Chez Serge

Yesterday I was at a conference with Frédéric Lippi, one of the two managers of Lippi, the 300-employee company that moved to an Enterprise 2.0 model, as I described here.

Amongst the managerial decisions they took, was one to abandon any individual incentives. What Frédéric said is, “You can’t tell people to work in a collaborative way, and give them individual incentives; there is a contradiction in there”.

Some people reacted in the audience, (Frédéric confessed that some people even considered him Marxist), saying that this was too radical, and that there were surely some be cases where individual incentives were appropriate. When I asked them for examples, one mentioned rewards for traders, but for obvious reasons everybody said that it was not a good example…

Then someone said “sales people”. I still believe than even sales people should no longer have individual incentives.

I am working with big French retailers. Retail culture is based on internal competition, and each company love to compare every month which store did better than another, like “oh, Marseille came before Rennes this month, great job!”. But it may happen in some future that they abandon this…

The shift in approach actually comes via the Internet. When e-commerce web sites were first opened, they were considered as another store, and were compared as such. There were many drawbacks to this, let me quote two.

The first one is pricing.

It is usual that each store is responsible for its pricing policy; the same product can have, therefore, different prices according to the city the shop is located. But then, how to price the product on a web site?

The second one is that the Internet is the enemy of sales people, because the web site is a competitor to sale in store.

Unfortunately for them, more and more customers do a lot of online research before buying in the shop. It is shocking to then hear a sales person saying bad things about the Internet.

Then came this practice: any online transaction allocates the money to a physical store.

One interesting result is that, suddenly, the Internet becomes the salesperson’s friend, and sales people become more open to customers who surf on the web.

So, the web site becomes a friend. Then, why not another store from the same brand?

Customers are more and more mobile, and what they see is a brand, not a store. It may happen than a person shops in a store for heavy products, and asks to pick-up in another one. If sales people are individually incentivised, they will lose out.

The Internet is reshaping enterprises into a collaborative mode. I bet that individual incentives will vanish, because it will become counter-productive to achieving sales.

Interestingly, I found a video which explains this even better.

Many things has been said about wikipedia, good ones, and bad ones. The fight is huge, between those who still believe in content written by experts, and those who say that the quality of wikipedia is at the same level as any other encyclopedia. The comparison made by Nature between wikipedia and encyclopaedia Brittanica, which said that levels were equivalent, has not calmed down the battle between pros and cons of the user generated model of wikipedia.

Many other interesting analysis can be made about wikipedia. It is not true that anyone can contribute: there are teams of people, who are usually experts in one field, who control any change on many articles, and prevent a lot of changes to happen. Wikipedia is not a place where everyone is free to do whatever he wants. There is a strong, albeit secret, governance.

However, wikipedia is a very innovative encyclopeadia, not because it is user generated content, but for at least four other reasons.

The first innovation in wikipedia is the “view history” tab (link is on the article about wikipedia). All changes made to an article are kept. This tab allows not only to see how many changes were performed, and when, but also to compare two different versions of the article. It also allows to roll back to a previous version of an article, a very interesting feature if any deliquency activity was performed on any article. But the innovation is there: it is possible to understand the history of the article.

The second innovation is another very important tab : “discussion“. Very often, specially in any collaborative work, shared intentions are not obvious. There always a need for a space where people can discuss about the result, before taking any decision. This is the place where it can be done. It id also the place where apprentice writers should start, before changing the core article itself.

The third innovation is about meta sentences, to be found at the beginning or inside any article, such as : “This article does not cite any references or sources.”, “Please help improve this article by expanding it“, “This article may require copy editing for grammar, style, cohesion, tone or spelling“, or, much more fundamental “The neutrality of this article is disputed“.

The fourth one is about different languages. On most articles, on the left side, one can find the same article in other wikipedia. It is not a translation, it is the same topic. The first side effect is that wikipedia can be used as a tranlation tool. I was doing a conference in front of Italian people, and I had to explain the long tail principle. I started from the entry in the English wikipedia, and fortunatly Italian was on the the languages, and by clicking on the link, I was able to explain what long tail was in Italian.

As of june 2009, there are 272 different wikipedia. It is the very first time in mankind that regional, or local languages have their own encyclopaedia in their own language which is not a translation from an occidental one. I think we see only the beginning of the impact it may have on local cultures.

Wikipedia is an encyclopeadia where the history and the creation process of any article is visible, where articles contain information about their quality, which is available in 272 languages.

There lays its innovation.

Facebook is amongst the weirdest social site in the whole world wide web.

Facebook is not as crazy as datemypet, which pretends to be a social network for animals, not as specialised as sermo, a social network of doctors, not as business as Mechanical turk, a platform to put together small knowledge workers, not as idealistic as kiva, a marketplace to invest against poverty, not as old-simple-and-basic as craigslist, the most efficient local ad platform, not as nice as Habbo hotel, the biggest virtual world so far, (over 150 Million teenagers, probably more than Facebook within the 10-15 years old), not as focused as myfootballclub, a social network aimed at buying football clubs, not as professional as Innocentive, a platform to improve innovation for corporates, etc…

So Facebook is not all of that. Facebook is just Facebook. What is weird about Facebook is that it is complex to use (funny to realize how complicated its interface is…); its privacy is a nightmare, as says this excellent article from the NYT, with a funny proof here; Facebook even contains its own rebellion, which seems to be a long tradition (yes, 2006…); it generates desire to quit (on the 31st of may…); has huge bugs; and seems to be in a rather negative phase those days, according to top google search : “how to delete my facebook account”.

And, as of may 2010, facebook has 400 million users; the third largest country in the world, with a huge velocity of 25 million new users per month end of 2009. In October 2009, hosting Facebook was performed using 30.000 servers.

So, why is there such a hate / love story ?

Facebook is a social network. Many people think a social network as a directory of people. It is not; it is a directory of links. What is most important is not who is someone, but whom is he connected to. When I quit Facebook (I did it four times), it is not my single entry which disappears, it is also all the links I had with my friends, and all the dynamic of what happened between my friends and I (well, it almost disappear). A social network is based on the six degrees of separation theory, which says that two random people on earth can be connected only with 5 intermediate people on the chain. A social network is about connection, while the Internet at first was putting the intelligence at the end of the connection. With this respect, Facebook is not in the pure Internet philosophy. Napster is.

On most social network the focus is on the link, but the semantic on the link is very limited. In Linkedin, as an example, the number of parameters on the link for the introduction is 6 (colleague, classmate, done business together, friend, other, and unknown person…). Then, people can share sub-groups. But there are no other semantic on the link.

The path chosen by Facebook was totally different: Facebook creates the network, and by opening its API, allows anyone to virtually plug any semantic on the links. We can share a same brand, a common taste, poke each other, send virtual gifts, etc… The idea in itself is brilliant, and led to 550.000 active applications.

Now, on the downsize: first, privacy. It is not that much about my information privacy, but my interaction privacy. Whenever someone interacts on my wall, it is never clear who as seen what happened to me. A friend of mine may post a porn video on my wall, it is OK as long as only my friend and I know about it. But who else has seen this, I don’t know. In some languages, plural starts at three. Old Greek, or modern Arabic, have a singular, a dual, and a plural. This is a very clever approach of life : plural starts only when a third party witnesses the interaction between two others. By being unclear on this, Facebook can make many people nervous. A totally open society, where everybody sees and knows 100% about everybody, is inhuman.

Second, identity in context. One of the beauty of the Internet is that it allows people to have multiple identities. Why would someone be the same on a forum devoted to digital photo, on a forum about Italian operas, on a professional forum, on linkedin, on match.com, in Second Life, etc… Even though the person is the same, the context is not. On Facebook, a person is one, single, and not divisible. But on Facebook, the context can be pretty much various, because of the API opening. This lead to a contradiction. As an example, one of the biggest issues is to decide if parents and children should be friends of Facebook. In real life, interacting with your children is a done within a very strong, specific, and focussed context. Finding this context openly interleaved with other contexts can make many people nervous. Moreover, Facebook connect is propagating this constraint outside of the platform. The “Like” button, which is part of their social media plugins, and now social graph, is their most recent attempt to be “the web”

So why are people using Facebook ? The biggest population is 18-24 years old, and the biggest rate of change is in the senior population (cf. slide 8 of o’Reilly radar slideshare). Facebook is not for teen agers. When asking people about why they use Facebook, the most common answer is “retrieving old friends”.

So the conclusion is very simple from my point of view: Facebook could be used to propagate information, to retrieve old friend, but no more. Don’t use Facebook for application, rather use Facebook to propagate the information about application. Don’t use Facebook Connect, use OpenId (by the way, Facebook is a sponsoring member of OpenId).

Brands should pay more attention to discussion forums, places where the quantity of important information, which are not always exploited, is much bigger than anywhere else. Much bigger than in Facebook.

I have quitted Facebook.

The conference was held 13 /14 may 2010. Link is here : http://www.ndu.edu/irmc/fcvw/fcvw10/live.html

Twitter : http://www.twitter.com/fcvw

Vastpark with player 1.3 vp://demo.vastpark.com:8278/fcvw

In my previous post, I briefly introduced how the Internet, by empowering peer to peer mode amongst customers, forced enterprises to reconfigure themselves, in a more cooperative manner. Now, once an enterprise is willing to move to 2.0, how can it be done ?

There have been many attempts to transform enterprises into horizontal mode. Quality circles, matrix model, lean management, etc. When looking at them, they may have brought slight improvement, but no major disruption. For most of them, they were used by people who had little understanding of the importance of technology. The general idea was that technology would follow business restructuration rather than playing a major role. Worst, none of them seem to have seen the impact Internet could have on enterprise restructuring.

However, even when considering the technology, and the major role played by the Internet, there are always many ideas that flows around. As an example, marketing must change its habit to do market studies, and should see what happens in blog, forums, twitter, social networks, etc. As pointed out nicely by Moore in “Crossing the chasm”, it is better to have less customers who talk together than many customers who are not exchanging.

Whenever an enterprise sees its customer exchanging, the value of it is big. As another example, sells people must go in the Internet, and meet their customers online, not only in real life. Working for Renault, I realized in a forum that one top car dealer was in a discussion forum about the brand, and was exchanging a lot with the brand’s customers, instead of waiting for them to come in his physical place. I think he should have been appointed as sales director !

A comment I often hear from CEOs is “there is so many things happening, how can I catch them ?” Well, in order to better track what happens on the Internet, everybody in the company should watch, and post whatever he or she sees. Only the network can interact efficiently with the network.

But all those are just tricks, ideas, which need to be ordered.

I consider an innovative process as a systemic relationship between three major components: structure, tools, and behaviour. By structure, I mean how an enterprise is configured: who reports to whom, what are the information and control flows, how decisions are taken, etc. By tools, I mean all information management tools: emails, intranet, ERP, repository, etc. By behaviour, I mean all the human aspects of an enterprise: fear, enthusiasms, desire, hate, etc. Any attempt to move one of those three aspects, and letting the other untouched, has lead to a failure.

The Lippi case is an interesting illustration of how to do. Lippi is a 300 employees French company which does industrial fences (France loves fences..). Amongst their customers, they have airports, industrial zones, etc.  To make the story short, Lippi decided to work on three axis:

• Lippi created a web school, and all employees without any exclusive were proposed to follow training. Courses were all about digital world, ranging from how to set-up a blog till digital video processing.
• Internet tools were used inside the company, on top of them an internal twitter, which acted as the information backbone of the company.
• The top manager decided to reconfigure the company, by taking some very disruptive decisions : traditional control was abandoned; middle management role was shifted to medium term thinking, and to support their employees when they had troubles;  organizational chart became fuzzy, but sociogram becomes stronger.

The outputs are interesting. Employees became more involved in the life of the company. A worker decided to bring his own movie camera to shot how fences were assembled, and posted them on youtube. Others decided to create a wiki. Pressure of middle management was replaced by pressure of the peers. On twitter, a delivery problem was solved in 20 minutes, without the customer even noticing there was an issue. Employees set-up a blog, which contains both nice or funny information about everyday’s life of people, and business information, such as the contracts Lippi signed with various airports. Well, this is so much human.

In 1996, I created the innovation tripod :

With this idea that all three components must be globally considered, in a systemic manner.

Lippi did it, and came the following scheme. They are really pioneers.

That the Internet impacts business is now obvious. The Internet is, by essence, a total disruption to the usual governance of traditional corporate companies, business, universities, and even politics. To say it in a few words: there was the CEO, the Professor, the Expert, the Manager, God, and everybody was happily listening to the speech going down. The horizontal flow of information between people was badly considered, if not disallowed. The generation pre WWII did not permit children to speak when eating at the table. Even now, there are schools who prevent students to talk together; same as those corporate companies who block the access to facebook, or to any other social network.

Then came the Internet. We tend to forget that at its very beginning, in the 70s, Internet was genuinely in peer to peer mode. I could access the content of someone who could access my content. Every computer had an IP address, and amongst the very first services, were email in 1972, and usenet, the ancestor of modern bulletin boards, in 1981. Interestingly, the web, which was such a powerful invention that most people confuse the Internet and the Web, was a regression to the foundation of the Internet, because it reintroduced a client-server architecture. Many companies do consider their web site only as a way to deliver content, thus making it close to a television model. Funnily, the only category of services which are in the genuine type are the one many government try to hunt down, like napster, emule, edonkey, etc. Skype is another example of such service, and the viability of its business model has deeply impacted traditional telecommunication operators.

It is not that the Internet has invented peer to peer. Horizontal relation were always an important and efficient way of communicating. Resistance movements had, obviously, a weaker hierarchy, and were mostly functioning in peer to peer mode. In terms of commerce, it is well known that buyers tend to more listen their friends than the sales person. The huge impact of the Internet was to amplify this social form to an extent where we can easily say that it is the main social relationship people are wanting now. Facebook, by reaching 400 million users, at the time I write this article, is the third country world-wide, after China and India, but before the US…

So we are facing two extreme governance models :

There is no judgement so far, between one model or the other. Both have advantages, both have drawbacks, and, as usual, it is a pure matter of context to decide which one is the best.

However, what is happening is more subtle:

1. customers are in network mode. The are part of forum, social networks; they exchange lots of information, they are in the “usage” layer, they are smart, and the real innovator emerge amongst them, or, to put it in a more business oriented manner, the Internet allows to see which are the best customer to work with.
2. enterprise’s boundaries became porous. Not only because any customer can access to IT system through web site, but also because any employee is much more well equipped at home than at work: he has a PC or Mac brand new, he can surf where he wants without any firewall, he can go onto youtube, dailymotion, vimeo or any video site, and, much worst, by surfing on blogs, forum twitter, etc. he can see his enterprise from outside; he can see what people say about it, and then he feels the contradiction between what corporate communication says, and what he experiences…
3. The enterprise remains in hierarchical mode, with silos, departments not talking each other, based on a competitive model.

This combination of a hierarchical enterprise, with porous boundaries, and networked customers, is not sustainable. The silo model is slower than the network model, it does not allow information to circulate freely; employees are not encouraged to work in a collaborative manner. Customers, on their side, see one brand, want more fluidity in their relationship, are not interested in internal wars. As an example: when a customer buys a product on a web site, or even in a physical shop, and want to return it in another physical shop, he does not understand why this may not be possible.

The Internet is bringing tension on this matter, but positive tension. How it is solved (or dissolved) depends upon many factor, but we can express two extremse : in some big corporate groups, employees who are close to customer are going to network mode, whether it is official by introducing social networking tools inside the company, or totally uncontrolled by hierarchy, who suddenly discovers that few thousand employees have opened subgroups in facebook, linkedin, or any social network. Another extreme is a little enterprise who has the capacity to change itself, by reshaping the enterprise around processes, training people to digital tools, and introducing Web2.0 tools to support information backbone. In any case, middle management is the layer which does suffer the most.

Enterprises should no longer deny this aspect. They should really move to another governance, more networked, where middle management role shifts from controls to support. This is not an easy task. But enterprises who do not switch may be one day in dire straits.

Australia is a very interesting country, when it is about the Internet. On the bad side, there are forces wishing to filter the content in a strong manner; there is no flat fee illimited Internet access. On the good side, they are quite ahead in terms of virtual worlds, and, above all, they are quite advanced in terms of government 2.0

In June 2009, the government launched a government 2.0 task force, which published a report 22nd december 2009. The philosophy was very interesting: recommendation were to work on three different lines: Opendata access to administration, use at most web2.0 tools to communicate with citizen, and change the culture of administration employees, to a more collaborative mode.

On the 3rd of may 2010, which means only three months later, the Australian Governement officially reacted to this report, the document being produced under creative common license!

The analysis of the answer is very much encouraging. It start with :

The Australian Government is committed to the principles of openness and transparency in Government, and a Declaration of Open Government is an important affirmation of leadership in these principles. A Declaration, in conjunction with the Australian Government’s proposed reforms to the Freedom of Information Act 1982, will also assist in driving a pro-disclosure culture across government. Accordingly, the Australian Government will draft a Declaration of Open Government for presentation to the Parliament, and through it, to the Australian people.

On the 13 recommendations, only 1 was deferred, 1 was noted, and the other one were agreed, with or without modification. One of them will be the creation of a central portal site, data.gov.au, to follow.

This may seem not enough, but Australia, like US, is fast moving in terms of government 2.0. Congratulation !

I wish France would do the same !!!

Having heard Jean-Michel Billaut‘s conference yesterday on skype, I was interested by his thought about the four coming convergent ruptures : nanotechnology, synthetic biology, humanoid robots, and Green techs.

I can understand about the first three, but I was more thinking about the fourth one. The question I had in mind was : can we have the same processing power, with less power. It appears now that the limitation to Moore’s law is heat. The consequence of this is that a server in a server farms requires around 300 Watts to work.

This goes back also to the relationship between thermal entropy, and information entropy, and a little paradox: Maxwell’s demon. The paradox is simple : a little demon opens or closes a door between two gas containers. If the molecule comes from the right, he opens the door. If it comes from the left, he closes the door. The energy balance is equilibrated, but at the end there is more gas in a bottle than another one. Let me remind that the paradox was solved by one of the most famous French scientist, Brillouin, who showed that, in order to check if an atom comes from left or right, he needs energy to acquire the information. This is the most simple, and brilliant demonstration of the equivalence between both entropies.

Back to processor’s temperature : there are some research about decreasing this, one field of research being by electron spin carrying 0 and 1 rather than a voltage. This technology leads directly to quantum computing.

Quantum computing may be the next big rupture., an idea which seems to become more and more close to reality. The leading company, D-Wave, is building a Quantum processor. The current state of art is a processor at 10 Quantum bits, (Qubits), and they plan to go to 128. The technology is promising enough to have Google working on the topic, using a D-Wave computer.

Can we imagine a worlds with quantum computers, who are able to solve non polynomial problems in a polynomial time, with little energy ? Well, then, human being low processing capacity is totally out of the scope. The only remaining capacity would perhaps be: can we make a computer laugh !!!

Google is quitting China, whether we like it or not. It was probably not an easy decision to take. In Burma, it is almost illegal to access the net. In North Korea, only lucky few can access. Some countries are filtering Youtube, Twitter, Facebook, or simple blogs. Reporters Without Borders keeps a list of “Internet enemies”. On the contrary, Government 2.0 is taking up. What is happening between Internet and politicians ?

The strength of Internet is « peer to peer »

Looking at the history is important to understand the debates. The Internet must not be understood as a causal process; there never has been an “Internet project”. Internet construction, as well as its governance, is based upon horizontal relationships in peer to peer mode between people exchanging in a perfect symmetrical and reciprocal manner. The very first services of the Internet, in the 70’s, were email and discussion forums, 20 years ahead of the Web.

Since its inception, Internet governance has been based on rough consensus between groups of people, who networked themselves in a non-hierarchical mode. IETF, the organization which defines the technological norms, describes itself as “a loosely self-organized group of people who contribute to the engineering and evolution of Internet technologies”.

This horizontal mode is the power of the Internet today: forums, social networks, blogs, Wikipedia, Youtube, Twitter, are places where people exchange in peer to peer mode. Enterprises are starting to understand the power of the customers talking to each other, and are more and more into viral marketing. Above all, Internet is a community media. But are the politician understanding this ?

Internet governance, and Network neutrality

On-going debate is strong, between the original governance based upon a network of independent organizations, and willingness to centralize governance under United Nations.

Internet governance addresses, amongst all, a very sensitive topic : the DNS, which is the directory allowing people to access a web site. Would the DNS be split in parts, connection to a site would become dependent upon the location of the user, and would lead to a collection of sub-networkst. Globalization would be finished. Since 2006, China already started its own DNS, Russia is threatening to do so, pretext being each time the capacity to write URL in each country character’s set.

Then, a second debate appeared: network neutrality. It started in 2006, when the US telecommunication operators, who understood that they could not increase their access rates, turned towards service providers, and threatened them to introduce class of services, and to ask them premium fees to have priority on their networks. All big players in the Internet field opposed to this, argued that this business model would kill any new comer, and would stop any innovation.

This debate became political, after more and more countries started organizing network filtering. In China, many sites are forbidden, such as facebook, or typepad; skype can be accessed only through a specific Chinese software. Australia started envisaging huge content filtering, but stepped back recently. In France, LOPPSI2 law just passed, whose official goal is to censor pedo-pornographic content, but allows the police to install software on any citize’sn computer and watch his Internet activity.

Another war is starting between traditional media or enterprises, and Internet companies. In Italy, it is now necessary to have a state license to post a video on a web site, the goal being to protect traditional Television companies from Youtube. In France, Hadopi law reinforces traditional traditional copyright laws by cutting the Internet access to people who illegally download music. European Commission plans to force any commerce web site to have a physical shop, the background being a fight between pure players such as ebay or amazon and luxury brands in respect to counterfeiting.

Filtering initiatives such as these are constantly criticized for their inefficiency: routing around them is easy for real criminals, false positive will be numerous. The network, whether it is human or technological, shows a great resistance to stress, thus making any filtering approach costly for a poor result. Moderation is quite efficient in a network, at least as efficient as hierarchical one, but at a lower cost, control structures being lighter. Education remains, in fine, the most efficient way to fight against any criminal activity.

Governement 2.0

A positive trend is emerging quite recently : national, or local government, are setting up initiatives with the objective to improve relations between administration and citizens, based on the web 2.0 model.

This process is built on three pillars : administration opens its data; then improves its dialogue with citizens who become proactive by using all modern Internet tools; culture and governance of administration shifts towards a cooperative mode.

Australia is the most advance country on this subject. A report has been issued in december 2009, proposition such an action plan. US, Canada, England, are following the same path. The Obama Administration has opened a space where citizens can exchange on the topic of network neutrality. More and more cities are opening their data within the framework of open311 initiative.

Internet as vector of progress

Each politician should understand the fundamental importance of digital society. In order to manage increasing complexity, we must position ourselves in cooperative mode, and the Internet is the main tool to achieve this.

But how can we know if citizens really wish such a model ? The answer is in Internet. As an example, in France, 87.000 teacher of primary school have opened their own forum, and have exchanged 4.4 million messages, helping them to improve their practice. In some enterprises, employees are using social networks to work in a more efficient way.

This is quite encouraging. Would our politicians promote such Government 2.0, and build society around digital age, debates would become more productive, cooperation would take the lead above silos, and citizens would find new enthousiasm for voting.

The Internet favours networked intelligence, and makes the citizens more responsible. The role of a modern state is to create value by improving relations between stakeholders. The observation of fast growing Internet usages show us that citizens are much more ready to this model  than that the traditional media will acknowledge.

The volume 2 number 4 of Journal of Virtual Worlds Research is now available. Co-edited with Mandy Salomon, from CRC, the topic is :

“Virtual economies, Virtual goods, and service delivery in Virtual Worlds”

In this special edition on virtual world goods and trade, we are pleased to present articles covering a wide range of enquiry from a global cohort. Some, like Edward Castronova, Julian Dibbell or KZero’s Nic Mitham will be well known to you as distinguished thought leaders in the field, but equally it is our pleasure to introduce some exciting new voices. Our collective comprises academics, practitioners, journalists, a documentary film maker and perhaps the youngest contributor to JVWR yet, Eli Kosminksy, who attends high school in upstate New York. We also point out that this issue extends the format to include Anthony Gilmore’s pictorial story, Julian Dibbell’s audio interview, and Lori Landay’s machinima. In real life, most contributors live in the US, the UK and Europe, and we, the editors, are based in Australia and France. We address warm thanks to the team at Texas University, especially to Jeremiah Spence, our editor –in-chief for his guidance throughout this process.