The New Invisible Hand

My book The New Invisible Hand will be released at the end of July.

This book is for you if you’ve ever struggled to understand how your company should react to different competitive threats enabled by changing technology. You’ll learn how five technological revolutions are upturning entire industries and determining new winners and losers in the marketplace.

While we cannot control these five revolutions, we can choose to see our reality as one of opportunity, rather than crisis. Good companies can survive despite these revolutions. Great companies can thrive because of them.

The New Invisible Hand features many companies that are doing just that.

The Age of Digital Disruption

James R. Schlesinger, economist and senior public official, opined, speaking as the U.S. government: “We have only two modes — complacency and panic.”

As Director of the CIA, Secretary of Defense, and our first Secretary of Energy, Schlesinger was only too familiar with the tendency of large organizations to become inured to “business as usual.” When times are good, there is no reason to change. When times are bad, there’s no time to change.

My goal with this book is to shake you out of complacency and, perhaps, to assuage your panic.

I started my career at the Center for Strategic and International Studies (CSIS), a nonpartisan foreign policy think tank in Washington, D.C. I researched global trends and helped to convene leaders from government, business, the military, and nonprofits to discuss the challenges they all faced. Collecting these various perspectives in the same room to analyze economic and security issues was invigorating, but it lacked the immediacy of working in business.

When I transitioned away from foreign policy, I thought my trend analysis days were behind me. But as a strategy consultant, I again get to meet with leaders to help them think through their most pressing issues and execute improvements. Thanks to the vantage point I have with Wiglaf Pricing, I’ve witnessed new trends over the past several years that have led me to the ideas behind this book.

The challenge for executives and organizations, in global affairs as in business, is to recognize obstacles and opportunities in advance. Additionally, the value behind synthesizing the findings of disparate experts and experiences of various organizations turns out to be very real in the corporate world as well.

The idea that the business landscape is changing at an unprecedented speed is not new. Executives and commentators have noticed it for years, but we’ve lacked a common understanding of how the different pieces fit together and how to prioritize new information.

This book presents an overarching framework to explain just that and to demonstrate how to position your company for success. Too many organizations seesaw between complacency and panic, never realizing that the opportunity to improve is always there for the taking.

Five Revolutions in the Digital Economy

The forces of innovation that are affecting the way goods and services are bought and sold represent one of the greatest threats — and opportunities — to all businesses today.

Over the past two years, I’ve spoken to dozens of business founders, leaders, researchers, experts, and entrepreneurs to uncover the innovations that are shaping the future of how we price everything. Their insights and experiences are critical to understanding that the effects these revolutions are having are only just beginning.

While not only forcing me to reframe the way I see the world, by gathering these insights, it became clear that there are five major revolutions poised to reshape pricing and business strategy as a whole:

• Reintermediation: How the role of much-maligned middlemen is changing, with new online intermediaries upending entire industries and finding new ways to bring value to customers. We’ll see how many leading companies are seizing such opportunities.
• Monetization: New applications of pricing models to hone in on your target customers and the importance of the pricing discipline. How the price of a single cup of coffee hamstrung a café in Washington, D.C. and lost the business tens of thousands of dollars a year in profit.
• Transparency: Promise and peril for your business. How changing expectations force companies to be proactive in how they communicate with customers. How one company found that more transparency wasn’t always better for its customers.
• Channel: Deciding who can help you reach your customers (and who is merely in the way). We’ll meet, among others, a dealership-less car company and a food startup that didn’t want to be available in the grocery store.
• Data: The new oil of the Digital Revolution. Data requires careful strategy and refinement to unlock its full value. Learn how certain companies are doing it well, and how others are falling behind.

These combined forces constitute nothing short of a revolution in how companies must create value for customers and stay ahead of the competition. Understanding these forces and how different companies are adapting to them is critical to maintaining and increasing profitability.

Smith’s invisible hand referred to the unobservable forces that guide the actions of customers, suppliers, and entire marketplaces. Supply, demand, and price allocate scarce resources and organize industries.

Reintermediation, monetization, channel, transparency, and data represent the New Invisible Hand. They are an additional layer to Smith’s concept. Unleashed by the Digital Revolution, these hidden forces increasingly determine who gets what, when, how, and at what price.

At Wiglaf Pricing, I have the pleasure of working with many leading companies in their industries. I’ve seen how these forces are affecting not only single firms but their entire commercial ecosystems.

They are challenging, but good companies can survive despite them, and great companies can thrive because of them.