Matter/Anti-Matter

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.

I'm still processing the many great insights from the next09 conference in Hamburg, Germany, one of Europe's leading digital-creative-marketing forums. This year's theme was "Share Economy," and the 1,300 attendees consisted of European VCs and angel investors, Web 2.0 entrepreneurs, media, creative agencies, and executives from German corporations (from BMW and Deutsche Bank to Deutsche Telekom).

 

Jeff Jarvis: "The Great Restructuring"

The first day, the keynote day, was a little disappointing, maybe because expectations were so high. Jeff Jarvis warmed up the crowd with his trademark "What Would Google Do?" PowerPoint deck. While a terrific thinker and speaker, for some reason he and the audience did not really click although he presented a lot of thought-provoking content. The rather stiff response may be attributed to the fact that the attendees were either too familiar with what they heard or felt slightly overwhelmed. Or maybe they were indeed excited--but too German to show it…

Umair Haque, who followed Jarvis, faced an even tougher, albeit partly self-inflicted challenge: explaining the new paradigm of "Constructive Capitalism" in 45 minutes. That's like asking Marx to walk you through his Communist Manifesto in Twitter. It didn't help, certainly, that Haque used the much gushed-about Prezi presentation software; all the zooming in and out was dizzying and, if anything, exposed the lack of stringency in his outline.

Fortunately, Haque had an opportunity to correct this first impression and reiterate some of his thoughts on a panel with Jarvis a day later, which turned out to be a much more suitable format for his ideas on the transformation of capitalism. He also took the occasion to rebut the attacks of Andrew Keen ("The Cult of the Amateur"), who, on the opening day, had chastised Haque (and all the other thinkers he considers to be under the dark influence of Silicon Valley) for propagating rampant free market liberalism and a dangerous new radical individualism in the guise of the social, consumer-empowered share economy that the conference was celebrating. Keen poignantly remarked that Twitter was getting us back into the 18th century, rather than liberating us from institutional hierarchies. He said it would reinforce an old power structure and an all too human division of roles, between those who follow and those followed.

 Andrew Keen: "Digital Vertigo"

Jeff Jarvis & Umair Haque: "When Money Talks"

Keen accused Haque et al of naivete and insisted that Google and the other Web juggernauts were not "leveling the playing field" through link love (by sharing the scarcest resource on the web: attention), as Haque had claimed, but were rather using it to expand their pursuit of world dominance. In Keen's eyes, Google's openness is nothing but a suave mechanism to foment a monopoly in the attention markets. In the same vein, a party pooper in the audience asked Jarvis: "If free sharing is the future of business, why doesn't Google share its page rank algorithm?" Jarvis' response wasn't all too convincing, "concerns over malicious abuse of the data." So much for radical transparency and trust as overriding principles in the share economy.

To Google's (and Jarvis') defense, one could counter with Haque's sharp line: "When we're all hyper-connected, the cost of evil goes up." True. Moreover, Google does provide real value as it has created a win-win-win business model (advertisers, consumers, Google) that is vastly different from the toxic chunk Haque bemoaned in the nonsustainable and ultimately value-free products that toppled capitalism as we knew it: the Hummer, fast food, derivatives, and so on. And yet, if advertising is the admission that you have a mediocre product, and that it is in fact an expression of "failure," as Jarvis put it, then it is hard to reconcile this view with the fact that advertising remains the main revenue stream in the very Google economy from which Jarvis wants us all to learn.

Despite the flaws in Jarvis' and Haque's thinking, however, I am eager to defend them. It's easy to deconstruct constructive visions of the future as ill-informed descriptions of present realities but it is a much bigger task to actually come up with a positive vision. Keen, the rebel with a good cause, does nothing but throwing a bomb, which he readily admits, but he falls short of offering an alternative to the frameworks Jarvis and Haque and others provide in response to the fundamental crisis of capitalism.

Google wouldn't care about any of this intellectual arm-wrestling all that much. It is fully consumed with doing what it does best: firing out beta-products and services, successfully failing by failing rapidly. One mistake that it made, however, may arguably have lasting implications. It didn't buy Twitter. And so the question, it seems, is no longer "What would Google do?" but "What will Twitter do?" Does Twitter mark the beginning of the end of the Google economy?

Jyri Engeström, who sold Twitter-competitor Jaiku to Google and is now a Google employee, might have a clue. On a panel with social media guru Chris Messina he offered some good insights on microblogging trends on the Web and defended the new Google Profiles ("you have to opt in"). Messina seconded him and brought up another interesting point that established the context for upcoming business models in the Twitter economy: the "glocalization" of Twitter. He described how Twitter is failing to extend the real-time conversation to the whole world, simply because of time zone differences: one part of the world is always sleeping when you're tweeting. The instant social Web conversation is therefore asynchronous, after all, and it is an interesting thought experiment to envision services that bridge the time zone gap and deliver tweets when the recipients can actually receive them (keeping them on the top of the feed), almost like an echo across time zones. What if the real value of real-time was the delivery of tweets when it really mattered?

The whole time dimension of Twitter is uncharted but valuable territory, and there are other add-ins, integrators, and localization services that will emerge in this vibrant new ecosystem. The conversation on the social Web is as rich as the human communication (if not richer), and it is just beginning to fully emerge.

What everyone agreed on at next09 is that the next big frontier on the Web (and in the Twitter economy) is how businesses talk to their customers. We are witnessing an irrevocable convergence of players. Conversational services such as Twitter and Yammer are moving into the social networking space and are acquiring the credentials of social networks and collaboration tools, while traditional social networking sites such as XING, LinkedIn, or Facebook are embedding conversational features to catch up with the irresistible pull of real-time communication.

For both groups, and, in fact, for all other companies, Umair Haque's advice is golden: Take one of the big ideals (democracy, peace, transparency, equality, and so on) and apply it to an ailing industry that is in need of transformation or at least some serious disruption: health care, finance, news, energy, government--you name it. Combine that with the principles of the Twitter economy--transparency, instantification, collaboration, and free sharing--and you have a winner.

A few months after Barack Obama’s historic election, and a couple of weeks after the release of Barry Libert’s and Rick Faulk’s book Obama Inc. (and, of course, Obama's inauguration), the first start-ups are popping up that directly apply some of the widely heralded business lessons emerging from the innovative campaign. The fact that most of these lessons lie in the marketing domain supports the view I’ve expressed earlier and on numerous occasions: 1) Marketing will (again) become the number one change agent in business, 2) when it follows the new rules of “marketing with meaning,” that is, marketing which (simply put) consistently creates added social value – not as an afterthought but a sine qua non. While marketing has always been the art of turning friends into customers and customers into friends, it is now the art of finding, befriending, and “activating” the like-minded for a common cause, for the common good, for profit. Marketing, as the “voice” of business, is THE interface in a time when interface is everything. Marketing is the software. And software drives the value of products.

A recent example of this kind of Obama Inc. start-up, San Francisco-based firm Virgance, was featured in the Economist this week, and the article indicates that social impact in an activism 2.0 world is shifting from a welcome side benefit to an integral component in the business models of Internet entrepreneurs. The new kids on the web have internalized the lessons from the Obama campaign, and now they want to make a difference, too – and money. The Economist describes Virgance’s model as “for-profit-activism.” Named after a plot device in Star Wars, the company aims to support social causes through a multi-pronged campaign platform that resembles the way Obama for America mobilized its supporters, and it typically consists of four core elements: a web-empowered volunteer network, a presence on Facebook, a team of paid bloggers to promote the campaigns, and YouTube viral videos. Among the first Virgance-supported campaigns are 1BOG (“one block off the grid” – aiming to convince homeowners to switch to solar energy), Carrotmobs (public contests that incentivize retailers to become green), and Lend Me Some Sugar (based on the Facebook application that gives users virtual sugar cubes for donations to a cause of their choice).

Virgance is not the first for-profit-do-gooder of course; there have been plenty of others whose business model combines bottom line thinking with social value: the Economist, for example, puts Virgance in a line with Project RED. But Virgance is more like Facebook Causes. It adopts the forces of “Here Comes Everybody” and builds its entire business on a social web platform, embracing the principles of open-source, mass collaboration, and transparency: “If a for-profit company did the type of work that non-profits often do, but did it more efficiently, would people trust it the same way they trust non-profits?” the Virgance web site describes the company’s ambitious mission. ”What if everything the company did was completely transparent? What if it was open source? If we can create this kind of company, and succeed, how many other companies would follow our example? Along the way, could we change the face of the business world itself?”

Does that language sound familiar? The Obamapreneurs are adept at turning their campaigns into movements. Clearly, the Obamanization of business – both in terms of substance and style – has arrived in reality, and we will see more Obama Inc.’s in 2009.

On February 27-28, IESE Business School will gather entrepreneurs, scientists, foundations, and corporations at its annual student-run Doing Good and Doing Well conference in Barcelona. It’ll be interesting to see how the Obama gem will make its way into the more old-school world of CSR (corporate social responsibility).

The new issue of our design mind magazine is out. The theme is "Motion," and it features a great interview with famed ballet choreographer Alonzo King, who discusses the risks and rewards of collaboration with San Francisco Chronicle dance columnist Rachel Howard:

"Collaboration is always risky. You don't have total control. Also, with choreography you have such a short amount of time to do it. If you're writing a book you've got years; a film, you can shop it around; Broadway, take it out six weeks for previews. With most choreographers, you've got to create the thing now. So I like to pretend I have absolutely no deadline. So we can play [with] every possibility of stupid mistakes, which are fertile, before you close the box and say, 'This is how it has to be.' There has to be a floating balance. And that's the reality of life.

In design, you'll hear people say, 'Yes, I'm going to do a series of chairs and they're going to be Shaker-inspired.' You'll hear people talking about appearances. But Shaker came out of what? A belief system. When Shakers are talking about efficiency, they're talking about a lean life with no fat, you know? When they're talking about economy of craft, they're talking about humility. This is a belief system. And true stuff has to come from inside out. That's where real design comes from. It has to be based on truth. Has to have a sense of wonder. You must bring something to it that no one else has because of who you are. What's interesting about you is you. Now, do people get rewarded for being someone else? Yes. Do people pay for a good knockoff or copy? Yes. But each one of us is an enigma. And we've got to figure out that enigma of our own lives before we close our eyes to the world."

Read the full interview

On the occasion of Independence Day, Steve Rubel reflects on the growing independence of knowledge workers in the network economy and predicts the rise of "Digital Nomads:"

"If you spend as much time on the road as I do, you're likely to run into Digital Nomads. This sector of the workforce includes both independents and corporate workers. They use web-based tools like Twitter, wikis, Google Docs, social networks and Skype to collaborate and work wherever, whenever and however they want.

(...)

The reality is that many of the tools that workers need to do their jobs are becoming free or low cost. This extends into verticals as well. For example the Google Ad Planner, which launched last week, theoretically could allow anyone to become a nomadic media planner.

Digital Nomads are growing in numbers and they will create ripples. This trend will accelerate use of Web 2.0 technologies in the workplace. Over time, this may slow the efficacy of email marketing and accelerate the reliance on social media engagement.

However, it goes deeper than that. If you don't allow your employees to become nomadic, they may do so and even compete against you in the process."

Remember the movie The Game, with Michael Douglas and Sean Penn as unlikely brothers, shot before the backdrop of vertiginous San Francisco?

Well, here's a new interface for the city by the Bay: SFZero is "a new representation for the data that's already there. Your mind is full of inaccurate representations that are affecting the way you use the San Francisco data flow, steering you away from interaction and collaboration and toward unproductive reflexive data loops.

SFZero designers are working double shifts to engineer this next-generation interface that will bring you together with your cohabitants to experience the freedom that is hard-coded into San Francisco's protocol."

Sounds enigmatic, looks enigmatic, and is enigmatic. I am therefore not sure if I fully get it, but in any case, SFZero seems to be a new kind of ARG (alternate-reality game)--a "Collaborative Production Game," as they call it.

"Let Someone Else Plan Your Day!" SFZero says. "Release total control of your life to an anonymous source that supplies you with instructions and directions!"

How can you not sign up for that?

Hat tip to Chelsea Holden Baker.

It's been a lackluster soccer season so far, especially in my favorite league, the Spanish Primera Division. The performances of the two top teams, Real Madrid and FC Barcelona (Barca), have been inconsistent, and while both have displayed some exceptional skills in their best matches, the passion, the surprise, and the big drama, all of which crucial elements of soccer's unique appeal, have been largely missing.

There is hope that this will change on Sunday when the two archrivals battle each other for the first time this season, in the derby of derbies, "El Clásico," which is historically loaded with enourmous psychological, cultural, and political significance. This edition is a special of specials: Madrid is leading the table with four points ahead of second-placed Barca, and the upcoming clash, the last game of the first half of the season, can potentially give Real a comfortable seven point cushion over Barca during the winter break.

Innovation is rare

Looking back to the past Clásicos and looking forward to the encounter on Sunday, I have been wondering what can make the difference when two equally star-studded teams compete. I think I have found the answer: innovation. The more innovative team won the past games, and the more innovative team will win this time. This hypothesis is as simple as it is challenging. Soccer is often used as a metaphor to describe innovation in a business context ("meaningful innovation is like scoring a goal in soccer -- it doesn't happen often, but is always a hallmark that differentiates the winning team"). But what does innovation actually mean in soccer?

First of all, if you examine the history of soccer for groundbreaking, "game-changing" innovations, you realize they have been scarce; by and large the game hasn't changed much. Some innovations resulted from a changing of the rules (on the macro-innovation level, if you will). Most of them, however, were truly driven by either organizational or individual excellence: for example, the position of the "Libero," the "sweeper" before the goal-keeper, who, freed from marking a direct opponent, was mandated with opening a team's game from deep in its own territory (German legend Franz Beckenbauer perfected this role in the 70s); the allure of the "playmaker" (personified by the French Michel Platini in the 80s); the introduction of a three-man defense row in the 90s; the "Sweeper-Keeper" performing the defensive actions of a libero; the increased importance of the "6," the central defensive midfielder; and the Dutch "Total Football" concept with its fluid, attacking 4-5-1 and 3-2-5 formations.

Total Football

As in business and academia, innovation takes place in soccer on both the collective and individual levels. And it is deeply rooted in culture. Starting in their youth education, great teams establish a distinct style which sets them apart from mediocre ones. Almost always, these styles have been shaped by a city's, a region's, or a nation's history. Ajax Amsterdam and the Dutch school of "Total Football," considered by many to be the most sophisticated and most influential soccer philosophy in recent times, can be traced back to historical, geographical, and socio-cultural factors, as can the Dutch refusal to win the "big one" (the Netherlands' national team never won a final at any of the international championships). Total Football was the first multi-disciplinary approach to playing soccer and implied that all players can play in all positions and have comparable levels of fitness, technical ability, and awareness. It is focused on the creation of space on offense and the destruction of space on defense. The result is maximum flexibility, a strong element of surprise, and the ability to exert pressure on any of the opponent's moves, at any time during the game. Besides Ajax, a number of British clubs including Arsenal London and Manchester United have embraced and refined Total Football, and so has FC Barcelona, with its strong tradition of Dutch coaches and players.

In stark contrast, the so-called "catenaccio" (literally translated, "door-bolt"), a rather static, defensive-minded tactic, is the hallmark of most Italian clubs. Some contend this goes all the way back to the Roman Empire and its poise to defend its borders, but I'm not sure if I buy into this explanation: even the Roman Empire, in order to become an empire, had to conquer territory first, no? In any case, the point is that soccer tactics and styles, and herein lies one parallel to business innovation, are inexorably linked to culture (to learn more about the cultural -- and religious -- underpinnings of soccer, read "How Soccer Explains the World" by Franklin Foer).

Wanted: Entrepreneurs

And yet, only a few soccer pundits would dispute that the most critical innovation in soccer occurs on the individual level. While some herald the "star is the team" philosophy and praise the power of the collective, it is more plausible to uphold the "whole is more than the sum of its parts" argument precisely because some of the parts, that is, certain individuals, are better than others. Although there are attempts underway to "crowd-source" soccer, the difference between win and loss is still marked by the quality of individuals -- players, coaches, and, not to forget, referees.

Players and coaches are chased with tons of cash not merely because they are stars who are able to turn the game into a spectacle and thus add invaluable charisma and entertainment to a club's brand, but also because their individual decisions, be they strategic (coach) or opportunistic (player), decide over fortune and misfortune. Both coach and player are risk-taking entrepreneurs, and the more creativity they exhibit, the more freedom they're typically given. Ironically, buying risk-takers is a measure for clubs to minimize risk and manage the inherent volatility of their success. The impact of coach and player is significant but their tools of influence are somewhat different. In the long-term, the coach can create a competitive culture that propels creativity and innovation, build confidence and team spirit; on the immediate match level, he can alter the formation and line-up, and make adjustments and substitutions during the game. But can his genius or lucky hand re-invent a team or truly innovate the game?

Ultimately, the most visible and arguably most impactful innovation lies in the feet of the players. Notwithstanding the team's culture, strategic formation, and tactical fitness, innovation on a micro-level is still the biggest competitive advantage, and it is engrained in soccer's DNA: Paul B. Paulus and Bernard Arjan Nijstad argue in their book "Group Creativity: Innovation Through Collaboration" that soccer offers more opportunities for creativity and innovation than baseball and other U.S. sports because the team's task is more "hierarchical, less sequential, and less cyclical." Furthermore, soccer players can innovate their game in every game. Here's what Barcelona's Ronaldinho, FIFA World Player of the Year in 2004 and 2005 and the most marketable player in the world, generating $57.8m annually, says: "The important thing is to keep on innovating and finding a way to surprise. You always look to surprise, with dribbling, a new move, a new pass. (...) As long as I believe I have the creativity for that, that's what I'll try and do. I'm never going to lose my characteristics because that's what I know how to do. I want to mix everything that is innovative with the same things as always. Perhaps the fans expect me to do all the tricks, the opponents as well. If you don't innovate, they all take the ball away from you. I believe it's important to innovate in order to avoid repetition."

Playtime

When El Clásico kicks off, keep all that in mind. Admire the poetic and sometimes melancholic Total Football of Barca, and respect the prosaic, rather efficient style of Real Madrid. And watch how a few players will decide the game. Soccer can be researched, carefully planned, and strategically devised -- however, the most beautiful thing about this "beautiful game" is the fact that there is no lag between idea and implementation. Creativity can be immediately applied and has to be found on the pitch again and again. Every match is a blank slate. There is no history, only anticipation. Nothing is ever the same. This is what business leaders can learn from soccer: Innovation is, literally, a "play," and the best players will win.