22 November, 2010

Driving the Third Industrial Revolution

The third industrial revolution will force companies like Nokia to let go, to break the traditional value chain where value has been created from within the firm to a co-creation process with consumers and other stakeholders. I think Nokia is well-positioned to leverage this upcoming change but it will be a painful process to change the mindset and collaboration mode.


I sat in and listened to Robin Teigland's presentation about the Third Industrial Revolution and where the Internet is going. Ms Teigland is an Associate Professor at the Center for Strategy and Competitiveness at the Stockholm School of Economics.



A quick comment, according to some Economic Historians, the industrial revolution really starts 40 years after break-through innovations. 40 years ago the Internet was born and 40 years ago we saw the first micro-electronic achievements. This leads to that we might be in the begin of the 3rd industrial revolution..


What got me going was the following comments about how Corporations are trying to control their destiny - and this also echoes the discussion about how an OEM e.g. Nokia can differentiate leveraging a real open source platform like MeeGo - and please follow my rationale (and find where the flaws are in my logic).


So, in the second industrial revolution, the industrial chain was focused on things like:

- separate work and private life

- roles and responsibilities appointed and supervised

- value created by firm's employee and firms are primary source of value creation

- competition is zero-sum game


But in the third industrial revolution, knowledge will rule and corporates able to leverage global sourcing of talents and knowledge working in a co-operative mode where products and services are defined and tested in real world environment.. Don't let Teigland's emphasis on Virtual Reality with avatar's dismiss what the key messages of her ideas are, as they are highly intriguing. And Facebook hires Cory Ondrejka, former CTO of Linden Labs (behind Second Life) is another sign of where social networks may be going.


Most, if not all companies today are clearly in the second phase, starting to explore what Teigland refer to as the second step in the 3rd Industrial revolution. Organized functionally or matrix-wise [1] to follow fairly strict rules of roles and responsibility to deliver result and create value for shareholders. If we continue with Nokia as an example, they are steered towards deliver mass-market low-cost handsets which results in a functional highly optimized cost-efficient organization.


And here's the million dollar question: do the companies have the guts to let go and drive the change to the third industrial revolution or are they going to stand by and see it happen before acting upon it?


And the consequences might be scary as the main implication will be to let go, stop controlling and rather influence and leverage what is happening in the extended ecosystem. When consumers and suppliers may enforce their opinions and knowhow already in the product creation stage - not just firms and consumer analysts pretending to listen to them, but they actually being involved creating the products with you, for you.


How is then the companies able to differentiate? How to keep the secret sauce hidden? Well, don't - that would not be the competitive strength in the upcoming Immersive Internet where moving from one way information spreading (early Internet) to sharing and participating (today's social networking) to co-creation and de-centralized social production (tomorrow's Immersive Internet) (check slide 9, don't know how to link to that one directly).



References:

1. Wikipedia on Organizational Structures

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