The Challenge to transform fast enough

The surprising similarities of the Japanese electronic industry in the 1990s and the German car industry today.

Here's a stunning example from Germany to understand the challenge every modern society and company are facing: How can you transform yourself fast enough when you reach the top? More specifically, how can you question success and prepare the future when past investments anchor you into existing social structures and technologies and the risks linked to innovation are so high that major decisions become a choice  between life and death?

Today, the car industry everywhere is facing a major challenge thank to a social and relatively artificial goal to move from gas or diesel to electric engines. Eventually the battery obstacle will be solved although putting affordable electric cars on the road will be more difficult in Germany than in China as the in-depth and very up to date documentary below makes plain.

Beyond that, the smart car will require a complete rethink of our mobility. And although this too is approaching fast, the interviewers carefully avoid the subject to stay focused on the transition from gas to electric.

And this I agree, is a challenge which needs to be understood in its context so let's rephrase the fundamental question which lurks behind:

Are societies and companies necessarily condemned to fail when they reach the top? From Portugal's explorations in the 16th century to Britain ruling the waves in the 19th century. From the IBM mainframe revolution in the 1960s to AOL opening the door of the Internet for all in the 1990s. It seems that investment rides on a wave of new ideas creating a new paradigm which flourishes, then matures and finally dies usually without being able to reinvent itself in the process. Exceptions are few and far between.

Of course, the most striking and recent example of this is Japan.

In the 1960s and 70s, following the war and an excruciating defeat which destroyed both its urban and industrial infrastructure, Japan rebuilt itself. But contrary to the consensus at the time, the country did not just imitate to build cheaper, junk products, it transformed the industrial process while doing so. Inventing new concepts like the Kanban system and Zero defects which quickly helped major companies like Toyota and Toshiba reach the pinnacle of their respective industries before being implemented around the world soon after.   

Then the financial bubble burst in 1990, investment stopped and the decline of Japan started. Having followed the rise and decline of the country up close, I was amazed to see how quickly winning solutions became handicaps. How for example, the well educated but docile, conservative and unimaginative workforce which was one of the major strength of Japan 10 years earlier became its main weakness in the later half of the 1990s, when companies moved from hardware to software centric at the turn of the 21st century.

In 1992, in Osaka, Sharp was presenting the very first color LCD panels which were going to revolutionize TV and computer screens first then basically every machine with better, clearer interface. As the same time, the company was selling an early organizer, "the wizard" which looked uncannily like an early I-phone but without the functionality. Hard not to believe that this was the future.

But this inability to develop attractive and useful software soon after turned out to be the problem. While hardware for which the Japanese were ahead was progressing slowly, software where they were not was progressing exponentially. Within 10 to 15 years, every company in the world would be offering hardware made in China or Korea with software made in the US. Finally, in 2016, Sharp was sold to Foxconn, a former part supplier based in Taiwan. This example was repeated countless times by a long list of Japanese companies, insuring that the lost decade of the 1990s morphed into the 2000s and finally into the 2010s with little hopes of a resurgence today. Amazingly, Softbank, the sole software giant in Japan announced last week that they would be sinking another 4 billion dollars into WeWork!

Based on this example, what are the chances that the German automobile industry will succeed and transition smoothly to electricity? The analyst in the documentary thinks the chances are 50/50 but in reality, experience and multiple examples as we just saw indicate that the chances are much lower. The weight of past investments, inertia, sclerotic ways of thinking, lack of agility, almost every factor acts as a brake on innovation. The very last, optimum diesel engine will most probably be German but by then it could represent less than 1% of the world automobile market. Just as today's Japanese TV screens!

Then again, the gas engine niche may remain larger than expected and Germany may succeed in facing the electric challenge. The future is not written yet, but this would be a rare exception, not the rule! It would imply a complete rethink of what a car is, not just changing the engine. Will such a revolution happen in Germany or in China? What are the odds?

The dispaly Ad industry is the next to be disrupted

The display ad sector has been growing extremely fast over the last few years as companies are trying to access their clients online.

Unfortunately as everyone can attest, the practice has been less than stellar lagging the theory of offering the right advertising to the right audience by a wide margin. Look for news on a new car and car adverts will follow you for months. Visit a place somewhere and lo, it will feel like you never left the place weeks after weeks.

So why is targeting so lousy and ineffective?

A large part of the answer has to do with the other side of the equation. Click factories and platforms willing to count whatever to improve numbers and nurture a nascent field.
 
Online advertising is supposed to be better because targeting is easier and everything is measurable. That would certainly be the case if numbers were reliable. They are not! And the consequences are plain to see.

This may be on the verge of a major evolution if the article below is right. But in the end, right or wrong, it does not matter. Blockchain will eventually transform the sector like so many others by introducing foolproof distributed systems which will improve tremendously the reliability of transactions and allow the potential of data and measurements the become reality.

Read on.  

Display Ad industry next to be disrupted

Published on Zero Hedge, October 1st 2019

Just like everything else that’s being disrupted, now we are looking at the ad serve industry.  First let’s explain what the marketplace concept for online advertising is.  Clients (Called Publishers) want to monetize their website with ads.  Advertisers create ads on the marketplace.  They bid on traffic, which is calculated per click.  This is known as Pay Per Click (PPC) marketing.  The exchange, or the marketplace, allows 2 sides to bid and offer just like a stock exchange would, taking the difference as their fee.  This model was pioneered by Google but now almost every ad platform uses a similar model, including Facebook.

But it’s not so simple, as there is an incentive for profit, there is an incentive for fraud.  When someone believes they can get money for free – here we go.  Click click click money comes.  But it’s not so easy.  Google will block Publishers who have ‘invalid clicks’ if they believe they came from the Publisher themselves or if there was a bot used to “Game” the system.  In fact, According to Click Guardian, $7.2 Billion was lost to click fraud in just 2 years:

    Click fraud is one of the most talked about issues affecting advertisers on Google and other Pay Per Click (PPC) platforms.  According to Click Guardian $7.2 billion was lost to click fraud between 2016 and 2018. That’s a staggering amount that millions of advertisers are losing to fraudsters and click errors.  So what is click fraud? According to Google it is an illegitimate action such as an unintentional click or a click resulting from malicious software.  In fact, Google chooses not to call it click fraud and calls it ‘invalid clicks’ instead. That’s understandable considering the confusion surrounding this topic and the various reasons why some clicks may be legitimate or an error.

So this is an ongoing problem in the industry, and we wanted to lay down the background before mentioning this exciting solution.  A company by the name AdEx has developed an open-source, transparent, and fraud-proof solution for display advertising.  What’s exciting about it is that they pay in real time on the Blockchain, so a click equals a payment.  Real time reporting and settlement means that fraud is complex as it can be spotted immediately.  And this can be done without giving up the users privacy.

Our background in this space is substantial, we started in 2006.  Our group has managed a remote SEO workforce of as many as 600 people, our monthly SEO spend has been well over $50,000 for a single client.   We’ve worked with companies big and small, ranging from car dealerships with multiple rooftops to local restaurants.  Content blogs, ecommerce, and more – they all have the same goal: increase traffic for the lowest possible fees.  The problem:  Google Ads works, but it’s expensive.  There is no way around inflation.

So we are hopeful that by eliminating fraud, providing efficiency, transparency, and a high tech low cost platform – costs of display advertising will decrease.

Display advertising is perhaps the most important business tool for startups or online businesses, due to its comparatively low cost.  Wait, didn’t we just say it’s expensive?  It is when compared with the cost of a cup of coffee, yet it’s still far cheaper than the traditional media which is print, TV, and radio.  Expect to spend millions on a TV ad and if you go with the ‘cheap’ option expect to have your ad displayed at night next to Ginsu infomercials.

The other alternative is SEO, which again is hard and involves hundreds of microtasks such as Meta Tag optimization too many to get into in this article.

The only drawback about AdEx is that it’s still private and in beta, so we will be waiting with bells on as they say, for the grand opening.