Digital technology is changing the world by enabling us to convert stocks – things we accumulate and hold – into flows – things we access on demand. This is the world where “it’s not what you know it’s what you can google”, one where you have a subscription to an on-demand car service like Flexicar rather than owning a (second) car (and working about running costs, servicing and depreciation).
The Shift Index[ref]Peter Evans-Greenwood, Peter Williams (2014), Australian Shift Index key findings: Setting aside the burdens of the past, Deloitte Australia[/ref] that we maintain at the Centre for the Edge is based on this premise that we’re moving from a world dominated by stocks, to one dominated by flows, and it tries to measure this in action. But what is a “flow”, and what are the various types of “flow”?
The following is a short list of possible flows to consider. Shoot me a note if you think the list is incomplete or can be refined.
Information
The shift from information stored in physical locations (libraries &c.) as stocks to information stored in virtual locations (Wikipedia, shared research data sets, &c.) where the information to be consumed on-demand as a flow.
This is considered an information flow at the paradigm has changed from “individual moves to the information” to “information moves to the individual”.[ref]This is aligned with the definition of “information flow” in information theoretical context, where an information flow is considered the transfer of information from a variable x to a variable y in a given process.[/ref]
Examples of information flows: Wikipedia, IMDB, MOOCs, etc.
Knowledge
The shift from developing stocks of knowledge (facts, information, and skills acquired through experience or education) before need, to knowledge acquired when needed, on-demand as a flow.
A key element of knowledge flow is the time invested in building your awareness of what knowledge is out there to be had (eliminating the unknown unknowns). Typically this is done by engaging in conversations and communities with which you share an interest. Eliminating the unknown unknowns means that you are aware of different areas and aspects of knowledge and know where to draw it from (via instruction, consultation &c.) when the need arrises.
Examples: Communities of interest, conferences, social media, specialist publications, &c.
Capability
The shift from needing to develop a capability yourself, to accessing one on-demand from another party.
This is related to servitisation,[ref]Servitisation is the strategy of creating value by adding services to products or even replacing a product with a service. Selling maintenance contracts for capital goods is an example of a service being added to a product. Contracting tyres by the kilometre to haulage companies instead of selling them outright is an example of a service replacing a product.[/ref] a manufacturing trend where products are transformed into value-added services, but is a larger and more encompassing concept as it includes services that do not rely on physical products.
Examples: The classic example is Rolls Royce’s TotalCare programme which sells jet engines as “power by the hour”, and is considered a key enabler in the development low cost airlines. Contract and short run manufacturing (i.e. the flexible manufacturing ecosystem). Outsourcing. The various car-share services (Flexicar &c). Contingent workforce and the various platforms that support them.
Space
The shift from needing to maintain your own space (for work) to being able access space on demand. (This might only weakly considered a “flow”).
Examples: serviced offices, the colonisation of the “third place” by road warriors, co-working spaces, telecommuting and other remote work, creation of the virtual office, the flexible office, etc.
Capital
The shift from needing to stockpile your own capital to being able to assemble the capital required on demand.
In some senses the creation of the joint-stock corporate (and, consequently, stock markets) was the original crowd-sourced flow-based model, which we’ve been building on ever since.
Examples: Kick Starter and the crowd-funding ecosystem, credit in its various guises including micro-loans and so on, new asset classes, shared equity models.
Image: Codex41
Thanks for your thought provoking article PEG.
The impact of this shift on our organisational culture in regards to risk management is huge… We have spent decades governing and controlling Stock’s across all functions (finance, technology, HR, etc) now the challenge is how to take advantage of the new flow based ecosystem. I see this struggle manifest itself daily across all business functions, which is why organisations that are created in this new paradigm have a distinct advantage over established organisation who have to move their culture in a game of catch-up.