Design and the disruptive startup: dynamic pivoting

In the mashup world of life, business, and web 2.0, spurred on by the Apple-ification of the world (iLife - as a concept not a product), one new idea is applying design to business models, and really by extension, applying design to everything.

Unfortunately, this does not mean as one might think, applying aesthetic principles, conceptually and literally, to business, business models, or any life context, adding beauty to function, and thereby function to function, and questioning the right proportionality of form and function.

Rather, at present applying design to business models means more basically, using design tools and design thinking in a business context, specifically, in the conduct of an iterative prototyping process with users.

In business 1.0, an entrepreneur would dream up an idea and write a business plan. In business 2.0, the claim is that entrepreneurs should interview dozens of potential customers to pivot through value propositions for ideas that solve the biggest customer pain points. Customer acquisition is tantamount, in a 'get, keep, grow' cycle. Elliptical tools like the business model canvas are proposed as support for this iterative prototyping process.

Social media and Enterprise 2.0

There is a much deeper application of Web 2.0 technologies and concepts possible in the enterprise than is currently being contemplated and implemented. Some companies have an early effort to use some of the tools but have not noticed that the concepts themselves can be applied to generate significant benefit. Worse, misapplication is also occurring such as the creation of Social Media Officers oblivious to the bottom-up rather than top-down property of social media.

Future of social media
The long-term future of social media is lifelogging - the auto-capture and permissioned auto-posting or archiving of every person’s every thought and experience. Feedhavior’s digital footprints continue to drive individual actions. The corporation goes away. Artificial intelligence becomes the most efficient form of outsourcing. People and organizations spend more time in simulation worlds than physical worlds. Entrepreneurs and organizations provide goods and services by making offerings proactively to groups of potential customers aggregated through their web-based interest communities. Marketing must be relevant to avoid being perceived as advertising.


Applying Web 2.0 Technologies to the Enterprise
There is no part of the firm at present that cannot make use of Web 2.0 and social media technologies. There are two dimensions for application:

External and Internal
Externally, a firm can use Web 2.0 and social media technologies for branding, re-inventing and testing business models, product and service sales, customer relationship management (CRM), partner ecosystem management, R&D outsourcing and recruiting. Internally, firms can use Web 2.0 and social media technologies for communication, collaboration, work assignment, task and project management, resource allocation and performance feedback.

Tools, Concepts and Values
Some examples of the direct application of social media and Web 2.0 tools are using blogs to supplement or replace marketing, APIs to supplement or replace business development, and crowdsourcing ideagoras to supplement or replace R&D. Applying concepts is for example not just using Digg for the firm’s industry news feeds but Digg functionality to bid up and down work assignments or performance feedback. Using Web 2.0 in the enterprise is not using mash-ups but mashing up internal applications, putting a virtual world front-end on any data application to represent the information in a high-resolution way. Internal trainings and meetings are conducted as open space unconferences. Everyone can participate in everything.

The values of social media are also applied internally and externally: authenticity, openness, transparency, participation, creativity, perpetual beta, new linkages, asking the wisdom of crowds (web, twitter), acknowledgement that everyone can have good ideas and contribute and using freemium and open-source business models (free + fee-based).

Capital markets evolution

A confluence of factors is impacting capital markets: first, the repeated failure of traditional financial markets (“Fed puts lipstick on Bear Stearns’ pig”) to provide capital and accurately-represented non-fraudulent investment products and their subsequent bail-out by taxpayers, second, the great shift in cultural attitude towards sustainable and socially responsible capital use (“Global 100 Most Sustainable Corporations” and “Beyond the Green Corporation”) and third, the inexorable expansion of technological capability and the entrepreneurial ideas that exploit it.

Business Model Spectrum
The expansion of technological capability is allowing business models to evolve and expand and is the topic of long-tail meme-founder Chris Anderson’s new book, Free. Digital business costs such as bandwidth and storage have become so inexpensive that it is essentially free to provide an increasing number of web-based services. Some of the new business models include:

1. Alternative monetization - competitive pressures suggest offering services for free and monetizing other aspects such as attention (traffic) and reputation (links).
2. Freemium - a combination of free plus premium services. It may be in the open source software model (free software, fee-based up-sell for implementation, customization and support services) or the flickr model where the small group of paying customers (1%) subsidizes the free offering for the others (99%).
3. Indirect model – a wider application of third-party supported offerings (formerly TV and radio, now search engines, website content and sponsor and gambling-supported free Ryanair flights).

Consumer Financial Services 2.0
Context, culture and appropriateness are important properties of social networks. FaceBook, MySpace, LinkedIn, Pownce, Jaiku and Twitter are not the place to talk about money but financial social networks are.

It is quite possible in the future that social networks will be the accompanying community feature to any website or topic area.

Finance 2.0 websites offer financial services and a venue to create and interact with the user community around them. For example, Wesabe, Expensr, Mint and Geezeo provide expense aggregation and management. NetworthIQ, Boulevard R, and Zecco provide investment and financial planning services. Several of these Financial Services 2.0 companies are being featured at conferences such as O'Reilly Media's Money:Tech, BarCampBanks and Finovate. As with many technologies, age-tiering is apparent as under 30s enjoy the benefits of aggregated financial services while those over 30 await a higher level of security. Yodlee and BITS are working to establish industry standards for financial information access via tokens and credentials, similar mechanisms will be needed for digital health information.

Content Smorgasbord

What a wonderful time to be alive! There is more content than ever now available in a variety of formats.

News. Of course the content smorgasbord trend started with the Internet, although really the library was the predecessor, in fact most European nations do not have the public library resources that are often taken for granted in the US. With the Internet, information became free and consumable. News. All functions and items from newspapers and much more.

Audiofiles. Starting in 2004 or earlier, audio files from conferences, lectures and talks started to be available for free on the Internet, provided by IT Conversations, the Long Now Foundation and Xerox PARC.

Music. Music content has also been evolving quickly. The best service (note service not product as the current market delivery mechanism) this month seems to be YahooTunes, where for $5 a month, a vast collection of music is searchable and downloadable to computers and MP3 players. While not every artist and title is currently available, especially newer titles, there is a seemingly inexhaustible collection of music to absorb and enjoy. YahooTunes applies to copyrighted music; Brewster Kahle's Internet Archive project has already made a variety of older out-of-copyright audio and video content available.

Video. Video content is not quite there. Being "there" would be having all video content (from all countries) available in a searchable repository for on demand viewing. Tivo and other personal video recorder technologies have allowed significant advances in effecting content on demand; content viewing without commercials and time-shifted for convenience.

Books. The content of all printed matter and media is the subject of several projects including the Brewster Kahle Internet Archival project, Google's university library digitization project and other efforts to put the whole of human knowledge available and online. Also exemplar of information sharing is MIT making its undergraduate courses available for free on the Internet.

Content is becoming freer and more fungible. A content consumer's dream. Content is also becoming increasingly manipulatable, as there are more ways to mix, match and alter content and create new content. Some examples of content creating are blogs, podcasts and citizen media à la Dan Gillmor; note the BBC requesting and posting pictures and comments from bystanders minutes after the July 2005 London tube station bomb incidents. Creating content, aside from being fun, is a great way to satisfy those human urges to personalize, individualize and actualize...

I want my personalized video media on demand!

It will be interesting to see how the trend to personalized media from mass media plays out in the video world. In audio, everyone can easily mix and match their favorite play lists, including e-books and MP3 lecture files, from hundreds of albums on their iPod or other digital audio player. The devices, tools, capacity, cost and ease of use allow millions to run their audio on demand.

After accessing and manipulating all existing audio media, the next step is being able to create it. With podcasting we can easily create audio files, with other recording equipment and on-line tools, music files. Though of course not everyone wants to create music files and additional tools could still make it easier for people without musical training to create music.

With video, there are more complications like the DMCA and other copyright protection and the much larger files require more storage and aren't as portable yet as audio files. Once these roadblocks are solved, we should have the same access, manipulation and control over video files as with audio. But this only pertains to existing video files, the full body of existing video content. The real power will be when we can create custom video content.

There are many underserved audiences for current video content. The target market for movies made in the US is teenage boys and the theme of these mainstream films has shifted from (already not illustrious nor widely-appealing) sex to violence and crude humor, probably somewhat because sex is widely available for free on the Internet. As a result, women, already in mostly underwritten sex kitten roles, are appearing even less in mainstream films. There is a huge market for more people to see actors similar to them in gender and age navigating issues that are real in their lives, including work, cultural, family, friends and personal issues. Independent films and changes in distribution have helped to create and disburse a broader range of content, but probably the dramatic shift will be when more can be done via computer rather than with real actors. We will likely see the advent of personal actors hired for short to long custom stints performing in a black box to which the computer adds background and context, similar to the vid actors Neil Stephenson describes in Snow Crash. Extending this, real actors and computer automated characters will be hired for a multitude of purposes from entertainment to learning to caretaking to companionship/friendship/relationship.

With new virtual reality applications, entertainees can view/experience a typical film or series either selecting or being surprised by the characters, background, storyline, issues and emotional range. There will also be many other applications at a variety of levels of interactivity such as learning knowledge and skills, running simulations of real or imagined situations (e.g.; asking for a raise, discussing an issue with a family member or friend, competing in an athletic, gaming or other context), and interacting with other humans or characters in a more robust way (e.g.; one small example is superceding the limiting Sims Online or Second Life instant messenger text bubble interactions).

As William Gibson points out in Neuromancer, you can dial up any channel you want on the entertainment console, even one for being bored and not knowing which one to choose. In our future, the concept of entertainment may be redefined as a multifaceted ability to create and experience content and interaction.

New Business Models I

This is New Business Models I because there are so many new ones springing up and surpassing the old world business models with many more to come. Perhaps the most notable new business model du jour is Open Source, even espoused by IBM CEO Polisano in a recent suggestion list to the US government on the imperative of increasing American competitiveness.

The new business model addressed here is the customer creating not only the content but also the applications. Customers have long been creating content in Internet business models like eBay, hotmail, craigslist, and now in blogging sites, flickr and other photo sites, and online gaming worlds like Sims Online and Second Life. The next wave is the customers, really a new class of entrepreneurs or other innovators, creating the applications as well, using web services APIs provided by Amazon and increasing numbers of others.

There are many amazing things about this including:

1) the exponentiation - exponentially more content is and will be created than the company/initiator could possibly create. From the vast sea of content will arise attendant phenomenon such as the coalescing of new special interest groups / shared interest communities, and patterns, linkage and ultimately new means of value creation from the content / information,

2) the necessary accompanying innovation of new tools (especially automated) to manage, search and create content,

3) the rise new skills to exploit this medium, the application and tool creators, to create derivatives of derivative of derivative applications, the need for people to be proficient in these new skill areas or at least decide whether they would like to or not, and services like the early easy website development sites allowing one not to know html,

4) the way humans are getting to be more meta with computers, adding layers of intelligence in how machines talk amongst themselves to make human live more productive and easier. This is great in lots of ways but also represents humans getting another step farther removed from the operating, and really, control, of computers,

5) the additional democratizing of the trend - allowing more people the freedom to dream and create the applications that are fun interesting and worthwhile to them, not having to wait until their needs are a large and valuable enough corporate marketing opportunity. This StarBucks of software development facilitates the proliferation of individuality, self-expression, and fulfills self-actualization levels in Maslow's hierarchy,

6) and the stronger form of democratizing of the trend, economically, individual application development and launch as a flexible income generator nicely complementing a traditional job and other life activities that can grow, turn into multiple businesses and deliver economic freedom. This is an important emotional empowerment, to not work for someone else but to be an autonomous unit coming together for collective collaboration, training, feedback and other activities but remaining fundamentally self-directed not answering to another or another's machinations within a slow-to-evolve corporate hierarchy.