Author Archives: Paul

Social Media’s Breakout Year

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This article originally appeared in BtoB magazine.

Marketing changed forever the night of February 4, 2007. That was the night that Super Bowl XLI, the most-watched advertising event of the year, featured no fewer than four ads created by ordinary consumers.

Frito-Lay’s 30-second Doritos spot drew the most attention. Produced in just four days at a cost of fewer than $13, it scored second in comScore Networks’ ratings of ads viewers said they’d like to see again. That spot, along with campaigns from Alka-Seltzer, Chevrolet and the NFL itself almost overnight put consumer-generated advertising on the map.

Social media has had a breakout year. While most of the innovation is still in the consumer marketing sector, b2b marketers are joining the party. Businesses that cautiously circle the blogosphere over the last couple of years jumped in with both feet last year. Corporate blogs targeting business customers now include Kodak, Marriott, Pricewaterhouse Coopers, Accenture, Southwest Airlines, Extended Stay Hotels and Wells Fargo.

Podcasts, those digital radio programs that almost no one had heard of two years ago, are now mainstream, with more than 90,000 programs listed on search engine PodNova. In the technology market, which has led the way in social media adoption, podcasts have become a standard companion to the more mature web cast. The convenience of the portable offline medium appeals to busy decision makers.

As an advertising medium, podcasting still hasn’t found its footing. EMarketer forecasts that podcasts will be a $400 million advertising market by 2011. That’s dramatic growth over current levels, but still a drop in the bucket compared to the more than $60 billion that Jefferies & Co. estimates businesses will spend on online advertising in 2010.

The real action in b2b podcasting is in programs produced by businesses to connect with their customers. Companies like American Airlines, Deloitte & Touche, Chrysler, General Electric and General Mills have launched programs about everything from business travel to nutrition. Needless to say, podcasts are ubiquitous in the publishing market. Directory Podcast Alley lists more than 1,500 podcast programs about business.

But it was video that hogged the spotlight in 2006. The phenomenal popularity of video download sites like YouTube (which logs 65,000 new videos each day), Google Video and Revver, combined with controversy over copyright issues, have made video the social media poster child.

Online video appeals to marketers on several levels. It allows them to inexpensively test ideas and to repurpose clips that would otherwise end up on the cutting room floor. Online video also offers a low-cost alternative to television, typically the costliest line item in the marketer’s budget. Plummeting equipment prices and open-source software have made it possible for amateurs to produce reasonably good quality programs at very low cost. Video is also a particularly effective medium for viral marketing, the brand of promotion in which people link to and share popular content with each other.

There have been some notable business-to-business viral video successes. Blendtec, a Utah-based maker of blenders for home and commercial use, scored a mega-hit with “Will It Blend?,” a series of Letterman-esque shorts in which Blendtec founder Tom Dickson pulverizes everything from golf balls to computer components using the company’s products. The clip showing an iPod being turned to dust has logged more than 3.5 million downloads on YouTube alone.

Eastman Kodak scored a smaller hit with “Winds of Change,” a humorous, self-deprecating video that was reportedly never meant to be seen outside the company. YouTube watchers overwhelmingly praised Kodak for acknowledging its past mistakes and vowing to be a leader in digital imaging.

Video and other viral marketing techniques have their downside, though. While word-of-mouth marketing can spread positive buzz with astonishing speed, buzz can work both ways.

Unilever N.V. experienced both extremes last year. It’s “Dove evolution” video, showing a young woman’s transformation into a billboard beauty, scored millions of downloads and positive comments. Yet a video invitation to customers to create videos for a Dove advertising campaign was so poorly received that the company shut down comments on YouTube.

All this activity rolls up into the bigger phenomenon of viral marketing, which is gaining traction in the b2b world. Grand Central Communications spread the word about its new product—a service that consolidates people’s phone numbers—by seeding the blogosphere with free accounts. Bloggers’ mostly rave reviews were noted by mainstream media, which gushed about the service.

Nokia Corp. is in its eighth iteration of a similar campaign in which high-end cell phones are distributed to influential bloggers whose commentary, both positive and negative, is posted on a company Web site.

Both companies are counseled by Comunicano, a marketing boutique that specializes in blogger relations.

Andy Abramson, who runs Comunicano, describes the strategy as “a story that pops in the media because of all the heat generated below. By the time the media bites, the story is already baked,” he said. “Once you have a fully-baked brand, it’s almost impossible to compete with.”

Jupiter Research reported in March that 48% of brand marketers plan to use social marketing tactics in the next year, a 10% increase over the previous year. However, an earlier Jupiter study also reported that seven in 10 consumers don’t trust product information they find on social media. The emergence of new services like PayPerPost, which pays bloggers to write about products, has stoked the controversy.

It’s hard to believe that the concept of social media marketing barely even existed two years ago. For now, the trend has all the characteristics of a craze, and no one knows whether it will go mainstream or crash and burn. It’s clear, though, that plenty of businesses will try their hands in the coming year.

– See more at: https://www.btobonline.com/apps/pbcs.dll/article?AID=/20070423/FREE/70423014/0/SEARCH#sthash.Kjy58T5b.dpuf

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What We Can Learn From Web 2.0 Innovation

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

Few icons of the so-called Web 2.0 revolution are as visible – or as controversial – as Wikipedia.org. This massive (11th most popular site on the Internet, according to Alexa.com) collectively edited encyclopedia has been hailed as both a shining example of collective wisdom and a chaotic cesspool of half-truths and misinformation.

One thing is for sure: Wikipedia is a bold experiment in transparent product design, and its lessons shouldn’t be lost on business. Whether you like Wikipedia or not, you can’t deny that its open-development model is just one very visible example of changes that are sweeping business.

David Weinberger last week spoke of a remarkable irony about Wikipedia. In admitting to the shortcomings of its community-edited content model, the encyclopedia actually makes itself more credible. Weinberger is a co-author of Cluetrain Manifesto, a 1999 essay that is generally accepted as the Declaration of Independence for Web 2.0. In a keynote address to the New Communications Forum in Las Vegas, he praised the culture of transparency that pervades Wikipedia, open-source software and the emerging open-development paradigm.

Wikipedia’s flaws enhance its credibility because it is so open about them, he said. Every entry into Wikipedia – including changes to facts, grammar and punctuation – is logged and frequently commented upon in the accompanying documentation pages. These history logs can be epic; for example, more than 1,000 revisions have been made to the entry on Saddam Hussein just since the first of this year. But the result is a window on the product development process that attempts to obscure nothing. Any flaws are right out there for anyone else to find and correct.

Wikipedia “is more interested in informing us than speaking as the voice of God,” Weinberger said, referring to the opaque process by which traditional publishers create their products. You’ll never see error logs or disclaimers in a daily newspaper or printed encyclopedia, he noted, because to expose mistakes implies fallibility. However, “The attempt to be infallible drives out credibility.” Human beings instinctively relate to human foibles. An organization that exposes its weaknesses and seeks help is more credible that one that covers them up.

You don’t have to be a publisher to see wisdom in these words or the creative potential that interactive media can unlock. Not long ago, software developers built their products under a shroud of secrecy and non-disclosure documents. It was as if only a select few people in the inner circle had the wisdom to innovative.

Today, the new breed of software developers is learning that their “public beta” programs inspire customers to contribute useful suggestions to a process that is never ending and to create products that constantly improve. For example, Ambient Devices, a maker of what it calls “glanceable” information displays, publishes detailed technical specifications of its products online and invites customers to improve its products. The company will even tell you how to build its product from scratch without paying Ambient a dime.

This kind of openness is an early-stage trend being pioneered by the technology markets, but it’s not hard to see the idea spreading into other spheres. Who will be the first auto maker to create a beta program for a new line of cars by posting specs and asking for input? For that matter, why would anyone want to try to keep new products secret any more, when so much creative energy exists out in the field?

Businesses have all but lost the ability to keep secrets. Why not consider turning a problem into a virtue by inviting comments on your ideas? You might find it enhances your credibility.

Customer Innovation Can Spearhead New Product Ideas

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Go to Google Maps Mania and prepare to be amazed. This labor-of-love site, which is run by Mike Pegg, a Canadian software sales manager, has logged thousands of innovative mashups based on Google Maps. It’s an impressive testament to Google Maps’ flexibility and a great ad for the service.

But you don’t have to be a high-tech company to tap into customer enthusiasm. Karmaloop is a Boston-based maker of ultra-hip street clothes. It has a program that enlists enthusiastic customers to become reps for the company, earning points for referring friends to buy clothes. The company also encourages reps to snap photos of cool new fashion ideas that they see on the street and upload them to a website. In making that feature available, Karmaloop actually offloads some of its product development costs to its customers.

Welcome to the new world of customer engagement. Author and consultant Patty Seybold calls it Outside Innovation and she’s written a book by the same title. Seybold believes that it’s increasingly practical and desirable for businesses to encourage customers to innovate around its products using rich interactive media. She believes that many companies should be managing as much as half of their new product development this way.

That may be a difficult concept for a lot of businesses to accept, but once you get your brain around the idea, it’s exciting. In her book, Seybold cites Lego Mindstorms, a line of programmable robots. “Within two weeks after the retail product hit the market in 1998, adult hackers reverse-engineered the firmware and developed a number of additional software programs that could be used to program these robots,” she wrote on her blog. “And, a small industry emerged of sensors and peripherals that could be added to these robots. Lego encouraged the customer-extensions to the product line, giving hackers a license to extend its software and firmware and encouraging a healthy ecosystem.”

You don’t have to be a software company to involve your customers. Fidelity Investments maintains a site, FidelityLabs.com, where customers can try out services the company is considering, including a search engine tuned for financial content and a service that finds free checking accounts. Fidelity is being widely praised as an innovator for opening the corporate kimono it this way.

It takes guts to let customers hack your inventions, and the idea doesn’t sit well with every company. Toyota Prius customers have hacked the car’s software to drive fuel efficiency as high as 100 miles per gallon. They’ve also come up with ways to work around Toyota factory settings that, for example, disable the visual navigation system while the car is in motion.

Toyota has discouraged this practice and, given that the company’s products are made to move at 70 mph, you can understand their concern. Nevertheless, I’d be surprised if the company’s engineers haven’t learned a few things from the hacks applied by customers.

The culture of secrecy and propriety that has invaded corporate culture for many years is finally giving way to a new realization that companies don’t have a monopoly on innovative ideas. In fact, those innovations often come from customers themselves. This attitude is epitomized in the practices of Web 2.0 software companies, many of which openly encourage customers to enhance and extend their products. But as the examples of Lego, Fidelity and Karmaloop demonstrate, even mature businesses can find gold in customer innovation.

What do you think? How can your company deputize customers to help you develop new ideas? Contribute your ideas in the comments section below.

Tips and Tricks for Raising Your Online Visibility

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

One of the least expensive and most effective ways to boost your market these days is through search engine optimization (SEO). SEO involves using a few basic tricks to make it easier for search engines like Google and Yahoo! to find you and elevate your site in their search results.  SEO should be a check-off item for any business; however, a lot of people barely even know what is.  Here are some basics.

It helps to understand first why SEO is important.  When people search on terms that are relevant to your business, they’re demonstrating an active interest in something you sell.  What better way to identify prospects them by popping up on their screens at exactly the moment they express interest in your product or service?

We’ll use Google as an example, but all major search engines use the same basic tactics these days. Google’s search results algorithm is called PageRank. It’s proprietary, but some basics are understood about it.  For one thing, it looks hard at page titles, which are the labels that appear in the upper left corner of your browser. The more specific the title, the better PageRank likes it. This means that, all other things being equal, a webpage titled “All About Bowling Balls” will perform better on a query about bowling balls than one titled “Resources for the Avid Bowler,” even if both pages have exactly the same content.

This importance of page titles is one of the reasons blogging can be so effective for your business. Most blog software uses the title of an individual blog posting as the page title, and blogs are collections of individual pages.  This means that if you are careful to label your entries appropriately, you can move very high in the rankings very fast. If you work in a very focused field –  nanotubes, for example – and you know your customers are searching on that term a lot, you should be sure to include “nanotubes” in as many page titles as possible.

Google also gives priority to pages that it believes to be explanatory or educational in nature over product listing pages. This is why your online catalog may perform very poorly in search results, while an article about how to use your product may do quite well.  Keep this in mind when developing site content.  A nice collection of “how to“ articles will serve you well, helping to drive traffic to your product pages.

Perhaps the best known innovation in Google is link popularity. All major search engines now use this technique in somewhat different forms. This proprietary and frequently changing algorithm assigns extra weight to pages that are linked to by a lot of other pages. Link popularlity is an imperfect formula that lends itself to manipulation (a Googlebomb is one of the more creative exploits) and constantly changed by the search engine companies for that reason.

Nevertheless, some basic principles are common. A page that is linked to by many other pages in different domains (links within a domain aren’t counted) will rise in the rankings above a page with fewer inbound links. The quality of the link is important: spam blogs are bogus sites set up specifically to influence link popularity rankings. Search engines are learning to quickly filter out this junk. Your best bet is always to post something that people in your field will find valuable, and then alert other site owners to it and ask for a link. The new breed of blog search engines like Technorati rely heavily metric as an indication of a blog’s popularity.

Finally, you can improve your site’s search ranking bt commenting on blogs, support forums and newsgroups. Search engines routinely index these busy venues and pick up on keywords or URLs that appear there. If your people are busy contributing to the community in which they work, the benefits will come back to you.

A note of caution: There are many shady operators who will promise to optimize your site through tactics like spam blogs, link farms and comment spam. Avoid these shysters. Not only are their tactics disruptive and annoying, but search engine providers often blacklist businesses that employ these devious tactics. Keep your SEO efforts positive and above-board and you’ll enjoy a much better quality of result.

What tricks do you use to improve your search engine rankings? Share a tip with your colleagues below.

What to do when over-eager end-users bypass the IT organization

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

Technology continually invades IT organizations through the back door but that doesn’t have to be a problem. You just need to learn to manage renegade users.

As devices become ever-cheaper and more functional and the Internet presents tantalizing new options for application delivery, users have more opportunity than ever to make mischief.

Not intentional mischief, mind you, but the kind that comes about when over-eager users bypass the IT organization end bring new technology into the work place without proper approvals or protections. It’s a phenomenon that dates back to the early days of PCs: technology comes into organization through the back door and spreads like kudzu. The IT department finds out too late about the problem and then spends valuable personnel and money getting things under control.

It doesn’t have to be that way, though. Tech-savvy users – I call them “renegades” –  can be great allies of the IT organization. Smart IT managers put their egos aside and focus on responding to the need the renegades are addressing, rather than shutting them down. Renegades often come up with innovative solutions and can be the company’s best salespeople for new ideas. You just need to listen.

Here are some strategies that I’ve seen tech departments use successfully to make the most of disruption.

Form a committee. Most users don’t want to fight their IT organization. Rather, their actions grow out of frustration with approval processes or the slow pace of change.  Instead of shutting them down, explain to them the importance of standards, controls, backed up and security. I invite them to form a committee with representatives from the IT group to figure out how to develop their ideas. Promise to put some budget dollars behind the initiative if the ROI is there. Set deadlines and deliverables and carry through on the users’ recommendations. Make them into extensions of the IT organization and turn them into your advocates.

Propose an alternative. Users are generally open to alternative approaches to solving their problems. Sneaking products in through the back door is just a call for help. Offer to study the problem and secure an appropriate solution, with the full participation of the users. Insist, once again, that users take a disciplined approach to measuring value. Promise action by a specific date, and plan on delivering on that promise.

Set up a lab. One way to get out front of the renegades is to create an advanced technology lab where users and IT professionals can experiment with new technology. Invite your most enthusiastic customers to submit suggestions for new products you should acquire for evaluation. Put the lab behind a firewall, set up a checkout system so users can take technology home or on the road with them and then let them play. This has the advantage of buying you deniability. If users fail to take advantage of this resource, you’re in a much better position to shut down their back-door maneuvers.

Hire them! This strategy is a little risky and politically delicate, but some of the best IT people I’ve known have started out in other departments. It turned out that they had a passion for technology and, given the opportunity to develop that passion into a career, found IT to be a rewarding profession. If you need someone to run that advanced tech lab, for instance, the person may already be in your business analytics or market research department. Don’t ignore the possibility that tomorrow’s valuable new employee may be today’s renegade.

Above all, keep an open mind. Among the mainstream technologies of today that came in through the back door are PCs, BlackBerries, local-area networks, the Internet, cell phones and e-mail. Managed properly, your renegades are your best scouts.

What tactics have you used to manage the introduction of new technology effectively?  Let me know in the comments area below.

Information Technology Leverage, Part II

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

When I was a kid, my world was changed by an inexpensive, portable device called a transistor radio. By the late 60s, every teenager had one. The sound quality was terrible and reception was poor but it didn’t matter. Transistor radios gave teens a way to escape from their parents while still indulging their passion for music.

Transistor radios did a lot more than that, though. They introduced businesses to a whole new audience and a channel that could reach them. New products began to be developed with portability in mind: cameras, CD players and later cell phones. The recording industry was changed as teens became a huge new audience. The Beatles were a transistor radio phenomenon.

Transistor radios tugged at our social fabric, too. Families no longer listened to radio together, which created new stress on home lives. Radio became an important news channel, making people better informed. Newspapers went into a long-term decline. New personalities like Don Imus in New York and Shadoe Stevens in LA began to influence pop culture trends. We became better connected with each other.

In short, transistor radio changed our lives in ways that very few people predicted when Texas Instruments brought the first one to market in 1954. That’s technology leverage at work, and it’s still a dominant force today.

Last week, I briefly mentioned camera phones. This technology will revolutionize the world, creating huge benefits in our ability to access information while will also introducing major concerns about privacy and legal exposure.

Imagine the changes: What if there had been 100 cameras trained on President Kennedy on Nov. 22, 1963 instead of just one? How will sports and performance art change when spectators can “broadcast” a game or performance? How will our perspective on the news be affected when we can pay an individual to be our eyes and ears at an event? How will business and government adapt when customers and citizens can document poor performance of wrongdoing?

In the world of entertainment, the success of MP3 players like Apple’s iPod is already creating momentous change. It’s roiling the record industry, changing the business model for television broadcasters and enabling new artists to find audiences without a middleman. Companies will use this technology to communicate more effectively with employees and customers. People will be better informed. New uses in education will emerge.

How should you adapt the principle of technology leverage to your business?

You should constantly be on the lookout for IT innovations that can affect business in both good and bad respects. The most disruptive technologies are those that create new markets or make existing markets accessible to new customers. The bigger the market, the more explosive the potential.

Don’t dismiss or nay-say technology that people clearly want to use. Instant cameras, mainframe computers and long-distance telephone services are just three examples of the penalties of denial. Adopt new technology with enthusiasm, but let others make the first mistakes. Remember that it’s usually the second or third generation of a new idea that becomes commercially successful.

The most difficult change for most enterprises to accept is that possibility that an innovation may undermine their entire business. However, successful businesses are the ones that are most susceptible to disruption. It’s no accident that failed companies often enjoy their healthiest profits just before the rug is pulled out from under them. Read The Innovator’s Dilemma for more examples of this.

Be able to change your model before the disruption arrives. For example, newspapers like The New York Times and The Washington Post realized years ago that their fleets of delivery trucks and news dealers were no longer sources of competitive advantage. They made the jump to electronic distribution and national delivery, putting them in a much better position to survive the industry’s decline.

Finally, be ready to accept some pain. Make sure your employees and investors know when radical change is imminent and are willing to stick with you as you transform the business. You’ll come out the process smarter, more efficient and better equipped for the next round of change.

What information technologies do you think will be most disruptive and how will they change our lives a decade from now? Let’s hear your comments.

How Web 2.0 Tools Help in the Hiring Process

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

The arrival of the Web 2.0-style publishing and networking tools gives managers more options than ever to find, screen and hire the right people. Here are some ideas for using online tools to improve the recruitment process. Disclaimer: always stay within the law and the ethical guidelines of your firm. Using online aids to make discriminatory employment decisions can land you in hot water.

Finding candidates

Most job descriptions and recruitment ads are dry and boring, so why not start a personal blog or get a slot in your company blog to tell your story? Write enthusiastically about the opportunities in your group and make sure you register your blog with search engines like Technorati and IceRocket so you’ll turn up in search results. You can find a great list of social media search engines on Robin Good’s site.

I’ve never used professional networking services like Linked In or VisiblePath for recruiting, but I know people who swear by them. These sites enable people to find each other through mutual acquaintances. There are hundreds of other social networking sites organized around special interests. Wikipedia.org has a good list. Become involved in a professional online network and post your opportunities there.

If you’re looking for young employees, consider hanging out a shingle on MySpace or Facebook. These services are incredibly popular with the under-25 set, nearly 70% of whom have created an online profile somewhere, according to one recent survey. If you think you’re too old for MySpace, think again. More than half of MySpace visitors are over 35. You’ll need a college e-mail address to get on Facebook.

You can also search social media for candidates. Technorati, IceRocket, Google Blog Search and Feedster are popular blog search engines. Look for people who are talking about your industry or company. You can find a longer list of blog search engines here.

Screening

If you have a lot of resumes to sort through, consider asking candidates to answer some questions online. Services like Pre-valuate ask focused questions that can help filter out candidates who lack the knowledge you need.

You can also create your own survey form at one of the hundreds of sites that provide free or paid online surveys. SurveyMonkey.com, Zoomerang.com and WebSurveyor.com are some popular options. Be sure to ask more than just technical questions. Have candidates write about their experiences and attitudes so you can get an idea of whether they’d be a good fit for your organization.

It’s a no-brainer to Google a prospective employee’s name and nearly three quarters of employers already do, according to ExecuNet, a Norwalk, Conn.-based job search and recruiting network. The firm also reports that 35% of recruiters who do online searches have deep-sixed a candidate because of something they found online.

Always query the employee’s name in quotes to get a better match and don’t forget to try searching with middle initials and nicknames (Edward, Ed, Ted). There’s more to the world than Google, though. Ask.com’s revamped search engine is a powerful alternative to Google and includes blog search. Amazon’s A9 is also worth a try. These engines may find something Google overlooked or interpret your query differently enough to yield you a better result.

Blog search engines will show you what a candidate has been writing about lately and they can yield some interesting insights. The Boston Globe wrote of one woman who lost a job opportunity after she blogged that the job didn’t interest her all that much. A review of her server logs revealed that the employer had seen the post.

People leave a lot of digital footprints these days and searches can turn up after-hours activities or past indiscretions that may make you think twice about a candidate. While you should always give people the benefit of the doubt, it doesn’t hurt to be armed with information. At the very least, ask for an explanation for whatever you found. The Wall Street Journal recently wrote about the problems that online archives can create for candidates. If it’s online, it’s fair game.

Zoominfo is an intriguing new service that assembles a kind of ad hoc resume of people you search for using information on the Web. You can also find people with common interests or at other companies (a great resource for informal reference checks). You can also dig into hard-to-find public records with paid services like Peoplefinder. It may be well worth the $20 to $40 fee to check out the finalist for a job.

I’m sure I’ve only scratched the surface of possibilities. Share your own tools and tips by commenting below.

Innovations 2007: Some Predictions

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

It’s the time of year when everybody makes predictions and who am I to buck the trend?

It’s actually been an exciting year in technology innovation and I think we’ll see that energy continue in 2007. We’ve got all the new tech we can handle right now, so next year will be more about  making choices and assimilating what we’ve got.

Expect virtualization to be a huge topic, with every server maker jumping into the fray.  You’ll also begin to see a lot of add-on products that build on virtualization platforms and provide for improved security, management and functionality. This is a hugely disruptive technology. For the first time, the operating system is being disengaged from the hardware, and that has the potential to change things pretty fundamentally This was the year that people got excited about virtualization; 2007 will be the year they figure out how to put it to work.

There’s no question that service-oriented architecture is going mainstream, and in 2007 we will begin to see public demonstrations of very impressive capability.  A lot of this new innovation will come from combining internal applications with commercial services. That’s one big reason software as a service (SaaS) is so important. We’ve talked a lot about the ease-of-deployment benefits of SaaS this year, but where it really gets exciting is when you start combining applications from multiple vendors and customizing them through a services interface.  We’re in the first inning of the shift to this new software delivery vehicle and I think the game is going to get very interesting next year.

Expect lots of action in mobile automation. There are some big wireless internet deployments in the works – more than 250 municipalities are working on them – and the prospect is there for an explosion of high speed services at little or no cost. This will become even more compelling as corporations make the move to voice over IP and equip their employees with phones that can connect to wireless networks. The cost of hard-wired bandwidth has been plummeting for three years while mobile networking has stayed stubbornly expensive. It’s time for that to change and we’ll all be better for that.

On the desktop, look for the first real signs of some action in Linux. The new distributions are simple and easy to install and use. For many business desktop users, they will work just fine. OpenOffice.org is a kick-butt office suite for the price and a lot of people have recently their first open source experience with Firefox and liked it. I’m not proposing that Microsoft’s franchise is in trouble but users to have a viable alternative to Windows for the first time.

If you read this column regularly, you know I’m fascinated by social media and the impact that personal publishing is having on business and society. There are 100 million people on MySpace already and the service is barely two years old. Forget the first inning, we’re still in the first at-bat of this megatrend. Social media will disrupt many of our institutions and assumptions fundamentally by giving ordinary people something they have never had before: the power to be heard at a global level. I don’t think we can even begin to predict the revolution this will kick off, but I sure want to be around to watch it for a while.

These are fun times to be writing about innovation and I look forward to continuing the conversation into the new year. Next week we’ll set the stage with a discussion of the exciting potential of small technology changes to kick off major disruptions in our institutions. Have a great holiday!

A New Business Model: Why Some Big Companies Will No Longer Have Big Workforces

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

In the fall of 1994, Fortune magazine published a cover story entitled “The End Of The Job.” More than a dozen years later, that premonition is coming true.

New communications and collaboration technologies are enabling businesses to completely rethink the way they are structured. Increasingly, they will decentralize and outsource that which is not strategic. This will be a difficult transition, but in the end will yield a much more efficient and competitive business model.

Consider eBay. More than 150,000 people now make their living primarily from selling products and services using the eBay commerce engine and more than $60 billion will change hands over eBay this year.  If all the people who depend on eBay for their livelihood worked for the company, eBay would be the second largest retailer in the world.  Yet the company employees less than 13,000 people .

In San Francisco, Craigslist.com is striking fear into the hearts of newspaper executives everywhere because it has conceived of a classified advertising business that is vastly more efficient than anything we’ve ever seen.  Founded just seven years ago, Craigslist today operates 300 web sites around the globe and is the seventh most popular English language website in the world.  It has a bigger web presence than the 133,000-employee Walt Disney Company and has been estimated to be worth more than $1 billion.  It has a total operating staff of 23 people.

Companies like these are creating a new generation of internet-driven business in which the company is a facilitator of commerce rather than a storekeeper. These innovators have figured out how to use the global network to connect people who would have otherwise never found each other.  In doing so, they are upending the proprietary and vertically integrated businesses that came before them.

These models will increasingly be applied to other industries. Already, many companies have relocated or outsourced their customer support operations offshore. The service rep you reach on the phone may be physically located 10,000 miles away, but it makes no difference because the network doesn’t care.

Customer service is just the first step. As the trends forecast in the 1994 Fortune article continue to play out, American businesses will increasingly be constructed on a base of partnerships, contracts and loose affiliations. We will move toward an army of sole proprietors.

In some ways, this is a back-to-the-future scenario.  Before the Industrial Revolution, very few people had jobs.  Most worked for themselves, plying their trade to anyone who needed them.

With factories came assembly lines and the need to keep the machines running. The job was born. But America has very few factories anymore and machines do much of what humans used to do. People work at all hours in all time zones. There’s no need to keep people busy 40 hours a week any more unless there’s work for them to do. In general, people are more productive when they’re looking out for their own interests then when they are looking out for their employer.

A full-time work force has its benefits and there will always be the need for payrolls. I expect, though, that businesses will involve in the future toward an increasingly decentralized model enabled by technology. Many people will serve multiple masters, bound to their clients by sophisticated communications networks. Businesses will learn to become more efficient by planning their resource needs around networks of contractors and partners in all parts of the globe. It will be a painful transition, but it will also lead to a better style of doing business.

The job as we know it may not end, but it will evolve into something very different from what we now know.

How do you see business evolving? Post your comments here.

Open-Source Software Model Is a Landmark in Innovation

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From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

The software industry is abuzz this week about Oracle’s audacious announcement last week that it would sell Red Hat Linux and undercut Red Hat’s pricing. Oracle baldly stated that it would strip out the Red Hat trademark from the underlying code and compete against Red Hat with its own product.

Such an act would be illegal, not to mention insulting, in the proprietary software world. But under terms of the GNU Public License (GPL), it’s totally legal. Any company that develops software under most open-source licenses faces the same quandary as Red Hat. And that’s why open source is such a great platform for innovation.

Open-source software is licensed under terms that require the developer to publish openly the programming instructions for the software. You can’t charge for open-source programs, although there are ways to charge for additions to them. Most open-source software vendors make their money by charging for support and custom enhancements.

Open source software has disrupted the software industry – for the better – in fundamental ways. It has removed the cloud of legal threats that hovered over the industry in the pre-GPL days. It was a cloud that led to enormous duplication of effort and sky-high costs for buyers. Most major software markets are today boiling down to one or two proprietary software vendors and a flock of open-source alternatives.

There’s no question that innovation flourishes when programmers get access to source code. Take SugarCRM, the leading open-source customer relationship management software. Its website lists almost 300 add-on modules that have been created by customers and developers to complement the core suite. A SugarCRM user gets access to this vast library by default and for free.

The Firefox browser and Thunderbird e-mail client, both developed by the non-profit Mozilla organization, are catching on like wildfire in large part because of the hundreds of extensions that have been developed for them. This dynamic is changing buyer attitudes.

But open source is driving innovation more broadly by lowering the overall cost of software. Open-source options today are available for almost anything you want to do. Sourceforge.net, the Library of Congress of open source, lists more than 130,000 projects, all freely available, much of it stable and reliable.

What this means is that software costs are no longer an inhibitor to good ideas. A creative person can now assemble the building blocks for a robust commercial application – operating system, database, programming language, web server and the like – for no money. That drives innovation up the stack to the really interesting stuff: the applications.

It’s no surprise that the Web 2.0 social media phenomenon has exploded recently. Hundreds of entrepreneurs have used open-source tools to launch services on the Internet at little or no charge. These services would have been impractical in the days before open source. The barriers to entry have been lowered by free software, as they have been by cheap storage (I wrote a bit about that last week). This unleashes innovation because developers no longer have to worry about intellectual property rights and patent infringement. They just focus on ideas.

Which brings us back to Oracle. It’s true that there wasn’t much innovative in the product Oracle introduced last week. It’s Red Hat Linux. But to square off against a competitor by selling its own product at a lower price, well, you’ve got to hand it to Oracle. That’s pretty clever. Even innovative.