Re-bundling the Firm around Problems to Be Solved — with Sangeet Paul Choudary
Tags: Commoditization, Platform, Future Of Work, Podcast, Business

This episode is hosted by Boundaryless Conversation Podcast host Simone Cicero with co-host Stina Heikkila.

The following is a semi-automatically generated transcript that has not been thoroughly revised by the podcast host or by the guest. Please check with us before using any quotations from this transcript. Thank you.

Simone Cicero:

Hello everybody, welcome back to the boundary’s conversation broadcast. Today I am here with my co-host Stina Heikkila

Stina Heikkila:

Hello everyone.

Simone Cicero:

And with us we have legend from Platform Thinking I would say, we have from Singapore Sangeet Choudary. Good morning Sangeet!

Sangeet Paul Choudary:

Good morning, Simone, hello, everyone, really glad to be here today.

Simone Cicero:

Right, and I just said good morning but in reality I think in Singapore its afternoon right? Something like that.

Sangeet Paul Choudary:

Yeah, you’re right there.

Simone Cicero:

Super, so I’m really excited about this conversation. We are in touch, I think since something like 6 years we have been comparing notes for many, many, many times and I have been an admirer of your work like thousands of other people in the world, so I think our listeners will be really excited to start the new season of Boundaryless Conversations Podcast with you.

Now and so, so I think the interesting thing to start, the interesting place to start this conversation with you would really be to discuss what we’ve been discussing quickly in the preparation chat.

So your journey from the micro aspects and the technicalities of platforms and how they work into the Macro context of platforms. So, topics related to the systems that at some point I would say, you know, contain these platforms and the systems where the platforms are having their impact.

So, Sangeet, how did it feel to go through this journey from your point of view?

Sangeet Paul Choudary:

Yeah that’s a great question. It’s actually a necessary journey that I believe you need to go through in order to really understand a topic like platforms or anything, in the system’s perspective, to really understand the topic very deeply.

You need to understand the micro interactions within the system before you are able to identify the macro effects of it. And I think the challenge partly comes in when people don’t understand the micro, and they talk about the macro directly.

You don’t approach it from first principles if you do that. There are a couple of things that I’ve kind of prompted or made this a natural progression. When I started out, I wanted to understand how emerging Business models and this is back in 2008 or so, when we did not really use the words platforms, and we didn’t use the word market place or two-sided market but very narrowly referred to certain kinds of app stores.

But I kind of started this journey trying to figure out how these new emerging Business models are fundamentally different then what made them different compared to the past, and were they fundamentally different or not in the first place? What was new? How were things changing? And that kind of led me into the micro effect.

Because when you go back to really understanding the micro, it starts with two specific questions: how is value created and how is value captured? Once you understand those two things from first principles. What is the minimum unit of value creation? What are the specific control points needed to capture value? How do you ensure governance in a new value creation paradigm? How do you ensure external participation? All of those are very much the basic micro components of understanding platform Business models platform interactions and then you start then building that lens, which I deliver in the first two years of my work.



I got a lot of opportunity with the next I would say 6 to 7 years or so, to apply this lens to a whole range of different fields you know, working in a whole range of different industries but also applying this to think about well, what does this mean for the future work? What does this mean for the future of how we build, how we address inequality in society or provide universal basic access to critical services? What does this mean in terms of geo- political competition? All of these macro effects started coming in as I was getting pulled into various contexts, and I had this really strong micro-lens to look at these contexts through.

And now it’s, I believe it’s at a point where I’ve been able to abstract and create more of a macro theory as well to an explain what is happening at the macro level. So that’s kind of been the, the journey as we think of it. And a lot of my initial work, the first two books that I wrote came out when I was in the micro phase, and I believe that it’s now a point where the macro pieces really catching up. So that’s kind of been the journey when I reflect on it.

Simone Cicero:

Right and if you were to write a book on the macro, like maybe you are doing, who knows? What would be the title of this book? So what would be the thesis or the multiple theses that are emerging in your thinking with regards to the macro of the platforms and ecosystem as they are embedded in this crazy society that we are living in these days?

Sangeet Paul Choudary:

Yeah, it’s a really interesting question. I think getting to a title is going to be quite difficult because I really need to write the book before writing of the title, but I would say the key pieces is going to be the following: if you really want to understand how technology is changing the world, don’t just think of it in terms of exponential value creation think of it also in terms of new rules of control and commoditization. And when you marry these two perspectives of exponential value creation, which comes hand-in-hand with control and commoditization, then you have a full picture of how the world is changing. If you just keep talking exponential technology, exponential organizations, it sounds like that, that is, the set of tools that literally every company can use and no matter where the industry is no matter what the company’s asset base looks like. But if you understand control and commoditization, you can then map out the playing field and say yes, we do understand that exponential technologies are in place but given where this industry is, given where incumbents are, given where new forms are coming in, these kinds of industries, these kinds of films have the ability to manage the exponential technologies for their benefit, because they are harnessing right control systems. And this kind of companies are getting commoditized and no matter what they do, they are not in a position to handle exponential technologies.

So I feel that there’s just too much narrative on the first part and too little on the second part and that, the second part is the focus of my work and that’s essentially what would be the focus of another book once I and go down that path.

Simone Cicero:

Right I’m particularly interested in — and I’m sure you’re going to touch also the control aspect — but I’m very interested, as a start, to understand how you relate to this idea of platforms with the dynamics of commoditization and componentization in the market.

So essentially, for our listeners as well, commoditization is always and often I would say an effect of the dynamics of competition. And I also know that you have very strong ideas about how these platforms in existence are changing the rule of competition. So I would love for you to expand a bit more, this relationship between you know exponentiality, competition, commoditization. What is it all about Sangeet?

Sangeet Paul Choudary:

So let’s think of this as me just thinking out loud on this. I don’t have a fully cohesive theory to bring to the table but, here’s how I see this: platforms fundamentally work because they have the ability to either aggregate the demand or they have the ability to standardize the supply. Those are the two things that platforms do really well. Some do the one really well, some do the other really well, so I’ll just give a couple of examples Netflix for example is not really a full platform business the way we would like it to be, because it aggregates the demand but it doesn’t fully standardize the supply. On the other hand Uber, for example, aggregates demand, but also standardize the supply to the extent that every supplier is interchangeable. You don’t really care who the driver that’s going to take you from point A to point B.

So platforms fundamentally do these two things really really well. Now if you think of these two aspects depending on how well the platform aggregates the demand it develops negotiation advantage to then standardize the supply. In order to standardize the supply the platform would need to pull agency away from the suppliers, and as an effect of that happening it ends up commoditizing the suppliers to some extent. So whether suppliers will become completely commoditized what level of agency will be pulled away from suppliers, what level of demand aggregation and control the platform have all these things vary from Industry to Industry. And I would say it’s not so much industry, which is the unit of analysis, but the nature of the interaction is the unit of analysis, so it varies with the type of interaction that we’re talking about and based on that we can then determine how to what extent a platform, to what extent suppliers need to be commoditized for a platform to be successful. Because there are certain Industries where they don’t have to be commoditized to the full extent and platforms can still be successful, they can still hold onto the suppliers and there are certain configurations of platforms which do not drive commoditization, but that is largely because those platforms are more focused on or not so much standardizing the supply as much as they are on enabling the supply and empowering them.

And so if you really think of it in these terms when platforms aggregate the demand, they have to standardize the supply to simplify matchmaking to simplified participation in the market. When platforms do not aggregate the demand, they end up empowering the supply. And a classic example here is let’s say Amazon Marketplace was a Shopify, Amazon aggregates demand and hence has to standardize the supply and eventually commodities them.

But Shopify does not need to make the matchmaking goal happen and hence it is able to empower the suppliers who then move into serving the market in many different ways. So you know those are, I would say that’s where the idea of this whole thing starts.

What’s, what are the Dynamics of your industry? What is the level to which standardization of supply has already been achieved. Maybe through open standard maybe through some other mechanism is like say a shared block-chain infrastructure, but if standardization has not been achieved through those back-end empowering mechanism and it’s being achieved through demand aggregation on the front end, then you end up in a situation where you will have to increasingly become commoditized to serve the platform’s matchmaking needs and this is fundamentally, you know, my point of you about how we think about the future of work as well.

Because when we think of the future of work, we constantly talk about two things, passion economy and gig economy, and the difference is just this that the passion economy is being driven by platforms that do not aggregate the demand and hence control and standardize the suppliers, and the gig economy is being driven by platforms that control the demand, own the reputation systems, manage the exchange and the escrow and hence are able to commodities the supplier. So if you just think of that lens that repeatedly helps you see, you know if Apple pay is entering a certain market, what is the current situation of banks will get commoditized, will they be able to compete? In Sweden, they don’t get commoditized because they have already created standards at the back-end to manage payments. But in Spain, in Australia it’s the other way round that its happening payment has not been standardized and so increasingly the negotiation part lies with the app than with the banks.



You can apply the same lens to literally any industry and you’ll start seeing how control and commoditization play a very important role in determining who will win and who will not. Because exponential technologies are there, but they are not democratically available to all businesses and these are the factors that determine who will be able to harness these technologies versus not.

Stina Heikkila:

And Sangeet, I wanted to ask you, when listening to these connotations of commoditizing supply and enabling supply, is any of these more desirable from a societal point of view?.

Sangeet Paul Choudary:

There’s always been something more desirable from a societal point of you when we think of capitalism. It’s not something that is unique to platforms and just like broadly in capitalism, you would prefer to have more equitable distribution of wealth and not have hoarding of wealth. In the same way, you would prefer to have something which standardize the supply while driving equitable distribution of demand aggregation rather than hoarding of demand aggregation with a few players. So if you think of it the from this perspective then when we actually talk about how platforms can be used for society good. It all comes down to this basic concept that if you, if you want to create something that is sustainable and that is actually optimized for social welfare, then you need to regulate aggregation of demand and you need to empower standardization of supply.

Because there is clearly a lot of benefit of standardization of supply. In fact, all the benefits of running marketplaces and platforms emerge not from the aggregation of demand, but the standardization of supply. So if you can regulate the aggregation of demand while ensuring that the standardization of supply is driven further that will be the right way to shape the future of the platform economy.

So, for example, if you could create a reputation system similar to what Air B’n B has for every room in the world but ensure that the the access to the demand side is not controlled by one player who also now controls the reputation system. Then you will be able to better regulate competition. So that would be the ideal way to do it. Unfortunately, the problem is that a lot of the standardization of supply has happened as a consequence of the aggregation of demand and that is the reason why today anybody who aggregated demand using a search engine or social network or a you know, an e-commerce channel has risen to a level where they are able to set standards for the supply side before other players can come in and start setting them.

But if you really were to regulate the platform economy in the right way, the regulation should squarely focus on the aggregation players and not so much on the standard setters. And the regulation should focus on preventing to some extent the aggregation players from setting the standard rather than trying to break down the ability to aggregate. That is how you should think about regulation to make this happen. So as you know, I think the way we think about hoarding and redistribution of wealth. We need to start thinking about hoarding and redistribution of demand as we move forward.

Stina Heikkila:

Okay yeah thanks, that’s very clarifying.

Simone Cicero:

And Sangeet, so it seems like to some extent that the industry is moving into two directions. One direction where regulation is gonna be much more important, I would say because also the impacts on society are going to be much more important. Is it not the case that maybe that then both — platforms that tend to be more able to both things — so to aggregate demand on one side and to commoditize supply on the other, are also the ones that have a bigger footprint. You know example mobility or travel and all the massively important processes that have a massive footprint, right?

On the other hand we’re talking about this passion economy that is much more in to the intangible world and maybe needs less regulation. And it’s funny to see today that at the end of the day what we are seeing is this big debate in the US and this big you know mess around Tik-Tok. Which is of course passion economy platform is very much in the intangible world and still it’s generated this crazy, you know, phase that is ending up these days with Oracle taking over — with this I would say symbolic takeover — because at the end of the day it’s just the infrastructures. And so we’ve moved but the substance remains.So what are you thought about this?



Sangeet Paul Choudary:

So Simone, I would say that when we think about things like passion economy and vertical marketplaces, the challenges that the proponents of these ideas are thinking about only a part of the picture rather than the macro picture. So let me explain what I mean by that. When we think about say earlier platforms used to be horizontal now they are becoming vertical because they are more coordination problems to be solved, there are more workflow problems that be solved, the actual fact that if you look at the macro picture the verticalization happening because the horizontals have been increasingly abstracted and standardized and their enabling the verticalization. That standardization may have happened at the API layer, but that is what anybody the verticalization like we just take the example of video platforms right now right? Zoom is the horizontal and in the future there’s conjecture that a lot of verticals will develop and what’s emerging is that all these vertical video meeting platforms are not building on this zoom development kit.

They are building on Agora’s API, Agora is another Chinese company which provides which essentially abstracts all the capabilities to, to run a Zoom for X right. So if you look this all these vertical platform that are coming up for specific kinds of video use cases. Maybe conferences, maybe a certain kind of Business Development call. These are all unique vertical Zooms that are coming up. They are coming up, not because we’re moving from horizontal to vertical, but because the horizontal has been abstracted away from an aggregator model, a demand aggregation model to a supply standardization model. So this view that we’re actually moving from horizontal marketplaces to vertical marketplaces is a very narrow and, you know, it’s a view that does not take the full picture of the Macro.

Because what is actually happening is, we’re not moving from horizontal Marketplace to vertical Marketplaces we’re moving from horizontal demand aggregation to vertical demand aggregation. They still standardize at a horizontal level because now you have all these cross vertical APIs is that are provided to standardize supply. So that’s how I think about what’s happening in vertical market places. With the same thing is happening on the passion economy side because a lot of proponents of the passion economy are coming at it from what’s happening on the demand side.

They’re not seeing the changes happening in the supply side. So when you think of what’s happening in the demand side you end up seeing Marketplace where, you know, you end up seeing more of this happening in intangibles where the supply and demand can be immediately connected. But if you think of what’s what happening on the supply side,if you go beyond the Substacks and the Tik -Tok of the world, and you think about how the traditional benefits package at in the you know, the so-called in a traditional work bundle is being unbundled and each benefit is now being provided as a service — that to me is this real passion economy, not the Substacks and the Tik-Toks of the world. The real passion economy is that I don’t have to care about my benefits. They don’t have to be bundled with my job.

They don’t have to be vertically integrated inside a firm because the job center benefits subsidies each other, all of these can exist outside and I can re-bundle them. I can push a newsletter, unsubscribe, I can do something else weather with it but there’s also this benefit as a service I can pull in from here.

So the passion economy is as much about what health insurance companies are doing as much as it is about what the Substacks and Tik-Toks of the world are doing. So I hope that clarifies when I think of the Macro is all that happening at the backend that is more interesting than just what’s happening on the demand side of it, which is with the verticals and the intangible coming up more and more prominently.

Simone Cicero:

Well, that’s an extremely interesting take and I would like to go a bit more depth with that. So if I understand well what you’re saying is that on the production side of the economy we are seeing this continuous compounding of labor from whether essentially and supposedly I think first of all my reaction is: this is massively challenging for the very idea of a firm. Because the individuals, the teams become much more powerful and at the end of the day I think we can definitely agree with that. Because we are living through and this again is a point that Li Yin knows of was raising recently. This idea of the micro entrepreneurs so it’s not just passion economy it’s also the idea of entrepreneurship that is unbundling and that’s also a thesis from Nicolas Colin that was formerly one of our guests on the Podcast.

My question is, you know, to see really massive impacts on society, what is your take on what is happening on the side of, I would say, the consumer? So if this unbundling of production happens and the expectations of the people, of society with regards to you know, with our day to day experience. So consumerism — or that kind of expression of the consumer side of the economy — doesn’t change. For example, if we don’t change our expectations with regard to our community experience with our day to day life experience, I am afraid that the result of this un-bundling of the production side will always, and also, sorry, only generate what something that also James Currier spoke about in this podcast. So what he calls the Matthew law. So the idea that all the best become better and the others become worse. So we have this palette or distribution of professionals and the most recoverable ones become the best of the industry and the other ones become just mediocre workers. And so I am curious to see how you can engage and wrangle with this idea of, you know, the nichification of our society and try to understand what does it mean in terms of societal change? What needs to change in terms of our I expectations on the consumer side of the economy?.

Sangeet Paul Choudary:

Yeah no, I think that’s great. I think you know, I’ve written quite extensively on this topic in the past. What we’re driving towards is essentially with all of this, what we’re driving towards is increasingly either a commoditization of work or it is the creation of a superstar economy.

Where exactly the Matthew effect you’re talking about the rich becomes richer that feedback loop, pushes some people towards inordinately high gains and the others towards much less, you know ability to stand out in the market. And so there, you know, at least three ideas, I want to piece out over here right. The first is the nature of work itself, which what kind of work are we talking about? The second is the nature of the medium and the third is just about you mentioned about bundling and unbundling of jobs, whether we, is this the end? How is this going to evolve further?

So the first part is the simplest. Let’s talk about the nature of work., the nature of work you know the more commodified work the most standardized a certain kind of work starts getting, because you take away the factor that used to provide agency to the worker, you take away the, the learning advantage that workers had. Ultimately workers differentiate themselves through skills which is required for learning advantage and if technology comes in and commodities that learning advantage then that work gets commoditized.

So a classic example of that is just you know the London cab driver who used to have this learning advantage that he has driven all his life, so he just knows the one-ways and the two ways and every part of the London Map in his head. The moment GPS comes in and Uber and Waze start coming in that learning advantage has been commoditized. The same thing to some extent is happening for example with Ping An good doctor, which is the telehealth platform in China connect doctors and patients and with every intervention the doctor provides to the patient, the AI is learning the symptoms and the feedback provided, and through that the AI is standardizing and commodifying the doctor’s learning advantage.

And the same thing to some extent happens with retail assistant software today because large retail change provide software to their assistance and the ideas is that the software keep learning from the best assistance and standardized that, so that in the future, you don’t need to hire really good assistants, the software will do half the job. So, the human skill gets increasingly commoditized. That’s the first piece to think about, the nature of work. Is your learning advantage something that’s going to get commodified because of changes in technology?

This is your learning advantage something that is going to be taken up and this applies not just to humans. It also applies to organizations. But especially for a worker, it’s a lot simpler to understand that if your competitive advantage was driven on a specialized skill set, at a specialized learning ability that is now fully you know embedded into software, then somebody else can take it up without needing to go through that learning curve anymore, and so your role has become the commodified.

So that’s the first thing, how commodified, can your role get because of technology, right. The second thing, so that’s the nature of work. The second thing is the nature of the medium of the nature of the market that we are talking about.

Is this a market where reputation systems play a very important role? Is this a market that requires you to single your credibility. Is this a market that requires credibility in the first place? And the thing is that the first and the second thing move hand in hand if your learning advantage has not been commodified, then you are automatically placed in a market where credibility is important because the ones who learn the best should be able to, will deliver the best.

And should be able to then earn the best and the moment you start thinking about that the reputation system start coming and because whether it’s a freelancing network or whether it’s any other market system, there is a reputation system on the basis of which the demand side will pick the best workers and even if you think of traditional organizations in turn lead their reputation systems, the more we move towards Innovation and micro enterprises inside an organization. We are relying on internal reputation systems, and they are susceptible to the same feedback loops and macro effects and superstar economy effects that open market reputation systems are. So my point is that if you haven’t been commoditized by technology or your learning advantage hasn’t been modified by technology. The next challenge you have to surpass is this reputation system piece because you are now in a market where higher value players are the players who can signal their value better will be treated much better.

They will get more opportunities that will help them reinvest and signal their value even more, and so there’s a positive network effect, a positive feedback loop that starts running and because of this reputation system that creates the Matthew effect that, you know, you were talking about.

So that’s the second piece to think about. The third piece then is well with all of this doom and gloom. Are we already at the end of this shift of this unbundling of jobs? And my experience here is just: I’ve never seen bundles getting unbundled without them getting subsequently re-bundled. Traditional bundles were built around production efficiencies, they were built around the firm boundaries, they were built around, you know, a production supply chain.

So they were built around the constraints of what enabled efficient production. As we move forward because demand is where in the ability to serve the demand is the key control point. You will have to re-bundle in order to best serve the demand

So even if jobs do become unbundled today, we have to think about the job market and see is this unbundling of jobs the new way in which jobs will work or will they be re-bundled outside the firm in a new way where you take health insurance as an API, you can take unionization as an API and the re-bundle all of this into a new bundle. Which is different from the firm as an organization upward bundle and a new kind of work bundle emerges around a problem to be solved. So just like, you know, financial services, for example, went from banks to unbundled Fintech to now being re-bundled around the customer. We will now similarly see work being re-bundled around a problem to be solved.

And, so I think, if you really think the future of work, you have to think about all these three elements to really paint a full picture and I haven’t talked to some of the other pieces in terms of you know even before you think about the nature of the job, you have to kind of break the job into tasks and learning advantages and learning advantages get commodified but so do tasks because some tasks get automated.

So you have to really think about a combination of the two things that and how they hit you. So it’s really this whole landscape we need to think through before we say this is going to be the future of work. And, so I really feel that we are in very much the early stages of this unbundling and are far from the re-bundling that is required to really take us to the new future of work. Where we are today is definitely not the future of work, it’s a transition stage much like, you know, we were in say, with next you’re coming in unbundling the album until it got re-bundled into Spotify or into iTunes we did not have new, the new landscape for competition and so, you know, if you really think of it you have to wait for the re-bundling to really see what the future of work looks like.

Simone Cicero:

And that’s what I would like to do if you don’t mind. So I am very intrigued by this idea of the post firm bundle, so it looks like we are unbundling the firm and that’s something that we are seeing in one key example, is the platform economy and to some extent not this idea that you transform a complex firm into a hub to some extent. Also, the unbundling as we said of the welfare services. But I would like to explore a little bit more with you what these post firms bundle is and as you were speaking I was wondering if this post firm bundled something like a post-org, so the real future of organizations it’s all about this re-bundling into something different after the unbundling of the firm and the welfare. And the last nuance to this question, if you want to explore this with me, I have two points: One is with this post firm re-bundling of work just be, you know, the place for the superstars or you know there is in this new bundles also for people that need to be I don’t know, sustained, enabled and need to have some kind of known Superstar role in producing value I would say and work.

And another one that I would like to explore with you is, what are these post bundles about? So without the key processes and where are the key outputs that they will produce. Because another very interesting thing we are wrangling with these days are, it’s the idea that we can we could be able to, you know, envision a new human development thesis around what we call economies of essentials, so for example there is an interesting, very interesting project that we have been interviewing recently called Participatory City, it’s based in the UK. Urban projects I would say but community development projects I would say where they have taken two boroughs of London, and they’re expanding now, and they’ve created these shared spaces for creation and now they have tons of enterprises coming up. Small things enterprising in industries such as you know, clothes or food or this basic economy. This economy of essential, the essential of shelter, food, you know, the experience of being together, clothing and really just basic processes that seem to be a good place, a promising place where this new human expression this new human development thesis could be, could be expressed.

So maybe this post firm bundles can operate in this space, what is your, what is your take?

Sangeet Paul Choudary:

I think, you know, if you think of this key idea that the, the industrial bundles were all driven by production designs and production efficiencies and the new bundles are essentially driven by customer problems and customer value proposition and I don’t really want to use the word customer, just consumer because it’s any form of demand, right? It’s not a market transaction it’s any form of demand along which you developed this. So if you think of work and I’ll come back to your other question about cities and social bundles because that’s fundamentally different from the post-, the new work bundle. If you think of the work bundle per se, I think this a bit of, there’s some level of emerging theory development now in terms of what this could look like by looking at certain other spheres.

So there is quite a bit of work which has looked at, military combat, where essentially while the army is an organization and the army works like an organization your, and it works like a very hierarchical traditional fordist organization, but because they operate during combat in an environment of extreme uncertainty, the things that actually work together a pulled together on the fly, they are pulled together on the basis of certain advantages, and they are focused on the problem to be solved. And if you just take that idea in the case of an army, or you know if you think that kind of example, the uncertainty is more disruptive rather than continuous, it happens, and then it goes away and then it happens. So the hierarchy continues to be there while the teams organized around uncertainty, but if you just translate that Idea into the field of work and if you think that in the emerging landscape, we are going to be centered around the solutioning of customer problems.

I would say that we would have to re-bundle the bundles that have been created today. The bundles being created today are people armed with, you know, publishing tools to, to publish and talk about it. People armed with a publishing and build an audience. People armed with you know design tools to design and collaborate whether it’s you know what started with Photoshop and now what’s moved to Figma and so if you just take, for example, the move from Photoshop to Figma we’re already seeing a new way to re-bundle.



Where you can re-bundle you designers around a problem right, so again when we think about it in terms of where this re-bundling opportunities like today. They seem to be or it’s more, I would say, it’s more staccato, it’s more something that’s happening episodically rather than a fundamentally new design, but moving forward that is where I would say the re-bundling would happen where you would have more of these work coordination or work coordination Infrastructures that will be developed that don’t necessarily need to own the demand. And the workers self organize themselves around this work coordination Infrastructures so if you think of Photoshop as a 1 person play and as Figma as a work coordination infrastructure for designers. I would think that those work coordination Infrastructures need to developed at scale to really start seeing end-to-end solutioning of a problem.

Because even if you coordinate design, there are other pieces into which design fits in and those pieces today, are linear and hence are contained within a firm and hence it kind of breaks down. But if you can think of this as new work, coordination Infrastructures being developed over the next several years that would then drive the re-bundling of work.

So that teams can easily configured themselves around a problem, solve that problem, create a new agency around a particular problem without having to do it in the traditional way of building an agency. And so that’s that have you think about the new bundle because even today when we start a new start up, and we start a new business, it is all started still with the Photo’s bundle in mind. But if going forward we were starting new businesses because teams had you know, elastically come together to solve 3 or 4 problems and then they realize that there is a common model in which they can continue solving problems and then the come together as a bundle that will that be the new re-bundled model because of these work coordination infrastructures.

So I know that sounds a little abstract at this point because we don’t have enough of that enough examples of work coordination infrastructures built up yet. But my point is that, that is what needs to come in, in this transition from a traditional bundle to an un-bundling open market to a re-bundling. And again, if I take that in e-commerce right, the traditional bundle was the store and the unbundling happened when anybody could sell online and the reputation system started coming and controlling it and that’s what for example is happening in the gig economy.

But then it’s now moving towards independent tools that you can really use. Whether it’s with Shopify or Stripe Atlas or any of these other kinds of tools that help you now kind of you know re-bundle and create an end to end retail experience for instance. So, that is, that is what I mean in terms of re-bundling of work as we move forward.

Stina Heikkila:

Thank you that’s super interesting. What I wanted to follow up on is, because I know you’re interested in country competitiveness and political landscape that we briefly mentioned before it. But so, how do you see that these work coordination infrastructures links to current institutions and, you know, our national governments but even cities to some extent as we know that they are big attractors for a lot of tech and innovation. So I’d be very curious to see how you see this transition in light of the geopolitical landscape.

Sangeet Paul Choudary:

Yes, if, the fitting of the geopolitical landscape right, we have to think of again additional macro variables over here because now we’re talking about countries competing with each other and when we just think about work coordination, infrastructure and infrastructural place like that in the long run the get commoditized. So if you think about country competitiveness. Country competitiveness is, which is to a large extent the way it’s playing right out now is around building these kinds of infrastructures but more importantly exporting those Infrastructures and creating a standard so that the whole worlds now start following your standard.

So what I believe is really happening at this point in time, if you think of country competitiveness is that traditional globalization was built around contracts, whether you call it you know I’m using the term contracts loosely, but it was built around bilateral agreements, multilateral agreements, right? Much like how traditional supply driven businesses worked around contracts. Future globalization or the new wave of globalization that is happening is going to happen around standards and protocols.

Much like you know a lot of ecosystems, all of a sudden now start moving in to standards and protocols rather than contracts. Countries that will start moving or working around standards and protocols in the best example of this is actually the, the Belt & Road Initiative by China. So if you think of the Belt and Road initiative — and I’ll come back to the work coordination infrastructure — but since we’re talking country I want to take it more macro. If you think of the belt and road infrastructure, it’s a trade and financial flows coordination infrastructure, that’s what it is.

It’s a bunch of physical infrastructure like ports and Highways but its also special economic zones. And China what is essentially doing, is it created a public private corporation’s frameworks other countries like Alibaba can align their capabilities along the belt and road.So Alibaba for example is launched the electronic world trade platform in EWTP which is essentially a trade coordination and structure where it sets up business hubs in individual countries, provides them the ability to digitize their SME so that they have access to global trade. And then initially drives the demand for that from the Chinese Market but then the goal is once enough hubs around the world are connected to China’s demand, eventually those countries can all then now start working with each other as demand and supply is well, and so this is entirely a new trade infrastructure that’s now being created and by virtue of owning alibaba.com and owning all the risk management and credit scoring models that Ant financial has, Alibaba has kind of all the pieces in place to, to exert control over the things that happen across the Belt and Rode right.

And so that is, you know, that is what I would a think of if you go beyond just a work Infrastructures to the really large trade infrastructures, financial infrastructures and financial today is investing in the leading payments wallet in every country. And the reason for that is, or the way it does, that, is it goes to a country, discusses an investment in the leading payment’s wallet, but the investment is made only on the condition that they move the infrastructure to the Alibaba cloud which is called Aliyun and so it’s contingent on building on top of the Alibaba cloud. So the idea eventually is then to create a payment center of the ability infrastructure at a global level once you’ve connected all of these payment wallets on the same cloud and Alibaba is also and financial also going to the banks in these countries than saying I can help you lend to the cash economy just because I got these great credit scoring models. Why don’t you build your bank on my cloud? And so, essentially, it’s now creating alternate financial infrastructure, which then when you connect the back with the Belt and Road initiative, helps China set up this, its Infrastructures standards and protocols across all these markets.

And you know the trade and payments is one part of it, using with China that wants, you know, global currency flows to move from a USD index model to more of a China, then maybe the index model, because that will depend on how much traded are able to capture through the systems. But even if you look at what China is doing through 5G, for example, the idea is to not just provide 5G also provide services, also provide smart city operations’ infrastructure. Whether it’s Alibaba providing its city brain project, which it does in Malaysia right now, or Hauwei running the city operations in multiple cities around along the Belt and Road. The idea is again to export infrastructure, export standards and protocols and through that create the new globalization and I think the final part of it and I’m kind of writing all of this in a, in a paper that’s going to come out with the Brookings Institution in a couple of months.

The final component of this is what they do with National identity. There, especially post Covid, they’re exporting a lot of identity management systems around the world in the name of contact tracing, but then also it helps to create the same standards and protocols that all these countries will use. So what I’m trying to say is that the future globalization is not about creating trade blocs. It’s not about bilateral agreements, it’s about using the same underlying infrastructure, whether its trade coordination, whether it is work coordination, whether that is financial services in to the observability, its fundamentally creating the same infrastructure for all these things.

And that is what I really mean when I think of a country as a platform because fundamentally the idea of a platform is to open yourself to the extent that you can standardize coordination for all players and then control and aggregate market activity on top of this standardization structure and that’s essentially what the Belt and Road combined with Alibaba, Huawei and ZTE and other players is kind of looking to do. So that’s my, you know, my view of how globalization is going to play out very much in a platform ecosystem model over the next two years.

Simone Circero:

Well that gives us a lot to think about, I think and I have some questions i think that comes from, comes to my mind very much related to these reflections that you are bringing about. So the first thig is, you know, you spoke about basically countries, but for example you wrote once about Singapore, so this idea of all the cities and all that are kind of gaining some kind of relevance. Especially in this perspective of partial deglobalization that we are seeing. So it’s interesting to hear you talk about this new phase of globalization that seems to be more than a globalization of trade even if you mention rightly the trade infrastructure that especially China is deploying at the moment.

But it looks like its kind of a globalization of information infrastructure. So information infrastructures and to some extent it’s also cultural globalization. So I’m really keen to explore with you as we enter the final parts of this conversation. What are the dynamics that you see in, happening when it comes to these dual I would say polarity. The polarity of the global and the polarity of the local, especially if you think about, for example, competitiveness in slightly different, from a slightly different point view which is for example the point of view of recipients.

I think Covid showed that some countries have been able to establish a better trust with their citizens just because they demonstrate, they demonstrate some capability to you know control the spread of a virus for example. Or more in general I think this would be more resilient to shocks and that in respective of our world that sadly is going to be exposed to much more uncertainty and shocks due to you know whatever or you know the 5 Hurricanes that at the moment are raging around the Atlantic. So it’s really, you know, do you have some ideas about ow this local resilience and globalization of information infrastructure you know, could play out from the perspective of this new platform economy, unbundling and re-bundling of the firm? What are your thoughts on this, if any?

Sangeet Paul Choudary:

Yeah absolutely, so as I mentioned before when you asked me about what the thesis of the next book would be right. I see all this eventually goes down to how you handle mechanisms around control and around commoditization, right it goes on to those two fundamental aspects. And if for example you build these systems with a very centralized control mind, set you’re kind of going against the resilience model. So lets me give you a simple example of that. Let’s say you know China builds out this overall infrastructure and this infrastructure is not just the physical trade instructor with all the Digital in structured around it. Right. The risk scoring algorithms, all of that is part of the central structure, right? If say, they build it up or if say any country builds it up or any country builds up this infrastructure and exports it around the world, it is constantly building a single point of failure if it is the sole creator and exporter of this infrastructure.

If you want to build for resilience you want to empower the edges to also innovate and then contribute reusable elements back to the central structure, the traditional model of you know, how we think about innovation and platform ecosystems is actually very stunted in the sense that the code is uniquely owned by the platform and the platform opens out another set of privileges and capabilities at the edge and innovation happens over there, which is all great for open innovation. But the platform still remains the platform owner. And their internal innovation road map creates the central point of failure for this whole ecosystem and that is where resilience just not coming.

If instead every app developer have the ability to build but also contribute code back and be a part of that whole pool of value that the platform is generating and not just builder’s up at one end. And not just apps’ anybody in the ecosystem if they could constantly contribute back into the platforms code that would make the systems resilient because it would constantly learn and systematize what it was learning at the edges. Now, the same challenge is happening with this new form of globalization where if you see one or two countries gaining inordinately high power because of the school feedback loop of the more people use my infrastructure, the more data flows I get and mean infrastructure in all this digital infrastructure, information infrastructure.

The more data flows I get, the more data flows I get the better learning models and prediction capability I have and the better I can solve problems for these individual cities and countries around the world. All of that is still a very centralized way of looking at it and prevents the creation of resilient infrastructure structure. Resilient infrastructure would provide enough agency to all these other countries and cities.

They would run their own, you know countries and cities using the underlying infrastructure, but then because it’s kind of the underlying pieces co-owned they would keep contributing back, and they would, the whole ecosystem would build up the platform rather than one single player building out the platform. And that is fundamentally the only way to build resilience in a platform ecosystem model where you want to (a) ensure that you don’t have a single point of failure, and (b) ensure that you don’t create extreme quality, extreme concentration of power, extreme concentration of control and you distribute all of it.

If you want to create the, if you want to set it up in a model that redistributes all of this, then you need to have the mechanism to ensure that the whole ecosystem has the platform ownership or in this globalization model of the cities model. All the cities all the countries have the underlying infrastructure ownership. If I Google, you know, sidewalk labs pulled out of Toronto I think a couple of weeks back and that was one of the big failures that Google had in recent times. But sidewalk labs at the same issue. It had a single point of failure, it has a single point of control and that is the challenge with a getting into the real world building infrastructure for the real world and then holding and centralizing the data capability that run that infrastructure so until we really free up and make them public goods, make the AI running these infrastructures itself a public good until that happens we will not build resilient systems.

And, so I think that is that is really how I would see the future landscape and how you would think about resilience and this landscape.

Simone Cicero:

Sangeet, I think we really gave a completely different, completely — I don’t know — we really transcended the conversation today. You really contributed to give us you know a much broader point of view on this conversation. I think I would like to stop here because and I’m sure we need to have another chat.

It was so enriching to explore this perspective. You know if i can wrap it up for our listeners and then you know if you wan to ass more points what we are seeing here with you is that you know these dynamics and bringing competition to our very different players. This idea that platforms are playing out in this international context you know , they are, at the end of the day they may have a much less important influence if we see and look in to what the States for example can do. You know by using the same dynamics there, for example platforms have been using in the, in the, last decade. So I would like to ask you to just add a few bits if you want with regard to you know things that are very much important to say and maybe we didn’t touch in this conversation?

Sangeet Paul Choudary:

I think one of the most important things that are, and it depends on whose listening to this, and if you’re running a business, and especially if you’re running a business and thinking about how do I transfer my business. You need to think about the perspective that is not all about exponential technology, it’s also about the spectrum of control and commoditization and where your business currently sits on that.

Because there are positions in that whole map where no amount of exponential technologies are going to save you and their irrespective of what hundreds of consultants may have to say about it. Just because other companies are doing, it may not work just because of where control and commoditization have already started playing out in your landscape.

At the same time if you do not set in those positions you need to know what strategy is right for you. It’s not here’s what Amazon did and that’s why here is a platform strategy that works for us because we’re also the tailor.

It’s not about that. It’s about understanding. What are whether you in that evolution and what kind of rules can you play in the ecosystem which, which will allow you to have the ability to harness the value created by the ecosystem and how commoditized is it to the ecosystem.

How standardized is it to enable you to play those rules. So the first thing is to kind of just to temper this idea about exponential technologies because it’s just gone a little too far to becoming this Panacea for all kinds of business issues today right so that the first piece I would think about.

The second thing I would just like to call out again is maybe think about regulation because I’ve done a lot of work in regulation of these platforms and repeatedly see regulators not making a distinction between the demand aggregation power of these platforms and thus the work coordination, supply coordination, production coordination piece of these platforms. And once you break it down those two pieces. You can see what you need to empower in order to enable Innovation and what you need to regulate in order to ensure that you know monopoly or monopoly effects are mitigated and until we make the distinction we’ll always keep thinking the regulation is going to stifle innovation because when we think regulation was simultaneously regulating both the demand aggregation and the supply empowerment. So that’s the other thing I would just call out and I think the final piece, what we talk about resilience cannot be overstated but then again having you know having worked a lot on societal platforms which are also with the best intents.

Like if you look at a lot of the work that The Gates Foundation is doing, there are the Nilekani foundation with which I work. They are doing a lot of them which are kind of building the societal platform model.How can we take this to a level where it benefits society? Where they become the future of education of health care of national identity systems. I think that is something we all need to really think about and all play a role in the, in the specific ways in which we interface with this topic. So yeah, I’ll just pause it on the three points.

Stina Heikkila:

I just wanted to thank you very much because for me this has been a very eye opening conversation. And I think I, I also had some ideas about control and commoditization but definitely I got a very much eye opened understanding. So, thank you very much for this conversation and I look forward to reconnecting again because indeed there’s a lot of ground to cover still.

Simone Cicero:

I just want to rhyme with what Stina said, you know, that really I think you contribute to open quite a lot of new, you know threads in our thinking. So thanks very much Sangeet and I look forward to re-connect soon also with our listeners and you know again, thanks very much.

Sangeet Paul Choudary:

Thank you, thanks Simone