Preparing for Business 2.0

If you were to advise someone considering going into business or becoming an entrepreneur today, what would you tell them? What is the best advice for today’s business schools? Where would you start; with underlying processes, human psychology, supply & demand theories or principles of management? I’ve been using the wirearchy tag to note articles that talk about the changing nature of work. Here are some examples:

Wirearchy: The performance management schemes, grade levels in the organizations and compensation practices have yet to recognize how work gets done in networked environments and increasingly, in a networked world.

FastForward Blog: … the radical reduction of transaction costs shifts the economic reality enough to eliminate the current value of organizations, making organizations effectively irrelevant.

Umair Haque: That’s the third, simplest, and most fundamental step in building next-generation businesses: understanding that next-generation businesses are built on new DNA, or new ways to organize and manage economic activities. Think that sounds like science fiction? Think again. Here are just a few of the most radical new organizational and management techniques today’s revolutionaries are already utilizing: open-source production, peer production, viral distribution, radical experimentation, connected consumption, and co-creation.

Scott Anthony: The Great Disruption creates real challenges for managers who have made a career out of focused execution. Smart management and prudent cost controls might have been enough to survive the Great Depression, but they are wholly insufficient for surviving the Great Disruption. For example, all the operational acumen in the world won’t help U.S. newspaper companies handle the seismic shifts in their industry.

G. Oliver Young: I see a fundamental rethinking of the definition and function of the firm; the single biggest change since the industrial revolution.

Are there any books that you would recommend to someone entering into a commerce program or starting their first foray into business? I think that the rules are changing rather quickly, as I see what people in my own networks are doing, especially with start-ups.

Is there a way to study and prepare for business today or is it better to jump in and make mistakes as you learn? Recommendations would be appreciated, especially from younger entrepreneurs.

13 Responses to “Preparing for Business 2.0”

  1. Meryn Stol

    This is a very interesting question. Below is my take on it. In case it sound a bit extreme: I might be wrong on some – or all – things. Still, this is my current “best guess”. I actually believe this. Also, I’ve read and thought quite a lot about this subject for my own purposes.

    If you’re rethinking business anyway, you must be aware that the concepts of nonprofit and for-profit organizations will totally converge. It will all about how people behave, how they collaborate, what values they hold. Financial details will be just that, details. Umair Haque is totally right that we’ll be seeing new organizational DNA, and this will all about openness, transparency and ethics.

    Therefore, I think anyone seriously wanting to study this field should read books about social entrepreneurship and nonprofits.

    The ones I’ve read are
    – The power of unreasonable people
    – Forces for good

    Also of course The Future of Management (Gary Hamel), The Success of Open Source (by Steven Weber), The Starfish and the Spider and The Hacker Ethic.

    For an example of the hybrid organization forms we’ll be seeing more of in the near future, read up on Yunus’ concept of “Social Business”, described in “Creating a World Without Poverty”.

    Also, I think we’ll see a move towards online collaboration, so you need to know everything about working from home and the emerging practice of coworking. Best for this are blogs I think. Web Worker Daily is a good start. I haven’t read “Grown up Digital” by Tapscott yet, but I think that’s a good one too. The practices and worldview of youth is totally different from that of the previous generation.

    If you’re wondering: “How are we gonna make money when we’re giving everything away?” remember that the purpose of a business is not making money, but delivering value to customers. And yes, the financial community does not really understand that yet, to put it lightly.

    Also study emerging trends in finance, such as new thinking on funding nonprofits (check out Tactical Philanthropy blog for instance) and peer to peer microfinance, best exemplified by Kiva. Money flows will change in an extreme way.

    Speaking of P2P, check out http://www.p2pfoundation.net/ . It’s all quite theoretical, but Michel Bauwens’ obsession with “everything p2p” is not accidental. He’s very well informed.

    I don’t think that today it’s possible to make the right preparation, other than simply developing very high ethics, skills and a good reputation. Economic organization of the future (I’m talking about the whole economy, the whole of society here) will look nothing like we’re used to. The thing that will be slowest to change is the physical capital.

    For example, I really don’t know if wall street has any importance in ten years. I mean that. The buildings will still be there though. Maybe the offices will be retrofitted as nice apartments…

    Also, classic strategy is “dead”. Because of repeated plays and transparency in operations, the ESS (Evolutionary Stable Strategy, the strategy that will crowd out all other strategies in the long-run) will be indistinguishable from principled behavior. This means you (as a person) don’t have to follow a strategy anymore. Being principled, behaving ethically, is enough.

    What does this means for organizations? Organizational boundaries will disappear, and accounting within one organization will become quite meaningless to measure success of the people included. The profit (if we’re still using money that is..) might be made somewhere outside the organization.

    But I want to say one more time that it’s not possible to properly “prepare” anymore. The fortunate thing is that you don’t have to. 🙂 Just be ethical, principled, develop your skills, learn as much as you can, do good in the world (for example by doing good within your company), and you’ll be alright – in the long run that is. If I know anything about the future, it’s that it will be really fair to all.

    Reply
  2. Meryn Stol

    “I pretty much agree with you”
    You do? Now that’s interesting. Are there parts you don’t agree with?

    It has become a pretty long piece, but I think you just asked the most interesting question I’ve come across in a long time.

    Reply
  3. Harold Jarche

    Actually I agree with everything except for the things I have yet to research 😉 Ethics, skills and reputation (trust) seem like the underlying core of any good business person. In a world of networks, these are becoming more transparent.

    I’ve read all the books you suggest except for Tapscott’s and much of what you say aligns with the wirearchy concept. Some of the changes you talk about may take longer, IMO.

    Reply
  4. E-Learning Tyro

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    Reply
  5. Meryn Stol

    “Some of the changes you talk about may take longer, IMO.”
    I can understand you feel that way. Sometimes I feel that I’m all whack for expecting change so fast… But I expect these changes because of gigantic technological catalysts. First there were weblogs, then twitter, government 2.0 has really taken off under Obama, crowdsourcing, etc etc.

    Especially the increased networking through blogs, Friendfeed and Twitter will result in a huge boost in creativity. I think we only have just set the stage for much more radical IT innovations than we’ve seen. In particular, I expect that P2P IT (that is, not dependent on corporations, using only the internet and local computing power) will get so good that together with voluntary user input (let’s call that part of the system “crowdsourcing”, we already have millions of people voluntarily blogging now) we’ll have a system that can made better resource allocation decisions than our financial system. That will be the point when we power down the stock markets. and the bankers can enjoy some vacation.

    Of course, this won’t happen as described above. We’ll see much more stages in between. It might even be the financial system will simply “mirror” the “decisions” of the new system, because investors will look more and more at information from the new system.

    BTW. I recommend you check out Friendfeed. It’s much better than Twitter for conversations. It’ll be worth your time. I’m at http://friendfeed.com/meryn

    Reply
  6. Jon Husband

    Actually I agree with everything except for the things I have yet to research Ethics, skills and reputation (trust) seem like the underlying core of any good business person. In a world of networks, these are becoming more transparent.

    Check out The Ethical Economy, by Adam Arvidsson and Nicolai Peterson, a not-quite-finished book that so far is being written on the Web, I think.

    Reply

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