Framing Change

Red Bridge

On this website you will find details of and links to a number of concepts that are important if we are to understand our future. My work is often about developing new ways to understand what we do in the wealth creation system – I avoid the term business or capitalism as far as possible because I think we are moving towards a very diverse set of ideas on what it means to work and create wealth.

A very significant aspect of that is the rapid move toward externalizing functions that enterprises have thought belonged inside their walls or that have done be done externally- design, innovation, social media. People are also being tempted, also, into the crowd labor force. Crowd labor, where thousands of people perform microtasks of one kind of another, in place of people who currently do jobs with a variety of roles involved, will be the outsourcing model of the next decade. But it can also mean crowdfunding or crowd-based innovation.

Many people now have multiple businesses (take a look for example at Dave Asprey’s Bulletproof. Dave works in Cloud infrastructure yet runs an entirely different, coffee-supply company in his spare time). A lot of people in corporate settings now run businesses on the side. The freelance lifestyle is, catching on, with one million extra people joining the free agent labor force in the USA in 2012. Individuals have also changed the enterprise IT landscape by insisting on using their own devices. So change is driven by us in our day to day activities, as well as by new infrastructure and new business ideas.

Haydn Shaughnessy at Sibos

Politicians don’t generally understand the direction of change today. Instead, they use the language of Keynesian and monetarist policies. They are familiar with these concepts and often addicted to them. But we live in a world where business is now conducted through complex global ecosystems> that we understand very little about.

The economics of business ecosystems or how to promote good behaviour in ecosystems is a mystery to us, though a very important one (I maintain also that business ecosystems are attractive to us because we are increasingly comfortable with a new naturalism, a language that uses natural metaphors to explain what’s going on in business.)

In fact a major theme of my work is the randomness of economic events and what succeeds online.

In this new world, companies will rely less on their research labs or even their research networks and more on their capacity to be adaptive in new types of markets. I’ve called this adaptive quality radical adjacency. You can see why by clicking on the link.

There’s another way of putting this – John Donovan at AT&T recently told me he thought product development was less and less a management skill and more and more a function of the crowd.

Companies that practice radical adjacency master their external environments. In a study for the Harvard Business Review in 2010/2011 I found that business writers have progressively become more focused on the external, rather than the internal, environment of the firm.

Go back to the 1990s and 2000s and the focal point was almost wholly internal, when it came to really hard-nosed analysis of what firms were trying to do. From 2006 onwards the focal point is the external world.

We need new concepts to help us understand our behavior and relationships in this new environment, so I coined radical adjacency as an indication of external mastery – the ability to enter any market without historical experience, at will, anywhere.

Radical adjacency goes hand in glove with mass differentiation. We are creating a new global middle class with different tastes and needs. Yet there are also commonalities. Companies need to learn how to cater for global markets that don’t just want western products. But as most products now have a strong service component it is becoming ever easier to take a core product – like the iPhone – and differentiate it many times over – through apps. That means mass markets but highly differentiated products too because of the service layer.

Differentiation though doesn’t always rest with the product originator. Much of Apple’s differentiation rests with the customer who selects apps, and the developer community that makes them. This ecosystem of developers and customer is ideally suited to producing for an era of mass differentiation.

Ecosystems take some of the innovation burden off the originating company and allow it to focus on managing its strategic options. In The Elastic Enterprise, Nick and I focus heavily on the strategic options portfolio as a new management concept.

By Elastic Enterprise we mean companies that were able to scale their businesses without incurring a disproportionately high overhead burden. We also wanted to convey that these companies can retract from growth if a product or market looks unpromising.

As the economy evolves I tend to think of an elastic economy as well as an elastic enterprise. Companies are increasingly seeking out new levels of adaptability.

These adaptive enterprises absolutely must seek out and utilize any mechanism to allow themselves to change. In some cases that means they see their core skills (or core competency, to use an older term) as a moveable feast. Young CEOs especially don’t think of their core competency as fixed. But it can also mean that they have to use many different strategies to secure change, and it means those strategies will change over time.

If those are some of the concepts on the enterprise side, you’ll also find concepts that describe changes in how we behave and how we organize our lives. Work-life integration is becoming a common term but I think it should be the other way round. Life-work integration would help us prioritize our needs more

I believe we are moving towards a human interest model of business where the language of social, crowd, customer, peer, indicates the need for us to become more aware of the new emotional layer of products, and also of work. So many people spend their personal lives engaged in work that they need more emotional return from the work place. This human interest model should force us to think “crowd, peer, social, emotion” when we think of a business.

Finally before this page gets too long, I’ve written a few times about personal innovation lifestyles, deliberately setting out to reconstruct our lives around the rewards that interest and fulfill us.

I hope you enjoy the ideas.