Updated: Nov 9, 2020
Clayton Christensen’s call with Andy Grove sparked (part one) the knowledge network: Intel had some of the brightest minds on its payroll, but Grove looked for knowledge outside of Intel’s walls.
Interweaving the above story with The Power of Pull, I began wondering whether such a call could happen at scale.
Businesses’ competitive advantage during the industrial age lay in acquiring an existing stock of knowledge and then milking the knowledge until its expiry date (patent). Today, the expiry date of knowledge is becoming less relevant: the ability to continuously create new knowledge is the new collaborative advantage in a world that is constantly accelerating.
To continuously create new knowledge, you need a new form of innovation: innovation at the level of network effects (a pull-based network).
At its core, the network effects innovation aims to layer multiple types of innovations on top of each other (product/service innovation, process/business model innovation, institutional/industry innovation, and even ecosystem innovation). The first barrier to the network effects innovation is our minds: when we stick to the old way of doing things (and how we define things), we imprison our imagination and blind our vision to anything outside the boundaries of our definitions.
For example, the entertainment, transportation, and hospitality industries problems during the last two decades was not with the product/service innovations: these industries have been imprisoned by a lack of business model innovation.
The players within these industries have been hindered by narrow definitions of business models that have merely maximized shareholder wealth while reducing transaction costs.
However, the disruptors of these industries used a wider perspective of what a business model should be and do. Thus, they leveraged their product/service innovation with business models’ innovation to enhance customers’ experiences.
Let us take this quick experiment — How do you define (understand) business models?
If you put on narrow lenses, you will reconstruct a business model that will force you to look inward; the model will solely be predicated on you (your business, your product, and your interests).
If you put on wide lenses, you will reconstruct a business model that will force you to look outwardly to cope with the evolution of customers’ needs, thus factoring in the network effects and the ecosystem.
However, today, the disruptors are finding themselves in a similar dilemma: their products, services, and business models are hindered by a conventional view of the network effects and ecosystems.
Businesses need new models to economically leverage the network effects’ hidden potentials: a new economic model that enables effective and scalable interplay between different value chains and the network chain to move from customers’ experiences (competitive advantage) to customers’ empowerment (collaborative advantage).
Accordingly, in part one, we started the journey of network effects innovation by (imaginatively) exploring a new type of network effects, the Knowledge Network, that aims at blurring the boundaries between entities and individuals to nurture knowledge across industries and societies (a bridge between business leaders and business thinkers).
In theory, business leaders and business thinkers are two sides of one coin. In real life, they are alienated from each other: deeply fragmented by misdirected economic incentives and motivations. Even worse, each side is further fragmented (e.g., by intellectual property, market shares, etc.).
To bridge the gap, we need a new vision (entry point) that can navigate knowledge flow within a rich social journey. Underneath such a social journey resides a rich and complex unbundling system: a new method of commoditization, differentiation, modulatory, and interdependency.
A knowledge network with such a highly differentiated human capital must start with modular frictionless access: Microsoft, for example, has only one Satya Nadella, and if he wants to know more about the Big Shift, Aggregation Theory, Network Effects Map, and Platform Scale, there are only one John Hagel, Ben Thompson, James Currier, and Sangeet Choudary.
The modular frictionless access enables Nadella to command his smartphone verbally to call the relevant business thinkers by using just a name, without the need for a phone number, email address, extension, hashtag, etc. The business thinkers’ names are their unique identifiers.
Thus, Nadella can be 100% sure about the identity of the person on the other side of the call, and vice versa. Unlike other applications, the knowledge network acts as an accessibility tissue across the business landscape to enable a free flow of knowledge.
Such modular accessibility enables business leaders and thinkers to interact beyond fancy titles or consultancy jargon: executives can express their vulnerability, and thinkers can express their humbleness.
From the Platform Longevity Growth perspective, the knowledge network is not meant to stop at the passive, static transactional layer (accessibility). It invites you to navigate into the active, dynamic, relational universe, all the way to penetrate the interactive, explorative, collaborative sphere.
Within the Platform Value Proposition Canvas layers, the accessibility resides at the Jobs to be Done (“J2bD”) layer. In our hypothetical example, knowledge is WHAT Nadella wants; thus, the J2bD layer is designed as an interface with a superior UX to enable a smooth flow of knowledge (transferring the existing “codified” stock of knowledge and tacit knowledge).
But, what if Nadella is interested in exploring more (digging into the WHY behind the WHAT). In such a case, he must invite the business thinkers into the Context to be Shaped (“C2bS”) layer (Hagel’s Contextual Age) where the knowledge network evolves the experiences from the modular accessibility into dynamic consensus co-operation via the Creation Spaces (another fascinating concept by Hagel).
Creation spaces within the knowledge network represent a unique mini-platform: unique identification number, budget, access authorization, objective, outcomes, tools, features, etc.
For open-source projects, the creation spaces organically create a social life for knowledge by leveraging the participants’ social media accounts. In other words, they place virality into the heart of network effects (an active interplay between scalability and defensibility).
Knowledge creation within the creation spaces gets registered, recorded, archived, translated, converted (text-to-audio, audio-to-text), etc., and can be available and accessible to business thinkers as well as outsiders; for example, business schools’ students will experience a new dimension in business learning (from the eyes of business thinkers and leaders).
But what about outsiders (passionate non-business leaders and thinkers)? Do we have a role in the journey of knowledge creation apart from viewing it?
Within the Creation to be Empowered (“C2bE”) layer, the creation spaces open channels between business thinkers and outsiders: where they can invite passionate individuals to join the knowledge creation journey.
However, moving from one layer to another (i.e., from J2bD to C2bE) is not merely dependent on functionality. Instead, the process of enriching the experiences is predicated on Hagel’s two pyramids. The entry point to the knowledge network is grounded on the purest form of trust; it is not about search or discovery. Thus, when Nadella (in our imaginary example) reached business thinkers, he did so because he trusts their knowledge.
But for Nadella to venture from the J2bD into the C2bS, he needs more than a surface level of trust: for Nadella to evolve within the knowledge network, he needs to climb the pyramid of trust.
To create a flow of new knowledge within the C2bS layer, Nadella needs to gauge thinkers’ willingness to work together.
And to navigate from the C2bS to the C2bE layer, business thinkers must invite outsiders to climb the learning pyramid.
The learning pyramid acts as a strategic framework that integrates the creation spaces with outsiders. Here, trust must be digitized (skills can be administered by the infrastructure stack). Business thinkers need to figure out if outsiders have the right capabilities and enough passion for building trust-based relationships.
Placing knowledge into a scalable learning context democratizes the process of knowledge creation, enabling passionate outsiders to evolve while helping business thinkers within adjacent domains and verticals.
In plain English, no matter how skillful an outsider is, the probability that s/he may work with Microsoft is almost zero: climbing the pyramids with business thinkers, amplify the chances of working with the giants.
The knowledge network acts like a black hole and can pull everything to a new core: Sequentially speaking, the current platform-based business model starts with 1) Architecting a platform, 2) Defining a core value unit, 3) Enabling a core interaction, 4) Nurturing network effects, and 5) Governing an ecosystem.
The knowledge network (as discussed in part one) blurs the boundaries between the core value unit (value proposition), the core interaction, and the network effects, thus placing the knowledge network in the center and shifting the gravitational balance to recreate a new core.
1) The network effects are the new center (new core).
2) The creation spaces (mini-platforms) are built on top of the new core (network effects).
3) Each mini-platform operates within a unique ecosystem.
4) The knowledge network pulls and layers everything on top of the new core.
Such an envisioned reality requires us to rethink how we create, capture, distribute, and govern the value creation process:
1) Moving from the shareholding system to the coreholding system;
2) Moving from administrative governance to behavioral governance;
3) Moving from capturing data to nurturing knowledge.
The knowledge network can leverage capabilities and resources that reside within adjacent network effects and ecosystems to catalyze continuous waves of knowledge creation.
However, layering the capabilities within adjacent network effects cannot be attained merely by adding a new core value unite, new core interactions between existing participants, or new (node) participants. For the knowledge network to harness the wealth of resources residing within different network effects, it must realign the entire elements of the interactions (from individuals to ecosystems).
So, who do you think might be the best candidate to materialize this imagination? I guess it is evident: Microsoft is perfectly positioned to spark experimentation with such a new edge (strategically and technically).
From a strategic perspective, experimenting with new edges requires a blueprint (The Only Sustainable Edge, Hagel and Brown). Microsoft’s edge experimentation strategy under Nadella’s leadership encapsulates the main pillars of Hagel and Brown’s blueprint.
From the technical perspective, well, just look at the above summary; businesses, intellects, and third-party developers can all work together by leveraging the integration between Microsoft Azure, Dynamics 365, and Power Platform to custom build creation spaces (mini-platforms) for countless verticals with unique tools and functionalities to create digital feedback loops of knowledge between adjacent creation spaces. Microsoft 365 can link user empowerment at the creation space level with user experiences at the enterprise level.
Can you imagine how HoloLens may leverage the integration between Dynamics 365 and Azure mixed reality to redefine how knowledge gets created?
LinkedIn can act as a fertile platform to supply the creation spaces to a growing population of passionate professionals: supply that ventures beyond mere connectivity into immediately actionable engagement.
How can this imagination be materialized? It depends on three main pillars: ability, willingness, and incentive.
These days, if humanity is looking at Mars, rest assured that ability is not an issue. Just imagine what might happen if Microsoft, Apple, Amazon, and Alphabet slightly align their interests toward a unified vision. Our problem is with the other two pillars: our willingness is blindsided by misdirected economic incentives.
Facebook, for example, tried to align its ability, willingness, and incentives with the Libra project, but the project clashed with the global political will. I don’t see how a global knowledge network could clash with anything: knowledge creation is a positive-sum game. Thus, if we can align the willingness with the right incentive, the ability will work its magic.
Despite Microsoft being the best candidate to spark such a journey, it cannot own it. The Knowledge Network must be a decentralized initiative where the giants within the tech industry collaborate to make it a reality, allowing knowledge creation to flow freely between the clouds (e.g., Azure, AWS, Google Cloud).
A new ownership architecture is needed: migration of value creation from centralized platforms (Return on Shareholders) to the network chain (Return on Coreholders). Under the core holding architecture, the newly created knowledge within one creation space can benefit the entire knowledge network in a value-sharing loop: the owner of the knowledge might be creation space XYZ, yet, the yielded benefit can be shared with other creation spaces within the network chain.
The founding core holders can securitize the knowledge creation process (i.e., issuing knowledge-backed securities). Different tranches of knowledge backed securities can:
Give its holders access within the supply side (between entities);
Give its holders access within the demand side (between thinkers);
Give its holders access to the supply or demand side (business leaders and business thinkers);
Give its holders the right to the knowledge created within the creation spaces, and;
Give its holders the right to share the value yielded from the newly created knowledge.
For example, Alphabet (Google) can reconstruct its Other Bet (edge experimentations) by funding promising startups through knowledge-backed securities, to grant them access to the right knowledge (expertise), as well as enabling them to create necessary new knowledge via custom-made creation spaces.
Via the different types of knowledge-backed securities, the startup can grow without diluting its shareholding, and business thinkers can be part of business opportunities (not just the knowledge creation process).
We must evolve our thinking from what the network effect is today to what it can be tomorrow. Together, we have explored this imaginary journey from the business point of view. Can you imagine knowledge creation in another context? The knowledge network may start with one vertical (business), but it will not stop there (healthcare, government projects, space, human welfare, etc.).