Google and Microsoft now driving SaaS’s disruptive innovation

As incumbent companies go through their own versions of Clayton Christensen’s disruptive innovation, I imagine early observations about the changes-to-come are similar to these seen last week with Google’s Chrome OS announcement…

Item #1:

But while I’m sure Chrome OS will pick up some fans, I have a hard time seeing this as the way of the future for computing.

Nick Mediati, PC World, Is Chrome OS The Future Of Computing? I Hope Not.

Item #2:

It’s certainly interesting and ambitious to state that the entire application platform will consist of web apps. If anyone was going to build such an OS, it’d be Google. Much of the initial commentary regarding Chrome OS has been wholly positive, but one common note of skepticism has been with regard to the “web apps are the only apps” aspect, with the frequent point of comparison being to the 1.0 release of the iPhone OS.

John Gruber, Daring Fireball, Putting What Little We Actually Know About Chrome OS Into Context

Item #3:

Netbooks may be important, but they remain a tiny part of the world’s PC sales. Google’s bet is predicated on strong demand for weak computers.

Google is counting on users of small computers not being tied to specific applications and being willing to accept low cost and, perhaps, ease of use over a more familiar and more powerful environment.

Nick Coursey, PC World, Five Reasons Google Chrome OS Will Fail

The quotes above reflect a rationale perspective on the fate of netbooks and an-all SaaS computing experience. After all, no one does that today. Most people haven’t even looked at the web-only alternatives out there. Microsoft Office is a client app. Adobe is a client app. File directories are client apps for files on your hard drive.

Why does anyone need a web-app only experience? Well, note Microsoft’s announcement of its web-based Office 2010. Something is afoot. Both Google and Microsoft are pushing forward significant initiatives that will increase the percentage of computing done via SaaS. What does Clayton Christensen’s theory say about this?

Disruptive Innovation

A disruptive innovation is one that upends the existing structure of an industry, often sending incumbents into niche positions, and niche players into incumbent positions. Three qualities define it:

• New technologies start out less functional than existing technology
• New technologies find their niche markets
• At the outset, it’s really hard to believe the new technology will ever displace the incumbents

Pretty much sums up the idea of all web-based computing.

Check out the chart below, which diagrams sustaining and innovation over time and performance:

Probably the single most important thing to note about this graph is that the incumbent companies (blue line)  continually add features to their products. This effort expands their addressable markets, as more and more niche segments are covered. It’s a rationale, smart way to grow.

But at some point, the incumbents’ innovations overshoot what mainstream users need. As Christensen notes, performance exceeds what customers can utilize. This is what happens as companies expand into niche markets.

Which brings us to the PCs of today. They are marvels, providing a slick experience for users and able to accommodate a host of new applications. But if I were a betting man, I’d say the most common activities people do with their computers are:

• Surf the web, engage in social media
• Email
• Write documents
• Build spreadsheets
• Create presentations
• Consume and work with media (video, music, graphics)
• Use web-based business apps

Among those activities, what’s the magic of client-based computing? The media-related activities perhaps require the horsepower of a client app. But even those are getting better with web apps.

Web-based apps fulfill the first bullet of early disruptive innovation above – they’re not as full-featured.

Second bullet is the initial niche that wants to use the less powerful alternative to incumbents. For web-based computing, I can see two markets:

1. Small businesses – lower cost, less hassle than installed apps
2. Students – more comfortable with third parties holding data, low cost, activities are mostly writing and web access

Those are the initial toeholds into the operating system market. Getting significant share in a couple segments is critical to getting the attention of application developers.

The Web Apps Are Coming Along

Let’s start with the apps most commonly used in work contexts: documents, spreadsheets and presentations. Zoho has been at it for a while now, and provides a very functional set of apps. Google Docs continue to evolve toward better functionality. And of course Microsoft has joined the SaaS movement. The TechCrunch article about Microsoft Office 2010 notes:

Most certainly a direct challenge to Google Apps, Microsoft is rolling out lightweight, FREE, Web browser versions of Word, PowerPoint, Excel and OneNote. All based in the cloud, the web-based versions of these products have less features than their desktop cousins but still let users that users basic tools to edit and change documents.

Already inside the enterprise, wikis are quite functional. As alternatives to writing up documents and emailing them around, they are quite powerful. Atlassian Confluence, Socialtext, JSPwiki and others are highly functional. They offer a formatting experience similar to the most commonly used functions of document applications.

And for graphics, a new company Aviary got a great review in NetworkWorld:

It’s true that there are a number of graphics editors online, but most fail to come anywhere close to the functionality of Adobe’s iconic software. Until now.

The ecosystem to provide online apps with functionality comparable to client apps is growing.

My Personal Evolution to SaaS

I’m a former banker, then I did product management at eFinance and Pay By Touch. In those jobs, I never bothered with hosted apps. I certainly never thought about wikis. I did my writing in Microsoft Word. At Pay By Touch, I was introduced to the Confluence wiki. I used it because engineering wanted me to, but only as a centralized document repository. I’d rather have emailed the documents around.

It was at Connectbeam that I started to really *get* wikis. The ease of writing on them. The value of a common place to find and share documents. I found the core rich text editing functions of a wiki to be quite sufficient for what I need.

Now you can’t get me off the wiki.

When I was noodling on a business idea 18 months ago, I wrote everything up on Google Docs. It was an easy way to share the documents while updating them as often as I needed to.

More recently, the client applications TweetDeck and Seesmic have been getting a lot of attention. I’ve resisted them, because I just can’t see downloading and running these apps. They take their toll on your PC, as Louis Gray wrote:

For those Web-addicted souls who spend a good deal of their day buried in Twitter, seeing their friends updates and exchanging conversations, most software options have required the installation of Adobe AIR software, which to date has whirred your CPU to life, turning on laptop fans, and chewing through memory. The work to throttle down load on RAM and CPU is a constant battle, which both Loic’s team and Iain Dodsworth of TweetDeck have been working on since their products debuted.

In contrast, logging into the new Web version of Seesmic doesn’t feel like you’ve sacrificed your computer power to get your Twitter fix, and you don’t give up features either.

In short, whenever I can make a move to web-based apps, I’m doing it. I’ve come a long way from my Bank of America days.

Google Chrome OS and Microsoft Office 2010 – Forever Changing the Game

Certainly the idea of PCs as basic on-ramps for doing work via the web has been around for a long time. In 1996, Larry Ellison believed that network computers would outsell conventional PCs by 2000. Well, we see how that turned out.

In 2009, things have changed remarkably. First, usage of SaaS for applications has grown significantly, although it’s still small as a percentage overall. Second, people’s comfort with web-based computing has grown tremendously. Most enterprise software is now delivered as a web application. Salesforce has been a tremendous trailblazer here. And Facebook is fostering a greater comfort with sensitive data held by a third party.

Finally, Google is a titan. Oracle was (and still is), but in 1996 it was the database company. No one knew what to make of its network computers. Google is an entirely different animal. It has established credibility with its Google Apps. And presumably, any web app will work well on the Google Chrome OS. Including Microsoft’s new cloud Office offering.

This doesn’t stop Microsoft from coming out with its own web-based OS. Expect that if the Chrome OS seriously threatens. A lower cost OS for low-cost PCs to use low-cost web apps.

Microsoft’s announcement is huge because the Office suite is a brand used and trusted by millions of people. With their marketing heft, this is a significant boost in the credibility of SaaS computing. Microsoft also is a student of history, and clearly doesn’t want to risk the marginalization seen in Clayton Christensen’s studies of disruptive innovation.

The past two weeks have seen two significant milestones on the SaaS front.

This brings me to my final point. Market transitions don’t happen that quickly. The Google and Microsoft offerings won’t be ready for a while. And existing hardware, software and habits are going to change overnight. We will still have client-based applications for quite a while.

But let’s see how the small business and student markets take to these efforts.

My Ten Favorite Tweets – Week Ending 071009

From the no-hitter home office at AT&T Park in San Francisco…

#1: If you tweet about a baseball no-hitter in progress, is that risking a jinx?

#2: It’s from 2008, but still a great read: Shirky’s Law and why (most) social software fails http://bit.ly/HslAq by @michael_nielsen

#3: Email: The First –and Largest– Social Network http://bit.ly/4dmIiw by @jowyang Hmmm….where does postal mail rank then?

#4: Reading: 15 ways to spark a fight in the E2.0 community http://bit.ly/QvOj9 by @gyehuda #7 is my favorite.

#5: Anyone remember Larry Ellison’s dream of the Net Computer back in 1996? http://bit.ly/hirKr Fast forward to 2009’s Google Chrome OS

#6: @SameerPatel @defrag Oh yes, happy to provide the State of California with Spigit. Better filtering, to avoid this: http://bit.ly/2WyL2t

#7: “What are the five things you value most in life?” asks @fhinnovation http://bit.ly/xkc4L Me? Kids, wife, health, living in U.S., job

#8: My wife and I are now sharing our Google Calendars. Only way to stay on top of the kids’ schedules now that they’re both starting school.

#9: Are you following @badbanana ? Practically every tweet of his is a treasure of humor. Found out about him a few months ago thru @chrisbrogan

#1o: My 5 y.o. son yesterday: “Daddy, would you still love me if my name was different?” Me: “Depends on the name.”

Google Gets Serious about Innovation

Yeah, that’s funny to say, isn’t it? Google is getting serious about innovating. “Serious” as in determined not to miss out out good opportunities. From the Wall Street Journal last week:

Google has recently started internal “innovation reviews,” formal meetings where executives present product ideas bubbling up through their divisions to Eric Schmidt, Larry Page, Sergey Brin and other top executives.

“We were concerned that some of the biggest ideas were getting squashed,” said Schmidt.

Google Searches for Ways to Keep Big Ideas at Home, Wall Street Journal, June 18, 2009

Google is renowned for its innovation chops. The company consistently ranks among the Top 2 most innovative companies in Business Week’s annual survey. It’s not surprising. The ability of engineers to devote 20% of their work time to any side project of their choosing is one of the strongest statements about the importance of innovation in the world (the new United States CTO recently praised it). Google has instilled innovation into its corporate DNA.

So when the company says it’s missing out on good ideas, this is both surprising, and perhaps somewhat expected. Surprising, because how does a company consistently ranked at the top of innovation surveys miss good ideas? Expected, because Google now employs 20,000. With that many people, how does a company stay on top of all those ideas?

What I’m seeing is a company that is is progressively systematizing its innovation practice. Google is following the path of its large enterprise brethren, adapting its internal processes to account for its size and its need to grow across multiple fronts. It really has to. It’s no longer the small company where ideas get tossed around on a white board, and everyone knows what’s going on. I mean, there are 20,000 people employed there.

Google is getting serious about innovation.

A Google’s Innovation Management Scorecard

The scorecard below is a simple one, which I’ll freely confess is based on what I’ve read about Google’s innovation. I don’t work there, but the assessment feels about right. See if you agree:

These are five elements of an innovation program, highly focused on the front end of innovation.

Strategic innovation focus areas: I rated the “strategic innovation focus areas” as average, because it’s not clear exactly what Google’s focus areas are. Google employees might dispute that assertion. But it’s also true that Googlers treasure the ability to work on off-topic, seemingly stupid ideas.

Employee ideas encouraged: Well, yeah! 20% time.

Visibility into ideas generated: I also rated “visibility into ideas generated” as average. Really, this rating is based on the Wall Street Journal article. It sounds like executives weren’t able to see all the good ideas they wanted to. I will note, that this Googler said:

In order for 20% time to work, anyone must be able to see what is out there

I’ll characterize “must be able to see it” as a wiki-like philosophy of easy accessibility. It also may have a local orientation, where you tell your colleagues to go look at your code. Making it easy to see the ideas and let the best one surface is a different issue. This becomes harder as companies get bigger. Eric Schmidt and Hal Varian wrote about the challenges growth brings:

A final issue is making sure that as Google grows, communication procedures keep pace with our increasing scale. The Friday meetings are great for the Mountain View team, but Google is now a global organization.

Select the best ideas: Go back to Eric Schmidt’s statement in the WSJ article. The biggest ideas were getting “squashed”. It may also be hard to define what exactly “the best” means. With a broad mandate to organize the world’s information, presumingly any idea could be considered among the best.

Google’s challenge of coming up with big ideas is something Om Malik wrote about a few months ago. Personally, I’m not insistent that innovation is only for game-changing ideas. But perhaps Om’s post can be an angle on the ability to identify the best ideas.

Operationalize ideas: Google is quite good at operationalizing its ideas. Search, AdWords, Gmail, Google Reader, Android, etc. It’s got the resources, market presence and experience to turn an idea into an innovation.

Prediction: Google Starts to Focus Employees’ Innovation Efforts

Google’s innovation strength draws from its employees’  willingness to spend 20% of time of new ideas. It is distinct among global companies with this regard. 20% time as a method of producing an immense number of ideas.

Which means these innovation reviews by top executives will be interesting. Already, Google Wave is the result of these. And a nice answer to whether Google can come up with big ideas.

It wouldn’t surprise me if these innovation reviews, and the projects that are selected, become a signaling effect to the troops. When they see what the top brass green-light and give resource priority to, it will likely have an impact on what they put their 20% time toward. Sure, some entrepreneurial types will do their own thing. And if they don’t get priority treatment, they’ll start their own companies. But I’d wager the majority would likely orient their research and creativity in the preferred areas.

Google’s growth is slowing, although much of that is due to the general economic climate. Still, expect for Eric Schmidt and team to look at areas where they want to see growth. And to let the troops know what those areas are.

Imagine that. All those 3.9 GPA-toting, know-why-a-manhole-cover-is-round brains putting their focus on specific growth areas. As Scott Anthony wrote about Google’s new discipline around innovation:

It doesn’t seem like Google is walking away from its ideals. Rather, it’s trying to couple its world-class approach to the “front end” of the innovation process with the world-class discipline exhibited by companies like Procter & Gamble. It might yet struggle to bring these two approaches together. But success could allow the company to create an innovation capability that actually lives up to the hype.

And hopefully the “stupid ideas” still get attention.

Google Wave and the Enterprise: Beautiful Potential, Faraway Dream

Google Wave…Google Wave…

Google Wave.

I’ve spent some time the past few days reading up on Google Wave. The Google I/O 2009 presentation by the Wave team was a smashing success. Quickly summarizing what it is, borrowing from Google’s own categorizations:

Product: Free-form page onto which multiple people can contribute and interact. Every wave in which you are a participant shows up in an inbox. The modes of communication are both email and IM. Email, because you can write something anywhere in a wave, and all wave participants see that the wave is updated in their inbox. Like Gmail.  IM, because updates post instantly, and anyone on the wave at the same time can see them. There’s more there, watch the I/O presentation demo to see it all.

Platform: Wave is to be an API playland. APIs to leverage the functionality of Wave, and embedding functions in Waves. The I/O demo includes functions for maps embedded easily into a Wave, and the ability to create a simple event tracker where Wave participants simply click whether they are attending or not (Evite for dummies). Very cool stuff. Another use of APIs…Wave as your Twitter client. With real-time search results served up into your Wave inbox.

Protocol: Waves are to follow an open federation, which means they all can interact with one another. Wave servers can be set up behind the firewall.

As they said in the demo, they though in terms of “what would email look like if we invented it today?” How long before Gmail converts over to Google Wave? Maybe in a year or two.

It’s quite early, and we have limited information so far on Wave. But I thought it’d be interesting to consider Wave from the perspective of an enterprise software company. It’s a starting point for me to get a handle on Wave and where it might have an impact. A few notes:

• I’ll make educated assumptions about what Google Wave can do
• I may be re-hashing old concepts here, such as portals
• Google Wave would need significant penetration of the enterprise market, potentially displacing Outlook email

Enterprise software is a broad area, too broad to analyze well in a post. Rather, I’m going to focus on the enterprise software I know well (my company’s), and make some points that will apply to all enterprise applications.

OK, with that out of the way, and Dion Hinchcliffe’s post about the enterprise and Google Wave as inspiration, let’s dive in. I’m going to lay out some initial thoughts of how enterprise software could integrate Google Wave. And then I’ll explain why I think it’s going to be a long time coming before it impacts the enterprise.

What Job Does Your Software Do?

Clayton Christensen talked about the “job” your product does. In other words, think less about your product’s features, and more on what needs your product fills for customers. From that perspective, innovations are more likely to emerge.

This notion struck me as a good way for enterprise software companies to think about how Wave might relate to their products. In other words, less focus on features, more focus on specific use cases.

Spigit provides enterprise idea management software. Its “job” is as follows:

• Easy place to enter your ideas
• Interact with people over your idea or ideas of others
• Help identify the best ideas
• Make it easy to track ideas during their progression into full-blown initiatives

I’m going to use these four tasks as the basis for thinking about Google Wave. Where will Google Wave have an impact?

Easy place to enter your ideas

With Spigit, we have a simple basis for entering your idea – a basic web form. And Google Wave supports forms, as shown below:

Example of a web form in Google Wave

The ability to use forms makes me think there’s an even better way for employees to enter ideas. A principle that I really like is that information and activities need to be in-the-flow of daily work. The more you can put things at the finger tips of where someone is engaged, the better it is for awareness.

In the demo, different types of waves were available via the New Wave dropdown menu to allow access to separate apps. Here’s what I can see happening:

• A menu option for New Idea is displayed inside an employee’s work Google Wave UI
• Selecting it launches a new Wave, with the idea template displayed
• Enter the info, click submit
• It’s now on the employee’s personal Wave page, as well as becoming a new Idea in the Spigit platform

The Idea is now part of the Wave inbox. It’s also accessible on the Spigit platform, for others to see. That would be great. It’s a level of interconnectedness that is difficult to put in place today. It wouldn’t just apply to ideas either. Why not do this for expense forms? Wiki pages?

Key here is leveraging the open federation protocol. A person’s individual Wave becomes a new object in another Wave-based application. The Idea would be considered a Wavelet in Spigit. From the demo, here’s an example of two separate Wave servers (i.e. two separate apps), where a Wave is shared between them:

Wave created on one server displays on a second server

Interact with people over your idea or ideas of others

The parallels between Google Wave and Gmail make Google Wave great for knowing when there are changes to a Wave. In Gmail, when a reply to a message hits your inbox, the original message becomes bold, and moves to the top. It’s a clear, easy way to see when someone has responded, while keeping the entire thread intact.

Google Wave applies this characteristic even more broadly. If someone replies to your wave, it returns to the top of your inbox, bolded. If someone edits your wave, same thing happens. Basically, any updated to a Wave will display as a changed item in the Wave inbox. The screen shot below shows this functionality:

Google Wave inbox - changed items at top, bolded

On the Spigit platform, a number of actions can be performed with regard to an idea: vote it up or down, comments on it, review it, post/edit a wiki page for it, become a team member. Now all of these actions are supported with email notifications currently.

Any of these actions will cause your Idea to return to the top of your inbox, bolded. Where an email notification is good, a Wave notification would be great. Everything can be seen in context, and you can respond right from your Wave inbox. Comment, IM or just see the latest changes to your idea.

Another great innovation is the ability to easily add others to a Wave. With this functionality, you can let others know about your idea, and they can see changes as they occur as well. If the idea isn’t interesting to someone, they just remove themselves from the Wave.

Really, really powerful feature.

These easy interaction hooks for objects and activities are something that many enterprise applications would benefit from.

Help identify the best ideas

The Spigit platform tracks many activities and included unique features to help surface the best ideas. And this where Google Wave doesn’t change things really. A lot of that is the secret sauce of the Spigit platform.

Which brings me to an important point: Google Wave won’t replace enterprise software applications. The logic and features of the individual apps – ERP, CRM, wikis, HR, etc. – continue to be the primary reason companies buy them.

Assuming Google successfully brings Wave into the enterprise, either replacing Outlook or standing beside it, I’m sure there will be companies that create Wave-based apps to compete with the big enterprise systems. But such competition happens today anyway.

Make it easy to track ideas during their progression into full-blown initiatives

In Spigit, ideas that make it go through a series of stages. Each stage has different criteria for evaluating whther it’s ready to be prototyped and operationalized. Along the way, aspects of the idea will be addressed in other enterprise applications:

• Company wiki
• Product development software
• Engineering issue tracker
• Enterprise resource planning (ERP)
• Accounting
• Project management
• Blogs
• etc.

This is where a couple of features might make sense. Google Wave includes robots. Robots are “automated elements” that perform tasks as part of a Google Wave. Let’s assume the original Idea wave is copied to other enterprise apps. Now, there is a connection from the original idea to these objects in other systems.

The robot can look for updates on those other Waves which tie back to my Idea. When there’s a change in status, My Idea wave gets the update. I’m now on top of what’s happening with my initiative, from anywhere in the company.

Yes, that would cool.

The Impossible Dream?

You may have heard the phrase “working the wiki way“. Well I’d like to work the “wave way”. The possibilities with Google Wave are tantalizing. A much more seamless experience for using software. A common protocol around which applications communicate.

Not likely to happen for a while, if ever.

For companies like Spigit, with a web 2.0 orientation and SaaS delivery, Google Wave is something we can do, and as an enterprise social software company, it makes sense. But to fully realize the benefit of Google Wave inside the enterprise, a lot of applications will need to leverage the Google Wave platform. It’s hard to imagine SAP, Microsoft, Oracle and the like doing much with Google Wave.

As Dion Hinchcliffe notes:

New protocols, servers, data formats, and client applications are required to use wave. Unfortunately, Google Wave brings a lot of baggage with it, though it’s mostly straightforward. You will require new software, though not on the client since that all runs in a zero-footprint browser client. This means more integration code, management, and monitoring.

You look at that, and contemplate all the installed software already in place. And I don’t imagine MISO thinks of Google Wave as being in their interests. Google Wave directly overlaps Microsoft Exchange and Outlook, for instance.

So it will be up to the young bucks to push for the new way to deliver end-user simplicity and in-the-flow accessibility to employees. It will take time.

I’ll be watching developments around Google Wave. How about you?

Three Reasons You Need to Be on FriendFeed *Now*

FriendFeed has got to be one of the most innovative companies around these days. It seems every week, it’s hatched something new with its service. That alone makes it worth being there.

Then there’s the interactions. When those are rocking and rolling, it’s a lot of fun. Even a few Likes and comments are worth the experience. Of course, not everyone is engaged enough on the service to fully benefit from that. Which is something I completely understand, by the way.

I’ve got three reasons you should be on FriendFeed now. Not for the conversations. Not for the real-time experience. But three reasons that will be valuable to you personally.

The FriendFeed triple play.

#1: Google Juice

You likely know the background of much of the FriendFeed team – Google. Yeah, these guys know search. Even more importantly, they know something about how Google manages search.

So it comes as no surprise that FriendFeed can rank pretty highly in Google search results. Here’s a favorite example of mine.

Alex Scoble (yes, Robert’s brother) is planning his wedding reception. One candidate location for the reception was the Hillsboro Cultural Arts Center. But the managers of that location were not very flexible in working Alex and his fiance. On FriendFeed, Alex posted about the Hillsboro Cultural Arts Center, with some comments explaining why he was not going to use them. It’s not a flattering portrayal of the Center.

Well, check out what a search on the Center’s name returns: Alex’s FriendFeed entry is the #6 result.

Not something that Center wants in their search results, but a great way for Alex to let others know about his experience with the Center.

FriendFeed’s Google prowess shows most strongly in name search results.

On this FriendFeed discussion, Mark Trapp noted that his FriendFeed account always ranks higher than his personal site. Well, if you run a search on mark trapp, you’ll also see that his FriendFeed account is ranked #1, ahead of some attorney named Mark Trapp. Without FriendFeed, that attorney would own the #1 search result.

And FriendFeed member Brian Chang noted this back in January: “I just discovered that my FriendFeed comes up on the first page of Google search results for my name. I think that’s the first time something of mine has actually done that.” A quick search on brian chang reveals he’s not on the first page, but he’s still there, among a lot of brian chang sites.

FriendFeed shows up #3 on a search of my own name.

#2: Personal Content Database

Let’s assume you participate in more than one social media site. Maybe Twitter, Del.icio.us, blog and Flickr. FriendFeed, of course, lets you pipe all of that into its site. If nothing else, having one place where you can search for all your content easily is reason enough.

Returning to the search pedigree of the FriendFeed team, there’s a really good reason to have your Twitter account piped in. It makes it easy to find your tweets. As Louis Gray noted last week, it’s much easier to find tweets in FriendFeed than it is with Twitter’s search. On FriendFeed, you’ve got an archive of all your tweets. On Twitter, you don’t.

Here’s an example. I’ve tweeted a few times about “friendfeed” and “search”. On Twitter, I get one result when searching my tweets for those words. On FriendFeed, I get many, as I’ve actually written those two words in a number of tweets. See the screen shots below, which show only a portion of the FriendFeed search results:

Remember when the bookmarking service Ma.gnolia lost all its users’ data? If you had saved your bookmarks there, you were out of luck. There was no recourse to getting that data out. In a post here, I noted that bookmark service Diigo lets you save to De.licio.us simultaneously. The idea being that you needn’t rely on just one service, in the wake of Ma.gnolia’s data loss.

Well, that same notion of mitigating your risk carries over to FriendFeed as well. I pipe all my Diigo bookmarks into FriendFeed. So now I have my bookmarks in three places: Diigo, Del.icio.us and FriendFeed. And when I need to look up one of my bookmarks, where do I usually search? FriendFeed.

#3: Tracking Web Content about What Interests You

Probably my biggest use case for FriendFeed is as a tracking platform for various topics I care about. I’ve got a room to track Enterprise 2.0, which I augment with following 70+ individuals from that world. I’ve got a room for tracking my company Spigit, its competitors and the innovation management field.

The importance and value of tracking the Web this way is something I’ve discussed here many times. You can visit those prior posts for greater detail on how and why.

But I’ll say this. Whenever I need to get up to speed quickly on something, setting up these FriendFeed Rooms and Lists is one of the first things I do. You’d be amazed at how effective they are. And unlike a lot of social media monitoring programs, FriendFeed doesn’t cost you a thing (although some would pay for these features).

Wrap-Up

Those are three powerful reasons you should be on FriendFeed. Right now. They don’t require you to get in there and apply Likes and comments to entries if that’s not your thing (that’s powerful in its own right, but more the province of social networks). But you will immediately start benefiting from what the service offers.

Know anyone holding out or just unaware of FriendFeed? Send ‘em this post.

Google, Yahoo, Microsoft Want to Legalize For-Money Prediction Markets

$500 on the U.S. economy turning positive in the first quarter of 2010!

Wouldn’t it be great if you could put money down on your predictions of future events? If Google, Yahoo and Microsoft get their way, you just might be able to do that.

Back in September 2008, Google and Yahoo, united under an organization called Coalition for Internal Markets (CIM), wrote a 28-page letter articulating their support for the legalization of small stakes prediction markets. On April 9, 2009, Microsoft added its support to Google and Yahoo’s letter. Here’s an excerpt from the CIM letter:

CIM believes that small-stakes event markets of the kind first developed by the Iowa Electronic Markets have the potential to provide significant public benefits and recommends that the Commodity Futures Trading Commission propose regulations under which such markets may operate, both as internal markets or as public markets.

I learned of all this through Oddhead, Midas Oracle and Bo Cowgill’s blogs. This has the potential to be quite powerful as a forecasting tool, and a way for people to profit from their prediction acumen.

Just how did this come about?

Commodity Futures Trading Commission Wants Input

The Commodity Futures Trading Commission (CFTC) is the government body that regulates the sale of commodity and financial futures and options.

In May last year, the CFTC put out a public notice that it was soliciting comments on the regulatory treatment of financial agreements offered by prediction markets. So apparently the idea of legalization is on the Commission’s mind. The CFTC distinguishes prediction markets as not including financial agreements on market prices (stocks, cotton, etc.) or broad-based measures of economic or commercial activity. Rather, they define them as:

Event contracts may be based on eventualities and measures as varied as the world’s population in the year2050, the results of political elections, or the outcome of particular entertainment events.

“Entertainment events.” Think American Idol, and putting your money down on who you predict will win. That Adam Lambert?

The CFTC notes that its staff has received “a substantial number of requests for guidance” on the propriety of prediction markets’ use. Sounds like a pretty healthy interest in this sort of thing.

Getting Ahead of the Regulatory Curve

In the CIM letter, Google’s Hal Varian and Yahoo’s Preston McAfee develop three themes:

• CFTC has the right to regulate these markets
• Prediction markets provide substantial benefits
• Propose a set of sensible rules for regulation

Google states that it started operating internal prediction markets in April 2005, and that now it runs 25-30 prediction markets per quarter. The purposes of the markets include forecasts of product demand, internal performance (e.g. product release dates), company news and external business environment factors. Google also uses the prediction markets to assess the strength of relationships between different teams.

Yahoo operates internal prediction markets. It also operates public events, such as the Yahoo!-O’Reilly Tech Buzz Game, in which participants predict which technologies will be popular, and which ones lack merit.

The two primary benefits discussed in the letter for predictions markets are: (i) Generation of useful information by aggregating the opinions of individual participants; and (ii) Hedging exposure by making predictions related to some position an individual holds.

The two companies then smartly propose some rules that would govern the small stakes prediction markets:

• Total exposure per market of $2,000
• Maximum loss at $2,000 over the course of a year
• Non-intermediated, electronic markets
• Trading could be matching bids and offers, or there could be an automated market maker
• Program to monitor trading
• Maintain trading histories for five years

Generally, the letter asks for a fairly flexible approach to the markets, with adherence to core operating principles to ensure fair, open trading.

An Inevitable Question: Gambling?

Perhaps as you’ve read this, the thought occurred to you…isn’t the same thing I can do in Las Vegas? Bet on sports teams? What distinguishes this from gambling? Indeed, in its solicitation for comments, the CFTC asks this:

What objective and readily identifiable factors, statutorily based or otherwise, could be used to distinguish event contracts that could appropriately be traded under Commission oversight from transactions that may be viewed as the functional equivalent of gambling?

The CIM letter notes that gambling is generally associated with sports events and games of chance. It recommends the CFTC develop a definition of permitted markets based on a set of examples, and expand the list on a case-by-case basis.

This question will likely receive the most attention from the public. What will be interesting is how Obama’s administration views this versus Bush’s.

Count Me In

Add my YES vote to this. I think it’d be great to buy and sell positions based on predicted event outcomes. The example I led this post off with, the economic rebound, is a great way to tap public sentiment about the economy. We’ll have to watch how this unfolds.

How about you? Do you favor small stakes prediction markets?

My Ten Favorite Tweets – Week Ending 050109

From the home office in La Gloria, Mexico…

#1: Not sure if it’s good or bad that I just learned that David Souter is retiring from the Supreme Court via Twitter Trending Topics.

#2: Had to do it, subscribed to @whitehouse

#3: The #TCOT grass roots conservative movement on Twitter is riven by feuding at the top: http://bit.ly/nwr1m

#4: Interested in corporate innovation? Join Forrester’s @oliveryoung & me for a webinar to learn practical ways to improve  http://bit.ly/cGI4W

#5: Reading: How to Get the Most From Your Best Ideas http://bit.ly/kuWci by @Accenture

#6: Looking at BW’s 50 most innovative companies http://bit.ly/18nBe7 How much of what #1 Apple & #2 Google do really applies to most companies?

#7: Reading – Enterprise 2.0 marketing score card: solid ‘C’ http://bit.ly/T1yJi by @sameerpatel Great Google Trends charts

#8: Joined foursquare, which asks you to add/rate stuff for cities. Hard to be hip as a parent, here’s my playground entry http://bit.ly/MBsE4

#9: Really interesting study and hypothesis about how our brains forget/rewrite memories just by recalling them http://bit.ly/1941k8

#10: Today is apparently a big day 4 college acceptance letters. Here’s a post that describes harshest/nicest reject letters http://bit.ly/1anN7p

My Ten Favorite Tweets – Week Ending 041709

From the home office at Twitter headquarters in San Francisco…

#1: Our long national nightmare is over… @aplusk is the first to hit 1 million Twitter followers http://bit.ly/qMUDN

#2: Watching Larry King show about Twitter. Sean Puffy Combs stresses that if you want followers, you have to have something to say.

#3: My co-worker just noted that @oprah ’s first tweet was all CAPS. No need to shout!

#4: One thought about the celebrity attention Twitter is now getting. Watch for increased spammers creating accounts to @reply us to death.

#5: Reading: Purpose-Driven Social Media is Key to Elusive ROI http://bit.ly/18voKY by @MiaD

#6: New Spigit blog post: Corporate Innovation Is Not a Popularity Contest http://bit.ly/27omc7

#7: http://twitpic.com/3c9y9 – Noting this for posterity…my blog hit top 10K in Technorati. Even got a little badge.

#8: My son Harrison turns 5 tomorrow. I’m making a card for him with PowerPoint, iPhone pix, Google images and my HP color printer.

#9: The marshmallow Easter peeps…I find myself not sure I’m really loving them as I eat one, but then I strangely crave another right after.

#10: When you hear Journey’s “Don’t Stop Believin’”, do you think of The Sopranos, or the Facebook crew’s video in Cyprus?

My Ten Favorite Tweets – Week Ending 032709

From the home office in Fargo, North Dakota…

#1: My alma mater, UVa, to drop its computer labs since everyone has laptops. http://bit.ly/6YnAe I remember the labs well.

#2: MSNBC picks up the cisco fatty story: http://bit.ly/IJH5

#3: ABC News online picks up the cisco fatty story http://bit.ly/HodQ1

#4: The twitterer behind the cisco fatty incident, @theconnor , blogs her response: “Dear Internet Superheroes” http://bit.ly/tDx4k

#5: Connor Riley (@theconnor of cisco fatty fame) sits down with MSNBC online for an interview http://bit.ly/KDcPe

#6: “Business is a good game – lots of competition and a minimum of rules. You keep score with money.” Nolan Bushnell (Atari founder)

#7: A classic Business Week article from 2000 asks “But how will Google ever make money?” http://bit.ly/ovA6x #twitterbusinessmodel

#8: Catching up on this amazing e2.0 post by @dhinchcliffe “Sharepoint and Enterprise 2.0: The good, the bad, and the ugly” http://bit.ly/IAiDW

#9: Still wonder why we don’t have BART ringing around the SF Bay. Instead, we get BART + Caltrain. Why? Tracks is tracks.

#10: Utterly fascinated with the SF K Files blog where parents (i.e. moms) are posting info about the kindergarten arms race: http://bit.ly/sl5fU

Microblogging Will Marginalize Corporate Email

In case you missed it last week, Google CEO Eric Schmidt had this to say about the microblogging service Twitter:

Speaking as a computer scientist, I view all of these as sort of poor man’s email systems. In other words, they have aspects of an email system, but they don’t have a full offering. To me, the question about companies like Twitter is: Do they fundamentally evolve as sort of a note phenomenon, or do they fundamentally evolve to have storage, revocation, identity, and all the other aspects that traditional email systems have? Or do email systems themselves broaden what they do to take on some of that characteristic?

At first blush, this seemed like an example of Google not ‘getting it’ when it comes to Twitter (see the comments to the linked blog post above). But I think he’s actually on to something. It is a new way of posting notes about what you’re doing, but it also has a lot of communications usage via @replies and direct messages (DMs).

Reflecting both on Schmidt’s statement, and my own use of Yammer at my company, I’m seeing that microblogging is slowly replacing a lot of my email activity.

As more companies take up microblogging with services like Yammer, Socialcast, Present.ly and SocialText Signals, employee communications amongst employees will both increase and divert away from email. Something like this:

Socialcast’s Tim Young said this about email:

Email is dead. If your company is relying on email for communication and collaboration, your company is walking dead in this new economy.

Being the CEO of Socialcast, that’s not a surprising statement. But I think he’s more right than wrong.

The shift I describe applies regardless of the microblogging application used. Since I’m actually familiar with Yammer as a user, I’ll talk about its features in the context of this shift.

Yammer Follows the Innovator’s Dilemma Path

A useful context for thinking about Yammer versus corporate email is Clayton Christensen’s Innovator’s Dilemma. Generally, the premise is that incumbent companies need to grow and increase the functionality of their products. This increases the products’ complexity and cost, but also increases margins. But as the incumbents are doing this, it opens an opportunity at the lower end of functionality for new companies to come in and attack the incumbents’ base. From Wikipedia, here’s a graphic that demonstrates the concept:

A useful way to think about the Innovator’s Dilemma in the enterprise software space comes from this blog post, Enterprise Software Innovator’s Dilemma. Existing vendors expand the functionality of their products, heavily relying on the requests of large customers. Over time, this has the effect of creating a robust, highly functional and more expensive offering. This trend is what opens the door for new vendors to come in.

Let’s consider Yammer in this context. Simple microblogging runs along the “low quality use” in some ways. At least in terms of the feature set. But it certainly takes “use case share” away from email.

If all you could do was make public notes, that’s the end of the story. Microblogging does not replace email. But these guys are advancing their product, and are rising up the performance axis.

Here is what Yammer now offers:

• Behind the firewall installation
• Public notes
• @replies
• DMs
• Groups
• Private groups
• File attachments
• Favorites (a form of bookmarking)
• Tagging
• Conversation threading
• Unlimited character length (i.e. not limited to 140 characters)
• Search

Look at that list. When you think about your own internal email usage, what ’s missing? Folders or the Gmail equivalent of tags seem to be something for the down the road. I’m not an IT manager, so I’m sure there are some heavy duty infrastructure aspects of Microsoft Exchange/Outlook and Lotus Notes that are not there. Thus, Yammer still has the insurgent, disruptor profile relative to corporate email.

But don’t underestimate that. There’s what IT knows is needed behind the scenes. and then there’s what the users actually do when given the different applications.

Expanding Communications, Marginalizing Email

Microblogging’s premise is that public proclamations of what you’re doing and information that you find are a new activity for people, and they have value. Information is shared much more easily and in-the-flow of what we’re all doing anyway. In an office setting, I continue to find the way Dave Winer describes it quite useful: narrating your work.

This use case is what promises to dramatically increase communications among employees. As we’re seeing with Twitter’s explosive growth, it takes time for people to grok why they should microblog. But once they “get it”, it takes off.

So services like Yammer have your attention as you post updates and read what others post. In reaction to what someone posts, you hit the Reply button. You’re having a conversation that others can see, and join in if they want. You decide to have separate conversation with someone in this context. Do you open up your email? Or just click “Private Message” to someone? I’m willing to bet you’ll do the latter.

Which starts the marginalization of corporate email. Why? Because a lot of what’s going to generate interactions is occurring right on that microblogging app you’re looking at. It’s the most natural thing to act in-the-flow and use that application in lieu of email. Well-designed microblogging applications are also quite seductive in terms of ease-of-use.

As I’ve written before, email’s role changes in this scenario. The logical end use cases are:

• Notifications
• External communications

This isn’t something that’s imminent. Email is quite entrenched in daily workflow, older generations aren’t likely to stop using it and internal microblogging is still nascent.

But no one said the Innovator’s Dilemma plays out over the course of a couple years. It will take time. But watch the trends.

*****

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My Ten Favorite Tweets – Week Ending 030609

From the home office in Damascus, Syria….

#1: Twitter has another huge growth month in February, per compete.com: http://bit.ly/aJ0p

#2: It always cracks me up when people say Twitter is nothing more than glorified IRC (http://bit.ly/KD3H6). Most people I know never used IRC

#3: A lot of posts like this lately: “Twitter destined to replace Google Search” http://bit.ly/14G7nn Some truth, but overstated.

#4: On Enterprise 2.0: “There is a big difference between an integrated user experience and a suite.” ReadWriteWeb http://bit.ly/6Njb

#5: Flashes of insight cannot be willed, they are spontaneous – Willam Duggan, Strategic Intuition

#6: Visa commercial uses Smashing Pumpkins “Today” as its theme. Visa gains some cool points.

#7 Anyone remember the Nestea Plunge? I have this game with my 4 y.o. son where I catch him falling backwards. Call it the Nestea Plunge.

#8: Just want to note for the record…last night’s ‘24′ was great. The show is strong this season.

#9: I miss the plastic bags we’d get from grocery stores here in SF. They were perfect for the little trash cans around the house. #ecoprogress

#10: My 4 y.o. son Harrison is a huge fan of the PBD Kids website http://pbskids.org/ Well done, incl. games with his fave PBS characters.

Data Privacy, Data Ownership and Who You Trust

In the recent imbroglio over what exactly Facebook was saying in its (now-reversed) updated Terms of Service (TOS), I found myself on the opposite side of a lot of smart people in terms of what it meant. There was a lot of concern that Facebook was essentially claiming the right to commercialize any content its members uploaded to the social network. As I said in a couple posts, it didn’t strike me that way.

In other words, I didn’t think the terms or the intent matched the hyperbole I was seeing.

So I ask why was I so sanguine while others were so worried? Jeremiah Owyang asked readers whether they had deleted their Facebook accounts. The most common response seems to be that they removed their photos, although I don’t expect that reaction to be the norm. Personally, I’ll keep uploading photos without concern.

Why? It’s not about the terms. It’s about trust. I trust Facebook.

We All Trust Companies of Some Type

In order to live in society, we have to trust companies. If you didn’t, you’d never buy anything, or you’d spend a lot of time carefully inspecting everything you purchase. We don’t do that of course.

Quickly, here’s why I trust Facebook, no matter the interpretation of their TOS:

• Established company with an imperfect, but acceptable rack record
• Companies that want to be profitable and go public don’t trash their relationship with 175 million members
• In the event Facebook ever started unilaterally using and selling its members’ content, the backlash would be 1,000,000 times greater than the Motrin Moms episode

I have no reason to distrust Facebook. Others apparently do. I sort of understand that, although no one who expressed their suspicions of Facebook could give an actual example of how the social network has done them harm. I think for a lot of people, this Facebook TOS story was a vehicle to vent their general concerns about social networks and the tension of making our personal info public. People like to participate in social media, but there’s always this dark side of concern in the back of their minds of what people will do with that info. Or it’s front of mind for a vocal minority.

In a previous job at biometric company Pay By Touch, I remember these concerns well. There was an understandable concern about some private company holding your biometric, personal and financial information. And yet plenty of people did participate.

Clearly, Facebook does have some work to continue building out people’s trust in the site. But as people watch Facebook, I thought it’d be instructive to look at the the terms of service for some other popular products and services that people use.

The idea here is to ask whether you are skeptical of Facebook but using other services that seem to have as much potential for violating data privacy and data ownership. If you’re not questioning these other services, why not?

Google’s TOS

Let me start with this comparison of Google’s TOS and Facebook’s TOS (initial updated version from The Consumerist):

Notice the similarities in those clauses. Facebook’s TOS looks like it used Google’s TOS  as a starter. The Facebook TOS story started on the news that the site had dropped two lines saying they no longer had such a license when you quit Facebook. By dropping those lines, it appeared they were claiming a license to your IP forever.

Yet the controversy I saw was less on that issue, and more on concerns that Facebook intended to grab all users’ content and start commercializing it. Let me put it another way. It wasn’t like bloggers said, “As long as you’re a member of Facebook, you’re fine letting them commercialize your content without your permission. Only consider that an issue when you quit Facebook.” No, it became an intellectual property issue, regardless of whether you are a current member or have quit.

Google has similar terms. Yet Google doesn’t face the same issue for having essentially the same terms as Facebook. Why?

Safeway Club Card

You may have a loyalty card with your local grocer. I do – the Safeway Club Card. If you don’t use a Club Card, you pay a higher shelf price for many products. Gotta get that discount!

So Safeway is collecting name, address info and purchase history for its shoppers – via the Club Card and online. Let’s see what Safeway’s privacy terms look like:

Really, not too bad, eh? Sure, your private information may end up in the hands of third parties, but it doesn’t appear to be to commercialize it. But check out that second-to-last paragraph. Safeway will hang on to your private information for as long as it deems necessary. Sort of like Facebook.

Safeway also reserves the right to update its privacy policy at any time, without informing you. Which is one of those fears people have about Facebook.

If you wanted to stir it up with Safeway, you’d blog something like: “What’s to stop Safeway from sharing your purchase history with insurance companies? Buy too many fatty snack foods? We’re raising your insurance rates!”

Yet we continue to shop at Safeway, and no one raises its TOS as an issue. Why?

Chase Credit Card

I love my Chase credit card. I get 5% back on groceries and gas. Great program. And most people have at least one credit card.

You ever look at the terms of service there? Here is Chase’s privacy policy:

Chase will share information about you with outside companies. In other words, you do not have complete control over your own transaction information. Even if you indicate a preference for your information not to be shared, it still will be made available to others. Kudos to Chase for its notification policy though, if they “broaden their information sharing practices.”

Still, aren’t you worried about this? All those purchases you’ve made that maybe you don’t want to the world to know about? They could end up sold to the highest bidder! Well, no, that won’t happen.

But certainly Chase’s policy contains elements that should scare people the way Facebook’s TOS did. Yet we continue to use our credit cards. Why?

Who Are You Trusting Right Now?

I had an energetic discussion about this with several people in a FriendFeed thread. After that, I’ve come to this conclusion:

If you trust a company, it doesn’t matter what their terms of service are.

If you don’t trust a company, it doesn’t matter what their terms of service are.

So why the ongoing distrust of Facebook. That’s a topic worthy of exploration. I’ve seen two plausible explanations out there.

Alexander Van Elsas says that the lack of clarity about Facebook’s ultimate revenue model injects uncertainty into its relationship with its members. In other words, it’s hard to be certain the company won’t lurch into some egregious territory with members’ content. I think there’s some truth in that, particularly for those tracking the industry closely.

In her interview with Facebook’s Chief Privacy Officer, Sarah Lacy asks whether Facebook is bumping into issues caused by its being at the leading edge of social networking. I think there’s truth here too. Grocery loyalty cards that track your spending are not without some controversy. Credit cards are not immune either. I imagine when these programs were first introduced, there was a lot of concern about privacy and data ownership.

How about you? Who are you trusting today with your personal information?

*****

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