A radical manifesto was contained in two books published at the start of the new millennium: ‘The Atomic Corporation – a rational proposal for modern times (2001)’15; and ‘Atomic – reforming the industrial landscape into the new structures of tomorrow (2003)’16.
This trilogy of three short papers examines the confluence of disruptive forces that led to: the requirement for a new theory of the firm (Part One); the radical predictions that preceded the dotcom revolution of the past two decades (Part Two); the need for a fresh vision of the future up to 2040 (Part Three).
The story so far
In Parts One and Two of this three-part trilogy, we described the disruptive, technological forces that called for a new theory of the firm. These included the rise of cloud, social media, data analytics and mobile, all of which were supported by the birth of the internet and World Wide Web at the end of the twentieth century. Our thesis across Parts One and Two was that in a hyper-connected world, large and complex organisational structures were largely obsolete. In their place, we hypothesised a set of discrete organisational ‘atoms’ or ‘Lego Bricks’ that would populate the digital landscape. These atoms would be underpinned by service and asset platforms that would provide scale and scope. This atomisation gave rise to a new ‘periodic table’ of corporate elements that could fulfil commercial functions in the twenty-first century.
But it’s now 20 years since we first advanced the atomic theory of the firm. Further technological disruption on a massive scale is expected during the next two decades. Such disruptions are likely to include blockchain, non-fungible tokens and cryptocurrencies, artificial intelligence (AI) and robotic process automation, the Internet of Things and drones, augmented and virtual reality giving rise to the Metaverse, 3D printing, quantum and edge computing, and much more. These advances are a second disruptive wave of technologies that will shape events in the coming two decades.
Next-generation Web 3.0
What is now apparent is that the World Wide Web is yet again in transition. Having originated in the early 1990s as a somewhat passive repository of content, search engines and limited e-commerce (referred to collectively as Web 1.0), the Web rapidly evolved post-2004 into an interactive platform (Web 2.0) that today provides the foundation for mobile apps, smart phones and online communities, including Facebook, WhatsApp, Twitter and Instagram. The result of this shift is that four billion people now interact daily on Web 2.0, and 10 Big Tech companies account for more than a fifth of global equity value.
Moving forward, we believe technologies such as blockchain will support the transition to a third generation of the Web, commonly referred to as Web 3.0. This generation will be a new era of decentralised architectures that could further threaten large and powerful corporations, old and new. In Web 2.0, it was possible for Big Tech to centralise data management and commercial control. In a decentralised economy, this feat might no longer be either desirable or feasible. Big Tech valuations based on their monopoly influence over ‘our’ personal data
could be under threat. Institutions of all kinds, such as banks, might break apart within a decentralised finance (De-Fi) landscape. So, what comes next? What might be the organising principles of the Web 3.0 economy?
A new era of hyper-personalisation
In the digital economy, information about our personal lifestyles and experiences is becoming the primary source of value around which most commerce takes place. This value is encapsulated in digital assets, including information about relationships, monetisation of our personal artifacts (NFTs), and our virtual properties (such as the open-source virtual world, Decentraland). We are moving from the era of ‘my physical stuff’ to ‘my digital experiences’. These experiences must be captured, stored, retrieved and monetised over time. It is worth reiterating the value of data. Big Tech already comprises 25% of S&P 500 value. Within the coming decade, this proportion could exceed 50%. This value creation relates directly to Big Tech’s ability to monetise our personal data for the benefit of vendors.
The metaverse, which incorporates virtual reality experiences, will further accelerate the move towards the new epoch of hyper-personalisation. Fresh personal and collective experiences will emerge and generate economic value. Think, for example, of the potential for this virtual technology to create new experiences in the sex and defence industries. Events of all kinds for work and play will take place virtually. Families might even live within this virtual space, purchasing mutual properties in open spaces such as Decentraland.
When it comes to physical products, embedded software and sensors will monitor our use of personal ‘stuff’ across the product lifecycle, sending reports constantly to manufacturers. These suppliers will be able to upgrade their products iteratively to align with our personal contexts. As Tesla is already demonstrating in the automotive industry, upgrades will extend the value and life of physical entities, whether that’s cars, white goods, homes or even smart cities.
The economics of information intimacy
We hypothesise that our intellectual property and that of the communities we interact with will be the primary source of value in Web 3.0. The big question for us today, however, is who owns and controls our intellectual property? The current answer is the Big Tech behemoths that trade our data to third parties for money. This trade in data has fuelled a boom in pop ups across every internet site we visit. In a decentralised economy, we expect to see a radical shift of ownership. Individuals will seize their data back from the digital giants. Today, the only trustworthy parties in this respect are the banks who are barred from reselling our data – yet we see little value in return, especially given their inability to derive useful insights from such information.
So, where will value reside in the digital economy? Here are some possible pockets of value:
The rise of the digital artisan
A combination of factors provides us with a unique opportunity to reform the current business landscape into the new structures of tomorrow. We believe these factors include changing millennial attitudes, loss of trust in large institutions, hybrid working and the ‘great resignation’, plus the technologies necessary to make change. Our proposition is that value will sit with the individual rather than Big Tech companies.
We will reassert our authority as individuals within a decentralised, Web 3.0 world that is fast forming around us by controlling our intellectual property and associated information assets.
With the help of AI and software robotics, we envisage the rise of the digital artisan – an individual who can generate vast amounts of economic wealth, perhaps beyond billions of dollars and into trillions. We will no longer need the atomic, two-pizza teams that emerged in the era of Web 2.0. Instead, we will see such artisans performing several value-adding tasks. These might include:
To enable these ‘frontline’ digital workers to flourish within the hyper-personalised and hyper connected economy, we believe other individuals will provide the tools and platforms to support their activities:
We believe the emergence of this scenario is probable because of advances in automation, AI, open sourcing and decentralised platforms. It’s also important to note the possibility that digital artisans could live together in collective communes that will resemble villages.
Birth of the digital village
Many city centre high-rise offices are already being turned into collective living and working spaces. With the advent of hybrid working, we can expect an acceleration of these trends, especially as 80% of the world’s population continues to live in just 500 cities. These communal dwellings, as with the socio-economic organisation of the eighteenth century, will take on the characteristics of a traditional village with virtual high streets and meeting areas. These physical domains might be twinned with virtual reality spaces, such as Decentraland and Second Life, to enrich social interaction and community activity.
The prospect is for a gradual blurring between physical and virtual reality where information is the common currency. This is also the case for the movement of physical goods, where supply chains are twinned with digital systems comprised of blockchains.
What are the implications for today’s corporations?
Digital leaders, such as CIOs and CTOs, would be unwise to dismiss Web 3.0 and blockchain. You will need to pay close attention to developments here as they could disrupt business models during the next 10 years. New organisational forms will emerge that could undermine your franchise. The potential for change must be shared across the C-suite and incorporated into business plans. Scenario planning is a valuable tool for assessing disruptions, especially during periods of uncertainty.
You should continue to modernise your organisations to improve efficiencies, as well as to increase agility and innovation potential. Just as software-as-a-service offerings are helping to hollow out corporate bureaucracies within the back office, new Web 3.0 services, such as smart contracts and workplace automation technologies, could trim corporate administration. But even this adoption of emerging technology will only help to perpetuate corporate survival for a few more years.
It is reasonable to assume that large scale production of physical goods will continue well into the future, although 3D printing could localise much of this process to cities and gated communities (the digital village). However, digital technologies, such as blockchains, sensors and drones, will be required to increase the flexibility and agility of physical supply chains to meet the demand from online consumers for higher availability.
In parallel, corporates will need to divert their scarce funds and skills into seeding and hyper-scaling new business models that are designed to suit the Web 3.0 environment. This shift will require mastery of new software-related techniques, including blockchain, NFTs, AI and robotics.
To paraphrase the words of Marc Andreesen, Software is (still) eating the World.
What are the implications for digital leaders?
As we see in the CIONET Cookbook – recipes for digital success17, leaders must adapt to new economic paradigms such as atomisation. Successful leaders today recognise that the future will be different, but its form is still unclear. These leaders change their organisations by overseeing agile teams of digital and line-of-business employees to deliver solutions in weeks and months rather than years.
Of even greater importance is the need for a credible vision from digital leaders that can excite staff with a sense of purpose and a feeling of belonging. The war for digital talent has never been more intense. The churn of talent has never had a more draining impact on organisations. The great resignation and new prospects for digital artisans could accelerate the rush of talent out of legacy organisations, just as it did at the start of the dotcom boom.
Perhaps the smartest lesson for a digital leader today is to maintain their network of talented staff, many of whom will become the productive hubs of the nuclear landscape. Organisational boundaries will blur. Power will reside within communities of talented artisans rather than within defensible corporate borders.