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The Remarkable S-Curve (Part 2)

Part 2 video on the "S" curves
<v Speaker 1>There is much that differentiates the <v Speaker 1>previous curve and the next one but no <v Speaker 1>characteristic is more important than the way in <v Speaker 1>which we design and manage organizations. The dominant organizational structure of the previous curve was the hierarchy. Much different than the network organizations that are so dominant in this emerging curve. That’s what Friedman was telling us when he described the earth as flat. In this emerging curve the value is not being created in hierarchies like it was in the last one it’s being created in networks, often global networks.
Compare for instance the different business models of someone like Henry Ford as opposed to someone like Travis Kalanick, the first CEO of Uber. Think about an industry like the movies. Now we’ve been making films for a long time, since the early days of the twentieth century, in fact we still have some of the same companies making movies, companies like MGM. Back in the early days a movie studio might make a movie like David Copperfield, an adaptation of the Charles Dickens novel. And it took just seventy one people to make this movie including both cast and crew, all of them employees of MGM.
So this was back in the studio days when even actors were what they called, “contract players”, making movies for just one studio and everyone involved in the production drew a paycheck from MGM. From the actors and directors to the set builders and the camera operators, well even the person who would load the reels in a the truck and drop them off at theaters all across the U. S. were employees of the studio. And in many cases the studios even own the theaters across the United States would only show their movies.
Now contrast that with the way in which movies are made today MGM is still around and they’re still making movies, and in fact they’re still adapting great novels to films like The Lord of the Rings and The Hobbit series. In these movies however, you also see two other
production companies right along side MGM: Wingnut Films is a New Zealand production company where these movies are filmed, and New Line Cinema is the distributor. You’ll also notice that it takes a whole lot more people to make a movie and here’s the really
interesting part: hardly any of them get a paycheck from MGM. Nearly everyone is an independent contractor. Ian McKellen doesn’t work for MGM he works for anybody he wants, whoever has an interesting project and is willing to pay him a competitive wage. Movies still need set builders and electricians but they work as independent contractors. I have a friend in the movie business and have visited him on location a couple of times and my favorite things about the movie set is craft services. That’s the area where there is a constant set of meals and snacks available for the cast and crew. Now these craft services groups are are small businesses that specialized in catering movie sets.
Now even the movie poster for The Lord of the Rings series, they were likely designed by a small graphic arts company. So these two thousand or so people will come together in a network, and they’ll make a movie, and when they’re done they will disband, never to come together in that exact configuration again or even to make the next installment in the series. Making movies in the second curve is quite different than it was in the first curve. Now consider your own experience. How do you see the shift occurring from the previous hierarchies of the previous curve to the networks in the emerging curve.
How was it changing the local or the regional economy where you live or an industry that is important to you. After you’ve given that some thought we’ll turn our attention to house strategy is different in networks than it is a hierarchies. See you again soon.
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