Social Brand Flow

The ecosystem challenge. Facebook must live with the world it created. Much is being written about Facebooks latest changes with most of the focus being on the privacy issues created for consumers, the marketing issues created for brands, and the apparent conflict between innovation of the service and corraling of constituents.

 

But why this dichotomy and conflict? And what to do about it? The answer lies in the large ecosystem nature of the service. When a product, a company or a brand becomes an ecosystem such as Facebook today or in the past, eBay, AOL, Apple, Adobe Photoshop, Microsoft Windows and IBM SNA- the first responsibility of the company and the most pressure is just maintaining it.

 

Usually the ecosystem is quite large and the company has its hands full just keeping it working. Assuming that calms down for a few days, the company's next challenge is to moderately advance the system consistently across the board without alienating its massive user and partner base.

 

I recall years ago when I was at Apple, one day attending meetings with our partner-foe Microsoft on their Bellvue WA campus. A Microsoft Vice President explained to me that they just didn't have time or energy to think much about the Macintosh as an OS competitor. Their primary challenge in life was upgrading 90% of the market reflecting hundreds of millions if installed Windows PCs. To move the installed base forward with even a few features was a monumental task. Worrying about competing with or out-innovating competitors with less than 10% market share paled next to the pressure of addressing 90% of the market.

 

And so it goes for massive online services. With 500 Million registered users, and hundreds of millions active daily, Facebook must first keep itself running, and then try to incrementally innovate. As we have seen when it moves too fast or too far, the installed base and the ecosystem won't absorb it and will even rebel. If Facebook moves too slow, they expose themselves to being eclipsed by a new competitor or not building a viable economic model. IBM, Microsoft , Apple and Adobe Photoshop addressed this by creating ecosystem based on development platforms for 3rd parties. The primary company took responsibility for the ecosystem while empowering and delegating to 3rd parties the task to innovate through applications built on the platform. Facebook is attempting the same model. By opening the system to application developers on the one hand and any web site on the other, Facebook seeks to extend its ecosystem in both capability and reach, just as Apple and Microsoft have done.

 

Here then are the opportunities and challenges:

 

1) The 3rd parties must create substantive value for other members of the ecosystem - in this case consumers and for brands creating economic opportunity through marketing returns. We've certainly seen a huge number of Facebook apps that consumers use and we can expect more. On the brand side, more progress is needed. Some tools and apps enable Brands to have a presence on Facebook, but few have impacted their real marketing goals. LiveWorld's new Facebook Conversation Applications (Forums, Idea Power, Ask & Answer) address this by providing brands with much greater customer engagement than previously available on Facebook. This is accomplished by deep dialogue capability among and with customers, rich media and strong moderation tools. So far brand and agency response is strong.

 

2) Facebook must manage the balance of supporting the 3rd parties to provide innovation, while advancing the basic ecosystem carefully. This is partly a matter of priority; does Facebook spend its resources helping developers with APIs, tools and marketing support, or working on the basic Facebook system. One might say do both. But that under-estimates the monumental task of just keeping it running Eventually Faceboolk will face the challenge of when to leave innovation to the 3rd parties or to co-opt the innovation itself. If it co-ops too much it will alienate the 3rd parties and damage a core part of the ecosystem. If it relies only on the 3rd parties it risks being beaten by a direct competitor.

 

As a Facebook 3rd party developer we are sometime asked "Since your application is so incredibly value add to Facebook, aren't you worried that Facebook will do it themselves?" The answer is "We keep an eye on that, but believe we are better suited to focused innovation than the eco-system steward."

 

3) Culture: Who rules, the company or the ecosystem? - All ecosystems have a culture in which the members participate. For our non-social web examples such as Microsoft or Apple, the company has both strong influence on and some level of control over the culture. But in a social web model such as eBay, AOL or Facebook, the social dynamic is actually stronger than the company that created it. These brands cannot simply control or direct the culture. They are as subject to it just as much as the 3rd parties and end users.

 

- Facebook's missteps (Beacon, the current privacy controversy) can be seen as Facebook at odds with the culture of the Facebook ecosystem. They desperately want to move the ecosystem forward, but the ecosystem keeps bending the company back to where it was. Facebook must find ways of working with the culture, yet not allowing it to hold things still. Most likely Facebook will just have to keep taking two steps forward,only to take one step backwards. .

The iPad is an entirely new class of device.  Should not be thought of as a netbook or small computer, nor a large iPhone.  Rather it brings an entirely new level of  touch based, visual mobile experience.  It will become one of the preferred ways of experiencing the Internet and social networking, distinctly different from computers, netbooks and phones.

The critical element to understand is what happens when a rich visual and communicative experience enable by a touch-stroke model is opened up by a larger screen, essentially always connected.  iPhones etc are great but fundamentally too small for a certain level of experience.  Computers and netbooks are derivatives of keyboard and mouse experience and even with a touch scree are a modal, more rigid structural experience.   Similarly, even though PCs in many ways are more powerful than video game consoles, they are not optimized physically nor the software architecture matched to the optimal physical handling of video game consoles. The game play effect of game consoles cannot be fully replicated on PCs.

Back when I was at Apple when we went from the Mac Plus to the Mac II we all thought the sea change would be the flexibility of the expansion slots.  But it turned out to be the large screen monitors. The larger screen real estate opened up the value of the Mac's graphical experience.  Similarly the larger but still mobile convenient screen of the iPad will open of the value of the touch experience on the web.

More intimate, mor social: This is partly just being able to see things larger and more of them. But more so the ability to glide ones fingers across the experience connecting mind and heart to the stimulus of  rich graphics/photos/videos, even more so to web content and even more so social interaction will expand the individual and group experience.  The iPad is also more social in person.  The larger screen, the tocuh stroke interface allows and motivates one to share the experience with others.  A PC or Netbook is physically too awkward for this.  The iPhone's smaller screen doesn't come close.

Brand marketing impact: The deeper emotional connection, visual and touch stimulus combined with its mobile conveniences opens the possibility for a brand to incorporate itself or its themes more into the consumer's daily life.

Attend Peter Shankman's Haro Happy Hour last night in New York City.  HARO or Help A Reporter Out, is a list of new sourcing information exchange in which reports can ask questions and people come across with the answers

 

Interesting dynamic last night is that pretty much everyone in attendance is connected due to HARO and hence online social.   Networked offline as a result, making new connections for their professional or personal lives -- which of course were followed up on today via online 

Oh, and the burgers, and bison steaks at Ted's Montana Grill, were great

People gather with their friends, some in costume, some not.   As in social networking the core value is that people  just wanting to express themselves, share a bit about who they are, have friends and get some special attention.  Even in costume, most people are just who they really are -- though you get some who for the moment release who they  might want to be -- or play at something else. A few people behave badly, but the vast majority are good.

50,000 people walk in New York City's Halloween  parade.  Untold more, watch.  Rain or shine, or in last night's case, drizzle or drizzle.  Like a social network,  the larger the population the more apparent energy, the more people to see.  But when  the crowd gets too big, it's harder to focus, harder to tell a story.  The experience is less engaging, though still has some promotional value.   A person (or a brand for that matter) might be able to get a little impulse attention, but no depth of story.  In the  more focused venues -- a smaller party, a group at a cafe table, a deeper story can be told and we get to know each other better.  New York City's Halloween demands both for the best experience, the mass around the parade that sends a headline message for all to connect with, and the smaller groupings where we can really talk and get to know each other.

And so is the social flow of social networking.  The core value to most people are self expression and  sharing who they are, friends and some attention.   The massively large social network venues, bring the most reach and promotional or short awareness value, but get so noisy its hard to tell a deep story.  The smaller venues (such as a branded community site) can go deeper, but only for a smaller # of people.  The full spectrum well integrated, brings the most value.

When it' raining, I think so.

mmm,mmm., good

I am the CEO of a $10 Mill/year, 200+ employee company and believe we need health insurance form now and with a public option. Our company is headquartered in Silicon Valley and is part of the Internet- Technology segment that is a driver of innovation and growth for our country.

Health insurance reform is necessary to save our economy, save jobs and create jobs in almost all American businesses, reduce business costs and make our country competitive in the global market place.

1) Reform will reduce costs for business, not increase them. Even if businesses have to pay new taxes and have increased requirements to provide insurance, the net impact on business is lower costs.

2) Reform will save and create jobs in small and large businesses in almost all industries (except maybe health insurance companies)

3) Reform will enable businesses to be more productive and more competitive in the global marketplace.

I'm not being liberal or conservative here. I'm just being a practical businessman trying to create and protect jobs in this country.

Each year the insurance companies raise our rates (like they do for most companies) by 15%-20%. (or the same level of coverage. (In some years rates have gone up 30%-40%.) There are only a few insurance companies in part due to the cartel nature of the industry, its local state regulated structure and it's profit and high exec compensation driven mentality. This combination drives them to pursue their financial goals independent of real competition or real consideration for their customers (sound familiar?)

In this context they all raise their prices, every year. Prices go up while coverage goes down. It is also very painful for businesses and employees to switch insurance companies due bureaucracy, loss of deductibles, loss of doctors from prior network, loss of coverage and assorted extra costs. This high switching cost further intensifies the cartel like structure of the health insurance industry.

They are a cartel because there are only a few of them, there have infrastructure economies of scale and they have coordinated standard practices in conjunction with state regulation. There is no true competition. Certainly no true price competition.

Each year we negotiate the rate increases down to 5%-10% coupled with substantial reductions in coverage and increases in deductibles. This means each year our direct costs go up. The lower coverage means our employees cost of health care goes up. Either we raise employee pay and our business cost goes up again, or the employees are effectively taking a pay cut. Until last year our company paid for most of the coverage fee increases, but we can't do that anymore. Now each year, like most businesses we shift more of the cost to be directly paid by our employees. So every year costs go up, coverage goes down, deductibles go up and the employees pay more.


The results for our business and most American businesses are:

1) Businesses are getting cost squeezed.

2) Employees are getting less health care because they can't afford it with lower coverage and higher deductibles. With less health care they are less healthy, not always able to work as well and business productivity goes down.

3) Employees are taking a financial hit in cost up and net income down. Meaning their net take home pay after health insurance premiums and health care costs is going down year after year.

The notion that health care reform will hurt businesses with increased costs (taxes, requirement to provide health insurance) fails to understand the health care economics of American business. Health care insurance is about 5% of our company's costs (which is actually low compared to some companies.) That's a pretty big % of cost when running a business. Using as a quick example a 20% annual increase in health insurance costs to maintain the same coverage:

- That would cause our total company costs to go up 1 1/2% every year or about $91,000/year for something that adds no direct value to the business. That does not create value for customers, employees and shareholders. That $91,000/year could pay for 1-3 jobs (depending on the position.)

Not likely our taxes or other such costs are going to go up that much due to health care reform. Even if they did, those new costs won't increase every year. With our current health care system over 5 years our insurance costs can increase by $451,000/year. Over 10 years by $909,000/year. A business can't sustain that. That's also the loss of 5-20 jobs each and every year that could be created if we implement health insurance reform.

Had we implemented reform years ago, our costs as American businesses would be lower than they are today. Our employees net take home pay after taxes, health care insurance and health care costs would be higher. They would be healthier, more productive employees. We would have healthier, more profitable businesses investing in new technologies, products, services and jobs instead of investing in the profits of health insurance companies and their executives.

If we want to create jobs, if we want to protect jobs, we have to change this situation with substantial reform and a model that breaks the insurance industry's cartel-like hold on pricing. That's a public option (at least.)

Most of Washington's debate on this subject is the equivalent of arguing over the color of the life preservers while the ship of our economy is sinking fast due to a busted health care engine. We need to save the ship now with a new engine now. We can tune it once we're afloat again.

As I hop among cities, always being connected really makes it easier to work and to play

Beautiful weather today -- Great work with LiveWorld team

Arriving to meet with clients. Very nice airport

Best London Zoo photo is the thinking monkey

The thinking monkey is the best

Demonstrating the latest feature in LiveWorld's platform

Using LiveWorld's great new Twitter integration feature

which allows a person to post inside a brand's community site and engage on Twitter at the same time

Using LiveWorld's new Twitter integration feature -- Great way to write at a brand's community site yet engage on Twitter at the same time