 Understanding the networked economy is our white paper on the transition of advanced economies into a form of information-based networked model. In the paper we provide insight, analysis, and recommendations to help researchers and organizations better understand and respond to current major structural changes in the economy driven by information technology and globalization. During the past decades we have begun in very significant ways the transition from an industrial economy to an information networked economy. With current developments we are moving in a very concrete way into the information and knowledge age. An idea that has to date been mostly an academic and theoretical concept is rapidly becoming a reality and this transformation is reshaping all areas of society, economy, and technology infrastructure. In an information economy surplus value is no longer derived primarily from the production and consumption of physical goods as it was in the mass society but instead in the production and exchange of information. Thus this process of change takes us from an industrial economy that was characterized by centralized hierarchical and formal organizations optimized for the processing of physical resources and defined by the constraints of those physical limitations to a form of information economy whose primary structures can be identified as open networks that are optimized for processing information and knowledge which are no longer defined so much by physical constraints but are defined instead by the inherent limitations of information and knowledge. An information economy is an advanced form of economic system where technology and economic organization converge in new ways and thus to understand this transformation it is important to understand the change in underlying technology. The two central aspects to information and communications technology are the analytical computational capabilities of the microprocessor and the global connectivity that is enabled by telecommunications networks. These two capacities combine to enable a whole new structure to economic organization networks that are distributed with automated coordination. Telecommunications enables a reduction in transaction cost and a proliferation of channels of communication as information comes to flow in all directions. Instead of information being constrained to flow in a linear fashion it comes to flow in multiplicity of directions. With this pervasive flow of information horizontally peer to peer people become more connected directly to others outside of the boundaries of the traditional vertical organization defined by physical constraints as networks form and strengthen. An economic organization is a set of connections between members but also it has to process information in order to coordinate production and exchange. Thus such peer networks remain relatively incapable as mechanisms for organizing economy and society without some system for information processing and coordination. The microprocessor gives us the capacity to iterate rapidly on simple operations and combine those into complex rules that we call algorithms. These algorithms now enable us to automate the processing of information required for the coordination of complex networks. When we combine telecommunication networks with algorithmic coordination we get distributed networks whose basic operations are automated. This organization may be called a platform. This capacity of information technology enables us to overcome inherent constraints in the centralized hierarchical model. Networks if they are peer to peer can scale to an almost arbitrary size. At the same time exponential increases in computation make it possible to build ever more complex algorithmic systems for automating basic network coordination. This combination means we can decentralize coordination and build ever larger more complex systems of economic organization without hitting the limitations of the centralized model. Since the advent of information technology during the 20th century, our capacity to harness the potential of this new organizational structure has corresponded to the development of more complex systems of economic organization. Prior to the advent of information technology, organizations of the industrial age were limited in scale and capacities. Information flowed in a linear fashion into the center of the organization where it was processed by people and sent back out to be acted on by the mass of members. With a strong chain of command in a fixed hierarchical structure that was required given the limitations. In the later half of the 20th century organizations were partially liberated from these constraints as they became enabled by the first wave of information technology. Organizations started using computers, spreadsheets and telecommunications and this changed organizations enabling corporations to take new forms, finance to develop new instruments and markets and supply chains to become globally distributed. However, it was not until the development of the global broadband internet infrastructure, widespread adoption of powerful smartphones, the new software capabilities of web 2.0 and the development of complex algorithms for coordination in the form of online platforms that we would really start to tap into the new possibilities. This breakthrough has come to be called the platform revolution. As online platforms connecting vast numbers of users quickly move to the top of market capitalization, organizing significant sections of physical economic activity and taking over whole industries as disruption became the new buzzword. Platforms represent a major step in this transformation in that they are primarily composed of a network of millions of people coordinated via automated algorithms, while the centralized hierarchical human component shrinks to a small fraction of this. An information networked economy is one where the underlying technology, the flow of information and economic organizations become one. The next stage in this process of convergence and transformation is enabled by a new set of technologies as we are currently in the process of remaking the technology stack of the Internet, building what is variously called Web 3.0 or the decentralized Web, a primary component of which is the blockchain. This next stage of economic development will decentralize our economies and shift operations to global information based networks like never before. Web 3.0 is essentially a set of protocols through which people can connect to each other within peer to peer networks to conduct transactions directly and securely without the centralized platform as all share one common database. This offers the potential for radical efficiencies in overall productivity in creating one database that all have access to and can trust without depending on centralized authorities for authentication. Likewise, it enables direct peer to peer secure transactions that can be easily monetized, meaning that very small contributions or exchanges of value can now create revenue streams for the individuals creating them. On top of these protocols can be built smart contracts and applications that automate the operations of the network according to rules defined by their members. The distributed Web will enable people to set up their own networks for value creation and exchange independent of traditional centralized organizations. What we will see is that the blockchain is really the tool for moving the economy to become mediated directly through distributed Internet protocols and algorithms. The distributed Web that enables peer to peer secure automated exchanges of value will be a key component in merging Internet networks with economic organization. As the flow of information and economic value becomes closer to being one. This is the foundation of the networked economy. The fact that the means of production are widely dispersed within the population that people are connected horizontally peer to peer and that computerized systems can automate complex coordination within huge networks without large centralized management structures. As this infrastructure to the information economy develops, the default mode for economic activity is shifting from closed organizations competing in the market to open collaboration within networks. This changes the nature of the game and the rules of success as the emphasis shifts from the management of closed organizations to the development of open networks for coordination. A huge shift that is taking place today in the locus of value creation is the move from production from organizations to individuals and networks. In the past, organizational structures defined people's value. They gave things their value, whether this was governments giving money value or one's value ascribed by one's place within the hierarchy of a business. Networks coordinate people in a distributed way via market systems where people's value is defined by their interaction with peers. Value is not given by a formal organization, but instead is created by the individual and to greater extent owned by them being defined by their interaction with peers in the network. As the infrastructure of connectivity and automated platforms develops, it makes it possible to directly connect ever more people and ever more value sources directly into networks on a global level. New forms of value can be quantified and brought into exchange within token based networks, which creates multiple economies. The emerging token economy built on the blockchain enables us to expand market structures to new spheres using tokens to define social capital, natural capital and cultural capital. This greatly expands our understanding of what an economy is and does as it becomes reformulated as a distributed management system for any kind of value. Markets become the model for coordination that is aligned with the underlying structure of the distributed network. Work becomes no longer a single homogeneous thing, but instead a stream of many different value sources automatically aggregated and exchanged via platforms. One earns value from one's attention, from one's data, from one's loyalty to a business and many other sources. Work shifts from being linked to formal organizations as people can now participate in open micro exchanges of value and platforms come to connect people directly into the global economy like never before. The powerful engine of the microprocessor makes it possible to duplicate information at virtually zero marginal cost. When this is coupled with the capacity for telecommunications networks to transfer these copies to billions of people around the planet, this has major implications for economic organization. Duplication means that resources can be created once and shared many times at very low cost, greatly strengthening the common exchange and usage of resources. As a cause of this, the balance in the capacity for value production shifts from that of the closed organization competing to collaboration within ecosystems. We saw this with the open source software movement, where for the first time open collaborative networks were able to compete directly with closed organizations in the market. These open source projects tapped into a deep structural change brought about in the information economy, the capacity for mass collaboration on an original generic solution which then can be duplicated, adapted and plugged into many different organizations at low cost. The end result is a model that harnesses the power of abstraction, similar to the technology stack that runs a computer or the internet. The enterprise instead of creating things itself starts to plug into generic services provided by other organizations, bundling them into new services. In this way, they have to collaborate with many other organizations to harness the power of duplication at zero marginal cost. They become networks that aggregate the services created outside of the organization and offered on demand as a service. Creating a much lighter and more agile enterprise. Over time, this paradigm becomes extended to the whole economy as it becomes reconfigured based around a networked service oriented architecture that is designed to harness this new capacity of zero marginal cost duplication. This model radically reduces cost, dematerialized the enterprise and economy increases agility and reduces redundancies as the enterprise has to collaborate within vast networks in order to create synergies and deliver viable solutions. The traditional asset heavy enterprise gradually evolves over time into a plug in place services oriented platform model. The result of this is that there comes to be more value accessible outside of closed organizations than inside of them. The emphasis shifts from ownership within organizations to access to resources in open ecosystems and in these ecosystems, collaboration becomes the key to competitive advantage. Increasingly, the most valuable resources within society are outside of any single organizations boundaries. They are in networks, whether these are global supply networks for physical resources or the internet for information and ideas. Instead of focusing on internal processes, the enterprise comes to focus more on the management of external interactions. The success of the organization moves outside of the organization to the ecosystem instead of creating a limited number of products within the organization. The platform leverages the capacities of the network to create integrated service systems, aggregating small parts and stringing them together into seamless services wrapped around the experience of the end user. As the underlying technology develops and as the software platforms become more sophisticated, these networks morph into ever larger systems of global coordination. Through network effects, they power economic globalization, reaching ever further and ever deeper into the traditional economic structures of the industrial age and nation state. It becomes increasingly recognized that the wealth is in the network. Increasingly, economies come to be seen as platforms for the global economy, as exemplified by the trade-free zones of major urban centers in developing nations such as Shenzhen, Shanghai and Dubai. Once distributed technologies are available at low cost and people can access global platforms for exchange. The model for development switches from planning, centralization and stipulating specific ends to ensuring people have the means of production and access to these exchanges that enable them to coordinate peer-to-peer. In a distributed economy without centralized organization, markets become the core platform for enabling the process of evolution as they work to aggregate information, generate responses to the given context and perform selection on those options. But such a system can only operate sustainably to the extent that it aggregates all relevant information and thus incorporates a multiplicity of value systems, as made possible by the move into a token economy. An information economy stands in contrast to the industrial economy in that it is not a mass society, it is a dematerialized economy. This means a shift in the development model from centralization and mass production of physical resources to the development of systems through improvement in their internal design as innovation moves to the forefront of economic development. As smart systems come to commoditize information processing and the Internet of Things comes to connect up information systems to our industrial technology base, the knowledge economy emerges and economic development switches to an integrated process of research, develop, deploy, run and iterate in fast cycles. We create new ideas that are translated into models that become code, that reconfigure protocols and networks, which allow for the more efficient organization of people and processes through automated systems. In a world of innovation coming from everywhere on the planet, when everything can be copied and systems become more open, the half life of creating an organization based upon a value stream of some fixed technology or service is greatly reduced and innovation becomes a requisite for continued survival. As the pace of change increases, those who are not able to innovate get left behind faster and survival through sustained evolution becomes a new metric of success for organizations. In the paper, we go in depth in our analysis of this overarching process of change as it plays out at an extraordinary pace, transforming our existing systems of organization into the more complex form of the networked economy built on web 3.0 technology. You can view the full paper by clicking the link below.