Transformation of Consumption

Some time ago I’ve posted on Six Graphs of Big Data and mentioned Consumption Graph there. Then I presented Five Sources of Big Data on the data-aware conference, mentioned how retailers track people (time, movement, sex, age, goods etc.) and felt the keen interest from the audience about Consumption Data Source. Since that time I’ve thought a lot about consumption ‘as is’. Recently I’ve paid attention to the glimpses of the impact onto old model from micro-entrepreneurs, who 3D-prints at home and sell on Etsy. Today I want to reveal more about all that as consumption and its transformation. It will be much less about Big Data but much more about mid term future of Economics.

The Experience Economy

It was mentioned 15 years ago. The experience economy was identified as the next economy following the agrarian economy, the industrial economy, and the most recent service economy. Here is a link to 1998 Harvard Business Review, “Welcome to the Experience Economy”. Guys did an excellent job by predicting the progression of economic value. The experience is a real thing, like hard goods. Recall your feelings when you are back to the favorite restaurant where you order without looking into the menu. You got there to repeat the experience. Hence modern consumption is staged as experience, from the services and goods. Personal experience is even better. Services and goods without staging are getting weaker… Below is a diagram of the progression of economic value.

ExperienceEconomy

It would be useful to compare the transformation by multiple parameters such as model, function, offering, supply, seller, buyer and demand. The credit goes to HBR. I have improved the readability of the table in comparison to their. There is a clear trend towards experience and personalization. Pay attention to the rightmost column, because it will be addressed in more details later in this post.  To make it more familiar and friendly for you, I’ll appeal to your memories again: recall your visits to Starbucks or McDonalds. What is a driving force behind your will? How have you gained that internal feeling over past periods? Multiple other samples are available, especially from the leisure and hospitality industry. Pioneers of new economics are there already, others are joining the league. And yes… people are moving towards those fat guys from WALL-E movie…

comparizon

The Invisible Economy

Staging experience is not enough. Starbucks provides multiple coffee blends, Apple provides multiple gadgets and even colors. But it is not enough. I am an example. I need curved phone (suitable for my butt shape, because I keep it in the back pocket). Furthermore, I need a bendable phone, friendly for sitting whet it’s in the pocket. While majority of manufacturers-providers are ignoring it, LG is planning something. Let’s see what it will be, there is evidence of curved and flexible one. But I am not alone with my personal [strange?] wills. Others are dreaming of other things. Big guys may not be nimble enough to catch the pace of transforming and accelerated demand. It’s cool to be able to select colors for New Balance 993 or 574, but it’s not enough. My foot is different that yours, I need more exclusivity (towards usability and sustainability) than just colors. Why not to use some kind of digitizer to scan my foot and then deliver my personal shoes?

“The holy place is never empty” is my free word translation of Ukrainian proverb. It means that opportunity overlooked by current guys is fulfilled by others, new comers. There is a rising army of craftsmen and artists producing at home (manually of on 3D printers) and selling on Etsy. Fast Company has a great insight on that: “… Micro-entrepreneurs are doing something so nontraditional we don’t even know how to measure it…” There are bigger communities, like Ponoko. It is new breed of doers, called fabricators. And Ponoko is a new breed of the environment, where they meet, design, make, sell, buy and interact. The conclusion here is straightforward – our demand is fulfilled by new guys and in different way we used to. You can preview 3D model or simulation being thousand miles away and your thing will be delivered to your door. You can design your own thing. They can design for you and so on. And this economy is growing. Hey, big guys, it’s a threat for you!

The most existing in economy transformation is a foreseen death of banks. Sometimes banks are good, but in majority of modern cases they are bad. We don’t need Wells Fargo and similar dinosaurs. Amazon, Google, Apple, PayPal could perform the same functions more efficiently and make less evil to the people. There are emerging alternatives [to banks] how to fund initiatives, exchange funds between each other. Kickstarter and JumpStartFund are on the rise. Even for very serious projects like Hyperloop. Those things are still small (that’s why the section is called Invisible), but they are gaining the momentum and will hit the overall economy quite soon and heavy, less than in five years.

3D Printing

Here we are, taking digital goods and printing them into hard goods. Still early stage, but very promising and accelerating. MakerBot Replicator costs $2,199 which is affordable for personal use. There is a model priced at $2,799, which is still qualified for personal use. What does it mean for consumption? The World is being digitized. We are creating a digital copy of our world, everything is digitized and virtualized. Then digital can be implemented in the physical (hard good) on 3D printer. There are very serious 3D printers by Solid Concepts, that are capable to print the metal gun, which survives 500 round torture test. As soon as internal structure at molecular level is recreated and we achieve identical material characteristics, the question left is about cost reduction for the technology. As soon as 3D printing is cheap, we are there, in new exciting economy.

Let’s review other, more useful application of technology than guns. We eat to live, entertain to live good, and we cure diseases (which sometimes happen because of lifestyle and food). So, food first. 3D printed meat is already a reality. Meat is printed on bioprinter. Guess who funded the research? Sergey Brin, the googler. Modern Meadow creates leather and meat without slaughtering the animals. Next is health. The problem of waiting lists for organ exchange is ending. Your organs will be 3D printed. It is better than transplant because of no immune risks anymore. And finally, drugs. Recall pandemic situations with flue. Why you have to wait for vaccine for a week? You can 3D print your drugs from the digital model instantly, as soon as you download the digital model over the Internet. Downloaded and printed drugs is additional argument for Personalized Medicine in my recent post on the Next Five Years of Healthcare. I assume that answering essential application of technology to the basic aspects of life such as food, lifestyle and healthcare is sufficient to start taking it [technology] seriously. You can guess for other less life-critical applications yourself.

4D Printing

3D printing is on the rise, but there is even more powerful technology, called 4D printing. Fourth dimension is delayed in time and is related to the common environment characteristics such as temperature, water or some more specific like chemical. When external impact is applied, the 3D-printed strand folds into new structure, hence it uses its 4th dimension. It is very similar to the protein folding. There are tools for design of 4D things. One of them is cadnano for three-dimensional DNA origami nanostructures. It gives certainty of the stability of the designed structures. Another tool is Cyborg by Autodesk. It’s set of tools for modeling, simulation and multi-objective design optimization. Cyborg allows creation of specialized design platforms specific for the domains, from nanoparticle design to tissue engineering, to self-assembling human-scale manufacturing. Check out this excellent introduction into self-assembly and 4D printing by Skylar Tibbits from MIT Media Lab:

Forecast [on Consumption]

We will complete digitization of everything. This should be obvious for you at this stage. If not, then check out slightly different view on what Kevin Kelly called The One. No bits will live outside of the one distributed self-healing digital environment. Actually it will be us, digital copy of us. Data-wise it will be All Data together. Second reference will be to James Burke, who predicted the rise of PCs, in-vitro fertilization and cheap air travel in far 1973. Recently Burke admitted: “…The hardest factor to incorporate into my prediction, however, is that the future is no longer what it has always been: more of the same, but faster. This time: faster, yes, but unrecognisably different…” And I see it in same way, we are facing different future than we used to. It’s a bit scary but on the other hand it is very exciting. In 30 years we will have nano-fabricators, which manipulate at the level of atoms and molecules, to produce anything you want, from dirt, air, water and cheap carbon-rich acetylene gas. As you may already feel, those ingredients are virtually free, hence production of the goods by fabricator is almost free. Probably food will be a bit more expensive, but also cheap. By the way, each fabber will be able to copy itself… from the same cheap ingredients. We will not need plenty of wood, coal, oil, gas for nanofabrication. This is good for ecology. But I think we will invent other ways how to spoil Earth.

The value will shift from equipment to the digital models of the goods. Advanced 3D (and 4D models) will be not free; the rest will be crowdsourced and available for free. Autodesk, not a new company, but one of those serious, is a pioneer there with 123D apps platform. They are moving together with MakerBot. You can buy MakerBot Replicator on Autodesk site and vice versa, you will get Autodesk software together with MakerBot you bought elsewhere. It’s how it all is starting. In few years it will take off at large scale. Then we will get different economy, with much personal, sustainable and sensational consumption.

It would be interesting to draw parallels with the creation of Artificial Intelligence, because in 2030 we should have human brain simulated on non-biological carrier. Or may be we will be able to 4D or 5D-print more powerful brains than human on biological, but non-human carrier? Stay tuned.

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2 thoughts on “Transformation of Consumption

  1. […] Other indicators of the business performance could be productivity, innovations in core competency, ABC, human factor, value and value-add. Productivity should go together with predictability. There is excellent blog post by Neil Fox, named The Two Agile Programming Metrics that Matter. Activity-based costing (aka ABC) could show where there is a fat that could be cut out. Very often ABC is bound to the human factor. Another interesting relation exists between productivity and human factor too, which is called emotional intelligence or engagement. Hence we’ve got an interdependent graph of measurements. Core competency defines the future of the particular business, hence innovations shall take place within core competency. It’s possible to track and measure innovation rate, but it’s vital to do it for the right competency, not for multiple ones. And finally – value and value-add. In transforming economy we are switching from wealth orientation towards happiness of users/consumers. In the Experience Economy we must measure and project delivery of happiness to every individual. More details are available in my older post Transformation of Consumption. […]

  2. […] like in Starbucks or lobster restaurant or soccer stadium or taxi ride. I already have a post on Transformation of Consumption. Healthcare industry is one of early adopters of the IoT, hence they deserved separate mentioning, […]

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