April 26, 2008
Taking the Show on the Road
The semester is almost over at HBS; I’ll be out of the classroom after this week. This means that I can travel much more easily and often, and I’m taking advantage of that fact by speaking about Enterprise 2.0 at a few conferences over the next couple months.
I always find speaking at conferences rewarding not primarily because I get to talk, but because I get to listen. I get to hear reactions to the materials and ideas I present, and to learn about others’ experiences. I also get to meet people who I probably wouldn’t have come across otherwise. As I’ve written before, social networking software like Facebook is a great tool for maintaining and exploiting a network of weak social ties and a healthy blogosphere can help convert potential ties into actual ones, but there is still no substitute for being in the same room with people.
So if you’re in the neighborhood, or available to attend, or just curious I’d encourage you to come to any of the conferences listed below, and to introduce yourself. I’ll be speaking about the latest developments and unfolding trends in E2.0, adoption best practices and challenges, open issues and unsettled questions, and the appropriate areas for business leaders to focus on if they want new tools and approaches to take root in their organizations. I’d love to hear your reactions.
The dates and conferences are:
Wednesday, May 7Van Web 2.0 naar Enterprise 2.0 (From Web 2.0 to Enterprise 2.0) Zeist, HollandTuesday, May 13BEA’s Participate.08 conferenceChicagoWednesday, May 14Webcom-MontrealMontrealThursday, May 15DIG 2008: Decisions, Information, and Governance
Las VegasTuesday, May 20INTERWOVEN: 2008 Legal IT Leadership Summit (LITLS)AtlantaWednesday, June 11Enterprise 2.0 conferenceBoston
Thursday, June 12Mark Logic User ConferenceSan Francisco
April 20, 2008
A Case for Prediction Markets
The case on Google’s internal corporate prediction market that I wrote with Peter Coles and Karim Lakhani is now available for wide distribution (a teaching note for this case is also available to faculty). The case’s introduction explains what prediction markets are, and why they might be interesting to business leaders:
"Prediction markets were very much like stock markets. They contained securities, each of which had a price. People used the market to trade with one another by buying and selling these securities. Because traders had differing beliefs about what the securities were worth, and because events occurred over time that altered these beliefs, the prices of securities varied over time.
In a stock market like the New York Stock Exchange the securities being traded were shares in companies, the prices of which reflected beliefs about the value of the companies. In a prediction market, in contrast, the securities being traded were related to future events such as an American presidential election. In this case, the market could be designed so that each security was linked to a candidate, and its price was the same as the estimated probability that the candidate would win, according to the market’s traders.
Prediction markets on the Internet had proved to be remarkably accurate at predicting the results of political elections and other events, and the Googlers had wanted to see if they could also be productively used within companies to forecast events of interest such as the launch date of a product or whether a competitor would take a specific action. The experiences of the previous seven quarters had shown that Google Prediction Markets (GPM) were in fact quite good at predicting such events. Googlers put none of their own money at risk when they traded within GPM; instead, they bought and sold securities within GPM using “Goobles,” an artificial currency."
I’m going to teach this case on Tuesday in my MBA course, and am really looking forward to it. It’s one of my favorite classes of the semester, and will be made even better by the fact that Bo Cowgill, the Googler who initiated prediction markets within the company, will come to Boston to share his insights with my class (and also with Tom Malone‘s at MIT).
Cowgill has written a paper with Justin Wolfers and Eric Zitzewitz analyzing data from Google’s markets, and Wolfers and Zitzewitz also wrote a more general overview of prediction markets. The Wikipedia article on the topic is another good resource. Prediction markets on the Web include the Iowa Electronic Markets, InTrade, NewsFutures, and the Hollywood Stock Exchange.
Our case concentrates on two issues: how to encourage more trades and more liquidity within a corporate prediction market like Google’s, and how business leaders can and should use the information provided by the market.
After writing the case, teaching it a few times, and spending some time understanding the mechanics and utility of prediction markets, I share the puzzlement articulated by James Surowiecki in his book The Wisdom of Crowds:
". . . the most mystifying thing about [prediction] markets is how little interest corporate America has shown in them. Corporate strategy is all about collecting information from many different sources, evaluating the probabilities of potential outcomes, and making decisions in the face of an uncertain future. These are tasks for which [prediction] markets are tailor-made. Yet companies have remained, for the most part, indifferent to this source of potentially excellent information, and have been surprisingly unwilling to improve their decision making by tapping into the collective wisdom of their employees."
Why is this? It’s not because the technology is hard to acquire: Inkling Markets, Xpree, and Consensus Point, among others, will happily provide a company with Web-based prediction market software. So what is the real stumbling block? Is it that companies don’t really want the most accurate information about future events to come out and be widely known?
Leave a comment and let us know what you think, or what your experience has been. I’ll post more on this topic after our class on Tuesday.
April 16, 2008
Homework the Teacher Learns From
Last week I used an online poll to ask my MBA students their opinions on the potential benefits of Enterprise 2.0 as well as the actual benefits most companies will be able to achieve. I also asked them to explain their answers to these questions. Below is a particularly insightful and encouraging response, lightly edited to maintain anonymity.
"I have been an eye witness of the power of enterprise 2.0 (although I didn’t know that is what it was called at the time) technology in promoting collaboration and connectedness across disparate individuals and groups within organizations.
While interning at Chemco this summer, we were briefed on the Company’s brand new intranet, which included blogging capabilities. The site was relatively new, and only a few people (mostly more senior leaders) had created blogs at that point. About a month into the internship, my supervisor (the head of coporate development and strategy) forwarded us a link to one of the comments to the CEO’s blog.
The comment had come from a low-level marketing manager located in a satellite office. In his remarks submitted to the CEO’s blog, the marketing manager openly questioned Chemco’s sacred cow - its ability to wring costs out of a process and to successfully operate an ultra-lean efficient organization. Specifically, he questioned the importance of one of the company’s favorite metrics (something they are extremely proud of); I’ll call it Metric A.
In his post (which was several pages, probably 800 plus words), he broke down basic financial information for Chemco and its 3 or 4 main competitors. Chemco was the clear leader in Metric A. He then overlayed this analysis with metrics such as market cap per employee and other metrics of value (I have forgotten what else he used), where Chemco was a distant laggard.
He went on to say that Chemco needed to essentially reverse its strategy and begin adding significant additional costs in the form of additional sales reps and R&D professionals, which are the key drivers of value in large chemical firms. His analysis was insightful, extremely thorough and bold.
I was amazed at how much buzz it created in the organization - my project team decided to use much of his material as a source reference for one of our deliverables. The office of the chief executive formed a small (informal) task for to investigate some of the marketing manager’s claims and test their potential benefit.
In short, without this new E2.0 vehicle, this manager’s voice would likely never be heard. From the look of his robust analysis, this was something he wanted to (and perhaps had tried to) share for a long time, and he now had the means of doing so. As the above example illustrates, I think that the potential benefits of E2.0 to an organization can be revolutionary - a step-function improvement in collaboration and efficient dissemination of information and resources.
However, in the near term, I think the actual benefits may fall short of the potential benefits due to company inertia and the difficult tension that managers face in actively promoting (even mandating) the technology while at the same time giving it enough room and freedom to be effective. This tension is perilously difficult to manage, and I think some managers’ inexperience will result in more than a few E2.0 rollout failures."
This sounds just about right to me. What do you think?
April 09, 2008
Evidence of the Value of a Blog
I just learned that the editors of Ziff Davis Enterprise put me as #38 in their list of the ’100 Most Influential People in IT.‘ The people putting this list together evidently considered being ’a torchbearer for the emerging Enterprise 2.0 market’ to be noteworthy. I’m honored and flattered.
I’m also pretty sure that this blog is the main reason I made the list. My original article on Enterprise 2.0 appeared just about two years ago in Sloan Management Review and has been pretty popular in reprints and downloads. But my blog has received almost 6.5 million page hits since its launch. I’m quite confident that the total number of desks that have been crossed by my articles and papers pales in comparison to the total number of desktops that have displayed my blog.
I’ve done a lot of speaking on E2.0 at conferences, universities, think tanks, and companies, and have engaged in a couple debates on the topic, and all of these activities have helped spread the word and the ideas. But nothing works as well as this blog. It’s attracted nearly 900 non-spam comments, and I’ve met plenty of people over the last two years who know me primarily as a blogger and are surprised to hear that I’m also a traditional ‘dead tree’ author.
In addition, the best a single article can do is spark thoughts for a reader -- get her to start thinking about a new topic, or to think differently about an existing one. In other words, it can initiate a conversation. I’ve found my blog to be a fantastic tool for continuing the conversation. This blog has allowed me to air ideas on E2.0 and other topics as frequently as I want, and at the length I feel is appropriate. In other words, the person determining the editorial calendar for these ideas is me, not an editor.
I’ve had nothing but positive experiences with Sloan Management Review, Harvard Business Review, and the other periodicals I’ve worked with, and I intend to keep publishing with them. But SMR and HBR have an annual ‘budget’ of IT-related articles, and only a subset of them can be about topics I’m interested in. And of course only a smaller subset of them can be authored by me. I operate under no such constraints with my blog. I put up as much as I want, and readers can consume as much as they want. And as new ideas (such as tying E2.0 to the concepts of social ties and tie strength) occur, I can use the blog to present them for consideration and discussion without having to wait for a traditional publishing opportunity.
I had the chance a little while ago to listen to Paul Levy, the CEO of Boston’s Beth Israel hospital (and my Facebook friend and fellow Red Sox fan), talk about why he blogged. He brought up the same point - that he can blog on issues he cares about as much as he wants. If the topic is of broad interest and his posts are good, they’ll continue to be read and can help shape thinking on the issue. It occurred to me that without a blog, his ability to do this is greatly reduced. Because of his position he might get to write a single opinion piece in the Boston Globe, and I guess his staff could continue to send out PR releases, but that’s about it. His blog greatly amplifies his voice.
The Berkeley economist J. Bradford DeLong got the role of academic blogging exactly right in "The Invisible College," an article he wrote for The Chronicle of Higher Education in 2006. He wrote that "[blogging] is a play in the intellectual influence game… A great university has faculty members who do a great many things — teaching undergraduates, teaching graduate students, the many things that are "research," public education, public service, and the turbocharging of the public sphere of information and debate that is a principal reason that governments finance and donors give to universities. Web logs may well be becoming an important part of that last university mission."
Hear hear, and I plan to use my blog to continue to play in the intellectual influence game. I’m gratified to see that it seems to be working so far...
April 08, 2008
Recession Tech
It seems pretty clear that the US economy is in the middle of a slowdown. Its depth, reach, and length are not yet obvious, and some folk still resist using ‘the R word,’ but leaner times are here, and might last a while.
During such times companies often throttle back their IT investments and hold off on big technology products. Some business leaders think this is the wrong thing to do— during the last recession, in 2001, Jack Welch said that "this is the moment to widen the gap" between GE and its competitors. "We are driving the hell out of IT spending… It’s the lifeblood of the company." But the fact remains that technology budgets typically get pared when times get tight.
Which make Enterprise 2.0 technologies and deployments all the more attractive, for three reasons. First, the tools themselves are ridiculously cheap compared to other enterprise-level applications. Some, like Wordpress and Mediawiki, are even free. And even the commercial E2.0 tools aren’t going to break the bank. Last week Awareness CEO John Bruce and co-founder David Carter came to my MBA class. The students looked at Bruce a bit quizzically when he revealed his company’s pricing: $4k/month, regardless of company size, # of users, etc. Bruce is not running a charity, of course, and his approach to increasing revenue with each customer is clever. Awareness charges an additional monthly fee for each neighborhood that a customer establishes. A customer will only go to the trouble of setting up a neighborhood if the Awareness platform is valuable to them, so Bruce can plausibly argue that he’s charging for value delivered. Even if a customer sets up a Manhattan’s worth of neighborhoods, though, the monthly tab from Awareness is not going to be painful. I once heard the total spending on Intellipedia and the US Intelligence Community’s other E2.0 tools described as ‘rounding error’ in any single agency’s technology budget. The tools of emergent, as opposed to imposed, collaboration are just not very expensive to purchase and install.
They also don’t need to be configured up front. The second reason that Enterprise 2.0 looks good during lean times is that its component technologies don’t need to be populated with data and business logic then extensively tested before they go live. The whole point of emergence is to start with something close to a blank slate, then see what… emerges. It makes sense, of course, to seed the platforms with initial content that will be compelling, draw in users, and encourage contribution, but this is entirely different than setting up CRM, ERP, SCM, and the other technologies that impose structure on collaborative activities. It takes a great deal of time and money to get these structuring technologies ready to go live. Here again, E2.0 looks like rounding error in comparison.
Third and finally, as business slows down workers often have more slack in their weeks. When this is the case it’s easier for them to find time and energy to participate in Enterprise 2.0. So lean economic times might be the right times to launch an effort to build an emergent social software platform.
Leave a comment and tell us what you think, and what you’re seeing. Is this the right time to proceed with Enterprise 2.0? Why or why not?
