A la Carte: America Unbundled
From fast casual dining to fast casual sex, nearly every implicit, explicit,\ and complicit social contract in America is unraveling, while transitioning from formal to informal and from relational to transactional – and all served up “To Order” and “To Go” – with no strings attached. Don’t believe me? Keep reading…
Unbundling, decoupling, unraveling, it goes by many names, but at its core is a fundamental unwinding of the fabric of America’s foundational social contracts which once connected the gentry and the generations with the fiscal and physical geography of this great land. Within the span of eight or nine American Presidents, the default terms and conditions of our prevailing expectations have been compromised and replaced with a hastily designed and increasingly inferior alternative. Welcome to “America Unbundled.”
When I was a kid, Wall Street’s default investment strategy was “buy and hold,” and Main Street’s default commitment strategy was “to have and to hold.” Sure, there were always exceptions to these customs, rules and traditions, but back then they were just that — exceptions. Nowadays, these societal understandings have been replaced with fast casual dining and fast casual sex, turning us into a nation of cultural “day traders” — waking up every morning not knowing who we’ll work for, who we’ll date, who we’ll mate, where we’ll eat, what we’ll eat, where we’ll sleep or what we’ll drive. When did we decide as a nation to collectively draw up the papers of our own Declaration of Independent Contractor, and how is it that I’ve got my hand cocked to sign it?
Since the 2012 release of my controversial Specialist Nation: A Survival Guide for America, our country has not only followed the trajectory predicted in the book but accelerated the trend for people and producers to specialize around their unique efficiencies, competitive advantage, compelling value propositions and indigenous core competencies. In fact, even the words we use reflect our rapidly changing preferences, replacing “sit-down family-style” with “buffet/cafeteria-style” offerings. What follows is a social commentary on a society increasingly trading commitment for convenience, where you only pay for WHAT you want, WHERE you want it, WHEN you want it and WHO you want it with.
Music: Bundled
As a child of the 60s, I grew up listening to these big black vinyl discs called “records” which were played in my house on something called a “stereo” or “hi-fi” (which, according to my disapproving mother, also meant “high price.”) When released by musical performers, these records were called “albums” and included roughly five songs on both the front and back of the record. However, whereas the front or “A side” included the artists’ best songs, the “B side” was usually filled with their less popular titles and less-inspired recordings. Back then, even if there were only two-three really good songs, buyers had to pay the full $15 dollars for the entire album — we had no choice but to endure the bad stuff that came bundled along with the good stuff.
Music: Unbundled
My teenage kids don’t know what an album is, much less the notion of “going to the store and buying it.” Today’s musical landscape is surgical and precise. You find a song, pay for the song, download it and repeat. You don’t pay for songs you don’t want. There’s no fluff, no reason for listeners to endure marginal content and no hope for artists hoping to monetize marginal melodies. The universe of millions of LPs or “concept albums” has been unbundled and reduced to millions of single songs, and listeners wield the supreme power of deciding which ones get rewarded with purchase, and which ones don’t.
Airline Travel: Bundled
Back in the days when you paid a travel agent to buy your tickets (and you dressed up to fly), the price of your ticket was the price of your total flying experience. Included in the price of that Milan to Minsk flight was the cost of transporting all of your luggage, all of your carry-on, lunch, dinner, snacks, beverages, blankets, headphones and whatever version of Rocky they were showing.
Airline Travel: Unbundled
For the first time in generations, airlines are actually making a profit. How? By unbundling every incremental component of the traveling experience and turning it into their own little profit center. Instead of a single ticket amount for a bundled airline experience, today every piece has a price: first bag $25, second Bag $100, third Bag $125, exit row $30, choice seats $50, preferred seats $99, snacks $4, soda $4, lunch $8, dinner $12, change fee $100, headphones $12, priority boarding, printed ticket, early boarding, online check-in, inline check-in, downline check-in, overweight passenger penalty, seatbelt extender tental, “Backpack Doesn’t Fit into the Tiny Bin” punitive penalty, and finally the “Failure to Smile While Going Through X-ray Scanner” tax. At this point, it would just be easier to put my wallet through the machine and let them keep it, as it’s usually empty by the time I leave the airport.
Gym/Fitness Center/Health Club: Bundled
In the early days of the fitness industry, it was customary for people signing as new members to pay a one-time initiation fee of $100, followed by a steady monthly fee of $75 (depending on location and profile of the health club). Included in the cost of membership was access to the pool, locker rooms, group classes, free weights, cardio area, and — at the gym I attended — racquetball.
Gym/Fitness Center/Health Club: Unbundled
Fitness Centers today are all about unbundling. Their “no commitment” strategy is increasingly demonstrated by eliminating the initiation fee and offering m-to-month memberships. Their “open 24 hours” facilities often feature a skeleton (if any) staff – reducing the expectations of customer service – and their offerings have become much like the airlines above. Childcare: $12, spinning class $15, hot yoga $25, cold yoga $35, barra yoga $65, tanning $9, Zumba $8, racquetball, party rental, parking, personal training, group training, heart monitor rental, locker rental, and of course, towel service.
*Note: At this point, rather than expand this premise and supporting data points into a Seth Godin-length book, I’ve decided to abbreviate it, as the storyline for each is eerily similar and equally saddening.
Cable TV: Bundled & Unbundled
When I was a kid, TVs were black and white, and watching them was free. Then along came this thing called “cable TV,” offering more channels and more choices – but it came at a cost. Over the next 40 years, cable TV packages became bloated monstrosities featuring everything from Disney to Duck Dynasty, and their corresponding content came with a corresponding cost — until 2014, when Americans finally decided to “cut the cord” and bail on the bundle. With the proliferation of set-top solutions and broadband options, Americans are instead moving towards an unbundled ala carte approach, selecting and paying for only those channels, programs and content that they consume and ignoring the rest. CBS chief executive Les Moonves put it best when he recently announced, “The number of homes with cable dropped by more than one million last year — the days of the 500-channel universe are over.”
Sports and Athletes: Bundled & Unbundled
I’ve got to be honest, while there has been a massive sea change in the world of professional sports over the past 40 years, it’s impossible to do it justice in three sentences. Here’s the short version. When I was a kid, players like Cal Ripken would play for the same team their entire career. While trades still happened, there was at least an implied sense of loyalty and commitment, with team rosters bearing at least a semblance of continuity year after year. Today, it’s cutthroat. Free agency, waivers, options, bonuses, franchise tags, trade deadlines, 10-day contracts, “one and done” college stars, signing bonuses, guaranteed salary and concussion protocols have all unbundled these storied franchises (owners and players) into scores of singular, selfish, transactions which tout “team first” platitudes — until something goes wrong. Then it’s every man for himself.
Transportation: Bundled & Unbundled
In many American towns with underdeveloped mass transit systems (like mine), owning a vehicle is considered essential. In my lifetime, I’ve witnessed an incremental progression from the tradition of buying a car with a five-year loan duration, to leasing for 36 months — and now millennials in our unbundled culture are increasingly eschewing vehicle ownership altogether, opting for ride sharing, bike sharing and Uber — a just-in-time transportation solution, involving no ownership and no commitment, from either driver or passenger.
Relationships: Bundled & Unbundled
Nowhere is unbundling more pronounced than in the notion and norms of modern relationships. While everyone will agree that things weren’t perfect and pure back in the “good ol’ days,” it’s clear that the familiar rhyming progression, “First comes love, then comes marriage, then comes Amy with a baby carriage” has become interrupted and uncoupled. Lifelong mutual commitments based on “Til death do us part” have been unbundled in favor of a hook-up culture promising no commitments and instant gratification — requiring only a swipe of the thumb — and transitioning from formal to informal, and from deep and relational to shallow and transactional.
Friendships: Bundled & Unbundled
The advent of social media has transformed real-life in-person friendships — into Twitter links and Facebook likes. Instead of a short list of deep, intimate, lifelong, trusting friendships, our circles have become wide, shallow, virtual, brief, and all too often, exhausting. Sure, there is value in being able keep up with far-flung relatives and business associates, but the increasing numbers of people throttling down their screen time is suggesting something far more hollow and nefarious.
Housing: Bundled & Unbundled
A long time ago, in a generation far, far, away, people rented while stashing away money for a few years, and then put down $5,000-$25,000 on a house, taking out a 30-year mortgage and then doing something called “putting down roots” — a colloquialism describing the process of investing in the street, surroundings and community for the long haul. After 30 years, you would then have a paid-for real estate asset called a “home,” which could also be used as a nest egg for the future and/or next generation. In the unbundled world of 2016, a company called Airbnb is popularizing a concept in 190 countries worldwide called “Just in Time” sleeping, offering people a place to sleep for a night with no stated or implied commitment for the future.
Careers and Companies: Bundled & Unbundled
When I was 12, I attended the retirement party of my grandfather from his 35-year career at General Electric, complete with cake, a humorous career roast, and yes — a gold watch. Those days are over. The average person will now have between 12-15 jobs in their career, and companies — driven by global competition in our flat integrated environment — have been incrementally unbundling the employer-employee relationship for decades.
The steady erosion of retirement benefits, pensions, 401(K)s, vacations, and the unbundling of healthcare thanks to Obama has increasingly reduced Americans into a workforce of outsourced, virtual, hourly, just-in-time “human cogs” featuring armies of independent contractors and freelancers doing temp jobs, and reducing the ideas of loyalty and longevity to antiquated notions of some mythical halcyon era. (Goodbye, gold watch — hello, golden parachute.) Corporate culture now proudly features nomenclature like lean, agile, optimized — all designed to support and celebrate an obsessive focus on core competencies and competitive advantage based on unique specialized offerings. However, to maintain operational efficiencies and their razor-sharp margins, firms have increasingly been cutting the fat in areas like training — which gets us to our next point.
College: Bundled & Unbundled
Thirty years ago, it cost around $40,000 for me to attend a four-year college and achieve a BS in economics. Back then, I had to endure the other 30 “required classes and electives” in order to take the 10 classes that I really wanted in the pursuit of my liberal arts degree. In the years since, while the cost of higher education has skyrocketed, the value has plummeted, for the simple reason that at a time when colleges are continuing to graduate broad, shallow generalists, employers are increasingly looking for deep, focused specialists who can come in on day one and contribute. As more students and parents are deciding that paying $100,000 for a credential with less value in the marketplace is crazy, they are systematically unbundling the college-career continuum to cut the fat and seek out those specific aspects of education that provide the most bang for the buck.
Tenured Teachers are the Next Medallioned Taxi Drivers
Just as Uber overturned the monopoly of taxi drivers (some of whom paid over $1 million for their taxi certificate), a new generation of entrepreneurial educators are opening specialized schools like Boole Institute, Tech Elevator, and We Can {Code} IT in downtown Cleveland. These coding bootcamps (and scores of others like it around the country) have strategically unbundled the tradition of higher education, offering more monetizing value in 12-16 weeks than many colleges offer in four years — and at a fraction of the price — and all while unapologetically focusing like a laser on a single repeatable outcome, namely, providing a direct pathway to obtaining an in-demand, high-paying job. (See also “The STEManifesto”).
As the “Uberization of universities” continues its acceleration, thousands of tenured teachers lecturing on obscure topics simply because students are required to take them for graduation will quickly find themselves on the outside looking in, as paying customers prefer instead to cherry pick those exact courses providing the most monetizing value. And just like the boring B sides of those albums of the ’60s, legions of warmed-over teachers and topics of questionable merit will no longer be able to ride the coattails of the handful of true academic “hits,” headlining the good stuff on side A.
Epilogue: Closing Caveats
As with any ambitious article, individual results may vary, and singular vignettes can always be summoned and supported as points of argument. I get that. So please understand. These are broad-brush strokes (megatrends always are), but as we say in the industry, “Data patterns are more powerful and predictive than their data points.”
[Written by Doug O’Bryon, MBA, managing director, Briarcliff Capital, author of Specialist Nation: A Survival Guide for America]