The Journal of 2020 Foresight

Reports from the Knowledge Labs about our recent findings, research topics, and interviews with lifestyle leaders who are creating their own futures.

How to stimulate your own powers of foresight. Consider the following thought provokers. Ask yourself, in these categories what are the brand new trends and forces? Which are the ones growing in importance? Which current forces are loosing their steam? Which have peaked or are reversing themselves? Which are the "wildcards" about to disrupt us in the future? POLITICAL AND TECHNICAL thought for food: Electronics, Materials, Energy, Fossil, Nuclear, Alternative, Other, Manufacturing (techniques), Agriculture, Machinery and Equipment, Distribution, Transportation (Urban, Mass, Personal, Surface, Sea, Subsurface, Space), Communication (Printed, Spoken, Interactive, Media), Computers (Information, Knowledge, Storage & Retrieval, Design, Network Resources), Post-Cold War, Third World, Conflict (Local, Regional, Global), Arms Limitation, Undeclared Wars, Terrorism, Nuclear Proliferation, Weapons of Mass Destruction, Governments (More/Less Power and Larger or Smaller Scale), Taxes, Isms: Nationalism, Regionalism, Protectionism, Populism, Cartels, Multinational Corporations, Balance of Trade, Third Party Payments, Regulations (OSHA, etc.) Environmental Impact, U.S. Prestige Abroad. SOCIAL AND ECONOMIC Food for thought: Labor Movements, Unemployment / Employment Cycles, Recession, Employment Patterns, Work Hours / Schedules, Fringe Benefits, Management Approaches, Accounting Policies, Productivity, Energy Costs, Balance of Payments, Inflation, Taxes, Rates of Real Growth, Distribution of Wealth, Capital Availability and Costs, Reliability of Forecasts, Raw Materials, Availability and Costs, Global versus National Economy, Market versus Planned Economies, Generations: Y, X, Boomers, Elderly, Urban vs. Rural Lifestyles, Affluent vs. Poor, Neighborhoods and Communities, Planned or Organic Growth. Got Knowledge?

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Thursday, September 07, 2006

Value Creation: Something New, Done, Improved or Applied

Chapter Four: The Tribal Territories

By Steve Howard, CKO
The Knowledge Labs

Table of Contents
Chapter One: Basecamp
Chapter Two: The Ridge
Chapter Three: The Outpost
Chapter Four: The Tribal Territories

"No wonder there is not a major company that I interviewed for this book that is not investing significantly in research and development abroad. It is not 'follow the money.' It is 'follow the brains.' 'Science and math are the universal language of technology,' said Tracy Koon, Intel's director of corporate affairs, who oversees the company's efforts to improve science education. 'They drive technology and our standards of living. Unless our kids grow up knowing that universal language, they will not be able to compete. We are not in the business of manufacturing somewhere else. This is a company that was founded here, but we have two raw materials -- sand, which we have a ready supply of, and talent, which we don't.'"

Thomas Friedman, “The World is Flat”

DOUBLE NICKEL RANCH: We've moved through a progression of five economic offerings, each customizing a current offering to progress to the next and at the same time commoditizing the previous.

Journal of 2020 Foresight: So, let's recap. In this “The-World-Is-Flat” thanks to “Globalization-Enabled-by-Technology” our jobs become commoditized. The products we produce or offer become commoditized, the companies and organizations we work for or have as clients become commoditized and decline -- what’s the world coming to?

Explorer: Invention and reinvention teams from around the world are shifting their offerings from the second wave manufacturing of products to creating more value and higher margins through services.

J2020F: Which in turn is in the process of becoming commoditized by the offering of experiences.

Explorer: Because services become more customized and personalized to eliminate customer sacrifice.

J2020F: To move from customer satisfaction, to customer surprise and customer suspense, right?

Explorer: Yes. We've also examined mass customization of products as a platform to customize services. And we used the same approach to customize a higher premium with service strategies.

J2020F: And lastly we explored the commoditization of service with the customization of experience, right?

Explorer: True. Every economic era has four things in common, according to Pine and Gilmore: A point of origination or creating value from something new; an execution component or generating value by getting something done; an improvement process or increasing value by correcting something; and application or producing value from how something is used.

J2020F: I imagine that the more entrenched or widespread the former economic era is or became, the more difficult it is for the old dogs to learn new tricks?

Explorer: Right. Each new wave ushers in a whole new paradigm – or changed background on a grand scale.

J2020F: So, the ingrained habits -- how origination, execution, improvement and application were practiced in a mature economic era -- almost always blinded the “practitioners” to the disruption about to commoditize their livelihoods.

Explorer: The progression of economic offerings began with commodities in the agrarian economy with its unique set of ingrained habits.

J2020F: As we discovered on our trip across the West– with the story of the Hudson’s Bay Company, one of the oldest, still active companies in the world, was almost 200 years old when Canada was created in 1867, roughly 20 years after the California Gold Rush.

Explorer: That’s right, and the core function is extracting natural resources that are stored in bulk once removed from the ground.

J2020F: Once word got out about fortunes to be made in mining and land to be had in the West to farm and raise cattle, the settlers migrated in at a ferocious pace to strike it rich and create their own value.

Explorer: What they didn’t consume themselves they traded. The seller of commodities is a trader on the open market to buyers looking for certain characteristics of the material offered.

J2020F: For years, while the fur trade flourished – getting hides back to St. Louis, or at least to trading posts as an interim step to exchange for next season’s supplies– became a major challenge.

Explorer: Which created the opportunity of bringing the market to the trappers – with the Mountain Men Rendezvous.

J2020F: It seems like for the earlier part of the Western history, all the trappers and mountain men did was to constantly search for new and untapped beaver “communities.”

Explorer: They not only had to survive the terrain and weather, but they had to make it back to market in one piece traveling through Native American territories.

J2020F: As did the miners who came west for the California Gold Rush and stopped in Virginia City to work the Comestock Lode – as Samuel Clemens, better known as Mark Twain did.

Explorer: It was one thing to discover the mother lode and quite another to bring it to market – depending where it was discovered.

J2020F: And, as happened in almost every mining town that struck it rich, a boom turned to bust.

Explorer: And that is a key point. A key success factor is discovering new substances, especially when a poor or depleted site no longer supplies demand in the market trades.

J2020F: So according to Pine and Gilmore, in the Agrarian economy the material needs to be discovered, the execution is the process of extracting the material from above or below the ground, and a correction occurs when a poor site triggers further exploration to find a new site and finally, the application comes in the form of a trade which connects the material to the market.

J2020F: Or else?

Explorer: Or else get used to a hardscrabble life unless you can find a way to “swim upstream” to higher economic value.

J2020F: You’re talking about Pine & Gilmore’s second progression of economic value?

Explorer: Yes – the making of goods in an industrial economy.

J2020F: When the pelts made their way back to St. Louis to be manufactured into top hats for customers on the east coast and in Europe, right?

Explorer: Yes. And, later on when the steam engine showed up as a way to extract more ore in mines and then replace mule trains for transportation in the form of the railroad.

J2020F: The whole industrial revolution, second wave.

Explorer: Exactly. The economic function is making tangible products through a standardized process that are inventoried after production.

J2020F: Beaver pelts become top hats, buffalo hides become clothing, metals become steam engines, etc.

Explorer. And the manufacturer sells the product to a customer who looks for specific features of the product.

J2020F: Or until a different material is discovered to create a new demand or a more efficient process? As was the case when silk from worms replaced the demand for beaver pelts?

Explorer: Yes. While commodities are discovered, new inventions are developed for the manufacture to make.

J2020F: Any problem triggers a solution intended to fix a mistake in the manufacturing process?

Explorer: Right. The focus shifts to improving the efficiencies of manufacturing processes instead of searching for new sources of commodities.

J2020F: And, finally the buying and selling transactions connects manufacturers with users of their products – as has been the several-hundred-year history of The Hudson’s Bay Company. Up next? Intangible services and memorable experiences just around the corner?

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