Merger and Acquisition Mania to Virtual Companies

In the 1980’s it was leveraged buyouts. In the 90’s and early 2000’s it was the IPO. Now the latest craze is merger and acquisition. Now it is the dream of every Web 2.0 company to be bought out by a larger company like Google or Yahoo. The founders start these companies as a form of short-term investment. They work really hard for a couple of years, sell it, and walk away rich. They have no interest in running a company long-term. Is this a result of the recession era of the late 70’s and early 80’s. This is when we saw companies that we thought would last forever go out of business. This is when job security was thrown out the window. Now it is a requirement to go into something with an idea in mind of how you are going to get out of it before it crashes down on you. It’s kind of like the dump them before they dump you mentality of dating. Rather cynical, isn’t it? Cynicism is a hallmark of Generation X.

So, if this blog is about Foresight and Futurism, what’s next? The virtual company is next. These are what you would consider consulting and outsource companies that band together then disband when a project is completed. In the end one of the companies ends up with a product that must be managed from the operational level. But, this product adds to its core competencies as something that it can bring to the next virtual company project. Therefore, the result is something of a hybrid of a traditional company and a consulting firm.

Designers in the Conceptual Age

The latest issue of Fast Company magazine sports a picture of Ambra Medda with the quote, "Designers are the new rock stars." Is this part of the rise of the Conceptual Age? For this to be true then design would have to be as common as a CD (or MP3) collection is to your average person. Are average people going to be showing off their latest designer items as prominently as they show off their music collections next to their entertainment system? I tend to think – No. For most of us design will be ubiquitous but not something that we are conscious of. The latest interest in design is a result of a move up in the hierarchy of needs and probably, more importantly, the need to sell more products. While design may be a conscious decision of the more affluent classes, the growing gap between the rich and the poor in America will still make price the driving factor in buying decision (you only need to look at the growth of Walmart to see this). Target touts design as being their selling point, but quite honestly, when I go in there I only see commodity goods at a higher price than they are at Walmart. If you truly want design you are still going to have to pay for it, like the $10,400 sofa that Ambra is sitting on on the cover of the latest issue of Fast Company.

The Conceptual Age

Some are heralding the rise of a new age. This would be a shift from the Information Age to the Conceptual Age. I think it’s interesting to note that these “ages”, at least in modern times, are very United States – centric. As long as the US remains the world leader then it would hold true that these trends/ages would begin in the US and migrate to the rest of the world. But, the forces that create these ages in the US are creating other ages in other nations, for instance, the Information Age in India and the Industrial Age in China.

Daniel Pink writes about how to find gainful employment in the Conceptual Age in his book, A Whole New Mind: Why Right-Brainers Will Rule the Future. You can read about what this means in this interview. Basically, he states that jobs like accounting and computer programming, which are high paying now, are becoming routine enough that they are targets for outsourcing to countries like India where labor is cheaper. So, if you want to earn a good living wage you need to perform some service that requires creativity that cannot be easily duplicated. As I write this, though, I wonder how this is different from the way things have always been. Hasn’t our personal value always been linked to being able to perform tasks that are in demand but that few can perform?

The Conceptual Age places a lot of focus on design. I have to wonder if this is simply a result of our currently strong economy. If things were to take a severe downturn I think design would take a back seat to cost. I suppose the challenge is to make good design cheap and available to all at every income level. I’ve always wondered why cheaper cars have bad styling while more expensive look better. If the body panels are just sheet metal that is placed in a press to shape it why can’t they make more appealing designs for the less expensive cars? Perhaps in a more competitive auto market this will take place.

So does this mean that rote knowledge is no longer valuable? Are we going to rely solely on our instincts? Or better yet, do you need to know it all? And if we do, what do we need to know? Where does this leave our education system? It appears that there are more questions than answers. At the heart of it all, the Conceptual Age is really only an effect. Further study is required to find the cause. From this point I will begin backcasting to find the cause then perform a STEEP analysis to project forward and outward. This will be the subject of further postings and articles.

Abduction and Scenarios

Most people are familiar with induction and deduction, but not too many know about abduction. I found many different explanations of what it is by searching on abduction and abductive reasoning. They range from very complicated to less complicated. Quoted here is one that I found that is simply stated and what I think relevant to the development of scenarios

"Concerning the validity of Abductive inference, there is little to be said, although that little is pertinent to the problem we have in hand. Abduction is the process of forming an explanatory hypothesis. It is the only logical operation which introduces any new idea; for induction does nothing but determine a value, and deduction merely evolves the necessary consequences of a pure hypothesis. Deduction proves that something must be; Induction shows that something actually is operative; Abduction merely suggests that something may be. Its only justification is that from its suggestion deduction can draw a prediction which can be tested by induction, and that, if we are ever to learn anything or to understand phenomena at all, it must be by abduction that this is to be brought about. No reason whatsoever can be given for it, as far as I can discover; and it needs no reason, since it merely offers suggestions." (Harvard Lectures on Pragmatism, CP 5.171-172, 1903)

There are many definitions on this page, but this is the one that I like the best. Scenarios help us to discover what could be. Therefore, a futurist should become an expert in abduction and its application.

Raising the exponent on Shirky’s Power Law

I am a little bit concerned about the effect that Web 2.0 is going to have on the variety of information that people find on the Internet. Clay Shirky wrote Power Laws, Weblogs, and Inequality to show how only a few websites get most of the traffic. As a Futurist I am always looking for unique things, trends that no one thinks is a trend yet. If I depended entirely on the Web 2.0 sites that vote on the most popular things I will only be seeing what everyone else is seeing. Sure, what you are looking at is the hottest thing, but you don’t need a Futurist to tell you that. So, if you want to be like everyone else, click on the most popular links. If you want to see what’s on the fringe you are going to have to be a little more creative in how you find your information.

Make Money, Don’t Make Anything

According to this article Microsoft is getting out of the software writing business to become a media company. This is the quote from Steve Ballmer that I like:

"Our close partnership with the ad community is extremely important to us as we evolve Microsoft from a software company into the world's largest, most attractive provider of online media through MSN, Windows Live and adCenter," said Ballmer. "Ad-supported software services are an integral part of Microsoft's plans to give consumers access to a broader variety of digital media, whenever they want and on whatever device they prefer."

They want to make money through advertising. This puts them on a head-on collision course with Google. Unless Microsoft comes up with another sly move like they used to get DOS from IBM or how they took the idea for windows from Xerox I don’t think they will win this one. But it makes me think of something else. GM makes more money from its finance division than it does from making cars. In ancient times bakers and pottery makers were not highly paid even though their services were essential for existence. The merchant class was the wealthy class. This still seems to hold true today. The further removed you are from actually making something the more you stand to profit.

The Power of Words

Have you ever thought about how much your words mean? They mean a lot. Your future and the future of others is shaped by them. When you really mediate on this it’s easy to see why words (especially the written word) was seen as something magical in the past. When you think something you can’t unthink it. When you say something and someone hears you can’t take it back, it’s in his or her head forever. The neural pathways of your brain and of others are irreversibly changed.

Think about all of the words that are being indiscriminately tossed about on the Internet right now. These words will someday become part of a global Artificial Intelligence. This AI will consume the Internet for its knowledge. Everything you say (for instance what you type on someone’s MySpace page) will become part of its mind. This is not a wild fantasy. It really is only a matter of time before a heuristic is developed to make inferences based on information read from web pages. So, right now keep in mind that everything you put on the Internet will become memories for the AI.

High Tech for Economic Growth

I have been thinking about the similarities between the development of railroads, the telegraph, telephone, interstate system, and the Internet. A major influence of my thinking is owed to the fact that one of my ancestors, David McConaughey, is responsible for the naming and the development of Cameron, West Virginia. The main thing that facilitated the development of a little mountain town was that it became a railroad stop. The interstate hi-way system and tractor-trailers have diminished the role of the railroad system in the United States. But, the true enabler of these transport systems was the electrically powered, long-distance communication systems of the telegraph and telephone.

Many believed that the Internet would facilitate decentralization of economic resources from the cities as information can be transmitted from anywhere on the network. This has not been the case. It appears as though the resources have become ever more concentrated in the cities because the population is more concentrated and a higher ROI is possible from the expense for assembling new communication networks.

http://varnelis.net/articles/centripetal_city

Looking at how history has progressed I hypothesize that if a community want to grow in prominence and economically it must invest in the infrastructure of our time. This would be high-speed data networks and airports. Although the information is a bit dated, The Internet Backbone and the American Metropolis provided some very interested data.

My advice to community planners is for them to get the cheapest, fastest Internet access for its citizens if they want to see economic growth in their community. Additionally, high-speed transportation to other communities, especially those with an airport, should be a high priority.

Web 2.0 on Web 2.0: Who's Who?

reddit.com has a listing of favorite Web 2.0 Startup companies. It's done Web 2.0 style becuase you can vote - user created content.

NOTE: This isn't a list of the most popular Web 2.0 sites. This would explain why MySpace is absent from the list. It is owned by News Corp (Fox).

Click here to view the list

Even More on Web 2.0

OK, I am really liking Paul Graham’s website. I just finished reading his article, simply titled, Web 2.0. But, it’s not only what he says about Web 2.0 that I like. Near the end of the article he discusses what has made Google successful. In doing so I think he describes what the role of a Futurist is.

“Google doesn't try to force things to happen their way. They try to figure out what's going to happen, and arrange to be standing there when it does. That's the way to approach technology-- and as business includes an ever larger technological component, the right way to do business.”

The Art of Making Wealth

I found yet another no-nonsense article on the truth about what money really is and on how to start your own company. It's written by Paul Graham and is titled How To Make Wealth. The theme is very similar to Marshall Brain's How To Make A Million Dollars . In a nutshell: Find a problem that needs to be solved for a significant number of people and Sell, Sell, Sell. It's simply not enough, though, to know the technology (i.e. technique). You also need to understand business. So, there are three things that you need to possess: 1.) A tangible skill on the level of a craftsman, 2.) Understand an application area, and 3.) Knowledge of business fundamentals and sales. One other thing - you can’t do it all alone. You will need to find other people who are interested in reaching the same goal that you have and are willing to work just as hard as you.

You Must Provide Value

This article proves that, once again, sound business principles triumph. Ultimately, you must provide something of value to your customers. The survivors in the Internet business, whether they are generation 1.0, 2.0, or 3.0, must look to what has made lasting businesses throughout the history of mankind. It’s true that you can make money on fads and gimmicks, but you cannot build a company that is worth anything on the stock market unless you find a product that has lasting value, you invest in quality infrastructure, and you follow sound accounting and management practices.

Read the article here:
Internet IPOs: Zombie dot-coms rise again

The Future Is In Your Head

In ‘Talking Business With Zig Ziglar” in the Summer 2006 issue of Success magazine Zig tells a story about how we can shape the future. As a new father this story really hit home with me. Here is the story as told by Zig:

“I had a friend who used to play major league baseball for our team here in Dallas. He liked to help out in prisons. While visiting one of those prisons, he was asked how he got to be a major leaguer. He said, ‘Well, when I was a youngster growing up and starting to play ball, my Dad would play catch with me. When I’d throw a ball, he’d tell me that that was the sort of thing that would lead me to the major leagues. When I’d start catching, he’d tell me sometimes that I’d just made a major league move. He told me that one day I’d be in the majors, and that’s exactly where I am.”

“Well, a prisoner was sitting right there, and he said that when he was growing up, his daddy said that he was no good and would one day end up in jail. And that’s where he was.”

It seems like such a simple thing to do – focus on the positive and encourage people to achieve to the highest of their abilities. Ultimately, you will wind up where your mind leads you. If your mind has been conditioned to think negatively then your life will go in a negative direction, but if your mind is conditioned to think positively then your life will go in a positive direction.

Bottom line: It all starts in your mind. Change your mind and you will change your life.

Social Networks: More Irrational Exuberance

Once again there is a lot of hype and a lot of buzz on the Internet. I found two reliable reports that point out that, like the first Internet boom, these new social networking sites that are generating all of the buzz do not have a solid business model. If you want to have a future you simply cannot ignore business fundamentals. Check out these stories:

MySpace, Facebook and Other Social Networking Sites: Hot Today, Gone Tomorrow?

Social Networks: More Bubble Than Profit?