(Credit:
Learning by Connecting)
"The difference between the optimist and the pessimist is that the pessimist has more facts," said Jean-Paul Betbèze, Chief Economist and Head of Economic Research Department, Crédit Agricole S.A., in a panel at the Millken Institute's Global Conference 2008 in Los Angeles a couple of weeks ago. True as this may be, his statement stood in sharp contrast to the overall vibe of the event: Yes, we can, was the prevailing sentiment, and the overwhelming majority of attendees would probably have outed themselves as fervent optimists, despite an abundance of fact-featuring PowerPoint slides supporting each of the panel discussions (I've never seen so many pie charts in my whole life). In fact, the gathered crowd was comprised of optimists with lots of money to spend on the world's most pressing problems (poverty; terrorism; population; resources; energy; environment; human rights; social justice; etc.) and may well have the power and means to solve most of them if they wanted to. Muhammad Yunus, Nobel Peace Prize laureate and micro-lending pioneer, pointed out: "We wanted to go to the moon, and we went to the moon. If we really wanted to end poverty, we would have ended it a long time ago."
After listening to him and some other brilliant minds, I felt over-inspired and under-accomplished, ready to change the world or at least my life. It was indeed a humbling experience. And yet, it stunned me to realize that many members of the powerful elite are struggling to cope with the new realities of business and society. The difference between being on top and being ahead, between being innovator and pioneer, became obvious in several of the panel discussions, particularly those that addressed the changing media landscape, the ongoing digital revolution, changing consumer behavior, and the new business paradigms that come with it.
These trends include:
- A surge in broadband penetration enabling ubiquitous content distribution and hyper-social connectivity
- The explosion of user-generated content: every minute 10 hours of video are being uploaded to YouTube
- The collection and the friction-less, platform-independent distribution of content as the next big challenge for media and communication companies
- Mobile as the new container and memory device: 85 years of video (a whole lifetime) will be able to be stored on any new iPhone in a few years
- The power shift from content providers to media distribution platforms (Comcast, Hulu, etc.)
- The consumer consuming on his own terms
- The "prosumer" as a market force to reckon with
- The wisdom of the crowds as a source of innovation ("we are smarter than me")
Lex Fenwick, the CEO of Bloomberg LP, exemplified the old guard's awakening almost in real-time. First he boasted that he invented email and created the world's most valuable user community (of 350,000 customers) "by mistake," then he warned of giving users too much control ("they may join forces to challenge your prices"). Barry Libert, CEO of collaboration software provider Mzinga, nailed him on this: "If you have something to hide from your customers, or you are afraid of giving them too much power, you have a problem." At the end, Fenwick had converted from Saulus to Paulus, from "From Me to We," and, in a cathartic turn of events, he admitted he had learned quite a bit from the panel: "Thank you for your insights. I am inspired to make a few changes to the Bloomberg community based on this discussion."
Other companies have made this leap before him: Amazon, Netflix, Virgin Mobile, P&G, Dell, and recently Starbucks are all moving from a firm-centric to a network-centric organization, building and leveraging their community of users by giving them a voice in strategy, product development, and marketing decisions. They understand that crowdsourced and peer-to-peer business intelligence helps them overcome the "not-invented-here" syndrome, reconciling "inside-out" and "outside-in" innovation. Libert: "If customers cut the red tape and re-connect with customers, that's making it easier for them to find out what they really need." Of course it's always easier to proclaim a new paradigm than defending an old one, or as someone noted on another panel: "If you're a futurist and you think ten years ahead, by the time you're wrong, no one will notice."
Jason Calacanis, founder and CEO of Mahalo and in-character as enfant terrible, thrived in the devilish charm of the futurist. In a panel on "The New Rules of PR," he joyfully exposed the insecurity of his audience. It was not so much his co-panelists -- some old-school PR pros who bravely defended their profession against his "PR is dead" claim -- but rather the ensuing Q&A that demonstrated how disturbing the new rules still are for many who have held the power in organizations for decades and find it difficult now to grasp and embrace some of the earth-shattering changes happening these days. "Should our CEO blog?" -- Yes. "How do I stay in control of my brand if our CEO gets critical comments to his blog posts?" -- Well, the truth is, you don't. Just let go. Brands are assets in the public domain. With production capabilities and financial assets off-shored and out-sourced, brands are ever more important as the only remaining indispensable value of a company, and yet they are ever more volatile. In this open-sourced, hyper-transparent economy, your customer owns your brand, and no brand platform, no brand book, no rigid compliance guidelines designed to protect your idea of your brand, can change that. Brands are social funds. Your mission is to raise their intellectual and emotional capital. The creation of brand equity is a cooperative act based on the values that you share with your customers. And, by the way, marketing's job is to promote these values, not to invent them.
In a panel on "Business Innovations that are Changing the World," Google Chairman and CEO Eric Schmidt said: "Let's not forget that the fundamental goal of any corporation is to change the world and not just to satisfy the interests of particular stakeholders." Indeed, this was the overarching theme of an economic summit that was all about social: social innovation, social media, social networks, social web, and social capitalism. What once was a noble mission is now a mandate for CEOs: the future of business is social, both in terms of raison d'etre and modus operandi. Companies that open themselves up to promoting and fully leveraging the social dimension of human beings in order to create smarter and more effective solutions for social problems will be the winners of this new social economy.
(Credit:
Salon)
Now here's an innovation: "music on demand," in the truest sense of the meaning. Radiohead, the juggernauts of intelligentsia rock, announced that they will give away their new album "In Rainbows" as a download for whatever price consumers are willing to pay. The band is free to sell the new album directly from the official website because it is no longer tied to a record label. So far, the album is only available to pre-order, but it can be downloaded when released on October 10.
It's not the first time that an artist or group has opted to charge nothing for an album (Prince, for example, gave away a whole record as a supplement in a newspaper), but the move is significant: Radiohead is one of the biggest bands in the world, and the self-distribution model could inspire other artists. It is is interesting from both a moral and economic perspective: As for the former, the band obviously relies on the "invisible hand," the self-regulatory forces of the market, to determine a fair price at the intersection of supply and demand, production value and perceived value. Radiohead trust that their fans follow an intrinsic moral imperative, ignoring possible "they're millionaires anyway" concerns and paying an appropriate fee for what is usually a superb artistic performance. Most people will probably just follow the pack, and it would actually be interesting if the Radiohead website showed in real-time the latest average price paid.
From an economic viewpoint, Radiohead's decision is far less radical than it may appear. First of all, the biggest chunk of revenue for them will continue to come from touring, merchandising, and copyright payments. Giving away the album for any amount won't really hurt them, even if no one pays a cent. But that won't be the case: The New Musical Express has conducted a poll among UK fans, and from those responses the band is making an average of £5 per album. There is some debate going on about the break-even: Salon claims it's $1.50 per album.
In any case, it's a nimble PR move, creating a side story the media (and bloggers like me) can pick up. Plus, it's smart marketing. Through the download offering, the band will build a pool of registered users as potential targets for future marketing campaigns.
Ps. In case you wonder: I would have paid hundreds of dollars for Radiohead's landmark "OK Computer" album. For this new release, coming after a long period of (radio) silence, I think I'd pay, let's say, $20. And you?
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