Thursday, February 28, 2008
The Long Tail of Gigantic Companies
So, there's an assumption floating around the b-sphere as a result of the Etsy discussion we kicked off that's a bit off the mark.
Here's how the 37Signals guys put it:
"...The true giants, like IBM, Microsoft, and Google, come to life so rarely that the chances of random company X being one of them is slim to the point that we might as well try to guess who’s going to be struck by lightning tomorrow or win the lottery."
In fact, it's the opposite.
Edgeconomy = turbulence + hypercompetition.
Turbulence + hypercompetition = lots of revolutionaries, lots of upsets, lots of volatility.
Lots of volatility = lots of new giants.
You can look at the numbers (hi, macro crisis). Or you can just look around. Where are they? Everywhere - literally. Mittal, Zara, Baidu, Embraer, etc, etc...
So nextism, if you like, is kind of important. Because it lets us understand what these guys have in common - if anything - that yesterday's incumbents don't.
Put another way, if you're trying to create new stuff, nextism is dangerous - it stops creative thinking. But if you're trying to understand stuff, nextism is an essential component of analysis.
I think I agree with you to the point where you're saying that Edgeconomy = Lots of volatility.
Does volatility necessarily create lots of new giants?
I'd think that one of the defining characteristics of the edge-conomy is the thinning out(distribution) of value over a number of revolutionaries that are in a state of hyper-competition. Sure, there might be(and hopefully will be) some value creation, but not localized to one "giant".
I think we're going to see fewer Microsofts and IBMs, and more Googles.
But only in terms of innovation, not gigantic stature.
The Google disruption was a first in the marketplace, enabling them to grow so big, so quickly.
And going forward, we'll see more such disruptions- the edge-conomy encourages and NEEDS these disruptions to happen.
But I think we've seen the end of mega/giant corporations and are at the beginning of a new age of micro/niche upstarts.
read the title of the post :)
thx for the comment.
Reading through Kottke one more time, though, and your Etsy post, I do feel like some portion of the debate has to do w/ taxonomy.
The first time I read your post, I was like 'Woah. WHAT?!!'. I even spent a good 15 minutes on Etsy, trying to see if I could see what you saw.
Drank a glass of water. Then I re-read your post. A few times over. By then comments were pouring in, and I was still digesting the info(explains why I didn't comment on that post..).
Now I doubt a lot of people would spend that sort of time- it's more natural to take what you said at face value: "Is Etsy the next Google? I think it just might be."
Maybe we ought to start thinking of new classification systems for winners in the edge-conomy. If the majority of winners aren't going to be giants, then analogizing them w/ the GOOGs and the MSFTs may not be the way to go.
Perhaps a question for your community: what do you call an emerging group of innovative startups that are successfully revolutionizing industries at the speed of thought?
(hey, i thought your other explanation was nicer. perhaps you could add that back in as well? i see the point of the title, but i thought clarifying the difference between frequency vs size was apt...)
you are wrong...
edge economy = flow + cooperation
your model is only a restatement of what already is
in higher order functioning, evolution does not come from agitation, (revolution is only reactive) and this is true in any creative endeavor, in brain functioning, in sport, or meditation, in art...
I think "flow + cooperation" is an ideal, rather than a representation of what the practical edge-conomy will be.
Agitation/volatility/etc. are essentially signs that we're trying to break away from old means of transaction, and build new ones.
Which means we're innovating...
(In natural life, innovation(not evolution..as you've rightly pointed out.) is the general outcome of agitation. Fire, ice cream shakes, adrenaline bursts, etc. come to mind immediately as typical outcomes of agitation.)
Are the new/innovative transactions going to end up being a zero sum game anyway? Will there be marginal value creation, making purists question the premise for said innovation?
Or will there be some incredibly noticeable value creation?
(I'd say that the latter case is the only plausible 'evolution' scenario. The middle case is the likely scenario.
The first case will make me close shop and go back to playing the piano.)
yes, my formula is "idealistic" but my take on the flow of time now is that transparency is increasing, community is increasing, privacy is decreasing, interconnctivity is obviously increasing... and the net result is that selfishness as a business strategy or motivating force is becoming less and less viable.
the existing dna in so many systems is based on old understandings, and is collapsing rapidly, wall street, microsoft,.. umair lists many examples.
our economic value derives more and more directly from being useful to the world
there is also such a thing as higher-order functioning, spiral dynamics is a good model for understanding this..
i agree with you, agitation is a response against limitation, but skill in action demands something slightly different to transcend those limits... how many rebellions, how little change, unless accompanied by a new understanding or model of what life can be.... this is going on now big-time i think...
would love to hear you say more about value creation... this is key, central, germane, important, i think, and could be an entire book... before you write it, give me the synopsis please
thanks for your time, enjoy,
Gregory: very sweetly put.
If I heard you right, you're proposing:
networked(transparency + community) =
increased visibility(b-models + economic advantages) =>
realistic opportunity for evolutionary action.
I like that.
Re: value creation- Oh I don't think I'm made/qualified to pull off a book on it. =)
But yes, I suppose I have a few thoughts on the subject that I'd love to summarize in a longer-than-usual 'synopsis'.
In the meantime, I find myself woefully ignorant on spiral dynamics, so thank you for that pointer. Wikipedia, here I come...
Weren't you going to post a follow up to your original post the next day? Did I miss it?
Oops. I see your etsy post will be coming soon. Please ignroe my other comment.
Thanks for the wonderful posts. They are very thought provoking.