HawaiiWritten by Dennis Hollier On 04 April 2011

I’ve written here before about a kind of company I call the “little vertical”, small companies that, despite their size, dominate their respective industries by offering such a broad suite of services that, practically speaking, they control all the vital points of entry. I like to use the example of ESRI.

This modest Silicon Valley company produces the world’s dominant GIS, or geographic information system, software. In addition to supplying the software, ESRI trains and certifies the technicians that use it, establishes and maintains the technical standards employed by both private industry and government agencies, and helps organize and distribute the vast reams of data created by their systems. There’s not much room for a competitor in that picture.

Maybe the most interesting thing about little verticals, though, is the degree to which their dominance is self-organizing. In Hawaii, for example, there are ESRI user groups on each island, and ESRI is integrated into the Hawaii Geographic Information Coordinating Council, the quasi-official body that attempts to standardize the digital mapping strategies of Federal, State, County and private organizations. ESRI is even a major sponsor of GIS Day, which introduces school children to GIS and (not incidentally) ESRI programs like ArcView and ArcWeb. This kind of grassroots activity institutionalizes ESRI as the software provider of choice for geographic information systems. More to the point, it works from the ground up; ESRI customers do most of the organizing.

This principle of self-organization applies to most little verticals, but it’s particularly prevalent among dominant nonprofit organizations like trade associations and professional groups. In a sense, it’s always been so. A good example is PADI, the Professional Association of Diving Instructors. Of course, PADI does all the things you expect from a trade association: It promotes the industry; it represents the industry in its relations with government and regulators; and it’s a venue for the dive industry to get together and network.

But PADI, like all little verticals, also assiduously controls the industry’s points of entry. In order to rent tanks or to join a dive tour anywhere in the world, you need PADI certification. All diving instructors are PADI trained and certified. PADI sets the standards for appropriate gear and best practices. PADI even offers specialized insurance for its members. More to the point, all of this is self-organizing – almost all of PADI’s services, training and regulation are provided by its members, not employees.

This principle of self-organization is symptomatic of large international bodies. For example, the naming of the world’s animals, from bacteria to blue whales, is controlled by the International Commission on Zoological Nomenclature. This vast enterprise, like life itself, is divided into taxa, each with its own committees, rules and structures. No government or regulatory agency guides its activities. The work of the Commission proceeds directly from its members. So it is with most of science, from the naming and categorization of stars, to the calibration and standardization of weights and measures.

Some of the best examples of self-organizing little verticals are in the software industry. Not only private companies, like ESRI, but the specialized organizations without which the Digital Age simple couldn’t exist. What would the Internet be without the self-organizing structure provided by the World Wide Web Consortium, or W3C? This organization, with a tiny staff and thousands of members around the globe, establishes the protocols and standards behind Web architecture, HTML coding, and the integration of different types of devices into the Web. The Internet wouldn’t work without the order created by its various committees and working groups.

It’s the same with countless other bodies that orchestrate the development of software and networks. An international network of Java Community Process member organizations presides over the evolution of the ubiquitous Java Platform. Similarly, an elaborate association of Linux User Groups handles the distribution and proselytizing for the free operating software. In fact, in the digital world, which we like to think of as populated by loner nerds and anarchic hackers, everywhere you look there are committees and commissions. All of them self-organizing.

Is there a message in all this? Maybe. If you want to build an organization that lasts – particularly a dominant one, like a little vertical – you better structure it with the mechanisms for change and growth built-in. Man, after all, is temporary; committees are eternal.

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