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Paul Saffo is one of the world’s foremost professional seers, and certainly the most entertaining. A visiting professor at Stanford and co-founder of Discern, an investment analytics firm, he divines the shape of things to come by melding an incisive grasp of history and current trends with a keen imagination. And a sense of humor — he delivers his conclusions with a conversational shrug, as if to say, even the best futurists can’t say for sure what’s coming down the pike.
In an October 3 presentation at Singularity University, he outlines the epochal shift of our time: the transition from a producer economy to a creator economy. Saffo’s analysis is brilliant in its simplicity, and it can help businesses think about how to create value in a networked world.
At the turn of the century, he says, the US was preoccupied with overcoming scarcity. Industrial manufacturing drove the economy. The hero of this era was the VP of manufacturing, and his byword was efficiency. Result: a producer economy in which production lines and punch clocks kept workers at peak productivity. Henry Ford painted his famous Model T black because that color dried quickest, allowing him to deliver more units in less time. By World War II, the US industrial machine could turn out weapons at a prodigious rate, smothering enemies in a flood of armament.
When the war ended, manufacturers trained this tremendous productive capacity on the consumer market, and the consumer economy was born. This new mode overcame scarcity with a vengeance — in fact, US factories produced more than citizens could possibly buy. The hero became the VP of marketing, the wizard who could invent unnecessary products and convince the growing ranks of consumers to purchase them. (Can I interest anyone in the electric carving knife that’s boxed up in my parents’ attic?) Easy credit, falling production costs, and mass media, especially television with its tireless succession of pitchmen shifted economic growth into overdrive.
“I know the month the consumer economy ended,” Saffo says: November 2008, when the financial markets headed into a tailspin from which they show little sign of recovering. “It was more than an economic downturn, it was an inflection between two economies: Consumer and creator.”
The creator economy is essentially Web 2.0 and beyond. Individuals no longer simply consume but create value through their daily activities. This is the era of free services dispensed for the price of a registration, where businesses leverage huge quantities of data into profitable market insights. Google’s world-changing search service feels free, Saffo observes, but is isn’t. Every time you enter a search term, you’re paying in unique, individualized data that only you possess. In aggregate, these search terms make for a bonanza in advertising revenue. Interaction is central to this new paradigm, and the basic unit of interaction is: Put data in, get data out.
The key to prospering in the creator economy is to maximize interaction while reducing friction. Generally this means minimizing the amount of input required from users (i.e., Twitter’s counterintuitive 140-character limit). They need to contribute freely and naturally without having to think twice. In Saffo’s view, the creator economy will reward businesses that leverage tiny amounts of user input. “The companies that will be the biggest,” he says, “are the ones that harness the smallest quantum of creative activity.”
In an October 3 presentation at Singularity University, he outlines the epochal shift of our time: the transition from a producer economy to a creator economy. Saffo’s analysis is brilliant in its simplicity, and it can help businesses think about how to create value in a networked world.
At the turn of the century, he says, the US was preoccupied with overcoming scarcity. Industrial manufacturing drove the economy. The hero of this era was the VP of manufacturing, and his byword was efficiency. Result: a producer economy in which production lines and punch clocks kept workers at peak productivity. Henry Ford painted his famous Model T black because that color dried quickest, allowing him to deliver more units in less time. By World War II, the US industrial machine could turn out weapons at a prodigious rate, smothering enemies in a flood of armament.
Paul Saffo addresses the Singularity University Executive Program: Welcome to the creator economy.
When the war ended, manufacturers trained this tremendous productive capacity on the consumer market, and the consumer economy was born. This new mode overcame scarcity with a vengeance — in fact, US factories produced more than citizens could possibly buy. The hero became the VP of marketing, the wizard who could invent unnecessary products and convince the growing ranks of consumers to purchase them. (Can I interest anyone in the electric carving knife that’s boxed up in my parents’ attic?) Easy credit, falling production costs, and mass media, especially television with its tireless succession of pitchmen shifted economic growth into overdrive.
“I know the month the consumer economy ended,” Saffo says: November 2008, when the financial markets headed into a tailspin from which they show little sign of recovering. “It was more than an economic downturn, it was an inflection between two economies: Consumer and creator.”
The key to prospering in the creator economy is to maximize interaction while reducing friction. Generally this means minimizing the amount of input required from users (i.e., Twitter’s counterintuitive 140-character limit). They need to contribute freely and naturally without having to think twice. In Saffo’s view, the creator economy will reward businesses that leverage tiny amounts of user input. “The companies that will be the biggest,” he says, “are the ones that harness the smallest quantum of creative activity.”
