IAM or “Social Media Man”

One of the central concepts of Social Capital Value Add is the Individual as Medium (IAM).  I also considered using the more anthropological “Social Media Man” but wanted readers to steer past the buzz words and/or gender concerns.

Which one do you like better?  I don’t care what you call it, as long as the dog brings back the bone.

I am realizing that the IAM concept may not come across very strongly in the e-book.  I dripped references to IAM throughout the e-book.  Let me try to draw them together in this post.

Perception is reality.

Shared perception requires some form of media.  I.e., thoughts must be communicated through some form of artifact whether fleeting or more resilient.  Examples include gestures, words, text, audio and visual … anything that can be sensed among parties.

For most of history, our ability to communicate was relatively geo-spatially limited.  We could communicate as far as our voices could be heard (town criers) or our eyes could see (smoke signals). Perception was very locally oriented.

Then along came technologies that Marshall McLuhan taught us to understand as Extensions of Man.  The printing press, radio and television are a few of the biggies.  These are essentially one way, broadcast forms of media. The telephone is another biggie, it is interactive & reaches far, but does not scale well to large audiences and requires synchronous connection.

McLuhan explained to us that “the medium is the message. This is merely to say that the personal and social consequences of any medium – that is, of any extension of ourselves – result from the new scale that is introduced into our affairs by each extension of ourselves, or by any new technology.”

He also said, “Our conventional response to all media, namely that it is how they are used that counts, is the numb stance of the technological idiot. For the ‘content’ of a medium is like the juicy piece of meat carried by the burglar to distract the watchdog of the mind. The effect of the medium is made strong and intense just because it is given another medium as ‘content’. The content of a movie is a novel or a play or an opera. The effect of the movie form is not related to its program content. The ‘content’ of writing or print is speech, but the reader is almost entirely unaware either of print or speech.”

When digital media started to really emerge with the introduction of the browser in the mid-1990s, it naturally incorporated many previous forms media.  But bandwidth, computing power and storage were still scarce and expensive.  A lot has changed since Netscape came along.

We have arrived at a point in history where the effect of IAM has been made the strongest and most intense form of media we experience because it has been given all other media as its content. The movie, the play, the opera, the newspaper, the television, the radio, commercial music, print and photographs, even the brand (a broadcast concept), have all been given over to the Individual to be reincarnated as the YouTube video, the prosumer indie, the blog, the blog comment, the forum, the Tweet, the IM chat, rating & review, the Flickr album, the podcast, the viral email and the mashup.

Real world social networks (and social network applications like email and MySpace that facilitate) are the infrastructure of these new forms of media that emit from the Individual.

SCVA argues that the effect is a new scale of social capital that marks a point of inflection for business and it is this new scaled-up version of social capital that SCVA is determined to highlight the value of.

Whereas, the network infrastructure to shape shared perception could be rented with great flexibility in the broadcast era (i.e. the 30 second spot), access to social networks is a function of social capital.

This new scale social capital is a critical corporate asset.

I spent the first half of the e-book illustrating how these entirely new scales of social capital are evidenced by new scales of the intrinsic elements of social capital which are individual assets (remember, the corporation is a form of individual).  These include: information flow, exertion of influence, certifications of social credentials and reinforcement of identity and recognition.  These are observations that are consistent with Nan Lin’s network theory of social capital, whose approach enables us to link the thinking to social network analysis and economics.

Technologies have evolved and mapped so tightly to the way humans transact, form relationships and create self-identity that it is time for business management to adopt the thinking of leaders in social network theory, such as the University of Chicago’s Ronald Burt.

Like it or not, the shift from broadcast media to IAM has implications throughout the corporate ecosystem.

Almost all of the changes highlighted in the illustration above have occurred exponentially, which is why we experience them as a sudden shift.  The “more of the same”, “everything that changes, stays the same” mentality will not derive competitive advantage from change like this.  It may not even survive change like this.

Does it not seem natural? Project and scale up the power of the individual, and that value of human connection of which we are all so instinctively aware, emerges in amplified forms as well.

In addition to the new scales of intrinsic social capital elements examined in the e-book, I would like to study further the extrinsic variables of social capital that aggregate into collective assets such as trust and network structure.  I am sure that there is similar evidence of new scale that would shed more light on social capital formation, access and use.

SoCap08: Is there a thread missing?

As I sort through the after math of SoCap08, I think that you might want to check out this post entitled, The Silver Lining in the Market Collapse: Social Capital.  It seems that the theme that Jonathan Salem Baskin & I were trying to highlight last week with our co-authored, co-posted piece entitled Looking for Leadership? Invest in your Networks? was resonating at the conference.

In short, this time of crisis in confidence is a time when business leaders are looking for answers.  It is a time of opportunity for advancing social capital thinking that so many of us are dedicated to.

I am picking up that most felt that the conference captured a gritty optimism, as signaled by the attendance of more than 600 to a first time event that was planning for 300.  While it is clear that Katherine Fulton’s presentation on the state of social capital markets was well received, I am wondering if the observation that social capital markets are at a very early stage of uncoordinated innovation was out of step with the enthusiasm of the conference?

In particular, I am wondering if there was sub-context at the conference about the forces driving a revolutionary rise in social capital that is breaking down the silos between value based management (i.e. the quest to manage sources of stable future earnings, over and above the cost of capital), social capital and social network analysis.

While there were discussions about breaking down silos, I am not picking up any thread extending Nan Lin’s network theory of social capital, that is so useful in connecting social capital to market thinking IMHO.  The money quote from Nan Lin … “social capital, as a concept, is rooted in social networks and social relations, and must be measured relative to its root . Therefore, social capital can be defined as resources embedded in a social structure which are accessed and/or mobilized in purposive actions .”  A merger between individuals, social networks and media has taken place.

In short, since broadband internet connections became more prevalent than dial up in 2004, the dominant media paradigm is shifting away from broadcast towards the Individual as Medium.  Increasingly perception and therefore stable future earnings emanate from IAM instead of broadcast or offline word of mouth networks.  Whereas time on broadcast networks can be easily rented with financial capital (i.e. the 30 second television or radio spot), access to social media networks will only be granted through social capital.

This means that managing these scaled up forms of social capital is at the heart of every enterprise right now.  Not two or three stages of maturity in social capital markets from now.

Were you at SoCap08?

Am I picking up on a missing thread to the conference?  Can you help me elaborate this?  This blog post is unfinished without the input of the organizers and attendees ….

UPDATE: Here is a great overview of the SoCap08 conference from SocialFinance.ca.

Here is the blog round up from Social Capital Markets Blog that I referred to:

Looking for Leadership? Invest in Your Networks

by Michael Cayley & Jonathan Salem Baskin

Lincoln and Roosevelt are heralded as great American leaders in times of crisis, and their vision and fortitude are recognized as drivers of their historic accomplishments. However, we think their greatness had far more to do with their abilities to be catalysts for network effects.

UPDATE@Nov.20: More on Lincoln as master network weaver.

If we’re right, it reveals a very different interpretation of the calls we’re hearing for “leadership” to restore confidence in our economic system. In fact, there’s a good chance that no government policy gesture or announcement will mollify the worries of businesses and consumers, let alone stabilize the markets.

Confidence must emerge from the networks in which we all participate. We need to lead ourselves.

This raises intriguing issues and opportunities for corporate marketers looking to craft a way forward.

“In times of uncertainty consumers rely more on trusted relationships when making purchasing decisions,” says Dr. Brent Simpson, an expert at the University of South Carolina who specializes in understanding how social order is formed.

Stanford University’s Matt Jackson, a leading social network theorist, adds: “People’s friends and trusted social relationships are important in influencing their behavior, and people learn from and emulate their friends. Attitude certainly can play into that, especially in turbulent times.”

So what does this mean for businesses directly impacted by the financial crisis, like banks, brokerages, and insurance companies, as well as any consumer business facing the prospect of declining (or less profitable) sales?

First and foremost, you can’t brand your way out of it. You can’t rely spin doctors to declare your path through the crisis; your customers must see and verify it. While your hired guns are hatching ads and press releases to statically “position” the situation, your networks are trading information and defining it in real-time.

And that information, whether accurate or not, has absolutely nothing to do with how the brand has been envisioned, promised, or promoted. Every network is founded upon the tangible realities of action and reaction, just as the mechanism of their function is cause and effect.

How do you empower these networks to step up and lead?

* Know your networks. Invest in software to map connections between people and content.

* Move your enterprise closer to customers, employees, partners and investors. In the past we talked about flattening hierarchies; now it is time to integrate internal & external sources of value.

* Trust opportunities that emerge from the exchange (don’t just talk, and certainly don’t lecture).

* Make information a utility as ubiquitous as electrical light. If what you share isn’t affirmed and forwarded, don’t repeat it…instead, recast or reimagine it, and find new ways to prove it to your networks.

* Demand feedback and ideas.

* Stop looking for ‘home runs’ and play ‘singles and doubles’ by finding small wins, frequent trials. Make constant adjustments. Allocate resources towinners and abandon losers without blame.

The larger revelation of today’s various crises is that the era of symbolic branding is waning, if not over. The woes of the financial institutions have graphically illustrated to us why.

It was always untenable for lenders to ignore the details of weak/bad relationships and to expect instead that homes or property (i.e. commodities) would appreciate in value with no accord to the strength of home owners (i.e. the source of value that differentiated the commodity). Instead of accessing and fostering the relationship to make the loan a better product, the banker chooses to focus on the derivatives.

All businesses face similar risks. From toothpaste to software services, consumer brands invite significant downside threats when they focus on manufactured identify and perception, and not on the drivers of true business strength: connection, interaction, involvement, collaboration, consumption and the other aspects of human behavior.

There are no brands, or businesses, without the networks of people who make them real. It is in, and through, the behaviors of these networks that the Lincolns and Roosevelts for our business and social communities will ultimately arise.

Jonathan Salem Baskin and Michael Cayley met through the concurrent release of their manifestos in the 50th issue of ChangeThis.

Jonathan Salem Baskin recently released the book Branding Only Works on Cattle. This post also appears on Jonathan’s blog at http://dimbulb.typepad.com.

Please list bright spots below …

Hat tip to Andy Lark for this Meltdown overview from Sequoia Capital.  Restoring trust and confidence seem key to me.  Trust and confidence are at the core of credit. Trust and confidence are social.

SoCap08

Social Capital underpins share values

Fabio Sabatini recommended Social Capital Blog and now I have added it to my blogroll. It is the handy work of Thomas Sander, Executive Director of the Saguaro Seminar at Harvard University’s John F. Kennedy School of Government.

He has a great post up entitled Economy dangling by the thin thread of trust that has some great links to some seminal and more recent contextual pieces on trust, the economy and the banking system.

I hung out because this vid that Thomas includes from “Its a Wonderful Life” kinda says it all …

These are painful times. I don’t know about you, but I find it difficult to focus on emergent value when practical, pressing concerns are breathing down my neck.

I am wondering about the differences and similarities between brands and financial products.

Are there similar factors at work in the debasing of traditional brand value and complex financial products? Aren’t both concepts some sort of derivative?

Will we emerge from this transition recognizing that it is the underlying relationships that contain value yielding assets not commodities like houses or oil or flavored water?

Supernova 2008 – Help ChangeThis

Welcome if you are an attendee or organiser of Supernova2008. 

This is a simple call to action. 

“One the key points in the history of brand management was the whole “Barbarians at the Gate” period, when the link between brand value and corporate valuations was established, touching off a wave of corporate deal making. Deals like Nabisco and Kraft commanded the headlines but the main outcome was the broad realization in global boardrooms that brands are a top priority. They require commitment, investment and special management methods.” – from the Canadian Marketing Association blog, Friday, June 13, 2008.

It is time to link social capital to corporate valuation. Social Capital Value Add is a management method designed to connect the pioneering intellectual enterprises of social capital and social network analysis to value based management and priorities of marketers.

It is designed to greet the challenges of the Network Age that you will be exploring at Supernova 2008 this week.

You can help usher in SCVA by supporting in until June 19 at www.changethis.com/proposals

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Ontario Government Please Invest in Global Links

UPDATE: See post: Spreading a globally oriented innovation meme in Ontario for my proposal to explore another model for seeding and managing innovation.

ORIGINAL POST:

I am not a doctor, but I play one on T.V.

That sort of covers my depth of analysis here. I am not an expert on how to make the VC ecosystem better, but about three months ago I had lunch with someone who is and we talked about the Ontario government’s approach.

A comment on a post over at www.startupnorth.com has turned into a post here because it is a good follow up to MESH, unMESH. Jonas’ points and Mark McQueen’s post both do a good job at covering the shortcomings of the Ontatrio government’s plan to resuscitate the local venture capital industry.

What’s that they say about doing the same thing over and over and expecting different results? Basically, this plan reinvests in the same players and doesn’t dedicate cash to domestic seed/venture startups.

I do not think that there is a shortage of entrepreneurial talent and energy. As some have pointed out, government regulation/programs/tax breaks are actually pretty good in Ontario. And while it is nice to see the Ontario government stepping in to address the VC crisis in this province, few authentic capitalists would argue that it is government’s job to be a venture capital market maker. Just get out of the way.

And if you are going to prime the pump with some cash, try to stimulate some competition and establish high value links to global VC markets instead of reinforcing the tightly bound social network that can sometimes stifle innovation (as I wrote about in the MESH, unMESH).

Here’s what I remember from that lunch. The nachos were good. Israel seemed to have come up with the model that has been emulated with some success.

In those cases, the government provided enough funds to convince top tier US venture firms to open a local office (with Americans contributing some matching funds). Typically a VC partner with a winning record opened the office. The startups received the value add of that experience, the experience of successful partners in the US and most importantly, a bridge into the US market for follow on rounds and marketing.

These foreign VC offices also eventually spun off talented VC partners into stand alone local firms and encouraged globally successful nationals to repatriate.

The effect was the development of a layer of global class venture capital partners and returns on investment that obliged institutional investors to open the flow of cash to the asset class. Ah-ha!

It is tough to message this kind strategy politically though. Who is going to lobby for and sing the praises for this kind of approach? Cash starved entrepeneurs who are too busy trying to get their idea off the ground? The TD Bank who just got a juicy management contract as a reward for sitting on the venture capital sidelines for years? The local VC firms who are the only game in town? Hmm … maybe this is a job for David Crow??

ONTARIO GOVERNMENT FUNDS U.S. VC FIRM TO COMPETE LOCALLY … not a very catch Globe & Mail headline if you are the Premier but it is probably the best job creation strategy possible.

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Privacy on social networks

What happens if the market comes to accept that social capital is directly linked to corporate valuation, as advocated by SCVA, and then FACEBOOK or a publicly traded company is found to be irresponsible with consumer data?

I believe that as the market factors social capital into stock price, the pressure will mount on companies to conform to transparent best practices regarding management of consumer data. The corporation will become more responsive and responsible in their relationship with their customers. The corporation will become more socially motivated. Where do we go from there???

Interesting story about how Facebook is accused of violating user trust in Canada.

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SCVA: Invitation to Great Minds!

Is There Value in Getting Involved?

This blog is an invitation to great minds from a rough and tumble practitioner of business. Criticize, collaborate, pontificate; choose your course, but please provoke the next step for this nagging collection of thoughts.  Shall we put them away and get back to the real (read: cynical) world or dedicate our life to them?

The basic idea is that a new form of social capital that is attributable to social media has emerged as a distinctive contributing factor to corporate valuation and this has changed the way business is practiced. It will change decisions that management makes and how investors choose to place their money. Over the last twenty five years markets have come to accept that the sexiest part of corporate valuation – the premium that acquirers are willing to pay over market trading value – is largely attributable to brand.

However, since Interbrand Corporation, a leading proponent of brand valuation technique since the late 1980s, began publishing its list of the world’s most valuable brands in 2001, two distinct groups of valuable brands can be observed in the top 100 – “broadcast made” brands and brand valuations that are “social network made” (this later category employing powerful network technology).

Great minds will ask: Is this distinction important? And if so, what valuation techniques should be employed to “social network made” companies vs. “broadcast made” brands?

 

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