A great column in this weekend's Sydney Morning Herald by Ross Gittins, a political and economic journalist and author, reflecting on the difference of perspectives between economists and sociologists on how markets (and organisations) operate - essentially while economists see that "markets are composed of many firms competing vigorously with each other", sociologists see something quite different. Describing the work of Neil Fligstein, a professor of economic sociology at the University of California, in this space he explains:
"Fligstein's argument is that the actors in markets seek stability in those markets so that firms can survive and make profits without too much angst. He says no actor can know which behaviours will maximise profits - either in advance or in retrospect - so action is therefore directed towards the creation of stable worlds.
There are two potential sources of instability they have to guard against: the tendency of firms to undercut one another's prices and the problem of keeping the firm together as a political coalition."
When we wonder why Enterprise 2.0 and other Web 2.0 technologies (and even other disruptive technologies before that) aren't making as much traction inside organisations as we might like, is it because we assume these organisations want to do better when really all the managers want to do is survive, and all without too much angst?
That's the old innovation and new revenue generation versus profit maximisation argument. Markets do tend towards equilibrium but something always happens to cause imbalance (and the world would be very boring if it didn't). IN a networked world, the big often tend to get bigger, especially at the infrastructure layer (eg Google, Microsoft, Facebook, Yahoo etc) while it globalises the capabilities of niche service providers. You are right that disruptive technologies cause significant disruptions to markets, in some extents, completely dissolving them over time. It is natural for the incumbents to resist - but often this is futile. For inside organisations, it's the middle managers who often tend to resist and depending on the power balance, it might be futile too!
ReplyDeleteMy view? Vive la difference!
This is a very interesting issue, and in my view goes to the heart of the question about what the future holds for corporations. if the 'Enterprise 2.0 evangelist' view proves right, middle management should be swept away. But they won't go without a fight, that fight might involve subtle weapons, and maybe they do add some value after all? If they don't add value but do survive, and resist E2.0, either E2.0 tools aren't very revolutionary after all, or their employers will be trounced in the marketplace by those firms that do adopt E2.0. Watch this space over the next 5 years or so....
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