06.11.09

Velocity - A forgotten force

Posted in Digital, Economy, GFC, Marketing, Media, Social Media at 6:56 pm by drwarwick

An exploration of pace and innovation …

We are still in the throws of the GFC (Global Financial Crisis), with all the attendant effects. One of those effects is a fall in production that varies by country or any other segmentation you may wish to apply. For this post, lets consider a fairly common fall as 2 percent (see The Age article of 27 May 2009, http://bit.ly/nTbAY), this is, in simplistic analysis, the same as going backward a year. In other words our financial position, standard of living, productive power are taken back to 2007.

So why does the effect feel so much worse?

One cause of hardship is rapid inbalance and unequal distribution, something our systems don’t cope with well. Some of us are not effected at all and others are severely hurt by the shift from growth to recession. I am proposing that another, perhaps more important cause is a dramatic fall in economic velocity. Let my try and illustrate this in a couple of ways.

Lets say I am looking to invest $1m. In a period when this is going into an economy that is growing across the board, I am likely to be agressive about investment. When the economy is shrinking, I am reticent to invest and much more likely to take time determining the appropriate place to ‘park’ my investment. Even the language in such a negative climate is full of terms that imply consideration, care, delay, reservation and let me say it – lack of velocity. This is a compounding effect that moves throughout the economy, macro and micro and saps the energy that is palpable in boom times.

If we were to use fluid dynamics as an analogy, most of our thinking and discussion relates to volume (how much money) and very little is about the pressure (market demand) and speed (rate of transfer). I believe that understanding the rate of transfer, the rate of signing new business and the rate of business completion would go a long way to explaining why we all know that this is much more than a two percent reduction in GDP. Lets face it, this feels nothing like 2007.

Something else to think about …

You can find examples of the world’s increasing pace everywhere, for goodness sake, we are even walking faster (see Daily Mail article, http://bit.ly/2CTIX), some 8 percent faster than a decade ago. We expect everything faster, goods, media, news, services, basically everything. The recession or GFC is letting many of us reassess work-life balance and in many cases business itself is encouraging part-time or reduced hours of work. This is unlikely to be a permanent dynamic, our personal lives are not slowing down, we are just transfering energy, so this is not a return to some previous era or a more relaxed or clever futuristic model.

Look at SMS, Twitter, TV show titles displayed picture-in-picture or moved online, shorter newspaper and online articles, or self-serve supermarket checkout for examples of velocity delivered. In fact look anywhere you like and you will see the ’speed’ imperative in action.

So what does it mean?

Economic growth can come from a number of sources. Primary resources which as we all know are finite and running out. Labour – we can increase population although this does not deliver per-person growth. Sweat – we can all work harder. Velocity – we can all work faster, the premise of this piece, and our walking speed, communication speed and stress are all indications of this. I suggest that our velocity has limits and is in itself a finite resource. At some point you just cannot walk, read or engage with someone any faster, get to work faster or even multi-task anthing else.

So either we are heading into a future where resource, labour and personal speed (velocity) have delivered to the engine room all that they can. To borrow from Star Trek, (here you shift to Scotish accent) “I’ve giv’n her all she’s got captain, an’ I canna give her no more.” Well thankfully for Star Trek there was always an answer, the same answer that has worked for us all along – Innovation.

Not surprisingly when the chips are down we encounter the most rapid change. War, disaster, economic downturn are in many ways the catalyst for adaptation and change. Now is the time to look for innovation in your business, your life and in addressing the many challenges ahead. If you can’t or won’t deliver innovation yourself (you can of course), then at least embrace the change because what worked before won’t work now.

I have some more to say on related topics and will post again soon.

For some velocity, see you on Twitter @drwarwick. Full URL http://twitter.com/drwarwick

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