Catch 22: Too Big To Fail, Too Big To Succeed

Hat in hand the U.S. Auto Industry lined up for their slice of government aid and it appears as of this posting that they will get the money they are asking for. These titans spent years hiding behind the “free market” shibboleth when convenient (the market wants gas guzzling SUV’s) and when punished by that same market we hear that they are victims of factors outside their control and that they are “too big to fail.” It has become a hackneyed expression precisely because it summarizes the situation so well; this is the privatization of profit and the socialization of loss.

The very concept of “Too Big To Fail” points to a deeper truth: the U.S.’s auto industry does not operate within the “free market” at all. Far from it. As their moniker suggests, the “Big Three” are an oligopoly with a long record of eschewing innovation (electric cars, hybrids etc.), killing off alternatives like mass transit and bullying public policy (lobbying against CAFÉ standards, environmental and tax policies [Hummer owners get a $34K tax credit!], the threat of relocating factories etc.) all in an effort to conform the not so “free market” to its lumbering non-strategies of pursuing short-term profit.

Now that their short-term thinking has met with long-term reality we are faced with bailing them out. Fair enough. There are millions of jobs connected to the automobile industry. But do we now trust these same institutions to deliver and execute the plan for a sustainable U.S. transportation industry?

If these are the flaws of the industry, consider their current leadership; The CEOs of these failing behemoths flew in on corporate jets, asked for $25 billion dollars, brought literally not one shred of documentation on what they intended to do differently and couldn’t explain how they arrived at the 25 billion dollar figure in the first place. When asked if they would accept a $1 dollar per year salary (Iacoca style) in exchange responses from GM and Ford ranged from non-committal to sarcastic (“I don’t have a position on that today” - Rick Wagoner of GM, “I think I am OK where I am today.” Ford’s Alan Mulally who earns $22m per year).

Oligopolies like The Big Three thrive on standardization, scale and market manipulation - not innovation. It is precisely their structure, size and leadership DNA that I believe precludes them from any chance of successful innovation. So there is the Catch 22. They may be too big to fail - but they are too big, bloated and corrupt to succeed. If we are the taxpayers funding the bailout, what are the alternatives?

“Technology is the 7th Kingdom of Life” - A conversation with Kevin Kelly

Or, you may download the file.

Kevin Kelly doesn’t need much in the way of introduction to Radar readers. He is a big thinker looking at the intersection of biology, technology and culture.

Kevin gave a great High Order Bit at the Web 2.0 Summit and I caught up with him afterward. This interview covers:

• The impact of the web on our recent elections
• The rich new possibilities for interaction and collaboration afforded by the web
• The Wisdom of the Crowds vs. the Stupidity of the Mob
• Technology is the 7th Kingdom of Life… looking into “what technology wants”

Online Communities: The Tribalization of Business

Or, you may download the file.

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” (see here for the Slideshare presentation).



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 for community’s sake: 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.

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 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; basically bringing a focus group online. 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.

Technology, Politics and Democracy

Or, you may download the file.
Recently I spoke with Jascha Franklin-Hodge, CTO and co-founder of Blue State Digital about how technology is affecting politics and democracy in the U.S.

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).

These videos (there are three total) are timely in light of the staggering September figures from the Obama campaign:

• 630,000 new donors (bringing total donors to 3.1 million)
• 150 million dollars raised
• Average contribution: $86

(continue reading)

Wikitecture - Radical Collaboration in Architecture

Many of the precepts that began with Open Source (collaboration, shared IP, crowdsourcing etc.) are migrating from software development into a series of ever more surprising disciplines. Today old-school institutions like Proctor and Gamble go outside of their own R&D; teams to innovate new products while Best Buy opens APIs to allow outside developers to build on their catalog data.

Now here comes “Wikitecture” applying these precepts to the very complex process of designing buildings. I want to dig into some of the details of Wikitecture and summarize what I think it has to teach us about collaboration.

My friend Jon Brouchoud is the co-founder of Studio Wikitecture, a group dedicated to bringing collaboration into the architectural process. He and Ryan Schultz have been pioneering "Wikitecture" for the past two years using Second Life as a proving ground.

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. A few examples:

• Adobe and gabion wall construction was suggested as among the most viable design material given the exact (and remote) location and the ability to utilize local labor. Other materials would not only cost more but could even be prohibitive in terms of shipping into the area.
• In Nepal an odd number of steps is considered inauspicious so all stair plans were designed for even numbers.

(continue reading)

A Star is Born? NY Times syndicates outside blogs but that's not enough

Recently the New York Times announced that it will be syndicating content from three well-known blogs, Read/Write Web, Giga Om and Venture Beat. The New York Times is using these blogs as an extra-sensory organ; they can dial into what is happening in the tech sector (and particularly the West Coast with this trio) without allocating a lot of internal resources to it. Smart move.

As newspapers are locked in a desperate bid for survival I get the sense that we are watching the business equivalent of A Star is Born. In this case the iconic, shaggy-maned newsman falls for a feisty blogger with a horrific perm. Two strangers meeting in life's stairwell; One headed down - the other headed up... Let's hope this pairing has a better ending.

Syndication seems to have one goal - leverage that content to build online ad revenues. I hope the Times has more up its sleeve because this is just a “more of the same” strategy. Ad revenues for newspapers dropped $3 billion in the first six months of this year. With the Wall Street implosion it looks like revenues will continue to collapse as overall big-spend, ad budgets decline. I say this despite predictions of growth in '09 online ads because big print newspapers need both online/offline revenue to stay viable. Bumping online ad sales in place of plummeting offline ad revenue will not come close to solving the fundamental problem.

In order to survive newspapers need to:
1. Get better at their core revenue business: advertisting. Use behavioral targeting to maximize ad prices - better user profiles equal higher revenues. Currently traditional newspaper ad networks are outsourced, weak and generic. Understanding these technologies should be a core competence inside a modern news organization.

2. Aggressive online diversification. U.S. Newspapers missed a chance to claim the classified space. Craigslist got there first and locked the newspapers out (in most U.S. markets). Schibsted, a pioneering media company in Europe, has a very healthy online classified business because they got there first. (Similarly Schibsted is competing with Google for search b/c they have huge data assets in content and video etc. that they are using to compete). Online services like this feed off of network effects - leaving precious little for runner-ups. It is too late for US papers to compete with Google or Craigslist but there are other areas that have not been claimed. Newspapers need to move aggressively to create services that deliver value; all-things-local; niche classifieds, local real estate, political polling data, creating decision markets with their readers etc. Newspapers still have assets that are hard to rival: large sales teams with great relationships; top-notch content-creation teams; established brands with public trust and, last but not least an online readership that can help become a pillar of new innovation.

3. Gene Therapy: This is what I call “the harder stuff.” Traditional newspapers require a DNA transplant. Many of the tenets of the social web: innovation from the outside, publish-then-filter, rapid adaptive behavior (fail forward fast) and learning from failure all meet with stiff organizational resistance. If newspapers do not empower their online businesses, take more small risks and get out of the way there will be nothing left in a few years to reclaim.

Newsgathering organizations serve a vital civic function - but without a clear revenue model they will become an artifact of the last millennium. Time is not on their side.

What else do newspapers need to do to save themselves?

Customer Service is the New Marketing: Interview with Lane Becker

The Internet changes the power relations between companies and customers.

Social technologies like blogs, social networks, ratings and reviews etc. allow customers to share experiences; good and bad to the 1.4 billion people on the Internet. Zappos exemplifies the positive benefits of extraordinary customer service while Comcast shines a light on the perils of getting it wrong.

Lane (co-founder of Get Satisfaction) speaks better than anyone about the power of building relationships via a strong customer service focus. During the Web 2.0 Expo New York we had a discussion that digs into
· What is meant by Customer Service is the New Marketing
· The challenges of moving to a customer-service-as-marketing model

The most insightful moment, in my opinion, comes when Lane talks about how even smaller companies, and companies not structured to provide superior customer service, can use new technology to get it right.

My favorite quote: "Historically, customer service has actually been customer avoidance" Remember that next time you need to schedule Comcast!

Lane agreed to answer some of the comments to this video post - so if you have questions - fire away.

(Disclaimer: OATV is an investor in Get Satisfaction)

Getting Web 2.0 right: The hard stuff vs. the harder stuff…

I had a powerful conversation recently in Europe with one of the top executives of a major industrial company. They have 100K+ employees in over 50 countries. When he joined five years ago their business was struggling and in need of major transformation; their stock was at two dollars a share, they had ethics issues and product quality problems - you name the malady, they were suffering from it…

Fast forward to 2008 and now they are one of the most extraordinary success stories in Europe - stock is over $28 a share, great profits, growing operations, well regarded in the business community etc. When you fly through a European airport they are everywhere.

I asked him how they were able to turn such a large, multinational ship around.

He told me most executives talk about “the hard stuff” vs. “the soft stuff”. Their focus for success in the organization is on the hard stuff - finance, technology, manufacturing, R&D;, Sales - where the money is to be found, where costs savings are to be made. The soft stuff - leadership, culture, change and implementation - is there in rhetoric but not in reality (e.g., “people are our most important resource”). But the truth is that it is not the “hard stuff” vs. the “soft stuff”, but the hard stuff vs. the harder stuff. And it is this “harder stuff” that drives both revenues and profits by making or breaking a decision, leading a project to a successful conclusion - or not, and allowing for effective collaboration within a business unit or an organization - or not. He told me it was a consistent focus on the harder stuff that allowed them to turn their company around.

This is an apt description of the problems we face in bringing Web 2.0 into the enterprise. Web 2.0 is a game changer - it holds the potential to turbo-charge back office functions, foster collaboration and transform every business unit in the enterprise. Yet the resistance occurs when it comes down to implementing Web 2.0 because it represents a series of shifts that challenge traditional business culture and models of leadership. How often have I heard the knee-jerk reaction, “we can’t let our customers talk to each other” or “we don’t share our data” or “we are going to upgrade to a new platform - we are on a three year plan to get it done” (I keep a list of these reactions so please help me add to it). If developing a web 2.0 strategy is the hard stuff - moving that strategy forward is the harder stuff - and the bigger the company I work with - the harder the harder stuff is.

Open beats Closed: Best Buy’s new APIs

Welcome to Joshua-Michele Ross, who joins the Radar team with a focus on how Web 2.0 is affecting business strategy - Sara Winge

Best Buy is a pioneer when it comes to unleashing the talent of their own staff; from the Loop Marketplace that allows employees to submit ideas for Digg-style ranking AND funding across divisions (for example an HR manager can fund an idea from a customer service employee) to their use of prediction markets and their support of the employee-driven social network, Blue Shirt Nation.

Now they are hoping to tap into the developer talent pool with remix.bestbuy.com which they announced at the recent NYC Web 2.0 Expo. According to project lead, Dave Micko, Remix is “an open API to access all of the data that feeds www.bestbuy.com. So, all of the rich information featured on Best Buy’s extensive, deep and content rich web site will now be available publicly via a simple, REST-based API call. “

While other big box stores are thinking small and releasing unappetizing Facebook widgets like this:


Best Buy is thinking much more strategically about the value of the Internet by allowing anyone to reinvent their entire online store. With “access to all the data that feeds Bestbuy.com” imagine the potential of creating your own, curated site on top of Best Buy’s catalog and supply chain. Imagine top Blue Shirts running their own online stores with select merchandise that they stand behind or imagine a thousand home-theater geeks and “go-to-guys” (and girls) extending their expertise and word-of-mouth via their own online stores.

Much needed breakthroughs in ecommerce usability (product and catalog navigation, visualization, design and findability) are now open to thousands of developers to work on. Best Buy will be able to bring that intelligence back into their organization. The only missing piece seems to be some form of compensation for folks who actually go to the trouble of creating their own stores; reward zone points, commission, reputation etc.

Open beats Closed:
This move reflects one of the new strategic principles at work on the Internet: Open beats Closed. There are two readings of open beats closed - both correct and on-point for Best Buy. First, it is the literal injunction to be consistent with the norms of behavior on the Social Web; authentic, transparent and candid. Second, businesses are finding new ways of sourcing content, innovation and market insight and energy outside of their organization. They are letting more people to contribute by allowing access to once tightly guarded data or business processes (via APIs and mashups). As a result they are redrawing the boundaries of the traditional organization. As we dig deeper into the network economy closed companies are going to find it more and more difficult to survive against open companies.

Has anyone in the Radar community seen a similar, open move by a big, traditional company? I have not.
(In full disclosure: I have worked with Best Buy on several initiatives but have nothing to do with the remix project.)

Tim O'Reilly and John Battelle discuss the upcoming Web 2.0 Summit

Beginning on November 5th, 2008 a wide array of thought leaders and practitioners of Web 2.0 are converging on San Francisco to attend the 5th annual Web 2.0 Summit. This year's theme, "Web Meets World" reflects how much Web 2.0 has evolved over the past five years. I recorded an informal conversation with co-chairs Tim O'Reilly and John Battelle to discuss that theme, highlighted speakers and how to get invited to the Summit. Whether you plan on attending or not, the discussion provides insight into the state of Web 2.0 today.

Transcript Follows:

(continue reading)

Recent Posts

• Experience Syndication: Powered by Zappos on September 12, 2008