Five Ideas That Matter

My Sunday mornings are currently spent catching  up on John Hagel and John Seely Brown’s Shift Index work. Though this concept is not directly in their work I would like to air it – the ambivalent purpose of social networks in business. To all the people I am linked to in LinkedIn, at least for a while, I used to say, so how can we help each other? How can I help you? What will you do for me? I never got a constructive response to those questions.

Here is why organisations are better than networks.

First, in passing this morning I read JSB and JH’s comments on the large organisation:

Only 20% of people are passionate about their work, and the least passionate are likely to be working in large organisations.

The fear is large organisations end up staffed by people who really don’t care.

My feeling about large organisations is their future lies in being platforms that organise people in any way that leads to sustainable revenue. JSB and JH see it slightly differently:

“We believe big institutions will become more relevant than ever–once they focus not just on efficiency but on providing platforms for individuals to systematically experiment, learn, and innovate. As scalable learning replaces scalable efficiency big institutions will become more appealing to talented individuals.”

I like the idealism in that statement but as a knowledge worker I educate myself, by and large. It gives me advantages to do it that way. And I am increasingly inclined towards greater degrees of individualism.

And yet, I like organisations. I like them for this reason:

“….the second reason we believe that large-scale corporations will remain a prominent feature of our professional landscape: because they will be best positioned to develop and support scalable, long-term, trust-based relationships. Think about it. Even the most accomplished networker supported by social networks like Facebook can develop only a limited number of trust-based relationships. On the other hand, a large institution could scale these kinds of relationships far more rapidly and broadly than any individual could.”

Yes, this is what makes me an organisation man. The fact that they provide a short cut to trusted relationships. And relationships where a revenue purpose might emerge without ambivalence. Ambivalent purpose is one of the big snags with social networks like LinkedIn and Facebook – really guys I want to be linked to you not because I admire that profile but for business purposes and that is both enough and worth while.

John Seeley Brown is the writer that converted me to digital sociology and digital economics. The Social Life of Information is the classic social technology text, written prior to anyone talking about social technologies. Lately Brown, along with John Hagel, has been writing about asset returns:

“Corporate returns are under pressure from far more than the recession. The patterns we’ve uncovered span decades and deeply affect even the highest performing companies, with the single greatest driver of these challenges, and indeed future opportunities, being our underlying digital infrastructure. Regardless of when the economy shifts back to an upturn, the long-term implications for continued erosion of return-on-assets will continue.”

And worrying abut their decline in the USA

Among the key findings, U.S. companies’ return-on-assets (ROA) have progressively dropped 75 percent from their 1965 level despite rising labor productivity. Even the highest performing companies are struggling to maintain their ROA rates and increasingly losing market leadership positions.

The point to where Seeley Brown and Hagel’s thoughts are leading is a kind of vanishing point. Radical innovation on a scale and of a type we can’t imagine. I know, I know. they quote things like the impact of innovation in China and India on the west – blowback innovation. But I value more this sense that we can’t imagine or anticipate the radical changes we are due after 40 yea of relatively lethargic inactivity disguised as growth.

I see the problem slightly differently – as a gradual desertion of conventional demand and supply economics for social and moral reasons – because it increasingly failed to deliver fairness. That’s the subject of a paper I’ve written which I hope will be presented soon in Stockholm but if not Memphis in December.

UPDATE: Meanwhile…. isn’t the RoA paradox partly resolved if we look at the contribution of intangible assets to corporate reporting? I can’t believe JSB and JH would have overlooked this so I offer the explanation tentatively. If companies are adding intangible assets in (patent rights, brand valuations) then their RoA will appear to be down because their asset base will suddenly increase?

Continuing our occasional coverage of the evolution of the web as an information market, Joe Wilcox had a great article recently that picked apart the story around the iPhone.

We’ve been reviewing iPhone coverage here and here oh and here as well. Here is the tail end of Joe Wilcox’s article. the whole is well worth a read as are the comments.

“Many of my journalist peers are themselves obsessed about iPhone and App Store. The number of blogs in any given week just dedicated to new App Store applications is evidence enough. There is informational obsession with the device that defies reality.

IDC’s Ryan Reith agrees. “The view about American journalist obsession with the iPhone couldn’t be more true,” he said.

It’s that misguided obsession as expressed in two separate blog entries posted yesterday that prompted my writing about iPhone. At the Apple 2.0 blog, reporter Philip Elmer-DeWitt asserts that “iPhone’s share of the smartphone market hits a record 40 percent.” Really? In what alternate universe? He writes:

Apple now has a substantial — if not the largest — share of the smartphone market in every region of the world except Asia and Africa, according to a report issued Wednesday by AdMob. Overall, the iPhone’s worldwide share grew to 40 percent from 33 perent over the last six months. In North America, its share of the smartphone market is 52 percent, as measured by hits on AdMob’s ads.

This data — based on advertising measurements — doesn’t even remotely jive with Gartner or IDC smartphone unit shipments, nor even Apple’s figures. According to Gartner, Nokia has 45 percent smartphone marketshare in the United States. But the data makes sense perhaps looking at AdMob’s share on different handsets. This kind of persistent reporting makes iPhone appear larger than what it really is. It’s wonderful for Apple’s Stock price.”

We are not frequent posters – opting instead to get a post up here when we have an observation that helps the underlying argument. Hope that explains the radio silence.

Over the past week or so I’ve been trying to think how to get back to the core argument. This goes something like:

There are profound changes underway in the economy and society and they are taking place at a point where a set of new ideas meets a set of new practices. We think we can understand the probable success of the new practices by understanding the power (emerging popularity) of the ideas.

The image is of the Sintesi concept car from Pininfarina. The picture  is an example of new fabrication technology (one of the big ideas in auto) that represents one of these joining points in ideas and economic activity. It offers up an example of how resilience (a key element of new ecological metaphors or bioconsciousness)  and personalisation and customer-driven configuration (the ability to create or hack what I wish to) meet. Here is a couple more images:

So the obvious question is – why is it so interesting? The answer lies in the involvement of Materialize, who specialise in Freeform Manufacturing. Here’s how they describe their speciality:

Freeform Manufacturing uses additive technologies (also referred to as 3D printing technologies), fully automated processes that don’t require molds and thus allow a virtually unlimited freedom in design. Today, these technologies are increasingly used in the production of concept cars. Gradually, this production method will be applied for the production of final cars as well.

I came across the Pininfarina example at 3D Print. The link is this: desktop fabrication that can power the design and data output to make complex objects, cheaply, is upon us. Materialize’s facilities are desktop factories writ large.

In fact the DeskTop Factory project and others are aiming at providing that facility.

The interesting development (or evolution) in personal fabrication (well not quite personal but certainly local at $5000 a pop) is self reproduction in fabbing technologies.

Inevitably that idea is driven by an open source community. I think we are going to be surprised by what can be self-made and at the cost. The dream of self-fabricating things like autos is definitely one for the future but how absurd sane or is it?

I had the pleasure a few years back of seeing a few of the micro-cars created by impoverished engineers in the 1940s. For the most part I was looking at German microcars. They were made out of whatever an engineer could find in the rubble. Here’s an image from the Museum of MicroCars (mostly models from the 1940s and 1950s). MicroCars were homemades and they were production models. Their distinguishing feature was a skilled engineer who knew the product’s totality.

We might never get back to that but future production systems offer an opportunity for people to reinvent their interests and rebuild their communities. The term “bubble car” by the way seems to come from the aircraft cockpit inspiration for these early post War designs. Finally – talking about aircraft cockpits here are two pictures of the 1953 Messerschmitt KR175,

We’ve said a couple of times below that the success of the iPhone is an important case study in how the Web’s information dynamics work. In light of that I was fascinated to see this piece by Javier Marti. It was written in autumn 2007 as the initial hype around the iPhone was dying down.

The Obama election campaign and its aftermath has parallels – which we will come to below albeit only briefly.Why is it important to Five Ideas? The Western ethos of progress through criticism is important; changing information dynamics seems to threaten the principle that criticism is good, and needs to be effective. If information dynamics are changing then we need to understand what it means for what is “true” and what the “truth-to-reality” cycle is becoming.

First iPhone.

Marti being close to the action points out all the negative reactions to iPhone at the time and as importantly points out that the iPhone’s biggest early success was to turn the US into a more mobile using population.

This graph from Nielsen suggests that during the initial launch period the iPhone secured close to 0.75% of all blog posts everywhere, which is a pretty amazing feat.

Still, many of those early reviews were negatives:

3. The camera is a simple application that has one button: The shutter. Picture quality is no where near exceptional.
4. SIM card is near impossible to open, if at all.
5. Web browser is slow, even over WLAN. Even the simple OneList web app that was created takes around 20 seconds to load over WLAN. You can not highlight, cut, copy, or paste and text from a website, and you can not save any images you find from a website either. The only nice thing about it is the tabbed browsing, which crashed when visiting Engadget and YouTube on two tabs. This is the only application that allows you to use the keyboard in landscape mode.
6. The keyboard sucks. It gets slightly better after the iphone “learns” you, as the employees said, but even then, it’s not a device you can use with one hand comfortably, much less without looking.

And so on. Interesting that some of these are usability and interface issues. Experienced mobile users are accustomed to working with one hand and to tactile devices whereas the iPhone is very visual.

Anyway, the point is Apple managed to overcome rational critique and the “how” of that I think should be on every marketers mindd, and every sociologist’s too. So to Obama.

This is from the New York Daily News back in April 2008: “It seems like ancient history now, but not long ago Hillary Clinton argued that Barack Obama was getting a free pass from the media.”

It’s interesting because it comes well before the election. However, 8 months in and Obama’s style, rhetoric and capacity to change Washington are all pretty much subject to wider doubt than at any time when he was being hailed for his ability to connect to the voter.

This is from Newsweek in January 2009:  “Luckily for Obama, the public still likes and trusts him, at least judging by the latest polls, including NEWSWEEK‘s.But, in ways both large and small, what’s left of the American establishment is taking his measure and, with surprising swiftness, they are finding him lacking.”

And this from the yesterday’s London Times: “President Obama is ready to retreat from a central part of his domestic agenda in order to achieve some sort of healthcare reform this year, two of his senior aides indicated yesterday.”

All politicians get an easy ride at some stage but I wonder is Obama another case study in the uncritical nature of open communications on the Web. If so what can we do to fix the problem. The great part of conventional information dynamics is its responsiveness, in principle, to the dialectic of criticism.

If I was a CEO or leader of a significant organisation, my response to claims that my company is threatened by, say Chinese competitors or climate change or indeed recession, would be, no: it is either safeguarded or threatened by my ability or inability to understand the changing patterns and dynamics of social interaction.

Everyone around me is equally affected by how people’s intentions change and what that says about their shared thought processes – the mutual future we are always building. Not understanding the speed with which people now recreate futures is why politicians are failing.

There is good harmless fun trend projecting and a couple of years back pure blogging listed a bunch of sites that do it well.

You can review those sites here. And we will review them all here soon.

My apoplectic response to apocalyptic trend spotting and critique goes something like this. Here is a dead easy futures portfolio.

1. The recession will last for a hundred years and you are all going to die. Pessimism sells well – in fact the author of Buyology Martin Lindstrom has shown the science of buying and selling is at one with fear. There is no shortage of futurology that tells folks it is all getting worse and will continue to do so until you listen to me.

2. The second version of futurology goes like this – Gen A (it could be x, y or z) is the ultimate slacker generation and determined to prove its slackiness is purer than the slackers who came before them (the mathematical formula is Gen = n [tusg]p where p = the present and tusg = the ultimate slacker generation.

3. The third category of doom apocalypse thinking is a combination of arguments that all say the condition of the world spells a sticky end soon. Climate, ascent of China, population growth, health care spending.

Behind each of these arguments lies a formulaic response which goes something like – if we get smarter, if we rely become more creative, adaptable, flexible, innovative (innovation is the new progress) then we can just overcome these problems.

When Chris and I started thinking abut metatrends one of the first things we noticed however is how well, how quickly and how imaginatively people are adapting to new circumstances. The brain and behaviour are the things we can change very quickly – curious fact, people continually talk about having attitudes and/or new ways of doing things in their DNA – my understanding is that genetic change takes about 40,000 years to work through in humans. Very little changes in our DNA – other than it becoming damaged or mutates.

It stands to a little bit of reason that change is therefore mostly social and interactive between people and the web is the place a lot of that interaction now takes place.

Here is a case in point During the recession the number of money saving blogs has been increasing as have their readers. This comes at a time when, the FT recently pointed out, old fashioned mutualism is dying out rapidly enough that Governments are trying to save it. American thrifts have had their day and European mutual societies got the high risk, high reward bug. Read all about it here.

By way of contrast we see a different mutualism growing. It is based around using the web as a source of mutual support and the primary weapon is not money but information.

Having said that, money is a focus of a new generation of peering systems, led of course by the ZOPA model. Even here in money, to date, information rules and includes the likes of wesabe and many more on that model.

In other words the adaptation of social DNA (the information repository for persistence) is well under way. We have written about it recently but only in private client papers. Hopefully we can approach the issue publicly soon. Understanding these trends and what they mean, before the opposition do is more important than the thought apocalypse.

We’re interested in ways of gleaning new insights from online data, and also in new ways of delivering those insights. So, our ears pricked up when we heard about a recently-launched iPhone application – called “Outbreaks Near Me” – based on MIT’s HealthMap resource.

From HealthMap.com

HealthMap monitors and maps semantic references to various illnesses through news reports and social media channels, giving users a potential early warning of outbreaks. It’s one among a number of interesting health data mashups that have cropped up, including Google Flu Trends – a similar initiative, which bases its findings on search trends, rather than media or blog comment.

Some are sceptical about the utility of these initiatives as standalone tools – false positives are an issue for example in both comment monitoring and search data. This scepticism is often justified, but we’re mainly interested in their contribution to metatrend analysis. Their value really becomes apparent when you look at combining the outputs from many different data sources together.

We can measure flu trends now by a combination of social media listening and aggregated search trends, but what else can we add to the mix? There have been successful attempts in the past to identify outbreaks through pharmacy sales data, and in the future technologies like FLIR (forward looking infrared cameras) might also have a contribution to make. More data, tighter insights, better value.

We reported below that the end of July brought about a potential reversal in web fortunes for the iPhone. A little digging around and we found non-US experts looking to short sell Apple shares already in June, because of poor performance and poor strategy over the iPhone (and a feeling that June price discounts were going to become the strategy).

Why does it matter to fiveideasthatmatter? Because we are trying to understand:

• The web sentiment stream
• How it works
• And how it affects the wider world of brands, governments and ‘life’.

Apple is a great example of a company that seems to have a true market-like presence on line, in other words if we can find the right way to put this – Apple, especially the iPhone, seems to illustrate a new type of sentiment market, peculiar to stock markets, commodity markets and the web. In this type of market, sentiment rather than fact prevails, or rather sentiment becomes fact.

Understanding the iPhone’s sentiment history is part of our project. Some US commentators were getting testy about the iPhone recently.

Here’s the bull stuff.

Here by the way is a post from 2007 that illustrates how vulnerable Apple’s shares are to bubble thinking.

A reminder here also from 2007 that positive iPhone sentiment was not a foregone conclusion.

Our argument is simply that a bear market may have begun in iPhone sentiment. Let’s see.

The Financial Times took a swipe at the auto industry last week. At least twice. When the business paper is so challenging of an industry with such a dominant role in the industrial economy, it’s a sign that in the post industrial economy, autos will not continue to dominate.

Is there a big idea that might save the auto-industry or is there a big idea that might change it?

Clearly the most significant feature of the auto-industry in the past decade is the inability of people there to make a big idea stick. Our experience of most companies we talk to is that people with big ideas generally cannot get champions. It is symptomatic of corporate life that we accept that champions are necessary – an alternative is to redesign the idea application environment so that good ideas stick more often. Companies with good open management policies indeed are doing that.

So meantime Tesla all electric supercar was built elsewhere, in fact backed by people from the IT industry who are familiar with disruptive thinking. And the TATA Nano is not a GM, Ford or Chrysler product and it costs not a lot more than a high end gaming computer does.

Even without a new big idea the auto industry will have to change, so much we know. But hasn’t this all been known for a long time? Yes, but people with big ideas have not been able to find champions….

What will replace the auto industry as an expression of consumer aspirations and identify? It may bs something like the personal energy identity that UK company AMEE is pursuing. Where does that leave autos?

Here is one view:

• Seek ways to make cars longer-life and up-datable in hardware and software
• Integrate more of the values that also attach to the home
• Adopt open source design
• Adopt open management techniques to co-define the future role of the auto
• Rescaling design and production around local fabrication, making it my car, made in my backyard

and here is the open source car: