Web 2.0 | On Digital Strategy

How We Gave Up Control Over The Social Web

November 13, 2013 1 Comment

A short but pithy piece over the weekend by Dave Winer titled “Why the Web 2.0 model is obsolete” got me thinking about where we’ve ended up with social media after nearly ten years. Blogs, wikis, and other tools of easily shared self-expression from the early days have given away in recent years to a much less diverse social media monoculture. A few large social networks now control our social identity, content, and behavior, and through their terms of service, often literally own our online existence legally and de facto.

This evolution was perhaps inevitable given the rules through which networks operate and certainly the result has its strengths. It’s far easier for consumers and businesses to adopt a hosted service than set up their own social presence, with all the complicated bits it requires to set up a fully functional social identity on your own these days. It’s also probably more secure, safe, and reliable long term. It’s certainly the shortest route to connecting with the vast captive audiences that the leading social networks now wield.

Yet in the process of making many short term decisions in the name of reach and convenience, many of us have given away our social capital, and along with it much of our online autonomy and freedom. I’ve long since stopped advising companies to drive their traffic to Facebook (disclaimer: I am a shareholder) and build their own online communities and digital ecosystems if they are intending to be strategic about things like social business and open APIs.

The impressive thing is that we’ve largely achieved the original vision of Web 2.0 and it’s just how we do things now. We share by default. We use social media more than any other digital activity. Social media is now woven into so much of what we do today. Yet the majority of all of this user generated content and online community is now centralized in a few large social silos that can no longer talk to each other.

Even worse, if we go the opposite direction that might seem better long term, we’ve discovered issues with that model too. For example, we’ve learned that when we create many smaller, self-controlled, and more autonomous social environments we then create fragmentation. We can’t easily communicate or collaborate with each other across these social islands. Thus, for as many downsides as the monolithic social networks have, they do achieve one important thing: They create a very large single social universe that we can all communicate across.

So what should we collectively do? Should we cave in and trust that the corporate owners of the social world will be benevolent, even when they clearly have business models that are very often at cross purposes to our needs and desires? Or should we find a way to solve the problem of creating our own social corners on the Web and then connecting them together, all while making it very easy to do so? Personally, I’m hoping it’s the latter. Certainly I’ve explored previously how open social standards have a genuine shot at helping with this, even if it might be a bit of a long shot.

The reality is that social media silos are now holding us back, both as individuals and as businesses. We can do much better if we want. But getting there requires a little long-term discipline and plenty of widespread demand. That makes it pretty unlikely in the face of the enormously strong network effects of the largest social networks today. But perhaps there’s a third option to regaining control over our social lives. In fact, I predict the next big breakthrough in social media is likely to come from the need to resolve this tension between the unfortunate long term consequences of centralized social media and the benefits of a much more federated and user controlled model. Unfortunately, recent history has been a steady march towards the former.

So until then, we all need to mull over where our collective decisions are taking us, for as social media is perhaps the greatest communication revolution in history, its intrinsic power cuts both ways.

Filed under Analysis, Network Effects, Social Business, Social Graph, Social Media, Social Technology & Standards, Strategy, The Web, Trends and Statistics, Web 2.0

Exceeding the Benefits of Complexity? A Fractal Model for the Social Business Era

September 12, 2011 10 Comments

Over the weekend my friend and industry colleague JP Rangaswami wrote an insightful post that pondered how we have gone about delivering on customer experiences as connected to our back-end capabilities. Specifically, he explored an issue that is increasingly challenging many of the large-company CIOs I speak with these days: That the present rates of change demanded of the accumulation of 20-30 years of legacy business systems is greatly exceeding the ability of our enterprises and associated software “stacks” to deliver on them, particularly as cloud, social, and mobile dramatically transform computing today.

The problem lies in our classical views of enterprise architecture and business architecture both. But JP puts it more poetically:

Development backlogs are endemic, as the sheer complexity of the grown-like-Topsy stack slows the process of change and makes it considerably more expensive to change. The stack has begun to fossilise, just at the time when businesses are hungrier for growth, when the need to deliver customer-facing, often customer-touching, applications is an imperative.

Which makes me wonder. What Tainter wrote about societies, what Shirky wrote about companies, are we about to witness something analogous in the systems world? A collapse of a monolith, consumed by its own growth and complexity? As against the simpler, fractal approach of ecosystems?

This fractal aspect of user systems, Web 2.0, and SOA is one that I deeply explored in the 2005-2007 timeframe, and my ideas on this even made the cover story of the SOA/Web Services Journal at one point. This is when we began to see successful, composite systems sprouting up “in the wild” that were eminently natural and highly successful, such as Amazon’s, Flickr’s, and many others. Innovative new open API-based businesses had definitively emerged and shown us — in fact, virtually proved to anyone willing to observe — that business/technology ecosystems could be routinely produced that were far more successful than the ones virtually any traditional business had managed to produce for itself internally with methods like SOA. It was clear something important and new was happening and we tried to learn from it.

The signature lesson in this time period was that being “in the business” of ecosystems, at multiple levels, was the key to resilience, growth, and sustainability. It’s still a far cry from how most organizations are structured today, but I do see the first hints that this is starting to change. Companies like Best Buy and Sears have been getting the message among the old guard firms and looking at integration, partnership, and engagement as an open network activity.

The Web has also shown us that complexity, as important as it is to address and resolve the many inherent vagaries of dealing with the real world, is largely the enemy, whenever it exists needlessly. Our assumptions of where the complexity should be, in the transports for example, was wrong. It was in the ecosystem itself and we paid dearly for half a decade (and running) based on that misapprehension. But we’ve learned. SOAP usage has almost completely shifted to REST, complex WS-* stacks have largely moved on to simple standards and methods like Web-Oriented Architecture.

But technical discussions obscure the very important truths about what we’ve learned in the interim between the “aha” moment when we realized that what was happening so successfully “out there” was something that would make us just as successful inside our organizations, for internal and customer-facing needs both. After all, this holistic ‘integratedness’ — usually triggered via our connections to the Internet — was a part of our businesses increasingly and we simply had to realize this and engage as Internet natives. But back then, Andrew McAfee worried that focusing on the plumbing was the wrong emphasis to have on the exciting changes taking place, and he was largely right from a communication perspective.

However, building fractal architectures that addresses the old and the new isn’t as easy as just deciding to cast off the old, less effecive ways, as JP notes:

What I’d established in my own mind was a growing belief that the issue was to do with rates of change and costs of change. Vertical integration paid off when the rate of change was low. Networked small-pieces approaches paid off when the rate of change was high.

We are clearly living in times of much greater rates of change. Unfortunately, the old systems, the old architectures, the old business “stack” is often running the core of the business. It’s usually deeply vertically integrated, and not made of small networked pieces, loosely joined that are truly agile, deeply harness innovation on the edge, and turn IT into a profit center instead of a cost center.

So, while I have a lot more to say about this, because I believe that social business context will be at the root of the future of our how we design our products, services, processes, and workplaces, below are a few basic rules you can take away that if you stay true to, can indeed help you make the transition to the future. Note that customer and worker experiences are outside the scope of this, this has more to do with the new business stack below the social layer:

4 Ways to Create Sustainable Business Ecosystems

If resilient, networked, recomposable, open business capabilities are the future of business and IT architecture, getting there then requires a substantial change in stance:

Open Your Business Stack. To everyone, internally and externally, generally in the order of the systems and data that are most often requested for integration. Make it easy for anyone to onboard themselves and use the simplest and most egalitarian technology possible to deeply connect the world to your business. Self-onboarding is crucial because it enables the killer asymmetric business advantage of systems that respond to external engagement best: Export most of the change effort to outside your organization and impose it on those that wish to participate and integrate with you. Enterprises that close the “clue gap” with Big Data will have an enormous advantage.
Go Into the Business of Ecosystems. Stand behind your open supply chain: Invest in it for the long term, market it, evangelize it, support it, and stand behind it like your customers — again, internally or externally — will be building world changing products and services from them (if you do this, the track record is that they will.) Be fair and generous with your IP and enterprise data; you are under-utilizing it by several orders of magnitude until you do this, leaving much or even most of the potential of your business on the floor. Worse, until you treat it like a business, you won’t get external contributions to enrich your ecosystem that will drive down the cost of change while greatly increasing the velocity of new solutions and local adaptations.
Begin Fractal Reconciliation of Your Classical Systems. While hanging a trendy Web API off an ancient COBOL accounting system might be a step in the right direction, long-term success will mean going well behind the API. The existing business/IT landscape must be converged and rationalized so they themselves are made of “networked small pieces” that are faster to change as well as more resilient and responsive to being so much more connected (and therefore useful and valuable) to the world.
Spin Up New 21st Century Business Models. All new possibilities, many of which will be foreign to non-digital native firms, are reachable once you have created a fractal enterprise stack. Dominating classes of data, metered business knowledge, all new monetization methods, and more become possible once the three transformations above have started.

Unfortunately, after having advised and directly assisted many large companies in doing much of what I’m describing here over the years, it’s clear that most organizations are at a major disadvantage in making this transformation. The organizational will required is actually quite low, since most of this is fairly easy to do now with cloud technologies, increasingly capable technology partners, and the latest development stacks. Instead, it’s the understanding of how important it is to kill excessive complexity and focus on ways of thinking about business and technical architecture that will propel companies into bright futures.

We must leave behind vertical integration and radically collapse the size of our seams (APIs) in our businesses, while radically increasing the number of useful endpoints such that we look at them as the very fundament of our enterprises. The benchmark for success is how many others are depending on your ecosystem for their own success. Starting now, the activity in your organization must be focused on optimizing for growth of this number. That is the only way we’ll ensure we’re building businesses that are the most relevant, meaningful, and valuable to us going forward. The enterprises that don’t simply won’t survive in their present form. I believe that much is at stake here. Unfortunately, the “cultural gap” John Hagel wrote of back when this conversation started between the enterprise crowd and the Internet crowd is still much too large and is still hindering the move forward for many organizations.

I look forward to continuing this discussion and exploring just how much we’ve recently learned about the future of business and enterprise architecture.

Filed under Analysis, CoIT, Enterprise Architecture, Network Effects, Strategy, The Enterprise, The Web, Web 2.0

How Social Could Disrupt Search

November 15, 2009 Leave a comment

The inimitable Fred Wilson concluded yesterday in "Why Social Beats Search", that "[m]achines can help us find what is good. But with the help of machines, our friends and trusted sources can and will do that even better." This statement capped off a fresh debate over the weekend about automated, keyword-driven "McContent" creation that started when Michael Arrington posted about "the end of hand crafted content". Richard MacManus also explored the same issues in "Content Farms: Why Media, Blogs, and Google Should Be Worried".

I find this discussion very intriguing because it's nearly a mirror-image to the still-unfolding story of the last big change in this space: How the volume and timeliness of social media has disrupted traditional media. I explored this subject in-depth recently on ZDNet about how this same transformation is now happening more broadly to other industries as well. Now we're full circle already: What went around with social media is coming around again rather quickly with McContent. The machines are in the upstart role this time and have the potential to displace social media "moms and pops" who might not be able to match the volume and speed at which automated content can be created. That of course, depends on if you believe that machines can match the quality of handmade content. And indeed, if quality ultimately matters as much as volume and timeliness. There's a balance here that I'm not sure we fully understand yet but I'm betting there's probably room for the full spectrum. This will only be true, however, if we are prepared to accept that the online landscape and current ways of doing business are going to continue to evolve rapidly.

The premise of today's information abundance reaching an unsustainable place isn't a new one. Information overload is a rapidly growing subject that a lot of smart folks are talking about these days. One bright area however, and this is the point that Fred Wilson touches on, is that social systems might actually provide an effective filter that will separate the wheat from the chaff by decentralizing the expertise and work of content curation into a sort of crowdsourced collaborative process (an increasingly widespread approach.) This could make it both scalable and sustainable and I do believe that social content curation is an important trend. But it's only one step in the right direction as we head into the future dominated by truly vast information abundance.

One holy grail of search is "search that finds you" just as and when you actually need it. Encouragingly, I'm now starting to see this happen with social environments like Twitter where I've received more and more tweets lately in the vein of "@dhinchcliffe Thanks for the link, was just looking for this 10 mins ago!" This is the seed of a trend that could be exploited by a very smart company that created the right product design that systematically optimized social recommendations and content referrals into something so much more than it is today: ad hoc serendipity. Will the company that does this be the ones with the largest active social networks, such as Twitter or Facebook? Or perhaps Google will figure it out as a component of real-time search? Or will it just as likely be someone that no one has heard of yet? If the history of the Web is any guide, it will come from a place we won't anticipate.

I also suspect that other forces are in the running and may end up limiting the impact of distributed social curation, or more likely co-opting it. Emerging trends like Web Squared and its autonomic filters and recommendation systems powered by data shadows as well as advanced forms of Enterprise 2.0 BI are just as likely to provide the solution in the medium to long-term. Either way, search is only going to get better and social will certainly improve it. That's not to say social won't disrupt search, but it may only complement the changes happening more broadly. One big question is whether social can be made to scale enough to be routinely effective for most users. In the end, that's the big question in my mind: The output of machines can always exceed that of people and that's not necessarily a bad thing as long as we still get access to both results when we need them.

Filed under Analysis, Social Media, The Web, Web 2.0

Web Squared Emerges To Refine Web 2.0

June 26, 2009 1 Comment

It’s been five years now that we’ve begun to understand what Web 2.0 is, starting way back in 2003. It’s been a fairly impressive if winding road as a new online generation was born. But far from getting long in the tooth, along the way Web 2.0 became vitally important — even central in some cases — to the very future of global culture and business. Oh certainly, sometimes we get tired of the term itself, and admittedly it doesn’t describe something necessarily new anymore, but what we just do these days. But the concepts identified as Web 2.0 have proved to be highly insightful, even prescient, and are used around the world daily to guide everything from product development to the future of government.

It has been today’s commonplace use of intensely popular and deeply pervasive social networks, the outright transformation of industries such as media and software, and the growing dominance of 2.0 techniques such as user generated content, open business methods, crowdsourcing, Enterprise 2.0, open APIs — in the business world and elsewhere — which has been striking, even if there’s a long way to go in some quarters. Indeed, Web 2.0 is not just here to stay, it seems to be a revolution that just keeps on rolling and giving us, as I often say in my talks, an amazingly resourceful and resilient new lens with which to 1) look at the world and 2) the network that now surrounds it, and 3) the opportunities between the two.

Now, to paraphrase Churchill, “Now this is not the end. … But it is, perhaps, the end of the beginning” of Web 2.0, many are starting to perceive deeper patterns and concepts within Web 2.0 practices. We can perhaps now see more clearly the next steps towards what some would like to call Web 3.0, and which Tim O’Reilly and John Battelle have decided to dub Web Squared, the deeper explanation of which you can find here on the Web 2.0 Summit site. Whether we need a new term and whether Web Squared will be as accepted, or at least as widely repeated, as Web 2.0 is perhaps unlikely but it nevertheless is a cogent, if necessarily, incomplete next progression. What is certain is, that like Web 2.0, the ideas within it are useful new strategic ones that are emerging from the countless practical experiences of Internet practitioners everywhere in the world’s largest living laboratory: The Internet.

At its core, the message is that the Web is becoming more autonomic, reflective, real-time, generative, and open while at the same time far more deeply embedded everywhere in the fabric of our environment. And like what came before it, Web Squared is likely to have profound impact to the societies and organizations, either way, that choose to understand it or ignore it.

What is Web Squared?

While this is my personal take, Web Squared articulates a broader fusion between the world-at-large, the Web, and the people connected to it. It’s a more extreme view of Web 2.0 while at the same time hinting that while social computing has been a major transformative force recently in the consumer world and beyond, the relentless growth of devices, network connectivity, and sensors into our lives across our homes, workplaces, and external environment is casting an growing “information shadow” that is increasingly hard to ignore. At first glance this can seem to be an impersonal and inhuman concept as the network expands to surround everything and dominate the participation that so far at least is still driven (for a little bit longer anyway) by what people do and contribute online. However, this bleak vision is tempered by the realization that far from being pushed to the side, we collectively must be the feedback loop that guides Web Squared through billions of daily interactions that makes it possible in the first place. It’s the full environment, including us, which makes it all work.

The comparison above gives a cleaner, most succinct sense of what Web Squared is by comparing it to Web 1.0 and classic Web 2.0. It’s not necessarily a generation beyond Web 2.0 since many of the concepts are simply more refined or focused. But the “knobs” on many Web 2.0 ideas like collective intelligence, feedback loops, network effects, and so on are turned up quite a bit more and are fueled more directly by our interactions with the world as well as our synthesis of it. We know now how to sharpen the scalpels that we use to design our online businesses a good bit better and Web Squared reflects this.

For my own part, it’s a useful evolution of Web 2.0 even if it’s not quite as dramatically transformative culturally. However, the implications in terms of the types of new businesses that will be created have the potential to be as potent as Google (or even more so) when it comes to cornering the market on new classes of data and therefore entire industries, since most winners in on the online space have outsized dominance of their sectors. You want to use Web 2.0 ideas for the most impact? Think in terms of Web Squared.

I’ll be exploring the concepts of Web Squared in further depth here as I am able, but it’s clear that we need to take what we’ve learned in the Web 2.0 era and focus on emerging techniques that seem particular promising. In particular, I think the key aspect of Web Squared will lie in teaching our applications to “learn inferentially” from our online product’s strategic sets of data and drive out previously hidden value. That’s where being able to create powerful new autonomic, environmentally-connected, database-driven applications, often from ecosystems of partners that will provide access to their data (for a price), has the potential to become a dominant new growth model for modern Web apps. Whether this is video search engines built on top of YouTube’s content, near real-time language translation using peer production in social communities, or just better product/content recommendation engines remains to be seen.

But the chances are just as likely that entirely new types of break-out products will be created that we can only barely imagine today, like we did with Web 2.0 just a few short years ago. These new applications will fully harness the Web of data powered by insightful and potent cooperative algorithms and novel integration strategies that are deeply connected to the world we live in. Developing these generative algorithms will be the central challenge for a new era of product designer. These product designers will be experts at developing interactive systems for drawing insight, collecting data, and creating value from instantaneous Web input. We can look to examples such as the Netflix Prize as successful models for distributed, open design “studios” for creating, validating, and identifying the winners. How we look at fostering innovation and harvesting it is being reshaped by this vision already.

One thing is for certain, however, the way we look at the network is in the process of taking another big leap.

I’d like to get together a list of Web Squared example applications and ideas. Please leave your suggestions and comments below.

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

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.

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?

Filed under Network Effects, Social Media, The Web, Web 2.0 Tagged with architecture of participation, exponential, formula, geometric, hyperlink, link propagation, network effects, techniques, viral

RSS is the Web 2.0 “Pipe”

November 11, 2005 1 Comment

Problematically, RSS is still not quite a household word yet, and even the software industry is just beginning to realize the importance of this workhorse syndication format. Though at this point it’s already clear RSS will be the key enabler of Web 2.0 and Software As a Service. It will do this both as a notification system and as the actual glue that will eventually hold many Web 2.0 services and mash-ups together.

Dave Winer famously created the current incarnation of RSS but its implications are still rippling through the industry. The folks that can fully appreciate RSS will reap corresponding rewards. Microsoft CTO’s Ray Ozzie is a good example of the folks that "get" the significance of RSS. I love the quote from his much-discussed leaked memo this week and I haven’t been able to stop using it for the last day: "[RSS] is filling a role as the UNIX pipe of the internet as people use it to connect data and systems in unanticipated ways."

And we can’t forget that RSS feeds, storage, synchronization will be a central new feature of the next version of Windows.

So expect to see RSS on every blog, every Web 2.0 service, web site, and piece of desktop software going forward. If you can’t find the feed, you can be sure whatever it is won’t last long.

And for the fully buzzword compliant and for the record, I do fundamentally believe REST/RSS is the new EAI. And the glue of first choice for lightweight SOA as well. And I’m actively starting to see some folks drop their traditional Web services and go RSS wholesale.

Of course, the real problem right now is that most people on the Web still don’t have any idea what RSS is. At best, the average Web user might understand that RSS forms some kind of information "feed". More sophisticated users notice that if they can find an RSS link somewhere (a blog or news site for example) that they can use it like a URL to get updates of information within services like My Yahoo, Bloglines, or something called an RSS reader.

Murkiness and partial examples are the enemy here. Raising awareness and finding clear examples that fully express the potential and power of RSS should be the goal.

Here are some clear, canonical examples that I think convey the full scope of what RSS does for us in a Web 2.0 world:

RSS Use Cases

Notification: Need to inform a lot of people about changes to information? Don’t want central control? Want to enable self-service? Use RSS.

Syndication: Publishing new information regularly? Put it into an RSS feed. This flows out to the world your blog entries, news articles, podcasts, videos, job posts, weather reports, financial updates, bug reports, etc. The software you use should be able to take your information and make it into an RSS feed. If your current software can’t, find new software. It’s that important.

Glue: Need to connect any service to another service on the Web (or anywhere else)? Trying to mash together data? Building supply chains? There is generally no need to ever ask anyone to stand up a new web service. Pull everything you need via its RSS feed. Some software developers will disagree with this and say there are better methods, but to this I point out: 1) RSS is robust enough that it’s all you’ll ever need nine times out of ten and 2) it’s what you’re going to offered automatically anyway, take it and get something done.

RSS creates the Web 2.0 information ecosystem by enabling interconnectedness, network effects, emergent behavior, and much more as well. And RSS doesn’t demand control of the other end of the conversation. This is a big enabler all by itself and is a classic Web 2.0 force. By letting consumers of RSS use any tool or service they want on their side, barriers are eliminated and connectivity is encouraged.

That doesn’t mean that RSS doesn’t have its weaknesses either and certainly there are other ways to create feeds, but RSS has the mindshare, support, and the goods right now. So though it’s not perfect, it’s more than up to the job. Let’s spread the word…

What did I miss? What other canonical examples are there?

Technorati: web2.0, rss

Filed under Social Technology & Standards, The Web, Web 2.0