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					                     Transcript of Andreas Weigend
               Marketing 2.x: The Social Data Revolution
                        MBA 267, Spring 2009-B
       Haas School of Business, University of California at Berkeley
Andreas Weigend (www.weigend.com)

Marketing 2.x: The Social Data Revolution
MBA 267, Spring 2009-B
Haas School of Business, University of California at Berkeley

April 9, 2009

Class 3 Company: (Part 2 of 2)

This transcript:
http://www.weigend.com/files/teaching/haas/2009/recordings/audio/weigend_haas2009_3company-2_2009.04.09.doc

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Transcript by Tamara Bentzur, http://outsourcetranscriptionservices.com/                                       Page 1

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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
Peter:           Andreas, I thought it would be good to maybe bring up some examples.

Andreas:         That‟s a good idea. We thought of giving you some examples, maybe. Would that be of
                 interest?

Peter:           Here is another one. You know how we talk about how markets are efficient mechanisms
                 for listening. We also see markets as financial markets. It turns out that in social
                 media, we can do a bunch of market-oriented things that can be very useful either
                 in marketing or internally.

                 How many of you have heard about the employee suggestion box, the idea that you have
                 an idea and you make a suggestion? The very idea of it sounds pretty stupid and
                 antiquated. At BestBuy, there is a woman who is charged with how you cloak an
                 employee suggestion box in a 2.0 way. They came up with something genius.

[Video]:         We were really worried about the idea of an online suggestion box. We didn‟t want that
                 because there isn‟t a magical person that takes ideas and implements them. What we
                 really wanted to do was to enable people to take action on it.

                 We built a functionality of funding, very similar to prosper.com. We added the element of
                 if you ask for money and if people want to fund an idea, you could do that online.

Peter:           Here is the concept; it used to be you’d be in some store and you’re like, “It would
                 be really good if we did x.” Nowadays, if you had the idea, someone might give
                 you the money from corporate and now you have to produce and deliver x. That
                 added accountability to the system, but it also created this marketplace where all
                 these ideas started bubbling up.

                 This is what the thing looked like, but all of a sudden, if all these ideas came up on
                 how to sell HDTV better, the HDTV product manager would start seeing ideas
                 coming from the field that she’s never seen before. If she liked them, she could
                 fund them.

                 The other interesting thing that happened is oftentimes, corporate doesn’t get it,
                 so other people in the field will see things. They just come together and do them
                 [0:02:01.8 unclear]. It makes things more flexible.

                 The first example they had is there was a kid who had been hired by BestBuy, had been
                 there for three weeks. He had an idea, which was they noticed they were selling a lot of
                 video games. The video games have parental controls; most parents have no idea how
                 to set these things. He said, “Why don‟t we turn that into a product line. We can charge
                 for the whole thing.” This went right up to corporate and he got funded.



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                     Transcript of Andreas Weigend
               Marketing 2.x: The Social Data Revolution
                        MBA 267, Spring 2009-B
       Haas School of Business, University of California at Berkeley
                 One, normally someone who has only been there for three weeks doesn‟t get funded.
                 Two, since he wasn‟t a marketing guy, nobody told him that you are supposed to ask for
                 $10 thousand … the program, write it up, and we‟ll build it out. I think he asked for $300
                 because all he could think about is cost because he had to Xerox some stuff, print some
                 things, and come up with something. He had a return of investment immediately, and it
                 began this movement that you could have an idea and the idea would get funded and you
                 could go do things.

                 Another form of market is prediction markets. This uses a stock market
                 mechanism to answer the question “Are things going on in my company smart or
                 stupid?” It was a very interesting way to give a lot of people a voice in a way that
                 wouldn’t occur to you because it’s a mechanistic model.

[Video]          It‟s a web-enabled stock market game. The reason we use the word game is for two
                 reasons. One is because it‟s fun and also because we‟re not trading in real money here.

                 I‟m taking play money and I‟m betting on stocks, selling and buying stocks. That doesn‟t
                 feel like I‟m registering my opinion. That is exactly what you‟re doing.

                 Stocks represent future events or future outcomes. People trade in the market, based on
                 what they think will happen in the future, around those events.

                 Assume this market you are conveying what you know and how you feel.

                 We have this mantra of wanting to listen to employees and we want to invite insights and
                 we want to connect those insights with actual decisions. It‟s so hard to do that.

                 The market is not a perfect crystal ball. It‟s not going to tell you exactly what‟s going to
                 happen all the time. What it does do is roll up the consensus of what the participants in
                 the market are seeing, hearing, and feeling.

                 If I‟m leading and the … is will this thing launch on time, and was trading at $70 and all of
                 a sudden went down 20%, I instantly know that something has happened.

                 We [0:04:32.2 unclear] inviting your employees to contribute their unique ideas and
                 experiences, to better serve customers.

                 This is yet another way to do it. It makes me feel like I have a voice. It gives me a
                 chance to have a voice to leadership and they‟re seeing this stock and they‟re seeing
                 where it‟s going and know that the stuff I know is valuable enough that people will want to
                 hear it and want to see it.

                 Everyone wants to participate when this thing rolls because it will only make the
                 information better, more valuable, and more accurate.

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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
Peter:           In the real world, you have things like Fantasy Football, Hollywood Stock Exchange, and
                 those kinds of sites. This applies inside the enterprise. Brad tells me it was a better
                 predictor of inventory at Christmas than their other systems, so the stuff kind of works.

                 My friend Don Tapscott wrote Wikinomics. It was the first book that really looked
                 at a lot of this stuff and said, “How is this stuff changing the enterprise.” It‟s still a
                 very good book. I talked to him and he was talking about how these social technologies
                 force you to really reconsider who you are as an enterprise and how you deliver value to
                 customers. We were talking before about [0:05:41.5 unclear].

                 The way an enterprise delivers value and the way that marketing people do that changes
                 very quickly when the nature of the communications changes. Here is Don [0:05:53.7
                 unclear]

[Video]          The paradigm is an [0:05:56.9 mental…]. Paradigms put boundaries around what we
                 think and they constrain our actions. The Earth is at the center of the universe –
                 paradigm. The big problem in the world has come and it’s a new paradigm.

                 Retailers have stores and they stock them with great products. They understand
                 customers and they sell effectively to segmented market, through certain channels.
                 Something could come along that changes the whole mental model. That’s what is
                 happening in retail today, a new paradigm is emerging.

                 When you get a shift like this, these things cause dislocation - conflict. They’re
                 nearly always received with coolness or worse, mockery, hostility.
                 Understandably, vested interests fight against change. Leaders of old paradigms
                 have great difficulty embracing the new. This is both the promise and the challenge
                 for BestBuy. You‟re a leader of the old paradigm but you’re success in the old can
                 become your inertia in the new.

Peter:           This harkens back to something we were saying earlier, which is we are at this moment
                 in business history where the old is going away and the new is very much the techniques
                 that you guys have grown up with. Sometimes, it‟s the fish problem; you‟re so close to
                 them you don‟t realize how destructive and interesting they are.

                 Here is my favorite example of a place that has embraced a new paradigm. You
                 would think of them as not embracing new. It’s the Central Intelligence Agency.
                 When all was said, they concluded that the reason 9/11 happened was basically no
                 Facebook.

                 There were people running around in the FBI that saw that folks were letting airplanes
                 take off and not landing. They knew this was suspicious. The way they were organized



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                     Transcript of Andreas Weigend
               Marketing 2.x: The Social Data Revolution
                        MBA 267, Spring 2009-B
       Haas School of Business, University of California at Berkeley
                 through email, and the person you got to talk to was your superior, who was interested in
                 drug busts; in fact, did not need to hear about [0:07:50.3 unclear].

                 There were these incredibly frustrated FBI agents in Florida, thinking, “This is not
                 good,” but they weren’t able to follow through. What the CIA later came to realize
                 is that the nice thing about Facebook is you could form a group called “People
                 Who Look at Wacky, Suspicious Things” that folks who would think heresy, could
                 go and talk about it.

                 In fact, naturally, those folks and other counter-terrorism people in Los Angeles who saw
                 these cells doing suspicious things would find each other and they would have put two
                 and two together in a [0:08:18.2 unclear] faction, as opposed to the way the government
                 normally works. You go up, across, and all that crap.

                 They created [0:08:24.7 unclear], the spook’s version of Facebook. Here, Time
                 Magazine gives it a great award. It goes across the whole set of intelligence
                 organizations. It literally is a new approach that is designed to speed up the ability
                 for people to see trends. This is exactly the same kind of stuff that customers do
                 with markets, and that brands have started doing with customers now.

                 This was the moment at the CIA where they realized they had to do things differently.
                 There was a paper they wrote that basically said, “How can we change ourselves in ways
                 we cannot predict,” or more directly; “How do we modify our nature to enable such
                 unpredictable changes?” Before giving the right answer, there is a wrong answer that
                 can be dismissed, up front – reorganization. Any reorganization, by its nature is both
                 predictable and slow so this paper is called “Towards a Complex, Adaptive Intelligence
                 Community”. It‟s basically about how emergence needs to change the nature of
                 management. That‟s basically what I‟ve been talking about here, today. I‟m just amazed
                 that these people studied and got it.

                 Here is another one.

[Video]          I was doing, back in the mid 1980‟s, socially, absorbing information that wasn‟t – in an
                 real sense – protected, information that was available – would we get ourselves up
                 against and be able to again, use that verb “absorb” it? In today‟s world, that information
                 that would have been available twenty, twenty-two years ago, only by this social
                 discourse, is now available in what we call open source, out there in the electronic media
                 in which our species has decided to put almost all known knowledge.

                 That experience, as an attaché, has given me an appreciation of that which we can
                 learn, information that is readily available, unguarded, not classified, if we would
                 but get ourselves in a position to access it.


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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
Peter:           That‟s a stunning thing, that the open source intelligence movement took off and
                 [0:10:31.1 and now they wholly believe in it.] So, it basically says an awful lot of what
                 matters, you can find by looking in the blogosphere without spooks.

                 The market version of that is that in the olden days, we invented market
                 intelligence because we had no idea what our customer thought. We hired a whole
                 organization to go out and panel an interview four times a year, and then someone
                 would show up at the marketing vice president‟s staff meeting, three times a year, and
                 there would be a big report and you were too busy to read it and it was a slow,
                 stupid, lugubrious process.

                 Today, you can’t but hear what you customers are talking about, all the time,
                 because they are on Twitter, they’re blogging, but you‟d be surprised how many
                 companies don‟t listen in. It‟s free. You use Technorati so everybody should be able to
                 listen in. At the CIA, they finally got around to realizing we should, and we do.

                 The portion of networking theory that this is about is this concept of weak ties
                 versus strong ties. It’s the same thing that’s at work when you’re looking for a job,
                 which is your five best friends aren’t where the leads come from; it’s somebody
                 you bumped into at a cocktail party, serendipitously. The most information comes
                 from a broader group of linked people and that’s the reason that Facebook and
                 similar things work so well. You‟re looking at that feed if something interesting
                 happens. It‟s that serendipity effect, it‟s people who you kind of are interested in, the
                 broader group, and then you see something interesting. It‟s what makes this stuff so
                 delightful and it‟s what the CIA put to work internally. It‟s the antithesis of the top-down
                 organization chart.

                 The CIA also has something called the Intellipedia, which is their [0:12:03.1 unclear]
                 wiki and again, they had a killer application which is keeping track of bad things going on
                 around the world, which they all like to do. It‟s not only that; they actually put in a little
                 incentive mechanism. You get this really stupid little trowel, “I dig Intellipedia; it‟s a wild
                 wiki, Baby”. It‟s goofy, but the point is; this is the little „attaboy thing. In business, you
                 want to thank an employee for a good job, you give them candy or a pencil. People like
                 to be acknowledged so this is like “You‟re a good digger of stuff”.

                 Let’s transition to talk about some other enterprises, such as this concept that
                 when you do this counter-intuitive thing, which is opening stuff up and giving it
                 away, you make more money or it will be more valuable, which is what BestBuy
                 was finding. You were talking about working at McKenzie, which is not a good idea.

                 This is the story of the Goldcorp in Canada. They had a new CEO; the stock was
                 down to about a $90 million valuation. The problem was that the head geologist just
                 could not find the gold and the company was heading out of business.

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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
                 In frustration, the CEO said, “What if I open source all this geological information?
                 I’m going to put it out there for physicists, mathematicians, scientists, and
                 anybody in the world to crunch the numbers and tell me where the gold is and the
                 winner gets $10 million.” The first problem was the geologists felt bad, like they
                 were doing their job wrong. It was no, as smart as you are, you could not possibly
                 be the twenty smartest people on the planet.

                 To make a long story short, they opened the whole thing up. Mathematicians
                 found the rest of the gold and the stock went from $90 million to $10 billion. They
                 reoriented, looking at the geologists doing it all themselves to being the curators
                 of what a community might do for us. They basically crowd sourced the thing, or
                 put it into an idea of [0:13:51.3 unclear].

                 Proctor & Gamble is doing the same thing. It’s interesting about Proctor, the
                 world’s most famous marketing company; they did not start doing this stuff in the
                 way they sold Tide. They started doing this stuff in the way they did R&D. They
                 actually chose to be company 2.0 before marketing 2.0, which is what I see
                 BestBuy doing. It goes both ways, but what I‟ve become convinced of is you have to do
                 both at the same time.

                 Here is my friend Don Tapscott, the guy who wrote Wikinomics. I was talking to him over
                 the phone and said, “Tell me what happened at Proctor & Gamble when these
                 technologies hit.”

[Video/Don]      It was a crisis that got them started. A few years ago, their market share was
                 declining; their stock price was down substantially. They had to bring in a new CEO
                 [0:14:36.1 unclear]. He concluded that the current operating model of the company
                 wasn‟t going to succeed.

                 For example, take the issue of innovation. They had lost their innovation edge. He
                 decided that “We need to reach outside the company,” using the web to do that.
                 “Within three years, half of all our innovation must come from outside.”

Peter:           It used to be your scientists were inside, built-in. It used to be invented here and the new
                 mantra is “probably found elsewhere”. That is probably the biggest cultural
                 change you could bring about in a company.

                 NIH, in Silicon Valley, it’s a big thing, although the open source world, people are
                 beginning to realize if you open things up and let other folks do it, it‟s a great thing to do.
                 They basically have from $10 billion to $24 billion worth of new product that has come
                 from innovation outside. They use an incentive here, which is a technique where
                 they say, “We’re looking to solve a particular problem,” and someone says,


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                     Transcript of Andreas Weigend
               Marketing 2.x: The Social Data Revolution
                        MBA 267, Spring 2009-B
       Haas School of Business, University of California at Berkeley
                 “Here’s a molecule that makes wine stains go away,” and that became the portable
                 version of Tide.

                 They have basically said to the world, “We can never have the smartest engineers.
                 All of you become part of our process.” This is a very big trend in enterprises and
                 some companies get it and some don‟t. It certainly drives costs down and it’s part of
                 this notion of unbundling parts of business and enabling much more efficient
                 things to happen.

                 I think the big story with this recession is that in addition to the fact that we kind of
                 got how we handle the financial markets wrong, is we’ll come out of this with
                 leaner, lighter, more object-oriented enterprises; ideas swap in and swap out, and
                 they’re not done by huge entities anymore. You see it at work, right here.

                 Here is another thing. It used to be that when you left Proctor & Gamble, you were
                 bribed because you left the mother ship and “be loyal to us”. This new CEO said,
                 “Wait a minute; we have the best possible alumni network in operations and
                 marketing; let’s celebrate.” The basically formalized the Alumni Network, had
                 meetings, embraced it, and it was a network just like the customers of [0:16:52.9
                 unclear]. It added value to the whole system and it just took a different point of
                 view to get that.

                 One of my favorite examples is Lego. Lego had an interesting problem. It built a
                 toy called Mindstorms, which was a software-based toy. You programmed it and it did
                 really cool things. People reverse-engineered the software, put it up on the Internet, and
                 it had all sorts of interesting ideas.

                 From the perspective of the customers, they open sourced it. The [0:17:18.0
                 unclear] of Lego, that would be stealing our intellectual property. Lego had a
                 fundamental question, “Do we sue our customers or embrace them,” not unlike that
                 Forbes Magazine article, “The Blogger‟s Writer Disaster”.

                 Fortunately, they embraced them. It turns out that within companies, and this is
                 important, when you leave here and you‟re running around companies, this is a thing you
                 will run into. These changes happen because there is some maniac who has decided
                 they‟re on a mission to bring about the change.

                 Michelle Lazar, who led the change at BestBuy, is convinced this is a better way of
                 doing things. I was interviewing her and the head of BestBuy, and I said to Brad, “When
                 Michelle started talking about enterprise 2.0 and web 2.0, and APIs and all this new
                 marketing stuff she was going to use, what did you think?” The CEO of BestBuy said,
                 “We got angry. We didn‟t know what she was talking about. We didn‟t know why she


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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
                 was talking to us about this.” Eventually, she prevailed and that’s the new strategy
                 there.

                 At Lego we have this guy here, Jake McKee, and he was in charge of adult toys at
                 Lego, which you think is the booty job. It’s like dads that buy $100 Star Wars sets.
                 What he learned was he kept talking to these guys and learned a lot. Because he
                 would built what the audience wanted him to bring into the committee, his sales
                 went through the roof. He had a great line to me, when I was talking about
                 marketing departments versus listening to your customers.

[Video/Jake]     In most companies, there is a culture that “We’re on the inside, therefore, we know
                 more.” What’s funny is that in five years that I worked at Lego, I did not find one
                 person that even remotely approached the level of knowledge that the dumbest fan
                 had about our product line.

Peter:           This is so true; your audience knows a whole lot. There is this arrogant thing. The
                 corporate marketing world has been a smart, hermetically sealed, arrogant thing. It got
                 built that way because there weren‟t market mechanisms, but rubbing up against all this
                 open market mechanisms, you‟ll see it.

                 Here is some of the stuff that took place. Somebody built a “briki wiki” which is every way
                 you could build a Lego design. Lego marketing didn‟t do it; the audience does the briki
                 wiki.

                 One of the interesting things about applying this is you often don’t have to go
                 borrow the ocean and build something huge. Lightweight social gestures go a
                 long way. For example, I use Delicious a lot. Does anybody here use Delicious?
                 It’s social bookmarking. You find something interesting on the web and you
                 bookmark it. That’s an [0:19:56.1 unclear] use of it, but the my friends keep track
                 of what I’m doing.

                 This is a very interesting little thing that I think Razorfish did. We‟re about to do it
                 on our own site at The Conversation Group. All the people who work there, who
                 obviously are into online marketing; that’s why they’re working there – they are
                 finding interesting articles and bookmarking them. Then, when you go to the
                 homepage, you see everything that everybody else is looking at. It would be as if
                 everything that you were looking at, related to marketing 2.0 on the web, went to
                 one place, and the rest of you saw it. You would walk into class and be talking
                 about that kind of stuff.

                 That’s the easiest thing in the world to do but it can produce results. You can
                 instantiate this in various ways. This is my friend Brian Sugar‟s site. He has
                 PopSugar and DeepSugar, mostly a bunch of sites for women. He realized that among

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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
                  twenty-four year old women who liked cosmetics, bookmarking sounded geeky. He calls
                  them “beauty marks”. A beauty mark is when you see a cool mascara, tag it, and say
                  that‟s kind of interesting. For that market, you just talk about it in their language so that‟s
                  why that was good.

                  This is another way of visualizing data. This is a [0:21:03.0 unclear] of my blog.
                  Everything in my blog, I threw it in a visualization app – just a quick view of what‟s on my
                  mind. It‟s another way of getting at that kind of stuff.

                  Let me just wrap up and say that there is some research that has been done by
                  [0:21:19.5 unclear], who is – there is a huge amount of power in networks between
                  your customers and your employees, and your company and your partners. It
                  used to be that companies would run themselves. Now, thinking though; how do I
                  actually build networks between me and my employees, which we’ve seen a lot of
                  here, today. How do the smartest of the employees hook up with customers? How
                  do we leverage partners? That’s the big frontier we’re going to get a lot of value
                  on.

                  I‟ll give you one more example from BestBuy. When I was working with BestBuy, they
                  said, “We need to go so much more further in delighting our customer and providing a
                  better experience.” I‟m like, “Why, what‟s wrong? The price is good, I get a pretty
                  [0:22:07.1 unclear] as a warranty.” They go, “That‟s the problem; that‟s all we do.”

                  The real issue is that once you take the machine home, aside from selling you a
                  warranty, they don’t know anything. As we learned from Lego, the customers
                  know them both. Here is how they set up the problem, and then I’ll tell you a
                  personal story of how they’re solving it.

[Video/BestBuy]

                  The gap today is that when consumers get home they can‟t figure out the small stuff.
                  They start turning to a friend network, start turning to other people they might know to
                  help them, or they go onto online communities. If BestBuy is not top of mind in that
                  space today, I envision this as that virtual community that walks around behind the
                  customer. It‟s composed of really smart customers that know how to use technologies,
                  those blue shirts, as opposed to e-squatting agents. Those three parties together are
                  going to support the customer in any given moment with their technology.

Peter:            Here is an example of something that happened to me. I came home one day and turned
                  on my TV. Right after I turned on the TV, it went off, and came on, and went off. I
                  thought it was busted. I thought I better call Sony. In the nanosecond between when I
                  had that thought, and I had my next thought, my stomach already started feeling, “We do
                  not want to deal with Sony, here.”

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                     Transcript of Andreas Weigend
               Marketing 2.x: The Social Data Revolution
                        MBA 267, Spring 2009-B
       Haas School of Business, University of California at Berkeley
                 I‟m thinking that‟s a bad idea, and said I‟ll call a TV repairman. It occurred to me,
                 whoever he is, he much have left town in 1988. I could just imagine some bozo showing
                 up, charging $200 an hour, and not knowing what was wrong with my TV. I thought, “I‟m
                 going to buy a new one at Amazon; that‟s really expensive and not great.” The only thing
                 I could do, at that point, was type the seventeen digit model number into Google and
                 pray. This is what came up.

                 A social network for appliances, called FixYa… it never would have occurred to me
                 that I’m going to fund a social network around appliances because you should do it
                 around people, not washing machines. It turns out that the only people who really
                 know what’s going on with the appliances are the customers. When you type it in,
                 you find a whole conversation called “my TV turns itself on and off,” and I
                 suddenly realized the world’s entire knowledge on my problem has been found.
                 That social network has the answer.

                 The answer is, if you scroll down, it‟s the light bulb. It‟s a rear projection LCD, so when
                 the light bulb gets ready to burn out it just winks on and off. If you bought a new light
                 bulb for $90, the problem is solved – which I did. I became a believer in this company,
                 FixYa, which is pointing the way to what I think BestBuy ought to be doing; if you
                 own the conversation about what goes wrong in products and you’re helping
                 customers with stuff, you’re certainly there in harm’s way for when they go buy a
                 new one. You are providing an ongoing form of delight, all powered by the
                 network knowledge of the audience.

                 This is where I kind of mentioned that this Nobel Prize was won. Enterprises used to
                 be monolithic. As you start taking them apart, you add a lot of value. I don‟t know
                 how many of you know the term “API”, application program interface, it‟s the idea that you
                 open up a program and let other people have at it.

                 I think this points to that in Silicon Valley, we invented this notion of developer market,
                 this concept that Apple would open up an API on iPhone and a lot of stuff would come, or
                 Microsoft would let you write for Windows.

                 Now, that mechanism is actually showing up in companies. The Guardian, in the UK,
                 through an API, has opened up all of its content and letting people build applications
                 around it, add historical content and finding applications to it.

                 Netflix put an API in and they spent months trying to build an iPhone app. They didn‟t but
                 the day they added the API, someone did go build one the next day. The New York
                 Times is doing this.




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                      Transcript of Andreas Weigend
                Marketing 2.x: The Social Data Revolution
                         MBA 267, Spring 2009-B
        Haas School of Business, University of California at Berkeley
                   Across the board, companies are kind of unbundling, opening up, and in an open
                   source manner they’re letting people get access to their data. I have an example of
                   how BestBuy does it.

                   I‟ll leave you with a quote from Clay Shirky. Clay wrote the book Here Comes
                   Everybody. He‟s actually the guy who figured out about power law, and the long tail
                   applying to the Internet. I said to Clay, “What’s the advice that you give companies
                   when they’re thinking through how to innovate in all this?”

[Video/Clay]       The classic mistake I have seen companies make in trying to pursue this is they
                   have a bunch of meetings, and then try to decide which one thing they’re going to
                   do. They put all of their resources in that.

                   As I have consistently said, if anybody will listen; whenever you’ve got somebody
                   who’s got a million dollar idea for transforming the business and taking advantage
                   of social [0:26:49.9 unclear] businesses, lock them out of the building and don’t let
                   them back in until they’ve thrown away the million dollar idea and come up with
                   ten, hundred thousand dollar ideas, or even better – a hundred, ten thousand dollar
                   ideas.

                   Lots of little experimentation that is relatively low-walled; so if there are two
                   fingers working a little bit they can potentially be joined up, rather than “This is
                   now the management decree for this system, that we will build from the ground
                   up.” They have a much better chance of finding something.

Peter              These structures that are open, emergent, or created by groups is what people
                   mean by enterprise 2.0. You see so much of it in our consumer world. I think it’s
                   going to make a big change in the enterprise and in business, and starting right
                   about now. It‟s the world you guys are marching into and I think when you start thinking
                   through how marketing is changing – CMOs in companies are in the business of having
                   to push this overall change because the company needs to come this way.

                   You see idea department CMOs and senior executives trying to work all this stuff out. It‟s
                   the forefront of what‟s going on right now. It only gets more important, given how difficult
                   the economy is.

                   Thanks. [applause]

Andreas:           Thank you Peter. My question is, after such a rich talk here, what did you guys learn?
                   What was important to help you sort of digest it and realize what you can do with it, to
                   make sure you actually learned something?




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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
                 My little summary and some of my main points here were that marketing 2.x is not
                 independent of company 2.x or enterprise 2.x; or, some companies first do
                 company 2.x and then move to marketing 2.x.

                 Clay Shirky’s beautiful example that it is no longer trying to have the one most
                 important thing, but trying to really have a number of groups in the company
                 compete.

                 Prediction markets was another example. For that, you have a certain outcome.
                 We ran prediction marketing in my class at Stanford, two years ago.

                 The nature of the firm is being dramatically changed by communications. That‟s
                 why we talked about communication before we talked about this. The firms you see, built
                 because inter-firm communication was cheaper than between firm communication. How
                 do things come about? Dell is a beautiful example that usually, by crises.

                 What we didn‟t talk enough about today was why do people do things? Why do people
                 participate? One of the things you said was people actually play games. That is a
                 discussion I think we should move a bit deeper into.

                 What did you learn here, today, in the marketing 2.x discussion? What was important for
                 you? What can you take with you?

Student:         One thing I found that kept popping up was this idea of attention getting, such as Twitter,
                 Video Blogger, and the videos for the 401K enrollment. I‟m wondering what your
                 thoughts are in terms of with our limited amount of attention that we could possibly give
                 all these opportunities to engage in various media, what is the next step in terms of
                 getting attention share, and also people becoming adverse to being bombarded so
                 much?

Peter:           We’ve moved from an era of scarcity to one of abundance, and in an era of
                 abundance – filtering. Therefore, the mechanisms by which we get attention and
                 get interesting stuff becomes the interesting problem. Arguably, it‟s where an awful
                 lot of money is being made in Silicon Valley, right now. That‟s what Google does, it‟s an
                 attention management system.

                 One of the big trends for marketers is that more and more of the attention that‟s out there
                 is created, managed, and nurtured by the audience. It used to be Thursday night there
                 were shows and then you see CBS, ABC, NBC, and FOX, and the attention was
                 managed by [0:31:32.2 unclear] those shows so you had the choice of four.

                 Today, the attention is what they’re linking to, or if you’re watching on Google it’s
                 what their friends are sharing or stuff like that. An awful lot of the energy comes
                 from the audience. There is a company called Addictive Games. They make casual
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                     Transcript of Andreas Weigend
               Marketing 2.x: The Social Data Revolution
                        MBA 267, Spring 2009-B
       Haas School of Business, University of California at Berkeley
                 games. They thought they were in the casual games business. They realized they were
                 in the business of making a platform for people to build and customize casual games.

                 For example, when Madagascar, which is a Pixar film, came to them and basically said,
                 “Promote our film,” they built a Madagascar game. What happened was, their audience
                 could customize the game. Because kids customized the game, they had to share it with
                 everybody who was there. Essentially, they invested in getting people to look at it but
                 then they created this mechanism where people just became zombie, “You have to play
                 that game,” and they got something like 1.4 million game plays because they turned the
                 audience into their workforce.

                 There is a company called Brickfish that is a relatively simple thing. You basically give
                 creative pass to kids. Mariah Carey launched a fragrance and the girls got to build a
                 Mariah Carey pink dress. They provided these twelve year old kids with a little CMO-
                 style dashboard. You could actually see, by social network, how many people were
                 linking to and looking at your dress. You could see how your friends were doing.

                 You immediately saw four folks in MySpace looking at mine and somebody else got
                 twenty; you then spent the rest of your time trying to get more friends over at MySpace to
                 look at your dress. They also gave you a geographical map. It‟s like, “Oh, I don‟t have
                 anybody in Europe. I better go find a friend in Europe.”

                 They turned the audience into these marketing people to go to work for them.
                 That’s one point; the audience, as an attention-getting mechanism, is a key thing.
                 The surveys show that people, as people’s filters, is a very big trend. That’s social
                 filtering, social shopping, using people you trust as a filter as opposed to just the
                 media.

Andreas:         Which of the examples you saw today are examples where you have audience
                 participation, where you have the consumer contribute to this web 2.0 nature of
                 architecture of participation? Which of them were more internal within the companies,
                 and what other possibilities do you see that we can get audiences, customers, potential
                 customers, users, or individuals to participate more?

Student:         I have a question. A lot of that seems very spontaneous and organic. You put this
                 platform out there and you get contributions from either your employees or consumers.
                 What if the contributions you get is going in the direction that is not consistent with the
                 strategy that the company has? There is this joke that if you ask 20% of the owners of
                 Porsche what they want, and if you put all that in the car, you get a Volvo. It‟s square,
                 safe, and boring.




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                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
Peter:           This is the interesting question. The classic think in entrepreneurship and marketing is
                 anticipating the market. The question to part of this is if what you’re listening to is a
                 bunch of people who don’t know what the future looks like, what do you do?

                 Apple is a good example of this. Steve Jobs has a great vision of what he wants to
                 build. He put something out there. They also have really sophisticated listening
                 mechanisms. When they did a price decrease on iPhone, and people erupted, they
                 actually came out with a new policy, within hours, and it‟s because they had a very good
                 mechanism to listen to and assess and look at all that stuff. They had something prior to
                 that, with the iTunes store, where they made a commercial when the first Intel Max came
                 up. The commercial looks suspiciously like a music video from some artist. Everyone
                 was like, “Look, Apple is ripping off the artist,” and they immediately put the artist on the
                 front page [0:35:44.4 unclear]. They’re actually able to listen and anticipate.

                 Dell does the same thing. Dell actually has the Ideastorm thing, where they’ll let
                 the audience go build one. Dell gets to build all they want, but if you take the audience
                 seriously –part of this is you don’t listen to everything. You discount a lot of it

                 These techniques give us “dog hearing”. We hear everything. If you heard
                 everything that people were saying about you, you’d probably go nuts because
                 people aren’t always saying the nicest things about everybody. This is part of
                 what happens with this; you hear every good idea, every bad idea, every crazy
                 idea, so you have to be good at assessing the right ones.

                 You have to be good at leading and then hearing what people are saying. These are still
                 great tools to lead people along. It‟s just that great leaders get to have visions on how
                 they do things, too.

                 A lot of it is how do you design these systems, not just to listen to the audience and tell
                 them what to do, but if you‟re actually trying to do things like sell more dinner stuff to
                 moms, a mechanism around what‟s for dinner tonight and every afternoon, between 12
                 and 6, things are popping up; you could work with that.

                 There are also a lot of stupid ideas that shouldn‟t be done.

Andreas:         Companies who open themselves up lose control and it’s not possible to keep
                 control and only have positive things, and have people voluntarily contribute.
                 That’s what you have to be clear about. I know it’s hard for many of the traditional
                 companies to accept that fact, but the only alternative is to become irrelevant.
                 That’s the way I see it.




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      http://www.weigend.com/files/teaching/haas/2009/recordings/audio/weigend_haas2009_3company-2_2009.04.09.doc
                       Transcript of Andreas Weigend
                 Marketing 2.x: The Social Data Revolution
                          MBA 267, Spring 2009-B
         Haas School of Business, University of California at Berkeley
Peter:           The act of losing control is an act of increasing shareholder value. We have to get
                 used to this thing that seems counter to what you grow up believing actually works very
                 well.

                 The best example of this – OpenSource should never have happened. Linux is an
                 impossibility. How the hell did the world‟s best operating system get built with nobody in
                 charge, in their free time, because they were interested in it? That should never have
                 happened. When it did happen, it should never have become very important.

                 Likewise, Wikipedia seems impossible. What‟s interesting there is these were totally
                 emergent systems but they actually had the right amount of control. Jimmy Wales knows
                 just the right rules and he‟s also learned this because there have been some pretty silly
                 examples; he gives some people more ability to edit. If it‟s a controversial subject, it‟s
                 locked down or else you‟d have a fight over the term “right to life” every hour. It would be
                 rewriting itself. You have to put a little more control over certain things.

                 Likewise, in Linux, there is a control thing there, but it’s amazing how when you open
                 things up, the power of what gets done. This is the thing that companies have to
                 learn. In general, they‟re so far on the side of not doing it that this is a continual process
                 of doing it.

Andreas:         In that spirit, thank you Peter. We are very open, so if you have stuff about us, we both
                 have blogs that you can comment on. Homework is clear, it is trying to get to the
                 attention of people. What is your strategy here on the simple example of the social data
                 revolution Facebook page.

                 I‟m at the pub tonight, at 6. I‟m looking forward to seeing the six or seven of you who are
                 coming. Next week, we are having Mark Choey, who is doing a real estate company that
                 is very much a web 2.0 real estate company. Next week, we‟ll do a specific example of a
                 vertical, which is a big vertical in the United States – real estate. Thank you and see you
                 next week.




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