AT&T was in the middle of a cultural shift. A new CEO had arrived, bringing a new team with him. That period of flux forced me to reflect critically about AT&T's aggressive strategy of promoting itself as the lowest-cost provider of telephone services. Their marketing centered around promotion and low price. It was all about packages, friend deals, family deals—price. And it all struck me as a terrible kind of dead end. Keep heading down that path and there would be no way back for the company.

So I was going into the meeting with a sense of deep concern about AT&Ts future: and my concern wasn't about how AT&T would come up with a new ad campaign. My words would be about matters of life and death for the corporation. My concern was about the corporation's deepest mission, of how it was going to build new relationships with customers, on the foundation of a new approach to its role in the lives of those customers. It was my job, standing before those executives, to tell them they would go out of business if they kept selling on the basis of price. It was a make-or-break situation for both AT&T and Y&R: we wanted and needed their business. But they had to hear the hard truth.

It occurred to me as I finalized my speech the night before, that, as CEO of Young & Rubicam in the late 1990s, I'd begun to face the same problems. We were all in the same boat. Good advertising, good PR, good communications of any sort, seemed easier to get than ever before, at lower and lower prices. How could this be? Why was this happening to all of us? We were experts—in all these camps—with a rare set of skills. Our talents were generating premium services and products that, it seemed, might eventually be sold for bargain-basement prices. It didn't make sense.

That night, though—the night just before I was to give my speech—the way back from this dead-end suddenly became apparent to me. I realized what was happening in the world of business and how to respond to it. So I went into that meeting, not with a sense of foreboding, but with a genuine sense of delight: I told them the world they knew had ended, but I offered this to them as good news. Something much better was about to take its place. We were all about to recognize a new source of success. And I explained what it was. As a result, AT&T pulled back from a disastrous course and reshaped its vision of its role in people's lives. The CEO listened, and their brilliant chief brand officer, Marilyn Laurie, worked with us on an inspirational marketing campaign. We created advertising about how AT&T was helping people connect with one another, imagines of mothers working on the beach, teleconferencing, while their children played in the sand. Powerful advertising to the sounds of Amazing Grace and Elton John's Rocket Man. And yet the advertising itself wouldn't have worked if AT&T hadn't reshaped its strategic vision: it's sense of its own role in the lives of its customers. For two years, the company rebounded and differentiated itself. Unfortunately, when management decided to expand through acquisitions outside the core business and de-emphasize the traditional consumer business, they lost their way. Early in 2005, old Ma Bell got bought.

Too Much of a Good Thing
I told those executives the world has crossed an unprecedented threshold: too much of a good thing has become a permanent way of life. For the first time in history, the supply of almost everything has begun to exceed demand, in a way that isn't cyclical. This isn't temporary. We can't wait it out. We must change the way we do business to adapt to a lasting, new economic landscape. In other words, we will likely never again see a world of scarcity for any length of time. We've entered a world of permanent excess supply. Almost everyone now acknowledges a cyclical downturn where supply will exceed demand for quite a while, but few see this condition as permanent. It isn't simply the result of an economic recession—surpluses are here to stay. As a result, everything is becoming a commodity. Everything.

An old world has ended, and a new one has begun. This isn't happening to the telecommunications industry alone. It's happening to everyone—or soon will. Partly as a result of the ascendancy of free enterprise, productivity will now outstrip demand for years and decades, perhaps forever. We now have the means, the technology, to make more of what people want and with ever lower costs. As a result, people may choose to buy from you, but they don't have to. They can buy from someone else just as easily. We have crossed a revolutionary threshold in world history, with overcapacity everywhere bumping up against diminishing demand in the developed world. This shift has enormous economic, social, and even political implications.

The reason many of us haven't recognized the permanent reality of excess supply is this: it didn't happen overnight, all at once. It sneaked onto the scene, thieving its way through one industry after another. Why the shift? You might be tempted to think technology alone has driven it. But it isn't that simple.

An entire network of complex factors has converged, so that everything that used to serve as a choke point to protect market domination has fallen away. With knowledge, expertise, technology, capital, labor, raw materials, and manufacturing capacity so readily available, most barriers to entry into any industry have broken down. Cash is cheap and easy to get. The tolerance for debt, on all levels of our economy, has gotten immense, and though this may not be a good thing, in itself, it has ensured growth, competition, and the quick translation of good ideas into profitable businesses.