The mourning for Brexit seems to be easing. A good thing too, because the country needs to start mapping out a new economic policy, and fast. Here is a message for Chancellor George Osborne: ditch the gloom.
There is a new type of economics, one where the economy becomes a series of platforms that enable economic activity at an unprecedented scale.
Let's start the reasoning with this piece of data: one in every five German-made cars is sold in Britain. That is a fascinating piece of data and a clue to the new economic policies Britain needs.
It is fascinating not just because it says that Germany will want a tariff agreement very quickly with Britain (the car industry is already requesting it). It is interesting also because car sales are going to go down for Germany, with or without a trade deal with Britain (and, by the way, trade tariffs are virtually irrelevant to the new economy).
Car sales will go down because consumer habits are switching out of ownership towards a "mobility mindset".
Transit services – that is the buying and selling of rides and associated costs such as ticketing – are worth $3trn (£2.2trn, €2.7trn) a year globally, according to Ford. The carmaking industry has yet to hit $1trn. The German manufacturing miracle is becoming a handicap, and BMW, Mercedes and Opel all know it.
What, you might now be asking, does this say about economic policy? It says these simple things:
- Making things is great. Every country should make stuff
- However, less people are going to buy big ticket items such as cars
- Companies will buy less big ticket items such as plants and machinery
- Even small companies will rent more small-ticket items, such as renting computer power instead of owning servers
We've known some of this for three decades now. We know that policy-makers have to encourage entrepreneurs to shift their focus away from purely making things. That is a cliche.
But they also have to shift entrepreneurs away from the belief that the universe of manufacture or physical goods is somehow past-tense. One big impact of government policy since 1982 has been to encourage the belief that things don't matter because the future lies in exploiting intellectual property or services.
Yet the fastest-growing businesses today are hybrid platforms – companies that exploit physical assets by introducing new levels of service. That is the Uber effect.
In a digital world, it becomes easier to manage the use of things – that is to let people have a product such as a car for a short period of time or to serve them up a drive, or a smartphone app that will let them go from a car to a bus or a train or even a bike.
The usage basis for the new economy is based on completely new competencies.
Chief among them is the capacity for infinite endpoint management. It is the new business competency of the 21st century. It is major principle number one. We can manage at infinite scale. That is new.
The UK needs to build its economy around the capacity for infinite endpoint management – the management of an infinite permutation of ownership, renting, using, switching, ticketing, attending, moving, communicating and sharing. In the new economy, pioneering companies have shown that major economic principle number two is to exploit third party assets.
The best known example is Uber. It exploits the assets of its drivers. In the process it injects a higher quality of service into the business of buying and selling rides.
The notion of finding assets to exploit doesn't just apply to cars. It is part of the new economic fabric.
In the next few years, we will see more and more assets exploited by the addition of technology. Street lights? Turn them into LiFi (light enabled communications systems). Cars: data assets for insurers to fine tune policies. Office buildings? How can they possibly stay occupied by firms day in and day out. The weather? Well, there are already apps for it.
This asset exploitation concept is a wonderful US invention that the UK needs to harness quickly.
It has a third major principle. Platforms are not bounded by geography. Platforms can set up shop anywhere. Their services and revenues know no tariff boundaries.
They can be British but they can have an operation in France, in Hong Kong, in Delhi. Geography doesn't matter because, by and large, what platforms do is manage cash. They take money in, for apps, rides, rooms, tickets, and they pass it out, to developers, drivers, room owners, venues. No country slaps import or export tariffs on them.
It is irrelevant is you are in or out of the EU if you are a platform. Uber does global revenue management from a small office in Amsterdam.
In mobility, or transit, German car makers like Mercedes, American car makers like Ford are trying to harness infinite endpoint management and asset leverage in autos. For example take a look at see Moovel. But no company has a right to inherit mobility markets just because they bash metal in Detroit or Stuttgart. Transit is suddenly an open market.
This is the platform economy. Policy makers need to understand how to accelerate UK companies to platform status. While there are a few platforms in the UK, by and large they do not take advantage of the greater opportunity.
One characteristic of platforms is that they tend to be adventurous. Apple for example operates in retail, autos, health, productivity and much more. So here is major principle number four: do anything.
Indiegogo is a crowdfunding platform. In the UK there are many good crowdfunding platforms. Here is a list. The problem is they stick to what they know. Indiegogo is a crowdfunding platform that has now become a pre-order platform and a fulfilment platform. It is becoming an ecommerce platform.
In a sense it is breaking the rules. Business schools tell entrepreneurs to stick to their core, stick to what they know and are good at. But platforms do not do that. They break a lot of rules. They are pirates.
They go into any market where they might have an advantage. They take business from incumbent companies.They grow fast without racking up an overhead. They function from a low asset base. They are nimble. And they are tied to no geography. If you are a platform, the UK needs you.
Haydn Shaughnessy is a principal of the Disruption House, based in London, and author of Shift: A Leader's Guide to the Platform Economy and Platform, Disruption, Wave: A New Theory of Disruption both available on Amazon.co.uk