@Business published an article subtitled "Inside the Brutal Realities of Supply Chain Hell”—it's getting serious.
This thread provides my (very) simple framework for understanding the key drivers:
By now, you’ve probably heard that global supply chains are in a state of disarray.
Here's a simple breakdown of what’s causing it:
@Business published an article subtitled "Inside the Brutal Realities of Supply Chain Hell”—it's getting serious.
This thread provides my (very) simple framework for understanding the key drivers:
Product delays (good luck getting appliances before 2022), product shortages (see semiconductors), port buildups (fly over LA and you'll see), and rampant freight costs (sorry, retailer margins).
It's pretty bad.
A butterfly flaps its wings in Shenzhen and impacts when I receive my bike in New York. Ok, maybe not quite, but almost...
So to understand the drivers of the crisis, we need a simple framework.
Supply here refers to everything related to manufacturing, production, and transportation.
Demand here refers to everything related to consumption.
I'll walk through each side:
Consumers are flush and not afraid to spend.
Further, lockdowns and restrictions have meant more spending on goods vs. services.
So you have a ton of demand for goods--those goods need to come from somewhere!
The major supply drivers I see here:
(1) Factory shutdowns
(2) Port shutdowns
(3) Flight reductions
(4) Container ship challenges
Hitting each one quickly:
Factories—particularly in Asia—have had a tough time managing and containing outbreaks of COVID.
This leads to delays and bottlenecks in production. If an upstream manufacturer is delayed, that impact cascades downstream and has an extensive impact.
Ports have experienced similar challenges—any have had to shut down or restrict labor to avoid outbreaks.
If ports are closed, products can't flow smoothly through the supply chain.
It's like creating a kink in a hose and watching pressure build.
It's news to most people, but about 50% of air cargo flies on passenger flights.
It's a great revenue stream for passenger airlines.
But with travel—especially international travel—reduced by COVID, there was a significant reduction in air cargo capacity.
The Ever Given clogged the Suez Canal in March, causing a backlog whose impact cascaded through global supply chains.
There aren't enough large container ships to meet all of this demand and containers are in the wrong places at the wrong times.
On one end, a structural surge in demand for goods.
On the other end, a number of significant supply challenges and disclocations.
Demand up, supply down.
For consumers, this means rising prices, as these rising supply chain costs are passed through.
Your holiday shopping may be a whole lot more expensive (and late) this year...
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Let's break down what "The Balloon Effect" is and examples of it in real life.
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1/ What is "The Balloon Effect"?
It is a particular pattern of growth.
It is not Instagram's growth trajectory.
It is not https://t.co/5axsTUKek6's growth trajectory.
"The Balloon Effect" is defined by several years of hard work & grit complemented by slow, linear growth.
2/ And then one day, one month, or one quarter...everything changes.
A business hits a tipping point and its trajectory shifts entirely.
Gradual growth turns to exponential growth & your brand and your size explode.
Like a step function.
3/ Now, you're probably wondering.
Why is it called "The Balloon Effect"?
Because filling/popping a water balloon follows the exact pattern I just described (and so many businesses experience).
Long unsexy slog 👉 Exponential tipping point.
4/ Initially, you turn on the faucet & water takes up space in the empty balloon.
Through effort you open the faucet, yet the results are unexciting.
But it's what must be done for water (or growth) to happen at all.
It's not sexy, but it's necessary.
Many businesses & creators have experienced a similar pattern of success.
From @MrBeastYT and @MorningBrew to @oatly and @Rovio.
Let's break down what "The Balloon Effect" is and examples of it in real life.
Keep reading 👇
1/ What is "The Balloon Effect"?
It is a particular pattern of growth.
It is not Instagram's growth trajectory.
It is not https://t.co/5axsTUKek6's growth trajectory.
"The Balloon Effect" is defined by several years of hard work & grit complemented by slow, linear growth.
2/ And then one day, one month, or one quarter...everything changes.
A business hits a tipping point and its trajectory shifts entirely.
Gradual growth turns to exponential growth & your brand and your size explode.
Like a step function.
3/ Now, you're probably wondering.
Why is it called "The Balloon Effect"?
Because filling/popping a water balloon follows the exact pattern I just described (and so many businesses experience).
Long unsexy slog 👉 Exponential tipping point.
4/ Initially, you turn on the faucet & water takes up space in the empty balloon.
Through effort you open the faucet, yet the results are unexciting.
But it's what must be done for water (or growth) to happen at all.
It's not sexy, but it's necessary.
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— Jeff Jarvis (@jeffjarvis) July 16, 2020
As @jbenton said in @NiemanReports : @mcclatchy transformation shows it STILL is possible NOW 'to be operationally profitable while still doing good journalism.' Not easy; Covid made it harder. But POSSIBLE and DONE by the great team in 2020 @mcclatchy. 2/
As @jbenton wrote: the #DIGITALTRANSFORMATION @mcclatchy 'shows a company that has managed the digital transition better than most; at last public count, it was making nearly half its ad revenue in digital and digital subscriptions were up 45% year-over-year.' Such focus 3/
On the future is digital is the SOLE way the still-powerful brands of local news and information will be able to have a business in the inevitable 'printless' future (Not today, not tomorrow, but printless someday) 4/
And the crisis in local news is relentless, unabating and by most measures WORSENING. More titles going dark; huge losses to our communities, because solely a blend of new digital startups AND existing footprint offer the scale 5/
