I just wrote a post on emergence, that basically points out that when a system is unstructured it allows people to use it how they like, and it’s use doesn’t have to follow a vertical value chain. Instead we can use these flexible tools to make our own work-flow, to connect horizontally…they are more organic and have a viral spread.
As I pointed out in the post, the concept of emergence isn’t just about non-rigid flexible tools, well this is the first step which is kind of a “use” emergence. The other aspect is “content” emergence, ie. people are are tagging their content, or we could run a concept tag script through a pool of content, which allows us to see what is being talked about.
An enterprise blogosphere and social bookmarks displays a tag cloud, and from this cloud we can see what is the most talked about topical content, ie. we can see the patterns that are emerging.
Aggregated content
I want to go a step back and see what is driving the content that makes up this emergent scape.
That is, what is the nature of participation.
Jeremy Thomas leads us into a hippie type altruistic notion of doing your unselfless bit for the community, which he, like Charles Leadbeater mention is what web 2.0 is about. I agree, without questions answered and blog comments, there is not much conversation, making for a boring web 2.0.
But Jeremy goes on to say that this is not the foundations of web 2.0, it’s more a personal motivation, akin to the del.icio.us lesson.
It begins by personal publishing, contributing, collecting, and during all this is conversation.
What is important is what drives the beginning; it’s loud and clear that it’s “personal benefit”. If a corporation acts like a person, then their reason for an internal web 2.0 is personal benefit (profits).
When you aggregate all this personal benefit you get a macro picture, basically, “The whole is greater than the sum of its parts.”
Jeremy relates this to economics:
“Adam Smith’s notion of the “Invisible Hand” that drives the Enterprise 2.0 ecosystem. A knowledge worker “…intends only his own gain”, he seeks recognition which can ultimately lead to promotion and increased salary. In describing the driving force behind free markets, Smith writes:
By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
The “selfish” contributions made by knowledge workers makes the enterprise as a whole better off. And the services the enterprise opens up makes other enterprises better off, and this is consitent with the “Invisible Hand”.
Enterprise 2.0 is not based on utopian ideals. It is instead based on the very principles that drive all free-market economies. Organisations that adopt enterprise 2.0 will do so for auto-preservation and corporate gain - to help their bottom line.” Period.”
Charles Leadbeater adds to this:
“…counter culture of the 1960s, combined with pre-industrial ingredients it has resurrected, folk culture and the commons as a shared basis for productive endeavour. The web allows for a massive expansion in individual particiaption in culture and the economy.
Greater individual participation will not, on its own, add up to much unless it is matched by a capacity to share and then combine our ideas”
Shawn Callahan describes the tragedy of the commons:
“That’s when the individual actors operate to maximise their self interest and in the process ruin things for the wider group.”
From all of this we see the personal benefit is what drives this participation culture, and in aggregation we see trends, but it’s also the aggregate of people that creates a market of conversation, that is the dynamic of web 2.0. The Cluetrain Manifesto talks about “markets are conversations“…yet to read it.
Market economy
So if enterprise 2.0 is a “market economy” what is enterprise 1.0?
In “The Wisdom of Crowds“, James Surowiecki points out that companies should work more like markets, an Autonomous flow (based on Collective intelligence) rather than an Expectations model…and this is just what can happen with Enterprise 2.0.
The following is lifted off a presentation I made a couple of months ago:
Companies pay people to perform on an expectations (target) model
- Hiding information may happen
Markets pay people on what they do
- Don’t make more money if you exceed expectations
Markets have “incentive” to seek valuable information (eg. Buyer behaviour)
- When acted upon, it becomes public knowledge
Companies need to work in this incentive model
- The more a worker contributes the more they are recognised and the more prosperous job (money)…information goes back up the value chain
- This is a new incentive model for what a worker does
Aggregation/Network Effects/Emergence
- The worker need only worry about personal benefit
- Others can benefit from public aggregation of information
- Social Capital is leveraged
This is saying currently companies (managers) set levels of expectations and reward people financially.
eg. you get a holiday bonus if you make 10 more sales this month.
By setting these incentives the company also benefits, but is this a narrow approach; are there lost opportunities?
In this type of setting why would I want to share my knowledge, it’s my “power”, we are all on our own, and my personal know-how is going to get me ahead. If I don’t share I will meet my expectations (and no-one else), but on the same hand if I don’t find any knowledge, I may not meet my expectations.
So in fact this expectations model promotes “not sharing” information.
I see this as the parts on their own, and not coming together as a dynamic whole…siloed people with a fear of trust to connect.
What if a trend spikes or drops in the industry without us knowing, but indeed someone else in the enterprise knows, but they are not in the business of sharing this information, or perhaps the enterprise would share this information, but they don’t have a sharing ecosystem (tools and behaviours).
You lose, because without this information you don’t get your job done, and your managers loses as you have missed an industry opportunity.
Had your enterprise encouraged knowledge sharing, this information would of surfaced to your attention. So here we have missed an opportunity which may have dire consequences, and worse still, someone in your organisation held this information…a bit like the enterprise shooting itself in the foot.
If corporations, in respect to the law, act as one person, they should also think about doing this in respect to “one intelligence.”
The idea is a knowledge conversation market, connecting all the brains into one hive mind, the more we share and participate (as is done in web 2.0) the more we are contributing, and these contributions form new content, they are valuable to others…re-using knowledge.
The new model can be financial rewards for participating, but not by gaming the system, the participator has to demonstrate contributing valuable stuff, engaging in conversations, and some success stories that have come from the simple fact that you shared and conversed.
Now you still get your reward, you and the company still win, and it’s more holisitc as the company is not missing out on opportunities as people are connecting to get their work done. From this it seems a social enterprise is essential, I’d want one now if I was a manager.
It’s a different way to look at the model, the more you share and engage the more you are seen as a “guru”, so you actually become more powerful by letting go of knowledge.
If this knowledge can be used to add value to the work of 5 other people, then they and the company are better off.
In essence, Enterprise 2.0 enables the enterprise to leave an expectations model for a social model, as conditions for innovation is the new performance driver, and this will only happen if there is a participative ecosystem where knowledge sharing is the currency.
NOTE: By knowledge sharing I just mean: visibility, publishing, participating, contributing, conversing…
Rod Boothby has a great post on emergent environments:
“Emergent intelligence only evolves when agents have the freedom to act independently. The traditional command and control structures employed by most large firms do not lend themselves to fostering this kind of independence.
However, that does not mean that there isn’t still a roll of management to play. Their task now is to cultivate an environment that encourages innovation.
To guide emergent intelligence in an organization, you need to think about management techniques that foster innovation, and encouraging dialog and the exchange of ideas.
Imposing rules and taxonomies isn’t going to achieve the goal. Nagging people to add to the “knowledge repository” isn’t going the right answer either.”
In the above rant about markets have I really been talking about a knowledge economy?
I think the knowledge economy is about relationships (client and internal), conversations, and information flow as the new competitive edge.
As mentioned in previous posts, it’s now a level playground in that enterprise’s can easily compete with assests, people, cash, outsourcing, offshoring, perfecting supply chains…relationships, conversations, sharing and exploiting know-how is the new way to get ahead of the innovation curve.
But it’s not just about profit, it’s also about quality. When everyone is in the loop there is less chance of mistakes in processes and design, hence less chance of not getting things delivered on time and and the right cost, and less chance of damaging client relationships.
The World is Flat by Thomas Friedman goes into great detail about outsourcing and supply chains, and I just came across a few typical links of this nature this past week, Artemis (film-making), and Ponoko (for furniture).
As you can see both the provider and the consumer can take advantage of e-commerce by bypassing a number of logistic processes, but it’s more than that. In a past post I mentioned David Weinberger talking about how web 2.0 is granular, and how you can pick and choose components and put them together, creating your own personalised view of the world. Well I found the same with using a web 2.0 site to buy a t-shirt.
My wife visited Redbubble where she keeps her art, this site also allows you to make t-shirt versions of your art…that’s all you have to do as a provider to have a shop, as RedBubble will organise the rest.
As a consumer I browsed t-shirt designs for hours, I could choose colour, long or short sleeve, etc…
This is similar to what web 2.0 has done to the news…the change from one-to-many in a physical shop, where the shop decides the range, to many-to-many where the consumer can choose stuff from the globe, from supposed non-experts.
Since this new edge, is about sharing your know-how in a more social and visible way, I think it will make for an enterprise where people feel socially connected (happy) and that they have impact on decisions made and direction…the networked enterprise will catapult innovation, just look at how fast web 2.0 spreads and evolves ideas, reducing the global into a coffee room.
Charles Leadbeater points out the limits of markets [as compared to a knowledge economy]:
“But markets of this kind have limitations: they work for specific problems that need exactly the right individual to solve them. They do not provide the basis for sustained creativity and innovation to explore difficult complex systems. That kind of problem solving only comes from intense collaboration.
…crowds need meeting places, neutral spaces for creative conversation, moderated to allow for free flow of ideas.”
So it seems a market economy is more a demand/supply thing whereas a knowledge economy is more about collaboration, volunteering know-how, conversations, connections…all due to participating and visibility.
More from Charles Leadbeater:
“In the economy of things you are identified by what you own: your land, house, car. In the economy of ideas that the web is creating, you are what you share: who you are linked to, who you network with and which ideas, picture, videos, links, comments you share.
That matters because the more ideas are shared the more they breed, mutate, and multiply, and that process is the ultimate source of creativity, innovation and well being.”
“The web’s underlying culture of sharing, decentralisation and democracy, makes it an ideal platform for groups to self organise, combining their ideas and know how…
At root most creativity is collaborative. It is not usually the product of a flash of insight from a lone individual.
The factory made possible mass production, mass consumption and with that industrial working class. The web could make innovation and creativity a mass activity.
Our preoccupation in the century to come will be how to create and sustain a mass innovation economy in which the central issues will be how more people can collaborate more effectively in creating new ideas.
The factory encouraged us to see everything through the prism of the orderly production line delivering products to waiting customers. The web will encourage us to see everyone as potential participants in creating collaborative solutions through largely self-organising networks.”
Perhaps a knowledge economy is a way of being, the way you work, it’s the notion that “none of us is smarter than one of us”…mostly it’s about the intangibles.
Social Capital and Conversation
The title of this post is “Participation is the currency of the knowledge economy”, but perhaps I should have substituted the word “participation” with the term “social capital”. Chris Fletcher has more on this:
“…we are seeing a change in perspective around knowledge from one of a content centric focus on Intellectual Capital, to one where social capital will be the currency. It will be about who we know and what we will do for each other. In essence, we are seeing shift to people being central to how knowledge moves through the organisation.”
Chris has a great matrix of moving from Content & Collection to Context & Connection. The collaboration and innovation quadrants are where conversations and connections happen, and this is where knowledge in context is exchanged and created.
James Dellow picks up on a post by Sam Lawrence, pointing out that a new way of working is emerging, “social productivity” focusing on the “we” over the “me”…more from Sam:
“This more accurately mimics our work-with-others activity vs. the produce-alone-and-distribute part of our daily equation”
Maybe in the title of this post I could of substituted the word “participation” with the word “conversation”.
Chuck Hollis, who I have posted about before, has realised that conversation is gold, and creates more gold:
“These conversations were personal, honest and context-rich. And they were perhaps the most important source of innovation and value-add in our corporate culture.
To go even further, the really cool conversations I was having usually started with someone saying “you know, I was talking to so-and-so, and we came up with the idea that …” so we had one conversation feeding into another.
If you believe that conversations were creating incredible business value, maybe the focus should be on having many more conversations, much more easily.
Conversations lead to passionate topics of mutual interest.
Passionate topics of interest lead to ad-hoc community formation.
Community formation leads to collaboration around shared activities, including document collaboration.
Community collaboration is the quintessential magic of all things E2.0.
So, not to oversimplify, but if EMC got really, really good at starting interesting conversations, the rest would follow naturally and organically.”
I’d like to hear what others think the differences are between a market economy and a knowledge economy…please leave a comment.
[UPDATE: Just read an interview with Clay Shirky that seems relevant to this post.
Clay Shirky: Coase is the economist who asked and answered one of the most famous questions in all of economics: if markets are such a good idea, why have firms at all? Why do we have these sort of institutional and organizational frameworks? Why can’t you just have everybody offer their services to everybody all the time, and have markets and contracts put it all together? And his answer was that there’s a huge transaction cost in simply finding who’s available, what they offer, making some kind of deal. And so what firms do, in Coase’s answer, is they lower transactions costs for group effort. And that gives them an economic advantage over markets in certain situations.
Everybody has understood since that article was published in the mid-1930s that there’s a Coasean ceiling: a point past which, if a firm grows too large, it just breaks down.
What we all missed, because it was never really an open question until now, is that there’s also a Coasean floor. Which is to say, there’s a set of group activities that would create some value but it isn’t worth forming an institution to create.
And the Flickr photo streams are a perfect example of something that’s beneath the Coasean floor. The costs of being an institution are too high to make the activity worth pursuing that way. But if you can get people to do it for themselves, you can create that value anyway. And that value, the value that’s under the Coasean floor, is I think one of the really big surprises of the current era, which is: now we’ve got places where we don’t need institutions, necessarily, to take on large or complicated tasks. We’re actually seeing kinds of value created that were simply unreachable by society previously.]
[ADDED 12/05/08: Is knowledge hoarding all about your pay cheque?]
Related:
k-flow
Tap into the social capital
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