So as the Facebook IPO controversy settles, what’s next?

I’ve written from time to time on the importance of Twitter and what’s likely to happen to the likes of Facebook (scroll for links). But what’s the bigger picture? Because the picture is really big.

I’m assuming the tech keeps bubbling away, but the relation between technology, usage, markets, cultural significance, and all the other components of our human community is indirect and highly complex. On the tech front, AIs will keep getting better, so (for example) voice recognition and instant translation will be built into everything. Devices will get more portable and also more versatile. But what will really be happening?

More to follow as I spin out each of these Five.

Here are Five Futures I see just over the horizon. They need to be built into every one of our scenarios.

1. Social will be universal. Every adult and older child, including the very poor, will possess smart mobile devices. Social will encompass the human race. 

2. Social will be a utility. Like landline telephony and the postal service, mobile will demand social inter-operability. Baseline social will be gardens with distinctive features but without walls.

3. Social will be personal. That is, it will be as private, confidential, or open, as we as individuals choose it to be, and easily, controllably so. No more book-length “privacy” statements; the simplicity and elegance of Apple design, as it were, will shape the personal functionality of social. One implication: traditional advertising models will remain on the margins, though innovative ones such as branded content will grow in impact.

4. Social will reshape every institution. All of our institutions – corporate, government, non-profit – have been shaped from the top down and the inside out. Social has already laid explosives under this modeling. From Gov. 2.0 to Biz 2.0 we have begun to see radical shifts in our institutions driven by a new accessibility and responsiveness – and requiring far more transparency and integrity. But this has only just begun. 

5. Social will drive reciprocally curated knowledge networks. The exponential growth of data and knowledge will be managed through engines of social curation which will in turn to be driven by an interplay between expert and crowd sourcing.

https://futureofbiz.org/future/why-twitter-matters/

https://futureofbiz.org/2012/06/04/is-facebook-doomed/

What would one expect to characterize a period in which exponential change really starts taking off? Well, terrible decisions, a lagging generation of leaders, huge advantage for economies and industries that were previously behind all the curves and for younger people, all that kind of thing.

So some of the big surprises we get, like this one, are no surprise at all! But wow: wanna get ahead of the competition? Hire guys who understand social and put them in positions of influence. ASAP.

In fact this squares nicely (nastily) with @markfidelman’s HBR piece on which I commented some weeks ago – that Fortune 250 CIOs are essentially in the social dark ages; only 4 of them have blogs, and 25 are on Twitter. Unbelievable, but also predictable. Terrible news for America and our current slate of uber-companies. Terrific for newbies of all kinds. Go read Thomas Kuhn. And remember, the exponential take-off has just started.

https://futureofbiz.org/2012/04/13/social-risk-seems-cios-think-social-is-beneath-them/

Several great links here to related studies:

69% of Global B2B Organizations Ignore Customer Feedback On Social Media | The Realtime Report.

Those  who have been following the ongoing debate between Peter Thiel and Vivek Wadhwa have been gripped by the bolts of words flying between these two icons of innovation and the Valley. They must be the two most outspoken figures in and around that community, and the most radical in some of their ideas. I’ve never come across either, in the flesh or on the web, without learning something new about how I should be thinking – and making decisions. I am looking forward to moderating a panel this week in Napa at the Tech Policy Summit with Vivek on the team.

Here’s his latest salvo fired into the vastly uninnovated and uninnovative education machine, about which he and Thiel are both frustrated though with somewhat different results.

No time here to sum up their respective and forceful arguments, but 4 key points as business, policymakers, and citizens look at the realm of higher education.

1. In 5-10 years we will see changes as revolutionary as those that have gutted and are beginning to remake, for example, publishing. Sorry, faculty. My modest suggestion that we dump tenure caused friends to palpitate. Believe me, that’s just the beginning.

2. Vivek’s proposal that we re-jig student loans so they can be retired in fresh ways is powerful. Education is in general a public good not merely a private one. We have powerful incentives to avoid a scenario in which smart kids don’t get it and those who do have major debt burdens.

3. The slowness with which “distance learning” (there’s an old-time phrase) has been adopted, even modestly, shows that only high explosives will shift the mainstream of our college and grad systems. But that’s just what happens when economics and technology perform a pincer movement. And they will.

4. The biz community should be driving radical approaches to web-based learning, which could provide us initially with a national online “community college” with free tuition and open access; and in parallel a global effort with USAID and the other agencies as partners working to deliver full college degrees worldwide at no cost to the student. The growing universality of English as a second language offers a remarkable spur to such an effort. And the benefits to American business, our values, and in the long term our security are all obvious.

I’m not claiming we can teach everything like this, or that it will always be as good as what can be done in the classic small-college model where professors and students spend years in round-the-clock community. But there are many options – and they will grow fast – between that and an old-time correspondence course stuck on the internet. We will soon be able to have professors delivered by avatar into living rooms, not merely to spout but to respond. AI is not the be-all and end-all. But it sure is going to make much else we humans do a lot simpler and more efficient.

The future-oriented biz community has a huge part to play in driving imaginative efforts of this kind, and ensuring that they not only deliver particular skills (plainly some, like coding, are a lot easier to teach this way than, say, poetics), but to do so in a manner that builds on the liberal arts tradition that is the jewel in the crown of American post-secondary education.

Dear Peter Thiel: Let’s Fix College, the Right Way.

VALUES AND THE VALUE CHAIN

Apple, Foxconn – and a new day for American consumers, Chinese manufacturers, and more besides.

Nigel M. de S. Cameron

The opening of Foxconn to an American TV crew marks, to use an old term apt here, an epoch in the several histories of CSR, outsourcing, Asian labor practices, the role of the consumer in the digital age – and, just perhaps, a seismic move toward the reshaping of the idea of value in western capitalism. Oh yes, and in the history of Apple post-Jobs. In brief: Post-Jobs Asian jobs; value, meet values.

We all know what makes Asian nations so interesting to innovative western manufacturers. 1. Highly skilled labor that is relatively cheap (though slowly equalizing with the developed world); and 2. Highly questionable labor practices. That’s why Apple Computer’s decision to sign on to the Fair Labor Association is both smart and risky. They work closely with Taiwanese giant Foxconn and the others in their supply chain, and the more innovative their products become, the faster models and devices change, the more wedded they will be. China, especially, has shown an extraordinary capacity to provide fast, reliable, manufacturing and assembly of the quality needed by the highest-quality consumer enterprise on the planet. The ridiculous levels of profit being reaped at the moment are drawing ever greater attention to its source, which is substantially the slice of the Chinese economy that assembles high skill, high quality, and low pay.

While Apple’s sign-on to Fair Labor may have been motivated entirely by moral conviction (Tim Cook just told his employees that he “cares about every worker in the supply chain”) and a generally eleemosynary disposition, it’s unlikely that was all it took to get to yes. According to a lengthy and important article in the New York Times, there are actually big disagreements among Apple execs on these issues (the Times piece is required reading). That suggests that the Fair Labor decision – and the release of a list of suppliers that preceded it – was the result of the classic alignment of interests that has tended to be necessary before major CSR-related choices are made by major corporations. That is, the do-gooders and the profit-maximizers sat down with the risk-managers and discovered that they all had reason to vote for the same motion. Yet this is very far from over. The Times quotes one inside as follows: “You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” said a current Apple executive. . . .And right now, customers care more about a new iPhone than working conditions in China.” In a recent survey, only 2% of consumers mentioned concern about overseas labor conditions. Apple has yet to face the kind of consumer-interest tipping point faced by Nike, for example. Yet Nikes are worn by runners. Apple users are the most social-media conscious, connected beings of all. We can imagine the risk party pointing this out rather forcibly.

As the quote above suggests, not everyone is convinced. And the release of the list of suppliers (who account for 97% of Apple’s payments) is just a start. Back to the Times: “However, the company has not revealed the names of hundreds of other companies that do not directly contract with Apple, but supply the suppliers. The company’s supplier list does not disclose where factories are, and many are hard to find. And independent monitoring organizations say when they have tried to inspect Apple’s suppliers, they have been barred from entry — on Apple’s orders, they have been told.” Looks like Apple has opened the door just wide enough to need to discover they have to open it wide. Soon.

There’s a broader point here, which is why this is potentially very good news, both for Chinese labor (in developing and applying under public scrutiny model labor practices) and American business. The commitment to quality that has been core to Apple’s success is exactly the commitment needed to revolutionize the “wild west” of labor practice in a nation such as China. It will spread to other Chinese manufacturers who wish to be seen as working at the top end, and competing for western contracts; and also to other western companies – indeed, signing on to Fair Labor is now the industry standard.

It remains to be seen of course whether Apple will bring to this new, higher, and more public level of commitment to supervise the execution of its contracts the same diligence that has characterized its engagement with manufacturers in China and elsewhere, which has itself been a key to its remarkable success. Our brands are always on the line, but now our leading brand has chose to focus the super-trouper on the techno-sweatshops of the People’s Republic, and in especial of Foxconn. The kind of price squeeze that Walmart are famous for (which as we know has led to some sad supplier stories) is now entailed as a quality squeeze on hundreds of thousands of Chinese workers. I hope Apple has the people in place to make this work. And that fresh forces from the reserves of Chinese bloggers and western investigative journalists are rising to the challenge.

But the point is broader still. While many of us hope for a revival of American manufacturing as a component in our development of the next generation of innovative products, there’s no doubt that the next 10 years will see growing use of outsourced manufacturing a la Foxconn; perhaps, on some scenarios, a huge increase of it, if the United States continues to be chief global innovator.

And there are yet other benefits. Enlightened labor practices that are built into the pricing of outsourced products will both help U.S. and other western manufactures compete. And they will build a bridge of goodwill among the Chinese people.

(Revised version of a column originally written for the U.S. Chamber of Commerce BCLC)

SUSTAINABILITY? ASK THE CFO, SAYS KPMG

https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/consumer-company-cfo-priorities.pdf

It’s all very well for CSR people to jump up and down and tell every stakeholder in sight that sustainability efforts will help all round. But it’s quite another thing if the CFO thinks that way too.

In this striking report based on interviews with hundreds of CFOs of global companies it’s very clear that sustainability issues are seen as key to building long-term value. A valuable read. And another straw in the wind in the direction of the Porter Thesis.

As events have unfolded in the News of the World scandal I have kept being reminded of a phrase that explains much of the appeal of that (now defunct) newspaper: the fascination of the horrible. Really grim things can grip. That’s 50% of the key to “tabloid” newspapers and their stories. (The other half is celebs; and when celebs hit scandals, tabloid sales get supersized.) It is a delicious irony that the most celebrated scandal-sheet on the planet has fallen rapid victim to just the kind of story it has always loved to report. The fact that it also saw itself as a campaigning newspaper – crusading on the side of truth and goodness as it drove up sales –further seasons the feast. There’s nothing more grimly gripping on the planet than a loud-mouthed and out-and-out hypocrite.

We don’t know where this will end, and neither do Mr. Murdoch, his executives, shareholders, and those who wish him well or ill. What we do know is that we are looking at a corporate empire under threat. We don’t have to speculate about the potential use by U.S. prosecutors of the Foreign Corrupt Practices Act (which makes bribing foreign officials, like British cops, a particularly nasty federal offence) to note the potential impact of public sentiment on a corporate empire. Or, in other words, of values on value. We may find it curious that the public seemed to care little for the hacking of celebrities’ cellphones – which was round one of the scandal – but was thrown into rage by the use of that same news-gathering technique on a victim of crime. But for the very reason that the British public is a vast consumer of “tabloid” news its appetites are fed by sensation and sentiment. Sentiment has swung with a vengeance. Murdoch’s big move to control the key satellite broadcaster has been condemned by all political leaders. The police have placed several of his top execs on notice that they are being investigated. He and his team are being invited to be quizzed by parliamentarians. And here in the United States, Congress is waiting in the wings.

What’s the moral? Well, first, look at the impact of technology. Before there were mobile phones all we had were clunky answering machines. Now there are great vats of highly sensitive and potentially valuable private information digitally accessible from any telephone in the world – if you punch in the right sequence of digits. Asymmetries are breaking out all over. Low-level people under pressure for stories break the rules. High-level people may pay the price and market value may be destroyed. What’s the moral? Simple, really: the leveraging that emerging technologies are bringing to business make it far more important for values to be aligned throughout the organization than they were before. Dumpster-diving for discarded correspondence is one thing; pumping 4,000 names into a spreadsheet, bribing the Head of State’s security detail, eavesdropping on the victims of crime and terror, and hacking the phones of cops who are investigating, is quite another.  That’s the power of the handset in the hand of the representative of an organization that, at some level, has been shown to be corrupt.

Sure, you can argue that every organization has bad apples. In the nature of the case scandal-focused journalism operates on the edge. The boundaries overstepped did not look so big at the time. All correct. But some lessons learned. First, bad apples are now far more toxic to organizations than they used to be – because of the combination of technological leverage and reputational damage so devastatingly demonstrated here. When all is said and done, the little nexus of private detectives and journalists at the heart of this story may end up destroying billions of dollars of shareholder value. Second, the edgier the effort – whether sensationalist publishing or, say, healthcare systems where physicians can be rewarded for the denial of care – the more central the need for unambiguous, enforced values to pervade the organization from head to toe. Third, just as corporate leaders are now post-Enron required to sign off on the accounts, they need to sign off on the values that pervade their entities. Not because Sarbanes-Oxley requires it, but for an even more pressing reason: their building sustainable value for investors does. We don’t need a SOX for values. We already have one. It’s called the bottom line.

Go figure. And watch News International’s value in weeks to come.

First posted on the U.S. Chamber BCLC site

Nigel M. de S. Cameron

We’ve not seen anything quite like it, and by that I don’t just mean the loosely-connected Occupy movements that are snaking their way round the west as a curious counterpoint to, perhaps caricature of, the Arab Spring. I’m seeing a broader movement arising from the grassroots of American soil that for all its disparate elements can be grouped under one heading: “exopolitics” – politics, as it were, outside politics. And it’s worth making the connections before we zero in on the bankers and the campers.

While the global dimensions of the Occupy phenomenon are fascinating, as Twitter becomes the communication medium of choice, the context in the United States is potentially profound.

We had those rallies, from right and left, in Washington DC – in which cable television celebrities usurped the role of political leaders and drew great numbers of ordinary Americans to the Mall (the mall they usually do not visit on weekends) in vast displays of people power. I was in town both days, jostling on a packed metro with mostly very ordinary citizens for whom a trip to DC was a costly investment, and who were much more like each other across the two weekends than most of the commentariat was prepared to acknowledge.

We had the birth of the Tea Party, which seemed an eccentric political joke until the electoral process brought a kind of anti-politician to town and, for good or ill, shifted the debate in Washington on debt and spending decisively in their direction.

And now Occupy Wall Street. Like all movements from the grassroots it is untidy, with all manner of malcontents joining in and making it easier to dismiss. It has been aided by a depressingly incompetent response from police departments in various cities who seem unable to distinguish between chaotic well-meaning citizens, whom they have a duty to protect, and potential rioters, for whom the public purse has equipped them with nightsticks and cans of chemical sprays.

There’s much more to be said, but three things seem very clear to me.

1.       Politics-as-usual has taken quite a beating, and is unlikely to be the same again.

2.       For similar reasons, business-as-usual is under a new kind of threat. For example, the move to shift personal banking to Credit Unions may gain traction (I can’t see why retail banking needs to be for-profit, and a fundamental re-alignment could result very rapidly). But this goes well beyond that. The politicization, as it were, of Wall Street as the banks were “bailed out” while waves of mortgage foreclosures continue to sweep through our communities, and the loss of personal equity remains huge for scores of millions who are keeping their homes, has perhaps forever changed the way in which Americans look at their financial institutions.

3.       While the politics of most Occupy activists seems to be way on the left, they have huge popular sympathy from across the spectrum. An astonishing example, from the right: a poll of 300,000 FoxNews online readers came down 60% in their support. And, let’s be honest, it’s hard to find anyone who has good things to say about bankers – not one of whom has yet joined the Enron-era business leaders on the wrong side of the walls of a federal penitentiary. And while it is frustrating to those who support markets and see capitalism as the key to economic progress for the left to be leading the critique, it’s in all our interests to get what regulation we do have in place to be more effective; to make boards properly responsible; to have markets operate responsibly and their actors honorably. Otherwise, they should fail, their investors lose, and heedless executives face impoverishment or worse. That’s capitalism. Feather-bedding is not. It should not be left to the left to make the case. At the same time,  our great institutions if they are smart will shoulder the kind of long-term responsibility for creating what Michael Porter has recently called “shared value,” in which the good of the community and the good of business are brought into alignment.

Yet in achieving alignment, as the example of board responsibility underlines, two issues emerge again and again. And they are as evident in the political realm as in that of corporate America. The first is the significance of the long term. The second is generally referred to as the “principal-agent problem.” Their importance here is stressed by the fact they lie at the heart of both our political and corporate malaise.

On the long term: Our politicians think shorter-term, not least as we make shorter-term demands on them, through lobbying of all kinds and, in the House, the tyranny of the two-year cycle that means electioneering never stops. Our business leaders, meanwhile, are also accountable to shorter-term market considerations, as stock is held for much shorter spans of time than it used to be, and markets respond dynamically to quarterly reports. So both pols and CEOs are beleaguered by short-term pressures, and respond accordingly.

The principal-agent problem would seem to work in the other direction. The core idea is that “principals” (whether stockholders or citizens, the owners, as it were, of the enterprise) find it a constant struggle to get their “agents” (corporate directors and executives; politicians) to act in “our” interests rather than “theirs.” Agents’ interests tend to diverge from those who are supposed to be their bosses. So politicians and business leaders tend to want above all else successful careers – while citizens want a certain kind of society, and investors seek value creation. It is, ironically, the careerist interests of leaders in both contexts that can outweigh the short-term pressures and lead them to deliver “long-term value.”

Long story short: These grassroots movements, a rising exopolitics, press the need to align the short with the long term; the interests of leaders and those whom they lead; the need to build value that will last. Whatever the campers in Zuccotti Park have in their minds and on their placards, the message is clear.

 

First posted on the U.S. Chamber BCLC site.

I’ve just written a substantial (well, substantive)  post for my U.S.Chamber of Commerce column on CSR, and will add it here once it has appeared. The Apple Fair Labor decision has strategic implications for U.S. outsourcing for many reasons, especially if Tim Cook means what he says.