…

According to this report; 2015 billionaires saw their wealth grow by 5.4%, which is more than double the rate of global economic growth. While collectively other tiers saw their wealth shrink by 0.6%. Other key findings include:

  • UHNW global wealth is expected to reach US$46.2-trillion by 2020…
  • UHNW wealth is expected to grow at a compound annual growth rate of 9%…
  • UHNW population is expected to exceed 318,000 by 2020…
  • UHNW female population remained steady at 13%, their share of total UHNW wealth fell from 14% to 11% this year. Average female high net worth dropped from US$147-million to US$126.3-million…
  • UHNW male wealth increased 2.4% from US$139.8-million to US$143.1 million, reflecting a greater focus on self-made wealth and higher-risk asset composition…
  • UHNW wealth in two-of-three cases is purely self-made rather than inherited…
  • UHNW wealth in under age-30 demographic accounts for just 1% of the world’s ultra wealthy population and 0.3% of global UHNW wealth…
  • UHNW individuals age-80 or over are seven times wealthier than those under age-30, and are worth nearly double that of average UHNW individual globally…

The biggest reason the ultra rich are getting richer while the poor are getting poorer is because wages for the middle-class in countries like U.S. have stagnated in recent decades, and because ‘investments’ is being rewarded, but not ‘labor’… One key trends underlying the huge concentration of wealth and incomes is the increasing ‘return to capital’ versus ‘return to labor’… In almost all countries, the share of national income going to workers has declined…

Wealthy people don’t build their wealth by accident, or even overnight. Becoming wealthy takes serious will power and long-term vision. You have to be able to keep your eye on the prize of financial freedom, and be willing to sacrifice present wants for the sake of future wealth… Contrary to popular belief, you don’t need to be an expert about finance…  You don’t need to come from an affluent family… You don’t even have to earn a massive paycheck…

For most people it all boils down to one thing: Investing… According to Ramit Sethi; wealth isn’t measured by the amount you make each year, but by how you save and invest the money you make... It’s how you manage– money, assets, investments… with goal of becoming wealthy and financially independent, over time…

A very wise investor once said– pick the traits you admire and dislike the most about wealthy people, then do everything in your power to develop the traits you like and reject the ones you don’t. Mold yourself into who you want to become, and you will find that by investing in yourself first, wealth will begin to flow into your life…

Success and wealth, beget success and wealth. You have to purchase your way into that cycle, and you do so by building your wealth one dollar at a time and invest each dollar, so that it works for you– every day, every week, every month, every year…

Long Tail of Consumer Product Returns-Upward 30% of Sales: Secondary Markets Valued at Over $400 Billion…

The value of consumer product returns– goods that consumers decide they don’t really want and return would rank as the world’s 21st largest economy, based on the World Bank’s global economies ranking… Put another way, it equals the combined sales of; Wal-Mart, Target, Best Buy, Gap, Macy’s… Blame it on– shoddy merchandise, wrong color, wrong size, buyers’ remorse, defective or poor-quality, lower price elsewhere… Consumers use many reasons when returning goods…

According to estimates; the consumer’s product returns market is staggering $642.6 billion, globally… According to IHL Group; returns account for an estimated 4.4% in retail sales… others estimate returns upward of 8%, and still others estimate returns of eCommerce sales upward of 30%. In product categories; clothing retailers see average of 10% of sales returned, which is highest among retail segments… And electronics, books, and other hard-goods follow with an average of 8.8% returns…

Clearly consumer product returns is a big issue for retailers, and it’s also a catch-22: On one hand, a liberal returns policy is seen as necessity for customer loyalty and cross-sell to other purchases… But on the other hand, retailers lose money on returns… According to Gartner survey of 300 retailers; only 48% of what’s returned can be resold at full price…

But at the same time there are enterprising entrepreneurs who are developing a whole new market/industry where they buy returned goods (at pennies on the dollar) and re-sell them at deep discounted price and still make a very good profit… This secondary returned goods market is estimated at over $400-billions…

National Retail Federation’s (NRF) Annual U.S. Merchandise Returns and Return Fraud Study has the following key findings:

  • Total size of returned products is overwhelming; if merchandise returns were a corporation it would rank #3 on the Fortune 500 list…
  • Holiday product returns rate is 2.0% higher than the annual rate: One out of every three gift recipients (38.0%) returned at least one item during holiday season…
  • Rarely or never do people include a gift receipt or original receipt when giving a gift, 31.9%… leading to increased potential for non-receipted returns…

In the article e-Commerce Product Return Statistics and Trends by Stacey Rudolph writes: Online retailing is souring and the rate of goods returns of online is alarming… According to Invesp; at least 30% of all products ordered online are returned, compared to only 8.89% bought in brick-and-mortar shops. To make matters worse, United Parcel Service Inc. announced that the tide of goods flowing back to e-retailers normally jumps 15% during holiday seasons…

According to whiteboardmag, some retailers experience as much as 50% return rates, whereas, most online retailers report a return rate of between 20% and 40%... Consumer reasons for returns vary wildly; According to TrueShip; 20% of consumers returned items because they received damaged products; 22% said they received different products from what they ordered; 23% said they received wrong item altogether; 35% of consumers return products for other or no reasons…

In the article Get Smart About Product Returns by J. Andrew Petersen and V. Kumar write: To many retailers product returns are a bitter pill to swallow… They are an enormous drain on revenue, plus the cash refunds to customers, plus the cost of repackaging, restocking, reselling returned items… But discouraging product returns with policies like; no refunds, or strict limits, or partial refunds… is a mistake.

That’s because consumers who know they can return anything they buy with no questions asked for a full refund are likely to buy more than consumers who are unable to return goods… and who are afraid they might get stuck with something they don’t want, or lose money on less liberal returns policy… In the end retailers that have a liberal return policy come out ahead…

However, having a liberal return policy isn’t the whole answer: Retailers must actively manage product returns so they become tool to maximize profit. That means encouraging fewer returns by some customers, and ironically more returns by other customers… For example; it was found that returns tended to be lower when shoppers buy items that are discounted…

Also, returns are lower when customers buy the same products that they usually do, but from a different sales channels, such as; ‘online’, instead of ‘in-store’. Hence lessons learned is simple: 1.) retailers must understand and influence the behavior of their consumers, 2.) retailers must manage their consumer product returns...

 In the article Managing Retail Returns: Good, Bad, Ugly by Lisa Terry writes: Retailers cope with all kinds of product returns; from apparel that didn’t suit the customer, to expired products that are no longer salable, to products recalls that endanger public safety… Hence, in the ‘forward-side’ of retail logistics, retailers spend the holiday months of; September through December moving volumes of goods in-stores and e-Commerce distribution centers…

Then in post holiday months of; January, February, March it’s all about ‘reverse-side’ of retail logistics… That’s when; the good, bad, and ugly post-holiday product returns hit; these are the damaged, unwanted, outmoded, leaking, spoiled, or counterfeit merchandise… that pour back into retail stores and returns consolidation centers, accounting for upward of 40 to 60% of the year’s returns.

Then it’s up to retailer’s reverse-side logistics to separate the wheat from chafe, performing triage and processing it all to reduce costs and mitigate loss. Retailers are devoting more attention and resources to reverse-side logistics seeking to extract as much value as possible from returned goods. The average retailer’s reverse-side logistics costs, is typically equal to an average of 8.1% of total sales– a figure which, unlike forward-side logistics, includes the value of the products…

However over past few years, most retailers have come to realize that creating liberal product returns experience is big competitive advantage… Ongoing studies suggest that over 80% of consumers view stores that offer lenient returns policies more favorable, and over 60% of consumers do take the time to read a returns policy before they make a purchase… Consumers repeatedly made it known that they want an easy, automated way to return products…

Consumers are going to spend an estimated $350 billion on holiday goods this season, a sharp increase from last year, but returns are also expected to peak at about 30-33%. Hence for every dollar spent, retailers could see about one-third coming back-in-the-door in form of returns, processing, shipping, labor… 

Hence retailers (both online and in-store) must focus on developing strategy and managing their operations so as to reap the most value from product returns. And that means engaging a secondary market, which includes; liquidators, outlets, salvage centers, auctions…

The consumer product returns market has blossomed into a $400-billion industry… And when retailers manage and embrace it they can recoup upward of 12 to 25% of a returned item’s original cost, versus less than 2% from recycling the item…

Paradigm of Gender Parity– More Women in Leadership: World is Shifting from Brawn-Power to Brain-Power…

A diverse group of current and former CEOs and business leaders announced the launch of the Paradigm for ParitySM coalition, an organization committed to achieving gender parity across all levels of corporate leadership… According to Ellen Kullman; we are thrilled to announce the beginning of a movement focused on achieving a new norm in corporate leadership positions: One in which women and men have equal power, status and opportunity…

According to Ms. Kullman; while many organizations support gender equality and call for enhanced diversity in the workplace, the ‘Paradigm for ParitySM coalition is unique– it outlines specific set of concurrent actions an organization can take to achieve gender parity… According to Jewelle Bickford; we have spent the last 18 months developing the Paradigm for ParitySM 5-Point Action Plan, a comprehensive road-map for increasing number of women in leadership positions, and through their implementation it will catalyze change and enable substantial progress toward gender parity by 2030. The five steps are:

  • Eliminating or minimizing unconscious bias in the workplace…
  • Significantly increasing number of women in senior operating roles, with near-term goal of at least 30% representation in all leadership groups…
  • Measuring targets and maintaining accountability by providing regular progress reports…
  • Basing career progress on business results and performance, rather than physical presence in the office…
  • Providing sponsors, not just mentors, to women so as to be well positioned for long-term success…

OK, this sounds great: But what is ‘gender parity’ exactly? According to pundits; gender parity is a numerical concept related to gender equality… Gender parity concerns the relative equality in terms of numbers and proportions of women and men, and is often calculated as the ratio of female-to-male values for a given indicator… In the context of gender equality, gender parity refers to the equal contribution of women and men to every dimension of life, whether private or public…

In the article Gender Parity: A Realistic Goal? by Caroline Turner  writes: I am more frequently seeing terms like ‘gender equity’, ‘gender parity’, ‘gender balance… For example, the report ‘Women in the Workplace 2015′, looked at the (great) economic value of ‘gender parity’… The report concluded; if the current (slow) rate of progress, continues, it will take 25 years to reach ‘gender parity’ at the senior VP level… and more than 100 years to reach parity in the C-suite…

So, is ‘parity’ (meaning equal number of men and women) the right goal? Leadership gurus tell us that the goals that inspire people the most are measurable, time-bound, attainable… And, they must be currently out of reach, but also realistic over the long-term… In the 2010 census, women were 50.8% of the U.S. population. But then is it realistic to think that, even within the next century, women will represent 50% of every level of business, including the C-suite? Is this an ‘attainable’ goal?

According to study ‘Power of Parity’ by McKinsey Global Institute; gender parity may not be the right goal: The study shows three scenarios – (a) ‘business-as-usual’ scenario, which assumes only the historical growth, (b) ‘best-in-region’ scenario, assuming that each county matches the gender parity results of the best performer in its region, (c) ‘full-potential scenario’…

The executive summary of the report explains why a less ambitious scenario, scenario (b), is considered as most likely; because it notes that (c) ‘full-potential scenario’ is ‘unlikely to materialize within a decade’ for two reasons. First, ‘barriers hindering women’ are unlikely to be fully addressed within that (relatively short) time frame… Second, ‘participation is ultimately a matter of personal choice’…

In the article CEOs of 27 Firms Pledge to Have 50% Women in Top Roles by 2030 by Laura Colby writes: The heads of Bank of America Corp., American Electric Power Co., Coca-Cola Co. and 24 other large global companies have pledged to boost the number of women in their top ranks to parity with men by 2030… It will be tough climb: Women currently compose 14% of the top five executive positions at each of the S&P 500 companies, and about 4% of CEO jobs… And, at current rates it could take more than a century to reach parity…

According to Bickford; what’s frustrating is that, to date, there has been so little progress… Many organizations support women, but there’s a disconnect between what companies say and actually do, in placing women in top positions… Hence, nothing will change unless there is definitive and actionable road-map, e.g.; mandating specific goal with timeline, e.g.; 30% women in management within the next five years…

In the article Disappearing Act: Gender Parity on Corporate Ladder by Von Julie Coffman, Orit Gadiesh, Wendy Miller writes: Ambition, competence, determination and resourcefulness do not come with gender labels. Indeed, as world economies increasingly shifts from brawn-power to brain-power, more women are joining ranks of the employed in greater numbers. Women now constitute nearly 50%  of the U.S. workforce…

But then something happens to women as they climb the rungs-up-the-corporate ladder; they disappear. Women don’t rise to leadership levels at the same rate and pace as male counterparts. Women enter workforce in large numbers, but over time steadily they ‘vaporize’ from higher echelons of an organization hierarchy… According to estimates; there are only 27 women CEO out of 500 (or 5.4%) in U.S.‘s largest publicly traded companies– these are S&P 500 companies… 

Clearly, as the ‘war for talent’ increases, business leaders must do the gender math… They must recruit and develop the best talent (without regard to gender– gender neutral) or fail… It’s not about parity;  it’s about getting the best talent in highly competitive global market place… But some pundit say; parity or equality don’t exist… they say; it’s illusionary… they say; it’s a modern notion held-up as Utopian ideal…

On a functional level, if you believe that any one person or a group of persons can on any day be– stronger, smarter, faster, funnier, or more creative than another, then you don’t really believe in equality. If you believe anyone can ‘earn’ anything based on work or merit or the like, then you don’t really believe in equality… This modern notion of ‘equality’ is a social construct in truest sense. This quality of inherent ‘sameness’ does not exist in nature–‘no two snowflakes are alike’…

There are always going to be those who have ‘more’ of some trait, capability or resource than another. The attempt to build a society based on this notion is a kin to building a castle on sand. It seems odd that often the words ‘diversity’ and ‘equality’ are used in conjunction with one another when the two concepts are not really compatible, e.g.;  as to be ‘diverse’ means to have variation… and to be ‘equal’ is to be without variation…

While we all belong to groups and ‘tribes’, but we all still choose in our own minds whether we will be masters of our destiny or victims of our circumstance. We all choose if we are going to conduct ourselves from a place of empowerment or from a place of weakness…

Ubiquitous Price Index– There is a Price Index for Every Thing: Understand there– Real Meaning, Use, Importance…

Price indexes have been around for centuries, and are commonly used in everyday activities in business, government. However, the complexities of a price index is not always fully understood… The basic concept of the price index is to facilitate comparison of two sets of prices of just about anything and they can be formed, either over time (temporal index) or regions (spatial index) for just one common item, or group (e.g., market basket) of items…

The index model is used in all areas of life, from the stock market (most famous of which is probably the Dow Jones Industrial Index), to inflation… Indexes are used for wage levels, corporate profits as a percentage of GDP, and almost anything that can be measured… It’s used to compare where the price levels are now, to where it’s been in past… A small sample of popular price indexes (there are hundreds of them) are as follows:

  • Consumer Price Index (CPI): Measures the change in prices for goods and services that consumers pay in their daily lives…
  • Producer Price Index (PPI): Measures the change in prices that manufacturers and producers experience on materials necessary for conducting business…
  • Employment Cost Index (ECI): Measures the change in the cost of hiring employees in various fields…
  • Gross Domestic Product (GDP): Measures the change in the level of prices of all new, domestically produced, final goods and services in an economy…
  • Higher Education Price Index (HEPI): Track the change of the main cost drivers in higher education…
  • Wholesale Price Index (WPI): Represents the price of goods at a wholesale stage i.e. goods sold in bulk and traded between organizations instead of consumers…
  • Food Price Index (FFPI): Monitors the change in costs in the global agricultural commodity markets…
  • House Price Index (HPI): Broad measure of changes and movement of single-family house prices…
  • Medical Care Price Indexes (MCPI):  Measure changes in the cost and quantity of medical care services…
  • Big Mac Price Index (BMPI): Tracks change in price of McDonald Big Mac hamburgers in countries worldwide… it’s regarded as an indicator for the purchasing power of an economy…

Consumer Price Index (CPI): CPI is a measure of the inflation and it’s calculated monthly by the Bureau of Labor Statistics (BLS)… and it’s considered the standard measure by which inflation is tracked… The CPI is one of broadest interpretations of inflation and it represents most consumer purchases of goods and services. Also at wholesale level, the ‘producer price index’ (PPI) is used to track inflation. For the CPI, the BLS classifies the cost of both goods and services into more than 200 categories, arranged into eight major groups, as shown in the chart:

The CPI affects everyone’s life in many ways, e.g.; Federal Reserve sets its interest rate policy based on the core CPI rate. Thus, all interest rates: mortgage rates, bank savings rates, credit card rates… are all related to the CPI If you get wage increase based on a change in ‘cost of living’, then CPI is usually the rate that sets the standard… Social Security payment increases are all based on the core CPI…

The CPI impacts most– business, workers, recipients of government subsidies… hence there are many important reasons to understand it… Here is a common formulation to calculate the Consumer Price Index (CPI):

According to Investopedia; CPI is one of the most highly viewed economic indicators, and its calculations impact both equities and fixed-income markets… as well as, Federal Reserve monetary policy… Also it goes far in shaping public opinion about state of the economy, and analysts use it to generate predictions about economic trends and where the economy might be heading…

But there are concerns that the CPI is misapplied and transformed from measuring the ‘costs of goods’ (its intended use), to measuring the ‘cost of living’… And since CPI is limited in capability to examine all costs in its calculation for ‘cost of living’, some economists suggest that CPI is a misleading indicator when used for ‘cost of living’… However, this debate will not be resolve here…

And for now let’s consider the holiday season, and the use of two price indexes:

Christmas Price Index®: PNC Financial Services Group prepares a price index each year as a whimsical way of tracking inflation and uses a calculation  method that is similar to government’s consumer price index (CPI)… But as the name implies, it measures the ‘cost of buying’ the gifts given in the song; Twelve Days of Christmas, and these include; 12 Drummers Drumming; 11 Pipers Piping; 10 Lords Leaping; 9 Ladies Dancing; 8 Maids Milking; 7 Swans Swimming; 6 Geese Laying; 5 Golden Rings; 4 Calling Birds; 3 French Hens; 2 Turtle Doves; 1 Partridge in Pear Tree…

This year, of the 12 items measured by the Christmas Price Index, eight remained the same price as last year. Wage inflation boosted the cost of ‘pipers piping’ and ‘drummers drumming’… The real increase this year, however, was the cost of ‘two turtle doves’, which increased a whopping 29% this year due to a shortage.

‘Turtle doves’ only lay eggs a few times a year, two eggs at a time, making them more difficult to come by than a ‘hatchimal’ this time of year. On the other side of the spectrum, the cost of a ‘partridge’ fell 20% – I guess there are loads of partridges to be had this year. The cost of a ‘pear tree’, like the cost of ‘five gold rings’, remained the same.

With those adjustments in mind, if you add up the cost of all the gifts in 12 Days of Christmas song this year, it would cost $34,363.49. If, however, you really want to impress your true love by nabbing all 364 items – the number of the items as repeated throughout the song over and over (and over) – you have to cough up $156,507.88, nearly $1,100 more than last year…

Christmas Travel Index: By tracking 11,000 airfares for flights during holiday season every single day, the price index calculates average fare for most popular markets.. According to Hopper; best time to purchase flights for Christmas is about 80 days before the holiday… According to other studies; the sweet spot is 2 months out (57 days, to be exact)…

But beyond question of when to buy tickets, the best holiday fares typically include; ‘usual suspects’ — checking alternate airports, finding connecting fares lower than non-stops, looking for lower fares at inconvenient hours… According to George Hobica; best tip for buying airline tickets is– when you find a good deal, buy it…

Price indexes are not just for study by academics, business people, and government officials… out of idle curiosity. Rather, these indexes have an important impact on policymakers’ decisions and on the operation of the economy… Employers often look to these indexes in determining wage and contract adjustments based on a specific price index…

Some government programs, e.g.; social security payment benefits… based on price indexes… Private business contracts may provide for price adjustments based on indexes… payments, e.g.; child support and rent have been tied to price indexes… Hence, take the time to understand them (pros & cons), learn from them, but be cautious when using them…

National Embarrassment, Disaster– Failing Public Schools: U.S. is Falling Drastically Behind Rest of the World…

U.S. public schools are failing to educate students– they are getting ‘worse’ at math and science, and their reading skills are stagnate… An updated study by Program for International Student Assessment (PISA) found that U.S. students are having major problems with math and science, and have fallen significantly behind the rest of the world…

These finding are part of the PISA study that looks at performance of more than 500,000 students, all who are 15-years of age, across schools in more than 70 countries… with just under 6,000 students who took part in U.S. schools…

The top performing country in all three categories of– math, science, reading– was Singapore, while Hong Kong and Macau were second and third in mathematics. Japan and Estonia, and Canada and Hong Kong rounded out the top-three in science and reading, respectively. The U.S. ranked 40th in math, 24th in reading, and 25th in science…

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In the article Math a Concern for U.S. Teens; Science, Reading Flat on Test by Jennifer C. Kerr writes: U.S. students have a math problem: The latest global snapshot of student performance for 15-year-old shows declining math scores in the U.S. and stagnant performance in science and reading. U.S. is losing ground– a troubling prospect when, in today’s knowledge-based economy, the best jobs can go anywhere in the world… According to John B. King Jr.; students in U.S. aren’t just vying for great jobs in U.S. towns and cities and across state lines, but they must also compete with peers in Finland, Germany, Japan… and across the globe…

According to Peggy Carr, acting commissioner at National Center for Education Statistics; this pattern of U.S. students failing math and science, as compared with other countries, is consistent with previous yearly test assessments… U.S. student proficiency in these critical subjects is just getting worse… The 2015 PISA study is the latest to document that U.S students are under performing peers in nations through the world… and if this continues the U.S. will become a third world nation…

This ever 3-year test study of more than half a million 15-year-old students in about 70 nations and educational systems is coordinated by the Paris-based ‘Organization for Economic Cooperation and Development’ (OECD)… Here is a brief summary of the testing:

U.S. SCORES AND RANKINGS: Not so encouraging… The test is based on a 1,000-point scale. Average scores in math have been on the decline since 2009. Scores in reading and science have been flat during that same time period. Across the globe, U.S. students were outperformed by their counterparts in 36 countries in math; 18 countries in science, 14 countries in reading. Among the findings:

  • In math; U.S. average score 470, below international average of 490. Average scores ranged from 564 in Singapore to 328 in the Dominican Republic…
  • In science; U.S. average score 496, about same as international average of 493. Average scores ranged from 556 in Singapore to 332 in the Dominican Republic…
  • In reading; U.S. average score 497, about same as international average of 493. Average scores ranged from 535 in Singapore to 347 in Lebanon…

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WHAT IS GOING ON WITH MATH? According to Andreas Schleicher; high-performing countries do really well in math in three things: rigor, focus, coherence, e.g.; many high-performing countries will teach a lot less but focus at much greater depths, particularly in countries such as; East Asia, Japan and Singapore… U.S. students are often good at answering the first layer of a problem, but as soon as students have to go deeper and answer the more complex part of a problem, they have difficulties…

BRIGHT SPOT IN THE U.S.: All eyes are on Massachusetts– the Bay State participated as an international benchmark in the PISA study and received scores separate from the U.S., as a whole. Students in the state performed exceptionally well… Massachusetts’s average scores were higher than the U.S. and the international average scores in science, math and reading… And for reading Massachusetts was a top-tier performer, just behind Singapore, and tied with Hong Kong and Canada…

According to Mitchell Chester, commissioner of Massachusetts public schools; the state has spent two decades implementing higher standards, testing of student performance, and money to support poorer districts… and measure progress against these standards… They hold people accountable for results, and financially support the system to reach the desired results…

WHAT PEOPLE ARE SAYING: What do the PISA high-performing nations do different than the U.S.? According to Lily Eskelsen Garc, National Education Association; they invest in students… It’s a combination of high standards, useful assessments, and investing in educators with high-quality curricula and professional development that can make a very meaningful impact. When you look at public schools that are successful, both in countries and states, they have this blend, and there is ‘real’ improvement…

OTHER FINDINGS: Globally, gender differences in science tended to be smaller than in reading and math. But on average, in 33 countries and economies, share of top performers in science is larger among boys than among girls. Finland was only country where girls were more likely to be top performers than boys…

ABOUT THE TEST AND COMPARISONS: The PISA test is conducted every three years, and  schools in each country are random selected. According to OECD; student samples are drawn from a broad range of backgrounds and abilities… Another international test, known as the ‘Trends in International Mathematics and Science’ Study (TIMSS) had similar international comparisons with Asian countries, and they too solidly outperformed U.S. students

In the article More Money, Same Problems by Gerard Robinson and Benjamin Scafidi write: Showering public schools with funds has been a costly failure. Why not try something different? There are states that are looking at ways to fix public schools beyond more money and more bureaucracy… Some are pushing for state constitution amendments that would allow them to take control of persistently failing public schools… Hence, state would either manage failing public schools directly or convert them to charter public schools governed by local boards of parents and other citizens…

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As mentioned earlier Massachusetts has shown that U.S. student can learn and excel in math and science… Massachusetts has one of oldest charter school laws in the nation and is home to the highest-performing charter schools… and these student have tested among the best in the world… With results like these, you might expect people to cheer; but that is not the case. Most U.S. school districts are content with the status quo, and with their heads in the sand…

It’s about time that public school administrators try something different to improve U.S. student education… It’s about time to give all students opportunity to succeed… It’s about time that– parents, business, institutions, government… even teachers unions– all join together and demand, yes demand, better education for all students… It’s critical for the future of the student, and it’s critical for the future of the nation…

While important, money alone cannot solve this systemic problem in the nation’s public school: It needs different and more creative thinking and the implementation of realistic and effective teaching and learning initiatives that prepare all student for the 21st Century, and beyond…

All Markets Are Not Created Equal– How to Compete: Understand Importance of Target Market (s)…

Targeting a market is a complex process with many variables, and choosing a model for targeting a market is crucial especially in the current global economic environment… But first; What is a Market? According to dictionary; it’s a set-up where two or more parties engage in exchange of goods, services and information… Ideally a market is a place where two or more parties are involved in buying and selling…

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At its core, every market is similar: On one side, there’s a seller (supply), on the other side a buyer (demand). The market acts as an intermediary to bring these two sides together… and, there can be much innovation in– How a market handles these transactions… How it takes care of its sellers and buyers… How it approaches monetization…

According to Khaled Almgren; targeting a market relies on capability of a market to ‘produce’ consumers that are willing to pay for a certain product or service… The factors of size, growth, stability, competition are the market variables that translate into growth. Markets are tough to identify and develop, but once they reach liquidity, they can be even tougher to kill. Perhaps the two most important strategic decisions a business can make is where and how to compete…

Different markets have different winning formulas. In some markets, brand strength may be the best competitive differentiator, in others a low-cost position, and yet others comprehensive product/ service offering or an ability to innovate more quickly than rivals…

In the article How to Identify a Target Market by Katey Ferenzi writes: Clearly defining a target audience (market), and creating a customer profile(s) is an imperative… You must not only determine– why someone would want to buy the product or services, but also who is most likely to buy… Often, its discovered that those who find the product or service appealing share similar characteristics, which will help in fine-tuning business messaging… When you are designing a product or service, one of the many questions ask ed is; Who is this going to appeal to? Who do I want to appeal to the most?

Knowing the target audience (market) determines which marketing tools to use… No business can just put up a marketing campaign and be done with it. It requires a lot of fine-tuning and adjusting and keeping in touch with consumer trends– all to keep adapting to change. Good marketing begins and ends with; Knowing your market… Knowing your customers profile(s)…

There are two basic areas of inquiry when defining customer profile, namely;

  • Demographic will get you started: Knowing– Age, Location, Gender, Income Level, Education Level, Occupation, Ethnic Background…
  • Psychographic will go a little deeper, bringing to light more of your target audience’s psychology: Knowing– Interests, Hobbies, Values, Attitudes, Behaviors, Lifestyle Preferences…

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In the article Factors To Consider When Evaluating a Market by Bill Gurley writes: A true market needs natural pull on both consumer and supplier side of the market. Aggregating suppliers is a necessary, but insufficient step on its own. You must also organically aggregate demand. With each step, it should get easier to acquire incremental consumer and supplier…

Highly liquid markets ‘tip’ towards becoming a clearinghouse where neither the consumer nor the supplier would favor an alternative. That only happens if momentum is increasing, and both consumers and suppliers are sensing an increasing importance of their place in the market…  Here are few factors to consider when evaluating the potential success of a market opportunity:

  • Experience vs. Status Quo: Great companies do not simply aggregate a market; they enhance it. They leverage the connective tissue to offer the consumer a user experience that simply was not possible before the arrival of this new intermediary…
  • Economic Advantages vs. Status Quo: Some markets provide enhanced economic advantages. If you can change the economics of a market, it gives a huge advantage when it comes to tipping a market…
  • Opportunity for Technology to Add Value: In many markets, the technology offering greatly enhances the user experience. Facilitating work-flow through the use of technology reduces work for the customers, and increasing switching costs…
  • Size of the Market Opportunity: A proper TAM (total available market) analysis is imperative, but it is easy to make mistakes looking only at TAM… For some markets it may not matter that the market is large, since an oligopoly of large players may control a massive percentage of the market and is unlikely to support a new entries…
  • Network Effects: Network effects are tricky and hard to describe but fundamentally it turn on the following question: Can a market provide a better experience to customer– ‘n+1000’ than it did to customer ‘n’ directly as a function of adding 1000 more participants to the market? You can pose the question to either side of the network– demand or supply. If the answer is yes,  then it’s magic, and you will get stronger over time…

In the article How To Identify a Market and Size-Up Competitors by Rebecca O. Bagley writes: Several of questions you try to answer are: How big is the overall market? How rapidly is it growing? What segments are most interesting? But it’s also important to distinguish between ‘addressable’ and ‘available’ market. The ‘addressable’ market is total revenue opportunity for a product or service. The ‘available’ market is the portion of the addressable market for which you can realistically compete.

Once you are clear about this distinction you can begin to collect data to size a market… Be aware that collecting information and finding relevant and accurate data can feel a bit like detective work, e.g.:

  • Customer Targeting: The goal is to identify customers that best fit a value proposition and can best influence broader adoption of the product or service… If you determined that the product’s or service’s primary value is, e.g.; technology, cost…then identify customers that prioritize with these values… Also, determine their influence and identify the decision makers… Use websites, personal connections and other tools to find out who they are and target them…
  • Competitive Assessment: Knowing who competes for customers is essential to assessing opportunities and odds for success. By understanding competitors’ value propositions, you can begin to evaluate top competitive threats and determine the availability of the market… Take broad inventory of competitive landscape, determine who are key competitors and identify their customers. Then, map their value propositions along three key dimensions: Cost, Service, Technology… Successful competitive strategies include highly differentiated value propositions tailored to the needs of a specific target market…

Companies often have a clear picture of their internal performance, but often have little visibility into markets, competitors… According to Karl Stark and Bill Stewart; knowing the attractiveness of your market, your competitive position, and a clear understanding of where and how to compete is critical… According to Finn Kelly; Who is your ideal customer? And if you say the target market is ‘everyone’, then you have a difficult task ahead…

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This is a fundamental mistakes that many businesses make. When you define the target audience (market) correctly and precisely, you focus marketing efforts on the people who are most likely to buy your product or service… hence you use valuable resources in the best way to solve that problem. They define an unmet need or under-served market, and offer a clear benefit to potential target customers…

According to Cindy Schulson; ask– what problem is your company trying to solve… people don’t buy a product or service; they buy a solution. Don’t define your business by what you want to sell, but by what target customers (market) want to buy…

Remember, it’s not about you – it’s about customers. Your audience (market) is not who you think they should be, but who they actually are… which may not be the same at all…