Restoring Balance in the New Year

A new year is upon us and it is time to make those resolutions, promising ourselves that we will do better this year.

In keeping with this time-honored tradition, let me start with a firm resolution to up my game on this blog.  Over the past six months, my postings have tended to be few and far between.  I have been consumed with the challenge and excitement of building a new research center for Deloitte & Touche USA LLP here in Silicon Valley.  We are now up and running (well, at least walking quickly but still in stealth mode) so I feel comfortable devoting a little more time and attention to these postings. Of course, I continue to be hampered by my inability to master the art of the pithy blog posting – once I get started on one of these, it is really hard to stop.

This posting won’t be any different. In the spirit of New Year’s resolutions, I’d like to offer a set of resolutions regarding some of the themes that I want to explore in the year ahead.  Many of these resolutions offer a contrarian take on some of the conventional wisdom floating around these days, especially in the Internet world.  Without revealing too much (at least not yet), this posting will offer a preview of some of the perspectives that will shape this blog over the next year.

I will explore the growing value of stability.  As I venture into the dot com corridors of Silicon Valley these days, I get more than a whiff of those heady days in the late 1990s when all moorings were cast aside and we plunged into the strong currents of change, celebrating the fact that “nothing will ever be the same.”  In the process of embracing change, though, we often lose sight of the paradox that stability becomes ever more valuable as more and more of our surroundings are put into play.  Institutions and individuals that understand where and how to offer stability will create enormous value in the changing times ahead.

I will explore the diminishing value of transactions.  Many of us have become enamored with the ease of doing transactions on the Internet.  One click shopping is deeply seductive.  The transaction mindset has even made headway on social networking sites where the ease of “inviting” friends has drawn many of us into an escalating game of building ever larger social networks of “friends.”  We talk glowingly about relationships on the Web, but too often when we take a closer look, we find that many of these “relationships” are simply transactions under a different guise. Focusing on transactions will guarantee diminishing returns. Deep relationships become increasingly valuable in times of widespread change (and, yes, I know that “weak ties” are also important, but not as a replacement for deep relationships – in fact, deep relationships are essential to capture the full value of weak ties).  Once again, institutions and individuals that understand where and how to build these deep relationships will have a significant advantage.

I will explore the diminishing value of advertising.  Ask the management team of any Internet business about revenue models and, more likely than not, you'll get the confident answer that advertising will provide the necessary revenue.  Even enterprise software businesses are beginning to consider advertising as a promising revenue source.  There’s no doubt about it, Internet advertising expenditures will continue to rapidly grow over the next several years. But I have more than a passing suspicion that advertising revenue streams are vulnerable in the longer term.  As the long tail of advertisers crowds onto the Internet and as customers become more protective of our attention, I suspect that online advertising will begin to run into seriously diminishing returns. Without developing the detail right now, let me suggest that traditional models of advertising where vendors pay for messages to be delivered to prospective customers will be challenged longer-term by various forms of collaboration marketing and advisory services where customers pay trusted advisors to recommend relevant products and services.  In the short-term, steadily improving algorithms for targeting ads will continue to draw advertisers onto the Internet and provide an attractive revenue source for Internet businesses. Unfortunately, this short-term advertising revenue growth has had a narcotic effect and made a lot of online businesses lazy. Longer-term, I anticipate that most businesses online will have to make money the old fashioned way – by offering products, services and experiences so valuable that people will actually pay money for them. Those who begin to develop this discipline today will profit in the long-term.

I will explore the growing value of place.  I have actually addressed this theme already.  As many of you know, I believe the world will become a lot more "spiky" , while paradoxically becoming flatter in terms of connectivity.  The much vaunted “death of distance” joins the “paperless office” as a too simplistic extrapolation of information technology. The more connected we become, the more intense our need to accelerate talent development will become.  People who come together in dense urban areas will be much more successful in developing their talent than those who remain isolated in remote rural areas, even if they have the best broadband connections.  Most people understand this.  That is why, on a global scale, the trend towards urbanization is accelerating rather than slowing down, even among the most wired digital elites in our younger generations. Place matters more than ever and where we choose to live will increasingly determine how successful we become.

I will explore the growing value of bold leadership.  In an era where the “wisdom of crowds” and empowerment are the watchwords of the digerati and where we generally have become increasingly cynical about the leaders of many of our largest institutions, we may lose sight of the importance of visionary leadership. We can take the notions of emergence and self-organization too far and dismiss the role of forceful leaders. In times of great uncertainty and rapid change, unprecedented opportunities arise to shape our environments to create even more value.  Shaping requires deep insight into the fundamental forces at work and powerful personalities to communicate conviction and persuade many who are on the sidelines that the rewards outweigh the risks. Even our most cited examples of collective intelligence, initiatives like Linux and Wikipedia, would have died stillborn (as most open source initiatives do) if it had not been for the forceful leadership of personalities like Linus Torvalds and Jimmy Wales. To be sure, this new generation of leaders employs a different set of techniques relative to more traditional leaders, but their leadership is essential to the success of these initiatives. Those who are able to exercise this forceful leadership and attract and mobilize others will reap significant rewards in the decades ahead.

I will celebrate length while appreciating brevity.  OK, this may be somewhat self-serving.  Having never mastered the art of the short form, I necessarily harbor a certain attachment to longer essays and, dare I say it, even the endangered book.  In times of rapid change, there is an understandable temptation to sample briefly and quickly from many sources, never lingering too long with any one idea or source.  As we race to keep up, we avoid or quickly discard anything that threatens to take up too much of our valuable time and attention.  But the risk is that we lose any sense of texture or deep structure that would help us to make sense of the changes going on around us and to make connections that might otherwise remain hidden in the whirlwind of events and distractions occupying our day. Vicious cycles begin to play out, where the more we surf from one source to another, the more sense of urgency we develop about falling behind amidst the rapidly proliferating long tail of resources available to us.  Those who invest the time to go below surface events and explore deep structures will be in a far better position to anticipate change and stake out positions that matter rather than simply racing to react to the latest unexpected event and spreading themselves precariously across to many fronts.

Before everyone jumps on me for the contrarian and somewhat retrograde views expressed above, let me hasten to add that I too appreciate the value of change, transactions, advertising, virtual connections, empowerment and brevity. Having recently returned from Vietnam, though, I have gained a renewed appreciation for the traditional Asian concept of yin and yang – two fundamentally opposing forces that come together to complete the world.  I simply want to restore some of the balance that we often lose when we get caught up in the events of the moment.  That’s the essence of my New Year’s resolutions – invest the time required to maintain balance in a time of great flux. I promise to be more frequent in my postings, but probably not a lot shorter.

Comments

[Ian Thomas]

John, I have to say that I was cheering your thoughts on your inability to be brief. I find that the clamour for sound bites is an increasing problem where people not only refuse to engage in considered thought because it's too complex but also see it as a failing in people who do as it's 'academic' or not 'commercial'. Sadly, however, I find that this attitude often (always) leads people to miss the significance of how many small things are just components of larger and more fundamental trends, leading them to just see the trees. For me broad strategic thinking and a quest to connect seemingly disparate ideas has never been more important than in our accelerating world and so I'm glad to see someone of your standing defend taking the time "to below surface events and explore deep structures"!

Keep up with the long posts - you are one of the few bloggers to really write considered and rounded pieces you can get your teeth into!

[Rachel]

All good resolutions John! I look forward to reading your blog this year!

[Marc Resnick]

Please forgive me if I plug your book here, but these ideas seem very well matched to your idea of the "process network." Stability of the performance fabric allows individual network participants to focus their capability building where they have a specific advantage. The orchestrator facilitates deeper relationships than would be possible in the bazaar model.

Thanks for getting back into your blog. I look forward to reading more.

[Michael_ONeil]

John,

Thanks for getting back to blogging with such a thoughtful list! While I agree with most of it, I particularly endorse the notion that advertising conveys diminishing value.

Broadcast-style media - including online display ads - relies on impression-based communication to build awareness and preference. Today, though - and especially, on the Internet today - there are simply too many sources of input to make this a successful "stand-alone" technique. As we are increasingly besieged by requests for attention, our ability to retain any individual message is decreased. Eventually, we tune out advertising messages altogether, through use of ad blockers, or simply by ignoring the banners on the screen.

This isn't to say that traditional impression-based communication is dead or dying. But if you view the return on spending as following a slope from "each new dollar reaches a new person" to "this new dollar had no impact", I think it's clear that over time, the slope is becoming steeper, and the associated cost of influencing behavior through impressions alone is getting higher.

I believe that marketers are coming to understand that they need to supplement "broadcast" techniques with interaction - dialogues involving customers, prospective customers, influencers, and potentially, competitors as well. Most marketing executives aren't comfortable with this "un-controllable" communication. But through time, they are realizing that with or without their participation, conversations are happening around their products, involving these customers, prospects, influencers, and competitors. The question isn't "do we prefer interactive media to more controllable broadcast models?" - it's "how do we establish an authentic voice in the online discussion, and how do we balance our focus and spending across interactive and broadcast options?"