John Hagel – What do you think is the single most important question after everything is connected?

I recently was pointed to a presentation of John Hagel who is a renowned strategy consultant and author on the impact the Internet has on business. He recently joined Deloitte and Touche, where he will head a new Silicon Valley research institute. At the conference (Supernova 2007), John outlined critical research questions regarding the future of digital business that remain unresolved, which revolved around the following:

What happens after everything is connected? What are the most important questions?

I had to watch the video a few times because its not possible to capture everything he says in one hit. So I started writing notes each time, which I have reproduced below to help guide your thoughts and give a summary as you are watching the presentation (which I highly recommend).

I also have discovered (after writing these notes – damn it!) that he has written his speech (slightly different however) and posted it on his blog. I’ll try and reference my future postings on these themes here, by pinging or adding links to this posting.

The shape of the busienss landscape and the world we are living in

1) What if there is no equilibrium – no stabilisation

  • The component technologies of our new infrastructure – computing, storage and networking – are advancing at an exponential pace. But at the same time we cling to very equilibrium institutional frameworks that are suited for times that are stabilised.
  • Clayton Christensen’s notion of disruption innovation has been a big breathrough, whereby there are points that are punctuated innovation where there are disruptive points, and then we go into equilibrium again. John asks: what if there is no equilibrium?
  • What are the institutional architectures where there is no equilibrium? The notions of agility, adaptability and flexibility are the answers – but how do we balance persistence with agility, within these institutional frameworks?
  • You can’t form trust-based relationships when everything is changing.

2) Can the firm survive as the action flows to the edges?

  • The e-lance economy, whereby we are all free from institutional boundaries
  • Firms are going to unbundle and rebundle and form a greater concentration than before
  • The whole rational of the firm is going to change – 20th century was about economising on transactions and coordination costs – but the 21st century will be an institutional platform to accelerate talent development.

3) Are all ‘ecosystems’ created equal?

  • John believes the word has been abused and debased in meaning
  • We need a better taxonomy, so that we can better understand new things that didn’t exist yesterday

4) If the world is so flat – why are spikes becoming more prominent?

  • Early vision of the Internet, was the death of distance
  • For the first time in history, the majority of the world now predominately lives in dense urban, not agriculture
  • Geography will matter, because of concentrations of people and talent – and will play an increasing role in talent development. And if that is the strategy for firms – talent development – what is a spike strategy for the firms we operate in?

Strategy – how to create value

1) Is adaptation all that is?

  • Conventional wisdom is that in the absence of equilibrium, adaptation is the best strategy – do it more quickly than everyone else, and you will survive
  • The real opportunity of a world with so much change, is that there is the chance to shape outcomes, which can’t exist in a stabilised world. What are those shaping strategies?

2) Can we escape the Red Queen effect?

  • Have to run faster and faster to stay in the same place
  • Product and process innovation only provides temporary relief. To escape the red queen effect, we need to harness institutional innovation that moves from scalable efficiency to scalable learning – so we can find ways to get ahead of the pack faster

3) As L-Curves replace bell-curves, what are the most promising routes to the head

  • Most business works in the world of Bell curves which give averages meaning and are relevant. We are now moving towards a worlds were extreme events prevail – the Long Tail
  • The L-curve is distracting us – what about the head strategies? There is a lot of value in the head (as the Long tail theory focuses on the tail) – how do we use the long tail to launch ourselves into the head?

4) What is required for effective participation for the flows of knowledge?

  • Stocks of knowledge are diminishing in value to flows of knowledge.
  • How do we avoid drowning in the flows, whilst tapping into the most relevant

5) What are the opportunities for the bottom of the pyramid, to attack the top of the pyramid?

  • Again, the bottom (like the right of the L-Curve) may act as a launch pad to get the fruit at the top
  • What is the nature of those strategies?

6) How do we measure success when so many of the rules are changing?

  • Financial metrics matter – but they are lagging indicators – they tell what already happened
  • We need leading indicators to predict success

Platforms to augment our capabilities

1) When is self-organising not enough?

  • Successful collaboration is never completely self-organising
  • Governance models in open-source software -> how do we take those mechanisms and apply them to outside the software model and to other product categories?

2) How are pull platforms likely to evolve?

  • Push programmes – where you have to forecast demand and ensure the necessary resources are required
  • Pull platform – helping people connect with the resources they need, whenever and wherever
  • Push programmes treat people as passive consumers, whose needs can be anticipated and shaped by centralised decision making
  • Pull platforms treat everyone as network creators, even when they are customers purchasing goods and services.
  • We are still at the early stages from push to pull. The work towards identity is a rich source to create governance in a federated model

3) What’s the next generation of IT architecture?

  • Started inside out – started with glass house – through to desktop computer – then with partners
  • Start with the proposition that you have 10,000 partners – and move from out to in

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