Shift Happens

Neat slideshow on technological and political shifts. It just won the "World's Best Presentation Contest" at SlideShare.

Survey of India's Consumer Market

McKinsey's Global Institute has just released a report on India's consumer market. There is an executive summary as well as the full report, available for free download (although you may need to register yourself to access these). The study projects the growth and changes in the composition of India's consumer markets from today through 2025. The highlights include the following projections about the market in 2025:

• India will be the fifth biggest consumer market. If India continues on its current high-growth path over the next two decades, income levels will triple, and India will climb from its position as the twelfth-largest consumer market today to become the world's fifth-largest consumer market by 2025.

• The middle class will increase tenfold. As Indian incomes rise, the shape of the country's income pyramid will also change dramatically. Over 291 million people will move from desperate poverty to a more sustainable life, and India's middle class will swell by more than ten times from its current size of 50 million to 583 million people.
  

• Marked shift away from basics towards discretionary spending. Indian spending patterns will evolve, with basic necessities such as food and apparel declining in relative importance and categories such as communications and health care growing rapidly.
  

The full report has a wealth of data that will be a useful reference for anyone interested in the Indian consumer market.

The 2007 e-Readiness Rankings

The Economist, along with IBM, has published this year's assessment of the state of information and communications technology in 70 different countries. The rankings, which have been published since 2000, measures a wide range of factors that collectively aim to measure the ability of a country to benefit from investments in information technology and communications infrastructure. The complete report is available here (it's free and you don't need a subscription to the Economist). It's an interesting read.

A couple of facts from the rankings:

• Denmark is the highest ranked, while the US and Sweden are tied for second place.
  
• The highest ranked developing countries are Estonia and Slovenia, at 28 and 29, respectively.
• Among the large developing countries, South Africa is the highest ranked at 35, followed by Turkey at 42 and Brazil at 43.
• Among the BRIC countries of Brazil, Russia, India and China, Brazil is the stand-out at 43. India, China and Russia are grouped more or less together at 54, 56 and 57 respectively.

The methodology used the generate the ranking is interesting and illustrative into what drives adoption of technology at a macro level. The rankings used the following six criteria, listed below along with their weight in the overall calculation:

• Consumer and business adoption (25%). Per capita spending on IT, levels of e-commerce activity.
• Connectivity and technological infrastructre (20%). Access, availability and cost of internet access.
• Business Environment (15%). General business climate, including political stability, taxation, labor policies and opennes to investment.
• Social and cultural environment. (15%). Literacy, training, and more generally, the "capacity" to ulitize the technology if it is available.
• Government policy and vision (15%). Government adoption of information technology, online procurement, public services online.
• Legal environment (10%). Ease of new business creation, intellectual property protection.

Interestingly, India ranks higher than China or Russia despite having a significantly poorer score for connectivity and infrastructure. It scores much higher in the legal environment and government policy and vision criteria, pushing up its overall rank.

How Do You Really Feel?

While on the subject of Stanley Milgram, there is another very interesting experimental technique he pioneered which I think is directly relevant to product managers and marketers. The issue is: how can you determine how people truly feel about something? Asking them (e.g. via surveys or focus groups) can be problematic and all sorts of biases may be introduced. For instance, how you frame the question has a strong impact on the results (nice little example of framing bias by Paul Kedrosky here).

While market analysts can adjust for these biases in some cases, things become particularly troublesome when the questions are more personal and/or sensitive. People tend to respond in accordance with a social desireability bias, which basically means they will tell you what they believe to be a more socially acceptable response, rather than what they really think. How do you estimate the amount of popular support for white supremacy or neo-Nazi groups? Almost no one who holds such a view will own up to it. Election polls in many countries severely understate the support for extremist political parties for the same reason (including the famous 2002 French election in which the extreme right winger Jean-Marie Le Pen came second in the preliminary round of voting - a shocking result. In the United States, a rough analogy would be if David Duke won the Republican primary).

Milgram devised a particularly clever experimental technique that attempted to deal with these types of issues. It was called the "lost-letter" technique, and it worked as follows. Milgram would address letters to a fictitious group whose affiliation would be clear from its name (e.g. "Society For The Advancement of White Supremacy"). The letters would be stamped and addressed to a Post Office box that Milgram set up ahead of time. Hundreds of these letters would then be placed at selected locations, looking like they had somehow got lost and just needed to be placed in a mailbox to be sent along its way. He then monitored the Post Office Box to see how many letters came in.

Milgram guessed that a degree of sympathy for the organization mentioned on the envelope would make it more likely that someone would actually send the letter on its way rather than ignore it. And the anonymous and indirect nature of the transaction would make it a lot easier to act on your true feelings about an issue, not just a socially accepted feeling. To factor out the "noise" from non-responses and other random events, Milgram would do the same thing with another set of letters, this time addressed to a completely neutral sounding organization (e.g. "Industrial Corp, Inc."). This would be the control data against which the responses from the sensitive letter could be measured. The greater the response, the more the support for a particular viewpoint.

The responses to the various sets of letters he tested with were not particularly revelatory. It's the technique that was his real accomplishment, not the results of the experiment.

Stanley Milgram and The First Social Network

I just finished reading a very interesting biography of the pioneering (and controversial) social psychologist Stanley Milgram. He is most famous for the Obedience to Authority experiments, whose aim was to measure the willingness of people to obey authority figures, even when those orders are in direct conflict with their own moral sense. A detailed article about the experiment can be found here, but a quick summary is this: the subject was brought into a laboratory-like setting and told to administer progressively stronger electric currents to a "victim" (actually an actor), all for the advancement of science. In an unexpected, and somewhat depressing, result, Milgram found that a full two-thirds of all subjects would administer even lethal does of the current when told to do so by the "scientist" (also an actor) even when the victim was in obvious physical distress. We are far more susceptible to manipulation by authority than we are aware. The numbers broadly hold in many variations of the experiments, and in many different countries.

More relevant to technology and development, Milgram was also a pioneer in social networks. Many decades before orkut, myspace or linkedin, Milgram researched the Small World Phenomenon, which says that the world is much more connected than people think, and any two people can be linked together by a relatively short chain of acquaintances. In fact, he first came up with the famous "six degrees of separation" idea when he found that the length of the chain connecting two pepople is, on average, six. Milgram conducted his experiments in the sixties. Today, with the rise of online social networking tools, mobile communications and cheap transportation, I wonder whether we are actually at "five degrees of separation" and trending lower.

To see the six degrees idea in action, check out the Oracle of Bacon. Type in any actor's name (past, present, any country, any language) and it will show you how they are connected to the actor Kevin Bacon. It's really hard to find a more than three links, and almost impossible to find more than four links. A generalized version is here: you specify both actors and the links are calculated for you.

Milgram is a fascinating character and a brilliant observer of the human condition. I am still processing some of his insights. More to come.