After the journey we’ve just been on it’s time to review the 4Ps, which were introduced in the very first chapter. These are the factors of production, the marketing mix — the only real elements that exist in the business environment. As we review each of these you’ll be taken back to each of the individual parts of the mix and reminded of how significantly the world of business has changed. Every single one of the Ps is unrecognisable compared to the pre-technology digital age. Let’s indulge ourselves in a review of them one by one.

Product

The products (and services) we buy, use and engage with have changed forever. We no longer have to accept mass products made for average people living average lives. We can instead find exactly what we want on demand from anywhere in the world. And if it doesn’t exist we can find someone to make it, or we can make it ourselves. We can mash things up. Mass products that do exist will continue to decline into commodity pricing, unless the mass product is ‘customisable’ once we have it in our hands. Just compare your smartphone interface to anyone else’s. No two in the world are the same. We can get any product we want from any geography via the infinite online retail stores and we can co-create using the tools that have been handed over to us by the smarter brand houses out there — the ones that have realised the brand is actually ‘ours’. From sports shoes to media, products are increasingly coming from platforms where the final product is not what we buy, but a set of ingredients we can use to make our own recipe.

And as far as radical technological ingredients go, we can expect that 3D printing will have as much impact on the products we use as the digital web does on the media we interact with. Bits are being turned into atoms and desktop manufacturing will change the way things come into being and will change our lives. The services of the future are quickly becoming a cross-referenced, mashed-up, gamified bunch of system hacks that suit the end user. The best option for any business is to say, ‘Here you go. These are our pieces of the puzzle. Put them together again your own way’.

Everything we know about products has changed and the future isn’t even designed yet. Stability is an illusion. The art of product design is to be able to have the courage to live with collaborative and counter-intuitive uncertainty.

Price

The price of everything is getting lower, cheaper, more affordable and more distributed so that everyone can afford what’s important. High technology prices are quickly heading to free, disposable, inconsequential … call it what you will, but price is no longer a barrier for the most vital parts of our economy. We all have NASA-level powers today. The current path of technology is to become cheaper, smaller and more available.

Contrary to what the tabloids say, life has never been cheaper. In developed markets wages continue to grow at rates above inflation year on year. Everything is getting cheaper and prices have never been more reasonable in real terms. And this will continue. New access to BRIC-nations labour will add more service providers to the labour market via digital connections enabling everyone — not just large corporations — to border hop and lower the costs of doing business and making things. Sites such as Alibaba will continue to open up low-cost manufacturing to those previously excluded, creating an increased oversupply of everything and forcing prices down. In simple terms, we just have to come back to the very first lesson we ever had in economics, the one I keep on ranting about and everyone seems to forget: price is a function of demand and supply, and the supply of everything is getting bigger and even infinite. We have infinite supply, and two-thirds of the world’s population is yet to arrive on the web and add to that supply mix. But that isn’t far away as the costs of getting connected are dropping.

We can add to this the perfect pricing information we have and a new ability to bid prices down via comparison and system hacking. New methods of finance and funding as discussed in chapter 12 are deeper recognition of a dramatically shifting price structure. Everything is pointing towards a future with lower prices. If your business thinks it’s hard now to maintain profitable pricing, you’d better buckle your seatbelt, because the trend is set to continue thanks to the forces at play. Profitable pricing in the future will be more about having the most efficient distribution system or about mashing up the seemingly disparate technologies to create new things that previously didn’t exist. Selling what someone else sells will just leave you swimming in commodity soup.

Place

Location is no longer relevant unless what people are buying is an experience, a live event or an irrevocably human experience.

Retail as we know it is over. Gaining access to generally available products at the best prices will be the domain of the online buyer. The cost of bricks and concrete is just too big and expensive to carry. Links in the distribution chain are being removed as our bits of information find a more efficient path in the same way that water does. The retail revenue leaks we’ve seen in the traditional space will become more of a tsunami.

Distribution has never been more fragmented or important. Having direct access to a customer base needs to be part of the innovation strategy of any company that wants to survive. Outsourcing the moment of truth (the place where the money changes hands) to a retailer or distributor is now a very dangerous game. The greatest amount of control now, more than in the history of business, belongs to the distributor. We only have to look at the power of Amazon, Apple and the new media giants to see that. They all go direct to their audience, not via someone else. Add to this the fact that every person is quickly becoming a retailer and can sell whatever they make (even their labour) with simplified humanised technological tools.

Distribution is now non-linear and undefined so it’s hard to tell whose job it actually is. Makers are now sellers, and sellers are now makers. The vertical supply and distribution structure is now an integrated and networked system where a vertical flow pattern no longer applies. Companies need to pay as much attention to how they sell things as they do to what they make and sell. Selling where you’ve always sold is now a path to invisibility. The industrial retail mentality of the supply chain is now unrecognisable. Distribution, or ‘place’, has been totally revised.

Promotion

The days of buying an audience on demand are evaporating before our very eyes. The 30-second road-block launch now belongs in a marketing museum. Even buying an audience via search and social tools is not a direct or possibly valid substitute. The media landscape has forever changed from an interruption business model providing free entertainment and interruptions with messages from sponsors to a permission business model, where the audience and business choose to have a relationship and interact with each other with known and expected interactions.

Audiences must be earned and advertising is not enough. The offer is the thing that matters, and when a brand has something significant enough on offer, something we care about, we’ll do the rest from there on. Smart brands need to concentrate less on making cinematic and comedic advertising addendums and focus more on what they actually provide; that is, the reason they exist. In a world where we can pay attention to what we want according to our own schedule, the model of mass advertising and buying a place in people’s hearts just doesn’t work anymore. Media is omnichoice on demand and über niche. Using it to sell a message is not nearly as effective as it once was. Audiences will increasingly fragment into their niche worlds. This means aggregated mass audiences will become a rare commodity. If we need to find a mass audience, we can only expect the price of that connection to increase. There are only so many Super Bowls in a year.

The media is no longer a path to promotion. The path to promotion is about having something in the market that’s worth talking about and then participating in that conversation when the market wants interaction. In the words of the Cluetrain Manifesto, ‘Markets are conversations’. And conversations always occur within a human voice, not a corporate PR brochure.

The way we promote is not the way our industrial mass market did yesterday.

Selling potatoes

During the industrial revolution, the prize in business went to those who embraced industrial-era economics. Working the field by hand didn’t compete with the combine harvester. Bespoke automobiles hand-built by craftsmen couldn’t compete with the production line. The US went from having more than 2000 car ‘builders’ in the early 1900s, to 44 in 1929, and then to 11 in 1976.¹ And when the television hit the lounge room the travelling circus could no longer compete with The Tonight Show.

We’re all in the technology business now, whether we like it or not. There’s no choice, regardless of whether the business sells microchips or potato chips. Yes, even potato selling is influenced by technology in the same way that making and selling everything is. The savvy potato farmer has integrated digital systems for irrigation using live feeds from web-enabled weather reports. They price their product using global indicators from commodity trading websites, and change the range of what to plant based on what’s hot in the leading gourmet restaurants. So, next season he moves to baby kifler, which is far more profitable. He has a geo-map of all the places he sells to, creating the most efficient run for his delivery, and accepts new forms of direct payment via his smartphone. The point is that technology isn’t about what we sell anymore. It isn’t ‘that segment over there’; it’s the entire economic structure that we live within. No business can choose whether something is relevant to them because everything is relevant to everyone.

The end of ‘big’?

Being big for the first time in a long time is now often a disadvantage, certainly if the business in question was born before the 1990s. The advantages of being big are being removed. For industrial-era companies, their former economics of scale are quickly becoming the economics of fail. Big makes a business too fragile and dependent on volume and size. Businesses built around the idea of supply-chain scale are at risk because as part of a vertical-based infrastructure they depend on each other for both throughput and stability.

On the other hand, businesses that are large, but networked, systems — built around the concept of horizontal distribution and integration — can be big or small. Because what they build is a collection of nodes. A failure in the system — a rogue node, if you will — does not break the chain itself. It doesn’t stop the system. The chain doesn’t break because there is no chain. Instead it re-routes itself to another node, keeping the system working.

The emerging form of big, a big that can work in our new environment, is the platform. This is made up of small parts loosely joined to each other. The new big provides platforms to the many and is inclusionary by nature. By inviting participation, the new big allows itself to become distributed pieces of the economic infrastructure. But it will not have control over many of these. It will build things that are built upon, not owned outright. It’s not the sellers, but those who provide economic and entrepreneurial democracy, who will have the scale — which will be something like an open-source scale — advantage going forward.

The new big is a bunch of smaller pieces of the collective.

There’s a very strong possibility that the future of large business has to become the sum of its parts financially, but not operationally. The two will have to be kept separate to maintain their nimbleness, or risk becoming victims of the accelerating pace of change. Keep the segments separate and aggregate the profits; don’t aim for false efficiencies in operations. Avoid the development of a monoculture, a viewpoint where a company thinks it has all the answers, which is something no company can do in times of rapid change. Instead, maintain an independent skunkworks mentality of self-hacking and disruption. The structure can’t be that of the industrial model; it just doesn’t work anymore.

The ‘now’ question

It gets heavy carrying an irrelevant past into the future. The key question big companies need to ask themselves is this:

If we were setting up shop today, which parts of our business would we not include? Which parts would be in-house, what would be outsourced, what would our culture be and what would we not invest in?

This is the same question startups ask before they disrupt an industry, and the same question that’s being asked about every established industry, if not by the incumbents, certainly by those wanting to eat their lunch. If you don’t do what they do, they’ll end up doing what you don’t do and put you out of business.

Survival is about evolution

For any species to survive it has to evolve. It has to adapt to its environment as it changes or it can be left behind, or even worse not survive the transition as the landscape changes. There comes a time in every species’ existence where it has to climb down from the trees — or its corporate ivory tower — get down to ground level and make its way into unchartered ground. The time to do this is when there’s no longer enough nutrition (revenue) in the place that has been feeding us up until now. People have been particularly good at this for millennia. We followed the herd and we even fashioned small craft to cross oceans to find warmer, more hospitable, fertile ground as our climate changed. In real terms, the climate has always been the ultimate arbiter of where we need to move to, and as much as we think we can manage the climate, or work around it, it’s always in control.

And business is really just one type of climate. It’s also a climate that’s out of our control. And the climate is going through a tectonic shift for the ages where the conditions will never be the same again, at least not in our lifetime. So the decision for the more mature species in the business environment is quite simply to make way for new ground. Leave the old baskets, structures and huts behind (our infrastructure). They’ll be far too heavy to carry on the long trip into the future where the world is more fertile. The new ground will provide for those who have the faith to make the trip. And it’s not as if the trip is into unknown territory. The startups that now shape a business technology world have already taken the trip. They’ve made it to the new ground, and it’s good ground. It’s fertile and they’ve even provided the old-timers with some charts and some rough ideas on how to get there. Sure, the ground is still changing, but many have crossed the chasm and it is doable. All they need is some courage to get there.

A lab or a factory?

Businesses need to decide whether they want to be a lab or a factory. There are some clues into which one may work best in the new business environment when we review what each one is.

• The factory believes it already makes something that people want. It can’t handle dramatic changes to the product or the formula because it was built to make specific, predetermined things. The factory’s core focus is on scale, cost reduction and efficiency. It wants what it wanted yesterday, but cheaper and faster. The factory is the biggest investment the company makes. The people who work in and around it serve the factory, not the other way around. There’s very little room for movement, change or creativity. It’s more about the boxes of stuff to sell that come out the other end. The factory took a lot of money to invest in, so we need to churn out lots of stuff from it for a long time to get a payback. We’re in it for the long haul, and it will work out better for the factory if things don’t change too much.
• The lab knows the answer’s in there somewhere; it just doesn’t know what it is yet. Many experiments will be undertaken in order to find something that solves a certain problem, and while there are some ideas around solutions, there’s no answer just yet. The ingredients are flexible and easily changed, as are the methods being undertaken. The thing that really matters isn’t so much the ingredients, but the people mixing them up, the imagination they have and their interpretations of the possibilities. Each experiment they do leads to another idea and provides some real-world feedback as to how things interact. The focus is on human capital as opposed to financial capital, so we can have lots of labs working on different things at the same time and finding answers. If the lab fails it’s okay. It’s part of the learning process. And failures are very low cost. Every failure becomes an idea that can be crossed off the list and gets us closer to the answers we seek.

In times of change it’s pretty clear that a lab mentality is what’s needed. The lab is an approach that doesn’t pretend to know the answers or believe that the world is stable. It’s an approach where the playbook is in fact to not pretend to know what’s next, but to understand that speed is the asset, creativity is greater than finance and collaboration is more powerful than control. The marketing model of the technology age is a model that must remain in a constant state of flux. What organisations need is a culture and structure that can cope with flux, one that revises how it goes to market based on what it learned today.

The great fragmentation

While at various points in this book it may seem like I’m dancing on the grave of the industrial revolution, and singing a happy song about the end of powerful industries or even corporations, I’m not. What I’m doing is trying to help everyone realise that what made companies big yesterday is likely to be their unravelling tomorrow. The tools of life and business are now in the hands of everyone. Mass is quickly fragmenting into a world of niche, smaller and more distributed things. And big businesses that need a new survival manifesto need to embrace the fragmented nature if they want to stay ‘big’.

We are entering the age of post-scarcity abundance. The great fragmentation isn’t just great because it’s huge or amazing — although, in fact, it really is. It’s much more than that. It’s a move to a more equalised and humane society where the power to know and the power to participate are being handed back to everyone. Both economically and socially, just about everything is being democratised for good. I think it’s better than good … I think it’s great.