Back when Gutenberg invented the printing press it was definitely still an information economy. The effect of the printing press on city growth is a direct consequence. When information is scarce replicating it efficiently puts you at an advantage. Today the internet is a huge repository of information and it is always at your fingertips. As information is no longer scarce we have entered a new kind of economy. A characterization of the kind of economy we live in unexpectedly comes from the 70s and is contained in a quote of Nobel laureate Herbert Simon.
What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention, and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.
So what we have is an attention economy. This is what explains the success of Google. They capitalize on helping us allocate our attention.
Back when information was scarce producing content was also not easy. This was the time when we had a “one to many” information model where a small number of content producers were catering to a large number of content consumers. As information became abundant the hurdles of changing sides from content consumer to content creator became easier to overcome. The causality direction almost certainly went both ways. As the rise in information enabled more people to have interesting things to say so did the rise in the number of people who had something to say lead to higher amounts of information. Today we have a “many to many” model in which information abounds and attention is scarce. This inevitably leads to the fact that it’s no longer about access to information so much as it is about access to conversation. This is the advent of social media. This is the reason of Facebook’s success. Social Media in other words is the culmination of the transition from an information economy to an attention economy and from a one-to-many model to a many-to-many model.
Social media in the firm can be a new way to cope with optimizing cooperation, sharing know-how and managing complexities. Come to think of it in a traditionally structured company, a pyramidal hierarchy is nothing but a naive way to manage the scarcity of attention. As it is impossible to oversee and pay attention to the entire employee population management installs intermediate layers between top and bottom, of decreasing sizes (as you traverse from bottom to the top) and every layer has a manageable attention allocation task downwards while it reports a digest of information to the top layer which hence in its own turn also has a manageable attention allocation task. The advantage and at the same time the disadvantage of this model is that from the top you don’t have a good picture of the bottom. A pyramidal hierarchy performs well in a static world but in a fast paced one it is definitely not sufficient. This is what explains why firms treat their employees as freelancing entrepreneurs and this is why social media can become the new way to manage attention in the firm. As you loosen firm structures to cope with fast paced change and technological recombination, Social Media (or what I call participatory technologies) are the optimal way to keep cohesion where the pyramid is strained.
Note: these are ideas from a presentation I gave at the third Expedition Unternehmen in February 2013.