To Minimize Costs We Don't Work with the Best people and That is Wrong, Not very Smart, and Costs More

What makes these new models so powerful is that they tap the “dark energy” (or, as writer Clay Shirky calls it, “cognitive surplus”) that’s been all around us already. It’s the ultimate market solution: open-innovation communities connect latent supply (talent not already employed in that field) with latent demand (products not already economical to create the usual way).

Every few generations, the fundamental means of production is transformed: steam, electricity, standardization, the assembly line, lean manufacturing, and now robotics. Sometimes this comes from management techniques, but the really powerful changes come from new tools. And there is no tool more powerful than the computer itself. Rather than just driving the modern factory, the computer is becoming the model for it. Infinitely flexible and adaptable, general-purpose industrial robots can be combined to create the universal Making Machine. And like computers, they work at any scale, from the mile-long NUMMI plant to your desktop. That—not just the rise of advanced technology, but also its democratization—is the real revolution.

In the mid-1930s, Ronald Coase, then a recent London School of Economics graduate, was musing over what to many people might have seemed a silly question: Why do companies exist? Why do we pledge our allegiance to an institution and gather in the same building to get things done? His eventual answer, which he published in his landmark 1937 article “The Nature of the Firm,”33 was this: companies exist to minimize “transaction costs”—time, hassle, confusion, mistakes. When people share a purpose and have established roles, responsibilities, and modes of communication, it’s easy to make things happen. You simply turn to the person in the next cubicle and ask that individual to do his or her job. 

But in a passing comment in a 1990 interview, Bill Joy, one of the cofounders of Sun Microsystems, revealed a flaw in Coase’s model. “No matter who you are, most of the smartest people work for someone else,” he observed, stating what has now come to be known as “Joy’s Law.” His implication: for the sake of minimizing transaction costs, we don’t work with the best people. Instead, we work with whomever our company was able to hire. Even for the best companies, that’s a woefully inefficient process.

Makers: The New Industrial Revolution by Chris Anderson