From the Knowledge@Wharton today blog.

The Indian economy may be going through a rough patch, but a recent study points out that as compared to women in developed nations like the U.S. and the U.K., women in India are more bullish about their entrepreneurial ventures.

Commissioned by PC maker Dell, the Women’s Global Entrepreneurship Study surveyed women entrepreneurs across India, the U.S. and the U.K. The study found that women entrepreneurs in the U.S. anticipate an average growth of 50% in their businesses over the next five years, while in the U.K. women entrepreneurs expect to see their businesses growing by only 24% over the same period. In India however, women entrepreneurs anticipate an average of 90% growth over the next five years. And 80% said that they are hiring.

The study was released by Dell at the third annual Dell Women’s Entrepreneur Network (DWEN) event held in New Delhi recently. The earlier DWEN events were held in Shanghai in 2010 and Rio de Janeiro in 2011. According to a statement by Dell, India was picked as the host country for this year’s conference because of “its role as one of the largest emerging markets, as well as its influence on the world of technology.”

“Women are playing increasingly important roles in leadership and we’re seeing some of the most exciting global growth coming from female-led companies,” said Moira Forbes, publisher of Forbes Woman, who led the two day event. She noted that in Asia, “female business leaders and entrepreneurs are changing the face of business and India is at the forefront of this phenomenon.“

Hema Ravichandar, a strategic HR advisor, suggests that the emergence of the services sector in India, which has resulted in an increase of women in the workplace, has played a key role in encouraging them to strike out on their own. “Many [women] after experiencing life as an employee [in the services sector] have been inclined to adopt entrepreneurship,” she says. “This not only gives them much-needed flexibility with regard to their respective work patterns — especially useful when on the ‘Mommy track’ — but also empowers them to do things differently and, [in] many cases, more effectively. This success in a way reinforces others into experimenting with this option.” Ravichandar adds that the emergence of the services sector “has also made [entrepreneurship] a much more level playing field unlike traditional industries, [such as] manufacturing.”

Nirmala Menon, founder and CEO of Interweave Consulting, a Bangalore-based firm that focuses on diversity management and inclusiveness in the workplace, points out that there is a lot of visibility and acknowledgement of women entrepreneurs as reliable partners and vendors. “Some organizations are encouraging them as part of their corporate supplier diversity programs. This is spurring other women to enter the space as well.”

Menon adds that Indian women inherently have an important entrepreneurial trait — resilience. “Women in India have had to traditionally manage with limited resources and that native intelligence helps them manage creatively with frugal resources available,” she notes. “They reuse, save, negotiate, find alternatives — all of which contributes to their success as an entrepreneur.”

But what are some of the challenges that they face? Menon suggests that women find it more cumbersome than men to navigate the regulatory and procedural complexities. She attributes this to “a fairly complex process managed mostly by men.” Menon adds that while women entrepreneurs have domain expertise, they often lack profit and loss experience and by consequence could struggle with the “business-side” of an enterprise. However, the biggest challenge for women entrepreneurs in India, she says, is coping with societal expectations. “These are changing, but still have some way to go.”

This post previously appeared in the Knowledge@Wharton today blog: A Bullish Outlook for India’s Female Entrepreneurs

From the Knowledge@Wharton today blog.

In 1991, when the Indian economy was on its last legs and the country was on the verge of defaulting on its international obligations, Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh ushered in an era of economic reforms. They worked: India became one of the fastest-growing large economies in the world.

But history is now repeating itself. India’s rating has been downgraded by S&P and Fitch. And a duo including Finance Minister Manmohan Singh is heading the rescue act. Of course, things are not exactly the same. Singh is prime minister too, having taken additional charge when erstwhile Finance Minister Pranab Mukherjee stepped down to run for president. (The presidential elections are on July 19 but, as a candidate for the ruling party with outside support, Mukherjee is near certain to win.)

This time around, Singh’s companion in action is the ruling Congress Party chief Sonia Gandhi and she is expected to want approval on every policy change. On June 27, shortly after taking over as PM, Singh called upon the country to shed the current climate of pessimism. “Revive the animal spirits in the country’s economy,” Singh told finance ministry officials. (Singh, an economist, was talking in a Keynesian sense of consumer confidence.)

Singh further spelled out the problems facing India. “At the current juncture, we are passing through challenging times economically,” he said. “The growth rate has taken a dip, industrial performance is not satisfactory, things are not rosy on the investment front [and] inflation continues to be a problem…. On the external front, I am concerned about the way the exchange rate is going. Investor sentiment is down and capital flows are drying up.”

There seemed to be acceptance of the fact that mistakes have been made. Former Finance Minister Mukherjee, on his last visit to his office, told the media: “I know that not every decision I have taken might have been right. But I have taken those decisions always keeping in mind the simple and poor people I knew from my childhood.” That is the nearest a politician can get to admit giving in to populist inclinations.

Perhaps Mukherjee’s biggest errors, his critics say, have been in the last Union Budget. He reversed a Supreme Court decision in a tax case against Vodafone. Retrospective taxes added to the scare. “There are problems on the tax front, which need to be addressed,” noted Singh. Much must be done “to restart the India growth story,” he added.

Getting Mukherjee out of the way was the first step, observers note. He has repeatedly defended his tax proposals, and suggestions that he move to another ministry with former Finance Minister P. Chidambaram taking over were not welcomed, as this would have been seen as a demotion. Mukherjee has been through this before. In 1984, when Prime Minister Indira Gandhi was assassinated, he threw his hat into the ring to become prime minister. But the party instead chose Rajiv Gandhi, a pilot for a commercial airline, to become prime minister. And Mukherjee spent many years in the cold. This time the President’s job can be projected as a promotion, though the role is entirely ornamental. (In India, it’s a job equivalent to that of the Queen of England.)

Will Singh be able to usher in reform a second time? Among the potential roadblocks are that some loyalists of the Gandhi family would like to see him fail, as success would take part of the aura away from Sonia Gandhi and heir apparent, Rahul Gandhi. A successful Singh may start commanding a political base of its own. Besides, the real issue is building up confidence in foreign investors and Indian businessmen. After the shocks they have had from the budget and other measures, that may not be too easy a task. The stock market, the principal leading indicator, has been ambivalent. They prefer to wait and watch.

This post previously appeared in the Knowledge@Wharton today blog: Manmohan Singh Attempts a Second Economic Turnaround in India

Professor Fariborz Moshirian

I have doubts as to whether the meeting  this week of European Union leaders – which kicks off on Thursday – will produce any more measures to tackle the euro debt crisis.

The debt crisis is now in its third year and the latest country to be hit is Spain, which is the eurozone’s fourth-largest economy. Stock markets around the world fell sharply yesterday on doubts that the European summit will make any progress in solving the region’s debt crisis. Spanish and Italian bond yields rose in a sign of investor worries, while the price of US government debt rose as investors sought safety.

Certainly sentiment around the eurozone debt crisis is worsening ahead of the crucial meeting.

Right now, everyone is pessimistic, and while we had some positive commentary last week from the G20 meeting, this week there seems to be German resistance to moving forward with joint fiscal liability.

Spain and the Cyprus have now become the fourth and fifth countries to request aid from the eurozone’s bailout funds, extending a casualty list in a protracted regional debt crisis that is threatening to break up the 17-nation currency bloc.

More financial difficulties in Spain, Italy and France are likely to accelerate the process of fiscal integration in the euro zone. This will then allow Germany to provide more financial support to the eurozone members in exchange for more power for the European Commission to supervise and monitor the national budgets within the member countries.

France is resisting fiscal policy supervision by the European Commission. However, more bad financial news from Spain and further the economic down turn in the eurozone may allow both Germany and France to compromise and fast track the process of public finance integration and the emergence of Eurobond over time.

During the upcoming EU Summit, I would strongly urge national leaders to consider the greater interest of Europe ahead of their own national interest and I believe that a collaborative approach to the current financial crisis could make every country better off. This would prepare the European economy to compete with Asia more effectively in the medium term.

Professor Fariborz Moshirian is the Director of the Institute of Global Finance at the Australian School of Business.

Gina Anderson | CSI Blog

Healthcare is a global issue, not just a local problem. Virus and pandemic, chronic illness and disability: they don’t generally have any respect for geography.  As such, they often have common symptoms and common outcomes; death, lifelong disability, spiraling healthcare costs and increasing impacts on those who can least afford it.

Australian research organisations like The George Institute for Global Health, Baker IDI, Burnet Institute, and many others, undertake global projects specifically designed to provide evidence that will directly inform decisions about health policy and help change practice. That is health policy anywhere in the world. They don’t guard their research results because stroke, obesity, road trauma or diabetes don’t only affect Australians. You can suffer from diabetes in Mumbai as in Melbourne.

However this international medical research work is under a threat with proposed ‘In-Australia’ legislative tax changes for charities. The proposed changes include an ‘operated solely in Australia’ restriction, designed to ensure that tax deductible donations are used for the benefit of the Australian public. Unfortunately these changes appear to put the deductible gift recipient status of medical research institutes that undertake work internationally at risk because their research trials and activities are not conducted ‘solely in Australia’.  

For instance, as a world-class Australian-based medical research institute, The George Institute undertakes critically important clinical research into the causes, prevention and treatment of the most common diseases affecting Australians. In addition, the work of  The George Institute has also already changed the healthcare received by millions of people worldwide. 

To continue to undertake this critical work, The George Institute needs to reliably ascertain the causes of disease and the effects of various interventions. This requires large numbers of participants in studies and trials, the most important of which will typically need to be run internationally to gather the greatest knowledge and insights. Indeed most high-impact research requires some form of international activity or collaboration. It is through this work that they contribute to improving the health of people around the world, including major advances in the healthcare of Australians.

The proposed legislation would be a backward step that would punish successful Australian research institutes by denying them deductible gift recipient status on the basis that some of their work is international.

While it appears the proposed changes were not intended to target medical research institutes, if passed as they stand, these changes would have an extremely damaging impact on the sector, and consequently on the health of Australians going forward.

Let’s hope common sense prevails so medical research institutes like The George Institute, can achieve their mission to “improve the health of millions worldwide”.

Gina Anderson is a member of The George Institute Board and was Executive Director and Chief Executive Officer of Philanthropy Australia from 2005- 2010. This article first appeared on the CSI Blog.

 Tim Harcourt | The Airport Economist

London is still abuzz from the recent royal celebrations, deemed the perfect lead-in for this year’s Olympics. And in typical fashion, Australians are pushing their way to the forefront of this sporting bonanza.

From BBC newsrooms to boardrooms the Australian accents are present and many of a Gen X and Gen Y vintage are making their own mark on London society.

The build-up to the 30th Olympics has seen every body from Prince William and Kate Middleton, the Duke and Duchess of Cambridge to the irrepressible Sacha Baron Cohen as his new character The Dictator in an orange Ferrari surrounded by 20 beautiful bodyguards pushed to the fore to promote the UK.

But Australians are quietly infiltrating the party as London prepares to host its first Olympics since the post-war games of 1948 under what were then times of austerity (a term used a lot in European political circles nowadays).

All the big names in Sydney 2000 are there again – Sandy Hollway, Michael Pirrie, David Higgins, and Simon Baulderstone along with newer players like Rob Abernethy, the ex-FFA official who runs the aquatic centre and Mark Evers, an Australian who runs the transport and logistics side of the games. Even the BBC studio at White City is full of Australian accents. The Sydney 2000 Games is now considered the model Olympics for LOCOG and the IOC itself.

Newly re-elected London mayor Boris Johnson constantly talks of Sydney being the benchmark and the need for the British Olympic team to win more medals than Australia. We are just waiting for the inevitable bet with Sydney mayor Clover Moore to fly the winners’ flag over the Tower Bridge or the Sydney Harbour Bridge.

Many Australian companies have also been involved in London 2012. In the East End of London, Stratford Westfield dominates the skyline and Frank Lowy’s vision has been to leave a strong legacy in a new town centre and shopping complex to help ameliorate depressed conditions in that part of London.

Architects that were prominent in Sydney and in Beijing, like PTW (headed by rock-star architect John Bilman) and Populous are building key facilities.

Behind the scenes Spotless (Cleanaway) are continuing on from numerous international sporting events since Sydney 2000, Advanced Polymer Technology is laying down the Astroturf, and a small company from the Adelaide Hills, Steriline Racing, is again working on an equestrian arena with an eye to Rio de Janeiro 2016.

The Australian Government, like before, will be holding a major networking event.

The Business Club Australia concept was set up in Sydney to give companies a chance to meet major international business visitors and according to the BCA’s own architect Ashley White, the Sydney Games launched a whole new concept about using international sporting events to make business contacts and build the nation’s business brand.

Austrade’s senior trade commissioner in London, Kym Fullgrabe, says the Sydney Games was where a whole cluster of world-class Australian companies began delivering excellence at the Olympics.

It is well known that Australia played a big role in Beijing in 2008, given our strong presence in China but even in Athens 2004, there were 43 companies. So bring on the Games, hopefully it will help to lift some of the economic gloom in Europe but we will still come home with a major share of the medals.

Tim Harcourt is the JW Nevile Fellow in Economics and an adjunct professor in International Business Strategy, at the Australian School of Business, the University of New South Wales (UNSW) & author of The Airport Economist:  www.theairporteconomist.com.

From the Knowledge@Wharton today blog.

With the introduction earlier this week of the Surface tablet, most observers seem to agree that Microsoft got a lot of things right, launching a well-designed product with features lacking in its chief competitor — Apple’s iPad — including a cover that functions as a keyboard and the ability to run desktop software programs.

But the presentation also left many unanswered questions, including the exact price, release date and battery life of the device. Perhaps more importantly, it is still unclear what the Surface offers beyond hardware — and if Microsoft can leverage successful offerings such as its Xbox gaming system and Office productivity suite to create a vibrant ecosystem to rival that of the iPad.

“At first glimpse, Microsoft appears to have gotten a lot right with the Surface tablet,” Wharton new media director Kendall Whitehouse says. “Including an integrated keyboard with the Surface is a great idea. More importantly, however, is that the Surface runs Windows 8. In this regard, Microsoft has leapt ahead of the competition. This is the eventual direction for tablet and mobile products: To close the gap between the mobile/tablet environment and the desktop/laptop environment.”

Whitehouse adds that making Windows 8 the operating system for the Surface is a “big bet” for Microsoft. “But I admire their courage in going ‘all in’ with their new OS. And, if they can pull this off by successfully implementing a consistent user experience across desktop, laptop, tablet and mobile phone devices, they could be back in the game in a big way.”

The move is also reflective of a growing trend in the tech sector, with companies focusing more on offering a full range of hardware and software similar to the Apple ecosystem, says Wharton marketing professor Eric Bradlow. “Every portal is trying to get into the device game,” he notes. “They are worried that someone else taking over the device market will create a friction cost so that the other portals are ‘harder’ to use. I treat Microsoft the same way. They are trying to develop a portal that will keep the Windows 8 platform and the Microsoft suite of products top of mind.”

According to Wharton operations and information management professor Eric Clemons, the iPad is “nearly perfect” as an entertainment device. But it is lacking in the area of productivity, which is where the Surface may be able to make inroads with consumers.

“Providing the Surface with twice the memory of an iPad was a nice move. Adding a USB port was even smarter. Providing Office was smarter still,” Clemons notes. “Until now, when I travel, I need three devices: I need an iPhone. I need a MacBook Pro. And I need an iPad for the plane ride itself. Now I can get away with only two devices, at least on shorter trips…. And a Surface would allow me to write real documents, send real e-mails and view my camera photographs — I mean from a real camera, a Nikon Digital SLR, not a camera phone picture.”

Clemons suggests that sales of the Macbook Air and the iPad could be threatened by the Surface “except that I expected this some time ago from a Microsoft platform, and I bet Apple did, too. So look for an iPad … that runs Office and has a USB port very soon.”

This post previously appeared in the Knowledge@Wharton today blog: Digging Below the Surface of Microsoft’s Tablet Strategy

From the Knowledge@Wharton today blog.

Every development that signals some progress in stemming the debt woes in Europe seems to do little to calm market nerves over the unfolding crisis. While the victory on June 17 of Greece’s pro-bailout New Democracy party eliminated the prospect of an imminent Greek departure from the euro, attention quickly focused on the difficulty New Democracy leader Antonis Samaris would have in forging a workable coalition with other parties in the country. Meanwhile, the eurozone’s plan to inject as much as 100 billion euro into Spanish banks was met with skepticism in the markets and mounting anxiety over the precarious financial position of the Spanish government. With pressure mounting for more action, reports are circulating of a possible deal to bail out Spain and Italy by directing two pan-European government funds to buy up 750 billion euro of their bonds. 

Mauro Guillen, a Wharton management professor and director of the Lauder Institute, and Olivier Chatain, a Wharton management professor, offer insights on the unfolding events in Europe in a conversation with Knowledge@Wharton.

Knowledge@Wharton: The victory of the New Democracy party in Greece seemed to calm the market for a brief period. Why?

Mauro Guillen: The debacle has been avoided, but that does not mean the preexisting problem is gone. Greece can’t service its debt under current terms, especially if the economy does not recover. And the economy [is] not recovering because Europe as a whole is entering a new recession. Some renegotiation of the terms might be necessary and/or the European Central Bank must accept higher inflation to underpin an economic recovery.

Olivier Chatain: There was relief because the prospect of an immediate and disorderly exit from the euro was not realized, as was feared if the far left had won the election. However, nothing has changed on the ground. There will be another government that will try to keep on muddling through, hoping to hold on until either the troika [of the European Commission, European Central Bank and the International Monetary Fund] becomes more flexible and renegotiates the bailout or until exit is unavoidable. Their preference is probably to stay in the euro, but at the same time the current course of austerity is not sustainable, so something will have to give.

Knowledge@Wharton: The bailout plan for Spanish banks seems to have only heightened worries about Spain. What is behind that growing concern?

Guillen: There are rumors of a plan to buy Spanish and Italian debt. With the economies in Spain and Italy shrinking, they need some help. There is no way out unless there is either a bailout or a return to economic growth (or possibly both).

Chatain: Greece is a sideshow compared to Spain and Italy. The root of the problem is that the Spanish banks have a large amount of bad debt following the implosion of the real estate bubble there and that the Spanish government has to bail out the banks to prevent a collapse of the Spanish economy. While the pre-crisis fiscal situation was very good, it is deteriorating very fast because of the need to rescue the private sector.

Now, it is clear that Spain will need significant help from the other countries and, until it gets it, investors are asking for higher interest rates, making a bailout even more necessary. The 100 billion euro package agreed upon last week is clearly not enough. If there is a larger bailout [as reports indicate], that will help Spain borrow at a lower rate, which is a prerequisite for moving forward. But the banking issue will still have to be dealt with.

Knowledge@Wharton: What do you believe must happen next to contain the crisis?

Chatain: The immediate concern is to fix the banking crisis that is propagating across the EU. These Spanish banks need capital injections. And Italy needs lower interest rates. There are many ways to make these things happen. But [attempts to address this] run into severe political constraints, as the electorates in countries that would need to pay for the bailouts are not happy with this prospect. At the same time, politicians are not explaining that the alternative — no bail out and the end of the euro — is likely to be much more damaging for them. Consider, for example, that if Germany were to revert to an independent currency, its exchange rate would rise … and its exports would suffer tremendously.

Guillen: There needs to be some debt restructuring in Greece, and at least a partial bailout of Spain and Italy might be necessary. But what is absolutely essential is that the conditions for economic growth are created, preferably through increased demand from the surplus economies, and [that there be] a tolerance for slightly higher inflation.

This post previously appeared in the Knowledge@Wharton today blog: ‘Greece Is a Sideshow Compared to Spain and Italy’

From the Knowledge@Wharton today blog.

The rapid growth in mobile phone use worldwide is good news for marketers and service providers, but challenges persist in monetizing that penetration.

Despite the fact that mobile users now make up 10% of all online traffic, ad spend in the U.S. on mobile was only 1% of the total, compared with 22% on the Internet, according to a report released last month by Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers (KPCB). Desktop Internet access scored over mobile phones in terms of average revenue per user (ARPU), the report noted: Last year, the ARPU from desktop Internet users was an estimated $49, while it ranged from below $4 to about $18 for mobile advertising at companies like Pandora, Zynga and others.

But advertisers have found desktop Internet advertising more expensive than mobile. The effective cost per thousand views in traditional online advertising is $3.50, compared with 75 cents on mobile devices, according to the report.

Kartik Hosanagar, a Wharton professor of information and operations management, says it makes sense that the ARPU is lower in mobile than on the traditional web. Mobile devices have limited screen space, and that makes it difficult to implement advertising efficiently, he points out. The nature of mobile usage presents another obstacle. “Most people access [data] on-the-go and are looking to pull information,” he says of mobile users. “Therefore, they are unlikely to linger around to consume other information/content that is pushed to them.”

However, Hosanagar finds significant untapped potential for other forms of monetisation in the mobile space. “A key difference is that while most content on the web is offered for free, paid content and apps are very much thriving on the mobile side.” The monetization model on mobile will be based less on advertising and more on paid content than the traditional Internet, he says.

The KPCB report also noted that the global Internet user population (including both desktop and mobile access) grew 8% in 2011 to 2.3 billion, led by China (513 million users) and followed by the U.S. (245 million users). A Cisco report, also released in May, put the number of Internet connections worldwide at 10.3 billion at the end of 2011, and projected that the number will grow to 18.9 billion by 2016. Driving that trend will be smartphones, tablets and other handheld devices. India will see Internet traffic grow the fastest, followed by Brazil and South Africa, according to a Bloomberg report.

As all that growth plays out, Hosanagar sees “a big opportunity” ahead for Internet service providers, but he notes that there are obstacles. “Their worry, of course, is that they might end up as dumb pipes carrying bits. If so, their services will become commoditised and have lower margins.” However, he doesn’t see service providers facing difficulties in monetising their investments in infrastructure with continued traffic growth in the medium term, especially with the increasing popularity of online video.

And while there has been tremendous progress in network speeds in recent years, the world has only harnessed a fraction of the Internet’s potential so far. “We are still having the same conversation we had 15 years ago, before the broadband revolution,” Kevin Werbach, a Wharton professor of legal studies and business ethics, said in a recent Knowledge@Wharton article. His comments came after a conference on broadband trends in April at Wharton’s San Francisco campus, organised by the school’s Mack Center on Technological Innovation and the Palo Alto-based Institute for the Future.

“We’re clearly at a fork in the road, but it’s not really clear yet what the branches are,” Werbach said about the evolution of Internet technology. “The most interesting questions are usually the hardest ones to answer.”

This post previously appeared in the Knowledge@Wharton today blog: Mobile Penetration Surges — Now, Where Are the Ads?

Daniel Schlagwein

The Internet is the biggest disruptive innovation impacting on the news genre since the invention of the printing press.

New research has found significant changes in the content of newspapers, and the roles of those people involved with newspapers, as the genre emerges into the digital age.

Our new paper shows how over the last two decades, the cultural and cognitive artifacts that information and communication technologies circulate have become entangled with human and technical actors to the point of inseparability.

Many people in media companies have followed a culture that emerged from the print business – clearly not only had the time come for a change, but that time was well overdue. Most significant in the emergence of the digital newspaper genre is the transition from what we describe as ‘interaction’ to ‘intra-action’. In effect, readers want to engage with their newspapers, taking advantage of what online, mobile and social media technologies can do, and have their say. The newspaper of today is now evolving into a 24 hour a day dynamic online sounding board. Newspapers used to be produced in a linear fashion, with a journalist slaving away for weeks on a story, and then getting one response on the letters page. Now, people want their soapbox too – and new technology means they can co-create a news ‘artefact’.

The paper shows how newspaper as a genre have been transformed in the print to digital transition. The digital medium affords readers new abilities, yet also brings about a struggle for new technology-based business models for media companies. Quite simply, advertisers can now see what they are getting for their money. The number of print readers is going down – hence they pay less for print ads.

Equally, online, advertisers can see their click through rates – and if it is poor, then advertisers won’t pay so much. A large block ad costing thousands is rapidly turning into cents-per-click online. In addition, pay walls for content are not widely accepted by readers who are used to getting their content online for free. It is clear online is replacing print in terms of news consumption but not in terms of financial income. Media companies are struggling to find innovative business models. Currently, there is less money to pay for professional journalism – so newspapers are letting the readers do it, with ‘User Generated Content’ – or, the comment box at the end of each article.

Google and social media are increasingly being used to search and find news. Hence, online newspapers are competing with content any teenage programmer can put up a website – and with a bit of Search Engine Optimisation they can rate nearly as high on Google as a traditional newspaper. You no longer need a huge budget to start a publishing house: All you need are enough readers to add enough comments, feeding back to your news website, your blog, or your Twitter account. Old newspaper companies need to see if they can develop new technologies and business models for both the production and consumption of news, or they will pass away.

Daniel Schlagwein is a lecturer at the Australian School of Business. 

He has co-authored the paper “Understanding the Digital Newspaper Genre: Medium vs. Message” with Anastasia Utesheva, and Dubravka Cecez-Kecmanov.

From the Knowledge@Wharton today blog.

What light does Nik Wallenda’s high-wire act over Niagara Falls, scheduled for tonight, shed on the difference between economists and marketers? Wharton marketing professor Peter Fader explains in this opinion piece.

Everybody has been buzzing about Nik Wallenda and his daredevil crossing over Niagara Falls this week. Elsewhere in the world of sports, the USA gymnastics trials for the Olympics will start later this month, and there’s nary a whisper about it. This difference in public interest/attention makes me think about the difference between the fields of economics and marketing: Economics is like a high-wire act, and marketing is equivalent to gymnastics. Let me explain.

Economists are an interesting breed. They have their heads in the clouds, dreaming of a magical world where people are rational, markets operate efficiently and all kinds of other strict rules apply about what’s right and wrong. In their vivid imaginations, they see upward-sloping supply curves, downward-sloping demand curves and all the implications that arise from these and other assumptions. They are not particularly troubled by facts, often because the actual “rubber meets the road” data that would support or refute such assumptions are hard to find — especially when they’re too busy balancing their delicate curves in a manner that often seems to defy the laws of physics.

Occasionally, economists encounter phenomena that don’t seem to comply with their balancing act — much like a gust of wind endangers the tightrope walker. That’s when their real skills start to show. They conjure up new assumptions and clever twists on old ones to prove that seemingly irrational phenomena are, after all, quite rational. Balance is restored once again. Well-written books like Freakonomics beautifully demonstrate this blend of art and science. It is wonderful to behold such mastery, and the skills required to stay safely perched up high are quite considerable.

In sharp contrast, marketers – like gymnasts – start and finish with their feet on firm ground. The marketer’s desire is to understand the way the world really works – not how it should work under a shaky set of assumptions. Marketers and gymnasts also emphasise the need for balance, but in their case this word means something different than it does for the high-wire economists. Much of the balance for a marketer/gymnast arises from the need to be quite good at each of several different tasks. For the gymnast, this means achieving excellence across a variety of physical challenges (e.g., floor exercise, vault, parallel bars, etc.); for the marketer, it means mastery across a variety of academic disciplines (such as statistics, psychology, anthropology, sociology and – yes – economics).

Overspecialising in any one of these areas is a path to sure defeat; the key is to develop a broad set of skills to ensure that you can take on all the twists and turns required by the problem at hand, while always landing safely on two feet. A marketer wants to “stick the landing” by offering an implementable solution to a real problem – not an ivory-tower explanation that merely proves that the world is still rational.

Because marketing/gymnastics is so deeply rooted in reality, it is gritty work that doesn’t generate the same “oohs” and “aahs” as a tightrope performance. People look up to economists and down at marketers – just like they do when their athletic counterparts are performing. Economists get to rub elbows with presidents; marketers get to sell more deodorant. Nik Wallenda gets a prime-time special on national TV, and marvelous movies have been made about other high-wire heroes such as Philippe Petit (Man on Wire). In sharp contrast, however, can you name a movie about a famous gymnast? Likewise, it’s easy for business leaders to name many economists, but how many can name even a single marketing professor? (I guess I should give up hope that they’ll make a movie from my new book, Customer Centricity: Focus on the Right Customers for Strategic Advantage).

OK, I admit it. While I’m proud to be a marketer, I do suffer from a bit of econ envy – as do many of my marketing brethren. It’s not that we feel intellectually inferior to our economist cousins; it’s just that we wish we could get some of the glory and attention that seem to come so naturally to them. We respect their work quite a bit (in part because our field derives some of its intellectual origins from theirs), but we hope in vain that they would share some of their limelight with us.

But when I stop being wistful about such matters, and get back to work, it’s all worthwhile. I genuinely enjoy the challenges of describing markets and consumers as they really are – not as they should be. I appreciate the opportunity to learn and combine different skills to solve complex real-world problems. I’m glad that companies come to me when they are looking for tangible recommendations and measurable solutions.

And while I know there will never be a Nobel Prize for marketing, at least I can draw some consolation that gymnasts can compete for Olympic gold, unlike the folks who teeter on the high wire.

This post previously appeared in the Knowledge@Wharton today blog: Marketing vs. Economics: Gymnastics or High-wire Act?