Interest at the Edge

Stephen DeAngelis

July 10, 2007

Zenpundit Mark Safranski pointed me in the direction of John Hagel’s and John Seely Brown’s web site. Having recently discussed events at the Edge of Globalization, I was immediately struck by their mantra “today’s edge is tomorrow’s core.” The two Johns focus on the edge of businesses rather than the geographical edges of development and globalization, but their mantra could just as easily be applied there. It also sounds very much like something Tom Barnett might write when discussing Core, Seam, and Gap states. In fact, Hagel’s and Brown’s latest book “explores some of the dynamics unfolding at the edge of the firm and at the edge of markets (especially focusing on the role of emerging markets like China and India).”

Hagel and Brown are among a growing group of analysts and innovators who realize that intriguing and important ideas are more commonly found at the edges or seams of different sectors and that opportunities are likely to emerge on edges of globalization. They note: “Companies, workgroups and individuals that master the edge will build a more sustainable core. While our primary focus will be on business activity, our perspectives will also be relevant to leaders of other kinds of institutions as well – educational, governmental and social.” In fact, I found their perspective very consistent with my own.

One of the reasons I started Enterra Solutions was to help organizations deal with increasing complexity, especially organizations whose processes were constantly affected by change. Hagel and Brown represent this complexity by talking about four domains of human action and four global forces:

“Four Domains of Human Action
What do we mean by edge? We will be focusing on the edges of four different domains of human action – social, enterprise, market and learning.

— The social domain involves the complex relationships between how we define our individual identities and the forms of social participation that we pursue to shape these identities.
— The enterprise domain looks at how we organize to create economic value and how we define the boundaries of these economic entities.
— The market domain explores how we compete and collaborate on a global scale to create, deliver and capture economic value.
— The learning domain seeks to describe how we learn, with particular emphasis on the interaction between individual learning and group learning.

“Complex dynamic loops shape the evolution of each domain and the interdependencies across domains. Many analysts have described elements of each of these domains, but no one has sought to explore systematically how these domains interact with each other. We believe that the biggest opportunities will arise where the edges of these four domains interact and generate tensions that need to be resolved. It is this intersection that defines the first dimension of our research agenda.

“To effectively pursue this research agenda, we will need to incorporate two other dimensions of investigation as well.

“Four Global Forces
On the second dimension of our research agenda, we need to better understand four long-term global forces and how they interact with the four domains described earlier:

Public policy – especially the broad movement to remove barriers to entry and barriers to competition
Technological innovation at three levels:
– the continuing improvement in price/performance in digital hardware building blocks and new techniques for designing, building and delivering software
– the changing architectures for organizing these hardware and software building blocks
– the movement into new arenas of these components and architectures (e.g., the mobile Internet, smart objects, bioinformatics and telematics)
Demographic – especially the changing age demographics around the globe
Cultural – especially the emergence of global youth cultures, the growth of the creative class and the growing importance of religion in cultures around the world.”

Hagel’s and Brown’s interests in opportunities that emerge where the edges of these four domains interact mirror my own interests. Breaking down traditional business silos and promoting Development-in-a-Box™ are both activities that operate at the edges discussed by Hagel and Brown.

Another of their current areas of research is what they call “Creation Nets.” They associate these nets with “open innovation.”

“Open innovation has become the latest management buzzword. We would have to look long and hard to find an executive who does not agree with the basic premise of open innovation — that success in coming up with creative new value to offer to the marketplace depends upon connecting effectively with other companies. We simply can’t do it alone. Virtually all executives now buy into the wisdom of Bill Joy’s observation that ‘there are always more smart people outside your company than within.’ But here’s the paradox: despite such broad acceptance of the basic premise of open innovation, why are there so few examples of companies that systematically and successfully practice this approach?”

They assert that the term “open” often frightens companies away because they fear “open” means “lack of control.” They define open innovation broadly:

“Henry Chesbrough, who literally wrote the book on Open Innovation, defines it broadly as ‘a paradigm that assumes that firms can and should use external ideas, and internal and external paths to market, as the firms look to advance their technology.’ Under this definition, many different kinds of initiatives fall under the rubric of open innovation: scanning the external environment for ideas, reaching out to a specialist on a contractor basis to solve a particularly vexing research problem, forming a joint venture, licensing technology from a university or participating in broad networks to coordinate innovation activity.”

I’ve written about many of these alternatives in the past. What struck me most about creation nets, however, was their similarity with communities of practice.

“Creation nets represent a particularly powerful form of open innovation designed to harness the potential of distributed innovation activity pursued by hundreds or thousands of participants. Creation nets implement a set of institutional mechanisms designed to mobilize independent entities in the pursuit of distributed, collaborative and cumulative innovation. … These networks are assembled by a network organizer who serves as gate-keeper, deciding who will be able to participate in the network. The network organizer also defines fundamental governance processes to coordinate the activities of the network, for example, determining how disputes will be resolved and how performance will be measured. These participation protocols are generally simple and informal, especially in the early stages of network formation. Participation in the network is rarely established through formal contractual documents, although specific initiatives within the network may be governed by such contracts.”

Hagel and Brown claim to be at the genesis of their work and are soliciting input from others with a similar research focus. It will be interesting to see how their work develops.