The Death of The Corporation

Here’s how most industrial corporations work.  They use a combination of loans and investors to purchase land, machines, and labor. All this capital goes in to producing one or more consumer goods. The corporation then buys time and space on mass media (TV, Radio, and Newspapers) to promote their product. If everything goes according to plan, the product will sell. Unfortunately, this model does not work anymore. It has nothing to do with new government regulation or awareness about the evils of consumer culture. We are merely becoming immune to corporation’s calls for our attention and our money.

The immunity is by no means complete, but already we’re seeing a downward trend in the use and effectiveness of advertising. Ads have become so ubiquitous, that instead of brainwashing us into buying more, they have become easier to ignore. Think about it. When was the last time an ad consciously affected your purchasing decisions? Corporations are starting to realize this, and traditional media outlets have started hemmoraging money as a result. The recent Conan-Leno controversy is nothing more than NBC panicking because their medium simply can’t sell any more widgets.

This is not to say that people will stop buying consumer products. We will be well supplied by the infinite torrent of competitors provided by inexpensive and ubiquitous machine labor. The resources to start a business are now a fraction of what they were 10 years ago. This low barrier of entry will attract companies who actually care about the customers they are serving. If corporations make their mistakes through their apathy and callousness,  then every call bumped to voicemail, every eye-roll from a customer service rep creates a niche for another small competitor to squeeze through. Those competitors don’t have to clear every decision with the head office, and they don’t have a board of shareholders answer to. When they have good ideas, they can move faster and with more purpose than large corporations.

Where does this leave companies like Coca-Cola and Nestle? As we’re seeing with India and China, eventually developing countries turn into developed ones. Cell phone and computer networks are cheaper to implement than terrestrial television and radio. This means they’ll be more used to media they can talk back to, rather than the one-way monologue of traditional media. It’ll be hard to trust the alien and artificial machinations of Pepsi when you can get the same kind of communication from your own culture and community. If those large corporations want to stay in business, they’ll have to be present for their customers in a way that is unprecedented. God help them if they put another person on hold.

If you want to read more on the subject, I suggest picking up Seth Godin‘s Permission Marketing or Linchpin. They inspired many of the ideas in the last two posts.