Friday, July 27, 2018

Societal and demographic signals are more influential than technology trends

As innovators, we are constantly entranced by the idea of signals in the marketplace.  Signals that indicate new opportunities, shifts in consumer demand, emerging technologies.  But so often it's easy to get captivated by the new technologies.  This is happening right now, as concepts like "digital transformation", artificial intelligence and blockchain are all top of mind.

The problem?  No one really knows what the long term impact or implications of any of these emerging technological solutions is or will be.  I have a hard time getting a good, clear definition of what 'digital transformation' is.  It seems to differ based on the potential adopter and the company making the offer.  Right now, firms are entranced by what emerging technologies like blockchain or artificial intelligence could mean for their businesses, and are ignoring sweeping changes that may be harder to quantify.  But these other changes I think can be shown to have greater impact.

The simple drinking straw

For years, billions of us have accepted a plastic drinking straw with our happy meals, at restaurants, at the convenience stores where we buy our oversized soft drinks.  Drinking straws are ubiquitous - they are provided at every fast food restaurant, most dining establishments and plenty of convenience stores.  Not to mention all the straws sold at grocery stores.  For decades we've used them and tossed them away.  Yet in a virtual blink of an eye, they may disappear.  Why?

Societal pressure.  People are becoming more conscious of small items like straws that are produced and thrown away in such volume.  New laws are  being introduced to eliminate or outlaw straws, based primarily on the health of sea life and the amount of trash that items like straws produce.  Never mind that straws are about one tenth of one percent of the plastic trash we generate.  Public opinion is shifting against plastic straws, and when public opinion shifts, politicians often act right behind the shift in public opinion.  When Starbucks and other national chains start eliminating straws, laws against straws can't be far behind.

We can argue about the value of the "straw ban" and its effect on trash and marine life, but there's a larger point here.  An entire industry is on the verge of collapse, not based on new technology, not because of blockchain or AI, but because a vocal minority of people moved against straws. 

Paying attention to societal and demographic signals

Straw manufacturers are in a world of hurt, and the damage has been inflicted rather rapidly.  Societal pressures and demographic signals are probably the most powerful signals about how the future will unfold, yet we spend less time listening and understanding these trends and signals than we should.

The straw ban is a good example - much of the data behind the ban is suspect.  Many media outlets reported the statistic that 500 million straws are used and thrown away each day, but further investigation revealed those numbers were based on a guesstimate by a child.  No matter.  Once the public gets behind a cause or an idea, and the cause takes root, consumer behavior and attitudes can change rapidly.  If you aren't paying attention to these signals, or worse are downplaying them or ignoring them, your entire value chain can collapse.  Retailers react to pressure to remove straws, and suddenly your best customers are actually your opponents.

Why don't large corporations pay more attention to societal and demographic trends and signals?  First, the data is qualitative and can be difficult to aggregate and interpret.  Most corporations like quantitative data.  Second, it can be movement or emotion based, which can have negative connotations.  Many corporations don't want to be leading political or legislative change, they'd rather wait to see what happens in the public sphere and then respond.  Third, some changes are challenges. If straws go away, how do we replace the task that they filled?  Do people bring their own re-usable straws?  Do we create disposable cups with a funnel or some other mechanism?  Finally, corporations often ignore or discount societal or demographic signals because they can conflict with the investments and emphasis on existing products.  No company and certainly no manager tasked with meeting quarterly revenue goals wants to think that their markets and consumers are likely to rapidly shift away from products they've used for decades.  It's easier to discount these signals than to incorporate them and consider the implications.

Looking further

But let's go further and make a prediction:  the humble straw is simply, forgive the pun, the first straw.  As millennials become a larger buying group, and the generations after them as well, their mores and purposes will come to the fore.  It won't just be straws that will be an issue, but we'll see acceleration of long standing trends toward reuse and recycling.  Takeout boxes, plastic forks, spoons and knives, foam cups, basically anything you can take away from McDonalds or 7-11 will become a focus for reduction or elimination.   You read it here first, but you already knew this - all that stuff you get in your Happy meal or buy in your snack run is going to go through dramatic change or it will be eliminated in the next few years.  Society will demand it, and technology will have to figure out how to make it happen.  This is why societal and demographic trends almost always trump technology trends.
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posted by Jeffrey Phillips at 7:44 AM


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