Emerging Digital and Social Markets

In September 1979 in a small computer trade exhibition in New Orleans, La, the first online shopping system was demonstrated. E-commerce would thereafter change the way the world does business. And there would be even more profound consequences.

The first driver for these changes was technological convergence. In 1979 connecting a domestic television to a real-time transaction processing computer via a domestic telephone created a new form of mass communication- not the traditional mode of one-to-many but the new world of many-to-many. These interactive, participative mass communications would create the digital social networks of today. Online shopping was the convergence of digital mass communication and digital commerce. Information Technology would become a new kind of communication medium.

My original intention with online shopping was to liberate consumers by separating the physical and logical parts of shopping, removing the physical barriers, improving choice and competition and finding new ways of doing business that would be more efficient and more productive. Shopping then was a particular construct of time, place, space and ambience created by the seller. It had grown over the centuries. It was recognised all over the world. But it wasn’t the only way to exchange goods, services and money. When the construct of ‘Shopping’ was unbundled it soon became clear that it was not necessary for buyer and seller to be physically present for a transaction to take place but for widespread online shopping, new infrastructure was necessary and existing infrastructure needed up-grading. New mass communications messaging, broadband telecoms, computer interface hardware and software, service providers, secure telecoms, payment and logistics systems needed development and existing business processes had to be re-engineered. These facility changes took 20 years. They were the first part of the revolution.

Human Interface Technology is basically the way people communicate with each other using computers. The smaller, simpler, cheaper, more reliable the interface the more people will use it. The world’s first online home shopper in May 1984, Mrs Jane Snowball, 72, never saw a computer. She used a TV remote and was given 5 minutes training. Over the years the interface devices became smaller, smarter faster and cheaper.

Once the infrastructure was in place to enable people to communicate easily and cheaply with each other they soon found things to talk about. With new mass communication came new mass Information dissemination services. Google, BBC Online, Wikipedia and Online Newspapers delivered news, information, knowledge and easy access never before available to mass audiences. The content revolution included the great social networks – Facebook, Twitter, U-Tube, Blackberry Messenger and the others. Issues began to emerge. The revolution was acquiring a political dimension. Everyone wanted to have a piece of the internet by controlling or monetising it.

It was now easy to organise support from other like-minded people on a mass scale be it for riots in the UK, political campaigns in Russia and Arabia or for social justice in Florida. Old institutions were crumbling . Old elites were suddenly under pressure. In the old world the Command [elite] exercised control through Communication and Intelligence. This was threadbare when the Command no longer controlled the Communication and Intelligence. Unfettered communications shed light and transparency, the greatest threats to the elites, weakening the elites’ control of intelligence. Inevitably for the democracies, there now have to be new social settlements on the proper boundaries for the control of communication and intelligence. These new settlements will not be small changes.

Take e-commerce as an example. A fundamental facet of commerce is the idea of Caveat Emptor or Let the Buyer Beware. Consumer law is concerned with protecting the buyer because the seller is usually perceived as the more powerful party in the business transaction. Sellers become more powerful with specialisation, market changes, size, growth including globalisation and are often protected by cartels and political forces. Consumer protection is usually on the back foot. But if social networks can exert people political power on the streets of Cairo by bringing together people with shared interests why can’t they exercise people economic power by bringing together mass buying power on the streets of London?

It has sadly become a fact that there are businesses in a free enterprise system that have been deemed too big to fail. These businesses are effectively outside any systemic, social or political control because of their economic power. Often these businesses play cat and mouse with democratically mandated rules and regulations as they pursue their own goals. They have been described as predator businesses and they pose huge threats to the free enterprise system. But although Governments may be unable to control them, direct financial action by organised buying groups exerting superior financial muscle and supported by appropriate anti-Trust legislation may well have the effect of moderating predator behaviour.

Welcome to the world of Caveat Servitor or Let the Seller Beware. Caveat Servitor is about using mass buying power to force dominant sellers to compete for business through Reverse Public Auction. The ability of buyers to dynamically construct buying groups or virtual co-operatives and to scale these groups easily through Cloud Computing has changed the business landscape. In May 2012 a project began in the UK called the Big Switch.

It began from the basic facts that there are around 20 million homes in the UK served by a small number of utility suppliers. Consumers are free to switch suppliers but 60% have never switched. There is no serious market and individual consumers cannot negotiate. Big Switch, run under the auspices of the Consumer Association’s ‘Which’ Magazine, has set-out to recruit hundreds of thousands of potential buyers to negotiate group deals. It will be interesting to see what happens. No utility can afford to lose hundreds of thousands or even millions of customers. The logic of Big Switch is that there can only be one lowest cost producer. Large suppliers may refuse to tender which is where anti-Trust legislation may be needed. The tender process is dangerous for suppliers because it will result in more transparency in pricing. Transparency is another word for Intelligence.

Whether the Big Switch works as a project is not important. It is rather like Martin Luther nailing up the 95 Theses. The idea is out of the bag. Time will tell. Ultimately dynamic, organised people power will prevail. Converging digital mass many- to- many communication with instantly deployable mass worldwide funds transfer has created a completely new socio-economic force- digital people power. Digital people power works anywhere the infrastructure exists. The laws of commerce will be re-written.

Digital social networks are changing the way people are communicating and are working together. The old boundaries are changing. The changes are having business, social, political and economic consequences. They stem from changes in control of communications and intelligence within societies because of new technologies. New participative many-to-many mass communication systems spanning the globe and allied to improved intelligence [transparency] provide the vehicles to drive the emerging digital social networks and markets. Online shopping set out to liberate consumers. Social networks are setting out to emancipate consumers. Deployable mass political and financial power outside of the old structures will be a new phenomenon. Growing convergence of even more technologies will fuel yet more power transfer within societies. The trends are global. It has long been said that ‘knowledge is power’ but add worldwide mass communications and transparency to knowledge and financial power outside the old structures and a new chapter in human development has opened. Digital people power will change the world.

It has all come a long way from a 72 year old great-grandmother from Gateshead, England, Mrs Jane Snowball.

Keynote Speech to International Management Research Academy Conference on ‘Emerging Markets’ London May 17th 2012