Social Business Design

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Contextual Citation

2. Esko Kilpi in an essay on Medium, “The Future of Firms,” reflecting on economist Ronald Coase’s theory of 20th century business organization [1]:

“The existence of high transaction costs outside firms led to the emergence of the firm as we know it, and management as we know it….The reverse side of Coase’s argument is as important: If the (transaction) costs of exchanging value in the society at large go down drastically as is happening today, the form and logic of economic and organizational entities necessarily need to change! The core firm should now be small and agile, with a large network.

The mainstream firm, as we have known it, becomes the more expensive alternative. This is something that Ronald Coase did not see coming. Accordingly, a very different kind of management is needed when coordination can be performed without intermediaries with the help of new technologies. Apps can do now what managers used to do.

Today, we stand on the threshold of an economy where the familiar economic entities are becoming increasingly irrelevant. The Internet, and new Internet-based firms, rather than the traditional organizations, are becoming the most efficient means to create and exchange value.” (


David Armano:

“Imagine if a company like GM, was at the core “social”. Not just participating in “social media”—but through every part of their business ecosystem, were connected—plugged into a collective consciousness made up of ALL their constituents, from employees to consumers to dealers, to assembly line works etc. What if big organizations worked the way individuals now do. We’re actively using cloud services, mobile, networks and applications that offer real time dynamic signals vs. inefficient and static e-mail exchanges. In short, imagine if what makes “Web.2.0″ revolutionary was applied to every facet of an organization transforming how we work, collaborate and communicate? We think this is possible. And we’re calling it “social business design“.” (


1. Marina Gorbis:

Emergence of Ecological/Epidemiological View of Markets and Behaviors. "Recently, scientists have begun to apply an epidemiological lens to many social phenomena, such as happiness, obesity, criminality, health behaviors and others. Turns out that what we have traditionally seen as individual behaviors are shaped by others.

Understanding the larger ecosystem is required for informed decision-making in the business sector. Prepare for the next generation of organizational and industry consultants to come equipped not with MBAs but with graduate degrees in sciences as diverse as zoology, biology, ecology and others focusing on complex interdependences of actors and resources.

Rise of Amplified Individuals. Two years ago, Time magazine’s Person of the Year was ... “You.” You, the individual, Time proclaimed, were in the driver’s seat as a creator and consumer of products, services and ideas. The story was right but only partially so. We are not talking about the powerful individual operating on his/her own. Amplified individual power derives from his connections to the collective resources and collective intelligence of multitudes of others. It is this ability to connect to their knowledge, tap into their resources and rally them when needed that amplifies individuals’ power and gives them unprecedented ability to bypass traditional organizational structures and boundaries.

Instead of fearing the power of amplified individuals, organizations have the opportunity to amplify themselves by tapping into amplified individuals’ skills and resources. It may be time to think of assessing your employees on the metric we at the Institute for the Future have come to call the “Network Intelligence Index” — the ability to access and use resources of the larger network to amplify one’s individual and, ultimately, larger network abilities.

Focus on Engagement. How do you get thousands of people to do things for free simply because the task is so absorbing, so satisfying, that they can’t stop? We see examples of this every day — people sharing links and ideas on Twitter, contributing Wikipedia entries and edits, offering reviews on Yelp, and spending hours playing online video games. My colleague Jane McGonigal, renowned game researcher and designer, calls this retreat from reality. But rather than blaming people for spending time on useless pursuits, ask yourself what is it that these platforms and worlds offer people that you don’t? And how can you harness this kind of engagement for the benefit of your project?" (


JP Rangaswami:

"When it comes to the entry of the Maker Generation into the workplace, I’d like to propose five principles:

1. The person will select the “task”, rather than be given the “task”. Ever since the inception of the modern firm, people were given tasks to do in a prescriptive, deterministic manner. Initially this made sense, since firms were built on industrial-revolution models, and linear workflow was the norm. But that was for a different time, and the environment has changed completely. Talent is at a premium. There’s no point in hiring smart people and then telling them what to do, that makes no sense whatsoever. The most precious asset of the knowledge-worker enterprise is the knowledge worker, her human and social capital, her relationships and her capabilities. It makes more sense to expose knowledge workers to problem domains and then giving them the resources and tools to solve those problems.

2. Tasks will be non-linear in nature, rather than assembly-line. When someone new joins a firm, the experience is going to be very similar to that of playing a modern video game. The new joiner will spend time in some form of sandbox or training ground, learning a number of key things: the “game mechanics“, the values, rules and principles by which the firm operates; the “game controls“, how you navigate around the workplace, how you discover things, how you acquire learning and other assets to deploy, how you “save” your work, how you “replay” or “continue”; and the “game dashboard“, the tools that let you see the environment, your powers and authorities, feedback loops on position and progress, primarily team rather than personal, though both are visible.

3. True team-based work will become the norm, not the exception. For decades we’ve been talking about teamwork in the enterprise, but that’s what it’s been for the most part. Talk. For teamwork to become part and parcel of everyday enterprise life, small, self-organising multidisciplinary teams must be allowed to exist, crossing many historical boundaries. Teamwork is meaningless unless the team is given work to do that is suitable for doing as a team. There’s no point in calling a bunch of individuals a team, just because they report hierarchically to the same point in the organisation, or because they have the same broad skills. Work is normally carried out by people in multiple parts of the organisation, belonging to different departments, putting to use their disparate skills. The “team”, in practice, is distributed across different departments, functions, locations. And the very structure of the firm militates against teamwork, since these departments, functions and locations tend to optimise within the department, function or location. That optimisation is often underpinned, even accelerated, by the reward system in place, which places a premium on the results of such local optimisation. Interdepartmental cooperation and collaboration is, sometimes unintentionally, sometimes very much on purpose, made difficult.

It’s actually much worse, since the teams spoken of so far are all within one enterprise domain. The teams of the future will include members from trading partners, the supply chain, and (perish the thought) real, live customers. It’s no longer just a question of misaligned incentives: we haven’t really figured out how to do this. Collective intelligence and crowdsourcing will have nothing more than a small number of hackneyed poster children to show if we don’t learn from this and do something about it.

4. Cognitive surpluses will be put to use sensibly, rather than discarded. We have to get away from the idea that knowledge work is smooth and stable and uniform and assembly-line in structure and characteristic. Knowledge work is lumpy. Period. There will be peaks. And there will be troughs. The current thinking appears to go something like this: “If we have troughs it will look like we don’t have enough work to do, so we need to pretend to work. Let’s fill our days up in advance with things that don’t depend on market or customer stimulus, things we can plan well in advance. And let’s call these things meetings. Then we can look busy all the time.” Such thinking has produced some unworthwhile consequences: layers of people who excel at meetings, who know how to game the process of meetings; the agendas and minutes and presentations and whatnot. Which then leads to the creation of a class of signal boosters, who summarise meetings and fight over who can carry the signal to the next level within the organisation, who slow work down by constantly asking questions designed to boost their signal-booster reputations, who work as the enterprise equivalent of K Street within the enterprise, unseemlily knocking each other over as they rush to “brief” their superiors in the hierarchy.

The solution to all this lies in recognising that cognitive surpluses can and do exist, and should be put to sensible use. Investing in wikipedia-like projects, dealing with definitions and jargon explanations and data cleansing and question-answering and the like.

5. Radically different tools and processes will be needed as a result, time-shiftable, place-shiftable, multimedia. Because, as Einstein is reported to have said, we can’t solve problems using the same kind of thinking we used when we created the problems. Tools that view privacy differently, that view confidentiality differently. Tools that recognise the existence of the individual within the firm, the existence of multidisciplinary, sometimes multi-organisational, multi-location as well. Tools that are intrinsically multimedia, allowing text to be augmented with image and voice and video. Tools that are platform and operating system agnostic. Tools that are mobile, self-examining, self-healing. Tools that can be replaced with ease, using the synchronisation power of the cloud." (


The historical context: Four Waves of Organizational Disruption

Gregg Satell:

"More specifically, there have been four waves of disruption that have transformed industry over the past thirty or forty years.

Lean Manufacturing: Pioneered by Toyota, lean manufacturing combines “just in time” operations, smart automation and data driven evaluation of processes to eliminate waste and drastically reduce production time and cost.

Agile Development: Over the past fifteen years, Agile software development has rapidly replaced the more modular and sequential waterfall methods. It thrives on close collaboration (including with customers), an iterative approach rather than strict planning cycles and emphasizes adaptation over prediction.

Design Thinking: Largely developed at IDEO (and described in David and Tom Kelley’s recent book, Creative Confidence), design thinking replaces the traditional “features and functions” approach to product development with a more solution-based model.

The Lean Startup: Originally developed by Steve Blank and popularized by Eric Ries, the idea of the lean startup is predicated on the belief that business plans rarely survive first contact with customers. The lean startup method focuses on developing minimally viable products and then continually improving them as data from customers comes in.

All four of these have one thing in common: They involve more than just a change in methods and procedures. They require a change in culture. And that’s what makes it so hard for large enterprises to adopt them. In effect, to compete today firms not only need to update their technology, but to change how their organizations function." (

Towards Social Organizations

Marina Gorbis on the case for having a new type of "social organizations":

"PatientsLikeMe, Facebook, Twitter, and, I expect, shortly, Chatroulette exemplify a growing clash between the promise of commons-based platforms and the relentless drive to convert them into profit-driven businesses. The clash is likely to grow simply because the number of such endeavors is growing exponentially. What this clash brings into focus is that while we have invented a generation of transformative technologies, we remain stuck in economic and organizational models of the past.

Our technology tools and platforms are highly participatory and social. They take advantage of intrinsic human motivations to contribute in order to be noticed, to share opinions, to be a part of something greater than ourselves. Otherwise how would one explain remarkable success of Wikipedia and many other crowdsourced sites that rely on contributions of volunteers? Our business models, by contrast, are based primarily on monetary rewards. They are mostly hierarchical and non-participatory decisionmaking processes (Facebook's unilaterial decisions regarding changes in privacy terms for members is but one example). And they operate without the kind of transparency of information when applied to their own operations that is at the core of communities they enable.

If we are to truly fulfill the promise of technology tools we have created, we urgently need to design new governance models and new ways of creating value. In the least, organizations whose value derives from communities they create should incorporate the governance principles of successful commons organizations and use the same technology platforms that are at the core of their operations for governance purposes. Here are some principles I believe they need to put into practice:

1. Clearly articulate the promise of the platform to the participants, with all the ensuing rights and responsibilities for members

2. Create or elect a community governance board (without direct financial incentives to the project) to guide and review major policy and strategy decisions.

3. Crowdsource major decisions guiding development and evolution of such platforms.

4. Ensure radical transparency around key decisions and financial metrics

5. Create reward structures for management and employees more akin to those of non-profits or coops rather than for-profit entities.

As community members, we, on the other hand, may need to stop thinking of such platforms as completely free and start supporting them financially in the same way we support Public Broadcasting Corporation or other non-profits whose services we use or whose missions we endorse.

We already have several organizations that operate on such principles. Wikipedia, Creative Commons, Sunlight Foundation. Several others use alternative financing mechanisms that are in line with their public and commons-like structure. accepts advertising only from organizations whose activities are not in direct violation of core beliefs and messages of its founders, either individually or collectively. Curetogether, another crowdsourced health and treatment platform, does not sell its members' data; to keep the site going, it helps pharma companies recruit subjects for clinical trials–companies can send their inclusion criteria for trials they need filled or surveys about adverse side effects, which Curetogether can then distribute to members who opt in.

No one would suggest that founders and staff working at organizations such as Twitter, Facebook, Curetogether, or many others like them should be doing it for free or should live in poverty. However, because of the unique promise of these organizations and the fact that without all of our contributions they simply would not exist, traditional profit-based business models just don't fit them.

It is not that radical of an idea to suggest that our organizational models need to change in line with the evolution of our tools. Let's not forget that organizations we inherit are not pre-ordained or immutable—they grow out of prevailing cultural norms, economic conditions, and technology infrastructure. Marshall McLuhan famously said, "We shape our tools, and thereafter our tools shape us." We invented a new generation of technologies. Now we need to allow those technologies reinvent us and our organizations." (

Designing institutions with Transparency in mind

Joi Ito:

"As we work on this process of making the powerful transparent, we run into some difficulties because most institutions, even those that are for the most part well-meaning and good, are not robust against transparency because they haven't been designed to be transparent.

It reminds me of software projects that try to "go open source" after they've been written. It's often nearly impossible because the code is a mess. When people write software to be open, they typically write it in a way that is understandable to the outside and isn't embarrassing. For instance, I know some developers who use obscene words for their variables or vent their frustration about their love life in the comments in their code. They'd lose their jobs or their spouses if their code was suddenly "open".

In most powerful institutions, corners are cut and methods are used in a somewhat "ends justify the means" sort of way. There are a lot of things that are done and said behind closed doors that wouldn't survive public scrutiny, but have become common practice. In many cases, these practices aren't necessarily critically wrong, but just embarrassing or politically incorrect in some way.

I believe that Wikileaks is just the beginning of a bigger trend where it will become harder and harder to hide information and citizen counter-surveillance will become a norm rather than an exception.

I think that this will cause a lot of pain to powerful institutions - some will be overthrown or crushed. However, I think that we can build institutions that are robust against transparency if we design them that way from the beginning. It will be harder than learning to write open source software, but I believe that in the end we'll have a society that is better, stronger, more effective and fair." (

The Social Business Value Shift

Graphic/table with 2 columns at


"In a recent post on Stowe Boyd’s site he says:

- “These [social] principles are fundamentally different from most business operations, so I think social can’t just be gravy poured on top of the current meat and potatoes. And it’s really about innovating, which again argues for a fundamental rethinking of how work works”

Perhaps the values that underpin Social Business may have existed in a previous time, and that somehow the needs of the industrial revolution and the Taylorist 20th Century – what I would term our “Necessary Past” – inverted them.

It is a concept brought to life by Nietzsche in his work the Antichrist (1895). Setting aside the religious context – this blog has no interest in the matter – he argued that Christianity had inverted humanity and was “hostile to life” – he called for a “revaluation of all values”, a transformative reversion to the values of a pre-Socratic life-affirming age characterised by vitality and spirit.

If we set the predominant, Taylorist-imbued values against Social, the contrast is marked by clear opposites…." (

Status Report 2010

More Information

  • Key background essay on the history of collaboration within the firm: Paul S. Adler and Charles Heckscher. Towards Collaborative Community / (Book: The Corporation as a Collaborative Community) [2]


From Peter Fingar:

  • Brafman, Ori and Rod A. Beckstrom, The Starfish And the Spider: The Unstoppable Power of Leaderless Organizations, Portfolio, 2006.
  • Chesbrough, Henry, Open Innovation — The New Imperative for Creating and Profiting from Technology, Harvard Business School Press, 2003.
  • Cross, Robert L. and Andrew Parker, The Hidden Power of Social Networks: Understanding How Work Really Gets Done in Organizations, Harvard Business School Press, 2004.
  • Fingar, Peter, and Ronald Aronica, The Death of “e” and the Birth of the Real New Economy: Business Models, Technologies and Strategies for the 21st Century, Meghan-Kiffer Press, 2005.
  • Grantham, Charles, Jim Ware and Cory Williamson, Corporate Agility: A Revolutionary New Model for Competing in a Flat World, Amacom, 2007.
  • Harrison-Broninski, Keith, Human Interactions: The Heart And Soul Of Business Process Management, Meghan-Kiffer Press, 2005.
  • Hayes, Tom, Jump Point: How Network Culture is Revolutionizing Business, McGraw-Hill, 2008.
  • Howe, Jeff, Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business, Crown Business, 2008.
  • Kelly, Kevin, New Rules for the New Economy, Penguin, 1999.
  • Li, Charlene and Josh Bernoff, Groundswell: Winning in a World Transformed by Social Technologies, Harvard Business School Press, 2008.
  • Malone, Thomas W., Laubacher, R. J., and Scott Morton, Inventing the Organizations of the 21st Century, MIT Press, 2003.
  • Malone, Thomas W., The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life, Harvard Business School Press, 2004.
  • Mulholland, Andy and Nick Earle, Mesh Collaboration, Evolved Technologist, 2008.
  • Mulholland, Andy, C. S. Thomas, and P. Kurchina, Mashup Corporations: The End of Business as Usual, Evolved Technologist, 2008.
  • Olson, G. M., Malone, Thomas W., and Smith, J. B. (Eds.), Coordination Theory and Collaboration Technology, Erlbaum, 2001.
  • Shirky, Clay, Here Comes Everybody: The Power of Organizing Without Organizations, Penguin Press, 2008.