In his book, Theory of Business, Peter Drucker (1994) explains that – in our fast-changing world – traditional ways of organizing (arranging) lead to a corporate structure that can no longer move along with external dynamics. The preservation of the structure has become an objective in itself, and has drifted far from the means that it should be. The traditional organizational structure mainly determines internal boundaries: job profiles, duties, responsibilities and competencies, the division of work, processes, procedures, and instructions. The human being is of secondary importance to this. The structure also determines the relationship between the organization and its environment: how we deal with customers, how external communication is managed, what kind of information can be published, and what cannot. The familiar organizational structures employ the basic principle that “to measure is to know,” and have an immense measure of control. The organization restrains itself with this type of structure and experiences the limits of the Coase Ceiling as a traditional organization which creates its own limitations in terms of available people, means, and time.
Joseph Pine and James Gillmore, the authors of The Experience Economy (1999), are looking more at clients’ perceptions of experiences when dealing with organizations and/or their products and services. This is the raison d-être for a company or organization. They base this view on their hierarchical model, which starts with the cultivation and selling of agricultural products, the fabrication of products using fossil fuels, setting up a provision of services around these products, and subsequently creating a special user experience.
Pine & Gilmore, in the 2011 update of their book, take this experience to the next step, to transforming the client as the ultimate experience. The transformed client becomes the actual service or product.
Ron Ashkenas recommends in his 1995 book, The Boundaryless Organization, that you literally break the traditional chains in order to enter the dynamics of the unbounded organization. Meeting each other within value networks simply happens in complete openness. You get to work together, whether you are an employee, a knowmad, a supplier, or a customer. This requires a completely different set of demands on the setup of the organization. It has to be predominantly “open.” What does this mean? Data are freely available, ranging from the source code of software to Web services and APIs (software hooks that can be connected to external websites, which makes data more freely and widespread available for third parties). Intranet no longer exists as limited Internet usage. Transparency, information, and sharing knowledge, both internally and externally, are relevant keywords. Knowledge is no longer the symbol of the power of possessive managers; knowledge is there to share and to be shared. This is boundless organizing.
Dee Hock made sweeping changes to his credit card company, Visa. In his book, Birth of the Chaordic Age (2000), he describes how the structures within traditional companies particularly spur the people within that organization to apply their thoughts, feelings, and actions for the benefit of themselves and the enterprise. Words like “together” and “stakeholders” do not exist within that vocabulary. The preservation of the established structures and processes has become the goal, instead of the means. The person in the company invariably complies with the main structure, and is inclined to renounce themselves and their abilities. Hock has named his new way of organizing the “chaordic organization.” “Chaordic” is an amalgamation of chaos and order. According to Hock, a chaordic organization is “self-organizing, self-governing, adaptive, nonlinear, and complex, which harmoniously combines the characteristics of both chaos and order.”
In the book, Blue Ocean Strategy (2005), Chan Kim and Renee Mauborgne talk about a Red Ocean situation in the market. It’s a bloody mess, wherein the parties involved try to maintain their market share by endlessly lowering their prices, even if it is partly at the expense of the organization. This situation can be characterized by hostile takeovers, price wars, reorganizations, outsourcing, redundancies, and a complete lack of stakeholder loyalty. The unwillingness to innovate (in other words, not supplying the ultimate customized product or service, and not advancing to the next phase of economic value creation as an organization) will irrevocably lead to commoditization, a situation in which all products and services look alike, and where the consumer is left with a single criteria for purchase: price. This is the zombie economy market.
Yochai Benkler wrote in his book, The Wealth of Networks (2007): “I see the emergence of social production and peer production as an alternative to both state-based and market-based closed, proprietary systems.”
As a Harvard blogger, Umair Haque talks about awesomeness:
“Insanely great stuff. Awesomeness puts creativity front and center. Awesome stuff evokes an emotive reaction because it’s fundamentally new, unexpected, and 1,000x better. […] Social strategies are about reinventing tomorrow. Their goal is nothing less than changing the DNA of an organization, ecosystem, or industry. Want to get radical? Stop applying 20th century principles (‘product,’ ‘buzz,’ ‘loyalty’) to 21st century media. The fundamental change of scale and pace that social tools introduce into human affairs – their great tectonic shift – is the promise of more meaningful work, stuff, and organization.”
In his book, The New Capitalist Manifesto (2011), Umair Haque names the critical success factors of his so-called “meaning organization.” The meaning organization only provides products or services if they are truly meaningful – not just as value for the short-term profits for shareholders, but also actually contributing something to society. The organization puts the wellbeing of the stakeholders at the forefront. This is how economic effort can enrich society. These companies ask the following question: What binds our stakeholders to our organization? It is not just about free trade, but also about fair trade; not only about doing business, but about doing it ethically as well; not solely about innovation but about integrity, too. It is no longer enough to like what we do within a company or organization, but to do what we like within those organizations. The new organization is bursting with ambition. It has the desire to turn the organization into a platform that will really enrich the world and humanity, both locally and internationally.
Joe Pine shows that once Experiences are customized, transformations result where the customer is the product.