The world of business has changed enormously. It is not what it used to be 10 years ago and earlier. It just isn’t. What are the driving factors of this change? Or, should we ask, what IS the driving factor of this change? It is one simple world. But it can mean almost a million things. And, it starts with T. No points for guessing, we’re talking about technology. Technology has changed the face of the business world. Trends catch-on in seconds, and last for a few weeks. Customers have never been so connected, or so fickle. Never has the top spot for businesses been so slippery. Social, mobile and a ton of other web and non-web related technology has made the business climate, as unpredictable as, well, the weather.
The truth is, we’re all sort of rushing along, simply zipping by day after day, without knowing in which direction we are headed. And businesses don’t have a map.
As Facebook rose, Blockbuster fell. The U.S. government debt spiraled out of control, while China’s economy is in a position to bail out Europe. Predicting any big change, has been frustratingly difficult. Heard of the chaos theory? Better get acquainted with it. DJ Patil applied computational science to help the U.S. defense department with containing bioweapons and assessing threats. He also worked with eBay on payments and fraud. Incidentally, Patil, who researched weather patterns in university, is a chaos theory expert today. He talks about predicting weather, while explaining the chaos that the business world is in today. Patil explains how sometimes predicting the weather is possible for the next 15 days, and at other times, it can’t be predicted for 2 hours. We’re now, officially in the 2-hour period.
When uncertainty looms, businesses aren’t sure of what decisions will work and what will fail. Confusion and chaos prevails in boardrooms. Executives grapple with questions about advantages that will stick, skills that will truly matter, and try desperately to sift risks from opportunities. Take for instance, a series of bad decisions by a company that entered the fray in a relatively calm environment but now, is faced with a market that renders it clueless. Let’s talk the Netflix debacle in the past year. Last July, Netflix announced that DVDs of movies and television shows that are shipped to the customers would now cost subscribers $7.99 a month. Then, they went on to tell these customers that streaming content on the net would cost them another $7.99. And, if Netflixers wanted their fix of both streaming content and DVDs, they’d have to pay $15.98 a month, which is basically cost of both the services put together. This was close-to $6 more.
While logically, in a boardroom it would have made sense. Problem: Revenue needs to increase. Solution: Cost of the services need to go up. This is not a historic, unprecedented move. But in a world where chaos theory applies, there’s no telling which way the pendulum will swing. For Netflix, it was flung in the exact opposite direction that the company wanted it to go. The result? A serious and severe backlash on social media. And when the company decided to apologize, they went on to their blog to do so. Not a press statement. And, good for them for doing so!
We touched upon briefly about the slippery No.1 spot. We weren’t just saying it because it sounds all catastrophic and the premise of this story is the whole chaos that has taken over the business world. Look around you (we mean metaphorically), and you’ll realize this is true. Take the phone industry and you’ll know exactly what we mean. In 2005 – doesn’t sound too far back right? – Nokia, Research in Motion, and Motorola were the top dogs of the cellphone business. And the companies that rules now are Apple, and the brand that nobody had heard of back in 2005, Samsung. Today, Samsung fights patent wars with Apple. If this isn’t chaos, then what is? Let’s look at the online companies. Nobody had heard of Facebook in 2002. Now, it sends shivers down the spine of Larry Page, whose struggling to build a relevant social networking site. The guy who co-founded the globe’s biggest web company.
And what makes all this even more complicated is the sheer unpredictability of the consumer. There’s just no knowing, like the chaos theory pendulum, which way he’ll swing. There’s no knowing what is more important to him. Take for example the fact that Afghan refugees in camps would rather go hungry than give up their cellphones. Overnight, huge swathes of the population could take to the internet and rise up against an autocrat they put up with for 20 years, as has happened in the middle-east.
In America, we have the Gen Y or echo boomer, a class of people born between 1980 and 1995, that is nothing like marketers have ever seen before. In fact, they often find that after working in industries for 15-20 years, they have to work under a Gen Yer who founded the company from his dorm room! So the Gen Y person, unlike any of the other generations we have known before has taken to cohabitation more than he (we will stick to ‘he’, but we also mean ‘she’) has to marriage. On graduating from college, and finding himself without a job, he’s totally cool about going back and living with his parents. Now, imagine an 18-something in the 90s, even considering moving back in with his folks! We did say that things are topsy-turvy.
When large numbers of people stop marrying or are increasingly more comfortable living with their parents, businesses need to adapt. For instance, products like insurance, as we know them, become irrelevant. Because, technically, single people have no dependants who will need them if something goes wrong. So many investment instruments become redundant. Factors like education are more important. If people are not marrying, then they need to be more independent and rely on themselves. Ergo, they need to study harder. So on and so forth. And yet, there’s no way for businesses to know that this Gen Yer will not marry. For just like that, this person may decide to marry after finding the elusive one. And most likely, this elusive person could be somebody they hooked up with, for, didn’t you hear? Gen Yers don’t date, they hook up!
Given the unpredictability of the business world, driven by the rapid pace of technological growth, companies have woken up to the fact that Gen Yers, also known as the Millennial generation need to be understood better. This is simply because, Baby Boomers, whom marketers have had decades to understand, the Millennial has turned into a customer only recently. And the Millenials outnumber the Baby Boomers, so despite the fact that they make marketing to them that much more difficult, understanding them is so much more important. U.S. alone has some 80 million Gen Yers, and their influence will continue to grow, hence, courting them remains top priority for companies.
Meanwhile, as national debt ratings are slashed, countries join unions and leave unions at the drop of a hat, as Iran surges forward with its nuclear program and technology drives everything at break-neck speed, we surge forward in the chaos. And, in many ways, that forward surge (and not ‘backward’ or ‘stagnant’) is the silver lining in the cloud.