Esko Kilpi on Interactive Value Creation

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

Tag: Social Network

Changing the way we work together

Many organizations are trying to ease into the social business environment. They take parts of the agenda in piecemeal fashion following an “easy steps” logic. Often this, in the end, means some additional communication tools inside the organization, or additional content through some additional new channels for customers. Nothing really changes what comes to the way people work together.

The way in which companies organize themselves and define their boundaries has essentially been determined by the way in which communication between people is planned and access to information is designed. The classic organizational structure was based on the assumption that a manager or worker could have rich interaction and exchange of information only with a limited number of predetermined people.

Our mainstream management theories are derived from the era of the production of tangible goods and high-cost/low-quality communications. These mind-sets are not only unhelpful, but wrong in a world of information products and ubiquitous, low-cost/high-quality connectivity.

New communication technologies have always had a strong impact on industries and the logistics around production. But this time, with information products, the societal changes are even bigger than before. The Internet is the first communication environment that decentralizes the financial capital requirements of production. Much of the capital is not only distributed, but largely owned by the workers, the individuals, who themselves own the smart devices, the machines of work.

The factory logic of mass production forced people to come to where the machines were. In knowledge work, the machines are where the people are. The logic of ubiquitous communication makes it possible for the first time to distribute work to where the willing people are, no matter where on the globe they may be. Knowledge work is not about jobs, but about tasks and interdependence between people. You don’t need to be present in a factory, or an office, but you need to connect with, and be present for other people.

Work is communication and cooperation, and there are so many new ways to do that.

We are living in a world that is built on the centrality of information and radically distributed contributions. As a result, the organization is not a given entity or structure, but an ongoing process of organizing. The accumulating failures of attempts at organizational resilience can be traced to the fundamental but mistaken assumption that organizations are vertical and/or horizontal arrangements, that guide and, as a consequence, limit interaction.

Information is the power plant that has the ability to change the organization. When information is transparent, people can organize effectively around changes and differences, around customers and new opportunities. Different people see different things and new interdependencies are created, thus changing the organization.  The easier the access that people have to one another and to information is, the more possibilities there are.

Rather than thinking of organization as an imposed structure, plan or design, organization arises from the interactions of interdependent individuals who need to come together. Sometimes people stay together for a long time, sometimes for a very, very short time. This is because any higher-value activity involves complementary and parallel contributions from more than one person, team, function, or a firm.

The focus of industrial management was on division of labor and the design of vertical/horizontal communication channels. The focus should now be on cooperation and emergent interaction based on transparency, interdependence and responsiveness.

What comes to the productivity of work, these may be the most important points on the social business agenda. The really big objective of social business is to reconfigure agency in a way that brings relationships into the center.

Success today is increasingly a result from skillful participation: it is about how we are present and how we communicate. Through new technologies, applications and ubiquitous connectivity, we have totally new opportunities for participation and communication – potentially changing the way we work together.

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More: the trend from routine to nonroutine work.

Contributions from many to participate with one

The nature of the relationship between customers and firms has changed dramatically. For over a hundred years, companies have assumed that consumers are an undifferentiated mass. Lately, we have moved through different degrees of market segmentation. Today, we have reached a point where the latest interaction technologies are creating an entirely new dynamic between the firm and the people we used to call consumers. Tomorrow firms will compete in making unique customer experiences possible.

The traditional approach was that the firm created value and then exchanged it with its customers. This firm-centric view of value creation is now being replaced by customers’ contextual experiences and co-created value. Value is created in interaction, but outside the corporate firewall. Even if a company is dealing with a very, very large number of customers, the firm must focus on one customer at a time.

We are in a world in which value is determined by co-created experiences – all a bit alike but all a bit different.

During the still (mentally) prevailing industrial era, most firms were vertically integrated. It was only around twenty-something years ago that firms started to source components from outside, from suppliers on a large scale. Today it is natural to rely on global supply chains. This is because the business goal is to access the most competent, knowledgeable sources and paradoxically, at the same time the lowest-cost producers. Access to resources and resource allocation is today by default multi-vendor, crowdsourced and global.

The changing relationships with customers and vendors are the main drivers behind the new ecosystems for communication and participation.

These trends also explain the situation we are in at the moment. The network is the architecture of work. People need to communicate and participate in order to invite contributions and to co-create unique experiences. It is about the relational view. It is not necessary to own the contributing parties. Capacity to connect and cooperate is what is needed. Cooperation is the new competition.

The world we live in today is in many ways the polar opposite of what we have been used to. The management challenge in the era of social media is to invite and combine the contributions of many in order to participate with one (at a time).

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Thank you C K

A relational view to management

Gregory Bateson argued that humankind’s fall from grace began through separations such as separating the self from the other, separating thought from emotion, separating the sacred from the secular and separating the subject from the object.

Today, there is new thinking that is based on the very latest findings in the sciences of complexity and sociology. These new approaches define a participative, relational perspective: we should speak about subjects interacting with others in the co-evolution of a jointly constructed reality.

In mainstream thinking, managers are understood as the prime originators of what happens in their businesses. The central concern is how the manager/subject gets the follower/object to act in ways that reflect the manager’s perspective. Management continues to see relationships in terms of influence and manipulation. The manager’s perspective is taken for granted in terms of what the facts are, and what is true or false. Employees are treated as instruments. They are less active and less knowledgeable although they can be sources of information for the manager.

In identifying management with science, two concepts were imported, which we now take so much for granted that we hardly notice them. There is the assumption of the autonomous, rational individual which corresponds with the atomistic view of society and the objectification of nature. The second concept that is imported into management is that of the objective observer who identifies causality and tests hypotheses like visions and goals based on these identifications. The objective observer is detached from the phenomena being studied. When this idea is imported into theories of organization, the manager is the objective observer who is supposed to act upon rationally formulated hypotheses about organizational success.

These assumptions have created the still prevailing subject-object understanding of organizational relationships. When a person is understood as a knowing individual she is being viewed as a subject, distinct from others, the objects. Relations are considered from the point of view of the subject and are instrumental in nature.

The social business/relational perspective to management views life and knowing from a different point of view: knowledge is socially constructed. Knowledge is not stuff accumulated and stored by individuals. Contextual interpretation takes the place of the objective fact. When knowledge and truth are viewed as social and temporary then constructions of what we call understanding or knowledge are always a part of what is going on.

Whether the social process is called leadership, management, networking, or communication, knowing is an ongoing process of relating. Social media best produce connectedness and interdependence as processes that construct collective authority and responsibility. Social media are most meaningful when giving voice to multiple perspectives, making it possible to seek out, recognize and respect differences as different but equal. Accordingly, reality in science is no longer viewed as a singular fact of nature but as multiple and socially constructed as David Weinberger writes in his newest book: “Too Big to Know”.

In a relational model identity is constructed from being in relationships, being connected, as contrasted with the mainstream view of identity through separation. Knowledge of self and the other thus becomes viewed as co-constructed.

The relational view sees networking and social media as conversational processes of meaning making. Here, people who network may be regarded as seeking to understand the meanings of the others’ contributions. To do so, they would have to give up the assumption that they and others necessarily mean the same thing by the same terms or expressions. A manager, when networking, would be asking questions that invite others to make explicit what is usually left tacit. In the end it is a process of movement of thought on the basis of multiple perspectives.

For Bateson and many others, re-engagement is essential for recovering wisdom and long-term vitality. This requires re-connecting with participative ways of knowing, with others as part of the self.

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Thank you Gregory Bateson, Doug Griffin, Ralph Stacey, Kenneth Gergen, David Weinberger and Katri Saarikivi

Christmas Letter

2011 was a year of major breakthroughs. The creative economy is here and looks very different from what we have been used to. I try to sum up some of the most important findings of the year.

The industrial logic was most vividly captured in the idea of the value chain. Value creating activities were sequential, unidirectional and linear. In the model, value was not really created but added step by step. The output of one task was the input of another.  The image of work was the assembly line, meaning that work could be fragmented and individual performance goals could be set for each worker. The world was all about people and boxes separated from one another.

Physical tasks can be broken up in a reductionist way. Bigger tasks can be divided by assigning people to different smaller parts of the whole. For intellectual tasks, it is much harder to find parts that make for an efficient division of labour. Intellectual tasks are by default linked and complex.

Reductionism does not work any more.

Knowledge workers are often put in a position where they have to negotiate some understanding of what they face. The same event means different things to different people. The cognitive opportunity lies in the fact that as we don’t all select the same things, we don’t all miss the same things. If we can pool our insights in a creative, enriching way we can thrive in the complex world we live in. The challenge is that people often treat the existence of multiple views as a symptom of a weakness and conflict rather than as an accurate and needed sign of uncertainty.

Higher performance occurs through the combination of different perspectives and supportive, enriching communication.

Social interactions also play a role in shaping our brain. Repeated experiences sculpt the synaptic connections and rewire the brain. Accordingly, our relationships gradually frame the neural circuitry. Being chronically depressed by others or being emotionally nourished and enriched has lifelong impacts. Our mental life is co-created in an interconnected network. The human mind is not located and stored in an individual. Rather, what we have called the individual mind is something that arises continuously in relationships between people.

Supportive, energizing and enabling patterns of interaction have proven to be the most important explanation behind creativity and business success. The quality of action is always constrained/enabled by the quality of the interaction. The lines between the boxes matter more than the boxes! Communication either accelerates or slows down. Communication either creates value or creates waste. Communication either creates energy and inspiration or demeans and demotivates.

Communication forms much more than informs.

What is now needed is to unlearn the reductionist organizing principles that are still the mainstream. Knowledge used to be understood as the internal property of an individual. Today knowledge should be seen as networked communication.

Work is interaction between interdependent people and the network is the amplifier, and at best a supportive and enriching enabler.

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The social business redefining what binds individuals together

Almost all leadership concepts start with the assumption that a key role for the leader is to set a direction. This usually means designing and communicating a vision and a set of goals. Traditionally, the roles of vision and goals have been there to help people to understand the direction of the enterprise and how they can contribute to it. Today we need something more.

We need to redefine what binds individuals together. Separate individuals subscribing to the vision may not be enough if people don’t connect with one another. What we are striving to do is not enough if there is no discussion about who we are, and why we do the things we do. We cannot talk about an organization of people without referring to what makes them a collective.

Leadership in the era of the social business should be about providing a platform for discussing the meaning of work and the collective identity.

Leadership should address the human search for being part of something larger than one’s self. The more gifted people are, the more they want to connect with meaningful people doing meaningful things together.

As almost all organizations are becoming increasingly diverse and network-like, and as all boundaries are increasingly flexible, the notion of what brings people together is becoming even more critical.

When we think of intelligence, we usually think of extraordinary individuals. We imagine the thought processes of independent geniuses innovating in isolation. Nothing could be further away from the reality. Creativity is an interactive and social process for even the most gifted. Significant creative breakthroughs almost always represent years of sustained collaboration with others. Creative individuals need both independence and interdependence to do their best work. A creative organization thrives on the tension that arises from widely different but complementary abilities and views working with one another.

In industrial management, employees were taken for granted and had no choice or voice. The foundations of work relationships are still largely built on asymmetrical relationships between the employer and the employee, the manager and the worker. This antagonism is already affecting labor markets in developed countries: firms are finding it increasingly hard to hire good people. Younger people are more and more attracted to self-employment and entrepreneurial possibilities instead of joining a corporation.

The ideas and technological solutions around the social enterprise can help renew and refresh outdated approaches to work.

The social business is very different from the industrial corporation. In order to be successful, the firm needs to listen and involve people in the same manner that we are today trying to do with one group – customers. Successful corporations, no matter how large and established, are evolving collectives of talented, passionate and diverse individuals in interaction

Knowledge workers want to have a say in what they do in life; where and when they work and most importantly – why and with whom!

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More on the subject: New social networks. David Weinberger on impractical knowledge and knowledge is the network. Douglas Rushkoff on the future of jobs.

Coworking spaces in London, and Amsterdam and co-working as a phenomena.

Responsiveness, emergence and self-organization

I gave keynote speeches at two conferences this week. The organizers of the events did not suggest a (#) hashtag to be used by the delegates. There wasn’t any backchannel Twitter discussion going on in the audience. I felt strange.

I wasn’t able to listen and respond to real-time feedback. I was missing the self-regulation and self-organizing that social media make possible. This is what I have grown so accustomed to. I started to ponder on two questions: Is it becoming more common for responsiveness to be the missing ingredient in many communities? And can there be rules for responsiveness that help to create viable communities?

I know that there are problems with two-way communication. There are the people with a pre-set interpretative model. We all know the people who are grinding their axe at the back of the room. They are the know-alls and the one-point-of-view evangelists, the people who insist on bringing all conversations round to their particular issue.

I know that there are even bigger issues: All participants are never visible. Any given conversation on the Web may have a few active participants and several silent ones. This creates a fundamental imbalance in the system and gives the oddballs the opportunity to dominate the space in a way that would be much harder to do off-line.

What I felt at the conferences was a crucial disparity: they hear me talking, but I don’t hear them. The audience was both present and absent at the same time. A conference with a Twitter backchannel creates inputs from the official speakers and responses coming from the audience that is present, but also the online audiences elsewhere. The most important thing is that the primary inputs can then be further adjusted on the basis of the responses from the group. There is real-time emergent self-organizing going on.

Information flows are far too often unidirectional. The audience is present but in a passive, invisible way. The tyranny of the hatemonger results from this one-way flow and scarcity of feedback.

The volume is too high for any single individual to filter out the useless or plain repulsive. There are, however, ways to filter out the irrelevant and the obnoxious, but it requires people to respond. If you are a participant, you are also a moderator.

The quality control has to be handed to the community itself without any single individual being in control. The solution is fairly simple in theory. It is about responsiveness and a mix of negative and positive feedback.

You always rate what you see. The ratings coalesce algorithmically into something that is called karma in Slashdot. If your contributions are highly rated you get karma points. The karma you have earned means that your subsequent posts begin life at a higher level than posts by others. Your ratings also have a higher value than ratings given by people with fewer karma points. Dynamic rating is to posts what links are to websites.

The people worth following, the leaders, raise bottom up. Hierarchies in network architectures are natural and dynamic heterarchies. In fact this is the only way that there can be leaders in democratic systems. One “algorithm” tracks the value of contributions; the other tracks the value of contributors.

The Web 2.0 gave the audience a voice. What is happening at the moment is much more radical. It is not about representation but gestures and responses leading to emergence and self-organization. It is not about the message or the media any more. It is more about the rules of responsiveness. In a simplified way, you can express those rules as constant positive and negative feedback moving the whole system towards a particular direction based on the behaviour of the participants.

The definition of what is quality and what is crap is a result of the responsive interaction. It is not group think however, because the ratings of people with high “karma points” weigh more than the assessments of the average members. The huge problem is that the majority viewpoints get amplified, while minority opinions get silenced. This is why we need a new category to support quality. It is diversity.

Changing the algorithm to reward diversity of opinion means the emergence of a system that looks totally different. Instead of highlighting posts with high average ratings, the system could highlight posts that have triggered a high divergence of ratings. There are many +5 responses, but also many -5 responses. The posts that inspire strong responses either way, both positive and negative, could then rise to higher visibility. The system can thus reward controversial voices, not only popular ones.

A viable system needs to reward perspectives that deviate from the mainstream. We need perspectives that don’t aim to please everyone. The oddballs would still be marginalized but the thoughtful minorities who attract both admirers and critics would have a visible place in the ongoing process of creating the future in responsive collaboration.

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Thank you Steven Johnson

Crowdsourcing and the theory of the firm

A firm is normally seen as an entity that is separate from its members. After specific financial investments have been made, the firm is defined by the ownership of the physical assets and the power that the people who made these investments have. The owners choose their representatives, who choose the managers, who act as the “agents” of the “principals”/the owners. The managers then choose the workers. The most important role for the agents/managers is to serve the interest of the owners, the people who made the financial investment.

As a result of this model, the relationship between the company and the contributors of financial capital is very different from the relationship between the company and the employees. Employees are seen as a resource, although a human resource, thus differentiating human beings from other resources serving the value chain. The role of the employee/resource is derived from the value chain architecture. The management target here is a close fit between the skill set of the employee, the job role description and the value chain. Because of this close fit, when major changes are planned to the value chain, it is more often good news for the investors than for the employees.

The system of selling and buying people in large chunks as a result of management decisions about doing it inside the organization or outsourcing is today explained as cost saving. In the 17th century the very same system of selling and buying large chunks of people was called slavery.

The modern firm has developed into a perfect vehicle for financial contributions and as a toolkit serves the needs of financial investors well, at least in good times. As creativity and knowledge define success today, access to capabilities is as important for a firm as access to money. But, what if people mattered even more than money? What if it is going to get harder in the future to get knowledge workers’ contributions than to get financial investors’ contributions?

Should firms serve ideas and creativity more than they serve money?

Is the way we think about firms helping us to meet the challenge of the future or is the mainstream theory of the firm an obstacle for us? Firms are social and legal constructs. They are what we think firms are. Should we renew our old social construct of the firm being based on mass production and high capital costs to a newer version, a knowledge- and innovation-based view of the firm?

In the knowledge-based world we live in today, a knowledge worker is a knowledge worker because of a particular experience base. Being able to do knowledge work requires learning, very often a lot of learning, for a long time. Thus the capabilities of a knowledge worker can be seen as resembling accumulated capital, following the same kind of logic as we use when we speak about the accumulation of financial capital. However, I use the term “human capital” here only as a metaphor in describing the new relationship between a firm and its employees. Skills are very different from money. Knowledge work is always contextual. It matters who does what and with whom. The skills of knowledge workers thus cannot be seen as homogeneous resources or as generalized labor. Knowledge work involves specific contributions to specific tasks.

The knowledge-based view understands firms as contextual interaction, rather than seeing them as entities outside of that interaction. Neither is it helpful to prioritize financial investments above human capital investments in the future.  The knowledge-based view sees firms as continually evolving live networks of investments and interaction

Knowledge work is not job roles, but task specific contributions

A knowledge worker is thus always an investor. This means that in practice that we should not talk any more about the employer – employee relationship, when talking about knowledge work. Instead, it is an investment – investor relationship.

The challenge for the firm is to be inviting to as many contributions/investments, as possible, from as many people as possible. Another difference from the industrial model is the growing need to cross organizational and geographic borders when trying to optimally match tasks and skilled contributions. The basic logic of creative work is thus Internet-based global crowdsourcing.

The firm of the future may be 10.000.000 people working together for ten minutes.

Crowdsourcing is not about the company consuming the information outsiders produce. By communicating and creating more relationships, the networked business increases its intellectual capital as the nodes of the network do the same. The network acts as an amplifier of knowledge. The challenge for the knowledge worker is to take responsibility for the value and growth of her human capital and to plan her investment portfolio carefully. Work should always equal learning. As work requires interaction between people who need each other according to the context and the task, taking responsibility for human capital also requires taking responsibility for the value and growth of the human network.

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The death of the sales funnel

The perspective behind the mainstream approach to marketing and accordingly to digital marketing is to create attention, to create eyeballs to feed the sales funnel. That perspective is heavily biased towards the selling side. Its point of view starts with sellers, not buyers. Everybody knows the old saying in advertising: half of the money spent on advertising is wasted. We just don’t know which half. Google has radically reduced the amount of money wasted. But it too produces a lot of wasted expenses because of the inherent, systemic inefficiency of the sales funnel process transforming attention only marginally to leads, and leads only marginally to buyers. The high cost of this process is not normally questioned because the low-returns nature of sales and the sales funnel are taken for granted.

Digital marketing is really about reversing the sales funnel

Digital marketing could reverse the sales funnel and develop business, starting in a people-/context-centric way from the intentions of the buyers, and not from the intentions of the sellers. If you are present on Facebook and if you listen to what people say via Twitter, you hear buyers notifying the market of their intention to buy all the time. It is called demand-side advertising. Unfortunately, and unbelievably, there are still very few sellers who think that it is worthwhile to have a social media presence and to be attentive to this reverse advertising: the digital demand funnel. They are stuck with the sales paradigm of yesterday, the physical world.

But the digital demand funnel does matter. Markets are essentially digital networks of communication. The nodes of the network are people and the links between the nodes are conversations. This is where reputations are earned and reputations are lost. Brands are more about reputations earned in those live, everyday conversations than about the messages bought from advertising agencies to transmit brand promises.

Digital marketing succeeds best if the old ideas of attention are complemented with new ideas of participation. Every company today should know where the conversations that matter take place, and how to take part in a value-creating way. Digital marketing should not only be about creating company sites and marketing messages. It should be about participation in social media.

The challenge is to be where your customers are and to join the conversation.

Interactive value creation

The division of labor reduces organizational effort and the cost of work. The division of labor also increases the quality of efforts through specialization. For this reason all societies and all enterprises are heading, at least to some extent, towards specialism. The assumption has been that the further the division is carried, the greater are the savings and the better the quality of the contributions. This has led managers to focus on the efficiency of activities separated from other activities and organizational design and management are seen as the planning and execution of a collection of independent activities forming the organizational system.

The function of the line manager was accordingly to be the representative of his box, his domain of action and resources. The manager enjoyed a high degree of autonomy and was accountable only for that domain. The grounding principle in practice was: “Don’t tread on my grass, and I won’t tread on yours”.

As demands for higher value and creativity are the norm today and the complexity of offerings has grown, we have begun to see that the division of labor has reached its point of diminishing returns. What managers have learnt is that the division of labor always implies a scheme of interaction by which the different divided activities are made to work together. The lines between the boxes are starting to matter more than the boxes! Complex value creation is impossible without interaction. This is because any higher-value activity involves complementary, often parallel, contributions from more than one person or one team. In fact, the more complex the offering is and the more specialized the resources needed, the greater the demand for the amount, quality and efficiency of communication, because of the inherent interdependence of the activities.

One-dimensional approaches to interaction have involved top-down command-and-control or sequential workflow-based communication, where the action of one part is meant to set off the action of another. Interaction has thus been seen as one-way signals, a system of senders and receivers (Shannon and Weaver 1948). These approaches seemed to work in simple, low-value environments, but are not creating the desired results any more. What managers have lately found out is that in the pursuit of higher value and when facing the growing demands of complex offerings the value of actions is limited by the value of the interaction. The two are mutually dependent

A system of partial activities that go into the completion of the total offering always implies a scheme of interaction among the persons concerned. If the scheme of activities changes, even somewhat, the scheme of interaction should change too. As the two are mutually dependent, it means accordingly that if there are changes in interaction, so the activities will change.

The mainstream management paradigm is based on the presupposition that activities are the independent, governing factors and the scheme of interaction conforms to the planned division of labor as a secondary feature. The organizational structure, as a number of independent activities, comes first. Then an appropriate system of co-ordination and communication is put into effect. If, however, action and interaction are mutually dependent, it means that low-quality interaction leads to activities that are poorer than planned, just as enriching, high-quality interaction may lead to higher-value activities than planned.

We need to understand how the present ways of dividing labor have been historically based on a very different communications environment than the one we are living in at present. The earlier high cost of coordination and communication is the reason behind many of the organizational forms that are taken for granted and which we still experience. The digital world we live in today is totally different when it comes to the transaction costs associated with coordination and communication and allows us to experiment with totally new value creation architectures.

The activity systems and units of activity can no longer be seen as a collection of independent activities and independent high-performing specialists. There are, however, many challenges ahead if we adopt the way of thinking of seeing interaction as the governing factor in organizations. One of the challenges is our language. That is the way we speak about work following the system of subjects and predicates. Our language of work is geared towards handling one independent factor and one dependent factor at a time: “someone is doing something to somebody”. Linear causes and effects, rather than thinking in terms of mutual interdependence and non-linearity, are built into our management speech. And yet, a situation that can be described accurately in terms of linear, rational causes and effects is the least common one in social contexts. An organization consisting of people is always a social network following a different logic – complex causality. Organizations as social activity processes are about interdependent people working in complex interaction.

If we take this view, it means that people and actions are simultaneously forming and being formed by each other at the same time, all the time, in interaction. Instead of thinking in terms of spatial metaphors, of organizational levels, boxes and lines, this explanation focuses attention on how the actions of people create patterns in time following a very different approach to communication than the sender receiver model.

Organizations can be described as patterns of communicative interaction between interdependent individuals. All interacting imposes constraints on those relating, while at the same time enabling those people to do what they could not otherwise do. Supportive, inspirational, energizing and enabling patterns of interaction are the most important raison d´être of working and being together. If we see interaction as the governing factor and see organizations and organizing as relationships between interdependent people, our methods of sense making need to change. Social interaction does not follow linear causality, seen as a system of senders and receivers, but is fundamentally non-linear, responsive and complex. Following this logic, organizations today and information-based value creation in general can only be understood if seen as complex, communicative patterns of mainly digital interaction.

Resource allocation has always been one of the main tasks of management: planning what is to be done by whom and by when. In integrated systems and with homogeneous resources, this allocation can easily be performed top-down and in advance. Planning can take place separately from action. When knowledge resources are the decisive factors of value creation and when work takes place in digital, global, decentralized environments, this top-down process is increasingly inefficient. A manager cannot know who knows best or where the most valuable contributions could come from. The solution has been so far to try to “know what we know”, and, even more importantly, try to “know who knows”. Neither of these approaches has quite fulfilled expectations. Knowledge databases have not met the situational needs of their users. Accordingly, people have not been able to explain what they know to others or even to themselves in a meaningful way

Because of the aforementioned growing needs in daily organizational life a new, different approach has to be adopted. One could even claim that a new mode of knowledge based production is now emerging in, and because of, the digital networked environments. The most important platforms for the new production systems are social media platforms.

This new production method refers to a new economic phenomenon: people from the whole network contribute pieces of their time and expertise to tasks, emergently, according to their interests, availability and experience, working in a transparent, open environment. This method has systemic advantages over traditional production hierarchies when the work in progress is mainly immaterial in nature and the capital investment involved can be distributed. For most knowledge-based products and services, this kind of production is the most efficient method of creating value from a resource allocation point of view.

The system is developed as much in a bottom-up manner as a top-down one. In a top-down system everything is created and provided by the organization to the user. The user has no or very little control over what services, information and people are available to him. Instead of forcing people into predetermined groups in the way groupware does, social media facilitate the natural formation of groups based on spontaneous, contextual needs for interaction. In social media, people affiliate through personal choice and need. Understanding this difference in community formation is crucial for building self-sustaining, dynamic communities.

A Wiki is a typical knowledge production medium, a platform for interdependent people to work in parallel interaction. A Wiki provides the most efficient way for a group of people to contribute, edit and interact with information that is meant to be shared. A Wiki can be seen as a way to create and iterate collective information, thus developing shared iterative learning. It’s about making visible what has been learnt and the road that leads to it. This leads to a better sharing of experiences, use of skills and utilization of the total number of brains in the network.

The primary goals are increasing the value and quality of information and the value and quality of interaction and at the same time lowering the transaction costs associated with information and interaction. Even more importantly, open interaction platforms such as Wikis are a medium for sharing what we would like to know next, where we would like to go, and what we would like to explore. A Wiki is a medium for continuous, creative learning. This thinking is based on a belief that everything can and should develop in iterative interaction among the network of users. In practice it means voicing questions and concerns for others to answer of their own free will: the small deviations, the small questions that we don’t normally pay much attention to or have time to explore. These are, however, the starting points for change, improvements and learning. There is a shift in thinking from sharing what we know to sharing what we don’t know.

All organizations essentially operate like Wikis. Every organization has it’s own language, resulting in a unique, iterative understanding of concepts, terms and ongoing sense making. There is always a lot of information that is continuously evolving in the “encyclopaedia” of an organization. The articles are things like strategies, customer databases, product information and manuals.

In these kinds of contexts, information artifacts that don’t connect with ongoing live conversations are often of less value, even obsolete and most probably out of date. Because of this, we are now moving away from a focus on content to a focus on conversations. Content should be seen as the by-product of conversation. Perhaps in the future of digital work IT will not mean Information Technologies, but Interaction Technologies.

This view focuses attention on the way in which daily, mainly digitally mediated communication between people organises value creation and, at the same time, creates value. An organisation should today be understood as complex, self-organising, iterative patterns of interaction, through which both continuity and innovation emerge as patterns in time.

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