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Clay Shirky on ‘the collapse of complex business models’ and the rise of innovation

   /   Jun 16th, 2010Uncategorized

Media sage/prophet/futurist/demigod Clay Shirky wrote a post on his website entitled “The Collapse of Complex Business Models.” While it’s ostensibly about the need for innovation in media, it also reads as a tacit endorsement of the power of innovators and entrepreneurs in any industry to help society adapt to upheaval (a conclusion echoed by the Kauffman Foundation’s recent finding that the Great Recession has sparked a 14-year high in entrepreneurship).

Shirky begins by referencing Joseph Tainter’s 1988 book The Collapse of Complex Societies, in which the author examines the decline of societies such as the Roman and Mayan empires, arguing that they collapsed because they were comprised of “huge, interlocking system[s] not readily amenable to change.” Layers of bureaucracy had made the systems inflexible and their leaders unable to adapt.

Does the current crisis in journalism follow this pattern? Shirky says yes—and he gives examples of how media executives have dismissed opportunities to change strategy in everything from audience engagement to revenue generation. Profits have plummeted as they’ve hemorrhaged viewers and struggled to respond to innovations like citizen journalism and online ad partnerships.

Shirky could have easily made a similar argument about the social sector. Many established organizations faltered during the Great Recession, relying too much on funding from traditional concentrated sources like governments and foundations. Those organizations that emulated Obama’s campaign tactics, using social media to build decentralized support bases, have fared better.

For example, These Numbers Have Faces, which provides college scholarships to South African youths, receives over 90 percent of its funding from individual donations averaging $25 a month.  “I’ll take that many small-scale donors over two or three large donors any day, because you never know what could happen with those two or three,” says founder Justin Zoradi.

Old guard organizations are now facing increased competition from entrepreneurial startups, which are nimbler, less complex and more adept at raising money through social media tools or business ventures–all of which increase their financial resilience.

Shirky concludes in a characteristic flourish: “When the ecosystem stops rewarding complexity, it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future.”

Photo: Nef Triple Crunch Blog

One Response

  1. Myong says:

    keep spririt, congratz to all of you