The Social Graph: Issues and Strategies in 2008

January 16, 2009 4 Comments

One of the hottest topics in the online world in the last couple of years has been the growth of social networking services such as Facebook and MySpace, as well as the addition of a social element to existing user experiences.  Despite riding several waves of hype, it's now clear that the social networking space will only get hotter in 2008 according to most watchers.  Social software has come fully into its own as of 2008 — for all appearances permanently — and understanding the reasons for this rapid rise as well as figuring out how to leverage it best is the job of everyone who wants to make the most of the Web 2.0 era.

Gaining a deeper insight to the social networking phenomenon, now exhibited by the tens of millions of users employing them globally on a daily basis for both personal and businesses uses, currently means understanding the fundamental unit of the social network, also one of the biggest new buzzphrases of the year: the social graph.  Fortunately, that's simple enough despite the term's oblique reference to graph theory, which it is heavily based upon.

Social Graphs - The pattern of social relationships between people

Simply put, a social graph is a set of people, referred to as nodes, that are connected together by vertices — better known as links or connections — that reflect their social relationships.  You can see a conceptual social graph above, showing the typical distinction of social networks to reflect whether a connection with another person is direct or indirect.  For example, the popular business social networking service LinkedIn, uses this model and sorts a member's social graph into different degrees of separation, which you can see a typical example of below and taken from my LinkedIn profile:

 

Organizing Social Graphs - Degress of separation is popular

Also becoming popular is the burgeoning field of social analytics, such as the Socalistics application in Facebook and the Interactive Friends Graph, though there are also commercial standalone products here or on the way for the enterprise and open Web spaces from companies like KnowNow and Bravadosoft.  The Interactive Friends Graph is a nice, simple example anyone can try on their own and you can see mine from Facebook below.  Hovering over nodes in the live version in your Facebook profile allows you to see who is connected to others in your network and begin to gain insight and understanding of the relationships in your network.

 Social Graph Example - One of many way to depict a social graph

But what are the top issues one must understand about the social graph in 2008?  As I've seen social networks become common on corporate intranets and in daily use on the Web, some of the issues are rapidly becoming clear.  However, the full story will certainly continue to unfold for the next several years at least.  Here's what we're seeing at the moment:

Strategies and Issues for the Social Graph – Circa 2008

  • The social graph is poised to replace the address book and contact list as the preferred organizing structure for personal and business relationships. This was one of my Web 2.0 predictions for 2008 and it won't fully come true for the majority of users for at least several years since there's such an installed base of traditional tools for managing relationship information.  What's the difference?  Social networks are usually opt-in, two-ways for one.  And they are social for another, meaning they tend to encourage communication and collaboration, such as through user profile event streams and status messages.  They also offer up and actively make use of the deeper insight into the full graph's social surface area beyond direct contacts, such as LinkedIn's introduction service.
  • Ownership of the social graph is going to be a ground zero issue in 2008.  Robert Scoble's widely covered attempt recently to use Plaxo Pulse to export his 5,000 Facebook contacts recently got him banned temporarily from the service.  But as users begin to realize that the contact lists they are building using online Web tools might not be portable, this will become a growing concern, particularly since two-way opt-in makes a social graph more valuable (and accurate) but significantly harder to recreate on demand elsewhere. This takes us to our next subject…
  • Many social networking services will adopt open data initiatives.  Both Google and Facebook recently showed support for DataPortability.org and Google has an interesting play in their OpenSocial initiative.  This is welcome news that will resolve some of the concerns around who owns the graph but interestingly, traditional corporations will be the slowest get this and will rarely let workers take their hard won social graphs and user profiles with them elsewhere as they move to new jobs.  Public social networking sites Web sites are leading the way here and this will only drive more business users to the open Web, where they at least have some control over their social graph.  Smart organizations will provide their workers with some form of open social graph support, lest they lose control completely as workers keep more and more of their graph in Facebook, LinkedIn, and Plaxo and not in prescribed relationship management tools.
  • Attempts to monetize social graphs will drive interest in regulation and legislation.  Social networking is now a global Internet phenomenon and that the information contained within them is highly central to everyone's lives.  This will make everything from protecting children to individual privacy of social graphs a hot issue for some local and federal governments.  All it will take is one or two widely covered exploits to make this happen.  Expect the European Union and the U.S. government to begin seriously examining the issue this year with many other governments following suite.  Good citizenship of sites that manage social graphs will be essential to prevent excessive government involvement.
  • The line is blurring between personal and business use of social graphs.  We're all rapidly getting one large social graph each already, with everyone we know in them.  Most public social networking sites do a poor job of separating different subgroups of our social networks, such as allowing pictures and status messages to only go to a specific subgroups (work messages to business, family message to family, friends messages to friend, etc.)  This actually works a little bit better in enterprise social networks, but not much, since it largely consists of a Contact Type field.  Segmentation of social graphs will be an increasingly requested feature by users struggling with their use.  The social graph management services that make this distinction and enable its leverage may do very well indeed.
  • Open Web identity, which will ultimately form the global "primary key" for social graph nodes, will not get anywhere soon.  This despite it being needed badly but the users of the Web have not yet felt compelled to demand it.  Data portability of social graphs will begin to drive adoption of user controlled Web identity, and hopefully government regulation will not.  See Dare Obasanjo's deep exploration of using openid to enable social graph interoperability as an example of what will need to happen, despite there being little incentive currently for sites to use other site's openids.
  • Making social networking "gardening" and administration easier will drive new innovations.  Most individual social graphs are primarily tended by hand today, although a growing number of products, such as Visible Path, do all the tedious work for you by watching your social interaction online such as through tight integration through e-mail and instant messaging, building a rich graph for you (even sending invitations) as you go about your daily social activities.  New innovations like these will make social graphs easier to maintain and richer in overall information while also driving adoption through ease of use.
  • The optional two-way confirmation of a social graph link becoming standard.  Many social graph management platforms (Facebook and Linked for example) require confirmation from the other side of the connection before adding a person to your graph.  Sites like Spock, which make it optional, will ultimately be more practical for managing a social graph while still allowing discernment of two way confirmations, which tend to be more valuable and convey key information about the trust and real extent of a social relationship.
  • Social networking fatigue will not set in as perceived constraints such as Dunbar's limit do not prove to be universal.  While there are many theories on how big a social graph can get before it become unmanageable and sees diminishing returns on growth (note that both Facebook and LinkedIn encourage ceilings), the fact is that the are many different purposes for a social graph, from data mining and historical research, to marketing and customer relationship management.  

What else is going to be key to dealing with the social graph in 2008?  Please leave in comments below and I'll update this post with any good submissions.

Filed under Social Business, Social Graph, Social Media, Social Technology & Standards, Strategy Tagged with , , , ,

Ten Aspects of Web 2.0 Strategy That Every CTO and CIO Should Know

September 14, 2008 Leave a comment

Over the last year I’ve worked with organizations around the world that are attempting to grapple with Web 2.0 and the growing external marketplace pressure being exerted for the change and transformation of their businesses. Along the way, I’ve been fortunate enough to be able to identify and assemble a working list of some consistent recurring issues and themes around Web 2.0 strategy.  I’ve provided them below at a high level. Your comments and additions are very welcome as we try to frame up a consistent picture of what’s happening in the marketplace.

It used to be a little surprising how long it’s taken for Web 2.0 to begin to have serious impact on or even high-level interest in the business world.  However, the ideas have had staying power and have also largely been validated; there are now fundamentally different and very powerful new models for engaging with customers, designing our products, and applying technology in general to our business that are proven and have growing bodies of knowledge.  The Web has become the single most important driving force in many fields of endeavor as well as the leading source of both innovation and potent new modes for communicating, collaborating, socializing, and working together. It’s taken a few years but businesses are now feeling the change in the air.

 

The Web 2.0 Transformation and Change Management Process for Business and Enterprises for CTOs and CIOs

 

However, as I’ve said a number of times in my various discussions of Web 2.0, the power of the network has deep roots in some profound shifts in society and culture, particularly the singular move from push-based systems (the 1.0 era going way, way back until right around now) to pull-based systems (the 2.0 era from roughly a few years into this century and going forward).  That this shift is well under way is clear if you look at the sudden explosion of the blogosphere, social networking, social media, open source software, online communities, and peer production in virtually all things.  The good news (or bad news, depending on how you look at it) is that despite the remaking of more than a few industries already — including media, software, advertising — this shift is only just beginning.

This all raises the question of how to make the transition from 1.0 to 2.0 safely and non-disruptively with your business largely intact, perhaps even with a superior competitive position.  That this transition can actually be accomplished by most businesses is still far from clear though some early transitions have met with varying degrees of success.  This list represents some of what we’ve learned so far  about 2.0 transformation but it’s something that strikes at the very heart of most businesses today: The rules for success are not-so-gradually changing and the marketplace is driving it in an often-subversive grassroots, bottom-up way.  The question now is no longer about “if” but increasingly about thriving long-term, period: What are you willing to do to adapt to a new business world?

This list is aimed primarily at CTOs and CIOs since they are mostly likely to be located at the convergence of traditional business thinking and the wave of 2.0 change coming in off the network. However these ideas apply to anyone looking at how to embrace 2.0 transformation in their organization and take advantage of it.  This is one of the most exciting eras to be in businesses since so many directions are in flux and the outcomes, players, and market leaders of the near future are far from certain.  Those who can see the new opportunities clearly through the lens of 2.0 transformation not only have a fighting chance, but are able to seize them with once-in-a-generation ease.

Note: I’ve dropped the “Web” in Web 2.0 for this discussion because one of the big lessons is that many traditional business thinkers turn off when they hear the word, even though Web 2.0 design patterns and business models have truly profound implications across any business today.  Consequently, hat the Web is driving most of these changes is being considered incidental for this discussion (though it’s absolutely the opposite when actually executing on these new models.) Instead, this is targeted a discussion about the transformative models themselves (such as who creates the products and where, how they are used, who supports them, how are they remixed, syndicated, franchised, licensed, IP protected, etc) in a strategic businesses sense. At the core of this discussion is how 1.0 business models of the 20th century are very much being eroded, transformed, and frequently dethroned by the immense motive forces that lie in the pervasive, open networked systems we have today, which are taking us deeply into a very new place: the 2.0 era.

Ten Key Aspects of Web 2.0 Strategy

  1. It’s not about technology, it’s about the changes it enables.  While technology is a close second (and ultimately makes 2.0 business models possible), the real discussion is about the disruptive new opportunities it creates.  Instead the discussion should be focused more around strategies such as harnessing millions of customers over the network to co-create products through peer production, engaging in mass customer self-service, customer communities, and open supply chains to thousands of ad hoc partners with open APIs. These are just some of the examples of using the network to create far richer and more profound results than could be created in the 1.0 era.  Don’t get caught up in the technology of 2.0 at first other than to understand the business possibilities it affords.  Avoid technology-first discussions like the plague.  Premature monetization discussions around 2.0 are also to be avoided, they tend to have a negative impact on process if done too early.
  2. The implications of 2.0 stands many traditional views on their head and so change takes more time than usual.  In the 2.0 world customers and partners have a much closer, more sustained relationship because of social interaction and tightly integrated online supply chains, to name just two reasons.  The shift of control from institutions to communities of users takes a lot of getting used to.  Just understanding how and why intellectual property is better covered by Creative Commons instead of copyright will take the legal department years (if not decades).  Each part of the organization will have its miniature 2.0 revolution.  These take time to happen and sort themselves out.  This means getting these new ideas into people’s heads is one of the first steps…
  3. Get the ideas, concepts, and vocabulary out into the organization and circulating.  If you’re trying to affect 2.0 change in an organization, there’s no better solution that exposing people to it.  Demographics can be a problem in this situation depending on the industry.  Younger workers tend to live and breath 2.0 while older workers may be aware of it but don’t think it applies to them.  I use point education where change needs to happen either first or quickly and then internal communities that bring the discussion of change, innovation, and transformation to the entire organization.  Either way, learning and education around 2.0 are a vital trigger to begin change and should be started early and non-disruptively.
  4. Existing management methods and conventional wisdom are a hard barrier to 2.0 strategy and transformation.  You don’t have to get far into discussions about the Perpetual Beta or Product Development 2.0 before existing management methods seem outdated, inflexible, and ineffective.  This is one of the more difficult aspects of adopting 2.0 models and the implications is that we’ll have to do a lot of rethinking how we manage businesses driven by 2.0 models, where the boundaries of organizations are less clear, the ownership is much more community-based, and the outcomes are far more diverse and spread out, making them less trackable, controllable, and directed.  Overhauling management practices and techniques will be a core activity in a 2.0 transformation and will be hard to achieve quickly enough due to the Innovator’s Dilemma.
  5. Avoiding external disruption is hard but managing self-imposed risk caused by 2.0 is easier.  The great fear than many businesses have is facing a fast-growth competitor that takes these ideas and either wrests away market share rapidly and aggressively or cuts them off at the pass with entirely new products.  YouTube did this to the broadcast and cable industry, which responded with Hulu.  Apple did this with iTunes to the recording industry and the blogosphere did the same to the newspaper industry.  Other industries are next likely including the financial services industry, real estate, and others.  Internally, however, risk management is still a challenge but is much more manageable.  The big implication for this is that starting internally first with things like Enterprise 2.0 initiatives and prediction markets to learn the ropes on how to deal with unexpected outcomes and results can help organizations climb the maturity curve.
  6. Incubators and pilots projects can help create initial environments for success with 2.0 efforts.  Too much contact with the traditional support environment of an existing, primarily 1.0 organization makes it hard for 2.0 efforts to succeed; everything gets done in the traditional way instead of the new ways that are required.  The traditional tools, processes, and skills just aren’t there or are just too slow and burdened with unnecessary overhead.  Creating dedicated incubators that are designed to use the strengths of the organization while being isolated from its weaknesses can help.  Incubators are at risk of becoming too isolated however, and won’t inform or change the greater organization unless care is taken to roll the lessons and capability back in.
  7. Irreversible decisions around 2.0 around topics such as brand, reputation, and corporate strategy can be delayed quite a while, and sometime forever. Most organizations get paralysis around change and transformation because of concerns around decisions that can’t be reversed.  Concern over damaging the company’s brand is one of the top issues I run into and it’s a valid concern.  The good news is that many organizations are discovering they can safely leverage the advantages of their organization (such as their extensive customer base to drive initial growth of 2.0 engagement and adoption of new products and services) without dragging their brand into it whatsoever.  New 2.0 products from major companies are now often released under new brands entirely. This enables serious experimentation with 2.0 while taking little risk to the organization.
  8. The technology competence organizations have today are inadequate for moving to 2.0.  This is key if you’re a CTO or CIO today; your organization is almost certainly not ready to handle the development, management, scalability, identity, governance, and openness issues around 2.0.  If you’re not sure, just ask your IT staff.  Examples include cloud computing, open APIs, mashups, rich user experiences, Web-Oriented-Architecture, community platforms, Enterprise 2.0, 2.0-era computing stacks like Rails and Django, are all disciplines that are considerable in their own right, of rapidly growing importance to organizations in the 2.0 era.  These are all likely to be things your staff needs to come up the learning curve on in significant ways and with the rate of change on the network what it is presently, falling behind is too easy to do.  Note: The existing technology landscape of most organizations will have to change as well which is where Web-Oriented Architecture (WOA) is getting quite a bit of attention today.  And the Web products themselves have moved far beyond the model of the Web page and most enterprises are very far behind.
  9. The business side requires 2.0 competence as well.  This includes how to design, build, launch, market, support, and maintain 2.0 products and services as well as the ways that workers should use the tools and concepts to work together.  I recently suggested that learning how to be effective in working within and directing communities of workers/users/partners to accomplish large-scale outcomes will be a vital skill in the very near future.  All of this requires both a new perspective as well as a hard-headed effort at skill building and a re-orientation of existing work habits and processes.
  10. Start small, think big.  We have discovered that the leverage the network can give us is almost unlimited.  It’s ability to scale ideas, products, and communities of users as fast as they are able to is one of the aspects that makes it so attractive to business.  2.0 products tends to be very simple at heart, and though there is certainly challenges and complications growing, small ideas can become big very, very quickly.  Getting to the right solutions, not-overinvesting (which leads to complication and heavyweight management and processes) and letting customers and partners take the seeds of great ideas and run with them is what makes sudden success turn into a large-scale success.  On the Web, starting small, and thinking big can take you a long, long way.  Read more about network effects driven by architectures of participation .

Please share your ideas around what else is essential in a Web 2.0 strategy below.

Filed under Social Business, Social Media, Strategy, The Enterprise

Building Modern Web Apps? Better Have A Deep Competency in Web 2.0, Open APIs, Widgets, Social Apps, and More

August 24, 2008 Leave a comment

The Web has an interesting property that those building Web applications and online businesses usually encounter soon after they first launch: It has its own unique and unforgiving rules for success and failure.  Appreciating them requires a certain level of understanding of the intrinsic nature of the Web and how it works.  Actually leveraging those rules requires an even deeper and more profound understanding of the Web. The challenge these days? The Web competency bar is climbing fast.

To drive the right decisions in what they do product designers, marketing teams, software architects, developers, strategy officers, and other key roles in today's generation of online businesses need to have a solid handle on an extensive array of Web topics.  This ranges from appreciating why plain old HTTP is so good at underpinning the Web to more sophisticated topics like modern application architecture, the latest in online user experiences, next generation computing models (grid/cloud/utility/SaaS/PaaS), cost-effective scalability, user identity, network effects, Jakob's Law, analytics, operations, user community, as well as the many compelling new distribution models that are nearly mandatory in the first release of most products. 

This extensive set of competencies is what's required nowadays to deliver a credible online product to a receptive user base and it has dramatic implications for both uptake and overall cost/time-to-market.  Worse, this body of knowledge has become extensive enough that many Web startups frequently fall far short of what they need to know in order to be successful with these far flung practice areas. 

Web Product Distribution Models - Web 2.0, Widgets, Social Apps, Open APIs

Does this complex body of knowledge mean the era of the two-to-five person Web startup is coming to a close? Not at all, at least not yet. The productivity level of the latest tools and techniques remains almost astonishing though the level of knowledge required of these teams is creeping up and up.  And as we'll see, new models for product distribution are pushing the capability envelope of the typical Internet startup team to the point we may very well see the day soon that they won't have all the skills necessary to deliver a fully-scoped modern Web application.  It is also one reason why fewer and fewer Web startups have the goods to be all around hits out of the gate.

Certainly, varying depths in subject matter are required depending one's exact role in a Web business, but Web-oriented products are fundamentally shaped the vagaries of the network itself.  Tim O'Reilly himself still has the best quote on the subject: "Winners and losers will be designated by who figures out how to use the network." And as we'll see, the Web is driving the evolution of a major new generation of online distribution models.

Why Adopting New Distribution Models Is Crucial 

As an example of this, I've been tracking some of the latest discussions around the hot topic du jour in the Web world: Social networking applications.  Specifically, it's been interesting to watch the surprisingly low level of industry attention around the titanic competition brewing between social networking application formats from Web giants Facebook and Google.  Why is this?  Some might say it's because these applications still have largely unproven business models.  Others, like Nick O'Neill at the Social Times recently observed (rightly in my opinion) that the struggle may have to do with a deficit in understanding why these new types of Web applications are so important. Nick notes that these widget and social networking style models for packaging and distributing Web apps often "have more eyeballs looking at their products than television channels have" and the challenge is that too many people just "don’t know what any of this means", despite the major players divvying up the online pie for themselves.  With the size of these next generation distribution audiences, ignorance has an extremely painful price: failure to produce results and growth, poor engagement with the marketplace, and loss of market share.

An excellent summary of the truly massive, but largely underappreciated scale of these new Web application models was last week's TechCrunch piece on the progress of Google's OpenSocial, an increasingly successful model for creating portable social networking applications that will run on any OpenSocial-compliant site.  Erick Schonfeld reported that OpenSocial now has a total reach of an astonishing 350 million users and it will soon be 500 million.  There are over 4,500 OpenSocial apps today, a healthy number for the application format but a small drop in the bucket compared to the number of Web sites in the world. But the key is that these applications are integrated much deeper into the social fabric of an engaged audience, interjecting themselves into the daily personal and work habits of the "captive" users of social sites and even have access to the personal habits and data of users of these sites.  Facebook's story is impressive as well with over 37,000 applications that have been installed over 700 million times.

And social networking applications are just one of many news ways that applications have to be packaged and distributed, yet far too many organizations persist in a very 1990s view of Web experiences, namely that Web sites themselves are the center of online product design.  Many even think that some of these other new distribution models are interesting but not part of their core online product.  Unfortunately, that's very much a parochial view in the present era.  Federated applications, atomized content and functionality, 3rd party product ecosystems through open APIs, and much more are required to establish a strong and resilient network effect which fends off competitors that are themselves bringing these potent new competencies to bear. 

 In fact, one of the things we emphasize over and over again in our conference workshops and in Web 2.0 University is that having a Web site is usually the least interesting things about new products.  Worse, it makes the customer have to find you amongst tens of millions of other sites.  Instead, these new models tend to focus on going to the customer, instead of making them come to you which is a much harder proposition. This can instantly give you the ability to reach millions of potential people with dramatically lower effort and cost, as long as you have something interesting to offer.

Unfortunately, the number of capable practitioners of these new distribution models remains relatively small compared to the large body of experts in traditional Web product development.  Demand is also low for these new skills as most organizations have been painfully slow to appreciate how much online product development has changed.  A quick search of the job aggregator SimplyHired tells the tale: Nearly a thousand Web designer positions are available while only 36 OpenSocial and 40 open API positions are open, for example.  This despite the the latter skills being able to project a product across the Web into hundreds of social sites or create an API that allows the product to be incorporated into countless other products for far less cost per customer than traditional methods.

The lesson here is that these new models still have a lot of fertile, unclaimed territory and many otherwise fierce competitors have not yet become fully aware of these new opportunities.  Get your piece of the pie while there's still time. 

The new Web 2.0 era distribution models remain largely untapped

I also find that the Web development industry has been slow to change, particularly outside the valley, and there is depressingly scarce information on how to deliver well on things like widgets, open APIs, social networking applications, and even syndication.  To help with this, I've put together a short primer and some good references for those that want to get started.

Because the good news is that there remains tremendous opportunity for growth and success — for both startups and traditional businesses — if they will actively begin incorporating these new product delivery models into their own online capabilities.

Overview of Online Product Delivery Models 

  1. Web sites.  This the classic model for Web presence.  During the early Web, creating a Web site was just about the only option for engaging with those online (e-mail being the other.)  Most early Web sites were used for publishing and not for user participation or peer production.  These days, Web sites are still important, though by no means mandatory, and have their content syndicated via RSS and ATOM (pushing the content to where it's wanted), provide an access point to obtain widgets, and maintain user identity, and create communities of users.  Upshot: They've evolved a lot but Web sites are only part of an extensive set of capabilities that must be brought to bear in the Web 2.0 era.
  2. Syndication. It took ten years for the Web community to figure out a workable syndication model.  Now RSS and ATOM are now the expected models used to distribute content off a single site and across the Web. Countless aggregation services now exist that make a site's information embedded in their services as well as a way to offer users a method for pulling information from a site and experienced in a means of their choosing, from Google Reader and Newsgator to the innovative Yahoo! Pipes.  Most sites still heavily underutilize syndication even for notifications and pushing out frequently changed information to draw attention to it much less the strategic ecosystem and integration opportunities it affords.
  3. Web 2.0 applications.  You might argue that Web 2.0 itself is not a product distribution model but a set of design patterns and business models and that would be a true statement. However, in this context we're referring to the fact that Web 2.0 apps package up the 3rd major type of networked value: user participation.  Before then, Web sites and syndication primarily had only centrally produced content or functionality that they could expose over the network and offer to the marketplace.  In other words, user participation its purest form — sometimes known as peer production —  ultimately results in products like Mechanical Turk and Predictify that provide direct networked access to user participation, but there are many fine gradations to this.  The bottom line, Web 2.0 applications plug the user into the network like never before and are a critical rung in the distribution ladder since it offers access to the largest set of content and information by harnessing collective intelligence.
  4. Open APIs and Web services.  This is one of the most important long-term decisions most online businesses can make.  Offering an open API lets anyone take the online components of a business, from its data and functional capabilities to the users themselves, and makes them open and accessible over the Web to be incorporated into other products and services, sometimes in the form of mashups and sometimes in the form of entire online products.  Amazon, one of the first Web companies in existence and is hence far downrange in terms of the experience curve, has been using this distribution model with notable success recently.  So have hundreds of others.  The real challenge has been how foreign this model is to the original Web model and thus to the various management and development competencies in most organizations.  It's much more an a way to OEM a product and leverage the customers and investments of hundreds of other partners.  However, overall, it affords the potential for much larger business outcomes than could ever be created with point Web presence.  It's now considered a significant oversight not to have an open API available for the typical online product.
  5. Web widgets.  Selecting parts of a Web site and it's data and packaging it up to make it run inside a portable, user distributable widget has been growing more and more popular over the last few years. For example, WidgetBox currently distributes 74,000 different kinds of Web widgets from its partners to over 1.2 million other sites.  Widgets lets users distribute a Web site to other places on the Web at no extra cost and it also creates an ecosystem effect, where other Web sites users become the users of the new site.  The YouTube badge is a notoriously well-known example of this that also helped drive the extraordinarily fast growth of the site.  Like APIs, widgets are now considered a mandatory must-have for new and existing online products. But unlike APIs where it's up to the API users, figuring out users want out of your site's widgets is still an art form.
  6. The Plaxo Pulse Story with OpenSocialSocial networking applications.  Sometimes viewed as an extension of the Web widget model, social networking applications are applications designed to run inside of popular social networking environments and usually have capabilities that tap into and make use of the social graph information resident in a user's social network account.  This is an amazingly fast moving field as you can see from a recent post on the latest happenings on the OpenSocial blog, to the extent it's hard even for well-funded companies to keep up.  However, despite skepticism that large businesses can be built exclusively through a social networking application, it's become ever more essential for a site to make its capabilities accessible usable in these environments.  Not only will users help distribute online products in these formats to their contacts but it also increases the overall usage of the your application including participation and its consequently growth of a site's network effect.  While not yet considered mandatory for online products, the ease with which these social network applications can be created and the large numbers of users they make available makes it a smart distribution option for most Web businesses.  Like widgets, however, figuring out what users will find engaging in a social networking application featuring your online product takes some research and experimentation.  However, the results can be very rewarding and some social networking applications have millions of daily users.  See the Plaxo Pulse story on Mashable for the details of how OpenSocial drove a 5x improvement in traffic in only 3 weeks.
  7. Semantic Web and Web 3.0. The Semantic Web, one of the original visions for the World Wide Web, has taken a while to arrive but it's beginning to look like it may hit critical mass in the next 12-24 months.  Combined with Web 3.0, which takes the architectures of participation at the core of Web 2.0 and drives it through a lens of Semantic Web capabilities.  The benefits can be profound and can greatly increase the value and leverage of information on the Web.  While this is very much not prime time yet, unlike #1-#6 above, it likely will be and smart organizations can get ahead of the learning curve and get an early market lead using these techniques.  For now, however, I recommend that most organizations focus on executing well on the first six items before tackling this and waiting for the technologies to finish emerging and maturing.

The list above should provide good guidance for starting move into the potent new models for distribution on the Web.  I'm seeing, however, that because of the major shifts in strategy and product design emphasis these techniques demand, most organizations take an inordinately long amount of time to become effective with them.  The lesson here: Start small now and build core competency.  Small investments now can pay off later in terms of valuable experience made from early experiments and pilots.  When done right,
these new distribution models can become the dominant channels that the world uses to interact with your business, like they already have with Amazon and Twitter.

I'll be talking about these and other strategic online product design topics in my upcoming Building Next Generation Web Apps Workshop at the inaugural Web 2.0 Expo 2008 NYC next month.  I'll have more details about this deep-dive session in an upcoming post.

Filed under Network Effects, Social Business, Social Media, Social Technology & Standards, Strategy, The Web Tagged with , , ,

The 6 Essential Things You Need To Know About Google’s OpenSocial

November 2, 2007 2 Comments

I've spent the last few days keeping track of the seemingly endless stream of news and blog coverage about Google's new OpenSocial model for social networking applications.  OpenSocial has been described by some as Google's industry "chess move" to outmaneuver and corner Facebook. This is fascinating set of developments to watch since Google's own growing social networking platform, Orkut, was eclipsed by Facebook in terms of overall traffic back in September.

Google's OpenSocial ModelUnless you've been hiding under a rock lately, you know that Facebook is presently the industry darling in social networking, having largely pushed MySpace off the industry's stage, as it seems to offer a more compelling model for social interaction to users overall.  Just as importantly, Facebook also lets any other company that wants to join in party do so by building 3rd party Facebook applications, of which over 7,100 now exist, making Facebook increasingly rich in functionality and content by leveraging the creative capacity at the edge of the Web.  In the Web 2.0 era (and in all computing eras before), the central truism is that a platform beats an application every time. This applies here with a vengeance and MySpace and other social networking sites have suddenly rushed to embrace openness and 3rd party widgets and gadgets to such an extent that MySpace has thrown in with Google on OpenSocial.

So the damage is done and in the fickle world of online social networking, Facebook currently has the upper hand.  This demonstrates yet again a powerful but counterintuitive aspect of networked software: the more control you give away, the more value you can get back.

Read my ZDNet coverage on how Facebook got ready to overtake MySpace and the challenges of setting up shop inside in Facebook.

However, much of the blogging around OpenSocial would have you believe that has Google now trounced the competition with a strategic move that counters Facebook's open SNS platform move with an open SNS application model that can work everywhere else too.  At least, that is, the other social networking sites that support OpenSocial's API.

But as Don Dodge noted in his OpenSocial coverage this isn't going to stop developers from building apps natively for Facebook any time soon and will have little practical effect on existing Facebook users for quite a while.  Not to mention the rest of the Web, since not even a single real OpenSocial application yet exists.

That's not to say however that OpenSocial doesn't have its advantages.  Joe Kraus, a Director of Product Management at Google, wrote today on the Official Google blog that OpenSocial will make life easier for developers "because it makes it easier for them to focus on making their web apps better; they get lots of distribution with a lot less work. It's good for websites, because they can tap into the creativity of the largest possible developer community (and no longer have to compete with one another for developer attention). And finally, it's good for users, because they get more applications in more places."

So, despite the early beginnings, does OpenSocial make sense from the production side of social networking applications?  It still remains to be seen, despite the enormous amount of early partner support for it, if the consumption side in terms of these kinds of applications really generates value.  Most of the applications on Facebook provide so little actual utility that they are barely worth installing.  While making these mini-apps portable between social networking sites is convenient — and it probably will appreciably increase the total number of available social applications —  it's really people and the network effect they represent for a given social networking site that makes the site truly valuable.  In other words, if my friends and colleagues aren't on the social networking site I use, then that site is of little or no use to me, even if I can take my apps with me.

It'll be interesting to see what ultimately happens to OpenSocial.  I suspect it will actually see fairly good uptake since it's based on the highly successful Google Gadgets model, for which over 23,000 different Gadgets presently exist.  But will it change the playing field in the social networking wars? Probably not as much as a federated social identity would.  Federated social identity could potentially let you exist and participate simultaneously in all the social networks you wanted to at once using one set of social metadata you control.  That's probably a lot closer to the Facebook killer that so many are looking for and things like openid are bring that world closer to reality all the time.

In the meantime, here's the six things you absolutely have to know about OpenSocial to have an opinion about it:

6 Essential Things You Need To Know About Google's OpenSocial

  1. OpenSocial only offers the lowest common denominator, not the full richness of each social networking platform.  While application developers can create apps using the OpenSocial model and they will be able to run on dozens of different social networking sites, OpenSocial can't help you leverage the full capabilities of the site it runs on.  Social networking site APIs aren't anywhere as complex as say, the Windows APIs, but we've seen this before with platforms such as Java, where the development model can't support the full capabilities of the underlying operating systems.  Like Java, write once, test everywhere is the name of the game for OpenSocial and while economies in this model certainly exist, a single universal widget model tends to discourage product differentiation in favor of broad distribution.  This means to get at the full richness of the underlying platform and create a competitive product, you have do custom coding for that site and you've just broken the reason to use a common application model.
  2. OpenSocial is largely based on open standards and there's only minor developer lock-in.  Overall, it actually seems pretty safe to do a lot of your social application development using OpenSocial.  It uses the essential browser open standards of XML, HTML, Javascript, and the data formats are all ATOM and RESTful/WOA.  You can even host Flash content and functionality inside the OpenSocial application as long as you don't break the rules.  Finally, most of the really popular development platforms, including Ruby on Rails, can support the server-side API.  All in all, Google seems to have stuck to a fairly open and non-proprietary model including avoiding crufty proprietary markup.  OpenSocial documentation and sample code all uses the Creative Commons licensing and Apache 2.0, and the OpenSocial FAQ says everything will be open sourced at some point.  Kudos for this open stance, Google.
  3. OpenSocial is a real doorway to social networking data portability as well as potential security holes. A site that supports OpenSocial applications provides that application with all the people data in that user's account.  Their own info as well as their friends.  This can be used to export user's social data from sites that don't support themselves directly and it could even be used to knit together a person's social data across other social sites that support OpenSocial, with properly designed 3rd party apps.  But it also opens the door to security problems and expect to see that security, cross-site scripting, and exploits become an issue over time, as it always does when platforms open up to the rest of the world. Update: Michael Arrington has reported that the first OpenSocial app has now been hacked.
  4. OpenSocial is simple and straightforward but also capable of developing full-blown, rich Internet applications.  And without server-side infrastructure.  Developers can simply innovate with a few bits of markup and procedural code and drop it into the OpenSocial ecosystem and leverage the massive audiences and scalable infrastructure of OpenSocial compliant sites.  OpenSocial even supports powerful interactive Web user interface models like Ajax explicitly.  Like we saw last year, with the new productivity-oriented Web development platforms, this will change what's possible while also creating mountains and mountains of relatively useless, uninteresting apps amongst a few real gems.  But a lot more wildflowers will bloom on the OpenSocial landscape and some will likely rise up and show us how useful these applications can be.
  5. OpenSocial is from Google and excessive philanthropy should not be expected.  Google almost certainly thinks OpenSocial will ultimately be very good for Google, if not outright bad for a few others (probably Facebook).  While the openness is encouraging, if OpenSocial is successful, Google has a plan to make that success work for it. Those plans may not always be to the benefit of everyone playing under the OpenSocial umbrella.  User beware.
  6. A new era in competency in social software is being ushered in by models like OpenSocial.  A lot more social applications are being created because of open social platforms have become so popular.  But building successful social applications is a lot different prospect from building traditional business and consumer applications.  Expect that many developers and software designers will fail to build applications successfully until we learn that a different focus and way of thinking is required.  I've written before about the basic rules for building good social applications, but these are just the beginning.  Understanding people is the key to building effective social networking applications, and that is often the hardest thing for us in an industry obsessed with connecting with each other via 1s and 0s.

What else do we need to know about Google's OpenSocial?  Put your ideas in comments below or drop me a line at dion@hinchcliffeandco.com.

Going to Web 2.0 Expo Berlin?  I'll be there November 5th and 6th giving two sessions (What is Web 2.0 and The Rise of Widgets) as well as on the show floor at the Reply booth, our European partners for Web 2.0 University.

Filed under Social Media, Social Technology & Standards, The Web

Product Development 2.0

January 17, 2007 2 Comments

While the window on using the “2.0” suffix is probably closing, I thought it would be worthwhile to explore an especially significant trend in 2006 that will likely see much more widespread uptake in 2007.  Specifically, I’m talking about building highly competitive online products by turning over non-essential control to users directly via the Web.  For now, I’m calling this online business trend “Product Development 2.0”, a concept that embodies the use of Web 2.0 concepts such as harnessing collective intelligence, users as co-creators, and turning applications into platforms, three of the most powerful techniques in the Web 2.0 arsenal.

What is Product Development 2.0 exactly?  It’s an informal term I’m applying to something that online startups and traditional businesses both are increasingly doing: leveraging of mass user contributions, providing open architectures for others to build on as they like, and even handing control over key product decisions directly to users.  The reasoning behind doing this is simple:  Satisfied customers have always been essential to having the most successful business, both online and offline.  But how best can you ensure that they get exactly what they want from you, as customized and quickly as possible?  This is where the scale, new tools, and business models of Web 2.0 have stepped in, giving us the potential to provide our customers with better, rich products, much more quickly, and with more of what they want.  Taken as a whole, it’s increasingly clear that there are new business models afoot that are just now being well understood.

Product Development 2.0 - URENIO | Intelligent Cities – Smart Cities – Innovation Ecosystems

Given that any business typically is vastly outnumbered by its customers and potential customers, and that putting a bureaucratic, centralized product development team into the critical path of product creation and ongoing maintenance highlights how little we can actually serve them, especially in an individualized way. And with everyone online, it’s increasingly obvious where the biggest source of talent, engagement, innovation, agility, and worker bandwidth really lies: with your customers.  Using the techniques and technologies that have emerged in just the last few years, you can now finally give them the tools and motivation to tweak, tune, refine, and contribute to your products and services.  And increasingly, they’ll probably do it.  YouTube is still currently one of the best examples of user co-development of a world-class product in its pure form (65,000+ videos uploaded by users per day), but sites like eBay, Slashdot, and many others have been leveraging their users in product development for a long time now.  And as it turns out, Product Development 2.0 is not a small topic and starts off at collecting explicit user contributions, leveraging the Database of Intentions, and putting in automated real-time feedback loops to identify the best or most popular new content or capabilities for other users that come along later.

It’s important to note that it’s a fundamental shift for a business to turn over a large part of its product development to its users, becoming more of a mediator and facilitator than a product creator or owner.  This is the shift of control from institutions to individuals that the apparently relentlessly democratizing force of the Web has begun exerting on the business models of organizations of every description around the world.  As more organizations figure out how to apply Product Development 2.0 to their individual offerings, they will reap significant competitive advantage over those not harnessing the Web to directly connect to customers and begin a rapid and never-ending innovation cycle.  This is another aspect of the perpetual beta concept that reflects the fact that increasingly, products and services online are never finished, and indeed, can’t ever be finished as changes and additions seamlessly pour in over thousands of millions of Internet connections.

But enough about the possibilities.  Let’s talk some examples, both in terms of what older style product development did vs. what this new style is doing.  Finally, let’s talk about some companies actually doing this successfully.  Note: Incidentally, though I normally write about services in terms of Software as a Service (SaaS) or Web Services, for the purposes of this discussion I’m talking about non-physical business processes for sale, such as car or medical insurance, tax preparation, etc. and not software.

Like the recently discussed Programming 2.0 concept — a set of software development tools, techniques, and attitudes that is, not incidentally, enabling much of this — and the original Web 2.0 definition, it is examples in lieu of principles that’s one of the best ways to paint a picture of what appears to be happening in the evolution of product development:

The Move to Product Development 2.0

Product Development 1.0  Product Development 2.0 
Primary Customer Interaction Channel:  Telephone, Mail, Face-to-Face, One Way Media (Print, TV, Radio, etc.), e-mail
 World Wide Web, e-mail, IM
Source of Innovation: Organizations Customers
Innovation Cycle: Months, Years
 Minutes, Hours, Days, Weeks
Content Creators:
 Internal Producers  External Producers
Feedback Mechanisms: Market research, satisfaction surveys, complaints, focus groups Analytics, online requests, user contributed changes
Customer Engagement Style: Controlled, well-defined process Spontaneous and chaotic
Product Development Process: Upfront design
 Less upfront, much more emergent
Product Architecture: Closed, not designed for easy extension or reuse by others; walled garden
 Open, very easy to extend, refine, change and add on to, ecosystem friendly, designed (and legal) for widespread remixing and mashups
Product Development Culture: Hierarchical, centralized, Not Invented Here, somewhat collaborative, expert-driven Egalitarian, decentralized, remix instead of reinvent, highly collaborative, Wisdom of Crowds
Product Testing: Internal, dedicated test groups, hand-picked select customers Users as testers
Customer Support: Customer Service
 User Community
Product Promotion: One-Way Marketing and Advertising
 Viral propagation, explicit leveraging of network effects, word of mouth, user generated and other two-way advertising
Business Model: Product Sales, Customer Service and Support Fees, Service Access Charges, Servicing High Demand Products
 Advertising, Subscriptions, Product Sales, Servicing All Product Niches (The Long Tail), Unintended Uses
Customer Relationship:
 External Buyer (Consumer) Partner and — increasingly remunerated — Supplier (Consumers as Producers )
Product Ownership: Institution, particularly executive management and shareholders Entire User Community
Partnering Process: Formal, explicit, infrequent, mediated Ad hoc, thousands of partners online, disintermediated
Product Development and Integration Tools: Heavyweight, formal, complex, expensive, time-consuming, enterprise-oriented
 Lightweight, informal, simple, free, fast, consumer-oriented
Competitive Advantage: Superior products, legal barriers to entry (IP protections), brand name advantage, price, popularity, distribution channel agreements #1 or #2 market leader, leveraging crowdsourcing effectively, mass customization, control over hard-to-create data, end-user sense of ownership, popularity, cost-effective customer self-service, audience size, best-of-breed architectures of participation

It’s worth noting a couple of key points about the table above.  One is that the Web makes the shift of control possible by putting every business in direct contact with every one of its customers.  No small system can remain unchanged by sustained contact with a much larger system, and this means that any business (which is the small system in this scenario) which embraces its customers over the Web in a two-way fashion will likely undergo a move fairly quickly from the first column to the second.  The fact is, if you have loyal customers who like the products and services that you offer online, you’re going to have a hard time avoiding the shift of control and opening up of your product designs and architecture.

The second is that those that play to the strengths of the Web as platform, instead of trying to fight it, can exploit the most powerful software platform, or indeed, platform of any kind, that has been created to date.  Triggering network effects, building an extensible platform out of our product offerings (whether it’s an online software application or if you’re an insurance company, doesn’t matter), and you can see the advantage to be had in the assyemtric model of business on the Web; all of the potential is on the edge of our networks now (where the users are) instead of the middle.  And waiting too long to enter the Product Development 2.0 arena potentially means waiting for your competitors to get their ahead of you.  And the longer you wait to get the clock started on collected the Database of Intentions (continuously turning 100% of all customer interaction into enriching your product dynamically), the more likely you will face competitive dislocation and even lock-out.  Amazon is famous for collecting user contributions to enrich their product database and they are about a decade ahead of potential competitors of in terms of the enriched, hard-to-recreate database they have built.

Now on to a few examples to highlight what companies are actually doing that has many of the elements of Product Development 2.0.  First, the usual preamble about checklists of features; just like Web 2.0, one doesn’t have to implement every one of these in order to deliver better results, just the ones that apply in your situation.  So let’s look at a couple of stories of companies — and I have many others I’ll be sharing as soon as I can — that are going part of the way down the Product Development 2.0 path and getting valuable early experience.  I selected real-world companies since that’s the majority of companies that have to figure out whether they’re going to play in this space or let others do it for them.

Product Development 2.0 Examples

XM RadioXM Radio is a satellite radio provider that has recently embraced some of the tenets of Product Development 2.0.  Compellingly, the Top 20 on 20 channel is one of the most popular channels XM has yet created.  Why? Because control of it has been entirely handed over to its users.  Says the Wikipedia entry on Top 20 on 20: “The channel plays everything new from rock to rap, with the songs chosen by online votes to the XM website. One can also vote their favorite songs by calling the station number, or text messaging. The channel is completely automated by listener voting with no DJ interruption. [DH- My emphasis] Top 20 on 20 is also one of the most popular music channels on XM. According to XM’s internal research, the channel achieves 1.8 million listeners a week.”  And though the channel was relaunched with some changes in December that have proven unpopular to many (less music, live DJs), it presents the cautionary tale of what happens when you assert bureaucratic authority over something that you’ve co-developed with your users; the possibility that you’ll kill the goose that lays the golden eggs of user contribution and engagement.

General MotorsGeneral Motors conducted its highly innovative Chevy Apprentice campaign early last year and made quite a demonstration of convincing users by the thousands to generate online video commercials for its new Chevy Tahoe SUV. By opening up the contest to anyone on the Web and only screening submissions for truly objectionable content they were able to elicit a stunning 22,000 user generated commercials exhibiting an impressive variety of creativity with both positive and negative messages.  From the beginning of the effort, they realized that in a freeform environment created by Web 2.0 tools, that they would only be able to respond to criticism and not control the message.  As expected, environmentalists famously picked up the tools to create ads savaging SUVs in general but GM’s Ed Peper understood that only by engaging in conversation instead of censoring dissent could they gain trust and get more information into people’s hands than they could otherwise.  Ultimately, GM created its own ads that highlighted the high amount of recycled parts and the best fuel-efficiency in its class of the Tahoe.  A brave piece of Product Development 2.0 for sure and one that many traditional business followers probably viewed incredulously as GM truly let their customers and potential customers co-create their advertising campaign with them on the world stage.  For the curious: You can see the many Chevy Apprentice commercials still up on YouTube.

The Potential for Disruption and Opportunity

The Web is a fundamentally different platform from any platform we’ve seen before. Unlike previous general-purpose platforms, the Web is fundamentally communications-oriented instead of computing-oriented.  Sure, computing still happens but what the Web does that’s so important is its ability to connect information and people together.  The hyperlink is the intrinsic unit of thought on the Web .  So, it’s information connected by links instead of programs that operate on data, that’s the basic difference.  But why does this hold the potential to put traditional product development on its head and usher in Product Development 2.0?  1) Because the aforementioned information can now truly be generated by anyone.  And 2) because we’re all nearly universally connected to this new medium by the devices on our desktops, in our briefcases, and in our pockets.  All of us can now be directly and continuously connected to the products and services which we need, which increasingly, is the rest of us and not a handful of large companies.  The very best companies in the future are likely ones that will create innovative new ways to facilitate innovation and collaboration by the hundreds of millions of us that can be reached and embraced by effective architectures of participation.  The big winners will enable us and encourage us to take control, contribute, shape, and direct the designs of the products and services that we in turn consume.

The good news: Only a few industry leaders and early adopters fully appreciate the significance of these trends as yet or even how to fully exploit and monetize them.  There’s still enormous opportunity, and for existing businesses with large investments in existing business models, blowing your business model up before someone else does will be the order of the day.  This will prove though very hard for most to do successfully.  And therein lies the potential for significant industry disruption in the next 5 years as new players with core competency in Product Development 2.0 push older, slow-to-adapt businesses off the stage.

While this is far-fetched for some, effectively embracing the Web is key to business success today.  Why do you think this will or won’t be the ultimate future of how we do business?

Filed under Crowdsourcing, Peer Production, Social Business, Social Media, The Web

All We Got Was Web 1.0, When Tim Berners-Lee Actually Gave Us Web 2.0

September 4, 2006 Leave a comment

“The blogosphere flew into its usual uproar a few days ago when the inventor of the World Wide Web himself, the venerated Tim Berners-Lee, was recently recorded in a podcast calling Web 2.0 nothing more than a piece of jargon.  There is little love and plenty of misunderstanding for this term in many quarters of the industry, despite the fact it has been painstakingly described by those that identified it to the world.  For all the folks tired of hearing about Web 2.0 and very often not knowing what it means, there nevertheless remains the underlying reason for coining it: clearly apparent, widespread new trends in the way the Web is being used.

Tim Berners-Lee Gave us Web 2.0 and All We Got Was Web 1.0

Of all the analysis I’ve read of the Berners-Lee podcast (and there’s a bunch, read Dana Gardner, John Furrier, even Dead 2.0), it’s Jeremy Geelan who has captured the real insight here with his post, "The Perfect Storm of Web 2.0 Disruption", where he brilliantly explains what is probably the key to the real significance of the Web 2.0 phenomenon as a portentous crossroads between the old and the new:

Web 2.0 is an example of what the historian Daniel Boorstin would have called "the Fertile Verge" – "a place of encounter between something and something else." Boorstin (and here I am wholly indebted to Virginia Postrel) pinpointed such "verges" as being nothing short of the secret to American creativity.

Postrel sums up what Boorstin was saying as follows:

"A verge is not a sharp border but a frontier region: where the forest meets the prairie or the mountains meet the flatlands, where ecosystems or ideas mingle. Verges between land and sea, between civilization and wilderness, between black and white, between immigrants and natives…between state and national governments, between city and countryside – all mark the American experience."

— Jeremy Geelan

Web 2.0 Is Much More About A Change In People and Society Than Technology

But is Web 2.0 really about the Web, or us? The rise of architectures of participation, which make it easy for users to contribute content, share it —  and then let other users easily discover and enrich it, is central to Web 2.0 sites like MySpace, YouTube, Digg, and Flickr. But this is still just another aspect in the way that we, ourselves, have changed the way we use the Web.  Not only have we gained 950 million new Internet users in the last ten years, but a great many of them use the Internet differently now too, with a hundred million of them or more directly shaping the Web by building their own places on the Web with blogs and "spaces", or by contributing content of virtually infinite variety.

Let’s not forget that there were important issues that really held back the early Web and prevented the widespread flourishing of the collaboration and connecting of people that Tim Berners-Lee originally intended.  This included privacy concerns, almost entirely one-way Web sites, lack of skills using the Internet, and even slow connections.  But these have now continued to drop away rapidly in recent years, with many younger people in particular not hindered by these issues at all (rightly or wrongly.)

And for sure, let’s not forget that the Web has changed over the years.  There have been countless technological refinements and even improvements to the physics of the Internet itself. These range from the adoption of broadband, improved browsers, and Ajax, to the rise of Flash application platforms and the mass development of widgetization such as Flickr and YouTube badges.  But the trend to watch is the change in the behavior of people on the Internet.  Because much of this Web 2.0 phenomenon comes from mass innovation flowing in from the edge of our networks; that’s millions of people blogging, hundreds of thousands more producing video and audio, hundreds of Web 2.0 startups creating hugely addictive social experiences, sites that aggregate all the contributed content that one billion Internet users can create and more.

Yes, the original vision of Berners-Lee is now apparently happening, so he’s right in a sense there while glossing over the reality of the early Web.  But though his vision was largely possible since the advent of the first forms-capable browser, at first we only got what we could call "Web 1.0"; simple Web sites that were largely read-only or at least would only take your credit card. The essential draw of mountains of valuable user generated content just wasn’t there.  And the millions of people with the skills and attitudes weren’t there either.  Even the techniques for making good emergent, self-organizing communities and two-way software were in their very infancy or were misunderstood.  An example: How long did it take the lowly editable Web page (aka wikis) to be popular and widespread?  Nearly a decade.  The fact is, most of us know that innovation is all too likely to race ahead of where society is.  I run into folks from Web 1.0 startups fairly often that bitterly complain about how they were building Web 2.0 software in 2000, but nobody came.

What Exactly Is Special About The Web 2.0 Era?

I write frequently that we as an industry rediscover over and over again the same classic design issues right at the juncture of people and software, just repackaged enough so we don’t recognize them until it’s too late.  This time around the sheer numbers and scale of the Internet have distorted our traditional, more parochial views of what we thought networked software was and online communities were.  One outcome is the illusion that we had large degree of control over what happens when large groups of networked people can join together collaborate and innovate.  We don’t.  It’s like a large door has been opened behind us and everyone is now just getting a sense of that it’s there and where it leads.

But what exact is new here?  I mentioned a few things, but a more complete list is better:

  • There are over a billion Internet users now. Network effects can quickly climb in even small corners of the Internet, since small can now mean just a hundred thousand users.
  • Many of these users have become profoundly Web-fluent.  Robert Scoble observed recently that many users are still casual and non-expert, but almost all can search, they can post, they can edit a Wiki, and a lot of of them are now comfortable cutting and pasting Javascript snippets, and frequently much more.  They are in control of the vehicle now.
  • Powerful practices in Web site design are becoming widely known.  The best and often most successful sites are finding out that carefully designing what Tim O’Reilly calls harnessing collective intelligence deep into the design of their sites can provide truly amazing results.  And this aspect of how we use the Web is actually far behind the first two trends.  It’s still surprising to me that many people cite Ajax as the exemplar of Web 2.0 and not building networked applications that leverage user contributions and trigger network effects.  There’s quite a bit of headroom here in fact, and I expect to continue to see compelling advances in Web 2.0 software design.

  • Thus, power and control is shifting to the new creators.  As the users of the Web produce the vast majority of content (and soon, even software), they are therefore in control of it.  This shift of control has enormous long-term consequences since the Internet tends to route right around whatever central controls try to be applied.  The implications for traditional organizations are fascinating and will only increase as the MySpace generation heads into the workplace in large numbers.

There are more secondary trends related to Web 2.0 but the first three are the key, without all three, I would assert we would not be seeing some of the truly amazing things out on the Web that we see today.  Is all of this "frothy", as Robert Scoble recently claimed.  Not in the slightest.  Are people excited about it?  Yes, and they should be.  And while I don’t find the term itself to be particularly important — it’s the ideas behind it that are so interesting — the fact that so many people feel so strongy about the term Web 2.0 tells us that it’s something we should understand better.

BTW, in that last link Scoble was talking about The New New Internet, a Washington DC-based Web 2.0 conference I’m involved in.  I can assure you it’ll be as far from content free as you can get and I do hope to see you there.“

Filed under Analysis, Social Media, The Web, Trends and Statistics, Web 2.0

Web 2.0’s Real Secret Sauce: Network Effects

July 15, 2006 3 Comments

A lot of the early descriptions of and speculation around Web 2.0 last year were either chock full of examples or long lists of interesting new phenomena that seemed to be emerging on the Web.  My list of Web 2.0 explanations last year is a good survey of these.  This year however we seem to be zeroing in on the core phenomena underlying the sea changes of the Web and even in society itself.  Sure, some fundamental upgrades to the Web’s infrastructure – including steady and significant improvements to the physics of the Web – have also helped things along (i.e. those great Ajax/RIA applications we love so much like Gmail and Gliffy, download in seconds now.)  But it’s the widespread use of the two-way Web that’s really the harbringer of an increasing sense of disruption.

Watch a TV panel that I was on with Google’s Adam Bosworth on how the improvements to the physics of the Internet have enabled Google’s newer products, particularly around SaaS and Ajax.

I wrote recently about the trend of Web 2.0 reductionism that is helping us get to Web 2.0 fundamentals and assisting us in understanding why it’s such a game changer.  The upshot is that the Web is rapidly evolving and is increasingly being shaped by its users.  If you’re not entirely sure that this is really a big deal though, you have only to look at the example of MySpace.  MySpace is as pure a Web 2.0 play as you’re likely to find and they’ve exploited user generated content and network effects to become the #1 visited site on the Web (as of last week), from out of practically nowhere two years ago.  This is an extremely impressive achievement and shows the power of Web 2.0 techniques to quickly best even the very largest and most established industry leaders, including Google and Yahoo!  This demonstrates that the successful exploitation of what has been labelled "Web 2.0" can be an extremely disruptive force.  People are sitting up and taking notice.

Inducing Network Effects with Web 2.0


If only the keys to doing this were in everyone’s hands, the thinking goes, then disruption could be and would be widespread, even rampant, across business and society.   And certainly, a lot of folks are very interested in taking advantage these techniques (such as maximizing your users’ social surface areas) both out on the Web, and within their own organizations.  This further explains the interest by venture capital investors, startups, and enterprises to get into the game before others use these techniques first to upend the traditional industry leaders in their areas of interest.  Mark my words, this year is only the beginning and those in less regulated industries that aren’t constrained from using Web-based network effects effectively are going to have a very tough time of it.  This will prove to be true particularly in the next 24 months as everyone scrambles to try to figure out where this is all headed.

Fantastically and ironically, the keys to doing this actually are in everyone’s hands today, right now.  Web 2.0 is a truly egalitarian force and though certain core competencies are required (being able to keep up with your own growth being one of them), just about anyone with a innovative idea and a good formulation of the techniques can access and tap into the existing audience of over 1 billion Web users.

Triggering Network Effects: As Simple As Establishing an Effective Viral Feedback Loop?  Surprisingly, yes.

The Web is the fabric upon which an ever increasing amount of our lives is woven into.  This is now most media including newspapers, TV, radio, entertainment, music, arts, etc. as well as what I call lifestyle logistics; e-mailing, IMs, calendaring, travel planning, time/task management, and more.  They are all moving or have already moved to the Web.  This very habit most of us have of being on the Web so much of the time, along with the easy lure of the hyperlink, which can redirect anyone via any of these ‘channels’ into a new Web 2.0 experience or site.  Thus, if someone loves your new site, they send their friends the link, they send their friends, and so on.  Instant pile-ons involving tens or hundreds of thousands of users overnight are now common.  And good viral feedback loops keep them there and keep them coming back, and bringing their friends with them.

Of course, in a few years the exact design patterns for triggering a new MySpace, Facebook, or similar social juggernaut will become common.  Then most likely balance will be reachieved in the industry and there will be less disruption.  But for now the secret balance of Web 2.0 techniques that powers growth through efficient access to network effects is still an art (read my Notes on Making Good Social Software for an idea of how these design patterns might look however).  The bottom line: the upside and downside potential of Web 2.0 is truly significant.  And it means that in most industries doing nothing is really no longer an option.

But let’s talk about network effects for a minute.  What are they?  I’ve written before that the core description of a network effect  is when a good or service has more value the more that other people have it too.  Easy so far right?  Examples include e-mail, IMing, the blogosphere, and even the Web itself.  But what’s not clear from this description is the raw power that is caught up in and represented by network effects.  Most rigorous studies and mathematical formulations reveal that there is tremendous geometric power in network effects.  Though Robert Metcalfe originally coined Metcalfe’s Law to describe the raw potential of network effects in computer networks, most recent formulations have attempted to capture the exact value of them more precisely.  Most notable has been David Reed with his relatively well-thought out and profound  Reed’s Law, as well as Odlyzko and Tilly with their work.  However, whichever formulation you believe is right (and Reed’s Law, if true, has staggering implications in this regard), the result is clear: At even an early point, the cumulative value of a large number of connected users goes exponentially off the charts.

The Potency of Network Effects and Thus Web 2.0


The end result: If you have a million people visiting your Web site but you’re not leveraging network effects with them (such as by letting them contribute and letting others see and respond to those contributions), then you’re probably squandering the greater part of the value of that million person audience.  Along comes someone else who does exploit the network effects of their users.  They can quickly leapfrog you if they figure out a good way to establish and harness the connections between those same users, again in some kind of viral feedback loop.  The new site will have the combined aggregated output of those users as part of its value proposition to new and existing users and it’s clear which will win.  Examples: Digg bested Slashdot in just such a way.  YouTube is set to do something very similar to network and cable television.  Google is staging itself to best the #1 software company in the world.  There are many others.

So what do you do?  Most of us will soon face situations where the person or organization we’re competing against will be trying to use these same techniques to gain advantage, marketshare, or whatever.  Agile development processes have taught us in recent years that that the tightest closed feedback loops resulted in better products, faster.  The Web is now allowing feedback loops of this kind between staggering numbers of non-centrally coordinated people from a ready -to-tap worldwide audience.  Emergent content, communities, and unintended results are all side effects of systems (and yes, your enterprise) with rampant network effects.  Learning how to channel these feedback loops and the resulting network effects constructively will become a significant competitive advantage and a required core competency across the majority of professional disciplines in the very near future.

Read David Berlind’s excellent overview of Eventful and how they are using Web 2.0 techniques to be successful

But is this really happening?  Is the competitive landscape about to be torn up?  Are companies starting to respond?  It does appear so.  For one thing, I’m increasingly seeing traditional organizations trying to do things like "MySpacing" their current product offerings.  Everything from Starwood Resorts to major national interest groups are looking at creating business communities that are really viral social networks powered by their users.  It is a fascinating time to be building or reinventing a business. And if you haven’t started, now is probably the time to begin the effort.  And worry not if you can’t figure it all out right now, the entire world is still trying to figure out how it applies to them too.

How will you apply Web 2.0 to your life, business, or organization?

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