In the past, few stakeholders of any company would invest if they were aware that the company may prosper or whither on the whim of a user population. Viable choices with little differentiation are everywhere, so classic barriers to enter markets no longer apply. There are no such things as reliable monopolies on the web. Today, false faith in the past notion of stability has prompted investors to infuse these companies with tons of cash.

Of course, these companies, while they remain on top are close to impossible to out-market. Their competitors have little hope in taking them down.  This was the case when Ask, a rival of Google, ran their “The Algorithm Rocks” campaign. Instead of pulling market share away from Google, Ask managed to bolster Google’s own name recognition. Randall Stross points out in his book Planet Google that “three months after the [Ask] campaign was launched, survey results…showed that most members of the general public…assumed that the “we” [in the Ask campaign] referred to Google.”

Prom Queen companies such as Google do not need to fear their competitors. They are practically invincible due to their integration into the culture of a population. Their names become verbs in the lexicon of a society and they reshape the interactions of entire communities. So, they are extremely difficult to unseat. Microsoft, the king of marketing, will have a very tough time with the 2009 product launch of Bing. Microsoft marketing paradigm of bundling products is growing weaker as the market moves away from the operating system to the web browser as a platform for applications. Without OS bundling, Microsoft’s marketing strategy based on incrementally better search is extremely weak, just as weak as Ask.com.

As ineffective as competition is at unseating Prom Queen products, they can be felled rapidly by their own constituency. A simple technological omission or exclusionary policy can bring a Social Networking company down like a house of cards. This was the fate for most of the largest companies that originated these new Social Media enterprises. Friendster was diminished by their user-base when they started to exclude certain users from participation. Napster was virtually regulated out of existence.

Change and restriction are an extremely dangerous business for a companies on top and yet many feel they need to continually innovate to keep their rank. Equating change with success is the fallacy that Craig Newmark in the least elegant way, has proven with Craig’s List. Craig’s List is a graphic designer’s nightmare. It is a graphical eyesore that has refused to use any new interface technology available for the last 10 years. Yet it remains the top site for classified ads in the country. Craig’s List would never survive if it was introduced today, but it is a Prom Queen product and it’s popularity will keep it on top as long and it doesn’t betray, exclude or alienate its constituency.

For the established front runners like Craig’s List, change and innovation are necessary only behind the scenes. Innovation should be quiet, subtle, effective and offered as incremental additions to the current user experience.  Any drastic change which unseats the original success of the product will be its undoing.

This was the case with a Prom Queen product called Lotus 123. In the 1980s and 1990s. Lotus 123 was the preeminent spreadsheet software. It’s only real competition was Microsoft’s Excel, which was forced onto the market as a virtual ripoff of Lotus 123 which was bundled with Microsoft Windows as part of Microsoft Office and given away for free on new computers.

Even with Microsoft giving the product away for free, Lotus 123 continued to hold market share until 1997 when Lotus (owned by IBM) made a catastrophic mistake. In order to bring 1-2-3 up to technical standards, the code needed to be rewritten for 32 bit processors which were becoming ubiquitous in the market. Lotus rewrote the entire code and relaunched the product. During the upgrade, the developers took the opportunity to also change the user relationship with the software including more powerful coding choices like LotusScript (a visual Basic derivative) and navigation that relied less on the keyboard and more on the mouse.

Instead of offering these changes as alternative features to the product, the designers buried the original user experience. Millions of users who had memorized keyboard shortcuts and the simple-to-use 1-2-3 macro language were all of the sudden given an alien product that they had to relearn. Now the choice to purchase an upgrade of 1-2-3 no longer seemed desirable next to Microsoft Excel, a free product already installed on their computers that managed the same task.

In the case of Lotus, the decision to innovate at the expense of the paradigm they had created, reduced their market share from industry leader to under 10% and then eventually to less than 3%.  Similar to the fate of Friendster , Lotus blatantly ignored the loyalty of their user base. Lotus designers were out of touch with their own fans and it cost them their market.

So what does a Prom Queen product company do when innovation is necessary. Even sites that seem to be motionless are constantly engaged in quality assurance and addressing the concerns of their constituency. These incremental changes mostly go unnoticed but are critical to maintaining a status quo that was formed by the site itself.

The best way to innovate is slowly by testing the market. Companies such as Google do not redesign their software UI and hope that their customers will embrace the change. Instead, they offer their latest interfaces as an option. Customers are not obligated to make any changes. Next, Google watches and tracks the success of the innovation. If a critical portion of the community adopts the change, they can safely pull the plug on the old interface. This works much better then the New Coke approach to upgrading software where you abruptly switch your formula. Coca-Cola was smart enough to bring back the original as soon as they realized their mistake. However, on-line businesses must be able to react faster than soft drink companies.

Perhaps the biggest lesson in the Prom Queen business is AOL. Nicolas Carlson of The Business Insider rightly points out that “AOL used to be a Social Network long before the term was even coined.” They may not have been aware of what could be done with such a large network but they were able to use critical mass to successfully bring Instant Messaging to the consumer market with AIM. This could not be accomplished without an already established massive community.

AOL managed to make every mistake it could as a Prom Queen. The company had locked itself into the web service market long after content and bandwidth increases ruled out the need for anything but the open internet. Yet, even with the web available for free beyond the paid subscription of AOL, users continued to stay with AOL. Ease of use and loyalty were enough to keep the user base committed. All AOL had to do was change the business model of AOL without changing the services it was offering it’s customers. The company already knew that it could roll out new technologies with massive adoption because it had the largest user base. Instead, AOL changed it’s browser, changed it’s subscription model, let it’s user tools languish and resigned itself to sit back and watch as Yahoo and others increased it’s market share by offering a similar AOL experience.

To this day, AOL still brings a reasonable revenue stream to Yahoo through a user base of almost 30 million users. Years ago they lost their title as Prom Queen but they continue to have  a formidable following. This is the case with MySpace, Friendster, Lotus 123 and even Napster. These leading products fell because they failed their constituency. Now they must enter a new chapter in their lives, the niche market and specialization, which, after all, is not the worst a consolation prize.

- Marc Dreyfus

Could this type of multitasking make you stupid? According to studies conducted by Dr. Clifford Nass at Stanford University, the answer is “Yes.” Apparently if you are a chronic media multitasker, then you are affecting three components of deep thought; filtering, filing, and switching.

The first, filtering, is your ability to discern between incoming information that is relevant versus information that is not. Filing is your ability to manage memory or file information in your head. The third, switching, is your ability to switch with ease from one task to another.

Now, to be clear, the good doctor is talking about media multitasking and not task-based multitasking, which I haven’t been able to distinguish yet based on his writing. Furthermore, I believe that he is specifically talking about multitasking on unrelated subjects. His research did not address multitasking on related information that many believe reinforces memory and cognitive function.

One important exception to the rule that media multitasking diminishes cognitive function is music. Apparently, if you listen to music while you work, you will be ok.

For more information, check out Nass’ work at http://www.stanford.edu/~nass/research.html

Historically, businesses have spent a tremendous amount of energy trying to determine the location of corporate knowledge among the company employees. In the 1990s there were traditionally two ways to go about this process. The first was to create a profiling system. The profiling system would combine human resource information with a set of proclaimed skills that an employee would share about him/herself. The employee and managers would author the profile record. Then the information would be shared with the rest of the organization.

This approach led to a variety of problems. The profile tended to include biased and inaccurate information. Contributors who wanted to appear as high achievers would pad their profiles to make them look like stronger employees. Counter-intuitively, some employees would do the opposite and purposely obscure their abilities for fear of being bothered and overwhelmed by others in the organization looking for their assistance.

Another difficult problem was encouraging employees to continually maintain the data. Since employees are generally mobile within an organization and new challenges require different skills, many employee’s profiles would expire almost as soon as they were written. This was the nail in the coffin for manually fed profiling systems. They are still around but they are generally an expensive exercise in folly.

The second attempt to derive this information was through automated systems. Instead of having employees profile themselves, information about their abilities could be derived from searching through the documents they author and handle. By directing a search engine to ‘spider’ through documents written, edited, or forwarded by an employee, the system could make several determinations about the subject. Enough to make a much more accurate picture of the expertise within the organization.

IBM attempted this around 2000 with its Lotus Discovery Server product. The Discovery Server would produce a corporate taxonomy which included key concepts and terms that the business deemed valuable. The system would then search through all available documents to map relevant terms in a document to the taxonomy which they called a K-Map. In turn, the system would assign a value to the document based on it’s perceived usefulness by the organization.  Usefulness was determined through employee interaction with the document. The number of links to and from the document increased it’s usefulness. So did the amount of times the document was opened, forwarded, and cited. Furthermore, to avoid the expiration of the document’s relevance, the system tracked updates and revisions.

Tracking popularity and interaction with a document in the context of the organization’s taxonomy was a brilliant leap forward. It was much less biased and much more reliable than the arbitrary self-promotion profiling systems that came before. However, the system was terribly flawed. The system needed to be massively scalable and would require an overwhelming amount of processing power for the end result. It proved to be economically unfeasible.

Privacy was another issue. The system was only as good as the data that you fed it. IBM designers encouraged customers to spider through employee email because they logically decided that email applications contained the most relevant data. Although the system was only looking for key phrases and concepts that aligned to the K-Map taxonomy, there were very few customers who felt comfortable having the system riffle through their email.

So, with both manual and automated profiling systems failing to deliver the promise of measuring and identifying the intellectual capital of unstructured data, companies surrendered to the realization that extracting that information was too complicated, flawed, and expensive.

Then something brilliant yet simple happened in the commercial market space. Applications engaged in crowd sourcing started to appear. It is likely that many of these application designers were not aware of crowd sourcing when they started building their applications and they stumbled into it with the help of the new design philosophy of Web 2.0. Wikis, social news, and social bookmarking sites provide the best examples of crowd sourcing but it is the news and bookmarking sites that broke the ceiling on Information Value Analysis.

The concept of on-line social bookmarking was very simple in it’s inception. It solved the problem of accessing favorite websites without the need for a specific computer or web browser. By placing the bookmarks on the World Wide Web, users could access them anywhere. This was enough of an incentive to get a large consumer audience for the product.

Yet it was the analysis that you could derive from the behavior of thousands of users that became extremely useful. By observing the bookmarking choices of a community, you could extrapolate the value of the target website to that community. Better yet, the cost of gathering that data was almost zero because the workload was distributed across the community.

Social News Websites were originally invented to remove the editorial bias from news publications. Companies such as Digg realized that the perceived value of an article would determine it’s placement on the newspage and many articles that were significant to audiences were buried and went unread. To remove the determination of the value of the article from the publisher, Digg built a site of news article links that readers could rank by voting. This act of voting on the news assigned the real value to the information to the Digg community.

This technique of identifying value through user interaction is the key to solving the profile and contribution dilemma that haunted companies in the 1990s. Not only do these systems work more efficiently, they are a fraction of the cost to build and maintain.

In the consumer marketplace, companies such as Facebook are well aware of the power of identifying the value of information. Their success is further strengthened by their ability to reach infinite numbers of communities and return information that each instance of community finds relevant. The design of social networking tools took social news one step farther by creating fluid communities instead of one community that defines itself into isolation.

Now, with these social software tools available in the market, companies can revisit the conversation around knowledge management, profiling, and expertise location. Of course, companies should look at tools they can bring in house or at least subscribe to as a private service. Once the infrastructure is set up, the next step is to create a positive social networking culture within the organization. This will happen automatically when the content of the social networking system reaches a critical mass of information. Once workers realize that a social network can be the fastest means of identifying and retrieveing valuable information, participation will start to expand exponentially. Companies that realize how Social Networking tools can not only manage our social lives but act as a gateway to solving age old business problems will find themselves with a critical market advantage.

-Marc Dreyfus

*[The term is also used by engineers to decide the cost/value of uncertainty within a study. The avoid confusion, the full name of the concept is ‘Unstructured Information Value Analysis.’]