Direct-Economics: The vision of a local, on-demand economics comes closer

Einstein at a chalkboard

It’s crazy, but it just might work.

Imagine this flavor targeting technology, Vivanda, in which SAP made an investment today, combined with a deeply augmented logistics system, which allows the individual to set the terms of service they will accept in business, as well as register their food preferences, in such a way that they receive only foods that fit those parameters, such as: “Never sell me a food containing gluten.”

That kind of preference could be very exact. Specifying precisely what you want that does not necessarily mean it has to exist for you to want it. Co-designing the future already starts in some people’s kitchens, why not everyone’s? Let’s start with getting food right by turning the whole system upside down. It’s an example of something I’ll dub “direct-economics” in this article. What do you get today by enabling preference expression?

A no-contact list with specific conditions. No more junk mail and eternal programmatic retargating (a technology that can be very useful if considered as a filter) of you across web, mobile, television, smartwatch, or the inevitable iSpoon–the first intelligent utensil from Apple. In Version 1, it screams “Don’t eat that!” in any one of seven Siri accents. But people still think it’s cool to carry them into restaurants.

SAP, who made the investment in Vivanda today, makes data management and application platform software, so they are in an excellent position to grow on the trend about which I am to expatiate.

Those of you reading for the short business summary can stop here. Want to think along? These are my notes toward a comprehensive thesis for local on-demand economies that deliver prosperity. This is outside of, and informed by, my research with, BIA/Kelsey,  Thank you in advance for a few moments of your time.

I’ll state ahead of time that if you’re inclined to think “no one gives a shit about changing the world,” this is probably the place to stop reading. I will simply point to the rise of marketing as a practice into a C-level role as validation that values do shape what people buy and suggest that not considering alternative approaches to marketing, which faces many challenges in the years ahead as parts of the practice become highly technical while the value of creative continues to rise as creative expression becomes more specialized.

Industries will rise on the capability to capture customer preferences and use them. The judo move I’m suggesting is to provide convenient access to customer preferences in order to turn the supply chain decision process upside-down, putting the individual in charge of their values.

The basic assumption on which this scenario turns: Once the local individual customer is empowered to set the terms of engagement with businesses that want to earn her money, supply chains will bid to be that person’s personalized provider — of food, personal services, legal services, finance, etc. More concierge service than on-demand, but implausible without an on-demand infrastructure.

It will make economic sense to manage these concierge services as branded networks, for example, these might be some brand propositions: Transportation by Ford; Tomorrow’s Daily Bread from Trader Joe; Health, brought to you by Google/Alphabet; Intelligence, from Apple; Microsoft Surface for Everything Intelligent. Within those brands, there will be ample room for many local brand and small business participation, a reseller and service network that will span the globe to touch customers in their homes.

I believe there can be myriad local brands instead, though do not yet have the evidence to point to this as an emerging trend. Consider it forecasted.

That’s the local, on-demand economy we describe at BIA/Kelsey as LODE.

The question is, will this new economy grow up from the bottom or be deployed top-down from corporations that set the terms of engagement?

The bottom-up, local model will see more money stay in the local economy as one of the conditions of service an individual sets, e.g., “I want you to contribute to my community, as any business should, by using locally source goods and services; in lieu of that you agree to pay a local sales tax designated by my city” — the actual computer-readable expression would be more complex. This, too, could allow cities to become the primary tax collectors, based on the governance of both participants locales or one — let them work out with the county, state and federal government what to do with the money. That’s a very different political equation than today’s manic focus on the presidency and four to six Congresspeople and Senators who “run the government.”

The top-down model is what could be described as “total surveillance, with the Uber touch.” I want to make a joke about Trump Life: The Country, but I don’t dare because it could come to pass.

We’re making decisions every day about whether to trust large organizations with almost state-like oversight of resources, and that is just one among many grave issues at a time of rapid change. We should debate these choices and, most importantly, create alternatives and experiment with outcomes as active citizens as well as the person sometimes known as “the customer” by People Who Want Our Money. By stating flatly that we will not even entertain marketing about specific topics we send a powerful message.

The local-up model represents a radical opportunity to shift the conversation from the agenda set by the “1 Percent” to one set by a democratic expression of preferences that must be fulfilled to earn a person’s business, even their attention, as well as do business in different . There will still be a debate. And I am sure the 1 Percenters will find a way to stay at the top, but this could accelerate the attrition rate at the peak of the economy by wrenching the valuation of things like oil, diamonds, automobiles, ice cream and a one-degree Centrigrade change in average global temperature from the people who profit today largely by ignoring the cost of everything their products does to people and the planet.

Then, for bad or good, the market will sort it out. Live with it, for purpose of this argument, though this author notes it is a controversial issue and subject to a separate detailed debate. As indicated above, taxation as a means of paying for access to resources, including transcations, could be a renewed source of local investment in infrastructure. No one else is doing it, and if you think autonomous cars are inevitable, please imagine a line of them dodging potholes, both ways, at rush hour.

Local markets, from New York and Seattle, Los Angeles and Atlanta to the cities of Rochester, Tacoma, San Pablo and Athens, will be the venue for most value exchange. At this scale, a group of people stating publicly (though anonymously) that they value products made without slave labor, ocean-killing plastic particulates, child labor, carbon-neutral and carbon-negative, and say they will welcome alternative options with their attention and, potentially with cash, can begin to make a difference. There is also a new form of economic demagoguery lurking in this technology, but we can be forewarned to it.

I choose to believe people want to shape their world, not just be shaped by it. With advanced logistics, identity management and, ultimately, the productive use of organic printing and other on-demand solutions to life’s wants, there is a crazily optimistic view that says it is simply a matter of asking people and they will tell you exactly what they want. Not in the sense of direct-democracy, which is a different aspect of the queston of central or distributed power, but direct-economics, the distribution of resources by analysis of the total expression of personal preferences at the individual and whole-population level. I am in no way arguing for equal distribution here, we need a contribution-based economy — one should earn one’s appetite, not simply have one’s appetite’s served.

Let’s dip a toe into the idea of direct-economics. We’re not talking about the publication of one’s preferences, but an encryption-based system to manage the interactions. But, just think of an elephant, and a guy who wants to sell it in steak form. Why would the elephant meat man want to spend anything communicating about Jumbo Brand steaks through paid media? Certainly, none of vegetarians, conservationists or any sane person who might be browsing the net on their mobile handset would be interested in receiving anything, ever, from Jumbo Brand. In marketing-speak, we’ve just identified a “high value consumer” and, unfortunately this is the underlying assumption of the operating plan for many online media companies and is certainly scrawled on a white board somewhere in Silicon Valley with the exclamation in red ink “App Store or bust!”

The elephant meat man is a stark example, because public outcry has been so great globally over the slaughter of elephants, this preference is already imperfectly achieved. We have had to legislate, but mostly society has raised the cost of elephant poaching to astronomical heights, and there lies the reality of Jumbo Brands today. Someone is always willing to make a site catering to the elephantavore, slime that they are. The same could be said for television’s A&E, Discovery and other channels, which have specialized in catering to subcultures within the United States after finding telling people about a bigger world to be less profitable. Corretly named today these networks might be called “Tennessee Guys,” as there are roughly as many people who watch Duck Dynasty as white males who live in the state, another would be called “New Jersey,” and, of course, the Caged & Bigoted network. But I digress.

We are back to conditions set by personal preferences. We can do better than think in terms of responding to offers from companies that frequently force consumers to concede their right to litigage as a term of use. An implementation of this might be best thought of as a firewall that opens ports for some commerce but not others based on the user’s expressed preferences. It could be deployed as a network of values distributed by “authorities” (this could be a media organization, such as Consumer Reports, the NRA, or whatever organization regardless of size) to which the user subscribes, so that in order to reach the user a message must first pass all the gates set up by the organization.

If applied to one’s consumption of news, opinion, and public information, this is an unmitigated disaster. Inverted and applied to the imposition of marketing upon us, it makes sense, one fit to respond to the debate about inequality and global warming — more detail on how permissions must evolve below.

As a means of lowering marketing costs by reducing wasted messaging, this is a huge savings for the marketing industry. It’s a role the Yellow Pages (YPs) of the world could step into as a new service business directed at the consumer to revive their revenues to the paper directory days. They have the sales forces necessary to address the small business opportunity local preferences create, as well.

The preferences firewall need be pinged once and told “Oh, you’re [insert condition, in this case] selling elephant meat. Go away, don’t ever come back or we will report you to the appropriate authorities” and the marketer never need waste a penny on it again, concentrating more resources on people who are willing to listen. It is likely organizations would appear that managed this interface, compiling preferences (by the customer opting in to the relationship explicitly, automatically or manually) and offering routing services for what amounts to a new layer of Internet protocol. [I now state I am making no claims about what these authorities should be, but I think it’s fair to say that in the face of global crime, nations, more specifically groups of nations, will be involved.]

Those preferences develop locally and grow out from there, over lifetimes. We cannot set and forget our needs, they need to be examined for greater opportunity for efficiency periodically, if not constantly. Maybe our job is to find new efficiencies always, until we can sustain the planet’s For example, early in the evolution of a new industry, a customer might make many changes in preferences. The GMO foods debate is an example of that in action. Consumers are changing their minds about GMOs, about the acceptability of one variety of GMO versus another, and we can expect that over time those preferences will settle out. Only to be re-examined when new options appear.

Artificial intelligence can handle this, surfacing material choices when a human needs to decide. It may be trite to write it, but this is the kind of busy work by machines people will manage as new professions emerge around the logistics nervous system of direct-economics.

Someday, people will have machines as direct-reports. For example, someone might have a career managing a swarm of AI bots searching for fashion breakthroughs. They might build and leave bots in one organization or take the bots along through a series of contractual relationships with Amazon, Wal-Mart and retail markters-yet-to-appear, where a “curated” line of fashion is sold. That career might last three years, then on to another “gig.” Everyone a local Kardashian, I suppose, but what else are we going to have left to do, as my friend Arnie Wernick puts it, but “invent things to entertain ourselves?”

All that personalization, albeit very unevenly distributed, creates demand for local skills, from artisans to zen massage.

I am painfully aware of the apparent naivete of this vision. It is not finished work. Nevertheless, I contend that if we were able to map demand in a VRM-friendly way (Props to Doc and VRM community), the debate over economic inequality becomes tangible and renegotiable on terms that avoid the tragedies of political revolution. That would be a substantial improvement over today’s relatively fixed markets for commodities and services, which take generations to change direction, and even longer to fully understand the consequences of our current decisions. Take lead paint, for example.

New forms of accounting are needed. The preferences expressed in direct-economics provide a foundation for new metrics that can be used as the basis for pricing what we’ve previously seen as intangible. The factoring in of risk management across transacations and markets, even a global system of wellness management, could be included in the price of everything.

But, I get carried away with the vision at this point. Time to think on it more. Ground it in more data.

This is not a prescription, but a scenario I can foresee emerging from the current range of technologies, trends and other information I study.

Author’s note: I finished a database project milestone this afternoon and this evening, this long note on the on-demand economy, which has been waiting, showed up. Many of the stories in the newsfeed have informed this article, and we’re working on the next version of the Local On-Demand Economy report at BIA/Kelsey.

About godsdog

Mitch Ratcliffe is a veteran entrepreneur, journalist and business model hacker. He operates this site, which is a collection of the blogs he's published over the years, as well as an archive of his professional publishing record. As always, this is a work in progress. Such is life.
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