Consumers Paralyzed by Identical Choice
Several developments have shaped the business reality we face today.
Everything has become much cheaper to produce do to outsourcing, and speed to market have been greatly increased do to technology. This have lead to an influx of products and services; an influx of choice. And consumers love ‘choice’, right? The problem is that all these products seem to be more or less identical, and as a result, consumers have become paralyzed by to much choice. No USP, just shelves full of identical products.
For years we have seen a steady stream of blue-collar jobs outsourced to countries with cheap labor. And today we also see a steady stream of knowledge workers’ jobs going to places like India and China. Columnist Thomas Friedman wrote that ‘there are over half a billion Indians under the age of 25, and a growing slice of them will be able to you white-collar job as well as you for a fraction of the cost’ (Navoth, 2005). In an article in Businessweek, Pete Engardio and Bruce Einhorn (2005) wrote that ‘first came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster.’ Lawyers, IT, developers, creatives, engineers, in the New Economy almost anything can be outsourced. Paying less for the same makes perfect sense to most businesses. The effect of this outsourcing means that big companies all have the same production cost for the same offering.
Speed to Market
Technology has changed the way we work and do business and consequently speed-ed up the entire process as Tom Peters (2003) explains;
“When a timber ship pulled into the docks in 1970, it took 108 guys some five days to unload it. That’s 540 man days… …At about the same time, something happened…. something called “containerization”. Thirty years later, at the turn of the century and, when a timber ship pulled into the same docks in the same city, it took eight guys one day to unload it. That’s 8 man days.“
Today fewer people are doing more of the work in a shorter time. Technology has also streamlined operations by increasing access to information and reducing process time. Take Dell’s new Optiplex spare-parts storage facility, which is only 100 square feet. That’s 10 feet by 10 feet for a manufacturing operation that turns out 80,000 custom-engineered computers per day. Technology have made ‘produce to order’ possible; sending products straight from factory to shelves, virtually making the warehouse obsolete. The effect of this technology means that big companies all have the same delivery time for similar offerings.
To New Economy
As goods and services increasingly are being outsourced companies are forced to move up the Experience Ladder (see diagram below) in order to compete. Tom Peters (2002), one of our times best known and outspoken business gurus defines the Old Economy as “Basic Goods & Services”, and the New Economy as “Solutions & Experiences”.
Joseph Pine & James Gilmore (1999) write in their book; The Experience Economy - Work Is Theater & Every Business a Stage, that experiences are as distinct from services as services are from goods. Nancy Orsolini15, District Manager of Starbucks claims that they have identified a ‘third place’, which she believes sets them apart. ‘The third place is that place that’s not work or home. It’s the place our customers come for refuge’ (Peters, 2000). A Harley Davidson executive was quoted in Results-Based Leadership saying that ‘what we sell is the ability for a 43-year-old accountant to dress in black leather, ride through small towns and have people be afraid of him.’ (Peters, 2000).