Why the New Economy reshapes the plastics industry and what you need to know for helping reshaping it too!

First things first: What is the New Economy thinking?

As already stated in one my previous blog posts, the New Economy, also called the Next Economy, follows one central rule: “The winner takes it all” – the first person to come up with an innovative solution gets the biggest market share (around 70%). The New Economy will affect all markets and industries including the plastics industry. The Internet of Things and Industry 4.0 starts to take off at industrial scale. In the next 5 years, maybe even earlier, decisions will be made and the gap between successful and failed businesses will be significantly increased.

My suggestions on how to accelerate the New Economy thinking in the plastics industry:

Orientate on the key principles of 4 major personalities who have established complete new systems and turn around whole industries in the 21^st century:

1) Elon Musk (Founder of Tesla & SpaceX): “It doesn’t matter whatever you are doing needs to be a great product or service”.

It doesn’t matter what the others offer, what you offer needs to be a lot better. For example, when you enter with your product or service an existing market place, you will need to stand out. Elan Musk states that you always have to jump into the customer role and ask: Why would I buy exactly this? You as a customer will buy the trusted brand unless there is a big difference compared to your trusted brand. It can be a price difference (much cheaper) or a value difference (significantly more added value).

There are often intellectual property discussions, which could come along with your product. Here, Elon Musk has an interesting view: “All Our Patent Are Belong To You”

Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard (Elon Musk, June 12, 2014).

2) Peter Thiel (Founder PayPal, Investor): “Competition is for losers”.

Straight forward his view on how to build successful businesses in the New Economy. You need to go from zero to one and aim for a monopoly. Your business needs to differentiate itself so much from others that it is not even competing. Important to note is that a world of perfect competition is a world where all the capital gets competed away! A good example which demonstrates the zero to one philosophy is Google: they have no serious competition. Google differentiated itself so strongly from Yahoo and Microsoft Bing that it has been able to hold the monopoly of the digital search engines for the past 13 years, which results in an enormous cash flow.

Part of a successful zero-to-one strategy is to find the secret path. Most companies try to rush through the tiny doors where everybody tries to get through. Maybe, around the corner there is a secret gate which no one is using. Always strive for the secret path.

3) Tim Ferris (Inventor of the 4-hour workweek, 4-hour body and 4-hour chief): “DiSSS formula”.

In the New Economy, adapting your skills in a certain direction or learning new skills may elevate the way to do business. How to do that best? Follow the DiSSS formula to master everything, from learning a language to learn cooking. Tim explains this method by using LEGO blocks [1]:

Deconstruction: "What are the minimal learnable units, the LEGO blocks, I should starting with?"

Selection: "Which 20% of the blocks should I focus on for 80% or more of the outcome I want?"

Sequencing: "In what order should I learn the blocks?"

Stakes: "How do I set up stakes to create real consequences and guarantee I follow the program?"

Apart of DiSSS, from the 4-hour workweek book, I took away 2 other concepts, which can make your daily actions in business easier: The Pareto principle (80% output results from 20% inputs) and the Parkinson law (a task will increase importance and complexity in relation to the time allocated for its completion).

This can help you increasing your productivity by:

1. Apply the Pareto principle to focus on important tasks and then
2. The Parkinson law for shortening your time to important tasks.

4) Simon Sinek (Author of Start with Why): “Why? How? What?”.

Great leaders inspire people from the inside (Asking: Why?) to the outside (Asking: What?), which is represented by the so-called golden circle. The key for motivating people to take on action starts  by stating out why you do certain things and not by explaining the ‘what’ of a task or product. The ‘what’ is always a consequence of your ‘why’. Take as an example the way Nike and Apple communicate.  People follow you, not because they must. They follow you because they identify themselves with your product’s philosophy. This is explained by Simon with the law of diffusion of innovation.

-The first 2.5% of our population are our innovators.

-The next 13.5% of our population are our early adopters.

-The next 34% are our early majority, our late majority (34%) and our laggards (16%).

For having a mass-market success you need to achieve the tipping point between 15 and 18 % market penetration. Then, the market starts to tip and your idea will be accepted by the majority or simple put:

“People don't buy what you do; they buy why you do it and what you do simply proves what you believe. (Simon Sinek)”

The unwritten rules of the New Economy will change the way how we do business, how we innovate and how we live. The best way of understanding the ideas around the aforementioned people is to ob­serve your direct environment. You will find already influencing changes in most disciplines of plastics processing, production and developments.

Further remarks on this topic:

To follow the ideas of the New Economy, we have to start living in 2016 and not applying concepts and methods from e.g. 2008. You can observe that strongly in marketing: companies spend millions of their budget on printed advertisements, however, nowadays you need to directly hit the customer within seconds (online)!!

Silicon Valley in the U.S. has a clear vision and answers on how we will live in coming years. They will influence the world population over their business monopolies. Only few people will decide on how millions of people will live. This way of thinking is imperialistic dominated. The United States of America is good prepared for changes to come up, since most of these monopolies have originated there. The European Union has no answer to most of the questions which will come up in the next years.

Main areas of strong vision for the future are:

• Our health: we will become older than 100 years. The medical treatment will shift from passive (going to doctor for treatment) to strongly preventive (measuring and recognizing upcoming diseases). Gen engineering will also be on the way.
• The way of transportation will change - self-driving cars are finding their way in the market.
• Artificial intelligence: the machines learn behaviors on their own and replace the human beings in certain jobs which can cause an increase in unemployment up to 40-50%.

All the aforementioned areas are chances for the plastics industry to deliver solutions. The most important assets of the New Economy are people with their ideas and how we spend our time. Time needs to be seen as the new currency. You need to be open for business opportunities 24/7. Share this post and till next time!

Greetings,

Herwig


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[1] http://uk.businessinsider.com/tim-ferriss-disss-system-to-learn-anything-2015-3?r=US&IR=T