Social business design: from relieving logic to an enabling logic

Stowe Boyd writes:

From a social viewpoint, the architecture of business seems all wrong. People aren’t really designed to do one thing, like a cog in a watch. They have various relationships with other people, and through these relationships they have influence on the work going on all around them. …And some, a few, are trying to think through a new model for business, reconstructed around what we have learned in the open web, balanced with what we know about the conduct of business.

Esko Kilpi has a really interesting take on this new business logic, in particular as it concerns relations between the firm and the customer.

Esko Kilpi:

“Before the industrial era, the mainstream economic activity was harvesting resources and trading them. In order to sell fish you needed to have access to the waters where the fish were, and you needed to have the right harvesting tools.

The industrial economy was centered on a different logic than the harvest and trade mindset. The logic was to transform the raw materials into products. The success factors were different. Raw material access was not the differentiator. In the new transformative economy, one could convert resources into products in places independent from where the raw materials or energy could be found.

Securing access to production knowledge instead of access to raw materials became the key success factor. As it was important to know, information became the differentiator. The industrial economy was based on economies of scale, standardization and specialization. The industrial logic was most vividly captured in the idea of the value chain. Value creating activities were sequential, unidirectional and linear. In the model, value is not really created but added step by step. To produce value, one receives something from one’s supplier, adds value to it and then passes it on. It is almost impossible to consider a supplier as a customer or a customer as a supplier.

But the relationships between firms, suppliers and customers are changing. The relationships are not purely transactional any more. The industrial relationship was based on the idea that the supplier did something for the customer that relieved the customer for doing that herself. Today leading firms are moving from the relieving logic to an enabling logic. Here the supplier does something together with the customer that enables the customer do things that would not be possible without the relationship.

The customers are not passive receivers and consumers of value but active contributors helping the providers to help them. Without the contribution of the customer, the value of the offering could not exist. Firm-customer relationships are not one-way but responsive interactions in which the parties “help each other to help each other”. Value creation is parallel and necessarily collaborative.

Division of work is now very different from the sequential, industrial value chain. Actors come together to co-create in a parallel, creative manner. Different actors participate differently in different times leading to each value creating situation being somewhat different and unknowable in advance. Thus it is not possible to take any organizational form or skill set as pre-given. Organizing and learning have to be ongoing, context specific, processes in time.

The move from the one-way and transactional business logics to interactive and relational logics changes the concept of management. Organizational change or strategic direction are neither caused by chance nor the choices of managers, but by the very nature of interaction, relationships and collaboration between people in the value network.”

How do the new firm-customer relation affect the internal workers of the firm. A transition is happening to task-based work:

“You could even claim that a new mode of knowledge production is emerging in digitally networked firms. This approach is called task-work. Task-work as a method refers to a new economic phenomenon: people from all over the network contribute small pieces of their time and expertise, voluntarily, to common projects modularized as tasks. Knowledge workers do this based on their availability, interest and experience. People choose themselves what they do, they choose the tasks they take up and the possible colleagues they temporarily want to work with.

Task-work has systemic advantages over traditional production hierarchies when the product under development is mainly immaterial in nature and the involved capital investment can be distributed in the network.

Collaboratively crafted content bases like the world’s largest encyclopedia, Wikipedia, were early examples of task-work.

We will see organizational applications emerge as technological innovations like the Microtask platform spread. For most kinds of information products, task-work is the most efficient method of creating value from a resource allocation point of view. The system of task-work develops as much bottom-up as top-down. In a top-down system the worker’s role is created and provided by the organization for the worker. The user has none or very little control over what tasks are available for him.

In the bottom-up system the user creates her role in an open-ended life stream based on her unique history and her unique intentions for the future. The knowledge worker selects the tasks best suited for her capabilities and best supporting her learning and long-term development.

Task work follows the vision of small pieces loosely joined. Task work is thus at the core of modern theory of the WEB and networked, interactive value creation. Work of the future is not role based but task-based.”

More Information:

Elko has many other interesting thoughtpieces in his blog:

* In “Re-inventing Capitalism“, he argues that the principal agent model of the firm is outtdated

* In the article on the “Internet-based Firm“, he argues:

“The Internet-based firm sees work as networked communication. Any node in the network can communicate with any other node on the basis of contextual interdependence and creative participative engagement. Work takes place in a transparent, wide-area, digital environment. The focus is thus not on independent tasks, or predetermined processes, but on participative, self-organizing responsiveness that creates patterns of continuity and creativity.”

*In Management in the time of social media, he writes:

“In the past we located intention, or thought, apart from or before the action. We assumed a world of cause and effect where the outcomes of our actions can be known before actions are taken. Now we know that intentions arise as much in the actions and outcomes cannot be fully known in advance. This is why a new, different, view of management is required to serve the creative, learning-intensive economy.

* He also examines the nature of human-centric workplaces:

“The interdependent, task-based worker negotiates her work based on her own purposes, not the goals of somebody else, and chooses her fellow workers based on her network, not a given organization. The aim is to do meaningful things with meaningful people utilizing networks and voluntary participation.

It is not the corporation that is in the center, but the intentions, choices and actions of individuals. This view of work focuses attention on the way ordinary, everyday tasks and conversations enrich life and perpetually create the future we truly desire.

The architecture of work is not the structure of a corporation, but the structure of the IT network. The organization is not a given hierarchy, but an ongoing process of organizing. The basis of work is not financial self-interest, but people’s different ad yet, complementary expectations of the future, conditioned by their accounts of the past.”

1 Comment Social business design: from relieving logic to an enabling logic

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