The Economies of Small
1st March 10
Posted in business models, culture
'Frenzy' by Amayu, courtesy of Flickr
“The money on the table is like krill: a billion little entrepreneurial opportunities that can be discovered and exploited by smart, creative people.” Landon Kettlewell, fictional CEO Kodak/Duracell in Cory Doctorow’s “Makers”
I’ve finally finished reading Cory Doctorow’s new novel “Makers” and – like a lot of people I suspect – needed to take a little break afterward to put my brain back together again. It’s the usual Doctorow high octane cocktail: stuffed full of imaginative near-future action & immutable human frailty, at times the plot veers close to depicting a post-capitalist, economic Armageddon. I’m not going to spoil the book for anyone who hasn’t read it by saying more. Instead, against an ever-increasing backdrop of recent pieces examining crowdsourcing (here are two of our own, here and here), I wanted to dig quickly into a single thought that the book provoked in me within its first few pages.
What if, instead of thinking about sourcing from the crowd, we reverse engineer that thought. In other words, why not send the company out into the crowd?
As Doctorow’s character Kettlewell (more force of nature than human being) puts it:
“Our business plan is simple: we will hire the smartest people we can find and put them in small teams. They will go into the field …capitalized to find a place to live and work, and a job to do. A business to start. Our business to start. Our company isn’t a project that pull together on, it’s a network of like-minded, cooperating autonomous teams, all of which are empowered to do whatever they want, provided that it returns something to our coffers. We will explore and exhaust the realm of commercial opportunities, and seek constantly to refine our tactics to mine those opportunities, and the krill will strain through our mighty maw and fill our hungry belly. This company isn’t a company any more: this company is a network, an approach, a sensibility.”
In our world, we regularly talk about the agency of the future being a ‘networked’ agency, if it isn’t already. It’s not who you employ on the payroll, it’s who those people are connected to on the outside. Only Superman can ‘do it all’ at warp speed, the rest of us need strong, mutual partnerships and a bucket of caffeine. Well-managed crowdsourcing takes that a step further, enabling a kind of controlled serendipity: potentially speeding the process to commercial & creative gain. Co-creation is a strand of crowdsourcing that can lead to physical production in many cases – think Nike ID and the rest. At the root of both is a flattening or democratizing of media and, to some degree, production.
As an aside, this is something John Willshire @willsh takes on a (significant) step in his presentation for the Battle of Big Thinking, where he talks eloquently about social production. On flicking around the interwebs as you do before you start to put fingers to keyboard, I discovered that Faris – of course – has already linked Makers and Willsh’s presentation with an excellent piece in praise of fabbers (the 3D printers that feature heavily in Doctorow’s new book and an innovation that also gets a nod in Willsh’s presentation), with the conclusion that:
“As Wilsh points out, we are moving towards the technologies necessary for social production….Anything that exists digitally can be copied and distributed at zero cost, and once everyone has a fabber [3D printer], a new type of industrial revolution seems inevitable.”
Indeed. Alex Bogusky and John Winsor also talk about democratizing prototyping in Baked In and the impact that can have on how a company actually behaves. This leads back to my initial thought here, which is less about 3D printing per se and a lot more to do with the radical re-structuring of an organization. When technology has enabled ‘company culture’ (think the connections between people brought together for a commercial purpose) to exist outside of four square walls, knowledge to be shared instantly, timezone differences used to increase not hinder corporate efficiency etc - isn’t it time we start really living the dream of the networked enterprise? Empowering small, autonomous, nimble teams to go out and source the next solution?
This isn’t just a way to reinvent red-blooded western capitalism (check out the comments on Tor.com where Makers was serialised ahead of publication); it might also be a way to look at developing economies. Let’s skip the consolidated corporate, ‘mass production + mass media’ stage and embrace a micro economic model where everyone can be an entrepreneur, a maker, a seller, a dreamer.
A final point on size – we’re all used to hearing the number ’150′ cited as the ‘optimum organizational size’. As the business strategist Tom Peters put it in 1994:
“Arguably, we got away with violating this limit during the age of mass production and hyperspecialization, when the traditional craftsmen’s imagination was subordinated to machine logic. Now, brains, imagination, craft, and whole jobs are once again the order of the day and 150 people, give or take, may again be the right group size.”
In a flat world, might 150 in fact be far too large? Might a network of multiple, much smaller, autonomous teams actually be more commercially successful than a conventional corporate body?
Doctorow seems to conclude somewhat ruefully that simple human will or belief is the greatest obstacle to this approach succeeding. What do you think? Does this model feel viable or is it just venture capitalism taken to an over-inflated extreme?
The fact remains: I can still get more done when I am in the same room as someone.
I’ve tried Skype, IM, email, Wave…
Nothing comes close to being able to break through the bullshit like face-to-face.
Another point, do you really think that the world at large is smart enough to grasp this concept? It would cut out a significant part of the workforce (especially in the US).
I like the idea and concept. I’m just thinking it may be a little early to toss capitalism completely out the window.
Hi Stuart,
I agree, I very much doubt it’s for all companies, right here and now (where’d be the competitive advantage in that?)
And like you, I also want to work face-to-face, if not hand-in-hand with a tight team. This isn’t about individual human nodes tapping away in splendid isolation, more a breaking up of a company into nimbler micro-teams and sending them out into the field together. The reference to technology speeding and increasing the transfer of information etc was really just to suggest there may be some centralized things we could just ‘download and go’ and likewise our ability to ‘report back’ becomes that much easier.. but I could have made that clearer. Frankly you also make a good point that the tech ain’t all that great yet!
Ah. Much better understanding of your thinking now Mel. Thanks
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This post was mentioned on Twitter by MattJMcD: Great stuff to get your brain going from @BBHLabs – The Economy of Small – http://bit.ly/dp6JWH...
Brilliant post. Though you reference some Scottish fool in the middle….
Anyway, I’m a big fan of the notion from makers of small, highly dependent teams working as part of a decentralised network…
…partially because it would seem to me to be a highly productive way of getting lots of interesting things done (and LOTS of interesting things are good, rather than one big hit-or-miss thing)…
…and partially because it frees up some space in increasingly crowded city centres…
…I went on about this a while ago, after seeing some industrial detritus on a hillside overlooking Macclesfield – http://j.mp/cWp5Pg
Thanks John. Like the idea of starting lots of fires too.
Got to admit I hadn’t thought through the implications for city centres.. or business parks for that matter. Wonder what we’d really miss – maybe we’d just need to find somewhere or something else to congregate around en masse. Very nice post, thank you. It reminded me a little of seeing derelict factories (and Lenin statues) at the close of the Soviet Union.
I do agree that simply human will or belief is the obstacle. Also, that these kinds of thoughts are easier talked about than done.
On the former: strikes me that muscle memory and not-invented-here syndrome still affect many companies, in our business and others. Look how long it took the US auto industry to wake up or the traditional advertising agencies to realize digital was either a threat or an opportunity.
People have a hard time moving outside their comfort zone, and surprisingly, it’s often creative people who most resist listening and embracing the ideas of others. Plus, of course, there is a whole new set of skills to learn, no corporate infrastructure to back you up and the need to be more entrepreneurial as in individual or team.
Perhaps if we would stop being so afraid of failure and not knowing the answers in advance more of us would embrace this thought.
Second, it seems, in some ways, not unlike what great market researchers or planners already do. Think IDEO and how they develop new products and services. The BoA keep the change idea comes to mind. Send small team out into market, observe and learn, gather from subjects, and discover the insight that people like to save but hate the act and effort of saving (so they overpay their bills, rounding up to an even 5 or 10 so the creditor owes them money; an odd way of saving, but one that shed light on the opportunity) that led BoA to one of the more innovative banking ideas in decades and one that generated billions in new deposits.
What we all need are trial runs, experiences, shared case studies, best practices. All backed up with a commitment to try. The challenge, of course, is that one or two or even three people inside a company can’t do this if they are surrounded by naysayers or resisters. That’s a different post, but one about the kind of people you need to surround yourself with. I think perhaps you’ve given me an idea.
Thanks for such a thoughtful response Edward. Most glad we’ve provoked an idea here. Great examples you cite too.
You’re talking to the converted about experimenting with this for real..As you say, it boils down to one thing in the end really: who are you going to surround yourself with?
WoW! Gr8 Post! Reading the first few sentences sent my brian into supernova. Particularly like the concept of a business as a network – reminded me of something akin to how Skype creates a powerful telecom system through a ‘client’ on every customer computer…giving them the capability to rival many of the services of heavily invested and traditional companies without the big, beefy, wasteful infrasructure (yes – just like Agency Nil too…). This proposed idea to send the employees ‘out’ into the market to create a network of delivery – which creates revenue and returns it to the company coffers – really works for me in many ways. Got to ask the question though – why have the company structure at all? What’s its purpose? Just to provide capital? Aren’t companies just the vehicles to create what people need in terms of products, services and money to pay the bills…if the business concept delivers those elements, why does there need to be a company that collects and redistributes? Wow, thinking about it – aren’t these concepts moving towards the real or original definition of communism before it was perverted by politics and dogma? i.e. a group of people all working together to deliver a greater whole than possible as individuals? *Gulp* *Scary stuff!*
Last question – the concept of the right size of company being 150 seems somewhat ridiculous to me (what about to you?) – isn’t it more to do with the right number of the right talent…does anything need to be 150 people strong anymore accept the army
Again, fab post! I’ll not put our physical address in case any elements of above cause flag waving or offence…
best to all
Thank you Andrew, there’s so much in your comment.. I wish this were communism-gone-good, but it’s not. I do think there’s a role for a company (see Pats’ comment below and my response), but yes, I agree, I am less convinced that 150 is the magic number.
While it isn’t agency-oriented, many of the points above are probably the causes of the criticisms we made in out blog (apologies if links are unwelcome) at http://spongenb.wordpress.com/2010/01/29/brand-loyalty-what-big-companies-can-learn-from-the-small-ones/ – a few weeks ago. Having worked with some of the very big agencies, I’ve found that the ones who work well, who coordinate best and who produce the most consistent results are the ones who operate like a small company.
A small agency we worked with who I won’t name did their best to mimic large agencies and tripped over quite badly – everything they stood for disappeared in a mire of meetings, brand alignment sessions and then getting a branding specialist in to tell them what they were all about. Yikes.
Conversely, many years ago, working with a small part of the McCanns group, I was impressed at how “small” they acted. The agency principal never lost sight of a single piece of the operation and they kept hold of their individuality, even within such a big group.
Great post Mel. The quotation from Kettlewell made the hairs on the back of my neck stand on end! (Must read the book now and hope he doesn’t turn out to be a homicidal megalomaniac.) It’s an extraordinarily exciting model but it posed one question for me. I love the idea of a company not being a structure, an infra-structure or a process but instead being “an approach, a sensibility”. The question I’m pondering is how a less tangible, more osmotic sense of what a company can be created without some physical proximity or philosophical alignment at the outset. That softer sense of a shared sensibility usually grows out of time spent together. It comes back to an extent to the question Ben poses in “Where does the agency end, and the crowd begin?” about the future of corporate culture versus the crowd. What is the value of corporate culture, both internally and as a differentiator with clients? Does it have real value (I think it probably does) and how do we maintain/evolve it in a networked, devolved world? Thank you for making me think about it!
Really important point you make here. There has to be a value exchange between the company and the teams in the field or else there’s no need for the teams to ‘serve’ the company’s cause.. the organization provides centralized support that’s both practical (info databases, support functions, access to proprietary products) and philosophical (a sense of mission or purpose.. certainly a sense that you’re part of a larger collective with shared values). All of which create economies of scale to complement and support the agility & rapid response provided by the teams in the field. All feels a little (too) like modern urban warfare all of a sudden, maybe.. Either way, you’ve given me food for thought, thank you Pats.
It actually sounds like Herbalife, Mary Kay, and Tupperware… Just spun to different industries.
love this post; what I find interesting is the extremely fine line between what Digital WOM and traditional WOM tries to achieve (find influencers to start a movement) and the images my mind creates as a result of reading Kettlewells speech, which could be construed as manufacturing our own influencers and artificially creating the movement from within the crowd.
Good watchout. I think we need to draw a distinction between how we act on behalf of brands/clients versus how we operate as a business, but that line blurs daily, clearly.
Mel
Great, high energy post. Given the right people I believe small teams are inherently more flexible, innovative, and faster to spot and exploit business opportunities than having the same people cooped up in a mothership office.
I’ve put my money where my mouth is on this one. A colleague and I just left an agency of 1,200 to launch our own strategy consultancy, and the energy and collaboration between the two of us is 10x what it was back at the ranch. And so far at least we’re winning business
What we’re doing (we believe) is building the agency of the future – where genuine strategic thinking leads and drives the client relationship, and where communication programs (digital or otherwise) may or may not be part of the solution. If they are, we’re building an ecosystem of like-minded souls to execute. We’re happy, motivated and there’s no politics. Hooray!
It’s only ever good to read a comment like this. Exciting times. Good for you and good luck, keep us posted on how it goes…
I like this idea alot, I wonder though what “out in the field” really means? Is it just a group separate from the bigger corporation? Or are those groups actually “in the field” like anthropologists? I would hope and expect the latter, as it seems that that’s where the opportunity lies to create something useful and to return something to the coffers.
If it’s just a separation by a small group of people then it doesn’t seem that powerful of an idea.
Good question. I see it as a whole company dispersed into the field in a very real sense. Definitely not just a single, small group separated. Otherwise the impact just isn’t there – think lots of nimble groups out scouting for opportunities (when speed & agility are *the* competitive advantages etc) – Does that help?
Good stuff, Mel. I think you’re right on. My sense is that large organizations will get a lot smaller and new, hybrid organizations will emerge. But, that’s what has always happened. Old, tired things die, new ways of working emerge.
What I love is the optimism of possibility.
Thank you John. The optimism of possibility is a wonderful turn of phrase.
Wondering if we can accelerate this whole process.. but that’s another conversation, no doubt.
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