Posts Tagged ‘social web’
Social Demand Finds Supply
Suppliers push products and services to market. People represent the pull for products and services through demand.
In economics, supply and demand describe market relations between prospective sellers and buyers of goods and services. The supply and demand model determines price and quantity sold in the market. The model is fundamental in macroeconomic analysis of buyers and sellers and of their interactions in a market.
Suppliers, manufacturers, service providers and distributors that have realized efficiencies in their supply chains – but that have struggled to gain similar returns from classic customer relationship management (CRM) solutions – are now increasingly embracing demand chain management (DCM) technologies to cut costs and optimize sales processes.
Demand Chain Management is the management of upstream and downstream relationships between suppliers and customers to deliver the best value to the customer at the least cost to the demand chain as a whole. The term demand chain management is used to denote the concept commonly called supply chain management, however with special regard to the customer pull.
The more widespread adoption of social technologies, combined with the challenging sales environment stemming from the conversational rivers enabled by the social web will cause selling organizations to heighten their focus on the demand side of the value chain.
What is The Demand?
Fundamentally the social web has enabled people to have a voice about anything and everything. When the lowest expectations about a product or service are not met the conversations swell like rivers and spread one to one to a million at the click of a mouse.
Tomorrows leading companies will have to engage people through the social web if they hope to fulfill the pull created by conversations. In doing so, they help themselves by acting on the conversations centric to speeding up cycle times, eliminating redundant activities, extending market reach, and most importantly, enabling buyers of all shapes and sizes with more choices and with greater input into, and control over, relevant business processes.
Many people are tired of companies controlling the conversations about their products and services. The old tricks of the trade are no longer tricks but obvious ploys for people’s attention and the people aren’t buying the tricks anymore.
The old theories of supply and demand have been centric to microeconomics. The new theories will become centric to conversations and the impact said conversations have on markets and the subsequent economics of those markets. The people are now in control of the conversations they want to have, the questions they want answered, the products they want made, the services they want to have and most of all the quality they need. If existing markets aren’t listening and participating they will likely be replaced by those that do.
As the social web becomes more “open” with less walls created by silos the conversational rivers created by the people will become more connected and more influential over markets. The demand on businesses will be for higher quality of service and performance and hiding behind slick marketing messages will become more and more transparent and irrelevant. The shift from supply to demand will have profound effects across every business segment and demographic imaginable.
Demand side economics is a chain controlled by the customer. The larger the chain the greater economic influence over markets. Doc Searls’ VRM vision is to enable more power and influence from the demand side of the supply chain.
What The Heck Is An Asset?
When you go into a store to buy anything, the rational person will always compare the quality of the object against the price of the object versus any alternative products or markets.
When you buy a home, the property is characterized by descriptions for “quality” (construction, neighborhood, schools) and a series of ”quantities” (number of bedrooms, square footage, price)
When you cross the road, you look both directions in order to assess the quantity and the quality of the traffic that may or may not kill you. Are the traffic slow moving pedestrians or are they fast moving trucks?
When a bank makes a loan, they “quantify” all of your valuable things like your home, cars, 401K, and personal income and they use the credit score to measure the quality of your finances (debts, credit pulls, past history, bankruptcies, etc).
Supply and demand cannot, absolutely cannot, be determined by any other means other than by measurements of quantity and quality.
In fact, economics is the science of incentives where the fundamental graph is the supply and demand curve. Both supply and demand behave according to inputs of quality and quantity, specifically price and availability. Supply and demand for anything absolutely cannot be determined by any other means than by coordinates of quantity and quality.
Investors manage risk.
Risk is an asset, if it weren’t, insurance companies would not exist. There are three things that an investor must know in order to manage risk. 1. They MUST be able to identify their exposure to peril. 2. They MUST be able to estimate the probability that the peril will or will not impact them. 3. They MUST be able to determine the cost of the consequences in the event that the peril happens.
Again, within the definition of risk – to which ALL INVESTMENT RESPOND, are the characteristics of an asset; what is the quantity (1) and (3) and what is the quality (2) of the peril. If the investor does not CLEARLY SEE these three positions, they will not invest. Period.
This is what drives successful markets and what kills unsuccessful markets.
To ignore the fact that all rational human behavior, intentions, decisions, reactions, conversations, relationships, education, ideology and every other state of human consciousness in a market, corporation, community, family, or social network ARE NOT characterized in the form of a quantity and a quality, is frankly, ignorant to ones market, irresponsible to one’s community, and incompetent to one’s profession.
Yet so many people do not see themselves as an asset. Maybe someone should give people permission.