4 ms·

This is definitely off-topic to the linked article, but to your point re: selling an LED vs a lighting plan: I think this is largely a failure on the part of co

by nbadg 10y ago

This is definitely off-topic to the linked article, but to your point re: selling an LED vs a lighting plan: I think this is largely a failure on the part of companies to transition to a service-based model in light of decreasing emphasis on consumerism and the greater importance of sustainability. More explicitly (and with fewer buzzwords), since WWII the USA has been pushing consumption as a cultural value to fuel the economy. Everything has been treated as "this equipment is disposable, with a service life of X". Arguably, goods producers still use the same process during design (since it provides a good optimization constraint), but the service life of consumables has been increasing. The LED vs incandescent transition is a perfect example, because you've gone from a consumable with a service life that is dependably short enough for the bulb producer to rely upon repeat sales, to an equivalent consumable with a service life that is so long that the bulb producer can't keep its own business running sustainably. As far as I can tell, consumer-side economic pressures have encouraged this trend for pretty much every market in existence, though each individual market may have a starkly different rate of change (the medical consumables market being perhaps the slowest, at least that comes to my mind). When you're faced with that transition, as a company your best hope for survival is to transition to a service-based economy. In the mobile phone market (and to a degree, in the computer market), the service being sold has, essentially, been innovation itself: "we'll release a new phone every so often, and in exchange for your yearly contribution to our coffers, we'll make sure it's an improvement over your last model". But I think the phone market also offers cautionary advice: this strategy saturates once consumers realize they've hit the point of diminishing returns. Furthermore, efforts to do something equivalent with LED bulbs are rightly met with skepticism, because those diminishing returns are immediately and clearly evident. So even that is clearly not a sustainable solution in the long term. So where do you go from there? Market contraction? As a company, that means you're playing roulette. You're going to try and find some other offerable service to maximize your odds of survival. But at the end of the day, I think it's that discord between consumer interests and supply-side economics that have created this brave new world of LED lighting plans and iPhones on demand. Call it what you will -- perhaps another indication of the upcoming technological unemployment crisis -- but given the degree to which we're developing these kinds of long-service-life consumables, I think the trend is only going to get stronger.

x2398dh1 10y ago
I agree with you that there is a trend of, "the service being sold has, essentially, been innovation itself," but respectfully, I don't agree with your characterization of the driver behind that trend. Widely held, "common sense," a term which I loathe to use, is that the service life of consumables has been decreasing, not increasing. There's the whole anecdote of how things like vacuum cleaners in the 50's would, "last forever," because the belt they used was thick, whereas as manufacturing techniques became more sophisticated, they figured out how to optimize the thickness of that belt so that it would break exactly after the warranty wore out. Not to disagree with you for the sake of online argument, but I believe the driving forces behind, "innovation is the product," include, 1) Greater ubiquity of manufacturing knowledge, which is arguably a function of time vs. improved information transfer technologies, and 2) Increased ubiquity of digital services, which is also a function of time vs. improved information transfer technologies. So basically, throughout the 20th Century, Bille Bob gets a hold of some files which show him how to manufacture vacuum belts, and so he opens up a vacuum belt plant down in Alabama. Then Jackie Wu over in Hong Kong gets a hold of a similar plan about 10 years later, and opens up a factory in Shenzhen, and then the same happens in Vietnam, and so on. So now what you have is basically a global economy of vacuum belts, which are basically a complete commodity - all because successive information-lacking regions gained more access to more information over time. So now we're at that, "paradigm shift," where Billie Bob is realizing that he's competing against the entire world, so he either needs to leverage nepotism (a short term strategy), protectionism (e.g. vote for Trump) or a third, innovative strategy, which may include the best value vacuum belts...kind of hard to build value...or turn those vacuum belts into a service, because building a service brand is not a function of intellectual property protection, and he can continue to hold a competitive advantage with a service business, indefinitely, as long as he can maintain that level of service. That's why we're going to see vacuums coming out with sensors that tell you when the belt goes out and automatically sends you a new one via Amazon or whatever - it's a huge competitive advantage over Jackie Wu back in Hong Kong. Where do you go from there? Well, using a 1980s mentality, you start going into other markets, you use your vacuum belt platform software that you built and you gobble up other, weaker companies in Alabama who can't figure it out. Or, using a late 1990s mentality, you create vacuum belt derivatives of some sort, and sell that data to rubber hedge fund managers to show how often vacuum belts are going out of service, so they can forecast and create short / long positions on commodity markets. Or you create a community forum on vacuums and talk directly to the consumer, reaching around the vacuum manufacturer, etc. There are tons of different ideas and it is only limited to your imagination. We are not necessarily living in a world of inevitable, "technological unemployment crisis."

by nbadg 10y ago

x2398dh1 10y ago

I agree with you that there is a trend of, "the service being sold has, essentially, been innovation itself," but respectfully, I don't agree with your characterization of the driver behind that trend. Widely held, "common sense," a term which I loathe to use, is that the service life of consumables has been decreasing, not increasing. There's the whole anecdote of how things like vacuum cleaners in the 50's would, "last forever," because the belt they used was thick, whereas as manufacturing techniques became more sophisticated, they figured out how to optimize the thickness of that belt so that it would break exactly after the warranty wore out. Not to disagree with you for the sake of online argument, but I believe the driving forces behind, "innovation is the product," include, 1) Greater ubiquity of manufacturing knowledge, which is arguably a function of time vs. improved information transfer technologies, and 2) Increased ubiquity of digital services, which is also a function of time vs. improved information transfer technologies. So basically, throughout the 20th Century, Bille Bob gets a hold of some files which show him how to manufacture vacuum belts, and so he opens up a vacuum belt plant down in Alabama. Then Jackie Wu over in Hong Kong gets a hold of a similar plan about 10 years later, and opens up a factory in Shenzhen, and then the same happens in Vietnam, and so on. So now what you have is basically a global economy of vacuum belts, which are basically a complete commodity - all because successive information-lacking regions gained more access to more information over time. So now we're at that, "paradigm shift," where Billie Bob is realizing that he's competing against the entire world, so he either needs to leverage nepotism (a short term strategy), protectionism (e.g. vote for Trump) or a third, innovative strategy, which may include the best value vacuum belts...kind of hard to build value...or turn those vacuum belts into a service, because building a service brand is not a function of intellectual property protection, and he can continue to hold a competitive advantage with a service business, indefinitely, as long as he can maintain that level of service. That's why we're going to see vacuums coming out with sensors that tell you when the belt goes out and automatically sends you a new one via Amazon or whatever - it's a huge competitive advantage over Jackie Wu back in Hong Kong. Where do you go from there? Well, using a 1980s mentality, you start going into other markets, you use your vacuum belt platform software that you built and you gobble up other, weaker companies in Alabama who can't figure it out. Or, using a late 1990s mentality, you create vacuum belt derivatives of some sort, and sell that data to rubber hedge fund managers to show how often vacuum belts are going out of service, so they can forecast and create short / long positions on commodity markets. Or you create a community forum on vacuums and talk directly to the consumer, reaching around the vacuum manufacturer, etc. There are tons of different ideas and it is only limited to your imagination. We are not necessarily living in a world of inevitable, "technological unemployment crisis."