Signal of Altruistic Type and Corporate Motivations

Collin Douma, the real Johnny Cash of social media, started this train of thought rolling with a worthy request.  He is a great guy and his sister is doing something cool.  Check it out!

I explored memetic branding and altruism in this post over at www.memeticbrand.com.

But the implications of signal of intention are not limited to the branding of a corporation and/or product or service in this era of broadband empowered individuals.

Adoption of Social Capital Value Add ushers in the possibility of new motives for corporate social responsibility. Not only will the corporation be asked to be more accountable for its actions, perhaps the corporation can be encouraged to invest in ways for its social connections – consumers, suppliers, employees, investors, owners, analysts and value added resellers, etc – to move beyond feel-good CSR tactics towards a relationship in which the opportunity is seized by each forging identities based upon greater social contribution.

As I have noted before, there are implications throughout the corporate ecosystem.

“Clarity of shared purpose and principle”, “mission statement” (which is a term that has been around for a while), community values … there are many ways of describing the need for self-organisation through unity of purpose that is characteristic of the era that we live in.

Dee Hock, former CEO of Visa has elaborated the vision of Chaordic Organizations which I think is aligned with this view in his book One From Many.  I have not read the book but I did check out this outline. (thanks to John Ringland for bringing this reference to us).

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Where will co-creation lead us?

I have been seeking some constructive feedback on “Introducing Social Capital Value Add” at a leading forum “Serving the Quantitative Finance Community”.

There I have learned that I am “not a kook” and that “Your writing sucks. In a world of people with no incentive to tell the truth, I am giving you the gift of honesty.”

Tough crowd, eh?

Golly gee whiz, I guess that the quant finance set hasn’t heard that its time to come together Web 2.0 style?

I am still hopeful that the discussion there will improve “Introducing Social Capital Value Add”.

One post has been helpful and noted “This manifesto only speaks about demand-side social capital. A more complete theory would estimate internal social capital, supply-side social capital, and government social capital.”

Most of the examples that I use in the paper focus on “demand-side social capital” but I do point out that the change in media paradigm from broadcast to the Individual as Medium has implications throughout the corporate ecosystem:

click for link to slides

click for link to slides

A link showed up in my inbox a few days ago through an investment banker friend (investment bankers are so much nicer than those quant finance folks!) and the McKinsey quarterly newsletter that provides some good examples of these effects playing out in product development, etc.

It is entitled: Where will co-creation lead us?

Check it out here: http://www.mckinseyquarterly.com/Information_Technology/Networking/next_step_in_open_innovation_2155

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Mark Zuckerburg: looting block party or catering service?

Nic Hodges has a thoughtful post up down under.  Thanks to John Maloney for flagging it.  Nic says,

“If Mark Zuckerberg turned up to your neighbourhood and started throwing you crazy block parties, while at the same time mining your backyard for gold, wouldn’t you want a cut of that gold?”

I agree with and have explored many of the same concepts Nic touches upon in his post. 

I agree that social networks are not owned.  But social network software services like Facebook are privately owned so there is a transaction: service for terms of service.  A problem can emerge when companies like Google and Facebook and others are becoming so entrenched in social networks and our old watchdogs like government and journalists are not motivated or equipped to help us bring the implications into focus.

I believe that the most important thing that we can do to cope with these potential problems is to establish the link between social capital and corporate valuation, to motivate corporate competition, bring into light the true sources of value and make them accountable to investors, markets and users/consumers.  Then the regulators and press gallery will be all over it.

Social networks can not be owned.  Agreed.  That is why I think it is very useful to distinguish social capital from social networks.  I think social capital, i.e. the resources that are embedded in social networks are intrinsicly individual assets.  (Note: the corporation is a form of individual).

By investing in a connection with you, I get flow of information, the exertion of influence, certifications of individual social credentials and reinforcement of individual identity and recognition.  Hey! Smells like social media to me.  That is why I think of social media as a new, scaled up form of social capital that has emerged since 2004 when broadband overtook slow connectivity in the USA.

Aggregation of individual returns result in collective assets and properties such as trust, norms, reputation, authority, sanctions, culture, network structure (open, closed, density, clustering, diameter, average path lengths, degree distribution, bridges, weak ties, betweenness and other forms of centrality, etc.) and location (structural holes, structural constraints, etc.), which are extrinsic variables that contribute to the formation, access and use of social capital. 

This is the stuff that we need to zero in on developing, measuring and valuing at this point – not just page views, unique visitors, CPMs which are all broadcast paradigm metrics.

P.S. I love Michael’s comment over on Nic’s post, “We are all becoming Paris Hilton”. 

Check out Lin, Nan, “Building a Network Theory of Social Capital” ©1999 INSA, Connections 22(1):28-51, see pp.28-31 for compact history of social capital.
 
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Thank You Canadian Marketing Association

A post went up today on the Canadian Marketing Association blog covering ChangeThis and making an appeal in favour of “Introducing Social Capital Value Add“.

Thank you to Jennifer Morozowich and to CMA for your support.

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Ontario Government Please Invest in Global Links

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 http://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 worth emulating and Peru has emulated it 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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MESH, UnMESH – the danger of social capital

I guess a little grass is good. It gets you thinking. As I was out in my yard mowing the lawn, digging up the flower beds, planting … the Florida, the MESH, the bonding and bridging social capital … it came together for me in a moment.  Shall we see if I can piece it together for you again in this post?

A couple of weeks ago I attended Canada’s biggest Web conference, MESH08 at the MaRs Discovery Centre in Toronto. Thanks to Mark, Rob, Michael, Stuart and Matt. It was a great event!

Coincidently, I bumped into Richard Florida while he was walking into his office at MaRs, KD Paine & Joe Thornley were leading the social media measurement meme during the week and I received word from ChangeThis.com that their editorial board has selected my idea to link social media to corporate valuation (vote here till June 19th).

Between Third Tuesday & MESH, I bumped into a lot of people.  I appreciated the chats with David Crow, Jonas Brandon, Scott Pelton, Michael O’Connor Clarke (ain’t he the best!), Jeremy Wright and Duncan Hill.  And as usual, I really enjoyed savouring new connections.  Reconciling Dragon’s Den, Sean Wise, Will Pate and VenCorps as consistent was fun.  David Jones & I connected through our ‘hood.  I am worried. Tamara Kremer might be more fun than me and Collin Douma has already taken the “Johnny Cash of social media” spot.  Networking on the patio through tech star Amber MacArthur to stir up the attentions of Mark Kuznicki was memorable.  Learning more about Radian 6 was key and of course, my personal favourite random media effect … the Mike Kelly, Mike Cayley human alliteration (heh, heh – his blog is entitled “strangely entangled”).

If you have not quite caught it yet … the subject of this post is links.  Helpful, influential, supportive links.  Links that must be invested in, over time, with contribution, sharing and commitment.  Or in other words, the resources that are embedded in social connections known as social capital.

As I reflect on MESH08, I keep thinking of a Harvard Business Review article entitled “When Social Capital Stifles Innovation” co-authored by Richard Florida, Robert Cushing and Gary Gates.

Once again, I want to commend “the MESH guys” on their effort to create the premier web conference in Canada.  My wondering about “the state of the nation” in terms of the Toronto scene and innovation in Canada in general is a testimony to their success. 

So here goes the wondering bit:  Is it impossible to create an innovation led culture and economy when our baby boomer bubble is so pronounced, we underfund startups, the venture capital market is shallow, small populations, small markets and a “branch-plant” mentality of scarcity breeds local hypercompetition?

I don’t think so, but Florida, Cushing and Gates serve a cautionary note.  “Relationships can get so strong that the community becomes complacent and insulated from outside information and challenges. Strong ties can also promote the sort of conformity that undermines innovation. Weak ties, on the other hand, allow a basic level of information sharing and collaboration while permitting newcomers with different ideas to be accepted quickly into the social network. Thus, social groups with weak ties could be expected to encourage innovative thinking.”

I don’t think Toronto (or Canada) is yet taking full advantage of our diversity, but I am hopeful that we are moving in the right direction.  Events like MESH08 and Third Tuesday help (on a different front) by connecting our tightly bound community through weak links to people like Marshall Sponder, Natalie Johnson (Shel says she gets it), Rohit Bhargava and David Gratton (great moderator!).  Panelists – you must really feel like “the new kid in town” when everyone rushes you at the end of your session.

At some level, perhaps the point is – who cares?  Once you understand the Gladwell/Wattsinfluencers-shminfluencers” thing,  but that is a whole other post. 

Brian Uzzi has found that striking a balance between bonding and bridging social capital is the best formula. So perhaps a couple of ideas that may be useful for any community that wants to steer clear of the dark side of social capital …

When a peer tries to innovate, makes a major move, attempts to reinvent an industry, risks financial and social capital and personal ego, a tightly bound social network can either help their fellow lobster out of the pot, or drag them back into the boiling cauldron.  A mentality of false scarcity and local hypercompetition can breed indifference or satifice driven criticism.  On the other hand, mobilizing in support of efforts to build global success stories enriches the home town crowd over the long term, digg it!?.  I am not suggesting a free pass, just a healthy awareness of the pros and cons of a tight social network and enlightened self interest when it comes to the weak links that are so valuable.

Wrt MESH specifically, maybe somehow broadcasting the twitter tweme on public monitors or projecting it can open up the amazing (but exclusive) dynamics of the back channel or the video shot during the conference could be played in the common area to create some feedback loops.

And perhaps there are some ways to bring in even more value packed outsiders into the conference? 

Music, advocacy, Club Penguin, StumbleUpon, Social Media and the Enterprise – I think that the content already meets the new standards for meetings and conferences that make them worth travelling for.  May be some strategies ontop of that great content like:

–  giving each panelist 5 free tickets and asking them to bring a posse of out of towners,

– coordinating twemes and a skype swarm with a sister conference, or, (UPDATE: Here is an example of someone getting going with that sister conference idea mentioned above: http://www.futureexploration.net/fom08/)

– raising the price to $1200 per person but including free air fare (airfair?) scholarships from anyplace in the world.

Just a few half baked thoughts.

Oh, and Jacquelyn, thank you! I don’t take links lightly and I really appreciate this one.

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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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