Given the rise of artificial intelligence, it is less likely that taxi drivers will become entrepreneurs or programmers. Their habits of sitting still and waiting for consumers have created a reactive habit instead of seeking proactive opportunities. Hence, despite the automation of everything that will make life easier, the lack of need to make one move to feed oneself, will not supercharge creativity so much in the medium and long-run as much as it will make people looking for other way to fill their tame which will often be limited to social activities that involve eating or drinking.
There are personal reasons for not embracing change as well. Some people are comfortable on a basic income and prefer more outside freedom than professional productivity. Others like the social aspect of their job and that has more value to them than a higher paycheck. So, they might invent a manual social job like pollinating fields in case bees die out and no tech replacement is provided.
As we embrace the future, the upper part of the pyramid begins to separate from the lower part of it. They are mission driven and would always find something to work on or believe in. They will find their purpose outside of satisfying basic needs of the flesh and pursue explorations and activities perhaps even beyond Earth.
The upper pyramid will likely be debtless and able to accept innovation much faster. The lower pyramid is likely to have debt and be unable to follow the trends of the upper pyramid. Basic income will be enough to survive, but the cravings for things one does not deserve, but can have, would continue in the future increasing individual and public debt.
We are already seeing this begin to happen today. Societies are losing their Middle Class because there is a growing concentration of AI and capital toward the top.
Some will make it into the top of the pyramid. Many will not.
In time, we will see the two parts of the pyramid, the creditors and the debtors, become two distinct classes of people. And debtors, like casino players, can’t help themselves.
For corporations looking toward the future, brands must either choose to cater to one class or develop unique messaging and marketing that appeals for both classes for a singular product.
We will also see corporations more readily embrace the top of the pyramid because it will be far more profitable. Example of this is the iOS that is bringing far more profits than Android that is more widely accepted. This will further reduce the purchasing power of the debtors who will focus more and more on basic products such as H&M squeezing out profit margins of companies without brands to serve the top of the pyramid.
We are already seeing this occurring in the United States.
Tesla is moving in the directors of the debtors. Based on the Pyramid Innovation Theory, that means Tesla is more likely to see an increase in canceled orders. Why? Because of debt.
People on the lower tiers of the pyramid are more willing to take on debt because they have a short-term perspective. They are willing to place a $1,000 deposit to book a Tesla 3 model, but do not have the means to purchase the vehicle when it is ready for them.
Debtors get involved with brands because of the perceptions of others or a perceived brand equity benefit. They want what the upper part of the pyramid regularly enjoys.
Debtless people have a different perspective. They can afford more luxury brands. They would place the deposit to book a Tesla 3 model because they want to help the environment despite Tesla not being favorite brand among many still. Their focus is not solely on brand equity and social image as they had a choice and perhaps even owned a luxury car before.
Using the Pyramid Innovation Theory, Tesla is forced into a choice: embrace the profits at the top or embrace the sociability at the bottom that cannot provide the profit margins needed to sustain long-term innovation. Elon Musk must know how the real Tesla finished life due to his selfless nature, especially in comparison with Thomas Edison. Innovation stifling is not because of the corporation. It is because of the consumer.
Even with added sociability and a wealth of good intentions, including a general societal acceptance of electric vehicles, the Pyramid Innovation Theory sees one outcome when downward action is the emphasis of a brand instead of upward movement along the pyramid: a path toward failure to profit.
When we evaluate the strategic plans of a corporation, there are generally two key points to observe.
Products are designed in the past to meet future needs. They are not put into production immediately because there is no demand for them. Here are some examples for review.
Take the concept car for the new Maybach vehicle.
Mercedes-Benz could produce this version of the Maybach, even today, as its retail price justifies the customization of the special parts needed to assemble it. Why do corporations then, if they know what their future products look like, fail to release their iterations sooner?
Wouldn’t this provide future-proof products to the marketplace?
This is a prime example of consumers holding back innovation. The future products do not reach the market because the consumers are not ready to purchase them.
No corporation is going to purposely shelve a product that they know will sell for years to come.
Every industry faces the setbacks of innovation that are driven by the consumer. The most recent versions of the iPhone, the 8 and the X (or 10), are another example of the Pyramid Innovation Theory.
Imagine what iPhone sales would be if Apple decided to release the iPhone X on its own without the iPhone 8 as a backup. The sales figures of the iPhone 8 show us that most people would not buy the iPhone X. It is for that reason Apple decided to release the first iterative improvement in the iPhone 8, as they have done in the past, including the “S” models.
Those who would be accepting of the innovation and its cost would naturally gravitate to the iPhone X. Those who would not would gravitate toward the iPhone 8.
There are even visual changes to the iPhone, between the 8 and the X, which influence consumer demand.
Apple has two specific reasons for releasing the iPhone 8 and the iPhone X almost simultaneously.
Even our apparel is affected by the Pyramid Innovation Theory. Let’s take a look at one of the latest shoe designs from Adidas.
As you can see, these shoes are laceless and strapless. That makes them easier to wear, maintain, or put on in the morning. A futuristic design is included to include curves and ergonomics. High-quality materials are combined with simplistic colors like grey, black, or white.
Pricing for the Ultraboost line of shoes from Adidas begins at the high $200 price point. That allows consumer habits to be updated toward an intellectually protected model without disrupting all their past consumers in the process who might not be ready for the laceless future.
Before Adidas got to the laceless and strapless athletic shoes, there were subtle design changes introduced into previous designs. Take the Racer design.
Notice how the laces appear in the lower tier of the shoe? And how the laces appear to be more of an ornament than a necessity for the shoe to perform properly?
In all of the above examples, we can see that our future will involve powerful processors, curvy designs, and fewer unused spaces. The future may seem more complicated, but in reality, it will actually be driven by a desire of consumers for greater simplicity. This introduction of innovation meant for higher tiers of society allows corporations to advance consumer trends toward their future products without being disruptive to the entire marketplace.
We’re seeing this drive for simplicity and added productivity everywhere. Voicebots are replacing typing. Universal translators are replacing human translators. Autonomous vehicles may even replace driving instructors one day.
Everything becomes simpler, which means the design of future products must follow this trend as well.
Digging Deeper into the Pyramid Innovation Theory
Needs make humans solve problems on their own. Corporations can then innovate off those ideas through business-based research and development.
Once corporations get involved, however, they must be able to protect their branding and IP because of the levels of capital investment that are involved. That means they are almost forced to create products that more people at higher levels of the pyramid would use and pay more for. Even startups with access to proper funding levels can get involved with the Pyramid Innovation Theory today.
Let’s take this idea and use it to examine what Apple is doing right now with the iPhone.
The consumer innovators are those who are at the top of the pyramid. Those who are not ready for the future don’t want to be ignored, but they don’t want to be innovators either. That is why there is a gap between the two consumer groups.
One embraces future products in a leap. The other embraces future products with baby steps.
By creating products which appeal to both consumer groups, Apple can optimize their profits as an innovator. In time, that can justify the capital intensity required for introducing future products to the market in coming years.
Not every corporation follows the rules of the Pyramid Innovation Theory. Instead of working up the pyramid, some corporations start at the top and work their way down.
Elon Musk and Tesla are an excellent example of this variation.
Tesla launched with a future-like product at the top of the Pyramid with their Roadster. Instead of expanding their influence at the top of the pyramid, they moved downward to embrace more consumers.
The lower levels of the pyramid come with less profitability. They do have more sociability, however, and the social nature of humans helps to drive future innovation. Elon Musk cannot change the laws of humanity or alter the concepts of capitalism. If he tried, he’d likely end up like Nikola Tesla, who found himself living in a hotel and talking with pigeons in his final days.
Sociability does not directly translate to profitability. Musk may be headed toward social change. Adidas is not. They are taking an approach that is similar to Apple's Iphone with their laceless shoes.
In today’s market, we have an interesting dynamic. Startups often describe the future marketplace quite accurately and dream of being a disruptive force. Then they criticize corporations for not providing innovation.
It is a short-term vs. long-term argument. Corporations are slowly pushing consumers toward the future without compromising their profitability. Startups want to shove consumers into the future and are willing to gamble their own futures to do it.
Both approaches can be successful. Both approaches may also fail.
By understanding the Pyramid Innovation Theory, startups can identify niche consumer segments that are not interesting to corporations in this process for their own strategic reasons. Instead of being disruptive like this, which comes with a high risk of failure, they can focus on incremental innovations that their market can accept.
In doing so, each will bring us one step closer toward the future.
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