Lessons from the Grid

The electrical power grid is a study in organizational behavior. Take how electricity is generated and distributed to the point of consumption. Huge power plants or arrays – fueled by “green energy” sources such as solar, wind, biomass, geothermal, and hydroelectric, or “brown energy” sources such as fossil fuels and nuclear – concentrate electrical power generation to take advantage of “economies of scale.” The resulting current is transmitted through an extensive redundancy of power lines, cables, substations, circuit breakers, switches and transformers – oftentimes referred to as the “power grid” – to individual consumers across wide areas.

Organizationally, this is a centralized model. Power is concentrated in a select number of locations and authority is distributed to other points as needed and according to priorities driven by limited supply during periods of peak demand. The overall system, no matter how inefficient or costly, strives to be convenient, available when needed, standardized in delivery, and transparent during use. The goal is to please the most and dissatisfy the least so that fundamental assumptions about the design of the system are unquestioned, significant investments in infrastructure modernization or extensive system redesign are delayed, and increases in operational costs, along with services, are passed fluidly to the consumer. In other words, the existing power structure prevails and remains unchallenged and the consumer is dependent on that structure to get what is needed and wanted.

For every movement, there is a counter-movement. There are those who regard being “on the grid” as a lifestyle that epitomizes wanton consumerism, promoting waste, excess, banality, and destruction of the environment. Their alternative is to live “off-the-grid” disconnected from public services including electrical power. Initiated during the 1960’s and ’70’s, the “back to the land” movement is often synonymous with off-the-grid solutions such as energy from solar, wind, and biomass sources.

The off-the-grid approach represents an alternative organization structure – a decentralized model. In this instance, power is held by a wide range of relatively small, independent individuals / families who are in total control of an electrical power system that meets their consumption requirements. As with many decentralized structures, one’s destiny is in one’s hands. However, the limits of these structures become apparent when consumption patterns change and more power is required or disaster strikes and there is no opportunity for a quick recovery.

As the title of this blog article, “Solar Power FAQs: Will The Electricity Meter Run Backwards?” posted on the Alba Energy website suggests, some homes with photovoltaic (PV) panels generate sufficient electricity during the day to meet and exceed the immediate consumption needs of the home. In a different twist to back to the land homes sporting off-the-grid solar-powered systems, the scenarios presented in this article illustrate how consumers can load surplus electrical power generated by solar panels onto the grid and receive financial credit for doing so through various net metering plans.

While a national mandate for electric power companies to offer fair net metering practices is not in place – albeit Jay Draiman of Northridge, CA, author of “Mandatory Renewable Energy – The Energy Evolution – R12,” touts this as a necessary step in overcoming our dependence on fossil fuels – momentum is gaining in several states as commitment to renewable energy is strengthened. One of these is New York where the New York Energy Research and Development Authority (NYSERDA) promotes net metering / remote net metering and interconnections ¹ through a range of incentive programs directed toward offsetting the installation costs for small-scale solar systems and encouraging connection to the public power grid in order to facilitate net metering.

From an organizational standpoint, this represents a very different structure – the integrated model. Although neither centralized nor decentralized, integrated structures blend a centralized surplus distribution and backup system with a decentralized network of small-scale operations. Such interdependence distributes responsibility and authority to individual members in the social system so they can engage in self-sustaining behavior patterns while linked to a broader network of resources and markets. Individuals are in control of investments, operating expenses, and utilization of resources. They can take care of themselves first, sell the surplus, or if circumstances warrant, buy what they need or want when they are unable to provide enough by themselves.

The combination of electrical power grid, PV panels, and net metering represents one way developments in technology influence organization structure and design. As systems technologies become more powerful, pervasive, and transparent, sub-systems will become more embedded, integrated, and interdependent. The same concept applies to computers, the Internet, and payment for posting articles on a website or blog. As information and communication technologies continue to evolve, they will empower individuals to THINK independently, work openly and in parallel, and collaborate when opportunities arise for bargains and balances to be struck among the various comparative advantages, surpluses, and deficits in the larger system.

Thereby comes one of the unintended but inevitable consequences of pursuing “green energy” sources for power generation in lieu of “brown energy” sources: the fundamental organization structure and assumptions for organization design shift. Control is no longer held by a central body, be it a corporation, government, or special interest group; nor is it fractured and splintered to such a degree that collective effort is no longer possible. Instead, it is held in balance at the point where production, distribution, and consumption work in unison with one another for the advantage of the system rather than favoring the interests of a few at the expense of the many. Conventional wisdom may differ, but the world will be a better place for it!

Originally posted to New Media Explorer by Steve Bosserman on Wednesday, February 7, 2007

The original New York Energy $martSM Program is no longer available ↩

Agriculture Megatrends: Ten Trends Redefining the Practice of Agriculture in the World

When I was growing up in south central Kansas, agriculture was a way of life – it was all around us in the form of wheat fields, cattle ranches, pastures, and gardens. Agriculture has had enormous economic significance throughout the history of Kansas, first, as a territory then a state. And it continues to be an important factor in shaping Kansas’ future. However, changing conditions over the past 60 years transformed the practice and scope of agriculture in Kansas: myriad family farms vanished through improved mechanization and consolidation of farming operations, absentee ownership of farms increased as farming businesses incorporated and adopted professional management in an effort to be competitive in a global market, significant tracts of productive farmland were lost to urbanization, and productivity of farmland became more unpredictable as precipitation patterns shifted, water tables dropped, and soil and ground water became more contaminated through unsustainable agricultural practices. While there are arguments both pro and con for the direction these changes took and their consequences, it is safe to say that agriculture is very different today than it was even a generation ago AND it will change even more with the next generation.

Changes in agriculture experienced by Kansans are not much different than those experienced by people in other states. The same phenomena of mechanization, consolidation, absentee ownership, globalization, urbanization, and non-sustainability have had similar affects throughout the United States and many other countries in the world. While the productivity / hectare or acre has certainly improved substantially over the last 60 years, the complications arising from less arable land, more distance from the point of production to the point of consumption, less oversight, and undesirable environmental consequences makes agriculture an even riskier endeavor than when success was determined by fickleness of the weather! If one extrapolates the next 20-30 years based on historical trend lines across the previous 60 years the picture for agriculture is not a particularly rosy one.

But just as mechanization had a profound disruptive effect on agriculture over 100 years ago, there are forces at play today and into the near future that are going to have a similar impact. My contention is that agriculture, rather than being relegated to the ranks of the mundane, mistreated, and maligned, will witness a rebirth into a new golden age. Whereas agriculture meant wheat, hay, and livestock when I was a boy growing up in Kansas, today, it extends across a full range of plant and animal applications: food for human consumption, feed for animal consumption, fuel, fiber, floriculture, horticulture, and nutraceuticals to name a few. This broader scope, when prompted by rapid and far-reaching developments in information and communication technologies and placed into the context of Marshal McLuhan’s “global village“, opens the door to examine agriculture in a more approachable, personal, and wholistic manner. Agriculture is reinstated to a more historically accurate location – an explicit, integral part of our lives, individually and collectively, and our world.

The purpose of this posting is to introduce ten agriculture “megatrends” – to borrow from John Naisbitt’s 1988 book, MEGATRENDS: TEN NEW DIRECTIONS TRANSFORMING OUR LIVES – that portend a renaissance for agriculture. Together, these offer a framework within which further details will be added. For now, though, the highlights:

Agriculture Megatrends: Ten Trends Redefining the Practice of Agriculture in the World

1) Growing concerns about the depletion of fossil fuels, the environmental impact caused by consuming them, and the consequences of paying those who do not have the best interests of others at heart for the fossil fuels is contributing to an increased investment in bio-fuels, biomass, and bio-energy.

Renewable energy from plant material and animal waste will continue to be a high-growth area.

2) Modifying a crop portfolio to include more plant material for fuel rather than food or feed equates to less food and feed UNLESS more land is put into production and productivity and output per unit of land is increased to make up the difference. This means that land in urban and suburban areas formerly dedicated to non-edible, non-fuel uses such as lawns and landscaping will be converted into higher value uses.

Localization of agriculture will be a high-growth area.

3) Raising crops for food and feed or fuel and fiber requires more production with less cost on smaller land sizes. This leads to a continuing emphasis on genetics either by modification or selective breeding to make significant improvements.

Genetic research and applications of genetically modified or selected characteristics for valued crops will be a high-growth area.

4) Using seed stocks with uniquely valued characteristics warrant tight controls through growing, harvesting, and post-harvest handling to assure purity. This promotes the application of techniques like RFID tagging and tracking to maintain an audit trail of traits, conditions, and treatments from end-products to their source.

Traceability will be a high-growth area.

5) Knowing that fresh food is grown without the use of certain fertilizers, pesticide, and herbicide is of increasing importance to consumers. The classification of “organic” is gaining ground as a way to assure food is grown and prepared according to specific guidelines that preclude the use of these chemical applications.

Organic food production will continue to be a high-growth area.

6) Curbing the release of carbon into the atmosphere is complemented by absorbing it into plant material and converting it into sugar and starch through photosynthesis. As more countries adopt broad-based systems to manage carbon credits more interest will be shown in selecting crop portfolios that take advantage of carbon credits as well as other value.

Carbon sequestration will be a high-growth area.

7) Recycling water, waste, and unused raw materials is becoming a more important consideration to increase efficiency and prevent unnecessary losses. This leads to a more systematic integration of farming practices along with the management of waste and by-products. Such systems offer wholistic approaches to year-round food production in temperate regions with a minimum of energy consumption, maximum utilization of inputs, and reuse of unconsumed outputs.

Integrated farming and waste management systems will be a high-growth area.

8) Decentralizing the generation of electric power and making electricity the common energy source for the vast majority of people worldwide is a mounting imperative. This invites the possibility of those who live in yet-to-be-electrified rural areas of the world to generate electricity through wind, solar, methane, or geo-thermal and use that energy to meet the needs of their agricultural, business, and domestic operations self-sufficiently off the grid. The development of a full array of electric-powered equipment in all price ranges is a natural complement. Of course, as the grid reaches out to more remote locations it will be a straightforward way for those who are generating electricity by whatever means to sell their surplus and draw upon in times of peak usage.

Electrification of rural areas and agricultural and multi-use equipment, especially with VERY low-cost solutions, will be a high-growth area.

9) Increasing agricultural production in widespread areas as well as concentrating agricultural operations in urban, suburban, and near rural settings requires new ways of moving and storing the output from the point of production through processing and preparation stops along the way to the point of consumption. Issues of food security and food safety coupled with the management of inventory to assure the least amount of loss while delivering the highest degree of freshness and quality are critical. This applies to inputs as well as outputs and touches upon the coordination among diverse growers for individual production portfolios.

Agricultural logistics and complex production management will be a high-growth area.

10) Forming, utilizing, and managing connections between and among agricultural producers, suppliers, logisticians, and customers is essential for effective business relationships to develop and transactions to occur. Whether wirelessly or by landline by voice, written word, or graphics, there are many ways to communicate and transfer information. The most important step is having the information and communication infrastructure to reach anyone, anywhere at anytime so that knowledge and insight about markets, prices, costs, pick-ups, deliveries, funding options, investments, etc. can occur expeditiously and consistently.

Information and communication technologies will be a high-growth area.

While these megatrends are introduced individually, the reality is many of them work in concert with one another to form an infinite variety of complex solutions addressing a wide range of community and commercial opportunities. Future postings will not only elaborate on each trend, but will showcase those combinations that provide additional value through interconnection and integration. More to come…

Originally posted to New Media Explorer by Steve Bosserman on Thursday, February 1, 2007

Value Propositions

As January draws to a close I look back on a busy month of travel that took me to three continents and visits to a wide range of clients in both the for-profit and not-for-profit sectors. A common theme no matter what type of organization is value for time, energy, and resources spent. We want more value in each of our transactions. As a result, regardless of how the metrics of time, energy, and resources are defined, they represent the ways in which comparisons between alternatives are drawn, distinctions and differentiations of one to another are determined, and ultimately, decisions to choose are made based on which alternative offers the greatest value. Does one alternative take less time than another? Does it take more physical effort, require specialized skills, or is it informed by direct experience? Does it cost more to rent, lease, buy, or contract, or does it tie-up more capital? These and related questions are at the heart of determining value.

Of course, what we are looking for from others who might help us are ways in which their input provides value. In other words, we look for what Geoffrey Moore terms the “value proposition” as the impetus to choose from what is presented to us for consideration including choosing nothing at all if it does not improve our current situation. (For further reference, consider the following books authored by Mr. Moore: CROSSING THE CHASM and INSIDE THE TORNADO, and his blog Dealing with Darwin) Essentially, the value proposition presents ways we can use our time, energy, and resources in pursuit of our endeavors. Our task is to evaluate whether one value proposition is better than what we are already doing or is best among other value propositions available. Knowing what constitutes a value proposition guides us in our evaluation of various alternatives.

Basically, value propositions surface in three ways: information, packages, and integrated solutions.

Let’s take information. Go to any blog, like this one, or website that features certain products, services, or points of view and what you see and read are testimonials with references. The authors describe the context in or circumstances under which their experiences occurred, including probable causes / root cause if a problem and contributing / off-setting factors if an opportunity; they document the results; and they offer an evaluation of the various factors and actions that made a difference one way or the other. The idea is that if we can match our circumstances with theirs we will be in position to make a more informed decision using the results of their approaches as guidelines. The value comes in not repeating the mistakes of others or duplicating what worked well by taking the same steps they did. The value proposition of time and energy spent going to a particular information source versus another is based on accuracy, timeliness, and relevance. For that reason one blog is more popular than another, one search engine is tapped more frequently than another, and one reference website is consulted more often than another.

The problem with information alone is I have to find it, first; then read it and see how it fits my situation; then act upon it. This can and often does consume considerable time. And it may very well be worth the effort. However, if I am dealing with a complex system where there are multiple dimensions to take into consideration, a complete package is preferable.

Here’s an example: let’s say I want a high-speed Internet access with a secure wireless router to do online banking transactions from my laptop. Also, I have been reading about VOIP and that service sounds interesting, maybe even a Wi-Fi phone to be independent of a computer. In addition, I have a cable TV service that includes Internet access as an option. Oh, and I have land-line phone service in the office that also includes a DSL option. But then the company providing my cell phone service offers wireless connectivity for my laptop through a wireless card. Of course, there are parts of the world where there is no cell phone coverage and land line service is spotty at best. For these there are satellite phones and high-speed Internet access.

With all these choices, how does one proceed? As one can well imagine, there is a wealth of information about each and every combination of service and product. The time and energy required researching these and putting together a cost-effective and reasonably performing bundle is ENORMOUS. Can’t someone do it for me?

Therein lies the next level of value proposition – the package. Most organizations providing a variety of products and services catalogue their offerings into generalized buckets that fit together logically and purposefully. Their interest is to reduce the time customers spend making a decision and is cost-effective and satisfying, operationally; the package functions as intended. The organization that presents a value proposition with the least outlay of costs, the fewest ongoing transactions and the greatest degree of “fit” and satisfaction wins the prize!

Despite excellent bundling and packaging strategies guided by Customer Relationship Management (CRM) practices the customer must choose among an array of options and alternatives to fulfill all the requirements of a business or personal application. Companies can engage in customer segmentation schemes to better target their package toward particular customer groups and reduce the customer’s involvement. Also, they can provide opportunities for customers to interact with representatives online or by phone to better tailor a package to meet specific and often unique requirements. Still, the customer remains the integrator who exercises the final step in putting a solution together that truly matches the unique context in which it fulfills its mandate. Packaging efforts fall short of the goal which is for an organization to design, deliver, and maintain a totally integrated solution that meets and exceeds the needs of the customer WITHOUT the customer having to be directly involved.

The strongest value proposition is the one in which the customer does not have to decide what is the best solution overall or which are the best components to include in the total solution. The organization becomes the integrator of choice for the customer. To be relieved of having to spend time, energy, and resources to develop, implement, and maintain an integrated solution is of supreme value to the customer.

This suggests a three-stage progression of value propositions organizations can use as a scorecard to see whether they are on the way to becoming the integrator or is the customer relegated to remain so:

Step one: is the information you provide accurate, timely, and relevant?

Step two: does the package of products and services you offer indicate you understand the customer’s needs and circumstances and does the package function as promised?

Step three: does the integrated solution you provide merit the trust and confidence of the customer that you are making choices in the customer’s best interest?

As might be expected, the third step is not easily reached. Only those who have the intelligence, means, moxie, and integrity to warrant such trust earn this right. However, it should be the goal of all who serve others through organizations of any type. How does your organization stack up?

Are you in position to offer a better value proposition for the customer?

Originally posted to New Media Explorer by Steve Bosserman on Tuesday, January 30, 2007

Push Me, Pull You — Dueling Business Models

Through the three hundred-year reign of the Industrial Age, businesses “pushed” their products and services onto consumers. Limited choice accompanied by considerable marketing hype was enough to make the consumer buy. It was a sellers’ market. Now, thanks largely to the Information Age, consumers are evolving into customers who can select what they want from a variety of providers. It is becoming a buyers’ market. But further changes are afoot. As customers get more they expect more, especially in terms of their business performance, their quality of life, and the welfare of the planet. Customers are beginning to “pull” solutions toward them rather than take what is “pushed” at them. Just like the challenges confronting the two-headed llama in Dr. Doolittle’s menagerie of strange animals, the implications of “push” or “pull” on business strategies are enormous. The differences between a business model intended to push products and services to consumers vis-à-vis a model built in support of customers pulling solutions into a shared reality are significant. While many companies will be impacted by this switch from “push” to “pull,” few will be prepared for the transition.

As indicated in the diagram below, there are numerous dynamics at play in the understanding and application of the push and pull business models. Can any business traditionally steeped in a push model operate concurrently with a pull model? It’s a question well worth consideration. There are no quick and easy answers. Read on…

See “Business Flow and Business Models-v14Apr2006” in “John Deere” folder

Distance to the Customer Revisited

A previous post explored the relationship between the dissipating Industrial Age and the emerging Relationship Age in terms of “distance.” During the height of the Industrial Age, many products and services were built, packaged, and delivered according to rigid, standardized specifications. While individual customers may have had some leeway in personalizing their purchases, all too often the range of possibilities were narrowly prescribed by the provider. Basically, consumers were pressed into a mold that kept them at a “distance” from providers and in a position to have to accept whatever product configurations providers offered. This enabled businesses to take advantage of certain “economies of scale” and improve operating efficiencies which reduced their costs, improved margins, and led to lower prices and greater competitiveness. Successful marketing campaigns generated more sales and revenue. The resulting profits were distributed to shareholders and used to grow the business through investments in people and their research and development. It was a simple formula for sustainability!

The advent of the Information Age began to challenge this formula. Advances in communication and information technologies opened doors to opportunities previously unknown or unavailable. Consumers became more aware of and had greater access to a wider range of product and service possibilities. In effect, as consumer expectations became more specific and refined, they became customers no longer content to take only what was offered by a limited number of providers. Gone were the days when if they wanted a unique, customized package they had to be willing to pay an exorbitant price – an option out of the question for most during the Industrial Age. Now, it was becoming routine to get exactly what one wanted at a reasonable price by comparative shopping in a larger universe of providers.

Businesses were also taking advantage of the Information Age. Formerly, the buying characteristics and specific business and lifestyle needs / wants of individual customers were not discernible. What market analysis was done came at great cost and with little granularity in the results leaving businesses to make gross generalizations about consumer interests within broadly defined markets. However, just as communication and information technologies gave customers more choices in providers, businesses used these same technological advances to learn more about their current and prospective customers. Lack of distinction among market groups has given way to proliferation of well-defined market niches and segments. While developing accurate and complete profiles on individual customers in mass markets remains a goal still in the future, the gulf is closing and the distance between the customer and the provider is shrinking.

Application of Intelligence, Innovation, and Knowledge

Regardless of the industry or circumstance, businesses imbue intelligence, innovation, and knowledge into their deliverables. Whether for professional or personal use, when customers make purchases they are buying know-how. The narrowing customer-business gap is shifting the point at which customers expect intelligence, innovation, and knowledge to be applied and where businesses must be forthcoming and effective at imparting it.

During the Industrial Age intelligence, innovation, and knowledge were instilled in products and services at the moment of their invention then distributed widely into large market areas. In the Information Age, developments in technologies enabled products and services to be combined in different configurations that yielded much better performance, reduced prices, and a wider selection of possibilities for the customer to choose. In effect, the application of intelligence, innovation, and knowledge shifted from solely in the products and services to their combinations.

Companies successful at making this shift purposefully designed the interfaces between various product and service lines so that the highest level of efficiency, effectiveness, and value occurred with those products and services from the same company. Perhaps the most obvious example of this is Microsoft. Starting with a simple operating system that became the standard for the vast majority of PCs, Microsoft continued to develop an array of supplementary software packages that interfaced easily with its own evolving operating system. This powerful combination of products and services proved to be a huge barrier to entry for competitors and Microsoft became the dominant player in the industry within a very short period.

As technology advances even further, the point of application for intelligence, innovation, and knowledge moves along with it. This shift goes past individual products and services or combinations of them to include multiple combinations from a diverse selection of providers. It is fueled in large degree by the breakdown in barriers that separate the product and service lines of one company with those of another, especially among competitors. The elimination of boundaries directly challenges the Industrial Age paradigm wherein companies attempted to keep their parts, components, and assemblies proprietary, non-standard, and separate from those of other companies in order to leverage internal investments and resources. The Information Age paradigm is leading to widespread adoption of comprehensive, industry-wide standards such as ISOBUS in the agricultural equipment arena, and the integration of two previously incompatible and competitive products into one as with Apple’s beta version of Boot Camp, which enable Macs to run Windows operating systems and software natively. This is the advantage that comes from being able to fluidly mix and match product and service offering from a multitude of companies.

Who Is the Integrator?

While seamless combinations of products and services are certainly a major step forward for customers striving to improve their businesses and quality of life, they still require the customer to analyze requirements, consider alternatives, make selections, and deal with the consequences one way or the other. Basically, the customer is still the “integrator” – the one who puts a solution or system altogether at the end as businesses compete among themselves for the right to provide the various pieces. In an environment that went from offering few choices to one harboring an infinite variety, life went from the seemingly simple to the extremely complex.

This growth in complexity comes at considerable cost in terms of time, energy, creativity, and money for the customer managing a business or personal interests. As a result, responsibility for integrating complete and comprehensive solutions for customers is quickly moving from the customer to the business. The nexus for delivering intelligence, innovation, and knowledge is still on the move. It is beginning to cover the full range of customers’ businesses or personal endeavors, the processes and tools they utilize, and the groups, entities, and individuals with whom they interface and interact. Companies that once “pushed” individual and combinations of products and services are now being asked to “partner” with a single customer, focus together on that customer’s business / lifestyle model, and “pull” a solution to it from the myriad possibilities within a supportive network / web. The Relationship Age is dawning!

While this evolution is predictable and straightforward, it is difficult to carry out. Usually, companies do one and not the other. Even when they start with the more traditional push model and dedicate a portion of their business to the pull model, they will eventually isolate one from the other or jettison one and leave the other. One of the most recent companies to make such a transition is IBM. In 1991, IBM was known for its computer hardware and consulting business. Mainframes and PCs constituted core businesses within IBM’s portfolio. Then, in 1991 IBM started another division, IBM Global Services, focused on developing and delivering total solutions in response to the needs of customers’ businesses. Today, IBM Global Services generates nearly $50 billion in revenue – over half of the total revenue for the entire corporation. To accentuate how challenging it is to maintain both business models, in 2005, IBM completed the sale of its PC division to Lenevo, a subsidiary of Legend Holdings in China. After being in PC design and production from the inception of the industry, IBM was now out of this business. And its Global Services arm continues to grow.

Companies think because they are offering integrated product and service packages of varying degrees of comprehensiveness and coverage they are using a pull model. This is not the case. Most companies continue to use variations of the push model wherein individual products and services are blended into certain combinations which are integrated with other combinations to increase appeal to the customer. When the number of additional features and functions included in the package reaches the point where the customer feels the deal is better than competitive offerings, the customer buys. No matter how sophisticated the bargaining process is between sales agents for the company and the customer, it remains a ‘here’s-what-I-have-to-sell-what-is-it-going-to-take-for-you-to-buy’ transaction – the customer is still the integrator.

Businesses that use the pull model begin with the customer’s business or personal interest “portfolio” – the critical mix of conditions and expectations within which the customer develops plans, takes action, and pulls a solution to it. The businesses are intimately aware of the customer’s business model. As such, they know how an opportunity fits into the customer’s portfolio; and they have the customer’s confidence that they can pull a powerful solution into place and put it into play. The customer trusts that the provider’s intelligence, innovation, and knowledge in large systems thinking and behavior is sufficient to bring about an appropriate solution in response – one that is so much BETTER than the customer’s approach that there is no need for the customer to second-guess the provider. The company becomes the integrator. The customer is relieved from managing a substantial level of complexity and can apply new-found time and energy into other areas of opportunity or interest.

An Opportunity Looking for a Place to Happen

At the outset of this posting I asked, can any business traditionally steeped in a push model operate concurrently with a pull model? Yes, but only to the degree that the business is willing to invest in a one-on-one working relationship with a customer — one of the hallmarks of the budding Relationship Age — to the point that the customer trusts that the business is the better integrator. It is a negotiated “partnership,” not a bargaining agreement.

How would one know the difference? An example might help. In May 2000, the German Bundestag passed the Renewable Energy Sources Act. Amendments to the act went into effect in August, 2004 that opened the door for numerous business opportunities for those in agricultural production. As the name of the act suggests and its content describes in detail, development of renewable energy sources for electric power generation is a major focus of the measure. One of the renewable sources encouraged is bioenergy, which includes biogas and biomass. Given the growing interest in biogas, there is a high likelihood that for some in organic agriculture in Germany a significant percentage of their business portfolios would be enriched by a biogas production component. Studies show how German producers can extract a distinct advantage by integrating biogas production in their overall operations.

This is an opportunity for businesses to emerge that provide customers with comprehensive organic agriculture portfolio solutions “pulled” from a broad-based network of product and service providers. A list of companies involved in biogas / bio-energy listed by Renewables Made in Germany is telling: not many companies are shown; those who are offer products and services related to the technology associated with bio-energy; those with established reputations as integrators using pull-based models are not listed. This is a heretofore unrealized business opportunity. The company that shows up with a viable, trusted process of engaging customers who are in agriculture production to improve their business portfolios by drawing upon deep support networks to pull a solution into play will win. So far businesses in this market are pushing their products and services. The customer is relegated to an age-old role of an integrator. How much longer? Time is drawing short. Let’s watch and see what transpires over the next few months!

Originally posted to New Media Explorer by Steve Bosserman on Sunday, April 16, 2006

Getting Close to the Customer

This past month, I had the opportunity to work with people across several units within a client organization and develop a strategic framework to inform their planning for future initiatives and projects. Some of the concepts and ideas we explored were related to topics I have introduced in previous posts here and here. This posting draws upon a couple of the diagrams we developed as a way to open the door to the future a bit further and peek into what’s inside.

In Figure 1 below, technology is plotted against society and economy. The vertical axis represents a trend that continues to influence humanity in all aspects: technology becoming faster, smaller, stronger, more integrated, and more intelligent by the day, hour, second. As technology advances, it displaces people from production – from making things. This was the impetus for the Industrial Age wherein mechanization displaced craftsmanship. It started the Information Age with its emphasis on integration and the globalization of production to those areas where human competency and capacity can be found for the lowest cost. And it will precipitate the Relationship Age wherein a wide range of relationships among people utilizing things is supported rather than being a means through which people are occupied making things and are kept apart from one another. This emphasis on relationships leads to increased localization at a community level.

As indicated in the horizontal axis, society and economy changes as these different ages unfold. The Industrial Age created jobs requiring specific skills. People learned skills / trades at school and entered the workplace where their skills were honed by experience on the job. Job opportunities represented income opportunities. Jobs, like the businesses that defined them, were mobile, starting, ending, expanding or moving from location to location depending on the economic circumstances in one area versus another. Where the jobs went, so did the people as it was relatively simple to relocate. People chased the chance to make things!

The Information Age began to shift the emphasis from physical production to the virtualization of production: distributed resources and capabilities, processes and tools, and real-time communication and networks. While work was still packaged as jobs, the nature of the work was rapidly changing – and still is. Having a defined set of tasks outlined on a job description pasted in a box within the hierarchy of an organization chart is no longer the guideline for the work required. Instead, people are expected to communicate across organizational boundaries, participate in open networks to stay abreast of changes in their work context, and form ad-hoc, multi-disciplinary teams focused on taking timely advantage of various opportunities as they emerge. Rather than being rewarded for doing the job, they are rewarded for adding value through collective effort. Competencies in convening and leading teams, being an effective team member, making meaning out of seemingly disparate pieces, identifying opportunities and advancing them in actionable ways, and fostering alignment across diverse groups to gain greater leverage are critical aspects in a person’s portfolio. This portfolio is marketable and portable; and like job mobility of the Industrial Age, the portfolio of the Information Age is mobile. Just ask the person sitting next to you on the airplane!

The Relationship Age has yet to get underway, although we can see vestiges of it on the periphery. As the virtualization of production continues and technology displaces even more people from the act of making things, the relationships among people becomes virtualized. By taking advantage of the same technologies that are virtualizing production, a person’s portfolio becomes virtualized and the competencies and capabilities contained within it can be delivered to anywhere from anywhere at any time. This changes the whole concept of where a person lives and works. Work becomes localized and community-based even though the delivery of that work may be anywhere in the world. A person begins to consider community affiliations for reasons other than job or work assignment. Commitment to a community can be longer term when the job or work does not cause one to be uprooted. Civic responsibility and being of service to the community takes root. Community infrastructures are strengthened and service endeavors are expanded. The dependence on larger regional and federal support structures dissipates. This is an entirely different model for living and one that has yet to be developed much less institutionalized. What will such changes mean to society, governance, economics, etc.? A “brave new world” unfolding, but what kind of brave new world will it be?

These questions are more rhetorical than answerable, but they do set the stage for a more accessible and pertinent topic – the relationship to the marketplace. The diagram below is a variation on the previous chart. The ever ubiquitous technology remains entrenched on the vertical axis driving the shift from the Industrial Age to the Information Age to the Relationship Age. However, the horizontal axis, society and economy, focuses on the transition from producing things to generating information to delivering service as the three “ages” are experienced.

There is now a point to all this activity: the marketplace. How our relationship to the marketplace changes during the transitions through these “ages” is of particular significance. During the Industrial Age the concept was to produce things and people would buy simply because the goods were available and they had the means to buy them. There was a deliberate distance from the purchaser and the producer. “Make it and they will buy,” was the attitude.

In the Information Age people have more information about products and services and they have more choices. Furthermore, they have the opportunity to switch from a set of individual products performing single functions to one product capable of doing multiple functions. The term used is “convergence.” Also, they can opt for products and services that are tied together into systems more powerful and capable as a whole than the sum of the contributions from each. The term “integration” is used to describe this phenomenon. The combination of convergence and integration changes the relationship to the person buying it. Rather than being viewed as a distant and generalized “consumer” who will buy anything made, the purchaser becomes a customer with highly individualized expectations and means requiring specific “solutions” in order for the sale to be made. The need to “know the customer” becomes paramount in this situation and brings the business closer to the customer.

It also brings people closer together either virtually or physically. Value is determined by how well one can understand the needs of a customer and package a solution that responds to those needs. As the position of the “we are here” circle and “x” on the chart indicates, we are just starting to move into that overlap between industrial age thinking and information age thinking about the customer rather than the consumer. Over the next span of time, the value quotient will increase in size based on a closer relationship with the customer as exemplified by the “we are heading here” point.

Underlying the relationships of people to people and people to solutions is the concept of delivering service. The more we leave making things and shift to utilizing things our value to one another will be in how well we facilitate the integration of things to people in really useful solution packages. To know what people truly need will require knowing how people live and how they aspire to live – that means living in their communities, understanding their circumstances, and being part of their solutions rather than seen as part of their problems. Once again, this is an entirely different model. What does it mean? How would it work? Questions without answers for now, but since human nature abhors a vacuum, we’re working on the answers to fill the void!

Originally posted to New Media Explorer by Steve Bosserman on Sunday, March 5, 2006