{"id":641,"date":"2012-03-19T21:36:03","date_gmt":"2012-03-20T02:36:03","guid":{"rendered":"http:\/\/steinvox.com\/?p=641"},"modified":"2012-08-11T12:14:47","modified_gmt":"2012-08-11T17:14:47","slug":"approaching-perfect-information-introduced-imperfections-may-drive-disruptive-innovation","status":"publish","type":"post","link":"https:\/\/steinvox.com\/blog\/approaching-perfect-information-introduced-imperfections-may-drive-disruptive-innovation\/","title":{"rendered":"Approaching Perfect Information – Introduced Imperfections May Drive Disruptive Innovation"},"content":{"rendered":"

Social media is moving us closer to the economic state of perfect information<\/em>. Can this kind of economic equilibrium really exist? How then will innovation occur in stasis or economic equilibrium?<\/p>\n

In stasis, perfect information implies best products and services will satisfy all customer requirement, need and demand at optimal price. In stasis caused by perfect information, consumers will have perfect information to always make the best choice, resulting in zero buyer regret.<\/p>\n

What Is Perfect Information<\/em><\/h3>\n

In Game Theory, perfect information is the state when a player has all the information available for all the possible moves in the game, and can therefore ensure or predict the outcome. This is easy to see in games such as tic tac toe<\/em>, and even complex games such as Chess<\/em>.<\/p>\n

In Microeconomics, the state of perfect information mimics an environment of perfect competition. In this environment, everyone is assumed to be operating rationally and will always make the best buying decision. In an environment of perfect information, the market dynamics will enable enterprises producing the best products and services to prevail over those with lesser products and services.<\/p>\n

Economists tell us that perfect information also assumes that consumers have enough information to predict probabilities for future perfect information based on outcome of future events \u2013 further driving market dynamics to reward the best providers of products and services, and punish providers that fail to meet consumer\u2019s needs.<\/p>\n

Advertising Value<\/h3>\n

In a world of perfect information, the cost of coordination approaches zero \u2013 as there is no need if everyone has the same perfect information, by definition.\u00a0 In a world of perfect information, the cost of collaboration also approaches zero \u2013 as the necessity for collaboration also becomes superfluous if the \u201cbest\u201d can always deliver what customers want, where they want it and when they want it.<\/p>\n

In this world, Advertising then has no value, as consumers have at their fingertips, the information necessary to make every decision.\u00a0 Can this really be the case?<\/p>\n

Innovation Requires Imperfect<\/em> Information<\/h3>\n

One reason that this theory breaks down is that a probability-predicted future presents a fraction of opportunity for disequilibrium. Disequilibrium means one of two primary possibilities<\/p>\n

    \n
  1. Some percentage of all people is not fully satisfied with current products or service offerings.<\/li>\n
  2. There is additional value (invention) to be presented to customers that upsets the status quo.<\/li>\n<\/ol>\n

    Add to this, the variability and unpredictability of diversity in human nature, and you have the perfect opportunity for disruptive innovation to incubate, hatch into ideas and develop into new products and services that eclipse the prior stasis.<\/p>\n

    Instituting Imperfect Information<\/em><\/h3>\n

    If we understand that nothing stays in stasis, why not introduce imperfect information<\/em> to systems in equilibrium to force innovation? Why not introduce imperfect information to force innovation in the environment overall? In fact, isn\u2019t this precisely what qualified marketing professionals intentionally do through the use of advertising? <\/em>Isn\u2019t this precisely the value of advertising, in the broadest sense, to start our thinking about\u00a0 and eventually choosing alternative options <\/em>over those which we are currently satisfied?<\/p>\n

    Is there a way, in a broader system or environment approaching perfect information,\u00a0 to plan for these changes?\u00a0 What role will advertising play then?<\/p>\n

    Consumer-side & Merchant-side Opportunity<\/h3>\n

    I wrote on Saturday last, about Jeff Holden\u2019s vision for the Groupon Global Commerce Operating System<\/em>.\u00a0 In his presentation at the Illini Center downtown Chicago, Jeff indicated that one of the premises this concept approaches is that consumers will begin to have perfect information at their fingertips (through their smart phones).<\/p>\n

    Jeff went on indicating with perfect information consumers can always find the best swordfish restaurant, for example. That restaurant would then be the best place for swordfish and everyone would go there whenever they wanted swordfish. This is the clear and visible value opportunity for perfect information on the consumer <\/em>side.<\/p>\n

    But, the question then becomes: How does this best place for swordfish become something more?<\/em><\/p>\n

    Why you might ask: \u201cif that one merchant is getting all the swordfish business from all the people, what happens if the merchant wants to become something more than just \u201cthe place for swordfish?\u201d Or, how does the restaurant plan for shortage or surplus in the supply chain? If there is a shortage, and they try to serve another entr\u00e9e customers will be confused and business will suffer. If there is a surplus, competitors will learn to reproduce what the \u201cbest restaurant does\u201d and become new competition, in a price-pressured economic climate driven by the surplus.<\/p>\n

    There are dozens of factors they must plan for in addition to the supply chain \u2013 but most significant, is the interest in diversity in their menu to cater to customer interests.<\/p>\n

    Ah Ha! This <\/em>is an opportunity for driving merchant <\/em>side opportunity!<\/p>\n

    Groupon+ (The \u201c+\u201d Is My Idea)<\/em><\/h3>\n

    Groupon already has a multi-faceted business ecosystem.\u00a0 My suggestion in this dialog on perfect information is that Groupon has an opportunity to be the engine of innovation<\/span> for the customer of its global commerce operating system, the merchant. By the use of perception and mood analytics, micro-variation in the perfect-ness <\/em>of the perfect information will surface. These micro-variations can provide merchants insight into where they should innovate to prepare for larger, but unobvious shifts approaching in the market.<\/p>\n

    Merchants would find value in the micro-shifts in competitor and tangential markets to their current \u201cswordfish\u201d market in which they were leaders. And Groupon could help merchants identify completely under-served and completely un-served market gaps, as new product innovation opportunity to merchants.<\/p>\n

    Unified Field Theory of Analytics!<\/h3>\n

    Cross-reference this market information with industry trends, technology advances, supply-chain variations, location, movement of consumers and other predictive analysis, and the Groupon+ engine becomes a driver of merchant innovation<\/strong>.\u00a0 How fast would future generations of innovation accelerate to market?<\/p>\n

    Packaging and deploying this will be fun, and inevitable.\u00a0 What do you think?<\/p>\n","protected":false},"excerpt":{"rendered":"

    Social media is moving us closer to the economic state of perfect information. Can this kind of economic equilibrium really exist? How then will innovation occur in stasis or economic equilibrium?<\/p>\n

    In stasis, perfect information implies best products and services […]<\/p>\n","protected":false},"author":1,"featured_media":644,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[63,11,59,104,85,50,4,39,8,41],"tags":[17,93,12,16,15,20,19,34],"class_list":["post-641","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-customer-user-experience","category-decision-making","category-definitions","category-economics","category-entrepreneurship","category-innovation","category-leadership","category-social-media","category-strategy","category-technology","tag-agile-behavior","tag-complexity-into-simplicity","tag-design-thinking","tag-fearless-marketing","tag-pervasive-strategy","tag-results-outcomes","tag-revenue-pursuit","tag-vision-mission"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/steinvox.com\/blog\/wp-content\/uploads\/2012\/03\/PerfectInformation.png?fit=150%2C150&ssl=1","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p25ukk-al","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/posts\/641","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/comments?post=641"}],"version-history":[{"count":0,"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/posts\/641\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/media\/644"}],"wp:attachment":[{"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/media?parent=641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/categories?post=641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/steinvox.com\/blog\/wp-json\/wp\/v2\/tags?post=641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}