I don’t think I can remember a New Year’s Day when I’ve been more excited about the year to come.

Let’s start with the political landscape. You all know about the year we’ve had, the long-standing governments that have tumbled, the despots and terrorists who are no more, the growth in measured nonviolent protest. It’s been a year of change, and all the signs are that there’s a lot more to come.

Take a look at what’s currently happening in Russia, what people like Alexey Navalny are up to right now. [Esther, thanks for pointing this out to me]. Now there’s a little part of me that wonders whether Alexey Navalny could do in the US what he’s doing in Russia, given the signing of the latest NDAA into law, but right now it’s only a little part: I still have considerable faith in democratic process however flawed it may look at times.

Why do I have faith in democratic process? Let me tell you a story. When I was 18, India was placed under a State of Emergency that gave the Prime Minister the power to “rule by decree”; she herself was quoted as saying she’d brought democracy to a “grinding halt”. Which she proceeded to try and do, for 18 months, before calling for elections. At the point of calling the elections, this was the set-up:

• Her father, Jawaharlal Nehru, was the country’s first prime minister, loved and revered in Indian memory.
• Her surname, Gandhi, resonated in the land of Mohandas Karamchand “Mahatma” Gandhi, even though she was in no way related.
• Her party were the only ones to have won national elections….ever.
• Her family had won her constituency seat since time immemorial.
• Her opponents were either in jail or in hiding.
• She’d been in dictatorial control for the previous eighteen months, with her young son acting as the ebullient enforcer.

You get the picture. Putin would have pouted his pleasure; Mugabe would have murmured his admiration. There could only be one winner to the 1977 election.

And yes, there was only one winner.

Democracy. Amazingly, while the opposition bayed and bleated “Fix”, the results proved otherwise. Congress lost the election. Indira Gandhi lost her seat.

Bad law can be passed. Bad law will be passed. Sometimes good law gets passed with bad bits added on by those who know how to game the system. And it takes time.

Democracies can’t be gamed. Not then, not now. Delayed, yes; disrupted, yes. But only for a time.

You can’t look at the changing political landscape without being aware of the immense social changes going on, many of which influenced the political changes. Following the success of OWS, people are really beginning to think how things are distributed today, how things were distributed before, how things may be distributed in future. Arab Spring and OWS could represent the beginning in a long journey of enlightenment of how a global society will learn to operate. Take a look at this diagram:

Figure courtesy td-architects

The 86%.

The 99% and the 1% represent inequalities in wealth distribution, perhaps in income distribution as well.

The 86% have other things besides wealth and income on their minds; things like food, water, disease control, energy, education, to name a few. There is so much to be worked out: figuring out how to get the right balance between growing food for people to eat, and growing crops that will help solve the energy and climate crises; learning how to battle new diseases, diseases accentuated by the global nature of modern trade and migration, while coping with the return of old ones, as antibiotics lose their oomph; treating water as the precious resource it is, taking care not to make it a Missile Crisis level problem as countries argue about riparian rights; dealing with those who would Balkanize the ocean depths and lay claim to large swathes of ocean and all the natural resources represented (sadly, I can already imagine a world where fish have “passports” branded on them); negotiating how to overcome the imbalance of a world where apparently 40% of new patents come from the US, where Liechtenstein is ranked 9th in the world league table for innovation, and where China, India, Brazil and Russia are notably absent. I have nothing against Liechtenstein, but puh-leeze.

Figure courtesy GOOD.is

The problems cited are not easy problems; they represent a whole new class of problem for humanity to face, global in their construct, immense in their complexity, and they’re going to need new classes of tools to help solve them.

My thanks to Vintage Lulu for the amazing photo above

Some tools aren’t appropriate any more. So we need new tools, tools that allow people to collaborate with low cost of entry, low cost of operation, low cost of change, low cost of exit; tools that work globally, consistently, across culture and geography and language; tools that are device- and location- and scale- (and for that matter socio-economic grouping-) agnostic.

Tools that have emerged, tools that continue to emerge, tools that make me realise that humans are wonderful beings. Tools that gave computer gamers the ability to solve a ten-year old puzzle related to AIDS research; tools that helped volunteers restore tsunami-damaged photographs to do their little bit in alleviating the suffering of those affected by the tragedy in Japan last March.

It’s not just tools, human beings are making breakthroughs in waters hitherto uncharted; Ronald Ross (incidentally the first Indian-born man to be given the Nobel Prize)  ”discovered” the parasite behind malaria while Queen Victoria was still on the throne. Yet it was only last year that people started speaking of a proper vaccine for malaria, a disease I know something about, having had it more than once. Similarly, I’m very excited about what Irit Sagi and team have been doing in Rehovot, experimenting with vaccines for Crohn’s disease and rheumatoid arthritis, amongst others. I have two members in my close family with Crohn’s.

I’ve just listed a small number of reasons why I’m excited about the year to come. Of course there are major challenges. The West is going to have to spend less and save more, something the West may not know how to do. The East is going to have to spend more and save less, something the East may not know how to do. Perhaps the East and the West, between them, have the answers.

We’ve chastised banks, and bankers, for lending too much, for lending to the wrong people, for investing in the wrong things. We continue to chastise the banks. We’re also chastising banks for not lending enough, for the credit squeeze, for holding up growth. In fact we’re doing so much chastising of banks they’re finding it hard to hire and train people to do the things we’re asking them to do. Hmmm. Something’s gotta give.

We’re going to have to understand more about economic growth, what it means, whether it is desirable or not, when it is desirable, when it isn’t. We’re going to have to understand what relationship that has with jobs, and what that means for society. We’re going to have to understand the role  played by what we call today a country, with its strangenesses of political and economic borders, how that changes.

As we enter 2012, there are many things that appear uncertain, starting with the economic, social and political landscape; this is true wherever we look.

Everything is up for change.

And you wonder why I’m excited about 2012?

And you know/the darkest hour/is always/always/just before the break of day/

And it appears to be a long/appears to be a long/appears to be a long/time/

Before the dawn.

David Crosby, Long Time Gone. Crosby Stills and Nash, Crosby Stills and Nash.

I made this collage up for the previous post. Some of my favourite albums from that time. See how many you can guess without enlarging the photo.

Born in 1957, raised as part of a liberal and progressive family in Calcutta, schooled by the Jesuits from 1965-66 to 1978-79: there is much in my background to explain why I espouse many of the beliefs of the Sixties. It begins with my family and my faith; it manifests itself in how I’m passionate about community and in communal activities, in a participative society, in a collaborative workforce. It underpins my interest in the “maker society”, in open source, in emergent behaviour, swarming, and servant leadership. It is to be seen in my attitude to ownership of material goods, it is to be seen in my attitude to ownership of ideas. It affects how I think about nature and the environment, and informs my beliefs in stewardship. It defines my approach to tolerance and to forgiveness, to war and to peace.  It even influences the way I read and write, what I eat, what I cook.

And it influences the music I listen to. Take a look at the image below:

It’s a collage of 100 album covers, and represents the first 100 albums I would buy in vinyl if they were available at a reasonable price and in reasonable condition. I’ve “owned” these albums before, sometimes multiple times. I’ve paid for them time and time again, in vinyl format, on prerecorded cassettes, as CDs, as 25th-anniversary-with-extra-tracks-you-never-knew-you-needed-(and-you-were-right!), sometimes even in DVDs. Do I hear you say “sucker”? Yup, that’s me.

I’ve managed to buy quite a few of them on mint vinyl already, not as reissues but by being in the right place at the right time. But.

But given a chance, I would buy them as a single transaction, a job lot, a bundle. Even if there was some further negotiation to be done with respect to the sequence in which I would receive them, and the time over which that would happen.

It’s not just about music. I travel a lot. And I’d love to go to an airline and say, I’d like to buy 100 flights. Return. Most of them are on sectors you fly. I will use those flights up in a year. It may not be just me travelling. I will vary the class of travel, “turning left” for longhaul business travel and for at least one family vacation.

It’s not just about travel. I read a lot. And I’d love to go to a bookstore and say, I’d like to buy 100 books. Most of them are on subjects you stock. I will use up those credits in a year. It may not be just me doing the buying, I will vary the class of book, “turning left” for signed numbered limited editions occasionally and for at least one set of family presents.

Music. Travel. Books. Clothes. Eating out. In some ways it’s all the same to me. I want to tell someone what I’m in the market for, build a relationship between that “person” and me. Tell them how much I’d be prepared to spend and over what period and for what class of thing. Work with them to figure out the sequence, frequency and timing.

And expect them to invest in that relationship as a result, be my friend, guide, partner through that process.

But it needs them to think differently, in order to view what they do differently, move from the product perspective to the customer perspective.

Without that fresh perspective, we’re going to continue to see abominations like region coding on DVDs. Which customer was that designed for?

Let me give an example of something that does not work.

Let’s take Premiership football in the UK. Most grounds have capacities in the 30-50,000 range, with a few clubs below 30,000 and a few above 50,000. All of them have fan bases that are multiples of that number, large enough fan bases to warrant the payment of very large sums of money to acquire “exclusive” rights to the live games.

And then someone chooses which games are broadcast live in the UK…. it would appear that if you didn’t live in the UK, you can watch pretty much all the games live. So my brother in India gets to watch his choice of UK-based Premiership game live, while I can’t. Go figure.

OK, so the hardened supporter buys a season ticket to go to all the games. Guess what? Analog is scarce, so there are waiting lists for many of the clubs. [That's true for most sports at an analog level, and why touts make real money: Lord's, Wimbledon, Twickenham, the O2, the story's the same.].

Since I can’t get an analog season ticket, the smart thing to do is to buy a digital one, right? Wrong. Because you can’t. You’re only the customer. Someone else decides what bundle of matches you get to watch, a bundle designed to disappoint every customer.

Which brings me to the nub of this post.

Customers are fundamentally unpredictable.

In the eyes of people trying to sell them things, that is.

Why is this? It’s because customers want to buy things their way, in terms of the nature of upfront commitment, the choices represented, the frequency, the sequencing, the bundling and the discount. And the ability to change everything.

I want to be able to buy 100 books or flights or albums. Or 10. Or 1000. I want to be able to buy it all from one provider, even if that provider has to source some of the services from elsewhere. I want to be able to choose what and when and how. And to change my mind. Of course, if I do change my mind, I will have to pay for it. But only as and when I exercise that “right”.

I don’t want a buyer’s market, I’m happy to see the service provider make a turn on the service provided. Everyone’s got to eat.

The trouble is, it’s been a seller’s market for far too long. Based originally on natural scarcity and monopoly, now more often based on artificial scarcity, regulatory arbitrage, ploys and schemes you don’t want to believe. All designed to ensure that business becomes more predictable….. at the cost of customer service, service quality and even freedom of choice.

This will change.

Customers will choose to make long-term commitments with companies that give them simplicity, convenience and freedom of choice. In many industries, the early movers have provided simplicity and convenience but not freedom of choice, as a consequence of which there are people who believe that the freedom of choice is not important. That’s a big mistake.

A time is coming when the customer decides on the bundle of products and services to be acquired, not the provider. In fact, that bundle will comprise services from more than one provider…. the services themselves will commoditise, but there will be a premium payable for simplicity and convenience, payable to the “prime” who constructs the multiprovider bundle. The customer chooses the bundle.

A time is coming when the analog components of that bundle will last, as they used to last. Cars. White goods. Entertainment systems. All examples of analog goods that used to be built to last, and are now designed for rapid obsolescence. This won’t be tolerated any more. Planned obsolescence will no longer be accepted.

A time is coming when everything, as a result of commoditisation: every bundle, every analog item, every digital item, will come with a published cost of change. The cost of change will be payable in two forms: an “option price” for the right to change, and  an “execution price” to make the change. The penalty for change must be published upfront.

A time is coming where the maintenance and repair of what is purchased will also be commoditised: where you can choose to go where you like for analog spare parts or digital equivalents. A time is coming when every customer will have the right to look under the hood, to tinker with the product or service, to make changes personally, A time is coming when the current warranty system will be overthrown, when the principle goes back to “fit-for-purpose” rather than “will work for a year or so”.

A time is coming.

Why has this time not come already? Because companies have designed products and services with the overriding principle of aiding predictability rather than meeting customer needs. 

A time is coming.

If you haven’t heard about Big Data this year, please tell me your secret. Tell me how you managed to avoid hearing about it. I want to know. Really. There are days when I want to be in a place like that. Desperately.

For some time now we’ve been hearing about device proliferation. A classic 10x market. People tell me that mainframes are numbered in the tens of thousands, minicomputers in the hundreds of thousands, PCs in the millions, smart mobile phones in the billions. Smart devices in the tens of billions.

These tens of billions of thingummybobs are getting busier and busier as they sense and observe and record everything and everyone around them, saluting the things that move and painting the ones that don’t.

In a perfect world, this would mean that there’s a lot of good data being produced, data that should prove useful to improve our lives. So that means there’s a market for software that helps us crunch the data into something useful, find the data we need, see the data in ways that can help us extract meaning and act on the meaning.

Even though this world is far from perfect, I’m glad to see that all that is happening. VCs have been plunging into Big Data for a while now. Data visualisation tools continue to get better, better and better. And search is beginning to do something about its verb-based future.

And yet……

And yet I have this sense of unease.

You can have lots and lots and lots of data, Big Data. You can have wonderful Big Data Crunchers, tools to help you do something with the data. You can have the world’s best visualisation and search tools.

But they all mean nothing unless you can act on what you see.

Innovation takes place through adoption into practice, and not just through invention and disruption. Until something is being used, nothing actually changes.

Big Data becomes useful when it leads to action.

That action takes place across a wide spectrum. At one end the actors are all machines. And we run the risks that Kevin Slavin alluded to in his TED talk, How Algorithms Shape the World.

At the other end all the actors are human. Shouting from the rooftops about overload, seeking to convert firehoses into capillaries. With limited success.

As Clay Shirky so memorably pointed out, there is no such thing as information overload, it’s all about filter failure. We need better filters, something I’ve been writing about for a while now.

Between the two extremes there’s a universe of space where we have a lot to learn. The more I read about the Air France tragedy the more I feel the need to look deeply into this, how human beings cope with decision making amidst such complexity. Just reading the IEEE blog coverage here and the Popular Mechanics coverage here gives us pause for thought.

My concerns get heightened when I realise major segments of the industry I’m part of can’t stop rubbing their hands with glee as they intone “big data, big big data, big on-premise servers, big on-premise storage, big processor licences, big profits…. Christmas is every day”.

That causes new problems related to the quality and reliability of the big data, as multiple sources take snapshots at different times. When I worked in capital markets, working on out-of-date data could cost millions in seconds flat; it became very very important to know how “live” the data was, and to keep checking that the data was real and up to the second (or even millisecond).

So we have the risk that there’s a lot of Big Wrong Data.

But you know something? These things can be solved. We can learn how to process the data more effectively, present it for visualisation more elegantly, check for its validity more ruthlessly, use the best software and services to do all this, use machines to filter and humans to curate. We can do it all.

And find ourselves in a situation where all we do is “wait faster”.

Because there’s one more thing we have to change. And that is this: the way we make decisions. And then do something.

Some years ago, I remember a story that was used to illustrate the importance of a particular book. [Sadly, I can't remember the book any more, other than it may have had something to do with Price Waterhouse and may have had a yellow cover]. The story asked a simple question. Five frogs on a log [Aha, that was the title. Five frogs on a log!] Where was I? Five frogs on a log. Four decide to jump off. How many are left?

And the answer was… five. Because, as the authors point out, deciding isn’t doing.

The way we’ve allowed email and calendar to become part of our work lives, decision-making seems to be perennially poor in large, often still hierarchical, organisations. Email chains fragment and break and become divergent infinite loops. “Snooze, you lose” gets stated sometimes but rarely acted on. Getting the right people together has become harder and harder, process delays begin with scheduling time. Everything is at priority one in the scheduling process. If compromises are sought on the quorum front, they are temporary, evanescent. Infinite loop problems recur.

Big Data can have Big Effects.

That excites me.

Big Data can create Big Problems, sometimes with tragic consequences; we need to take extreme care.

Big Data can lead to Big Waste in on-premise activity, and we need to take care here as well.

Big Data can have a Big Positive Impact on industry, on education, on healthcare, on jobs (the subject of a separate post I will try and write this week) and even on government. People like Tim O’Reilly, Tim Berners-Lee, Nigel Shadbolt, Wendy Hall et all have worked hard to get everyone to understand what is possible here, and I am a convert.

But the cultural changes that have to take place in institutions should not be underestimated. Institutional immune systems can render all the big data useless by rising up to slow the processes down, make decisions harder to take, make action harder to initiate, make outcomes harder to achieve.

Big Data means Big Changes.

It’s Not How Big It Is, It’s How You Use It.

There’s a part of me that doesn’t want to write this post. The internet was not, and is not, solely a new distribution mechanism for Hollywood and for pockets of the music industry; but the power of these incumbents is immense in the Western world, and it is therefore possible, perhaps even likely, that bad law will be legislated to protect decayed and dying industries from being disrupted. Even though the customer suffers as a result.

There’s a part of me that doesn’t want to write this post. The internet wasn’t always a global phenomenon. It grew principally from the vision and commitment of US citizens, and as a result there has been a level of US-centricity about its progress and evolution. If the US were to give up this leadership role (which it no doubt will, if SOPA goes ahead) then others will step into the breach. The internet routes around obstacles, we have seen this repeatedly during Arab Spring.

There’s a part of me that doesn’t want to write this post.  The anchors and frames for this debate have already been subverted; the incumbent lobby has done a good PR job. The commonly held belief is that people against SOPA, by definition support stealing,  support denying artists their rightful income. So everyone who tries to attack SOPA goes through that mill, and the mill grinds slowly and exceeding small.

There’s a part of me that doesn’t want to write this post. Anything I do may not be enough to stop it happening; it may not matter anyway; and it may damage my reputation unduly and unwarrantedly.

There’s a part of me that doesn’t want to write this post. There appear to be only downsides to my action.

So why am I writing it?

Because the internet matters. It matters to the world. It matters to people who are giving their all to changing historical and broken paradigms in education, in healthcare, in business, even in government. As the price of being connected with smart mobile devices drops, as three billion more people join the ranks of the ubiquitous always-on, we’re going to see amazing changes. Changes that will radically improve the lives of our children and grandchildren.

For that to happen, we have to make the internet a safer place. We. Not me. Not you. We. Much has been done to achieve this, much remains to be done. Sustainable cybersecurity is essential if we wish for a world where health, education, welfare, business and government are transformed anew. And there’s been so much progress in making this happen that wasting it is bordering on the criminal, the insane, the criminally insane.

This transformation, bringing in the power of the collective, making everything more social, more sharable, democratising access and knowledge and power, this transformation is essential if we are to solve some of the core problems we face, in environment, in disease control, in health and nutrition, in climate change, in food supplies, in water. The institutions we looked to in the past cannot cope with the complexity they face. They need the internet and what it represents. And they need it to be safe,  secure, reliable.

I’ve read more than I care to list here about SOPA; I can’t claim to understand all of it, I’m neither a lawyer nor a politician. The Wikipedia article is probably a good place for you to start, if you’re interested… the very existence of Wikipedia is threatened by everything that SOPA represents.

There is so much emotion around about SOPA that I wanted to give my readers something fundamentally different to look at, when it comes to forming your views. What I suggest is, leave aside everything else you’ve heard and read about SOPA, and concentrate on this one point:

How do you defend cyberspace while protecting against online piracy?

This research paper by the Brookings Institution: Cybersecurity in the Balance: Weighing the risks of the PROTECT IP Act and the Stop Online Piracy Act, is a must-read in this context. Here’s part of the opening:

This paper does not deal with the questions of economic value, free expression or other issues raised by advocates on both sides. Instead, I highlight the very real threats to cybersecurity in a small section of both bills in their attempts to execute policy through the Internet architecture. While these bills will not “break the Internet,” they further burden cyberspace with three new risks

The “three new risks” mentioned are spelt out further in the article. I summarise them below (my words, my interpretations):

• PROTECT IP and SOPA make it harder and more complex to keep the internet secure, just in terms of architecture and processes
• In addition, as companies and customers are forced to migrate away to less secure places, they will be exposed to greater risks
• Current national and international initiatives to improve security will be undermined, set back, and sometimes even abandoned

We need to frame the argument differently, and the Brookings paper helps us do that.

It’s not “Do you support Hollywood or do you support stealing?”

It is “Do you want a safe internet where health, education, welfare and government are transformed, or do you want a distribution mechanism with protection for Hollywood’s historical business model?”

I hope SOPA does not happen. I hope better, more sensible, more technically feasible, more equitable and more progressive means are found to deal with the problem of decay of Hollywood business models. I hope that the more sensible routes will actually mean that creatives get paid properly, rather than what happens to them today.

[This post continues from where I left off in the early hours of this morning, here].

I’ve been following the work of W Brian Arthur for over three decades now, starting with his paper on “Samuelson, Population and Intergenerational Transfers” in 1978 or thereabouts, while I was reading Economics at university. During the 1980s, he was responsible for introducing me to the concepts of increasing-returns models, understanding path dependence better, working out the importance of positive-feedback loops and so on. His work on looking at the economy from the perspective of a complex adaptive system was also a key influence on me.

He may have written many books, but the two I’ve read were both brilliant: Increasing Returns and Path Dependence in The Economy (back in 1994) and The Nature of Technology (which came out a couple of years ago). More recently, I made reference to his article in the October 2011 issue of the McKinsey Quarterly, on The Second Economy.

The article is all about this great invisible network of things extremely busy talking to other things so that people like us can get on with our lives. Don’t write it off as yet another “internet of things” article, Professor Arthur deserves real respect. His description of the evolution of the web of interactions between machines is of fundamental importance, particularly once you understand that it’s all about software, particularly when you realise that this is what happens when Wal-Mart grows up.

You can see the sequence, can’t you? There was a world before Wal-Mart, and the machines who lived there were called mainframes. Then came minicomputers and Wal-Mart and some level of distribution. Along came PCs to increase distribution’s reach, and that begat Amazon. And soon we were in the land and ubiquity of mobile phones, heralding the dawn of Facebook. Now, that people are talking about another 10x, the internet of things, who’s going to be the facebook of that generation? What particular Noah Business will they be in? What disruptive vision will they build the infrastructure for?

You can see where you thought I was going. But I’m not going there. That post is for some other day.

Here’s where I am going.

We all appear to be very relaxed about machines talking to machines in their biliions, yet remarkably un-relaxed when it comes to people talking to people. As Doc Searls said in The Cluetrain Manifesto, markets are conversations.

Doc reminded us of the market in the context of the Middle Eastern souk, where relationships come first, then conversations, then transactions.

Let’s look at Facebook in that context.

The Friend Graph is all about relationships.

The Timeline is all about conversations.

Yup, you know where they’re headed. And they should. Relationship before conversation before transaction.

We’ve lived in a transaction-focused world for too long. Transactions are outcomes of relationships and discovered via conversations. That’s why markets are conversations.

I keep quoting Drucker, but who cares? He said people make shoes, not money. Money, like a transaction, is an outcome of something else done well. Not a goal in itself.

The broadcast-model centralised advertising-is-God style of business that dominated the postWar world should have been strangled at birth. But it wasn’t, which is why Messrs Locke, Levine, Weinberger and Searls had to write Cluetrain in the first place. To remind us of what we were losing.

Relationships.

And conversations.

The Facebook Timeline is about persisting conversation in a new way. Making conversation mobile, multimedia, multipartite. Yes, it’s an audit trail and that can make you feel creeped-out. But then your mailbox was an audit trail as well. And your call detail records. And your analog mail.

Over time, it’s become easier to persist the audit trail of conversations. This persistence comes with benefits and with risks.

The risks are to do with our erstwhile concepts of privacy and confidentiality and data protection; the concepts will themselves change, along with the social mores and values they underpin; as the concepts change, as society transforms their meaning and purpose, the law will catch up. Sometime.

But in the meantime there are many benefits to be had as well, as we share more and we understand more about what, when and how we share. As we interact with what we share, individually and in community.

It was only yesterday that I received an email from Pandora suggesting that I “listen to holiday music by Jim Croce”. Why? Probably because I’d tweeted about listening to him, or perhaps even because I’d tweeted my intention to have dinner at Croce’s in San Diego in early February.

One way or the other, they’d identified that I was interested in Jim Croce. They’d managed to identify an email address that went with my twitter handle (assuming their actions were related to my tweeting). But despite all this they hadn’t managed to identify that it’s not easy for me to use Pandora, given they adhere to the barbaric notions of licensing music according to national borders.

In all probability, you’ve been at the receiving end of targeted advertising gone not-quite-right, and sometimes wondered what you’d shown in your profile to get that reaction. That will improve and it will also change. Recommendations by social network are gaining in importance, and intention signalling is becoming more and more common. These developments will alter the advertising landscape in remarkable ways.

Marc Benioff’s Social Enterprise is about all this. It’s about getting the relationships right first, then enabling the conversations, so that the transactions that occur are not ends in themselves, but instead consequences of the relationships and discovered via the conversations.

In a way, when it comes to Professor Arthur’s statements, we may be talking about three economies rather than two: the first, the one we all know, the one that’s lying tattered and broken; the second, the invisible root system between machines; and the third, the now-becoming-more-visible conversations between people.

Markets are conversations. Conversations are social, and take place between people usually around social objects. Social objects come in many shapes and guises.

The Facebook Timeline is about making the discovery of those conversations easier in space, time and context.

A couple of days ago, I was home chatting to my son. The topic of conversation moved to recent events in North Korea; we touched briefly on a cartoon depicting satirical “last words” associated with the passing of Kim Jong-Il (“I told you I was Il” …. apologies to Spike Milligan). I remarked that I’d seen some bizarre photographs of life in North Korea recently, and he mentioned that vice.com had done a really interesting video some time ago, and asked whether I’d like to see it.

I said yes.

And he said:

I’ll put it on your Wall, Dad

Like others in his generation, he uses email, but sparingly and reluctantly. For him, posting something on someone else’s Wall is the natural thing to do; it is the way he shares information and social objects with his friends.

His younger sister doesn’t do e-mail at all. Some months ago, I heard her tell a friend:

He’s lost his phone, so you’ll have to inbox him on Facebook

She doesn’t even use the word “email”, that’s how far removed she is from the mail culture. [Ironically, she uses a BlackBerry nevertheless, as do many of her friends. They're big on BBM.]

Her elder sister, my firstborn, was my third friend on Facebook. [Dave Morin was my first; his wife Brit Morin, then Bohnet, was my second.] She too engages with her friends mainly via Facebook Walls.

As of tonight, I understand the Wall’s coming down, to be replaced by the Timeline.

I think this is a big deal. And to explain why I think that way, I’d like to take you on a trip back through my own Timeline. Down Memory Lane, as they say.

The story begins with Wal-Mart and then continues with Amazon.com before coming to today and Facebook. [It also explains why I'm fascinated by Marc Benioff's vision for the Social Enterprise, something I will touch upon later. It's one of the reasons why I'm so enjoying my time at Salesforce.com].

Each of these companies is what I term a “Noah business”. Like Noah in the Bible, they saw something that others did not see, a great storm coming. And, like Noah’s ark, they built infrastructures to execute on their vision.

Wal-Mart decided that they could put stores in places where others wouldn’t, because they saw the store as part of a network. A town didn’t have to have 100,000 people before they opened a superstore there. They built distributed infrastructure to connect stores up, located distribution hubs to serve networks of stores more efficiently, built up a nervous system with the store at the edge. Competitors had to follow suit or die. K-Mart anyone? If you’re interested in the story, this HBR article by Pankaj Ghemawat in September 1986 is a good place to start.

Over a decade later, Amazon did something similar. They decided they could ship books to places where others wouldn’t, they saw the customer as part of a network. They built the infrastructure to deliver as little as one book to a customer’s home address, and the connected customers, using their own computers, reviewed and recommended Amazon products and services to each other. Amazon invested in making sure they could serve networks of customers more efficiently, and built up a nervous system with the customer at the edge. And again, competitors had to follow suit or die. Borders anyone? If you’re interested in the story, this HBR article by the late CK Prahalad and MS Krishnan is a good place to start.

And now we have Facebook. Mark Zuckerberg’s genius is often quoted as being around the “friend graph”: Facebook saw the relationship as part of a network. They built infrastructure to deliver relationship glue to everyone, and focused heavily on helping people share social objects. They invested in making sure that they could serve networks of relationships more efficiently, and built up a nervous system with the social object at the edge. And yes, again, competitors will have to follow suit. Or die. If you’re interested in the story, reading David Kirkpatrick’s The Facebook Effect is probably the best place to start.

[Of course, to do that, you should go to Wal-Mart and buy an Amazon Kindle, then download the e-book,  to complete the circle of my story elegantly].

Relationships thrive around social objects: by sharing experiences around what you have in common, you build the wherewithal to withstand the differences that will come. Jyri Engestrom and Hugh MacLeod are well worth reading in this context, it was through them that I really understood the importance of social objects.

Today, when I look at Timeline, what I see is an efficient engine for sharing, commenting on, “liking”, or otherwise engaging with, social objects. The original Wall was an early attempt to do this, but it was limited in its ability to help us understand the relationship networks in the context of the social objects. Timeline allows us to view the community of interest around an object more vividly, more easily. Time and location data are also easier to comprehend.

One way of looking at the Wal-Mart-Amazon-Facebook sequence is to compare it with the mainframe moving to midrange, PC and mobile. When I first heard Marc Benioff speak about the Social Enterprise, he made this point about how excited he was to be in an industry that’s evolved that way (from mainframe to midrange to PC to mobile); for some time now, he’s been reminding people that when he founded the company (along with Parker Harris) the question they were asking themselves was “why isn’t all enterprise software like amazon?”…. and, not surprisingly, some years later, the question they asked was “why isn’t all enterprise software like facebook?”

To my way of thinking, the Social Enterprise is the natural evolution of all this. Some companies need help in the Wal-Mart phase, connecting up their stores and employees. Some companies need help in the Amazon phase, connecting up their customers. Some companies need help in the Facebook phase, connecting up their relationships and their ability to share.

And some companies need help in connecting their Wal-Marts and their Amazons and their Facebooks into one open ecosystem.

The Facebook Timeline, by making it easier for us to visualise activity around the social objects we share, will help us understand more about us, our interactions, our relationships. Location and time will become more easily discernible. The text and still photo and link that dominated the Wall will evolve into a richer environment with audio and video, persisted when required (even if it was streamed earlier). It will help us understand our sharing habits more precisely: active and passive sharing will evolve further, as will the use of Like and Share. Communities will form around the conversations that the comment streams represent.

And Facebook will continue to evolve. And adapt. And learn. And share that learning with us.

Do I think Facebook has done everything right every time? Of course not.

Do I think there are significant learnings to take place, about privacy, about confidentiality, about the right to be forgotten, about educating people on good practice and prudent usage, about preventing stalking and cyberbullying and and and? Of course.

Do I think that walled gardens are a bad idea, and that open ecosystems are the way to go? Of course.

There are lots of things wrong with facebook. There are lots of things wrong with lots of things. One of the things I like about facebook is that people listen to views and complaints and then proceed to make changes in response. Not many organisations do that as effectively.

So, while I see a lot of comments aired about Timeline, I’m for it. I think it’s part of the evolutionary process we’re all in. And I look forward to learning more….. I guess this post is going to get some serious flaming, praising facebook is not the way to become popular :-)

As most of you know, I was born and raised in Calcutta; I spent my first 23 years there, fifteen of them being educated by the Jesuits. Calcutta, where, from 1977 to 2010, there was a “democratically elected communist government”. And the Jesuits, with their focus on promoting social justice. Between the two, they made sure that I experienced something about the moral, economic, social and political implications of unequal distribution of wealth.

[This is not meant to be an economics lesson, even though I read economics at university. I am keen on trying to explain my thoughts from a "first principles" basis, so that I can engender some real dialogue with readers rather than get bogged down in definitions and semantics. The objective of this post is to excite that dialogue, so that I can learn and refine my understanding. And perhaps help you refine yours in the process].

I’ve had an interest in The Maker Generation for some time now, as evinced by these posts over recent years: The Maker State (2007); Dersu Uzala (2008); Ragu and Bolognese and Cory Doctorow and Makers (2009); Better Mousetraps and the Maker Generation (2010); The Maker Generation in the Enterprise (2010);  and most recently 2012: The Year of Maker-Friendly (2011).

For many years now, I’ve been trying to document what it means to make something when you’re a “knowledge worker”. More recently, I’ve started writing a book on the subject (my fifth unfinished book; this Christmas I intend to finish one of them!). But that’s for another day.

Today’s post is about wealth, its creation and distribution. Over the years, besides Calcutta, besides the Jesuits, there have been a number of influences on me when it comes to this post. My father, my family and close friends are the obvious ones. But two other influences have material bearing on what I’m intending to write here, material enough for me to share them here. First off, this post by Paul Graham from May 2004 on How To Make Wealth. I was very taken with it when I read it, even if I didn’t make a song and dance about the post right then. For sure it influenced my thinking. And more recently, this very recent article by W Brian Arthur on The Second Economy. I would urge you to read both articles  slowly, take your time, it is well worth the investment.

So now you have an idea of the people and concepts that influenced what I’m trying to write here. It’s a classic provisional, partly formed Sunday post. I tend to write all my posts start-to-finish in one sitting, usually a couple of hours, usually no going back. Write, quick preview for any images or inserts, then publish. Here goes:

Doing anything at all requires an expending of energy, an effort. This effort gets called work. As you expend the energy, something around you changes. You can imagine this change to be an output, an output of the work you perform.

This output has value. The value can be positive or negative. That depends on whether someone else values the output you’ve created. If someone else values (and values positively) what you’ve created, then you’ve created wealth.

Value can be expressed in many ways; money is just one way, and it is a useful way. Because you can then convert that value you’ve created into something else you may want or need, by using the money you’ve received for the value you’ve created to “pay” for the value someone else has created, to pay for the something you want or need. This is why money works as a store of value and as a medium of exchange.

Everyone can create wealth as a result, just by expending effort to make something that someone else values; that wealth becomes “fungible” if you can exchange the value you create for the value someone else creates. If you exchange one thing for another then you’re bartering. Money, by being a medium of exchange, simplifies this process.

So all human beings can create (and destroy) wealth. This wealth that is created gets distributed in a number of ways, depending on how the wealth is created.

You make something and you sell that something for value; the terms differ but the principle is the same. You do a job and get a salary; you make a sale and get a commission; you invest and get a return; you advise and get fees. Most of the time it’s that simple.

If the value of what you create is greater than the value of the things you want, then you will start accumulating wealth.

There are some quirks. If the something that you make has physical form, then you can rent it out rather than sell it. So you can keep “creating wealth” as long as there’s a rental market for the something you make, a house, a car, a boat, whatever. We’re very clever, we human beings, so we come up with even more extreme ideas. The something you make does not have to have any physical form for it to be designated your property; the State is prepared to let you keep making money from something you did once, and call it “intellectual property”. And sometimes you can even get paid for destroying something: say for example you’re in the demolition business.

One way of looking at all this is that wealth gets created by people doing work, in a plethora of ways. And wealth gets distributed in a plethora of ways as well: through jobs, trading, investments, patents, copyright, and suchlike.

These ways of distributing wealth are usually directly connected to the ways of creating wealth. If there is inequality in the landscape of creating wealth, then there will be inequality in the landscape of distributing wealth.

When it comes to creating wealth, people have advantages (and disadvantages) all the way from birth: inherited wealth; the atmosphere at home, the stability and care from the family; health and nutrition; education; cultural nuances, and so on. We’ve come to recognise this inequality and we’ve tried to deal with this in a number of ways, usually by passing laws against discrimination, occasionally by putting in mechanisms to correct historical inequalities via positive discrimination for a period of time.

This attempt to reduce unequal wealth distribution has probably gathered pace over the last 50 years. It would appear to be true for most democracies; it is likely that steps to reduce inequality have existed longer in the developed world when compared to the developing world.

Fifty years. And I get the impression that wealth inequality has increased during that time. And increased at some pace, particularly in the west.

Hmmm.

There could be many reasons. Equality of opportunity does not guarantee equality of outcome. Some people don’t like hard work. Market mechanisms to value outputs aren’t necessarily fair. A free market can be gamed, sometimes despite regulation, sometimes because of regulation. Barriers to trade, particularly protectionist barriers, can be erected by the incumbents to try and prevent erosion of the power to create wealth, or for that matter erosion of the accreted wealth. Yes, there could be many reasons.

If anti-discriminatory legislation and short-term positive discrimination have not succeeded, then perhaps we need to look at what we can do to change the way wealth is distributed rather than just the way it is created. This can happen in a number of ways; in fact this does happen in a number of ways:

People can amass wealth and give it away, distribute it to the masses, make donations to charities and nonprofits. People can pool their wealth in groups and communities, so that everyone in the community gets helped, as in Acts 2:42 or perhaps in some of the modern Kibbutzim.

Free markets alone don’t seem to work, if the last 50 years are anything to go by. [And non-free markets, if we look at communist examples, appear to fare at least as badly if not significantly worse.] Jobs as the basis for distribution don’t seem to work; for one thing, not everyone has a job; in future, with the current economic environment and demographic trends as the backdrop, full employment is not likely to be anything more than a theoretical economic model, much like the “rational actor” who preceded behavioural economics.

The recent book by Erik Brynjolfsson and Andrew McAfee, Race Against The Machine, is well worth a read in this context; it shares a relatively gloomy outlook on many types and styles of job, a view that is echoed in W Brian Arthur’s article on the Second Economy, which I referred to earlier, since it was the trigger to my writing this post.

So where do we go from here? One of the ideas I’ve been playing with is a simple one:

What if people got paid for their data?

We live in an age of lifestreaming. For decades customers “spoke” in the past tense, “I bought” or “I did”, because it was expensive to invest in the infrastructure to collect anything else. IT-intensive investments were made at the point of sale and in the back office, and so everything the customer did was viewed as a transaction in the past.

More recently, with the ubiquity of smart device and connectivity, customers began to speak in the present tense: “I am doing”. Even more recently, customers have begun to speak in the future tense “I will do” “I plan to” “I want”. Sometimes they even speak in groups “we intend to” “we are prepared to”.

The data in the lifestreams has value.

Soon everyone will be able to lifestream.

What if people got paid for their lifestreams?

Just wondering.

Views? Flame away, I do this to learn. And sometimes I learn best when someone tells me I am talking absolute balderdash and poppycock. As long as you take the time to explain to me why I am so wrong.

There’s been a lot of buzz about Sugru for a couple of years now; I’d read the coverage, played with the stuff, but hadn’t bothered to buy any until today. It was the same with opensource software and, later, opensource hardware. I’d see the buzz, lurk for a while, then commit a couple of years in. It happened with linux, it happened with arduino, and it will continue to happen; I hope to get my hands on an affordable 3D printer soon.

As I completed my Sugru transaction, I marvelled at the site and the way it made me feel; and it occurred to me that perhaps we were not far off a time when “maker-friendliness” became valuable, as the tectonic plates of society did their regulation generation shift.

And it made me think about the whole concept of maker-friendliness, in terms of what it could mean, how it could be claimed or certified, who would do the claiming. All of which would need some answers to the why and the when as well.

So I thought I’d share what I’d been thinking about, see what you thought about it, learn from your comments.

The essence of maker-friendliness: one person’s perspective

My formative years were spent in India, more specifically in Calcutta. One city, two addresses (three if you’re being pedantic), 23 years. Throughout my time there, I was able to observe a city of makers. People who built or made things from first principles, from raw materials. Houses were built from scratch: you saw the doors and windows being made, the floor mosaics were made and laid in front of you, glass was cut to size, paint was mixed to the tones required, the furniture was not just made in front of you, it was made to suit the environment it was meant to fit in.

Labour was extensive and affordable. “Custom” was cheap and “manufactured” was expensive. There were a few manufactured goods, mainly electrical. Electronics was busy being invented, the transistor found its way into our lives only in the early 70s. There was an automobile industry, any colour you like as long as it was a copy of 1950s designs from Austin, Fiat and Standard. White goods were rare largely because they didn’t serve much purpose: electricity was not in reliable supply.

Besides shelter and transportation, the same was true of food. Food was rarely available in processed form, and frozen food was unheard-of. Dishes were prepared from scratch: fresh herbs, fresh spices, everything chopped and ground and dried or made into paste in front of you. (And everything smelt heavenly). Fast food was rare as well, except via the street vendor, whose particular chemistry of secret spices attracted and beguiled all who passed.

Clothing fared no better. Manufactured clothes, particularly those made from artificial fibre, were rare, expensive and (sadly) sought after. [I wonder how many Asians of my generation were "forced" to wear terylene shirts, clammy, incapable of absorbing perspiration, rash-forming, ill-fitting and altogether decidedly uncomfortable? All this in preference to handmade pure cotton tailored, absorbent, skin-friendly shirts that had somehow become unfashionable.... how life changes.

Things worked. And when things didn't work, they were repaired. Made to work. By people who knew what they were doing, people who showed mastery in their skill. They would observe something not working, listen, sometimes touch and feel the not-working thing: I have seen car mechanics put their ear to a car bonnet and just listen, intently, and then pronounce what needed to be done.

Repairing was about making do. Spare parts were rare. So the first resort was to try and use what was already there, mutate the existing part. The second resort was to cannibalise the part from some other thing, again with mutation as needed. The final resort was to make the part from scratch.

There was no resort called "throwing it away". Not last, not first, not ever. Shoes, clothes, even cars. Mended, not replaced.

Some household goods were mass-manufactured. So I saw people buy toothbrushes, toothpaste, sugar, salt, pepper, "Western-style". But I also saw people clean their teeth with sticks of neem and with salt. I saw people "making" salt by boiling sea water. I saw people use molasses or jaggery instead of "refined" sugar. You could buy polished rice as well as brown, natural, still-with-husks rice.

Sugary and carbonated drinks were rare. Cold sugary and carbonated drinks were rarer still. When you had a fruit drink, it started with the fruit in front of you. If you wanted, you could pay someone to make the drink for you: this was common for things like sugarcane juice, where the cane was crushed between two heavy cylinders and the juice run-off collected and served. But if you wanted you could just chew the sugarcane yourself.

We were relatively well off; more accurately, we thought we were relatively well off, and we were treated like we were relatively well off. And so, like many other Indian families, we had servants. And service was not seen as a stigma. Handymen were common, people skilled at fixing things and altering things to suit changed needs. I was one of five siblings. By the time number five arrived it was clear that we needed more beds. But the bedroom (singular) wasn't expandable. And bunk beds were dangerous because of an odd contraption called the ceiling fan, which worked sporadically and could therefore cut heads off sporadically as well. So we contrived. [Our family motto was for sure We Shall Contrive. For some reason I think its adoption as a motto had to do with Georgette Heyer, it may well have been through one of her Regency books that we discovered and adopted the motto].

The contrivance was simple. Two beds of normal height. And two further beds that came out at night, on wheels, staying underneath the normal beds by day. Custom built for us. When furniture was made, it was made from scratch. Something needed re-caning? The cane was stripped and prepared in front of me. A chair needed mending? Dowels and plugs were made to size in front of me. I cannot remember our buying a single piece of furniture during my childhood or youth. Repairing, yes. Re-upholstering, yes. But buying new? Not a chance.

When you read my attempts at formulating a list of what makes something maker-friendly, please bear the foregoing in mind. I am a product of my experiences.

Maker-friendly attributes

Before I can call something “maker-friendly”, I would look for the following attributes:

Based on “first principles”: There were instructions as to how you could make the thing yourself if you so chose, using simple accessible”raw” materials. From “first principles”, a la what Marcin Jakubowski and his friends have been up to with Open Source Ecology and The Global Village Construction Set.

Underpinned by communal learning: If you did use the instructions from scratch, it was to be based on what Doc Searls called NEA in the early days of open source: Nobody owns it; Everybody can use it; Anybody can improve it. NEA provides a sense of community and sharing that I found powerful at the time, and continue to find powerful.

Commoditised by design: For many years I thought of something as “commodity” when the price was driven down by open competition. More recently, I think of something as a commodity when it has no real differentiation in itself, when it can be used for a variety of purposes. Not “standardised”. Commoditised. Where you can modify purpose at will, as in “this used to be part of my bicycle and will now be used to repair that grandfather clock”.

Lookable under-the-hood: You should be able to take it apart, even if you find it hard to put back together. The putting-back together should not require specialist machinery that is hard to find or rent.

No parts-ransom: Repair must be something you can do yourself, without having to buy spares from a specific outlet. Without invalidating the warranty. [The more I think about, the more I realise that the very concept of warranty may need simplification, and possibly doing away with completely. Something is either fit for purpose or it isn't. Perhaps warranty has become a Trojan Horse besieging Makers worldwide].

Globally available: Regional constraints in licenses and agreements are often reprehensible. Even today, I was frustrated that a book I wanted to buy was not available in the UK while it had been released in the US. Ironic, since the book was about reform of copyright! I tend to think that region coding of DVDs was perhaps the single stupidest technical “invention” I have come across, stultifying its inventors in its ability to pave cowpaths.

Encouraging development of skills: This one’s likely to be contentious, but I feel strongly enough about it to give it a try. Maker-friendly things will encourage the acquisition and development of a skill or skills, will help lead to achieving mastery of the skill or skills.

 

Maker-friendliness: How it is claimed, who does the claiming

I think that there is a case to be made for the “manufacturer” of the goods in question to make the claim; but as a community we can get involved in the process. It’s still very early days, but I was thinking something along these lines would work:

1. The community sets up a Maker-Friendly site, probably a wiki, listing what makes something maker-friendly: it doesn’t matter whether the community uses any of the things I’ve suggested, what matters is that there is a community-verified list of attributes, the “terms” of Maker-Friendliness.
2. Someone who wishes to claim “maker-friendliness” then uploads the reasons why into the Maker-Friendly Wiki, and then unilaterally agrees to adhere to the terms. Legally binding.
3. The claim is rated by the community, term by term. There is a threshold below which no claim is assertable. After that, a Maker-Friendly score is available for the product or service, a score that is a derivative of individual term ratings.

Maker-friendliness: Why and why now

This is no longer about politics or “freedom” or utopianism or anything like that. It’s about being stewards of what we have on earth…. as a community. It’s about that stewardship, and about bringing more sustainability into our actions. It’s about reducing waste.

And it’s about unleashing creativity. By the truckload. Because we’ve been wasting the latent creativity of whole generations by denying them the opportunity to be makers, denying them the satisfaction of gaining mastery in skills that have meaning. And sometimes mystery as well.

What next?

Well, if people are interested in the idea, something will happen. If people like what I wrote, they might involve me. And if the idea’s not worthwhile, it will die. Which is what it will deserve if people don’t like it.

Views? What can I improve? Where have I gone off beam? Let me know.

1. Parasitoid larvae in caterpillars affect the behaviour of moths: Found this as a result of my looking into ecosystem equilibrium. I am fascinated by how pests, parasites and plants live in fragile harmony: there is beauty in that fragility and in that harmony. I also like three-cornered hats and regulatory systems. Parasite hides in caterpillar, gets to plant as caterpillar goes munch munch, proceeds to protect said plant from said caterpillar’s future state. Something poetic and wonderful and almost psychedelic about that.

2. World in 2000 as predicted in 1910: Found at the delightfully-named sadanduseless.com site, a collection of drawings by a French artist on how he perceived life would be at the turn of the next century. Very instructive. I’m very tempted to see if we can’t start an opensource competition, Answers On a Postcard, asking people to submit their visions for 2100. Tim O’Reilly?

3. Learn to code|codeacademy : Interesting cloud-based selfserve approach to teaching someone to code. I’ve only looked at the first few exercises, classic scripting language stuff around javascript, but I do like the interface and the flow. I can imagine a time when the knowledge of a scripting language becomes a universal need, so anything that lowers barriers to entry is worth it.

4. SpaceChem: Been researching design-based games suitable for entry into the world of work. Minecraft seemed an early possibility. SpaceChem holds fascinating promise. But I haven’t really tried it out yet, need to move over to a linux machine for that. Like what I’ve seen so far.

5. Information is cheap, meaning is expensive: A George Dyson article in the European. Always interested in what he has to say.

Incidentally, I will only continue to do this if you guys find it useful. So feedback is important.