If you’ve heard me speak at conferences over the last few years, then you’ve heard me say this:
Actually nobody “became evil”. Becoming evil is not suddenly getting easier. What we’re seeing is the confluence of a number of trends:
- Growth in the power of the consumer, in consumerism, a post-Nader, post-Sixties phenomenon
- Advances in information transmission and reproduction, particularly with the advent of the internet and the web
- Emergent affordability and ubiquity of edge devices that increase the number of people connected to each other
I also think that investors have become more and more short-termist over the years, accelerating poor behaviour by companies, but that’s just a personal hunch and not a trend I can prove.
So now more people get to know about more “bad things” more quickly, and have more ways of responding and protesting, more ways of doing something about it. Which is why you can insert pretty much any company name into the search term <…….. sucks> and you will get a number of hits. When “Herman Miller sucks” gets over 18,000 hits you know that something different is happening. [ When I was young, I had to work, I couldn’t take the time off to study management. So I learnt what little I learnt “on the job” and through the brilliant books of Peter Drucker and Max De Pree. And so, somewhere along the line, I acquired a healthy fascination in the chairs of Herman Miller, and in Herman Miller as a company.]
Where was I? Oh yes, this increasing propensity for firms to “be evil”. Investors want to invest in stuff they can rely on, with reasonable levels of predictability in demand, supply, input and output prices, revenue and profits. This has always been the case. During the agricultural revolution it was easy. During the industrial revolution it remained easy. As we moved from agriculture and manufacturing into services, it became harder and harder to control the factors of production, much less the factors of consumption.
As we entered the information/knowledge economy, things became even worse. So for the last forty years or so, companies have striven to recreate some form of control over the market by doing one of two things: monopolising the market; or locking in the customer.
In a digital world, these things are harder to do, often needing the collusion of regulation and/or government. Even with the collusion, all that can be done is to stave off the inevitable, which is what will happen with the DMCA, the ACTA, the Digital Economy Act, Hadopi and others of that ilk. If I called them shortsighted I would be acting too kindly. [But that’s not the subject of this post so I shall move swiftly on.]
When infrastructure is commoditised, when monopolies and cartels are illegal, when capital is cheap, when global distribution and reach are available to all, firms are desperate to find new ways to “lock in” the customer, to try and bring some predictability to the whole shebang. This has been happening for a while.
No new business models have emerged in the meantime: since the year dot, there have only been three ways of collecting value for services provided: pay-per-drink, all-you-can-eat, get-someone-else-to-pay. We have a litany of terms for the third way: advertising, sponsorship, patronage, gifting, subsidy, freemium, it doesn’t matter. There are still only three models.
So what’s a poor firm to do?
One of my favourite professors, Venkat, used to keep saying to me that we’re migrating from hierarchies of products and customers to networks of relationships and capabilities. So what firms are now doing is trying to find ways of locking in customers at the relationship and capability level. This happens at a number of levels:
- First, the static data to do with the customer: contact names, addresses, and so on. The network of relationships that becomes the friend graph.
- Then, the flow data associated with the customer: transactions, purchases, etc. Why I can’t merge my Amazon purchases with my Abebooks ones.
- Then, valuable artifacts left by the customer in trust with the firm: photos, music, ratings, reviews, etc. Much of the current social network challenge.
- Then, even more valuable artifacts derived from customer transactions and interactions: the basis for collaborative filtering, for targeted advertising, for recommendation engines, for the development and growth of attention and intention markets.
Look very carefully. Everything in the list of points just above this sentence relates to data. Data you generate. Data that cannot exist without you. Now that data is valuable, it is the new lock-in. Anyone can build another auction site, but 200 million ratings can’t be acquired overnight. Anyone can build another bookstore, but 10 million reviews can’t be acquired overnight. Google. Amazon. eBay. Flickr. Facebook. YouTube. Everything where the value is created via data you create in the first place.
So everyone spends an incredible number of cycles figuring out ways, building new tools to make it easier for you to share your data. Mountains of data. There’s gold in them thar hills, podner.
And as a result of all this data being mountainised, a thousand new flowers of service are blooming. And retrograde green shoots of predictability and order are re-entering the environment. We’re encouraged to stay on the consumer side of the argument, and not become producers. We’re being encouraged to purchase things where we can’t tinker with them, where we can’t look under their hoods or take spanners to them. We’re being encouraged to share what we have in order that others can create new layers of lock-in using what we shared in the first place.
These are some of the issues that Doc’s VRM is trying to deal with. These are some of the reasons why privacy and sharing and not-sharing are needing to be discussed, understood, legislated for. These are some of the reasons why identity and intellectual property and net neutrality are critical issues, issues that must be resolved in a sensible way.
Nobody’s being evil. There’s a Wild West out there. And there’s a lot of gold out there as well. Gold that is based on usage patterns, relationships, transactions, flows. Gold whose very existence needs us to think differently about many things, in order to develop and enhance our potential.
Observe. Experiment. Participate with care. Don’t drink too much of the Kool-Aid. There’s a lot of good stuff happening out there, and the potential for a lot of bad stuff as well.
Once we recognise that we are all pioneers, it becomes easier.
People are exploring, staking ground out. Homesteading. Migrating in large numbers. Going West as Young Men. Hoping to find their fame and their fortune.
And we’ll see inventions and innovations aplenty, many Levi Strausses. There will also be many unscrupulous people, trying to make their bucks as fast as possible, selling their snake oil.
So when you see the danahs and the Stowes and the Docs say what they say, recognise that they’re not trying to stop the pioneering. They’re just making sure we circle the wagons every now and then when we come under stress.
It’s going to take some time before we have the conventions, practices and laws to make the digital landscape the land of the free and the home of the brave. Until then, our watchword should be careful experimentation. But experimentation nevertheless.