Business & finance professor, digital lawyer, restaurant owner, board member & traveler.
Big companies don’t innovate fast enough.
Big companies tend to build a “kill-zone” around themselves. They destroy everything and everyone that gets too close.
There is no joy in working for a big company. More personal fulfilment can be found in a startup or other younger and smaller organization.
I come across these statements a lot in the media (old and new) recently. Many of my co-workers and students appear to agree.
Of course, there is something to these ideas. The pace and range of digital innovations as well as shorter innovation cycles make it much more difficult for bigger companies to survive. This sort of pressure is not going to deliver a stable and fulfilling work environment. And this trend seems set to continue in the future, making working for (and with) big companies even less attractive.
But there is a flip side and we shouldn’t dismiss corporate giants too quickly. Working for (as an employee) or with big companies (as a startup or research institution) can be exciting, rewarding, and inspiring. It may even be the best and only way to build a career or have an impact with your startup.
However, this will all depend on whether that big company is operating as an “intelligent platform.”
When I use the term “Intelligent Platform”, people immediately assume that I am talking about companies that operate a “social” platform (Facebook, Instagram), an “exchange” platform (Amazon, Airbnb), a “content” platform (YouTube, Medium), a “software” platform (GE’s Predix, Microsoft’s GitHub), or even a “blockchain” platform (Ethereum, EOS).
This is not surprising. After all, the emergence of these new platforms and services has been one of the major economic developments of the last two decades.
But we should recognize that there is so much more to “platform companies” than facilitating transactions, exchanging information, or connecting people. There is a much more important lesson to be learned from the success of such companies.
What platform companies all have in common is that they empower and facilitate experimentation, collaboration, and co-creation amongst multiple groups of stakeholders.
These stakeholders include employees and investors, but also consumers, developers, content creators, other companies (both large and small), non-profits, educational institutions, governments, etc.
What makes an “intelligent platform” special is that it uses stakeholders’ input and feedback to improve the user experience and engagement with the “platform” and its products, services, and other solutions. This is the real lesson to be taken from the success of Amazon, Facebook, Netflix,etc.
Crucially, digital technologies are central to this approach. In this sense, all companies that wish to operate as intelligent platforms need to think and act “as if” they are a tech company.
As such, intelligent platforms are built around the idea of delivering constant innovation via an open and inclusive process of co-creation. By “organizing-for-innovation” in this way, such platforms are radically different from the clearly defined, static roles and fixed hierarchies of traditional organizations.
These are the distinctive features of “intelligent platforms”, and this is why, in an age of hyper-competitive global markets, every company needs to re-invent itself as an “intelligent platform.”
But more than that, everyone needs to ask themselves:
Is my (current or prospective) employer organized as an intelligent platform?
And why does this matter so much? Because only “intelligent platforms” can deliver the kind of environment conducive to a meaningful, fulfilling, and fun experience. Working for a big company can be fun, but only if it is organized as an intelligent platform.
So, how can we tell whether a company is organized in this way?
It should be noted that there is no “one-size-fits-all” model for such platforms.
Intelligent platforms can take multiple forms ranging from slightly “tweaked” versions of traditional (hierarchical and closed) companies through to the (flat and open) blockchain-based “decentralized autonomous organizations.” The “best” approach depends on the individualized circumstances of a particular business or organization.
The structure and organization of an intelligent platform does depend on four crucial “ingredients.” Every company has to analyze and use these ingredients to find the unique recipe for its “platform” to maximize creativity and opportunities for innovation.
And every employee needs to understand these ingredients in order to find an organization that works for them.
It could be argued that intelligent platforms aren’t new. Some form of platforms has always been around. The exponential growth of technology, however, has significantly accelerated the emergence, possibilities, and opportunities of platforms.
For instance, Airbnb or Amazon rely on the “wisdom of the crowd” — as established via an online platform and user reviews — to help consumers make decisions. A combination of software rating algorithms and consumer reviews have become more important than brand loyalty in establishing trust and shaping consumer choice.
New technologies, such as artificial intelligence, sensors, and blockchain, will further facilitate the organization of more and different types of “intelligent platform.”
For instance, in an Internet of Things environment, the user experience will be more and more dependent on technology and how it will increase smart connectivity between devices and convenience.
Most discussions about intelligent platforms revolves around the uses and possibilities of new technology. This makes sense because smart technology is necessary to adequately coordinate people and assets, and manage businesses.
However, technology alone isn’t sufficient. The “failure” of GE’s Predix platform that was designed to run, scale and extend digital industrial solutions is a striking example. The success of an “intelligent platform” also depends on other “ingredients”.
Most issues between a platform company and various key stakeholders are often the result of a company’s failure to communicate properly. For instance, YouTube’s difficulties with its content creators have tended to be the result of poor communication.
The most “intelligent platforms” understand that communication is not a one-way process of information disclosure but, instead, a more engaged, responsive and open process that encourages some kind of dialogue.
There are many alternative means that can now be used for communicating. For instance, business leaders can interact with a company’s stakeholders via an “annual letter.” Such letters seem to work best when written in a personalized and honest style.
Social media and other online media (such as blogs) are becoming more and more important as a forum for disclosing information about a company, both internally and externally. There are many new opportunities and possibilities for more creative forms of information dissemination and sharing.
A well-documented example of a company that has adopted this type of approach is Amazon. Jeff Bezos’ annual letters to investors are considered a “must-read” for anyone with an interest in Amazon(and platform companies).
What is perhaps most interesting is that these letters not only provide investors and other stakeholders with last year’s performance and future developments and growth prospects but also include business advice and insights. It is not surprising that these letters attract enormous attention on social media. They have created significant hype, which makes the communication even more personalized, open, and effective.
It is clear that in more open and flat environments, organizational culture becomes crucial. A best-idea-wins-culture needs to be embedded in the “DNA” of an intelligent platform.
A company that is often cited as having been successful in creating this kind of open culture is Netflix.
In 2009, its founder Reed Hastings pointed out that too many companies have “nice sounding” value statements, such as integrity, communication, respect, and excellence. However, he understood that these “values” are often not what is really valued within a company and, all too often, are just empty window dressing.
In a 124-page slide deck, Reed Hastings (and Netflix) outlined that the dynamic of this employer-employee relationship needs to be changed. Moreover, the quality of the working experience and environment now matters so much more. Of particular importance are opportunities for learning and capacity building. As was stated in the slide deck:
The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go.
This forward-thinking approach to culture helps to attract talented people as it offers them a much greater degree of freedom and responsibility. In the absence of this type of culture, the best young talent will simply leave.
Inside Netflix, it is all about context, not control. The result is that every Netflix employee is basically treated as an entrepreneur.
That the open culture is in the DNA of Netflix is also shown by its ability to attract creators. They are attracted by the creative (and financial) freedom offered by the Netflix platform.
To successfully transform into an intelligent platform, leadership is of course essential. Business leaders should be visionary, entrepreneurial, and innovation-minded. They should understand the “platform dynamics.”
Take Netflix again. When Reed Hastings “let go” of his Head of Communications for repeated use of a racial slur, he showed the importance of leadership.
In a memo to Netflix staff, the founder CEO wrote:
“I should have done more to use [a first incident] as a learning moment for everyone at Netflix about how painful and ugly that word is, and that it should not be used. I realize that my privilege has made me intellectualize or otherwise minimize race issues like this. I need to set a better example by learning and listening more so I can be the leader we need.”
A company’s success in becoming an intelligent platform is largely depended on its leadership and their ability to listen and engage. Business leaders should have a thorough understanding of the ingredients that make a company a successful and intelligent platform company.
Platform companies aren’t static. The world is constantly changing and digital technologies are developing exponentially.
Successful “intelligent platforms” can easily lose their appeal in a relatively short period of time. Also, traditional and social media are quick to portray platforms in a bad light. Particularly, the dominant and more centralized platforms attract a lot of attention. Think Amazon and its treatment of employees, Facebook and the way it deals with privacy, etc.
And yet, these platform companies are still topping the most attractive employer rankings.
Also, other companies still want to become part of their platform. For instance, corporate executives increasingly refer to platform companies on earning calls. Moreover, more and more startup companies realize that by becoming part of an intelligent platform company their growth potential and strategic possibilities will be greater than if they remain independent.
To make this work, it is necessary that the platform allows the startup (1) to preserve its own identity, whilst (2) enjoying the benefits of being associated with a larger firm (i.e., growing faster, exploiting synergies with other departments or businesses within the “platform” and (3) opening the possibility of the startup influencing the culture and practices of the acquiring platform company.
Founders leaving their startups is often a sign that the ingredients (technology, communication, culture, and leadership) of a platform have to be reassessed. Otherwise a platform risks turning into just another big and unintelligent “dinosaur” company.
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