Posts Tagged ‘geometric knowledge growth’

Why The Economy Isn’t Working Like It Used To

Monday, November 1st, 2010

We’ve all been through a very rough ride over the last two years. Some are surviving, holding on by their fingernails, others have failed, and still others have show some degree of growth. How is this possible? Being a student of life and an active observer, several things have become apparent and i’d like to share my observations.

First, there has been a fundamental change in the way we do things. It’s been developing for a number of years, but most of us aren’t fully aware of the significance. This has to do with change. In the old economy, our goal was to find a better way, prove it, refine it, apply it, and then make a gazillion widgets using these new methods or tools over and over until we made the next innovative extension of the idea. We’ve been doing just this for thousands of years, and it’s worked well because we’ve built our economies on the principle that knowledge is potential economic power. If guarded, and applied carefully, we can use this knowledge for our economic advantage.

Our patent system, professional trades, and even our higher education system are based on the controlled delivery of scarce knowledge. When knowledge was hard to find, and difficult to master, it was very easy to design an economy where knowledge could be exploited in this manner. We established an education system where the pure knowledge was hypothesized, fabricated, and proven. Later, often years later, this raw knowledge was commercialized and protected by the patent system so that technology originators could recover the development costs and profit in a protected environment for a certain number of years.

Today, all of that has changed. Along with the geometric growth of computer processor speed follows the same geometric growth of knowledge. Couple this blinding expansion of information with instant accessibility via search engines and we upset the economic model we’ve been using for thousands of years.

Things are moving too fast to achieve any real long term profit. In the printing industries it used to be that a company would buy a huge printing press (which we affectionately call “big iron.”) Their market would only be marginally established. Over a period of time, their huge investment in this big iron would pay off because of the opportunity it presented not only to the company, but to the marketplace. Simply having the capability was enough to attract new business. Often business would develop organically, independent of the actual marketing effort. Pricing was based on quality, service, and price. You could have any two of the three. Now, we need all three AND we’ve added smaller runs and faster turn times besides.

Today, that scenario is gone. Digital technologies are in continuous change. Products are obsolete as soon as they hit the market. Worse, the next generation digital is twice as fast at half the cost. It’s therefore an economic disadvantage to be the first one in. The only exception to this is if you have a fully developed marketing plan, with customers, and a backlog of orders in place. In this case you have a chance of success, but it is only fleeting at best.

The key to success in today’s information driven, expanding digital economy is to have a market that is expanding as fast as the technology. This has become an exceedingly illusive and difficult thing to find. In fact, it’s almost impossible to attain given the general state of the global economy today.

What will allow for success under these conditions requires a shift in our thinking. It’s clear we’ll need to do things differently. There are two things needed to enable this kind of growth. The first is to greatly develop and hone your skill of using Search to find and reach new customers. This is typically done through the use of keyword searches. Our ability to position our goods and services so that a big enough pool of potential customers can find you and buy your offerings will be essential.

In the old economy we did this by broadcasting who we were and how great we are. We would blast our messages out to the world in massive numbers, hoping enough potential customers would find us to sustain our business. That too has changed. Today, our customers are searching for solutions. To succeed, we must be seen as a relevant solution.

To accomplish this.

The second, and far more difficult challenge is to overcome what I call “legacy baggage.” These are the holdover thoughts, ideas, and practices of the old economy. This is tremendously difficult to achieve because our employees have been taught to learn once, use over and over. It is exactly what the old economy was built on. It no longer works. Today, employees must be retrained to be open minded and actively embrace change. It almost never happens that way. The reason is simple.

Most blue collar workers, and many white collar workers have abandoned continuous learning. School and learning threaten them. They don’t want to risk being exposed as less than competent. They don’t want t make a mistake or appear to be weak or dumb. In the process, there is a built-in resistance to anything new. The culture and environment of change is critical to your success. Yet, management rarely knows what they want to do, or how they’re actually going to accomplish it. They’re used to mandating by directive. That approach no longer works.

The resistance to change, or rather the resistance to the acceptance of new knowledge, is at the core of our ability to survive. This is why new start-ups and even offshore competition often get the new business. They don’t have the entrenched resistance to change. The one-two punch of “not invented here” and “we’ve never done it this way before” are the killers of innovation. The legacy baggage of the old economy are pulling us under. Look at your own organization and ask yourself honestly, it this isn’t the case for you. Recognizing the situation is the first step toward finding a solution.

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