Prof. Peter Wippermann
“Those who don’t allow any “control” will drown”
18. June 2010 | « previous | next »
You describe Flow Control as practising “information logistics”. To what extent can the skilful handling of information be equated with happiness?
The digital world’s supply of information is very much bigger than we could ever hope to cope with in a single lifetime. As a result, the right filtering is one of the most important tasks we face, be it as private individuals or as companies. In a river, you can either swim or drown. It’s the same thing with the information flow. Those who don’t allow any “control” – any filtering or selection – will drown. The escalation logic of the past no longer applies. It is not the addition of possibilities that leads to success but the subtraction. It’s a matter of deciding: What’s relevant for me? What’s just entertaining? What bugs me?
Surely it’s not just about the information you receive, but about what you yourself pass on as well?
Yes, that’s right, because we reveal a great deal about ourselves in the digital world – regardless of whether we do it knowingly on the Internet or unknowingly via radio chips. This information becomes a commodity. It is sellable and scalable. Its value can rise and fall. We are entering an economy in which privacy represents a monetary value and an advantage, where your own life becomes a resource. When I use a navigation device, I disclose the data about my current position and planned route in exchange for perfect orientation. I enjoy huge advantages when I’m in that kind of “flow”. I can concentrate on what’s really important to me; everything else is organised for me.
Yet right now people seem increasingly sceptical about the constant exchange of data.
This is where the word “control” comes into play. On the other hand there is of course the desire for control – I don’t want the whole world to know what I’m doing or where and when I’m doing it the whole time. And that’s where it gets really interesting. It’s increasingly becoming a question of weighing up what service I expect in return for my private data. Where do I want a shelter so I don’t turn up in the digital world? How much am I willing to pay for that? Basically, it’s all a question of “How do I handle the value of my identity?”
What does flow control mean for companies?
Ideally, it means being able to react to every single customer. In the meantime, the Prahalad formula that every individual all over the world counts pertains to almost every company. In the 1980s and 1990s, the introduction of IT as a company’s central nervous system led to a revolution. Calculability, i.e. controlling, became possible. The “Chief Information Officer” was instated. Today we don’t just have an internal data flow, we’re networked with our end customers too. The predictions of the Cluetrain Manifesto have become reality. The net is turning into a conversation. As a result, companies are faced with hugely increased complexity. A whole ocean of possibilities for observing a customer is opening up to firms. They too have to incorporate filters and ask: Where is the conversation with the customer interesting? Where does it turn into mere blabbering? It’s a bit like being at a party: you have to know when it’s time to leave.
So for the company it’s not so much a case of knowing everything about the user but only what’s relevant?
Exactly. Companies have to be able to assess the value a consumer offers them. Anybody who uses Web 2.0 as a marketing or sales channel has to know how much money the individual customer is prospectively worth to him. How worthwhile is it to track his data so as to be able to make him an offer at precisely the moment when my product becomes important? “Customer Lifetime Value” is a very apt expression for it. Mutual communication between consumers and companies only makes sense when it results in a better quality of life. When the customer’s car breaks down, but he knows: “My car dealer will help me.” In order to do that, the dealer has to know: “What kind of breakdown is it? Does the customer need a repair job, a rental car or a brand new vehicle?” Making offers in the relevant situation is of course far more effective than trying to imprint yourself on the customer’s memory to such an extent that, when the time comes, he turns to your company and nobody else.
Which companies are already practising these principles successfully?
The best examples are companies that grew up in the dotcom phase and survived the bubble, whether it’s Amazon, Google or a classic industrial enterprise like Apple. They’re all moving in the same direction: they’re basing their thinking on the customer and focusing on the benefit for the individual consumer. At the same time, Apple, Google and Amazon are developing very different ways when it comes to e.g. how they want to earn money with their personal media offering. Apple wants to sell advertising. Amazon absolutely doesn’t want to sell advertising, it wants to give priority to content instead. Those are two very different approaches to “control”. The filter mechanisms and thus also the criteria for doing business successfully vary and appeal to different people too, of course. Apple’s restrictions in relation to pornography have led to very severe reactions. Is that a “control” point that has to be abandoned? Or will they deliberately opt for the clean, Disney version of the product?
What implications does the principle of Flow Control have for the way the company is organised?
In essence, Flow Control means being able to deal with surprises. Knowing the right way to react in a dynamic conversation situation with several million people is vital – and is precisely what Nestlé failed to do recently. The online debate [about Nestlé suppliers who pose a threat to species conservation] gathered momentum extremely quickly and on a global scale. On the one hand, companies cannot assess the significance of this kind of event correctly because they lack the appropriate seismographs. On the other hand, it is impossible to react with the necessary speed because the matrix organisation of most companies doesn’t permit such rapid reaction times. The IT department might realise there’s a sudden increase in data traffic, but a period of at least several days will pass before the marketing department or head office is informed. That’s too slow. But being able to react correctly and early enough to a situation like that means being informed in real time and acting just as quickly. A company that masters these principles is a happy company.
You cite “Digital Residents” as the vanguard of Flow Control. Will corporate practices change as younger generations move up?
The main thing the younger generations mean for companies today is that they will have to adjust to a totally different kind of employee. On the one hand, Digital Residents have highly specialised interests and a profound knowledge. On the other hand, they’re not interested in observing and interpreting connections. For them, the feedback loops and information cascades of their own, often self-contained communities are more important than anything else. Thomas Huber touches on this topic in our blog. That’s why management has to focus on the productive networking of individuals. So that great, new and processual steps can be