Continuing to think about platforms and trends, let’s start with five frames shaping today’s business opportunities.

I tend to use “frames” and trends to identify opportunities rather than industries or businesses because it pushes the focus away from the present and forces us to think about the larger, systemic trends shaping our futures. Each industry responds differently to similar fundamental forces based on their unique developmental paths and learned best practices, but as old truths and “best practices” fall by the wayside, focusing on fundamental trends allows us to import, export and apply pertinent learnings across industries, business and products. Change creates opportunities, so where are the opportunities?

Let’s start with five frames:

• A renewed look at capitalism, the role of markets and the mix between centralized and decentralized decision-making.

  Society tends to change its organizing principles (feudalism, capitalism, socialism, democracy, et. al.) over time in response to cultural and technological trends; there is no absolute “right organizing principle”, but rather the right principle for the time. Right now we’re in the middle of a massive shift in how we interpret and apply capitalism as an economic and societal organizing principle. Pay less attention to the ideologies (traditionally rigid terminologies such as capitalism, managed capitalism or socialism) than the fundamental trends driving us to re-evaluate how we organize lives and frame incentives; we may come out the other end with a very different set of economic rules and cultural expectations from five to ten years ago. Remember that the true turning points of our lives are revealed not in the moment, but in hindsight.

  Honestly I can’t begin to explain the full ramifications to do this topic justice; I just know we’re underestimating the full impact of current economic and geopolitical events.

• Entrepreneurship: a revolution or a fad?

  Revolution:

  … startups may represent a new economic phase on the scale of the Industrial Revolution. … People are dramatically more productive as founders or early employees of startups … and that scale of improvement can change social customs.

  Fad:

  “When I was in college, guys usually pretended they were in a band,” comments one observer. “Now they pretend they are in a start-up.”

  Entrepreneurship may be the sexy thing getting all the attention today, but the fundamental, underlying question is really about how people will organize themselves to create economic value.

  Vertical integration and horizontal integration may have fallen by the wayside, replaced by circles of small organizations, but the underlying economics shaping these organizational strategies aren’t set in stone. Current innovation strategies are based on creating modularized value chains using widely-available data to foster decentralized innovation – microbusinesses aimed at microinteractions – but we will reach a limit in how small each unit of the value chain can be divided until we develop more efficient methods for collaboration, compensation, incentive structuring and legal organization.

  Under-innovation will drive many large firms out of business, but that’s the point: from creative destruction comes creative reconstruction, and the survivors (large and small) will be the ones that find ways to re-orient their internal structures to take advantage of new technological and cultural realities. The economics of collaboration is a driving force behind internal corporate structure as much as external industry organization.

  To think that large companies will fail to adapt is folly; all companies exist in a marketplace for talent, capital and the valuable factors of production, and as the economics behind scale and scope shift, corporate collaboration and integration strategies will change. In short, “small” may be winning right now, but there’s no reason that “large” can’t catch up.

• A new, broader kind of middleman: not merely to execute transactional exchange but to facilitate interaction by aggregating, filtering and delivering relevance.

  Context is still expensive to create, for the simple reason that algorithms simply aren’t good enough (yet). Perhaps the largest opportunity in creating context and delivering relevance is to find better ways to use computing cycles to access “human cycles” through inexpensive, structured micro-interactions.

  As computer cycles get cheaper and easier to access, “human cycles” get more important.

  At a conceptual level, a “personal API” describes how we can create mediums and methods of exchange to reduce inter-personal interaction costs to make it easier for people to exchange more (quantity) and deeper (quality) units of value.

  How can we leverage technological platforms to access “human cycles” cheaper? Besides open-source software and collaboration / communication platforms, try out Mechanical Turk as an early example.

• Converting offline experiences into online structured data to capture, aggregate, understand, publicize and price our actions and externalities.

  How much do we truly understand about the costs and benefits of our decisions and actions? Do we understand the true, full societal costs of our personal lives?

  It’s fairly easy to track and analyze our online lives by piecing together what we tagged, shared and wrote; but it’s still fairly difficult to really track and understand our offline lives.

  Structured data is the required link between intention and action; only by understanding the full impact of our decisions can we hope to change our behavior.

  What’s the opportunity? Creating tools and platforms to unearth, capture, tag, analyze, aggregate (publicly and privately) and promote to price the full impacts of our actions. It’s not a new concept: the theories behind assigning and pricing externalities underlie a wide variety of government regulations (carbon caps, city trash regulations and tax policies just to start); but “scaling down” how we understand and price externalities to the individual level is an innovation opportunity. Scaling down data collection, aggregation and analysis to the individual level allows people to take decision-making into their own hands and offers people the information and control over their lives never possible before.

  But imagine what happens when we use online tools and networks to share, aggregate and benchmark our individual actions and impacts: we create the opportunity to identify new trends, create new solutions and tap into the “hive mind” to create value at the individual and societal levels.

  Examples? Off the top of my head, FitBit, Nike + iPod’s Nikeplus and Google PowerMeter come to mind. Remember at the end of the day it’s about combining the online and offline worlds; if we’re only focused on the online world, then we’re not thinking big enough.

• The enduring power of mystery and the unknown.

  In an “ambiently intimate” world, value is being created through the unexpected intersections and “human collisions” in our loose ties and loose networks.

  Mystery, powered by structured data and serendipity, underlies how positive variable intermittent reinforcement creates the most successful products and business models. We’re addicted to the potential for every click and interaction to create a new insight, connection or opportunity; introducing mystery into our communication, entertainment and work brings out the joy of solving puzzles deep within every person and delivers a richer, more powerful sense of engagement than otherwise possible.

  Why is mystery important right now? Ubiquity and reach is driven by the known, depth of engagement is driven by the unknown. Introducing a bit of mystery into a product or service is the key to creating the dedicated base of users less apt to switch to the new thing simply because it’s better, cheaper or faster.

  Please note I’m not proposing making things hard for people to use or understand, but the opposite: make things simple for everyone to understand and use very easily, but build in attributes and values for dedicated fans and users to discover and use; as people dig into your product and peel away the layers, make sure there are some extra layers there for the dedicated fans and users.

The outstanding question.
Agree or disagree, fire away; but the most important, unanswered question: how can we apply these cultural and technological frames to identify and target intriguing industries and valuable businesses opportunities?

Let’s start the discussion there.

As a side note, I’m trying to figure out a big project to apply myself to; ideas and thoughts are appreciated…

Related:

• What trends can entrepreneurs leverage to create new businesses?, Nov 24, 2008.
• What is the next platform for new businesses?, Dec 8, 2008.
• Value is created at the edges but captured at the hubs., Jan 29, 2009.
• Ten Frames (+1) framing the future of venture capital and entrepreneurship, March 15, 2009.
• Relationship “contracts” need to be based on our inability to predict the future., April 8, 2009.
• What’s free today may not be free tomorrow., May 15, 2009.
• Ambient Intimacy: Creating Archetypes from Avatars, May 19, 2009.