Saturday, January 07, 2006
The New Local - What does it Mean to Business?
Great posts! To get us back on somewhat of a structured track, let's move forward to the next segment in the outline - the effect of the new local on business. What does the new local mean for business? We've had a few references to this in some of our previous posts. What types of businesses will be most affected by the new local. What businesses are immune - if any? How can a business capitalize on the new local? Up next - the impact of the new local on consumers.
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4 comments:
Walter, it's good to see you posting again. Here are my 2 cents on your topic.
The industrial age, and even the information age, have been about manufacturing. The Participation Age will be about creating relationships, building community, forging connections. Like the activist adage, Think Global, Act Local.
Businesses that want to thrive will need to build a sense of "Ohana", the Hawaiian word for family, by giving their customers a sense of participation, of being part of the family. The consumer/producer model will become obsolete. Look at the success of the Open Source movement.
This will impact all businesses, though certainly some will feel the impact before others. The ones that will have to pay attention first will be the small and nimble entrepreneurial organizations, though smart large companies will do well to pay attention. But some won't. And they'll be gone tomorrow.
Look how long it has taken Google to become larger than Time Warner. Larger in market capitalization than IBM. Some businesses will have the luxury of riding on their laurels, patents, whatever. But internet time will only get faster.
Though we haven't really agreed on what "The New Local" means, there are clearly areas where globalization will seem to have more impact. But ignoring the new local will not be the best way to profit from globalization. But it may be a few years before this becomes more clear.
EVERYTHING is affected by the new technology which is driving the new local definition.
I do not see any business that will not be touched by this. Sometimes I think there must be little niche markets that can escape this but I just cannot see how. No doubt some people running small businesses will make a positive decision not to get caught up in the technological revolution and stick to their tried and trusted ways of operating. I don’t have a problem with free choice – I encourage it. My worry is that all businesses are ‘up for grabs’ as non traditional thinkers come up with original yet simple ideas that shake the very foundations of traditional business processes and culture. I highlight Google, Skype etc.,
I am staggered now when I go into Jessops (UK Photography Retailer) and I see customers downloading their digital photos and get them printed instantly very cheaply. My mind wanders back to the ‘old days’ five years ago when the customer may have waited a week for negatives to be developed in a mechanical process that involved big machines and lots of people. Then I think about a lecture I attended recently from Professor Gary Hamel who said for instance that the 3000 top selling books at Amazon account for less than 50% of total sales – customers want variety. Professor Hamel also gave these staggering insights
• 12% of what we know we have learned in the last five years. That has never happened before
• Computing Power – 1946 - 14 functions per second – 2005 - 300 trillion per second
• 50,000 divorce settlements now online so that ‘customers’ can see typical settlements and thus save expensive lawyer time
Self publishing now means anyone can now write a book, publish it and market it without putting any money up front. Patients are now arriving for health service consultations with clinicians and the patients are ‘armed’ with downloads about their condition – this is challenging the experts to keep ahead.
I think in some ways we are just scratching the surface because our management and business ‘minds’ are working based on our past experience. We sometimes cannot see the potential of doing things differently. It is the brash people who challenge our thinking who will motivate deep cuts into our traditional thinking about how things are done now and take us to a new way of looking at a familiar problem.
In summary I say NOTHING is sacred – every walk of life is potentially affected by the new local. We will have a choice as always – we can wait and see what happens while others play around with current thinking or we can join in and try to make a difference by trying something.
Fascinating discussion guys …
Brilliant post Trevor. I was born in a market = commodity age. But now it's moving toward relationship. Owning great content certainly has gone far, but with the rapid rate of change, being plugged into a vibrant community is worth a whole lot more. A static website isn't going to keep getting hits.
There's some really interesting contrasts in your post, Paul, something that's easy to forget but what folks are deciding about as they enter the market "conversation". The huge corporations can become machines with no heart - like the symbolical tinman in the Wizard of Oz. No wonder there's been a desire to keep a clean divide - though in reality it's only been a perception of a clean divide. Any thriving community is built around deep relationships with the local businesses.
Thanks for the cluetrain manifesto. I've been hearing that word, but hadn't read it yet. Really strikes at the potential value proposition for businesses that "get it".
In my opinion, the new local's impact on business relates to getting involved in the customers life on a personal scale.
While the Walmarts of the world work on volume, mass production, and minimal cost other types of services and products often don't have the ability to control(or at least very significantly impact) production costs due to their market volume.
Instead, businesses that cannot differentiate themselves on price have to do so with either quality or personal relationships. This is one of the reasons I think we see such an emphasis these days on CRM (customer relationship management). And it's not simply about doing a good job of servicing your product or service. It's about creating value-added components to your offering. That's why you see so many businesses starting to add things like concierge services to their services. Some credit card companies have all manner of personal service perks attached to various elite levels.
You see other types of services offered in other industries yet it all boils down to an attempt to become integrated into a customer/client's everyday life and not just be a commodity.
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