Thursday, 19 January 2012

On Change: 2 (via Tertiarisation & Moore's Law)

Yesterday I offered up the first part of my keynote to BIC’s 2011 New Trends summer seminar, sliced into short posts. I began with two of five key observations about change (as it pertains to publishers and the supply chain). First, Change isn’t new, and second Change can go unnoticed.  So here goes for observations 3 & 4. No literary references today – instead we're skimming over some economic principles. I like to keep my frame of reference eclectic...

Observation 3: change happens
I grew up in the North East of England when the region was suffering an identity crisis of epic proportions. The traditional employers (coal mining and shipbuilding) were dying, resulting in social and economic pressures that culminated in the miners’ strike (immortalised in the musical and film Billy Eliot, and engraved painfully deep into the psyche of those of us who grew up witnessing the conflict and social schisms that accompanied the stand-off). In the following decades the employment profile in the area has migrated to service industries such as call centres and financial services (until the sub-prime mortgage market did for Northern Rock, in any case).

Those of us studying A’ level geography at the time learned that what we were witnessing was the economic theory known as “Tertiarisation”, or “the three sector economy” (developed by Jean Fourastie and Colin Clark) in action. Something that puzzles me about the Book Industry is that because we work with books – which have been around for so many centuries – we seem to see ourselves as insulated from the great economic trends that sweep the world’s economies. Publishers’ self-perception seems rooted in phase one of the three-sector economy (extraction) – extracting IP from authors, or possibly stage two (manufacturing) – making books as physical objects. Perhaps we’d all do well to take a running jump into the third sector – the service economy – because if we regarded ourselves as service providers – we might get back ahead of the game.

We are operating in a world where our product is rapidly uncoupling from its long-established delivery method (the book). Yet right now, revenue from those same books still forms the majority of revenues and cash flow for most publishers and booksellers (innovators like Sourcebooks being possible rare exceptions). Therefore we must buy ourselves time to invest in our future by making the process of obtaining physical books as easy and as pain-free for consumers as possible. That is to say we must invest in an efficient, effective supply chain that competes credibly with other offline and online consumer experiences in the service economy.

Observation 4: change is speeding up
Yesterday I was dismissive of a tendency to panic at the notion of change – however I do believe the pace of change gives us plenty to be concerned about - and Moore's Law is why I believe this. Wikipedia describes Moore's law as follows: 

“a long-term trend in the history of computing hardware. The number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years.[1] This trend has continued for more than half a century and is expected to continue until 2015 or 2020 or later.  The capabilities of many digital electronic devices are strongly linked to Moore's law: processing speed, memory capacity, sensors and even the number and size of pixels in digital cameras.[3] All of these are improving at (roughly) exponential rates as well. This exponential improvement has dramatically enhanced the impact of digital electronics in nearly every segment of the world economy.[4] Moore's law describes a driving force of technological and social change in the late 20th and early 21st centuries.”

So not only have content and books moved out of their exclusive marriage into an open relationship that can include all sorts of other partners (web-based delivery, e-book readers, apps), but publishers and booksellers are operating their businesses within the context of an technological information infrastructure that is being propelled by laws of exponential change, with knock-on effects on the pace of change within our social and economic frameworks. The book is a product with a comparatively stable (if low) perceived value fighting for life in a dynamic, volatile world of constantly upgraded high-price consumer goods, free social media applications, rapidly changing social expectations and enormous peer pressure.

Moore’s law has made change exponential technologically, economically and socially.

That’s enough for one day, don’t you think? Observation 5 tomorrow…


  1. We've talked about it before, but I wanted to say here that your assessment of the impact of Moore's law (accelerating rate of change) on traditional businesses is a vital contribution. The businesses that publishers are competing with move at speeds that few of us can imagine, let alone match. We're always playing catch-up from positions that are increasingly weak.

    1. Brian - thanks for coming by and for your comments. Timely because my next post looks at your "context first" presentation. More importantly thanks for your endorsement of my comments on Moore's Law. It's something I hear referenced increasingly by speakers - but I don't think many people grasp how all pervasive its effects are - we're all playing catch up - but change is exponential we're getting further behind!