Markets and business are not as rational as some economics courses would have you believe. Human beings value some things more than others. We need water to survive, yet a bottle of water is much less expensive than a bottle of scotch. When figured for usefulness and scarcity, water has been shown to be more valuable than diamonds - yet we pay minimal taxes, turn the tap, and we have water.
Context is the root of value. Business makes money by discovering and manipulating context.
Business imbues,identifies and enables objects with context and then finds some way to make money from those activities. In the Internet world, we call this "Monetization", a word that makes most spell checkers gag.
The key here is to recognize that context drives value. To the creator of an Internet service - like Facebook - the value of that object (Facebook) is over a billion dollars. Now, let's say for easy math it's a billion dollars and there are ten million facebook users.
Some people wanting to monetize the Internet would want to charge each 1,000 dollars to use the system.
That might not work very well, because the context of Facebook from a user perspective is that it is free. And if it stops, something else will be free.
So, we have two contexts - Facebooks' valuation of itself (Facebook context) and then the User's valuation (User Context). We can add to this Microsoft Context, Market Context, Competitive Context... and we have a soup that allows users free access to a service that has value with payment provided by outside parties (sponsors).
Bringing This Home
Companies create vast amounts of Intellectual Property as a byproduct of daily activities that are squandered because of context myopia.
Say, for example, you are a consulting engineering firm and you are doing a series of transportation planning projects. As your team works, it creates byproducts of value that are not directly related to your final planning document.
In consulting engineering, the deliverable - as defined by the client - is the focal point for the project. When projects end, often all information gathered for the project is turned over to the client and the consultant moves on to the next project.
There is little institutional memory that came from the project. Thus, opportunities for capitalization on by-products are completely overlooked.
These may come from process improvement, trend data between projects, or the capture of accidental benefits that could be gained from variations in team communication or working style.
By and large, any capture of post-project value in consulting engineering is anecdotal.
Where Might These Gems Be Stored?
This takes us back to the concept map above. This information has historically been overlooked because it was never saved. Increasingly it is accidentally saved as an artifact of modern business tools (Social Media).
E-mails, wiki, shared documentation, CRM, all store the remnants of these relationships and can allow correlation with project data like schedule / budget adherence, team membership, throughput, and work flow. Hence, process improvement.
The surprise for most companies is: They have accidentally installed social media already. Information that previously evaporated after a project was complete is now being stored - awaiting value analysis and realization through internal use or commercialization.
In industries like consulting engineering - where the product is highly commoditized and margins are unspeakably thin (very often less than 10%) - social media tools can create objects of value that can provide large value to both the firm and its clients.
Over the next month, I will be presenting a series of posts that demonstrate the existing role of social media in business and daylight how simple analysis of this data can create value for the organization.