Thoughts at the close of a troubling decade

My philosophy of planning is that it is an uncertain business but one that requires decisiveness and clarity at all times. There is an innate conflict within that viewpoint, and reconciling it is what the actual practice of planning is all about.

As another decade--one that never acquired a name--comes to a close, it's appropriate to look back on some of the things we have learned. A key lesson for me is that uncertainty truly does rule our existence, but that does not prevent us from trying to understand how things hold together and drawing insight from that understanding.

So here are some things that I learned these last 10 years, some that surprised me, some that confused me, and some that validated what I long suspected.

1. Don't trust predictions--of any kind.
   
   The Wall Street Journal ran an interesting piece last week looking back on the stocks that "experts" had recommended at the end of 1999 as sure-fire winners for the next 10 years. They included choices like AOL, Cisco, and Texas Instruments. If you had bought that whole portfolio, you would be down by 66%. As the tired old story goes, you would be better off throwing darts at the stock page (if you can find one anymore). Over the last 10 years, the S&P is about flat, not down 66%.
   
   What were these experts thinking?  Probably nothing. Sure, they had "logical" arguments, but my guess is that these experts just had a personal liking for these stocks. It reminds me somewhat of those periodic "Top 100" lists that radio stations assemble for the greatest hits of all time. Just because some program director at a radio station in Akron thinks that the number one rock tune in history is "Stairway to Heaven" doesn't mean that it is. It just means he or she likes it.
   
   Predictions are arbitrary almost all the time. Next time you look at one, keep that in mind. No matter who is making it. Economists are the worst, however.
   
   
2. The Web became even more interactive than I ever thought it would be.
   
   Ten years ago the dot-com bubble was getting ready to burst but not many people were thinking about that. The Web was still exploding but trends like blogging and social media were faint stars on the horizon. Most of us didn't even know much about Google, and YouTube was five years away.
   
   The Web was still about "surfing" and "browsing"--terms which did not adequately value the medium's extraordinary potential. E-commerce was in a fanatic but disorganized growth spurt. I remember thinking that Amazon was foolish to be expanding beyond books when they were losing $5 on every one that they sold. Why didn't they concentrate on getting the book business right before they did anything else> They were violating the Trout and Ries mantra of focus and simplicity, but they are the ones that proved to be right. A large part of their success was because they understood how to make their channel fully interactive. Referring, reviewing, suggesting....then building robust databases around it all was a game changer.
   
   
3. Television is just as important a medium today as 10 years ago.
   
   If I'm writing this blog 10 years from now it will be interesting to look back on this post and see if television has been fractured by the likes of Hulu, TiVO/DVR, YouTube, and the Roku box. I'm not going to predict (see item #1). But none of those things have fractured it so far. According to Nielsen, people are doing 99% of their video watching on television, and television viewing has actually increased by 49 minutes per week for the average adult. (How they have time to make all those Facebook updates and still watch TV, I have no idea--maybe they're multi-tasking.)
   
   As a medium, TV is still frightfully wasteful; the media companies get by with murder by selling all that waste, because enough advertisers line up needing and wanting to reach that audience who is addicted to sitting in front of their plasma screens. It's true that huge audiences don't congregate around just a few shows any more and that the whole market is more fragmented; but the one thing that hasn't changed is that there are only a certain number of hours that someone can watch TV in a given day. This means that the supply of potential advertising inventory is limited no matter what. And, as long as there are advertisers out there competing to get in front of them, advertising costs will continue to rise.
   
   It's true that there has been some price deterioration during the recession, but that has more to do with the virtual disappearance by local car dealers and local banks from the marketplace. When conditions improve, many of them may get back into the game and keep the upward pressure on media cost. Or, a new set of advertisers will emerge to take their place.
   
   Just keep this in mind about television:  far more than Facebook, it's what won the 2008 presidential election for Barack Obama. Yes, he figured out social media and used it as an effective get-out-the-vote tool. But the way he buried his primary opponents and then John McCain is that he raised a boatload of money and used it to advertise on TV. It worked.
   
4. The decline of print, especially newspapers, has been worse than I ever expected.
   
   This is another case where the business of prediction is so tricky. It's very easy now to understand how threatening the Internet is to the traditional print model. I can log onto my Google Reader account and funnel articles from hundreds of newspapers (and other sources) directly to my desktop. Ten years ago the basic infrastructure for this trend was fully in place; no one paid attention to it, however.
   
   The Great Recession may be hastening the demise of this old medium because advertisers have pulled out suddenly and with a vengeance. But it was bound to happen anyway.
   
   There's one hope for print's survival:  community newspapers. The big metropolitan daily is less relevant because it is no longer useful as a source for national and international reporting. There is too much of that out there already and you can use Google Reader or some other source to get whatever you want. While I have no hard data, it seems to me that small community papers are doing well. They don't need to extremely timely--arriving once a week on your front porch is actually a nice, predictable respite from typical news frenzy. And the London Times sure isn't going to cover the Webster Groves versus Kirkwood annual Turkey Day Game. This will be another interesting thing to look back on 10 years from now.
   
   
5. Mass destitution is possible even in our society.
   
   To be perfectly blunt, we have dodged a bullet in this recession. All those New Deal mechanisms like deposit insurance, unemployment compensation, and Social Security prevented the worst from happening. But we still have "underemployment" of about 16% TO 17%. There is lots of suffering and lots of anxiety; but the existing safety nets have prevented the absolute worst from happening.
   
   The Federal government, headed by people enlightened enough to understand that letting the financial system collapse was not an option, made decisive moves that prevented catastrophe. Even so, we came perilously close to the total collapse of that system. That's what makes this recession so different from others that most of us under age 80 have ever experienced:  it is accompanied by and most probably caused by a widespread banking crisis.
   
   I've done a lot of reading in this past year about the Great Depression. Things are nowhere nearly as bad now as then. But the lesson of the Depression is that when the crisis of over-production is severe enough, and when the banks have totally squandered their stewardship of the people's deposits, people can literally wind up on the street, starving.
   
   That is what happened between 1929 an 1932. It could have happened in the past 18 months. It could happen again.
   
6. Brands are merely a reflection of value, they are not valuable in and of themselves.
   
   This is the one thing I say here that might draw the most disagreement, especially from the advertising community. We tend to congratulate ourselves on creating valuable brands, on bringing out value from something intangible.
   
   I beg to differ.
   
   I tend to think that what we do in this business is fairly simple (and I don't mean "easy" when I say that) and not all that auspicious. We find a way to capture a reflection and get people to look at it. If the resulting communication eventually leads to record sales, we'll get some credit and we can say we established a valuable brand. All we really did was frame an identity that people can understand. Now, I happen to think that this is useful, difficult, and frankly quite noble. But if we learn nothing else from the earthshaking financial crisis we have been through it should be this:  "value" is ephemeral and fleeting. And it can be often artificial.
   
   In a modern economy, branding plays an important role. It's part of a continuum that includes the development of raw materials, design, manufacturing, finance, fulfillment, and distribution. All branding does is illuminate the value that those others functions bring together.
   
   Ten years from now, I don't think I will view this any differently.
   
   
   
   
   
   

Comments

[Jay Lewis]

Nice retrospective. Regarding #2, I've found myself coming back to The Cluetrain Manifesto quite a bit. Its four authors rightly predicted ten years ago that the internet revolution wasn't about the technology behind it, but rather about changing the way people interact and communicate.

[David Gutting]

The Cluetrain Manifesto was indeed breakthrough thinking, one of those rare pieces that looked at the unexpected and not the obvious.

The technology of the Web is not reallt that amazing and in some ways it is odd that it took so long to evolve from the time we first started connecting computers.

I always believe that understanding how people communicate is the key to everything. People are communication machines. We need to understand that about ourselves.

Sent via BlackBerry from T-Mobile

[ed hardy]

Yeah, I think it's hard to see how traditional trade publications can survive much longer in print