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Exponential Entrepreneurship
How communities through social networks build ecologies of businesses in the 21st century
A Field Manual
Kevin Koym
The Rise of the Entrepreneurs
Export Datetime: September 30, 2007 at 6:53 pm
I dedicate this book in loving memory of my Grandmother Mable Robbins, who built communities around her through her love.
any work is a community project, one person just happens to be the source of the work in pulling it together. there is a community around me that supported me through building this book out… I would like to thank the following people, as well as the extended community that supported this effort in coming to market.
Grandmother- taught me about community building
Dominique Moore
Rafael Panteon for patient support, coaching, and ontological grounding
Damon Clinkscales, whose support and inspiration came right at the right time to open me up to this book
Melvin Hall- introducing me to the North Texas Enterprise Project
Damir Jamsek- gave me a training opportunity to see an idea to apply in a whole new way
Billo Naravane and Dr. Yuri Cook, sharing their insight
Jeff Sexton and Oz Jaxxon for their continual support at a critical time in the writing process
Ken and Robin Rowland- getting me to take a vacation that helped free my head up to realize it was time to write
Tom Brown, Jonathan McCoy, Bijoy Goswami, John Thornborrow
Betty Sue Flowers
Fernando Flores
Introduction
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The world is changing... how to deal with all of the changes. Offering a revolutionary idea about how to deal with the chaos of change, and how to still get productive work done while involving increasing numbers of others
notes:
a call to a return to building strong communities
working together, and through working together, increasing the opportunity for all.
Competitive advantage no longer comes from “labor”. Barriers to entry are no longer enough… for any barrier can be quickly destroyed with a decent website and a community of interest. Model of “labor” does not work anymore… because competitive advantage comes from new ideas, and executing them faster.
The only way to build out the ideas is through harnessing lots of brains, and to do so, either must have as much money and capability as Google, or must learn how to create your own ecology.
Must invite people into the ecology, can not force them in, and can not control them once they are in your ecology network.
The world is changing... how to deal with all of the changes. Offering a revolutionary idea about how to deal with the chaos of change, and how to still get productive work done while involving increasing numbers of others
use a different word than manifesto
A manifesto for a new type of work that has the opportunity to have more of us doing what we truly want to do
why a manifesto for entreprneuers? it is because the time has come that entrepreneurs will be the only people that are really ready for what is coming- to be able to respond. The old world institutions will not be able to take the strain of the changes that are coming. entrepreneurs will be able to respond, and create a stronger social and business fabric than the one that proceeded it before.
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Chapter 1: Waking up to the new reality
Cold concrete warmed around the world:
What would be worth sitting for 12 hours on the cold concrete of NYC?
July 28, 2007 an estimated 250,000 technology zealots purchased iPhones within a 24 hour period. Lauded as the most successful product launch of the last 10 years, Apple by the end of the weekend would sell quite a few phones, and through doing so, unleash one of the most aggressive reverse engineering projects that the world has ever seen.
Reverse Engineering Echo:
Whether or not the iPhone represents one of the most revolutionary product introductions of this decade, albeit an interesting question, is not anywhere near as interesting to answer as to see what happened when 250,000 fans cracked open their phones in the early days after the iPhone launch. The same demand that created such passion and willingness to sit and wait for the launch of the iPhone, within it enclosed the seeds for launching an equally, if not more powerful, reverse engineering echo. Although product reverse engineering happens all of the time within the confines of competitors’ product labs, with the iPhone, reverse engineering went to a whole new level. Fans of the phone stepped showed that they not only desired to be relational partners with Apple, but that they would not be stopped as co-producers of the next set of applications and tools for the phone.
Apple stated that they were closing the phone to outside modification and applications. However, within hours of picking up their phones, a cadre of software developers and hackers assembled and organized themselves virtually to knock down these prohibitions. Apple’s success released a counter-revolution of innovation.
Within three weeks of the production introduction, and after thousands of man-hours of pounding, the first new rogue applications were released. Software developers around the world shared insight and tools that had been specifically built upon the work of others. The first application that was publicly released was a terminal application that allows users to login to other computers via the Internet. Even the top consumer products company, with one of the most respected brands in the industry could not prevent its products from being ripped right open. This cadre of enthusiast kicked Apple’s prohibitions to the curb.
So what you say?
What made it possible that despite Apple’s prohibitions that so much work and innovation had been released in such a short time that the iPhone had been hacked and a real productivity application had been built and released into the public within three weeks?
Apple’s product introduction secured great interest and demand for the phone. The same marketing program, though, unleashed underlying forces of innovation and creativity at an equal level to the excitement originally created by the phone. Working around the world 24x7, coordinated through websites and chat channels, hackers and software developers shared their best insight towards a shared goal of opening the iPhone, despite Apple’s prohibitions.
My personal guess says that at the cadre that broke its way into the iPhone was at least a hundred times the size of the group that Apple employed to actually build the phone in the first place. This cadre was loosely coupled, with little or no relationship to the others that were organized around the phone. This decentralized revolution made quick work of tearing into the phone. Their work has not stopped since… and as of this writing, there are daily reports of new applications and insights coming out for the phone.
Round the world, the shot that is being heard
So what does a bunch of hackers pounding on the iPhone have anything to do with how business dynamics are changing?
Everything! Although the example of how the iPhone has been hacked might seem like a handful of enthusiast digging into their hobby, the underlying business dynamics of how this cadre has organized represents one of the largest shifts in over a hundred years in how products are produced, and how business is done.
In a recent presentation[1], Jeff Bezos, founder of , debunked the myth that the Internet was another 1849 California Gold Rush… and instead he likened the Internet at its present stage to the introduction of electricity into the households at the beginnings of the 1900’s. In Jeff’s example, he states that network of transmission wires that were strung across the US in short order were originally put into place for the purpose of brining light into factories and into the home. The need for light after hours drove the introduction of electricity across the US. However, once the network of electrical transmission wires were in place, entrepreneurs built a number of products that took advantage of the electrical grid. One of the first products, the washing machine, brought labor saving right into the household. Demands for these products sped up the underlying demand for greater electric grid coverage.
In a similar way, Jeff and I think that the Internet increasingly compounds and secures its rapid pace growth. New uses of the ‘net daily drive business capabilities where they were not possible only two years ago. New ways of doing business, new ways of collaborating, and new workforces are joining together to create one of the most business-disruptive innovations that the world has ever seen. The washing machine equivalent that drives further Internet adoption and usage is right around the corner.
I, myself, have seen this ability to disruptively innovate in great detail. Using the Internet since 1989 I have seen the levels of opportunities increase and change with each stage and each new application that takes advantage of our global connection. With tools like Google Spreadsheet (an online Microsoft Excel competitor), Skype (a free voice to voice chat application), email, I rapidly assembled a team from 9 locations around the world to build out one of the largest website systems in the State of Texas Internet [2]. This was done on one of the smallest budgets imaginable, when calculating in that the site is now one of the most powerful content management systems available, and that the site has on the order of 5,000 active pages in use. The success of this project was not that I had the best project managers, nor the best tools, but that I had the insight of how to organize individuals to take advantage of our loose connections, our ability to act independently and our 24x7 work schedule.
Through leveraging the same insights that the iPhone cadre uses for coordination and collaboration, our much smaller team was able to move very efficiently to creating this behemoth of a website. Our ability to work independently, yet stay coordinated, while working with each other through a specific set of practices was essential to being able to build the new site, port over the old content, and make it happen at a level that could not have been imagined just a few years earlier.
Work no longer about “labor”
Yet man will say that the new paradigm that I speak of only is happening in the software world, and might not be applicable to their industries. To this I say “bunk!”. The world of work has changed from being all about “labor” to one of “knowledge”. Every process in an industry with any competition in it has become about how the industry creates knowledge, shares it, coordinates and collaborates around it. Yet, given that many of us have been trained in the paradigm to work hard, long hours, we often times miss the fact that work has changed. The notion that work is about picking up large objects and moving them from point A to B no longer makes sense in a world where someone can come up with an idea, launch a website, and within a short series of months, sell the company for over a billion dollars. [3]
Given that knowledge creation, sharing, coordination, and collaboration are the underlying pinnings of this new disruptive force on the Internet, the same force that unravels Apple’s prohibitions on the iPhone are being used to constructively build fresh new industries (while disrupting industry incumbents). Because these tools and processes are disrupting so many industries, and remaking the world, we will look deeper into this shift.
What are some examples of industries that are being remade?
While I can not think of one industry that is not being disrupted, here are a few examples that show the breadth of the start of this penetration into changing our world.
Area:
Example:
Details:
politics
Extreme Democracy
From the way funds for political campaigns are raised, to how candidates interact with questions posed to them from constituents, citizens around the world are shifting the dynamics of governance into their collective control
war
Fourth Generation Warfare
Originally written about by US war researchers, “Fourth Generation Warfare” has drastically changed the dynamics of how wars are fought and won. Much smaller, loosely connected groups are able to exert considerable control on much larger foes
cars
Home
Although there has been strong resistance by major industry players in creating electric vehicles available to the mass audience, enthusiast are coordinating and building vehicles based around electrical car models that are being widely shared in an “open source” fashion.
higher education
MIT releases content
In this case, MIT has made available to anyone with an Internet connection and a web browser the ability to learn and leverage MIT’s top tier education materials.
software development
Linux
There are countless examples of open source projects that are producing products of the quality and features of their incumbent rivals. Linux, an open source operating system, has shown that tens of thousands of software developers can be coordinated to produce a product strongly preferred by business users around the world.
medicine
Farmer Model
Disgusted by what modern medicine wasn’t accomplishing for infectious diseases for Haiti’s poor, Dr. Paul Farmer built the “Partners In Health” model- giving hope to many around the world that health care crises in both the first and third worlds can be effectively addressed through a new way of organizing health care’s constituents. [4]
Even author and venture capitalist Guy Kawasaki leveraged these forces in preparing and releasing his most recent book The Art of the Start. In order to come up with a compelling book cover, Guy created a contest where artist from around the world could submit their ideas for the art for the cover for the book. Although this is a somewhat simplistic example of how the paradigm shift could be leveraged, it speaks volumes to how a community of interest can be built up around a topic, and leverage the underlying social interest of that community to not just be in relationship (as in relational customers) but that the community of interest can co-create and co-produce a work along side the original author, visionary, or business person.
The World Is Flat
Recently, Thomas Friedman released a book calling the world flat. Friedman’s book is indeed a harbinger for the trend towards chaotic disruption coming because of the new dynamics. One comment that I believe sums up the essence of The World is Flat came from Publisher’s Review:
“…. cheap, ubiquitous telecommunications have finally obliterated all impediments to international competition, and the dawning 'flat world' is a jungle pitting 'lions' and 'gazelles,' where 'economic stability is not going to be a feature' and 'the weak will fall farther behind.' Rugged, adaptable entrepreneurs, by contrast, will be empowered.”
The Field Manual for navigating the Flat World
The purpose of this book is to be your field manual to implement strategies that take advantage of these trends, with the goal to be an adaptable, empowered entrepreneur, versus flat-world-road-kill. I propose the need for a field manual for implementation, as there are several great books, including Friedman’s The World is Flat, that go into analytical detail about the trends that are happening. I will share high level analysis in this book of some of these trends. I will also color some of the examples that I believe show how hard and fast these trends are shaping industries that are ill-prepared to move quickly enough- but my main focus will be to propose the tools and ways of thinking that can be used to shape responses to the chaotic pace of business innovation. If you would like to review some of the analytical literature further, please make it a point to look at the appendices of this book where you will be able to find pointers to other books that I believe will be helpful. I have organized the book list around specific domains to pick exactly what is needed at the time, without having to do an exhaustive search through the literature to figure out what you need to do next.
Its not about me, but, hmm… here is something about my background
In writing this book, I will draw on my background of the last 20 years of working in leading and bleeding edge technology startup environments. In all total, I have worked for seven different startups, with the last five being either the founder or one of the very first “bare metal” employees. My background has always been as the visionary recognizing a trend, assembling a team around that trend, and then executing to bringing our shared vision to life. I am a balance of action and strategy, focusing on the analysis and insight that supports strategy- but only if it aids in taking effective action.
The new social architectures that i speak about above are still in very nascent levels. This reminds me of the time around 1994 when I and a few friends were talking about eCommerce, and how the world was about to start buying products from the Internet. Many people did not see this trend. In fact, even after launching the Dell Computer Corporation eCommerce engine in 1996 which sold over a billion dollars of computer equipment, Business Week still in 1998 was asking the question “is eCommerce just a passing fad?”. As we can now in 2007 clearly see, eCommerce is here to stay as a fixture. In a similar way, the methods of production of products, the conversations between “producer” and “customer” are in the process of blending in a way that will make today’s world seem quite archaic.
My career has focused on innovation through the adoption of new technologies. This background includes:
• Building the Dell eCommerce engine in my living room, launching it in record time for a website at that point
• Building skunkworks for Fidelity, Dell, AT&T, Apple, and the US Department of Energy
• Deploying technology quickly for Abbott Labs, IBM, Motorola, Southwest Research, the UT Health Science Center in San Antonio
• Worked at Steve Job’s startup NeXT, and enjoying ever minute of the sharp edge of technology that we brought to the world. NeXT’s software is the software behind Apple’s OS X.
• Chief Architect of the Bootstrap Network of Bootstrap Austin, a network of entrepreneurs that support each other through the collaborative building of their companies.
In building these solutions for this wide grouping of companies, I have worked in a number of fields, with my specialty being in the adoption of new technology, versus a focus on any one type of technology. I believe that this diversity of technology backgrounds, and given that I have lived and worked all over the US, Mexico, and Chile has given me insight on how to coordinate across business and country cultures. The training and experience in working cross-culturally has been key for understanding how to leverage heterogeneous teams.
I will also bring with me my background in the martial arts, which I believe helps develop an insight on how to put practical strategy into action. Over the last twenty years I have had the opportunity to study several different types of martial arts including boxing, combat karate, judo, and over the last ten years, a deeper study of Aikido. As of this writing, I am a “shodan” in Aikido. (This means quite literally a beginning level blackbelt). My insight on how to create situations between large groups of people in mass-collaboration environments is informed by Aikido. The notion of resolving conflict without resorting to violence, as well as having a principled and balanced approach to respond to life threatening situations (versus reacting to them) is a metaphor for how business people and businesses can respond to the chaotic environment of the flat world that we mentioned earlier.
Given the breadth of the material, and the need to be able to draw upon many different modalities to build a social architecture to support your business, I have organized this book into several smaller chapters than you might find in other books. I am doing this for the purpose of making the book more at hand- that is, easier to leverage at the right place for the right time.
You will find two strong focuses of this book:
1. To build, care for, and mobilize the network that your business can leverage for success
2. To cultivate the entrepreneurial mind set needed to respond to the chaotic environment, as well as harvest opportunity from this environment
Moreover, given my experience in historically starting a number of companies and building skunkworks organizations for larger corporations, I will propose solutions that can be leveraged in two different ways. These ways might look separate, but essentially are the same. They are the same because the underlying model of building an ecology of companies that can leverage off of each other are critical to small startups as well as to much larger Fortune 500 companies. Both sets of companies require leverage and flexibility to be adaptable to their environments. Here are the two forms:
1. Networks of entrepreneurial companies that form an ecology that support each other- e.g. in Bootstrap Austin we have over 600+ startups that support each other through sharing insight to help each other mature their companies faster
2. An ecology of companies anchored around one or more larger organizations where innovation networks can be leveraged by smaller organizations to innovate in the larger organization.
Chapter organization:
How are the chapters organized?
How are chapters A through B organized?
How are chapters C through D organized?
How are chapters E through F organized?
How are chapters G through H organized?
What resources are in the back waiting for you?
So let’s delve right in!
Given that the Internet and disruptive cadres of competitors are not stopping to wait for us, let’s hop right in and investigate this phenomena further… and let’s implement a solution that can be immediately leveraged to your company or community’s bottom line.
Although I have organized a cornucopia of information in this book for the implementation, please be aware that we will be extending this conversation as well at our Enterprise Teaming website:
.
Please come join our conversation, get on our email list, share insights with your fellow readers, and leverage these concepts so that they positively impact your bottom line.
Chapter 2: Concepts context- The Chaos Context
As we are building an architecture for our businesses to respond to the chaos released through these new conceptual shifts , let’s look at into what is being said about the changing conditions in the market that creates this chaos. I will share my quick analysis of Friedman’s and Tapscott’s work, while proposing my own variant of how I see the playing field to be developing for entrepreneurs. Given that this book is about implementation, not just academic analysis of these trends, I will point to several other authors and their work while focusing my analysis to the dynamics that engage startup, small, and medium size businesses.
In the book The World is Flat Thomas Friedman writes that a perfect storm of change in the business world is brewing, driven by what he calls a “triple convergence”. To Friedman, the following three forces are converging:
• New playing field: New ways of work and collaboration that are taking place driven by usage of the Internet
• New ways of doing business: New models of doing business are driving the flattening of business hierarchies
• New entrants: New workforces are entering the market, including but not limited to China, India, and Russia
Although Friedman might call this the “triple convergence”, in previous talks I given I have called it the “Friedman Triple Threat”. As I mentioned in the previous chapter, telecommunications technology has flattened out the playing field, and many traditional businesses are getting run over on this flattened playing field.
Donald Tapscott on the other hand, in his book Wikinomics, and in a presentation that he made called “Winning With The Enterprise 2.0” [5]. Tapscott, in his analysis of the situation, says there are four forces that are coming together to form a “Category 6 Business Revolution”. These four forces are:
• Web 2.0 technologies (technologies where two way communication is enabled instead of being just one directional
• The Net Generation- net-savvy Internet users entering into the workforce, mainly led by the Millennials (younger generation) that interacts with technology in ways that their parents have a hard time imagining
• The Social Revolution- a continuation of the social revolution of the 1960’s in which notions of personal empowerment were started
• The Economic Revolution- an economic revolution possible now because business is starting to take heed of what is possible with these new technologies, and leverage them for business, not just social interaction
Although Tapscott and Friedman differ a bit in their analysis, the fundamental root is the same. In fact, other voices have been recognizing the trend towards personal empowerment, new entrants into the market place, technology usage in ways never imagined before…. and as you have heard from me- there is nothing less than a “Category 6 Business Revolution” taking place. In taking a historical look at this revolution, many have argued that we are in the middle of the rapid acceleration out of the Industrial Revolution into something distinctly different.
I also believe very strongly that if you are looking into the literature for further reading, make sure that you read Yochai Benkler’s The Wealth of Networks. I recently remarked to a colleague that reading Benkler’s book is like eating pennies. Very high in the minerals that you might need, albeit very dense, with mind-bending insight. Benkler not only goes his analysis of the underlying business dynamics, but he also gives policy and governance directions on directing supporting this Business Revolution. Given that I think that Friedman’s and Tapscott’s books are a little more accessible, I will refer to them first. Please know well, though, that I have great respect for the work that Benkler has shared with us well.
“The corporation as we know it, which is now 120 years old, is not likely to survive the next 25 years. Legally and financially yes, but not structurally and economically."
Peter Drucker
What this business revolution is enabling is a whole new set of business topologies not imagined before. Friedman calls this trend “Globalization 3.0”.
Globalization 1.0 was practiced by countries- colonizing underdeveloped parts of the world. To get into this game, you had to have big ships and guns. Only powerful companies could play.
Globalization 2.0 was marked by corporate interest being able to produce products in multiple markets, assemble them, and then sell them back into even more markets. Given the cost of access into these markets because of laws and physical space limitations, only stronger corporate interest could leverage this type of globalization
Globalization 3.0 is marked because its key characteristic is that anyone with an Internet connection can play in this market. Sometimes called the “micro-multinational” [6] the key characteristic is that doing business globally is available at a level that the individual can leverage it.
[pic]
A consumer focused business that shows the power of “Globalization 3.0” is the web site dating service called “Plenty of Fish”. Concerned that his programming skills were falling behind, Markus Frind decided to come up with a learning project that he could learn how to program in Microsoft’s dotNet programming language and tools. Markus released the software on a server that ran in his bedroom, just to try out the software, to see that the code would run. Four years later with Plenty of Fish in first place in Canada and the UK, and third place in the US for the largest dating site, Markus now manages the site about an hour a day, with no other employees. Oh… and the business makes $5 million per year, leveraging Google’s Adwords advertising service. This simple little program-learning project turned into a global dating service, bringing many couples together, and creating profit as well.
Historically I use to be a software developer… And other than kicking myself for not building that same business with the skills that I use to hone years ago, what I find amazing about what Markus has been able to do actually speaks directly to what Tapscott and Friedman are writing about, and the underlying social phenomena that is happening. The Plenty of Fish website is simple from a software standpoint…. so what gives about this site? I believe that the phenomena of what is happening has little to do with the actual web technology, but speaks more to the “Social Revolution” that Tapscott speaks about. Enough people are engaging the net in a way that they have never considered doing before (Net Generation). The Social Revolution towards taking action for themselves has them adopting this new way of interacting with social software so that they are open to doing one of the most fundamental of human activities (creating relationship) through a piece of technology (the Plenty of Fish website). Finally, because of the new paradigm of using Google Adwords, an Economic Revolution was possible- a five million dollar business that runs on about 300 man-hours of effort each year.
So programming in your underwear, working around 300 hours a year managing a $5 million business that Markus started just as a learning project? Let’s get to the essence of what makes it possible for Markus’ business to exist. How is this possible that guy produced an application that created so much value in such short work?
These are the dynamics of the knowledge-based Business Revolution in which we presently live. What is funny to me as I write this is knowing that a decade from now I will look back on this sentence and know how naive and short sited my own vision was for this Business Revolution that is coming.
Tapscott and Friedman have given us a starting point, for their four and three respective business revolution forcing functions. Their analysis is excellent. Given that parts of their work have been funded by large institutions and their historical focus is on larger corporations, I believe that they miss opportunities for how these trends can be driven by entrepreneurs. Let’s look at these trends with a focus on how little David entrepreneurial startups, small and medium size businesses will utilize these concepts to out maneuver their Goliath counterparts.
2. Super-empowerment of the individual
1. Attitudes have shifted on working together
3. Communication technology is shifting sources of power for innovation
4. Knowledge ecology
Let’s look at each one of these conceptual shifts in detail. Over the next four chapters I will share my insight of the conceptual shifts that I see, with insight on how you can engage these conceptual shifts to your business advantage.
Chapter 3: Shift #1: The Super-empowerment of the Individual
The first tectonic conceptual shift to look at focuses on the individual: how much power a single individual can now wield through the ability to produce outputs at a much lower cost than ever before. Never before have individuals and especially individual entrepreneurs been able to start new initiatives and collect others around those initiatives. Tim Ferris in his book The Four Hour Work Week chronicles his ability to get a health supplements business off the ground, working round the world, and only have to tend to it a couple of hours a week, enabling him to take mini-vacations many times a year. What makes it possible for Ferris to work a few hours a week, or from Chapter 2, Markus to be able to make $5 million from his apartment every year? Let’s look into this in detail.
First off the cost of production, that is how much money does it take to get a product built, out the door, and into a customer’s hands, has gone down, way down. As in the example of , Markus has showed us that real cash can be created with minimal work… in fact only a few hours a day working on a website that was a pet, learning project. In Markus’ case, he was able to program the underlying software himself. Available vendors provided support, allowing Markus to focus in his area of specialty- software programming.
But in today’s world, you don’t even need to be a programmer to assemble a team to build a project like what Markus has built. With hundreds of thousands of software developers available around the world, available through a few clicks of a mouse through sites like or e-, building software as a skill is not a prerequisite to building out a community of interest like Markus built.
Moreover, many individuals’ businesses seemingly have nothing to do with software development, yet they are taking advantage of this lowered cost of production. An extreme, but salient example of this is how some farmers and fishers in rural India and Bangladesh are using cell phones. Part of the labor savings that is happening in these remote parts of the world are that farmers can call or text message to neighboring towns with markets to find out which markets need their fruits, vegetables, fish, or other products. Market prices shoot to their phones, suggesting which physical location they should travel to. In the past, these individuals would have to take their chances on guessing which market to go to. Prior to being able to use a cell phone, if a farmer went to a market that was saturated with products, his day would have been wasted- for his opportunity to sell products in that or another market would have been forfeited given the great amount of travel that it takes to get to that market.
The message that I mean to send with this example is that the cost of information controls how money is made efficiently, whether it is where to host a website, get advertising revenue, or what market needs fish.
“The future is here. It's just not widely distributed yet.”
William Gibson
Part of what is driving this cost of production down is that the underlying workforce is ready for these changes. As I mentioned in the previous chapter, one of the interesting footnotes in the history of the Internet is that many of the abilities that are now taking off, like dating sites, mobile phone text messages among others, is that all of this capability was possible a decade ago… but socially, the “Net Generation” was not ready to pick it up yet. Given that the technologies have been around, familiarity in the general population plus access to the Internet now puts these activities at hand. And most importantly, not only are these technologies and this awareness available to drive dating sites, this same capability is available to get larger and larger groups of individuals working together.
The social websites of Facebook and Myspace provide an equally interesting example of how social behavior is driving down the cost of information and therefore production. Millions of users actively go to these sites to socialize, share pictures, notes, and insight
To write these behaviors that we see at Facebook and Myspace off as just socializing would be very shortsited. Just like how simple personal hobby websites in the early 1990’s proceeded real business usage of the Internet, we should see the wide spread adoption of Facebook and Myspace as the harbinger of how work and business is conducted. The technology for a uber-disruptive business strategy is ready and at hand. This technology is just not widely distributed yet… and most companies are just not ready for it.
So how should companies get ready for leveraging this conceptual shift, or more efficiently leverage this conceptual shift? In the over simplification of all time- let me make a statement- it is all about building networks. Figuring out how to build a network of the individual organizations and entrepreneurs that are part of the “virtual value chain” around your business is key. We will go into the actual implementation of the right tools for attracting, retaining, and leveraging these networks later in this book. For now suffice it to say that building a network where information can be easily and quickly passed between individuals is key.
“Strategy is increasingly becoming about leveraging resources that are not owned.”
Marco Iansiti
Marco Instanti reports in his book The Keystone Advantage that this network should be thought of as an ecology- pulling from the ideas of biology. The basic premise, which we will build upon in the implementation section of this book is that network builders, in order to build effective ecologies (and therefore lower the cost of information and production) must act as keystones versus dominators. Keystone species are plants or animals that allow and support a great diversity of other species around them, where as dominator species destroy the delicate balance around them. Dominator species typically create situations where the ecology in which they reside becomes no longer sustainable.
The Work Blind Spot
In the context of implementing a strategy to take advantage of the Business Revolution, with regard to this conceptual key of the cost of information and production going down, we must be aware of a historical blind-spot of how many of us have been trained. Especially in the US culture, with the notion of the “Protestant Work Ethic” work (and business) has been equated historically with labor, especially with physical labor, e.g. moving an object from one place to another. In the knowledge economy this idea blinds us to the opportunity that Markus Frind, among others, has seen. Success, whether on a personal level or the result of a business strategy, no longer is about working really hard day in and day out, and then success will follow. A ready made labor pool from around the world is waiting to support our efforts, and production cost for building anything have gone down.
In Tim Ferriss’ book The Four Hour Workweek, Ferris goes into great detail of his model for employing these trends with the leverage of an estimated 200 people around the world supporting him. Yet none of this network of individuals actually works “for” him.
Ferris, and Markus before him, show us in these examples of a few hours per day or per week that there is a paradigm shift with regards to the idea of work that has changed.
Production and waste flows of work have changed
As I stated in the last few pages work has changed. The notion of work is no longer based around the idea of just moving things from one place to another… but in having the right information at the right time to know exactly what to move. A conversation with Fernando Flores in the third quarter of 2003 had me see this paradigm shift about how lowering the cost of information was driving down the cost of production. One way of estimating how productive a process is is to measure its waste. [7] Summing this up in terms of how waste in a productive process are thought of:
In the labor tradition
In the knowledge tradition
scrap left over from manufacturing process
labor (individuals) just another asset
ineffective meetings
poor relations
delayed schedules
stress
loss of energy
individuals represent the source of new ideas and products
It is therefore essential that as you look at building out systems to take advantage of the lower cost of information and production to remember that real work in the context of this Business Revolution is not about hard work, but truly about working smarter.
Super-empowerment for super-business
The results of this super-empowerment of the individual pays off for individuals not only in allowing them to be more productive, but is also creating a fundamental shift on startup entrepreneurs, small and medium business people. This trend has been recognized by a number of researchers and futurist.
Intuit, in conjunction with the Institute for the Future charted this trend and their projections for the next decade in a recently released report called The Future of Small Business. [8] This report details projections of how droves of individuals are leaving the historically perceived “safety” of the traditional job and working for themselves. The following graphs, from Intuit’s report, show both qualitatively and quantitatively this shift towards entrepreneurship.
[pic]
Intuit’s “Economic Transformation”. Due to the accelerators of how the social transformation of the 1960’s and 1970’s and the technological transformation of the 1980’s and 1990’s is enabling a “economic transformation” opening opportunities to entrepreneurs everywhere.
[pic]
Figure: ’s Small Business entrants graph from Intuit’s Future of Small Business Report
What is interesting about the above small business number growth between 1998 and 2004 is that this period of history includes one of the biggest bubble burst and economic downturns that the US has seen in recent times… but never the less, hardy entrepreneurs continued to build businesses, to the tune of approximately 3 million more businesses in those six years alone. Perhaps these businesses were driven by entrepreneurs out of necessity for the down turn in the market around 2001, or perhaps the economic transformation that Intuit reports in the previous graph has already begun. Either way, it is clear that entrepreneurial activity is growing rapidly.
In fact, Intuit reports that over 75% of the jobs in the US being created at this time are by small business, with over 50% of all private sector workers (and growing) are in small business and startup businesses. These numbers confirm that entrepreneurship is on the rise, and that it is a force of nature that all businesses both need to be aware of, as well as need to learn how to take advantage.
As an example of the power of this shift, several researchers have estimated that 724,000 people are creating their full time income by leveraging the eBay network [9]with quite a few others supplementing their income through eBay. This ability to provide for their families while maintaining a great deal of independence compounds the effects of conceptual shift #1 (cost of production is going down) in that many more entrepreneurs are getting into the game of working for themselves.
With the announcement of their report, Intuit made one other prophetic declaration important for us to consider. Here it is in brief:
The line between small and large businesses will blur as more entrepreneurs form free-agent contracts with large companies as a natural response to the demise of lifetime employment. By 2017, free agents will thrive with less job security — they will have clients, not employers — but, in trade, will exert far more control over their time and working conditions[10]Super-empowerment Liftoff
The force doubler of these shifts in production power and ability to build businesses is and will have an increasingly positive psychological feedback as well. To see this, look to Maslow’s Hierarchy of Needs. Given the shift of control to the individual, he or she is able to handle resource needs and self actualization needs at the same time.
[pic]
Figure: Maslow’s Hierarchy of Needs
Jeff and Bryan Eisenberg, in their book Waiting for Your Cat to Bark? explain Maslow’s hierarchy the following way:
Maslow identified self-actualization—the desire to become everything you are capable of becoming—as the overarching human need. This is not a deficit need; it’s a growth need, and fulfilling it is generally a lifelong process. Maslow acknowledged that even when our deficit needs are met, the need to be true to our own definition of ourselves influences our attempts to satisfy every category of need on the pyramid. [11]
Self directed growth and self directed work will compound together to create an increasing amount of psychological power for the individual entrepreneur, creating an increased opportunity for finding meaning in the work that they undertake.
Because of these statements, Tim Oreilly stated: “What we're seeing though is the erosion of one of the pillars of society as we knew it, the industrial corporation. One effect of the internet and what Thomas Friedman calls ‘the flat world’ is the re-empowerment of the individual as economic unit.”
It is because of this focus on the ability of the individual and his / her capability to be an empowered economic force that I state that the second big conceptual shift that we need to pay attention to in our analysis is the decentralized decision making and the rise of the entrepreneurs. When applying this same paradigm to the field of war making, John Robb in his book Brave New War calls this phenomena of the individual actor being a force of nature a “super-empowered actor”. In the dynamics of the world that we presently live, one person can make the difference, whether it be for good or evil.
Certainly the economic effects of these shifts are powerful, whether we look at it through Intuit’s “Economic Transformation” or Tapscott’s Business Revolution. However, I think that all of these other authors besides John Robb are missing a greater fundamental shift. This shift is the psychological effect of what happens when an individual actually recognizes their “super-empowerment” status. It is my prediction that a decade from now the psychological effect of having this much opportunity from anywhere in the world with a connection to the Internet will confer to our world culture a set of distinctions that hereto have been reserved only for the US, especially for Silicon Valley. That is, instead of packing up and moving to Silicon Valley to join a startup and make a lot of money (as quite a few of my friends that graduated with me from the University of Texas at Austin’s Engineering School), teams will form around the world quickly and aggressively, without regards to prior history, previous financial status, work location, or ethnicity.
When paired with Conceptual Shift #1 (the cost of production being lower), the super-empowerment of the individual entrepreneur will further ignite the Business Revolution that presently rumbles in the distance. In deed the means of production are being taken into individuals hands, this time with a distinctively entrepreneurial capitalistic flavor. [12]
As entrepreneurs liberate themselves, and create increasingly more humane work environments for themselves, I believe that the process of achieving self-actualization will not only be fulfilling their economic needs, but create a further depening of the shift to spiritual fulfillment. [13] Through the compounding of the power of low production cost, shifting wasted work, and psychological empowerment, the super-empowered individual will rise.
Chapter 4: Shift #2: Leverage the Most Brains to Win
“The cost of gathering information determines the size of organizations”
Coases’ Law
Ronald Coase
In 1932 Professor Ronald Coase of the College of Economics and Commerce in Dundee, Scotland made a profound statement, that with its key insight, won him the Nobel Prize in Economics in 1991. Note that it took 59 years for the world to recognized the profundity of his insight. Taken to its logical limit, his statement means that if information of where resources can be found , a single person could build a substantial business. In the previous chapter I reviewed a couple of examples of this conceptual shift- with the examples of the Four Hour Work Week and that confirm his insight.
However, this insight does not stop at building single person businesses. Building single person organizations is only one way to look at the insight that Coase gave us. Lowering information cost can drive cost down. Creating many new ideas can create higher profit margins. Competitive advantage use to come from having great resources (he with the best raw materials and vertical integration wins). It shifted to having the best barriers for entry (he with the best patents and smartest scientist wins). With the connectivity of the Internet, and manufacturers prepared to duplicate products in short times, profit margins no longer come from labor or historic barriers to entry… High profit margins now spring forth from the the best ideas. And the best ideas come from harnessing the most brains. To harness the most brains, individuals inside and outside of your organization must be leveraged. To do this, you will need a way to harness these brains.
"There are more brains outside your organization’s walls than inside".
Bill Joy
Although it might be quite obvious that there are more people on the outside of your organization than inside it (after all the world has over 6 billion people in it), his implication is much more subtle. What I interpret in what Bill says is that given that there are quite a few people outside of your organization, there is quite a big amount of innovation and ideas that your company is missing out on, that is, if you don’t leverage the people outside of your organization.
Leveraging people outside of your company is by far, the $60,000 prize, especially if we remember back to Marco Iansiti’s quote that strategy is increasingly becoming managing assets that are not owned. Iansiti, in his book, The Keystone Advantage, suggests to develop strategy as if it was an ecology- an ecology of customers, vendors, employees, and other stakeholders.
So what’s the point of this idea of leveraging the stakeholders around your organization into an ecology? The whole point is that other organizations are already doing this, which brings us to the force behind Conceptual Shift #4. Organizations in all walks of business have begun employing these changes, and these organizations are accelerating the pace of change for all industries. More than likely, your competitors, whether incumbents or two new guys in a garage, are employing these tactics, with eyes on eating your lunch. John Seely Brown and John Hagel sum it up in the following statement:
As change accelerates, something interesting happens- and it can be very unsettling to leaders of large, established institutions. All of a sudden, what we know- those “stocks” of knowledge- become less valuable. The life-time value of knowledge rapidly shrinks as the rate of obsolescence in knowledge increases. Now the game becomes using our knowledge as a way to connect more rapidly and effectively with others to create new knowledge. Stocks of knowledge become progressively less valuable while flows of knowledge- the relationships that can help to generate new knowledge- become more valuable. Rather than jealously protecting existing stocks of knowledge, institutions need to offer their own knowledge as a way to encourage others to share their knowledge and help to accelerate new knowledge building. [14]
Shift to Flat Organizations
The insight of Coases’ Law describes why over the last few decades there has been a shift towards “horizontal” or flat organizations inside of companies. Decision making has shifted “towards the edges” of an organization. John Seeley Brown and John Hagel, in their book The Only Sustainable Edge write that innovation is happening on the edges of an organization. Strategies that require centralized authority to make decisions to drive a business forward typically fail because of the business’s inability to respond quickly enough.
As an example to this, right now, the top problem that your business is facing has already been solved multiple times by many teams across the world. Finding the one individual or team that has the solution to the problem your business is facing can be a daunting , slow, arduous process, and if not done quickly, can cost great amounts of money or lost opportunity. A number of services on the net are changing the dynamics of finding the right answer. Whether through Google, e-, email list, a community of interest around the problem set that your company is facing can be sought out, and solutions implemented faster than many might suspect.
A few of the methods that are being used to find business partners faster are:
Example:
Insight:
Google, and other search engines
Straight google search results often times can lead to either business partners, solution ideas,
Digg, delicious, Slashdot
Community/ collective reporting sites where it is easier to see who is commenting (wtih what expertise) on different trends.
Blogs
Bloggers compiling pointers to their own or other’s expertise
LinkedIn questions
Ability to query your network with business questions; Ability to look up expertise through linked in connections
Facebook, and other social networking sites
Numerous communities of interest and communities of practice to connect into
Yahoogroups, and other email list
Specific groups assembled around specific topics of interest- with the ability to query the group around this community of interest.
Yet, because the cost of information and production has gone down, individual entrepreneurs around the world are taking advantage of this situation. Businesses that use to take hundreds or thousands of people to coordinate and deliver products can how be built with a minimum full time staff. Individuals taking the means of production into their own individual hands is tectonically shifting the economic and social outlooks of each entrepreneur. This ability to create so much value with so few resources does release chaos, it is as well, creating opportunity for more and more individuals.
Let’s look an example of how leveraging outside insight and team members resulted in a 100 fold increase in company value
$100 invested in this company in 1993 would be worth $3,000 now
How is it that an under performing $100 million company in 1993 is now worth $9 Billion? Goldcorp CEO Rob McEwen had an idea… it would be a gamble, and it would go in the face of traditional wisdom from the mining industry. The company ceased mining production, and was in trouble. Knowing that something radical had to be done, McEwen took a page from the open source software movement called Linux. If thousands of the best software developers could collaborate openly and produce a great operating system, there was a possibility that mining operations could be similarly revolutionized.
Disregarding industry wisdom and practice, Goldcorp took all of its “proprietary” data on their mines, and released it openly- unheard of in this industry. Over 400 megabytes of the most sensitive data was released as part of the Goldcorp Challenge. $575,000 was set aside for prizes for answering the question where the gold was located in their Red Lake Mine. As reported in Wikinomics: McEwen said "I'd like to take all of our geology, all the data we have that goes back to 1948, and put it into a file and share it with the world". "Then we'll ask the world to tell us where we're going to find the next six million ounces of gold."
What resulted was the best of the best minds in the world came to work on the problem. However, the $3.4 billion find winner was not lead by geologist, but instead a computer visualization company. Goldcorp’s loose network had allowed a diverse set of actors to work with them on finding the gold. Diversity of approach by many different actors had created the best answers possible.
By finding the right team to leverage their data, Goldcorp found a whole new way of finding more gold. Imagine being able to do the same with the biggest business challenge that you are presently facing.
How does this tie into into the way work is being done? Another quote, that I was originally exposed to in Jeff and Bryan’s Waiting for Your Cat to Bark? [15] is from Saatchi & Saatchi advertising guru Kevin Roberts where he said "The future belongs to those that can make emotional connections in the market" [16] The future will belong not only to the businesses that know how to advertise through emotional connections, but also to the businesses that understand how to widely tie into entrepreneurs’ productive efforts and leverage.
Yochai Benkler sums up the power of my Conceptual Shift #2 in The Wealth of Networks with the following:
“The over arching point is that social production is reshaping the market conditions under which businesses operate…. the more fundamental effect on the business environment, is that social production is changing the relationship of firms to individuals outside of them, and through this changing the strategies that firms internally are exploring. It is creating new sources of inputs, and new taste and opportunities for outputs. Consumers are changing into users- more active and productive than the consumers of the industrial information economy. The change is reshaping the relationships necessary for business success, requiring closer integration of users into the process of production, both in inputs and outputs. It requires different leadership talents and foci….” [17].
Consumers are becoming users, and co-producers of the products that they use. Some of these co-producers are taking advantage of the fruits of their work, and leveraging their entrepreneurial talents to the point that their behavior satisfies their social, economic, and self-fulfillment needs. Never before have so many people been empowered, and the world will never be the same.
Brown and Hagel point to flows of knowledge being the source to help accelerate new knowledge building. One question that this quote might prompt- is “What’s different than before?”- what is it that is obsoleting old stocks of knowledge, and accelerating new knowledge flows? To answer this question, we should look to David P. Reed.
David P. Reed’s title of one of his more recent articles sums up what is happening in his article called Weapons of Math Destruction, A simple formula explains why the Internet is wreaking havoc on business models [18] . Reed introduces in this article what is commonly being called Reed’s Law (more formally being called The Law of Group Forming Networks). Simply stated, Reed’s Law states a network that allows groups to be formed in it grows in value to the 2^n value. By saying the “value” of the network, we can summarize that as how useful is the network to a group of individuals that might choose to be a part of the network (and by being attractive to their use, tends to pull more people into it).
Essentially Reed tells us that by allowing participants in a network to self organize into groups, more efficient knowledge flows are created, and the knowledge creation process is accelerated.
So what do these two points of finding the right person easily, and the ease of collaboration create for us? When coombined with each other, point #1, finding business partners faster, and #2, the tools for collaboration and coordination being easier, we have the result of what David P. Reed calls “Group Forming Networks” or GFN for short[19].
Reed states:
"[E]ven Metcalfe's Law understates the value created by a group-forming network as it grows. Let's say you have a GFN [group forming network] with n members. If you add up all the potential two-person groups, three-person groups, and so on that those members could form, the number of possible groups equals 2n. So the value of a GFN increases exponentially, in proportion to 2n. I call that Reed's Law. And its implications are profound." [20]
Historically the “valeu” of a network of people (e.g. the phone network) was perceived to be related to the square of the number of possible connections that could be made in the network (this is called Metcal’f Law). That is, in a phone network, where any two people out of the whole N members that had a phone would be valued at N^2. But the Internet is different than the old phone network. Not only can we connect one on one, but we can connect as groups… and not just a few groups, but many different groups. Groups around every personal, hobby, or business interest that each one of us has. What “Reed’s Law” says is that the value of a network of people is not just based on the number of possible one on one connections, but the number of group connections that we can make. For me, this might include my interest in Aikido, the neighborhood that I live in, groups around my hometown of Austin, groups around green energy issues, groups around the disruptive nature of the concepts in this book, groups of book authors, groups of other startup entrepreneurs, my family group, and countless other groups. It is through being able to affiliate at low cost with these different groups that I, as an individual, can take advantage of the power of Reed’s Law. It is through being able to easily participate in these groups (some in the real world, some through the Internet) that I, as an individual, or my business, can take advantage of the power of these networks, as described by Reed’s Law.
An example of the power of Reed’s Law can be easily found online. Why is it, that if I ask you where you might be able to buy a book online, could you name three or four (or more) websites (e.g. , , Barnes and Nobles’ ) yet, when asked where can you find an auction online to buy and sell Pez gum dispensers, most people can only remember the name ? eBay dominiates mentally in this space mainly because it has become the most valuable network for buying and selling due to its group forming nature- that is, eBay has become the place that small groups of collectors of all types have found eBay as the place to meet and conduct commerce.
In Innovation and Entrepreneurship, Peter Drucker proposes the idea of unanticipated innovation. Drucker gives an example of how Macy’s knowingly resisted a shift in their business, because of the an ungrounded assumption about a ratio of what one type of sales “should be” compared to another type of product sales. [21] Drucker tells us that Bloomingdales’ on the other hand embraced the change that their data was showing them, and in the end, grew substantially because of this response to the market. (Macy’s eventually responded too, although their first reaction was to resist the change). Macy’s “common sense” assumptions did not server their business goals. Yet it took several years and an almost failed business to have Macy’s realize this, before Macy’s again aligned their business strategy with the market’s feedback on Macy’s previous strategy. Drucker argues that Macy’s had this chance at slow evolution of their strategy because at the time the market moved slower than it did in later years. The market does not move anywhere as slow now, twenty years since Drucker wrote this book.
For a simple, informative way to understand why companies, like Macy’s and others have difficulty in seeing where their strategies are failing can be drawn from psychology, called the Johari window. The Johari Window introduces to us the notion that there are blindnesses that all humans and organizations have. Some of this blindness debilitates its owners quite aggressively, causing difficulty for the individual or organization in question. Here is a simple diagram of the Johari Window:
[pic]
The Johari Window explains to us that there are four areas of awareness:
• Open: Things that we know about ourselves, that are known to others
• Hidden: Things that we know about ourselves, but that are not known to others
• Blind: Things that are known to others, but that we are not aware of ourselves
• Unknown: Things that are unknown to others and unknown to ourselves
In psychology, the Johari Window is used to support individuals to discover aspects about themselves in the “blind” quadrant. As said before, for an individual, some of these aspects can cripple or severely impair a person’s ability to function in the world, especially in a changing environment where the environment is not fully understood. This same is true for organizations that are organizationally “blind”- perhaps unable to see, or unable to act upon a situation or flaw in the organization’s strategy or actions.
In the past, organizations like Macy’s could hide their strategies- no one would be able to watch and see what was really happening…. But in the context of the transparency that the Internet brings to all business and personal transactions, an organization’s strategy choices or blunders have no place to hide. If the emperor is not wearing any clothes, on the Internet, the emperor will find out, and quickly, and the emperor’s folly will be shared round the world in record time.
Chapter 5: Shift #3: Attitude Shift Towards Working together
The third conceptual shift that contributes to the need for working within ecologies is being driven by major psychological changes about how individuals are defining themselves. Largely driven by Generation Y or the age 18 to 30 “Millennials”, the sources of personal identity have shifted, and are in the process of shifting further. I see this shift from what I call a “surrogate identity” to a “shared identity”, moving from having their identities defined outside of their control, towards each individual making active choices on how they choose to define themselves.
In this chapter you will find insight on this shift from the advertising world, from academia, from economic development, and from management consulting thinkers, all which are pointing to a fundamental psychological shift taking place on a massive scale. Although many of these thinkers’ fields are targeted at how ecologies can be utilized for entrepreneurship, one thing is clear across the them all- a shift is taking place, redefining how humans are defining who they are, what they do, and what affiliations that they make.
Simplistically speaking, identity has shifted from trying to reach some fake ideal of attainment at all cost to being the real, defining “who I really am” with no pretense. This shift will continue to have major impacts on the work that we do, the locations in which we choose to live, and how we choose to define ourselves through choices we make either through affiliations or product choices we make.
This shift is moving from the left column to the right column:
Surrogate Identity (previous)
Shared Identity (present, and future)
Finding a job, moving to the job
Choosing hometown first, then finding a job
“Me generation” - “I did it”
“We generation”- “We did it”
Separation
Working together
Individual hero superstar
Birds of a feather flock together
TV programs focus on the rich and famous
TV programs focus on reality
Looking good
Being who you are
I am my own cause
I focus on the following causes and concerns
Seeking the ideal
Seeing real action towards the goal
For the purpose of establishing that a psychological shift is happening, I will cover several other thinkers’ statements about this shift. My premise for this conceptual shift is if this is indeed a psychological shift for the individual, this will show up in the way work is done.
Work affiliation has changed, and continues to change
As has been widely reported over the last few years the historic corporate work affiliation of lifetime employment to in some cases, being a short term contractor at best. In order to compete, corporations have trimmed their head count, streamlined cost, and restricted benefits. Former employees and prospective employees have at the same time stepped away from the ideal of having lifetime employment, and have adapted in a way that what was perceived a risk of not having a job is turning into the opportunity of having flexibility. As he reported in The Rise of the Creative Class, Richard Florida states that historically individuals moved to jobs for opportunity. Historically location was not important, but job opportunity was the driver. Florida states that this has shifted that location supplants the corporation as being the number one organizing driver of why an individual might live in one city versus the next. Now, as reported by Rebecca Ryan, in Live First, Work Second, 3 of 4 young adults surveyed said that they chose where to live first, and then looked for a job in that location. Desire for lifestyle drives mobility, more than job opportunities or family locality. Moreover, Florida states that these days, employees are on average staying at jobs for three years, with adults under 30 staying at a job on average only one year. Defining oneself through a tie to one corporation no longer exist. Instead, young adults are much more likely to do project work on contract and to work on causes that they care about, versus working inside of other organizations. Because of this independence from being an employee, companies need to learn to create affiliations with this growing workforce through creating ecologies that allow these individuals to express their interest and affiliation with the ecology, but not be stuck in a specific job at the company.
Entertainment choices have shifted
The psychological shift is effecting what TV programs are being watched as well. The historic formula of “pull a few celebrities together to get a crowd” does not work anymore. Advertising executive Roy Williams states in his Monday Morning Memo about how the show American Idol beat out the 2006 Grammy Awards:
If you were somehow unplugged and didn't receive the newsflash, the combined strength of Paul McCartney, Madonna, U2, Mariah Carey, Coldplay, Faith Hill and Jay-Z wasn't enough to swing the hammer and ring the bell during this year's Grammy Awards. A frail 17 million watched these legends read their cue cards while a muscular 28.3 million cheered hopeful, nameless kids singing their hearts out on American Idol.
It was just one more indication of how we're moving away from the vertical hero-worship of Idealism to establish the horizontal links that mark an emerging Civic generation. [22]
Williams statement about “vertical hero-worship of Idealism to establish the horizontal links that mark an emerging Civic generation” elude to a presentation and a second Monday Morning Memo in which he defines these terms- explaining that each 80 years there is a shift from evolutionary social change to revolutionary social change.
1963 All Over Again
December, 2003: We're about to finish 1963 for the second time.
Forty years is how long a true "generation" stays in power, during which time social change will be evolutionary, rather than revolutionary. But in the waning years of each generation, "alpha voices" ring out as prophets in the wilderness, providing a glimpse of the new generation that will soon emerge like a baby chick struggling to break out of its shell.
Ten years prior to 1963, Jack Kerouac's On the Road and J.D. Salinger's Catcher in the Rye were the alpha voices that gave us a glimpse of the emerging Baby Boomers. The musical Alphas that rang out 5 years later (1958) were Chuck Berry and Elvis Presley. Then, at the tipping point - 1963 – we encountered the Beatles followed by the Rolling Stones and the world began rapidly changing its stripe and color. The passing of the torch from the duty-bound WWII generation into the hands of the Do-Your-Own-Thing Baby Boomers was officially underway.
AOL and are the Kerouac and Salinger of the new generation that will soon pry the torch from the hands of Boomers reluctant to let it go. Chuck Berry and Elvis Presley have become Tupac Shakur and Eminem, and the Baby Boomers' reaction to them is much like their own parents' reaction to Chuck and Elvis. But instead of saying, "Take a bath, cut your hair and get a job," we're saying, "Pull those pants up, spin that cap around and wash your mouth out with soap."
At the peak of the Baby Boom there were 74 million teenagers in America and radio carried a generation on its shoulders. Today there are 72 million teenagers that are about to take over the world. Do you understand what fuels their passions? Can you see the technological bonds that bind them?
Baby Boomer heroes were always bigger than life, perfect icons, brash and beautiful: Muhammad Ali... Elvis... James Bond. But the emerging generation holds a different view of what makes a hero.
Boomers rejected Conformity and their attitude swept the land, changing even the mores of their fuddy-duddy parents. But today's teens are rejecting Pretense. Born into a world of hype, their internal BS-meters are highly sensitive and blisteringly accurate. Words like "amazing," "astounding," and "spectacular" are translated as "blah," "blah," and "blah." Consequently, tried and true selling methods that worked as recently as a year ago are working far less well today. [23]
Popular celebrities these days come across as real and raw. As reported by , rapper Eminem had the following to say about himself: "My insecurities? I'm dumb, I'm stupid, I'm white, I'm ugly, I smell...I have freckles...Um...I'm short, I'm white, I'm not very smart, I wanna kill myself...My nose is crooked. Um...my penis is small. I'm f***ed.” [24] To get a sense of the shift, compare this with the painted face of Gene Simmons of the band Kiss just twenty years before. The “duty bound” generation that is developing, that Williams calls a “Civic Generation”, want no posturing or plastic from the organizations and causes that they affiliate. Ecologies, not hierarchies, foster the horizontal connections that Williams writes about.
Be Real
Several examples of organizations that have been already burnt by not understanding the new realities that this new generation demands. Following is a story about how Wal-mart failed to understand the transparency afforded by the Internet, as well as the net’s lack of acceptance of anything less than total disclosure.
The Emperor's Lack of Clothes Revealed: Walmart’s Folly
An example of how the Internet transparently reveals strategic folly, bloggers on the Internet revealed two of Wal-mart’s “flogs” (fake blogs). Direct from one of the bloggers that reported on Wal-mart’s reported misunderstanding of the new Internet reality: [25]
Edelman Reveals Two More Wal-Mart 'Flogs'
by Tom Siebert, Friday, Oct 20, 2006 6:33 AM ET
PUBLIC RELATIONS FIRM EDELMAN, WHICH last week pledged to be more transparent in its involvement with client-related blogs, Thursday revealed it is behind two more 'flogs,' or fake blogs, created on behalf of Wal-Mart.
Until the new disclosures, both blogs appeared to have been created and contributed to by independent supporters of the big box retailer, an Edelman client.
One blog appears on the home page of Working Families for Wal-Mart, the allegedly grassroots advocacy group formed by Edelman last December, which is "committed to fostering open and honest dialogue...that conveys the positive contributions of Wal-Mart to working families." The second blog is on WFWM's subsidiary site Paid Critics.
The Paid Critics blog is devoted to "exposing" links between unions and other vested interests that are "smearing Wal-Mart" through the media. Until yesterday, blog entries on both WFWM and Paid Critics were uncredited. Thursday, bylines were added to blog posts "in response to comments and emails."
Last week, the travel blog "Wal-Marting Across America" was shut down following revelations that it was the work of two writers paid by WFWM.
In one of my favorite explanations of the transparency, and underlying need, that the Internet is bringing to business transactions on the net, Donald Tapscott stated in a recent speech [26] “If you are going to be naked, you had better be buff.” The Internet is opening up every company and individual’s behaviors to scrutiny, and in most cases, to competition. Business strategies that formerly allowed organizations to “hide” what they were up to will no longer stand (think back to Johari’s Window for a moment). The time for all individuals and organizations to recognize the new transparent world that we are all stepping into has already come, whether it be for an individual or for an organization the size of Wal-Mart.
The Good, Bad, and Ugly About Transparency
The good news about this coming transparency is that the same ability to create transparency that might out and amplify nefarious behaviors by individuals and organizations is that this capability has a positive side as well- companies and individuals can use the same immediate action on the Internet to amplify positive strategies as well. The same capability can be used to harness and seek new solutions to pressing business problems. Yet, as we have established above, transparency is just the start of where these trends are taking us. Instead of presenting a facade set of affiliations as Wal-mart did, be open, and be real.
Talk is cheap. Action counts
The Civic Generation that Williams writes about expresses affiliation to the organizations, causes, and concerns that they feel connected to… and they take action. One sign of this can be found in the number of organizations that have been created in short order over the last couple of years for taking on large, complex problems in the world, whether they be environmental, health, peace, or work related. Some of the examples of this include , , , , and even websites that allow citizen created media like . Notice that these organizations allow the “Civic” generation to get involved, and to play an active part in solving large problems. This comes from the disposition of the Civic generation towards action. Sending a check to a televised cause is no longer enough for this generation. To harness this disposition whether for community development, business leverage, or cause support, an ecology that allows this Civic mindset is required. Ecologies that allow individual voices be heard and sing in harmony with the members of the business or cause will dominate over business fake facades in the future.
Chapter 6: Shift #4: Communication Technology Shift
“Whenever a communication medium lowers the cost of solving collective action delimas, it becomes possible for more people to pool resources. And ‘more people pooling resources in new ways’ is thie history of civilization in … seven words.”
Marc Smith[27]
The final conceptual shift that I would like to draw your attention to has to do with technology, both in tools and practice. Most readers would immediately think that the point to be made would be around “Web 2.0” technologies. Yet, to stop at the changes that are happening in the tools of websites, cell phones, and new devices overlooks significant technological progress in the way these tools are used- the practices. Web 2.0 technologies, many of which could have been fashioned together with the available resources as far back as 1997 or before, do not in themselves constitute the major shift presently happening labeled “Web 2.0”. To think that the technology tools themselves are causing this shift is to miss the point of what has already begun happening.
Focusing on the tools themselves misses the point that the technology was available several years ago to do many of the items that are now being called “Web 2.0”. It is the technology literacy now held by the majority of the bulk of the Internet, along with the attitudinal shifts mentioned in Chapter 6 that are driving this new behavior. Users now expect to be in the conversation, not just to listen to it. Website operators that focus on broadcasting to their users, and that do not have a way of engaging their customers in conversation will be largely ignored. The principle at play here is to not just look at the new technologies that vendors are releasing onto the network, but how are these tools being utilized. Observers should watch not just for new tools, but for the new practices that are employing the tools. And the best (and pretty much only way) to do so is to create an ecology in which to watch this emergence of practices around new tools.
Social networking kinda feels like websites in 1995
It is through the frame of view that I just presented about looking for practices and tools when considering technology shift that you should consider what I am about to say… Social networking through Facebook and Myspace, among others, feels like the simple website builders like Tripod of 1995. One of the first places that an individual could set up their own website were these multiple page websites, one of which was called Tripod. Many individuals started by setting up a simple page. Most of these pages were awful, some of them were useful. But many individuals set up these sites, not for corporate or other organizational reasons, but for social reasons- to show their friends some pictures, to put schedules online for easy access, or other random statements. Most of the sites did not have a real business purpose.
A similar evolution is presently happening with social networking websites as well. Initially driven by Friendster in early in the 2003-2004 timeframe, and then Myspace through 2005-2006, now by Facebook, what started as social interactions are now becoming productive work interactions… yet this is not because of the software behind these websites- it is because of the sophistication of the practices that people use to interact with each other through these medium that really count. And it is the individuals that are actively experimenting with these new practices that are reaping the biggest rewards, like 17 year old self made millionaire Ashely Qualls who gives away free templates at her website . [28]
It is through the most experimentation that the practices are being developed… Ashley Quails prepares for a lifetime of retirement while most business people look to IT to put up a new website. Through building an ecology around your business, you can find the practices that take simple technology and create value in it… but it is only through either building or actively participating in an ecology, a community of practice, that these new practices will be found… IT is thinking about the new technology… it is the business that learns how to apply the technology that wins, not the business that builds a new technology.
So what is it that is happening that has Facebook taking over where Myspace left off? Facebook has deepened the type of interactions that are possible between it and its ecology members by presenting the ecology an API- an Application Programming Interface- that allows ecology participants to build systems directly connected to Facebook’s systems. It is through this deepening of connection (as well as measured trust) through which Facebook’s ecology experiments, and finds new tools and practices that produce greater value. As reported by CNN:
Dave Morin, Facebook's director of platform, told the Developer Meetup audience via videoconference that more than 40,000 developers have requested to be part of the project, around 1,500 applications have been produced so far, and some of the most popular went from zero to 850,000 users in three days. "This is unprecedented in the history of the Internet," Morin said to the developers.[29]
Again, remember that websites in the mid 1990’s started out as a set of hobby projects, with very unsophisticated websites. Now the web dominiates the way business conducts business. Aggressive, empowered entrepreneurs will engage group forming networks through social networking sites like Facebook to further transform business. Don’t expect ripples… prepare for tsunamis.
Youth versus Wisdom
In chapter 5 I reviewed the attitude shift that has the Millennials shifting how they create their identity differently than previous generations. Another key insight into how this younger generation is shifting the technology practices of adopting new tools. In my work of assisting companies to adopt new leading (and sometimes bleeding) edge technologies, I have noticed a world view that typically is held more for younger individuals than older individuals in the clients that I have worked with. Of course, there are no rules about this, but more of a general feel. Let me explain this through use of a metaphorical question. When working with younger employees, typically the world view question that a younger person is asking when confronted with a new technology is “How can I use this?” whereas older employees typically ask the question “What is it?”. In fact I can remember one distinct set of meetings that drastically emphasized the differences upon introducing a new technology… the older employees of this organization wanted to have meetings defining how a new program was to be used, and what it meant. Younger employees just hopped in… not going to the meetings, but just picking up the technology and utilizing it, with some of them finding and creating practices that had not yet been thought up as possible usage scenarios. Great resistance came from the two groups as one group did not understand how the second group (the youth) got to their practices for using the tools, because they were not defined methodologies. Yet the best usage practices of this technology came from the younger employees and their experimentation. I believe that this same experimentation mentality of “how can I use this” shows why most of the social networking activity is being done by the younger generation right now, and why in a few years we will look back and understand that the best ideas came from their experimentation.
The Unexpected Communication Shift
Tectonic communication technology practice shifts are not just coming from the youth on social networking sites, or from what is considered traditionally to be technology (computers, cell phones, websites) at all. A separate set of practices are developing from proponents of dialogue as well, and continue to accelerate their impact on business. Reintroduced by Peter Senge in his book The Fifth Discipline: The Art & Practice of The Learning Organization, Senge introduces dialogue through the work of physicist David Bohm:
Bohm, a leading quantum theorist, is developing a theory and method of “dialogue” when a group “becomes more open to the flow of a larger intelligence.” Dialogue, it turns out, is a very old idea revered by the ancient Greeks and practices by many “primitive” societies such as the American Indians. Yet, it I all but lost to the modern world. All of us have to have some taste of dialogue - in special conversations that begin to have a “life of their own,” taking us in directions we could never have imagined nor planned in advance. But these experiences come rarely, a product of circumstance rather than systematic effort and disciplined practice. [30]
Dialogue capabilities and practice have been developed by a number of individuals and organizations including physicist David Bohm, professor William Issacs, Marshall Rosenberg[31], Edward de Bono[32], and organizations like Vital Smarts.[33] It is my belief that in the coming years we will see an explosion of activity between the trends that are being lead by dialogue practitioners and the efforts that are happening in social networking systems, with the result being not just learning organizations but learning ecologies taking us in directions we could never have imagined nor planned in advance.
Incomplete implementations of The Learning Organization
With over a million of copies in print since 1990 Senge firmly has popularized the concept of the Learning Organization, yet I believe that most organizations have failed to understand what the learning organization represents in the context of the Internet and social networking technology. To explain, let’s look at the work of US military strategist John Boyd. Boyd is known for revolutionizing US military strategy by applying logician Kurt Gödel’s Incompleteness Theorem to explain how military organizations can compete against adversaries. Simply put by Boyd an organization “cannot determine the character or nature of a system within itself.” [34] Or… as one of my friends has said, if you are in a bottle, it is hard to read the label. [35] Individuals and organizations have a hard time figuring out which of their assumptions about the world are wrong, and fail often times not because of lack of effort, but because of lack of insight. Think back to the situation about the “smart” Coca Cola executives that decided New Coke the direction that they should go. Millions of dollars later, and after quite a few upset customers, old Coke was brought back.
John Boyd’s strategy to win was to physically, mentally, and morally isolate adversaries, while deepening his teams connections along the same lines. Isolation from complete information put his adversaries at risk, and typically into disarray. What this means back to the model of the Learning Organization is that it is not good enough to have good internal connections between members of a company, but that explicit connections into the outside world are required. What this says is that there is no way to know if assumptions are correct for a business strategy without getting significant outside input. Building a business ecology around your organization is one way of ensuring that you are getting this input.
Dialogue and Participation not Broadcast and Control
When looking of how to leverage the shift in communication technology tools and practice, shift from trying to broadcast messages and control individuals to dialoguing with them through the systems that are put in place. Members of an ecology can not be dominated… or they will leave and isolate the ecology. Leverage communication tools and practices to create knowledge flow, creating greater connections to the surrounding business environment, or suffer the consequences of the large established institutions that dinosaur themselves into history.
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[1] accessed September 21, 2007
[2] Texas Building and Procurement Commission website
[3] History of YouTube.
[4]
[5] Enterprise 2.0 Event, June 20, 2007
[6] footnote with link to business 2.0 article
[7] This idea of measuring waste flows to measure production comes from the Toyota Production System.
[8] Available as of August 15, 2007 at .
[9] accessed September 21, 2007. This article was published August 18, 2005 so certainly the numbers are higher at the time of this writing
[10] accessed August 15, 2007
[11] Page 14 of Waiting for Your Cat to Bark?
[12] footnote- I see the opportunity for a much wider group of people to play a part of this revolution, and I intend to help them into that- especially with the 86% of the world that has not solved these basic needs yet. It is my belief that through the introduction of the OLPC project and other platform projects around the world that the world will have a new methodology for extending solutions to each other for the bottom part of this pyramid, while allowing top part of the pyramid as well to be possible.
[13] but this is a topic for a different book.
[14] p. 11 Creation Nets: Harnessing the Potential of Open Innovation by John Hagel III and John Seely Brown, April 2006
[15] p. 112 of Waiting for Your Cat to Bark
[16] quote originally from Kris Oser. “The sisomo of Kevin Roberts at Ad:Tech: Saatachi & Saatchi CEO as New Age Guru,” Interactive News, (November 8, 2005). , (accessed August 15, 2007)
[17] p. 127 The Wealth of Networks
[18] accessed August 19, 2007
[19]
[20] David P. Reed's, "The Law of the Pack" (Harvard Business Review, February 2001, pp 23-4)
[21] p. 37, Peter Drucker, Innovation and Entrepreneurship
[22] accessed September 20, 2007
[23] accessed September 19, 2007
[24] accessed September 19, 2007
[25] , accessed August 15, 2007. There are several other reports on this action, two more which can be found at and
[26] Donald Tapscott Enterprise 2.0 Keynote 2007
[27] Relayed by Howard Rheingold, author of SmartMobs: The Next Social Revolution, reflecting on an interview with Marc Smith of Microsoft
[28] accessed September 20, 2007
[29] accessed August 16, 2007
[30] p. 239 of The Fifth Discipline: The Art & Practice of The Learning Organization by Peter Senge
[31] Non-Violent Communications by Marshall Rosenberg
[32] Six Hats by Edward de Bono
[33] see Crucial Conversations by Vital Smarts
[34] I have yet to find a really good tet about Boyd, but I have found the following website accessed September 21, 2007 to be a particularly good resource on Boyd and his philosophy.
[35] Advertising executive Roy Williams in classes at the Wizard Academy has said this several times.
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