This is one of my more provisional posts; in it I bare my thoughts somewhat more vulnerably than I am normally wont to do, because it is about an important subject. I’ve been thinking about it for some time now, which means it is a long post. It’s rambling and woolly because it is provisional. Francis Bacon, in one of my favourite quotes, said:
If a man will begin in certainties he shall end in doubts; but if he will be content to begin in doubts he shall end in certainties.
I am content to begin in doubts. With your help I shall end in certainties. This is that kind of post.
Marshall McLuhan is meant to have said something along the lines of:
“I don’t know who discovered water, but it certainly wasn’t a fish.”
Fish have no understanding of water. Fish have no understanding of fire either.
Every one of us has a problem recognising what we’re immersed in; sometimes, because we’re so immersed in something, we also have a problem recognising things beyond that which we’re immersed in.
Take “abundance economics”. We don’t understand it. Why? Because we’ve all been brought up to understand and respect “scarcity economics”. Which seems to go something like this:
- It’s all about supply and demand.
- Uh, wait a minute. Isn’t it all about supply, provided you can corner the market?
- So, if you could somehow continue to stoke up demand while controlling supply….
- …Yes, it’s all about supply and demand. Provided you control the supply and excite demand.
Everyone understood it. And everyone played the game. And scarcity economics was seen to thrive. God was in His Heaven, and all was Right with the World. Just as long as you were a Seller and not a Buyer.
We have all been brought up in such a world. Become the seller in a seller’s market. Or be a wimp, a wuss, a loser. Caveat emptor. Morituri te salutamus. Monopoly is a game played by lawyers and regulators, and the customers always lose. Antitrust is just a US variation of the same game: same players, same losers.
Sellers traditionally look to create scarcity. When the goods for sale are physical in nature, this is not hard to do. All you had to do was to corner the market and hoard the goods. This happens all the time. Diamonds and oil. Gun mountains and butter mountains.
That’s the way it’s been. A seller’s market. Scarcity rules OK.
In a world based around scarcity economics, with everything under seller control, things are made to slow down. There’s a QWERTYing of the seller-buyer interaction, a direct consequence of disproportionate seller power. Which is what leads to nonsensical constructs along the lines of Assembly Line. Any color you like. As long as it’s Black. Warehousing and inventory management are nothing more than “legitimate” hoarding. Hoarding by sellers.
So, particularly in the West, we were brought up in a world where sellers were encouraged to hoard and buyers were encouraged to borrow. After all, what does a buyer hoard? Money. Time. Attention. Intention. And most of the time, sellers work hard to make the buyer stop hoarding. (Make a sentence with “fool”, “money”, “soon” and “parted”). At university, it seemed to me that one of the key differences between the East and the West was that people continued to save in the East. The savings rates I was used to in India were phenomenal, and there was no credit to speak of. People spent a part of what they’d saved.
Which sort of leads me on to the real reason for this post. [And no, it’s not an attempt to link all this up to the credit crunch. Though there is a link.]
I think scarcity economics goes with selling, and abundance economics goes with buying. I think selling goes with things static, and buying goes with things dynamic. I think selling can be plastic and artificial, while buying tends to be real and authentic.
And I think Web 1.0 was all about the seller, while Web 2.0 should be all about the buyer. A static web enables artificial scarcities, while a live, participative web, like nature, abhors the vacuums so created. As a result, equal and opposite artificial abundances emerge.
Esther Dyson called it “the customer’s in control”. Before that, the Cluetrain had come to town, and people were beginning to understand the importance of authenticity. Since then, Hugh Macleod, Kathy Sierra, Tara Hunt, Seth Godin, Doc Searls, they’ve all preached elements of this in different languages. Languages like Creating Passionate Users. Languages like Social Objects. Languages like VRM.
Buying is participative; it’s about relationships and conversations, not transactions. Unlike selling, which is all about transactions.
For many years I’ve wanted to publish RFPs and RFQs and RFIs on the web, because it seems a sensible thing to do. Tell the world what you’re looking for, and help them come and find you. No lies and no cheating, just the facts.
But people railed against me when I said things like that. “You don’t understand procurement, that’s for sure. Don’t ever play poker, because you’d lose a lot of money. Transparency is for losers. There’s no point negotiating unless you’re prepared to walk away. You’re an idiot”.
I guess I am an idiot. Because I still think that way.
You see, scarcity economics is about hiding needles in haystacks; abundance economics is about making haystacks out of needles. What would you prefer?
The worlds of advertising and search are deeply intertwined right now. Not surprising, because they’re all immersed in scarcity economics and staticness and Web 1.0.
Search means something else altogether when it becomes about intention and not inventory. So does advertising, when it becomes about recommendation rather than rationing.
Every day, more and more people are becoming connected. Affordably, sustainably, ubiquitously connected. The move from sellers and inventory to buyers and intention is already happening. Social media in all its forms (blogs and wikis, IM, e-mail and Twitter, electronic social networks) help make this possible. Tools continue to emerge and improve.
In many firms, in many markets, in many societies, we’ve had a number of Emperor’s-New-Clothes words and phrases, words like “transparency” and “collaboration”. Words that were smoothly wheeled out to mean the opposite, and everyone went along with it. Why? Because we were immersed in Scarcity Economics.
Scarcity economics was all about making the customer pay for what you had to sell; if you had to drum up demand first, that was fine. It was called advertising. If the customer didn’t need it that was also fine, you weren’t running a charity.
Abundance economics is all about giving the customer what she wants and then letting her pay for it herself. The only thing you have to do is make it easy for her to tell you what she wants, and, when she does tell you, to listen.
Of course customers don’t always know what they want. Of course there will always be customers who want what they had yesterday, only faster cheaper better. Of course there will always be customers who want “faster horses“. Of course there will always be an Innovator’s Dilemma. Always?
Always is a big word. Maybe it gets smaller as we move from a seller’s world to a buyer’s world.
It’s all about choices. It’s all about choice. Customer choice. Choice based on recommendation, choice signalled as intention, choice executed in abundance.
To paraphrase Michael Schrage, innovation is what the customer buys, not what the producer sells. As we move into the new world, the very concept of the Innovator’s Dilemma begins to change. All this is happening, happening now. The future’s already here, it’s just unevenly distributed. But you know what? I think the credit crunch is accelerating the change.
I’m done for today. Flame away. And I will learn. This one has been a Long Time Coming, it’s going to be a Long Time Gone.
[An aside. Even if you hated this post, even if you disagreed with every word of it, go on, do yourself a favour, listen to the song I’ve linked to in the paragraph above. Superb stuff].
[Another aside, for the more literary-minded amongst you. I’ve linked to the Wikipedia entry for Browning’s Pippa Passes earlier in this post. Go read it. I knew the poem well, yet learnt something today.]
10 thoughts on “Just freewheeling about buying and selling”
I agree with you about most of this; we can change the paradigm on economics. Well, we could if we started a revolution of sorts. But one thing is unclear. The Qwertying, as you refer to the seller buyer relationship. I could be wrong, but the order of the keys just makes it easier to communicate no? If you are saying the seller’s set the rules, that’s a different story. @gapingvoid on Twitter sent me here and I’m glad he did. I will read it again.
@carole – I think QWERTY was invented as an artifical device to stop early typewriter keys sticking. If the popular keys were too close, they’d keep clashing.
@JP – interesting post. I’m going to read it again but initial reaction is along the lines of: the removal of the ‘bargaining position’ drops potential income towards zero. We need to bargain with something and, I guess, the most honest thing is our time. The revenue level will depend on the value placed by the buyer on our skills/knowledge. But, reading that, I’m not sure I’ve added much. Sorry. I’ll think on…
Very thought provoking stuff JP. It has all been in the air for some time, hasn’t it…scattered evidence that the world is changing which the credit crunch has pushed us towards linking up: Web2, open-source & collaboration+zero growth economy (as a good thing) & re-evaluating what is important. I have lost half of the money my mum left for my kid’s education on the stock market crash, but in this new place – ‘beyond the water’, as you suggest, I keep reminding myself not of the loss, but of the love I have for my children whom I would rather have than any money… so if the money doesn’t matter ..(it is hard to say that) what else doesn’t matter and what are the other elements of the new world that are there just beyond us. If we are moving beyond the age of the dinosaur… where are the tiny mammals hiding that will change the world?
Epona, the tiny mammals are here. It’s our turn. Our turn to be the tiny mammals.
The difficulty is that one person can sell a product, but you need a full trust chain to sell a service. And its usally a service that replaces the seller’s scarce product isn’t it?
In the sellers world, I would buy a car that a seller wanted me to buy. In an abundant world, I select a service that allows me to use a car when I need it. Pay as I go. I never asked for ownership of a product, so why do I need to buy my transport.
But unless we recreate the brand images of the sellers world, we have to accept that services are harder to create and maintain and therefore trust. Thats why many companies sell cars, but there are fewer rental services. You need local knowledge, and trust to do that.
Very interesting attempt to ‘boostrap’ an Abundance Economy from Scarcity economy using the the ‘future is here’ as the bootloader.
Read with the next post ‘Invented Here’, I’m tempted to stretch the boot analogy further:
Is Financial Crisis = Blue Screen Of Death.( Wrong Drivers ran amok?)
Stretching it a bit more, is the Abundant Economy the Opensource equivalent? Again is a multi-boot option possible? [It is no coincidence that multi-boot is an enabler and result of Opensource. Multiboot is about choices]
Are Abundance Economy and Scarcity Economy mutually exclusive?
The quintessential corner retail store in Scarcity Economy indeed is a (virtual) abundance provider. Abundance Economy is driven by filters( eg. authenticity ) – a scarcity mechanism.
This is getting too yin-yang-ish already.
Disclaimer: This comment is provisional ;)
This certainly rang bells with me. I’m all for transparency and more people knowing. In the past knowledge has been power and the most powerful have been those gatekeepers to knowledge. “Pay me (attention / money / in kind) and I will graciously share my knowledge with you. If the web is sustainable and can be maintained as an open forum then that attitude has to go the way of all past ideas and attitudes.
Maybe it is coincidental that at a time when knowledge is beginning to flow freely that “The Powers That Be” appear to be struggling to contain and “manage” it. I am thinking particularly of recent news stories of keeping records of _every_ text and email message
Well, this is how the world looks from my farmers’ market stall, anyway. The fruit & veg people have guaranteed business, those of us who make stuff have to find out what customers like and want, and keep working on it, or we wouldn’t survive. Luckily we get to talk to them in person every time they buy anything, which helps a lot :)