Introdution
Before we start on the meat and potatoes, it’s important to set the table for this blog entry. I have been working in the business of building b2b marketplaces for the past 12 or so years, over that time a lot has changed in both the enabling technologies and the acceptance of digital transactions of all sizes.
In the early (ish) days we looked at using data to provide intelligent insight into the historic transactions being made on a platform or marketplace for interpretation. By providing actionable insights to business operators and workstream owners they were better able to appreciate the market conditions, augmented with their experience to shape future transactions.
This intrinsic and human-scale knowledge, experience and wisdom are hard to replicate in technology, since it encompasses a broad range of inputs. For example, being able to read a newspaper in the morning over your boiled eggs and subconsciously onboarding some minor change in macro conditions.
Or through a casual conversation over lunch with someone in the same industry, where the topic discussed is less information-heavy than the sentiment being expressed; A happy and engaged person generally is in a situation where their business is encouraging opportunity and growth. Or conversely, someone being effusive about a subject but you being able to detect the undertones of desperation.
In short, the input variables are hard to delimit, and therefore the data required to codify this or feed an ML model aren’t obvious, or perhaps are apparent at a given moment in time, but change with alarming frequency.
How to create the right understanding without appreciating everything; software agents.
The antidote to this problem is relatively straightforward when you look at it through the right lens. Bots. Yes, Bots, robots, (semi)intelligent agents, or put another way software which enables you as either a buyer or seller to model your business needs, in both demand and supply. The software agent (bot) is able to act on your behalf once it sits across the table with the bot on the other side of a trade, this facilitates efficiency.
Now, this might seem, at least on the surface, that we’re automating the conversation around pricing at any given time… however this is more sophisticated the agent will be taking information from your business (what the demands for your products are), looking at forecasting future demand, understanding cost of carry vs risk of running out material, and so on.
The agent is operating in time series, not on a transaction by transaction basis. It’s deciding, for example, frequency of purchase, quantity, price banding, supplier by geographic spread, etc.
The agent is operating in time series, not on a transaction by transaction basis.
These agents taking part in transactions are able to interrogate each other without revealing specifics about needs (i.e. information is power, so you wouldn’t want your supplier knowing exactly how vital the next shipment of grommet screws might be).
Once you reach a particular scale around the adoption of automated trading agents (in the real world, there are plenty of examples in financial services already), efficiency starts to kick in, and we move to fluid, optimal markets.
Buying and selling agents, with agency. Enter personality.
Now we have a highly functional set of buying and selling software agents; things should be going well. Obviously, companies will attempt to upgrade their agent to increase their competitive edge, but this is a zero-sum game in the long run since other agents will bias dealing with buyers or sellers who operate on a fairer principle; in other words, exploitation of the technology will not be a long or mid-term advantage. Anyway, for the sake of this blog post, let’s assume that this really doesn’t happen for whatever reason.
How, now, do we create an edge? What can we, as a business owner, do to create advantage? Simple. We can use our personality to create a culture and an environment in our business to foster creativity and innovation. Both of these are hard to automate characteristics and are fundamental to progress. What is an entrepreneur other than someone who can connect the dots that, to date, others have not managed to achieve?
So, personality, the ability to either inspire, lead, or just someone with creativity built-in. These are the people which through creating a collective of specialists, who are correctly motivated and jointly focussed are able to level up your business. Create new products, or services, tweak ingredients to make the perfect chicken pie, or design the most amazing iPhone app which gets people to do more situps.
I’ve spoken before about creativity being the new currency, but my evolved thinking is collectively inspired people will deliver incremental or step-change improvements relatable to whatever commerce demands as we stride through the years.
Creativity has always created differentiation, but the emphasis now is more around collective creativity, expressed in the right context through personality and organisational structure.
What does cross-border taxation have to do with it?
It does seem a bit of a tangent right? But tax has become a tool used to deliver competitive advantage in today’s society. There are many people who would wish it otherwise and let’s hope some global taxation standards start to level things out, but society and governing principles move at glacial, barely perceivable speed.
With the assumption that trade is being automated and things like logistics, delivery risk, quality, etc are all being handled by our software agents (bots), the only thing standing in the way is physical borders.
Globalisation stands to move production to the location which is most efficient. However, taxation to maintain the population of the producing country varies greatly. This is a more expansive topic, but even at its base level, some countries provide a greater set of social services than others, and this must be paid for by tax. Other countries use low taxes as a means of attracting commerce and assume populations will collectively benefit and leverage their social needs independently.
Whatever the case, and I’m no expert, tax is a key element that sits across our perfect marketplace and means one supplier or buyer is favoured because they operate within a jurisdiction that either provides a commercial advantage or doesn’t artificially retard production due to other policies (like environmental impact, or some other analogous contributory factor).
The company(location) of the (near) future
Location then becomes a huge deciding factor in shaping your enterprise, business or set of future plans. The ability to create and maintain cohesion between people who work in the business to leverage personality becomes a design principle. With the inclusion of greater geographically dispersed teams through remote working, what element of elasticity do you have to mix physical and virtual locations?
I would suggest that you have a hub and spoke kind of setup, organising your key personality and cultural identify providers in some vaguely commutable location. In doing so, one allows the message and ethos to be distributed via osmosis. The personality emanates out and is carried in increasing diluted parcels through virtual and physical interactions.
Locating the tax domiciles is a secondary consideration and one which comes down to the level of value being delivered by a business. The lower the differentiating factor (i.e. the more commoditised) the end product, the more likely that tax will influence competitive advantage. The higher the differentiation, the more a business can make decisions about what best reflects their brand. Social and environmental capital is becoming more important and the awareness of this is bubbling up within our collective minds.
Of course, I’ve touched on many topics here and I’m not going to suggest I’ve done a good job of being fully inclusive or expansive in my thinking. It’s a simple concept to provide you with a little food for thought.
I’m planning a podcast to discuss decentralisation, which has a huge impact on taxation, but this is an even more involved topic and a conversation around it is probably easier than sneezing out a huge monologue filled with points of view.
Stay tuned for the next future focus… on personal transport.
