Could our growing individualism lead to greater dependence?

Individualization is now about to reach new stages, enabled by new technologies, low entry barriers and new value systems. It will further change our society and economy and increase the power of individuals. However, it will also make them more vulnerable by increasing dependence on often monopolistic backbone technologies. Can we find ways to ensure that everyone can benefit from the new opportunities?

Today’s societies are increasingly pluralistic, with more and more opportunities for individuals to consume and produce a uniquely tailored blend of products and services. Technology such as e-commerce platforms and online shops increasingly enable targeted marketing and delivery of nuanced offerings. An example of this “long tail” phenomenon is the German beer market. Over the last decade, per-capita consumption of beer has fallen, while the number of beer brands and breweries has grown.

Individualization has progressed furthest in digital goods. The music and media industries have been transformed by the ability of individuals to pick and choose from a range of entertainment sources and to find an audience and market for their own self-expression. The rise of 3D printing is set to do the same for physical goods, by enabling individuals to shape product design and manufacture objects out of cellulose or plastic in their own homes. This DIY economy will enter the mainstream with user toolkits and intuitive product configurators making specialized design and production knowledge obsolete.

This phenomenon is not confined to advanced economies. Individualization in emerging countries is still much lower, but growing. The key drivers towards individualization are technological progress, levels of education and prosperity, and urbanization, as cities tend to be associated with higher levels of creativity – all trends likely to continue in the coming decades, especially in emerging countries.

The growing middle classes in the emerging world seem especially eager to individualize and have a high affinity for new technologies that enable them to stand out from the crowd. An example is the trend to customize high-end cars in China, with Porsches or Ferraris being chrome-painted or painted unusual colours. The vehicle modification business in China is estimated to be worth about $8 billion.

The advance of individualization will have profoundly disruptive effects on a wide range of industries. Just as the media and music industries have struggled to adapt their business models in recent years, other sectors will increasingly be disrupted by the rising power of the individual – from product design and manufacture through 3D printing, to energy utilities as a fragmented and emancipated customer base increasingly produces its own energy using technology such as solar and wind power.

All of this can be considered as a major threat for traditional industry players due to the radically lower entry barriers to their changing markets. The only way to survive is to transform their structures and to innovate business models.

Greater individualization will lead to more creativity and human flourishing. The positive side of the disruption of established players is the greater chance it gives to individuals to create niche businesses with low capital investment and global market reach via e-commerce platforms. Hidden potential for innovation and entrepreneurship will be unleashed, and different and more flexible working models will emerge. The socialization of arts and media offers huge spaces for individual creativity.

As technology becomes more accessible, the benefits could include new solutions to bottom-of-the-pyramid issues. With local access to global knowledge resources and innovation networks, it will become increasingly possible for individuals to develop solutions and make them available for everybody within low-cost innovation networks, an example being the rice husk gasification plants now supplying villages in India with stable and sustainable power.

However, the new stages of individualization also create dangerous dependence and new vulnerabilities. They typically rely on strong backbone systems, such as smart energy grids or information platforms, the centralized structure of which makes them easy to manipulate. Global monopolistic structures among these backbones, especially in the IT industry, can already be observed today. Providers of non-physical systems can more easily hide in unlegislated areas and misuse their market power.

As individuals grow more reliant on these backbone systems, the potential for harm increases: whether from authorities filtering information or shutting down networks in response to protests, as already observed in some autocratic systems; or from livelihoods coming to depend on monopolistic online platforms which could suddenly change policies to privilege certain sellers over others, or increase costs knowing that it is difficult for individuals to switch to other systems – the individual as a market player does not have the power of large companies to fight for his/her own interests. Additionally, system-wide IT security gaps pose enormous risks.

Should we consider bringing parts of the digital backbone under public ownership, or enshrining individual rights to its use? Can we revitalize competition among system providers to strengthen the position of the individual? How could technology empower and protect individuals while enabling the opportunities of an individualized world?

If we can overcome these risks, the next stages of individualization offer significant benefits – both economically and for human freedom.

This piece is one of a number of individual perspectives from the Global Strategic Foresight Community of the World Economic Forum for the Annual Meeting 2015. To read more access the full collection.

Author: As a Director in Strategic Transformation, Trudpert is heading the strategic foresight activities of Corporate Development Strategy at Siemens AG, based in Munich.