What are emergent collectives and why are they important now?
04/01/2012 6 Comments
The First decennium of our new millennium was disruptive for a lot of businesses. Internet-related information and communication technologies (ICT) became all too quickly mature and to a great extent useful. Ripened fruit that could be harvested by those who saw new ways of doing business. Strange, but existing businesses seem to lack flexibility to adapt to the new ICTs. Examples of businesses that were not lean enough to respond to these emergent ICTs were record labels, television stations, propriety ERP software vendors, and print media.
Since the phenomenon of disruptive innovations is well researched by many scholars, the impact on existing businesses is well known. Therefore it is astonishing why vested organizations still hesitate to jump on the bandwagon. The real power of the new technologies lays in their ability to shorten the channels to reach customers while broadening the market scope at the same time. Intermediary organizations, essential in a less connectioned world to get in touch with the end-user, are thereby bypassed or simply eliminated in existing businesses. Intermediaries are typically powerful organizations, like distributors and wholesalers. They are supportive to establish a stable and linear value chain in an old economy. However in a virtual and connected world, intermediaries become redundant. They lose their function and become obsolete. On the other hand value chains become complex value nets where it is now hard to witness the real value and money streams.
New companies like Facebook, Google, Amazon have emerged out of the exploitation of the Internet. One could ask, why were these initiatives not taken by large enterprises governed by well-skilled people? The answer seems quite simple: they just did not assess well the potential possibilities of these emerging ICTs. They focused too much on their daily business and kept on milking their cash cows. In some way this is of course too simply stated. Before the Internet, technology was always in control of engineers and therefore in control of enterprises that were able to afford engineers on their payroll. The Internet has another modus operandi. There are (still) no central control mechanisms for governing the emergent behavior induced by the use of the Internet and probably there will never be such centralized mechanisms. Still large organizations keep on searching for these governance models to stay in control.
Within the lapse of the Internet all sorts of emergent behaviors can be noticed. Petrie (2011) refers to this as an ant colony in which its behavior, and intelligence is the result of the rather mindless interactions of individual ants following simple protocols of interaction that result in qualitatively different global behavior. This is exactly how e-mail and even the web emerged. Although at that time existing businesses were able to incorporate this behavior within their running control systems. Management like to be in charge. But can they still hold this for future and more complex emergent behaviors like the social media phenomenon’s Twitter and Facebook? Millions of people are using social media on a daily basis, in their job, at home and on the road. But who’s in charge of this all? And where is this behavior leading to?
We must try to understand this behavior before we can make some predictions. The disruptive usage of Internet-related ICTs all have in common that the content is under control of the user. Even Mark Zuckerberg, founder and CEO of Facebook is not in control of all the produced content on his platform. This makes the difference between an email system, which is merely an application and Facebook or Twitter which are social communities of people. Does the absence of a centralized control mechanism leads to anarchy and chaos? The answer is definitely no! Although social media seems to have the power to change politics and government, as one could observe during the Arab spring last year, they do not aim at chaos. Chaos is merely a side-effect. And of course there are hackers who try to play their role in the piece, but their roles are extras. But what thrives people to participate in the play? What is the motivation for people to act collectively?
To explain the phenomenon, Petrie (2011) introduced to concept of “Emergent Collectives” (EC) as the combination of emergent control networks, tools, and incentives that motivate people to act collectively. The motivation for collectively acting lays within the capacity of the networks to scale and to increase value for the user. A necessary (but not sufficient) condition for the take-off of an EC is the speed by which data can be interchanged. A speed of 11Mbps is a strict minimum. Not only the speed matters but also the degree of mobility of the connection. Users do not access the Internet at a specific place (and time) but everywhere and at anytime, since they are highly mobile with their Smartphones.
This brings us to the next condition for an EC to become airborne: the customization of IT. Users today do not depend anymore on IT only available within the boundaries of a company, but can chose to use IT everywhere, at home, at the office and on the road. Tablets, BlackBerries, iPhones, and iPads are becoming commodities at an increasing speed and are capable to support almost every possible application (apps). Access to the Internet by these devices comes in a wide variety of protocols (3G, 4G, WIFI) and at high speeds. These powerful mobile stations drives the users out of the office and out of the organization.
Another necessary feature of an EC is the user being in control of the content. This is why we cannot consider GSM and even 3G networks as ECs, since users cannot contribute other than paying for their use. WIFI-networks on the other hand could be seen as EC, since their use is (mostly) free. The system can scale and there is not a single controlling entity that governs the network. Telecoms still struggle with ECs since they cannot control the broadband access due to WIFI. The walled gardens are under attack. Another example of an EC is the open source movement who attack propriety ERP and other software vendors.
But what business model is now appropriate for a EC? Fundamentally there are two major ways to make money, generate more revenues than expenses (differentiator) or cut expenses below revenues (cost leadership). These models are grounded in the economic climate of the older ecosystems, with well-defined markets and centralized control of the businesses. Although the business orientation has already moved away from a production focus to a customer focus, the real power of the customer has yet not been seen. This is the point where the users take full control over products and services. The response of large enterprises was always adding extra layers of complexity to their control systems to gain back control of a market. However this leads to complexity-driven organizations with large fixed costs. Somewhere this ever increasing organizational complexity must come to an end. The end is near when the additional complexity has a negative marginal value due to the law of diminishing returns. Indeed, current markets do not reward these complexities anymore, thus leading to a collapse of inflexible institutions. This is what happened to the record labels that try to keep their profit margins high on the sale of CDs and DVDs by suing students for copyright infringement and thereby completely ignore the potential of a download market. This potential was seen by Apple (a computer manufacturer!) with the introduction of iTunes.
Another nice example is the “Charlie Bit My Finger” video. The CBMF video is the most watched minute of video made in last five years with over 174 million views (Shirley, 2011). This video was made by amateurs recorded in one take with a poor camera. Not a single professional was involved in the making, editing, distributing and selling. There was not a penny that was changed between creator and viewer. This is the raise of a new video-ecosystem, peer-to-peer oriented and build on other beliefs, culture and goals.
ECs will change our society in fundamental ways. In the new evolving ecosystems everybody will be customer and supplier. On YouTube everybody can upload movies and look to the movies of his peers. Every single individual has become an independent one-person business. But the digital interaction of individuals is a mixture of leisure and work. The boundaries of the workplace and the privacy of the home are becoming vague. This give raise to issues with privacy legislation, which will probably one of the major challenges to deal with. Smart business are now trying to simulate ECs to predict future emergences. This give raise to explore new business models that hopefully embrace ICTs instead of trying to control them.
I think we have explained what ECs are. Why are ECs important now? Because we live in a globalizing world with a commoditization and digitalization of almost everything, from our way of living, working studying, sleeping, to our way of doing business. Traditional economies will not fit anymore in that user pattern. It looks that large companies are under pressure just because of their size and complexity. The competitive advantages of the early days, become more and more handicaps in current times. Centralized control of a market or a service offering is less feasible since users want to be in control of their own content, hereby helped with Internet-related ICTs and emerging social media. The money making capacity lays now within the ECs and is ready to be carefully discovered.