The View Above The 'Weeds'

by , Nov 10, 2011, 10:40 AM
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Yesterday was not a good day.

It was a day that made me wish I had never gone into this business -- a day that made me long for a warm beach and a mai tai. I don’t have these days very often, but yesterday, oh boy, I had it in spades!

I’ve been doing search (yesterday, I used a different, less polite noun) for a long time.  And I have to be honest, some days it feels like a thousand leeches are sucking the blood out of me. Given that, it was impossible to muster up much enthusiasm for the roll out of Google+ Business Pages or the raging controversy of Facebook’s “LikeGate.” Really? Are those the most important things to litter our inboxes with?

On days like yesterday, when I get caught in the weeds of digital marketing (where the blood-sucking leeches tend to hang out) I sometimes lose sight of why I got into this in the first place. This is a revolution. What’s more, it’s a revolution of epic, perhaps unprecedented, proportions. In macro-economic terms, this is what they call a long-wave transition or a Kondratieff wave (named after the Russian economist who first identified it). These cycles, which typically last more than 50 years, see the deconstruction of the current market infrastructure and the reconstruction of a market built on entirely new foundations. They are caused by change factors so massively disruptive, often in the form of technological innovations or global social events (for example, a World War), that it takes decades for their impact to be absorbed and responded to.

The digital revolution is perhaps the biggest Kondratieff wave in history. One could tentatively peg the start of the transition in the early to mid ‘90s with the introduction of the Internet. If this is the case, we’re less than 20 years into the wave, still in the deconstruction phase. To me, that feels about right. If history repeats itself, which it has a tendency of doing; we have yet to get to the messiest part of the transition.

These waves tend to precipitate what’s called a “regime shift.” Here is how the regime shift works. Companies started in the old market paradigm eventually reach a stagnation point. In our particular case, think of the multinational conglomerates built around market necessities such as mass distribution, physical locations, supply-chain logistics, large-scale manufacturing, top-down management and centralized R&D. In this market, bigger was not only better, it was essential to truly succeed. Our Fortune 500 reads like a who’s who of this type of company.  But eventually, the market becomes fully serviced, or even saturated, with the established market contenders, and growth is restricted.

Then, a disruptive change happens and a new opportunity for growth is identified. At first, the full import of the disruption is not fully realized. Speculation and a flood of investment capital can create a market frenzy early in the wave, looking for quick wins from the new opportunities. Think dot-com boom

The issue here is that the full impact of the disruptive change has to be absorbed by society -- and that doesn’t happen in a year, or even 10 years. It takes decades for us to integrate it into our lives and social fabric. And so, the early wave market boom inevitably gives way to a collapse. Think dot-com bust.

As the wave progresses, the “regime shift” starts to play out. Established players are still heavily invested in the existing market structure, and although they may realize the potential of the new market, they simply can’t move fast enough to capitalize on it. Case in point, when industrial America became electrified in the late 1800s and early 1900s, the existing regime had factories built around steam power.  Steam-powered factories had a central steam engine that drove all the equipment in the factory through a complex maze of drive shafts and belts. The factories were dirty, dangerous and inefficient. New factories powered by electricity were cleaner, brighter, safer and much more efficient. But even with the obvious benefits of electricity, established manufacturers tried to retrofit their existing factories by jury-rigging electrical motors onto equipment designed to run by steam. They simply had too much invested in the current market infrastructure to shut the doors and walk away. New companies weren’t burdened by this baggage and built factories from scratch to take advantage of electricity. The result? Within a few decades, the old manufacturers had to close their doors, outmaneuvered by newer, more nimble and more efficient competitors.

When I plot our current situation against the timelines of past waves, I believe that given how massive this wave is, it could take longer than 50 years to play out. And, if that’s the case, there is still a lot of deconstruction of the previous marketplace to happen. The good news is, the building of the new market is a period of huge growth and opportunity. There is still a ton of life left in this wave, and we haven’t even realized its full benefits yet.

On days like yesterday, when my to-do list and inbox conspire to burn out what little sanity I have left, I have to step back and realize why I did this. Somehow, way back then, I knew this was going to be important. And yesterday, I had to remind myself just how massively important it is.

 

0 comments on "The View Above The 'Weeds'".

  1. Paula Lynn from Who Else Unlimited
    commented on: November 10, 2011 at 11:24 a.m.
    Terrific post !
  2. Joel Porter from INVENU
    commented on: November 10, 2011 at 11:33 a.m.
    A well stated commentary on much more than the "weeds' of search and the digital world we are all learning to live in. At INVENU we are half way through de-construction and beginning our re-construction carefully trying to avoid poorly attached, inefficiently functioning "electric motors".
  3. Nicholas Fiekowsky from (personal opinion)
    commented on: November 10, 2011 at 11:35 a.m.
    Gord, Spot-on. We could be riding a tsunami on this one. Previous technologies matured within a handful of decades - railroad, automobile, air transport, electric power, telegraph... This facilitated adaptation and subsequent stability. Our slavish adherence to Moore's & Metcalfe's laws (chips & network), the technology keeps changing. This produces a so-far-endless string of radical consequences. What happened to photo film, CDs, landlines... I expect "stability" will be constant adaptation for a few more decades. This is one heck of an exciting time to be alive.
  4. Rhonda Campbell from NA
    commented on: November 10, 2011 at 12:02 p.m.
    Good post. I think we're experiencing change/shifts on a global level across in several spheres (e.g. finance, marketing, communication). Curious to see where it all lands.
  5. Leon Thomas from Orlando
    commented on: November 10, 2011 at 1:02 p.m.
    You should run for office because the people need to hear this. Brilliant post.
  6. Paula Lynn from Who Else Unlimited
    commented on: November 11, 2011 at 8:37 a.m.
    After I re-read your very relevant to everyone post , you have described the problem with our education system dilemma.
  7. Gordon Hotchkiss from Out of My Gord Consulting
    commented on: November 11, 2011 at 11:44 a.m.
    Thanks for the comments... I agree that we're not paying enough attention to this cycle. Most companies I work with have never heard of it, and, if they're part of the regime being "shifted" out, don't really want to hear about it.
  8. Erik Ford from Boost Media
    commented on: November 21, 2011 at 4:02 p.m.
    Gordon- So very true. Although 50 years may be condensed down to 5-15 because of the huge dollars behind these initiatives. Interestingly, I wrote about the functional innovation that finds itself as the focal point of the regime shift you write about. The concept lies in the massive evolution in retail infrastructure to deliver price conscious goods in as close to real-time as possible: http://digitallynative.tumblr.com/post/12950465047/forget-digital Thanks for an article with such great perspective-

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