Final tips and further research

A story that resonated with me is that of Wendy Piersall and her blog - emoms at home . This blog started as a personal blog and is now transcending business/personal boundaries. With a passion for starting up online businesses, Wendy set up her blog and it has taken off, in fact I'm sure I've read it is bringing in $1 million annually through ad revenues. Wow! I think her post 'unsuspecting secrets to fast blogging success' offers some great tips for those small businesses or individuals looking to set up a blog.

A quick search of http://www.amazon.com shows a number of books have been released in 2006 on blogging in business. These are sure to offer a number of tips for effective company blogs.

In a world where value chains are drastically changing as customers become co-innovators, blogs offer a way of building relationships and detecting opportunities. These arise from both a start-up firm's own blog and from effectively monitoring the blogosphere.

Has my research been balanced? The references I have used have come from a mix of sources, from universities, from business consultants, from small business bloggers themselves. Yes, the last two groups have motivations in their work to say "yes - blogs are great and every business should have one." However in searching there have not been many negatives, the only negative is that there is limited research providing quantifiable outcomes. But can this occur? Blogs are working in action with so many other business tools. To separate their effect from other tools is near impossible.

Should further research be done? Yes, and quickly so as not to miss the Web 2.0 wave. As I've mentioned previously, there is certainly potential to study entrepreneurs, to particularly test the value of an entrepreneur keeping a hand in their start-up firm as it grows through managing the company blog. Are there entrepreneurs doing this already and building new horizons through co-innovating with consumers?

Business Models (4) - the options cont...

Ad revenue
Where is the money in a blog? As a business builds up readership of their blog, there is potential for revenue generation through a variety of means. In Blogging for Dollars which I've referred to in my post Why bother?, Sloan and Kaihla speak of the massive profit potential through ad revenue. The Build a Better Blog site by Krakoff and Wakeman has numerous entries on the way blogs can produce revenue, and is especially good in breaking down the myth that corporate blogs are only for large firms. Through building up affiliate links, featuring, promoting and reviewing other companies' products you gain commission. If you are attracting a large or focused readership base, corporates will want to advertise on your blog.

Business Models (3) - the options cont...

Company blog A start-up firm may choose to start up a corporate blog for a number of reasons, which I have outlined extensively in previous posts. I would be interested in setting up a study - to test the potential value of entrepreneurs switching their role from managers to executive bloggers as their firm grows.

Entrepreneurs add value by their capacity to learn/to innovate. In class we've spoken about entrepreneurs often needing to exit the business as it grows when project management skills and planning become more important (process innovation) to firm survival than ideas/creativity (product innovation). Why not allow the entrepreneur to co-innovate with the customers, as long as they are willing to share knowledge with customers?

Small businesses are flexible and generally have the capabilities to change their business models fast to take advantage of an opportunity. A corporate blog offers many opportunities for business model innovation to capture value.

On a slight tangent, but still speaking of business models, Open Business is an amazing site - it's a collaboration of several countries with firms sharing business models online. The project is conducted as a joint project by the team which started Creative Commons UK, in equal partnership with Creative Commons South Africa and FGV Law School in Rio de Janeiro, Brazil. There is a much positive talk regarding the potential for small firms to be as competitive or more competitive than major corporations in this new world of open and shared innovation. Rose's blog entry on entrepreneurs is such an example.

Monitoring the blogosphere:

Other companies - A blog specific search engine (Technorati or feedster) can be used to search the blogs of other companies. A start-up firm would need to determine exactly what they are looking for as this could be a time consuming and costly task. Do you search your competitors' blogs to establish what their customers are looking for in a product? More sophisticated software such as Intelliseek or Buzzmetrics will perform extensive analysis, but is more costly.

For negative press - In my research I have found that many firms search for negative press on themselves, and seek to use external blogs as an 'early warning system' to avoid major business disaster. Kirkpatrick (2005) highlights the massive potential for blogs to destroy, or at least massively damage a business. On Sep 12 2004, a post to a bicycle enthusiast group relayed the fact a U-shaped Kryptonite lock could be picked with a ball point pen. Two days later, there was video footage of this lock picking on the world reknowned Engadget blogging site. On Sep 16 the company issued a rather bland statement that did not sit well with customers (along the lines of the lock remains a deterrent and the new line will be tougher). By Sep 19, a week after the first post, there were 1.8 million postings regarding the Kryptonite locks (measured by Technorati). The debacle was estimated to cost $10 million. As Kirkpatrick states, 'you live by the blog, you die by the blog'.

Where does a business start?

Although there is a lack of research-based evidence that business blogs work, my exploration has shown me the potential benefits that can arise from a small cost and time commitment. The earliest adopters of corporate blog are tech-based firms. Due to their constantly evolving business models, start-up firms have an advantage over majors in using blogging to obtain value.

From my research, it seems there are several key considerations and associated planning that needs to take place before jumping on the blogging bandwagon as a small start up firm:

TIME
Although setting up a company blog and writing a couple of posts a week, responding to comments as they come in does not seem like a lot of work... Once your firm has an established blog (recognised by search engines etc), your blog entries will be linked to by others, there will be both positive and negative comments regarding your firm/products. It is the time taken to monitor the blogosphere, including other industry related blogs, that is so time consuming.

BLOGGING POLICY
1) Company policy
2) Personal blogging policy (for non company blogs)
3) Defensive blogging policy - to avoid blog swarms whereby bloggers build on criticism of a company. Monitoring the blogosphere for negative press is important.

WHO WILL WRITE?
One author versus several versus character blog. One - consistent style and flavour (eg CEO blogs) vs Team-based - not such a problem when bloggers leave the organisation (eg Ask Jeeves). Character blog - rare to find a successful blog based on a character (lose the human voice).

There is also the option to outsource blogging, although the personal voice of the company could be lost.

TECHNICAL HOMEWORK

STRONG BLOGGING PLATFORM - There are several options for choosing a blogging platform - however the majority are built on type pad, movable type or wordpress. Fee structures will vary - some charge on a per blogger basis, others a monthly fee.

SEARCH ENGINE OPTIMISATION AND SITE DESIGN - Keywords, Directory Listings, Technorati Tags, Set up feeds accurately.

References used before links

Here a couple of references used in earlier posts (before I learned to Hyperlink!):

Arguello, J., Butler, B., Joyce, E., Kraut, R., Ling, K. S., & Wang, X. (2006) Talk to me: Foundations for successful individual-group interactions in online communities. In CHI2006: Proceedings of the ACM Conference on Human Factors in Computer Systems. New York: ACM Press.

Levine et al (2001) http://www.cluetrain.com/book/index.html

Business Models (2) - the options

Why do small businesses blog? I keep returning to this question, as there is little quantitative evidence (through research) that proves that blogs work. I've tried to show sources of anecdotal evidence through my exploration blog so far. In a study by Jeffrey Hill (2005) (a research paper for his MBA), Hill studies 15 small business bloggers with varying purposes. The consensus from the bloggers was that visibility and credibility of a business were enhanced through blogging. These small business bloggers had little knowledge of who was reading their blog and in what numbers.

So what should start-up firms do in relation to blogs? Dive in? Or wait until the Web 2.0 wave has passed by?

In this environment of co-innovation, business models will include the customers at the centre. What are the options that I see as pertinent to start up firms? I have drawn together the research previously mentioned in my blog to provide potential options below. I will firstly clarify that I have attempted to generalise across business fields in this analysis.

Blogs to learn internally Osterwalder in his blog: An Innovation Competence Process Coming from Knowledge Management speaks of tapping into the innovation potential of each and every employee. This approach was learned from Geoff Parcell, formerly at BP. The process aims to connect people in organisations and enable them to share and learn from each other. An internal corporate blog seems ideal for connecting with others in an organisation, and for managing knowledge in an organisation.

Of course a blog is more likely to be needed as a start up firm grows. At the initial stage, with so few employees, knowledge management is not a real issue.

I've had a quick glance at Sun Microsystem's blog (http://blogs.sun.com/) and MSDN's blog (http://blogs.msdn.com/), both internal company blogs which the general public can read, but not post to. Both blogs are very popular with employees, the MSDN blog looks more targeted and relevant to corporate knowledge, whereas Sun's blog would require much filtering to draw value, with many comments that are personal journal entries.

Business Models (1)

Alex Osterwalder, in his blog provides a visual model of the 9 components which describe a business model, obtained through his synthesis of literature. In summary, the 9 building blocks are:

value proposition
target customer segments
communication and distribution channels
customer relationships
core capacities
value configurations
partners and their motivations
revenue streams
cost structure

If a firm chooses to implement a blog, their business model will drastically need to change. As Osterwalder describes, there can be business model innovation in each of these building blocks. From my research I believe a company blog has the potential for innovation in each of these business model components:

value proposition - learn what customers want (from own blog/other company blogs)
target customer segments - there are no longer 'targets'. Customers are collaborators.
communication/distribution channels - blogs as a relatively inexpensive marketing tool.
customer relationships - build through blog. Find out what customers want from me.
core capacities - flexibility, recognise opportunities and capacity to react fast.
value configurations - value chain 'blown out of the water' - customers as co-innovators. partners and their motivations - partners with differing needs established through blog.
revenue streams - potential for high revenue through blog (not immediately).
cost structure - many options. flexibility key.

Strategy and Innovation

Firms are thinking more and more about learning from customers. As a small firm, it is important to build the capacity to learn and the capacity to compete.

Mintzberg's (1978) emergent strategy model outlines strategy as a synthesis of strategic thoughts (http://en.wikipedia.org/wiki/Henry_Mintzberg). Through my studies and through hearing small business entrepreneurs speak, I have too begun to see start up firms as strategic thinkers, the process is often unpredictable, with strategic ideas emerging from a variety of sources, both planned and unplanned. Entrepreneurs must jump when an opportunity arises, not sit down and formulate an appropriate plan.

Firms need to build the competencies to draw value from online customers as they will be the source of many strategic initiatives. As Morris (2006) suggests, a rise in companies partnering with customers could be seen as a groundswell toward 'changing business' relationship with lead users.' These customers are 'passionate about being the first on the block with anything.'

Morris (2006) refers to a study of 50 projects in development over about a year, which showed the lead user approach produced returns averaging 8 times greater than conventionally-developed products. Von Hippel (2005), in Democratising Innovation provides case studies of early user innovation while Henkel and von Hippel (2005) delve into the social welfare benefits of user innovation. There are several messages I obtained from these resources: users often come up with the ideas years before a product is available commercially; users can enable an increase in innovation efficiency through information provision - thus firms through understanding customers will identify emerging market needs and possible solutions leading to more successes in the marketplace; user innovations complement manufacturer innovation (different innovations and mass vs niche products); while knowledge and capabilities are also complemented. Thus both manufacturer and use benefit.

Although it would take me on a tangent that I will not have time to delve into in this analysis as it sits outside the role of blogs in start-up firms, it is interesting to consider the models of visual communities developed by Chen and Lee (2004), ranging from a Virtual Customer Community (where customers give consumption information to manufacturers) through to the Innovator/Early Adopters model (where users are co-innovators, throughout the whole process of product development, sharing technical-related information. Chen and Lee (2004) note that this second model is uncommon, and that for manufacturers to utilise these communities effectively, customer toolkits should be developed. It also requires a adjustment of business models - the authors note more needs to be done in this area. How should manufacturers utilise these online communities to gain value at each stage of the value chain?

Reference: Morris, P. The democratisation of innovation. In Business Review Weekly, 7 September 2006.

Why blog? The GM story and CEO blogs

Here's a summary from the six apart case study of General Motors's blog (GM) (www.sixapart.com/movabletype/casestudies/):

AIMS: Primary aim is to discuss GM products, it would also help humanise the company and gain customer feedback.
HISTORY: Started Oct 2004. The GM blog is one of the first senior executive blogs.
DIFFICULTIES: defending and managing reputation beyond the blog. Keeping a focused blog - product blog (but forward on and respond to other queries). Time commitment - not just own posts, but keeping aware of what's being said in the 'blogosphere'.
BENEFITS: listen to and understand customers, more responsive to customers, openness (but within and outside company).

I had a look at the GM blogs (www.gmblogs.com/ ). It seems GM's fastlane blog is a winner with customers and it looks as though mangament are really listening to the suggestions of consumers. I read a few of the 100 plus comments on 'Give the People MORE of What They Want' Sep 1 post, and many of the readers suggested an extended warranty is the way to show you back the quality of your product. On Sep 6, Bob Lutz, GM Vice Chairman, posted 'Because We Can' which discussed the new 5 year warranty scheme. These words from Bob's Sep 6 post says it all:

You can rest assured that, along with our continuously improving quality, customer feedback played a large role in our decision. And a terrific source of customer feedback is right here on this blog. Your voices were heard, and will continue to be heard. Thanks for the input.

CEO and Senior Executive blogs are taking off. Wikipedia (http://en.wikipedia.org/wiki/Corporate_blog#CEO_blogs) lists the following:
Andy Mulholland, Ron Tolido - Capgemini
Alan Meckler - Jupiter Media
Bill Brown - Cedarville University
Bob Langert - McDonald's
Bob Sutor - IBM
Federico Minoli - Ducati
Hu Yoshida - Hitachi Data Systems
Irving Wladawsky-Berger - IBM
Jonathan Schwartz - Sun Microsystems
Michel Edouard Leclerc - E. Leclerc (in French)
Randy Baseler - Boeing
Rich Marcello - HP
Joel Warady - JWG

The business world is changing dramatically. CEOs now realise the need to have a personal voice, to listen directly to the 'voice of the customer'.

Why bother?

In January 2006, more than 228 internet users read blogs -this is the main selling point for the firm I discussed in my last post - Six Apart. What a massive market!

The recent article 'blogging for dollars' by Sloan and Kaihla (Sep 8 2006) got me pretty inspired about the money generating potential of blogs (through advertising). (http://money.cnn.com/magazines/business2/business2_archive/2006/09/01/8384325/index.htm )
This article talks about how small blogs are making big money. As a newcomer to the blog world, I thought I'd have a look at one of the blogs mentioned. www.boingboing.net is a 'directory of wonderful things'. The article states the company is a four person operation, that should gross $1 million in ad revenue this year. I must admit I was drawn into reading the blog, which provided links to some really cool stuff (I spent some time putting together my own McDonalds road sign from a link).

Sloan and Kaihla speak of 'uneconomies of scale' which benefit blog operators - an individual or very small team can gain massive audiences and generate big profits. The personal nature of blogs mean that their recommendations are highly valued by readers.

And new space is opening - start ups are forming in niches. John Battelle (editor of Wired magazine) launched Federation Media Publishing (FM) which analyses web traffic and connects advertisers to the most successful bloggers.

What I get from Sloan and Kaihla's article is that if you are an expert on a topic, you can draw in a huge audience and what might start as a hobby, will become a highly profitable business. TechCrunch (www.techcrunch.com/), by Arrington is a blog with scoops and analysis of new ventures. Arrington, a Silicon Valley entrepreneur and lawyer, started this blog in 2005, and holds an affluent and tech-savvy audience. He is attracting investment from companies such as Apple and Hewlett-Packard to run ads on the site.

Designing corporate blogs

A corporate blog is a weblog published and used by the organization to achieve the organizational goals. They are mostly categorized as either external or internal corporate blogs. (http://en.wikipedia.org/wiki/Corporate_blog)

A new industry based on the disruptive technology of blogs has emerged. Those firms that provide the software for blogging/or the service industries which set up blogs have proven to be a great starting point in my research as they hold case studies. Although I started from Brian's website on small business blogs (see post Sep 4), it was difficult to find any direct outcomes from blogs. The site was however useful for finding out pointers on how to design blogs, which I hope to return to later.

The firm Six Apart (www.sixapart.com) sells blogging tools for business and personal bloggers. They have some great case studies including General Motors (GM) and also some smaller firms.
Six apart lists several reasons for why a small to medium business would start a company blog. Summarised, these are:

• improve communications with customers at low cost
• boost Search Engine Rankings - each post is like a new web page
• Increase reach - notify customers immediately
• Customer research, insight, and loyalty - feedback and innovation

Web communication advisor Fredrik Wackå (who set up www.corporateblogging.info as a site to organise his own learning) adds to this list:

• Become the expert as a thought leader
• Media Relations - a channel is created where media check everything you say
• Internal Collaboration - project members all updated
• Knowledge Management - on the job learning
• Recruitment - your firm will be seen as an attractive place to work
• Test ideas or products - a measure of value. Do your ideas generate interest?

As I type this I realise my world is being changed dramatically. I had a look at www.technorati.com, a site that monitors blogs, and at this moment 53.5 million blogs are being tracked. I found the most popular searches and the most popular tags (topics) that people are writing about, right now (not surprisingly the legendary Steve Irwin) ranks highly.

Realisation - models of TOLCs don't work

Several of the articles I've read have focused on the authors developing a typology of on line communities (mental note - reference list Ned!).

And they don't work. One of the key messages I've gained through studying Management & Strategy in Tech-based Business this term is that static models and strategic planning tools do not really work in such a dynamic business world with rapid growth. The models will change as technology changes, and as people and firms learn new ways of comunicating.

So instead of spending time classifying the different types of TOLCs, which is really not going to help us as future managers of start up firms, I am going to focus on corporate blogs. In particular:

• Companies that set up blogs for others
• Case studies of corporate blogs
• Why did companies go this way?
• What did they achieve by having a corporate blog?
• KSFs of blogs
• to be continued...

What I have been worrying a little about is that I will not be incorporating enough of the models Don has presented us with in class. But hopefully this does not matter, instead of portraying models and showing where this fits in, I'm hoping to develop some of my own models (of sorts) for business blogging.

Home time and tomorrow's plan

That's it from me for today. Fish and chips calling! I realised my last post was very unblog like in that it was not personal, did not ask questions of the audience etc...

Tomorrow I think I'll look a bit more at blogs (defn. weblog - an online journal) in terms of knowledge construction, and look more specifically at the use of TOLCs in firm innovation.

Key Success Factors of TOLCs

Key elements of success of an online community, as defined by Arguello et al (2006) are
1. the community's willingness to respond to a member's message (responses build content which benefits the group)
2. the member's commitment to the community (reflects their satisfaction)

KSFs of TOLCs:
* Clear initiating message - targeted approach

* Ensure messages relate to the topic (use of a moderator?)
* Self disclosure, describing cognitive states and process and positive/negative emotions, and the use of questions will create messages more likely to receive responses.

* Size of group and volume of messages needs to be optimised - information overload versus minimum volume to draw/retain members.

* Ensure newcomers post again (note that in Arguello et al's 2006 study, only 27.8% of newcomers post again, compared to 72.2% old timers) by ensuring:

a) they receive responses, even if it is a greeting to first time posters by the manager. Or a moderator could forward to another user to respond.

b) receive training (or provide examples of the way a response can be formed to increase likelihood of response).

* allow for anonymity (if you desire more initial members)

What is an online community?

There are a vast number of definitions of an online community. For the purposes of this work, I coin the term targeted online community (TOLC) as opposed to other definitions such as that of Rheingold (1994) - 'cultural aggregations that emerge when enough people bump into each other often enough in cyberspace.' A TOLC is an on line community established for a particular purpose, which is articulated to users initially although the community may evolve over time, as the interests/needs of the members change.

I will begin a list in the next post of Key Success Factors of TOLCs. I will try to generalise this list so that it holds for all firms, irrespective of size or stage in the life cycle. Arguello et al's (2006) paper 'Talk to me: Foundations for successful individual-group interactions in online communitities' has proved useful for beginning this list. In this study, the authors analyse a longitudinal sample of 6,172 messages from 8 Usenet newsgroups to determine predictors of success of online communities. Usenet is a 'one to many' internet discussion system where users read and post email-like messages (called 'articles') to a number of distributed newsgroups, which are categories (Wikipedia, 2006).

the plan...

Evening all. In my presentation to the class, this is where I said I was heading:

The path ahead…
SWOT – On Line Communities in large firms
SWOT – On line Communities in NTBFs (translate?)

Business case:
* Benefits of On line communities
* How will this work?
* Key success factors for NTBFs
* Models for NTBFs (case studies?)

This isn't going to be a 'typical' essay. It is a little daunting beginning this process. Especially for me, a person who loves a structure, a framework. Still, this blog is proving a useful way of translating the ideas in my head and from what I'm reading to words. I'm going to try to be a little innovative and write things as they come into my head. I don't think I can begin with a SWOT. I want to know about how these things work first - what sets successful online communities apart?

Good thinking Gav!

Thanks to Gav for the idea of writing my assignment as a blog. If anyone in Don's class fancies posting to this blog - please feel free (yeah I know everyone is flat out with assignments/ enjoying the sun). I'd appreciate any perspectives you may have on this topic. Or if you just want to enjoy the excitement of posting to a blog, that's all good too.

Now where to?... Options:
a) continue more random web searching and distraction
b) a google scholar search to find some theory on this subject
c) start writing

I choose b. The problem I've having at the moment is trying to link this topic of online communities and their use in start-ups to the theory we've learned in class (without token links). I really want this work to mean something and to be useful to someone starting up a new firm.