About the author:
Charlene Li is an influential thought leader and guide on emerging technologies, with a specific focus on social technologies, interactive media, and marketing. She is the co-author of the business best-seller, Groundswell: Winning In A World Transformed By Social Technologies, published by Harvard Business Press in May 2008. Named “One of the Most Influential Women in Technology” by Fast Company magazine, Charlene is the founder of Altimeter Group which provides speaking and consulting services to organizations looking to understand and thrive in a new economy driven by social media tools and techniques.
Reflection:
Before I read this book, I was confident that I know what social media is because I have been using them ever since these social technologies emerge in China. Also, I believed that all these social technologies are just entertaining tools which do not have many business implications or usages. So, when my instructor told me to read this book which focus on social technologies, I thought:” well, let’s just see what something new or insights the author will provide us.”
After reading this book, I realized that I was well proved to be wrong in many ways because I could never have imagined that social media is such a broad sense which has implications in many ways of our life and definitely not just entertaining tools.
Basically, the author divided this book into three parts:
In the first part, the author focus on explaining the idea of groundswell, what kind of challenges and opportunities that groundswell presents to companies and why and how to develop groundswell thinking by taking advantage of the social technographics profile. Also, the other important message raised in this part is that it’fundamental to “concentrate on the relationships, not the technologies.”
In the second part, the author outlines five principles that companies should pursue in order to tap into the groundswell:
1 Listening
2 Talking
3 Energizing
4 Supporting
5 Embracing
To make these objectives seem more relevant to our daily business practice, I transform them into our business strategies: listening to the groundswell means researching and focusing on the conversation happening on the groundswell on your companies. Talking to the groundswell means participating in the conversation and asking for your consumers’ concerns and opinions on your companies or products. Energizing the groundswell means energizing your consumers or audience to be more active in the groundswell – to be able to provide more feedbacks, generate more meaningful conversation and eventually develop a more strong connection with your companies. Supporting the groundswell means providing more opportunities, channels and information in the groundswell to let them thrive. Embracing the groundswell means trusting and counting on the groundswell to get yours companies developed and thrived in this environment
The second part also goes into more detail as to how to leverage technologies to achieve these strategies. There are detailed case studies, and in some cases even some rough numbers outlining the ROI of the activity. The list of companies and case studies are impressive and help legitimize the movement. Not all of the stories are straight-forward ’success stories’, but each shows to highlight how an individuals’ vision and dedication made a difference.
In the last part, again, the author emphasize the business importance for companies to embrace groundswell to engage with their consumers. Also, the author outlines two main shifts of companies to in order to embrace groundswell: the first one is to ready shift controls.The author explains that a major consideration, and one that organizations are not always prepared for, is the notion of giving up control. However,
In the groundswell environment, people are powerful and they are in control of everything – your brand is not what you say what it is, people say what it is. So, I see this is an essential step to truly leverage the power of the Groundswell, but requires a fundamental change throughout the organization. The other one is to get ready to leverage the tools of the groundswell inside the company itself. I’ve seen many ceo or employees opening their blogs, facebook accounts and searching information in google.
However, it is simply not enough to only have several accounts. What is really important, as the author indicates, is that company’s leadership should fully recognize the significance of such relationships in the groundswell environment, and everyone within organization embrace this new way of doing business. To give a close to the book, the author paints a picture of what is the future of groundswell. And again, the focus is not on specific technologies or tools, but rather on how relationships are evolving and how to be prepared for them.
Wrap-up:
The author did a good job by giving us an amazing tour to the world of Groundswell. Her interpretation of Groundswell’s implications are also precise as well as far-sighted. My ending thought is that Groundswell is beautiful and it is time for giant companies to shift their power back to their consumers.Why? We have been hearing entrepreneurs working in giant multinational talking about making companies powerful and bigger. However, during the financial meltdown, we also have been witnessing those giants like AIG, GM bankcrupting in short time, which is pretty impossible for us to believe in just a few years ago. The reason behind these unusual phenomenon is that the economy is changing, transforming in a speed they can not catch up with. Under the industrial economic system, giants always win partly because of their rich capital, scale, and standardization which makes them quickly obtain the largest market shares. But what is even more important as I believe is that choices are scarcity at that time and therefore customers could only rely on a few companies to create whatever they want. However, this is not the case anymore. Now, we are entering the age of Groundswell and transforming into a new econmic model named infor-economy. Under such economic system, with all these cheap tools, technologies and rich channels available, choices are created quickly, and choices are abundancy. So, gaint companies offering limited choices today will fail or not fast enough to meet their consumers’ ever changing needs and start to lose their markets shares and revenues. But, for those individuals or SMES(small and medium enterprises) which sucessfully survive in the meltdown, they are young,dynamic and agile. They’d love to embrace groundswell technologies(cheap, ease of use,functional) and they are fast enough to change their focus and create choices and customization for their customers. Also, they are small and have little to lose compared to giants. If they win, they will hold on to their “groundswell thinking” essence. If they lose, then what the hell, they lose little and at least they are die trying.
I’ve just finished reading this incredible book called The Wealth of Networks by Yochai Benkler. The subtitle given is “How social production transforms markets and freedom”. So, as I see, the title is obviously a reference to Adam Smith’s The Wealth of Nation, which is like the bible of modern free-marketism.
Benkler focus on explaining the emergence of the networked information economy in the first part, which is also frequently referred as post-industrial economy or information economy. As Benkler indicates, the industrial information economy of the mid-nineteenth and twentieth centuries is now being displaced by the “networked information economy”, followed by decentralized individual action carried out through distributed, nonmarket means. And there are two big shifts accounting for this transformation:
Production has shifted from the physical goods (food, cloth, vehicles and etc.) to information goods and services (movies, software, musics and etc.)
Communication tools have shifted from a centralized, mass-market approach (Newspaper) to a much more distributed and interconnected approach (the Internet).
The first shift means that this new form of production will play a central, rather than peripheral role today. The second shift indicates that markets are being reshaped, while at the same time these innovative and cheap communication tools enables new opportunities for human-being to enhance individual freedom, cultural diversity, political discourse, and justice.
Benkler also believes that non-proprietary strategies have always been more effective in the production of information goods than in the production of physical goods. Now these activites are even cheaper, so theoretically, these strategies should play an even bigger role. And indeed they have. Google searches return the result of the coordinated efforts of uncoordinated actions of a wide and diverse group of individuals. Furthermore, there are numerous examples of effective, large-scale, cooperative efforts to create information and culture. This is introduced by Benkler as peer-production and is typified by the open-source software movement. Other examples include Wikipedia and SETI@Home. So, as I see the purpose of the book is to provide a sophisticated framework that will allow us to understand peer-production and its economic, political, cultural and justice implication for what it really is: a new mode of production, one that is powerful, efficient, and sustainable.
As most of us will agree that how we make, get, share, and receive information are central to individual and political freedom. In the second part of the book, Benkler examines how the networked information economy effects four dominant commitments of democratic societies: individual freedom, a participatory political system, a critical culture, and social justice. Often these commitments are contradictory and therefore must be balanced against one another. For example, a commitment to social justice that takes the form of a progressive tax necessarily limits individuals’ freedom to spend their income as they see fit.
In the last part, Benkler restates that we are coming into the new era of the networked information society, but no incumbents or historical lessons will necessarily lead us to an open, diverse, and liberal enviornment. Like economic shifts of the past, this shift will lead to redistributions of money and power. The incumbents–Hollywood, the recording industry, broadcasters, and printing industry, seem to be the losers in this reallocation. Also, these incumbents are not only resisting technological and legal changes that threaten they but also taking pro-active measures to ensure that the techno-legal landscape is favorable to their old modes of production.
I see this book as a comprehensive social theory of the Internet and the networked information economy. And this book reminds me of the other book I’ve read, Free. I found both books inspiring because both authors obvious agree on a situation that there is a transformation going on between industrial information economy and networked information economy, and cheap communication methods and tools are the driving factors. However, what I do not understand is Benkler’s rather negative tone of traditional media industries. My perspective is that even though Benkler advocates diversity through out his book, he seems to characterizes networked information economy as the only viable economy model.
I’d agree to an extend that certain forms of traditional media are probably dying in developed nations, but absolutely not the whole economy model. For example the newspaper industry will not die, only its printed form. The major newspapers are and will continue to be a primary source of information for many people. The same goes to other forms of media. Did the invention of the printing press kill off the spoken word? No. It just meant that hand-lettered books were no longer necessary, and it gave more people access to literature and information.Did the invention of radio kill off the written word? Again, no. Did television indeed kill the radio star? No, but it might have forced some radio stars to adapt to become more television-friendly. And it also created a whole knew breed of radio stars. Did the internet kill television? Again, no. If you’re coming from developing countries, you will know that a lot of people are still using a cheap television set and watching television shows because cheap computation and broadband is still just a joke to them. Even for myself, I am a big fan of sports, I still prefer watching NBA on my HD TV screen rather than on my computer. And also, I’d rather go to the theatre to enjoy latest blockbuster rather than downing and watching it on my computer. It is just different user experience. So, my whole point is that while networked information economy is certainly rising up as a new and dynamic economy model, it is not reasonable to deny the necessaties of traditional one. The right attitudes should be to admit diversities of benefits that both models give us, and figure out ways to keep them supplementary to each other.
All in all, Benkler is incredible at pointing out how patterns of information, knowledge, and cultural production are changing—and shows that the way information and knowledge are made available can either limit or enlarge the ways people can create and express themselves. However, I believe that he should be more objective in terms of comparing networked information economy with traditional information economy.
Before I opened the book, “free”, I think free is a meaningless word because I was assuming that nothing in this world is really free. In other words, Free in most circumstance is a marketing gimmick and method, at best. So, I was wondering what creative perspectives on free the author can give us? Is it going to be another boring marketing book repeating facts most people already know?
I was wrong, mostly. The author, Chris Andersen, clearly has a unique understanding on the issue of free. To explain free thoroughly, Andersen gave multiple meanings to free that free was mainly a marketing gimmick, which was based on the economics of atoms, shifting money from one to another rather than the other business model before the 21st century; and free has a whole new definition in the 21st century that it represents a entirely new economic model based on the economics of bits.
In the first session, Andersen introduces origins of free, and what does free imply in both atoms and bits economics. Also, Andersen gives us four models of free which are common in our daily life.
In the second session, Andersen further explains why free is no longer a marketing gimmick in 21st century. One fundamental reason I found in this book is because of the Moore’s law that a unit of computer processing power halves in price every two years, the price of bandwidth and storage is dropping even faster. Also, Andersen explains how does free represent a new business model which gives corporations chanllenges as well as opportunities. Examples used in this book are Microsoft’s reactions on new entrant Corporation based on free business model and Google’s sucessful free strategies.
As I see, Andersen’s perspectives on free are overall, persuasive and credible. However, he should be more clear in terms of leveraging and quantifying free, other than selling ads which is at the cost of user experience. Leveraging and quantifying free are not easy at all, especially for small to medium scale corporation. I’ve seen many corporations or individuals sucessfully taking advantage of free but still failing to make direct money from it. Companies in the dot-com business, such as facebook and Myspace, they have been sucessfully developing a great cyber community with lots of features, applications and users. However, these great things do not turned out in revenues or cashes. So, they are giving away all the resources they have for reputation which will not directly transfer into cash. So, what should they do?
As I see, there is no business model served as panacea in this case. The best way to do this is to learn from peers. For instance, Tencent is a very sucessful media company in China, not only in terms of their great reputation but also their capability to turn reputation into cash.
The secret lies in micro-transactions. Tencent operates the largest instant-messaging network in China and is one of the largest overall community. Tencent, which includes the QQ IM service, QQ Show (an avatar social network modeled after Korea’s Cyworld), and QQ Pet (virtual pet)—is the No. 21 Web property in the world and the second largest in China after Baidu (the two keep switching the No. 1 and No . 2 spots).
A big reason for the difference in this profitability is that advertising makes up only 13 percent of its revenues. The rest are in micro-transactions for digital goods, online games, and other services that Web surfers gladly pay for, as well as mobile services. Here is how Tencent’s revenues break down:
Internet services (digital goods, games, micro-transactions): $344 million (66%)
Mobile services: $110 million (21%)
Online ads: $67 million (13%)
Total Revenues: $523 million
All in all, free is definitely a new business model, other than solely marketing method, in the 21st century. However, with all these free tools, we still need to figure out sucessful ways to turn all these free “stuff” into real cash because free doesn’t automatically do that for you.
Another issue which jumps into my head when talking about “free” is piracy.Since with all these free tools, ideas and access are made available, people will inevitably take advantage of “free” to pirate, distribute illegal copies to make profits. With such huge price advantage, (for instance, windows 7 was already available a few weeks ago in Mainland China before it is officially released, and of course, the ghost version, a nick name for pirated version. And the ghost version costs only 20 yuan, or $2.93, each, a fraction of list prices of the official version, which are as high as $320.) these illegal actions are almost undefeatable. As Chris Andersen, introduces Bill Gates’ famous “pay now or pay later” strategy on the issue of software piracy in China. He quotes that “China is developing, if they are going to steal software, I’d rather they steal ours. If piracy software lowers the cost of computing, and accelerates the rate in which China adopts computing, and they adopt computers using our softwares,they will develop faster, and they will someday be able to pay for softwares, and they will be able to hook on our stuff. They will become paid customers.” Bill Gates’ comments are inspiring as well as foresight. However, as I see, there are two problems represented. First of all, it might not be a problem of if they are able to pay for these softwares, but rather if they are happy to pay for them. Certainly, under this heavily piracy enviornment, people who can afford paying official softwares might not eventually be the paid customers. Who is going to pay 2000 if you can get it for 20? On the other hand, even though the idea of obtaining the largest market share in China by taking advantages of piracy softwares is brilliant, there is little chance that people get used to free product will be glad to pay in future. Even if Microsoft pushes harder, they might simply abandon their softwares, and use other free open-source softwares. Or simply, developing their own cheaper one.
So, it seems to me that the piracy problem is tough and might not be alleviated in short-term.
Resources:
http://abovethecrowd.com/2009/03/09/how-to-monetize-a-social-network-myspace-and-facebook-should-follow-tencent/
http://digital.venturebeat.com/2009/03/19/the-worlds-most-lucrative-social-network-chinas-tencent-beats-1-billion-revenue-mark/
