Strategy and Technology Transform Industrial Age Assumptions
Updated March 25, 2022
All organizations should examine how they employ industrial age points-of-view. When firms apply an industrial age lens, they tend to over-index efficiency and productivity: how do we generate more money (or save more money) over the same period of time. A report by Eric Felten in the Wall Street Journal (In Praise Of Inefficiency: A Manifesto, February 26, 2010) documents his thoughts and prompted this post.
So we automate. We remove friction and costs go down. I think Eric and I are on the same page with that: good for automation. Then the darkness creeps in. The industrial age strategic imperative starts going: hey, if we can take money so easily, perhaps we should take more of it.
So Eric documents, in the case of toll rates, that the automation, vs. coins, results in a 20%-40% increase in rates. Couple that with the decrease in costs and that’s a pretty good answer to a Frederick Taylor equation. Everybody wins…well…
Well, this is the twenty-first century, and not only do the companies and governments have technology but so do consumers and employees. This isn’t just a hidden fee that no one will squawk about. If the toll operators can amplify the size of the hand in your pocket, then you can amplify your voice to complain. This affects the relationship metric, the quality of the relationship between customer and supplier. A metric with which Taylor would not be familiar.
What kind of strategic relationship do organizations want with their customers? If they see them, in light of the industrial age, as inputs, then keep taking the money. If, however, they see them as 21st Century customers, then they might want to tone down the fees because every disgruntled relationship results in a link to efficient free alternatives to the toll road, petitions to sign, and tweets about how refreshing it is to take a slower route and enjoy the character of the local economy. That strategic choice requires a new equation, a more complex equation.
Consumers make strategic choices in light of available information as much as businesses and governments do. Strategic thinking moves toward a point-of-view, it doesn’t just assert one. Organizations can no longer keep their heads down and worry only about productivity and efficiency. They are all part of an information ecosystem where consumers have nearly as much power as commercial or tax-funded organizations.
Look at the 2022 conflict between Disney, its employees and the state of Florida over what has become known as the “Don’t Say Gay” bill. The Disney situation offers a good example of how many variables organizations must consider, and the rising power of consumers, and employees and consumers that will inform strategic choices well beyond, in this case, the number of visitors or how much they spend on popcorn.
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