About iPhone, corporate social networks and import substitution
I remember a conversation with my old friend Pavel Eiges when he was director of the Russian representative office of McAfee. I shared with Pavel the ideas of creating our company , that we would be engaged in socializing the business, promoting corporate social networks, and Pavel was trying to understand what would make people move and change their habits from old methods of work to new ones. And as always, the conversation of the two men again went about the iPhone. The fact is that when they were born in 2007, there were not so many fans of Apple products. But their proposal was so simpler, more convenient and more understandable that people switched to them almost painlessly. In scientific terms, the iPhone has created an area of reduced transaction costs.
Let's take a closer look at the theory of transaction costs and how this relates to corporate social networks.
According to institutional economics, transaction costs are interpreted as “the costs of collecting and processing information, the costs of negotiating and deciding, the costs of monitoring and legal defense of contract execution”. For example, resolving the issue of supply disruption, replacing low-quality raw materials, finding a new partner, negotiating cost and concluding a contract, protecting property rights. This is the transaction costs (*).
In economics, the transaction costs theorem reads as follows: “If property rights are clearly specified and transaction costs are zero, then the production structure will remain unchanged regardless of changes in the distribution of property rights if we ignore the income effect.” In everyday human language, the theorem can be formulated as follows: "If we don’t have to agree among ourselves, it doesn’t matter where anyone is."
The interesting part begins when transaction costs are not equal to zero and their size and structure begin to influence the redistribution of rights. Using the physical analogy with friction, we can say that the flows of resources (assets) flow where the viscosity is lower (internal friction). Translated into the entrepreneur’s language, we get the following statement: “If it’s easier to negotiate with me, then they will negotiate with me.” If I am able to reduce my transaction costs in relation to others, then I get advantages that lead to a natural redistribution of rights in my favor. I do not take away the rights of others - they give them away themselves, because it is beneficial. That is, if you create an environment within the organization with lower transaction costs - naturally, resources, assets and people will flock there.
We give an example. In order to actively develop domestic business, our state can:
- form an area of low transaction costs for Russian manufacturers within themselves (simplify procedures and regulations, secure the business);
- reduce the transaction costs of the transition to a new business model (to convince Russian businessmen that the new rules will not constantly change, reduce costs in obtaining targeted loans);
- increase the level of external transaction costs (prohibit the import of imported products, increase obstacles (for example, SES) on the import of imported products).
About what our state does or does not do, I propose to leave it outside the scope of this article and not comment. There are other forums and blogs for this. And we will consider how this is refracted in part of our favorite topic - socialization of business.
Observation number 1. A corporate social network in itself is a system that creates an area with reduced transaction costs. Indeed, the ability to receive and provide feedback without hierarchical obstacles, a convenient search throughout the organization, the ability to ask the community a question, without even knowing who will answer, are activities that make the organization more transparent, and therefore remove internal uncertainty.
According to the theory, assets, including new ideas, flock to the zone of low transaction costs. This is partly why the corporate social network is a convenient platform within the organization for experimentation, innovation, and the generation of ideas.
Observation number 2. Manufacturers of corporate social networks are well aware that it is impossible to force people to work in a corporate social network, because the internal personal consent of the user is necessary. For people to start using the corporate social network, they need to see that it is easier for them to do the same work in the new system. Therefore, manufacturers of corporate social networks ensure that direct users and entire organizations receive a minimum of transaction costs associated with the transition from the old system to the new. For instance:
- virtually nothing is required to deploy a system for an organization ;
- long-term free use is offered;
- the interface is made as simple, convenient and familiar as possible so that a minimum of training is required;
- There is a simple search throughout the organization that no other modern IT system has;
- There is integration with the corporate user authorization system, so that even an extra login / password does not become an obstacle for new users.
For some this is better, for others worse, but the trend is visible.
Observation number 3. A sharp increase in transaction costs of the old system can give an additional impetus to the transition to a new one. For example, when the e-mail system went down, the local computer on which all your work was broken, the e-mail box with the mark “at all” was full, ideas for import substitution were needed. In general, you can use the right moment.
Vladimir Ivanitsa Facebook | LinkedIn
(*) The article uses materials from the cycle “ In Search of IT Efficiency ” by Vladimir Ananyina.
PS. If we talk about communications, then the communication transaction should be associated with the achievement of clarity of meaning when both sides of the communication considered that they understood each other. Thus, the total cost of a communication transaction will be the cost of creating the information block you want to send, plus the cost of a communication transaction, that is, TICs .