Confusopoly, or Scott Adams, Prophet of Finance

While sitting in a small room perusing a book from the bottom of the stack, The Dilbert Future, I idly looked again at Scott Adam's prediction #2:

In the future, all barriers to entry will go away and companies will be forced to form what I call "confusopolies".

Confusopoly: A group of companies with similar products who intentionally confuse customers instead of competing on price.

OK, good snark. But look at the list of industries he identified as already being confusopolies:

• Telephone service.
• Insurance.
• Mortgage loans.
• Banking.
• Financial servvces.

Telephone companies of course since then have gone to great lengths to try to nuke net neutrality.

And the other four are the source of the currrent economic meltdown, precisely because they sold products that customers couldn't understand. Worse, they didn't even understand them!

It gets better. What industry does he predict will become a confusopoly next? Electricity! And this was in 1998, before Enron engineered confusing California into an electricity-price budget crisis.

For risk management, perhaps it's worth considering that simply selling something the customer can understand can rank way up there. Certainly for the customer's risk. And given how much the FIRE companies drank their own Kool-Aid, apparently it's good risk management for the company itself. Especially given that the Internet now gives the customer more capability to find out what's going on behind a confusopoly and more ability to vote with their feet.

To actually make a product the customer wants, and then provide good customer service: how old-fashioned! And how less risky and more profitable in the long term.

Comments

[James]

Be prepared for a hoard of Dilbert Blog readers. Excellent Post by the way. Welcome to Marketing?

[Jan]

Scott Adams actually read your post and blogged about it!
http://www.dilbert.com/blog/entry/confusopolies/

[jsqrisk]

Scott Adams likes the way I write? Man, I have read too much Dilbert!

He makes a good point about car companies: if anybody can start one of those, most things can be commodities these days.

Yet there are still natural monopolies or bottlenecks:

http://riskman.typepad.com/peerflow/2007/02/faucets_and_tub.html#more

This is why Frankenbell has reassembled itself, little more than 20 years after the breakup of AT&T.

If somebody finds a way to make wireless Internet access as fast for large numbers of people as DSL or FTTH, that will become a commodity, too.

[David]

Just finishing up Collapse. Great book. May look at a few of the others in the side bar.

Nice post. Go Dilbert.

[Jorge]

Congratulations, that prediction is about to come true as well.

Wireless voice service is well on its way to being a commodity. Data won’t be far behind unless the companies selling the data service can do a good job of confusing their customers.

4G wireless is rolling out now in the Baltimore area. 4G is wireless data with upload and download speeds that are on par with DSL.

The company driving this right now is called Clearwire. They're supported by Sprint who is a partner and will begin selling 4G service in various markets around the country in 2009.

There will be multiple sellers of the 4G service. Clearwire will market it along with Sprint and a couple of cable companies.

The thing is it will all be over the same radio frequencies and network. The only difference in the initial service will be the header on the monthly bill. But I'm willing to be it will be darned hard for most consumers to realize it. The companies sending those bills will compete fiercely with one another, all the time telling us why one is better than the other.

By 2010 there will probably be other actual competing 4G networks in place but again, the public won’t really know that or be able to prove it.

[jsqrisk]

Meawnwhile, economic conditions are so bad that even after Clearwire announced with Sprint Monday $3.2 billion in investment from several big companies, its stock was downgraded and there are rumors its WiMaX (4G) rollout will be delayed. CLWRD was up to almost $8 on Monday, and right now is exactly $4.

http://finance.google.com/finance?q=clwrd

Guess we'll see if the consortium backing CLWRD has deep enough pockets and patience to do this during a depression.

[Ricky]

good post. Maybe I should read the book again and see if any of his predictions came true.