In the third blog of three about "The Information Age," the third book Toffler wrote about change was “Powershift." The basic idea in this book is, if you give everyone the same information at the same time, the power will shift outboard. No longer will the power be concentrated in two or three people at the top who know everything, decide everything, control everything... the power will shift outboard. In fact, if the customer, the recipient of the product or service of the Enterprise has access to the same information that the Enterprise has access to, the power will shift into the external environment ... to the customer. It will become “market driven”! Those of us that come from the Information Community see all kinds of evidence of this over the last 15 or 20 years... all kinds of activity around Data Warehouse, most of it centered around customer. We don’t know much about the customer... we know lots about the products or services but little about customer.
In fact, I think this Powershift is having a dramatic impact on the nature of Enterprises. It is inverting the concept of the Enterprise. In the Industrial Age, the concept of Enterprise was: get yourself a good product or service and then go find a bunch of people to sell it to. From the perspective of the Enterprise, the market was integrated. If the customer wanted the Enterprise or its products to be integrated or customized to their (the customer’s) requirement, the burden of integration fell on the consumer, the customer. That concept is inverting... in the Information Age, the concept is, get yourself a good customer and then you figure out the range of products or services required to keep that customer a good customer. From the perspective of the customer, the customer wants the Enterprise’s products or services customized to their specific requirements, that is, the customer wants to see the Enterprise and/or it products integrated. The burden of integration shifts to the Enterprise. If the Enterprise cannot accommodate the customer’s specific requirements, “click”, they get a different supplier. It is a global market... and it is easy to switch suppliers. And, it is difficult, expensive to get a customer back. In the Industrial Age, it was easy to get new customers... open a new market. But in the Information Age, the Market is no longer totally elastic... all the customers already have suppliers. You have to take the customer away from another supplier... it is expensive.
The burden of complexity falls on whomever has to deal with integration... Enterprise- wide integration! Custom products/services on demand! That is a lot different and a lot more complex than building and running systems! And the Information people already KNOW it is impossible to deal with Enterprise-wide integration... clearly, it would take too long and cost too much! You understand the practical implications of this Powershift?... It would mean that from now on, every time IT gets a demand for some new implementation, it would be a demand for an Enterprise-wide, integrated implementation!
I did a lot of work with the CEO of a large retail department store... this company was like Walmart... it was not Walmart but it was like Walmart... and the CEO would say, “the customer is a market of one”. I could never “get it”. The customer is a market of one... in a retail store??? But... think about it... the retail store knows a lot about you... they give you points or special promotional deals to gather data about you. They know who you are, they know your phone number, your address, how many times a week you visit the store, how much you spend, probably how much you make, they know what you buy, what combinations of products you buy... they have a lot of “big data”... they have so much big data that they probably don’t even know what to do with all of it... yet.
In the future, they won’t even have to give you incentives for you to give them your data. They will have RFID tags on every product and they won’t even need a cashier to ring up your sale. The products will tell them what is in your market basket and they will just hand you a bill on your way out of the store. In fact, they won’t even have to hand you a bill because the RFID tag in your credit card will just pay the bill on your way out.
And what the department store knows is, if they don’t have on the shelf every product you want to buy on your next visit, they lost you as a customer. You will go across the street or “click your mouse” and get a new supplier. The customer is a market of one! It is a global market and easy to change suppliers! You have to know what each customer wants and provide it at the moment the customer wants it! The power shifted to the customer.
The customer is a market of one! The customer wants a custom product (or service), custom to their specifications, and they may not even know what their specifications are until they want the product. This will drive the complexity of the Enterprise out of sight! You have to customize your product or products to the specification of every individual customer... on demand?!
There was an old story about Proctor and Gamble and Walmart floating around years ago. I am not sure if it was accurate or if I have all the details correct but it is plausible and if it is true, it would be a great illustration of the point so I will tell the story anyway. The way I heard the story was, Sam Walton, the CEO of Walmart met with the Vice President of Marketing for Proctor and Gamble and said something like, “if I send you my cash register tapes at the end of the day, you can send me a one line-item invoice at the end of the month... it is all my data... and I could send you one check in payment and then I could get rid of my accounts payable department and you could get rid of your accounts receivable department. And then, if you drop-ship to my stores that night all of the product to replace the product I sold during the day, my shelves will always be stocked with your product. And, reputedly, the Vice President of Marketing for Proctor & Gamble said something like “No Problem... in fact, I will bear the carrying costs of the inventory on your shelves for you”.
One of the factors that made Walmart dominant in the market and enabled them to change the “core logistic” of the industry was their ability to customize their local stores to the local market, maintain inventory and build customer relationships. Power shifted to the customer.
A service-based business is different. If you are in a product-based business and you go out of business, the product still exists. Someone else could create it, sell it, re-sell it, it change it, maintain it, etc. However, if you are in a service-based business and you go out of business, the service no longer exists. The service is YOU, your business. The Information Age customer, every individual customer, wants you to customize YOUR BUSINESS to their specification... on demand!
Go back to the rate of change issue for a moment. If you drive the rate of change out of sight... what will that do to your “time-to-market”... from the time you get an order until you provide a response, fulfill the order?... Your time-to-market is going to shrink... if you drive the rate of change to infinity, your time to market will shrink to... ZERO.
Just think about IT (Information Technology) for a moment... go back a year or two ago... what was the IT time-to-market in those days?... from the time IT got an order for a new system or some new implementation of some kind, how long did they have to deliver something useful for the Enterprise? People usually say, “oh, about a year.” If IT could do something useful in about a year or so, they were “home free”.
What is the IT time-to-market today? Is it a year? People usually say, “oh, about 3 or 4 months.” Go out a year in the future... what do you think the time-to-market is going to be a year from now? I am pretty sure it is not going to revert to a year! If it is 3 or 4 months today, a year from now it is likely to be 3 or 4 weeks, 3 or 4 days, 3 or 4 hours, 3 or 4 minutes, 3 or 4 seconds... where will it stop? It is going to approach zero. As the rate of change approximates infinity... the time to market will approximate ZERO!
The customer wants what they want and they want it NOW. The customer wants a custom product, mass-produced in quantities of one for immediate delivery. If you can’t produce that... “click”, they get another supplier. It is a global market and it is too easy to change suppliers.
Just looking at this from an IT perspective again, what are you going to do when the IT “customer” (General Management) wants a new, custom Enterprise, integrated, Enterprise-wide, today, in time: zero? Hmmmm.
Do you think this is not happening?
What is going to happen to the Enterprise if IT can’t deliver to those specifications?... The Enterprise is likely to go OUT of business... because that is what the Enterprise needs in order to accommodate their customer, the Enterprise customer.
The question is, how are you going to deliver custom Enterprises on demand? Who is working on this? Is it even possible to produce Enterprise-wide integrated Enterprises at the click of a mouse?
There is an argument to be made that it is not possible. The argument boils down to Enterprise-wide, integrated implementations would take too long and cost too much. It is impossible. Your only hope is to produce a few more lines of code.
However, there is another argument that it IS possible... but it is different... it is not more of the same... it is not building and running systems... it is a NEW PARADIGM. This is the point of developing the Information Age context. Major changes have to take place if the Enterprise and its Information Technology are to stay in the game... big... or, small; Private... or, Public!
I use the Toyota case to prove that it IS possible to produce custom products, mass- produced in quantities of one for immediate delivery... the “new paradigm”.