Characteristics of Future-Proof Companies in the Age of the Collaborative Commons

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Discussion

Excerpted from Simone Cicero:

"It’s some time now, therefore, that I wonder what it means to create a futureproof business, and recently I have often wondered if this is still a topic of interest. One thing that I pondered often lately is the trends related to S&P500 dynamism. If you look at the history of this index you find that, while in 1958 a company could expect to stay in the S&P for an average of sixty years, today the average number of years is decreased to 18 (and is decreasing regularly). So: what does it mean to prosper? Is it about having a long life? Is it about adaptability? And what about the brand when products become platforms?

Graphic at http://meedabyte.files.wordpress.com/2014/04/resilient-enterprise-11.png


Three Characteristics

What emerges clear and strong is a clear demand to companies: to collaborate more with society, creating adaptive solutions that are enablers of relations, economies, trade and creation of value and wealth.

Given this perspective, companies need to focus on three main objectives:

  • To become a generative environment by enabling innovations (as Enabling Platforms)
  • To achieve energy and resource and long-term ecological balance (Ecological Equilibrium)
  • To implement a chain of profitability that is fairer, equitable and sustainable throughout the whole Value Chain (Equitable Profiteering)


ENABLING – ECOLOGICAL – EQUITABLE

The first principle (Enabling Platform) responds to a paradigm that is finding growing success: that value is user-defined and user-built, in a personalized way. The company needs to create a platform that allows users to create their finished product and, in some cases, a product or service to be offered to another component of the ecosystem that can consume it.

The second (Ecological Equilibrium) reflects the need to ensure that company’s processes are sustainable in view of a sharp rise in energy costs and externalities that, beyond Exxon’s considerations, is not just a predictable, but also desirable.

The last issue, that of Equitable Profiteering, relates to the ability to build supply chains and distribution patterns of production that are co-operative and where the value and profits generated are shared by many stakeholders and spread over the entire value chain.

Application of this transformation effort in companies covers at least five different levels:

  1. Products & Services
  2. Knowledge
  3. Organization
  4. Governance and Ownership
  5. Infrastructure


The Five Levels of Adaptation

Products and Services

At this level is becoming increasingly clear, as I said, that transforming products into enabling platform is today’s must: the firm produces bricks that the ecosystem of users use to create new value.

The transformation concerns the transition from a linear paradigm: “I produce, you consume” to the multi-sided paradigm meaning which users produce and consume on top of the platform that is responsible for the facilitation of relationships and transactions (in relation to this please look into the platform design toolkit).

A very interesting example is that of Google’s Project Ara: the project for a modular and open source hardware Smartphone, which brings many promises to revolutionize the production of consumer electronics from a more sustainable and smarter point of view. These days, Project Ara team released the first Module Developer Kit: a manual that includes all the technical specifications of the platform and the links to files for download. That’s a first step toward a smartphone platform developed in an open and collaborative way (I’ll keep an eye on this project ​​and will keep you informed on this).


Knowledge

Beside the generation of substantial data, information and metrics and their interpretation, resilient companies must shifts focus on “awareness“. Although Agile and Lean practices challenge organizations to operate on short batches and apply continuous adaptation and changes; futureproof companies, also adopt longtermstrategic thinking based on situational awareness. Strategic mapping can be a fundamental tool when operating in markets based on exponential change, such as today’s markets. With these (exponential) dynamics playing in the game if you do not understand market changes very early and very clearly, you are likely to experience effects of changes when it is already too late and the disruptionis therefore inevitable. That’s a pretty common pattern with exponential processes: you don’t notice them until they’re too big to be controlled. So, to follow the words of Simon Wardley (whose blog I’ll never praise enough) “Business is a game of chess”, the important thing is to learn how to play: to study the moves of other players, assess their in advance and plan your own.

Understand how a given strategic choice, such as releasing a previously proprietary technology in open source, or transforming a product into aservice (as is the case with auto manufacturers now stepping into car sharing) can impact your target market is a matter of value chain analysis and understanding.


Organization

This is certainly the era of the end of Fordist micromanagement and siloed organizations: you may already know that the largest and most innovative companies in the world today have a manager-employee relationship who is even 1 to 60 (as for Google).

More practically some have basically no management, as in the case of Valve, that is famous for having enclosed the principles of its un-management practice in a wonderful and really must read “Employee Handbook” available herehttp://www.valvesoftware.com/jobs/index.html

The horizon of the experimentation in this field is really very exciting. A few weeks ago there was much talk of Holacracy - in correspondence of Zappos’ announcement about the adoption of the same – but the pioneers of anti-fragility and fluid management are scattered around the world.

Just a few days ago, Cocoon Projects – an innovative Italian service firm that adopts the principles of lean, co-creation and openness – was awarded as a winner of MixPrize Digital Freedom Challenge by virtue of its original, stripped down and innovative management process that leads to the “liquefaction of rigid controls and structures that create bottlenecks, silos, hallway, misalignments and the myriad of other organizational pathologies”.

Interesting and related news from New Zealand is instead the birth if Loomio an open source platform to foster collaborative decisions making in organizations that is born from the collaboration between activists of the Occupy movement and the network of social enterprise Enspiral.

As we can see, models come both from a changing corporate world (such as with Valve or Cocoon Projects) and from the world of the social enterprise, sometimes producing even more ambitious visions like that of Open Value Networks: open networks of value creation that provide all the functions of a “corporation” (such as accounting, asset ownership, etc…) but in an open manner and according to the paradigm of collaboration. Basically, Open Value Networks apply the open source model to the corporate: they embody a protocol that is capable of coordinating open enterprises, around a common production infrastructure and facilitate the reuse of assets produced within the network, taking care of the fair distribution of the profits generated on top of common resources.


Ownership and Governance

Can real innovation in management exist if the Firm governance model is old, monolithic and unchanged? And what about the ownership structure of the same?

Indeed some of experiences presented here show that it is technically possible to innovate a management model without affecting the private capital structure behind it. For example, Google and Valve are privately held companies with different types of investors with no particular innovative ownership structure (details regarding employee benefits packages mechanisms that may operate are undisclosed).

A massive wave of innovation regarding ownership is already in place and is empowering several experiments of cooperative management such as those represented by Las Indias (http://grupolasindias.coop/)- a Spanish transnational cooperative network – or the English United Diversity (http:/ / uniteddiversity.coop/).

Since there are countless examples of ownership experiments, again I suggest the reader to watch the talk by Marjorie Kelly, author of “The Emergent Ownership Revolution” whose transcript you can find here. A passage will help understand how changes in ownership can play a key role in generating a different economy:

“There are many changes needed to get us to a new economy – political, cultural, and technological. We’ll need changes in regulation, changes in personal values system. But there’s a critical element we aren’t talking about enough, and that is ownership design. As one colleague put it, “Ownership is the original system condition.” Ownership is how wealth is created, and it determines who gets that wealth; it determines who controls the economy.”


Infrastructure

Another fundamental aspect in the transition towards a low energy, efficiency and agility based company refers to the ability to rely on existing infrastructures and not create new ones. This approach is essential not only from a resilience and efficiency perspective but also to generate a rapid and exponential growth while keeping the “zero marginal cost“. Leaning on the existing makes it possible to grow quickly and to exploit the so-called “idle capacity” made ​​of untapped resources. Once again, the clear example is that of AirBnB, which has created a business that now nearing $10B literally out of nothing (or better from your couches and your vacant room) and is now capable of rivaling the largest hospitality chains in the world in terms of nights.


In conclusion

Which role for companies?

Therefore is increasingly clear that we need a radical rethinking of the mission of capitalism and of the nature of the Firm because as they have a too much important role in shaping our future in this delicate moment.

In a very nice post on his blog, french blogger Thierry Debaillon frames this moment very well:

- “beside culture and structure, organizations have to rethink about their nature […] For more than a century, they have grown on top of our society, draining tangible and intangible resources for their own sake, up to the point they have become totally closed systems, subject to growing entropy. Instead of fighting for a shrinking piece of profit, organizations have to learn how to be useful again to the society which nurtures them, beyond shareholders’ interests, and to become the thriving engines of a global circular economy” (http://meedabyte.com/2014/04/22/welcome-to-post-capitalism-plus-5-layers-of-corporate-transformation/)