This one is worth it: “What is the value of your brand?” by Uwe Hook, co-founder and CEO of BatesHook. He makes so much sense so often, I just kept nodding my head. The essence for me is this: A company’s values motivate, energize, engage, and reward the people that work there. A mismatch of an employee’s and the company’s values make work “work.” People who do something they love every day are not working; they are living. I particularly like these thoughts from Uwe:

“After the multitude of bubbles have burst, shareholder value and making money for the sake of money doesn’t feel that good anymore. And consumers are craving institutions that care and give back. This and the age of product parity lead to an avalanche of brands that suddenly care, that support businesses in making positive change, try to rebrand themselves as green or just transform communities around the world (right after they almost destroyed the whole financial system).

“Most of this comes across as advertising, not as a commitment. Because it’s not rooted in real values, we are starting to deal with caring parity: Suddenly everybody cares for the wrong reason. (emphasis mine) Consumers want us to care, let’s care. Brands purely jumping on the caring bandwagon are missing out on a huge opportunity: Stand for something. Have values. And express yourself as an organization based on these values.”

I can’t help but think of the swarming now to social media by companies not really committed to the value of the relationship with the customer. I read an interesting interview with Magic Johnson, head of Magic Johnson Enterprises, in Knowledge @ Emory. This quote from Johnson stuck with me: “You have to know your customer and you have to speak to that customer every day.” Social media are an excellent way to accomplish this, but, when customers get the sense they are being used or sold to more than listened to, social media are also an excellent way to turn conversations into sales pitches and turn customers and prospects into former customers and disinterested prospects. Johnson’s Magic Johnson Enterprises web site repeats a mantra for the company on the home page: “We Are The Communities We Serve.” The first part of the message is clear; the last word is the message. If social media serve the customer, the company wins.

Each category around the “wheel” represents a different type of conversation. By implication, each type of conversation serves a distinctive business purpose. Solis and JESS3 did the hard work. For each type of conversation they mapped the appropriate collections of social media tools. According to the “Prism”, Facebook and Linked-in serve different types of conversations. Facebook, MySpace and Friendster are Social Networks. Linked-In, Plaxo, Ning and others are Interest and Curated Networks. Most of us lump all of them into the same category.

As one moves around the wheel, other helpful distinctions become apparent. Forums, Reviews and Ratings (e.g. yelp, Epinions, Amazon), SMS/Voice, Lifestreams, Twitter Ecosystems, Micromedia (e.g. Twitter, Yammer), Blog Communities, Blog Platforms, Blogs/Conversations, Crowdsourced Content, etc serve different objectives and different types of conversations. Each conversation has a different collection of social media tools. One readily gets the idea. It immediately makes sense. Each of the twenty-four different types of conversation requires a different type of social media.

The taxonomy also marks a key milestone in the evolution of social media. A key indicator of the maturity of a discipline is the ability to create a meaningful typology. While the creators developed the Conversation Prism from a marketing perspective, the taxonomy applies to many other disciplines and contexts.

Here are some thoughts on how to use The Conversation Prism:

Marketing. Everyone is interested in getting more customer mindshare, establishing meaningful conversations and developing hot communities around products. But how? Distinguishing among the different types of conversations and tools helps to focus effort. Sean Moffitt, one of the key thought leaders in nGenera’s Marketing 2.0 program notes that Facebook, Twitter, YouTube and Flikr are key conversation forums, but one has to also match the conversation to the marketing objectives and the product or service. The Conversation Prism provides a way to rethink which types of conversation reach the best audience and achieve the right message and customer experience.

Enterprise Strategy. I’ve lost count of the many conversation with executives who simply dismiss social media as an irrelevant pastime or an “Extra-curricular” activity. Many think Facebook and MySpace are the sum total of social media when they are not. And often, social media is dismissed out of hand, to the detriment of an organization’s strategy, because everything is lumped together. The Conversation Prism cuts through the clutter and buzz and assigns the role and place of various types of social media. Use this taxonomy liberally for internal business strategy discussions, social media strategy, and most importantly, our soapbox – collaborative enterprise management.

Finance. Yes, finance. What does social media have to do with finance? Take a look at the wheel again. Armed with the taxonomy, the CFO or the controller for that matter can begin to think about where various tools might add value in conveying and explaining financial concepts, policies and performance. For example, quick relay of confidential financial information to small group would use a different set of social media than information disseminated to institutional investors, or retail investors. What type of conversation provides the best result for each constituency?

Information Technology. Increasingly, various groups expect the IT organization to recommend the right social media tool for the right problem. On what basis should these decisions be made? The Conversation Prism enables IT professional to understand the landscape and make recommendations based on desired business outcomes, not simply technical features. Bandwidth, storage, API’s, architectures, apps, widgets, gadgets and price vary by social media type. Some tools require internal infrastructure, other operate as SaaS in the Cloud.

Human Resources. Conversations and social media involve people. Duh. However, employees should understand appropriate use. Often, social media gets a bad name, or experiments fail, because the wrong tool is applied to the wrong circumstance. Ever consider using a text message for a performance review. Some have. Use “the wheel” to teach appropriate use.

The Conversation Prism provides a welcome tool as social media moves into its second stage of development. It surveys and maps the social media landscape. Perhaps other destinations will be added. However, in the mean time, The Conversation Prism, a simple framework, provides self-evident guidance to those who wish to profit from the social media revolution.

While the global battlefield showcased the fight between ideas like Communism, Fascism, and Western Liberalism, other ideas are pit against one another on smaller scales all the time. Take for instance the showdown between alternating current and direct current (AC and DC). Both are ideas about how to transfer electricity. DC ultimately lost because it wouldn’t work on a large scale; it wasn’t viable in the long term. Had Edison’s pro-DC publicity campaign been successful and DC became the dominant electricity model, it’s likely that we would have quickly hit the upper limit of usefulness and been abandoned in favor of AC anyway (or another, better technology).

This happens everywhere: Phrenology lost to Psychology; more trivially the curtsey lost to the handshake. Betamax was superior to VHS but lost the format war of the 70s. Either format would have been beaten handily by DVD but only VHS lived to see its own demise. Inconsistent (or suboptimal) approaches lose out over and over again.

For now Western Liberalism married with Capitalism seems to be the mode of choice for maximizing individual freedom in the broader context of society. This means having a democratic society with—in varying degrees—free markets. This has been supplemented by finance, a global network that connects all countries and peoples of the world and communicates information about supply and demand via indicators (market prices) that drive human behaviors.

The hierarchy of things should be that governments set the rules for economic behavior, and within those confines companies and individuals act in their own self interest. Unfortunately in practice money is seductive and politicians are (often) bribed. Further still, government is inherently local while finance is global. In essence, by its nature finance struggles to be the highest principle at play—the one at the heart society. After all, there’s more money to be made when everything—government included—is subsumed into the profit-seeking construct. This isn’t to say that finance is bad, just single-minded.

The recent financial meltdown seems to hint that Capitalism may have at its core some inconsistencies that undermine its long term viability. These objections aren’t new; take for example shopping at Wal-Mart: short term benefit (in the form of low prices) is contrasted with the long term cost of driving down wages and moving business overseas. Similar arguments can be made socially and environmentally.

In the past few years we have seen the rise of another global network that connects all peoples in all countries and efficiently communicates information about supply and demand: the Internet. While the relationship between finance and technology has usually been mutually beneficial, with the advent of the Internet it seems possible for technology to offer an alternative to finance as the central pillar for global society—one for which finance is a tool rather than a master.

Already large companies are trying to bend the internet into a new corporate-controlled distribution channel for their products and services, but could this go the other way? Could the internet replace finance as the central pillar that networks the world together? Are the two necessarily in competition? What would the world look like if this shift ever took place? Do we want it to?

I’m curious to know.

Joseph Brusuelas, economist at Moody’s Economy.com is quoted in the Wall Street Journal as saying he fears “we’ve lost a generation of investors.” His take was that people won’t invest because they won’t have the money to do so, but I think it’s safe to say that there will also be a certain lack of trust in the market. Have we gained a generation of entrepreneurs? A generation of socialists, scrutinizers, realists, and environmentalist?

Jon Stewart’s “senior black correspondent” Larry Willmore jests that the swath of white collar crime leading into the recession will change the face of criminality in America such that the Wall Street look (i.e. white men in suits and ties) will be seen as inherently untrustworthy in the future. Willmore’s analysis is satirical, but looking at our own research here at nGenera, Scrutiny and Integrity are two of the eight norms of the Net Generation that will definitely be amplified by the recession (the other norms are Freedom, Customization, Collaboration, Entertainment, Speed, and Innovation). If the Net Gen weren’t already scrutinizing corporate America before, they certainly will be now.

For some deeper thinking on the effect of the recession on the Net Gen, I turn to Fast Company staff writer and author of Generation Debt, Anya Kamenetz. As Anya rightly noted in one of her Yahoo! Finance columns, “Economic dramas shape an entire generation’s beliefs about the nature of the economy and the risks involved.” That was a year ago and already she was postulating about how the Net Gen’s psyche might be shaped. Specifically, she noted that young people:

• Won’t expect to get rich quick.
• Will “get real” about consumption.
• Will buy on the cheap.

I spoke with Anya recently so I thought I’d ask her to elaborate on her thinking.

What effect do you think this recession will have on the psyche of people entering the workforce now?

“The climate in the last 10 years has been a very unrealistic one. We have been living in this huge bubble. For young people who are entering the 20’s now, this is really all they knew: Inflated expectations, ridiculous monthly consumer debt, and the idea that you don’t need to save for the future because you can just count on the equity in your house. But, when the bubble bursts, the paradigm shifts. For young people now, they are really looking around and seeing the world as being a very different place. For older people, it can be a lot more traumatic to have this happen, but for young people, they’re more ready to maybe accept that change.

And so, if you look at ‘The Greatest Generation’ that came of age during the depression and then entered World War II, they were able to achieve at incredibly high levels and get a great education. That legacy of the depression, obviously it was very hard for a lot of people, but it also led to realistic attitude about money, and a very practical down to earth determination to try to succeed, and some strong family-oriented values. I think that I’m starting to see the beginning of that among this generation. People are saying, ‘Well, you know, this idea of endless wealth and greed, it’s not something I really want to sign up for.’ Young people are forced to consider, at a very young age, what is really important to them and what they really want to have because they know they can’t have it all.”

So, really, this is good for us?

“From a purely economic point of view, I think it could be [good for us]. It’s a mixed bag, right? Because on the one hand, the drama that you enter into upon graduation, it actually can determine your salary for years to come. So if you start in a down market or you have to take a job that’s not exactly matching your skills, it could have a long term effect on your income. But on the flip side, if you get into a habit of saving very early, you have the magic of compound interest on your side, plus you develop lifelong healthy financial habits.”

So, in the end, a generation known for being spoiled, having unrealistic expectations about work, and graduating university with an inflated sense of entitlement might actually end up being the “sensible generation.” I would add to Anya’s analysis the notion this will be a generation that will trust corporations even less than previous generations and will be more adamant in demanding integrity from their corporate and government leaders.

And while I hope all of this is true, I also know that there is a layer of insulation between the Net Gen and the economy: their parents. The extent to which many Net Geners will feel the impact of the economy is also dependent upon how well their Boomer parents are able to weather the storm and continue to provide for adult children that may still be living in their basements. Given that many Boomers are being forced to delay retirement, I would say the insulation is getting thin. In fact, if pensions shrivel up and forced retirements put a strain on the family coffers, the Net Generation may even have their own basements occupied by Boomer parents that need caring for in old age. I’m sure there is an entire school of psychology devoted to that topic, so I won’t even get started.

According to the founder, amuktrade.com’s principal goal is to facilitate quick speculative asset pricing based on user estimates and equally novel quick cashless trading through exchanging of shares of large, illiquid assets like real estate. So assets that are currently hard to price would be priced (virtually) by leveraging the collective wisdom of the site’s users. Users can then exchange their virtual asset shares by join trading communities where they can hedge risks, diversify their portfolios and share investment rewards.  

What problems might this solve? The founder has turned her attention to real estate. A homeowner, for example, could decide to sell fractional ownership interests (i.e., shares) in their home, allowing them to acquire and/or keep their homes without paying the high cost of full ownership. For someone facing foreclosure, selling a 49% of the ownership interest in her home is surely better than having to sell it or lose it entirely. Selling and buying shares in commercial real estate and vacation properties is already common, so why not personal real estate? Could be handy in a time of crisis, but I could also see how this could potentially accelerate the kind of absurdly risky and opaque behavior that triggered the crisis in the first place.

Love to hear your thoughts on this.

The plan revolves around installing smart metering technology to monitor energy consumption in power hungry systems such as heating/cooling and lights. The meters are connected to the internet allowing for remote monitoring and management. The data collected by the meters can be analyzed to identify areas for improvement and to benchmark against other buildings.

The potential for the use of information technologies to manage and reduce energy consumption is enormous. As more devices, such as electronics, appliances and even cars are connected to the internet, the granular information collected on their energy consumption can be used to identify inefficiencies. Online tools and dashboards will help people and businesses manage their usage. Eventually online energy markets will also allow customers to select their source of power from particular providers. The way is being led by companies such as HSBC to see how this can be done in practice.

P2P lending involves borrowing and lending between participants without the use of traditional financial channels. This is a flagship example of how Wikinomics (and the Internet in general) is fostering a “disintermediation” trend, stripping down marketing and distribution channels. To be fair, P2P lending marketplaces are a version of “disintermediation-lite”, as they do broker transactions, and add a layer between counterparties.

U.S.-based lending firms have also been feeling the squeeze, as they say default rates creep higher and return-on-investment drops for lenders taking the plunge. I did some surfing on LendingStats, a visualization site that feeds from Prosper’s open data feed. I went in expecting to see delinquency rates rise when comparing YTD 2008 with the same period in 2007, and it turns out delinquency rates have dropped markedly. For YTD 2008, 615 of 11,542 loans on Prosper (5.3%) are delinquent (late or defaulted). The same period in 2007 the delinquency rate was 2,429 of 9,356 loans (25.9%). Big difference. So what’s the deal? Seems contrary to what most of us expect.

So I took a look at the average amount per delinquent account between years, and 2008′s average is around $5,800 and 2007 is around $7,400. So not only is the proportion of defaulters dropping, but so is the average amount of the delinquency.

The only thing I could glean from the data that seems consistent with the Big Banks’ experiences was that the average credit score of the delinquent pool is getting better. In other words, people with better credit scores are delinquent more on average than last year (average delinquent score 4.55 in 2008 versus 5.04, lower is better)

[I must disclaim: The figures from LendingStats are on an average basis, and as such may not be as accurate as would be a dollar-weighted measure of credit score etc. But I thought it interesting nonetheless. ]

Where the SEC fits in is that it’s reviewing requests by Prosper and Lending Club to allow a secondary market for the P2P loans arranged through their site. In other words, it will create a marketplace where lenders can sell their loans to others. This reselling scheme smacks like what got us into hot water with mortgage-backed securities, but I guess the trouble will only start if loans are bundled together into a jumbled mess and sold off tranche by tranche. The size of the marketplace probably makes transparency easier—for now. Perhaps some readers have some insight as to whether this is a good idea or not, or the likelihood of history repeating in the P2P market.

Also, I wanted to post another question to the Wikinomics Community: are we getting away from what made P2P work? Many think that it was the personal aspect of P2P that turned people on to it, a welcome change from the rubber-stamp mortgage managers at your local branch. Could a secondary marketplace promote detachment, where the loan buyer doesn’t care (or know) that his $500 is helping Joe the Plumber get his plumber’s license?

Maybe I’m just too sentimental.

Here’s how it works: you sign up for a new account on their website and select the method you wish to use to upload your transaction information. There are a few to choose from, ranging from a handy Firefox extension to a manual uploader application. After that, you select your bank, point it to your financial statements, and let Wesabe to the rest. Wesabe then creates charts and transaction lists for your earnings and spending. I found out that my afternoon Starbucks habit averages only $2.05, which isn’t bad considering a significant number of people are closer to $5.

Each of your transactions are tag-able, and each of the places you spent at are reviewable. Most of the popular places (like Starbucks and Chipotle) have a huge number of useful user comments. Some range from how to maximize Peet’s Coffee’s discount when you buy beans to tips on saving money on a healthy lunch instead of inhaling that double cheeseburger. The user groups are also interesting, as you can find out about smarter ways to shop for car insurance to Household Budgeting 101.

The neat open source aspect of Wesabe is that it has a robust API which allows Wesabe enthusiasts the flexibility to develop whatever their cost-conscious minds can dream up. Wesabe has an articulate stance on how having better information about your spending habits is the first step toward reining them in. There are widgets for Vista, OS X, and even your iPhone.

Looks like those GI Joe cartoons from the 1980′s were right! Seems like knowing is half the battle. Keeping your credit card in your wallet is now the tougher other half.

Fortunately, European traders had recourse in several new electronic exchanges, such as Chi-x and Turquoise. After imagining huddled masses of traders without their exchange, I took some solace that they had those alternatives (even though they come with their own liquidity issues).

Then I got to thinking: what about other mission critical functions that companies and people have come to rely on? Namely those with systems beyond the control of an IT manager just a four-digit extension away? SaaS comes with its well-documented benefits of low capital costs and more, but what about uptime and reliability? The LSE hiccup isn’t exactly SaaS, but it is an example of a centralized service that is crucial day-to-day going awry.

SaaS darlings, Google and Apple found themselves in the crosshairs when their email services Gmail and MobileMe went down for hours on August 11^th. And this was another misstep for Apple, since MobileMe was down for 11 days in July. Steve Jobs meted out his form of justice by canning the executives in charge of the program, but does that allay an IT manager’s concerns?

Seems like those managers are split on their future with SaaS. In an article on InfoWorld those managers who made the move to Google after choosing to leave their established infrastructure were concerned about future hiccups. One manager was especially concerned, as the crash came only days after he had migrated his company completely to Google. Suffice it to say he felt a little foolish. On the other end of the spectrum, the smaller start-ups (with no messy IT systems to divorce) were more than forgiving with Google.

So what’s the point? Regardless of the potential SaaS has for small companies that have never known a complicated IT infrastructure, those companies that make up the old vanguard are still the bulk of the market. SaaS has limitless potential; but with highly-public failures creating doubt in IT managers responsible for adopting these systems, it seems like Google and Apple will have to do more than just satisfy their armchair evangelists, and start appealing to those uneasy decision-makers: those with their fingers on the IT purse-strings.

In the very short run, it means we should all be able to run cross-company comparisons at a much greater level of detail than before — not just, for instance, comparing revenue or book value; but also, comparing items that appear in Notes to the financial statements.  (Think of contingent liabilities, or stock option valuations.)  Also, the data is much more likely to be truly comparable, because the companies will be tagging it themselves, rather than relying on teams of data-entry staff in India or elsewhere.  Just as CFOs carefully manage their “adjusted operating income” or other specialized measures they use for forecasts, they will want to carefully manage how their numbers look in standard comparisons with their main industry competitors.  For more detail on XBRL as it stands today, see this white paper from Bowne here.

In the longer run, the XBRL approach could bring about a much more radical shift in the relationship between investors and corporations — hopefully bringing the “prosumer” worldview, where consumers now help co-produce many goods and services (see Wikinomics, the book), to a new “provestor” community, where investors can engage with corporations more successfully.

Imagine the following roadmap (in no particular order):

• Step 1.  Corporations publish data in a standard cross-company, machine-readable format, to a single, open-access standard repository in each major jursdiction (e.g., the SEC the US; similar agencies in Korea, Japan, China, the EU, etc.).  [Currently underway in multiple countries.]
• Step 2.  Someone publishes the separate national XBRL repositories to a common global repository (e.g., on ManyEyes or Swivel), for true cross-company comparison across geographies and accounting standards.  [Currently feasible, though not in practice, to my knowledge.]
  • Step 2a.  The DNS infrastructure extends so that investors can find the relevant XBRL data, signed by the relevant corporation or oversight agency, using simple “xbrl://” calls, just as we now find websites through our browsers by typing “http://” or “https://” calls.  [Requires major changes to internet routing conventions, but not unhead-of.  FTP and other protocols exist already alongside HTTP.]
• Step 3.  Analysts, either “informed amateurs” or professionals running subscription-based financial blogs (see, for instance, Psychology of the Call or www.rightside.com), start to publish forecast models also in XBRL, tied to the global repository.  These could provide segment-level detail or other sub-analyses, and could also become the basis for “consensus” forecasts and deltas vs. actuals.  [Would require some additions to XBRL, either ad-hoc or eventually official, to include forecasts for line-items rather than just actuals.]

I’m sure we will see all this, and much more, over the next 20 years as Wikinomics hits the financial markets.  In fact, I see a huge opportunity to mitigate risk through crowdsourcing, with measures that go beyond Step 3 here.  (This is the topic of a future blog post.)  In the meantime, these early steps by the US, Japan, Korea, China and others are a great step forward towards transparent, meaningful data all investors can work with.

PS — Christopher Cox, SEC Chairman, has a cute sense of humor.  In  last week’s speech (see video here), he harkened back to the announcement of EDGAR, the SEC’s online repository of financial data — by referring to a 1985 article in Women’s Wear Daily.  Who knew that wwd.com makes a better resource on the SEC than, say, the Wall St. Journal?

As I have written before, one of the most fundamental changes may be where the Net Generation goes for banking services. The emergence of the peer to peer model in the industry heralds a fundamental shift which may take customers (especially young ones) away from large banks and towards individuals or syndicates for products such as loans. One new service, called Fynanz, is offering to connect students with individual student loan providers – a product that is traditionally a good starting point for a more serious banking relationship. By not catching young people early, banks are less likely to get subsequent business such as car loans or mortgages. (Which can also be arranged through peer to peer lending sites such as Prosper and Zopa)

The Net Generation’s need for transparency and their ability to collaborate is also making an impact on the industry. An example of this is the quickly organized Facebook campaign to stop HSBC from increasing the interest charged on their student overdraft accounts. The “Stop the Great HSBC Graduate Rip-Off!!!” campaign acquired over 4500 members who persuaded the bank to freeze the planned fee increase. While a few years ago customers would have virtually no way of protesting the bank’s decision, today, the Net Generation is armed with tools that are making banks more accountable and transparent.

Lastly, the N-Gen need for speed means that banking will need to take place anywhere and anytime. This means mobile banking and payments. In the technology obsessed Japanese market customers can already do all their banking and pay for many things using their cell phones, a service offered by the country’s telecommunications providers. However, North American and European financial institutions have been slow in bringing these services to their customers.

The emergence of non-traditional players, consumer empowerment and mobile banking are only three of the many changes we can expect. I would be interested to know how some of our readers in the financial service industry are seeing their business change. Your comments would be most welcome.

It’s one thing to share information about what music you’re listening to via a widget, but would people really use a widget to display financial information? Well, 23% of people are apparently interested in having a widget that could display the current balance from their bank account.

Jwaala is leading the charge when it comes to socializing financial information – here’s some great examples and screenshots. They have widgets that can do everything from sharing your most recent costco purchases to charting your most recent automobile expenditures. Here’s a few example widgets below (sample data drawn from their site):

Automobile spending widget

Net Worth widget

Recent transactions over $100 widget