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Geoff Colvin: Friction-Free Economy Will Create More Opportunity for Michigan’s Future

It’s no longer business as usual, says Fortune magazine Senior Editor-at-Large Geoff Colvin.

Taking Michigan’s Center Stage for a keynote address and Q&A with “Autoline” Host John McElroy, Colvin explained how today’s most innovative enterprises are finding success and profit by removing “friction,” the barriers between consumers, services and products, from every facet of their business. Eventually this will create a completely “friction-free” economy that will revolutionize every single industry.

While this may lead some companies to fear a friction-free economy, Colvin contends that the most vital, underlying theme behind this unprecedented phenomena is actually good news:

“The best companies, the most successful companies will see [a friction-free economy] as a huge opportunity, because they can be that competitor that comes out of nowhere. That’s why a friction-free economy is bottom-line more opportunity than ever in history.”

Colvin finished his keynote with a final rally to attendees: “Seize it.”

Key Takewaways:

  • Companies can no longer compete merely by lowering costs and creating efficiencies. They must fundamentally rethink and redefine their business for a friction-free economy.
  • In a friction-free economy, information, money and labor move cheaply, easily and instantly.
    • Amazon’s Dash Button allows customers to order products without ever going online.
    • HourlyNerd provides business, from small startups to large businesses like Microsoft and General Electric Co., the ability to “rent” talent and expertise for a short period of time.
  • In a friction-free economy, companies create value in new, and often unexpected ways.
    • Despite being completely free to download, mobile app Candy Crush saw its users spend a total of $4.5 million a day to buy “new lives” as they progressed through the game.
    • Candy Crush was eventually purchased for $5.9 billion by a larger gaming company.
  • In a friction-free economy, the most profitable industries are asset-light.
    • Alibaba.com owns no inventory, AirBnB owns no property, and Uber owns no vehicles.
    • What these businesses do is more seamlessly connect buyers and sellers together.
  • In a friction-free economy, new business models will reapportion value.
    • Skype siphoned $37 billion from traditional telecom companies, but only made $3 billion in profit.
    • Where did the rest of the money go? It was returned to consumers who reapportioned this value back into other parts of the economy.
  • A friction-free economy shortens corporate lifespans and may even end the existence of corporations as we know them.
    • When finding new services or suppliers is too difficult, friction allows inefficient companies to continue operating.
    • A friction-free economy may push us closer to a continuous “Hollywood” model, where people and entities come together for a project and then disperse.
  • A friction-free economy lowers barriers, “allowing every person and organization the opportunity to possess the 21st century’s most valuable assets: Openness to new ideas, ingenuity and imagination.”
  • Because of this, a friction-free economy will create more opportunity than ever before in history.