Can enterprises organize themselves as markets

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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.

Enterprises formalized all transactions and exchanges that have to take place within itlselft. Not only by determinating them in a limitative way bt also by organizing them strictly what results in many intermediaries, worflows, coordination works and, logically, costs. Here’s for the financial part, because for what’s about the willingness to do things in another way, the issue is elsewhere.

Don’t mislead ourselves : a company that would try to operate as a free open maket won’t last for long. There are many reasons to that but we can have a quick overview.

• Adhoc vs standardization : web users work in an adhoc mode, proposing solutions and answers to given problems while enterprises have to devliver a standardized product / service.

• Push Vs pull : companies work in a “pull” mode : an offer is conceived, its production modelized, and the whole is pushed threw the organization, following the hierarchical lane, to the market that has to be convinced and, then, satisfied. Web users start from a need, a question, and if no answer or solution exist they try to build it together, even if it means building an interaction system dedicated to a unique use, an unisuqe process. Here this is the market, the need that drives, pulls the organization just when in the previous case it’s the product that pushes the market, via the organization.

• Costs vs revenue : enterprises measure their efforts and the way their ressources are used because they manage their costs. Web players (I’m taling about individuals…), only results matter. Did you noticed that people always mention the success stories born from freeform peer to peer collaboration on the web without ever mentionning what it costed or the amount of efforts that was necessary ? More, “web failure” never come to surface, we all know what work but never think about what wasn’t solved, what didn’t work. It’s because web users are costs for no one except for themselves. Whatever, companies can’t engage ressources without having any visibility on their activity’s impact related to the time / money that were spent.

• Costs vs revenue (bis) : this point may be harder to catch but it strikes me. Enterprises are costs driven, every employee’s activity has a cost for the only reason a ROI has to be planified in advance. The web is result oriented, regardless to the efforts it consumes. Even so, when applied to organization, the difference cost or revenue related management implies two opposite conceptions of management (those who’d like to know more should read Goldratt’s Critical Chain for instance).

These three points prove than an enterprise can’t work in an internal open market logic, or, said differently, that the dynamics of general public web can’t be imported as is. Of course one can discuss whether such rules are well-founded or not, their objectivity and the fact they may only be the consequences of a bias, but since they exist and we have to deal with today’s realities, we must admit that it doesn’t work.

But are we forced to assume that enterprises are doomed to not use their full potential or face incredibly high coordination and intermediation cost when they want  take the most of it from time to time ? Or that, in order to continuously exploit their potential, they must accept to lose visibility or rely on the outside everytime the traditional organization will show its limits, even if it means that prohibitve costs will take them to focus on coordinating an external ecosystem ?

I don’t think both are antinomic. It’s more about articulation than exclusion, companies that are used to think in terms of “or” have to learn of to think in terms of “and”.

So we could imagine that :

• In a knowledge economy, production should be pulled and not pushed, but being operated according to defined rules and processes.

• a competence and internal resources marketplace must exist in order to easily switch to the “market” mode when the “planified mode” shows its limits. That’s obviously the place for social sofiware.

• a management that would give more autonomy to people, making them able to switch when needed (remembering that it doesn’t mean the end of hierarchy).

Something that would look like wirearchie or service oriented organization. An evolution made necessary because it is where opportunities to increase performance exist and that it’s not possible to ask employees to continuously deal with contradictictions anymore. Organizations have to evolve, which supposes a “macro” view. Nothing but logic when you consider that an enterprise is not an unique value chain but a tangle of interactions.

coase, coordination, couts, couts de transaction, internet, Management, marché, marketplaces, organisation, places de marché, production, social-software, soo, Web, web-2.0