• The customer now has the information. As yet, the Internet lacks the equivalent of a telephone book that would make it easy for users to find what they are looking for. It still requires pecking and hunting. But the information is somewhere on a website, and search firms to find it for a fee are rapidly developing. Whoever has the information has the power. Power is thus shifting to the customer, be it another business or the ultimate consumer. Specifically, that means the supplier, eg, the manufacturer, will cease to be a seller and instead become a buyer for the customer. This is already happening.
General Motors (GM), still the world’s largest manufacturer and for many years its most successful selling organisation, last year announced the creation of a major business that will buy for the ultimate car consumer. Although wholly owned by GM, the business will be autonomous, and will buy not only General Motors cars, but whatever car and model most closely fits the individual customer’s preferences, values and wallet.
• Lastly, there are few unique technologies any more. Increasingly, the knowledge needed in a given industry comes out of some totally different technology with which, very often, the people in the industry are unfamiliar. No one in the telephone industry knew anything about fibreglass cables. They were developed by a glass company, Corning. Conversely, more than half the important inventions developed since the second world war by the most productive of the great research labs, the Bell Laboratory, have been applied mainly outside the telephone industry.
The Bell Lab’s most significant invention of the past 50 years was the transistor, which created the modern electronics industry. But the telephone company saw so little use for this revolutionary new device that it practically gave it away to anybody who asked for it — which is what put Sony, and with it the Japanese, into the consumer-electronics business.
Who Needs a Research Lab?
Research directors, as well as high-tech industrialists, now tend to believe that the company-owned research lab, that proud 19th-century invention, has become obsolete. This explains why, increasingly, development and growth of a business is taking place not inside the corporation itself but through partnerships, joint ventures, alliances, minority participation and know-how agreements with institutions in different industries and with a different technology. Something that only 50 years ago would have been unthinkable is becoming common: alliances between institutions of a totally different character, say a profit-making company and a university department, or a city or state government and a business that contracts for a specific service such as cleaning the streets or running prisons.
Practically no product or service any longer has either a single specific end-use or application, or its own market. Commercial paper competes with the banks’ commercial loans. Cardboard, plastic and aluminium compete with glass for the bottle market. Glass is replacing copper in cables. Steel is competing with wood and plastic in providing the studs around which the American one-family home is constructed. The deferred annuity is pushing aside traditional life insurance — but, in turn, insurance companies rather than financial-service institutions are becoming the managers of commercial risks.