Category: Collaborative Age value production system

What the Single Most Important Difference Between Small and Large Companies is

“The most important difference between big and small companies is the amount of time running versus creating. A desire to do more creating is the right reason to want to join your [small] company” writes Ben Horowitz in book ‘The Hard Thing About Hard Things‘.

startup_meetOf course, creativity is essential to the success of small companies because they need to be agile and respond to the needs of the marketplace to survive. Creating something is intrinsically part of their DNA. Large companies prefer the comfort of predictability and will often discourage too highly creative endeavors even if they profess to foster innovation. This is of course an issue for creative companies that grow too fast and might become bureaucratic before they realize it. It must be a constant challenge at Facebook or Google to maintain a creative atmosphere in spite of the rapidly increasing size of the organization.

Another reason is that it is more difficult to work as a cross functional team in large organizations that in small companies, and you need to ask permission before doing anything like this. Creativity comes from mixing ideas and viewpoints, hence it is fostered naturally in small organizations where everyone works together.

Finally, creative people will then possibly find more satisfaction when working in small organizational structures. With the Fourth Revolution, small organizational structures become much more viable. Hence staying creative will remain easier in the Collaborative Age.

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How Facebook Creates Value for the Real Economy

Facebook commissioned a study to Deloitte that shows that it adds more than $200 billion to the global economy and 4.5 million jobs. Of course that might be a bit inflated being a study commissioned by the culprit, but that still makes one think about the global value generated by a new tool that was created in 2004 (The report, though, does not comment on the possible value and jobs it destroyed elsewhere).

FacebookSo what are the areas that have been considered for this evaluation?

In this study, there are mainly three:

  • 65%: marketing effects of course (creating value through increased marketing)
  • 22%: connectivity effects (consumers are enticed to buy new terminals to stay connected on Facebook!)
  • 13%: platform effects (creating value by developing and selling apps for the facebook platform)

The percentages vary depending on the country, for example in India, the connectivity effect is relatively much larger.

Facebook seems to be on its way to develop a sustainable business model, creating value and jobs while enabling many remote connections, conversations and sharing that would have been impossible to imagine even ten years ago. Like another candidate, Google, is it becoming a candidate to be one of our new institutions of the Collaborative Age?

Here is the link to the full report including the methodology.

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What Stops Change in Large Organizations

“An early lesson I learned in my career was that whenever a large organization attempts to do anything, it always comes down to a single person who can delay the entire project. […][Even] Small, seemingly minor hesitations can cause fatal delays” says Ben Horowitz in book ‘The Hard Thing About Hard Things‘.

management_stopI have the same experience and I find this quote very much to the point. In my executive and consulting years I have had much experience in large organizations of situations where an entire team wanted to change something, only to get rebuffed by a single person generally in a position of authority, or even a member of the team just not doing her work.

The decision to stop was generally taken for inadequate reasons – from selfish career considerations to belief that the person was more competent than the entire team proposing the change.

What should a leader do when a team comes up with enthusiasm with a proposal for a change that should greatly  help the organization moving forward? In my view, give the keys and the responsibility to the team to implement that change, making sure that the interests of the rest of the organizations are protected. Empowering people is the best way to get great things done.

This bears a lesson for change managers – one of the most critical actions is to identify early those people that will slow down or even stop change. Sometimes they are easy to identify, sometimes they are hidden. Sometimes they are in positions of authority, sometimes they are not. Still they are always the cause for most change derailment in large organizations. Focus of change management should be to make sure they do not impede transformation.

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How Salaried Work in Large Corporations was a Historical Exception

We need to remember that salaried work in large corporations as we know it is an invention of the Industrial Age. Before that, most craftsmen were on their own, selling their services. They learnt by being an apprentice for a while and by travelling around places to gather the best practices.

craftsman middle-ages
Like the craftsman in the middle ages, the KEEN is nomadic independent worker

What is happening now on the labor market can be seen in fact as a return to a situation quite akin to the previous Agricultural Age for learned ans skilled labor: independent craftsmen that move from project to project and learn through experience and travel.

Of course there are quite a few differences: many valuable crafts are now intellectual and not necessarily manual, a much larger proportion of total population is sufficiently learned to enter the category, apprenticeship still exists in a somewhat less formal way in the form of years of experience and mentoring, etc.

The interesting part is the similarities: craftsmen need to know how to market themselves and not just be good at their craft; their value increases with international exposure and nomadic habits; they are engaged on a project basis rather than a continuous basis; and this creates a higher inequality in compensation, where common skills become a commodity and rare skills are highly valued.

Salaried work in large organizations governed by scientific management methods is what we consider normal employment. In fact it will just be a blip in the history of labor relations. Let’s make the best of it and look in the future of the independent craftsmen that join to realize incredible projects like the cathedral builders of old!

You can continue this exploration of the new labor contracting approaches in a very interesting paper in ParisTech review about the new forms of employment (in French or English).

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Why a Working Business Model is One of the Ultimate Creative Endeavors

A working, effective Business Model is probably one of the ultimate creative endeavors. It is often the result of a long-winded development effort, including many trials and errors. It reflects a relationship between a number of stakeholders with the aim of creating value to most of them. It can be shown and described like a piece of art. And it is a practical, real-life invention.

Business Model Framework
The Business Model Framework from the book Business Model Generation

The interesting observation here is that as a creative endeavor, the most successful, disrupting business models are those that go beyond the conventional, that reflect ‘out-of-the-box’ thinking. Thus those that develop those business models need to be somewhat unconventional and able to see beyond the obvious practice.

It also requires the business model generation process to be highly creative, without bounds, and highly iterative as well. Specific brainstorming situations need to be created accompanied by data retrieval or generation. It can sometimes take years to come up with a workable business model, and many trials and iterations.

And when it works, what a marvelous creation! And what really makes it an ultimate creation, for me, is how it creates value for a large number of stakeholders, not to mention that fact that it creates strong links and experiences for the same many people!

A business plan is one of the most powerful contemporary works of art.

Note – the figure is from the highly recommended book Business Model Generation – A Handbook for Visionaries, Game Changers, and Challengers.

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How Integrated Systems Increase Fragility and Decrease Adaptability

The more systems are integrated, the higher the potential that a mistake (involuntary or purposefully introduced) can propagate trough the entire system and pollute its overall accuracy. Hence, integrated systems are intrinsically fragile.

system integrationPromoters of integrated systems fight this issue by adding a number of filters to the entry of information in the system, de facto decreasing significantly the system flexibility and the possibility to adapt to changing needs.

John Hagel mentions that it is the same with organizations: the bigger and more monolithic the organization, the more fragile it can be. And very large, integrated organizations and systems are an impediment to change and adaptation.

The solution is hence modularity and creation of small, understandable, and interconnected entities or systems. The key lies in devising standard interfaces to deal with the interfaces. This obviously has an additional cost compared to integrated systems and organizations (it is less efficient), but on the medium term, the adaptation capability should produce better and more resilient results (thus, a higher effectiveness)

When will we stop thinking that efficiency, integration, standardization is better? Do we need some more meltdowns to prove that effectiveness, modularity and diversification is much more desirable?

Hat tip to ParisTech review, papers on the future of the organization (in French).

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Why ‘Relationship Capital’ Becomes Essential for Organizations

“The modern company becomes a relationship organization and thus needs to develop a relationship capital” says the French futurist Denis Ettighoffer,

relationship-capital“The methods whereby ideas and related value are created in the Collaborative Economy have nothing to do with the traditional productivity enhancement methods. In the networked organization, the relationship logic replaces departmental and functional logic“.

Furthermore, “The continuous expansion of knowledge creates a rupture in the way wealth is apprehended. What creates value is not any more the physical side of work but the creative and networked component of the activity of each human contributor. Getting access to the adequate ideas and knowledge becomes as vital as getting access to rare materials or even to capital, because knowledge allows to replace physical resources that might be missing“.

Relationship capital is not yet measured consistently, although it is certainly what makes the value of the most well-known start-ups of the Fourth Revolution. In the future we can expect that this component will become one of the most important performance measurement for organizations.

When do you start focusing on developing your relationship capital?

Source: very interesting article (in French) on ParisTech Review on ‘the Company of the future‘. Translation by Fourth Revolution Blog.

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How Employee Engagement though Empathy is the Ultimate Competitive Advantage

Hugh McLeod at Gapingvoid says: “Employee engagement is the ultimate competitive advantage. Unlike other advantages that can be bought and sold, this one is a bit trickier. It has to be inspired“.

empathy competitive advantageAnd true enough I lived through a number of instances where employees where fully engaged in the organization – often through decisive acts of leadership from its leaders, and that really made a difference.

Where Hugh makes a point though is that engagement is not just about leadership and inspiration. It is about creating empathy between the participants to the adventure. And thereby creating stories, the stories of the adventures of this group of people.

“Stories in business are especially powerful because they can unite everyone on a common mission. Tell everyone the story of how you got to where you are – and they’ll likely take over the rest. After all, the best books ask us to imagine our own endings…”

What about creating your own ending to the project you are on, together as a group full of mutual empathy?

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How the Collaborative Age Requires Global Political Action

I very much enjoyed reading the popular book ‘Capital in the 21st Century‘ by the French economist Thomas Picketty. Of course, I really enjoy the historical approach as I believe that historical perspective can give us really valuable insights into the major changes in our societies – that is quite a similar approach to the approach in followed in my book, although of course I had less time to dwell and research into historical economics series!

piketty-capital-21st-centuryI really recommend this book for learning about inequality changes throughout the Industrial Age, and in particular in the 20th century. The book clearly demonstrates that our societies are facing today a particular political challenge regarding both rewarding success and entrepreneurship, and minimizing inequality, in particular when it comes to inter-generational inequality.

One point of the book which is particularly controversial is that the solution for Picketty is clearly some worldwide action on the tax structure. Today it is not possible any more for a single country to develop a tax system that would resist the tendency to inequality, as the financial system is so globalized (re-read our post on When will governments finally realize that the interconnected economy is already here?). There lies precisely one particular issue that I noted in the Fourth Revolution book – political action now needs to be global. We can hide between a super-power that tries to do all the work by itself (with some noticeable success even on the tax side, but limited to its citizens only).

Our political systems need to grow. Nations are outdated. Europe is necessary, and not even sufficient. Global policies must be put in place to be successful in our transition in the Collaborative Age.

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Why You Should Learn What Happens At the Periphery of Your Business

“Learn what goes on at the periphery of your business” says Andrew Grove, former CEO of Intel, in his book ‘Only the Paranoid Survive‘. He goes on to explain: “When I absorb news or information coming from people who are geographically distant or who are several levels below me in the organization, I will triangulate on business issues with their view , which comes from a completely different perspective. This will bring insights that I would not likely get from my ordinary contacts.”

shakeheadillusion
Can you figure out what it is if you don’t rely on straightforward observation? Watch differently -Shake your head!

In my observations it is not just about observing what happens in the industry or in the particular company. Peripheries are great places where experiments happen, and where people in your organization grow much faster than at the core because of the exposure.

Most organizations do underestimate the value that could be brought to them by their peripheries. It goes to the point where the experience of people sent there (typically, expatriates) is not valued at all by the core organization and gets ultimately lost to competition as these people leav in droves, unsatisfied by the lack of recognition.

With the Fourth Revolution, the importance of the periphery and of groups of people that are not directly within the organization will increase significantly, further from what Andrew Grove observed when he wrote his book in the 1990’s. Organizations that continue to focus excessively on their core will lose competitiveness. Watch for your periphery and leverage on it!

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Who We Surround Ourselves With is More Important Than What We Do

“It’s often the case that the people we surround ourselves with (and the tasks we do) have far more to do with job satisfaction and performance than the subject of our work.” – Seth Godin in a blog post on Staples.

Group_working_together
What can give more satisfaction on the long time than the people we surround ourselves with?

Being a consultant I change probably much more often than most people who I am working with. The more it goes, the more I find that: a particular topic can be exciting to discover and develop, but that is a short-lived satisfaction. Long-lived satisfaction comes from working together as a team with people you have in high esteem and with which we feel we work together to produce worthwhile outcomes.

The same goes in personal life of course, where truly the people we surround ourselves with for that major project of our lives are the key to personal satisfaction.

When you look for your new job or assignment, how exciting it looks, consider first the team you will be part of. It is much more important than the topic or the role.

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How Scientific Publishing Gets Deeply Disrupted by the Fourth Revolution

Scientific Publishing – the system whereby scientific papers are peer reviewed and published by specialized publishers, is being deeply transformed by the Fourth Revolution. “Watch This Multi-Billion-Dollar Industry Evaporate Overnight” says Dylan Tweeney on a post, describing how open publishing and reviewing is profoundly revolutionizing the scientific paper publishing industry.

scientific paper and journals published by a handful of intermediaries - soon a thing of the past?
Scientific paper and journals published by a handful of intermediaries – soon a thing of the past?

One of the main issues for the interested dabbler in science is that it is almost never possible to access important scientific papers without paying significant fees. I am not a scientist, merely an interested member of the public, and this barrier is a barrier to spreading knowledge in the wider society. And more – why would a small number of publishers benefit when most writers and peer-reviewers do the work for free? Scientific publishing sometimes looks like an oligopoly held by a few entrenched publishers.

Sites like Academia.edu propose to change fundamentally the balance of power in this industry, and basically to wipe out the intermediaries – publishers – which added value is now squashed by the internet. In their latest blog post about reaching the bar of 10 million users, the founder states “It would be a great thing if we could get every science PDF ever written on the internet, available for free. There is a lot of work to do before we make that vision a reality, but this 10 million user milestone is a good start”. A good start – we can already predict that within a few years, the entire system for producing, reviewing and making science available will be transformed for the better of humankind!

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