Monday, September 20, 2010

Scaling relevance: Delivering bespoke utility at low cost

The networked world will overturn many traditional business models which focus on low cost - often driven by the desire to feed on the economies of scale of mass production.

In a networked world we have the potential to scale relevance and should focus on that first.

Relevance - or fit with our specific needs - is reduced by the focus on economies of scale that mass production delivers. Relevance = Utility; in that the more relevant it is to me, the more useful it is to me.

We all have a preference for the thing we find most useful - and place most value upon it. Mass production can't deliver relevance - at least it can't beyond meeting lowest common denominator requirements. The bargain we enter into, when accepting mass produced approximations of fit with our specific needs, is low cost.
There is a balance point between utility and cost - which varies for each of us dependant on circumstances.
I believe our ability to connect with those people like us seeking solutions to the same problems we do, which the web enables, swings the balance strongly in favour of relevance, fit, utility.

And as it does so, so we must start considering, and delivering, new business models which seek to serve the network and not the world of broad mass production; models that make delivering relevance (highest utility) their key driver.
An example; we'd all prefer a made-to-measure, bespoke suit. Not only can we specify it to our taste, it will also be optimised for relevance. In other words it'll fit not just our taste, but our specific shape. To service our bespoke requirement in this regard is costly - particularly when compared with the price of an off-the-peg solution.

Granted suits on pegs are not sold quite at the level of one-size-fits-all, but they are certainly sold against a series of broad 'fitness' points. Very rarely, a buyer's specific taste and shape requirements will be matched by an off-the-peg suit. And on that rare occasion no doubt the rare buyer will rave about the quality of the fit of the suit to all his pals (who no doubt will find buying the same off-the-peg-suit far from satisfactory).

Consider how the networked world could make suits. Let's assume that people are able to accurately measure themselves in all the dimensions a quality bespoke tailor would (and yes, that is quite an assumption, but play along for the thought experiment, please).

Imagine a platform which could gather the meta data of these measurements, associated with their owners (a website, if you like, where people enter the relevant data) where those with excellent matches are introduced to one another - on a global scale.

Now these customers are formed into a group via the meta data of their shared dimensions and taste. Assume thousands of them (remember, we are operating on the global scale of billions of internet users) are a match - and they can all buy together. Now they can get the same order of utility (hand stitching aside, if that is indeed an advantage) as the individual bespoke suit buyer - at the same order of cost as anyone buying a mass-produced off the peg suit.

Imagine the relevance-first model applied to your industry.

The network has the ability to scale fit (relevance) in a way traditional mass production can not. In the complex adaptive system of the economy, those best adapted to the actual fitness landscape are best equipped to survive.

It's another example of how the web reveals the true role of the organisation as a platform - and the web as a place where orgs make things with (others) rather than take things from.
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The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?