Thursday, March 23, 2006

Is the world flat or spiky?

Richard Florida takes on Tom Friedman's analogy that The World Is Flat, arguing instead that The World Is Spiky.

Friedman's analogy of a flat world is that barriers to commerce are dropping globally - thus The World Is Flat. Florida makes Friedman's point several times in the article, for example, "leading city-regions—London, New York, Paris, Tokyo, Hong Kong, Singapore, Chicago, Los Angeles, and San Francisco among them—that are strongly connected to one another." Florida's point is that free flowing commerce does not mean commerce will flow everywhere evenly, but rather that commerce will freely flow to the areas that are distinctive in some dimension.

Clayton Christensen argues that the people that make the money are those focused on the constraint at any given point in the life cycle of a product or industry. Early on, when technologies are immature, those that can integrate components together and make the product work make the money. (Thus, because BMW is a performance leader and pushing the envelope in cars, the focus of ICAR is systems integration inside the automobile.) Late in the life cycle of a product, when components are standard and mature, winners are those that can cost efficiently assemble end products and distribute them to end consumers. (Think ScanSource).

Geoffrey Moore has a great observation: "[In marketing] there is one fundamental key to success: When most people think of positioning … they are thinking about how to make their products easier to sell. But the correct goal is to make them easier to buy. The goal of positioning is to create a space inside the customer's head called "best buy for this type of situation" and to attain sole, undisputed occupancy of that space."

Regardless of whether the analogy is that the world is flat, that commerce flows freely, or that the world is spiky, that free flowing commerce settles in areas that have distinctive competence, the question for us as a community is to identify where we are a ""best buy for this type of situation" and what we have to do "to attain sole, undisputed occupancy of that space."

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