Sep 12010

The Pendulum

Back and forth and back again...

Much of life seems to move like a pendulum.

Economic cycles of boom and bust and boom again are but one example. New ideas in teaching pedagogy today were also new ideas 20 years ago...and 20 years before that. We've gone from mainframes and centralized computing, to desktops and distributed computing and now back towards a centralized cloud model. We see this in our national politics, business management philosophy, on and on.

Consider the news business. In the 19th century there were thousands of independent local papers. Anyone with access to a printing press could start one, and, if the copy was good, they had a chance at catching on. Economies of scale, however favored the companies that could afford the best writers and journalists, could land and execute advertising deals, and produce papers at the lowest cost per page. By 1990 there were essentially 6 companies that controlled the news. Enter cable TV, the internet, and the blogosphere and now there are millions of sources of information accessible 24/7 and largely free of charge.

But the pendulum isn't likely to stop here, either. At some point, the absence of fact checking, lack of funds for in-depth journalism, and the impossibility of sifting through all the different sources of information to find what you want will pull us back towards edited, quality, consolidated, screened news.

Will we see something similar in retail? In the bad old days folks were limited in choices to the stores within a few miles of their homes. Cars extended shoppers range, somewhat, but catalogs really threw the doors open. As time goes on, more efficient business models win and the mom and pop stores lose out to the chains, and the weak catalogs fold. Then, the internet expands the range of choices and the number of specialty shops blossoms beyond imagination, but will the countervailing desire for "one-stop shopping" mean Amazon or Google will be all that's left standing? At least, until the pendulum swings back the other way?

The root cause of the pendulum seems to be human nature. We get a sense of which way the pendulum is moving and jump on board creating tremendous momentum in one direction, but at some point we cross beyond the mid-point of reason and keep going until something fundamentally breaks and forces the pendulum to change directions again. It is in our blood to carry every concept too far.

At the risk of echoing Seth: could it be that the real leaders are the folks who are always angling for the middle whether the mob is behind them or the mob has left them behind to push a movement beyond the reasonable?


11 Responses to "The Pendulum"
Hi George, sometime in my early 20's I decided that if the mob was following something or doing something that I would be very cautious before participating myself. This has served me well so far. Always question the mob’s reasoning (or lack of reasoning), but be nice to them because you want them to buy your stuff. In many was mindlessly going the opposite direction of the mob is better than mindlessly following one (if we are to be mindless anyway).
Hi George, Your comment on retail reminded me of this paper I read a few months ago that investigated the online to offline connection. The findings were that when a store (in their case a book store) opens locally, it cannibalizes online sales. Also, when you have a local store people are less sensitive to online discounts. Interesting stuff.. The paper: Competition between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live Link: Sid
billy wolt says:
Hi George, this is the reason i have avoided twitter....the mob will move away soon. drop me an email, i want to pick your brain about some google stuff and throw some ideas back and forth.
Chad, thanks for the observations! Sid, the paper sounds interesting. I only read the abstract, but I wonder if they studied type of merchandise as a factor in the outcome. People like to browse in book stores. People might want to try on shoes. But for something like auto parts or batteries, or steak knives, I wonder if the results might be different. Sid, when are you going to ditch the "evil empire" and come to work for us? :-) -- Just kidding, Anil! least about the "evil" thing...
Hi George, The paper chose books for a few reasons. This is what they say in the paper " By focusing on books, we study a commodity product where brand-specific and product-specific factors are less likely to influence channel substitution, and where purchase-related factors that cannot be determined digitally are relatively unimportant. Moreover, we study an environment where e-commerce sales are high (so the tradeoff we explore is economically important) and where online disutility costs (shipping) are likely to be relatively low (so our estimates of the magnitude of online disutility costs relative to offline transportation costs are likely to be conservative, in comparison to other products and industries)." As far as the "evil empire" goes I turned to the dark side a long time ago. I met my father... Luke
Use the force, Luke, use the force! :-)
Billy, I've been predicting the death of Twitter for a long time. I try to keep those predictions to myself though, because I thought "the internet" was a waste of time back in 1993 :-)
Adam Audette says:
Brilliant post, George. There's something to be said for the 'middle way' to be sure, for dedication to what works and results, and avoiding fads and trends. But innovation is realized by the masses pushing beyond the reasonable, sometimes. There are some great ones, very rare, that are already out beyond the pendulum and the masses pushing only barely catch up with them, if ever. And the great ones can even sort of pull us all along; the rest of us who aren't there yet. Everything cycles and changes and retail is an interesting example, as you illustrate very well. In comScore's Q2 online retail report, Amazon is not only the largest online retailer but also one of the fastest growing sites. Only Netflix grew faster in Q2. And yet, consumer loyalty to specific brands has decreased in favor of finding deals and discounts, because the web makes it easy. Areas important to look at are in promotions and free shipping, which is harder for smaller pure play retailers. With so much competition and price comparison shoppers will quickly move on to a big retailer that can offer these discounts. Free shipping is all but assumed by online shoppers today. I don't think there's as much desire for one-stop shopping online as there is for price and customer service. Certainly a good selection is important, but once you find what you need at a decent price, then fast and free shipping, easy returns and exchanges, and an enjoyable online experience will keep them coming back.
Thanks Adam, and your point is well taken. It is certainly worth pointing out that when the pendulum swings back to the middle the industry has usually picked up new "features" that innovators brought to the table. The game has changed, and those change agents certainly do well. I do think the folks who are last to the game tend to chronically be going in "the wrong" direction, where the leaders are always a step ahead of the game.
I think everything in life is one pendulum swing to the next. It's how the world operates and we need to accept that, even find hope in it at times like these!


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