The Future of Value Creation.
The switch from product-centric to interaction-based
Let’s start this discourse with a time travel to beginning of the first industrial revolution. The transition to new manufacturing processes from about 1760 to the 1840s included going from hand production methods to machines, new chemical manufacturing and iron production processes, the use of steam power, the development of machine tools and the rise of the factory system. And at the dawn of the 20th century the great inventors gave the world electricity, conveyor belt production and the superpowers of the internal combustion engine. This marks major turning points in history, since almost every aspect of the daily life in the so called developed world was influenced: the average income and population began to exhibit unprecedented growth. The standard of living for the general population began to increase consistently over the long term for the first time in human history. But it seems, that our brains still define value automatically with physical products like we did the last 100 years. It seems to be easier for the brain to associate value with things, that one can grab than with services that one receives or gives. And this is an important point:
We still lack precise metrics and tools to measure the human interaction. We are used to assign the worth of 10 currency units to a working hour of a barber and a mediocre haircut. And then we can even compare that haircut with the value of 5 kilograms of potatoes. Or match 100 haircuts with 125g of cell-phone magic. But as more and more interactions are done by the tap of a finger or the push of a button in a virtual world we need more precise methods to assign that actions with a proper value and share the economical benefit with all participants.
Today more than 70% of the inhabitants of the First World countries work in the service area and the rise of self-service and software-services transforms this area in a way that is completely different to all conventional methods we are used to.
The internet giants like google and facebook as an example have metrics to assess the worth of a users click on an ad. Sometimes the worth of a click is 0.3 currency units and sometimes it is worth 2.0 or even more currency units. But in any case, the person that actually clicks is not rewarded for that action. Interaction happened and the reward goes — again — mostly to the companies and not the person that interacted. To speak with Hamlet: “Something is rotten in the state of Denmark.”
The switch from product-centric to interaction-based
Okay, there were some setbacks like major and minor wars, and a great depression in the 1930s but it seems, there was a kind of a happy end. In the golden 50ies every family can afford physical products like a car, a fridge, a home and a TV.
In the 18th century around 80% of the people worked as farmers, in 1950 only 20% of the people did and today only 1.4% of the workforce is creating the crops that feeds the world. And technology accelerates the way we produce and consume by a multitude since the late 1970ies. And this revolution is culminating in the internet and computer driven world we live now.
What we see is, that there was first a tremendous shift from farming to industrial manufacturing and then a shift to a service oriented society. And this process assigns the generated wealth mostly to the companies and not to the individual that generated that value. And now we stand at the forefront of another revolution.
We are facing the next revolution and an interesting challenge alike: as the creation of products move towards fully automated assembly lines without major human workforce needed, human interactions and the consumption of (digitally) provided services will be one of the largest economic resources to create value.
The challenge of an interaction based society
Let’s imagine a society, in which every person could be rewarded fair and transparent for every action: be it by clicking on an ad, picking up some garbage from the pavement or helping me to carry my groceries to the sixth floor.
To make this a reality we need to invent ways to precisely measure every human interaction — digitally and physically — and then create means to reward individuals directly and without a middle man for their attention, action and response. With technologies like the blockchain it would already be possible to identify and measure interactions individually and calculate their worth for the individual and the value for companies and the society in some areas. And with digital currencies tied to that process it would even be possible to break the boundaries of the current money system and create a stable and sustainable economic system, that is based on human interaction instead of only being based on the interests of corporations, on material goods and on governmental regulations.
The wealth of possibilities of this technology could currently be one of the main reasons, why many countries try to inhibit the growth of new approaches by banning crypto currencies and parts of the blockchain movement and creating negative media buzz. It is, because those technologies would — in the long term — put more power back to the people.
Originally published at www.profit-sharing-network.com on July 17, 2018.
