John Hagel on expanding markets through virtual communities

March 12, 2007

I'm writing this from the Community 2.0 conference, which promises to be two great days of inspiration on online community building and management. It got off to a great start with a presentation by John Hagel on "What's Possible? Expanding Markets through Virtual Communities".

Here are some of the highlights of John's talk:

How do we create effective online community? 

  1. What do we mean by community?
  2. What skill sets are needed?
  3. What mind shifts are needed?
  4. What organizational structure is needed?


1. What is community?

There's a tendency to regard anything that's interaction as community.
The emphasis of real community establish connections among people so they can participate in shared discussions over time, leading to a complex web of relationships, and to an increased identification with the overall community.

The key to real community:

  • shared discussions
  • shared relationships
  • shared identity

There's an inexorable desire for these communities to meet in physical space as well, and over time the virtual and physical communities get woven together.

2. What skill sets (culture sets) are needed?

  1. Creating content.
  2. Structuring/catalyzing social interactions in a way that promotes enduring relationships.
  3. Economic business models. How to sustain over time.
  4. [My note: technical skills/culture is a fourth important set, and needs to be integrated with the first three.]

Communities typically start from one of these skill sets.

3. What mind shifts are needed?

  1. Need to be participant-centric. I often hear questions about what's the value to the company of doing this; but not about the value to participants.
  2. Need to think long-run. People think too short term.
  3. Need to move from top-down organizational perspective to bottom-up perspective. Need to give up control.

4. What organizational structure is needed?

Key issues:

  1. Who is responsible for community initiatives and do they have the authority to mobilize the resources needed to make community work? Do they have the appropriately broad perspective? Even if they're senior, they may be too narrowly focused on marketing or another narrow area — and that narrows community to the functional area of the person in charge?
  2. How do they define success? Too often there's not even a definition of success. What are the operational metrics. Are there systematic reviews to enhance performance over time?
  3. Who has the relevant experience in the organization and are they being mobilized into the community?

What value do businesses get from online community?

ROA: Return on Attention
Participants should ask themselves: What is the value I derive from the attention I put into and receive from this community? ALWAYS focus on ROA from participant viewpoint first. Organization can then look at the ROA for their own org. How much did it cost to catch the participants' attention, and how much value did that attention deliver to the organization AND to the  participants.

A small proportion of your customers deliver the majority of your value. How do you get them more engaged? And how do you take the less profitable customers and make them more valuable thanks to their communtiy experiences?

How do I create environments to provide resources participants didn't even know existed, let alone searched for, but which are valuable and relevant to them? This is the highest value return on attention.

Recommends Peter Moorville's Ambient Findability. Powerful way to think about return on attention. While most people think about usability, usability presumes findability. Have to figure out first how they can find you.  Hagel says  findability=fundability.

ROI: Return on information
where information = information on participants

Look at ROI initially from participant viewpoint, then from provider/organizer viewpoint.

From participant perspective: how much info have I shared, and how much effort did it take to share it? And how much value did I receive from sharing that info?
From organizational perspective: How much info did I receive from participants, and how much value was I able to generate — for myself and for participants — from that information?

Organizations are investing a lot in collecting info but aren't thinking much about how to use it.

How can we be more helpful to participants by providing resources based on their profiles/behavior?

How can we shorten cycle between when participants provide info and when they get value back? That's key to motivating participation.

ROS: Return on skills
For participants:  skills from participating in these communities
For organizers: am I able to attract and retain the most valuable contributors?

Distinguish between communities of interest and communities of practice.
In COPs, focus on places where people are coming together to generate work product, eg in open source software communities. Expects COIs and COPS to start converging. As we face more pressure to deepen our skills and increase value delivered from their skills, I see increased tendency for people to make their passions their professions,b/c you're more likely to develop skills where you feel passion. Likely to seek out communities where people develop their talents while engaging with their passions.