Esko Kilpi on Interactive Value Creation

The art of interaction, the design of digital and the science of social complexity

Tag: Nokia

Designing a beautiful business

I have recently heard people say: “I have a great job.”; “I love what I am doing here.”; “He did it in a beautiful way.”; “I work in lovely surroundings.”; “I work with nice people.” Conventional analysis of organizations is dominated by a rational tradition that ignores aesthetics, yet life is pervaded with beauty as these people proved.

Aesthetic considerations can sometimes be of decisive importance. Apple products and the Nokia N9 attract people the same way that the theory of Einstein attracts scientists – by virtue of their sheer elegance.

Organizations are social constructs. They are nothing but constructs to which people are drawn in pursuit of some purpose. Healthy organizations are a concept of relationships to which people are drawn by beauty, values and meaning, along with the freedom to pursue them cooperatively. Healthy organizations enable more than constrain.

Unhealthy organizations are a concept of relationships into which people are forced by birth, necessity or manipulation. Unhealthy organizations constrain more than they enable.

The concept of the social organization has intensified the debate as to whether competition or cooperation should rule in business. But competition and cooperation are not mutually contradictory. In the new design of work they don’t have opposite meanings. They need to be complementary. In every aspect of a healthy life we paradoxically do both at the same time. No successful social endeavor has existed without combining the two.

But sometimes things have not worked out.

The idea of cooperation went mad in socialism leading to an unhealthy and false pursuit of equality and left us with centralized, totalitarian governments enslaving their own citizens. Competition has also gone mad in many capitalist countries, which has led to mindless self-interest and left us now to cope with the results of the irresponsible abuse of people and natural resources.

We need new thinking beyond the old dichotomy: The political left lacks any convincing narrative in the post-socialist world. The right tells a story in which greed is the dominant human motivation and markets actually mean gambling.

The Internet era has proven that we are capable of working together competitively/cooperatively and building social communities that some time ago many would have dismissed as impossible dreams. Thus we don’t yet have a good idea of what cannot be done by connected people working together in new ways. Changes in existing organizations and the evolution of new ones will have characteristics in common. Just as natural systems like the human body are not vertical hierarchies with each part superior to another in ascending linear order, neither will organizations of the future be structured that way. This is not to say that all present industrial organizations are doomed but the models we use to describe the world around us are.

We need a new vocabulary beyond the models of industrial production and separatist, mechanistic concepts of a corporation.

The emerging organizations cannot be portrayed in two dimensions on a traditional organizational chart. They are closer to the networked organization of neurons in the brain. Yet, even these dimensions are not enough without the aesthetic dimension of doing a beautiful work.

The next challenge is to design a beautiful business.

Happy, Beautiful New Year!

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Thank you Dee Hock and Thomas Kuhn.

From systems to ecosystems

In the past, the influence of external forces on business was not significant. The industrial factory was a fairly simple, isolated machine. The rest of this system was designed around the machine with tightly integrated supply chains and optimized use of coupled resources insulating the machine from shortages and stock-outs. Being efficient and productive inside the system was enough to prosper.

The assumptions of industrial management are not suited to today’s business environment. In contrast to the industrial era, when value was added primarily in the repetitive manufacturing processes, value is today created elsewhere, outside of the old industrial system. Value is co-created in the context of usage through customizable, reconfigurable and more or less unique solutions aggregated by the customer, not the manufacturer. There are no consumers any more!

The new environment is marked by conflicting constraints, variables that shift very rapidly and value creating relationships that change constantly. Linear methods of management are not effective in a complex environment.

The ecosystems approach to efficiency is not designing processes but recombining successful elements to create new versions, some of which may thrive. Global coordination arises, unplanned, from the local, responsive interaction of the elements.

The traditional management approach was to require each worker to assume a predetermined responsibility for a specific role in the process sequence. The ecosystem approach represents a different logic of organizing based on neither the traditional market nor the process. Whereas processes involve relations based on dependence and markets involve relations based on independence, ecosystems involve relations of dynamic interdependence.

Minimal hierarchy, organizational diversity and responsiveness characterize ecosystems. Ecosystems are a response to the increasing complexity of strategic horizons and short half-life of designs. To cope with the uncertainties firms see themselves and the world around them as ecosystems, where every unit, every node in the network, should engage with learning. Instead of centralized design and planning, the activities of exploration are the responsibility of the whole network. Because of greater complexity, coordination and communication cannot be planned in advance, controlled or managed hierarchically.

Authority needs to be distributed; it is no longer delegated vertically but emerges horizontally in the networked ecosystem. Under distributed authority work teams and knowledge workers need to be accountable to other work teams and other knowledge workers instead of a single boss. You need to have many “bosses”. Success at ecosystems depends on learning by mutual accountability and responsiveness. This is much more than matrix organizations or internal markets.

Management and strategy used to be about rational choice between a set of known options and variables. Under circumstances of rapid technological change, the challenge is to create openness to possible options. Management of ecosystems is about facilitating continual renewal. Organizing in ecosystems is not something you do before you can work, but work is organizing. Success is based on continuous redefinition of the organization itself. It is about recombining options and contributions in a competing and collaborating environment.

The industrial model was based on thinking alike and subscribing to the same goals. The ecosystem model is based on diversity. New forms can emerge only if the nodes of the network differ from each other enough.

Instead of focusing on whether some managers institute more efficient processes or design the division of work better than others, ecosystem theory suggests that the properties of communication and connection between people are the causes of success. What the ecosystem becomes, emerges from the relationships of its members.

Value creation cannot be understood as industrial systems any more, but as continuously developing, complex, responsive ecosystems of connected people.

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Discussions around the Nokia / Microsoft ecosystem: TechCrunch. GigaOM. Scobleizer. The official Nokia blog. GigaOM. The Intel opinion. The Wall Street Journal. Asymco on the Burning Platform Strategy.

More on the subject: Consumer innovation by Eric von Hippel. Blog post by Stowe Boyd. The connected company by Dave Gray. From products to ecosystems by John Steen. Blog post by Michael Anton Dila.

Mobile phones, high definition and complexity

The future for mobile phone companies and telecoms industries lies in leveraging HD-audio and HD-video as the new primary media for knowledge work. The implementation of high-definition voice and high-definition video utilizing mobile broadband and mobile handsets is going to make the mobile phone a useful alternative in contexts that presently require getting together in a meeting room. I believe that voice and video derivatives for many to many communication are going to be the main ingredients of the office suites of tomorrow. The computing power of a modern high-end mobile phone makes it a viable alternative to a laptop as the primary tool of a knowledge worker. A mobile phones is no longer a phone. It’s now a mobile, internet-enabled device that also (occasionally) works as a phone.

There is a change going on at the moment from document centric thinking to communications centric thinking. It is only one of the results of the newer findings derived from the sciences of complexity. Organizations are about complex, wide-area interactions. The scientific modeling of these interactions demonstrates the possibility that efficient local communication between large numbers of people, with each participant responding to others on the basis of her own local goals and organizing principles, can produce coherent patterns on the global, organizational level.

The process of richly connected interaction has the capacity to produce coherence in itself, without organization-level goals and process maps. This suggests that high-quality interaction is sufficient to create coherent actions and development. The approach sees the organization as a process of ongoing organizing and construction of the future with the potential for both continuity and transformation at the same time.  More interaction and more divergent and richer local interaction increase the potential for novelty just as repetitive, narrow communication keeps people stuck.

The criticism of mediated interaction has been based on the fact that people communicate with each other not only with words, but through a conversation of gestures: movement, tone of voice and visual representation. This can be achieved through HD-video utilizing mobile devices in a much more efficient and faster manner than through high transaction cost office practices and document-centricity. The knowledge-based organization is a responsive, temporal process of iterations in continuous cycles of interaction. To enable this, IT today should not stand for information technologies but interaction technologies.

All conversations involve more than information; communication is full of feelings. When we communicate we share feelings much more than we share information. With the new HD and mobile approaches to communication these feelings can be as alive in mediated communication as in face-to-face interaction.