What will/should happen to business in the 21st century?
Via Umair Hacque:
“What is the role of marketing in a world where consumption must slow?
In the 20th century, marketing was the pusher of a consumption addiction: Madison Ave’s game was to create perceived value by “differentiating” the same razors, blades, and toothpaste. At the Lab, we’ve found that companies who create perceived value are significantly less profitable and more vulnerable than companies who are rethinking marketing to create real value. Think (the awesome) Nike Plus.
What is the role of distribution in a world where consumption, savings, and investment will accelerate in volatility?
In the 20th century, advantage was attained by seizing or building distribution channels. At the Lab, we’ve found that value chains built on inert channels are significantly less profitable than value chains built on circuits – two-way channels, where context flows in one direction, and goods in the other. Think (the totally radical) Threadless.
What is the role of production in a world where consumption becomes savings?
In the 20th century, economies of mass scale led giant, evil corporations to a cost advantage. The flipside was a world of homogeneous, mass-made widgets overflowing from bleak exurban shelves. At the Lab, we’ve found that scarcity pays: companies who can rescale production at the micro-level are disproportionately more profitable and powerful. Think (the industry-reshaping) Zara.
What is the role of strategy in a world where the game is no longer about winning more consumption than rivals?
In the 20th century, strategic thinking helped players “win” wars fought against rivals – the most strategic player “won” the greatest relative share of consumption (market share, mind share, etc). At the Lab, we’ve found steeply diminishing returns to orthodox strategy – because, like actual war, it destroys tomorrow for today. The 21st century demands a rethink of what’s “strategic” – versus what’s merely selfish. Think (the eminently anti-strategic) Google.
What is the role of innovation in a world where greater investment will flow to reinventing moribund industries?
In the 20th century, innovation was about processes, products, and services: that’s why most boardrooms are still investing in lower-order innovation. At the Lab, we’ve found that higher-order innovation – business model, strategic, and management innovation – is associated with significantly more powerful and durable value creation. Think Apple (reinforcing simple product innovations, like the iPod and iPhone, with disruptive new value chain designs, via iTunes and the Apps Market).”
