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In the course of writing an upcoming post I was reminded of an interaction I had with a senior executive in Bangkok about two years ago. We were on the 64th floor of a skyscraper having dinner- it was an open air restaurant at the very top with terrifyingly low, glass guard rails. Paydirt for an Irwin Allen location scout… You could see all of Bangkok spread beneath and while it was beautiful, it kind of made me queasy.
I remember very little about the meal or the conversation really. But in the course of talking about human behavior in organizations, this one bit of conversation has really stuck with me. He said, “If I go out of my way to get something done for a client and they say ‘thanks’ I don’t simply say ‘you’re welcome’ because that is the same as saying, ‘you are welcome to make my life painful. Go right ahead.’ Instead, I say ‘You would have done the same for me.’ With that one, slight modification we are now in the land of favor-trading and the social contract. I have done them a favor and they owe me in kind. That is powerful” It really struck me and I have found myself using it (or variations of it) in a myriad of interactions.
One of the main points raised in The State of the Mediasphere is that most formats (with the notable exception of TV) will remain viable but in a smaller-than-present-day form. This isn’t too surprising but the stats are interesting:
Theatrical Movies are still profitable but have progressively gotten smaller as other choices have proliferated. Ticket Sales(in the English speaking world) in 1946 totaled 4.3 billion sold whereas in 2007 (with double the population) there were only 1.4 billion tickets sold… The market for theatrical releases have shrunk yet movies are still profitable and drive the home DVD market. 1946 was a peak year since TV came on strong in the 50s and eroded some of the market.
News business will continue its migration to an online operating model: Cole makes an argument that as newspapers move online they will shed the roughly 70% of operating costs that are attributed to printing and distribution (these costs are near-zero in the online world). I think this is a bit of a glossing over of the current state of collapse in the news business but I agree with the ultimate analysis that the news business will survive as a business — if not as a shadow of it’s former size and dominance. Looking at Schibsted as a model newspapers can see some of their future.
Music Business is the big loser. We are moving to a world of singles -- not albums -- which drastically reduces profits. Also, digitization has dramatically affected CD buying. In the ’80s a successful album routinely hit 15 million copies. More recently the top sellers attest to the continued erosion in the market.
Cole makes a great point about Sony’s music division killing their internal effort to develop an iPod-like device (before the iPod was even in the market). As the digitization of content was eroding their business model, old music businesses decided to litigate rather than innovate.
“Television” wins big: Echoing a recent Kevin Kelly piece in the NY Times (Screens are Everywhere) “television will escape the home” and go mobile. Video content will be free of device constraints and shown wherever we happen to be - or based on personal preferences (big new movies will enjoy a first viewing on large screen TV or theater -- second viewing on mobile phone etc.).
How do we make money from digital content? 2005 marked a change in people’s behavior around free content. First, there were the big issues around trust and spyware when getting content from P2P services like Kazaa and Limewire. Suddenly, “stealing” content had serious perceived drawbacks. This intersected with the first time that a simple, convenient platform for music became available; namely iTunes. Apple created a virtuous circle -- connecting an intuitive piece of desktop software (iTunes) with an elegant device (the iPod) and a shopping destination (iTunes store) that all worked together. There is an enormously instructive lesson in this for companies. The music industry reacted to a changing environment by creating litigation and by publicly branding as “criminals” people that they felt should be purchasing their CDs. It appears likely now in retrospect that they misjudged — people weren’t really “stealing” music so much as migrating to a convenient method of getting music online. iTunes and Amazon are both successful (if not much smaller) models. Cole states that he forecasts the disappearance of paid music in the near future. He forecasts an ad supported model - I personally don’t see that coming in the near term.
Subscription burnout: According to Cole the average American spends $260 per month on communication services (The poorest among us still average $180 per month) that did not exist a generation ago (mobile phones, data plans, Internet, Cable TV etc.). The big point here is not how much money this represents but the fact that we are maxing out on what we can charge people in subscription fees. In Cole’s opinion it is still advertising that will drive the revenues from online content. Users are increasingly willing to pay for content but he points to advertising as the key revenue driver. Subscription based services for content is going to continue to be a hard sell (look to the death of Times Select etc.).
What then the future of advertising? With the rise of social networking and communities, advertisting is likely to get more targeted and personal. This has HUGE ramifications over how Sales and Marketing do their jobs, engage their customers on a personal level, and measure their success. Since this mode of “intimate advertising” requires a higher level of consideration -- it also involves a higher transaction cost. The higher transaction cost will require more measurable results… This last point is part of the massive transition companies are making from impersonal mass broadcast models to targeted social group models of interacting with their customers. This transition requires a transformation of most of the fundamental precepts of the corporation; from a legal framework of relationship to a social model of trust and intimacy. More on that in an upcoming post.
Recently Studio Wikitecture won Architecture for Humanity’s Founders Award for their submission; a health facility in Nepal. There were over 500 entrants to the contest. Many of Studio Wikitecture’s contributors (roughly 40) were not architects but each brought specific, local knowledge that benefitted the project.
I want to summarize some of the insights from looking at how Wikitecture works -- and then follow with some great video from the project.
Many businesses are wrestling with the notion of “collaboration” and its possible benefits. Wikitecture reinforces some important points:
Here is a demo of the “Wiki Tree”
Recently I spoke with Francois Gossieaux of Beeline Labs about the role of online communities in the enterprise. Francois has been evangelizing the learning gained from his recent study, The Tribalization of Business (click here for the Slideshare presentation). I am embedding the second in the three part series but you can see all of them here:
The interview is broken into three parts. Francois is a great storyteller, bringing case studies in to support nearly every point. Here are a few insights I took away from our conversation:
Community First: (Note: in the original post I called this “Community for Community’s Sake” and had this to say….)
Most businesses begin planning a community with traditional objectives (lower support costs, drive innovation, increase customer loyalty etc.). On the Social Web this is the equivalent of entering a personal relationship with an ulterior motive (which never works out quite right). Businesses should begin with the question, “how can I satisfy the needs of this community?”– and then follow the community’s lead. Be open to the unexpected.
In my experience this is one of the hardest things for companies to get behind and relegates this kind of “enlightened” community effort to either top-level leadership or skunk works development. Middle management is typically the most reluctant to deviate from standard practice and place a bet on community for the community’s sake.
After a bit of reflection I think this summary is insufficient. I didn’t ask Francois to clarify the “community first” position – leaving the viewer with an impression that community building should be an abstract leap-of-faith. I don’t think this is the case. Business leaders have every right to ask how allocating a significant amount of time, resources and funds are going to deliver value. The Tribalization of Business study is an attempt to answer that very question. Community first is an approach that allows businesses to nurture a successful community by thinking about what motivates community behavior and user contribution (after all, if you can’t get that, all your business objectives go out the window too). So the thrust of my revision (not sure if Francois agrees) is that business objectives are important and should be part of the planning process and should be measured – yet if you aren’t dead clear about what value you are delivering to the community first you are going to have problems.
Communities require a social framework to thrive – most companies have a mindset that reflects the legal, contractual and hierarchical underpinnings of their business and carry these behaviors with them into the community. This informs their planning, measurement and how they encourage contribution. These incentives and disincentives have little sway on the Social Web where the mindset is social and trust, reputation and relationship are big drivers of contribution. As Francois says, “The most successful communities occur when you tap into that social framework”
Consider stories as a success metric: While there is a fair amount in this interview about measurement – this was my favorite: A great anectdote about how one company views the stories that emerge from their community as a key metric of success. Great stories are inherently viral and can have a profound impact on decision making in an organization.
Think Bigger: Most large companies are satisfied to have small communities; essentially replicating a focus group model. Doing so misses the potential of the online community to transform your business. Consider how Intuit is now embedding live community directly into their application – allowing users to seek help and get questions answered directly.
Transformative communities blur the lines between company and customer and portend a future where retail ecommerce sites go well beyond ratings and reviews and provide problem solving, shopping mentors, product development and other services directly from the community. Where internet sites are co-evolved (from interface to feature-sets to codebase) in cooperation with community, where complex applications (desktop and cloud-based) meld standard functions with community functions. Communities are certainly helpful in providing feedback on customer behavior but that is just one small part of the story.
Implicit in any proclamation that technology will solve big problems (in the world or in our businesses) is that first a human being, or group of us, will conceive, organize, develop and then use technology to solve that big problem. When technologists and alpha-geeks leave this piece out we are leaving out what is so hard about solving problems. Human factors of visionary leadership and innovation are ground zero for solving big problems. So is a richer, more complex way of seeing the world. Missing this piece accounts for why Web 2.0 often fails inside the enterprise and why the highways aren’t filled with electric cars.
As Web meets World connecting the promise of technology to the innovative capacity of human beings is the transformative act of our times. Unlocking that creativity from current constraint-based, status quo thinking in business and politics is the challenge of the 21st century.
Jan Carlzon called these “Moments of Truth”, the moment when customer and company touch. Carlzon thought Moments of Truth consisted of ANY touchpoint – whether with a person or with a system or process (like calling an automated voice system). The Social Web puts Carlzon’s concept on steroids because it (1) radically increases the number person-to-person interactions between company and customer and (2) it magnifies the value (good and bad) of these interactions (It only took one sleeping Comcast technician to garner 1.3 million views on YouTube).
That Means Every Moment of Truth is a Marketing Moment of Truth
Currently people speak about this phenomenon through the lens of their own business responsibility:
“Customer service is the new marketing…” right! (Look no further than Zappos)
“Product development is the new marketing…” right! (Look no further than Google)
In fact even your legal department is the new marketing if you aren’t careful… Stop us before we sue again! (Look no further than the Associated Press).
Connect the dots and you reach the conclusion that marketing is now a horizontal discipline – it cuts across nearly every business unit in the company.
I am not saying that we won’t have a CMO anymore, or people who are marketing experts – I am saying that, like it or not, marketing has become everyone’s responsibility. “The technique of promoting, selling, and distributing a product or service” engages everyone in your organization because nearly everyone has moments of truth (if they don’t now, they will soon – trust me). Those that factor customers into each business unit (with care) and see it as a marketing moment of truth; will be unstoppable companies.
If you aren’t allowing your business to benefit from customer input and charging everyone that does has some marketing chops (in the best – moment of truth – sense of the word)… I have a news flash; the train has left the station. Drop your suitcase and run. You might still make it ☺
While in NYC I interviewed Jashca Franklin-Hodge, CTO and Cofounder of Blue State Digital. This is a three part series that explores how technology affects our political process.
Blue State Digital was born out of Jascha’s experience helping Howard Dean’s seminal run for the White House in ’04. and is the technology and strategic services company powering Barack Obama (and many other Democratic leaders and social justice causes like Save Darfur and We Can Solve It).
Here is part three of the series…
Here are the key observations I took away from the discussion:
Online U.S. political communities will morph from a campaign fundraising role to a governing role. Regardless of whether Obama or McCain wins in November, every 2012 political campaign, even the laggards, will be as sophisticated as Obama is today- and any campaign with that much momentum won’t be able to stop community participation at the White House door or the Capitol steps (“thanks for all the money and support, I‘ll see you in four years”). Online communities will follow politicians into their governing roles. This summer when MyBarackObama experienced the FISA revolt within his own community this became clear. This has far more transformative potential than the fundraising juggernaut we are seeing now. Powerful communities may come to dominate the agenda of incumbent politicians providing feedback, direction and policy input. There is a whole book to be written on this topic alone. It also factors in for businesses currently running one-issue communities – Are you prepared to follow your community as it moves deeper into your organization?
Microcampaigns and Swarm Politics: Rather than one centrally governed behemoth, MyBO is enabling a thousand small campaigns to flourish. MyBO puts the tools into the hands of anyone that wants to get active; from having your own blog, downloading voter lists to make calls with “Neighbor to Neighbor” or having your own fundraising dashboard to mark your progress. This kind of swarm politics has generated enormous amounts of energy (and money) from ordinary citizens. Jascha sums it up best “We are helping them run thousands and thousands of little local campaigns that roll up to a central set of issues or candidate or goal” That is unbelievably powerful.
Technology (infrastructure and know-how) will become a necessary core competence in all U.S. political campaigns. Jascha points out that campaigns traditionally mirror movie productions, with all of the resources, technology and logistics brought together for a short burst of activity and then disappearing once the final scene is shot; this results in an enormous loss of knowledge and skills that need to be relearned once the next campaign begins. Campaigns that maintain or are able to tap into a continuity of software, infrastructure and human capital will have serious advantage. Blue State Digital was conceived to fill that gap on the Democratic side of the aisle…
Open Data and transparent government. Part Three of the video series digs into the value of open data in government to allow citizens to hack and remix at will. When lobbyist data, earmark data etc. is available in standard formats it will be a great leap forward for more transparency in government. Great stuff.
When talking about bringing social technologies into business I think it is helpful to address both the “bottom up” and and the “top down” ways that it occurs.
I think of it in terms of Pirates (with a nod to Matt Mason) and Poohbahs (with a nod to Gilbert and Sullivan).
Pirates push change at the margins - Often the ones making the changes inside the organization are the Pirates – agitators for a new order. People who operate at the margins, across borders, challenge business norms, and bring new ideas into being. Pirates can come from every business unit: IT, Marketing, R&D, HR etc. Pirates can sometimes even be in leadership (Poohbah) positions (Scott Cook of Intuit, Shari Ballard of Best Buy, Bob Lutz at GM). Pirates push change at the margins. However at some point leadership needs to get engaged to move from margin to core business. From small payoffs to big payoffs.
Poohbahs push change from the core. Poohbahs set the vision and goals to be met . They exemplify the cultural traits they want to see in the organization. Poohbahs can create safe haven for their pirates (a.k.a. sponsorship and championing a cause). Most importantly Poohbahs can help drive education around new ways of doing business – the what, why and how of social technologies. After all, a company that speaks the same language and shares the same vision is unbeatable
False Logic of the Holy Pilot: Since social technologies are essentially bottom-up and built upon the participation of the lowest common denominator of an organization; customers or employees, the argument goes that the rollout of these technologies should be bottom up and organic; “Let the employees (or customers) play with the tools and you will have a wildfire on your hands….” I say think small and you stay small.
Pilots are sometimes a good start. Often it is a necessary start before making the case to the Poohbahs. But it is not a roadmap to transforming your business – often I have seen it become an excuse to underfund an initiative. If you want to harness the power of social technologies to transform business get ready to tackle the harder stuff – leadership, change and culture. This requires both Pirates and Poohbahs.
If you look at what is happening at Best Buy, Intuit, Proctor and Gamble (very different industries), the Poohbahs are driving these changes – creating a safe haven (indeed a culture!) where pirates can thrive.
Pirates and Poohbahs Unite!!
Divergent thinking describes a mindset where anything is possible, new ideas are welcome from all quarters, where issues and opportunities are freely discussed. It is the realm of strategy and planning.
Convergent thinking is strictly goal oriented, a mindset of managing scope, schedule and budget where strategy is realized. It is the realm of execution, of project management and risk evaluation.
I have watched many conversations in the executive office swing wildly from divergent possibility to convergent peril; from “imagine if we did X’ to “imagine if we lost Y.”
Here is the thing: these two mindsets are necessary for a healthy, functioning business but they do not coexist well in the same conversation. When creating new possibilities for your organization you need divergent thinking. When executing on a project you need convergent thinking. During any discussion, people in the room will gravitate to the dominant mindset of their formal role; the IT manager who decries the security risk of social networks (convergent) the rogue change agent (did I say Creative Director?) who wants to turn everything upside down (divergent), the CMO who is terrified of losing control of the message (convergent).
If you can consciously move everyone to the mindset appropriate to the moment you will be amazed at how much easier the conversations run. I am explicit. I start out a meeting with the goal and the stated mindset and ground rules. If we are divergent – I explain what I mean by divergent thinking and ask people to hold any discussion of risk, scope, schedule and budget until a set of possibilities has been gathered. Conversely at a certain point it is absolutely necessary to begin the hard discipline of closely subjecting exciting possibilities to critical questions.
And here is the interesting part; when you free people from their formal role in the organization you will be surprised how much enthusiasm they can bring, divergent or convergent, to the task at hand.
On Sept. 18 we hear that all is well at Wachovia:
CEO Bob Steel posts on wachovia.com, reaffirms company is strong, stable, well capitalized, check it out here: http://tinyurl.com/3s7kg7
Then the rollercoaster begins… and you have to feel sorry for any shareholding Followers of Wachovia.
These near-real time blasts relate another fascinating aspect of Twitter that my friend Steve Nelson at Clear Ink blogged on. While it may prove to have historical reference value (as blogs and other internet content have) Twitter is a real-time news river and this makes it a far more effective tool for searching on current (I mean NOW) events. Here is Steve on that point;
On Sunday, Speaker Nancy Pelosi announced that an economic stabilization bill had been written and was available at financialservices.house.gov. I tried going there for about 10 minutes, but the servers were swamped.
So I went to Twitter search, and merely searched for “bill”. The immediate results included several comments about the bill, and at least two links to download it from non-swamped servers. This tells me a couple things: I trusted in the critical mass of contributions to Twitter that I would find what I wanted – and sure enough, it was there. It also shows the power of searching the immediate NOW.
A Google search for “bill” includes a 5-hour old news link, imdb’s of movies like “Bill” and “Kill Bill” and wikipedia entries on Bill Gates and Bill Clinton. But for the moment I was searching for “bill” on Twitter, there was only one “bill” that mattered most.
This is how Twitter brings together the massive amounts of information being fed it NOW with what I am searching for NOW. This is just one way Twitter works, if you know how to use it
I am a digital strategist focused on how technology opens new possibilities for social transformation and innovation within business. I am a Partner and Director of Digital, EMEA for Fleishman Hillard. I blog here, on O’Reilly Radar, and am a contributor for Forbes.com.
