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Sunday, January 12, 2020

A Recession Caused by Consumer Debt?

Consumer debt has steadily over the past few decades. As with all big pools of debt there is a chance of market changes and corrections. A little video for people who like economic stuff below. While this is anecdotal, a marina manager shared some knowledge on how during The Great Recession of 2007 a lot of boats got abandoned because there was no cushion for people.

Wednesday, January 8, 2020

Two Tricks for Calming Jumpy Horses-A Bucking Challenge!

Horses and man have a history together that spans thousands of years. Despite all that time and domestication not all horses are ready to give up their instincts to a human rider. Bluebell is beautiful Arabian and quarter horse mix brought from a rescue. She is smart, knows what she is doing, has lots of skill and potential but jumps at the slightest sound! Doors, cars, dogs, almost anything!

Let me say that I have met a lot of people who love a challenge. They come latte in hand into their offices and work everyday while looking out the window. When its their time off they take on challenges like horse riding, training, trail riding and enjoy being away from the hustle and bustle of big city life. Horses have a lot of benefits for business people who need some time outdoors working with something they can see results. Research indicates people who like outdoor activities like horse riding are more intuitive and introverted than others (Cashel, et. al. 1996). For them, there is something about the basics of it all. 

While you may enjoy working with animals they may not always be willing to work with you! The horse is a prey animal and its natural instinct is to run. Because I'm unsure of Blue Bell's history I cannot say what might have created the startle response: perhaps it was always there. What I can say is that we have to teach the horse to maintain calm. Over the long run that ability to be calm will make the difference between a horse that can be saved and one that can't!

The first thing I would look at are the causes of bucking. It could simply be a nasty horse that doesn't want you on her or it could have another cause like pain or improper tackle. In the first case, the horse needs more consistent riding and firm command to extinguish bad behavior. In the second case, the horse might have something hurting him and adjusting its equipment can make a difference. 

Bucking can be dangerous because it can throw the rider and cause serious injury. The horses value is also much lower if she cannot be ridden without having a problem. Even with some riding experience I'm a little nervous when I get on her and that likely makes things worse. Dangerous horses are a major liability and they must learn to enjoy riding or be all cost for the owner.

Research indicates that a lot of this jumpy behavior is based on reflex and impulse (Friese, Hofmann, & Wiers, 2011). To limit and eventually extinguish this behavior there should be more emphasis on immediately stopping dangerous reactions and helping the horse calm down. Beyond lunging the horse to remove excess energy, and habituating her to the environment, you may also want to use the one rein stop.

You can also get a feel for the horse by paying attention to your horses snorts to see if he/she will be willing to let you ride. Not kidding! 🤣 The snorts of your horse indicate its happiness level (Stomp, et.al., 2018).  The frequency of snorts gives a peak into the horses state of mind and this could impact how it acts in the arena. It will snort more when in a good mood so just keep it in mind.

If you are destined to ride then consider these two tricks......

1. One Rein Pull: If few things are working for you try the one rein pull. You are turning the horses head to the side of her body in an effort to keep from losing control. This should be used only if you have no other option to protect yourself, others and the horse from injury. It will still be a bumpy stop but the horse will be force to cross over its hind legs.

2. Environmental Familiarity: Horses can be jumpy because they are unsure of their surroundings. It is as though they walked into a busy street and keep reacting to everything around them. Walk them around the area a number of times and prepare them for training at those facilities. Let them create a memory map of where they are and encourage them to sniff, stand, look around, etc... until they don't care. You may want to do this everyday until you reduce environmental impacts.

I might add as a side note that around Rapid River Michigan (and Bark River) you can find some pristine land with super cheap housing for horses. That is assuming you want to buy some land in the area and make a new life out of it. Its about 15 minutes out of town. The cost of boarding at a local ranch in the area is $235 with hay and grain but doing so yourself is much cheaper.  I always thought someone could set up a fairly large horse ranch take in rescues and rehabilitate for the larger markets of Detroit, Milwaukee, Chicago (all under six hours drive). Just a thought for people who like that stuff.

Cashel, et. al. (1996). Personality preferences of outdoor participants. Report (ED413133).

Friese, M., Hofmann, W. & Wiers R. (May, 2011). On taming horses and strengthening riders: Recent developments in research on interventions to improve self-control in health behaviors. Self & Identity (3), 10. Retrieved https://doi.org/10.1080/15298868.2010.536417

Stomp, M., Leroux, M., Cellier, M., Henry, S., Lemasson, A., & Hausberger, M. (2018). An unexpected acoustic indicator of positive emotions in horses. PLoS ONE, 13(7), 1–23. https://doi.org/10.1371/journal.pone.0197898










Friday, January 3, 2020

Pure Michigan Campaign-The Value of Return on Investment to State Taxes

"Business has only two functions-Marketing and Innovation" (Milan Kundera).  Pure Michigan, a state sponsored national marketing campaign launched in 2008, created a buzz highlighting the attributes of the Lady of the Lake state. Law Makers are confounded on precisely how much (or little) the campaign has contributed to her prestige and prosperity. Expert numbers span the spectrum leaving doubts and in turn a line item veto that removed the program from state budgets. This article is an effort to shed light on the merit of state-sponsored marketing in Michigan and what policies will improve the transparency and functioning of the program.

To assess the program's value we must ask ourselves two fundamental questions about Pure Michigan to better ensure the money is wisely spent. 1. Does it have a positive ROI? and 2. Does it have a negative ROI? A positive ROI means we should invest in it because it brings additional revenue while a negative ROI means its wasting taxpayer money.

Let me say that I'm not indifferent to the outcome. Working on some of my own economic theories, scientific literature has supported the idea that marketing state attractions can lead to multi fold benefits of lifestyle and tax generation. I'm also a resident of the Upper Peninsula of Michigan where much of the economy relies on tourism dollars. Yet I am also a man of science and believe that people should do their very best to understand such issues themselves through critical review.

Lets take a look and see what we can find....

Pure Michigan = Positive or Negative ROI?

Net Return?  There are those who feel the Pure Michigan initiative is well worth any state monies spent because of its financial returns.  ROI on Pure Michigan was reported as $8.33 in 2016 (MEDC, 2017), $8.88 in 2017, and $9.28 in 2018 (SmareInsights, 2019)   On the surface those are some pretty compelling numbers. Put a dollar in and wallah we generate wealth! (sort of)

There almost always is some alternative numbers and ideas out there. Critical thinking requires us to think through the positive and negative numbers to make an assessment. As a bonus we can provide improvements to the program that could raise its value to stakeholders.

Net Loss? Not everyone is so sure that the campaign earns what the contractor says it earns. They take the alternative perspective and believe it looses money and wastes tax payer dollars. The Michigan Center for Public Policy that advocates for research and education believes the numbers provided are over inflated and not accurate. It is suspected that significant costs, such as the costs of production, were not included in the calculations (Michigan Center for Public Policy, 2018).

A review entitled An Analysis of State-Funded Tourism Promotion found that for every $1 million in state funding there was only $20K return for the hotel industry (Hicks & Lafaive, 2016). They looked at a number of studies and data from 48 contiguous states over a period of 39 years. That is a pretty compelling argument to ignore; even if focused on the benefits of hotels.

How Study Design Impacts Results

Bad designs lead to even worse decisions! It is imperative that important research that impacts the people of a state lead to useful results. The ultimate purpose of research is to answer questions so we as a human species can make better choices. How we measure and interpret data influences its value for strategic justification. Collecting and interpretation often rests on multiple research studies that create a body of knowledge on the topic. 

To determine what an economic study indicates, and whether or not the numbers are meaningful, we can review the research questions and design. "The devil is in the details!" Strong designs seek to draw the most direct conclusions based on the simplest and most reasonable methods of data extraction, analyze and reporting. When the design is simple and parsimonious it often leads to better useful results.

This mini review is not the final word on the topic and new information provides better conclusions. Since I'm not trying conduct a full scientific review the goal is to collect a "quick" review of similar studies and make a few basic calculations to come up with a reasonable ROI. There will be plenty of people who disagree due to the important nature of the topic.

It should also be noted that unbiased research is indifferent to the results. That means that a positive finding is as beneficial as a negative finding (at least in theory) because both are added to a body of knowledge. The body of knowledge is what other researchers use when they try and understand a problem and continue to investigate findings. Beware of research that is designed to find a specific result because it will skew all decision making based off of its findings. 

One of the ways to ensure that results have some validity is to put it within the context of other literature that pertains to the same topic. In this case, most of the analysis seem to use the data of state and local taxes generated per dollar spent and the amount of money visitors spent each time they traveled to Michigan. While the approach seems valid adding another metric or two might counter the limited perspective of the data.

Miscalculated Costs According to the Auditor General

The Office of the Auditor General released the results of their report and found that a number of costs were not included that would have reduced return on investment (Ringler, 2017). They also found that state taxes were calculate, but local taxes were not, which would have increased the ROI.

1. Media Placement $3 Million (-)
2. Media Production $4.3 Million (-)
3. Production Monitoring $2.3 Million (-)
4. Pay-per-Click Advertising Costs $500,000 (-)
5. Public Relations $581,000 (-)
6. Partner Contributions $6.2 Million (-)
7. Local Tax Generation not collected (+)
======================================
Total: 16.9 million not included costs + unknown local taxes collected.

At this point we need to start doing some calculations. My disclaimer is that I'm not an accountant and if there is a better, or more accurate way, to complete these calculations let me know. Within the Auditor Generals findings we see that for 2017 Campaign Expenses are $12.9 million, State Tax Boost was $107.3 million, providing an ROI of $8.33 (Calculate as 107.3/12.9=$8.32). If we add the expenses that were originally not reflected in initial calculations we have ($16.9+12.9)= $29.8 million in total expenses.

It would make sense to calculate the new ROI (107.3/29.8)=$3.6. That is a much lower number than what was originally reported. The new number is still beneficial and worthy of serious consideration on its own. The ROI should go up a little more if we include any benefits to local taxes. This is somewhat dependent on whether it is enough money to be worth the calculation to substantially improve ROI. (*It might be worth someones time to research and calculate*.)

Someone Forgot About the Locals!

Right now our calculations are [($107.3+Unknown Local Taxes)/$29.8] =
 something greater than $3.6.

Reviewing studies that separate out the impact of state and local taxes provides us a "rough" benchmark. More direct data for Michigan would further clarify local and state tax impact from tourism dollars. Because we do not have access to the raw data used in the study, we will do the best we can to find a number that "sort of" works.

State Tax Studies
% State Tax
Study 155
Study 244
Study 336
Study 442
Generic Benchmark44

To obtain a basic benchmark we can add up the 4 studies and get a simple average. More studies mean greater accuracy. (55%+44%+36%+42%)/4=approximately 44%
  • Study 1: Colorado conducted a 15 month advertisement campaign in 2007 and came out with 62.4 million state taxes and $76.9 million local taxes (Ahmed, 2010). That calculates out to something like 55%.
  • Study 2: We can look at similar states in the region to determine how their tourism taxes are dived up. A report in 2019 discusses the economic impact of federal, state and local taxes in the adjoining state of Wisconsin (Tourism Economics, 2019). State taxes in 2018 were $879 and local taxes were $703. ($879+703)/703=44%.
  • Study 3: Here is an old study in 1994 from the U.S. Advisory Commission on Intergovernmental relations that indicated, "State governments collected 64 percent of total state and local travel tax revenues in 1991; local governments collected 36 percent ( U.S. Advisory, 1994)".
  • Study 4: In 2006, Virginia report stated that there were $7.2 million and local taxes $5.2 million. That calculates out to approximately 42%. We can also include an impact study of domestic travel to the state in 2018 that showed that between state and local 44% of taxes were collected by local governments (U.S. Travel Association, 2019).
What the Research Says?

Using numbers provided by one company to make determinations over millions of budgeting dollars and impact on people's lives can be risky. One of the ways to help ensure that numbers are not "way off base" is to put them within the context of other impact studies that calculated state & local taxes. Below you will find a table with four studies. The more studies you include, the more data and information you can get on ranges and benchmarks. For the purposes of this literature piece...good enough!

ROI Studies
$ State & Local Tax
Study 14.3
Study 210.28
Study 38.5
Study 47
Generic Benchmark7.52
  • Study 1 A study reviewed the impact of state spending on 11 states, including Michigan, from 2000 to 2010. The studies were conducted by SMARI, Longwoods and in one case Minnesota Department of Trade & Economic Development.The average ROI is 4.3% with a range of $2.4 to $20 (Ahmed, 2010).
  • Study 2 In 2017 Wyoming put their Tax ROI from advertising dollars at $10.28 (Insights Strategic Marketing & Research, 2017).
  • Study 3 A 2016 to 2017 $8.50 per dollar invested (New Hampshire, 2017).
  • Study 4: Oklahoma posted $7 state and local taxes ROI for 2015 and 2016 (Oklahoma, 2017). 
The Upper and Lower Range of Pure Michigan ROI

Lets start with a base number. The average for Pure Michigan 2006 to 2016 based on a review without local tax included (Ringler, 2017) Average Pure Michigan ROI= $5.49. We will then add in the 44% from state taxes to obtain a total. Local Taxes=(5.49X44)/66=$3.7.  Once we add together the average ROI and the Local Taxes we have an upper limit based on an average. Upper Limit Average=$9.19

We already calculated the new ROI of $3.6 so we can use that to add in the local taxes. Calculation based on Self-Calculation derived from State Auditor Adjustments. State/Local ROI A/ Audit=($3.6 Self Calc.X44)/66=$2.4. New ROI $3.6+Local Taxes $2.4=$6

The range for the combined state and local tax impact is $6- $9.2 ROI  for 2016-2017. New numbers may change this but by using the State Auditors report we can sort of come to a closer government supported number.

Standing back and taking a birds eye view of the problem it would seem that overly optimistic projections had an impact on perceptions. It is hard to ignore the State Auditor's recommended adjustments as they have a responsibility to be as objective as possible. The public trust rests in the government function and after calculating their recommendations, and adding in the projected local taxes, we come out with approximately $6 return for each dollar invested (ROI).

Personally, I like $6 as a conservative number when calculating costs, profits, expense, etc... We are dealing with a lot of unknowns and numbers can be significantly skewed based on the design of the study, how data is extracted, which data is extracted, and how it is calculated and reported. Going conservative leaves a greater likelihood that people will work with caution and think through options.

Mostly, I like it because it is based on some calculations brought forward by the State Auditor and implicitly accepted by Longwoods. The auditors report indicates a number of missed expenses but also recognized that local taxes were not included in their calculations. That leaves me with the understanding that Longwoods agrees in part to the findings or otherwise a rebuttal would have been issued.

State Strategic Choices

Six dollars ($6) per ($1) dollar invested is still a pretty good return on investment. As a state we have to decide if we want to include Pure Michigan funding in future budgets. We can conduct a political and strategic analysis to determine the most likely outcomes. However, in this case, I'm only going to conduct a strategic analysis in order to solidify my own thoughts.

Decision trees help us formalize our ideas, data and judgments to make tough choices. The one provided below is limited simply because it would take a lot of market research to collect all the data to make a market projection. Companies have included political analysis, environmental information, percentages, other research, competitor information, etc.... all to better understand the most likely options.



Options (no particular order)

1. Nix Pure Michigan. If we don't believe the numbers, don't feel it provides any benefits to the the people of the state lets get rid of it. In this case $6 dollars indicates the program does have value. A decision to remove would likely be based on limited resources and trust in its function. We are dealing with comparative advantages of programs. 

2. Adjust the Funding. There are options here that include partial funding. For example, the state may want to provide a matching budget to public sponsored funding. For example, if the business community can come up with $30 million the state would match that $30 million. Another option could be to provide tax incentives to businesses that put money into state sponsored funding.

3. Leave "As Is" with Some type of Budget: Utilize the budget for last year, increase, or reduce it. Lawmakers could decide that the value of the program is worth the expense and may choose to provide a budget.

Future Considerations

The value of research is often based in its practical utility. Research rests on creating models and we should use what we learn to continue to improve the model. In this case, we have some value that may have not been realized and we have better alignment of marketing messages with short-and long term needs.

1. Adjust the message to include the key marketing components of tourism (short-medium strategy) and investing (long-term strategy).2. It is possible to determine the long-tail value of marketing such systems. Someone should determine that value.
3. Encourage corporations to include key aspects of the two marketing components into their own marketing campaigns to create wider reach and recall of the total message.
4. Encourage clusters to market and attract businesses, talent, and resources to enhance their clusters.
5. Create better audit functions through either state or subcontracted firms that are willing to review the research and numbers.
6. Calculating the long-tail of marketing (year over year improvements) and Federal tax influence can provide a broader perspective.

**If you have better numbers, or a similar study and want me to link to it as another perspective let me know**

The Context of Research

I'm working on my own research related to transactional clusters that rests in part on Creative Destruction, Theory of the Firm and Social Networking Theory to create innovative growth in industries. Part of literary section focuses on pack (coordinated) advertising as well as coordinated investments. Effective advertising can lead to the enhancement of Michigan based industries (or any other state) that improve economic prospects. Its not a finished (or completely edited) work but you may read here. 



Ahmed, A. (2010). Measuring return on investment of tourism marketing. University of Minnesota Extension.  https://conservancy.umn.edu/bitstream/handle/11299/167913/MEASURING%20RETURN%20OF%20INVESTMENTS.pdf?sequence=1&isAllowed=y

Hicks & Lafaive, (2016). State of Michigan. Office of Auditor General. Letter. https://audgen.michigan.gov/wp-content/uploads/2017/12/Pure-Michigan-Letter.pdf

 Insights Strategic Marketing & Research 2017 (2017) Advertising Effectiveness & ROI (2017). https://travelwyoming.com/wp-content/uploads/uploads/industry/Wyoming%202017%20Ad%20Effectiveness%20FINAL.pdf

MEDC (2016) Report: Pure Michigan campaign is working.https://whtc.com/news/articles/2017/mar/24/pure-michigan-campaign-is-working/

Michigan Center for Public Policy (2018). New Pure Michigan Return-on-Investment Figure Won’t Include All Costs. Retrieved

Oklahoma Come See for Yourself (2017). OTIA Boardhttps://www.otia.info/docs/OTIA_Board_Presentation_2.9.2017.pdf

Tourism Economics (2019) The Economic Impact of Tourism in Wisconsin. http://industry.travelwisconsin.com/pdfs/wi%20economic%20impact%202019%20final.pdf

U.S. Travel Association (2019). The Economic Impact of Domestic Travel On Virginia Counties 2018. A Study Prepared For Virginia Tourism Authority Doing Business as Virginia Tourism Corporation. https://www.vatc.org/wp-content/uploads/2019/09/2018-Economic-Impact-of-Domestic-Travel-on-Virginia-and-Localities.pd

U.S. Advisory Commission on Intergovernmental relations that indicated (1994). Revenue Diversificationhttps://library.unt.edu/gpo/acir/Reports/information/M-189.pdf

New Hampshire (2017). 2016-17 Advertising Effectiveness & ROI. Insights Strategic Marketing and Research. https://www.visitnh.gov/getmedia/e1245092-c83b-4604-b69b-1c3ea8bb5171/NH-2016-17AdEffectiveness.PDF







Wednesday, January 1, 2020

Suits in the Thicket-2020 Happy New Year's from a Trail

Play and business mesh in the tundra! Business owners can use outdoor activities to tap into their creative side. The outdoors is part of who we are from the deeps roots of our existence. Spending time out there reminds us that life is relative and the goals we set for ourselves should be meaningful to us and beneficial for the rest of the world.

The outdoors offers no bias, no social class, no stores, no phones, no...nothing! It is just what it is....our world!

Since many of us have business (or job), families, and competing interest we don't make it outside as much as we should. Perhaps 2020 will be that year where you begin to explore places like the Upper Peninsula of Michigan where nature blankets everything.

If your the type of who is a business owner and love the outdoors and small forest town life you can always open a business here. Plenty of people are willing to put those good old fashion woodsman(woman) skills to work! Labor costs are more affordable than most of the big cities and local officials are willing to work with you.

Trust me I know that if you own your business you never truly get time off! Yet...you can use the outdoors and the physical activity to get away from your business and spend some time relaxing so tomorrow will be an even more productive day. Sometimes the best ideas hit you when you skiing into the rugged wilderness of the Yoop! its ok to be a suit in the thicket!

Monday, December 9, 2019

Using Regression Analysis to Make Better Strategic Decisions

Scientists researching insecticide use at Algonquin Provincial Park
1. 
Regression analysis is a process that evaluates the relationship between two or more variables. Companies sometimes desire to determine the strength of those relationships to better evaluate advantageous options. Executives may also utilize such statistical methods if they want to make a decision about future unknown events. Business wish they could look into a "crystal ball" but have a hard time doing so without good data to make the most logical decisions. The better a company is at managing data, the less hazy that ball will look.

Consider you are a company that desires to invest in Product Line A and Product Line B. The problem is that you have limited resources and must choose between the two. Ultimately you will want to measure the market (through some type of data extraction method) and plot your measurements on an XY axis scatter type chart.

When stepping back and taking a look you might start seeing some bunches, relationships and other "aha!" things coming to mind. To determine the strength of those relationships one might employ a Regression Analysis. Harvard Business Review has a solid description of one here https://hbr.org/2015/11/a-refresher-on-regression-analysis

One of the best ways to see and understand regression analysis is by looking at companies that actually do this kind of work. They do it everyday trying to gain more information on the market in an effort to make better predictions. Read this blog post by SurveyGizmo. https://www.surveygizmo.com/resources/blog/regression-analysis/

Review the charts in the post and see how they draw a line right through the center of the data points. That line is the relationship between your dependent and independent variables. Everything else is measure off of that line to determine the degree of influence. Software can help you determine the precise line but for many of us "guestimating" works.

Strategic Decision Making?

You have limited resources and two strategic options that will expend those resources. Before deciding which one to choose you may want to take all the market data you have and create a regression analysis to review for trends. In essence, you want to run some software and determine the strength of certain relationships.

What some executives might do is review their internal resources, competencies, knowledge and abilities to see what strategy they are most likely able to fulfill given the resources they have available. Wise executives might also want to include external environmental information such as regulations, labor skill, etc... before coming to a final conclusion.

Data is increasingly important to decision makers as the market picks up more and more information through electronic commerce. This information will be organized and utilized in new ways to make better market decisions. At the end of the day, the ability to understand and use data is important to one's long-term career. Science and rational thinking abilities will not go away and knowing your customers through the data they leave behind is part of the next global innovation trends.


Monday, December 2, 2019

Honoring the Polo Horse! Need for Speed!

There are few things more beautiful than watching a horse gallop at full speed across a field! The rhythmic sound of hooves dancing the dirt.  Debris spring to life when they machines leap forward! Nostrils flair while necks push to reach each step. The rider floats inches above the saddle in a gliding world wind.

Mankind began domesticating these animals around 10,000 years ago (1). Since then we have sought to harness and improve their power. In polo we seek to use this power in a competitive manner. That requires a lot, and I mean a lot, of training! You can see that hard work in their gait, dexterity, and responsiveness.

In my spare time I make polo mallets and sometimes get lucky enough to sell a few here or there. 50% of profits go to orphans. Another 10% may be donated to horse rescues (or other related). As a hobby business, and a sport I sometimes get to play, I can't think of any other places to spend some free time. Put on my headphones and get to work.  I sell them around $70 as practice mallets until quality is improved. The grip quality and availability straight canes seems to be my primary concern.  Got an idea on how to use a rubber inner core for the handle.

Wednesday, November 27, 2019

Digital GDP on Government's Mind. Can We Maximize Growth Through Cluster Development?

There is a growing body of evidence that the current economic measures are not capturing the full power of the digital economy. More particularly, digital content and the digital economy are not fully utilized. The Theory of Transactional Clusters starts to build a broad/general theory based on existing cluster research to better determine how information sharing within the digital economy impacts innovative growth.

Data has exploded over the past few decades. The value associated with digital services, software, and its impact on industry development is elusive at best. Older models are limited by the assumptions gained during their historical development. GDP is one such measure of national output but often doesn't do well in calculating digital value. Research has shown that digital content can increase GDP by as much as 6% (Byrne & Corrado, 2019).

From an economic standpoint, digital content represents only a sliver of total economic value. According to one of the largest Chinese technology manufacturers Huawei Technologies Co, we are skipping over a significant portion of our productive value in the GDP debate (Wladawsky-Berger, 2017). There is real value that will drive future markets and we have only just started to calculate that value. 

The Federal Research discussion on the value of consumer goods is broken down into the home goods that we buy to access networks and the subscription services for digital services (Byrne & Corrado, 2019). The value not reflected in standard GDP measurements amounts to approximately $1,775 per connected user per year from 2004 to 2017. The formula they use for the value of consumer digital services is below (hardware+subscription):

(Byrne & Corrado, 2019)
There is growing consensus that digital innovation has real value and influence on the development of new wealth. If we add in business development networks (i.e. collaborative networks) into the overall mix we will likely find that the value of efficiencies and innovation isn't being fully realized. We are missing a golden opportunity to develop areas of our nation that spearhead new ways to return manufacturing back to the U.S.

One of the major advantages of technology is that it creates spill over that speeds the pace of cluster growth.. "The digital spillover happens when technology accelerates knowledge transfer, business innovation, and performance improvement within a company, across supply chains and amongst industries, to achieve a sustainable development economic impact"(Xu & Cooper, 2019, p. 24).


Principle: Data services and technology have real value on innovation and GDP.


Consider that emerging online networks and software empowers companies to collaborate in ways that was not possible 20 years ago. Information is increasingly being shared and having major impact on jobs, life, and the economy as we know it! Those networks lead to innovation that is responsible for things like new cell phones and improved government efficiencies.

As much as $1.7 Trillion can be added to the economy by 2025 through digitization (Xu & Cooper, 2019). The same report said that 24.3% of the global GDP will be from digitization. Matched with proper cluster management it is possible that number could be much larger putting the U.S. on a leading path of inventors and builders. 

Principle: New inventions and the Butterfly Effect Increase Cluster Development.

In the cluster model the right factors lead to innovation and in turn impact the growth potential of the entire cluster. Think of a new manufacturing method in one company and how it is quickly adopted throughout the cluster to strengthen the entire system. The networks (physical and virtual) improve the speed of technology transference to other members of the system that creates benefits for the entire cluster. 


Principle: Technology can Increase Innovation through Connecting Ideas


Innovation occurs by connecting new and unique ideas to solve problems. Companies that are in close proximity to each other, share resources, and have movement of employees (spill over) have an easier time innovating. In the cluster model it is possible to see how creative destruction (Schumpeter) leads to pressure to innovate through the need for change, the firm invests in new products/services, and the social networks create and disseminate that innovation throughout the entire cluster. 


In the physical world, companies have an advantage by being next to each other and share physical assets. In contrast, in the virtual world companies have the mutual advantage of sharing intellectual resources. Physical proximity enhanced with digital interactivity that leads to product innovation through the sweat spot of economic growth. 


According to an article in Wall street Journal the U.S. has the largest digital economy 35% of GDP when compared to 18.5% average for other advanced nations (Wladawsky-Berger, 2017).  The number further represents about 1/3 digital assets and 2/3 digital spill over. Spill over often results in additional innovation as its make its way throughout its cluster.


The digital economy is going to continue growing. According to a 2017 Huawei Technologies Co., Ltd. and Oxford Economics study entitled Measuring the true impact of the digital economy, the digital economy will move from 15.5% of the entire global economy in 2016 to 24.3% in 2025. The U.S. should be leading that growth sector by making adjustments now to enhance future invention and manufacturing sectors.


More interesting the same study found that for every $1 invested in digital technologies over the past three decades a whopping $20 was added on average to GDP (Xu & Cooper, 2019, p. 24) That was much higher rate of return when compared to other investments that maintained on average a $3 return per $1 invested. As investment in technology increases so does wealth increase for a nation.

Principle: Investments in national technology leads to high impacts on GDP.

Interactive clusters strength is based in part on its infrastructure. Of which, the ability to share data and information relies heavily on high speed data delivery that can move ideas and resources quickly. Cities that invest in their technology infrastructure may find better opportunities for future growth as networks form to improve cluster development.

Principle: Technology infrastructure can enhance cluster development.

Our digital GDP provides a major strategic advantage that will lead to national innovation when harnessed properly. It is through this digital economy and the innovation it provides that new products that enhance manufacturing occur. When we put people to work building the products our companies invented we will find, not only our national wealth growing, but also our personal and local income.


There are two important things to consider when fitting this study into an economic cluster research....


1. Digital collaboration networks create value for businesses within a cluster. 

2. Bunching these networks into interactive clusters may enhance GDP through market driven innovative outcomes.

The study I'm working on fits with modern cluster research but was developed semi-independently from other theories. It has a few advantages that include sustainable development and the connecting of a few theories into one that may lead to break out markers. It is not a finished product but you may read about how far I am HERE 

David Byrne, Carol Corrado (2019) Accounting for Innovations in Consumer Digital Services: IT still matters Federal Reserve Board, Washington, D.C.https://www.federalreserve.gov/econres/feds/files/2019049pap.pdf

Wladawsky-Berger, I (September, 2017). GDP Doesn’t Work In A Digital Economy. The Wall Street Journal. Retrieved https://blogs.wsj.com/cio/2017/11/03/gdp-doesnt-work-in-a-digital-economy/

Xu, W. & Cooper, A. (2017). Measuring the true impact of the digital economy. Huawei Technologies Co., Ltd. and Oxford Economics.
  https://www.huawei.com/minisite/gci/en/digital-spillover/files/gci_digital_spillover.pdf




Monday, November 25, 2019

Steps to Preparing Data- Keep it Clean!

Collecting pounds of data is useless unless we can do something with it that leads to new knowledge and information. You may start with a mound of useless numbers, samples, and information. It can feel a little overwhelming. You can reduce data anxiety by thinking about your study beforehand and following a few steps to preparing it for analysis and use.

Pre-planning is important. Developing your coding process, organization methods, and statistical measurements beforehand will lead to a better study. That doesn't mean the process are set in stone but that a better data plan improves the end results.

Scrub out useless data that isn't going to help your study. Be aware that what you may find useless does contain useful information. For example, if you have a lot of people who abandon your survey it may be the language, design, or even type of questions that push people to leave.

Take out that data which is truly not helpful to your study because of inaccuracy and human error. Review each removed data points and try and keep some records of what you did. I save multiple versions before and after the scrubbing.

Then I begin to categorize the information about the variables. Sometimes I need to code the data so it is more useful. That occurs when you need a specific numerical number or letter to designate where the data came from. Depending on how I want to categorize I will use any number of methods and coding methodologies.

There is a lot of information out there on classification of data. I suggest you read this blog article from the Digital Guardian Blog. https://digitalguardian.com/blog/what-data-classification-data-classification-definition  It provides some great resources.

Data classification makes data useful. You will want to ensure that whatever encoding process you use that you can find the things you need. I have seem people put together great coding systems and then find they can't retrieve the information from their data bases properly. Keep it simple in science!

Raw data is relatively useless. You have a responsibility to make it more useful by preparing it for data analytics. The better job you do at the root level, the better off you will be when you want to analyze that data for connections and meaning. One of the best things you can do is have this all written down and figured out before you get started.


Tuesday, November 19, 2019

Boxing and Muay Thai as Fitness: Watch the Knee to Abdomen!

If your planning on getting into shape and don't really know how to do it then you might want to pick up some Muay Thai boxing. While originally a number of years of training in Kenpo and general boxing I must say that Muay Thai has some serious advantages for fitness.

Its almost all cardio!

That is right! Boxers are known to be in shape. They spend almost all of their time training and very little in the ring. Thus, they are constantly conditioning and that means little to no fat on their bodies!

Useful coordination!

When your body works together to complete these moves there is useful coordination. The movements can be used for other types of activities that rely on those basic skills.

Muscle and upper body strength!

Kickboxing is known to produce people with high muscle strength. Mixing speed and force together creates a nuclear powerhouse for growing muscle.

How did I do? Well...it was a great practice. Lots of body mechanic movement type stuff to make sure proper elbow placement and proper rotating of hip during kicks.


Sampling Your Population-One Nut at a Time!

Sampling is a little like going to the grocery store and plucking a nut or two to "sample" the product. While this might get you kicked out of your local grocery store in a research world it is encouraged to sample as much as you want!!!! No one will shun you for grabbing a handful of sample nuts as long as you share what you did! 🤯

It would be in most cases, except a few small populations, excruciatingly difficult to test everyone in the population. We then must consider a smaller and more reasonable size that "sort of" shared the same characteristics as the main population.

The risk in many of these cases is that sampling is done incorrectly and misrepresents the true population. To better ensure accuracy we may use a number different methods such as random and convenience samples. The video below gives a few ideas....




There is no such thing as an accurate sample! You can sample as much as you like, over and over, and it won't be 100% correct! Sampling in different ways by taking multiple measurements from different areas leads to better outcome.

Sometimes samples are not big enough to draw any real conclusions. Confidence levels and sample size calculations can help ensure a size of participants needed to make meaningful conclusions.

Likewise, how we design our study is going to have influence on the samples taken. Designs will impact how and what types of samples are needed and where we draw them from.

What we should learn here is that sampling is very important and if we desire to have studies that draw meaningful conclusions from the data some consideration over sampling is needed. Review your study design, access to samples, the selection and tools you will need to make a solid analysis of your study focus.