STRATEGIES – New Rules

New Rules for the New Economy

Kevin Kelly — Mon, 19 Nov 2012 08:47:42 +0000

1) Embrace the Swarm. As power flows away from the center, the competitive advantage belongs to those who learn how to embrace decentralized points of control.

2) Increasing Returns. As the number of connections between people and things add up, the consequences of those connections multiply out even faster, so that initial successes aren’t self-limiting, but self-feeding.

3) Plentitude, Not Scarcity. As manufacturing techniques perfect the art of making copies plentiful, value is carried by abundance, rather than scarcity, inverting traditional business propositions.

4) Follow the Free. As resource scarcity gives way to abundance, generosity begets wealth. Following the free rehearses the inevitable fall of prices, and takes advantage of the only true scarcity: human attention.

5) Feed the Web First. As networks entangle all commerce, a firm’s primary focus shifts from maximizing the firm’s value to maximizing the network’s value. Unless the net survives, the firm perishes.

6) Let Go at the Top. As innovation accelerates, abandoning the highly successful in order to escape from its eventual obsolescence becomes the most difficult and yet most essential task.

7) From Places to Spaces. As physical proximity (place) is replaced by multiple interactions with anything, anytime, anywhere (space), the opportunities for intermediaries, middlemen, and mid-size niches expand greatly.

8) No Harmony, All Flux. As turbulence and instability become the norm in business, the most effective survival stance is a constant but highly selective disruption that we call innovation.

9) Relationship Tech. As the soft trumps the hard, the most powerful technologies are those that enhance, amplify, extend, augment, distill, recall, expand, and develop soft relationships of all types.

10) Opportunities Before Efficiencies. As fortunes are made by training machines to be ever more efficient, there is yet far greater wealth to be had by unleashing the inefficient discovery and creation of new opportunities.

Maximize the opportunity cascade.

Kevin Kelly — Mon, 23 Apr 2012 13:42:40 +0000

One opportunity triggers another. And then another. That’s a rifle-shot opportunity burst. But if one opportunity triggers ten others and those ten others after, it’s an explosion that cascades wide and fast. Some seized opportunities burst completely laterally, multiplying to the hundreds of thousands in the first generation–and then dry up immediately. Think of the pet rock. Sure, it sold in the millions, but then what? There was no opportunity cascade. The way to determine the likelihood of a cascade is to explore the question: How many other technologies or businesses can be started by others based on this opportunity?

Scout for upside surprises.

Kevin Kelly — Mon, 23 Apr 2012 09:23:58 +0000

The qualities needed to succeed in the network economy can be reduced to this: a facility for charging into the unknown. Disaster lurks everywhere, but so do unexpected bonanzas. But the Great Asymmetry ensures that the upside potential outweighs the downside, even though nine out of ten tries will fail. Upside benefits tend to cluster. When there are two, there will be more. A typical upside surprise is an innovation that satisfies three wants at once, and generates five new ones, too.

Why can’t a machine do this?

Kevin Kelly — Mon, 23 Apr 2012 09:17:50 +0000

If there is pressure to increase the productivity of human workers, the serious question to ask is, why can’t a machine do this? The fact that a task is routine enough to be measured suggests that it is routine enough to go to the robots. In my opinion, many of the jobs that are being fought over by unions today are jobs that will be outlawed within several generations as inhumane.

Imagine your customers as employees.

Kevin Kelly — Mon, 19 Dec 2011 10:26:54 +0000

It is not a cheap trick to get the customer to do what employees used to do. It’s a way to make a better world! I believe that everyone would make their own automobile if it was easy and painless. It’s not. But customers at least want to be involved at some level in the creation of what they use–particularly complex things they use often. They can superficially be involved by visiting a factory and watching their car being made. Or they can conveniently order a customized list of options. Or, through network technology, they can be brought into the process at various points. Perhaps they send the car through the line, much as one follows a package through FedEx. Smart companies have finally figured out that the most accurate way to get customer information, such as a simple address, without error, is to have the customer type it themselves right from the first. The trick will be finding where the limits of involvement are. Customers are a lot harder to get rid of than employees! Managing intimate customers requires more grace and skill than managing staff. But these extended relationships are more powerful as well.

The final destiny for the future of the company often seems to be the “virtual corporation”–the corporation as a small nexus with essential functions outsourced to subcontractors. But there is an alternative vision of an ultimate destination–the company that is only staffed by customers. No firm will ever reach that extreme, but the trajectory that leads in that direction is the right one, and any step taken to shift the balance toward relying on the relationships with customers will prove to be an advantage.

All things being equal, choose technology…

Kevin Kelly — Thu, 01 Dec 2011 11:38:11 +0000

…that connects. Technology tradeoffs are made daily. A device or method cannot be the fastest, cheapest, more reliable, most universal, and smallest all at once. To excel, a tech has to favor some dimensions over others. Now add to that list, most connected. This aspect of technology has increasing importance, at times overshadowing such standbys as speed and price. If you are in doubt about what technology to purchase, get the stuff that will connect the most widely, the most often, and in the most ways. Avoid anything that resembles an island, no matter how well endowed that island is.

Connect customers to customers.

Kevin Kelly — Mon, 28 Nov 2011 03:06:01 +0000

Nothing is as scary to many corporations as the idea of sponsoring dens in which customers can talk to one another. Especially if it is an effective place of communication. Like the web. “You mean,” they ask in wonder, “we should pay a million dollars to develop a web site where customers can swap rumors and make a lot of noise? Where complaints will get passed around and the flames of discontent fanned?” Yes, that’s right. Often that’s what will happen. “Why should we pay our customers to harass us,” they ask, “when they will do that on their own?” Because there is no more powerful force in the network economy than a league of connected customers. They will teach you faster than you could learn any other way. They will be your smartest customers, and, to repeat, whoever has the smartest customers wins.

Just recently E-trade, the pioneering online stock broker, took the bold step of setting up an online chat area for its customers. We’ll see more smart companies do this. Whatever tools you develop that will aid the creation of relationships between your customers will strengthen the relationship of your customers to you. This effort can also be thought of as Feeding the Web First.

Make customers as smart as you are.

Kevin Kelly — Wed, 16 Nov 2011 06:47:49 +0000

For every effort a firm makes in educating itself about the customer, it should expend an equal effort in educating the customer. It’s a tough job being a consumer these days. Any help will be rewarded by loyalty. If you don’t educate your customer, someone else will–most likely someone not even a competitor. Almost any technology that is used to market to customers, such as data mining, or one-to-one techniques, can be flipped around to provide intelligence to the customer. No one is eager for a core dump, but if you can remember my trouser size, or suggest a movie that all my friends loved, or sort out my insurance needs, then you are making me smarter. The rule is simple: Whoever has the smartest customers wins.

Preserve the core, and let the rest flux.

Kevin Kelly — Thu, 05 May 2011 03:36:18 +0000

In their wonderful bestseller Built to Last, authors James Collins and Jerry Porras make a convincing argument that long-lived companies are able to thrive 50 years or more by retaining a very small heart of unchanging values, and then stimulating progress in everything else. At times “everything” includes changing the business the company operates in, migrating, say, from mining to insurance. Outside the core of values, nothing should be exempt from flux. Nothing.

You can’t install complexity.

Kevin Kelly — Mon, 18 Apr 2011 04:44:57 +0000

Networks are biased against large-scale drastic change. The only way to implement a large new system is to grow it. You can’t install it. After the collapse of the Soviet Union, Russia tried to install capitalism, but this complex system couldn’t be installed; it had to be grown. The network economy favors assembling large organizations from many smaller ones that keep their autonomy within the large. Networks, too, need to be grown, rather than installed. They need to accumulate over time. To grow a large network, one needs to start with a small network that works, then add more sophisticated nodes and levels to it. Every successful large system was once a successful small system.