Living Networks: Changing Your Business and Your Life
What the Changing Flow of Information and Ideas Means for Business
Connectivity is shrinking our world and, in the process, transforming business. As communication between people becomes more fluid and pervasive, it is creating what looks like a global brain, in which ideas procreate freely, and we collaborate to filter an ever-expanding universe of information. However, just a small proportion of the planet's population is connected. It is critical that we extend participation as broadly as we can. Macromedia, the company best-known for selling Flash software, is blogging. Weblogsusually fondly abbreviated by their devotees to "blogs"are essentially online publications of people's stream of consciousness, available to anyone who cares to drop in to their Web sites. Opinions and personal perspectives are offered freely and informally, almost always in the context of breaking developments and others' views. This means that blogs are liberally filled with links to whatever is most interesting in the ever-shifting landscape of information on the Internet.
Usually, when Macromedia releases new versions of its software, it provides detailed documentation to its community of software developers, and, if it has announcements, it posts the news on every related Internet forum it can find. When in May 2002 it brought out updates to four of its main packages, it asked five of its most switched-on staff to each create their own weblogs to discuss the intricacies of the new releases. In addition to offering their own insights and personal perspectives on the software, they provide links to all the other interesting online discussion happening worldwide, and independent developers link to their sites when they post something worthwhile. The rich network of links between these ongoing, informal discussions means that what is most interesting to the community is swiftly known to all, and less valuable information leaves barely a ripple in the flow.
Instant messaging was not long ago seen as the domain of teenage girls, who compulsively sit at their computers and chat in cryptic abbreviations about music, boys, and hairstyles with their girlfriends in the next street or the other side of the world. It didn't take long for instant messaging to be appropriated by Wall Street. Eight of the top investment banks have implemented an instant messaging system that links their bond traders and salespeople with 2,000 institutional investors. Information about market conditions and trade execution flows far more swiftly and easily than ever before.
Macromedia's foray into what it calls "the blog strategy" and the bond market's use of instant messaging provide simple illustrations of how business is being transformed. Already, relatively recent technologies like email, mobile telephony, and text messaging are changing the way people communicate and the way companies work. Now, a new phase of emerging technologies, such as Extensible Markup Language (XML), web services, and peer-to-peer, is taking us a stage further. The networks that are the foundation of all society and business are literally coming to life. Our economy is now dominated by the flow of information and ideas, and that changes the rules of success. In this book, we will take a journey together to understand how the foundations of the economy are shifting, the profound implications for business, and how we can be extraordinarily successful as organizations and individuals in this new world.
The coming of hyper-connectivity and the living networks has implications for almost every aspect of business. I examine five key issues through this book.
How companies create value with their customers, suppliers, and partners. The rapidly increasing ease and speed of information flow is blurring the boundaries of organizations. To survive and thrive, companies must create new kinds of relationships with their customers, suppliers, and partners, based on transparency, collaboration, and sharing value. This requires new ways of working. Nabisco and the grocery chains that distribute its products share information and collaborate to result in higher sales and lower inventory costs for all partners. Corporate Executive Board is a membership-only consulting firm that gathers vital information and best practices from its members . . . and sells that information back to them.
How people work within organizations. Work today is based on people's networks within and across organizations. Knowledge needs to flow by connecting the right people, and diverse groups working in different locations and often different companies need to collaborate effectively to do their work. The lawyers at New York virtual law firm Axiom Legal work from home or their own offices, but are connected to shared legal resources and each other to perform their work. Eli Lilly's research and development group uses an internal collaboration system based on the principles of how insect swarms function, to allow the best ideas of a distributed research team to emerge.
Innovation and intellectual property. Our sophisticated economy is increasingly dominated by innovation and intellectual property. However, the increasing complexity of technology means that collaboration is becoming essential to develop valuable ideas. This results in a need for new models to share in the value of intellectual property. At the same time, an ever-larger proportion of intellectual property can be captured in digital form and can thus flow freely between consumers, requiring a shift to new business models for content. Investment bank Dresdner Kleinwort Wasserstein uses an open source model to develop its systems integration software, which makes it freely available for anyone to use. Capitol Records promotes the rock group Radiohead with a suite of digital marketing tools, including providing the more than 900 fan sites for the group with the entire album Kid A before its release. The album hit #1.
Strategy and positioning. Almost all economic activity is converging into a single space based on the flow of information and ideas. This emerging flow economy comprises a vast array of industries, including telecoms, technology, media, entertainment, publishing, financial services, and professional services. Every company in this convergent space is facing new competitive threats and is seeing massive new opportunities open up. Budget travel guide publisher Lonely Planet has used its powerful position with its customer base to sell telecommunications services, television programs, music, and interactive handheld city guides. J.P. Morgan Chase is leveraging its strength in payments to help its clients present and process invoices, allowing it to become central to the flow of business information inside and between corporations.
How individuals provide leadership and create personal success. In this world of connectivity, collaboration, and blurring, executives no longer have control over most things that matter, sometimes even including their own business processes. They must provide true leadership inside and outside the organization to successfully implement new ways of working, while skirting the associated risks. Free agents also need to develop new approaches to create success in a networked world, both by positioning themselves effectively within networks, and fully exploiting the intellectual property they create. Bob and Steve Buckman of Buckman Laboratories have helped create a firm that builds trusting, highly collaborative relationships with its customers. Successful science fiction writer Eric Flint not only chooses to provide his books online for free to help him sell books in bookstores, but has also supplied the facilities and encouragement for other authors to do the same.
In order to understand fully the implications for business and what we must do to be successful in this new world, we must first examine the foundations of the living networks. These are connectivity, the rapidly changing flow of information and ideas, and the creation of what looks very like a global brain.