We shall not dwell on the amazing Facebook statistics; 500 million members, whose half connect every day, thus contradicting a sentence I hear quite often: “I am fed up with Facebook, and I quit” (sentence putting Facebook equal to the television). Actually, the celebrity on Facebook who lasted the shortest time was a charming English Lady, Ivy Bean, who joined Facebook in 2008 at the age of 102, and died in July 2010 with 5,000 friends, and also 56,000 followers on twitter.

Facebook is fundamentally different from other social networks, by at least one aspect: its open APIs. Most social networks, including professional ones, have very poor semantics in respect to the links. Linkedin, for example, allows two main definitions for the link : “we know each other“, with a few parameters (we are colleagues/one is the boss of the other/we have contracted work between one another , etc.), and “we are part of a same group“.

In Facebook, the semantic of the link is open through a set of programming interfaces, thus enriching the relation between two or more persons. Users can then calibrate their interaction, for instance they may poke each other, send flowers, play together, invite one another to an aperitif, or even share a kitty to buy a common gift. This opening of the APIs is what attracts brands, with the hope to make low cost viral marketing.

Facebook was, from the outset, designed to be an applications platform, something much more sophisticated than a simple social network. And so, little by little, Facebook overflowed out of it’s platform, and, as a cuckoo, positioned itself on sites beyond its own, each time bringing with it, a very interesting function, albeit a little intrusive.

The first one was Facebook Connect . The principle here, is quite straight forward: when someone develops a web site which requires authentication, why bother developing this feature, when Facebook offers it for free, and at low integration cost. The interesting side effect is that the end user is no longer obliged to enter one more time their own identification. It is a real win-win-win deal : the user avoids burden, the web site owner avoids development, and Facebook gains not only more users, but also more knowledge about usage. One should remark that, on Facebook, one has usually a single identity, which is contrary to the basic usage of the Internet: why should one be the same in a professional bulletin board, a forum of enthusiasts, on dating site, or as an avatar in Second Life? Facebook is always chasing for people taking another identity than his own; Facebook is anything but anonymous.

Then came the like button, which was also free to put on any other web site. If someone browses a site, and likes it, they can very easily share it, by making a single click and have it then appear on their Facebook wall. It is the same win-win logic, the web site developer sees his own viral promotion done for free. The same logic applies for other plugins : recommendations, videos, and so on. They are all offered by Facebook, under the obvious term “Social Plugin“, with the intention to be the viral marketing enablers; not only on Facebook site, but on any other site. This is a big shift from other social networks, and is in the same spirit as the Amazon set of widgets which were invented 5 years ago.

The very last one, still under test, is the button subscribe to, which allows users to follow someone else’s messages; a service directly competing with Twitter.

Facebook is forging its expansion in creative ways. In what is perhaps the strongest signal yet, it made a significant shift in its relationship to virtual goods. Those little virtual objects, which are to be found on social platforms, and hugely in 3D immersive platforms, represented, only in the US, a 3 billion US dollars market in 2009. Facebook started selling them in 2008, but the revenue was low, a few ten million dollars, almost nothing. Facebook therefore decided, earlier this year, to totally change its strategy, stop selling virtual goods, offering instead, a virtual currency, Facebook Credits, which allows 3^rd party virtual goods to be brought and sold inside the platform. If the same logic applies, this virtual money could, one day, be used on other platforms. Will Facebook become the apps store of virtual goods? Will Facebook also be interested in the market of real goods, trying to do better than Google Checkout, an attempt to be a front-end, unique payment system, which never really took off?

Then, very recently, came Facebook Places…

The market of local information is the biggest battlefield of the Internet nowadays. Being straightforward: I can quite easily, owing to twitter or blogs, know what happens in the street of Tehran. But it is 5 to 8pm on Sunday in Paris, there are three boulangeries which close at 8, I have not enough time to visit all of them, and I don’t know which one has remaining bread…

Many actors are in this market of local information. Google with Google maps, Yellow Pages, Craig’s list, Tripadvisor, Aroundme, and the last one, Foursquare. Facebook is now clearly entering this arena, and wishes to position itself on geo-localized data . Mobile Facebook apps already offer this function, albeit in the US only, at the time of this writing.

The difference between Facebook and Google is striking. We must not forget that the power of the Web is in peer to peer relations. Google, counter-intuitively perhaps, has never been 2.0. Google groups, is a revamping of the Usenet hierarchy, through the acquisition of dejanews. It is the only Google service where users are interconnected. On the other hand, Facebook Places, like Foursquare or Aroundme, allows users to exchange information on a wall. Google Maps does not.

If Google is still heavily controlling search, and advertisements on the Internet, Facebook is positioning itself more and more in crucial places: authentication, virtual goods and why not one day real goods payment, exchange of information, local information; and all this not only on its own platform, but everywhere, through its plugins. For Google, the search engine is free, and makes its income by leveraging other products, such as AdSense or AdWords. Facebook is now doing what Google has done so well, giving away its core service, to allow side businesses to come in. The difference is that it is doing it where Google is not that present: peer to peer.

Facebook is clearly taking control of some crucial applicative layers of the internet, specially the viral ones, with a probable desire to be, one day, the operating system of the Internet.

Trevor is developing an idea which I find very interesting, and innovative. He says the Internet should be divided in three types of services : the basic Internet services, the managed services, and the publicly supported (government) services.

The basic Internet services simply entails IP packet being delivered to the users, who then manage the range of services as they wish. They may use Skype, email, iTunes, youtube, or any web site or portal that they wish to subscribe, needing only the internet connection, if possible at a monthly flat rate for an unlimited amount of data, as it is the case in some countries like France.

The managed services are in addition to the pure Internet, and are provided by the Internet service provider (ISP). At the beginning of the public Internet, ISPs tried to set-up walled garden, with a full range of owned services, thus threatening to reduce the basic Internet layer to almost nothing. This did not work, and consequently the ISPs had to reduce their managed services to a few ones. Today, there are principally two :

• telephony, which is done using voice over IP, thus totally escaping the traditional commuted network (the famous POT; Plain Old Telephony);
• television, using IPTV specific protocols.

There have been attempts to deliver more specific services, like ftp, hosting, file sharing, but none of them are on the scale of that which will be the next huge service in this category : “mobile phone”. Using Femtocell, an ISP can put a 3G antenna on the home gateway, like the bewan one. This allows its community of users to call or surf, using a mobile phone, anywhere there is an available connection, offered by a customer from the same provider; which is very easy in dense areas. Some ISPs are already providing this feature with WiFi, it would be easy to switch to 3G. This is probably what the French ISP Free will do, now that they have the license to use 3G wavelengths. In this respect, the managed services part will convey the three services which, with the pure Internet, forms the quadruple play.

On top of this, Trevor says the Government should use part of the bandwidth for its own services, the publicly supported services. This includes e-health, e-education, e-government, or any other type of services which are provided by an administration. This is a brilliant idea. As Trevor says, how come the government creates a network without taking part of it for its own services? However, this scenario implies a very important second question: what would be the impact on the network architecture? Or, to put it in another ways: does the introduction of a Government set of services compromise the principle of a neutral network?

The design of the Internet was meant to put no intelligence in the network, and to distribute it to the extremities. Therefore, the Internet network processes any IP packet in a purely equal manner. So far, the focus on bandwidth is on the last mile, because of the slowness of ADSL, and its asymmetry. Its backbones, owing to the Internet bubble investments, and the availability of Content Delivery Network (CDN), are not saturated.

Then, came the debate about network neutrality. The telecommunication providers, who were looking for ways to increase their revenues without impacting on end user bills, thought about introducing classes of services in their routers, thereby asking content or service providers to pay for privileged services. As Tim Wu explained it, amongst all impacts, it could lead to stop the innovation that created the Internet. All pure Internet players complained, and, so far, the debate is still open.

Now, Governments start embracing a very innovative approach to the Internet, such as Opendata, Government 2.0, Government as a platform. Therefore, one can imagine in the near future that they will develop a whole range of truly useful services. Will such Governments accept the “best effort” traditional philosophy of the Internet, or will they require some sort of reserved bandwidth inside the network?

Let us make two scenarios.

• The first one is tele-medicine. A very important remotely performed clinical operation requires specific high broadband end-to-end communication. If the network is congested, because, as an example, people are downloading movies, leading to a failure in the remote operation, how would the public react to this ?
• The second one is an emergency situation, say earthquake, bushfire, flood, etc. In two major crises, namely 9/11, and the Haiti earthquake, the Internet proved its resistance to stress, by being the only alive communication network. So, it may well happen that, in case of a crisis, emergency services require that the network is devoted entirely to its management, and I don’t see any counter reason to do so.

In both cases, it would imply introducing classes of services in the network. And, if this is done, I can hardly imagine the telecommunication operators not using those classes of services in other, more commercial, contexts.

How to solve the issue while keeping the Internet neutral? I see three solutions. The first one is to say that Government creates a specific network for its own services. This would be highly costly, and totally counrary to the mutualisation principle of the Internet, which led to low price adsl access, and the whole Internet economy. The second one would be to insure a high availability network whatever the situation, something that would lead to an under used network in normal time. This is the case as of now, but what happens to the backbones when fibre-to-the-home is, at last, available everywhere? CDN is not a solution, as it is of no use for a synchronous peer to peer communication. The third one would be to rely upon civic behaviour; not an easy solution…

I sometimes wonder if keeping the network always neutral is feasible, or if it is utopia. Now that the Internet is an essential service widely used, shall we be able to continue the spirit of its inventors, something like “a globally interconnected set of computers through which everyone could quickly access data and programs from any site”.

How have I done this ?

FIrst of all, I found a very reasonably priced site for downloading scores : pianopublicdomain.

Then, owing to dropbox, I have put those files on the cloud.

I finlly used goodreader to uplod files from dropbox onto the iPad.

Overall, let us not forget the splendid half grand pleyel from 1898, number 118020…

I have seen many analysis of this, talking about too much business orientation, or a step back to B2C.

It is a serious issue for all people who, like me, believe in the business of virtual worlds. We need to remind the history of Second Life. At first, Linden Lab was created by Philippe Rosedale with the aim to build a software that would be sold. Second Life was created as a showcase, a proof of concept of the capacity of the platform. However, Philippe is more and more interested in the social aspect of Second Life, to a point that he may have forgotten the business issue. Not a good thing to do when you have Mitch Kapor, Pierre Omidyar, and Jeff Bezos at your board. Well, facebook is in the same mood, but facebook is over 400M accounts, while Second Life is around 16M, which is low, even though the peer to peer transactions amount for 567MUS$ in 2009, a very nice result in my view. So Philippe was replaced by Mark Kingdon, who decided to go back to the basics, and create an enterprise solution. Well, he created two enterprise solutions : the first one is just owning islands in the main grid, with specific features such as more flexible avatar naming, the second one, “second life enterprise beta”, being beyond the firewall.

This is, in my view, the main issue: it is not possible for a company to have both a B2C offering, and a B2B one. Amongst all issues, two are huge. The first one is about culture; sales process are not the same, sales people are not the same, pitch are not the same, eventualy it means having two different teams, which is costly. Let us remember the excellent words from crossing the chasm: “better have three customers who talk together than ten who don’t”. The second issue is about product roadmap; obviously, the requierment from a social network are not the same as the one from companies, specially the corporate ones. This leads to tension on the product. Moreover, social networks are not that much the friends of CIOs… Consequences are dramatic: the residents are more and more disapointed by SL; the B2B inworld offer seems to offer a low level of reactivity (friends of mine talk about many weeks before having an answer), and Second Life enterprise beta business model, 55k$ per year for 16 islands but only 8 simultaneous, looks outrageous, specially compared to other collaborative tools.

What is emerging now looks like a willingness from resident to step back from SL. For those close to the original spirit of Rosedale, opensim seems a good candidate. However, remains a big problem: what about all assets inworld? Everybody has in mind the closure of metaplace, and the resulting loss of assets. Maybe this is why VenueGen has offered to migrate enterprise assets into its own world?

Shall we assist to a Second life crash ?

Whether it happens or not, I still believe in virtual worlds. This excellent post made after Thinkbalm decision to widen its scope (we must all thank Thinkbalm for their constant support to Virtual Worlds), shows many positive coming aspects. In the hype curve, Virtual Worlds are clearly at the Trough of Disillusionment. Time is now on for technology to show its real potential.

What are the positiv aspects?

• The most important is the vgov initiative, lauched by US administration, whose aim is to manage virtual worlds for all US administrations. The Internet exist mostly because of the important role played by US administration, the same story may happen with Virtual Worlds. Four platforms have been selected : Web.alive; Forterra (acquired by SAIC); teleplace; and Vastpark, a very innovative opensource platform. Second Life has not been slected.
• Education already makes a huge use of virtual worlds. The special issue of the journal of virtual worlds research shows interesting results.
• Healthcare sector is also a place where virtual worlds have had big success, in SL, but not only. A study performed by doctors showed the great advantage of virtual world as a training tool.
• The enterprises are more and more interested in serious games. I can’t imagine serious games without a virtual world. With this respect, the openness of the technology becomes a key success factor…
• Tradeshows, conferences, are more and more moving to virtual worlds, with big success. Not only cost of travel is lowered, but the quality of interaction is superior to 2D tools, as shows IBM case study. Robots have now their virtual conference; and even wine producers go for it !
• On the social side, Kids and teens are massively in virtual worlds. Almost 400 millions users in the range 8-15 years old are in virtual worlds, comparable to the number of facebook users, but who has a larger scope in terms of age.

I would like to add a personal touch. Many times, I have met people very reluctant to the internet, people who did not understand the importance of social networks, forum, for whom the web was no more than an online content tool. I was always able to change their perception by showing them machinimas realized in corporate situations. Their reaction was always the same : “at last I understand what it is all about”. Well, let us be honest : facebook interface is amongst the most complicated we can imagine. At least, a 3D interface is easy to understand.

The immersive web is now entering a time of obvious concrete realizations. On the technological side, tools are diversified, some close to games or social networks, some close to corporate intranet tools. The biggest improvment is their availability through the browser. I It is now obvious thet the browser is the entry point to the Internet, and 3D plugins are the preferred solution to clients download. WebGL norm, when available, will be a huge step.

Virtual worlds are now entering their mature phase, and we shall all thank SL to have shown its potential value.

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 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 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.

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

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

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.

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.