CHAPTER 1
The industrial deal: the shift from industry to technology
The industrial revolution was a pretty good deal. Hereâs what we got: stable jobs with better pay, paid annual leave and union-improved working conditions; improved housing with automated heating and cooling; homes filled with labour-saving devices and disposable widgets; free entertainment projected directly into our living rooms; personal motorised transportation and a national transport infrastructure; a garage filled with toys; air-conditioned supermarkets selling packaged goods with long shelf lives; big box retailing; government sponsored education, medical innovation and public hospitals; jet aircraft that could fly us through the clouds; and a life expectancy beyond the age of 35.
Itâs no surprise that people living in industrialising countries clamoured to gain the benefits of a longer and wealthier life. The only rational choice was to sign up for it. The benefit of an improved life expectancy on its own was quite compelling. But when we added the layers of conspicuous consumption and free entertainment on tap it was a real human high ground.
So we handed in our craftsman and artisanal skills to help build the one-size-fits-all economy and the consumables that fill it up. It was the only way all of us would be able to own everything. It meant we had to trade in the very personal touch of a craftsman and become part of the machine itself. By becoming part of the machine we were able to have more. We were handed everything earlier generations could only dream about, a standard of living beyond that of gentries and kings when we take into account the upgraded living standards we all acquired. But there was a price to pay: we had a job to do. Our job was to help churn out the items that built the industrial world and to buy the items we churned out. We had to become consumers.
Terms and conditions
The industrial revolution didnât come with a set of terms and conditions; however, there were some unspoken rules that werenât covered in the text book. The textbook was so focused on how to make widgets and money, it forgot about why any of that mattered.
We abided by these terms for the best part of 200 years. The two most important terms were:
Weâll enable a more materialistic lifestyle
but
Youâll need to follow the rules set by the owners of the capital.
This was a simple way of saying that our individual creativity canât compete with the industrialistsâ aggregated efficiency. Itâs something that goes against the basic human spirit â our need for collaboration, creativity and nuance, which is imbedded deeply into our past and, thankfully, our future.
Consumers and creators were two different classes in the industrial world. The industrialists owned the factors of production. The ability to create independently was taken away from workers and re-engineered so it belonged only to the capital class. Without saying it, the deal was: âYou let us design, make, distribute and advertise and in exchange weâll give you a higher standard of living.â They left out the bit about keeping all the profits for themselves.
This economic model worked well until we reached the point where we owned everything we needed. But now the deal has entered its final phases and the gig is up. The industrial revolution is putting itself out of business. I wonder if they had a planned-obsolescence in mind.
Unlearning
The methods used by corporations became so effective at generating more for less that theyâre making their own era an obsolete business method. Companies that want to thrive during the technology era need to seriously revise their economic playbook. The efficiencies these corporations generated have made high-end technology disposable, or at the very least, low cost. Itâs difficult to make a profit when products have to improve each year and cost less than they did last year.
This means that in the new economy weâre all required to do some unlearning to stay profitable and relevant.
It means the only way of achieving revenue upside is to sell more units, but there are only so many mobile phones and televisions a person can own. This means that in the new economy weâre all required to do some unlearning to stay profitable and relevant.
A new business infrastructure
The entire economic, political and social infrastructure is going through a 200-year shift from the industrial era to the technology era. All of the elements that make up our economic infrastructure are experiencing a technological disruption. These changes are not the comfortable, incremental ones weâre accustomed to, but step changes that â for the unprepared â hurt careers and kill businesses. Products and services, distribution systems, pricing methods, advertising and promotion are all following a transition away from clustering and aggregated power structures. Theyâre moving from a one-size-fits-all model to small, distributed, specific, customised platforms that deliver to a one-size-fits-one model. Previously stable economic systems are now fragmenting rapidly.
The 4Ps
In order to understand the changes in our economic system, we need to investigate the changes in parts. The simplest way is by looking at the parts that make up whatâs known as the âmarketing mixâ. This is called âthe 4Psâ: Product, Price, Place and Promotion. While modern marketing mavericks will try to displace these simplest of production-related business factors, thereâs nothing in business that can exist outside of these four parameters. Weâre limited to using the 4Ps when it comes to configuring what we hope to sell. User experience, community, interface, responsiveness â take your pick â they all sit inside and are part of the marketing mix and they go back to the foundation of economics, the Ws: What, Where, Who, How much and for Whom. The 4Ps are the only levers we can use for building anything in business for a profit: theyâre the factors of production in their simplest form. All four parts are changing rapidly and forever. A simple explanation of each of the 4Ps will help create a context for the journey in this book.
- Product. This is what we sell, whether itâs a widget, a service, an event or an idea. Itâs what we use to generate revenue from.
- Price. This is the price we sell a product for, even if that price is attention or privacy. Price also includes the impact of demand and supply, finance, currency considerations and payment systems â anything that must be considered when money changes hands or thereâs a transaction.
- Place. This tells us where we can get the product and how itâs delivered to us, both physically and virtually. It includes all considerations for distribution systems in exchanging goods and services between people and organisations.
- Promotion. This is anything to do with communication about whatâs available and why people may want it; for example, the tools of information exchange and media among people, brands, organisations and governments.
The 4Ps form the interdependent system, or âmixâ, from which we do business. In fact, itâs the same marketing mix that people employ when they earn their living, but most people donât have the presence of mind to see it in such simple terms. While certain brands and companies often focus heavily on a particular part of the mix to create a point of difference, itâs getting them to work in concert that leads to a profit advantage. And when all of them are changing rapidly we need to pay attention and reset our mode of operation. What it comes down to today is that a business is either disrupting these factors of production or itâs being disrupted by a new competitor trying to put the incumbent out of business. When the factors of production change, the world we live in changes too. Where we work changes, so where we live also changes. It impacts the support systems around the economy as well: the financial system, the education system and even government policy.
The greatest innovation weâve seen since the commercial internet was born in the early 1990s has been the rebuilding of infrastructure. Thatâs why everything is up for grabs. Until now, many industrial legacy organisations have remained unaffected by the change. It was a temporary situation for them. But all of the 4Ps are â and will continue to be â disrupted.
The first example of disruption affected the fourth P, promotion. This was to be expected, given the world wide web (the web) is all about interacting in a new way; itâs a form of media in itself. It was the easiest of the 4Ps to disrupt, thanks to our new internet technology.
The biggest and first P to be hit hard by the technology revolution was legacy media. But open communication does more than just disrupt the media: itâs the bellwether for rapid innovation. Knowledge exchange affects everything and redesigns the...
