The adventures of an analog engineer and digital storyteller who studies emerging networks and their impact on the great game of business.
Oct 29, 2012

The history of business has been driven by three forms of mathematics: subtraction, division, and differentiation.

Consider for a moment the terms that we use to describe our businesses with. We organize our companies into “divisions,” “departments,” and “branches.” We “segment” the marketplace and “allocate” our budgets.

The majority of our manufacturing process has been based on the process of subtraction. For example, we start with raw stock and subtract from it until the component that we want is revealed. We carve with chisels, cut with saws, make holes with drills and punches, and shape with grinders. In all of these manufacturing techniques, we start with raw material and end with a product plus significant waste.

Why do we break things into smaller pieces?  Because up until now, it has been the most cost-efficient way for businesses to manage their resources.

However, recent advances in technology (digitization, networking and the Internet of Things) have opened up new ways to build businesses upon a new math: addition, multiplication, and integration.

Consider the process of building a component with a 3D printer. Rather than subtracting material until a product emerges from the waste, we build the product sequentially, layer by layer. Since we only use the material required to create the product, we eliminate not only the waste, but all of the negative things related with it, such as landfills, stock costs, freight charges, etc…

We are at the dawn of a new economy that is being built through adding resources, multiplying their abilities, and integrating these changes into our professional and private lives. The days of divide and conquer businesses are limited. New technologies allow us to draw upon rich resources that were once too expensive to acquire, such as ubiquitous networks and the instant access to vast resources of the human, capital, and manufacturing variety.

The ramifications of this additive economy will be profound. Managers who are used to creating budgets, schedules, and staffing profiles based on inherent inefficiencies will struggle. Companies who seek to corner markets by hoarding resources will also find themselves at a serious disadvantage.

If Joey has the ability to manufacture your product in his spare bedroom using a 3D printer, what does that mean to your business? If Suzie has the ability to cost-effectively tap into vast labor resources through Mechanical Turk, how can your company’s R&D department keep up with her? If a start-up venture has access to a plethora of shallow-pocket investors, will it be able to enter the great game of business by simply bypassing the venture capitalist gatekeepers?

As we wrap-up 2012, its time for your company to consider the consequences of the fast-approaching Additive Economy. What if the fundamental assumptions that your company was built were turned totally upside down? Specifically, what ramifications might your company be forced to deal with if it were suddenly more efficient to add instead of subtract, multiply instead of divide, or integrate instead of differentiate?

Are you ready for the changes that the Additive Economy may bring?

Photo available under Creative Commons from urbanmkr

Filed under: Disruptive Tech

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