Musings on Entrepreneurship and Innovation
Friday, August 30, 2002Ray Ozzie wrote, "Because cooperative work exists at the intersection between people, organizations, and technology, collaborative systems are truly fascinating: in order to serve people effectively, technologists must, for example, understand social dynamics, social networks, human factors. In order to serve people in the context of organizations effectively, technologists must, for example, understand organizational dynamics, modularity and transaction cost economics."
When I moved to Bozeman, Montana six years ago, I sniffed at the "node" companies that I found here, because they didn't look anything like the "real" integrated firms I had worked with in the past. Over time, I began to learn more about complex adaptive systems, modularity, social networks, the transaction cost theory of the firm, and the value of real options in the face of uncertainty. (Many of these ideas were brought together for me by Carliss Baldwin and Kim Clark in their book, Design Rules: The Power of Modularity.) The net result was that I've come to believe that these node, or modular, business entities are adaptations to the environment in which I live. Communications and coordination costs remain high here, notwithstanding technological and transportation advances, and business uncertainty is relatively high. Firms that depend upon high levels of interconnectivity tend not to survive in this environment. On the other hand, a printing firm that focuses on self-contained digital pre-press processes and outsources its printing using well-established interfaces and protocols (e.g., the transmission of PDF documents via the Internet) can do very well.
As Richard Langlois writes in his paper, Modularity in Technology Organizations, "Technology designs organizations in the same sense that the arctic designed polar bears: the bears emerged as structures well-enough adapted to, and therefore reflecting the nature of, the environment they faced."
My company, Small World Networks, is focused on leveraging our knowledge of the interplay between human relationships and technology to create solutions that facilitate entrepreneurial learning. The best way to learn about entrepreneurship is from other entrepreneurs. We're exploring ways in which peer to peer technologies (such as web logs, Groove, etc.) can facilitate, extend, and enhance such learning. If you share this interest, please send me an email.