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Common knowledge

Twenty-five years ago anyone who suggested that hundreds of thousands of ordinary people located across the world could, together, create anything of real value would have been seen as either an hopeless romantic or a complete lunatic. Nowadays user (consumer) generated content (UGC) is all the rage, especially in new media circles, and empires like YouTube and MySpace have been built almost entirely on UGC. And then there's Wikipedia, the online collaborative encyclopaedia that has the modest aim of one day being the greatest and most comprehensive repository of human knowledge ever built. If you don't know already, Wikipedia is 'open' in the sense that anyone can contribute and the resulting content is made freely available to anyone that wants it. It has a benign ruler (a foundation) but no leader. It's huge too. There are presently 4 million articles on Wikipedia in 120 languages. In contrast Encyclopaedia Britannica online has around 100,000 articles. Wikipedians (the content providers essentially) agree collectively what is and isn't allowed and multiple users create, edit and link the pages. Interestingly none of this was really supposed to happen, at least not in this manner. The original idea for Wikipedia (or Nupedia as it was then known) was to use experts to contribute content but it turned out that the experts weren't in the least bit interested. Now you might expect that using 'amateurs' instead of 'experts' to supply, agree on and edit content might be a good recipe for anarchy and online vandalism but a recent study by the journal Nature found that the quality and accuracy of Wikipedia articles is almost indistinguishable from that of Encyclopaedia Britannica. And vandalism is almost non-existent because the community stops any anti-social behaviour as soon as it starts. This is all quite interesting but to my mind the really interesting thought is what the consequences of Wikipedia might be. For instance, delicious philosophical questions such as 'What is truth?' can now be answered by a democratic community rather than an expert elite. 'Truth' is now whatever Wikipedia says it. Moreover, 'truth' is whatever Wikipedia says it is right now (which, by implication, may change tomorrow). And here's a final thought. The Internet is like Wikipedia but without the user editing facility. Wikipedia is an Internet where everyone owns everything. So if you'd like to contribute to the sum of all human knowledge log on and write or edit an entry of your choice. It will only take you five minutes.
Ref: The Atlantic Monthly (US), September 2006, 'The Hive', M. Poe.
Search words: Open innovation, distributed innovation, UGC, user created content
Trend tags: user created, open source

How big can big oil get?

In the future there will only be two types of company - very big ones and very small ones. And the oil industry could very well set the tone for what a very big company might look like. The world's big oil companies are in trouble. Taxes set by the countries that own the vast majority of known oil reserves are rising, as is energy nationalism, which is making the terms of future supply far from certain. Eighty per cent of all known oil reserves are now controlled by state-owned companies in countries that are, shall we say, struggling with the concept of democracy. This leaves Western oil majors (and you and me) very vulnerable. Moreover, reserves owned by the oil majors are all shrinking. In 1997 the big (Western) oil majors replaced 140% of their existing reserves. By 2005 this figure has fallen to 75%. Investment in the production of alternative fuels like gas, LPG and bio-fuels is one possibility but so far investment has been minimal. The only other solution is a mega-merger and there have already been rumours that Shell has run its famed scenario planning against a merger with BP.
Ref: The Observer (UK), 29 October 2006, 'Big oil may have to get even bigger to survive', O. Morgan.
Search words: oil, energy, scenarios
Trend tags: nationalism, energy

Green taxes

According to a broad coalition of politicians, environmentalists and economists, green taxes (and carbon taxes in particular) are the solution to the growing problem of energy scarcity around the world. With many of the world's governments facing a budget deficit, green taxes offer a way of building a better environment (or appeasing the environmentalists if you're of a cynical persuasion). Crucially, they also generate extra tax revenue that electorates find it difficult to argue with without appearing selfish. According to Dieter Helm at New College Oxford (UK), green taxes will be used by most democratically elected governments within the next five years. In New Labour Speak (UK) this means there will be a shift from taxing 'goods' to taxing 'bads'. According to the OECD, there are currently an amazing 375 different green taxes in operation, which raise around 2 to 2.5% of GDP. Most of these taxes target companies but in the future the green tax burden will shift to households.There is also likely to be a shift from energy and transport-related green taxation to taxation based on pollution, chemicals, waste production and especially packaging use. Like I say, many of these taxes may be aimed at individuals and small businesses although most of the pollution, for example, is produced by a tiny handful of large companies. Research conducted by the Guardian newspaper in Britain, for instance, says that just six companies in the UK (EON UK, RWE, Npower, Drax, Corus and EDF) produce more CO2 than all the car drivers in the UK combined. And it's not just big power companies that are the problem. Companies like Kellogg's, Tesco, Unilever, Ford Allied Bakeries, Trebor Bassett and Nestle all emitted more than 100,000 tons of CO2 in 2004 - more than some states like Vanuata.
Ref: FT International, reported in The Australian, 30 September-1 October 2006, 'Climate not right for green tax regime', V. Houlder.,; The Guardian (UK), 16 May 2006, 'New industry figures reveal scale of industry impact on climate', D. Adams & R. Evans.
Search words: taxation, sustainability, waste
Trend tag: pay-as-you-go

Word detective: freemium

A word that's been doing the rounds of venture capital companies over the past few years is freemium. Essentially, freemium is a business model that relies on a product or service being given away for free but which contains a premium (upgrade) element. How is this possible? Easy - the Internet provides a low-cost (virtually no-cost) distribution channel so innovators that wish to build up a viral following for their new product or service simply give it away for nothing and the rest is left to word of mouse. Examples of freemium companies include Adobe (possibly the original innovator of the concept back in 1994), Macromedia (1995), MySpace, Blogger, Flickr,, MySQL and Stardoll. The intent is usually to upgrade users to a paid for product or service so, for example, Six Apart (a blogging platform) has moved 2 million of its free customers to paying members at USD $20 a piece. It all sounds too good to be true and possibly it is. According to Howard Anderson at MIT Entrepreneurship Centre, only 10% of 'free' companies succeed, partly perhaps due to an inferior product or because revenue from premium services fails to cover the cost of the free ones. Here at the ambition is more modest but version 2.0 of the site is now based on the freemium model.
Ref: Business 2.0 (US) October 2006, 'Why it pays to give away the store', K. Heires.
Search words: free, freemium, low cost, luxury, Internet, business models
Trend tag: viral, low cost

Disruptive innovators

Which innovations that exist today have the potential to become industry game-changers in the future? According to Clayton Christensen, disruptive technologies are "everywhere" at the moment, so Business 2.0 magazine recently highlighted 11 companies that have the power to turn their respective industries on their heads.The companies include Netvibes (a company that offers customisable web start pages), Eestor (a company making ceramic energy storage devices for cars), Applied Location (a company that uses satellites to warn drivers about road congestion, which can also be used for pay-as-you-go car insurance purposes), Zopa (the peer-to-peer money lending site) and Jajah (a company that offers free phone calls via the web without the need for downloads or headsets).
Ref: Business 2.0 (US), October 2006, 'The Next Disruptors', E. Schonfeld & J. Borzo.
Search words: disruption, disruptors, innovation

Wal-Mart goes green

What would happen if the world's largest retailer - and arguably one of the most powerful companies on earth - decided to save the planet? Well we're about to find out. Wal-Mart (revenues US $312 billion per year) recently laid out a plan to turn itself (and by default its suppliers, staff and customers) green. The aim includes increasing the fuel and emissions efficiency of its vehicle fleet by 25% by 2009 and doubling this by 2016. The company also plans to reduce energy use in-store by 30% and lower solid waste (for example, packaging) in its American stores by 25% by 2009. Total investment in sustainable and environmental projects will be close to half a billion US dollars. Critics obviously say this is a 'greenwash' but the company claims that what was initially a defensive strategy is now offensive. Wal-Mart has already become the world's largest buyer of organic milk and organic cotton and is also starting to buy food locally to reduce 'food miles' and increase freshness. But there's a dilemma. Wal-Mart set up its stall on the basis of low prices, which helped the little guy (poor and middle-class Americans). This is fine if the little guy wants to save the planet but what if she or he does not? What if, for instance, Wal-Mart shoppers still want to buy bottled water when most experts agree that the product harms the environment? The answer, in the short-term, is that Wal-Mart will respond to existing customer needs but there is a bigger game at stake. Wal-Mart, through its sheer size, has the power to affect what people think and want and therefore has the power to democratise the sustainability issue. Of course it could also be about just increasing the share price, which has fallen 30% since January 2000, but perhaps that's just being cynical.
Ref: Fortune (US), 7 August 2006, 'The Green Machine', M. Gunther.
Search words: Wal-Mart, sustainability, environment, green
Trend tags: sustainability