If there is one key lesson to be learned from the Internet, it is that we are moving from an “Industrial Age” to an “Entrepreneurial Age,” a paradigm shift in how we design, produce, manufacture and market products. Historically, human beings have adapted to new technologies; increasingly, however, we are moving to a world where new technologies will adapt to individual human needs and behaviors.
In the new environment of open networks and fluid knowledge-sharing, the most competitive companies will not survive as closed, proprietary systems working in vertical value-chains. They will constantly need to leverage people’s creativity, spontaneity, serendipity, knowledge and passion. This type of engagement will extend not just to a company’s staff and suppliers, but to customers and the general public.
These organizational shifts are necessary because technologies are empowering collaboration on a much larger scale, making it a routine fact of life. This is fostering a new emphasis on relational patterns in business instead of simply transactional ones. Each individual is becoming a peer in a larger community – a personal producer and entrepreneur who uses a variety of platforms to carry on a variety of relationships – not just among humans, but with machines. This environment of hyper-connectivity and relationships is empowering people to produce, design or service almost anything.
In my country, Italy, many industries are rooted in old artisan cultures called “Mestieri.” Some of them have grown and adapted to the industrial age, earning a solid reputation for their craftsmanship. Their commitment to artisanship and high quality work remains a deep part of their organizational culture even as industrial production has become the norm. Mass-market production simply cannot match the quality of such artisanal enterprises.
But the pervasive role of the Internet and other digital technologies in mainstream commerce is changing this equation. I believe that we are at the beginning of the “New Artisan” generation, in which skilled workers – often, young people – will be able to combine deep knowledge and experience in a given field of artisanship with new technologies such as 3D printing, robotics, artificial intelligence and “smart materials.” We are seeing the digital mindset blend with artisanal culture, and we are seeing the rise of new business models that make artisanal quality products widely accessible, profitable and scalable.
This will change the commercial landscape significantly, and it will open up a completely new spectrum of challenges. When the boundaries between a company and its partners, suppliers, customers and future staff become blurry and porous, a company needs to re-think how it will manage those relationships over the long term. I believe that competitive companies will need to develop entirely new “relational structures” – for educating and recruiting new talent, for securing the attention and loyalty of customers, and for managing production in an always-changing “value network” (rather than static, linear “value chains”).
We can already see hints of this future in the advertising industry with Web-based innovators like Zooppa. Zooppa has attracted more than 243,000 creatives to come up with crowd-created and -critiqued advertising campaigns. The giant, traditional advertising firms regard Zooppa as a novelty and perhaps as a niche competitor. They do not understand that it represents a transformative model for advertising that is likely to expand in coming years – a model based on radically dynamic social interaction. Advertising as a social conversation.
Incumbent industry leaders always seem to have this problem: they see upstart innovators through the lens of existing markets. Hence Zooppa is seen as “just another advertising firm.” In truth, Zooppa is a new socially based, rapid-response platform for building trust and credibility in a brand. It is about redefining the very meaning of “branding” and the social framework for marketing.
Camera makers had a similar blind spot when smartphones started to include simple cameras. The photography world was condescending to this innovation and did not see it as a serious threat. But over time the quality of smartphone cameras got a lot better, and soon smartphones began siphoning away business from traditional camera-makers.
We can see a similar response to Nest, the innovative “smart thermostat” that incumbent manufacturers failed to see as a serious competitor. Nest was seen as a niche novelty – a Wi-Fi-enabled, auto-scheduling thermostat that can be remotely controlled from a smartphone or laptop. Now that Nest has been acquired by Google, it is more evident that thermostats are not just themostats anymore. They should be seen as a powerful point of access to a wider universe of digital devices and cloud services.
It is noteworthy that the innovators mentioned here emerged from the periphery of established markets. Historically, the dominant businesses in an industry could safely ignore the edge because – even though great ideas sometime arose there – they could not easily scale. Artisanal culture was permanently consigned to the fringe. The quality and customization that were born in small shops and local industries could not reach global markets nor maintain their quality standards if they tried.
But that is changing today. Artisanal production and culture can increasingly reach consumers and scale rapidly. We see this every day among Internet startups, which grow from a few programmers to very large enterprises in only a few years.
Now imagine this dynamic playing out in markets based on physical production, such as the design, manufacturing and retailing of countless everyday products. Large, brand-name manufacturers and retail chains are going to face increasingly fierce pressures from small, artisan-based companies. Why? Because those companies will be able to deliver stylish, customized products at any location, on demand. They will go beyond the impersonal, one-size-fits-all feel of mass-produced products, and instead conform to the social attitudes, needs and practices of small and localized niches of consumers.
Mass-market manufacturers will also need to rethink their production processes.
For decades, large companies have sought out low-wage countries to produce their products, which are then shipped halfway across the world to reach customers at a retail outlet. As Apple advertises, “Designed in California” – while its products are quietly, without fanfare, produced in China.
This design and production model will face new pressures as the artisanal business culture develops the capacity to out-compete the historic model. Experienced craftspeople in one location – say, Italy – will increasingly be able to sell products that are manufactured on-demand at thousands of retail locations around the world. The special design and production knowledge that a local community of artisans have cultivated, will be able to be transmitted to 3D printers in thousands of retail stores, for example. A Long Tail of distinctive, high-quality eyewear will be available on a mass-market basis. One company that I know envisions producing ten new models every day.
The artisan-driven model will become supremely efficient, not to mention customer-friendly, because its design, production and retailing will take advantage of the modularity made possible by open networks. This is how the Web functions, and why all sorts of startups have been able to disintermediate large, well-established industries. In the near future, large companies with static, vertical supply chains will find themselves at a disadvantage in competing against artisanal suppliers who have greater speed, flexibility, social connections to customers and creativity.
We are going to see new ways of conceiving, designing,
rketing and retailing products. Production and manufacturing of products will be diffused rather than concentrated, as in the industrial model. Groups of artisans will participate in larger manufacturing networks that are able to participate on shared platforms, much as APIs provide a point of access to shared technology platforms for Apple and Amazon.
Branding itself will undergo a transformation. Instead of closed, proprietary brands that peddle an unattainable dream, image or lifestyle, brands will become “open.” That is, many artisans and companies will contribute to the brand identity and image. The brand will not be a proprietary, top-down creation “owned” by a single company; it will be a bottom-up social enactment that “belongs” to the collaborative community of artisans, companies, suppliers and customers, all of whom participate in the shared ecosystem. Open brands will have a social authenticity – a credibility and depth – that is rarely associated with branded products today.
The closest version of open branding today would be the social ecosystems that revolve around software platforms such as Linux and Apache, and around the open hardware world known as Arduino. Participation in a branded ecosystem is available to anyone, but participation is predicated on accepting certain principles, protocols and behaviors.
While conventional companies would probably be threatened by the idea of other businesses “participating” in “their” brands, open branding simply reflects the new realities of ubiquitous open networks – and then leverages it. After all, any company is embedded in a complex cluster of interdependencies. Why not make the most of that? Instead of trying to “go it alone” in the style of traditional, proprietary business models, open branding enlists all participants in a shared ecosystem to cooperate (in building the brand) while competing (on the basis of a distinctive value-added).
This new understanding of brands is more realistic than industrial-era branding because it recognizes that brands are not idealized, remote icons, but rather living, breathing social systems. Open brands provide a way for artisanal enterprises and their suppliers and customers to collectively express a shared commitment to certain standards of quality, production ethics and community values.
Mestieri-based branding will establish strong, credible linkages between artisan-producers and customers via API-based platforms for design, production and retail. Designers will be able to instill their authentic, distinctive craftsmanship into products, and highly distributed local manufacturing outlets around the world will be able to deliver higher quality products. Customers will enjoy the conveniences of vast choice, on-demand production, customized features and express delivery – and companies will avoid the inefficiencies, limited choices and unsold inventories that plague conventional production.
Of course, many questions remain unanswered. How shall the new generation of artisans learn and cultivate their skills? How can artisanal companies develop the brand relationships with customers and fend off takeovers by large companies that wish to stifle the competitive alternatives that they offer?
To be sure, incumbent market players, especially large companies invested in old infrastructures and business models, will resist this new world. That is always the case when disruptive innovation arises. And startups will need to be savvy in maintaining their integrity of vision, especially since large companies will find it convenient to buy startups as a way to learn new tricks.
But we have seen how each new generation of tech innovators always has some determined visionaries eager to break with the old ways and forge new paths that are both profitable and socially appealing. These challenges will be made easier by the proliferation of “out of control” technologies that can work on open digital networks.
Artisanal production will not supplant everything else. There will still be large manufacturing concerns based on economies of scale. But they will coexist with – and be challenged by – networks of smaller companies and solo businesses that can compete with greater agility, speed and customization.
The new production capabilities will post a clear challenge to traditional consumer culture, however. For years, manufacturers have cultivated a strict dichotomy between low quality/low price and prestigious brands/high price (but not necessarily high quality/high price). The challenge going forward will be to validate the market position of higher quality/higher price products (but not luxury, not Cucinelli’s). This will not be a trivial challenge.
The transition will also require visionary entrepreneurs who are willing to understand the new technologies and master the artisanal skills to shape new commercial models. These leaders must have a commitment to quality and taste, and recognize that redefining mainstream consumer expectations will take time. Within their companies, too, they will need to develop new forms of apprenticeships and education to nourish artisanal cultures, especially as existing masters of various crafts grow older.
Finally, the rise of the Mestieri production culture will require appropriate frameworks of applications. Mainstream social networks today are still mostly used for entertainment. While there are a number of game-changing platforms for crowdsourcing and crowdfunding, these applications will need to expand and become more versatile if they are to become engines for digital artisans.
Many unresolved issues will need to be addressed, obviously, but it is clear that as the company of tomorrow moves to open platforms, traditional linear chains of production developed in the industrial era will give way to loose networks of designers, producers and customers. And this will require that we understand production as far more than a transactional process, and more as a deeply relational one.
Maurizio Rossi started his business career in sales and new market development for Rossimoda, a leading Italian luxury footwear company started by his grandfather. In the early 1990s, Rossi started a new sports apparel business division, Vista Point, whose brands he licensed and distributed globally for over ten years. Rossimoda was later acquired by the luxury giant LVMH. In 2005, Rossi cofounded H-FARM, a platform for incubating a new generation of Italian entrepreneurs.