Transcript For Masses - College of Business and Public Policy

Current Marketing
Issues Seminar
BA635
Dr. Ed Forrest
TONIGHT:
Delineate the Organizing
Paradigm of this Course
Waves of Change
Spheres of Society
Defining Dimensions &
Operating Principles
The Essence of Marketing
Anything/Everything
one does to facilitate
exchange
ERGO
Whatever impacts
Why-What-Where-When-How
Exchange occurs…
is (or becomes)
an Issue…
Marketing Issues
in
Perspective
Marketing - part of Business
& Business - part of Society
Marketing
Business
Society
“Societal
Change”
creates
“issues” for
Business…
which creates
“issues” for
Marketing
Thus- in order to
identify- anticipate- understand
Marketing Issues
in particular
One needs to
identify-anticipateunderstand
Societal Change
in general
Society Defined:
A group of humans broadly
distinguished by:
mutual interests,
participation in characteristic
relationships,
shared institutions, &
a common culture
In the final analysis marketing
strategy is formulated to address…
THUS-
Patterns
of/changes to:
human interests,
relationships,
institutions &
culture…
…become
marketing issues
Hence- our search for marketing
issues begins w/ examination of…
Course Organizing Paradigm
“… begin in a
more or less
inductive or
empirical
fashion by
identifying
what all
civilizations
have in
common”
Alvin Toffler, Previews & Premises
(William Morrow & Co. New York, 1983) Page197
All civilizations have:
an
energy
system…
producing goods & services…
a system for distributing those goods &
a method of
services…
Energy, production & distribution are all …
tied together… to form a
TechnoSphere
All societies have some sort of
communication infrastructure–
an InfoSphere
“
Every civilization has a
SocioSphere
consisting of interrelated social
institutions, associations,
reference & affinity groups
‘PsychoSphere’=
intimate
relationships,
subjectivitypersonality
All societies operate
within a BioSphere
& have a
PowerSphere-authority allocated
thru formal &
informal political
institutions
“Put together these spheres encompass most
all that goes on in any civilization or society”
POWER
SOCIO
PSYCHO
TECHNO
BIO
INFO
Our Seminar:
Techno
… will explore
each sphere
Info
ascertain what
changes are afoot
and– as a
consequence–
delineate what
“marketing”
issues have
arisen/will
arise…
Socio
Production &
Distribution-Customization &
Customer-ization
Marketing
Communication;
Internal & externalchannels & strategies
Changing consumer
living-working patterns;
social, professional &
corporate networking
Consumer values; SocioPsycho Psycho
/Techno-Graphic
Segmentation
Bio
Societal/Green
Marketing
Power
Business & Marketing
Regulation; Corporate
Citizenship & Social
responsibility
When change concurrently impacts
& ripples thru & across all Spheres…
SOCIO
PSYCHO
BIO
INFO
TECHNO
You have a paradigm shift in the principles &
processes that define a civilization…
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
Social Wave Theory: When all
Spheres
totally transformed a new Civilizational-Wave
rolls over preceding waves
"In a time of change, it is
learners who inherit the
future.
--The learned find
themselves well equipped to
live in a world that no longer
exists." — Eric Hoffer
As early as 1969 Peter Drucker
foresaw an “age of Discontinuity”
w/ upcoming shifts:
From manufacturing
based economy
to knowledge based
economy
From primary focus on
engineering &
manufacturing
to primary focus on
information gathering,
analysis & marketing
Drucker, Peter F. The Age of Discontinuity. Harper & Row Publishers, Inc: New York, 1969.
In 1988 Drucker wrote “The Coming
of the New Organization”
“by 2008 successful
organizations “will be

knowledge-based
… composed largely of
specialists who direct … their
own performance through
organized feedback… from
colleagues, customers &
headquarters.”

In early ’70’s Daniel Bell foresaw
coming post-industrial society-- that
would:
1. Shift from a goods-producing to
service economy
2. Be dominated by professional &
technical class
"Coming of Post-Industrial
3. Be knowledge driven Society: A Venture in Social
Forecasting; 1973
4. & Future oriented
Key Resource
Pre-Ind.
Industrial
Post-Ind.
Land
Machine
Knowledge
Corporation
Lab
Socio-locus Farm
1980- Toffler’s
rd
3
 First Wave ~8000BC
Hunter Gatherer To Agricultural
Age
 Second Wave ~1750’s
Agricultural Age To Industrial Age
 Third Wave ~1950’s
Industrial Age To Information Age
Wave
Addressed transition from heavy industry to new tech- economy
Computers
emptied factories
& gave us paperwork in offices
As Machines emptied
countryside...
& gave us factorywork in cities
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
1st Wave
2nd Wave
3rd Wave
KEY COMMODITY
LAND
•Basis of
economy
•Life organized
‘round village
•Economy
Decentralized
•Every village
produce most of
its necessities
CAPITAL
•Like land- a zero
sum commodity*
•Necessary for
control of
Production-Labor
& Raw materials
Information
Uniquely
different from
previous key
commodities
What’s so different about
information?
• Expandable- infinity
expansive commodity
• Transportable-
geography no longer matters
• Compressible- can be
summarized, encoded
• *Sharable- Value
increases when shared
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
TechnoSphere
-Energy
1st Wave: MANIMAL
winches, wedges, catapults,
winepresses, levers & hoists –
amplified by man & animals
2nd Wave Electromechanical –
“w/ moving parts, belts, bearings
& bolts– clacking & ratcheting
along”
Initial Electro = Hydro & Direct Current
necessitated Local Sourcing
Alternating allowed Central Utilities w/ Long-D Dist.
3
3
2010
3
2020
2030
Production The Pin:
New Technologies
powered by New
Energy sources
enabled mass
production…
Adam Smith -1776w/ the pin lesson &
concept of “manufacturing”
Applied in 1908 by
Ford in production of
Model T
One craftsman = ~20
pins/day
Break into 18 steps10 workers-each 1-2
specialized tasks =
4,800 pins/day
Division of Labor
The Model T Requires
7,882 tasks requiring:
Characterized by:
• Hi energy input
• Hi waste pollution
“949 strong men
3,338 ordinary men
670 legless
2,637 one legged
2 armless
715 one armed
10 blind men”*
• Low skill
• Repetitive work
• Standardized goods
• Centralized control
*autobiography
2ND WAVE DISTRIBUTION
Sales rate volatility
Production rate volatility
Supply chain management substitutes
information for inventory
Standard Deviation, 10-yr Moving Average
20%
Production Growth Volatility
18%
16%
14%
12%
10%
Sales Growth Volatility
8%
6%
'68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04
100 %
Brick & Mortar
Economy
75
% U.S.
GDP
50
Goods & Services
Sold ; Distributed
Online
25
0
’72
’78
Source: Marvin Zonis & Associates
’84
’90
’96
’02
’08
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
The INFOSPHERE
1st Wave
2nd Wave
3rd Wave
Interpersonal
Mass
Interactive
Virtual
Face to face
Mediated
1:1
1:Many
Networking: many-to-many
Augmented by:
•Listening post
•Distance Runner
•Town Crier
•Pigeon
•Pony Express
•Newspaper
•Magazine
•Film
•Radio
•TV
Internet
•WiFi
•Cellular
•Satellite
Any 1:Every 1
Media Evolution
From Mass Mind to Blip Culture
“Instead the masses receiving
the same messagesmaller fragmented
groups/individuals send &
receive their own thoughts &
images” …(the BLOG??)
“On a personal level .. besieged
by blips… Info-Blips that are
contradictory & unrelated”
Toffler- 1980
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
Dramatic Shift in
Marketing Reality
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
The SocioSphere
Element
1st wave
2nd wave
3rd wave
Relationships Spiritual
Contractual Mutual
Family
Extended
Nuclear
Expanded
Education
Elitist
Mass/
LifeLong
Standardized
Business
Ind./Partn.
Corp.
Conglom
Relationships
W/ Divorce of Production &
Consumption—
Relationships became set of
transactions
Society not based on
kinship, friendship, tribal
allegiances- but on
contracts
2nd wave emergence of the
Company Man
The Family:
From Mother Hubbard
to Ozzie & Harriet to Big Brother
1st Wave: Extended Family--
Aunts & Uncles; Grand Pa & Ma: Inlaws & In-breds under one roof
2nd Wave: Nuclear Norm
(working Pa, housekeeping Ma + 2kids, a dog &
BBQ) everybody else own unit or
institutionalized
3rd Wave: Aggregate HH’s:
Mother-Other; Poly-Parents By 1980’s:
<7% US-HH’s nuclear; 20% Single, 1:7 single Mom
(1:4 Urban); in one Chicago neighborhood 86
different adult configurations…
Education:
From Athens, to Ohio State to Phoenix
1st Wave: For
Privileged
2nd Wave: For
Masses:
w/ Standardized
Curricula Texts & Tests w/
Bell Curve
3rd Wave: For
Individual
Life-Long/
Personalized in Time &
Mode of delivery
Business
From Dad & Sons to GM to AOL-Time-LifeWarner-Turner…
1st Wave: Shopkeepers &
Partnerships
2nd Wave: The Corporation &
Franchise
9-5, Strict Labor – Management hierarchy
3rd Wave: Resurgence of small
business & Emergence Global
Alliances
Horizontally, vertically & strategically integrated
Conglomerates— thru leveraged buyouts, hostile takeovers; out-sourcing, networking & symbiotic alliances
Ad-Hocracy replaces bureaucracy
Flex—Time, Task & Title
Many bottom-lines
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
Meta-convergence:
“the tightening of connections among
spheres that have hitherto been more
independent”
"Culture, religion, politics,
environment, ethics, are all
going to interpenetrate one
another to an extent never
before seen, and they will,
in turn, penetrate business
in all sorts of strange new
ways…“
Riding the third wave: A conversation with Alvin
Toffler
The 21st Century- Spherical
Meta Convergence
-Religious
&
Secular Groups
-Industry
&
Business
Associations
-NGO’s-
IMF,
WTO, World Bank
Ecological impact
Labor conditions
Pollution
Health & safety concerns
Human rights abuses
Child labor
Working in-w/ anti-democratic regimes
Globalization
Corporate, &
activist –
Shareholder
organizations
-Special
-Local,
State &
National Gov’t
Agencies
Interest &
Affinity groups
ILO-list 450+ Activist
Org. W3-sites
“promulgating policy
initiatives”
~ie~
Stark Contrast w/ 2nd wave Mantra:
The only business of business
is business--Milton Friedman
A successful business satisfies enough
customers at a high enough price so as to
return a profit to those who have invested
in the entrepreneurial activity…
…to the extent that customers express
satisfaction in a product or a service, in
continued purchases, the producer
serves the "public interest."
Today's Managers must balance
the bottom-line against the
ideals –
“--- want max profit for shareholders
…with honesty in business practices,
…safety in the workplace,
..and also serve larger environmental
& social issues.”
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......
Origins of our identity
Our individuality = result of
Nature & Nurture
War; civil unrest; social
movements
Political persons & events;
economic swings
Scientific/Technological
discoveries & advances
Tragedies: Natural & Manmade
Our commonality =
results from our
shared culture &
experience
Entertainment: Movies, TV,
Music; artists, celebrities
Clothing styles; Lifestyle
trends, Fads
Generational
Imprint as we
Come of age
Each generation molded by world
events that occur during its
formative years.
…distinct historical ex
periences
create characteristics that stay w/
people thruout rest of their lives
Generational Marketing: Reaching the Hearts and Minds of Consumers
http://circman.com/ar/marketing_
generational_marketing_
reaching/
Values are shaped by:
Generational Life Experiences
Called “Markers”
 Events
 Culture
 Politics
 Economy
 Technology
 Personalities
February 08, 2005
Lax Natarajan & Sully Romero Ordonez
62
•Generational
mindsets … are major
factors in determining
what & how
consumers buy…
Common
Experiences
Common
AIO’s, values,
tastes, style...
The
notion a group of people
bound together by sharing
experience of common historical
events 1st introduced by Karl
Mannheim - early 1920s
Common
responses
to marketing
mix
variables
Generations Variously Named & Dated:
1.
2.
3.
4.
5.
6.
7.
Matures – < 1946
Baby Boomer – 1946-1953
Generation Jones – 1954-1964
Generation Rerun – 1965-1975
Generation Xceptional – 1976-1986
Generation M – 1987-1995
Millennials – 1996 and beyond
Depression cohort (1912 to 1921)
THE GI GENERATION: 1901-1924
THE SILENT GENERATION: 1925-1942
BABY BOOMERS: 1943-1960
GENERATION X: 1961-1981
GENERATION Y: 1982-PRESENT
WWII cohort (1922 to 1927)
Post-war cohort (1928 to 1945)
Baby Boomer cohort #1 (1946 to 1954)
Baby Boomer cohort #2 1955 to 1965)
Generation X cohort (1965 to 1976)
N Generation cohort (1977 to date)
Waves of change affect
different generations in
different ways
Rode the Last
Wave
GI
Silent
Caught
Between
Waves
Grow Up w/
New Wave
Gen
X
Depression
War Baby
1925
1935
1945
Boomer
1955
1960
1965
1975
Riding
the wave
Gen Y
1985
2000
Agricultural
Industrial
Technological
Land
Capital
Data
Man-imal
Fossil
Bio-Tech
Widgets
Electromechanical
Digital/Genetic
Production........
Crafted/Self Use
Mass/Exchange
Prosumptive
Distribution.....
Restricted
Mass
Disintermediated
Marketing
1:1/ Barter
Product-centric
Consumer-Centric
InfoSphere
Interpersonal
Mass-Mediated
Interactive
Spiritual
Contractual
Mutual/Networked
Indiv./Partnership
Corporation/Bureaucratic
Conglomerate/Ad Hoc
Extended
Nuclear
Expanded
Elitist
In Mass/Standardized
Specialized/Life-Long
Inherent
Elected
Semi-direct
Inherited
Divided
Self Defined/Discovered
Toffler's Waves
Key Commodity
TechnoSphere
Energy.......
Technology.....
Communication
SocioSphere
Relationships
Business
Family............
Education
PowerSphere
Authority.....
PsychoSphere
Identity.......

Old Economy
– Manufacturing driven
 Standardization &

New Economy
– Information driven
 Differentiation &
Duplication
customization
 Economies of
Economies of
Scale- Mrkt
Share/sales volume
 Hierarchical Bureaucratic
Scope- Versatility –Long Tail
Inventories, Marginal Prdtn &
Dist. Costs; Networked Customer
base
 Diversified Adhocracy
January 3, 2000, page S1
“There’s a new economy out there – and it
looks nothing like the old one”
At Least
Ten Key Differences
Old Economy
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Tangible assets
Rigid-Vertical Org.
Protected markets
Competition
Distribution hierarchy
Rigid barriers
Standardization
Domestic
Prdt-Life Cycle=Years
Seller power
New Economy
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Intangible assets
Fluid & Modular
Open markets
Hypercompetition
Direct to customer
Flexible entry
Personalization
Global
PLC=months
Buyer power
“The new economy is not
just a dot.com thing.
It’s not just about high
tech, computers or microchips.
- it is about new ways of
doing things in every industry,
every government.
It’s about speed, quality,
flexibility, knowledge and
networks. It will affect
everything.”
(Collaborative Economics)
Tapscott’s Defining Dimensions
of the New Economy
Knowledge
 Digitization
 Virtualization
 Molecularization
 Integration
 Disintermediation

Convergence
 Innovation
 Prosumption
 Immediacy
 Globalization
 Discordance

Strategy in the new economy Don Tapscott. Strategy &
Leadership. Chicago: Nov/Dec 1997
Knowledge
“The new
economy is:
a
knowledge
economy
 based
on
human capital
& networks”

Old Economy
– Manufacturing driven
 Buildings,
tools &
equipment are
assets
 people are
expenses

New Economy
– Information driven
 Buildings, tools &
equipment are
expenses
 people are assets
 & knowledgeable
people greatest asset
of all…



How many mfgg plants & office
buildings does Microsoft own?
What is the value of all the
equipment in its offices?
How much inventory does it
have?
Microsoft’s real assets
walk out the door every night…
The New Economy
%
75
“InformationWorkers”
65
50%
55
45
35
25
2%
15
5
-5
1860
1990

A Knowledge Economy
By 1990 -1/2
American workers
are knowledge
workers
Today -80%+ of
new jobs are in
information
intensive sectors
Agriculture
Manufacturing
Services
80%
70%
% 60%
o
f 50%
40%
G 30%
N
20%
P
10%
0%
1850
1950
2050
Another Dimension to
Consider:
Digitalization!
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The “Media Fusion” Bomb
Akin to energy generated
by nuclear fusion,
communication power
generated by media
fusion is formidable…
W/ digitalization all
media become
translatable into
each other –and
gives one ability to
digitally mix all
media on a common
palette…
The New Economy:
Digitalization
A Digital Economy

Old information flow: atoms - paper
• Cash, checks, invoices, maps, photographs…

New information flow: bits
• All things - done digitally
“Being Digital” (’95) is
understanding the
significance of...
The movement of
compressed weightless
bits of data/ information
Transmitted at speed of light
 Combined seamlessly
 Retrieved instantly, anywhere
 24/7 around globe

Virtualization
“As information shifts from analog to digital,
physical things can become virtual…
Changing the metabolism of the economy,
the types of institutions & relationships
possible, & nature of economic activity
itself ”
Entering the infosphere
Journal of International Affairs ; New
York; Spring 1998; Michael Vlahos
The Virtual:
 Partner/
Community
 Office/ Corporation
 Store/ Mall
Virtualization
Molecularization
“The old corporation is
being disaggregated
replaced by dynamic
molecules & clusters of
individuals which form
the basis of economic
activity”
The knowledge worker (atom) forms working
clusters/ molecules
Integration &
Internetworking
“The new economy is a networked
economy, integrating molecules
into clusters which network w/
others for the creation of wealth”
Enables small companies to
• Overcome advantages of large
companies economies of scale &
access to resources
• Avoid burdens Bureaucracy,
hierarchy & inflexibility
... Work
has become Communication!

From work dominated by
machines & production-- to
work dominated by people &
conversation.

Going to work is to going
meet....

Work, education &
entertainment are mixed. Work
goes on anywhere, anytime...
we become nomads as
technology becomes mobile
Bo Dahlbom: President of the Swedish Research Institute for
Information Technology http://www.informatics.gu.se/
Disintermediation
Middleman functions
…being eliminated
thru digital networks
Musicians don't need
recording companies
 Airlines, Hotels don't
need travel agents
 Food Companies
don’t need
wholesalers
100%
90%
80%
70%
60%
50%
40%
30%
20%
Mfgrs
Wholesalers

Retailer
s
0%
Japan
Britain
United
States
Number of companies involved in each
level of the food industry, % of total, 1993
‘Disintermediation’=
removal of business process layers in value chain
Reduces Transaction
Costs:
Reduces costs of finding
buyers, collecting
payments, & (in some
cases) delivering product
Facilitates Dynamic
Pricing:
Real-time interactions between
buyers & sellers determine
worth of items
INFORMATION SYSTEMS
IMPACT
EFFECT OF INTERNET ON BUSINESS MODELS
THE EFFECT OF THE INTERNET ON BUSINESS MODELS
Convergence
1
“ the
2
dominant
economic sector is
being created by
three converging
industries
which, in turn, provide
the infrastructure for
wealth creation by
all sectors” - Tapscott.
3
Over 100 years ago a technology
convergence fueled a new economy
Electric
Power
Mechanical
Engineering
Material
Sciences
The resulting Industrial Economy defined
the business landscape for the 20th century
Today, another technology
convergence is fueling a new
economy
Computing Communication
Technologies Technologies
Content
Technologies
The resulting Techno/Info-sphere is redefining the business landscape for the 21st
century
Innovation
“The new economy is an innovationbased economy.
…Obsolete your own products

The collapse of product life cycles
• ‘96 Sony introduced 5000 new products
• “No matter how good you are, you are
only 18 months away from failure”
Prosumption
3RD Wave finds gap
between consumers &
producers blurring
CUSTOMERS INVOLVED
IN PRODUCTION
PROCESS
•Levi’s – Original
Spin
Prosumption
Dominant
Economic
Sector
Production

1st Wave=
Sector A
Crafted/ for
Self Use
2nd Wave=
Sector B
Mass/ for
Exchange
3rd Wave
Mixed
Prosumption
2nd Wave created situation where vast majority of
food, goods n’ services destined for exchange
(Sector B)


Virtually wiped out goods produced for selfconsumption (Sector A)
Created civilization where almost no one– not even
farmer was self-sufficient
3rd Wave Rise of
PROSUMPTION:



1970’s few self service
retail outlets nor tools,
building materials,
medical instruments
sold to consumers
1980’s DIY explosion in
full force
3rd wave characterized
by massive growth of
sector A
1970
1980
8%
70%
Tools
<30%
>70%
PG ID
0
~20 million
Self-Serve
Gas
Customerization

CRAYON- http://www.crayon.net/
Principle of Prosumption- variants=
Crowdsourcing
&.
Wisdom of the Crowd
Wisdom in vs. of
the
Crowd
• Wisdom in =
CrowdSourcing
• Wisdom of =
aggregating
estimates or
aggregating
contributions
(collective
intelligence)
CrowdSourcing:




Microsoft’s most valuable professionals (MVP)
program- MVPs answer more than 10 million questions each year
and provide vital feedback
TripAdvisor – relies on the opinions and reviews of its members to
provide information to people interested in a flight, trip or
vacation. With over 40 million reviews
Walkers Crisps “Do us a flavour” campaign – Walkers brand regard
was eroding and competition was increasing. Through their “Do us a
flavour” campaign they handed over creation of their next crisp
flavour to the public.
uTest – provide software testing services. They have a global
community of over 30,000 professionals providing software
companies with a new way to test their applications
10 examples of how
crowdsourcing is changing the
world.




We Are Hunted Ranks the Web's most popular songs based on
blogs, Twitter, MySpace, Facebook, forums, peer-to-peer file sharing
services and more
James Patterson's AirBorne let members of the public write most
of the chapters for his new book, AirBorne. He handled the first and
last chapters of the "chain thriller," then let members of the public
submit the other 28.
Galaxy Zoo Lets any astronomer, amateur or pro, help classify one
million different galaxies that were photographed by the Sloan Digital
Sky Survey. ..now packed with more than 50 million classifications
GooseGrade Can't afford a proofer or fact-checker for your site?
Just sit back, relax and let your anal-retentive readers do the work
for you!





CrowdSpring- Lets you post design projects or brief
copywriting assignments, name your price, then pick from a
wide range of solutions submitted from around the world. On
average, projects get 68 submissions.
Brand Tags Shows you a company logo and asks you to write
the first word that comes to mind.
Twitter Tees by Threadless Lets you nominate your favorite
Twitter posts to be turned into T-shirts, designed and sold by
the popular Threadless.com. You can even get a cash reward
for your submission, up to $500
TipJar by Google Collects money-saving tips from people
around the world. Advice is divided into categories such as
shopping, food and travel.
BioMapping Creates a map showing how people's emotions
are affected by different parts of a certain city or area. The
project relies on more than 1,500 volunteers who agree to wear
a device that measures their "Galvanic Skin Response," a sign
of heightened emotion.
Tapscott,
Immediacy
 Economy
is global-24/7/365
 Technology
Technology capture/filter/disseminate
information
 Organization
continuously analyzeadjust to changing
business conditions
In an economy based on bits
Immediacy becomes a key driver
Product life cycles
compressed:

From concept to production.


In 1990, autos took 7 years; In
1997 < 2
From Introduction to Mass
Diffusion

New products taken up
much more quickly
Market Adoption Sequence:
Traditional and Internet Life Cycles
Source: Patel, McCarthy; 2000; Digital Transformation; Mc Graw Hill
“If it works,
it’s obsolete.”
—Marshall McLuhan
From Adoption to
Obsolescence- a matter
of months

“In the old economy, an
invention like Polaroid
camera ensured revenue
stream for decades.

Today-consumer electronic
products have a typical
lifespan of 2 months”
*Strategy in the new economy Don Tapscott. Strategy &
Leadership. Chicago: Nov/Dec 1997
“If things seem
under control,
you’re just not
going
fast enough.”
Mario Andretti
Acceleration Quiz
Q: Disney & Sony (respectively)
produce and launch one new
product every _________?
“Disney =every five minutes…
Sony launches three new
products per hour…”
http://www.enlightennext.org/magazine/j28/business.asp
Elizabeth Debold, The Business of Saving the World
Discord
The natural occurrence when
waves/civilizations collide

LITTLE JOB MOBILITY BETWEEN
OLD INDUSTRIAL & NEW
TECHNOLOGICAL WORKFORCE

THE “HAVES’ PARTICIPATE
FULLY IN SOCIAL &
COMMERCIAL LIFE –
THE "HAVE-NOTS" WILL FALL
BEHIND-INCREASED SOCIAL
STRATIFICATION
Are jobs obsolete?


Globalization

“Borders are Becoming
Meaningless”
Work performed globally….
continuously….
 “The entire globe is now tied
together in a single electronic
market moving at the speed of
light. "There is no place to hide”

• Walter Wriston, Citicorp Chairman
globalization & technology =2 main
forces create a new level of
interlocking fragility in world
economy.
the world economy entered new era
marked increasingly frequent
periods of turbulence = the new
normality
The new normal in the global
economy =continuous &
unpredictable turbulence that is
punctuated by periodic &
intermittent spurts of prosperity
and downturn
2009
Globalization
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