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Social Media Leads the Future
of Technology
Published: November 10, 2008
Author:    Martha Lagace

    From Facebook to smartphones, advances           people in the world, about 1.5 billion have          statistics suggesting that in 2007, 12 percent of
in technology are changing the way we work           Internet access, more than 300 million have          newlyweds met online. In addition, of the users
and communicate. Professor David Yoffie led          broadband access to the home, and 3 billion          in the United States, half sleep with a cell phone
three experts in a recent panel discussion on        have cell phones, a growing number of which          or other electronic device nearby, and married
"The     Technology       Revolution    and   its    offer Internet access.                               couples usually do not share cell phones.
Implications for the Future" at the HBS                  What these statistics suggest is that "the            Innovation will serve people who want
Centennial Business Summit. Key concepts             most precious currency today is information,"        simplicity of technology usage. As the network
include:                                             said panelist Jim Breyer, an early investor in       gets larger it becomes less relevant to
 • A lot of growth potential remains                 Facebook and a director of Wal-Mart Stores.          individuals, she said, so people want to organize
    worldwide.                                       "Each year there is more information created on      their experience according to their own
 • The sticking point for business is spanning       the Web than in all the previous years               interests. "Companies that will do pretty well
    the gap between the physical and digital         combined. Investment initiatives are around          will create a dashboard of simplicity that is very
    worlds. For example, it remains difficult to     participating in the information flow. We [at        open to the whole Internet, not just to the
    figure out consumers' specific intent on the     Accel] are interested in companies that help us      company it may be associated with, and will
    Web.                                             understand how to structure information,             elevate social connections in a way that drives
 • What people want most of all is technology        communicate, categorize some of that                 dollars."
    that is simple to use, said one panelist.        self-generated information, and then act on it."          How exactly social connections will drive
                                                         A sticking point currently for businesses is     dollars remains to be seen, she added. Although
                                                     spanning the gap between the physical and the        some sites such as Yahoo! include premium
    Internet-connected televisions, social           digital world, he continued.                         services that require fees or subscriptions, the
media, and the power of simplicity were all              "Right now there are significant problems        largest business model by far is advertising: a
cited as launch pads for future innovation in        understanding how to take what we are getting        $45 billion industry globally that has been
technology, according to a panel of experts that     at point of sale in the physical world               growing about 20 percent per year, said Decker.
convened at Harvard Business School as part of       environment—very         valuable     info     on    Advertising on the Web is very effective in the
the HBS Centennial Business Summit in                customers—and how to integrate it with all the       sense that advertisers can reach great scale and
October.                                             information that is being generated on the Web.      do precision targeting. The challenge is to
    And though advertisers love the Internet, to     To date, there is no company that allows one to      discern consumers' intent.
what extent they can capitalize on these             take quickly all this information 'in the cloud'          "Search is unbelievably efficient because
transformations remains an open question.            and integrate it with the vast arrays of             you look at a little query box. You can tell
    HBS professor David Yoffie moderated the         information in the physical world."                  exactly what people care about, and you can
session on "The Technology Revolution and its            Difficulties aside, Breyer said the promise      serve an ad that is relevant at scale. In social
Implications for the Future," with panelists         of technology meant that innovation to solve a       media, that is very difficult to do. It's very hard
James Breyer (HBS MBA '87), partner of the           problem could arrive from any quarter:               to know what people care about with respect to
venture capital firm Accel Partners; Susan L.        prominent companies, nonprofit enterprises,          buying things, because you are inferring intent,
Decker (HBS MBA '86), president of Yahoo!            "two students in a dorm room, or mothers or          you're not taking intent directly from the
Inc.; and Eric Kim (HBS MBA '81), senior vice        fathers after they have done their school            consumer," said Decker.
president and general manager of Intel               pickups." He continues to be impressed by                 "Advertisers really want to be there: They
Corporation's Digital Home Group.                    businesses       that    start     with     little   love the demographics, they are increasingly
    The first computer, the ENIAC, cleared the       capital—anywhere        from      $10,000       to   comfortable with some of the brand risks of
path for future innovation in the late 1940s, said   $50,000—yet get to scale quickly and build           what that might mean. But Internet advertising
Yoffie, who set the context for the ensuing          new applications on the Web.                         still doesn't perform very well, and that's a
discussion. Today, millions of Web users                                                                  challenge. How do you serve the right ads to the
generate free content, and we are witnessing an                                                           right user and understand what it is that that
"explosion" in video and cell phone use, he          Sleeping by the cell phone                           individual would be interested in buying?"
continued, with more than 100 million                    Just as technology is influencing society,
smartphones already in use. In addition, there is    society is increasingly making demands on
the phenomenon of virtual worlds, where              technology, said Sue Decker of Yahoo!                TV and the Internet
approximately 217 million online players                 "The way we live, love, communicate, and             Pressure has been building for a merging of
interact.                                            work will influence technology, and the greater      television and the Internet, said Intel's Eric
    This is an evolving landscape, with much         population will be exercising an increasing          Kim. Consumers now expect Internet service
growth remaining, Yoffie said. Of 6.5 billion        amount of control," she said. Decker cited           everywhere, with implications for entertainment

COPYRIGHT 2007 PRESIDENT AND FELLOWS OF HARVARD COLLEGE                                                                                                    1
                                                                              HARVARD BUSINESS SCHOOL | WORKING KNOWLEDGE | HBSWK.HBS.EDU

and advertising.                                   and choices," Kim concluded.                            "Increasingly, companies will find ways to
    For almost 90 years, the television has been       "There is no silver bullet in a lot of these    leverage whatever social networks you're in,
a one-way device, and it should be a two-way       economic models," added Breyer. "It's almost        find ways to service those in ways easy for you
device. "This is not a new idea," Kim clarified.   always the case that the business models shift in   to access, and try to go for more simplicity,"
"Many attempts have failed. It primes us for       every successful company. I think it's our job as   she said. "Simplicity is the single thing people
success." Prices of televisions are going down,    board members, CEOs, and investors to find          really want. It's going to get faster in terms of
and the industry as a whole is mature, leaving     breathtakingly brilliant entrepreneurs who then     technology. There's going to be more
an opportunity for the Internet to disrupt both    try to find breathtakingly brilliant operating      opportunities and interconnections.
the value chain and the content industry.          executives who also understand the products,            "But     fundamentally,     removing      the
Advertisers, for their part, continue to feel      and try to spend a great deal of time finding       complexity and adding simplicity so you can
comfortable placing ads on TV, gauging that        pockets of monetization. There will be a great      easily access in an open way everything you
their dollars will not be wasted. Emerging         deal of experimentation. Some of it will work       want, and leverage a lot of social connections
markets further propel the growth potential for    and a lot won't. Five years from now, many of       rather than going to multiple ones, is how the
innovations combining the Internet and             them will have found highly successful business     user experience will evolve."
television, which is a natural, low-cost, and      models," but it is tricky at the beginning of a
ubiquitous way for people in emerging markets      new venture to predict what those models might
to engage with the Internet, he said.              be.
                                                                                                       About the author
    "We think there's a lot of room for                A dashboard concept is very important as          Martha Lagace is the senior editor of HBS
innovation here and a lot of room for richness     the key to innovation, said Decker.                 Working Knowledge.

COPYRIGHT 2007 PRESIDENT AND FELLOWS OF HARVARD COLLEGE                                                                                               2

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