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Who Needs Unfinished Business?

Umair Haque made a bold post on his Edge Economy blog on the Harvard Business Publishing site this week. In it he calls for the development of next generation businesses that will challenge the rot he sees at the heart of the institutions of business, most lately indicted by the fall-out of the Sub-Prime crisis.

Haque proposes that there are five steps in the process toward building next generation businesses.

  1. realize that we moved beyond “strategy decay”
  2. understanding how the global economy is really changing
  3. understanding that next-gen businesses are built of new DNA
  4. infusing that DNA into all levels of economy
  5. putting meaning back into business

I think that Haque’s diagnosis is sound and that it shows the relevance, even the necessity of the Unfinished Business project.

Beyond strategy decay: The simple claim here is that the issues at the heart of the current financial crisis do not represent failed strategies or unsound business models per se, but a fundamental (genetic) corruption of the very institutions of business. What does this mean, other than rhetorically claiming that these businesses (e.g. investment banking) are beyond saving? The evidence for this is the core meltdown of the underlying financial system that the failure of several of these businesses over the last two weeks has set off. When the profitability and growth of these institutions of business has become so leveraged to uncertain and ungovernable forces, the volatility of the system itself suggests these intitutions are fundamentally unsound. As Haque puts it: “poor incentives, near-total opacity, zero responsibility, absolute myopia - that was the problem. The rot [is] in their DNA, in their institutional makeup, not in their strategies or business models.”

The global economy is really changing: This powerful charge is that the world that insitutions of capital were designed to address no longer exists at all or at least is in irrevocable decline. Globalism has been disrupting business and economy like mad for the last decade. Starting with the collapse of the Russian economy in 1998 and the expansion and acceleration of the economies of India and China in its wake, it has become a truism that the fundamental global economic order has shifted profoundly. Does this mean or entail that the underlying principles of the economic order are no longer tenable? It does seem reasonable to assert that the ability of nation states to control their economies and for global financial insititutions to efficiently and securely allocate capital is now in serious doubt. “The centuries-old institutions of orthodox capitalism cannot support the transition to a hyperconnected global economy. They are increasingly unable to allocate capital efficiently, much less grow it productively. And so what we are seeing nothing less than the wholesale deconstruction of the global financial and economic system.” This is a bell, it seems increasingly clear, that cannot be unrung.

Next-gen businesses have new DNA: This rests on the claim, like the one David Weinberger makes about the shift in the order of order of knowledge and information, that fundamentally new forms of business and economy are emerging. These new forms, this DNA (though I personally do not love this metaphor), is very clearly an emergent phenomenon of the scaling of the Internet, though it is not reducible to the “thing” of the Internet (if that’s even a coherent idea). Michael Porter’s conception of strategy, that it “requires a strong focus on profitability rather than just growth, an ability to define a unque value proposition, and an ability to make tough trade-offs in choosing what not to do,” does not seem to hold with the same force that it once did. The investment banks did all these things and are failing, Amazon and Google do few or none of these things and are challenging Porter’s orthodoxy about competition.

New DNA must be infused into all levels of economy: “The centuries-old institutions of orthodox capitalism cannot support the transition to a hyperconnected global economy. They are increasingly unable to allocate capital efficiently, much less grow it productively. And so what we are seeing nothing less than the wholesale deconstruction of the global financial and economic system.” If Haque is right about this, what is next? It seems clear that there is no one answer to this question, but perhaps should be our first clue. Perhaps we no longer need a single system (if indeed there ever really was one), perhaps this is precisely the first and deepest innovation of the “hyperconnected global economy”, that it enables a proliferation of forms that can each generate value and which do not have as a requirement that they must cohere into “a” system. Haque’s list of new forms of organizing and designing work, “open-source production, peer production, viral distribution, radical experimentation, connected consumption, and co-creation,” is incomplete, but suggestive. We are daily creating new and more ways of working, living, organizing and producing and we are starting to radically change what, where, how and why we produce in the process.

Putting meaning back into business: This, I would like to propose, is the meaning we should give to the word sustainability. To put it in a definitional form: Sustainability is progressive commerce, it leaves things better than it finds them, from “cradle to cradle“. Sustainable businesses and economies would have good as integral to their design, rather than externalized . There does not, indeed, there cannot be a single definition of what is good, but to follow William McDonough, our idea of good or successful has to be stronger than simply being less bad. We do not have a remedial task facing us as we confront the failure of our institutions of business, economy and government. We are dealing with root corruption not of individuals or of people primarily, but corruption of the very constitution (or foundations) of the systems we have come to rely on. This will not happen overnight, it will not take the form of “total revolution”. It will, I think, be a more diverse, more social, and more surprising cascade of human innovation.

Now that the old forms of business and economy have unravelled, the point is not to reconstruct them. We all know how the Humpty Dumpty story ends, not with bailouts but with a bang. The point is not only that the old economy is finished, but that the emerging economy is Unfinished.

The “Fourth Quadrant” and the Limits of Statistics

Nassim Taleb, author of The Black Swan: The impact of the highly improbable, has written a fascinatng essay for the EDGE site, entitled: “The Fourth Quadrant: A Map of the Limits of Statistics.”

This teaser from the site’s intro to the piece ought to whet your appetitie for his subject and its relevance:

Taleb, looking at the cataclysmic situation facing financial institutions today, points out that “the banking system, betting against Black Swans, has lost over 1 Trillion dollars (so far), more than was ever made in the history of banking”.

Taleb’s essay challenges us to think about not only the limits of our frameworks and our knowledge, but also to think about how to design better ways to navigate those limits.

Digital Intimacy: Dunbar’s number evolved?

Michael Dila forwarded me the link to this article which explored the impact of micro-blogging and the emergence of what author Clive Thompson calls “Digital Intimacy.” I find this subject extremely fascinating particularly in how it’s changing the way we interact with each other. [Cross-posted at The Foush]

Redefining Our Social Circle

Wikipedia defines Dunbar’s number as:

The supposed cognitive limit to the number of individuals with whom any one person can maintain stable social relationships: the kind of relationships that go with knowing who each person is and how each person relates socially to every other person.[1] Proponents assert that group sizes larger than this generally require more restricted rules, laws, and enforced policies and regulations to maintain a stable cohesion.

No precise value has been proposed for Dunbar’s number, but a commonly cited approximate figure is 150.

But with the advent of cellphones, blogs, email, text messaging, social networking and more, there are many who claim that number is on the rise. The latest entry into the market is Microblogging, with services like Twitter, Identi.ca and Rejaw and of course, the infamous Facebook Newsfeed to name a few.

Micro blogging has emerged as yet another extension of our online selves. To many, the activity seems pointless. I mean, who cares about the minutiae observations and remarks generated by our ever expanding  networks? It seems like another time-wasting, self-promoting, privacy-violating fad. However, Thompson points out the benefits of these activities and the new areas of opportunity they are creating within our social lives. To others (me included) the aggregation feature allows me to quickly scan a wider group of people and more easily keep up with my online friends.

The rise of these services are an indication that the nature of the way we work and communicate is changing. Particularly, it is impacting our “weak ties,” or the people we connect with outside of our immediate family and close friends. These will be our resources for business development, recruiting, marketing and communications. It is the new and extended corporation.

Transforming the “face of business” into the “faces of business.”

With the rise of free agents & mobile workforces more and more of people are working on their own, often isolated. Microblogging helps us connect to people in an effortless way. Unlike blog posts which tend to be more structured, tweets are spontaneous little glimpses into one’s daily life.  Thompson calls this constant online contact “Ambient Awareness.” Which is similar to hanging out in a room with a friend and you’re both doing different things, but every once in a while you exchange a smile. You don’t have to be aware of every little thing they do, but it’s nice to have them there.

To me, this is a reflection of the changing nature of business models. Microblogging grew in popularity to fill a need, in this case a viable replacement for the daily gestures we used to get from those around us. The way we collaborate and co-create are being redefined and technology is responding to that.

Plugged into the Collective Unconscious

Psychologist Carl Jung described the Collective Unconscious as a reservoir of the experiences of our species. Microblogging in particular has plugged in to this wisdom of crowds by providing the ability of a near-instant response.

Source: Twittown.comInformation Exchange: I find my Twitter community to be an invaluable resource, in fact, I don’t remember how I ever did anything without them. From answering questions about every conceivable topic to becoming an extra set of eyes or ears, they always make sure I am in the know, and I am only too happy to return the favor.

Trend Spreading: Things that are cool become really cool, really fast. From new gadgets to new websites, once the buzz starts it seems like everyone is listening.

Ad-Hoc Social Organization: this is one of my favorite twitter phenomenons. Someone tweets about a cool conference or event and before you know it, I’m signing up. I have met so many great people by the spontaneous gatherings that have popped up in Toronto. From the Mozilla Firefox 3 launch party to the seminars at MaRS

Transparency: I find the low commitment of microblogging sites encourage a deeper level of transparency. I like it because it shows a softer side of the people whose blogs I read, including anything from an affection for their children, the joy of a new puppy or even the excitement of starting a new job. There is something nice about sharing the little milestones in our lives together. I recently lost my grandfather and was in a strange city where I didn’t know very many people. It was my twitter friends who offered words of comfort and support through out the day, making me feel less alone. We share both our sorrows and our successes together.

What this means:

Ultimately to me this means the rise of the “in between,” which is the most interesting space of all.  Web 2.0 has fostered conversations in the space between traditional business models and corporate communication channels . Now, these new tools are creating a “digital intimacy” that is delving even deeper, tackling the moments between blog posts and social network activities. The conversation is a little rough around the edges at times, but its true potential lies in the fact that it is still evolving and still very much unfinished.

Unfinished Theory

John Boyd, considered to be one of the most important strategic theorists since Sun Tzu, never wrote a single book.  Despite this, his thinking has become one of the dominant perspectives in the military strategy community, and increasingly his theories are seeing growing application in the business world.

What’s interesting about Boyd’s work is that he left his ideas deliberately unfinished.

While Boyd is most commonly known for his model of decision-making, the OODA loop, his true contribution to the field of strategy came from a series of presentations that he made which ran over a period of almost two decades.  His briefings often lasted upwards of 10 hours, and were in a constant state of evolution.  Boyd used these briefings as a mechanism to help evolve his thinking by prototyping and testing his ideas in the sandbox of the briefing itself.  They were designed to be a discourse that challenged his audience to think and respond. Considered to be the first post-modern strategist, Boyd sought to prolifereate discourses with his audiences and with the community without trying to fit these dialogues into a permanent grid. He wasn’t concerned with answers so much as understanding how to evolve the discourse itself,

Boyd’s influences included individuals such as Godel, Heisenberg, Popper, Kuhn and Polanyi. Certainly not the expected inputs for the average military strategist.  In particular his work was heavily informed by two ideas; Gödel’s Incompleteness Theorem and Heisenberg’s Uncertainty Principle.  The attachement to Godel is especially interesting, as it suggested to Boyd that any model of reality was incomplete; constant refinement and adaptation was required based on new observations.  Boyd not only used this idea in his theories, but in the development of the theories themselves, recursively iterating towards a deeper understanding of the true nature of strategy.

Towards the end of his career, he began to describe the thinking that arose from his discourses as the “conceptual spiral”.

Boyd’s Conceptual Spiral:

  1. Comprehending
  2. Discovering
  3. Doing
  4. Unlearning
  5. Shaping
  6. Innovating
  7. Achieving
  8. Relearning
  9. Adapting
He felt that engaging in this spiral led to three key outcomes: Insight, Imagination and Initiative, which he referred to as a “paradigm for survival and growth”  When Boyd passed on, he was still at work on his unfinished theories, which increasingly reveal themselves to be some of the finest strategic theory ever developed.

If we want to benefit from Boyd’s thinking, embracing the idea of being “unfinished” is only the beginning. Just as critical as the idea of being unfinished is the development of a conceptual spiral that helps create the discourse, which in turn drives the evolution of thinking and theory.
 

Unfinished Game

Today one of the most anticipated games in development has been released. Will Wright’s Spore has been the justified subject of hype for a great many reasons: no of those reasons, however, include the importance of his game to business design.

Spore is described by Wright as “philosophy game”, which is a weird enough signal that it might be different from first-person shooters or classic arcade games. This makes perfect sense, since in 1989, Wright created The Sims, a sort of Game of Life on steroids, that allowed its players to influence hundreds of variables in order to make and guide the life of a family. Among the many things that made The Sims both successful and novel was its emergent field of play. Instead of knowing rules and goals from the beginning, the player is forced to explore, improvise and imagine the “object” of the game.

Spore takes this body of open-ended play and drops it on a powerful new chasis. One of the most exciting novelties of Spore is its exposure to the network. This is not the advent of networked gameplay, which has been around almost as long as the Internet, but never before has the potential for such rich interaction and emergence existed in a game: maybe never before in the history of interaction have ordinary folks had this kind of power put in their hands.

At the heart of Spore, is the creature editor. The player is not merely customizing the appearance of an avatar, but literally designing its life chances. Spore is a game on a cosmo-evolutionary scale. It begins with a single celled creature, which gameplay evolves and progressively allows the player higher and higher degrees of design capability to change. In networked gameplay, creatures made by one player interact with those of others. Not only has this effected amazing innovation in game (interaction/experience) design, but it makes Spore one of the most powerful and fully-realized examples of what my colleagues Greg Van Alstyne and Robert Logan have called designing for emergence.

Why do I think Spore is important to business design? It provides an immersive experience that creates the opportunity to learn myriad lessons about interaction with complex systems and how to design for them and it plays out this leaning on a human scale. Wright didn’t design Spore as an educational game per se, but it appears to me to have enormous implications for breaking learning out of the classroom, something that is of growing importance to business design and business model evolution and innovation.

Finally, Spore provides a challenging template for new models of virtuality. The game/virtual world of Second Life seems sadly unsophisticated by comparison. Second Life offers little beyond a sadly rendered mirror-world as a stage for computer mediated interactions. Spore appears to take us far away from the world we know, but paradoxically pulls us onto the shopfloor of the design of reality itself. A philosophical game, indeed.

Unfinished Book, Unfinished Business Model

Dave Gray, friend and colleague, did an amazing thing recently. He published a book he had started but hadn’t finished. Then he added to that amazing thing something more radical still: he shared the book with others and invited them to help him contribute to it, to literally write and/or draw in it, on it. Not to finish it (I don’t think), but to add to it, change it, make it better, smarter…to give it life. The book Dave published isn’t unfinished in a defective way, but by design.

The unbook
View SlideShare presentation or Upload your own. (tags: books book)

This is, I think, utterly ingenious. Now that we know what an Unfinished Book might look like. What about an Unfinished business model?

What is Unfinished?

The UNFINISHED BUSINESS Initiative has been an incubator project of Torch Partnership for the last nine months.

The UNFINISHED BUSINESS Project is a program of collaborative innovation that will enable a select group of enterprises to co-create knowledge, experiences, along with prototypes for new designs of value.

The UNFINISHED BUSINESS Project will:

• explore the potential of “open” collaboration in a commercial context

• test and validate theories about the power of social technologies in the service of innovation

• develop commercial strategies for sustainable products, services, business processes and business models

• prototype methods and models for the social design of value

• design & deploy a platform for innovation that has network and social designs (designs for emergence) at the heart of its business model and value proposition

• invert or upend models of knowledge based exclusively or primarily on authority (whether derived from domain knowledge or disciplinary training)  and the businesses of “expertise” built around them AND to challenge them with a model organized around collaboration, participation, sharing: thus bringing the principles of network effects not just to knowing, but to knowing/doing (putting the techne back in technology)

• develop a model for a new way of building, extending and renewing human and organizational capability