“First they ignore you. Then they ridicule you. Then they fight you. And then you win.”
That’s one of my all-time favourite Mahatma Gandhi quotes. (But it doesn't displace the No 1: When asked what he thought about Western civilization, Gandhi replied, “I think it would be a good idea.”)
Whenever I think about paradigm shifts, particularly in the context of those influenced by technological advances, the Gandhi quote comes to mind. Clayton Christensen’s book, The Innovator’s Dilemma, covers some of the relevant ground, but doesn’t evoke the emotional dimension quite as succinctly as Gandhi does.
We’ve been in the midst of a massive change in paradigm for some decades now, what John Hagel, John Seely Brown and Lang Davison referred to as ‘The Big Shift.’ Driven by continued and continuing advances in digital infrastructure, and augmented by liberalization in public policy, businesses now operate in markets where competitive intensity is increasing, where barriers to entry are reducing sharply, where margins are hard to sustain.
There are many ways to characterize the shifts taking place.
Hierarchies to networks
Stocks to flows
Centralized to distributed
Broadcast to peer-driven
One-way to two-way
Command-and-control to community
These shifts, in turn, create the beginnings of other, more complex shifts. Markets affected by the Big Shift tend to move to the extremes of hyperglobal/low touch or hyperlocal/high touch; the middle ground becomes hard to hold, whether in terms of size or scope.
Industries that relied on ‘national’ boundaries find this very hard to deal with. It is therefore no surprise that media, entertainment, telecoms, banks and airlines, amongst others, feel like they have been caught in a crossfire for a very long time.
There’s a good reason for them to feel that way. A simple reason.
They have been caught in a crossfire. Between hyperglobal and hyperlocal.
Opportunities
Connectivity is becoming ubiquitous and affordable, as is access to compute power and storage. Smart mobile devices are everywhere and allowing everyone to connect to everyone else, allowing everything to connect to everything else. Soon it won’t just be our phones that have SIM cards and GPS: so will our pets, pots and pans.
Markets affected by the Big Shift tend to move to the extremes of hyperglobal/low touch or hyperlocal/high touch; the middle ground becomes hard to hold, whether in terms of size or scope.
The communities that are formed by such connections create new market opportunities. In the past, such opportunities were only accessible to those with the right background, the right connections, the right education, the right socio-economic status, perhaps even the right lineage. Those barriers are weakening day by day as the Internet, the Web and smart devices are enfranchising billions in new ways. And not surprisingly, those whose power came from the protection afforded by those barriers are seeking to use the remnants of that power to delay the inevitable. That’s why I was so pleased to see the Stop Online Piracy Act (SOPA), Protect IP Act (PIPA) and Anti-Counterfeiting Trade Agreement (ACTA) come and go. They were so clearly acts of desperation, with unintended benefits. They helped wake people up, helped educate them about what was at stake.
What we saw at the 2012 World Conference on International Telecommunications (WCIT-12) in Dubai had similar characteristics: desperate actions by those who saw their power being eroded, a protest movement in response, publicity about what was going on, education of the men and women on the street and ultimately failure of the intended action.
We’re going to see more of this cycle in the coming year. Even dinosaurs learn to dance. But the desperate dances are not going to be the main event.
This is because the main actors will be people similar to you and me, yet subtly different. People who for the first time will be enjoying the power of ubiquitous affordable connectivity, compute power and storage. People enjoying this power wherever they are, whenever they want to, for whatever they like.
That power creates opportunities for people to build markets and communities; this has already
been happening for decades now, but we’re going to see this trend accelerate.
As more and more people find new ways to connect with each other, they find new ways to create value for each other.
These new ways to connect and to create value, in turn, create opportunities for others to build tools that help people do this.
Platforms
When I speak of platforms, I tend to speak of open adaptive constructs that allow people to layer value around and ‘on top of’ the foundation. A closed platform is likely to evince linear growth at best. More open platforms are capable of supporting geometric or exponential growth. The principle is the same: the more open the platform is, the more likely it is that relationships and interactions between platform participants will create new and differentiated value.
Platforms come in many shapes and sizes, guises and disguises. A credit card is a platform. So is a car. A mobile phone is a platform. So is the Web. Communities and fora like The World Economic Forum and TED are platforms. So are political parties. An airport is a platform, so is a newspaper.
Platform. A term that means so many things to so many people. Yet when you look at platforms from a digital perspective, some common elements emerge:
**Platforms are open **— Of course some platforms are more open than others, as incumbents retain barriers to entry, often with the assistance, at times even connivance of regulators. Incumbents tend to have considerable financial power until they cease to exist.
Open means open to competition — Open means allowing participation by all. This has implications on standards, prices, prerequisites, the cost of entry and the cost of exit.
Platforms are adaptive to the environment — They’re elastic, allowing participants to scale both up as well as down. They’re responsive to change: cost of change is as important a measure as unit cost in a market where change is a constant. Adaptation and scaling take place at speed, allowing creativity to operate at the pace of the market, not the incumbent.
Platforms enable ecosystems — They are ‘multi-sided’ like exchanges and marketplaces, focused on simplifying interactions between participants.
As David Weinberger said, “the smartest person in the room is now the room.” This year, there’s going to be a room born every minute. A very smart room. Those rooms are going to demand support for their interactions and their creativity, as they change the way they live. That support is going to come from platforms.
Platforms. Open, adaptive, enabling. Allowing ecosystems to be formed and to flourish.
Technology vendors understand platforms. Even incumbent technology vendors understand platforms. But many of them are tied to hardware or processor licensing models, the digital rights management (DRM) of the computer industry.
Apple’s climb to the stars has made some of these vendors relive their dreams of yesteryear, allowing them to believe that the money’s in hardware.
The money’s not in hardware. It’s in ecosystems. (And if the ecosystems support elegant and well-designed hardware, that’s great.) I think it was James Gosling who described OSX as “Linux with QA [quality assurance] and style.” No ecosystem, no hardware sales, no hardware margins.
People forming communities to do magical things together; people building infrastructures that enable this to happen. People creating value individually and collectively across the whole spectrum: in education, health and government; in business and in the arts; in personal lives as well as in community.
All this has been happening for a while, but a change is going to come. This whole space is going to get injected with ‘quantum energy’ as the number of empowered people gets to critical mass.
Below are five ways in which this happens; how value is created, how sharing is enabled and where human qualities and needs factor in.
1. Platforms create value by enabling social interactions between participants
The simplest way that platforms enable sharing is by helping people communicate with each other. The traditional post and telegraph companies, forerunners to the modern telcos, are classic communications platforms. All you need is a directory—some way to look up who’s there. If possible, you can reduce the cost of searching through the directory by grouping/sorting alphabetically, regionally, functionally, whatever. When directories were analog this was very important; now with digital search capabilities, not so much. Nevertheless, the ability to form groups and to have those groups discoverable is important.
Telco 1.0 was about enabling primarily voice-based means of communications (though telegraph played a part for a while). Directory updates were analog and annual, grouping capabilities only available to the directory publisher. Telco 2.0, led by Microsoft, added e-mail to the functionality, and with that form of messaging allowed the scheduling of events to become reality. Telco 3.0, led by Facebook, made all this real-time, available as a feed, and with exposure of APIs to make it a real platform.
Once you have a platform that allows simple social interaction, the next simple thing is to enable sharing of digital things. Photographs. Documents. Music. Film. Blog posts. Smaller blog posts. Microblog posts. No surprise why we’ve spent time going through all this, with the consequent impact on traditional analog intellectual property structures.
The value was not just in the sharing of the digital object per se, but in making that object ‘social,’ as people like entrepreneur and application designer Jyri Engestrom, reminded us. By allowing people to participate, new forms of value emerged. Everything could be tagged: folksonomies emerged, new ontologies and taxonomies could be formed, more flexible and more adaptive than their predecessors. Discovery of the object became easier.
It went beyond the tagging and labelling. Everything could be rated or reviewed. In fact, even the rater or reviewer could be rated or reviewed. So the next stage of value came from participant ratings (as in eBay) reviews (as in Amazon) comments (as in blog posts).
There was an obvious next step: lists. Top 5s, top 10s, favourites, whatever. So that became the next basis for adding social value.
And then of course you needed a way to share the tags, the comments, the reviews, the ratings, the lists, with a larger group of people. So we saw more ways of publishing come to the fore, with Tumblr and Twitter. But unlike the past, the growth in participants did not need to arrive at spam. Because these new publishing mechanisms came with new subscribe mechanisms. Pub-sub (publish-subscribe) was here to stay.
All that was phase one: the sharing of digital objects, the facility for participants to enhance those objects with comments and feedback and the capacity to publish or distribute the enhanced objects.
From that point, platforms have continued to evolve in at least two ways: allowing people to build platforms themselves (by exposing infrastructure and software and data as services); moving to engaging with analog objects, not just digital (where now only the icons and labels of the shareable things were shared within the electronic community). Sharing physical inventory became valuable, with recent examples like the home-cooked meal swap platform, Mealku, and the airport-based car-sharing platform, FlightCar, as part of a category that includes Kiva for microfinance, Airbnb for vacation rentals and for that matter, Amazon's Mechanical Turk for finding or tasking paid work; they’re all exchanges where one person’s excess meets another’s scarcity, for a small fee. Sharing applications built on top of the platform is another step, which means the platform needs to offer APIs and some form of app store. WordPress for writing, Discogs for music, Etsy for handmade goods, Minecraft for digital building, these are all examples of communities that can be built with APIs and apps.
2. Sharing also creates value by reducing waste: the growth of the 21st century scavenger
I want to emphasize this by sharing some recent examples that came across my radar screen, examples that excited me a lot: With Mealku, you get a chance to do what The New York Times called “making reservations for leftovers”: you have an excess of food prepared at home, and the platform allows you to get rid of that excess meaningfully. With FlightCar, you lend your car to others while it would normally have been parked at the airport waiting for your return, and they return it in time for you.
Resource scarcity is a reality for us now. We’re already facing challenges with energy, water and minerals, and there’s more to come. Reducing waste is no longer a nice-to-have option. So services that allow us to match one person’s excess with another’s shortage are going to become more and more important. When I was a child in India, I remember being told that every day, the US throws out enough food to feed Canada. I have no idea whether that’s true, I haven’t been able to verify it. But anecdotally it appears to make sense.
So services that allow us to match one person’s excess with another’s shortage are going to become more and more important.
There’s a lot of research that’s already been done on how scavengers and rag-and-bone men and their ilk were part and parcel of city ecosystems in the past. Those were all about physical cities, bounded by physical spaces. Now those constraints have gone, with a new dimension of freedom added: the concept of renting scavengable inventory. Borrow my car while it’s in the car park. Eat my leftovers. It’s an exciting area, disrupting many markets, and allowing for new forms of intermediary to form and thrive.
3. All this sharing creates Big, Small and Open Data
Big Data is by itself nothing new. We’ve had distributed devices for decades, collecting transactional information, and allowing for pattern analysis through aggregation and visualization. The credit card is a classic example.
As we moved from small numbers of dumb devices to somewhat larger numbers of smart devices, the changes that took place were at least twofold. One, we moved from transactions to conversations and activity streams to intention signals: the ‘tense’ of the activity stream moved from past to present to future-as-well-as-past-and-present. And two, this information came wrapped in metadata about time and place and actor and anything else the sensor could ‘lay hands on’: altitude, temperature, rainfall, friends present, devices used, ambient conditions, whatever.
There was a third change, a material change. We started involving people by connecting them. A whole new world, no longer machine-to-machine. Lots of data. Lots and lots of data. You’ve heard the similes. They go something like “In year X the world had a total of Y data. Today we add that in two days.”
What’s important is that we understand that there are at least three types of data from a platform perspective. Aggregated forms that allow us to act as groups or be understood as acting in groups. Drilled-down forms that allow us to act as individuals, or to be understood as acting individually. And conventions, definitions, labels, part numbers, classifications that allow us to have meaningful aggregations or drilldowns.
Both Big Data as well as Small Data come in open and closed forms.
We understand the value of the Big and the Small, but we have only just begun to scratch the surface of the Open.
4. Machines filter. It takes a human to curate
By now most of you have probably come across the kind of problems of an algorithm-driven world. Similarly, you’ve probably understood most of what there is to understand about the benefits and risks of filter bubbles. I guess my whole philosophy about all this can be understood in what Sugata Mitra had to say, in his TED Talk on education. Mitra said, quoting Arthur C. Clarke; “A teacher who can be replaced by a computer should be replaced by a computer.”
So it is with all of us in all our walks of life, as knowledge workers or traffic wardens or surgeons or rocket scientists. There are things that we do that can be replaced by computers. And they should.
And then there are things that can’t be replaced by computers. Those are the things we should concentrate on.
Technology is at its best when it is serving us, in the form of tools that augment our human actions.
5. The enterprise context: everything starts with the customer
I spend a lot of time thinking and writing about the enterprise, and about how information lives within and beyond the enterprise.
Open adaptive platforms, underpinned by robust social networks, aided and abetted by strong analytical capabilities, are here to stay. They’re some of the reasons I joined Salesforce.com in 2010, convinced by the importance of the multitenant model, the platform and Chatter.
The traditional lock-ins for customers have disappeared in most markets, making the loyal customer a scarcity. Understanding customer engagement has become an imperative. Not just how the company engages with the customer, but more importantly, how the customer engages with the company or companies. So it is no surprise that the focus on investment has moved from traditional back-off systems to ‘front-office.’
But there is a subtler change. Customers are also investing in ‘systems,’ platforms that simplify their engagement with the business world at large. How they identify themselves (login, Facebook, Twitter, LinkedIn). How they share their personal information. Who their friends and advisors and recommenders are. What devices they’d like to use. How they’d like to pay. Their preferences in terms of devices, approach to contracting (no contract versus term, prepaid, pay monthly, the lot), approach to payment (card, PayPal, Square, Amazon Payments, etc).
Those ‘systems’ are often based on services provided by platforms, and companies must now build services that take those systems into account.
When you start thinking from the customer perspective, it all starts with Consumer to Business (C2B). It may look like C2B but often it turns out to be C2B2B2B2B. Soon it may start looking like C2C2C2B2B2B2B.
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