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“It's Been Like Walking Into a Forest With a Match”

For Wired UK’s “Work Smarter” issue (just released), I had the pleasure to speak with John Winsor, co-founder and CEO of Victors & Spoils (V&S), the world’s first creative (ad) agency built on crowdsourcing principles. You can find a shortened article in the Wired UK magazine. Here’s the interview in full length.

Q: V&S launched a few months ago. How is it going so far? How many clients do you have, and can you share some of the work that you are doing?

It's going really well. We're working with a half dozen clients and have done a dozen projects, thus far. We've been doing everything from brand strategy work, to developing digital tools, to design projects. We've just started working on a couple of TV spots and an industrial design project. It's been a fast three months. You'll see the work start rolling out the door in the next few months.

Q: I guess it's one thing to have a bold idea like crowdsourced advertising and another to actually do it. What made you believe that this might be a viable business model?

I think what we're doing is bigger than just crowdsourcing. The rise in digital connectivity has fueled new ways to use co-creation, mass-collaboration and open-source innovation as powerful tools for business. I've been a firm believer in these disruptions since I wrote my first book about co-creation, Beyond the Brand, in 2004.

Likewise my career has benefitted from several disruptions. First, the rise of desktop publishing allowed me to start a publishing company, Sports and Fitness Publishing. Without the revolution that Apple started with the Macintosh, along with Quark and Adobe's help, I would have never been able to afford to go into the magazine publishing business. Likewise, the rise of other digital technologies allowed me to build Radar Communications, by combining the worlds of anthropology and journalism to provide a new way to do brand strategy and market research. And now, Victors & Spoils wouldn't even be possible without the communities of talented people that are aggregating online.

Of all the disruptions I've had the opportunity to build businesses upon this is the greatest opportunity in my career.

Q: With Starbucks, Best Buy, and other big brands launching crowdsourcing platforms, some industry observers seem to believe that crowdsourcing has jumped the shark. Is V&S the logical end of the line or are we going to see more crowdsourcing, across other creative disciplines?

I think we're seeing a bigger and deeper change going on in the way we work. Every time a new technology disrupts an industry, there are those who try to protect the current way of thinking. While this current digital disruption might seem like a new and frightening trend to those how hold on deeply to the current paradigm.

Just look at history. During the Renaissance, in the middle of the 15th century, there was a similar disruption happening that was shaking the pillars of the then current media world. The methodology of using movable type on a printing press, developed by Johannes Guttenberg, was spreading like wildfire, making books more accessible throughout Europe, allowing a whole new generation to have the tools that only a few held. At the time, books were produced by an elite group of monks in a few monasteries. These scribes were the media elite of their day. As it became more obvious that the new disruptive technological changes produced by the printing press some felt the need to turn the page back. In 1492, Johannes Trithemius, the Abbot of Sponheim, a well-known monastery, wrote, In Praise of Scribes. In it he wrote, "We must preserve the old order at any cost." Yet, he had a problem. If he used scribes to produce the book it might take too long to stop the tide of the disruption caused by the printing press. Instead, he used a Guttenberg press to print In Praise of Scribes, only accelerating the change.

The same thing is going on now. Agencies are trying desperately to protect the old way of doing business while bigger cultural trends are shifting the sand below their feet.

Q: If the crowd turns out to be more creative than specialized professionals, will that be the end of the creative industry?

It's only the beginning. How much creativity was there when only monks could write books? Likewise, Apple and Adobe have ushered in a new age of democratization of creativity. The current trends of mass-collaboration, co-creation and crowdsourcing, based on mass connectivity are only further democratizes creativity. Just look at You Tube. When digital tools become cheap enough everyone can gets involved. Now, it's a question of what's good content and what's bad content. But often, that's a matter of personal taste.

Q: Some people say that your radical crowdsourcing approach might just be a PR stunt to get some publicity around the launch but that V&S will eventually become a more traditional creative shop or at least a hybrid of crowdsourced and expert services. What do you tell them?

For us, it's been unbelievable. It's been like walking into a forest with a match. Sure, we wanted to start a fire and build a business. The cultural conditions have been right for something much bigger. We've gotten calls from several of the most progressive CMOs in the world. They are tired of paying too much money for too few good ideas. They want change.

It used to be that creative quality and price were diametrically opposed. The more you paid, the better quality you could get and vice versa. It was an "or" relationship. You could get quality or price. Certainly, that's been the way the current advertising and design world works. What we're seeing is the opposite. Two things are happening. First, with our own projects and with projects like Unilever's Peperami's crowdsourced scripts project on Ideabounty, talent rises to the top and wins. Our contention has been that in truly free markets, the best work produced by the most talented people rises to the top. It's not blocked by internal politics or hierarchical competition that can smother the best ideas inside big organizations. And, it's only accelerating, many of the most talented creatives and strategists are starting to play around and do work on the new digital networks that are emerging. We've also found that in an apple to apple comparison with the projects we're working on, clients typically save 75% in their creative fees for the same quality. Projects that used to cost $100,000 now can cost $25,000 (or $1,000,000 is now $250,000) for the same quality. We're seeing that with the same strategic and creative direction, results are very similar. Clients are telling us they want to leverage the power of "and." They want the best creative work and pay the best price. That's what we're trying to do. We're using the latest digital tools to provide the best creative product for the best price. Crowdsourcing is only one of the tools to accomplish that goal.

Q: How do you hire, and how do you manage the crowdsourced creative department? Is it limited to a submission of "big ideas" or do contributors collaborate on projects from start to finish?

The first thing we've noticed is that there are lots of different ways to use co-creation and crowdsourcing to solve marketing and product design problems. We've run projects on Crowdspring, 99designs and GeniusRocket. All of these platforms are good for different things. They get a lot of people involved in a project. But it's easy to get overwhelmed by the number of entries. And, Sturgeon's Law, that only 10 percent of any large group of creative output is good, definitely applies. In these large community crowdsourcing projects it takes a lot of creative direction. One of our core principles is "Victors" instead of "Victor" or paying many winners instead of just one. We do this with every project we run.

Another way we've been using the community for projects is by selecting small groups of people from our 500+ strong creative department, a global network of some of the best creatives and strategists in the world. In these projects we've been inviting 50-100 folks to participate in a project, selecting between 6 and 12 finalists to compete. In these cases, the finalists get a fee for participating. There is then another fee for the winner of the competition. These smaller, swat team efforts have been working well with all kinds of projects from more complicated design projects to strategy and brand platform projects. One of the advantages has been the ability to keep projects more tightly controlled confidentiality and the ability to creatively direct more complicated projects. But, unlike the larger public projects, the sheer number of ideas is more limited. There are lots of tools in the toolbox and surely more are coming.

It still comes down to the strategic and creative direction to make sure the work produced by any crowd, either internal or external, pushes the work forward in the right direction to accomplish a client's objectives.

Q: How do you pay your crowd(s)? Do they receive a percentage of the client fees? Are there several layers of contributors with varying payment levels? Do contributors have any influence on V&S' strategic decisions?

Yes. We have many different payment models, as described above, and are constantly developing new ones. People in our creative department have a ranking based on their reputation. And, we constantly ask the department to participate in decisions. This space is bigger than all of us and is constantly evolving.

Q: You previously worked at Crispin Porter + Bogusky (CP+B), a legendary firm with a distinct brand. With V&S, how can you develop a creative identity over the long term when your creative is crowdsourced? How do you maintain your quality standards?

Working with guys like Alex Bogusky and Chuck Porter was an honor. Alex and Chuck are fearless the way they approach work and life. The attitude is the key ingredient of making CP+B what it has become. Quality and consistency of the V&S brand comes from great strategic and creative direction. My two partners, Evan Fry and Claudia Batten, are two of the best. The three of us spend a lot of time developing the V&S brand. So far, we feel like it's going pretty well.

Q: You write on your blog that "Brands need an alternative to current ad agencies and crowdsourcing platforms. One that offers the strategic direction, engagement and relationship management that agencies deliver today but one that also delivers engagement, connectivity, creativity, and ROI that crowdsourcing platforms have the potential to deliver." How does V&S measure ROI?

We believe that marketing and product design should be judged on how it affects sales and profits for our clients. At the end of the day, that's what they're being judged on. We do work with clients to develop goals for every project. Each project has a different ROI metric. That said, when clients are saving 75% on their creative investment to start with they can achieve their goals much more easily. They also have the ability to try a lot more creative ideas.

Q: At CP+B you launched a product innovation group, and now you have set out to innovate the entire creative industry. In your opinion, what are the biggest barriers and challenges that stand in the way of organizations becoming more innovative?

When Alex Bogusky and I were doing research for our latest book, Baked In: Creating Products and Businesses that Market Themselves, we noticed that the biggest stumbling block to being more innovative for most companies were the internal silos that have been created. Marketing is a silo. Product Design is a silo. Innovation is often its own silo. To be more innovative companies must knock down the internal silos and start to get everyone working together.

Q: What business innovation are you still waiting for?

I'm really looking forward to even more collaborative digital tools, especially video conferencing technology.

[photo credit: David Sykes for Wired UK)

Goodness on Twitter: From Attention-Sharing to Tweet Fund Drives to Good Mobs

Twitter’s “suggested users” list is a Who’s Who of Twitter celebrities, featuring the likes of Al Gore, Lance Armstrong, Ashton Kutcher, John McCain, Martha Stewart, and others with millions of followers. The New York Times claimed that a spot on the list would guarantee 500,000 additional followers and reported that social media guru Jason Calacanis had offered $250,000 to be listed.

Last Friday, Twitter did something remarkable. It added a number of well-known social entrepreneurs and innovators to this list, among them Social Edge, Skoll Foundation, Kiva, Matt Flannery (Kiva co-founder), Acumen Fund, Jacqueline Novogratz (Acumen Fund founder), charity: water, GOOD Magazine, Kjerstin Erickson (FORGE founder), and Room to Read. Not knowing what was going on, Kiva’s Flannery thought there was a spam attack and complained about the 500 new users a minute he was getting. But not for long.

Twitter’s move is huge, not only because it propels social entrepreneurs to enter mainstream but also because the micro-blogging service – THE trading floor for attention on the web – has decided to give away some of the attention it attracts to promote good causes. Consider it the New Socialism: a redistribution of attention, not of material wealth. What’s even more remarkable is the reaction of one of the benefitting organizations, Social Edge, which immediately sent out a message to all its new users pointing them to a list of 100 other social entrepreneurs and innovators on Twitter. Give more than you take: that’s the power of meaningful marketing and exactly the kind of giving that makes companies thrive in the ‘share economy.' Good creates more good.

There are other, even more immediate ways in which Twitter can be used for doing good. My colleague Jacob Zukerman proposed it the other day, and I found the concept instantly compelling: instant social action, enabled by Twitter. Tweet Mobs for collective action. The idea is simple: Convert all the attention on Twitter into real-world action – in real-time. With some twitter users attracting more than a million followers, their social influence is significant – why not use it for social good, especially when you can “eventize” it by creating artificially scarce moments of real-time public collaboration?

The link between tweet and deed is not new on Twitter and exists in various formats (Mashable has provided a great overview): Cause-related fundraising (Tweet fund drives) via Twitter has been made popular by Twestival, Tweetsgiving,12for12k, Tweetathon, and others. An alternate concept is Twollars, a Twitter-based currency with no hard money value that allows users to pledge money to charity using Twitter. Describing itself as “a currency of appreciation for Twitter,” it effectively connects micro-payments with micro-blogging. (Speaking of currencies, PollyTrade links Twitter accounts to E*Trade account and allows brokers to trade stock via Twitter.) And there are Tweet-Ups – offline events initiated and organized via Twitter – but in this case, too, the tweet and the deed are asynchronous. Carrotmob, a congenial social media platform for social activism, uses Twitter, but it still requires a moment of translation as well: good will and a commitment to a cause can be immediately “socialized,” however, the output – the action – still occurs via intermediary.

All these formats do not convert instantly into offline action in the way Flash Mobs do. What if followers not only follow but do (in the best “Here Comes Everybody” style)? What if Blog Action Day became Twitter Action Minute? These Twitter Mobs or Smart Tweets would capitalize on the unique combination of peer pressure, presence, location-based eventization, and of course, sheer reach. The train wreck Sarah Lacy-Mark Zuckerberg interview at SXSW 2008 was a negative example of live-mobbing on Twitter, a disaster unfolding in real-time, amplified through the synchronous meta-conversation on Twitter. The #CNNfail campaign in response to CNN’s deficient coverage of the Iranian election, was another one. The enormous power of these real-time conversations is frightening, but it is also promising. The more optimistic equation goes like this: Attention = social capital = social action. What if a group of Twitter followers all picked up one piece of garbage from the street? What if they all gave food to a homeless person? What if they exchanged money, products, hugged a stranger, etc.? And so on. It’d be a real-time, real-world transaction that would be as swift as the transactions taking place at breathtaking pace every second in the highly virtual realm of international finance. A smart attention-to-action cascade. A Good Mob.

Maybe a fantasy – but a good one.

[image credit: Maple and Leek]

The New Digital Divide

After participating in frog's first Digital Brand Think Tank in Munich a couple of weeks ago (a lively discussion with 20 marketing executives from Audi, BMW, Google, Continental, and other top-tier brands), I must admit that I’m a bit tired of having to evangelize (or even justify) the value of brands using social media. It is astonishing to me that companies still ask for evidence when the tweet is on the wall. The event showed that there is a new Digital Divide that cuts straight through the ranks of the marketing industry – some executives get the Social Web, some don’t. No one has figured it out yet. Most would admit that they need to catch up and keep learning.

Marc Mielau, head of digital media at the BMW Group, certainly belongs to the former cohort, and at the event in Munich he shared some interesting insights into his company’s much acclaimed online strategy. BMW has long been on the leading edge of marketing innovation and has embraced social media formats early on (remember the hugely successful branded entertainment “The Hire” film series, featuring renowned directors like Wong-Kar Wai?). To me, more than the actual programs, the most remarkable thing about BMW is how the company has managed to establish a culture of marketing innovation. It is much easier to pull off a sporadic viral hit than to build and sustain a proactive and trendsetting digital marketing engine.

Management guru Peter Drucker once wrote, “The business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results: All the rest are ‘costs.’” BMW took this axiom literally and created a “Marketing Innovation” group. Mielau described how the Bavarian carmaker concluded that an innovative brand needed truly innovative marketing and consequently put its money where its mouth is. With the Marketing Innovation department, it installed a function that was freed of any P&L pressure, given a considerable budget, and the mandate and support to experiment with various types of emerging marketing technologies and techniques – occasional failures included. Serving as a sort of marketing R&D, sounding board, incubator, and innovation catalyst, the Marketing Innovation group explores new user behavior trends on the web and on mobile devices, while at the same time rapidly prototyping tools and campaigns to address them. While not every program has been an immediate or massive success – BMW’s engagement in Second Life, for example, was terminated, albeit in an elegant way – all activities undertaken by the group helped BMW learn by doing and enabled it to be the first mover when new formats eventually became mainstream. This has led to the high ‘social media readiness’ needed to instigate, enhance, or rebut conversations occurring in the echo chamber of BMW’s expansive and influential social graph. The key is that BMW’s short-term social media agility is based on a strong commitment to a long-term vision for its brand.

This very vision would help Vodafone these days, whose “Generation Upload” campaign in Germany has been the subject of much ridicule and scorn from the very Digital Natives it so eagerly (and maybe a little too eagerly) aimed to embrace. The company had obviously studied the social web playbook and thought it was doing all the right things: It created cross-platform social media channels for live-feedback to the campaign’s launch press conference; it put user-generated content at the center of the campaign; and it featured a prominent German blogger as the campaign’s ‘hero.’ However, it made one big mistake: It launched the campaign without backing it up with an actual product offer for the targeted “Generation Upload.” The “medium is the message” approach was simply not enough in this case. Sure, the Gen Y’ers love to converse – but they also appreciate products and rates that meet their needs. Besides that, “Generation Upload” is an unfortunate term that describes user behavior as purely mechanistic when in fact it is not so much characterized by the function of uploading but the desire to share.

And yet: “If you can’t get fired for your marketing campaign, it is not innovative,” marketing author Seth Godin once pointedly said. I’m not sure if any heads were rolling at Vodafone, hopefully not. The company deserves credit for taking a risk and jumping right into the social web without a safety net. Ultimately, I believe, this strategy will be rewarded by the marketplace. Already, the campaign – notwithstanding all the negative comments – created a lot of buzz. And as they say, there is only one thing worse than negative PR – and that is not being talked about at all. This truism is magnified on the social web. With a long-term commitment and flawless follow-through similar to BMW’s, Vodafone might indeed have made a first step towards transforming its brand.

Marketers, beware! The New Digital Divide is very real – but you may not always know exactly which side you are on.

[Image: Neil McLeod - "Chasm"]

TEDGlobal: Connected Consequences

One of the main themes at TEDGlobal this year has been a lively debate between optimistic and pessimistic voices on the social potential (or doom) of the web. This outlook has been somewhat more somber than I expected at a TED conference, perhaps – as some attendees suspected – due to the cultural differences between Long Beach and Oxford. There is definitely a palpable sense of enlightened skepticism at the conference, a distinctly European tone that serves as welcome counterweight to the Californian brand of optimism that TED is often associated with (just read this amusingly British commentary in the Times of London).

One of the most vocal and polemic representatives of this kind of socio-techno-skepticism was Internet researcher Evgeny Morozov. Arguing that the web impedes democratization, he chastised social web apostles for naively believing that the medium is the action and scoffed at the phenomenon of “slacktivism” (saving the world one click at a time through Facebook Causes). Morozov coined some catchy terms such as “iPod liberalism” and “Spinternet: (Spin + Internet) to expose what he considers a rather one-sided view of online activism and in fact a delusional assumption about the social power of global, collective voices on the web. Morozov's biting sarcasm (“There was a time when governments had to torture people to get intelligence. Now they just need to go to their Facebook pages.”) was refreshing and welcome amidst the usual choir of politics 2.0 cheerleaders, however, he failed to provide much evidence for his heretical claims. He might indeed underestimate the smartness and agility of digital natives, especially when he questioned the role of Twitter during the Iranian protests. Sure, each new technology comes with Faustian ambivalence, but even though the Twitter protesters may not have lead to any substantial change (yet), I’d argue that the worldwide attention (and sympathy) for the cause of the Iranian people was significantly enhanced through the hundreds of thousands of Twitterers who used #iranelection (especially given #CNNfail). Was this ad-hoc Twitter community a political movement? Maybe not. But it politicized and generated social power that can instigate political change. Or does Morozov really think Obama won the election because of TV commercials and townhall meetings?

Anthropologist Stefana Broadbent added some more nuances to the discussion: She drew from research she conducted and presented some interesting numbers that prove what she calls the “democratization intimacy” – the observation that most social web users communicate with a nucleus of 1-5 people and cultivate strong ties rather than adding weak ones to their networks. In other words: They aren't expanding their circle of friends but strengthening their most important relationships. And they do this at work: According to a recent Pew study, more than 50% of office workers in the US use email and messaging services for private communications. Broadbent concluded that we are witnessing a “re-appropriation of the personal sphere:” “Through their communication channels, people are breaking an imposed isolation that institutions are imposing on them.”

Jonathan Zittrain had begun the session with a general state-of-the-web analysis that was a real shock-and-awe fireworks. It says something about the unstoppable momentum of the Internet if talks like his consist mainly of screenshots of goofy web sites like “Cats that Look Like Hitler,” social phenomena like couchsurfing, and other Internet memorabilia. Apparently, the Web is much wilder than theorists can make it. Indeed, the Internet does not have a business model, as Zittrain poignantly remarked, and yes, it is a verb not a noun. Consequently, he ended his talk with a simple: “Let’s march.”

Speaking of verbs and nouns (and marching), Aza Raskin from the Mozilla Foundation wants to bring language back into the user experience in order to turn a functional task management paradigm into what he calls “you-centric computing” – putting the user in charge, making computing human(e). And yet, as rain followed sun in Oxford this week, idealism was immediately juxtaposed with a rather melancholic interlude: a short film titled “Real Human Interface,” starring a human, imprisoned in a small (in and out)box, nurtured by a constant flow of mundane communication and tasks. A sad and lonely tale of OK Computer happiness and the 21st century answer to what Alain de Botton calls the quintessential 21st century question:

“What do you do?” – Interfacing.

The Future of Capitalism in Five Minutes: Meaning-Driven Business in Fast Times

Never let a crisis go to waste! Inspired by the transformative impetus of the economic downturn, my employer, frog design, will soon be starting a series about “Meaning-Driven Business” that invites leading business thinkers as well as C-level executives to discuss alternative ways of doing business and creating value. The series is based on the assumption that the current crisis is also a moral crisis, a fundamental crisis of trust in business leadership. According to the Chicago Booth/Kellogg School Financial Trust Index from April 8, trust in business has reached unprecedented lows, with only 10% of Americans now saying they trust large corporations. The “future of capitalism,” it seems, is at stake.

All this serves as a clarion call for business as unusual, and new ideas and values are in high demand. We believe this is an important conversation, and with “Meaning-Driven Business” we would like to provide a forum in which our guest contributors (some of them our clients) can present their ideas – from different backgrounds, different industries, and different corporate functions. Obviously, we‘re not the only ones exploring new horizons for business, nor are we the first. Some distinguished scholars and thought leaders have staked the claim and produced some great thinking around this topic.

Let’s start with an unlikely expert: the Catholic Church. The New York Times reports that Pope Benedict XVI is worried about global capitalism going awry. In “Charity in Truth,” his first papal encyclical on economic and social matters, he posits that Roman Catholic teachings can help reign in Western economics by encouraging social justice (which always means solidarity with the poorer and weaker) and closely regulating the market. In the same article, the Times cites German archbishop Reinhard Marx, a close advisor to the pope, who has written a best seller titled “Das Kapital” (“The Capital”), in a not so subtle reference to his more famous namesake. Obviously inspired by the success of the German post-war model (and the European welfare state philosophy in general), the archbishop calls for a universal “global social market economy” but is prudent enough to acknowledge its limitations, quoting Jean-Claude Juncker, the prime minister of Luxembourg: “I approve of the notion that Europe sees itself, unpretentiously, as a model for the world, but the consequence of that is that we would have to constantly change that model because we are not the world.”

Like the pope and his archbishop, economist Umar Haique argues that we need to re-boot capitalism. And like Reinhard Marx, he focuses on a re-definition of “capital.” His concept of “constructive capitalism,” however, is more radical than the social market economy solution Marx proposes. Haique demands that 21st century economics fundamentally rethink “what capital isn’t – and what capital really is.” “The value equation of industrial-era capitalism was toxically imbalanced. Why is industrial era business so destructive – why does it slash and burn rainforests, endanger entire species, vaporize culture and community, marginalize the poor and disadvantaged, and erode our health and vitality? Because none of those have value in an industrial economy: none are capitalized. So the bean counters of the world are free to plunder and ruin them – because, economically, they actually don't exist. 20th century capitalism, in other words, marginally valued pure financial capital too highly, while marginally valuing human, natural, social, and cultural capital at zero – or, at the limit, negatively." One example of the “capital deepening” Haique envisions are carbon assets: “Once they're capitalized, they become next-gen assets: assets that can be traded, hedged, remixed, tweaked, open-sourced, or shared. The difference is that they're assets with intrinsic, durable, human value – not the lemons Wall St was in the business of hawking. It is only by capitalizing the things we really value that the spark of value creation can be lit again.” As another example of really valuable capital Haique refers to Rypple, an ad-hoc social network that provides simple, direct, anonymous, and ongoing customer and employee feedback: “Rypple’s economic engine is powered by human and social capital – Rypple taps the connections people have with friends, colleagues, bosses, and mentors, to help them get smarter and more productive.”

Former Harvard professor Shoshana Zuboff would agree with Haique. She is the author of The Support Economy: Why Corporations Are Failing Individuals and the Next Episode of Capitalism, and in her recent BusinessWeek article “The Old Solutions Have Become the New Problems,” she proposes companies charter what she calls the “i-Space”: “Business is no longer just about the product. Now it’s about solutions for the individual. Economic value is hidden in consumers’ unmet needs and is released by providing people with the means to fulfill those needs. But in order to release new value, you need to get out of organization space and into the subjective space where individuals live. I call it ‘I-Space.’ This means shedding the ‘us-them’ mentality. Now everyone is an insider.” To succeed in i-space, companies “must federate and collaborate to compete:” “You can't do it alone because the needs of individuals don't conform to existing organizational and industry boundaries. This means learning how to manage what you don't control or own. These economies of trust are becoming even more important than economies of scale. (…) Amazon’s marketplace and eBay's webs of buyers and sellers are early prototypes of these federated networks. Apple and Facebook are struggling to understand the rules of engagement that should govern relationships with their applications developers. You can see them climbing a new learning curve through trial and error as they figure out how to build and sustain economies of trust.” Zuboff is wary of the old paradigms still taught in business school and calls all previous “compasses” obsolete: “You're in a new place. The bad news: There are no maps. The good news? You are the mapmaker.”

Similarly, Jeff Jarvis' concept of the "Share Economy” and Chris Anderson’s notion of the “Free Economy" are both based on the assumption that there is no viable business in markets in which information and content are abundant (i.e. the news industry) unless you add the value of aggregation, create artificial scarcity, or give away those abundant assets (i.e. music recordings) that drive attention to assets that are truly scarce (the live concert experience). Or as Kevin Kelly puts it in "Better than Free": "When copies are free, you need to sell things which cannot be copied."

Richard Edelman from Edelman PR believes we are entering a new era of “Mutual Social Responsibility,” in which “people (formerly labeled as ‘consumers’ by marketers!) contribute to society’s sustainability and well-being in partnership with business, government and non-governmental organizations. But they demand a seat at the table and real voice in the discussion.”

Noah Robischon from Fast Company coined the new, chic term “Ethonomics:” “We live in a world that's resource-constrained but ingenuity-rich. So an upstart generation of entrepreneurs – and innovators within the world's biggest companies – are founding businesses that are good for the world as well as the bottom line. They are practicing social change through urban revitalization, sustainable agriculture, green IT, alternative energy and online community-powered investing. Any business that claims to be truly sustainable and innovative should be increasingly efficient with energy and natural resources, transparent and accountable, and good on balance for people and other living things.”

Speaking of social, there are many who would argue that the future of social is indeed the future of business. This trend even extends to the world of finance – arguably the one industry sector that has suffered most from excessive short-term innovation and is in greatest need of real transformation. Social innovation platform Volans calls for a "WeBank" and asks: "Are people replacing institutions?" As an example of alternative micro- and real-time financing models it refers to Zopa, the world’s first online social finance company:”With no middlemen, less overhead, improved rates for lenders and borrowers, and a sense of transactions between ‘real people,' it creates trust and shared interests between lenders and borrowers.”

Peter Kim, together with Jeff Dachis, David Armano, and other partners, has launched “the first social business firm,” Dachis Corporation, and developed a "social business design framework" for "understanding and applying social constructs to business.” Social business design is “a mutually exclusive, collectively exhaustive way of considering how a corporation, business unit, or project can create and capture value from today's emerging technologies and evolving operating environment. The social business design framework captures ecosystem (community), hivemind (culture), dynamic signal (collaboration), and metafilter (content). Putting these into play creates improved business outcomes as well as emergent outcomes. Measurement provides the backbone to the entire framework, as driving change requires proof.” The most interesting archetype of Social Business Design to me is the Dynamic Signal, “the concept that every activity and action is recorded and made available, that every piece of data goes from being a database entry and is instead an event. An event which can be managed, shared and collaborated on by all of those in the organization,” as Dachis partner Jevon MacDonald explains. This concept resembles the familiar vision of the “Real Time Enterprise.” Rypple – mentioned before – offers real-time, ongoing customer and peer feedback, acknowledging that “Real-time business is inherently social – there is no real-time without social."

Yet the accelerated transactions and interaction cycles on the Real-Time Web need to be balanced with sustainable thinking. Quick decisions are easier to make if they’re grounded in a long-term perspective' agility requires stability; and the prerequisite for openness is a strong (and tight) community. It is it ever-more important that companies have a stable foundation, rooted in a set of shared of values and beliefs. At least that’s Charles Handy thinks: “....what enables a corporation to succeed in the longer term is a wish for immortality, or at least a long life; a consistent set of values based on an awareness of the organization's own identity; a willingness to change; and a passionate concern for developing the capability and self-confidence of its core inhabitants, whom the company values more than its physical assets. I suggest that those conditions are best met when organizations live up to the literal meaning of the word company –‘the sharing of bread’ – and regard themselves as communities, not property.....in time, the laws governing corporations will change to reflect (this) new reality." ("Looking Ahead," HBR September 1997).

For former Procter & Gamble chairman and CEO A.G. Lafley “Balancing present and future” is one of the key responsibilities of CEOs: “Don't allow the short-term interests to take precedence over the company's long-term objectives," he warns in a recent article for the Harvard Business Review (“What Only the CEO Can Do”). He describes the CEO as the only person in an organization who can link the external with the internal perspective. “It’s a job that the CEO must do because without the outside there is no inside.” You could argue, of course, that the real-time, hyper-transparent social web has made that distinction obsolete anyway: Inside and outside are congruent; they are one and the same.

There are numerous other thinkers that envision a faster and yet more sustainable, social business as the future of capitalism, and you can browse through articles and blogs post without end. Some recurring themes emerge though the more you read: On the organizational, delivery side, these themes are "social,” “real-time,” and “micro.” And on the cultural, the leadership side, they are “authenticity,” “generosity,” and “empathy.” If you combine the two layers, you get an interesting matrix – let's call it the "Meaning-Driven Business Matrix.” This is the playing-field in which all product, service, and business model innovation will take place from now on – but that’s a topic for a whole series (coming soon).

Fluent: The Razorfish Social Influence Marketing Report

This latest, 50+ page thick report by Razorfish examines the ever more important role of social (influence) marketing:

 "In a world that is increasingly empowered by social media, connected by screens, out of your control and enchanted by innovation, all that matters is the story your customer tells about your brand - your brand's value, in 140 characters or less. Is it a good story? A bad story? Or just no story at all?"

"We believe that we live in a world where brands can't simply push messages anymore. Brands must do. They must engage with their customers (and across every platform, channel and device). We also believe that Social Influence Marketing has a large role to play in this world where actions speak louder than advertising."

Download the report, which doesn't require registration, here.

Get Social Now!

Several blog posts this week, combined, pinpoint what are arguably the two most influential trajectories for the impact of communication technologies on business these days: from real-time web to real-time business, and from social media to social business design.

Let’s start with the former. Referring to Salesforce.com founder and CEO Marc Benioff and his presentation at the Structure 09 conference in San Francisco last week, DigitalBeat claims that the real-time web is not only shaping the future of all computing but also that of business overall: “In business it’s real-time or it’s no time.” It goes on by quoting Benioff: “Customers (…) expect everything to happen right away— if they update their data, they expect those changes to appear immediately, not an hour or two in the future. (…) Any concept of batch or delay in development or execution, I think, will not be tolerated by customers anymore. (…) Even in development, customers are demanding now that they want to be able to build in that sandbox and deploy immediately, instantly, no delay.”

Sure, you may say, customers always want it faster and cheaper, that’s not news. But the implications Benioff talks about are more profound and affect the way organizations operate and adapt their business models to the new and ever-changing demands of immediacy. Some examples: Zara, the Spanish clothing chain, uses customer feedback to develop new clothes, in near real-time. TCHO, the San Francisco-based chocolatier, relies on continuous flavor development and customer feedback to drive constantly evolving versions of its dark chocolate, with variations emerging as often as every 36 hours. Status updates, embedded news feeds, and Twitter apps have injected some “real-time-ism” into professional online social networks such as LinkedIn and XING, converting them from address books to conversational circles, from networking forums to collaboration platforms. Zappos, the online retailer, successfully combines real-time customer service on Twitter with near-real-time delivery – having established a powerful, dynamic brand before letting its customers decide what business it was actually in. And Skittles, the candy brand, ingeniously replaced its corporate homepage with the 'Interweb,' a collage of real-time social web conversations not by but about Skittles – essentially recreating itself as the first ever real-time brand. All these models show that the news industry’s big conundrum applies to every other business, too: It used to be that there’s nothing more boring that yesterday’s newspaper. Now there’s nothing more boring than today’s. When you relaunch your business model, product, brand identity, web site – it’s already too late. Real-time beats planning to the punch.

Real-time businesses therefore must get rid of long-term strategy plans, product road maps, goals and objectives, and all the other superfluous documents that distract organizations from focusing on their true mission – the here and now. Most of these documents are inward anyway and can be easily replaced with one strong and permanent mission statement (which, if your company culture is intact, does not even need to be verbalized).

Real-time business is inherently social – there is no real-time without social. The more businesses open up their organizations and invite external voices into their inner sanctum, the more real-time they will become. Getting social will help companies gather customer intelligence in real-time and use it to move faster. In the future, real-time businesses may deliver before their customers even articulate their needs. And they will provide immediate value without immediate return, in other words they will over-deliver – free for now but with a material or immaterial return later. What is the inadvertent business model for media might be a fulcrum for companies that manage to achieve a brand premium through customer participation as a part of real-time product development: “building a plane in the air,” together with their customers.

"The process is the product,” as Trendwatching writes in its latest report, in which it also claims that the real-time the web is breeding a new quest for longevity or “Foreverism”: “the new popularity of technology that allows consumers to find, follow, interact and collaborate forever with anyone & anything.” It’s not as paradoxical as it may sound. Living real-time means living in the ongoing – forever. If everything happens in real-time, nothing is ever final and always in permanent beta. Conversely, if everything lasts forever on the Google web (your emails, networks, conversations) and your digital presence is only as good as your latest search results and Twitter updates, you better utter some digital impressions NOW.

And yet, what’s required is a shift in thinking and ultimately a new organizational model that goes beyond feeding the social media beast on the real-time web: “If the big picture is business transformation, it's going to take more than a few tweets to get there,” David Armano writes in his post on ‘social business design,’ and argues that ““Social Businesses are those which are designed from top to bottom as a reflection of the world we all live in online today. A business where everyone is connected and able to contribute but also where the right tools are available to them to do all of this with business intent from the beginning.”

For centuries, organizations have considered it their task to conquer chaos and manage people, now they have to embrace the sudden chaos instigated by unmanageable throngs of instantly and elegantly self-organized individuals. Whether that will lead to the end of organizations remains to be seen; it will definitely lead to the end of organizations as we know them.

Is Advertising Dead? or The Third Way of Building Brand Equity

(Credit): Element 22

There seem to be three (non-mutually exclusive) models for marketers tasked with building brand equity: marketing scarcity, marketing artificial scarcity, or marketing relevance.

Scarcity seems to be at the core of all marketing: an exclusive, unique value that can be reproduced; an original idea replicated for many. That's how markets work, how marketing works. Branding is effective when it keeps the aura of an original idea intact despite its mechanical reproduction. Apple's original idea, for instance, could be described as "technology must be fun and human," and it has not lost an inch of its integrity. That's the trait of a strong brand: the idea remains scarce while its distribution becomes abundant. The scarcity of all branded, manufactured products is of course artificial. If it wasn't, these products wouldn't need to be branded. That's the whole point (and the difference between water and bottled water.)

Some brands have taken this concept a step further by creating a special type of artificial scarcity: "democratic exclusivity." Sounds paradoxical? Well, it is. But it works. Gmail has pioneered it: An (exclusive) invitation-only service that pretty much everyone can get invited to (democratic). As another example, take Apple's strategy with the iPhone app store. It is a closed system (exclusive) but principally open for third parties (democratic). Look at the Kindle that Amazon purportedly shares as an app for other mobile devices. It shows that it's certainly good to have recognizable hardware (exclusive) but the true value lies in the software that you own and that you can use to extend the reach of your brand (democratic). Or Radiohead's pay-as-you-like release of “In Rainbows”: Buyers could determine the price (democratic) but the offer only stood for a limited period of time (exclusive). The album - online and physical distribution combined - sold more than Radiohead's previous releases, and the radically democratic way of pricing created a significant amount of brand equity for the band. Democratic exclusivity at its best: artificial scarcity in abundance.

The third and perhaps most game-changing model for marketers is selling relevance rather than scarcity. Jeff Jarvis points to Digg's new advertising system that enables users to vote on ads. Techcrunch calls it a "self service advertising product" that is "somewhat similar to Google Adwords, but with a twist." The twist is essentially a reversal of the traditional advertising paradigm: The most popular ads, as voted on by Digg users, will get more prominent placement and a lower cost-per-click. In other words: The more users digg an ad, the less the advertiser pays. "The Digg system rests on a Cluetrainy need to deliver authentic value and relevance – like Google's ads," Jarvis notes, and he argues "that's the way advertising probably needs to go: The better your relationship (which springs from a better product and service), the more your customers will market it for you, the less you'll have to pay to market it." Jarvis is right: "The future of advertising needs to be selling – that is, enabling – relevance instead of selling scarce space, time, or eyeballs. The future needs to be about adding value – relevance – rather than selling scarcity (extracting what the market will bear).”

Equity is the accumulation, the repeated occurrence, of actions, interactions, and transactions that add value. The best way, then, to build brand equity is to repeatedly and consistently add value through all your interactions with customers. Advertising doesn't add value; branded content does (information). Promotions don't add value; branded entertainment does (entertainment). When you brand something, you don't just market scarcity and advertise your products and services, you market your ability to add value that is relevant.

The web, and the social web in particular, reconciles artificial scarcity with relevance, and that's why more and more branding dollars are moving online. It is the ideal forum for creating an abundance of scarce moments, thousands of small great ideas instead of one great big one. These small great ideas come to live in brief moments of attachment with customers that are personalized and truly relevant for them.

"Advertising is failure," says Jeff Jarvis, and he thinks "media only get in the way of customer relationships." And indeed, how will you make more friends at a party? Showing up with a big banner around your neck that says "I am a great friend" or engaging in a handful of conversations with strangers, listening to their stories and detecting affinities whilst accomplishing a sense of privacy that gradually becomes intimate? Right. In the end, that’s what we should be doing as marketers to build real, sustainable brand equity – creating publicity through intimacy, loyalty through decency.

The Conversation Prism

Great chart by Brian Solis, visualizing the conversation economy:
Hat tip to Kristina Loring

next09: Video of "Chief Meaning Officer" Talk

Here's the video of my talk at next09. Note that I changed the title last minute...