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 / Winter 2012 / Issue 69(originally published by Booz & Company)


Best Business Books 2012: Innovation

But, as the author explains it, cloud computing is only a small part of the story, and the full scope and impact of the cloud are still emerging. Koulopoulos explains how this network is expanding so quickly that soon it will provide any resource — not just computing, but content, partners, components, labor, data from 5 billion mobile devices, and so on — as responsively and efficiently as the power grid provides electricity at the flip of a switch.

Metcalfe’s Law tells us that the power of a network scales exponentially with the number of nodes. Today, the number of nodes in the cloud is approaching the number of connections in the human brain. What does this giant global brain mean for our future? Koulopoulos believes that the cloud will restructure information and society and will connect people and resources in entirely new ways. Indeed, it has already been instrumental in bringing us the Arab Spring, the lean startup, “big data,” and software as a service. And it has even bigger implications — in terms of governance, privacy and trust, cost structures and value chains, consumerism, intellectual property ownership, and the nature of work — that have yet to be fully understood.

One of the most interesting chapters in the book explores the effect of the cloud on commerce. The cloud enables value chains that are ever more intertwined and global. And Koulopoulos echoes Adner’s ecosystem thesis when he writes, “The survival of one company or industry is intimately tied to the survival of others.… Success is based on a level of collaboration and community we are just beginning to appreciate.” Unlike in the last century, for example, when corporations attained competitive advantage from vertically integrated and often proprietary supply chains, competitiveness now depends on speed and agility, and today’s companies can use the cloud to tap into a nearly limitless and flexible supply base. Trading platforms such as the E2open Business Network are emerging to not only supply components on demand, but also anticipate and adjust for global demand on the basis of intelligence derived from the cloud. The cloud is leading a shift from mass production to what Koulopoulos calls “mass innovation,” and it can empower all businesses, large and small, to play an increasingly important role in global commerce.

Cloud Surfing makes it clear that the cloud will transform many industries and create entirely new ones, but its chapter on innovation could have been more fully developed. It focuses primarily on new “cloudsourcing” approaches for finding solutions to problems, but does not explore the broader impacts of the cloud on key frontiers of discovery. For example, academic research has started to expand its focus from biology to big data in treating disease, and from solar energy to the smart grid in addressing our energy problems. The effects of the cloud on the forefront of research and development will shape our future.

Koulopoulos also could have more explicitly discussed how the cloud is enabling business model innovation. For example, he might have highlighted the emergence of a sharing economy that is giving rise to a whole new class of peer-to-peer markets for renting personal vehicles, borrowing personal goods, and accessing services on demand. The cloud is catalyzing numerous paradigm shifts such as this, opening up entrepreneurial opportunities that would be appropriate for a chapter on innovation.

Yet, on second thought, perhaps there is no reason at all to have a distinct chapter on innovation in Cloud Surfing: The entire book is about a new context for innovation that stimulates the imagination of the reader. This is why Cloud Surfing is my choice for the year’s best business book on innovation. Instead of a “how-to” book, it is a “what-if” book that sets out a bold vision for the future and provides the tinder needed to spark innovative ideas. It amplifies the implications of all of the year’s other business books and provides a better understanding of the seismic shifts being driven by today’s rapidly advancing technology.

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