WEBVTT 00:00:00.586 --> 00:00:02.649 I'm going to talk a little bit about strategy 00:00:02.649 --> 00:00:06.823 and its relationship with technology. 00:00:06.823 --> 00:00:09.718 We tend to think of business strategy 00:00:09.718 --> 00:00:11.681 as being a rather abstract body 00:00:11.681 --> 00:00:13.396 of essentially economic thought, 00:00:13.396 --> 00:00:15.026 perhaps rather timeless. 00:00:15.026 --> 00:00:16.966 I'm going to argue that, in fact, 00:00:16.966 --> 00:00:19.521 business strategy has always been premised 00:00:19.521 --> 00:00:21.940 on assumptions about technology, 00:00:21.940 --> 00:00:23.913 that those assumptions are changing, 00:00:23.913 --> 00:00:26.630 and, in fact, changing quite dramatically, 00:00:26.630 --> 00:00:29.702 and that therefore what that will drive us to 00:00:29.702 --> 00:00:32.605 is a different concept of what we mean 00:00:32.605 --> 00:00:35.043 by business strategy. NOTE Paragraph 00:00:35.043 --> 00:00:36.524 Let me start, if I may, 00:00:36.524 --> 00:00:39.294 with a little bit of history. 00:00:39.294 --> 00:00:41.038 The idea of strategy in business 00:00:41.038 --> 00:00:44.338 owes its origins to two intellectual giants: 00:00:44.338 --> 00:00:46.472 Bruce Henderson, the founder of BCG, 00:00:46.472 --> 00:00:50.244 and Michael Porter, professor at the Harvard Business School. 00:00:50.244 --> 00:00:53.076 Henderson's central idea was what you might call 00:00:53.076 --> 00:00:56.067 the Napoleonic idea of concentrating mass 00:00:56.067 --> 00:00:58.936 against weakness, of overwhelming the enemy. 00:00:58.936 --> 00:01:00.729 What Henderson recognized was that, 00:01:00.729 --> 00:01:02.125 in the business world, 00:01:02.125 --> 00:01:04.780 there are many phenomena which are characterized 00:01:04.780 --> 00:01:06.815 by what economists would call increasing returns -- 00:01:06.815 --> 00:01:08.178 scale, experience. 00:01:08.178 --> 00:01:10.052 The more you do of something, 00:01:10.052 --> 00:01:12.449 disproportionately the better you get. 00:01:12.449 --> 00:01:15.412 And therefore he found a logic for investing 00:01:15.412 --> 00:01:18.154 in such kinds of overwhelming mass 00:01:18.154 --> 00:01:20.707 in order to achieve competitive advantage. 00:01:20.707 --> 00:01:22.775 And that was the first introduction 00:01:22.775 --> 00:01:25.439 of essentially a military concept of strategy 00:01:25.439 --> 00:01:28.421 into the business world. NOTE Paragraph 00:01:28.421 --> 00:01:31.156 Porter agreed with that premise, 00:01:31.156 --> 00:01:32.707 but he qualified it. 00:01:32.707 --> 00:01:35.696 He pointed out, correctly, that that's all very well, 00:01:35.696 --> 00:01:39.571 but businesses actually have multiple steps to them. 00:01:39.571 --> 00:01:41.144 They have different components, 00:01:41.144 --> 00:01:43.676 and each of those components might be driven 00:01:43.676 --> 00:01:45.461 by a different kind of strategy. 00:01:45.461 --> 00:01:47.789 A company or a business might actually be advantaged 00:01:47.789 --> 00:01:51.267 in some activities but disadvantaged in others. 00:01:51.267 --> 00:01:53.368 He formed the concept of the value chain, 00:01:53.368 --> 00:01:56.438 essentially the sequence of steps with which 00:01:56.438 --> 00:01:59.590 a, shall we say, raw material, becomes a component, 00:01:59.590 --> 00:02:00.953 becomes assembled into a finished product, 00:02:00.953 --> 00:02:03.594 and then is distributed, for example, 00:02:03.594 --> 00:02:06.010 and he argued that advantage accrued 00:02:06.010 --> 00:02:07.551 to each of those components, 00:02:07.551 --> 00:02:09.265 and that the advantage of the whole 00:02:09.265 --> 00:02:11.396 was in some sense the sum or the average 00:02:11.396 --> 00:02:13.744 of that of its parts. 00:02:13.744 --> 00:02:16.321 And this idea of the value chain was predicated 00:02:16.321 --> 00:02:18.889 on the recognition that 00:02:18.889 --> 00:02:22.535 what holds a business together is transaction costs, 00:02:22.535 --> 00:02:24.830 that in essence you need to coordinate, 00:02:24.830 --> 00:02:27.405 organizations are more efficient at coordination 00:02:27.405 --> 00:02:29.067 than markets, very often, 00:02:29.067 --> 00:02:32.123 and therefore the nature and role and boundaries 00:02:32.123 --> 00:02:35.962 of the cooperation are defined by transaction costs. 00:02:35.962 --> 00:02:38.526 It was on those two ideas, 00:02:38.526 --> 00:02:41.912 Henderson's idea of increasing returns 00:02:41.912 --> 00:02:43.460 to scale and experience, 00:02:43.460 --> 00:02:45.883 and Porter's idea of the value chain, 00:02:45.883 --> 00:02:47.796 encompassing heterogenous elements, 00:02:47.796 --> 00:02:51.131 that the whole edifice of business strategy 00:02:51.131 --> 00:02:53.908 was subsequently erected. NOTE Paragraph 00:02:53.908 --> 00:02:56.337 Now what I'm going to argue is 00:02:56.337 --> 00:03:02.051 that those premises are, in fact, being invalidated. 00:03:02.051 --> 00:03:04.605 First of all, let's think about transaction costs. 00:03:04.605 --> 00:03:07.002 There are really two components to transaction costs. 00:03:07.002 --> 00:03:09.872 One is about processing information, and the other is about communication. 00:03:09.872 --> 00:03:13.153 These are the economics of processing and communicating 00:03:13.153 --> 00:03:15.627 as they have evolved over a long period of time. 00:03:15.627 --> 00:03:18.637 As we all know from so many contexts, 00:03:18.637 --> 00:03:20.893 they have been radically transformed 00:03:20.893 --> 00:03:23.205 since the days when Porter and Henderson 00:03:23.205 --> 00:03:25.299 first formulated their theories. 00:03:25.299 --> 00:03:27.365 In particular, since the mid-'90s, 00:03:27.365 --> 00:03:29.233 communications costs have actually been falling 00:03:29.233 --> 00:03:31.224 even faster than transaction costs, 00:03:31.224 --> 00:03:33.783 which is why communication, the Internet, 00:03:33.783 --> 00:03:38.398 has exploded in such a dramatic fashion. 00:03:38.398 --> 00:03:40.568 Now, those falling transaction costs 00:03:40.568 --> 00:03:42.544 have profound consequences, 00:03:42.544 --> 00:03:44.337 because if transaction costs are the glue 00:03:44.337 --> 00:03:46.759 that hold value chains together, and they are falling, 00:03:46.759 --> 00:03:48.401 there is less to economize on. 00:03:48.401 --> 00:03:51.333 There is less need for vertically integrated organization, 00:03:51.333 --> 00:03:54.211 and value chains at least can break up. 00:03:54.211 --> 00:03:56.710 They needn't necessarily, but they can. 00:03:56.710 --> 00:03:58.850 In particular, it then becomes possible for 00:03:58.850 --> 00:04:00.616 a competitor in one business 00:04:00.616 --> 00:04:03.941 to use their position in one step of the value chain 00:04:03.941 --> 00:04:05.773 in order to penetrate or attack 00:04:05.773 --> 00:04:08.937 or disintermediate the competitor in another. NOTE Paragraph 00:04:08.937 --> 00:04:11.598 That is not just an abstract proposition. 00:04:11.598 --> 00:04:13.277 There are many very specific stories 00:04:13.277 --> 00:04:15.049 of how that actually happened. 00:04:15.049 --> 00:04:18.542 A poster child example was the encyclopedia business. 00:04:18.542 --> 00:04:19.991 The encyclopedia business 00:04:19.991 --> 00:04:22.093 in the days of leatherbound books 00:04:22.093 --> 00:04:23.797 was basically a distribution business. 00:04:23.797 --> 00:04:26.251 Most of the cost was the commission to the salesmen. 00:04:26.251 --> 00:04:28.877 The CD-ROM and then the Internet came along, 00:04:28.877 --> 00:04:32.293 new technologies made the distribution of knowledge 00:04:32.293 --> 00:04:34.572 many orders of magnitude cheaper, 00:04:34.572 --> 00:04:37.286 and the encyclopedia industry collapsed. 00:04:37.286 --> 00:04:40.118 It's now, of course, a very familiar story. 00:04:40.118 --> 00:04:42.160 This, in fact, more generally was the story 00:04:42.160 --> 00:04:44.669 of the first generation of the Internet economy. 00:04:44.669 --> 00:04:46.869 It was about falling transaction costs 00:04:46.869 --> 00:04:48.344 breaking up value chains 00:04:48.344 --> 00:04:50.973 and therefore allowing disintermediation, 00:04:50.973 --> 00:04:53.310 or what we call deconstruction. NOTE Paragraph 00:04:53.310 --> 00:04:55.627 One of the questions I was occasionally asked was, 00:04:55.627 --> 00:04:58.143 well, what's going to replace the encyclopedia 00:04:58.143 --> 00:05:00.794 when Britannica no longer has a business model? 00:05:00.794 --> 00:05:02.960 And it was a while before the answer became manifest. 00:05:02.960 --> 00:05:05.747 Now, of course, we know what it is: it's the Wikipedia. 00:05:05.747 --> 00:05:08.970 Now what's special about the Wikipedia is not its distribution. 00:05:08.970 --> 00:05:11.374 What's special about the Wikipedia is the way it's produced. 00:05:11.374 --> 00:05:13.614 The Wikipedia, of course, is an encyclopedia 00:05:13.614 --> 00:05:16.141 created by its users. 00:05:16.141 --> 00:05:18.021 And this, in fact, defines what you might call 00:05:18.021 --> 00:05:20.509 the second decade of the Internet economy, 00:05:20.509 --> 00:05:23.869 the decade in which the Internet as a noun 00:05:23.869 --> 00:05:25.776 became the Internet as a verb. 00:05:25.776 --> 00:05:27.645 It became a set of conversations, 00:05:27.645 --> 00:05:31.721 the era in which user-generated content and social networks 00:05:31.721 --> 00:05:34.412 became the dominant phenomenon. 00:05:34.412 --> 00:05:36.310 Now what that really meant 00:05:36.310 --> 00:05:39.684 in terms of the Porter-Henderson framework 00:05:39.684 --> 00:05:43.075 was the collapse of certain kinds of economies of scale. 00:05:43.075 --> 00:05:45.413 It turned out that tens of thousands 00:05:45.413 --> 00:05:48.496 of autonomous individuals writing an encyclopedia 00:05:48.496 --> 00:05:50.042 could do just as good a job, 00:05:50.042 --> 00:05:51.733 and certainly a much cheaper job, 00:05:51.733 --> 00:05:54.712 than professionals in a hierarchical organization. 00:05:54.712 --> 00:05:57.169 So basically what was happening was that one layer 00:05:57.169 --> 00:06:00.063 of this value chain was becoming fragmented, 00:06:00.063 --> 00:06:01.907 as individuals could take over 00:06:01.907 --> 00:06:05.194 where organizations were no longer needed. NOTE Paragraph 00:06:05.194 --> 00:06:07.826 But there's another question that obviously this graph poses, 00:06:07.826 --> 00:06:10.109 which is, okay, we've gone through two decades -- 00:06:10.109 --> 00:06:12.787 does anything distinguish the third? 00:06:12.787 --> 00:06:14.902 And what I'm going to argue is that indeed 00:06:14.902 --> 00:06:16.407 something does distinguish the third, 00:06:16.407 --> 00:06:18.853 and it maps exactly on to the kind of 00:06:18.853 --> 00:06:21.321 Porter-Henderson logic that we've been talking about. 00:06:21.321 --> 00:06:23.908 And that is, about data. 00:06:23.908 --> 00:06:25.577 If we go back to around 2000, 00:06:25.577 --> 00:06:27.936 a lot of people were talking about the information revolution, 00:06:27.936 --> 00:06:30.237 and it was indeed true that the world's stock of data 00:06:30.237 --> 00:06:32.511 was growing, indeed growing quite fast. 00:06:32.511 --> 00:06:35.369 but it was still at that point overwhelmingly analog. 00:06:35.369 --> 00:06:37.187 We go forward to 2007, 00:06:37.187 --> 00:06:40.372 not only had the world's stock of data exploded, 00:06:40.372 --> 00:06:42.892 but there'd been this massive substitution 00:06:42.892 --> 00:06:44.907 of digital for analog. 00:06:44.907 --> 00:06:46.776 And more important even than that, 00:06:46.776 --> 00:06:48.516 if you look more carefully at this graph, 00:06:48.516 --> 00:06:50.536 what you will observe is that about a half 00:06:50.536 --> 00:06:52.150 of that digital data 00:06:52.150 --> 00:06:54.536 is information that has an I.P. address. 00:06:54.536 --> 00:06:57.387 It's on a server or it's on a P.C. 00:06:57.387 --> 00:06:59.194 But having an I.P. address means that it 00:06:59.194 --> 00:07:01.364 can be connected to any other data 00:07:01.364 --> 00:07:03.227 that has an I.P. address. 00:07:03.227 --> 00:07:04.873 It means it becomes possible 00:07:04.873 --> 00:07:07.960 to put together half of the world's knowledge 00:07:07.960 --> 00:07:09.612 in order to see patterns, 00:07:09.612 --> 00:07:11.969 an entirely new thing. 00:07:11.969 --> 00:07:13.937 If we run the numbers forward to today, 00:07:13.937 --> 00:07:15.363 it probably looks something like this. 00:07:15.363 --> 00:07:16.531 We're not really sure. 00:07:16.531 --> 00:07:18.559 If we run the numbers forward to 2020, 00:07:18.559 --> 00:07:21.459 we of course have an exact number, courtesy of IDC. 00:07:21.459 --> 00:07:25.799 It's curious that the future is so much more predictable than the present. 00:07:25.799 --> 00:07:30.194 And what it implies is a hundredfold multiplication 00:07:30.194 --> 00:07:33.167 in the stock of information that is connected 00:07:33.167 --> 00:07:35.395 via an I.P. address. 00:07:35.395 --> 00:07:38.856 Now, if the number of connections that we can make 00:07:38.856 --> 00:07:41.996 is proportional to the number of pairs of data points, 00:07:41.996 --> 00:07:44.459 a hundredfold multiplication in the quantity of data 00:07:44.459 --> 00:07:46.562 is a ten-thousandfold multiplication 00:07:46.562 --> 00:07:48.127 in the number of patterns 00:07:48.127 --> 00:07:50.204 that we can see in that data, 00:07:50.204 --> 00:07:52.864 this just in the last 10 or 11 years. 00:07:52.864 --> 00:07:55.688 This, I would submit, is a sea change, 00:07:55.688 --> 00:07:57.772 a profound change in the economics 00:07:57.772 --> 00:07:59.723 of the world that we live in. NOTE Paragraph 00:07:59.723 --> 00:08:00.887 The first human genome, 00:08:00.887 --> 00:08:02.453 that of James Watson, 00:08:02.453 --> 00:08:06.373 was mapped as the culmination of the Human Genome Project in the year 2000, 00:08:06.373 --> 00:08:08.550 and it took about 200 million dollars 00:08:08.550 --> 00:08:10.531 and about 10 years of work to map 00:08:10.531 --> 00:08:12.946 just one person's genomic makeup. 00:08:12.946 --> 00:08:15.551 Since then, the costs of mapping the genome have come down. 00:08:15.551 --> 00:08:17.438 In fact, they've come down in recent years 00:08:17.438 --> 00:08:19.112 very dramatically indeed, 00:08:19.112 --> 00:08:21.558 to the point where the cost is now below 1,000 dollars, 00:08:21.558 --> 00:08:24.509 and it's confidently predicted that by the year 2015 00:08:24.509 --> 00:08:26.240 it will be below 100 dollars -- 00:08:26.240 --> 00:08:29.436 a five or six order of magnitude drop 00:08:29.436 --> 00:08:31.381 in the cost of genomic mapping 00:08:31.381 --> 00:08:33.804 in just a 15-year period, 00:08:33.804 --> 00:08:36.199 an extraordinary phenomenon. 00:08:36.199 --> 00:08:40.604 Now, in the days when mapping a genome 00:08:40.604 --> 00:08:43.613 cost millions, or even tens of thousands, 00:08:43.613 --> 00:08:45.591 it was basically a research enterprise. 00:08:45.591 --> 00:08:48.133 Scientists would gather some representative people, 00:08:48.133 --> 00:08:49.347 and they would see patterns, and they would try 00:08:49.347 --> 00:08:52.237 and make generalizations about human nature and disease 00:08:52.237 --> 00:08:53.828 from the abstract patterns they find 00:08:53.828 --> 00:08:57.288 from these particular selected individuals. 00:08:57.288 --> 00:09:00.121 But when the genome can be mapped for 100 bucks, 00:09:00.121 --> 00:09:02.469 99 dollars while you wait, 00:09:02.469 --> 00:09:04.659 then what happens is, it becomes retail. 00:09:04.659 --> 00:09:06.516 It becomes above all clinical. 00:09:06.516 --> 00:09:07.728 You go the doctor with a cold, 00:09:07.728 --> 00:09:09.662 and if he or she hasn't done it already, 00:09:09.662 --> 00:09:11.900 the first thing they do is map your genome, 00:09:11.900 --> 00:09:13.555 at which point what they're now doing 00:09:13.555 --> 00:09:18.084 is not starting from some abstract knowledge of genomic medicine 00:09:18.084 --> 00:09:20.148 and trying to work out how it applies to you, 00:09:20.148 --> 00:09:22.717 but they're starting from your particular genome. 00:09:22.717 --> 00:09:24.157 Now think of the power of that. 00:09:24.157 --> 00:09:25.946 Think of where that takes us 00:09:25.946 --> 00:09:28.892 when we can combine genomic data 00:09:28.892 --> 00:09:30.381 with clinical data 00:09:30.381 --> 00:09:32.340 with data about drug interactions 00:09:32.340 --> 00:09:34.629 with the kind of ambient data that devices 00:09:34.629 --> 00:09:36.388 like our phone and medical sensors 00:09:36.388 --> 00:09:38.246 will increasingly be collecting. 00:09:38.246 --> 00:09:40.707 Think what happens when we collect all of that data 00:09:40.707 --> 00:09:42.180 and we can put it together 00:09:42.180 --> 00:09:44.668 in order to find patterns we wouldn't see before. 00:09:44.668 --> 00:09:47.579 This, I would suggest, perhaps it will take a while, 00:09:47.579 --> 00:09:50.020 but this will drive a revolution in medicine. 00:09:50.020 --> 00:09:52.340 Fabulous, lots of people talk about this. NOTE Paragraph 00:09:52.340 --> 00:09:54.779 But there's one thing that doesn't get much attention. 00:09:54.779 --> 00:09:58.063 How is that model of colossal sharing 00:09:58.063 --> 00:10:00.709 across all of those kinds of databases 00:10:00.709 --> 00:10:03.201 compatible with the business models 00:10:03.201 --> 00:10:05.815 of institutions and organizations and corporations 00:10:05.815 --> 00:10:08.112 that are involved in this business today? 00:10:08.112 --> 00:10:10.888 If your business is based on proprietary data, 00:10:10.888 --> 00:10:13.931 if your competitive advantage is defined by your data, 00:10:13.931 --> 00:10:17.451 how on Earth is that company or is that society 00:10:17.451 --> 00:10:19.549 in fact going to achieve the value 00:10:19.549 --> 00:10:22.554 that's implicit in the technology? They can't. NOTE Paragraph 00:10:22.554 --> 00:10:24.601 So essentially what's happening here, 00:10:24.601 --> 00:10:27.245 and genomics is merely one example of this, 00:10:27.245 --> 00:10:29.559 is that technology is driving 00:10:29.559 --> 00:10:32.128 the natural scaling of the activity 00:10:32.128 --> 00:10:35.055 beyond the institutional boundaries within which 00:10:35.055 --> 00:10:37.213 we have been used to thinking about it, 00:10:37.213 --> 00:10:39.376 and in particular beyond the institutional boundaries 00:10:39.376 --> 00:10:41.630 in terms of which business strategy 00:10:41.630 --> 00:10:45.085 as a discipline is formulated. 00:10:45.085 --> 00:10:48.571 The basic story here is that what used to be 00:10:48.571 --> 00:10:52.233 vertically integrated, oligopolistic competition 00:10:52.233 --> 00:10:55.024 among essentially similar kinds of competitors 00:10:55.024 --> 00:10:57.483 is evolving, by one means or another, 00:10:57.483 --> 00:11:00.844 from a vertical structure to a horizontal one. 00:11:00.844 --> 00:11:02.559 Why is that happening? 00:11:02.559 --> 00:11:05.064 It's happening because transaction costs are plummeting 00:11:05.064 --> 00:11:06.992 and because scale is polarizing. 00:11:06.992 --> 00:11:08.734 The plummeting of transaction costs 00:11:08.734 --> 00:11:11.372 weakens the glue that holds value chains together, 00:11:11.372 --> 00:11:13.040 and allows them to separate. 00:11:13.040 --> 00:11:14.975 The polarization of scale economies 00:11:14.975 --> 00:11:18.101 towards the very small -- small is beautiful -- 00:11:18.101 --> 00:11:20.769 allows for scalable communities 00:11:20.769 --> 00:11:23.886 to substitute for conventional corporate production. 00:11:23.886 --> 00:11:25.890 The scaling in the opposite direction, 00:11:25.890 --> 00:11:27.923 towards things like big data, 00:11:27.923 --> 00:11:29.332 drive the structure of business 00:11:29.332 --> 00:11:32.055 towards the creation of new kinds of institutions 00:11:32.055 --> 00:11:34.033 that can achieve that scale. 00:11:34.033 --> 00:11:36.791 But either way, the typically vertical structure 00:11:36.791 --> 00:11:39.795 gets driven to becoming more horizontal. NOTE Paragraph 00:11:39.795 --> 00:11:42.210 The logic isn't just about big data. 00:11:42.210 --> 00:11:45.536 If we were to look, for example, at the telecommunications industry, 00:11:45.536 --> 00:11:47.911 you can tell the same story about fiber optics. 00:11:47.911 --> 00:11:50.047 If we look at the pharmaceutical industry, 00:11:50.047 --> 00:11:51.940 or, for that matter, university research, 00:11:51.940 --> 00:11:53.614 you can say exactly the same story 00:11:53.614 --> 00:11:55.353 about so-called "big science." 00:11:55.353 --> 00:11:56.888 And in the opposite direction, 00:11:56.888 --> 00:11:59.085 if we look, say, at the energy sector, 00:11:59.085 --> 00:12:01.945 where all the talk is about how households 00:12:01.945 --> 00:12:05.529 will be efficient producers of green energy 00:12:05.529 --> 00:12:08.157 and efficient conservers of energy, 00:12:08.157 --> 00:12:10.037 that is, in fact, the reverse phenomenon. 00:12:10.037 --> 00:12:11.907 That is the fragmentation of scale 00:12:11.907 --> 00:12:14.261 because the very small can substitute 00:12:14.261 --> 00:12:16.855 for the traditional corporate scale. NOTE Paragraph 00:12:16.855 --> 00:12:18.646 Either way, what we are driven to 00:12:18.646 --> 00:12:22.017 is this horizontalization of the structure of industries, 00:12:22.017 --> 00:12:24.607 and that implies fundamental changes 00:12:24.607 --> 00:12:26.669 in how we think about strategy. 00:12:26.669 --> 00:12:28.701 It means, for example, that we need to think 00:12:28.701 --> 00:12:31.248 about strategy as the curation 00:12:31.248 --> 00:12:33.893 of these kinds of horizontal structure, 00:12:33.893 --> 00:12:35.533 where things like business definition 00:12:35.533 --> 00:12:37.095 and even industry definition 00:12:37.095 --> 00:12:39.897 are actually the outcomes of strategy, 00:12:39.897 --> 00:12:43.078 not something that the strategy presupposes. 00:12:43.078 --> 00:12:46.234 It means, for example, we need to work out 00:12:46.234 --> 00:12:48.591 how to accommodate collaboration 00:12:48.591 --> 00:12:50.457 and competition simultaneously. 00:12:50.457 --> 00:12:51.543 Think about the genome. 00:12:51.543 --> 00:12:53.321 We need to accommodate the very large 00:12:53.321 --> 00:12:55.456 and the very small simultaneously. 00:12:55.456 --> 00:12:57.399 And we need industry structures 00:12:57.399 --> 00:13:00.341 that will accommodate very, very different motivations, 00:13:00.341 --> 00:13:02.974 from the amateur motivations of people in communities 00:13:02.974 --> 00:13:04.947 to maybe the social motivations 00:13:04.947 --> 00:13:07.283 of infrastructure built by governments, 00:13:07.283 --> 00:13:09.908 or, for that matter, cooperative institutions 00:13:09.908 --> 00:13:12.400 built by companies that are otherwise competing, 00:13:12.400 --> 00:13:15.394 because that is the only way that they can get to scale. NOTE Paragraph 00:13:15.394 --> 00:13:17.371 These kinds of transformations 00:13:17.371 --> 00:13:21.096 render the traditional premises of business strategy obsolete. 00:13:21.096 --> 00:13:23.665 They drive us into a completely new world. 00:13:23.665 --> 00:13:25.086 They require us, whether we are 00:13:25.086 --> 00:13:27.853 in the public sector or the private sector, 00:13:27.853 --> 00:13:30.153 to think very fundamentally differently 00:13:30.153 --> 00:13:31.973 about the structure of business, 00:13:31.973 --> 00:13:35.427 and, at last, it makes strategy interesting again. NOTE Paragraph 00:13:35.427 --> 00:13:38.240 Thank you. NOTE Paragraph 00:13:38.240 --> 00:13:40.755 (Applause)