Change is happening all around us: new technologies, new companies, even new aspirants for the highest office in the land are lining up to debate each other. But how much of this change is actually new? I joined Dave Donars, Cardwell Beach’s chief of research, to talk about the power of tradition and how it influences consumer behavior. How do successful firms like Apple, Tesla and Starbucks tap into our affinity for tradition to drive sales? How long does it take so-called “new” technologies to permeate into the marketplace, and why do some technologies have greater uptake than others? We dive into these questions in the podcast below.
Podcast Transcription:
Dave Donars: Welcome to the third episode of the Cardwell Beach podcast. My name is Dave Donars and I’m chief of research.
Brian Erickson: I’m Brian Erickson and I’m the chief marketing officer.
Dave Donars: So today we are going to start our discussion by talking about the presidential campaign. We’re going to talk about it in terms of just some minor weird facts that are happening and kind of how it could relate to advertising or branding. There is no industry that has as akin to marketing as I think politicking necessarily. So, we’ll discuss some of those connections. And also probably getting into the name game about how agencies, how various tech firms, and even old standard tried-and-true traditional brands are now using a dual name format to be the X of Y, to be the Snapple of Uber or the Uber of Snapple, depending on how it works. So, thank you very much for listening and we’re going to kick it off.
Brian Erickson: Great. So let’s talk politics.
Dave Donars: So, yesterday, yesterday was the third presidential debate, Republican presidential debate.
Brian Erickson: Yeah.
Dave Donars: I have to admit that I am a cord cutter so I did not watch it live.
Brian Erickson: I actually did not watch it at all.
Dave Donars: We’re not — given the time delay that we’re dealing with on this, we’re not necessarily going to get into the nuances of the debate itself but one of the things I would like to discuss are some aspects of branding and really about familiarity, both in the range of topics that are discussed and more importantly the name recognition factor. What’s amazing to me is that just to kind of give this some consideration, the modern American presidency probably begins in 1952. That’s the first non-FDR election since the Depression era—by non-FDR, I know that Truman ran in ’48 but he was on FDR’s ticket previously, he was the vice president—and so ’52 is the first one where you get a clean slate of candidates. It’s a post-war era, it’s kind of the beginning of the modern presidency.
What is amazing to me is that including 2016, that is 17 presidential election cycles. And of those, there are two names, only two last names that are on the vast majority of those tickets. So, Nixon or Bush are on 12 of the 17 campaigns for the Republican side which is pretty significant. It’s around 70 percent. The outliers—just to kind of lay this out—are ’64, which is a Cold War election, ’76, which is post-Watergate, ’96, and then 2008, 2012, that’s it.
Brian Erickson: Wow.
Dave Donars: So, there’s a period of time between 1952 and 1996, going into the ’96 election, not counting the ’96 election. So, that’s a solid 43 years or so.
Let’s say you’re in 1995. Eight-two percent of your elections at that point had Nixon or Bush as the ticket name. Now that doesn’t mean that they were on the president, there was the president or the vice president which is just — it’s staggering and — to think about there’s either been a Clinton or Bush on the ticket and if we consider Hillary Clinton’s run in 2008 to be a serious run where she — you know, it was on odd situation where the electors almost decided it. If we consider her run there pretty serious, from 1980 through now, there has been a Bush or a Clinton running in every election except for 2012. So, that’s — you know, that’s our lives — that’s our entire life. Where am I going with this, is I think there is a certain comfort around name recognition. There’s a certain comfort around the idea of tradition and familiarity which — I don’t know. When I started to look at this, one of the things that struck me was about how much tradition means to people and how much — just that comfort of something that has been done before even in something as important as a presidency, it’s still kind of what they fall back on.
And if I’m totally off on this then there’s a lot of people who have been off on this idea. But I think that when you — when it comes to the president, that’s probably a little bit more important than the deodorant that you choose but I think that familiarity and tradition and those elements really start to show themselves when we look at the aggregate US voting population which is, you know, basically around the same age or demographic of anyone that you’d be marketing to effectively anyways, so.
Brian Erickson: Interesting when you get into, you know, the conversation around tradition and familiarity, I was just having a conversation with Matt the other day about pumpkin spice flavoring and the rise of pumpkin spice. Did you know that pumpkin spice as a concept did not except pre-2003? It had not been invented. Starbucks invented it. They were looking for a seasonal flavor that was differentiated not to–not to have resonated or not to have been taken in share of mind and pumpkin was something that was very top of mind in the season but not very prominent in beverages.
Dave Donars: But there was a pumpkin pie, right?
Brian Erickson: There was certainly pumpkin pie.
Dave Donars: So, they were kind of co-opting the idea of pumpkin pie or what was that?
Brian Erickson: I guess. I mean, I think — I don’t — I mean, I don’t — I guess they were creating a pumpkin pie beverage but I just — I mean, pumpkin spice has really gone out of control. I just saw a pumpkin spice Oreos…
Dave Donars: Mm-hmm.
Brian Erickson: …on the show so I had to do a little research myself and they were good, they were good.
Dave Donars: And the new Daily Show, the one with Trevor Noah, just did a piece on pumpkin spice which was — it does kind of talk about that there’s a fascination with pumpkin spice and it is so seasonal.
Brian Erickson: Mm-hmm.
Dave Donars: And people get used to it being around a certain season. There is really something about tradition. There is some type of comfort level and — I don’t know. I kind of want to explore why does tradition matter, you know, like, what are the ins and outs of what gives people comfort and it can be about food, it can be about rituals, it can be about media consumption, you know, like, tonight speaking of pumpkin spice, the great pumpkin, the — it’s the Great Pumpkin, Charlie Brown.
Brian Erickson: Yeah.
Dave Donars: It is being broadcast tonight. And, you know, I can — I mean, I always watched those as a kid and I can — I now want my daughters to like it as much as–much as I did which is — it’s kind of nonsensical, right?
Brian Erickson: So let me ask you this, are you implying that the brand choices that we make are in whole or in part driven by tradition and the comfort that tradition gives us?
Dave Donars: I think so. I mean — I think so. I think it’s societal, familial, or personal, but there’s some aspect of tradition that we all partake in no matter how chaotic our lives are or how untraditional we try to be that there’s going to be some element of those three that we kind of fall into.
Brian Erickson: So — I mean, how do you new brands enter the scene if they’re not traditional?
Dave Donars: I think that they have to ride on the coattails of some form of tradition or some radically new meme but even that meme could still become a personal tradition at that point. When we take a step back and we’ve spoken before a lot with Apple and some of the other things, Apple probably isn’t going to be remembered necessarily for having the world class tech or any other aspects that they kind of go with now. They’ll probably be remembered as being able to introduce new products for a period of time, introduce totally new products, and not have to overcome any of the aspects that they don’t fall into people’s tradition…
Brian Erickson: Mm-hmm.
Dave Donars: …whatsoever, that they kind of — were just consumed and applied into people’s lives in an incredibly rapid pace and not just in this country, this is a global phenomena that they kind of struck on. Obviously tech can do this in ways that consumer package goods that automotive and some other elements cannot do but I think that…
Brian Erickson: I don’t know. I knew Tesla has done that…
Dave Donars: Yeah.
Brian Erickson: …to a certain degree. This is how, you know, Tesla is really becoming popular. I witnessed one Tesla almost T-bone a second Tesla in Brooklyn and they both jammed on the brakes and they were just ticked off like no other and they both looked at each other. The second they recognized they were both driving Teslas and they gave each other a thumb’s up. And I was like, wow, that’s when you know that Tesla has created an incredible brand, that they have made electric cars so cool that two 40 something white dudes in Brooklyn almost T-boning each other end up smiling and giving each other a thumb’s up. But there were–there were another example of somebody who has kind of brook in tradition in a meaningful way, in a bold way.
Dave Donars: And I think bold is kind of — bold I think how we think of it in language is a really interesting term because it becomes something that is ultimately just very — it’s about an accentuation on some aspect of tradition. So, for instance, Tesla isn’t a completely new product, it’s a car that has four wheels but how they advertised it, remember some of the original stuff is they could go zero to sixty like monster fast.
Brian Erickson: Yup.
Dave Donars: And those type of aspects which we can still kind of consume and own and absorb about, like, is the car macho enough because it had an electric engine and all those other elements, you know, where — I remember some of the original stuff with electric cars was that, I was surprised by this but there was some movement and who knows how much was hyped up by the media but that the blind were very against electric cars because they were so quiet that they couldn’t see — hear them, sorry. They — they’re blind, they actually can’t see. So, they couldn’t hear them which was kind of causing safety concerns…
Brian Erickson: Mm-hmm.
Dave Donars: …when crossing the street and other things. But I think for the vast majority of people, they don’t have to deal with safety concerns about this and it was just about how we consume it culturally. How do you–how do you own that badge of being a person who drives an electric car? Like, you’re saying they both give each other a thumb’s up.
Brian Erickson: Yeah.
Dave Donars: You know, there’s some associations and bond there that they were playing into that falls into a personal tradition because they have to plug the car in every night, right?
Brian Erickson: Yeah. They’ve got a 250 mile range with no hope of ever — you know, if they get stuck 250 miles out, that’s it, like, call the tow truck.
Dave Donars: Yeah, it’ll be like Mad Max 7 movie then just looking for outlets…
Brian Erickson: Yeah.
Dave Donars: …instead of, like, the search for gasoline?
Brian Erickson: Yup.
Dave Donars: But there–but there’s an affinity there, there’s a personal relationship, there’s a personal tradition that you have to perform when you have that thing, and it’ll be — like, if iPhones were rare or other element.
Brian Erickson: Just kind of coming back to the whole tradition element and, you know, you do raise some good points. I like your analysis or I like your emphasis of the word bold in that they are really highlighting certain pieces of tradition and paving the way forward. I think even the name Tesla, right?
Dave Donars: Mm-hmm.
Brian Erickson: Was relatively unused term but a huge piece of history and a huge piece of tradition when it came to electricity. And even kind of, you know, being the underdog in, you know, the race for electricity, even though he has the prevailing standard that we use today, you know, Edison really gets a lot of the credit for it and, you know, kind of that underdog spirit is something that has no–has no age.
Dave Donars: October 21st, 2015 was Back to the Future Day and it is been kind of widely discussed that I believe Back to the Future Part II came out in ’89, so they would have been doing production design, construction, writing of the script in ’88 — ’87, ’88 range. What has been taught — discussed is just how many things they kind of got right about, you know, we don’t have flying cars, I don’t think, you know, Bob Geller expected us to have flying cars but just the little things about, you know, when you’re in the house, the little elements that had become true, just the things that are in the background.
You know, I think that a lot of it was much closer to the world we live in than maybe people in 1988 or ’89 would have expected it to be. But even with that, as we move forward to things that were purposely put into the plot to be an exaggerated truth of reality, to be something bold. So, a hoverboard is a skateboard but without wheels. There’s — that movie was so popular that it created a comfort for all of us to have around the idea of a hoverboard and there are some kind of functional prototypes of hoverboards that exist right now. You know, even futurism is in its own way a kind of tradition now…
Brian Erickson: Mm-hmm.
Dave Donars: …because technology’s moving at such a rapid pace. I mean, when we — I think –maybe I’m overspeaking but I think when we’re speaking about tradition, we’re not speaking about, you know, churning butter and, you know, this kind of overly pastoral life. Tradition is something that can be actually very future-looking, very forward-looking even beyond what we currently have but it is still a part of tradition. If we lived in a world where technology just stopped and there were no advancements of technology, that would be radically untraditional…
Brian Erickson: That’s very true. I mean, you think back to, you know, kind of being a kid and waiting for the next video game system to come out was kind of a tradition, right? It’s like, what’s going to be the next advance in technology here and, you know, you anticipate that as part of a ritual that you have with friends and family. It’s — it is kind of the tradition of what’s next.
Dave Donars: Yeah, right. And I mean I don’t know if that is the — where the kind of fault lies on that is us waiting for what’s next. Is that a fault of technology or advertisers or where does that anticipation come from because that is one of the senses where we can kind of relish the anticipation whereas most aspects of life it is about this instant gratification but the next product cycle, the next thing coming out, we can’t–we can’t time travel, we — I mean, technically, we’re all time traveling because we’re moving forward every second right now but we can’t choose to opt in and out at variable speed. So, since we can’t jump forward to that in a world of high levels of instant gratification, there is some kind of cultural touch point to having to wait for something, to having to just have things be out of your control and that you’re not the one deciding all these futures I think is an element of…
Brian Erickson: Well, that’s kind of interesting segue back into seasonal trends like pumpkin spice, right? It’s — you know, there’s scarcity there, it’s out of your control. And, you know, you wait for it and you anticipate it.
Dave Donars: Yeah. I think — what used to probably be something that was familial within your family about, you know–you know, an apple pie cooked by your mom or your dad at a certain time of year or pumpkin pie coming at Thanksgiving or those elements are now much more societal, they’re much more up for barter or exchange but we still obey these weird rules about seasonality, you know. I mean, there’s not that many people who, you know, are drinking like mulled of wine on a hot summer day. It just doesn’t make sense. It’s not something that you would do.
Brian Erickson: Well, it’s actually kind of cool, I was looking at — when I was speaking with Matt and I was looking at Google Trends and I was just kind of inputting different terms and, you know, ones that I thought might be seasonal, it’s kind of crazy — I have to come up with a more exhaustive list but the ones that I did no or did find crazy seasonal spice with obviously were pumpkin spice and just pumpkin in general. Watermelon during the summer is unbelievable, I mean both literally and in the trend sense. Cider peaks twice around Thanksgiving time and then February. And cinnamon right around New Year becomes extremely popular. Asparagus in the spring as well as eggs. But, you know, I want to switch conversation from…
Dave Donars: Yeah.
Brian Erickson: …food and flavorings back to electricity, just talk about how can brands in the energy market, you know, in electric sense do what Tesla has done and, you know, in a bold way break tradition or redefine tradition. Specifically I want to talk about light bulbs. It’s — you know, this is kind of epitome of an emotional decision that really defies logic if — you know, I would bet that most of you if you go home and you take inventory in your house, how many light bulbs you have and how many of those light bulbs are standard old fashioned incandescent light bulbs versus how many are high efficiency LEDs or even compact fluorescent light bulbs. The math is a no-brainer. So, you’ll spend probably ten to fifty times — well, I don’t know, it’s some sort of order of magnitude of greater spending choosing incandescent light bulbs. The thing is, an incandescent light bulb is 65 cents in the store and an LED or even a compact fluorescent light bulb is six bucks or ten bucks, something like that. But the life of the light bulb I believe in incandescent light bulb is 750 hours and an LED or compact fluorescent is 10,000 hours.
So you won’t ever have to change it. You’ll probably forget that you ever had a changed light bulb and you’ll save an incredible amount of electricity and, you know, your energy bill will come down. But most people don’t do it, A, because they don’t want to shell out the five or ten bucks for that LED or compact fluorescent light bulb and, B, I think for a while there was a stigma that the color was not as good on these other types of light bulbs but that’s actually no longer true with most LED lights. So, you know, how can energy brands stop playing that rational game that so many of them play saying, oh, we can save you money, and give a little bit emotional and start to redefine tradition of something as boring as a light bulb?
Dave Donars: I just looked up some cost percentages and so we’re looking on incandescent being about a dollar twenty-five and these LED lights being about thirty-five dollars and ninety-five cents. The reduction — the light bulb’s lifespan increases about 40 fold. Your electricity use decreases to about 12 percent of what you are as an incandescent but that increase in cost of the bulb is, an incandescent is one-third of one percent of the cost…
Brian Erickson: Mm-hmm.
Dave Donars: …of the LED lights. I think we have moved beyond the lighting thing. I remember that. I remember that being a big issue.
Brian Erickson: Yeah. With the color?
Dave Donars: Yeah.
Brian Erickson: Yeah.
Dave Donars: That it wasn’t natural.
Brian Erickson: Yeah.
Dave Donars: And it’s just like, what the hell are we talking about with natural? Like…
Brian Erickson: Yeah.
Dave Donars: …this is a thing that was invented by Thomas Alva Edison, like, he’s not–he’s not God, like, it didn’t grow in the ground, it’s not natural. This tone of light is an approximation that we’re just traditionally used to. It’s not an actual thing. And I think we started to fight that battle probably in the ’90s and into the last decade and I think that that’s kind of been resolved, the color issue. But at one-third of one percent of the cost of entry, it’s — I think a lot of people are going to kind of make the same decision over and over. But it also depends on where you are like in your life cycle and I think that that’s maybe where you play to, that this is something equivalent to high-end flatware or something like that, given the length of these bulbs. You know, you’re probably looking at really directing your message to homeowners and you’re really directing it to people who are young enough, old enough, you know, so that they’re not so old that they — they’re just like, all right, this light bulb is going to outlive me, like, that’s not–that’s not a viable cost proposition. But, you know, they want something that will last a long time, that has value that enhances your house, that reduces your cost as a homeowner. I think to the rental market, especially where electricity is covered in your rent, it’s a forsaken argument at least for the time being until you move to institution or governmental change.
Brian Erickson: I mean, but what — you know, even that conversation came back to cost. What I’m asking is, can there be a Tesla of light bulbs where people will pay more for something because it’s cool and I haven’t seen anybody in that market — you know, they do that with the, oh, the cool colored — you know, change your room to red…
Dave Donars: Yeah.
Brian Erickson: …when you bring your date home or something like that, great. But I mean for the average white light consumer, why hasn’t that happened since Thomas Edison? I mean, honestly, I think that the cost case that they’ve made is so compelling that they’re stuck in it and it’s too rational and not emotional enough of a value proposition to turn people to something else.
Dave Donars: I mean, electricity is a very odd thing. It’s under the rubric of utilities.
Brian Erickson: I mean, I’m going to in–I’m going to interrupt you on that. I mean if we’re going to talk about the fact that you cannot differentiate a utility service or product, I’m going to talk to you about bottle water.
Dave Donars: I know. I was just going to say that. The thing is is that water — but water is something that goes inside our body. We can taste it. Taste is like a soup — like, how I taste something, I can never know if you’re tasting the exact same thing because I can’t, like, weirdly be inside your mouth at the time you’re tasting it.
Brian Erickson: We don’t want to hear about that.
Dave Donars: Like — I mean, like, that — I don’t know how — taste is the unsharable sense.
Brian Erickson: Yup.
Dave Donars: But even with sight, even how we see things with like, you know, what color is the dress or whatever things we want to use, how people perceive colors and impression — things — that’s a radically different thing but the one that is extremely personal is taste, plus you’re consuming it, it’s inside your body. The bottled water argument is incredibly good. It makes — okay. If we were in, like, you know, French Guiana or something like that right now, bottled water would be a great idea, like that makes total thumb’s up sense because there’s not a widely dispersed highly regulated infrastructure to make sure that no one is getting sick, there’s not a — you know, there’s no culpability necessarily if things break down, there’s just not enough money to have set up a system like there was in the United States and the United States used to have very bad water for a very long time.
You know, Ken Burns talked about it in his thing about Prohibition, the first part of it was called the nation of drunks which was because alcohol had purity law. People even into their tweens and teens, you know, hopefully not children directly but, you know, people were just basically drunk, a vast majority of the time, like, they were consuming like three, four, five alcoholic beverages in a day at pretty high levels of potency because simply water wasn’t an available substance. So, you know, 1860s through, you know, the ’20s when they start really cleaning up these systems. But it doesn’t make sense. In the United States it simply doesn’t make sense that anyone would buy bottled water. I don’t know if we’re going to get a bottled water off of this discussion necessarily. But it’s amazing how they made that transformation and I don’t know if any other utility can because we want the lights to turn on but people seem to have less — much less of an emotional connection to where that electricity comes from if it’s solar or wind or if it’s coal generate, you know, that thing is just kind of loss where the value of how it’s produced or where it comes from matter greatly with water.
Brian Erickson: Yeah, it’s interesting. I mean, is it just — are energy related companies just doomed to not be cared about?
Dave Donars: No. Maybe there is a turning point, maybe there is some of infliction point, and maybe we’re dealing with it now. When I was a kid, you know, however nonexistent or nascent the internet was, when you went some place that didn’t have electricity, basically it might — you didn’t have lights, you didn’t have an alarm clock, but you could have wind up alarm clock, you know, just to make sure, and you didn’t have television, right? Now, without electricity in a lot of ways, it means no internet and that is so much more essential to people’s lives. I would go without — and I would go without lights before I go without internet.
Brian Erickson: Yup, seriously.
Dave Donars: Yeah, not going to…
Brian Erickson: If I had to pick 24 hours without lights or 24 hours without internet, I mean, my phone has a flashlight, I’m good.
Dave Donars: Yeah, right. And I’ll sleep during some of the hours…
Brian Erickson: Yeah.
Dave Donars: …when it’s really dark. Like it just doesn’t — it doesn’t impact me the same way. And going without the internet is becoming really essential. So, maybe that that’s play in with electricity is that there is a much more essential aspect to electricity than maybe there previously was. As we move forward in time, it’s always interesting to me about Amish [inaudible 00:29:09] a fascinating culture and fascinating decisions that they make because they do accept some things of modern life and they don’t accept other ones and, you know, they’ll kind of agree as a group what technology to accept and there’s no Amish pope, there’s no centralized authority over that, so each pair is just making their own decisions. And what’s interesting about that is even with all those things, how quickly cellphone technologies had to be absorbed into Amish culture, you know, it’s leapfrog a tremendous amount of things and I think that that’s speaks to the personal nature of this which could be the way in about the personal approach to electricity and light bulbs if that makes any sense because it’s about that very personal experience. Water is required to live. Outside of air, it’s our number two thing, right? Like, we can only really live about three days without any water. So, you know, that’s pretty taken care of.
If we had to buy our air, I imagine that that — even though a utility would be an even higher premium than the–than the water we drink because the — you know, the common cliché isn’t the water we drink or the electricity we use, it’s the air we breathe. So, I believe like a Maslow’s hierarchy perspective that’s the highest level. But moving off of that, personal connection to other people and your connection to society as a whole is incredibly important through the internet and other ways that we now connect with people. It’s for our job, it’s for everything about it. I don’t know where the necessarily is with light bulbs about that but it is about that but it is about that electricity has started to become more and more important because the things that rely on electricity have become more and more important over the last 20 years.
Brian Erickson: I mean, maybe we need to connect light bulbs to the internet, something people are passionate about. And actually there are number of companies that are out there doing it.
Dave Donars: That’s what I was just going to say.
Brian Erickson: One company that I know in particular that’s doing some crazy things is called Sensity and they’re more on the commercial side of things but they’ve got temperature, they’ve got humidity, they’ve got seismic sensors, and now you’ve turned a light bulb not just into a light source but into a censored network of unparalleled scale and now you kind of care about what your light bulbs are.
Dave Donars: Yeah. I mean, I think that would probably also play into some of the things with home security or home maintenance…
Brian Erickson: Yeah. They’ve also got these incredible HD cameras — I sound like I’m poaching them right now but that they’re using at airports that are in the light bulbs. But maybe it’s just the cost has to come down and you got to find that intersection of what’s the–what’s the payback going to be.
Dave Donars: I think at one cost, it’s difficult to make the argument.
Brian Erickson: Yup.
Dave Donars: But once they start getting closer, I think it starts to make a lot more sense. You know, one of the things that’s always annoyed me is that computing power doubles all the time but obviously other elements like battery life and things don’t double all the time. The thing that is annoying about technology that always seems to hold a premium in cost is RAM.
Brian Erickson: Uh-hmm.
Dave Donars: Why the hell is RAM so expensive? Why isn’t there some factory somewhere making RAM super cheap? I just don’t understand. What’s happening with RAM?
Brian Erickson: See RAM suffers the same problem. I mean, it’s just not sexy. Nobody says like, oh, you got so much RAM.
Dave Donars: Yeah.
Brian Erickson: You know, they’re like you can process faster and you can store more. That’s all you care about.
Dave Donars: Yeah, yeah.
Brian Erickson: Except at the very high end of the market. Nobody thinks about it or cares about it.
Dave Donars: But I mean you’re right. I mean there’s probably some equivalent with electricity to RAM.
Brian Erickson: I think there’s an element of visibility too. You know, you can’t have status on something that’s not publicly visible.
Dave Donars: Also, you need a light bulb, right? Like…
Brian Erickson: Yeah.
Dave Donars: …you need it to do other things but it is not the taste in your mouth like water is. It is not the direct thing. Light, we don’t just stare at a light bulb, we turn on a light so we can see other things in the room or we could do things. We — you know, if we’re staring at a light bulb, it actually can give us like a headache and, you know, cause vision issues so I think you’re right that that’s the underlying problem with it is that it’s infrastructure…
Brian Erickson: Uh-hmm.
Dave Donars: …not the consumable itself. It’s perceived as the infrastructure. But going back to this argument…
Brian Erickson: What about paint?
Dave Donars: Paint’s really personal. Paint…
Brian Erickson: Yeah.
Dave Donars: Because paint is color. Color is personal vision.
Brian Erickson: You said light can be colored too. It’s not treated that way.
Dave Donars: Yeah.
Brian Erickson: Let’s just — you know, I don’t think we’re going to solve this today. Sorry lighting companies.
Dave Donars: I do want to kind of say one thing about this. There is — and I kind of want to call out of this so I apologize. But this is from June 9th, 2007, it’s an article and slate by Tim Harford. I’m just going to read some excerpts of it. It’s called The Shock of the New, what the history of the electric dynamo teaches us about the future of the computer. And why I’m calling this up is because first of all, I think it’s relevant, I think it’s useful, but also just to give a quick call into Tim Harford, this article is very synched, it’s incredibly well written, and it is something that I’d referenced ever since I first saw it, it’s been — I take it with me to enumerable business meetings, it’s framed how I think, it’s one of those just major things that kind of walks through it. So again, this is in June 2007, actually 6:18 AM. I didn’t know they date that specifically. Fine, okay.
Alfred Chandler, the great business historian died in May. One of his many achievements was to highlight the way technology influenced the organization of corporations. Chandler realized that the railroad — “The railroad and the telegraph, the steamship and the cable,” had made it possible for companies to grow to a vast scale, that internment handling — handing control of the corporations over to professional salaried managers in place of the owner entrepreneurs. Naturally the story did not end with the railroad and the telegraph. Economists believe that technology and business performance shape each other. If history is any guide, the impact of the latest technologies on business organization is likely to be vast. It is also likely to be more gradual than the rolling hype that the last decade suggests. Paul David, an economic historian at Stanford presented a brief, prescient research paper to the American Economic Association back at 199 titled, The Dynamo and the Computer, and this is an amazing article. Professor David’s aim was to persuade economists that the history of the electric dynamo would tell them something about the ongoing information revolution. Electric light bulbs were available by 1879 and they were generating stations in New York and London by 1881. Yeah, the thoughtful observer in 1900 would have found little evidence of “Electricity Revolution” that was making business more efficient. So that’s 21 years later. Steam powered manufacturing had length the entire production line to a single huge steam engine as a result factories were stacked on many floors around the central engine with drive belts all running at the same speed. The flow of work around the factory was governed by the need to put certain machines close to the steam engine rather than the logic moving product lines from one machine to the next. When electric dynamos were first introduced, it allowed companies to — the engine could be ripped out and the dynamo could replace it therefore machine after machine could be used but productivity didn’t move. David showed that World War I which led to the immigration controls and choked off some cheap supply of labor for untrained immigrants was one of the spurs to make these changes. US productivity growth left in the 1920s, four decades after the commercialization of electricity. Product growth raised in US manufacturing in the 1920s more than five percent a year, a rate that makes the new economy looked laughable.
But David’s research suggests patience. New technology takes time to have a big economic impact. More importantly businesses and society itself have to adapt before that will happen. Such change is always difficult and perhaps mercifully slower than the march of technology. But I think that the point is that it takes decades for us to consume this. If it’s something truly radically new and has not basis for our in any consumable way of cultural, familial, or personal experience, if it’s really outside tradition, it takes decades for us to really start holding it in. And maybe that’s where we are with lighting. I mean–I mean there could be an aspect of this being cost probably has to go down but — that we haven’t acculturated to thinking that lighting is something that isn’t just a cost by — and that — maybe that’s where the play is is that it’s about kind of higher end or couture lighting or that there is some enhancement to your life beyond cost considerations for going with these little lighting things.
Brian Erickson: Some things that jumped out of me from that article, I mean — and something we’ve talked about in the past is, have we hit the point where — I mean, this may seem like kind of an obvious question or statement, where the piece of technological change is no longer the limiting factor in human society’s progress forward if you want to call it that. The limiting factor in human progress is our ability to understand and assimilate new ideas.
Dave Donars: And by assimilate, it means turning something that feels radically new into something that feels like a ritual?
Brian Erickson: Yeah.
Dave Donars: That is adaptation at its core.
Brian Erickson: Uh-hmm.
Dave Donars: And people are pretty good at that. I mean, for whatever else people are bad at, this is–this is one thing where people are very, very good at. We’re highly adept at this one specific skill. And, you know, a lot of this is just how do we as marketers kind of pull this in because there’s a fine line between embracing the new and embracing tradition.
Voiceover: Thanks for joining us this week on the Cardwell Beach podcast. Join us next week as we discuss new ways companies are thinking about their products and services. Will firms increasingly become the Uber of everything? Tune in next week for more insights. Thanks for listening.
