The Company as a Platform? No Thanks

The company as a platformExpressions often have a deeper meaning than the words that form them. This is typically the case with those depicting the new conditions of work, turned upside down by the rise of networks and technology. The first expression was “Enterprise 2.0″, pointing to the most representative form of human production activity, the company. Then came “social business”, in which the organization was replaced by the activity. Today, “digital transformation” is trending, that completely ignores the subject of this transformation, allowing to refer to changing conditions without grounding them in their context. Pure coincidence? It is indeed much easier to deal with change without tackling much more uneasy questions regarding the nature and purpose of our organizations. Everything happens as if we were so deeply immersed and conditioned by our Judeo-Christian roots than the unescapable necessity of work as a foundational burden was taken for granted. Yet, the necessity to understand at a deeper level the nature and purpose of businesses has become critical in order to build the future.

The next logical step

The change from industrial structures toward platforms that we are witnessing has deep implications, way beyond requesting the evolution of managerial practices. To understand them, it is useful to get some background from the theory of organizations. From an economic point of view, one of our main understandings of the nature of commercial organizations is derived from a short essay written in 1937 by Ronald Coase and entitled The Nature of the Firm.

For Coase, entrepreneurs gathered individual workers under the aegis of large entities to minimize the costs associated with transactions. Firms, and their internal mechanisms, would then be much more cost-efficient than the supply and demand effects involved in free markets. Yet, as I have already written, this efficiency alone has vanished, as the pressure of technology now allows almost everyone to produce goods and services at almost no cost. Thus, the transition to companies as platforms, harnessing the capabilities of networked individuals to provide or even produce on-demand goods and services, giving birth to what we call the sharing economy, is the next logical step. But should we call it a step forward?

The revenge of the markets

Commoditized consumption and the raw effects of markets’ mechanisms have lowered the price of most of the goods and services we use in our day-to-day life. But what is true for individuals is not necessary the case for companies. An organization, for instance, would pay at least ten times more than I do the same internet fiber access I am enjoying. Booking a flight within the context of a corporate contract usually costs much more, rear setback set apart, than the ones I can find on my own. In these cases, the transaction costs associated with the exchange are much higher for a company than for an individual, because of the many added layers they include: taxes and costs required to maintain a bureaucratic structure, of course, but also, and more importantly, costs necessary to ensure the liability and the repeatability of the transaction.

For a buyer, most of the transactions involved in dealing with platforms do not take these costs into account, but rather provide minimal liability support over free markets. Would they want to ensure better repeatability, they would have to rely on heavier bureaucracy and enforce stricter procedures. From a purely transactional point of view, platforms only represent an artificial advantage over industrial firms, advantage that may disappear once stabilization and efficiency of the newly created markets take place.

Technology versus work

There is another way to look at the economic nature of organizations. The resource-based – or capability-based – view, instead of considering a general mechanism under which companies settle and grow, focuses on the way they organize themselves and operate in order to succeed over markets and over their competitors.

Building from it to better explain how firms evolve and respond to rapidly-changing environments, the knowledge-based theory consider knowledge as the most important capability of a company. For a platform company relying on a network of workers, relying on collective intelligence looks like a fabulous premise. But fact is that most of its actionable knowledge comes from ever more sophisticated algorithms, not from human wisdom. Amazon’s Mechanical Turk gets its power from cleverly computerized division of labor, the strength of BlaBlaCar comes more from the precision with which it links short rides from car sharers into long distance journeys. The list could go on forever. From a knowledge-based point of view, platforms companies represent a bright future for technology, not for workers.

Disposable business models

The theory of dynamic capabilities, exposed and developed by David Teece in the beginning of the nineties, proposes a larger view upon capabilities. In The Dynamic Capabilities of Firms: an Introduction, cowritten with Gary Pisano, he set the basis of his theory, writing that :

“We posit that the competitive advantage of firms stems from dynamic capabilities rooted in high performance routines operating inside the firm, embedded in the firm’s processes, and conditioned by its history. Because of imperfect factor markets, or more precisely the non-tradability of ‘soft’ assets like values, culture, and organizational experience, these capabilities generally cannot be bought; they must be built.”

For Teece, the reorganization of available resources, through reconfiguration of its assets, through learning and building high performance routines, are the core elements that characterize a company.

In the case of a platform company, most of the resources are externalized. Work is outsourced, and with it most of the capabilities allowing them to evolve. Without a supportive organizational framework, routines building and learning is left over to individuals, and cannot be capitalized at global level, unless people working from them form true, tightly coupled networks. Innovation thus can only occur at the core level, further limiting the ability of platforms to adapt to a new environment. Fact is that most of these companies build a competitive advantage from a very limited set of ideas and processes, within a fixed business model. Once this one is challenged and the company is unable to sustain it, it usually move on to another project. The whole “real economy” (the production of goods and services, without financial-only wealth accumulation), is becoming the playground for a startup mindset. Pivoting has replaced evolving, whatever the consequences for workers might be.

An history of exhaustion

The maybe only path on which the platform company can be seen as a step forward is in fact a negative one. The history of the firm with regards to its relationships with technology, which can be traced back to the invention of the flying shuttle by John Kay in 1733, follows its own radical logic: the exhaustion of resources. The race toward greater productivity, typical of the Industrial Revolution, has pushed companies to overexploitation of natural resources and fossil energy. The next step has been -and still is for many companies- about efficiency and cost cuttings, leading to exhaustion of internal resources and to the programmed agony of salaried status. The following figure shows pretty well the growing decorrelation between profits and the gross share of salaries.

wages

By encouraging the commodification of services otherwise freely exchanged in a social context, aren’t platform companies taking exhaustion one step further, eroding the tissue of our society itself?

A contractual node

Do not let us fool ourselves by the fact that the platform company use networks as their primary resources. Organizational theory seems to tell us that they represent a dead end, a local maximum, in the evolution of work, and are, under many aspects, a regression from the company of the Industrial Age. To try envisioning a brighter future, we definitely need to look for more sustainable structures. Here too, theory can provide some clues.

For this, let us get back at Coase, or rather at Oliver Williamson, who, building on Coase’s ground, developed the transaction costs view of the firm. For Williamson, the more specific knowledge transactions require, and the more uncertainty exists in their outcome, the more likely they are to take place inside organizations to minimize the costs involved. Central to his conception is that this optimisation is linked to two different layers of relationships between the actors involved. First, a lattice of contractual bonds, internally as well as externally between the buyer and the supplier. Then, as these contracts are considered as incomplete – they cannot cover any possible situation -, a layer of governance based on authority, allowing its beholder to make decisions in all cases not covered by the contracts.

In its will to control, the industrial firm has evolved toward bureaucratic behaviors, tightening hierarchies as structure of authority, and contributing in tailoring the law of contracts to their own interest, from expressions of the principle of good faith to formal straightjackets, as Grant Gilmore exposed in his classical The Death of the Contract. Platform companies follow a different path, dismissing the governance layer to rely on the markets to resolve what is left over by contracts.

Diving into the unknown

Is resorting to markets clearly a sustainable solution? I really don’t think so. The purpose, as well as the mechanics, of human transactions do not reduce themselves to market dynamics. The need for people to gather to reduce the costs involved with these exchanges is a constant, not only from an economic only point of view. Our challenge is, to be able to guide organizations of today, we have first to understand the shape of things to come, which includes organizational structures as well as the contractual framework that will glue these structures internally. As our personal and professional life melt into each other, and as the workplace more and more expands into the space of the city, we have also to understand who the actors of these new dynamics are, and what their responsibility toward each other is.

Sure, there is a deep digital transformation at work. and we need new organizational principles and frameworks to guide us through. And let us humbly recognize that we are diving into the unknown.

Image: Howard Pyle illustration of pirate walking the plank, from Howard Pyle’s Book of Pirates. -public domain-

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The Future of Networks Depends on Technology. Or not.

powerless hamsterThe turn of the year is traditionally a period of intense prediction making, and I cannot go wrong today while predicting that the future will be networked. But which future? If we can expect technology to bring us faster, smaller, more connected and more clever tools, devices and algorithms, human psychology doesn’t follow such a straightforward path – I resisted writing “linear”, as the advances of technology rather seem to be power based, if not exponential. History is full of dead ends and periods of regression, and the structures of power and subordination that hold our society together are so deeply engrained into our minds that any cultural or social change is subject to strong resistance, or even to denial.

While evidences of the necessity to change a system that has fostered wealth inequality and deepened social and environmental degradation for more than a century are unveiled every day, most organizations stick with present inefficiency and bureaucracy. Even worse, technology is commonly used to leverage a faster and dumber business as usual. Some of last year’s heroes of an enlightened sharing economy reveal themselves as no better than sweatshops. Is that to say that we are doomed to live in a dystopian future? I don’t think so, but for our heavily hierarchical organizations, the shift toward resilient and wirearchic networks, able to adapt to complexity by enabling the creative and cognitive power of their workforce, won’t take place overnight, despite what many “social something” zealots might say. Information technology, of course, has a major and critical impact on our life, and is here to stay. But believing that collaborative solutions will transform the way businesses create and deliver value, by reshaping the way we work, is as meaningless than hoping that Facebook will change the course of the world. To ignite and sustain the conditions for purposeful networks to grow, we need more. And there is more. But is it the right path?

Stealth

Even if you didn’t see the movie, you might know Minority Report’s famous sequence, in which Tom Cruise is greeted in person by an animated billboard. What was pure science fiction in 1996 is today almost a reality. The tremendous computing power at the disposal of marketers allows them to segment and target consumers at the nearly individual level, and to build context-aware campaigns. Each of our digital footsteps is now tracked, analyzed, then translated behind our back into so-called “interest-based advertising”. We still have the possibility of opting out from some companies’ assaults, but for how long? And to which extent?

As very few organizations care about protecting their internet surfing with an external VPN, through their search history, Google knows what problems they are trying to solve, which prospects they are targeting, what they are buying, selling, when and to who. Today’s internet is the playground of data gatherers, and it is unlikely that, as enterprise networks need more and more to extend their reach beyond organizational boundaries to include customers, partners and suppliers, they extend in the “public” internet space.

In fact, the consumer world is already showing the way. As the web is following the same path as the printed media industry, once almost exclusively informative, then more and more cluttered with promotional and advertising content, people are beginning to protect themselves from marketers’ eyes. Ad blockers plugins and ad removal mobile apps are gaining mainstream traction. As privacy concerns grow, free public VPNs are multiplying, showing increasing trafic, not only from countries where internet access is censored, but also from many Occidental countries. Tor, originally developed and deployed for the US Navy, not only allows people to connect anonymously to the Web, but also extends privacy forward by providing support for hidden web services, invisible outside the Tor network. As inter-organizations networks appear, chances are high, and by large, for the benefits of security and integrity, they will be stealthy.

Health

Among other criteria, the performance of networks is linked to the reliability, the efficiency and speed at which information flows across their links and nodes. The quest for these capabilities was already at the heart of ARPANET, the ancestor of our internet. But while ARPANET’s original transmission protocol, NCP, which was later replaced by TCP/IP, focused on data distribution among links, it took a couple more decades before Napster introduced a truly decentralized way to distribute information. With the birth of peer-to-peer file sharing, appeared the possibility to build resilient digital networks.

One of the main weaknesses of many peer-to-peer networks has been the lack of security, which leaded to the creation of truly anonymous networks, using cryptography to ensure the validity of data exchanged. Other projects, such as Tribler, involve adding anonymity and true decentralization to popular peer-to-peer protocols. Yet, it is only with the development of the blockchain technology, the technology underlying Bitcoin, that truly decentralized networks reached usefulness beyond semi-legal file sharing. By eliminating the need for trusted authorities and regulators in applications like financial transactions or voting systems, blockchain technology may open the way for truly independent networks, freed from external bureaucracies and power. As the founders of Ethereum, one of the projects aimed at developing the technology for other uses, state it:

“This design would allow the DAO to grow organically as a decentralized community, allowing people to eventually delegate the task of filtering out who is a member to specialists, although unlike in the ‘current system’ specialists can easily pop in and out of existence over time as individual community members change their alignments.”

One thing at least is sure: healthy networks are, and operate, in a fully decentralized way.

Wealth

Here comes the tricky part. The wealth of networks – I am not talking about monetary possessions here. The economic dimension of blockchain-like architectures is a whole subject by itself, that I don’t feel qualified enough to tackle – lies in their ability to create value for themselves as a whole, as well as outside of themselves. The technology we see rising aren’t considering networks as a whole, but rather as a collection of individuals aiming at creating value for themselves. By itself, their purely transactional nature reduces the true nature of communities to a caricatural expression, even if some initiatives, like the one Reddit is initiating, aim at leveraging the effect of individual transactions for the benefit of the whole community.

Take trust, for example, which is one of the core intangible assets of communities. Today, trust is a kind of chicken-and-egg problem, in a world in which most of workers are disengaged, and characterized by hardcore individualism and irreducible hedonism. How do we foster fruitful relationships without trust? And how do we restore trust without leveraging genuine intimate relationships? Trust is built interaction after interaction, on the foam of shared expectations and realized premises. Reputation systems, that can be implemented with the latest developments in blockchain architecture, are a just a wee proxy for trust. In fact the blockchain is opening the way for trustless networks…

The wealth of networks isn’t the sum of the wealth of the individuals that compose them. We still need a way to create value for them as a whole from many perspectives, whether this be intellectual property, trust, or any what you could think of collective outcome. From distributed, we have at least to go to cumulative.

Limbo

Systems built on the blockchain architecture are, or can be, stealth, and truly distributed. Yet, they don’t, for now, leverage the possibility to build fruitful networks. On the opposite, they are allowing for the substitution of centralized institutions by faceless, anonymous closed markets. The risk is here, by adopting this range of technologies without challenging ourselves about the basic needs for efficiency in a network-based society, that will transform us into human hamsters, relentlessly spinning a flashy wheel. Banks, the symbols of top-down absolute power, have already understood the opportunity of using the blockchain to their own advantage. If we don’t care, we will soon end up in limbo, kept away from where the shift still has to occur, unable to reach the real tenants of power. Let us not be blinded by technology which may leads to the rise of powerless networks, and instead, let us build the future on what makes us human.

Image: “White face roborovski dwarf hamster” by Sy – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons –

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Organizational blindness

organizational blindnessIn 1970, the scientific journal Nature published a small but important article by Colin Blakemore and Grahame F. Cooper, two neurophysiologists from the University of Cambridge. The article, titled Development of the Brain depends on the Visual Environment, described the results of experiments in which they have raised kittens in a environment in which they were confronted only to horizontal or vertical lines, but not to both. In this context, when growing up, these cats became virtually blind to lines orthogonal to the direction they were exposed to, as their brain adapted to the particular nature of their environment.

Broadening of the Hierarchies

Hierarchies may be as old as the world itself. Yet, whereas primitive societies of hunters-gatherers were egalitarian, their social organization involved many transient hierarchies, allowing them to delegate authority to specific individuals or groups, according to ongoing necessities. The causes and rise of the status hierarchies that are so typical to our societies and organizations isn’t easy to decrypt. In Human Evolution and the Origins of Hierarchies, Benoît Dubreuil has developed an interesting theory linking them to the development of large-scale societies, triggered notably by the development of agriculture, in an era when human beings didn’t have the cognitive faculties necessary to deal with them in an egalitarian way.

Whether we do subscribe to Dubreuil’s theory or not, fact is that power-based hierarchies (where status, as mean of social or economic dominance, becomes a synonym of power) are key to the dominant paradigm that today prevails in most organizations, and that, far from being contained inside the companies’ boundaries, drives most of the production-consumption relationships between businesses and customers. The “we produce, you consume” motto, born in the age of industrialization and mass-markets, is nothing but a generalization of hierarchies, in which customers gave up their ability to think critically over their real needs and to decide on their own consumption patterns, for an accumulation of goods and services manufactured on (or notwithstanding) their behalf. From companies point of view, they became the last link in the production command-and-control chain, with almost no opportunity given to provide feedback (toll free numbers didn’t exist before the end of the 60s) and the single and straightforward “buy” order given.

While shifting from a product orientation to a marketing orientation after World War II, businesses haven’t untied customers from these hierarchical bonds. Quite the opposite, by focusing on and teasing customers’ aspirations, they induced further hierarchical behaviors among them, discretionary economic power translating into conspicuous consumption patterns and social tension. For the sake of growing business and developing companies, the cornucopia unsealed during the Glorious Thirties has become a tyranny of consumption, under which reign has the rigid mindset prevailing in organizations been extended to the customer world. An attitude perfectly symbolized by Patrick Le Lay, CEO of the French television channel TF1, as he stated in 2004 during an interview: “what we are selling to Coca-Cola is minutes of available human brain.”

Dealing with complexity

In the meantime, the world has changed. Drastically. Yesterday’s certainties have disappeared behind arrays of possibilities and fuzzy choices, weaving complex environments in which there is no simple path, no really secure option. Constant streams of information are flowing around us, requesting, to make sense of it, a level of judgment and of knowledge more and more out of the reach of individuals. At the same time, technology allows us to connect and interact with practically no limits, reshaping our consumption behaviors through collaborative learning and distributed intelligence. As complexity increases, we rely more and more on our connections to meaningfully screen and qualify information. Our networks have become our filters.

Organizations, too, have evolved. Mass production has become, for many companies and in many sectors, a shadow from the past. Technology opens new possibilities to better listen to customers, to segment them according to economical, behavioral and social patterns, at the near-individual level, and to craft new channels allowing deeper and more relevant interactions and information exchange.

Yet…

Yet organizations still consider their customers as if they were the bottom level of their internal hierarchies. They keep on believing that, while stuck in a paradigm built on silos, hierarchies, and denial of power to the front line, they can tame customers’ will and expectations. As in Blackmore’s experiments, they act as if, born and grown in a world where hierarchies were the most convenient structure to drive profit and maximize performance, they became unable to see how much the world around them has changed. They behave as if workers were insulated from the outside world, and impervious to the changes that affect us all as human beings. They operate as if rigidity and boxed expertise were able to compete with the imagination and nimbleness of networks of prosumers.

Playing by new rules

In a world where your customers are smarter than you, you are left with no other choice than playing by their rules to survive. Despite what some say, the present rise of a so-called collaborative economy might not represent the future of work, as most of these new companies still operate in a traditional centralized and heavily capitalizing way, harnessing the power of external networks mainly at the advantage of a narrow hierarchy. However, it clearly shows that any industry, every company is now at risk of being disrupted by newcomers able to answer real customers’ needs, as deeply rooted in networks.. From music majors to car rental, from hotels to real estate, the list of such examples is growing day after day.

It is a strange world out there. Trust and credibility are the cornerstones upon which we are processing information, weight suggestions and create knowledge in the midst of our networks. Unless organizations become aware of this new reality, they won’t be able to take advantage of it. What worked in an era of hierarchical production mindset has become irrelevant. Creating value for networked customers requires being able to dive into their networks, and to adhere to their rules and principles, to avoid running the risk of being thrown out like foreign bodies out of a living organism.

For most organizations, it won’t be an easy task. Decades of centralization in search for efficiency, years of capitalistic formatting in search for profit, have ossified their structure into blind hierarchies and one-way chains of power. For them, relying on technology will only enforce the status quo, falling short of enabling any kind of transformation. The solution lies in the power of people. As customers, as human beings, we know how to connect, how to co-create value, socially as well as economically. We are able to do the same as workers. It requires to trust us, to relinquish control, and to commit to build supportive structures. It -only- requires to open the eyes, and to learn how to bear the harsh light of our new reality.

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What Have They Done to My Song, Ma

broken organization

credit: Erwin Schoonderwaldt

“Look what they done to my song ma
Look what they done to my song
It’s the only thing I could do alright
And they turned it upside down
Oh ma, look what they done to my song”
– Melanie –

We know the importance of experience, of the accumulation of tips, tricks and shortcuts that nurture our curiosity and our ability to adapt to new situations. Yet, we judge the skills and capabilities of one’s life mostly upon curriculum and diplomas, upon a period of five to eight years. Is that reasonable?

We value creativity, experimentation and intellectual curiosity, yet we ask our youth to abdicate the most creative and innovative part of their life to conform to a formal yoke that we call education. Can we really adapt to an ever changing environment while enforcing such a mechanistic process?

We aim at economic growth. Yet the resources we rely on are finite, if not decaying. The only infinite resource at our disposal is knowledge, yet we leave more and more people, thus more and more sources of knowledge, on the side of the road. Is that sustainable?

We look for, encourage and measure individual performance. Yet, any sport coach knows that collective efficiency is what matters, and that individual performance often gets in the way. Is that sane?

We value our customers. Yet we keep on feeding them with products they don’t need, with the false premise of making their life better, when what really matters is our income. Is that honest?

The world we used to live in no more exists. Yet, all the mechanisms and beliefs that prevailed during the industrial era are still the ones that rule our education system, our organizations, our life. We are still playing the same old song with new lyrics and new instruments, while the need to change the melody becomes more and more obvious. We don’t need new performers anymore. To thrive in today’s world, we need new composers.

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Return of Venn – Looking at the Future of Business

My last post sparked a few amazing comments. Looking back to the little exercise I attempted – representing organizational structure as Venn diagrams – I realize that my view was a bit enterprise-centric. “Customer”, as a concept, is quite reductive when considering the relationships between individuals and organizations. What if, instead of focusing on the world of work inside companies, we considered the larger context in which work takes place? Work, in fact, is the human activity of producing artefacts – goods and services, of course, but also capital, or knowledge – to allow for exchanges to happen. These kinds of transactions – non-market, if we consider exchanges of knowledge as transactions – have existed since the dawn of humanity, amongst the first tribes of hunters-gatherers, encompassing both physical and symbolic transactions between individuals and the community they belonged to. A straightforward world…

Well, not quite. Starting from the first cut stone, technology has always played a major role in magnifying and extending human capabilities. If we can illustrate the initial transactional context as follows…

The real initial world of transactions

… as we navigate in time from prehistory to history, individual interests more and more lost their importance in favor of the collective. Technology began to allow completion of more sophisticated tasks, often requiring more than one individual for being completed. From one-to-one or one-to-many transactions, production mechanisms, fueled by the growing division of labour, turned into many-to-whatever, giving rise to the need for formal structures to optimize technology driven production.

Productivism and organizational disease

With the Industrial Revolution came an important shift: most of technological breakthroughs didn’t empowered individuals, but required a collective structure to deliver. Not only were firms the logical outcome of economical evolution, but they were a natural fit for the rapid evolution of technology occurring during the XIXth century. It would be childish to say that large corporations are born by technological necessity, but fact is, in this pre-unionist era, that most of the resistance to the world of work taking shape wasn’t caused by deteriorating conditions of working, but directly linked to technology, as François Jarrige describes in Face au au monstre mécanique : Une histoire des résistances à la technique. The Luddite uprisings from 1811 in Great Britain is one of many such examples.

At the same time, another major change took place: the emergence of the nation state. By providing a symbolic as well as practical context in which most community-based exchanges could take place -administration, law, education,… – and securing the identity of communities through a distinct and infrangible territory, it freed corporations from their duties toward the communities they belonged to, allowing them to pursue an economical only mission. The complex dynamics of interpersonal relationships involved in traditional transactions, implying reciprocity and feedback loops, disappeared, replaced by markets only dynamics. In this emerging paradigm, people began to be considered according to a dichotomic prism: they became either employees, for the sake of production, or customers, for the sake of transactions. In the most cynical cases, this duality was meant as an autonomous circle; Henry Ford famously raised his employees’ wage, so they could afford to buy his cars.

Building on the diagram from my previous post, here is how we might represent business in the industrial and post-industrial ages:

the industrial world of transactions

From this diagram alone, it is easy to deduce the symptoms of today’s organizational disease that we witness around us:

  • Disengagement from work. Productivism isn’t a human ideal. By reducing employees to production tools, by protecting work from the rest of human activities, organizations have created conceptual and functional strongholds. The premise of recurrent wages isn’t a stirring enough purpose to trigger and sustain involvement in such isolation.
  • Hardcore individualism. Customer is king, of course, but propelling consumerism for a century has flattered our ego in unprecedented ways. Businesses have operated in an apparent paradox: to propel mass-production, they have pandered to -an created- individuals’ needs and expectations in a more and more targeted way, encouraging conspicuous consumption and fostering devious hedonistic behaviors. By playing sorcerer’s apprentices, organizations have have allowed this individualistic mindset to blossom inside their walls, facilitated by hierarchical structures and concentration of power.
  • Ethical chasm. By disregarding the collective, corporations have grown in isolation from the issues impacting human communities, in some -many?- cases worsening them: environmental degradation, wealth imbalance, cultural inequalities,…

Toward a new world

Yet, a totally new breed of technology has appeared, disrupting industrial age behaviors even faster than precedent technological milestones have helped in shaping them. For the first time in history, a device, the personal computer, when associated to the internet, has become both a tool of production and a tool of consumption, challenging the producer-consumer relationship on which the industrial paradigm was based, erasing the lines carefully drawn between work and other activities, freeing individuals from this dichotomy, allowing them to think differently over their own role and to relentlessly connect with each other.

As no surprise, most of the technologies built upon this breakthrough derive from this awareness and share common traits:

  • They are personal. Unlike technologies from the industrial age, they are built for the individual, and don’t require heavy infrastructure or strong coordination to be operated. Organizations, in fact, struggle when trying to adapt them to their own command-and-control mindset, stifling their outdated notion of productivity.
  • They are adaptive. As Manuel Castells explains, the networks that information technologies enable doesn’t warrants by itself their superiority over centrally structured hierarchical organizations. Their advantage comes from the flexibility, the ability to adapt to changing environments to “de-center performance and share decision making” according to the context they allow.
  • They are multi-purpose. These technologies are themselves networked and modular, giving individuals unprecedented ways to make them fit any purpose, and to use them to address goals beyond production or consumption only. Unlike precedent technologies, their impact on the society is not predetermined, and lies on the will of those who use them, for better or for worse.

Hyper-connectivity and dynamic reallocation of resources based on trust are the main characteristics of the new, networked, world unveiling in front of our eyes, allowing the rise of micro-markets and the re-appropriation of production by individuals , who have become both producers and customers.

the collaborative world of transactions

Our society’s infrastructure, fitted to the precedent centralized paradigm, is slow to adapt. Our compensation-based world of work, backed up by an omnipotent banking system, is curbing our ability to fully embrace a network-based economy. Our nation states which, after having favored the domination of the mechanistic corporation, could paradoxically be a key actor in the rise of a prosumer world, are now too weak to take over this role.

Yet, it is only a matter of time. In our recessing economies, the movement toward individualization and self-determination is hitting the job market, as part-time and contractual work make up a growing part of the workforce. The future of business is about an organization’s capability to create value from, for, and inside networks. The kind of linked structures businesses are more and more forming in the midst of their ecosystem is not flexible enough to avoid the risk of being disrupted by emergent outcomes from the rising collaborative economy. To avoid this disruption, organizations have little if no choice. Internally, they have to behave as networks to adapt to their environment, thus to embrace the organizational principles of wirearchy. Externally, they must act as nodes in the larger networks making up our communities as well as our society: purposeful, supportive and trustworthy. For many businesses, it is a long way to go. But it is the kind of world we, as human beings, have already started living in.

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