The Race to the Bottom

We know about companies and artists that compromise their work, hoping to pass off the degraded item as the real thing, because they feel their customers cannot afford to pay full price.  While this can be somewhat dishonest, if deception lies at the heart of their enterprise, we know they mostly do it because they think it’s the right thing to do.  They assume that customers can’t or won’t pay for a high quality product, so cut corners, make terrible compromises, rush the making and generally don’t finish or polish their work, so that a lower price can be charged.  It’s just simple economics, right?

They might be right about that.  Customers might be finding it difficult to prioritise spending on your art, especially with disposable incomes being squeezed and real wages stagnant.  When discretionary spending must be curtailed, can there be any spending more discretionary than buying a piece of art?

Is the answer to the problem to risk your reputation and your work’s quality, to meet their price point?  Is it your job to make your art cheap and cheesy enough that it can be made into a purchase priority?  What if in trying to meet a commodity price, your art loses its distinctiveness and is denuded of any purpose or meaning for you, its maker?  Are you a factory worker, making identical widgets, as if by machine, or an artist exploring the frontiers of your own creative powers?

We’re changing, biologically speaking.  Read this:  http://www.theguardian.com/sustainable-business/etsy-economy-biological-event-purpose

The article claims that we’re on the cusp of a great change in society and the economy, because people are increasingly seeking purpose in their working lives.  Purpose is becoming the motivation for innovation and growth.  In other words, we shouldn’t be trying to ape machine-made goods, by hand-making them badly, we should be preserving the integrity and artistic merit of what we make.  Why?  Because in the long run, this will prove to be good business.  It is the direction the world is going in.

In the short term, however, we’re not there yet.  What are some transitional strategies that both preserve your purpose and artistic integrity, while ensuring you don’t starve to death in the mean time?

Surely a better answer than cheapening your output is to make your art worth the price.  If your art represents good value at the price charged, whatever that price happens to be, then the bottom line is that it is good value.  Granted, it may be more difficult for customers to find the funds to buy your art in the first place, but if it represents good value, as defined by the high quality of your work relative to the price charged, then it’s going to maintain its residual value over a longer period of time.  It isn’t going to instantly depreciate like so much that is made and sold in our throwaway society, as if it were some disposable piece of commodity junk.

Another strategy could be for you, as an artist, to enable more of your potential clients to earn enough to afford your product, so that your high quality output easily becomes a purchase priority.  If what you make helps people make their own art, then to the extent that your product enables your customers to make their own art more valuable, you succeed.  You might need to make your art stay valuable, by its quality and desirability, so that a secondary market is created for your work, enabling people to minimise their depreciation or even make money by selling your work on.  Your work needs to be primarily about creating value, not cutting costs.

Wal-Mart and Amazon are both out of time and will soon, I fear, be out of favour.  Both would sell more and make more profit if they used the money they’ve already earned (and don’t know how to spend) on simply raising the salaries of their employees.  It would be enlightened self interest.  Henry Ford knew that enabling his own employees to buy his company’s products was the key to success.  An assembly line populated exclusively by robots is not the same as having a workforce comprised of people that are also customers and consumers, as well as being production workers.

I know that when I worked for Amazon and had the benefit of a staff discount, I bought very little from the company I worked for, because I couldn’t afford to do so.  Amazonians might not like to hear that, but for me, it was true.  Not on the pay I was taking home.   Interestingly, some of the people in my chain of management were originally from Wal-Mart, so there is definitely an affinity there.  Both companies behave in similar ways.

A quick look at my Amazon purchase history shows that I demonstrably bought more from Amazon when I didn’t actually work for Amazon, both before and after.  This is hard data.  Amazon loves hard data.  They claim to make all their biggest decisions based on hard data.  I predict that one day, Amazon and Wal-Mart’s adherence to their current pay policies will be seen as the biggest business strategy blunder ever made.  They’re currently not counting the cost to their reputation or people’s willingness to continue to support them, when the zeitgeist is clearly heading toward the purposefulness goal and no longer as strongly toward the profit maximisation motive alone.

Another way that you can support your potential customers’ desire to pay for your art is to offer flexible payment terms.  If they can spread the payment over a period of, say, six months, then it may represent less of a blow to their monthly outgoings and move a purchase decision about your work from “out of the question”, to “bearable”.  If you are in a position to allow payments to be made in instalments, then you will probably find more buyers willing to sign up.

Sometimes, if your customers are struggling entrepreneurs or start up businesses, then helping the entrepreneur raise enough funding to buy your services, technology, art, creative contribution (or whatever it is) can be a “no brainer” decision.  As long as you are assured of payment, then making your work available to them up front, as a means of attracting the funding they need for their larger enterprise can benefit you, as a contributor, too.  Just be sure that there is a clear understanding of expectations and of what everybody should get out of the arrangement.  This isn’t working for free, but it is taking a risk.  It can go wrong, so be warned.

There will always be those deluded enough to believe that the best things should always come to them for free (or nearly free).  These people are an obstacle to be avoided.  Others know that good value is what they really want, not something for free.   Seek these people out and offer them good value.

The race to the bottom is not a race you can win, because somebody will always go lower.  Even if it were possible to be the winner of a race to the bottom, is that where you really want to be?

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About tropicaltheartist

You can find out more about me here: https://michaeltopic.wordpress.com/. There aren’t many people that exist in that conjunction of art, design, science and engineering, but this is where I live. I am an artist, a musician, a designer, a creator, a scientist, a technologist, an innovator and an engineer and I have a genuine, deep passion for each field. Most importantly, I am able to see the connections and similarities between each field of intellectual endeavour and apply the lessons I learn in one discipline to my other disciplines. To me, they are all part of the same continuum of creativity. I write about what I know, through my blogs, in the hope that something I write will resonate with a reader and help them enjoy their own creative life more fully. I am, in summary, a highly creative individual, but with the ability to get things done efficiently. Not all of these skills are valued by the world at large, but I am who I am and this is me. The opinions stated here are my own and not necessarily the opinion or position of my employer.
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11 Responses to The Race to the Bottom

  1. olivierlehe says:

    Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
    As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market.
    If you are interested by more information, you can read my article on Disruptive innovation you can read at: http://worldofinnovations.net/2014/06/21/what-is-a-disruptive-innovation/

    • As it happens, I read Clayton Christensen’s books when they first came out. I disagree that products get too sophisticated, too expensive and too complicated. Having been a product designer for over 30 years, what tends to happen is that the companies lose sight of what their actual customers need or want. They drift into releases that upgrade according to what marketing thinks will cause a splash, not toward solving the customers’ problem better or more fully. The needs of customers evolve, for sure, but not always toward less sophistication, expense and complication. There are software applications today, for example, that don’t do enough, with enough finesse at any price. Customers would be willing to pay more for an application that handles the complexities of their real world task better than the existing available tools do, but all that is on offer are hard to use, but dumbed down tools. In short, I think Chistensen got it wrong, or at least grossly over-generalised. He speaks as an academic. I speak as a practitioner.

      • olivierlehe says:

        Thanks for your comment. I think it is not “black” and “white”. I disagree that he is too academic in a lot of case. If you take the case of mobile phone and telecom contract attached, I don’t know the market in your country, but in my country, during 14 years, the product “telecom contract” was more and more complex with a lot of options; in some case, using your phone, you were able to have free place of cinema; crazy,weren’t you? For many telecom operators, they had 200 different contracts with 1000 of options… And one day, a new comer have invented a simpler solution with 2 different contract … and a price divided by 10! It was totally disruptive innovation. The product is simpler, less sophisticated and the cost 10 times less important. It was perfect because at this stage, all teenagers would like to have a phone; and nobody in the country was able to pay more than this product offered by the new comer; the new comer is named Free Telecom. Think about it.

      • I still think that is marketing run amok, not the fault of product designers and innovators. I left my senior software management job at Symbian in the late 1990s because I couldn’t convince upper management to take audio and video seriously. Those options had little to do with complex contracts and everything to do with what the customer actually wanted. I think I was right, in the end. So back to your point, the reason that the teenagers wanted simpler telecoms contracts is so that they could utilise the new media options available to them, without being afraid of costs. I claim that is a more complex product, but a simpler offering.

      • olivierlehe says:

        I agree with you: the product remains complex and it is the offering that is simpler … in appearance! But not only because the main interest of people is to be able to buy something with a cost less important, especially if the cost is considered too high. Take an other sample with rocket launch. This is a complex product, we cannot say the reverse! But with disruptive innovation, SpaceX is able in 2014 to sell the product 1.5 to 2 time less than competitors; and his cost is less important than the Proton Russian Rocket. The product is less complex than competitor because SpaceX is able to produce all pieces of the Rocket with 3000 people as competitors need 10 times more. SpaceX is able also to produce reusable pieces. The analyse of the value chose to SpaceX that the cost to sell the Rocket is mainly due to number of people working on the preparation of the rocket and the rocket itself. The energy used to launch the rocket is only 2% of the cost. And at the end the product is less complex: only 2 stages: only 1 motor used in the two stages… If you are able to produce a product less complex, with less people with a product reusable, aren’t you be a disruptive innovator?

      • It depends entirely on what safety margins were cut, what additional backup systems have been abandoned and on what externalities the so called disruptive innovator has introduced (costs that he passes on to others, instead of keeping on his own balance sheet). I don’t think the case of SpaceX is clear cut. Working fewer people harder, to cut the cost of launching a space vehicle, as if slaves, is not an innovation. The pharaohs had that system 4000 years ago. As you say, it’s never black or white.

      • olivierlehe says:

        The fact that SpaceX is able to sell a launch for 12000 dollars / kg as Proton (Russia) sell it 18000 dollars / kg, Ariane (Europe) sell it 24000 dollars / kg and Boeing with Delta V (USA) sell it 26000 dollars / kg : this is an innovation! As the process of delivery take 10 times less people to build it: this is clearly a disruptive innovation for me. But I agree with you,the way to understand “disruptive” is not see easy. Nevertheless our conversation was very interesting! Thanks a lot.

      • Yes, I have enjoyed our discussion too 🙂

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