The industrial age: An abbreviated history
The industrial movement initially was born out of a need to integrate several capabilities into a single streamlined model in order to gain efficiencies. Those efficiencies resulted in goods being produced on a more massive scale at a substantially smaller cost and heralded an era of widespread availability of goods to a larger segment of the population. As a result, things that had once been available to only rich people (basic things like soap, shampoo and running water) became available to the masses, improving everyone’s living standards and creating a lot of the world we live in today.
As time went on, however, the rise of the publicly traded corporation and the demand for increasing returns on investments lead to increasing consolidation into larger and larger conglomerates. In the search for improved efficiencies, those conglomerates worked hard to first figuring out how to get more out of their existing production lines. Eventually, the leadership of many of these organizations came to the conclusion that they could not improve efficiency any further on the existing model and found that the salary people who worked for them were the only portion of the system that had not been optimized.
Searching for ways to optimize salaries, large corporations moved their production overseas, where workers in less developed countries could manufacture goods at a cheaper rate than those in more developed economies. In order to effectively manage this new approach, companies had to define new approaches and methods to creating and manufacturing goods, giving rise to a new portion of the economy focused on offering services around small portion of that value chain. Eventually, a lot of manufacturing ended up in the hands of manufacturing specialists: companies that did not necessarily take part in the development of new ideas and products or in the marketing, sales, and distribution of those goods but provided an optimized way to manufacture goods.
The near death of the artisans
Prior to the industrial revolution, most goods were manufactured by artisans (or craftsmen) who focused on producing goods manually and generally offered them within a limited geographical range. Because labor was primarily manual, artisanal goods were not mass produced: their scarcity also meant that the produced goods were generally more expensive and not traditionally available to all.
With the rise of industrialization, many artisans disappeared, as their craft became automated and they were unable (or unwilling) to produce goods at ever decreasing costs and in ever increasing amounts.
Some, however, thrived by focusing on smaller and more high-end markets, in niches where goods could not be mass produced. Artisanal work increasingly got praised for its uniqueness and the thought that has gone into its design.
In more recent times, this has meant that artisanal work has been seen as more exclusive because of its scarcity. However, along the way, an interesting phenomenon happened.
The new artisans
Caught in the gap between mass produced offerings of the industrial age and one-offs presented by artisans sat a whole class of potential products that could not previously be made available to people. Those products were the kind of offerings that could appeal to a small portion of the public but may not be appealing to enough people to warrant the interest of large corporations.
At the same time, fewer large entities became interested in taking risks because doing so could potentially end up in failure, thus lowering the returns they made to their investors. This risk-wariness has allowed start-ups to thrive as smaller enterprises concerned themselves with innovating and either failed, grew large, or were gobbled up by the larger players.
Up until the end of the last century, however, most new startups focused on services or offerings like software that required low upfront capital requirements. The manufacturing and delivery of physical goods was still something that was best left to large corporations.
With the rise of contract manufacturing and increasing access to networked resources across the internet, the cost of developing, manufacturing, marketing, and delivering goods has dropped substantially, making it possible to create and distribute an increasing amounts of goods to small er and smaller markets.
The new artisan supply chain
Simplifying the traditional approach to building and selling ones, one can organize things as follows:
- Individual or team comes up with idea
- Individual or team builds and test prototype(s)
- Prototype is tested in the market to assess if there is demand for it
- If there is demand, money is raised to build final product
- Product gets manufactured
- Product gets shipped to warehouse or distributor
- Product gets sold
- Product is shipped to buyer
In this model, a large amount of money is required to manufacture and store the product. In more recent time, the concept of just-in-time manufacturing has lowered those cost but there is still some costs associated with it.
The new artisan model, however, turns the whole process on its head:
- Individual or team comes up with idea (same)
- Individual or team builds and test prototype(s) (same)
- Individual or team does pricing research to assess how much it needs to sell product for
- Prototype is shown in online video to assess if people are interested
- Kickstarter campaign is kicked off to sell product BEFORE it is manufactured
- If Kickstarter campaign is successful, product is manufactured and send directly to buyer
What’s been amazing to me is that a lot of this revolution seems to be emerging out of New York. Kickstarter is based in lower Manhattan. Etsy, which provides storefront and a marketplace for craft-makers is based in Brooklyn. Meanwhile, Adafruit provides inexpensive electronic components to manufacture new gadgets and is based in mid-town Manhattan. Buglabs offers a modular set of electronic components to build complex electronic goods out of a lower Manhattan space. And Makerbot industries offers inexpensive 3-D printers from a space in Brooklyn.
It appears as if the next industrial revolution infrastructure will be coming out of the most unlikely of places: New York city. Now all that is needed is for a marketplace for contract manufacturers to bid on turning prototypes into real products and the whole value chain will be completed. And that appears to be another software problem that could be solved by a New Yorker.