How an emerging pattern of material flow could empower innovation

Trade and manufacturing are two cornerstones of the human endeavour, together they shape a society’s flow of tangible, material goods. As discussed in a brief history of material flow, trade and manufacturing have evolved only very slowly for most of our history, with the significant exception of the period after the Industrial Revolution. Today I’ll present snapshots of the characteristic patterns of material flow, with a specific focus on emerging trends and their potential influence on our future innovation capacity.

The archaic pattern

In a distant past, and up until the Industrial Revolution, material flow was fairly basic. Only very few things were transported or traded over longer distances (say, more than a day’s travel). Those exceptions were usually valuable, scarce, or luxury – just consider silk, fur, spices. Even though trade networks existed and spanned entire continents already, these networks were patchy and thin, with only few nodes, little density, and low frequency.

Production covered the basic needs of daily life, and because those needs didn’t require highly specialised skills to fulfil them, everybody had access that such production within the immediate neighbourhood. Production was essentially set up locally, directly accessible from within the local community. Hence access to a trade network was not required in everyday life – trade and production were independent of each other.

The modern pattern

Things changed dramatically as an outcome of the Industrial Revolution, paving the way for the current pattern of material flow where everything is interdependent and interconnected.

It’s no exaggeration that today everything is transported, and logistics itself has become a major business. Take just-in-time logistics as a case in point: the intent is to minimize the storage of raw material or finished products at the factory. Effectively, that storage is transferred into the network itself, it’s in the trucks, trains, ships and aircraft that carry material around the globe. The result is a hum and buzz; material is always in motion, in a state of permanent flux – material has become almost as fluid as information or energy.

And there’s a parallel development on the production side, depending on and reinforcing that fluidity of material flow: driven by the quest for economies of scale, production today is highly specialised as well as centralised. In order to reduce production cost, to improve and refine specific products further, or to diversify a product line within a given market segment, specialisation turned out as a highly successful approach. In this success story, the professionalisation of the workforce went hand in hand with the optimisation of processes and the perfection of tools. Yet in order to sustain and further deepen specialisation in production, one essential condition is centralisation, the centralisation of material flow to and from the factory. The logistics network to the factory orchestrates the raw material needed for production, while the network from the factory brings the finished products to the customer.

As a collateral effect, specialisation and centralisation increase the physical distance between the factory and the customers. Already in the beginning of the Industrial Revolution, factories replaced the individual craftsman down the street. Since the middle of the last 20th century, the emerging consumerism put pressure on the specialised shop on Main Street, ultimately replacing it with the Mall in the suburb. And the convergence of mail order, e-commerce, and courier services allows for the direct delivery to the customer’s door step, without the no need to leave the house.

From the perspective of the individual, the pattern of material flow turned inside out, even though very slowly: In the archaic pattern, the individual initially acted as a self-sustaining producer who had little need for trade. In stark contrast, today’s pattern positions the individual as a consumer with little direct access to production, who depends on the trade networks to deliver what is needed. In this modern pattern, the distribution of products to the customers is organised so efficiently that everybody has access to everything, even way beyond the immediate daily needs. While we’ve gotten very used to this pattern, the question is whether this pattern going to stay with us into the future – or not?

An emerging future pattern …

There are clear indications of a further evolution of material flow that is already taking shape in the makers movement. Chris Anderson presents that compelling story in Makers: The New Industrial Revolution: emerging technologies like 3D printing are changing the nature of production, reducing the barriers to entry, requiring less specialised expertise.

As a result, production is getting back to the neighbourhood, it becomes local again. And that means that the make or buy decision is not the prerogative of the business world anymore – everybody can be a producer. The individual gets to choose whether he accepts the consumer role, or whether he prefers to create his own product. The makers movement actually offers a new role for the individual, the role of the prosumer. Merging the formerly separate roles of producer and consumer, the individual will acquire a denser and wider personal network. Just think about crowd-funding as an approach to gain access to additional resources, or crowd-sourcing as a way to access additional production facilities in order to scale up production if need be.

The emerging pattern of material flow goes back to the roots of self-produced goods, while fully embracing the benefits of the global logistics and information grids in order to produce at whatever scale necessary, and to deliver to wherever the demand is. In this emerging pattern, interdependence will certainly prevail, and it will increase even further. But this pattern will be less rigid, less controlled, less centralised than the current pattern, giving way to more agile, more organic, more local interactions.

What difference could that make for innovation?

In the current pattern, centralisation is an asset. Focusing responsibility and control at the top of a hierarchical organisation is the key characteristic of the corporation, which is the preeminent incarnation of a centralised organisation in today’s business world. And the centralisation of material flow has reinforced the power of the corporation for a long time. With all its benefits like efficient resource management and decision-making, as well as contained business risk. And with all its downsides, including the rigidity of processes, the focus on efficiency innovation, and the aversion against disruptive innovation.

In the emerging pattern, the tide will turn in favour of greater flexibility. Decisions are already taken at lower levels of an organisation, and control is increasingly redistributed “from the ivory tower back to where the action is” in order to accelerate decision making. And that broad trend toward decentralisation will empower innovation.

I believe that this emerging pattern of material flow will make it easier to test and validate ideas, to try and improve concepts and designs. At the same time, a larger proportion of the population will have the chance to get involved in innovation, especially in the area of implementing novel ideas. While that’s no guarantee for better ideas, more people involved will bring more ideas. The future pattern of material flow will accelerate the experimentation with those ideas. Ideas can be tested faster and cheaper, to either turn out as dead-ends, or to be validated, matured, and pulled through. A fascinating perspective for our collective innovation capacity …