3C Economy 2011

Tuesday, 3 May 2011

 

these few days off have given me a chance to think about the state of play in the west- specifically the UK. A complex but infinitely exciting time is what I see and feel, so here goes:

BAD:
as the austerity measures start to bite in the real economy (rather than just be debated by the political classes) we see the standard of living we have all become used to not only theoretically coming under threat, but actually happening. with VAT at 20% and income tax rates at up to 62% ( if you include national insurance, which is simply income tax with a different name) this mean that we are taxed more than ever in recent history.
with inflation rising the underlying cost of goods and services are rising and at the same time there is deflation in wages, we have economic misery.

this is the Malthusian view of Britain’s future and certainly looking at it from any current position, things don’t look like they are going to get any better with the rise of China/India/Brazil, Russia offering a new threat with their low-cost and well educated workforce coming onto the scene in the medium term. This will bring mas produced anything ( goods or services) at an unbeatable price point to you, that we in the UK can’t compete with -if we keep our standard of living, so this will have to give and an inevitable gentle slide of per capita GDP has started.

tricky times ahead, and one that I am trying to explain to MBA’s or my daughter ( who is currently ‘revising’ for her A levels whilst engaging with her social grouping on Facebook….) in that the world is unlikely to be ever as easy as it was to gain a house, nice life, an adequate pension and your health through to old age again. what was taken for granted, won’t be in future- it will have to be worked for, harder than ever simply to stand still in economic terms.

this is factual and therefore will have greater real-world resonance with the populous than the next lot of thoughts. these are more ethereal. it is nevertheless real and happening! I see many nascent reasons to be optimistic in the UK about a potential rebirth and GDP growth.

GOOD:
there are many equal and opposite trends out there that are encouraging for the UK- they are more disparate and harder to see, but they are there and first I will list then and then come up with a “bundles” of combinations that could just change something’s around in the short-medium term.

our innate competitive advantages brought to us by our forbearers- GMT making us slap bang in the middle of the world’s economy (LA is 8 hours behind, Shanghai is 8 hours in front- we can speak to 90% of the world’s people in our normal working day). the world speaks English in business. our concept of ‘fairness’ and honesty are well regarded in the business community, we have a stable country, both in environmental terms and political terms. the ability to work well as with individually or as a team. we are literate, creative, mercantile in outlook and tolerant of people different than ourselves ( racially, religiously or politically). we have some of the best tertiary education in the world. we have very limited organised crime or state/commercial corruption. we should never forget these facts (amongst many, many others) which makes the UK in the top 10% of places in the world to do business & I never take it for granted- it gives us a solid base to build on, a foundation for the new economic model we need to create if citizens of the UK are to keep what they have or build for the future.

so, we have a good starting points, but what are the building blocks that this new way of creating wealth will be built on over the next 10 years ( for it will be in that kind of timeline that all these bit will be brought together):

NEW ECONOMY FEATURES
- codifying of your social or business networks- if you are under 30 you will have facebook>LinkedIn- over 30 the other way around. you don’t know how to use either network to create economic benefit without being crass and risking your friendship/business influence.

- lower cost of setting up a business or organisation ( either legally or infrastructurally) than ever before

- lots of free things out there to use ( software, hardware, advice, relationships)

- lots of free information, insight and ideas

- lots of people under or unemployed from conventional jobs

- lots of experienced people who now need to work again, after the age they would have conventionally retired

- lots of young people who are educated but the conventional career path is not open to them

- media that has made enterprise “sexy”

- 3D printing technology that allows an inexpensive prototype or batch size of 1 of any physical product you can think of- the opposite of mass production

- free IP in all sorts of places from universities to businesses

- “carbon transparency”- people will want a cradle-to-grave assessment of the carbon footprint of any good or service- producing local will have a massive competitive advantage here.

- the concept of mash-ups

- the concept of network effect

- the concept of the long tail

- the green agenda inverting the old way of doing things & opening up virgin opportunities in established markets

- the concept of peer-to-peer

- transparency; both in business practise and reputation

- the ability to source and connect with talent globally- and keep in touch with them for a lifetime easily

this is a far from exhaustive list but I see these as incredibly exciting times, another inflection point in the history of humanity in the same way that the agrarian revolution and industrial revolutions were. This is the Collaborative Revolution.

NEW BENEFITS
who knows in how many ways it will manifest itself, but here is my top 3 changes that I see around the corner, as at May 2011.

1. TALENT UNITED; older people need younger people and young people need more experienced people ( enthusiasm can only take you so far even Facebook needed a fair dollop of this to get the network moving), therefore there will be a business dating service to match the two- big opportunity.

2. LOCAL MICRO-FUNDING; I think it will be more community based than ever before with local funding being available thru the formation of community capital pools as a way for the asset rich to make a reasonable return on their savings. Community “banks” will replace VC and conventional banks for a lot of start-up and second round capital, as we are talking small abouts of money to achieve lots here and most of the time all suppliers need is a credit line they can rely on rather than actual cash up front- established companies could take the smaller ones under their wing by offering this for a gain share.

3. SUPPLIERS BECOME CLIENTS; there will be supply chain networks out there who will act as VC, looking for bright innovation within their industry or sector ( rather like google does now) to buy or partner with as they realise the old rules are no longer in play, and to leverage what they currently do they need to look outside & combine with others ideas. they won’t be able to rip off the smaller players because their reputation would be in tatters and they would effectively be black balled for future opportunities, so all sorts of new collaborative frameworks will appear.

I have to get onto the day job now so enough for now, but there are 3 major trends around which the future economic advantage of the UK will be based- collaboration, creativity and community- the 3Cs of a sustainable economic future.

Onwards and upwards- hopefully!

:-)

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