What Creates Advantage in the “Social Era”?

http://www.mitpressjournals.org/doi/pdf/10.1162/inov_a_00241

For each era, there has been an optimal business model that provides advantage.
The Evolving Relationship Between Business Form and Advantage:

Time Era Business Form Advantage Finance
1600-1850 Colonial Multi-national State-granted monopoly Government
1850-1900 Industrial Robber barons Land, labor, capital Business banks
1900-1950 Production Large Manufacturing Efficiency and scale Stock market
1950-1990 Competitive Conglomerates Differentiated Strategy Institutional investors
1990-?? Social Networks Ideas Angel, Venture, or Community Capital (IndieGogo, Kickstarter)

Today, three factors govern whether or not your organization succeeds:

  1. how well you manage the performance of the firm given certain resources
  2. whether you provide the best products and/or services in the marketplace
  3. at a framework level, whether you take advantage of the rules that frame how to
    create value in the marketplace. In other words, if you are playing by the old rules
    in a new context, no amount of good strategy and management will yield an optimal
    outcome

In previous eras, competitive advantage demanded that a firm lock up their
resources, and position itself to create a unique ability to serve specific consumer
needs. Today, in the Social Era, the advantage a firm can gain is its collaborative
capacity to contribute to shared work. And, ultimately, this era’s necessary collaboration
between strategy and innovation is driven by the firm’s community and purpose. Community includes how a firm interacts within its institution and the way it
engages its core stakeholders across its networks. Purpose is the main mission and
existence of a firm.

The Social Era will reward those organizations that realize they shouldn’t create value alone. If the industrial era was about building things, the social era is about connecting things, people, and ideas.

Platforms are one well-documented mode of connecting people, but they get
an undue focus. The key is not to rely solely on techonlogy for idea connection,
but to utilize the new efficiencies in creating connection. Those that understand
the new “how to succeed in the new market conditions” can take advantage of
shifting forms of advantage and thus maximize gains.

The factors that enable advantage in social times will in turn allow for success in the following areas as well:

  • Get new ideas, which still fit the organizing principles.
  • Gather based on need. Not everyone/every idea needs to be in, or stay in same
    construct.
  • Galvanize ideas into reality without having to check back in.

These are inherent advantages that collaborative/social constructs produce, rather
than some of the tensions that competitive/comparative ones create.

Marginal Ideas Are Key
Anyone—without preapproval or vetting or criteria—can create and contribute.
In fact, it is crucial that they do. Recent research12 of 166 science challenges
involving 12,000 scientists shows that novel ideas come from “marginality”—a
source of different perspectives and heuristics, play an important role in performance.
This idea inclusion— across ages, genders, geographies, cultures, sexual orientation,
and all the other ways in which new ways of thinking can manifest —is
essential for solving new problems as well as integral in finding new solutions to
old problems.

The element starts with celebrating each human and, more specifically, something
Nilofer Merchant recently termed “onlyness.” Onlyness recognize that each
of us stands in a spot that fits only them, and is a function of history and experiences,
visions and hopes. That unique point of view is the genesis of new ideas, the
ones that challenge the status quo, or improve upon the existing condition. The
more traditional formulation of the source of ideas was considered “talent”.
Talent, however, was often credential-dependent. We relied on gates to determine
just whose ideas were worth considering as valid contributions. The evaluation of
the value of an individual’s ideas was cost-effective method to sort. But, in time we
have fount that this reliance on certain ideas and the exclusion of others often
measured the wrong things.

Thus onlyness is an advancement on the idea of talent. Oftentimes, talent is defined as those with a specific degree or experience conferred by others, when onlyness points to inherent capacity. Those can overlap, of course but if you are the one to enable onlyness
in your efforts, through systems and leadership, then you draw on the fuller potential
of what exists.

Purpose is important in the social era for several reasons. Where once an organization served as a necessary and vital structure, or architecture that gave people together effectively, purpose today appears to be a new scaling construct. The governing principle of purpose allows everal constructs to shift:

  • Authority shifts from assigned responsibility to onlyness. Purpose brings out the
    best people.
  • Legitimacy, shifts from “officially” sanctioned, to be about shared commitment
    to a common goal. Purpose brings out the best in people and the best people.
  • Acountability is created by transparency, because peers can review and
    enforce guidelines so that the collective stays aligned by purpose.
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