Thursday, June 16, 2005

Good (but only temporarily available) discussion on Web 2.0 stuff (wikis, blogs, RSS feeds etc.) and the way they challange and change business.

The big surprise for me is this, quote from Philip Evans.

One of the simplest arguments I've used to get people out of a traditional mindset is to point out a statistic -- the cost of transactions in the U.S. More than 50% of the non-government GDP in the U.S. is based on transaction costs. Now, what's interesting is that the way most people think about economics is that execution costs are on the periphery. If you start from the premise that transaction costs are central to the productivity of any system, and if you then recognize that most of our time is spent negotiating, securing, monitoring, making sure people did what we expected them to do, dealing with the fact that motivations aren't entirely aligned, and so on, you realize that we have to find a way of working together amid this asymmetry of information. About half of our time is spent doing those things.

This changes the way you think about productivity in organizations where innovation, adaptability and dealing with complexity are the key challenges. So much of reengineering, which is what major corporations have been about for the last 10 or 15 years, has been about linear efficiency -- lining everything up in as tight a way as possible along a path. That's wonderful if you know exactly what it is you want to do, and the aim of that task will never change. Increasingly, that's not the relevant challenge. The challenge is adaptability, complexity, uncertainty and your capacity to mine the elements of your business, people and knowledge into different and new combinations. If that's what you are trying to do, then your transaction costs become the biggest inhibitor to your capacity to do that."


I'm not surprised that we need to get more flexible (disorganized). I'm surprised that the opportunity is so measurably large. Yet more reason to be searching for disorganized strategies.
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