Madam, ribbon is free

A rich American woman visits Paris’s most famous hat maker. She sees an exquisite long ribbon and immediately falls in love with it. The hatmaker picks up the ribbon and twists it a little to make a stunning hat. Vividness! The woman grabs it right away. “”How much is it?? “She asks.5000 francs, “The hat maker will answer.”5000 francs!! “Woman shouts”But it’s just a ribbon!! “”Madam“The hat maker says.Ribbon is free.. “

Welcome to the “ribbon is free” economy, the knowledge economy. What matters is intelligence, skills, abilities, know-how, and human capital. Yes, you need financial capital as a means, but you compete for your ability to create value, and this ability is more in the intangible thinking process than the tangible ones in your bank account. Yes, I also need a ribbon, but everyone has one. The hat maker is unique and the ribbon is a product. The industry was once competing for quality. Today’s quality is baseline, path, minimum entry. Others such as design, fashion and additional services have been taken over. Knowledge is now a currency. Companies need to define themselves not by what they are doing, but by what they know.

It’s a “how-to” world

There is nothing terribly new in the story of the Paris hat maker. Value has long been seen as going beyond the obvious product. Either (a) your own know-how, (b) the ability to create ribbons on demand, or (c) how ribbons can be an excuse for something else. Will hat makers sell other, more profitable items at their stores? In 1999, American companies began offering free computers to anyone who signed a long-term contract for Internet services (Fortune, October 2000). Madam, computer is free. In the UK (and suspicious elsewhere), some mobile operators distribute mobile phones as long as they are signed by the airtime service. Madam and mobile phones are free.

Amazon.com is a bookstore on a superficial level. At a more serious level, it’s a system that knows who you are and what you’ve purchased in the past, tailored to you when a new book about something you care about is written. Allows you to send recommendations and emails. At yet another level, it’s a public forum for book reviews where readers can post their reviews and see what others think. And at another parallel level, it’s an incredible search engine for topics, ideas, and cross-references. Madam, this is all free-you just pay for the book.

The software economy took over long before people started talking about the knowledge economy. A good example of this is the licensing of SABER, the parent company of American Airlines, the software package used by travel agencies and airlines to make reservations, which makes more money than the airline’s own traffic. .. It’s a “how-to” world. The software economy is a “how-to” economy.

It is also an access economy. Access to information, access to customers, access to the general public, and above all, access to services. The “material” world has problems in the access economy. Microsoft will stop selling CD software in colorful boxes and instead offer continuous access to the software that can be downloaded from the website for a fee. In fact, everything that can be programmed can follow the same pattern. As someone once said (probably in Silicon Valley), “If you can help it, don’t own anything.Rent shoes if possible.. “It’s rental time, knowledge time, access time, and intangible time. Madam, CDs are free, you pay for the use of” how-to “.

Means the end

It is also a “means” business world and a variant of the access world. BAA, the owner of London’s Heathrow Airport, earns more money from retail activities than traffic from all airlines. Yes, as you may not know, Heathrow Airport is a large shopping mall with landing pads for what is called an airplane that moves people from A to B. The real business is shopping. It is becoming more and more common for passengers to spend more money in stores than airline tickets. Airline traffic is access to passenger pockets.

Madam, is transportation free? This is not the case, especially given the tremendously high prices of airline tickets.

Europe. Here, the customer pays for all costs, including air transportation, facility use (airport tax), and items purchased while waiting. In other words, pay to be there, pay to wait, pay to buy while waiting, and pay to go.

If someone needs more persuasiveness, they don’t have to look for anything more than a newspaper.quality

British daily newspapers cost a penny. News is an excuse, or means of advertising. Newspapers don’t make money with the news. Yes, Madame and newspapers are (almost) free. Indeed, the world of free newspapers and magazines is growing. I predict that free, high-quality daily newspapers will soon become a reality. All that is needed is for Stelios Haji-Ioannou, chairman of easyJet, a European low-cost carrier, to wake up one day and decide to show the world that it is possible and that it can make money. is.

What kind of capital is moving around in this new economy, where intangible assets and access to assets are more important than solid bricks and ownership of the assets themselves? The types of capital seem endless. A set of conceptual information, references, essays, and business models based on lesser-known forms such as structure, consumer, digital, process, and innovation capital, as well as human, social, or intellectual capital. You can find the whole thing. The main challenge for businesses is how to measure them.

New economy organizations emphasize them to varying degrees. Swedish insurance company Skandia has long publicly reported all these forms of capital and its flow in its annual report (Skandia Navigator). Another Swedish company, consultancy Celemi, well known for its business simulation game Tango, has incorporated an “intangible asset monitor” into a line similar to Skandia. It won’t be long before it becomes standard for companies to try to provide detailed measurements of intangible assets.

Investor metaphor

But let’s get back to the ribbon-is-free economy. Here is one that defines the current time. It is the victory of the brain over the hand. Henry Ford complained, “Why does my brain stick every time I ask for both hands?” He obviously didn’t like attachments. Today he would have had a heart, sometimes in a pair of hands.

In this new business world, one thing stands out for me in ideas, new concepts, old concepts disguised as new, jargon, and new business talks. It is the so-called “investor metaphor”.

Initially, employees were a cost. In fact, it’s still a cost in many current business models. By the 1980s, employees had become an asset. In fact, CEOs and HR executives around the world say employees are the company’s most important asset.

Although the Western world’s re-engineering / downsizing operations, and other economies, have been to a lesser extent, the credibility of the statement has barely improved. As one of my friends said, they forgot a word: disposable. Employees are our more important (disposable) asset. Nevertheless, “assets” are an improvement in “costs”. After all, operating expense reports prefer to feel like an asset rather than a few dollars.

The third change in employee understanding, following costs and assets, was driven by Terri Lyne Carrport and others. An employee as an investor. In other words, human capital investors (their own). And what do you do when you have the capital to invest? Grow by allocating to a growth environment. You take care of it, manage it, withdraw it if it is not growing, and at the end of each year you see the return on investment.

Individuals have their own human capital (talents, abilities, skills, knowledge, wisdom)

In the field of true capital, HR, things start to look very different. The workplace should allow individuals to grow their capital-no one grows or invests in a negative growth environment.

The HR department then becomes like a venture capital provider or incubator, managing all these investments. The main role of leadership is to create the conditions for its capital to grow. The investor metaphor applied to employee relationships puts “brain holder value” first. Shareholder value is the result. And the person in charge is the person who has the capital to invest, not the person who receives it.

This new model makes a big difference beyond metaphor. It’s not just semantic, it’s revolutionary. Silicon Valley, for better or for worse, has followed the investor’s metaphor more than anywhere else.

People are comparable to the brains of the valley. According to the author Michael Lewis, in reality valley = nuts + (resources x power x glory) Liar poker And recently New new.. Given how silicon boys jump from company to company and how brain bids dominate the market, we probably need to talk about the “mercenary metaphor.” But this is another day’s topic.

In this Brains-R-Us economy, the individual is responsible. The only problem is that the message hasn’t reached millions yet. Then things look different. For example, rewards and profits (C & B) are still largely universal models. OK, two sizes, part-time and full-time, plus / minus benefits. Time is rapidly approaching “individualized transactions” and “individualized brains.”

At some point, companies need to offer a portfolio of C & Bs: number of hours / allocation (compliant with local labor law, but personalized and adjusted), training packages, sponsored higher education, personalization Bonuses, family benefits, etc. This is a “choose your own” package in which people who make trade-offs between the benefits offered participate. 10 hours a week, 4 days, sponsored education instead of bonuses, no cars, creche, long vacations, unpaid access and sabbatical vacations.

By 2003, 60% of C & B packages in Western Europe could be highly customized, according to consultant Towers Perrin. In other words, people create their own deals. Fordian’Any C & B package can be used here as long as it’s available to everyone’ is gone. No changes in labor practices have yet been seen in Western countries.

Madam, what I do is free. You pay me for what I know.Monthly salary comes to the end of my list

C & B rewards for my intellectual capital investment. Expecting ROI for the next year …