Collaborating with co-workers and customers: Socialutions as a management strategy

We are, of course, social creatures, and many marketers understand that. Telecom companies have long encouraged us to connect with our friends & family (or Unity), call our network for free, and purchase family plans. Starbucks has built a business around a unique mixture of offline connections accessing online content “together.” Many email newsletters have the “forward to a friend feature.” And, a growing number of communities are using a mixed-use design that allows us to work, live and shop in one area.

We are naturally drawn to places where people we know congregate. As social networking sites have demonstrated, we go where our friends are, and we connect to people with whom we have something in common. So it’s pretty natural to think that managing an organization would include understanding the relationship dynamics of those who contribute in some way to the bottom line, right?

Not necessarily.

Many large organizations operate with a directed-association model. Departments are set up in hierarchical fashion, and we learn to work with or for people with whom we may never have come in contact but for our employment. Some enterprising organizations make attempts to capitalize on our personality styles, but how many try to capitalize on our networking styles? Do we examine the “fit” that new members to the team demonstrate in relation to those already established?

Not very often.

Caldwell, et. al., in studies of perceptions of “fit” found that as organizational change becomes the norm, adaptations by individuals is expected, though the ready embrace of change often eludes the observer. The change itself may be the variable, and many organizations are finding that change strategies should include possible reactions to change. So, if people initially deemed “a good fit” for the organization are suddenly experiencing major challenges, was the hiring process faulty?

Tomorrow’s employees are engaging in the social space now, and they are bringing this tradition to the workplace. They may adapt to the directed-association model, but they may also rebel. These are not members of the complacent generation(s) that took what they got and kept silent. These are the “kids” who have been asking why and what’s in it for me since they could talk.
So how do we incorporate them into our management strategies?

A recent example of the technology-enhanced ability to have everyone manage processes was described by Denis Pombriant in his look at Right90, which captures and tracks changes to the business forecast (all the things that can and should be forecasted in addition to revenue, so that a company can keep its supply chain informed of coming changes) in real time. With Right90, if a salesperson reports that a customer is doubling an order for 32-inch HDTVs, managers in sales and operations get alerted, and the full implications of the change in the forecast get thoroughly reviewed.

Pombriant observed that this kind of attention to detail gives every relevant person and department a seat at the table, and makes them accountable for bringing in the forecasted revenue in the forecasted product lines. Imagine this strategy being implemented in your organization!

Many small businesses have the idea of this kind of collaboration built in to their initial organizational cultures. Have you ever been to a diner where one person tells the other, “I’m going to the freezer, do you need anything?” The ensuing dialog is likely to result in an informal report of the number of a certain product remaining in stock, followed by a quickly calculated mental note by the person who orders these things. As the business grows, however, each position becomes more intense and focused, and it becomes decreasingly natural to see the operation as a system.

And that’s where the problem lies.

When all the participants in a system fail to see it as a system, each facet of the operation becomes disjointed. If not integrally connected, much additional effort is needed to catch up to at least temporarily unify the thought process for actions such as logistics, personnel, finance, and the like.

By implementing Socialutions as a management strategy, organizations can capitalize on the relationships and relationship connections of the people connected to them in some way. This naturally includes the employees and the organization’s leadership, and should include customers, clients, vendors, and others served by and serving the organization. These people all represent the company in some way, so why not acknowledge and try to affect the way they represent? As we engage The Relationship Economy, we need to find new ways to leverage technology to interact with people to solve real problems. Only those people, communities, and organizations who use this type of collaborative problem-solving model will emerge successfully. Those who choose to go it alone and use long-antiquated systems and applications will look back and wonder why they didn’t.

If these suggestions look familiar, perhaps you are seeing a similarity to team-building, which the social web appears to be well suited for. Team building in Asia has been part of the culture since long before W. Edwards Deming traveled to Japan to implement Quality (and plan-do-check-act) in the post-war rebuilding effort. Global team building has enjoyed mostly steady growth as organizations expand an a variety of travel opportunities contract. Socialutions as a management strategy requires using a group (team) of people (stakeholders) to be accountable for the process.

What do you think?

Caldwell, S.D., Herold, D.M. and Fedor, D. B. (2004). Toward an Understanding of the Relationships Among Organizational Change, Individual Differences, and Changes in Person-Environment Fit: A Cross-Level Study. Journal of Applied Psychology, 89(5), 868. Available at http://www.ncbi.nlm.nih.gov/pubmed/15506866

Pombriant, D. (2008, May 7). The Dawn of Social Networking 2.0., ECT News Network – Tech News World. Available at http://www.technewsworld.com/story/web20/62896.html?welcome=1210165490

Completely and totally unscientific . . . but Facebook beats LinkedIn and Myspace for growth

. . . and, I'll bet more Twitterers have Facebook than LinkedIn and more Facebook than a MySpace (or at least they talk about Facebook more).

(corrected)

According to Twist, which displays trends on Twitter, Facebook is discussed a lot more than MySpace (at least in the past week).

And there's a whole lot more being discussed about Facebook than LinkedIn, in the same time frame, too.

Is that relevant?

I think it is when you look at the March 2008 statistics, that show MySpace has or is reaching the saturation poinnt and Facebook is doubling year-to-year (no, I didn't plot this out month-by-month). According to MarketingCharts.com, MySpace is up 8%, while Facebook is up 98%. LinkedIn managed a 319% increase in the same period.

To confuse these results even more, see what we, the users, reported to be the 100 best Web 2.0 applications. Over 1.9 million votes were cast to select these Webware 100 winners in the Social space:

What did we miss? Perhaps the OpenSocial initiative is working better as a marketing strategy than an implementation plan? :-)

So what has changed in the past year, since the 2007 Webbys?

What do you think?

The online version of office suites, or a hostile takeover?

In a previous post, we noted a tendency toward focusing on specific social networking sites, and suggested that in the future many of us will simply be using what was "learned" in these sites to just be more social -- out in the open, on an Internet without walls. The people we relate to, the relationships we have with them, and the use of available communication tools are the keys to success in this space, not “the site.”

I'm looking for Unified Communications 2.0, and we aren't there yet.

In the meantime, it is important to find transitional points, since we don't yet have a functional cross-platform personal portal, where all of our documents, email accounts, instant messaging clients, microblogs, and friend updates can converge with our videos, personal learning, and VOIP communications accounts.

So where do we find this virtual office suite?

Steve O'Hear recently highlighted the Facebook apps he calls a few shiny gems that can help you turn Facebook into a super-charged personal assistant. Steve listed and discussed many third-party applications that promise to help run your business, including accessing your LinkedIn contacts. But in this time of economic uncertainty and build-it-so-you-can-sell-it mentality, do we really want to invest time in a Third Party App?

I know that Jeff Pulver recently alerted the world to his Facebook conversion, but should the rest of us follow along? He contrasted the experience of Facebook to LinkedIn by identifying the former as a wealth of opportunity for vibrant interaction between users and groups of users, and at once more rewarding and more nuanced and meaningful. And Jeff is still living on Facebook, though his "community" appears to be limited in number by Facebook (a month or so ago he was maxing out at 5,000), and community (they have a limit on the number of groups you can join, as well).

So should we move all our stuff to Facebook? Andrew McAfee (and others he credits) posted an overview of how Facebook can be used as an organizational intranet. Ultimately, I think highly sensitive documents could be linked within Facebook and hosted on a protected server, but security is not my only concern. Facebook for business is still close to Web 2.0 (or as Doc Searls calls it, AOL 2.0, or AOL done right). So what do we do when we truly have a virtual presence that is unrestricted by the gated community mentality? What's the cost of conversion then? I'm all for mashing up as many parts of my life as possible, but I'm not convinced Facebook (or LinkedIn, or any other gated community) is the place to do this. What happens when they make decisions based on their needs, and not on ours?

What do you think?

Social Network Portability is coming, with a twist

Microsoft appears set on getting into the social space, whether by owning it or facilitating it. It's kind of like "let someone else build it and if they come we'll go get them and invite them over." Now it appears they are going for the Mall approach, rather than the franchise or leveraged buyout approach. Or at least, so it seems.

In a prior post, we noted Google's opening the cross-platform communications mode with OpenSocial, and the many developers working on an aggregator for users. Could this latest venture serve as an aggregator not just for individual profiles, but also one for groups? We are still looking for a mobile solution, too . . . waiting to be invited to participate in the mashup of Dashwire and ProfileLinker!

Microsoft is working with Facebook, Bebo, Hi5, Tagged and LinkedIn to create a safe, secure "two-way street" so we can move our profiles and relationships between social networking sites. It's a little late for that, isn't it? How 'bout something that will synchronize what we have, or maybe even a business and personal profile, with by-individual or by-group access? We've already copy-pasted our "About Me" and a variety of likes and quotes and . . . What happened to the Open Social adventure that Facebook was avoiding making a commitment to?

Microsoft has been using SharePoint, with support for wikis, blogs and RSS feeds, with privacy and security so everyone can feel secure, for enterprise social networking, but now they are going after those who aren't connected by their internal company relationships. And they are proposing that we help them by using Windows Live Messenger to connect with Facebook (available now), Bebo, LinkedIn, Hi5 and Tagged (coming soon). The strategy starts with inviting your friends and connections to connect on Windows Live Messenger (not sounding a lot like portability here -- I am thinking "import from").

So I tried the only currently available option -- Facebook. A login to Facebook screen (with Windows Live logo but a Facebook URL) popped up, and the first try on login failed (hmmm, a phishing site?). But the next screen had the Facebook logo, and it logged me in just fine. I didn't however, see where I could add anyone to an invite list, so . . . I gave up and started blogging.

I was using MS Internet Explorer on XP on a Dell, so maybe that's what the problem was. Next time I find myself with nothing to do but beta-test for Microsoft, perhaps I will try Firefox on Leopard on a Mac.

I'm not sure that this will be a profitable venture for Microsoft, but it's worth a try. We know that owning a centrally located piece of real estate and inviting big names to stake their claim there has worked in the real world in the past. Microsoft has shown their ability in Web 1.0 to make money, and it's apparent that no one in social networking has figured out how to do that yet . . .

So we'll just keep beta testing while Microsoft keeps building . . .

Note that when I recently installed FriendFeed and Twitter on Facebook, it went off without a hitch. They obviously aren't related to Microsoft.

What do you think?

The Nail don't hurt bad enough

Today I concluded a multiple-session meeting with a company that we were considering a partnership with, and I was reminded of a story I used on many a sales call back in the day . . .

Ben went to visit his neighbor, who had a front porch that extended across the entire front of his house.

On the porch sat the neighbor's dog, howling . . .

whooo-whooo-whooo

Ben asked his neighbor what the dog's problem was . . .

whooo-whooo-whooo

The neighbor said, "he's sitting on a nail."

whooo-whooo-whooo

Ben asked why the dog didn't just stand up instead of howling

whooo-whooo-whooo

The neighbor said . . . The nail don't hurt bad enough yet . . .

Does your nail hurt yet?

How long will "social networks" be around, and how long is the tail?

A recent article in my not-so-favorite form of media, the NYT - addressed: Why Old Technologies Are Still Kicking. The article identified the common traits of survivor technologies as 1) some enduring advantage in the old technology that is not entirely supplanted by the new, and 2) business decisions that invest in retooling the traditional technology, adopting a new business model and nurturing a support network of loyal customers, industry partners and skilled workers.

Is that what's happening with social networking?

In The Roaring 2000s, Harry S. Dent made some interesting observations and predictions. He missed the boat on a couple of them (like the Dow reaching at least 21,500 by the year 2008 -- it barely passed 14,000 in October 2007 and hasn't been the same since). In all fairness, there have been some significant unpredictable events, but take a look at what Dent was seeing here. Dent found recently that it was typical to have a major crash and shake-out as new technologies approached 50% penetration on the S-Curve, and in 2006, he forcasted that most stocks will soar to unprecedented highs—most likely to around 20,000 on the Dow by 2009.

Dent saw and examined the impact of new technologies on the S-Curve, and I think that's critical as we examine the longevity and enduring advantage of technology like social network or networking sites (not to be confused with the activity of social networking, which doesn't need a specific site). Boyd and Ellison (2007) define social network sites (as distinguished from social networking sites) as web-based services that allow individuals to (1) construct a public or semi-public profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system.

Dent explains the growth catalysts of the S-Curve like this:

The first comes as many early stage market entrants go under as the product first moves mainstream around 10% market penetration and the field of mainstream potential options narrow down. Then there is a second and most violent shake-out as the product moves towards 50% penetration and growing competitors over-expand. That shake-out shifts market share further to the strongest leaders who bring costs down further through larger economies of scale. Once the industry matures between 90% and 99.9%, foreign or new competition often sets in and even dominant leaders have to fight to maintain market share in an era of declining growth and margins.

So where are we with social networks?

I think it depends on how you are looking at these sites. Social networking sites as they are used now ultimately serve to identify the changes in our approaches to socializing, especially dependent on the stage of life we are in. Take a look at three of these sites (my reasons for being on each of them were covered previously). We've got the mall (of MySpace), the Coffee Shop (of FaceBook), and the Chamber of Commerce function (of LinkedIn).

There is a likelihood of traditional social use -- both with MySpace and the mall.

Youth (and some adults) enjoy the time spent in "hanging out" at the mall. That's where groups of friends go to the mall to show off recent acquisitions (clothes, mobile phones, etc), to hang out with friends, and to hang out with friends of friends you can't connect with in your neighborhood.

Adults are more likely to meet in Facebook or at a coffee shop

The local coffee shop is a place way from home, perhaps an office-like environnment that can be used as a place to work or a place to relax. It's a short term stop between other personal and professional errands. It's a neutral, friendly place for informal conversation for business or pleasure. And most of them are more than a coffee shop.

People with business on their mind are more likely to go to LinkedIn or a Chamber of Commerce function.

LinkedIn has mall-like qualities, as does a Chamber of Commerce mixer. People often gather (group) together to chat, plan, or introduce others, and it's pretty clear why they are there (it's likely there's a clue on their nametag or profile). LinkedIn allows us to share details about each other and our professional interests, and provides a useful venue for introducing others.

LinkedIn also has coffee shop qualities, as it provides a place where business isn't the only thing that needs to be discussed. That's especially helpful in Chamber of Commerce mixers in some of the Southern U.S. locations, where it's taboo to conduct business before spending a minimum of 15 minutes about the weather, politics, and your choice of either the SEC or NASCAR.

Their use often differs by demographic, and their specific use and potential are different.

So where will social networking sites be in 5, 10, or 15 years?

In Metcalfe's Law is Wrong, Briscoe, Odlyzko, and Tilly say that Metcalfe's Law, which says that the value of a communications network is proportional to the square of the number of its users, is wrong. Of relevance for this topic is their observation that:

The fundamental flaw underlying both Metcalfe's and Reed's laws is in the assignment of equal value to all connections or all groups. The underlying problem with this assumption was pointed out by Thoreau in relation to the very first large telecommunications network, then being built in the United States. Thoreau wrote: "We are in great haste to construct a magnetic telegraph from Maine to Texas; but Maine and Texas, it may be, have nothing important to communicate."

The authors noted that if Metcalfe's Law were true, it would create overwhelming incentives for all networks relying on the same technology to merge, or at least to interconnect. These incentives would make isolated networks hard to explain. They introduce Zipf's Law, which says that if we order some large collection by size or popularity, the second element in the collection will be about half the measure of the first one, the third one will be about one-third the measure of the first one, and so on. In other words, the kth-ranked item will measure about 1/k of the first one. They also propose their own calculations, which states that the value of a network of size n grows in proportion to n log(n). They note that this cannot predict the value of a network from its size alone, but if we already know its valuation at one particular size, we can estimate its value at any future size, all other factors being equal.

Here's the n log(n) law in application:

Imagine a network of 100 000 members that we know brings in $1 million. We have to know this starting point in advance—none of the laws can help here, as they tell us only about growth. So if the network doubles its membership to 200 000, Metcalfe's Law says its value grows by (200 0002/100 0002) times, quadrupling to $4 million, whereas the n log(n) law says its value grows by 200 000 log(200 000)/100 000 log(100 000) times to only $2.1 million. In both cases, the network's growth in value more than doubles, still outpacing the growth in members, but the one is a much more modest growth than the other. In our view, much of the difference between the artificial values of the dot-com era and the genuine value created by the Internet can be explained by the difference between the Metcalfe-fueled optimism of n 2 and the more sober reality of n log(n).

There's a lot more to their argument, but I think the key is that as the shakeout in social network sites continues (are you listening AOL, Google, and Microsoft?), the real valuation can be estimated, but only based on a previous real valuation. If we look at the anticipated growth with the expected mergers and acquisitions, it's possible we may avoid the kind of pain we saw with the bubble bursting in the late 1990s.

And so, Metcalfe's law is trumped by Zipf's Law and the law of n log(n) -- leading us to The Long Tail of social network sites for which we still don't have an assigned value.

So how does this fit with our look at social networking sites?

If an enduring advantage and a retooling mindset are the keys to success, then social networks should be around for a while. These sites didn't invent the social part, nor did they invent the networking part, so the enduring advantage is there. They facilitate acquaintance and reacquaintance, and are run (at least initially) by technology entrepreneurs -- with a retooling mindset built in. I think the question is not whether they will last, but in what form they will emerge, and how many mergers will we see before the shakeout is over.

As note in a previous post, I see a tendency toward focusing on specific social networking sites, but in the future I think many of us will simply be using what was "learned" in these sites to just be more social -- out in the open, on an Internet without walls. The people we relate to, the relationships we have with them, and the use of available communication tools are the keys to success in this space, not “the site.”

What do you think?

References:

Boyd, D. M., & Ellison, N. B. (2007). Social network sites: Definition, history, and scholarship. Journal of Computer-Mediated Communication, 13(1), article 11. Available at http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.html

NEED HELP with Social Media & Online Business Networking Must-Reads

I could really use some help building this list. I'm trying to include all the books that relate to the business-oriented social space.

My list at present is located here. Any method of response (blog comment, twitter post, email, or any of the communication methods to the right) ==>>> would be appreciated!

Thanks!

The CIO versus the CMO - slow and steady (with the right strategy) wins the race!

Once upon a time there was a Fortune 500 CMO who, boasting how he could generate business better and faster than anyone else, was forever teasing the company's CIO for his limited contributions to customer acquisition and retention. Then one day, the irate CIO answered back: "Who do you think you are? There's no denying you're fast, but even you can be beaten with the right strategy!" The CMO squealed with laughter.
"Beaten in a competition? By whom? Not you, surely! I bet there's nobody in the world that can win against me, I'm so good at what I do. Now, why don't you try?"

Annoyed by such bragging, the CIO accepted the challenge. A competition was planned, and the next day at dawn they stood at the starting line. The goal was to generate new business by engaging new or lost customers. The CMO had been honing his craft for several years, and his marketing team was the best in the business. The CIO had only recently begun testing a strategy that included reaching out to customers and potential customers to engage them in communication -- even building relationships . . . It started when he realized that this strategy produced the best crop of employees, and he was interested in testing to see whether it worked for company business, as well.

The CMO yawned sleepily as the CIO trudged slowly off to his office to send a Twitter message to his team. When the CMO saw how painfully slow his rival was moving, he decided, half asleep on his feet, to have a quick nap instead of rallying his top-notch marketers. "Take your time!" he said. "I'll have forty winks and catch up with you in a minute."

The CIO's team got busy, posting on their well-read, cross-linked blogs, updating the internal and external technology wikis, and brainstorming (on Skype, and Free Conference Calls, of course) ways to get the word out. One of the team members had his video camera, so the team shot a quick (amateur) video announcing the challenge, posted it on YouTube, and then posted it on their blogs and their networking profiles.

The CMO woke with a start from a fitful sleep and gazed round, looking for the CIO. But the CIO was only a short distance away, having barely moved at all while blogging for the third time that day on Social Media Today and Always On: The Insider's Network. Breathing a sigh of relief, the CMO decided he might as well have breakfast, and off he went to eat at the new Cinnabon he had noticed across from the mall. But the heavy meal and the decaf latte made his eyelids droop by the time he made it back to the office.

With a careless glance at the CIO, now engaged in a webinar with over 100 new contacts from LinkedIn and another 75 from Facebook, the CMO decided to have another snooze before rallying his team for a winning last-minute marketing push that afternoon. And smiling at the thought of the look on the CIO's face when he realized the CMO's intellectual superiority, he fell fast asleep and was soon snoring happily, with his feet kicked up on his desk.

The sun started to sink below the horizon, and the CIO, who had posting (and linkinng) to related posts in the blogosphere since that morning, was getting up for his last Jolt. At that very point, the CMO woke with his own jolt. He could see the CIO walking toward his office from the break room and off he dashed. He set up an on-the-fly conference call with his team at record speed and gave them all news of the challenge, his tongue dragging, and gasping for breath. Just one strong push and he'd be the winner. He called a handful of his fellow CMOs and asked them to negotiate some quick dual-branding strategies so he could claim a superior follow-on strategy, and typed up a press release in a matter of minutes.

But the CMO's last minute leap was just too late, for the CIO had beaten him with his slow and methodical relationship-building strategy. The CIO's team was just shy of having 500 new relationships that day -- a third of which were with former customers, and over 150 had placed rather large orders. Poor CMO! Tired and in disgrace, he slumped down beside the CIO who was leaning against the wall silently smiling at him.

"Slow and steady (with the right strategy) wins every time!" he said.

This contemporary re-write of The Tortoise and the Hare, one of Aesop's Fables, was designed to provide you with a glimpse into the paradigm shift that business has to make in order to survive The Emergence of The Relationship Economy.

What do you think?

Can I have a Coffee Lite Frappucinno and some FREE WiFi? Apparently the answer is YES!

I just got an email from ATT (where I get my home and mobile phone service with DSL Internet) and they announced that I could go get free wireless with a cup of coffee!

I am pumped!

A search of the ATT.com site (and even Cingular.com which autoforwards) found nothing on a search for starbucks . . . maybe only the marketing department knows . . .

But the STARBUCKS site is touting "free Wi-Fi access for qualifying AT&T customers and any Starbucks Card holder" - Heck, I have both!

I wonder if that's why they had the company-wide store closure the other day? Is this another example of Customer Powered Service?

Earlier I was reading a very indepth article on branding. In it, Umair Haque, Director of the Havas Media Lab, said Brands are perhaps the most intuitive example of cheap interaction’s atomizing hand. Yesterday, they were a potent source of advantage. Today, the game has changed: investing in traditional brands is yielding fast diminishing returns, and leading more and more players directly into value destruction. That’s why it’s not just revolutionaries like Google, but also mass-market giants like Nike and P&G, who are rethinking orthodox branding.

I'm thinking ATT might be going into the coffee business, so they can compete with McDonalds . . .

What do you think?

Arrrgghhh! All those years studying Political Science were a waste!

It's a shame when you realize that you wasted time doing something. It's even more a shame when you realize you wasted A LOT of time doing something!

No, I'm not talking about the times where we might second-guess ourselves after a failed marriage. I'm not referring to the soul-searching that goes on when one of our adult children does something REALLY stupid and we wonder where they learned that from. I'm not even talking about the feeling we get when we are downsized, rightsized, or even (God forbid) laid off, nor am I talking about what happens when you and your spouse vote for opposing candidates (more on that later).

I'm talking about the time we've wasted studying the variety of ideologies and political maneuverings at the Federal, State and Local levels of government in our fine country. I'm talking about the time we (even now) spend on trying to discern the benefits of voting for one primary candidate over another, or even trying to engage in public dialog to assist others in distinguishing from one potential political candidate over another.

This revelation comes like a cannon ball in the gut (I've never felt it, but I watched enough cartoons as a child to be able to imagine how it feels). Could it be true that it is actually our gut that affects our political persuasion? That's what it looks like . . .

According to James Fowler and Christopher Dawes of the University of California, San Diego, genetic predisposition can account for up to 50 percent of our political ideology. Tom Jacobs observed that political scientists have debated which environmental influences have a bigger impact on a young person’s nascent political ideology: the belief system of one’s family of origin, or the alternative ways of thinking one is exposed to in the outside world (say, at college). “All liberals know conservatives don’t have a heart, and all conservatives know that liberals don’t have a backbone,” joked John Alford, a political scientist at Rice University and one of the first academics to explore genetic influences on ideology. “So the issue has always been biological. “This takes some of the onus off of parents,” he added. “If your kids become liberal and you’re a conservative, they’re usually not doing it to poke a finger in their eye. It wasn’t a choice for them, so it doesn’t reflect a deliberate flaunting of your beliefs.”

The sure thing here appears to be that politics are not simple to understand -- at least not as simple as business.

Doc Searls, Scott Allen, and Jay Deragon have all posted of late on the effects of the basic factors of The Relationship Economy on politics in the context of the recent debates. Doc reported that Clinton called it “an honor” to be running against Barack Obama, and that “Whatever happens, we’re going to be fine.” Scott and Jay observed that in recent debates, Obama was saying that we have to have a relationship in order to effect change, while Clinton was saying that “they” have to change in order for us to have a relationship. In order to keep this framed in one ideological stance or another, let me observe that McCain was deemed newsworthy by the New York Times for claims made eight years ago regarding his relationship with a telecommunications lobbyist . . . oh, wait, that's not we mean by The Relationship Economy . . . Actually, I think Newsweek did a decent job of covering the recent mud-slinging toward the GOP candidate-in-waiting.

The bottom line is that all these politicians need is a crash course on relationships. In the marketplace, the reaction to someone who completely and totally offends your offering of a relationship is the removal of that offering, the commitment to take your business elsewhere, and (if they were really offensive) the commitment to report this offense to everyone you know, everyone they know, and as many people as you can by a variety of broadcast mediums. In government and politics, we have to wait a bit longer -- usually around four years. Nonetheless, we all remember the ways to get involved in politics from our American Government class, right? If you don't like the way you are represented, either jump on the bandwagon of someone you agree (more) with, or build your own bandwagon.

It is sad, but I think the choices in this election season started out in the crapper, and they just keep swirling around and around.

Here's Tango's attempt to combine Politics and Relationships:



See if you can do any better!

What do you think?

Are we teaching open social networking?

Another discussion in the open!

The NY Times recently hosted/posted Is MySpace Good for Society? A Freakonomics Quorum - Freakonomics - Opinion - New York Times Blog: "Has social networking technology (blog-friendly phones, Facebook, Twitter, etc.) made us better or worse off as a society, either from an economic, psychological, or sociological perspective?"

A collection of thought leaders (Martin Baily, Danah Boyd, Steve Chazin, Judith Donath, Nicole Ellison, and William Reader) responded with some pretty insightful ideas, and there has been much discussion in follow up.

As note in my comment there, I see a tendency toward focusing on specific social networking sites. This limits the ability to examine and understand the phenomenon. MySpace replaced Friendster as the leader by offering what we the people demanded, and Facebook, LinkedIn, and others are trying to (and succeeding in their efforts to) redefine the space. The collection of people we relate to and incorporation of communication tools are the keys to success in this space, not “the site.”

These sites may not last forever, but we have always been engaged in social networking — now supported by technology. The top 5 SN sites could crash and burn tomorrow and we would still do what we do. It’s a revolution, and it’s here, now. Let’s usher in The Relationship Economy!
http://carterfsmith.blogspot.com/2008/01/revolution-called-relationship-economy.html

In response to the Freakonomics Quorum, Paul Glazowski has a recommendation for parents: teach kids (as well as yourselves) as much as possible about any and all networks. He observes that though a percentage of Web users find them useless, redundant, and banal, tens of millions have found such services to expedite tasks - for work or personal purposes - and essentially streamline their lives significantly. There is, after all, something important to saving time and energy.

I think the presumption is that parents know what networking is all about. I'm not so sure that they do! Today's younger (and many older) networkers often connect just to connect. Where did they learn that from? Is it possible that a parent would sit down and explain why everyone at their office came over last night for a dinner when all that parent does when they come home from work is complain about everyone they work with? Do we really think that kids understand (or care) why their folks stop at some chamber of commerce mixer after work?

I think we have to assume that people connect 'cause they think it's the right thing to do, but many have no idea why.

Here's an installment on the challenge:



http://www.teachertube.com/view_video.php?viewkey=04ced4ee44c4b9104e8e

What do you think?

War of the Worlds - Spoofing Social Networking

BOOK ONE/CHAPTER ONE - THE EVE OF THE WAR

No one would have believed in the last years of the nineteenth century that this world was being watched keenly and closely by intelligences greater than man's and yet as mortal as his own; that as men busied themselves about their various concerns they were scrutinised and studied, perhaps almost as narrowly as a man with a microscope might scrutinise the transient creatures that swarm and multiply in a drop of water. With infinite complacency men went to and fro over this globe about their little affairs, serene in their assurance of their empire over matter. It is possible that the infusoria under the microscope do the same. No one gave a thought to the older worlds of space as sources of human danger, or thought ofthem only to dismiss the idea of life upon them as impossible or improbable.

The War of the Worldsby H. G. Wells [1898]

In "Social Networking Sites Linked to Poor Social Networking Skills," Barry Foy reports:

A study released yesterday draws a strong connection between websites devoted to "social networking" and the inability of their subscribers to network socially. The survey's results suggest that teenagers who conduct social activities via the internet are likely to end up singularly ill-equipped to conduct social activities.

On the plus side, the report goes on to say, many of them develop impressive skills at making pornographic videos with cellphone cameras.In the Stanford University experiment, 30 teenagers were banned from their computers and forced to engage in face-to-face social interplay for a period of three weeks. For nearly all, this proved challenging.

Among the most difficult adjustments they reported were: 1) eliminating frequent pauses they had learned to introduce into conversation to allow for advertising, 2) getting used to just how few actual human heads are highlighted from behind by customized "wallpaper" and 3) finding the cursor.

The humor is perhaps subtle (reminiscent of War of the Worlds?), but the two-pronged message is clear. First, social networking has arrived. You don't spoof things that are not working. Sometimes folks take their time to write about things that aren't going to make it (like the HD DVD that just admitted defeat by BluRay), but no one takes the time to spoof the nearly dead. Second, there may be a bit of reality in this post. How long have today's youth been called socially unaware, only to be defended by well-meaning parents and psychologists who pointed to intereaction in online social networks.

I think the problem we have here is one of transition. The old-school networking model (mostly face-to-face) required social skills like looking at someone (not their shoes) while speaking to them. It required speaking in complete, understandable sentences, not slurring, speaking in code, and using half-finished sentences. And most of all, it required actually finding some value in the relationship, not just connecting for the sake of connecting.

No matter how social we (or our kids) get, you can't learn that stuff behind a computer screen.

What do you think?

If traditional marketing won't work in The Relationship Economy, what will?

Relationships, that's what!

In Generation MySpace Is Getting Fed Up, Business week reminds us that "Social networking was supposed to be the Next Big Thing on the Internet."

The article covers a variety of noteworthy points:

• Advertising on social networking sites is growing fast. Last year global ad spending on these sites shot up 155%, to $1.2 billion, expected to jump 75% this year, to $2.1 billion.
• The forecasts may prove unrealistic. Besides the slowing user growth and declining time spent on these sites, users appear to be growing less responsive to ads, according to several advertisers and online placement firms.
• Google didn't generate as much revenue from social networking as expected.
• Many people on social networking sites pay little to no attention to the ads because they're more interested in kibitzing with their friends.
• Social networks have some of the lowest response rates on the Web, advertisers and ad placement firms say. Marketers say as few as 4 in 10,000 people who see their ads on social networking sites click on them, compared with 20 in 10,000 across the Web.

So what should we be doing to get the attention of the people formerly known as the audience? Perhaps we should treat our markets as conversations . . . perhaps we should engage our customers in dialog, getting to know them before we tell them what we have "just for them." Possibly, we should stop selling, and start listening . . .

In The Relationship Economy, the first step is the relationship. We are sick and tired of the push-marketing model, and are demanding that the pull (our pull) be implemented. The days of build it and they will come are gone. We want you to build, make, and provide stuff that we tell you we want. We'll only tell you in a conversation. The only way you will get it is if you are listening.

That's how relationships work.

Take a look at the new model, brought to you by some of the Cluetrain Manifesto authors.

The updated theses (numbering is not a mistake -- he skipped a few) as posted by Charlene Li - Josh Bernoff at Social Media Today.

1. Advertising as we know it will die.

2. Herding people into walled gardens and guessing about what makes them "social" will seem as absurd as it actually is. (Facebook is his example.)

3. We will realize that the most important producers are what we used to call consumers. (Yup.)

4. The value chain will be replaced by the value constellation. (Many connections.)

5. "What's your business model?" will no longer be asked of everything. (What's the business model for your kids?)

6. We will make money by maximizing "because effects". ("Because effects" are what happen when you make more money because of something than with it.) E.g. search and blogging.

8. We will be able to manage vendors at least as well as they manage us. (Agreements between companies and customers shouldn't be skewed in favor of the companies.) At Harvard Law they call this VRM -- vendor relationship management -- which is what Searls is working on (projectvrm.org).

10. We'll marry the live web to the value constellation. (The Live Web isn't just about stars. Relationships of anybody to anybody.)

What do you think?

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?

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

Analysis of The Relationship Economy Model

Businesses that capitalize on and thrive in The Relationship Economy will not use a business model that resembles that of a traditional business. The businesses that have been retrofitted for The Relationship Economy will have the basic building blocks of traditional business models, addressing their Infrastructure, Offering, Customers, and Finances, but there will be some highly unusual additions. When you think about a Relationship Economy business, think hybrid.



The Relationship Economy Business Model



Recent news from eBay indicates they are attempting to appease sellers by lowering the upfront listing fee and increasing the back-end fee for sellers. Their "success-based" model is meant to increase listings, but according to Betsy Schiffman (2008), it will do little more than enrage its merchant base. Schiffman suggests that it isn't just the fee structure that has sellers complaining: eBay also changed its feedback system so that sellers cannot give a negative or neutral rating to buyers.

Ironically, eBay's business model has been one of the most successful in the online business movement. (Somewhat) average business people can minimize risk and overhead while avoiding the time and geographical constraints that can plague traditional businesses. They often benefit from social interactions (both in their online endeavors and in the frequent face-to-face seller conferences that eBay offers). The eBay-powered businesses often enjoy a large number of bidders, and benefit from networked markets.

Networked markets benefit from the effect that causes a business' products and services to have potential value beyond that of traditional markets. This phenomenon, often referred to as
network effect, grows exponentially based on the number of additional customers who have and use the products or services. The term was coined by Robert Metcalfe, the founder of Ethernet, the most widely installed computer local area network (LAN) protocol. But eBay, and other businesses intent on surviving The Relationship Economy, must master yet another model.


The customer loyalty model is useful for those companies that, like eBay, deal with a multitude of customers and collaborators who engage in conversation around and about the products or services they are purchasing and using. Businesses who use the customer loyalty model find that cost of customer acquisition only occurs at the beginning of a relationship, while the cost of maintaining (and retaining) that customer declines. These customers are generally loyal, satisfied, less price sensitive, and are less inclined to switch providers. This loyalty manifests itself in customer advocacy, where customers openly share their convictions about the company with others. These customers refer their friends and acquaintances to the company and vice versa, often promoting a company better than the marketing department could ever dream about.

How do businesses build relationships?

Relationship building for businesses seems almost counter intuitive. Back in the day, Customer Relationship Management was the practice of leaving the house, stopping for a cup of coffee at the local diner on the way to work, taking a break to visit with your neighbors who happened to be long-time customers, and generally engaging others in conversations about anything and everything.

Over time, businesses realized that in order to make those who held the purse strings happy, they had to generate revenue beyond what they had generated before. This first led to cutting out all nonessential and unproductive activity. Go figure -- taking the time to talk to others was one of the first activities to go. Think about the last time you engaged in conversation with:

• the store owner of a place you visit at least once a month


• your barber or hair stylist


• the person who delivers your newspaper (I know, you don't talk to digital people)


• your bank teller or your financial adviser


• your business associates

I'm talking about real conversations here - beyond 2-3 word phrases and in more depth than a peripheral dialog on the weather forecast. The habits of the business world have carried over into our lives, and causing us to be very antisocial.


So what kind of conversations are we having with those we engage in business? We let them set the rules and make the initial approach. They use traditional business relationship techniques, sending us information they "know" we want, about stuff they "know" we need. We throw printed matter in the recycling bin, wear out our computer mouse (and left-button finger) hitting the delete button, and still they persist. Every once in a while we will actually speak with a human representative of the company, but it's usually after we have become very annoyed because we did not get what we expected for our money (and then had the privilege of listening to old, stale elevator music for 20-30 minutes).


Jay Deragon recently addressed these issues in his question: Ever try and reach someone with influence at a Fortune 500 Company? He noted that those that have any authority to make changes to improve customer relations are insulated from the customer. Even worse, companies that are growing will find it beneficial to outsource customer care (to people who may have less experience with the company and its products or services than the newest customer) If they really want to build our trust, they'll install a Customer Relationship Management (CRM) system to manage the details of our lives.

That's not a relationship!


So if we get the point, and we have the technology available, how do we get started?


Larry Weber (2007) provides us with Seven Steps to Build Your Own Customer Community.

1. Observe.
   – See what’s going on without you, who is talking and what they are saying
   – Map (locate) your customers


2. Recruit.
   – Drive traffic to your business locations -- online and offline. Lose the strategy of "build and they’ll come."
   – Develop innovative (and sincere) ways to send out invitations
   – Find and devote time to building your community & make connections to other communities


3. Evaluate platforms (conduits to others).
   – Reputation aggregator
   – Enlist someone in your organization to Blog – make the material regular, relevant and connected to not only your company's mission but also to the needs of your customers (in other words, allow comments).
   – Participate in E-communities (those developed for folks with a common interest) & Social networks (those used by members to make and develop connections)


4. Engage.
   – Your content and conversations should be engaging, meaning you are engaged in the discussion (not like when talking to someone who interrupts your favorite television show). By seriously demonstrating your commitment to customers, you will develop committed customers.


5. Measure.
   – Frequently check the level of community involvement you have, compared to the level you hoped to have.


6. Promote.
   – Everywhere you (and your customers) go, you should be there. Learn how to talk about your business (face-to-face or online) in such a way that people don't get the feeling that's all you think about, but they should realize that you are passionate about it.


7. Improve.
   – Improving your "strategy" requires (gulp) listening to users - both customers and prospects, and actually evaluating (not summarily dismissing) the suggestions they make.
   – As you come up with new innovations, test them. If they aren't accomplishing what you had hoped, re-evaluate, tweak, fine-tune, or replace them.

In many cases, the only way to get new business is to find the unhappy customers of a competitor. Hopefully you can avoid being on the losing end of this transaction!


What do you think?


References:


Schiffman, B. (2008, January 30). Ebay Sellers Riled Up About New Fees, Rules. Wired Blog Network. Available at http://blog.wired.com/business/2008/01/ebay-sellers-ri.html

Weber, L. (2007). Marketing to the Social Web: How Digital Customer Communities Build Your Business. Hoboken, New Jersey: John Wiley & Sons