I really like this HBS blog post called The Case for Institutional Innovation from John Hagel, John Seely Brown, and Lang Davidson. In it they argue that future organizations are more likely to be “pull organizations”:
Pull-based institutions are those that bring the force of attraction to bear on tens or even hundreds of thousands of participants around a common platform. …
Pull institutions unleash the forces of attraction through:
A galvanizing view of the opportunity unfolding as technology and policy changes disrupt a market or industry for a wide range of players. This helps clarify and make sense of an uncertain world, drawing participation and creating buy-in or influence.
A set of positive incentives that share the value among all who helped create it. Incentives can help catalyze collaborative action.
A platform that supports and organizes the activities and interactions of participants.
One reason I like this idea of a “pull organization” (and I use the word “organization” instead of “institution” because an institution is a set of rules or arrangements that structure an interaction) is that it focuses the attention of the firm on the value it provides to the consumer: what is my value proposition, and how can I attract consumers (and, for that matter, investors or employees) toward it?
It won’t surprise anyone when I say that I find this idea incredibly compelling as we look at the potential technological and market opportunities in the electric power industry. This industry’s main operating model for the past century has been very much what they characterize as a push industry:
As the world becomes less certain, scalable efficiency is losing its way. Yet our economy is chock-a-block with businesses that exist to maximize efficiency at scale. Businesses presuming predictability in order to push out mass produced products supported by mass marketing programs. Businesses relying on command and control in a world that’s increasingly difficult to command or control. Businesses losing their leadership positions at an ever-faster rate because they continue to push in a world gone pull.
Yes, the death of command and control has been greatly exaggerated for years now. The early prognosticators, however, mistook the lead times required for deployment of the new digital infrastructure. They also missed how long it would take to develop the new social and business practices needed to harness the capabilities of our new infrastructure–capabilities that are only now becoming visible on the fertile edges of business and society.
What we need, rather than a managerial philosophy based on the communications and transportation infrastructures of the 19th century, is one geared to the digital infrastructure of the 21st. We need a new rationale for our biggest private and public sector institutions–to re-imagine them in line with the world around us. Rather than scalable efficiency, we need scalable connectivity, learning, and performance. Rather than push, we need institutions that pull.
If you put those ideas together, you can see the connection between the kind of business model they have in mind, and the kind of business model and industry structure that I’ve been laying out that is increasingly possible due to smart grid technology. In particular, they argue that pull organizations create value through flows of knowledge, and that the organizational structures that maximize the potential benefit from pull instead of push are more decentralized and less hierarchical.
I think this is also true about the structure of the network itself in electricity, which will have many distributed agents, many of whom can simultaneously be producers and consumers because of technologies like distributed generation and plug-in electric vehicles. There’s a ripe synthesis opportunity here between these ideas and the evolving smart grid.