Pull Economies
From P2P Foundation
This is a widely discussed meme, referring to the contrast between the old industrial model of push economies, vs. the new pull economies.
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Description
"Pull approaches differ significantly from push approaches in terms of how they organize and manage resources. Push approaches are typified by "programs" - tightly scripted specifications of activities designed to be invoked by known parties in pre-determined contexts. Of course, we don't mean that all push approaches are software programs - we are using this as a broader metaphor to describe one way of organizing activities and resources. Think of thick process manuals in most enterprises or standardized curricula in most primary and secondary educational institutions, not to mention the programming of network television, and you will see that institutions heavily rely on programs of many types to deliver resources in pre-determined contexts.
Pull approaches, in contrast, tend to be implemented on "platforms" designed to flexibly accommodate diverse providers and consumers of resources. These platforms are much more open-ended and designed to evolve based on the learning and changing needs of the participants. Once again, we do not mean to use platforms in the literal sense of a tangible foundation, but in a broader, metaphorical sense to describe frameworks for orchestrating a set of resources that can be configured quickly and easily to serve a broad range of needs. Think of Expedia's travel service or the emergency ward of a hospital and you will see the contrast with the hard-wired push programs." (http://www.johnhagel.com/view20051015.shtml)
Discussion
David Bollier on the Pull Economy
Here an excerpt from David Bollier, who co-authored a report on it, for the Aspen Institute.
URL = http://onthecommons.org/node/824
The Report, entitled When Push comes to Pull, is downloadable at
[1].htm
"Briefly put, a “push economy" – the familiar industry model of mass production – is based on anticipating consumer demand and then making sure that needed resources are brought together at the right place, at the right time, for the right people. A company in the “push" model forecasts demand, specifies in advance the necessary inputs, regiments production procedures, and then pushes the final product into the marketplace and the culture, using standardized distribution channels and marketing.
By contrast, a “pull economy" – the kind that appears to be materializing in online environments – is based on open, flexible production platforms that use networking technologies to orchestrate a broad range of resources. Instead of producing standardized products for mass markets, companies use pull techniques to assemble products in customized ways to serve local or specialized needs, usually in a rapid or on-the-fly process.
Instead of companies pushing their products at us (in pursuit of their own strategic or competitive advantages), the networked environment radically empowers individuals, and communities of like-minded individuals, to pull the products and services that they want, on their own terms and time requirements. For example, small groups of people with unusual niche interests – say, extreme skateboarders or opera buffs – can now aggregate their consumer demand and successfully induce businesses to serve their specialized interests. In the process, many corporations are having to radically re-organize themselves in order to serve the emerging “pull" market demand.
What’s really interesting to those of us interested in the commons is how the Internet now enables small groups of people to easily constitute themselves as an online commons. In so doing, they can often get what they want through social sharing and collaboration, without even using the market! This is because a community based on norms of trust and reciprocity can be tremendously more efficient than markets, which tend to have huge fixed overhead costs (bureaucracies, advertising, distribution systems, lawyers to fight piracy, etc.). As John Seely Brown, the former director of Xerox PARC, put it, “The collaborative peer production achieved through pull platforms can be radically more efficient than classically structured corporations."
A handful of companies have established themselves as “pull platforms" – think eBay, Yahoo, Google and Amazon. But there are also manufacturing enterprises such as Cisco, the tech company, and Li & Fung, an apparel manufacturer, that are also using "pull" techniques to compete more successfully. "Pull" companies are structured to draw upon a vast global network of suppliers who can meet customized needs rapidly. This works because pull platforms are modular and loosely coupled." (http://onthecommons.org/node/824)
David Bollier then quotes from the Aspen report:
"A company can substitute any specialized function with another, more appropriate module with relative ease, as needed. Instead of having the entire corporation build around a rigid, standardized protocol, the interfaces among modules and the protocols for connecting them are standardized. “This means that anybody who wants access to these resources can figure out what they are and how to connect them," said John Hagel, a noted management consultant and co-author of The Only Sustainable Edge.
With modularity and loose coupling of functions, it therefore becomes easier to have frequent and rapid enhancements of the production platform. “The idea is that these platforms are not defined in advance," said Hagel. “They are emerging over time as a result of the actions of the participants, in rapid and frequent enhancements."
This points to another design premise of pull platforms: that more and more participants will join the process over time, adding greater value in the process. This enables companies to easily incorporate new supply and distribution participants, and to rapidly scale in size as market conditions or customer demand changes.
Pull platforms have a subtle but powerful advantage over push systems in their ability to leverage people’s enthusiasm and motivation. As Hagel and Brown have written, “Pull platforms harness the passion, commitment and desire to learn of their participants, thereby enabling the formation and functioning of distributed communities that can rapidly improvise and innovate." Pull platforms tend to be able to mobilize and deploy social energies more effectively than bureaucratic, standardized push platforms." (http://www.aspeninstitute.org/site/c.huLWJeMRKpH/b.612049/k.612F/Communications_and_Society_Program.htm)
John Hagel and John Seely Brown
Citation from McKinsey Quarterly [2]; Access through: http://edgeperspectives.typepad.com/edge_perspectives/2006/05/creation_nets.html
"Push systems contrast starkly with pull ones (exhibit), particularly in their view of demand: the former treat it as foreseeable, the latter as highly uncertain. This difference in a basic premise leads to fundamentally different design principles. For instance, instead of dealing with uncertainty by tightening controls, as push systems would, pull models address immediate needs by expanding opportunities for local participants—employees and customers alike—to use their creativity. To exploit the opportunities that uncertainty presents, pull models help people come together and innovate by drawing on a growing array of specialized and distributed resources.
Rather than seeking to constrain the range of resources available to participants, pull models constantly strive to expand it while helping participants to find the most relevant options. Rather than seeking to dictate the actions of participants, pull models give even people on the periphery the tools and resources (including connections to other people) needed to take the initiative and to address opportunities creatively as they arise. Rather than treating producers as passive consumers whose needs can be anticipated and shaped by centralized decision makers, pull models treat people as networked creators even when they actually are customers purchasing goods and services. Pull platforms harness their participants' passion, commitment, and desire to learn, thereby creating communities that can improvise and innovate rapidly.
The open-source world isn't the only niche community where this kind of learning and innovation now take place. The world of rare books, for instance, has been turned upside down by Amazon's ability to aggregate the offerings of many local special-interest sellers; customers are no longer constrained by the quirky collections of titles assembled by owners of antiquarian bookshops in out-of-the-way physical locations. In extreme sports such as surfing and windsurfing, participants increasingly innovate and cocreate new offerings, such as footholds on windsurfing boards to enhance wave jumping.2 And customized cars, or hot rods—automobiles modified to suit individual tastes—rank among the fastest-growing segments of the North American automobile market. In each of these cases, consumers are becoming more engaged in the creative and commercial processes.
Cocreation is a powerful engine for innovation: instead of limiting it to what companies can devise within their own borders, pull systems throw the process open to many diverse participants, whose input can take product and service offerings in unexpected directions that serve a much broader range of needs. Instant-messaging networks, for instance, were initially marketed to teens as a way to communicate more rapidly, but financial traders, among many other people, now use them to gain an edge in rapidly moving financial markets.
How to pull
The benefits of pull systems should by now be clear: enhanced innovation, increased opportunity for collaboration, closer relationships with customers and suppliers, more rapid feedback, richer reflection on the results of distributed experimentation, and greater scalability, for example. In our view, however, the essential reason to begin implementing pull systems is the fact that they help companies to secure deeper sources of competitive advantage at a time when the traditional sources are disappearing. Although a comprehensive exploration of the way big corporations can assemble pull systems is beyond the scope of this article, several areas of focus are worth highlighting.
Use metaphors to deepen understanding
Push models are typically based on programs—an image that conjures up thick and tightly scripted manuals, standardized curricula, the offerings of network television, and software. By contrast, pull approaches tend to work on platforms, a word suggesting a more open-ended design, to accommodate the changing needs of participants. The right image is conveyed by Expedia's travel service or a hospital's emergency ward.
These platforms are invariably modular to help make resources and activities more accessible and flexible. Instead of being rigidly specified, as in push systems, the modular elements are "loosely coupled": they can be joined easily, without friction or customization, and just as easily disassembled and reassembled. Interfaces show users the contents of the module and how to access it.4 A module might, for instance, consist of a business partner or partners (as in Li & Fung's global process network) or of a specialized tool (such as a radio telescope or an electron microscope that can be operated remotely through standardized interfaces). Understand the spectrum
Pull platforms and push programs are not mutually exclusive. Li & Fung's global process network is a highly flexible pull platform, for example, yet many apparel producers participating in it organize their own resources in the traditional top-down way. Amazon and eBay use pull models to help consumers gain access to books produced by traditional push programs, but pull distribution systems are now creating opportunities to reconfigure the production process through publishing on demand.
Examine your mind-set
Companies incorporating pull platforms into their operations must challenge and refine their key assumptions about what is required for success: greater control, for instance, will no longer be the appropriate response to growing uncertainty, which must be seen as an opportunity, not a threat. Executives will have to stand back and let individual employees identify and mobilize resources and collaborators at the right time. In many cases, it will be necessary to transform not-invented-here cultures that prevent organizations from effectively leveraging third-party resources. Instead of wondering what companies can get from their business partners, executives will have to ask what they and their business partners can learn from one another. Reexamine your company's focus
As we have noted, companies traditionally carry on three core processes: managing infrastructure, managing customer relationships, and creating and commercializing products. It's tough to be on the leading edge in all three areas, but in an effort to retain control, most companies try. More versatile pull platforms let executives concentrate on becoming world class in one of the three processes, relying on external partners to supply the elements of the other two.
In our experience, most companies already use pull platforms in fragmented and informal contexts. Executives can begin preparing for a more systematic and formal transition from push to pull by investigating how effectively their companies now utilize such pull capabilities and which of their most profitable revenue streams might be vulnerable to pull-oriented competitors. These executives can start to transform corporate operating processes by challenging the managers who run them to deploy additional pull capabilities as a way of meeting performance targets. And companies can begin to redesign the organization by making pivotal employees—engineers in a high-tech company, for example, or brand managers in a consumer goods one—responsible for creating a pull platform to improve the way they work, both within and outside the enterprise."
More Information
- Extensive report from David Bollier for the Aspen Institute, 2006: When Push comes to Pull
