In your email is a latent network of most of the people you know, and how often you talk with them. The Outlook add on - not made by Microsoft - called Xobni (pronounced ZOBNEE, and named for Inbox spelled backwards) looks through all the mail on your machine and figures out who knows whom by who is copied on which emails. In other words, your emails naturally contain your social network. It would be easy for Microsoft to simply ask your permission to contact the people in your email list, and Outlook contact database, and ask them if they were willing to join your Microsoft social network.
Microsoft could either build Xobni-like functionality, or simply buy the firm and they would sprint to the head of the social networking wars.
Who cares? Well, look at the history of the internet. First we had the browser wars - Netscape versus Internet Explorer - which Microsoft won by a combination of brilliant strategy and brutal tactics. Then came the search wars. Remember Alta Vista, Lycos, Excite? Today they linger on, marginalized by Google who decimated everyone except the struggling Yahoo! and quirky Ask.com. Search engine marketing is now integral to every company's communications plan. Firms dispatch staff to buy search words and study the Google search algorithm in that hope that their link comes back on the first page -what is ironically termed "above the fold," quaintly reminiscent of the newspapers that Google eviscerates so efficiently.
While Google and Microsoft are busy trying to mine your behavior to serve up ads and figure out who you are, LinkedIn's 27 million (and growing) users disgorge reams of personal information, including where they worked, where they now work, who they are, who they know, what their interests are, whether or not they are in the market for a job. Jigsaw and Spoke compete with to be the resource for business contacts, while on the social side, Facebook has already marginalized Friendster (now, literally, a case study) and is currently dueling with MySpace.
We are only at the beginning of the social network wars. Eventually, every company will have to work with the winning social network firm or firms, just as almost all companies work with Yahoo! and Google.The social network firms have superior access to talent, polling, research, and create a platform for the most targeted advertising on the net with messages aimed at the exact the demographic, title, and industry the advertiser wants to reach.
So, are you using the power of these social networks, or is your company stuck in the pre-network world of Microsoft?
So the question is: Can you use this new, portable, low-cost, user-friendly platform to sell more and serve customers better?
The first step would be to
sponsor some of the innovations that are emerging naturally. For example,
a car company could sponsor the software that turns your iPhone into a flashing
emergency light to put in
the back of your stalled vehicle at night. There's also a pedometer app that uses the on-board accelerometer to measure how much you have walked or run -- Nike could count how much you Just Did It. There is even a glucose
counter, which I'm sure will soon have a Bluetooth-enabled glucose tester,
which will enable you to prick your finger and automatically
update your record and your doctor -- which should be of interest to Bayer
Diabetes Care, to name just one.
Companies should be encouraging end-user iPhone innovations consistent with their brands - and let the App market sort which ones are useful. Because the medium is so new, the costs are very low.
Build the content, serve it up through
iTunes -- and let the market decide what it wants.
I have the good fortune of working with behavioral economist Dan Ariely, and he has an idea called "the pain of paying." Everyone hates to pay, and they hate to pay more if the costs are frequent, obvious, and in tangible terms. Yet, we often make bad things like gambling easy to buy, and good things like preventative medicine hard to buy. He has shown that by changing the mode of paying you can change behavior. Concerning energy, people are feeling the pain of paying on gas - because they see the pump racking up the cost, as Dan recently pointed out in a New York Times Op Ed. But your electric bill comes once a month, and has myriad charges on it that make little sense - like power generation fees, transmission fees, and uninterpretable taxes. When I look at my energy bill I have no idea what it costs per day to run my air conditioner or fridge.
But, if we could increase the pain of paying and make energy consumption of all types more visible, consumption will drop. The Prius, with its beautifully big, graphic display of fuel consumption is a natural experiment and we see consumers adapting. As reported in the Washington Post, there are a whole cadre of Prius drivers who compete with each other to achieve the coveted 60 MPG mark for a complete tank of gas - all because the consumption of fuel is so easy to see while driving. Given the fact that transportation represents just under 30% of our country's energy use, this feedback loop could be material to our plight.
Another useful place for devices that measure consumption is the home. Utility company National Grid has teamed up with Blue Line innovations to provide a device that easily hooks up to your electric meter, and displays how much energy you are using. With this simple feedback, people's energy consumption dropped anywhere from 5% to 20%. Who knows, by simply making our energy use apparent to the user we might decrease consumption by as much as a billion barrels a year of our 5.5 billion consumption in the USA.
Businesses could benefit too. As I am writing this on my laptop, I have no idea how much energy I burn when I leave it on overnight. If companies instrumented their copy machines, computers, lights, and anything that consumes power, people would turn them off more often and waste less. Information changes behavior - all we need to do is make it transparent. So while we are waiting for T. Boone Pickens to build his wind farm - are you instrumenting your home and place of work?
One way to create a great fortune is to ride the next wave, and my money’s on LinkedIn. Bain Capital, Greylock, Sequoia, and Bessemer Ventures -- four very savvy venture firms -- recently invested $53 million dollars in the company at a billion dollar valuation – which means they think it is worth at least ten. Unlike Facebook, Linked-In is already profitable, and they took capital to grow faster.
Who cares? Well everyone should because they sell access to professionals. I have personally found it useful for recruiting, business development, and research. How much do you need to pay to get access to over 25,000,000 professionals? Does $7,000/month sound reasonable? That’s what you can buy from LinkedIn. Peter Merholz recently blogged on this site about use of LinkedIn in recruiting. My question to all of you is: Are you using LinkedIn? If so, how? Let’s share some stories about it. If not, why not?
Not everybody is paying attention to how fast Linked-In is growing; it took Linked-In over 400 days to recruit its first million participants, and only 19 days to gather its 20th million. Today, rumor has it they are over 25 million participants and growing. Their goal is to be the globe’s largest professional network, and that clarity of purpose helps avoid many of the issues that Paul Michelman experienced in his attempt to mix business with pleasure in his recent Facebook presence. Going to LinkedIn is like going to a convention – you may find some fun, but you know people are there for commerce.
They make money by selling access to people -- not just eyeballs. Personally, I have found it useful to find old business colleagues and start discussions that are turning into business for my firm. My colleague Chris Curran used the Linked- “InMail” product, which charges you to send email to people you don’t already know, to reach 200 LinkedIn participating CIOs. This feature -- selling email access within Linked-In to other members of the network -- is a core revenue generator for the firm. Chris received more useful responses from the 200 CIOs he found in LinkedIn than he did from a mass mailing to thousands.
Chris is not alone. I find friends use LinkedIn as a way to access experts, and the company is on its way to creating the world’s largest network of participating experts, which I think will swamp firms like Gerson Lehrman, which sell access to deep expertise. Nielsen should watch out too because LinkedIn will have millions of consumers -- especially business consumers -- to question, and thereby provide world’s largest, and most dynamic consumer panel.
Not only that, but the Kellogg School at Northwestern University recently announced that they are using Linked-In as the engine of their alumni network. As a graduate of Harvard Business School, I tried to get my alma mater to join the wave, but so far, our alumni network is still closed – which I think is a mistake. Harvard, like all organizations, should participate in this growing network, while still creating their own group as a distinct, but connected space. Like with the Internet, the largest, and most capable network will win.
How are you using Linked-In?
]]>Every company, including Google, is rushing to know their customer’s desires better than anyone else. Google does a superior job of tracking, mining, and delivering customer’s wants faster and in more detail than any other media firm. This brilliant competence underpins their stratospheric valuation. Other companies like Progressive, USAA, or Active Health also have deep knowledge of their customer’s activities and use it to improve their products and services.
Yet firms need to be watchful not to go too far. Customers come to Google because they trust the firm, and all trust is built upon reciprocity. Today, Google holds all the cards: they know what their customers do, where they live (in terms of IP addresses) and, when people set up an account, who they are. Google trades on how you, and I, and billions of others behave. And Google provides a GREAT service to us all.
However, if they are not careful, Google will fall into an old media paradigm in which those who deliver eyeballs can sell access to that audience without consent of those being sold -- which sounds strangely like government without consent of the governed. Google is not unlike King George who unleashed in the colony of America a band of “subjects” who fought to be citizens. Citizens, unlike subjects, choose to participate, or not participate, in the reigning power structure.
Google professes to do no evil, yet, it does not give its “governed” any rights at all to control how information is captured on them, what level of disclosure they want to give, nor how the information about them is used and sold.
Many companies have this problem, and I’d like to start a dialog about what it would take to enable more trust, and more user-controlled identity management.
For example, what if the user could control what data are kept and or not kept about them? What would happen if users of Google, of any system, could elect to not have any of their actual behaviors tracked?
Second, what if all username systems had multiple levels of disclosure under control of the user? If Google had a more robust identity management system, they could turn over to Viacom the viewing habits of their audience, but never need to disclose their screen names or their IP addresses.
Third, and this may be the most radical notion, what if any person could request all and any data captured on their behavior from the company doing the capturing. Put another way, don’t I own my own behavior? Imagine 1,000,000 people going to Google and asking for their search data, so that they could turn the data over to a new search company that offered to do an even better understanding what those million people wanted.
What rights do you think your customers should have about their own data?
]]>A recent Financial Times article criticized the new iPhone for being too closed, and I agree that their lead is being squandered – with very poor uptake in Europe – because of this. Imagine an iPhone that had easy, cheap, standard, memory upgrades. The easier it is to upgrade, change, and improve the product – the more likely it is that people will adopt it, make it better, and an entire ecosystem of products and services can grow up around it. But since its founding, Apple does a great job of launching the first product and then refusing to open up to achieve market dominance.
On June 19, the Obama campaign said that they will not take public financing. Why? Because the openness of their interaction with their supporters is so great, and their social networking so successful that they can afford to refuse the $84,000,000 in public support. The Clinton campaign knew that the world was changing but refused to create an interactive web presence that engaged their audience – and suffered the consequences.
The same thing is happening at your organization. Is your firm open with customers? Are you embracing the dialog that is happening about your products and services in the Groundswell that Josh Bernoff and Charlene Li have so eloquently written about? Inside your firm, do you allow or even encourage your employees to be part of the social network and blogosphere? Is Facebook allowed during work hours or does your firm limit access?
I was just consulting with the top management of a Fortune 100 company that dropped their policy this month of barring Facebook at work it because they were losing promising young employees who refused to go to work for a company that would not allow them access to their lifeline. As my friend John Perry Barlow noted, the internet reroutes around censorship. Likewise, traditional notions of control are obsolete, and executives need to get comfortable that all products, services must open up faster, and customers and employees expect openness at all levels.
We need a new management paradigm that embraces the fact that we are not in control, but in a dialog with all our constituencies including customers, employees, shareholders, and suppliers. Nokia’s Mosh site allows clients to create and upload new wallpapers and ring tones and Staples has a entire process for allowing customers to propose new innovative products for the company to sell – just to name two. But, letting go of control is never easy, and there are risks. If you don’t think carefully about the few things that you keep closed, you can lose your strategic advantage.
In this new setting managers must consider carefully where they can continue to extract value – even as things become more open. The most extreme example is Craig’s list, which only charges for job ads and gives all else away for free -- and yet they are very profitable.
How is your organization dealing with this new challenge?
]]>That’s precisely the problem companies face today with their IT.
Today, few executives spend any money or attention on shaping the tools for their knowledge workers – despite the fact that knowledge workers are an increasing part of the cost and productivity base of all firms. For example, I was talking with the CIO of a multi-billion dollar military contractor, and I asked him how much time engineers at the firm spent looking for information. He reported on a study that showed the typical engineer spent 30% of their time looking for information, and that 30% of their expenses were engineering salaries, which meant that 9% of their entire cost base was spent searching for information. Putting Google in would not help this problem because the firm's data is not made up of web pages and typical documents. Despite this huge cost, they did not have a single person dedicated to creating customized search tools to drive increased productivity of their engineers.
Managers today have been convinced by the vendors and by their own lack of knowledge that the tools they have are the best they can get. The devices we have today are still based on designs from the late 1960s and if you look at the “mother of all demos” by Doug Englebart who ran the Augmented Knowledge Workshop at Rand Corporation, you will see more functionality demonstrated in 1968 on machines 1,000 to 100,000 times less powerful than today’s devices.
A few leading companies like Amazon are willing to invest in new information devices like the Kindle. Some investment banks are willing to invest in customized information environments for their traders – to give them an edge. And the military is always pushing the envelope in terms of what the inside of the cockpit of a fighter aircraft to enhance the decision making ability of the pilot.
Given how important knowledge workers are to our economy, my question is why have so few firms been willing to invest in building new tools to enhance the productivity of their workers? Manufacturing does it all the time, so why is it so hard with information?
]]>Every company can find an information advantage, if they are creative enough.
On June 3, the Wall Street Journal reported on Wal-Mart’s quiet launch of Oodle.com, a free classified service that carries 30 million items – from Madonna tickets to houses. Of course this will result in even more traffic to Walmart.com and provides a new service to its 130 million weekly customers. But the more interesting angle is how it allows Wal-Mart to better understand consumer demand. They already dominate all other retailers in their ability to spot trends, analyze data, and capture demand – from hurricane stock ups to college car washes they seem them coming.
My bet is that they have ramped up Oodle.com so that they can get access to a new frontier of insight, which will come as they analyze the used market, and demand for items they don’t carry. They can see the used price for things they sell, for things that complement things they sell, and for things they don’t sell but may be good indicators of consumer sentiment – like cars.
Wal-Mart now has a view into an entirely new set of transactions that will help them to run their core business even more powerfully. The advantage has migrated from analyzing just purchasing behavior of the new to the new and used.
They are not alone in creating such an information advantage. In December Goldman Sachs bought Litton Loan Servicing, which is a mortgage servicing company that services high yield loans. They used Litton to buy Fremont General’s loan servicing rights for $12.2 billion in loans as well. Not only will Goldman make money on servicing the high priced loans, but as importantly, by buying this asset, they are able to get superior access to information about the mortgage market more broadly. The information premium can be found by understanding not only the sourcing, structuring and trading of assets, but also in the servicing behaviors too.
Likewise, back in 2005, Aetna bought Active Health Management, a healthcare data analytics company, for $400 million to help them better understand consumer behavior so that they could design superior health management plans. For Aetna to take the next step in accurate pricing and better client servicing, they needed a more complete predictive model of customer health behaviors. The competitive battle ground is not just in pricing and claims anymore, it has moved to predictive analytics and health management.
So the questions are:
Where is the information advantage in your industry?
Are you making the strategic moves to capture it and use it to drive value?
Due to habit, most firms never consider increasing the size of the digital window, or windows, that we work within. If Henry Ford were around now, you can be sure that his employees would have at least two screens.
Most people don’t know that you can add an additional screen to any laptop and, by changing the desktop settings, which takes less than a minute, create a continuous work space from one screen to the next. The mouse moves across; you can drag applications to the other screen seamlessly. (Windows can drive up to 10 screens.)
Why bother? Well, two screens lets you open two full-sized windows or applications at once, so if you are looking at your email, you can also see your calendar, or open a document. With the trivial cost of 15-to-19-inch screens, many now under $100, every knowledge worker should have at least two screens. They will pay for themselves almost immediately.
This handy tip is part of a larger concern I have. With the exception of extreme knowledge work jobs like bond trading or flying a combat aircraft, companies have not thought creatively about the interface of their knowledge workers and the information tools. The model may be “The Bloomberg,” the information utility designed and delivered by Mayor Michael Bloomberg’s eponymous company. It comes with two side-by-side screens in the most popular installation.
Small investments can make a huge difference in productivity and employee satisfaction. Most executives have forgotten that a key task of management is to design work – not manage it in the existing design. With the increasing information intensity of all work, we must return to first principles and design more productive and useful interactions of people and their information tools.
You should ask yourself:
Will Amazons achieve mass penetration of this device? Who knows, but it is worth noting that the Kindle is not just a reader – like Sony’s device – the Kindle is an entirely new form of network computer – and like the BlackBerry, will create whole new sets of user behavior. Amazon charges a hefty price for both the device ($399.00), digital books ($9.99 to $120.00 or more), and even blogs ($0.99 per month for selected titles). I expect prices to come down, and the device to open up more over time, and I did add Hamlet for free to my device by going to Project Gutenberg, and simply transferring it with my USB port. Any print media company or book seller that is not experimenting with this new device is missing out on a vital window into new consumer behavior.
The general lesson for all companies is that Amazon has this breakthrough strategic option because Bezos did not stick to his knitting. Think of the courage it took to enter one of the most crowded and competitive product categories in the world – consumer electronics. Imagine trying to get investment capital within an old line company like The New York Times to create a product like Kindle. My bet is that the executive chorus would universally shout: Stick to our knitting (even if our knitting is predictably shrinking)!
In a recent Business Week interview, Bezos said companies which innovate within their existing competencies are doomed to fail; innovation means building new competencies. As Gary Hamel eloquently stated in Leading the Revolution, most executives in an industry are “blind in the same way,” both to what is happening and to what they don’t see happening. In order to perceive new things, leaders must be willing to try innovations beyond current competencies. Put another way, if it is comfortable it is probably not profitable. You need to ask yourself:
• Is my firm’s dedication to the core killing our ability to innovate?
• How can I, as a leader, help discover new customer needs?
• Do I have the courage to lead the investment in new capabilities to fulfill those needs?
]]>Are you taking no more than a squirt gun to the talent wars? Most people find jobs through social connections. In 1974, Harvard sociologist Mark Granovetter published his landmark study that showed four out of five people find jobs through personal connections. Yet, in our recent Diamond Digital IQ survey, only one in three senior executives think information technology will impact their human resource management function over the next three years! This means they will lose out on the most powerful, fastest growing, and most influential channel to be find talent.
Take the case of LinkedIn, the upstart social networking site whose aspiration is to become the world’s dominant professional network. It had 19 million members as of February. It took LinkedIn about a year and a half to achieve its first million members, and only 29 days to get its 19th million. For $7,000 per seat per year, you can look at its entire network.
The company is already profitable through three sources of revenue. The first is its InMail product, which allows you a prescribed number of email to people you don’t know in the network who have agreed to accept emails from people they don’t yet know. LinkedIn charges for access to the other people in the network – think of Six Degrees of Kevin Bacon but charging for the second through sixth degree. The second source of money is the service mentioned above in which HR directors can see the full network, and there is some advertising, too.
Many firms have found great success using Craigslist, which has over 450 cities covered around the globe, and over two million new job postings each month. The other social media like Facebook, MySpace and a host of others also energize how people connect and share information on everything – including jobs. Social media are only going to grow as technology gets ever more pervasive – with half the world’s people having mobile phones within five years. It will not stop – but only increase in importance.
When the implications of IT and social media are so apparent, why is your HR department and your management team missing this trend? Because the people who run companies, the 40-somethings to 50-somethings, are not usually in these social networking sites. They don’t know how the world of job hunting has changed.
So the questions you have to ask yourself are:
* Does our company really know what is going on with the social web and our talent strategy?
* How can we differentiate in this new, emerging market so we win the very best people?
For example, if you go to How Stuff Works, you'll find a clear, well referenced, and brief explanation on happened with the MD-80s. Why didn’t American Airlines do this -- or at least point to it? American could have created a resource for its customers and reporters alike on where they could find status, discover additional information, dig into stories pro and con. American could have tried to set the context of the overall story. Context is the best form of spin control.
Media cynics routinely note that “if it bleeds, it leads." Yellow journalism and sensationalism are as much a part of media as fact and objective reporting. Yet there is still a thirst for “the rest of the story” as Paul Harvey used to call it, and the spirit of deeper news coverage is migrating to the web, where both professional and citizen reporters can create more researched coverage for the interested audience.
What this means for companies is that they need to respond and tap into the context from other reasonable voices. Further, they should give these discussions context on the company’s website. Companies should point any and all communications with customers and the media to this ongoing dialogue on the website so that it will at least become a resource for the overstrapped-infotainment-oriented reporter, and at best become the respected context for all the opinions about the event – good and bad.
Yet, few companies have the expertise to even see what is going on around them on the web, and fewer yet think of their web presence as way to get their message directly to the marketplace and to their customers. So you have to ask yourself:
* Is my company even aware of the dialog going on around us?
* Can we move fast enough to become the reputable context for any new issue that hits us?
For more on the airlines see:
The Airline Industry Whistleblowers
Assessing American's Apology
British Airways' Terminal 5 Disaster
Delta-Northwest's Interactive Public Relations