The Business of Flow

There has been an explosion of writing these days about business planning. Plan less! Plan more! Strategize! Don’t strategize! It is, shall we say, just a tad chaotic. One of the reasons this is a hot topic relates to “the rate of change”. The argument is that it is speeding up. Sort of like global warming, but for business.

So is it? There is a pretty strong consensus that it is. Markets are disrupted more frequently than they used to be. And technology — especially information technology — speeds up the rate of exchanges of ideas and makes experimentation less expensive. So let’s assume that this is correct. Is there a “metric” that we can use to see change coming?

This kind of metric requires a new vocabulary. People tend to forget, for example, that the word “progress”, as we use it today, is a modern word.If you used it in conversation with a person from the middle ages, they would have no idea what you would be talking about. Indeed, humans only started talking about “humanity” as a single thing only around the 18th century. So when we talk about “value added” and “changes in value added”, well, we are talking about mental experiments. These phrases have no clear meaning.

But one trend is pretty clear. We are emerging from a time when “value” and “value added” mainly related to things. A Ferrari is expensive because it offers huge value added for a market segment that can pay for it. Other things, like garbage have negative value added. They cost money to deal with. As it gets less and less expensive to make things, the value added we get from better things falls.

Think about that. When I say it falls, you might ask, it falls relative to what? It falls relative to the value added we got from prior improvements. And it falls relative to other stuff that is harder to produce. Like what? This “other stuff” is cognitive. It is the ability to see more clearly into the future. Call it “trend analysis” or “seeing market inflection points”, whatever you want. But it is not about things. it is instead about flow.

Here is the interesting thing. As you follow the media, check out how we talk about flow. What vocabulary do we use? How accurate is it? I have found that it is mostly descriptive rather than analytical. And a guy like John Hagel III thinks he can make money by offering a more analytical view of flow analysis.

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