by futurist Richard Worzel, C.F.A.
We are standing at the edge of the next revolution, one that will shake the foundations of the corporate world. It will both create and destroy jobs, and build and decimate organizations, and at speeds that will catch people – and organizations – by surprise. The winners will be those who foresee what’s ahead, think clearly about how to take advantage of these emerging trends, and act decisively. We are witnessing the end of ‘business as usual’ in any sense of the phrase.
In the corporate world, we tend to think of innovation as a corporate process. It typically involves a team looking for improved ways of doing things the organization already does, then implementing them to increase the corporation’s profitability, or competitive advantage, or both.
Yet, one long-term trend is clear, undisturbed, and will be markedly disruptive: power is devolving from large organizations to individuals and small groups.
Power Devolving Away From Large Organizations
Computers used to be the preserve of the large organizations that could afford to build or buy them, and had the technical specialists to program them. Today, they’re ubiquitous, and anyone who wants one has one or more, whether they’re desktop machines, laptops, netbooks, tablet computers, or smartphones.
The creation and distribution of moving pictures used to be the preserve of television networks and movie studios. Today, anyone with a digital camera, a piece of movie-editing software like iMovie or Movie Maker, and an Internet connection can create, edit, and post a video on YouTube for the world to see.
Likewise, creating and selling software used to be the preserve of large corporations like IBM, Microsoft, and Apple. Now (thanks to Apple), almost anyone can create an ‘app’ and sell it online, whether through iTunes or one of its competitors.
Textbooks used to be a pricey, captive market, dominated by organizations like Pearson or Houghton Mifflin. Now anyone can write a textbook, publish it, either as a print-on-demand hard copy, or electronically. Indeed, Apple (again) has made a suite of textbook-creating tools available to make the process even easier (with the appropriate toll paid to Apple, of course).
My point is that power is devolving from organizations with lots of resources down to individuals as the tools that IT makes available become more widespread, more powerful, and progressively cheaper, following the exponential progression described by Moore’s Law (‘Computers will double in speed, and halve in price, every 18 months’).
The Next Stage of Devolution
We are now about to see the next stage in this power-to-the-people evolution, and it will strike at the heart of traditional industry.
There are two primary kinds of ‘products’: tangible and intangible. Intangible products include services, but also things like software. I’ve already talked about the new market for apps that has revolutionized the software business. This doesn’t mean that enterprise software will become an app, but it does mean that more and more things will be doable by more and more people without needing to have a large organization’s resources. We don’t need to create shrink-wrapped boxes of software, and develop a distribution system in order to capitalize on our developments. You can be a high school nerd and create an app that captures peoples’ imaginations, plus 99¢ from their pockets, and make money that way.
Or you can be a large corporation, like Apple or Google, that creates the marketplace that allows the high school nerd to do this, and collect a toll for each unit downloaded. It’s not a matter of large or small; both models work.
What’s being violently reshaped, in this example, is the older market of writing software, burning it to disks, printing instruction manuals, mass producing it all, putting it in shrink-wrapped boxes, shipping it to computer stores, and hoping it sells.
The Rise of ‘Personal Manufacturing’
Now, though, tangible products are about to go through the same process with the introduction of 3D printers. Such printers have been in development since Charles Hull produced the first one in 1984 using stereolithography techniques, which he named and later patented. Today there are several different techniques for 3D printing, but the important part about it is that now someone can go from having an idea to manufacturing a product without having a factory. Indeed, another name for 3D printing is ‘personal manufacturing,’ and according to The Economist newsmagazine, ‘Three-dimensional printing makes it as cheap to create single items as it is to produce thousands and thus undermines economies of scale. It may have as profound an impact on the world as the coming of the factory did.’
What’s more, there’s an open source movement in product design, just as there is with software like FoxFire or OpenOffice. This means if you want to produce a wrench or some other tool you don’t have, for instance, or a new blender for your kitchen, you can download the plans for it into your 3D printer, and produce one. If the plans are open source, then you only pay for the cost of materials, plus the amortized cost of your printer.
But beyond that, if you have an idea for an invention, and can design it, again using some of the open source software available right now, then you can produce it yourself, and at a price that’s competitive with a mass production run from a big manufacturer. You can compete with the big boys without having all the money they have invested in tools and people. And the Internet can help you market your products without the marketing and salespeople they employ.
Most such designs will be amateurish, and probably pretty lousy. But some won’t, and the percentage of good stuff will rise consistently as more tools become available, more people become familiar with them, and competition pushes people to design stuff that gets better all the time. Moreover, someone who is talented at this can be nimble a hell of a lot more easily than a large organization, especially if she can compete at the same level of cost as a mass market producer.
The Limitations of Personal Innovation
Of course, there are limitations. I don’t think Joe Blow, working in his garage, is a threat to Boeing, because no matter how clever he is, he can’t produce a 787 Dreamliner. Nor will he be able to compete with Intel on the next computer chip. There are issues of scale that relate to the size of the final product, the complexity of design, and the capital required to produce even one passenger airplane or one microprocessor that make it impossible for any individual, no matter how talented, to compete with Boeing or Intel.
But how about the supply chain Boeing uses? Will it be possible for an engineer, working on his or her own, to create a better instrument for the cockpit than an established instrument maker? And what might that do to Boeing’s suppliers? And how will that affect Boeing? It’s an interesting question, and one that we won’t know the answer to for some time.
All of which brings me to my original point: innovation itself is about to undergo a massive revolution. More and more of the things that used to require a large corporate structure will be doable by individuals or small teams of people, and they will be immediately competitive with large corporations. Meanwhile, facilitators of such individuals or teams may also spring up and create new tools and new means of distribution that they can cash in on, much as Apple has with iTunes. This might be marketing services, after-sales support, warranty services, or even just selling the cartridge refills for the 3D printers themselves. Indeed, if you think of the high-profile organizations that have shot to prominence over the past 10-20 years, they are mostly facilitators that provide the means for individuals to shine: Apple, Google, Facebook, Twitter, and so on.
A Truly Rude Awakening
My point is not that big is bad, and small is beautiful. My point is that the corporate world is about to be shaken up in ways that most organizations are not even considering. And those organizations that continue to plod along, pursuing business as usual, are about to experience a truly rude awakening. And no pun intended, but what’s more is the Moore’s Law as I stated it earlier is wrong because it’s too conservative. Not only is the rate of change accelerating, but the rate of acceleration is increasing. This means that even those organizations that are coping with today’s changes are going to be caught by surprise by the extent of the changes ahead of us.
What I am recommending to my clients is that this is a time in history that calls for radical thinking and re-thinking, practicing extended foresight, performing serious environmental scanning of the trends already in place and those developing, and dedicated brainstorming to consider how you want to be positioned for the next 10 years.
The innovation revolution is gathering speed. Don’t get caught looking.
© Copyright, IF Research, March 2012.
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