3rd Industrial Revolution: Exploring New Value Creation

February 2011February 2011www.hhs.sewww.hhs.se

"...when the rate of change "...when the rate of change outside an organization is outside an organization is greater than the rate of greater than the rate of

change inside, the end is change inside, the end is near...." near...."

Jack Welch…Jack Welch…

Did You Know: Shift HappensDid You Know: Shift Happenshttp://www.youtube.com/watch?http://www.youtube.com/watch?

v=cL9Wu2kWwSYv=cL9Wu2kWwSY

How are these trends impacting How are these trends impacting you and your organization?you and your organization?

GrowthGrowth

TimeTime

Information Information and knowledgeand knowledge

Human Human absorptive absorptive capacitycapacity

Human capacity cannot keep up…Human capacity cannot keep up…

Adapted from Cohen & Levinthal 1989Adapted from Cohen & Levinthal 1989

””No one knows everything, No one knows everything,

everyone knows something, everyone knows something, all knowledge resides in all knowledge resides in

humanity.”humanity.”networksnetworks

Adapted from Lévy 1997

Six degrees Six degrees of separationof separation

- Milgram, - Milgram, 19671967

BA

Two individuals/organizations Two individuals/organizations with the same number of contacts…with the same number of contacts…

……but with very different access to resourcesbut with very different access to resources

BA

Network dynamics impact Network dynamics impact creativity and innovationcreativity and innovation

BA

Poor Poor creativity and creativity and

innovative innovative performanceperformance

Highcreativity and

innovative performance

Teigland 2003

Avoid creating insular networksAvoid creating insular networks

http://www.enronexplorer.com/focus/19185#http://www.enronexplorer.com/focus/19185#

A shift from being A shift from being problem solvers to solution finders problem solvers to solution finders

The wisdom of the crowdThe wisdom of the crowd

ClosedClosedExpensiveExpensiveComplexComplexAccurateAccurate

OpenOpenInexpensiveInexpensive

SimpleSimpleClose enoughClose enough

Hinton 2007

AccurateAccurate

History tends to repeat itself….History tends to repeat itself….Innovation, financial crisis, industrial revolution, Innovation, financial crisis, industrial revolution,

… …

Steam Steam engineengine

Internal Internal combustion combustion

engineengine

MicroelectroniMicroelectronicscs

Late 18Late 18thth C C Late 19Late 19thth C C Late 20Late 20thth C C

Schön 2008

Third industrial revolution?

A new workforce is appearing…A new workforce is appearing…

Prensky 2001, Beck and Wade 2004, Mahaley 2008 Prensky 2001, Beck and Wade 2004, Mahaley 2008

““Digital Immigrants”Digital Immigrants”““Digital Natives”Digital Natives”

Company loyaltyCompany loyaltyWork ≠ PersonalWork ≠ Personal

Learning=Behind the deskLearning=Behind the desk

Company loyaltyCompany loyaltyWork ≠ PersonalWork ≠ Personal

Learning=Behind the deskLearning=Behind the desk

Professional loyaltyProfessional loyaltyWork = PersonalWork = Personal

Learning=Fun and gamesLearning=Fun and games

Professional loyaltyProfessional loyaltyWork = PersonalWork = Personal

Learning=Fun and gamesLearning=Fun and games

Adapted from FredCavazza.net

“u r always on….”

Drivers of evolutionDrivers of evolutionIn

crease

dIn

tera

ctivity

DiGangi 2010DiGangi 2010

Building skills in virtual environmentsBuilding skills in virtual environments

My CVMy CV•Leading a virtual team of 30 Leading a virtual team of 30

individuals from across the globeindividuals from across the globe•Creating and successfully Creating and successfully executing strategies under executing strategies under

pressurepressure•Managing cross-cultural conflict Managing cross-cultural conflict

without face-to-face without face-to-face communicationcommunication

Teigland 2010

Our economy changesOur economy changes

Pine Jr. & Gilmore, 1998; 1999; DiGangi 2010DiGangi 2010

Business models

So, what happens to them?

Johnson, Christensen, and Kagermann 2008, DiGangi 2010

They evolve...

DiGangi 2010DiGangi 2010

Closed model

Organizations internalize resources for value creation; restrict access to

knowledge, and protect intellectual property. DiGangi 2010DiGangi 2010

DiGangi 2010DiGangi 2010

Open model

Organizations leverage both internal and external resources for value

creation; strategically interact with environment DiGangi 2010DiGangi 2010

Access to 24x7 global workforceAccess to 24x7 global workforce

Average wage Average wage approx. USD 1.40 / approx. USD 1.40 /

hourhourhttp://www.people.fas.harvard.edu/http://www.people.fas.harvard.edu/~drand/~drand/

““Distributed groups of individuals Distributed groups of individuals focused on solving general problem focused on solving general problem

and/or developing new solution and/or developing new solution supported by computer-mediated supported by computer-mediated

communication.” communication.” Dahlander & Wallin, 2006 p. 1246Dahlander & Wallin, 2006 p. 1246

User-driven Innovation

DiGangi 2010DiGangi 2010

DiGangi 2010DiGangi 2010

““Distributed groups of individuals Distributed groups of individuals focused on solving general problem focused on solving general problem

and/or developing new solution and/or developing new solution supported by computer-mediated supported by computer-mediated

communication.” communication.” Dahlander & Wallin, 2006 p. 1246Dahlander & Wallin, 2006 p. 1246

User-driven Innovation

Co-created model

Organizations encourage flow of knowledge between internal and external resources; focus on common good where

both parties benefit DiGangi 2010DiGangi 2010

Threadless:Threadless:What came first What came first

– – the community the community

or the or the company?company?

eZeZ 230+230+PartnerPartner

ss

32,000+32,000+CommunityCommunitymembersmembers

5,000+5,000+Customers in Customers in 130 countries130 countries

• #1 open source content management #1 open source content management softwaresoftware

• Customers include UN, Vogue, Hitachi, 3M, Customers include UN, Vogue, Hitachi, 3M, MITMIT

• 75 employees in 9 countries (US, Europe & 75 employees in 9 countries (US, Europe & Asia)Asia)

eZ PhilosophyeZ Philosophy

Connecting people who share a passion for something they do

so that they can collaborate, share ideas,

learn, and create knowledge

eZ provides eZ provides platforms for interaction platforms for interaction throughout its ecosystemthroughout its ecosystem

eZ Software development team

Driven by both parties sharing their experiences and co-creating value of

network.

Private-collective Community

But how to balance needs of community with needs of firm in value co-creation

model?

DiGangi et al 2010DiGangi et al 2010

Transparency, transparency, transparencyTransparency, transparency, transparency

http://twitter.com/#!/zappos

Core Value #6: "Build Open and Honest

Relationships with Communication

Some things do not changeSome things do not change

Innovation Exchange

Exchange Trust

Trust Relationships

Relationships Interaction

"E-connection is processed in the brain like an in-person connection."

http://slideshare.net/missrogue

Just when you thought you got it…..Just when you thought you got it…..

O’Driscoll 2009O’Driscoll 2009

How many usually think of virtual worlds…How many usually think of virtual worlds…

Teigland 2010

But what else can they be?But what else can they be?

•Ability to manipulate/create contentAbility to manipulate/create content•Virtual economy and currencyVirtual economy and currency

http://www.youtube.com/watch?v=Quh2OiPHkm8

Moving out of “Gartner hype cycle” troughMoving out of “Gartner hype cycle” trough

Virtual worlds today

http://www.gartner.com/it/page.jsp?id=1447613http://www.gartner.com/it/page.jsp?id=1447613

>1 bln users

Facilitating the virtual workforce Facilitating the virtual workforce through virtual worldsthrough virtual worlds

Welch et al 2010Welch et al 2010

Tomorrow’s education & training?Tomorrow’s education & training?

Learning virtual Learning virtual teaming skills teaming skills

through experiencethrough experience

http://www.youtube.com/watch?v=N8XPmp0qGyghttp://www.youtube.com/watch?v=N8XPmp0qGyg

Accelerating innovation to meet global Accelerating innovation to meet global needsneeds

Teigland et al. 2010Teigland et al. 2010

Integrating users in Integrating users in development development

processprocess

http://www.youtube.com/watch?v=2kMNWBU1Yb8http://www.youtube.com/watch?v=2kMNWBU1Yb8

Leveraging VW affordancesLeveraging VW affordances

Teigland et al 2010Teigland et al 2010

Simulation Avatar

design

Multi-modal

communication

Co-creationArchiving

Immersion

““Clearly if social activity migrates to Clearly if social activity migrates to synthetic worlds, economic activity will go synthetic worlds, economic activity will go

there as well.”there as well.” Castranova, 2006Castranova, 2006

http://www.flickr.com/photos/rodenberger/5085364909/in/pool-popartlab/#/photos/rodenberger/5085364909/in/pool-http://www.flickr.com/photos/rodenberger/5085364909/in/pool-popartlab/#/photos/rodenberger/5085364909/in/pool-1240578@N23/1240578@N23/

•US US $3 bln in virtual good sales 3 bln in virtual good sales in 2009 to grow to US in 2009 to grow to US $12 bln in 12 bln in 20122012

•US $222,000 raised at American Cancer Society Relay in Second Life

•Swedish government granted Swedish government granted bbank license to Mind Bank in 2009

•US US $3 bln in virtual good sales 3 bln in virtual good sales in 2009 to grow to US in 2009 to grow to US $12 bln in 12 bln in 20122012

•US $222,000 raised at American Cancer Society Relay in Second Life

•Swedish government granted Swedish government granted bbank license to Mind Bank in 2009

USD 635,000 for an asteroid!USD 635,000 for an asteroid!

http://blogs.forbes.com/oliverchiang/2010/11/13/meet-the-man-who-just-made-a-cool-half-million-from-the-sale-of-virtual-property/

USD 500,000 profit in 5 yearsUSD 500,000 profit in 5 years-Jon “Neverdie” Jacobs-Jon “Neverdie” Jacobs

The rise of Avapreneurs The rise of Avapreneurs (avatar+entrepreneur)?(avatar+entrepreneur)?

Global marketsGlobal marketsMicropaymentsMicropayments

Microemployees Microemployees

Teigland 2010Teigland 2010

OpenSim Project: OpenSim Project: Exploring pivate-collective model in Exploring pivate-collective model in

virtual world development virtual world development communitiescommunities

Increasing pace of VW development!Increasing pace of VW development!

VWs on VWs on stickstick

Browser-Browser-based VWsbased VWs

SeamlessnessSeamlessness

http://www.hypergridbusiness.com/2009/05/hypergrid-101-why-its-good-for-business/http://www.hypergridbusiness.com/2009/05/hypergrid-101-why-its-good-for-business/http://mediagrid.org/groups/technology/OFF.TWG/http://mediagrid.org/groups/technology/OFF.TWG/

"Create Once, "Create Once, Experience Experience

Everywhere”Everywhere” Expanding Expanding usesuses

For smart For smart phones and phones and tablet PCstablet PCs

“As soon as the Facebook generation wakes up and

embraces virtual reality, we are going to see a giant

wave of virtual world millionaires”

-Jon “Neverdie” -Jon “Neverdie” JacobsJacobs

Which professions and industriesWhich professions and industrieswill will notnot be revolutionized? be revolutionized?

53

From the mobility of goods From the mobility of goods to the mobility of financial capital to … to the mobility of financial capital to …

...the “mobility” of labor?...the “mobility” of labor?Teigland 2010Teigland 2010

Interested in learning moreInterested in learning more??

Leadership moving forward……Leadership moving forward……

HierarchyHierarchyLinear, static, process-Linear, static, process-

based organizationbased organization

HierarchyHierarchyLinear, static, process-Linear, static, process-

based organizationbased organization

HeterarchyHeterarchyDynamic, integrated Dynamic, integrated

collaboration networks collaboration networks

HeterarchyHeterarchyDynamic, integrated Dynamic, integrated

collaboration networks collaboration networks

Teigland 2010

What should you think about?What should you think about?

How to let go?How to let go?

How to leverage the power of How to leverage the power of networks to create value inside and networks to create value inside and outside the boundaries of the firm?outside the boundaries of the firm?

How to create a sustainable How to create a sustainable ecosystem?ecosystem?

Karinda RhodeKarinda Rhode

aka Robin Teiglandaka Robin Teiglandrobin.teigland@hhs.serobin.teigland@hhs.se

www.knowledgenetworking.owww.knowledgenetworking.orgrg

www.slideshare.net/www.slideshare.net/eteiglandeteigland

www.nordicworlds.net www.nordicworlds.net RobinTeiglandRobinTeigland

Karinda RhodeKarinda Rhode

aka Robin Teiglandaka Robin Teiglandrobin.teigland@hhs.serobin.teigland@hhs.se

www.knowledgenetworking.owww.knowledgenetworking.orgrg

www.slideshare.net/www.slideshare.net/eteiglandeteigland

www.nordicworlds.net www.nordicworlds.net RobinTeiglandRobinTeigland

Photo: Lindholm, Metro

Photo: Nordenskiöld

Photo: Lindqvist

If you love knowledge, set it

free…