In 2016 to 2018 we embarked on a research journey into something we later came to call “Hourglass Economics”. We spent the better part of 2018 and 2019 compiling our findings into a series of talks, and the fragments of a book — until the world came to a standstill in early 2020. Since then, we have rigorously validated and updated our findings, insights, and case studies — all of which we will share with you and the wider community over the course of the next weeks and months through our radical Briefing and LinkedIn.
Let me invite you to join me on a journey into the new shape of business.
From Pyramids to Hourglasses
Possibly, the most significant change in our markets over the last 40 years is that the classic business school model of the Product Pyramid, typically built on top of the similarly entrenched Demand Curve, is crumbling before our very eyes. In its place, we are seeing an entirely new Hourglass-shaped model emerge.
Here’s what is happening. The top of the pyramid, traditionally focused on rarified, high-margin, low-volume products and companies, has been growing like crazy for the last decade or so. Meanwhile, the base of the pyramid, typically full of low-margin, high-volume businesses and their products and services, is also widening and spreading out. But the middle, where most of today’s companies sit, is disappearing faster than many of us can count to three. Companies and products in the middle of the old product pyramid are battling to survive. Many are shrinking slowly but surely, while others are disintegrating dramatically or are already bankrupt.
As a result of these movements, the old Pyramid model looks nothing like a pyramid anymore, and has been reshaped into what we now see clearly as an hourglass. This shift is happening because of the accelerating rate of change brought about by new technologies colliding or integrating and stacking on top of each other, which leads to dramatic changes in the way products are made and sold, and how companies are being built. Every single one of the traditional 4Ps (Product, Price, Place and Promotion) of product and marketing are seeing seismic shifts, driven by compounding changes in technology, which is dramatically reshaping our businesses from the inside out.
The key takeaway here is that the properties of successful companies at both the top and the bottom of the new Hourglass model are entirely different than they were even five or ten years ago. The sands of time move faster than ever.
In our next dispatch, we will show you where we first saw this seismic shift happen, and what the ripple effect through industry after industry looks like.