By Linna Zheng, 3B CFM

Are you stuck thinking that Computing and Financial Management looks a certain way, that you’ll be trapped inside the tech or financial industry, and that the rest of your life will be a repetitive, gruelling and boring grind against broken code and piles of bills? If that is the case, here is a much-waited-for article that will expand your perspective on CFM.

Instead of searching “fun technology” or “fun finance”, I decided to find ways to apply CFM by reading about topics I normally would not read about (that said, you are always free to do that search yourself). I went on Harvard Business Review’s “All Industries” page and took a look at its top articles for 10 ‘fun’ industries: accomodations, advertising, beauty & cosmetics, entertainment/recreation, food/beverage, journalism & news, media & broadcasting, motion pictures & video, music, tourism, and travel.

Here is what I found, though I will tell you in advance that most of these are centered around making money and I had to think creatively about how computer science is involved too. Most of technology’s presence in these examples is subtle – you will have to read between the lines to get it.

  1. How Uber, Etsy and AirBnb turned 1000 customers into 1 million: Uber’s first struggle was finding drivers when there were no customers, and customers when there were no drivers. They managed to find their first batch of drivers by marketing at live events. For Uber, Etsy and AirBnb, the strategy for getting the next 900k customers was radically different. They had to figure out what would make their service levels ‘perfect’ for the more unwilling later adopters of their apps. AirBnb found out that customers wanted to 1) know their renters before buying, 2) stay only at clean places. In response to those needs, AirBnb made the renters non-anonymous through Facebook, and set up a renters’ laundry and cleaning program. Uber looked at the habits of people in urban centres, and found that there are a lot of people in Chicago who party late at night and want a safe, affordable ride home. It is no surprise, then, that Chicago is one of the top cities in the States that uses Uber today.
  2. Why do immigrants cluster in particular industries? You may have noticed Vietnamese manicurists, Korean dry cleaners or Haitian taxi cab drivers in your hometown. Contrary to popular belief, rather than being driven together because of circumstance or not being able to find mainstream opportunities, these groups form friendships from their common ground and share their business expertise with each other.  They are better equipped to serve the special needs of their ethnic group in their region, which leads me to think about how ethnic groups use technology differently. For instance, more Hispanic and African American millenials use YouTube and Instagram to get news than any other millenial ethnic group. Research shows that concentrated ethnic groups, who work together, earn a price premium over others in their industry.
  3. The History of Beauty: “It does not take a great deal of capital nor technological expertise to launch an entrepreneurial venture in many beauty products—although for such a venture to have any hope of success, high levels of imagination and creativity have always been required.” For those of us who are creative, low-budget thinkers that can be a very attractive prospect for us to work in the beauty industry. That said, beauty technology such as special effects and light-up cosmetics can be truly magical and add to the experience of someone’s life. Anyone else thinking about film make-up, weddings and Halloween costume parties?
  4. Pokemon Go: The platform has a remarkable ability to pull traffic to particular locations. What financial opportunities can open up from that? If you are in Waterloo, you might have seen Sweet Dreams’ Pokemon campaign on their painted shop windows, or noticed that Skyzone Trampoline park in Kitchener is a designated hatching ground. How could Pokemon Go change the face of sponsorship and mobile advertising? For instance, in July,  McDonald’s sponsored Pokemon Go’s launch in Japan, and designated all of its restaurants as gym battlegrounds. What about all the data it collects? Google already knows how to track where you’ve been and what you’ve been doing, then sell you things based on that. On top of that, Nintendo can track how you respond to various stimuli, which is a lot of data. On a more serious note, this data as a lot of potential for misuse and can cause safety problems. Perhaps we need to look at how to regulate this data so it is used safely and users can continue to trust big companies with their personal data.
  5. A bank that takes cheese as collateral: The Italian regional bank Credito Emiliano accepts young Parmigiano-Reggiano, the “King of Cheeses”, as collateral, then ages it in climate-controlled vaults. The more the cheese ages, the more delicious and valuable it becomes, like cash in an interest-bearing account. “Eighteen-month cheese gives pasta zing; thirty-six-month cheese makes angels sing.” The cheese producers face several challenges: 1) the prices fluctuate wildly; a 1% change in demand can impact price by up to 10%; 2) their working capital is tied to inventory for two years and is illiquid. The bank helps them deal with these challenges through loans, which strengthens the local community and builds a lot of goodwill, as people in Italy do not like to lend money. The bank is relatively safe because as soon as the cheese forms bubbles or cracks, it can call producers and let them know that its value was not as high as they thought it was. That said, this kind of collateral is not always safe; The Salad Oil Swindle of 1963 involved trader Tino de Angeles’ soybean oil collateral, which he used to take out big bank loans. Inspectors checked his oil regularly, but his tanks were filled with mostly water, with oil floating on top. Perhaps a monitoring system can be used to alert the bank about illegitimate cheese or cheese being stolen. Based on collected data from past cheeses, during and after production, it can also track the root causes of cracking or bubbling cheese and allow cheese makers to make less mistakes. This kind of technology would need to be inexpensive for the cheese makers, or affordable for the banks, and there has to be some kind of incentive for the banks to buy it.
  6. Encouraging niche content in an ad-driven world: Sun and Zhu released an ad-revenue-sharing program on a Chinese blogging website, and found that popular content increased around 13%, with 50% of the popular content being 1) salacious, 2) about the stock market, and 3) celebrities, in order for writers to draw a bigger paycheck from the website. Writers had a greater incentive to lengthen their posts and include more photos and video clips, which made their sites 5.9 times more likely to be bookmarked by readers. However, what advertisers are really looking for are quality posts that match what upper-end customers want: a mix of variety and quality rather than duplicate mainstream content. This way, a reader would be more likely to click on ads. What kind of payment scheme would motivate writers to produce the variety and quality that advertisers and readers both want?
  7. The power of scarcity marketing: KFC’s Double Down features two slices of bacon, two kinds of cheese, and the Colonel’s secret sauce, all sandwiched between two slabs of fried chicken. According to KFC, it’s “so meaty, there’s no room for a bun!” The Double Down was very popular on social media, and consumers even organized “Bro Downs” where men competed to see who could eat the most Double Downs. KFC removed the item from its Canadian menus, which made the Double Down’s comeback in 2011 not just “so good”, but “even better”. McDonald’s used a similar strategy with its McRib sandwich, a ground pork patty with BBQ sauce, onions and pickles. By taking it off the market and continuously reintroducing it for the last three decades, normally in the fall, it creates nostalgia for summer barbeques. The McRib was a key part of the 4.8% in company sales in Nov 2010. Another example lies with cars. In Manhattan, customers pay $11 000 to drive high-end cars for 13 days, which is a bargain compared to owning the vehicle. Companies are starting to make product-sharing available for everything now, from villas to handbags to yachts. The psychology behind all these examples is: knowing that you can’t have access to something all the time may help you appreciate it more when you do. Now, you might be asking yourself, “How do I spend money for my happiness?” Research shows that you can 1) Buy Experiences (rather than focus on material goods), 2) Make it a Treat (limit your access to your favorite things), 3) Pay Now, Consume Later, 4) Buy Time (rather than high-priced goods), and 5) Invest in Others (which makes us more fulfilled than spending purely on ourselves). A question for the tech-minded: how can people effectively track and say yes and no to products and experiences in order to maximize the happiness they get from spending their money?
  8. Lady Gaga: Troy Carter faced the daunting task of launching the performer’s first major solo concert tour, “Fame Kills”, in 2009. Lady Gaga was scheduled to go on the tour with Kanye West in November, but after he impulsively bullied Taylor for winning the Best Female Video award, he was attacked by the media and had to pull out of the tour. As Lady Gaga’s manager, and having spent $4 million on the tour already, Carter faced 3 choices: 1) continue with the arena tour solo, 2) develop a small tour for smaller venues, or 3) cancel the concert series entirely. 2) would have less financial risk, but ticket prices would decrease and the team would have to redesign a scaled-back tour in a matter of weeks. 3) would risk Lady Gaga’s star fading away without a tour to guide it. Digital technology was having a strong negative impact on revenues from recorded music, while concert revenues were steadily increasing. So Lady Gaga could not rely only on her recorded music to bring in income. Her success as an artist was not only deciding to do the November tour, renamed “Monster Ball”, but also on the genuine relationships she formed with her fans: through 1) social media and 2) personal interviews with reputable music bloggers. Harvard Business Review has cited the Lady Gaga brand as a ‘marketing phenomenon’.
  9. Oktoberfest: Done by Germans and non-Germans alike around the world in the US, Brazil and even China, this two-week festival is loaded with beer and chicken. People tend to either hold the festival to 1) preserve their own German heritage, or 2) go to a place, drink together and have a German experience outside of Germany. Unlike Champagne in France, Cava in Spain and Prosecco in Italy, Oktoberfest does not have a legal framework to protect the tradition and thus anyone can produce it. Because anyone can produce it, it becomes free advertising for the festival. Now the question is, how did this festival become popular around the world? Can we explain it from a financial perspective? Out of the hosting cities, the beer tents, and the people hosting the rides, who makes the money from the festival? The city of Munich is more concerned about their tradition rather than making money, but China is an interesting case. People there want to try the ‘real Oktoberfest’, so companies there want to pay for the rights to claim that they are real. And even if it is not real, like a $10 Gucci bag off the street, it gives people the aspiration to try the ‘real thing’ one day. The moral of the story? Marketing a global product exactly the same way in every country may not work. Aside from financial considerations, how does technology (in general) support a tradition in going global? It helps product exporters and importers get in contact with each other, makes global fan groups, spreads the news, and connects audiences worldwide to events going on in other countries.
  10. Class wars in airplanes: When boarding an airplane, people in the economy class walk past the first-class seats before sitting down. Research shows that having that kind of setup in the airplane reminds people of their lower status and what they are missing out on, causing high levels of stress and increasing chances of bad behaviour on the plane by 3.84 times. On the other hand, those aware of their higher status tend to be more selfish, entitled and scornful, which is the downside of having high status.  Some airlines deal with this having a curtain between the classes, or by having people enter through the middle of the plane and and not pass the first-class area. Plane staff are also debating whether they should show customers a ‘sneak peek’ of the luxury class to convince them to upgrade, but they always face the trade-off of having unhappy customers. The same kind of thinking can be applied to office space layouts that emphasize hierarchy, and high-price versus low-price sections in sport arenas. Again, for those of you who are more tech-minded: how can we monitor class warfare and minimize it, while at the same time motivate people to move to a higher class for their self-betterment? If you can answer this, you can impact customer and employee satisfaction, and convince them to stay for the long term.

A surprising number of these ‘fun’ topics ties into marketing, and how that brings in the money for a business to run. When I think about it, a startup business’s first questions about finance are likely to be “How can I get my first paying customer? What do I need to do to get my first government grant?” and eventually “How do I not lose my customers?” A lot of what we study as CFM students relates to life after a business gets their first paycheck: how to invest the money, how to make money using money, how to account for it, and how to make money more easily. The marketing dimension is an important one that we are missing – once we understand it, our ability to run a business will be much more complete.

Another closing thought I have is about computer science. As you saw in the business examples above, technology is only mentioned subtly and I had to create more questions that would get us thinking about what it can do. It leads me to wonder, what is technology exactly? Is it the computers, or is it what the computers do for people? Is it less about computers and more about a way of thinking, a way of doing things efficiently? Or is it simply about providing a solution, in any way, to anything? Ultimately that is what I believe our programming courses train us to do – to focus on delivering quality solutions to complex problems under deadline. With that kind of thinking, you truly can take your degree with you anywhere, using the momentum and sense of achievement on those endless assignments to spur you forward to becoming any kind of person, who can do work that you find both fun and rewarding.