Dear Gunnar,
Thanks for your reply. This is an intriguing conversation. Since I use
words with care, I’m going to cheerfully quibble back.
I don’t think I’m distorting Rosan’s intent. She has been asking
important questions in an effort to understand the sources of invention
and innovation in successful business models.
What I am addressing here is the way that she describes two companies.
Rosan wrote: “organizationally, Bell Labs represented the
‘vertically integrated model’ and the silicon valley in which
Facebook is a node, represents a ‘distributed model’.”
The issue is not whether Bell Labs is or was vertically integrated.
According to your note, we agree that it was not. The issues, then is
whether Bell Labs in some way “represents” a vertically integrated
model. It does not. Bell Labs played no part in the AT&T supply chain or
the value chain of the AT&T business model. Even though some of the
engineers and scientists in Bell Labs worked on telephony, Bell Labs as
an organization was a large, general research laboratory unlike nearly
anything else before or since when you understand both its multiple
research streams and the scale on which Bell Labs functioned.
While it is true that Rosan described Silicon Valley as a distributed
model, this is also somewhat inaccurate. Silicon Valley represents an
important innovation cluster, but it is not distributed in the sense
that one may somehow transfer goods and services among actors without
contracts or payment. While many Silicon Valley firms are linked with
one another as business firms and social networks, these are not the
same firm. To describe a business firm based on a model of vertical
integration by contrasting it with a business firm based on a
distributed business model means that we are describing models
applicable to single organizations or conglomerates.
Facebook is not a node within a distributed business model. It is an
independent, wholly owned business firm under the sole control of one
individual. Few individuals since Henry Ford have held as much control
over a single major public company as Mark Zuckerberg holds over
Facebook with roughly 57% of voting shares. (In comparison, the Murdoch
family controls only 38% of the voting shares of News Corp. This is
different to billionaires such as the Koch Brothers who own companies
that are completely private.)
At any rate, Facebook is not a node in a distributed network. I
appreciate the multiple and varied nuances of this thread. If you’re
going to quibble over words, though, I choose words carefully for clear
meaning.
Yours,
Ken
Professor Ken Friedman, PhD, DSc (hc), FDRS | University Distinguished
Professor | Dean, Faculty of Design | Swinburne University of Technology
| Melbourne, Australia | [log in to unmask] | Ph: +61 3 9214 6078 |
Faculty www.swinburne.edu.au/design
--
Gunar Swanson wrote:
—snip—
But before I sign off, a quibble with a quibble: I think Ken is
distorting Rosan's intent. She didn't say that Bell Labs was vertically
integrated. She said that it "represented" a "vertically integrated
model" and the Silicon Valley (as opposed to Facebook per se) represents
a "distributed model" and she points out that nothing is absolutely one
or the other. I would also, perhaps, argue with her terminology but her
point was worth teasing out in a perhaps more friendly manner.
—snip—
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