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Achieving LongevityHow Great Firms Prosper Through Entrepreneurial Thinking

Jim DewaldUniversity of Toronto Press, 2016224 Pages

₹ 1685.15/-

Non-ObviousHow to Think Different, Curate Ideas & Predict

Rohit BhargavaIdea Press Publishing, 2015252 Pages₹ 1606/-

Leading with Noble PurposeHow to Create a Tribe of True Believers

Lisa Earl McLeodWiley, 2016256 Pages₹ 374/-

The Laws of Disruption

Basic Books, a subsidiary of Perseus Books LLC.304Pages₹ 1400/-

The Future

Business in the Digital Age

Larry Downes

Harnessing the New Forces that Govern Life and

Power Forum is pleased to bring out its second issue of Good Reads.

In this issue we are covering the areas of Strategy through four books, namely:

1) Achieving Longevity

2) Non-Obvious

3) Leading with Noble Purpose

4) The Laws of Disrup�on

Good Reads will be providing you the insights from these books through key Take – Aways and Summaries.

For those who would like to go into details and are interested in reading the complete book, details of the author, publisher, etc. are

also provided at the cover page.

Good Reads Issue 2, January 2017

Achieving LongevityHow Great Firms Prosper ThroughEntrepreneurial Thinking

Take-Aways

• Many businesses copy other companies and aren’t innovative, and most executivesaren’t prepared for sudden shifts in market conditions.

• Leaders would like their companies to survive, but few firms earn “longevity.”

• Businesses can increase their longevity with ideas and behaviors that boost innovation.

• In the 1900s, businesses innovated, mass-marketed and commoditized three “generalpurpose technologies”: “electricity, the telephone and the internal combustion engine.”

• Ford democratized innovation; he cut car costs so average people could buy them.

• Management education focused on commoditization, not on how firms should functionduring intense change.

• Management expert Peter Drucker advised entrepreneurs to concentrate on opportunityrather than risk.

• Firms avoid new ventures for several reasons, including, “If it ain’t broke, why fix it?”

• Innovations must jump “cognitive, resource, motivational” and “political” hurdles.

• Explore entrepreneurial innovation while holding onto your “strategic focus.”Demonstrate devotion to your new venture but prioritize your firm’s longevity.

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Relevance

What You Will Learn

Review

Summary

“Businesses ingeneral, and businessleaders in particular,have lost touch withthe all-importantentrepreneurial spiritthat drove growth andprosperity in the past.”

“We may perceivemassive and rapidchange today, but ourperspective is relative.What strikes us aschanges are actuallyshifts toward greaterefficiency, exploitationand commoditization.”

Seeking “Longevity”Many businesses no longer try to create new ventures. Instead, they copy others. Emulatingother firms can reduce a company’s risks and give its leaders the sense that they arecompeting in a stable market with the prospect of healthy returns. Unfortunately, seniorexecutives often don’t prepare for the impact a dramatic change in market conditions couldhave on their company.

Corporate leaders often hope that their companies will survive long after they are gone, butfew firms last over the long haul. Instead of prioritizing longevity, businesses tend to lookfor ways to cut cost or to increase cost-effectiveness. However, an organization can extendits life span if it encourages “entrepreneurial thinking and capability development thatrewards innovation.” Experts who see today’s business environment as being in the gripsof an accelerated rate of change suggest that companies must seek “sustained competitiveadvantage” if they wish to endure.

“General Purpose Technologies”As fast as change is happening in today’s corporate world, it unfolded even more quickly inthe 20th century. The advent of three general purpose technologies (GPT) – “the lightbulb/electricity, the telephone and the internal combustion engine” – transformed the globaleconomy. Companies raced to commoditize these advances in several stages. When peoplelearn or invent something new, that’s an “innovation.” Preparing the innovation for marketis “democratization” and continually improving it encourages market “exploitation.”

By mass marketing cars, Henry Ford “democratized” the internal combustion engine. Whenhe started, manufacturers sold a car for about the cost of a home. Using “standardization”and the assembly line, Ford reduced the cost of the car. He democratized it by making itavailable to the average person. Then, he steadily improved it. The lightbulb underwent asimilar process. As its price fell, its affordability gave people an incentive to connect theirhomes to the electrical grid.

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Most people argue that the rate of change has accelerated. However, University of Calgary strategy professor Jim Dewald makes the case that change actually has slowed markedly compared with the pace of change a century ago, when the motorcar, the telephone and the electric lightbulb shook up the global economy. Since the early 1900s, businesses have concentrated on commoditizing these technologies. If they are rigid, that focus could put them at risk as fundamental changes now further transform technology and the economy. Companies can increase their “longevity” by abandoning rigid forms of strategic planning and encouraging thinking and behavior that boosts innovation. It recommends Dewald’s provocative thesis to entrepreneurs, business owners and leaders.

In this summary, you will learn: 1) Why employees disengage, 2) How organizations can prioritize meaning over profits, 3) What having a “Noble Purpose” accomplishes, and 4) How to identify and activate your Noble Sales Purpose (NSP).

“The last real periodof change occurredbetween 60 and 100years ago, and itresulted in a one-timequantum shift broughtabout by the decliningcost of transportation…and the ubiquitousconvenience of a plug-in world.”

“These changes droveeconomic growth in the20th century, but thatengine is wearing out.”

“Sticking to a perceivedsustained, competitive,resource-basedadvantage can lead toonly one conclusion –failure, brought aboutby the inability to adapteffectively.”

“Only throughsuperior leadership,innovation and effectiveimplementation canfirms survive andprosper.”

As companies raced to commoditize the car, the lightbulb and the telephone, the study ofmanagement focused solely on this process. That single-mindedness left the discipline ofmanagement without the know-how to cope with the abrupt change generated by additional“GPT innovation” and its extension into mass markets. Going forward, entrepreneurialthinking could fill this void. Generally, executives hope to identify long-term competitiveadvantage using strategic planning. Once they achieve that advantage, they expect it to last.But corporate experience since 1970 suggests that competitive advantage doesn’t endureamid rapid change.

Traditional management research failed to understand or demonstrate how firms shouldfunction and build in longevity during great change. It didn’t fully appreciate the role ofleaders. To catch up, businesses must adopt a flexible approach based on “entrepreneurialthinking and corporate entrepreneurship.” Leaders need the knowledge and agility to decidewhen to stay in a market or leave, and must recognize the demands of change in technology,the market and the economy.

Countering ChallengesIn times of change, companies face a common challenge: adjusting their mission andproducts or services to neutralize new rivals. When Honda began in 1946, it mademotorcycles. Today it regards its business as involving anything that has its own engine. In1902, 3M began as a mining company. Today, it features a range of products that includeScotch Tape, Post-it notes and cleaning supplies. These corporations survived by varyingthe nature of their business and being able to change over time. Honda and 3M show whyleaders must embrace a quick-response, agile entrepreneurial culture to thrive long range. Ifthey want long lives, corporations must think like entrepreneurs to adapt to market changesand shifts in economic and global conditions.

From Poverty to Wealth“Business and management schools have yet to develop systematic approaches topreparing future managers to think like entrepreneurs.” People tend to associate the word“entrepreneur” with someone who gains wealth by harnessing individual acumen, but nowentire companies must become entrepreneurial and embrace “strategic entrepreneurship.”This approach to gaining competitive advantage combines “corporate entrepreneurship”with “strategic management,” the approach companies traditionally use to gain competitiveadvantage by using or redeploying existing assets. Strategic entrepreneurship benefits firmsthat seek longevity primarily through increasing their agility and adaptability, yet leadersfind it challenging to execute. They know they need entrepreneurial thinking to discoverunconventional opportunities in unsettled times. Even in stable environments, companiesrely on critical thinking. During rapid change, they must contend with “disruptiveinnovations” that pop up when a new product supersedes an existing offering. The producersof the earlier product keep going, but at increasing risk. The creators of disruptiveinnovations don’t carve out just a small market segment. They cause a major shift in theexisting market, overturning firms that lack an entrepreneurial strategy.

The Executive’s JobManagement expert Peter Drucker (1909-2005) saw “innovation and entrepreneurship,in fact, as part of the executive’s job.” He galvanized research into entrepreneurshipas a discipline. Earlier academic work had focused on entrepreneurial psychology andwillingness to take risks. Drucker suggested, instead, that successful entrepreneurs shouldconcentrate on opportunities, not risks.

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“Efforts to build strongcorporations createdefensive force fieldsaround the very idea ofnew ventures.”

“Today’s managementeducation curriculumis driven almostexclusively by the studyand investigation ofwhat worked in an eraof exploitation, notinnovation.”

“The foundation ofstrategy is strategicplanning, whichoriginally entailedestablishing goalsand objectives andsetting growth patternsintended to secure firmlongevity.”

“Corporateentrepreneurshipemanates fromwithin an existingcorporation. It mayinvolve establishing anew subsidiary, or itmay represent a shiftin the core focus of theexisting firm.”

Interface Global, the world’s largest modular carpet manufacturer, opened in 1973 with asimple goal. Founder Ray Anderson, a chemical engineer, wanted to expand the modularcarpet market. In 1994, his colleagues asked him to explain his perspective on theenvironment. Anderson lacked a coherent view, so he decided to create one. He set out toensure that, by 2020, Interface’s work would have no negative environmental impact. Tothat end, it manufactured “carpet tiles” made entirely of recycled carpets. Anderson diedin 2012, but Interface remains committed to his vision and still leads its industry. It setsan example of corporate entrepreneurship that led to sustainability and that works withina clear, purposeful management context.

Boosting SustainabilityNucor Steel has overtaken other steel manufacturers to become North America’s largest.When it acquired a steel joist manufacturer, Vulcraft Corporation, Ken Iverson came in torun it. Iverson revolutionized the industry by optimizing steel manufacturing using the mini-mill process, which eventually produced high quality steel. He understood the commoditycycle and purchased other steel manufacturers when they faced tough times. When the steelindustry did well, Iverson built up cash reserves and used them to acquire many rival firms.Nucor’s success derives also from its egalitarian culture. It decentralizes management andencourages workers to optimize their processes and improve quality. It rewards good work.Nucor has endured for more than a century.

Many companies that take an entrepreneurial approach tend to have open, democraticcultures. In 1958, Bill and Genevieve Gore founded W.L. Gore. They sought to establishan egalitarian organization that wasn’t run entirely by senior executives. Though it hassince added structure, it has produced more than 1,000 products while functioning in abroadly democratically manner since its founding. IBM and 3M also successfully combineentrepreneurship and longevity.

Fear of FailureMost entrepreneurial initiatives fail, but firms that don’t attempt new initiatives also fail.Leaders need to recognize 12 obstacles within a firm that can prevent it from tryingnew projects:

1. “It’s not our business” – Sometimes, firms veto projects because they lie in areas toofar from their main activity or they don’t know if they could make money from them.

2. “It’s not a business” – Firms (and experts) sometimes don’t see the moneymakingpotential in an idea. For example, when Fred Smith proposed an overnight deliveryservice in a college paper, his professor marked it as “an unworkable idea.” Smith laterfounded Fed-Ex.

3. “It’s not big enough for us” – Companies tend to embrace only big ideas.4. “It wasn’t invented here” – People may reject an idea because they didn’t think of it.5. “It was invented here” – Firms see a new in-house idea as inferior to a market leader.6. “We’re not cannibals” – Sellers fear that a new product could gut their

existing offering.7. “It ain’t broke, so why fix it?” – This is the main reason companies don’t pursue

entrepreneurial ideas – and sometimes it’s a good reason.8. “Great minds think alike” – Groupthink rejects “descending views.”9. “Customers won’t/don’t want it” – Clients may not know they’ll love something new.10.“We’ve never done it before” – When an innovation changes your field, “act fast.”11.“We’re doing okay as we are” – This is the “success trap.”12.“Let’s set up a pilot” – This is a valid strategic choice, unless it’s just a delaying tactic.

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“When a corporationmakes entrepreneurialchoices, it is replacingsomething known andpreviously successfulwith somethingunknown, untested andunreliable.”

“The only sustainablecompetitive advantageis an organization’sability to learnfaster than thecompetition.” (PeterM. Senge, “The FifthDiscipline”)

“The seeds oflongevity are found inentrepreneurial thinkingand innovation – inexploring ways to adaptcorporate and businessstrategies in response tomarket, technological,and social and culturalchange.”

Jumping HurdlesW. Chan Kim and Renée Mauborgne of Blue Ocean Strategy fame identify four kinds ofhurdles that can impede your organization’s willingness or ability to change:

1. “The cognitive hurdle” – This crops up when people see no reason for change.Institutional perceptual frameworks can block an understanding of the big picture.Leaders might not see changes that confront their market or understand how newtechnology will affect it. Make sure your senior officials experience this challengedirectly so they can shift their view of innovation.

2. “The resource hurdle” – Proponents of new initiatives must consider how theirbusiness will fund their ventures. This calls for management support and may requirepushing the company to reallocate assets and put them to more productive use.

3. “The motivational hurdle” – Companies need a psychological reason to change. Toforge a new way, identify opinion leaders who understand the organization’s culture andconvince them. Give them a prominent platform from which they can convince others.

4. “The political hurdle” – Seek support from the “key influencers” in your firm and fromoutside the organization. Kim and Mauborgne say to cultivate three types of supporters:“angels, devils and consiglieres.” Colleagues who could benefit from changes canact as angels. Work closely with them. Devils fear they could lose out with change.Understand their apprehensions, and address them separately from other colleagues. Callon politically adept colleagues, or consiglieres, who can spot trouble ahead and alert you.

Firms don’t operate alone. For a new initiative to succeed, you also need support from yoursuppliers. A firm has to find new sources for products beyond a current supplier’s range.

Opposition from CustomersBusinesses must deal with the greatest challenges from new initiatives when they launch,but any hazards lessen with time. Clients can be a stumbling block. You must convincethem to try your new product or service. When you add a radically different offering, youmay need to seek new customers. Buyers of new offerings want to trust the sellers, buthave less interest in the mechanics behind the offering. Companies must get customers toaccept their integrity by showing willingness to stand behind their goods. Don’t involveyour customers in the early stages of designing a product. Win their trust first, and thenensure excellent supply and support.

Explore entrepreneurial innovation while holding onto your “strategic focus.” Demonstratedevotion to your new venture while prioritizing your company’s overall longevity. Youcould increase uncertainty if customers wonder about your intentions. Some efforts tocombat new competitors could aid your rivals. For example, Walmart launched Sam’s Club,a warehouse club, because it feared Price Club’s and Costco’s big-box warehouse approach.These businesses operate without focusing just on product profitability because they alsoearn money by selling memberships. Sam’s Club didn’t add much to Walmart’s revenues,but its launch provided legitimacy to Costco. When a market leader like Walmart emulatedCostco, it suggested that Costco was doing something right.

About the Author

Jim Dewald is dean of the University of Calgary’s Haskayne School of Business where he is also an associateprofessor of strategy and entrepreneurship.

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Non-ObviousHow to Think Different, Curate Ideas & PredictThe Future

Take-Aways

• Fads are ideas or behaviors that enjoy brief popularity, while trends reflect a pervasivecultural shift.

• Those with the ability to perceive and curate trends can discern how today’s culturalripples become tomorrow’s cultural norms.

• “The Haystack Method” gathers news and stories and examines them to findconnections that form groups of ideas.

• Consider the shared concepts among several idea groups to find new trends.

• Social media encourage consumers to share intimate details with retailers so they cancreate personalized, even celebrity-style, experiences.

• The average person’s attention span has dropped to eight seconds. Goldfishmanage nine.

• The selfie-created cyberself represents the ideal self the poster aspires to be.

• Embracing your product’s quirks makes it distinctive and gives it humanity and charm.

• Small businesses can use their “Small Data” to improve service and bond withcustomers through social media.

• Connect apparently disparate trends to create a novel approach to your product.

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Relevance

What You Will Learn

Review

Summary

“Discoveringreal trends takesa willingness tocombine curiositywith observation andadd insight to createvaluable ideas that youcan then test to ensurethey work.”

“Proving trends is thefinal step in ensuringthat there are enoughexamples and concreteresearch to justifywhy an idea doesindeed describe theaccelerating presentenough to be called atrend.”

Tracking the Elusive TrendHolding traditional corporate viewpoints tends to blind marketers to trends. Theirperception of what trend spotting involves implies that the trend already exists and awaitstheir notice. Rather than researching a wide range of examples as parts of a possible whole,many of those who see themselves as trend spotters lazily promote fast-fading fads as real,up-and-coming social forces.

Those with industrial expertise may suffer tunnel vision and miss input that comes fromunfamiliar sources. Corporate peer pressure can transform conscious bias or wishfulthinking into a self-serving forecast. Even scientists who have credible data may lack theinsight to interpret it from the human angle. The press compounds the problem by offeringtrend predictions that are too unrealistically broad to play out over the long run. The workof discovering real trends is different. It requires curiosity, observation, thoughtful analysisand practical application. Successful trend predictors observe the ever-changing present,noting details for later reflection. They seek connections among industries and ideas.

Helpful Habits of Trend CuratorsBecoming a trend curator calls for thinking like museum curators who combine apparentlyisolated pieces into a connected collection that tells a gripping story. You can combine bitsof information with your original insights to detect and foresee a trend’s narrative. Trendcurators exercise several deliberate habits:

• They cultivate curiosity with thought-provoking books and documentaries, seek a rangeof diverse viewpoints and always ask questions.

• They are observant and pay close attention to details.• They are fickle in their attention, so they can examine many ideas briefly and file them

for later use.

In this summary, you will learn:r1) What methods you can use to research, recognize and curate emerging trends; 2) Which 15 startling trends may change your business model most radically; and 3) How to apply knowledge of trends to benefit your business and your customers.

After years of accurately forecasting trends in his annual Non-Obvious Trend Report, best-selling Likeonomics author Rohit Bhargava now reveals his practical methodology. He describes himself as the curator of thousands of bits of information that reflect the changing present. He looks for subtle but broad connections among many apparently disparate industries, behaviors and ideas. Then, he uses long-term analysis to find patterns that signal newly forming trends and to develop insights about applying them. His “non-obvious” thought curation process leads him a deeper understanding of people as interactive consumers and can enable you to anticipate near-future changes in behavior patterns and to use that information to improve your business. Bhargava illuminates his analysis of 15 top trends and tips on applying them with a step-by-step explanation of his forecasting process. It recommends this distinctive take on trend prediction to intrepid entrepreneurs and curious consumers.

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“Intersection thinkingis a method forcreating overlapbetween seeminglydisconnected ideas inorder to generate newideas, directions andstrategies for poweringyour own success.”

“Mastering the art ofgathering valuableideas means trainingyourself to uncoverinteresting ideas acrossmultiple sources andbecome diligent aboutcollecting them.”

“The best trendpredictions…shareinsights on what itmeans and what youcan do to use the trendin your own situation.”

“All of this attentionon the role of ouremotions and moodon how we learn, playand consume mediais leading to moreinnovation in how thesemoods can be trackedand measured.”

• They are thoughtful; they take time to consider others’ views and share their ownviews coherently.

• They are elegant in their style, and present their concepts with eloquence and simplicity.

“The Haystack Method”Catching a trend flying by within a barrage of information is as unlikely as finding a needlein a haystack. Yet if you break the barrage down into its individual reports, behaviors andideas using the Haystack Method, you may see connections that form the basis for trends.The five steps of Haystack Method are:

1. Gather stories and ideas from a wide range of sources, including broadcast and socialmedia, books, magazines, lectures and personal conversations.

2. Aggregate the ideas, grouping them by demographics, human needs and behaviors, oraccording to any other connections that appear.

3. Elevate those aggregated idea groups into wider patterns that form them into a trend.4. Name your trend with a simple, recognizable, yet not clichéd brand; try collective words,

alliteration or a new tweak on a familiar phrase.5. Prove that the trend is viable and offers a unique take on a cultural or social shift that

will affect widespread behaviors, now and into the future.

Trends in Culture and Consumer BehaviorThe trend toward “Everyday Stardom” reflects the ubiquity of social media channels, whichencourage people to share their private lives with the public. Consumers display ever-moreintimate information in their search for memorable, shareable experiences. Selfies, tweetsand photo walls imbue a person’s cyberlife with a sense of recognition, even celebrity.Retailers who set out to fulfill consumers’ innate need to express such daily star-powercustomize their services to each customer’s Internet-posted desires.

On social media sites, typical consumers craft themselves more attractive online personas.The online self-portrait is a key component of that finer version. This edited self reflectsthe trend of “Selfie-Confidence.” The person who posts selfies chooses the most flatteringphotos taken in the best light and at the venue. This cyberself represents the ideal self theposter aspires to be. Dismissing selfies as narcissism ignores the Selfie-Confidence trend.Staged attractiveness on the Internet bolsters a positive self-image. A 2014 survey showedthat 65% of teen girls feel more confident when they post flattering selfies.

In the “Mindfulness” trend, meditation has traveled off the yoga mat and into the corporatemainstream. Its goal is to maintain a constant degree of self-awareness, social awarenessand stress-soothing perspective. Google, the World Economic Forum and the SeattleSeahawks use this yoga-inspired method to encourage team relaxation, brainstormingand bonding.

Trends in Marketing and Social MediaFor decades, corporations sponsored traditional charities with hard cash, earning PR forsocial responsibility. Today, consumers demand “Branded Benevolence.” Corporationscaught up in this trend must show they operate a conscience and have a commitmentto good works and employee participation. Coca-Cola promoted its social conscience byinstalling twin vending machines in India and Pakistan, long-time enemies. Along witha streaming camera, each machine showed an interactive touch screen linking the twocountries. Buying soda required two people touching hands across the border. This videowent viral as consumers enjoyed promoting world peace.

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“Our online identity isbecoming a greater andgreater part of who weare to the world.”

“Social mediaand the rise of thepersonal brand enableconsumers to putthemselves at thecenter of their own lifenarratives, creatingpersonalized momentsand memories as well.”

“Being fickle isn’tabout avoiding thought– it is about freeingyourself from the timeconstraints you mightfeel around collectingideas by making iteasier to save an ideawithout necessarilyanalyzing it deeply inthe moment.”

“In a low-attention-span world, the mediathat wins is the one thatcan capture attentionin a moment – nomatter how fleeting thatmoment happens tobe.”

With the rise of Internet shopping, retailers discovered the “Reverse Retail” trend, a conceptthat combines e-commerce with physical shopping. New stores operate as showrooms,allowing shoppers to try clothes on or try product samples for future purchase online. Thistrend emphasizes lively entertainment at the showrooms. Customers leave with positivememories of warm, personal service. These feelings, more than any purchases, bindconsumers to the retailer.

In the “Reluctant Marketer” trend, ingenious companies encourage customers to advertisefor them. These firms concentrate on creating a product or experience so superior thatconsumers spread the cyberword. This subtle trend skips commercials in favor of well-researched, helpful content. Tomorrow’s marketing promises a blend of customer care andsocial media buzz.

Trends in Media and EducationMarketers have created the trend toward “Glanceable Content” – offering brief contests,short cartoons, heart-stopping headlines and other bite-sized bits to capture the web surfer’sroving eye. The National Center for Biotechnology reported in 2013 that the averageperson’s attention span had plunged to eight seconds, down from 12 in 2000. The averagegoldfish can manage nine. Curtailing their attention span helps consumers gain control overthe constant media barrage.

Corporations track web users’ product and media searches and choices. Simple trackinghelps companies tailor their products – and media qualify as a product – more accuratelyto consumers. In early 2015, Apple took a giant leap, patenting a technology that virtuallysenses a consumer’s mood. Companies can use this “Mood Matching” to recognizeconsumer emotions and offer tailored content. This radically alters media and advertisingstrategies and customer service.

Social media offer new access for amateurs and semi-professionals to conduct socialexperiments, even on a global scale, using “Experimedia.” For instance, in 2014, freelancejournalist Esther Honig emailed her photo to designers in 25 countries along with a simplerequest to make her beautiful. The retouched images the designers sent back reflected thefull spectrum of cultural beauty biases. Honig used her experience to write a feature storyon Buzzfeed.

Trends in Tech and DesignYour internal hardwiring responds to imperfection. Flaws or quirks that distinguish youfrom cookie-cutter conformity capture attention and affection. The trend of “Unperfection”surges from Ugly Christmas Sweaters to Ugg boots to the rise of artisanal products. Flawsinherent in handmade, artisanal items make them unique to each buyer, which in turn makesbuyers feel unique and emotionally bonded. Retailers respond by offering intentionallyflawed products.

Consumers welcome innovative technology that makes their lives healthier and safer.Maintaining the resolution to use these apps, however, fades over time. New apps takecharge of waning willpower with “Predictive Protection.” Fitness trackers use inactivityalerts to urge owners to exercise. Apps notify you of poor posture, or awaken you in syncwith your sleep cycle. Many car models feature blind-spot monitoring and assistance inchanging lanes. Some automakers are experimenting with self-driving cars to remedy error-filled human control.

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“A powerful story isa reason to believein your brand andproducts – and italways matters.”

“Customer care andservice is blendingwith marketingthrough social mediaengagement.”

“Preparing for thefuture starts withunderstanding today, asit always has.”

A controversial trend, “Engineered Addiction,” caters to the consumer’s natural compulsionto indulge in bad habits that feel good in the moment. Game apps epitomize a built-inmanipulation of the game player’s need for success, entertainment and loyalty. The KhanAcademy website harnesses this habit as an incentive to learn. Students who complete atopic or donate their time to tutor their classmates earn badges to mark their success.

Trends in Economics and EntrepreneursCorporations mount vast data gathering and analysis operations to improve and tailor theirproducts. Now, everyone can use his or her own “Small Data” – collected from onlineactivities and the myriad apps, from exercise bands to teakettles, that track personal details.Small data records your behaviors, ideas and ideals over time. The small data analyst canfind useful insights about his or her personal attitudes and behaviors. Small businessescan benefit from their small databases of current customers by bonding with them throughfeedback surveys or by encouraging customers to share websites and personal stories.

For decades, major industries like entertainment and publishing maintained product controlthrough hierarchies of distribution. Now, the Internet directly connects music and programsto a streaming audience. Eliminating the middleman this way epitomizes the “DisruptiveDistribution” trend.

The “Microconsumption” trend focuses on charging only for each transaction, no matterhow minute. Shared-ride apps like Lyft and Uber have forced companies to reconsider thepayment options they offer. DreamWorks Animation CEO Jeffrey Katzenberg predicts thatfuture movie streaming services will charge according to screen size, offering entertainmentby the inch.

Applying Trends to Your BusinessSuccessfully forecasting trends requires searching for and applying unlikely connectionsacross the cultural spectrum. Connect apparently unrelated trends to create new approachesfor your business. For example, recognizing the public’s desire for both nutrition andfun food, the ad agency CP+B pushed baby carrots with its “Eat ’Em Like Junk Food”campaign. Organize “Trend Workshops” to apply these trends strategically to meet yourbusiness goals:

• “Customer journey mapping” – This helps you apply trends like Everyday Stardomand Reverse Retail to each phase of your customers’ buying process.

• “Brand storytelling” – Use the Unperfection trend to share an emotional aspect ofyour product. Branded Benevolence emphasizes employees’ personal commitment byreferring to their individual histories.

• “Business strategy” – This explores ways to update or enhance major components ofyour business model, such as brand positioning, marketing or payment processing, usingtrends like Mood Matching, Selfie Confidence and Microconsumption.

• “Corporate culture” – To inspire a positive workplace, encourage your employees toconnect as a team and to invest in a personally meaningful mission statement.

About the Author

Georgetown University professor Rohit Bhargava predicts trends in his Non-Obvious Trend Report. He founded theInfluential Marketing Group and wrote the bestseller Likeonomics.

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Leading with Noble PurposeHow to Create a Tribe of True Believers

Take-Aways

• Firms that focus on the “money story” – instead of the “meaning story” – fuelemployee disengagement.

• Make your employees’ work meaningful by emphasizing your “Noble Purpose.”

• Aim to have a positive impact on your customers’ lives through your products orservices. That becomes your Noble Sales Purpose (NSP).

• Your noble sales purpose is the basis for an effective strategy of purpose-driven growth.

• Companies that put purpose first are more profitable than firms that prioritize profits.

• Gather employees into small groups; ask them to share their answer to three questions:

• How does your firm make a difference? How is it unlike its rivals? What do yourstaffers love about their jobs? Have the group members share their answers witheach other.

• In your formal NSP launch, assign high performers who are “True Believers” to act as“Noble Knights” and champion your NSP to help make it operational companywide.

• Use “customer-impact stories” to communicate your NSP to your employees.

• Make your NSP an essential component of your firm’s charter.

Relevance

What You Will Learn

Review

Summary

“Making money andmaking a difference arenot incompatible. Thisduality is the birthrightof every person on thisplanet.”

“Think about your ownbusiness. Is the drivingquestion, ‘How can wemake more money?’ Or,is the driving question,‘How can we makea difference to ourcustomers?’”

Monster.com and “Noble Purpose”During a Super Bowl broadcast, Monster.com, the job site, ran memorable “When I GrowUp” commercials featuring children saying, “When I grow up I want to be a yes-man or yes-woman.” Another said, “When I grow up, I want to claw my way into middle management.”

Monster’s ads delivered the message: “You deserve a better job, and we want to help youfind it.” That was Monster’s “Noble Purpose.” Founder Jeff Taylor connected the twoideas of a more desirable job and an improved life. This Noble Purpose paid dividends forMonster: In 2006, its website was one of the top 20 most visited on the Internet.

In 2007, a new team, led by CEO Sal Iannuzzi, took over Monster. Iannuzzi didn’temphasize better employment opportunities for job searchers. He cared about corporateearnings. Without a leader dedicating the company to finding more fulfilling jobs forapplicants, Monster’s purpose lost its nobility. Iannuzzi told employees his sole prioritywas “increasing shareholder value.” This new direction disappointed Monster employees.Some wrote online comments suggesting that Monster had “lost its soul.” Such employeecomments emerge when companies revert from a “purpose-focus” to a “profit-focus.”Money and profits matter, but they seldom inspire employees. Customers rarely care abouta company’s financial ambitions.

Iannuzzi cared about profits, not purpose. He had nothing to say about improving the livesof Monster’s customers. His decision to shift Monster away from its Noble Purpose provedto be a corporate disaster. By 2014, Monster’s stock price fell to an all-time lowD. uringIannuzzi’s tenure as CEO, its market capitalization suffered a 93% loss. Monster’s boardfired him in 2014.

Monster’s ReboundThanks to a new CEO Timothy Yates, Monster is on the rebound. Yates’s “all the jobs

Sales leadership consultant Lisa Earle McLeod teaches that when organizations infuse their operations with a “Noble Purpose” – when they focus on improving customers’ lives instead of only on profits – they inspire workers to regard their jobs with joy. She details how companies can discover their “Noble Sales Purpose” (NSP) and share it to motivate employees. Even while explaining the learning curve, heavy agenda of employee events and persuasive campaign that inculcating a Noble Purpose may require, McLeod warns leaders not to turn their Noble Purpose into the latest “flavor-of-the-month initiative.” Instead, she says, teach your employees how to identify their values, eexpress them in their work and explain why their NSP matters to them. It recommends her worthwhile counsel to senior leaders who want to refocus their organizations based on having a Noble Purpose.

In this summary, you will learn: 1) Why employees disengage, 2) How organizations can prioritize meaning over profits, 3) What having a “Noble Purpose” accomplishes, and 4) How to identify and activate your NobleSales Purpose (NSP).

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“As a leader, you’rethe lynchpin. If yourorganization is going torise above mediocrity,you have to be the onewho takes it there.”

“To fully leverage thepower of purpose, youhave to name yourpurpose and thenoperationalize it.”

“Noble Purpose isthe new narrative ofbusiness. It will enableyou to deliver betterresults and become thekind of leader peoplewant to follow.”

“Purpose is like aplant. You have towater it, you have totend to it [and] youhave to nurture it. (GAdventures founderBruce Poon Tip)

all the people” strategy turned its orientation from numbers back to customer welfare. Itrededicated itself to helping job searchers find satisfying work. Monster rediscovered itsNoble Purpose.

Many case studies demonstrate that when CEOs and senior leaders make purpose – notprofit – their firms’ primary objective, the corporate “emotional undercurrent” shifts.Everything changes for the good within the organization and higher profits inevitablyfollow. Sales take on a higher meaning, a “Noble Sales Purpose” (NSP).

HootsuiteHootsuite, a Vancouver, Canada software-as-a-service (SaaS) firm, deliberately putspurpose above profits. Its NSP reads, “We empower our customers to turn messagesinto meaningful relationships.” Founded by Ryan Holmes in 2008, Hootsuite provides aplatform for companies to manage multiple social networks efficiently. It has become theworld’s most popular social relationship platform.

The company doesn’t pay exorbitant salaries or give employees plush offices and specialbenefits. Hootsuite’s “True Believers” love working for the firm because of its NSP.Hootsuite promotes its Noble Sales Purpose to employees by sponsoring “Story Offs” –events in which employees who deal directly with customers share their best “customer-impact” stories in 90 seconds or less. They describe the positive results customers achieveby using the Hootsuite platform. The storytellers focus on compelling details that inspireemotion and validate the NSP.

Story Offs inspire pride and motivate Hootsuite employees. The company considersthe creation and communication of customer-impact stories so important that it kmesastorytelling a vital metric. Hootsuite’s methods bring extraordinary financial success. In t hefive years leading up to 2016, the company grew 56,000%.

Regardless of industry or product lines, companies that put purpose ahead of profitsexperience growth and stability. When a firm focuses on purpose, its employees concentrateon their customers. And customers reward them with consistent sales and profits.Employees of Noble Purpose firms stay motivated to do their best, enabling their firms totriumph over their rivals.

PurposeIn a discussion of purpose, Viktor Frankl, author of Man’s Search for Meaning , wrote, “Lifeis never made unbearable by circumstances, but only by lack of meaning and purpose.”People need their lives and effort – and their work – to matter.

Working at firms that lack purpose grinds employees down, making their jobs dishearteningand unpleasant. Most white-collar employees regard their jobs as demoralizing and can’tattach any significance to their work. Fully 51% of employees don’t feel engaged withtheir jobs; another “17% actively disengage.” Their disconnection is a symptom of alack of meaning in the workplace. This emptiness springs from companies putting profitsforemost. At firms where money counts and purpose means nothing, the “money story”dominates, not the “meaning story.” Money is seldom an effective employee motiva.tor“You can’t spreadsheet your way to passion.” Corporate leaders who view their employeesas commoditized line items will quickly learn that those workers regard their organi zationsonly as a source of a paycheck, not as a source of pride.

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“With no commonpurpose guidingthe organization,people tend to treattheir individual ordepartmental goals asorganizational goals.”

“Using the samebenchmarks aseveryone else in yourindustry doesn’t set thestage for competitivedifferentiation.”

“Relying on dataalone enables leadersto avoid the messyemotional work ofactually leading.”

“Bringing thecustomers to life invivid ways sparksgreater engagement,connection andinnovation. Nothumanizing thecustomers puts you atrisk. It’s the death ofemotional engagement.Customers wind upbecoming a benignabstraction or even anintrusion.”

Companies that put purpose first are more profitable than companies that prioritize profit s.Mike Gianoni, CEO of the cloud company Blackbaud, understands that “a healthy culture”includes honorable, trustworthy leaders who only hire those who care about the customersand employees who put clients’ needs first. A healthy culture turns a healthy profit.

Real-World SuccessExamples of what can happen when firms operate with Noble Purpose include:

• A 10-year study of 50,000 brands indicates that companies which prioritize customers’well-being and satisfaction grow at three times the rate of their competitors.

• Based on Deloitte’s 2015 workplace study, Deloitte chairman Punit Renjen said, “Astrong sense of purpose drives businesses to take the long view and invest for growth.”

• Salespeople who want to make a contribution to their customers’ lives – those sellingwith a Noble Purpose – outperform salespeople focused on sales “targets and quotas.”

Effective Business StrategyThe best growth strategy is to operate with a Noble Purpose that brings “meaning backinto the workplace.” These businesses serve customers best and motivate employeesmost effectively. Several factors differentiate companies that focus on profits fromh tosethat focus on purpose. Profit-focus firms ask how to increase earnings. They emphasizeshareholder value. Their leaders care about “quarterly earnings, bonuses, stock price” and“efficiency measures.”

Purpose-focus firms, which still work for a profit, ask how to “create more value forcustomers.” Their leaders urge employees to “make a difference in the lives of ourcustomers.” Senior managers seek innovative differentiation. These leaders focus on“company values, customer impact, industry innovation” and “employee engagement.”

Implementing a Noble StrategyIdentifying your firm’s Noble Purpose requires analyzing what matters to your customers,how your organization differentiates itself from its rivals and how to “ignite” employees’“emotional attachment.” To gather this information, assemble a cross-disciplinary atem.Have its members answer and discuss three questions to develop your NSP:

1. “How do you make a difference?” – Consider how your offering improves customers’lives. Be as specific as possible.

2. “How do you do it differently than your competition?” – Examine the “tangible andintangible” aspects of what makes your firm and the way it delivers its products orservices stand out.

3. “On your best day, what do you love about your job?” – This should elicit emotional– rather than rational – responses from your employees.

Once you establish your NSP, share it throughout your company. Start with a formal launch.Substantiate your NSP by sharing customer-impact stories. Make clear to employees thatyour NSP isn’t a “flavor-of-the-month tagline” or quickie corporate initiative.

The Customer-Impact StoryAn effective customer-impact story differs from a case study that covers only the facts.A customer-impact story – while true – appeals primarily to the emotions. It combinesfeelings with reason and facts. Launch your NSP by sharing your best stories throughoutyour company.

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“Every organizationhas an ethos: if notby design, then bydefault. The ethos is…collective beliefs aboutthe organization’sidentity.”

Prior to your launch, create “noble-purpose accelerators” to demonstrate that your companyis already putting its NSP into action. For example, expand your service times, place your“client mission” at the beginning of all sales presentations and include customer-impactstories as the opening elements for meetings. Noble-purpose accelerators should directlyalign with your NSP and should direct the narrative in the direction of your customers.

The NSP LaunchWhile introducing your NSP to your workforce in a full-fledged, public “official launch,”follow this sequence: Start the meeting or session with your best customer-impact story.Discuss the three questions that helped your team develop the NSP.

Ask audience members to meet in small groups to discuss their personal answers to the threequestions. Then, ask the groups to share what they develop. After they do, say, “These aresome of the same things the team and I recognized.” Then introduce the agreed-upon NSPto the audience. Tell everyone why you call it an NSP. Explain why the NSP matters t o youpersonally. Outline the purposes of the launch: to make work meaningful for employeesand to deliver maximum value to customers. Share your noble purpose accelerators.

After the launch, have department managers organize sessions during which employeesdiscuss how the three questions apply to their particular units. Instead of having employeesrelate how the NSP applies to internal customers, emphasize external customers – thelifeblood of any business.

These discussions have three components: 1) Elucidate the NSP, 2) tell an NSP story and3) have employees explain what the NSP means to them on personally. The NSP is whatemployees do, the story substantiates the NSP, and employees discuss how and why theNSP matters to them.

Develop plans to communicate the NSP and accompanying customer-impact storiesthroughout the organization. Line up enthusiastic supporters – your “Noble Knights.”Put them in charge of making the NSP an operational reality. Emphasize meatrnicds performance indicators that concern clients – “customer performance, client retention,customer comments, and so on.”

Hire “purposeful” people who want to work toward a Noble Purpose. Google, for example,wants employees to exhibit “Googliness.” Make alignment with your Noble Purpose animportant evaluative measure. Promote your Noble Purpose at every turn, including in theannual report.

To sustain your Noble Purpose through successive CEO administrations, ask the board tomake Noble Purpose part of the firm’s charter. These steps can transform employees intoenthusiastic True Believers and extend your Noble Purpose throughout your company andamong its clientele.

About the Author

Consultant Lisa Earle McLeod, a sales leadership expert, also wrote Selling with Noble Purpose.

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The Laws of DisruptionHarnessing the New Forces that Govern Life andBusiness in the Digital Age

Take-Aways

• Three laws direct the revolutionary changes wrought by computer technology.

• “Moore’s Law” says computer chip memory doubles every 12-18 months at no rise incost to the consumer.

• “Metcalfe’s Law” says networks become more valuable as more people join them.

• The “Law of Disruption” says that “technology changes exponentially, but social,economic and legal systems change incrementally” and struggle to keep up.

• Digital goods are “nonrivalrous”: Multiple people can use them simultaneously.

• As the digital world converges with the analog world, conflicts occur. New communityagreements must emerge to protect individual rights affected by digital technology.

• The right to privacy has dissipated. To protect yourself, share data pragmatically.

• No universal rights exist – on- or offline. Online firms should create “social contracts”that users must accept to gain admission to online services.

• Rather than pushing inapplicable existing laws into the digital realm, society needs newlaws – such as in patent and copyright – based on community and corporate standards.

• In the end, open access will triumph over treating digital creations as products.

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Relevance

What You Will Learn

Review

Summary

“Throughout modernhistory, technologicalbreakthroughs regularlysurpass the people whoinvent them.”

“As information hasbecome more central tothe economy, the failureto account for its valuebecomes dangerous.”

The Digital World and the “Law of Disruption”When a new technology is introduced, society must adapt. To understand how a majortechnological change creates far-reaching ripples, consider the effect of replacing metalstirrups with “flexible leather” stirrups in Europe during Charlemagne’s reign. This simpleinnovation provided medieval knights with more balance, efficacy and deadly success.Essentially, the leather stirrup “saved Europe.” But, rather than pay their knights directly,kings gave them land and the right to collect rent. This led to a structured feudal society thatoutlasted – by 1,000 years – the initial need to pay victorious mounted knights. If you buyproperty in some areas of London even today, you pay “tribute to the Duke of Westminster.”

Consider the effect of another disruptive technology, the railroad, which changed shippingin 19th century America. The courts had no “clear precedent to determine ‘fair’ rates” forrail shipping. Attempts to adapt old laws proved useless. As famous attorney Brook Adamsargued, “The character of competition has changed and the law must change to meet it, orcollapse.” The legal system had to accommodate this new technology and other disruptiveinnovations over time, from “reading glasses” to “the telegraph, antibiotics, automobiles”and the “atom bomb.”

Now, digital technologies are the disruptive innovation creating a sweeping revolution. Inthis case, as in many of the others, “technology changes exponentially but social, economicand legal systems change incrementally.” Thus, the “analog world” is reaching a pointwhere it can no longer keep up with “digital life,” forcing the emergence of a paradigmshift in which existing systems fall and replacement systems evolve to make better sense ofnew phenomena. Amid such a shift, older laws become useless because they are based onassumptions that no longer apply. The free market, while imperfect, deals with such changesbetter than formal legal structures, like courts. Understanding how such impact spreads isa modern challenge. Three laws explain the changes that digital technology is creating:

In this summary, you will learn: 1) How nine powerful change agents called the “laws of disruption” work; 2) How the digital revolution is changing society and 3) What you – and the legal system – must do to adapt.

Business strategist Larry Downes, author of Unleashing the Killer App, is much more specific than most authors about how digital technologies are changing the world – and why technology will advance even more and have more impact. While he addresses numerous issues that have received lots of attention already, Downes also looks beyond the headlines and the obvious implications of digital technology to examine the root causes of change. He pays informed attention to the law and legal structures. He also draws parallels between the digital revolution and the social changes wrought by other technologies, showing how such change ripples through the economy. He presents his findings as nine “laws of disruption,” which, somewhat confusingly, are the change agents of the “Law of Disruption.” This forward-looking book is fun, lively and useful. getAbstract recommends it to executives who are trying to plan for a shifting future and to those intrigued by digital technologies or social structures.

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“The Law of Disruptionhas initiated an armsrace between thosewho use technologyproductively andthose who use itdestructively.”

“Human beings thriveon interaction, andcomputers have givenus remarkable newtools to connect,collaborate andcommunicate.”

“To resolve the privacyproblem, businessesand governments needto recognize that it isnot violations of their‘right to be left alone’that people object to,but unfair exchanges ofvalue.”

“At the fringesof digital life,where technologyincreasingly mimicsand even exceedsthe opportunities forhuman interaction,digital pioneersare experimentingwith a range of newways of living andcommunicating.”

1. “Moore’s Law” – In 1965, Intel’s founder, Gordon Moore, predicted that computer chip“processing power” would double every 12-18 months without a rise in users’ costs.This has held true since. While inflation harms other goods, deflation rules computertechnology. Because software is manufactured and distributed electronically, it has “zeromarginal cost,” unlike the carrying costs of older consumer goods.

2. “Metcalfe’s Law” – “Networking pioneer” Robert Metcalfe said that networks becomemore valuable the more people use them. Every time someone joins Twitter, Facebookor, by implication, the Internet, that network becomes markedly more constructive.

3. “The Law of Disruption” – The dissemination of change is “uneven.” Various elementsof society struggle to keep up with rapid technological change.

The digital and material economies function differently. Most material products are“rivalrous goods.” If one person uses them, another cannot; two people can’t build a houseon the same site. Digital goods are largely “nonrivalrous.” Several people can use them atthe same time. Copying a song doesn’t use it up, destroy it or keep anyone else from usingit. This information-based digital economy follows five general principles:

1. “Renewability” – You can renew data, but not exhaust it..2. “Universality” – Everyone can access the same data simultaneously.3. “Magnetism” – Information grows in value as more people absorb it, which, in turn,

creates a network effect, drawing more people who want to learn.4. “Lack of friction” – The more smoothly information flows, the more valuable it is.5. “Vulnerability” – Criminals can harm or misuse information. They can destroy it, ruin

it or steal it (as in identity theft). In this one sense, data is like physical goods.

Disruption follows nine significant laws:

“Law One: Convergence – When Worlds Collide”When the physical world and the digital world clash, society has to negotiate the chaos. Thisjob has fallen largely to ill-equipped lawyers and judges, who have used legal reasoningand precedent to create the “emerging law of digital life.” Consider the repeated courtbattles between the Beatles’ Apple Corporation and Apple Computers. First, they foughtover the name. The courts resolved that by dividing up business arenas: the Beatles coulduse the name to sell music, while Apple Computers could use it for computers and relatedtechnologies. The convergence problem emerged with the development of the digitaltransfer of music and, then, of iTunes. Changing technology led Apple Computers into anew area where earlier delineations between operating areas no longer applied. Today, youcan download Beatles songs from Apple Computers. Such changes, though they take timeto unfold, are happening across society.

Should predigital rules for cellphones, auctions, radio stations and other realms also governWeb phone calls, auctions, radio stations, and so on? Court decisions have varied. Nationalboundary conflicts and issues concerning “digital vice” add complexity. Combatants tendto phrase their attempts to regulate digital vices (pornography, gambling) in moral terms.Actually, the fight is really more about who gets the revenue from regulating vice. Mostcourts have dealt with digital technologies’ power by trying to limit it. This generally failsbecause businesses and “consumers reject these artificial limits” and oppose out-of-datelegal systems. Emergent networks let tech users communicate and collaborate, so theyeasily can organize against obsolete structures. They seek a legal system that finds justice bycreating new approaches, not adapting old ones, given “the danger of using ‘legal reasoning’to analogize old cases to new activities.”

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“Encouraginginfrastructure is good;micromanaging it isbad. Nothing could beeasier in principle orharder in practice.”

“Perhaps the mostremarkable feature ofInternet economics isthat digital informationmoves with almost notransaction costs.”

“Open source turns thetraditional assumptionsof the copyright modelon their head.”

“The gap betweenthe potential and thehumanly possible, thechief byproduct of theLaw of Disruption,inevitably leads todramatic change in theshort term.”

“Law Two: Personal Information – From Privacy to Propriety”Personal information issues are shifting from matters of privacy to issues of propriety.People think that “they have a right to privacy,” but they don’t agree on its extent or origins.In fact, no universally accepted right to privacy exists. The digital world is changing howmuch data about private individuals is readily available and how other people can obtainit and use it. Governments protect people from different kinds of intrusion. Generally,European laws shelter citizens from corporate monitoring. In the U.S., the 1974 PrivacyAct protects citizens against government invasiveness. On the Web, personal informationis currency, so protect yourself. Offer your data pragmatically to meet your own purposes.If your firm collects personal data, safeguard it. People imbue their personal informationwith emotion. If you want it, ask delicately.

“Law Three: Human Rights – Social Contracts in Digital Life”Technological disruption has radically changed human rights. Some of this shift is due toexternal factors, such as the U.S. government’s increased monitoring due to its “war onterror.” Other changes result from the clash of the physical and digital realms in humanrights. Just as no universal right to privacy exists, no universally recognized human rightsexist either. Specific governments grant their citizens some rights, but which national rulesapply in the borderless digital realm? Ultimately, governmental attempts to protect civilrights in the digital world will fail. The best alternative is a set of “social contracts.”Facebook, Microsoft and other “application providers” have established codes of conductfor their sites. They set a precedent by asking people to accept their codes in order to gainadmission to their online communities.

“Law Four: Infrastructure – Rules of the Road on the Information Highway”In 1974, the U.S. Justice Department sued monopolistic AT&T “under federal antitrustlaws.” After lengthy proceedings, the government split AT&T into seven regionalcompanies. This required complex implementation and monitoring until the 1996Communications Act passed. This law set out to deregulate telecommunications, but theLaw of Disruption arrived first. While the U.S. government tried to decide what to do withtelecommunications and how to do it, the Web exploded into existence, generating newphysical infrastructures, such as fiber-optic cables, and new uses for old technologies, suchas using voice lines to transmit data. This demonstrates disruption’s fourth law: The digitalworld will change the existing infrastructure and its use.

“Law Five: Business – All Regulation Is Local”The U.S. Federal Communications Commission (FCC) played a major role at a time whentechnology firms held local monopolies over essential telephone communication and had tobe compelled to serve not-at-all profitable rural areas as well as profitable cities. The needfor such regulations – and even for distinguishing between phones and other communicationtechnologies – no longer exists. In general, governments are good at “establishing the basicprotocols” of an infrastructure and at helping to distribute “sparse resources.” Governmentsshould fund research and provide safety nets, but should not apply outdated, moralistic or– in the modern marketplace – regional laws to the digital world, which has bypassed mostsuch regulations. Many laws make online interactions harder without benefiting anyone.Instead, the public needs a “single uniform law of digital commerce,” a pragmatic, workingcode based on reality, not theory.

“Law Six: Crime – Public Wrongs, Private Remedies”In the digital world, “crime is just another kind of information use.” Like most laws,policing agencies generally are bound by geography, which limits their effectiveness

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“Your digital selfaspires to a better kindof civilization. Netizenswill not accept a formof government thatmoves backwards fromthe best that democraticsocieties enjoy today.”

“A computer is afundamentally newkind of machine. Oneminute it is a wordprocessor and the nexta thermostat regulator;even better, sometimesit’s both at the sametime.”

“The semiconductor, or‘chip,’ was first addedto a calculator in 1967,to a toy in 1978 and toa toaster in 1983.”

against digital crooks. Too often, officers don’t know the digital world. Data-gatheringfirms can self-regulate to some extent and can use the “Code of Practice for InformationSecurity Management” to reduce the likelihood of identity theft. The free market couldoffer insurance against identity theft, maybe with the support of very focused legislation.Consumer education could teach people to share data more wisely. Criminals also attack thedigital realm with spam and viruses. No single cure can mitigate these attacks, and banningthem won’t help. Often, the perpetrators operate under free-speech laws. The best defense isa multipronged tactic, using technological solutions and taking advantage of “the Internet’sdecentralized design,” which makes it resistant to disruption.

“Law Seven: Copyright – Reset the Balance”Existing copyright law is partly “archaic” and partly useless in a digital world, wherecopying files is so easy. Recent actions by U.S. lawmakers, such as lengthening the termof copyrights, including retroactive extensions, make the situation worse. Additional stepstaken by large corporations, such as instituting piracy-prevention mechanisms, also have anegative impact. These actions generate lawsuits, impede creativity and fail to block piracyor account for the digital world’s speed of change. Three actions would help:

1. Reduce the length of copyrights, making them more “realistic” and releasing works tothe public domain sooner.

2. Restore laws on “fair use” to keep companies from duplicating and selling content thatbelongs to other parties. This will reduce lawsuits.

3. Reverse the “Digital Millennium Copyright Act,” which stifles free speech and disruptsthe balance “between information producers and users.”

“Law Eight: Patent – Virtual Machines Need Virtual Lubricants”Current law tries to treat software like a patented product. This doesn’t work because ofthe speed with which software is developed and becomes obsolete, the nature of softwaredevelopment, and the way software reuses “prior art,” in that new programs are builton their earlier versions. The U.S. must change its patent laws. This reform must occurat the legislative level, not in the courts. The patent office is inundated, and the manysoftware patents being filed add to what are essentially very expensive nuisance suits. Somecompanies are “patent trolls,” that is, they file patents on everything and anything, claiminginnovations they did not invent nor manufacture.

“Law Nine: Software – Open Always Wins...Eventually”Software, digital life’s raw material, enables computers to function. Copyright andpatent laws now protect software, but the way these laws are drafted fundamentallymisunderstands the nature of software and the digital economy.

The logical future route is not to treat software as a product, but as an open resource, so thatthe collaborative nature of the digital world can renew and improve it continually. Ratherthan selling it, creators should give software away or sell it by subscription. In the end, openalways wins. Adapting systems for greater openness fosters additional innovation.

About the Author

Larry Downes, a partner with the Bell-Mason Group, is a nonresident fellow at the Stanford Law Center for Internetand Society and the author of Unleashing the Killer App.