New media is terrific for its viral distribution, but there is a dark side if what’s being distributed is unsavory.

The Domino’s video that made its way around the ether, starting with YouTube last week, was a PR nightmare (see USA Today article).  The video had over half a million views in its first three days, with folks eager to see what the video creators claimed was a hoax but what Domino’s took extremely seriously.  When you see food in a restaurant being tampered with in its preparation, that puts fear into the national psyche (though some viewers no doubt found the crude video funny). 

Two things happened that illustrate Digital Disruptions trends: 1) the video spread like wildfire (New Media), and 2) Domino’s response was swift and strong (Information Transparency).  New media, with its content unfiltered and uncensored, fosters a transparent environment, which means that companies that find themselves on the receiving end of something unpleasant – whether a nefarious act by employees or a legitimate customer complaint – need to act pronto.  As we wrote, having so much information free-flowing on the Internet “puts pressure on corporations to tell the truth and rectify problems quickly.”

To Domino’s credit, the company responded immediately and posted its own video on YouTube two days later showing the CEO responding.  The original video was ordered by YouTube to be removed, but it has surfaced on other video sites (à la New Media).  Word of warning: Be careful what you post on the Internet because it doesn’t go away.  That will be a continuing problem for companies like Dominos who are maligned, not to mention the perpetrators, two 30-somethings who were fired and who had warrants issued for their arrest.

Is the answer removing video cameras from Dominos stores?  The USA Today article reported that Dominos was considering that, but the problem is one of behavior, not technology.  New media is a world of new policies, so having an HR policy about employee use of video cameras, blogs and social networking sites is entirely appropriate.  Viral media is where the opportunity lies, but when it crosses over to the dark side, then countering the speed of viral media is the ultimate test.

If I had to distill into a single theme the unprecedented power disruptive technologies have given us in the 21st century, it would be the power to connect.

Ever-more powerful wired and wireless communication technologies (e.g., IPv6, WiMax, WiFi, NFC, GPS, UWB, SDR), combined with ever-more powerful and easy-to-use social Web 2.O. and new media development and distribution tools, underpin our newfound ability to connect instantly. We can now connect with people – people we know, people we used to know, people we want to know, potential collaborators, customers, anyone – and information – information about people, places, things, actions and transactions – at any time, from anywhere in the world. As Mark Zuckerberg put it in 2006 on turning down the $1 billion offer Yahoo made for Facebook, which he launched from his Harvard dorm room in 2004, how many times in your life do you have a chance to fundamentally change the way people communicate?

The now-familiar term “social networking” doesn’t begin to do justice to the capability first used by the net generation to keep up with friends, as its collaborative possibilities are now being leveraged for serious work by major corporations.

Here at CSC, WikonnecT is one prominent example.

Just recognized with CSC’s highest honor, the Chairman’s Award for Excellence, WikonnecT is an enterprise application that joins the CSC Property & Casualty product development team and more than 5,000 members representing 368 P&C and general insurance companies into one application lifecycle management community. Linked to customers by WikonnecT’s more than 100 active message boards, 41 community spaces, and 30 blogs, the CSC P&C team rapidly logs and manages issues, be they bugs or requests for enhancements, moving them to work items; prioritizing the work items; and adding the work items to projects, where they are scheduled, completed and released. Though not exactly a social network per se, Wikonnect harnesses social (collaborative) power in a big way. WikonnecT is an agile open source software product development community for CSC and its industry clients, resulting in continuous small-dose improvements based on customer demand.

WikonnecT is deserving of the Chairman’s Award not only because of its proven record of improving quality and reducing costs and delays in servicing the P&C industry, but because it serves as a valuable new disruptive delivery model for all CSC areas and other companies to adopt.

Imaginatik is another way we CSC’ers connect. Imaginatik is an ideation platform we use internally to gather and promote the best ideas from among our over 90,000 employees worldwide. An ideation event is planned for a particular topic, where ideas are proffered, filtered, rated, prioritize, budgeted and executed. We recently held an event, called CSC & Green, on how we might make CSC more energy-efficient and environmentally friendly, and develop our internal solutions into an offering to help our clients do the same. The CSC & Green initiative was so successful, a CSC Green Way Board was established to steer CSC’s green strategy into action; to provide a forum for incubating, vetting and sharing green activities around the world; and to exemplify, and therefore encourage, a collaborative and proactive culture.

In various ways, CSC connects on a regular basis with the best minds throughout the company, our partner companies and our customer base.

We connect. How do you connect?

While it is flattering to receive favorable reviews, it is often more instructive to consider critiques, and the nature of a blog is to stimulate honest dialogue which encompasses both. In that spirit, I would like to focus on a point raised by Mike Treder, co-founder and Executive Director of the Center for Responsible Nanotechnology.

On his blog (http://crnano.typepad.com/crnblog/science_technology/) he states:

Alex Fuss, lead researcher for CSC’s Digital Disruptions report, offers some interesting predictions about the future in this interview published by Financial Times. [Hat tip to Nanotechnology Now]   

Among other things, he says:

We will be able to print out toys, parts, furniture, designs and more from the net using three-dimensional printers. Today 3D printers cost $20,000 and can only print prototypes. But maybe beyond 2013 you’ll actually be able to print a pair of sneakers in your size. . .

There will be no more lies. You’ll still be able to have secrets but only if you can keep them off the net. Privacy will be available but only to those who can afford to pay for it. For most people, privacy will end in 2013, or a little beyond that. . .

Quantum computing will shatter current encryption techniques, jeopardising anything that relies on encryption, such as credit card transactions, and requiring new approaches to information security. Using an electron spin as opposed to an electron charge in quantum computing would mean all the cryptography we have today would have to be rethought. . .

Unfortunately, he gets one thing very wrong:

From 2025 to 2050 and beyond, nanotechnology will give us the capability to create anything, molecule by molecule, atom by atom. The technology is at very early stages but it is definitely going to happen. For example, it will be possible to create a piece of wood. But self-replication is crucial, otherwise the technology won’t scale up. What’s needed is nano parts that self-assemble—that way you can mass-produce anything. [emphasis added]

This is a common misconception that still persists although it has been obsolete for a decade and half. Obviously, Alex Fuss has not read Nanosystems (published in 1992), nor any of the hundreds of pages on our website and others that expound on those ideas.

But all he really needs to know is contained in a press release issued by CRN a few years ago, titled “Leading nanotech experts put ‘grey goo’ in perspective.“ Here is the key paragraph:

Contrary to previous understanding, self-replication is unnecessary for building an efficient and effective molecular manufacturing system. Instead of building lots of tiny, complex, free-floating robots to manufacture products, it will be more practical to use simple robot arms inside desktop-size factories. A robot arm removed from such a factory would be as inert as a light bulb pulled from its socket. The factory as a whole would be no more mobile than a desktop printer and would require a supply of purified raw materials to build anything.

Self-replication is not crucial for the technology to scale up. Advanced nanotechnology—exponential general-purpose molecular manufacturing—will be achievable without it. And perhaps even sooner than Fuss expects.

I was given the benefit of the doubt and my position somewhat defended in a comment by Brian Wang posted in response to Treder’s blog entry: 

It might be possible that he was speaking about self-replication in simpler terms. For instance when the first nanofactory is built we will have to start somewhere. We will not build each nanofactory arm by human guidance because it would cost too much time and money. So maybe he just meant that nano systems would construct other nanosystems in a factory setting with no danger of run away replication.

For the record, Treder is correct in saying that I did not read K. E. Drexler’s Nanosystems (Wiley-Interscience, 1992), but I did read Nanofuture: What’s next for Nanotechnology (Prometheus Books, 2005) by J. Storrs Hall, which includes a foreword by K. E. Drexler.

In that book, Hall, following Moshe Sipper, distinguishes between reproduction, self-replication, and autogenous replication.  “[R]eproduction involves making, on purpose, imperfect copies for the purposes of evolution, whereas replication is the similar mechanical process of making an exact copy.” In a self reproducing cell, the parts that the cell factory produces, protein molecules, “are not picked off the production machine and carefully conveyed to meet the next part in the process. Instead they float loose to bump randomly into other parts until they meet one they click together with, in a process called self-assembly. In a nanomachine, as in a human sized ‘factory,‘ parts are never loose to drift around. They are moved by robotic arms, shuttles, and conveyor belts from spot to predetermined spot and are assembled by mechanical force….The nanomachine is a lot faster and simpler in some ways than the machinery of the cell. On the other hand, [the nanomachine] has a big disadvantage: it can’t evolve.”

Once we build the first nanofactory that can build all the parts to produce a second nanofactory, and can assemble that second factory and transmit to the second factory the instructions for doing same, we have an autogenous system where “[t]he system as a whole can extend or repair itself,” even though “it does not contain a single machine that can replicate on an individual basis.”  It is to thit capability that I was referring in the Digital Disruptions report upon which the UK Financial Times article was loosely based. In the report we wrote about “atomically-precise manufacturing and self-assembly”.  In my interview with the UK Financial Times, that somehow became “self-replication,” probably through a slip of my tongue. As Hall points out, something that makes copies of itself is very different than something that makes copies by itself. Thank you, Mike, for pointing that out and noting that exponential general-purpose molecular manufacturing will be achievable perhaps even sooner than I project.

Incidentally, subsequent to the completion of Digital Disruptions, I came across Adrian Bowyer’s Replicating Rapid prototype (www.reprap.org), a 3-D printer that “prints” all the parts needed to build a copy of itself except the screws needed to hold it together. Currently, a human with a screw driver is required to assemble the parts to produce the “son-of-printer” printer, but one can imagine it won’t be long, relatively speaking, before we see truly autogenous factories on both the macro and nanoscale.

It’s flattering that over the past couple of months our Digital Disruptions report has received attention by the press – most recently in a provocative article featured in the Digital Business section of the December 3 edition of the Financial Times – and has generated inquiries from CSC clients, potential clients, and CSC Account Executives planning C-level innovation strategy events.

A few weeks ago, a company in the financial software sector seeking to understand how to deal with some major disruptions it was facing asked me to discuss possible strategies for advancing its business in the digital era.  The main challenge: how do you compete with Free? Free open source software that approached the company’s financial application capabilities was being produced by volunteer developers across the Internet in the same manner that the Linux operating system – highly successful in challenging Microsoft, IBM and Apple dominance – was developed in the early ‘90s. Ostensibly “free” [1] open source development is progressing from the realm of computer infrastructure software to the business application realm.[2]  What’s a company to do?

Experience Beats Product
The answer, we are learning, is for companies to:

• Innovate to provide value they are uniquely positioned to provide.
• Provide a platform upon which a community can form whose members collaboratively help to improve proprietary offerings and support each other.
• Create a complete customer experience that is greater than the sum of the company’s products and services.

For example, if a company sells accounting software that is being challenged by open source alternatives, why not position its new offering as not merely a software accounting product or service, but as the on ramp to the go-to place on the net for accounting information and advice, and the place to hang out with people who share an interest in accounting issues. (Where Bernard Madoff’s $50 billion disappeared to would probably be a very popular question there right now.)

Maybe start with an Accountapedia, a Wikipedia for accounting terms, issues, case studies, etc., accessed through the company’s Internet accounting site.  Set up an accounting-related social network à la Facebook, or maybe link with Facebook and MySpace and have the company’s accounting experts participate in discussions and advise its constituents. What about extending the relationship you have with customers via their computer to their mobile device, which they have with them 18 hours a day? What about hosting informative and entertaining events in virtual worlds, and providing various kinds of actual person-to-person support in the real world?  What about leveraging viral media so that, for example, people pass around links to your YouTube video that explains certain accounting concepts, or embed the video in their blogs?

The idea is to develop relationships with and among one’s customers that cannot easily be reproduced by software that is merely well-functioning and inexpensive. Empathize with your customers’ life and business challenges and provide a rich experience, not just a sterile product or service, that addresses these challenges.  Customers and advertisers may feel it’s worth paying for what you offer, despite the availability of Free.

Two Can Play at Open Source
At the same time, nothing is stopping companies from reducing their own costs by leveraging the abundance of open source software at their disposal. If as a traditional business you’ve had the upper hand until now, the trick, as in a game of chess, is not to obsess about holding onto your current and possibly fleeting advantage, but to translate your current advantage into a new one. You have at your disposal all the means your competition has, plus the unique characteristics with which you started out. Isn’t free enterprise wonderful?!

__________

[1] Open source software may not have an initial purchase price, but there are often other usage costs involved.
[2] Fore more on other products and services trending to free, see Chris Anderson’s cover article in Wired March 2008.

Though disruptions are not inherently negative – if I disrupt what you’re doing to present you with a check for $1 million, I think you would deem that disruption positive – they typically present challenges before they surface opportunities (remember going from A to chaos to B). The three major disruptions in the news today, I would say, are: global warming, the presidential election in the United States (although this is primarily a domestic event for us in the US of A, indubitably our choice will impact world events), and the financial crisis. Leaving out global warming for now, let’s see whether digital technologies are involved in the other two.

New Media and New Campaigns
Unquestionably, the US presidential candidates had to embrace the digital disruption presented by online New Media (New Media is a disruption in the Digital Disruptions report) or risk falling behind in raising money and getting their messages out, as well as risk being deemed out of touch with their increasingly tech-savvy constituencies.

Obama jumped on the Internet early but McCain has come back strong, according to an article in Online Media Daily:

Barack Obama trounced John McCain in online media and advertising during the first six months of the year, according to a new comScore study. The Web ratings service found Obama’s online display ads drew 92 million views monthly on average from January through June 2008, compared to just 7.3 million for McCain.

The Obama campaign appeared to ramp up online efforts in May and June as ad impressions surged to 150 million and 244 million, respectively, while McCain’s fell to a low of 3.2 million in June.

Obama also outstripped McCain in the average number of monthly visitors to their respective campaign sites (2.2 million to 583,000) and searches of “Obama” versus “McCain” (5.3 million to 1.3 million). . . .

One area where McCain turned the tables was video. His site had more than triple the video views of Obama’s at 2.1 million to 612,000. ComScore attributed the Republican presidential nominee’s online upset to video being featured more prominently on the home page of JohnMcCain.com than on BarackObama.com.

McCain has also been closing the gap more recently in video views on YouTube, where Obama has far more ads and original shorts. In the last month he had 6.5 million views to Obama’s 9.8 million, according to video tracking site TubeMogul.

Though one could argue that this does not represent a shift to a new grassroots political model as was initially thought – after all, we increasingly purchase online, so online donations merely reflect that trend (see article) – no one would dispute that New Media technologies represent one of the fastest, most effective ways to bolster a campaign.

Information Transparency and Financial Transparency
As for the financial crisis, I would argue that it was created in part by digital technologies, and I think it will be resolved by them as well. In the late 80s and early 90s I worked on Wall Street for Bankers Trust – often credited with inventing derivatives: customized, complex securities such as mortgage-backed securities and collateralized debt obligations.  I managed the design and implementation of C-Trac, the first collateral management system for these exotic offerings and learned that without powerful computers it would have been impossible to craft, value, pool, strip into traunches, and mark to market all but the simplest of these, not to mention track the collateral that was being rehypothicated on a daily basis – i.e., passed around institutions to back whichever deals’ change in net present value required additional risk mitigation.

What was lacking then is lacking now: information transparency (another of our digital disruptions).  When Bankers Trust’s clients started to lose money on these initially highly lucrative deals that turned corporate treasury departments into huge profit centers, they claimed they didn’t understand the risks they had been taking. Very few outsiders were aware of the huge risks to which the increasingly unregulated investment banks and hedge funds exposed themselves and their investors, and many of those who were aware were profiting handsomely from the risky transactions and weren’t about to blow the whistle.

This is changing. The New York Times started a blog on Merrill Lynch, Lehman Brothers and the bailout. Web sites like factcheck.org and glassdoor.com, which aggregates insights anonymously provided by employees and is consulted by the press and, it is hoped, the Securities and Exchange Commission, are exposing in real time what CEOs and CFOs may be withholding from their shareholders and the government.

Last week the Federal Reserve Bank of New York met with Eurex, NYSE Euronext, CME Group/Citadel, IntercontinentalExchange/the Clearing Corp., representatives from the major dealers who sell Collateralized Debt Securities contracts, buyers of the contracts, and representatives from the SEC, the Commodity Futures Trading Commission, and the European Central Bank to discuss setting up a clearinghouse for the hitherto unregulated $55 trillion market for credit derivatives.  (See article.)

This is a first step in exposing to players, investors, industry and government the day-to-day market value of these complex assets, and the leverage that players and investors have taken on. I envision something like a software RFID-like tag for securities that allows the world at large to track every detail of what is going on in the financial markets, in the same manner that Wal-Mart tracks products from initial order to production, sale and restock. This follows, too, the much publicised example of information transparency, the Goldcorp turn around.

When in March 2000 the mining company Goldcorp exposed all of its geological data to the world and launched the Goldcorp Challenge, with prize money for those who provided the best methods and estimates for mining Goldcorp’s property, it was a huge success.  More than 1,000 virtual prospectors from 50 countries helped propel the “under-performing $100 million company into a $9 billion juggernaut while transforming a backward mining site in Northern Ontario into one of the most innovative and profitable properties in the industry.”  (See article.) 

Similarly, by leveraging some of the technologies reviewed in our Digital Disruptions report, and others, a new level of information transparency and collective expertise can be brought to bear on the financial markets, making them once again the safe and liquid engines that finance and reward innovation.