Tag Archives: business

On the relationship between orgs and crowdsourcing

The model shows institutions and market as a p...

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Good post at Warren Ng’s blog:

Corporations exist for a reason. That reason most likely is attributed to the power of many, yet corporations break down when executives make bad decisions and the remainder of the company suffers. Promotions and bonuses are put on hold or worse jobs are lost. Seems that corporations haven’t figured out how to utilize the man power effectively.

My reply:

You’re making some important points here (and adding some much-needed balance to the breathless claims that crowdsourcing will replace the corporation). The reason for traditional organizations to exist is largely based in Coase’s theory of the firm: the transaction costs of using a market are minimized or eliminated when performed internally by a firm. Crowdsourcing shifts some of those activities out of the firm by providing lower transaction costs than the firm, something difficult or impossible prior to social media technology.

Savvy entrepreneurs in the crowdsourcing space are beginning at the point of determining which organizational processes lend themselves to being performed outside of the firm, whether they are viewing their value proposition that broadly or not (incidentally, outsourcing and offshoring were both precursors in the attempt to seek lower transaction costs). There are some processes that will probably always stay within the firm–primarily those administrative activities that cause a firm to cohere. This is currently exemplified by the tendency of most new commercially-focused crowdsourcing ventures to form a company first, then sell the results to another company. At present it is more efficient for a company to seek funding, hire staff, and build platforms within a traditional company structure. That may not always be the case.

It’s interesting to contemplate the evolution of organizational forms as technology enables new arrangements. It challenges a great many of our assumptions. That said, I should probably leave it there lest this comment become a post of its own.

Too late.

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Politico notes absence of CEOs in Obama adminstration

Politico fronts this story today:

This constellation of talent, however, has something of a black hole. There is virtually no one on Obama’s team with outsized achievements or a high-profile reputation earned in the world of business.

There are no former CEOs in the Obama Cabinet. And among the people who make up his daily inner circle, there is only a dollop or two of top-level private sector experience.

Whether it is a signifcant absence, however, is far more debatable. As it happens, only a small number of the business leaders in recent administrations were stand-outs. And several were ostentatious flops. It would be hard to argue that there is a close correlation between success in business and success in Washington.

Still, some long-time White House observers find it noteworthy that when Obama convenes his best minds, there will be few people who have answered to shareholders as well as voters — people who know by intuition how the business community is likely to react to any given day’s news.

I have wondered about this myself.  Putting aside the certainty of breathtaking cuts in pay–one would think that extraordinarily wealthy CEOs would be honored to add service to country to their legacies–it seems… Obama-like… to include some big-name corporate talent to the administration, especially in light of the financial crisis and what I predict will be an inevitable reorganization of significant parts of government.  Certainly it would send a message if the usual suspects such as Gates, Jobs, Welch, etc. rushed to the aid of their country.

There are a few personal favorites I would nominate, among them

These are purely personal picks.  None of them is perfect, but they are all achievers in their own right.  It isn’t necessarily a must to bring CEO talent into the White House–John Castellani, president of the Business Roundtable, thinks the administration has done a good job in reaching out to business–but any of these would be certain to leave an imprint.

[Note: I recognize that my list is lily-white and male.  I would expect this to shift in the next few years.]

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