Winning by Sharing

Trust is the killer app

we_sell_openness_RBS_600 v2
Originally uploaded by ixtlan

A timely extract from Winning by Sharing circa 2004 on the importance of Trust.

Research produced by IBM  concludes; "Individuals in higher-trust societies spend less to protect themselves from being exploited in economic transactions. Trust is an economical substitute for extensive contracts, litigation, and monitoring in transactions and thus economizes on transaction costs."

Organisations (of every size) pay for a lack of trust over and over again and it is the absence of trust that is choking innovation and productivity.  This doesn't mean contracts should not exist between business counter-parties, but the rules and acceptable use policies of networks and the reputation metrics of individual members means they can be lightweight, equitable, and in some cases, redundant.
However crude these reputation metrics are, one team of researchers  states that “reputation systems are performing commercial alchemy (in auctions), where they enable trash to be shuttled across the world and in the process transmuted into personal treasures”.   Breakdown of trust is just about the only thing eBay has to fear, and if it can sustain its largely positive environment of trust, it will likely dominate for many years to come.

William Davies at the Institute for Public Policy Research and recently published another ground breaking paper  that examines the role of the government in the increasingly decentralised social and political activities taking place online.   He states there are three sources of trust: State, Community & Online Community.  Notice the absence of corporations.  He goes on to say that “out of nowhere trust has become the most talked about abstractions of our times” and notes that online communities have an unusual propensity to create environments of trust. 

One of the most comprehensive studies of the open source community was conducted by Yochai Benkler  to understand how Linux, a free operating system, and a slew of other Internet facing software products (e.g. Apache), have come from nowhere to challenge mainstream, paid for products from Microsoft, IBM and others.  Benkler concludes:

“Removing property and contract as the organizing principles of collaboration substantially reduces transaction costs involved in allowing these large clusters of potential contributors to review and select which resources to work on, for which projects, and with which collaborators.”

In 2003, for the first time ever, Microsoft formally stated in its annual report the threat from Linux to its revenues.  It has even started to play this new game by releasing portions of its Windows code ‘open source’ style.  The big question is, does the world trust Microsoft?  If it doesn’t, not even its gigantic fortune can save the company.  Howard Dean, a former US democratic presidential candidate, recently inferred that command and control is all over in the next generation of political activism. "We discovered that the path to power, oddly enough, is to trust others with it."

Trust is the killer app.

A model for self-funding health care

THE BIG PICTURE, HISTORY, CONTEXT

We propose that it is economically viable for the UK's National Health Service (NHS) to become a self-funding entity by selling patient healthcare data to a wide variety of industry actors.  We also propose that an individual’s healthcare data record itself can eventually becoming an earning asset that can be passed on to future generations. 

In 2004, Jeff Kelley, an American Organisational Development expert working with Freddie McMahon, a UK Knowledge Software expert ‘discovered’ a means of capturing patient behaviour and preference data that is of sufficient value  for pharmaceutical companies, insurers and healthcare providers to actually pay for.  

They collaborated with IBM, Google and the UK Work Foundation who contributed to, and verified an economic model that could make any large scale healthcare system self-funding.  The author was involved in early discussions in the context of using social networks as a platform for testing and piloting the model.  Jeff Kelley died and his work was never published.

THE ECONOMICS – ‘HEALTHWEALTH’

What is the data? Think of a patient record as more than a static file or electronic representation of doctors’ notes. Think of it extending to DNA fingerprints, Tesco Clubcard data, medication consumption data (using RFID tagging), exercise data, and most valuably, self-service diagnosis data because it can be gathered in real time.  This data, aggregated at scale, provides answers to questions like;

• How many more type 2 diabetics are there?
• If I know the rate at which people are taking up no-smoking treatment should I really launch this new cigarette brand?
• Exactly how many heart drugs should I buy this year?
• Are we over-prescribing antibiotics in children, and by how much?

In fact the combinations of data are almost infinite, as are the questions.  What this data really does is allow companies to sense demand, predict and change user behaviour, and they will pay more for this than they do for conventional  market data.  Enough for the NHS to eventually become completely self-funding.

Both Microsoft and Google have introduced online services aimed at consumers who want to maintain their healthcare data in exchange for a range of benefits.  Neither of these initiatives has been successful in terms of scale and economics.  Their failure has been largely through lack of trust.

To illustrate the value of consumer data consider this; all the current academic research on large data sets provided by the major social media providers concludes that advertising is not a sustainable revenue model.  The reason why Facebook, Bebo (prior to acquisition) and Twitter are free is because they are VC backed, and even YouTube (owned by Google) has applied for broadcast TV rights in its major markets because online ads aren’t generating enough revenue. 

 Recently both Twitter and Facebook announced the development of what  they call ‘sentiment engines’ signalling a radical shift in their business model.  Sentiment engines are web services for anyone who wants to extract intelligence from the conversational content of huge numbers of consumers – for a fee. Big companies already have huge budgets for customer insight systems (CRM) and ‘social data’ is just another form of this data.  In the next 2 years, between them Facebook and Twitter will hold more valuable (that is, saleable) data about UK citizens than the government itself. 

The UK government would have to pay US software companies run by teenagers to test the impact on people of consuming these items: how many burgers is too many? How many beers? How many late night films? How much violence on a video game? How much cough medicine?

NEW MODELS OF ORGANISATION

Some upside-down thinking is needed to create a model of trust such that 60m citizens’ healthcare (anonymised) data can be monetized in a way where there is a continuous exchange of value for all parties.  The answer lies in organisational form.  

Perversely the clues can be found in financial services.  Visa’s organisational model created a network of 22,000 banks, 1 billion card holders, and 16 million merchants, generating $2.4 trillion of transactions at its peak.  Only 0.2% of that value was required to operate the Visa platform making it one of the most profitable businesses of all time.  The fact is, traditional command and control organisation is not suited to 21st century value creation models.  Dee Hock, the founder of Visa created a non-stock, for-profit membership based network with ownership in the form of non-transferable rights of participation. He designed the organisation according to his philosophy: highly decentralized and highly collaborative.

If the participants own the service, have full control and responsibility for the veracity and quality of their data and are able to democratically agree upon how this ‘Health Wealth’ is distributed, then people will trust it.  Jeff Kelley suggested the creation of a Public Interest Enterprise based on Open Source models of value exchange and ownership – “The power of us”.  Given that healthcare models in the US and Britain are only 10-20 years away from collapse we’re going to have to bet more heavily on the future, than we do on the past.  Indeed, such is the value of the nation’s collective health data, that it’s a future national asset, and of major strategic importance to the United Kingdom.

Think about this.  If a patient can derive an income from their medical data, even if it means re-keying it into another platform, they will.  All the indications are that Microsoft, Google and a number of ‘up starts’ are creating these platforms. 

In December 2007, 23AndMe launched an online service that enables consumers to understand their own genetic information by sending a mouth swab sample for genome mapping. Users know whether their children are predisposed to certain traits or talents — athletics or music or languages — and encourage them to pursue certain paths. “We will, counter intuitively, face even more pressure to conduct our lives carefully, strictly, and cautiously; we'll practice the art of predictive diagnosis and receive a demanding roster of things to avoid, things to do, and treatments to receive — long before there's any physical evidence of disease”.   In other words, this service is creating the very behaviour change in patients that governments seek. Google has invested in 23andMe, whose co-founder Anne Wojcicki is married to Google co-founder Sergey Brin.

HOW DOES IT START?

It starts with having a healthy disrespect for the impossible.

It starts with the maxim "We are continually faced with great opportunities which are brilliantly disguised as unsolvable problems." - Margaret Mead

It starts with understanding that “It is not because things are difficult that we do not dare; it is because we do not dare that things are difficult.”  - Seneca

POST SCRIPT

Serendipitously, on 19th February 2009, a German university announced the development of  Assistance for patients: Intelligent sensor networks that remotely monitor important vital signs of patients or measure their activity.  Heart patients simply wear a small, lightweight device on their body.  The device records movement. A physician can evaluate, for instance, the heart rate in connection with physical effort, thus simplifying the diagnosis.

The data is transferred via a home gateway to an Internet portal where the physician can access the information remotely. A range of optional components can be added to the system to measure other vital data such as blood pressure, weight or blood sugar level.

Fractional work. The next small thing?

Fractional work emerges in the developing nations. An archetypal example of Winning by Sharing. Nathan Eagle, a research fellow at the Santa Fe Institute, in New Mexico, is launching a project similar to Amazon's Mechanical Turk but that distributes tasks via cell phones.  For example, mobile phone menus  are being translated into obscure African languages, small pieces at a time, to a large number of people.  Each translation earns pennies but projects a trebling of the average daily wage in some of the world's poorest countries.  Read the whole thing.

Shameless self-promotion?

I'm amazed and honoured that after four years since publication, readers of Winning by Sharing are still being touched by its key messages.  At the risk of boasting here's an excerpt of an email I received a few weeks ago from a delightful film maker in America that would make any author feel it was worth while writing anything to get just one reaction like this;

I guess my "frustration", not lack of recognition, led me to do some research on the Web 2.0 movement. I wanted to find some common ground with someone or a group of people that could identify with how I was feeling about my job and my duties, and how the technological changes that are currently happening and evolving as we speak are opening and transforming the work environment and all the stuff that goes along with it. So I found your book Winning by Sharing!!!

After reading it I was like "right on!!!" You summarized it all in nice easy-read. I couldn't believe it, all of a sudden my perspective changed. I understood what was happening to me and why I was feeling frustrated. So it was a pretty awesome awakening and much more.... And perhaps that is the reason why I dreamt about you? My dream was about your book, it was about the message of your book, it was about the potential we all have to gain a wider perspective, it was about the opportunities that are available to all of us that are willing to "jump higher" while being propelled by thinkers such as you. You obviously made a pretty deep impression on me and my psyche. The dream was very symbolic and special.

Thank you!!

Thank you Daniela - you really made my year.

Where is the book?

After receiving dozens of messages on Ecademy asking for the location of my eBook, here's a copy on this post sprinkled with a few cartoons.

Download winning_by_sharing_online_ebook_cartoons_v1.pdf

As always, don't forget to browse the Big Picture here.

Enjoy.

NextWeb 2008: Quick roundup

  next web poster 
  Originally uploaded by ixtlan

NextWeb 2008 Event   Don't have time for a full write up, so here are some trends that caught my eye;

Aggregation.  There seems to be a trend in aggregation.  Lots of talk about FriendFeed and a couple of start ups planning either content and/or profile aggregation.  UberVu hasn't launched yet but will be a space where conversations (community) can be started around your content.  Postmachina's social hardware will synchronise and aggregate social network profiles on the web.

VC.  Venture capital is looking for BIG ideas, new approaches (to old problems) and growth sectors (e.g. mobile) - according to the founder of TheFunded - a social network for funded CEOs.

Business models.  At last! A social network that extracts value from member data.  Wakoopa is network for serious software developers and end users (.Net, Adobe, Mozilla, etc) that gathers statistics about people's usage and opinions of end user software tools.  It sells this data on to the software vendors. NetLog founder reported over 30m users and a revenue stream that is 80% advertisement and 20% premium services.  They also report massive demand for Group Pages and plan to launch a mobile, location based social network. Not bad for a company of only 43 people.

Other points to note;

Zilok seems to have gained a lot of traction.  A place to rent anything.  Proper contracts and insurance and a decent web experience for monetising everything from lawnmowers to saxophones.  Very localised (because people have to meet) so some potential social benefit by enabling relationships between parties that are previously unknown to each other.

eBuddy is bigger than I thought.  A meebo clone with tools that enable advertisers to reach the IM community.  Love the way eBuddy hosts all their press and media info on Flickr!

Adoption of Cloud Services is very high amongst west coast start ups.  The founder of Lookery, a Facebook advertsing tool says that he and most of his entrepreneur friends consider it the only way to go.

BIG hat tip to Nova Spivack of Twine who gave a "semantic web for dummies" master class. By far the most informative, insightful and profound speaker over the two days.  His entire approach to the semantic web, and indeed his entire ethos, is coincidentally very Winning by Sharing.

I missed the talk by one of the founders of Dataportability.org but wanted to enjoy Friday afternoon in Amsterdam with my wonderful wife!  Lunch at Gaucho followed by shopping and an afternoon nap back at The Grand hotel.  Nice!

Overall an excellent experience and very well organised by Patrick de Laive and his team.  Well done!

Robert Scoble poses with Leon Benjamin?

  Leon Benjamin and Robert Scoble 
  Originally uploaded by ixtlan

Or should that be the other way round?  In any case, Robert Scoble delivered a key note speech on day two of the NextWeb 2008 event.  It was short and to the point;  Have you noticed how social software really sucks if you don't have any friends?  When you sign up for Twitter, Pownce and other social software services your initial experience is so poor you wonder what the point is until of course, you add your friends.   Robert described this as the Friend Divide.  This is in stark contrast to traditional thick client software where everyone has the same experience (Excel, Word, etc), irrespective of the type of computer they use. 

Robert's talk only lasted 30 minutes and was designed to create more time for people to ask him questions.  An area he's investigating right now is mobile video streaming. He conducted a live demo of QIK - a new service that enables mobile phones to stream video to the web in real time.  It's also integrated with Twitter, more details at this Crunchbase article. He's off to Israel to interview the founders of a similar service - possibly more sophisticated.

This is going to seriously change news gathering and distribution because in a few years time, the quality and sophistication of devices will be good enough to deliver news programmes.

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.

Pick 'n' Mix Business: Heads in the clouds?

This article was first published in 2004 and inspired by Graeme Burnett's original paper (XML & the Role of Web Services, 1999).  Article starts with;

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.

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.  And of course Microsoft's bid for Yahoo is about control of the Cloudsphere - a 'place' where all these applications will reside.

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.

The network is female

The New York times ran an article  on the effectiveness of Chris Bowers' initiative to expose the hypocrisy and inconsistency of Republican candidates ahead of the US November congressional elections.  It leverages Google's search engine algorithms by linking the names of prominent Republicans to trusted, accurate news sources on the web that expose the gulf between what they practice and what they preach.  Bloggers have legitimately managed to ensure that the search term "miserable failure" produces the official web site of President Bush as the first available search result (Google has now altered its algorithms to prevent this type of 'gaming of the system'). 

This reminded me of the uncompromising news produced by The Yellow Times which was forced off the web by the Republican war machine prior to the  US/UK invasion of Iraq.  Paul Harris, a Canadian freelance journalist, wrote a superb article a couple of years ago called Women have ruined the world that illustrates a point I want to make. In it he says;

"It has been my experience over a half century, most of that alive, that women tend to be much better people than men: more honest, more loyal, more caring, more thoughtful, more trustworthy, and much less dangerous. But women are to blame for the state of the world because they have utterly failed to take charge of it."  He goes on to say;

"I am proposing a "new world order" - not that crap that George Bush the Elder was always talking about or even the biblical stuff that believers are always trying to force on others. I mean something real, something substantive; something designed to fix the mess we're in. I am proposing a political movement whose sole purpose is to convince all the nations of the world to change their laws so that only women can hold political office."

The article ends with;

"Think this is an idiotic notion? Then think on this: If men don't run things, there is no Hitler. There is no Mussolini. There is no Napoleon. There is no Hirohito. There is no Attila. There is no Genghis Khan. There is no Inquisition. There are no Crusades. There is no Robert Mugabe. There is no Ariel Sharon.  There is no Stalin. There is no George Bush.  Wouldn't that be a safer and happier world?"

I happen to agree with him.  When men are in power, the difference between rape and seduction is only a question of salesmanship.  They exercise power in a manner that is actually weakness disguised as strength.

In general, my experience of participating in online communities in the past few years is that despite their male dominance the posture, attitude and expression of these communities are predominantly female.  By this I mean people are genuinely welcoming, offer unsolicited benevolence, guidance and assistance and freely give the most valuable thing that anyone can give; their time.  This isn't normal for other types of patriarchal organisations.

To this day, I have no idea what particular combination of software, ethos and policies these networks have implemented, that attracts people to exhibit these female qualities online, but it's basically changing people's behaviour, and that behaviour is female in nature.

This was written almost 3 years ago.  Since then, now the United States, UK, New Zealand, Singapore are many other countries have predominantly female members and overall across Facebook it's a 64%F/36%M split.  See Techrunch for the detail.