The case for collaborative consumption

This presentation by Rachel Botsman on TED about collaborative consumption is an eye-opener about the power of the Fourth Revolution in the field of consumption.

It gives revolutionary ideas in particular about what to do of the unwanted Christmas presents!

It also gives revolutionary ideas about how our day-to-day behaviors about consumption will be revolutionized.

When you think about it, consumption currently is in the broadcasting stage. The Broadcasting intermediaries are the stores and the department-stores. You buy what they have. They decide which products are being sold. They spend huge money in advertisement to try to influence tastes.

Like publishers will progressively disappear in the field of book and music publishing, so will the broadcasters of consumption. It has started. The infinite shelves of online stores like Amazon reference many more articles, and the collaborative platform of ratings and discussion gives the power to the consumers.

That idea is scary. But so real. We need to understand its intricate consequences.

Consumption broadcasters beware! The Fourth Revolution is on you! If you want to survive, anticipate!


The organization’s social network needs to become open to the outside

The Collaborative Age organization will be open to the outside (see a previous blog post: the organization needs to open itself).

Likewise their social network systems need to open to the outside. That’s even less straightforward.

I was just reading Tony Hsieh’s book on Zappos (‘delivering happiness’) and what struck me is how they leveraged a spirit of collaboration with the outside world through their systems to become successful. Indeed they work with their suppliers in a spirit of collaboration and give them access to sales data which would have been the graal of confidential information in Industrial Age organizations. And it works to leverage the commitment and support of the external world. It becomes aligned with the purpose of the organization.

Likewise a great parameter of Amazon’s renewed success is the openness of their website to the comments of readers and authors.

open close button

By opening its systems to the world the organization leverages on the world’s creativity, and avoids creating internal duplicates which are much less deep and responsive.

We don’t know what’s the recipe for opening the right way, at the right time. But experiments like Zappos seems to show that openness should not be feared, as long as the spirit of collaboration is there.

So, when do you open your internal social network to the world?


Social networks is the foundation of organization’s value creation

Social networks is the foundation of value creation in any organization.

social network

It has always been the case.

Today we can create virtual social networks that span continents and create a much denser connection between individuals.

Hence we have the capability to enhance significantly the flow of value created by the organization.

When do you implement a virtual social network in your organization?


Why organizations don’t implement virtual social networks

Because management is scared.

Because time spent on social networks is not immediately productive. Where is the tangible output?

Because reinforcing the informal organization dis-empowers the formal hierarchy.

Because management feels it looses control.

Because if we allow employees to write what they want, they might sabotage the organization.

Only a few organizations will understand that the value of leaving employees express their creativity is the key to success in the Collaborative Age.
These organizations will dwarf all others.

Because these organizations will have had their hierarchy and bureaucracy sabotaged.

When do you let aside this illusion of control, and create an internal social network in your organization?


A Revolution in organization management legitimacy

In the Industrial Age, organization management is all about control of the information.

Communication means are scarce, the hierarchical organization is the best way to coordinate the organization by minimizing communication channels. Sitting at the top of his pyramid, the manager is the only one that has access to all the available information. His legitimacy is information control. His main skill is information processing. His tool is the scarce long distance telephone, the telex, the telegram.

manager at desk 1950

Today long distance communication is abundant. It does not require any more a dedicated infrastructure. Organizations do not need any more to organize around scarce information transmission. Hierarchy is obsolete. Network, matrix, fluid organization is of the essence.

Information is everywhere, scattered. Controlling the information, restricting access to it is a hindrance. It destroys opportunities for value creation.

What is then the legitimacy of the manager in the Collaborative Age? Instead of controlling and restricting information, he or she makes it more free and accessible. The manager gives access to resources, iinformation. The manager creates connections, interaction and links.

When will managers stop believing their legitimacy is information control and processing? When will they focus exclusively on creating value through interactions? When will they free information?


Management’s will to control everything needs to stop

In the Industrial Age, management was controlling everything. Efficiency was about minimizing movement, focusing on work. The work was divided in small chunks. Productivity was key.

old office organization

Management was controlling everything to make sure nobody wasted time. No initiative was tolerated. It would have disturbed the order of things so well engineered by much more knowledgeable managers.

This approach was great. In a world of scarcity, commodities were appreciated when one could get it. This method has produced great improvements in productivity, cheap products and as a result a much better lifestyle on average.

Today the world is one of abundance. We don’t care so much about commodities. We want choice. We want creative products. We want something different.

Never mind the grandiose plans of the managers. The organization won’t produce that without the bottom-up initiatives of all it’s members.

Unleashing the initiative has a difficult side. Managers are not any more controlling everything. They do not decide any more which product will work, which product will not.

Today many managers still want to believe they are entirely in control. But they are not. It is an illusion. In these conditions, taking an initiative in an organization is difficult. It needs persistence. It often fails because managers fear losing control. Value that could have been created is lost.

Managers need to keep true the purpose and the values of the organization. But they are not any more in control of the details of it’s destiny.

When will managers and senior executives stop believing they are in control, and when will they voluntarily unleash the initiative of the organization?


How can an organization mobilize the power of the ‘long tail’?

We now know that the ‘long tail’ is an extremely valuable resource.

The long tail is this large set of followers that only contribute occasionally. The thing is, because they are many, the sum of their contributions is significant.

Wikipedia is a typical product of the long tail. Linux and other open source software also.

The successful organization today will know how to create and maintain a network of followers and supporters, and draw on their creativity and insights.

How to we do that in traditional business? Experiments have just started. Some ingredients are already identified.
The organization must have a strong purpose to bring something to the world (not just making money!) to enthuse the supporters and followers. The organization must give freely to the world in order to be able to receive. The organization must foster a tribe with a distinctive sense of belonging.

Not so many traditional organizations know how to give out for free. Maybe they should start doing that. Then, inevitably, return will follow, if they are flexible enough to receive it.
funny long tail
Even dinosaurs had long tails. Hope is not lost for old-fashioned dinosaurian companies of another age! But most of them will disappear in the tremendous transformation to come.

When do your organization start giving out for free and create a tribe?


The organization needs to open itself

The organization of the Industrial Age was closed. Only insiders were allowed. Everything else was outside, in a dangerous world. The organization was a secret to be protected. External communication was carefully filtered.

The successful Collaborative Age organization will be open. It will need to be, because by doing so it can use ‘the long tail’: the suite of passionate, part-time supporters and followers that would be too expensive to maintain inside the organization but that might bring decisive a contribution.

organization in the Collaborative Age

Successful organizations today maintain a link and exchange with a wide network of supporters. Decisive improvements to Open source software are brought by users that maybe will do one single contribution in their life.

The successful organization of the Collaborative Age will use to the fullest the power of the long tail, the power of collaboration.

Organizations that will stay closed will be progressively overwhelmed by open organizations. The value and dynamism of collaboration will just dwarf them.

When do you open your organization?


Manufacturing will become subsidized

In the world beyond the Fourth Revolution, Manufacturing will become subsidized, as Agriculture is subsidized today.

manufacturing assembly line

This is because Manufacturing will still be needed, but it’s relative value will be very small compared to the value created by long distance collaboration.

Workers of the Manufacturing industry will probably still represent a strong social force, like farmers today.

But the value they will create will diminish relative to the new value creation. For manufacturing workers to maintain a minimum standard of living, manufacturing will have to be subsidized.

Deindustrialization as an effect of globalization? It is rather an effect of the Fourth Revolution.