Web 2.0 Blog – Discovering Innovation Opportunities using Social Media

Archive for the ‘Mostly Plain English Explanation’ Category

Note: I have no education in economics but economics is beginning to trump all other concerns primarily due to a lack of trust in financial markets, so I am trying to pay attention.  Since one use of social media is to engender trust, can social media play a role in mitigating the damage from the current deflationary cycle we are in?

PS I am certain the educated economic people will tear me apart on my simplifications/misunderstandings of economic theory…but here goes..

Some background from Wikipedia:

Joeseph Schumpeter was “an economist and tried instead to integrate sociological understanding into his economic theories.”  He has some interesting predictions which seem to be playing out in the current news.

Creative Destruction:

“In Capitalism, Socialism and Democracy, the Austrian economist Joseph Schumpeter popularized and used the term  to describe the process of transformation that accompanies radical innovation.[2]  “

“In Schumpeter’s vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.”

Sounds familiar? Social media as disruptive/transformative? Linux vs. microsoft?  It seems there are 2 social media issues which intersect with the economy.

1. Social media as a both a social and technology innovation which has the potential for significant creative destruction. (I will deal with the creative destruction power of social media in another post because I already have a headache thinking about economics and social media at the same time.)

2. Social media as a tool which is able to spread sphere’s of trust faster and wider than they could normally be spread.

But how about this on the trust issue.. According to Schumpeter as interpreted by Roger Arnold, former radio talk show host and macro economist, the reason a recession becomes a depression is due to irrational decisions which start to occur when leaders frantically try to find a quick fix to stop the downward trend.  They listen to the economic models which promise the faster fix rather than the ones which have most predictive.  They also tend to turn inward as they make the decisions.

The depth and length of the deflationary cycle will be determined by whether cooler heads prevail and on rebuilding confidence of INFLUENCERS in markets, NOT the confidence of markets. (Social media axiom:  people trust people not organizations. Therefore markets cannot trust. People in markets trust and are trusted.  Also financial markets are notorious for being led by their influencers, so an influencer map is incredibly important.)

So the real risk we run, is that irrational decisions further corrode trust among financial influencers with the administration.  That leaders will loose the market’s confidence even further by thinking they will pander to constituencies with a quick fix and ignore the concerns of the financial influencers who are expected to come back to the market.  The fact is the rescue will be slow and will need the help of those same finance guys who got us into the mess in the first place. People don’t like that but there it is.

So how do we prevent further loss in confidence?  We need to address economic issues which matter to financial influencers and convert them to evangelists for the administration’s economic policies.  Yes, talk with the a…holes who got us here in the first place.   Also we need to make sure Treas/Fed have a broad economic theory outlook rather than a narrow set of Friedman economic assumptions taken as fact even though they don’t seem to be good predictors any longer.

Is this happening now? It seems the opposite is the case.  There seems to be a trust gap between Fed/Treasury and market leaders right now.   Neither trusting the other to act to work towards a mutually beneficial outcome.

If  ever we needed collaboration where all parties are trusted to act to achieve the best outcome and make sure diverse opinions are heard, the time is NOW and the place is the financial  sector.

I have been struggling on how to think about the Web 2.0 or social media phenomenon. It seems to have taken on its own language now. And I made the mistake in 2007 of trying to explain Web 2.0 using those infectious terms of blog, tweet, follow, friending etc. This tool centered explanation by example, I found, does not work too well among the uninitiated. Besides that, today’s tools will not be tomorrow’s tools but I think there are underlying communication principles which drive the sucess of the current Web 2.0 experience and can be used a guide for future innovations. I also think these guiding elements can help discuss new pure Web 2.0 innovations, but also reveal opportunities to improve more familiar processes in business, government, and non-profits.

In this blog, I want to start a conversation about what is in the audience experience of Web 2.0 solutions have made them so successful among the much sought after consumer audience. I have noticed 5 reoccurring core themes which underlie the recent successful web 2.0 applications and companies.

First let’s talk about the difference between web 2.0 and web 1.0. The use of the internet in the web 1.0 era (which of course was a continuum to 2.0) was to convey information through web sites. The use of Web 2.0 is instead to evoke a response from the audience and turn that initial response into an ongoing engagement or conversation.

The Web 1.0 sites hoped to have the audience do something in response but it turns out evoking a response through simply conveying information on how they should respond is not very effective. Yet that was the hope all along for businesses, government, and nonprofits that by conveying information passively, they would get the audience to behave actively in some way. Even when a response was achieved it did not have a high probability of getting future responses from that same individual.

Web 2.0 has been much more successful at evoking responses and turning initial responses into a longer back and forth or engagement with and among audience members and this is why the tools which use these response-oriented techniques and technologies have become the focus of so much attention.

A good place to start finding opportunities for brick and mortars or more traditional organizations to better evoke a response from and create engagement with their audiences and in general to improve traditional processes is to identify what seem to be the underlying communication principles which drive the success of Web 2.0:

1. Interactivity
Use methods which make it clear and easy how an audience can interact or respond online and give multiple pathways to respond without violating element #4 (revelance). The interactivity must be highly accessible and match the information habits, styles and preferences of the users

2. Connections
Make connections and relationships with real people whether the connections are with people inside an organization or with others in the audience.

3. Outreach and listen to communities.
Think of your audience in terms of communities not demographics and actively outreach to the targeted communities. Communities are interconnected so they are pre-organized for communication to flow them and therefore provide more potential avenues to communicate with people in the community.

4. Relevance.
Provide highly relevant content to the audience. Content should be individualized to the individual’s interests when possible. This should not be confused with providing everything under the sun. Making content overwhelming makes is less relevant not more. Quality not Quantity.

5. Empowerment
Empower the audience whenever possible. People want to be heard and feel heard and wherever possible make a difference.

I know what you are going to say. I missed a lot things which also underlie some if not all sucessful Web 2.0 solutions. Such as the authenticity, social content, a human voice, crowdsourcing, interoperability, the networked audience effect, etc. But for now I want try to dissect what it is in the audience experience which makes social media so compelling. As with all web 2.0, this is up for discussion though. Hope to hear you opinions on this. In future posts, I will attempt to expand on this and discuss how these 5 themes can guide us to create better process in business, government and the non profit spaces.