THE FOCUSED MIND

For home builders the message from the market is clear: it is now go multi-generation, go micro, or get stuck with investory.

With one quarter of 25-to-34 year olds living with their parents, multi-generation homes are becoming more practical for many families.  In the U.S. as a whole, the number of 25- to 34-year olds owning homes dropped 12 percent from 2005 to 2010. Fifteen percent in that age group can’t find work.

Some home builders are responding to the new marketplace.  Last year, Lennar Corp introduced a “Next Gen” model, calling it a “home within a home” – houses that feature a completely separate unit with its own kitchen, bathroom, bedroom and living area, and its own entrance, attached to the main house via a double door similar to adjoining hotel rooms. Said Lennar’s western U.S. president, “We can’t build them fast enough,” while noting that most buyers were primarily families with either grown children or elderly parents living in the attached unit.

While some houses are getting larger to better accommodate more family members, there is also a demand for smaller homes, and in some cases, much smaller.  In 2008, for the first time in at least 10 years, the average square footage of single-family homes under construction significantly shrank, from 2,629 square feet in the second quarter to 2,343 square feet in the fourth.

Those are mansions, however, compared to the new properties popping up in cities like San Francisco, Boston, and New York City. The new “micro” apartments being built in these cities range between 225 and 350 square feet.  A 24-unit, four-story building in San Francisco’s South of Market (SoMa) neighborhood, will be comprised of 300-square foot apartments, which come fully furnished with compact features such as a dining-room table that folds out into a bed.

As we have recently written in the context of what we call the consumer’s new Values Hierarchy, individuals and families are looking for homes closer to work, shopping, entertainment and other forms of civil and social engagement.  They will also be looking for the kind of connectivity that multi-generational homes can provide.   The demand is there, can home builders fill it?

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Last year, sales of environmentally friendly products in the U.S. surpassed $40 billion, including $29.2 billion on organic foods and $2 billion on energy-efficient light bulbs.  Meanwhile, in a GfK survey, 93 percent of consumers said they had changed their behavior to conserve energy in their household.   This all looks good for things going green.  Yet, recent surveys suggest that consumers, while interested in environmentally-friendly products, are not willing to pay more for them.

A different study of the U.S. food supply has learned that 40 percent of American food goods are wasted after being brought home – that is, American homeowners let 40 percent of the foods they purchase spoil before they use them or get thrown away as excess.

As attitudes change about the utilization of resources, perhaps, homeowners, while cutting back on energy use, will also start consuming a better part of the 40 percent of the foods they waste.

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Stop smoking and talk about yourself?   Lose weight by talking about yourself?  Quit Alcoholics Anonymous and, right, talk about yourself.  What is happening here?

Between 30 and 40 percent of everyday conversation consists of people talking about themselves.  For online social media, that figure jumps to 80 percent.  Evidently, without our counterparts in personal, real-world conversation being able to roll their eyes, groan or even say “stop” (in various ways, both polite and not-so-polite), we humans will just talk on and on about ourselves, a reality that has led to more than 1 billion people on Facebook, constantly updating what they have to say about themselves, and to Pinterest “pins,” providing users a way to visually “talk” about themselves.

A recent Harvard study revealed that sharing any information with others triggers a pleasurable neurochemical reaction in the brain but that sharing with others information about the self triggers an even larger shot of the neurochemical dopamine.  For some time, scientists have known that such a physiological shot of pleasure accompanied winning food and having sex and that similar effects came from acquiring money. But this was the first study to prove that the body was particularly pleased and therefore offered larger rewards for something researchers called “self-disclosure.” That certainly gives a vote of confidence for the “quantified self” movement, which encourages individuals to monitor their activities and vital signs and to share their data with others.

Meanwhile, other researchers have focused on what they call “addiction transfer.”  For instance, many patients who have undergone gastric bypass surgery to suppress eating and control obesity have subsequently become addicted to something other than food, such as drugs, alcohol, cigarettes and the like.  Pursuing that curiosity, scientists at Brookhaven National Laboratory in New York and the U.S. National Institutes of Health in Maryland have discovered that the body has specific receptors to control the release of dopamine.  Many people have fewer such receptors and thus are able to get addicted to activities that prompt the brain to unrelentingly release the neurochemical.  In other word, when denied access to one kind of addiction that triggers a dopamine fix, those short of the control receptor transfer to something else that can supply the pleasure shot.

And so, now that we know talking about ourselves can trigger the dopamine shot, researchers might have inadvertently discovered another kind of “talking cure,” the name typically applied to psychotherapy. The 80 percent of social-media conversations that focus on “self-disclosure” suggest that this new form of talking cure might be successful.   Is society really OK with a wild spread of social-media addiction?  Facebook stockholders certainly hope so.

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A recent report from Eurodata TV Worldwide, looking at 11 of the top international territories for U.S. television shows, found that, among the top-performing series during the 2010-11 season, only 13 percent were from the U.S., compared with 19 percent a year earlier. Further, in four of the biggest international TV markets – the U.K., Spain, Italy and Turkey – there no longer is a single U.S. show among the 10 top-rated scripted series.

Despite the grand indulgence and self-congratulations of last week’s Emmy awards show, Hollywood may have a huge problem on its hands. The U.S. Census Bureau valued license fees for international TV rights at $3.3 billion to American producers in 2010. The top-performing series in international markets remain NCIS, Criminal Minds and the CSI franchise – all dating from the early 2000s. Can Homeland, Breaking Bad and Boardwalk Empire – all winners of “best” Emmys last week – replace these international hits?

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Georgia kindergarten teacher Deanna Jump has earned more than $1 million selling lesson plans on a peer-to-peer site called TeachersPayTeachers.  Since the site launched in 2006, 26 different teachers have made more than $100,000 each.  The American Federation of Teachers (AFT) launched its own site this summer, Share My Lesson, where teachers can share free lesson plans.

This is great for the teachers trying to make ends meet during a time of reduced funding to education, and another example (following eBay, Craigslist, Kickstarter, Etsy and others) of the power of peer-to-peer sales.  Schools facing budget squeezes might want a piece of the action, though.  A New York Federal court ruled in 2004 that schools have a right to some of the profits, if teachers produced marketable lesson plans as part of their regular work, even if it was on their own time.  Will schools start suing some of these teachers for their share of the lesson-plan profits?

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Call rewrite! Bring in the editors!  Marketing needs a redo.  The movie and publishing industries, which have relied heavily on historical patterns to guide their market segmentation, have been taken by surprise, and they need to rethink their markets.

First, for some time, the movie industry has targeted its filmmaking power at the young, yet last year, movie attendance declined among every demographic group (including the young) but one:  those over 60, which actually increased.  Second, the publishing industry has long looked to Baby Boomers to lead all segments in book buying, and they have…until last year.  In 2011, book-buying leadership slipped away from those born between 1945 and 1964 to those born between 1979 and 1989, Generation Y.

What an inversion of stereotypes! Book-buying young people and movie-going elders, really?  Looking a little deeper, the younger cohort’s book buying makes sense because they are buying books for school and are purchasing digital books. Yet that younger age group has never taken the book-buying lead in the past.  Also, looking a little deeper into the over-sixty segment of the Boomers, the reality that they have money and time, and, in fact, indulged deeply in movies in their past suggest that they are returning to what once drove their media interests.  They are indulging their movie-going whims just as the younger cohort turns to digital technology to satisfy their move-viewing needs.

These realities have taken both industries by surprise, and as a result, every movie studio has an “older demographic” film in the pipeline, and every publisher is looking for another title to sweep across the youth market.  Marketing messages will adjust accordingly.

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Our intelligence suggests that society currently lacks a grand narrative, an embodiment of its ideals, values and goals.  Historically, such narratives have given cohesion and direction to society, acting as an accepted vision of what society and its members seek.

We are monitoring the development of a new grand narrative for society, one that so far seems to go against a basic element of the now discredited former grand narrative: namely, “bigger is better,” in home size, drink size and so on. The KFC commercial below shows that the adverising world is catching on to the fact that the “bigger” mantra of the old grand narrative is losing appeal. Meanwhile, we are watching closely to keep track of the next grand narrative as it develops.

http://youtu.be/v5PXqnUeDuE

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During a massive U.S. Navy demonstration in July, dubbed the Great Green Fleet, the military flew 71 aircraft powered by biofuels.  The next generation biofuels came from camelina, algae and waste oils like cooking grease and chicken fat.  These biofuels can be used in regular ships and jets without modifying the engines because they are hydrocarbons with an identical molecular structure to fossil fuels.

The Secretary of the Navy Ray Mabus pledged that, by 2020, the Navy would reduce its dependence on fossil fuels by half. As part of that effort, over the next few years, the Navy will invest $170 million in private-sector companies that are building advanced biofuel refineries and will receive equity in return.  The Department of Energy and the Department of Agriculture are contributing another $170 million each.

This will also help advance a Congressional bill called the Federal Renewable Standard, passed in 2005, which requires the country to use 21 billion gallons of advanced biofuels by 2020.  Two billion were produced this year.

The investing Departments are hoping to repeat the successes of prior venture-capital like approaches to building new technologies such as microchips, radar and GPS.  In those instances, prices eventually came down enough for those products to take off in the private sector. As the Navy had a fuel bill of $4.7 billion last year, the biofuel industry may be poised for a meteoric rise.

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“Type 3 diabetes”?

That is what some researchers are calling a new connection between Alzheimer’s and diabetes discovered during research from Rhode Island Hospital.  Interfering with her lab animals’ insulin uptake, researcher Suzanne de la Monte not only triggered obesity in the animals but a disorientation that signaled dementia.  Poor sensitivity to insulin is usually associated with type 2 diabetes, which the lab animals expressed when their bodies failed to respond to the insulin hormone. But the confusion and disorientation they expressed suggested a progressing link between obesity, diabetes and Alzheimer’s.

This new connection adds to existing research that has demonstrated how neurons in the brain need insulin to extract energy, especially in the hippocampus and frontal lobe, areas of the brain associated with memory and learning. The growing consensus of recent research is saying that the “epidemic” of diabetes sweeping theU.S. will likely be followed by an equally large epidemic of dementia.

Can the current healthcare system deal with that?

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Is “too big to fail” in retailing becoming “too big is failing”?

For the past few years, we have written about the ways in which consumers have gained control over their shopping experience, and one of the results of that control is the beginning of the end of the big-box era  (see, “The Consumer in Control Goes Shopping” http://www.inferentialfocus.com/our-discipline/current-topics/).

Walmart, for one, appears to realize that, if it wants to remain a retailing power in this new environment, it will need to improve the shopping experience for its customers, both online and in the stores.

The company has built a new search engine from scratch in order to better help customers find what they are looking for. Walmart is managing its own search in-house, in a similar manner to online competitors Amazon.com and eBay, but in opposition to its conventional brick-and-mortar peers that mostly outsource their search technology. Walmart’s new semantic-search engine technology, named Polaris, includes something it once called the “Social Genome” – a way of enabling discovery using algorithms that rank results via social signals from around the web. Walmart claims the new search engine will increase by 10 to 15 percent the likelihood that customers will complete their purchase.
Walmart has also begun testing an iPhone-based self-checkout system in one of its Arkansas stores, making it the second major retailer (aside from Apple) to try such a system.

 
Over the past few years Walmart has purchased small technology companies such as Kosmix, OneRiot and Small Society and combined them to create WalMart Labs, which the company is using for digital innovation.  Walmart’s low prices will still be a draw for many consumers, but in an era where consumers also value simplicity and experience, it won’t be enough.  We expect Walmart to continue to aggressively address the digital side of the retailing experience, and for others big-box retailers to follow suit.

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