[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.
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.