Monday, November 23, 2009

Adding Value, Reducing Cost

I was listening to This Week in Google (Ep. 17), and I once again heard Jeff Jarvis say (quite correctly) that internet efficiencies "add value and reduce cost". Jarvis is famous for saying about the Internet-connected economy, "middlemen are doomed". Again, he's right.
Most importantly, he said that "Google kills waste". The question I have is "how much of the U.S. economy is based on waste management?"
I've gone on at length about this topic before, but I'm going to try and boil it down. If you want the long-winded version, start here.
In the Industrial economy of the 20th century, people who weren't getting paid extracting raw materials or pounding them into something useful, were being paid for coping with the inefficiencies inherent to acquiring the materials for, producing, promoting, or delivering, material goods. (Sure, some were being paid for handling Intellectual Property and not material goods, but I think we all know where that's heading).
The Internet is drastically reducing these inefficiencies. They are no longer inherent.
We've watched the U.S. economy move from a production-based economy to a service-based economy. Now, the Internet is making us an increasingly self-service based economy. This is the value that Jarvis is crediting the Internet for--the public is adding value for the public (for nearly free, free, or less-than-free), on top of internet platforms. We are promoting and distributing music. We are acting as our own travel agents and realtors. We are making gourmet meals in their own homes and sharing cooking tips and recipes online. We are doing our holiday shopping on the internet, away from brick-and-mortar stores and their sales staff. We are reporting the news on twitter. We are filming it on Youtube. We are providing analysis on blogs.
Inside of corporations, information technology is streamlining management and flattening the org charts, reducing the "middlemen" inside every industry. It's not just affecting the industries that act as "middlemen". It's affecting the middlemen of every industry.
So... What percentage of U.S. consumers make their livelihood as "middlemen" (in this broadened sense)? How many U.S. jobs are the "cost" that's being reduced?
Once upon a time, we were afraid that technology (in the form of automation) was going to undercut the blue-collar labor market (turns out, Southeast Asia's cheap labor beat the robots to the punch.). But in the 21st century, it's white-collar jobs that have to be aware of their tenuous position, as technology (in the form of I.T.) eliminates or reduces the need for their jobs. I say this as a warning to prepare for it, not as a call to fight in vain against it.
In the next century, we're going to find out that there's a lot of stuff we don't have to pay for that we are used to paying for. At the same time we'll find out that a lot of us are getting paid for things that don't need doing anymore (at least *as a profession*). We should work towards making this transition as smoothly as possible.
If you have a young child today, my suggestion is that you send them into medicine, engineering, education, or teach them how to drive a UPS truck. Almost any other job I can think of is one that we'll do for ourselves or for each other for free, thanks to the efficiencies the Internet is bringing us.