Rethinking Business in a Platform Economy
I am on my way to Australia.
I will give presentations on “doing business” and the “future of work” in a digital age.
To pass the time, I was browsing the web in the airport lounge. Aimlessly following links until I came across something interesting.
I ended up “finding” this 2010 talk by US sci-fi novelist, Bruce Sterling, in which he describes the challenge of being a “creative artist” in a globally networked world.
Atemporality for the Creative Artist_An unrepentant sympathizer took the trouble to type up a full transcript of my speech at Transmediale 10 on February…_www.wired.com
One part really stood out for me. Sterling’s suggestion that the “analog system” of “our parents” has been “shot full of holes”.
To describe the newly emerging social order, Sterling identifies two symbols — the “ruined castle” and the “favela slum” — as metaphors of life in a digital age.
The settled — yet crumbling — authorities of “our parents” (the castle relics) and the fragmented, chaotic, technology-driven spaces that we now all inhabit (the vibrant, but unpredictable favela).
Sterling’s takeaway? We now live in a new age of “Gothic High Tech” and “Favela Chic”.
Sterling provides some ideas about how “creative artists” might navigate this uncertainty. It is a positive message (which I like) of freedom, radical creativity and new opportunities.
Sterling gave this talk in 2010, but what has happened in eight years. What have business (and workers) done in order to flourish in Sterling’s new world of crumbling monuments and chaotic ghettoes?
“Become a Platform!”
For me, the answer is very simple. In order to remain relevant, more and more companies have embraced the “platform idea”.
Whenever I make this point, people assume that I am talking about Uber-type companies, such as E-Bay, Airbnb, Alibaba or blockchain platforms.
Although I am a great believer in business models that use technology to facilitate peer-to-peer transactions, we should realize that there is so much more to platform companies than facilitating transactions.
We need to broaden our understanding of what makes a platform company special.
For example, a platform company — in this broader sense — collaborates with and incorporates technology from multiple partners (other corporations (both large and small), nonprofits, and educational institutions) to build an open and inclusive ecosystem that facilitates innovation and drives business performance.
A platform company is not only about facilitating transactions, but about delivering innovation via this more open style of organization.
And in order to be successful, everyone inside a company (both technologists and non-technologists) needs to embrace a platform culture.
We can easily bring this back to Sterling.
The old hierarchical companies are the crumbling “ruined castles” of “our parents”. They may live on as monuments to a disappearing world, but it seems unlikely they will ever be relevant again. Reverence of their past triumphs makes little sense. Especially when the future is so exciting.
Instead, the “favelas” of the business world are the platforms. They are the fluid and chaotic spaces that focus on building messy, yet creative, networks. They take inspiration from wherever and whoever they can find it in order to create and deliver innovation.
Of course, this is risky. And some — perhaps many — of these experiments in open collaboration will fail. But I don’t see a better alternative to the open-ended possibilities of messy creativity.
Three Strategies for Collaboration in the Digital Ghetto
Here is a non-exhaustive list of strategies for achieving this goal.
(1) Embrace the “Maverick”
Consider Netflix.
In 2009, its founder, Reed Hastings, pointed out that too many corporations have “nice sounding” value statements that emphasize things like vision, excellence and creativity. However, he made the point that these “values” are often not what is really valued within a corporation. All too often, they are just empty window dressing.
To really see the “actual company values” as opposed to the “nice-sounding values”, Hastings suggests we look at “who gets rewarded, promoted or let go”.
How Netflix Ticks: Five Key Insights From the Company's New Corporate Culture Manifesto_Netflix had long been famous for its "freedom & responsibility" slide deck, which the company first published in 2009…_variety.com
I like this suggestion.
All too often “mavericks” or “deviants”, either inside an organization or as partners of an organization, are “let go”. Conformity with pre-defined structures and settled roles is prioritized over more unsettling forms of creativity.
Particularly, when that creativity creates tensions with those pre-defined structures and settled roles. And this will often happen, as it is in the very nature of creativity to be dismissive of the past and disruptive in the present.
A more forward-thinking approach involves embracing mavericks and recognizing the value they can potentially bring to an organization. In turn, this can help to attract talented people as it promises a much greater degree of freedom and responsibility.
Indeed, the opportunities afforded by such freedom and responsibility can help make corporations attractive (again). After all, in the absence of this type of culture, the most creative young talent will simply leave.
(2) Resist Assimilation & Grow Via Mutual Learning
By this I mean, that platform companies should not seek to change those with whom they collaborate and that the partners — be they organizations or individuals — should resist losing their own distinct identity as the collaboration deepens.
Take the example of Amazon and Zappos. Amazon acquired Zappos, an online shoe retailer in 2009 for about $847 million, its largest acquisition at the time. Both companies had a reputation for innovative — and possibly controversial — organizational approaches that drive employees hard. Zappos had earlier instituted a system of “holocracy” that scrapped management positions and left it to employees to independently decide how to get the work done.
Unsurprisingly, this organizational principle was not for everyone and the company itself admitted that 15–20% of employees left the company, dissatisfied with the “flatter” operating environment.
Furthermore, Zappos instituted a “pay-to-quit” policy in which they offered all employees a reasonable dollar amount to quit. The logic of “The Offer” seems clear. If an employee is not 100% committed to the firm and its “flat” culture, then the company would rather “pay now than pay later”.
The interesting thing about the Zappos example is that after the acquisition Amazon did not seek to change Zappos’ internal organizational culture. Quite the contrary, aspects of Zappos became part of the much larger Amazon ecosystem, in the sense that the “pay to quit principle” was adopted elsewhere within the Amazon group.
Why Amazon Bought Into Zappos's 'Pay to Quit' Policy_Helping employees quit, and literally paying them a quitting bonus, may seem insane, but many leaders are finding it…_www.inc.com
Instead of Amazon assimilating Zappos, the Zappos way of working was retained, assessed and — ultimately — integrated into Amazon’s own culture and practice. In turn, this flatter, more open style of relationship makes it more likely that the founders will stay, other talent will be attracted, and that — in consequence — the startup maximizes its chances of long-term growth.
In this way, Amazon used the acquisition as a successful learning opportunity from which they could grow as a company.
(3) Let “The Vision” Drive Everything
In a platform context, the main task of business leaders is to reiterate constantly the vision of the company.
In the case of Tesla and Elon Musk, for instance, the vision is “making the world a better place” by accelerating the world’s transition to sustainable energy.
Elon Musk's vision for the world's transition to sustainable energy_Energy is fundamental to economic systems and, indeed, to all life. Elon Musk has always insisted that Tesla's ultimate…_www.teslarati.com
Indeed, for the last ten years, Tesla has been on a clear and pre-defined journey from the low volume, high priced electrical Roadster, via the “mid volume”, “less-high priced” Models S and X, to eventually the high volume and low-priced Model 3. The final leg of the journey is the seamless integration of solar power with battery storage.
Tesla’s recruitment policy and working environment also plays a crucial role. The recruitment of new staff, for instance, is not based on prior industry experience, but on a demonstrated ability to solve complex problems under conditions of uncertainty.
In this way, problem-solving capacities are seen as a crucial proxy for future success and achievement. This model is carried over into the work space by creating small teams who work “cheek-by-jowl” to identify relevant solutions to particular problems and by making innovative problem-solving — “improving things” — the basis of staff bonuses.
It should therefore come as no surprise that Tesla outperforms its competitors in terms of the creation of market value per employee.
The vision of the company is operationalized in every aspect of the company’s activities.
Australia
The aim of any platform is to facilitate an open and inclusive style of collaboration in which opportunities for mutual learning are emphasized.
There are many other things that can be done to achieve this goal, but the above strategies can provide some hints. In this sense that we can talk of a large corporation “borrowing the startup genie’s magic”.
After all, each of these strategies and goals can be more easily achieved in a younger, less complex organization that is staffed by individuals that intuitively understand the values and practices of life in the metaphorical ghetto.
I really don’t see a better way.
This will be my main message for the events in Australia.
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