Distributed Capitalism

In the article, “Creating Value in the Age of Distributed Capitalism,” Shoshana Zuboff presents the case for capitalism’s shift from mass production to mass customization. She begins by explaining how the Model T Ford and assembly line production solved the “premium puzzle” that enabled the middle class to afford what was once a luxury good. Similarly, the iPod and iTunes solved the premium puzzle by digitizing music and removing the cost barriers locked in physical distribution. These mutations infiltrate status quo business models and offer consumers new experiences at an affordable cost.

Winning mutations are built on five principles. One, they focus first on the customer’s needs rather than company financials. They ask, “Who are you?” “What do you need?” “How can we help?” Two, they rescue assets. Assets such as knowledge, music, books must be moved from the silo of institutions into digital space. Three, they bypass unnecessary costs. For example, they digitize books to afford cost-effective distribution. Four, they reconfigure assets to fulfill user needs. Music aficionados no longer need to browse channels waiting for a good song to come on the radio when they can configure their own station through Pandora. Five, they support the platforms and social relationships that they engender.

The emerging logic of distributed capitalism rewards enterprises that realign their practices with the interests of the end consumer and punishes enterprises that try to impose their own internal requirements or, worse yet, maximize their own benefit at the expense of the individual end user.

Mutations do not arise within industries; they arise as reconfigurations of assets defined by the unmet needs of individual end users. Mutations take root in individual space, and they quickly blur the boundaries of industries, sectors, and enterprises—ultimately making those boundaries obsolete. Is Amazon.com, for instance, in the retail, the logistics, or the Web-services industry? The question no longer makes sense.

Mutations occur under the following conditions:

1. Products are affordable to few but desirable to many
2. Trust is broken with the end-user
3. There are high fixed costs that could be distributed
4. The organizational structure is inflexible
5. There are underutilized assets
6. Assets can’t meet customer needs
7. Fail to uncover latent customer needs

These times are rich with unique opportunities for companies able to decipher the emerging pattern of mutation and to convert that understanding into new business models that support the complex needs of the 21st-century individual.

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