2.) Trends to Watch in 2010 – The Coming Legal Marijuana Era

Posted by admin on December 21st, 2009

6 marijuana 728w2

Legalizing Marijuana
With the hippie generation moving into the seat of power, many of the hard-line arguments for keeping marijuana on the same banned substance lists as heroine and cocaine are fading into the history books.
The challenge all along for those wishing for outright legalization of pot has been that it doesn’t exactly fall into the “good for you” category, parents raising small kids are afraid of it, and it would remove a substantial income stream from the very powerful justice system.
With local, state, and federal governments at odds over how to classify it, marijuana has become a rather confusing issue on many levels. Even though marijuana remains banned federally, the Obama administration has decided to end federal raids on pot-sellers in states that have legalized medical marijuana.
Indicators clearly point to an outright legalization of marijuana in the near future, but there will be some interesting twists and turns along the way.
Consider the following data points that are now forming clear signposts towards legalization:
• 13 states now allow for the legal use of medical marijuana with a doctor’s prescription and several others are considering it.
• Attitudes are changing. A recent Gallup poll showed 44% of the population supports legalizing marijuana, up from 25% in 1995.
• With groups collecting over 200,000 signatures for upcoming ballot issues in 2010, California will be voting on marijuana becoming a taxed and regulated substance similar to cigarettes and alcohol.
• On July 22, 2009, Oakland, CA became the first city in the US to approve a tax on marijuana.
Pro-legalization groups such as NORML argue that the U.S. has been squandering vast amounts of money and manpower chasing and locking up marijuana users, both of which could be used for more important things.
Many other consumer groups have begun to side with legalization. In 1997 Consumer Reports issued a statement saying that, “for patients with advanced AIDS and terminal cancer, the apparent benefits some derive from smoking marijuana outweigh any substantiated or even suspected risks.”
Marijuana is an industry with proven demand waiting to spring to life. However, the vast majority of people cannot envision it as a respectable industry with most conjuring up images of raucous teen parties, dealing with unsavory drug dealers, and smoking reefers.
The fact is that most stoners are terrible writers, so the biggest advocates are the worst communicators.
For marijuana to become legal on all levels, the fledgling industry will have to go through an extensive makeover with professional advertising and PR people entering the mix. One person will need to emerge as the voice of the industry, the rock star of pot, a credible authority who makes it onto the TV talk shows and leads the movement.
In the end, it will be less about the legalization and much more about the framework established to unleash the opportunity.
PREDICTIONS:
• Within ten years marijuana will emerge as a staple at most night clubs and parties.
• As part of a rebranding effort it will no longer be called marijuana, but some other name invented by Madison Avenue.
• After all the hype wears down, it will prove to be a much smaller industry than most have feared or anticipated. While still a lucrative field, the majority of money will be made on ancillary services.
OPPORTUNITIES:
The early-stage opportunity will be to reinvent the industry. The people who shape the industry will also help define the kinds of opportunities that it creates.
With a growing aversion to “smoking,” the style and form of marijuana will need to be shifted into edible and drinkable products.
The resulting industry will create thousands of new jobs in agriculture, processing plants, transportation, distribution, marketing, advertising, training, certification, regulators, and many more.

With the hippie generation moving into the seat of power, many of the hard-line arguments for keeping marijuana on the same banned substance lists as heroine and cocaine are fading into the history books.

The challenge all along for those wishing for outright legalization of pot has been that it doesn’t exactly fall into the “good for you” category, parents raising small kids are afraid of it, and it would remove a substantial income stream from the very powerful justice system.

With local, state, and federal governments at odds over how to classify it, marijuana has become a rather confusing issue on many levels. Even though marijuana remains banned federally, the Obama administration has decided to end federal raids on pot-sellers in states that have legalized medical marijuana.

Indicators clearly point to an outright legalization of marijuana in the near future, but there will be some interesting twists and turns along the way.

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1.) Trends to Watch in 2010 – The End of Golf

Posted by admin on December 20th, 2009

6 golf 876 w

Golf has hit a brick wall, a veritable trifecta of bad luck.

The End of Golf – Rest assured, golf won’t be going away anytime soon, but the current industry slump is only the beginning of a much larger trend.
Golf has hit a brick wall, a veritable trifecta of bad luck.
When you combine the fact that there are too many golf courses, declining revenue streams, record number of golf course bankruptcies, the implosion of the game’s only superstar, Tiger Woods, and an emerging youth population who would rather play Wii Golf than real golf, it becomes easy to see red flags getting raised instead of American flags at many of the nation’s country clubs.
The number of U.S. golfers peaked in 2005 at 30 million. Experts are estimating that most golf courses have lost 30% to 50% of their worth in the last two years. So far only 114 of the nation’s 16,000 or so golf courses have closed in the first 9 months of 2009, according to the National Golf Foundation. But that number masks the thousands currently operating in Chapter 11.
Most importantly, the financing has dried up. A bankrupt golf course doesn’t lend itself to any other development, and this is particularly true if the course is in the middle of a residential development. The neighbors won’t allow it. In short, golf courses are simply bad collateral.
PREDICTION:  Within the next 10 years over 25% of all golf courses will fail.
OPPORTUNITY:  There will be two significant opportunities arising from golf’s misfortune. The first, a bargain hunter’s dream of being able to purchase a first-class course out of bankruptcy for pennies on the dollar. With substantially lower debt and a more efficient business model, many golf courses will once again survive and thrive.
The second opportunity will come to those who devise a logical new development concept for golf courses. Courses come with vast primo landscaped acreage, and a set of neighbors who will torpedo anything that somehow diminishes the natural beauty of the community. It is a challenging environment, but one with huge upside for the right business model.

Rest assured, golf won’t be going away anytime soon, but the current industry slump is only the beginning of a much larger trend.

When you combine the fact that there are too many golf courses, declining revenue streams, record number of golf course bankruptcies, the implosion of the game’s only superstar, Tiger Woods, and an emerging youth population who would rather play Wii Golf than real golf, it becomes easy to see red flags getting raised instead of American flags at many of the nation’s country clubs.

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iTunes U – The Rise of the 800 Pound Guerrilla

Posted by admin on December 18th, 2009
In April 2009 Stanford University announced that its iPhone Application Programming course had broken the 1 million download mark from the Apple iTunes site. And it did it in record time – less than seven weeks.
The course is nothing more than a series of classroom videos being taught by a team of Apple engineers. But the price was set at that very attractive price point of “free.” One catch though, only people who were enrolled at Stanford University received credits for the course.
With over 200,000 courses from over 200 different institutions to pick from on iTunes U, and all of them free to anyone who wants to take them, Apple is quickly becoming the world leader in courseware aggregation. The obvious question to ask is “what is Apple’s motivation for doing this?” and “how do they intend to make money?”
History of iTunes U
Shortly after Apple opened its iTunes Store in April 2003, the company started receiving requests from colleges to post courses on the site. Initially the requests were directed to the podcast section, but as the numbers grew, Apple devised a strategy for adding an entirely new division.
iTunes U was formally in May 2007. The service was created to manage, distribute, and control access to educational audio and video content for students within a college or university as well as the broader Internet.
In October 2008, Apple hired Dr. Joel Podolny, the Dean of Yale University’s School of Management, to run what was quickly becoming known as Apple University. This move, while very curious to most Apple observers, signaled a much farther reaching strategy than what most were anticipating.
The Missing Pieces
While Apple is doing a good job of aggregating existing courses from existing institutions, they haven’t made any moves to open the floodgates, and we are talking serious floodgates here, to engage other potential courseware providers.
In our way of thinking, communications and search have been the two dominant forms of use for the Internet. However, the one application that could become far more dominant that either of those uses is education. What’s at stake is the creation of the largest and most influential site on the Web.
Here’s what’s missing:
* Easy Authoring Tools: Currently the realm of online course creation has been reserved to learning professionals, not topical experts or passionate amateurs. In much the same way Wikipedia started, a simple online system for creating new courses could cause a tsunami of new content to flood the Internet. Some will be good, but most will be below average. In the middle will be a few shining examples of unique new ways to present course content, and these will be the ones that the pave the way for the next wave.
* Courseware Standards: Existing college courses are too long, too dry, and too boring. While we may not be able to create standards that prevent boring content, we can certainly do something about the length. All courses need to be standardized around 60 minute (one-hour) course units. Standards can also be created for testing comprehension, student records, transcripts, pricing standards, and a variety of other variables that will help streamline an emerging new system.
* Profiling Engine: The system needs to know the student before it can recommend courses. Profiling software has been used for many things and can be easily adapted for this. The trick will be to imbed learning objects that can read the learning style and adapt the course to the precise level of student’s skills, knowledge and confidence.
* Recommendation Engine: After the completion of every course a recommendation engine needs to list several options for the next course, but the options need to be closely synced with the whims and desires of the student.
* Feedback System: Courseware authors need to have a real-time understanding of student engagement, confidence, achievement, and enjoyment.
* Credits and Certification: Every course that is completed needs to be accompanied with a system for marking the progression of the student. And the system needs to lead to levels of accomplishment as certified by the organization that bestow them.
* Courseware Monetization System: If iTunes can change $1.29 for a three minute song, they can easily charge $1-$5 for a one-hour course. Money can be parceled out to the course author, distribution system, recommendation engine, profiling engine, record-keeping company, and possibly a few more. A little friction in the system will help deter the spammers and those intent on disrupting the system.
Apple has dabbled some in the courseware authoring arena with the Woolamaloo Automator, but it’s still a far cry from the fully integrated modality agnostic, language agnostic system that we see coming. You can see a more extensive look at the future of colleges and universities.
Colleges are on the verge of a significant transformation, and Apple is currently in the driver’s seat. But as we have seen so many times in the online world, new players can spring to life over night, and one that is positioning itself as one of the key players is a little startup in Denver called SatoriEDU.
Newspapers, travel agencies, yellow pages and record labels are all industries that have been greatly affected by the Internet, and each of them tell a different version of what may lie ahead for colleges.
The current system was designed for slower times and a different culture. In a world going through major upheavals in technology, culture, and lifestyle, our current college system has continually rearranged the deck chairs, but has shown virtually no ability to grasp the bigger picture. The next couple years will indeed be fascinating to watch, and for Apple, it’s currently theirs to lose.

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In April 2009 Stanford University announced that its iPhone Application Programming course had broken the 1 million download mark from the Apple iTunes site. And it did it in record time – less than seven weeks.

The course is nothing more than a series of classroom videos being taught by a team of Apple engineers. But the price was set at that very attractive price point of “free.” One catch though, only people who were enrolled at Stanford University received credits for the course.

With over 200,000 courses from over 200 different institutions to pick from on iTunes U, and all of them free to anyone who wants to take them, Apple is quickly becoming the world leader in courseware aggregation. The obvious question to ask is “what is Apple’s motivation for doing this?” and “how do they intend to make money?”

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The Future of Colleges & Universities – Part Four

Posted by admin on December 16th, 2009

Future of Colleges and Universities 543 Disruptive Scenarios

NOTE: The following is the fourth in a four part series title: The Future of Colleges & Universities:  Blueprint for a Revolution

Most of us have great difficulty translating ideas of what the future holds into useful stories and concepts. For this next section, I have chosen to describe the upcoming changes in terms of scenarios. Each gives a brief description of one element of change, explaining how it will unfold and what the likely consequences will be.

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The Future of Colleges & Universities – Part Three

Posted by admin on December 15th, 2009

Future of Colleges and Universities 552

Disruptive Technologies

NOTE: The following is the third in a four part series title: The Future of Colleges & Universities:  Blueprint for a Revolution

Even though learning technologies will ascend to the realm of the virtual world, there will still be interface devices that connect digital learning with the human mind. In this section I will focus on five disruptive technologies to give you a sense of the ingenuity about to be unleashed. There will be far more, perhaps hundreds of new categories, and thousands of such devices.

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The Future of Colleges & Universities – Part Two

Posted by admin on December 14th, 2009

Future of Colleges and Universities 545

The College Experience

NOTE: The following is the second in a four part series title: The Future of Colleges & Universities:  Blueprint for a Revolution

Colleges and Universities carry with them considerable inertia. They have long-standing traditions, huge alumni networks, solid brands in the minds of consumers, and are more durable than corporations with many having lasted centuries and still going strong. Most have integrated themselves into their respective communities with multiple funding tentacles, many with massive State-funded budgets, and others with intense fundraising operations that extend around the world.

People attend colleges for many reasons including a desire for a better job, a sense of personal accomplishment, to improve their resume, status and prestige, build relationships, and to have fun. However, all of these reasons boil down to one overarching motivation – a quest for a better life.

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The Future of Colleges & Universities – Part One

Posted by admin on December 13th, 2009
Future-of-Colleges-and-Universities-542

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The Future of Colleges & Universities: Blueprint for a Revolution

NOTE: The following is the first in a four part series title: The Future of Colleges & Universities:  Blueprint for a Revolution

A recent article in the Washington Post began with the statement that today’s college students “may be part of the last generation for which ‘going to college’ means packing up, getting a dorm room and listening to tenured professors.”  By using these three aspects of college life – packing up, dorm rooms, and tenured professors – the writer was able to clearly illustrate the ritualized process of traditional university education, setting the stage for major changes coming in the very near future.

In 2007 I released a paper on the future of education, culminating an 18 month effort to probe the likely evolution of a system that has become emotionally linked with many of our country’s and the world’s deficiencies.

I talked about what I saw as the coming iTunes form of education where courses from anywhere in the world could be easily created through a templated process, sent to a central distribution site, and easily distributed to students around the world. At no time had it occurred to me that iTunes (Apple) may be one of the key players in making it happen.

While the paper generated huge amounts of interest, the predictions of massive change happening within the following two years proved to be a few years too optimistic. That said, a revolution is coming.

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The Coolest Profession on Earth – Next Generation Agriculture

Posted by admin on November 17th, 2009

Future Farming 483s

Next Generation Agriculture
The coolest profession on earth
When people think of farming, they typically conjure up images of a tractor cresting a hill billowing large plumes of exhaust into the air. However, recent news of a system for channeling tractor exhaust into the dirt, so carbon fumes are plowed into the soil eliminating the need for fertilizer, has been gaining significant attention. The win-win arrangement of turning a known pollutant into a soil enriching additive, combined with the prospects for significantly lower operating costs from the elimination of fertilizer has many farmers buzzing. The technique, developed by Canadian, Gary Lewis of Bio Agtive, is currently in trials at 100 farms around the world.
Stories such as this are happening with ever greater frequency as the slow process of farming adapts to the fast world of communications, and ideas that used to take years to ferment, now begin to snowball within days, even hours. The stage is being set for an unprecedented new generation of farming driven by ever greater levels of precision, relevancy, and control, the likes of which will transition the once primitive profession, typified by long grueling hours in the sun, into a hotbed for techno-geek agrarians packing handhelds and data readers trained to monitor far more than markets, yields, costs, and moisture content.
As with all industries, there are many micro-forces driving the changes ahead. But viewing them through the lens of these three progressing trend lines helps us grasp the interwoven nature of these sometimes competing drivers.
Trend Line #1 – Precision
We have witnessed the transition from corn sold by the bushel, to corn sold by the kernel. Bags are now being shipped in units of 80,000 kernels with approximately 24,000 to 30,000 kernels planted per acre depending upon soil and moisture variables.
A typical ear of corn holds 800 kernels. Since one kernel of seed will grow into a stalk with more than one ear on it, the yield per kernel can be as high as 1 to 3,200 or more.
Accurate GPS systems enable farmers to plant far more consistent crops with steering-assist features on tractors to navigated near-perfect patterns in the fields, and planters automatically shutting off seeding tubes if any overlap occurs.
Spraying systems for herbicides and pesticides also employ GPS trackers that cause the shut-down of individual spray nozzles to maintain optimum consistency.
Emerging tech companies such as the Denver-based Moedus and their LiDAR (Light Detection and Ranging) scanners with accuracy to 1 mm, have the potential to not only radically improve GPS accuracy, but also add 3D imaging characteristics to the data.
With this level of precision already existing, it becomes inconceivable to most that we may be striving for even greater precision. However, borrowing a term from my Oxymoron Dictionary, not only will we be pushy for greater accuracy, the stage is being set for “explosive precision.”
Smart Dust:  The idea of smart dust was introduced by Kristofer S. J. Pister at the University of California in 2001. Smartdust has been conceptualized as an RF powered network of tiny wireless micro-electromechanical systems including sensors, robots, or other devices, installed with wireless communications, that can detect anything from light, to temperature, to vibrations, to chemical composition, etc.
With the same equipment used to sow seeds, smart dust will be “planted” into the soil to begin the monitoring process. Farms that are imbedded with smart dust will essentially be glowing with real-time information.
Beyond the notion of simply monitoring a piece of land, smart dust will become the interface to the soil. Scientists are now studying the use of magnetism at the nanoscale to monitor and control biological activity, at the cellular and even the single-molecule level. By emitting everything from magnetic fields, to sound waves, to signal frequencies, farmers will begin to experiment with micro-controls to alter plant characteristics, ward off pests, and enhance crop production.
Higher protein levels needed? Just dial it in.
Problem with borers or weevils? Just adjust the frequency to chase them off.
First generation smart dust will be quite expensive and each particle will be carefully tracked. But a few innovation cycles later, the price will plummet, and over time their use will become ubiquitous.
Trend Line #2 – Relevancy
Can better food create better people? Will a better food supply lead to healthier, stronger, better thinking people?
These are exactly the type of questions driving the relevancy issue. How can we make the food we eat sync up with our own unique metabolism? In short, how do we make food more relevant?
Consider a model that already exists – in the human-food interface. Metabolism is a term used to describe the various chemical reactions that take place in every cell of the body. Every metabolism is different. With our rapidly improving ability to read and monitor a person’s metabolic reaction to the food eaten will cause the agriculture industry to evolve with great precision around the tiny niche demands of consumers.
Smart Foods: Over time the food industry will create feedback loops and demand signals similar to human metabolism. Science will create real-time reactive sensors in our bodies that can read everything from the fluctuation of brainwaves, to micro changes in heartbeats, to gastro-digestive processes, to variations of skin perspiration rates. This constant monitoring of hundreds if not thousands of bodily nuances will translate into healthier food choices and, more importantly, choices tailored specifically to an individual’s needs. Sensors will be designed to interface with a hyper-segmented supply chain to meet the needs of a hyper-individualized consumer.
To put this into perspective, a typical home in 2030 will have a personal monitoring system that generates a grocery list based on the anticipated needs and stated desires of each person living there. Food orders will be placed either automatically or with as much control as the person desires. The order will go to the local food supplier, who will be in constant communication with regional suppliers, and they will be in constant communication with the food producers.
The entire demand-driven supply chain will be wired to the needs of the end user.
Much like the seemingly endless iterations of coffee at Starbucks, food from restaurants and fast food outlets will come in over a million variations. Customers will be able to order a 13.2 percent fat cheeseburger with 2.7 grams of potassium and 3.6 grams of calcium, coupled with a hint of almond and banana flavoring, on a sesame seed bun with exactly 47 sesame seeds on it.
This may seem like a ridiculous level of specificity. But in an automated society, the process will become seamless and invisible to the end user. It will be commonplace for a person to simply order their particular cheeseburger. Medium for me, please – with only one dill pickle, no lettuce and a tomato.
Farmers will become expert at producing “jacked-in” food stocks with countless variations, managed through computerized processes designed to manipulate the end results. Controls will be exercised along a broad spectrum from environmental conditions such as light, water, and oxygen levels in the air to genetic manipulation according to approved safety guidelines.
The regulatory system for insuring ultra-safe food supplies will be constantly monitored through automated data feeds at each step of the supply chain.
By 2030, a farm or ranch will adopt technologies that leave today’s operations far behind. Pushing the envelope even farther, the ultra high tech farms of the future will generate exotic half-plant, half-animal vegetation as well as crystalline plants, air plants, and generic non-species plants designed for post-harvest flavor and nutrient infusions.
Trend Line #3 – Control
Every business is more easily managed with better control of the variables. Farming is an industry with far too many variables to yield consistent results.
First, the weather variable. It is extremely rare to hear a farmer say, “I had the perfect amount of rain this year.” It’s either too hot, too dry, too wet, too cold, too windy, lightning, tornados, hail, or something else.
Second is the pest variable. Everything from birds, to insects, to army worms, to moths, to gophers, to other unimaginable little critters raising havoc on a crop.
Beyond that are soil variables (mineral composition), climate variables (length of growing season), and distance variables (shipping costs to processors, distributors, and consumers).
Farmers are constantly searching for better ways to gain control of the hundreds of variables that currently exist.
Silo Farming:  The precision we use to monitor consumer demand, coupled with the increasing need to control variables, will begin the transition to ultra-precise farming operations in highly controlled environments. Today’s surface farming is both imprecise and subject to extreme external influences, making it less than ideal to supply the consumer marketplace of the future.
Since traditional greenhouses are expensive to build and inefficient to operate, farming in the future will go vertical.
Several experimental vertical farming projects like Dr. Dickson Despommier’s at Columbia University are in various conceptual and experimental stages of implementation. However, most designs are far too expensive to compete economically with existing ag operations.
The concept of vertical farming that I envision, has been framed around the idea of creating both below-surface and above-surface silos serving as vertical greenhouses for the production of food. These cylindrical shaped silos with either layered or honeycomb lined walls filled with rich top soil have the ability to convert a small surface area on land into a much larger surface area on the walls of the silos.
The entire production area in these silos will be managed with a robotic arm that travels up and down a central shaft performing all necessary tasks of planting, weeding, watering, harvesting, and post-harvest cleanup.
The central vertical shaft will double as both an optical shaft through which sunlight will be channeled to provide natural illumination for optimal plant growth as well as the primary rail for the robotic arm. Sunshine will be collected via a solar concentrator from the above-ground portion of the silo.
Special hybrid crops will be created for these confined space environments. Short-stalk corn, personal sized fruits and vegetables, and fragile seed crops are but a few of the ag options coming for silo farms.
With water generated from an ongoing evaporation system that extracts moisture from the air, and external wind generators for power, these self-contained farming silos can be constructed in desolate climates, deserts, on rocky ground, and some of the most unforgiving places on the planet. This, coupled with the fact that it creates a year around farming operation on greatly expanded surface area, has the ability to increase the earth’s ability to produce food by a thousand fold.
As we monitor the trend lines of precision, relevance, and control, the future starts to come into focus. Next generation farming operations will create unprecedented new levels of opportunity, making future agribusiness professionals some of the most highly skilled people on earth, and the envy of the executive class.
Farming is about to become the coolest profession on earth.
About
Thomas Frey is the Executive Director and Senior Futurist at the DaVinci Institute and currently Google’s top-rated futurist speaker.
Because of his work inspiring inventors and other revolutionary thinkers, the Boulder Daily Camera has referred to him as the “Father of Invention”.  The Denver Post and Seattle Post Intelligencer have referred to him as the “Dean of Futurists”.
Before launching the DaVinci Institute, Tom spent 15 years at IBM as an engineer and designer where he received over 270 awards, more than any other IBM engineer.  He is also a past member of the Triple Nine Society (High I.Q. society over 99.9 percentile).
Thomas can be reached at dr2tom@davinciinstitute.com or 303-666-4133

Future agribusiness professionals will be some of the most highly
skilled people on earth, and the envy of the executive class

When people think of farming, they typically conjure up images of a tractor cresting a hill billowing large plumes of exhaust into the air. However, recent news of a system for channeling tractor exhaust into the dirt, so carbon fumes are plowed into the soil eliminating the need for fertilizer, has been gaining significant attention. The win-win arrangement of turning a known pollutant into a soil enriching additive, combined with the prospects for significantly lower operating costs from the elimination of fertilizer has many farmers buzzing. The technique, developed by Canadian, Gary Lewis of Bio Agtive, is currently in trials at 100 farms around the world.

Stories such as this are happening with ever greater frequency as the slow process of farming adapts to the fast world of communications, and ideas that used to take years to ferment, now begin to snowball within days, even hours. The stage is being set for an unprecedented new generation of farming driven by ever greater levels of precision, relevancy, and control, the likes of which will transition the once primitive profession, typified by long grueling hours in the sun, into a hotbed for techno-geek agrarians packing handhelds and data readers trained to monitor far more than markets, yields, costs, and moisture content.

Read the rest of this entry »

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The Hornet Nest Theory

Posted by admin on September 23rd, 2009

The Hornet Nest Theory
An atypical test for spotting financial system failures
In nature, the Asian Giant Hornet is a predator that feeds off bees with the goal of obtaining the honey bee larvae. One of these hornets can kill as many as 40 honey bees per minute. It takes only a small amount of these hornets a scant few hours to exterminate the entire population of a 30,000-member hive, leaving a trail of severed insect heads and limbs, effectively destroying their food supply. Without the natural barriers of distance and geography, hornets would wipe out the entire bee species.
Many areas of the business world demonstrate a similar “win at all costs” business model even if it goes so far as to destroy their customer base.
The core premise of the Hornet Nest Theory is that wherever this is allowed to happen, it is a clear sign of system failure.
Getting Stung
Recently I was on a trip to Phoenix to attend a National Speakers Association Convention. While driving back to where I was staying I was unknowingly stung by one of their photo radar cameras and issued a speeding ticket for $182 for going a mere 12 mph over the speed limit on the Interstate.
It gets better. The ticket arrived a full six weeks after the violation. Up to that point, I had no indication that I had exceeded the speed limit.  I was far more concerned about “where I was going” in an unfamiliar city than “how I was driving”.
The notion of traffic tickets being used to promote safer driving habits was totally abolished from the equation by the sheer length of time between infraction and receipt of ticket. To me this was nothing more than a government sanctioned money-spinning operation split between the local government and the company that installed the radar cameras.
Understand that I’m not saying I didn’t exceed the speed limit, only that the legal violation seemed only distantly tangential to the rights it granted them to fleece my pocketbook.
Much like walking too close to a hornet’s nest, I was stung, and don’t plan to go back.
Regardless of their self-justifying posturing promoting a so called safer society, as a consumer, I’ve chosen to stay away from that particular hornet’s nest. I was planning on attending a second conference in Phoenix in November, but I’ve now decided not to go. The “Big Brother” style speeding ticket was the deciding factor.
I am using this example to illustrate the fact that government and private enterprise are concurrently competing directly for the same consumer dollars. Because of the extra penalties levied by insurance companies, court costs, and others (my rental car company tacked on an additional $10 fine), the issuing of one questionably-intentioned traffic ticket can result in a significant blast zone with long-term consequences and ramifications.
While I haven’t found any studies on it, I feel confident that cities who aggressively enforce traffic violations and other petty enforcements are the same communities where businesses struggle. Aggressive enforcement of any kind scares people. Would-be customers have a long memory and will travel considerable distances to avoid getting stung.
The Hornet Nest Theory
The Hornet Nest Theory, simply stated, is that people tend to stay away from places where they get stung. If they don’t or can’t stay away there is something clearly wrong with the system that governs it.
The late Citi Group Chairman Walter Wriston stated that capital, when freed to travel at the speed of light, “will go to where it is wanted and will stay where it is well-treated.”
Any municipality that develops the moniker of “speed-trap city” is putting their local businesses at a distinct competitive disadvantage. Each consumer represents a self-guided revenue stream, and given the freedom to self-direct, their decisions will be heavily influenced by ”where their money is wanted and where they feel well-treated”.
It is basic human nature to avoid the horrors of any hornet nest.
But the Hornet Nest Theory applies to far more than just a few ticket-happy municipalities. It applies to virtually all aspects of business.
Consumers and their money flow to businesses that make them feel welcome and give them great value.
System Failure
One area that best demonstrates a Hornet Nest system failure is the seemingly masochistic relationship that banks and credit card companies have with their customers.
These financial institutions are notorious for repeatedly stinging their customers with a plethora of fees and penalties to the point of cannibalizing entire bank accounts, effectively killing their base of customers.
Why then don’t customers flee from this kind of hornet-stinging customer abuse? The answer is simple. They feel trapped! With the heavy handed influence of credit bureaus and the rigid requirements for opening a new bank account, many are left with no other options. They either endure the financial pain of the hornet stings or go without, and the “go without” lifestyle is far less appealing.
From a business standpoint, it easy to understand why companies want to make it difficult for customers to leave. As an example, phone companies insist on two-year contracts to offset contract incentives, such as free phones, and to minimize churn. Real estate brokers often insert penalties and other encumbrances into their contracts to ensure that buyers won’t walk away from a deal.
It’s also easy to understand why companies will finesse their penalties and fees to a point where it becomes a major source of income. Rest assured, customer loss is closely monitored, so they are keenly aware when the pain threshold has been pushed too far.
In the financial world, penalties and fees are an effective way to circumvent usury laws and boost the bottom line. Often times this can amount to double, triple, and even quadruple the rates normally allowed by law.
For certain, banks and credit cards are not the only industries creating win-lose relationships with their customers. Pawn shops, payday loan services, rent-to-own, and check cashing services are just a few of the many players who work on this lopsided end of the customer relationship spectrum.
Customer Abuse
During the past few months, credit card companies have become increasingly blatant in their treatment of longstanding customers. Most have increased interest rates to the current maximum of 29%. In less than a week, five credit card companies sent us letters saying they were raising rates, sometimes as much as doubling, our previous interest rates. For people like us who routinely make payments on time, they’ve resorted to other tactics such as changing the due date for payments to five days earlier than the previous due date. Late payments not only trigger a penalty, but also gives these hornets an excuse to ratchet interest rates to the legal maximum.
Credit card companies are currently waging an all out war against “shallow pocketed” individuals, and this includes most of us. Anyone who cannot instantly pay off their remaining balance is subject to attack. Consumers simply have no recourse other than to pay the exorbitant amounts or file bankruptcy.
While congress is currently making noise about curbing this kind of excessive behavior, any actions they take will come far too late to prevent the “hornet nest” carnage currently being left in the wake of these attacks.
Probable Futures
Clearly what seems to be missing from the current equation is any kind of checks and balance system. So the question remains, how do we create a system that allows for the free flow of customers and their money to places, as Walter Wriston suggests, ”where their money is wanted and where they feel it is well-treated”.
As a futurist my work involves looking at system failures and the resulting breaking points. Left unimpeded, any win-lose system such as this will result in an industry that will inevitably self-destructs.
These are the all-important breaking points that will force us to go a new direction. When the pendulum swings one way, it will invariably swing back. So what are some likely scenarios?
In our rapidly morphing business world, change is being driven by three primary disruptive forces – disruptive public policy, disruptive business methodologies, and disruptive technology. Here are four possible scenarios that may trigger major changes.
Scenario #1 – Redirecting the Revenue Streams from Penalties – (Disruptive public policy)
Currently the law allows for individual bank and credit card companies to act as the judge, jury, and executioner for each “customer violation”.
What if the companies that imposed the penalties were no longer able to receive any benefit from them? What if the revenue streams from penalties and fees were redirected to another entity such as a credit reporting agency, conflict-resolution company, or governmental regulatory body.
One can easily imagine that if the U.S. House & Senate Banking Committees legislated this one simple rule change stating that companies could no longer received any direct benefit from their penalties or fees that the fees and penalties would instantly begin to evaporate.
Scenario #2 – No-Bounce Bank Account – (Disruptive business methodology)
Moore’s Law has dramatically changed the timing of transactions. Transaction technology has continued to speed up and the traditional time float has been squashed to zero. We have entered an era of real-time transactions. And along with real-time transactions comes other opportunities less obvious to financial communities whose thinking has been based on established linear ways of doing business.
Our primary tool for conducting financial transactions in the future will inevitably be convenient handheld devices such as the iPhone, the PRE, Android, or Blackberry. We will not only use them to make payments and deposits, but also have a running account balance available at any given moment. The devices will be equipped with multiple layers of security, such as biometric scanners, to insure every transaction is safe.
When the time float is reduced to zero and risks of transaction failures are all but eliminated, a natural progression points to a disruptive business model I refer to as the “no-bounce bank account.” Financial institutions, including banks and credit cards, have long been criticized for the excessive penalty fees they charge for overdrafts, late fees, and over limit fees. With real-time transactions, a renegade banking company could quickly differentiate themselves by introducing a no-penalty consumer-friendly bank account and establish an entirely new standard for the industry.
This type of service could greatly increase a bank’s customer base to include many of the un-banked and under-banked opening entirely new markets for banking services.
Scenario #3 – Bank-on-a-Chip – (Disruptive technology)
Currently banks serve as intermediaries. They are the in-between institution governing our access to money and managing the distribution of it.
At the heart of the banking industry lies a payment system that has been difficult to design around. Bank accounts serve as the central repository for personal wealth and offer a convenient way to issue payments.
Beyond our paper-based currency, the entire monetary system operates as nothing more than digital bits and bytes. Where we store our own bits and bytes should be up to us. So the logical question to ask is, “What if the money wasn’t stored in a bank, but rather on a chip, a chip that we control with multiple backup systems that talk to a central controller to insure system integrity? And continuing with this line of thinking, what if the payments could be made directly from person to person with no bank involvement?”
Current efforts in developing peer-to-peer payment systems are leading us towards this kind of “no-bank banking concept”.
Yes, there would indeed have to be a trusted institution in the background to insure the integrity of the system, but it could conceivably be something other than a typical banking operation. If, for example, Google and Wal-Mart were to team up and offer “no-bank bank accounts” and deposits were privately insured and considered safe by the consumer, the migration of customers would be swift, and millions of traditional bank accounts may well evaporate over night.
The primary motivation behind this movement is once again the feeling by customers that their money is no longer “well-treated”.
Scenario #4 – Foreign Competition
In a recent survey we asked the question, “If one of the following organizations began issuing their own currency, which one would you trust the most?” The question was followed by a list of 15 organizations including Visa, Harvard University, Llyods of London, Apple Computers, the State of California and several more. It was interesting to see that the two that rose to the top were Google and Wal-Mart, viewed in this context to be America’s most trusted brands.
Since it is becoming increasingly unnecessary for customers to live in close proximity to their bank, an obvious question to ask is, “Will foreign banks be able to make a serious play for U.S. customers.” It is true that Swiss and European banks have a long history of serving American customers but this is still a tiny percentage of the market.
Perhaps a better way to ask this question would be, ”Can any foreign bank garner sufficient trust to seriously compete for a large-scale migration of U.S. customers?”  The answer that we give today will most certainly shift along with technology and the political landscape.
To make serious inroads, a foreign competitor will need to offer a substantially better alternative to the current U.S. based companies.
Final Thoughts
Shown in this light the Hornet Nest Theory becomes a valuable tool for spotting potential weaknesses and failure points in our current skewed systems. Done correctly, a well-executed structure for the banking system could dramatically improve the economy. Money would flow more efficiently with less friction to contend with.
Realizing that we will never be able to create the absolute perfect system and that the human element is equally as difficult to design for as around we are left knowing that people are both the greatest problem and the greatest solution. However, whenever the imbalance is great enough, people are driven to action, and in this environment the actions will happen swiftly. So just how close to the nest are we?

Hornet Nest 728

An atypical test for spotting financial system failure

In nature, the Asian Giant Hornet is a predator that feeds off bees with the goal of obtaining the honey bee larvae. One of these hornets can kill as many as 40 honey bees per minute. It takes only a small amount of these hornets a scant few hours to exterminate the entire population of a 30,000-member hive, leaving a trail of severed insect heads and limbs, effectively destroying their food supply. Without the natural barriers of distance and geography, hornets would wipe out the entire bee species.

Many areas of the business world demonstrate a similar “win at all costs” business model even if it goes so far as to destroy their customer base.

The core premise of the Hornet Nest Theory is that wherever this is allowed to happen, it is a clear sign of system failure.

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business trends, future scenario, new strategy, powerful idea 10 Comments »

When Smart Grid Meets Smart Home

Posted by admin on August 30th, 2009
When Smart Grid Meets Smart Home
What’s Missing?
Way back when guys were sporting white leisure suits and “mod” hair styles, I enrolled in my first programming class. In 1973, programmers were introduced to the far less glamorous world of FORTRAN working with machines that churned out punch cards.
Like electricity, computer power was a precious commodity that was closely metered. As a more mature industry, electric power had become a staple of modern living. Even though it was moderately priced, change was coming. The era that began with lighted dance floors and disco balls closed out with oil prices soaring. The cost of electrical power increased and forced what we now see as a constant tension between escalating prices and the customer ability to pay for it.
Meanwhile, the cost of computer power has steadily been approaching zero. Computer processing costs have dropped so much that Wired magazine’s editor Chris Anderson describes it as “too cheap to meter.”
At the DaVinci Institute, the diverging trajectories haven’t gone unnoticed. We began to ask why?
Falling prices have transformed the computer industry. Business users lived through many iterations of the computer before the shifting tectonic plates of change culminated in the introduction of the personal computer. At this point, the home user entered the picture. Faster, smarter and affordable computers began to attract more users, and the industry in turn was all too happy to oblige with more speed and power until the trend reached a tipping point. In a few short years, the industry exploded and suddenly everyone had a personal computer. Then came the Internet and a communication explosion was underway. In mere decades, the PC turned the world on its ear.
While all this was going on, electric power seemed to be left out in the cold. There was no new interface for power and light. The power business moved so slowly it put shareholders to sleep. While focused on ways to generate more power, no one in the industry even pondered creating a better interface. As a consequence, electric power is the same stagnant business it was a hundred years ago. We’re still connected by copper wires to the same lackluster grid our grandparents knew.
With homeowner’s growing dissatisfaction, and an eye on the possibilities stemming from a vibrant online computer industry, a similar scenario awaits the power industry. Despite its leader’s disinclination to change the “status quo,” innovation will be driven from the bottom up. And, innovation will be driven by the creation of a better interface.
Queue Up the Smart House
The smart house has been around long enough that Microsoft has remodeled its entry into the market several times. An interesting aside: There is not a single desktop to be found in the latest version. Microsoft has assumed that computing power, mesh networking and thin LCD and OLED screens will become so cheap and ubiquitous that residents will be able to interact with computers from anywhere in the home. Wallpaper that will double as video displays is currently under development at Phillips. Others in the game include such names as Motorola, LG Electronics, Cisco and Pulte. The state of the art smart home has remote controls for lights, smart security systems, and thermostats that automatically adjust heating or cooling to the arrival and departure of home occupants – all a mere glimmer of what is possible.
Much is in store for electric customers. Homes will soon become an interface to more magic. Not only will the smart home become a key interface for electric power, there will be more sophisticated monitors and controls for water, sewer, trash, air, entertainment, work, security, transportation, and more.
The technology trend will transform the home, creating what will approximate an intelligent organism, a living, breathing life form. Driven by the need to push down utility costs, home innovation will incorporate the hastening advances coming from sustainable energy, electronics and computing.
Using the metaphor of the home as an intelligent organism, it becomes easy to translate it into a form of biomimicry by applying biological principles to it:
Intelligence:  Advancements will bring unimagined developments to the smart home. A critical feature driving this change will be intelligence – intelligence that will spread throughout the home environment. We will begin to see intelligence built into appliances, walls, and systems. What will intelligent power look like? How will home life change with the use of intelligent water? When intelligence is added to sewage and trash, how will that make our lives better?
Aware:  Awareness is another leap forward. The living house must be aware of its surroundings, its content, and everything flowing in and out of its structure. Awareness will be achieved by adding sensory and monitoring capabilities that extend capabilities both externally and internally. Further miniaturization of circuits will enable more exotic technologies that will profoundly affect our day to day living.
Biological Systems: Appliances will imitate body organs, serving distinct purposes, but carefully crafted to coordinate and serve the function of the larger organism, the home. The outer walls of a house already can be thought of as human skin as it shields us from the elements. But what is in store is an extension of the metaphor. Walls will be sensitive to temperature changes and react to external changes. Walls will be constructed to become alternately porous and protective.
Symbiotic:  A living home will form a symbiotic relationship with its occupants. This kind of home offers a superior environment that will enhance human performance and efficiencies, managing the inflows and outflows from both a resource-conscious and human-centric perspective.
So how do we translate the esoteric qualities mentioned above, into an interface that we can begin to implement today? The answer: inputs, outputs, and storage mechanisms.
Inputs, Outputs, and Storage Mechanisms
The smart home will flourish in the same way software applications multiplied. The early PCs were created as a platform for user experimentation. Through this stroke of brilliance, legions of savvy Internet users were invited to come and play. Apple’s iPhone echoes this same phenomenon. You can find a different iPhone application for any of a thousand different uses. Expect to see a platform developed for home-owner experimentation.
Traditionally intelligence has flowed from top down and most products reflected this very narrow view of the world. Today’s innovators have shattered that assumption. Designers are now the end-users who take the clay of technology and mold it into something more personal, functional and sometimes entertaining. Imaginations that appreciate the public’s diverse individuality have become the engines of innovation. People are now allowed to decide for themselves what is important and what is not.
Expect further innovation to follow consumer-defined product demand. Demand will also come from aging Boomers who want automated environmental controls, security systems and lighting. The components of the smart home interface will include:
1. Inputs – Anything that flows into a home is an input. This list includes diverse elements such as electricity, water, air, information, odors, seismic vibrations, rodents, insects, and, of course, people.  The ability to detect, observe, and manage inputs is an essential piece of the smart home equation.
• Information Inputs – Every item that enters a home has an information component associated with it. Our ability to create, digest, and manage the information is an essential ingredient.
o Sensors – Sensors in the walls of a home detect deficiencies. They can find insulation gaps, termite infestation, or other structural maladies. All can be better managed and controlled. Sensors can be made to detect changes in food and water supply as well as air quality.
o Monitoring – In addition to “sensing” where problems are at the time they occur, the smart home will have the capability to monitor and observe changing conditions over time. Electric usage monitors, water and air quality monitors.
• Electricity – Electric power is the lifeblood of households. Electric needs will be supplied partially or wholly by appliances, such as solar and wind generators, added by the homeowner.
• Water – Most of the water that enters a home is never actually consumed. The vast majority of water passes down the drain.
• Air – The quality of air that moves in and out of homes has been subject of much research, but remains largely a mystery. Several million variations of air quality exist within a range dubbed acceptable, and that includes interior air that is a habitat for harmful bacteria and microorganisms.
2. Outputs – This is a forgotten goldmine. Monitoring outputs is every bit as critical as monitoring inputs. In addition to water and air leaving a house, there is valuable information that can be gleaned.
• Electricity – Colorado is at the center of a push toward sustainable power, power that can be produced on rooftops and towers. Many consumers already have the ability to sell power back to the grid.
• Water – Water that leaves a home can provide a wealth of data about the functional characteristics and environmental qualities inside the home.
• Trash and Sewage – Every physical item that comes into a home eventually leaves, most often in the form of trash or sewage.
3. Storage – Self-sufficiency comes with our ability to manage the gaps between usage and availability.
• Power Storage – In-home generation systems such as wind or solar units become far more useful when power can be stored from one day to the next.
• Water Storage – Currently water is being staged for each home in the pipelines leading up to the house. An in-home storage system enables us to monitor and manage supplies more directly.
• Information Storage – Adding terabytes of data storage to a home seems relatively inconsequential, but the key is adding intelligent systems to manage the information over an extended period of time.
• Food Storage – Virtually all homes have capacity for food storage. However, our ability to manage and monitor food supplies is woefully lacking.
Closing Thoughts
Current efforts to drive the smart grid forward only make sense if the grid interfaces with smart homes. The smart-grid in its present stage of development is a wired utility coming into the home. At the heart of the smart grid is its ability to form an intelligent network.
A network is an interconnected system of things or people. In general, a network is a system created to improve efficiency and connections. Networks tend to be simple-minded organisms that function well in their simplest form.
Going off the grid has been a tantalizing goal of many, including myself. However, off-gridders perhaps have forgotten about what life will be like being disconnected. The on-grid vs. off-grid debates are certain to continue for many years to come as there are valid arguments on each side. The economy already is playing a role. As demand for new homes remains weak, expect the primary demand for a new interface to come from existing homeowners.
The smart home interface will be a challenge of engineering, a challenge of design, and a challenge of inspiration. Perhaps most important, it will be driven by the desires, motivation, and purchasing power of passionate, well-meaning end-users.

Smart Home 575

Way back when guys were sporting white leisure suits and “mod” hair styles, I enrolled in my first programming class. In 1973, programmers were introduced to the far less glamorous world of FORTRAN working with machines that churned out punch cards.

Like electricity, computer power was a precious commodity that was closely metered. As a more mature industry, electric power had become a staple of modern living. Even though it was moderately priced, change was coming. The era that began with lighted dance floors and disco balls closed out with oil prices soaring. The cost of electrical power increased and forced what we now see as a constant tension between escalating prices and the customer ability to pay for it.

Meanwhile, the cost of computer power has steadily been approaching zero. Computer processing costs have dropped so much that Wired magazine’s editor Chris Anderson describes it as “too cheap to meter.”

At the DaVinci Institute, the diverging trajectories haven’t gone unnoticed. We began to ask why?

Read the rest of this entry »

business trends, future scenario, new strategy, powerful idea, prediction, technology trends 5 Comments »
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