Saturday, December 12, 2015

From Firms--To Platforms

The Evolution of How We Organize Production and Distribution

Technology and the culture of work is rapidly evolving to allow us to organize our work and our production much, much differently than was the norm during much of the twentieth century. It is becoming a growing consensus that much of the world's production will shift to platforms in the coming decades.
This is a continuation in my ongoing series for orienting the builders, backers and connectors that will belong to the Glia Revolution of the Future of Regional Auto Transportation.
This post looks at platforms as the new organizational structure.

What Is A Platform?

At its simplest, a platform is digital medium which lets others connect to it. Uber, Lyft, AirBnB, Amazon, are some examples, there are many more that are allowing a high scalability, and meritocratic approach to getting things done, that also removes the bureaucracy and hierarchy that is crippling  many firms, and their necessary ability to adapt and innovate. 
As Lee McCabe, the new head of travel and education strategy for Facebook puts it, in this excellent interview with McKinsey & Company:

 Well, first I should say that I understand it’s not easy. It won’t happen overnight. For the first time, technological capability is actually exceeding organizational capability. Companies now have the technological capabilities required to take better advantage of big data, which really just means better targeting. But organizationally it’s challenging because most traditional players are siloed. And then there’s the issue of data science. If a big travel company—an airline or a cruise company or a hotel—doesn’t have a really good data-science department, it’s missing out.
If you look at a typical OTA, it has a pretty clean organizational structure. There’s one department looking at supply data and one department looking at demand. These two departments work together very closely, and mobile is now the backdrop for everything they do. The groups talk to each other every day, and they are constantly looking to decrease friction. But in typical travel suppliers, there’s far more ambiguity in the organizational structure. They often have multiple brands, and those brands are split into different regions, and those regions have different departments. Sometimes there are several people with the same title—head of commerce or head of mobile, for instance. It can become ambiguous and cumbersome. So a clean organizational structure is paramount. You need to be able to move fast and build things and move things around because the mobile environment itself is fast.

McCabe is comparing the difference between the speed and agility of the platform enabled OTA (online travel agencies) and that of the traditional structure of old travel companies.
Platform based organization are bred to cross-fertilize knowledge and data, to be learning platforms, whereas the culture of too many old style firms, is that of hoarding and politics around knowledge, information and data.

In a business landscape where the ability to use mobile and apps to compete, it's increasingly difficult for these old organizational structures and cultures to compete with the agility of platform driven business models.

Acclaimed complexity and organizational theorist +Esko Kilpi , in a Medium post from last summer, From Firms, To Platforms, To Commons, writes:

Work systems differ in the degree to which their components are loosely or tightly coupled. Coupling is a measure of the degree to which communication and power relation between the components are predetermined and fixed or not. Hierarchies and processes were based on tight couplings. The new post-industrial platforms are based on loose couplings following the logic of the Internet. Some people will work on one platform every now and then, while others will work simultaneously and continuously on many different platforms. The worker makes the decision about where, with whom and how much to work. The old dichotomy of employers and employees is a thing of the past.

This allows a much different, more rapid approach to problem solving and value creation, with leaner transaction costs, than that of the bureaucratic firm. 

Looking further still, into a seminal post, The Hacker Ethic of Work, we get an ever deepening look at the "case for non-bureaucratic organizations:
Clear signs tell us that, today, organizations that embraced a post-industrial transformation and defeated the bureaucracy and rigidity of linear business models are the masters of the market. According to Javi Creus (the passage is taken from PentaGrowth report) these companies “integrate more resources from different origins in their processes, they take better advantage of their users’ capacities, and share tools and resources to enable others to develop their own businesses and lifestyles” and “the value of these organisations is not their volume, but the amplified view of what is available for them […] their advantage is based on scope, not on scale and […] generate value beyond what they need to capture in order to sustain and evolve”.
This also hints at my own Smart Swarms approach to orchestrating value creation, as innovation, team work, and customer experiences.

"Design Thinking" is baked into the networks DNA, better clarified here from the same article:

In the first place, the hacker attitude should be applied to the discovery and understanding of the market. In this sense, companies must be very careful not to fall into the trap of the protection of competitive advantages and incremental innovation. These safe havens cannot last long at today: it will be more important to focus efforts on continually creating tangible value for users. As the “Lean Startup” method can provide a good starting point, “The Four Steps to The Epiphany“- the seminal book from Steve Blank which is a bible for  frugal and effective entrepreneurs – provides guidance for the so-called “Customer Development” process, that wikipedia effectively defines as: “a scientific approach that can be applied by startups and entrepreneurs to improve their products success by developing a better understanding of their consumers. Primary to the concept is a balanced relationship between developing a product and understanding the customer”
A complement of the customer driven innovation point of view can come then from Design Thinking: an approach that is aimed at designing products and innovations around problems and needs of real people (herean old post in which I tried to clarify how Design Thinking and Lean approaches such as Customer Development can coexist).
Such an approach will increase the ability of the company to design and truly understand the needs and objectives of users and, ultimately, will help companies design services that are more meaningful, appreciated and adopted.
Within the context of re-inventing how we "supply transportation" to cities and regions, and moving away from the culture of mass production fueled traffic congestion, the platforms and culture, bringing together the complex array of technology, data and services, becomes all the more important.

+Rawn Shah , writing in his Forbes Magazine article, Moving From Mass Production Supply Chains To Market Networks, observes that:
The successful future organization is one that excels in its strategic capability to orchestrate networks or ecosystems, whenever needed around the context of a job to be done, and to deliver sustainable value creation for all partners involved.  On the micro scale, this is the capability to build dynamic teams that collaborate as needed around a job activity or project. On the macro scale, it is about many individuals and organizations partnering to solve large-scale problems in dynamic multi-stakeholder ecosystems.
Which is as perfect a description of the Glia mission as there is!

+John Hagel , Co-Chairman of Deloitte's Center for the Edge, writes in this recent Wall Street Journal article, Manufacturers Reassess Role In Value Chain:

Some manufacturers are rethinking products as platforms, with each platform the center of an ecosystem in which third-party partners can build modular add-ons. Platforms are often thought of as software, such as computer operating systems, but platforms can also encompass nondigital objects, such as thriving aftermarkets that exist to customize and personalize automobiles for both utility and aesthetics.

This is all the more important, as the automobile continually evolves into autonomous operation, a complex compilation of hardware, software, design and data, to become a component in Transportation as a Service, rather than that of an end unit in mass production sales.

As Glia, and our mission to "Design, Develop and Deliver The Future of Regional Auto Transportation, building from the 'ground up' off of a platform, to organize the third party partners in our transportation ecosystem become the only logical, and business wise way to start and grow our social-business venture.