Coke and Pepsi

Coke’s Plan to Teach the World to Sing Is Almost Complete

Earlier this month, Coca Cola announced that it to open its first bottling plant in Myanmar – the nation formerly known as Burma. This now leaves just two countries in the world – Cuba and North Korea – where the brand is not officially available.

The Myanmar launch presents Coca Cola with an interesting challenge. Here is a market that not only has no idea what Coke tastes like (sweet, fizzy, vaguely fruity) but one without any previous exposure to advertising either.

I’ve no doubt that Coke will succeed, but I think the manner in which it will how achieve that success is very interesting, because it also tells us a lot about ourselves.

There have been other colas available in Myamar for many years; Max Cola and Star Cola for example. I imagine they don’t taste all that different to Coke, but whether they do or not doesn’t matter at all. Nor does the fact that Coca Cola needs to be served chilled and Myanmar is a tropical country where domestic electricity is in short supply.

Coca Cola is well aware of this, so on a practical level each bottle of Coke in Myanmar will come with instructions on the correct way to ‘enjoy’ the product and, by implication, the essential tools required to do that – electricity, a fridge, some ice – which are not widely available. Thus the second issue is boxed off: ‘What do you mean you didn’t enjoy it? Well it’s probably your fault for not serving it properly. We did warn you.’

Coke’s inevitable triumph – and it is inevitable – will in fact have nothing to do with what the real thing tastes like (The Product). It will be down to what the people of Myanmar can be made to believe The Real Thing stands for (The Brand).

Coca-Cola and Pepsi are long standing arch-rivals, but in terms of their chemical composition composition they are virtually identical. Despite this, people commonly express a strong preference for one over and above the other. A 2004 study into how our perception of the brands shapes our preferences was carried out at the Baylor College of medicine in Houston USA. In the experiment, one group of subjects was given Coke and Pepsi anonymously without any branding or indication as to which was which, while the second group was given branded versions of the colas to try. During the tastings, the subjects were given MRI scans to determine if anything different was happening in their brains. In the anonymous task, brain scans revealed that the group was relying exclusively upon sensory information to inform their preference, however scans revealed that the group with the branded products were also using a different parts of the brain, including the hippocampus, which plays an important role in the formation of new memories about experienced events. This showed that brand knowledge was biasing preference decisions.

And it’s not just cola. As we stroll through the supermarket aisles, with several thousand different brands on display, it’s easy to reach out and put whichever seems to be speaking to us into our basket, without ever stopping to consider why we’re doing it.

The next time you’re out shopping, try asking yourself why you’ve chosen to each particular item over all the competitors. You might be surprised how difficult you it is to come up with an answer.

What North Korea and Cuba are holding out against is not bottles of pop, but a ruthlessly efficient system for communicating ideas and making emotional bonds with people: a system that makes the frankly ludicrous notion that sweet, vaguely fruity fizzy drinks can have ‘values, heritage and history’ an unremarkable fact of life.

So where now the people of Myanmar thought, ‘I’m thirsty – I need a drink!’ many will soon start to think, ‘I’m thirsty – I need a Coke!’

Which is of course, the title of the song that Coke has been teaching the rest of the world to sing.

This article by Steve McKevitt was originally published on Huffigdon Post. Click here to see all Steve’s Huffingdon articles.

The Day of Peak Oil

Peak Oil Day

UK motorists have been celebrating a 4p reduction in the price of a litre of petrol. The news brought some relief to businesses and consumers dealing with the economics of rapidly escalating fuel costs. In February, petrol experienced its third 8p to 10p-a-litre increase in 12 months.

The price of filling-up was not quite as steep as the all time record-high of March 2012, but it came at the worst possible time: right in the middle of a long, cold winter.

There is a widespread sense of injustice about the price we’re paying for our fuel. Each increase is met with outrage and often organised opposition, while a furore greets any energy company announcing profits.

What people want is simple enough – to pay less at the pumps – but in practice, and despite George Osbourne’s suspension of a 3p increase in fuel duty in this year’s budget, that is probably beyond the ability of anyone to deliver.

The price of oil has quadrupled over the past decade from $25 per barrel in 2002 to $110 in 2012. All the forecasts predict that it will continue rise. That is not surprising because our entire industrial and agricultural system relies upon a constant supply of oil. Currently we burn through 90 million barrels per day (mb/d).

Over the long term it is difficult to see how demand will slacken. In 2030 there will be 9 billion people in the world, rather than today’s 7 billion, and many more living high-consumption lifestyles. As such, demand for oil is conservatively predicted to be at least 25 per cent higher.

Nor should we forget that there isn’t an infinite supply of oil. It is by its nature non-renewable: a ‘use-once’ source of energy. So even if we are finding more creative ways to extract what’s left one day we are going to run out. It’s impossible to know for sure how much oil remains and we won’t know for certain until we reach a point where we can’t extract enough to satisfy demand.

‘Peak Oil’ is the term used to describe that point: when the maximum rate of global petroleum extraction is reached, after which the rate of production enters into terminal decline. The idea of peak oil is based on observations of production from existing oil wells and fields combined with estimates about the likelihood and size of undiscovered reserves.

The Day of Peak Oil itself is impossible to estimate, because the world’s reserves of oil remain hidden from us. We may have already hit peak oil. The International Energy Agency believes that 2006 was the peak year of production for conventional crude oil, and even the most optimistic estimate forecasts that production will decline after 2020.

Environmentalists reading might be inclined to cheer. Their argument is that market forces will push consumers to make better decisions about energy use and conservation, and create an opportunity for alternative fuels. That is almost certainly true, but ignores the fact that the high price of fuel is not simply due to demand, but moreover to the rapidly rising cost of extracting whatever is left.

Whichever projection is correct, it is highly unlikely that we will ever be able to increase production much beyond 90 mb/d; a lot less than we are predicted to need. So while it is inevitable that oil will run out, long before then, it will have become prohibitively expensive.

We can but imagine the impact that will have on economic growth. The current price of oil is having a hugely negative impact on the global recovery.

The irony is that there is no economic or techological reason for our continued reliance on petroleum. Alternative liquid fuels do exist today. Methanol is one such viable alternative, offering convenience and efficient energy storage on a large scale over without any of the shortcomings of biodiesel, hydrogen or battery power.

So what’s stopping us?

There is a widely held misconception, among politicians and the general public alike, that addressing this problem is exclusively the domain of science and engineering. That is simply not true. Technological solutions largely exist today. There is no major breakthrough waiting to happen, nor is one necessarily required.

The key obstacles to achieving energy sustainability are not technical and scientific, but in fact the political and public understanding of the issue.

Historically, energy transitions take 35-50 years to happen. There’s no reason to believe that the move we must make to a post-carbon economy is going to be any quicker, and a great deal to suggest that it will take much longer. Making the kind of decisions that will enable us to do that takes brave politicians with the vision to see a pay-off down the line, unblinded by the short-termism that blights all our current crop of political leaders. Certainly there is no sign of anyone making them.

It is an incontrovertible fact that at some point in the future, we are going to need an alternative to oil – and to coal and gas – to power our homes and industries and to fuel our trains, planes and automobiles.

Surely it makes sense to do so, while there’s enough fossil fuel left to allow us to do so?

This article by Steve McKevitt was originally published on Huffigdon Post. Click here to see all Steve’s Huffingdon articles.

Five Daunting Words

Steve McKevitt

Are There Five Words More Daunting to a 45-Year-Old Man Than, ‘Eat Less and Exercise More’?

‘I didn’t realise that you actually went to the gym,’ Chuckled my editor, after I graciously agreed to provide him with a monthly column. It was an innocent enough admission on his part, but little did he know that he had effectively kicked sand in the face of this 45-year-old, 14-stone weakling.

‘We’re looking for an older man’s perspective on health and fitness,’ he said.

I immediately thought he was going to go on ask me if I knew any older men who fitted the bill, but the silence made me realise that he’d reached the end of both his statement and his search: that really I was, with my 46th birthday in admittedly advanced planning stages, that ‘older man’.

I thought briefly about crying, but instead decided to man-up and seize the opportunity. Why the hell not? After all, I have been ‘working out’ three times a week for the past 12 months… alright then, twice a week. Most weeks… And if my current fitness regime hasn’t exactly got me down to my perfect fighting weight just yet, then it’s certainly prevented me from thinking about taking up Sumo wrestling any time soon. My current weight is 91 kilos the same as it was 12 months ago. At a little under six foot, that still makes me technically overweight, but the lack of further movement northwards weight-wise, is a source of minor celebration.

You see my aim was to stem the glacial process that has seen me move steadily from a 30 to a 36 inch waistline over the past quarter of a century (and thereby, from the top to the bottom of the piles of jeans in House of Fraser). Granted, when I began my current exercise regime, I was hopeful of achieving something more than attrition, but if I’ve learned anything over the past 45 years it’s that life is essentially a series of compromises.

I’ve never been entirely indolent and maintained reasonable levels of activity throughout my twenties and thirties thanks largely to enthusiastic participation in Sunday League football. But as I go older, and my own game got slower, the seasons evolved into longer and longer periods of injury, punctuated by the occasional match. I eventually packed the sport in at 43, due in part to a recurring calve muscle injury, but largely to the realisation that the only thing I was getting better at was arguing with the referees.

I looked for an alternative. I’ve never really been one for racket sports. Golf? Lee Westwood’s body shape is what I’ve got not what I’m after, and as for cricket, well Shane Warne’s never looked better since he gave it up.

‘Why not try swimming?’ Suggested my physician wife, going on to spell out its low impact benefits. So I did. Thereby wishing that I’d saved us both a lot of time in the first place by simply replying ‘Because it’s really, really boring!’

Of course the answer was in my wallet all along. It was my gym membership to the local branch of one of those large chains. Of course I never went, but now all that is about to change. Next week. For sure.

A feature originally published on Huffington Post.

iPhone5 – Not Rocket Science

A week on from the launch of the iPhone 5 – Apple’s most eagerly anticipated launch since… well, the iPhone 4 – and what have we learned?

Since the rumour mill began to grind in the spring, there has been an increasing sense of anticipation. The phone’s actual announcement was greeted initially with derision, due to the perceived lack of headline improvements. But the usual raft of ‘leaked’ photos and memos added grist and the reviews have been largely enthusiastic – ‘the best iPhone ever’ no less, is the consensus.

In the event, a bigger screen, panoramic camera, turn-by-turn navigation and some new maps have proved enough to shift five million units in the first weekend. Here in the UK, it was reported that 1200 people queued for almost a week to make sure they would be first (or at least, not twelve hundred and first) to get their hands on one.

So, how are these legions of early adopters feeling now they’ve spent some time with their shiny new phones? Are millions of lives being radically transformed by a revolutionary piece of technology? Perhaps owners are wondering how they’ve survived without a panoramic camera and a sixth row of apps (they can never go back to five). Maybe they are still excited at the contribution these unparalleled benefits could make towards a brighter future.

Or are lives pretty much unchanged; albeit with a slightly better phone than the one they had a few days ago and 500 quid lighter for the experience?

At the very least, those with an iPhone5 will be feeling better that the laggards holding on to their iPhone 4s. For those poor souls, today’s slight dissatisfaction with their current handset is sure to increase over the coming weeks and months. How many are wondering when they’ll be able to upgrade and are, even now, hopefully checking contracts and amending birthday or Christmas lists, we can but guess.

The success of the iPhone5 will not only boost the bottom line of Apple Inc. Early predictions that it could add up to 0.5 percent to U.S. GDP are proving to be a tad optimistic, but there’s not doubt that the iPhone 5 is still big – cosmically big – in economic terms. The company’s first major launch of the post-Jobs era may well establish Apple as the World’s Most Innovative BusinessTM (it’s currently languishing in fifth according to Forbes Magazine’s latest rankings).

And for me this is surely the most remarkable aspect of the story, because really, just how innovative is Apple?

Don’t get me wrong: the iPhone 5 is beautiful piece of kit, but when all said and done, it’s just a slightly better phone than the model it’s replacing. It’s not a cure for cancer, it’s not the key to nuclear fusion, and it won’t put an end to global warming.

We can also safely assume that Apple Inc is not about to task the research and development team with finding a replacement for oil, or indeed any of the clear and present challenges facing the survival of our species due to exponential population growth and the associated issues of food and energy security.

No, what’s almost certain is that they are already working on next year’s object of desire – a product tentatively named ‘iPhone 6’ – which we can expect will allow us to do pretty much everything we can with an iPhone 5, but in a slightly improved way.

Well done for shifting five million units Apple, but I can’t help thinking that, some 40 years ago, we were reserving this level of excitement for moon landings and supersonic jets.

If this really is innovation at its best, then perhaps we must accept that progress in the 21st Century will not be a matter of giant leaps for mankind, but of baby steps.

Whatever happened to the future? Weren’t we promised jetpacks?

A feature originally published on Huffington Post.

Success Without Achievement

Is Success Without Achievement the New Corporate Culture?

This week Bob Diamond became the latest BigCo CEO to fall on his sword following accusations of poor leadership and corporate mismanagement. I doubt very much that the former Barclays head will be the last to roll.

The dominant feature of today’s economy is failure. Even before the credit crunch of 2008 around 80% of new product launches were unsuccessful.

The truth is that commercial success has always been difficult to sustain, but never more so than today. The number of options facing business leaders in the 21st century can be baffling. The rapid evolution in technology alone provides companies with an overwhelming number of strategic opportunities. You may ask where would you be without your broadband, satnav or smart phone but the answer is, most likely, in 2003, 2005 or 2008. Had you been a CEO who failed to predict any one of these developments, you will have found that backing the wrong horse is easily done and usually ruinous, with share prices mauled, profits eroded and jobs lost – quite possibly yours.

There is an argument that with failure so prevalent, and serendipity usually making the biggest unspoken contribution to success, then trying to run a business properly might be counter-productive. After all, if you’re in a position where you know you are unlikely to succeed, a better strategy might be to make it look like you are succeeding, perhaps even ‘bending the rules’ if you have to (although some might call that cheating). The rigging of global interest rates by Barclays should be seen as nothing other than an attempt to fool people into thinking that the bank was performing better than it really was; that its management team really was worth those six and seven figure bonuses they were paying themselves.

In a society that values winning above everything else, we should not be surprised that a culture of cheating has become endemic. So much so in fact that it is now entirely possible to enjoy a successful career without achieving anything at all, without ever being involved with a successful company or project.

Every day in the media we see famous people living fabulous lives: role models who are not really famous for very much at all; perhaps singing songs, looking nice in a frock, taking their top off, dancing in time to music, reading an autocue or almost having sex with someone they’ve known for five minutes on a reality TV show. The result is that success and achievement have become mutually exclusive: people want to be famous – they just don’t want to be famous for anything in particular.

The corporate world is also filled with people who have realised that presentation is more important than substance. Many will be building hugely successful careers based on this premise. For them, their employer is no more than a vehicle to further their personal ambition. If the company’s objectives fit in with their own, then all well and good, but more often than not they don’t. These individuals may hold senior positions already, but certainly they will be on the lookout for impressive high-powered jobs. Some of them are even running big companies. These are the ‘City Slackers’: the people who know that it ain’t what you do, it’s the way that you do it.

City Slackers are not losers, in modern business they are the real winners, reaping rewards without enduring any of the real stresses of risk and return. Don’t mistake them for the stereotype incompetents, the idlers who are the butt of office jokes, who arrive late, leave early and are commonly regarded as a waste of space. The City Slacker is more likely to be one of the more intelligent and respected members of the workforce

The culture of our service economy has provided City Slackers with the perfect environment to flourish. Thirty years ago, when most people were gainfully employed in the process of making or manufacturing things, performance was relatively easy to measure. We could see, for example, that Dave was working hard because he’d bolted X many cars together. And we could also see that British Leyland wasn’t working well because Y many cars had been bolted together badly. We left behind the rigid, hierarchical structures of companies that make things and replaced them with ephemeral project teams that don’t. This has brought flexibility, but also ambiguity; a lack of accountability and responsibility.

The company structures have changed, but performance in knowledge businesses is often measured by the same hidebound criteria. How do we identify accomplishment in the new economy of ideas, where there are no genuine rewards for endeavour alone? How do we recognize and remunerate those who make a genuine contribution and root out those who exploit the contemporary blurring of image and reality? Confronting the City Slacker is the biggest challenge facing British business.

City Slackers are costing us billions. In 2010, the Independent revealed that the UK government had wasted over £25 billion on IT projects that were not delivered, over budget or that simply unfit for their purpose. This depressing reality is entirely unnecessary; much of the cost is due not to the technology itself but to endemic bad management, poor working practices and an apparent inability to learn from the mistakes of the past.

Bob Diamond, Fred Goodwin and their ilk are testament to the fact that the culture of success without achievement goes right to the top. The prize for ruining a company like Barclays, Royal Bank of Scotland, or even the England football team, is usually a multi-million pound pay-off. How often do we hear about CEOs who have just announced record losses, accepting gilt-edged severance agreements or golden goodbyes? Today’s company men and women have a new priority: themselves.

This article by Steve McKevitt first appeared in The Huffington Post. Click here to see the article and reader’s feedback.

Why The Sale Must End Soon

Issued by The Royal Society, People and the Planet is a new study concerning the challenges posed by population growth.

The global population set to increase by a further two billion people over the next 20 years, but the report highlights the fact that the key question is not How many people? but rather How are they all going to live?

The startling conclusion is that in developed and the emerging economies, consumption has reached unsustainable levels and must be immediately reduced. The report claims that the increase in population will, ‘…entail scaling back or radical transformation of damaging material consumption and emissions and the adoption of sustainable technologies. This change is critical  to ensuring a sustainable future for all.’

These findings will something of a body-blow to David Cameron’s vision of an export-led return to growth, but at least he can take some comfort from the fact that his strategy didn’t appear to be working anyway. The implication is clear; whether we like it or not, the good times are not about to return any time soon. But while this news is certainly bad for the Coalition (and also for the other centre-right Governments in the Eurozone) it is not necessarily bad news in and of itself, nor indeed for the rest of us.

The strategy of Governments over the last 30 years has been to focus on increasing the wealth, well-being and opportunities of individuals rather than of society as a whole. Like any policy there have been winners and losers, but the result is that this recession intuitively feels different to all the others. In comparison with the previous slumps of the 70s and 80s, GDP is much higher – which is a good thing – but the gap between rich and poor is now much, much bigger than it ever was and it is continuing to widen at an unhealthy rate. Literally in fact. For example, in my hometown of Sheffield,  the average life expectancy in the richest parts of the city is more than 20 years greater than that in the poorest. This pattern is repeated in cities across UK, Europe and North America.

Change is required, but the truth is that this is as much attitudinal as it is economic. A third of all food purchased in the UK is simply thrown away, while 80 percent of all items bought are used once and then discarded. Everything Now is an indulgent and wasteful way to live, and we have all been complicit in its emergence, but that doesn’t mean that we won’t be happier, or better off without it. Reusing equipment, recycling materials, reducing waste, obtaining energy from renewable sources, and getting consumers to stump up for the actual cost of their consumption will make a huge difference to our way of life, but not necessarily to our quality of life.

Ultimately, persuading people to spend and consume less will do nothing to promote growth, but perhaps the debate should actually be about what growth is and why it’s so important. After all, we live on a small planet with finite resources and as Leo Bloom, the hapless account in The Producers, famously said, ‘You can only sell 100 percent of anything, Max.’

What we need is a new way of measuring economic success beyond GDP and GVA, which fail to take into account things like levels of well being and contentment. This will take far sighted political leadership across all the parties; and probably not the kind of people who feel that closing a VAT loophole requires them to pretend that sausage rolls are the best thing since sliced bread, because worrying about how every policy will ‘play out’ in the short term, spells disaster for the long term.

The Tesco Choice

The retail sector has been in trouble since the credit crunch in 2008, but Tesco’s fall in profits was still a shocker. Certainly the grocer seems to have pressed, if not the panic button, then the one marked ‘Action Stations’ announcing it has has completely revised its strategy away from expansion, concentrating instead on refurbishing its existing stores and ‘improving customer service’ at a cost of £200m. Its ad agency The Red Brick Road – long regarded as ‘part of the Tesco family’ – has been asked to re-pitch for the £110m brand communications account, so expect an ‘All New Tesco’ coming our way soon.

These initiatives are an attempt to engage more effectively with customers and good luck to them. But behind the new strategy, the goal remains exactly the same:. Put simply, Tesco want us to buy everything from them. To that end, great strides have been made over past two decades: in 2011, one in every eight pounds spent on the UK high street, was spent in Tesco.

Tesco and its main competitors epitomise one of the biggest contradictions of Everything Now. Whatever shape the rebrand takes, you can be certain that, like all major retailers, Tesco will talk a lot about wanting to offer their customers choice. But what is ‘choice’ in this context?

Tesco is the UK’s leading retailer, and one of the world’s biggest companies. It began by selling us groceries, but these days it sells us pretty much everything – from fish fingers and furniture to finance and foreign holidays. Tesco is no longer just a supermarket, it’s a bank, insurance broker, mobile phone operator and music download platform (with a surprising 10% of UK music download market).

Yet while the range of goods and services across the board, is vast, the choice within each category is usually extremely limited. Supermarkets cherry-pick the biggest selling titles so while Tesco is the fourth biggest bookseller by volume, where it is possible to get the latest release by JK Rowling or Jeremy Clarkson, for a fraction of the cover price, the number of different titles on offer will be more on par with a motorway service station, dwarfed by even the smallest branch of Waterstones.

I am amazed that the supermarkets’ definition of choice isn’t challenged more often. In reality nothing it is more than the opportunity for us to buy any item that they have elected to stock and, to me, the ability to select one from 150 brands of chemically-identical toothpaste, doesn’t really seem much of a choice at all.