Category: Four pillars

Liz Strauss, commenting on a recent post of mine, muses about the separation of the information web from the relationship web, one data driven, one social.
You can see her post here:

blogherald.com/2007/05/29/are-you-ready-for-a-whole-new-blog

I’m currently in the midst of moving house and will be without access to thè web for a while, except via blackberry. So my comments are of necessity short.

I think the answer’s simple. We need to keep on ensuring that we build the web in a customer centric way, a la cluetrain. First relationships. Then conversation. Then transaction. Then the distinction between the two webs will disappear.

It is up to us. More later.

I was reading Stephen Smoliar’s latest post on The Google Paradigm and its Discontents, and something he said struck me harder than it ever did before, even if he’s said it a million times. Now most regular readers know Stephen by now, he’s one of the most prolific commenters here.  I agree with Stephen about many things; I disagree with Stephen about many things; and then there’s a large group of things I don’t even claim to understand as yet, and that doesn’t stop me reading what he writes.

I quote from that post:

As I suggested in the opensourcing discussion, we cannot talk about processes in any productive way unless we are as “epistemologically comfortable” with verbs and verb phrases as we are with nouns and noun phrases.

Something about what he said there made me think about the glazed look people used to give me when I first spoke about any aspect of software as a service. To many people, software is a noun and inanimate as well; to many people, service remains a “doing” word and closer to a verb despite being a noun. And this separation of service from software seems to create a whole series of problems in people’s minds.

The three biggest problems it seems to create are in the following areas:

Creativity: People seem to believe that software can be “clever” while service can’t; as a result, they seem to think that software is patentable, leading to all kinds of blind alleys. Which is why we now see terms like software-and-a-service, suggesting that there has to be a difference, and (at least in my mind) basing that difference on intellectual property lines.

Substitutability: For many years it has astounded me just how often oe particular class of projects fail, those based on replacing human labour with software. It doesn’t seem to matter just how mind-numbing the activity being displaced is, somehow the substitution never happens. This behaviour is at least part of the reason why many aspects of process re-engineering did not work, since processes were tied to people and doing, while the re-engineered components were tied to software. It didn’t matter what we did with the software, the people stayed on. Sometimes even grew in numbers. A variant of this happened in the offshore world. How else could you explain the focus on offshoring standardised repeatable cookie cutter tasks rather than those requiring human brainpower? Surely tasks that were standardised, repeatable and cookie-cutter would be excellent candidates for automation rather than offshoring? But what do I know?

Service innovation (which I guess is an amalgam of the two prior points). For some reason, whenever I’ve tried to drive a discussion similar to that on the opensourcing of process, I start hitting this noun-verb argument. In many people’s eyes, process as a concept seems very tied to people, in a way that software isn’t. Perhaps it’s a function of just how long the concepts have existed. This is the reason why we spend so much time carefully paving the cowpaths; in fact we’ve been doing it for so long that nowadays, when we find bits of road, we dig it up and pave them differently so that they continue to look like the cowpaths they never were.

Just musing.

A little while ago, I had the opportunity to talk to some people about multi-sided open platforms and their threat to traditional companies; the “traditional companies” I chose to speak about were eBay and Amazon, just to make a point; and I characterised the emergent competitor as follows:

• 25m participants, already an eighth the size of eBay
• No 1 photo site on the web, more photos than Flickr
• No 6 site in the US, but tellingly No 1 for both males and females in the 16-25 category
• Only four years old

As you probably guessed, the answer was Facebook. Ever since 2004, I’ve found Facebook to be fascinating; as with Second Life, I haven’t actually done very much in it, I try and learn from watching others, particularly my kids. And they don’t mind, they don’t see it as my spying on them (although I did ask my eldest, who’s 21 now, whether she minded before I signed up…..her answer was to be delighted, to befriend me electronically and then…. to upload and tag some truly embarrassing photographs of me. Children!)

That day, I had learnt two things about Facebook. One, that they had launched Facebook Marketplace, seemingly a competitor to Craigslist. The second was far more interesting, at least to me. I received an invitation to join a group called Booligan, apparently set up to barter textbooks.

Booligan hasn’t really done much since, from what I can see; but, as in chess, the threat is stronger than the move. Facebook represents an unusual community in three respects: One, there is high homogeneity in the base community, everyone was a student; two, unlike Amazon or eBay, the community does not come to search and transact, they come to converse; it’s Cluetrain all over again; and three, the community has stayed independent.

Now that’s what I call a ready-made marketplace, a bunch of buyers all dressed up with nowhere to go, furiously talking to each other in multimedia speech. So, when I was looking at this a few weeks ago, with Booligan in the forefront, I considered whether Facebook could become a true rival to eBay or Amazon. I realise that there is some analogous equivalent to software bloat in the textbook industry, sadly, albeit only occasionally, with the apparent collusion of the teaching class: students were regularly prescribed newer and newer editions of key publications, artificially depressing the secondary market for textbooks. But maybe that’s changing. Maybe Booligan (or something like Booligan) will come up with a working barter model for textbooks.

The barter approach is itself interesting, because of the nature of the core Facebook crowd. A reasonable number are likely to be without credit cards, and as a result may feel disenfranchised from participation in traditional web transactions. This is particularly of note in the non-Western parts of the world, rumour has it that there is a largish population there.

So if someone were to “enfranchise” these people, with something along the lines of microcredit, the developments could get interesting. Which means that barter plus microcredit structure equals competitor to eBay. And targeted book buying could become a competitor to Amazon. You know something, they don’t have to be particularly big to be particularly threatening.

There’s the opportunity for other things to come into play as well, in the context of people reviewing and annotating the textbooks in an opensource manner, a sort of Cliffs Notes written by a wise crowd.

Moving swiftly along. With all this as background, I was fascinated to learn about the Facebook announcements over the last day or so. Facebook Platforms.

What realy intrigued me about the announcement was the list of companies intending to launch applications on the platform. I quote from TechCrunch:

A number of third party applications will also be announced, including Microsoft, Amazon, Slide, RockYou, Box.net, Red Bull, Washington Post, Project Agape, Prosper, Snapvine, iLike, PicksPal, Digg, Plum and others. Seventy companies in total are currently developing applications.

What a perfect example of the change that has taken place in the last twenty years….. a platform, a many-sided marketplace, consisting of consumers, open and transparent, with erstwhile platform creators now taking space and time on the edges of the marketplace.

Which brings me to my final point. When I was in Boston, I had the opportunity to meet up with an old friend, Professor N “Venkat” Venkatraman. He picked up on some of my observations in a worthwhile post about platforms, particularly about their essential networkness.

Venkat speaks about the scope of platform architectures straddling multiple and different industry boundaries. I think it’s more than that.

I think every enterprise is now required to be a platform. Open. Multisided. I think that we are watching this happen in front of our very eyes, and that it has significant implications for the 21st century firm. Each firm a marketplace where competitors can roam freely, converse with your customers, consort with your staff, connive with your partners and supply chain.

That’s when we’re going to find out what we’re made of. Which relationships have been built on solid ground and not on sand. Which relationships will sustain through business cycle downturns. Relationships involving customers, partners, staff and competitors.

Covenant not contract. In a contract, at the first sign of breach, you say “How will you compensate me? In a covenant, at the first sign of breach, you say “How can we fix this together?”

I’ve just finished reading Nicholas Carr’s latest article, The Ignorance of Crowds, in the latest issue of Strategy & Business. (And it’s refreshing to note that Booz Allen Hamilton don’t appear to have constructed the traditional consultant paywall. For this relief much thanks.)

Carr makes a number of points succinctly and eloquently, and peppers them with relevant quotes:

Opensource tends to be “extraordinarily powerful way” to improve things that exist, but tends to be “less successful at creating exciting new programs from scratch”, and as a consequence “it’s an optimisation model rather than an invention model”

He quotes University of Michigan professor Scott Page as saying “when solving problems, diversity may matter as much as, or even more than, individual ability”, and extends this theme by saying “What an unorganised, fairly random group of people provides is not just a lot of eyeballs but a lot of different ways of seeing”

Eric Raymond, who is quoted extensively, is quoted as saying “debugging is parallelisable”;  Carr builds on this, saying “all the debuggers have to do is to communicate their findings and fixes to some central authority, like Linus Torvalds

Based on optimisation not invention. Demonstrating the power of diversity. Depending on the capacity for  parallelisation. Principal characteristics of opensource. All well-made points, not all new but definitely well structured and articulated, and worthy of further analysis.

Carr then goes on to look at what he considers some key limitations, again derived at least in part from Raymond’s work.  He claims that “peer production works best with routine or narrowly defined tasks….. not well suited to a job that requires a lot of coordination among the participants… the crowd’s size and diversity would turn from a strength to a weakness, and the speed advantage would be lost”. He goes on to suggest that opensource “works best when the labor donated or partially subsidised”. He then asserts that “the opensource model — when it works effectively — is not as egalitarian or democratic as it is often made out to be.”

There’s a lot of good stuff in the article, go read it for yourself. I even agree with most of it, and will spend time masticating over the article at leisure. But. And it’s a mid-sized but.

I think there’s one key aspect he misses, or rather doesn’t do justice to. And that is this:

We shouldn’t dismiss lightly the propensity for opensource to innovate, to augment innovation and to accelerate innovation, for the following reasons:

The diversity inherent in the crowd creates long-tail effects, and this causes the bazaar to come up with stuff that the cathedral wouldn’t consider; in cases where the cathedral does consider the innovation, the bazaar is often faster and cheaper; and finally, while tight coordination by central authority seems a worthwhile thing, we should not forget the number of camels designed by committees.

In fact that’s one of the key stanchions of opensource communities. They don’t do camels. 

In a post headed Tara and the Blue Monster, Hugh discusses Tara Hunt’s comments on Microsoft’s adoption of the Blue Monster; Tara’s scepticism is something that is shared by many, and she makes a key point:

… it isn’t as simple as GM keeping Tahoe-bashing ads up on their site longer or Microsoft using a cool Hugh Macleod cartoon on their conference materials.

Subversion isn’t a marketing tool. It’s a path to change. We can’t lose sight of that.

If I’ve interpreted her correctly, she also alludes to another, equally important point: People want Microsoft to change. That is the essence of what made the Blue Monster such a hit, it was a way of people outside Microsoft telling people in Microsoft of the intense need for change, a  point that Hugh makes eloquently. [Disclosure: I have one of the first Blue Monster lithographs, and count both Hugh as well as Tara amongst my friends].

Hugh also refers to the effect that Scoble had within Microsoft:

I am reminded of a big A-HA! moment I had a few years ago when I first realized that the REAL story about Robert Scoble’s blog [when he was still working at Microsoft] was not about how it was changing external perceptions about Microsoft [“Oh, what a lovely blog. I think I’ll stop hating Microsoft from now on.”], but how it was stirring things up inside the company.

I think it’s more than that. When a company achieves critical mass in terms of “external” bloggers, there is no longer an inside or an outside. Blogs do not support hierarchies or vertical silos, they tend to be lateral and networked and and all-over-the-place. Blogs are not respecters of walls, whether inside the firm or at the firm’s boundaries.

Not having an inside or an outside. That’s how tomorrow’s customers will figure which of today’s companies to bless.