The Future Is Disorder

Here’s a peak into Chapter 2 of my new book, Firms of Endearment (abridged and edited):

In discussing the current epochal scale of change in virtually every dimension of civilization, in his play Arcadia Tom Stoppard’s character Valentine first delivered the words, “The future is disorder.” before a public audience in April 1993. A dozen years later that future has arrived – at least in the business world.

The globally iconic Coca-Cola brand is in disorder. It is seeking to regain lost footing under CEO Neville Isdell who has vowed to “double the value of the Coca Cola trademark within a decade by reviving the icon with advertising with a youthful point of view.” Isdell ignored the fact that population growth among the young has slowed to a crawl and in some age groups, has actually come to a halt. That and the fact that soft drink consumption generally falls off in the 30s means demographics are working against Coke’s prospects for growth.

The beer business is in disorder. Population growth in its most important demo – 21 to 27-year-olds – has stopped. After the 20s, people are likelier to prefer distilled spirits (and wine) to beer. In 2004, with total sales of $25.6 billion, beer sales were 53.2% of the alcoholic beverage market – down from 56% in 1999. Meanwhile, market share for distilled spirits grew to 31.3%, up from 28.2% in 1999. As with Coke, demographics are working against sales growth. because

The domestic auto industry is in disorder. Both GM and Ford, saddled with heavy legacy costs consisting primarily retirement medical and pension benefits, had their creditworthiness marked down to junk bond status last week. Riding on the chassis of every car GM builds are legacy costs of $1,600. Additional benefits push the starting costs of each car to over $2,000. Analysts figure GM needs at least 25% market share just to break even. In 2004, GM’s market share fell to a scary 25.6%.

Marketing is in disorder. P&G head, A. F. Lafley, acknowledged this when he said, “We need to reinvent the way we market to consumers. We need a new model. It does not exist. No one else has one yet..” P&G global marketing director Jim Stengel has forthrightly declared, “Marketing is broken.” Ad critic Bob Garfield wrote of marketing disorder in his epochal 5,000-word essay “Chaos Scenario” that Advertising Age ran in early 2005.

Network television is in disorder. Audience attrition has reached crisis proportions. Yet, network executives still blithely put on a heroic face to mask the grim realities they face. Last summer, NBC Television president Jeff Zucker predicted imminent turn-around in network viewing. The networks were about to enter the first season ever in which cable had a larger audience. At the same time, CBS chairman Les Moonves claimed, “More people will be watching network television. That’s a great story for network television” – empty words suggesting that wishful thinking carries more weight in television executive suites today than reality does.

Radio is in disorder. Satellite radio, XM radio, podcasting and the Internet are sending broadcast radio down for the 10-count.

The newspaper business is in disorder. Circulation has been declining 0.5% to 1.0% annually since the mid-1980s. The trend accelerated between October 2004 and March 2005, with a drop of 1.9 %. Newspaper industry analyst John Morton says,  "I don't see any bright spots and I don't see any reasonable expectation this is going to change anytime soon.”

And every one who flies knows that the traditional airline business is in disorder.

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Why is there so much disorder around us? Stay tuned.