Here’s my theory.
It still takes a long time for great ideas to become mainstream. It always will. But we’re now staggeringly fast at exposing and weeding out bad ideas, uncompetitive pricing, misleading marketing, and fraud. And it’s only going to get faster.
It’s harder than ever to sell inferior products, because thousands of buyers leave reviews on Amazon.
It’s harder than ever to provide bad service, because thousands of customers call you out on Yelp.
It’s harder than ever to be a bad employer, because thousands of employees tell their stories on Glassdoor.
The information age promotes a lot of good behavior. But more powerful is its ability to reveal bad, inefficient behavior. What used to be policed by a handful of reporters and review publications is now done by billions of everyday people on the prowl for anything that doesn’t look right.
Jeff Bezos once said:
The balance of power is shifting toward consumers and away from companies. The right way to respond to this if you are a company is to put the vast majority of your energy, attention and dollars into building a great product or service and put a smaller amount into shouting about it, marketing it.
Michael Dell echoed the point, saying:
You can’t trick the consumer anymore. The businesses that had an advantage because they sold things in a geographic area where people had limited information, and they couldn’t travel to go buy something else. Those folks are in real trouble. The Net kind of destroys that business model.
The explosion of online content has two sides. Everyone has a platform to tell their story and share their information, which is great. But everyone is also watching each other, scanning the world and waiting for you to slip up so they can reveal your inefficiencies and bad behavior.
The guy who exposed Valeant’s crazy accounting wasn’t from a big Wall Street bank or newspaper. He’s a sleuth who works from home and publishes his work online for everyone to see.
Melania Trump’s similarities to Michelle Obama’s speech at the Republican National Convention wasn’t caught by investigative journalists. It was first noted by unemployed guy sitting in Starbucks who, thanks to Twitter, instantly had the world’s attention.
The biggest threat to the financial services industry isn’t poor performance and high fees – both have been customary for decades. It’s the newfound ability for anyone to instantly, without much effort, compare fees and performance to other products.
Detectives spent 34 years unsuccessfully trying to identify a murder victim. They then put a post on Facebook and solved it in six days.
This kind of stuff didn’t happen even 10 years ago. We probably haven’t awoken to its full potential.
I had lunch with a career journalist not long ago. He told a story about meeting with advertisers in the 1990s.
“The ad-sales guys would sit in a room with advertisers and show them how many papers we printed each day, and where the papers were sold,” he said. “These were huge numbers of course. We printed more than one million newspapers a day. So the ad-sales guys would say, ‘We’ll put your ad in front of one million readers.’ The advertisers drooled.”
Everyone knew this wasn’t really true, he said. Not every paper that’s printed is read, and for every paper that’s read only a fraction of pages are seen. But no one could prove it. Detailed data on exactly how many readers were seeing ads didn’t exist. It couldn’t be tracked. “One million readers. People just kind of went along with it.”
“Then digital ads came along, and we could measure exactly how many readers interacted with ads,” he said. “It wasn’t much.” And while it may have taken years to convince people to read their news online, the decline in ad rates was instantaneous once the data was exposed.
It’s a great example of the contrast between the old and new world. In the past, people “just kind of went along” with inefficiencies because there wasn’t much else you could do about it. Today there is. Everyone’s watching you, and has data on your practices. There’s no place to hide.
Business has always been competitive. But it’s doubling down. Anyone who thinks they can get ahead by shouting the loudest is wrong. And anyone who doesn’t have data to prove their worth without shouting won’t make it far.