#Facebook again: And Biz Models

Doc Searls has taken the critical analysis of Facebook’s value to another level, by pointing out the fundamental weakness of its ad-supported revenue model. His argument is worth serious reading.

Put a somewhat different way: We assume too readily that exponential pressures mean we can just draw lines up graph paper from anything that has started to work. It’s how startups make their pitch. It may or may not be realistic. The Groupon situation is a case in point. But more tech-focused models also face the same problem. As targeted ads get more and more targeted, especially in the unwelcome context of a “social” network where we are not generally searching for products and services, will they just run out of steam as we run out of patience?

Which brings me back (sorry) to my point: We need innovative biz models to go along with innovative services. Facebook is a social marvel. Its biz model is based on deep privacy mining. Why not a subscription-based service with mutual ownership? It will be a utility soon enough. Might as well plan from the start. Of course, this horse has now bolted, IPO-style. But perhaps a lesson can be learned.

 

 

Doc Searls Weblog · After Facebook fails.

#Facebook being dumped, says Reuters: What’s the real issue? Well, there are 3.

US STOCKS-Wall St rebounds, but investors dump Facebook | Reuters.

 

Whether Facebook is “worth” $100bn or (as one serious voice suggests) $30bn is neither here nor there – unless, of course, you bought your stake on Friday. The P/E ratio is way out of whack with comparable companies like Google – though, as can be plausibly argued, Fb is on the way up and its biz model has yet to be fledged. But that (see below) is at least as big a problem as it is an explanation.

To my mind, three issues are at stake here.

1. The deeper we move into the digital economy, and the more digitally-powered a company or product is, the faster we may expect the forces of innovation to do their terrible work. That is, companies such as these are already aging fast. I was much amused by the blogosphere discussion last year – as IBM’s remarkable 100th anniversary was being noted  – of  “which great companies will be around 100 years from now?” The innovation process is not building vast new brands to take the place of those slipping into the sinkhole of the “old economy” 20th century. It is developing pathways of creative destruction along which products, services, brands, companies, will flow with less and less friction. Facebook may yet prove  a cash cow before it goes the way of all cash cows. I’m doubtful. But whatever the future holds, the exponential character of digital disruption will ensure it holds it more quickly and more briefly than we would anticipate. (AOL. MySpace. Oh, I know it’s different this time. It’s always different this time.)

2.  More specifically, while Mark Zuckerberg has proved remarkably adept at driving his vision and pulling around him highly competent executives to enable it, the Murdoch-style governance structure that gives him enormous power in the public company and its sparkling but remarkably undiverse board do not bode well. This is not the place for a catalog of questions around privacy and business models; suffice to suggest that the lock-down approach that has been adopted is not well-suited to rapid adaptation and response in a rapidly-changing environment. How well the founder’s vision of a company intended for social good that only incidentally plans to make money (I hope that’s a fair summary) will cope with market pressures raises a related set of problems. It is a thousand pities that (as I have argued before) a more innovative and appropriate model than IPO was not developed that would secure the social purpose of Facebook.

3. Three specific factors convince me that within X years we shall not have, say, 3 billion members of a Zuckerberg walled garden. One is interoperability, and the fact that technologically the social media experience will fast become a utility in which hacks and competitive requirements destroy the moat around the castle and in the process the option for economic profit. Second, perhaps through the deployment of anti-trust measures, global governments will not permit the emergence of a Facebook that essentially serves as a private planetary telecommunications and postal system of several billions of members reporting to one man in an office on the West Coast of the United States. Third, and more simply, while Facebook was created for college students it has been driven by teens. Teen culture moves on. And with it the culture of cool. Now everyone’s mom, dad, and grandparents are being recruited to Facebookland, it will be no hard task for the Next Cool Thing to do its thing. Oh yes, barriers to exit are presently high. But that sure isn’t cool either.

Guys, innovation in Century 21 is all about change and disruption. It’s a really bad time to be making bets on the future of terrific inventions and great new companies that have yet to deliver. Which is another reason why the IPO model, as applied to entities like that one,  may have had its day. IMHO.

The #CSR Business: Alignment and Transparency in C21

In the old (pre-Murdoch) days, The Times of London, which then had a fair claim to be the world’s premier newspaper, promoted itself for years with the tagline, “When The Times speaks, the world listens.” But in the 1960s when I first began reading it the entire front page was still filled with classified ads. The world has moved on. As has (sad to say) The Times.

Pride of place now has been unambiguously ceded to the New York Times, though The Economist, which describes itself still as a “newspaper,” could on a broader definition make a claim.

So when The Economist tackles a subject, even in its often quizzical way, it means it matters.

A piece on “corporate social responsibility” is therefore worth noting. It doesn’t add much to the discussion, but recognizes big shifts from when it was regarded as merely a reputational snow job. I’ve written more about this, including the significance of Michael Porter’s intervention and the concept of Shared Value,  in my CSR column for the U.S. Chamber of Commerce. (http://bclc.uschamber.com/profile/nigel-m-de-s-cameron).

My sense is that CSR is presently a thoroughly transitional form. This explains the somewhat disordered situation of the CSR community as (let us say) a quasi-profession. The Chamber’s Business Civic Leadership Center and the CSR professional association recently collaborated in a report that noted the lack of institutionalization (training, standards, and so forth). Seems to me that this is not a problem as the whole effort  is in transition; indeed, the idea of deciding in high school that when you grow up you want to be a CSR VP suggests a category mistake.

CSR is a nettlesome enterprise in the nature of the case, catalytic in respect of mainstream, old-time, bottom-line businesses; indirectly also in the social enterprise direction; and as a whole a component in a set of fast-moving parts as we are drawn into fresh models of capitalism in a culture sensitized to issues of social good – with brands scrambling for credibility and ever-more transparent windows replacing the opaque screens that used to shield all but the product and the marketing ploys chosen  by the Ad Men to present it.

As I have noted elsewhere, I think we need not to be naive in our adoption of Porter’s Shared Value concept as if tomorrow afternoon altruism and the pursuit of profit will have come into perfect alignment. But the tendency is there. Slow but, I do suspect, sure. The values market is increasingly asserting itself as a frame for the more conventional market, and the integration of the two will become progressively more plain with the passage of time and the growth of transparency-hungry technologies.

More on this soon . . . .

The report:

http://bclc.uschamber.com/blog/2012-03-28/new-research-release-state-corporate-responsibility-profession

Economist:

Schumpeter: Good business; nice beaches | The Economist.

Of #Work and Its #Future: #workplace #design humans and exponential #change

UNWIRED :: WORKTECH 12 New York.

I’m unpacking my thinking after one of the most stimulating days in some time – Unwired’s NYC version of their WorkTech conference that is offered around the planet.

The future of work and the workplace brings together people from real estate, architecture, interior design, human resources, and assorted other silos, with futurists who are anchored in what lies ahead. It’s a brilliant inter-disciplinary mix, and I was privileged to be invited to play a part. I was up second, following Sherry Turkle from MIT @sturkle who opened the day with her elegantly stated critique of social media and its impact (OK, I will let media be single here) on our private and business lives.  I see her and Andrew Keen @ajkeen asking some of the sharpest questions about the implications of the digital revolution for our knowledge and relationships. The faster, more complex, and more far-reaching the process of change, the more important it is to frame its challenges. Those with the hard questions tend to have the best ones. We may not buy all their answers, but that’s hardly the point. Answers are needed.

I’ve never labeled myself a futurist, but for a long time my focus has been on what lies ahead – and our problem in preparing for it. So I was second up, and my theme was that problem. It’s best illustrated with what I call The Kink. That is, we look back and see exponential change, a steep curve. We look ahead and we smooth things out – it’s hard to grasp the idea that the future will see changes greater and faster than the past, so we kink the curve. The Kink is today, always today. Another way of putting it:  We look back and see the Big Bang. We look ahead and see Steady State. And it’s here, in The Kink, that there lies the core problem of global risk.

More of that another time (there’s a book brewing); for now, some reflections on the future of work in light of yesterday’s insights.

Some things seem very plain.

1. As I stated in my presentation, the implications of AI/humanoid robotics have been far too little examined. This offers a special case of the problem of innovation destroying jobs faster than it creates new ones. My view is that robotics will remove many categories of job from the economy. Some high-level jobs (surgery) and many lower-level – not just manufacturing but nursing aides, cleaning, driving, retail – all kinds of assistive roles – will be completed by machines.

2. In general, the trend toward career changing/contractor self-employed status/project work will continue. It will drive the need for benefit provision (health, retirement) that is not employment-related (an American alternative to single-payer European-style provision may emerge from a revivified labor union movement shaped for professionals/knowledge workers). It will provide companies with far more flexibility, and knowledge workers, especially, with opportunity.

3. Bricks-and-mortar workplaces will decline in significance year by year. We heard at WorkPlace two interesting contrasts from leading-edge companies adapting to the new tech/social environment – moving into a “thin” approach to the office. At GSK, telecommuting is encouraged, personal workspaces are being replaced with a variety of shared and private work areas, and the trad notion of “going to the office”  is in decay. At Google, we were told, while the cubicles are endlessly re-arrangeable (legos came to mind), people do not telecommute and they have personal workspaces.

The Fordist approach to office environments, like the closely-related persistence of Peter Principle approaches to advancement, have outlived their logic. It’s plain to me that form will follow function, and that the coffee-shop experience will be more the typical future work environment for “white collar” workers than anything we would now recognize as a business environment. With rapid advances in all aspects of communications technologies and 3-D avatars, for example, turning video-conferencing into something far more effectively replicating the meeting-room environment, there will be a slow and finally dramatic decline in the company office. Brands will wish to maintain locations and buildings, but they will have less and less to do with the actual operations of the corporation. Outsourcing to other nations, now so common, will be followed by outsourcing to machines/machine intelligence and the use of shared spaces by workers.

It’s a surprise to me that the spread of traditional shared office suites, incubator start-up facilities, and collaborative spaces somewhere between the two, have not made the obvious leap to the coffee-house environment  where millions of workers (including this one) spend much of their productive time. I foresee Barnes and Noble, for example, not simply with small Starbucks cafes attached, but co-locating with Fedex/Kinkos and hourly hire agencies, with private meeting rooms also, to offer a full-service commercial experience to individuals and small groups in the heart of our communities.

Telecommuting, aside from its unappealing  name, has too much been seen as the option of “working from home.” Many of us do not function well in contexts in which we are either entirely alone, or where we have family distractions. And yet whether we have a convenient and congenial coffee house around is a matter of chance. And they don’t print and may be too noisy for calls.

Point is: While it has taken longer than was anticipated (like the “paperless office,” which is in fact being slowly realized, not least thanks to the cloud), digital has destroyed much of the significance of location. While the security issues, not least, will occupy attention as these transitions tale place, we are moving toward a situation in which knowledge workers and the entire white collar class cease to commute long distances, and work in informal environments within their own communities.

And, as with much else, this will happen faster than most of us anticipate. Those who do anticipate will, of course, win. And if as a community we can also engage in serious anticipation, some of the ill-effects that would otherwise flow (such as the benefits issue) can be mitigated.

 

 

 

#California and Destiny: #Valley #DC #China #Innovation #Singularity #TED et al.

As news keeps coming in of California’s decline – budget, public schooling, even the UC system –  some strategic stock-taking is in order.

I have written before of the disastrous divide between the culture of Silicon Valley and that of Washington, DC. Here’s a sample: http://nigelcameron.wordpress.com/risk/the-valleydc-divide/ Part of what I note is that one thing these two highly geographical communities have in common is their mutual disinterest. They are culturally as far apart as any entities in the United States; indeed (as I suggested in the aforementioned commentary) in the Solar System. The nation’s creative powerhouse and its seat of government are seemingly unbridgeable.

I sat in the office of a well-known Valley VC some time back discussing this predicament, and he offered me two reflections that I shall not easily forget. First, “we see Washington as a European city;” and, secondly, “when I look out of the window I see China.”

Well, OK, let’s work with that for the moment. Let California be California. If its interest in engaging in the transformation of these United States runs no further than technology and commercial enterprise, what of the state? As California crumbles, it also hosts most of the self-proclaimed hotbeds of ideas and smart people – quite apart from, though inter-related with, the Valley community itself. Like TED. Singularity University (oddly perched on a NASA campus). The Singularity Institute. (Both homage a Kurzweil.)And a host of other futures-focused centers and projects. On it goes.

But how much interest do they have in what takes place in Sacramento? Is their other-worldliness (OK, I have also written of technoculture a la SxSW, which epitomizes it, as a new fundamentalism) – is it a federal disengagement or does it pertain also in the shambling state they mostly call home? (Yep – SxSW is a Fundamentalist Bible Camp –http://nigelcameron.wordpress.com/2011/03/22/sxsw-nxne-and-the-new-fundamentalism-a-perspective-from-the-analog-polis-of-a-digital-people/)

My concern here is this: California is the United States’ border with China. This is true on several levels. And just as we need to revivify this nation by bringing to a common focus our government and our creativity, we need also to engage with full force the fact that this faux-European nation in the 21st century will live or die by its engagement with Asia. Some time back I suggested we move Camp David to Menlo Park for a start. The President could, I think, do that in a memo. (Main response I got was complaints from Valley friends about the traffic holdups that would ensue.) But in the long term the issue is when, not whether, the federal government is relocated to the west coast. The prosperity and geopolitical status of the United States hinge in part on when and how that transition takes place. The United States has dwelt for two centuries in Europe. In the third, its home will lie increasingly as a Pacific power.

Point is: the Valley culture and the creativity and far-sightedness it represents are the keys to leveraging the democratic and humane values of this nation into the third millennium and across the Asian continent. I am no naive technophile; what I am arguing is that a failure to engage vigorously with the technological future will gravely set back both our values and our prowess. And technology developments must be grounded in a healthy polis.

So, California, what about it? Revamp the state with the smartest and wealthiest and most creative to whom you are home. And give this ailing nation a bridgehead into what comes next.

 

 

 

 

 

 

Jerry Brown: California Needs Cuts ‘Far Greater’ Than Originally Expected.

California’s Golden Opportunity – #innovation #China

 

Dire budgetary news from California has become as tedious and predictable as the latest on its educational failings, tumbling from the top ranks of American higher education to way down the rankings. We know part of the reason, which is tax initiatives that ave crimped the state’s ability to undergird what were once world-leading educational initiatives. There are of course other reasons, which include dumb teacher unions and state representatives unable to offer leadership.

But there is a wider point to be noted. California stands ready to serve as the linchpin of the emerging global Pacific order; the U.S. representative that offers the fulcrum to the Pacific states as the world’s leading center of entrepreneurship. Is this happening?

Silicon Valley, earth’s chief creative organ, is as detached from the Pacific as it is from the continental body of the United States. Its denizens need to discover interest and enthusiasm for both the polity of their nation and the opportunities of their ocean if they are to take the lead in the most consequent generation that earth has yet seen.

 

 

Huge New Shortfall Predicted in California Budget – NYTimes.com.

#SocialEntrepreneurship, #CSR, and the #Imagination

I was delighted to join the Ideation conference in Chicago earlier this week, and can do no better than link with @tonyshen’s 22 learnings which sum up the impact of a series of terrific presentations from some of the most brilliant people in the social enterprise scene and its environs (link below). Charles Lee and my friend J. R Kerr curated a winner.

What fascinates me is how many moving parts we have in the values/business arena. Social enterprise (SE) itself covers a range of nonprofit and profit-seeking efforts in which social good is the goal, or a substantive part thereof. Then we have corporate social responsibility (CSR). Here our point of departure is within traditional companies, who seek to deliver social good (not my favorite expression, but let’s use it anyway) either to assuage the conscience and meet the charitable interests of the company/founder, or to spruce their brand, or at a more fundamental level align mission with other than directly profitable goals; or, as in Phase 3, to build “shared value,” as Michael Porter has called it, in which these goals are in the long term precisely aligned. A more modest but similar case was made in the report commissioned from McKinsey by the Committee for Encouraging Corporate Philanthropy, which despite its somewhat Victorian name was founded by Paul Newman and operates the key network on CSR within the Fortune 500 CEOs. (Pursue that at corporatephilanthropy.org – the report is a great read.)

The logic of “shared value,” as I pointed out in a commentary for the U.S. Chamber of Commerce, is the end of CSR. No more “triple bottom line,” just a bottom line. Porter’s proposal has been seen as outlandishly optimistic by some, but his essay offers a thought-piece that I believe we need to wrestle with as we look ahead at how sustainable value will be built in the emerging social-cultural-economic matrix of C21. Ironically, the most prominent funding of social good, by far, is coming from the Gates-Buffet-Soros old school of Carnegie-style philanthropy – giving away the riches won through business. So all three types of are operating in parallel.

But there’s a third category that needs to be noted in this meta-conversation: the need for innovative financing and governance models to be devised in response to the vastly innovative technological (and social) developments of the digital revolution.

Jimmy Wales’ Wikipedia offers (so far as I am aware) the only major project of the digital era that has struck out in another direction than IPO-dom. We need more. Google should have. Facebook should. The pressures of the market are not necessarily the ideal environment for the development of visionary, values-driven efforts. As Mark Zuckerberg wears his hoodie to Wall Street, we may well wonder why something as radically innovative as Facebook is beholden to the funding and governance system that sustains the enterprises of the “old economy.” That is, can innovation not run right through the system? Ahem, alignment?

Seems to me that we have here 3 more silos: social enterprise in various shapes; the three-fold CSR package; and innovative, generally digitally-driven, companies. We need above all a meta-convo that will bring these efforts round one table to focus these brilliant, diverse, projects for social good – and, in most cases, also for profitability.

The future? Moore’s Law, social media, globalization – these and other inexorable forces are re-shaping the landscape. It would be fun to work on some scenarios for 10 years’ time.

 

My take on Michael Porter’s proposal on Shared Value: http://bclc.uschamber.com/blog/2011-06-30/one-our-greatest-business-gurus-redefines-capitalism-perhaps

 

22 Hacks & Perspectives for Social Entrepreneurs | MOVEMENT 121.

We are now Post-IT: the Problematics of the #CIO – #CFO #CMO too. Chief Knowledge Broker.

Some weeks back we discussed the fact that Fortune 250 CIOs have remarkably limited engagement in social media. Indeed, it is so remarkably limited that there should be a slew of vacancies – once their bosses work out what is (not) going on.

Now comes a report that both underlines the seriousness of this situation for companies with an interest in the 21st century, and partly explains it. 42% of major company CIOs report to the CFO. In smaller companies it rises to 60%. Plainly, in half our corporations we are working with a depressingly old-economy model in which the CIO and the IT team are seen as technicians placing and maintaining the interconnected typewriters and filing cabinets which constitute the comms/data systems of the firm. Routine stuff, to be kept under the spendthrift thumb of the spreadsheet guy. (Really, who could make this stuff up?) So: CFOs have a major role in CIO recruitment as well as supervision and budget. And they are hardly likely to demand personal engagement in social media (what’s that?). If 4/250 CIOs blog, the proportion for CFOs is probably well under zero.

What these studies have highlighted is a cavern of unawareness deep in the heart of half our companies (at least).

My take? There shouldn’t be a soul in the C Suite who is not personally splashing around in the social space. If that sentence were taken to heart in the bastions of the U.S. corporate scene, it’s hard to conclude they would not be much better placed for what comes ahead. Because “social” is becoming central to marketing, product development, customer relations, and everything else that determines success – and the more central the younger the customer base.

Take home? CEOs and CIOs need to become best friends;and the CFO needs to be taken out of the loop, like tomorrow. The CIO/CMO relationship is also explored in this poll, and needs to be close. One problem with the whole “C” way of looking a things is that by defining executive leadership in functional terms it is increasingly out of kilter with the cross-functional efforts that emerging technologies and their social impacts enable and bring to the center of tomorrow’s needs and opportunities – and that, mercifully, excellent organizations have learned to engage at all levels.

Perhaps the CIO is an anachronism of the days of “IT.” We are now post-IT. IT itself offers a component within the CIO role, but the CIO is not CITO. The CFO reporting stats suggest that is exactly how he/she is (still) seen. The issue is information, not technology. Information is the business of every function. The CIO needs to emerge as the information leader, the Chief Knowledge Broker (CKB), of the organization. With techies to back up as and when needed. The last person on the planet to whom the CKB should be reporting is an accountant.

My piece in response to the Fidelman/HBR report:

http://nigelcameron.wordpress.com/2012/04/13/social-risk-seems-cios-think-social-is-beneath-them/

The post I am responding to here:

Do CMOs, CIOs, and CFOs Embrace Each Other? – IT Management – myITview.com.

#Hashtags and the #Twitter Power of Simplicity

Someone famous once said (was it Einstein) that we must seek not the simplicity that lies on the nearside of complexity, but on the far side. This isn’t a comment on our political malaise (though it could be) but on the best example the digital world has yet produced of the astonishing power that lies on that desideratum of a far side. And it’s called . . . Twitter.

I have written about this before, and I shall again. Here is the before:

http://nigelcameron.wordpress.com/future/why-twitter-matters/

The hashtag, whose potential and practical application is laid out in this brilliant post, just exemplifies the principle: utter simplicity (say, 1000 times as simple as Facebook) that enables us to engage the exponential explosion in data of all kinds and knowledge in particular. Twitter offers a Reciprocal Knowledge Engine.

And as @rorysutherland recently was quoted as saying, this could mean it is worth a lot more the Facebook. http://viggoandersen.visibli.com/share/3C4fe4

 

Twitter Hashtags 101: Complete Guide to Discovery and Power | Internet Media Labs Blog.

Placing a price on research; #HBR blog on #innovation and the long term . . . .

Anne Marie Knott from Wash U biz school raises briefly a profound question: how to maintain a major R and D budget when returns are graded quarterly and markets fluctuate by the second. Which always makes me realize how much better, in fact, is our corporate decision-making than it really should be. Out there is one alternative universe in which is really is the current stock price and the next quarterly report that shape every decision.

I’ve written elsewhere that, as it happens, the principal-agent problem (both here and also in the political realm) ends up helping to mitigate short-termism, since executives (like pols) want careers, and careers require reputations for long-term effectiveness. There are other reasons too, the most legitimate of which lie in the minds of long-term investors (of whom there are still a few).

The point Anne Marie Knott makes tellingly here is that what she terms the research quotient (RQ, a way of measuring research commitment/effectiveness) offers a different slant on capitalization. My somewhat broader point would be that the market needs to find ways to place a more reliable value on both such balance sheet commitments and the willingness of the executive team to take short-term hits for long-term value. That might involve polygraphs in the C Suite. It certainly (sigh, don’t we know) involves coming up with salary and bonus structures that deliver what is needed rather than what gluttonous execs feel is their desert for a good day’s work. This may seem like rocket science, but as Elon Musk is demonstrating, rocket science isn’t necessarily, well, rocket science. And the growing shareholder revolt on executive remuneration, reaching most recently to Barclays and now very much a mainstream effort, can’t fail to help.

At the core, it’s all about the long term. And the fact that as change comes faster innovation becomes both more necessary and more risky is driving a very different kind of corporate culture from that to which big companies used to aspire.

 

 

Don’t Cripple Innovation for the Sake of This Quarter’s Numbers – Anne Marie Knott – Harvard Business Review.