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Re-building your business around a renewable resource.

Posted 02.06.09 by Adrian Ho

A little while ago, I did a bit of thinking and writing about how the fundamentals of branding were firmly rooted in industrial age thinking. Over the past couple of years I’ve also come to realise the same is true of most marketing and business strategy. While the majority of businesses in first world economies are now based upon services and not tied to physical resources or laws, most business still operate as if they were entirely bound to finite resources.

A (still staggering) example of this for me is in the media marketplace. We all know that TV ratings have been declining for eons and most normal people (i.e. non-marketers) would therefore assume that the cost of buying a TV spot would have decreased. However, as many of you know, the reverse is true. The cost of many spots has actually increased because they are bought on a CPM basis and as there are fewer M’s the C’s are larger.

This makes absolutely no sense to anyone except for media property owners who are treating attention as if it were a finite and diminishing resource. This is so clearly wrong it’s hardly worth discussing, yet there are still billions of dollars spent by otherwise reasonable people in propagating this myth. Attention is finite in any given period, but it’s finite in the way that grains of sand on the Earth are finite. As Clay Shirky points out, we haven’t come close to tapping the full power of people’s attention, so why are we acting as if “Peak Attention” happened in the 80s?

I think it’s because people haven’t yet examined the basic assumptions upon which they and their businesses are operating. Unless you happen to be in an information-based category, it’s entirely possible that no competitor has forced you into re-evaluating things and therefore your category can go about its business fairly unconcerned with the fact that so much has changed. I think this must be quite a nice life for the kinds of people who like that sort of thing. There’s a calming predictability to it all and you can operate every day as you did the day before, half asleep.

However, it’s equally certain that some day in the not too distant future, someone somewhere will wake up your category and those businesses who are still operating on Industrial age principles will be in trouble. Conversely, I also believe there’s a ton of opportunity for many companies to truly break out by taking a long, hard look at their beliefs and practices. How can you change basic economics of your business? How can you re-think your business from a finite materials-based model towards an infinite imagination-based  model? I think these are the kinds of questions business and marketing strategists need to be asking themselves today.

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  • http://curiouslypersistent.wordpress.com Simon Kendrick

    Hi Adrian – this phenomenon may be US Specific as in the UK, TV ratings are at pretty much their cheapest ever level. And they have been shown to have greater ROI than other media
    Cheers
    Simon

  • http://shrinkcooperative.com peter spear

    i love this post. especially the well-cut matrix clip. i was asked the other day about the mythologies that are defining our time. my finally answer turned into an observation about there being simply a multiplication of mythologies, from which one is free to choose.

    my initial response, however, was the matrix and something to do with the kid who got videotaped after the dentist:

    http://www.youtube.com/watch?v=txqiwrbYGrs&eurl=http://scienceblogs.com/cortex/2009/02/is_this_real_life.php&feature=player_embedded

  • http://jakeybro.blogspot.com/ Jake Yarbrough

    Nice post, as always, Adrian. I’ve got look into Shirkey’s notion of the misguided idea of “peak attention.” Love that concept.

    I’m sure you’ve read Umair Haque at Harvard Business. He has several posts recently on the economy of the future based on rewriting the rules and reconsidering the valuation and concept of resources.

    Thanks for keeping me intrigued.

    Jake

  • http://experiencefreak.com Andy

    thanks adrian. It’s funny how the matrix analogies are so very applicable now, even it does scream “show me your geek” these days ;)

    I’m particularly curious about the above’s implication to fundamental re-orging (or disaggregation) of business from a staffing perspective. Consider the industrial age notion “you must be on the assembly line to make the widgets” mentality? How much does this really apply in a connected world, particularly in a service economy? You’d think that people resources, how business considers FTO hires vs a kind of “molecular” staffing could move to customized solutions that are much more flexible. Not to say that that everyone will be a freelancer, or office space etc will go away tomorrow but from my view of the world at the moment it’s entirely possible for things to dramitically shift in that direction (particularly for marketing and advertising).

    the fundamental infrastructure to make this happen is all around us.. from Oracle’s ventures into video applications, crowdsourcing,auction project markets like elance and crowdspring, discussions of connecting business intelligence and metadata into non-linear databases on the web (see TED talks) as well as what I’m guessing to be part of the vision of the Peter Kim..Jeff Dachis “social computing” venture. the infrastructure to break down hierarchical business structures is flattening much like communication, media and product/service distribution already has.

    point being is that the industrial age business assumptions dont only break down at the business and marketing level.. but they flip over to the staffing, “career” and employment side of things as well.

    I think this could hit marketing first. imagine a situation where marketing work is ad-hoc yet somewhat instantaneous in nature to initiate. you’ll have molecular organizations that combine and detach frequently to solve problems. And technology will facilitate the collaboration, pricing and payment of this work.

    Some would see this as pretty strenuous and scary for marketing and creative people. “Commodization” is what you hear from many, particularly design folks. But I think the opposite, it’s liberating. You pick the best work, you land the deals and individuals build careers the are multifaceted, dynamic, constantly changing. That sounds pretty cool to me.

    Hopefully we won’t be working in home pods and eating oatmeal from a tube, but otherwise I’m in.

  • http://www.crowdspring.com Ross Kimbarovsky

    Adrian – nicely done! You’re absolutely correct that most businesses and industries find themselves at a crossroads. The trouble for the newspaper industry didn’t start in December 2008 – it’s been brewing for a decade (or more). Same for the music and design industries. People have become too comfortable and entrenched and have stopped challenging themselves and their industries.

    I would add two things to your comparative list. In the left column, I’d add “gatekeepers” to reflect that in most industries gatekeepers sprung up to keep competition at bay. Record labels in the music industry and major media in the newspaper industry are two examples. And in the right column, I’d add “level playing field”.

    Today, bloggers, simply through their talents and well-written articles, are showing a staying power and reach that was unexpected only a few years ago. Open source developers are putting a great hurt on established corporations. And talented creatives from around the world are challenging the status quo in the design industry. The internet and technology has enabled such groups and there’s no turning back. And you are absolutely correct that there are huge opportunities.

    And all of these industries have at least two things in common. First – they’ve all reacted the same way to the challenges – by rejecting the notion that anyone could or should change their decades old practices. Second – they’ve all come to realize (perhaps too late for some), that they are complaining in an echo chamber and that businesses and consumers aren’t listening. People want free markets and opportunities – and the gatekeepers can no longer sustain the old ways of doing business.

    This fall, my business partner and I presented a talk on this subject. If you’re interested, you can view the video here: http://blog.crowdspring.com/2009/01/12/beware-the-underdog/

  • http://zeusjones.com adrian

    @Andy: Clay Shirky talks about this in his book, “Here comes Everybody.” His point is that businesses have typically operated through reducing the cost of interaction between different disciplines. In the Internet era, the cost of interaction is approaching zero and therefore businesses are in trouble. My view is that businesses do more than simply make it possible for different kinds of people to work together. They provide framework for rituals, missions, values, safety and shared purposes that bind people together as well. That’s why I’m not as new age about this stuff when it comes to dismantling businesses as others.

    However, I do think people are re-thinking what’s inside the business and what’s not. I know we talk about this all the time.

    @Ross Gatekeepers is a very valuable add! You are absolutely right. Old business is about preventing the smooth flow of information, capital, goods or whatever and New business is about providing open access. Thanks!

  • http://zeusjones.com adrian

    @Simon, your data are for TV spots overall which matches the situation here in the US. However, the CPM price has risen here pretty continuously as there is “more demand for fewer eyeballs.” (http://www.tvweek.com/news/2008/06/tv_nets_eye_92_billion_take_de.php)

    As far as ROI goes, there are lots of studies which all say different things – ROI is hard to generalise across different media and different marketing objectives I think.

  • http://experiencefreak.com Andy

    thanks for the shirky bookmark. I definitely need to check it out. I too am a big believer in culture, interaction and “place” being as important to a company as the products and services it provides. an elance like IT backbone doesnt build that. but I do think “place” is bending and skewing quite a bit. how people attain satisfaction in these interactions seems to be changing too, hence the popularity of biz & social minded twittering, emerging co-working spaces, skype-oovoo vid conferencing and meetups, etc. somewhere within this cultural shift at least some of the current definitions of place will change and the office will be a mix of traditional spaces and more loosely networked peers? ..off to read shirky ;)

  • brian

    gotta throw in a gendered reading of your oppositional columns – industrial/networked. the attributes and qualities under the “networked” header privilege those attributes that have been culturally positioned as “feminine” – collaboration, access, supportive, mutuality, and intimately bonded. While I’d certainly not suggest some sort of essentialism about women & men – there’s a lot of truth the in whole “future is female” in terms of what’s ascendant as a long term strategic investment.

    one other point adrian – “business” itself is contested terrain – not just the holder of rituals, values, mission, etc. it’s a meaning making enterprise itself. from the 3 martini lunch to the watercooler to the coffee break – all “industrial business” rituals that tried to get access, coalition building, mutual support,etc – in their own historically specific, masculinist way.

    oh yeah – great post & the usual stimulating thinking. thanks!

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