Pull economies vs. push economies

This is a widely discussed meme, i.e. the contrast between the old industrial model of push economies, vs. the new pull economies.

Here an excerpt from David Bollier, who co-authored a report on it, for the Aspen Institute.

The Report, entitled When Push comes to Pull, is downloadable here.

“Briefly put, a “push economyâ€? – the familiar industry model of mass production – is based on anticipating consumer demand and then making sure that needed resources are brought together at the right place, at the right time, for the right people. A company in the “pushâ€? model forecasts demand, specifies in advance the necessary inputs, regiments production procedures, and then pushes the final product into the marketplace and the culture, using standardized distribution channels and marketing.

By contrast, a “pull economy� – the kind that appears to be materializing in online environments – is based on open, flexible production platforms that use networking technologies to orchestrate a broad range of resources. Instead of producing standardized products for mass markets, companies use pull techniques to assemble products in customized ways to serve local or specialized needs, usually in a rapid or on-the-fly process.

Instead of companies pushing their products at us (in pursuit of their own strategic or competitive advantages), the networked environment radically empowers individuals, and communities of like-minded individuals, to pull the products and services that they want, on their own terms and time requirements. For example, small groups of people with unusual niche interests – say, extreme skateboarders or opera buffs – can now aggregate their consumer demand and successfully induce businesses to serve their specialized interests. In the process, many corporations are having to radically re-organize themselves in order to serve the emerging “pull� market demand.

What’s really interesting to those of us interested in the commons is how the Internet now enables small groups of people to easily constitute themselves as an online commons. In so doing, they can often get what they want through social sharing and collaboration, without even using the market! This is because a community based on norms of trust and reciprocity can be tremendously more efficient than markets, which tend to have huge fixed overhead costs (bureaucracies, advertising, distribution systems, lawyers to fight piracy, etc.). As John Seely Brown, the former director of Xerox PARC, put it, “The collaborative peer production achieved through pull platforms can be radically more efficient than classically structured corporations.�

A handful of companies have established themselves as “pull platformsâ€? – think eBay, Yahoo, Google and Amazon. But there are also manufacturing enterprises such as Cisco, the tech company, and Li & Fung, an apparel manufacturer, that are also using “pull” techniques to compete more successfully. “Pull” companies are structured to draw upon a vast global network of suppliers who can meet customized needs rapidly. This works because pull platforms are modular and loosely coupled.”
(http://onthecommons.org/node/824)

David Bollier then quotes from the Aspen report:

“A company can substitute any specialized function with another, more appropriate module with relative ease, as needed. Instead of having the entire corporation build around a rigid, standardized protocol, the interfaces among modules and the protocols for connecting them are standardized. “This means that anybody who wants access to these resources can figure out what they are and how to connect them,â€? said John Hagel, a noted management consultant and co-author of The Only Sustainable Edge.

With modularity and loose coupling of functions, it therefore becomes easier to have frequent and rapid enhancements of the production platform. “The idea is that these platforms are not defined in advance,� said Hagel. “They are emerging over time as a result of the actions of the participants, in rapid and frequent enhancements.�

This points to another design premise of pull platforms: that more and more participants will join the process over time, adding greater value in the process. This enables companies to easily incorporate new supply and distribution participants, and to rapidly scale in size as market conditions or customer demand changes.

Pull platforms have a subtle but powerful advantage over push systems in their ability to leverage people’s enthusiasm and motivation. As Hagel and Brown have written, “Pull platforms harness the passion, commitment and desire to learn of their participants, thereby enabling the formation and functioning of distributed communities that can rapidly improvise and innovate.â€? Pull platforms tend to be able to mobilize and deploy social energies more effectively than bureaucratic, standardized push platforms.”

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