Supernova 2004

Thomas Malone, MIT.Sloan School

What I am going to try to explain to you this morning is not just why decentralization is a cool thing for technologists, but why decentralization is the next stage in a progression that has been going on for thousands of years--and what that means for where we are going in business.

We are in the early stages in a new freedom in business... Information technology is reducing the cost of communication to such a low level that it is now possible for people to have all the information they need about the big picture to make decisions themselves about what they do, rather than relying on a manager.

Examples: Wikipedia. Anyone can add to or change wikipedia, but people who contribute regularly watch the change list and manage what's done, so the quality stays high. This illustrates both the themes of freedom and scale: freedom because anyone can contribute; scale because of the global pool of contributors and audience.

How does this fit into my themes?

Well, my next example is eBay: $2B in revenue last year,150,000 people who make a living selling fulltime on eBay (as independent store owners these folks decided for themselves what to sell and so on) but they also have global scale in their infrastructure and market.

So this is the next logical stage in pattern of the evolution of human organizations.

Humans began with hunting and gathering, living in groups called bands. About 12,000 years ago, we saw the rise of larger human societies ruled by leaders called Emperors and Kings. 200 years ago, we began to live in democracies.

In each case, one change factor has been the improvement in communications: writing made it possible to organize in larger groups and share information; the printing press helped make democracy feasible... without a press to inform large numbers of people, it would be hard to have a participatory government.

This pattern appears to be playing itself out again, more rapidly, in business today.

Historically, businesses were small family affairs. Starting in 1800, new technologies made it possible to organize businesses on a larger scale, the "kingdoms" of the business world.

Now, new technologies are helping us enter the third major stage in the way businesses are organized."