Use value Vs sale value and Innovation

GDP, the scorecard of economic performance, does not adequately differentiate between Use value and Sale value. This can be illustrated with a simple example.

Use Value Vs Sale Value - Example

The GDP contribution of one coconut is sold is price of that coconut let say Rs 6/-.

A village buyer then drinks the water and eats the fleshy part of coconut, use outer fiberous cover as scrubber, uses the hard shell as a soap holder and later uses all of this as fuel to heat his bathing water.

A city buyer, typically, drinks the coconut water and eats the fleshy part and rest of it is discarded as garbage.

Now the use value of Rs 6/- is totally different in each case. This is what Karl Marx explained, in his paper called "Capital", the difference between use value and sale value. In this difference, or the divide between use value and sale value, lie many possibilities for innovation both for economic learning and entrepreneurial innovation.

Economic Learning opportunities - the hypotheses

First is related to computing GDP numbers. This divide implies that economies with higher ability to extract use value should feature higher than they actually do. Consequently, the algorithms used for estimating this value need to be tweaked to accommodate this difference.

Secondly, we need to interpret the GDP numbers carefully. A country may be actually creating more value than the GDP suggests.

Thirdly, I wonder if that is why economic development is accompanied by stress and loss of happiness (if it happens i.e.). Possibly in our hearts we know that by spending on packaged coconut water, plastic soap boxes and branded scrubbers we are actually in a loss (in terms of costs vs added benefit) than we were using plain old coconut.

Entrepreneurial Opportunities

On the other side, it also leads me to believe possibility of entrepreneurial innovation would be highest at the  innovations bridging this divide. An apt example can be found in the story of "Idea on a leaky platter". Entrepreneurs can gain immensely from bridging this divide.

Bridging this divide helps increase measured GDP. Secondly the adoption of these innovation is much faster (it already exists!), therefore easier to monetise (that the only thing entrepreneur has to do!). It also leads to productivity gain as firm-based efficiencies come into play.

In Sum

Innovation at the divide between use value and sale value holds a lot of promise in terms of success for investors and entrepreneurs. It is this area we should be concentrating upon. What say?

Newspaper or Waste Paper

Every morning my local newspaper reaches a new low in journalistic performance. The matter has come to such a state that I can trash my entire newspaper without even looking at it once and I wont miss anything.

Newspapers as they exists, seem doomed. They cannot fight television in terms of speed. The Internet beats the newspaper in terms of ability to cross-linkages ease of being discovered.

On top of it, it is really difficult of attract and retain a set of readers that advertisers would love to sell to. With money in the hands of people across the intelligence and vocations spectrums, tabloidisation seems the easy solution. Yet, it is now time newspapers realised that tabloidisation is not going to get them anywhere.

When I read in Indian express the interview of two very senior journalists - Tina Brown and Harold Evans - about this very subject, I hoped change would be round the corner. But apart from the comment that highlighted the importance of websites for the newspaper there wasn't much to look forward to. So what do newspapers do?

Step 1: Differentiate or Die - Playing the marketing game right!

Jack Trout provides clear solution, that must be the answer. Newspaper publishers should differentiate among themselves, within themselves and within their readers to survive. While most companies know about the strategy, few know what to differentiate between.

Differentiating the consumers - i.e. the readers!

Typically, for a family newspaper, readers are diverse. At the most macro level, diversity exists between families. Drill down and there also exist a diversity within each family unit in terms of age groups, maturity and gender. The appeal of each class, as created above, to the advertisers actually decides the target group. Analysis of consumption basket of target group coupled with typical annual advertising spends by brands in corresponding categories will logically decide best target segment.

Differentiating the content - guiding the eyeballs

Within a target household, there also exists diversity between roles of the readers. These can be classified into Skimming (glancing across headlines) and Analysis (in-depth coverage on headlines that catch attention). The content layout needs to be optimised for guiding the relevant household member to relevant page.

Standardizing the layouts effectively guides eyeballs. It also helps guide eyeballs if used creatively, case in point being the Google logos!

Differentiating within - between the covers

First and foremost, newspapers must differentiate within the pages. Newspapers have a systematic classification that puts city news on one place, political news on other place. From users point of view, it hardly makes any a difference unless the user can read into the classification. Newspapers seem to have forgotten that the classification must be based on users rather than news. That is the reason, why page 3 is called page 3. It would be great if newspapers can create brands out of their pages as successfully as "page3" brand was created.

For example, any mainstream newspaper may decide to addresses families of working families as their core target audience. Newspapers/periodicals are also known to target college going kids specifically. But as their audience is generically diverse - it is necessary pages are segregated properly so that advertising efficiency may be increased.

Step 2: Playing the production game right

Newspapers need to address "news production" a little differently. Current news production process can be classified into event reporting, reporter investigation, content generation, editing and finally delivery. Let us first enlarge this process by adding "follow-up" to it. As far as I understand, it is the news agencies that do the event reporting. The real winning strategy for a newspaper, therefore, needs to reside in the later part of the "news production" process.

Using reporter investigation better

As Goldratt mentioned in The Goal!, newspapers must optimise the process on their constraint. Clearly world class reporters are the constraint in this case! Using the same reporters and content they have generated, can a newspaper publisher create various stories that can move from plain event reporting to analysis of social issues behind the event. I believe they can. The process is called versioning. Content generated by reporter investigation can be versioned to feed into the headline breaking news story, the reporter's blog or a deeply researched piece. In fact newspapers often have lots of versions of the story write-up ready. (These days they literally have lots of versions of facts - hence had to specifically mention "write-up"). To be able to achieve this, content created by the reporter needs to be redefined. On this redefined content publishers can unleash different sets of editors to make the story readable for different audiences.

In essence one set of reporters can create many newspapers without much cost addition. Alternatively, news can be versioned across editions. E.g. City in the story can have detailed write-up whereas other city editions can have shorter versions!

Follow-up!

Once my boss remarked that if follow-up was an industry it would be the biggest industry! Websites give newspapers a mechanism to follow-up with their customers. Still if you read online content, it is an exact replica of the printed content. This, to my mind, defeats the purpose of the website.

Using IT effectively!

Internet should have allowed all the newspapers to have faster reporting. If all the reporters could upload their stories onto a central database, tag it properly. An intelligent editor with local knowledge can simply check-mark and get the edition out. This will enable the newspapers to create as many papers as they want.

In sum

Newspapers are an area where there is lot of potential for creating value. Steps indicated above are just outsiders view of the industry. Insiders can really create more and better avenues delighting us readers with well created, updated and analysed news in a crisp newspaper!