Archive for the ‘Challenges’ Category


The Dark Side to the Collaborative Economy

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Graffiti alley at night
As part of my ongoing coverage of the Collaborative Economy (read all the posts) it’s important we explore all facets of this disruptive trend to corporations, not just upsides, but the downsides as well.  I also see that “marketplace friction” is a sign of the disruption that occurs as power changes hands, which should make the seasoned web strategist want to look closer.

If you’re from the sharing movement and are offended by this post, my opposite of this post is The Three Drivers of the Collaborative Economy, where I documented over a dozen specific attributes that are driving this movement.  Please read it.  While the recently published Report on the Collaborative Economy lists the key challenges continues to obtaining traction, let’s focus in at a deeper level on what’s counter-acting this market, and look at both sides objectively.

Index of Challenges: The Dark Side of the Collaborative Economy

  1. It might be illegal.  In some cities, it’s against the law to act like a business if you’re not one.  Amsterdam ruled that unlicensed hotels (houses) were not legal.  We’ve seen similar rulings in cities like New York and Berkeley.  It’s difficult to move forward if sharing has been deemed a criminal behavior.
  2. New is better than used.  No more unwrapping new videos.  You’re getting nothing but hand-me-downs for the rest of your life, Johnny.  New products have their appeal.  They’re shiny, unbroken, and devoid of anyone else’s grimy fingerprints.  New cars, houses, clothes and even baby toys have intrinsic value over sweaty, beaten and ‘proven’ older products. Imagine an AirBnb, which provides value-added services of security, food, concierge, and of course, that coveted mini-bar, versus hotels.
  3. The sharing mindset challenges traditional values.  Call it hippy-dippy; call it radical liberalism; call it anti-consumerism; call it the anti-thesis of what a healthy society is built on; call it whatever you want.  Not only will society cause those who don’t share to feel selfish, the very core values of some Western societies are rooted in owning a three-bedroom house and white picket fence a sign of success of, reinforced by marketing to “live the dream.”  The mindset of sharing with others challenges the very values and principles that many consumers and business owners have been taught to fight against.
  4. Traditional business models are threatened as the crowd becomes empowered over institutions.  Undoubtedly, existing corporations are being disrupted by this burgeoning trend that enables the crowd to be their own company, bypassing corporations.  Corporations are left with a burning question that keeps them up at night: “What role do we play if people buy once and share many times with each other?”
  5. Governments balk in order to defend taxable revenues.  Across the world, we’re seeing governments at the local level, and sometimes federal, resist the sharing of homes or cars, as it radically disrupts business models, taxable revenues, security, transient guests, and existing institutions.  I assume that most lobbyists are gearing up, funded by corporate backers, in order to take these battles to court.  Even in San Francisco, new rulings will be unveiled next month.
  6. Service providers could be deemed a second-rate marketplace.  Second rate hacks now posing as professionals?   Professionals at hotels, restaurants, service firms and staffing agencies will tell you that their workforces are better than those found at on-demand marketplaces like oDesk or Taskrabbit.  They’ll claim that their workforces are full-time professionals, working full-time, not stay-at-home part-time workers.
  7. Concerns over public safety and quality control leave regulators reeling.  Berkeley showed concerns that transient migrations of guests to neighborhoods could be a public safety hazard.  Furthermore, as startups like Feastley arise that enable anyone with a kitchen to act like a restaurant, concerns over food safety arise.  In a morbid case study, accidents and deaths in car sharing led to great concerns over safety, as unlicensed drivers act like taxi drivers, putting those around them at risk.
  8. Legal liability is challenged as ownership and access models are diluted.  Who’s liable if a car is shared, rented, or borrowed and then crashed by a stranger?  That is an example of the questions posed by insurance companies that the legal sector and owners of assets will face.  While websites like RelayRide offer insurance policies up to $1 million for autos, will that cover a tragedy caused by users of this service?
  9. Lack of spending reduces the overall market, impacting jobs and the economy.  Forget your silly startup; the bigger issue is that sharing reduces taxable revenues, jobs, consumption and economic injections from consumers spending widely.  If no one ever bought anything again and, instead, just shared, fixed, and made their own products, capitalism as we know it could start to unravel.
  10. Lack of trust in two-sided marketplaces leaves owners at risk.  To quote contrarian, Milo Yiannopoulos, who presented a compelling speech at LeWeb, he “Works hard for his nice stuff and doesn’t want strangers touching it,” (paraphrased) strikes a chord with many. Furthermore, we’ve seen case studies of AirBnb properties being looted or damaged, or cars that were part of the sharing economy crashed.  It’s hard to trust strangers, despite Facebook connect systems.
  11. Collaboration in an economy ripe during recession, but not during a bull market.  Penny-pinching is great during financial struggles, but during times of boom, it creates an undesirable friction, as I can buy new with wild abandon.  Economic disparities aside, the developed nations will discard the silly notion of sharing when, instead, they can own more at will.
  12. Oligarchy is reinforced, as owners rent to the economically deprived.  The rich get richer as those who have the resources to build and fund startups, or the resources that will be used in these marketplaces or used on demand, will continue to generate the money.  In fact, traditional corporations, like car rental companies, have purchased car sharing startups in this space, securing their place in the market.  Venture capitalists and investors, who already stem from the 1%, seal their place in power positions by being owners of the movement.
  13. Excess venture capitalist funding inflates an artificial marketplace.  Those crafty venture capitalists continue to inject funding into startup clones, so their portfolio is also proven to have them covered in the car-sharing market, hotel-sharing market, services-shared market and office-sharing market.  This artificial injection casts traditional business models aside, as startups have one focus:  market adoption, rather than business models that will sustain, as they prepare for an IPO or an M&A exit.
  14. Startup saturation in every category confuses the market.  With over 20 car sharing/renting/on-demand car services available, how does one keep track of who does what?  Trying to invest in the right service leaves those who would consume confused, and creates marketplace churn.  With barriers to entry so low, what’s to stop this market from continual wasteful churn, as everyone tries to do the same thing?
  15. Socialistic values are at odds with free market capitalism.  Boom.  I swore to myself I wouldn’t bring it up in public, but it warrants a discussion.  The collaborative economy, like the internet and social media is a form of socialism where the crowd gains power over institutions.  History is rife with examples of variations of socialism being challenged, not working at all, or in a few cases, working just fine (see Northern Europe).  Nothing I learned in business school prepared me for these radical models where corporations, and capitalism as we knew it, are upended by this radical change.
  16. Lack of standardized reputation systems.  Currently, the startups don’t share reputation systems, and are generally siloed.  While over 50% have deployed Facebook Connect, the ratings and review data of the individual goods being offered, or the owners, are not being shared in a consistent way.  Solutions, like Trustcloud, have emerged, but lack broad market adoption.  (Added this a few hours after I posted
  17. A conduit for the underworld.  There is an emerging black-market in every category, unchecked by regulatory bodies.  Need I say more?

A sign of market disruption is heat from friction as power changes hands.
Friction comes from disruption, which gives us pause to look more closely at market drivers and market resistors.  This growing list illustrates the challenges this market will have to contend with, take head on and overcome in order to become a mainstay in society.  I’ve provided some additional resources that aided me in compiling this list, to which I hope you will add your comments.  The market will fight these challenges for years to come.  We’re just at the very beginning.

Related Resources: Marketplace Friction

Update June 27th: Respected Shareable magazine has joined me in the debate, and posts a worthy response to my critique, please read.

Matrix: Challenges of the Social Technology Industry, July 2010 Edition

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While the opportunities for social technologies to change the world, business, and our individual lives continue to unveil, it’s also key to focus in on the challenges that impact the industry.  For many folks who have decided to invest in social technologies to improve their careers and business, it’s even more important to pay attention to these challenges.

First of all, have the right mindset. The savvy person will realize this isn’t a list of gripes, but instead an opportunity list.  Leaders at vendors, agencies, or brands will see these list of challenges of problems to fix and monetize.   If you’re in this space, you’ll want to send this list to your product teams, or strategy teams so they can think about how to solve many of these issues –or at a minimum, be prepared for it.


Matrix: Challenges of the Social Technology Industry, July 2010 Edition

Challenge Description Why it’s Painful How it will be Resolved
1. Noise overwhelms signal With over 50mm tweets each day (more stats here), and more coming, there’s an excess of noise. Expect this to increase as the ‘Internet of things’ and inanimate objectives emit signals. A compounding problem. Finding the needle is an incredible challenge as the haystack continues to grow.  As a result, individuals and companies will rely on analytics tools to derive what’s important, meaning they have less time digging in deeper as their viewpoint becomes larger. Expect social inbox aggregators to filter signal like Facebook, Google, Bing, Salesforce, and eventually social analytics and then social insights vendors, We’ve mapped our a roadmap in our Social CRM report, but expect companies like Crimson Hexagon, Crowd Factory, to be the filter and conduit for advanced listening and analytics.  On the consumer side we can already see the Facebook news feed pruning the most relevant information from our average of 150 contacts.
2. Amateurism threatens expertise The social web is like a vuvuzela, everyone has one, blows it, resulting in a pure buzzing sound. Now, this means that non-experts are commenting and asserting influence in areas where only experts had voices.  Andrew Keen has explored this topic at great detail. Media, journalists, photographers, videographers, and all other IP or media based industries are impacted as everyone is on the game.  The challenge is, with amateurs and prosumers in, it’s created challenges.  For example see keynote panel at SXSW debating crowdsourced graphic design vs the elite professionals New markets are being developed that meets the needs of both the expert elite class as well as those of the masses.  We’re seeing experts adopt these same tools of the masses, for example, nearly every online newspaper has integrated social technologies.
3. Power shift to participants Those who use social technologies like ratings and reviews are sapping power from those that don’t.  Furthermore, voices from those with simple tools like blogs, score well in search engine results pages, a common starting place for information seeking. Research on trust, such as Edelman’s trust barometer indicates that people trust others like them, in almost every situation.  As a result, institutions and organizations are being cut out as an unneeded middleman. In order to get back trust, these institutions have to use the same tools as the commons.  The challenge is developing a significant shift in mindset and deployment.
4. Fast moving industry creates confusion There are few other industries that move as quickly as the social space. A combination of low barriers to entry of commodity technologies fused with injections from venture money there’s constant innovation. The technology is innovating faster than companies and institutions can’t keep up.  Furthermore, the list of choices is staggering, such as the 145 brand monitoring vendors and 125 community platforms. In the end, consumers will define which technologies are adopted and at what rate.  To keep track of these trends, a combination of research from analyst firms and vertical specific media sites like AdAge and News blogs like Techcrunch, Mashable, RWW will provide illumination.
5. Risk of overhype Fast growth, consumer adoption and celebrity adoption of these tools has lead to a media frenzy.  Yet this space can quickly get overhyped as small changes in Facebook features yields huge news coverage. Perspective is lost when we’ve over focus on the disruptions from such simple technologies.  If there’s excess hype, then there will be a continued flood of investor money spurring more cloned companies –exasperating the situation. Decision makers should focus on business needs and business goals before succumbing to the latest headlines about Facebook changes and look at the long term aggregate view. Use data to construct a long term view.
6. Lack of qualified talent Finding the right talent is a challenge. For example, within the corporate space, companies have only been adopting these tools with great fanfare for a few years (Scoble, being one of the starting block at Microsoft in 2006-2007) Companies are ill-equipped to take advantage of this fast moving pace.  As a result, while those with experience and talent will quickly find an increase in salary, the demand for recruitment will result in a lot of job hopping. Time will slowly give experience to this budding industry, it’s not something that can be rushed.  Yet professionals should continue to tap into education, blogs, books and conferences to stay abreast.  This is an opportunity for publishers, educators, conference creators, and existing experts.  See this list of those in these roles in corporate now.
7. Measurement elusive While engagement (the interaction) of these tools and technologies is high, it’s not an effective form of measurement.  Secondly, while the interaction is high, it’s been difficult to tie back to commerce. While it’s easy to measure pokes, RTs and likes, they don’t tie back to true business measurements or KPIs.  Companies want more fans for their Facebook page but aren’t sure why.  As a result, efforts will spin focused on less meaningful metrics without a clear impact to business. All companies and professionals should measure their efforts based on business objectives.  In our latest report on social analytics, we’ve categorized this into 4 major areas: learning, dialog, supporting, and innovation.   Then, you can work with brand monitoring vendors, insight vendors, and eventually business intelligence software vendors.  Lastly, we’re hosting a conference on social commerce to tackle many of these issues head on.
8. Disparate Data and Irregular Standards. There are many vendors that are constructing their own systems.  Each social network has their own API, and despite efforts to bring standards, the fast moving landscape makes it difficult While the cultural impacts have been severe for many companies, gluing together ever-changing data sources creates confusion.  As a result, data will end up in silos that the CTO will have to glue together later, as well as the ever constant management of data formats. Although foundations have been setup to lead OpenSocial, there are other vendors like Gigya and Janrain are starting to provide technology that can manage the multiple identity systems.  Expect new tools like Social Inbox Aggregators to start to fuse information into one place, and eventually passing to Business Intelligence systems.
9. Culture shift creates an internal rift inside institutions. For nearly every institution, this has caused an internal cultures shift.  A few reasons: Power has shifted to the participants and companies realize they must now participate.  The ‘always-on’ mode means that business doesn’t stop at office hours, and now employees can choose the technologies to be used over the CTO. As a result, companies are struggling to get organized internally, and formerly silo’d groups (like Marketing and Support) must come together to support the same customer.  Furthermore companies who stem from command and control must give way to anarchist Cluetrain talk in order to stay relevant. The biggest opportunity is for internal evangelists and change management teams to lead the charge.  However they won’t do it alone as analyst firms will provide education and guidance and an emergence of new types of consulting agencies like Dachis Group, Ant’s Eye View,  will enter the fray along with traditional agencies like Organic, Razorfish, Ogilvy, and Edelman.  They won’t be alone as consulting firms like Deloitte and McKinsey will quickly come on board.
10. Privacy Woes scare companies and consumers. As more individuals share information the greater the risk that this content can cause harm by malicious parties.  Furthermore the more brands use this data to do accurate marketing, the fear of ‘big brother’ will increase. Facebook is the most telling example, as information that was first promised to be ‘just for your friends’ continues to be more open. As they slowly shift towards a more open model, you can see the reactions from consumer, press and media. Over time, society will start to normalize (look at Generation Y’s openness) and sharing will often be a default norm.  Expect services to emerge that will remove and hide information from the internet in order to keep consumers safely tucked away.

How to Overcome These Challenges
Taking on issues head on is a powerful way to take control over your own destiny. Use this list and develop strategies to hurdle over them.  Send this list to your leads at your company who focus on the future direction. If you work at a social technology startup or agency, send this to your executives now.  Secondly, print out this list and identify which challenges you’ve already taken on, and which ones that haven’t.  The savvy corporate social strategist or the smart entrepreneur will recognize the many business opportunities and models this list offers.  The truly smart folks will figure out how to improve their careers, add more value, and even profit by taking these challenges on directly.

This is just a partial list, and you can feel free to leave a comment with what you see as the biggest challenges in this space, I’ve kicked off a discussion in Twitter, and you can see more folks add to the list of challenges, see the tag #SocialChallenge.  Disclosure, some of the companies listed above are Altimeter clients.

When Appliances, Pets, and Plants Start to Tweet

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Soon, we should expect devices and appliances of all kinds to emit digital updates.  Will it be signal or noise?  It depends on your perspective. This “Ambient Status” is in which a non-living device or non-human beings compulsively create digital signals and updates.

With technologies at hand that allows anyone to share their opinion and status, the world becomes more connected. Perhaps one of the challenges in our overly connected world is the damage that excessive noise from many who publish causes.   It won’t be limited to just people: expect our cars, refrigerators, servers, pets and plants to start tweeting, blogging, and live streaming.  

For example, we should expect in the near future that:

  • Cars to alert us in SMS, Twitter or email when they need to be serviced, have low air pressure or other service.  In fact, we’re already seeing technology that will allow your car to text on your behalf while you drive.
  • Automated alerts from loved ones will be tweeted or texted to us. We know that Onstar can alert a centralized office if there’s an issue with the car being in an accident or stolen, why not alert loved ones (idea via @rototok)
  • Medical devices like life alert, or wrist bands or watches that measure heart rate and pressure could be used to auto alert loved ones of sick or elderly.
  • Refrigerators, washing machines, coffee machines and other home appliances will alert us when they need service or have completed a task.  If your plant can already Tweet when it’s thirsty (yes this already exists) then why can’t your air conditioning system and lights? 
  • It won’t be just home appliances, expect overloaded servers, web systems, and alerts when your boss is approaching your cubicle to be able to emit signals.
  • In the not-so-far fetched future, we can expect our pets, infants, and even unborn children to emit digital signals that we could aggregate in Twitter, Facebook, Blogs, SMS or email.  Heck even my puppy @goodboyrumba already tweets, (with some aid from his human servants) but we could expect new collars that measure his bio rhythms to emerge and let us know when it’s time to be let out for number 1 or 2.

The real question is, is this ‘ambient intimacy‘ or just adding to the ‘noise’.  While it may help us to be more connected, aware, and easier to manage our lives, it’s also going to make us a little more frantic, over-sensitive, and overwhelmed.

Looking Behind the Curtains on the Social Media Stage: Humans Don’t Scale

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I’ve been watching this space for a few years now, and I’ve started to notice that the people (often those that we think of that are at the upper echelons) are not able to scale, as a result here’s what they’re doing to compensate:

Many social media bloggers don’t even manage their own accounts, they often hire virtual assistants to do their Facebook and Twitter follows and replies.

Quite of few of those top social media bloggers don’t even answer their own emails, they have a virtual assistant that reviews them, sorts them, and sometimes responds on their behalf.

Many of the top social media news blogs are on a race to see who can publish the fastest, why? whoever gets the earliest time stamp often gets the credit and links from other blogs, and will risest fastest on the techmeme tower or google news gauge. As a result, many of these blogs will publish the headline, then adjust, edit, format, punctuate, and add links to the post in real time.

A few authors that have published one of the thousands of social media books outsource their content to ghost writers who create the majority of the content. Although it’s the headlining author’s name that drives book sales, in many cases they don’t actually write the content.

Many of the top celebrities or top social media names don’t even write their own blog posts and tweets, they may outsource it to others.

So what does this mean? It means the social media space is starting to look like just about every other industry that starts to get mainstream. Social media is often the premise built on 1:1 relationships, and even with technology, that clearly doesn’t scale, and I can relate.

What about me? I’m asked every few days “How do you do it all” my answer is “I don’t, the wheels are falling off” Well you’ve probably noticed I’ve not been blogging much, nor tweeting lately, I’ve been under heavy travel and projects (that I’m behind on). Every blog post and tweet that you see is me, including all the errors and typos that come along with them. I will admit that sometimes, I even updated blog posts after they publish, to polish it up. I skim all my emails, read many, but if I answer, I promise you that’s always me. I may not be good at scaling my social efforts, but I assure you, I’m authentic, warts and all.

I can relate to those who don’t scale well. If you’ve ever met me at an event this last year, you may have noticed dark circles under my eyes, and somewhat of a flustered appearance. I recently had a long talk with a good friend yesterday, when I’m tired from traveling nearly every week, you may notice that I actually draw my strength from within or being online, not always from others. So if I’ve ever came across as a bit messy and sapped, I certainly don’t intend to, I’m just stretched to the limit at times. 

So what happened to transparency and authenticity?  Maybe it’s the econony, with less resources, and more pressure, we’re all being stretched to the limits.  Or maybe, this is the evoluation of every industry, music, art, and film started out simple and pure, then became institutionalized. Or maybe, I just never bothered to look  close enough.

Update: Chris Saad, who inspired me to write this, has responsed from his own blog. Paid content highlights the challenges. This post has generated a lot of discussion from my friends as I meet them in person, interesting.

What’s Wrong With Corporate Social Media, and How To Fix It

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What’s Wrong With Corporate Social Media?

Well, A lot of things. I was invited to join a panel designed by Peter Kim (he used his blog to gather feedback) at the Web 2.0 expo to explore just those topics. We managed to get Charlene Li, and it was like a mini-reunion. Over dinner the preceding night, we decided to focus on four key challenges that we see across the social media marketing industry.

The Four Major Challenges of Social Media Today

1. How to get culture to adopt & get executives to buy in?

2. How to make social media “campaigns” work?

3. How do you measure social media?

4. Does social media even matter?

Folks who blogged the session:
There were a handful of folks who live blogged or reported the sessions (a rarity these days, thank you) and rather than I rehash what we said, I’d rather let you go see what they wrote:

  • Susan Etlinger from the Horn Group
  • Jennifer Leggio, Zdnet
  • Holger Nauheimer
  • Mia Dand
  • Michael G. Cayley
  • Shanee Ben-Zur from Voce
  • The Four Fail Whales of social media, CRM Magazine
  • Audio: Charlene has now posted an MP3 of the session, listen in.
  • For additional information, we made the session interactive and encouraged everyone to write back their thoughts and solutions using the #smfail tag. I’ve looked through the hundreds of tweets, and there weren’t a lot of solutions but mainly retweets and folks tweeting what was said on the panel. It was great to be with my former colleagues, if you get the opportunity to work with them now, I consider you very fortunate.

    Culture, the Great Influencer on Corporate Social Media Adoption

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    I’ve helped dozens of companies define their social media strategy based on research. Often, we conduct custom research efforts to evaluate first if their customers are using these tools (technographics) then we often talk with many stakeholders to find out their thoughts on social media.

    Sadly, in some cases, brands that had active customer bases using social technologies were not ready to participate themselves due to culture. Whether is paralysis, legal, or a cultural influence from management, or even location (I did a tour in Japan to find out how social media is growing there).

    One example that comes to mind is a financial company I worked with, they are one of the ones that have an incredible amount of money –and a lot at risk as their customers were on the verge of self-connecting to each other without their account teams involved. Despite the clear business need to ‘fish where the fish were’ we advised them not to participate as their internal culture was not ready, there were too many roadblocks.

    Recently, after a presentation I gave at the Ominture Summit last week, I was able to meet the marketing manager at Apple who’s responsible for social media. While I’ll respect the privacy of our conversation, I know the impacts of culture on deployment.

    What about big companies? Yes, they are a unique beast, and typically organize in what I call the ‘Tire’, where adoption happens at the edges of the company. Let’s lean on IBM’s Adam Christensen who presented this slideshare of how big blue was able to filter social computing throughout the company.

    What other companies really live and breathe social computing throughout their DNA? Facebook, Google, Microsoft, SUN, and of course any social media vendor.

    Love to hear your thoughts on these questions that many struggle with:

    1) Does culture impact adoption of social technologies within a corporation?
    2) Even if customers are using social technologies, and the culture is not ready, how will you convince the powers that be?
    3) How do you change a top down culture to a bottom up?