Can enterprises organize themselves as markets

What’s a market ? It’s a place when offer meets demand.

Companies love markets because it’s the more efficient way to find outlets for their products and identify suppliers. It’s a competitiveness factor because of the outlets it provides and the optimization of costs that competition makes possible.

The “social” web is a market somehow. Contents can find an audience, ideas outlets, projects people who’ll make them become real, people partners, question answers. It’s because of this market that events as trivial as flashmobs happened, that some people had great carriers evolutions, that some companies where born. This huge self-organized space made possible things that would not have been in a classical, organized, regulated market, operation costs making it irrational the organization of niche micro-markets. It’s because it has no physical nor economic barriers that the web made all this possible : intermediation and transaction costs are near to zero.

There is another place that is full of ideas, projects, needs, competences, longings, question, which would gain a lot if the ones were able to meet the others within its walls : the enterprise.

Experience showed me this is definitively the place where exist the more questions and answers, and the place where we can be sure there are very few chances that the ones meet the others. Companies are traditionnally, on this point of view, the place for misses opportunities. It may sound surprising according to all the things companies do, to all their obvious successes, but when looking at what they don’t  or painfully do and would make sense, it may makes us feel dizzy. A kind of vertigo that is proportional with the size of the enterprise. Are there any reason to that ? Of course : high transaction and intermediation costs and the fact companies don’t want to give intermediation up.

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Must companies stop trying to organize cross-organization work ? The Nortel Case

Nortel announced they were going to give up their complex matrix organization to focus on their business units. The purpse is to act faster, making decisions as close as possible to the market. Making decision close to the marketin reminds me of either SOO or subsidarity at a time when but is it a pure coincidence, I see many companies trying to tackle the question of empowerment.

The post where I got the information is wondering about the efficiency of going back to a vertical model. What can we think about that ?

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Web 2.0 : a more realistic systemic approach

This could have passed unnoticed. In a post about Dell an the fact their online shop was more 2.0 than their ideagora Ideastorm, Tim O’Reilly made his definition of web 2.0 seriously evolve from the original one.

For your information, here his the “original” defintion as it can be found on wikipedia today.

Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as platform, and an attempt to understand the rules for success on that new platform.

A visionnary definition that was victim of the too many interpretations it allowed and gave rise to techno-centric trends. If the web’s flexibility made it possible to get out of that, adapting the definition to the enterprise’s world, aka enterprise 2.0, which was something like “using blog and wikis within the enterprise” did more harm than good to the E2.0 concept, even if Andrew McAfee refind the termis of its definition from the use of web 2.0 tools within the enterprise to the use of emergent social tools within the enterprise and with clients and partners as I noticed in Montreal in may.

In brief, O’Reilly introduced a major evolution of its vision. Even if I often find discussions about definitions more funny than useful, what this one implies deserves that we have a closer look at it.

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Toyota : a good example of SOO that reduces business risk

First a quick summary of the Service Oriented Organization concept (SOO) : it’s about giving employees the ability (ie tools and organization model) that allows them to bridge the gap between task they have been assignedJ and thoses that are actually required by their day to day job, assuming that organization reached such an optimum in verticality that deviations, that are more and more frequents) can’t be solved verticaly but by adhoc.

A good example comes from Toyota and its integrated suppliers system. This ecosystem is so optimized that expertises, skills, are often unique. What would happen if a factory, manufacturing a piece used on every vehicle, burn ?

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To understand enterprise 2.0 companies should learn from theory of constraints

It’s funny to see how history seems to be endlessly repeating, how issues that have been fixed years ago are coming back to the surface.

Because the question of productivity, time management, ROI in an enterprise 2.0 or in a Service Oriented Organization remembers me of something that already took place years ago (and was fixed) in manufacturing industry and seems to be breaking out again in the knowledge and services industry.

It’s nothing more than a nth application of theory of constraints (TOC).

I first looked into this case when I was a student and was very interested in optimization issues (finally I didn’t change that much since I’m mainly blogging about optimizing organization in a knowledge economy context). At the end of a manufacturing management class, the outside contributer advised me to read “the goal”, from Eliyahu M. Goldratt.

First surprise, it was a novel. The proof of the power of storytelling because I’m not sure I would have been caught up in this if it had been writen in a more academic manner.

Second surprise : I was really slapped in the face to realize I had to unlearn many thing I thought being unbreakable truth. The young and inexperienced student I was at this time was convinced that everything was about productivity and outputs there was no sheet anchor. I learned, on the contrary, that it was sometimes efficient to have employees that don’t work and machines that don’t produce anything. It was not that idiot : if the final product needs many pieces to be assembled, it’s no use having a huge sock of “A” if “B” needs more time to be produced. Doing this drives stocks that cost lots of money, so it’s sometimes better to slow production down, even interupt it. And the employee that is, as a consequence, not working, helps you to make money because he’s not making you loose money by creating stocks.

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What management has to learn from the Airbus vs. Boeing competition

Remember, it was a long long time ago, that, in the times we are living, means something like ten years. At this time Airbus was wondering how to compete with Boeing on the big carriersmarket and was working on what would become the A380. On its side, Boeing was not thinking about replacing its mythic 747 and was working on a smaller carrier, which would become the 787.

Why these two so opposite approaches ? In fact, they were the embodiment of two radically different visions.

According to Airbus, airlines companies and were should be on a trend of rationalizing costs and most globally transportation organization. So their conclusions were that passengers would have to be taken to Hubs from where they would fly to their final destination, possibly another Hub. That meant that, for example, to go from Marseille to Miami, you should go from Marseille to Paris where you would be gathered with a lot of people going to the USA, then fly to New York and, then onlyn take a plane from NYC to Miami. It would allow to rationalize the use of airports infrastructures (for which companies has to pay), take off slots, ensure a maximum planes occupancy in order to lower the cost per passenger.

In the other hand, Boeing was convinced the future was in peer to peer travels (ie direct flight from Marseille to Miami). That implies smaller planes that can be more easily filled filled.

Who was finally rigth ?

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SOO + Reuse = productivity

In a former post I gave you my first thought about what I walled SOO or Service Oriented Organizaton. A recent post from Oscar Berg about SOA gave me more ideas about this.

According to him it’s important to focus on reuse which is the very basis of SOA. It is essentiel to isolate, prior to anything, which services have to be reused by others in order to make them become components on which other services will rely.

If I try to apply the same theory to organization, the fact is it’s impossible to know what will be reusable. So a system has to be set tup in order to isolate reusable knowledge and make it “solid knowledge” with a process that solidifies gaseous information. Which implies companies have to hire best practices hunters.

But there are also what I call “golden nuggets”, which are too specific or not strategic enough to be “solidified” but may still be useful for anyone, knowing information’s value is relative : what’s gold for some could be mud for others. [Read more...]

What if the future of organizations was SOO (or SPO) ?

The idea of this post came to me after a meeting with someone working for the French Armament Comission, a few month ago. When he asked me “do you know what our job is ?” I answered, hesitant, “Choose the weapons the army will use”. “It’s a bit of that, but it’s more complex”. “Really ?”

Initially, I believed that the army what what it is (ie navy, airforce etc…) and the only point was to built the needed weapons, planes, ships, in order to provide people with what they need to do their job. In fact things were not that simple.

They don’t provide the existing structure with tools, they respond to identified issues with ad-hoc systems. What does it mean ? They identifie potential issues, threats and build a response in terms of systems. A system is the interaction between people, tools and an operating mode. None of this component has sense by himself regardless of all others and the issue.

This makes a big difference with the way companies behave.

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