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Attention is fast becoming one of the scarcest resources, so one of the most valuable as well

“What infor­ma­tion con­sumes is rather obvi­ous: it con­sumes the atten­tion of its recip­i­ents. Hence a wealth of infor­ma­tion cre­ates a poverty of atten­tion, and a need to allo­cate that atten­tion effi­ciently among the over­abun­dance of infor­ma­tion sources that might con­sume it.” – Her­bert Simon¹

Atten­tion is nat­u­rally scarce: each of us only has 24 hours in a day. Some tech­nolo­gies can increase the thresh­old for indi­vid­u­als’ atten­tion amount (for exam­ple flow appli­ca­tions), but it remains bounded. “What’s changed is that we have more and more options com­pet­ing for our atten­tion. We face increas­ing abun­dance both in the pro­duc­tion and dis­tri­b­u­tion of goods and infor­ma­tion about those goods”². And as with any goods, with increas­ing rel­a­tive scarcity comes increas­ing value. Atten­tion Scarcity has been (for a long time) and con­tin­ues to reshape deeply nearly every aspect of our envi­ron­ment.

Here’s John Hagel’s excel­lent con­cise sum­mary of what is at stake:

Atten­tion eco­nom­ics will reshape busi­ness eco­nom­ics. It is not just a ques­tion of re-thinking mar­ket­ing, but re-conceiving busi­ness. Yet, with a few notable excep­tions, we are only at the very early stages of map­ping out what atten­tion eco­nom­ics means, much less what its impli­ca­tions are for business.

As I have writ­ten about here and here, atten­tion eco­nom­ics starts with the obser­va­tion that, as prod­ucts and infor­ma­tion pro­lif­er­ate, atten­tion becomes the scarce resource – we each have only 24 hours in the day. Where we choose to allo­cate this atten­tion will increas­ingly deter­mine who cre­ates eco­nomic value and who destroys eco­nomic value.³

The economics of attention

When exam­in­ing the con­se­quences of atten­tion scarcity, it is impor­tant to dis­tin­guish atten­tion and infor­ma­tion, which bear rad­i­cally opposed dynamics:

“Had we infi­nite atten­tion to give, we might look at a data stream. But atten­tion is scarce: Each of us has just so much capac­ity to pay atten­tion and wants to use it to good pur­pose. One def­i­n­i­tion of eco­nom­ics is the sci­ence of the man­age­ment of scarci­ties, so an eco­nom­ics of atten­tion makes sense, in a way that an eco­nom­ics of infor­ma­tion, which is open-ended and unlim­ited, would not.”⁴

Michael Gold­haber goes fur­ther and makes the point that from this spe­cific angle, what is exchanged in a trans­ac­tion is atten­tion, not infor­ma­tion. Tak­ing the exam­ple of 2 suf­fer­ers that com­mis­er­ate together:

“No knowl­edge of any prac­ti­cal value need be exchanged – no cures or doc­tors’ names, just com­mis­er­a­tion between fel­low suf­fer­ers. This is not an infor­ma­tion trans­ac­tion; it’s an atten­tion trans­ac­tion. The next time you’re in con­tact, you will both remem­ber your talk favor­ably and will­ingly exchange a lit­tle more atten­tion.”⁴

Here are some fur­ther key points about atten­tion pointed out by John Hagel and Michael Goldhaber:

• “Unlike many peo­ple who have writ­ten about the rel­a­tive scarcity of atten­tion rel­a­tive to infor­ma­tion over­load, Gold­haber never loses sight of the fact that atten­tion is ulti­mately about the con­nec­tion between peo­ple.”³
• “Gold­haber also avoids the trap of view­ing atten­tion as a com­mod­ity – “Com­modi­ties are usu­ally stan­dard­ized, more or less generic things or sub­stances that can be bought and sold in mea­sur­able amounts. None of this holds for atten­tion.””³
• “Gold­haber is close to view­ing atten­tion as a flow, rather than a stock – some­thing that must con­tin­u­ally be refreshed, if it is to be main­tained. One can only con­tinue to attract full atten­tion if one offers some­thing new along the way.”³

Attention scarcity has deep implications for businesses

Now, for most exec­u­tives, this can seem like a pretty abstract dis­cus­sion with­out any clear rel­e­vance for near-term actions. That impres­sion would be a mis­take. The atten­tion econ­omy is sur­fac­ing around us today – it is not some dis­tant future. As with most eco­nomic trends, those who spot them and act on them early are most likely to cre­ate sig­nif­i­cant value. Here are some early action items:

• Explore the impli­ca­tions of atten­tion scarcity for firm struc­ture – I view atten­tion scarcity as a key cat­a­lyst dri­ving the unbundling and rebundling of firms that is occur­ring on a global scale
• Mas­ter the man­age­ment tech­niques required to increase return on atten­tion, not only for cus­tomers but for employ­ees and busi­ness part­ners as well
• Cre­ate mech­a­nisms to help cus­tomers and employ­ees attract the atten­tion they need to become more suc­cess­ful in their endeav­ors, espe­cially in terms of their tal­ent devel­op­ment.³

Atten­tion scarcity is reshaping:

• value chains
• orga­ni­za­tional struc­tures and cultures
• basic foun­da­tions of entire indus­tries (think about the media industry)
• what it means to build a “good” soft­ware application
• how cor­po­rate IT func­tions should approach their role

This truly is a change of par­a­digm that needs to be incor­po­rated in cur­rent strate­gies or will back­fire sooner rather than later.

How to reshape your business strategy

Let’s use Umair Haque‘s excel­lent analy­sis of the media indus­try as an exam­ple of strat­egy reshaping:

“Across con­sumer mar­kets, atten­tion is becom­ing the scarcest – and so most strate­gi­cally vital – resource in the value chain. Atten­tion scarcity is fun­da­men­tally reshap­ing the eco­nom­ics of most indus­tries it touches; begin­ning with the media indus­try.”⁵

Umair fol­lows with a set of ques­tions to get you started on eval­u­at­ing the impact of atten­tion scarcity on your industry:

• “To what extent are my indus­try eco­nom­ics still dom­i­nated by dis­tri­b­u­tion and pro­duc­tion scarcity?
• To what extent are my indus­try eco­nom­ics now dom­i­nated by atten­tion scarcity?
• Is effi­cient atten­tion allo­ca­tion on my list of priorities?
• Can I use effi­cient atten­tion allo­ca­tion strate­gi­cally, to co-opt or pre-empt com­peti­tors, or to build a sus­tained com­pet­i­tive advan­tage in mar­ket share?
• If so, what resources and capa­bil­i­ties do I need to drive effi­cient atten­tion allo­ca­tion? At what lay­ers of the value chain do I need to invest? What alliances and part­ner­ships will be valu­able in devel­op­ing these resources and capabilities?
• Can I lever­age edge com­pe­tences to effi­ciently allo­cate atten­tion?”⁵

These are essen­tial ques­tions for a wide range (though not all, yet) of indus­tries. For more on this domain, look at this pre­sen­ta­tion from Umair⁶.

How attention scarcity impacts organizations

Orga­ni­za­tions have to adapt. The major­ity of employ­ees are now knowl­edge work­ers and how they con­sume the infor­ma­tion flows inside and out­side their own orga­ni­za­tion is directly impact­ing their pro­duc­tiv­ity. The need to max­i­mize the Return on Atten­tion for employ­ees is becom­ing more and more impor­tant, as retain­ing tal­ent also .

In that respect, com­pa­nies must refo­cus their processes and IT appli­ca­tions in order to min­i­mize the cost in terms of atten­tion for employ­ees to com­plete these work­flows. Too often, IT tools are only eval­u­ated on their “fea­tures”, the capa­bil­i­ties they offer on paper, but not in terms of atten­tion, the capa­bil­i­ties they deliver to employ­ees in their very real activity.

Com­pa­nies should repo­si­tion their IT appli­ca­tions to achieve 2 gains:

• increase the total amount of atten­tion that is freed by inno­v­a­tive com­bi­na­tions of IT appli­ca­tions and work­flows evolution
• take advan­tage of inno­v­a­tive IT tools enabling employ­ees to increase the return they get from their atten­tion. This will mostly come from con­sumer appli­ca­tions and par­a­digms mak­ing the cross to the enter­prise market.

How to start incorporating this increasing scarcity in your business model

Though it would be illu­sory to cover, even super­fi­cially, the many impli­ca­tions of AS in one or sev­eral posts, you can start by focus­ing on 4 dis­tinct areas:

• Busi­ness model: How is your indus­try and busi­ness model rede­fined by this new par­a­digm? Some indus­tries are heav­ily dis­rupted (media), some not yet (com­modi­ties). Even­tu­ally though, all will be. React imme­di­ately or plan for later, depend­ing on the degree of disruption.
• Prod­ucts and Ser­vices: How are you incor­po­rat­ing in your prod­ucts or ser­vices the increas­ing value of atten­tion for your cus­tomers? If not well done, a com­peti­tor will take advan­tage of this weak­ness. Think of the many legacy enter­prise IT appli­ca­tions in IT that are being threat­ened by sim­pler, less pow­er­ful prod­ucts that does less but extract more value for the atten­tion consumed.
• Orga­ni­za­tional effi­ciency: all orga­ni­za­tions are con­cerned. Knowl­edge pro­duc­tion, con­sump­tion and dis­tri­b­u­tion are con­sum­ing atten­tion. How do you opti­mize your tools to enable your employ­ees to be the most effi­cient with the less atten­tion cost?
• Mar­ket­ing: atten­tion is more dif­fi­cult to gain. Mar­ket­ing has been reshaped long ago, but one key prin­ci­ple here is to be remark­able enough to be notice­able. Remark­able now beats excel­lence (though excel­lence can be remark­able for itself).

Updated May 6th 09 with addi­tional mate­r­ial

References

1. 1 Her­bert Simon: Com­put­ers, Com­mu­ni­ca­tions and the Pub­lic Inter­est, pages 40–41, Mar­tin Green­berger, ed., The Johns Hop­kins Press, 1971 [↩]
2. 2 John Hagel: Return on Atten­tion and Info­me­di­aries [↩]
3. 3 John Hagel: The Eco­nom­ics of Atten­tion, 2006 [↩] [↩] [↩] [↩] [↩]
4. 4 Michael Gold­haber: Atten­tion and soft­ware – RELease 1.0 , March 26, 1992 [↩] [↩]
5. 5 Umair Haque: The atten­tion econ­omy [↩] [↩]
6. 6 Umair Haque: The New Eco­nom­ics of Media: Micro­me­dia, Con­nected Con­sump­tion, and the Snow­ball Effect [↩]