Proximity

Proximity Plot Summary

Introduction

We stand at the precipice of a profound shift in how value is created, delivered, and experienced in our world. This transformation, driven by digital technologies, is redefining the fundamental relationship between supply and demand, dissolving the traditional constraints of time, space, and scale that have shaped our economy for generations. The essence of this revolution is simple yet revolutionary: the production of value increasingly occurs at the precise moment of demand, not before. This emerging paradigm offers unprecedented opportunities to overcome longstanding trade-offs between customization and efficiency, accessibility and sustainability. As digital capabilities enable production and provision of products, services, and experiences closer to actual demand, we witness a future where resources are deployed with remarkable precision, waste decreases, and personalization flourishes without sacrificing scale. The implications extend far beyond business models to reshape our relationship with technology, redefine sustainability, and ultimately transform how we experience daily life. By understanding this transition through a framework of critical analysis and strategic foresight, we gain not just a window into technological change, but insights into how we might harness these forces to create more resilient, adaptable, and human-centered systems.

Chapter 1: The Proximity Imperative: Producing Value at the Moment of Demand

The concept of Proximity represents a fundamental shift in how we create and deliver value. In its simplest form, Proximity measures how close in time and space the production and provision of value are to the actual moment of demand. The ideal state—P = 0—represents the theoretical point where supply and demand instantaneously meet, with no latency, inventory costs, or waste. Throughout industrial history, businesses have aspired to respond quickly to customer demands, but technological and economic constraints made this impossible for most products and services. The massive factories and global supply chains that dominated the 20th century represented a compromise: achieving economies of scale at the expense of flexibility, customization, and responsiveness. Businesses predicted future demand, produced at scale, shipped finished products to warehouses, and hoped their forecasts proved accurate. Digital technologies are systematically dismantling these constraints. From streaming services that deliver media content on demand to 3D printing technologies that can produce customized parts anywhere, we see early manifestations of the Proximity revolution. These examples illustrate the four defining principles of proximate business models: Moment of Use production and provision, data and analytics across competitive ecosystems, true customer centricity, and real-time learning and adapting systems. What makes this transition particularly significant is how it overcomes traditional trade-offs. The economics of postponing production until the moment of actual demand changes fundamentally when enabled by digital capabilities. Rather than the cost disadvantages that just-in-time systems once faced, proximate models potentially offer both greater customization and lower costs. They require less prediction of future demand, generate less waste, and can be more responsive to changing conditions. The Proximity imperative is not merely theoretical—it is already reshaping industries from healthcare to manufacturing, entertainment to energy. Organizations that recognize and adapt to this shift gain strategic advantages in resilience, sustainability, and customer responsiveness. Those that remain anchored to distant, pre-demand production models face increasing competitive pressures as the gap between customer expectations and legacy capabilities widens.

Chapter 2: Digital Technologies as Enablers of the Proximity Revolution

Digital technologies form the foundation that makes the Proximity revolution possible through two transformative characteristics. First, they enable the distribution of capabilities—sensing, data collection, analysis, decision-making, and production—across more locations, closer to each point of demand. Second, they allow the accrual of diverse value in digital form with minimal incremental costs for sharing, replicating, or learning. The convergence of several digital technology domains is particularly significant in accelerating this revolution. Advancements in artificial intelligence enable systems to recognize patterns, anticipate needs, and make decisions with increasing autonomy. The Internet of Things creates a web of connected devices that sense, communicate, and coordinate actions. Additive manufacturing transforms digital designs into physical products with remarkable precision and flexibility. Cloud computing provides the computational backbone that connects these distributed capabilities. Together, these technologies redefine what's possible in creating just-in-time value. Consider how pharmaceutical production is evolving. Traditionally, drugs are manufactured in massive batches at centralized facilities, shipped globally, and stored until needed. This model creates vulnerabilities to supply chain disruptions and results in significant waste from expired medications. Innovative approaches like On Demand Pharmaceuticals, developed with DARPA funding, demonstrate how small-scale, digitally controlled systems can produce generic drugs precisely when and where needed, using basic chemical inputs that have virtually unlimited shelf life. The digital nature of these technologies also enables continuous learning and improvement. Every interaction generates data that feeds back into the system, creating virtuous cycles of enhancement. Unlike physical assets that degrade over time, digital capabilities often become more valuable through usage as they accumulate data and refine their operations. For business leaders and policymakers, understanding how these technologies interact to enable Proximity is essential. The question is not simply how to digitize existing processes but how to reimagine entire systems to leverage the full potential of digital capabilities. Organizations that merely apply digital tools to traditional models gain incremental improvements; those that redesign around the principles of Proximity can achieve transformative outcomes.

Chapter 3: Overcoming Trade-offs: Efficiency, Customization and Sustainability

The Proximity paradigm challenges one of the most persistent assumptions in economics and business: that fundamental trade-offs exist between efficiency and customization, between scale and personalization, between sustainability and economic viability. These supposed dichotomies have shaped industrial strategies for generations, leading to centralized production models that prioritize standardization and economies of scale. In traditional manufacturing, producing custom goods means sacrificing efficiency. Each variation increases complexity, requires different tooling, extends production time, and raises costs. Similarly, conventional wisdom suggests that sustainability comes at a price premium that consumers and businesses must be willing to pay. These trade-offs were accepted as immutable laws of economics. Digital technologies are systematically dismantling these constraints. Consider the apparel industry, where a company called CreateMe has developed technologies that enable on-demand garment production. Rather than focusing on automating sewing—the industry's common approach—they eliminated sewing altogether, using computational geometry and advanced adhesives to produce highly customized garments at nearly any scale. The result is not just incremental improvement but a fundamental redefinition of what's possible: single, made-to-order garments become profitable, overproduction plummets, and sustainability improves naturally as a byproduct of producing only what customers actually want. This pattern repeats across industries. Vertical farming achieves 150-350 times greater yield per acre while using 90% less water than traditional agriculture. Cultured meat production promises real animal protein without the massive land use, water consumption, and ethical concerns of conventional livestock. Distributed energy resources enable resilient, renewable power generation closer to where it's used. What makes these examples revolutionary is not just technological innovation but the systematic elimination of trade-offs previously considered inevitable. By postponing value-added activities until closer to the moment of demand, these models simultaneously enhance customization, improve efficiency, and reduce environmental impact. The more a business can wait for actual demand—rather than producing based on forecasts—the less waste it generates and the more precisely it can match supply with customer desires. For legacy businesses, this creates both extraordinary opportunities and existential threats. Organizations designed around large-scale, centralized production face fundamental challenges adapting to models that distribute capabilities closer to demand. Those that successfully navigate this transition can achieve competitive advantages previously considered impossible, creating more value with fewer resources while better serving customer needs.

Chapter 4: Industries Transformed: Case Studies in Proximity-Based Models

The principles of Proximity are reshaping industries in ways that transcend mere digitization. These transformations reveal patterns that cut across sectors, demonstrating how the fundamental relationship between production and demand is evolving. In healthcare, the shift from reactive treatment to proactive prevention illustrates Proximity in action. Traditional healthcare systems require patients to travel to centralized facilities when symptoms appear—often after conditions have progressed significantly. Emerging models leverage continuous monitoring, AI-powered diagnostics, and distributed care delivery to identify and address health issues earlier, closer to where patients live. Companies like MedArrive enable emergency medical technicians to provide non-emergency care in patients' homes during their off hours. Always-on health monitoring systems can detect potential issues before they become emergencies. This transformation isn't just about convenience—it fundamentally improves outcomes by shortening the distance between health needs and appropriate interventions. The energy sector demonstrates how distributed capabilities enhance resilience and sustainability. Traditional electricity grids depend on massive centralized generation plants connected through vulnerable transmission networks. During the 2021 Texas power crisis, this centralized model failed catastrophically, leaving millions without power. Companies like Generac are pioneering distributed energy resource management systems that coordinate networks of smaller generation assets—from rooftop solar to battery storage—creating virtual power plants that respond dynamically to changing conditions. These systems are more resilient to disruptions and more capable of incorporating renewable energy sources. Food production illustrates perhaps the most profound transformation. For centuries, agriculture has followed a pattern of increasing centralization and scale, with food traveling thousands of miles from farm to table. Controlled environment agriculture and vertical farming are reversing this trend, enabling food production closer to population centers with dramatically higher yields, lower environmental impact, and greater resilience to climate disruptions. Singapore's "30 by 30" initiative aims to produce 30 percent of nutritional needs locally by 2030 despite limited land—a goal made possible only through proximity-based approaches. Defense and security applications reveal how Proximity enhances adaptability in volatile environments. Military forces increasingly rely on distributed, networked capabilities rather than massive centralized assets. The success of Ukrainian forces against Russian aggression in 2022 demonstrated how smaller, more agile units leveraging digital technologies and just-in-time intelligence could prevail against traditionally superior forces. Future conflicts will increasingly occur in digital and physical domains simultaneously, with cyberspace representing the ultimate proximity battleground where effects can be delivered at the speed of light. These case studies reveal a consistent pattern: organizations that design systems to create value closer to the moment of demand gain advantages in customization, efficiency, and resilience that were previously considered mutually exclusive.

Chapter 5: The Future of Proximity: Opportunities and Ethical Considerations

As we project the trajectory of Proximity into the future, two frontiers emerge as particularly significant: the expansion into virtual worlds and humanity's ambitions beyond Earth. Both contexts intensify the need for proximate solutions while raising profound questions about how we relate to technology and each other. Virtual worlds epitomize Proximity by collapsing physical distance entirely. Early metaverse experiences, despite their current limitations, point toward future environments where any experience can be generated on demand. As these technologies advance beyond clunky headsets and cartoonish avatars, we approach what might be called a "post-virtual" world—where digital experiences become indistinguishable from physical ones. Companies like Ceyeber, developing smart ocular implants, suggest how invisible interfaces might eventually replace external devices entirely. These developments promise unprecedented access to information, connections, and experiences without regard to physical location. Space exploration and eventual settlement represent another frontier where Proximity becomes not just advantageous but essential. As Barbara Belvisi of Interstellar Labs notes, "If someone were to cut all your wires elsewhere, you would be able to survive." On a spacecraft traveling to Mars, everything needed must be either brought along or produced on demand from available resources. Technologies being developed for space applications—from food production systems that create nutrients "from thin air" to on-demand manufacturing of replacement parts—have profound implications for sustainability and resilience on Earth as well. These future trajectories raise critical ethical considerations. As technologies enable more immediate satisfaction of desires, we face questions about what lives we wish to create. Will we use these capabilities to enhance human flourishing, expand access to essentials, and regenerate natural environments? Or will they amplify existing inequalities, enable new forms of manipulation, and accelerate unsustainable consumption patterns? Privacy concerns intensify as systems collect and analyze ever more intimate data about our behaviors and preferences. Security vulnerabilities multiply as critical systems become more distributed and digitally mediated. The potential for digital environments to manipulate perceptions raises profound questions about autonomy and reality itself. The ultimate question may be what writer and philosopher Aldous Huxley foresaw: will technologies that can satisfy every desire lead to a world of mindless consumption, or can they enable more meaningful pursuits? As proximate technologies free us from many constraints of time, space, and scarcity, we must grapple with more fundamental questions about attention, purpose, and connection. The future of Proximity is neither predetermined nor binary. It presents a spectrum of possibilities that will be shaped by the choices we make as individuals, organizations, and societies. The same technologies that could enable unsustainable consumption could also help us overcome environmental challenges. Systems that might surveil and manipulate could alternatively empower and connect. The key lies in approaching these developments with clear values and intentional design.

Chapter 6: Implementation Strategy: Leading the Proximity Revolution

Transforming organizations to thrive in a proximate world requires more than incremental improvement or digital veneer over legacy models. It demands fundamental reimagining of how value is created and delivered. Successful implementation follows a pathway from initial exploration to systematic transformation. The journey begins with recognizing where traditional models rely on distant, pre-demand production and identifying high-potential opportunities to move closer to P = 0. This requires mental time travel—envisioning an ideal future state where value is created precisely at the moment of demand, then working backward to identify barriers and enabling trends. Questions like "What if we could have what customers want, produced and provided immediately and affordably no matter how customized—with minimal environmental impact?" unlock creative thinking beyond current constraints. Rather than attempting wholesale transformation, organizations typically start with transitional business models that operate within current capabilities while building foundations for future states. Netflix's initial DVD-by-mail service illustrates this approach—the company name signaled their streaming vision from the beginning, but they adopted a transitional model until technology caught up with their ambition. Similarly, pharmaceutical companies might begin with small-batch production of personalized medications at regional facilities before eventually enabling point-of-care production. Successful implementation requires developing what complexity theorists call both resilience and evolvability. Resilience enables systems to maintain function through disruption, while evolvability allows adaptation as conditions change. Distributed, networked capabilities typically outperform centralized models on both dimensions—they can continue operating when parts fail and can experiment with new approaches at smaller scales with lower risks. Ecosystem thinking becomes essential as no organization can master all required capabilities internally. Companies like UPS demonstrate this approach by investing in 3D printing venture Fast Radius, located adjacent to UPS's worldwide hub. This partnership allows Fast Radius to print parts on demand and ship them within 24 hours while giving UPS insight into an emerging industry that could drive future logistics demand. Perhaps most challenging is the shift from optimization mindsets to exploration mindsets. Industrial Age success came from relentless optimization of known processes; Proximity demands continuously discovering new possibilities. Organizations must develop capabilities for peripheral vision—systematically scanning beyond industry boundaries for emerging technologies, business models, and customer needs that could reshape their contexts. Leaders face particular challenges as traditional management approaches evolved for centralized control prove inadequate for distributed, adaptive systems. As John Bremen of WTW observed when boards asked how to address managers struggling with remote teams: "They can't be managers anymore." New leadership approaches emphasize setting direction and context while empowering distributed decision-making closer to the point of action. The most successful implementers view Proximity not as a single technology or initiative but as a fundamental reorientation of how they create value—designing systems to wait until the last possible moment to commit resources, gathering data across ecosystems, truly centering on customer needs, and continuously learning and adapting.

Summary

The Proximity revolution represents a fundamental shift in our relationship with time, space, and value creation. By enabling production and provision ever closer to the moment of demand, digital technologies are systematically dismantling trade-offs that have constrained human possibility for generations. This transformation is not merely about efficiency or convenience, but about reimagining what's possible when we can have what we need, where and when we need it, without compromising sustainability or equity. The strategic imperative is clear: organizations designed around distant, pre-demand production face increasing challenges as proximate models demonstrate superior performance in customization, efficiency, and resilience. Yet the deeper implications extend beyond business strategy to profound questions about how we live, work, and relate to one another. As the distance between desire and fulfillment collapses toward zero, we gain unprecedented agency over our environments—and with it, responsibility for the worlds we create. The question becomes not just what we can produce and provide, but what lives we desire and what futures we wish to manifest through these remarkable capabilities.

About Author

Loading...

Robert C. Wolcott

Read more