What Makes Digital Tech Companies Models of Generativity?

Buffer, WordPress, AirBnB, Waze, LoveWithFood, ModCloth, Etsy— so many of the organizations I’m using as examples of generative businesses share a similar profile:

They are relatively small, young, organized around a core software process or product, filled with coders and developers, and part of a specific tech community.

Why is generativity such a defining part of how these businesses work?

Are they filled with more generous people? Are they somehow smarter or better than other organizations? Does generativity come “naturally” to them?

It’s not that generativity comes “naturally” to these companies. But, these companies are aware of generativity as an alternative way to orient their business. They have learned some generative practices that have demonstrated to them that generativity works. They are surrounded by examples of generative businesses and business leaders that serve as role models, and they exist in a world where generativity is normal and valuable.

I’ve been working to distill what’s behind this, and I’ve got my first crack at it, below. I’ve narrowed it down to:

Size, Age and Cohort open digital businesses to radical influences,
Digital Business Models are often generative themselves,
Sharing Makes Making Software Possible, and
Professional Cultures (Open Source, Agile) teach generative practice.

[The one thing missing– and this is key — is that digital products are themselves often generative. This idea is a bit too large to tease out in this post, so I’ve set it aside. For now. Because you know I’ll opine about it soon enough.]

Why Generativity Comes Easily to Digital Tech Companies

Generativity comes more easily to digital tech companies, especially start-ups, because features related to their work, their professions, their business models, and their age & size all make being generative normal, possible, and desirable.

Size, Age, and Chohort Open Digital Businesses to ‘Radical’ Influence

The small size and young age of most digital tech companies, along with the generation in which they are growing, makes these businesses more likely to be open to unconventional practices and organizational models.

Smaller companies generally have less structure, less formality, and fewer established procedures. They can be more flexible and adaptive, which makes it easier for them to try different ways of connecting and working with other companies. Young companies want to define themselves as innovators. As they choose how they want to organize themselves, they may be more willing to try new business practices that offer a different, more responsive pathway to profitability and ‘success’.

Moreover, fledgling business need to reach out to each other for help. They learn early on that they can’t do everything on their own; they need to ask for help with all sorts of tasks, from crafting a term sheet to testing their landing pages to staging their next round of funding. Startups learn to ask for help and to offer help to each other, which makes sharing processes ideas feel not only necessary but also normal.

And, companies born in the last decade are being established in a culture where many are advocating that businesses should embrace larger purpose, social impact, and generosity.

Less than a dozen years ago, “maximizing shareholder value” was the idealized goal of a successful business. Companies that rejected the primacy of shareholder value, in favor of purpose, meaning, or social impact, were mocked and marginalized. Now, thank goodness, we not only accept but applaud when a company aims to help others, to focus on a larger purpose, and to have a positive influence. Generative businesses fit the dreams of our time.

Digital Business Models Are Often Generative

Digital business models themselves are often generative by design. Many digital companies structure their businesses as multi-sided platforms. The company supplies a platform — an online place or a kind of technology — that brings together two or more different sets of users, who are customers and suppliers to each other.

The company makes money by managing the space or technology for the user community, designing additional tools and processes to support the interaction of other users and making money from providing these services.

With a multi-sided platform, the company also opens up opportunities to additional sets of participants, such as third party companies who can create products that add to the experience of the primary parties.

For example, Etsy’s marketplace platform brings together makers and sellers and also third party service providers like Stitch Labs. StitchLabs created a cloud-based inventory management program for Etsy sellers, helping both the sellers and Etsy itself grow their businesses.

Similarly, Automattic’s WordPress.com platform provides a place and a technology for companies that want to publish internet content. WordPress.com (only a portion of the WordPress system) provides the foundation for 76 million blogs. Much of this is specifically ‘business activity’; all of it is information being shared between people. Thus, the platform is hugely generative.

When a company’s business model revolves around creating opportunities between and among different sets of stakeholders, the company has to maintain and enhance this generativity in order for it to be profitable and grow.

It makes sense that the values and skills put into action to build the platform’s generativity will also influence these companies to use generative practices in other parts of their organization too.

The Task of Creating Digital Products Encourages Sharing

Digital businesses depend on the continuous development of better and better software. Whether they’re companies like Atlasssian or MongoDb that develop software as their actual product, or like ModCloth or AirBnB that run their services on specialized software that they develop largely in house, making software is large part of what they do.

Features of software itself, as well as features of how software projects are managed, make it easier for software makers to learn how to be generative.

Code is easy to share because it’s modular and costs nothing to duplicate or give away. Software programs are complex, but they can be broken down into discrete pieces that have their own integrity. These modular chunks of code contain directions for a complete routine, program or section of activity. These chunks can be easily shared because they are coherent and have integrity.

Code chunks are easy to share, and not just because it costs nothing to make unlimited copies of code. Computer code is what’s known as a ‘non antagonistic resource’. This means that my company can give code to you while still using and enjoying that same code ourselves.

Code can also be shared easily because it exists in a shared language community. Code written in Javascript or Python can be easily plugged into programs written in Javascript or Python at some other company. Code written in the same coding language reflect the same programming paradigm, and share the same understanding of how computer tasks should be broken down, directed, prioritized, and coordinated.

Much of the coordination you’d need between one company’s software and another company’s software is already accomplished by the larger language community. The community maintains norms, standards and even quality control processes than ensure the consistency that makes coordination easier.

Software programs are too big and too complex to build without some kind of outside help. You can’t build it alone or from scratch– you have to borrow code from other projects, other companies and other people. Every software project builds on code that’s been created before by others, and every project can potentially benefit from advances made by others in real time.

As a kind of work that digital companies must do, software development is particularly amenable to practices of sharing, borrowing, collaborating, and coordinating, all of which are key practices for being generative.

Professional Cultures of Open Source and Agile Teach Generative Practices

The professional cultures of software engineers and digital product managers, such as Open Source Culture and the Agile Movement, reinforce generative values and behaviors.

Open Source Culture. Nearly every software engineer has some experience with ‘open source’ code, the open source model of collaborating, and the organizing principles behind the “open source way”. (An overview of the open source movement and model would be too much for this post, but an introduction to the open source approach should suffice.)

The open source way is an attitude towards work that expresses “a willingness to share, collaborating with others in ways that are transparent (so that others can watch and join too), embracing failure as a means of improving, and expecting—even encouraging—everyone else to do the same.”

This open source heritage has influenced the work culture norms of many digital business people. It’s shaped employees’ and founders’ ideas about how work should be organized, how people should interact with each other, and even how separate businesses should participate in a larger sharing community.

The cultural influence of software development as a profession gets more specific when we consider the kinds of management practices that have evolved to address the chronically complex process of creating software, such as the Agile Movement. The Agile Movement is a software development methodology that supports the generative values and practices in many digital tech startups.

Specific coordinating systems, work methods and practices vary across different applications of Agile methodology, but all applications include norms that encourage working across different boundaries, prioritizing frequent, collaborative communication between everyone involved in making and using the software product, and emphasizing the interdependence of stakeholders.

When a company like Spotify uses Agile systems to build its products, it’s not surprising to learn that it also turns to Agile models for organizing its entire organization, from human resources to marketing.

Startup Communities And Clans Encourage Generativity

Digital startups tend to cluster together. They create and join physical and virtual startup communities, by joining accelerator programs, renting desks in a coworking space dedicated to startups, or they congregate at industry and professional conferences and meet ups. Within these communities, they share ideas and best practices, learning how to take turns drafting behind each other as one startup or another takes the lead in some area.

Digital firms often also share investors, and these investors can encourage employees of their portfolio companies to share ideas with each other. For example, Twitter, Meetup, Tumblr, and Kickstarter are all investments of Union Square Ventures (USV). The partners of USV bring the ceos and managers of their portfolio companies together to share ideas and practices.

Of course, it’s good for USV if their portfolio companies learn faster, but it is also good for each individual company to have a peer group it can turn to for ideas. It’s not just the companies themselves, but also their investors and industry press, who celebrate idea sharing and role modeling.

Young tech firms interact in formal and informal communities where sharing and helping are necessary, regularly practiced, and publicly celebrated.

What about Analog Organizations?

In digital tech firms, features of their work, their professional background, and their context teach them that sharing, borrowing, help seeking and help giving are all normal, desirable, easy practices…. Not just for the specific work of technology development, but also for other practices too.

While these features make it easier for smaller, digitally-inflected businesses to be generous, nothing prohibits non-digital businesses (like yours?) from becoming generative.

Some analog businesses already use generative practices, although not enough of these companies are explicit and deliberate about their desire to create opportunities for others as part of their own growth strategy. That’s why we need to:

Become more aware of generativity as an alternative way to orient our business,
Learn some generative practices to see for ourselves how generativity works,
Surround ourselves with examples of generative businesses and business leaders to serve as role models, and
Envision a world where generativity is normal and valuable.