Archive for June, 2009

Michael Wells
by Michael Wells
Tue Jun 30th 2009 at 8:01pm UTC

The Wikipedia Revolution

Tuesday, June 30th, 2009

I recently read The Wikipedia Revolution by Andrew Lih. The story of Wikipedia is a microcosm for looking at at least three things:

  1. How the Internet and Web are changing almost everything, destroying old models but with inherent weaknesses of their own.
  2. How collaborative group efforts can be greater than the sum of their parts.
  3. The human desire to have all knowledge.

1. Wikipedia is a perfect symbol of the Internet. It exists in a virtual reality, with a mass of contributors who don’t know each other. It has almost totally undercut older encyclopedias like Britannica and World Book, but depends entirely on the goodwill of its contributors. It has no stable means of support, and at the end of the book (published this year) Wikipedia was moving its headquarters to San Francisco, expanding staff and becoming much more expensive to operate in a leap of faith.

2. Wikipedia’s model of using a large number of contributors isn’t new, although the lack of professional editing is. The Oxford English Dictionary was originally built the same way, using file cards in cubbyholes in the 1800s, a fascinating story told in The Professor and the Madman. Wikipedia’s strength is its self-correcting and self-regulating nature. Its weakness is that unless someone knowledgeable about a field contributes, the articles will be weak.

In 2005, Nature magazine famously did a comparison of Wikipedia and Britannica’s science articles and found their accuracy comparable. However, when I first saw Wikipedia a couple of years ago I looked up two things I knew something about: grantwriting, which is my field, and BKS Iyengar, who is my wife’s teacher. Both were weak – not inaccurate, but sorely lacking. I checked recently and the Iyengar articles are much improved, but grants articles are still marginal (I’ve resolved to fix them when I get some time). If these two quick checks are representative, there are probably many other weak areas (in fairness, Britannica Online doesn’t have seem to have articles on either topic.)

3. People have been trying to capture the world’s knowledge for millennia. The first modern encyclopedia was probably Diderot’s French Encyclopédie, although Lih’s book says the first major attempt may have been by Pliny the Elder in the first century. But since knowledge is incomplete and constantly expanding and changing, the print versions were outdated within years. Wikipedia corrects this, but at the expense of a central editor or editors.

The larger question is about knowledge itself, which is famously growing faster than anyone can keep up. It has also been destroyed or lost in massive amounts, like the burning of the great library of Alexandria, the book burning in China’s Quin dynasty, or the medieval witch burnings which eliminated knowledge of folk medicine. In Asimov’s Foundation Trilogy, the Encyclopedists are trying to preserve human knowledge in advance of a total breakdown of civilization (apparently the books are going to be made into a movie next year). (Funny thing about old science fiction. Spaceships leap across the universe, but computers are still the size of houses and books are still published on paper.)

Obviously, things are changing very fast. Wikipedia could drive print encyclopedias out of business then fail itself. The wiki model is very democratic, but like many very open systems subject to error and manipulation. Stay tuned.

Richard Florida
by Richard Florida
Tue Jun 30th 2009 at 11:00am UTC

The Big Shift

Tuesday, June 30th, 2009

Two of my favorite management thinkers, John Hagel and John Seely Brown, have just released an important new study, The Big Shift. I’ve read the research, which expands on some of my own constructs, and had a chance to talk with Hagel about it at length last week. One of the most important findings is that return on assets for American companies has been declining for decades. Here’s a short-form version that appeared over at Harvard Business Review online.

The 2009 Shift Index reveals a disquieting performance paradox in the US corporate sector. On the one hand, labor productivity has nearly doubled since 1965. During those same years, however, US companies’ Return on Assets (ROA) progressively dropped 75 percent from their 1965 level.

How can firms be getting lower returns even as they’re becoming more efficient? The answer resides in the heightened competition among firms. Competitive intensity nearly doubled between 1965 and 2008, forcing firms to compete away the benefits of productivity gains, which were instead captured by creative talent in the form of higher compensation and numbers of consumers through increasing performance/price ratios and wider choice.

It’s little surprise to find also that the highest-performing companies are struggling to maintain their ROA rates and are increasingly losing market leadership positions. Taken as a whole, the findings portray a U.S. corporate sector in which long-term forces of change are undercutting normal sources of economic value. “Normal” may in fact be a thing of the past: even after the economy resumes growing, companies’ returns will remain under pressure.

To respond to this performance challenge, U.S. companies will need to let go of industrial- era organizational structures (and the reporting relationships, incentive systems, and managerial processes that go with them) and operational practices in favor of the new institutional architectures and business practices needed to create and capture economic value in the era of the Big Shift.

Companies must move beyond their fixation on getting bigger and more cost-effective to make the institutional innovations necessary to accelerate performance improvement as they add participants to their ecosystems, expanding learning and innovation in collaboration curves and creation spaces. Companies must move, in other words, from scalable efficiency to scalable learning and performance. Only then will they make the most of our new era’s fast-moving digital infrastructure.

The full report is here. The section on creative cities begins on p. 60. It shows strong relationships between cities with high scores on the Creativity Index and economic output (measured as GDP), returns to talent and economic freedom, as well as a large performance gap between high and low scoring cities on that index.

Richard Florida
by Richard Florida
Tue Jun 30th 2009 at 10:54am UTC

Free, or Not…

Tuesday, June 30th, 2009

Chris Anderson’s new book Free argues that with the rise of digital marketplace business can profit more from giving information and content away than by charging for it.

Malcolm Gladwell, reviewing the book for the New Yorker, says not so fast.

There are four strands of argument here: a technological claim (digital infrastructure is effectively Free), a psychological claim (consumers love Free), a procedural claim (Free means never having to make a judgment), and a commercial claim (the market created by the technological Free and the psychological Free can make you a lot of money). The only problem is that in the middle of laying out what he sees as the new business model of the digital age Anderson is forced to admit that one of his main case studies, YouTube, “has so far failed to make any money for Google.”

Why is that? Because of the very principles of Free that Anderson so energetically celebrates. When you let people upload and download as many videos as they want, lots of them will take you up on the offer. That’s the magic of Free psychology: an estimated seventy-five billion videos will be served up by YouTube this year. Although the magic of Free technology means that the cost of serving up each video is “close enough to free to round down,” “close enough to free” multiplied by seventy-five billion is still a very large number. A recent report by Credit Suisse estimates that YouTube’s bandwidth costs in 2009 will be three hundred and sixty million dollars. In the case of YouTube, the effects of technological Free and psychological Free work against each other.

So how does YouTube bring in revenue? Well, it tries to sell advertisements alongside its videos. The problem is that the videos attracted by psychological Free—pirated material, cat videos, and other forms of user-generated content—are not the sort of thing that advertisers want to be associated with. In order to sell advertising, YouTube has had to buy the rights to professionally produced content, such as television shows and movies. Credit Suisse put the cost of those licenses in 2009 at roughly two hundred and sixty million dollars. For Anderson, YouTube illustrates the principle that Free removes the necessity of aesthetic judgment. (As he puts it, YouTube proves that “crap is in the eye of the beholder.”) But, in order to make money, YouTube has been obliged to pay for programs that aren’t crap. To recap: YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube’s ability to make money around Free, and forcing it to retreat from the “abundance thinking” that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds …

And there’s plenty of other information out there that has chosen to run in the opposite direction from Free. The Times gives away its content on its Web site. But the Wall Street Journal has found that more than a million subscribers are quite happy to pay for the privilege of reading online. Broadcast television—the original practitioner of Free—is struggling. But premium cable, with its stiff monthly charges for specialty content, is doing just fine. Apple may soon make more money selling iPhone downloads (ideas) than it does from the iPhone itself (stuff). The company could one day give away the iPhone to boost downloads; it could give away the downloads to boost iPhone sales; or it could continue to do what it does now, and charge for both. Who knows? The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws.

Richard Florida
by Richard Florida
Mon Jun 29th 2009 at 11:02am UTC

The Real New Economy is Yours

Monday, June 29th, 2009

Tyler Cowen outlines some themes of his new book, Create Your Own Economy, in Fast Company.

In a typical day, I might write two tweets, peruse 15 blogs (Jason Kottke and Penelope Trunk are two must-reads), and watch James Brown dance on YouTube. If it’s a really fun day, I’ll read more blogs, scour the Web for movie reviews, browse eBay, Google myself, and spend more time on Twitter. None of this costs me a penny, and yet I am producing plenty – namely, my own interest and amusement.

More and more, “production” – that word my fellow economists have worked over for generations – has become interior to the human mind rather than set on a factory floor. A tweet may not look like much, but its value lies in the mental dimension. You use Twitter, Facebook, MySpace, and other Web services to construct a complex meld of stories, images, and feelings in your mind. No single bit seems weighty on its own, but the resulting blend is rich in joy, emotion, and suspense. This is a new form of drama, and it plays out inside us – with technological assistance – rather than on a public stage.

Online, you can literally create your own economy. By that, I mean you can build an ordered set of opportunities for prosperity and pleasure, analogous to a traditional economy but held in your head. There is no obvious monetary transaction, but you’re using your limited resources to get a better deal – the very essence of economics. In fact, “economics” comes from oikonomia, the ancient Greek word for household management, and the modern practice of economics is returning to that idea.

More here.

His day sounds a lot like mine, though on the best of them I’d find time for a road ride. His argument makes a lot of sense.

Richard Florida
by Richard Florida
Mon Jun 29th 2009 at 9:22am UTC

Art, Music, and Modern Management

Monday, June 29th, 2009

There’s no shortage of debate on this one. But a new report (pointer via Tyler Cowen) by the intriguing combination of Harvard professor of Technology and Operations Management Robert D. Austin and Lee Devinand, a theatre dramaturg, shows there’s really no conflict:

[W]e examine the apparent conflict between artistic and commercial objectives within creative companies … We surface some assumptions that underlie such debates, compare them with findings from our research on creative industries, and identify three “fallacies” that sometimes enter into discussions of art in relation to money. This, in turn, leads us to propose a framework that can support more productive discussion and to describe a direction for management research that might help integrate art and business practices. We conclude that despite an inclination to take offense that often attends the close juxtaposition of art and commerce … the interests of art, artists, and business can be best served if more commerce enters into the world of art, not less.

Check out the other fascinating work on art, music, and management this team is doing.

Michael Wells
by Michael Wells
Thu Jun 25th 2009 at 6:34pm UTC

To Your Health

Thursday, June 25th, 2009

While most of the focus in the national healthcare debate is over whether to have a public insurance system, the real action is in a couple of other areas. One involves how the local medical community is organized and decides on treatment. The other is whether decisions on treatment will be based on science or on “local practices” and what’s most profitable for the doctors. Both of these will have far more impact on the cost of healthcare than who pays for it.

The social sciences and mental health or addiction treatment are moving to Evidence Based Practices, where a practice is independently evaluated to see whether it has positive outcomes. But doctors and medicine still make decisions on what they learned in school, maybe decades ago, and on what the local practices are when they talk shop at the country club. As a result, people are often overtreated using less effective models.

As discussed below, people are often overtreated and evidence-based practices would provide a mechanism for changing how medicine is practiced, producing better health outcomes and lowering costs. Buzzcut (a frequent commenter on this forum) calls reducing overtreatment “rationing” and argues that it would prevent medical mishaps. Whatever you call it, it’s going to be vital to both controlling medical costs and raising the quality of healthcare in the United States to the level of other industrialized countries.

There are several examples in America of low-cost, high-quality institutions – the Cleveland Clinic, the Mayo Clinic, Kaiser in the Bay Area and Portland, Geisinger in Pennsylvania, Intermountain in Utah. These institutions are organized for efficiency and effectiveness, using different models and serving different populations, but they universally provide excellent care without generating excessive costs. There are also some local communities where doctors and hospitals have organized themselves without an institution – The New Yorker article below talks about Grand Junction, Colorado.

I’ve been a Kaiser member for years and while you do need to learn to work with the bureaucracy, it’s less hassle then coping with Blue Cross. Aside from a co-pay, I never have additional charges nor receive bills or paperwork. All my health records are kept electronically – if during an appointment my doctor orders lab tests, prescribes from the pharmacy, and refers to a specialist, the information is in their records before I leave the exam room (and without the notorious doctor’s handwriting problem.)

The stimulus package dedicated $19 billion to starting to create a national electronic medical records (EMR) system. In the digital age it’s obscene that people get poor treatment because their records are scattered among file cabinets. I recently worked on a collaborative project between a large mental health/substance abuse provider and a FQHC “safety net” primary care clinic. They both have EMR systems, but the softwares aren’t compatible, so they can’t easily share patient information.

This is from the current issue of Time Magazine:

Americans tend to assume that more is better, especially when it comes to the heroic brand of try-everything medicine we’ve watched on ER and House M.D. But overtreatment is a national scandal. It’s bad for our health: with medical errors now estimated to be our eighth leading cause of death, drugs, procedures and hospital stays can be risky (as well as painful, time-consuming and wallet-straining) even when they’re necessary. It’s also bad for the economy: health costs are bankrupting small businesses and even conglomerates like General Motors as well as millions of families. And it’s awful for the country: Medicare is on track to go broke by 2017, and our long-term budget problems are primarily health-cost problems.

They’ve already stuffed $1.1 billion into the stimulus bill to jump-start “comparative effectiveness research” into which treatments work best in which situations. Now they’re pushing to overhaul the entire health-care sector by year’s end, and they’re determined to replace ignorance with evidence, to create a data-driven system, to shift one-sixth of the economy from “that’s what we do here” to “that’s what works.”

And an article in The New Yorker is what started me thinking about this issue. Here are some quotes:

McAllen, Texas is one of the most expensive health-care markets in the country. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

El Paso County, eight hundred miles up the border, has essentially the same demographics. Both counties have a population of roughly seven hundred thousand, similar public-health statistics, and similar percentages of non-English speakers, illegal immigrants, and the unemployed. Yet in 2006 Medicare expenditures (our best approximation of over-all spending patterns) in El Paso were $7,504 per enrollee-half as much as in McAllen.

The annual reports that hospitals file with Medicare show that those in McAllen and El Paso offer comparable technologies-neonatal intensive-care units, advanced cardiac services, PET scans, and so on. Public statistics show no difference in the supply of doctors. Hidalgo County (McAllen) actually has fewer specialists than the national average. Nor does the care given in McAllen stand out for its quality. Medicare ranks hospitals on twenty-five metrics of care. On all but two of these, McAllen’s five largest hospitals performed worse, on average, than El Paso’s. McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it’s delivering better health care.

As America struggles to extend health-care coverage while curbing health-care costs, we face a decision that is more important than whether we have a public-insurance option, more important than whether we will have a single-payer system in the long run or a mixture of public and private insurance, as we do now. The decision is whether we are going to reward the leaders who are trying to build a new generation of Mayos and Grand Junctions. If we don’t, McAllen won’t be an outlier. It will be our future.

Steven Pedigo
by Steven Pedigo
Tue Jun 23rd 2009 at 6:15pm UTC

Creative Noosa – A Success!

Tuesday, June 23rd, 2009

CCG recently finished up a Creative Community Leadership Project in Noosa, Australia. The program was a true success with the original group of catalysts championing several successful initiatives. 

As the program moves forward into the second year, it will operate under a broader umbrella – the Sunshine Coast Regional Alliance. The program’s goal will be to build off of Noosa’s success and extend the Creative Community project to the entire Sunshine Coast.

Read more about the coverage here:

Noosa Journal – Now it’s over to you…

Noosa News – Change of name is a Sunshine Coast merger

Sunshine Coast Daily – Handover stretches benefits of alliance

Michael Wells
by Michael Wells
Mon Jun 22nd 2009 at 2:36pm UTC

Social Support

Monday, June 22nd, 2009

I’ve been thinking about social support networks lately and so pieces in recent books have stood out. Humans are social animals who are able to organize ourselves or act individually, but the family and small group networking connections are still more important than generally acknowledged. The implications for a creative economy is that how companies and cities are organized can be as important as what they do or make in their success.

These examples are mostly medical, partly because that’s where a lot of research goes on, but the implications for society are universal.

  • The first chapter of Malcolm Gladwell’s Outliers talks about the town of Roseto, PA which was founded by Italians from Roseto, Italy in the 1890s. Doctors noticed that the residents were unusually healthy. But investigations showed little difference in diet, personal habits, the natural environment, etc. What they did find was that the social and friendship networks were unusually strong. This mutual support resulted in less heart disease and other maladies.
  • This reminded me of Dr. Dean Ornish’s work with treating heart disease with diet, exercise, meditation, yoga, and social/family support. When his success in not only stopping but reversing heart disease was reported, the medical establishment said, “Yes, we know that if our patients shifted to a low-fat diet, exercised, and reduced stress it would reduce heart attacks. But people won’t follow our orders so we just schedule bypasses.” The difference was the social and family involvement, which got people to change their behaviors.
  • In The Age of the Unthinkable, Ramos tells about AIDS patients in Tugela Ferry, South Africa who had extraordinary levels of medication compliance because rather than doctors just saying “take these pills” they explained the science and involved family members. People stuck to the regimen despite the extreme side effects, while groups who were just told to follow doctors orders would stop medication when they felt better.
  • A growing evidence-based practice in residential drug treatment is the “Therapeutic Community,” where peers are involved in each others’ recovery. It has better results than just staff-led treatment.
  • Then this article in the Portland Tribune tells about a program to have severely mentally ill people work real jobs rather than “sheltered workshops.” The job stress that was assumed to be too much for them to handle turns out to actually help them get better.

From quality circles to army platoons to extended families, people working together are healthier, more productive and more creative. How can this knowledge be used to build the creative economy?

Nisi Berryman
by Nisi Berryman
Mon Jun 22nd 2009 at 2:26pm UTC

Must We All Be Knowledge Workers?

Monday, June 22nd, 2009

Matthew Crawford’s observations on the nature of work, notably manual labor, struck me as extremely valuable. Per Crawford:

“Many of us do work that feels more surreal than real. Working in an office, you often find it difficult to see any tangible result from your efforts. What exactly have you accomplished at the end of any given day? “

His essay explores the rewards/fulfillment of working with one’s hands, and rightly notes that many “knowledge workers” (myself sometimes included) are often denied a real sense of gratification or creativity.

“Ultimately it is enlightened self-interest… that will compel us to take a fresh look at the trades… For anyone who feels ill-suited by disposition to spend his days sitting in an office, the question of what a good job looks like is now wide open.”

Not to mention, Crawford notes, that many jobs such as his – repairing motorcycles – simply can’t be outsourced. He might over-romanticize some of the truly dirty work that is performed but his essay and hopefully his book Shop Class as Soulcraft: An Inquiry Into the Value of Work asks some powerful questions.

Do you feel accomplished at the end of a long day sitting in front of the computer or in meetings?

Kwende Kefentse
by Kwende Kefentse
Mon Jun 22nd 2009 at 9:21am UTC

Culture Under Pressure from the Global Economy

Monday, June 22nd, 2009

Last summer, I blogged about Under Pressure in Montreal, one of Canada’s premier graffiti conventions. While out last night checking out a show, DJ Static [of the internationally acclaimed WEFUNK radio show and regular DJ @ Under Pressure] mentioned to me that the festival has recently encountered some economic peril with many of its funders backing out. It is not the only one though as the Under Pressure blog indicates:

After 13 years of dedication and hard work, the organizers of Scribble Jam had to regretfully announce that due to lack of funding and the current economic climate, they do not have the resources to continue with the festival this year.

Read more HERE.

Events such as Toronto’s Style In Progress have already succombed to the same fate and this serves as a reminder more than ever that Under Pressure 2009 needs YOUR support this year…

Meanwhile, festivals that are a bit smaller like Ottawa’s House of PainT, which are primarily DIY with a bit of local community support, continue to roll on. I’ve always understood Hiphop culture to be grounded in “get-it-how-you-live” economics. In other words, it emerged out of an endogomous low-budget environment where the idea of sponsorship or support from external agents was far-fetched at best. To borrow a concept form Karl Polanyi, the economy was very embedded in the society. To extend that idea a bit further, when economy is embedded in society that way, value becomes determined by metrics that are responsive to that society. That is to say the distance between expense and expectation is shorter in these kinds of societies. Particularly with respect to cultural products – currency expectations (read: cost) are set based on the value of that product, which is determined by those society specific metrics.

Haute Finance and global economics have disembedded economy from society such that the value of a product, cultural or otherwise, is set externally and determined by metrics that are often quite apart from the society that produces them. The idea was that the ability of federal governments to communicate, exchange currency and goods, and participate in this international system would set up a more even-handed trickle-down system for the citizens who produce those goods/services. 150 years later, we see how that’s worked out.

What’s going on with these festivals is a good example of all of that. As this culture globalized and patched itself into a bigger economic system, it’s on the ground value – the endogamous value – became supported by off the ground finance, and things got disembedded such that culturally important gatherings find it difficult to support themselves on their own steam.

Might we see more regional and embedded expressions of culture in the future, based on real value to that region like the House of Paint model? What other feasible models might emerge? How will cultural investment strategies be affected by/reposition on account of the economic climate?

Before I go, I’ve gotta give a big Rest In Peace shout to IZ the WIZ, one of the very few Kings graffiti, setting the standard in New York and all over the world. He passed away on Friday. Do the knowledge here.