The past is prologue as drama of 2023 begins
While it is true that trends do not follow calendrical cycles, I think popping the shrink wrap on a new calendar gives us opportunity to take stock and make a few predictions. While we shake the Magic 8 ball with a blend of angst and hope, I have three words that I think are worth contemplating, terms that will help us think about what promises to be another challenging year.
I have one each for retail, manufacturing and all of us: de-positioning, friendshoring and polycrisis.
First, de-positioning, a variation on the theme of brand positioning that refers to communicating and emphasizing a positive feature or aspect of your business that in the highlighting serves also to draw attention to a deficit in the business or brand of your competition.
De-positioning isn’t negative advertising; it’s more sophisticated than that.
Apple de-positioned Microsoft and the PC market by emphasizing its Apple products’ simple usability and “less is more” interfaces that require virtually no learning curve. This has held true for iPods and iPads, for Mac Book Pros, and more recently for Apple watches. This de-positioning has simultaneously emphasized Microsoft’s and PCs’ reputation for notoriously high learning curves, complex interfaces and frustrating UX.
Let’s look to automotive for another example. Carvana de-positioned its dealer-based competition by removing fees, installing price integrity and putting all of the information relevant to a pre-owned car purchase at the fingertips of its users. This transparency and agency highlight the eely, oily bartering game that consumers know they have to play in dealer showrooms, a game in which the house always seems to win. (The pandemic and its accompanying computer chip shortage has only further tilted the negotiating odds against the buyer.)
How about an example from home furnishings?
Ikea sends a powerful message with every sheet of image-only assembly instructions, which is that the consumer will indeed have to assemble the item, but that the activity will be so simple that no words are needed. The visually oriented instructions underline the product’s simplicity, as well, and that Ikea has thought through the entire process. Finally, the step-by-steps signal that the consumer is getting a reward for their labor, which is a lower sticker price.
Of course, the instruction sheets are the product of exquisite product and graphic design and as such they also serve to de-position Ikea’s competition. For this competition, consumers have little to base their expectations upon such that Ikea owns the value equation just as Disney owns magic, Subaru durability and Bose high-fidelity.
Common to all of these de-positioning strategies are simplicity, authenticity and replicability, and common to all of the features these strategies emphasize is the reduction of friction for consumers — the friction in shopping and buying, assembling and ultimately using the products.
It’s also important that consumers learn to make these de-positioning associations; they aren’t the result of big-buck advertising campaigns, or at least not merely ad campaigns.
Finally, a little-considered implication of these de-positioning strategies is how they inform even ideation and product development. Whatever Apple introduces, that new product or version must deliver on the Apple brand narrative, which is anchored in ease-of-use and minimalist, utilitarian design. Whatever furniture Ikea puts into its superstores, it must be an immediately recognized value that, in the box, fits into your car, van or SUV and that can be assembled in minutes without multiple trips to Home Depot.
Pandemic and politics combined to upend shipping and the norms of global trade. In a previous column, we explored the mid- and long-term options for U.S. companies seeking to improve their supply chain resiliency. These options include on-shoring and re-shoring, or bringing production back to the U.S., as well as near-shoring, which replaces offshore supply with sources closer to home in Mexico and Canada.
Add to this taxonomy what the White House has called “ally and friendshoring,” or relocating supply chains to countries and regions where the risk of disruption from political change is low (or at least manageable). More broadly, friendshoring means working deliberately to forge more meaningful business relationships that can withstand the changing geopolitics that threaten risk calculations.
This past year, those calculations had to include Russia’s invasion of Ukraine. Previously, they have had to adjust for U.S.-China relations, rhetoric and policy.
Mexico is, of course, the big winner in any friendshoring strategy, with shipping times measured in weeks rather than China’s months. Trade figures indicate that, in fact, Mexico is benefiting, exporting $382 billion into the United States during the first 10 months of last year, 20% more than the same period for the year prior.
Unfortunately, there is little logic that connects the locations of geopolitical friends with the most favorable conditions for factories, especially when it comes to cost. Mitigating this, however, is the fact that the pandemic forced a re-calibration of value and cost equations for virtually all durable goods at all price points. This makes it more palatable, at least in theory, to de-emphasize cost as
a priority in favor of, say, political stability.
Finally, a term for all of us: polycrisis
We are accustomed to thinking about global challenges in isolation: The coronavirus pandemic as a global health problem, inflation as a fiscal and economic problem, and climate change as an environmental threat. These crises are occurring simultaneously, and it is this abundance of existential challenge that is the “poly” in polycrisis. If the global economy were a house, you could hear the pipes clanking, water running in the dark, and the mortgaged walls shifting along multiple fault lines.
As an industry and as a nation, we should think about these “colliding crises,” as scientists Thomas Homer-Dixon and Johan Rockström refer to them, more as one polycrisis, so intertwined are they in causes, effects and, potentially, solutions. We should add Russia’s
invasion of Ukraine, authoritarianism, biodiversity declines and human migration to our already daunting list of deeply entangled global crisis events.
As Homer-Dixon and Rockström write, “complex and largely unrecognized causal links” are shared among the systems from which these crises spring, thereby increasing the likelihood that any one or more of these risks will grow to critical and require drastic remedy.
I have long considered life expectancy to be the single most valuable metric or index when considering economic disparities, systemic racism and threats to humanity. Since 2019, or before the pandemic, the average human expectancy globally stood at 72.6 years, where it has been steady for more than a decade. In 2021, this all-important metric had dropped to 70.96.
This means that overall life expectancy declined by one and a half years during the peak of Covid, with even larger decreases for Hispanic (3 years) and Black (2.9 years) populations.
I haven’t even mentioned cyberattacks, political unrest and protest, financial system instability or drought.
My point here isn’t to scare; the facts speak for themselves. My goal is to encourage us to collaborate, to consider more than earnings or sales when strategizing and managing our supply chains, and to more meaningfully consider ourselves as part of an increasingly fragile global community.
Polycrisis will require much from all of us.
I opened with Shakespeare (“Giddy fortune’s furious fickle wheel” comes from Henry V), so I will close with the Bard, as well, from All’s Well That Ends Well:
Our remedies oft in ourselves do lie,
Which we ascribe to heaven: the fated sky
Gives us free scope, only doth backward pull
Our slow designs when we ourselves are dull.