In a guest blog post on Om Malik's site, Robert Young brilliantly lays out the changing dynamic between companies and communities as more of tomorrow's content and services move on-line.

I'm going to quote it heavily here because he's saying things which are very important to me and the work I try to do...

There’s a certain level of what (for the lack of a better phrase) I will refer to as cognitive dissonance when you run a business based on community. And that’s that you quickly realize that the members of the community feel strongly that the service belongs to them, and the control that you, the corporation, think you have is actually, in large part, an illusion.
After all, a community, by definition generates its own content, its own style and culture… it’s all by the people, for the people. As a result, if you’re an executive at such a company, you oftentimes feel more like a politician than a businessperson. To do anything that would suggest that you, as the corporation, owns and controls the service (and in effect, the community) is, well, akin to heresy. This is something Rupert Murdoch will have to contend with, as the new owner of MySpace.
As the worlds of media and technology collide with a force that can split an atom, such cognitive dissonance is a natural by-product of the fact that more and more content (and code) is being produced by the people themselves. At the same time, with the increasing digitization of media, the definition of “distribution” is also changing from channels previously rooted in the physical world to one where people themselves become the new distribution channels via tightly and loosely-coupled social networks connected together by the universal language of IP and bits.

It wasn't until I read the article a third time that I made it to the end and realized he closed with a compliment to Yahoo! (I got sidetracked writing this post before I made it to the end.)

It won’t be the corporation that locks its customers into a walled garden any more; instead, it will be the people themselves who create their own high switching costs. For instance, if you are an eBay seller, your switching cost is not so much the relationship you’ve created with eBay itself and the store you set up, it’s the reputation and trust you spent years building with fellow members of the community. Similarly, if you are a member of MySpace, it’s not the web-page and blog you spent time constructing, it’s your social network of cyber-friends you’ve cultivated and accumulated over time.
At the end, the lesson is one of a paradox. As the power shifts increasingly towards community, the corporation loses its grip on the traditional means of control. Yet, by letting go of control, the corporation creates an environment where the community willingly creates its own switching costs. Such changing market behavior, which is structural and permanent for any industry being usurped by the Internet, must be met with a corresponding shift in corporate mindset. Otherwise, a “generation gap” will exist between the members of management themselves (old vs. new media), as well as the company and its market. In my view, if there is one company that seems to grok such dynamics better than anyone, and is in the process of executing superbly against these new set of challenges, it’s Yahoo!

When I first skimmed the article, I decided that it did an excellent job of summarizing why I get into many of the arguments (I mean "discussions") that I do at Yahoo. I've got one foot inside the company and the other firmly planted in the community. The two are often at odds and, more often than not, I side with the community.

This makes some people at Yahoo very unhappy, but I really believe that it's in the best interest of Yahoo. I'm not doing it just to be a pain in the ass. Some people are really good at running a business. I like to think that I do a decent job of representing community interests when I try to do so. And making sure the community is heard loud and clear inside the company walls helps keep us honest. That's why I say many of the things you read here.

The two camps need to better understand each other.... somehow.

The transition from the old way to the new is not easy, but we're making real progress. Some groups are getting their heads around it faster than others. Having the Flickr folks in the Yahoo family helps. Flickr is all about community. The same goes for Chad, Danah, Alex, and many of the others who've joined Yahoo this year, either through acquisition or relentless pursuit of them. The more community-minded folks we hire, acquire, and breed, the better off we are in this brave new world. There will be more before this year is over.

If there's a good way to make sure everyone at Yahoo reads Robert's post, I'd like to find it.

Posted by jzawodn at September 08, 2005 10:28 PM

Reader Comments
# Nida Zada said:

Fantastic post.

"Yet, by letting go of control, the corporation creates an environment where the community willingly creates its own switching costs."

Exactly - the best way to create a strong community and a strong product.

on September 8, 2005 11:33 PM
# Nick Wang said:

"If there's a good way to make sure everyone at Yahoo reads Robert's post, I'd like to find it."

Good question, ask about it on backyard! :D

on September 9, 2005 12:43 PM
# Right On said:


Though I may not always see eye-to-eye with you, this post is really on the money. Not only should every employee @ Yahoo make a point to read it, but *all* companies in SV should embrace the philosophy.

It really is all about building products/delivering services which inspire a strong following, as opposed to letting the [generally] clueless marketing types try to figure it out (no offense to anyone in the Marketing dept). It's not that those guys/girls don't care (and aren't scary smart), it's just that they lack the first-hand experience to be inspired.

on September 9, 2005 07:05 PM
# Joe Zawodny said:

So, should I imply that the first to market with a good product will capture the 'space'? What does it take to get the community to evolve? How do you one-up an eBay, an Amazon, or a Flickr?

Flickr is an interesting example. It has a multi fasceted community, but I fear that they'll lose parts of it by pandering to a smallish clique. What happens when you develop a rich and fertile service and a small segment of the community ends up driving it into the ground? How do you keep a pulse on what is happening and what actions can and should be taken to "police" things? How do you protect the company and the shareholder value? Without investors there is not service - for long.

on September 9, 2005 08:18 PM
# John Dowdell said:

It can be a difficult thing, being the canary in the coalmine.... ;-)

Neither group is right all the time. Each has valid interests. It's when their interests do not really mesh up that there's friction. Some of us are the oil that helps find ways for these two massive interests to get along.

"This makes some people at Yahoo very unhappy, but I really believe that it's in the best interest of Yahoo." Do you have executive-level support for saying what you see, and what you think will happen? Execs are responsible to the shareholders, and so will take eventual responsibility for any failure to satisfy customers. Do you have internal allies when you need to get a point heard by a local decisionmaker...?

"It wasn't until I read the article a third time that I made it to the end..." That's another problem, all right. ;-)

on September 13, 2005 05:23 PM
# Nivi said:


This awesome paper gives an economic justification for building communities rather than just broadcasting or focusing on network effects:

on September 15, 2005 02:51 PM
# Stefan said:

Actually the relationship between companies and communities is a very hot topic in research at the moment. Do any of you know about interesting cases where ideas of a community have been commercialized by a company? I am thankful for any hint.

on August 18, 2009 08:26 AM
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