This is one of my favorite times of the year – because the Supernova conference is on. There are few conferences that combine so much big-picture insight, tons of fresh ideas, and real-world problem solving. It was awesome to be invited to speak there again this year (here's a video of my session from last year).

Unfortunately, because my mom is ill, I couldn’t make it (I'm really sorry, Kevin). That sucks massively – because I’ve been looking forward to it all year.

So here’s a short summary of the talk I was going to give instead. To get the most out of it, I suggest reading my guest post at Leading Green on new DNA first.

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21st century capitalism needs a revolution. How does growth happen – from a strategic point of view? The great Joseph Schumpeter argued that growth happens through a process of creative destruction. There’s a simpler word for that: turbulence.

I think there’s a problem with this thesis. In an interconnected world, there are more and more players creating and destroying – as a simple example, the pool of workers in export-oriented industries has tripled, from 300 million to about 900, over the last 20 years. And so, today, turbulence is intensifying.

Creative destruction has two sides – the costs of destruction as well as the benefits of creation. And as creative destruction intensifies, the costs of this great tradeoff are going to sharpen. The price of growth, it seems, is a world that’s always riskier, more uncertain, and more brutal at the margin.

I think that accepting this tradeoff, perhaps, is the single most toxic orthodoxy that holds boardrooms back today. Why? The problem is that value creation isn’t just about productivity gains: it’s also about human welfare.

Consider this. When the last bubble was in internet technology, welfare was minimally affected – jobs were lost. When it shifted to housing and credit, welfare was affected more – houses and saving were lost.

Today, it’s shifting in large part to energy and food. What happens when hypercapitalism causes a food bubble? What happens when the masters of the universe in Greenwich bid up the price of food for India, China, and Africa's huddled masses?

Here’s the answer: marginal starvation. Lives are lost.

That's the very real toll that creative destruction extracts. It's the price that a better food industry tomorrow demands of us today.

If that’s 21st century capitalism – maybe it’s time for a revolution. One where the price of a dynamic economy isn't relentless damage to everything and everyone else.

The invisible hand is crippled. What’s going on here? Wasn’t the invisible hand supposed to raise everyone into prosperity and well-being?

Yes – but it’s not. The world is getting phenomenally richer – but the costs of that wealth seem to be endemic poverty for vast swathes of the world’s population, the poisoning of the water we drink, the pollution of the air we breathe, and the fraying of the social and cultural fabric that binds us together.

We’re richer, but that wealth doesn’t reflect durable, authentic economic value – which is hitting fast diminishing returns. The growth that we’re pursuing is neither sustainable – nor is it, in many ways, real growth at all. Boardrooms from finance to autos to energy to pharma to fashion have learned that the hard way.

Growth is in the DNA. So how do we begin rethinking economic growth? With the understanding that technology alone isn’t enough – and in fact, it’s not the harder part of sustainable growth.

Even if we invent a magic energy or food source tomorrow, it does the world little good if it’s in the hands of a Bill Gates 2.0 – the amount of new value that’s created is minimized. Conversely, it also does us little good if it’s in the hands of a Ford 2.0, who’ll just push-market next-generation gas guzzlers that put us squarely back into an energy trap.

The real problem is that the industrial economy is riddled with incentives to rip your head off, sell you lemons, maximize so-called “profit” at all costs, and exert power against you – not for you. That’s why it seems that pain, suffering, and value destruction are deeply embedded in the very DNA of our rusting, industrial-era economic system itself.

And that means that though technology is necessary, it’s not sufficient. What’s harder – and what truly unlocks new value – is new DNA. The fundamental question new DNA must answer is this: how do we organize and manage resources so they’re not depleted, crushed, strip-mined, and slashed-and-burned?

It is players who can answer that question – players who can renew yesterday’s rusting DNA – who will be able redraw the boundaries of value creation in the 21st century.

Organize something. Why does Google insist that it’s goal is to “organize the world’s information”? Because it’s figured out one of the deepest secrets hidden at the heart of 21st century economics: markets, networks, and communities can organize economic activities radically more efficiently than firms.

How do we begin reorganizing the industrial economy? By using markets, networks, and communities to alter the way resources are managed: to weave a fabric of incentives for sustainable growth and authentic value creation into the economy - a new economic fabric that’s meaningful to people.

Google utilized a market - AdWords - to utterly eviscerate a stale, broken media value chain. Here's a more visceral example. Muhammad Yunus revolutionized finance - not by collecting more money to lend, but by using communities to fundamentally alter the value equation of lending to the poor. The result was industry transformation.

See the similarity? Two vastly different industries - finance and media - were both revolutionized by new DNA. It was new ways to organize and manage that exploded the boundaries of value creation.

The revolution needs revolutionaries. Today’s investors, boardrooms and entrepreneurs are looking for value in all the wrong places. Facebook's game of musical chairs won't solve big economic problems - and neither will making token investments in greentech.

Where is the next industrial revolution crying out for revolutionaries? Simple: in industries dominated by clear, durable, structural barriers to efficiency and productivity.

The next industrial revolution begins here. What happens when we think of using new DNA to reorganize structurally inefficient industries? A blueprint for the next industrial revolution emerges. Here’s what it looks like.

Organize the world's hunger.
Organize the world’s energy.
Organize the world’s thirst.
Organize the world's health.
Organize the world's freedom.
Organize the world's finance.
Organize the world's education.

That's not an exhaustive list - it's just a beginning. In fact, let's open source it: please add to it ("organize the world's xyz"), and we'll keep an index here or elsewhere.

What's important is the logic behind the list. Let's make that as razor-sharp as possible.

Organize: to transform DNA, not lower-value technology. The world's: to have a global impact; to be able to scale to global levels. Hunger, health: some measure of economic well-being: to radically change the world for the better.

If you're a startup, and your elevator pitch isn’t shaped by this blueprint; if you're an investor, and your portfolio isn't full of companies like this; if you’re a corporate boardroom, and you're not refocusing and restructuring to meet these new challenges – here’s the bottom line: the next industrial revolution has your name written all over it.

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Regular readers might have noticed that this talk is also a follow-up to my Open Challenge to Silicon Valley post. Fire away in the comments and let's discuss one or both.

A few weeks ago, we discussed how new principles of management might reshape a fading Detroit for the 21st century. Here's a more pressing question: what principles of management does the green revolution demand that we inject into the rusting DNA of the industrial-era firm? That's the subject of my guest post this week over on Harvardbusiness.org's Leading Green blog.

Over the last few weeks, many of you have said - as many CEOs have said to me over the last couple of years - "Hey: why do you talk about Google so much? Can we have some other examples?"

Now, I've talked about many other players here: Starbucks, Nike, Tata, Wal-Mart, and Ryanair, to name just a few.

But let's put those examples aside for a second. Let me offer you the same logic I give the boardroom.

The problem is this. Google is light-years ahead of, well, almost everyone. Consider how subtly yet totally Google just outflanked Microsoft. If strategy was an evolutionary tree, most businesses would be slugs, and Google would be a mammal.

Or consider what Eric Schmidt said today: that Google has a "moral imperative" to help publishers benefit from advertising. That's a living example of one of the principles we've discussed - good beats evil - being used to make real-world strategic decisions.

How many other CEOs have mentioned the words "moral imperative" recently? Almost none. The results of a search on that phrase related to CEOs, for example, are almost all Eric Schmidt - and I stopped counting after ten pages of results. More tellingly, the inverse search - CEOs who aren't Eric Schmidt talking about a moral imperative - yields almost no meaningful results.

Can you imagine Steve Ballmer, Steve Case, Chuck Prince, Michael Eisner, Rupert Murdoch, or Jeff Immelt talking about a "moral imperative"? It's about as likely as Elvis coming back from the beyond. Why don't they? Because orthodox management and strategy have given them tools and concepts built for an industrial era. Perhaps it's no surprise, then, that the companies they run (or ran) are falling squarely into strategy decay.

And that's how Google ends up in a league of it's own. Schmidt's quote is important because it's a vivid demonstration of Google having the courage to question business as usual - in fact, this time, Schimdt is challenging perhaps the foundational orthodoxy of industrial-era business.

Greed is good, right? Wrong. In fact, good is good: today, it's good that can be deeply strategic, and powerfully profitable.

Think about that for a second.

No - Google doesn't always get it right, it doesn't always do no evil, and doing good isn't the only new principle of management (here's another one). In the coming days, we'll discuss Google's weaknesses. But Google - to resort to an inelegant turn of phrase - gets it.

I discuss Google often because I think it just might be the first real 21st century business: a company with a radically different set of principles wired into it's DNA. Larry, Sergey, and Eric, I think, understand intuitively that the tools and concepts of orthodox strategy and management are failing today's boardroom - and, even better, they're defining a new CEO agenda for it.

Let me get your perspectives. What do you think should shape the the next-generation CEO agenda? What questions, principles, and ideas do you think tomorrow's boardrooms must discuss that today's boardrooms don't? Fire away in the comments.

The most interesting contest of the last few months hasn't unfolded in the corporate world, but in the political one. So how did Barack Obama pull off such a radical upset, anyways?

Over the past few weeks, many of you have pointed out that the Obama campaign is a great example of many of the principles and concepts we’ve been discussing – he’s kind of the Google of politics.

So let's discuss how he clinched the Democratic nomination - from a strategic, not a political, point of view. Put aside your own personal politics for a moment – and I’ll put mine aside, too (or let's at least try to :) .

What’s immediately obvious is that Obama didn’t spend decades building the resources to power a campaign which could defeat Hillary: he was able to do so in a matter of months.

Here’s a parallel. Yesterday, it took Coke decades – and billions invested in advertising – to build the world’s most powerful brand. As we’ve discussed, today, the most powerful brand in the world is Google. And Google built it in less than decade – with almost nothing spent on advertising.

Both outcomes are remarkable - and remarkably similar. Why?

Yesterday, the majority of competition was symmetrical: between players with relatively evenly matched resources and capabilities. Think Ford vs GM, P&G vs Unilever, or K-Mart vs Sears: the long march of the oligopolists.

That’s reflected in industrial era assumptions about competition that are still with us – King Kong sized competitors are who boardrooms should worry about most; pint-sized ones aren’t much of a threat.

Right?

Wrong. Today, its time for boardrooms to consider a troubling proposition. Competition is increasingly asymmetrical: pint-sized revolutionaries are able to pop seemingly out of nowhere and topple yesterday’s giants – fast.

Players playing by radically new rules are rewriting the rules of strategy. And I think the Obama campaign is one of the best examples of the rise of asymmetrical competition.

Yes, startups have always challenged incumbents. So what makes asymmetrical competition different? First, rarely before new and lateral entrants been able to upset incumbents so decisively – to actually put them out of commission. Second, rarely have they been able to dominate entire industries with such speed. Third, almost never before have so many revolutionaries threatened so many incumbents across a broad sweep of industries. Fourth, in asymmetrical contests, yesterday’s sources of advantage become today’s sources of disadvantage.

Let’s discuss just two aspects of asymmetrical competition that challenge orthodox approaches to strategy: how resources are built, and how important DNA is.

Obama’s campaign didn’t have any of the resources Hillary’s did, to begin with – not cash, not experience, not a brand, not relationships, not Bill. Yet, he was able to accumulate these resources at light-speed.

How? By learning to leverage resources at the edges of the firm, instead of at it's core.

Orthodox strategy teaches firms to hoard and hide resources at the core. But consider how precisely and deeply the Obama campaign inverted this lesson:

"...in state after state, the campaign turned over its voter lists — normally a closely guarded crown jewel — to volunteers, who used their own laptops and the unlimited night and weekend minutes of their cell-phone plans to contact every name and populate a political organization from the ground up."

That's a textbook lesson in edge leverage: often, in a hyperconnected world, instead of hoarding a critical resource, more value can be created by sharing it at the edges.

Think about that for a second. How far outside the boundaries of possibility is that logic for most boardrooms? That's the gap between orthodoxy and economic reality.

Or take cash. Where Hillary tapped macro-donations from the establishment, Obama tapped micro-donations from anyone – an effect that was small at first, but grew like a snowball hurtling down the Matterhorn.

Sound familiar? It should – think Wikipedia vs traditional encyclopedias.

Or take marketing. Where Hillary’s strategists focused on the tired, industrial-era strategy of segmenting consumers to divide-and-conquer, Obama focused on crafting a message and a brand that cut across artificial divisions in market space.

Sound familiar? It should – think Google’s deliberate refusal to sell out, by making, for example, Google Kidz, or Google for Evil Marketers.

Or take distribution. Where Hillary focused on building relationships by pushing soundbites to people, Obama focused on letting people pull a richer set of information: his campaign engaged communities both on and off-line, and made a point of making speeches and info available via sites like YouTube, where you could watch them to your heart’s content.

Sound familiar? It should – think of how Myspace is reorganzing music from an industry where “product” is pushed at people, to one where, well, music actually counts again.

Now, I haven't been able to follow the race as closely as I would have liked, because I've been finishing my book (yes, finally :). So I'm sure the above isn't the whole story at all - feel free to add or subtract from these examples.

The larger point is that shifting from core to edge is how the Obama campaign reversed tremendous resource asymmetries. But why wasn’t Hillary able to capitalize on her existing resource advantages?

The difference is in the DNA. Sometimes, at least, it seems the Obama campaign might just be organized and managed according to a different set of principles than orthodox political campaigns.

Consider, for example, Obama’s ongoing refusal to attack Hillary negatively – a clear violation of orthodox political and corporate strategy’s playbook, where bloodsport is the name of the game.

So why won’t he do it? It’s a stark demonstration of a principle we’ve discussed: in an edgy world, what goes around comes around. If Obama attacks Hillary today, the costs of allying with her supporters go up tomorrow.

Who else do we know that applies that principle? Google, of course, who strives to do no evil, as we’ve discussed.

Both Google and Obama have their flaws. Google, for example, doesn't always do no evil. But contrast their DNA with industrial era DNA – where it’s ripping the other guy’s head off that counts.

Where was the latest example? In finance, of course – where the would-be masters of the universe thought, amazingly enough, that they could get away with selling each other lemons…forever. Think of how much better off they would have been if bankers had obeyed edge principles – instead of thinking with their bonuses.

In other words, it’s new DNA that drives asymmetrical competition – when we organize and manage in new ways, we are able to tap new sources of advantage. Because the Obama campaign was organized differently, for example, it was able to overcome, and then actually turn the tables on, massive resource asymmetries, by shifting from core to edge.

So where do we see asymmetrical competition happening in the corporate world? The real question is – where don’t we see it happening. Here’s a short list of asymmetrical competitors: Tata, Embraer, Ryanair, American Apparel, Whole Foods, Cipla – and, of course, players like Google, Apple Craigslist, Wikipedia, and Threadless.

Not all of those players leverage the edge to the massive extent the Obama campaign has. But what they all have in common is that they’re organized and managed very differently than the industrial-era firm: they’ve all got radically different DNA. That brings us, full circle, to another principle: advantage is in the DNA.

That was dense, so let’s discuss. Who else do you think should be on that list? Do you see the strategic logic of asymmetrical competition? Is it at work in your industry? What rules do you think would-be asymmetrical competitors should live by?

Fire away – and let’s try and stick to strategy, because I’m sure we all have very different political preferences.

A couple of weeks ago, I discussed how the endgame of competitive dynamics amongst Facebook, Microsoft, and Google would be openness.

Today, there's a vivid demonstration of exactly these dynamics at work: Facebook is opening up it's platform, at least partially.

That's a surprisingly quick confirmation of our discussion - so let me take a sec to discuss some of your responses.

Some of you felt I shouldn't have written about a rumour. If this was a newspaper, I could see why. Instead, I'm here to help you anticipate strategic change. Sometimes, that will require us to veer into the unknown.

A few of you disagreed with my explanation. The most concise response in this vein was from eCPM, who took the analysis further than most:

“…Hard technological switching costs are only part of the issue. There are also indirect network effects, which I do believe play a bigger part IF one views Facebook as a platform (not just a social network site) for valuable apps.”

Killer response: eCPM points out the distinction between indirect and direct network effects, an important concept in models of platform wars.

Here's how I might model it. The lower switching costs are, the more direct network effects are – when we can switch easily between different platforms, the most “direct” platform wins. In a sense, what makes network effects indirect is steep switching costs. That’s why openness is hard to beat in this case.

Contrast eCPM's economic insight with John Naughton's column in the Observer, which glossed over the post entirely, and simply concluded:

" …Profound, eh? Give me the hysterical ladies of Cranford any day.”

Perhaps I have great expectations. But I think If a business columnist doesn't find being able to predict strategic moves weeks in advance interesting - something's a bit amiss.

What's more amiss is that John's article is also grounded in, well, a stereotype: girls are obsessed by gossip.

That stereotype is at odds with one of the most basic economic insights of the last 20 years. So let me offer John and the Observer's business editors a crash course in economic reality: women are perhaps the most powerful contributors to global output today.

I love the Observer. But what does it say when both regular commenters and independent bloggers have more meaningful - and more economically informed - responses than one of their business columnists? I think the Observer can and should do (much) better.

Thanks to everyone for the discussion - we will be adding to it in the coming weeks.

Last week, I asked: how would you rethink a rusting, obsolete American auto industry?

Let me rephrase that question, to illustrate why I asked it. I was really asking: how would you hack Detroit?

The answers were (seriously) phenomenal: different approaches to hacking Detroit's resources, capabilities, business model, and DNA.

Why is that so important?

Hacking wasn’t just a cultural phenomenon; a bunch of socially awkward dudes with even worse haircuts than investment bankers geeking out in their bedrooms. It was larger: a loose set of anti-management principles that unlocked innovative capacity companies couldn’t – and still can’t – match. Hacking was a radically different - and often hyperefficient - way to find big economic problems, and then solve them.

And that's exactly what we've been discussing: the malaise gripping the venture industry, because it's seemingly unable to find and solve big problems. One of the reasons today’s revolutionaries are failing is because they're losing perhaps the most essential part of their DNA: they’re forgetting what it means to hack stuff.

So what does it mean to hack stuff - from the point of view of management, strategy, and advantage? Here are some of my very limited answers.

The hack must be idealistic. Hackers hack real-world stuff – but only because they’re deeply, profoundly idealistic. The point of phreaking wasn’t to make free phone calls – it was to explore and subvert the economy’s most valuable piece of infrastructure at the time: telecommunications networks. Better yet, who would’ve been naively idealistic enough it could be done with simple, homemade boxes? Only hackers who didn’t have beancounters, board meetings, or bosses telling them they couldn’t. Conversely: if it's not idealistic, it ain't much of a hack.

Everything can be hacked. One of the most enduring aspects of hacking was that it was anti-authoritarian. It wasn’t about software: rather, it was about rejecting an industrial era worldview of narrow, limited possibility – anything could be hacked, and often, with tremendous simplicity.

Consider the legend of the origin of phreaking. John Draper - aka Captain Crunch - discovered that the toy whistle given away inside Cap’n Crunch cereal boxes played at exactly 2600 Hz: the same pitch that telcos used to control their phone lines. The rest is history. It’s a scenario neither Hollywood nor corporate boardrooms could have dreamt up: some of the most advanced technology in the world hacked by…a cheap, plastic toy whistle.

The point of that story – that everything can be hacked – has never been more true than today.

Hacking global poverty? Check. Hacking lame clothes? Check. Hacking Lego? Check. Hacking…catastrophic weather? Check.

Why is everything hackable today? Because in the edgeconomy, the universe of the economically possible has exploded: resources are more and more accessible. And if you can get your hands on it, you can hack it. The point is simple: nothing is impossible when you’re hacking.

Hacking means taking things that suck and making them better. Hacks aren’t always elegant, though they should be. But the logic of hacking is elegant: find things that suck, and make them better.

This is a principle I use in boardrooms all the time. Here’s what happens: I get, ironically enough, huge amounts of jargon thrown at me – what about radical vs incremental innovation, competitive dynamics, value drivers, resource leverage?

Those are important concepts. But they complicate a simpler economic reality: the industrial era left us drowning in a world of bland, dumbed down, sucky “product”. You name it, it mostly sucks: food, cars, clothes, books.

And so the anti-strategic logic of making sucky things better often defeats the best laid plans for world domination of bean-counters. Just ask Steve Jobs.

Hackers play. Hackers don’t spend huge amounts of time learning in a structured way. Yes, textbooks, theories, and models are important – but when they’re called for by stumbling blocks to solving real-world problems.

The bigger the problem you’re focusing on, the more you’ll likely need to play to solve it. Big problems aren’t solved overnight, and they often can’t be solved in a tightly structured way. Hacking goes (way) beyond the limits of structured, rigid thinking.

That’s important – because in a world where you can hack anything, play means that it pays more to start hacking than keep toying with spreadsheets. Who’s the master of this principle? Google, of course. It’s busy hacking the world’s big problems – while competitors are still debating how to “monetize” them.

Hacking industries, markets, and companies is more valuable than hacking technology. Yesterday, hacker principles yielded the greatest gains when applied to technology. Why? Because changing the ways in which we organized and managed people was costly - but bits and microchips were relatively cheap.

Today, it's hugely powerful to apply hacker principles not to bits, but to industries, markets, and companies - because putting resources and activities together is cheap and getting cheaper. If that doesn't make sense, think about Wikipedia: Jimmy Wales and the Wikipedia kru took hacker principles, and applied not to phone lines or programs, but to the publishing industry itself.

The problem is that there’s a massive reversal taking place in today’s economy. While today’s revolutionaries are losing sight of these principles, ironically, its industrial-era corpocracies who are learning to use them to rethink their DNA.

The shift is slow, cautious, and often-times well-hidden. But it’s very real. P&G’s Connect & Develop program is just a kind of massive recursive hack – a hack to put hacker principles into the DNA of a giant, evil corporation. When Starbucks stops talking, and starts listening – it’s just another way to bring hacker principles inside, and drive the lameness orthodox strategy created out.

Conversely, ask yourself the reverse: what is Facebook hacking? Is it making sucky things better, is it subverting authority, is it deeply idealistic? Not really - perhaps because it's too busy playing cheesy domination games. What did Yahoo hack? Nothing – it was too busy trying to protect a rotten, decaying media value chain.

There's a much simpler way to see all this. In a world where everyone's interacting all the time, the economic pressure to hack and get hacked is almost irresistible. Corpocracies are making the shift because they see the writing on the wall - maybe revolutionaries should too.

My list of principles for next-gen hackers is just a starting point. It's by no means exhaustive, and it’s probably not very accurate.

So fire away in the comments and let me hear your thoughts - judging from the comments on the Detroit post, they'll be (way) more insightful than my post.