The futurist: Inventing our next great scarcities
Scarcity is defined as an economic condition that arises when people have far greater wants than the available resources. Most often we think about the limited supplies of natural resources, but it includes far more than that.
As an example, in September 2010 China decided to block shipments of rare earth minerals to Japan. Rare earth minerals are used in manufacturing everything from consumer electronics to batteries to defense systems. China only has about 30 percent of the known supply of rare earth deposits but accounts for about 95 percent of global production.
While momentarily shaken by this political posturing, Japan quickly reassessed its situation, launched a global search for new rare deposits, established recycling centers to extract the metals from old electronics gear, and cut a deal with Australia, who ramped up their supply of the minerals to meet Japan’s needs.
As a result, the demand for China’s rare earth minerals has since plummeted as they instantly branded themselves as the “untrusted supplier of last resort.”
The scarcity in this situation wasn’t the supply of minerals. Rather, it was a momentary shortage of creative problem solving, something the Japanese are very good at.
Even though the Internet has turned the world of scarcity on its head, there are tons if imbalances yet to be mined and turned into profitable businesses. These imbalances are what gives society it’s forward motion, turning problems into opportunities.
Historical View of Scarcity
To understand the scarcity-abundance phenomena, it helps to look at historically scarce products that somehow lost their pricing advantage.
- Salt: Many battles were fought throughout history over what was considered to be the most valuable of spices, salt. One of the more recent examples is the Salt Satyagraha, a Gandhi-led non-violent protest against the British salt tax in colonial India, which began with the Salt March to Dandi on March 12, 1930. Hundreds of protesters were beaten in this battlefield directed toward breaking down the walls of scarcity. Today, salt is an abundant product, available everywhere for mere pennies.
- Pearls: Because they were difficult to find, and divers had to spend countless hours under water to find one, ancient societies dubbed pearls to be some of the rarest of stones. This rarity also made it one of the most expensive pieces of jewelry. But that all changed in 1916 when Japanese researchers Mise and Nishikawa patented their now famous process for making cultured pearls.
- Telephone Service: An industry that was built on the scarce one-wire-to-the-home option has been replaced with an abundance of wireless and VOIP telephony options.
- Classified Ads: A business invented by newspaper publishers became a cash-rich industry and the lifeblood for newspapers. Print advertising had the rug pulled out from under it when Craig Newmark created the free self-organizing Craig’s List.
The scarcity-abundance shift only happened on rare occasions up until the advent of the Internet and electronic commerce. Over the past decade, the World Wide Web has caused this type of shift to happen on a far more frequent basis. Startup visionaries are now scouring the entrepreneurial landscape daily to see where the next great imbalance may occur.
The Great Disruptors
The greatest disruptions in business have happened when something previously in short supply has suddenly become abundant.
Access to world news was once very scarce, but is now widely available. Our access to global music, movies, traditional and alternative medicines, as well as higher education were all once in short supply, but now are widely available. So what’s next?
The best way to spot future targets is to look closely at existing revenue streams and assess the level of discontent among customers. In the past, I’ve used what I call a “customer abuse index” to determine which industries have the most abusive relationships with their customers. A high customer abuse index indicates a company or industry begging to have its financial legs knocked out from under it.
As another piece of the equation, Governments will have far greater difficulty protecting industries the way they have in the past. Our global economies are creating unusual ways for ingenious thinkers to circumvent traditional restrictions and regulations.
So what areas of life will maintain their pricing integrity and remain “abundance proof?”
The most obvious one is time. We run up against some hard barriers when it comes to increasing the available amount of time we have in a single day. Yes, we can make ourselves far more efficient and squeeze in a few more accomplishments. Perhaps we’ll even be able to clone ourselves some day, but we still have temporal limits we cannot ignore.