Non-rival goods and their impact on the future of our economy
A view from Jess Kimball Leslie

Non-rival goods and their impact on the future of our economy

Amazon and Alphabet understand is that in our future economy, most competition will occur through creating and selling non-rival goods.

People love to talk about the future of work in meaningless corporate platitudes. "We’ll create in ways that are digital and human ... We’ll collaborate in connected spaces... We'll… AI!"

The problem with these niceties is that they’ve been successful at only one thing – preventing us from having any real conversations about the future of work.

Oxford Martin estimates that 47% of our workforce will automate within the next 20 years. Already industries like investment banking ("The quants run Wall Street now," declares The Wall Street Journal) and retail ("89,000 American retail workers have been laid off since October," reports The New York Times) have seen massive waves of layoffs happen due to automation.

How is it that we don't have meetings in our calendars every day that say, "Discuss what our company looks like in the age of mass automation?"

The French philosopher André Gorz called such happenings "non-reformist reform," meaning that significant change doesn’t always require some startling public revolution, but instead, systems can change from within.

Our economy is already drastically changing from within, and one of the changes that certain companies like Amazon and Alphabet understand is that in our future economy, most competition will occur through creating and selling of non-rival goods.

A "rival" good is something with a cost of production – say, a can of soda (if I drink your soda, you have to go buy another one). A "non-rival" good, like an MP3 file, is something that can be instantly replicated for free (if you steal my Kanye West album off my phone, I still have my original copy).

One of the changes that certain companies like Amazon and Alphabet understand is that in our future economy, most competition will occur through creating and selling of non-rival goods.

The non-rival goods of the present and future follow a totally different rules of economic competition than the rivals goods of our past did.

One of the most fascinating examples of competition in an era of non-rival goods is playing out right before our eyes. Snap Inc is battling fearsome competitor Facebook for the future of Millennial advertising eyeballs.

I’ve been bearish on Snapchat for years, because I do not think they understand how non-rival goods work. Whenever Snapchat releases a hot feature, like face filters, Facebook immediately copies it, because face filters have almost no cost of production.

Facebook doesn’t need to build a new factory to create them, nor a new distribution plan to spread them out all over the world. The only cost of production involved in stealing Snapchat’s core feature right out from under them is the engineers’ hours required to copy the face filters. And for a behemoth like Facebook, that’s a drop in the bucket.

Competing in an era of non-rival goods means that your company will have to grapple with competitors that literally pop up overnight. Gone are the days of Crest worrying about Colgate. Your next great competitor is probably someone you can’t even imagine.

When Uber responded terribly to President Trump’s proposed Muslim Ban, they lost 200,000 users in a week. 

Just the other day Amazon announced it’s considering making a play for the pharmaceutical industry. Alphabet’s interested in immunology, and Apple may just create that self-driving car after all.

Surprise competitors will mean increased volatility for investors. Look at Uber and Lyft. When Uber responded terribly to President Trump’s proposed Muslim Ban, they lost 200,000 users in a week. Talk about something that would freak me out if I was an Uber investor.

How will we build this sort of unprecedented volatility into our methodologies for valuing companies private and public alike? And if Uber can lose almost a quarter million users overnight, does their $70bn valuation still hold? These are the economic questions that we must learn to ask in order to build the future of work.

So what does your company look like in 2027? What new resources will you need to put in place to compete in this climate? What non-reformist reforms are likely to take place within your category, due to changing consumer needs and expectations? How will you maintain shareholder value in a world of non-rival goods?

These are the questions that automation demands we ask of ourselves.

If you’d like to read more about The Future of Work, download a free copy here. If you’d like to request a free printed copy, email jess.kimball@ogilvy.com and I’ll give as many away as I can.

Jess Kimball Leslie is global chief futurist of OgilvyRED.

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