Thursday, 20 October 2011

Economic metabolism


We live, we eat, we procreate, we die, and it seems the rate at which we can these things faster and more, creates economic value. After hurricane Irene I had the benefit of seeing the slow decay of preparations made in haste. Duct tape crosses on windows lingered for months in Harlem as the speed at which they were applied did not match the speed at which they were removed. Quickly becoming the new default, anchored and too stubborn to be moved.
But how do we apply this observation to the broader context. The concept of economic metabolism becomes most tangible in the every day sense when companies have to deal with crisis in the same way. The speed at which accenture responded to their own PR hurricane, removing Tiger Woods billboards after a scandal, says as much about their vitality and responsiveness as the fading duct tape in Harlem says about economic decay (personally I still saw Tiger Woods posters 3 weeks after the affair in Oslo airports, the Munich ones disapeared over night).

Surely this must have some bearing on the prospects of brands and organisations. If the organisation is able to metabolise new data, be it threats or opportunities faster than its foe, there must be a sustained footprint on the overall competitiveness. Should we be measuring channel response time in the same way that a terrorist tests potential hit sites? How long does Unilever take to respond to a complaint letter? How long till one company can install that broadband, versus another. The basic pace of economic activity hardly features as a metric in stock valuation, yet the ability of a company to respond is one of the most obvious ways to assert its core dynamism.
Traditionally the key moving metric the market would assess are things like days of cover/inventory days or burn rate. This just expresses the need of financial markets to assume the world is linear and predictable (like a sparkline fitting between a known upper and lower border).

The web has somewhat moderated this impulse by talking the language of bounce rates and clicks to target. The half life of links are now showing the inherent value of social media conduits, essentially bringing the concept of economic metabolism closer to the fore. Can we start using the half-life of customer complaints too as a leading indicator of brand share growth? And should the usefulness of technologies be redefined (like trans fats) according to their impact on economic metabolism? This will have a profound effect on development aid!

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