Dear Wikinomics community member,

I want to thank you for your support and interest for Wikinomics.com. We created this site more than three years ago as a follow-on forum for the ideas Anthony D. Williams and I presented in our 2007 bestseller, Wikinomics: How Mass Collaboration Changes Everything. The book revealed how mass collaboration was reinventing the way businesses communicate, create value, and compete in the new global marketplace. Since its inception, Wikinomics.com has hosted many good discussions with insights from posters and readers alike.

Now we want to continue and expand the same great discussions on a new site, Macrowikinomics.com, which derives its name from the new book that Anthony and I have just released: Macrowikinomics: Rebooting Business and the World.

The book’s thesis is that we are mired in more than just a recession. We’re seeing the precipitous decline of the industrial economy as a whole. Many of the institutions that have served us well for decades—even centuries—seem frozen and unable to move forward. Yes, the industrial economy brought us unprecedented productivity, knowledge accumulation and innovation that resulted in undreamt-of-wealth and prosperity. But that prosperity has come at a cost to society and the planet.

It is clear that the wealth and security enjoyed in advanced economies may not be sustainable as billions of citizens in emerging markets aspire to join the global middle class. If we continue on a business-as-usual path, today’s global instability will surely increase. Indeed, we believe the world has reached a critical turning point: reboot all the old models, approaches and structures or risk institutional paralysis or even collapse. We look at more than a dozen fields—from finance to health care, science to education, the media to the environment—that are ripe for reinvention by mass collaboration.

Eric Schmidt, the CEO of Google says that “Don Tapscott and Anthony Williams’ insights about the power of collaborative innovation and open systems, and their call to ‘reboot’ our institutions—business, education, media, government—haven’t come a minute too soon. Macrowikinomics inspires by chronicling these path breaking developments and pointing the way forward for all of us.”

Please join all of us at Wikinomics.com as we make the move to Macrowikinomics.com. This site will continue to be available as an archive of all of the discussions that have gone on to date. New posts and comments will not be possible. Recent posts on this site have already been copied over to Macrowikinomics.com, and you can continue any discussions there.

If you haven’t read Macrowikinomics yet, I encourage you to do so. Visit Macrowikinomics.com to get your copy.

Best,
Don Tapscott

For every Like that is made, Facebook is able to correspond a product affiliation to demographic information such as sex, age, geography, and education, as well as social graph data about relationships and influence within a group. With Places, Facebook can even correlate product activity to mobile location data. If mobile payments ever take off, they could get actual sales data as well.

Ad Age recently asked the very poignant question: What Happens When Facebook Trumps Your Brand Site? (alternate title for the article is: How Facebook Became the Biggest CRM Provider). The online article was accompanied by the following graphic showing the top ten brands on Facebook (in terms of total Likes):

Top brands are garnering millions of Likes, yet only driving a couple hundred thousand visitors per year to their branded sites. What this all means is that Facebook has better data about customers than most consumer products companies do. As Ad Age notes:

For many marketers, their Facebook fan bases have become their largest web presence, outstripping brand sites or e-mail programs either because a brand’s traditional web-based “owned media” is atrophying or because more consumers are migrating to social media.

While fan pages may work a lot like a marketer’s traditional “owned media,” they’re not actually owned by the marketers. Facebook hosts the pages and provides analytics for free, but growing marketer dependency on the network for CRM programs, combined with simultaneous declines in traffic for many of their own brand websites, could give Facebook a valuable revenue opportunity.

Of course, it would be difficult to sell granular individual data about users (people would object); however, Facebook could sell aggregate data (trend analysis and market research) and act as a “black box” CRM (Customer Relationship Management) solution whereby companies offer targeted promotions and messaging to individuals with select profile characteristics, mediated through Facebook. Already some companies are using basic Like data to hone their retail strategies. In one example, Urban Outfitters is arranging clothing in its online store based on Like activity and offering select promotions to all those who have liked products. Additionally, Facebook is making information about the Like activity on ads (i.e. “social context” data) available to advertisers on its site. Armed with this data, advertisers can decide to further optimize campaigns by targeting people who have expressed a Like for the ad.

With the Like button, Facebook is benefiting from the power of weak tie relationships (Facebook calls it “lightweight sharing”). Many markets point to the fact that people that Like a product aren’t real fans or brand advocates in the traditional sense. This is s feature, not a bug. By lowering the bar for Liking something, Facebook has opened a channel to—and is gathering data about—ordinary consumers of the brand who otherwise would have no formal connection to the company or its products other than isolated, anonymous purchases. This connection can be potentially valuable in terms of loyalty programs and promotions, market research, and customer support.

A number of factors suggest that the number of Likes will probably continue to grow, including: the continuing growth of the Facebook user base (see chart above, which shows no indication of plateau), expansion in global markets (70% of Facebook users are outside the U.S.), the recent proliferation of the Like button on a range of products and services (the Like button is now on over 350,000 sites), and the growing use of mobile technologies that allow users to Like physical products and experiences. With this in mind, it’s by no means hyperbolic to think that Facebook could be the largest single CRM provider in the world.

But I have a different perspective, and believe that many brands (and companies) can succeed on Twitter without necessarily engaging in conversations, or being particularly active. Not only that, but I believe the hypothesis that customers necessarily want to be engaged in conversations with brands needs to be challenged, as I don’t think it’s true as a blanket statement.

I’ve been doing a lot of research on this recently, but today I’ll just provide a few different Twitter accounts that appear to be doing very well, in terms of followers, without engaging in conversations (or doing any of the other things most people are recommending they “should” do on Twitter).

@woot:  A quick glance at their Twitter page reveals they typically post once a day (occasionally 2 or 3 times). This post is a link to a daily deal. There is simply no conversation or two-way engagement. They have over 1.6 million followers (#90 overall, between Biz Stone and Penn Gillette), and have been listed 7,000 + times. This makes woot one of the most popular brand accounts on Twitter (out of companies that actually sell stuff).

@zappos: this account is operated by CEO Tony Hsieh, and Zappos is frequently mentioned as one of the leading companies in delivering compelling customer experiences, and engaging in social media. But if you look at his actual activity, there are few signs of conversation to be found. It’s mostly some quotes he finds interesting, a few links, and some seemingly random thoughts. He also doesn’t post that often – less than once a day. He has over 1.7 million followers (#72 overall, between inStyle and Serena Williams), and has been listed almost 10,000 times.

@mashable: Mashable is the online guide to social media. If anyone was to be using Twitter “correctly”, you think it would be them – and this account is run by Pete Cashmore, the CEO. It is popular – @mashable has over 2 million followers (#45 overall, between Pete Wentz and Mandy Moore), and has been listed almost 50,000 times. But again, just look at the activity – a continuous series of links to various articles. More active then the two examples above, yes – but conversational, absolutely not.

You might think I just cherry picked these examples, and that they are the exception to the rule. But I didn’t – there are many more examples where these came from. And as for the rule, well, I think the rule is wrong.

That social media can be used to engage in conversations is absolutely true, and many people and companies are doing that effectively. I don’t dispute that. But somewhere along the way, there seems to have been a near consensus emerge that:

a) two-way conversations is the only way to use Twitter.

b) two-way conversations is what every customer wants on Twitter.

I don’t believe it. The fact that so many people seem to be interested in so many accounts that do the exact opposite is rather telling on this front. And as more and more people engage on Twitter (and other platforms), and create more and more connections, with the potential for more and more messages, I truly believe we’re going to see more and more people realize that “conversations” isn’t what it’s all about.

Now, Cataphora is in the business of modeling “informal networks” within the enterprise for HR and operational efficiencies, as well as to monitor compliance with internal policies and external regulations. By analyzing the relationship between e-mail data, documents that are shared, calendar information, call logs, and people, Cataphora can assess employee productivity, uncover shadow networks, and map collaborative behavior. Digital Mirror offers some of these capabilities to the public for free by analyzing your archived data from Microsoft Outlook.

I ran Digital Mirror on my own Outlook data and came up with some pretty interesting results. A caveat I would add is that you need to have a lot of archived data for this to work well—several outputs such as “Blow-Off Scorecard,” “Buck-Passing,” “Temperature Gauge,” and “Loud Talking” didn’t work for me due to lack of sufficient data. Some of the other interesting outputs that did work are shown below:

Who have you spent quality time with?

Who have you talked with, about what, and when?

Who has been stressed out, and about what?

The goal of Digital Mirror in its current incarnation is to illuminate relationships, topics of interest, tensions, and hidden processes in the workplace. I think over time, digital reflections and analytics such as these will become increasingly important and, in many cases, baked into our both our personal computing as well as corporate processes.

As more data (beyond simply data from Outlook) is incorporated, I can imagine much richer, higher-definition mirrors. Aspects of our rich digital selves that are open for analysis include things like education; employment, and resumes; health records and government documents; search history; profiles on social networks; comments and posts on forums and blogs; and location information from cell phone signals and GPS-enabled devices. They could include aspects that we actively update like registrations for groups, associations, and publications, or aspects that we are not aware of like un-tagged photos of us on other people’s Facebook or Flickr profiles and images from closed-loop IP-enabled surveillance cameras.

Today most of this information is disassociated, residing in many different databases and in many different organizations. More often than not, the information is not under the control of the individual. In the future, we can envision a composite digital picture of the individual that will augment and accompany each human from cradle to grave. As the world becomes more instrumented, multiple machines—some under our control and others not—will be slicing our data and making observations about our activities billions of times each minute, in parallel.

Beyond optimizing processes and sparking what is likely to be heated debate about privacy and data ownership, digital reflections will also help people understand how they are perceived by others. With this knowledge in hand, we can go forth in the online (and offline) world making conscious decisions about how we want to represent ourselves in different contexts. Most people don’t step out into the real world in the morning without—at least briefly—consulting a mirror. Why should the online world be any different?

My first issue is with the word now. From my perspective, the customer has always been in control – the fate of companies providing products and services in a capitalist economy is ultimately determined by what customers choose to buy. In turn, the analysis shifts towards social media somehow giving customers slightly more control than they had before – a small, but important, distinction.

The typical argument is that as customers have connected with each other through platforms like blogs, Twitter, and Facebook, the opinions they share amongst themselves have increased in importance, while the typical “broadcast marketing” approaches have decreased in effectiveness. While I do believe there is some truth to this, there is another way to look at what’s happening.

For starters, if customers only wanted to hear each other’s opinions, they could do so without engaging companies at all – either in somewhat self-organizing fashion through Facebook and Twitter, or “neutral” services like Yelp. But many, many customers are also opting to directly connect with companies – liking, following, lurking in communities, etc. – through these very same platforms. In doing so, many are effectively asking companies to engage with them.

Second, being “in control” takes time and effort. I would argue that many customers may want to “take control” in relation to certain product and service decisions, for many others they are happy to be passive recipients of messages (and offers) from their preferred brands. For example, the #2 reason given for becoming a Facebook fan (based on a survey earlier this year) was to receive coupons. And while I don’t have time to go into it here, one of the consistent findings from my research is that customers like being “broadcast” to on social media more than many people think.

On a related point, I believe that many customers are being overwhelmed by all the brand-related conversations taking place. For example, many brands on Twitter now commonly send 30+ messages a day, responding to specific people. Many consider this to be engaging. But if you follow (say) 30 such brands, that’s over 900 messages a day – most of which will be of absolutely no interest to you. Perhaps the method will persist for many more years, but perhaps not.

Finally (at least for today), as “word of mouth” marketing has moved online, and more and more data is generated, it’s becoming ever easier for brands to monitor exactly what people are saying, thinking and feeling about various things. I personally believe that all this information points towards a world where many brands can be far more “in control” than they’ve ever been before.

Tying it all together, I’ve taken to asking what someone like Don Draper – the lead character on Mad Men – would think about the rise of social media if he was ported into 2010. Would he look at all the new tools and behaviors and say “wow, I can’t control anything here!” Or would he say “wow, I can influence, monitor and control things more than ever before!”

My sense is that it would be the latter – and many companies would be well served by taking a similar line of thinking. After all, to be in control implies having power; it is commonly said that knowledge is power; and all this information is giving companies more knowledge than ever before.

Interestingly, the same could be said for many of the platform design projects currently underway in the Enterprise 2.0 space. In many cases, IT teams are designing and implementing collaborative software without the benefit of collaboration. Yet, collaborative business platforms suffer from many of the same challenges as sustainable building projects. They try to optimize for interactions across complex business ecosystems, usability of digital tools, and aesthetics. They also involve multiple stakeholders and risk costly lock-in if poor architectural or design choices are made early in development. I’m convinced design charrettes can enhance the performance of platform projects as well.

Here’s how it works. In a typical project, as time goes on, the ability to make changes that greatly impact resource allocation and design diminishes. At the same time, the cost of implementing changes increases as successive design choices create inflexibility and lock-in. The effort consumed by stakeholders and the allocation of resources typically follows a bell curve, so a large portion of the project unfortunately takes place during a time of diminishing impact and rising costs. Moreover, if you don’t get people involved early you tend to have a long tail of resource expenditure on after-the-fact customizations, modifications, and revisions.

In a design charrettes, the idea is to shift the project curve to the left so that more time and resources are devoted to planning and a significant portion of the decision-making occurs when the impact of changes are high and the cost of implementing changes is relatively low. Ideally, at the end of the project, the need for modifications would much lower since input from relevant stakeholders was baked into the original design. Since I’m a pretty visual learner, creating the graphs helped me understand how beneficial this approach can be.*

One of the arguments against charrettes is that they result in “design-by-committee” outcomes (usually meant as a derogatory statement, invoking images of the Homer car, designed for the “average” American) and design delays brought on by conflicting egos. In fact, we’ve seen some leading examples of where design-by-committee works great, including Local Motors and CrowdSpring. A good, recent post advocating for design charrettes is “A Camel designed by committee is a camel,” by LEED architect Rob Fleming, where he argues that, given the current state of the World, what we need is design-by-committee “camels,” not “race horses” by impresario architects. In terms of managing conflict, independent, third-party moderators and mediators also play an important role in steering collaboration for productive charrettes.

* Kudos to Jeff Ranson for his leadership in the area of design charrettes and his back-of-the napkin graphs that helped inspire this post.

In 2007, nGenera Insight began writing about what we call “hothouse innovators”—a new breed of global enterprises in Asia, South America, and Eastern Europe that are being built under fertile conditions for accelerated growth, including: A vast pool of low-cost, and increasingly highly-skilled labor; a rapidly growing group of wage-earning domestic customers with few preexisting expectations or brand loyalties; active government involvement in the private sector; and greenfield IT infrastructures that lack legacy complexities.  By exploiting these conditions, global hothouse innovators are developing business models that allow them to move up the value chain, compete with firms in mature markets, and threaten the profit structure of incumbents in almost every industry.

The Economist article touches on all of these elements, but expands the argument by introducing additional factors worth discussing. Specifically:

• Superior positioning for M&A: Rapid growth has made resulted in cash-rich enterprises with access to highly-developed, public and private capital markets. Additionally, large conglomerates benefit from consolidated ownership which helps diversify risk and increase flexibility. The combination of these two forces is allowing large emerging market companies to use M&A not only to reduce cost or achieve economies of scale (which they have in many cases), but rather as a way to acquire name brand recognition, skilled workers, and global distribution channels.
• “Frugal” innovation: We tend to think of innovation as “more bells as whistles,” but this mentality is base on the notion that consumers are going to shell-out more money to get the latest-and-greatest gadgets. In contrast, hothouse innovators are dealing with a population with highly-constrained budgets. In many cases, innovation is aimed at the bottom of the pyramid and focused not on growing wallet-share but rather turning non-consumers into first-time consumers. With low margins, the emphasis is on volume and utility; “new and improved” really means “simpler and cheaper,” as well as “tough and easy-to-use.”
• New Western investment: Think of it as fertilizer for the hothouse. Companies like Cisco, General Electric, Microsoft and many others are investing heavily in emerging markets, and China and India specifically. As The Economist report notes, “Companies in the Fortune 500 list have 98 R&D facilities in China and 63 in India.”

To understand how truly competitive some of these emerging companies are, it helps to study some leading examples. Consider the following, pulled from nGenera’s previous research on the subject:

• Foxconn: Taiwan’s Foxconn, a once lowly parts manufacturer, is challenging the traditional value chain model by designing and assembling entire products¾often leveraging new innovations and intellectual property to achieve this. In 2007, Foxconn earned $2.6 billion on $38 billion of revenue; its top five competitors combined lost $1.6 billion on sales of $57 billion. Foxconn’s success was bolstered by a record high 81,820 patent applications in 2007; 49,007 of which were granted. By comparison, IBM – the leader in US patent applications –at the time held approximately 40,000 active patents worldwide (out of over 2 million granted since 1974).
• ICICI Bank: In less than 10 years, and from a standing start, India’s ICICI Bank ICICI has become India’s second largest retail bank, leading in every retail product market that it targets. Using e-lobbies and customer self-service, it drives over 70% of its transaction volume through electronic channels in a country where Internet and mobile phone penetration are below five percent. The company’s IT systems—which are generally based on servers instead of mainframes—are free from complex legacy issues and cost less than one-tenth of developed-country benchmarks. Moreover, the bank operates on 90-day business plans and established its UK subsidiary in only 65 days.
• Tencent: Although few people outside of China have heard of it, Tencent QQ, China’s premier integrated platform for social networking, media, and mobile gaming currently boasts 400 million active users (the same as Facebook) and 2009 annual revenues of over USD $1.8 billion (more than double the between $600 and $700 million 2009 revenue estimated for Facebook). Perhaps the most remarkable figure around Tencent’s financial model is that over 75 percent of revenues stem from value-added services (paid for by users), not advertising. The company’s virtual currency, Q-Coin, which is used to purchase products (such as shows, online “pets,” games, and music) has become so widely accepted that it is also being used to purchase physical goods from other online retailers.

But opportunity is not without risk. These waters be uncharted and filled with pirates. As The Economist notes:

“These markets are among the toughest in the world. Distribution systems can be hopeless. Income streams can be unpredictable. Pollution can be lung-searing. Governments can be infuriating, sometimes meddling and sometimes failing to provide basic services. Pirating can squeeze profit margins. And poverty is ubiquitous. The islands of success are surrounded by a sea of problems, which have defeated some doughty companies. […] This combination of challenges and opportunities is producing a fizzing cocktail of creativity. Because so many consumers are poor, companies have to go for volume. But because piracy is so commonplace, they also have to keep upgrading their products.”

What this means is that not only are emerging market companies benefiting from hothouse conditions, but they are also operating in markets that pose fairly substantial barriers to entry for Western firms. At a macro level, what we’re seeing is not only a new wave of innovation, but also a global redistribution of wealth. The Economist says, “The emerging world is enjoying the most spectacular growth in history. Its share of global GDP (at purchasing-power parity) increased from 36% in 1980 to 45% in 2008 and looks set to grow to 51% in 2014.” Another source, Worldmapper, provides a visual representation of how this might play out:

World wealth: 1990 to 2015
(map area shows relative wealth)

So, is the West doomed? Not by a long shot. But, we probably have a lot to learn from what’s going on in emerging markets. Established companies have to rethink innovation in a way that focuses equally on features and branding, as well as cost, simplicity, volume, distribution, durability, and accessibility. Enterprises can also develop strategies for open innovation that broaden the scope for disruptive ideas and increase the potential for high-yield opportunities.

Now, a new crop goes beyond these to analyze what went wrong, what were the underlying causes of the crisis and what should be done. The common conclusion is that the worst of the financial crisis may be over, but for business and government leaders the toughest days lie ahead. To save capitalism, we need to make some fundamental changes.

Who would have imagined three years ago that, in 2010, the central discussion among business and government leaders would be how to save capitalism?

Two books offer surprising and radical perspectives

The first is The Crisis of Capitalist Democracy, by Richard A. Posner, the prolific author and U.S. Court of Appeals Judge.  (Harvard University Press, 402 pages, $29.95)

Until recently, Posner was one of the free market’s most articulate proponents. He contributed greatly to the anti-regulation perspective that shaped public policy for the past three decades.

Posner now confesses that he and the so-called Chicago School believed erroneously that “markets were perfect, which is to say self-regulating, and government regulation in them almost always made things worse.” But the crisis shows that pure market competition can cause people to take reckless and irrational risks, with short-term profit-maximizing behaviour jeopardizing society’s long-term interests.

I suppose it’s a step forward to acknowledge that markets, left to their own devices, will result in disaster. But it’s hardly a revelation.

Posner foreshadowed his change of thinking in the Sept. 23, 2009, issue of the New Republic, with How I Became a Keynesian. In the book, he expands his argument and makes a compelling case that liberal icon John Maynard Keynes was right when he argued that governments need to play a strong role in the economy, particularly in stimulating demand during recessionary times.

In this dense tome, Posner presents well-argued suggestions for change and offers fresh thinking about the business cycle, building on Keynes’s theories. Like many critics, including former Federal Reserve chairman Paul Volcker, he would reinstitute the Depression-era Glass-Steagall Act, which was repealed in 1999. It separated risky investment banking from commercial banking. He also savages the three bank-funded bond agencies that rated worthless financial instruments as AAA, arguing they should lose their semi-official status.

He serves up the dismal science of economics on a skewer, a popular pastime these days. Some economists defend themselves by saying their job is not to predict the future. Posner rebuts that economists didn’t do bad forecasting; they were “oblivious to danger.”

But, in the end, he offers little confidence that this crisis is over, let alone that its causes are fixable. He believes that polarized U.S. democratic institutions cannot rise to the challenge, lobbyists have near-complete control of government, and the prevailing belief that low taxes and appropriate public spending are both possible is foolhardy. We should expect waves of aftershocks resulting from rising public debt, including currency deflation, severe inflation and continued turmoil or worse.

The second book is The Road from Ruin: How to Revive Capitalism and Put America Back on Top, by Matthew Bishop and Michael Green (Crown, 373 pages, $32). For Bishop and Green, capitalism as we knew it ended on Sept. 15, 2008, the day Paulson made the grave error of letting investment bank Lehman Brothers fail.

Like Posner, they propose sweeping changes to the capitalist system, which is a bit surprising coming from editors of the centre-right, pro-business Economist magazine: “If the biggest mistake we could make after the crisis would be to abandon capitalism, the second-biggest mistake would be to assume that capitalism does not need to change.”

The book is a delightful and stimulating read by two of today’s best business writers. Throughout, they take insightful deep dives into the history of capitalism, from the 1720 credit crunch in England to today, showing how the system has been built on constant crises. With a fresh view that is hard to categorize, they dismiss free-market fundamentalists such as Ayn Rand or Arthur Laffer, along with left-wing advocates who argue that markets can do no good.

They conclude there are five mistakes we must avoid making: Believing that bubbles are wholly negative; that governments should avoid bailing out the financial sector; that crises can be solved without addressing underlying economic causes; that an economy will always naturally recover on its own after a crisis; and that the solution is simply a rush to more regulation of financial markets.

Where Posner decries the reckless innovation in financial instruments that caused the crisis, Bishop and Green applaud the spirit of creativity. The predictable bubbles and crashes that result are part of a learning process, and we shouldn’t, warn the authors, throw out the innovation baby with the recklessness bathwater.

In addition to the wonderful review of economic history, the book is strongest when it presents four big ideas to shape this new and improved capitalism: Rethink economics; redesign global governance; put values back into business; and promote financial literacy. They advocate replacing the dollar with a new world currency, and for a new set of business values, blaming the crisis on “toxic ideas” rather than “toxic assets.”

Dissenting from Posner, they say that reinstating a new Glass-Steagall act would undermine U.S. banks’ international competitiveness. The authors might gain evidence for this view from the Canadian experience. Our banks avoided the risky and unethical behaviour of their U.S. counterparts, even though there is no Glass-Steagall-style imposed separation.

Bishop and Green, like Posner, stop short of laying out a comprehensive blueprint for change. However, clearly we’re in early days of this debate and enormous change lies ahead. By painting a rich historical tapestry and providing startling insights into how economics needs to recognize the complexity of human behaviour, they have made a powerful contribution to get us off a road that is indeed surely ruinous.

While Twitter is a stand-alone company, the value of the service is heavily dependent on the large ecosystem of developers innovating on top of their API. Like Twitter itself, most of these developers took a “build the customer base first, worry about business models later” approach. “Later” is now here. As  everyone involved starts scrambling to try to make money, everyone almost invariably stumbles onto the word “advertising” as the solution. But no one’s quite sure how big the advertising pie will be, and Twitter itself needs to grab a pretty big piece of it. This is going to make it tricky to hold the ecosystem together.

While there were many signs of this coming through 2009, two particularly big ones popped up late in the year. The first was changes taking place with StockTwits, which described itself as “real investors providing real ideas in real time“, and had grown to become one of the most popular Twitter applications. As a TechCrunch article in September explained, StockTwits was evolving to create an entire back end independent of Twitter itself – “Yes, StockTwits is slowly breaking away from the service that inspired its name.” In turn, it would be reasonable for Twitter to think that an important partner might become a competitor, and others might follow.

The second was that Twitter itself was (finally) starting to innovate on top of their own platform. “Lists”, which were launched as a “great way to organize the people you follow and discover new and interesting accounts“, was one such example. Instead of just enabling people to share information, the company seemed to be making baby steps towards making it easier to sort through. If they continued down that path, it could eventually put them in direct competition with services like TweetDeck.

I was reminded of this when reading the recent Economist article called “Up for promotion – Twitter decides to sell advertising.” In paragraph seven, the issues I was pointing towards in #2 are made clear – it opens with the sentence “A few of these may compete with offerings from developers.” It mentions how people at Chirp (Twitter’s first developer conference) were a little upset about Twitter’s purchase of Atebits (the maker of Tweeties), and that “makers of rival programs complain that Twitter is now competing with them.” A developer is quoted saying that “the way they have done this is scary” – and many would argue he has a right to be scared. A New York Times article on the same subject hit on the same themes and arguments.

However, as #1 pointed to, Twitter needs to be a little scared itself, as developers might just shift their attention away from the platform (particularly if they feel threatened), perhaps taking current users, and ideas for new innovations, with them. More to the point, they need to make strategic choices about what should be created on the platform, and what should be left to the ecosystem – a message Twitter’s CEO is clearly sending to developers now. With quotes like “(there are also) features built for Twitter that maybe only exist in client applications, and we’re going to build them in because they should be there“, it’s pretty clear some nifty innovators are going to be put out of business by the platform they innovated on top of, as Twitter tries to find find the appropriate balance.

Such challenges are not new in the competitive collaborative platform space. Companies like YouTube and Ning have had similar issues pop up now and again, and we expect to see such tensions arise far more in the future. How exactly it will play out is anybody’s guess. But as more and more companies move to platform-driven models to derive competitive advantage, what happens here is worth paying attention to.

One of the more important lessons may end up being that the owner of a given platform (or, say, community) that has a clear business model from the outset, and allows ecosystem partners to innovate around it, instead of plugging holes in the core offering, is more likely to build a sustainable ecosystem model. In addition to the quotes above, Fred Wilson, a long-time Twitter Board Member, had a recent blog post that highlights the need for Twitter to (belatedly) move in this direction. In the future, companies that, you know, already make money, might be in a better position to create competitive collaborative platform strategies than those starting from scratch.

On the flip side, perhaps a “winner takes all” model will take hold here – where the best innovators are acquired (maintaining the incentive for developers to engage) and integrated into the main platform, and the rest wither away and die. We see more and more of this type of rewards distribution popping up all over the web, and while it may not seem “fair” to everyone, I think it’s a definite possibility. I don’t know – but with pressure on to find a business model that validates all the venture capital money that has flowed in, I have a feeling Twitter will soon find out.

Either way, there’s actually another interesting lesson in here worth repeating. Many people are expressing “surprise” and “shock” at these latest Twitter developments. They shouldn’t be. Everyone knew Twitter had to eventually find a business model, and little signs have been popping up to point in this direction for quite some time. If you looked carefully at what Twitter (and key partners) were doing, and thought about the challenges they were facing, you didn’t have to wait for the CEO to tell you this was coming.

But a much bigger gap exists, often unnoticed by companies: The amount of money contact centers and support organizations spend on social media is nominal compared to the percentage of customers’ queries that hit these emerging channels. This is the “support gap.”

Social media has become a new service and support channel that customers employ to raise concerns about products and services, describe their experiences, seek help from others, post new product insights, and consult for advice on features and functions. For companies, this is not trivial. It means that conversations about your products that would traditionally have occurred in your customer contact center are now occurring in public places. The Consortium for Service Innovation estimates that fully 90% of customer conversations about a company never touch the organization. What’s more, a mere 1% of all customer conversations are assimilated as organizational knowledge.

nGenera’s own Customer Interaction Management solution recently added social media support for its contact center product, but many companies have yet to consider this option. In most cases, if a social media strategy is being implemented by the support organization, it’s on an ad hoc basis with a few employees manually monitoring Twitter and branded Web spaces and responding to customers where appropriate. These interactions, though helpful, are not strategic in that they are not integrated with enterprise systems or contact center processes. Building processes and accountability around these activities is the first step that companies can take today—connecting to CRM systems in a robust and meaningful way will be the next horizon.

The plight of marketing and the plight of the support organization are linked and the two organizations need to work together, using shared information, on a common platform. Traditionally, marketing has been about communicating brand messaging, while the customer service department deals with problems and complaints. But a customer that you’ve engaged through social media for marketing purposes doesn’t see the separation – and customer service is becoming a key aspect of managing customer relationships online (I’ve talked before about how “customer service is the new marketing“). This is not trivial. It means matching the tremendous amount of time and energy spent on other official support channels such as e-mail and phone in order to meet customer expectations for social media and deliver a consistent and authentic customer experience. Those companies that think social media is just a cost-effective way to get the message out are in for a surprise. By marketing on social media you inadvertently open a new support channel as well—get ready!

Many see mobility as simply another communication channel or another medium. Others mistakenly view mobility as simply another information technology, much like those that preceded it. They do not see how a mobile device combined with a business platform (elsewhere I have discussed the characteristics and success factors of business platforms) can lead to new business models, entirely new businesses, and new growth options.

Here are five critical elements executives must understand about mobility. Mobility creates:

1. Micro-tasking. How small can a meaningful piece of work be? Is not the right one-word answer immeasurably productive at the right time? What about a single word of encouragement at the right moment. Rehearsing a new set of phrases for a new language as an adult or reviewing multiplication tables during a couple of available minutes as a child can be remarkably effective and efficient. This is the power of micro-tasking and mobile platforms enable this behavior in ways and times not possible before. Multiply this by the millions or perhaps billion moments per day and you have new levels of potential human productivity and significantly revised time budgets. And there are examples: The Extraordinaries harnesses voluntary micro-tasking to help those in need and see Denis Hancock’s post, “The iPhone, growing up digital, and my daughter’s education,” on the way micro-tasking changes the way pre-schoolers learn.
2. New Creativity. Humans are fundamentally asynchronous and associative. We require props to operate on schedule. Most of the time our ideas, inspirations, and breakthroughs seem random or triggered by some event, association with another idea, or situational experience. Because our devices are always with us and allow us immediate access to tools that were formerly attached to a desk or office, mobile platforms enable us to work in a more natural way – asynchronously and associatively. When did you have your last creative idea? Being connected to a global infrastructure, able to access capabilities at a whim, or simply using an appropriate app at the appropriate time enables new levels of creativity.
3. The Growing World of Sensors. Mobile devices loaded with sensors will revolutionize health, safety and security. Sensor technology is growing in its ability to sense the world that is visible to humans as well as the world that is not. When you integrate sensor technology (biosensors, temperature, radiation, personal sonar/radar etc) into mobile devices married to platform infrastructures, every human being becomes a sensing station that can measure environmental pollutions, noise pollution, unhealthy emissions, or dangerous hazards. The implications for health, safety and personal care surpass any in a non-mobile, non-sensor based world.
4. Enhanced experience or augmented reality. Much like the headphones issued at some public museums enhance the one’s understanding of museum artifacts, all facets of daily life can be enhanced by location, context and proximal awareness. Location data can enhance the experience of the local opera, theatrical performance, or visit to a museum. Commercial enterprises, whether serving B2C or B2B marketplaces, have the ability to augment the entire procurement process through mobile platforms. Employees can be augmented with relevant information and tools when serving customers and providing contracted services.
5. Digital Identity and the Rich Digital Self. As remarkable as the human capacity to remember is, it remains limited in many ways. The same is not true of devices that sense and store, activities that mobile platforms do in unique and often helpful ways. If my rich digital self is only based on what I can recall, it is limited. On the other hand, a rich digital self enhanced by streams of unbounded data collected through my mobile platform can create personal value and protect my privacy.

Are these areas where the greatest opportunity awaits? Are there others that I have missed? Are there companies and institutions that seem to really recognize—and leverage accordingly—the power of mobile platforms? Is there a role of for mobile business platforms to meet the special needs of your marketplace? Or will you stand by and let others, competitors and new entrants till the fields of mobility?

A recent article by Nate Anderson in Ars Technica highlights professor Mayer-Schönberger book, Delete: The Virtue of Forgetting in the Digital Age. The message: “Technology has now made ‘remembering’ the default approach to information, and in doing so, threatens to make ‘forgetfulness’ obsolete.” This is not only a profound change from 20 years ago, it can also be detrimental to our ability to think and analyze information. The article goes on to say: “Selective forgetfulness is a boon to humanity; it keeps us from drowning in our own recorded data. It allows us to sift and sort, then to think at a higher level of abstraction instead of wallowing in detail.”

But, this may all soon change.  Perhaps, computers can learn to forget too.

Researchers led by doctoral candidate Roxana Geambasu, at the University of Washington in Seattle are working on project called Vanish. The idea is to encapsulate data such as e-mails, selected text in messages, or documents that are sent over the Internet. The system would create corresponding keys for decapsulation that are widely available online, but that would deteriorate over time so that the data in readable form would only be available for a certain period of time. The overview page of the Vanish project states, “We strongly believe that realizing Vanish’s vision would represent a significant step toward achieving privacy in today’s unforgetful age.” Mayer-Schönberger suggests a similar solution that uses metadata to tag data objects with expiration dates and cites the work of Lawrence Lessig who has proposed a broader approach to combine policy and software to force privacy compliance.

nGenera’s research project Leading in an Age of Unbounded Data is looking at new sources of data available to the enterprise and how these will lead to new insights, opportunities, and challenges, as well as change enterprise processes and decision-making. One of the assumptions we make is that data will continue to grow and companies, through analytics, will develop a type of ‘sixth sense’ or situational awareness about the organization thanks to information captured from across the business ecosystem. We have already found that the growth of personal information and digital identity data will lead to rich digital profiles containing social graph information. These rich profiles present opportunities to better engage with customers and employees, improve customization, and facilitate knowledge management by anticipating user needs and connecting them to relevant people and information.

Projects like Vanish force us to think about data, not as an asset with an indefinite lifespan, but rather as something that depreciates over time, just like physical assets do. This would effectively reduce the amount of data that we need to manage and improve signal-to-noise ratio as more important facts and information would be retained while less significant information would be deleted. By eliminating the perfect memory of computers, we might also feel less pressure to maintain digital facades and manicure our online profiles. Additionally, the idea of adding expiration dates and metadata to data could accelerate the shift in power away from marketer towards consumer as it would allow individuals to dictate what personal data is used, who has access, for how long, and for what purpose.

But, self-destructing data would also diminish the value of many of the ‘big data’ opportunities that we talk about such as using large data sets to infer the truth about various situations, and using sentiment analysis to mine online customer comments and status updates for market research and product insights. It would confound companies and marketers that store petabytes of information to generate longitudinal trends and rely on usage data to drive Web analytics and build reputation and ratings, as well as improve information management through technologies such as collaborative filtering (e.g. the technology used by Amazon to recommend books to you based on the activity of people with similar behaviors). By collectively deleting our less-than-favorable digital trails, would we also be doing a disservice to future generations of anthropologists that could benefit from a complete digital history and behavior map—both good, bad, and questionable actions—of their ancestors?

The idea that all data should live on forever is a relatively new concept that many people have already taken for granted. In general, I think enterprises, governments, and individuals would benefit from more discussion on the topic instead of seeing it as a foregone conclusion. The idea of having an information lifecycle for all data is a powerful one. Personally, I would welcome more initiatives such as those by the Vanish team and professor Mayer-Schönberger that broach the topic and reintroduce a little forgetfulness into our digital lives.

6. The world needs better governments.

Some governments in Central America and Africa are just holding on and many are dysfunctional.  But governability is becoming an issue for G20 countries as well.  One leader said the US is on the brink of being “ungovernable.”  One Chinese executive responded thusly when asked to defend his country’s lack of democracy:  “So we should adopt the American system where lobbyists run everything and nothing happens?”

Democracy was still seen as an unstoppable force but in many regions of the world it is becoming stalled, and in some cases losing ground.  Basic democratic institutions are at risk and in danger of failing part due to the economic crisis in poor countries.  The best predictor of democratic survival is per capita income.  In some countries portions of the government have been captured by interest groups. Other non-democratic countries are proving competitively stable and economically healthy.  And the current economic crisis shows that national governments and domestic regulation are inadequate to deal with the challenges of the global economy.   There is also danger of protectionism and isolationism.

7. It turns out the internet DOES change everything

The much-discredited phrase from the dotcom period is not just geek speak.  The Internet and Social Networks were central to many of the discussions here.  The digital age seems to be coming of age.  I participated with CEOs of most of the important social networks in a session called The Power of Social Networks. It got a lot of buzz at Davos.  A few minutes into it the session we solicited questions from Facebook.  6,000 questions appeared in first 2 minutes.

The growing consensus is that new business models are emerging in every industry and throughout society.  I’ve argued that social networking is becoming social production and that a new mode of production is emerging – changing not only how we make software or encyclopedias but physical goods like motorcycles.

Most leaders love that a web company – Google –  is taking on China. The circumstantial evidence that the China-based hacking of Google was conducted by authorities looking for information about activists was the straw that broke the camel’s back.  Talking to Google execs I’m convinced they not going to back down.

8. Girls, women and gender. A sea change is underway.

There was lots of buzz about women’s emerging purchasing power, known as the Power of the Purse.  The expected worldwide increase of women’s income by 2013 is $5.1 trillion, which is greater than China’s expected growth of $3 trillion for the same period.

Deep interest in the so-called Girl Effect, i.e., investing in girls offers the biggest ROI in the developing world.  In African countries female illiteracy is almost a third higher than that of men.  But every year of schooling increases a girl’s future earnings by 20 percent.  And by earning more and influencing how dollars are spent, women would acquire a stronger voice in all aspects of their lives.

Although women are becoming stronger financially, they are still very weak politically.  Countries should be more aggressive in finding female candidates for public office, and look outside the regular channels. But increased financial and political power brings responsibility. Woman could be key in refocusing our political and economic efforts away from consumerism.

9.  We need new measures of progress

There is growing agreement that GDPs and GNPs are flawed tools for measuring the health of country, and we should instead emphasize the idea of Gross National Well-Being or something similar.  Just as some companies have moved to “triple-bottom line” reporting for their impact on society, many economists argue that GDPs and GNPs measure activities that are detrimental to society and ignore activities that are beneficial.

A pandemic will increase drug sales and visits to doctors, thereby driving up GNP.  Volunteer work or work in the home is not recognized as contributing to GNP.

There is no lack of research and creativity on this issue, as some governments and academics have developed a wide array of yardsticks to more accurately capture how well and healthily a country is growing.  The key now is to have these new tools recognized as legitimate and encourage their widespread adoption.

10. A new big idea.  The Global Commons.

Like a park in a village we need new global parks in the global village. Some of the global commons areas are well-recognized, such as our atmosphere, oceans and space, but there are less obvious areas that exist, or should be created, such as know-how concerning sustainability

Conventional wisdom says you should control and protect proprietary resources and innovations – especially intellectual property – through patents, copyright and trademarks. If someone infringes your IP, summon the lawyers out to do battle.  That’s often the wrong approach.  Contributing to “the commons” is not altruism; it’s the best way to build vibrant business ecosystems that harness a shared foundation of technology and knowledge to accelerate growth and innovation.

A good private sector example is when more than a dozen pharmaceutical firms abandoned their proprietary R&D projects to support open collaborations such as the SNP (single nucleotide polymorphisms) Consortium and the Alliance for Cellular Signaling.  Both projects aggregate genetic information culled from biomedical research in publicly accessible databases. They also use their shared infrastructures to harness resources and insights from the for-profit and not-for-profit research worlds. These efforts are speeding the industry toward fundamental breakthroughs in molecular biology – breakthroughs that promise an era of personalized medicine and treatments for intractable disorders. Nobody gives up their potential patent rights over new end products, and by sharing some basic intellectual property the companies bring products to market more quickly.

One overarching theme at the conference is the confidence that young people have such great potential. Obviously we have a lot of work ahead of us if we don’t want to pass on a deeply damaged planet to our children.  At the final session at Davos, we heard from six inspiring young people on stage on their hopes and ambitions.  There were more than a few tears in the audience.

1. The state of the world is not good.

The theme of Davos was Rethink, Redesign, Rebuild, which may sound a bit grandiose to some people. I doubt many attendees think this now. The world clearly needs fixing.

Figures cited at the Forum show we’re a long way from being out of the woods on the global recession. Jobs are and will continue to be a huge issue. It is estimated the unemployment in the word jumped by 50 million during the recession, and the working poor increased by 200 million.

But the financial meltdown and recession are arguably symptoms of a bigger systemic crises and deep institutional failures. There is growing recognition that many of the organizations and institutions that have served us well for decades, even centuries, are no longer able. Many of the pillars of economic and social life have come to the end of their life cycle. In 2009, the American auto industry — the epitome of the industrial economy — collapsed. The upheaval is now spreading to other sectors — from the universities and science, to entertainment and media, to government and democracy. The continuing collapse of many newspapers in the United States is a storm warning.

Many other serious problems loom. Lack of access to fresh water is a catastrophe for humanity, as 2.8 billion (or 44%) of the world’s population already live in high water stress areas, increasing to 3.9 billion by 2030. In a world of growing capacity, global poverty is getting worse. Ten children die of hunger every minute and a third of the world’s population fester in slums. Almost everyone, especially the scientists at Davos is deeply troubled by climate change. We need to reinvent out energy grids, transportation systems and reindustrialize the planet. And we’re running out of time.

As Bill Clinton said to a few of us at a cocktail party, “The world is too unequal, unstable, and unsustainable.”

2. Everywhere there are new collaborative models emerging to solve global problems

Our systems of global cooperation are not rising to the many challenges we face. The global warming conference in Copenhagen has become a metaphor for failure.

I believe the Forum itself is an example of the global multi-stakeholder cooperation that is picking up where nation states and formal institutions left off.

The global humanitarian response to the Haitian earthquake is showing us what is possible. The 7.0 magnitude earthquake not being just a Caribbean island crisis, but a world crisis. Millions of people and thousands of institutions have responded in non-traditional ways. They are donating their time, money, goods and services. Charitable organizations such as the Red Cross received donation of tens of millions of dollars within days by using new technologies such as texting, Twitter, Facebook and YouTube. Social media has become the pre-eminent tool to connect people around the world, and help empower people become active participants in relief efforts.

There are 100 million people on Facebook Causes – the biggest application on Facebook. These are not just people talking to each other. They are now organizing activities in the physical world. I heard of dozens of examples at Davos.

3. There is a profound rethinking of the financial services industry and its role in society.

French President Nicolas Sarkozy put it well: “The banker’s job is not to speculate, it is to analyse credit risk, assess the capacity of borrowers to repay their loans and finance growth of the economy. If financial capitalism went so wrong, it was, first and foremost, because many banks were no longer doing their job. Why take the risk of lending to entrepreneurs when it is so easy to earn money by speculating on the markets? Why lend only to those who can repay the loan when it is so easy to shift the risks off the balance sheet?”

The mood at Davos was widespread: Banks need to be reined in, the sooner the better. US banking executives used to be the stars of Davos. Now they are a low-key, humble and dour looking group. Last year at Davos everyone was in a degree of shock. This year, a better term would be “fed up.” Fed up with banks that are “too big to fail,” with government bailouts, with the human costs of this crisis and with an industry that basically got out of control. For some CEOs the crisis warrants a critical re-evaluation of market capitalism.

4. Executive pay, especially for bankers, needs fixing.

There was a very strong sentiment that the issue of exorbitant executive compensation needs to be corrected. The biggest targets of discussions were bankers and other architects of the financial crisis. Many heavily damaged their own firms, some to the point of bankruptcy, paralyzed the commercial credit market for tens of thousands of companies, and today are not able or willing to loan money to entrepreneurs. To set aside $billions for bonuses just after they had been bailed out by the government was viewed by almost everyone as unconscionable. Even those banks that didn’t need a bailout cannot justify 8 digit compensation packages.

5. Sustainability is an idea whose time has come. Business is moving from talk to action.

As one executive put it: “It’s no longer about the Green Economy; it’s about the Economy.” Sustainability is the central issue many businesses face.

A few short years ago, sustainability was buried in a company’s PR department and it was primarily a matter of spin. But then governments began forcing certain reporting and behaviors, and the corporate issue became compliance. Then sustainability became a matter of competitiveness and cost reduction, by capturing efficiencies such as reducing waste and energy use. CEOs everywhere at Davos said we’ve now arrived at the point where sustainability must be integrated into the business strategy — what is a business, and how it does it operate and relate to the rest of the world.

We’ll see if they walk the talk.

I’ll post themes 6 – 10 tomorrow.

Music to my ears.  Evidence is mounting that the world and many of its institutions are stalled and need reinvention — from the financial system, the old model of government, the media, our energy and transportation systems, our cities, the university, science and even democracy. Needless to say, transforming these is a daunting challenge that will require the efforts of many parts of society.

“Global multi-stakeholder cooperation lies at the heart of the Forum’s mission to improve the state of the world,” says Professor Klaus Schwab, founder of the Forum. “We have to rethink our values – we are living together in a global society with many different cultures. We have to redesign our processes – how do we deal with the issues and challenges on the global agenda. And finally, we have to rebuild our institutions.”

Most significantly, our systems for global problem solving are broken. Says Professor Schwab: “We have to look at the Forum meeting in the context of what’s happening in the world … and we see that, clearly, the present system of global cooperation is not working sufficiently. So we want to look at all issues on the global agenda in a systemic, integrated and strategic way, and we want to address in particular the issue of global cooperation.”

While the Davos event is often misrepresented as a meeting of the business and political elite, this year’s 2,500 attendees will again include a broad cross-section of society, with representatives from business, government, the media, science, religion, the arts and civil society.

Nearly half of participants come from outside business, including more than 30 heads of state or government, at least double that number of government ministers, over 100 heads or top officials from international organizations and NGOs, over 200 leading academics, and more than 200 media leaders.  There will be over 30 social entrepreneurs present, and there will be almost as many labor leaders as central bankers participating, with over a dozen representatives from each category.

Like me, many attendees will have participated in the Forum’s Global Redesign Initiative, which began following the 2009 Forum. The Initiative is a multi-stakeholder dialogue addressing many of the challenges confronting our world today. Over the last year we have been developing recommendations to help adapt and improve the structures and systems of international cooperation.

Now, I appreciate that such an initiative sounds grandiose. Is it delusional for the Forum to try and pull off such an ambitious undertaking?  My response: If not the World Economic Forum, then who?

To achieve new models for global problem solving we have to overcome a major obstacle: The world is organized around nation states based on national economies and that is unlikely to change in the foreseeable future. The idea of national sovereignty dates back hundreds of years with the 1648 Treaty of Westphalia. After World War II there were many bold initiatives to create better systems of global cooperation, including Breton Woods, The United Nations, The General Agreement of Trades and Tariffs (GAAT), The Geneva Conventions, and the Universal Declaration of Human Rights and later the World Trade Organization and now the G8 and G20.

But, as evidenced by last month’s UN Climate Change Conference fiasco in Copenhagen, the existing structures are increasingly inept at fixing what ails the world. Contrast the Copenhagen failure to the growing global networks and movement of millions of people motivated to turn back warming.  Evidence that the solution to global problems is not to create some global government.  Rather there are new possibilities on the digital age to create networks involving business, government and civil society.  The Forum is a case in point — a global collaboration that is actually making the real progress in solving global problems on many fronts.  I for one am in!

Some might say this is all just talk and no action.  Wrong there too.  At the 2009 meeting, I participated with Mark Parker, the CEO of Nike, in presenting an idea called the GreenXchange (GX) project to a group of about 80 CEOs of large companies. Over the last year several other companies have been working to incubate this idea and this year at Davos it will be formally launched. My company, nGenera, is supplying the GX’s technology platform pro bono, because we think this idea is so important.

The GreenXchange is a clearinghouse for unpatented innovations (“know-how”), patent pledges, and patent licenses related to sustainability. Companies participating in the GX will be able to make both patented and unpatented “know-how” available for research uses and commercialization on standard and transparent terms and conditions.

Nike conceived the GX because there is too much duplication of effort in sustainability, and collaboration on shared challenges is a proven way to reduce costs and increase innovation. Companies face very similar sets of sustainability challenges — how to reduce resource consumption and achieve greater efficiency — but without the ability to share learning and best practices in response to those challenges, good solutions fail to take hold or make a broader impact. The GX was created to address this problem by making it easy to enable sharing and promotion of industry best practices leading to sustainability, while making sure that credit is given where it is due. The GX will also help reduce some of the barriers separating innovators from entrepreneurs in the sustainability space.

In the short term, the GX will make it easier for companies and individuals to identify, share, and obtain licenses to available technologies. The GX will enable rapid identification of commonalities in technology across industries and in turn identify gaps in available technology. In the long term, the GX will create a clearinghouse of public license offers for entrepreneurial development, innovation, and technology adoption. This is the sort of creativity the Global Redesign Initiative is designed to promote.

Contributing to the brainpower of the Global Redesign Initiative is the Forum’s Network of Global Agenda Councils – over 1,000 experts representing more than 50 thematic areas of international cooperation (e.g. Water Security, Pandemics, Migration). Approximately 3,000 participants drawn from the Forum’s industry, governmental, civil society, academic and media communities provided input.  They were selected as the most innovative and relevant thinkers to capture the best knowledge on each key issue and integrate it into global collaboration and decision-making processes.

I have spoken to many other members of the Councils over the last year.  Most of us were impressed at the high-caliber and sincerity of the discussions.  Our job at Davos will be to not only challenge prevailing assumptions, monitor trends, map interrelationships and address knowledge gaps, but to propose solutions, devise strategies and evaluate the effectiveness of actions.

I’ll be blogging and tweeting throughout to let you know how it’s going.  Stay tuned.

Gartner’s Hype Cycle for social media classifies Social CRM (i.e. the integration of social media into CRM systems) as a transformational technology that is two-to-five years away from mainstream adoption in customer service applications and five-to-ten years away from adoption in community marketing. While I agree that Social CRM will be transformational, I think the adoption will (and must) happen more quickly. Specifically, our research at nGenera has uncovered new data, new tools, new channels, and a new mindset that are accelerating the trend towards Social CRM.

Data: The data that is included in traditional CRM is limited to very basic identity and transactional information about customers. It does not typically include the type of rich digital profile information contained in places like Facebook and LinkedIn.  Customer feedback is collected through surveys, a method of data collection that is expensive, time-consuming, temporal, and often annoying for customers. But this is all changing. Customer data can be gathered from many sources, some old – such as the contact center – and some new. With respect to the contact center, the amount of unused customer data that is generated is astounding. One interviewee recently confided that his contact center writes the equivalent of a book every day – a book that nobody reads.  A first basic step is to generate organizational learning from contact centers. Once you’ve mastered this, you’re ready to move on to new sources of data. In this case, I’m thinking about reality mining, social networks, forums, blogs, and other digital venues where customers are engaging in behaviors that affect the company’s brand.

Tools: Listening platforms and sentiment analysis tools allow companies to capture customer preferences, complaints, feedback, and queries expressed online, while social network analysis can provide insight into the connections between individuals and identify key influencers. Companies can also track prosumer activity across branded communities and company-sponsored networks. When integrated with CRM databases, this information helps create accurate, up-to-date, and meaningful customer records. Although the CRM systems that currently offer applications to incorporate social media data only include data from a limited number of social networking sites – of which Twitter is the most common – this will likely change. Data will eventually be collected from all public online discussions as the concept of Social CRM becomes more accepted and companies develop strategies to deal with larger volumes of data. Once customer conversations have been successfully captured and incorporated into CRM databases, one can imagine a future where companies will be able to capture other forms of rich data, such as emotional data, photos, voice, and even video content (i.e. not just video metadata). According to a vendor I interviewed, companies can already correctly identify individuals online using available profile data with up to 90% accuracy.  This allows comapanies to find existing and potential customers online and gather new data about them. The contact center of the future will have a much richer digital picture of customers, allowing companies to personalizing product and service offerings, engage customers in meaningful conversations, and generate sophisticated trend data.

Channels: Many contact centers, such as those at Best Buy and Comcast now support social media channels and have dedicated teams devoted to responding to customers and prospects in public and branded digital venues. The question of whether or not to use social media as a listening platform or a contact center channel is major one for organizations as it affects the number of touchpoints that need to be managed and the complexity of customer support operations. However, as sentiment analysis tools get better, and integrate more readily with CRM, we expect this distinction to become less and less of a concern. In the future, the new sources of data (inputs) will be the same as the channels for customer interaction (output). As these channels mature, I fully expect the data and analytics to help “close the loop” with respect to customer engagement metrics – directly connecting social media investments with customer sales information. In this way, companies will be able to measure the value of customer intention and calculate the ROI of social media interactions.

Mindset: The notion of ‘relationship management’ brings with it a particular bias that data is controlled by the party that is doing the managing, rather than ownership of the data by the individual. So, in the case of CRM, it is assumed that the company is managing customer relationships by controlling the data about them and their interactions. New notions of relationship management seem to embrace the idea that ownership of both identity information and the customer-vendor relationship should reside with individuals, not companies.  Exchange of information should be based a two-way value proposition in which individuals selectively share aspects of their rich digital profiles, as well as their discretionary effort in exchange for useful and targeted messages, promotions, and reputation.  Paul Greenberg from ZDNet discusses this in more depth and notes, “Co-creation and mutually derived value, is at the core of Social CRM.” As an example, The Internet Identity Workshop and Project VRM (Vendor Relationship Management) at Harvard is exploring a highly customer-centric view of identity information where the customer controls their data and manages relationships with various vendors.

I’ve heard the argument that traditional CRM “is dead,” but this is far from the truth. In fact, as Brian notes, Social CRM does not replace transactional CRM systems, rather it augments them. What CRM is in desperate need of is new data sources and tools that help integrate and analyze this data. The future vision of CRM also requires that companies get involved in new channels and cede a certain amount of control to the customer – it’s less about management and more about engagement.

This week I’ve had the pleasure of attending a very well executed Government 2.0 Summit held in Washington D.C. I was pleasantly surprised to find many ‘kindred spirits’ at the conference and additional examples that signal the rise New Public-Private Ecosystem.

Tim O’Reilly, whose firm conducted the conference, opened with a keynote that argued that the twin developments of open data and the power of shared platforms had the capacity to revolutionize government. He noted that platforms such as Google, eBay, Amazon, Craigslist and Apple’s iPhone App Store were successful because they harnessed user contributions to create enormous collective value – value way beyond what they could do alone. He then went on to argue that this same logic could be applied to the role of government services. He argued that the government needed to begin to think of itself as a platform. He pointed to how the investments made by the U.S. Department of Defense in globally positioned satellites (GPS) spurred others to develop applications, products and services, and spawned an entire industry.

Over 40 noteworthy examples of the government as a platform were seen at the conference. Here are some of the highlights:

• NASA’s Spacebook – “Lessons Learned from NASA’s Enterprise Social Network,” (Emma Antunes) that supports internal and external cross-fertilization of ideas and innovation at the juncture of different scientific disciplines.
• TSA’s IdeaFactory – “Transportation Security Administration’s IdeaFactory: Social Media and Securing America,” (Tina Cariola) that harnesses front line TSA employee’s ideas for innovation and continuous improvement at the TSA.
• Citizen budget input in Santa Cruz – “City of Santa Cruz Offers Blueprint for Solving CA Budget Crisis with Social Media,” (Peter Koht) was used to deal with radical budget cuts in municipal services and reallocate resources.
• State of Utah – “Utah Department of Public Safety Media Portal,” (Jeff Nigbur) – a shared portal that coordinates safety information, enables collaboration with private media organizations, and saves money for the State of Utah.
• Data and Platforms – “GeoEnabling Gov 2.0″ (Jack Dangermond) – GIS wizard, pioneer and founder of ESRI, illustrated how open data sources with powerful GIS tools and government platforms can enable “on-the-fly” mashups to support situational awareness and crisis situations in realtime, like the recent Station Wildfire in Los Angeles.

One of my favorite sessions was a panel on “Creating an Effective Platform,” with John Markoff (New York Times), Vinton Cerf (Google), Jack Dorsey (Twitter) and Tim Sparapani (Facebook). Markoff started off the session by distinguishing between “platforms of liberation,” and “platforms of control,” suggesting that platforms of liberation lead to creativity and innovation whereas platforms of control tend to limit creativity, stifle innovation and by implication in the worst case, be used to enslave or oppress. All the panel members reiterated that effective platforms (aka liberating platforms) have the ability to enlist broad voluntary participation. Cerf noted that a combination of design requirements from the Department of Defense for connectivity among all of their assets mixed with the values of the academic community fostered an open, cooperative architecture for the Internet. Dorsey, the creator of Twitter, noted that the concept of a utility, like the electricity grid or the Internet was his inspiration for Twitter – a reliable platform that can be used by others to build new capabilities. Sparapani noted that while Facebook has over 250 million members, it is also important to note that Facebook’s architecture also enlists and supports over a million independent developers that add value to the Facebook platform every day.

At the highest levels of the Obama administration the United States, with the appointments of Vivek Kundra as the first CIO of the United States and Aneesh Chopra as the U.S. CTO, is developing policy frameworks (e.g. The Open Government Directive) and new tools (e.g. data.gov and The Federal IT Dashboard) that will support collaborative platforms and open data. Both Mr. Kundra (see here) and Mr. Chopra (see here) provided additional information on these efforts at the conference.

So the story continues and I believe the mindshare is growing. Policy makers, practitioners and thought leaders are rising to the idea that a globally interconnected world affords new opportunities to reshape government. Open data unleashes the creative potential of citizens and private enterprise to create new services, software applications, and insights that the government cannot do by itself. The shear numbers tell the story. Millions of citizens and hundreds of thousands of companies of all sizes uniting to independently create value and enhance the common good. The proprietary ownership or licensing of that data to a few (Gov 1.0) seriously limits the power of the New Public Private Ecosystem. Now not all government data should be open and privacy must be safeguarded to be sure. Nonetheless, the vast proportion of government data falls under the non-private category.

The same logic applies to collaborative platforms. In contrast to open data, however, collaborative platforms require investment and development. As we further explore the New Public-Private Ecosystem, policy makers, entrepreneurs, and the market will need to work out where it is best for the public sector to invest and where the private sector should invest. The dividing line is not clear. Only 10 years ago, one would not expect Twitter to emerge from the private sector; utilities were the province of governments. But the good news is that democracies, republics, and open societies have the natural open forums to debate and collaborate to find the answer. Closed societies force themselves into a comparative disadvantage on the world scene – they only harness a small proportion of their collective creative spirit. We are not likely to see the New Public-Private Ecosystems and its benefits emerge in those nations.

This is a new age of collaboration and the train has left the station. Distinctions between less government or more government are the realm of old categories and thinking. Government may well get smaller – a happy thought for citizens. Howeverit will get smaller, not through fewer services, but rather through the power of collaborative platforms, open data, and the New Public-Private Ecosystem, and in the final analysis, private citizens will have more services and a play a greater role in the development and delivery of those services. Everyone can win: the dedicated public servant, the engaged citizen, the investor, and the company.

Readily available transparent communications are changing how people form and use social networks in their personal lives.  When anyone with a phone can instantly publish every moment of their lives in real-time, flirtations, relationships, and other personal interactions increasingly play out right before our eyes.  The “new paparazzi” are amateurs armed with smartphones capable of real-time, transparent reporting on anything they see, anytime, anywhere.  Ten years ago, mobile phones were relatively uncommon, yet tweens now demand unlimited texting, mobile maps, and three megapixel cameras.  Highly mobile, entirely digital, completely transparent, real-time gonzo reporting isn’t on the average person’s mental radar just yet.  But how long will that last?

Emerging new media technology has resulted in an enormous rise in visibility of real (and imagined) niche subject matter experts who draw greater attention to their knowledge than ever before, and hence accumulate audience share in a competitive information marketplace.  They are interviewing their friends at private parties, filming television networks filming “reality” shows, and opining on every topic under the sun.  And they’re often closer to the disaster scene, premiere event, or other topic of interest than the mainstream media.  When the media is outside the exclusive event and Ashton Kutcher is interviewing his friends using Twitter and UStream inside it, who’s the subject-matter expert?  Who’s the reporter?Objective, removed experts are increasingly victims of the phenomenon that David Weinberger describes as “transparency becoming the new objectivity.”  The notion of objectivity – the journalistic authority with credentials you can trust without looking into matters any further – has been undone in a new virtual world of hyperlinks and microsharing.  Now, audiences want to see where authorities’ ideas came from, see the references they link to, and look at their online social networks.  Then they’ll decide as a network of readers who is authoritative, objective, biased, smart, and influential – or not.  Credentials will continue to be important when building authority and influence in journalism, but they will probably cease to be sufficient.

In a world where transparency is the new objectivity, audiences increasingly want to get information from accessible, authentic, gonzo subject matter experts.  In a recent post I coined the term “bantamweight publishing” to describe the Web posting of globally-accessible information in extremely short bursts. Collectively, this is called “citizen journalism.,” but I think tweeting about Derek Jeter eating at Nobu is behaviorally no different than texting my friend about it.  Citizen journalists are nothing more than universal sources.

What has changed is that they are free, real-time, locally global sources that everyone in the world has access to.  The information  these universal sources share with their bantamweight publishing is archived, and therefore accessible, searchable, discoverable, and easily repurposeable.  Audiences are increasingly failing to distinguish the differences between universal sources and the “authoritative” journalism trade.  In the era of transparency and authenticity, people in the audience are effectively collecting raw data, conducting mental experiments, and drawing conclusions of their own about what is and is not news.  However, when planes crash, flu spreads, and protests rage, one thing hardly anyone knows the answer to is: Which raw sources can I trust?  Mainstream media can help to answer that question.

Amateur universal sources will only get more talented and prominent with newer technology, experimentation, and practice.  So how can mainstream media survive in an environment where universal sources are giving away the milk for free?  An enormous emerging market that large media companies can enter is intelligently collating, analyzing, and presenting  real-time and right-time information from millions of universal sources for their readers.  When transparency is the new objectivity, media brands can gain credibility with, and provide value to, audiences by doing what lone amateurs cannot: providing a combination of massive analysis,  high-quality packaging, and authoritative marketing.

It used to be that people would trust the news from Walter Cronkite.  In the near future, people may trust the news that CBS distills from a million distributed Walter Cronkite wannabes.

Envision a world where networks of public institutions and private companies seamlessly work together.  In this next generation world, each member of an ecosystem divides their collective resources and labor according to those functions and capabilities best performed within each respective entity.   The ecosystem has a unique division of labor, clear decision rights, and defined roles across tens to thousands of individual organizations. Such new levels of collaboration arise from the economic and technological capabilities available in a massively internetworked planet.

True, public-private partnerships are not new – in the 20^th century we saw many in areas ranging from space exploration to entrepreneurial innovation.  However, the combination of online platforms and networked ecosystems transforms their underlying form and function. Public-Private Ecosystems fortified with powerful online platforms can drive entirely new ways to involve citizens, divide work activities among traditionally private and public enterprises and harness talent in new ways for the common good.  Here are three examples that point to the potential and key elements:

• Crossroads Bank for Social Security, Belguim.  Maryantonett Flumian, a fellow colleague and frequent contributor to our Government 2.0 Insight program, tells the story of the Crossroads Bank for Social Security (CBSS) – a platform that links 3,000 private and public sector agencies to cooperatively deliver services for the citizens of Belgium.  The “bank” itself holds no information – the information of the citizens and the services delivered travel among the right agencies across the right public, private and jurisdictional boundaries, at the right time.  To quote Flumian, “The work of the CBSS has resulted in dramatic reductions in forms, decreased burden on employers, and streamlined access to better social services. It is estimated that since 2002 the system has saved companies 1.7 billion Euros a year in administrative costs.”
• City of Frieburg, Germany.  One of our student interns, Alex Marshall, studied a software platform developed by the local government of the City of Freiburg and TuTech Innovation (see post).  By architecting a web-accessible system of “budget sliders,” Freiburg enabled citizens (1,291 participants) to increase or decrease the spending levels of 22 proposed budget line items. The city gained new insight into the desires of its inhabitants and in the final analysis readjusted some of its spending priorities.  Similar examples can now be seen in Hamburg, Germany and Belo Horizonte, Brazil.
• Apps for Democracy, United States. Vivek Kundra, the first Chief Information Officer (CIO) for United States Federal Government, came to Barack Obama’s attention through his innovative approach to leveraging government databases as Chief Technology Officer for the District of Columbia. Kundra found that by taking existing government databases and adding common software interfaces, he could generate a free-form public-private platform and ecosystem of the District of Columbia staff, external software professionals, private firms, and creative citizens.  In contrast to the prior examples, the data grounded the effort, the platform was mashed-up from a collection of open source software, and an ecosystem formed through the independent activities of interested parties to find new ways to use the data for the public good – ways that the District of Columbia neither had the time or resources to find by themselves.  Now Kundra is applying the same logic to the U.S. Federal Government through a series of open data initiatives (see http://www.data.gov).

So what have we learned and what are the implications for citizens, governments and public policy?

1. Focus on differential advantage.  Anyone who manages an organization knows that appropriate division of labor is often a prerequisite for success. We need to apply the same thinking across enterprises and institutions in this new massively networked world.  Let’s extend the lesson of Belgium’s CBSS to link capabilities regardless of jurisdiction utilizing the strengths of each organization.  In a networked world why should we duplicate efforts across enterprises or start new enterprises when enterprises work together?  Such a mindset goes a long way to unbundling our preconceptions of who should do what and taps into a latent stream of broad societal efficiencies. What latent capabilities exist that can be linked when we reexamine particular types of work that must be done for the public good across the traditional divide of public and private entities?
2. Consummate network externalities.  Let’s not be shy.  In most developed nations we have a surplus of 20^th and sometimes 21^st century capabilities locked down and isolated in balkanized 18^th century structures.  As the world has become networked so too we need to re-examine how we have created divisions of labor among what we call public and private.  Sure there are legal and jurisdictional boundaries that protect the common good and regulate political and economic power.  However, these new examples indicate that not all divisions are necessary for good democracy or regulatory imperatives.
3. Information does not need to be consolidated in one place to do good. As seen in both the CBSS and the District of Columbia examples, in the networked world a free flow of information can enable previously siloed organizations to collaborate and revise their division of labor.  The result: potential new efficiencies for society and economic benefits from a better use of assets and capabilities.

While many details need to be worked out in the new public-private ecosystem, including privacy, legal, governance and regulatory factors, the emergence of these new structures, processes and participants could usher in a more effective set of arrangements for the common good.

Over the past year, we’ve been researching extensively the topic of digital identity. Not surprisingly, a lot of the theory we explore directly affects our day-to-day lives and how we interact online. As an example, I’m finding a growing “identity divide” as my various social graphs intersect (or more importantly don’t intersect) with my digital self. To put it bluntly, it’s becoming increasingly uncanny how my online persona—instead of converging—is in many ways actually diverging from the “real” me.

Why is this? One reason is that many of our most significant interactions—those with family and close friends—occur offline and are not captured as part of our digital identities. I think the bigger reason is that we’re constantly reminded that our digital identities are entities that need to be managed, so what does appear online tends to be a highly sanitized version of us. danah boyde talks extensively about the issue of digital identity. In her 2002 thesis paper “Faceted Id/entity: Managing Representation in a Digital World,” she says:

“In any given situation, an individual presents a face, which is the social presentation of one facet of their identity. I believe that an individual has a coherent sense of self, but in presenting only facets of their identity, they are perceived as fragmented. People maintain many different social facets and often associate particular facets, and therefore faces, with particular contexts.”

For knowledge workers like me, the vast majority of Internet use is work-related. In many ways, if you’re developing a professional online brand, the decision to cut out personal details is made for you. I could use Twitter and blogs to talk about how cute the baby is or to complain about how I was up all night working on a paper, but how would that contribute to my brand? Why does anyone care about what movie I saw on the weekend or who I’m cheering for in the playoffs? The general question is: What is the value of using the pubic Web as a venue to air personal issues?

I would argue not much (unless maybe if I’m a celebrity). But it does create a gap in my online identity. In a sense, it’s unfortunate that what I talk about online is of no interest to family and friends. I could develop professional distinction on the Web but few people that who are really near and dear to me would notice.

One of the models we can use to help think about this digital identity divide is the Johari Window. The image below shows a 2×2 matrix that contains different types of information about our identity – aspects that are known to us and those that known to others. Over time, more and more of the matrix comes into play as personal information is digitized and shared. Prior to social networking everyone projected a particular image within which there were characteristics of themselves that they knew about and chose to share: the Arena. There were also characteristics of which they were aware, but chose not to share: the Façade. This was changed by social networking technologies which can now uncover a whole other aspect of the self: the Blind Spot(s) – things that we don’t know about ourselves, but that are well known to others (e.g. characteristics such as habits, expressions, or even behaviors).

The true power of social networking becomes apparent in the co-operative era, during which knowledge is taken from narrow to broad base by organizations that can now link up personal information known in different contexts/realms and make it useful for their own purposes. Finally, we have the tireless machine era in which we have to imagine a world (not too far away) where machines and software will be operating 24/7/365 in the background, enabling powerful reality mining applications. Much of what is uncovered in the tireless machine era will still have been unknown to us and to others as well, but will be collected, aggregated, analyzed, monitored, and tagged by powerful, always-on systems running in the background of all Web applications. (Note: nGenera members will hear more about the Johari Window and pervasive digital identity in several forthcoming research projects).

The progression to the tireless machine era is by no means linear, and I think what we’re experiencing now are growing pains. Currently, I think the highly managed approach to most digital identities is moving more information from the Arena to the Facade, creating the divide I talk about above. The purposeful collection of personal data by companies is adding to our Blind Spots (e.g. companies can now use social network analysis and reality mining to identify behaviors and trends that we don’t perceive) but I don’t think the technology is quite good enough yet to create much that it fully Unknown.

I don’t think anyone feels comfortable with idea of always putting up a facade – most of us would like to think we “keep it real,” however I think in many ways, the Internet gives us little choice. A Net Gen take on Richard Florida’s Creative Class asks, “Why leave your personality at home? As free time blends with time on the job you want to make a statement and be comfortable at the same time.” It’s a nice thought, but it sounds unlikely for most professional environments.

CoTweet is a platform designed specifically to help businesses use Twitter. It lets multiple individuals at one company send tweets on up to six corporate Twitter accounts and keeps the messages in sync across all of the accounts. Per its website, CoTweet is “How Business Does Twitter”. I spoke with the Co-Founder and CEO of CoTweet, Jesse Engle, @jesseengle earlier this week. Per Engle, “CoTweet’s underlying value proposition is to help companies engage in authentic two-way communication and to focus on that engagement.” Illustrating that point, CoTweet offers the ability to view conversation histories allowing you to view your team’s responses in context so you can see which tweets have been responded to and know who’s said what to whom. Engle feels that this is one of the most useful features and is part of what makes CoTweet unique. I personally like the assignment feature which allows you to delegate a task/tweet to someone on your team for follow-up. There are too many other features to include here, but the model is intriguing and already creating a buzz among enterprise customers including @Ford, @Pepsi, @JetBlue and @MSWindows, yep, that’s the Microsoft Windows team. The Twitter API team, @twitterapi even uses CoTweet to manage user requests, and uses CoTweet’s CoTags, a convention for using signatures when tweeting from a company’s brand account.

Still a free service, how will they make money? CoTweet is planning to implement a SaaS model where subscribers pay per month to use the service. Pricing levels and timing are still up in the air, though it’s been reported that this model could be implemented by the end of the year. Also reported in The Wall Street Journal, “Scott Monty, Ford’s digital and multimedia communications manager says that he and a team of nearly a dozen others use CoTweet to manage Ford’s multiple Twitter accounts and would pay for the service when asked to.” A pretty nice endorsement that I’m sure the 6 CoTweet investors liked seeing. Did I mention that CoTweet secured $1.1M in funding last month? Not bad for a company that just launched its public beta site on July 9th.

Another company I came across is StockTwits. This company provides an idea and information sharing service for investors. It’s a very simple concept, you follow @StockTwits and watch or participate in real-time conversations about stocks. The service allows users to see trading activities, conversations about certain stocks as well as view activity about a particular company in one stream. Users tag tweets about specific companies with a $ and the stock sticker symbol. Tweets not about specific companies are tagged with $$. Yesterday I caught up with Co-Founder and CEO of StockTwits, Soren Macbeth, @sorenmacbeth. He mentioned that they have received many testimonials from users who value the opportunity to trade alongside thousands of other traders vs. trading alone. Macbeth believes, “The community is the real value. It’s like a global virtual trading floor for traders.”Given the clout of some of the active traders on StockTwits, companies have started to take notice. Bloomberg now takes some of StockTwit’s tweets and posts them in the Bloomberg Terminal. On August 3rd, StockTwits announced an initiative with NASDAQ called Data Junkies, @datajunkies. NASDAQ now posts real-time stock prices to specific streams on StockTwits, and will host StockTwits virtual lunches with inside tips to help traders take advantage of the different tools. StockTwits will also host StockCamp at the NASDAQ MarketSite, a physical gathering for traders to meet, exchange ideas, tips and generally collaborate. Just yesterday NASDAQ and Stocktwits announced a contest where 30 lucky Data Junkies will be picked to ring the NASDAQ closing bell on August 25th alongside the StockTwits team.

So what about the money? StockTwits has received $1.6M in total funding and is already producing revenue via 3 subscription-based, premium content blogs launched this spring – alphatrends.net, upsidetrader.com, and investingwithoptions.com. Per Macbeth, “Micro-blogging is great for real-time posts during the business day, but longer form content is needed for deeper research.” Macbeth also knows, “This is not new. Subscriptions to financial content has been around for a long time, we are just presenting it in a unique way.” And that unique way is what should help drive revenue for this popular start-up.

I also got the scoop on another revenue channel that StockTwits is planning to introduce this fall. On September 1st the company will launch a desktop application along with its own micro-blogging platform. Features will includes things that are currently not feasible on Twitter like vertical specific services, groups i.e. an option trader group, as well as watch lists so you can see posts related only to specific stocks you are interested in. The application and platform will remain free with premium subscription-based services eventually rolled out on top of the platform.

So where does this leave Twitter? There are many other Twitter-based tools out there doing lots of interesting things. Will Twitter end up acquiring some of these companies or are they already developing more unique capabilities in-house? There is even speculation that an online giant like Google should acquire Twitter.

Two things we know for sure – 1. Twitter’s ecosystem is huge and highly dependent on the platform’s success which should buy them ample time to figure out and implement a feasible revenue model 2. Twitter-based tools like CoTweet and StockTwits are for real, have real funding and are set up for real revenue. There are many options for Twitter and its ecosystem. What do you think Twitter should do? I’d love to hear from you here or of course, on Twitter, @lcarrillo.

Apple understands that business platforms fundamentally change the rules of competition and accelerate cumulative business performance. Competitive business platforms drive and nurture the latest business innovations – mass collaboration, social networking, community formation, ecosystems, global cooperation, prosumerism, community branding, transparency, options portfolios and real time analytics to mention a few. And they also do the same for “old-fashioned” ones as well – things like business process management, customer intimacy, and supply chain management. We’ve studied business platforms extensively at nGenera Insight and Apple is not alone. But Apple has taken the approach and out-executed almost everyone else on the planet.

While many see Apple as enslaved to secrecy, unresponsive to external input, and obsessed with product control, the company has put many of those behaviors behind them. In fact, Apple is writing the book on 21^st Century style collaborative business models and continuous business strategy.Nokia and RIM became Apple students in the last 12 months – both have adopted a business platform approach. Ironically, RIM had the makings of a business platform long before Apple, but did not really exploit it. AT&T is being schooled again about business platforms as it copes with Apple’s latest generation iPhone 3Gs release (it seems that AT&T’s network can’t keep up with new iPhone features such as tethering and MMS messaging). Verizon is playing catch-up because it only recently saw the light – but rumors suggest it may have a deal with Apple on the “iTablet.” Meanwhile, it appears that Motorola still doesn’t get it.

But Motorola’s not alone. Almost 10 years after Apple’s launch of the iPod, iTunes and the iTunes Store, most corporations either stand in awe of Apple’s accomplishments, or see Apple’s approach as completely irrelevant to their businesses. They’re mistaken. These developments signal a new formula for business success that extends beyond the glitzy world of Hollywood or the high tech software and telecommunications industries. More importantly, leading firms in other industries have used the recession to put plans in place.

Let’s take a look at what the iPod, iTunes, the iPhone and the App Store really mean for business. A bit of history first. Apple Inc. launched iTunes, the now famous digital music application, on January 9, 2001 for the Macintosh computer. A little over 9 months later Apple launched the 1^st Generation iPod on October 23, 2001. About 2 years later Apple launched the iTunes Store on April 28, 2003. The iPhone was released 4 years later on June 29, 2007 after the runaway success of the iPod-iTunes-iTunes Store combo that revolutionized the retail music industry. The iPhone App Store was launched on July 8, 2008 with 500 applications, 125 of which were free. Today the iTunes Store is a digital media store encompassing all forms of digital media including music, games, software applications, podcasts, and a growing collection of video assets.

In the process, Apple sold in excess of 200 Million iPod units and over 40 Million iPhones. Apple sold more than 1 Million of the new 3Gs iPhones in the first weekend of its introduction in July. The iTunes store has sold 8 billion songs since inception, and is the undisputed leader in digital music sales. Moreover, Apple revealed in April of 2009 that the App Store introduced in July of 2008 had already hit the 1 Billion mark in downloaded applications. By late July of 2009, Apple reported that its extended community of iPhone developers, which split revenue with Apple on a 70/30 basis had produced over 65,000 applications that were approved by Apple and available for download on the App Store. At the end of 2001, Apple’s annual revenues were approximately $5.3 Billion USD. At the end of 2008, annual revenues had grown to approximately $32.4 Billion.

Here’s what Apple has learned and what I believe all companies should heed – the undeniable superiority of the 21^st Century business model:

1. Products must become business platforms that grow through collaboration. The iPhone, the iTouch, and iPod are not music players and multimedia phone – ergo products – so much as they are business platforms. A business platform is the totality of the physical product (e.g. iPhone), the embedded software inside the product (iPhone OS), the collaborative platform (iTunes+App Store), the economic community (the iPhone ecosystem which includes AT&T and other wireless providers, Google, Yahoo, the iPhone developers, related iPhone social networks and communities, and the iPhone global industrial complex (core manufacturers – e.g. Intel, accessory providers etc.).
2. Business platforms create superb externalities and a powerful ecosystem. Business platforms create a sort of lingua franca for all of the participants. In other words the business platform contains a common understanding for business transactions, business rules, business communication, technical specifications, interface standards and requirements. As a consequence transaction costs are minimized for all parties and efficiency results. For example, embedded in the iPhone OS, the iPhone SDK (systems development kit), the App Store and the iTunes store are the complete “rules of the road” for operating in the iPhone ecosystem. The result is a cumulative transparency that enables tens of thousands of participants to collaborate asynchronously and independently. In so doing they create economic value, a continuous wellspring of innovation and mutually extend the overall value of the economic community. They also rapidly extend the capabilities of Apple’s core product way beyond what Apple could ever do so on its own.
3. Business platforms create a learning platform that spawns communities of interest and communities of practice. A multitude of social networks and communities surrounding Apple’s iPhone business platform. Numerous Apple-sponsored and independent communities trade ideas, IP and practices daily and cajole and attempt to predict Apple’s next move.
4. Business platforms generate untold business analytics for the platform’s owner and participants. Because all elements of the business platform are networked, the platform generates a prodigious amount of valuable information about the product, the ecosystem, the participants, and the customers in realtime. Apple knows the score for each element of the platform and uses the information to fix, improve, extend and enhance the product and ultimately delight the customer.
5. Business platforms generate a superior portfolio of strategic options. The generation and management of options remains at the core of business strategy. Business growth depends upon the portfolio of business options available to the executive team. Traditional business models depend upon internal knowledge and internal innovation processes to generate new product ideas, new ventures and appropriate acquisition strategies for growth. Such traditional processes are anemic when compared to an enterprise armed with a 21^st Century collaborative business platform. Who has more options for the future, Apple or Motorola? Who has a richer options portfolio on potential products and services? Who has better information by which to value those options? For an investor looking to make an investment, which company has greater future value? The company with a business platform or a company with a 20^th Century, product-focused, internally driven innovation engine. I know my pick.

In subsequent blogs I will examine what we’ve learned about managing business platforms and dealing with negative and positional externalities, what traditional firms must do to change and embrace the rise of business platforms, the power of business platforms in Collaborative Enterprise Management, and the role that business platforms play in continuous business strategy.

To Apple I say: mega kudos, keep up the good work – it’s good for the economy and good for business. Thanks for letting the cat out of the bag.

Signal-to-noise ratio: I think the most visibly important metric – analogous to points on a basketball stat sheet – should be one that is focused on the value and quality of content you broadcast.  Using Twitter as an example, measure tweets versus re-tweets.  If your content is getting re-tweeted it’s safe to assume that it’s valuable (signal) and not noise. For blogs, the metric might be comments per post, indicating a compelling or timely argument worth discussion. Using online sentiment analysis tools, companies could add an additional layer of complexity to this stat by also measuring positive versus negative comments.  As a basic example of signal-to-noise, my ratio based on re-tweets/tweets is: 10/91 = 0.11.  For comments/blog posts it would be: 289/79 = 3.7.  Of course in a multi-channel world, the metrics get muddled.  If re-tweet is the new blog comment, how do you calculate the metric?

In/out ratio: How good of a curator are you of information?  We interviewed the company Cataphora a few weeks ago (recently profiled in BusinessWeek) – their software uses social network analysis to identify good content by how much it is shared and passed around and track document originators and curators to assess individual productivity.

Document “originator” stats: Building on the previous point, how much good content do you generate, where “good” is defined by the number of times your content is reused (this is similar to signal-to-noise, but attempts to quantify the strength of the signals). At a more granular level, the originator stat might also highlight certain areas of expertise – e.g. all good ideas related to robots originate from Alan.  A twist on this metric could be “conversation initiator stats,” which would track who kicks off popular conversations on ones that lead to valuable ideas that are implemented.

Responsiveness: This would be a fairly basic stat that looks at how quickly you respond to other people’s requests.  As part of this, you would also have to account for the number of requests an individual gets (which might actually be another stat around collaborative demand or reputation).

Feedback assessment: To temper responsiveness stats, you’d want to have something like the “assist” stat in basketball, where you only get credited for responses that lead to a positive outcome.  As an example, you could base it how much change occurs to documents as they flow through you.  This would have to use software that analyzes document content and tracks versioned documents (independent of filenames, which often change as they pass through different users – e.g. docs that come through me usually leave as filename_nh).

Sociometric factors: These are the intangible aspects of collaboration that don’t necessarily leave a digital trail that is easily measured.  I liken this to measuring an individual’s plus/minus in basketball – it’s based on how other people perform on their stats when they are around you.  Since there’s no “court time,” in enterprise collaboration, you could measure face time through badges, digital connections, or even video.  Using this type of reality mining, a company could also analyze things like the tone of conversations as well as emotional response in order to gauge the impact you have on the morale of those around you (without necessarily measuring content, which leads to privacy issues).  This stat might also highlight diminishing collaborative returns – if too many minuses start showing up, maybe you’re collaborating too much (or are not very good at collaborating).  A company could also develop a “starting line-up” for projects based on sociometric factors that show positive results from certain combinations of employees.

I’m no fan, but the mainstream appeal is clear: the video has almost 13,000,000 views. I’ll allow Wired.com to explain what happened next:

On YouTube’s business blog, technical account manager Chris LaRosa and music partner manager Ali Sandler describe how Chris Brown and Sony Music managed to capitalize on the 12 million-plus times people have watched the “JK Wedding Entrance Dance” video, which shows Jill Peterson and Kevin Heinz’s wedding party boogieing down to the Chris Brown song “Forever.”

“The rights holders for ‘Forever’ used [YouTube's content management tools] to claim and monetize the song, as well as to start running Click-to-Buy links over the video, giving viewers the opportunity to purchase the music track on Amazon and iTunes,” they wrote. Not only did the song rise to No. 4 in the iTunes music store and No. 3 on Amazon, partly as a result of YouTube’s links, but Sony and Chris Brown also collect a share of revenue from Google’s text ads on the page itself.

The wedding video is inspiring people to click through from YouTube to Amazon and iTunes at twice the normal rate, according to LaRosa and Sandler. And the effect appears to be spreading to YouTube’s official music video page for the song, where they say the click-thru rate has increased 250 percent over the past week.

And the kicker:

Unfortunately the newlyweds depicted in the video aren’t making any money from the video’s millions of views, which would have surely helped defray their wedding and honeymoon costs. YouTube spokeswoman Jennifer Neilsen confirmed that Sony is the one monetizing the video, and that the people depicted in the video are not part of the revenue equation.

This is very frustrating. Worse still is YouTube’s prideful gloating about finally monetizing a video.

Sony’s implicit logic is that because that they own the rights to the music they could have the video removed. Since it remains online by their good graces alone, they are entitled to all click-through revenue that the video generates.

This makes sense legally (it shouldn’t) and is exactly the kind of arrogance I expect from Sony. It’s also a terrible way to engender consumer loyalty. The increased Chris Brown sales would not exist were it not for the video. Taking advantage of content creators and then leaving them out in the cold is not a viable long-term strategy. If users feel that their work is going to be leveraged by others to great effect, they’ll stop sharing it.

An even more egregious example of the one-way flow of content control was South Park’s Internet Meme episode. Viacom felt entirely within its rights to take the likeness of iconic Internet/YouTube celebrities and use them in the episode to generate ad revenue. If those same Internet celebrities uploaded clips of the episodes that featured their claims to fame to their own YouTube channels they would receive takedown notices. This is completely unfair.

Both of these are examples of a larger issue at play which is tightly knit with copyright law. The use and compensation surrounding content between individuals and media companies is not bidirectional. YouTube is not only complacent, but jubilant at the prospect of allowing its users to be exploited. And worst of all, I had to listen to a Chris Brown song to write this post.

Something has to change.

Last week I had the opportunity to attend the Open Government and Innovations Conference in Washington, DC. The two-day conference was a fantastic opportunity to hear some of the leaders in open government thinking, including:

• Aneesh Chopra, Federal CTO – “The Innovation Imperative“
• Vivek Kundra, Federal CIO – “Town Hall Meeting – The IT Dashboard“
• Dave Weinberger, Harvard Law and Cluetrain Manifesto – “Transparency as a Virtue“
• Tim O’Reilly, O’Reilly Media – “Government as a Platform“

(If you’re interested, those talks are available via Adobe Connect here. Click on the linked headshot of the speaker you’d like to watch.)

I sat in on some great panel sessions as well:

• Openness, Information Sharing, and the Use of New Media in DoD
• Case Studies in Citizenship Engagement
• Transforming Citizen Engagement with Congress
• Embracing a Collaborative Culture

It was also great to connect with some of the participants and speakers through the conference’s live Tweet grid. If you’re interested in more links and insight, just search the hashtag #OGI on Twitter.

Throughout the conference I picked up on a few core themes that seemed to run through all the sessions. While the official themes were Government to Government, Government to Business and Government to Citizens, the following seemed to be the three focal points for moving forward with open government initiatives.

1. Despite the hurdles, collaboration is possible

You may be familiar with the memorandum President Obama issued in January to all heads of departments and agencies in the Federal Government. Aneesh Chopra highlighted this in his opening address, crediting the memo with enforcing the ‘three pillars of open government’: transparency, participatory and collaborative. Since that memorandum, new government collaboration projects have surfaced and already-existing projects have enjoyed being in the spotlight of case studies and media writeups.

One great example is the Transportation Security Authority’s (TSA) ‘Idea Factory’, which is also featured in the White House Open Government Innovations Gallery. The Idea Factory, boasting the slogan “Innovate. Collaborate. Succeed”, is a two year old project connecting some 50,000 geographically dispersed employees across countries. Tina Cariola, the Idea Factory’s Program Manager, said the TSA needed a way to tap the knowledge of all of their employees across the organization. She had clear guidelines: the site had to be up and running within only a few weeks and was to be designed as more than just an online suggestion box.

The result was a dynamic community allowing employees to interact and collaborate with each other around ideas. What’s really interesting is the fact that the Idea Factory was originally rolled out as an innovation program, yet the community has turned into a powerful tool for employee engagement and communication. TSA management is actually using the Idea Factory as a way to monitor the workforce ‘pulse’, providing insight and awareness of key trends among employees.

Currently, the Idea Factory is seeing around 300 ideas submitted per month, and after community and management review, 1-2 of those are being implemented.

Tina’s tips:
-Establish cross-functional teams when originally establishing your collaboration strategy and reviewing user generated ideas (lawyers, IT, management, HR)
-Publicly recognize key contributors and leaders within the community. This could mean award ceremonies as well as involving that individual as ideas are selected to advance to the next stage of development.

Cases like these demonstrated for the audience that despite the oft-cited security and IP risks, collaboration within, and even across, government departments is possible. In many instances, government employees’ experience in dealing with sensitive information was seen as a real asset when making the shift to a culture of collaboration.

2. Open innovation on a continual basis

Perhaps my favourite part of the conference was hearing about departments opening up and making considerable efforts in the areas of citizen and business engagement. By governments building an effective platform for participation, sharing information and inviting participants to build off of that, communities can be established where innovation can come from anywhere at anytime, RFP issued or not. Aneesh Chopra presented the platform idea via a “Menu of Open Government Tools”, empowering others to develop their own initiatives in a cost-effective manner:

A shining example here is the Department of Defense website DefenseSolutions.gov:

“A portal through which innovative companies, entrepreneurs, and research organizations can offer potential solutions to the Department of Defense. This portal, and the team behind it, are designed to encourage companies that have never considered doing business with DoD to participate.”

Aneesh Chopra also outlined the open dialog initiative wherein the White House invited citizens to draft policy recommendations for a Presidential Directive. Using well known collaborative tools such as IdeaScale and MixedInk, the three stage process produced thousands of votes and comments and can still be seen at each individual phase here:

1. Brainstorming
2. Discussion
3. Drafting Recommendations

For me, this marked the transition from a mindset of closed, project-based, incremental innovation to a government prepared to take good ideas from anywhere. As Aneesh pointed out, “Great ideas get funding, regardless of the rules“.

3. The need to provide compelling experiences

Last, but not least, I felt a real sense of urgency for government agencies to rethink their interactions with participants; the need to provide compelling experiences. This includes with other agencies, government employees, businesses and citizens.

Tammy’s talked about the power of great experiences before. As the idea of government as a platform takes off, I think this becomes even more crucial. Talent, customers, processes and selected information reside outside of the traditional boundaries of the organization. How people interact with the platform out ‘there’ is what’s important. Why should they engage? What’s the reward of doing so?

Part of this comes in presenting information in a consistent, clear, interactive and useful way. The IT Dashboard, as presented by Vivek Kundra, was a great case study here. The searchable and customizable dashboard is so compelling it has attracted more than 30 million visitors since it was launched…on June 30! It’s been effective, too. One presenter spoke of a case where nearly 45 projects were halted at once when someone interacting with the data raised some red flags about cost management.

By making all this data available for mashups and other innovative services, everyday people are allowed a view into government with far more relevance on their personal lives than, say, just tables of data. And when people are compelled to take action, change happens (e.g. 45 projects get halted because of poor contractor performance). A few weeks ago I posted an interview I did with Zappos about engaging potential talent. The same principles apply here when engaging the public. Compelling comes in the form of personal, emotional, and/or relationship-based interactions.

David Weinberger labels this human touch as ‘the spiritual lure of the Web’, in the The Cluetrain Manifesto:

This fervid desire for the Web bespeaks a longing so intense that it can only be understood as spiritual. A longing indicates that something is missing in our lives. What is missing is the sound of the human voice.

The spiritual lure of the Web is the promise of the return of voice.

Citizens and business are beginning to engage with government in interesting ways because of new expectations of a two way exchange of information and learning. New social tools are combining with changing mindsets on openness and collaboration and are starting to demonstrate the real power of that ‘return of voice’ in the form of effective citizen and business engagement.