The Social Era Fuels The Intangible Economy.

by Jay Deragon on 12/11/2012

The economy has changed. The changes have occurred due to a shift in value from tangibles to the intangibles.

The economic landscape of the present and future is no longer shaped by machines, materials and labor but by relationships, information, technology and co-creation.

On the consumer side, we consume and create more and more content-based artifacts of information and entertainment. On the supply side, intangible assets such as, human capital, relationship capital, structural capital and strategic capital have become major determinants of a companies’ performance and value. The creation and influence of intangible capital is now the source of a new economy. Welcome to the  Intangible Economy.

The Social Era has created a shift to the intangibles and it will be long-lasting. It affects all sectors and all aspects of the economy. According to Diane Coyle, we live in an “weightless world”, where an ever increasing shares of GDP resides in “economic commodities that have little or no physical manifestations”.

The recognition of the weight of intangible assets is not limited to brands. Intellectual property – patents, trademarks, human, relationship, strategic and structural capital – is considered a critical competitive weapon for today’s leading organizations.  Yet traditionally strategic development has not even begun to approach the value of such intangibles.

Nilofer Merchant, in her book 11 Rules for Creating Value in the Social Era states:  Traditional Strategy (T.S. as a person) is survived by two generations: his immediate children, the management thinkers who are now struggling to fit relatively newer concepts like crowd-sourcing, open innovation, transparency, co-creation, and collaboration (all intangibles)  into its classic models; and his many grandchildren attending business schools who continue to be taught his antiquated ideas from out-of-date textbooks.

Markets Are Shifting

The Social Era implies a change in the nature of markets. The markets main purpose is no longer to support strategies and structures focused on traditional economic theories but to facilitate an exchange of intangibles as the means to create a new economy.

Time honored separation between work and leisure, home and work-place, intermediate good and final output, consumer and producer,  have become blurred. This is not a temporary shift rather a systemic lasting change in how  markets behave. The intangible economy does not follow the traditional rules of business logic rather it follows a different set of rules brought on by the Social Era.

At the core of business in the Social Era is the recognition and emphasis of intangible capital as the core for creating, sharing and improving value continuously. Focus on the core and everything else will take care of itself.


{ 1 comment }

jackson mutebi December 11, 2012 at 11:48 am

great insights about new trends in market and social era


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