The Relationship Economy……

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In most corporations communications are controlled. Management doesn’t always tell the whole story to employees yet employees usually always figure out what is the real story. The same applies to suppliers and customers.

Controlling communications is an attempt to control or manipulate outcomes. The process has and will never work yet managers, corporations and institutions continue in their belief that hiding the real story is to their benefit.

Times are tough and markets are in a reduction mindset. Businesses are cutting back because sales are falling and expenses are going up. Management decides it needs to cut expenses so layoffs are inevitable. Management meets and decides what and who to cut.

Employees feel the tension and wonder how safe is their job. Employees begin to talk amoungst themselves and rumors begin to spread like wildfire. When confronted by the employees management denies the rumors and acts as if everything is ok. A week or a month later people are let go and those remaining don’t understand why certain people, their friends, were let go and wonder when the next cut will come.

Whatever future communications come from management is discounted as spin and distrust permeates like a virus contaminating everyone in the organization. And we wonder why people don’t trust what businesses say.

Scott Degraffenreid writes: Communication is the cornerstone of business. Being able to deliver and receive information in an accurate and timely manner is simultaneously the most fundamental and critical business process. Communication is also essential to the development and effectiveness of all human social networks.

As Christopher Locke, Doc Searls, and David Weinberger wrote in their Cluetrain Manifesto back in 1999: Increasingly, we value only two qualities:

• The engagement and passion-for-quality of genuine craft
• Conversations among recognizably human voices

The simple, if painful, prognosis: organizations must encourage and engage in genuine conversation with workers and markets - or go belly up.

People like to know the whole story. Empowered and enabled people will find or create stories and share it one to one to millions. People don’t like to be controlled. If you think you can control people with lies you loose.

Get it?

Some businesses will build a “social platform” but do not know how to use it. Some will design a platform for others but still not know how to show the client how to use it. Some will build a network and sell value added services for the network operators but again many do not know how to use it.

The difference in building and using a network is like owning a plane but not knowing how to fly it. To get from point A to B you need to hire a pilot.

What Does “Using It” Mean?

I’ve visited several firms who have built proprietary platforms for others. They are good at designing the value proposition, building enabling technology and designing specific community attributes. The consistent shortfall of many is a fundamental understanding of both how they and their clients should use the network for maximum return on investment. Allow me to elaborate.

1. Use of a network enables people reach to others. The more direct connections one has the farther the reach to indirect connections.
2. Building relationship credibility and social capital is an art and science of attraction, traction and the laws of givers gain. .
3. Your blog, given you provide relevant content, is the means of attracting others and building your brand credibility relative to a specific subject matter and a specific audience segment.
4. Participating in numerous networks enables you to increase your profile, enhance distribution of your content and create further affinity and attraction to others.
5. The art and science of a network isn’t centric to technology rather it is more about knowing “how to use” technology to enhance human relations and serving the interest of many.

Most business leaders are struggling to understand how they can use all this social stuff to enhance revenue. Most business leaders are still consumed with end results and few will focus on understanding successful methods required to achieve results over and over again.

To create revenue within any market one has to establish relations. Relations get enhanced through conversations and credibility is advanced over time as the relationship becomes familiar and the context creates a value exchange, a transaction.

From the marketing, sales and positioning perspective knowing how to use a network increases the assurance towards any specific relationship opportunity, any specific transactional opportunity and use of the collective value network to insure revenue capture.

The business priority ought to be to share and facilitate the organization learning of how to leverage a collective network of relationships for positioning, relational building and ultimately earning the right to a transaction. The power of the “social web” is in reach. The method to leveraging reach to revenue is the art and science of “using the network” for business purposes.

The quickest way to capture revenue is to help as many internal resources reach the appropriate relations, enhance creditability with existing relations and do so systemically so the process is institutionalized rather than contained by any one resource. The market of vital few relations that provide the most value to a company is the quickest route to the larger market of relations, conversations and subsequent transaction.

Revenue is the result of collective business processes that enhance relations, deliver solutions and create value. Revenue cannot happen without relations, conversations, credibility, value and social capital. All this social stuff is simply a high power jet whose destination is revenue. Unless you know how to fly or you hire a good pilot a network won’t take you anywhere.

In 1999 The Cluetrain Manifesto framed the emerging web as a marketplace of conversations. As we approach the ten year anniversary of the books release one wonders how many business have yet to understand the dynamics of conversations, relationships and the dynamics of the emerging marketplace.

Do we really understand “how to use it”? What say you?

As we engage in conversations with business leaders a set of common questions usually develop. These common questions reflect a continuous disconnect between business leaders understanding “how” the social web can influence business results.

Much of the media describes the social web in terms like “connections, social media, networking” and the list of ambiguous buzz words proliferate the “conversational content” like a virus. Comprehension and definitions of the latest buzz only make it hard for businesses to assimilate what “it” is and how “it” can add value to business results.

Most business leaders understand the concept of “systems” being inter-related parts aimed at producing an end results. There are systems for: marketing, accounting, human resource, IT and the list goes on and on. So lets start with the word “system” to define the social web in business terms.

A System is a set of interacting or interdependent entities, real or abstract, forming an integrated whole. An ‘integrated whole’ can also be stated in terms of a system embodying a set of relationships which when connected produce a combined result. i.e. production, distribution, marketing, sales etc. collectively produce results.

The Social Web is a System of Influence

The social web is a dynamic system of technology that enables people to connect with people and create conversational content aimed at attracting people with affinity to topics and people of influence. The system accelerates human relationship dynamics.

Influence is a term that refers to the ability to indirectly control, shape or affect the actions, beliefs and attitudes of other people or things through ones behavior, words or presence. A sphere of influence (SOI) of a business, organization or group can show its power and influence in the decisions of other business/organization/groups. It can be found using many factors, such as the size, the frequency of visits, etc. Traditionally, a company described as bigger had a larger sphere of influence until the social web changed the dynamics.

The social web enables the small to become bigger spheres of influence by leveraging conversational content that attracts relationships. Technological advances have empowered individuals with reach and richness, one to one to millions. Content is the attraction, relationships are the outcomes.

What Does this Mean for Business?

Sales and marketing is about methods to reach spheres of influence. If you want to sell more you need to reach more decision makers and provide an influence which motivates them to buy from you. The social web is a new dynamic which enables individuals and businesses to create and promulgate “conversation content” which creates an attraction , or pull, to the potential of a relationship.

Whether it be products, services or information every business has an objective to increase or at least sustain sales. However, the new “system of influence” is smarter, more engaging and influential than the old “systems of influence”.

Lets just examine blogs as a point of reference to influence. Mediapost Research Brief states: Consider the results of a recent survey of U.S. journalist, blogs are not only having an impact on the speed and availability of news but also influencing the tone and editorial direction of reporting. The biggest impact of blogs, says the study, is in the speed and availability of news, while 61.8% of the respondents said that blogs were having a significant impact on the “tone” of news reporting, and 51.1% said they influenced “editorial direction.”

Unless you’ve isolated yourself from the news you’ve heard how the social web is influencing politics, advertising, purchasing, distribution and a host of other markets and business processes. Last but not least the social web is influencing relationships which are the fundamental tenets to any business success.

Call “it” a fad, a “thing that kids use” or whatever you want but to ignore “its” influence is like saying “Our business doesn’t need any customers”.

The new “system of influence” is unlike any other system used by business. Its primary elements are connectivity with people and conversational content which connects people. So how connected is your business? How influential are your conversations? Maybe you need a new “system”.

What say you?

Business leaders have a unique opportunity to connect customers to customers. However the typical reaction to this proposition is one of fear.

Business leaders fear that if you connect customers to customers they will reveal business weaknesses, complain and create negative PR.

Here is a clue, customers are already connected to customers. A businesses customer base typically represents one or more market segments of business affinities. Businesses create products and services to serve specific needs for target markets, some large and some small. Regardless of the size of market customer segmentation represents a thread of common needs that suppliers, businesses, try and fill.

A bank provides a set of financial services for personal banking needs, for business banking needs. Banks typically target geographic locations whose demographics support the establishment of a branch. The demographics represent businesses and individuals within a geographic domain. People and business within that domain interact formally and informally. Do you think the conversations ever create dialog over banking relations?

The same analogy proves true for any business the scale and scope changes with the size and reach of a business. The one thing that never changes is the fact that customers do in fact connect with other customers. Whether this be at trade shows, local meetings, online or in person, customers are people and they converse about everything and anything.

Kevin Kelly writes in his book New Rules for the New Economy “Nothing is as scary to many corporations as the idea of sponsoring dens in which customers can talk to one another. Especially if it is an effective place of communication. Like the web. “You mean,” they ask in wonder, “we should pay a million dollars to develop a web site where customers can swap rumors and make a lot of noise? Where complaints will get passed around and the flames of discontent fanned?” Yes, that’s right. Often that’s what will happen. “Why should we pay our customers to harass us,” they ask, “when they will do that on their own?” Because there is no more powerful force in the network economy than a league of connected customers. They will teach you faster than you could learn any other way. They will be your smartest customers, and, to repeat, whoever has the smartest customers wins.”

“Whatever tools you develop that will aid the creation of relationships between your customers will strengthen the relationship of your customers to you. This effort can also be thought of as Feeding the Web First.”

Businesses cannot insulate or control conversations rather they can engage and learn. Instead of trying to insulate relations and control conversations maybe businesses should connect people and encourage conversations that enhance market opportunities between customers and suppliers. Businesses can also become a conduit of knowledge by enabling the sharing of knowledge, one to one to millions. The social web actually is a model of collaborative conversations that build relationships and create opportunities. What business leader would not want to be engaged in the middle conversations that create market opportunities for them to fill?

Whether customer, employee or supplier, they are all people

Most people don’t live in isolation or do they get satisfaction out of attempts to be controlled. Most people like to be heard and seen as a positive influence in business relations and opportunities. Does a business tell its employees “Today we want you to create negative conversations and turn down any opportunity to serve our customers better”. Not likely however the practices of management are creating the same results but no one wants to hear the real conversations or understand the true state of their relationships with employees, customers and suppliers.

You disagree? Then please point us to a swarm of businesses embracing the social web and doing so with the right intent. We can’t seem to find the “swarms of businesses” rather a few seem to be trying to mimic the actions of people for whatever business intent. The cross road of success for businesses is to be able to think and relate like people rather than trying to make people think and relate like business.

What say you?

As the landscape of the social web explodes with developments, new entrants and increased utility, one wonders who will come out on top in the end.

Users are being “pinged” daily with request from different social networks and other social web initiatives vying for the consumers attention with slogans, hype and promises as to why their network is better than the rest.

The market of “social networks” does not have a long enough history to point to one network or more whose strategy has created a significant competitive advantage. Additionally the very dynamics of the medium is creating a new paradigm of human behavior whose dynamics change with every new technological enhancement to the social web. To say the least the market of social networks is a moving target constantly reacting to shifting dynamics discovered as consumer behavior shifts with every new development and sets the stage for the next shift.

The business design and strategic models of the social web are also somewhat unique as well. We have platform operators who enable application developers to create unique functions and features aimed at attracting users. The application developers are left to figure out their own economic models aimed at monetizing their efforts over the long term. Platform operators enable developers with creative ideas to create a business by enabling them with the opportunity of reach.

For the most part operators offer the use of their network to consumers for free leveraging the nets advertising models as the initial revenue means as their primary source of income. Some operators propose schemes with upgraded subscription models which promise increased utility for paying customers. So which strategy is most likely to create competitive advantage for the players in today’s market?

Competitive advantage (CA) is a position that a firm occupies in its competitive landscape. Michael Porter posits that a competitive advantage, sustainable or not, exists when a company makes economic rents, that is, their earnings exceed their costs (including cost of capital). That means that normal competitive pressures are not able to drive down the firm’s earnings to the point where they cover all costs and just provide minimum sufficient additional return to keep capital invested. Most forms of competitive advantage cannot be sustained for any length of time because the promise of economic rents drives competitors to duplicate the competitive advantage held by any one firm.

A firm possesses a Sustainable Competitive Advantage (SCA) when it has value-creating processes and positions that cannot be duplicated or imitated by other firms that lead to the production of above normal rents. An SCA is different from a competitive advantage (CA) in that it provides a long-term advantage that is not easily replicated. But these above-normal rents can attract new entrants who drive down economic rents. A CA is a position a firm attains that lead to above-normal rents or a superior financial performance. The processes and positions that engender such a position are not necessarily non-duplicable or inimitable.

Analysis of the factors of profitability is the subject of numerous theories of strategy including the five forces model pioneered by Michael Porter of the Harvard Business School. To be sustainable, a competitive advantage must be:

1. distinctive, and
2. proprietary

According to Porter a company is said to have a competitive advantage over its rivals when its profitability is greater than the average profitability of all other companies competing for the same set of customers. While Porter’s definitions and models for determining competitive advantage seem logical the new dynamics of the social web brings yet another critical element to the models of competitive advantage.

That element is human creativity. Creativity is the driving force of competitive advantage for firms wishing to capitalize on the dynamics of the social web. Creativity (or creativeness) is a mental process involving the generation of new ideas or concepts, or new associations between existing ideas or concepts.

Despite, or perhaps because of, the ambiguity and multi-dimensional nature of creativity, entire industries have been spawned from the pursuit of creative ideas and the development of creativity techniques. This mysterious phenomenon, though undeniably important and constantly visible, seems to lie tantalizingly beyond the grasp of scientific investigation.

It may also be beyond the grasp of those that follow old business models and designs. It can be found in a toddlers imagination, in the boundless minds of the youth and within institutions that do not rely on what is previously taught rather they seek what is unknown. “Creativity, it has been said, consists largely of re-arranging what we know in order to find out what we do not know.” George Kneller

Who will come out on top in the end? Those that have the most creative advantage.

What say you?

News Corp. Chairman and CEO Rupert Murdoch made a statement during the company’s annual meeting last year where he said:“We’re only at the beginning of two of the most profound social and economic trends of our age–globalization and digitalization,” rattling off a few of the company’s milestones of the past year.Besides Fox Interactive and all the other News Corp properties, much of Murdoch’s emphasis was on the success of MySpace and the fact that it turned profitable within the past year.Murdoch’s often refers to the success of news Corp being centered around creativity aimed at the globalization and digitalization in the new economy. News Corp has been known and for “breaking away from the traditional and creating the new”

What drives News Corp’s Success?

They understand the “laws of increasing returns in the new economy driven by a networked world”. Metcalfe’s law (”The value of a network increases exponentially as its users increase arithmetically”) and the law of increasing returns (”The more who use social networks, the more attractive networks become”). News Corp’s MySpace illustrates the third corollary of increasing returns: how small signals can suddenly become booms.

The social web encourage the successful to be yet more successful. The social web creates the tendency for those which are ahead to get further ahead; for those which loses advantage to lose further advantage.

Economist Brian Arthur discovered that when technological competitors were modeled in a computer, increasing returns favored one technology over the other—to the eventual demise of the unfortunate one . And “unfortunate” is the right word. According to Arthur’s research, the technology that came to dominate, thanks to increasing returns, was not necessarily the superior one. It was just the lucky one. Or the early one. Arthur writes: “If a product or a company or a technology—one of many competing in a market—gets ahead by chance or clever strategy, increasing returns can magnify this advantage, and the product or company can go on to lock in the market.”

Kevin Kelly writes “Being first or best sometimes helps, but not always. The outcome of competition in a network is not determined solely by the abilities of the competitors, but by tiny differences, including luck, that are greatly magnified by the power of positive feedback loops. The fate of competition is “path dependent” on minor nudges and hurdles that can “tip” the system in one direction or another. Final destiny cannot be predicted on the basis of exceptional attributes alone.”

“The archetypal case of a success explosion in a network economy is the Internet itself. As any proud old-time nethead will be happy to explain, the internet was a lonely (but thrilling!) cultural backwater for two decades before it showed up on the media radar. A graph of the number of internet hosts worldwide, starting in the 1970s, stays barely above the bottom line, until around 1991, when the global tally of hosts suddenly mushroomed, exponentially acting upward to take over the world.”

“The curves of Microsoft, the internet, fax machines and FedEx (I owe Net Gain author John Hagel credit for these four examples) are templates of exponential growth, compounding in a biological way. Such curves are almost the definition of a biological system. That’s one reason the network economy is often described most accurately in biological terms.

“Indeed, if the web feels like a frontier, it’s because for the first time in history we are witnessing biological growth in technological systems.”

A New Order of Things to Come

Individuals from around the world are tapping into the power and opportunities presented by the mediums of social networks. Those individuals who understand Metcalfe’s law, either by chance or by plan, will gain a significant competitive advantage as the “laws of increasing return” are a natural phenomena of biological growth in a networked world. Leveraging the opportunities of the networked world is largely driven by creativity on the fringes of change rather than by application of old knowledge to a new technological system.

Traditional business models and mindsets do not work in the new economy. The old creates conflict with the new because it doesn’t understand the nature nor the medium. A pebble of creativity can create a wave of change. Consider the story of David and Golliath. The giant was taken down by a young boy who used a pebble of creatively.

The global stream of conversational rivers are filled with creativity. What say you?

As we examine the possibilities for business to leverage the medium of social networking we find numerous perspective that are limited to obvious silo opportunities.While there are certainly obvious benefits to use social networking for specific business functions the mediums functionality and feature capabilities have the potential to touch and enhance every business process and all relationships across all segments globally.Businesses are just discovering the systemic nature of the medium and the media continues to drive home the message within business circles. Jennifer LeClaire of TechNewsWorld

writes “The phenomenon of social networking for business purposes is a logical extension of personal networking. After all, businesses are merely people linked by common economic purpose, said Barry Kessel, managing director and chief client development officer at global marketing firm Wunderman.”

“A recent Pew Internet study lends credibility to the concept. Pew researchers report that more people are using the Internet to strengthen social ties that they maintain in the offline world.”

“Increased travel costs and a depressed economy are two factors driving the trend. Time being money, online social networking is also winning favor with time-stretched businesses. It costs less and takes less time to network online than in person, said Scott Allen, co-author of “The Virtual Handshake: Opening Doors and Closing Deals Online.”

“As more business happens online, it’s natural that the business dealings that lead up to the transactions would happen more online. We have a generation coming into the workforce now that have grown up with broadband. IM and SMS messaging are actually preferred over the phone by many of them,” Allen told TechNewsWorld.

A Productivity Threat or Tool?

Sally Whittle ZDNet.co.uk writes: “So, is social networking simply a productivity threat or can companies learn to live with Facebook and its ilk? “My gut instinct tells me that we’re going to end up with a Facebook for the enterprise, or Facebook in the enterprise,” said David Bradshaw, an analyst with Ovum. “There’s too much at stake for organizations not to start looking at bringing this stuff under their control.”

“For starters, companies are realizing that levels of communication are increasing on social-networking platforms — outside the control of the corporate IT department. In addition, companies have a lot to gain from social networking, according to some experts.”

“There are some pretty obvious benefits to using social-networking applications as a business tool, according to Graham Cluley, senior technical consultant with security firm Sophos. “It’s a great research and recruitment tool,” he said. “You can check people out, see what their career history is like, who they associate with, even what their conduct might be like outside the office.”

“However, Cluley said that the benefits of social networking could be taken a step further. “If you look at Facebook, it’s a platform, and you could easily develop applications to sit on top of that, to do virtually anything around collaboration,” he said. For example, firms might consider creating a messaging application that workers can log onto while on the road, or a quick reference guide for employees that pulls in links as part of news feed.”

“Social networking provides a ready-made knowledge-management platform, said Bradshaw. “In an increasingly competitive world, the most valuable asset companies have is their knowledge, and the one thing this type of platform lets you do is find people with the knowledge you need, and use those skills better in collaboration with other people.”

Looking from the Outside in

For businesses to maximize the opportunity of the medium of social networks they’ll need to gain a perspective from the outside in. What we mean is that thinking tends to be molded over time by ones view of their environment, their business rules and the mental models learned from experience. However, looking from the inside out can sometimes be limited by the paradigms of experience, the lack of outside knowledge and limited vantage points.

As the media reports more and more about innovative uses of social networks for business purposes the old mental models will be pushed from the outside in. The analyst, consultants and market makers will create the new paradigms which eventually will be adopted by businesses globally.

If the phenomenon of social networking for business purposes is a logical extension of personal networking then the collective individuals currently using networks will be those that create the new paradigms….until the next generation expands our thinking even more.

What say you?

In business and accounting, an asset is defined as a probable future economic benefit obtained or controlled by a particular entity as a result of a past transaction or event.

Assets are usually listed on the balance sheet. It has a normal balance, or usual balance, of debit (i.e., asset account amounts appear on the left side of a ledger.)

Probably the most accepted accounting definition of asset is the one used by the International Accounting Standards Board .”An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.”

Most businesses today do not think about or account for the value of relationships as an asset. Yet none of what has traditionally been defined as assets could actually create any value without relationships. Just maybe relationships are the means for maximizing the value of previously defined “assets”. Historically relationships have been considered intangible assets thus rarely if ever do we see the intrinsic value of relationships defined anywhere in the minds of leaders and on the traditional balance sheets of businesses.

Are Intangibles More Important than Tangibles?

Verna Allee, author of “The Future of Knowledge: writes: “As expressed by Warren Buffet in a recent discussion at IMD, Lausanne: “If I trust that the owners run a smooth business I invest. I do not make a Due Diligence to look for IP (and other intangibles)”

If you would sit down with Warren and ask him what he means by running a smooth business he would be describing intangibles such as the quality of the leadership team (intangible), consistent and responsible financial management (tangible), competent people and normal turnover rates (intangible), reliable supply chain partners (intangible), solid customer base (intangible), reputation (intangible) and so forth. He would actually be naming intangible assets
The power of any management practice lies in the way it takes the things we do intuitively and helps us do them deliberately and therefore more effectively. Processes didn’t suddenly show up in business in the late1980s. Business processes have been around for thousands of years. What was different is they were made visible and negotiable. Intangible assets, value networks, KM, social networks, communities of practice. There is nothing “new” happening. What is happening is our capacity to make all of these visible, negotiable and more manageable (not controlled.)

Just maybe all this “social stuff” and the representative influence and power will magnify the true value of the intangibles, relationships. Then again relationships have always been there but the intrinsic value has been set aside while the economic value of tangible assets has dominated markets.

If markets are conversations developed through relationships and transformed into transactions then maybe its time to label relationships as tangible. After all, people are not hidden rather they are all around you carrying on conversations. Conversational exchanges also represent a significant amount of value that isn’t considered “tangible”.

What say you?

Business models have changed over time to reflect consumer trends and economic shifts developed through the evolution of technology.

Technology has driven historical shifts from the industrial economy, the information economy and now the emergence of the relationship economy.

Every economic shift comes with revolutionary changes to business models and consumer preferences. Every cycle of change comes faster than the previous change and the accelerated technological dynamics fuel creativity and innovation which only fuel further changes.

Technology is the primary influence both in the changing dynamics and the possible outcomes. Each new technological advancement enables both individuals and institutions to “think out of the box” as to the implications, usefulness and subsequent market dynamics created by the advancement.

As we reflect on history we can see the accelerated changes and the condensed cycle times of change caused by technology. Business 1.0 was a period of basic business models aimed at maximizing the economic gains brought on by production of products and distributed to the masses for consumption. During the era of Business 1.0 people were told what to do and they did it because they wanted to economic gain of a paycheck.

During the era of Business 2.0 businesses produced information brought on by computers networked with other computers and the aggregation of information was consumed by institutions, businesses and individuals. We all became overloaded with too much information and lost in its meaning. Businesses used the information to develop new strategies, new products and process improvements. We all became overwhelmed and became paralyzed by the analysis of all the data.

People were told how to interpret and use the data. The media supported this premise with reports of market movements and developments based on the information technology provided. People became paralyzed and overloaded with the information. Individuals were labeled as “customers or data points of measurement for business gains”. While promoting relationships as a common marketing theme the business cultures were too consumed by the desire for information to think about forming real relationships.

Business 3.0: Enter the social web

The past business models have been consumed with the end target, economic gains. While applying technology, knowledge and management advances the past business models have left behind the most important element of any business success, relationships.

Business cultures have suppressed employee participation rather the cultures have created an environment which encourages following rather than leading with self expression. Businesses have proclaimed the importance of the customer while creating barriers to customer participation and responsive service. Under the pressure of competition businesses have reacted by the numbers, cutting budgets, while not clearly understanding the root cause of poor performance, poor relations.

The social web empowers people with a freedom of expression and the ability to connect with people. The eco-system is creating new relationship dynamics and the consumers are listening and responding to other consumers. People have been empowered by technology and subsequently people are filling a void which was created by the business models of the past.

We’ve been taught not to trust the politicians, the media and our employers. Subsequently we created a subculture of connections, both personally and professionally, with like minded people who see, feel and experience the same dynamics of institutional speak, corporate changes that don’t really bring the changes required and a dominate media that feeds us the same spin. The majority of people have been and continue to seek other people who can relate to the business environment of the past and the fallacy of the behavior that continues today.

Now the people have found a method of fulfilling the fundamental desire for relationships based on free and open expression of thought without governance by any institutions, we the people have become the institution of expression. The social web has created empowerment, individual recognition, the power of self expression and said attributes have attracted the masses forming into “swarms”. These collective dynamics are creating a paradigm shift which the majority of businesses have yet to comprehend and in many cases aren’t even remotely aware.

The Emergence of The Relationship Economy will be fueled by individuals. The Businesses that understand and embrace the very dynamics that are fueling the social web will themselves create significant market shifts in distribution, sales and subsequent revenue growth. Why? Because those business leaders that lead their companies through a revolutionary transformation will gain the respect and loyalty of the people. A simple yet profound truth grounded in the fiber of human relationships.

What say you?

Technology is fueling rapid change within markets, management methods and the definition of success for business. Old established paradigms of what makes a business successful and competitive is being replaced by “innovation” fueled by massive unstructured collaboration enabled by social technologies. Innovation is to business is what communications is to relations, without it little if any progress can be made.

An excerpt from “The Future of Management,” by Gary Hamel with Bill Breen provides a good overview of the critical elements being fueled by innovation.

In a world where strategy life cycles are shrinking, innovation is the only way a company can renew its lease on success. It’s also the only way it can survive in a world of bare-knuckle competition.

In decades past, many companies were insulated from the fierce winds of Schumpeterian competition. Regulatory barriers, patent protection, distribution monopolies, disempowered customers, proprietary standards, scale advantages, import protection, and capital hurdles were bulwarks that protected industry incumbents from the margin-crushing impact of Darwinian competition. Today, many of these fortifications are collapsing.

Collapsing entry barriers, hyper efficient competitors, customer power—these forces will be squeezing margins for years to come. In this harsh new world, every company will be faced with a stark choice: either set the fires of innovation ablaze, or be ready to scrape out a mean existence in a world where seabed labor costs (Chinese prisoners, anyone?) are the only difference between making money and going bust.

Given this, it’s surprising that so few companies have made innovation everyone’s job. For the most part, innovation is still relegated to organizational ghettos—it is still the responsibility of dedicated units like new product development and R&D, where creative types are kept safely out of the way of those who have to “run the business.”

Today innovation is the buzzword du jour, but there’s still a yawning chasm between rhetoric and reality. If you doubt this, seek out a few entry-level employees and ask them the following questions:

1. How have you been equipped to be a business innovator? What training have you received? What tools have you been supplied with?

2. Do you have access to an innovation coach or mentor? Is there an innovation expert in your unit who will help you develop your breakout idea?

3. How easy is it for you to get access to experimental funding? How long would it take you to get a few thousand dollars in seed money? How many levels of bureaucracy would you have to go through?

4. Is innovation a formal part of your job description? Does your compensation depend in part on your innovation performance?

5. Do your company’s management processes—budgeting, planning, staffing, etc.—support your work as an innovator or hinder it?

Don’t be surprised if these questions provoke little more than furrowed brows and quizzical looks. Truth is, there are not more than a handful of companies on the planet that have built an all-encompassing, corporate wide innovation system.

Our world is changing faster than most can comprehend. Technology is accelerating relational communications. Communications are the foundation of any economy. Conversational rivers connected by social technology enable waves of innovation to flow and creative thoughts to manifest at the click of a mouse. Innovation is about changing things for the better. Are you ready? Are you contributing? After all innovation is everyone’s job.

What say you?