Friday, March 19, 2010

How to build a business for the networked world

Former accidental economist turned accidental technologist JP Rangaswami was at his engaging best when he gave a keynote at the first European Social Business Summit in London yesterday.

JP - on twitter as Jobsworth and blogging as Confused Of Calcutta - is a big brain behind clever stuff at BT.

Yesterday he turned his attention to what it takes to be a business in the networked world.

Economists will know that the purpose of a company is to reduce transaction costs.

Starting from that view point, JP outlined three key elements that must be designed into a business from the word go to succeed in the networked economy.

There is much resonance with the platform thinking approach I advocate:

In a nutshell, organisations should use their resources to discover and bring together people who care about solving the same issues they do and support them in resolving those issues (reducing the transaction costs for all).

This platform approach means the company (the org) doesn't end at the edge of your premises, or at the firewall... and certainly not at those listed on the payroll. It's the Ninety10 way

JP's three tips for building a business for the networked world were these:

1. Design for sharing;
2. Design for scale through participation,
3. Design to take advantage of the synchronicity/asynchronicity the web enables.

Design for sharing: JP gave a neat example of how the ability to benefit from the value creation of sharing has to be part of the structure of the organisation: Food. (image courtesy Photo Mind)

He noted how in India he could always bring a few extra people home for dinner with him. It was never an issue. In England it is much harder to be as spontaneous because our food is structured differently. You may have four steaks ready at home to feed four people. If another three turn up, sharing becomes awkward.

Indian food is more granular, easier to redistribute. It is structured for sharing.

And it's this kind of thinking you have to embed in the structure of the networked org.

People aren't for doing stuff to, they are for doing stuff with
Design for scale through participation: The likes of wikipedia, facebook, twitter have hundreds of employees - millions of willing participants. They were designed from the off as a participatory business. If no one outside participates, they fail. Those outside aren't seen as people to do stuff to, they are seen as people to do stuff with. They are essential and integral.
To pick up on JP's food metaphor - think about a pic-nic. A pic-nic is a meal in which everyone attending contributes something. That can scale from 2 to a million or more.

Design for the Synchronous/Asynchronous:
JP says: "Things that were previously synchronous, like voice communications, can now be asynchronous, and things that were previously asynchronous [like knowing people, status, location or current work] can be synchronous."
In the industrial era people and resources had to be brought together not only physically, but also temporally, to create an outcome. In the networked world this is no longer the case. People all around the world, and at all different times, can contribute. Design this into the structure of your org.

I'm hoping that I've captured the key elements of JP's points here. And I'm sure that if I haven't he will be willing to clarify and/or expand. (UPDATE - JP has added to this in a comment below; with reference to reducing the transaction cost of information for an organisation through search - and the value of social search).

His approach gives an interesting check list for those of us building businesses, or attempting to make existing ones better adapted to the networked world.

And there isn't anyone in any business or organisation anywhere who shouldn't include themselves in that number.

After all, as JP put it: "Trying to create an industrial era firm in a network age is plain blind stupidity."

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The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?