The MySpace Generation


BusinessWeek continues its attention to the unfolding online world with a cover story titled The MySpace Generation. MySpace is the most successful social networking site, boasting 40 million members, and serving an extraordinary 10% of all online ads viewed in October, according to BusinessWeek. People who have grown up in an online world want to socialise in an online world, tapping the immense power of mutual visibility, sharing, and multi-channel communication (of course without supplanting “meat” world interactions!).

Rupert Murdoch demonstrated he was finally a convert to the online world when he paid $580 million for MySpace’s owner Intermix Media in July. Under 25s have little interest in traditional media. Circulation figures for teen publications are plummeting. The only way to capture their attention is to get into the interstices of their immensely rich social interactions. Statistically and anecdotally, far more teens and young adults use MySpace or other social networks than have blogs. The reality is that the individual spaces on MySpace are much like blogs, yet within a bounded domain, and with specific tools to share music and other entertainment, the glue that binds together youth culture. I don’t believe that social networks such as MySpace are overhyped. We are just now getting to a stage where the technology allows easy, media-rich online interaction that supports offline socialising. As social network technologies shrink and enrich our personal degrees of separation, the next generation’s natural habitat is being born.

Business transparency or mob justice?


The recent case of a blogger who had a poor experience with a camera shop brings out the phenomenal power of the blogging. Thomas Hawk, a professional photographer, ordered a camera online from PriceRitePhoto. When he was called by a salesperson to sell him expensive accessories, which he turned down, they reportedly refused to deliver the camera and abused Hawk. Hawk blogged his tale. Many other bloggers wrote about the story. However most importantly, Hawk posted the story at Digg, a technology news site that allows its readers to vote on the most interesting stories. Thousands of votes for Hawk’s story later, the story spread onto top-ranked blogs such as Boing Boing, and on to the mainstream media. PriceRitePhoto was quickly delisted by Yahoo Shopping, CNET, and PriceGrabber, and is under investigation by the New York Attorney General.

In the aftermath, Hawk wrote:

I think that the popularity of this story comes in large part because the message resonates so strongly with all of us. Although in a sense it is the classic tale of David and Goliath retold, it is much more than this. We all have at one point or another in our lives been bullied and most of us have been defrauded or ripped off. The fact that so many times in the past there was nothing we could do about it makes us feel all that much better about the fact that in today’s internet and blogosphere we actually CAN do something about it.

Absolutely. In an intensely connected world, trustworthiness becomes completely visible. You used to be able to get away with doing poorly by your customers, because although you wouldn’t get much repeat business, there would always be suckers who hadn’t heard about you. The ability to do business this way is quickly disappearing. Customers have the right to complain, and today the ability to be heard by many. Partly as a result, there is no question that the general level of customer service in the economy will continue to improve at a significant pace.

Some would ask whether this is not a case of mob justice. We’ve only heard one side of the story, after all. This neglects the fact that PriceRitePhoto too has the right of reply, one that they haven’t chosen to exercise in a public forum. I wrote recently about how a scientist exercised his right of reply when he felt he was misquoted by a journalist. We now all have that power. Perhaps this was mob justice, yet the answer is not to cut off people’s ability to complain publicly about the service they receive. As with the case of the Sony DRM debacle, any small signal will get amplified in line with how strongly people respond to it. That is the world in which we live. And we are better for it. However what it certainly means is that companies today need to be in a position to respond effectively, by themselves engaging in the debate rather than simply being subject to it.

Best books of 2005


BOSS magazine has named Developing Knowledge-Based Client Relationships as one of the best books of 2005 in its December issue, out today. Always nice to get positive feedback! If you haven’t got hold of a copy of the book yet, feel free to download the free chapters.

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.


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 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.