Ross Mayfield's Weblog

Service and the Fifty Percent Rule

Next time you go into an Apple store, notice that 50% of the space is for retail sales and 50% for service and support.  I overheard this weekend that it is the most profitable arrangement in the history of retail. 

True or not, it is curiously obvious that complex products not only need after-market support, but giving it equal treatment increases profit through customer satisfaction and loyalty.  Plus all the cross sales when you have to walk through the retail space or wait a bit.

By contrast, you have to walk through a cramped support department to get to things at Fry's.  After some extreme frustration there I shifted my technolust procurement to Best Buy.  Their service department is clean, well lit and all, and they do have that Geek Squad specialization.  But recently I attempted to have my six month old PS3 serviced there, but apparently they will do absolutely nothing for in-warranty products unless you buy some kind of extra insurance at the time of purchase.  Absolutely nothing.  So I had to call Sony and go through a ship and repair process.

This is in contrast to when my wife's camera broke under warranty and Keeble & Schuchat sent it to Canon and called us when it came back to the store for pickup. Simple enough, and I bought a tripod while there.

What Best Buy is missing is the fact that they provide no after market value add with their retail -- in comparison to buying and servicing with an e-commerce vendor.  If I buy something in person I expect a person to be able to help me when things go wrong.  At least during the manufactures warranty, and I might pay to extend that period with the retailer.

But I think Apple gets something more than the value of customer experience.  According to the Consortium of Service Innovation, there is an iceberg effect for product knowledge.  90% of conversations about supporting products never touch the company.  Only 10% touch the call center.  And 1% of this service and product quality knowledge are assimilated. 

Sometimes this distribution is purposeful.  Support is viewed as a cost center.  Time to resolution (which we've decreased by as much as 30%) often trumps customer satisfaction or capturing knowledge.  Worst practices are often employed to incent contact center reps to avoid contact.

The problem is far worse with multi-vendor support.  Multi-vendor issues take 3-4 times longer to resolve.  So almost all vendors explicitly do not support these issues at all.  There is some promise in Vendor Relationship Management, or communities that address systemic needs through the demand side supplying itself, but only the beginning of promise.

So I wonder if Apple's vertical integration strategy is what makes this possible.  Is the 50% rule only a rule if you tackle the multi-vendor support problem?  Alignment or integration between Marketing and Support plays a role and some organizations put the same person in charge of Product Quality and Support.  But this opportunity space inherently requires rethinking not just organizational boundaries, but the firm itself.

For your business online, what porportion is dedicated to retail vs. support?  When not constricted by the boundaries of physical space, and can be empowered through community, where do you draw that line?  What crosses that line is a process not unlike osmosis, where energy is released with the right balance.

UPDATE: article in the Boston Globe on listening and participating to online conversations about service and support

The Wikinomics Playbook

UPDATE: An interesting related project by Penguin Books is A Million Penguins, letting anyone edit a book to be published.  The wiki is down at the moment, but PaidContent notes it began with “It had snowed, and was now raining. Gritty slush covered the pavement. Sharp crystals of snow decorated grass.”  Reuters notes the challenge is finding “believable fictional voice” within the mass collaboration.  This was a big challenge for group editing of the Wired Wiki story.

The last chapter of Don Tapscott's new book, Wikinomics, invites readers to write it: “Join us in peer producing the definitive guide to the twenty-first-century corporation on www.wikinomics.com.”  Today we launched a Socialtext wiki for the Wikinomics Playbook, where people can not only learn about the power of mass collaboration, but participate in it.  The book is already one of the fastest selling business titles and is an excellent primer on how models of collaboration are unfolding from open source to blogging to wikis in the enterprise to enable people to participate in the economy like never before.

The second to last chapter is about enterprise wikis.  Half of it discusses how Best Buy is using a wiki knowledge-base for the Geek Squad.  The other half is an interview with yours truly and shares some of Socialtext's success stories. The first chapter is available online as a pdf.

 

This is a great example of how a book can be augmented with a wiki, as most books are out of date by the time they are published, never quite finished and have the potential for participation. Last month we helped Larry Lessig share the entire Code 2.0 book in a wiki.  I expect that soon such commons-peer production, a wiki for every book, will be common.

Abundance, and Five Years of Blogging

When I sat down in my first economics class at UCLA, the professor wrote on the blackboard all we would learn, in really big letters:

SCARCITY

I've been blogging for five years as of this month, and here's what I've learned:

ABUNDANCE

I have discovered I have a lot to give.  And when I give, I notice others give more.  Some of them I've formed relationships with, and trust opens giving, but I have also learned to trust strangers to share in abundance.  Life is iterative, markets are not transactions and scarcity of attention is false. Our learnings compound abundance and there may be no limit to what we can produce.

David Hornik strikes again with Chris Anderson Strikes Again: The Economy of Abundance:

The basic idea is that incredible advances in technology have driven the cost of things like transistors, storage, bandwidth, to zero. And when the elements that make up a business are sufficiently abundant as to approach free, companies appropriately should view their businesses differently than when resources were scarce (the Economy of Scarcity). They should use those resources with abandon, without concern for waste. That is the overriding attitude of the Economy of Abundance -- don't do one thing, do it all; don't sell one piece of content, sell it all; don't store one piece of data, store it all. The Economy of Abundance is about doing everything and throwing away the stuff that doesn't work. In the Economy of Abundance you can have it all.

I trace a lot of my thinking about abundance to Jerry Michalski's, here's a small chunk of it:

It drives me nuts that scarcity is seen as such a fundamental requirement for creating a business. Sure, there are plenty of businesses built around scarce resources, and sure, Dave's time and my time are scarce, but that's no proof that businesses can't cruise along profitably creating voluntary loyalty by knowing their customers better, never betraying them, always being available and fixing problems, responding more quickly than others.... you get the picture. But go to business school and what they teach you is how to create artificial scarcity. That's the kind of thinking that got us into the present mess.

Digging deeper, Howard Reingold is fostering a discipline of cooperation studies. You can also find this wiki page, with a link to a 1994 essay by Flemming Funch who I used to blog alongside a lot in the early days.

I suppose that abundance economics would include giving one's ideas and actions freely, because one feels like it, because one sees the need for it, and because one understands that when you contribute to the whole, we all benefit.

The Internet is a good example of some of the principles of giving freely and of abundance. So many resources here are given freely, without expecting anything directly in return. So many people are willing to help each other, even though they don't really have to and they don't get "paid" for it.

I think there are many times more power in actions that are done freely, because one sees a need for improvement, than in actions that are done reluctantly, because one is forced by lack.

I believe that abundance thinking, and actions, trumps the minds and greed of the scarce.  That the one overarching pattern in the present wave of innovation is share control to create value.  That what powers it isn't Moore's Law processessing infinite supply or Metcalfe's networking choice and collective wisdom.  It is the capacity of people to produce when old frameworks don't in the way of each other.

So much of this is about how we envision the future.  Not in the grand sense that the rules are changing.  But when two or more people can believe in an opportunity, they can share cost and risk to get there together, in the process reduce them -- and learn so they and others can build upon it.

Structured Blogging

Structured Blogging is described by Marc Canter as a way to gain structure without people having to look at XML.  Today at Syndicate they released an open source component to structure as microformats in microcontent within social software apps. It currently works with Wordpress and Moveable Type.

Socialtext is supporting this ad hoc standards effort alongside 40 or so great companies. These collaborative initiatives, harkening back to the social software alliance, are perhaps the greatest reason for innovation in social software.

My personal take is this bottom-up approach won't degrade into Semantic Fuzz.  But only a subset of users will fill in forms to contribute metadata (readers are better at it than writers, and they are better at writing in an unstructured way and freeform tagging than the constraints of a form).  The real test is if new innovations provide a strong enough incentive for user contributions at the cost of a form.

Catching Wikimania

The first thing that struck me when I arrived at Wikimania was how diverse the group was. Far more international than even blogger events these days. As a result, you have to admire the volunteers grappling with multiple languages and cultures. But then again, they do this all the time, just not in person. There is a ripe sense of empowerment like many blogger conferences, but a different set of issues and constructs for sharing and producing.

The first session I attended was on Wikipedia as a Learning Community (link to paper), by Cormac Lawler. He put forth an argument that we are all experts, but we are learning the practice of Wikipedia by doing it -- creating a network of experts of the future. Shared learning and shared expertise. People who are self-directed and motivated, open to debate but all framed through neutral discourse.

He provided a number of examples that highlight community management issues: ex-wikipedian complaints, conflict, issues of governance, written and unwritten social contracts. One slide quoted Chris Allen:

Wiki Editing Dichotomy -- One interesting possible barrier of entry to active participation in a wiki is what I call the "wiki editing dichotomy". You have to be proud enough to believe what you are contributing is generally worthwhile to others (or at least worth your effort), but you also have to be humble enough to understand that others can improve it. I don't know of many other collaborative media that requires both pride and humility.

He believes that as long as we are self-critical and share our experiences -- Wikipedia can be a learning organization. Suggests creating Lessons learnt pages (on Meta) as one possible step. One person suggests creating a balance between strife and joy. One person says the mark between the learner and the teacher is blurred with the Internet, unlike Gutenberg style one-way communication. One person points out that you can bend a wiki to reflect a hierarchy with rules and permissions so it doesn't function as an open system. Someone points out how tools can change culture, such as in Japan how kids point with their thumbs (trained from SMSing). But in the the middle of the conversation, Cormac made a significant point on the need to shift from rules to discourse. He points out that "a large part of leadership in Wikipedia is knowing where information is," and stresses the need to document community processes.

Open Source To Do Lists

Joi has opened his To Do List on a wiki page.  Heath Row calls it Gutsy. Fun. And potentially more productive.

I do the same in our company wiki, calling it "TTD Ross" (as in Things To Do) and keep it as the first bookmark in my browser.  I really appreciate when others do the same.  While I wish others would do some of the things on my list, it does help to share.

See Also: Cringe-Busting your To Do List

Searching Wiki Feeds

Tim Oren picks up the RSS deficit in wiki land, via a Google translation of a German post and Dave Johnson post where Scott Rafer comments:

“Much of the work to be done is on the wiki side, unfortunately. Feedster, et al, would be thrilled to make wiki changes as easy to search as everything else, but (…) the Wiki vendors need to make RSS output a standard option”

Much of this thread was started by Jeremy Zawodny's valid complaints about RSS feeds that are barely-human-readable Recent Changes statistics.  He picks on the Channel9 feed, but its a common feature for wikis.

Socialtext was one of the first to provide RSS feeds for Recent Changes (partially because Steve Gillmor was bugging me for them).  We chose RSS 2.0 full text feeds as the first implementation in recognition of how news aggregators were adding track changes, which complements the diff of History when logged into the Workspace.  You can find the same approach with Kwiki, Purple Wiki JSP Wiki and other open source wikis by now.

The problem is in high volume wikis, getting a copy of every changed page is too burdensome, a problem noted by Jeff Nolan (btw, go read his 10 questions to ask a VC).  This part of the reason we offered tightly integrated group weblogs within Socialtext.  Any wiki page can be added to a weblog which has its own RSS feed.  One of our users created a convention called a Track Blog, where instead of flagging or bookmarking things of interest, they add it to their own blog (like a Watchlist) which pings them when there is an update.

The Pull Model of attention management puts the user back in control of what consumes their time.  Email notifications at the interval of their choosing, RSS the subscribe to, and more imporantly, unsubscribe from on their own accord.  To state it once again, RSS is pull, not push.  The model only works when a user can leverage:

• Transparency -- when everything is on a need-to-know and C.Y.A. basis, occupational spam proliferates and social discovery suffers.  When people work openly you can browse the periphery of your attention when its less scarce.
• Amplification -- when other people find something of interest they can edit it or link to it to bring back to top of group mind.  In other words, when you miss something in a first scan, there is a greater chance people will bring it to your attention. First order merits of attention are usually personal, covered by email and IM. Second order merits of attention are more difficult to judge at first pass and are best offloaded to a group.
• Search -- when you have confidence in your ability to recall the past, you can focus on the critical path of the present.

Which brings me back to Scott's comment.  I believe we helped start a general trend for RSS in wikis and this conversation may help raise the bar again.  Even though the vast majority of Socialtext wikis are private (providing private syndication), our handful of public spaces will ping cooperatively (we ping Technorati today). 

Meanwhile, Jimmy Wales and others are working on Wikia, a wiki search engine, and Wikipedia produces a nice diff feed.  Adapting to MediaWiki covers 1/4 of public wikis.  There are well over 100 open source wikis, a wonderful diversity to respect, and search engines would do well to adapt to them over time just as they have with less standard blog implementations.

Tim's basic point was Wikis do not supply contentful RSS feeds.  I'd suggest that blog search engines have had the ethic of just ping us and feed us, we'll do the rest -- which should apply not only to blogs, but wikis and whatever else we dream up.

As almost a side-note, I should mention that the wiki world isn't wild about nofollow for at least one simple reason. On a blog you have an author and the audience (commentators?).  Within a wiki, everyone is an author.  We are still evaluating where we will use nofollow, I personally see it as  great industry cooperation creating a tool to use.

Cornucopia of Cooperation and Social Spillover

This is a lengthy rant, cross-posted on M2M (comment there), where I suggest that Cornucopia production can be realized not just through cooperation in developing a resource, but building upon success in governing each other as peers while in the act.

Tagging Napster

What do Napster and Wikipedia have in common?  Both had or have rapid growth with value created by users.  But what's fascinating is how this value was generated from personal and social incentives.

Dan Bricklin's classic 2000 essay (yes, anything written in 2000 that stands the test of time to 2004 can be deemed a classic), Cornucopia of the Commons, provided a framework with three ways of building a valuable database: Organized Manual (e.g. Yahoo), Organized Mechanical (e.g. Altavista) and Volunteer Manual (e.g. Slashdot)

Napster provided incentives for users to contribute organized content and a simplified UI where creating the copy in the shared music directory can be a natural by-product of their normal working with the songs. Bricklin defined this as a Cornucopia of the Commons, where Use brings overflowing abundance.

This is in contrast to Garrett Hardin's 1968 classic The Tragedy of the Commons:

Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit -- in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.

Back in 2000, around when Ev wrote his 2000th post, he pointed out: There should be a payoff to the user for entering accurate information.  Specifically he noted that HotorNot's ratings didn't provide any incentive for accurate photo data. 

By now you can probably guess that tagging is a Volunteer Manual construct that leverages Commons-Based Peer Production with incentives for accurate information. Creating bad labels hurts your own organization and lessens your group benefit when you want to pivot on the global view of the tag.  What Flickr demonstrates is not only adoption growth, but the creation of a database that scales socially.

Orders of Cooperation

This week Paul Hartzog provided a lecture on Creating Institutions for Collective Action for Howard Rheingold's Towards a Literacy of Cooperation class at Stanford.  Paul distinguished between two orders of dilemmas in cooperation:

First order dilemmas: how do we the users appropriately manage the resource?
Second order dilemmas: if I have to cooperate with you, how do I manage you?

Paul suggested that managing the commons was a function of rules, norms and strategies to address common problems identified by Elinor Ostrom: "coping with free-riding, solving commitment problems, arranging for the supply of new institutions, and monitoring individual compliance with sets of rules."  He highlighted Elinor Ostrom's findings that groups that are able to organize and govern their behavior successfully are marked by the following design principles:

1. Group boundaries are clearly defined.
2. Rules governing the use of collective goods are well matched to local needs and conditions.
3. Most individuals affected by these rules can participate in modifying the rules.
4. The rights of community members to devise their own rules is respected by external authorities.
5. A system for monitoring member's behavior exists; the community members themselves undertake this monitoring.
6. A graduated system of sanctions is used.
7. Community members have access to low-cost conflict resolution mechanisms.
8. For CPRs (Common Pool Resources) that are parts of larger systems: appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises.

Cornucopia of the Commons provides an example of how Napster managed the first order with simple rules that led value to accrete to the database.  But Napster wasn't Social Software and did not have to address the second order.  Is there a Cornucopia phenomenon that relates not to a resource, but between people?

I would suggest yes, that value accretes to social fabric as much as an information resource.  When groups achieve something together, there is a natural inclination to cooperate further.  In Political Science, this pattern is found in Neo-functionalism:

One theory of political integration, a study of how groups converge and new organizational forms emerge, is neofunctionalism. It suggests that all political integration begins with technocrats working together on non-political issues. As technocrats work with each other and achieve successful cooperation, the technocrats desire higher-order cooperation. Functional spillover occurs from technocratic to economic to political and even security domains.

Neofunctionalism can be used to describe the political unification of Europe. It begins with the Marshall Plan, with technocrats from different nations working together to distribute aid and rebuild. This cooperation and dense network of international relationships led to the formation of the economic structures such as the European Monetary Union to the European Union to the Euro. Functional spillover occurred into inter-governmental EU political structures. If NATO did not expand its alliance for ascension of Eastern European nations the same would have occurred for defense.

While Neo-functionalism does not account for all the factors that led to the creation of the EU, it provides a pattern of accretive cooperation at significant scale within institutional constructs.  When I asked Paul about this in class, he pointed out a fascinating example on the rise.  China's adoption of open source is a marked departure from totalitarian organization (Organized Manual) -- will functional spillover occur from open source to civic space?

Cornucopia of Cooperation

This is a very big question.  But open source organization is often marked by benevolent dictators.   While the right to fork counters abuses in power and encourages flatter organization and emergent leadership -- the complexity of developing software demands hierarchy at certain scales.  Paul suggested, as others have, that explicit reputation could enable open source projects to scale as heterarchy rather than heirarchy. 

Most open source projects, the ones you rarely hear about, have a flat structures without benevolent dictators.  Cooperation at scales below is not only easier, but an inherent value of the small:

In the 1950s, an economist, Mancur L. Olson, found that small groups are more likely to exhibit voluntary cooperation in these experimental games than larger groups, and that cooperative behaviors increase when the games are repeated over and over with the same groups and when communication is permitted among the participants.

Its worth noting that the risk of fork is greater at small groups (of course, there is less to fork over). But as they scale beyond 12 to 150 and more, the coordination risks increase substantially, especially in software production which is marked by a high level of interdependency between contributions.

Writing code is an act of vertical information assembly (e.g. Apache), marked by the dependencies between contributions made by team members.  By contrast, production of content (e.g. Wikipedia) is an act of horizontal information assembly without dependencies.  This perhaps explains the heterarchical governance of Wikipedia that continues to function at significant scale.  Perhaps explicit reputation could aid decentralization at scale for open source projects and address coordination risks.  But beyond Slashdot, making reputation explicit in the open source community may do more harm than good for factors of production.

Any good leader knows that success is an opportunity to build upon.  Volunteer Manual demonstrates a model of production where a resource of value with the right interface naturally accretes greater value.  Peer Production can be applied to creating a resource with additional social incentives, as in the case of tagging. 

But something altogether more powerful happens when you leverage both first and second order effects.  In Wikipedia, users govern each other through shared control and produce as peers.    Tagging in its present form is only additive, although nofollow/anti-links/vote links are harbingers of what's to come.  With blogging itself, users govern each other with their words, silence and the act of not linking.  Not only do wikis accrete value to the resource in first order cornucopia -- but strangers trust one another with social spillover for a second order cornucopia.