In the past century, we’ve witnessed significant transformations in how businesses operate and create value. From the industrial revolution to the internet age, each shift has reshaped our world. Now, we’re entering a new era defined by a concept called “Proximity.”
In a special episode of the Outthinkers Podcast, co-authors Robert C. Wolcott and Kaihan Krippendorff lay out the key discoveries they made as they interviewed innovators, business leaders, and other experts seeking to piece together the facets of the concept of their latest book, Proximity: the idea that digital technologies are pushing the production and provision of value ever closer to the moment of demand in time and space.
They discovered a monumental shift in how businesses approach value creation. Rather than following the typical value creation chain that has long prevailed the concept of business and industries, businesses are now meeting customers by creating value at the moment it is needed. Not just when they need but actually where they need it.
The implications of this shift with change almost every area of life: the way we work, eat, heal, produce, power, defend, explore space. And the implications for businesses are profound as well. In the episode, Kaihan and Rob share what leaders need to know and act on now if they want to stay ahead of this curve that will likely upend every business industry as we know it.
Understanding Proximity
Proximity represents a fundamental change in how businesses approach value creation. Instead of following the traditional value chain model, companies are now focusing on creating value at the exact moment it’s needed. This shift is driven by digital technology, which allows capabilities to be compressed into smaller packages and distributed throughout the economy, bringing production and value closer to the point of demand.
As Philip Kotler notes in the foreword to the book on this topic, “Proximity is about far more than being faster or more responsive. It’s a new way of envisioning business models, delivery platforms and customer service.”
Examples of Proximity in Action
- Coca-Cola Freestyle Machine: This soda dispensary allows customers to create custom flavor combinations on the spot, demonstrating how value can be added at the last possible moment.
- On Demand Pharmaceuticals: Developed by Dr. Jeffrey Ling, this system can produce drugs on-demand using basic ingredients, revolutionizing pharmaceutical supply chains.
- Haier’s Peking Duck and Zero Distance Model: Haier coordinated various businesses to deliver a gourmet experience to people’s homes during COVID-19 lockdowns, showcasing how Proximity can bring complex services closer to consumers.
- Quickparts: This manufacturing-on-demand company uses 3D printing facilities worldwide to produce small runs of parts for defense and medical industries.
The Four Key Trends of Proximity
- Improved ability to sense demands and shifts in demand accurately and rapidly.
- Enhanced capability to respond to demand quickly and in a customized way.
- Ability to power responses through decentralized energy and blockchain technology.
- Increased value of Proximity due to shorter supply chains and environmental considerations.
Transforming Business Models
Proximity isn’t just about responding faster; it’s about transforming business models to wait as long as possible before producing and providing value at the moment of demand. This approach reduces the need for prediction and demand planning, allowing businesses to be more efficient and responsive.
Proximity’s Implications
- Healthcare: Proximity is driving a shift from curing diseases to preventing them through always-on health monitoring.
- Sustainability: By enabling local production and reducing waste, Proximity can contribute to more sustainable practices in industries like textiles and food production.
- Space Exploration: The constraints of space travel are driving innovations in Proximity that have applications back on Earth.
- Virtual Reality: As VR technology improves, it will enable “proximate” experiences anywhere, anytime.
Challenges and Opportunities
While Proximity offers numerous benefits, it also presents challenges. Businesses must carefully consider how to leverage their existing value while incorporating Proximity into their operations. They need to decide what to build anew and what to adapt from their legacy systems.
Moreover, Proximity raises questions about how humans will cope in a world where anything is available anywhere, anytime. It’s not just about implementing new technologies but about fundamentally rethinking business models and societal structures.
Final Thoughts
Proximity represents a paradigm shift in how businesses create and deliver value. It’s not enough to simply do things a little better or faster; Proximity enables us to do things we’ve never done before. As this trend continues to reshape industries and consumer expectations, businesses that embrace Proximity will be best positioned to thrive in this new era of on-demand everything.
More Resources
Book site: www.proximitybook.net
Kaihan’s LinkedIn: https://www.linkedin.com/in/kaihankrippendorff/
Rob’s LinkedIn: https://www.linkedin.com/in/robert-c-wolcott-4a624a/
Kaihan’s Twitter: https://twitter.com/Kaihan
Rob’s Twitter: https://twitter.com/RobertCWolcott
Outthinker Networks is a global peer group of heads of strategy, innovation, and transformation at $1B+ companies who are determined to move their organizations to the next level. Members engage in curated learning, practical conversations, and networking opportunities to be more successful in performing their roles, solving their top challenges, and keeping their organizations ahead of the pace of disruption.
