Detroit: Currently rebooting. Picture by PhotoFusion
Detroit, and the rest of the American economy, is in deep trouble. Drastic changes are taking place because of the skyrocketing price of oil, from GM shuttering plants to the nosediving airlines, but to fix the problems of towns like Detroit, it’s going to take more than an unlikely return to cheap gas prices.
I was so happy to see Obama finally clinch it last night, for so many reasons, but it’s going to take more than changes we can believe in. We need changes we can be involved in and instigate. To fix places like Detroit, faced with uncertain global economic conditions that change by the hour, we need systems that allow for change constantly. We need systems and organizations that can organize and reorganize at a moment’s notice. Companies and cities like Detroit need to become hackable. Ryan Holiday just pointed me in the direction of a great article on hacking industrial economies by Umair Haque over on the HBS site. Haque writes:
“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 wasnâ€™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 couldnâ€™t â€“ and still canâ€™t â€“ 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 todayâ€™s revolutionaries are failing is because they’re losing perhaps the most essential part of their DNA: theyâ€™re forgetting what it means to hack stuff.”
It’s a good read. I think there is also another side to the point above about the venture industry. The VC business and the record industry for that matter, and many other industries besides, are not solving the big problems as well because we have other ways to solve them. We don’t necessarily need an encyclopedia company to make an encyclopedia (See Clay Shirky’s excellent book for more on this). You don’t need a $100,000 video and a fleet of trucks loaded with plastic discs in jewel cases, headed to stores you have to pay to display your plastic discs, to get a great song out there. And you don’t always need a VC firm to scale a good idea. You just need the idea.
Meaning and ideas have long been spoken of as currencies, but it seems to me their value is going through the roof while the value of hard currency is falling. Companies create value by privatizing some idea that starts as social capital – like a form of youth culture which is co-opted to sell sneakers. Sometimes this works out, and the company adds value to the culture as well as making money (see: the surf, skate and snowboard industries). Sometimes it doesn’t, and the culture becomes a bloated corporate parody of itself (see: disco). But now we are finding new ways to create value without traditional companies, and some problems that could previously only be solved with private capital can be addressed with social capital.
Take Zipcar founder Robin Chase’s latest venture, GoLoco.org for example – a great combination of carpooling and social networking. Go Loco hacked Detroit by creating a new layer of social capital on top of the value created by cars. I’m sure business is booming for them given the current price of gas. Of course by ‘business’, I mean the amount of social capital they are creating, but that means the private capital saved can be used in other ways. The money saved on gas can be spent somewhere else. Using social capital to unlock new forms of private capital, which in turn needs to be supportive of new layers of social capital, is a great way to build sustainable economies, and create dynamic systems which could regenerate rusting cities. A rising tide may indeed lift all cars.
Apparently Detroit is already being hacked, for all the wrong reasons. Invincible and Finale made this music video/documentary hybrid rhyme about the impacts of gentrification on the Motor City. This piece includes interviews with community activists discussing displacement and predatory planning versus sustainable development in the D. Thanks to Dart for the heads up.