Creative Class

But the enormity of the creative destruction sweeping the industry goes far beyond the iPod killing off the CD. The Gang of Four’s Dave Allen argues that we are seeing the “end of the album” – a construct initially created by the limitation of vinyl technology in 1930 – as the organizing principle of musical production. He sees this as potentially liberating for musicians – or those musicians that can adapt. Industry veteran Bob Lefsetz predicts a return to the pre-LP era, when artists constantly pumped out singles and toured. He even draws a comparison to the way that Toyota has succeeded by building a reputation for reliability gradually through word of mouth.

Technology is also changing the way we experience music. Strange as it may seem to vinyl purists out there, many of the net generation increasingly prefer the “sizzle” of compressed MP3s to the sound of higher-quality files. Some musicians now check their final mixdowns on cell phones.

But not all the results are positive. Mark Fisher counters that the ubiquity of digital recording is again changing the way we experience music. As more and more people produce their own music, and with more music to consume online and elsewhere, we have less time to actually experience music. We now take our music in small bits, seldom listen to anything “whole,” and have precious little time left over for live events. Like a digital-age Walter Benjamin, Fisher argues that such instantaneous exposure deprives cultures of the time and space they need to germinate and grow.

Technology and music have long interacted as economist Peter Tschmuck has shown. On the one hand, new technologies like the long play (LP) record, the synthesizer, and now the iPod have changed the music industry and led to the rise of whole new music genres. But, on the other hand, music has also powerfully affected the rise and dissemination of new technology. Without music and some ingenious entrepreneurs in the music industry, the phonograph would still be used as Edison intended: to dictate letters and store phone calls. Radio was seen as a “wireless telegraph” until one of Thomas Edison’s researchers broadcast himself playing O Holy Night on the violin on Christmas Eve 1906. And we’re all familiar with the way the MP3 popularized peer-to-peer file-sharing and broadband internet connections. But, It’s about more than just technology, actually.

The way I see it, that music is a “fruit-fly industry” – one that can tell us a lot about the nature of technology, new business models, and the economy in general. Music is a highly competitive business – a hyper-competitive market in miniature, where competition for sonic, technological, and talent advantage spurs rapid evolution and change. New recording and network technology means that barriers to entry are lower than ever. Music is often the first sector to experience the full force of disruptive technology. It was the first industry to face the file-sharing crisis, and other industries like film and publishing are now learning from its experience. Musicians are quintessential examples of free-agent workers, mixing income and seeking out affordable, creative places to do their work. And the concentration of musical talent and firms into clusters and scenes – in an industry which requires little in the way of capital infrastructure and fixed costs – can help us better understand geographic clustering across a wide variety of fields.

The Pew Research Center recently asked a sample of Americans what they consider to be life’s necessities. Here’s a chart summarizing the key results.

Felix Salmon reacts:

I’m quite surprised that the landline phone is still considered more of a necessity than a cellphone — I can’t imagine that’s going to continue to be the case for long. I am interested in the huge drop in the perceived necessity of the microwave, however. Yes, there’s something about microwaves which just feels old-fashioned and unnecessary — but the microwave hasn’t really been replaced by anything … I’m also surprised that 52% of people consider a TV set to be a necessity, while only 23% of people consider cable or satellite TV to be a necessity: subtract the second number from the first, and you get a good indication of the sheer power of network TV. I’m sure that, too, will erode quickly.

The huge drop in the perceived necessity of clothes dryers, home air conditioning, and dishwashers is I think partly a response to the economic crisis, but more a response to the bursting of the housing bubble: people don’t define themselves by their appliances in the way that they did during the housing boom.

What went up in perceived necessity? Nothing, really — nothing more than the margin of error of 3.6 percentage points, anyway. Although it would have been interesting to see the results if intangibles had been included in the survey.

I mainly agree with Salmon. The results show the fragility of the old suburban, fordist, “keeping up with the Jones’” lifestyle. Looks to me though that the old order has declined, but we’re still awaiting something to replace it.

But this begs a bigger question: When might we see a tipping point toward something new – a new normal, so to speak.

The numbers for high-speed internet and iPod are not so encouraging in terms of potentially signaling the rise of a new higher-tech consumption bundle. But there are many things that are not probed, as Salmon notes. I wonder what the results would be, not just for intangibles but for experiential goods and for things like personal development (education, learning), higher-quality food, exercise, health-care, and a cleaner, greener environment.

It’s important to begin to understand what this new consumption bundle and new lifestyle might be for a simple reason. It’s not government spending that ultimately will set the stage for long-run recovery, but a shift in private consumption that provides the broad pattern of consumer demand that fuels innovation and new patterns of production. As I’ve noted before, it was the rise of suburbanism that powered post-war recovery and expansion.

We’re in the earliest phases of the current reset so it is still hard to tell what the core components of that new consumption bundle might be. The Great Depression began in 1929, for example, and it was not until the 1950s and 1960s that the new suburban lifestyle burst onto the scene fully formed. My dad was an eight-year-old boy in 1929 living with his nine family members in a tiny Newark apartment without a refrigerator or full plumbing. Like so many others of his generation, he bought his first suburban home in the late 1950s. He could not even imagine the total transformation of his lifestyle 20 or 30 years earlier, buying his own home on what was then a farm, filling it with all manner of modern conveniences, and driving his Chevy Impala car to work.

It may not be apparent yet, but a new consumption bundle and a new way of life will have to emerge sooner or later. It will have to be less oriented around the auto-housing industrial complex: We’ll all have to spend less on these things, so we can create demand for the stuff that will power and build our future.

If we look closely we can already notice some of the emergent strands or threads of this new normal – in the shift away from big cars and big houses, away from conspicuous consumption and toward not just organic and energy-efficient, green products, but from material goods to experiences, health, and personal development.

But, it’s still very early in the resetting process. Transformations on this scale take time.

Still, I can’t help but wonder what the shape of the new consumption and new lifestyle might be, and would very much welcome your thoughts.

Not Steve Jobs, jobs-jobs. My old friend Greg LInden and a team of UC Berkeley researchers crunches the numbers (via Michael Mandel).

[W]e estimated that the iPod and its components accounted for about 41,000 jobs worldwide, of which about 27,000 are outside the U.S. and 14,000 in the U.S. (Table ES1). The offshore jobs are mostly in low-wage manufacturing while the jobs in the U.S. are more evenly divided between high wage engineers and managers and lower wage retail and non-professional workers. As a result of this, and of cross-country wage differences, U.S. workers earned $753 million, while workers outside the U.S. earned $318 million … While China accounts for the largest number of jobs outside the U.S., Japan earns by far the largest share of the non-U.S. wage bill ($102,380,000) because of its role in supplying key components like small hard-drives and displays. … [T]he iPod supports nearly twice as many jobs offshore as in the U.S., yet wages paid in the U.S. are over twice as much as those paid overseas. The most important factor is that Apple keeps most of its R&D, marketing, top management and corporate support functions in the U.S., creating over 5,800 professional and engineering jobs for U.S. workers that can be attributed to the success of the iPod.

These findings clearly show America’s very advantaged position in what geographers call the “spatial division of labor,” and show why bailouts of production operations promise far fewer economic benefits than investments in innovation. We need stop trying to slow down the process of creative destruction. The world has a complex globe straddling division of labor. More innovation creates more jobs here and good manufacturing jobs abroad. Seems like a win-win to me.

As originally published in BusinessWeek, this is the fourth installment in a series about decision-making and design. Part One. Part Two. Part Three.

Without Apple’s willingness to keep modifying and enhancing the iPod, even though it was already successful, we wouldn’t have the marvelous current manifestation or the likely further enhancements that we may not yet be able to contemplate.

It’s uncommon for corporate decisions to have such a smooth and steady enhancement path after deployment. Rather, it’s more likely to be seen as a sign of failure rather than success if a decision is revisited and altered.

In summary, great design is characterized by deep user understanding, visualization of creative resolution of tensions, collaborative prototyping to enhance solutions, and continuous modification and enhancement after launch. The result is design solutions that are easy for users to adopt, delightful for them to use, and likely to get better over time.

Corporate decisions, in contrast, are likely to be driven more by producer desires than user needs, accepting of unpleasant trade-offs generated without intensive involvement of users, and applied inflexibly. As a result, decisions tend to take a long time to make, often unravel, take expensive and time-consuming “buy-in” procedures, and are lower quality than they could be with greater user understanding and input.

With the recent uproar about the redesign of Facebook, is the modification and improvement of existing designs always a good thing?

Read this story in its entirety at BusinessWeek.com

As originally published in BusinessWeek, this is the third installment in a series about decision-making and design. Part One. Part Two.

Because companies are hierarchical, decision-makers tend to put the needs of the decision’s producer ahead of the needs of the decision’s users. This isn’t unlike the stereotypical architect who designs a house that makes him happy rather than makes the client happy. The great corporate decision designer, like the great architect, instead would get creative about how the user needs could be integrated into a creative solution.

In addition, corporate decisions tend not to be elegant and intuitive. They tend to be abstract – “We are going to be customer-centric” or “Quality is job one.” Or they tend to be internally inconsistent – “We’re reorganizing and downsizing in order to provide better customer service.” This is yet another reason for the many implementation task forces and “buy-in” sessions. These task forces are the human equivalent of a 500-page user manual for a VCR. And “buy-in” sessions are the human equivalent of Soviet indoctrination camps.

Great designers use rapid prototyping to refine their design before locking in on a solution. Rather than work on one design, fall in love with it, and jam it down the throats of users, the great designer engages users in a collaborative process of testing and refining to help the design rapidly evolve to the point where it delights users. Involving users in prototyping can lead to a solution the designer couldn’t have otherwise contemplated.

INVALUABLE SOURCES. In corporations, most decisions are never prototyped. At most, the decision-makers float a trial balloon to see whether a firestorm will ensue. And if it does, the decision is taken back to be privately reworked and floated again later.

Users typically aren’t involved. Why? To make sure the decision process doesn’t “get out of control.” As a consequence, the decision designer cuts herself off from an invaluable source of design ideas and enhancements, and is much less likely to produce an elegant and intuitive decision design.

Finally, great designers continue to modify and enhance the design after it’s in use rather than insisting that it be cast in stone. For many, Apple’s iPod is the current poster child for perfect design – elegant, intuitive, delightful, economical, etc. However the iPod went through a lengthy period of profound design changes after its first launch to become the “instant success” that everybody thinks it is (as chronicled by former chief scientist for Alias Wavefront Bill Buxton in a book on design).

What recent products do you consider as having perfect design? Does Apple still lead the pack?