The current definition being;

A company that acts as a platform to serve the needs of an ecosystem of partners, which includes customers, in an open and transparent way.

Well now I’m putting my money where my mouth is and launching my very own Open Business called RetailerSaver.com

The Elevator Pitch

RetailerSaver.com is a pioneering digital B2B group buying platform for independent retailers within the convenience/ impulse and licensed channel.

Using the latest in Web & Mobile Marketing technologies we help retailers aggregate buying power to achieve discounts and gain access to suppliers & brand manager expertise in order to drive greater consumption from their customers.

How is it Open?

Well firstly it’s great to have a blank canvas rather than trying to navigate closed legacy issues or political silos that make a company a poor fit with the Networked World. Our challenge is that of limited time and resource so we have to be selective in our ambitions.

So how do we doing open at launch?

Purpose:

Our Big Why? The team have a clear purpose which we openly state on our website here. The initial employees and partners have been recruited specifically because they share this conviction and are aligned to its intent. We use it as a moral compass helping us short-cut decision making.

In short; we believe passionately in a healthy, independent & local UK High Street. We are saddened by its decline and erosion due to the dominant big corporates and are compelled to use our know-how to counter it.

How? We use new digital technologies to help independent retailers become more successful.

What? The end product of our how is Retailersaver.com; a web-to-mobile B2B group buying platform for independent convenience stores, forecourts, bars and cafes.

But because our ’Why’ is bigger than our ‘What’ we will continuously explore further commercially viable means to deliver on it over the coming years.

Open Capital:

Because we’re a B2B company focused on a niche market crowd-funding wasn’t a viable way to raise money. Instead we raised money via a network of angels and in the future, should we need external investment, will look to our customers where possible. This is done to ensure we always serve their interests first rather than just the financial interests of shareholders. We believe it is crucial to our success that increasingly our customers are our direct shareholders in our business.

Networked Organisation:

We run a lean ship. We do not handle or warehouse any physical goods. We simply broker deals between an ecosystem of; Suppliers, Wholesalers and their customers, the Retailers.

Where possible we look to use existing infrastructures rather than replicate and are focused on avoiding as much fixed and limiting structures as possible. For example rather than building our own teams of buyers we utilise a network of independent brokers, rather than replace the wholesaler we look to work with them to drive efficiencies.

In fact being networked is at the root of our model; we treat customers as partners. We drive our revenues from sharing in the discounting leveraged through group buying. We only profit if both the supplier hits a minimum deal order within a given time-frame and we only take a fixed percentage with the lion’s share always going to the retailer.

Referral and affiliate marketing is central to our acquisition model. We look to customers and other external stakeholders to help spread the word.

We share our monthly targets with customers. If we exceed them we share the profit via site credits.

Connectedness:

We are only a handful of employees at the moment but everyone will be accessible and connected via Twitter and LinkedIn. This means they can’t hide behind switchboards or answerphones. You can always openly hold them accountable.

I myself will blog on the RetailerSaver.com website, as well as here in my personal stream, and try to respond to as many questions as possible, where possible, openly. Hopefully this is the start of that dialogue.

Transparency:

FMCG wholesaling is a very closed industry with all kinds of rebates and complex mechanisms for money-flow which leaves the retailer never really knowing how much value was passed onto them. So in response we practice open book accounting. We show our customers exactly what our commission is on any deal and where allowed, that of our suppliers. We openly report other ancillary revenues that may arise from their custom. We hope this builds trust and loyalty.

We allow any customer to openly provide feedback to us, be that good or bad, in plain sight. Every deal or supplier can be commented on and rated. If we get something wrong we will openly admit it and get on with solving the problem.

Member-Led:

We are creating a panel of 100 retailers to help inform decision making across all key work-streams. They will hold a pool of options and have a representative seat on the board.

We’ve made sure our investors are as representative of our partner network as was possible including; 2 x investors that have interests in Bars, 1 x Pub Chains, 1 x Convenience Retail Group and the other Supplier side via a Winery.

Trust:

Trust is a key KPI for us and will be reviewed quarterly by the Board. All our customers and partners will be surveyed to gauge the level of trust we have in the market. We will openly publish the results and detail how we intend to improve it and where we think we have gone wrong.

Open Innovation:

We will leverage our Retailer Panel for the crowdsourcing of ideas and development of them through structured co-creation for new commercial lines, service solutions and product ideas.

We will regularly survey customers through Twitter, SMS and Facebook whilst allowing each to easily submit their own ideas through a channel of their choice straight to senior management.

Open Data & Shareability:

So what about Open Data & Shareability? Well as a totally new company there are some principles we can’t implement straight away. We look to realise these ambitions once we have something of substance to share!

However we are committed to publish under Creative Commons to ensure the widest use and distribution of our content. Alongside that if we have data that we think will benefit our customers, partners or the wider good we will endeavour to make it available in a format that people can easily share and innovate with it, namely that of an API.

Conclusion

So there we have it in black-and-white. I’m sure you will let us know if we stray from these promises.

Over the coming months we will look to external parties to score us objectively on our openness. We will naturally share these results. It’s only early days and there are many barriers to success but I hope to make RetailerSaver.com a powerful living example of how Open Business equates to good business.

I’m fortunate enough to already have a number of investors who have backed the project and with every day a growing team of brilliant people join the board as we march towards launch.

A couple of days ago one of the investors, long standing friend and supporter, virtually connected me to another angel investor she had met at a recent gathering and thought worth my meeting. I take any recommendation of hers very seriously so followed up to arrange a quick exploratory Skype call to introduce myself and the project. Due to the sensitive nature of my project, and my obligations as a director to my shareholders, I always ask anyone new to kindly sign a standard NDA. However in this instance, and to my surprise, I received an email in response simply stating;

‘Jamie I won’t sign an NDA’ and a link to the following blog post by Chris Heivly on Inc.com http://tinyurl.com/bu63uwn

Now this was a first for me and I won’t lie it immediately got my back up. I took it as a personal affront and after much muttering was tempted to write an equally short email back. To my surprise I managed to hold off and take some time to reflect. Perhaps I was having a bad day, the medium of email had (not for the first time) failed diplomacy or maybe he actually had a valid point. Well, I owed it to him and my investor who made the recommendation to at least consider the possibilities.

We are now 24 hours on and after much considered thought here is my response:

Before I do it’s worth stating:

a)      I have been assured he is a cool guy, well respected and this from someone I deeply trust so I’m fairly confident his intentions aren’t anything sinister but I do think, despite all the rationale, they are seriously misguided.

b)      The spirit of this post is not confrontational so I won’t name him directly but I would encourage him to respond and open the debate up to the wider investor / angel / entrepreneur community. Why? Because I feel very strongly that this is not a good thing for him to be doing as a business person nor would it be beneficial to my peers were it to become the industry norm.

c)       I’m also not sure if he is saying he won’t sign any NDA ever or just not in the capacity of an angel investor to start-ups like me. That seems to be what Chris Heivly (the author of the blog post) is saying. I doubt either would refuse this request from a big prospective client of one of their interests, or someone about to contract him as a consultant, so to do so here comes across as somewhat arrogant.

To read back to Chris Heivly (the blogger) a line from his post that he really should be applying to himself:

‘I now have to remember what I can talk about and what I cannot. So either you understand that or you think that you are special and should be an exception.’

First Impressions:

From a personal perspective, and that of an entrepreneur who has setup a handful of companies, when I’m meeting a potential investor first impressions matter. This is someone you are possibly going to go on a big, probably emotional, journey with. Their simply being a source of capital is never enough.

I’m fortunate that I am not desperate for money and experienced enough to know to never enter into a business relationship that makes you feel compromised. So this was a flat out deal breaker for me. The fact he was prepared to risk this shows me he doesn’t feel he needs me, or people like me, and maybe he doesn’t but if anything this will (or at least should) restrict his playing field far greater than any individual NDA.

To me it feels like; ‘I’ve got cash. If you want it it’s on my terms. Take it or leave it’. Perhaps this is lost in translation but neither my contact’s email or the post he shared spend much time on its presentation therefore it doesn’t show them as someone looking for a partnership built on respect. I would hope that if I ever make it to the fortunate position be able to invest in other people’s start-ups I would go out of my way to ensure no one would think this of me.

The point of an NDA

NDAs are, in themselves, difficult to enforce and especially in digital where code comes from all over the place and ideas overlap. In fact I don’t personally know of a situation where they have been the key element of a court case. They are more a nicety to show that the receiver of the information acknowledges its confidential nature and that they will endeavour to respect that it is not to be shared freely. To refuse this nicety, whatever the rationale, is to refuse to respect this point and the person prepared to bust a gut to make you both rich.

As an investor you can negate compromising yourself by immediately stopping someone as they begin to reveal a project that you think conflicts  with another conversation you are having. There and then state your discomfort, tear up the agreement and part ways.

So why I am upset:

As I said I would never risk the future financial security of my family or the cash of my investors to ever waive an NDA so why I am writing this post?

Well were I more inexperienced, naïve (perhaps a younger me) or down right desperate maybe I would have given in. I’m more than sure many in this position do. It is protecting these people, as fellow entrepreneurs, I feel an obligation to.

My advice is NEVER EVER waive your absolute right to ask for an NDA no matter how respectable, well known, wealthy or mission critical the person in front of you appears to be. Because if the last few years have shown you anything giving people in finance (I acknowledge I am using the term very broadly here) carte-blanche offers too much temptation for most. As a start-up often armed with just a good idea, a plan built on assumptions and hopefully some relevant experience  you are so very vulnerable as a business.

What’s more:

- I think it is an insult to ask The Entrepreneur, the only people that can repair our broken economies, to give up all protections whilst taking the personal risks they do.

- It shows the investor either doesn’t understand or has gotten so removed from the coal-face they have forgotten what it’s like to be an entrepreneur and doesn’t bode well for them as a sympathetic partner.

- But worse what if this becomes the norm? If the wider investor community demanded the ‘No NDA’ rule I can guarantee you a segment of the community would absolutely abuse that position, irrespective of reputation, so the fact a few or even the majority wouldn’t is neither here nor there. Just look at the banking industry to see what money men do when they are free of obligation.

I hope both Chris Heivly and the chap that forwarded me his post at least stop and think about the implications of what they are asking. But more than that I hope every start-up out there has the confidence to (to quote Chris H) ‘exit the room 10 minutes after’ being asked to waiver their NDA.

I would love to hear your thoughts…

In case the concept is new to you The Open Economy is powered by Social, Mobile and Location based technology or So-Mo-Lo and the Open Innovation, Open Data, Open Communications Movements born from it that have facilitated the following:

- Open Media (Where people’s news source is derived less and less from the established mainstream channels and more from their peers and citizen journalists)

- Open Education (Access to the best education is only limited to connectivity)

- Open Business (Businesses look outside their organisation for innovation)

- Open Government (Governments look externally to engage citizens in decision making, innovation and action, championing transparency where permitted)

- Open Society (Activists using social media to drive international attention to forcibly open traditionally closed institutions or processes)

- Open Finance (Peer-to-peer lending for Start-ups, SME’s and individuals as opposed to traditional closed high-finance institutions)

What’s been unique about 2012 in this story is there has been a shift from being fringe to becoming a popular movement fuelled by global discontent at both economic and societal levels. The Open Economy has now become a popular demand and its constituent parts are beginning to converge to build strong powerbases which will be hard for mainstream politics and media to ignore.

I believe in 2013 we will see a wide-scale shift from a fundamentally Closed Society (one that happens behind closed doors, is elitist and hierarchical) to an Open Society (that is open to all, is democratic, bottom-up and leaderless). What will be most interesting is the escalation in clashes between these two opposing systems as one begins to replace the other. If the reactions to the Arab Spring, Julian Assange, Russian Pussy Riot and Chinese Zhai Xiaobing, are anything to go by 2013 is going to be a bumpy ride for those leading Open…

Why a clash?

Put simply there are those people, functions, and institutions that have developed over time that continue to prosper, or in some cases can only exist, in a Closed Society and by their nature resist anything that threatens or undermines their system and place within it. Their system operates under certain rules (be that moral or other) and so the agents of a new Open Culture will seem immoral or abhorrent by deliberately breaking them and playing to a different tune. Just look at how the Establishment has gone after Assange who is seen as a terrorist without equal by the US. This is not about any kind of conspiracy theories just the natural laws of what happens when new social systems clash with old ones that you can see played out throughout history and even in biology.

It may sound dramatic, perhaps even fantastical, to think we are witnessing such a shift but below I’ve listed some of the powerful and converging movements that are gaining increasing momentum as we speak and who clearly articulate Openness as their stated aim:

Hacktivist Movement

So Assange is holed up and seemingly out of action, although recently promising over a million leaks in 2013, but you only need to see the Anonymous logo to understand the hacktivist movement has no head to cut off. If anything they are now collectively stepping up their activity and recently began Operation Tyler (named after cult hero Tyler Banks of Fight Club) on 12.12.2012 which is calling upon a guerrilla movement of operatives to download their evolved and honed new malware via USB and upload it into the IT systems of their place of work… ideally the world’s major corporations. Their ambition is to continue the work of Wikileaks to unveil the world of corporate and political lies behind the Closed System.

#Occupy Movement

The occupy movement is maturing into a permanent fixture in global politics getting closer to developing a clear purpose beyond simply protest that can potentially be articulated to the masses. All it lacks is an effective spokesperson at the helm but a book, called Debt 5000 Year History (which I highly recommend you read), by one of its founding members David Graeber shows a possible candidate and well respected anthropologist who debunks almost all of the market fundamentals that today’s Economists have built their flawed principles on. Deep moral questions are now being asked about the need for a redefinition on the role of the state, corporations, institutions and citizens play in ‘markets’. Mainstream news is trying to marginalise the occupy movement as lost and without cause however this seems less important as increasingly the political agenda is being driven by the internet.

 Empire Fights Back

It would appear the Closed System has naturally begun to fight back at the highest levels possible to be able to gain greater controls of the open web at the recent WCIT Conference. Because technically governments do have the power to simply switch off or censor the Internet as they have regularly done in the Middle East and China. This represents a significant challenge to the emerging Open System. In just the last two years governments have enacted 19 new laws threatening online free expression and 42 countries regularly filter and censor content. Things look so serious Google weighed in using its reach to engage Internet users with the facts and directly lobby the UN in advance of The International Telecommunication Union (ITU) which saw regulators from around the world re-negotiate a communications treaty.

We only have to look at Assange to see that the Closed System and its constituent parts are actively trying to shut down this counter culture; firstly through blocking donations payments and now through criminal courts and good old honey traps.

I would expand Closed System to Closed Systems as it is not just a Western phenomenon; In China, which now has more Internet users than any other country, the government recently introduced new “real identity” rules to tame the activist blogging scene. In Russia, there are continued calls to rein in a blogosphere blamed for fuelling a wave of anti-Vladimir Putin protests and it has been reported Iran is planning its own closed internal “national internet” from this summer.

Some have likened this battle between systems to a birthing process. There is a lot of blood and screaming before something beautiful is born. I would say it’s no surprise that Establishment Institutions from MPs and expenses, Police and Bribes, Big Media Hacking & Corruption and now even The BBC are falling one by one as we enter a more Open Age. This isn’t always being driven directly by the Open Web but seems to be due to the very intimate network of inter-relationships these closed organisations have is causing a domino effect as each one becomes opened to public scrutiny by a more open society.

But guess what Openness just got Radical

So no doubt The Open Society fuelled by an Open Web has its opponents and things will only get bloodier but destiny would appear on its side. The truly mind blowing levels of technological innovations that happen to connect us to one another to share these revolutionary ideas and challenge the status quo are also, at least in the West,  the only real new and significant drivers of economic growth. So even if the Closed System could find a way to shut it all down the current economic climate and it’s pressures would make it impossible.

I close off with this truly inspiring video on ‘Radical Openness’ by Jason Silver.

“RADICAL OPENNESS” – for TEDGlobal 2012 by @JasonSilva from Jason Silva on Vimeo.

 
1. You can’t bank ideals

It’s great to have a vision for the future and be at the leading edge of your market but you can only bank the realities of what people will buy today. Selling the future is difficult because people mostly focus on today.

2. Failure is never accidental

It’s easy to mask failure as accidents, a series of bad luck or due to the actions of others but to do so is to play victim and deny yourself the invaluable lessons it can teach. Failure for those that believe they are the masters of their own destiny is something that requires deep reflection. How did you, your actions, motivations and true intent form the sequence of events? Sometimes you choose to fail. Understand why.

3. Build a business around the life you want to live

Sometimes people find themselves in jobs that are at odds with their personal lives, personalities and aspirations but as an entrepreneur, a creator, you have no excuse. Why when you could choose to create something should you manifest a company at odds with who you are and the lifestyle you want to live? If you find the company you have created compromises you and who you are move on and create something new and more fitting.

4. Always see a new venture as part of a master plan

You can never guarantee the success of a new venture. Sometimes, and statistically more often than not, they fail. But if every venture is chosen as part of a bigger master plan the knowledge gained and skills developed over the course of a venture, whether a failure of a success, are always time well spent.

5. Know your weaknesses and fill the gap

It should be a fairly obvious one but, at least for most men, it may be hard to conceive of the possibility that you can’t be good at everything. Once you have acknowledged and accepted that this may the case you can focus your energies on the areas in which you do excel. Put aside the ego and find someone who excels in your areas of weaknesses. It’s not about your incompetency at one thing but simply different strokes for different folks. To try and pretend you have mastered all the sides of running and growing a business will only drain you of confidence and distract you from achieving your goals.

6. Trust your gut its often right

If there is a constant nagging feeling you have about a person or opportunity that something just doesn’t sit right… trust it. It’s often much more informed than you think. Trust your instincts and move on.

7. Nothing is so important to your success you should allow it to compromise you or your team

When your business begins to build momentum sometimes you get caught up in the heat of the action and begin to tolerate people or things that continue to test your patience and creep into your thought cycle often with a negative impact. Remember despite what the spreadsheet says nothing or nobody is so important to your company’s success that they should be allowed to disrupt, drain or distract you and team from your bigger mission. To allow them to do so is personal and professional negligence. Cut ties and move on.

8. Get to know yourself

This one actually underpins most of the above and to an extent the spirit of this blog post.
Sometimes it’s good to find an independent party to bounce ideas and thoughts off be that a mentor, counselor or other. This transcends age. The best people I know are always learning about themselves well into their later life. Colleagues, friends and family have too vested an interest to ever be able to give you truly impartial advice and will inevitably colour advice with elements of themselves, their wants, needs and fears.

I think it’s crucial for business leaders to find someone, professional or otherwise, and pay them to listen to you and offer a detached and neutral view on your situation. All the above has come from realisations I’ve had from talking to a neutral party and each has led to greater happiness and success in both my professional and personal life.

London Centricity

Not for the first time the Govt could be accused of showing a bias towards London. Sure London is our only truly international city based upon the number and reach of communication routes into it. It’s where the money is and so where VC’s want their investments to be based too. But this is where I begin to see a fundamental misunderstanding emerging. It would appear we are building our digital economy on top of the financial sector’s legacy because, understandably, this Govt sees a British (or more to the point London based) Facebook as the end-game. Unsurprisingly so do Google and well… Facebook who support the Tech City Investment Fund and are hungry to get-in on the next big thing. History tells us that sort of stuff needs lots of VC cash and should lead to a floatation on well… The London Stock Exchange and so theirs appears to be the logical conclusion; a Tech City of London.

But does the Govt really want the British Economy to be increasingly dependent on a series of Facebooks? You just need to look at share value post-floatation for your answer to that question. It would appear the Govt is as seduced and naive as the markets when it comes to technology blinded by a mirage of quick-wins and high-returns. You see VCs want rapid growth, flotations and quick exits they don’t care about long-term viability. Its why digital has been vulnerable to bubbles in the past. I would argue this culture is not sensible for any steward of an economy and even the most short-termist of politicians. This is not mentioning companies like Facebook don’t actually pay any tax to the UK Govt despite generating millions from their offices here.

I am not saying the Digital Economy as a whole is a risky growth strategy but certainly one focused on rapid-growth media companies fuelled by VCs and The City is. The vision of the Digital Economy should be in part divorced from The City and seen as the enablement of a nation of small to mid-sized companies who do not need to be based in London. After all the UK digital marketplace is spread across the whole of Britain with one of World’s highest levels of digital penetration (84.1% April 2012). With the growing importance of virtual capital markets crowd-funding now means London will soon no longer have a strangle hold on access to digital fund raising.

The Opportunity

Forget for a second exactly where the teams that are behind digital business are to be based. Let’s focus on the benefits that would come from a truly national digital economy:

-Growth. Put simply digital is the fastest growing economy in the world and is worth £87 Billion or 11% of Economy. It makes common sense as we see a decline in our other industries competitiveness this is where we focus.

-Global Reach. A good digital business can easily expand beyond physical borders often with its only barrier being language this is highlighted by the success of companies like the UK’s ASOS. And this is not just a route to international markets for pure play digital companies but also physical businesses such as Burberry.

-Better Job Distribution. A large number of jobs for digital companies could be delivered from almost anywhere including home-working environments. This means jobs could go where they are most needed and to those who are most unable to work in traditional roles; people with disabilities or new parents looking for flexible working.

-Low Barrier to Entry. The cost of starting and running a digital business is comparatively very low and the tools required are increasingly user-friendly. People are often able to scale digital businesses gradually running them parallel to full-time / part-time jobs. This offers to unlock latent entrepreneurialism and increase the Nation’s productivity.

-Meritocracy. You don’t need to have traditional qualifications to start a digital business and often to work for one. You just need to be able to demonstrate ‘game time’ online doing and developing your digital footprint. The Digital Economy is built on trust and community.

Digital Cottage Industry

From the benefits listed above one thing should be clear; the Digital Economy has the potential to revive the British country as a whole not just add to the concentration of success in London.

When I visit my town-of-birth, Northwich, Cheshire (sadly a mirror of most towns outside the M25) I’m depressed at the number of boarded up businesses along-side; betting shops, cash-for-gold, charity shops and big-chain supermarkets. There are simply no jobs and any aspiring or skilled business person has usually migrated to the nearest cities which even then struggles to compete with London. This may seem normal until you travel to a country like Germany which has a number of cities that each enjoy their own form of commercial success.

London doesn’t need the Tec City but the rest of Britain does. The Government should recognise Britain is no longer a ‘nation of shop owners’ (they appear to be all shutting down) but should be focused on becoming a ‘nation of internet shop owners’.

And its focus should not be on creating the next Facebook but a sustainable Digital Cottage Industry distributed across the country’s towns. Think of the positive impact on the ability of workers to actually buy homes and not get stuck in the letting-trap of big cities, the reduction on the strain to the cities transport, the improvement in the quality of life for young families that can live in the countryside and the impact of unemployment.

Germany has shown a nation’s growth and stability comes from the ‘Mittelstand’. The small to mid-sized companies who often deeply tied to their local communities and the welfare of workers are why Germany is enjoying the only economic boom in Europe. If we could somehow combine this model of success with a push for Digital Cooperatives to allow networks of workers to collaborate together and share in success we could become a real global contender.

The Challenges

Tax Incentives: Here is the irony. The biggest digital companies don’t like the UKs tax policy. Google, Facebook don’t pay taxes with only Microsoft doing their duty. Even WPP the great British Advertising Group, a big supporter of the digital economy, moved out to Ireland. We need to be more competitive if we want those that are successful and begin to scale to continue to base themselves here. I would rather 10% less than nothing at all. But again it highlights big tech media companies are not the answer to raising tax a healthy digital Mittlelstand is.

Better Distribution: We are grossly behind regions like Asia for 4G and Broadband sometimes by x10 as much. And even our current networks need to be better distributed across the country. You can’t be digitally productive in the countryside without reliable mobile and broadband connection. There should be further legislation that those who want licenses to provide this infrastructure are bound to serve every citizens right to connectivity. For every £1 spent on connectivity £5 in value is created according to a report by Vodaphone so it has a sound economic argument.

Open Capital: The UK should stop trying to plug the gap with public funds or ‘encourage’ banks to lend more to businesses they should throw everything they can behind disrupting the stagnation of the current lending system and give greater incentive to those who use their savings to ‘crowd-fund’. On this note I am proud that UK is unique in allowing equity to be bought on such platforms but we need to go much further.

Better Logistics: Working in villages and towns is great but at some point you need to access cities. Digital Cottages should get free access to city business hubs near to key rail-links and there should be massive investment in public works connecting up our cities and towns with affordable and effective rail networks. There is a simple law of economics; trade happens most at cross-roads. The Internet creates virtual cross-roads but it needs a physical network to support it.

Foreword: 2011 has been the year when the general public have finally seen what we meant when we said; ‘the greatest invention since the printing press’.

I genuinely believe intellectually there has never been a more exciting time to be alive with so much happening around the world both good and bad. The cultural, political and social effects of social media enabled connectivity continues to drive great disruption.

Typically this time of year would see people make predictions about what 2012 will bring, but given the complexity of the world around us, I thought it wiser to highlight the questions 2011 has raised for the New Year and beyond. By chance rather than by my own genius this actually comes in the form of 12 points.

If you are a more visual thinker (like me) I’ve also created a slide-deck to support my points.

Social media review 2011 12 questions for 2012

Q1. Can social media bring real change not just revolution?

The Arab Spring has given us no doubt social media can empower people to unite, self organise and bring down oppressive governments but can it bring about real and lasting change?

The big question levelled at countries such as Egypt is; a leaderless revolt by the masses is all well and good, but can it replace what it has overthrown with something other than just constant chaos?

Revolutions of the past have usually had a figure-head, a central force, to rally around but in today’s world it is decentralised and fragmented. It will be interesting to see the shape of what happens next in the modern revolution.

Q2. Can social media empower the WHOLE world?

The Arab Spring has made many powerful leaders concerned that they too could lose their control but does social media’s power extend to toppling the world’s super powers?
More recently Putin has found his Government’s monopoly of media and heavy control of the streets does not make him immune from the attack of its unhappy citizens. With more serious resources at his control is Russia immune?

Q3. What is the social impact of connectivity?

Whilst many have used social media empowerment to challenge oppression around the world others, particularly in the UK, have simply used and abused it as a point of advantage over an out-dated system.

Will we see an increasing amount of anarchic social unrest or have the Western world’s government’s and police forces learnt their lesson from 2011?

Q4. What does the new politik look like?

Social media has given almost everyone in the Western democratic world a voice and forum to share their opinions. The consequence is an increasingly fragmented political landscape and crowded public agenda that really tests traditional party politics. What does this mean to the new politik and how will governments react to a REAL democracy?
The Tea Party movement in America has torn the Republican party in two complicating traditional pluralistic politics and playing havoc in the decision making process where clear majorities are needed to act quickly in a challenging world. This dramatically saw America lose its AAA credit rating what other complications will arise from the new normal?

Q5. Can social media be ‘State Sponsored’?

Whilst one can only really speculate on the intricacies of what actually goes on in China they have, to date, been able to by and large control social media. This has been through careful regulations and policing of the Internet and actively supporting state ‘sponsored’ ‘own brand’ equivalents of Western platforms such as Twitter and Facebook. But there are signs that excessive censorship, and lack of trust is seeing people move off local platforms. What will fill the vacuum in their place? And as China’s economy faces slowdown are its citizens still prepared to ignore their countries problems?

Q6. Do social media movements develop an agenda over time?

One of the most intriguing trends is instant global movements such as #OccupyWallStreet. They have enabled ordinary citizens to drive the news agenda, despite the establishment’s best efforts to dismiss them (see video) to voice populous frustrations but have been criticised for not having any clear agenda or set of demands.
It will be interesting to see if they merge with other movements, create figureheads and begin to drive / serve a political agenda. What will be the evolution of such trends as they mature?

Q7. What happens when social media IPOs?

2012 will see the West’s big social media players launch their IPO’s. Will this lead to a bubble as many predict?
As companies go public will the requirement of open accounting and public obligation expose what is really under the bonnet of these commercial enigmas?

For those that stick around through 2012 how will they spend their money and how will this impact the media landscape

Q8. Can Google finally put all its pieces into place?

Google launched Google+ to much excitement and mixed review adding another interesting component to their tool suite. Will they finally manage to integrate social media (Google+, YouTube) with search results, browser (Chrome) and mobile (Android) to dominate the user brand journey? If they can it will create a real challenge to the social media status quo.

Q9. Can The Establishment control The Hacktivists?

Wikileaks and other ‘hacktivists’ have run rings around the establishment and have seemed all but immune until the recent lockdown on Julian Assange. Can old-school clandestine tactics of defamation; honey traps and the blocking financial payments finally put a stop to their greatest fear?

Q10. What will happen when the last screen in our lives is finally connected on mass?

The last few years have seen a plethora of new AND ever more connected screens introduced to our lives. But there is one, the TV, which still remains largely as a silo. As internet connected TV’s become the standard what will be the cultural effects of social TV and who will dominate the war Android, Apple or Amazon?

Q11. Is this officially the end of the era of auteur and the birth of the crowd?

What does the death of perhaps the last great auteur of industry mean to the Internet? Steve Jobs a man obsessed about control and often quoted alongside Ford dismissing customer feedback, was a leading advocate of the ‘closed platform’ and gave those who argued against customer centricity an excuse not to leverage social media to become more open. He fooled many into thinking they didn’t need the consumer like Ford said, ‘I don’t ask them what they want I show them’. With him gone has the excuse to not open through social media also diminished in business discussion?

Q12. Does social media impact financial market volatility?

We know news travels fast ever since the 24-hour news channel popped up but what happens when social media exaggerates the rate and virality of how information spreads exponentially around the world.

A VC fund recently discovered there was a direct correlation between Twitter sentiment as a predictor of movements on the financial market. Does social media mean more volatile markets in the future? Will it amplify panic buying and selling? It’s to be seen how much it is a driving force into today’s economic turmoil.

While like most people I feel the same sense of disgust and revulsion when I see all the videos circulating online I can’t help but think that when it happens on this scale there is more to it than simply dismissing them all as idiots.

A Perfect Storm

I think there are a number of things at play. Personally I don’t think one is more significant than the other but rather as in the Middle East there is a perfect storm brewing.

Firstly I think there is a generation that has been let down by society. It isn’t a few bad apples it is a national societal problem which I think will become clear over the coming days as this spreads to other inner-city areas across the UK.

Secondly social media and mobile phones have connected us to our peers in a way never seen before. Without it there would be no Arab Spring and for sure no London Riots. The difference between the two is the Arab Spring is connecting around a purpose. The London riots show what this connectedness does without giving society and community purpose. It leads to anarchy.

I will address the matter of purpose a little later.

Detached & Disenfranchised 

Kids especially these kids don’t have buckets of empathy and so are prone to mob mentality of grotesque levels so are particularly vulnerable to an anarchic connectedness.

There is a whole list of society ills that led to a lack of respect for any kind of authority:

-Hands off parenting & teaching

-Society insisting on treating kids like adults

-The shadow of a corrupt world of politicians

-An increasingly violent world (I bet they see more blood and death on the BBC News than they do in any movie)

This leads to detached and disenfranchised members of society.

Unashamed Materialism

Combine this with high levels of unemployment for young inner city men (a recipe for disaster in any country) you have political unrest. The problem, referring back to my earlier point, is these people don’t even have a politick. Well they do but it’s unashamed materialism imported from the US. The fact they call the police the ‘Feds’ sums it up for me.

However this ghettoisation of older male teenagers is seeing them groom younger children for criminality (nothing new in other parts of the world think Brazil and elsewhere). Armies of ‘soldiers’ without empathy or anything to lose. How long has this kind of violence been inwards on itself? One young male after another shot of stabbed to death on our streets. This shocked but didn’t interrupt our day to day lives. Now it has united and turned outwards on to wider society – an unavoidable social consequence. It finally has our attention.

The fact this happened in August (holiday season) is no coincidence and without a fix could become as regular a fixture as the May Day riots.

Personally I think these older males should be charged with child abuse for their role as Fagan but it still doesn’t stop the momentum of why.

To purpose:

Connected and empowered is good…. with purpose. Without it you have anarchy. This is the new reality Governments around the world will face over the coming years. It’s the Age of Connectedness.

I believe here in the UK we need to invest in programmes (the new non-military version of national service) for our young unemployed in rewarding community-oriented initiatives.

It will help them develop empathy, keep them busy with money in their pocket, connected to a mission and purpose developing skills that will be very useful in future life.

Being able to work well with others will be the single most important skill in the Age of Connectedness. This should be our societal purpose.

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I read a blog post recently which points out one of the many flaws in Groupons model. This time for the B2B customer using the platform and its mass impact on the SME marketplace. I suggest you read it before you do this as I speak directly to it and its author..

I think it’s good to look under the bonnet of such a runaway successes. Its consumer proposition is fairly clear but people are right to ask what is the true value for advertisers?

Before I respond I will make clear I am not an economist but I do have experience in high-churn promotion lead industries which is usually a race to the bottom that you describe. However I think that experience does and doesn’t apply in the context of your example and Groupon generally.

Race to the Bottom

There is only a race-to-the-bottom if there is no / to little product differentiation. Then all you have erosion of price in the market place.

Many do make money there at the bottom. You only have to look at insurance and specifically car insurance here in the UK to see how much money has to be spent in the acquisition phase and the annoying lengths they go to be front-of-mind.
However insurance companies are big and very good at math. Your average SME isn’t.

Apply this to local SMEs and I think despite minor erosion price may be the primary deciding factor in the first phase of the purchase life-cycle but will factor less in repeat high-street behaviour where decisions are often more complex including environment, staff, proximity etc.

Losing Promotions

The best comparable form of online marketing that can shed some light here is affiliate marketing.

In markets where affiliate marketing & CPA (Cost Per Acquisition) play a big factor, if you didn’t know your projected ratio of customer types by; life-value, churn / drop-off rate and true CPA you would find out 6 months later you had actually made a loss from your promotion. Paying too much for too little.

Why because a small savvy few would game the system by deal hunting with no intention to be a repeat customer. These will almost definitely be the early adopters of Groupon. If it makes it more mainstream this effect will diminish with more repeat / less savvy customers. The odds should play out.

Good predictive modelling, math and daily tracking would help you optimise your ROI. HOWEVER I don’t think Groupon will be helping you figure out what happened next.

Even if they wanted to they couldn’t because they can’t serve every SME with an account manager. Google haven’t even got close to this after all these years. AND a self-service dashboard is only relevant to a small number of tech savvy SMEs not the masses.

As you point out they could see noticeably more people through the door but less money in the till at the end of the month. They could sadly assume this to be part of a wider macro-trend, probably economic, or worse for Groupon simply writing it off as a failure. Both would be missing the point.

Missing Factor in your Math

What’s missing in the formula on this blog and in Groupon’s model as a whole is retention and its measurability. Groupon is just one part of the mix and in isolation won’t do itself nor its customers justice.

Here you cover just the one-off basket value but actually the only way you could see the true ROI is by understanding life-value of a customer.

This would allow you to understand the ratio and value of passing trade (who may be gaming the Groupon system) and returning customers allow you to adjust your promotions accordingly.

Missing Expertise

So this is actually where the Groupon’s business model and importantly valuation ($25 Billion IPO) falls apart along with Four Square and others. Most SMEs and especially independent high-street shops, bars and restaurants can’t and won’t ever do the math here.
For Groupon or any other SME focused B2B model you must be able to develop a service to allow customise to get real and visible value to come anywhere close to realising the valuations flying around at the moment.

Conclusion

Actually I think the targeting of Groupon promotions is rubbish but let’s assume they get it right. To use it well is complex and needs some hand-holding. Second the value actually resides in the gap between promotion acquisition, loyalty and retention.

I did once have massive issues with reception, it was none existent for me in my house, but I stuck with them and now it’s fine. So I’ve been a loyal customer. Why? Well until very recently I’ve been too busy to have an issue with them. I want an easy life and have other priorities.

However I’m increasingly told by my peers they are not the best around. Three of my colleagues and friends have left to Vodaphone for a variety of reasons one even setup this group ‘O Poo’ in a stand against new data caps which is a big issue for me. I’m due an upgrade and can’t get the new iPhone 4 because none of the o2 stores, that fit into my schedule, have it in stock. But my colleague just left and immediately got one with Vodaphone. So I’m beginning to feel a schmuck.

Today I was on the tube and saw this ad:

Whilst it’s for broadband it’s still o2 in my mind, The fact that they house all related o2 stuff in the same Facebook page would imply it’s the same to them too. When I saw the ad I got excited that o2 were going to really deliver on their Advertising pledge of ‘nobbling those niggles’ and the ad was implying you can work with them to help improve their solution in a Starbucks My Idea type way.

Instead you get a game where you can kill those typical problems with broadband. GREAT. THANKS O2. For me this sums up O2 and how seriously they take their customers. I want a better O2 not a game. I am willing to help you give me a better service. Looks like below others are too.

Spend your money on making your business better by using things like your Facebook page rather than ad campaigns and crappy games to make people think you are doing something. If you are good you won’t have to make games to drum home the point. People will tell people will tell people.

Right now I have three issues with you. I am still a customer. This is the extent to which I will invest in helping you keep me. Save me the hassle of moving. It is more efficient for you to retain me than spend loads of money trying to acquire a new customer. That’s basic math.

Listen, Serve, Retain, Acquire in that order.