Esko Kilpi on Interactive Value Creation

The art of interaction, the design of digital work and the science of social complexity

Tag: Clay Shirky

The problem with the iPad and Facebook

I loved Napster.

I saw Napster as a fundamentally important social innovation when it came out in 1999. These thoughts were brought to my mind as I recently heard of Shawn Fanning and his new venture.

The original Internet was designed as a peer-to-peer system, like Napster was. Up until around 1993, the Internet had only one model of connectivity. Computers were assumed to be always on and always connected. The goal of the original Arpanet after 1969 was to share computing resources through integrating networks and allowing every host to be an equal player. Any two computers on the Internet could send packets to each other. Firewalls were unknown and communication patterns were by default symmetric.

Reach together with symmetry and equality were the things that made the Internet such a radical social innovation.

The explosion of the Internet in 1993 – 1994 was largely the result of the web browser and a different logic: the client-server protocol. The client initiates a connection to a known server, asks a question, downloads the answer and disconnects. The device running the client doesn’t need to have a permanent address. It does not even need to be always on. This is the reason why broadband providers gave us asymmetric bandwidth. More bandwidth is offered when getting data from the Internet than when sending data to it. The assumption was that the majority of users want to download and consume, not upload and produce.

It was not about symmetry and equality any more.

The client-server model was not the only development that changed usage patterns. The original model was transformed even more as a result of firewalls. Now the hosts of the network could not talk freely to other hosts because of firewalls creating obstacles to communication.

One of the most common and widely spread social developments is people being able to be their own authors and publishers. What Napster did was a different and likewise revolutionary social innovation. It came up with a third alternative, a new logic between producing and consuming: every computer in the network was used as a re-publisher and curator.

The assumption that there were few publishers and many consumers did not hold any more. Napster changed the flow of data.

The real genius of Napster was the way it made collaboration automatic. By default, a consumer of files was also a producer of files for the network. Once somebody downloaded a file, her machine was available to pass along the file to other users when needed. A central addressing authority connected the nodes of the network and then after that left everything else to take place by itself.

The totally transparent architecture produced value as a by-product of people getting what they wanted. No altruistic sharing motives were needed

Napster was a very decentralized system with some important centralized elements. In a decentralized system every host in the system is an equal participant. No hosts have facilitating or administrative roles. But Napster was also a search engine. It maintained a master song list adding and removing songs as individual users came online. This created redundancy and led to a high probability that a given file could be found although the probability of a given user being online is very low. As a result the contribution of one individual is very small but the collaborative interaction of the group creates tremendous value.

In a centralized, hierarchical system, coordination between peers is controlled and mediated by a central server, one host. A modern version of a hierarchical system transfers some coordination responsibility down from the centre to a tree-like architecture of coordinators. In this model, peers are organized into groups, where a local manager/host mediates communication between peers in the same group, but communication between peers in different groups is passed upwards to a higher level manager. This is essentially the way firms operate today.

Ronald Coase developed the concept of transaction costs. These are the costs of coordinating actions and the costs of interacting and contracting.  When it is cheaper to do this inside a formal organization than as a network of more or less independent parties, organizations will form and prevail.

The reverse side of the Coasean theory is even more interesting. As transaction costs outside the organization fall as a result of technological and societal advance, the reasons for formal coming together dissolve. This leads to the organization becoming outdated, unless it can simplify its processes significantly. The big challenge for many organizations is to do things in a much, much simpler and more responsive way. The sad truth is that it is easier for managers to grasp the threat of competition than the risk of simply becoming obsolete.

In theory, if transaction costs in society at large become low enough, there will be no hierarchical, formal organizations as we have known them. The transaction costs of forming and maintaining these types of organizations are higher than the transaction costs of the alternative ways of creating the same value. The traditional hierarchical and formal organization is just too complicated, slow, and far too costly as a system. Unfortunately, the mainstream business schools haven’t figured this out yet. They still keep on teaching yesterday’s pricey way of doing things.

Peer-to-peer is an architectural model that is much more interesting, but also much more demanding, than the dominant client-server models. I believe that Napster gave us a glimpse of the future. The architecture it pioneered is going to be a viable model for the agile value constellations of the very near future.

Client-server is not the only truth and Facebook is (just) a modern version of a Telco. Facebook is not the same as the Internet.


Thank you Larry Lessig, Clay Shirky and Andy Oram

More on the subject: The early history of the Internet. Blog post by Doc Searls. Blog On personal dataPersonal leverage for personal data by Doc Searls. On user-centric identity. Blog post by Venessa Miemis.

Communication as crowdsourcing

Communication constitutes reality. Communication is said to be the primary process by which human life is experienced: how we communicate creates and forms our experiences. Accordingly social life consists of dynamic interaction processes rather than stable structures. Therefore the way we communicate is of great interest. Where then do our communication-related habits come from?

We saw communication as a process of senders and receivers. The mass audience was seen as passive receivers and easily influenced by the media. The audience today is very different. Individuals have access to modes of communication that, just a few years ago, were available only for people working inside media channels. Most importantly the mathematical theory of communication, the concept of senders and receivers is not only unhelpful, but has been proven to be plain wrong in human communication!

Two distinct modes of communication have emerged and spread since the invention of the telegraph. The first mode was private point-to-point communication that was meant to connect people. The original telegraph was the classic example. It’s more developed form, the telephone, made synchronous communication between individuals on a global scale one of the defining technologies of the modern society.

The second mode was the public broadcasting of content. These two approaches to communication were advanced significantly by a series of innovations resulting in media technologies being perhaps the most socially disruptive developments of the past century, but the basic division into the two modes of private point-to-point and public broadcasting has remained essentially the same until now.

Thomas Edison filed a patent claim in the autumn of 1888 for a device, which, according to him “does for the eye what the phonograph does for the ear.” The kinetoscope as it was called, carried a long spiral of tiny images that could be viewed in a moving sequence by turning a crank and peering through a magnifying glass. Edison’s vision of this new technology was quite quickly taken over by people who saw motion pictures not as a personal experience but as a publicly broadcasted mass media.

In the US the primary financing for radio and TV broadcast stations came very quickly from airtime used for advertising. In other countries, different models emerged. In Europe radio/TV was funded largely through license fees paid by radio/TV set owners. This model was grounded in the belief that radio/TV is a political voice that should serve the interest of the “people” and not the interest of making a profit.

The broadcasting model of communication was now turned into the property of either advertisers or politicians.

This was because of the inherited way of thinking about people’s actions. We have two major ways of understanding why people behave the way they do. On the one hand, there is the causal explanation. People change because of external forces. People can be influenced, educated, motivated or even forced to change their behaviour. This is the causal thinking of mainstream management theory: I send you a message and you act. I steer you and your use of time.

On the other hand, there is the assumption of agency based on response-ability and responsiveness. Instead of seeing the audience as an undifferentiated, passive mass, we understand the audience as a network of people, forming small groups and larger communities. The commercial and political interest to broadcasting was a result from the belief that the media can mold masses. In contrast to earlier thinking, the society is today seen to consist of numerous differentiated communities, each with own values and interests. All media content is interpreted within the community according to social sense making within the group. The individuals are influenced more by their peers than by media. Meaning is not in the message, but is produced in interaction. Different people will understand what they view and read in very different ways.

A new, third form of communication in the digital, networked world combines broadcasting and point-to-point. The means of broadcasting are today available for individual people. They are not only the property of institutions. The audience for this new form of private broadcasting is not a passive mass, but the emerging, active communities that the individual wants to reach and connect with.

In it’s most basic form, responsive communication involves a three-part relationship: an initial broadcasted gesture from one individual, leaving it free who in the audience acts on the gesture, a voluntary response to that gesture by another, and resulting crowdsourced activity. Meaning here does not reside solely in any one of these parts but in the relationship of all three.

The passive audience view suggested that people are easily influenced by the media. The active audience view thinks that people make active decisions about how to aggregate, and how to respond. The mass society theories subscribed to the passive conception of the audience and public broadcasting. It is time now to subscribe to an active, responsive notion of the audience and the possibility of private broadcasting.

A transformative, third mode of communication is here.


Thank you Robert Friedel, Kenneth Gergen, Stephen Littlejohn, Stowe Boyd, Doug Griffin, Clay Shirky, Kim Weckström and Jeff Jarvis

More on this: confused of calcutta and Using communication tools as a form of “co-presence” (The New York Times). Changing communication patterns.

Online is not a separate place

With the emergence of writing, physical presence was no longer necessary for sharing information. In other words, a person’s being there was not necessary for their influence to be felt. As typing replaced handwriting or when movable type replaced the hand copying of words, it became even easier to communicate with words that replicated ideas and simulated human interaction without face-to-face contact.

Cultures without writing used human contact as a means for interpreting shared reality. Information within these cultures was community-based and people tended to construct their identities in relation to the community. People were dependent on contact with others for information. Print cultures in contrast encouraged more individuality and less connectivity with the community. Literacy led to people looking for information through the relatively isolated practice of reading rather than through face-to-face interaction.

When encountering anything for which we don’t already have a term, we turn to metaphor in order to make a comparison between the new phenomenon and a familiar thing. For example we display applications on our desktops, we place documents in folders, and we check our mailboxes for messages or we speak about virtual communities when we refer to groups of people communicating online.

Online communication has challenged our ideas of what a community can be. Social media allow people to relate to groups of people who live beyond the borders of location and time in the very same way that print once allowed information to be free from the constraints of location. Social media thus redefine what local interaction is and remove the constraints we earlier had on community building. The view of online as a separate space, a “virtual” space or “cyberspace” is an unfortunate example of a misleading metaphor that makes it hard to understand what is going on today. Our social media tools are no more alternatives to real life than books; they are very much part of it – making life more meaningful. People who are concerned about the increasing use of online communication and digital media often express their worries about the decay of face-to-face contact, but in effect social media are reducing the transaction costs of group activities and are increasingly the new coordination tools for real-world action. It is all about a richer life!

Communities are about bonding and belonging. The public access that the Internet now allows people to have is mistakenly believed to mean trying to get the broadest possible audience. But in effect people are trying to reach people like themselves, like-minded people, in order to belong to a community. There has been a tremendous increase in the amount of material that is available to the public, not really intended for the public, but instead for the emerging communities.

Many of our behaviours are held in place not by rational decisions or desires but by present or bygone constraints. Our cultures are shaped as much by these constraints as they are by capabilities and aspirations. Changes often take place very fast when the constraints are removed. The challenge is that misleading metaphors are often the biggest obstacles to moving forward after the technological constraints are gone.

Change occurs not so much as a result of new information leading to individual learning but when the patterns of connectedness between individuals change. Learning as a result of the print revolution was seen as an individual process. Learning as a result of the social media revolution is an active process of communication between people. Knowledge was earlier seen as being stored in content. Today knowledge is understood to be perpetually constructed in communication. Books could be transmitted from one person to another. Today knowledge is the process of relating. The technological constraints are gone; now is the time to get rid of the wrong, constraining metaphors.

We are living a communication revolution that equals the changes brought about by print.

Thank you Andrew Wood, Euan Semple, Matthew Smith, Clay Shirky and Ralph Stacey


Reading revolutions Thomas vander Wal’s blog

How to fight group-think

The mainstream approach to groups and teamwork underlines the need for consensus and cohesion. It is believed that members of an organization should commit themselves to its policies and chosen direction. Many writers claim that people should share the same vision, be positive and work harmoniously together. Seeking consensus often becomes so dominant in a group that its members tend to leave out of any alternative thinking. The symptoms of what is called group-think arise when people are not motivated to judge or criticize views and assumptions. People are positive and seek harmony on issues with no conflict to spoil the “we” atmosphere.

Often the more cohesive the group, the greater the inner compulsion on the part of the group members to avoid creating a disturbance. This often leads to people believing in the soundness of whatever proposals are promoted by the leader, or by the majority present. The danger is not so much that each individual will fail to reveal ideas that conflict with what the others propose, but that he will think that the proposal is a good one, without attempting to carry out any critical study of the possible alternatives. When this kind of group-think becomes dominant, there is often a considerable suppression of deviant or creative thinking. But it takes the form of each person deciding that his differing thoughts are not relevant and should be set aside.

Evidence of the group-think symptom is that things are left unsaid.

James C Thomson was a historian who studied the Vietnam War through observing decision making in the US State Department and at the White House during the war. He writes about the victims of group-think ignoring warnings. People collectively construct rationalizations in order to discount any negative news and feedback that, taken seriously, might lead the group members to reconsider their assumptions, as they recommit themselves to past decisions. Thomson’s findings came into my mind as last Wednesday I listened to Anssi Vanjoki defending Nokia’s past strategic decisions – no mistakes have been made!

Thomson writes about the fall of 1964. Just before the bombing of North Vietnam began, some of the policymakers predicted that six weeks of air strikes would force the North Vietnamese to seek peace talks. When someone asked: “What if they don’t?” the answer was that “Another four weeks would certainly do the trick!” The assumptions behind the decisions were never questioned.

What is being discussed in groups is often unclear. The lack of clarity is the very reason for having the conversation. We come to know what we are talking about as the conversation develops over time, if it develops. Communication is not one person saying something and others listening in order to understand what is being said, and thus formulating a joint decision. Whatever people do in groups is accomplished in communication, which always has a thematic pattern. The thematic patterns are, in turn, iterated over time as repetition, group-think or creativity. The demand that (management) group meetings are carefully planned and agenda-based may actually kill the possibility of any new meaning to emerge.

A group’s ritualistic adherence to meeting procedures and idealized rules of behaviour may create a false justification of the decisions made.

Research on complexity and creativity has shown the importance of diversity. If members join a group and have nothing in common at all, obviously, joint action will be impossible. But perhaps the bigger challenge today is if they conform too much in the name of group cohesion and thus block the emergence of the new. Organizations have the capacity to change only when they are characterized by diversity and deviance.

What is needed in groups, is paradoxically, conformity and deviance at the same time.


Thank you James C Thomson, Irving L Janis, Clay Shirky and Patricia Shaw

(Mårten Mickos blogs about this topic in Finnish)

More on group-think

The changing media ecosystem: from channels to contexts

The Internet is disaggregating media content and media logistics. To get to the desired content, you don’t need to go through a channel or subscribe to a newspaper. The number of people going to a newspaper or a TV channel is going down because more and more people don’t get any value from this detour, turning the channel into an extra transaction cost as Paul Graham has pointed out. In this situation what you do, is go straight to the source following the easiest and most direct route, which is what all kids do. However, the traditional role of the channel was not only delivery, but to charge for the content and pay the authors. This creates the problems we have today.

For decades, media companies enjoyed a geographically defined monopoly over the ad market. The iPad and the efficient Apple sales people prolonged the situation and supported the false idea of a digital channel. This is still evident as newspapers are trying to cling to their earnings models, and now try to force customers back to outdated modes of user experience.

The earnings model crisis has been emphasized because of the criticism of the inefficiency of the sales funnel. Advertisers claim that they have overpaid the channels and been under served by them. So is the challenge of the Internet really about people not wanting to pay for content, or what is going on?

The future-oriented alternative would be following what young people do and learning from that. The information related habits of digitally native people are much more efficient and create much more value than the models we were forced to in the past.

There is a fundamental change taking place that is perhaps not fully understood yet.  Aggregation, meaning the decisions on what to include and what to exclude, why and when, is changing from the server-side to the client-side, typically to the smartphone and the user. The context the customer is in matters more than who the customer is. The server-side aggregation/editorial process was largely about decisions on servicing defined customer segments. But because what really matters is the context, the situation the customer is in, the reader/viewer is becoming the editor and wants to decide for herself what to bring together in a bundle. This means that the buyer, not the seller, makes the editorial decisions. Again, why then pay for something that you do yourself?

The Internet is not about channels and sites but contexts and purposes. The concept of a digital channel is not only unhelpful but wrong. For media organizations this means that the unit of competition is changing. For example, newspapers don’t only compete against other newspapers. The articles about a given topic are in competition with writers outside of channels writing about the same issue. Newspaper articles compete against the best stories on the Web and newspaper staff members compete against the best writers on the Net.

People are willing to pay for content, but it has to be good content. The relevance of an article is easy to measure on the Net: how often is it recommended or linked to? Channels can turn into a network also for newspapers, radio and TV. “Social Proof” is the new content filter and an example of future media logistics. Why pay for content of lesser quality when a recommended alternative is available, and often much easier, with fewer clicks, and for free?

The Internet makes the traditional, institutional model of journalism harder to sustain but not impossible. However, if media organizations don’t see what is happening around them, and don’t change their content and channel based focus towards understanding the purposes of people and contexts people find themselves in, we are going to see an irreversible shift from the old types of institutions to a very different information ecosystem.


Thank you Paul Graham, Ralf Blomqvist and Clay Shirky