The "Experimental" Economy: A New Idea for Economic Development

Here is a clip from a very interesting working paper by John Zysman, University of California, Berkeley on creating value in the "experimental economy." His thinking has major implications for industry clusters and many other things we work on in economic development.

"The twin drivers, the global and the digital, constantly shift the sources of market advantage, forcing companies and countries to adapt. New competitors, new competitive strategies and tools, are continuously appearing, constantly buffeting companies and countries.

Company internal functions suddenly become products to be bought in the market, products that have generated premium prices suddenly become commodities, and the sources of differentiation for products and process are evolving. It is not just that there is an increased pace of change, but that the market environment is inherently less predictable. This chapter first situates the present digital era in historical perspective. It then considers how the Global and the Digital change the problem of value creation in the marketplace.

In a sense, this chapter asks the question of how wealthy nations stay wealthy amidst radical changes in competitive markets. In the conclusion I argue that traditional tools of strategy and policy analysis will not suffice. We have to consider the place of conscious experimentation in corporate and national adaptation. Companies will have to look at their initiatives as “experiments,” attempts to find their way through a maze of quite fundamental uncertainty. Each company effort, and each effort of a competitor, must be culled and systematically assessed for lessons. Governments must consider what an Experimental Economy will require, and how an environment can be created for individual firms and networks or clusters of firms to experiment effectively."