Kevin L, Author at Kevin Low

Design & Business

A while back, I was writing about LVMH because they were featured in a briefing on The Economist. One of the strategies that were highlighted in the article was Louis Vuitton’s effort in researching customer flows in malls:

In 2005, when Maurizio Borletti, owner of several prominent department stores in Italy and France, was preparing for the opening of a refurbished La Rinascente department store in Milan, he recalls, the Vuitton people built a scale model of the building in their offices to understand customer flows and get the best positioning. “In this they’re the most professional in the industry,” he says.

I didn’t think too highly of it then but recently I was forced to think about this issue when I wonder why a crowd in the mall refuse to go to the cafe I was at.

The design of Iluma is definitely pretty interesting; with all the glittery looking stuff on the building surface, some kind of balcony on the middle floors and fancy looking glass doors that looks as though they weigh a ton but opens automatically (at least some of them). The outside main entrance area, there are 2 escalators; one leading from and another leading to the second level of the building. The interior of the building is big, and the ground floor is capable of holding lots of people in the middle, perfect for events and normally used for cart-stalls giving it a bazaar feel.

There’s another pair of escalators there, leading to the fourth floor directly. Wait a minute, fourth floor? Yes, it leads you directly to the fourth floor, by-passing the second and the third, which totally explains why it’s hard to get crowds within the building to go to the shops on the second floor. The pair of escalators inside the building that leads to the second floor is absolutely hidden from the crowd standing in the middle of the interior of the building. Some pictures of the interior will help you see why. Even when it takes about 40 seconds or so to reach the end of that long escalator, it’s fun enough to attract people to hit that level where a bunch of other cafes awaits.

The Coffee Bean will largely have to rely on people entering from the escalators at the front main entrance for business (come on, who takes the lifts these days?). On 13 December when 8-Days Magazine was having their 1001 issue exhibition, people who are naturally drawn to the ground floor interior of the building will probably not take that escalator and so the crowd they anticipate at their cafe will probably not manifest. The only people who might patronize them are those who came over to Iluma via the newly built link bridge from Parcos Bugis Junction and unable to find the escalator that will lead them down to the center of activity at the ground floor…

The customer flows in malls are pretty important in this sense, the location of the escalators, the entrance/exits, the link bridges and the placements of your signboard. That will all be before your staff’s attitude. Studying these flows before you rent out a space in a mall is going to make a whole load of difference to the destiny of that shop/unit.

Popping Up?

With the Subprime Financial Crisis, the global economy tumbled, trade flows scaled down rapidly as economies started contracting. Initially, during the boom, trade was growing faster than global income, implying that the global growth, mainly concentrated in the already developed parts of the world economy was gained from increasing specialization and division of labour through trade and exchange. And for a slight contraction in the global economy, a lot of these supply chain will face problems in-between and go bust, resulting in a huge contraction in trade since the businesses relied on each other heavily for business. Daniel Gross discusses the decline of trade, and the implied slowdown/reverse of globalization on Slate.com. The situation is probably not as serious as Gross makes it sound.

The crisis is leading to a re-organization of globalization, towards greater degrees of cooperation and perhaps with less imbalances. With economists finding a better means of carry trade, and more reasons for Asia to get together, the world won’t be drifting apart that soon. In the latter article from Banyan column, The Economist highlights the strengths of a more integrated Asian economy and the challenges facing Asia.

The world seem to have accepted the global multilateral trade isn’t exactly going to be possible with all that decline in trade and rise of calls for protectionism and so regional multilateral trade and economic integration is the second best thing. Forming trade blocs or even common markets would do a great deal to help further globalization and put it on a path with more supranational bodies’ control. The idea is that having authorities in the process of globalization might help make it a better force in this world.

Cafe Ironies

In an entry with the same title on my blog, I detailed my experience at The Coffee Bean recently that didn’t quite start nicely but ended off pretty intellectually. I’m quoting the gist here:

I approached the counter with a maths worksheet in my hand (I was planning to work out some problems there while I sipped on the tea since I had some spare time on my hand and needed to exercise my mind) and made my order. The young man serving me immediately asked if I intended to sit around to study.

I commented that I’ll probably be around for half an hour and asked if it’ll be a problem. He replied that there’s an event downstairs and they anticipate a crowd so they discourage people from studying at the cafe. I kept quiet and took my receipt. I thought that the Large Chai Latte should at least buy me 30 minutes of time at the cafe.

This post is a discussion seeks to answer the question: “If a cafe wants to maximize their profits from a crowd and yet is limited by their available seats, how do they discourage people from studying there besides using attitude (which I assume is something I experienced)?” So before answering that question, we list out the factors that would encourage one to study at the cafe and see if there’s anything we can do to manipulate them:

Things that encourage one to study at a cafe

Good lighting; makes reading comfortable

Extremely hot or cold drink; takes you longer to drink and the taste of the drink don’t change that rapidly over time which means more excuse to stay at the cafe longer

Quality drinks; makes for nice beverage while you study and you probably won’t mind ordering one more and staying longer

Comfortable seats; allows you to study comfortably and sit at the cafe for longer time without feeling discomfort physically.

Technically speaking, removing any of these would help to reduce the time people stay around the cafe and also discourage studying. On the other hand, attitude (on part of the service staff) won’t help to reduce the determination of people studying at the cafe. In fact, it turns off people who genuinely just want to chill at the cafe for a while without discouraging the studying students. When one plans to stay at the cafe for a long time to study and sip on drinks, service at the counter makes up only a small part of the experience, whereas for customers who are interested to get a good drink and sit for a while, the service at the counter makes up half of the experience. In other words, giving people attitude is the worst possible solution compared to removing any of the above.

I strongly recommend the dimming of lighting, which doesn’t harm people out to relax but makes studying tedious and difficult. But this is not always possible since The Coffee Bean that I went to utilizes the in-building lighting that they probably have no control over. It’s not wise to compromise the quality of the drinks since it sends out the wrong messages and is disastrously difficult to control. That leaves us with modifying the seats.

I got this idea when I was at Saizeriya Restaurant at Liang Court; they feature a drinks bar where you pay about $6 bucks or so and get to drink lots of different drinks and it’s free flow – literally a drinks buffet. At first, I wondered why the seats there were so narrow and small; the cushion were thin and not exactly comfortable with prolonged sitting. Later I rationalized it as a means to get people out of the restaurant as soon as they’re done with the food. Of course it’s not going to put off people determined to try all the drinks, but at least they’ll finish with their affair and get out fast.

So here’s some prescription for cafes who hopes to attract people there for a drink and to sit around for a while (after all, if the cafe was empty you might think the drinks suck) but discourage students from spending their entire day studying there, the best move would be to adjust lighting according to your needs to adjust demand. Where this is not possible, modify the seats to make prolonged sitting uncomfortable.

Tuition Services!

I’ve got loads of friends looking for tuition jobs and I thought I might as well advertise for them here. I’ve included their contacts and subjects to be taught under our services page (in case you didn’t know we have one). But here’s a reproduction for readers:

Other Tutor’s Services (former students of top JCs)

Wei Si is interested to give tuition for Economics, Chemistry and General Paper at JC Level. English, Chinese and Chemistry available for Secondary School student too! Interested students, please contact her via email: stardustt.14 [at] gmail [dot] com

Ruiyuan is hoping to give tuition for Economics and Geography at JC Level. Geography and Chemistry available for Secondary School student too! Interested students, please contact him via email: stainless.rui [at] gmail [dot] com

Jia Hao hopes to give tuition for Chemistry at JC Level. Mathematics, Physics and Chemistry available for Secondary School student too! Interested students, please contact him via email kel_ojh [at] hotmail [dot] com

Yan Min is providing tuition services for Chemistry at Secondary School level. Chinese (and Higher Chinese) and Mathematics for Primary school student too! Interested students, please contact him via email: dwellerz [at] hotmail [dot] com or call him at 97293953.

Vertical Thinking

I finally found a copy of Edward De Bono’s Lateral Thinking, published in 1970s. It collects his earlier insights about Lateral Thinking and reflects his more original ideas about the subject. The books he published much later are more or less repetition of these earlier ideas, presented in alternative means – some acting as encouraging creativity, others at simplicity of thought and some plainly about motivation and happiness.

I’m not exactly a fan of De Bono – I think he exploits his authority in the area of lateral thinking pretty well and have managed to set himself apart from the general ‘creative thinking’ bunch. I think his Six Thinking Hats programme made him quite a lot of money and his success in trying to frame his concepts into thinking in the business realm means more money. Still, he offers much valuable ideas that are untapped by the masses.

He highlights some problems with Vertical Thinking that we traditionally use to think about problems and perceive our world; these problems are intricately woven with the advantages of this system of thinking so the point is to be aware of these inadequacies and counteract them with Lateral Thinking. Here are some of the problems with our thinking system I would like to share and explain how they might impede us in our daily thinking:

1) Our thinking creates patterns that helps create an efficient system of memory that relies of amazingly few details to trigger the recollection of an entire experience. Unfortunately, they become established ever more rigidly since they control our attention; we’re constantly searching for patterns to fit into our experience to make sense of things. These patterns are also difficult to change once they become established.

This is the case of conspiracy theorists who see patterns in places people don’t and form elaborate theories of conspiracies even when they are just a series of coincidence. The pattern that these conspiracy theorists establish in their minds direct their attention to particular details that reinforce their beliefs in their theories. It’s difficult to convince them that their ideas are flawed.

2) Our system of thinking tends towards ‘centering’ (a term used by De Bono), which means that anything which has any resemblance to standard pattern will be perceived as the standard pattern. Because the information that is arranged as part of a pattern cannot be easily used as part of a completely different pattern, it is hard to change the way one perceive the same set of information to interpret them differently.

This is a case of stereotyping on steroids, best exemplified by the character Mr “Everything Comes From India” in the BBC Sketch Comedy, Goodness Gracious Me. Here’s an Youtube clip showing how he makes his arguments that frustrates his poor son.

3) There’s also marked tendency to ‘polarize’ in our system of thought, moving to either extreme instead of maintaining some balanced point between them. This implies that even when the choice between two competing patterns are very fine, one of them would be chosen with another being completely ignored.

Using the above example of Mr “Everything Comes From India”, we notice that his thinking is such that there’s only the two extremes of ‘Indian’ and ‘Not Indian’. He thinks little of the effects of globalization and the influence of culture on each other or the possibility of overlapping rituals between different cultures.

Finally, patterns that we accumulate can get bigger and bigger, resulting in declarations like, “There are only 2 kinds of people in this world…” People package a whole lot of individual patterns and lump them within a bigger pattern, that immediately trigger off other perceptions that are unreal or not observed. Of course, there are advantages to this system, with it’s roots in instinctive fight-or-flight responses when efficiency of generating a response is more important than producing a precise/correct response.

The idea is to know when we should make use of what sort of thinking. In pondering over important issues in life and generating ideas for a project and such, one should suspend our typical system of thought in favour of lateral thinking that has the advantage of proliferating more ideas even if they don’t appear to be quality on first impression.

Another Week

The weeks seems to be passing faster as the entries on ERPZ becomes more frequent. The one-entry-per-day rate now is not exactly very sustainable without additional support from guest writers and contributors so I’m once again calling out for interested parties to leave a comment with your emails so I might be able to contact you and get your contribution up.

This week’s reading delves into some less-read areas, namely consumer choice. Knowledge@Wharton recently ran an article about How Assortment Size Influences Healthy Consumer Choices. Earlier, they discussed how environmental cues influence consumer choice too.

The linked article mentioned about the ‘paradox of choice’, which is the topic of Barry Schwartz’s talk on TED.com. He explains the disadvantages of being offered too many choices and the problems associated with the implications of having too many choices in the first place on the psyche of the person after making the decision, citing Dan Gilbert’s presentation in the same TED conference.

Barry is another great speaker, mixing humour consistently throughout his talk with a steady flow of cartoons. The point he makes in our escalating expectations is very real and worth pondering over for anyone who wants to exert discipline on their thinking to keep their mind healthy. He claims he wrote the book, The Paradox of Choice to explain to himself why he felt worst when he got a better jeans than he previously did.

Chemistry Notes!

I’m not sure if this is long awaited, but ERPZ finally started a Chemistry Notes Section! I guess everyone would be more grateful if this was up a couple of months back when people are preparing for A Levels. Well, I haven’t found Zhuoyi’s website then and I was unsure about my handwritten notes then. So now, there’s only 2 sets of notes available, one kindly shared by Zhuoyi, which I’ve consolidated and reformatted into a single document. I might soon put up individual links to each set of Zhuoyi’s notes if readers are interested.

The other set is by me; it’s mostly handwritten with typed pages here and there. For those who might be interested, I’ve added a set of handwritten instructions on how you can make use of your Graphic Calculator’s statistics functions to perform calculations for reaction kinetics at the last few page of the document.

Enjoy Learning!

Making Judgments

Just a few days back I was discussing how we have to hold contradicting ideas as social science students; and it dawned on me that some students after training themselves to do just that, fails to make a judgment using the ideas. To them, it seems that everything is equally right and there’s no quantitative means of assessing which side is better. I hate to say this but then you actually have the power to decide what is right. After all, politicians, social scientist, economists and such are always at loggerheads and as I mentioned in that earlier post, no one is exactly right – at least we’ll never know what is truly right. We can only be sure of approximations to the right thing but then again there are high estimates, low estimates, depending on how things turn out.

The fact is we all make many decisions these way. There’s no way to know for sure that a plan will carry through and we have default positions, knowing all well what they rest upon and how they might change. We might wake up at 10am every Sunday Morning but then we adjust accordingly when we have appointments around that time on that day. You know that your priority is with the appointment and not with sleep; so unless your priority is the other way round, you’ll compromise. Likewise, when confronted with the question as to whether a Monopoly is harmful to consumers you might have to consider your priorities. You might be concerned with net transfer of wealth from consumers to the monopolist and thus against the theoretical supernormal profits. In that case you’ll argue that while the firm might be a natural Monopoly and the only one serving the market, it is harmful as long as it’s not taxed such that it only earn normal profits (with the tax revenue redistributed to the consumers).

On the other hand your sympathy might lie with consumer choice and welfare so you believe that as long as the monopolist exhibit some sort of dynamic efficiency, innovating and proliferating the market with variety then you’re fine with the Monopoly. After all, it is giving the consumers what they want that earn them the profits. But in an event when it becomes complacent and exhibits some sort of inefficiency (not in the P=MC sense though) then it needs some competition injected. Following that line of argument, some might choose to take side with competition right from the start and argue that as long as the market is a rather contestable market, with huge players ready and able to enter anytime (despite high barriers to entry), then the Monopoly need not be too closely regulated. The above arguments would all make sense and they could well be right answers for economics essays but then the question is whether you’ve presented your case convincingly by showing what are your priorities or principal considerations.

In other words, you do not make judgments when you’re analyzing or dissecting the ideas but when called upon, you’re able to demonstrate your principal concerns and judge the ideas in accordance to them. You should be comfortable with changing your stand when you adjust your judging guidelines and not cling on too hard to your positions. Karl Albrecht, author of Practical Intelligence believes that the open-mindedness so essential to learning and the path towards intelligence require this ability to see opinions/positions and separate from ourselves. So learn to pick up opinions from making judgments but readily drop them and learn to justify what prompted you to do so (new information input, changing circumstances, difference in judging guidelines).

Age of Turbulence

I read the review of Alan Greenspan’s book 2 years back in The Economist, but didn’t buy it until late last year when I went on a book-shopping spree. The book gone on to stay on my book table (yes, I seriously need a bookshelf) for another year or so before I dusted it two weeks ago and began reading it. In any case, I bought an updated version, which features an epilogue detailing Alan Greenspan’s take on the Subprime Financial Crisis and his prescriptions.

I was immediately surprised by Alan Greenspan’s clear writing and simple style so contrary to his famous inscrutable public announcements about the Fed. It is this that earned The Economist’s rare praise:

Sub-heading of the book review: “Not many surprises in this memoir-cum-essay except that it is an unexpectedly enjoyable read.”

Book Review Quote: “[D]espite everything, the book turns out to be first-rate. It engages on different levels: it is intelligent in a way that few popular books on economics manage or even try to be; and, wonder of wonders, it is a good read.”

The book begins as a memoir, detailing Greenspan’s childhood, interest in music, schooling, economic/technical inclinations and his long career in the Federal Reserve Bank where he was Mr Chairman. His memoir ends somewhat abruptly in retrospect at the eleventh chapter, The Nation Challenged. Beginning with the chapter, The Universals of Economic Growth, he went on with his economy essays and analysis of various economies, industries and trends. Like what The Economist says, Age of Turbulence is a good read, his memoir was very neutral and he was very humble about his work at the Fed. His accounts of the workings of the Fed provides non-American readers a good starting point to learn about their system. Greenspan’s essays on the world economy and economics stays faithful to his belief in the power of free markets and respect for the freedoms and rights that the American Founding Fathers have sought and preserved.

He defends his views that no one can possibly identify a bubble and actively sought to burst it before it gets too big and cause a crisis in its subsequent burst. As a matter of fact, this is the case because anyone who can confidently identify the bubble can profit from it by going against the flow and thus end up defusing it before it builds up. At times, when the so-called ‘irrational exuberance’ exerts too powerful a market force then regulators wouldn’t actually be able to defuse it anyways. He seem to sigh at the voter’s expectations that the government is almighty and is disappointed by typical politicians who doesn’t seem to understand the meaning of ‘trade-offs’. These are typical economist’s perennial concerns about the world in democracies that never seem they’ll ever go away.

As a pragmatist, Greenspan shows great appreciation for the rule of law that has maintained the workings of the market and fostered a culture of trust so essential to capitalism. And reflecting on that, Greenspan gives suggestions on how the emerging economies need to improve their governance and legal systems to catch up with their prosperity and march towards developed status. These are valuable insights gained from Greenspan’s 19 years of being the Chairman of the Federal Reserve Bank. Indeed, Greenspan confesses that he knows little about international economics until he took on this role since his work at Townsend-Greenspan & Company (which closed following his nomination to that post) deals little with the economies of other nations.

Overall, Age of Turbulence provides wonderful insights into workings of the capitalist system of America and great ideas about emerging economies, the direction the world economy is heading to – knowledge significant to any economics students and economist-wannabe.

Another sort of Criticism

After penning the entry on Yuan’s appreciation, I come to observe another sort of criticism that is used on China that does contribute to the global imbalance and probably needs more attention than the currency but is an issue the Chinese government have way less control. That is the lack of spending by the Chinese, which is something repeated time and again. The Economist’s Banyan column recently compared India to China:

Levels of capital and infrastructure investment [of India] compare favourably with China’s. And, much more than in China, the hot story in India is domestic demand. India is no mercantilist adding to global imbalances. It imports more than it exports, creating much needed global demand.

Although the article goes on to discuss the flaws of the Indian economy, especially its lack of participation in the supply chains that link up much of the emerging economies of Asia as a result of their focus on exporting services rather than industrial goods. Industrial production in India remains largely in the hands of a huge number of medium-sized enterprises.

Anyways, back to the fact that China is under-consuming; James Surowiecki explains on The New Yorker why the Chinese don’t spend. He briefly ponders over culture, but goes on to focus on the nature of their economy, and the structures that are reducing access to credit and thus raising the need to save, which means perenially low consumption.

In a sense, the culture revolves around the idea of investment for the future, saving first so that one would be able to spend them. The long history of struggles and uncertainty means the Chinese are probably more risk adverse than their Western counterparts and reluctant to take on debts. In a period of growing wealth, the Chinese naturally hopes to put aside money for the future (be it studies, starting a business, a family or just for rainy days).

As the economy develops, it’ll mature and eventually shift towards higher credit and lower savings. The large investment that the government is pumping into the economy will have to induce greater efficiency in use of capital to help speed up the maturity. Till then, Americans will still get the chance to complain about Chinese inability to spend in the consumer sense.