Another postmodern signpost – banks

Here we go again.

A new Citi Global Perspectives & Solutions (GPS) report on how financial technology is disrupting banks provides another look for us into our rapidly ascending postmodern future. According to the report, mobile distribution will be the main channel of interaction between customers and the bank, which will mean a dramatically reduced need for bank branches. This will lead to the loss of 1.8 million employees between now and 2015, down a whopping 40-50% from its peak in 2007.

banks

An article in Business Insider referencing the report compares it to earlier projections:

That’s in line with former Barclays CEO Antony Jenkins’ recent prediction that pressure from the tech industry “will compel banks to significantly automate their business” and “that the number of branches and people may decline by as much as 50% over the next years.”

The CITI report suggests that as more and more transactions move to mobile, there will be a “rebalancing of staff from transaction-based roles to advisory-based roles,” but I don’t believe such jobs will pay as much. As such, I’m not certain this “rebalancing” will make much difference for those out of work.

This is downside of the Great Horizontal, when it’s viewed from a strictly modernist, top-down perspective. These bank executives know that reduced expenses mean increased profits, so their concern about employees is disingenuous, at best. They will be surprised when faced with the granular investment opportunities that will occur along the bottom of their top-down paradigm, and then the real postmodern disruption of the banking institution will begin. A modernist culture requires banks, but I’m not convinced they will be at all relevant as the twenty-first century moves along.

One thing is absolutely certain: making a living will be completely redefined, and the time to start thinking about that is today.

Our addiction to formulas is killing us

pattersonFormulas are the greatest gift and yet the greatest curse of modernity. In a culture where the wheels of commerce are greased through mass marketing, there is no greater path to wealth than a successful formula. However, when formulas are used to stifle creativity, the whole culture stagnates and eventually is ripe for disruption. The United States of America is stagnating, because we’ve steadily embraced this obsession with road maps over the last century. Rather than elect leaders to take us forward, we choose managers who can show us bullet points, formulas, and a spread sheet. The result feels safe but is actually stagnating and deflating, because it has no imagination.

Formula addiction is especially useless for institutions during times when equilibrium is lost amid chaos. In the 21st Century, we are in one of those times.

But formulas can also become counterproductive value propositions when people manipulated by formulas gain their (formerly) secret knowledge. One, formulas then produce a boring and predictable sameness, and, two, anybody is free to take up the same formula, thereby destroying the value of its former uniqueness. Add to this the corporate greed of formula exploiters, and suddenly a formula that used to “work” becomes a net turn-off to its customers. This is where institutions fail the most, for modernist hierarchical groups can’t afford to talk with customers.

Star Wars, for example, is a very successful Hollywood formula. The rarity of its episodes (there have only been 7 in the last 40 years) doubtless contributed to that success, but we’re about to get one Christmastime movie a year (including spin-offs) from Disney, because they like the profits produced by the formula. This means other movies won’t be made, because why should a corporation that’s in it for profit take a chance when all they have to do is copy a known formula for success, right?

It’s the same way with publishing, which is why James Patterson is the only author you see in TV advertising. The man is one giant formula gone to seed. Formula addiction contributes to failures with media, with education, and every aspect of our society, even the arts.

Beancounters love to copy. It’s why nearly every client I’ve had in broadcasting – when offered my ideas – has responded with, “Who else is doing this?” The inference is a reticence to experiment rather than copy something that’s already been tried and proven a success elsewhere. The ability to show broadcasters what’s working elsewhere is the core competency of TV news consulting, so my iconoclastic approach didn’t win any business for my employer. My evidence didn’t matter. I could show clients the damaging pathway of their existing strategy, and it didn’t matter. I could appeal to reason and present clever images to spark their imaginations, but it didn’t matter. None of it mattered, because their profit was based on known formulas, and despite evidence that the formulas wouldn’t ever meet their digital expectations, they still cling to them today. It will be their downfall.

Christianity is another tired cultural formula that’s being picked apart today. The Emergent or “Emerging Church” movement exploded on the scene as a “postmodern” alternative to stagnating orthodoxy, but it has slowed down considerably in the wake of scandals and other mischief. As one who writes of postmodernism, I’ve always felt both kinship with and distance from the leaders of this group, for they were using the basics of postmodern thought and tools to create a new hierarchy (and sell books). This is quite absurd by default, for horizontal chaos is the authority in a postmodern culture, not hierarchies.

Keep this in mind as you go about your lives in this century, for it’s on display everywhere. The left brain thinking that has governed life in the West for so long is crumbling under the weight of its disrespect for imagination.

UPDATE: Independent Contractors for Media

I’ve been writing about the inevitability of media companies moving to independent contractors for over a decade, and the signs continue to point in that direction. As revenues slow, cost-cutting becomes the only way to maintain margins, and the one-to-many need to wrap employees into one super brand will become less important in the profit-driven minds of managers. Besides, the Net – which is where everything’s going – is more receptive to personal brands than those of industry. So-called “social” media is where you’ll find the people formerly known as the audience, and big brands don’t belong there.

INSEAD’s Knowledge blog uses the Dutch model to make the statement: The Future for Labour Is Self-Employment, validating the ideas expressed in an essay that I published five years ago.

nonemployerIn 2005, we crossed a milestone in this country when the number of people self-employed went over 20 million. Data from the Small Business Administration put that figure over 21 million in the latest year for which the information was reported, 2008. By now, we expect that number is approaching 23 million, as more and more people — especially older people — set up eBay stores or find other ways to support themselves and their families online. These people are well-educated in the ways of the Web and don’t spend their marketing money in traditional ways. This figure bears watching, for while they live and work in our communities and neighborhoods, the money they earn comes from everywhere. They are a part of a new subset of our economy, and…it’s actually growing.

The economy is better than it was in 2008, and much of that has been due to the continued rise of self-employment. A Business Week article in 2011 put the number at 40 million and offered the advice that “To boost the economy, help the self-employed.” As an optimist, I believe this is an issue that Congress will have to address sooner than later. The article notes “By 2019, the self-employed will account for 40 percent of all American workers, according to the U.S. Bureau of Labor Statistics.” How can such a staggering number not include reporters, photographers and other practitioners of “the news” downstream?

Another Bureau of Labor Statistics article  published last year offers the below graph. Note that writers and photographers are already two careers with high self-employment rates.

Screen Shot 2015-04-11 at 10.18.49 AM

The times they are a-changing have changed

Steve Denning's newest bookHere are a couple of great lines from a Forbes article by Steve Denning, “Resolving The Identity Crisis Of American Capitalism:”

Once making money becomes the goal of a firm, companies and their executives start to do things that not only lose money for the firm but cause problems for the economy…

…Customer capitalism involves a shift (of) the focus of companies to delighting the customer and away from shareholder value, which is the result of delighting the customer.

The shift to customer capitalism doesn’t involve sacrifices for the shareholders, the organizations or the economy. That’s because customer capitalism is not just profitable: it’s hugely profitable.

The shift to customer capitalism does however require fundamental changes in management. The command-and-control management of hierarchical bureaucracy is inherently unable to delight anyone—it was never intended to. To delight customers, a radically different kind of management needs to be in place, with a different role for the managers, a different way of coordinating work, a different set of values and a different way of communicating.

The shift to customer capitalism also involves a major power shift within the organization. Instead of the company being dominated by traders and salesmen who can pump up the numbers and the accountants who can come up with cuts needed to make the quarterly targets, those who add genuine value to the customer have to re-occupy their rightful place.

What I love most about Denning’s approach is the use of the word “customer,” when many others would use the term “consumer.”

Burn this into your mind and into the minds of those around you: We have entered a new era. Period. It’s not on the horizon; we’re already there. Those who take a leadership position and beat their competitors to the punch are GUARANTEED the top spot in this new era’s business infrastructure. It’s all about the customer today. Making money is the end, not the means anymore. It has to be that way. The beancounters and manipulators are lesser players in the new status quo, because, as Steven Covey wrote many years ago, “You can’t talk your way out of something you behaved your way into.”

Umair Haque wrote in 2004 that in a networked world, the emphasis must be on the product, not marketing. Jay Rosen says basically the same thing in his brilliant thoughts about “The Great Horizontal” and “Audience Atomization Overcome.”

Dylan’s classic song noted that “The Times They Are A-Changin’,” but I’m much more inclined today to say that they’ve already changed. When the brightest business minds of the day — and I certainly include Steve Denning in that group (John Hagel, too) — shift their thinking from hard core making money to hard core customer service, it’s time to give up on an agenda that only defends the past.

This bubble stuff feels eerily familiar

Celebrating after the AOL Time Warner mergerI was sitting in a conference room at the hi-tech incubator BizTech in Huntsville, Alabama with hopeful eyes fixed on the TV. It was January 10, 2000, and on the screen was the press conference during which the AOL and Time Warner merger was announced. I remember it like it was yesterday. Here I was trying to raise a million dollars for my own start-up, ANSIR (A New Style In Relating), and these guys were talking about a merger valued at $350 billion. AOL itself was valued for the deal at $165 billion. It was then and remains the biggest merger in business history.

I remember the excitement and the wonder of it all. Little did we know it was all just part of a big market bubble, and I remember especially this provocative line from Time Warner CEO Gerald Levin, a very sane, important and knowledgeable businessman at the time.

“I accept that something profound is happening in the Internet space; I believe that. The new media stock-market valuations are real – not in every case, of course. But what AOL has done is get first position in this new world. Its valuation is real, and I am attesting to that.”

Levin’s attestation would later be proven wrong, and he would be forced out as the merged company shriveled under the blended brand. It is now a case study in why what Levin said is a bad reason to take such an enormous gamble. Walt Disney built his empire with what he called “the plausible impossible,” and I suspect that was at work here. Logic is great, the old saying goes, unless you begin at the wrong spot. Believing the valuations was what grew the bubble. Turns out that if it seems unbelievable, it probably is.

I’m recalling this today, because I’m feeling the same vibe as Facebook is about to approach Wall Street with an IPO valued at $100 billion, a valuation that’s roughly 100 times its earnings from last year. It sounds and feels oh so familiar.

So are we in a bubble? The always astute Mathew Ingram has a nice overview of the subject today that’s worth a read, although his conclusion tends to support those who feel we’re not.

So while some venture funds may be doing their best to inflate expectations and cash in on high valuations, that appears to be causing problems only at the small end of the startup pool — for now. Without any obvious signs of a public-stock mania that puts individual shareholders at risk, it’s hard to argue that we are in a 1990s-style bubble yet (although some critics fear that the new crowdfunding bill could accelerate the problem). Whether Facebook’s IPO triggers a broader inflationary atmosphere remains to be seen.

Dave Winer says we’re “definitely” in a bubble, and I believe him. I mean, look at the evidence. AOL’s model was based on a pre-Internet business model, one we know of as mass marketing. They could make tons of money, if they could just keep people inside their walls, a “walled garden” as many would later call it. When the fickle public disagreed, a new garden called MySpace sprang up. This social network could make money the same way, and for awhile, things looked good, until a young guy named Mark Zuckerberg took over with his Facebook. So here we are again, and the whole thing still hinges on the same value proposition, that Facebook can somehow keep those people within its walls. Old school media value, after all, is about controlling the infrastructure for content, whether its made by the New York Times, Zuckerberg or Joe Blow.

And for the last few weeks, we’ve been treated to justification and rationalization that Facebook is somehow different than its predecessors. The company paid a billion dollars for Instagram in what most (myself included) feel was an overpriced grab at real estate Facebook needed to be inside its wall instead of outside. But is Facebook substantially different that previous walled-garden approaches? Get real. It may have a few more bells and whistles and connections, but the core competency is the same. Web research and consulting firm BIA/Kelsey is hosting a webinar on the topic this week to probe this specific issue:

…questions continue to swirl about its (Facebook’s) actual worth and whether any company can justify becoming public at such a high value. The prevailing question: How will Facebook support this valuation…?

I don’t believe it can be justified, although lots of smart people who’ve doubtless done their homework will try to explain that it is entirely justified.

I’m sure Mr. Levin had done his homework when he made that infamous statement back in January of 2000, but at some point in a gamble, you must consider that you could be wrong, partly or as the AOL Time Warner deal proved, utterly and completely. So in addition to homework, what say we also consider common sense. We could also ask a few teenagers.

“Everybody’s switching to Twitter,” a 17-year old family member told me. She used to be a pretty regular user of social media, but her activity has been shrinking for the last year or so. She doesn’t need Facebook anymore, and besides, “it’s pretty lame.” Think about that for a minute. It’s AOL all over again.

“To everything is a season,” we’re taught. I wouldn’t bet on Facebook’s future if you gave me the money with which to do it.

An open letter to newsroom employees everywhere

The business of media has been a part of my life for over 41 years. I care deeply about it and especially the people who are in it for reasons of journalism. It is to you that this open letter is addressed:

    To Whom It May Concern:

The time to prepare for the collapse of the institution that employs you is at hand, and I thought it would be useful to lay out a scenario in which you come out on top when it happens. You may think I’m nuts or overly negative or a doomsayer or whatever, and that’s all right. I claim no special vision of tomorrow; I only follow the bigger trends as they relate to culture and our profession, and frankly, there’s just not a place for specialist newsrooms that pay living wages in the world into which we’re heading. You don’t have to believe that for it to be true, but it would be wise to at least consider the road ahead.

Most media companies are publicly-owned. In such cases, management has a fiduciary responsibility to the company’s shareholders. This is as old as the stock market, but a sweet return on investment for those shareholders is getting harder and harder to provide. That’s because it isn’t about revenue with these companies; it’s about growth, and in a fragmenting, disintermediated marketplace, the lack of growth is a real killer. Privately-held companies can absorb stymied growth somewhat better, but even the people who own these companies would like to see their compensation growing instead of shrinking. There are only two ways to produce growth: either increase revenue or reduce expenses, and these two challenges are not going away. Ask anybody who’s been in media management for very long, and they’ll tell you the growth is gone. Political advertising produces gold every other year, but there’s no guarantee this will continue and it’s a poor model to begin with.

Don’t get me wrong. There’s still a TON of money being made in the media world, but the industry has matured and the ROIs just aren’t what they used to be. There’s no sign either that things will ever be what they once were.

This reality exists in the background, as we go about our daily lives holding our collective breath. The TV upfront season is upon us, and there’ll be increases announced. The illusion will be that everything is fine. The NAB conference in Las Vegas next month will be filled with positive statements and sessions about how to capitalize on this innovation or that one. The NAA’s mediaXchange conference in Washington, D.C. next month promises that “media thought leaders” will “provoke and inspire attendees.” But managers in the industries of media know well that these are challenging times, and that the background threatens to become the foreground with each passing day.

So how does this impact you, and what should you be doing about it?

If you haven’t already done so, now is the time to begin building and refining your personal brand. The good thing about this is that you’re in charge, so you get to pick and choose how and how much you are promoted in the world of personal media. It’s not necessarily the size of the fish in the pond that will succeed tomorrow, although that’s always a nice advantage. What will be important is your niche and how valuable you are within that niche. This will produce value to the people who will want exclusive or first crack at the content you’ll create, regardless of the financial structure available. If aggregation and curation are the filters for media consumption downstream (they are), your place in the queue matters much more than which corporate brand you represent. You control this through the quality of your work and attending to the marketing of yourself. You can’t blame anybody else for success or failure here.

For lots of excellent and practical advice on personal branding, I highly recommend tuning in to The Personal Branding Blog. It’s a wonderful resource for the hows and what-to-dos of personal branding. Spending a few hours here will shortcut your learning.

This is incredibly important for you, because, like it or not, we’re moving to a scenario where you very likely won’t be employed directly by a media company. You’ll work as an independent contractor and sell your work in a variety of ways. It’s simply more cost effective for media companies to hire independent contractors than it is to carry the burdensome costs of employees, but that’s not the only reason you should be thinking this way. Telecommuting is one of the big trends in employment in 2012, and people who play in this world really, really like it. You — the currently employed — will be able to live a happy and successful life outside the bonds (that’s right) of employment. Absent the old, colonialist practice of “owning the help” through a paycheck and benefits, you’ll do better, more important work, because you’re doing it for yourself. You’ll enjoy working from your home. You’ll enjoy the growing tax benefits of the independence, and I’m convinced that insurance companies will happily create umbrella options that will work better for everybody. The whole world is drifting in this direction, and the benefits vastly outweigh the negatives, the chief of which is simply fear. Fear is tissue paper disguised as a brick wall. Never forget that.

Don’t get caught up in the details, because they can and will all be worked out. Don’t judge tomorrow’s opportunities by today’s seeming reality. Even if I’m wrong (I’m not), you can still benefit from the advice to hone your personal brand. Remember that in the world of work, the only person who really cares about you is you. Technology has given you the opportunity to better yourself through personal branding, and I strongly recommend you get busy. Don’t fall for the illusion that you just need to hang on for a few more years and everything will work itself out.

  • Internally insist that you do nothing for pay that doesn’t directly or indirectly promote you and your brand. Nothing. Don’t be a fool here and get yourself into hot water over this, so let it be an internal driver only. Don’t worry; you’ll find ways to accommodate your mandate. It simply needs to be top-of-mind.
  • Pick a niche, something for which you have a deep passion, because passion can literally take over when everything else fails.
  • The days of a mile wide and an inch deep are over. You must become a/the valued expert in the information niche of your choosing.
  • Deliver the goods. Be the best you can be at news and information (or whatever) for that beat. Let no one best you. You’ll establish yourself through your work, not what you say about your work. Spend the hours up front that it’ll take to relentlessly pursue the promotion of you, your work, and your brand, but above all, be known by and for your work.
  • Get off the market-hopping merry-go-round. Seriously. Put down roots somewhere you want to live, and start living! Roots are an enormous asset even today, but tomorrow their value will be incalculable. A part of owning your niche is geographic, for parochial attitudes and beliefs govern many issues.

Blossom where you’re planted, and Life will show you the rest. Knowing that your brand’s value will increase over time, plan accordingly. But do plan! Take a really hard look at what you want and what you need. If your needed level of compensation is above what the market will pay (be realistic here), give serious consideration to doing something else, but also weigh that against the possibilities you have as an independent contractor. Is your niche such that you can find additional compensation elsewhere? Take your time with this, for your future is at stake.

I believe that a Great Winnowing is at hand, when those who’ve chosen journalism as a way to make a difference are separated from those who view it as a channel to be a big shot. Humility is a wonderful human attribute, but one that’s increasingly absent in the people who’ve chosen this career path. This winnowing will relieve us of many of the ego-driven personalities found in those who are using their employers to see their names in lights. Again, it’s your work, not you, that matters in a meritocracy. Embrace that or find a different way to make a living. You will not get paid in media just by showing up, not in any capacity.

Be smart and begin to disassociate yourself with the industrial age concepts associated with modernity. Don’t put yourself in a position where you function as a virtual slave to the one who signs your paycheck. Put your dependence where it belongs and move it away from your “employer.” You want to be self-reliant? You can do it, and there’s no time like now to get started.

And to the managers who work in newsrooms, it’s in the best interests of your company to assist in promoting the personal brands of your employees. You know and understand the marketing value of the mass. You know that it works. You also know that there’s a commensurate value that comes back to you in promoting the people who work under your brand. Moreover, your reputation as one who advances the personal brands of those who work for you will get around. Don’t you want the top of the class working for you? Don’t you want the real experts in the community working for you? Don’t you want those people free to grow their own followers beyond the reach of your signal or your circulation? Of course you do, so do what you can to puff your own, for it’s the smart — although initially counterintuitive — business path to tomorrow.

Understand that there are personal brands with “media” minds already growing in your community, and that some of them (even one) might provide very useful content as an independent contractor already. Begin looking at systems and compensation programs that will benefit everyone.

Also to the managers, begin studying and examining the processes and systems you’ll need to create a genuinely virtual newsroom. Embedding journalists in the community makes much more sense today, because the need to work from a centralized location is increasingly unnecessary. The cloud is the center today. More time in the field produces results, from both quantity and quality perspectives. Time is, after all, the new currency.

To managers in sales departments everywhere, personal branding applies profoundly to you and your team as well, and the same rules, responsibilities and opportunities that exist for news people are also there for sales people. People buy from people, and the net provides a unique connective thread that we didn’t have just a few years ago. We’re seeing some areas where car sales people, for example, are buying ads at the hyperlocal level in order to raise their profiles in the community. We should be doing the same things — and more — with and for our people.

When is all of this going down? Gradually, at first, perhaps in the next 3-4 years. Unless something positive and dramatic happens with the economy, 2013 is going to be an absolutely brutal year for the industry (again), and all of this will accelerate. Don’t wait for somebody else to do it; YOU do it, regardless of your position within the whole.

Again, you don’t have to believe any of this, but my money’s on the folks who take advantage of what’s at their fingertips in building for themselves a better chance when the winnowing accelerates. Others will sit back and wait for more obvious signs that they’ll have to do something. By then, however, it’ll be too late. Nobody can rest on their laurels. Nobody.

Please accept this in the spirit with which it’s intended, and good luck.

Terry