Thursday, May 22, 2008

Industrial vs. Social Production

In a recent TED Conference talk, law professor Yochai Benkler speaks on the topic "open-source economics" and makes the compelling argument that
collaborative projects like Wikipedia and Linux represent the next stage of human organization.
The heart of Benkler's argument is a distinction he makes between "industrial production" and "distributed production" and "social production." The impact of the transition that Benkler describes reaches far beyond "open source."

In fact I believe that the shift that Benkler describes is also at the core of understanding the way in which business will change over the next decade.

Soho Engineering Works

Scottish inventor James Watt filed a patent in 1769 for a steam engine. His company, Soho Engineering Works, is often cited as a landmark on the map of events that brought about the "industrial revolution."

This progress began to accelerate about 150 years ago when the steam engine began to find broad application in transportation and power generation. Mass production, mass markets, and mass media all grew up around this set of technical advances.

The challenge of the modern corporation in the twentieth century was one of coordinating large numbers of resources (people, equipment, capital) by aggregating those resources under the control of a small number of individuals who could direct those resources toward a specific end (you know, capitalism).

Along the way we had to develop hierarchical organizational structures, operational efficiencies to simplify and standardize the role of labor, eliminate differences in products to achieve economies of scale in manufacturing and distribution, and invent a marketing methodology that delivered a simple message to the largest number of people through an increasingly consolidated set of media outlets (you know, industrial production).

And we think of the world that Watt created as being "normal."

How to stop worrying and learn to love the Internet

1) everything that’s already in the world when you’re born is just normal;

2) anything that gets invented between then and before you turn thirty is incredibly exciting and creative and with any luck you can make a career out of it;

3) anything that gets invented after you’re thirty is against the natural order of things and the beginning of the end of civilisation as we know it until it’s been around for about ten years when it gradually turns out to be alright really.
With a nod to Dr. Strangelove, the late Douglas Adams penned an article for the News Review section of The Sunday Times all the way back on August 29th, 1999 entitled "How to Stop Worrying and Learn to Love the Internet." Like Strangelove's bomb, Adams sees the Internet as a challenge to us on how to adapt to a world which has suddenly and forever been fundamentally changed by technology. Its funny to read, as Adams always is, but it would be funnier if we had all already understood the core message of change that the Internet brings and shown some adaptability.

Far too many of us still believe that the industrial world is normal. In fact it was a brief episode in human evolution. It expresses some of the best and worst of what is possible in moving from tribes to global civilization. And its undoing actual began long before the Internet -- which is to say, like the 80 years that passed between Watt's patent and the real take-off point for the industrial revolution, the technology to bring about the next major economic, social, and political force has actually been at work for decades. The Internet (and the web in particular) is the tipping point -- the application of this new technology into a product that will transform instead of merely change incrementally.

The Magic of Coordinating Distributed Production

But many people miss WHY the Internet is so important. They focus on how it "disintermediates" existing markets but this is a symptom not a cause. Some focus on how it "levels the playing field" making it possible for small companies to compete against large ones or individuals to have a voice -- also a symptom. The really important change is in the way in which resources are coordinated.

In an industrial production model, coordination of resources was dependent upon people managing and overseeing the investment, labor, or other resources. But three things have changed this -- virtually free computation, data storage, and network bandwidth. Now we can put the algorithm in charge of coordinating distributed production.

How does this change things?

Each of us have a capacity to produce -- money, data, ideas, opinions, observations. That production can be quickly and easily harnessed via web applications, and then coordinated across all like producers to achieve outcomes that no one person could ever achieve.

A simple example of this is the website "FreeRice" which aggregates attention and cash and converts the two into donations of rice to the UN world hunger program. The site was created by programmer John Breen who was interested in helping his sons study for their SAT college entry exams. So he created a site that provides vocabulary challenges. In exchange for each correct definition 20 grains of rice are donated. These donations are funded by advertising (currently Unilever is promoting their partnership with the World Food Programme) .

So what is happening here? The value to someone (in this case Unilever) for a moment of your attention is worth approximately 20 grains of rice. Alone these pennies of value for your attention and my attention are difficult to do anything with. It is difficult for Unilever to find an efficient way to spend that little money at a time. It is difficult for anyone to do anything with that little. But John Breen, by creating this point of coordinated production called FreeRice, gives Unilever an efficient way to aggregate enough attention to be worth their time (and money) to spend to attract that attention. And the output of that attention, the aggregate of all those pennies for attention, is large enough to make a real difference in the world.

32 Billion grains of rice donated in the first six months.

What does this mean for you?

Start applying the following question to the things you want to achieve -- in your business, in your community, and in your life -- how can you use the Internet to coordinate production to more rapidly attain your objective?

This has a set of questions you need to ask in order to be successful. Here is just a beginning: What is the resource you wish to coordinate? What is the right way to engage the people who have that resource? How will you promote this amongst the various participants? What are the component parts that you need to build, buy, borrow? Who will partner with you to make this possible?

How do I get started?

Watch Benkler's speech for yourself:








1 comment:

bluesky said...

Another great charity site is AIDtoCHILDREN.com. It donates money to children in need through World Vision.

Check it out at http://www.aidtochildren.com