For nearly a decade, ever since I started the company that became ZEITGUIDE, I’ve been tracking cultural change. So—through the election of Barack Obama to the arrival of Donald Trump. Through the glorification of digital startups to the end of net neutrality. Through the near collapse of Wall Street to the new stock market highs. Through the denial-acceptance-denial of climate change.But 2017 was the most broadly disruptive year I’ve yet to see.
It was a great year for stock portfolios, but one filled with polarizing conversations. The vitriol of politics was its most prominent feature. But there was also the unstoppable destruction of hurricanes and wildfires—whole communities erased from the map. Not to mention the collective power of #MeToo, exposing so many workplaces as swamps of toxic sexual harassment. And technology—once our potential savior—has been revealed as a dangerous tool for fake news, hacking and possible election-tampering.
I recently reread the last six annual ZEITGUIDE books to get grounded in context, and what struck me most was how much the business cycle in recent years resembled the stages of grief. Like a death in the family, digital disruption spawned anger and denial (paralysis) followed by bargaining (deal-making) and acceptance (acquisition).
But looking back, and training my focus on legacy companies, I wonder how much the changes taking place reflect genuine innovation? All the open-concept workspaces, the internal business incubators, the enterprise social systems, the design thinking—did they really open minds and embed new ideas?
Innovation, it turns out, is not enough. Now we are entering an age of transformation. And if we want our careers and businesses to stay relevant, we also have to transform as individuals. We need to transform ourselves emotionally, spiritually and intellectually.
Emotionally, it could be painful, albeit exciting.
Spiritually, we have to accept it might be a long road ahead.
Intellectually … well, that’s the purpose of ZEITGUIDE. Always has been.
We have transformed our annual ZEITGUIDE compendium in three important ways for 2018. First, we turned it on its side. Rather than breaking chapters down, industry by industry, to examine the trends in each, we’re focusing each chapter on a cultural force causing those changes. Second, this ZEITGUIDE that you’re reading in January will be followed by three quarterly briefings—so that in April, July and October you’ll be filled in on how the leading-edge issues are panning out so far. And finally, we’ve added “Zeitguidance” sections at the end of each chapter to help you actualize what you’ve learned.
There’s much equivocation about the year to come. That’s how it is when the culture is at a crossroads. More swells of change are coming, and they will land faster and with more force. ZEITGUIDE is happy to be here to help you surf the big waves throughout the year ahead.
Wishing you a great 2018, and as we always say at ZEITGUIDE,
Founder & CEO, ZEITGUIDE
Corporate walls today are more transparent than ever. This creates an urgent need to be aware of–and responsive to–the tectonic shifts happening seemingly moment by moment in the landscape beyond. If the world outside is undergoing constant change, then the organization inside must adapt and transform–or else it risks sinking under the weight of obsolescence. The most agile companies are redefining job titles, altering workplace rules and environments, and adjusting their decision-making hierarchies. Moreover, while it used to be that companies expected a lot from their employees, today, employees expect more of their companies. For a business to succeed, it must be one of the top destinations for today’s premier talent, which means attending to the needs of its workers. In this chapter, we distill the most pressing issues facing every part of the org chart, beginning with the C-Suite.
The stock market climbed to all-time highs in 2017, but the country’s executive leadership is uneasy. Why? We found two relevant studies from consulting and accounting firms PwC and KPMG.
PwC surveyed nearly 1,400 CEOs around the world and found the following:
According to a survey by KPMG, the greatest concern for CEOs in the United States is cybersecurity. A third of CEOs said it was the issue with the biggest impact on their companies today, but only half acknowledged they’re prepared for a cyber event.
Target, Yahoo, Equifax and even Uber were among the companies experiencing high-profile data breaches this year. Close to 800 cyber events occurred in the first half of 2017—this is a 29% jump over last year, according to both the nonprofit Identity Theft Resource Center and data security firm CyberScout. But who is surprised by the uptick? The growing number of hacks is likely a consequence of the low level of preparation.
And being unprepared ain’t cheap. The Equifax breach cost the company $87.5 million in the third quarter, and the lasting effect on consumer confidence has yet to be determined.
While some CEOs are investing in stronger customizable software, the smart ones are also developing a plan of action for handling the damage when it (inevitably) occurs. Now there’s an emerging cottage industry of consultants who engage senior management in “cyber drills.” These, which many call “war games,” prepare key execs for the anxiety of facing data breaches, while also helping them determine the right time to inform customers and investors of a catastrophe.
If you work at a corporation, expect a few days devoted to anti-hack education. Don’t begrudge that time. It’s just as important right now as learning about your 401K.
Clearing the many hurdles facing business today will be a new crop of CEOs, many of them leading the country’s most recognizable companies. Here we provide you with the most notable recent appointments, what led them there and the challenges they face.
A rung down the corporate ladder from the CEO is arguably the most creative job in the C-Suite: Chief Marketing Officer. It’s also the most tenuous.
Per executive placement firm Korn Ferry, CMOs have the highest turnover of all C-Suite executives, staying at a job for an average of a scant 4.1 years . In fact, a global survey by the Fournaise Marketing Group revealed that 80% of CEOs don’t trust or are “unimpressed” with their CMOs, whereas only 10% feel the same way about their CFO or CIO.
But that sentiment goes both ways. According to Harvard Business Review, 74% of CMOs believe they aren’t being allowed to exert maximum business impact for reasons ranging from unrealistic expectations to misaligned performance metrics.
It might be time for CMOs to market themselves differently. ZEITGUIDE notices a blending of the CRO (Chief Revenue Officer) and the CMO positions into a new position; that of the Chief Growth Officer—the CGO.
Coca Cola replaced its CMO with a CGO, and marketing research firm Forrester predicted that more companies will retire the CMO label in favor of a position that can better tie its initiatives to growth.
By tying growth to marketing, CGOs can highlight the return on investment: they don’t just spend money, they make money, too. Which will require a new set of metrics that are very different from those that marketers and agencies are accustomed to. Linda Boff, CMO of GE, has pushed her team to create an “ecosystem” of metrics that take into account all the factors that lead to a sale. “I never need to see an ‘impression’ number again, never. I’d be fine without it,” said Boff at BI’s Ignition conference.
Moving forward, the best CMOs will need to become CGOs. It’s not just about messaging or telling a brand’s story to bring customers through the door or direct them to a site, it’s getting them to make the purchase. Connecting all the dots—digital and traditional marketing, promotions and events, the brand story, customer experience, innovation, growth and even the sale—will become a mandatory part of the job.
Hollywood came under an unwelcome spotlight when allegations of an industry-wide culture of sexual misconduct became the lead story for news cycle after news cycle in the fall of 2017. But the movie industry wasn’t the only one to be exposed. Social media posts using #MeToo uncovered harassment in industries including—but not limited to—tech, art, news, food, advertising, publishing, politics, hospitality and fashion.
Now a global phenomenon, that hashtag has not only helped expose the conditions women face in the workplace that make them vulnerable to abuses, it‘s also gone far in explaining why victims are unlikely to come forward. In many of these cases, an uneven power dynamic was weaponized. For years, the message has been: Stay quiet, or the offender and his enablers will destroy your career.
Actress and show creator Brit Marling dubbed this the “economics of consent.” As she explained, “consent is a function of power. You have to have a modicum of power to give it.”
Although there’s no easy fix, abuses would be less likely to occur if gender ratios in the workplace were more balanced, and if there were less financial inequality between the sexes.
Some are reacting defensively and promoting something of a corporate abstinence. The New York Times reported on male staffers avoiding female colleagues, refusing to have meetings alone with women, or, most damaging, not hiring women in the first place.
Corporate celebrations might get the axe—goodbye, holiday party? —to keep alcohol out of the picture and minimize inappropriate behavior.
These responses are misguided. They address the symptom, not the problem, and unintentionally reinforce the economics of consent. Throwing a company party shouldn’t be an issue for a healthy company.
Still, important conversations are now taking place. Exposing workplace abuses creates dialogues around the broader issues contributing to sexism and misogyny. Some men are even finding that the seminars on myths of masculinity now being run by advocate organizations and universities can be helpful. The question is: are these conversations just attempts to avoid a scandal like the one that torpedoed the Weinstein Company? Or is this a seminal moment, a pivot that could reshape the workplace and society at large?
In other words, is the patriarchal order truly being dismantled?
The restaurant industry has the worst track record when it comes to sexual harassment of women—that’s according to a conversation at the SUMMIT SERIES between Jane Fonda and Saru Jayaraman, co-founder of the Restaurant Opportunities Centers United.
The bad behavior, it was found, is due to the power disparity between staff and management, and between servers and customers—with the withholding of tips. Many servers are women, who are stuck with tolerating bad behavior to protect their livelihood.
One solution, advocated by ROC United, is for servers to be paid standard minimum wages in addition to tips, instead of the sub-minimum wage servers make in most states. Servers in the seven states (AK, CA, MN, MT, NV, OR, WA) that eliminated sub-minimum wages are half as likely to experience harassment. They are less dependent on gratuities, less vulnerable to harassment, and more likely to report it when it happens.
This suggests that an increase of salary is an increase in power … power to fight back and not tolerate harassment.
Automation is threatening jobs everywhere from Michigan to Guangdong. In a compelling piece in The New Yorker, Sheelah Kohlhatkar described the eerie phenomenon of dark factories, where there is no need to keep the lights on when there are no human workers.
CEO Gerry Wong, whose Cambridge Industries Group manufactures telecommunications equipment in China, told Kohlkatar that he’s trying to “replace as many workers with robots as possible.” Wong claims that displaced workers will adapt to the new reality, just as they had done during the Industrial Revolution—they will have to find new roles, possibly in the service sector.
But will this phase of automation outpace new opportunities?
Now, some young adults are going to trade school instead of college, allowing them to sidestep the crushing debt of a four-year institution and meet the needs of the modern labor market.
But no job can be considered safe. Automation is starting to chip away at the roles of doctors, lawyers, teachers—and even those in the C-Suite. There’s an upside to that. The research and advisory firm Forrester projects that while automation will eliminate 9% of jobs in 2018, it will create an additional 2% as part of the new “automation economy.” Consulting firm Cognizant Technology Solutions proposes 21 new jobs that will be needed in the near future. Some of the more fanciful roles include genetic diversity officer, virtual store sherpa and personal memory curator.
To this point, Cognizant’s study adds that there’s a potential for automation to liberate us from dull jobs and free us to work in more fulfilling and creative endeavors. “We shouldn’t have a ‘pre-nostalgia’ for the mortgage processor in the way that some people are nostalgic about miners and steelworkers,” they write.
Per the U.S. Bureau of Labor Statistics, 1 in 3 Americans earn income from work that doesn’t fit the traditional 9-to-5 job. An estimated 20 million people in the United States are contractors—who may or may not be working from home in their pajamas.
Working per gig is the path to freedom for some, but a Wall Street Journal survey reveals the very real downsides: no benefits, no paid vacations, no sick days. Usually, freelancers aren’t on a clear career path into full-time work, and contractors have second-class status in the workplace.
Beyond that, freelancing defies easy labels. There’s a mistaken belief that it’s solely the province of Millennials. In fact, research at Princeton and Harvard Universities found freelance work to be more prevalent among Baby Boomers. And it’s difficult to generalize how freelancers’ money is spent. For some, their side hustles represent essential income, while others take on short-term assignments for pocket money.
One upshot of the gig economy? It has created a hot market for co-working spaces. WeWork is now in 58 cities throughout the world, with a $20 billion valuation—making it the fourth most valuable U.S. startup. Members get a (tiny) workspace, internet, free coffee and, just as important, access to a network of thousands of other freelancers and entrepreneurs. This kind of co-working environment certainly beats toiling away at a Starbucks.
In a highly symbolic move, WeWork has taken over much of the space in the Lord & Taylor building in Manhattan for its headquarters—poignant testimony that co-working is on the rise while bricks-and-mortar retail declines. The $850 million sale is a windfall for Lord & Taylor and parent company Hudson Bay, but it’s a small investment for WeWork.
The needs of corporate offices have helped fuel WeWork’s growth, whether it involves renting clusters of desks, an office floor or an entire WeWork building. But companies might also be wise to tap WeWork for these connections to creative entrepreneurs, who represent both a source of potential talent and new business ventures.
Calling to mind the past efforts of Chrysler and Carnegie to remake the landscape with edifices to their success, tech giants are paying top dollar for starchitect-designed corporate headquarters.
There’s an arms race to build headquarters that will impress and awe the public, while giving employees something to humblebrag about on Instagram. Anonymous office parks with good cafeterias are no longer enough: the more influential the company, the more dramatic the architectural statement.
Get ready for these tech behemoths to make a lasting mark on design:
Amazon’s approach suggests something even bolder. The company’s wish list for the location of its second global headquarters is lengthy, and it’s not limited to a building or even a campus. The intention is for it to function as a blueprint for the modern American city.
Amazon wants to be located close to a strong university system that produces skilled talent, and to be in an environment with modern infrastructure, a commitment to energy efficiency and sustainability, ample green spaces, a fully developed public transit system, and a diverse population. Those are just several of its must-haves. Few companies can be so demanding, or so ambitious.
It’s no surprise that our work and personal lives have merged now that we use our phones like appendages, 24/7.
This is the new reality. Perhaps it’s no longer about work-life balance—which suggests a compartmentalized lifestyle of work and leisure or work and family.
Instead, it may be time for what Jeff Bezos calls work-life harmony.
“Balance,” he says, “implies there’s a strict trade-off. Work is about generating energy, not depriving energy.” Speaking personally, he adds that being a productive team member at work “makes me better at home. If I’m happy at home, it makes me a better employee, a better boss.”
Of course, that’s easy to say when you run a company. For others, erasing the line between work and home may be harder to do. The office can be a stressful place—whether it’s due to fear of losing our jobs, the frustration of lengthening commutes, time-sucking office politics, or the constant pressure to impress—and shaking off the anxiety of work is a growing issue.
The reality is that to create true work-life harmony, the employee experience (EX for short) needs to be addressed. Companies are looking at a new measure of future success: How happy, they want to know, are their employees?
It’s not just about ping pong tables and kegged cold-brew coffee. It’s about operating with transparency and cooperation. It’s about giving employees the skills to navigate the new processes of the future, and helping them in a transformed labor market. It’s about being in an organization that not only rewards them for work, but enables them to have work-life harmony.
Taking employee experience into account inevitably adds up to good business. That’s because happy employees make for better customer experience. And customer experience has an outsized impact on business success.
EX will become more and more important in a competitive landscape for premier talent.
We are at a crossroads: how do we get the most from technology, without losing what it is that makes us human?
Make no mistake—digital will continue to transform the business and cultural landscape at twitch speed. However, we are right now seeing a change in the public’s perception of digital technology’s impact on society. Just as the Industrial Revolution brought labor unrest, income inequality, and environmental distress, the tech revolution is grappling with its own litany of negative consequences.
This section will discuss the conversations swirling around Big Tech, what other companies are doing to stay competitive and the next wave of technology that will determine who dominates the business landscape—that is to say, who will redefine our culture and behavior?
The Big Five—Apple, Alphabet, Microsoft, Amazon and Facebook—take the top spots for market capitalization. Most are new faces. Of the top five from the start of the 21st century—GE, Microsoft, Exxon, Citibank and Walmart—only Microsoft is a holdover. Our transformation into a tech-dependent society now realized, we’re left to consider the consequences.
First, the upside. The Big Five have been responsible for the most influential and popular innovations of the past quarter century: searching through all of human knowledge with a few keystrokes; a phone that’s also your camera, your family photo album, and your music collection; a digitally seamless marketplace that also streams television shows and movies on demand, while arranging for any purchase to be delivered to your doorstep; a news feed tailored to your interests; and powerful storage units to activate your IT in the cloud.
But now the Big Five are losing some of the public’s trust. “The technologies we were most excited about 10 years ago are now implicated in just about every catastrophe of the day,” wrote technology journalist and New York Times columnist Farhad Manjoo. Have they become what Manjoo calls the “Frightful Five?”
Tech companies long argued that all they did was provide the platforms—and they couldn’t be held responsible for how consumers used them. Fake news, near-monopolies, habit-forming technologies: That argument now falls flat. “Once a public darling in the Obama years … the tech industry has effectively become Big Tech, an aggressor industry along the lines of pharmaceuticals, oil, or tobacco,” wrote Ian Bogust in the Atlantic.
Here are some of the other challenges Big Tech has produced:
Scandals Over Fake News
The Russian meddlers who bought ad space to promote misleading or outright false stories on Facebook exposed just how hands-off the social media giant can be when deciding who could use a platform that now reaches over two billion people. Public pressure and investigations by Congress are pushing the company to better police itself. How will the platform prevent the spread of harmful content, without jeopardizing the freedom and openness it has always provided to its users? There’s no quick fix.
Your Brand is Not Safe
YouTube has had a safety issue with automated ads (known as programmatic ads). Brands that paid for ads to auto-play before videos sometimes found their ads showing up just ahead of questionable content such as Isis propaganda or videos supporting pedophilia.
Your Industry Ain’t Safe Either
Amazon has bought Whole Foods, and is closing in on being the only retailer you’ll ever need. Enough said.
The Digital Mafia
Facebook and Google eat up more than 60% of digital ad spending, which doesn’t leave much for other media companies. Have a killer app? Get ready to pay Apple registration fees and a high commission to appear in the App Store. Retailers find they must sell on Amazon’s platform as brick and mortar traffic falls, giving Amazon further domination of ecommerce growth. They’re also getting into the ad business, so be prepared to give them even more cash.
Nomophobia, the anxiety of being without a phone, is now in the public lexicon, and for good reason. The average person touches her or his mobile phone 2,000 times a day. A report on “60 Minutes” suggested that phones are altering our brain chemistry, and not for the better. This habit-forming phone dependency is not news to tech companies, which have been accused of designing their platforms and features to exploit human psychology to their benefit.
Such a level of dependence is having a profound effect on teenagers and children. As one 13-year-old put it, “I think we like our phones more than we like actual people.” While Millennials had to age into technology, Gen Z’s, or “iGens,” are growing up texting, tweeting and snapchatting. Hanging out with friends in real life is increasingly replaced by an online existence that can breed isolation, cyberbullying and sleep deprivation. A November 2017 study published in Clinical Psychological Science found that teens who spent more time on new media (such as social media or smartphones) were more likely to report mental health issues. The same study drew a direct correlation between the rise in teen suicides between 2010 and 2015 and this growth in new media use.
The skepticism of Big Tech makes sense, but other developments show that the industry giants don’t have total ownership of our lives just yet.
Congressional Interference is a Growing Possibility. Legislators from both sides of the aisle are scoring political points just by mentioning the possibility of cracking down on Big Tech. Are they grandstanding for the cameras? Maybe. But the concentrated power of the biggest tech firms makes regulation feasible.
Tech Firms in Bitter Competition. The rivalry between major tech firms might prevent any one of them from achieving outright dominance. Each is deeply invested in constantly iterating and improving their own products, and in uncovering new markets and technologies. That competition can escalate and become vindictive. For example, Amazon long refused to carry Google Home and Google-owned Nest products on its online marketplace, and Google responded by removing YouTube from Amazon devices.
M&A of Legacy Companies. Could titanic-scale mergers and acquisitions among telecom, media and content companies give Big Tech a run for its money?
AT&T, which owns DirecTV, is negotiating to get its merger with Time Warner approved. If it succeeds, it would be better positioned to send its content—including Turner, CNN and HBO—directly to consumers. It would be better able to compete with streaming video services such as Netflix, Amazon, Hulu and YouTube, as well as with Facebook and Apple, which announced their own original video content plans in 2017.
Disney’s deal to acquire Twenty-First Century Fox’s film and television properties bolsters its own efforts to compete with those video content disruptors. The plan is to go toe to toe with direct-to-consumer competitors Netflix and Amazon using what the Washington Post’s Steven Zeitchik calls “the weapon of scale.”
“Amass as much entertainment content as possible … then draw from it to populate an online streaming service,” writes Zeitchik. Disney’s Fox acquisition will help towards that end, as well as give the company a majority stake in streaming service Hulu. That stake could be used to support Disney’s own desire to build an over-the-top offering for its own content, including Star Wars and Marvel, which you won’t be able to find anywhere else. Remember, Disney just pulled all its assets from Netflix.
On the retail side, CVS acquired insurer Aetna for $69 billion to propel itself ahead of a potential Amazon move into health care. The purchase resembled something Amazon itself would do: spend big to become more competitive in a critical business space.
Threats to Net Neutrality. The undoing of Net Neutrality could give more power to the traditional internet service providers, such as Comcast, ATT, Verizon, Spectrum and DirecTV. Those ISPs could charge users more to access competing digital video platforms (i.e., Netflix or Amazon), while putting their own content on the internet’s “fast lane.” It might seem counter-intuitive, but the end of Net Neutrality could diminish Big Tech’s firepower, and bring balance to the marketplace. However, the reversal of Net Neutrality could also prevent digital upstarts from gaining a foothold—and potentially growing into Big Tech’s future competitors.
While workers grapple with if—or when—automation will replace their jobs, companies continue to invest in artificial intelligence as a competitive imperative.
How soon AI achieves its potential as a tool to help us do our jobs better, or as a manifestation of our fears of it taking over society, will be up to a limited—and extremely well-paid—pool of AI experts. (Salaries will range from $300,000 to $500,000 or more a year, according to the New York Times.)
The unresolved question: who is responsible for controlling all of this? Who will ultimately decide not just what AI can do, but what it should do? Ryan Holmes, founder and CEO of the social media tool Hootsuite, says, “AI doesn’t have to be evil, we just need to teach it how to do good.”
In any case, here are some examples of how AI is being developed across industries.
Anybody else grumbling about not getting into Bitcoin early enough, now that the cryptocurrency is priced at almost $20,000 for a single bitcoin at the end of 2017?
The rush of investors outside of Bitcoin’s early, technically savvy purveyors is picking up speed. In one single week in November, 300,000 Americans downloaded Coinbase, the most common cryptocurrency brokerage platform—making it the most downloaded iPhone app for a time. The currency has also long been popular among young investors looking to invest for retirement outside of traditional mutual funds.
Bitcoin and its competitors (covered below) utilize a technology called blockchain that enables digital exchanges outside the system of central banks, governments or other traditional institutions. This means you can make a purchase with anonymity, and without fees.
Yet the jury is still out on the soundness of investing in cryptocurrencies. Warren Buffett has called them “a joke,” akin to other speculative bubbles throughout history. Nobel laureate and economist Joseph Stiglitz believes they should be outlawed. The market is subject to volatility, as seen in the hit taken when China announced a ban on cryptocurrency trading, though there are rumors the ban may be lifted. The reputation of cryptocurrencies has been tarnished by associations with money laundering, drug trafficking and other illicit activities. At the same time, uncertainty over its legal status has kept the digital currency in the shadows of global markets. And despite claims to its security, there have been prominent hacks of the currency.
Indeed, it’s a volatile investment. And yet two of the four top accounting firms (Ernst & Young was the first; PwC followed) are now accepting Bitcoin, while the other two (Deloitte and KPMG) are building crypto-advisory services. Goldman Sachs plans to trade in bitcoin futures. Exchange operators CME Group Inc. and CBOE Global Markets Inc. plan to launch bitcoin futures contracts, as does Nasdaq Inc. The SEC is still debating how to monitor and regulate bitcoin exchanges, as its chair Jay Clayton has said he sees “very little distinction” between putting money in bitcoin and “handing people a piece of paper that says ‘stock.’”
Should you invest in cryptocurrency? At ZEITGUIDE, we believe that adoption could accelerate if there’s further acceptance from the big banks, accounting firms and consulting firms. If you want to buy bitcoin right now, you might be late to the game. But there are other options for investors interested in cryptocurrencies. Still, if the value begins to plummet … well, you know. It’s risky, but if you have some money to play with and don’t want to go to slots, why not?
Here are the top cryptocurrencies to know about, should you get the itch to consider investing.
In addition to Bitcoin, everyone’s talking about blockchain, mainly because blockchain is the very technology that Bitcoin is run on.
What exactly is blockchain?
At its most basic level, blockchain is a system that lets us exchange anything of value faster, more securely, and without the need to rely on a business or institution to oversee and verify transactions. Instead, every transaction is recorded on a blockchain—a digital ledger that can’t be tampered with and yet is available to the public.
What does that mean? On a practical level, there are lower (or perhaps no) exchange fees, as well as transparency of the exchange from the original to the final owner. Most of us in the West may trust our banks or other institutions, but those in other parts of the world, like India or Africa, don’t.
This ability to make low cost, transparent exchanges has benefits beyond currency.
For instance, a musician using blockchain to share his or her music could track the intellectual property from the artist or platform to every consumer. Rather than work through a publisher, he or she would be compensated through the blockchain’s transparent ledger. Digital technology has hurt artists to this point, but blockchain could address music’s attribution problem. The industry is taking note. Spotify acquired the blockchain startup Mediachain in April of 2017.
Other creative industries could use blockchain. A painter selling his or her work on the blockchain could own a percentage of it, and use it to track the piece’s ownership. If it sells again at a much higher value, the artist could see a return from that. It would also benefit collectors, who could better vet the authenticity of what they’re buying.
Here’s how blockchain is already playing a role in other industries.
Today’s business-to-consumer connection has been optimized for smartphones, laptops and tablets. But the future of the consumer experience won’t be on a screen. It will be all around us.
The first major step towards this future is voice technology, exemplified through the release and rapid adoption of home speaker devices. Amazon’s smart assistant Alexa, accessed through the Echo or Echo Show, has about 70% of the voice device market. Amazon’s primary competitor is Google’s Home device, but the market is getting more crowded. There is the Invoke from Harman Kardon, which runs on Microsoft’s Cortana. In 2018 Apple will introduce the HomePod—marketed as a higher end offering with high-quality sound and a focus on privacy.
These devices represent a radical change in how we interact with technology. But for consumers accustomed to visual interfaces like TVs, smartphones and computers, the transition hasn’t proved as instinctive as initially hoped. While Alexa has 12,000 available “skills” (as the voice-activated apps are called), users largely use Echo as a timer (85%) or music player (82%), or to get news updates (66%). Part of the issue may be the low expectations users have for what voice interfaces can handle.
The adoption of voice devices creates new challenges for companies grown accustomed to navigating the SEO landscape. With voice queries becoming more common, providers today must figure out how customers will get from “OK Google” or “Hey, Alexa” to the products and services being sold. That means another expense for all brands and another slice of the pie for these digital platforms and distributors to consumers.
To be able to always respond, these assistants are always on, and always listening. Those who bought the Echo or the Home seem to have accepted that reality—privacy concerns and all.
This is a first small step toward what is called ambient computing—when everything from your phone to your TV to your refrigerator will collect feedback from its surroundings at all times, and automatically respond to your wants and needs, even without being prompted.
Consumers will want to know how this information will be used and protected. What will happen when the next major hack captures your voice, and the voices of everyone in your household? Given how soon every part of our lives will be digitally connected, monitored, and personalized through devices, sensors, screens, and objects, it may be past the time to communicate such fears.
We are in the midst of a tectonic shift that is upending the order of the commercial establishment. In the pre-digital era, consumer-facing businesses not only shaped the buying behavior of the public, they influenced the culture at large—what was good for General Motors was good for America.
Not anymore. Today, the impact of social media gives the consumer more of a voice—and more control. Now it’s the buying public that shapes a company, impacting not only the products that are created and how they’re brought to market, but the very values that form a corporate identity. Consumers have power, and they’re not afraid to leverage it.
They can even direct how the business leader responds to world events. Consumers now are loud, fickle and impressionable, and if one well-voiced opinion rings true it will be repeated and amplified with alarming speed.
Success is more of a challenge when your audience is that demanding. But there’s good news too. The very technology that created this landscape also provides the means to navigate it.
Digital provides a direct conduit between companies and consumers: it accelerates discovery, transactions, delivery and service, enabling brands to cut through the clutter and target consumers with more precision. Just as important, that conduit permits a point of contact—it creates a personal touch.
Today, the value of your product and how you perform in the marketplace is tied to how well you know your consumers. If you have any chance of keeping them, you must show them that you value them.
Every industry has seen new entrants to the market quickly outpace legacy brands through their canny use of digital technology. If there’s no entrenched way of doing things, the costs are lower. And when the barriers to entry are lower, the upstarts can rapidly respond to the needs of the market. But the greatest advantage they have is using digital technology to circumvent the middleman and form a direct connection with consumers.
This readymade access enables a seamless, frictionless experience for consumers—they can get what they want, when they want it. It also allows businesses to collect real-time data on their consumers, providing an understanding not only of who they are, but what their needs are—and how those needs are likely to evolve. In other words, digital technology makes the consumer the star.
Who is the leader of what’s called “customer-centric” tactics? That should come as no surprise: Amazon. A customer-centric mindset has pushed Amazon’s expansion from an online bookseller to a giant across retail, entertainment, hardware and web services. Each new venture—including the acquisition of Whole Foods this past summer—gives the mega-business further direct access to customers, along with a greater and greater understanding of just what shoppers will want and need next.
Amazon isn’t the only success story. Every industry deals with digitally-driven players who are reshaping consumer expectations.
We created a list of our favorite examples with our client and thought-partner Geoff Walker, Executive Vice President and Chief Strategic Technology Officer at Mattel. It appeared in a custom ZEITGUIDE we produced on the topic in the summer of 2017.
Competition from these digital-first upstarts is forcing legacy companies to do everything they can to get that direct conduit to their consumer. Here are a few examples from different industry verticals that recognize the need for digital transformation.
Digital technology enables the collection of vast amounts of data about the consumer. At the same time, businesses are creating more descriptive data for the content and products they offer. Better consumer data and better product data are making it easier to match an individual consumer with what he or she wants and needs.
Media provides a good example. TV shows have long used metadata—the descriptive information and visuals about programming such as title, storyline, cast, genre, release date, key art, photos and more—to make shows searchable and help viewers decide what to watch. Now, scene and speech analysis is augmenting what metadata can accomplish. Today, a viewer might not simply search for “Modern Family,” but “that episode where Jay and Phil fly model airplanes together.”
At the same time, direct-to-consumer media platforms are delivering specific insights into the program viewership and behavior of individual viewers. Instead of showing a viewer 50 options, a media provider can match three or four suggestions tailored to what it knows about that viewer. With advances in smart TVs and ambient computing devices like voice-powered home assistants, this information will eventually include biofeedback markers that show levels of engagement and emotional responses.
For advertisers, these technological advancements are making it easier to deliver targeted ads to consumers. Programmatic ads, involving their automatic placement in front of a desired audience, has its limitations. Dozens of advertisers yanked ads when YouTube couldn’t firewall off offensive videos, including those promoting violence, hate and racism.
Today, we’re seeing something called “advanced advertising,” creating ad products using all available data (1st party, 3rd party, social media data, set-top boxes, digital-video partnerships, credit card data, etc.) to guarantee placement with precisely-defined customer segments across broadcast, cable and digital. This means that an advertiser can tell that a potential car buyer from Georgia with three kids is watching a particular show at a particular time. This is great for a car company; it now can find a more likely consumer. Targeting ads to specific viewers will make them less likely to be skipped—the ads contain information the consumer actually wants to see.
In this era of countless content choices, media companies no longer have the power to dictate what, where and how media is consumed. Audiences can choose from an ever-expanding list of platforms and social content formats: streaming subscription services; OTT (over-the-top) platforms from CBS, Disney and others; premium TV; user-generated video; original content for social media from Facebook to Snapchat; digital networks; and content that companies create to build brand awareness or drive them to a purchase.
Every media company faces the imperative to create high-quality content, and make it easily discoverable by its intended audience.
Who is winning the eyes, ears and hearts of consumers today? Here are the changing consumer media habits to note from the year that was.
TV has not yet hit its peak. A record 455 scripted shows aired in 2016, and 2017 surpassed that figure. Netflix alone offered 50 seasons of new and returning original TV shows. The total number will likely climb again in 2018, with Apple committing $1 billion to acquire original programming, and Disney planning to create more original shows for its stand-alone streaming service.
Streaming services are no longer second-class TV citizens. Hulu made Emmy history by becoming the first streaming service to win for Best Drama Series—one of eight awards taken home by “The Handmaid’s Tale.” Netflix had three Best Drama nominees itself, and added 5.5 million subscribers worldwide in the third quarter of 2017 alone, bringing its total to around 110 million.
A report by Deloitte found the amount of time spent watching live TV is declining for all but the oldest generation of Americans. Increasingly, TVs are being used to stream digital video. The Interactive Advertising Bureau found that less than half the time spent watching TV is devoted to linear programming, and 20% of TV time is spent streaming digital video. All the better for binge-watching your favorite shows—something 73% of US consumers and 90% of Gen Z and Millennials are now doing, per Deloitte.
The U.S. and Canadian box office this past year didn’t to live up to a record-breaking 2016. Hurt by a disappointing summer that ended with the worst-performing Labor Day weekend since 2000, even “Wonder Woman” and a huge opening for “Star Wars: The Last Jedi” didn’t save 2017. The box office is projected to finish down 2-4% from the year before; however, international grosses rose 5%. Movies that did do well, such as surprise hit “Get Out,” benefitted from strong reviews and word of mouth, which proliferated through social media.
There has been a steady decline in moviegoing in the last decade, propelled by the growth of online streaming. Can subscription services from theaters themselves get viewers off their couches? Call it box office binging: MoviePass, accepted in 91% of theaters, gives users access to one movie ticket per day for just $9.95 per month. The service has attracted more than one million subscribers so far.
Digital music downloads are headed the way of MySpace and AIM. Digital sales fell 24% for the year. Physical music sales fared better, dropping by just 1%, helped by a 3% increase in vinyl sales.
Yet the music industry is up overall, propelled by a 48% increase in streaming revenue. More than 30 million subscribers in the U.S. now pay for streaming services, and the $2.5 billion earned by these services now accounts for 62% of the entire U.S. music business.
Spotify, leading the space with more than 60 million paying subscribers worldwide, is expected to debut an IPO in 2018 that could value the streaming service at as high as $20 billion.
There’s something encouraging about the resilience of print books against the lower costs and greater convenience of e-books. While e-book revenue fell 5% across the industry in the first half of 2017, sales of physical books rose 3% in the same period. The tactile experience of thumbing through a book still resonates—and the bookshelf in your living room can show off your worldliness and good taste in a way your kindle can’t. The dominance of digital tech might have its limits after all.
Next Gen Media
Also competing for consumer attention is the burgeoning market for augmented reality (AR) and virtual reality (VR) media. Investment in entertainment VR was up 79% in the second half of 2017 compared to the year before. Niantic, the creator of last year’s breakout hit Pokemon GO, raised another $200 million on the potential for its next AR endeavor with Harry Potter.
There’s a tantalizing potential for storytelling through VR. The Tribeca, Sundance, Toronto and Cannes film festivals all featured virtual reality in one way or another. Cannes had its first official VR selection: “Carne y Arena,” a collaboration between Oscar winners Alejandro Iñárritu and Emmanuel Lubezki that explores the experience of immigrants and refugees.
VR technology is also catching up to initial consumer expectations. Included here are new and improved VR cameras from Facebook and Google, and improvements that take away the headache- and nausea-inducing distortion.
You might not be on board. Who wants to wear a helmet for an entire movie? Fair enough. But with the abundance of spending, the shortening of attention spans, the explosion of content, and the rapid rate of technological transformation, don’t rule VR out.
2017 was another record-breaking year for online sales. Shoppers in the U.S. made $7.9 billion worth of purchases across Thanksgiving and Black Friday, and another $6.59 billion on cyber Monday. Those represented increases of 17.9% and 16.8%, respectively, from last year.
Efforts by retailers to make mobile shopping easier on these days paid off. Mobile sales on cyber Monday jumped 39% from a year ago, representing 21% of all online sales that day. Mobile dominated sales during work hours.
While many predict a pending “retailpocalypse,” brick-and-mortar store traffic fell by less than 1% compared with Black Friday’s 2016 numbers. But with retail’s growth happening online and on mobile, and store visits flat or facing small declines, smart retailers are continuing to rethink how best to use their physical space.
We see efforts to make retail spaces must-attend destinations through a blend of emerging technology and entertainment. A showroom with tech tools such as VR allows consumers to be transported into a virtual world where they can see themselves engaging with a product. While VR can place customers inside a separate, fully immersive virtual shopping experience, AR is able to superimpose images or data over reality to reveal details about a product. Another in-store tech innovation: Magic mirrors that let you see how you look in an outfit without even trying it on.
Here are a few of our favorite recent examples of store tech and entertainment, as put together with ZEITGUIDE collaborator Pam Kaufman, CMO and Global President of Consumer products at Nickelodeon.
The most encouraging sign for conventional retail may be that highly successful online retailers continue to leverage what they learn about consumers online to move into brick-and-mortar territory. Direct-to-consumer outfits including Harry’s (the shave club) and Casper (mattresses) struck up distribution relationships with Target, and can now be found in its megastores. The ethical e-commerce site Everlane advertises its new store in New York City’s Nolita district as “a website you can walk into.”
Amazon is opening bookstores that stock titles known to sell well locally, it’s expanded into the grocery aisle with its acquisition of Whole Foods, and it continues to experiment with automated convenience stores.
Google opened pop-up stores for holiday shoppers in New York City and Los Angeles.
Chinese e-commerce powerhouse Alibaba has opened supermarkets where customers can shop and dine as they would in a typical grocery store, as well as select items for home delivery. These developments signal that shopping benefits from having both online and offline components. We are progressing toward an omnichannel retail future, blending the best of physical and digital—or “phy-gital,” for short. Taken together, the phy-gital experience will make shopping not only more convenient and seamless, but also more tangible and human.
Millennials were the generation that came into the workforce during the digital revolution. Currently, the focus is shifting to Gen Z, whose entire conception of what it means to be social has been shaped by smartphones and social media.
The next age group to enter the lexicon is Gen Alpha. The oldest members of this group are just 5 years old, but a few likely outcomes can already be predicted. For starters, this will be the most diverse generation yet. Among U.S. newborns, there are now more babies of color than non-Hispanic white babies.
The defining characteristic of Gen Alpha, according to demographer Mark McCrindle, will have to do with media. Anyone observing preschoolers has likely seen them swipe a TV or laptop—or even a magazine—as if it were a touch screen. No longer is reading or video-watching a passive experience. The expectation is for every screen they encounter to be responsive. With that in mind, children-focused media companies like Nickelodeon are working to build interactivity into the shows these kids stream on their parents’ phones and tablets.
The New Weed Consumer
Acceptance of marijuana use is growing steadily: almost 60% of Americans are in favor of legalization. It’s a dramatic shift from a decade ago, when 60% were opposed.
Spearheading this change in attitude was medical marijuana, which is taken to relieve the pain and side effects from cancer treatments and other ailments. Since 1996, 29 states have legalized medical marijuana. A study in Washington found a quarter of cancer patients in that state now use it, and 90% asked their doctor for more information about its use. And marijuana today is advocated as one way to curb the need for pain-killing prescription drugs that contribute to the country’s opioid epidemic. Pharmaceutical companies, ever aware of a money-making opportunity, are developing marijuana-based prescription drugs.
And now with the legalization of pot’s recreational use in seven states, consumption will increase even more. Colorado has already taken in over $500 million in taxes and fees since recreational retail sales began in 2014. And the potential for business is limitless: Think not just of weed and edibles, but all the ancillary lifestyle products and services the industry will help launch. That means delivery apps for your pot or your munchies, or the Blue Apron for cooking with cannabis. Emerging marijuana businesses also require marketing, branding, big data and analytics, and ag tech to improve efficiency for growing and harvesting. Police departments will need better tools—think weed breathalyzers—for determining when drivers are impaired. All together, these additions to the economy could add up to a quarter of a million jobs.
So who is the new weed consumer? Definitely no longer the pot-buyer stereotype of a High Times-reading, Grateful Dead-loving, tie-dye-wearing pothead. For every frat boy with a gravity bong, there’s now a granny with her tea, and an entrepreneur ready to expand the market.
The Luxury Buyer
The traditional essence of luxury was exclusivity. Whether set apart by status or price or scarcity, luxuries were by definition unattainable by the masses.
And yet here we are in an age when everyone can hire a private driver via Uber, when designer fashions find their way to Marshall’s and eBay, when fine art can be bought online. Digital connectivity has disrupted exclusivity.
In such an age, luxury can perhaps be defined by instant gratification, hyper-personalization, digital privacy and, perhaps most of all, having the time to enjoy what’s been earned.
Some prime examples: You can now customize your Gucci handbag or create a custom shoe with Jimmy Choo. An entire industry is emerging around encrypted Cloud services, secure internet connections and email accounts. Concierge medical services, in exchange for an annual fee, will provide physician care on-demand 24 hours a day—right at the patient’s home. Bentley drivers can access an on-demand service that will come to their driveway to fill their tank. Who has time to stop at the gas station, after all?
The Health-Conscious Consumer
Your new organic shopper isn’t a crusty vegan, it’s a mom in ballet flats.
Currently there are more than 16 million Millennial moms (born 1980-1995) in the U.S. alone, and more than a million Millennials are becoming new moms each year, according to the Pew Research Center. This new generation of parents is demanding healthy food choices and even toys that promote an active lifestyle. Millennial moms place greater importance on locally grown produce, chemical-free clothing and cleaning products, and a greater sense of connection with their children. In fact, 71% of Millennial moms are choosing more nutritious foods, with 37% opting for organic.
This demand for healthy food is justified by the national state of childhood health. The Centers for Disease Control and Prevention estimate that one in five school children (ages 6–19) is obese—more than triple that number of the same age grouping in the 1970s. If parents insist on better choices for what their children eat, we might hope to see a reversal of this trend. Data from the CDC suggests that obesity rates may have plateaued, and even seen small declines among pre-school age children.
The number of Chinese Millennials alone (some 415 million) is greater than the entire population of the United States, with an aggregate income Goldman Sachs projects to grow to $3 trillion in the next decade.
That’s an unbelievable market opportunity, and smart businesses will make an effort to better understand this demographic. Here are three things you may not know about Chinese Millennials, with help from our friends at China Skinny, a research, digital and marketing agency for businesses looking to grow their market in China.
Mobile economy. Millennials in China are aggressive users of mobile device workarounds, as legacy industries (such as banking and retail) were slow to create their own apps. The continual innovation of platforms such as WeChat makes all things available from their smartphone—whether it’s groceries, a ride or a date. And forget about cash or cards—mobile payments are the dominant way to pay.
The new collective ownership. While Uber and Airbnb have made Americans aware of the sharing economy, this concept is showing the greatest potential in China. The young share everything from umbrellas to phone batteries. This reflects an attitude that is less focused on owning lots of stuff, and more on saving for premium experiences, such as dining or travel. For the ambitious, the sharing economy offers a way to live frugally and save up to launch their own startups.
Discerning consumers. China’s Millennials don’t automatically covet foreign products—a point often missed by global luxury brands. One company that has succeeded with young Chinese consumers is Estée Lauder, which got actress Yang Mi to be its brand ambassador, particularly on the social media platform Weibo. And since Estée Lauder is on the popular e-commerce site Tmall, its products are available to consumers outside the major cities. It also uses the messaging app WeChat for customer support and communication. Rather than replicate strategies from other markets, this U.S.-based company is savvy about going where young Chinese consumers are already found.
Companies are on a journey to take note of every taste, every desire, every habit and every purchase of each consumer. The approach isn’t to reach Millennials, or even Chinese Millennials, for that matter: It’s to describe the individual by the micro-detail. It’s knowing not just that a consumer might be a 35-year old father of two, but that he’s an SUV-driving, “The Crown”-watching, soccer-loving, Untuckit-wearing, Amazon Echo-owning gamer with a thing for analog watches. Consumers are more than the sum of their demographic groups. Companies that stay digitally connected to them will better cater to their specific tastes and desires—and not lose them to a competitor more attuned to their individual needs.
Even a quick scan of international affairs will provide plenty of reasons for concern. Each day brings a new development somewhere on the planet that could imperil and completely reshape the established order.
These issues are no longer limited to the portfolios of presidents and politicians. Corporate leaders have a responsibility to understand the global shifts taking place, and shareholders, employees, and community stakeholders increasingly expect them to be prepared to respond to political events.
“More than ever, you need intelligence and contingency plans for political developments, even as it becomes more overwhelming to keep track of it all,” says political scientist DJ Peterson, president of Longview Global Advisers, who is ZEITGUIDE’s external partner on geopolitical issues that concern our clients.
Having a solid point of view and a plan is a daunting task, especially when facing a seemingly endless number of global issues. To guide you along, here’s a quick tour of what we believe will shape the coming year as well as the conversations among investors, leaders working abroad and all our clients whose title contains the word “global.”
The Trump presidency’s “America First” approach to international affairs is a catchy tagline which helped win an election. It’s less effective at communicating a position of global leadership.
Indeed, the Trump administration pulled out of the Trans-Pacific Partnership (TPP) on trade and the Paris Climate Accord in short order. It also is driving the initiative to recognize Jerusalem as the capital of Israel, a move that has been rejected by 128 states of the United Nations. The political climate within the U.S. might be starkly divided, but whatever your views, the fact is the world is moving on with or without the participation of the U.S.
Meanwhile, Beijing is aggressively positioning China as a world superpower that is less isolationist than in the past. At Davos in January 2017 and during the Communist Party congress in October, General Secretary Xi Jinping presented China as a nation with strong, unified leadership and a well-defined plan for the future—one that will drive global growth and integration, as well as play a more active role in multilateral institutions. China increased its voting shares at the World Bank and International Monetary Fund, and is a leading contributor to the United Nations budget and peacekeeping operations. It is working toward its own trade deal with 16 Asia-Pacific countries, including Japan, India and South Korea.
And while China was for years skeptical of climate science and Western-led global agreements—and of the cost of adapting new technologies—it has lately emerged as a leader on these issues. The political motivation might come from China’s excessive smog, but the financial incentive is rooted in renewable energy’s potential to transform the country’s economy. The Chinese government is going all-in on the climate change marketplace: not only is there heavy investment in the transition away from fossil fuels, but the government is clamping down on skeptics and censoring climate-change critics.
China has its own issues, mind you: Inadequate healthcare, an aging population, rising debt, civic unrest and corruption. But it is making up for these deficiencies with its sense of initiative while operating on the world stage.
Will the Trump administration continue to be a lone wolf when it comes to geopolitical issues, or will the U.S. be able to recapture its leadership role? How will this new world order shape the way we do business?
Hurricanes. Wild fires. This past year was besieged by so-called once-in-a-century natural disasters. We get the hint: cataclysmic events may become yearly events.
All along, climate scientists have said that climate change is not simply making the planet warmer, it’s creating the conditions for extreme natural events that will become commonplace. Politics, business and culture have always been volatile; now it’s the weather, as well.
The economic impact was indeed felt in 2017. Over half of S&P 500 companies reporting third-quarter results pointed to Hurricanes Harvey, Irma and Maria as harming their business, according to a Thompson Reuters analysis. Such companies include Costco, Harley-Davidson, Delta Airlines, Procter & Gamble, and insurers AIG and Travelers, which made large payouts for damage.
“Politicians sometimes argue that fighting climate change is bad for the economy. But climate change itself is bad for the economy,” writes global risk expert Dante Disparte in Harvard Business Review. By his estimate, the amount of economic output at risk from climate change, including the impact of increased human pandemics and natural disasters, will come out to $2.2 trillion through 2025.
That underscores the economic logic of taking steps to address climate change. The cost of staying the course will be far greater than what it will take to start making transformational changes now.
Can we innovate our way out of the disasters heading towards us? Emerging technologies offer hope. Here are some initiatives and investments being made by industry leaders.
There’s strong debate as to whether AI and automation will unlock new levels of human productivity and creativity, or simply put a significant part of the labor force out of work. Should the latter prove correct, the question becomes then what?
One, albeit controversial, solution gaining traction for dealing with a world without work is Universal Basic Income. The idea is that each person, regardless of need or skill level, is provided with a regular stipend—a baseline salary that can be spent on anything. By providing for basic needs, people could then use their time for other productive pursuits. That could be volunteering, or participating in the arts. It could be professional training. It’s hard to seek more education when you’re holding down a job, but with UBI you wouldn’t have to choose between paying rent and attending class— you could afford to develop the expertise to move into a new career.
Such a system is already being tested out with some unemployed citizens in Finland, while the Canadian province of Quebec has taken steps toward implementing such a system for all those unable to work.
It’s not about ending work—that need will always be there. Universal Basic Income means the population at large could do what it most wants to do, not what it needs to do to make ends meet.
With the guidance of our geopolitical thought-partner, DJ Peterson, here’s a quick tour of countries most likely to be talked about in 2018, and why they matter to business.
March 29, 2019 is tabbed as the date for Brexit, though the slow pace of negotiations means that the effective date of many changes is likely to get pushed back by years.
This means prolonged uncertainty about the rules of the game for doing business in the U.K. British business groups are already warning that more progress is needed to sustain confidence in its economy. Otherwise, expect a dip in 2018-2019.
The government is promising a bright future, but according to a recent RAND Corporation assessment, every post-EU relationship option mooted for the UK—along the lines afforded Canada, Norway or Switzerland—promises to depress Britain’s long-term economic outlook.
Other analysts, including Peterson, see long term growth from tech innovation and other creative industries, as financial services are bound to play a diminished role.
Led by the 32-year-old Crown Prince Mohammed bin Salman, Saudi Arabia is going through a political, social and cultural transformation.
The crown prince, with his Vision 2030 initiative, hopes to reduce the country’s dependence on oil and build a more innovative, entrepreneurial and inclusive economy.
One change has drawn attention in the West: In 2018 women will be able to legally get behind the wheel. Overturning the ban on female drivers is a civil rights victory for Saudi women, but the impact will be felt in the economy: women can now more easily enter the workforce, and the money previously spent on expensive drivers can be used elsewhere.
Can the crown prince continue the momentum? So far, he detained dozens who are perceived opponents to his policies, including princes, clerics and some of the richest men in the world. He also has the support of those in the younger generation who are fed up with the status quo.
2018 should provide more insight into whether the crown prince can consolidate enough influence to transform the conservative kingdom and provide confidence to foreign investors.
Russia’s presidential election in March of 2018 will be more of a coronation than a democratic event—the re-election of Vladimir Putin is a certainty. Meanwhile, headlines about election meddling, geopolitical power plays and secret meetings with the Trump campaign in 2016 burnish Putin’s stature at home.
The real challenges for Putin will be stamping out questions over the legitimacy of his election, and recovering the economy from a two-year recession. Russia is heavily dependent on oil revenue—firming global oil prices, along with improved domestic consumption, will give it a boost; but that may be a limited fix. While the Kremlin becomes more relevant geopolitically, Russia’s economy grows more peripheral.
Nationalism and fragmentation dominated the headlines in Europe in 2017, but the outcome wasn’t as fraught as anticipated.
Despite Europe continuing to face economic woes, nationalism, terrorism and migration pressures, the EU will hopefully come together to find solutions, and in turn ignite investor and business optimism.
Political developments in Latin America have largely been eclipsed by events around the world, but keep your eyes on the region in 2018. Presidential elections will be held in Mexico, Brazil and Colombia, shaping the direction of three of the region’s most important economies.
The North American Free Trade Agreement (NAFTA) negotiations are not going well between the U.S., Mexico and Canada and could result in a U.S. exit announcement in early 2018. The Trump administration is insisting on several “poison pill” changes, including minimum U.S.-origin content requirements for automobiles. Canada and Mexico have made it clear they will walk away if the U.S. maintains a hard line. The collapse of NAFTA will force manufacturers to rethink their complex supply chains, but don’t expect many manufacturing jobs to come back to the U.S. Mexico still holds a large advantage on labor costs, and the devaluation of the peso is likely to erase the impact of rising tariffs.
A U.S. withdrawal could also inject NAFTA into Mexican electoral politics, providing sustenance to the most populist and nationalist of the three main presidential candidates running in the July 2018 poll—Andrés Manuel López Obrador. His victory would represent a historic shift to the left. The broader U.S.-Mexico relationship would then be under pressure on both sides of the border, hurting not only trade and investment but also cooperation across a host of issues, such as investor protection, drugs and migration.
Further south, Venezuela’s economy is in tatters, despite having the world’s largest oil reserves, causing shortages of basic provisions—including food and medicines. Now the country is in the grip of a hunger crisis, with severe malnutrition hitting children especially hard. In 2016, there was a shocking 30% increase in the youth mortality rate.
The government’s response? Hide the details of this growing disaster. Should there be regime change, don’t expect a rapid improvement. A transition government will have the Herculean task of stabilizing and reforming an impoverished, polarized and armed country while placating debt holders abroad.
Now that American cities are in range of North Korean missiles, is it time to take preparations for a nuclear event seriously? Or is Kim Jong-un’s saber-rattling largely political gamesmanship, meant to preserve his grip on power?
The truth is, the more immediate threat isn’t to the U.S.; it’s to South Korea, from conventional weapons. There are 25 million South Koreans within range of North Korean artillery, ten million in Seoul, the capital. By one estimate, the North could launch 300,000 rounds of artillery into the South within the first hour of a conflict. South Korea and its allies would respond with overwhelming power, but not before untold damage could be done.
Then there’s the economic impact. South Korea accounts for a sizable chunk of the world’s production of liquid crystal displays (used in TVs and other electronics) and semiconductors (used in smartphones). The automotive and shipping industries are also significant. “If South Korean production was badly damaged in a war, there would be shortages across the world,” note economists Gareth Leather and Krystal Tan of Capital Economics Ltd.
South Africa has come a long way from the days of President Nelson Mandela and Archbishop Desmond Tutu.
A 2019 election will pick a successor to current President Jacob Zuma, whose time has been marked by economic stagnation and widespread corruption. Zuma had pushed for his party, the African National Congress, to choose his ex-wife, Nkosazana Dlamini-Zuma, as their candidate for the presidency. But in a move away from Zuma, the party voted in December to choose business- man and former political stalwart Cyril Ramaphosa as their candidate, and presumptive winner of next year’s election.
Ramaphosa’s victory owes in large part to his speaking out about corruption. His ties to business also suggest a different direction than the populist approach represented by Zuma and Dlamini-Zuma. His ability to limit corruption and improve the country’s economic outlook will do much to determine the fortunes of South Africa, as well as the southern African region as a whole.
A provocative piece by Thomas Gonzales Roberts in The Atlantic asks whether we should worry about a war in space.
Today, the heavens are crowded with satellites launched by China, North Korea, Iran, Russia and the EU. Yet there are few rules dictating these operations. “The United States, Russia, and China have not agreed upon a rulebook outlining what constitutes bad behavior in space,” writes Roberts.
That makes the United States, which has the greatest number of satellites in space, the most vulnerable. “If our satellites were attacked, we would be blinded, deaf, and impotent before we even knew what hit us,” says Tennessee Representative Jim Cooper. “Everything from ATM machines to Zumwalt destroyers would be paralyzed.”
Despite all these global disruptions, the business backstory for 2017 is that geopolitics did not really matter, says DJ Peterson. The world’s economic outlook is the rosiest in years and markets are buying high. The global economy is in the best shape it’s been in for some time, and tax cuts and deregulation in the U.S. have dramatically boosted business and investor confidence. The U.S., Europe and Japan are expected to accelerate in the coming year, China is holding strong and India is growing even faster. Corporate leaders have learned to keep their heads down and focus on their business.
A big question for them in 2018 is what to do with all the wealth they create as they navigate the seas of social and political unease.
What worked culturally and financially in 2017? Here are ZEITGUIDE’s picks of some of the successes that resonated most with fans and critics alike, as well as some of the inevitable missteps and flops.
The Horror, The Horror
“Get Out,” the directorial debut from Jordan Peele, and “It,” based on the novel by Stephen King, scored with critics and audiences, and marked a strong year for the horror genre in movie theaters. Perhaps viewers are looking for scares that rival the ones they see on the news each day.
Women Behind the Scenes
In a year that highlighted the contemptible treatment of women in Hollywood, two leading films made a big statement for putting more women in charge. “Star Wars: The Last Jedi” had an opening weekend that only trails “The Force Awakens” for the biggest of all time. Both “The Last Jedi” and “The Force Awakens” star a female lead, and the continued success of the series owes in no small part to the leadership of Lucasfilm head Kathleen Kennedy. Over at D.C., “Wonder Woman” grossed over $800 million worldwide, and had an opening weekend that was the biggest ever for a female director, Patty Jenkins.
Latin Culture in the Mainstream
Pixar delivered its usual magic with “Coco,” a film whose story revolved around the Mexican holiday Day of the Dead. The song of the summer, Despacito, introduced the U.S. to Latin pop artists Luis Fonsi and Daddy Yankee.
Music Business Boon
Streaming revenues helped the music industry achieve its best performance since the late ‘90s. Pacing the way were R&B and hip-hop, which led the industry with 25.1% of total consumption and 30.3% of all on demand streams—that’s the first time this joint category has led since Nielsen began tracking sales in 1991. This big year for the genre featured new releases from established stars Drake (“More Life”) and Kendrick Lamar (“Damn”), as well as emerging artists Post Malone (“Stoney”), Cardi B (“Bodak Yellow”) and SZA (“Ctrl”).
Series That Struck a Chord
“Big Little Lies” was conceived as a one-shot series, but its runaway success prompted HBO to sign on for a second season. The narrative of unspoken domestic abuse resonated in a year that revealed assault after assault on women, and the firepower of the acting made it one of the most talked-about shows of 2017. Hulu’s “The Handmaid’s Tale” made history when it became the first series from a streaming service to win the Emmy for Best Drama Series. The dystopian nightmare it presented, a world where women have no rights over themselves or their bodies, struck an eerie chord in 2017.
The Japanese artist brought her Infinity Mirror Rooms to Los Angeles, and then to New York at the David Zwirner Gallery. Audiences waited for up to four hours to spend 30 seconds in the installation, called Let’s Survive Forever, in which every wall and column were covered in mirrors reflecting seemingly endless silver spheres. In a second room, Longing for Eternity, visitors had up to a minute to stick their heads inside a hexagonal box filled with lightbulbs with changing colors—i.e., a life-size kaleidoscope.
Leonardo da Vinci
Leonardo da Vinci’s “Salvator Mundi” sold in November 2017 for a record $450.3 million to Saudi Arabia’s crown prince, Mohammad bin Salman, who will place the painting in the Louvre Abu Dhabi. Interest in Leonardo’s life has also experienced a renaissance with a new biography from author Walter Isaacson.
Small Toys, Big Bucks
LOL Surprise dolls continued the unboxing phenomenon. Each doll comes in a plastic ball containing seven layers, each filled with stickers, charms and other surprises, before getting to the doll itself. Kids don’t know which of the 80 possible dolls they got until they unwrap the entire thing. Also topping holiday wish lists were Fingerlings, robotic monkey toys that attach to your finger. These quickly disappeared from shelves, and resellers deployed bots to snatch up online inventory that was then resold at huge markups.
Need a break from the office? Meditation studios are popping up, offering a space to return to your inner focus. Pay $25 and do nothing but close your eyes and sit? It’s worth it.
No, no one (we know of) actually followed through on the threat to move to Canada after the presidential election. But it sure is a great place to visit. Travel & Leisure named it Destination of the Year. “It’s clear that travelers have become fully aware of the country’s exceptional blend of world-class cities and epic natural wonders, its rich culture and eclectic cuisine,” wrote the magazine’s editors.
“Lincoln in the Bardo”
George Saunders is an established writer, but until now he never tried his hand at fiction. His first novel, “Lincoln in the Bardo,” is an imagined account of Abraham Lincoln’s relationship with his deceased son. It became a bestseller, winning the Man Booker Prize. Why the strong reactions? Maybe because it shows how wide a gap there is between the man many consider our greatest president—and our current one. “Now you have … somebody who seems to delight in not learning, not growing, pissing people off, pulling in the boundaries of tolerance,” Saunders told the Financial Times. “So to me, it is almost a diametric opposition.”
Airbnb achieved a rare feat among startups: it had a profitable year in 2017. Bookings were up 50% from 2016, and up 180% in China. It’s one of the only US-originated startups to successfully break into the Middle Kingdom, due in part to a successful rebrand under a Chinese name, Aubiying. Airbnb is rumored to go public in the U.S. in 2018.
Digital Publisher Struggles
BuzzFeed missed earning projections and laid off staff. Mashable sold to Ziff Davis for $50 million after a $250 million valuation just the year before. Mic.com fought against claims from comScore that its audience had plummeted since 2015. With Google and Facebook commanding a plurality of digital ad spending, is there room for anyone else to live off the ad-supported model?
It’s not looking good on the gridiron. The NFL season opener experienced a 13% drop in viewers compared to last year, with declines on its first Sunday broadcasts on CBS and Fox. Has interest in the NFL peaked? The league has its work cut out for it. It needs to grow ratings even as people watch less TV; it wants players to be community pillars without protesting injustice; and it wants to make this game more exciting, even as investigations into the impact of playing such a physically violent sport raise the question of whether anyone should be playing it at all.
Two years ago, New York restauranteur Danny Meyer moved his dining establishments to a “hospitality included” pricing plan—a trailblazing attempt to reduce pay disparities between kitchen and dining room staff, and retain skilled line cooks lured by more affordable cities such as Austin or Asheville. Yet staff turnover has increased and anecdotal evidence points to a decline in morale. Longtime employees, meanwhile, have seen their salary advantage over junior counterparts erode. Competitors including Craft, Momofuku and i Trulli have all abandoned the experiment.
Snap missed targets on user growth and revenue, and took a $40 million loss on its camera-equipped sunglasses, Spectacles. The year validated questions raised during its IPO: Can Snap expand its audience—a notoriously fickle one—if Facebook-owned Instagram can copy and have more success with its innovative features?
YouTube dealt with brand safety issues throughout the year, as ads for major brands popped up just ahead of inappropriate videos. It also faced criticism late in the year from children’s advocacy groups saying that it’s Kids offering inadvertently contained unsafe content for young viewers, including adult-themed cartoons and videos about suicide and torture.
Blue Apron Blues
Blue Apron replaced its CEO after seeing its stock drop 70% after its IPO. With Walmart and Amazon now in the meal kit space, other entrants will be challenged to compete with the existing scale of both commerce giants.
2017 marked the end of the gluten-free craze for those not suffering from celiac disease. Earlier in the year, Harvard researchers published a report showing higher incidence of Type 2 diabetes for non-gluten eaters.
The Red Scare
Sales were up for red meat. Wine-drinking is at a record high. This despite 2017 studies that link both to increased cancer risk. But stress is at an all-time high, which is also bad for your health. Eat up and drink up while you can.
Fitness tracker maker Jawbone went out of business this year despite earning over $900 million in investment in its short lifetime. Competitor Fitbit saw its stock slide. After all, who needs a wristband when your phone, or Apple Watch, can do it for you?
A number of brands took big swings at being part of “the conversation” about pressing social issues—and whiffed. Pepsi’s embarrassing Kendall Jenner ad was exhibit A. With an Edelman study showing that 57% of consumers are more likely than not to buy from or boycott a brand based on its social or political stances, the talk turned from embracing activism to staying away.
We appreciate you going on this journey with us, as we continue to learn and anticipate the rapid forces transforming business and culture.
ZEITGUIDE 2018 was published on January 10, 2018, right before the start of the first quarter of the fiscal cycle. Consider this a snapshot of where we were on this date. We will next provide an update to how the narrative has evolved at the beginning of the next fiscal quarter, April 15.
Throughout the year, our cultural think tank will continue to provide you with our Zeitguidance through weekly newsletters, on social media and our presence at live events. Our goal is to help you achieve great success in what we are calling THE AGE OF CULTURAL TRANSFORMATION.
To conclude this edition, we leave you with the 4 main themes and provocations explored in the preceding content. Be assured we will continue to help you answer these questions throughout the rest of the year.
Workplace culture has been evolving for quite some time—but now it’s experiencing a revolution. Are you ready to become a part of it, or will it catch you unawares?
We are at a crossroads on how digital technology is impacting our lives, businesses and society at large. On the one hand, greater connectivity fosters convenience, speed and a better customer experience. On the other, such high reliance on the digital world makes us more dependent on it and vulnerable to hacks. Will we get sucked into its vortex, or find ways tech can impact us in positive ways?
Consumers are growing more powerful and fickle with each passing day, so how can we benefit from the current “phygital” landscape to better find them, know them, serve them, delight them, and thus, keep them?
So far, no crazy geopolitical event has disrupted our culture or economy, but the state of the world is now more precarious than anything most of us can recall. Who knows what a careless tweet, a bomb threat or a debt crisis could do to unravel us? We need contingency plans for every scenario, even those that once seemed unimaginable.
I would also like to use this opportunity to thank my team. Ralph Robinson, our Director of Research, Strategy and Content, has been with ZEITGUIDE for 3 years. Ralph was a true thought-and-writing-partner to me during the production of this annual cultural almanac. His understanding of the ZEITGUIDE tone, brand and purpose has been instrumental.
Karen Salama, our COO, keeps us all in shape and on track.
Ivy Tashlik, our graphic designer, brought the ZEITGUIDE to life on these pages.
Daniela Mendoza, who produced the illustration, totally nailed the big-picture concept of this entire product. As she put it so well, “In an age of cultural transformation, you have to accept it spiritually, and also be mindful of where our fast-moving world is going.”
Thank you to the rest of our research, writing and editing team: Robin Rauzi, Linda Dyett, Oliver Strand, Kristofer Porter, Olga Massov, Justin Sharon and Luke Robert Mason.
Thank you to our tech team at Cortex Creative.
A special thank you to my go-to strategists, Jay Strell and Scott Grossman.
A big thank you to our clients who engage us to create custom learning programs and content for them and their organizations. And thank you to YOU, our supportive readers, for trusting us in helping to accelerate your learning velocity.
Enjoy the ride of 2018!
– Brad Grossman
CEO & Founder, ZEITGUIDE
ZEITGUIDE is a think tank that partners with companies representing all industry verticals. Using FIND FILTER FOCUS—our signature methodology tapping a wide variety of primary sources and subject-matter experts—we study, advise and publish on what you need to know, as our constantly changing culture continues to impact business and society. Our mission is to keep leaders and their entire organizations culturally relevant, innovative and successful in the future. Learn more at www.zeitguide.com.