… what’s surprising is that so many companies are still betting against the net, trying to solve today’s problems with yesterday’s solutions. The past few years have taught us that business models based on controlling consumers or content don’t work. Betting against the net is foolish because you’re betting against human ingenuity and creativity. …
In 2007 we’ll witness the increasing dominance of open internet standards. As web access via mobile phones grows, these standards will sweep aside the proprietary protocols promoted by individual companies striving for technical monopoly. Today’s desktop software will be overtaken by internet-based services that enable users to choose the document formats, search tools and editing capability that best suit their needs.
Driving this change is a profound technological shift in computer science. For the past 20 years a client-server computing architecture has dominated digital infrastructures. Expensive PCs ran complex software programs and relied primarily on proprietary protocols to connect to bigger—and even more expensive—mainframe servers. The data and the power lived in these computers and their operating systems.
Today we live in the clouds. We’re moving into the era of “cloud” computing, with information and applications hosted in the diffuse atmosphere of cyberspace rather than on specific processors and silicon racks. The network will truly be the computer. … Cloud computing is hardly perfect: internet-based services aren’t always reliable and there is often no way to use them offline. But the direction is clear. Simplicity is triumphing over complexity. Accessibility is beating exclusivity. Power is increasingly in the hands of the user.
… put simple, intuitive technology in the hands of users and they will create content and share it. The fastest-growing parts of the internet all involve direct human interaction. … online communities are thriving and growing. The internet is helping to satisfy our most fundamental human needs—our desire for knowledge, communication and a sense of belonging. …
We’re betting on the internet because we believe that there’s a bull market in imagination online.
The amazing thing about Flickr is that nobody uses the service to upload pictures. Nobody says to themselves “I need to upload me some pictures”. Instead, they’re satisfying some other need in their lives, like showing off the new kid to relatives. Or showing their friends how their trip to Europe went. Or letting their co-workers in on their conference activity.
All of these things have to do with their life, their relationships, their everyday activities that aren’t centered on the Web, but are made much easier by it. If we look closely, that’s what most successful web apps do: they make our offline lives richer.
Quote by Joshua Porter
When it comes to successful examples of Web 2.0 social networking services many people see Del.icio.us and Flickr as the primary candidates. Their stunning success influenced all sorts of business models for start-ups, that are being built around the idea of generating network effects through social software architecture to create both value for the user and revenues for the providing service. However some business plans might be at risk looking at their role models from a different perspective:
The one major idea behind the Del.icio.us Lesson is that personal value precedes network value. What this means is that if we are to build networks of value, then each person on the network needs to find value for themselves before they can contribute value to the network. In the case of Del.icio.us, people find value saving their personal bookmarks first and foremost. All other usage is secondary.
As people use Del.icio.us more, and in order to gain more personal value, they use tags to be able to find their bookmarks later. Tagging isn’t even the primary function of Del.icio.us. Most of the tagging done on Del.icio.us is done secondarily, and for personal use.
The social value of tags on Del.icio.us is only a happy side-effect. Even though most of the ink spilled about Del.icio.us is about the social value, it’s really not the reason why people use it.
Similar to Google aggregating links that were originally created for taking readers from one document to another, Del.icio.us can aggregate tags in order to find out how people value content. If 1,000 people save and tag the same bookmark, for example, that’s a good sign that they find value in it. But to think that people tag so that this information can be aggregated is to give people a trait of altruism they just don’t possess.
Joshua Porter is a keen observer of design and technology trends associated with the emergence of Web 2.0 and for those interested in these topics his writings are highly recommended.
With their Special Achievement Award the Webby jury honors the work and activities of Thomas L. Friedman as author of the book "The World is Flat: A Brief History of the 21st Century" and as columnist at the New York Times.
For those who are still unfamiliar with his viewpoints I highly recommend the video lecture he was giving at the MIT as an introduction:
"Globalization is changing the nature of competition and value creation in ways more subtle and fundamental than simply cost. By incubating scores of new business models that can unseat established companies, globalization is creating opportunities for new value creation and highly profitable growth at the two ends of the value chain––new customer connections at one end and new models of innovation at the other."
"Globalization makes strong business designs stronger, and weak business designs weaker. That’s true in part because new competitors from all corners of the globe are combining low cost and high technology to build market share very quickly."
In a world where customers have more and more choices from a vast array of increasingly commoditized products and services, highly personalized customer connections are a company's best opportunity for differentiation. Products and services might be commodities, but you never, ever want your customers to feel like they too are just commodities. A successful business will make each of its clients feel special by understanding and addressing their unique requirements.
This presents a seeming paradox: the more global and commoditized the economy, the more local and personal the customer relationship must become to ward off competition. This is not easy. It requires a deeper knowledge and more specific management of distinct customer types and segments, "a new game - call it the Cambrian explosion of new segments - with new rules" the article says. A business has to be very good at market segmentation and at serving those markets as efficiently as possible.
While multinational firms will have to learn again to "think local" for global competitive reasons it also gives great opportunities for flexible regional companies, that are really closer to their markets to find a sustainable niche for their products and services or to integrate into specialized innovation networks.
Further extending the discussion around the role of cities in the global competitive economy there are two influential positions taken by Thomas L. Friedman and Richard Florida. Friedman proposes in his latest Book "The World is Flat" that due to the egalitarian and open nature of the Internet, modern communications and travel, innovation need not be concentrated in historic urban centers. Richard Florida, avid promotor of the "Creative Class" concept, on the other hand suggests in his article "The World is Spiky" (PDF) that these same forces actually increase the gravitation toward acknowledged centers of innovation.
As always, John Hagels take on that discussion is very much on the spot:
The greatest insight will come from understanding the paradox that the flattening of the world is creating opportunities for even greater spikiness.
Especially in the UK the idea is gaining ground with the release of two studies, that underpin the importance of creativity and design innovation as a competitive advantage and critical success factor especially for small and medium enterprises.
A synopsis of a recent breakfast meeting with Dave Snowden, head of the Cynefin Centre and thought leader on complex systems and narrative and their application in business.
As he described his learnings and discoveries about complex adaptive systems and how pervasive they are in our business and personal lives, I began to realize that appreciating enterprises, organizations and systems as (mostly) complex rather than merely complicated is more than just a basis for re-framing business methodologies, it is a completely different way of sensing and dealing with the world. It changes everything. Here are just a few of the extraordinary paradigm shifts that this reframing provokes:
|Complicated World||Complex World|
|Assumption of order ("research this to find out if there's a market for it"||Realization of unorder ("let's explore what might happen if we did this")|
|Importance of aggressiveness and charisma to "lead the change"||Importance of collaboration and humility to participate in the evolution|
|Actions driven by authority-based direction||Actions based on learnings from conversations, consensus and freedom to act bounded by personal responsibility|
|Top-down hierarchical communication and knowledge transfer||Peer-to-peer (networked) communication and knowledge transfer|
|Military win/lose competitiveness||Natural win/win cooperation and coexistence|
|Emphasis on action (making decisions quickly and 'expertly')||Emphasis on paying attention (making decisions continuously, improvisationally)|
|Assumption of rational choice ("tell people why they should buy X")||Realization of entrained behaviour ("study people to discover if they might buy X")|
|Primacy of objective reality ("what's happening here")||Primacy of perception ("what do people think is happening here")|
|Changing the way things are||Understanding why things are the way they are|
|Assumption of intention ("why did this happen")||Realization of meaning ("what do we learn from this")|
|Assess causality||Look for pattern and correlation|
|Leadership is everything||Membership is everything|
|Strive for stability||Strive for resilience|
|Exploit weaknesses, opportunities, needs via speed-to-market||Explore weaknesses, opportunities, needs via continuous environmental scan|
|Mechanistic (machine) models of behaviour, relationship, order, connection||Organic (natural) models of behaviour, relationship, order, connection|
|How do we solve the problem||How do we deal with the situation|
|Set "go-to-market" mission, objectives, strategies, actions||Understand the market and actors' identities and influence the attractors and barriers that bring the market to you|
|Market as rational|| |
Market as emotional