Shaping Network Society

This weekend, I was playing around with my new Amazon Kindle 3. I was loading as many classics (Plato, Aristotle, Sun-Tzu and Cory Doctorow) that are freely available onto the Kindle, on the hunch that whenever I would have some idle time, I would use it to reflect on the great thinkers of all ages. It reminded me that for several years, I had wanted to write on the topic…

Idle time is a concept that was introduced into the English language quite early, as an action that is void of any real worth, usefulness, or significance; leading to no solid result; hence, ineffective, worthless, of no value, vain, frivolous, trifling. [Oxford English Dictionary] First mentioned in 825: Dryhten wat eohtas monna foron idle sind (whatever that actually means in modern day English). Idleness always carried a negative connotation. Only in the 21st Century, has idle time turned into the biggest asset humanity has at its disposal to create value.

The metaphorical mapping of the term from the human to machinery arrives in the 19th Century, as in to run idle, to run loose, without doing work or transmitting power. first found in a patent application by Mr Milton in 1805 (Patent No. 2890) “As near..to each active wheel as a workman may think proper, low, strong idle wheels..are to be placed..ready in case of an active wheel coming off, or breaking, or an axle-tree failing, to catch the falling vehicle.”

In the 20th Century, it expanded its use to computers, where it is defined as the time during which a piece of hardware in good operating condition is unused. With networked computers, the idea was that idle time of distributed processors could be put to good use, as long as it can be managed – SETI@home is only one example.

In the 21st Century, when suddenly big user-generated content projects appeared (Wikipedia, Linux, Apache, but also Facebook, Flickr, and Ushahidi), one of the questions raised was about the sustainability of these projects, connected to the idea of “where did the time come from to produce this content?” – At Web 2.0 Expo 2008 and later in his book Cognitive Surplus (2010) Clay Shirky gave where he argues that we are finally able to activate the cognitive surplus generated by industrialization which up to now we had squandered away by watching television.

Television was a solitary activity that crowded out other forms of social connection. But the very nature of these new technologies fosters social connection—creating, contributing, sharing. When someone buys a TV, the number of consumers goes up by one, but the number of producers stays the same. When someone buys a computer or mobile phone, the number of consumers and producers both increase by one. This lets ordinary citizens, who’ve previously been locked out, pool their free time for activities they like and care about. So instead of that free time seeping away in front of the television set, the cognitive surplus is going to be poured into everything from goofy enterprises like lolcats, where people stick captions on cat photos, to serious political activities like Ushahidi.com, where people report human rights abuses.

This transformation from a mass society with its one-to-many media (television) to a network society of many-to-many media (web 2.0) allows us to capitalize on idle time. By segmenting value chains into modular and granular tasks, where anybody can chime in anytime and anywhere.

Shirky’s idea of idle time, however, only touches the surface of the concept. Idle time spent in front of the television that can be reallocated into socially meaningful values makes up a big chunk of the cognitive surplus that we will be able to capture in the next years. However, the bigger part will be captured, when we are able to transform actual idle time into productive time: the idle time when waiting for something/someone, the idle time of the disenfranchised on this planet, the idle time of being between tasks, and the idle time of not working on what fullfills us. So, idle time is about empowering those that are not yet empowered, but also about when you are in the board meeting and bored. Idle time is everywhere! Think of it through the lense of fractal geometry – idle time is self-similar. Once you start looking, you will find it in all aspects of life. My back of the envelope hunch would be that we can multiply Shirky’s number by at least two or three.

Idle Time vs. Down Time: Managing our Wetware Needs

But as soon as we have solved this puzzle, where all this productive capacity for our common futures will come from, we come to the next Luddite summer worry (actually, one of the most emailed articles in the NYTimes this summer):

The technology makes the tiniest windows of time entertaining, and potentially productive. But scientists point to an unanticipated side effect: when people keep their brains busy with digital input, they are forfeiting downtime that could allow them to better learn and remember information, or come up with new ideas.

“Almost certainly, downtime lets the brain go over experiences it’s had, solidify them and turn them into permanent long-term memories,” said Loren Frank, assistant professor in the department of physiology at the university, where he specializes in learning and memory. He said he believed that when the brain was constantly stimulated, “you prevent this learning process.”

The findings are to be taken seriously and it clearly means that we need to be careful with how we deal with our idle time. In the digitally networked age, we need to take responsibility for our sanity. We need to learn how to schedule downtime and offline-time. But theoretically, that should be easier, because now we can manage our interfaces to the digital network, by blocking incoming information.

And this brings me back to the Amazon Kindle: The Kindle does only one thing, it lets you read books. It does that particular well, with a look that is distinctly Steampunk and after 48 hours it clearly seems to be one of those devices that actually allows you to manage your brain cycles and give your brain that downtime that it needs to solidify impressions into knowledge.

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As I am wrapping up my time at the Willy Brandt School of Public Policy, it is time to write down some of the lessons I learned here at Erfurt University, where Martin Luther developed some of the frameworks for Information Revolution I. The Willy Brandt School is a brave experiment in bringing together students and young professionals from over 40 countries to rethink public policy. It is an experiment that is important in our days, where we are confronted with huge challenges on this planet. One day last year, while walking to my lecture, it hit me that we are working on the project of planetary public policy. I then wrote a short blog-entry that I always wanted to expand:

Planetary thinking is a term introduced by Martin Heidegger, to reflect the role of philosophy (a Greek/Western concept) in comparison to other systems of thought. Planetary public policy balances different approaches to public policy problems, reminds us that problems come in all sizes (local to global), that we can learn from each other, but that solutions need to be “tropicalized” (adapted to the local context). If public policy is about thinking about having a structural impact, then planetary public policy is about “rocking the planet.”

Planetary public policy combines (a) an acceptance of global problems (climate change, trafficking of women, drugs, weapons, etc.), with (b) an appreciation for comparative learning in public policy (e.g. issues of birth control, slum dwelling, public transportation, crisis management are similar in kind in very different environments), and (c) a sensibility for inter-civilizational exchange of ideas concerning our planetary publics. It is a simple doctrine, but remember territorial sovereignty, the doctrine that has been guiding our thinking and doing for the last 300 years is just as simple. Simple grammars allow for surprisingly complex frameworks. But in the 21st Century, no public policy school can ignore it.

Looking back…

The doctrine of territorial sovereignty developed as part of the transformation of the medieval system in Europe into the modern state system, a process that is linked to the Treaty of Westphalia in 1648. The emergence of the concept of sovereignty was developed in analogy to the Roman civil law concept of private property.  Both emphasizing exclusive rights concentrated in a single holder, in contrast to the medieval system of diffuse and many-layered political and economic rights. Within the state, sovereignty signified the rise of the monarch to absolute prominence over rival feudal claimants such as the aristocracy, the papacy, and the Holy Roman Empire. Internationally, sovereignty served as the basis for the anarchic nature of the international system and for its ground rules like the exchanges of recognition on the basis of legal equality, diplomacy, and international law. This led to an international system where states were responsible for their own security and self-sufficient in their social and economic needs.

However, with globalization we moved into a world where somehow these two core rules of the international system are broken. we are moving into a world where states are not reliant on themselves in terms of economic production anymore, and neither are they in terms of security. The most basic question we would ask you is, who of you is wearing clothing that’s made in just one country, at this moment. Even Lederhosen, the typical Bavarian dress, all of them, including the Burghausen style are produced in India.

What we are missing is a unifying doctrine that allows us to place our actions in such a world. Territorial sovereignty has lost its grip over us, but planetary thinking is only slowly emerging. Here are the three basic tenets of this emerging doctrine:

Accepting Global Problems

Global problems become global by being referred to as global. Even if the impact of climate change will be different locally, we have firmly constructed it as a global problem. But others less so. Last year, our planet’s population lost $9.3 billion to 419 scams. 419 is a paragraph number in the Nigerian penal code, in the law, which deals with a very specific cyber crime, which is basically have you ever received an email that said,

I am a princess from Nigeria, and my dad left me $80 million in a bank account that I need to transfer out of… Ghana, Nigeria, South Africa, Mexico, Argentina, Texas, or Southern Bavaria. I need your help to do that, and I will be of course very helpful in giving you 50 percent of what is in the bank account if you help me.

Is that a global problem? Should it be constructed as such?

Comparable Local Problems

Planetary public policy assumes that there are local problems that we can compare to each other and learn from each other. For example, squatting on public lands. What is the Malaysian solution to squatting on public lands versus what is the Mexican solution to squatting on public lands versus what is any other country that has that problem? For a long time, we had assumed that local contexts would be so different that learning across continents would not take place.

Inter-civilizational Meaningful Conversations

Inter-civilizational Meaningful Conversations remind us of the question, how can we develop a fair platform on which we can have a conversation? A conversation between different cultures and through space and time. And that, of course, is the challenge we are facing in the Brandt School, with students from more than 40 countries. But it’s also the challenge that we have to face when we are trying to solve this issue of humanity surviving on this planet.

So public policy in the 21st Century needs to focus on global problems, comparative public policy challenges, and inter cultural, inter civilizational meaningful conversations.

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I am back from Berlin, where we were discussing at the google collaboratory how to evaluate the impact of open government. While the excitement about enterprise 2.0, government 2.0, and open government has been building, critical voices in organizations have questioned the return on investment (ROI) of such projects. 2.0 projects are often still looked upon as insignificant or superfluous. The now classical response to this has been to allude to the ROI of  successful projects:

Consider Apps for Democracy, which yielded 47 iPhone, Facebook and Web apps in 30 days – a $2.3 million value that only cost the city $50,000. It’s hard to dismiss an estimated 4,000 percent return on investment in one month’s time. The contest’s success, powered by iStrategyLabs, spurred Apps for Democracy “Community Edition” and spinoffs in other cities.

This approach of utilizing the ROI framework to defend 2.0-strategies, however, has several flaws, (a) it might have been a lucky shot, (b) it might not be sustainable, (c) contests might not focus on what citizens need (d) any impact below a certain threshold, let’s say $ 1 billion does not carry weight in big governmental or corporate organizations, but (e) most importantly, ROI is the wrong tool to evaluate success of enterprise/government 2.0 projects, because most of the value is accrued with the consumer not the producer of the value.

If we look at the most successful 2.0 projects of the last years, we see a pattern, where the ROI is not a relevant indicator to evaluate the project. One of the first big 2.0 projects, Wikipedia, destroyed the encyclopedia industry, but is not generating major revenues.  Couchsurfing and sites like http://airbnb.com/ or http://www.crashpadder.com/ are taking big bites out of the Hotel industry without generating equivalent returns. Open Street Map is having a huge impact on the mapping industry, one of the most profitable industries of the last years. Dynamic ridesharing is creating a secondary mobility infrastructure in most countries, basically competing with our complex integrated public transport systems such as the German Railway, with revenues of more than 10 billion euro in passenger transport per year or shorthaul flights. The combined revenues of the 5 major German ride sharing companies is way less than $ 10 million, but the impact on the lifeworld of their users is dramatic.

There are three lessons to be gleamed from this:

• the impact of 2.0 project are not to be evaluated in ROI, but in consumer-focused metrics (shadow prices, counterfactuals, reduction in average cost, rate of demonetarization, etc.). Ideally, not in monetary terms, because 2.0-strategies aim to de-monetarize.
• for corporations, 2.0 strategies go way beyond “normal” cannibalization strategies. They focus on the de-monetarization of industries. Therefore, as strategists, we need to ask, how can we generate a revenue flow that does not inhibit adoption, but sustains the effort.There is no choice, either we do it, or someone else will do it.
• For public value strategists that are not entrenched in existing practices this is a dream-come-true. You can now recreate a multi-billion-dollar infrastructure (the German railway system) with a web-page.

If this does not sound like a fun scenario from the perspective of an existing organization (be that governmental or private), be assured that there is nothing you can do against it. The two mega-trends driving the development are the dematerialization of the economy which has been going on for over one hundred years (the weight of the US economy per dollar of GDP has been decreasing more than 100-fold in the last century) and the implosion of transaction costs of organization through digitization and the rise of n-to-n (peer-to-peer) media are leading to new forms of organization (open value chains) and new products and services that can be digitally provided at basically zero marginal costs.

An analogy of what is happening today can be seen, when we look at the historical institution of medieval knighthood, probably the most expensive and sophisticated approach to individualized fighting and organization of social and cultural life in the history of humanity. In 1386, at the battle of Sempach, a “web-startup” consisting of Swiss peasants defeated the Austrian knights, by pushing them down from their high horses by using long poles. Not very sophisticated, but sufficient to get the job done. Expect more of that today.

When in Berlin, I also had breakfast with Peter Scheufen, the CEO of Skobbler, a smartphone navigation company that was globally the first to utilize Open Street Map in its core navigation product and that is making the navigation industry very nervous.  Peter sees his role as a negotiator between the world of the voluntary mappers, software developers that might want to build applications on top of his server offering, and consumers that expect a working navigation product for as close to free as possible, and believes he can build a business model where he can generate a non-intrusive revenue stream for his company. Navigating these waters is not easy, but it can be very rewarding for all of us, who believe we can have a positive impact on this planet and generate revenues, by figuring out how to generate revenue streams that do not disturb the value chain. So, ignore the ROI-issue and focus on the big picture of (public) value creation!

Open government is the doctrine and governance approach which holds that the business of government and state administration should be opened at all levels to effective public scrutiny and oversight to improve capacity and legitimacy of collective action. It outlines a “brave new world” of doing governance. The discourse on the topic has focused on the technical aspects (open data) and the legitimatory aspects (e-participation) but has dangerously ignored the managerial aspects (open statecraft). In the following I argue, why we should put more emphasis on this concept.

In 2010 we are confronted with new policy and management approaches in the public sector like technologically mediated policy initiation and formulation (Obama’s Open Government Initiative), distributed intelligence gathering (the US intelligence communities Intellipedia), crowdsourcing of accountability (The Guardian’s British Parliament invoice scandal platform), or peer producing political campaigning (the Obama Campaign), and social media enhanced (twitter) revolutions (Iran). No government in 2010 can afford to not use these types of new public governance. Most governments today are confronted with several policy and administrative challenges (transparency, effectiveness, corruption, legitimacy, etc.) that can be addressed by an open value creation.

Open Value Chains that interface to experts, local knowledge, stakeholders, and crowds allow for new modes of organizing collective action in business, society, and government. Recent dramatic reductions of transaction costs in organizing collaboration have allowed for amazing advances in collective value production (think Wikipedia, Linux, or Ushahidi) and will transform our lifeworlds.

Open government introduces new logics of collective action that move beyond the “modern” core ideas of governance, which are based on institutional legitimation of processes and very restrictive information sharing (arcana imperii/state secrets, administrative secrets, business secrets, complex intellectual property rights regimes). This conceptualization of collective action as open value chains implies three important perspectives:

Open Data

The technological perspective represented by the Open Data Movement. Open data is a philosophy and practice requiring that certain data be freely available to everyone, without restrictions from copyright, patents or other mechanisms of control.

E-Participation

E-Participation is the use of information and communication technologies to broaden and deepen political participation by enabling citizens to connect with one another and with their elected representatives.

Open Statecraft

I propose the term open statecraft to introduce the managerial and strategic perspective, to open value creation. The term statecraft refers to the art of conducting state affairs, sometimes with sinister implication, as used by Macaulay (1855) in his Hist. Eng. xviii. IV. 163 A double treason, such as would have been thought a masterpiece of statecraft by the great Italian politicians of the fifteenth century. So open statecraft openly states the ambition of actors to utilize the logic of openness to achieve objectives. Anything else, would be insincere.

The core technologies of open value creation from a managerial perspective are the wiki (principle-based, user-generated platforms, with flexible moderation capacity), the forum (question driven user-generated knowledge platform), blogging (core message with feedback/discourse loop), social networks (such as Ning-communities or Facebook groups) and work flow management and visualization tools (Government resource planning, government process mapping tools, think SAP, Oracle, SugarCRM, etc.). Together they allow us to structure policy and administrative public value creation processes, by enhancing ideation (idea-generation), deliberation (commenting and discussion), collaboration (generating public values), and accountability (parsing data to hold government accountable).

In the discourse on open government the main focus has been on open data and new modes of participation, often without considering the political ramifications of these ideas. It sometimes even seems that the idea of thinking through the strategic, managerial, and political consequences of opening value chains is considered as untrue to the original idea of the concept or even “Machiavellian.” However, without the buy-in of political entrepreneurs that are able to structure open value creation processes, we will not get there. Utopianism without strategy spells disaster.

Therefore, we need to augment the technocratic ideas of open data and the democratic ideas of e-participation with the strategic, manegerial, or political perspective of open statecraft. Only if we offer a perspective that involves the power politics taking place in any institutional setting, can we realistically discuss and implement Open Government as a new form of collective action.

John Maynard Keynes once famously quipped that “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”There are four authors of the 20^th Century that have become background knowledge shared across most global cultures that are keeping us from fully seeing the opportunities of social media empowered collective action and its progressive potential. They are Coase, Horkheimer/Adorno, Olson, and Schelling.

By foregrounding their solutions (to yesteryears problems) and placing them in their historical context, maybe, we can make room for new logics of collective action.

In 1937, Coase published the Nature of the Firm, defining the idea of transaction costs in order to address a puzzle that mainstream economics had ignored at the time: the question of why firms exist in a world, where markets were assumed to be the most efficient allocators of resources. The analytically powerful tool of transaction costs allowed him to ask situation-specific questions on when a firm might be more efficient then market-based transactions. He clearly operationalized his framework, by stating that other things being equal, “a firm will tend to be larger, the less the costs of organizing and the slower these costs rise with an increase in the transactions organized.” (Coase 1937)

He is wrong, at least in some situations: a new form of (non)organization emerges when transaction costs fall so dramatically that neither a market nor a firm is necessary to integrate global supply chains, as we can observe in the case of Wikipedia or Linux.

In 1947, Horkheimer and Adorno published their Dialectics of Enlightenment, a small book of essays that they conceptualized as a “message in a bottle” to a future audience. Their chapter on the culture industry is a scathing attack on art in mass society. They describe the complex environment of capture where industry plays to a mass audiences taste that itself becomes streamlined by industry. Art looses its relevance as an outside critique of existing power asymmetries.

Their media critique hinged on one technological factor, namely that 1-to-N media outperform N-to-N media. They do not imagine a world of a thousand blossoming blogs and youtube-publishing grandmothers. Most media critics have been raised on their scenario, therefore are not good at imagining a world that is neither elitist nor captured.

Mancur Olson’s Theory of Collective Action (1964) is based on the simple recognition of the category mistake that the common collective interest of a group does not automatically lead to harmonious collective action by its members (I agree). His words “rational, self-interested individuals will not act to achieve their common or group interest” have been seared into our unconsciousness. The elegance of his argument has led us to assume free-riding wherever and whenever at least two people get together. We tend to forget that his argument relies on several contingent assumptions concerning transaction costs of collective action (that they are fairly high) and on how we understand human agency (ignoring that most of what we value is inter-subjectively derived).

Thanks to Mancur Olson, we have lost the ability to explain why people act collectively beyond their narrowly defined individual self-interest. So when confronted with the phenomenon, we have been denying its existence. And even after being confronted with lots of empirical evidence (think Linux, Wikipedia, or Mother Teresa) we are struggling to develop the vocabulary to talk about open value chains, commons-based peer production, and massive collaboration. The poverty of our economics (in the original sense of good husbandry) has forced us to rely on a fairly undeveloped metaphorical language of Marcel Maus’ gift economy, the communal cooking pot, or the North American Potlatch system to make sense of something as intuitive as intersubjective coproduction.

Thomas Schelling took the idea of rational interest to the extreme. By postulating a situation of an absolute threat to individual and collective survival (the anarchy of the international system under the threat of nuclear annihilation), he could get rid of all inter-subjectivity. Assuming a world without language (or a world where language had no value, because it would not carry weight), he was able to concentrate on signaling, the thinnest form of co-action. The beauty of signaling is that it is self-explanatory and clear, no messy inter-subjective understanding needed.

However, he purposely ignores all aspects of social life that depend on humans working together to find out something that neither of them knows ex ante. As good acolytes of Thomas Schelling we assume that “talk is cheap” and facebook is suspect. Never mind that anything human that is of value is inter-subjectively created.

Nietzsche said, you must have chaos within you to give birth to a dancing star, but definitely, we should not rely to much on C-H-A-O-S, when constructing the political theories of tomorrow.

Keep an open mind, relearn to speak inter-subjective philosophy, ignore contract thinking in political theory and economics, learn from what you see around you, develop an appreciation for new logics of collective action, and start building open value chains and communities of practice. Imagine what Machiavelli would write about, if he would would write today.

I am sitting in my apartment at Peapody Terrace, overlooking the Charles River wrapping up my time at Harvard. Teaching in the collaborative governance program with Jack Donahue, Akash Deep, Tony Gomez-Ibanez, Chris Letts, Edgar Aragon and Mary Hilderbrand was amazingly fun. Conversations with Gerald Knaus, Jorrit de Jong and Linda Kaboolian have been invigorating and I am ever more convinced that we need to carefully work out the logic of collaboration in high trust societies where transaction costs have collapsed because of new n-to-n communication technologies.

It is a historical moment analogous to the new logic shaping societies when we moved from transcendental to immanent explanations of collective action in the 15th century. And just as Machiavelli tried to uncover the systematic aspects of these logics, we need to focus on new statecraft and new strategy. Below is a  screenshot and link to an interview I did along these lines with an Austrian Monthly, you might enjoy it (if you read German).

Yesterday, I was giving a talk at the Salzburg Business School in Schloss Urstein for Austrian business leaders. My main argument was that we should not think about 2.0 strategies, i.e. the integration of twitter, facebook, Xing into our communication strategies, but about Strategy 2.0, namely the integration of the logic of new forms of collaboration into our core business processes.

I started out by showing a knight, probably the most elaborate (and expensive) personal fighting machine ever developed in the history of humanity and made the analogy to our modern businesses with their corporate headquarters, huge man counts, sophisticated policies, etc.

Well, in 1368, at the battle of Sempbach, a group of Swiss peasants with long poles developed the approach of pushing the knights of their horses and then killing them as they were lying on their back in their heavy armors. Is there anything we can learn for today’s business?

I continued to show how macro-historically, the interplay of technologies and ideas have transformed modes of production and consumption dramatically in the history of humanity and I outlined the logic of “really simple group forming” and how it needs new leaders (what Sofia Elizondo and I call anti-leadership) and new forms of organization (open value chains). Here is the presentation – hope you enjoy it!

I am just coming back from a wonderful day of debate with Germany’s and Austria’s top policy makers in the information technology field. The conference headlined by the new German CIO was titled Information and Communication Technologies as Strategic Instruments for Government. I had been asked to give the final talk after a wonderful tour of the Austrian national library that confronted us with the knowledge politics of the printing age.

I took up that thread and connected it to the idea of statecraft, a concept you can only talk about with a straight face, when speaking in the halls where Metternich, von Stein, Kelsen, and co. voiced their ideas and created the modern state. In this situation, we were able to start an important conversation on how the idea of collaboration in open value chains and social media technologies are transforming public value production.

It was amazing to learn from the top German government officials concerning the topic. There is clearly a very sophisticated, but distributed community out there in government that is starting to make change happen. Expect great changes in the next year.

Anyway, if you want to read the talk, I posted it here. I would love to get your feedback on the text and continue the conversation.
(in German)

The following video is a virtual choir of 200 voices from 12 countries that were brought together by conductor/composer Eric Whitacre. The project has all the attributes of what we expect of networked organizations: Disintermediation of space and time, asynchronous collaboration, granular well-specified tasks, and modularity. If this can be done, what else could we do? Is this the tip of the iceberg?

Co-authored by Sofia Elizondo and Philipp Mueller

This year in our leadership course students came up with new questions that we had not heard before: why do you teach us leadership, if value is created through the collaborative efforts of open source communities? And how does your class help us to foster such collaboration?

While meandering through the Alte Pinakotek in Munich, one of the world’s greatest collections of old masters, where societal transformations of the 15^th Century are painted onto canvas (stark reminders of the power of ideas on our worlds), Sofia Elizondo from the BCG strategy institute and I mulled over this question.

Here’s our raw thinking that will form the basis of an article on anti-leadership. Do join us in this effort!

Moving from Strategy to Second Order Strategy

The world has seriously changed.  Not just the financial crisis, but a systemic profound shift.  We can see this broadly across many different “categories” from politics to our lifeworlds. For example, interconnectedness has changed our societal behaviors and expectations; Technology has changed the way organizations relate to each other and generate value.

In the business world, we used to want to be industry leaders because industry leadership granted security in the # 1 spot.  NOT ANYMORE!   While industry leadership used to last 10 years, it is now common to find industries where the #1 spot is held by a handful of companies during any given year. We also assume that industry leadership is desirable, that market share increases profitability.  That relationship has also disappeared and in some industries even inversed.  So why do many companies’ mission statements still say: “we want to be the number 1 provider of toothpaste?”

To explain this marketplace turbulence, some academics push the “hypercompetition” theory.  We see all of this turbulence in industries because the world is approaching a more perfect marketplace, competition in fiercer so more value is transferred to the consumer..  However, the data show the contrary.  The difference between the top performers and bottom performers within industries is actually increasing, not decreasing.  So SOMETHING must be driving that change.

Now, if we look at classical strategy – the strategy derived from 19^th Century Prussian military thinking, we realize that Clausewitz’ian strategists basically do the following: analyze their market, forecast the future, and optimize the company accordingly through a first order strategy plan.

This might have worked very well for the stable business world of the 60s, but it assumes we can KNOW all of the relevant variables, and that we can FORECAST them.  These assumptions unfortunately do not work very well today.

Now, is classical strategic planning irrelevant in all industries?  Not really.  If we plot all industry groups across a “turbulence chart” measuring rank volatility across the x axis, unpredictability on the y and the difference between bottom and top performers on a 3rd axis, we see that there are particular places where it is much more relevant, and other industries that are hopeless. Unfortunately, it is hopeless in the fields that we care about, such as telecoms, software, internet retail, media (which is not surprising).

So now what?

Let’s replace the Prussian military battle analogy with a metaphor of organizations successfully thriving in unpredictable environments: genetic systems in biology (populations of species, for example) The trick of biological systems is their second order “planning” capability: they adapt flexibly to changing environments without asking their CEO for permission. Naturally, populations randomly generate enough genetic variation to survive environmental changes, such as food shortages, climate changes or new predatory patterns. In that sense, the population is not optimized for lean six-sigma performance, but carries some “genetic slack” that can be very useful for the survival of the species if an Ice Age comes along (or if their food source dies out, a meteor strikes or any other unpredictable event occurs).

Adaptive Strategy’s aim is to set the context for strategies to emerge, NOT to specify The Strategic Plan for the organization. Now as with any metaphor, let us not take the biological approach to an extreme. We can still assume some type of coordinating function, or what we could refer to consciousness or an organization that defines the second order strategies, designs the organization fit to carry these out and intervenes in extreme situations, where adaptation would fail. And this is where anti-leadership comes in.

The Leader of the past

In the past the leader was an authority figure.The term “leader” begs the question: Of what? The immediate answer is: of followers. Notice that it is content agnostic. (Leading towards good or evil is still leading). The leader would focus on the crowds it leads: big, small, fully committed, yet-to-be-convinced, etc. The leader “knows more,” therefore had more authority, therefore, was legitimized.

Anti-leadership / second-order leadership / “designers” begs a different question: not “who and how do I lead?” but “what should be achieved?” which is where the focus should be: the target, aim, direction in front. Not the crowd behind. The anti-leader knows that she does not know, that the emperor has no clothes. In that sense, she relies on the organization’s tentacles to gather, interpret, and act on information.

Implementing Adaptive Strategies through Anti-Leadership

With the advent of constructivist thinking in academia, professors have been slowly moving from taking the role of “the sage on the stage, to the guide by the side.” With adaptive strategizing, CEOs will have to learn this lesson. And it will not be easy to move away from the idea of leading, where essentially all others are blind followers, willing to internalize the messages of the leader.

The core principle of anti-leadership is fairly easy. When you cannot analyze, forecast, and plan anymore, you need to empower your organization to be able to modulate it to turbulent contexts, by allowing for variation (think Google’s 20% rule), define meta-principles of selection through mechanisms such as simulation, scorecards, or actual performance in the market place (think Google’s testing of any interface changes), and amplify what works, through scaling-up mechanisms.

The PILS Framework of Anti-Leadership

This type of modulation can be done by designing your organizations around processes in the following way:

Process: Design a beta-process, deliberately, expose it to the real world before it is finished, so that feedback and selection mechanisms can help it adapt.

Interface: Design as many interfaces to the process as possible, these can be internal or external, they can be to experts or to the unwashed masses. Interface design is a second order strategy guided by the question, who should be allowed to contribute to the process and it is a third order strategy, when you ask who should be allowed to make changes to the process.

Legitimacy: Do not stop in defining interfaces, which can be seen as a technical issue (what APIs to use, what standards, etc.), but imagine communities around them (and again these can be contractually bound to you or not. They might be experts, carriers of local knowledge, or crowds).

Scale: The issue of scaling processes is not trivial. Just as different forces of nature work differently at different scales, think about how gravity does not really affect an an ant – it will survive a fall from a 10 story house, however, wind does. An elephant on the other hand will not be swayed by wind, but could not survive the drop. So the challenge for the anti-leader is to think about processes at different levels of scale and how to get from one to the other.

Skills of the Anti-Leader

Anti-leaders are not loud, they listen. The do not command, but empower. They do not choose, but design decision mechanisms. They do not aim to be smarter than the crowd, or the outsiders, or the locals. But they guide and shape and LEARN. Is this what we teach in leadership class? Is this how you see yourself as a leader? It might be time to rethink our higher education curricula….