From Social Business To Superlinear Corporation

How do we make corporations more like cities, which get more productive as they grow bigger? Help me with my ongoing research project.

Venkatesh Rao, Contributor

December 15, 2011

3 Min Read

If you decide to run with it, you're adopting a fruit fly philosophy. This generally works better for short-lived market opportunities that require primarily human labor and software to exploit. You give up even trying to build a company. You look instead for the most lightweight and transient mechanisms with which to milk a market opportunity while it lasts.

The software-hardware stack for such a company is out there, and it's mostly free. Start a blog to get the marketing going. Work out of a co-working space/Starbucks. Find the people you need on online marketplaces. Boot up your servers on Amazon. If it's a hardware/physical product business, find an agile outfit in China that will manufacture to your specs. Write a lightweight profit-sharing contract. Set up your business processes on Basecamp and similar cloud services. Sell. Take in the money. When the flow slows, shut down, divide up the profits, sell the company or give away the IP, and move on.

Alternately, you could fight the shortening lifecycle effect. This is generally the wise course if your company needs large capital investments, sees multiple related opportunities across which there are economies of scale and scope, and sees other indicators that the market opportunity is long, for the right kind of business model.

Here, you will necessarily run into the sublinear/superlinear challenge. As you scale, vitality will go and mortality will loom.

This is where the Enterprise 2.0 stack comes in. Consider the things we often talk about: blogs, wikis, CRM tools, more public communication, customer-driven innovation, social missions, conversational word-of-mouth, innovation portals....

The unifying theme across all of these technologies we're struggling to deploy is openness. If that's too abstract, I really mean: making the corporation more like a city.

Let's call companies that try this approach rainforest companies. Google is one of them. The Googleplex is an attempt to create an entire rainforest inside a single building.

Not only is this hard, it's effectively impossible. You can increase your lifespan somewhat by trying to become a rainforest company, but you will not achieve the immortality of cities. You can't transform a corporation into a city, no matter how good your social business toolkit.

Why? Because cities subsume the entire lives of their citizens, while corporations, no matter how hard they try, will always subsume only a part of the lives of their employees, customers, and suppliers.

Instead, corporations should use the Enterprise 2.0 stack for a more modest goal: integrating more completely with an existing city (or cities, for multinational corporations). Not "community" in the abstract, but specific cities, where people physically live. It isn't sufficient to integrate better with purely virtual non-corporate communities.

This is what Zappos is trying to do in Las Vegas, for instance.

Modeling And Measuring Superlinearity

Can you model corporations in such a way that they capture the essential dynamics of openness, fruit fly/rainforest nature, degree of integration with host cities, and so forth?

Can you use available data to flesh out these models and produce analytical versions of the empirical scaling curves? If the trajectory is sublinear, can you predict when your corporation will die?

Can we build a sort of litmus test to figure out if a company is succeeding or failing overall in adopting social business ideas, tools, and practices, using the superlinear/sublinear distinction?

These are hard questions, and thanks to a couple of consulting clients who have shared some useful data, I'm starting to get a handle on them. If you're willing to share data about your business to help me with this ongoing research project, get in touch.

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