I’ve just finished going through this presentation from Netflix CEO Reed Hastings and I’ve got to say it’s probably one of the best explanations on how organizational culture effects the performance of organizations. Reed outlines beautifully how the scale of organizations drives organizations toward the common sort of toxic, calcified corporate culture that is so common. It really makes me think that organizational culture might be one of the most important aspects of an organizations success and ironically probably the least understood by many corporations.

I’ve always been fascinated by culture and it’s ability to almost surreptitiously drive behavior in organizations. One of the most interesting and dynamic cultures that is emerging is of course the cultures on the internet, it is like an electronic petri dish of all sorts of fascinating culture that drives a whole host of tacit behaviors that we are only just becoming aware of. Think about what culture dominates on various social networks like yelp, slashdot, digg, twitter, or even 4chan. All very different cultures with different norms, purpose, symbols, and stories that drive the behavior of the members.

I’m thrilled to announce that I’m joining a new company, NetBase as their Director of Social Strategy & Design. As anyone that reads this blog knows I’ve been convinced, ever since I started working on the internet in 1997, that it will radically and deeply transform business as we know it. Not just how we market, not just how we advertise, but how businesses create and deliver value. That transformation is well under way, some companies are leading, and some are being dragged, but few are untouched by the consumer revolution that is in progress.

I’m particularly thrilled to now be part of the NetBase team because I believe that our technology is going to allow companies to be much more strategic and less reactive to the new consumer landscape. In other words we’re going to help companies stop getting dragged and give them tools to help them create new products, services, and creative that will connect to the new consumer.

I’ve written more on the topic over at the NetBase blog, where you can also download a paper we released today called “Netnography: The Marketers Secret Weapon – How Social Media Understanding Drives Innovation”. I’m looking forward to hearing thoughts, feedback and questions about the product so please don’t be shy commenting on the NetBase blog

Oh, and as you know I’ve been working with Traackr for the last few months helping them with strategy and marketing, and that has been an amazing experience, but being in Boston the commute was getting a bit much so now i’m going to be in Mountain View. Seriously though, Traackr is an awesome product, if you want to find influencers in your industry they are THE company to talk to.

Michael Porter popularized the idea and proposed generic strategies for organizations like Cost Leadership and Differentiation. Normally i’m not a fan of generic strategies as I don’t think they really lead to a sustainable advantage. IMHO most strategies should take such good use of your organizations talents, capabilities and resources that it should be virtually impossible to copy your strategy. In other words if you are worried about sharing your strategy with people because you think people might steel it, I’d suggest you find a new strategy.

That being said I’ve realized recently that there are a couple of generic digital strategies that, rather than being stolen, could help maintain focus and understand what business you are really in. The reason that I think these strategies are important is that I believe the dynamics of competition in the digital and social media space are vastly different than the economics and dynamics of business over the last 50 years or so. The two generic digital strategies I’ve been thinking about are either “Drive the Community” or “Become the platform” (I’ve added social production and data production as examples of value creation, but not limited to that).

• “Drive the community – Social Production” – Yelp, Threadless, Foursquare
• “Become the Platform – Data Production” – Twitter, Google, youtube, WordPress
• stuck in the middle – Facebook, myspace

Drive the Community – Social Production

I’ve been thinking about yelp for many years as I’ve always felt it was at the forefront of companies that were using social production as a way to create intellectual capital. In other words they got their customers to do work for them as opposed to trying to just sell them something. This concept of social production or co-creation has had me enamored with the internet from the very beginning because it changed the economics of creating value. For me the very heart of strategy rests on the value creation question, who does it, why, by what means, and how do we do it better and cheaper than the other guy. This is the reason for intense focus by strategists on “value chains” as a means to explain how different parts of an organization ‘adds value’.

The Drive the Community Strategy answers the question ‘how do we motivate participation that will create a specific value. For yelp that specific value or unit of production was the review and they put in place community eco-system that would drive the creation of reviews, and lots of them.

Now yelp is of course a pure play business, but I think Drive the Community strategy is where organizations need to be looking who want to take advantage of the tremendous activity and engagement that is happening online. Both Dell and Zappos are examples of companies who have used this strategy. What companies need to avoid is trying to become the platform which will waste resources on reinventing core technologies. When I first joined Nokia 3 years ago an agency was in the process of building a blogging tool from scratch in flash, needless to say that was killed and we installed wordpress

Become the Platform – Data Production

Tim OReilly has said on several occasions that data is the ‘intel inside’ of Web 2.0 and for platforms that is often where the money is hidden. No better example of this than Twitter’s recent shift from cash burning startup to profitable business by inking content deals with Google and Microsoft. What twitter has sold access to is it’s data, it’s real time data. What Google and Microsoft and many other startups in the Twitter ecosystem have to do now is provide context to that data in a way that is valuable. Many people of course misunderstand the value of access to this real-time data and talk a lot about real-time news, and IMHO the closer news gets to real time the less valuable it is because the less context it has and the less time has passed to enable reflection, synthesis, or understood what other perspectives were involved. What is fascinating about real-time is as Chris Saad @chrissaad said the other day in a conversation with myself and Jeremiah Owyang @jowyang “real-time inference” is the valuable part, in other words what meaning can automatically derived from various data points in real time.

I’m digressing, but the point is that by becoming the platform Twitter has carved out a sustainably competitive advantage in a very short space of time and has now inked deals with two companies that would have surely preferred to keep their 25M but are being forced to pay for access to data.

So what’s the difference between a Drive the Community strategy and a Become the Platform strategy? Well in many ways i’m sure most organizations are some combination of both. Twitter it could be argued came from a drive the community strategy and became the platform. Possibly, but I think the cautionary tale is for organizations that don’t know if they want to drive the community or become the platform. AOL, Facebook, Myspace etc. and for that reason I think these could be valuable frameworks.

What do you think? Who do you think is doing a good job with either of these, any other companies that are stuck in the middle?

Related:
ost by Jonathan Rosenberg of Google: The meaning of open. Competitive advantage in the internet age. /via @timoreilly

One of the things that struck me recently as I was teaching a class in Blogging and Social Media at San Francisco’s Academy of Art University is that whatever technology I was teaching about might not be here next year. I tried to take an approach where I didn’t teach tools so much as much as tried to demonstrate what creative and amazing things people were doing with the tools. I was trying to teach these guys how to be curious, creative, and to think critically. When I saw this video today it just slammed that fact home.

Things are changing at such a rapid pace, and it’s not just technology. Technology and specifically the web has become a ‘culture accelerator’ or a ‘culture globalizer’. Just as Television accelerated change in culture across America, the internet is accelerating change in culture around the world. The developing countries are in many ways like America was in the 50′s. Lots of new technology, new concepts of free time, and disposable income.

I’ve heard people describe developed nations moving to a Post Consumerism society, and I think the hybrid economies talked about by Lawrence Lessig and the cogitative surplus described Clay Shirky are examples of a Post-Consumer thinking (I’ve written further about those concepts here). Now, it is unrealistic to imagine that developed nations have fully become post-consumerist society but it is happening. But my question is, how quickly will the developing nations move beyond the new consumer culture that is being foisted upon them and adopt a more meaningful model of creativity and consumption? I hope the culture accelerator does that otherwise our planet is in even more trouble than it already is.

In this fascinating interview on Charlie Rose, Lawrence Lessig provides some interesting comments about “hybrid economies” where companies co-create value with their customers. As he says some companies, mostly new and small, are already adopting this hybrid economic model, but bigger companies in the future will be transformed by this.

Most companies look at what consumers create, co-create, and share with the world as some kind of free resource to be exploited in what ever way they can, but the winners in the future will be the companies that can create ecosystems in which all the participants are valued, rewarded, promoted, and empowered. Companies are going to increasingly have to treat their customers as contributers and stakeholders in their business, and the concept of where a company begins and ends will blur.

Social Media is the engine behind this massive and slow moving change and for most companies change is not something that can be avoided. Anyone who thinks that social media is about influence, popularity, or an audience is sorely mistaken and business models built on that will be shaky at best. Social media provides the tools to empower and lead a legion of people who believe in your vision, be they customers, employees, partners or competitors, the opportunity right now for all companies is to be a change agent for your industry, are you up for the challenge.

BTW this was the topic of a recent talk/presentation I gave at Inverge and the Social Media Marketing summit, it was titled “Employing Your Customers For Fun and Profit”, I hope to have video of that soon. I’ve had some companies express an interest in having me come in and do the presentation for them and I’m happy to share it, time permitting.

Anyway, don’t just take mine and Lawrence Lessig’s word for it, check out these books if you are interested in this transformation of business.

The Future of Competition: Co-Creating Unique Value with Customers by Prahalad & Ramaswamy

“web-empowered consumers will usher in “a new industrial system” characterized by “co-creating value through personalized experiences unique to the individual consumer.” Under the new regime, headstrong consumers will “seek to exercise their influence in every part of the business system,” and companies will accommodate them by, for example, allowing them to design their own individualized cosmetics and houseboats (an innovation whose benefits include “emotional bonding with… the company” and “a greater degree of self-esteem”).”

Remix: Making Art and Commerce Thrive in the Hybrid Economy by Lawrence Lessig and it’s associated blog page here

Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky

Also watch this video of Clay at the web 2.0 expo where he puts into describes the massive cognitive surplus that enables huge projects like Wikipedia to be created, and how much of it is available

Related: Kaplak Blog has an excellent write up of the Rose/Lessig interview as well, worth reading.

Also follow Lawrence on twitter.com/lessig Clay Shirky at twitter.com/cshirky and me if you like at twitter.com/karllong.

It’s funny, I would suggest that Apple and Google probably have very different design processes and certainly a very different culture so what is the common denominator?

I think it could well be that they both have very influential people at the executive level in the organization that is focused and passionate about the design of the customer experience, ie. Steve Jobs and Marissa Mayer.

Can you point to the one person in your organization who “owns” the design of the user experience? Do they have the power and influence to effect every aspect of the user experience?

via

T-shirt All Tied Up From Full Bleed via tcritic

Having read this on a post at LinuxWorld it got me thinking:

So when the cost of deciding to do something becomes much more expensive than doing something, what do you do? Here are a few ideas:

• Empower teams to launch experiments
• Develop a process for manageing projects as a portfolio of experiments
• Evaluate projects regularly
• Killing projects should be as easy as starting projects and everyone needs to understand that, and the criteria
• Start cheaply
• Get ready to fail faster
• Prepare to fail in public and be ok with that
• Create a “beta” culture
• Put basic legal boilerplate frameworks in place that minimize risk, don’t reinvent it each time

Those are just some rough ideas, any more? Anyone facing this issue?

It still boggles my mind how many startups think that advertising is the monetization vehicle of choice. Didn’t we already do that during web 1.0, eyeballs are not the be all and end all.

IBM just completed a survey called “the end of advertising“, and in it Read/Write web reports that 11% of users say they would pay for a “youtube premium” account to avoid advertising. This would yeld 100 million in additional revenue.

I’ve always thought the Flickr “pro account” idea was one of the best and simplest examples of monetization in web 2.0 – provide something of value that your most passionate users will pay for, let them subsidize the usage by more casual users. This is of course in direct opposition to most product strategies which take the “safe” route and create a product for the “majority” of their users, which as Seth Godin will tell you is the risky thing to do.

And myspace might be saying “Thanks for the add” to google as well.

I had initially thought this story from Tech Crunch was like a formation of a “coalition of the willing” with the other social networks, but I’m begining to think it might have much bigger implications.

Essentially Google has defined a set of api’s for core features for “social applications”

Could this form the foundation for the Internet to finally become the platform? Sure you’ve got a few social networks involved but what if enterprises started using this as the basis for their own social networks? Imagine companies that started to run their businesses on social applications. Sure email is the lingua franca still, but wikis, blogs, and the concept of social networking are changing the way businesses are working.

The only thing that I see missing that would really enable this to happen is some kind of real identity system, because still the advantage that Facebook has at this time is pretty good identity and relationship management. Again the old adage applies, “on the internet nobody knows your a dog”

UPDATE:
It seems that quite a few people think it’s likely that Facebook will likely join OpenSocial as well, it makes sense, but it’s clear that Google had to get everyone else on board first.

Ars Technica has some more on the story as does Read/Write Web who I totally recommend following for more insight on this.

Peter Merholz of Adaptive Path has just posted a presentation on the topic “The Experience Is The Product” on slideshare, even better he has synced the recording of him presenting this in the UK. In this presentation Peter does a great job of explaining that the experience is everything, it’s the branding, it’s the marketing, and how often our approaches to design screw this up.

Peter will hate me for doing it because he tried to do the whole presentation without mentioning the ipod, but of course he had to, because it’s the best example of experienced centered design out there.

One thing I’ll add is that when people say “experience design” or “experienced focused design” a lot of people think “sensory orgy” or the “wow”. But it’s not about the wow, it’s actually about focusing on the broader experience beyond the product, beyond the use of the product, the system if you like. The experience is the system is probably another way of saying it. Way back in 2003 I wrote a post that is somewhat related called “Thinking Outside the Product”

You might also find this presentation interesting from Marc Rettig on the history of interaction design which illustrates the transition from task focused design to design that takes into account the broader experience.