Twitter Value Prop: Addiction?

addictionI’ve been wondering what the Twitter value proposition to me is for some time. I get what Twitter is, and yes, I Tweet, but I’ve never been entirely sure why Twitter should matter to me. Apparently, many share in my quandry, says Silicon Valley, The Harvard Business Review, Nielsen and others.

By a number of measures, Twitter’s metrics look pretty dismal. User engagement is low and customer retention even lower. Numbers like these beg the question, what is the real and compelling value to a business or consumer in using the Twitter application?

Even the CEO says what he’s shooting for in a relationship with his audience is addiction.

Web 3.0: Show Me the Money

piDespite a sincere enthusiasm for all things Internet, Site can’t help but to have noticed a lot of over-valuation going on.

Site applauds recent news from Silicon Valley that increasingly scrutinizing eyes are being put to Internet-based investments. Most notably, VCs now seem more interested in investing in companies projecting non-ad-based revenue models, citing that Accel’s early investment in Facebook might not be repeated today given the social platform’s challenges with monetization.

Making money online is attractive because it’s extremely efficient and cost-effective if done right—not because it magically happens with when traffic or even market share get large. Potty-mouth notwithstanding, Jeremy Schoemaker makes a nice case for caution when counting your Internet chickens before they are hatched in his 7 Deadly Sins of People Trying to Make Money Online.

Making money online is smart. Making smart money online is even smarter. Cheers to the portfolio managers who see past simple site popularity and look for clean, predictable and short paths to profitability when deciding how to spend investment dollars.

Malcom Gladwell on Innovation

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I had the good fortune to hear Malcolm Gladwell speak at The Conference on Marketing held in Naples, FL earlier this week. His talk (refreshingly delivered entirely without slides) explored the concept of two distinctive types of creative innovation: Conceptual and experimental.

Conceptual innovation, he argues are those bold, breakthrough ideas that are well articulated quickly and delivered into the world. Experimental innovation is the slow, iterative process of exploration that may happen over a lifetime before it’s gotten right.

Examples of conceptual innovators include Orson Wells, Picasso and Herman Melville. Conceptual innovators tend to peak early – often the value of their output decreasing over time. The highest price Picasso ever fetched for a single painting occurred at the age of 26. Work done in his 60s is valued roughly at 1/4 of his peak prices. And we all know what happened to Orson Wells after Citizen Kane. Not much.

Cezanne, on the other hand, was an experimental innovator. He painstakingly painted the same scenes over and over again, evolving his genius in slow, iterative, baby steps. Cezanne peaked in his 60s, his later work valued at roughly 15 times work done in his 40s. Another experimental innovator, Alfred Hitchcock, explored the thriller genre again and again over a lifetime delivering perhaps his best picture, Vertigo, at the age of 59.

Gladwell argues that much to its detriment, today’s culture has lost patience with the experimental innovators. Musicians are now routinely dropped from the roster if their first single isn’t a blockbuster. Yet the traditional music industry is now in complete free fall according to Gladwell, because “you cannot run a creative business unless you have a combination of Picassos and Cezannes to create lasting value.” Long term, lasting value comes from a portfolio of ideas that include both the bold and groundbreaking as well as those that need iterative experimentation in order to mature.

Moreover, consumers form a very different bond with Picasso and Cezanne ideas. Picasso ideas get a lot of attention, but don’t develop lasting loyalty or significant influence (Friendster who?). Cezanne ideas may take a while to mature, but have much greater impact and create more lasting value over time. The Sopranos, we are reminded, didn’t have much of an audience in season one or even season two. But with a little patience, HBO allowed the writing, the characters and even the audience to mature and the series has now arguably has changed the face of in-home entertainment for a long time to come.

I’d Like to Buy the Virtual World a Coke

coke

One of the most interesting speakers for me at THE Conference on Marketing held earlier this month in Naples, FL was Michael Donnelly, Global Digital Marketing Director for Coca-cola. He presented the case study of a contest held by Coke to design a virtual vending machine in Second Life. The machine was not to dispense soda cans, but experiences for Second Life avatars.

Examples abound of marketers trying to force fit old media formats into new media. The first web sites were basically print brochures. Most of the branding activity in Second Life still revolves around “impressions” as measured by the number of avatars who wear, drink or otherwise carry around your branded content.

Sure, the Coke design contest winners end up carrying around branded content as well, but the nature of the design contest, to my mind, really leveraged the unique character of the medium. One of the winning designs dispensed snowballs and allowed avatars to engage each other in snowball fights. Certainly a more resonant experience than spending In World currency to buy a virtual can of soda.

Michael’s approach struck me as an example customer-centric marketing at it’s best. Really getting inside the heads of the target audience “Second Lifers” and engaging them in ways they really want to be engaged.

There were a number of other general points Michael made also worthy of repeating:

  • “Criticism leads to conversation marketing. I’d rather somebody tell me something bad than to not tell me anything at all.”
  • “There is a fine line between taking advantage of the community and being a part of the community.”
  • “Always get the advice, council and permission of a community before entering it.”

Evolution: Differentiation by Design

evolutionI caught Malcolm Gladwell talking about conceptual vs. experimental innovation and it brought to mind my favorite business read of 2006, The Origin of Wealth by Eric D. Beinhocker. In it, Beinhocker explores an interesting shift in thinking within the field of economics about the nature, structure and governing forces of economies. Rather than the traditional view that holds an economy as a closed system trending toward equilibrium over time, new thinking explores economies as complex adaptive systems, much like the system of evolution.

Complex adaptive systems are open rather than closed, accept inputs, adapt to those inputs and create outputs. Complex adaptive systems evolve through learning. Examples include financial markets, certain insect colonies, the human brain, manufacturing and the Internet.

A multitude of interactive algorithms govern the growth and morphic nature of complex adaptive systems, but one of the most fundamental is: Differentiate, select, amplify. So the algorithm for evolution – and economic growth – has a differentiation mechanism baked in. Evolutionary change is not spurred by random, accidental mutation, it’s differentiated by design in order to spur rapid learning and adaptive growth.

So what’s the magic formula for differentiation? How many different ideas, products, organic life forms should you put out there in order reach your full creative potential, get the best return or evolve into the most successful species, product or brand?

I just picked up The Black Swan: The Impact of the Highly Improbable by Niassim Nicholas Taleb. I haven’t cracked it yet, but I expect a lot of argument for the value of the bold and the radical. We’ll see.

For now, I’m with Malcolm. Evolution is most successful through a combination of conceptual innovation – the bold and radical, and experimental innovation – the small and iterative. An examination of rich artistic traditions, wealthy economies and successful species reveals a common theme: Those with a history of both small, iterative exploratory change and bold, breakthrough radical change tend to come out in front.