Early Indications February 2009 Miscellany: Trust, Loyalty, and Book Notes

1) Trust in social networks

Several recent developments point to the big questions regarding trust in social networks. First, both Facebook and MySpace announced that registered sex offenders were removed from their sites: 90,000 over two years for MySpace, and 5,500 (out of 175 million users) for Facebook, which is still responding to the same subpoena as MySpace. For Facebook especially, those are extremely small percentages. Harvard's Berkman Center published a study that asserts that online threats to teenagers generally mirror real-world issues: bullying and intimidation are the most common problems in both school hallways and on line.

In addition to thinking twice about who the person on the other end of the online interaction might be, Facebook users are uncertain as to the service's policy regarding their data. Over the past few weeks, Facebook updated the terms of service to assert broad claims. According to the San Jose Mercury News, Facebook's current policy is as follows:

"Users retain ownership rights. However, when a person posts content to Facebook, the company is automatically granted 'an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to use, copy, publicly perform, publicly display, reformat, translate, excerpt (in whole or in part) and distribute such User Content for any purpose, commercial, advertising, or otherwise.' If a person removes content from Facebook or deletes their account, this license expires but Facebook may retain a copy of the person"s material."

The legalese of even this modified version sounds pretty one-sided. But as Facebook founder Mark Zuckerberg pointed out on the corporate blog, making virtual trust work is a very tricky business:

"People want full ownership and control of their information so they can turn off access to it at any time. At the same time, people also want to be able to bring the information others have shared with them—like email addresses, phone numbers, photos and so on—to other services and grant those services access to those people's information. These two positions are at odds with each other."

Layer Facebook's global constituencies, many litigation environments, and rapid technology change onto the company's core business model problem -- lack of monetization and the implicit pressure from investors -- and one begins to grasp how fragile online trust really is.

2) New Tactics in Wireless Retention

Even though Sprint lost 1.3 million customers in the fourth quarter of 2008, the drop was lower than expected and the company's stock surged. One tactic that will bear watching is a recently-announced customer loyalty program, similar to grocery store loyalty cards or frequent flier miles. Longtime customers and high-value subscribers are targeted: people with 10 years of loyalty, or three months on a $69.99 monthly single-line plan, will be eligible. T-Mobile is rumored to be developing a similar program.

What do the customers get? Better handset upgrade policies (including first access to the Palm Pre), free minutes, and free ringtones comprise the telecommunications benefits. Subscribers' service plans will be evaluated periodically to see if they fit evolving needs. Sprint also plans to more randomly award "Just Because" benefits such as sports or entertainment tickets.

3) Book notes

I recently read a study of innovation at The Economist that illustrated, unintentionally, the difficulty of getting startup-like behavior from employees at established institutions. Amidst the publishing collapse, The Economist has actually grown in the past few years, but in the spirit of looking beyond the headlights, in 2006 the magazine initiated a project (Red Stripe) to generate new Internet-based business models adjacent to the print operation. The ultimate ideas from the team were never formally approved, but several have seeped into deployment. Thus by one definition the team failed, but by others, its members succeeded in spurring change.

The book's subtitle -- "Incubating Innovation and Teamwork" -- hints at a deeper problem. The issue of team performance in an organization of any size or status is critical, and while much has been learned, many issues crop up reliably: people commonly feel confused about mission, view some colleagues as free riders, or are unable to incorporate learning into earlier commitments that were made in the inevitable state of not knowing what you don't know.

Similarly, innovation has been widely studied, yet few durable prescriptions can be cited. Innovation can be open or closed, inside-out or outside-in, capability-driven or requirements-driven, and on and on. The problem in both the book and the project is that the two pursuits get conflated: even if a better-performing team would have generated better or more acceptable ideas to the Economist management team, could it have made them into a profitable business? Doubtful.

That said, there's a lot to be learned about organizational behavior from Project Red Stripe. In facing a problem, for example, one approach is to strengthen your solution -- but, as the book states, "it's often as fruitful to consider how to diminish the forces working against [the team]." [83] The book also features excursions into corporate story-telling, untested assumptions, and the perils and necessity of commitment to a position or idea. On niches, for example, one advisor told the team "although there may be a gap in the market, the key is whether there's a market in the gap." [111]

In the end, the team's ideas were plenty viable: a financial information site for kids, a social networking service for NGOs ("A Facebook for good"), and an Economist video site begin a long list. Each member of the team was a salaried employee with a "home" office and function. None would enjoy the upside potential of the equity shares of a startup. In short, it feels like the term "entrepreneurial committee" might be fatally oxymoronic. But the story contains useful lessons nonetheless.

Andrew Carey, Inside Project Red Stripe: Incubating Innovation and Teamwork at The Economist (Triarchy Press, 2008)

On the same plane flight, I dipped into Don Tapscott's new study of what he calls "the net generation." Seeing samples of said demographic on a daily basis, I compared notes, and there's definitely overlap. Tapscott identifies eight "norms" to describe people born in the 1980s as they diverge from their elders:

1) Freedom and freedom of choice

2) Customization

3) Collaboration

4) Scrutiny of outsiders

5) Integrity

6) Fun, including at school and work

7) Speed

8) Innovation

All of these are readily evident when you spend time with people under 30. To call them a generation, however, overreaches the evidence. Tapscott relied on an online survey instrument that suffers from considerable self-selection bias: active net users found the survey and proceeded to discuss how actively they used and internalized various facets of the net. Based in large measure on the behavior of his admittedly talented, bright, and insightful children and their friends, Tapscott says on page 2 that "I came [in 1996] to the conclusion that the defining characteristic of an entire generation was that they were the first to be 'growing up digital.'" (emphasis added) That statement is problematic for any number of reasons; let's list four:

-Middle-class white and Asian kids, such as those in big-city U.S. and Canadian locales like Tapscott's Toronto, absolutely exhibit some of those eight traits from time to time. They are not, however, a "generation": according to the Pew Hispanic Center in 2007, only 31% of Latinos without a high school degree (that group counts for 57% of the constituency) go on line. Given that the U.S. Latin population is a) big, b) fast-growing, and c) less educated than whites, they cannot be bundled into Tapscott's "generation" without qualification.

-Just as off line, the online world is hardly homogeneous. To connect any two users of various elements of the Internet only on that basis makes as much sense as to say that everybody who drives, or watches television, is a generation. danah boyd's observations on social class differences between Facebook and MySpace users are instructive here (and absent from Tapscott's bibliography). Video-watchers and uploaders are [at least] two different species, as are flame warriors versus lurkers, or Columbine-searchers versus Amazon-shoppers. Web 2.0, Tapscott's pole star, while undeniably a powerful force is not yet universally embraced by members of any broad demographic, not even the 20-somethings.

-As far as "integrity" being a generational attribute, think about the business school students at Duke: 10% of the class of 2008 was caught cheating despite honor code posters prominently posted in the building and multiple adjustments to the curriculum in that direction. A separate study of 54 universities found that 56% of MBA students admitted to cheating; how many more cheaters lied? In 2005, dozens of applicants to Harvard Business School tried to view acceptance letters before they were mailed by poking around in the school's website after a security hole was reported. HBS denied admission to all 119 net-savvy snoopers.

-This cadre is still young. To define a generation, before they reach 30, by a set of technology artifacts embraced in different ways to various degrees by only some of them feels premature if nothing else. How many of the Paris/Chicago/Prague 1968 generation similarly embraced "fun" or "freedom" as core values back in the age of typewriters? Short of World War II, has any American generation been defined (to the extent that a generation can be defined) before they reach 30?

We're now looking at a global recession (or worse), and the results could well include the first generation in memory, if not American history, whose economic prospects are worse than those of their parents. That is, if the "net generation" experiences widespread downward social mobility, that's considerably more defining than the fact that some of them like to blog or watch funny videos at work.

Don Tapscott, Grown Up Digital: How the Net Generation is Changing Your World (McGraw Hill, 2008)

4) Correction

Regarding last month's assertion about the largest federal government employers, my colleague Russell Barton pointed out that the Department of Veterans Affairs is the largest non-peacekeeping employer. At 278,000 employees (most working at one of 153 medical centers) as of January 2009, it dwarfs Agriculture. Treasury, at 101,000 (lots of those in the IRS), was also bigger than Agriculture.

Here is a complete listing, in rounded 2006 numbers, of federal headcounts courtesy of the Partnership for Public Service's Best Places to Work in the Federal Government 2007:

Agriculture 85,000
Commerce 32,000
Defense (no services) 611,000
Education 3,800
Energy 14,000
Health & Human Services 53,000
Homeland Security 128,000
Housing & Urban Dev. 9,400
Interior 57,000
Justice 102,000
Labor 14,000
Social Security 61,000
State 19,000
Transportation 52,000
Treasury 101,000
Veterans Affairs 205,000