Batch twelve of Effy – The living efficiency goes back to basics of economy: sales, product life cycle, Adam Smith and the origin of money… Plus guest art from H2!
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Adam Smith’s “The Wealth Of Nation” presented the origin of money by society in its chapter four. Now my Effy just reversed the logic. I modestly developed a model on how money impacted individuals in societies, and challenges that this create.
Adam Smith’s “The Wealth Of Nation”
Adam Smith was an economist. In 1776, he wrote one of the most influential political economy book in history entitled “The Wealth Of Nation”. Whether you agree or not with his views, the book is a fundamental read for anyone interested in economy; and as such he is studied by economists worldwide. Chapter four (“Of the origin and use of money”) details how money came to be, as a tool for societies to improve exchanges’ efficiency.
What Adam Smith does not cover is the impact of money over individuals within the society. That’s what this episode is all about. I tried to lay down basic stages using a parallel with marbles, a game from primary school. Kids game are never innocent!
Impact of money over individuals in societies: a model
- Joy -> first possession, might it be earned or given, but the value remain abstract.
- Exercising pleasure -> first purchase, and the realization that money has a real tangible value that can buy things (such as a game of marbles…).
- Codification -> first negotiation, and the realization that the value given to money is not fixed and can be discussed.
- Belonging -> first invitation, and the realization that money can open the doors of certain group within the society to the individual.
- Alienation (should be a 4 bis really, because it comes together with belonging) -> first rejection, and the realization that lack of money can close doors of certain parts of the society to the individual.
- Desire -> first jealousy, and the realization that the lack of money prevents the individual from getting what she/he wants.
- Obsession -> the first time money starts losing it’s rational and tangible value as a mean to an end for the individual, and become an irrational end in itself.
- Need -> first time the individual is acting to earn money for the sake of money, without ulterior and clear motives. This cements money as an end and no longer a mean to an end.
- Conflict -> first contradictions between the mean and the end, that can lead to the individual working against other individuals or even societies, in order to secure money.
- Constraint -> first time the need for money is so strong that it actually prevents the individual from exercising its value.
- Misplaced power -> when money is collected by the individual to the point it is no longer used to exercise its value, it becomes useless and worth nothing…
Implications of this theory
Now as individuals, we might all have experienced some if not all of these stages. The last stage is even more important. In effect, actions of individuals impact the role and function of money for the society as a whole. Societies created money to represent tangible value; a mean that has an associated power. If important amounts of power are not being used, then this power loose its value. And that is for every individuals in the specific society, lowering the ability of comparatively less wealthy ones.
With the widening wealth gap, open societies might drastically modify the way they conceptualize and operate money. Acknowledging its current status of an end for many individuals, and the challenge this poses for the society. This might generates alternative methods to value exchanges, and we see experiments in secluded societies, in which money disappears. This will lead to even more alternative methods to limit money’s power, through transaction restrictions of drastic adaptations on societies’ tax and subsidy systems. Or this might trigger more and more conflicts within societies, if it’s not already the case…
PS: If you’re not familiar with Adam Smith or his works, rather than reading summaries, I strongly suggest that you treat yourself with “The Wealth Of Nation” directly, which is easily available online for free (it can be found here (Geo Lib), here (Holy Books) or here (Federalist Papers), and many other places).
Processes generate a wide range of outputs, damaged goods being one of them. To treat all outputs as an opportunity to value, is one way to optimize a process efficiency!
Different types of process outputs
Processes use a wide range of resources (or inputs), to generate results (outputs). Efficiency generally focus on desirable results, meaning the valuable outputs intended to be produced by the process. However most processes generate multiple outputs, the desirable ones, but not only. These outputs are generally categorized by value, from high to low. You can have by-products, outputs which are not the main purpose of the process, but that still possess a substantial value. There’s also waste and scrap, which are outputs resulting from the process but with little, zero or negative value (we covered these in previous episodes here and here). And then there’s damaged goods. Damaged goods are desirable output with defects, that can drastically affect their value.
Not clear? Think about chicken to butcher. Chests, thighs and wings are your desirable outputs. Heads, feet or hearts can be by-products that you can eat, or feed to your cat. Scrap would be the tiny chunks of meat you didn’t manage to cut from the carcass. We generally consider feathers and bone as waste, that will need further processing to get rid of. Now the damaged goods would be the chest you erroneously cut in half because your knife slipped.
Methods to value outputs
Efficiency focus on the ratio of valuable outputs / inputs. So one way to optimize a process is to limit impact of negative outputs and value all the other ones. There’s basically two ways for that, diversify markets or reworks.
- Diversify market: Find new purposes to the output and repackage for someone with a need. => Ship chicken bone to necromancer!
- Rework: Create a side process with additional resource to transform and add value (recycling falls into this category). => Mince damaged goods and all pieces of scrap together to do minced chicken patty.
So what was the episode about?
Life is a process like any other. We grow with desirable goals, results we want to achieve. We use up ourselves, but like in any process, not everything ever go 100% right. So the point is to find value in everything. The main protagonist valued her anger in a burst of emotions… giving a purpose and a new value on what others perceive as “damaged goods”.
Modernity has a passion for speed, which makes decompression popularity and assimilation in every industries’ product life cycle all the more fascinating.
Decompression in comics
In comics, decompression consists in stretching storytelling, leaving more space for visual. So the story slows down, using more panels and pages to say less. In other words, you could say that panels’ efficiency plummets (that is from a story point of view). I invite you to check out this comprehensive article from Ogiue for more details.
One factor that help spreading comics decompression popularity, was that it made sense commercially. With the rise of faster and more visually oriented support, audience naturally turned to narratives that are more immersive and easier to follow. So lower word count / panel and more splashing visuals. As for traditional paper comics, decompressing a story helped “milking the cow”. Once you hooked the audience, you could multiply the volume of books sold with the same story (that is assuming you managed to hook the audience). As a result, stories that used to last one monthly episode became story arcs spreading over four weekly episodes. Same frequency (one story / month), four times the volume sold!
Product life cycle & narratives
In essence, decompression helped the comics industry to extend their product life cycle. The product life cycle is a theory that divides the life of core content (product or service) into various stages. Number varies, but essentially: Development / Introduction / Growth / Maturity / Saturation / Decline. More details about product life cycle’s theory on Hubs blog or Investopedia. Decompression was the comics industry solution to spread the maturity phase, without being too obvious.
Marketing and advertising are focusing more and more on narratives to target their market, and as such, teachings of decompression are becoming widespread techniques for almost every industry. The new norm for success is to increase frequency and be extremely reactive, but to distill less ‘new’ content each time (multiplied fashion seasons, tech’s doted updates, parted movie franchise, and so it goes).
So, as the slogan goes, ‘Less is more’…
PS: A big thanks to guest artist H2 for this page!
Special thanks to H2 for this bonus episode of Effy about sales efforts. As a car parts buyer herself, H2 is well aware of chinese commercial practices in the southern Guangdong. Lost somewhere between Dongguan and Shenzhen, where deals are celebrated with:
