So what is so different about the 21st century that we have to completely rethink the way we do business?
Just like the Industrial Revolution the cause of the change is technology. Instead of steam engines though this time it is the computer and the Internet. And just like the Industrial Revolution it is most certainly not limited to technology. It has & will continue to have huge economic & social impacts and will shift the balance of power.
Let’s take a look at some of the trends more closely.
Rate of Adoption
This graph says everything we need to know about how quickly the rate of adoption of new ideas & products has changed.
And this is an old chart of 2012. In early 2013 Temple Run 2 took the crown by getting it down to 13 days. But Psy (of Gangnam Style fame) smashed through it with 50 million views of his new single ‘Gentlemen’ in just 36 hours!.
Plummeting cost of tools & hardware
Another interesting graph is the cost of a Gigabyte of storage space. Remember, this is a logarithmic scale.
The original Human Genome Project cost an estimated $2.7 billion. 20 years later it is in the range of $5000. An iPhone is about 84,000 times faster than the total computer power at NASA during the moon landings. And has an HD camera worth tens of thousands of dollar in the nineties.
And don’t get me started about SaaS (Software As A Service) & 3D printing. Tools that cost a fortune a decade ago are now generally available and affordable for most.
Cost, ease and speed of communication
This one doesn’t need a graph to make sense. We can now communicate instantly with pretty much anyone anywhere on the planet for next to nothing. And even more importantly we can find like-minded people and reach millions of people in seconds.
It allows people from all over the world to find each other and collaborate without hierarchies or bureaucracies. It is hard to overstate how important this is.
In 2001 a small on-line project started that would allow anyone on the Internet to edit anything in an on-line encyclopedia called Wikipedia. You would have been hard-pressed to find anything to take a bet this small group of people would win against a media-rich, encyclopedia written by experts and published by the biggest software firm on the planet. Which is of course exactly what happened in 2009 when Microsoft shut down Encarta.
Barriers to entry are gone
Nokia & Blackberry were kings of the mobile phone market. It was impossible to think then both would be made irrelevant in less than a decade by a computer & music player manufacturer (Apple) and a search engine (Google).
But barriers to entry are crumbling everywhere. Financial markets are notorious for their high barriers to entry, but PayPal, which started in 2000, processed $145 billion in transactions in 2012. Disruption will not just come from your competitors, but can come from anywhere. Starting a business has never been easier or cheaper than it is today. A lot of great stories are found in The $100 Startup.
Shift from physical to knowledge work
This shift has gone on for some time, but it is only getting more and more pronounced. Even jobs that have traditionally been physical work like factory assembly line work are now knowledge work. Almost all the manual labor is automated away, so most of the work that is left is configuring machines or requires thinking.
Even waiting tables has changed. It is no longer about how quickly you can serve and clean a table, but how the customer felt when he left.
Which means we have to completely rethink the way we ‘motivate’ people. Current management thinking is still very much focused on getting people to produce output, instead of customer outcomes.
Consumers, not corporates, are in charge now
With the rise of the Internet, social media, price compare & review sites consumers have all the information and choice they need. When blogger Jeff Jarvis took to the Internet in 2005 to complain about a lousy laptop and service from Dell thousands of customers joined in the on-line crusade, which caused a measurable drop in their revenue.
But then there is also the story of the Tesla Museum. Matthew Inman, writer of the Oatmeal (an on-line comic) noticed Tesla’s old workshop was for sale and raised $ 1.3 million from more than 30,000 readers to restore it and turn it into a museum.
Or take Kickstarter, a crowd funding platform where people with ideas & prototypes meet people who want to pre-order them and make them a reality. A famous project was Pebble, a smart watch. Almost 70,000 people pre-ordered $10 million worth of watches. Steve Denning explores this trend in his book The Leader’s Guide to Radical Management and on his blog.
This is not even a complete list. There are other trends happening like globalization, increasing complexity & uncertainty, the rise of the network organization, the need to collaborate and how software is eating the world, but this post is long enough already.
So is all this good or bad news? That depends. If you are a big corporation trying to squeeze the most efficiency out of your current business model and processes it is very bad news.
I personally think it is extremely exciting news. The playing field has never been more level and there are almost limitless opportunities.
To take advantage of those opportunities we do need to completely rethink the way we do business though. But we do not have to start from scratch. Quite a few people and organizations have looked for (and doing) better ways to do business: Many books are already written on the subject and we are starting to see case-studies appear about those better businesses. We just need to spread the word.
So what do you think? Good news or bad news? Let me know if the comments below.