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The new networking

The new networking

A guide to the latest issues that dominate much contemporary global thinking.

Two dogs are sitting in front of a computer screen. One turns to the other and says: "On the internet no one knows you're a dog." This famous New Yorker cartoon by Peter Steiner was published 15 years ago and was more prescient than the cartoonist realised. Steiner could not have known how much the issues of identity and trust - within our organisations, our social groups, online, in public and in private - would come to dominate much contemporary global thinking. It's all about the networks

For the past few years, serious strategy theorists have been wrangling with the idea of networks. The internet is just one of the many sets of connections we are all part of each day. Theorists are focusing on how to design these networks for strength, trustworthiness and efficiency, and how to take commercial advantage of them.

Imagine the organisational chart of your company. Now overlay that with a map of the other kinds of networks that are influential within the organisation: the work networks that make up part of everybody's daily routine; the social networks, with whom people check in to see what's going on; the innovation networks through which people develop ideas; the expert knowledge networks, the career guidance networks, the learning networks. Everybody in the organisation may move within each of these networks, but play different roles in each. Understanding the nature of the links within these networks, the different ways people use them and the aggregate amount of trust they create can help organisations perform more efficiently, driving down the amount of politics and organisational friction, and upping the level of purpose and productivity.

Corporate anthropologist Karen Stephenson's work in mapping and overlaying organisational networks laid the basis for much of the multi-disciplinary thinking in the field. Now a rich seam of strategic insight, social network theory, under-girds the work of scholars such as Ron Burt at the Chicago School of Business and David Krackhardt at Carnegie Mellon, as well as the development of "hot spot" theory by Lynda Gratton at the London Business School. These theorists look at the quality of relationships within and outside organisations, how information is spread and how influence works.

How influential are influentials?

Malcolm Gladwell's "tipping point" theory of a few years ago proposed that a tiny number of "superinfluentials" - people whom others trust deeply - can take up a trend (a brand of shoes, a gadget) and start a society-wide rage. By tapping in to the right kind of people - celebrities, for instance - marketers can spread their products like, well, like a virus, all without spending a penny on advertising.

But according to Duncan Watts, a network theory scientist at Columbia University and chief researcher at Yahoo, influentials have no special role in establishing trends at all. Watts programmed a series of computer simulations of the way influence spreads, which showed that trends are just as likely to be started by a random Joe as they are by, say, Posh Spice. Watts' experiments indicate that the major influence on whether something is going to be hot or not is how susceptible society is to the trend. It doesn't matter how high-profile Kate Moss is, she wouldn't have been able to convince British women to combine Wellington boots and shorts if they weren't ready for it. Companies looking to start trends, therefore, should spend less time hunting down celebrities to flog their ideas than they do tracking social trends in general.

Trust me, I'm a blogger

Even Watts doesn't deny that some people simply are more influential than others. Bored billionaire blogger Marc Andreessen (see pmarca) definitely is. Having made his stash from floating Netscape way back in the days of Internet 1.0, Andreessen is now an industry observer who resources his own reporting better than any of the established media brands. As a shareholder of Yahoo, I might like to commission a report from the top lawyers in the US about the implications of the takeover battle with Microsoft. But I can't afford it. Andreessen can afford it, and he does it, and he publishes the report on his blog.

Andreessen and contemporaries such as Arianna Huffington (the Huffington Post) and Michael Arrington (TechCrunch) are at the cutting edge of a trust debate that is consuming the traditional media. Last year in the UK, broadcasters including the BBC were caught out misleading the public in a series of scandals. High-profile speeches have been devoted to how the media can win back the public's trust, from broadcaster Jeremy Paxman's address to the Edinburgh International Television Festival to Tony Blair's last major speech at the end of his prime ministership.

Adrian Monck*, professor of journalism at City University in London, says the problem is not that the media is no longer trustworthy (was it ever?). Instead, if we want trustworthy reporting, society should help create it by reforming freedom of information laws and making society more transparent.

The internet seems to be generating this activity all on its own, with the advent of sites such as FactCheck.org and Politfact.com, which check every word the politicians say, and sites such as wikileaks.org which are doing journalists' job for them.

Other sites, such as Digg.com, use the public itself to solve the trust issue, by getting readers to rank news stories and other online content according to how interesting, and trustworthy, they are. Run by 37-year-old Jay Adelson, who was named by Time magazine as one of the 100 most influential people in the world, the site gets about 26 million visitors a month.

Digg's big idea is to aggregate the knowledge, time and web-surfing labour of its audience in order to create compelling and trustworthy content. It's an example of what Canadian management guru Don Tapscott calls "wikinomics", the new economics of mass collaboration.

A wiki, such as that which forms the foundation for Wikipedia, is an online tool for mass collaboration. If I write an online essay about, say, the big ideas of 2008, you could edit it, and a wiki could aggregate the content and reveal who contributed what.

Tapscott and his contemporary ideas-men believe mass collaboration of the Wikipedia kind is the way forward for corporations of all kinds - that the design of anything from a jet aeroplane to mutual fund products can be done using open-source collaboration. The trick for companies will be to move from the traditional hierarchy and control models to taking advantage of the possibilities afforded by global models of collaboration.

The idea of "open source" is also the next big idea for the internet itself, according to Tim Berners-Lee. He sees it evolving from "world wide web" to "giant global graph": from a series of interlinked documents to a series of interlinked subjects or people. Berners-Lee and his colleagues in the "semantic web" movement believe the problem with the internet at the moment is that it compartmentalises information according to the owner of the "site" rather than the owner of the information.

While there is only one me, online there is Facebook me, Flickr me, Google me, Plaxo me, a couple of MySpace mes, and probably a dozen others, many already long forgotten. On the Semantic Web, each of these networks could talk to each other, be open source, and connect seamlessly, with information delivered to me in whatever format I want.

According to Charlene Li, a consultant at Forrester Research in the US, social networks will be ubiquitous, "like air". Instead of users logging on to Facebook to see what their friends are doing, the news will come straight into their email, or customised home page, or RSS reader or SMS. It is already happening.

Concerns about privacy, data tracking and online surveillance, and the tension between security and liberty, will become a core debate as societies come to terms with the new kinds of trust needed to live in a world of perhaps three billion online souls.

Doing well by doing good

In the eyes of many, global capital has at least two major crimes to answer for: creating a disparity between rich and poor, and threatening the global environment. The world's largest companies are keen to be seen trying to square the society, environment and money circle. "Doing well by doing good" is already a cliché, but for global capitalism's leaders it is a big idea of the moment. They must argue that we can trust them and the juggernauts they steer with the future of our planet.

At oil supermajor Shell, CEO Jeroen van der Veer uses publicly released scenarios to encourage his company and governments around the world to tackle climate change through innovation and policy, while Indra Nooyi, CEO of the global snack food behemoth Pepsico, has as her motto "performance with purpose".

Bringing a no logo-ish perspective to the world of shareholder returns, Nooyi says: "If all you want is to screw this company down tight and get double-digit earnings growth and nothing else, then I'm the wrong person. Companies today are bigger than many economies. We are little republics. We are engines of efficiency. If companies don't do [responsible] things, who is going to? Why not start making change now?"

Paul Hawken, who wrote The Ecology of Commerce in the 90s, now thinks business needs to get to grips with the convergence of the environmental and social justice movements as "the largest social movement in history" (see page 50.) Hawken and his colleague John Picard are taking their arguments for businesses to mimic natural systems to their clients, which include Sony, Lend Lease, BP and Interface, the world's largest carpet manufacturer, which has pledged to zero its net environmental emissions by 2020. In this line of thinking, small and local are two powerful big ideas.

The smartest brains in the world of economics are trying to find ways of applying the efficiencies of the private sector to social problems (see philanthrocapitalism story on page 41). Others have their eyes on lifting the lifestyles of the middle class in the developing world. In January, Ratan Tata, automaker and head of the sprawling Indian conglomerate Tata Group, unveiled the NANO, a glamorous little bubble of a car, with a 623cc engine that will muster 33-brake horsepower. Tata intends to sell it for 100,000 rupees (about $2500). If it lives up to its promise, "the people's car" will be affordable for hundreds of millions of middle-class Indians and will revolutionise the car industry around the world. With other carmakers designing low-cost models, Tata may have opened up a whole new market.

Others too are being audaciously good. On the last day of 2006, former SAP executive Shai Agassi pitched a national zero-emissions car scheme for Israel to the country's prime minister and was told to come back with hundreds of millions in venture capital and a car major onboard. So he did, within a year hauling in more than $200 million and Carlos Ghosn, boss of Renault and Nissan, to make a new kind of electric car for the Israeli market.

China rising

In What Does China Think?, European think-tanker Mark Leonard dives into the intellectual world of China and discovers a roiling debate about the merits of development, democracy and the markets. He also finds that the entire western think-tank community could happily fit into the west wing of just one of China's giant policy development bodies.

In China, "harmony" is the word of the decade, with slogans such as "harmonious society" and "harmonious development" peppering speeches, banners and headlines. Fang Ning's 1997 article "Socialism is about Harmony" was the inspiration, and his thinking, about direct democracy at the margins - using localised surveys and public consultations to develop policy - flavours much political discussion. Meanwhile, economists such as Hu Angang and Wang Shougang are debating how much focus should be put on social goods such as the environment and equality. Now that the market is driving economic growth, they ask what should be done with the wealth. Can China foster a model of development that benefits all its citizens?

Will all this pay off as China struggles to gain the trust of the west, whether around its exports of toys or pet food - or its ability to present a harmonious front when it hosts the Olympics?

The Ludic principle

The hottest commodity in the global markets is the ability to read the economic runes. Like other commodities, however, its value is directly proportional to its rarity. The whole credit crunch affair was what author Nassim Taleb considers a "black swan" - something that could not be predicted by our linear ways of thinking. According to Taleb's "Ludic" fallacy (from the Latin ludus, to play, referring to the misuse of games to model real life situations), humans confuse the "maps" that we use to interpret the world with reality. In the same way, the financial models on which many systems are based cannot predict what has not been programmed into them. Even former US Reserve Bank chairman Alan Greenspan used a Ludic-like argument in a public letter defending his role in creating the bubble that went bang last year. "A model, of necessity, is an abstraction from the full detail of the real world," he wrote in the Financial Times.

A burgeoning class of economists is now studying the other end of the economic transaction spectrum - the level of the individual. In the UK, Tim Harford, the "Undercover Economist", investigates such mysteries of life as why prostitutes agree to unprotected sex for just a little more money, or why we should pay our CEOs even more to do even less. In Australia, Austrade's chief economist, Tim Harcourt, uses The Airport Economist to explain what on the surface appears to be odd consumer behaviour. Meanwhile, Origin of Wealth author Eric Beinhocker proposes an open-source model of economics, arguing against the closed system thinking that leads to the kind of Ludic snafu that has taken a bite out of so many big-city bonuses this year.

The Ludic concept is now moving beyond its origins in the philosophy of finance. Garrick Jones, a musician cum social psychologist cum innovation guru, and his Ludic Group uses "design thinking" to help complex companies see their way through the Ludic problem in strategy setting. The idea is that combining disciplines and coming at problems from a variety of directions, using as broad a range of tools as possible, will build as good a vision of the future as any.

Autopilot

Sebastian Thrun's robots are good drivers. The Stanford University robotics professor recently led his team in an event in Victorville, California, where cars had to execute complex manoeuvres in traffic, including merging, passing, parking and negotiating intersections, sans drivers. Thrun's team came second in the US Defense Department-sponsored event.

Banksy

The enigmatic British artist's stencils speak about modern evils in a very anti-establishment way, and he's popular with the Gen Y crowd. A Banksy original graffiti recently sold for more than $450,000. The artist's latest work in central London is a comment on Big Brother society: it depicts a boy painting the words "One nation under CCTV" as he's watched by a security guard.

Clouds

Forget about investing in soon-to-be-obsolete silicon. The latest offering from amazon.com is cloud computing: selling computer hardware as a service. Users rent storage, data and computer processing ("geek treats") at cheap rates. Amazon has spent more than $US2 billion on technology to turn clouds of bits into the retail equivalent of the next Harry Potter.

Dilbert.com

Lets fans take up the cartoonist's pen. Users can create and send online "mash-ups" of cartoon strips with altered speech bubbles. The site illustrates the media's new direction: more conversational and interactive. Dilbert's creator, Scott Adams, plans to comment on fans' work. Cartooning is now a competitive sport.

Energy

Steel-making is a dirty business and Californian entrepreneur Mike Hart wants to clean it up. The Chinese steel industry is very interested. Hart's company, Sierra Energy Corporation, has developed a system to turn landfill waste into clean-burning synthetic gas. His technology requires 50 per cent less coke, with a potential efficiency bonus up to 40 per cent.

Flicker

Subliminal advertising is banned and hugely unpopular with consumers. The best example of mental scarring is the "Blood Bath" interactive room installation. After entering the toilets of a German nightclub, the lights switch off and a black light reveals a bloody crime scene with the message: "See what others don't see." The tactic was to promote thriller and horror films on TV.

Gratis

We're hopeless suckers for anything "free", according to economist and MIT professor Dan Ariely's book Predictably Irrational. In one experiment Ariely offered normally high-priced Lindt chocolate truffles for 15 cents and ordinary Hershey kisses for a penny. Most chose the truffles. But when the price was cut to 14 cents for the truffles and "free" for the kisses, most chose the kisses.

Haptic

Japan telecom giant Nippon Telegraph has developed a system for entering rooms without the need for ID cards or keys. The technology uses electric fields: data from a small device pulses through clothes, handbags or shoes and turns the surface of the human body into one big data transmitter. No need to remove the device to open sesame - just touch.

Informer

Your mobile is forever dropping digital crumbs, for example as it pings the phone tower it reveals its location. This sort of data fascinates Sandy Pentland, professor of media arts and sciences at MIT, who filters through mobile phone data to study human behaviour - a process he calls "reality mining". It offers a glimpse into workplace dynamics, community health and wellbeing.

Juvenile science is using brain imaging and molecular genetics to find out why good kids go bad. Terrie Moffitt, from the Institute of Psychiatry in London, says there are two types of teen criminal: those drawn by the allure of being a "badass" but who outgrow it; and those who show antisocial behaviour in kindergarten and risk becoming lifelong criminals.

Kindle

E-book readers are on the rise. Amazon's new portable, hand-held reader allows users to download books, newspapers and magazines. The device is one of the first consumer uses of a low-power, cheap, easy-to-read display, and it could be the iPod for digital books. Priced at $US399, the device is easy to use - and e-books cost less than real ones do.

Life

Icelandic-born artist Olafur Eliasson's exhibition Take Your Time at the Museum of Modern Art in New York blends science and natural phenomena to create a truly multi-sensory experience. It lays out a visual theme, then asks you to wait, watch and discover. The deliberately simple art aims to spark a visceral reaction to life itself.

Manga

Business author Dan Pink is riding Japanese pop culture's wave of popularity. His latest book, The Adventures of Johnny Bunko: the last career guide you'll ever need, is done entirely in comic-book form. Illustrated by Rob Ten Pas, the 160-page graphic novel imparts career advice and lessons for success.

Nip/tuck

We're avoiding the knife. According to market researcher Mintel, there has been a 754 per cent jump in the number of non-surgical cosmetic enhancement in the surgery heartland of the US over the past 10 years. Compare this to a 114 per cent rise in surgery. Last year quick-fix treatments such as Botox, micro-dermabrasion and laser hair removal amounted to almost 10 million cases.

Orient

Hiroshi Moriya is an authority on Chinese culture and philosophy. His latest book, The 36 Secret Strategies of the Martial Arts, is a collection of ancient Chinese maxims that encapsulate some of the Far East's most cunning battle tactics. The volume's six "strategic" parts are filled with short, pithy takeaways such as: "Borrow a Sword to Make Your Kill" and "If You Covet It, Leave it Alone".

Posukuru is a minibus that travels to areas in Japan that don't have access to financial services. The vehicle can accommodate about 30 people, and has an automated teller machine and postal services inside. The concept is being trialled by the privatised Japan Post Service.

Quick

Multi-taskers and bored commuters demand speed. Say hello to snack drama: content you can watch online or on your mobile phone. Example: Forget the Rules (www.forgettherules.com), which airs on the Optus mobile network, follows the lives of three flatmates living in Fitzroy, Melbourne, with episodes lasting only a couple of minutes.

Ring ring

Could a mobile phone help end global poverty? There are more than 3.3 billion mobile-phone subscribers worldwide, which means at least 3 billion people don't have one. Spice Ltd is one of many telcos aiming to make cheap and affordable handsets for the developing world. Based in India, Spice has made a "People's phone" handset priced at about $US20.

Sex

Testosterone is good for business, according to a Cambridge University study, but too much can be risky. The study found hormone levels in stock market traders influence financial events. On financially profitable days, a male trader's testosterone skyrockets, and he's likely to make more money. Because testosterone rises in a bull market, resulting risk-taking behaviour could exaggerate the rally.

Test tube

Want to know your genealogy or whether you're at risk of diseases such as diabetes? Anne Wojcicki and Linda Avey hold the answers. Their Silicon Valley lab, 23andMe, is among a handful of companies that offer a mail-in genetic testing service. Simply spit in a test tube, pop it in the post, and in a few weeks you'll have unlocked your genome and have access to it via a secure website.

Umbrella

There are more than 100 million umbrellas made each year in Japan and about 420,000 of them end up being abandoned. The "shibukasa" project, developed by a group of university students, collects discarded umbrellas and lends them out to citygoers at cafes and participating stores free of charge as an incentive

to re-use them.

Virtual reality

The University of Tasmania plans to open the world's first human-computer interface laboratory next year. Two virtual reality studios will be equipped with three huge screens to provide individuals wearing polarised 3D glasses with full 3D effects. The simulation technology is useful for surgeons, architecture and design, visual and performing arts.

Wi-power

Imagine devices charging themselves without being plugged into a power outlet. Marin Soljacic, assistant professor of physics at MIT, is working on technology to do just that. He and his colleagues recently powered a 60-watt light blub through the air over a distance of two metres. This technology has the potential to eliminate the need for messy cables and power cords.

Xtinction

Company executives will increasingly find their environmental conscience and develop innovative ways to forestall the earth's destruction. Think of the 1983 movie, Local Hero, in which a young Texas oil executive ambitiously sets out to exploit a Scottish coastal village in an effort to access offshore oil - but falls in love with the village's charms and resolves to save it instead.

Yves Béhar won the Brit Insurance Designs of the Year award this year for his One Laptop Per Child project. Designed for developing countries, the inexpensive computer reduces energy use by 90 per cent and can be charged by hand-cranked power. It features wi-fi antenna "rabbit ears", energy-efficient LCD, a digital writing tablet, integrated video camera and networking capabilities.

Zen

France's national railway SNCF already has mobile phone-free "zen zones" in select compartments on its high-speed trains, and Austria's second-largest city, Graz, has ordered public transport users to keep their phones on silent mode. The crackdown has triggered a noisy debate between advocates of free speech and people who are sick to death of "loud talkers".

© Fairfax Business Media

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