Basic economics tells us that markets are efficient when supply and demand are in balance. Too many goods brought to market, and prices fall. Too much demand for scarce supply and prices rise. Although we can appreciate that reality is more complex, it’s easy to believe most real world markets eventually adjust to find an equilibrium where markets clear.
So what happens when information technology comes along and massively disrupts that balance? What happens when digital innovation in fact changes the very nature of the offer being brought to the market? Prices could drop rapidly, demand increase, and new markets become addressable. In economic terms, goods and services are democratised as they become more widely available, new needs are uncovered and met, and new jobs are created. That’s the vision I wrote about in a previous blog — Everything as a Service — and I want to develop the idea with a couple of illustrations.
As we move from the world of things to the world of data about things, the definition of a product or service changes. The world of “things” is organised around machines and experts as scarce resources, the world of “data about things” conversely has an abundance of derivative outcomes, analyses or services that can be consumed. From a world of a few, scarce things to which access has to be rationed, to an infinite amount of data based products with essentially zero marginal cost of production.