Sunday, November 23, 2008

So why not Chapter 11?

I agree with my good and respected friend, Don, who kindly left a comment. We need to accelerate the pace of de-consolidation or break-up of the parts of the Big 3 Automakers. How fast we can move is limited by socio-political structures. The key here is the UAW. Either they exist in a radically modified sense or they may not exist at all. Clearly the import manufacturers in the USA are not unionized, and they are much better off. I believe politics (especially for the Democrats) will necessitate that the UAW must exist, but with concessions and modifications. Hence, I think we evolve to Don's vision of a new approach to auto manufacturing through either Chapter 11, or a government guaranteed loan program with concessions.

Why do I favor a 1979-type of approach? The answer is two-fold:

  1. Chapter 11 will kill consumer demand. I was riding in a cab in San Franciso, and the driver, an African immigrant, said, "Hey, I'll ride in a plane of a company in bandruptcy, but I don't want a car with a warranty from a bankrupt auto maker." I think this is emotional, but real.
  2. Chapter 11 will take too long. I also think that Chapter 11 will take 2-3 years of NEGOTIATION before real work starts getting done. Yes, the companies still operate, but they will do so under "busness as usual" approaches. I want to get the radical restrucuring agreed to in the next 2-3 weeks!

Comments welcome. This is really important!

Friday, November 21, 2008

Big Three Rescue Part 2 -- Let's learn from Chrysler 1979

I am hopeful that my proposal for government-guaranteed loans and credit lines for the Big Three, in exchange for the meaningful structural changes, will soon become reality.

Without knowing it, I was in some ways recounting what happened under President Jimmy Carter in 1979 with Chrysler. Check out this wonderful article from Time Magazine’s archives:

http://www.time.com/time/magazine/article/0,9171,947356-1,00.html

To summarize,
  1. The government guaranteed loans to Chrysler totaling up to $1.5 billion
  2. Chrysler had to secure another $1.43 billion in private financing at reduced rates from banks
  3. Chrysler had to gain concessions from suppliers on cost and financing
  4. Chrysler committed to $462.5 million in concessions from the company’s union employees, plus another $125 million from salaried workers.
  5. Chrysler shed unattractive assets (wholly owned parts and components factories), cut the workforce.
  6. The US government also extended the deadline by two years for Chrysler to meet C.A.F.E. requirements.

As referenced in the above article, the Holy Grail was the K car platform. Since I drive one, a 1986 Plymouth Reliant to be exact, I am obviously a big proponent. The K car was under development and would lead to over 10 million vehicles produced off of one platform. The first minivan was derived from the K platform.

The other point made in the article was the charismatic sales leadership of Lee Iacocca. But the substance of the turnaround was both operating changes, AND new great product. Iacocca had to fire thousands of managers and salaried staff. The UAW leadership begrudgingly agreed to concessions. While many suppliers initially balked at the concessions required by the company, they all eventually agreed. Finally, the U.S. banking system, 442 lending institutions, agreed to terms which led to Chrysler accessing the loan guaranteed by the U.S. government.

As I have argued, a radical restructuring must take place.

The other point which cannot be forgotten is that we must stimulate demand. Iacocca did it through pragmatic patriotism. I don’t know if patriotism will work this time around.

Also remember, Chrysler benefited from falling interest rates and a rebounding economy.

Oh, and yes, President Ronald Reagan imposed a “voluntary” restriction on Japanese imports. It may be wise for President-elect Obama to consider that as well for 2009.

I believe some intelligent form of "buy American" -- I have suggested Tax Credits but another idea is more than welcome -- is necessary. Comments welcome!

Monday, November 17, 2008

Everybody wants to know what I think about the Big 3!

Well, because I spent 17 years in the auto industry, I am getting a great number of inquiries about "what should we do with the Big 3?"

What I share here are my own opinions. I do not suffer from naivete about how hard this will be. But I do wish for a sustainable resolution, and not just another short-term fix, which inevitably leads to more pain and hardship in the near future.

Here are my thoughts for beginning to truly address the Big 3 issues. I believe that there should be no "free lunch." I do not support a "no strings attached" plan for the Big 3. They need support and encouragement to make the changes they have discussed for decades.

If our government supports the domestic-owned industry with loans or grants, then in exchange, it must seek to create a viable business for employees, and a return for investors. The only way to guarantee employment is to create an ongoing and viable business model that can compete and win. To survive, and in the future prosper, the industry must reform.

Here are the types of radical changes needed in these dire times:

Topic One: Lower labor cost per unit, health care cost per unit, and pension cost per unit.


1. An immediate reduction of UAW payroll and benefits is required. I estimate a 20+% may be needed. In exchange, employment is guaranteed for one year at today's level, and the dollar value of the lost wages and benefits is placed in a government regulated health care and pension program. This same wage reduction would apply to all white collar employees, but their employment must continue to be rationalized further, with perhaps 25+% potential job losses. The white collar workers are more fungible than their blue collar counterparts. This is why employment is so critical. Re-allocating the UAW labor is not an easy thing to do.

2. I cannot do justice to the idea of creating a health and pension program for the auto industry in this blog. This process has been underway for some time. John Devine's genius work to secure a Trust for GM Pensions is one model. There is funding now, but it needs to be set up separately from the auto business. We must have a defined contribution program, and not a defined benefit program. Those days are over. Health care also needs to establish emergency support for major illness and accidents, and set a floor for support. But a new system must begin to insure some semblance of market forces. People need to make good decisions about whether to smoke, be overweight, etc. based upon the true costs to their lives. In the same way, the medical decisions they make must have some association to reality. Insurance can help for the unnatural, but elections must be market-based. I will have another entry to express the similarities between an entitlement mindset for credit (I want it now and will pay later) and the entitlement mindset for health care (I can do whatever I want and somebody else will pay).

Topic Two: Get Consumer Demand Up for Domestics

1. I can say without any embarrassment that GM, Ford and Chrysler automobiles are high quality automobiles. I am a brand marketing expert, and I know that the quality issues of the past still bias many consumers against the Big 3, and towards imports. There are also other reasons why some people like imports, but that is irrelevant to review here. Suffice it to say that if we can get people to "Try a Ford Lately?" then we will not disappoint them. Same is true for fantastic vehicles from GM and Chrysler. Up and down the line, they are really strong.

2. So what do we do? I believe that the U.S. government should provide consumers with a tax credit when they buy American cars. These are CREDITS. They would in effect be a check if no tax is due, and reduce taxes owed dollar for dollar. There should be a $1,500 minimum growing to a maximum of $5,000 (10% of net price paid).

Topic Three: Lower Fixed Costs, Research & Investment

1. Closure of excess capacity. I don't have access to the details, so I am making an informed estimate here, but General Motors has 5, Ford 2 and Chrysler 3 plants that have been frequently targeted for closure. They should be closed. It is ugly and painful, but necessary. As plants close, remaining plants must absorb as much union labor as possible. The goal will be for all plants to go to a 3 shift format. Investment from the government must go to increased plant flexibility to build 2 or more models in each factory, and move towards specific emissions and CAFE goals. There may be permanent layoffs of UAW workers after one year, but we can address that with other programs.

2. All capital expenditure for new model development should be deferred by two years to conserve cash. The only exception would be for alternative fuel power trains. Have all R&D focus on bio-fuel, electric, and fuel cell. I agree, if only to gain support for the plan, with Jennifer Granholm that we should further energy independence and national security with this rescue. I would not be opposed to having the U.S. military partner on development and deployment of new technologies.


Topic Three: Suppliers and Dealers must also contribute.

1. There may be some reductions for suppliers, but they have been squeezed a great deal in the past decade. Some of them may need to participate in the government-led wage/benefit concession for health and pension programs.

2. We learned at Chrysler in the early 2000s that dealers have options. Even still, this is very serious and I believe they will be willing to contribute if they can help save the Big 3. I believe they need to accept a lower margin on all aspects of their business (retail minus wholesale). In exchange, they could receive 180 days or more of interest free floor plan to hold full inventory in return. Again, this stimulates lending, which is good for the economy.

To summarize, the government support leads to creation of a single health and pension program. It guarantees employment and viability via management and labor wage and benefit reductions. It also incentivizes consumers with a stimulus program. There could also be a pro-lending element for financing autos, and supporting inventory and wholesale with dealers.

The alternative to government support is Chapter 11 (which is also a form of government supervision). In bankruptcy, the unions will lose. The question will be how much. They come before shareholders and after creditors. They will not easily be re-employed. They need to accept their role in all this, and take a cut for some certainty. They will say it is not there fault that Detroit cannot design cars people want. That is offensive in its absurdity. There is blame to go around. Time to put up and shut up.

There are no winners in my plan, save consumers, in the short-term. Shareholders will likely lose everything. All employees take a hit. Some factories will close. But the industry survives, and will eventually prosper. If done correctly, the pension and health care programs created can pave the way for solving our national health care and Social Security crises. In the long-term, the industry will move towards a cleaner and more prosperous future. And by long-term, I would target 2010.

Wednesday, November 12, 2008

Another Trend -- Nostaglia

What do Glen Campbell, Seal and James Taylor have in common? They have all put out cover albums in the past month. Is it co-incidence? Maybe, but mark my words, as the economy continues to suffer, people are going to be going for nostalgia. We will see it in music, in movies and TV shows. We will see it in fashion. People will want to reflect and reminisce about the past as they struggle in the present.

Monday, November 10, 2008

My thoughts for Our President, Barack Obama

While I have posted on what I think the country must do to succeed (see below..."8 points"), I would like to continue with a humble open letter to our President, who is facing a very difficult environment. But he is the leader who can indeed make the right things happen for all of us.

So what should President Obama do? Perhaps two recent articles provide a little guidance. The first was in Businessweek by Michael Porter:

http://www.businessweek.com/magazine/content/08_45/b4107038217112.htm

In it, he outlines what has made America successful. The second piece appeared in the Wall Street Journal. It is an editorial by Henry Olsen published yesterday called "What would Reagan do?" In it, the key theme was "focus on freedom."

httphttp://online.wsj.com/article/SB122637470965416637.html://

Both Porter and Olsen have as a foundational element this theme of freedom. Let's reflect and explore upon where our great nation must go to continue to be great. What makes us unique? Clearly freedom is a foundational element.


To summarise what I saw in Porter's article, he feels the keys to our past and future success are:
  1. Free enterprise: I believe in the entrepreneur. My father was one, and I guess for the time being, I am one too. The spirit of owning property -- real and intellectual -- and being able to make the most of it for yourself, your family and society, is at the bedrock of the Federalist Papers, and our Constitution. Being able to see opportunities outside of government, to solve problems via commerce, has been the driving force of creativity and employment for the USA. How do we make it possible for more people to create jobs for themselves and for others? How do we truly empower the people most engaged in this election; many of whom feel disenfranchised?

  2. Innovation: while this is closely linked to start-ups, it is not exclusively the domain of them. The government, mostly through the military, drives tremendous amounts of research & development. The airbag, anti-lock brakes, Google Maps, all came from our government. I am far from an advocate of bigger government (I believe George Bush and Congress have wasted trillions in the past eight years). My question is, "can we find ways to make available more of the R&D to the private sector, perhaps through the SBA, to get more people working on new business development in energy, technology, education and transportation?"

  3. Higher Education: we have the most robust university and college system in the world. Students and professors desire to attend and teach here. But the "feeder system" is in duress. We must find a new model to fund and insure excellence for all students in public education. We must also find ways to share best practices from the private, Christian and Catholic schools. My experience with private schools is that the teachers are not "in it for the money." With a mother, aunt, brother all in the teaching profession, I see that a true love for teaching is at the heart of their professional choice. How can we use technology and collaboration to provide more resources and support across the entire national system?

  4. Free markets for capital -- human, physical, financial and intellectual: We have demonstrated the ability to change faster than any other nation in history. We have restructured industries (agriculture, steel) and must do so again (autos, healthcare). We renew and restore as we innovate and grow. The key is efficient allocation of resources for optimal growth and prosperity. This means a focus upon productivity in all areas of commerce. Yes, change can be painful, but trying to avoid it just prolongs what will ultimately be much worse. Having the right programs in place to transition is key. Do we have any role models? Yes, we do. We should study how South Korea moved from ship building to autos in the 1980s.

  5. Decentralized governance of the economy: Porter argues that our nation has succeeded because we have not tried a "one size fits all" approach from Washington. Born from our federalist origins, the states and regions of the US have consistently addressed the unique problems they face on local basis. I have seen what good policies provide for urban renewal in Philadelphia (preparing for 1976 bicentennial celebration) and in Cleveland. I have seen what poor policies do as well in Detroit. Everyone should be familiar with what is going on in Nashville and Tennessee. That city has very progressive, pro-business tax and policies in place and it is exploding with jobs and growth.

  6. Acceptance of failure; learn and move on: No one likes to fail, but moving quickly beyond mistakes and getting it right the next time is a hallmark of American industry. I remember Alan Gilmour, Vice Chairman at Ford Motor Company, saying that a good strategy was being a fast follower. Ironically, some feel that this is not true to the American spirit, but that is far from the truth. Indeed, let people pioneer, but we must have those ready to pick up the pieces from any failures, and be the ones to learn and get it right the next time. Look at Apple. They did not invent the MP3 player. But they followed and got it right.

While I have laid out some suggestions above in response to Porter's plans. Let me be so bold as to suggest to our President-elect, what should we do now? My suggestions come from a profound belief in freedom of opportunity, but also a gentle hand to insure that equality is not reduced to "survival of the fittest."

  1. Let's get ready for the inevitable fragmentation which will follow the present state of consolidation. I have seen in my lifetime a consistent pattern WITHIN industries of consolidation then fragmentation. Look at airlines (mergers then start-ups, then mergers). Look at retail (start-ups then acquisitions, then spin offs). How can positive growth policies help people take advantage of new opportunities? As people "hunker down," can we not encourage small businesses in local communities. By getting stores back into the neighborhoods -- urban, rural and suburban -- we can increase law & order, education, and job stability. Why would we not wish to link our agricultural policy with the creation of retail neighborhood groceries?

  2. Trade agreements should not be tied to buying armaments. They should be tied to infrastructure investment. If they are loans, so be it, but if they are grants, then pay as the projects are accomplished. Many have lost faith in global trade, and this faith should be restored, but it will only be done by showing that our investments are yielding prosperity and stability abroad. We need strong markets for our exports, and viable trading partners for more than just commodities.

  3. Universities should be asked to use their endowments to promote research and development. And these projects should be used to create new businesses via Venture Capital and SBA support.

  4. Let's take Americorps, our National Service Corps, to another level. Remember, it was created by George H.W. Bush and strengthened under Bill Clinton. let's re-invigorate our Peace Corps with a specific commitment to a four year college education at the end of 2 years' service. Let's get a commitment from the best endowed universities to jointly fund this program, as sponsors of both the Peace Corps and Americorps. We have the national health services corps already. What is our plan to get people involved in fixing healthcare? I would suggest young people should be part of the solution.

  5. Let's get Social Security right! Let's make the tough call and move towards a Defined Contribution Plan rather than a Defined Benefit Plan for all pensions -- public and private. Let's set minimums and maximums. Let's put the funds into inflation-adjusted government bonds (TIPS). Social Security should be an incentivized savings plan for both unemployment and retirement. We should seriously look at revising our unemployment p0licies as we take on Social Security.

  6. Let's get serious about protecting intellectual property. The key for the 21st century is in authentication, validation and commercialization of software/hardware relationships. This is where some of the billions in university endowments should go. I believe both private and government R&D is making progress, but standardization in this technology could unleash billions of dollars of profit and investment if we can get a secure and stable platform.

  7. Separate public education funding from property taxes. It is a guarantee that poor areas do poorly. I also think a new alliance between private and public schools should be fostered to align excellent curriculum and professional development for teachers.

Those are my initial thoughts. More to come. The underlying support for these are freedom: freedom of speech, of thought, of property ownership, of assembly, and yes, of opportunity.

Friday, November 07, 2008

Why I love the Lex Column

For the past 20 years, I have told anyone who will indulge me, that if they could only read one thing each day, that one thing should be the Lex Column in the Financial Times of London.

Why do I love the Lex?
  1. It uses case studies to teach

  2. It is not afraid to use an advanced technical and financial lexicon.

  3. It makes me feel smart

  4. It has a sense of humor

Let's look at each in turn. First it goes without saying that case studies, when done well, are very effective tools of instruction. Granted, Lex keeps the words to a minimum, but everything that is written is tied to a company, industry or goverment. The Lex column rarely invokes theory without a specific example. While it is true that the majority of comments are negative, I would argue that Lex uses the concept of criticism in its true Latin intent; "kritikos" means "able to make judgments." Yes, the English use tends to have an overtone of "faultfinder," but Lex always discusses what SHOULD be done. It is able to make a judgement and provide guidance.

Second, for those of you who studied business, and certainly all you MBAs and Finance types, the Lex is not afraid to apply the concepts of EBITDA, Discounted Cash Flows, Current, Quick and Debt/Equity Ratios, and Interest Coverage, in nearly every column. But they frequently take a step back to remind readers as to the definitions of these concepts. They explain how they calculate them, and how they should be used. They also regularly review common financial and business measurements and discuss their relevance (Basil II comes to mind). Last, but not least, they also discuss less robust rules of thumb for evaluation.

Third, and yes, this may be repeating the fact that the majority of the Lex is "taking the piss out of someone" (to coin an English expression), but when I read about how poorly others are doing, it makes me feel smart. I think, "no matter how tough I have it, or how difficult things are for me, it certainly seems much worse for that company's management team." I also feel like I am exercising my brain by thinking deeply about issues around the globe. The Lex will have both micro and macro-economic issues discussed daily. And when I don't know what they are talking about, I tend to dig deeper to learn more about an issue.

Fourth, Lex is funny. It is a classic educated English humor, but for me, it works. They start many of their articles with a turn of phrase. They frequently cite literature and history to establish a context and reference, and most of the time, it is not flattering. Granted, it is not a belly laugh funny, but at a minimum, Lex makes me smirk if not smile.

Hope I've convinced you!

Evidence that Social Publishing is Next

Check out a very enlightening article on Financial Times online:

http://http://www.ft.com/cms/s/0/ee324904-a940-11dd-a19a-000077b07658.html?nclick_check=1

The quick summary is that young people -- 11 to 29 -- are using technology, both at work and at school, in very unique ways versus their older brothers and sisters, let alone parents.

Employers are finding, according to an Accenture Survey, that younger workers are not using email systems. They are relying upon social networks, instant messaging and blogs.

What is next? Check out my entries below on Social Publishing. I predict that universities and businesses will increasingly use WIKI platforms for communication and collaboration. Here we go!

Tuesday, November 04, 2008

What the 2008 Election Means to Me

I remember seeing Barack Obama speak at the 2004 Democratic National Convention. I was impressed. I also recall seeing him again in 2006, and can proudly say that on my birthday, professed a belief that he would be a bona fide candidate for the U.S. Presidency. My brother did not agree with me, and I respect his opinion as a teacher of civics, political science and history. As it turns out, I was right.

For the past eight years, I have been very disappointed in George W. Bush. I thought he would be a consensus builder, maybe even a healer, after the eight years of bickering during the Clinton Administration. I must admit that I was very bothered by the scandals (Monica, Jennifer, etc.) because I believe in the honor of the Presidency and that beyond what any single administration can do, it must represent the ideals of our society. I was also bothered, however, by the viciousness of the politics during Clinton's two terms. I have to believe in hindsight that this was caused by the zealots of the Reagan Revolution. When people feel vindicated and triumphant, as the Reagan generation did, then they act like conquerors, not leaders. When Clinton beat a weary George H.W. Bush, I think these same extreme elements decided they would fight rather than try to govern. For them, the revolution had not completed all of its objectives. Unfortunately for all of us, they did not understand that the nation did not want them to complete them all.

Back to G.W.B, I did support the declaration of war against Afghanistan, and I did not support the declaration of war against Iraq. It is not because I supported Hussein. It was because it had nothing to do with the War on Terror. The next logical move would have been Pakistan. I should mention that one of my two Masters degrees is in foreign affairs, and that I am a student of Robert Tucker's. Hence, I view national security and international affairs in a very realpolitik and tort fashion. I would also like to state that I did not support Dubya's economic policies. I believe that we have been grossly lax on our monetary policy. Too much cash seeks increasingly risky returns. Well, clearly I was right.

I recall seeing Senator Paul Tsongas, while he was speaking at Kenyon College in 1982. He said that politics was like a sail boat with a huge ballast. If it goes too far to one side, then it begins to right itself in the opposite direction. He argued that it tended to over shoot at times, but that was also healthy as the nation explored issues and policies and practices to remain a healthy democracy. I share this because after eight years of George Bush, excessive government spending, tax cuts and two wars, we should expect for the ship to tilt the other way.

So what do I hope for this Presidential election? I believe Barack Obama will be our 44th President, and I hope that he leads this country in a new direction. What I hope he avoids is overseeing a conquerors march into Washington. I hope he avoids the Democrat's turn to be like the Reaganites. What I hope he does do is help the nation restore civility and a common sense of destiny. When I read his two books, I saw a man that seriously considers the perspective of others and then carefully finds a creative and lasting solution. This is what we need in Washington and the world. We need to address education, employment, energy in a holistic way. We need to promote family and faith, without losing our inclusive and diverse heritage. We need to be proud of our technology and industry without seeing them as zero sum games where the spoils must be divided before they are earned.

This is what the election means to me. The chance to have a leader and government which thinks deeply and not dogmatically about our nation and will in turn, lead us to success in addressing opportunities and challenges alike.

Sunday, November 02, 2008

Will the Semantic Web be Next? Will it be Web 3.0?

Web 3.0 – hither and yon

Let’s turn our attention to what is next for the World Wide Web. It would appear that most commentators are focused upon something called “The Semantic Web.” The goal of Semantic Web is to enable automatic machine generation and processing of content. Semantic Web demands rich machine recognizable semantics in web pages so that machines can understand web content. The aim of the Semantic Web is to build a world of intelligent and inter-communicable web pages. In plain language, to achieve this objective everyone and everything on the Web needs to use the same approach to content. People understand statements because of syntax rules. For the Semantic Web to work, then there will need to be a common syntax that computers will all understand. The syntax of any language defines the rules for building the language statements. The work towards a Semantic Web is trying to describe all things in a way that computer applications can understand. This is where the controversy begins. Not everyone can agree on one approach. Another controversy is whether the benefits would outweigh the costs even if we agree on the technical elements.

So what would the benefits be? Well, the use of consistently universal formal terms and structures will allow all content – text, video, audio, photos, etc. – to be recognized, explained and publicly understood by humans and machines alike. The process of recognition, explanation and understanding is actually a process of semantic annotation or semantic authoring. Hence we come to the name, Semantic Web or Web 3.0. Semantic annotation and authoring in Web 3.0 will allow content in web pages to map to a formal ontology of definitions, which can be recognized and processed by machines. Clearly this is easier said than done. But why is this so important?

By using common annotation and language, machines will be able to use logic to make inferences and draw conclusions. This concept is tied very closely to that of artificial intelligence. The inferences and conclusions will not always be exact or correct, but they can improve over time.

What are practical examples of how this could benefit the average web user? For one, shopping would be made faster, more informed and would most likely save money. If information on all merchandise, whether music or cars or shoes or electronics were stored in a common method, then intelligent web applications (the machines) could collect the information from many different sources, combine that information and present it to users in a meaningful way. Moreover, web applications could be set up to monitor information and present it whenever there is a meaningful change in price, availability or features. For anyone who has tried to buy a car, or get information about prescriptions, or travel by air, can immediately see the benefits of this type of functionality. Further, managing financial information, computer updates to software, or even social contacts would all be made easier if there was a common semantic language for data,

Web 1.0 was conditional and reactive. Web 2.0 began to build social and common language connections. For Web 3.0, Semantic web pages will be embedded with web services like those described above. As a result, remote machine agents can understand the content on local systems, and local system agents can understand the meanings of remote requests.
If the Semantic Web were realized, the web would become like a society of educated people. This dream, however, has yet to be realized. There are many reasons for this. Besides all the technical difficulties, one main obstacle is the issue of consistent communication protocol. The consortium promoting the Semantic Web has developed RDF or “Resource Description Framework.”

So what have we observed in the web evolution to date? Web 2.0 represents a new generation. In terms of content, linkage and services, Web 2.0 significantly advances over Web 1.0. Content and linkage in Web 2.0 rely heavily upon collaborative activities. In contrast, the majority of content and link in Web 1.0 was based on independent activities of webmasters. In addition, Web 2.0 has advanced the types of services with web feeds and web widgets. This has moved from a “conditional reflex” on Web 1.0 to a more dynamic and interactive set of services today.
What is next is still unclear, but it looks like making all data on the web more recognizable to machines will bring benefits. But the issue of time and money has not been adequately addressed.

The Cutting edge of the Web: Social Publishing

As we know, the Internet has evolved from a crude communication tool to its current role as the backbone for global information publishing and acquisition, communication and commercial transactions. When we quickly review the changing World Wide Web, we see that we started with static web pages. They were basically brochures online. We have see from there several interesting developments in communication on the web, moving well beyond emails and instant messaging. These all fall into the category of publishing, and represent the democratization of information, and the formation of community.

The first trend in publishing to consider is “Micro-blogging” (the most famous of which is Twitter). This content is highly perishable, and only relevant in fleeting moments in time. People literally share their moment by moment experiences; their reactions to events and the actions of others. It is social small talk with a wide range of subjects. This type of information and its frequent updates is best suited for mobile phones and less appropriate for social networks.

The next and perhaps best established trend is the use of weblogs or “Blogging” (Wordpress, Typepad, Blogger are all big players). This is generally less stream of consciousness, and more considered content. It will generally have a longer shelf life. It is very common to link to other websites and even opinion blogs. The power of this software is being able to easily create and edit content, pulling different threads of information together. For the author, being able to return and edit ideas, revisiting and revising them is appealing. With an audience, there is an opportunity for limited dialogue vis-à-vis comments or discussion forums.

The third area of web publishing is the large and growing “Social Networks” (Facebook, MySpace, Linkedin, and Bebo to name the biggest). These are largely ways to present one’s identity. The content is relatively static – your sex, age, education do not change. The connections are also casual and circumstantial – where you went to high school or college. This has been a good start, but the content tends to be photographs of parties. When someone gets serious about publishing, they appear more like people using a blog or twitter with their new found audience. These sites have run into image problems because of stalkers online or false identities leading to disasters (a young woman committed suicide after a false boyfriend hurt her feelings). Also, when young people post compromising photos (drinking excessively, or committing vandalism), their potential employers find them and decide “no hire.” Thus managing a new persona, as Will Ferrell showed us as “Frank the Tank” in Old School, can be difficult if not done carefully.

The last, and most important are is “Social Publishing” (Wetpaint, Ning, Wikia are the best known). When they first appeared, wikis promised to allow “many to many” publishing and editing of information. Wikipedia has been an amazing success in one sense – it has a lot of information. But in another critical sense, it has been a disappointment. It is not easy to use. Moreover, the hierarchy created -- editors, moderators and contributors – leads to a division of power. Only administrators or editors can decide what stays and what goes. There is “an ongoing tension within Wikipedia is characterized as the inclusionists versus the exclusionists. The inclusionists argue that one of Wikipedia's core values is that it should be open to all ideas that truth emerges from a variety of directions. Better to include than exclude. The exclusionists see Wikipedia's utilitarianism diminished if too much froth clouds the valuable information inside,” according to Sean Silverthorne at Harvard Business School Cases.

What is keeping wikis or true social publishing from taking off? For one, the user interface has not been easy to use until now. With http://www.wetpaint.com/, and its competitors, anyone can follow a simple 1-2-3 process and establish a site, and then begin to “click and type” to add content. The question will move from “how can I be heard or find my 15 minutes of fame?” to “how can the power of social publishing be used to benefit my business or organization?” Some of the first benefactors of social publishing have been non-profits and charities, especially in the area of education. Also, media publishers, literally those who distribute video and music, may well find social publishing to be a way to address the chronic challenges they face in monetizing their intellectual property and securing a loyal and growing community. Let’s look at several key constituents beyond the individual creator of websites and wikis.


IT Professionals: For the most part, platforms offered by firms like wetpaint or wikia are ad-sponsored or free. In the case of wetpaint, they are easy to set up and require little training and administration. These platforms can and have been deployed for a number of internal applications, including: Knowledge management; Project documentation and collaboration; E-learning Archival record keeping; and Status reporting

Publishers: What social publishing offers to traditional is a chance to create community and engagement around their IP, and to monetize the “long tail” of content. The growing atomization of content has thus far been difficult to capture for publishers. Netflix and Amazon have done so with different business models. Social publishing encourages people to not only create community and content around books, magazines, movies, television shows, and issues, but it also establishes a commercial platform for the IP owner. The potential is only limited by the imagination:

1. User-created topical content mediated by a publisher’s editorial staff
2. User-enhanced content where additional content is added to existing material (for example, dynamically generated newspapers or newsletters created by volunteers).

Software vendors: Social publishing offers a platform for software vendors to establish customer service centers with the users aiding each other in problem solving. Moreover, users of social publishing in the software space can and will drive development of technology solutions to meet their needs. Software vendors should keep this in mind as they continue to layer functionality on top of products that may already be over- engineered. Another lesson is that if off-the-shelf products aren’t available to meet users’ needs or they are priced too high, users will invent their own solutions. Moreover, in the increasingly altruistic world of software development, they are quite likely to share their solutions with others. Open source and public domain software philosophies are completely consistent with the social publishing application to the collaborative work space.

To summarize, the newest and most exciting wave in the evolution of the web is happening right now. It is social publishing. The applications for improved individual identity and experiences on the Internet are manifold. The opportunity for community-building around any topic or passion point is nearly limitless. The implementation of social publishing in business is very promising – from acquisition to owner loyalty engagement to customer service to product development. In total, social publishing and wikis are just beginning but will soon shape everything we know as Web 2.0.