2017 Commercial Aviation Trends

Learned a lot lending an editorial hand on this Strategy& annual industry perspective:

What a difference a couple of years can make. In 2013, Warren Buffett called the commercial aviation industry a “death trap for investors.” In 2016, the legendary value investor spent more than US$1.3 billion buying the stock of four major U.S. commercial carriers: American Airlines, Delta, United Continental, and Southwest Airlines — and he has recently upped his stake to more than $8 billion.

Notwithstanding the speculation that this action is a precursor to Buffett’s company, Berkshire Hathaway, taking one of these major carriers private, Buffett seems to be betting that consolidation will continue to pay off for the airlines. He may or may not be right, but it is undeniable that airlines in the U.S. and in most other regions are enjoying a run of good results, buoyed by steadily rising demand and an extended drop in fuel costs. Industry-wide passenger traffic grew by 6.3 percent in 2016. And according to the latest International Air Transport Association (IATA) figures, commercial airlines posted their strongest financial performance ever in 2016 — reporting $35.6 billion in net profit, just a bit above 2015 results but nearly double those of 2014. For the third consecutive year (and only the third year in airline industry history), carriers reported a positive return on invested capital. Read the rest here...

The Flare and Focus of Successful Futurists

Enjoyed editing Amy Webb's adaptation of her book, The Signals Are Talking, for MIT Sloan Management Review:

Futurists are skilled at listening to and interpreting signals, which are harbingers of what’s to come. They look for early patterns — pre-trends, if you will — as the scattered points on the fringe converge and begin moving toward the mainstream. The fringe is that place where hackers are experimenting, academics are testing their ideas, technologists are building new prototypes, and so on. Futurists know most patterns will come to nothing, so they watch and wait and test the patterns to find those few that will evolve into genuine trends. Each trend is a looking glass into the future, a way to see over time’s horizon. This is forecasting: simultaneously recognizing patterns in the present and thinking about how those changes will impact the future so that you can be actively engaged in building what happens next — or at least be less surprised by what others develop. Forecasting is a learnable skill, and a process any organization can master.

Joseph Voros, a theoretical physicist and professor at Swinburne University of Technology in Melbourne, Australia, offers my favorite explanation of future forecasting, saying it informs strategy making by enriching the “context within which strategy is developed, planned, and executed.” The advantage of forecasting the future in this way is obvious. Organizations that can see trends early enough to act can gain a first-mover advantage. They can also help shape the broader context, keenly understanding how developments in seemingly unconnected industries will affect them. Most organizations that track emerging trends are adept at conversing and collaborating with those in other fields to plan ahead.

While futures forecasting is a professional and academic discipline going back more than 100 years, few companies employ futurists. That’s starting to change as more leaders become familiar with the work futurists do. Accenture, Ford, Google, IBM, Intel, Samsung, and UNESCO all have futurists on staff, whose work is quite different from what happens within the traditional R&D function.

The futurists at these organizations know that their tools are best used within a group — and that the group’s composition matters tremendously to the outcomes they produce. Within every organization are people whose dominant characteristic is either creativity or logic. If you’ve been on a team that includes both groups and didn’t have a great facilitator during your meetings, you probably clashed. If it was an important project and there were strong personalities representing each side, the creative people felt as though their contributions were being discounted, while the logical thinkers — whose natural talents are in managing processes, projecting budgets, or mitigating risk — felt undervalued because they weren’t coming up with bold new ideas. You undoubtedly had a difficult time staying on track, or worse, you might have spent hours meeting about how to have your next meeting. This is what I call the “duality dilemma.”

The duality dilemma is responsible for a lack of forward thinking at many organizations. Read the rest here... 

Regulation, Who Needs It?

LinkedIn, March 11, 2017

by Theodore Kinni

President Trump wasted no time launching his promised war on federal regulation. Ten days after the inauguration, he signed Executive Order 13771: Reducing Regulation and Controlling Regulatory Costs.

You’ve probably already heard that EO 13771 is a two-for-one deal. It requires that every newly proposed federal regulation be accompanied by the repeal of two existing regulations. And just in case the folks at the FDA or EPA or SEC or any other agency think they can pull a fast one, the order also requires that the total additional cost of all new regulations in fiscal 2017 net out at zero. Read the President’s lips: No added cost!

This is music to investor ears. Within a couple of weeks of EO 13771, the S&P 500 Index rose 5 percent. The chief executive’s order is not the only reason for the jump, but clearly less federal regulation means more profit for your company. Right?

Maybe not. Like President Trump himself, EO 13771 is only concerned with “how many” and “how much.” Also like the President himself, the order tars all regulation with the same brush. You’d never know it from EO 13771, but companies in all sectors—agriculture, auto, financial services, healthcare, pharma, tech, telecommunications, etc.—depend on and demand regulation. Read the rest here...

Nir Eyal’s Required Reading

strategy+business, March 8, 2017

by Theodore Kinni


Nir Eyal teaches companies how to hook customers. When he says hook, he doesn’t mean entice or engage — he means designing products that are habit-forming.

“Habit-forming products change user behavior and create unprompted user engagement,” Eyal explains. “The aim is to influence customers to use your product on their own, again and again, without relying on overt calls to action such as ads or promotions. Once a habit is formed, the user is automatically triggered to use the product during routine events such as wanting to kill time while standing in line.”

Eyal first got interested in habit-forming products in 2008, as cofounder and CEO of AdNectar, a platform for advertisers trying to reach social gamers. In the process of launching the company, he became intrigued with the behavioral influence that gaming sites and other social media sites, such as Facebook and Twitter, exerted on users.

After AdNectar was acquired by Lockerz in 2011, Eyal took a deep dive into the nuts and bolts of habit formation. He taught at the Stanford Graduate School of Business and the Hasso Plattner Institute of Design. He invested in and consulted with companies seeking to hook customers. Eyal encapsulated his findings in the best-selling book Hooked: How to Build Habit-Forming Products (Portfolio, 2014), which details the Hook Model, a four-step cycle for creating habit-forming products.

When I reviewed Hooked a couple years ago, it raised a few eyebrows: The ethical line between creating a habit and creating an addiction seemed too thin to some readers. It’s a common response and one that Eyal, like other influence experts such as Robert Cialdini and nudger Cass Sunstein, takes pains to address. “Let’s admit it: We are all in the persuasion business…[but] the power to build persuasive products should be used with caution,” Eyal warns.

One of Eyal’s motivations for developing the Hook Model and writing Hooked was his own frustration with the lack of information on the topic for product designers. When I asked him about the books that had influenced him, he shared the following four titles. See the titles here.

Zero-based trade for CPG leaders: Five steps for raising the impact of your trade promotions

Learned a lot lending an editorial hand here:

PwC Strategy&, March 8, 2017

by David Ganiear and Edward Landry


The next wave of profitability for consumer packaged goods (CPG) companies will come from zero-based trade (ZBT). This adaptation of zero-based budgeting goes beyond cost management of trade promotion. It helps manufacturers rethink their patterns of spending and increase the profitability of this all-important way of reaching end consumers in retail stores. Trade promotion, which directs shopper awareness at the point of sale, is a valuable strategic capability. In the annual expenses of a CPG company, it typically ranks second; only the cost of goods sold is greater.

ZBT represents a five-step process for raising the impact of that spending. The first step is to diagnose your situation and look for previously unseen opportunities for improvement. Second, develop trade promotion strategies that are aligned with your business strategy, reflecting both the financial returns you expect from your trade promotion investment and the level of freedom you have to redeploy it. Third, employ trade optimization levers — budgeting, pricing, analytic planning, and post-event analysis — to implement these new strategies. Fourth, bring your overall trade budgets in line with your new approach. Finally, give this new ZBT practice the enabling capabilities needed to sustain it over time. Together, these steps add up to a new overall trade promotion strategy that can yield millions in savings for your CPG company and give it a customer-facing competitive edge. Download the white paper here.

RSA 2017: 5 Takeaways From the Biggest Cybersecurity Conference

Lent an editorial hand here:

WSJ.CustomStudios, March 2, 2017

by David B. Burg and Grant Waterfall, PwC

The annual RSA Conference acts like a microcosm of the global cybersecurity ecosystem: everyone’s there, and it’s as kinetic and chaotic as the industry itself. Yet the industry’s biggest cybersecurity conference also provides some valuable insights, as we recently found.

Since returning from RSA in mid February, where PwC maintained a lively presence amid the hubbub, we’ve condensed our takeaway into five key points:

Efficiency: A record 43,000 information security professionals attended this year’s RSA, roaming 550 vendor booths and choosing among more than 500 educational sessions to attend. As the cybersecurity world continues to expand and grow in importance and relevance, this event continues to grow as well — just five years ago, only 17,000 information security professionals attended RSA, according to the event managers. So for anyone who wants to find out just about anything about cybersecurity, it’s all there. Someone new to the cybersecurity and privacy industry could theoretically cram months of research and learning into just a few days in San Francisco. Read the rest here.