I read a tweet from Saul Kaplan asking, “What if the world’s ingenuity was unleashed from industrial era structures, business models and social systems?” Later in the post he answered his own question with, “It will happen when self-organized, purposeful networks force intransigent institutions to pay or be disrupted.” I agree with Mr. Kaplan but my question is, who will build these networks?
Many of the start-up companies I come across are looking to sell their business to a larger company as an exit strategy. There are very few looking to build standalone companies let alone networks. It may be that they want to cash in on the buyout rush by larger internet companies. It may also be that they don’t foresee an ability to compete in the long term with the Googles, Facebooks and Amazons of the world. In a winner take all world of large platform players it is difficult for a niche player to survive. But possibly the problem is the kinds of companies people are trying to start.
There are too many people that are trying to build companies that tuck into the larger platforms or that will build a user base big enough to attract a large buyer. There are not enough people trying to use technology and business models design to tackle the many problems that exist in the world. While Google, Facebook and others are not industrial era business models they are in many ways more harmful to society. They create very few jobs or value for society relative to the value they create for their shareholders compared to the industrial business models.
The only way we are going to solve the challenges of the world and break away from the ever increasing vacuum of the large platform players is to build new business models. These models will be designed to create real value for a large number of people. There have been great examples of social businesses that create local value for their community. The challenge for many of these entrepreneurs is to scale their businesses through replication in other communities or through interaction with communities across the globe. This area is where a network of these entities can enhance their impact by sharing the benefits across a wide group of people. Sustainable farmers in one region can trade with those of other regions creating bigger markets for both. They can ensure that the supply chain itself is also sustainable. A further advantage is that the network can provide these benefits while preserving regional differences.
Building these business models needs to start with strong local ventures that work on solving needs in a community. These business models will be inclusive and will look to build value for the community as a whole. There is room for good incomes for people and good returns for investors but they will be in proportion to the value created in the community. As these local ventures are developing there is a need for global connectors that can link up these ventures on a global scale. These connectors may be existing multi-nationals that learn to work these new models in a sustainable way. They may also be new organization structures that work across these new ventures that are themselves new business models.
We need entrepreneurs that want to build sustainable businesses instead of gadgets and copycat models. They must want to create value for a lot of people and not just to get rich themselves. Investors must also support these ventures with patient capital that understands the need to spread the value across the community. Large company with global scale have to start to work with these ventures in a way that creates value for everyone in reasonable proportions. If they don’t global connectors will arise that will work around and eventually replace them. Just thinking in terms of networks of value creation instead of stand-alone ventures and existing industry structures starts the process moving in the right direction.