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The Personalized Economy

The Personalized Economy

Mass production has hit a dead end. Today's consumers increasingly expect individualized attention. CIOs can help their companies understand this shifting economic landscape.

A quarter-century ago, MIS directors complained of not having a seat at the strategy table. The CIO's role eventually emerged - a technology visionary and bridge to a gleaming future. Has that dream died? In recent meetings, I have been surprised by the old familiar refrains - the lack of strategic clout, the difficulty of sustaining board-level interest. At one elite gathering, there was a palpable sigh of relief when a CIO proclaimed: "It's our job to build the sewers."

I guess he's right. According to the latest figures, 75 percent of the typical IT budget is spent on legacy systems. Instead of redefining their industries, too many CIOs became prisoners of the status quo - buried in mandates for cost reduction and compliance. But while they were trapped in the sewers, all hell broke loose above ground. These same 25 years have seen a tectonic shift in the foundations of capitalism, a shift that has left our businesses badly out of sync with the people who depend on it for consumption and employment. Today's companies remain rooted in a business logic invented a century ago to mass-manufacture goods for a then-new population of people with very little stuff who wanted more. The 20th-century corporation required a strict inward focus in order to manage the new complexity of economies of scale. It emphasized the concentration of resources, command and control, cost and efficiency. This "managerial capitalism" produced epic wealth for many decades, because mass consumers wanted exactly what companies were skilled at giving them: cheap goods.

But yesterday's mass society has given way to a new society of individuals - people who are more educated, informed, experienced, travelled and connected than earlier generations. They are shaping a profound change in the nature of consumption: It's no longer about the quantity of stuff, but rather about the quality of life. A growing body of data suggests that the new consumer is in search of something that isn't even available yet: advocacy and assistance in the daily work of negotiating an ever more complex life. Toasters and mortgages are necessary, but no longer sufficient. For example, it's easy to find a competitively priced health insurance policy but difficult (impossible?) to find an insurance company that will really be there when you need it - no tricks, no strings. Patients can get access to a range of medical specialists, but there's no one to shepherd them through the system - find, sort, integrate and explain critical information - and advocate on their behalf. We can pick from among comparably priced and equally uncomfortable airline flights, but there's no one who will take responsibility for managing a complicated travel schedule, transportation and lodging, needs that arise on the trip and the requirements of your household while you are gone. Just to change my flight today - same airline, same day, two hours earlier and a plane that was nearly empty - I paid a penalty fee of $150. When consumers are routinely punished for their intricate lives, it's no wonder these fragmented transactions no longer yield significant margins.

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