How did we arrive at Intangible Economics?

Before we dive into details, let's have a quick look at how success factors of business have evolved over time.

When you play poker, do you continue with the strategy you started with in the first betting round, or do you adjust with each new set of cards? Since the Industrial Age, there have been quite a few sets of cards dealt. With each round, businesses have re-evaluated the skills that were needed to succeed in the marketplace.
Have a look at how we got where we are today.

 

We begin the story in the 1960’s

WITH MANUFACTURING

This era was about Manufacturing and owning factories. Capital, hard assets, and processes for manufacturing were key. Small players didn’t stand a chance against the powerful incumbents

 

... then came the 1990’s

DISTRIBUTION

Asian suppliers enabled cheap mass production and the economic upswing enabled mass consumption. As a result, mass marketing and mass distribution became critical for business success. Success was driven by access to capital, distribution channels, brand power, efficiencies in production and cost benefits through larger scale. All of this creates strong barriers to entry.

 

... to the 2000’s

TECHNOLOGY

Now technology and information start to enter the stage. New productivity tools enable companies to operate more efficiently, reducing the impact of scale. Product Development is gaining in importance as the speed of product lifecycles increases.

 

... and the Present Day

INSIGHTS

Low cost production tools, global factories and supply chains are now available even to small start ups. Production capabilities have been democratized, and as a result customer access and insights gain in importance. The advancement of data availability and analytics improve the ability of companies to generate these insights.

How did we get from the Industrial Age to the Age of Intangible Economics?

There’s a lot of change that lead to Intangible Economics. Many simply talk about ‘digital transformation’ or ‘disruption’. Yet both terms fail to grasp the scope of the shifts that have been happening. The impact of the reshuffling begins with the way that products and services are being built and distributed and it extends to how consumers interact, communicate and select those products. You could simply say that the whole business space has been reshuffled.

CONSUMER HABITS ARE TAKING A JOURNEY

Take for example consumer habits. There are plenty of layers to the transformation of consumer habits.
We as consumers not only went from shopping in a retail store to ordering online and mobile.
We also have moved from buying products to obtaining the same offering as services.
We became used to communicating not only with websites, but also with apps and increasingly with bots. And with each new social media platform, marketers even have to relearn new ways to communicate with humans.
Along the way we also have switched sides of the transaction. We have become hotel operators, full-time content producers, curators, thanks to AirBnB and the ‘like’, ‘share’ and ‘comment’ buttons of social media platforms.

BUSINESS ACTIVITIES SHIFT GEARS

Building cars has become a software task. The mechanical parts of electric cars are much simpler than those of combustion cars. At the same time autonomous driving, connectivity among others require software capabilities.

The biggest marketing agency of today started out as a social network. Its key asset is the data that it collects about our behaviour. We are talking about Facebook of course.

Similarly, the success of our movie and music stores is now driven by their data science capabilities. If in doubt, just have look at Netflix’ recruiting site. And of course, the ‘hotel’ business AirBnB, operates neither hotels nor appartments.

PRODUCT DIFFERENTIATION HAS BEEN DILUTED

The physical quality of many of our products today is at an equal level. How can you tell one Plasma Screen TV from another these days? Why is their quality on a similar level? That’s because many of the components that are needed to build and deliver these products have been commoditised. Hardware components not only have reached an advanced level, they also can be purchased by anyone who wants to set up shop.

But it’s not only about physical components. Also the software infrastructure that was required to run a business can now be sourced as a service. If standard solutions are not sufficient for our needs, well, then platforms provide us with outsourcing opportunities across the globe, whether we need a database entry person or a certified financial accountant.