The Digitally Enhanced World of And

They say if you want to reach the top of a mountain, focus ten feet in front of you.  And if you were to ask Bob Johansen how to reach the future, I’m sure he would advise you to focus ten years in front of you.  That’s what struck me most when I recently had lunch with Bob.  When the distinguished fellow and former President of the Institute for The Future was asked to describe himself, he responded that he is a ten year forecaster.  Bob, who has been helping organizations around the world prepare for and shape the future for nearly forty years and has authored eight books, focuses a great deal of his time now on creating custom ten year forecasts for businesses. His self description enlightened me as I tend to indulge my imagination in possibilities of the distant future.  As those of you who follow my blog know, I’ve created a future vision in my Ecosystem of You infographic and Bob’s perspective has motivated me to explore what the next ten years of the Ecosystem of You transition could look like.   

Transition From Industries To Ecosystems

The Ecosystem of You is founded on the spiral dynamics framework of human values, which I use to make sense of signals that portend the future.  It portrays a transition from siloed industries anchored in the competitive and capitalistic origins of the prosperity value system to an ecosystem model based on the emerging community and interdependence value systems.  I see signals of the ecosystem model everywhere and I am documenting them in my Top Ten Reasons Ecosystems Are The Future series.  As the series culminates and I shift focus to exploring the ecosystem transition, I have been troubled by what I viewed as a battle between the dominant prosperity system, represented by the centralized platforms of technology giants and the emergent community system, represented by decentralized technologies like blockchain and the sharing economy. Decentralized technologies are evolving to a point where they not only could unseat dominant industry platforms, they could conceivably replace the organizing function of corporations altogether via decentralized autonomous organizations that aggregate individual talent. As I have pondered this transition, I’ve been troubled by how to advise businesses to envision or even embrace a future that does not include them.

Reciprocity Advantage

When I asked Bob for his perspective on what I characterized as a Y in the road between the prosperity system/centralization and the community system/decentralization, he responded that he didn’t feel it was a question of Or, but rather a question of And.

The And perspective is the central thesis of Bob’s most recent book Reciprocity Advantage, which presents a juxtaposed business model for innovation and growth that gets to the very heart of centralization vs. decentralization.  In his book, Bob and co-author Karl Ronn masterfully lay out how businesses are using reciprocity, a term typically associated with community values, to create a marketplace advantage, a term associated with competition and capitalism.  They describe our world today as the world of Or where companies compete and customers choose between them in a transaction-centric model. They believe, however, that the concept of reciprocity “will be reborn in a digitally enhanced world of And” as commoditization and price competition encourage businesses to collaborate. They present reciprocity advantage as a new type of advantage whereby a large business seeking new revenue sources gives away assets in order to experiment and learn new ways to earn revenue in the future.  They describe reciprocity advantage as follows:

“In a reciprocity-based business model, I give you something, and at some later point in time, I trust that I will learn how to get even more value back in return.  While transactions are the currency of today’s Internet, reciprocity will be the currency of tomorrow’s world of cloud-served supercomputing.  The cloud will allow individual companies to look out for the interests of their partners -and themselves- on an unprecedented scale.

A reciprocity advantage begins with smart giving, which is distinctly different from philanthropy or altruism. The reason for giving assets away isn’t just about doing good – it’s an important part of an ongoing value exchange spread over time where partners commit to looking out for each other as part of a shared vision.

Reciprocity advantage will live in the space between transactions and philanthropy – between list price and free. Businesses will be able to create new growth that would not have been possible to do on their own. And they will share some of that new value with others.

Harvard professor and expert on competitive strategy Michael Porter [believes] that societal cost and benefits ought to be more integrated with businesses. [] He sees greater need for collaboration across these diverse organizations to identify societal needs and respond to them. [] In many cases, those are smaller businesses, governments, nonprofits, foundations, and even end users themselves. Large businesses have valuable assets, infrastructure, and know how that make it easier and more efficient to scale solutions to these societal issues. In this way, business / community partnerships can spur innovation and growth that are profitable to the business and also benefit the community. Companies who find their own reciprocity advantage will be better partners in shared value initiatives.”

Companies Creating Reciprocity Advantages

Johansen and Ronn give several examples of companies creating reciprocity advantages.

In its Smarter Planet initiative, IBM is creating a reciprocity advantage out of its expertise in big data and advanced analytics.  When IBM introduced its artificially intelligent computer Watson by defeating two of the most successful Jeopardy! champions, Watson’s reputation enabled IBM to seek a reciprocity advantage in determining: “to whom IBM could give Watson so that it could have great value in creating a smarter planet and from whom IBM could make a considerable profit in providing services to support Watson.”

By making Watson available as a development platform and partnering with governments, customers, competitors and companies of all sizes, IBM is using its reciprocity advantage to work on such problems as wind energy, customer retention, cancer treatment and city operations that involve large complex data sets.

TED, the conference for Technology, Entertainment and Design innovators, created a reciprocity advantage when it allowed anyone to run a TEDx conference.  By giving away it’s conference model and assets to anyone wanting to organize a TEDx conference, TED is perfecting it’s conference model, rapidly building it’s brand across the globe and using TEDx as a talent search for presenters at its main conference.

When Google Fiber selected Kansas City to launch its high-speed digital network, it was seeking a reciprocity advantage to determine how businesses, schools, nonprofits, government agencies and individuals would use extreme bandwidth broadband service.  “Now, Kansas City is booming with hackers and makers, all searching for new models of innovation that benefit from the great increase in bandwidth.  We know market research companies that are buying houses in Kansas City just to tune into the experimentation that is happening.  Most of these experiments were not just technology tests; they were partnership tests.  Kansas City has become a speed-dating hot zone for bandwidth partnerships.”

Google Fiber gives access to platforms for prototyping and collects data to learn the benefits of ultra-fast speeds.  Like the other businesses that are part of the newly formed Google parent company Alphabet, Google Fiber is seeking out situations where it can add value, experiment and partner to make money in new ways.

Advanced Ecosystem Thinking

In the spiral dynamics framework, value systems are segregated into two tiers: subsistence systems which focus on individual existence and being systems which focus on the human need to co-exist.  None of the first tier subsistence systems, which include the prosperity and community systems can fully appreciate the value of the others. Each believes that its worldview is the only true perspective.  This is what Johansen and Ronn refer to as the world of Or and has also been referred to as scarcity culture. At the Being systems tier, systems thinking becomes the norm and mental activity consists of joining, linking, and synthesizing.  This is what Johansen and Ronn refer to as the digitally enhanced world of And and has also been referred to as abundance culture.  Because ecosystems are the organizing structure for the abundant world of And, reciprocity advantage is advanced ecosystem thinking.  It embodies the unique value that a participant (organization or individual) offers to an ecosystem and presents compelling motivation and a clear path forward for businesses facing disruption in the world of Or.

Embracing A Future That Doesn’t Include You

This brings me back to my original dilemma – how to advise businesses to embrace a future that doesn’t include them.  I now realize that this is a challenge for one with a mindset of Or.  From a mindset of And, the future holds opportunity for all of us. Reciprocity advantage creates a new context for envisioning the Ecosystem of You as a model comprised of both centralized corporate platforms and decentralized autonomous organizations.  The question, which makes forecasting the future so fascinating, is which aspects of our current industry model will evolve toward centralized platforms and which will transition to decentralized autonomous organizations.  Thus, the challenge for everyone isn’t to embrace a future that doesn’t include them, but rather to determine the organizing structure in which they will participate.  It may well be both.