Globalization de-materialized by 176 Clicks

Went up to Chicago this weekend, and saw Millennium Park and all kinds of really interesting Architecture, too.

But, what was interesting and relevant to my observations on current trends in Globalization was a small purchase I’d made at Ikea. As usual, Ikea has gotten so many things right in both their business plan and their designs, because both are integrated. Their business plan is fully integrated into the criteria they establish for designs.

(Apparently, no owner of an  American furniture company that serves the residential market can understand this concept, so the American furniture industry, in the face of Ikea’s competition, is just going to roll over and play dead…)

This particular purchase was of a light, called in typical Ikea fashion, KNAPPA, to wit:

This little light is an elegant composition of paper-like sheets bent to shield the light source, creating a well-proportioned blossom of diffuse, warm light. But I’ll leave aside the aesthetic critique for now, and concentrate on other aspects of the Knappa Pendant light.

The trend I see exemplified here is the de-materialization of the objects of Global trade. Often when speaking of the de-materialization of Global trade, what is envisioned is trade of IP products and services (think the Indian software/IT services, typified by companies such as InfoSys, or the emerging off-shoring of the back-offices of Legal Firms) and the manufacturing sectors are left out of the equation here. But it is precisely those sectors, such as manufacturing and retailing, that can ingeniously de-materialize their objects, and thereby reap decisive advantages over their competitors. IP is already dematerialized, so all firms using the internet to deliver IP are on a more or less level playing field. Those that produce material goods, on the other hand have the opportunity of of besting their competitors by quickly and ingeniously dematerializing their products and services.

Before discussing this trend, some analysis of it is in order.

What are the forces that will lead to de-materialization of Global trade? First, there is the increased cost of energy, which will push those companies with Global distribution systems to make those systems as efficient as possible. Second, even more important than the relatively high prices of energy, is the uncertainty of that price in the future. Thirdly, is the fact that the uncertainty is tied directly to the outcomes of a War in the Middle East, and it appears that that War may be out of control, and the above mentioned uncertainty may be about to grow, in an out of control way, perhaps exponentially. So there are many reasons for Globalized economic structures too seek to dematerialize the objects they create.

Now the other trend that I see influencing the de-materialization of the objects of Global Trade is Sustainability. In today’s economy most impacts to the environment are un-priced, that is to say, they are free. However, forward-looking companies (and I include Ikea in this group) are planning for the day when this is no longer the case.

So, once again, the processes of Sustainability and War are leading to the same trends. (As I had promised earlier I have a whole series of posts on that exact subject, coming in the near future, but I need to finish Benkler’s The Wealth of Networks and Amartya Sen’s Development as Freedom first, as both are very relevant to this exploration.)

What is interesting is that those companies that can comprehensively integrate this understanding into all steps of their business plan can reap rewards and competitive advantages that others can not.

So, we have: Knappa, packed in a very compact (only 7 3/4″ tall, 5 1/4″ deep and 7 1/4″ long) nearly triangular box. Note the boxes are packed with alternating boxes place upside down to form a cube, so that no space is wasted when they are shipped. The light is actually smaller when shipped in its box than it is when it is assembled. My informal survey at Lowes the other day, it seemed that the average light was about twice the size when packed than it was than when it was fully assembled.

And, when unpacked, the 5 bundles of parts are: The wire/plug/bulb holder, 48 paper-thin flexible light shields, two plastic rings and 8 “C” shaped plastic struts, and some mounting screws in a plastic bag, to wit:

So the value added by Ikea in this product has been distilled to the design and organization processes, with the materials diminished to a minimum amount, to meet the required function.

Now, compare this with any light you can find in Home Depot, Ethan Allen, or Lowe’s and although you may well find a light produced in China, the product is comparatively heavy, poorly designed, and much more bulky in its packaging.

Next trend which this product, and Ikea itself typifies: Intelligent Re-Localization of labor

Although obviously Ikea did not invent the concept of shifting the labor to assemble items such as lights and furniture to the end user, they have integrated the shifted assembly process into their design thinking. Ikea have intelligently shifted that assembly to the end users. The assembly almost never requires any more tools than a screw driver, or perhaps an Allen wrench (which, if required, is always included) The assembly of the above lamp, follows a very simple set of rules, and each part of the frame has arrows indicating the up orientation, and all pieces fit together by being pressed together until they click and inter lock. So, about 15 minutes and 176 clicks (22 click attachments for each of the 8 struts) later, voila, light is complete.

Compare that with my recent experience assembling a light my mother had purchased at your typical big box American hardware store, and no wonder so many of those lights are returned…