Subscription economy

For the past 120 or so years, we’ve been living in a product economy. Companies designed, built, sold, and shipped physical things under an asset transfer model. Business was about inventory, shelving, and cost-plus pricing. The relationship between seller and buyer was based on discrete, often anonymous transactions. The sign by the cash register summed it up: “All Sales Final.” Early retail pioneers like Sears and Macy’s changed the way mass society consumed things, but they had minimal insight into who was actually buying their products or how they were using them.

When Henry Ford’s first moving assembly line went into operation in 1913, it was really just an extension of manufacturing principles first put in place during the Industrial Revolution of the 1800s. The assembly line wasn’t just about maximizing efficiency through discrete repetitive tasks, it was a metaphor for how a company’s product can dictate its supply chains, manufacturing processes, distribution channels, and management layer.

The product was the only governing principle—it organized everything across a perfectly straight line. The actual people involved in making, buying, and selling the product were entirely disposable. Henry Ford’s customers could famously pick any Model T color they wanted, as long as it was black. The result of all this relentless efficiency was that Henry Ford’s cost per unit dropped precipitously, allowing him to flood the market with cheap but durably made cars. Model Ts came only in black because with one automobile coming off the line every three minutes, that was the only color that would dry fast enough.

www.linkedin.com/pulse/product-economy-over-heres-how-survive-subscription-tien-tzuo

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