ExperienceCurve

Dec 22, 2009

Generic Social Strategies: Become the Platform or Drive the Community

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.

Screen shot 2009-12-22 at 1.02.45 PM

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

  • http://twitter.com/mckra1g mckra1g

    >So what’s the difference between a Drive the Community strategy and a Become the Platform strategy?

    It’s a symbiotic relationship where one begets the other. “Driving” the community is a result of the sifting of what the collective “wisdom” of the Platform has deemed important enough to spawn a need/application.

    Digression: I get a visual of sediment in a glass of water with an active “pouring” stream into it when I think of real time data. The settling is the natural sorting process into applications and the gift of the entrepreneur/developer is seeing the possibilities in the still-moving flotsam.

    I don’t think I answered your question, but you’ve given me food for thought. Awesome post.

    Best, M.

  • http://experiencecurve.com Karl Long

    Thanks M,

    I don’t think they are always intertwined, although I do think that any organization that wants to become the platform will need to start with a drive the community strategy to gain a foot hold. The challenge is how do you build the community without hindering your ability to become the platform. What companies must be careful to avoid is allowing the community features or the companies desire to “own the community” get in the way of “becoming the platform”, this is the essence of getting stuck in the middle IMHO.

  • http://twitter.com/mckra1g mckra1g

    >The challenge is how do you build the community without hindering your ability to become the platform.

    In generic terms, I would say that the overriding constant would be one of maintaining the vision/purpose for which your community was formed. The tendency to “settle” or morph into the platform is when you allow process to drive content or to be unclear in your (one’s) vision.

    I’ m fascinated by the amorphous quality of forming, sustaining and evolving Community.

    Thanks for making me think. :) Interested in learning more.

  • http://danielgoodall.com/2010/03/02/the-goodwill-hunters/ The Goodwill Hunters « ALL THAT IS GOOD

    [...] former colleague Karl Long puts it succinctly: “the very heart of strategy rests on the value creation question, who does it, why, by what [...]

  • http://www.danielgoodall.com Daniel Goodall

    Great stuff Karl.

    I love your phrase: “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”. I have already been quoting that :)

    I wonder whether Drive the Community is “vastly different”, or if it is actually a modern spin on Porter’s focus strategy? e.g. from the link you provide: “the premise is that the needs of the group can be better serviced by focusing entirely on it”. Now of course there are now new ways to exchange value with that group, but it feels like an extension of Porter to me rather than being completely different as a strategy.

  • http://www.yousaidit.com Charles Borwick

    You definitely have something here but I can’t quite seem to grasp it. How is Yelp not a platform? They are certainly community focused but everything occurs on their platform, within their walls.

    Facebook is clearly a platform and drives a massive community. But doesn’t Twitter as well? The difference between Facebook and Twitter is:

    1. The nature of the social connection (follower vs. friend)
    2. The accessibility of their data (open vs trying to become more open)
    3. The relevance of their data outside the context (twitter is relevant, FB not so much)

    If I looked at the same criteria for yelp: (1) more like twitter, (2) closed? (3) more relevant than twitter perhaps.

    So, it seems to be a platform you need to be open and relevant out of context? Does that mean if Yelp decided to open everything via APIs and enable Apps that they would become a platform?

    Sorry to be dense, but I think it’s a very interesting idea. Just not sure there’s enough clear criteria to quite grasp the differences. Thanks for the thoughtful post.

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