The connection economy: How modern businesses are evolving from the Industrial Age
It was proposed that concerns about the economy were a major driver in the outcome of the recent US election. In particular, many voters were upset about the loss of manufacturing jobs that dominated the industrial economy for much of the nineteenth and twentieth centuries, fueling the eventual rise of a powerful middle class. Though these concerns are legitimate, since nobody likes to lose a well-paying and stable factory job, the reality is that the world economy is shifting from traditional industrial manufacturing to a connection economy.
What is the connection economy, anyway?
Though there is little doubt that automation and robotics are displacing factory workers, as with every industrial revolution, that’s just the way dynamic economies work. When companies realized they could use steam and water to power their factories over 100 years ago, the economy shifted, creating new and different jobs.
In today’s cloudy and mobile world, another shift is occurring that businesses can’t afford to ignore. Enter the connection economy. Coined by tech entrepreneur Seth Godin a few years ago, this emerging economic model is centered around building relationships with customers and partners, rather than simply pumping out physical products from an assembly line.
To say that this is an emerging economic model is a bit of a misnomer — we are already in it. In fact, Forbes claimed late last year that businesses with a focus on connecting with customers and building long-lasting relationships topped a list of the top 10 business trends that will drive business success in 2016.
For example, Uber is the largest taxi company, yet it doesn’t own any vehicles — the company makes money from connecting riders with drivers. And crowdfunding businesses such as Kickstarter are expected to outgrow traditional venture capital, even though those companies don’t actually have funds to invest.
How businesses can transition in the connection economy
Though the global economy has been consumer-centric for decades, the internet and the rise of mobility have significantly changed how businesses must engage with their customers and supply chain partners. To put it another way, consumers have taken more control over the interaction and expect more than ever from the businesses from which they purchase products and services. If they aren’t satisfied, they are only one click away from a competitor. There are several ways for businesses to connect with this new class of consumer, including the following:
- Social media
According to research by Statista, there will be 2.67 billion social media users globally by 2018, up from 1.91 billion in 2014. Companies that want to compete in today’s connected world must engage on these platforms with targeted and personalized offers and quick, proactive customer service.
- Online forums
To stay ahead of the competition, industry forums enable businesses to stay on top of new product and service developments, market trends and the latest news when developing sustainable business and operational strategies.
- Review sites
As most consumers carry mobile devices with them everywhere they go, they have on-demand access to product reviews and ratings from their peers. Companies must monitor these sites and make appropriate changes to maintain their reputation with existing customers and gain new ones.
- Community involvement
Although the internet enables people to engage around the world, local communities are important to many consumers. It’s particularly important for small- to medium-sized businesses to engage customers by highlighting their involvement with community organizations that are aligned with their personal concerns.
- Word of mouth
Though all the points above touch on this, it’s worth mentioning in the context of employees, family and friends. If a close constituent is satisfied with your products and services, they will help strengthen your brand across all channels of communication, both online and in face-to-face interactions.
Though manufacturing still exists, the global economy is moving forward and is being changed significantly by the cloud, mobility and hyperconnectivity. To survive in the latest incarnation of the consumer economy, businesses must evolve to serve today’s tech-savvy population. Change is always difficult, but businesses that don’t retool for the connection economy will ultimately be left behind.
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