The Inflection Point of Economic Measures

by Jay Deragon on 10/01/2013

inflection pointsWhat would happen if companies, industries, sectors and economies changed what results mattered and how those results are measured? What would happen is the behavior of companies, industries, sectors and economies would change.  Sound familiar?

Companies, industries, sectors and economies are dynamic and constantly evolving. Inflection points are more significant than the small day-to-day progress made and the effects of the change are often well-known and widespread.  An inflection point can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result.

Andy Grove, Intel’s co-founder, described a strategic inflection point as “an event that changes the way we think and act.”  Now ask yourself what event has change how the market thinks and behaves? You shouldn’t have to think very hard.

The Economic Engine Has Shifted

The economic engine of the 20th Century relied on factories, equipment and labor to produce more things for consumption.  The economic engine of the 21st Century relies on factories of ideas, technology and networks of minds to create more value.  That represents a significant shift is what ought to be measured to really understand the welfare of a country, a state or an organizations

Often change isn’t the result of one specific thing rather it is many factors coming together to create collective change. One would have to be living in a cave not to recognize that changes in markets, economics, politics, power and communications are being fueled by digital technology. Digital technology has also had a significant influence on how markets behave and what people think.

Digital technology has unleashed to power of human capital and enabling the evidence and influence of relationship capital on markets, on businesses and governments. Digital technology has created a new class of strategic capital to become real-time and empowered entrepreneurs with structural capital that was once only available to the BIG Corporations. Digital disruption continues to be the force of change created from intangible assets not accounted for in our accounting systems that have provided traditional economic measures of performance.

The forces driving much of the inflection point of economic measures are intangible influences that are rewriting economic history.   As more and more global evidence appears on the social landscape leaders are recognizing that there are deep changes occurring in the fabric of our economic engines.  There are driving forces of change being restrained by past thinking and behaviors of the 20th century reinforced by institutions, policies and people hanging on to the power created from old economic measures of influence. The restraints will be overcome by the economic and social developments being created by the forces of changes.

Measurement of output alone or simply monetary measures are no longer reflective of what is really influencing the welfare of a country, a state or an organization. The measures will need to change to show the dynamics of a truly globally connected marketplace whose economic output is largely driven by intangible capital. 

Intangible capital is the inflection point of economic measures created from digital technology that is changing the way we think and behave.

Economic Force Field Analysis

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