Web 2.0 Blog – Discovering Innovation Opportunities using Social Media

Posts Tagged ‘motivation

Economics, according to wikipedia, is the social science that studies the production, distribution, and consumption of goods and services.

Notice money is not mentioned. But the current theories of economics socio-economic (Kondratieff (Kondratiev), Schumpeter, Kuznets) , fiscal-economic (Keynesian / Monetarist) and political-economic (Libertarian/Austrian) theories are all based on monetary markets.

Well that makes sense because MOST of the production, distribution and consumption of goods and services in society has used money as a means to relate them to another for at least 200 hundred years.  Money was a great leap forward in human history because it allows independent  transactions of goods and services. You can sell to one person and buy from any other, instead of having to set up a complex barter network with multiple prosumers or grow/hunt/forage everything on your own.
In modern times, you can also manipulate the market by artificially altering the money supply like a throttle on an engine.

Even so non-monetary based transactions have always been with us and seem to take 3 forms:

1. Bartering. Exchange between 2 people or a chain of prosumers.

2. Reputation. People will do things so that others think of them differently (usually in a more positive light).

3. Common good.  Sometimes hard to distinguish from reputation.  A good example are for-profit companies which contribute to common open source code based so they all share an updated platform to build their products on.

These have not been considered when discussing economics this century, because these types of economies were usually limited to family and local neighborhoods for most people.   A couple of examples:

1. Entering a local pie contest. (production driven by reputation)

2. Helping family members to do home improvements. (service driven by reputation)

3. Taking of your lawn so it looks as good as the neighbors’ and keeps the value of the neighborhood high.  (service driven by common good).

These are not significant to a modern economic structure.  And while wealthier people have donated to causes driven by reputation,  it is usually lumped into the other economic theories because it involved money instead of services.

Most people have been limited in terms of the amount of goods and services they can produce for these non-monetary motivations because raw materials  bought with money were usually required and then it essentially becomes a donation with a small value add. (Purchase the ingredients for brownies and donate them to the bake sale.)

Services can more easily be offered for non-monetary motivations, but their significance has also  been limited in modern times.  Usually these involve some basic labor such as fixing the neighbor’s flat tire. When they get more complicated they start to compete with opportunities to earn income which tend to limit the amount of skilled service people are willing to donate.

The impact of services offered for non-monetary motivations have in the past have also been limited in there impact to the larger economy for three major reasons:

1. Monetary costs of distribution and replication.

2. Limited distribution limits the potential impact and thus motivation for common good, reputation driven services and good.

3. Modern demands for complex goods and services limits the impact of the individual.

Social media removes these all barriers in the case of information products and services. (see more detailed explanation below)

In social media, two types of phenomena have started to change the impact of non-monetary activity to the larger economy:

1. Crowdsourcing/Collaboration (distributed production/ distributed problem solving). The best example is in software: linux, drupal, and other significant software programs which other companies charge license fees for.

2. Information distribution and analysis. Blogging in short.  Reporting on events, spreading the reports of others and analysis of news events.

3. Social Networks.  These have made it possible to impact large numbers of people if you create or collect highly relevant services or information.

Social media is technology amplified social interaction and allows for broad free distribution of information products and services.  Linux now is starting to threaten Microsoft’s dominance in the server and device markets.  Blogging has now replaced a significant amount of the magazine and newspaper industry.  (Actually newspapers seem to be hanging on by getting story leads from the blogosphere.  Don’t believe this? Check the thickness of your favorite magazine and compare it with what it was 5 years ago.)

So the big question… What does  is the impact on people of a non-monetary social gain? How do you compare it against monetary based gains?

Do we need to now combine non-monetary and monetary economics into a more comprehensive understanding of the well being of society?

Broadcast media. Monetary loss?

Broadcast media is irrevocably changing now that anyone has the power of mass information distribution.   And it is being replaced in part by largely non compensated product. The more organized the blogosphere gets, the more crowdsource news sites will popup and probably dominate.  The power of news analysis will be with in the hands of the most trusted analysts (bloggers)  rather than media distributors which many would view as a more just world.

The most significant loss related to media would seem to be the loss of an advertising based which we have relied on to drive consumer demand in the western world for the past 50 years.  If people listened to their friends, they might buy what they need, rather than be convinced to buy what they should want.  Will sidebar advertising on facebook, google and the like replace this as a consumption driver.

The power of social networks to set behavior standards and norms should not be underestimated. The July 07 New England Journal of Medicine had a 30 year longitudinal study which showed that obesity can be spread through social networks.  The messages sent through social networks are powerful.  Broadcast media for the last 50 years has supplemented social messaging with profound effects on society.  From the newness of the car you drive to the size of the house you ‘need’ to live in and has greatly affected consumer demand and is largely responsible for the ‘need’ now to have 2 earner households in the US. (IMHO.. havent had time to do the research yet).

Software and the long tail. Monetary gain?

Linux is growing rapidly as both a server and desktop operating system (though desktop adoption is still small).  IBM one of its biggest supporters though sees an advantage in linux as well as a significant number of its own patents being freely available for anyone to use and innovate on.

The advantage lies in the power of the long tail when it comes to technological innovation.  It turns out inviting people who should know very little about the core of a complex project, often know something very significant about an aspect of the project which is critical or at least important to its overall success.  The one guy who contributes one thing which turns out to be a critical patch against a hacker attack adds tremendous value to the project.  The more complex technology becomes, the more important the long tail is.   And on the opposite end, the less successful closed door efforts are in creating complex solutions.

Skeptics will say that Linux was paid for with money, that it is just a service based model. And for the most frequent contributors that was true to some extent. But the majority of the long tail contributions do not seem to have been paid for and while some programmers may have done the work on company time, it seems clear others worked on their own time. In either case a contribution to something accumulative and distributable to people who were not their clients is clearly a non-monetary contribution, even if services were paid for one time. The net result is a paid short term service plus a freely distributable enhanced product.

Overall win or loose?

The death of mass media while significant in the short term, means that people will more in touch with the reality of others in the world, rather than having vision created for the purpose of selling product.  I argue that mass media is in some ways a result of technological limitations because natural human communication is 2 way with all parties having the ability to choose to broadcast or  listen.  Hopefully this more tightly knit online world community can help prevent the potential damage which could occur as we go through the current deflationary cycle.

According to socio-economics, we need a significant technological innovation in order to bring about the next economic boom. While some have assumed this would come from nanotechnology or robotics, I think it may come from the development of a knowledge or semantic web. A semantic web could be brought about more quickly by using crowdsourced techniques to create the necessary underlying ontologies or definitions in a ‘Linked Open Data’ model.

So if social media can be utilized to bring out the next economic boom based upon a crowdsourced knowledge web platform, it would definitely result in an overall economic gain.

Look for more soon on why a knowledge web would lead to the next economic boom.

Why social media removes barriers to impact of non-monetary goods and services.

In business when you offer a skill, you create mechanisms to make it repeatable or widely distributed to multiply it’s economic effect.  Repeatability and distribution mechanisms have normally been costly in time, labor or infrastructure,  so were not used normally utilized in non-monetarian economic transactions.  And because they have lacked these features,  non-monetarian economic productivity contributions have normally been considered insignificant.  Also the limitation of distribution and replication have also limited the motivation to produce these goods and services.  Social media has removed the cost of distribution and replication for information based products and services.

The need to complex services for greater impact has also limited the economic impact of these non-monetary distributions.  Traditionally it has been difficult to collaborate on voluntary efforts because the small amount of time people have had to put into non-monetary efforts.

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