Surviving the hourglass economy

Technology causes economic inequality and threatens to destroy lazy businesses, Chris Clarke warns.

Credit: Getty Images
Credit: Getty Images

For as long as the internet has existed, most of us have operated on the basis that technology is by and large a force for good. We have tended to see innovation in business, better consumer offerings and a greater transparency across the board.

All right, massive technological change will always leave a few casualties and create the odd problem.

But as we watched the music industry suffer the effects of piracy, we could tell ourselves this was the consumer speaking and something better would emerge in place of the old and the broken. Recent evidence suggests that this is looking less likely, and that the relationship between technology and society might be more complex than we thought.

It gets harder to make the case for unchecked tech progress if the disruptors are giving their product or service away for free to dominate a market and then sell their businesses, hoovering up all the value for themselves and their investors.

The outcome of all this disruption, as more people began to appreciate in 2013, wasn’t just a changing of the technological guard; it was a significant contribution to the demolition of jobs and incomes, and the hollowing-out of the West’s middle class.

For example, Amazon may be one of the most efficient, customer-friendly companies the world has ever seen, but its ability to vaporise as many as four jobs for every one it creates gives us a more nuanced picture of its social value.

Society’s ills aren’t all technology’s fault, and technology does have a role to play in fixing them. In emerging economies, mobile technology is lifting millions out of poverty.

But there’s a new, hourglass-shaped economic reality now: we are more unequal than ever, and the benefits of recovery are only reaching the elite and the people who serve them. This is a reality digital technology exacerbates.

In 2014, armed with a more nuanced view of what digital technology can be, agencies and their clients need to think carefully about how to handle the opportunities and pitfalls it puts before us. For example, agencies should tell clients that, while advertising as a demand-creation tool may be more important than ever, simply attempting to advertise your way out of a situation is like farting against thunder. The challenge goes deeper.

Rapid response is the way of the world. Sluggish, inefficient companies are marked for death

Many corporates are in a woeful place organisationally to deal with all these changes. There’s a prevailing culture of PowerPoint consensus building; by the time a decision comes, the opportunity is gone. You don’t see that inside the disruptors. Companies need to be far faster and leaner, because rapid response is the way of the world now, and sluggish, inefficient companies are marked for death.

On the one hand, businesses might be well-advised to shed fixed costs and adopt a more flexible structure – and for those who are hopelessly inefficient, that may well be the only way to survive. On the other hand, our economy needs big companies to hold fast and create jobs, which calls for innovation, investment and a canny eye towards threats against their business.

A clear understanding of how technology is reshaping our economic reality is the first step in getting this right. The courage to put in place "internal disruptors" to anticipate and create change is probably the next step but, to really succeed, corporate hierarchy and decision-making in general need looking at.  

A safety-first approach has traditionally been the best way for marketers to preserve their own jobs but, when whole markets are being bulldozed by disruptive technology and consumer shift, radical new approaches are essential. Better to fight for what you’ve got than to surrender it. Brands that are shy of trialling new approaches and concepts shouldn’t be scared of failing. They should be much more afraid of standing still and doing a Kodak.

Some companies accustomed to chasing middle-income consumers will find their natural place downstream, while some need to head towards the luxury end. Still others need to chase international revenues, but they all need to make these shifts decisively, and do it well. Scores of major global brands still don’t believe their businesses are under any kind of threat, but a dramatically restructured consumer market challenges all such certainties.

From an agency’s point of view, we need to make sure everything we do for our clients strengthens their business, whether they like it or not. We can’t afford to be well-paid PowerPoint suppliers for doomed clients who would sooner strategise than act. We need to add real business value by making things happen, and the first lesson for brands is they need to change, because everything else already has.

Chris Clarke is the chief creative officer, international, at DigitasLBi