Big Shift

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JP Rangaswami:

'There’s been a material, long-term shift in the nature and structure of business, whom we conduct business with, how we conduct that business. The shift covers many trends we have sought to document, understand and analyse: globalisation; demographic changes; the evolution of the digital infrastructure, of mobility, of ubiquitous connectivity; partnering, outsourcing, offshoring; open platforms and innovation; social networks, relationships and interactions; collaboration, co-creation, crowdsourcing and collective intelligence.

It’s been hard enough to bring these apparently disparate trends into one unifying narrative. It’s been even harder to quantify the impact of the trends, particularly when seen as a coherent whole. The Big Shift is the narrative the authors give to this whole phenomenon, and the Shift Index is their way of measuring the impact of the shift. As a result of the shift, competitive intensity has increased considerably over the years, and return on assets has fallen sharply over the past five decades or so. Companies that want to succeed must learn to innovate “institutionally”, taking advantage of the tremendous advances made in digital infrastructure, transforming themselves from focusing on “scalable efficiency” (operating cost reduction) to “scalable learning” (reducing the cost of adaptation and change).

The Big Shift is characterised by three “waves” of fundamental long-term change. The first wave sets up the foundations, leveraging the digital infrastructure and where appropriate the significant shifts in public policy that have eroded barriers to entry, participation and movement in most arenas. This accelerates change and intensifies competition, moving the source of economic value of companies from knowledge “stocks” to learning “flows”; static, codified knowledge is replaced by distributed tacit knowledge and collective intelligence, and, more importantly, the ability of the firm to generate new knowledge, to disperse that knowledge, to iterate it and learn from the iterations. The second wave concentrates on these flows and the ways they can be facilitated and amplified.

These two waves are necessary, but by themselves are not sufficient to deliver the radical performance improvements needed to respond to the Big Shift. The third wave is about that response, how institutions will have to learn to innovate at institutional level, truly transform themselves from the foundations outwards; how they will move from scarcity-thinking to abundance-thinking, from diminishing-returns models (based on knowledge stocks and experiences) to increasing-returns models (based on knowledge flows and learning); how the environments and participants and techniques necessary for this will manifest within and beyond the enterprise boundary.

The Shift Index therefore consists of three sub-indices, related to each of these “waves”: the Foundation Index, the Flow Index and the Impact Index." (


The Big Shift and the Social Enterprise

JP Rangaswami:

"The concept of the Social Enterprise is underpinned by the cloud: a public digital infrastructure based on open standards, scalable and elastic. In effect, it represents the Foundation “wave” of the Big Shift.

The core of the Social Enterprise is connectivity, bringing about collaboration and co-creation; customers, staff, partners and products are all connected, using common “language”, facilitating the transformation of the organisation from experience-based to learning-based, from stocks-based to flows-based. In effect, this represents the Flows “wave” of the Big Shift.

The construct of the Social Enterprise is institutional innovation: innovation in engagement, in sales, in marketing, in service, in product engineering and design. The scalability and flexibility of the infrastructure, combined with the ease of identification and access to the right resources at the right time, allow the enterprise to find areas of high growth potential simply, effectively and affordably.

The networked character of the Social Enterprise means that innovation takes place at the edge of the organisation, where customers and partners come into contact with staff; processes are created, repaired, eradicated by people who use them every day, who derive value from them every day. When areas of high growth potential are identified, the cost of building products is kept low because of the cloud infrastructure; you can rent the compute, storage and bandwidth needed; using internet-quality development processes, product launches take place quickly; using social media monitoring tools, feedback loops are effective and meaningful.

The Social Enterprise is a self-reinforcing process where growth opportunities are identified close to the market and in conjunction with partners and customers, where the right people and information is made available at the right time and in the right place, where experimentation is economically sustainable, where true learning takes place, where the quality of the feedback loops is unsurpassed. It works well for existing products as well, not just by reducing the cost of change, but by allowing exception handling to take place using the power of connected communities, within and without the enterprise." ((

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