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In reading the book The Happiness Hypothesis by Jonathan Heidt I came across an important element that makes ultrasocial societies work - reciprocity.

Heidt defines ultrasociality as: living in large cooperative societies in which hundreds of thousand of individuals reap the benefits of an extensive division of labor. Only four instances of ultrasociality are in existence - among hymenoptera (ants, bees and wasps), termites, naked mole rats, and humans. In all species but humans the force that makes that possible is the genetics of kin altruism. In an ants nest or a bee nest, everybody is brother and sister, and since you have as much genes in common with your siblings as you have with your children, the evolutionary drive to leave surviving copies of your genes makes those ultrasocial communities work - shared genes equals shared interest.

In societies that are not structured like bee or ant colonies, the shared set of genes that you have with others drops off rather dramatically - while you share 50% of the genes with your children and siblings, you only share 1/8 the genes with your cousins, and 1/32 with second cousins. In a strictly Darwinian calculation, you would only spend as much energy to save 4 of your cousins as you would for 1 child or brother. That is why kin altruism explains only how groups of a few dozen, or perhaps a hundred, animals can work together. The rest would be competitors in the Darwinian sense.

So what happened to human societies? How did we get fictitious families, like the Mafia, where there is no real kinship, even though they talk about the Godfather and being part of the “family”, to work as ultrasocial societies? It’s the old fashioned “you scratch my back and I’ll scratch yours” phenomenon - which is in fact a mindless and automatic reciprocity reflex. if someone receives a favor, that person will be driven to repay that favor - not because it the proper thing to do - but because it is a built-in ethological reflex. It’s tit-for-tat, hardwired in our brains, that opens the possibility of forming cooperative relationships with strangers. Now mind you that tit-for-tat can only explain the existence of social groups up to a few hundreds. What allows larger social groups is its co-existence with vengeance, gratitude and gossip as tools that reduce the payoff to cheaters by the cost of making enemies.

Those very primitive hardwired human behaviors confirm a lot about what makes online communities work as well - the importance of reputation, the importance of self-organized posses to police communities, the importance of helping one another as a currency, and the failure of communities where reciprocity is not an integral component of the community.

Many companies seem to have legal departments that put up huge barriers to adopting communities and other social media programs that include employees, customers, prospects and even detractors. In fact some put up barriers so high that nobody can do anything in the space. Now, if your competitors cannot find a way to overcome those objections either, you may be ok, but if they do and manage to extend their business processes to leverage the power of the internal and external crowds, it may be “game over.”

Typical legal objections include the issues related to brand protection, engaging hourly workers as part of internal communities, the threat of liability for what employees say in public, having employees socialize online instead of doing work, meeting regulatory compliance requirements, and more. While most legal departments will claim that their situation is very unique, at the end of the day the issues are fairly common among many companies.

I do not think that there is one best practice on how to overcome those objections. Some companies find it easier to get legal involved upfront in the process, while others are asking legal to quantify the risks and then balancing those with the benefits or the risks of doing nothing. One good bit of common sense (as recommended in this BT case study) is to make sure that you do not overhype what you are trying to do and position it as something radically different from other programs. Many companies already have policies in place that cover things like email communications and acceptable behavior in public forums - which could possibly be extended to virtual environments without too much change.

What have you found to be working?

Scott Antony, one of the Innovator’s Dilemma gurus, has a great post on how market research, if not done properly, can kill the innovation process within a company.

In essence he says that there are 4 ways to screw up innovation with market research - ask the wrong people, ask the wrong questions, have the wrong people interpret the data, and making the wrong decisions based on the data.

Does that resonate with your experiences? How many companies have you seen do market research to prove something which they have already taken a position on? And how many times have you seen companies do market research only within their existing customer base, even though they need 90% of all their future revenues to come from companies or people who never bought from them before?

Scott is right when he says that if done properly market research can be a powerful weapon - it just needs to be handled by pros who know what they are doing. Unfortunately, and in most cases, market research is done by amateurs who put out crappy surveys - or worse, pay you money to fill out those crappy surveys.

While most people haven’t really yet grasped the meaning and the potential impact of the web 2.0, some are already trying to define the Web 3.0, and along with that comes the usual litany of buzzwords - let go of control, more pervasive, more intelligent, always on, we are in control, etc. (Stephen Baker from Business Week talks about it here and here, Valeria Maltoni has a very eloquent post with a great discussion here, and then of course Phil Wainewright and John Hagel were already having this debate two years ago).

One of the things that most people forget is that we always overestimate the amount of change in the short term and underestimate the amount of change in the long term.

Let’s start by taking a look at the short term. The adoption of web 2.0 is not anywhere near a done deal - with very powerful barriers to adoption standing in the way of success. Many of those barriers were the same that the web 1.0 tools and even pre-web tools faced. In fact many of those barriers are the same as the ones described in the context of innovations as far fledged as agricultural innovations in third world countries by Everett Rogers in his seminal book on adoption of innovations - Diffusion of Innovations.

Most of those barriers are from people, culture and political nature - the hardest of all to overcome (I like how Valeria calls it the Human 1.0 ability). Web 2.0 tools and processes have the potential to change organizational structures and to overhaul existing hierarchies, causing people in charge to resist those tools and come up with smoke-screens to defeat them - think security and compliance. Web 2.0 tools are social and collaborative in nature and many organizations just do not have a collaborative or social culture. And because of the collaborative nature of the tools, even self-organized groups face the classic collaboration conundrums - the white screen syndrome (how do we get started and who in the group decides how we organize ourselves in this collaborative space), and the fact that the value of the tools goes down to zero for all team members even if only one of them decides not to adopt the tools.

So with that in mind, trying to extract what the web 3.0 will look like based on what is currently happening with the web 2.0 is an exercise in futility. In fact, many of the extrapolations have been part of the innovator’s toolbox or vocabulary for a long time. Are we not overestimating the amount of change in the short term?

On the flip side, the web 3.0 could come with new forms of organizational structures, new political realities, and a new workforce - one where a new class of artisans bring their own tools to “the” work at hand. Some thinkers have painted big picture futures, including many great sci-fi authors, but also some business thinkers and magazines like Kevin Kelly, or FAST Company, just to name a few.

So, aren’t most of us underestimating the amount of change in the long term?

It does not matter what you think about your customers - what really matters is what they think about themselves. Many marketers overlook this point and end up talking about their products in ways that the customer can not relate to.

Let’s take a high-tech example that continuously pops up, especially as you have many ex-enterprise-software marketers now marketing software-as-a-service solutions. You might think of the market you’re selling into as the enterprise market - large multinational companies with thousands of employees. If your buyer is not in IT and if she can buy your solution by the drink and expense the cost of it - she is not going to think of herself as an enterprise buyer. So even if you have hundreds or thousands of users like that in a single enterprise, if you start positioning your product as an enterprise solution - your potential buyers will not associate themselves as candidate customers for your solution and never buy it.

It does not matter how you segment your market - always think about what the potential buyers think about themselves…

According to a recent report from emarketer reported in Dead 2.0, only 2% of US employees subscribe to RSS feeds. 88% do not even know what it means! Other stats show that only 13% have a good idea of what podcasting is. You can actually see the bell curve of adoption at work, with 12% of people still not knowing what spam is (via Business 2.0).

The RSS numbers also jibe with the numbers mentioned by Martin Nisenholtz from the New York Times in another Business 2.0 article (not online yet). RSS feeds at the NYT only generate 12.2 million pageviews out of a US total of 295 million.

[Tags: rss syndication ]

Over at the Fast Company blogjam, Dave Pollard looks at whether great product innovation really starts with the customer - and describes the whole issue as a chicken or egg question.

Involving the customer in product innovation is not an either or proposition - it is something that should always be done - but done in the right context. And when listening to customers companies need to realize that their mileage will vary depending on the type of product or the phase within the product life cycle.

In some product categories, people could care less about the products or the companies that manufacture them - making customer feedback useless at the least, or potentially dangerous if given too much weight.

Newer products that are still primarily appealing to innovators and early adopters have a different problem with potentially similar consequences. Assuming the product is successful, customers probably care about the product in this case. But their ability to innovate ahead of what is available will likely be several steps behind the ability of the team that came up with the innovation - and giving too much weight to customer feedback may limit the future product potential and give the competition an opportunity to catch up and out-innovate the incumbent.

Then you have more mature product categories where people care - probably the area that yields the most valuable customer feedback. Except that here too you have to be careful about how much weight you are giving to that customer feedback. If your goal is to grow your product revenue by 80% in the future, then you have to realize that “all” current customers only make up a fraction of your future customer base. Attaching too much weight to their feedback may eliminate a large number of future customers that do not share their profile. And according to Harvard Prof. Clayton Christensen’s disruptive innovation theory, your trajectory of product improvement will eventually cross the mainstream trajectory of customer need - limiting your potential future customer base, and opening yourself up for a disruptive innovation.

All that being said, and according to MIT Professor Eric Von Hippel, in some fields there are a small number of “lead users” who invent new products out of necessity and who can be an important source of new product concepts. The kind of customer listening that is required in this case is very different from what most people think of when talking about customer involvement in product innovation!

Related posts:
- You cannot outsource innovation to your users!
- Where will your killer competition come from?
- Whatever marketing becomes…

[Tags: customer feedback marketing product innovation innovation customer listening marketing innovation]

The June issue of the Harvard Business Review has an interesting article describing some of the latest findings in the psychology of new-product adoption (here - can be purchased or requires subscription).

According to the author, Prof. John Gourville, there are a few psychological biases in decision making that need to be considered when using Everett Rogers’ “relative advantage” as a measure for successful product adoption.

Gains and losses:
First off, people evaluate attractiveness of new products and services not on an objective scale, but on a subjective/perceived scale which is based on products they already own. Every benefit of the new product compared to the new one is considered a gain, and every shortcoming is considered a loss. The kicker is that potential buyers give losses a much bigger weight than gains in their decision making process. In fact, multiple studies have shown that gains have to outweigh losses 3:1 before customers will adopt the new product or service.

The endowment effect:
Because of this loss aversion, people value what they have more than what they don’t have. In fact, multiple studies have shown that people demand 2-4 times more compensation to give up products that they already possess than they are willing to pay for those same items in the first place!

Status quo bias:
The status quo bias explains why people tend to stick with what they already have, even when a better alternative exists. Studies have shown that the extend of loss aversion grows over time from a factor 2 to 4 - meaning that people’s pain perception of giving up something increases over time and reduces their willingness to trade up.

But that is not all! Not only are consumers overvaluing losses and existing benefits of entrenched products by a factor 3, sellers are also overvaluing the benefits of their innovations by a factor 3. That makes the mismatch between what innovators think consumers desire and what consumers really want 9 to one!

So what is one to do? The author has a few suggestions. Come up with products that contain few product changes and require little behavioral changes and you will end up with an “easy sell.” If your new product has considerable product changes compared to the incumbents - make sure that they require little behavioral changes. By doing so you may end up with a “smash hit.” A high degree of product change combined with a high degree of behavioral change is much like the TIVO and those innovations are “long hauls.” Doomed out of the gate are those new products with little product changes that require a high degree of behavioral change.

[Tags: buying behavior product adoption innovation adoption of innovation]

Sorry for the light blogging - as I have been dealing with an ill friend in the past few days…

But that resulted in me reading the USA Today yesterday where they reviewed a study that concluded that early adopters are all over the US - not just in the spots you would expect them to be.

The study’s numbers on early adopters were a bit out of whack - you just cannot have 29% early adopters - but that was partly due to the fact they measured early adopter status by looking at people who bought technologies that I would now consider mainstream.

[Technorati Tags: early adopter technology adoption]