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“Don’t use the social web as a layer on top of your organisation – use it as the foundation for your income”

“Don’t use the social web as a layer on top of your organisation – use it as the foundation for your income”

By Natasha Friis Saxberg

Lane Becker studied art history and dreamed of a professorship, but became a web pioneer in Silicon Valley. He has resided in this epicentre for communication technology since 1994. It was he and others around him who defined the “blog”, and were behind the development of Google Analytics, Adaptive Path and AJAX (JavaScript), which generates the simultaneous suggestions we get when we put things into Google’s search box. SCENARIO’s Natasha Friis Saxberg met Becker for a talk about Silicon Valley’s wholly unique entrepreneurship ethos, which he now sees spreading to the rest of the world.

I first met Lane Becker at an internet conference in Germany in 2009. He was from Austin, Texas, and I was from Copenhagen, and we hung out ”backstage” where there was a free bar, and we had plenty of time. He did not look like the usual geeky web entrepreneur of the kind we know from Europe, but rather a lively, curious pirate who had given up searching the seven seas for treasure. He was an inspiring thinker and groundbreaking serial entrepreneur who started his internet career in 1994. This was when he dreamed of becoming a professor, at a time when only one book had been published about the internet: O’Reilly Media’s Whole Internet User’s Guide and Catalog (1992), written by Ed Krol. Of the book’s 300 pages, only three described the internet, and that as “a new invention where physicists can exchange formulae.”

In 1999, Lane started his first company, Deep Leap, but the dot.com bubble burst the following year, and he had to close the company. Instead, in 2001 he and Peter Merholz started a consultancy firm where the focus on technology was replaced by a focus on people and value. Adaptive Path became the world’s first company to work with user experience in a social and cultural context. Lane Becker and I met again recently, and I asked him what the entrepreneurial techies in Silicon Valley are developing right now and why the principles found on the San Francisco peninsula will be the future for companies that want to survive.

“Silicon Valley is a small, isolated world and still the only place you need to be to observe all the signals and patterns that shape the future in technology and entrepreneurship. If everybody here sees and does the same thing, a new trend has been created that at one point will roll out over the place’s boundaries and flow to the people. Right now I see that this ethos is spreading around the world. This entrepreneurial epicentre, which has been the foundation for massive change and over decades has created groundbreaking communication technology and reached the world with more than just its chips and high-tech inventions. The desire to create openness and the urge to explore the technologically impossible and break with status quo is exported, and today an entire generation of young people are aware that they can create extreme change if they just have access to a computer. This isn’t just true for Larry Page and Mark Zuckerberg. Any kid in Egypt can make a protest page on Facebook and lead a popular uprising. This is precisely what has defined the Silicon Valley spirit for decades, and now it is spreading. What we will see the next 5–10 years is that the technology’s entrepreneurs and the opportunity for transparency and openness will reform organisations, nations, and business models all over the world,” he asserts.

SCENARIO: In Europe, we still experience that the hard part of an organisational paradigm shift is that companies are afraid to lose control and risk transparency. How do you see the future for companies that hesitate to move forward?

“Any company that isn’t now asking itself how they can create a more open and committed business will be replaced by competitors that aren’t locked in by this problem. Traditional companies must hence embrace change, but this is hard, since the value in organisations has always consisted of stock bound to knowledge. This knowledge, which a lot of people were hired to protect, had to be paid for if you as an outsider wanted a part of it. Since so many companies have been guided by this principle, they now find it difficult to release control – for they are used to accrue value from this control. Now, however, value isn’t just stock any more; the value consists of ‘flow’. Flow, where information can move freely and rapidly through the company and where the cost of making errors is far lower than the cost of trying to avoid errors.

“Another paradigm shift for companies is that they traditionally have based their business around transactions with cash dividends as the goal of the transactions. A company centred around transactions will only attempt to create linear financial transactions where each dollar given out is measured against the dollars coming back. In return, a company built around relationships will try to create all sorts of interactions that can be connected to a circular relationship model. In the end, this model creates more value and more profits because the goal isn’t a single project, but rather the sum of the many ways customers can meet a company.

“It is just as important to remember that good management and healthy company operations for many years has been a matter of not making mistakes. After all, the stock-market value of a company typically depends on whether you make mistakes or the world thinks you have made a mistake. Just one wrong statement can have enormous consequences. But that is the old world order, and we no longer live in a time where breakdowns are a disaster. Instead, we live in a world with daily server breakdowns. Fortunately servers can be rebooted, and the same is true for a company, and the modern organisation knows that mistakes aren’t just unavoidable, but even a necessary consequence of operations. Development, test and mistakes create progress.”

SCENARIO: Every morning an army of employees goes to work across the world. At the same time, they operate privately in a flow involving their social networks. When will these people rebel against the restrictive framework and rules of the traditional organisations?

“We have long talked about an entirely new generation of youths, the Millennials (born 1980 and later), who expect flow; i.e., free knowledge sharing and transparency. They don’t want Knowledge Management or Content Relation Management systems, which is the way we for decades have tiered and protected knowledge in companies. So, it you want to attract the talents of the future, you must create the organisation of the future without Knowledge Management. The development may go two ways: Either the young will influence and move our existing organisations, or they will rebuild everything from scratch.

Something else is what Google spotted long ago, namely that in a network, there’s always someone greater than yourself – no matter how big you are. Google, which is a gigantic organisation, has built their company from precisely the recognition that the rest of the internet is greater than they are. Because of this, Google acts contrary to everybody else, who most often act like isolated islands that refuse others access. Facebook, which is more closed than Google, also knows that it is simply a piece in a larger game. All they try to do is to build their own social graph by tracking and mapping the network they are a part of. Companies that sell physical products should also see themselves this way in recognition of the fact that more happens outside the company than within it.”

SCENARIO: Your latest web company is Get Satisfaction. How has this moved other companies towards recognition of there being forces outside – not inside – the organisation that influences them? Have you succeeded in teaching that it is companies’ outside relationships that in reality determine their innovative ability?

“In Adaptive Path we experienced, among other things, that customers enjoy interacting with each other about their support questions in an open forum outside companies’ closed support environment. In early 2007 we then launched Get Satisfaction, which offers communities for companies, enabling them to facilitate an open dialogue with and between their customers, who in practice can help each other before the company can do it. Get Satisfaction is based on the philosophy that the relationship is the platform, and that the open, transparent and committed approach not just is an expression of the philosophy about working smart, not hard; it can also be measured directly on the bottom line. We found that companies can get up to 85 percent fewer support cases simply by opening a customer service community outside of the company. The companies that caught onto this idea now find it far easier to loosen up in relation to other business areas, allowing the customers to also create value there. The customers are involved rather than excluded.”

SCENARIO: But what you outline is the social web, which hasn’t simply moved out of the IT and marketing departments, but in part also all the way out of the company…

“Even though we have come further in the US, there still are many companies that remain at a regressive level where a lot of obvious opportunities to utilise the internet’s potential for creating relationships are lost. Companies often look at the social media platform as pure entertainment – or as a dangerous move towards something potentially uncontrollable and hence dangerous for the company. What if a dialogue on a blog between en employee and a dissatisfied customer gives the impression that the company has screwed up? Better, then, to hold back on openness. My own approach is the diametric opposite: Don’t use the social web as a layer on top of your organisation – use it as the foundation for your income.”

About the writer

Natasha Friis Saxberg is a member of the SCENARIO trend panel and is an associated staff member at the Copenhagen Institute for Futures Studies. She works as a web entrepreneur, lecturer and writer.

The next project

The next thing serial entrepreneur Lane Becker plans to do is to revolutionise the venture capital sphere, so he has just joined Freestyle Capital. Freestyle Capital is not centred around bankers, but is a foundation and a network of successful entrepreneurs who are ready to help other start-ups become successful.

Pioneers

Peter Merholz from Adaptive Path is registered in Oxford English Dictionary as having invented the word ”blog”. In 2001, there were about 10 blogs in the world, and Adaptive Path had two of them. One of the other co-founders of Adaptive Path, Jesse James Garrett, in 2000 wrote a book about user experience and here defined the groundbreaking technical term AJAX (Asynchronous JavaScript And XML). Simply put, this term describes everything that happens in Google’s search box when we type in a word and suggestions appear before we click “search”.

API

The openness to the world at large about knowledge – what constitutes online currency – can be seen in online companies’ open API (Application Programming Interface). Through the API, developers around the world can access the company’s data and products and adapt them to their target group. In practice, this means companies like Google, Facebook and Twitter let the market innovate for them while they achieve extreme market coverage. They still own their data, but provide access to them, making them constantly flow through their surrounding network.

When the phone came up short

When Northern Europe was hit by the ash cloud from the volcanic eruption in Iceland, the Scandinavian airline company was able to use its Facebook and Twitter pages to reach far more customers at once than they otherwise could. And these customers could help each other. The only real alternative was the telephone, where Scandinavian was limited to helping one customer at a time, even though most people phoned in with the same question, requiring the same basic answer.

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