Welcome to the Service Economy

In my lifetime the world has moved from the industrial age through to the knowledge economy and now to the new service economy. So what does this mean and how will it affect us personally and in business?

With the expansion of the Internet and associated advances in technology that allows businesses to deal with larger and larger numbers of customers in a more intimate manner through automated systems, the level of service that a business can offer has increased. This along with growing consumer affluence and a rapid increase in the number of choices available to consumers has lead to a shift towards demands for greater levels of service.

Whether many businesses know it or not, price has always been in about fourth or fifth position when it comes to decision making. With cheap global manufacturing facilities in countries such as China, the cost of production has dramatically reduced. This has lead to an imbalance for many local businesses and an ensuing readjustment period where prices of goods have dropped to compete with their 'cheap' cousins. But for most products prices have reached their lowest point and the 'Sale Price' tactic used by businesses to gain market share must be replaced with something else.

Quality personalized service has previously been the one advantage small businesses have had over the larger corporate company. But this is no longer the case, and the consumer knows this. All businesses, big or small, need to find new ways of dealing with larger numbers of clients on a more intimate level. The small business has an extra challenge as it needs to work to build their client base both in width and depth in order to compete. The only realistic way of achieving this is through greater automation.

The corporate multi-national business must also adjust their thinking as the multi-national small business is no longer a ridiculous concept. Through the use of the Internet and automation, the number of employees that a business has is no longer an indicator of its position in the market or the size of its turnover.

All in all, every business, be it service or product based, big or small, must learn how to maximize its use of automated systems to provide greater levels of service at a lower cost in order to compete in today's local and global markets.

From Cottage Industry back to Cottage Industry
Both manufacturing and services businesses used to be based around a family home. This Cottage Industry was replaced by manufacturing plants that could mass produce products cheaper and more reliably.

The outcome of this was a society that changed to accommodate the factory. Parents would go off to work at the factory so children had to be placed in institutions to be 'baby sat'. The governments of the time created schools to fill this role. But their primary focus was simply to create factory workers and soldiers - not business owners.

With few factories and with housing being built to service these factories - literally on their doorstep. Transportation and roading was not an issue as most people simply walked to work and their children walked to school.

However, with the move away from the industrial age through to the service economy there has been a dramatic shift in the needs and structure of society. Houses are no longer within walking distance of either schools or work places. This has meant that the roading infrastructure has been stretched beyond its ability to cope.

Not only this, but schools can no longer produce the outcomes demanded by society. More and more children are not being catered for and are slipping through the ever widening gaps that the institutionalized education system produces. Parents want their children to become business owners, not just employees. Schools were never designed to educate to this level.

Society needs to re-embrace the Cottage Industry style of business - where the parents work from home and children are home schooled. The Internet and new technology enables this to happen. The service economy makes it the only viable option in today's world.

Businesses need to work to re-invent their business model and encourage their employees into this new way of working and schooling their children. Workers need to be re-educated to cope with the greater demands this places on them to run their own lives and not to so heavily rely on the institutionalized structures to 'mother' them.

This would also create less demand for government assistance as people became more self reliant.

Today's service economy based society demands that we all re-examine how we do business and how we live our lives. We will either adapt to this change and prosper or struggle to 'maintain status quo' and see an increasing number of people being disenfranchised from society, which will lead to an ever widen gap between the rich and the poor and growing social problems and crime rates.

Each one of us needs to up-skill ourselves and adopt the advantages new technology offers if we are to see our society healed and give our children the best chance of prospering now and in the future.