This month’s “Ask the Chefs” entry posits a question that touches on a number of potential themes — scale, agility, disruption, marketshare, negotiating power, future planning:
“Who will win the future — the small, the mid-sized, or the big organization?”
Answers from the Chefs are posted below in the order in which they were received. Again, nobody saw each other’s answers, and I wrote my answer before receiving anyone else’s answer, so this is purely a list of discrete responses.
Kent Anderson: I think the big organization that organizes itself, behaves, and seems to its audience to be a small, nimble organization will win the future. There are behaviors one assigns to each category, with “big” equating in my mind to bureaucratic, slow, out of touch with its customers, and lacking innovation. Small companies tend to be highly driven by their customers, haven’t yet developed arthritic decision-making of bureaucratic institutions, and must innovate to survive. Look at Procter & Gamble or 3M as industrial/commercial models of “big acting as small” — they subdivide into market segments and subsegments, and their push for innovation is baked into their cultures. Amazon feels like a small company still, as does Apple — hungry, innovative, nimble. Facebook is big, but feels personal. Patch.com is growing quickly by leveraging local talent and incentives. By being or becoming big, these companies have a lot of advantages small companies don’t — economies of scale, huge bargaining power, strong capitalization options, and experienced management. So the only way to survive in my view if you’re now big is to act small, and if you’re now small is to get big. And if you’re in the middle, don’t get smaller.
Joe Esposito: There is an ambiguity in the question: Are we talking about today’s “Bigs” or the “Bigs” of tomorrow? Of course, the Bigs will prevail; that you can count on. But it is not foreordained that the large and successful companies of today will be market leaders in the years ahead. The big will prevail because the Internet lends itself to a concentration of power at fewer and fewer nodes on the network. This was beautifully expressed several years ago by Clay Shirky in an essay on power laws and Weblogs. It is sometimes assumed that because the Internet lets a lot of people talk, everyone finds an audience, but in fact audiences become harder and harder to develop the bigger a network becomes. So the organizations that can break out of the pack — separate itself from the democratic rabble of open expression — will take on larger and larger roles. We see this today, with large organizations in the content area like Elsevier and John Wiley, but even more important are the tech companies: Google, Amazon, and now Apple. There will be comparable behemoths in the future. Size matters.
Ann Michael: The future of publishing belongs to the organization that can watch, learn, and adapt. Does size prevent that or does attitude? From what I’ve observed, it’s the entrenched or the excessively confident that have great difficulty adapting regardless of their size. They often have such strong and rich histories that they find it almost impossible to separate meaningful, valuable tradition that should be preserved from outdated ideas, tools, and practices that should be jettisoned. Additionally, participation in the markets you serve is no longer optional. Without participation we lose touch with our customer and are in danger of producing “ivory tower” products that excite us but leave our customers flat. Regardless of size, some organizations find it difficult to believe they don’t already have the answers. People may believe that it’s the small company that has the advantage because they’re nimble, fresh, and unencumbered by bureaucracy, but I don’t believe that’s the case at all. The organization that will win the future is the one that puts the user first, has a collaborative yet decisive culture, can execute on its aspirations, and can adjust appropriately as the market responds.
David Smith: “At the end of every long tail there’s a big dog” – Tim O’Reilly. Aaah the future, that place we see through a looking glass darkly. Well, for the purposes of this answer, I posit that the future is digital, that winning equals global domination, and that big is defined by . . . well, I’ll define big a little later. The digital world is a strange place, one that our primate brains don’t fully understand yet, even though we’ve created it. Digital things love to replicate, you have to try really hard to stop them doing so. Digital things also tend to be connected to other digital things; nodes of information on a network of connections, a network that is constantly reconfigured by the actions of the people using and sharing those digital things. Digital things from the future can be used to reconfigure the properties and information content for things from the past. And the whole digital world doubles in size and complexity about every 18 months or so. The organisations that can get to grips with this, understand it, leverage it, and monetise it will win. They’ll have to be agile. But will they have to be big? Agility and size tend to correlate inversely. You might think Google is big, but is it? 28,000 employees, yes that’s big, but then those 28K do serve some 365 billion searches per year. Facebook has about 2,000 employees and serves 800+ million users. In a digital world, a relatively small number of people can serve essentially the entire connected population of the planet. Now let’s look at it in terms of market domination: Search Engine Market Share – Google 80%+ Yahoo 6%, Bing 4%; Social Network Market Share – Facebook 60%, Youtube 20%, and Twitter 1.5%. It’s early days yet, but there seems to be a law emerging in digital economics. If you “win” you win really big. You absolutely utterly dominate the environment you are in. Clay Shirky wrote about this back in 2003 (http://shirky.com/writings/powerlaw_weblog.html). And here’s the thing; the VC funded/start-up/big data/network effect/user generated content/web2.0/social graph boys and girls totally understand what a Zipf curve is. So does Amazon for that matter (the Zipf curve basically explains their entire strategy on eBooks). They also understand that the gold is to be found in cracking the problem buried in the power law curve; how to surface the hidden, quality digital items that for whatever reason didn’t get to rise to the top (see http://www.nytimes.com/2007/04/15/magazine/15wwlnidealab.t.html for a discussion on this). So, to answer the question, relatively small, agile organisations can/do/will utterly dominate huge sections of the digital environment. They’ll acrue, and therefore control access to, vast collections of digital things. And there won’t be much left over for the rest of the players. Still, it’s not like the digital world is a stable environment, so there will always be the opportunity to be the next big dog. Just ask Apple. Now then, where’s my Ono-Sendai?
David Wojick: As a hard-nosed analyst I find this question obscure, so I will enjoy seeing how our more imaginative Chefs answer it. I cannot imagine what “winning the future” means, except perhaps either surviving or thriving. If it means surviving then I am sure that some will and some won’t, in all three size groups. If it means growing, then the small outfits have an advantage, as always, just because they are small. But this has nothing to do with scholarly publishing per se. What is fun about scholarly publishing is that there is such an enormous range in sizes. Instead of one size fitting all, all sizes fit, now and in the future.
Phil Davis: Because of their economies of scale, big organizations will dominate the future of publishing. Yet, their size and profitability will make them slow to identify and react to new opportunities, allowing small organizations to find and exploit new niches. Realizing their growth potential, big organizations will move to acquire the small, leaving an unfilled gap for medium-sized organizations.
David Crotty: I’m going to suggest this is a trick question. If the future belongs to you, then you will inevitably become a big organization. The companies now dominating the landscape — Facebook, Google, Amazon, Apple, etc. — were all small startups at some point. The next small startup that drives a new behavior or activity will grow as well. We live in an era where the social nature of any product is increasingly important. This, combined with the growing success of aggregators points to markets that will coalesce around a small number of sources due to network effects. Big organizations also have a habit of snatching up smaller organizations that show promise (see Google’s purchase of YouTube as an example). So the short answer is “big organizations,” but not necessarily the ones we know now.
Tim Vines: The future depends on the cost of transportation, and hence on the price of fossil fuels. Large manufacturing organisations will find it hard to maintain global supply chains and still sell mass produced goods if the price of fuel increases dramatically. The future may well therefore be local, small, and comparatively primitive. Large services organisations do not face this kind of supply chain challenge, but one has to wonder how much demand there will be for complex data management services if it’s hard to get a computer. The optimists point to human ingenuity and ongoing discoveries of crude oil to maintain supplies and keep the price down, but as we’re talking about ‘the future’ this isn’t a long term strategy. Aside from that, the future belongs to the big corporations — the ever rising cost of winning elections means that their priorities will come first when governments set the regulatory environment and dole out public money. The good news? Maybe a big corporation will invent jetpacks.
Rick Anderson: The short, glib version of my response is “it doesn’t depend on the size; it depends on the organization.” Speaking more specifically from a higher-education context, I think the slightly less glib version of my response is that the organizations that win will be of two categories: the first is those that are “too big to fail” (where “big” can be translated as “so deeply rooted in the culture and so richly endowed that their survival is functionally guaranteed”). The second category is those that are (pardon the cliche) nimble. That second category, I think, has two subcategories: those that are nimble in response to changing circumstance and flexible (where “flexibility” refers to a willingness and ability to question core assumptions and values) and those that are nimble and inflexible. Nimbleness alone characterizes a minority of institutions; the nimble-and-flexible group is even smaller. In libraries, which are fundementally conservative organizations, the challenge of nimbleness can be overwhelming–and true flexibility is very rarely manifest. I believe that this fact poses a potentially existential threat to the traditional research library, and I believe that size has little to do with it.