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.

Traditional Closed Business Stack vs. Open Networked Supply Chain API

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

Dreamforce 11: Live Blogging the Benioff Keynote

August 31, 2011 11 Comments

Dreamforce 11I’m here at Dreamforce 11 right now in Moscone Center in San Francisco. Salesforce made major announcements last night about Chatter, their social business platform, that is now more Internet facing.

I once called Chatter an enterprise social operating system and these announcements make it even more true now. Expect that this will significantly improve their positioning in customer engagement as their CRM tool is probably the top product in the space. The move connects their core strengths to social computing even better than Chatter did before, while putting them into the Social CRM business in a significant way.

The new Chatter now has customer groups and social analytics features and more. Larry Dignan did a good round-up of the changes and additions this morning on ZDNet.

Social enterprise and Salesforce

It’s very clear with the prominent focus on social business this morning that Salesforce definitely wants to be seen as the social enterprise leader. They’re working very hard to position themselves as such. The confab certainly confirms no small level of market enthusiasm: There are huge crowds in the streets and tens of thousands of folks here.

Crowds at Dreamforce 11 outside Moscone CenterThough sales automation was Salesforce’s original focus, they are very much moving to become a full spectrum social business enabler. It’s a story all social business practitioners should follow closely and this is a pretty major series of announcements, not just for the products but because the messaging will be heard far and wide in boardrooms and the C-suite.

Liveblogging and analysis of the Dreamforce opening keynote

You can watch it live here and I’ll do some real-time analysis here, so refresh as often as you like. Note: If it’s in quotes, it’s very close to exact wording, otherwise it’s a paraphrasing of the speaker.

9:03 – The keynote is about to start with Marc Benioff on stage shortly.

9:11 – Still hasn’t started yet but they announced it will shortly.

9:14 – Salesforce’s Peter Coffee is announcing a Hawaiian themed opening ceremony, saying Marc Benioff has great appreciation for the state and its culture.

9:19 – Music montage, Benioff is not on stage yet.

9:23 – Benioff is up: “You are now part of the largest technology industry event.” Says 45,000 people in attendance and 35,000 people online.

9:24 – “Salesforce.com was born cloud and have now been born social.” “We want to delight our customers with something new. We’ll look at how Salesforce is helping organizations become more social.” Mentioning Twitter’s #df11 hashtag to follow everything.

Marc Benioff on stage at Dreamforce talking the Social Enterprise

9:26 – Talking about the transition from mainframe, to client-server, to cloud. Multi-tenant vision of shared services. Talking about their new philanthropic model. Took 1% of equity, profit, and employee time and put it into a 501(3c).

9:28 – Talking about the evolution of computing, from mainframe, to mini, client/server, Desktop/Cloud computing. Mentions Steve Jobs, everybody claps. “Entering new era, an exciting new era”. Not thanking IBM, not thanking big companies, we’re thanking Facebook that’s creating change and transformation, an “Arab Spring” in business.

9:32 – When will we hear a “corporate spring”, when customers rise up and demand that organizations listen? That’s the social revolution that’s coming. E-mail has eclipsed social networking users. Look at how Facebook is eating the Web. Now it’s all about Facebook.com/yourcompany, your company, your project, etc.

9:33 – It’s not just about social, it’s about mobile. Mobile apps are used now more than Web browsers. Tablets and smartphones are taking over.

The Five Stages of Computing Including Social Enterprise - Dreamforce 11

9:35 – It’s not just about consumers, it’s about the enterprise. “So, what’s happening, what do we need to be thinking about?” This social revolution has created a social divide. Your customers are social and employees are social. But are our companies? Our are enterprises social? This has really been on my mind since we last met.” It doesn’t matter if you’re in Japan, Russia, or the United States.

9:36 – We want to help organizations bridge that social divide. I’ve traveled more in the last six months than the last six years. This transformation is so important we need to find a new answer. “Think about this:” We’ve been looking for best practices, modeling the success stories, finding the companies breaking through and ask them when they are doing.

9:37 – We’ve come up with a 3 step process. First it’s about the database. You can learn more about your customers than ever before on the network. Step 2, we want to create an employee social network. We’ve been talking about that for several years now. We launched Chatter last year. We’ve learned from you that we need more than that, we need collaboration. It’s not just about another island of collaboration, or island of data, it’s about integrating all your business processes and workflow and applications into that employee social network. Including the sales force, the customer service organization, and including custom applications.

9:39 – Step 3, which was a huge wakeup call. Our really incredible customers were creating product and social networks. Including customers in the social network. It blew us away. We saw you doing this in social marketing, listening, analyzing, deeply in the network. In other words: Social analytics and social business intelligence (my take on this.)

9:40 – We have to step up. Want to excite you, inspire, and look into the social enterprise and take you through the door, a door we’ve locked ourselves. Now he’s talking about Salesforce and the cloud.

9:41 – Your project is portable, your data is portable. Everyone can participate.

9:44 – Discussing their social enterprise research from around the world. Says that their vision of the social enterprise “is inspired by you.” Telling the story about using social networks, travel, and their organization. How in his recent trip to Boston, they talked extensively on their network about their plans, yet the hotel knew nothing about what they discussed. “Delighting customers means knowing who they are and what they like.” Getting that customer database so that they have a great experience when they use your products.

9:46 – We have to get back to our data models, back to the core. Introducing Dan Darcy, VP of product development. Showing a contact record in Salesforce. “Your contacts, they’ve gone social.” The new social customer profile builds an entire picture. Name, picture, where they are geolocated, what apps they use, what deals they are involved in, what customer service issues they have. A deeply integrated view.

9:47 – Says social contacts is really exciting, the crowd claps. Talks about giving everyone the tools to really “delight their customers.” Takes everything from Facebook, Twitter, and public information and streams it into Salesforce. As of today, everyone can go into Database.com, with APIs, OAuth, and start working with this information.

9:50 – You can choose where your data is. It doesn’t have to be in our datacenter, it can be in your data center with the new data residency option (DRO) for those that store sensitive data and it is compliant with many corporate and government policies. Now you have the ability to keep it where you want. Note: This has been a major sticking point for many companies.

9:51 – This sets us up to for something really amazing, really critical. Inspired by Facebook, LinkedIn, and all these networks out there doing collaboration. “Why do I know more about those strangers on Facebook than my own family or employees?”

9:53 – Let’s look at some stories about Chatter. CEOs on Chatter: “This is a change that is going to last forever.” “The conversations really focus around our customers and products, all in one location. How they’re thinking and interacting and that we’re moving in the right direction.” “Instead of wondering how such-and-such is going, now someone whips out an iPad, and says let’s find out.”

9:54 – “It’s a wonderful place to be. I can see using Chatter to really drive changes in our top line.” “Companies that don’t have this collaborative and competitive advantage will fall behind.” “Wherever I can, I can very effectively communicate with 18,000 people in our company.” “The biggest impact in the next 5 years for companies effectiveness will be the use of social media.”

9:56 – Dan claims Chatter has become the leader in employee social networking. “We’re excited to make a series of new announcements” (so far everything that’s in Larry Dignan’s post.) Including Chatter Now, screen sharing for collaboration. We’ve learned that the key to success with social collaboration is integrating social into workflow. Collaboration is not an island. (Note: Great stuff that’s spot on with current Enterprise 2.0 effectiveness discussions.) There is even Chatter for SharePoint.

New Chatter Features in Winter 12 - Dreamforce 11

9:58 – Introducing Kraig Swensrud, Salesforce CMO, to demo the new Chatter features. “Chatter has really started to bridge the divide between different departments.” New features are coming in the Winter 12 release. Sharing stories from meeting rooms, people chiming in, and streaming information back into the meeting. Says customers wanted an open system, says APIs are available for social integration. No word on OpenSocial support (yet.)

10:00 – The Chatter activity stream shows what’s going on in the entire company, “it’s never overwhelming, can be drilled into, filtered.” You don’t have to spam the whole company with questions. You can post something and “the answer finds you.” This is crowdsourcing. Chatter for your entire company means you don’t have to fumble around and find the right system. Including ambient IM, hyperlinks, file sharing is part of Chatter, a killer app we think.

10:02 – We have an amazing social collaboration happening inside our company. “Wouldn’t it be great if we could bring our customers into this process.” Can create customer groups, “user empowerment”. Looks like normal Chatter groups. Shows a group with 12 employees and 3 customers. Says it’s happening today, just with legacy technologies to share proposals, marketing, working on RFPs. It differentiates you as a business to connect with them this way. Customers don’t have access to private and secure company info, just what’s in the group.

10:04 – Kraig is talking about mobile social apps to customers, says all their capabilities work on mobile devices. Demoing the app now. Now showing Chatter working on Android Honeycomb, very cool. “This is the new world of social collaboration, the face of the new social enterprise.”

10:06 – Now going back to Marc. “Now customers can be part of your Chatter network.” They are firewalled off from all your other information. Just introduced Neil Young and is talking about how he’s using Chatter to collaboration and produce his next film. Also using it on their new Hires for the Masses product and more.

10:10 – “Now we’ve been talking about collaboration. But there’s another key part of building your employee social network.” Has been traveling around and getting inspired by his companies. Talking about Groupon visit and seeing the energy level, growing at 22,000%. The way they achieved it by hiring as fast as possible 5,000 sales people. The level of communication and collaboration, planning, logistics is amazing. $750 million in revenue, constant collaboration and building custom apps to support new capabilities.

10:12 – Talking about 150 new features. The big ones are social contacts and social sales. Now they are announcing Data.com, access leading providers of data including Dun and Bradstreet to connect it into the CRM process.

10:15 – Benioff is discussion how HTML 5 is going to revolutionize the mobile user experience. Pinching devices to access fields. They are announcing touch.salesforce.com. All these apps are going to run natively on HTML 5, including all the apps customers have already built are going to be brought forward. Note: I think this is a very smart move to improve user experience on Salesforce.

10:17 – Kraig is back and talking about Salesforce sales features. “Under every deal is Chatter.” Includes support for pricing approvals, sales strategy, mapping out the organization and influencers and decision makers.

10:18 – “Of course, everything is now mobile. This is what you’ve been asking for.” Showing a demo of the new touch site. Looks like a native iPad experience, but is not, all HTML 5. Showing how well the user experience works on touch-based tablets and smart devices. Everything apparently runs in this new interface with little to no rework.

10:20 – Now looking at social customer profiles. “What if I don’t have the information about the customer yet?” Shows how new Data.com services might have what you need. One-click integration of external social information from their partnership with Dun and Bradstreet. Then you can see who they are and what they’re talking about in external social networks. Salesforce clearly understands big data, social media, and the strategic value of data use.

10:22 – Talking about bring the customer into social meetings in Chatter to collaborate and discuss. One final new aspect, everything is integrated in real-time including mobile, so messages are immediate everywhere. Get an immediate Chatter notice “that someone has exceeded their sales quota” right when the order is booked.

10:25 – Marc introduces the president of Verizon Business, Bob Toohey, to talk about shaping the social enterprise. “Need the flexibility to create the B2B to C in a very simplified way.” Benioff asks him how their customers are becoming social. “They want to know more about their customers. They want identity management. Customers want to be able to say I want the flexibility to integrate everything and make it work.” Hints at predictive analytics.

10:27 – Now Marc is talking about the customer they are going to profile this morning, carefully selected so they can learn from it. It’s NBC Universal. Now showing video of talking about NBC Universal’s social enterprise experience.

10:30 – NBC Universal video concludes. Marc: “It was only a couple of years ago that we made a strategic decision to get involved into the customer service business.” Says it’s their fastest growing product line.

10:31 – Talking about Zynga, with 30,000 customer service cases per day. Over 1,000 representatives online. $597 million in revneu, 392% annual growth. Marc’s calling it a “new age company”. Now mentioning Bank of America handling over 1,100 tweets requesting support per day. Twitter.com/Bofa_Help. “An incredible story about a modern bank becoming a social enterprise.”

10:33 – It’s not just about banks. Now talking about airline KLM’s 130,000 Twitter followers, reduced first call resolution rate to 1 hour. KLM’s customer service is “deeply integrated into the social universe.” KLM has taken this “to a level I’ve never seen”.

10:37 – Marc asking if the CEO understands the need to become a social enterprise. Does the C-suite understand? Does the board understand? Do our employees understand? Announcing Chatter Service to enable customer service and taking “the Service Cloud even higher.” Community feeds, suggested knowledge, crowdsourced answers, agent escalation and much more.

10:39 – Kraig is back out showing off Chatter Service in the Service Cloud. “It all started with Twitter. When Twitter started amassing users, everything was public.” Instead of contacting the company, customers just post, hoping that someone will help them in hundreds of millions of users.

The Chatter Service Cloud at Dreamforce 11

10:40 – With the Service Cloud, customer service gets plugged into the social conversations. Showing a live demo of real-time streams of YouTube and other social media and route the issue right into the service center to resolve the problem proactively. Talking about taking all the “paradigms of the social world and plug it into your organization.” Exploring Cirrus computing story with an example of how it all works, including cross-posting resolutions back out to Facebook and Twitter.

10:43 – “Helps you service your customers in completely new ways.” Call center can’t be left behind. “Of course, we’re integrated into telephony”, including the social profile, right when they call in so the agent knows what they are doing and what their concerns are. The knowledge base will recommend the right answer and relay it to the customer via e-mail or telephone. But in a social world we can do something better. Can even do Facetime service to iOS devices. And he’s showing it live.

10:47 – Marc is back and talking about Avon, BMC, Kelly Services are running social apps on Force.com and others creating “breakthrough apps”. Very interesting: Now Facebook’s CIO Tim Campose is talking about how they use Chatter and “have been able to adopt it across the board”. 70% of Facebook’s internal apps run in the cloud and most of them use Force.com.

10:49 – Now Parker Harris is on video from the show floor talking about the exhibits and campground. Continuing to talk about Facetime integration. Invites those to come in and see how all the technologies discussed integrate together.

10:54 – Marc is talking about Step 3: creating a customer social network. “The customer social network has been a real eye-opener for me.” It started with their acquisition of Heroku. Has the Heroku team stand up. Says that it now runs Java, not just Ruby. Talking about Disney’s dynamic social communities. Games, vacation communities, photo sharing applications. ESPN, Best Buy, and Warner Brothers are all doing this and using Heroku technologies. Now with Heroku with Java and frictionless scale, availability immediately. Brings 6 million Java developers right into their social platform.

10:57 – Talking more about social marketing. Now having MC Hammer standing up in the front of the crowd. Now MC Hammer is actually saying pretty good sound bites about how the wall is coming down in enterprises. Social universes can be used to see if products “really resonate.” Relating his experiences with crowdsourcing ideas in the music industry, and using betas to strategically validate ideas with customers. What’s working, not working, and making changes dynamically based on social feedback loops.

10:59 – Marc is now bringing up the great (but now fairly old) story about Gatorade’s social media network operation center. Video is playing about their story.

The Challenge of Social Media Listening, Analytics, and Social Business Intelligence

11:01 – Here’s the exciting part of the confab for me: Discussing the Radian6 acquisition, social media analytics, and how it turns into social business intelligence. Half of the Fortune 100 uses Radian6 to analyze social media. “The beginning of the marketing cloud”. Demonstrating Heroku and Radian6 with a Disneyland app. Companies are creating social experiences and doing it on Facebook to create phenomenal customer experiences.

11:08 – Still demoing social customer experiences. “The next generation of listening and engagement. Marc is back up. “Most exciting part of the keynote. Going to talk about an incredible new capability.” A new product called “Product Social Networks”, will affect every company in the world. Showing a video about the Burberry CEO Angela Ahrendts about how to create a “consistent feel for customers regardless of how they were accessing the brand.” For any CEO that is skeptical, she says “You have to [do this]. You have to have a social enterprise. Otherwise I don’t know what your business model is in five years.

11:12 – Now Angela — who is actually here — is up talking about the borderless enterprise is the future. Talking about the Burberry Community vision. They want to bring together their “great customers”, suppliers, partners, into a social enterprise. “What is the next step?”, asks Benioff. “How do you plug all of this back into the existing infrastructure?” says Angela. None of that goes away, Salesforce is an addition to plug it all into to optimize the social enterprise. As a global luxury brand, and the brand is the #1 asset, is what they’re selling before they sell anything else. The opportunity to take Chatter and brand it completely as Burberry is the key for them.

11:17 – “It’s not about channel, it’s not about technology, it’s about wherever the customer goes.” – Angela. She looks at the audience, “you are the social revolution.”

Angela Ahrendts CEO of Burberry Talking about the Social Enterprise

11:19 – Marc is talking about Toyota and the social enterprise. Relating the story about Toyota Friend, and how they are using that as the first part of their transition to the social enterprise. Connecting dealerships, customers, distributors, support centers, and even vehicles together socially. “Get your cars running on these social networks.” Now they are going to show Toyota Friends actually working so the user can see the charge level, maintenance cycle, tire pressure, interior temperature, etc. All information streams to you in a chatter feed (great stuff showing how devices and sensors can be social as well.) Connects to the whole family of cars and can be extended out to Facebook, Twitter, and so on.

11:24 – Continuing the Toyota Friends demo. Not just for customers, dealers, but also internal employees of Toyota. Marc’s back up, saying “this is happening to companies all over the world.” Discussing Enterasys and how they redesigned their products to be social. “Their switches are social.” Users receive real-time alerts.

Toyota Becomes a Social Enterprise with Toyota Friends

11:26 – Coca-Cola is now being featured on how their rewards, events, and other communities including food service, mobile payments, and other capabilities to brought into a single social enterprise experience. Marc is now standing by a vending machine and uses his iPhone to get a loyalty point for standing in front of the machine using geo-location. “It starts to have a relationship with me. We can bring the offline world online and increase customer intimacy.”

11:27 – Bringing up the CTO of Coca Cola, Alan Boehme, and talking about the vision for Coca-Cola and the social enterprise. Where have you said “wow, this has really opened up for me.” Over 700,000 partners and colleagues around the world. Their big challenges: Who’s know who, who knows what, and who know who that knows what.” Technologies that bring people together creates major opportunities.

11:29 – Marc is taking about a new social enterprise license agreement so that per-user pricing delivers every product for every employee. Alan inspired them to create the new social enterprise licensing agreement.

11:31 – Wrapping up now, talking about transforming and “igniting” organizations around employee social networks, customer social networks, and product social networks. Eric Schmidt, Vivek Kundra, and Metallica are all coming up today and tomorrow.

Summary: Overall an impressive amount of messaging and pretty spot on for the most part. We definitely get a better sense of where their social strategy is going as well as the larger outlines of how they’ll be going to market with this. Frankly, I’d be worried if I were a lot of social software vendors, because of the deep cross-product integration, opening of the platform, and the sheer number of key, strategic features now operational for true social business. If I were a CIO considering the social enterprise, I’d now be including Salesforce in my short list. I’ll be analyzing this more on ZDNet, the Dachis Group Collaboratory, and elsewhere soon.

Marc Benioff Wraps Dreamforce 11 Keynote on the Social Enterprise

Filed under Analysis, Social Business, The Enterprise Tagged with , ,

Sunday Musings: New Social Business Research, Plus Disruptors of Tomorrow’s Enterprise

August 29, 2011 1 Comment

All in all, it was a good week for the exploration of big ideas in social business. PWC’s Technology Forecast quarterly published an epic 68 page examination of the future of collaboration in the enterprise. For those without the time to read through it all, Sameer Patel wrote a great overview of the contents today.

Standout areas of focus in this report include 1) an emphasis on dealing with exception handling as the norm in collaborative environments, 2) an underscoring of the central role of the CIO, which is something I’ve seen as key for success in social business, and 3) last — but certainly not least — positioning social media to directly support ongoing business processes. Says Sameer:

One thing enterprises have learned is that siloed, standalone consumer Web-style microblogging or social networking tools rarely work well inside an enterprise. Social technology that’s embedded in the enterprise application environment to offer collaborative support to specific business processes, or explicitly targeted at unifying all communications and collaboration, can be much more useful.

If you’re not sure about this, the importance of connecting social business to workflow was clearly driven home this week in the discussion that Laurie Buczek sparked in the Enterprise 2.0/Social Business community. See the comments and pingbacks in the link for details but it’s clear the social media for its own sake just isn’t enough to drive significant business impact.

For me, it’s become abundantly clear that smart social business initiatives — and the ones that will ultimately have the most success — will focus on connecting their efforts directly with 1) meaningful line-of-business activities and/or 2) transforming and integrating the most important horizontal functions like the intranet, content management, and document management.

But PWC’s report and Laure’s noteworthy post were not the only significant happenings this week. Earlier today Ray Wang published an engrossing and significant overview of 43 Use Cases For Social Business. Maps like this are important to help those trying to understand how to apply social media to various parts of their business. Ray’s use cases cover the gamut of the following areas:

  • Public relations/ marketing (PR/MA). Key impacted business process: Campaign to lead
  • Sales (SFA). Key impacted business process: Lead to deal
  • Service and support (CSS). Key impacted business process: Incident to resolution
  • Projects (PBS). Key impacted business process: Kickoff to delivery
  • Innovation/ product life cycle management (PLM). Key impacted business process: Concept to production
  • Supply chain (SCM). Key impacted business process: Sourcing to acceptance
  • Human capital management (HCM). Key impacted business process: Hire to retire
  • Finance. Key impacted business process: Invoice to payment

I DM’d Ray and indicated I felt that this was just a start on where social business will have an impact and he agreed. The list is light on general purpose workflow/collaboration, but then again Ray’s view here is actually connected to specific business activities, as per the previous discussion. We should also keep in mind that Ray’s perspective is based on actual data gathered from those engaging in social business, which makes it particularly invaluable as a look at ground truth. I especially liked his chart on the top 20 use cases based on the responses of over 100 early adopters:

Top 20 Social Business Use Cases By Early Adopters

Ray and his team has been doing some great research lately and I look forward to watching what they put out next.

The Disruptive Business Landscape Adds Big Data, Algorithms

As enterprises get backed farther into a corner by the constant changes swirling around them, there’s been a lot of speculation about the root causes of disruption at present. Everyone knows that cloud, social, mobile, and now increasingly big data, are to blame, but are they really the whole story? Not by a long shot in my book and Michael Fauscette agrees.

Citing the usual suspects, Michael took a fairly deep dive this week into the additional forces that are remaking the way we work and operate our businesses and came up with some gems that paint a fairly complete picture. I’ve taken a shot at describing the macro changes several times in the last year or so, but Michael’s list has a great perspective. Be sure to read it yourself, but Organic Business Networks was the one that resonated most with me.

Disruptive Changes To The Enterprise Cloud Social Mobile and Big Data

For my part, I think the BBC’s When Algorithms Rule the World adds the final item of serious competitive disruption to both our lists. Will we truly be smart enough to rule over them while only reaping the benefits? I worry that we won’t and that few of us are putting enough thought into the implications of big data and the analytics that will pervade just about everything we do. Next-generation enterprises will be ones that own their classes of data while being able to maintain the highest leverage over what they know that others don’t. See my discussion on closing the “clue gap” between what most enterprises can do today, and what tomorrow’s leaders will be able to do.

Finally, as Web technology continues to provide an ever-growing force multiplier that’s placed into the hands that master it, I’ve been exploring one of the new leading edges of social business: The process of extracting strategic intelligence from the knowledge, connections, patterns that become much more visible when organizations become social. It’s a topic that’s growing central to the discussion of ROI as well as attaining long-term competitive advantage. You can see all the details at Harnessing Social Business Intelligence: Nine Strategic Uses and Social Business Intelligence: Positioning a Strategic Lens on Opportunity.

At Dreamforce in San Francisco this week

I’ll be in downtown San Francisco for Salesforce’s massive and increasingly influential Dreamforce 2011 conference from Tuesday onward. Expect pictures, videos, and blog posts in my Twitter feed as we see what they have in store for the social enterprise. I’ve been having discussions with a number of Salesforce partners this week that are announcing innovative and intriguing add-ons and support capabilities for Chatter and other elements of company’s growing and increasingly impressive ecosystem. I’ll cover as much as I can here and elsewhere. It’ll be a great week of conversations and moving the thinking forward in this fast moving space, even as social business tries to keep pace with social media.

Filed under Social Business, The Enterprise, Trends and Statistics

Putting Social Business To Work

August 24, 2011 25 Comments

A great post yesterday by Laurie Buczek brought home for me a key issue that I’ve been pondering lately, namely how surprisingly disconnected some social business efforts end up becoming. We know many of the reasons this happens: Not-invented here, political fiefdoms, integration challenges, the tendency of many applications to turn into silos easily, etc. However, social media in the enterprise is about connecting deeply to those around us to improve the way we work. It’s certainly not about isolation, yet that sometimes becomes the state of affairs. How we organize for social business determines much of our success, as emergent as the process is. As Laurie said in her post (her emphasis):

The big failure of social business is a lack of integration of social tools into the collaborative workflow.

I should be clear that it’s not social business as a concept that’s the problem here. It’s that social must be connected to the day-to-day work that takes place. Unfortunately, most work today is done through existing systems that aren’t very social. If we’re lucky, we can forge a link to a piece of enterprise data from within a social tool, a basic requirement for social collaboration. But more likely we have to manually copy information from the systems of record in order to collaborate on it. Even more likely, the social business environment just becomes a parallel silo that’s not connected to the business and is used for light conversation and status updates instead of meaningful, high value line of business activities.

Social Business Connected To Flow Of Work

Yes, many large ERP, CRM, and HRM vendors including Oracle, Salesforce, IBM, Saba, and many others have either added or are otherwise incorporating social layers in their products that can help address this. But this is not necessarily the same as making our businesses fundamentally or more meaningfully social. Such duplication of social tools has its own silo issues and ultimately, rolling out social software on its own does not in itself produce results. No, the ladder of social business maturity requires more from us than that.

Instead we need to wrap our businesses in social in a more ambient and deeply connected manner. To work, this must be more than for example merely adding threaded conversations to our systems of record. It’s about weaving collaboration into everything we do, efficiently and simply. The good news is that there’s now hope to readily address what Laurie was referring to and connect social to workflow. With recent advances like real, mature, standardized social integration with OpenSocial 2.0 — with widespread support by enterprise software makers for the first time — there’s a genuine opportunity, right now, for us to connect our daily departmental and enterprise-scale work activities en masse to an overall social fabric that enables real change, real results, and real ROI.

Note: I do not think pure technology can ever be the full answer to this issue. But whenever we have a means of much more easily putting social in the flow of work we must go well beyond paper strategy and employ them.

So it’s up to us to see the importance of doing this and making it happen. Want social business become just a fancy chat tool in your organization? Don’t put social business to work. Do you want to unleash untapped worker potential, including cognitive surplus, peer production, and collective intelligence and all the big strategic buzzwords? Then put social business to work. The big lesson here: Failure to connect social business to work on the ground will pretty quickly result in limited value. We are now in the possessions of techniques to avoid this and we must use them.

See my writings on connecting business software to systems of engagement, social networking applications, and social app stores for more details on this subject. The Social Business CIO Shortlist can help as well.

Filed under Social Business, Social Media, Social Technology & Standards, The Enterprise

Sunday Musings: Google’s Identity Struggles, Plus Social Media Bans Around the World

August 21, 2011 Leave a comment

The Web’s missing features for built-in user identity have become a real headache for the industry, and for its users too. It certainly took its toll on market leader Google this week as its “Identity Theater” continued (Source: Kevin Marks.) The issue? It’s turning out that making every single user comply with the Common Names policy isn’t workable for a variety of reasons. Reports of Google deleting accounts en masse are driving a lot of the discussion. Robert Scoble has his own recommendations for Google and while they’re probably the least that would be acceptable to the majority of people, it doesn’t go far enough I think.

It certainly doesn’t have to be this way. Twitter allows companies, bots, and just about every other type of social account and it works quite well in the end. Twitter ran into a similar identity issue in a big way a couple of years back after facing lawsuits and widespread complaints. They managed to muddle through with Verified Accounts.

A growing consensus is that Google should allow user-defined accounts as well, with verified identity for those that want or need it. Personally, I’m not sure I see Google coming around with a response fast enough to prevent some damage to services and impacting Google Plus‘s runaway adoption. But in my analysis, it’s most likely to only hurt the commercialization of the service, not regular usage for most for now.

Social Identity Ownership - Google or Facebook?

Worse, the problem may actually be core to the way Google’s stack is conceived and architected. It may not be easy for them to change course in the short-term without ripples through the way global Google’s services fundamentally operate from a security and identity perspective. It also may not be good for their business model which is almost certainly based on the fact they know who people really are. This issue is one to watch given Google’s pervasiveness. It also has some significant implications for business users of its products, especially now that they seem to be gaining some much needed traction in the social networking wars.

For now, I’d recommend that businesses use Google Plus with an eye towards experimentation while the Web giant gets its philosophy and policies around identity sorted out. Frankly, the bigger industry issue is social Web identity itself. Users and companies increasingly depend on commercial providers like Facebook, Twitter, and Google to provide everything identity-related, from login access to storage and maintenance of their social graph. This is causing key elements of power and control to start to swing away from the open standards that made the Web so successful and essentially fair.

Will the W3C step in and resolve what’s appearing to be an increasingly glaring absence in the Web stack? So far it seems unlikely given the failure of many years of open standard Web identity efforts. The culprit? You have only to look in the mirror. Apathy by users and lack of consensus on the part of Web developers. There’s also a lot at stake financially for those that end up owning a big chunk of Web identity. Consequently, online — and especially social — identity is likely to grow into a full blown brouhaha in the next couple of years as issues, missteps, and abuses inevitably surface. However, we could also decide to put our own house in order before governments step in, the least desirable of all outcomes in most imaginable scenarios. The worst probably being governments owning, issuing, and centrally managing verified Web identity credentials for everyone.

Which brings us to the next subject…

Government Bans Chipping Away At Social Media Freedoms?

A couple of interesting things happened this week with governments aiming their considerable might at social media. While knee-jerk responses to this space were common enough a few years ago, with the U.S. Marines banning social media access for a while for example, these are now generally understood to be counterproductive and unworkable for a long list of reasons.

However, that didn’t stop the German government from banning the Facebook ‘Like’ button on Friday, sure to ignite a small firestorm in that country given that it seems to apply to any site accessible from inside its borders and the fine is a stiff €50,000. The Like button, used on millions of sites around the world to enlist users to leverage their Facebook social network to share content from 3rd party sites (see: k-factor), is significant enough on its own to put German Web businesses at some competitive disadvantage on the global stage. The concern is over privacy and that “all the information was sent to the US company even if someone was not a Facebook member.”

In another similar situation, the Missouri state government’s new law preventing teachers from using social media to communicate privately with students, the former who just announced that they are fighting back, is another case in point. There are obvious free speech issues with the law despite the good intent on its face to protect students. The real issue is that the law is that violations are almost impossible to detect and enforce, until its too late, and that it ensures teachers, one of the most collaborative and interaction driven professions with far reaching impact, can’t have much of a social media presence of any kind until the implications are sorted out. It also presumably doesn’t prevent teachers from privately communicating with their students in any number of other digital channels. All of this means the law won’t accomplish a whole lot other than sowing confusion and promoting the use of increasingly obsolete methods in an increasingly fast-changing economic and societal landscape.

The real issue with both of these laws is that they are 1) essentially short-sighted, 2) exhibit such poor understanding of social media as to be essentially useless, and 3) are therefore unlikely to be meaningfully carried out. Worse, they chip away at the edges by introducing step-by-step, largely ineffective government oversight and control over social media, one of the largest economic, cultural, and societal changes of our time. This will become an even hotter topic as the Middle East’s social media coordinated model for uprising spills out of the developing world. In fact, this has already happened in Britain and there are already cries to ban social media in cases of civil unrest.

I should be careful to note here: I’m not by and large suggesting there’s any overarching government scheme to interfere with and control social media. Instead, I’m suggesting we keep a close eye on these developments as social media legislation increasingly (and inevitably) accumulates in bits and pieces on the base of knee-jerk responses to individual situations. This will have a great many unintended and unwanted consequences. The continued growth of laws and regulations in a vital new industry that thrives on inherent openness and trust has the potential to limit it so profoundly that we could lose much of the great promise that social media can provide.

While we must find ways that work to protect our citizens, we must also provide them access to one of the most open, free, and powerful means of interacting that has been invented. Let’s push back on unreasonable measures while also proactively being responsible for solving them. It’s up to us to start finding globally acceptable solutions to privacy, security, and misuse in social media and getting them into the hands of those who don’t understand this space well enough yet to govern it. The options for making this happen are something I’ll explore as soon as I can.

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

Connecting Agile Business with Social Business

August 11, 2011 4 Comments

When Jim Highsmith graciously invited me to give the opening keynote at the inaugural Agile Executive Forum in Salt Lake City this week, I had to really sit down and think about what I’ve been working on the last few years, namely social business, as compared the conference theme, agility and business. While agile methods have had many separate and distinct threads within the business and technical worlds over the last 20 years, one of the most active areas has been in software development. For its part, social business is a much newer phenomenon that’s become a top priority for many business leaders in the last couple of years. So, while I’ll cover the details of my presentation — in which I connected agility and social business as drivers of innovation, in another post — I will attempt to more formally to capture the specific similarities here.

In recent years, as agile development has been increasingly borne out as a fundamentally better, more efficient, lower risk, and more cost effective way of doing things, there has been significant and growing effort apply agile lessons to business in general. And, as it turns out, agility and social business, as two major new ways of connecting and organizing people in directed activity, have plenty in common. Perhaps even more importantly, they have key things to learn from each other.

I’ve had quite bit of experience with agile methods personally, having led extreme programming project teams and been closely involved in large, distributed SCRUM projects in years past. I’ve seen agile methods work significantly better than classical processes. This is probably why it’s now the most common development process in software that developers identify with in my experience. Consequently, I’m in a position to see some of the connections between business agility and social business, in all their many flavors. The connection isn’t trivial either. There are hard won lessons learned from agility that social business initiatives could certainly benefit from. Just as there are innovative new approaches to scale, transparency, process, and tooling that social business brings to the table, as extreme and radical as they may appear to agile folks, who are more used to being the harbingers of change.

Comparing Agile Business and Social Business

What’s the point of connecting these two approaches? Because they can learn a great deal from each other. Agile methods can be updated and modernized from what social business brings to the table, and social business can apply some maturity and rigor to what it does, as appropriate. This I believe is a fruitful exercise for both disciplines and is one I summarize below.

Agile Business and Social Business: Side-by-Side

Keeping in mind that some agile process purists are still on the fence about applying the methods more broadly, the focus here is on agile processes of any kind as applied to general people-based business activities. Some processes are more amenable to agility, just as some are more amenable to social business. In general, however, the less collaborative, more rigid, and user-isolated a business activity is, the less applicable either agile or social media methods will be to it. However, if you have a complex, open-ended, and outcome-oriented business process involving many people, especially including those that it most directly affected (typically, the customer, internal or external), then both approaches represent the very best ways that we know of today to deliver successfully on them.

As you’ll see, agility and social have much more in common than they have differences. Here’s my take on how they break down:

  • Coordination Instead of Control. Both agility and social eschew using centralized hierarchies to achieve control. Instead, as Brad Appleton has long recommended, they both work best with autonomous, adaptive, and accountable actors. The first two are something that applies very much to social business, while the latter is something inherent in any social environment that has a strong identity system (which, unfortunately, not all do.) The lesson here is that emergence (an important and prized aspect of Enterprise 2.0) and self-organization are very similar and are shared as core values in both disciplines.
  • Designing for Change/Loss of Control. This is something in which agile is inherently stronger than nascent social business methods, which are just wrapping their heads around this. Not killing emergence requires the acceptance that external change is a desired constant and should be responded to productively to get the right results with the resources at hand. Ignoring that requirements aren’t what the customers need, that the planned outcome of a business process won’t be very useful, and other denying of reality is anathema to both disciplines, but is more formal and well-defined in agile methods. Social business does recognize that the majority of productive output is on the edge of the network and largely outside of formal control, but other than measuring community sentiment, that’s often as far as it goes in terms of responding to new ground truths. The best results in both approaches are when there are tight feedback loops to all stakeholders and that a planned response to that feedback is the central factor in re-engagement with the project or online community in the next cycle. For additional insight, read Tim Leberecht’s great overview of this issue, titled Openness or How Do You Design For the Loss Of Control.
  • Frequent Work Cycles. Agilists call work cycles iterations. Social business doesn’t have as strong a notion of discrete work cycles because it’s essentially continuous and itself emergent, a more extreme version of agile when you look at collaborative work in social media environments such as crowdsourcing efforts or Social CRM. In either case, the project and/or community must assess and respond to change at the end of each iteration, or do it continuously which is more common in the case of social business processes.
  • Open Contribution. Social business works best when the broadest possible invitation is made for stakeholders to get involved and contribute. Agile processes tend to define valid contributors to a smaller audience, though it’s entirely up to the project and varies widely. Social business realizes that the “anyone can contribute” default stance is one of the most powerful concepts in recent business history (as only those that care about the outcome will get involved, yet that’s almost always many more people than you thought.) Agile methods could learn from the extreme openness and fewer contribution boundaries and barriers in social media. I made the point in my speech that open source software has proven this in the real-world better than any a priori speculation about what works best ever could.
  • Working Results. It’s long been the mantra that agile processes value working software as soon and often as possible at any given time in the project. When the requirements are right and/or the budget runs out, you have the best possible output, ready to use. Social business is not yet so disciplined in its directed outcomes, yet by its very nature is always up-to-date with the latest revisions, contributions, or updates.
  • Continuous Processes. While agile business typically recommends iterations, milestones, review steps, and other processes to happen as often as they provide useful course corrections (typically every few days, or weeks at most), social business is even higher velocity and larger scale. Consider real-time processes that run around the clock globally involving tens of thousands and sometimes a million or more simultaneous contributors. This means the scale and velocity of social business often outpaces agile by two to four orders of magnitude. Social business could learn a lot about continuous in the small (builds, releases, work product iterations, etc) while agile can perhaps learn to scale and go even faster in a way it never could before.

This comparison just scratches the surface but is a useful start. I’m happy to be called out on any details anyone feels like I may have gotten wrong. I do believe that agility and social business go hand-in-hand and that we can cross pollinate the two to create far stronger results that either can by themselves today. Put simply, agile business and social business are two sides of the same coin. That may be a controversial statement to some but I believe that as far along as these two disciplines have come in parallel, they will do better with more explicit and effective connection. Our organizations (businesses, organizations, government, etc.) will almost certainly benefit.

What do you see as the commonalities and differences between agility and social?

Filed under Social Business, Social Media, Strategy, Trends and Statistics Tagged with , , , , , , , , , , , , , ,

On Web Strategy

June 29, 2011 6 Comments

Global Use of Social Networks and E-mailMy old Web 2.0 blog is finally closing due to hosting issues so I’m moving the conversation here going forward. I’m also relocating my large library of old posts and visuals to this blog over the next few weeks. Collectively they’ve had over 12 million views and are witness to an amazing time in the history of the Web, business, and society. 

It’s been a profound era of change by any measure, and one that we’re fortunate to live through. Over the last seven years we’ve seen the rise of social media, Web 2.0, Enterprise 2.0, and now social business. Put simply, the Web-based world has changed nearly everything about the way we globally connect together and create shared value. For now, this blog as well as ZDNet, ebizQ, Dachis Group, and Hinchcliffe.org, will be where I will continue exploring the emerging edge of business and technology, with this blog focusing more on the Web itself and my other channels focusing more on the enterprise aspects.

I’m renaming this blog to On Web Strategy because I’ll continue to focus on the way the Web works, particularly what makes it so powerful for those that understand it. There’s lots of exposition available online about the changes taking place today, but not enough exploring the specifics of how Web-based networks are driving pervasive change. Among the endless information streams available now, there’s still room for more thorough examination of the way the Internet is co-evolving into the single most powerful platform for self-expression in history. I believe this is true whether you’re a person or a business; there is no other place nearly as compelling, innovative, valuable, or relevant today. And the Web itself, far from reaching maturity, remains the single most exciting — and most rapidly moving — place to improve and transform how we live and work.

Knowledge Work Dominates U.S. Labor by SectorWhile my primary interest lies in connecting the two too-often loosely connected roads of business and technology, I think the increasing convergence between them is where much, if not most, of tomorrow’s opportunity resides for those that can successfully overcome the obstacles. For its part, social media has become a leading force for value creation in the world along with the rest of our digital footprints, with which we are now creating the richest and most vibrant record of our times. Visionary enterprises are now seeing how to tap into this and join in partnership with the rest of the world to create entirely new types of products and services together with their customers. From the data, it’s clear that social co-creation and other new and closely related models, such as crowdsourcing, are genuinely changing the nature of human activity, especially value creation, control, ownership and other less-tangible qualities like trust, openness, and understanding.

While some organizations and individuals will continue to debate the actual magnitude of the changes that the new low-barrier, high scale, and virtually free tools of self-expression are fostering today in the large, there’s little doubt looking at the macro trends that momentous things are happening. I have certainly been asked, “are these changes as big as the printing press? As big as mass media? How about personal computing” Yes and yes and yes. And much more significant in terms of actual change wrought. I’ve included here a few recent pieces of my research that illustrate the case that the business, cultural, and societal landscape is being remade right now, and doing it quickly in some cases. This includes the following data points:

Trends and Drivers of Work and Life Today

    Portion of the Web That's Peer Produced

  • Social is how we communicate today. There has been a generational change of communication from point-to-point (e-mail) to social in four short years (see first figure above). Certainly e-mail is in decline and will be with us for a decade or two, but it has dramatically lost its prominence and relevance in recent years. For now, social media is the way we increasingly prefer to connect and work together. Traditional organizations have had some trouble catching up to these trends, but I’m finally seeing evidence that they’re doing so.
  • Knowledge work is the driver of our world economy. People-based activities centered around the creation and exchange of information (financial services, real estate, education, media, governing, etc.) are what modern economies are built on (see second figure above.) Methods that greatly improve the creation and exchange of information will have inordinate value, especially models that optimize for it, i.e. social media and by intent, social business. Knowledge work is about 60% of the labor force today and growing steadily. The less valuable service economy is growing as well and is also a beneficiary of these new and emerging forms of communication and collaboration.
  • Peer production is now the primary motive force for creation and sharing. Centrally controlled models for production in business and government are much less powerful and inordinately more expensive. The creation of information on the “edge”, by individuals, has transformed traditional media as well as the Internet: It’s now made by us, with approximately 80% of information on the Web (see last figure, right) now coming from user generated content. In the future, sensors and other information generators may outpace us, but for now the most important trend is that productive capability has moved decisively into the hands of us out there in the long tail.

What does this all mean? That’s what this blog was developed to figure out. Come back and visit. I’ll be exploring Web strategy and cutting-edge innovations that are likely to have significant impact to the way we run our organizations and live our lives. Please drop me a line if you want to share your ideas, or better yet, contribute them in comments below or in your own blog or social network.

Filed under Crowdsourcing, Peer Production, Social Business, Social Media, The Web, Trends and Statistics

The K-factor Lesson: How Social Ecosystems Grow (Or Not)

January 5, 2010 1 Comment

Recently for some work that I’m doing I had to revisit the techniques for creating successful online social environments.  This is a surprisingly deep and nuanced topic that we as Web application architects or enterprise social computing practitioners are just now fully beginning to grasp.  The subject matter itself runs the gamut from key conceptual underpinnings — esoteric topics like systems theory and network effects — to the daily grind of understanding and managing the needs/expectations of an often difficult-to-control community of actual, live people.

In general, I’ve found that the ideas behind social systems themselves are clean and elegant while dealing with their practical realities can definitely be messier and many find them annoyingly unpredictable as well.  In the end, online social ecosystems are invariably a fascinating mix of the classic vagaries of technology and people.  However, despite the apparent science, making them grow into something undeniably successful is still very much an art form.

Interestingly, there’s no real name for this skill yet and it’s an important — even vitally strategic one — for any organization that has to engage with a lot of people over a network. And that’s increasingly most of us in these days of the ever-present Facebook news feed, Twitter microblog, and workplace Enterprise 2.0 environment.  It also means that creating a workable online community requires a good dose of hard-nosed engineering as well as highly effective “soft” skills in UX design, social architecture, and community management. For it to really work — to have a vibrant and growing community — you have to seamlessly connect both of these worlds: a well-crafted social environment together with the people that will use it. The rewards for doing it successfully speak for themselves: Ultimately, businesses and communities are groups of people, and if they produce more value for each other together than they can individually, then there is something in it for everyone. And the online world lets us create these entities far easier, more quickly, and with larger populations than ever before in history.

Related: Network effects are just one of several dozen “power laws” that social architects must know today.

We used to call this process “founding a business” or “creating an organization”.  We would call the people that did this entrepreneurs or occasionally philanthropists if their goal was non-commercial. But this terminology doesn’t seem to apply as much to what’s happening now.  For one thing, communities are organized differently and frequently have other motivations for participation than the usual one for traditional businesses: the worker/employer relationship.  Second, the output of large distributed online communities — especially when focused on discrete outcomes — can greatly exceed the results produced by densely concentrated single institutions.  While we are certainly in the very early days of this phenomenon, I’ve frequently pointed to numerous examples of these new models for creating shared value.

So putting aside the socialism vs. capitalism arguments for now (they are increasingly brought up in this discussion, though why they don’t seem to apply here is the subject of a future post) the 21st century networked economy — powered by people and knowledge connected together globally at virtually no cost — has set free fundamentally new ways of innovating and collaborating for mutual benefit.  Specifically, it’s the rules for how these new mechanisms thrive and create value that is the object of discussion here.

Viral Growth of Social Systems: The K-Factor Lesson

For my own part, I’ve been fortunate to encounter ways to reduce the concepts for creating growing social ecosystems to a short list, the key ones which I’ll present here. Please be warned, some jargon is necessary, but I will explain it along the way.

How To Create Self-Sustaining Social Ecosystems: The K-factor Lesson

Like my 50 Essential Strategies for Web 2.0 Products, this overview cannot possibly be exhaustive.  It does however highlight the central idea behind all successful communities: They are either busy growing or they’re busy dying.  Gaining critical mass early on is another important lesson that we’ve garnered from the early Web 2.0 pioneers.  Finally, the aforementioned and mysterious K-factor is introduced and explained below.

  • Fiat and network effects are the two primary ways that social ecosystems grow.  The first is based on an explicit or implicit mandate of some kind.  An example of a fiat is when an organization requires participation in a particular social group, perhaps a committee or online community.  The second, a network effect, is when a social group has more value the more that other people are involved in it too (which is usually, but not always the case.) Keep in mind that the degree of value in each new member, or their contributions, is based on the structure or design of the social system and will vary greatly.  Also note that the fiat approach that is common in business today is a top down effort to “push” participation, while network effects are a “pull” method and tend to be more bottom-up and organic.  Background: Read more about push vs. pull systems. Critically, the degree to which a network effect is realized can be influenced by many factors not the least including the intrinsic nature of the social ecosystem itself and how it is connected to the rest of the network (the Web or your intranet.)  In general, network effects will ultimately be more successful than fiat for most purposes, especially since the use of social systems are so often made optional, even in business environments.
  • Network effects can be encouraged by promoting self-sustaining growth via feedback loops (aka virality).  One of the myths of the online world is that viral growth can’t be engineered. While it’s sometimes not straightforward, it can indeed be created intentionally. While cynical uses of virtuous growth cycles won’t produce results for long, the basics work best: letting any user improve the community by contributing knowledge, often to a lightly structured data set or encouraging them to invite their friends and colleagues.  In fact, any good social ecosystem will make it easy and rewarding to do so, such as allowing users to discuss, converse, jointly edit, or otherwise work together on common goals.  Stated another way, the future of software applications that don’t provide more value when more people are present in an interaction is probably going to be fairly short. A good place for more background on the lifecycles of systems (social or otherwise) is William Varey’s Unlimited Growth.
  • Measure your K-factor and keep it above 1.  The K-factor of an ecosystem is a statement of whether your network effect is self-sustaining or not.  A K-factor of less than one means that your organic growth level is falling (exponentially) and a K-factor of greater than one means that it’s growing naturally and again, exponentially.  How to increase your community’s K-factor? There are literally countless ways but allowing users to contribute to hard-to-recreate data set, adding user distributable widgets that provide useful offsite functionality, as well as integrating meaningfully with 3rd party social networks through their application model are a few of the more popular and effective ones.  I explored some of these distribution approaches in more detail a while back in my overview of the new distribution models of the Web.
  • The higher the social feedback loop intensity, the higher the breakthrough factor.  Feedback loops are created for example when a user invites another user to the community and then that user invites their friends and so on.  However, the quality of the feedback loop is a measure of how often it reaches outside of the community and how effective that outreach is (often stated as  k = e * i, where “e” is the efficiency of the feedback loop and “i” is the average number of invites per user.)  An individual user’s ability to affect the quality and intensity of the feedback loop is usually a measure of their social surface area, which I generally consider to be the size of their social graph x the number of online channels they use x the frequency of participation x the amount of influence they exert. If you have a social ecosystem with a lot of influencers or users that are very active online, they will clearly fuel the response to your feedback loops more effectively. The design of the social environment itself also has a major effect depending on whether it makes it easy to invite others or otherwise create feedback loops.  A breakthrough factor is achieved when the feedback loops rise above a certain threshold of attention, such as when multiple invites come from multiple persons over a short interval of time.  When this threshold is crossed for a prolonged period, the K-factor increases much more rapidly.  This rise can be self-sustaining (the so-called virtuous cycle) and can lead to a permanent and dramatic growth climb as evidenced by many of the popular social networks early on, such as MySpace and Facebook.
  • External “high impulse events” can be used in the short term as a catalyst to reach the breakthrough factor.  This was famously the case with MySpace which used a database of 50 million e-mail addresses to drive initial users to the site, whereupon their feedback loops soon created a particularly strong breakthrough factor.  Traditional marketing is often used as the seed to drive the initial population of communities, but unless the K-factor soon rises above 1, the long-term cost of this approach is usually prohibitive.  It’s worth noting that it all my research, I’ve never encountered a community that was successful long-term without naturally self-sustaining growth.  This is the K-factor lesson of this post’s title: You can grow any community in the short term using artificial means but it will only last and continue to grow on its own because of the inherent quality of the people and the knowledge that has accumulated.  That said, you must get your community growth primed in some way.  High impulse events can include (by no means exhaustive) traditional marketing, paid incentives (expensive but Paypal was very successful with this model in its early days), and — particularly for business communities — seeding initial high value content.
  • Growth in a social ecosystem is not endlessly exponential and eventually hits a ceiling. Plan for it.  Typically described by the S-curve, it is encountered when you either fight an existing network effect or when resources are exhausted on the network.  While hitting the upper bound of the S-curve is desirable and denotes a successful system (Facebook is just hitting this now), it can also be an indicator of a failure or a bottle-neck in the feedback loop design.  A false S-curve is most often evident in my research when a community undergoes a major UX redesign and users have to find their way again, often unable to find and use the features that drive growth and sustain the community. Be aware of this and guard against the potential causes of premature S-curves.

I’ve written in the past about deliberately creating emergent phenomenon and then capturing some kind of value from it.  Like most efforts on a fixed scale of zero to the maximum possible result, there is a reverse bell curve effect, meaning that most people will get middling results, some will get very poor, and some will hit it out of the park.  From the projects I’ve been involved in, I find that the most successful social efforts are ones that are highly agile and willing to capture lessons learned early and often and then make changes quickly and do it all over again the next week.  The Web favors those who experiment, adapt, and evolve and thus should go your social ecosystems.

Good luck with your social media and Enterprise 2.0 efforts.  Please don’t hesitate to ask questions below or contribute your own wisdom.

Filed under Network Effects, Social Media, Strategy, The Web Tagged with , , , , , ,

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.  TWill Social Surpass Search?hat 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.

Web 1.0, Web 2.0, WebSquared Compared

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

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