My Google Reader feeds have gravitated towards smaller, less frequently updated blogs now (I’m up to 202 subscriptions still, but I’ve gotten rid of some of the noisiest that post dozens of entries a day). Some of the best blog entries lately come from those like Umair Haque, a strategy advisor who writes at the otherwise dull Harvard Business Blog.
One of his latest entries discusses the post-hypercapitalism world, which is dying a violent death after the credit collapse (even Greenspan gave a mea culpa today) and dramatic paradigm shift of the internet’s Moore’s Law effects on concentrated capital (i.e. big business). He lists three transformations:
- A change in global patterns of savings, investment, and consumption.
- Strategists must rediscover the lost art of authentic value creation.
- Strategists must rediscover entirely new sources of advantage as old ones fade and decay.
Haque’s big thing is that companies need to rewire their DNA so that they can move quickly and nimbly in a business world that doesn’t reward the traditional ideas anymore.
In this post, he talks about Starbucks and how their hypercapitalist attempts to pawn off music, mugs, and doohickeys along with their coffee eventually didn’t provide long-term sustainable growth.
The key, he says, is to plan for the long-term, so that instead of selling cheap shit and diluting the brand, you’re providing services like barista training and community development.
Howard Schultz, Starbucks’ original CEO, just got the position back and promptly shut a lot of the extra shit down. Jerry Yang, much maligned right now for coming back to Yahoo! and turning down a buyout offer from Microsoft, is doing the same: lay off the excess, scale back operations, and get back to core business (in Yahoo!’s case, building open platform tools).
So it’s good to see that some companies are breathlessly trying to adapt. Others won’t even try and will fade away. I think it’s fair to say that, at least for a while, consumer culture is on the decline and business models won’t be so fearlessly predicated on the notion that you can just jam shit down customers’ throats.
What will the future look like? Well, it might be most instructive to look at the internet for the early signs.
What is coming is the network of things, or the One as Kevin Kelly calls it. Soon every device and even inorganic thing will probably have some webness that lets it contribute to the online brain, which is what all the linked computers in grids and clouds are becoming. Your kitchen appliances, small RFID chips, GPS sensors, even nano devices. This is all on top of an increasingly developed world where there are still billions of people who have never been online.
At the same time, as Jeff Bezos presciently explains in a TED Talk about the Internet gold rush back from 2003, the internet is less like the gold rush after the dotcom bubble and more like the advent of electricity.
At first, electricity was not intended to power a lot of devices. It was just intended to provide energy to light bulbs. Later, light bulb sockets were used to power some crude devices, since wall sockets did not yet exist. Even a dangerous washing/wringing system used a light socket. Bezos claimed that back in 2003, we were at that point in terms of where the internet was relative to where electricity was. His insight is that we have a lot more innovation to discover than we have already.
Internet access has yet to be commoditized, but it will be soon. It will become easier to connect to and interface with, and devices and appliances we could not have dreamed of will come out. With plummeting storage, processing, and access costs, companies will be able to drop their capital expenditures and rent out time and bandwidth from other companies. Individual users will be able to create and innovate on their own as they have through writing on blogs and on web sites. There’s a lot of growth to come for those who are willing to adapt.
The credit crisis is helping to bring this upon us. Limits in capital, labor movement, and the weakening of tyrannical oligopolistic holds on a lot of industries and sectors will push innovation harder. Entrepreneurs will find new ways of doing business that will be highly rewarded. It’s been a while since we’ve seen a tremendously successful company come out of the 2001 wreckage: probably Facebook is the main example there, and it’s still trying to figure out how to best monetize.
Geoff Huston wrote an excellent post back in 2006 about the advent of IPv6, a new protocol coming soon to address the shortage of IP addresses under the IPv4 system (addresses like 192.168.1.1 are on IPv4). Depending on who you talk to, the shortage will begin to take effect in 2011 or so. The IPv6 standards have been in development through consortium for over a decade now, and once implemented, there will be billions upon billions of possible addresses, which should take care of any problems we have in the foreseeable future. Said Huston:
“So what’s left? I suspect that the truly revolutionary message in IPv6 is a message about the extracting efficiencies in the business model of communications. We appear to be looking at a transition from value to volume with IPv6. IPv6’s true leverage is about the ability to encompass world of tens of billions of chattering devices. The service industry that provides the networking services to these tens of billions of devices will not be a bloated inefficient relic of a bygone era of monopoly service enterprises. Indeed its likely that there will be nothing in common with the enterprises that operate in this industry today. IPv6 appears to be carrying an implication of a quite dramatic shift in the service enterprise to an industry based on a commodity utility. We are looking at an industry that will operate at a level of single digit operating margins and investment returns similarly phrased. If we want IP to operate from anonymous sockets in the wall, or seamlessly over wireless, then we will be looking at service delivery systems that provide simple lowest common denominator networking service. The search for valued-added services and value-added networks have no logical role in such a commodity utility world. This all sounds quite conventional, and the path to commoditization of many artefacts and services is a well trodden one in many industries and service sectors. So why is this such a revolutionary message for the communications industry? I suppose that the observation here is that this is one industry which is continuing to live the myth that there is a pot of gold out there in value-added networking-land, and that the windfall profits made in successive waves of innovation in the telephone industry over the decades will continue to repeat itself, and there is a pervasive air of denial over a message that says that the value is going to be destroyed by volume. In this industry the words “commodity” and “utility” remain taboo!”
This is all tremendously exciting for geeks like me! The future is awash with innovation, with opportunities for new companies and projects, and with optimism and increasing potential for individuals to bring ideas to market.