Kevin Drum, a smart blogger about politics, economics, and assorted other topics, posts here a relatively lengthy thought piece about the current and future state of technological innovation in America. Drum makes a lot of different points, all of them thought-provoking, so I recommend reading the whole thing. But I think he’s fundamentally correct about his major thesis, which is that it’s highly unlikely that we’ve left behind forever the era of big technological breakthroughs (and the demand creation they stimulate).
As Drum says, most emergent industries are the offspring of a handful of major inventions, like steam power and electrification, and it seems plausible that we have a long way to go before we finish exploiting the ramifications of computerization. So it’s more likely that we’re in a lull marked by numerous small-scale developments while the next huge breakthrough is in the works, rather than that there are no more big breakthroughs ever to come.
(Of course this conclusion, even if true, is no reason for complacency about our recent societal neglect of support for basic scientific research, which, as we explain in Demand, could delay the arrival of that next big breakthrough, causing needless economic drift and stagnation in the meantime.)
I also like another more minor point Drum makes, which is that some recent innovations we might be inclined to write off as trivial are actually worthy of respect. As Drum says, “Once you have a certain level of food, shelter, sanitation, and so forth, you start adding nonessentials. Basically, luxuries, whether you call them that or not. Entertainment. Vacations. Restaurant meals. Fancier clothes, faster cars, and bigger houses.” Therefore, “Above a basic level, the whole point of productivity improvements is to provide us with more fun. Facebook may show up as a smaller contribution to GDP than a nationwide chain of movie theaters, but so what?”
I agree–which you might expect me to do, since as a writer I make my living providing such nonessential goods as ideas, insights, and information (rather than food, clothing, or shelter). But who would want a life made up of nothing but necessities? I’m not even sure I’d call it “life.”
Kevin Drum, a smart blogger about political, economic, and social topics, links here to a Julian Sanchez post about how the ubiquity of social media–and in particular the increasingly ready availability of crowd-sourced opinions on products and services–may end up making traditional marketing and advertising less relevant. Drum and Sanchez even go further: As rating services like Yelp grow in power (they ask), don’t the “quality signals” provided by (for example) the branding of chains like McDonalds eateries and Marriott hotels become less necessary and useful? And if that happens, won’t the playing field be increasingly leveled, giving small operators the local companies an enhanced ability to compete effectively with giant, well-funded corporate brands?
It’s too soon to tell whether the long-term impact of sites like Yelp will be that great. But it seems to me that, in the short term, companies need to think about Yelp, Tripadvisor, Zagat, Amazon reviews, and similar services as being amplifiers and accelerators of traditional word of mouth. Which means that the necessity of pushing your product and service quality from “good enough” to “magnetic” is likely to be greater than ever.
If we are moving into a world where the key to sales is getting people to brag about you to their friends–and to thousands of strangers!–then making your customers genuinely excited about your offerings is likely to be the new holy grail of demand creation.