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The Powerof Pull:  Impact of Rapid  ICT Change on the Business Models of 21st Century Corporations

The world is broken.  Business doesn’t work anymore.  Across the S&P 500, return on assets is headed toward zero.  Wall Street goes on an unregulated tear and tanks the economy. Washington steps in and bails everyone out pushing the deficit to unthinkable heights.  A monetarily fueled recovery is knocking at the edge but once more it will be jobless.  These events render pretty well impossible any future resurrection of the mass production, centralized, top down, economy-of-scale version of the petroleum fueled, assembly line based, push economy that powered the world up to the point of the popping of the internet and housing bubbles.  Everyone would like to understand:  ‘why did all these things break?”  The Power of Pull explains the seeming inexplicable.

The book’s thesis is that a ‘big shift’ from push based, mass production, top down, economy of scale kinds of organizations is taking place.  The digital micro-processor, internet based economy that has matured over the past 30 years has insinuated itself into the old style companies and enabled them to make changes that squeeze more efficiency out of the old models but that is in pursuit of a diminishing returns strategy as The Power of Pull explains.  In some ways, what the authors describe has overtones of Carlota Perez but goes beyond her work in showing with finer resolution how the productivity enhancements of our new digital infrastructure enable what he calls creative edge that can pull the no longer productive aspects of the core to innovative projects at the edge.  Edge based skunk-works transform the core in this new world.

What Are the Flows Found in the New and Successful Digitally Based Ecosystems?

The book posits a shift from push-based economy to a pull-based one and is in my opinion at its most useful when it is not positioned as a self-help book.  You are the executive and this is what’s happening and here at the end of every chapter are the key questions the answer to which will tell you where you are in the process.  It seems that the book’s publishers bound by the push-based world of economy of scale, assume that this is necessary to sell more and more copies.  (But to many readers the questions may also help to ground what much of this actually means.  See below.)

Such was my first reaction.  But JSB responded with the following VERY eloquent informative paragraphs when I asked him to do a final quick review of my text.  My thanks to him for permission to include here what he wrote.

“Actually John and I pushed the publisher into putting those questions in.  Why? Very simply. The more I talk about this work to executives the more they may nod their heads and say:  “yes yes we get it.”  But do they? When we start laying out specific issues or questions and ask them to start answering them - then we start to get the oh-my-God reaction. “You mean I should change MY behavior? You mean I should actually get out of MY comfort zone? You mean I should think about Reverse Mentorship? You mean I should be re-thinking the not invented here syndrome, MYSELF? And the more precise we are on each element of the Pull Framework, the more they realize they could do something.  However, by really grounding it in crisp questions, many realize they are not really prepared to engage in the emotional work required to do that.  We want to try to drive the same lessons home to those who are reading the book”

“Our purpose in this book is to bring about a change in behavior at all levels of the firm and eventually public policy. We need new ideas, new frameworks but also new pathways in - into the minds and action spaces of the firm!  That is what I think is unique about our effort. We have sweeping ideas but also show readers pathways to action.”

“Ironically John Doerr was the one who told us that he found the questions at the end of each chapter the most powerful part of the book.  These are questions that Boards of Directors should be asking their CEO, etc.  These questions are way beyond the purview of HR or Chief Strategy Officers.  But they are also questions each of us should be asking.  Indeed, you asked yourself many of these (even before reading this material) which, as you have pointed out in this document, is leading to your morphing your own operation .. We hope this gives more folks courage to do what you are doing, yourself.”

Before JSB added the above information I had written: forced to chose between self-help and a more descriptive point of view, I much more prefer the writing contained in the December 2009 Deloitte Shift Index which gives an analysis of how knowledge flows in the three phases of what the authors see as the big shift.  The 20th century firm was structured on the ability to process stocks of raw materials.  But flows of knowledge are now key in the networked 21st century pull-based economy.  Worker passion fuels better knowledge flows that in turn are the keys to viable economies.

The problem is not binary.  It is not just technology or organizational but rather very much the combination of the organizational emotional drive and the human technological enterprise that is critical in determination of future outcomes  As the chart on the next page shows, the most basic foundation of everything is indeed telecommunications and computer infrastructure no matter whether you are mapping strategy for your own career or that of your firm or that of government policy.

The authors presume a very fluid economy rather than static one.  If new knowledge gained through productive friction is the new fuel the new raw material and therefore the new currency then, in tracking it, you have a lot more to consider than you would if you were only tracking bags of cement from the quarries to the warehouse to the construction site.  Knowledge “flows.”  Amplifiers of these flows are found in indices of worker passion and social media activity.  The old economy valued predictability – something that meant passionate creative workers with new ideas were too often received as threats.   It also flows in terms of physical indicators such as migration of people to what Richard  Florida calls creative cities and the authors more loosely term “structured spikes.” Movements of people in travel and movements of capital are also indices – as well as virtual flows of Internet and wireless traffic.

Over all what fascinates is that things like intellectual property on which the 20th century push economy focused turn out to be things that are less important and often largely irrelevant in the 21st century economy.  What was possible and productive in the former is destructive in the later.  The authors ask critical questions like what is value and where does it come from, in doing so they may help us separate productive from destructive activity.

Perhaps because most of the economic activity of the globe is still found among the largest corporations, they assume that these will remain significant economic engines.  The environment in which those engines operate is undergoing rapid flux and the authors are very good at describing that flux while along side of that, the open source knowledge commons world being catalogued by Michel Bauwens is also growing and will be the subject of another COOK Report in a month or two.

New Foundations for Strategy Building and Problem Solving

Problem solving and strategy building is a central foundation for all business. With the very complex changes brought about by the Internet and the continuing exponential advance of computing (often involving new architectures) that the authors describe throughout their entire book, the old top-down ways, “push” based ways of doing this, are no longer very productive.

The authors say that the on going practice of business depends both on accessing resources and attracting new people and their passions.   Doing this is of little value unless coupled with a third set of actions "that focus on driving performance rapidly to new levels. These practices involve participation in, and sometimes orchestration of, something we call “creation spaces” -- environments that effectively integrate teams within a broader learning ecology so that performance improvement accelerates as more participants join."  [p.18]  I point out that to engage the power of pull you need a creation space.  According to JSB "to get better faster at whatever it is you do, you've got to be supported by a broad array of complementary people and resources from which you can pull what you need to raise your rate of performance improvement (and vice versa – reciprocity matters now more than ever)."  [p. 19]

To quote the authors: “we need to marry our passions with our professions in order to reach our potential. As we'll discuss later this is not about the select few who surf for a living it's something that all of us need purposely to set out do.   Passion in this context refers to a sustained deep commitment to achieving our full potential and greater capacity for self-expression in a domain that engages us on a personal level. We often develop and explore passions in areas such as sports or the arts outside of work, but we rarely integrate our passions with our professions.  As we make our passions of our professions, we may find our dispositions shifting two. Rather than dealing change as a threat and something to be feared we will find ourselves embracing change, recognizing its potential to drive us to even higher levels of performance.” p. 21-22.

Contents

Introduction: The Power of Pull

An Examination of a Brave New World  p. 3

What are the Flows Found in the New and Successful Digitally Based Ecosystems?  p. 3
New Foundations for Strategy Building and Problem Solving p. 5

Collaborative Innovation and a Pull Economy

John Seely Brown, Stanford University April 14, 2010  p.8


Technology Changes the Way the Corporation Uses Knowledge     p. 12

Opportunities -- Create an Eco-system that byUsing the Cloud Allows Start-ups in Garages Once More p. 14


How Talent Learns  p. 15

Serendipity – How Do You Facilitate Learning in a World in Flux?            p.19


Build an Edge that Attracts the Core  p. 23


Deconstructing the Learning Curve     p. 24


Flipping the Curve with The World of Warcraft  p. 25


The Purpose of the Firm is Changing  p. 29


Questions p. 32


A COOK Report Afterword  p. 36

Internet Based Business Will Have Characteristics of Eco-systems        p. 37


Why What Worked in the 20th Century Will Fail in the 21st  p. 38


Meanwhile in the Netherlands  p. 39


Coming Full Circle  p. 40