Pull Economies

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This is a widely discussed meme, referring to the contrast between the old industrial model of push economies, vs. the new pull economies.


Contents

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)


Characteristics

"Pull works at three primary levels, each of which builds on the others.

It starts with access, which is the ability to find people and resources when we need them. This is particularly important because our stocks of knowledge are diminishing in value more rapidly than ever before as a result of the rapid technological advances as well as the intensity of global competition.

“In more stable times, we could sit back and relax once we had learned something valuable, secure that we could generate value from that knowledge for an indefinite period. Not anymore. To succeed now, we have to continually refresh our stocks of knowledge by participating in relevant “flows” of knowledge - interactions that create knowledge or transfer it across individuals. These flows occur in any social, fluid environment that allows firms and individuals to get better faster by working with others.”

“Unfortunately, this represents a significant challenge for our existing institutions, since they have been organized around the proposition that economic value comes from protecting existing stocks of knowledge and efficiently extracting the value that these stocks of knowledge represent. It’s not always easy for us as individuals, either, to acknowledge that all those years of education may not be as helpful as we had hoped. We discover that we must compete for employment with talented individuals halfway around the world, in places we may never have heard of before.”

The second level of pull is attraction, that is, the ability to surround yourself with people and resources that are relevant and valuable, even before you are aware of their existence. Think of the serendipity of stumbling into something really valuable, rather than the search for something we have already identified as valuable.

“We can be systematic in our search techniques and scenario planning, but often we’re at a loss for what questions to ask, much less what to look for. In this kind of world, access and search have important, but increasingly limited, utility. . . . Our success in finding new information and sources of inspiration increasingly depends upon serendipity - the chance encounter with someone or something that we did not even know existed, much less had value, but that proves to be extraordinarily relevant and helpful once we find out about it. . . . What if it is possible to shape those unexpected encounters so that we could increase the probability and quality of the encounters?”

“Serendipity is also one of the secret ingredients explaining the continued growth of “spikes” - geographic concentrations of talent around the world. The Silicon Valley engineer attends his daughter’s soccer match and happens to meet another engineer on the sidelines. In the course of their conversation, the engineer stumbles upon an interesting solution to a design problem he had been wrestling with for months. And so on.”

“Serendipity also generates congregations of complementary talent in virtual communities of like interests, from mothering to survivalism. Online communities are perfect for bringing together far-flung people who have common interests. If you want to find out what it is you don’t know that you don’t know, you need to hang out with other people who might already know it.”

The third and final level of pull is achieve - “the ability to pull from within ourselves the insight and performance required to more effectively achieve our potential.” Individuals and institutions can use the techniques of access to find what they need, and can then use the techniques of attraction to surround themselves with the right talent, ideas and information. These are necessary, but not sufficient conditions to differentiate yourself from everyone else out there and pull ahead. For that, you need extraordinary achievements. And, it is in their description of what it takes to achieve at these levels that The Power of Pull itself comes to life and moves to its own next level.

Their advice is both right on target but quite subtle. Extraordinary performance generally comes not from people at the core, but from those at the edge, “ . . . because it is exactly at the edge that the need to get better faster has the most urgency. Incumbents at the core - which is the place where most of the resources, especially people and money, are concentrated, and where old ways of thinking and acting still hold sway - have many fewer incentives to figure out the world, or to discover new ways of doing things, or to find new information. They’re on top, and they’re ready to keep doing what got them there.”

They define the concept of creation spaces, - “environments that effectively integrate teams within a broader learning ecology so that performance improvement accelerates as more participants join.” These creation spaces “ . . . allow large numbers of participants, often in the millions, to come together to test and refine the practices required to master this third level of pull - achieving their potential more effectively.”

“Although from a distance it may look like they are emerging spontaneously, self-organizing in response to the needs of the participants, a closer look reveals that creation spaces are carefully crafted by their organizers, especially in the early stages, to engage the right kinds of participants and foster specific types of interactions, all within environments that unleash the potential for increasing returns.” (http://blog.irvingwb.com/blog/2010/04/the-power-of-pull.html)

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."


The Push Economy is fading fast

"To best appreciate what the pull economy is all about, it is best to contrast it with the push economy that has so permeated our lives over the past hundred years:

“Push approaches begin by forecasting needs and then designing the most efficient systems to ensure that the right people and resources are available at the right time and the right place using carefully scripted and standardized processes. . . Push programs have dominated our lives from our very earliest years.”

“We are literally pushed into educational systems designed to anticipate our needs over twelve or more years of schooling and our key needs for skills over the rest of our lives. As we successfully complete this push program, we graduate into firms and other institutions that are organized around push approaches to resource mobilization. Detailed demand forecasts, operational plans, and operational process manuals carefully script the actions and specify the resources required to meet anticipated demand.”

“We consume media that have been packaged, programmed, and pushed to us based on our anticipated needs. We encounter push programs in other parts of our lives as well, whether in the form of churches that anticipate what is required for salvation and define detailed programs for reaching this goal, gyms that promise a sculpted body for those who pursue tightly defined fitness regimens, or diet gurus who promise we will lose weight if we follow a certain menu or choose from particular foods.

“Push knows better than you do, and it’s not afraid to say, ‘Do this, not that!’”

Push was the right way to organize the fast growing industrial-age companies and economies in the past century. While all kinds of public and private institutions were experiencing major changes as a result of the Industrial Revolution, those changes were relatively incremental and predictable. The key challenge was to manage the growing means of production in the most efficient way possible. The hierarchically organized enterprise was the management model adopted by businesses to help them scale their production of goods and services.

This push economy served us well in a relatively deterministic world where the same actions yielded (more or less) the same results, and models could make (relatively) accurate predictions. It was a remarkable achievement of management and engineering.

But, the push economy is fading fast." (http://blog.irvingwb.com/blog/2010/04/the-power-of-pull.html)


We Need Pull Institutions

John Hagel:

'The scalable efficiency institutional model is fundamentally and irreversibly broken as I’ve argued at great length in The Power of Pull, with my co-authors, John Seely Brown and Lang Davison.

Why is it broken? Because digital technology has re-shaped our global business landscape in profound ways. It makes forecasts and predictions more and more challenging as we see more and more volatility and the increasing frequency of extreme, unanticipated events (“black swans”). We increasingly find ourselves in a Paretian world but predictability can only be found in a Gaussian world where averages are meaningful. The push programs that seemed so essential to scalable efficiency now produce the opposite: increasing inefficiency, as rigidly constructed programs face unanticipated changes in the market.

Equally importantly, we’re moving from a world of knowledge stocks, where competitive advantage resides in proprietary knowledge of lasting value, to a world of knowledge flows, where competitive advantage can only be attained by participating effectively in a larger and more diverse set of knowledge flows. In a world that’s changing more rapidly with growing uncertainty, knowledge stocks depreciate in value at an accelerating rate.

This suggests an alternative rationale for institutions. Rather than pursuing scalable efficiency, perhaps we need a new set of institutions that can drive scalable learning, helping participants to learn faster by working together. While simple to state and intuitively appealing, this requires profound changes to our institutional landscape.

Rather than relying on rigid push programs, we need to increasingly develop scalable pull platforms where people can draw out people and resources where they are needed and when they are needed, not just to perform pre-defined tasks, but to engage in creative problem-solving as unanticipated challenges arise. Interestingly, the authors of Race Against the Machine, cite a number of promising entrepreneurial initiatives that all turn out to be examples of scalable pull platforms, but they don’t step back to really develop what is different about these pull platforms or to explore their potential for accelerated learning and performance improvement.

These pull platforms have an interesting property. They not only accommodate, but demand, the attributes of participants that are least susceptible to automation – imagination, creativity, genuine insight and emotional and moral intelligence. In fact, these pull platforms catalyze, cultivate and reward these attributes – the same attributes that are so suspect in today’s push driven institutions. In pull-driven institutions, participants are no longer fungible cost items but instead become fully visible as assets with the potential for virtually unlimited development.

One more point. These pull platforms are much more challenging to scale without digital technology infrastructure. At long last, we will have an institutional framework that requires us to race with the machine, rather than simply racing against the machine.

This emergence of pull-based institutions isn’t simply confined to the domain of corporations. It will pervade all institutional domains. For example, our educational system is a classic push driven environment – not surprising, given that its primary mission was to prepare individuals to enter the workforce of push driven corporations. Adopting this institutional re-framing in education points out the limitations of the authors’ recommendations on education – simply investing more money and working longer hours in a push driven educational environment will have only marginal impact at best." (http://edgeperspectives.typepad.com/edge_perspectives/2012/08/from-race-against-the-machine-to-race-with-the-machine.html)

Key Book to Read

  1. The Power of Pull. John Seely Brown and John Hagel.

More Information

  1. Extensive report from David Bollier for the Aspen Institute, 2006: When Push comes to Pull