Winning by Sharing

The value of social networks

A friend of mine told me in 2006 that an executive he knows at an oil company was willing to pay 20p-50p for instant (over 24 hours) opinions from a demographically suitable population of people.  This is several orders of magnitude greater than the advertising model (with the exception of the usual suspects with billions of page impressions every month).  I've argued for many years that the source of value in social networks is behavioural/opinion data, particularly those arising from digital conversations. Selectricity (Voting machinery for the masses) appears to be a robust tool for implementing it.  SwarmTeams - has similar utility.

Key to creating a movement at scale is figuring out the model of trust (the exchange of value) and the feedback mechanisms back to the community.  Feedback is crucial because prizes and other material incentives won't work (You want me to pay? I want you to pay attention).  They are obviously entirely inappropriate for cause related communities.

The biggest challenge brands face in their attempts to create customer communities and engage/interact with social networks is actually changing some aspect of their product, service or policies as result of the feedback they receive.  They also must communicate and attribute the benefits of that change back to the community.

To do this well they must start from the inside.  That is, create, learn, and experiment with social software. The first step is to discard the company Intranet, a largely one way broadcast medium, and replace it with systems that enable conversations, connectivity and peer-to-peer sharing.  This is probably stating the obvious but to participate in a network, a company must itself be network centric.  Unfortunately this means taking a conscious decision to dismantle hierarchical organisation.  Democratising decision making (crowd sourcing), creating openness and transparency is a big step for large organisations in particular.  For most of them, this is still a step too far.

Some more commentary here in an interview with MyCustomer.com.

Markets are conversations

The desire to communicate in groups is fundamental to human nature.  The development of co-operative communities was a critical contributor to the survival and evolution of civilisation.  This desire to relate to other people continues to drive society today, and it is natural that this is now reflected in the online environment.   

People are speaking to each other in a powerful new way.  ‘Smart mobs’ of activists with mobile phones are coordinating and orchestrating sophisticated demonstrations ‘on the fly’. Pressure groups with millions of registered members are being formed overnight, and the business models of entire industries are being disrupted by the spectre of peer-to-peer networks, some of which are mounting serious competitive challenges to the present incumbents.  Blogs and Podcasts have established themselves in the mainstream news gathering industry where they "democratize the creation and flow of news in a world where giant companies control so much of what most people see, hear and read". 
   
Markets have become conversations.  New social forms have emerged from providers of community services.  These services enable conversations between parties that are previously unknown to each other to the extent where over 50 million people are able to interact in a single online space, generating billions of web site page impressions every month.  Social software and the communities it hosts has indisputably become an industry in its own right.  A Social web is being spun - one that can no longer be ignored by any brand. 

Moreover, the online community phenomenon signals the end of the broadcast paradigm as an effective marketing strategy, as consumers spend more and more of their time interacting with each other. While brands still broadcast (or preach), consumers connect.   

Never before has a company had the opportunity to harness the collective knowledge and energy of its stakeholders to achieve such spectacular revenue, marketing and PR success, for comparatively speaking, so little effort.  Many are already doing so, and some have been successful at it for several years.

Ghandi was on the Cluetrain

My good friend John Caswell at Group Partners found this quote from Mahatma Gandhi;

"A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider to our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to do so."

Is it possible that Gandhi understood the principles of The Cluetrain Manifesto over 50 years  ago?  Here are some choice samples from the 95 theses.

• To speak with a human voice, companies must share the concerns of their communities.
• But first, they must belong to a community.
• Companies must ask themselves where their corporate cultures end.
• If their cultures end before the community begins, they will have no market.
• Human communities are based on discourse—on human speech about human concerns.
• The community of discourse is the market.

Football seeks new revenue streams

With David Beckham announcing his departure from Real Madrid to join LA Galaxy with a promise to take football to new heights, and Tottenham Hotspur's hiring of Keith Mills who brought the 2012 Olympics to London, the expansion of the fan bases of top Premiership Clubs is set to go global. 

After talking to several London digital agencies, several brands and a couple of newspapers, The Comedy Hub was unable to convince anyone to take its concept any further.

Concept – The Comedy Hub & Pod The Premiership

• Create a platform that enables the user generation of sketches, fan songs, and football related humour
• Platform functionality designed to create any number of other comedy themes (future).
• Users submit in text and/or audio format
• A blend of studio and live audience recordings are professionally acted, directed and produced as RSS compliant podcasts
• The platform enables rating of content.  This increases the probability of consumption and file sharing behaviours – the wisdom of crowds.
• Platform editors select most popular/relevant submissions to professional produce official weekly Podcasts (2 per week)
• Brand/sponsor advertising inserts are placed at start/end of each Podcast

User Acquisition

• A media partner leverages its audience (readers or viewers) to participate in The Comedy Hub’s Pod The Premiership initiative through competitions and other promotional activities
• Media partner receives rights to distribute free content through all its media channels
• Media partner attracts new audience demographic worldwide

Distribution

• iTunes
• Media partner(s)
• Web - partners, reciprocal linking, RSS
• Mobile networks
• Fan sites & premiership club

Business Model

• Assume potential worldwide fan base of 100m-150m people, and growing
• One or more brands pay for platform development and operation in return for ad placement within Podcasts
• Two 5-7 minute Podcast shows are distributed every week over the 9 month Premiership season
• The Comedy Hub can likely achieve 10% penetration or 10m Podcast listeners by the end of the premiership season.  This translates into 20m opportunities per week to transmit brand’s message/ad

From a standing start in early May, zero spend on marketing, and near-zero on production. The Comedy Hub World Cup Podcast has;

• Produced 12 episodes - around 1.5 hours of audio – intra world cup
• Reached number 1 on ITunes under "world cup comedy" - ahead of Adidas, The Mirror, The Times (Not Baddiel & Skinner) and Telegraph. 
• It featured in the first 4 podcasts under "world cup" along side The Beautiful Game, Baddiel & Skinner, Sky Sports 
• In week 4 we broke through the 100 barrier and we are now listed at number 85 across ALL iTunes podcasts

I wonder what LA Galaxy would do with this concept given that it would only take a fraction of their spend on Beckham to make this reality?

Big brands open up?

Maybe.  It's too early to tell.  FordBoldMoves video records its management meetings and publishes them on the web, iniviting the public to comment on the discussions and decisions on a wide variety of business challenges.  Ford proclaims: With the future at stake, how does Ford balance risk with reward? By daring to be different, with an eye on the past and an ear to the present: It's the latest "people mover".

Some of the big oil companies have opened up in a similar way.  A few years ago Shell published accusations of murder on its own web site to engage local communities and continues to operate its Tell Shell programme.

It's early days but brands are beginning to understand the Big Picture, slowly moving from fortress like postures to adopting community and dialogue.  As Jean Francois Noubel says "the future of companies depends less on the nature of its issues, than its capacity to invent social structures able to solve them". It's in this area that social software will really make a difference by changing the behaviour of an entire organisation.

Remind you of anything?

Had a conversation recently with a large UK company that told me a story about its response to the earthquake in Pakistan.  Apparently, the rapid movement and installation of huge equipment, the mobilisation of people and expertise to the region and the life threatening timescales available to execute meant they had to do two things.  First, appoint a leader and trust him/her to get the job the done, and secondly, to waive all formal project governance requirements.   They say that the effort and budget expended was equal to a traditionally governed project that normally takes 18 months to complete.  They completed in 3 months.  Is it time for PMOs (Programme Management Offices) to get a reality check?

This reminds me of Steven Johnson's snippet form an article he wrote in 2003;

In his classic novel Cat's Cradle, Kurt Vonnegut explains how the world is divided into two types of social organizations: the karass and the granfalloon. A karass is a spontaneously forming group, joined by unpredictable links, that actually gets stuff done— as Vonnegut describes it, "a team that do[es] God's Will without ever discovering what they are doing." A granfalloon, on the other hand, is a "false karass," a bureaucratic structure that looks like a team but is "meaningless in terms of the ways God gets things done."

No doubt you've experienced these two types of networks in your own life, many times over. The karass is that group of friends from college who have helped one another's careers in a hundred subtle ways over the years; the granfalloon is the marketing department at your firm, where everyone has a meticulously defined place on the org chart but nothing ever gets done. When you find yourself in a karass, it's an intuitive, unplanned experience. Getting into a granfalloon, on the other hand, usually involves showing two forms of ID.

Companies still preach, while their people connect.  It's that simple.

All seeing, all knowing?

A recent article in businessweek describes yet another scenario for deriving value from Social Network Analysis.  "Management consultants and academics, along with technological advances, are also driving the trend. Accenture Ltd. (ACN ) and Katzenbach Partners LLP have begun analyzing the informal connections in their clients' organizations during the past year. Boston Consulting Group, meanwhile, is using the approach to map ideas:"  Full article; The office map that really counts

SNA is being increasingly used in the US for a wide variety of purposes.  Valdis Krebs was one of the first on the scene with InFlow and Verna Allee has been taking SNA to another level to measure intangible value in large companies.  What she terms  Enterprise Value Networks.  In the UK, Onalytica is working with a number of companies who use their service for organisational development and in some cases on target companies, prior to acquisition.
 
The problem with this approach is that networks are in a constant state of flux.  Onalytica's service maps social network for its clients once a year!  Why not roll out social software, and create community?  It’s almost as though organisations are prepared to do anything except engage with people.

The last time I asked a senior manager, in a large UK company, if they would consider creating community, the answer was ""What's that?" Folowed by, "What's the ROI?"

Remember Cluetrain?   

#34 To speak with a human voice, companies must share the concerns of their communities.

#35 But first, they must belong to a community.

#36 Companies must ask themselves where their corporate cultures end.

#37 If their cultures end before the community begins, they will have no market.

Decisions, decisions

At long last the brilliant Freddie McMahon launches his blog on how customers will interact with companies in the future.  He describes two complimentary modes of knowledge sharing.  In the first, how subject matter experts, like a nurse administering a hospital procedure for treating a diabetic, can 'transcribe'  that detailed knowledge into software.  This software can turn itself inside out, and provide a dialogue on the web that enables self-treatment or self-diagnosis, based on the expert's procedure.  When the procedure changes in the field, it changes on the web.

In the second, the data that is captured by this interaction is based on the decisions made by the 'end user'.  This type of data is quite different from data generated by some one traversing a web site, through to a 'buy' button.  If it's done at scale,  then it opens up very different possibilities for both consumers and brands.  Read on.

Pick 'n' Mix Business

Inspired by Graeme Burnett

Imagine…

being able to build an entire business by walking into a store and buying the pieces you need, in the same way you would if you were building, in a do-it-yourself fashion, a new kitchen, bathroom or garage.  The common components of these businesses would be functions like open an account, create a bill, process a credit card payment, lookup credit rating and auction this item on eBay.  Like the DIY construction industry,  the implications of  the 'end user' supplying itself are far reaching.

"Successful businesses need to supply computing solutions that can respond very quickly to market changes. Timescales for change will be impossible to meet using traditional code development, testing and deployment techniques. Instead, business functionality will be created dynamically by combining services from different sources and re-branding them to exhibit a company’s identity." Graeme Burnett.

Enter the role of web services.  Web Services are not just sources of information or handy routines, but plug points that are key interfaces and relationships that will enable a business to reconfigure itself.  Think plug and play business not plug and play software.

For two years, Samsonite has been auctioning its distressed inventory on eBay in a completely automated fashion.  Samsonite took four weeks to create a web service that linked its internal product catalogue to web services exposed by eBay's platform. The impact on its balance sheet was immediate and sustained.  Samsonite's web services are now consumed by other online auction sites, providing the company with multiple points of distribution.

In July 2004, Amazon announced the launch of  Amazon Web Services 4.0.  These allow other businesses to embed Amazon's functionality into their web sites.  Amazon's CTO said "If more of the information and processes that businesses (already) have were exposed via web services so developers could integrate them, people would do incredible things".  The most valuable web service on earth will be Amazon's One Click™ technology, white labelled and re-used by millions of other web sites for the sale & purchase of goods.  Every time another business invokes this service, it will pay Amazon a few cents.  Amazon will make more money from One Click™ than it will from the sale of books, videos and DVDs combined.

Distribution is key

But where are these software pick 'n' mix stores?  They are beginning to emerge.  Grand Central, SalCentral and ComponentSource are getting there but do not go far enough.  There is a need for web services intermediaries, intermediaries that can bring together consumers and providers of web services and build a critical mass of participants.  These intermediaries will provide a trusted environment for the publication and subscription, secure delivery, metering and payment of services.  They will enable transactions between parties that are previously unknown to each other. Intermediaries will eventually apply  debt style reputation ratings (e.g Standard & Poor) to these services, effectively shifting the value of an enterprise's web services from a dark corner of the IT department to the corporate balance sheet.  Intermediaries will also enable independent programmers with good ideas to become wealthy individuals.  Eventually web services will take on the characteristics of bonds and will be traded on open markets.  "Companies will finally be able to focus on delivering services relating to their main business, rather than code production. This will allow them to respond quickly to opportunities provided by new niche markets, thereby opening up new revenue streams". Graeme Burnett.

 Child's play

Extending the DIY analogy to Lego blocks, successful businesses will be those that can create the most innovative, attractive, and useful shapes.  Business models can be tested on the fly and new partners can be switched on in hours.  This will have quite profound human resource implications for enterprises.  People with the imagination and curiosity of children will be far more valuable than a Java architect or a .Net developer, and they will spend more of their time in conversation with the market - managing relationships and sourcing services.   In California, some VCs are already adjusting their business models for start up funding requirements measured in six figures rather than  seven or eight figures.

The web services paradigm is for those who belong to upstarts, who don't have anything to lose, and the risk-takers among big companies, who are willing to bet more heavily on the future than they do on the past.

Since this was published...

This article was first conceived in 2004 and inspired by Graeme Burnett's original paper (XML & the Role of Web Services, 1999).  In 2008 at least two ventures have launched that prove the veracity of the predictions here.  Rollbase offers "a growing library of web-based business applications that can be installed into your Rollbase account with a single click."  Coghead lets you easily build your own applications and then lets you share them with anyone, any time, any place.