IBM and Creative Destruction

One of the fundamental aspects of successful capitalism is the principal of creative destruction. In a capitalist system, businesses that are hampered with flawed business models, substandard management, unproductive labor or changing markets, among other things, pass away in a sometimes agonizing fit of destruction. New businesses, with a better take on what the market is willing to buy on an ongoing basis and how to produce that profitably, spring up and thrive. It’s the business version of earth to earth, dust to dust and the circle of life.

Even though we all know this story and can intellectually recognize that it is a required component to make a capitalistic economic system work, when push comes to shove, or more realistically, padlocks come to factory gates, things get a lot tougher. When long-standing, treasured companies die, such as Maytag, it is traumatic, especially for the local communities.

If they are big enough or politically well connected, governments sometimes step in and prop up dying businesses. In the last year we’ve seen multiple examples of this in vehicle manufacturing, insurance, financial services and banking. But even while entire economies are distorted by artificial means, the market keeps changing and creative destruction keeps happening.

» » » Click here to read the rest of this post « « «

The Bandwidth Gap

One of the downsides of the insularity of the American culture and the self-enclosed European culture is its bounding effect on opportunity space thinking.

One example that is easy to illustrate is in technology. People in the post-development societies of western Europe and the U.S. live in a bandwidth rich environment. If they ever venture outside the post-development nations, they tend to travel to centers of commerce, bandwidth oases in the global bandwidth desert.

Due to thier limited world bandwidth view, what these post-development society people miss is that the rest of the world lives in a reality of low- to no-bandwidth.

The bandwidth rich conceive of, develop and implement technology solutions that further enhance and accelerate the bandwidth enabled. Meanwhile, the four to five billion people who live outside the high bandwidth areas are locked out of those solutions and those enhancements to life and development.

While many are aware of the digital divide, they conceive of it as representing those who have and those who do not have computers. In reality, the digital divide is a bandwidth gap between the high-, low- and no-bandwidth people on the planet.

High bandwidth costs real money, low bandwidth costs much less. Who can afford real money? Mostly those in the wealthiest one billion people on the planet. Who can afford low bandwidth? Just about everybody in the next segment lower, the three to four billion next wealthiest people, because they almost all have mobile phones. Who can’t afford any bandwidth? Many to most of the people in the remaining bottom tier.

The next wave of technology winners, those who understand what the bandwidth gap is all about, those who will define the next ubiquitous technology capability on the planet, will leverage the billions in the middle tier who have access to low bandwidth phones. Why? Because those who have low bandwidth phones now are the same billions who will have high bandwidth mobile devices in the future. Technology always climbs up the food chain, not down. Technology dominance always starts at the bottom and consumes the market as it moves up. Build a solution for the bottom now and consume the top later.

In this case, future technology dominance starts with those who have the least available bandwidth, not the most.

That’s a very challenging market to comprehend for those trapped inside the insular, inside-looking-out, high-bandwidth fishbowl.