Fad or Revolutionary Change?

by Jay Deragon on 11/15/2007

Revolutionary Changes fueled by social mediumsAn interesting article appeared in MarketWatch this morning titled: Will the real Steve Ballmer please stand up? Commentary: Why Facebook was worth the bet.

The articles starts out : “On October 1st, in an interview with the London Times, Microsoft’s CEO declared social networking was a fad — the kind that appealed to younger people. He added, “There can’t be any more deep technology in Facebook than what dozens of people could write in a couple of years, that’s for sure.

Well, that was then. On October 24th, Microsoft announced it had won its bid for a stake in Facebook, the world’s second largest social networking site after News Corp’ MySpace. For $240 million, Microsoft acquired a 1.6 percent stake in the company, implying a valuation for Facebook of $15 billion.

Our age is one of rapid obsolescence of business models — and the gale of “creative destruction,” as economist Joseph Schumpeter famously put it, may soon imperil today’s rulers of the Web. Just look at the growth statistics for sites by type.Comparing 2005 and 2006, it’s striking to note that portal businesses grew page views by 10 percent; e-commerce grew by six percent; and entertainment sites grew page views by 21 percent. By contrast, social networking sites grew page views by 285 percent. Now that’s consumer engagement!

The technology underlying social networking platforms is hardly mature, and already Facebook has outsourced its development to an engaged community. Which illustrates the point: Facebook and its brethren are not technology plays, nor are they media companies, exactly. Moreover, they are no more “fads” than eBay.

Like the buyers and sellers who create a market on that dominant auction site, today’s social networks that have achieved mass scale will prove hard, if not impossible, to dislodge. As host to powerful social dynamics that are fueling the next great wave of user participation online, Facebook will deliver what counts most for advertisers — consumer attention and engagement.

The spin about social networking is all around us and at moments it is hard to sort throw the facts from the fiction. However the facts seem to clearly point to revolutionary changes to the entire web as we know it. Additionally while watching the growth and populatrity of the social medium for more than ten years it appears as thoiught the BIG (Microsoft, Google, Yahoo, News Corp, IBM to name a few) have awoken to the attention and utility the small (you and me) are using and creating out of the mediu of social networks.

Consider how much money has been thrown at existing networks or creating new networks over just the last year, lasy count was in excess of $50 billion in capital infusion.In our previous post titled “Systemic Changes to the Web” we discuss the revolutionary changes being brought on by the social networking medium. When the advertising market models of the web shift you can be sure accelerated shifts will continue to follow.

So was Steve Ballmer spinning with his statement about a fad or merely trying to play down the role of the social web while he and his team contemplate strategic moves to remain a giant of the web? Is all the data, growth, capital chasing a fad or a revolution?

McKinsey & Company have a site titled ” Dialog with Leaders” and in which one of their papers states “Leaders from around the world are facing a new kind of challenge: coping with the various waves of disruptive, revolutionary change that redefine the context of business. One wave has to do with the rise of the Internet-based “new” economy and its driving force, the process of digitization (Castells, 1998; Kelly 1998). A second has to do with the rise of new relational patterns and their underlying driving forces: the processes of globalization (of markets, institutions, products), individualization (of products, people, and their careers), and increasingly networked structures and web shaped relationship patterns (Castells, 1996).

Sounds like many global leaders are examining the revolution brought on by waves of disruptive, revolutionary technological advances that are driving the new economy. You think maybe they are referring to The Relationship Economy? Maybe I should ask Steve Ballmer or suggest he hire McKinsey or us.

What say you?

{ 3 comments }

John Dierckx November 19, 2007 at 7:52 pm

You wonder if the business leaders may perhaps be referring to the “relationship economy”. These leaders speak in terms of “globalisation, individualisation, networked structures, web-shaped relationship patterns.”

What these leaders apparently do not speak off is social networking and social networking online. This is an important notion since it appears to indicate, at least to me that these leaders speak of the WHAT and not so of the HOW. That is probably where the big difference in thinking is between the leaders and the followers. They thing in WHAT terms where the HOW will enfold itself.

See my full response here: http://johndierckx.terapad.com/
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Michael Pokocky November 15, 2007 at 3:58 pm

“Fad for sure. That’s why we have illusion. Revolution? First you need a leader and then you need to define your cause clearly and then you need to sell it to the people and then you need to explain to the people why its going to work. Now all I want to know is who would want to take on a job like that and who is going to pay them? Read the current anniversary issue of The Atlantic, The Future of the American Idea and then you’ll have at least some idea of the extent of the problems inherent in the Gold Rush of 2007″_Michael Pokocky

“You can’t go on getting excited every year about this. There are limits to getting excited finally.:_Dorris Lessing[…reflections on Nobel Prize for Literature after 40 years a potential honoree]

“Simplicity is the ultimate sophistication.”
Leonardo Da Vinci 15/4 1452 – 2/5 1519

“I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.”
Leonardo Da Vinci 15/4 1452 – 2/5 1519

“It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things.”
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“Life is pretty simple: You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is the doing something else.”
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Mark Kerrigan November 15, 2007 at 12:03 pm

With Microsoft’s acquisition of Facebook, or a portion of it, online social networking suddenly became validated to be more than “just a fad.” Read social networking strategist Jay Dergon’s post on Microsoft’s purchase.

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