Category: Organization in the Collaborative Age

How Company Ownership Can Be Extractive or Generative

In the very interesting (and recommended) book ‘The systems view of life‘, the work of Marjorie Kelly is mentioned about various ways of owning a company. She opposes extractive and generative ownership.

Her view of ownership design is that five essential patterns work together to achieve either an extractive or a generative design:

  • purpose,
  • membership,
  • governance,
  • capital
  • and networks.

Extractive ownership has a mainly a financial purpose: maximizing profits. It is actually the classical business organisation that emerges from the classical theory. Generative ownership, however, has a living purpose: creating the conditions for life. It is closer to non-profit organisations and is generally more characteristic of smaller, more human-size organisations.

I find this analysis quite interesting as it creates a distinct framework to analyse the economy and the economic actors. And it is quite true that many smaller organisations correspond more to the generative type, as they contribute to develop living networks without focusing exclusively on profit.

Generative vs extractive ownership is quite a useful distinction.

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How I Actually Am a Modern Artisan

As a consultant I realized I work as an artisan. An artisan in intellectual work, of course, but nevertheless an artisan. And I am perfectly happy doing this without trying to grow into an industrial approach.

old-fashioned artisan

In my daily consulting work, I spend my time adapting my knowledge and material to my clients’ situations, polishing it with a view on excellence, never twice producing the same although every time it is similar; learning from master and from practice to deliver ever better solutions and insights.

Thus we should see today artisans in a much wider sense than the usual touristy ‘artisan craft’ of old-fashioned love for manual work. And there are actually many artisans all over the modern world putting their love of things well done in their creations for needing clients. There are many more artisans that what you’d believe. And everyday I discover new small niche companies providing artisan-ware and services to many different parts of our societies.

Artisans are not disappearing, they are rather thriving in the new collaborative work as it allows them to have a wider audience and thus sustain their work. It co-exists with industries that are also needed to deliver the benefits of scale. Still we need dedicated artisans, and I am one of them.

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How the Horizon of Investors in Startups is Not Always Compatible With Their Development Cycle

Following up from our previous post ‘How Venture Capitalists Don’t Really Play the Role We Believe‘, I also observe as a Business Angel that the typical 5 to 7 years’ time expectation of investors, and investment funds in particular, is not always consistent with the time-frame for developing an innovative company.

As a Business Angel with industry experience I have a specific tendency to invest in start-ups that develop tangible innovative products mostly in B2B situations. For those start-up companies, between developing the technology in a sufficiently mature stage, the decision cycle of industrial managers and the time to effectively setup the hardware, the usual investment cycle of 5 to 7 years will often be too short to demonstrate the full value of the company. A horizon on the order of 10 years may be more realistic.

The 5 to 7 years horizon may be more suitable to virtual products in B2C mode and effectively in that space, this time-frame is often sufficient to show the value of the innovation.

I am a bit unclear whether this difference in startup situation is well appreciated by investors and there may be many cases where industrial start-ups will be forced to take decisions that are not supportive of their development after 5 to 7 years because many investors will want to leave at that point.

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How To Avoid that Increasing Complexity of Business Leads to Collapse

In this Gapingvoid post about business complexity, that refers to a Clay Shirky 2010 post ‘The Collapse of Complex Business Models‘, we are reminded that excessive increase in complexity often leads to collapse of organisations or societies (and not to improved adaptability).

Organisations and societies would sometime collapse because of their sophistication. According to some studies, increase in complexity is first positive, before reaching a point of diminishing returns and even becoming detrimental. And “When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.”

The issue here is not that complexity inevitably increases in organizations and societies. It does. The issue is how to ensure that this additional complexity makes the organization or society more flexible and adaptable to substantial changes and shifts in its environment – and not too rigid, leading to collapse.

In the business world I know only of one solution: allowing new activities to develop in relatively independent subsidiaries. They may one day replace the mother company as values shift, but then the accretion of new activities won’t create excessive additional complexity and the various activities remain relatively flexible and nimble. The case for the diversified group of companies as a way to be more resilient is open!

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How the Economy Increasingly Becomes a Project Economy

In this post ‘Welcome to the Project Economy‘, an interesting perspective if given on the transformation of economic activity towards a project-based activity (to be taken with a pinch of salt though, the author being part of PMI and thus promoting project-specific training and certification).

Still, the historical perspective provided in the post is interesting and quite aligned with my views. “A century [after the Industrial Revolution], the future of work has once again become a central topic. Technological advancements and automation are provoking a business transformation every bit as radical as the one set in motion a hundred years ago.” “Amidst all this chaos, one thing is clear: the 4th Industrial Revolution has unleashed The Project Economy. The fusion of physical and digital in a desire to blend speed and precision as organizations integrate strategy design and delivery, is taking hold in broader and more sophisticated ways“. The post goes on to give interesting examples in a number of companies and industries.

I certainly concur about this transformation and this explains why I am passionate about project management. At the same time, there are many different types of projects and ways to approach them, and it may be a bit excessive to broaden the concept too much or to try to put all projects under the same approaches and methods.

What’s exciting is that each project remains a single human adventure involving a limited team to create new stuff that may change the world. How many projects are you in at the moment?

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How the Number of Publicly Listed Companies Decreases

In this otherwise illuminating post ‘Fixing Capitalism’s Oligopoly: A Response To Ray Dalio And John Mauldin‘ I noticed a particular aspect, which is the strong decrease of the number of publicly listed companies in favor of private capital.

This trend is very noticeable since the end of the 1990’s. “The phenomenon is under-researched, but the papers that have been done look at issues like 1) impact of Sarbanes-Oxley (SOX), 2) growth of private equity capital, 3) the growth of M&A activity on Wall St and its need to keep the pipeline growing, and 4) a number of structural issues (like SOX) hurting small company formation“. The author believes that it is mostly the growth of private capital that explains this trend, which in turns tends to explain the much higher share of income captured by the wealthy (company owners). Another aspect is the increasing industry concentration with very large players that attain quasi monopolistic status.

This trend is at the same time interesting and problematic. It shows that probably a greater share of value creation is not directly accessible by the public through public shares. This, in turn, generates a number of interesting questions about the structure of our economy. Its agility is in question, and thus its future adaptability. Not quite the trend that would be expected in an increasingly unpredictable world.

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How Careers Will Include Much Less Front-Line Work

This interesting Financial Review ‘Why this ship marks the end of your job‘ reminds us that modern equipment tend to remove the need for large crew on the front-line. In this example of an actual warship, the actual crew has been shrunk by 80% compared to traditional warships of the same size. 80%! From 200 down to 40 sailors! This trend will be observable in all occupations requiring dangerous, remote or costly human deployment. But also for a lot of front-line work that can be automatized.

We can of course observe that trend in the military with the apparition of drones of various sized and capabilities that avoid putting lives in jeopardy. But we will also observe the trend in more and more commercial ventures.

An interesting side effect of this approach is that the equipment itself is considered to be more disposable and replaceable than the previous equivalent equipment. This is apparently even true for this warship type – the limited crew will not allow to respond to all emergency situations and it is accepted that it may have to be lost with a higher frequency than previous warship generations.

The new approach comes with the benefit of exposing much less people to hazardous occupations. At the same time there is a substantial risk of loss of know-how: the current solutions are put in place with the help of those that currently do the work, but in the future no-one may remember how to do it.

As a result, there will be a deep need to review the usual career paths that have been inherited from the Industrial Age to ensure that the competencies required will still be available, as they evolve. And people that are still in the front-line will need to be better educated, more flexible and will have much greater responsibility than today. The landscape of work is already changing dramatically!

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How Important It Is to Remember Krulak’s Law: Today, Front-Line Agents and Supervisors Win the Battles

Krulak’s Law states that the future of an organization is in the hands of the privates in the field, not the generals back home (Krulak was a famous Marines general, son of another nicknamed the ‘Brute’). Seth Godin in his post ‘The $50,000 an hour gate agent‘ gives a perfect example in daily life.

What I find interesting here is the statement that it is the increased complexity of war that requires more initiative and decision-making to be done at a lower level (‘the strategic corporal’). And hence the deployment of a vastly different approach in military organization and training.

This observation about the changes in military organization created by increased complexity are probably transferable to any kind of human organization in today’s world. It shows that the old-fashioned top-down management is doomed; and that front-line employees need to be given initiative and sufficient competency to take the right decisions at the right moment, because they are the ones that are faced with the actual issues.

It is not certain that this idea has permeated many of the larger corporate organizations, and changing the manner those organizations work and consider their personnel will take time. However, increased complexity coupled with easier communication will necessarily force the transformation.

Be proactive in applying Krulak’s law. Today it is the front-line agents and supervisors that win the battles. Not any more the generals and corporate executives.

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How Important It Is to Understand the Root Causes Before Treating the Symptoms

This post is written in the context of business for professional services, but of course the title applies more widely. Nevertheless, it is an essential aspect to be considered because as consultant we are often contacted because of some symptoms that have been noticed. And we should seek to understand the root causes before jumping into solely treating the symptoms.

Understanding the root causes often requires to take a more systemic view of the organization or the situation, looking in some details at all relevant aspects to identify if the symptom is isolated or only revealing a deeper issue. This should be the first step of the intervention, what I call the ‘discovery phase’. And it is essential that it is addressed in the most comprehensive manner so as to identify and treat the relevant root cause.

The ‘systematic’ approach here is essential as in any complex system: it needs to be considered in its entirety including the interfaces and relationships with external stakeholder to allow to identify the root causes.

In the past months I have been continuously amazed, as we have made this approach more systematic, at how we uncover root causes that are unexpected but relevant – requiring a lot of discussion with our clients.

This approach is not always understood even from clients who want a ‘quick fix’ solution, but that should be part of our ethics as professionals not to allow to just put a band-aid on a situation, but have a wider view of its causes. It is in any case absolutely essential for the sustainability of any change we intend to bring in the client organization’s or way of working.

It also applies in coaching situation and any situation of dysfunction: take the time at first to carefully assess the situation of its root causes so that you can treat the issue at its root.

This post is a follow-up from the post ‘Useful Lessons Learnt for the Professional Services Business‘ based on Pamela Slim’s post ‘23 Lessons from 23 years in business‘.

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Useful Lessons Learnt for the Professional Services Business

I love this post by Pamela Slim ‘23 Lessons from 23 years in business‘, because it resonates with my experience while providing a useful perspective. Of course it is mainly applicable to professional services such as coaching and consulting, although after consideration, its relevance is actually quite far reaching. I really recommend the short read.

Here are some of the lessons that resonate the most with me:

  • we often don”t know but we have the find out attitude (through the depth of our network or reference basis)
  • the importance of professional ethics – any lapse will catch up later
  • be conservative on the financial side and on the commercial expectations to survive on the longer term
  • it’s actually more work and pain than you’d expect first!
  • seek impact rather than income
  • the importance of the client in our success and development
  • the need to look for root causes instead of going straight for the symptoms brought to our attention initially by the client

In some follow-up posts, the last three specific topics will be developed further because I believe they are so important.

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How Small Groups Can Now Bring Change Even Inside Large Organizations

It is well known that “A small group of thoughtful people could change the world. Indeed, it is the only thing that ever has” (Margaret Mead). It would seem this also applies from within large companies such as Google or Amazon, as explained in this interesting post ‘Small Groups United by a Shared Purpose are Changing Big Tech Companies. Here’s How‘.

The examples developed are how a group of Google employees have successfully raised the issue of the company getting involved in defense program; and how Amazon employees have pledged the company to do something active in the field of climate change.

The capability of communicating in groups, broadcasting and receiving feedback, allows easier self-organization of groups with a purpose. It may be the most visible in ‘Big Tech’ where it may be more natural, but it will undoubtedly also change how large companies address certain issues.

Employees, like citizens, are increasingly empowered to raise to their leadership topics of concern and obtain a voice for change. Welcome to the Collaborative Age!

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How Internet Giants Disruptors Now Have to Address the Physical Economy

I love that post from Mitch Joel ‘A Funny Thing Happened On The Way To Disruption‘ that started from the issue faced by publishers over last Christmas: loss of capacity in printing shops made many popular books unavailable.

Uber buys thousands of cars

Internet disruptors have reached a disruption stage where their decisions have so much impact in the physical world that they now have to intervene in that world.

Mitch Joel quotes “Tom Goodwin (of Zenith Media) and his well-worn/well-used quote from 2015: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”“

“What many people don’t know, is that Tom updated that quote this year to read: “The world’s largest taxi firm, Uber, is buying cars. The world’s most popular media company, Facebook, now commissions content. The world’s most valuable retailer is now Amazon, and has more than 350 stores. And the world’s largest hospitality provider, Airbnb, increasingly owns real estate. Things change.””

Things change indeed, and also show how internet disruption really impacts our daily life now. This may lead to another deep transformation of our economic setup: as internet companies will have to own much more physical assets, their business model will also transform.

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