No More Unicorns: Just Dragons, Insurgents and a Business Model for 2016 and Beyond
We are living through an astonishing transitional phase. History is moving away from a 5000 year era of empire that viewed efficiency, extraction and the consolidation of wealth as the way to power.
On one level this shift is obvious: it is becoming harder and harder to extract natural resources out of the earth and labor out of human beings for the cheapest price possible. On another level, however, this shift is invisible.
Because of technology and the almost perfect mastery of the empire business model by venture capitalists and top executives in most of the biggest companies on earth, consolidation of wealth via extraction is happening in a way that rivals the great Kings, Emperors and Khans of history.
Herein lies a great paradox that the vast majority of market actors are lost within.
But out here on the margins of the market (for now…) there exists a small group of entrepreneurs committed to creating a world that moves beyond the empire paradigm of extraction, pyramidal wealth creation and a base understanding of power. We are spending our time inventing and discovering business structures and tools oriented around a special form of strategic cooperation.
We see a future in which individuals like us — and the companies and market ecosystems we build — will demonstrate leadership according to principles of cooperation and the co-creation of wealth and success. As such, we will master entire segments of the marketplace, not as our predecessors at Andreeson & Horowitz, Uber, Exxon and Apple did, but in ways that truly bring value to the commonwealth. We will rise all the boats, while the old guard continues to riff of the extraction play of draining all the water out of the harbor for their sole benefit.
There are four components to the development of a strategy based on cooperation and the co-creation of wealth. And to be clear, this strategy is not designed to insurge against a given company or even an industry. Instead, we are interested in creating entirely new markets that possess the potential to make history and benefit large swaths of people:
1. Insurgent market ecosystem innovation // The kind of innovation capable of radically challenging every assumption of the extraction paradigm
2. Creation of transparent and regenerative value chains and equity models
3. Intimate relationships and authentic trust with all stakeholders
4. Recognition that development does not have to be linear and that economies (particularly emerging markets) are capable of skipping over current models
(EX: Africa went directly from drums to cell phones, skipping the landline phase of telecommunications development. South Korea today has more broadband Internet capacity than any other country, skipping over the original dial-up systems. The emerging Cannabis market is being built, right out of the gate, using a host of non-empire, distributed and decentralized growth strategies.)
The next question, of course, is how does it work?
There are many barriers for large corporations and empire investors to practice and implement radical, insurgent business models. Primarily, their investment in the current status quo as it relates to growth, profit, and the use of cheap fuels, labor and materials.
Secondarily, they rely almost exclusively upon a centralized, acquisition-based partnership model. When they see a piece of innovation or a brand they like, they acquire it. This acquisition is then absorbed into the enormity and complexity of the parent company with the consequence that most, if not all, of the innovative potential to disrupt the marketplace and serve the planet is lost.
In stark contrast to this strategy of centralization and acquisition is a strategy grounded in the principles of a mesh, or distributed network.
In a mesh partnership model, a host of well trained, agile organizations embedded in a distributed network can collaborate in ways vastly superior to the type of relationships built in the acquisition model. This model creates an entire ecosystem that is resilient and held together by a shared vision for the future, two values central to market success in an era marked by uncertainty and constant change.
The mesh is uniquely suited to counter the liabilities of a hierarchical, centralized control model. In a distributed mesh network of aligned partners, incentive exists everywhere, at every part of the alliance structure. All alliance partners are motivated by every possible incentive — economic, moral, intellectual and spiritual — to radically insurge because the opportunity is multiplied exponentially. As one member grows, every member grows.
Further, no one individual is responsible for the protection of the whole. The web of distributed relations and alliances is able to handle infinitely higher forces of pressure and opposition than any one member alone could ever hope to cope with.
There is a reason a spider web is so strong, and it is the same reason why the fascia level of muscle in the human body is exponentially stronger than any other part of the body. Communication, knowledge and cooperation is spread throughout the entirety of the network and does not depend upon any one central hub for resources, creativity or leadership.
On the most fundamental level, companies and individuals aligned in the mesh model are deeply incentivized to grow and innovate in a transformative and insurgent manner. Challenging and disrupting the status quo benefits them in every way.
Characteristics of the Mesh
In the common partnership or acquisition model, one dominant organization sits in the center with partnerships feeding into it. In the mesh network model, multiple organizations of equal influence work together to create an entire ecosystem of enterprises that grow, thrive and evolve together.
What does it mean then to build an alliance? Literally it is to bind, to join via rites and responsibilities. An alliance is bound together by a shared vision for the future. It is enacted via rites, responsibilities and special skills that all parties share in common, just as they share in common the vision for the future.
Alliances are extremely rare among businesses. Instead, what we call strategic partnerships are commonly created. Strategic partnerships are marked by the following characteristics:
· Narrow and defined in scope.
· Involve 2 parties.
· Guided by contracts and rules.
· Protective
· Motivated by risk mitigation.
· Each party is interested in maximizing their gain
· Results are measured almost exclusively in financial terms.
A mesh alliance is not a strategic partnership and is marked by the following characteristics:
- Bound by commitments as opposed to contracts.
- Leadership does not set off knowing precisely what it is going to do beforehand. Success in this case is not due to foresight but instead is revealed in retrospection. Emergence principles are the central operating principles.
- Leadership knows with certainty the institutions and social patterns that provide a traditional source of security are going to be continually disrupted and challenged. Guided by the knowledge that the familiar and the known are always more tentative than one would like to believe, resiliency is prized over other values.
- A broad understanding of trust emerges among alliance partners to meet the requirements for cultivating and creating the future.
The Mesh and building new markets: In conclusion
Distance is light, as long as you keep in mind that there are no limits. We are distance. -Edmond Jabes
To work in the realm of market creation with collaborators requires the building of an extraordinary type of trust and cooperation because the nature of the relationship is emergent as opposed to known before hand.
The roles we play, the jobs we have, the organizational structures and ideas we have taken for granted are all in play and open to change. As a consequence decidedly different tools, skills and practices are required to create successful mesh alliances.
These are tools, skills and practices typically absent from the leadership toolbox for a leader accustomed to creating strategic partnerships and pushing towards extraction goals that are known and familiar.
As we and our alliance partners do our work to build new market ecosystems and regenerative asset classes we are inventing, discovering and implementing entirely new ways to see the world and to create wealth. We are prototyping new market creation every day. So stay tuned, and over the next months we will be sharing what we learn.
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Andrew Markell is the Co-Founder of Exile, a company that creates, advises and helps capitalize transformative companies and market ecosystems dedicated to empowering people + planet.
