Due to my renewed interest in “Pancakes” I was looking for some info in my archive (yes, the paper one…). In the past I have worked for a company called BSO, founded by Eckart Wintzen. During the years I worked there I was director of a consultancy cell (I’ll explain the term cell later on), technical manager, commercial manager and director in the electronic commerce service line before leaving the company in 1999.
Eckart was a remarkable person, sometimes a bit difficult but always inspiring and, well, very present. He developed the vision that people work best in small teams up to 50 people. And implemented this vision!
When he left in 1996 the company had more than 4000 employees but was divided in units not larger than 50 people, called a Cell (from the biological cell). When a group grew to big it was split up and half the management team and employees started a new cell in a different place. There Board was doing their best not to steer the cells directly but tried to convince. There was almost no middle management (and nobody listened to them anyway). In many ways it was a Pancake organization before the electronic means were there. This was possible because Eckart was one of the few CEO’s that did not like raw power for himself.
Anyway, while looking into my archive I found the letter below that was part of the yearly report of 1995 (the reports were always very special, this one was designed as a folding map were you put in several papers between tabs (some of you elderly people will remember them!). This letter describes (in Dutch) how the Internet is not so much about infrastructure and computers but about connecting people and was written by the director of the McLuhan program (BSO was a sponsor of this program). Quote:
Het beeld van een wereldomspannende netwerkomgeving is niet zozeer dat van een ‘snelweg’ als wel dat van een soort ‘wereldgeest’
The concept of a worldwide network is not as much about a ‘highway’ but more about some sort of world ‘conscience’.
Funny how many of these issues already came together in 1995..
A couple of years ago I read the book “De eeuw van mijn vader” (“My father’s century”) from Geert Mak. In this book he describes how the Dutch society has changed from 1900 to 2000. One of the passages that struck me most was his statement that the majority of people in 1900 were not an employee at a firm. Many people were self employed as sail maker, baker, carpenter and other craftsmanships. Other were employed on a temporary basis as day laborer. For many people this independence meant of course mainly insecurity and near starvation.
It did open my eyes that the big Firm as a way to organize work is something relatively recent and started around that time. Before the Firm work was done by many individual and small informal companies, afterwards much of the work is done in large companies with often an emphasis on management and control. At the same time there was the shift from mainly local transactions to global transactions.
These days we again see a move towards smaller size of companies and and more informal contacts to coordinate work. Most important example is of course the explosion of Independent Professionals. But also many examples of small companies that supply a specific service, often on a global scale, like BasecampHQ, Evernote and others. My conclusion is that the Social Media and Cloud and the themes they bring forth put pressure on the size of Firms. Big is beautiful nor efficient anymore.
In 1936 (Nobel price winner) Robert Coase wrote the artikel “The nature of the Firm”. In this (very famous and often cited) article he states that the size of a Firm is based on the difference in transaction costs between the market (buying the service) and organizing the service yourself. He describes the relation between transaction costs and size as follows. The firm grows when:
- the less the costs of organizing and the slower these costs rise with an increase in the transactions organized.
- the less likely the entrepreneur is to make mistakes and the smaller the increase in mistakes with an increase in the transactions organized.
- the greater the lowering (or the less the rise) in the supply price of factors of production to firms of larger size.
Transaction costs in this are all costs associated with a transaction: communication, contracts, delivery, etc. If we compare these with the themes Scalability, Communication, Cooperation, Anyplace and Anywhere and Transparency it is clear that these themes are lowering the external transaction costs dramatically.
Scalability: the advantage of the Firm has always been that within the Firm it is easier to share resources over several activities. Now many operational costs have become variable costs in relation to turnover this advantage of size is not valid anymore. The risks of major investments in infrastructure is therefore also largely diminished. Due to the high level of automated processes there is less advantage in high volumes of purchasing
Communication and Cooperation: Finding people has become easy, contacting them has become easy and exchanging information on specifications and expectations has become easy. This means that transaction costs go down. This holds mainly for external costs since internally searching and working with people was enabled by the Firm.
Anytime, Anywhere: The Firm creates a context where it is easier to know what to expect from others and has a management structure to enforce compliance to this context. Social technology now enables us to contact everybody from everywhere at any moment. A natural advantage of the firm was that it was easier to do business within the Firm on a global scale. Now small companies can do the same in a virtual enterprise.
Transparency: We now see reputation mechanisms to build trust without previous experience with that person of service. We see reviews of previous experience of others that are similar to us. We know we are looking at the same data stored in the cloud. I know where you really are because of location based services. This transparency drives down risk immensely.
From all of the above it follows that due to social and cloud technologies Firms will shrink in size. Small will be more efficient. This also has a lot of impact on middle management whose role it was to coordinate work in the Firm. This coordinating role of management will evaporate and thereby create flatter organizations: Pancakes!
Fractals create fascinating pictures. On the one hand they look very structured and symmetrical but when you look closer you see that the pattern is repeated in a different way on every level. There is order and there is chaos simultaneously. The math behind fractals is surprisingly simple. The trick is that the factors in the equation repeat themselves in a recursive way (meaning that the formula calls itself withing the formula).
For example, the formula for the fractal on the right is “(1 − z3 / 6) / (z − z2 / 2)2 + c” (for more info on these fractals go to: http://en.wikipedia.org/wiki/Julia_set). Many of natures most beautiful expressions are based in Fractals, e.g. leafs , trees and flowers. Here the relatively simple codes in the DNA create fascinating structures in the organism.
The mechanism is similar with the effects of new technology on our way of living and working. At the moment we see many fields of business changing in very profound and different ways. Often due to wide spread implementations of new developments like Cloud technologies (that impacts how business interact) and Social Media (that impacts how people interact).
However, the driving forces behind this change are relative simple. The basic variables that are impacted by this change in technology are:
- Unlimited Scalability: Technology and processes become scalable. IT costs become a variable costs. This means that a company can start small and grow evolutionary. Communities can be scaled up from a few to hundred thousands of people in a short period. This flexibility gives rise to new competitors and new services that had not been possible before.
- Ubiquitous Communication: (Social) Technology makes it possible to find the person with the right knowledge instantaneously. Communication channels are easy to access for broadcasting to targeted audiences as well as direct interaction.
- Seamless Cooperation: We have now been given the freedom to work and cooperate everywhere. Where in the past closed systems made it difficult to work together it is now made possible by standardized tools in the cloud. Sharing data, sharing tools and sharing contacts is now possible.
- Anytime, Anywhere: Instead of real-time communication in a specific place we are now free to interact wherever and whenever. Many of our tools support direct communication (chat) as well as a-synchronous communication (e-mail). Changes made in an online document are always seen directly by all so they can be reacted upon. In many ways we overcome the limitations that a physical world imposes on us
- Maximum Transparency: With the use of Cloud technology information can be visible to all and often is. In the past systems were closed by default since databases could be accessed only from a few places. Now all you need is an Internet connection and a browser. Also by sharing much of our thoughts, activities and trivialities a sometimes unexpected amount of transparency is achieved, though sometimes accidentally.
All these themes create tremendous opportunity but also unexpected risks and consequences. As society and as businesses we have to learn how to optimize these themes to create good and sustainable outcomes. The differences between MySpace and Facebook were small at the start …
Last few weeks I have been trying to integrate a lot of ideas I have been working on in the last few years. Partly in research programs on SaaS, partly and several project around the adoptation of technology and partly from my own company. Below is the (extend) set of sheets I have made out of this. Next period I will be writing a bit about the different parts of it.
One of the interesting features of technologies is how it can bring people close together, in real life as well as in perception. Google has an interesting new feature called Google Latitude. Through this service you can show your location to your friends and of course see the location that your friends are sharing with you. Interesting feature is that the application has a fine grained way of setting your privacy in relation to the various friends that you have. This I think is a general direction you see in web 2.0 that more and more people are becoming concerned about privacy and about who really are your friends you are willing to share all. In the past I used an application called IYOUIT that was also capable of showing this like this. To me it was surprising how much feeling is involved in knowing precisely where your friends are.
One of the area’s of research from Telematica Instituut is using technology to determine the context of people. For example where you are, who you are with, what is your mood, what are you doing. This context is very usefull input for a lot of other things like recommendation (when you search for a restaurant to dine with you new girlfriend and value my opinion you do not want to use my recommendation of a restaurant I liked because it is so nice for the kids). So context is king for lots of new “social” applications.
For this we have created a new application called IYOUIT (meaning I, You and It). This is an application for mobile phones (Symbian S60) and constantly monitors your context and shares this with your friends. Recently this tool is made available to all. Have a look at it. It uses only the standard phone sensors (GSM signal, Bluetooth, WiFi, GPS if available) to determine things like location, who is close and such.
One of the things this also shows is the power of “mashup programming”. The application uses all kinds of readily available applications. Google Maps of course but also weathersites. Why measure local temperature (and be dependent on extra hardware sensors) if you can find the local temperature based on your location data on a existing weather site?
I read this post at salesforce:
Salesforce.com is considering bringing to market a new service enabling companies to share leads, opportunities and custom objects with each other (assuming both are using salesforce.com). What would you call this service?
If you have another name suggestion please post it in a comment.
This seems a rather interesting application of Web 2.0 sharing of information. Companies sharing leads in a network through their CRM system. There are of course a lot of questions like how do you protect your leads against competitors, how easy it is to create rules how to share and such. But still, the idea has a huge potential I think.
I remember as a small child that, when you had taken some cookies from the cookie jar you were not supposed to take, your mother somehow always knew. I suppose this must feel the same for the people that got caught by the Wikiscanner.
This is an application that relates the IP adresses from the people who did edits on the Wiki pages. Surpringly (or maybe not so surprising really) a lot of edits come from organisations that are involved in the wiki-article and their intentions are not always without self interest. The page of George W. Bush was edited from the home security office (removal of the fact that he had a drinking problem) and the best of all about the edit from the queen’s home address where information from her daughter-in-law Mabel was edited to make her look a little better.
This all is of course not surprising. When information can be edited there is no reason to think companies and people will not do so in order to make them look better. The interesting part is that it turns out that many of the un-truthful edits had been discovered very quickly and have been repaired withing hours and sometimes even minutes.
Also, the wikiscanner is a new step that “the crowd” can and will use to make the information more trustworthy. More transparency will lead to better information. Not perfect but still a little bit better and better to judge.
These are for example the edits from the Telematica Instituut (looks like we have a lot of mathematicians in the company or are these the edits of one person?). Interesting…
They made it! The group of people from AssignmentZero I blogged about some time ago have their articles published on Wired. Though it is easy to see that it has been a mixed blessing in results it is also easy to see the enthusiasm people have in doing this. One of the conclusion they have reached is that a good balance or professionals and amateurs is crucial. The professionals know how to present news, the amateurs are everywhere where news may be found. Read more about it here.
Also, we have an example of this trend in the Netherlands. They recently published an ad in the newspaper “DAG” for citizen journalist to cover news from the “Tour de France”. I think that is an excellent combination of enthusiastic amateurs covering many locations with phone camera’s in combination with a professional editorial team. All sides win: the amateur have a great time while watching the tour with a missions and the newspaper gets wider coverage of the news.
Lot’s of people love producing instead of just consuming.