Future of jobs in a connected social world

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Following is a copy of some remarks that made about the future of jobs at the IT Talent Management Conference IT18.

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Thank you very much for the opportunity to speak here today. I will start with a brief consideration of my own IT career and then consider how the changing technology landscape is reshaping for careers and for business.

When Phillip asked me to speak here today I started thinking about the origins of my IT career. I was literally standing in the kitchen at the National Trust in Sydney when the Executive Director, Wendy McCarthy, asked me if I would like to be the IT Manager.

I knew very little about technology at the time.  But soon realised that it was a tremendous amount of fun. It was ideal work as it required learning new things, and experimenting to find out the best solutions. I became a jack-of-all-trades, doing a bit of programming, some database administration, desktop support, server and network engineering, across both Windows and UNIX systems.

Then Wendy said off the cuff one day, “so what are you doing about your career?” It was an entirely novel thought. I had never considered what I was doing as more than an interesting job.

After that I pursued an IT career with diverse organisations such as Citibank, AMP, General Electric, NSW Treasury, and Westfield. And during that time I saw enterprise IT in the raw.

My career progressed and eventually worked on fascinating projects in roles such as Enterprise Architect, Software Development Manager, Project Manager, Program Director, IT Manager, and CIO.

The way that I entered the IT world, informally and without a degree or IT qualification has largely disappeared, now a Bachelor’s degree is seen as a minimum requirement for entry.

How will the digital revolution impact jobs in the future?

The job that I do now did not exist when I left school. The technologies that I work with were not even dreamed of when I started my career.

Many people today are doing jobs that didn’t exist five years ago. At the same time many jobs are being displaced by technology.

IT has been undertaking a quiet revolution over the past forty years. Most people seem to have hardly noticed that IT has been about removing jobs from businesses, automating business processes and removing clerical or manual labour positions. This process of shifting work from people to machines has been under way for over forty years and shows no signs of abating.

There are now factories that have only a handful of people to run them. I know of a chemical engineer who is retraining as a maths teacher because he is lonely at work. In his factory it is just him and the maintenance engineer working onsite. Everything else is managed centrally.

It professionals are no stranger to this process. Outsourcing took jobs out of enterprise IT during the 1990s and early 2000s. Those jobs are not coming back.

Cloud computing is the new version of outsourcing. It will take internal IT jobs out of business on significant scale over the next decade. This means that the demand for system administrators, DBAs, server and network engineers working inside businesses will reduce. Some jobs will end up like the computer operators of yesteryear, a distant memory.

Traditional bespoke or custom application development is another area under threat. Increasingly organisations will continue to move to hosted SaaS platforms. And with the evolution of online marketplaces for application development, like Elance.com or Freelancer.com.au it will no longer be necessary for companies to have high cost internal development resources on premise.

Similar processes are in play for other roles too, and not just IT professionals.

For example designers. Why pay someone to sit in your office when you can simply outsource your new logo to 99designs.com?

Even big data can be subject to outsourcing and crowdsourcing via solutions like Kaggle.com, where even big companies like GE or Merck can have 88,491 of the world’s best data scientists working on their problem.

I see a difficult future for many giants of the IT vendor world. Oracle and SAP are two examples that spring to mind.  Their business model is predicated upon installing large complex systems with long term client lock-in and high switching costs. Along with these vendors, the large systems integrator firms who do the implementations for these large systems will also face challenges. The traditional model of delivering a truckload of low paid graduates to work on a systems implementation and then charging the client high consulting rates will not be sustainable in the long term.

Ironically I see Microsoft as being well placed to weather this new environment, in particular with their enterprise footprint and products like Exchange, SharePoint, and their recent acquisition Yammer.

There was a time in the distant past where one could safely say ‘nobody ever got fired for buying IBM’. Those days are long past. This shift to cloud and SaaS is an equivalent technology revolution to the PC revolution. And this was a revolution that broke the business model for IBM. I’m not sure yet what this means for the IT industry and who will survive in the long term.

We as IT professionals need to look to our skills and position ourselves to be ahead of this trend. One thing that is worth noting, several of the startups that I’ve mentioned as part of the changing landscape are Australian in origin.

What the future hold for workers, workplaces and jobs

There are two quotes that sum up for me where we are today:

“@mpesce: We have clearly reached the point when anything of any interest is always being recorded to a device. Nothing is unseen any more.”

 

“There will come a time when it isn’t ‘They’re spying on me through my phone’ anymore. Eventually, it will be ‘My phone is spying on me’.”  – Philip K. Dick

We live in the age of the quantified self. And we organise our lives by means of our smartphone apps. My Fitbit records how active I’ve been each day and allows me to compete with selected friends.

We update our status on publicly available forums like Facebook and Twitter.

This growth in social media and social sharing of personal information means that the nexus between personal private spaces and public open spaces has all but disappeared.

It also means that we are hyperconnected in ways that were impossible only a few years ago.

As Mark Pesce said in his recent TEDx talk

“Today we draw upon the knowledge, experience and intelligence of five billion others, our hyperconnected sharing now transforming learning into something utterly unprecedented.”

This means that we are also subject to more surveillance than any other generation that came before us.

As you have heard from previous speakers, the nature of recruitment is shifting. From finding a body to talent management. From finding a job to the right job finding you. From hiring for specific skills to hiring for character and training for skill.

This means that our entire social existence, which is increasingly mediated via social platforms online, now forms part of what people see when searching for us.

These social platforms are also increasingly important to users and disconnecting them from these channels during the work day is not acceptable.

Also employers are increasingly seeking to harness the online social profiles of their employees on behalf of the business. This is translating to employees becoming people with significant personal brands. Great examples of this are Charlene Li of Altimeter Group and Jeremiah Owyang formerly of Forrester then Altimeter.

How is the environment changing?

Changed competitive landscape: The digital revolution is also levelling the playing field between competitors, and being large is less advantageous than previously. Smaller competitors can form loose coalitions that provide similar scale to a larger organization without the need for capital intensive setup.

We are likely to see a reduction in the market power of big players. Some traditional businesses will fail to scan the environment and detect shifts in the consumer environment. A good example of this is the differences in adoption of new technology and business models and its impact on the performance of competitors Kogan and Harvey Norman.

New internet: Another game changer is the internet of things – things knowing information about their self and talking to each other, and enabling us to interact with them.  Thus metadata becomes increasingly important and enables the continued development of augmented reality applications such as those made possible by technologies such as Google Glass.

The internet of things will be enabled by wirelessly connected sensor technology. An interesting example of this is DNA tags as used by ethical Australian timber company Simmonds Lumber to help stamp out illegal logging. Yet this technology will have important ramifications for our personal privacy too – we will be asked to trade-off convenience for privacy.

Cost shifting to lower cost regions will continue – but those regions may change as economic shifts happen in the developed world.  That is, due to economic shifts, developed countries may evolve as lower labour cost regions.

Changing customer landscape: Power relations between business and consumers are shifting, and the shift is toward empowerment of consumers. This requires new attitudes and responses from business, and this requires customer insight which is provided by good data. Data will increasingly drive decision making and the making of meaning within businesses.

New approaches – loose coupling: Innovation will be powered by loosely coupled technical components that are joined up with loosely coupled business components. Even large businesses will need to find ways of being nimble and agile, to develop the ability to pivot rapidly in response to environmental changes.

Change cycles will increase in rapidity so businesses will need to constantly scan the external environment to assess and adapt.

Organizations will need to develop skills in entrepreneurship as an internal capability to drive innovation. If access to credit or capital becomes constrained then organic growth capability will be critical for business. Further, the ability to partner effectively with other organizations will also be critical to growth.

Effective use of resources becomes critical: Sustainability will continue to grow in importance, not just to save the environment. Sustainability will be important from both a cost control and environmental perspective.

Access to natural resources that we take for granted – such as water or petrochemicals – will become increasingly competitive.  And access to other resources needed to grow a business is also likely to be problematic.  A good example is access to credit.

New ways of doing traditional things like education and work: Schools and universities will not need to look like they do now. The need for large places and enormous investments in physical infrastructure are no longer necessary to perform the task of education.  Online education and collaboration technologies mean that we do not necessarily need to ‘go’ to school in the way we do now.

This has implications for society and business. We currently use schools as a holding bay for children while their parents are working at the office 9-5.  If young people no longer need to attend school in a physical sense then how will their parents manage, and what impact will this have on the traditional workplace?

Also the need for workers to be physically present at an office to do their work will reduce. Better communications and presence technology means that adults will also be able to work from other locations than the traditional office. Some good examples of the evolution of co-working in Australia are Hub Melbourne, or Hub Sydney, Vibewire and Fishburners in Sydney.

This will drive changes in the ways that organisations design and define their physical footprint. It also means significant changes for currently viable business models such as building and renting commercial real estate.

Yet human beings still need interaction with others. Our young people need to interact with each other physically to evolve as human beings. Adults need to connect with each other in the work context.  We have a strong social drive and these needs still need to be met.

It is likely that localised co-working spaces will continue to evolve as solutions to this need for human contact and affiliation.  No longer will we head, lemming-like, to a corporate office in the city, instead we will head to the local co-working space where we can connect virtually with our colleagues.

Rise of collaborative models – leisure, work, competition: This does not mean that competition will disappear, however it will change.  Due to increasingly scarce resources collaboration will become more important for business. Further, the question of why a business needs to do everything for itself will become important. With cloud and ubiquitous connections to the network partnering with best-of-breed service providers will be easier.

In the personal sphere collaboration is likely to increase too.  And the change will be driven by similar considerations to business.  For example, why own a car when you don’t need one all the time, especially if you can get access to one whenever you need it?

Shared resources – cars, tools, etc – will make increasing sense to people and shift the consumer culture from one of product acquisition to service adoption. Some good examples of existing collaborative consumption models include Open Shed and 99 Dresses.

The future is a distant country*

Some of my prognostications will be wrong in their particulars. But the technology trends are clear. The next decade will see the rise of new businesses fuelled by technologies that don’t exist yet.  The job I do for a living did not exist when I left school. The industry I work in did not exist at the start of my career. I can see no reason why those trends will change in future. We need to be open to the new opportunities and accept that things move faster now.

* with apologies to L.P. Hartley

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Change or die – business, competition, and the new world

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changing business competition landscapeWith the changing business world it is a good idea to think about habitual business practices to ensure that we are not doing things that made sense for the past and which do not make sense now.

Insanity: doing the same thing over and over again and expecting different results.
— attributed to Albert Einstein

We all want to improve business results, driving KPIs higher and higher. Is this really a sustainable approach? How can we increase productivity and innovation by re-using the same practices we’ve always used?

Changing social and technology landscape

The changing social and technology landscape means that some traditional ways of approaching business might no longer be fit for purpose. Many of business practices are inherited from a world where communication was not instantaneous and where information asymmetries abounded. Now there is vast computing power in the hands of ordinary people and they are rapidly overcoming the information asymmetries that gave businesses an advantage over customers.

Social and cultural expectations are also shifting what is seen as good corporate behaviour. For example the use of so-called ‘booth babes‘ at a conference to promote a product is now seen by many as a reason to avoid a brand.

Changing Competition Pressures

If we look at the competitive pressures on business today things have changed from the way they were at the end of the twentieth century. In the 20th century industrial age the competitive landscape could be modelled using Porter’s five forces as a framework:

  1. Threat of new competition – this threat still remains, yet it can come from unexpected and non-traditional sources. Environmental scanning to see what are the emerging trends becomes a critical response.
  2. Threat of substitute products or services – this threat is even more important, with technology trends moving so quickly it is easy for a good or service to become obsolete.Again, environmental scanning is a critical response to this threat.
  3. Bargaining power of customers (buyers) – this is major emerging threat to traditional business models, consumers are increasingly well-armed with information about products and competitors. It is important to realise this new reality. Consumers will punish businesses that they see as lying to them. Truth is a crazy idea that might just work. Also being clear about your place in the value chain, be clear on your competitive grounds. If you are not competing on price then be clear on your competitive advantage to the consumer. Apple is the poster child for this, they do not compete on price, rather they compete on design and experience.
  4. Bargaining power of suppliers – this threat depends upon one’s situation, if a market-making behemoth then this trend is working in your favour (for example Coles and Woolworths supermarkets in Australia. It might be even more of a threat if you are one of the suppliers in question. A sensible response is to be clear as to the grounds you compete upon.
  5. Intensity of competitive rivalry – this threat continues to remain strong, traditional rivals are still in markets competing hard and there are new entrants and new products or services competing for the same consumers.

Shift in scarcity – what about abundance?

Until now scarcity has driven markets, but we are moving into an age of abundance and the old rules no longer hold. Greg Satell summed it up well in his post on the new economy:The New, New Economy of Accelerating Returns:

“…in a world of abundance, what will we pay for?”

The response to this question is being played out in the retail sector right now and they provide an ideal example of the issues. Traditional stores are seeing their market share being eroded by online competitors. Business leaders, like Gerry Harvey, are calling upon the government to reintroduce protectionism to save the retail industry from competition. Yet shoppers continue to vote with their spending power and shop online.

Information Asymmetry

Previously individual shoppers had limited access to information about the comparative pricing and range available elsewhere. Now shoppers have the world at their fingertips and can easily find out the best deal available to them – be it based on range or price or other considerations. These trends are impacting upon traditional retailers worldwide, even retail icons, like JC Penney and Sears, are being questioned as to their chances of survival.

At the same time, Australian retailers have not invested in new technologies over the past decade and they are currently reducing their workforces. It has become almost impossible to find a sales assistant in many stores. The response of many retailers has been to compete on price, to reduce prices by means of sales to attract customers back into their stores. But all this is doing is training the shoppers to expect discounted prices, and customers hold of on purchases unless they receive a discount. Further, in the supermarket sector, this downward price pressure is destroying the businesses of suppliers such as farmers.

Against this backdrop of retail turmoil we see a retailer like Apple – with few products in the market and yet they are able to command premium prices for them. It is worthwhile researching organisations like Apple and Amazon to see how they are thriving in this age when so many businesses are in turmoil.

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Digital economy and the digital revolution

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Lately I’ve been thinking a lot about the digital revolution and the changes that it is driving in the economy. We are seeing a bifurcation between the old 19th and 20th century manufacturing based industries and the 21st century digital economy.

This is a shift from creation of tangible products to the creation of digital products.  These digital products are not intangible. We still touch them, but the interaction is mediated by digital devices. For example we are still reading books and listening to music, but instead of reading a physical book or listening to a physical record or CD we simply download the digital media to our devices.

 Newspapers are a good example

What drove the success of newspapers and magazines in 19th and 20th centuries? The need for information, the scarcity of that information, and the tyranny of distance that prevented ordinary people from acquiring information easily.

And it was advertising and information about shipping that was the killer app for the newspapers. Classified advertising and the shipping schedules met key information needs for consumers and merchants alike.

This situation made newspapers a valued intermediary between sellers and buyers. And it made them valuable to consumers of information about the world, people, politics, and current events

Even digital business are not immune to change

A stalwart digital business is World of Warcraft, and I was surprised to see it reported via BBC News that World of Warcraft loses another million subscribers. 

Yet along with Facebook, with its recent IPO debacle, and Zynga, with its disappointing earnings and consequent management changes, we are seeing digital business struggle. This shows that being a digital business is not the sole answer.  There are other elements of success that we must uncover.

Thus it is interesting to consider The 10 (Surprising) Companies That Make More Money Online Than Facebook where Alexis Madrigal notes (via Paid Content) that the following companies earn more revenue that Facebook:

  1. Google
  2. China Mobile
  3. Bloomberg
  4. Reed Elsevier
  5. Apple
  6. Yahoo
  7. WPP
  8. Thomson Reuters
  9. Tencent
  10. Microsoft

One thing of which I’m certain: businesses whose revenues rely solely on people clicking online ads are destined for the deadpool in the long run.

Information scarcity is gone – we need trustworthy filters

That day is gone. Information scarcity is a thing of the past. Instead our need is to identify the best and most reliable sources among the flood of information available to us.

There was a good discussion of this in Techdirt recently: Turns Out That The iPad Won’t Magically Bring Back Scarcity For Magazines .

The fallacy of adopting old business models and applying them to the digital economy

There has been a belief that we can simply pick up old business practices and apply them to digital channels and expect similar results to what we got last century.  But some recent evidence indicates that this might not be the case.

Some recent articles that point to emerging challenges to traditional advertising approaches are:

New models evolving

Some new approaches that are evolving are supported by concepts like content marketing and community engagement. In recent times the retailer Sears has adopted a new approach and recounts progress: Sears Explains Its Success In Content Marketing.

This article by Shane Snow discusses some of the issues facing us in the digital economy How To Thrive In The Free-Product Economy, the fairly radical call here is:

“The bottom line is someone will probably one day ship a version your product for free. Maybe it will lack this or that feature you hold so dear, but that won’t matter. The broader the appeal, the more likely someone’s going to undercut your paid product with a free one.

I say beat the competition to the punch. It’s going to happen anyway. And setting your product free may just earn you the most business you’ve ever had.”

Even in traditional businesses some are reporting success in the digital economy, for example as Mathew Ingram reported recently:

“Both the Financial Times and the New York Times have either already crossed or are close to crossing an important threshold: namely, the point at which revenue from reader subscriptions exceeds the revenue they get from advertising.”

But Ingram notes, this success is largely because advertisers are departing in droves. The decline of advertising driven revenue models will only get worse in this age of information richness.

Technology shifts are driving the change even faster

As Dave Copeland notes Social Discovery Is Pushing Search and Social Closer and:

“Social Search Is the Web’s New Disruptor”

And consumers are increasingly living in a realtime world and feel annoyed or disrespected when organizations do not deliver to their expectations. A good example of this was the so-called #nbcfail where the NBC network in the US did not broadcast Olympic events to its audience in realtime. Instead it chose to only present them in delayed telecast during prime time.  This led to negative reports on social networks and even to Twitter banning a journalist at NBC’s request, which led to reports like: The #nbcfail isn’t about email addresses, it’s about corporate cronyism.

The Olympics also provided an example of how walled gardens for sponsors simply result in bad user feedback in these hyperconnected days. For example, this user reported their experience of visiting the London Olympics and provided their feedback on one of the sponsors.

The kind of command and control approach used by the Olympic organising committed and their sponsors seems strangely out of step with the digital world.  And it is so easily subverted as demonstrated so amusingly by Nike in London.

I’m not sure what the disruptors will be, but as Tom Foremski said of changes to our traditional business models:

“This is the Gordian knot of our times. The saving grace is that if anyone, I, Rupert Murdoch, or you — figure it out, we all benefit, we can all adapt to that business model.

I’ve been warning about this issue since I left the Financial Times in mid-2004. At the time, I was confident that we’d find a solution within five years. We haven’t — and I’ve seen nothing yet that shows that we will. “

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Real time, right time – it’s all about ‘me’ – so what about Twitter?

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A recent article The Future of Mobile is Right Time Experiences by Maribel Lopez got me thinking about mobile and the future of the web.

It is an especially important topic to consider now that Twitter is seeking to further control and constrain the way that its users interact. A good outline of the issues at play here is Nick Bilton’s piece: For Twitter-Owned Apps and Sites, a Cacophony of Confusion.

At Web 2.0 Summit 2011 (video) Twitter CEO, Dick Costolo, noted that he is inspired and ‘mentored’ by Apple. Any admiration for Apple and the way it does business is likely to be coupled with a desire to control the user experience.

The interesting thing to note is that control of the end user experience has never been a big part of the Twitter world. Instead their strength, and indeed a reason for their survival to date, has been a willingness to throw open their doors to a broad app ecosystem.  Further, significant innovations that have improved Twitter (e.g. hashtags) have come from the community and have been adopted by the company.

But Twitter is a company that is growing up, emerging from its startup phase and evolving into a ‘real’ business.  ‘Real’ businesses do things like consolidate infrastructure to better manage costs, and they seek to add layers of management control over the business.

This desire to control the user experience is fairly typical of a ‘real’ business.  It signifies the development of an organisation that is developing a command and control structure typical of the late twentieth century.

The problem is that end users of the platform have started to evolve beyond command and control models. We are using many different devices – PCs, tablets, smart phones – and we use them as we need and in different contexts.  We do not necessarily want the same experience across each device we use. Increasingly we are using a mobile rather than a fixed device, even in the home or office.

What we do want is the right experience in the right context.  We are hungry for a kind of ‘just right’ interaction with our favourite platforms. And we also seek to remove friction from our online interactions.  We flinch away from interactions that are scratchy, our friends say ‘come over here, it’s better and easier’, we use the power of our social networks to seek out the newest way to improve our online existence.

This means that the API revolution has arrived at just the right time to meet user needs.  And it means that businesses that resist the desire to exert absolute control over the user experience can harness a vibrant API ecosystem to power their business.

I think that consistency of user experience across multiple platforms is overrated. But I do wholeheartedly encourage consistency in APIs so as to enable rich user experiences that drive engagement on the user’s terms.

Businesses that fail to realise that the command and control world of the late twentieth century is dying risk killing their businesses.  It is already happening with the news media. It can happen with newer businesses too, such as social networks. As Mark Pesce noted we face a business environment that is “fast, frictionless, and on fire“.

Note: I had a brief chat about the recent changes to the Twitter consumer app ecosystem with Stilgherrian, Leslie Nassar, and Henare Degan on the Patch Monday podcast, one imagines it will be up on the ZDnet site in the fulness of time.

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Your Blog Your Brand at Wordcamp Sydney 2012 #wcsyd

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I’ll be discussing blogging and building your brand at Wordcamp Sydney 2012 – it’s on at University of Sydney 21-22 July 2012.

You can register here.

Some info about my session:

WordCamp Sydney July 21-22, 2012How personal blogs have revolutionised publishing.

This talk will demonstrate how a WordPress blog can provide a platform for individuals and small businesses to build profile and get noticed.

It will outline:

  • Key practices and principles for blogging success.
  • How to use social media integration to maximise distribution of your messages.
  • How to harness the power of WordPress and plugins for maximum benefit – the must-haves.
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There's a fraction too much friction! Customers, service, and staff.

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While trawling around on YouTube recently I came across a 1980s video of Tim Finn’s There’s a Fraction too much Friction and it got me thinking about the things that annoy me  in dealing with businesses. I concluded that the source of my irritation is friction.

I have long observed that business has many things in common with war, and friction is probably the thing that most comes to mind as significant in both business and war.

The problem with friction is nicely put by Clausewitz:

“Everything in war is simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war.”

This description of the effects of friction in war are eerily reminiscent of dealing with a large business (say for example, one of our large telecommunications companies).

The huge opportunity that the digital revolution offers is to remove friction between different parts of businesses – between customers and staff, between operational silos within the organisation, between groups who are internal and external to the organisation.

Organisations that see and act on this opportunity are the ones that will triumph in the hyperconnected future.

People who see a dedicated niche that they can service seamlessly and effectively will grow their businesses almost without trying, and customers will flock to them.

In this milieu the one-stop-shops that try to do everything – those who previously leveraged scale and centralization – are likely to suffer.  This is because scale creates and does not reduce friction. Only in the past when the friction in having services and products delivered from many smaller suppliers was so great did the one-stop-shops have an advantage.

But now even small organisations can remove friction and deliver seamlessly to their customers using web and mobile applications.

Now organisations are liberated to serve customers in ways that were impossible before ubiquitous internet connected mobile devices.

Big companies that are not already offering effective online services are the new dinosaurs.  It will take only the slightest change in their terrestrial trading conditions for them to sicken and die. Two examples of this phenomenon  worth keeping an eye on are Harvey Norman and David Jones . It will be very interesting to see if they can evolve their business models sufficiently fast to survive.

Reduced information asymmetry is another opportunity offered by this reduction in friction.  In the past companies, especially retailers, had better information about pricing of the good they sold.  Now this asymmetry in access to pricing information is dying. A recent tweet from my friend Mark Pesce exemplifies this new trend:

And US retailer J.C. Penney recently launched a new pricing model:

“J.C. Penney (JCP) is permanently marking down all of its merchandise by at least 40% so shoppers will no longer have to wait for a sale to get the lowest prices in its stores.

Penney said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. On Feb. 1, the retailer is rolling out a three-tiered strategy that offers “Every Day” low pricing daily, “Monthly Value” discounts on select merchandise each month and clearance deals called “Best Price” during the first and the third Friday of each month when many shoppers get paid.”

Source: Daily Finance, 25 Jan 2012 

The results of this pricing experiment are just starting to flow in.  There has been an initial drop in sales revenue but analysts note:

“We believe our findings demonstrate that the strategies announced to transform (Penney’s) business are the right actions to take and will resonate well with consumers over time” (Source: MSNBC, Penney’s pricing strategy takes a toll on sales, 30 Mar 2012)

Against this backdrop it is amusing to see an Australian retailer’s response to market conditions – “David Jones Outlines Strategic Plan to Cut Costs” along with their very late in the day online shopping initiatives. It is especially amusing when one observes one of their chief competitors, Net-a-Porter – saying:

“It’s very easy to copy the look and feel, which people have helped themselves generously to,” Massenet said. “But we have 12 years of building ahead [of other sites] and we are sending out 5,000 orders a day as opposed to 20 orders a day and I think it’s very difficult for a business to keep up with that operationally.”

Source: Sydney Morning Herald, How to create an e-empire, 29 Mar 2012

Net-a-Porter is an excellent example of an organisation that has nailed servicing a niche, delivering good product, and ensuring a good customer experience supported by excellent customer service.

The bar has well and truly been raised for traditional organisations. And only those who work out how to reduce friction and deliver seamless service will survive.

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The Reputation Economy, Employees, and Privacy

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As companies embrace the notion of a reputation economy fueled by the power of social platforms this brings a new set of challenges for management and employees.

I was at the Salesforce #cloudcrowd event in Sydney recently and we were discussing this issue with guest speaker Peter Coffee.

The issue is that companies increasingly require employees to interact online on behalf of the company but using their own persona.

Upon consideration, it is not much different to offline where one meets with business contacts using a real name.  But the difference is that those meetings are mostly written on the wind.  Online interaction is forever. It is an almost permanent record of where you were, what you said, and to whom it was said.

Thus for the employee, the private conversations and meetings of the past have transformed into public online interactions, potentially geotagged and with accompanying photo.

What this is doing is tying the individual’s personal reputation very closely with that of the company in a very public and well documented way. In the past it was relatively easy (especially in a big city) to gloss over a former job and what you really did in it.

But now this will become increasingly difficult as more and more of our business interaction is transacted in public and online.

It will also become increasingly difficult for companies on several levels:

  • Firstly, they will find it more challenging to repudiate the activities and actions of employees, since these will be well documented online.
  • Secondly, they will find their public reputation increasingly tied explicitly to employee behaviour as played out in various online forums.
  • And thirdly, there is the risk that employees will use online forums to share their feelings (both positive and negative), as per the very colourful  examples of Goldman Sachs’ former employee Greg Smith Why I Am Leaving Goldman Sachs or Google’s James Whittaker Why I Left Google.

Problems for employees include:

Rawn Shah’s October 2011  presentation gives a nice overview of the issues involved in The Blurring of Job Loyalties, Social Collaboration and Personal Freedom.

One thing is certain, the boundaries between private citizens and their online activity as representatives of a company is starting to blur and this is likely to increase.  It also means that we individuals will increasingly be subject to ongoing and continuous surveillance from companies as well as the government.

Privacy is truly dead.

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The growth of the recommendation economy

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Seth Godin wrote about the the attention economy. But it seems to me that we are also seeing the evolution of an online social recommendation economy.

When we all lived in villages there was a strong recommendation economy, and it was fuelled by the fact that everyone knew each other and their reputation. Word of mouth drove choices about which business to patronise and which individuals with whom to socialize. Reputation was everything, and it was protected fiercely on olden days.

With the shift of population to large cities we became disconnected from the hyperlocal reputation economy. But with the digital revolution and the growth of social networking platforms we are seeing a return to the reputation economy for both individuals and businesses.

There is also a growing recommendation economy developing via social media and social networks. This growing recommendation economy is no longer volitional. Instead you are a participant even if you never signed up (refer to my previous post on Klout for some examples).

We are now seeing the growth of explicit social recommendation networks. However, a number of other social networks serve to provide insight into the influence of individuals or brands but these recommendation networks aim to aggregate and rank user’s influence.

Some of the players in this space include:

These networks are all aimed at measuring online influence, and this need is largely driven by marketing needs. As traditional media continues to fragment marketers are seeking to identify those influencers who can help them to connect with audiences.

As Mashable summarised back in 2009, mostly these platforms use metrics to assess influence:

Incoming Traffic – Pageviews, Incoming traffic from search engines, rss subscribers
Incoming Links – Primarily manual links such as blogrolls, in-post deep links
Reader Engagement – Internal searches, time on site
Recommendations – Retweets, share stats
Connections – Number of mutual connections, number of mutual connections on multiple sites
Track Record – Age of domain, number of blog posts, length of engagement
Engagement – How often and long a person has engaged with a service online”

Source: HOW TO Measure Online Influence, Micah Baldwin, 2009

This means that everything we do online is potentially subject to analysis of this nature. And, even if we are participating in ‘private’ social networks, there is the chance that our activity can also be subject to this kind of analysis.

Even if we do not choose to participate in the recommendation economy it is happening, just like it used to happen to everyone in a village.

Along with all of this we are seeing the development of recommendation markets, where people connect and exchange information about the quality of information, connections, work, etc of people or businesses within their networks. Increasingly this kind of recommendation network is driving job search, new business, business connections, and innovation.

This means we need to work out how to benefit from this new environment.

WHAT TO DO

Probably the best advice about managing one’s reputation comes from Maslow via Wayne Dwyer:

“Self-actualized people are independent of the good opinion of others.”

And he goes on cite Dr Seuss:

“Be what you are and say what you feel, because those who will mind don’t matter and those who matter don’t mind.”

From my point of view the only practical response is to keep doing your thing, whatever that might be. To analyse results and take feedback from reliable sources.

But, as I know from experience, if you try to please everyone then everyone ends up unhappy (I’m sure Oscar Wilde said something along those lines too).

Above all we need to accept that we now dwell in a panopticon, and like the villagers of old, we are always under observation in the digital world. This new reality has implications for our comportment online. It means that we need to monitor responses to our activity and adjust our own responses to the current situation.

It also means that even those who do not choose to play in the online arena are playing (whether they like it or not). Reputations are no longer a private matter, instead we live in a digital global village where our reputations are common currency and we rise or fall on the recommendations of others.

This new environment means that we need to remain vigilant, stay connected, and build up social capital to enable us to survive when things do not go well. Just like in a village it is the quality of our relationships that will make life easier.

READING

Some other interesting analyses of this phenomenon include:

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The evolving power shift and our hyperconnected society

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As we move away from the power structures and ways of thinking that governed the twentieth century we are seeing a desperate rearguard action from the power elites who ruled that time.

Dying Dinosaur Industries in their Death Throes

A good example of this is the film and music industries, whose centralized model of creation and distribution is breaking down.

The proposed US anti-piracy legislation to protect film, music and other intellectual property from unauthorized distribution – SOPA in the House and PIPA in the Senate – has shown deep divides between modern hyperconnected businesses and old world centralized, command-control industries. And it is now reported that the SOPA bill has been shelved after global protests from Google, Wikipedia and others.

The rearguard action by the old industries is also clear in threats against those who fail to support the old industries:

“Consumer group Public Knowledge on Friday accused the Motion Picture Association of America (MPAA) and its head, former Sen. Chris Dodd, of trying to intimidate lawmakers into supporting a pair of controversial anti-piracy bills.

In recent days, Dodd and other top Hollywood figures have threatened to cut off campaign donations to politicians who do not support their effort to crackdown on online copyright infringement.”

Source: The Hill: Consumer group accuses Hollywood of ‘threatening politicians’, by Brendan Sasso, 01/20/12 04:08 PM ET

We are seeing increased efforts from the old guard to control people and their communication. But the genie of a hyperconnected populace is out of the bottle. And it cannot be put back. Even if they remove the internet as we know it – free flowing and accessible to all – we will invoke Gilmore’s Law and route around that damage

The Economy and the Death of the Western Middle Class

The death of these old industries has important implications for society. These industries enabled the creation of a well-off middle class in the latter half of the twentieth century.

But with the digital revolution many the economic drivers that created the twentieth century middle class have disppeared, as outlined in this article about Apple and US jobs.

And even in Australia we are seeing the gradual shift of middle class jobs overseas, as in this recent example from Westpac, Ultimate insult: Sacked Westpac workers forced to train replacements.

It is becoming apparent that even new businesses no longer guarantee jobs like they used to. For example: ‘No new jobs, dollars’ in bulk stores.

The truth about job creation is only now beginning to dawn on us, and we are seeing the inevitable social and economic consequences of transferring work from high cost to low cost economies.

People are even starting to ponder which jobs will disappear next – for example Will these 10 jobs disappear in 2012?

The old industries employed sufficient numbers of the western populace to keep them in comfortable consumerist peace. Their children could afford an education and thus improve their lot in life. The idea that each generation would be materially better off than the previous seemed unassailable.

But now it seems that truth might no longer hold. The #Occupy movement is seeking to bring attention to the economic bifurcation of society between the the very well-to-do and the strugglers.

Embracing the Future

Those who are not trapped in the old model are embracing the evolving world that is fuelled by the digital revolution. They are accepting the dispersed, decentralized, and peer-to-peer future.  The old intermediaries are dying (or are in their death throes), and in their place new ones are arising.

The future is about human beings  connecting with each other. It is about collaboration and cooperation. It is about sustainable growth. And it is about making space for people to create new possibilities unconstrained by the behemoths of centralized command and control.

Author Paulo Coelho summed it up nicely on his blog recently:

“As an author, I should be defending ‘intellectual property’, but I’m not.

Pirates of the world, unite and pirate everything I’ve ever written!

The good old days, when each idea had an owner, are gone forever.

First, because all anyone ever does is recycle the same four themes: a love story between two people, a love triangle, the struggle for power, and the story of a journey.

Second, because all writers want what they write to be read, whether in a newspaper, blog, pamphlet, or on a wall.

The more often we hear a song on the radio, the keener we are to buy the CD. It’s the same with literature.

The more people ‘pirate’ a book, the better. If they like the beginning, they’ll buy the whole book the next day, because there’s nothing more tiring than reading long screeds of text on a computer screen.”

Source: My thoughts on S.O.P.A. by Paulo Coelho on January 20, 2012

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