What is the future for newspapers?

Newspaper circulation appears to be on a slippery slope, with over the last six months U.S. newspapers showing a circulation drop of 2.6% for weekdays (after falling 1.9% the previous six months) and down 3.1% for Sundays (after a 2.5% drop in the half-year before). The worst was the San Francisco Chronicle, down 16.4% over the last six months, though this was the result of a deliberate strategy to cut unprofitable circulation. In this context, Robin Miller, editor-in-chief of Open Source Technology Group, the publisher of an array of online technology media sites, including Slashdot, has written a very interesting article titled A Recipe for Newspaper Survival in the Internet Age.

For those who haven’t come across it before, Slashdot (whose tagline is “News for Nerds”) is one of the founding examples of the power of participatory media. Readers submit to Slashdot news articles they think are interesting. A group of moderators then select the most pertinent articles, and readers can then submit their comments on the articles. Where the real magic happens is that every reader has the ability to rate the value, relevance, and interest of everyone else’s comments. Even though every story gets hundreds of comments, you can quickly sift through to find the ones that a large, sophisticated audience has collectively deemed most worth reading. Anyone can quickly delve in and get the condensed insights of this eclectic and intelligent group of über-nerds. Those whose comments are most highly rated are invited to become moderators for a period. The community collectively filters and creates the news, which is why Slashdot is one of the top few technology media sites in the world.

In his article, Miller uses lessons from Slashdot to provide recommendations to the newspaper industry. He discusses the need to draw in reader contributions, while addressing issues of both the value and propriety of their input. Most relevantly, Miller focuses on the local community strengths of newspapers. There is a massively important role to play being a voice for a community, something that newspapers have long proclaimed they do. Yet today they truly have the capability to provide their readers with that public voice. If they can do that effectively, there are a wide range of ways to build effective and sustainable business models around that, and absolutely keep their readers. However few newspapers today seem to be following this path other than half-heartedly.

The heart of professional services strategy

Last week I chaired a conference on Strategic Law Firm Management organized by Ark Group. While there was disappointingly little on law firms’ high-level strategic positioning and how that may shift over coming years, there were a wealth of insights into more general management issues. Clearly, people and culture are at the heart of managing professional firms, while the competition for talent is growing ever more intense. Getting people and culture right is the single most important determinant of success. Other success factors will be driven by this.

Listening to the speakers reminded me of a framework I’ve been mulling over for a while, on how attracting, retaining, developing, and motivating great people is linked to attracting the most worthwhile work from the best clients. Clearly, these two highly desirable outcomes feed on each other, yet many firms do not explicitly link them in their strategies and activities. To my mind, building knowledge-based relationships is at the heart of being able to link client development and people development. In knowledge-based relationships you are able to learn most from clients, get the most interesting work, and attract the best clients. Providing “black-box” services to your clients disengages your ability to attract either great people or great client work. It is important to recognize that there is a very real difference between great clients and great client work. Many professional firms have outstanding clients, but often the work they do for them is mundane and unstimulating. It is getting great work that is more important for developing your people and capabilities than getting brand-name clients. Small clients can give you fantastic work.

The framework below shows the nature of great people and great client work, how these feed on each other, and what is required to link them. At the center of attracting both great people and great client work are a set of common values and behaviors. These are fundamental to both of these outcomes, and how they are linked. Leaders of professional firms need to consider what specific activities and initiatives will help to develop this cycle, which is at the heart of professional services strategy. Successfully engaging in this cycle will rapidly develop meaningful, recognized differentiation in highly competitive marketplaces.

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Moving on from email

Investment bank Dresdner Kleinwort Wasserstein is using wikis, blogs, instant messaging, and other collaborative software tools to supplant email, according to an article in this week’s issue of BusinessWeek titled Email is So Five Minutes Ago. J.P. Rangaswami, Dresdner’s CIO, an ardent critic of email, says that in some cases use of these tools is resulting in project-related email being reduced by 75% and meeting times being halved. There is no question that email as a corporate communication tool is in fact more representative of communication breakdown. When a significant proportion of executives get literally hundreds of emails a day, it is hit-and-miss whether any one email will actually be read or answered, even with the best of will from the recipient. While email will not disappear for the foreseeable future, the problems with email overload and more are rapidly accelerating the uptake of collaborative software tools. For specific, focused applications, blogs and wikis are admirably suited. One of the most relevant applications, and where there is strong traction already, is in project management. There is defined scope, known yet diverse participants, and a need to make issues quickly and readily visible to all. These requirements are usually better addressed with collaborative software than with email. Expect to see email fairly rapidly shift out of favor as a core project management tool, now that there are simple, inexpensive, effective alternatives.

More on the future of PR and influence networks

Ketchum PR, one of the top few public relations agencies in the world, has just posted on their company intranet an interview with me on major trends in PR. They’ve kindly allowed me also to post it here on my blog. The key themes they distilled from our original wide-ranging interview are on the role of knowledge-based relationships in PR, the importance of relationship leaders, the need for agencies to adjust to the rapidly changing media landscape, and why agencies should get their clients to participate in the marvellous world of blogging.

Ketchum PR is noteworthy on a number of fronts. I wrote about their client extranet initiatives in my second book Living Networks, and also referred to it in my Microsoft White Paper How to Lock-in Your Clients. As early as 2000 Ketchum was inviting clients to participate in project workspaces, giving them visibility of the work being done for them as it happened, and the ability provide their own input to the process. Paul McKeon, Ketchum’s CIO at the time, called it letting the client see how they “make sausage”, so they see the messy stuff that goes in along the way, not just the neatly packaged output. Ketchum has also recently released a very interesting service, Influencer Relationship Management (IRM), that identifies and targets key influencers in a particular market or key decision. This relates to some of the work I’m currently doing on applying social network analysis to the role of “influence networks” in decision-making. Decisions are primarily based on input from trusted individuals, so understanding the structure and functioning of these influence networks is critical both in making better decisions, and in effectively influencing decision-makers. More on this later!

Microcredit gains momentum

Microcredit (also known as microfinance) is the business of making very small loans, sometimes as low as $50 or less, to poor people who can invest the money to help them make a living. Recipients of loans may buy sewing machines or other simple tools that allow them to earn money, pay off the loan, and help to break the cycle of poverty. Muhammad Yunus acted as the grandfather of the industry by founding Grameen Bank in Bangladesh. One of its operations, Grameen Phone, exemplifies the spirit of microcredit by providing loans for villagers to buy mobile phones. If a single person in a village has the means to buy a phone, and then pay it off by renting the phone out to others, in one simple transaction an entire village can become connected. Long gone are the days when less than half the people on the planet had made a phone call. Today there are one third as many mobile phones as there are people alive, and many of the phones in the developing world service entire communities. Microcredit may be done as a not-for-profit venture, but is also frequently undertaken for financial return. One of the great strengths of microcredit is repayment rates that banks in developed countries would often drool over. Because loans are made within communities, there is a very strong understanding of the customer, and peer pressure to keep the funds in good standing.

Last week Pierre Omidyar, the founder of eBay, made a donation of $100 million to Tufts University, on the condition that it is used for microfinance in the developing world. The funds will be used to help develop economies and alleviate poverty, while the profits will go to Tufts, in a true win-win. This will play an important role in helping the industry grow and develop. The gift spurred a good article in BusinessWeek on the phenomenon, and an interview in Fortune, while coincidentally The Economist had almost simultaneously published an excellent story on microfinance. Other interesting blogs and references in the space include the blog of Unitus, one of the largest players in the field, and Nextbillion.net. The continuing rise of microcredit reflects the broader trend of greater granularity and flow in the economy. Business can easily be executed in smaller pieces, and has to be to access the next massive tier of the global middle class. The whole domain of “social entrepreneurship” also provides fine examples of knowledge-based relationships. Almost every microcredit institution is as focused on helping its clients invest funds effectively (and repay them!) as in providing those funds. I have long had a strong interest in microfinance, and hope to be more active in the domain at some stage.

Thanks to my friend Chris Turillo, who has recently arrived in India to work for the microfinance institute SKS after a few years working at my alliance partner Business Development Institute in New York, for pointing out some of these references to me, and keeping me posted on what’s happening in the exciting world of microfinance.

The new generation of social networking and expertise location

Blogs, wikis, and other social software tools are rapidly gaining traction in the business sector. In particular, they are being applied to issues that were previously addressed with other tools and approaches. Last week executives from IBM Lotus, which arguably provided the first enterprise collaboration platform back in the early 1980s, stated that they see the future of collaboration in social networking tools. They are backing their view by embedding blogs and wikis into IBM’s systems and platforms. IBM, with 370,000 employeees, is a great case study in requiring effective collaboration tools. IBM is already one of the biggest users worldwide of instant messaging in its everyday business, and has allowed over 20,000 internal blogs to be set up by its workers. In organizations such as IBM, MIT, and many others, blogs are increasingly seen as the foundation for effective knowledge management. They provide defined spaces for immediate collaboration and information sharing on specific topics and projects, rather than intermediating people’s knowledge sharing through databases and documents.

Very interestingly, blogs and wikis are now being applied to “expertise location”, one of the lodestones of knowledge management in large organizations. In massive global firms (and even smaller ones), being able to identify who has the most relevant expertise in the organization to help on a particular issue is enormously valuable. Yet trying to populate corporate “yellow pages” with everyone’s resume is impossible to create and update in a way that truly reflects individual’s expertise. In the article, Morgan Stanley’s CIO is quoted as saying that its previous expertise location efforts “failed miserably”. The investment bank is now finding that blogs and wikis are far more effective than packaged systems at being able to find relevant expertise. What corporation are increasingly finding is that as blogs and other social software are implemented and become more linked together into a system, valuable business outcomes, some of them unpredicted, are emerging.

Update: Sony withdraws its DRM

Following on the previous story on Sony digital rights management, Sony has announced it will stop making CDs using this DRM technology, after the first virus that uses Sony’s copy-protection software to hide had been discovered. At a public event yesterday, Stewart Baker, the assistant secretary for policy at the Department for Homeland Security made pointed comments evidently aimed at Sony: “”It’s very important to remember that it’s your intellectual property — it’s not your computer,” as he discussed the implications for the security of technology infrastructure. Given the Bush administration’s tendency up until now to support sometimes even the heavier tactics of the entertainment industry , this is encouraging.

In 1421 the government of Florence gave the first patent to Filippo Brunelleschi for inventing a way of bring goods up the unnavigable river Arno to the city. He asked for and was given the right for three years to burn any competitor’s ship that used his innovation. I think we’re finally realizing that potentially destroying the computers of your customers is not valid, even less than burning ships of competitors. This event has been an important turning point in perception of how digital rights management is used and intellectual property enforced.

The Sony DRM debacle shows you can’t hide

The big story this week has been how Sony BMG has way overstepped the mark by how they have used digital rights management (DRM) technology to prevent copying of its music CDs. This could shift the course of the debate and public perception of DRM. For those who haven’t read about this yet, Mark Russinovich, a specialist in the deep innards of PCs, stumbled across a “rootkit” installed in his computer. A rootkit is software that installs itself at the heart of the PC operating system and reconfigures files to hide its presence. Not surprisingly, this technology is usually only ever found in “malware” that is designed with nefarious intent. In this case, it turned out to have been installed when Mark had played a Sony CD on his PC. There are a couple of interesting implications of the installation of the rootkit. Anyone who tries to delete this uninvited presence on their PC risks irremediably damaging their computer. In addition, the presence of the rootkit makes it far easier for people less benevolent than Sony to hack into the PC and hide their activities, including from anti-virus software. This is potentially a massive security risk. While Sony states on the CD packaging that it has used copy protection software, it doesn’t indicate in any way what this software does. While consumers can ask Sony to uninstall the rootkit, they need to apply, provide personal details, and are then given another piece of software to uninstall it.

There is no question that Sony has gone too far here, certainly ethically, and potentially legally. While the protection software was extremely carefully hidden, it was naïve at best to imagine it would not be uncovered, and for this to become a public issue. Increased transparency is one of the most powerful trends today. The reality of transparency is not only that things get found out, but that if people are interested, word will spread very rapidly. While all the mainstream media reported this story after the case, this was first reported on a blog, and news spread through blogs. The very measure of people’s distaste for Sony BMG’s activities is how quickly this became a major story. In trying to hide what they are doing in their customers’ PCs, Sony BMG has created security risks for their customers, and created a major problem for itself. Openness is and will be rewarded in the market. Sony BMG doesn’t understand this, and undoubtedly will be punished in the market. Digital rights management has a role, but precisely how it works must be visible. Otherwise the backlash will be far bigger than the entertainment and content companies seem to comprehend.