Community vs. the Corporation

jeremy zawodny had a great post covering a piece by robert young on the dilemma and internal battle faced inside companies like yahoo in deciding how far to go in handing control over to their communities…

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.

and robert young writes…

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!

my response…

i totally agree with this concept. this has been an issue at tribe since its founding. i would love to start a community site where the community has a much bigger role in deciding its fate. i do believe this is part of the brilliance of craigslist. craig is fanatical about listenting to the community both so he doesnt fuck up and so they trust they are partially in control. what’s hard is that often a small part of the community is most vocal while the silent majority is too busy to bother. tribe made some big mistakes over the past couple of years by focusing at times more on business model than user love. the lesson from web 1.0 was that user love alone didnt make successful companies. in the first chapter of web 2.0 companies like myspace seem to be proving the opposite as that company has had little success in getting high ad rates or monetization per member, but such massive success on uniques and page views it doesnt seem to matter.

7 thoughts on “Community vs. the Corporation

  1. In your opinion, how do sites which are social networks make money? What is the business model? Does it work? Will a site like ever make money and if so how?

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