Tag Archives: A VC

Social media: bubble, definitely not; revolution, probably not; evolution, absolutely

Is Social Media in general (and mobility in particular) a bubble or revolution? Is it a a powerful and disruptive force that will transform governments and social organisations? Or is it no? There seems to be a few{{1}} people{{2}} pondering this question

[[1]]The video above is less than a minute long. Please … @ bryan.vc[[1]]
[[2]]Is The Mobile Phone Our Social Net? @ AVC[[2]]

Mobile phones are interesting as they are addressable. Two-way radios made communication mobile a long time ago, but it wasn’t until mobile phones (and cheap mobile phones, specifically) that we could address someone on the move, or someone on the move could address a stationary person or service.

The second and third world showed us the potential of this technology over ten year ago, from the fishermen using their phones to market and sell their catch while still on the boat, through to the distributed banking based on pre-paid mobile phone cards. Image/video sharing is just the latest evolution in this.

The idea that this might be a revolution seems to be predicated on the technology’s ability to topple centrally planned and controlled organisations. Oddly enough, central planning is a bad enough idea to fall over on its own in many cases, and the only effect of mobile technology is to speed up a process which is already in motion. The Soviet Union might well be the poster child for this: collapsing under the weight of it’s own bureaucracy with no help from social media (or mobile phones, for that matter). Even modern democracies are not immune, and the US energy regulation policies leading up to deregulation in the late 70s is a great example of the failures of central planning{{3}}. The (pending) failure of some of today’s more centralised, and authoritarian regimes, would be more accurately ascribed to the inability of slow moving, centrally managed bureaucracies to adapt to a rapidly changing environment. Distributed planning always trumps central planning in a rapidly changing environment.

[[3]]The Role of Petroleum Price and Allocation Regulations in Managing Energy Shortages @ Annual Review of Energy[[3]]

If we pause for a moment, we can see that governments do a few distinct things for us.

  • They provide us with what is seen as essential services.
  • They create a platform to enforce social norms (policies and laws).
  • They engage with the rest of the world on our behalf.

The reality is that many of the essential services that government provides are provided by the government because it’s too difficult or expensive for citizens (and to some extent, corporations) to access the information they need to run these services themselves. Mobile phones (and social media) are just the latest in a series of technologies that have changed these costs, enabling companies and citizens to take responsibility for providing services which, previously, were the sole domain of government. From energy, water and telecoms, through FixMyStreet and the evolving use of social media in New Orleans, Haiti and then Queensland during their respective natural disasters, we can see that this is a long running and continuing trend. Government is migrating from a role of providing all services, to one where government helps facilitate our access to the services we need. Expect this to continue, and keep building those apps.

As a platform for agreeing and enforcing social norms, then it’s hard to see anything replacing government in the short to mid term. (As always, the long term is completely up for grabs.) These social norms are geographical – based on the people you interact with directly on a day-to-day basis – and not virtual. Social media provides a mechanism for government to broaden the conversation. Some governments are embracing this, others, not so much. However, while people like to be consulted, they care a lot more about results. (Think Maslow’s Hierarchy of Needs{{4}}.) Singapore has a fairly restrictive and controlling government, which has (on the whole) a very happy population. China is playing a careful game of balancing consultation, control and outcomes, and seems to doing this successfully.

[[4]]Maslow’s Hierarchy of Needs @ Abraham-Maslow[[4]]

Finally we come to the most interesting question: government as a means for us to engage with the rest of the world. In this area, government’s role has shrunk in scope but grown in importance. Globalisation and the Internet (as a communication tool) has transformed societies, making it cheaper to call friends across the globe than it is to call them around the corner. We all have friends in other countries, cross-border relationships are common, and many of us see ourselves as global citizens. At the same time, the solutions to many of today’s most pressing issues, such as global warming, have important aspects which can only be addressed by our representatives on the global stage.

So we come back to the question at hand: is social media a bubble, a revolution, or an evolution of what has come before.

It’s hard to see it as a bubble: the changes driven by social media are obviously providing real value so we can expect them to persist and expand. I was particularly impressed by how the Queensland government had internalised a lot of the good ideas from the use of social media{{5}} in the Victorian fires, Haiti et al.

[[5]]Emergency services embrace Social Media @ Social Media Daily[[5]]

We can probably discount revolution too, as social media is (at most) a better communication tool and not a new theory of government. (What would Karl Marx think?) However, by dramatically changing the cost of communication it is having a material impact of the role government in our lives{{6}}. Government, and the society it represents is evolving in response.

[[6]]The changing role of government @ PEG[[6]]

The challenge is to keep political preference separate from societal need. While you might yearn for the type of society that Ayn Rand only ever dreamed about, other people find your utopia more akin to one of Dante’s seven circles of hell. Many of the visions for Gov 2.0 are political visions – individuals’ ideas for how they would organise an ideal society – rather than views of how technology can best be used to support society as a whole.

China is the elephant in this room. If social media is a disruptive, revolutionary force, then we can expect China’s government to topple. What appears more likely is that China will integrate social media into its toolbox while it focuses on keeping its population happy, evolving in the process. As long as they deliver the lower half of Maslow’s Hierarchy, they’ll be fairly safe. After all, the expulsion of governments and organisations – the revolution that social media is involved in – is due to these organisations’ inability to provide for the needs of their population, rather than any revolutionary compulsion inherent in the technology itself.

From doctrine to dogma: when did a good idea become the only idea

When does a good method become the only method? The one true approach to solving a problem; the approach which will bind them all. The last few decades has seen radical change in our social and business environments, while the practice of business seems to have changed relatively little since the birth of the corporation. The problem of running a business, the problem we work every day to solve, has changed so much that the best practice of yesterday has become an albatross. The methods and practices that have brought us to the current level of performance are also one of the larger impediments to achieving the next level. When did the yesterday’s doctrine become today’s dogma? And what can we do about it?

Our methodologies and practices have been carefully designed to help steer our leviathan ships of industry, tuning their performance to with five and three year plans. The newspapers of today, for example, hold a marked resemblance to the news papers of 100 years ago, structured as large content factories churning out the stories with some ads slapped in the page next to them.

The best practices evident in companies today represent the culmination of generations of effort in building, running and improving our businesses. The doctrine embodied in each industry in a huge, a immensely valuable body of knowledge, tuned to solving the problem of business as we know it.

doctrine |ˈdäktrin|
noun
a belief or set of beliefs held and taught by a church, political party, or other group : the doctrine of predestination.
• a stated principle of government policy, mainly in foreign or military affairs: the Monroe Doctrine.
ORIGIN late Middle English : from Old French, from Latin doctrina ‘teaching, learning,’ from doctor ‘teacher,’ from docere ‘teach.’

OS X Dictionary, © Apple 2007

However, a number of fundamental changes have taken hold in recent years. The pace of business has increased markedly; what used to take years now takes months, or even weeks. The role of technology in business has changed as applications have become ubiquitous and commoditized. The assumptions which existing doctrine were developed under no longer hold.

Today, most (if not all) newspapers are watching their as revenue is eroded by the likes of Craigslist, who have used modern web technology to come up with a new take on the decades (if not centuries) old classified ad.

Let’s look at Craiglist. I’ve heard people estimate that they are doing close to $100mm in annual revenues at this point. Many say, “they could be doing so much more”. But the Craigslist profit equation is interesting. They apparently have less than 30 employees. That’s about $4mm/year in employee costs. Let’s assume that they spend another $6mm per year on hosting and bandwidth costs and other costs. So it’s very possible that Craigslist’s annual costs are around $10mm/year. Their value equation then is 10 x (100-10) = $900mm. That’s almost a billion dollars in value for a company with only 30 employees.

Fred Wilson, A VC

Craigslist has taken a fresh look at what it means to be in the business of classified ads, and used technology in a new way to help create business value, rather than restrict it to controlling costs and delivering process effencies; an approach Forrester have labeled Business-Technology.

The challenge is to acknowledge that the rules of business have changed, and modify our best practices to suit the new business environment because, as Albert Einstein pointed out “insanity is doing the same thing over and over again and expecting different results.” If we can’t change our best practices to suit, then our valuable doctrine has become worthless dogma.

dogma |ˈdôgmə|
noun
a principle or set of principles laid down by an authority as incontrovertibly true: the Christian dogma of the Trinity | the rejection of political dogma.
ORIGIN mid 16th cent.: via late Latin from Greek dogma ‘opinion,’ from dokein ‘seem good, think.’

OS X Dictionary, © Apple 2007

Enterprise architecture (EA) is prime example. As a doctrine, enterprise architecture has a proud history all the way back to John Zachman’s work in the 70s and the architecture framework which carries his name. EA has leveraged large, multi-year transformation programs to deliver huge operational effencies into the business. These programs have delivered a level of business performance unimaginable just a generation ago.

The pace of business has accelerated so much in recent years that the multiyear engagement model these transformations imply is no longer appropriate. What use is a five or three year plan in a world that changes every quarter? Transformation projects have been struggling recently. Some recent transformations edge across the line, at which point everyone moves onto the next project exhausted, and the promised benefits are neither identified or realized. Some transformations are simply declared a success after an appropriate effort has been applied, allowing the team to move on. A few explode, often quite publicly.

This approach made sense a decade or more ago, where IT was focused on delivering the next big IT asset into the enterprise. It’s application strategy, rather than technology strategy. However, the business and technology environment has changed radically recently since the emergence of the Internet as a public utility. The IT departments we’ve created as application factories have become an albatross for the business; making us incapable of engaging anything but a multiyear project worth tens of millions of dollars. They actively prevent the business from leveraging in innovative solutions or business opportunities. Even when there is a compelling reason to do so.

Simply put, the value created by enterprise architecture has moved, and the doctrine, or at least our approach to applying it, hasn’t kept up. For example, a common practice when establishing a new EA team seems to involve hiring architects to fill each role defined TOGAF’s IT Architecture Role and Skill Definitions to provide us with complete skills coverage. Driving this is a desire to align ourselves with best practice, and ensure we do the job properly.

Some of TOGAFs IT Architecture Role and Skill Definitions
Some of TOGAF's IT Architecture Role and Skill Definitions

Most companies don’t need, nor can they can afford, a complete toolbox of enterprise architecture skills inside the business. A strict approach to the the doctrine will result in a larger EA team than the company can sustain. A smarter approach is to balance the demands and available resources of the company against the skill requirements and possible outcomes. We can tune our approach by aligning it with new techniques, tools and capabilities, or integrating elements from other doctrines—agile or business planning techniques, for example—to create a broader pallet of tools to solve our problem with. This might involve new engagement models. We can buy some skills while renting others. Some skills might be sustainable at a lower levels. It is also possible multi-skill, playing the role of both enterprise and solution architect. Similarly, leveraging software as a service (SaaS) solutions can also force changes in our engagement model, as a methodology suitable for scoping a three year and $50 million investment in on-premises CRM might not be appropriate for a SaaS solution which only requires 10% of the effort and investment as the on-premises solution.

Treating doctrine as prescriptive converts it into dogma. As John Boyd pointed out, we should assume that all doctrine is not right—that it’s incomplete or incorrect to some extent. You need to challenge all assumptions and look outside your own doctrine for new ideas.

Our own, personal resistance to change is the strongest thing holding us back. It seems that we learn something in our early to mid twenties, and then spend the rest of our career happily doing the same thing over and over again. We define ourselves in terms of what we did yesterday. If we create an environment where we define ourselves in terms of how we will help the organization evolve, rather than in terms of the assets we manage or doctrine we apply, then we can convert change from an enemy into an opportunity.

There is light at the end of the tunnel. For all the talk of the end of newspapers, some journalists are banding together to create new business models which can hold their own in a post-Craigslist world. Some old school journalists have taken a fresh look at what it means to be a newspaper. Young but growing strong and profitable, Politico’s news room is 100 strong and they have more people in the white house bureau than any other brand.

As TechCrunch pointed out:

Journalists still matter. A lot. Especially the good ones.

The challenge is to focus on what really matters, get close to your customers and find what really drives your business, question all the common sense (which is neither common or sensible in many cases) in your industry’s doctrine, look into the doctrine of other industries to see what they are doing that you can use, and use technology to create a business which their more traditional competitors will find it impossible to compete against.