Thursday, January 6, 2011

Order and Chaos--Trust is the Only Commodity with Value

One of the biggest differences between the land of today (our current operating environment) and that, say, of 1980, is the pace of change. Pace of change can be said to be the time and space between order and chaos. If order is predominant, there is relatively little change, at a relatively slow pace. Adjustment or adaptation is relatively easy.
If chaos is predominant, change is dramatic, pace can be instantaneous.

Today's world is more marked by chaos than it is by order. The music and media industries are two arenas of business where this is most noticeable. The avenues of disruption are fragmenting audiences (which affects advertising rates), radical shifts in distribution chains and models (the slow death of the CD as a music vehicle), the rise of consumer as content (barrier to entry of content creation and distribution is continually lowering), and what maybe can be best described as a general lack of trust between the consumer and the producer (producers seeing the rise of empowered consumer as the threat to their business models, which is correct, but seeing and treating them as the 'enemy' is no way to salvage your business).
This is of course by no means an exhaustive missive of the woes of the media world, but it touches broadly on the modes of disruption.

The broader point is this chaos is not going away--that's obvious enough I would hope--perhaps less obvious is where there is chaos there is opportunity. But the attitude to find those opportunities is to create and manage your own chaos, rather than letting it manage you. Being reactive can be effective in times of order, it is all but a fatal strategy in times of high chaos.

The question becomes two-fold:
1)--how much is your business (model) being or going to be affected by the space between order and chaos?
2)--how then do you and your company/organization create and manage our own 'chaos'?

Risk analysis of your own business, it's model, and it's general operating environment is not easy. Especially if times are good (or, for that matter, times are bad). The default assumption here should be that odds are pretty good that your business and model are at risk. Odds are you are leaving opportunity on the table that you cannot see because you are too comfortable in your current model and assumptions you have about it.

The challenge in creating, managing and finding opportunity in chaos is that it is by it's very nature Not Easy! This, I am here to tell you, is The Good News. If it was easy--as I am found of saying in the home building world--everybody would be doing it, and the arbitrage of opportunity would be diluted to the point of meaningless.

What is the take away here? That the power is increasingly going to reside in the consumer. What You Need To Understand is that the chaos is also increasing for the consumer. Be the organization that makes their life easier, and develop the real relationships with them so they will trust you.

When there is chaos, trust is scare. Scarcity creates value.

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