Amazon, eBay, Google, Craigslist, Yahoo and others have successfully ushered in the information age. This has been universally acknowledged as a miraculous and valuable thing. It is transforming the economy in ways not seen since the industrial revolution but doing so much more rapidly. In 2008 we saw the negative results of this upheaval and they were not pretty. There has been and will continue to be a lot of collateral damage.
What's going on? My view is that we haven't been thinking about the human implications of high speed information access and transparency.
What happens when mortgages can be requested and received within minutes? Borrowers can purchase property impulsively. That is not a good thing because it obscures the gravity of the decision and doesn't enforce time to think about options and the implications of a buying decision. Result: a lot of people taking mortgages and home equity loans because they could without really thinking about how they would manage the purchase over the long term.
What happens when people can buy and sell stock online without having to speak with anyone? People trade on rumors, panic, and impulses. The speed at which bad news translates into financial implications has increased significantly. Result: People don't take time to consider all the factors, there is no filter between an impulse and a transaction, and the network effect of people sharing information causes enormous volatility in stocks.
What happens with a company's strategy for customer acquisition has been advertising based (not product or relationship based)? As we've seen with Chrysler & GM, customers who now have a high degree of transparency regarding product quality but no loyalty or relationship with the company have abandoned those brands. While a generalization, Japanese manufactures have been focused on value - great products at reasonable rates and the European manufacturers have been focused on relationships - great products supported by car clubs, gear, events, etc - both groups have performed better than domestic car companies because they do not rely as heavily on advertising and price incentives.
The information economy has changed the way people behave - particularly in the consumer world:
- More product and service transparency is making it vital for companies to think hard about the quality of both their products and services and ensure that the experience is consistent across the customer lifecycle. Most companies today hand off their customers from marketing to sales to delivery to support and the experience for the customer is often quite different depending on where they are in the process. This is less and less acceptable to customers that can now 'see' the entire process through the eyes of another customer.
- People can now act immediately on information. This is good and bad - for companies with discrete products, selling things through search advertising has been a huge boost. Independent niche product companies can survive like never before - and customers can find just about anything they need or want. For complex products and services however, customers can make purchases without thinking through the implications of their actions. Most companies are not set up to help customers much in this regard but, as we've seen in the mortgage market, it would have been smart to educate its customers better and then stick withthem supportively through the life of their loan. However because companies too were after short term gains (which had big financial gains through the stock market), they were not incented to slow down the process. That may be where regulation must step in.
The information economy has created a better informed but often impulsive consumer and it has created a networked information effect that ripples quickly through society allowing small pieces of information to set off a disproportionately large reaction - some positive and some negative. Like never before we can also act on information immediately creating economic whiplash.
This happens on a person level as well - information overload has increased dramatically so much so that I spend more time absorbing and less time thinking/processing than I used to. My goal for 2009? Working on my filters and behaviors so that the balance of information intake and work output changes. I may even try a few 'unplug the internet' and 'turning off the computer' days...we'll see.
How do you see information access affecting you or your business? It is a net gain for you or a troubling challenge?
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