[ENT 601 Week 6] Reflections: What Is Lateral Power and Why Is It Running My Business?

This is Part Five in a series of six blog posts reflecting on The Third Industrial Revolution: How Lateral Power is Transforming  Energy, the Economy, and the World, by Jeremy Rifkin (2011) as it relates to the topic of Entrepreneurial Innovation.

As we decentralize our energy and communication structures (or die off as a species first, for which all bets are off), we will move into an era of distributed capitalism where lots of little power plants replace a few big ones owned by literally everyone.  Mass communications once controlled by very few (six large corporations own 90% of mass media outlets currently) finds fewer and fewer viewers and cable subscribers as more people obtain their news from thousands of smaller free sources available on the internet.  For good or ill, anyone “reporting” “news” can call himself The Media.  Rifkin calls this lateral power, where more players participate as equals in a new “collaborative economy” where everyone owns a stake and equally needs others to achieve personal individual goals.

Rifkin notes how lateral power replaces the “adversarial relationship between sellers and buyers” with “a collaborative relationship between suppliers and users.”  Closely guarded corporate secrets get replaced with the open source commons, as Elon Musk continues to demonstrate as he places every new patent into the public domain thus keeping greedy companies from stealing patents for themselves while giving a road map to whoever wishes to follow in his footsteps as he blazes the trail of the Third Industrial Revolution.  Transparency replaces secrecy in every aspect of business because no one’s trying to fool their partners, and “self-interest is subsumed by shared interest.” (115)

Rifkin was writing in 2011 but even seven short years later we’re seeing Wikipedia replace Britannica, Open Office replace Microsoft Office, Facebook instead of network news, streaming movies and music which have devastated intellectual property models and the music industry middlemen, and will soon eliminate cable television.  I created Abundance to support this revolution as many of us figured out that changing the way we relate as a society will start with changing the way we relate doing business.  And what we’re all doing is reinventing business using distributed capitalism and lateral power.  Starting a business today is as simple as thinking up a product or service and spending less than $100 per month advertising on Etsy, Facebook, and any of hundreds of sales and social media networking platforms.  Because we won’t have a market soon.  Just a dizzying series of networks (like we already have).  Teaching people how to navigate networks has become a valued skill in the modern economy.

Businesses like Facebook and Etsy even Google were in their infancy when Rifkin was writing this book.  Twitter, LinkedIn, and hundreds of household names in social networking had barely even started up.  Microsoft was king and getting sued successfully for stifling innovation.  Microsoft figured out how to stay relevant by partnering with huge centralized computer distributors like HP and Dell to place their operating system in every new computer not named Apple.  But lots of open source software has made a huge dent in their ability to corner even more market share and they are one crappy operating system from seeing Linux or several open source players we don’t know yet challenging their supremacy.  I mean, why was the Windows 10 upgrade free?

None of this matters in Rifkin’s opinion.  Eventually business will fall in line with the Third Industrial Revolution because it will have no choice.  Entropy is already falling victim to inertia as lateral power takes hold.   The democratization of communications has moved ahead of green energy, but it’s only a matter of time (or we just won’t survive as a species).  Because once the Third Industrial Revolution takes hold completely, you would be quite unfashionable pulling up to a party at a self powered green home in your polluting gas powered car.  And you will have a heck of a time finding a gas station.

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