Just ask Alice

The only way Lewis Carroll’s Alice could access the thrills, perils and rewards of Wonderland was to make herself smaller with a magic drink. Wonderland was a place populated by freakish characters, where the rules, realities and logic of the natural world were either reapplied or dispensed with altogether. A bit like the internet, or at least much of its content.

There is a theory that, if you want to succeed in the new economy that has the internet at its heart, you’d be well advised to follow Alice’s example and focus on small. It’s a theory espoused by Paul Saffo, managing director of Foresight at Discern Analytics who gave the guest keynote at the 2011 Ericsson Business Innovation Forum, which has been taking place in Silicon Valley this week.

On the campus of Stanford University, where Saffo is an Associate Professor, he offered up a lesson in the evolution of the US economy that had enormous relevance for the telecoms industry.

One hundred years ago, Saffo explained, the US was an emergent producer economy. The key actor in the scenario was the worker who toiled in the nation’s factories to generate goods for sale. The central challenge of the economy was to stay one step ahead of scarcity, and maintain availability of product. Henry Ford’s famous assertion that customers could have their Model T in any colour they wanted so long as it was black was actually motivated by a desire for efficiency, apparently. Black paint, Ford’s tests revealed, dried more quickly than any other colour, meaning production could be sped up.

This phase of the economy reached its conclusion in the boom years after the second world war. Contrary to expectation there was no depression after the war; the economy didn’t contract and had become so good at maximising production that, rather than staying a step ahead of scarcity, it had actually created a surplus. As Saffo said, “economies typically end because of the unintended consequences of success.”

Two other developments came into play as the 50s and 60s unfolded. The first was the widespread adoption of the credit card and the second was the surging popularity of television. With a surplus of goods to sell, television was harnessed as a means of creating desire among the population for goods they hadn’t previously wanted. Credit enabled people to spend money they didn’t have on goods they didn’t need. The producer economy had given way to the consumer economy—and the consumer, not the worker, took centre stage.

That economic phase imploded in 2008 with the credit crunch and financial crisis. Now, Saffo suggested, we are entering a new era; which he calls the Creator Economy.

Anyone with access to the internet can create content today. You don’t need to be a journalist on a newspaper to publish your opinions; you can just make a blog post. You don’t have to be an actor or a TV presenter to put yourself on TV, you just need to upload your footage to YouTube. This, Saffo said, is a fundamental and profound shift to a new age of participation. “Mobile,” he added, “is the ground zero of the new creator economy.”

From a small number of players producing large volumes of content, we’re moving to an enormous number of people producing very small volumes of content. And content doesn’t have to be a video or a blog post. It could just be a search string. Google doesn’t charge for its search facility, Saffo pointed out, because the user pays with their request for information. The aggregation of millions of daily searches is what gives Google the foundation of its business.

And Google understands the importance of openness, Saffo said. “Crowds, clouds and openness” are the fundamentals of the creator economy and they all enable people to harness the skills of many more people than can be employed by a single organisation. This understanding is what is enabling it to succeed, Saffo said, and what is causing incumbents like Microsoft to suffer. (As an aside, Microsoft’s purchase of Skype came up, and Saffo compared the new acquisition’s prospects to the fate of the ark of the covenant at the end of Steven Spielberg’s Raiders of the Lost Ark. Locked into an anonymous crate, the ark is wheeled into a massive warehouse full of other anonymous crates, never to be seen again. )

In the creator economy, the central player is the creator; anyone with an internet connection. The shift to the importance and empowerment of the individual rather than the organisation was a theme that ran through the entire Ericsson event. Lior Netzer, vice president of mobile network strategy at cloud specialist Akamai pointed out that the key ingredients of the cloud; internet connection, shared infrastructure, scalability, on demand and metered usage make life an order of magnitude simpler for aspiring entrepreneurs. They don’t need to hire different people to fulfil different functions, and divert their focus away from innovation towards corporate structure and people management; they can simply harness the cloud.

Away from the corporate, the huge growth in social networking also does its bit to carry the trend. Facebook’s mobile strategist, Dihraj Kumar made three statements that illustrated that company’s outlook on this. “The networked society makes all of us more visible,” he said. “People now have a voice to shape the world,” he said. Most interestingly, though, he suggested that “It’s unimaginable today that we would not put our real identity online.” Facebook should be an exact reflection of physical existence, he argued. We should all be going through the looking glass; just like Alice.

Except it’s not that simple. Ericsson’s event, which was fascinating, was all about visions of the future; the kind of visions that are conveniently unencumbered by reality. Several times speakers stressed that the complexity of the technology behind all of these scenarios should be kept hidden from the people who are using them. But that complexity is what Ericsson and its competitors do, and without these complexities being comprehensively addressed, this networked society will never happen.

Google might not charge its users to search, but you can’t use its service without paying someone else to give you the access, after all. And when you’re well used, as I am, to not being able to get a 3G connection in central London, you’re reminded—after surrendering to those compelling visions of the future for a couple of days—that there’s a little way to go yet.


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