March 2021 marked my one year anniversary of what can be considered one of the largest social experiment in history due to the global COVID19 pandemic.
Impacts of this experiment in consumer behaviour have been significant with a demand shock for human interaction (with a spike of unemployment in associated industries) and a forced global alignment towards product and services that favour Z/contactless convenience.
The social cost to this shift is difficult to calculate today without some distance. We can speculate that the abstinence from any micro-social transactions or the more extreme "don't trust anyone" rhetoric used to halt social interactions (see the invisible enemy seem to have affected overall our ability to retain perspective and empathy, both incredibly valuable trait for an inclusive democracy. The jury is still out if that affected somehow the long term of some of our democracies, but certainly it hasn't been a quite year.(source)
The opposing force of Z/contactless convenience, are human interactions or experiences. The pandemic showed vividly the distinction between L/retail as logistics and L/retail as experiences and services. While Z/contactless convenience is a race to scale & lower margins, experiences are doubling down on the human interactions and premium (often physical) experiences.
My thesis is that those experiences will remain and carve themselves a long term space - currently underrated - because of the village effect is a consistent craving for the human factor that makes certain "transactions" (you'll see below some examples of it) more efficient. From a business standpoint, it is deeply rooted in human behaviour and will likely always have a part in equilibrium of commerce - which is due for a correction after the pandemic.
The book provides a good account on the evidences available behind this intuition.
In a nutshell - it confirms that face-to-face matters and any rapid move at the polar opposite typically brings negative consequences in the long run and thus course correction.
Present day technology has not yet bridged the gap to replace — without consequences — a face-to-face interaction to satisfy this fundamental human craving. It is often a tradeoff between quality (offline interactions) over quantity (online interactions).
There seems to be a cognitive dissonance between what we think we want (and what technology enables us to do) and what we actually need.
We are wired for frequent and genuine social interactions and a sense of belonging, yet digital goods and services are the most efficient creation of value for a company and thus billions of dollars are spent every year to manipulate our natural impulses into spending more in the higher margin product and services.
Here are some take aways:
(1) Scientific progress is (was?) still a function of proximity
One 2010 study led by Harvard’s @Isaac Kohane shows that the further scientists are from each other geographically, the less influential their work is on their discipline. Even proximity on the same campus has been proven to influence the work of scientists.
(2) (corporate) Innovation (often) happens in a physical place
Google has understood and utilised the Village effect to its advantage for several years. They have designed their Mountain View campus in a series of angular buildings, all clustered around a common green spaced equipped with seating and shade, to promote the “casual collisions of the workforce”. 8000 employees are housed in 65 connected buildings, none of whom are ever more than a two minute walk away from any other employee.
“Our preference for face-to-face interaction is why we are 4 times as likely to exchange ideas with someone sitting six feet away as sixty feet away.” says urbanist Greg Lindsay.
I recall having read a similar concept in Steve Jobs’ autobiography, and the huge spaceship Apple is building in Cupertino is clearly built using that concept.
Today, despite the pandemic Google has taken the stance that collaboration is a face-to-face activity, piloting an adjustment to the 5 day a week in the office work culture - to a 3 "collaboration days" a week.
(3) The sense of belonging and community has an impact on our long term health:
The village effect has been proven to fortify your immune system, calibrating your hormones and rejigging how the genes that govern your behaviour and resilience are expressed.
“The Roseto Mistery” - the opening of @Malcom Gladwell in Outliers — covers a similar point. Roseto is a village in Pennsylvania with a staggering low mortality and disease rate with respect to the rest of the United States. It has been classified as an outlier and has been studied with interest to understand and potentially mimic its secrets.
I like this example as it is often cognitively easier to use geographical elements to justify life expectancy differences, but Roseto is the perfect empirical study to control for that and focus on other relevant aspects.
Long story short, this study concluded that the reason behind Rosetans’ strong health was not specific to any genetic trait or even dietary habits but rather to the community and culture that this “transplanted Italian village” had maintained over the years. The extended family clans and communal nature that underlay the social structure of the village was indeed what made these people so resilient to diseases.
(4) Basic education and human interaction
Even in education, research shows that face-to-face contact with a skilled teacher for even one year of a child’s life has more impact on the child’s learning than any laptop program has had so far. The effect decreases over the years and depending on the learnings, but it is still meaningful enough to consider early on.
People need people.
A business model based on disintermediation or “digital only” does not necessarily have to mean a “human-less” model.
As technology becomes more advanced to be integrated and less prominent, I am perhaps a contrarian in believing in a return of the human factor as being the focus of the following iterations of companies/strategies.
I imagine disruption (being technological or not) as a wave that requires some volatility before reaching its steady state.