12 February 2006

Transparency, Not Disclosure

I'll admit, I was too distracted last week to properly blog the latest tempest in a blogs-pot concerning the so-called A-list bloggers jumping on the bandwagon over FON's financing coup. You can read about the controversy over at David Weinberger's blog, as he was one of the A-listers implicated by the Wall Street Journal article:
When Spanish Internet start-up FON Technology SL tried to generate some buzz this past weekend about new funding it had snared from Google Inc. and eBay Inc.'s Skype Technologies, it pitched stories to traditional media outlets.

But the tiny company also got publicity from another source: influential commentators on the Internet who write blogs — including some who may be compensated in the future for advising FON about its business...

That can be a murky issue in today's clubby blogosphere, where many people including venture capitalists, lawyers and journalists write about Web issues and companies — and often, each other — with little editing. The rebound in Silicon Valley's economy, coupled with the popularity of cheap, easy-to-use blogging tools, means there are more aspiring commentators than ever opining about start-ups and tech trends on the Web. And increasingly, it is difficult to discern their allegiances.
The innuendo is that these enthusiastic bloggers stood to financially gain from their recommendations of FON. The fact of this particular case is that, without exception, all the "influential" A-listers did disclose their affiliations with FON so that their interests would be transparent. The other fact is that none of the bloggers were unanimous in their praise - each offered critique and pointed out the doubt, uncertainty and limitations of the current service.

I offered a comment to David that I want to highlight to my readers, since I perceive this incident is an exemplar not of old-media vs. new-media, but of old (read, Industrial Age) business vs. new (read, Ubiquitously Connected and Pervasively Proximate) business. Here's what I wrote:
I think this ... reveals an interesting shift in the business ground under UCaPP conditions. Under the old paradigm and governing rules, there *must* be a fairly direct tangible, motivation (ie, close-to-direct compensation) for contributing to a business's success where the the contributor has a nominal arms-length relationship with the business. The WSJ - not as a member of old-media but as a member of old-business - understands the world according to this paradigm. Hence, the so-called influential bloggers (an accusation with which I wouldn't disagree) must have a pecuniary interest somewhere - it's just a matter for the mud-diggers to find.

As I perceive the changes occurring under UCaPP conditions, the nature of compensation becomes far more subtle and nuanced, and far more indirect. Much of it has to do with reputation as convertible currency. In this case, for example, if David is seen as being an advisor to a company that creates a surfeit of beneficial effects throughout its total environment (eg. creates a greater good in society, is respectful of its people, becomes fiscally sound and profitable, enables other companies to create equally beneficial effects) then David's reputation increases, as does his ultimate economic value in the things he does to pay his own bills - irrespective of whether or not he actually receives direct, or once-removed, compensation from his advising that company. David's own success as a network enterprise (in Manual Castells's terms) is dependent on that greater reputation.

The WSJ has not yet adapted and adopted to the changes in the business environment so created by UCaPP - they're still in the instrumentality and functionality phase, as are almost every other business, institution and organization.
For those who are interested in my research, this is the crux of (one of my) arguments. The vast majority of extant businesses do not understand the Internet. They consider it instrumentally and functionally - what can it be used for as if it was a machine? What are its functional capabilities? How can it make us more efficient, more productive, more profitable? Indeed, this is what is being taught in every single business school around the world (and if you are a professor at a business school that is teaching something else, I'd love to hear from you)! Very few of the pre-Internet businesses, if any at all, and most of the Internet-era businesses, are considering how UCaPP effects fundamentally change the existential premises upon which contemporary businesses are based.

Here's a quick pseudo-test to tell if your business is IA-bound, or UCaPP-ready:
1) Is leadership an important concern for your business?
2) Does your business plan rely on being directly compensated for what you nominally do?
3) Does your strategy consider your stakeholders that would include your employees, your investors, your customers, and your suppliers?
4) Do you consider your intellectual property a vital asset that should be monetized? (Okay, that one's a gimme.)

If you answered "yes" to any of the questions, you are IA-bound; the more yeses, the tighter the binding, and the more you need to read How to Determine the Business You're REALLY In. This paper (which, I'm told, is being taught at several name-brand management schools in North America) was written before I started to seriously think about the problem of the corporation of the future. But it's a good starting point, I think.

Answers to the test:
1) Leadership is an artefact of hierarchy and bureaucracy that is inconsistent with UCaPP conditions.
2) Under UCaPP conditions, indirect compensation is far more effective, and increases not only the company's opportunities, but employee's willing and enthusiastic participation in the company as well.
3) What about your competitors? What about the biological environment? What about the cultural/social (and socially-networked) environment?
4) Come on guys. Together we're all smarter! Aren't you following the discourse on how tightening IP laws is strangling innovation?
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