Nic Brisbourne set this particular snowball rolling along, with his comments on one of my recent posts. I’d been talking about a future where increased commoditisation led to there being only one real sustainable differentiator, the customer experience.

One of the things Nic said struck a chord with me. A discordant and jangly one. [And no, that’s not because I’m listening to James Marshall H play Voodoo Child (Slight Return) right now].

Here’s a quote from what Nic has to say:

• Recently I have been reading a lot about the importance of customer service as a differentiator – Brad puts in this context on the Union Squares blog and JP recently wrote the following:

• As we move towards realms where more and more things get commoditised, and more quickly at that, it is reasonable to assume that the only aspect of a service offer that differentiates one firm from another is the quality of the customer experience.

• If this is true it is bad news for venture capital.  Customer service and the customer experience are of course important to get right, but they are more about perspiration than inspiration – and inspiration is where the big money is at.  You wanna be investing in companies that have revolutionary products – like the ones I listed earlier.

Thankfully, Nic doesn’t stop there; he points out that there are many opportunities for innovation that have yet to be exploited, and gives the real-world use of virtual worlds as a good and down-to-earth example [you’re right, I just couldn’t resist describing virtual worlds as down-to-earth :-) ]

But somewhere along the line, the deeper point he makes jarred me into thought.

It’s been 50 years since  the tertiary sector began its explosive growth, so much so that we’ve already had a coupe of services-intensive recessionary cycles. Yet, during all that time, as the VC community we know and love has evolved to what it is today, the reality is that VC investment is still about products.

And now, as we move deeper and deeper into the knowledge economy (often referred to as the quaternary sector, and sometimes even seen as inclusive of the quinary sector, covering pure health, education and welfare services), we could have a problem.

We’re moving into the Because Of Rather than With World, so eloquently described by Doc. Where infrastructure is often built on a Nobody Owns It Everyone Can Use It Anyone Can Improve It world. Where the creativity and innovation of the knowledge worker teams operate on the edge of the core infrastructure. A core infrastructure that used to be a rich vein of gold, but is now a humble spade.
And maybe. just maybe, VCs aren’t prepared for this. Product-based business plans are all about With. You make money With the product. Knowledge-based business plans will all be about Because Of. You make money Because Of the product.

[Doc commented on some of this in a recent Linux Journal post, which you can read here]

Up to now, things have been easy, as Nic describes:

• Best practice for financing web2.0 style companies has been (for a while now) to:
• Have an original idea for a new product
• Quickly launch a rudimentary service
• Capture feedback as traffic grows to improve the service so creating a virtuous circle (note the winner-takes-all nature of this)
• Find a way to monetise
• It is usually only at the third stage of this that money on the venture capital scale is required and companies need less money overall.

There is an argument that suggests that Web 2.0 companies have been creating their own private version of Global Warming, using up more infrastructural resources than they create. Much of the hoopla about Net Neutrality was about some version of this argument.

This is all about perception, the perception that Web 2.0 companies are free-riding on someone else’s infrastructure investment.  And the VC community may well believe that as well, I need to think about it.

If I’m right about this, then one of the unintended consequences of such perception is seen in stupidities such as bad IPR and bad DRM.

Doc and I conversed about this for quite a while in the early summer. How do we fund things that are really Because things? What is the investment model for Because infrastructure?

• Anyone can see we have a problem
• Everyone stands to gain if we solve the problem
• Nobody’s doing anything about it.

We need to solve this. We need to know how to get Because Infrastructure funded. If we don’t do this, we will probably go back to the Dark Ages, where vendor lock-in was common, where everyone paid EAI tax to move information around between prisons, and where, just occasionally, someone succeeded.

We need to solve this. Before Nicholas Carr needs to write another book on the subject.

Any ideas out there?

When I looked at some of the myths related to social software, I received some very interesting comments, comments that I’m still working on. For some serendipitous reason, one particular aspect of my research grew faster than the others, so I thought I’d start the snowball rolling.

The issue in question is the independence of the blogger.

First, I came across a story in the Sunday Times headlined Glowing online reviews by hotels and restaurants dupe public, which then led to a longer article in their Focus section, A Five-Star Scam. [Thank you Sunday Times for ensuring there’s no paywall in between].

Then, as I moved from print over breakfast to my Netvibes, I saw a snippet by Doc Searls which then led to a fascinating longer article in Linux Journal, headlined Follow The Lack of Money.

And while mulling over these two, I went through yet another ritual of mine, checking incoming links to this blog. [I tend to use WordPress Admin through to Technorati for this, and occasionally I go direct to Technorati. Is there a better way?] One of the more recent links was from the unusual Insanity Creek. Besides taking me to a crazy Finnish Complainers Chorus on YouTube that you can view here, Michael of Insanity also took me on a journey to ReviewMe.

And all this started me thinking. The Sunday Times article was looking at how some people were writing rave reviews of their own stuff, and thereby conning potential customers about the quality of their particular poison. The article looked at the explosive growth of online reviews, and how this was driving various print guides out of business. It went on to describe the way the blogosphere was being gamed in this respect, with sponsored reviews, spammed e-mails and self-published paeans of praise.

Balderdash and piffle. Have we not had advertorials in MSM for years, with disclosure so subtle you were hard put to find it? Have we not had paid reviews in MSM for years, with little opportunity for criticism of the review in question? Don’t we still have the lobby system in place in much of the West, with all its attendant corruptions and cash-for-conscience trades? The blogosphere is not being gamed. Reputation is earned not bought. Given enough eyeballs all corruptions become shallow as well. And, as I stated in my earlier post, the corrections to the blogosphere appear where the corrections need to appear. Either in the text or next to it, either as amendment or as comment. This does not happen in MSM.

Doc made some fascinating points while commenting on Jeff Jarvis’s post The Stewardship of Journalism’s Future. Read both the posts, they’re well worth it. Some examples:

Jeff on the future of the newspaper industry:

• And so I thought about the newspaper business. If these new, successful, innovative, smart, large media companies can’t invent, how can we expect for a second that the existing newspaper industry can invent its future? It can’t. Full stop.

And he continues:

• The old players can’t do it. We need more new players to take hold of the future of news — not just journalists but entrepreneurs and managers and investors and inventors. It’s there for the taking.

While Doc comments:

• Frankly, it’ll be a long time before newspapers fail, if they ever do. And magazines remain a healthy, if not a high-growth, business. Papers like the L.A. Times are actually quite profitable. They’re just not profitable enough to satisfy Wall Street.
• That’s why I’m beginning to think that fixing big-J journalism (that is, fixing newspapers) with Yet Another Business is like fixing Catholicism with Protestantism, or fixing Windows with MacOS.

And he goes on with:

• Computing gets better all the time because the operating systems business is being steadily replaced by building materials (mostly Linux) and practices (FOSS) that grow wild in human nature — and are hardly businesses at all. Yet they’re extraordinarily good for business, because they create a solid infrastructure on top of which all kinds of “solutions” can be built.
• The same thing needs to happen in journalism.

Doc ends with a plea for inventors. I guess that’s how I see what we’re doing where I work, inventing new infrastructures that let both old as well as new participants, in sectors like journalism and entertainment as well as more traditional business, play on level playing fields with greater freedoms and lower costs of entry.

ReviewMe intrigued me in a strange kind of way, I had this feeling of revulsion coupled with mild interest. Told you I was confused. I felt that writing a paid review like that was a bit like putting up an article on myself in Technorati. Something not quite right.

I guess it could work, if there was useful collaborative filtering and adequate critical mass. But offhand I can’t be sure. There are many things I play with, many I lurk around in , and even a few I participate actively in. I could be wrong, but my jury’s still out on ReviewMe. Haven’t quite got it yet. I read reviews written by people I trust, and that trust is earned over relationship and time and some modicum of common perspective. I’m not sure how quickly I can get those via ReviewMe. But I’m going to watch it, there’s no point having a closed mind on anything like this.

So with all these serendipitous reads, what do I think?

• I think the blogosphere can’t be gamed. Not over time, and time in the blogosphere is measured in small quantities.
  I think it’s OK to be paid to write things on the blogosphere. Even if I don’t think I ever will. There’s only one proviso, make it very clear you were paid to write whatever it is you wrote. Very very clear.
• I think the blogosphere has an independence that can’t be taken away. Too late for that. Whatever gets shut down, something far more powerful will replace it.
• I think MySpace and Bebo and even FaceBook and Flickr and YouTube are really blogs for younger people, covering different age groups. They all represent participative journalism and fiction and reportage and comment and and and. I have a FaceBook and Flickr and YouTube and Second Life account, just to try and understand what’s happening. No different from trying out eBay or Amazon a decade ago, or Mosaic or Netscape before that. You have to try things out.
• I think, as Doc and Jeff aver, there is a need for entrepreneurs and managers and investors and inventors, to take all this to the next stage. Particularly inventors. Particularly independent-thinking inventors. Particularly infrastructure-focused inventors.

People used to say, in a gold rush sell spades.

I prefer the Chinese proverb When You’re in a Hurricane, Build Windmills.

A few weeks ago, I wrote about how using opensource makes you responsible; one of the tragedies I’ve seen regularly in large institutions is the willingness of service departments to hand off blame to the “vendor”, and I’ve often wondered why people abdicate responsibility that willingly.

The customer does not care about your sourcing strategy. The customer cares about what he/she experiences. That’s what we have to design for, that’s what we have to test for, and that’s what our sourcing and partnering strategies need to underpin.

As we move towards realms where more and more things get commoditised, and more quickly at that, it is reasonable to assume that the only aspect of a service offer that differentiates one firm from another is the quality of the customer experience.  And one of the things that intrigues me about all this is how to get better at designing for customer experience, and its cater-cousin, testing for customer experience.

While researching this, I came across a transcript of Danah Boyd’s talk at the O’Reilly Emerging Technology Conference in San Diego earlier this year, via Kathy Sierra’s post on ultra-fast release cycles.

The entire talk is a must-read. Examples:
[Talking about MySpace, Flickr and Craigslist]

These three sites have many attributes in common. They all grew organically. They each have public personalities that early adopters feel connected to. The early adopters really felt as though they were participating in and creating an intimate community, even as the community grew to millions. Users are passionate. Designers are passionate. They feel a responsibility to it and are deeply invested in making users happy. Character was not boiled out of the site; the text on the system is natural and goofy, reflecting the personality quirks of the developers rather than the formal speech of a corporation. Each site has a unique culture that was born early on and evolved through years of use and growth. The culture evolves with the designers and users working in tandem.

Customer service is not a segregated group who simply answers questions of a finalized product. They are completely integrated into the design system and the senior people are the most deeply embedded in user culture. There is a strong commitment to the needs and desires of the users.

While the creators have visions of what they think would be cool, they do not construct unmovable roadmaps well into the future. They are constantly reacting to what’s going on, adding new features as needed. The code on these sites changes constantly, not just once a quarter. The designers try out features and watch how they get used. If no one is interested, that’s fine – they’ll just make something new. They are all deeply in touch with what people are actually doing, why and how it manifests itself on the site.

[Talking about how the creators of these sites use embedded observation]

The designers of these systems are engaged in embedded observation. They are living in the culture that they are helping to frame. They are aware of the others living in that culture and constantly engaging with them to really understand the emergent behaviors. They recognize their power as designers and try to use it to benefit the collective rather than their own personal goals. Their design process is stemming from this embedded observation, producing a state of “flow” to use Cziksentmihalyi’s term. The designers love what they are doing and infuse their passion into the systems. This is a very powerful way of doing design.

What they’re doing methodologically is very unique in software development and is not yet part of the standard practices for developing social software, although it should be. Embedded observation allows developers to understand culture. They are doing a form of ethnography, the method used by those seeking to understand culture. They understand culture by living amidst the cultural natives, trying to understand practices from the perspective of the people engaged in them. They are trying to make sense of how the symbols came to be and how the culture is maintained. They are doing so in order to understand culture and to help shape the architecture to support the culture.

Embedded observation takes into account the cultural forces that can not be systematically tested or modeled. As a result, the designers are aware of social problems when they materialize and can work immediately to try to influence change. Their efforts at understanding culture and evolving the design alongside it create a meaningful bond between the users and the designers.

[As part of a set of guidelines at the end of the talk]

Make sure designers and customer support are engaged with one another. Customer support should help designers know what is going on with users; designers should work to understand what customer support is seeing. This probably means they need to be seated near each other, have an opportunity to socialize together, etc. Oh, and for good measure, have your designers drop into the support queues every once in a while.

None of this is rocket science; as Danah so eloquently explains, many of the more recent successful companies live and breathe this stuff.

I think there’s something that’s really important, something fundamental, that Danah captures well. As IT professionals, we’ve been good at listening to a lot of people. We used to be good at listening to ourselves, to the detriment of evweryone else. But we learnt from that, and we got better at listening to the “customer”. And quite often that meant the person who paid the piper. The front office. The sales channel. The product marketer. Whatever.

But we never really listened to customer service reps. And if we want to improve the customer experience, it’s a good place to start.
We need to get better at involving our customer service staff in the design process; we need to get better at getting them to articulate the scenarios they would like to have improvements made to; we need to get better at understanding what it really feels like at the customer service coalface.

More later. I’m interested in comments from people who have done this, what they’ve learnt, what worked for them, what didn’t work.

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