Here is the full text of an article I wrote for the Capco Journal of Financial Transformation. Unfortunately the original is no longer available online – only as published by myself here on this blog. If you like this article you may want to take a look at what I have written here, which in the most part are pieces which expand on some of the themes outlined in the article below.
This article exposes the impact of a fundamental shift in the way information moves within our society which is generating creeping obsolescence for the business models of organisations involved in the institutionalised provision or mediation of information, be they newspapers or banks, as well as creating a new information space which is currently called social media.
The article examines the way in which the disruptive effect of this obsolescence is already making its presence felt and sets out a course for organisations who wish to adapt to the world of social media. This is based on shifting investment from control of content and transactional channels into the collaborative, collective and communal assets where value will sit in a world where power no longer resides in the institutionalised capability to control access to information.
If mankind has enough of a future to still have a history, it is possible that the last 500 years will be come to be known as the Gutenberg era on account of there having been one defining characteristic, first established by Johannes Gutenberg, responsible for shaping the nature of society and its institutions throughout this whole period. This characteristic, which could be called the Gutenberg principle, is the fact that the mass distribution of information became possible, but was expensive and therefore institutionalised. This principle has been so fixed and all pervasive that it has become like a hidden foundation and standing as we are now, in the twilight of this era, it is still difficult to appreciate the extent to which it has shaped the fabric of our world. It is only the emergence of a new world, where information does not conform to the Gutenberg principle, that affords us the opportunity to recognise the extent to which this relationship between information and distribution has shaped and created not just organisations like the media, but also other forms of mediators such as banks, lead to the creation of mass consumer brands and controlled the relationship between individuals and institutions of all types, both commercial and political.
This article seeks briefly to expose the extent to which the Gutenberg principle has shaped our world before turning its attention to the likely characteristics of the post-Gutenberg era – the world of what is currently called social media – identifying both the ways in which organisations will feel its impact and also the ways in which organisations will have to adapt in order to survive where power will not lie in the institutionalised capability to control access to information.
The pre-Gutenberg world
In the world before the introduction of the printing press it was not possible to distribute precise replicable information to a large number of people. Information could be captured, in the laborious and time consuming process of hand-produced books, scrolls or tablets, but access to this information was restricted to a small elite group. Transmission of knowledge thereafter had to rely on purely word-of-mouth channels and the form of information that was prevalent was therefore the story, this being the form best adapted to surviving the process of ‘Chinese whispers’ that mass communication involved.
Institutional development was limited and society tended to be dominated by religion and feudal political systems, institutions which were well adapted to the use of narrative or hierarchy as means of propagation or control.
The Gutenberg revolution
It is widely acknowledged that the introduction of the printing press was revolutionary in its impact. It was credited as being the catalyst for the Renaissance, the development of science and creating the pressures which forced power to slip from the hands of monarchs and religious orders and become shared across a much broader section of society. However, there is a temptation to see all of these shifts as history and fail to see the extent to which, what might be called the Gutenberg principle, continues to play an active role in the shape and operation of society and institutions today.
Simply put, the Gutenberg principle can be expressed as the fact that mass distribution of information is possible, but expensive. The effect of the Gutenberg principle was the rise of institutionalised and mediated channels to create the efficiencies and scale necessary to manage the interaction between people with information and needs on the one hand, and the people who wanted that information or could satisfy those needs.
The most obvious example of an institution which emerged was the media but in reality almost all of the institutions that have emerged since Gutenberg owe their existence in some part to the operation of the Gutenberg principle: a bank, for example, at its most basic is simply a way of creating the efficiencies and scale necessary to mediate information about people with money and people who want money.
While the technologies and channels for the distribution of information have developed significantly since the Gutenberg press, the basic structure of the Gutenberg principle has not: it still costs lots of money to distribute information to a mass audience.
The post-Gutenberg world
The emergence of the internet and the World Wide Web in the 1990s was initially hailed by many as ushering in new democratic age, driven by much greater access to information. In reality, while the internet had a dramatic impact, the revolutionary shifts predicted did not occur. This is because, in its earliest days, the World Wide Web still conformed to the Gutenberg principle. Building a web site, accessing server space and publishing information required both money and technical expertise and was therefore still the preserve of institutions rather than individuals. The reality of much greater access to information was not matched by a greater ability to publish it.
Speed of access also limited the ability of the internet to be a channel for all forms of media, restricting its use to text based and transactional forms. As a result, much of the initial investment in the web went into servicing and creating institutional opportunities, with e-commerce emerging as the major new web-based phenomena.
This changed with two developments. First, the spread of broadband internet access made it possible to easily both upload and download all forms of media: video, images and audio as well as just text and transactions. Second, tools emerged which made it simple for people to publish or spread information. Blogging was the first example, followed by social networking and distribution and sharing sites like YouTube and Flickr.
There has been a third trend which is gathering significance, based around attaching relevance and context to all of the otherwise random pieces of information now being published. This concerns practices such as tagging, rating and commenting, as well as services such as social bookmarking and news-sharing sites which allow individuals to store and share information. This trend is responsible for creating forms of collective intelligence and what has been called ‘crowd wisdom’ and is probably the most important area to watch going forwards because of its ability to allow individuals to create the trust and connections necessary to transact and communicate amongst themselves without any institutionalised intervention.
Information can now flow between one individual and all of the potential individuals for whom that information might be of relevance, without any form of significant institutionalised intervention (except the provision of a freely available technological infrastructure). This is what could be called the post-Gutenberg principle although perhaps a better term would be the social information principle.
In very general terms the social information principle is likely to generate a very powerful disintermediating or de-institutionalising effect which, in theory, could have consequences for society at least as significant as those generated in the first instance by the development of the printing press. This is likely to play-out over many years since institutions and practices which have been the foundation of our society for 500 years are unlikely to disappear over-night. However, there are some significant effects of the social information principle which are already upon us, and it is these which are examined in the next section.
Understanding the post-Gutenberg world
There are essentially three ways in which the post-Gutenberg world is already intruding. These are:
- The decline (or slide into irrelevancy and obsolescence) of institutions and businesses for whom information mediation is their principle function
- The rise of transparency and the challenge to institutionalised trust
- The challenge to markets posed by reduced costs of entry and the ability to service niche demands.
The end of institutionalised mediation models
As noted earlier, the Gutenberg principle is hard-wired to a greater or lesser extent into almost every institution that has emerged over the last 500 years because it controls the way in which information flows within organisations and society as a whole. However, it is the businesses which deal with information or content in its purest and simplest form – those that were the first to emerge following Gutenberg’s discovery – that have also been the first to feel the impact of the end of the Gutenberg era.
These are the media, music and film businesses and an examination of their decline is important, not just because of the clues it gives as to how other sectors may be affected, but also because of the role and importance of the media – the news media in particular – in business and the wider society.
Almost all time spent by individuals with forms of social media is achieved at the expense of time spent consuming traditional media. There are many estimates of how this is developing, but one very credible source, Ron Bloom, CEO of Mevio (formerly PodShow) made the case in 2006 that within 5 years 50 per cent of the media consumers consume would be produced by other consumers (i.e. social media). While this may be an estimate at the higher end of the scale, almost no-one has seriously challenged the view that participation in social media is significantly reducing consumption time of traditional media – and consumption time directly equates to the available revenue pool.
This obviously has huge commercial implications for the traditional media (if Bloom’s prediction is correct this will equate to a 50 per cent market reduction), but more generally any organisation which relies heavily on the traditional media for communication or distribution of information will find their ability to communicate severely restricted and they will be forced to enter the social media space simply in order to maintain profile or share-of-voice. This alone could be the factor which forces organisations to engage with social media, especially since organisations which can successfully exploit this space will gain a significant competitive advantage.
What is highly instructive about the decline of the traditional media is the way in which it happening. Many in the media still have a false sense of security based on the idea that the content of social media is not ‘as good’ as the content of traditional media: it’s not written as well, produced as professionally or to set standards of ‘journalistic integrity’. Therefore the idea that a newspaper could ever be replaced by ‘the narcissism of the blogosphere’ or television by ‘the rubbish on YouTube’ seems to them absurd. In reality, their definition of ‘good’ is shaped by the requirement for it to be of mass appeal and, of course, the social information principle dictates that individual relevance rather than mass appeal is what dictates the distribution of information. This belief is underpinned by the false assumption that one form of institutionalised access to information (a newspaper) will be replaced by another institutionalised form of access. Instead what is happening is that the process of information sharing within social media is replacing much of the function of information provision organised by the institution of traditional media. This shift from institution to process is one of the defining characteristics of the shift from the Gutenberg to post-Gutenberg world. This is not happening because social media is doing ‘news’ any better – rather it has changed the definition of news, shifting it from a definition restricted by the economics of expensive distribution to one based on individualised preference. People still want national and international news and content of mass appeal, but in terms of priority, this frequently sits below information about family, friends, work, leisure interests, gossip and neighbourhood.
As Clay Shirky puts it, in his recent book ‘Here comes Everybody’, the media, and the profession of journalism “has been created as a result of scarcity (the ability to publish) … the professionals are often the last to see it when that scarcity goes away. It is easier to understand that you face competition than obsolescence”.
Almost certainly the traditional media will not be the first business to be challenged by obsolescence rather than a traditional competitor. Managers of businesses in many other sectors are going to find their customers deserting them and their market contracting, not because they are doing anything wrong, but simply because their customers have found better ways of doing things or spending their time – usually by cutting out middle-men and transacting amongst themselves.
Transparency and Trust
In the Gutenberg world, trust was institutionalised. Organisations worked to establish reputations such that people would trust anything and everything they did without feeling the need to interrogate it for themselves.
This worked because it was efficient, from the organisation’s perspective and because individuals recognised that they couldn’t (or couldn’t be bothered), to comprehensively interrogate all the organisations they dealt with. They would accept an organisation’s ‘institutionalised representation’ of itself (its brand) – provided they could have a level of reassurance that this representation was reasonably accurate. The one flaw in this model was that if anything caused people to doubt this representation, this would undermine their confidence in the whole institution and cause them to lose trust. However, this could be mitigated against by the fact that, for example, one instance of poor customer service tended to live and die with the individual concerned and maybe the group of friends they discussed it with, and if it did come to greater prominence this tended to be through channels which could be controlled – either sidelined by effective PR or drowned-out by advertising.
In other words, the effectiveness of the model of institutionalised trust rested on two assumptions: people couldn’t easily interrogate all aspects of an organisation’s activities and behaviours nor could they easily publicise examples where the reality of corporate behaviour was found to be inconsistent with its institutionalised image.
Social media is undermining these assumptions. Now that the tools of mass publication are available to any it is possible to expose inconsistencies between claim and reality. Every customer is potentially an investigative journalist, equipped with sound and video recording equipment (i.e. a mobile phone). Forums are springing-up specifically to allow these experiences to be logged and promoted. And even if examples that highlight flaws in institutionalised trust don’t ‘go viral’ or get widespread promotion, neither do they lie dormant or fade away as they used to. Nothing, in the digital world, goes away or lies dormant. It gradually gets linked to other bits of information and pulled into the digital halo or storm-cloud that is slowly building-up around organisations (and individuals) – their ‘digital identity’.
But perhaps the most critical thing is that this new transparency does not demand that everyone takes the time to use these new tools to interrogate organisations – the power of the crowd comes into play. The fact that someone is taking the time to do this and you know it is happening and can interrogate the process if you wish is sufficient. As soon as sufficient numbers can be brought to bear a form of crowd intelligence can be generated very quickly – Wikipedia being the classic example.
Trust within social media is not vested in institutions it is vested within visible process. The best way to explain this is to look further at the Wikipedia example and its battle with Encyclopaedia Britannica. The Encyclopaedia Britannica is a classic example of institutionalised trust. You trust its entries based on your knowledge of the reputation for accuracy it has established and carefully nurtured over the years. You don’t feel the need to look behind or interrogate this reputation in any way. Wikipedia is totally different. You trust its entries purely on the fact that it has made visible the way that entry was produced and refined. Even if you don’t choose to examine the history of every entry, the simple fact that you can do this and there is a process in place which means somebody is doing this, gives you a level of trust. Critically, an element of this trust is based around the need for you to make your own assessment of the process and how much trust you will decide to allocate to it.
It is not that people are going to reject institutionalised trust, but the task of sustaining institutionalised trust is going to become much harder in the world of transparency brought about by social media. Organisations will therefore find that ultimately the only efficient way to maintain trust is to switch to a model based on process, which will mean creating the ability to see in much greater detail how an organisation goes about its business.
Mass markets disrupted by niche effects
This effect probably has fewer implications in the short term for most organisations, but in the long term has the power to be the most disruptive. At the moment there is only one business that is really feeling its impact and that is the music business which has not only lost the power that came from control of the means of distribution (via the rise of music file sharing and downloading) but is losing further relevancy through the sharing of musical tastes and preferences via music blogs and the subsequent loss of ability to channel musical tastes through a restricted number of channels otherwise known as rock or pop stars or bands.
Social media is making it easier to target or relate to much smaller consumer or customer segments and this is making it possible to create businesses that target niche markets that were previously not viable. In the past, it was difficult to be a niche brand and it was very difficult, if not impossible, to be a niche brand that could challenge the big players in terms of scale or ability to operate in the markets within which these players operated. This was because, rather obviously, niche implies that customers are spread out in such a way as to make them difficult to access or aggregate and because the costs of entering a market and then competing with big brands for attention and retail or distribution space are significant, you need to attract a large number of people to make this viable.
This is changing. Much of the costs of establishing and maintaining a mass brand are invested in what could be called Gutenberg assets, i.e. buying the channels and media to reach your consumers or customers. But within social media, distribution is free and if you know how to communicate within social media this levels-out the competitive playing field between big and small brands. In fact, it can often tip the bias in favour of the small, because they are often more flexible and responsive and can adapt to the behaviours and practices within social media far more readily than big organisations. Social media also opens up the economics of the ‘Long Tail’  providing access to and the ability to aggregate market share from parts of the tail not previously available.
At the same time, the costs of product development and market entry are coming down as organisations learn how to leverage the power of the crowd. The concept of ‘crowdsourcing’ or ‘open sourcing’ is advancing, whereby the ability to design and develop products and services, or at least contribute to this process, is shared across a large group of people: people who may then become the eventual market, thus further saving on marketing and market entry costs.
The rise of the niche is also further empowered by an existing trend – that of separating out the economics of product design and marketing from product manufacturing. Most big brands already outsource their product manufacture to China or parts of the developing world. While this seemed to make sense in the short term, it also meant surrendering any competitive advantage that lay within the process of manufacture. This didn’t seem to be an issue at the time and the brands that did this surely didn’t realise that they were essentially levelling the playing field for a huge new set of competitors – creating a high quality manufacturing capability available to all.
These new niches are unlikely to create totally new markets, instead they will succeed by taking tiny bites out of the markets created and controlled by mass brands. The net result is that many mass brands are going to realise that large chunks of what they thought was their consumer or customer base are only aligned behind their brand or product out of necessity or convenience and because there was nothing else available. They are not there out of any fundamental loyalty or commitment and as more tailored alternatives emerge, they will simply drift away.
The increased ease of market entry combined with lower costs of competition will mean that new brands can spring-up and then die-off relatively quickly, potentially creating a segment within a category that is in a continual state of flux, populated by temporary ‘category squatters’. This could also be hugely disruptive to the more established category players.
Adapting to the post-Gutenberg world
In this section we look at the more specific implications of the post-Gutenberg world and start to chart the steps all organisations can take to mitigate their effect or profit from their development. But first, a word of caution. The unpalatable truth is that many business models may find they have very little long-term future in the post-Gutenberg world. The fact there have been only two significant casualties to date, in the traditional media and music business, is because these businesses operate as pure play content mediation services and are thus exposed to the basic, entry level, forms of content sharing and distribution that social media has currently developed. However, social media is in its infancy and has yet to develop the structures that will allow it to bring to bear collective and crowd-based mediation and brokerage into more complex areas such as banking and financial services. Thus, while it is possible in theory to construct a world without banks or institutionalised mediators of financial services, this remains a world some way-off, even if the initial signs and clues are already there as to how this might develop with things like peer-to-peer lending via Prosper.com, the management of financial information in sites like mint.com and the sharing of financial information and advice in sites like wesabe.com. None-the-less, this should not induce complacency. The time that it will take for the transformative impact of social media to affect sectors like financial services is, in itself, a critical asset that must not be wasted. The changes involved in adapting to the post-Gutenberg world will be substantial and can only be managed through progressive, long-term and sustained effort. The organisations that succeed are likely to be those that start the journey earliest.
In terms of starting this journey rather than try and peer too far ahead into the future and make significant strategic decisions against outcomes that it is still very difficult to predict with any certainty, the best approach in adapting to the Post Gutenberg world is to start the process of shedding investment and asset in areas that might be called Gutenberg dependant and developing assets and competencies that have value in the social media world.
The principal shift to make here is away from ‘hard’ investment in Channel and into the three ‘soft’ spheres of Content, Conversation and Community.
Looking at this in more detail: in the Gutenberg world the key to success generally lay in control of channels, be they channels of information, content or transaction. Social media is giving control of channel to individuals rather than institutions and allowing information, content or transactions to become non-channel dependant. Therefore, rather than try and own the channel the opportunity now lies in the things that will flow through the channels and in understanding what it is that the channels will connect.
The new channels will broadly speaking contain two things. First a vastly increased load of information or content brought about by the fact that everyone has the ability to publish and distribute information and secondly conversation, in the sense of direct interaction between individuals. The connectors or nodes in the new model will not be institutions, rather they will be digital communities where individuals coalesce and where much of the process of mediation and knowledge sharing will take place.
In very brief terms these new assets or competencies can be described thus:
- Content – the ability to start seeding and colonising your digital space with a broad range of discoverable content and information, tailored to niche interests, which will draw the relevant people to you and help generate trust
- Conversation – the ability to engage your key audiences and allow them to start to make a contribution to the products and services you provide – i.e. not simple to be passive receivers
- Community – creating or supporting the ability of those people whom you have engaged in conversation to start to talk and transact within themselves about the issues relevant to the products and services you provide.
Below we look at tangible ways organisations can develop competencies in all of these three areas as well as looking at some examples of organisations that are succeeding.
It is possible to represent engagement with the new assets of content, conversation and community as a form of a journey – as represented in the diagram below. The easiest place to start is simply by taking your current content asset and making it more digitally available and discoverable. As a very simple illustration of this, video assets are much more discoverable and available in YouTube than they are if they are locked-up in a website. The ultimate destination is the ability to share control of aspects of your business with communities that you have no ownership or control over. This may seem a ludicrously far-fetched idea but its relevance as a destination lies in the fact that, as we shall see below, communities are likely emerge as the seat of power in the post-Gutenberg world with institutions simply providing the infrastructure required to help communities interact with each other. This power shift will play-out over the course of many years but it is a radical shift and therefore one which can only be accommodated progressively. Those institutions which start the journey now are therefore likely to be the ones still around 10 or 20 years hence.
As the diagram suggests – the key to success in this journey is the progressive ability to start to share control with your stakeholders. For example, it is not possible to have a successful one-way conversation and many companies are already discovering the value in encouraging customers to create and share content: the so-called Consumer (or User) Generated Content. While it might be attractive to believe that you can progress from content into conversation and then community by following a horizontal track and retaining complete control there are very defined limits to this approach. At some point it will become necessary to generate the elevation that comes from shared control because effectively engaging in conversation and community is impossible without it.
In the Gutenberg world organisations produced a restricted range of information. That which was produced was expensive and of high production value, for example advertising, brochures, corporate videos or corporate websites. This was because the Gutenberg principle dictated that it had to be of mass relevance in order to subsidise the high cost of distribution. Simply put, if you are spending millions buying media for an advertising campaign you will want your content to be as focused and high quality as possible. (Note: focused should not be confused with niche in that focused is about crafting a refined proposition that can capture the generic interest of a large group, whereas niche is about crafting information of high specific relevance to small groups).
At the same time, the rules for maintaining institutionalised trust dictated that information and information channels be restricted so that they could be controlled.
The rules of content are different in the post-Gutenberg world because the cost of distribution no longer applies. This creates both the opportunity and the need to produce a much broader range of information.
Looking first at the opportunity – the dynamics or ‘acquiring customers’ are changing. In the social media world you do not acquire customers, instead, customers acquire organisations and the way that they do this is through the process of picking up, sifting and following a large swathe of information, either as an individual or through the use of collective or crowd-based recommendation systems. Even when they are presented with a direct approach from a product or service provider they are unlikely to respond without first having validated their choice by consulting ‘the crowd’ and in particular testing their specific need rather than responding to generic assurances. Crowd intelligence cannot be created easily by pushing-out mass communication because ‘the crowd’ only responds on the basis of individual relevance. A better way to inform crowd intelligence is through a digital bait strategy – throwing out a mass of very niche and specific information that can act as digital threads that can be traced back to products and services. Organisations that can push-out a fine-mesh network of relevant digital content threads the furthest are therefore likely to capture the greatest interest. Whereas the question for communication in the Gutenberg world was “is it relevant enough?” the question for the post-Gutenberg world is more likely to be “is it irrelevant (i.e. niche) enough?”
Looking at the need to create a much broader, richer and discoverable content asset, we have seen in the previous section how trust is shifting from institutions to processes and why it is becoming harder and more expensive to maintain institutionalised trust models. The way to respond to this, and make the shift to a trust model based on visible process, is to give greater visibility to the things that you do, providing information to ‘the crowd’ on your own terms rather finding that ‘the crowd’ has broken-in and exposed the information. This has the added advantage of discouraging ‘the crowd’ from breaking in the first place.
How therefore should an organisation approach the development and extension of its content asset?
The first step is to recognise the concept of relevant digital space. In the past, organisations tended to view their digital space as that which could be captured or controlled by their corporate website or e.commerce operations. What is happening now is that digital spaces are being created that are much broader and more sophisticated than this. One of the best ways of illustrating this is to do a Google search on your company name. With any luck, your corporate website will appear at the top of the search. However, it is likely that the majority of entries in the top ten and certainly top twenty are created and driven by other people and organisations creating content that is about you or the sector in which you operate. Such a test gives a very basic indication of the boundaries of your relevant digital space and a more sophisticated investigation will start to reveal its intricacies and influencers in more detail. The challenge for all organisations is to understand and then exert a level of control over their relevant digital space and recognise that this can’t be achieved from behind the wall of a corporate website.
Once an organisation has this understanding it can start to colonise this space with relevant content threads as well as recognise which of the other players within that space, communities, networks etc. it needs to either monitor or engage with. There is an element of urgency here. At the moment very few organisations have a good understanding or control over their digital spaces and these spaces are not exclusive. They will be shared to a large extent by all of the organisations competing in that sector as well individuals and interest groups. The ability to establish as broad a presence as possible, and be amongst the pioneers to spread a network of content threads will deliver significant competitive advantage in the short term, both in terms of staking-out territory but also in terms of controlling the message. As the space becomes more crowded or penetrated, this process will become harder.
The next step is to create the publishing platforms necessary to launch content into this digital space. Traditionally corporate websites have been designed to be places individuals are driven to and contained within – a walled garden approach. However, as we have seen, most of the relevant digital action is taking place outside of this garden and traditional websites are not very good at launching information into this space. The switch within corporate websites therefore needs to be from walled garden to plant nursery approach, so that the people that are driven to the site can find information which they can pick up and use or distribute. However, a more effective and easier strategy than re-designing corporate websites is to adopt the publishing tools and platforms that individuals are using to colonise digital space.
Probably the simplest first step here is to use a blogging platform to create an on-line newsroom – even if you have a newsroom or press releases within you corporate site. A blogging platform has all the functions necessary to produce social content built into it – such as the ability to use RSS feeds, content which is automatically tagged to be search-engine friendly and the ability to create a level of interaction through commenting. Put simply, a press release published from such a platform will be far more discoverable and social media optimised than exactly the same release imprisoned within a corporate site. It will have the ability to find its relevant audience, rather than rely on an audience being driven to it.
Such a platform also has the advantage of being able to operate in real time – publishing through it is very easy and fast – and once established it can be used to launch any sort of content as well as being a hub to link together other places where you may wish to place content such as videos in YouTube or images in Flickr.
Looking at this later point in more detail – there are now many sites exclusively devoted to the distribution, sharing or mediation of digital information. YouTube and Flickr are perhaps the best known, but there are others such as news rating sites like digg or social bookmarking sites such as delicious or StumbleUpon. Identifying and establishing a presence within these sites or networks is therefore critical in spreading a network of content threads and the ability to do this should become a core competence of a marketing or corporate communications department.
The other publishing tools which are available include the likes of micro-blogging, such as Twitter where people publish 140 character messages, or FriendFeed which people use to collect in one place all of their digital publishing activity. These may seem rather esoteric tools for corporate use – but it is worth noting that institutions such as the BBC, Downing Street and NY Times all use Twitter and that monitoring Twitter is the most effective way of keeping track of breaking digital news about you or your sector. Almost every news story relevant to your organisations will have first surfaced within Twitter via the people immediately exposed to it, before being picked up by blogs together with images or video posted in YouTube or Flickr. It will then make it to the on-line operations of news organisations before finally appearing in traditional news broadcasts and finally print publications. If you restrict your ability to detect and respond to such information to contact with traditional news organisations you will have missed the opportunity to engage and respond at the crucial early stages in the development of an issue.
Microsoft is a good example of an organisation which recognised, at an early stage, the benefits from creating niche content. In 2004 it allowed a group of employees to form an initiative called Channel 9, which was essentially five people with camcorders wandering around the organisation interviewing engineers about their jobs and products. These clips were then posted, largely un-edited, to a website. Despite resistance and protest from some within the organisation, especially those in PR and legal with a vested interest in controlling reputation, the initiative has been hugely successful and responsible for a transformative effect in Microsoft’s reputation and relationship with the wider software development community as well as shifting overall corporate reputation away from a remote and arrogant organisation to one which is open, flexible and transparent. It is also a classic example of how an organisation can make the shift to a process-based trust model. Interviewed for an article in Wired magazine on this issue, John McKinley, former CTO and head of digital services for AOL, said, “The messages coming out of Microsoft used to be so one-dimensional and managed. Now you can get four clicks into the organization and see engineers talking about products. It gives Microsoft a human face.” This Wired article presents a highly informative overview of Channel 9 and the wider initiatives in corporate transparency it spawned.
Coca-Cola is developing a different approach. The organisation has recognised that it its archive is a valuable content asset in terms of material that is not only readily available, but which also re-inforces its desired brand image as original and authentic. It has therefore created a blog for its corporate archivist, called coca-colaconversations.com which serves as a content platform to launch information about Coke’s history into the digital space a well as serving to generate conversation and encourage the development of the community of people interesting in Coke memorabilia.
Within financial services First Direct is an interesting example of an organisation that is responding to the opportunities of digital platforms as a way of distribution content via its interactive space on its website. In particular it was an early adopter of podcasting. However, this initiative is undermined by the fact that all its content is still imprisoned within a corporate site and the information itself is ‘Gutenberg content’ i.e. an institutionalised representation designed for mass consumption rather than a Channel 9 type of authentic representation designed for discovery by niche groups. Many organisations early experiments, with podcasts in particular, reflect similar weaknesses.
Conversation is a more difficult asset to develop than content. There are two reasons for this: first it is necessary to establish what you can have a credible conversation about and second, conversations need to have humans at both ends of them and this has implications for use of, and investment in, people.
Turning to the first point – one of the problems that organisations frequently encounter when they wish to develop conversation with their customers or stakeholders is that the things the organisation wishes to converse about are not the things the ‘target’ wishes to speak about. This is because the organisation is making the mistake of taking the content it used to produce in the Gutenberg arena and simply dumping it into social media. Thus an organisation may think that it wants to have a conversation about a new buy-to-let mortgage it is launching, when the people it wants to talk to would much rather talk about the whole issue of buy-to-let and why such products are generally higher cost and less flexible. In more extreme instances there have been examples of hair care brands trying to talk to their consumers about music – on the assumption that music is relevant to their target audience, forgetting that their product and area of expertise gives them no credibility to talk about this and that even the music business is losing its ability to engage credibly with consumers of popular music.
The only solution here is to spend some time looking within your digital space at the conversation threads that are already there – and then identify where your organisation may have something to offer. This raises the second issue, namely the time involved, because this type of digital browsing is time intensive. It can’t be done by a machine, only a person, especially when it comes to actually responding to issues that are uncovered. Organisations are solving this in two ways, either simply by recruiting more people to spend time within their digital space (Dell for example has a whole team of people devoted solely to Twitter) or to spreading the conversational burden across the whole organisation. Microsoft has deliberately instigated a policy to encourage its employees to blog about their work and now has in excess of 4,500 of them doing so. The thought of 4,500 bloggers within a business seems a terrifying prospect to most CEOs, corporate communications directors and in-house lawyers. However, the experience of the organisations that have embraced this approach has usually shown that the application of a basic blogging guidelines policy, plus assumption of a basic level of common sense amongst their employees, is enough to avoid most of the control and disclosure fears and, in-so-far as there are any negatives these are usually significantly outweighed by positives in terms of the ability to generate the engagement and support of customers and stakeholders.
In terms of the expense of recruiting people to manage conversation, organisations tend to find that as they engage with social media, their need to spend money buying media and channels of distribution decreases significantly. Thus they are able to shift resources from buying traditional media to making social media and the function of their traditional media spend and communications changes, becoming much more focused and tactical and much less about trying to sustain brand image. This is very eloquently explained by Andy Lark, Dell’s Head of Corporate Marketing in this video interview (http://tinyurl.com/5kgelz) captured at a Dell product launch recently.
Dell, in fact, represents a very good example of an organisation engaging in conversation. It is also probably the best example of a large organisation that has really grasped the benefits of social media. Interestingly, Dell’s current leadership here was prompted by a painful experience of the changing power relationships in the post-Gutenberg world. In 2005, a blogger called Jeff Jarvis had a very bad experience of a Dell computer in terms of product failure but also customer service to get the laptop fixed. He blogged about this and his posts were widely circulated and became ‘branded’ Dell Hell. Dell’s response, eventually, was not only to fix the original issues which were causing offence, but to then proactively engage in talking to its customers, first through a number of corporate blogs and then through an initiative called IdeaStorm. IdeaStorm allows customers to contribute suggestions to Dell about products and services they would like to see. These can then be discussed and voted on by the community of all contributors, including Dell people themselves and this community is then informed about what specific actions Dell is taking. This blog post by Anthony Mayfield (http://open.typepad.com/open/2007/04/blogs_changing_.html) presents a good summary of the Dell experience, with links to the original Dell Hell posts and the ultimate reaction of Jarvis himself who has stated that if Dell “keeps on the road it’s now on, it could well end up being the smartest company in the age of customer control.”
The area of community represents a further step-up in terms of degree of difficulty than conversation. It is also the area which is only just starting to form and we therefore have to rely far more on extrapolation and prediction to give some clues as to how it will operate.
The rise of MySpace and Facebook as well as more professional networks such as LinkedIn and Plaxo has stimulated a great deal of interest in social networks. What is often overlooked is that these are not really social networks, they are simply facilitators of social networking and in-so-far as people have tried to create networks or communities within these infrastructures, they have not been especially successful. Facebook Groups for example, despite much initial hype, rarely become established as true communities. However, what the Facebook revolution has achieved is the desire to create mini-Facebooks, either within organisations to replace corporate intranets or based around much more specific subjects of interest. In response to this demand there has been an increase in the development of what are called ‘white label social networking tools’, hosted software products, like blog platforms, which allow people to create their own social networks.
This has started the process of familiarising people with creating and participating in digital communities, often building on behaviours they first became familiar with in a Facebook or LinkedIn. The rise of social networks within the work environment – a trend called Enterprise2.0 – is further normalising this type of behaviour in much the same way as email usage and culture was introduced via the workplace. The technology research company Forrester has recently forecast that Enterprise 2.0 will become a US$4.6 billion business by 2013. A very good example of an organisation engaged in this is BT which has developed a range of network based tools for its employees and appointed a head of social media – one of the first organisations to make such an appointment (see http://tinyurl.com/4jpcz3).
The net result of this activity is two-fold. First, individuals are discovering the benefits from creating small digital communities based around focussed needs and interests. Secondly, organisations are becoming interested in the commercial opportunity in creation and ownership of community – often looking to convert what was previously a customer database into a community.
This clearly is an area of great interest for financial services organisations which have a database driven relationship with a large number of customers. The difficulty here is that the terms of engagement established via a database driven relationship do not necessarily accord with rules that apply within a successful community. Successful communities are based around interaction between individuals and this dictates that they tend to be relatively small and also that the role for institutionalised participation is restricted.
What is more likely therefore is that in the future individuals will gather together in communities in order to collectively manage their interaction with institutions, rather than allow themselves to be managed within communities controlled by institutions. The community will become the new individual – but an individual which has far more leverage and power than was previously the case. This is especially likely to be the case within financial services where the benefits from communal or collective action can be easy to define and where there is an established history of collective action in the form of co-operatives, mutuals and friendly societies – albeit the Gutenberg principle determined that these collective benefits could only be achieved through the creation of large institutions. The social information principle now makes these benefits available to much smaller communities.
This suggests that the role for organisations in financial services lies not in trying to create and own communities but in facilitating and supporting the process of community building within their customer base, essentially becoming a community host and creating the permission to supply such communities with the infrastructure and products they need to transact within and between themselves. A good recent review of some of the things happening within financial services can be found on the blog / on-line publication ReadWriteWeb (http://tinyurl.com/3ezj5m) Unsurprisingly these are all independent specialist services, but they give a clue as to the sorts of services financial services organisations could be building within their customer base.
As previously stated, this is still very much a blue sky area. The creation of digital communities is in its infancy and participation within them by the mainstream has yet to occur. It is therefore difficult to see what the dynamics of digital communities might be and how the balance of the relationships between individuals, communities and institutions will pan-out. None-the-less there is enough evidence of the potential power of the focused digital community to suggest that organisations should closely monitor the development of such communities within their digital space and participate in the process of community formation along the lines suggested above.
Looking once more at Dell, its most recent social media initiative has been the launch of a community called Digital Nomads designed to align itself to the needs of mobile workers. It is too early to see if this initiative will garner the success and plaudits of IdeaStorm, especially since this is less about creating specific communities or sense of community amongst its customers and more about the creation of a sense of global community around an issue. However, perhaps the most instructive thing is that a leader, like Dell, has chosen to head in this direction.
We are just starting to recognise that we standing in the twilight of a world that has lasted for 500 years. It is a world which has become shaped by the institutionalisation of the information that flows between individuals. The world we are moving into is one where new technologies are making the process of institutionalised mediation obsolescent. Information can flow between one individual and all of the potential individuals for whom that information might be of relevance, without any form of institutionalised intervention except the provision of a freely available technological infrastructure.
It is unlikely that power and influence in the world that is now forming will lie in the control of channel. Instead it will be vested in forms of community, which will have a tendency to exclude any forms of institutional interference, control or ownership. This new world is in its infancy, but its principal characteristics are starting to become apparent as is the significant transformational challenge for organisations that wish to manage the transition from one world to the next. It is only by understanding the shifts that are taking place and switching investment from channel based assets and competencies into assets and competencies that reflect the collaborative, collective and communal characteristics of the post-Gutenberg world that organisations will be able to protect themselves from functional obsolescence.
Update: This is a somewhat old post, although nothing that I have seen since has changed me to doubt its’ fundamentals. In fact, most of the mistakes being made in social media stem from a lack of recognition as to how profound the impact of social media might be and how different the rules that govern this new space are. Many organisations are trying to shape this new space work around their existing strategies, rather than shape their strategies to the new space – and therefore either wasting money or failing to really exploit the opportunities available. If you want some more up-to-date analysis you might like:
Content: what content? A look at how content and engagement work in social media
Stop wasting money on social media and social media agencies Self explanatory really
Facts, lies and probability A thought on how mediation may operate in the social space
The rise of the story: or why social media may kill P&G A more detailed look at the importance of stories as the basis for marketing
The sanctity of publication A pop at traditional journalists and the information elite (this is my favourite ever post, and it is actually quite short)
This idea was expressed as the 5:50 prediction – i.e. within 5 years, 50 per cent of the media consumers consume will be produced by other consumers, while speaking at the IMedia Connection Brand Summit, Florida, 2006
 Anderson, Chris (2006). The Long Tail: Why the Future of Business Is Selling Less of More. New York: Hyperion. ISBN 1-4013-0237-8 see also http://en.wikipedia.org/wiki/Long_Tail
 Operation Channel 9, Wired Issue 15.04 – March 2007