What are the economics of relationships in The Relationship Economy?

In order to grasp the economic value of relationships, let’s take a look from a business perspective.

Kevin Kelly's Customer Control
Kevin Kelly (1998) suggests business owners:
1) Create what the customer wants
2) Remember what the customer wants
3) Anticipate what the customer wants
4) Change what the customer wants.

Before you judge the message, consider it in the context of a hybrid type of business, not a traditional business, and not a business in The Relationship Economy. Kelly’s message indicates that businesses control the relationship – do they? In The Relationship Economy, it will be the consumer that holds the controls, and they will hold the economic power, as long as they demand it.

Go Daddy's Money Spots
In a recent media censorship challenge, Fox Television rejected an advertisement that included references to a slang term for a woman’s “private parts.” The ad, at Go Daddy Hot Spot, was one in a history of risqué ads that seemed to get more “exposure” than they would have had they been aired.

Go Daddy had issues in previous years http://www.informationweek.com/hardware/personaltech/175700416 http://humor.about.com/b/2006/02/05/go-daddys-banned-super-bowl-xl-tv-commercials.htm but apparently isn’t getting the message . . . Or are they?

The company proudly lists the timelines for ad rejection from 2008, 2007 and 2006 on their website, and many bloggers have covered their adventure.
http://www.micropersuasion.com/2005/02/godaddy_ceo_fig.html
http://www.faniq.com/blog/Go-Daddy-Super-Bowl-Ad-Rejected-by-Fox-Because-it-Used-the-Word-Beaver-Blog-6107
http://www.socialmediatoday.com/blog/JDeragon/site/posts/?bid=25541
But only one that I found shows data to indicate that this was a bad move:
http://www.internetfinancialnews.com/financialblogtalk/news/ifn-6-20080208SalesGeniecomGoDaddycomDamageBrand.html

What do you think?

The Denver Post - Work, connected by social networking

Another company who gets it! A reecent article in The Denver Post - Work, connected by social networking - reports "'Web 2.0 and social networks, blogs, wikis, tags, all shifted the way we can all connect and share with each other,' said John Kembel, co-founder and chief executive of HiveLive. 'Either from a competitive point of view or the effectiveness of doing business with each other, people realize they need to bring different communication tools to the business.'"

This in a services organization . . . what a concept! I am sure that they considered the "wasted" time spent by employees "trading photos and recipes," and realized that community building was far more important than bean-counting.

As one of the team leaders noted, ""It's kind of like walking into someone's office or cubicle, where you can see pictures and other things about them."

What do you think?

Innovation: Corporations Embrace Social Networking

I think we may be making some progress! According to Fox Business, in Innovation: Corporations Embrace Social Networking: "Increasingly, corporations and business professionals are embracing this new way to communicate and network. From established corporate social networking Web site Linkedin, to upstart SkyLounge (which went live last week) to embedded social networking in human resources applications, companies across the country are trying to capitalize on this burgeoning market.

And it's all being driven by executives at the highest levels of corporations."

Hopefully, they have read our post about "The CEOs new social network strategy"

The next big things in wireless | CNET News.com

The social-networking craze has come to the mobile phone, and the topic promises to be a hot one at Mobile World Congress. There's a whole session dedicated to social networking at the show. And there will likely be a lot of announcements.

Let's hope some of them are aimed at making social networking useful for business!

The next big things in wireless CNET News.com

What do you think?

Is it copying or collaborating?

Copying or collaborating?

In school, it’s called copying, and it’s wrong. In business, it’s called collaborating, and it’s expected and rewarded. When two people work together to submit the same work product, how should it be received? It depends on the 1) assignment, 2) agreement between the parties, and 3) recipient's expectations.

Individuals are moving more and more toward collaboration, especially in the business community. We’ve seen team-building become almost an art form in business, and the focus on forming short-term business teams appears to be a foregone conclusion during negotiations. So where do we draw the line?

If we can’t monetize it and ensure we get our share, we aren’t likely to go for it!

Knowledge in organizations is (rightfully) treated like it has value. But, as with other things of value, the usefulness of knowledge depends on how we process it. There are apparently two perspectives, or schools of thought, on the handling of knowledge in organizations.

One perspective is that knowledge consists of objects that can be created, collected, stored, retrieved and reused. This model suggests that knowledge needs to be codified in order to be effectively managed. This model can be understood using a "conduit" model of communication (Heo & Yoo, 2002).

The second perspective is that knowledge in organizations is socially constructed and collectively held. It is malleable, uncertain, and embedded in work practices and social relationships. This model is more in line with the “communities of practice” model (Heo & Yoo, 2002).

Many organizations are still concerned about getting an immediate return on investment for the knowledge they create, maintain, and share. The Relationship Economy won’t work that way, so now would be a great time for us to learn to get over this antiquated business practice. We may all agree in the importance of fostering a collaborative culture within our organization, but just how do we go about doing so?

Tapscott and Williams, in their book Wikinomics, identified four steps we can take.

•Encourage and reward openness in networking for all members of the organization.

•Create peering environments that foster self-organizing human connections for collaboration and innovation.

•Allow radical sharing to expand markets and create new opportunities.

•Think and Act globally as an individual, team and organization.

(Tapscott & Williams, 2006).

To achieve Openness means ensuring a culture of candor, flexibility, transparency and access. How many of today’s workplaces can accurately be described by these words? Openness means making your organization’s boundaries porous to external ideas and human capital. It means being open to the talent pool that lies outside your walls and sharing access to corporate performance. Moreover, it means seriously participating in the global knowledge economy (Tapscott & Williams, 2006).

Peering is also important in the establishment of a collaborative culture. Peering results in the creation of a horizontal organization that is often unrivaled by hierarchical organizations in speed of solution deployment. Looking at some examples of peering may give us an indication of how it can be accomplished.

•Marketocracy is an organization that uses collective intelligence on virtual stock portfolios. Marketocracy is a research company whose mission is to find the best investors in the world and then track, analyze, and evaluate their trading activity. They claim to have beaten the S&P 500 Index in 8 of the 11 quarters since inception http://www.marketocracy.com/

•Wikipedia is a free multi-contributor online encyclopedia. Wikipedia is written collaboratively by volunteers from all around the world. Unlike a paper reference source, Wikipedia is continually updated, with the creation or updating of articles on topical events within seconds, minutes or hours, rather than months or years for printed encyclopedias. http://en.wikipedia.org/wiki/Wikipedia:About

•Linux is a Unix-based operating system with shared infrastructure and resources. It was originally created starting in 1991 by Finnish programmer Linus Torvalds with the assistance of developers from around the globe. Linux runs on a wide variety of hardware platforms, from huge mainframes to desktop PCs to cell phones. http://www.linux.com/whatislinux/

Peering succeeds because it leverages self-organization. The natural self-organizing behavior of humans suggests that self-organization should be expected in our society. Self-organization can provide a platform for a decentralized, distributed, self-healing system, protecting the security of the actors in the network by limiting the scope of knowledge of the entire system held by each individual actor (Self-organization, 2008). Usually the growth of such networks is fueled by an ideology or sociological force that is adhered to or shared by all participants in the network.

Radically sharing Expanding markets

As any business model demonstrates, expanding markets create new opportunities. These opportunities are beneficial, and often require insight into the local business culture. They are also likely to require the sharing of duties among people who haven’t worked together before. In order for these relationships to work, there has to be an agreed upon comfort level between the participants.

Technology has brought us a couple of excellent examples of sharing that we (as humans) might try to replicate in our endeavor to “get radical.”

Computing power sharing allows companies to harness the processing power in a multitude of computers and combine that power to accomplish tasks that before required expensive supercomputers (Kessler, 2003). Shared computing also lets companies, or researchers, shift computing power via a network to where it's needed, cutting costs and increasing computing productivity.

Sharing bandwidth (neighbors or neighboring companies) can also keep costs down. Talk to any (honest) telecom sales representative and they’ll tell you it’s rare (like with streaming media) that all the bandwidth is needed all at one time. Those office buildings who treat bandwidth like electricity or water and pick up the tab for their average tenants have the right idea.

Content sharing is becoming more and more useful on the Internet. Many of the once-stagnant websites we mentioned previously are now dynamic because of shared content.

The sharing of scientific and medical knowledge is how both communities got to where they are. The research may go on behind closed doors, but the results are only useful when they are shared with the community. How many other communities do you know that freely share their findings?

Thinking and Acting globally

Thomas Friedman was right - The World Is Flat. The only way that today’s companies will be able to maintain a healthy balance sheet tomorrow is if they focus on staying globally competitive. That means they need to devote time to monitoring international developments. They will have to begin (or continue) tapping the global talent pool. They will have to get to know the world.

The International Labor Office provides us with Eight Dimensions of Knowledge Sharing. Contemplate these as you decide whether you are prepared to engage:

• Create a supportive culture
• Gather internal experience
• Access external learning
• Expand communication systems
• Use creative mechanisms for drawing conclusions
• Develop an organizational memory
• Integrate learning into strategy and policy
• Apply the learning

(ILO, 2007)

Examine your tradition of knowledge sharing to see how many of these dimensions you use.

Tomorrow’s successful companies will need to find ways to Think and Act globally, even if their budget and management has them stuck with legacy systems and processes. They will need to become true global companies, with no physical or regional boundaries. They will have to learn to treat the world as if it was one company, run by truly global individuals. They will need to see remote as if it were local, and realize that we don’t need to be in the same room to collaborate (Tapscott & Williams, 2006).

Michael Powell, then Chairman of the Federal Communications Commission, said that change is inevitable. He made this statement after using Skype (Tapscott & Williams, 2006).

What do you think?

References:

Heo, D. & Yoo, Y. (2002). Knowledge Sharing in Post Merger Integration. Case Western Reserve University http://sprouts.case.edu/2002/020412.pdf

ILO (International Labour Office), (2007). Results-based management. Available at http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_084822.pdf

Kessler, M. (2003, January 8). High tech's latest bright idea: Shared computing. USA TODAY. Available at http://www.usatoday.com/money/industries/technology/2003-01-08-shared-computing_x.htm

Self-organization. (2008, February 2). In Wikipedia, The Free Encyclopedia. Retrieved 18:43, February 5, 2008, from http://en.wikipedia.org/w/index.php?title=Self-organization&oldid=188631462

Tapscott, D. & Williams, A. D. (2006). Wikinomics: How mass collaboration changes everything. New York: Portfolio

Knowledge Sharing in The (networked) Relationship Economy.

The way we share information has changed. We have transitioned from what was never called Web 1.0 to what is now called Web 2.0. We have partially transitioned from a reliance on printed material to the (at least partial) use of digital publication. Our organizations have transitioned from the industrial age use of Quality Circles to the Information age use of Communities of Practice. Many of these concepts are becoming keys to success in the knowledge-based economy (Tapscott & Williams, 2006).

But there’s a problem. With the ready availability of information comes the incentive to use the information for your own benefit without compensating the creator. We’ve seen the initiation of digital rights management in one form or another to assist those in the audio and video business in collecting royalties. Colleges and Universities have seen a variety of software tools that comb the Internet to check originality of material. All this leads us to ask the question, “How does knowledge sharing work in The Relationship Economy?"

What edition of the web are we on?

The previous era was never called Web 1.0 because no one realized there were going to be so many drastic changes that would so dramatically alter the engagement paradigm. In a relatively short period, we transitioned from the “surfing” of websites to get information to the practice of immersion in a collection of interlinked computing platforms that serve us in a way not dissimilar to software on our local machines.

The Web 1.0 period ranged from about 1994 to 2004. Websites were characterized by the requirement for designers (webmasters) to provide all the updates. Guestbooks that worked a lot like a physical bulletin board, were about as close as these static sites got to interactive. These sites were a place where we could go to get stored information.

Web 2.0 came up on the radar screen about the time the phrase was coined by Tim O’Reilly, founder of O'Reilly Media to describe “the web as a platform.” Webmasters now have shared content update responsibility with their readers and users. Instead of static pages, these pages have dynamically generated content, and provide a place where people can meet and interact. This space is typified by social-networking sites with interactive posting areas, wikis, and blogs. Web 2.0 websites allow users to do more than just retrieve information.

Traditional knowledge sharing medium

For many years, we have shared knowledge using the written word. This is often seen as a reliable method, and is usually preferred to passing on information verbally. In recent years there has been a transition (in some areas) from printed media to digital. Though preferences for one or the other are as unique as the individual, there are some clear benefits in both cases.

The Print publication era is still with us, though it has undergone many transitions since the invention of the printing press. It is characterized by places where information is gathered, sorted and disseminated -- libraries and other information warehouses. The process of searching for printed material is a rather cumbersome and slow process. In many cases, it requires more physical action than actually accessing the material. We have to plan for time to read, and we are inclined to uni-task – just read, with very little else going on.

The Digital publication era provides a much different experience. Whether on the public Internet or in a local database, the process of searching, retrieving, and accessing material is limited only by the speed of our connection. Digital publication has redefined what we used to call bookstores and libraries. We are able to read whenever and wherever there is time and opportunity

Quality assistance

Groups of people have always collaborated to assist each other. In recent years, we have seen a transition of this practice from physical meetings to assist the organization to virtual meetings to further the profession. Quality circles and communities of practice epitomize these different approaches.

Quality Circles are a group of workers who meet to discuss improvements and make suggestions to management. The intent often focuses on the quality of output, in the content of organizational performance. Quality circles are known to motivate and enrich the work lives of employees (Quality circle, 2008). These groups are usually limited to a specific organization, and rarely focus on extra-organizational issues.

Communities of practice describe the process of social learning that occurs when people who have a common interest in some subject or problem collaborate over an extended period to share ideas, find solutions, and build innovations (Community of practice, 2008). Communities of practice are usually formed within a single discipline in order to focus efforts in sharing knowledge, solving problems, or innovative ventures, but multidisciplinary participation provides an advantage in these efforts because of the expanded focus and even holistic goal that can be achieved (Community of practice, 2008). These groups often look to challenges common to many organizations.

Quality vs. Quantity

As we have mentioned previously, there are limits to the number of people we can effectively manage and communicate with. When building networks for knowledge sharing, we will see more of a communities of practice design, where a larger group of people converse with the group. It is important to keep the intent for building in focus, and to share the intent with those we invite to join us.

Though little research has been done in this area, surely there is a limit on how big we can build and still have a useful network. Robin Dunbar, an Oxford anthropologist, is often sited by those who are concerned about network building effectiveness. His most noteworthy work (in 1993) is often used to support the notion that we cannot have a functional network above 150 connections. It should be noted that Dunbar’s limit was derived from a study of social groups in nonhuman primates. Dunbar, who reportedly does not engage in social networking himself, says that social network sites could "in principle" allow users to push past the limit (Bialik, 2007). "It's perfectly possible that the technology will increase your memory capacity," he says (Bialik, 2007).

But there’s likely a cap on the effectiveness of our networks when we add people just because we can. At some point, people feel used (as just a “number”), and word gets out in your community. Nonetheless, if done right (and for the right reasons), it is possible to build a functional network of hundreds of people. The key is on learning the basics of networking, where very encounter is an opportunity to:

•Add connections

•Strengthen existing connections

•Connect your connections

That said, we should make a habit of regularly auditing our connections

•As they affect the individual

•As they affect the larger organization

•As they align with objectives

These audits may result in additional connections, or they may result in a form of “culling” of our network. In any event, we should build our networks as a place where knowledge is freely distributed and treated with the respect it is due.

What do you think?

References:

Bialik, C. (2007, November 16). The Numbers Gut: Sorry, You May Have Gone Over Your Limit Of Network Friends. Wall Street Journal (Eastern Edition), p. B.1

Community of practice. (2008, February 1). In Wikipedia, The Free Encyclopedia. Retrieved 20:18, February 4, 2008, from http://en.wikipedia.org/w/index.php?title=Community_of_practice&oldid=188459226

Tapscott, D. & Williams, A. D. (2006). Wikinomics: How mass collaboration changes everything. New York: Portfolio

Quality circle. (2008, February 2). In Wikipedia, The Free Encyclopedia. Retrieved 20:19, February 4, 2008, from http://en.wikipedia.org/w/index.php?title=Quality_circle&oldid=188527357

Share and Share Alike in The Relationship Economy

Sharing Knowledge can and does occur in our social networks. We’ll cover these more later, but for now let’s look at how the two can intersect.

•Knowledge is central to economic development with new technology.

•The development of new technology doesn’t just happen, it depends on initiatives.

•Development begins with the recognition of a need, and it results in change

• Change to the way we do things.
• Needs are often recognized when a few people get together and discuss their wants and desires.
• This happens often when people network.

•Self-organizing networked social systems generate shared knowledge

•This shared knowledge can benefit many of the network members. The only thing that limits knowledge dissemination is the method used to transfer the information and the limitations or restrictions placed on it by those who hold the knowledge.

•The Internet circumvents imbalanced relationships by removing restrictions for those who seek information.

•How many industries have we seen opening up since the Internet became an integral part in so many people’s lives?

•Automobile sales were one of the first to experience the infiltration of informed customers, thanks to Edmunds and Kelly Blue Book

•The insurance industry has likewise been affected

•Mortgages and other loans, stocks and other investments, even simple banking transactions can occur with an institution we never physically visit.

•The medical field is experiencing an increase in informed patients with companies like WebMD

•And there are many more, and more to come.

So what’s in it for me?

In The Relationship Economy, the sharing of knowledge (like the sharing of many other factors) will produce revenue. Another way of saying that is by sharing knowledge you are engaging in economic development. Let’s examine economic development from a two different perspectives.

Personal economic development benefits the individual, who must acquire and implement the knowledge, and their family, who benefits from contributions by all of its members. We are all part of an organization of some kind, so let's look at it from a wider perspective. Organizational economic development benefits the smaller groups, like one’s team or section, which also benefits the individual (and their families). Economically benefited individuals and groups ultimately benefit the whole organization. And from an even broader perspective . . .

Community economic development starts at the local level, where projects including workforce education and development are launched and nurtured so they can raise the income of those (individuals) in need. At the state level, economic development includes a variety of cooperative projects and strategic expansion initiatives. Sometimes there are regional developments that engage in economic stimulation – often these are cooperative operations with private and public organizations. When economic development occurs on a national scale, there are multitudes of players involved. Projects at this level take a significant amount of planning

But we don’t like to change!

It’s difficult to get people to change – even if it is in their best interests. It can be even more difficult to get groups of people to change. Ultimately, in order to provide an environment for change there must be an identified need.

Some examples of needs (or wants) resulting in change include:

•Open Source software

Open source is a software development method that uses distributed peer review and transparency of process. The need that brought about the The Open Source Initiative (OSI) was better quality, higher reliability, more flexibility, lower cost, and an end to predatory vendor lock-in.

The OSI is a non-profit corporation formed to educate about and advocate for the benefits of open source and to link different open-source community constituencies. http://www.opensource.org//

•Creative Commons licensing

•Creative Commons provides free tools that let authors, scientists, artists, and educators easily mark their creative work with the freedoms they want it to carry. Individuals can use private rights to create public goods: creative works set free for certain uses.

•Creative Commons can clearly identify copyright terms from "All Rights Reserved" to "Some Rights Reserved." http://creativecommons.org/

•Voice over Internet Protocol

•Voice over Internet Protocol (VoIP), allows you to make voice calls using a broadband Internet connection instead of a regular (or analog) phone line. Some VoIP services are proprietary, others allow you to call anyone who has a telephone number, and some services allow you to use a traditional phone connected to a VoIP adapter. http://www.fcc.gov/voip/

•Video creating and sharing

•A variety of new technologies, websites, and social network domains like Facebook and MySpace, has motivated large numbers of individuals to create videos and post them on the Internet. This trend crosses the individual and corporate space, and is expected to continue to grow. Current examples include YouTube, MySpace, and Google Videos.

•Blogging

A blog (web log) is a website where entries are commonly displayed in reverse chronological order. Many blogs provide commentary or news on a particular subject; others function as more personal online diaries. A typical blog combines text, images, and links to other blogs, web pages, and other media related to its topic. The ability for readers to leave comments in an interactive format is an important part of many blogs.

Network Power

The power of a network is related to the amount of knowledge held by the individual members, how much they share with others (and re-use from others), the number of others with whom they share and the capability of the network to generate new knowledge.

For an organization, the network power equation requires.

•Hire and retain people who have a high level of expertise (and therefore a large amount of knowledge).

•Hire and retain people who are natural sharers.

•Hire a diverse population of people so that the knowledge they have is varied; i.e., there is enough similarity so that they can understand each other, but not so much that they all know the same things.

•Put in place a work environment that encourages and enables knowledge sharing.

The bottom line is power is knowledge shared. Through knowledge management, you can increase the power of your organization exponentially to solve problems, to invent new methods, and to overcome physical distance.

(Smith, 2001)

Technology-Enhanced Synergy

Synergy happens when a group of diverse individuals gets together and collaborates. When forming a strategic team, it is important to find a variety of personality styles, backgrounds, and experiences. Only by interacting with a heterogeneous group can we experience the real power of collaboration. The results of these collaborations often contribute to the overall knowledge base. Previously established networks can also be used to disseminate this collective knowledge.

There have been many recent examples of technology-enhanced synergy. Though many of these exist in the software world, their application in similar models in the “real world” can be easily accomplished.

•Wiki is software that allows users to create, edit, and link web pages easily. Wikis are often used to create collaborative websites and to power community websites. Wiki is from a Hawaiian word for "fast." A defining characteristic of wiki technology is the ease with which pages can be created and updated. Wiki technology and style has been used to create

Encyclopedias

Dictionaries

Textbooks

News

Quotes Listings

Search Tools

Learning Resources

(Wiki, 2008)

•Open Courseware is a free and open digital publication of “high quality” educational materials, organized as courses. The OpenCourseWare Consortium is a collaboration of more than 100 higher education institutions and associated organizations using a shared model. The consortium includes:

Defense Acquisition University

Harvard Law

Johns Hopkins

MIT

Michigan State

UMass Boston

UC Irvine

Notre Dame

. . . and many others

Topics come from a variety of academic subjects, including Philosophy, Biology, Calculus, International Relations, Adolescent Health, and Statistical Reasoning are offered – completely free. (http://www.ocwconsortium.org/)

So where do we start?

What do we need to do to create a Knowledge Sharing Culture? We need to start with making knowledge sharing the norm in our life and the life of our organization (Gurteen, 1999). We need to regularly encourage people to work together more effectively, to collaborate and to share. This will help instill the habit in the lives of others in the organization, and will go a long way toward making organizational knowledge more productive

But remember:

• We are talking about sharing knowledge and information – not just information.
• We share knowledge to help the organization meet its objectives. We are not doing it for its own sake.
• Making knowledge productive is as important as sharing knowledge.
• Changing a culture is tough. It means seeing the world in a different way, and revealing hidden paradigms like the tacit acceptance that “knowledge is power”.

It starts with you!

• Knowledge sharing begins with the individual. Each of us has his or her job, objectives, and sphere of influence.
• Sharing is about being more open in your way of work and in your relationships with other people.

(Gurteen, 1999)

We can get there from here!

The most effective way to create a knowledge sharing culture is to start at our level. The higher up we go in the organization the more effective we will be in changing the knowledge sharing culture, but we have to start where we are. We must implement knowledge sharing and show others the results.

An organization’s knowledge assets include explicit knowledge (concepts, procedures, and routines) and tacit knowledge (experience, relationships, and know-how) (Chun, Williams, & Granados, 2007). An organization’s knowledge assets develop over time, and can be difficult to manage. Quite often the knowledge needed to solve a given problem already exists within an organization, but locating the person, document, or server holding the knowledge is challenging. Many of us have our own methods for knowledge management. Is your desk covered with sticky-notes? How do you retain knowledge that you know you will need some day? Hopefully some of the ideas you have seen here will help you in your quest for knowledge sharing!

What do you think?

References:

Chun, M., Williams, M., & Granados, N. (2007). Managing Organizational Knowledge: Insights offered from the Southern California aerospace industry for managing knowledge assets. Available at http://gbr.pepperdine.edu/072/knowledge.html

Gurteen, D. (1999) Creating a Knowledge Sharing Culture. Available at http://www.providersedge.com/docs/km_articles/Creating_a_K-Sharing_Culture_-_Gurteen.pdf

Smith, R. (2001, May 9) Knowledge Management – The Road Ahead. Presented at "Unleashing the Power of Partnerships", the 2nd Conference & Expo of the Staff Exchange Program of The World Bank Group, Washington, D.C.. Available at http://www.rgsmithassociates.com/Power.htm

Wiki. (2008, January 30). In Wikipedia, The Free Encyclopedia. Retrieved 19:38, February 1, 2008, from http://en.wikipedia.org/w/index.php?title=Wiki&oldid=187815038