Connections create more value than Transactions in a Complex World

Image via Wikipedia

I just love conceptual art. Can't help it.

It must be the way my brain is wired, the abstract, spatial perception, holistic, and imaginative attributes of my brain that are relatively overrepresented (and some would argue settle in the right hemiphere of my brain).

So you can imagine how smitten I was when I read a brief article on dutch newssite nu.nl about the artist Caleb Larsen and his work:

A Tool to Deceive and Slaughter

Perpetual online auction, internet connection, custom programming and hardware, acrylic cube.

Combining Robert Morris' Box With the Sound of Its Own Making with Baudrillard's writing on the art auction this sculpture exists in eternal transactional flux. It is a physical sculpture that is perptually attempting to auction itself on eBay.

Every ten minutes the black box pings a server on the internet via the ethernet connection to check if it is for sale on the eBay. If its auction has ended or it has sold, it automatically creates a new auction of itself.

If a person buys it on eBay, the current owner is required to send it to the new owner. The new owner must then plug it into ethernet, and the cycle repeats itself.

This work is discussed in the catalogue for The Value of Nothing, a 2009 exhibition.
Buy or download it.

Follow the current auction here: http://atooltodeceiveandslaughter.com

via www.caleblarsen.com

What Caleb has done wonderfully well (beyond the obvious references to black box trading as a dig at the Wall Street models that got us in the current economic mess), is showing in his artistic way that connections are more important than transactions. Every time the 'sculpture' is sold - a transaction, the result becomes undone by the the piece itself which pings - a connection - the Ebay site and automatically sells itself again, forcing the owner of the piece to establish a connection to plug in the ethernet card. All (previous) owners of the piece are connected through having had the pleasure of a moment in time at which they owned the sculpture, and the sense of loss from the failed transaction. Wow!! How metaphysical is that?

When musing about this great artwork, I remembered the very good post by John Hagel III that I had read earlier today on his excellent HBR blog. It was about the challenge he issued to (certain forms of) open innovation, particularly the ones that were driven by transactions (e.g. InnoCentive). He argues convincingly that connections (he says relationships, but I am taking the liberty here to use the synonym) are more important when confronting the difficult and complex task of innovation. In a previous post, I argued the point that innovation belongs in the complex domain of the cynevin framework. Here is what Hagel writes (bold emphasis by me)

If you look at most of the widely cited examples of successful open innovation, the model in use poses a question to a group of "solvers" who then provide an answer. You might call this the transactional model of open innovation — involving only narrowly defined, short-term transactions. Problem posted, solution offered, payment made, transaction completed, all parties move on.

This approach has two limitations. First, it misses the opportunity to build long-term trust-based relationships among participants. Second, it does not encourage participants to build cumulatively upon the contributions of others.

Why do relationships matter more than mere transactions? Transactions work when explicit knowledge is involved — problems must be precisely framed and solutions must be equally precisely articulated. Of course, this works for a certain class of problems but some of the most challenging problems cannot be precisely framed — that is part of the problem. On the other side, really challenging problems require tapping into the tacit knowledge possessed by more than one individual in order to create new knowledge and generate a workable solution.

Tacit knowledge is the "know-how" that is hard to express or transfer and therefore much more sticky than explicit knowledge. Sharing this kind of knowledge typically requires long-term, trust-based relationships that can support the inevitable fumbling that occurs as we try to express and share tacit knowledge. Effective sharing of tacit knowledge also requires shared practices — the participants need to engage in real work to address challenging performance needs, rather than simply engaging in casual conversations.

We're moving from a world where value is created and captured in transactions to one where value resides in large networks of long-term relationships that provide the rails for much richer "knowledge flows."

via blogs.hbr.org

Hagel uses different words, but essentially he argues that the task of open innovation is so challenging that it can be only solved by placing it in the complex domain and applying the sense-making tecniques that work really well in this domain: leveraging the collective intelligence through conversations amongst agents, from which patterns emerge that can be built on or surpressed. One of the essential characteristics of a complex problem is that cause and effect relations are not present or at least not stable. When playing back the video tape, you would find a different effect from the same cause every time, since the interactions amongst the agenst are in perpetual flux and have large impact on the outcome.

The networks that Hagel favors have a "join up" quality - many agents, no central coordinating mechanism. The transaction model that he rejects have a "join us" character - central coordinating mechanism (the InnoCentive hub), relatively few connections and interactions amongst the agents. See this visualization that I found today on the social media wiki on wikispaces through @venessamiemis:

The transaction model is in essence a model that is borrowed from another domain, the 'simple' domain in cynefin terms, where cause and effect relationships are present and easily perceived. These transactional models work really well for problems with a 'simple' character (e.g. translating an english text in dutch), but applying tools from this domain to the complex domain is a big mistake and will yield sub-optimal outcomes at best. 

Another blogpost I came across today (from Esko Kilpi) argues the point about complex systems and the importance of connections much more eloquently than I just did:

A complex system consists of a large number of agents/nodes behaving according to own principles of local, self-organizing interaction. No one agent, or a group of agents determine how the system as a whole behaves. Self-organization here means the agents interacting locally, following their own principles, rules and intentions, without steering from outside that interaction. All influence takes place in the local interaction. No one agent in the brain or on the Internet, or in an organization, can be in control of the whole system and how it develops, as it develops.  But there is control and there is development, all the time. Both control and development are emergent phenomena of interaction. The interaction itself constrains and enables the people in interaction. People cannot just do whatever they want in a relation. Relations create stability just because relations always constrain. Relations that are based on diversity and difference may enable development without a plan for development.

via eskokilpi.blogging.fi

So here are my questions:

Do you relate to what I write here or are you sold :-)

When do you favor transactions over connections or vice versa

What (online) tools work best to create connections and leverage the collective intelligence to build out and amplify patterns (especially in an open innovation context?)

Related articles by Zemanta

• A Sculpture That Perpetually Sells Itself On eBay (laughingsquid.com)
• The uncollectable artwork (blogs.reuters.com)
• This Disgruntled Artwork Perpetually Sells Itself on EBay [Art] (gizmodo.com)
• Open Innovation's Next Challenge: Itself (blogs.hbr.org)

Comments

[JamesDX]

Maybe this is me talking nonsense, but it seems like Google isn't a company run strictly by the top and they seem to be doing quite well.

[Berend Jan Hilberts]

Hi Venessa,
incredibly insightful post of yours on this related topic! really recommended reading for anyone interested in this topic. You are doing great honor to your blog's name "emergent by design", by designing your enhanced network through weaving, hosting the conversations around topics of your (and their) interest, and having patterns, meaning and ultimately insight from it emerge!
@berendjan

[Venessa Miemis]

Hi Berend,

thanks for the reference. We've been thinking along the same lines! I just finished up a post building on these same ideas.

The Importance of Managing Your Online Reputation - getting into the idea of becoming a "network weaver"
http://emergentbydesign.com/2010/02/06/the-importance-of-managing-your-online-reputation/

- @venessamiemis