The ‘5-35-60’ change framework

“EVERYTHING IS CHANGING. NEW NEW THING WILL NOW REPLACE THE OLD NEW THING!”

We who swim digitally in that vast and polluted information ocean that is zero cost self publishing platforms (twitters, blogs, IG) and old media gone digital (print, tv) see it all the time. It perenially feels like the above line is the undertone in and of all headlines in these last 2 decades.

Every media entity and business firm that is vested in change is interested in convincing us that everything is changing and fast and if we don’t change too we and our firm will be left behind. This is exhausting. Most of us have ‘status quo bias’ and this relentless change message barrage grates against this bias. It chafes like a pointy splinter against our understandble need for the blanket of the familiar.

Recently it has began to dawn on me that this message is bogus. Everything ‘Hot!’ and ‘New!’ at the moment is not destined for world domination, inspite of breathless non-stop press. William Gibson coined the term “Cyberspace” and later popularized the concept in his novel Neuromancer. He has a awesome quote attributed to him way back in 1993: “The future is already here — it’s just not very evenly distributed”.

Remembering that quote was the breakthrough. For it helped me understand that while Change is a constant, it is never evenly distributed. Which I then internalized into my own “5-35-60” framework to better understand change and reclaim my sense of calm.

The framework : At any given moment something that has gained traction is going to peter off at 5% if it is a worthy but incremental improvement over the status quo , 35% if it is a vast improvement and 60% if it vast improvement, cheaper and easily scalable. The initial 5% will feel rapid and feed the headlines. The next 30% will be slow but feel fast. The last 25% to reach 60% will feel glacial. And after that an evenly distributed 70%+ share will likely be generational change. 

Things that roughly fit this framework out in the real world:

  • Online eSales (Amazon currently has about 44% of U.S. e-commerce market share. Not even 50%. Amazon ha sbeen at it for 23 years now. Bet you thought it was 80%+)
  • The rise of smartphones (over 2 decades the number of people that own a smartphone is 4.78 Billion, making up 61.67% of the world’s population)
  • MOOCs vs traditonal college education (under 5%)
  • Netflix vs Cable TV as a % of TV Consumption (3 people in a room of 100 people have Netflix, globally. Also that’s how privileged you are!)
  • Tesla is likely not going to own the majority of car market globally (but is priced like it is. Toyota sold 10.46 million vehicles, Tesla sold 367,200 vehicles last year)

Nothing is going to go on a smooth upward path from 0 to 100%, no matter how much fawning press it gets and however much the consultants and industry hacks try and convince you otherwise.

  • Amazon is never going to get to owning 100% of eRetail sales.
  • AirBnB is never going to get to owning 100% of Room sales in a city.
  • Chrome is never going to get to 100% of Browser Share. (it’s 63%)
  • Bitcoin is NOT going to repalce Fiat Currency

Bezos has a mature take on change. In an interview he said “I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”

In this breathless no-standards no-skeptic news saturated world we always feel like any new phemomenon/tech is going to own 100% of the market by the end of next year. But Evenly Distributed takes effort, flawless execution and hell of a time. Things peter out much earlier (at 5%, at 35%). Even the obvious improvements. Red Queen Effect is a thing too.

This 5-35-60 framework is a calming pill. Use liberally.

 

Celebrity Endorsements is BS

Celebrity Endorsements are a fraudIt is a lie told to get the consumer to lower skepticism about the product/service.  Is the cola/chips/detergent/shampoo really better than all its competitors ? Is your hair really that lustrous because you really use that shampoo everyday or because you have the genes and a hair posse Ash ?

Have you seen Bachan Senior ? Is there any product category he won’t attach name to ? If you have the cheque I suspect he’ll endorse seal clubbing. Wait. He did. They did. Hrithik Roshan, Sachin Tendulkar and Shahrukh Khan….Remember the Home Trade ‘More’ campaign ? I love the way TimesOfIndia mocked the phenomenon. Genius.

Look I love Bachan. Is there any movie that captured both the angst and zeitgeist like Deewar did? But when you tell me to buy something I know you personally have never really been a fan of (cement!) you aren’t convincing me about the product but you sure are telling me something about YOU and your character with your faked sincerity and enthusiasm. That those two emotions can be purchased because its on sale. How crass.

Cricket and Bollywood have got so into this phenomenon I think its now reached a saturation threshold. I mean does the campaign really standout when the next 5 ads also have the same guy in it? Marketing experts will roll out reams of focus group and related studies showing how it works. How consumers want to identify with the celebrity and how their shampoo helps them get one step closer to that aspiration however misguided that instinct may be. Reminds me of the classic line from Tyler in Fight Club. ‘Sticking Feathers up your Butt does not make you a Chicken’ Just because you are blind and stumbling into a dark alleyway am I obligated to rob you ? Do ad agencies and companies go down this murky trail because proving genuine product superiority is murkier ? Or maybe impossible because its isnt superior? What about the downside ? 

At least stick to the profession. Ask a basketball pro to endorse basketball shoes. Don’t ask a mutimillionaire actor to endorse cement. Also please don’t get a model to wear a doctor’s coat and pout that I need to but this ‘scientifically proven’ soap/shampoo/paint/toothpaste/bazooka. That’s worse. I think you need to pitch to me with a smarter approach angle or maybe just use the budget in more innovative ways. Don’t tell me that’s impossible. BS. You go the endorsement path because its the laziest way to reach the target demographic. Not because its the smartest or most effective.

India Files : On Cheap Airfare

I was in Bangkok a few days ago with friends of mine and had the good judgment (helped by insistent tips from other friends) to stay at the western traveler mecca that is Khao San Road. We did multiple laps of the nearby streets in our short stay there.

Actually anything less than a month should be under that category for the gorgeous city that is Bangkok and the country that is Thailand)

@Bangkok with mates

The streets bustled with services and potable trinkets on sale, which make sense since you cant get travelers facing onerous luggage restrictions from buying the best selling local furniture hit of the year. From slick clocks to swiss army knives to paintings to CDs to the latest trendy shoes and iphone covers. If it was potable it was there. At throwaway prices if you had a modicum of bargaining skills. Luckily since we were from the right country for THAT, THAT was not a problem.

Now I need to add that I was in SE Asia thanks to cheap tickets on Air Asia and walking through the market browsing and occasionally buying stuff on sale I could not help wondering : If the internet allowed us to now transcend geography and buy/consume the best ideas out there, be it a magazine article in the NYT over the crud on timesofindia.com or a HBS Blog post over something in ET on corporate strategy, can cheap air fares over the long run ensure even the market for physical items went to the best out there ?

Why buy the overpriced BlackBerry or Laptop at the showroom here when you can for a deep discount at your next short weekend break. A decade ago laughable as a concept. Now, thanks to upstarts like Air Asia, who knows.

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the next threat to your business model may be getting ready to take off.

If the SVP for Strategy is mapping out market threats using Porter’s 5 competitive forces framework maybe she should add ‘dead cheap air travel tickets‘ in the Power Of Buyers section. And as a threat to their fat margins.

Cheap air fares could do for some industries what the internet did for others.