Hot Commodity

I’ve mentioned several times that I’ve been researching innovative companies from around the world for a project at Brilliont. Several of these companies can be characterized as belonging to the “social web” category, but few companies that are in this category, in my opinion, are truly innovative. I’ve written previously about The Point, a community website that helps people congregate around the issues they care about and combine forces to make things happen. This, I believe is a novel idea. The majority of the companies I read about, however, are social networking sites, which despite their best efforts, are simply not innovative. Most of these websites fall into one of three categories, each as unappealing as the one before.

The first is the “copycat” category. A few days ago I came across an “in pictures” list on Forbes of “Facebook Copycats Abroad” that details a few of the several hundred Facebook clones around the world. I’m not sure how you can call yourself “innovative” for starting the 8 millionth “social networking” website and basing both the aesthetics and the functionality entirely off a website that already exists. Although I must admit that I am quite a fan of Hatebook, an anti-social utility that disconnects you from the things YOU HATE. Its tag line reminds us that “the enemies of [our] enemies are [our] friends” and encourages us to find them on Hatebook.

The next bunch fall in the “niche but totally outrageous” category. My boss recently told me about a social networking website for women that like ex-convicts. Hilarious? Yes. Creepy? Definitely. Innovative? I don’t think so. Then there’s Petster, a social network where you, the human with typing abilities, can make a profile for your pet and share with others every detail of your pet’s existence. And if this is too vague or broad for you, I’m sure either Dogster, Catster, or Hamsterster will suit your fancy. You thought I was kidding about that last one right? Nope, check out the link. I’m sure ferretster.com is coming soon. I could go on for years, but I think you get the point.

Finally, we have the “let’s get every single human being under the sun to join because quantity is so much better than quality” category. Yesterday my boss sent me a link to myyearbook.com, a social network started by two high school students because “friendster gets boring, myspace is creepy, and classmates is a rip off”. So what makes myyearbook.com so different from these other social networks? Nothing. The founders want myyearbook.com to “be the only community of people worth going to. It would have every high school, every college, every graduate school, every summer program, every employer, everyone.” Let’s go back to basic principles. You cannot be everything to everyone (unless you are Google), and if you try then you will fail (again, unless you are Google). The only thing that I think makes any social network at all unique or useful is exclusivity, and this website has clearly thrown that to the wind. Even Facebook, the one social network that I am a member of (I joined because it was exclusively for college students), has lost much of its appeal by opening its doors to anyone and everyone with an email address.

I’m waiting for the day when the founders of any one of these social networks are able to truly monetize their website. Meanwhile, I’ll enjoy reading about the ridiculous ideas people keep coming up with. Better yet, maybe I’ll even start my own social networking site.

As I’ve been chasing innovative companies into the depths of cyber space for one of my projects at Brilliont, I’ve noticed that lists are all the rage. Whether it is a list of innovative companies, a list of things entrepreneurs should or should not do, or a list of successes (or failures), lists are everyone on the internet. Having read so many lists I’ve come to some conclusions about why we are so enamored by them. Here goes…

20. In this age of news and other online content aggregators we are becoming accustomed to a new level of quality, quantity, and diversity of information that is often easier to reach with a succinct list rather than drawn out paragraphs.

19. Lists allow us to get directly to our point, without having to worry about introducing a topic or concluding (ie: they are often easier to write).

18. Lists sometimes allow us to mention several very distinct pieces of information at one time in one place without having to find concrete ways to connect them.

17. Did you know that the population of Canada is only 1/9^th that of the United States?

16. Lists make it easy for us to gauge how much content we have finished reading and how much we have left to go.

15. It is easier to retain information in list form because they cut away the trimmings.

14. Complete sentences unnecessary.

13. People tend to feel that they can skip over a few points in a list without missing the gist of the article. This means that on occasion, if we don’t really have that much to say but want to look impressive with a long list, we can string together some random verbiage for a bullet point or two and hope that no one notices.

12. I’m just writing random stuff and hoping that no one will actually read this point or even if they do they’ll be so enamored by my overall list that they won’t even notice that this sentence is entirely ineffective.

11. Or alternatively, we can throw in an entirely useless point but use a buzz word in hopes that it looks impressive to the large majority of people that will only skim the article.

10. Cars that are GREEN and save ENERGY are really great for the ENVIRONMENT and the ECO-FRIENDLY nature of our lifestyle.

9. Lists are of course, only attractive when they come in round numbers. 5, 10, 20, 100- these are good numbers for lists. They tend to imply that the author has exhausted all important points on any particular topic. On occasion this means that we find ourselves repeating content by presenting it in different words. Luckily, lists often help hide this repetition.

8. Lists can be redundant but the bullet point structure can help disguise this fact.

7. Lists tend to generate debate. They are inherently a ranking based on the writer’s opinion and understanding. It is often easier to pinpoint and extract the author’s view and support, negate, or simply discuss it.

6. Lists are fun to send to family, friends, and colleagues. We tend to be much more likely to skim through a forwarded list of “Top 10 XYZ” than to read through a long or dense article that we receive.

5. Lists make it easy to explain anything that requires steps. For example, directions and recipes are unbelievably easier to follow when described in list form.

4. People love categorization, comparison, and statistics. Since lists often claim some sort of extreme (eg. The BEST cities to live in, the TOP 10 solar energy firms, the WORST 15 movies of all time, etc) we get excited. Then we can turn around and sound particularly well read in conversation… “Well you know Bob, the PATH trains are said to be the absolute worst form of public transportation in the history of the universe because they are always late and broken and crowded…”

3. Lists make great blog posts. Enough said.

2. The numbering system of lists leads to the expectation that the last item will be particularly exciting, insightful, or eye opening- especially in the case when lists are numbered backwards.

1. Sometimes this is true. Sometimes, unfortunately, it is not.

I recently read a particularly thought provoking article by Scott Anthony, a discussion leader for the Harvard Business Blogs, that discussed whether or not large incumbent companies should even bother with innovation. I’ve written previously about Toyota and Honda and the fact that while analysts, academics, experts, and lay people alike are praising them now, in the past few decades both companies have been criticized publicly several times for pouring money into “unproven” technologies while refusing to follow the rest of the industry into large sport utility vehicles and pickup trucks. Well, as I said before, “unproven” is what innovation is all about! Both of these companies exemplify not only how important innovation is for incumbents but also how successful the correct approach to innovation can make them.

But today I actually want to briefly give mention to a different aspect of success- one that I find is often neglected or forgotten- and that is luck. Jim McCann started out selling flowers on the side and ended up with 1-800-FLOWERS, the world’s largest florist. Ted Waitt started Gateway 2000 on his family’s cattle farm in Iowa and in less than ten years was running a billion-dollar company. What special ingredient do these and the hundreds of other famous success stories have in common? Luck. (I recommend reading about these and other successes in What’s Luck Got to Do With It?: Twelve Entrepreneurs Reveal the Secrets Behind Their Success).

Even contemporary companies such as Google, Apple and Amazon owe something to luck. It doesn’t matter whether you are starting a new business or applying to a new job, choosing classes in college or trying out for a sports team- luck plays an immensely important role in how our lives shape up. Sometimes luck just means being in the right place at the right time. There is no doubt that Honda and Toyota did years of research and spent hours understanding all kinds of models before deciding to invest so heavily in alternative energy and fuel efficient vehicles, but even they could not have known how quickly the energy crisis would arise and how pervasively the ‘green’ movement would infiltrate our nation or the world in the past few months.

Unfortunately top management doesn’t really like luck because it is, by definition, erratic and uncontrollable. So how do we then deal with it? Well, we can, to some extent, create luck- only then it goes by a different name, and that name is opportunity. The most successful people create and take opportunities wherever and whenever they can. Whether this means turning your company’s name into an everyday action verb (Google, Sergey Brin & Eric Schmidt), taking an aggressive approach to branding and style (Apple, Steve Jobs), or revolutionizing customer interaction and satisfaction (Amazon, Jeff Bezos), successful companies and successful people are always creating unique opportunities.

As Hector Berlioz said, “The luck of having talent is not enough; one must also have a talent for luck.”

We’ve always known that people with titles like Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer are important. Recently we’ve also become accustomed to reading about the significance of the Chief Technology Officer, the Chief Marketing Officer, and perhaps even the Chief Innovation Officer.

As I’ve been exploring innovative companies for a project at Brilliont, however, I’ve come across Chief Talent Officers, Chief Cultural Officers, Chief Diversity Officers, Chief Privacy Offiers, Chief Sustainability Officers, and Chief Reputation Officers. At some companies they even have Chief Blogging Officers, Chief Apology Officers, and Chief Hacking Officers. The winner so far: Chief Beer Officer. Wait- rewind- did I just type Chief Beer Officer?! Clearly a very essential position at Sheraton’s Four Points Hotel…

Several outlandish contemporary titles have cropped up in both large and small companies alike. Whatever happened to corporate hierarchies where top management encompassed only those at the top? This appears to be “title inflation”- an overabundance of C-Suite jobs that is cheapening the prestige and achievement that top titles once signaled.

Some say this may simply be a reflection of corporate restructuring and the fact that several organizations are “flattening out”. In a flat organization there is less hierarchy and therefore less opportunity to be distinguished and thus this leads to “title inflation”. Even if this is the case it’s not very good news. At least in a hierarchy there is some higher point to reach, a corporate ladder to climb so to speak. If employees want to get promoted but have no where to get promoted to, some companies seem to believe that they can just start inventing titles for the people they want to keep. Basically by offering a little more money but a lot more “ego capital” they figure they can alleviate employees’ itch to get recognized and even instill more loyalty.

These titles and others are obviously often tied to recent events or trends. Indeed it seems that the reason many companies give out chief titles is to signal the importance of that particular issue to the corporation. And the way to signal that is to create a C-level job to implement it. I think this may also suggest that there is something “strategic” about the role, further elevating it. The problem of course is that if several companies are doing it, then everyone and everything becomes “strategic” and at some point companies will have to distinguish themselves and their employees in a different way. In big companies it seems that too many title promotions might lead to cynicism about what these new titles really mean. Luckily they’re capped at 26 as there only so many letters in the alphabet.

One exception is startups and smaller companies. Here it may make more sense to have several chiefs because each employee often actually has real strategic responsibilities and because there are far fewer employees. Also, if used correctly, chief titles do motivate some people to work harder. Even so, there is probably no reason for very outrageous positions.

I was recently “dubbed” as the “Chief Google Officer” at Brilliont because I supposedly am good at finding information. It’s a funny enough joke, but I wouldn’t be surprised if this position really does appear at large companies soon!

The Point is a community website for organizing group actions. They basically help people congregate around the issues they care about and combine forces to make things happen. Campaigns (group actions) on The Point are all based on the “tipping point” model (great book by the way) where participants take action to solve their problem, but only once a critical mass of people have committed such that the combined force will “tip” the issue. This makes it different from typical fundraising campaigns because no one has to act until it is confirmed that enough people are committed to make a difference. Campaigns range from minor issues like “Facebook must allow users to choose the color of their profile or else we will all send messages to their PR staff if 50,000 people join this campaigns” to movements to rebuild community parks, raise funding to produce a musical, boycott an oil company once enough people join to force them to reduce profits, and even move the Super Bowl from Sunday to Saturday (that’s just crazy).

The concept behind The Point is really interesting in and of itself but the website is also very well designed and has several neat functions. One such feature allows you to set your relationship to the “target” of the campaign; for example, if you were trying to get AT&T to do something you might set your relationship as “customer” and then other AT&T customers would be notified of your campaign. Continuing with the “network” theme that the tipping point implies, they also have a “6-degrees” type of “supply chain” feature that maps the relationship between different companies. So say that company X sells to paper mill Y which sells to consumer-accessible stationery store Z. You can tell The Point which companies you interact with directly, and they’ll tell you all the ones you’re supporting indirectly.

Andrew Mason (the founder) is quite the visionary. He believes that when effectively aggregated the consumer’s purchasing power is ultimate power. In the long run he figures The Point could be a tool for individuals to, in effect, regulate corporate policy by wielding their pocketbooks. No need for government. “This is true democracy- this is what America’s all about! And the efficiency of the process, I think, is a win for individuals and companies alike,” he says.

The website just launched in late 2007 so it’s going to be a while before we know how effective it is, but I really like the concept. They will, of course, have to be responsible for quite a bit of content moderation as I’m sure there will be people who try to start inappropriate campaigns like “I’ll run around the block naked if 5 people give me $1” or threatening ones like “I’ll put a bomb in the White House if 20 people agree to help me” (hopefully writing that doesn’t get me in trouble). People may also have difficulties in structuring campaigns that address the issue or problem they really want to attack (see On the Folly of Rewarding A, While Hoping for B).

Overall though it’s a great example of the overarching theme of how the internet is enabling people to connect without the need of a “middle man” or “moderator”, a role that I see as quickly going extinct in several different spaces. But more on that another time- for now, I’ve made my point.

In response to the recent scramble between Microsoft, Yahoo, and Google, several experts have been examining the future of the online search domain, and in the last few weeks I’ve come across several articles that state that the “Big Three” are actually fighting over the “scraps of the last decade of innovation” when in fact a new movement may change the way people use the Internet to search altogether. Of course, this sounds ridiculous when you look at the success of a company like Google that has developed a very rapid and highly efficient method for handling and making sense of the vastest collection of data we humans have ever compiled. As the Web grows exponentially larger and larger, it would seem that search would become increasingly important as well. If you think about it though, as the Web grows larger and larger it will also become more difficult to search efficiently and meaningfully in a way that will deliver useful search results.

So, with the rise of social networking websites such as Facebook, MySpace, Twitter, Second Life, LinkedIn, and Orkut, the youngest generation of Internet users might find themselves searching via their various social networks instead of a complicated (but still generic) search algorithm. Thus, Delver and several other startups are now attacking the concept of “Social Search”, a more refined version of basic Internet search that helps streamline your results based on the argument (or hope) that people you interact with through various social networks should know you better than a mathematical equation. Even Udi Manber, Google’s VP of Engineering in charge of search quality, has suggested that Google’s search could naturally evolve to embrace the data produced from these sites. “Search has always been about people. It’s about getting people what they need. The art of ranking is one of taking lots of signals and putting them together. Signals from your friends are better, stronger, signals,” he says.

(picture courtesy of PopularMechanics)

 Beyond just the social networks you join, think about the amount of information you voluntarily (sort of) provide to Netflix, Amazon, iTunes and several other popular online vendors. Currently a lot of this information is stored in different places (ie: your browser history, your Facebook or MySpace page, the Netflix or iTunes server, etc) but imagine if this mass of information could be used to influence search results on a regular basis. It is already done on a small scale by several of the applications and websites I’ve mentioned but nobody “owns” social search in general the way Google “owns” search (though it is very conceivable that Google may just evolve to own social search as well).

I think it is only natural that a more informed search “algorithm” evolve but I do see some potential concerns.

• Sometimes I like the “more random” results that Google generates. There have been times when I was looking for a website that I had visited before or that had been recommended by a friend who swore by it and ended up finding something else- something better. If “Social Search” eliminates these from the results (or moves them to the very end) we may find ourselves narrowing the search domain further than we want.
• How would organic versus non organic search work? Would websites/companies that pay to appear first or on the sponsored links tabs be subject to this informed search as well?
• When I’m talking to someone remotely and I want to find something they’ll often tell me key words to search for and then say something like “it’s the 5^th one down.” If search becomes more customized the search result order may differ drastically.
• There will of course be all kinds of privacy and security issues that crop up as this phenomenon emerges. I won’t even get into that here.

Some of these are minor issues that are probably worth enduring for the sake of a very efficient and “custom” social search and others will probably be addressed as the search evolves. I wonder what kind of effect this would have on social networks and vendors such as Amazon, Netflix, etc. and what kind of revenue opportunities may emerge?

Today’s Dilbert:

So classic.

It seems that too many managers don’t recognize what they do and don’t need to know about technology to be successful. It is not so much a matter of mastering the engineering behind a product as it is developing a keen sense of the emerging technological trends, assessing the length of product life cycles, and promoting technological product and process innovation from the bottom up; and then using managerial expertise to accomplish all of these goals. Most importantly, they can never be satisfied with the current situation and must always be looking for ways to further enhance the use of technology throughout the organization.

On the other hand, they can’t expect technology to fix all their problems either. It’s not the magic cure all- if it were there wouldn’t be so many unsuccessful companies today. They must first establish processes and methodologies that are aimed at achieving the organization’s overall mission and then find ways that enable the employees and company to further integrate technology into their daily tasks. A classic example is 3M whose leaders have always provided an environment that allows employees to spend up to 15% of their time on projects outside of their day-to-day work, consequently encouraging innovation from all levels of the company’s hierarchy. With this practice in place, employees develop and test new (sometimes very radical) ideas, thereby pushing technology to new extremes. Thus, the “15% rule” enables the company to expand its technological reach and use innovative, funky, technologies as a competitive advantage.

Scott Adams, you are a genius. Now if only I could convince professors to assign comics instead of 50 page articles for class.

I tend to be pretty skeptical of companies and organizations that drone on and on about how consumers can do “small things” and make “big differences” in energy consumption and the fight to go ‘green’. Most companies simply advertise their own consumer products/services under a ‘green’ disguise and try to convince customers that the company’s products/services will help them create a “sustainable lifestyle” even though they don’t provide a real incentive for consumers to actually take action. (ie: see my previous post about the Ikan).

I recently read an article titled “How to Turn Pennies Green” in BusinessWeek, however, that highlighted a company that I think approaches ‘green’ in the right way. Apparently soaring copper prices are making it very expensive to make coins: it now costs 1.3 cents to make a penny and 7.7 cents to make a nickel. Also, there’s an environmental cost to minting new coins, namely copper mining and refining involves huge amounts of power and water. Coinstar, a company that is known for its huge coin counting machines that convert change to cash or credit at supermarkets and drugstores estimates that there are around 150 billion coins going unused in the U.S. Cashing in just 10% of this amount would translate into sizable environmental savings. More specifically, 82 million showers (water), 4.1 million 60-watt light bulbs (energy), or 12,619 cars removed annually from the roads (CO2 emissions). The company does of course charge a fee for this conversion to cash/credit (8.9% to be exact), but the service is actually entirely free for consumers if they choose to convert their coins into a gift card for a select number of vendors (including popular companies such as Amazon.com, Circuit City, Starbucks, JCPenney, iTunes, etc). And more importantly taking action in this case is actually beneficial to the consumers who are rewarded for being careful with their coins. I personally have a coin jar that I’ve been collecting loose change in since middle school and I plan on cashing it in at a Coinstar machine at the end of college. I’m pretty excited about all the cash I’m going to get back, and it’s nice to know that I’ll be doing a little something for the environment

At the end of the day, Coinstar is using ‘green’ advertising to promote its service but at least consumers have a personal motivation to cash in. This is just one small example but basically I think that companies that really want to promote sustainability and the green movement ultimately have to have both a profit agenda as well as a legitimate way to motivate customers to succeed. Non-profits and community service can only achieve so much. That’s my two cents anyway.

I recently read an article in The Economist about the Asian video game industry’s unique business model. They basically give away the software as a free download and let users play for nothing. Revenue instead comes from small payments made by more avid players to buy extras. The article went on to say that this model is now being applied outside of Asia, particularly in the United States. Although the concept of giving away “the game” for free and charging avid players for “extras” may be somewhat new to the American video games industry, companies have been luring customers with “free” with years. The most current and prominent example, of course, is the online consumer services industry. Several websites charge nothing for their services and instead make money via advertising… but of course, it’s not that easy. For example, while in the past newspaper advertising supported the traditional subscription fee, the newer (braver) news websites rely solely on advertising and may face big problems when the economy gets hit hard and advertising is the first thing that gets cut. Plus figuring out how to get consumers to click on ads is still a mystery for the most part.

Big companies also take advantage of “free” in order to penetrate the market and squeeze out competitors. Just think about how IBM gave away the integrated development environment (IDE) for free; it more or less destroyed the Java software tools market and enabled IBM to then sell its other products easily. Eclipse and the surrounding set of tools for debugging, testing and profiling Java code are not the best, but they are good enough because they are free. Companies could no longer justify paying for products, and under the guise of “open source” IBM’s strategy worked beautifully.

The consequence of such “give aways” is that my generation (the Millenials as we are called) is growing up not only with an expectation of free, but also a sense of entitlement to free. We want free music, free books, free software, and free services- and free is making several people very nervous. The online consumer services industry is still young and I don’t know how the business models of online companies (such as Facebook and the millions of other “social” websites) will evolve, but as youngsters become totally reliant on free tools like Google’s search engine and Gmail, companies will have certainly have to be innovative in developing their revenue models as well.

I listen to the radio when I drive to the bus station in the mornings, and I recently heard the DJs discussing www.mygallons.com, a new website that has done for gas what the United States Post Office’s forever stamps did for postage. The company guarantees the price of gas by allowing consumers to lock in the average gas price in their area today, for any given number of gallons they’d like to prepay for. The company supposedly makes money by charging a fee for this service. You sign up for a MyGallons Card for an annual fee of either $29.95 or $39.95, pre-purchase gas on your MyGallons Card and lock in a price before going to the pump. Then you just use the card when you get your gas. To get the cheaper annual fee, though, you must agree to allow MyGallons to automatically replenish your account when you drop below 15 gallons.

There are many major filling stations around the country, including Chevron, 76, Shell, Texaco, Exxon, etc., and since their launch in January almost 2,000 people representing a cross-section of regions across United States have signed up with the service to help them “find ways to cope with the rapidly rising price of gasoline” says Steven Verona (founder and owner). The risk to the consumer arises if gas prices fall in the future, and this would probably signal the end of MyGallons business. However, right now that risk appears pretty minimal. The company also reminds consumers that overtime the price will increase even if there is no change in the supply/demand relationship simply because of inflation.

Unlike forever stamps, however, this business model inherently incorporates a much higher level of risk. If gas prices continue to increase the way they have been recently, or worse, take more drastic leaps, it would seem that the company would be in major trouble. Verona claims that they use a “sophisticated hedging strategy to protect and meet obligations to members” but so far I haven’t been able to find more details. The future of this market is so volatile that I can’t quite figure out if this is going to be a Company Zero or a Company Hero yet, but if prices do continue on their current trend this could lead to huge savings for the average consumer!