Charles Darwin never said “survival of the fittest” though many people wrongly attribute that notion to him. Instead, Darwin said “it is not the strongest of the species that survive, or the most intelligent, but the ones most responsive to change.” It’s being able to adapt in the face of changing conditions that sets the course for longevity and survival.
While it’s no surprise that this is also true in business, it isn’t very often that you get a sort of sea change event that will dramatically ripple through many industries. A super mutation, if you will.
A super mutation has happened, and while it isn’t going to kill organizations or industries overnight, several of both are already suffering and failing to adapt.
The super mutation is very well described, oddly fittingly, by a rock star in a really well written piece in The New York Times. The piece called WhoseTube? by Damian Kulash Jr. of the band OK Go. I will admit I didn’t recognize the name of this band until Mr. Kulash mentioned the hugely famous YouTube video his band posted that shows the band members doing some really creative things on a series of treadmills. The video literally cost them nothing to make, they filmed it at his sister’s house (though he didn’t mention why she has six treadmills in her house) but nearly 50 million people have watched it and it was hugely helpful in making the song and the band a global phenomenon.
So what does that have to do with a Darwinian super mutation? I am getting there. Even though the record producer EMI made a mountain of money as a result of the spike in the popularity the band caused by the YouTube video, they won’t allow anything like it to happen again. EMI feels like they should have gotten money from all of the people who watched the video and heard the song. They won’t let people embed the video link on other sites and they want to charge $.004 per view. EMI is trying to charge for something that is free advertising which is the best way to sell more music. That is at the heart of this super mutation – knowing what to charge for and what not to charge for, and what the right amount to charge is.
Kulash also does a very good job of explaining that record companies used to act more like venture capitalists (what he calls “risk aggregators”) where they would invest in lots and lots of bands, knowing only a tiny number would be huge hits, but they would keep most of the profits and that model worked for them. Now record labels (probably in part due to shows like American Idol) sign mostly just the sure bets making it less likely that the OK Gos of the future will be able to sign on with a major recording studio for their first record.
The super mutation is that 20th century notions of licensing and royalties are dead. Napster was the first shockwave where we learned that people want songs one at a time, and many people don’t think they should have to pay for it (the notion of property and intellectual property, especially when it costs little or nothing to duplicate, has changed). The same happened with TV on YouTube when stations wouldn’t allow clips (or all) of their shows to be posted.
The first part of the super mutation is the fragmentation of the product. Not so different from the introduction of pizza by the slice (which was initially laughed at), people don’t want to buy an entire album or watch an entire show, or pay for all of a software product. While that is huge by itself, this radical shift in the idea of property is even bigger. Last year the very popular band Radiohead did something groundbreaking that is probably one of the smartest adaptations to this super mutation – they posted a new album and asked people to pay what they thought it was worth. This huge experiment was a gigantic success and I think it will set the pace for further adaptations.
But that brings up the other half of this super mutation, which is the marketing side. Viral marketing and messaging isn’t new, but the mechanisms and media by which something can got viral (Facebook, YouTube, Twitter, blogs, etc.) have become the most powerful marketing tool imaginable.
The software world is probably the industry that is, thus far, doing the best job of adapting to this super mutation, through software rental, software-as-a-service (SaaS), and now Cloud computing (which is more than just the internet), and when you think of a huge company like Microsoft shifting from a model where people to buy their software to a model where customers pay for it in different ways, that’s a gigantic shift in everything from revenues, to sales commission structures, to marketing and beyond.
Licensing, pricing, marketing, and property models are changing very rapidly. Everyone from the entertainment industry to Microsoft needs to start getting a handle on this change, and ask who their customers are (20-somethings have very different notions already compared to the 50-somethings, and so you need to know who you are dealing with) and plot a very different course. Plotting a different course is harder than ever because you are trying to define where you will end up in such a volatile time – but it must be done, otherwise in the immortal words of Yogi Berra “if you don’t know where you are going, you might end up someplace else.”
So break out the big rethinking guns and plot your course.
OK? Go.
-Ric
P.S. Speaking of Darwin and change, I couldn’t help but wonder this weekend when I read a piece about dolphins being able to cure themselves of diabetes, if through all of the drugs and medical care we get, if that’s starting to teach our bodies to be less adaptive to change. If the medicine solves the problem, we don’t have to do anything to deal with it. Is that possible? I would be interested to hear your thoughts.
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