Small Business Labs

The Average American No Longer Exists

That the U.S. has become more multi-cultural is no surprise.  But the extent of the demographic changes that have occurred over the last few decades can be surprising.

According to an article in Advertising Age that anticipates the results of the 2010 Census, there is no longer an average American. Key quote:

"The concept of an 'average American' is gone, probably forever," demographics expert Peter Francese writes in 2010 America, a new Ad Age white paper. "The average American has been replaced by a complex, multidimensional society that defies simplistic labeling."

Examples of this include:

• Married couples with children account for only 22% of households
• White non-hispanics comprise less than 50% of the populations of Texas or California
• In the nation's top 10 cities, no racial or ethnic category describes the population majority

Going forward, the country will become even more multi-ethnic and multi-cultural.  80% of people 65 or older are white non-hispanics; but just 54% of children under 18 are white non-hispanics.  In 2010, hispanics will be the largest minority (50 million) and the fastest growing.

Ad Age has a more detail and projections in a white paper they have for sale. 

The Rise of Social Games

Social games are online games that are played on social networks like Facebook or MySpace, or on smartphones like the iPhone. 

One of the most popular is Zynga's Farmville.  It is a Facebook application that allows users to grow digital crops and sell them for virtual money - which is used to buy virtual items that help you improve your farm such as tractors and tools.  As silly as this game sounds, there are roughly 61 million players around the world. 

The game is social because all the players are logged into Facebook and users can choose to work together or compete with one another.  During my very brief Farmville experience, I neglected to water my crops.  But in an interesting example of the social nature of the game, a friend of mine noticed this and watered them for me. 

Besides Zynga, two other social gaming firms have popular games.  Playfish has 21 million users of its Pet Society game and Playdom has 16 million users for its Mobster game. 

The companies make money two ways.  The first is selling virtual goods to game players.  Using a credit card or Paypal, users improve their game performance by buying items that speed up play or make it easier to reach a higher level in the game. 

The other - and much larger - revenue stream comes from lead generation for companies advertising on the games.  The game companies offer virtual cash in exchange for game players taking offers from advertisers.  Sign up for a credit card or Netflix, buy ringtones or an energy drink and you get rewarded with virtual cash.  The company gets rewarded with real cash.

These companies already have substantial revenues and are growing very rapidly.  Not surprisingly, they are also rumored to be quite profitable (all three are private) - which is not surprising since they are selling virtual goods and trading fake money for real money.   

For more on social games see BusinessWeek's article on the App Economy or the Tech Crunch review of social game companies. 

When Do Megatrends Matter?

An interesting part of the trends business is trend identification is easy.  The hard part is figuring out when a trend will have broad impact and matter to businesses. 

iMedia Connection's article 5 Marketing Megatrends You Can't Ignore looks at megatrends that marketers should care about.  The author defines megatrends as:

"What's a megatrend, you ask? It's something big. I'm talking really big. Think of a giant unstoppable tsunami of change transforming society as we know it. Think global warming scale -- then apply it to mass human behavior. Think glaciers carving the grand canyon of consumer sentiment."

So megatrends are really big trends, as opposed to everyday trends like a fashion trend. 

The author lists 5 new megatrends he believes will transform society in the coming years:

• Mass collaboration is powering the new economy
• Constant connectivity in an on-demand world
• Globalization
• Pervasive distrust of big corporations
• A global sense of urgency to mix the problems of the modern world

What's interesting about these "new" megatrends is all have been talked about, at least in the trends community, for many years - even decades.  This does not mean the list is bad or late.  Trends take a long time to reach the point where they matter. 

One of the key indicators that a megatrend is starting to have broad impact is discussion and activity across multiple disiplines.  All of these trends have reached that point - and all of these trends matter or are starting to matter to small businesses. 

The Greying of the Workforce

Pew Research recently released a study on the aging American workforce.  The study echos other research showing that the workforce is aging and many older Americans want to work beyond the traditional retirement age.  Key quote:

"According to one government estimate, 93% of the growth in the U.S. labor force from 2006 to 2016 will be among workers ages 55 and older."

The report introduction has two charts that nicely summarize Pew's findings.  The chart below shows that over half of workers over the age of 65 work because they want to.

 

The second chart (below) shows the impact of the recession on retirement age plans.  Many boomers are now expecting to delay their retirement because of the economic downturn.

   

The recession has come at a bad time for the nation's 76 million baby boomers.  The early boomers are just past the age of 60 and don't have a lot of time for the financial markets to recover before they reach traditional retirement age.  Even younger boomers have seen their retirement assets and home values decline enough to be concerned about retirement funding. 

The good news is (well, at least sort of good news) many baby boomers want to work past the traditional retirement age.  The other goods news is boomers will be healthiest older generation ever with many boomers able to work productivity well past retirement age. 

Prior to the recession we were forecasting that over half of baby boomers would work past the traditional retirement age.  Because of the recession, we now believe this number will be higher.

Inc. on the Future of the Human Body

Inc. has an interesting article covering 10 medical technologies that promise to improve the quality of life and potentially reduce the costs of health care.

As the article is kind enough to point out, there are 78 million baby boomers and the oldest of this cohort are about to turn 65.  According to the article:

"Keeping all those bodies in good working order represents not just a challenge but an unparalleled business opportunity."

It is interesting to note that many of the technologies listed fall into a category called "human augmentation" by futurists.  These are technologies or drugs that improve or enhance humans.  This category includes everything from memory enhancing drugs to artificial limbs to genetic engineering. 

Not too long ago human augmentation was something that only happened in science fiction.  It is quickly becoming a reality.  

With health care spending close to 20% of U.S. GDP and growing, the opportunities in health care are enormous.  Longer life spans and the large cohort of aging boomers means even if we somehow get control of health care costs, demand for health care will continue to increase for at least several decades.

Demand for human augmentation will also grow to substantial levels and add to the size of the health care industry. 

 

Where the Young and Moneyed Are

Nielsen Wire, a useful and free source of research data, has an interesting article on the 10 U.S. counties with the highest percentage of what they call "young money" - those aged 25-34 earning $100k or more. 

The data in the article highlights two trends.  First, it illustrates the growing importance of Washington D.C. as an economic center.  16 of the top 50 counties with the highest concentration of the young moneyed are in the Washington D.C. area. 

The other cities with a major presence on the list are San Francisco, New York and Chicago.  In absolute numbers, New York county has the largest total number of those aged 25-34 making more than $100k (768,000) and San Francisco county is second with 332,000. 

The second trend is what the article calls "the densification" of young money in major metropolitan areas.  This means young people making $100k or more are increasing found in or near urban centers. 

This trend has been known for awhile, with Richard Florida's book Who's Your City covering it in detail.  Florida also has a blog called Creative Class that also covers this and related topics. 

As an aside, I think "densification" is a cool word.

2010 Technology Trends From the Burton Group

The Burton Group, a research and consulting firm focused on enterprise IT, has identified 3 executive IT planning trends for 2010.  

Burton's three are:

1.  The externalization of IT:  The growing number of options for using external IT resources, including cloud computing, is increasing opportunities to cut costs, streamline operations and increase business flexibility. 

2.  The consumerization of IT: The average person has become a more sophisticated technology user and wants choice and flexibility in their use of personal and group productivity tools. 

3.  The democratization of IT:  The rise and growing importance of social networks is changing the "ways of work." Gen Y is a driver of this trend.

While the Burton Group's research and forecasts are targeted at large corporations, they are also appropriate to smaller firms. 

Saving Time, Money and the Environment With Video Conferencing

Desktop video conferencing company Avistar has started an effort called Green Workday to promote telecommuting and the use of video conferencing to replace travel.

While it is clear that Avistar is not an unbiased source on this issue, the case for video conferencing is getting more compelling every day - primarily due to three drivers:

1.  Video conferencing saves time:  According to the Travel Industry Association of America the average business trip last 3.3 days and the average business traveler takes 5.4 trips per year.  Anyone who travels for business knows much of this time is wasted. 

I've been using video and web conferencing to reduce my travel and I love it.  Not only do I save time and increase my productivity, but I also get to eliminate travel stress and see more of my family. 

2.  Video conferencing saves money:  According to American Express, the average business trip costs $1,110 in T&E expenses.  It is pretty clear a video conference is a lot cheaper.

3.  Video conferencing is green:  The Nature Conservancy recommends video conferencing as one of their top 10 tips for saving the climate.  Jet's are heavy emitters of CO2 and produce 12% of all transportation related greenhouse gases.   Telecommuting also cuts the emissions associated with commuting.

Avistar has released a green calculator that allows a company to enter in data and estimate the time, money and environmental savings associated with video conferencing.  The numbers are quite impressive.

In addition to the above drivers, the technology behind video conferencing is much improved and cheaper.  Even across the Internet, video conferencing quality is quite good.  And, of course, corporate network quality is even better. 

We expect video conferencing to continue its strong growth.  With quality improving, costs down and the time, money and environmental benefits increasingly clear, video conferencing's time has come.

The Advantages of a 4 Day Work Week

The Utah State government has been experimenting with a 4 day work week by having 17,000 state employees work 4 10 hour days a week.  In return, they get fridays off. 

In addition to 82% of the employees saying they prefer a 4 day work week, other advantages include:

• lower energy and cleaning bills
• fewer commuters on the roads
• reduced greenhouse gas emissions
• employees reporting feeling healthier and more productive 
• a reduction in sick days

For more details and other examples, see Should Thursday be the New Friday in Scientific American.

Is the Paperless Office Finally Happening?

The paperless office is a great example of a popular technology forecast that has never come true.  For at least 3 decades futurists and tech forecasters have declared the imminent decline of paper due to digital technology. 

And for three decades they've been wrong.  Paper use - both overall and per capita - has consistently increased over the past 30 years.  There is even a book on this topic, The Myth of the Paperless Office. 

But after all this time, it appears that our use of paper may be starting to decline. 

According to the Business Week article The Revolution in How Printers Work, both consumer and business printing demand is shrinking. 

The article references an IDC study that says for the first time the number of printed pages in the U.S. will decline from 1.5 trillion in 2008 to 1.47 trillion in 2009. 

I know in our office we are printing less.  But despite this, our use of printers has gone up.  Scanning has become more important as has copying. 

We recently added several new standalone printers to replace older models and improve our scanning capability.  We chose the Epson Workforce 310 based on price, the paper feeder and the easy to use scanning (we know this because we already have a WorkForce 600 that we use as a wireless group printer). 

Our offices are hardly paperless.  But hopefully we were are at least headed in that direction.