This is part II of a series on how the social era affects every business model, from how we organize, what we produce, and what we sell. (Part I, the foundational rules of the social era can be found here.) Do let me know what you think.. and especially what you want to see addressed in a later post on what it all means for our careers.
A Stanford Professor quit his job. But he doesn’t plan to go to another prestigious university. Nope. He, like others, has discovered the power of teaching online; in his case, he reached 160,000 students in a single online course on artificial intelligence. This is more than a story of online learning or mass dissemination. It proves a point: What once required a badge and a title within a centralized organization no longer does.
The implications for global education are huge, of course. And that would be interesting enough. But there are also implications for organizational design and talent management for firms of all sizes. While social stuff is often associated with marketing or customer service, social can affect every part of the business model, including how we organize. This post is part of a series on the Social Era and answers the question: If you were going to design an organization from scratch today, what would you design for? And the answer is: nimbleness.
Here are two different examples of organizations designed for speed, at least in one part of their business.
Nimbleness model #1: Staffing with “concentric circles.” A mark of a good university was to have hired leading-edge researchers into full-time tenured faculty roles, in big buildings. Impressive facilities were a way of showing off the power of your wealthy alumni.
Singularity University flips the concept around. “Rather than a locked down curriculum, full time faculty, and buildings, we organized for latest thinking, no built-in overhead, and flexibility in design,” says Salim Ismail, Singularity’s founding Executive Director. With that design in mind, Singularity delivers 300 hours of lectures with only seven full-time staff.
The seven full time employees form a nucleus, or core group to handle program management, operations, and communications. They also recruit the next rung of talent, a set of 10 thought leaders, one for each domain area in which SU teaches. These experts are highly briefed on the purpose and goals of the SU organization. These leaders then act as curators for the rest of the organization, assembling 10-20 domain specialists each, from around the world. Virtual work teams form as needed to coordinate curriculum intersection points using Skype and other online tools. While the core maintains the mission and continuity, the curators act as talent recruiters for the next layer: the extended outer circle of specialized talent that adds topical expertise and content delivery. The talent ratio is 5% core, 15% curators, and 85% specialists. As the definition of and market for the latest thinking evolves, SU is in a unique position to fluidly respond.
Instead of organizing in a hierarchical way that focuses on “getting the right people on the bus,” this model is about building concentric circles of talent that flow and resize as needed.
A construct of circles rather than hierarchies allows an organization to tap into the so-called “freelance nation,” the global talent pool of the creative class. In 2005, one third if the US workforce participated in this freelance economy, and some measures suggest it could be as high as 50% today, accelerated by the recession. Some would argue — myself among them — that this number would be larger if portable health care existed. But the point for organizations is that this freelance workforce is not a fad, or a trend. And using it fully is a way to organize and design organizations for fluidity and flexibility.
And it doesn’t just apply to whom we employ. It can change how we to co-create value. Model #2 is an example of that.
Nimbleness model #2: Customer service outside the perimeter. Typically an in-house cost center, service is usually viewed as a necessary evil and constantly targeted for “efficiency.” Over time, notable service firms built outsourcing capacity in India, Malaysia, Singapore and elsewhere to allow any firm to have a global service workforce at low cost. Sometimes lost in that process was the expertise that previously came from experienced in-house employees.
McAfee did something transformative to their service exchange by using social. McAfee formed a strong bond of commitment with the hundreds of unpaid technical experts in the larger marketplace who know (and like) McAfee’s platform of solutions. They invited these “McAfee Maniacs” to participate in much of McAfee’s web-based technical support. The most prolific Maniacs posted responses numbering in the thousands.
These experts participate for a number of reasons: keeping their skills current, building a body of work for their own IT support business, and some for altruistic reasons. McAfee’s competitors were spending between 3-7% of their overall SG&A expenses on service; McAfee’s became virtually zero, directly boosting the dollars they could contribute to R&D and other innovation efforts.
And did McAfee or its customers lose something in this change? Hardly. Indeed, McAfee gained a first line of defense of loyal, committed experts cooperating in the viability of the platform. Customer satisfaction didn’t decline. There is probably no better defense shield than passionate market experts co-opted with a company — and for free.
Isn’t This Just Another Way To Cut Costs?
At first these examples may seem like they’re just about reducing direct resources. But it’s not just that the “800-pound gorilla” is going on a diet of sorts. The point of these examples is what these organizations got, not what they cut. They gained fluidity and flexibility — important to the demands of the social era. But they also got, in the case of Singularity, the leading edge content people to come together to teach current ideas to what they believe are change-agents who will make the world better. It is entirely possible that no traditional institution could recruit them full time; but the fluid model gives SU an advantage. In McAfee’s case, they got experts who passionately solve problems pro bono — just because they like doing that, because it’s their way of making the world better. And McAfee’s ability to engage with its community means that they have people deeply interested in making McAfee better, thus building a competitive moat.
These are not stories of less; they are fundamentally stories of more. The common thread is that the involved participants have a shared purpose — and that creates more power.
Shared Purpose as an Alignment System
When you have shared purpose, it doesn’t matter how many people work “in the company” and how many work “with” the company or how many are serving as an army of volunteers who want to advance the mission. What will it look like to lead an organization when only 5% of talent affecting output is directly on payroll, and others come and go? Organizations will not need to be big to have a big impact. But they will need an extremely clear purpose, and shared, decentralized power throughout. When a clear purpose is coupled with shared power, people can self-organize to reach the goal.
In essence, organizations will finally act flat because they will actually be flat. (And, of course, this affects management’s role and how we all manage our careers. More on that in future posts.)
Work is freed. This changes not only how we work at the broadest levels — and how we organize every single part of our organizations — but what we make, how we produce and distribute it, and how we market and sell it. Is that scary? For many, yes. But, for better or worse, social is giving us this freedom. The question now is what we do with it.
This post is part of a HBR series on how the Social Era will reward fast, fluid, flexible organizations. The original is published here. Now that we’ve covered the rules of the social era and the way it affects how we organize, the next post will focus on how companies produce and distribute.
Wow. Beautifully articulated. This is exactly the line of thinking that informs how we are going about building our (young) company. The top-down hierarchical organization is a construct of the (19th & 20th century) industrial economy. In the information economy, loosely-coupled networks and ecosystems bound together by shared goals and values will be the optimal way to organize talented people. Even though our company is very young and still small, we are already seeing the tangible benefits; simply stated, there is no way we could have otherwise assembled the group of talented professionals and entrepreneurs we have using the old model. And if you don’t mind, I’m sure we will find ourselves referring to and quoting this post when explaining our model and approach to those who find it hard to step out of their old frames of reference.
Leave a reply