Scope not scale
As the big end of town shreds jobs to retain profitability, the key to success will increasingly give smart companies the edge through scope not scale.
They will simply bypass the industrial state, set up new enterprise networks to negate pay-roll taxes and adopt online production and communication technologies that make regulatory intrusion increasingly irrelevant.
Increasingly business will be done outside of the office and the factory with capacity to make presentations, sales, service up-grades and prompt innovation on the road and online. Modern communication means that advertising and consumer demand require instant communications that connect clients and consumers.
Smart companies and independent contractors are replacing the workforces of the industrial revolution as the information and experience economies merge. The home-based worker and the entrepreneur are now able to replace the industrial management megaliths with an online, intelligent interface with people who buy their services and disintermediation large sections of the value chain.
There can be no doubt that Steve Jobs has changed not only the shape of digital media but also the scope of small and medium enterprise to get up close and personal with customers and consumers. He has shown that quality of design and quality of management relationships must be closely integrated to generate international performance.
The global village means that more customers have immediate access to what they want, when they want it at a lower cost and with an infinitely better level of customer responsiveness on the phone or tablet. The big stores now carry space rather than service, stock rather than customer contacts and generics in place of brands.
The Isobar/Carat global report shows that by 2020, 80% of all media will be digital. Just wait to see the revolution in business, learning and trading patterns when Apple releases its interactive TV that fully integrates the household purchase pattern with small business enterprise in the local community.
Who needs the massive overheads of large companies when IT applications and the cloud provide instant and enormous customised capacity to provide micro markets and direct response capability. Small firms can have all of the administrative, professional and business benefits that were previously a function of scale without the downtime, inventory and development overheads.
Take Jaime and Mark Van Wye, owners of dog-training franchise Zoom Room, who say they're running a leaner, more efficient business thanks to tablet technology. Customers in all 10 locations use iPads to check in, while the Van Wyes use apps while on the road to stay in constant touch.
Have a look at Albert Park College where students have helped design new backpacks that need less books, calculators, notebooks, atlases and diaries because of iPad access. Students submit assignments and tests by email and each subject has a web portal with homework, lesson plan and applications to download.
The days of Adam Smith are over – scope is now the key to productivity and performance. Customers are now not only your spouse (David Ogilvy’s maxim) but also they must now be accepted as part of the design and development team. Printing presses are replacing the blast furnaces in production for a market of one. Energy is being supplied by home-based production plants in the same way that homebrew added flavour to the beverage market.
Toyota has shown how to renew its lean technology but is now learning that getting closer to its staff team and customer base may prove necessary to get better productivity, rather than rely on offshore production and imports. Big companies are seeking subsidies to stay in Australia and others are seeking scale by moving offshore to be closer to their markets at a time when new jobs are coming from small and medium enterprise.
It’s time again for Australia to generate an enterprise and experience economy that rewards innovation, creativity and entrepreneurship rather than lock into the large handouts to firms that have not renewed their relationship with their teams and the digital age.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.