A SCVA Investment Thesis. Congratulations! Barbara Gray and Brady Capital

Figure1-Performance-vs-Benchmarks-11-13

At various times on this blog and in the ebook I have thanked my MBA classmates and professors. Way back in 2007, they let my interests in social capital invade every conversation and assignment.

In one such case, in our Portfolio Management course, I persuaded my group to adopt a Social Capital Value Add investment thesis. We ended up being over weighted in banks because of the deep data that these companies have on the life cycle of consumers. But we did not have a lot of data to go on and it was a six week experiment. We were outperformed by at least half of our competitors.

Nevertheless, there is a difference between a weak thesis and poor execution. So I am pleased to share this update from Barbara Gray and Brady Capital.

On November 15th last year, we launched our Customer Value Index 200 (CVI 200), a research-based analysis, based on my social capital investment thesis, that provides investors with exposure to the top 10% of North American-listed companies with a market capitalization over $1 billion that score the highest in terms of competitive strength, social attributes, and authentic core values.

.. the CVI 200 (www.cvi200.com) came in with stellar performance in its first year – rising by 41.3% compared to the 32.1% gain in the S&P 500 over this period – an outperformance of 920 basis points. And as shown in Figure 1, the CVI 200 shone against the resource-laden Canadian S&P/TSX Index, which gained only a paltry 12.7%, outperforming it by 2,880 basis points.

To be clear CVI does not employ SCVA’s valuation method, but it is nevertheless, trying to focus on the same drivers and defenders of value.

See the full update here. Congratulations Barbara and Brady Capital!

A Different Road to Social Capital

This post originally appears on the Brady Capital Research blog, posted by Barbara Gray, CFA.

PREFACE: Here is the back story of how I arrived at the Social Capital Value Add thesis – by trying to make sense of my experiences as the CEO of social media network startup and then cobbling together an academic “bricolage”.

Barbara Gray, CFA – August 16, 2012 – Just over a month ago, I received the following tweet from an individual named Michael Cayley (@memeticbrand): “@barbcfa great post hope you visit socialcapitalvalueadd.com would like to talk to you”. As I don’t receive many direct tweets (I only started tweeting last Fall), I was intrigued and after checking out his website, I looked up Michael’s profile on LinkedIn and sent him the following message:

Hi Michael – thanks for reaching out to me on Twitter. Wow! It is amazing what a small world it is. I would love to talk with you about your Social Capital Value Add thesis – you were way ahead of the curve coming up with it back in 2007! I am an Equity Analyst and developed my social capital investment thesis back in 2010 after attending SXSW Interactive and #140 Conf in NY and realizing the impact social media would have on companies’ risk/growth profiles and thus valuation. I would be happy to share my Social Capital article (just published in Intellectual Asset Management magazine) with you. I look forward to discussing social capital with you. – Barbara

I think this really illustrates the thesis I presented in my recent research report on LinkedIn titled: “LinkedIn: Disrupting By the “Power of We””: how LinkedIn’s power to create both bonding and bridging capital for its members provides it with a distinct competitive advantage over leading social networking platforms such as Facebook and Twitter. As the nature of Facebook’s social network is based on bonding capital (i.e. formation of strong ties) with families and friends, it did not play any role in connecting Michael and I as we are not related and do not move in the same social circles. What is interesting is that Michael made the initial contact with me through Twitter, whose network is based on bridging capital (i.e. formation of weak ties) as it allows its members to “follow” anyone they want. However, Twitter’s platform does not facilitate trust, as it does not provide the means to access the competence or character of its members. For that, I turned to LinkedIn as it provided me with transparency into Michael’s credibility in terms of his:

1. Competence (a quick glance at his Professional Profile revealed that he is a fellow Canadian, worked for over a decade in various marketing and product development roles, achieved his MBA in Marketing/Finance In 2008, and is an entrepreneur as he founded Social Capital Value Add in 2007 and Cdling Capital Services in 2009).

2. Character (his 500 plus connections gives me comfort in the integrity of the information he disclosed in his Professional Profile and if I wanted to check his intent, I could call up one of my former investment banking colleagues from Toronto who is a mutual connection).

By contacting Michael via LinkedIn, as opposed to just email, I made it easy for him, in turn, to assess my credibility so he could decide if it was worth investing his time and effort to engage with me. He did – so we then exchanged email addresses, I sent him my Social Capital article, and we set up a time to talk via Skype. It’s interesting as at the end of the day, I think social media only gets you so far – to build a real relationship with someone you need to engage with them off-line – first email, then by phone, and then hopefully in person.

If you have any interest at all in social capital, I encourage you to read Michael’s absolutely brilliant ebook (and keep in mind, I have read over 75 business strategy business books the past two years so I don’t use that term loosely) titled “Follow the Yellow Brick Road: Introducing Social Capital Value Add”. What I find fascinating is how we developed very similar theses on social capital – yet at different points in time and in different ways. Michael researched and formulated his Social Capital Value Add thesis by taking an academic approach as he studied the research done by social capital pioneers as part of his MBA back in 2007 and 2008.

Ironically, I wasn’t even aware of the existence of the concept of social capital when I published my first paper “Social Media: An Exposing Disruptive Force – Look for Companies with “Heart” and “Soul” But Beware of “Empty Shells”” back in January 2011. It wasn’t until I read the fascinating book “Firms of Endearment” in the Spring of 2011 that I became aware of the concept of stakeholder equity. This made me realize how social media is leading to the creation of a new form of appreciating equity as Facebook, Twitter, and LinkedIn are global, dynamic, 24/7 social exchanges that I believe essentially convert a company’s stakeholder relationships into highly liquid assets and/or liabilities. At first, I thought of using the term “social equity” (equity = assets less liabilities) but that seemed too socialist. So I decided to use the term “social capital” instead and titled my November 2011 research report: “Social Capital: A New Strategic Play for Investors – Look for Companies with Heart and Soul”.

My basic investment thesis is that social media empowers individuals and is ushering in the Social Era, which will lead to a structural change in companies’ underlying risk and growth profiles and will accelerate their value creation/erosion process. This sentiment is echoed by Michael who states that “broadband internet connections have empowered individuals, making them the most disruptive and intense form of media (i.e. the Individual as Medium); there are implications throughout the corporate ecosystem”. I believe the companies that are best positioned in the Social Era are those with heart and soul as they will be able to use social media to capitalize on their strong and authentic stakeholder relationships to leverage the high level of enthusiasm and deep psychological attachment to the company’s brand and greater purpose. This is consistent with Michael’s thesis of how the symbolic brand is being replaced by the memetic brand (i.e. a company with “heart and soul” that stands for something) as companies can only “activate IAM (Individual as Medium) through social networks to achieve maximum reach and that activation is a function of social capital”. Like myself, he also predicts that the leading source of corporate value will shift from brand to social capital.

Michael’s book opened my eyes to a whole academic body of research that explores the concept of social networks and social capital… I just downloaded Ronald Burt’s book “Structural Holes: The Social Structure of Competition” – it was published in 1995 so it will be interesting to delve into it to see if it provides any further insights. And perhaps one day, the investment community will start to embrace our concept of social capital as the new driver of corporate value.

Disclosure: I have a LONG position in LinkedIn Corporation (LNKD-NYSE).

Cdling: principles of Social Capital Value Add applied

We have extended our closed Alpha Group from our HTML5 mobile version onto the web.

Please sign up.  You can really help just by signing up.

Last week we poked up our heads to make an alpha release of our Cdling Scores. With the chart available at that link, you can quickly and easily see that Jason Calacanis has great instincts when it comes to assembling a diverse judging panel of established investors, Founders and influential analysts.

The same applies to helping investors in Ontario or the UK or Germany or NYC or Chicago or Asia or anywhere … build trust faster with investors in Silicon Valley.  Cdling Scores tell you a lot about a player in innovation at a glance.

Folks who took the time to check out the chart were galvanized by the insight.

Pulitzer prize winning Forbes journalist George Anders ask us to use Cdling Scores to compare the existing influence of the PayPalMafia with the emerging Facebook Friends.  With this kind of insight, the PayPalers can make better decisions about who they might co-invest with from the Facebook folks to help insure that they keep getting chances to get in on the best deals and have the best connections to help their existing portfolio of startups succeed.

We are grateful to Christine Wong at ITCanada for writing about what we are doing in an informed and entertaining way. And to her Associate Editor Brian Jackson for understanding that even when you are introducing a way for everyone to win, it is really, really hard to get folks to support a new approach.

Mark Fidelman hits the nail on the head

I just came across this post by Mark Fidelman. It is the best illustration of Social Capital Value Add that I have ever seen.

It still focuses on the grand influencer – but it captures the value impact.  And Mark does point out that there are a number of factors that impact the increase in value, including I suggest the value of the whole community that Robert Scoble fosters.

Why Every Company Needs a Robert Scoble on Seek Omega

http://www.seekomega.com/2011/01/why-every-company-needs-a-robert-scoble-infographic/

3 Economies of Online Currency: money, reputation and attention

I think we are doing some ground breaking work with Cdling, coming up with our “seeds” monetary system.

I have been doing some related reading this evening.

When I read this post by Alistair Croll, it prompted me to get off my duff and actually post something here again, so I think that is a huge endorsement.

Check it out:

The Three Economies of Online Currency.

Collaborative Consumption by Rachel Botsman & Roo Rogers

Entertaining video here and their Booktracker campaign is an interesting memetic approach.

Crowd Building: 2020 Media Future @ OCAD

Thanks to Walter Derzko for inviting me to join yesterday’s 2020 Media Futures Workshop at the s-Lab (Strategic Innovation Lab) at OCADSuzanne Stein and Greg Van Alstyne did a great job of moderating and facilitating a fairly free wheeling group of thinkers.

It looks like I was the only one using twitter during the workshop or maybe I had the wrong tag? Here are a few thoughts that emerged that could each be turned into a blog post:

  • We think about discontinuity as a threat but the new global success stories will have discontinuity at the heart of a new approach.  Are the incremental gains achieved through “baby steps” and the “go slow”, “fast follower” practices of Canadian business enough to maintain Canada’s position in the world moving forward?  At the moment many are quick to heap praise on the stability of our financial sector.  I remember a few observers noting that growth in Nova Scotia was not effected by the global downturn.  Hmmm. When achieving global success requires embracing discontinuity, what design approaches should we advocate and adopt?
  • How do digital connections qualify/disqualify people for precious face to face time?  Many of us have now experienced the little thrill of having connected with someone online via twitter or a blog exchange and then met them in real life.  As we become more connected, how will the productivity of our face to face time be impacted.  Is it a sign of disrespect if you have not bothered to “google” someone before attending a scheduled meeting with them?
  • Does copyright transform into “identity right”?  Copyright was established to protect the investment and intellectual property of creators for a reasonable time period.  Online is “busting through to reality” (pick up Jesse Schell’s talk on the Future of Gaming at the 10:56mark).  Is the final produced piece of art or software code the point where we need these protections?  When our life stream is “sensed” and iterative design is key to progress, do we need an entirely different set of rights to ensure that individuals have the ability to profit from the digital footprints that they cast off or in other words, how they direct their lives?
  • We must integrate consumers into design & production.  This generalizes to “crowd sourcing” or making sure that we make corporate decisions, not based upon the smartest person sitting at the table at that moment, but based upon having the smartest thinking anywhere available at the table for the moment of the decision.  It is the kind of motive behind the idea for a Seedling Prediction Market that initially drew me into MDes’ (i.e. Masters of Design in Strategic Foresight and Innovation) orbit. This is not really a question for 2020.  I think it is a question that we need to be answering right now to maintain Ontario/Canada’s position in the world.
  • So some “Crowd Building” related design thinking …
  • MIT Tech TV

Introducing Dr. Dima Dimitrova

In February, Dr. Barry Wellman introduced me to a colleague from his Netlab at the University of Toronto.

Dr. Dimitrina (Dima) Dimitrova has extensive research experience, which includes evaluation research and project management engagements.

Her areas of expertise are social networks, workplace and technology. She was the Principal investigator of the NetMap consulting project, which examined the social network and collaboration practices of researchers and partners of the Canadian Water Network. Here is one of her presentations on this work:

Her doctoral research “The Telework Mosaic (University of Toronto, 2002)” focused on the social implications of new technologies for social networks and new forms of workplace arrangements.  As well, she has conducted research in the areas of diversity, health care, and industrial relations.

She is active at scholarly conferences, presenting and organizing several sessions, peer review work, and in community research. Her latest publication is a co-authored chapter on Virtual Communities of Practice. Other research findings have been published, as co-author or independently written work, in the US, Austria, Britain, Norway, Italy, Russia, and Bulgaria.

Dima is currently teaching at York University and working on a paper on the use of social capital in collaborative research. She is a member of NetLab, a social network group at the University of Toronto led by Barry, who is a leading authority in social network research and theory and a founder of the International Network of Social Network Analysts.

In the weeks since meeting, Dima and I have met several times.  At the second meeting she showed up with a printed copy of my ebook that had so many highlighter marks and post it notes attached to it, I needed to pull out a copy myself just to remember how to answer all of her diligent, expert questions.

While the ebook has been viewed well over 10,000 times now, downloaded more than 1,500 times, featured by Scribd, marked as a favourite by about 60 Scribd users, “liked” by about 30 more and Olav Sorenson has given it a thorough read … I am quite confident at this point that there is no one who has given Social Capital Value Add more thorough, qualified consideration than Dima.

We have crafted a proposal to test the Social Capital Value Add approach in a precedent set of Fortune 100 companies.  If your company would like participate in this research & development program or financially support the design phase of the program please contact me.

This will be an initiative that will help define corporate management methods designed for the network era on a scale equal to similar work by MIT and IBM.


IBM MIT Virtuous Cycle IBM MIT Virtuous Cycle Michael Cayley IBM is working with MIT to define management methods designed for the network era. In the past we have not been able to see how these kinds of efforts have a direct impact investor’s perception.

SCVA research & development program is a similar opportunity for 3 to 5 companies.

Craig Newmark – Hilton sisters, Hot or Not? CluetrainPlus10

Okay, so do you find Craig Newmark and the Hilton sisters hot or not?

Hilton Sisters, Hot or Not

This post is my contribution to the CluetrainPlus10 project, in which 95 bloggers are commemorating the 10-year anniversary of the Cluetrain Manifesto by reflecting on the 95 theses of this seminal social media marketing work.

thesis #70. If you don’t impress us, your investors are going to take a bath. Don’t they understand this? If they did, they wouldn’t let you talk that way.

Corporations (for profit) are a pretty incredible form of human organization don’t you think?  It seems to me that they were originally formed to enable groups of people to take actions together in ways that were previously not common.  The corporate form let groups enter into contracts, own things and most importantly it enabled people to treat risk differently.  Leverage.  Scale.  Risk is a big part of innovation.  It is related to rewards.  It is how we get ahead, isn’t it?

This form of organization has proven to be very effective at creating wealth.  It is responsible for lifting more people out of poverty than any other approach.  Even still, eventually we end up asking how is this wealth creating form of organization accountable to the rest of us?

The call for regulation is getting attention these days.  Does anyone think that any group of policy wonks is going to get in front of a mammoth like Google and many corporations like it that are way around the curve on investing in and understanding the power of data and networks?  Regulation is important but don’t you think it addresses practices after giant shifts have occurred and there is a new status quo to code into the system?  I think a more important and achievable check at the early stages of new practices is developing greater accountability to markets.

Being accountable to customers is one form of market accountability.  But all boats rise in a flood.  If a company is fortunate enough to be doing enough of the right things and it is connected to the context of an inexorable global trend they can grow like crazy and ignore their customers.  Or they can completely disregard all of their potential customers and new streams of revenue and just hang onto the ones that come easily. Nice little business.  Everybody is happy, except the folks at Tribune.

It could be worse, one could be totally free of direct responsibility for production of product or service and still able to live off of the spoils of corporately created wealth and the attention and power that access to capital affords (are they hot if they are not heiresses?).

In any event, some people at the top of Tribune, the banks and a lot of other major corporations lost the plot recently, but does anyone feel like these corporations are not accountable to the market?  They seem to be getting hammered by the market the last time I checked.

Looking back over the last ten years and reflecting on thesis #70, we now have many examples that investors suffer when companies do not adjust to the network era.  But do investors fully understand this and reflect it in their analysis of the future prospects of a company?  I think the answer is no.

I think this is a big part of the problem at the heart of the #smfail thread that recently evolved out the of the Business of Community Networking  conference in Boston and Web 2.0 Expo in San Francisco.

Howard Lindzon has part of the answer. He says, “it’s time for some Venture Capitalist’s and founders with balls to take some real chances and lead change.”

For whatever reasons, folks like Bill Gates and Clark/Andreesen and Jeff Bezos engaged with public markets, became poster children for embracing change for all of us, created a lot of wealth for a lot of people, scaled to the global challenge/opportunity and they changed what investors look for in a company in the process.

A Twitter, Facebook or Craigslist IPO would have similar effects IMHO.

But I don’t think that the real answer is “out there” with other people.  It is not the responsibility of a few to provide leadership for the rest of us anymore.

Any so-called social media expert can help stop the Web 2.0 Swan Song.

1.  Stop selling social media as a cheap alternative to television advertising.  If something is better it is worth more.  If a television campaign is worth $1-million then doing social media right is worth $1.2-million.  Go after those deals and you will quickly find your self sitting across the table from senior executives, rather than junior managers. (Real quote within last month, from real director level employee in Canadian operations of a brand you know and trust: “We are not adopting social media, and if we were that decision would not be made here, it would have to come from a senior level executive in the US office.)

2. Stop waiting and advocating for some sort of “executive buy in”.  Yes, leadership from the top will help, but it will be the little success stories or implementations that start small but spread memetically that draw in the senior execs as champions.  Who is hosting corporate changecamp in NYC?

3. When you do get into the CEO suite, don’t propagate the “Giving Up Control” myth.  Telling a middle-aged executive who has fought half of their life to get where they are that they need to give up control is quite the “conversation” killer.  Worse – it is not the truth.

4. Let’s put an end to the arrogance of looking down on the way corporate types speak.  Excessive PR is one thing but let’s recognize that if we want investors to understand the imperatives of the new economic model, we need to make the effort to convert our “conversation” into terms and language that they can act upon.

The shift to common perception shaped by broadband empowered social networks is accelerating and the dominant source of shared perceived value for the last 50 years, broadcast media, is in rapid decline.

Ultimately the ability to maintain margins is dependent on a shared perception of sustainable difference in value between price and costs.  That means that brand value, around 50% of big company corporate valuation, is at risk of evaporating.

Broadband connectivity is set to triple every six months and it is the key driver.  The broadband trend, along with mobile communications & GPS integration is eliminating the boundary between the virtual worlds & the so-called real world, establishing the link between broadband empowered people and stable future earnings.

Should the “conversation” go something like that?

Part of the problem is that a cross-disciplinary solution is required.  It really takes collective input from a variety of experts to arrive at a satisfactory answer.

With a seed investor and a few precedent setting corporations we could all get involved in an open source approach to making the business case to investors in a meaningful way.  Call me if you have $200K and want to get started.  I will send you the proposal.

Read the other posts in the CluetrainPlus10 project.

1. Markets are conversations. Christopher Locke, Mystic BourgeoisieEntropy Gradient Reversals, @clockerb

2. Markets consist of human beings, not demographic sectors. Simon Kendrick, Curiously Persistent@curiouslyp

3. Conversations among human beings sound human. They are conducted in a human voice.Keith McArthur, Rogers Communications, keithmcarthur.ca @keithmcarthur

4. Whether delivering information, opinions, perspectives, dissenting arguments or humorous asides, the human voice is typically open, natural, uncontrived. Shel Holtz, A Shel of my Former Self, @shel

5. People recognize each other as such from the sound of this voice. Dave Fleet, Davefleet.com, @davefleet

6. The Internet is enabling conversations among human beings that were simply not possible in the era of mass media. Jose Leal, wikiDOMO Blog, @jaleal

7. Hyperlinks subvert hierarchy. Chris Brogan, Chrisbrogan.com, @chrisbrogan

8. In both internetworked markets and among intranetworked employees, people are speaking to each other in a powerful new way. Mitch Joel, Six Pixels of Separation, @mitchjoel

9. These networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge. Neville Hobson, nevillehobson.com, @jangles

10. As a result, markets are getting smarter, more informed, more organized. Participation in a networked market changes people fundamentally. Ed Lee, Blogging Me, Blogging You, @edlee

11. People in networked markets have figured out that they get far better information and support from one another than from vendors. So much for corporate rhetoric about adding value to commoditized products. Andy Beal, Marketing Pilgram, @andybeal

12. There are no secrets. The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone. Dan York, Disruptive Conversations, @danyork

13. What’s happening to markets is also happening among employees. A metaphysical construct called “The Company” is the only thing standing between the two. Lauren’s Library Blog @laurenpressley

14. Corporations do not speak in the same voice as these new networked conversations. To their intended online audiences, companies sound hollow, flat, literally inhuman.  C.C. Chapman, CC-Chapman.com, @CC_Chapman

15. In just a few more years, the current homogenized “voice” of business—the sound of mission statements and brochures—will seem as contrived and artificial as the language of the 18th century French court. Tom Ewing, Freaky Trigger, @tomewing

16. Already, companies that speak in the language of the pitch, the dog-and-pony show, are no longer speaking to anyone. Steve Dodd, B2B Selling with Social Media Technniques, @steve_dodd

17. Companies that assume online markets are the same markets that used to watch their ads on television are kidding themselves. – Jason Griffey, Pattern  Recognition, @griffey

18. Companies that don’t realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity. Ivan Croxford, The Fumoir, @croxy

19. Companies can now communicate with their markets directly. If they blow it, it could be their last chance. Kyle McInnes, BlackBerryCool.com, @blackberrycool

20. Companies need to realize their markets are often laughing. At them.Tom Nixon@tomnixon

21. Companies need to lighten up and take themselves less seriously. They need to get a sense of humor. Jay Moonah from Wild Apricot, Media Driving, @jmoonah

22. Getting a sense of humor does not mean putting some jokes on the corporate web site. Rather, it requires big values, a little humility, straight talk, and a genuine point of view. Colin McKay | Canuckflack | @canuckflack

23. Companies attempting to “position” themselves need to take a position. Optimally, it should relate to something their market actually cares about. tamera kremer, (3i), @tamera

24. Bombastic boasts—”We are positioned to become the preeminent provider of XYZ”—do not constitute a position. Anthony Power, Power Points, @apowerpoint, Post here.

25. Companies need to come down from their Ivory Towers and talk to the people with whom they hope to create relationships. @sclapp, Sharon Clapp, librarywebhead

26. Public Relations does not relate to the public. Companies are deeply afraid of their markets.  Heather Yaxleygreenbanana, @greenbanana Post: http://greenbanana.wordpress.com/2009/04/28/public-relations-does-not-relate-to-the-public-companies-are-deeply-afraid-of-their-markets/

27. By speaking in language that is distant, uninviting, arrogant, they build walls to keep markets at bay. Karen Russell, Teaching PR, @KarenRussell

28. Most marketing programs are based on the fear that the market might see what’s really going on inside the company. Brenna Flynn, com.motion, @b2therenna, Post: http://www.causeacommotion.com/2009/04/cluetrainplus10-project-most-marketing.html

29. Elvis said it best: “We can’t go on together with suspicious minds.” Post: Elvis was right Pete Burden, www.peteburden.com, @peteburden

30. Brand loyalty is the corporate version of going steady, but the breakup is inevitable—and coming fast. Because they are networked, smart markets are able to renegotiate relationships with blinding speed. Kevin MacKenzie, mack-musings.blogspot.com. @mackenstuff

31. Networked markets can change suppliers overnight. Networked knowledge workers can change employers over lunch. Your own “downsizing initiatives” taught us to ask the question: “Loyalty? What’s that?” Blake Medulan, blakedot.blogspot.com @thebdot

32. Smart markets will find suppliers who speak their own language.@debworks http://debworks.blogspot.com/2009/04/cluetrain10-number-32.html

33. Learning to speak with a human voice is not a parlor trick. It can’t be “picked up” at some tony conference. Bob LeDrew, Flacklife @bobledrew

34. To speak with a human voice, companies must share the concerns of their communities. Keith Burtis, keithburtis.com@keithburtis

35. But first, they must belong to a community. @LizStrauss – Successful-Blog.com

36. Companies must ask themselves where their corporate cultures end. Matt Moore engineerwithoutfears @innotecture happy endings

37. If their cultures end before the community begins, they will have no market. Farah Qasemi, The Burgundy Rants, @efcue

38. Human communities are based on discourse—on human speech about human concerns. Mathew Ingram, http://www.mathewingram.com/work/2009/04/28/cluetrain-human-speech-human-concerns/ @mathewi

39. The community of discourse is the market. Tim Walker, hooversbiz.com, @Twalk

40. Companies that do not belong to a community of discourse will die. Toby Greenwalt, theanalogdivide.com, @theanalogdivide

41. Companies make a religion of security, but this is largely a red herring. Most are protecting less against competitors than against their own market and workforce. Maddie Grant

@maddiegrant  [post coming soon]

42. As with networked markets, people are also talking to each other directly inside the company—and not just about rules and regulations, boardroom directives, bottom lines.

43. Such conversations are taking place today on corporate intranets. But only when the conditions are right.

44. Companies typically install intranets top-down to distribute HR policies and other corporate information that workers are doing their best to ignore. Nancy Dowd, The ‘M’ Word.

45. Intranets naturally tend to route around boredom. The best are built bottom-up by engaged individuals cooperating to construct something far more valuable: an intranetworked corporate conversation.

46. A healthy intranet organizes workers in many meanings of the word. Its effect is more radical than the agenda of any union. Connie Crosby Intranet Apocalypso http://crosbygroup.ca/blog@conniecrosby

47. While this scares companies witless, they also depend heavily on open intranets to generate and share critical knowledge. They need to resist the urge to “improve” or control these networked conversations.

48. When corporate intranets are not constrained by fear and legalistic rules, the type of conversation they encourage sounds remarkably like the conversation of the networked marketplace.

49. Org charts worked in an older economy where plans could be fully understood from atop steep management pyramids and detailed work orders could be handed down from on high. Mark Federman What is the (Next)  Message?

50. Today, the org chart is hyperlinked, not hierarchical. Respect for hands-on knowledge wins over respect for abstract authority. Michael Stephens, tametheweb.com, @mstephens7 http://tametheweb.com/2009/04/28/hyperlinked-libraries-org-charts-the-human-voice-ten-years-of-the-cluetrain-manifesto/

51. Command-and-control management styles both derive from and reinforce bureaucracy, power tripping and an overall culture of paranoia. Omar Ha-Redeye, LawIsCool, @OmarHaRedeye

52. Paranoia kills conversation. That’s its point. But lack of open conversation kills companies. Malcolm Bastien, Open Mode, @MalcolmBastien

53. There are two conversations going on. One inside the company. One with the market.    http://bit.ly/CluetrainWizard – “CluetrainPlus10 and The Wizard of Oz”, John V Willshire, @willsh

54. In most cases, neither conversation is going very well. Almost invariably, the cause of failure can be traced to obsolete notions of command and control Michael Karesh @TrueDelta

55. As policy, these notions are poisonous. As tools, they are broken. Command and control are met with hostility by intranetworked knowledge workers and generate distrust in internetworked markets.

56. These two conversations want to talk to each other. They are speaking the same language. They recognize each other’s voices.

57. Smart companies will get out of the way and help the inevitable to happen sooner. – Mike Russell, PlanetRussell.net/blog, @planetrussell

58. If willingness to get out of the way is taken as a measure of IQ, then very few companies have yet wised up.  Helene Blowers, LibraryBytes – The secret is in letting go @hblowers

59. However subliminally at the moment, millions of people now online perceive companies as little more than quaint legal fictions that are actively preventing these conversations from intersecting. Andrew Goodman, Traffick.com & Page Zero Media, @andrew_goodman

60. This is suicidal. Markets want to talk to companies. Danny Whatmough @dannywhatmough

61. Sadly, the part of the company a networked market wants to talk to is usually hidden behind a smokescreen of hucksterism, of language that rings false—and often is. Nancy White @nancywhite

62. Markets do not want to talk to flacks and hucksters. They want to participate in the conversations going on behind the corporate firewall. Andrew Cherwenka, Trapeze, @andrewcherwenka

63. De-cloaking, getting personal: We are those markets. We want to talk to you. Ian Capstick, MeidaStyle.ca, @iancapstick

64. We want access to your corporate information, to your plans and strategies, your best thinking, your genuine knowledge. We will not settle for the 4-color brochure, for web sites chock-a-block with eye candy but lacking any substance. Aerin Guy @aeringuy

65. We’re also the workers who make your companies go. We want to talk to customers directly in our own voices, not in platitudes written into a script. Kate Trgovac mynameiskate.ca @mynameiskate

66. As markets, as workers, both of us are sick to death of getting our information by remote control. Why do we need faceless annual reports and third-hand market research studies to introduce us to each other? Tom Demers WordStream Blog @tomdemers

67. As markets, as workers, we wonder why you’re not listening. You seem to be speaking a different language. monica levy. http://www.monicaonmarketing.blogspot.com. @mjlevy

68. The inflated self-important jargon you sling around—in the press, at your conferences—what’s that got to do with us? San Antonio Byline Blog @clgoodman

69. Maybe you’re impressing your investors. Maybe you’re impressing Wall Street. You’re not impressing us. Tony Goodson www.tonygoodson.com @tgtips

70. If you don’t impress us, your investors are going to take a bath. Don’t they understand this? If they did, they wouldn’t let you talk that way. Michael Cayley www.socialcapitalvalueadd.com @memeticbrand Craig Newmark – Hilton sisters, Hot or Not? CluetrainPlus10

71. Your tired notions of “the market” make our eyes glaze over. We don’t recognize ourselves in your projections—perhaps because we know we’re already elsewhere. Doc Searls @dsearls

72. We like this new marketplace much better. In fact, we are creating it. Joe Kraus, @jokrausdu, http://www.nuthingbut.net/2009/04/we-like-this-new-marketplace-much.html.

73. You’re invited, but it’s our world. Take your shoes off at the door. If you want to barter with us, get down off that camel! mr heretic, @mrheretic

74. We are immune to advertising. Just forget it. Jane Shkolnik @jshko www.blurtheline.ca

75. If you want us to talk to you, tell us something. Make it something interesting for a change. Duane Brown, Creative Traction, @duanebrown

76. We’ve got some ideas for you too: some new tools we need, some better service. Stuff we’d be willing to pay for. Got a minute? Michelle Sullivan, Michelle Sullivan Communications, @msullivan

77. You’re too busy “doing business” to answer our email? Oh gosh, sorry, gee, we’ll come back later. Maybe. Gina Lijoi, http://wordondigital.blogspot.com, @ginalijoi

78. You want us to pay? We want you to pay attention. Eden Spodek, Bargainista, @EdenSpodek

79. We want you to drop your trip, come out of your neurotic self-involvement, join the party. Sarah Prevette, @sarahprevette

80. Don’t worry, you can still make money. That is, as long as it’s not the only thing onyour mind. Beth Robinson, Inventing Elephants, @bethrobinson Response posted at http://www.inventingelephants.com/beyondmoney.html

81. Have you noticed that, in itself, money is kind of one-dimensional and boring? What else can we talk about? Rebecca Leaman, Wild Apricot, @rjleaman

82. Your product broke. Why? We’d like to ask the guy who made it. Your corporate strategy makes no sense. We’d like to have a chat with your CEO. What do you mean she’s not in? Michael O’Connor Clarke, Uninstalled, @michaelocc

83. We want you to take 50 million of us as seriously as you take one reporter from The Wall Street Journal. Ged Carroll (@r_c, renaissance chambara) posted here and here

84. We know some people from your company. They’re pretty cool online. Do you have any more like that you’re hiding? Can they come out and play? Dan Wilson, @wilsondan wilsondan.co.uk

85. When we have questions we turn to each other for answers. If you didn’t have such a tight rein on “your people” maybe they’d be among the people we’d turn to. Reid Givens @reidgivens reidgivens.com

86. When we’re not busy being your “target market,” many of us are your people. We’d rather be talking to friends online than watching the clock. That would get your name around better than your entire million dollar web site. But you tell us speaking to the market is Marketing’s job. Danny Brown, danny brown – social media pr and marketing for the conversation age@dannybrown. Post now live: “We’re Your People Too”.

87. We’d like it if you got what’s going on here. That’d be real nice. But it would be a big mistake to think we’re holding our breath. Joe Buhler, buhlerworks, @jebworks Post live on Marketing on the Smart Web

88. We have better things to do than worry about whether you’ll change in time to get our business. Business is only a part of our lives. It seems to be all of yours. Think about it: who needs whom? Nick Gadsby @nickbjorn of Lawes Consulting READ MY ENTRY @ Dark London

89. We have real power and we know it. If you don’t quite see the light, some other outfit will come along that’s more attentive, more interesting, more fun to play with. http://hessiej.wordpress.com/2009/04/28/cluetrainplus-10-thesis-89-we-have-real-power-and-we-know-it-if-you-dont-quite-see-the-light-some-other-outfit-will-come-along-thats-more-attentive-more-interesting-more-fun-to-play-with/, http://twitter.com/hessiej

90. Even at its worst, our newfound conversation is more interesting than most trade shows, more entertaining than any TV sitcom, and certainly more true-to-life than the corporate web sites we’ve been seeing. David Berkowitz, Inside the Marketers Studio, @dberkowitz

91. Our allegiance is to ourselves—our friends, our new allies and acquaintances, even our sparring partners. Companies that have no part in this world, also have no future. Kurt Cagle, Metaphorical Web, @kurt_cagle

92. Companies are spending billions of dollars on Y2K. Why can’t they hear this market timebomb ticking? The stakes are even higher.  Sally Falkow Proactive http://falkow.blogsite.com Now live http://falkow.blogsite.com/public/item/231350

93. We’re both inside companies and outside them. The boundaries that separate our conversations look like the Berlin Wall today, but they’re really just an annoyance. We know they’re coming down. We’re going to work from both sides to take them down. Morten Blaabjerg, When The Garden Walls Come Crumbling Down Kaplak Blog

94. To traditional corporations, networked conversations may appear confused, may sound confusing. But we are organizing faster than they are. We have better tools, more new ideas, no rules to slow us down. Robin Hastings@webgoddess

95. We are waking up and linking to each other. We are watching. But we are not waiting.  Leigh Himel, http://leighhimel.blogspot.com/2009/04/cluetrainplus-10-thesis-95.html – @leighh

#smfail, Why Social Media Fails: The Experts Weigh In @ #w2e

Thank you to @sagenet for turning me on to the #smfail twitter thread that was streaming out of today’s Why Social Media Marketing Fails  – and how to fix it panel at the Web 2.0 Expo.  Industry thought leaders – Peter Kim (Dachis Corporation), Charlene Li (Altimeter Group), and Jeremiah Owyang (Forrester Research) led the discussion.  UPDATE:  Thanks to Peter, Charlene & Jeremiah for linking to this post.

My comment on a post by @miaD on her Marketing Mystic blog has turned into this post here.

Mia reported “Keeping true to the spirit of social media, Peter Kim invited input for this session before the show, on his blog where folks respond to what they wanted to see at this session. Not surprisingly, it was standing room only for this brilliant panel of former and current Forrester analysts.”

Here are my thoughts along the themes established by the panel:

1. How to get culture to adopt & get C level buy in:

Demonstrate the link between corporate value & social media the way that the link between brand & corporate value was established in the late ’80s.  Brand value is now the 3rd most monitored benchmarks by CEOs (can someone help me find the link to where I read this factoid?).

2. How to make “campaigns” work:

I agree with the panel, the campaign model is wrong.  It leads to the wrong metrics (CPMs, web analytics), wrong strategy, etc.  However, cycles of activity tied to a good strategy are required.  “Campaigns” will work if they are part of corporations mobilizing their internal & external networks toward the creation & defense of enduring value … not about going viral, not about views or meaningless registrations.

3.  What Measures Matter (are right for social media):

Measures should be derived from the academic work that has been done in quantifying social capital.  Nan Lin’s network theory of social capital is a good place to start for a definition.  Social network analysis is also an important place to look for meaningful measures (see @barrywellman and INSNA for more).

4. Does social media matter?

Oh yes.  It is very critical.  That is like asking is it important that major American corporations maintain market share that is disproptionate to population as China, India and the developing world begin to project their power into global culture.  The shift to common perception shaped by broadband empowered networks is accelerating (as opposed to broadcast networks).   Broadband connectivity is set to triple every six months and it is the key driver.  The broadband trend, along with mobile communications & GPS integration is eliminating the boundary between the virtual worlds & the so-called real world, establishing the link between broadband empowered people and stable future earnings.  Ultimately the ability to maintain margins is dependent on a shared perception of sustainable difference between price and costs.  So yes – social media matters, very much, to every publicly traded corporation … in fact to everyone & it will only continue to increase in importance.

Here are some of the other recaps of the panel …

And Kate Brodock did a good wrap up of the Business of Community Networking conference where we covered similar issues last week in Boston.