Building Innovation from the Edge

In the 14 years since Jerry partnered Esther Dyson to write Release 1.0 and put on the famous PC Forum, he has developed insights into social systems theory and technology that have started him on a journey where he has put together a loose social network composed of a large group of like-minded people. Every year a subset of this group gets together and self organizes in a “retreat.” I was fortunate enough to attend the most recent in Oaxaca, Mexico in early February. I interviewed Jerry on March 16, 2006. What follows is the story of another remarkable journey made possible by the Internet’s ability to connect people into open fields of collaboration rather than keep them penned up behind impenetrable corporate walls.

COOK Report: Tell me how you evolved into your career with Esther and from then into what you are now doing?

Michalski: I call myself the accidental technology analyst. I had no plan to be in technology and no formal training to be an analyst. I just happened into this. It turned out that I am reasonably good at it, so I stuck with it. My undergrad degree is in econometrics, which I refer to often as “how to lie with numbers.” You give me a set of numbers and I can use it to tell you any story that I want to depending on how I slice and dice things. Reality can be relative, unfortunately.

A Rate Clerk at Mobil Oil in the Pre-PC Age

After graduation I worked at Mobil Oil for 30 months as a rate clerk back in the days of paper tariffs. The first hour or two of every day was spent on updating a roomful of paper tariffs from the Interstate Commerce Commission and various regional rate bureaus. These tariffs described what it cost to move things from place A to B to C to D. I learned how to calculate these during 1981 - 1983. I would also get calls asking what it would cost to send a load of packaged lubricating oil from our warehouse in McKees Rocks, Pennsylvania, to a customer somewhere else. I started with truck rates, then graduated to rail rates, which are more complicated.

In 1981 I bought myself an Apple II Plus and I joined the Washington Apple Pi Users Group in DC. I started attending the meetings religiously and remember very well the excitement, the fervor and the fun of learning all this stuff. I audited some tech courses and remember that in the database course they taught us about the hierarchical model, the network model, and the relational model – which hadn’t obviously won yet. Then in the telecom course they talked about DECnet, SNA, and TCP/IP, which also had not obviously won yet. It was wonderful because I got an objective picture of what all this stuff was and how it worked.

I was curious about why there were so many computer languages and what were they good for, so I started collecting compilers and interpreters. By the time I retired my Apple II in 1984 for an early Macintosh, I had collected 3 or 4 Basic compilers and 3 Pascal compilers, one of which was the Berkeley UCSD P-System, which I made my text editor. I wrote all my papers for my first year in grad school using the UCSD editor. I also had MUMPS, Forth, LISP – a whole bunch of these things.

I have never programmed for a living and I could barely do “hello world” in all these languages. Nevertheless, at Mobil they started to think I was some kind of computer guru, so they put me in charge of a mainframe freight-rate publishing system. It was simply a bunch of mainframe programs. But it enabled me to get to know System 370 at the same time I was learning about these little micro-computers. All I was doing was copying information from the tariffs and sending it down to keypunch. They were keypunching all these pages of rates that then got flowed into big ISAM and VSAM files – not into anything that could be called a database. All this stuff was republished in the form of customized reports that got sent to the different field offices.

COOK Report: And pretty soon the light goes on that you can do all this on your Apple II?

Michalski: I told them: “you need to get a PC.” But the whole time I was there they never even bought a PC – forget about the Apple, I was also showing them spreadsheets. This was also, I will point out, during the time of OPEC II. There was another oil crisis going on and what happens when you are in the transportation business is that every month you are getting these rate increases and surcharges on existing rates. Every time you had to calculate a new rate you also had to calculate the incremental surcharges on the rate. Right? It was getting kind of nutty and I said: Why don’t we take this little PC and start calculating? By the time I left to go to grad school they had still not bought one, but now that whole industry is completely automated.

Social Systems Science at Wharton

I started at Wharton in the fall of 1983. I always knew I wanted to go to business school but I never knew why. While there, one of my housemates said: “Hey, you should try this guy Russ Ackoff.” Russell Ackoff was one of the founders of systems science – his department was called Social Systems Science or S-Cubed – and I sat in on one of his classes. It stuck. While my graduating documents say International Business, in reality what I did was social systems science.

Ackoff and his peers really changed the way I see the world. He had the idea that there is no such thing as a problem. The Operations Research approach is to gather data on a problem, turn the crank on a tool like dynamic or linear programming, multiple regression, queuing theory, Monte Carlo simulation and get an optimal solution. You then feed that answer back into the problem and fix the problem. This is basically a fiction. Ackoff maintains that there are systems of problems. That every problem seems to touch other problems and affect them – especially when you get into social systems.

I have come to focus on a mixture of the interaction of computers and information technology with people and social dynamics. This is the sweet spot for me. I graduated in 1985 and didn’t interview very much. I did not want to become an investment banker. One of the interviews that I stumbled into was Price Waterhouse trying to start a baby McKinsey. They had had a study done for them by McKinsey. One of the study results was that you should be in our business also. If you want to be a full service business, you should be offering strategic consulting and services. They poached away the partner who had done the study – hired some other middle level project managers and then 20 freshly minted MBAs of which I was one. One of the reasons I joined them is that one of the senior partners advocated the Russell Ackoff view of the world, and I thought if they are willing to try new things I should sign on and see what happened.

They opened three offices and I went to the one where that partner was, which happened to be in St Louis, Missouri. I spent two and one half years there with more responsibility than I or the other junior consultants should have had because the middle level of managers was pretty thin and we ended up doing the 90 hour work weeks. We had a great time and learned a bunch of stuff including some early McKinsey-style thinking. What was funny was that there were some partners from Bain, some from Mac Group and some from McKinsey. There was so much diversity that we got a very useful mix of their perspectives on how to solve a client engagement.

I got to do a health care project and a telecom project while I was there, but I wasn’t a good cultural fit and I got fired. There was a reckoning day when you either got promoted or counseled out. I was told that I had ninety days that I could use the office, do what I wanted and find other work. It turned out to be a marvelous time. I had a research associate run a search for me on artificial intelligence, a subject about which I knew nothing. The search yielded 40 documents that I then plowed through. This was now 1987 and among those 40 documents were a couple about neural networks.

Neural Networks at New Science

1987 was really the second spring for the idea of neural networks. I discovered that I had a genuine passion for them. It turned out that at my undergraduate school of UC Irvine there was a center for the study of neurobiology of learning and memory there. I went there for a conference that they just happened to be having in a month and met the who’s who in the new field of neural networks, including some really interesting folks. I realized that what I liked about this was the fusion of mathematics, biology, computation and semantics. There was a whole bunch of ideas that were being blended. I didn’t know much about the bio or computational end of this but I loved the idea that this was all being fused together in an effort to understand how things worked and that it might have some pretty radical implications for computing and what products we got out of computing.

I did some informational interviewing and found my way to a little analyst firm in South Norwalk, Connecticut. We were in a third floor walkup above a restaurant called Portofino’s. I became their neural networks analyst at a time when they only had one research service, on Artificial Intelligence. I was doing a subset of AI in what could be called the AI winter – when AI became deeply unpopular and it got either mainstreamed into applications like credit review or it started getting a voodoo property where companies no longer wanted to play with it.

Neural networks, however, was hot and, as a result, we began to broaden our offerings. There were three founders and then the first employee started a service on object-oriented programming and another guy started a service on network computing where he was covering Sun and Apollo and a whole bunch or workstations. Networked computing was something that only workstations did at the time. The whole idea that the Internet was there wasn’t there yet – at least not in the popular imaginations.

(COOK Report: I was the only tech writer and science editor at the von Neumann Supercomputer Center in Princeton at this time but I had many similar interests.)

Michalski: I remember hearing about things like FTP. Back in 1983 I had bought a 300 baud Hayes modem and had addresses on the Well, the Source, CompuServe and some BBSes. I had email but I really lusted after a “real” Internet address, which I finally got on the Well when I became [email protected].

At New Science, I started two of their seven research services. The first I called Intelligent Document Management. At the time, two of the founders came to me and said Jerry: there’s this thing called electronic imaging that seems to be pretty hot. There is a company called BIS Cap that runs a conference and some newsletters: Why don’t you take a look at that and see if we should have an offer. I did and thought: “This is really stupid. We are scanning documents. Putting them on laser discs. And then buying expensive juke boxes to be able to pull them of the discs and print receipts.”

COOK Report: It reminds me of the mainframe mentality at Mobil that you described earlier.

Michalski: Very much. I thought this is asinine, but it’s popular, so I created a service called Intelligent Document Management that had that stuff as one of the peripheral elements, but that also had hypertext, character recognition, pattern recognition, moving large objects around networks so that I could touch some of the network computing stuff. As well as document structures and document formats.

I also created a bubble chart – a kind of lily-pad-like illustration that was the scope document of service. Our main competitor was Gartner Group, and until that moment every service description of every competitor was basically bullet points on a one-page sheet. I created a chart and on the back of the chart we put the companies that we were covering and some of the things that we would cover.

Within a year or two all of our services and basically the industry at large had converted to diagrams that illustrated the conceptual scope of each service. The diagram proved to be a really nice sales tool because our people could drop that document in front of a client and walk their way around the diagram and say here is what we cover, here is how it interacts, here is a way of looking at the industry. That worked really well.

A year or so later I started another service called Continuous Information Environments. That was a long elaborate name founded on the idea that the minute you step away from your desk, your information environment breaks. It is discontinuous. You cannot get to anything that is at your PC. By then we did have PCs that were connected to something, mostly personal devices. This was in early 1991, when we don’t really have Internet connectivity yet in the broad world. Cell phones were just beginning to take off. I covered computer telephony integration, which is how I met Dan Miller and the telecom mafia. I covered fax, voice, data – all the media fusion sort of stuff. I covered wireless networks.

The neat thing was that 80% of my clients at New Science Associates were corporate advanced technology groups. They included the C-Star group at Andersen Consulting. O’Connor & Partners, which was a hot derivatives trading firm that later got bought by Swiss Bank. They had the largest installation of NEXT machines around. American Express, Sears, State Farm. A bunch of guys who were trying to figure out – what to do with the new interesting-sounding thing called neural networks. What do we do about document imaging. What was nice is that we got paid just as much if we told them to stay away from things or how to use technology judiciously as if we hyped and jumped up and down and said buy this because it is really cool.

Meeting Esther Dyson and Trading Research

I forgot to mention that during the years in grad school I had heard of Esther Dyson. I saw her quoted all over the place. I needed a summer job in 1984. I cold called her and said I am looking around for summer work, I love what you say, would you mind spending 20 minutes with me to steer me towards some summer job opportunities. She agreed. I took Amtrak from Philly and she greeted me at the door of the Seagram building – barefoot and in corduroys – and proceeded to steer me toward a half dozen companies like Quarterdeck, Mindset computer all of which have since gone extinct. I had asked Esther what she thought about New Science before I joined. She though they were good. She and I crossed paths a bit later and I gave her the scope document to the second research service (Continuous Information Environments) and I asked her if she would swap research with me. She said yes and started getting what I was writing every other week and I started getting Release 1.0.

About four or five months later she gave me a call and said could you come into New York some time. I have a question I would like to ask you. I had absolutely no idea of what was about to happen and I trundled in from Connecticut one day to go talk to her and she offers me the job. I accepted and joined her in October of 1992.

She had offered it to John Markoff but he wanted to stay with the New York Times and then she asked me and I said: “Well, I just started this new research service.” Then I talked to Dan Miller. Dan has been doing telecom research forever and does business as Opus Research here in San Francisco. Dan is the reason I know Bruce Kushnick. They used to all work for Probe Research. Pretty much Dan’s only reply was: “What? Are you nuts? How often does anyone get an opportunity like that?”

I called Esther, took the job and I started writing. At first I was writing every other issue. And then after about six months or so I started writing every issue except for two every year. One we worked together on. That was the PC Forum preview issue and then we had one guest issue every year. She edited my work. It turned out to be much fun.

When I joined, I wrote about wireless. Esther then said, “Do you know what you’d like to write about next?”, and I said “Yes: online community” She said, “Eh??” I explained it to her and described what people were doing on AOL and on the Well. I explained what I saw and she told me to go ahead. I did, and the issue grew so much that I split it in two.

This was exactly when Howard Rheingold was publishing his book about virtual communities. He hadn’t published yet and I was able to interview him for the issue. One of my favorite panels ever at PC Forum was a panel on virtual communities that we ran after that. The panel had Sherri Turkle, Bob Kavner from ATT, Adam Curry, who at the time was an MTV DJ and a couple of others. The panel was really magical in the interplay of ideas that flowed.

I started writing about things and picking up ideas or processes that had odd combinations of social dynamics, interesting technology and so on and so forth.

COOK Report: Was Esther doing PC Forum the whole time?

Michalski: Yes. PC Forum actually predates the newsletter. She bought the whole operation from Ben Rosen, who helped her do a management buyout. PC Forum made all the money and the newsletter broke even. (If we were lucky, it covered its costs.)

COOK Report: How did the no-agenda meetings that came to be known as Jerry’s Retreats begin?

The Word “Consumer” as a Litmus Test

Michalski: As an introduction to that question let me talk a bit about the structure of the PC Forum and then about the word consumer.

I calculated once that I’ve listened to some 4,000 different pitches (between 5 years at New Sciences and five and a half years with Esther and since then a bunch.) When the dot boom started in 1994 – 1997 and the Internet started getting hot and when people came and started to pitch things, the tenor of the pitches changed. When the Internet showed up, the pitches changed from: “Hey, we sell a time and expense server that costs $30,000 and this is how you install it,” to “Hey, the Internet is changing everything and this is why our company is best positioned to take advantage of the Internet because we have designed our product and service to do x and not y.”

Amid these pitches, I started noticing that the word “consumer” seemed to be a really good litmus test to sort between people who saw the world and these opportunities as a way to corral and train consumers to do their bidding versus others who were showing up with interesting stuff, even though they were not quite sure how to make a living with it – but they knew it was valuable and useful to humans. Those tended to be two big buckets into which things fell.

Everyone tended to use the word consumer. There is b2b and b2c and all that kind of stuff. But consumer was simply a basic part of the business language. However the people who had built something useful – if I mentioned to them that the word consumer seemed odd and a little bit dangerous and talked about my feelings, they got it immediately. And they would respond: “Oh yeah – you’re right,” and they would shift their use. The other folk would shrug and go “Yeah, but who cares”?

COOK Report: So you are saying that, from your experience at seeing what all this leading edge stuff was and being used to thinking of it in an Ackoffian social systems science framework, you were formulating some ideas yourself on how this technology was changing the way people could live within the social system of a locality, community or nation state and you were using these conversations to bring a new and changing reality into focus? And you saw how people responded to what you were asking them – feed their responses back into your own perception and that those responses in future became something of a litmus test of where a person fit into the new paradigm?

Michalski: Yes! And this has informed my thinking for a long time now. I am in the process of writing a book about this. I started being mindful of the word consumer and the business model that it implies. Of the frameworks and metaphors that are constructed around it. Of the language of advertising and marketing which is the language of war. You launch a campaign against a target demographic. You aim messages at them that are basically missiles . You get paid by the impression, which is basically a psychic dent. You want to make an impression in their skull so that they won’t forget you – so that you will remember to turn around in the store and buy Pop Tarts and Rice Krispies.

This is what we do and somehow we take it completely for granted that this is the language of warfare. I started paying attention to it – following it and listening to it. It led me all over the place, including strangely enough into the whole world of Intellectual Property and copyright. This is an area where I am not an expert, and I started thinking, what am I doing here. Then a bunch of things dawned on me.

One of the “Aha!s” that came out of this quest was that the businesses of culture – radio, music, news, TV, all those guys – unconsciously don’t want us to have a memory. If we have a memory and we can store and remix ourselves, then we blow their business model, which mostly consists of us watching the ads that they have sold in between the content. The content is really bait for the ads. TiVo then really freaks them out.

But then I started looking at software and at how our society works and it dawned on me that we don’t have good tools to make shared context. The tools that we use a lot. – email and blogging and all that are all flow tools. If you don’t have a good place to put them and make context, you are going to forget them all. Search engines help a little bit but you can’t always rely on a search engine.

I contrast “stocks” versus “flows.” A river is a flow and a lake is a stock of water. A bottle is a stock of water that you can use when you need it. A database is a stock. But basically the tools that we use are flow and the reason that we are so flooded by the info torrent is that we have very poor tools to manage the flow.

Tools to Manage Flows

The other thing that helped me to figure this out was that I have been using TheBrain for ten years. The company that invented it showed up and demoed this thing right at the moment that I was writing an issue for Esther that I had titled “Links and the Net.” I was writing about Inspiration and Mind Manager and Semio and Perspecta – companies that were in some sense trying to manage links but in another sense make sense of the interconnectedness of ideas and show that interconnectedness to people visually. TheBrain shows up in the middle of this issue when I am deeply frustrated because none of the tools I have found seems any good. They became the highlight of the issue and I have been an advisor ever since. I have been using this tool for a decade and it has changed my life. In five seconds I can find something that somebody mentioned that passed that hurdle of “Oh- I should put this in my Brain.”

There are some special things about how TheBrain works. One is that it is an authoring tool. You can add things to it. The design is really sweet. The second thing is many competitors have a paper metaphor. You draw from a starting point. You go left or go right, and in doing so you wiggle out the tendrils of the tree you are building. But those tools are really hierarchical, and once you reach to the edge of the page, if you want to link to the edge of the other side, you’re kind of hosed.

Now TheBrain is not 3D like a space-travel simulator. I call it 2 and a quarter D because it has just enough depth and is non-hierarchical entirely. You can link anything to anything and it is super easy to navigate between things. It works for me because I am very visual.

Of course not every one is this way. Some are very auditory. Some are very time-oriented. Pick you personality framework. But for me TheBrain worked perfectly. I was able to start putting things in it and found it useful right away. Now I have 69,000 nodes in my Brain. I use it every day. I am not tired of it. I am a little afraid because it is a proprietary format and who knows when it all taps out, but in a worst-case situation I simply will export all my data into some new and more interesting tool. It taught me a whole bunch of interesting lessons on the way.

The URL for my online Brain that you can actually go and browse is The inventor of TheBrain, Harlan Hugh, put up an online server of the enterprise product that he has been selling for ten years, then munged my PersonalBrain data to fit it. Now you can go open a browser and wander through my Brain. That online version is not as elegant as the application I use, but it will give a taste for what the data is. You can search for “Gordon Cook,” for “Internet” or what ever you want and then go randomly through it and see what connections I have made.

COOK Report: Onward!

Michalski: One big thing was this quest for what is meant and understood by consumer. I am still on that quest. The word continues to amaze me and inform me every single day. The second big thing was about how human beings share knowledge in person.

Impact of Group Process on How We Share Knowledge

PC Forum is one of the premier conferences in the tech field and we worked REALLY hard to produce it. In the run up to it we had to recruit and arrange the panels. That is normal. We would then do an issue of the newsletter where we wrote about every panel and every single speaker. We said why they were there and what we were hoping the panel would be about. Effectively why the panel was important. That was a lot of work. It involved many interviews and we both worked very hard splitting the conference down the middle. The conference itself was lavishly produced. A big stage with lots of video cameras that recorded everything. Afterwards Daphne would produce a transcript that I would occasionally edit. We would boil down the conversations and trim them up a bit so that we could publish a paper relic souvenir of the whole thing with funny captions under the photos that were taken. There was a tremendous amount of work put into to the PC Forums that we all did because it was the big money maker. But I felt at the end of a couple of those that we weren’t getting to the topics I hoped we would cover. We weren’t having conversations that we wanted to have. I remember that one time I was moderating a panel on Kids in Education that included Roy Pea. I was going to give him a softball question and he was going to nicely explain the difference between knowledge and knowing. And then when we were up on stage he doesn’t do it. I am sitting there thinking: boy, that didn’t work. And I started think how we might do it all differently.

In the meantime, I had become an amateur student of group process. On my own I had gone to the Omega Institute and taken a workshop from Scott Peck on community building. I had gone to Maine and taken a workshop from Harrison Owen on Open Space. I had joined a [David] Bohm Dialogue group in New York, and I had started attending Quaker meetings in Connecticut before I joined Esther.

I fused all of these ideas together and pitched Daphne and Esther on them as in “Hey: would it be possible for me to run a no agenda, invite-only, small conference and just bring people together?” In 1996 I had the first of these Retreats and have had them every year ever since. They are pretty phenomenal. In Oaxaca – that was your first experience of the Retreats. I have learned a lot about bringing people together in an atmosphere where there is some degree of trust. I practice trying to moderate conversations in ways that build that trust. The unstructured model is one of the ways to do it.

By the way, I am thrilled by how the idea of camps is taking off. Foo camp. Bar camp, Mash-up camp. All these camps are riffs of Open Space techniques which have now made it into the geek community in a big way.

In a Quaker Meeting nothing is said for an hour unless the members of the meeting say it. There is no adult supervision, no minister, no sermon. It is all people doing things for one another. It dawned on me that one of the things that I loved about Quaker Meeting, Harrison Owen’s Open Space and other such processes was that they trusted the human beings who showed up to do what “needed” to be done. They created a comfortable environment and a safe place within which people could collaborate whether it was from ministering to each other as in Quaker Meeting or solving a problem as in Open Space – where people starting taking responsibility for aspects of a project – to break up into meeting rooms and solve things.

Trust and Making the User the Owner of the Process

Now going back into technology and looking at the businesses of culture, it dawned on me that that was a major, major issue for me and it was one of the reasons when I spotted wikis I fell in love with them, because their signature instruction of “edit this page” is a message of trust. “Edit this page,” it shocks a lot of people.

Notice the point that we have come to with the Web. We navigate it with a “browser.” Browsing is not editing. The original web that Tim Berners-Lee envisioned was a two-way writable web. You traverse links forward and backward. You could write on pages as well as read pages. When Marc Andreessen and his crew UIUC invented Mosaic, they threw away ideas of editability. They threw in multimedia which made the browser really cool and they fixed a few other things, and then Mosaic took off like crazy. But we ended up with something that treats the Web’s content more like a magazine than like a collaborative shared memory space. I’m not fond of Websites with high production values. I hate Java and Flash when they come in and start doing fancy things, because to me the web should be always linkable, always searchable, always findable. With everything at your fingertips.

COOK Report: And those Java and Flash presentations are like playing a movie for you the consumer to sit there and passively watch. You have to watch it like a TV commercial or click out and go somewhere else. It is totally against the paradigm you are talking about.

Michalski: Yep. So trust has become a really central issue between what I do and what I care about. Also authenticity. I recently went to South By SouthWest to be on a panel that was nominally titled Open Source Management but was really about corporate vulnerability. We had a corporate volunteer as a kind of Guinea pig.

COOK Report: What is meant by corporate vulnerability?

Michalksi: A lot of it is about being willing to talk about things normally considered weaknesses. It shows up in marketing, word-of-mouth and corporate blogging – how companies show up in cyberspace.

COOK Report: It sounds Cluetrain-oriented.

Michalski: Very much so. And by the way, two of the Cluetrain authors met at the first Retreat. Corporate vulnerability is all about taking down the corporate veneer that Corporate Public Relations exists to buff. And actually opening in some cost-effective way portholes of communication between people on the inside and people on the outside of the company – and doing so in very authentic ways.

Working In a Condition of Vulnerability in an Open World – Robert Scoble

I have done a few speeches for the Center for Service Innovation which is all about high-tech support and how to minimize the cost of doing that. Greg Oxton, who runs it, was at the Oaxaca Retreat. He works by convening meetings with Intel, Oracle, Dell, HP, VeriSign, Novell and so on. They try to figure out how to share all the data they have about how all their systems are broken, which of course they are unwilling to do because that is really mission-critical information. Letting it out could be dangerous to your enterprise because it is all about how your hardware and software doesn’t work.

So it dawns on me sitting in the audience after having spoken at one of his conferences that he had no one from the open source community in the audience or on stage. And how in the open source community all those ugly warts on the software are visible to everyone because anyone can download the software. As a result, you begin your work in a basic condition of vulnerability. But you also get to the point where the software is good enough and being used by enough people so that you don’t need to worry about your image. You don’t need to worry about being vulnerable because of the open way you got there. You worked in the open. Your problems got solved along the way and you don’t need to worry about any skeletons in the closet. You don’t have stuff that you know the market doesn’t yet know because there is no disjunction between reality as portrayed inside of and outside the company, there is no disconnect between what is really going inside the company and what people are saying to the outside.

COOK Report: So the vulnerability is created by the gap between what the high level executives tell PR their company is and the real interaction of that company with the rest of the world – warts and all?

Michalski: True. But it is interesting that I was thinking of vulnerability in a different sense. In this sense the corporate executive shows up in a vulnerable intentionally in public so that you can see the guy is really human and really cannot walk on water. So that you get this feeling for who they really are. What you just said is totally true also – namely that the corporation becomes vulnerable because of bad things they have done in the past that are not in the public view. There is a disequilibrium. There’s an imbalance. You have just used the idea in a different and interesting way that I need to factor back into what I do when I talk about this.

The vulnerability thing is really important because there is no market for company messages and companies have forgotten how to actually connect with humans. As an example, I will state boldly that Robert Scoble has single-handedly reversed the negative impression of Microsoft that Waggener Edstrom, their PR firm, couldn’t touch for 20 years. I have talked with tons of their people as I have dealt with Microsoft over the years. The terrible public image of Microsoft –from my perspective in many ways actually deserved – was a “needle” that Waggener Edstrom was incapable of moving. Then here comes this guy who is not being paid to blog, who nevertheless starts a blog and who then starts this really interesting thing called Channel 9, where he schleps a video camera around inside of Microsoft’s campus and does surprise interviews with people. He puts them directly on the Web, thus creating an atmosphere of vulnerability and connection with the outside world.

Scoble is a really junior guy in the organization who is getting more and more famous. He is also getting a lot of internal power at Microsoft. I saw him at South by SouthWest, but before that we had done some work together. He was exploring whether he has more power when he tries to talk to executives personally inside the company or when he just blogs publicly about what he was trying to tell them. It turned out that if he just blogged about it they would wake up and talk to him saying: “Oh no wait – wait a minute, you can’t say that.” When that happened he had his internal conversation that he could not get in any other way. Otherwise when he tried to point out something that he found interesting, he also found that they weren’t really listening.

This visibility to the outside world creates vulnerability that is a source of power also. You can’t abuse it. One of the other interesting things that Robert does is that he tests the envelope often. He will sometimes do something that he knows is a little over the line to see where that membrane is and see if he can’t push it over a little bit further.

Nature abhors a vacuum. What’s happening is that when you pierce the vacuum created by the corporate veil you begin to put a vibe out in the world about what you care about, who you are, what’s going on – all those kinds of things. Traditionally the testosterone-induced, top down, hierarchical, command-and-control, power-over, traditional corporate architecture is all about shielding those secrets and creating a buffed corporate veneer that looks great to everybody and is really appealing. The corporation then target-markets it and focus-groups it and beats people over the head with messages so that they show up and do its bidding. It’s like taking “consumers” and dragging them by the hair out of the cave in front of the elk you just landed and making them eat it.

COOK Report: Is there a relationship here between the issues impacting the centrally-managed, vertical-silo, walled-fortress, telecoms and MSOs and the more open culture written about by John Hagel and John Seely Brown, where they talk about the necessity of talent building?

Blogs: What They Are and Are Not Good For

Michalski: Yes that is a very fertile area. Part of this whole area that you bring up is how do you connect what a company is doing to the outside world? Here blogs are very useful. My problem with blogs is that they are too unidirectional.

As an aside, I generally don’t like comments on blogs. Some people have really great comment threads. If you go to Jason Kottke’s blog, the comments are just outrageously great. If you look at what Dan Gillmor does, those comments are really good. But most comment threads are little dead end conversations. I’d rather they occur on a mailing list or somewhere else where they are part of a longer term conversation – even though on a mailing list it is sometimes hard to disentangle the main threads that are going on concurrently.

The other thing that I don’t like about blogs is that they are flow. So that really great posts, once they get shoved off the bottom of the list by newer conversation, just go into the big dustbin of history.

COOK Report: But the blog archives?

Michalski: Those are the dustbin of history. Unless another blogger pointed to them or unless Google scoured them, which Google is, thank God, good at doing, they are going to vanish entirely. For me – worse than that is that they are not available in context. Thus even if I find that one blog post again, I don’t get immediately around it all the other cool stuff that I know I heard at that moment about that topic. Which is what I do get with TheBrain.

A particularly good blog post is to me Brainworthy. I will put it in my Brain in the right place and then when I go back and look for it, I will recall what other contextual materials I have about that thing, which is really useful.

All of this then is about showing up authentically. It’s about trust. It’s about being understood. For example Doc Searls has been an “A” list blogger forever now. When asked where does he get the energy to blog so much, he says he basically answers his email in public. In so doing he is setting up a resonant wave – kind of a vibe out there in the world that tells everyone what he is interested in. The result is that he gets more and more email about stuff that he cares about. It is a wonderful feedback loop that blogging does create.

COOK Report: He answers his email in public?

Michalski: For example, someone will send him an interesting article, or comment or insight and instead of answering in private, one-on-one, he will go over to his blog and post - hey this interesting thing just came in and this is what I think about it. In doing so he shares his thoughts with hundreds or thousands instead of only one. He does it with discretion and with a good sense of when something really private should be left out and the sender and or the organization represented should be anonymized.

This never ever happened before. All we ever had was pair-wise phone conversations where someone might be honest. Then we had memos which were normally pair-wise and occasionally go to the whole company. The more people the memo has to go to the less it actually says. And then we had external marketing materials. Those are even worse, because those materials have to represent everything that is going on in the company to the entire world.

Doc’s email does give him a really rich bucket of things to write about. If you treat it this way, blogging does have a feedback loop. People will email him stuff directly that they see he is interested in because. They know what he is interested in because they read it in his blog. This is new. He has been blogging for about six years now and he evolved very rapidly into his answering his email in public style.

COOK Report: How would you describe Dan Gillmor’s style?

Michalski: Dan has the brilliant insight that his readers know more than he does. Dan was the first journalist to adopt this outlook and to this day there are still too few journalists who really get this and do it this way. He would post about what he was looking into for his future writing. He would get leads and ideas and insights from his readership. He is very serious when he says my readers know more than I do. But his style enables him to become a hub for the attention of people who will pay attention to what he is paying attention to. He is a very good and crisp interviewer and communicator and he then writes back what he sees which in turn helps people understand how things work.

COOK Report: Is his current effort designed to help people understand the blog world and what it is good for and what it is not good for and to help them think about how to get into blogging effectively?

Michalski: Yes. Totally.

COOK Report: So a lot of what you do is to help people and companies who want to explore the new mechanisms of openness and trust do so effectively as they fight a veritable war on behalf of openness and collaboration against the forces who would maintain the walled gardens and vertical silos of control? And you have various groups who form and collaborate on the issue of how to make these complex systems perform effectively? And grow strong enough to resist any attempts to dominate them and control? Many of the software tools are those that have been developed to facilitate the ability of these groups to collaborate together.

The Battle Between the Walled Gardens and Open Fields and Learning How to Profit from Dynamics of Openness

Michalski: Yes, and you have just explained it in a refreshing way. Call it the battle between the walled gardens and open fields. We may be discovering all this for a second time because I think the world worked this way before we built all the walled gardens. We are relearning, somehow, how open-field dynamics work. And that they are very valuable and that for the very first time we have the ability to link everyone up and share materials all around the world easily and transparently. This is because of the Net and its connectivity. Before the Internet, it was easy to build walled gardens because the third copy of a cassette tape was a pretty terrible copy. And there was no way to share it easily, so who cared if someone made a remixed tape or ripped off a couple of cassettes. It was really hard to do on an industrial scale and it required physical goods that were expensive. With the Internet, the connectivity has been blown through the roof and the costs have fallen through the floor.

This combination means that the dynamics of openness now pay off very quickly and very powerfully. I’m in several different conversations and have been to several different conferences where the question is in the air: “does product innovation actually work better openly?” And if so, in what realms? Is it only for software or only for the Wikipedia? Why and how is this the case? Could you build the next toilet mop through open innovation? Maybe not.

Where does this line of reasoning end? Can you build hard products by open design? Would you get a camel which is a horse designed by a committee, if you tried to build a car by open design? I don’t know. I am not sure that you would. I think you might get really interesting variety of different sorts of cars that you could mess with.

Openness happens at different levels. In John Seely Brown and John Hagel’s Only Sustainable Edge they talk about the Chinese motorcycle industry and how the Chinese looked at motorcycles and said: You know, if we modularize these things through open component design thereby lowering the basic components costs, we can be a lot more competitive.

COOK Report: Speaking in terms of the work of these two men, I wonder what your thoughts are on Hagel’s writing in his Edge Perspectives blog where he talks about talent building and the role of corporations in doing that? They are talking about innovation in every field and the conditions that enable that. I am beginning to think the Asian mind is further down this path than the rest of us.

Michalski: I am actually very mixed on that. In some areas I think the Asians are stellar and absolutely outstrip what we can do – in other areas not at all. Consider for example the whole question of building social networks. At some level there is tremendous cooperation across China in business dealings but at another level there is no trust and almost no community and strange things are happening.

COOK Report: When they talk about talent building one begins to wonder if this is a prime requirement for any successful company. JP Rangaswami made it critically clear in his conversation with me that his most important goal is to create an environment where the best minds want to come to DRKW to work. Where and how do you see these issues as becoming paramount in global business?

Hagel’s essay on the quashed Dubai port deal pointed out that the high level management of the Dubai ports company was American and English and had begun innovating and talent building in the American and British merchant marine industry and when local conditions became stifling to their ability to innovate. The point he makes is they represented the top talent in their industry and when stifled they were free to go and set up shop anywhere. And that they did just this.

Michalski: Exactly. I think that this is happening world-wide.

COOK Report: How then do you see the dynamic of this mentality being played out world-wide? And the role of the Internet as an enabler?

Enabling Talent to Thrive in Open Communities

Michalski: The whole hunt for talent and the creation of viable communities that know how to work together is essential. Architecting the infrastructure for collaborative innovation that spans company boundaries using service oriented architectures and all the other stuff you talked about – this is in the background and is perfectly parallel to the general process you are talking about.

There are lots of ways of building talent and you can take an open or a closed approach to building talent as well. The part of this that I am really interested in is the natural way that talent bubbles up and out when you have pretty open communities that are collaborating.

There are a thousand kinds of talent. This is not a good example but if you talk to a company that uses the Myers Briggs Personality Inventory a lot, you will find that they are looking to blend different kinds of talent on their teams. You don’t want six Indian chiefs on a team – but rather some followers and leaders. In other areas you don’t want only creative types. You better have a mixture of creation, execution, vision and reality. What you need is this deep pool of talent that has a variety of aspects.

The example I do want to cite is open source projects. If you look at the Apache foundation and how Apache matured, you will find that different people’s talents became evident from the way the projects evolved. It used to be that your talent was somehow reflected on your resume and that as an ordinary individual you had maybe three or four resumes depending on what kind of job you thought you were applying for and what you thought that particular employer was going to look for. That’s kind of dumb.

Now your interactions in your blog and in the online social groups in which you participate become a kind of memory of who you are. Those on line exchanges really become the modern resume. Nature abhors a vacuum. The resume process – the old interview dance of “you lie to me, I lie to you” can be superseded by newer online tools.

COOK Report: Can it be said then that in an open, productive, and well-managed operation that the role of a director, a manager, or someone else in a leadership position is to create an environment that balances these issues of corporate vulnerability and enables talent to bubble up? From this bubbling up process he or she will get a pretty good idea of what talents, abilities and strengths do exist within the company, and that if they are a good leader, organizer, manager – such a person will be in position to help grow and organize productively the innate talent within the organization.

Michalski: Or hire in missing pieces of talent. Part of the makings of a really good manager is to be able to understand what is missing from the team and to be able to make sure it shows up. Totally. You can do this in an open way or a closed way and the dynamics are pretty substantially different although the human skills of noticing what’s going on are probably the same.

COOK Report: Elaborate on open versus closed please.

Michalski: Closed is how we used to do it entirely unless there was a very small community of people who knew each other. Now imagine these high school kids who have their Facebook and MySpace. Now by the time they show up years later for an interview, maybe they are going to make it illegal to search for your Facebook file, but somehow I doubt that. There will be no way to avoid knowing you were a profligate and otherwise irresponsible youth.

COOK Report: Maybe there is an opportunity for someone to create a talent-filtering spider to comb the Facebook archives and the net in general?

Michalski: Similar stuff is already here. Korn/Ferry is one of the big headhunters world-wide. Years ago I had a friend who worked there and he described the contact and prospect management software they had. They timestamp when they left you a voicemail message and they will then stamp when you called back and get an index of your responsiveness. That is how they evaluate candidates. If you are responsive they know it. Even if it was with four or five other people at Korn/Ferry whom you interacted with. They are being mindful that your ability to execute depends on your ability to be mindful of these things and they have a way to measure that mindfulness – so they do.

COOK Report: What’s your opinion of LinkedIn a as a talent bazaar?

Michalski: I don’t like it. You are making me realize why I don’t like it. The reason is that it looks like resumes. Orkut is actually more playful. I have actually recommended to several companies that they create internal Orkuts. (This is Google’s social network). It’s like LinkedIn only less business-y.

A Guide to the Relationship Economy

COOK Report: There are so many things going on. So many paths and tendrils out there, such rapid change. How does one cope with it all? How does one deal with the fire hose of data with still only 24 hours in the day? Is there any thing out there that can be used to help make choices of what to turn one’s attention to?

Michalski: Unfortunately, no. We are in that punctuated equilibrium phase where all this stuff is being figured out. What is exciting is that you are talking to these people like Hagel and JSB who are among the leaders of figuring all this out. Therefore you are in the middle of it. We haven’t formulated this properly. It’s what I am trying to write about.

This conversation with you was really helpful to me in crispening-up a way to approach a lot of these topics that totally makes sense so that people can grab hold of it and say “oh OK – I see, I am with you now.”

COOK Report: What we are engaged in everyday is a process of having conversations, but also figuring out with whom to have them and then how to get paid for having them by understanding better who needs the accumulated knowledge that you own?

Michalski: Exactly. If you can get yourself paid for continued investigation of these changes, this is the target and the goal.

Here is what I say to people: These are the changes that are happening. I will be your scout into those changes. This is why I call myself: “your guide to the relationship economy,” because the relationship economy is what I think a lot of this is about. That triggers a couple of good questions. Oh what do you mean by relationship economy? Oh I see. Great, great, great. And as a guide what you are doing is filtering what’s going on and then giving people tours and then provoking good conversations and hopefully leading to insights that will help them better understand the impact of technology on social systems and on business.

A European partnership is getting underway. Please check out Cook Report Europe

Contact Information