I had breakfast this morning with Antony Brydon, the CEO of Visible Path, to talk about the business application of social networks. Visible Path provides an Enterprise Software package that allows businesses to create their own contact networks, similar to online social networks like LinkedIn and Plaxo.

The discussion ranged far and wide, only touching the surface of some fascinating topics that warrant deep consideration–topics I’m planning to explore further in the near future. But the most important topic, from the standpoint of the business case for social networks, is the quantification of intangible assets to describe real market value. The notion is that among the intangible assets that enhance real market value, but don’t show up on the balance sheet–e.g. intellectual property, knowledge, business processes–one of the most powerful is human relationships.

Think of it this way: when you hire a sales person, one of the topline metrics of value is the depth and quality of their personal network. How big, how current, and how powerful is their Rolodex? The same concept is true for a business, but on a much larger scale. How extensive is the company’s network–with prospects, partners, regulators, financiers, etc–and how well are they using it to create real value, like products made channels built, deals closed? If you could map your network, place a value on the nodes of that network, and track some of the critical business functions that utilize that network, like lead generation, sales, and referrals, you’d be able to demonstrate an asset that generates value for the company, and reduces risk for investors because it moves a series of important processes into the light of day. That becomes value you can measure in the marketplace.

There’s a lot to explore in the uses and meanings of social networks, and I’ll be talking to Antony more in the future. Look for a column, or a podcast on this topic in the near future.

The prospect of using neuroscience to improve the practice of marketing is equally exciting and worrying. On one of their beta posts for a new blog on the Future of Marketing, The Institute for The Future offers some links to articles on the application of neuroscience to advertising. 

On the one hand, there’s a geewhiz factor to the notion of mapping the brain’s response to advertising, and using that data to shape more effective ads. There’s also an obvious ethical debate that will arise from perfecting the art of persuasion by science. Not to mention a legal one: Can you imagine what the defense of Big Tobacco would have been if they were using scientifically designed manipulation techniques to motivate buyers?

But beyond the obvious technological, political, legal and ethical questions–which will be the press fodder that boosts this topic into the mainstream–there are some practical business questions that always seem to get lost in the noise. Is there really a competitive advantage for most companies in diverting funds to manipulation technologies and away from just building better products and experiences?

One of the examples cited in the research is the mapping of brain patterns after the subject was exposed to a cola drink, without an associated brand, and then after. When just drinking samples of carbonated sugar water, the subject had little preference. But when sugar water was linked to a few cola labels, the brain patterns went off the charts in showing a preference for Coke. Great. Undoubtedly there’s something to learn from that. But will it help Pepsi create a more successful product?

You could compare the Coke response and the Pepsi response and draw the conclusion that Coke’s marketing, which is really the major substantive difference between the two brands, is just better, and Pepsi’s better improve. But any time you’re measuring a person, an organic brain, you can’t separate out the lifetime of baggage that comes with it. It may look like just a set of brain waves, which Pepsi could theoretically try to emulate by testing a new brand mix. But what you can’t see is the memory of drinking a Coke on a summer day at a family picnic. Or laughing so hard at the joke your best friend told one time at the ice cream shop when you were 10 that the Coke came streaming out of your nose. Those memories are anchored to the brand and inseparable from the brain waves that show preference in a lab. So what will Pepsi emulate?

Coke didn’t create those experiences, even if they effectively enshrine them in their advertising to enhance recall. They’ve had good, consistent marketing over the course of most people’s lifetime, and a long string of personal experiences have been attached to the brand. I’m not sure how knowing what the impact of those experiences look like in the shaping of preference-oriented brainwaves on a CRT scan will help Pepsi create a more successful product today. 

I can see the application of monitoring brain waves as a supplement to product response studies and focus groups,so that Pepsi can isolate the most appealing ad, and I suspect that’s probably the point. But I also suspect that isn’t sexy enough to push neuromarketing into the mainstream press and boost interest in the technology and the companies that create it. Far better to amaze and frighten us a little with the prospect that companies will be able to engineer desire from whole cloth. Just think of the consequences!

I’m no knee-jerk captalist, but China’s appeal to the U.N. to internationalize control over the Internet is a strange and fascinating view into the baseline assumptions of a communist system.

"Chinese Ambassador Sha Zukang
told a UN conference that controls should be multilateral, transparent
and democratic, with the full involvement of governments, the private
sector, civil society and international organizations."

"It is of crucial importance to
conduct research on establishing a multilateral governance mechanism
that is more rational and just and more conducive to the Internet
development in a direction of stable, secure and responsible
functioning and more conducive to the continuous technological
innovation," he said.

If we applied the same thinking on a national scale, any large company could argue that the government should take over Microsoft to ensure more rational governance conducive to stable, secure and responsible functioning, and more conducive to continuous innovation. Wait a minute, that sounds promising. Unless, of course, you envision congress trying to make decisions about what is rational…

Hackers broke into ChoicePoint, a company that aggregates consumer data and resells it to the government and businesses, and stole thousands of private records with sensitive data like credit records and Social Security numbers. About 35,000 customers in California have been notified that their records were compromised.

The story is scary enough on its face–enough to make any Californian monitor their credit reports even if they haven’t been notified. But what is mind-boggling is the deliberate mis- and dis-information that ChoicePoint is putting out about the whole debacle.

In the first place, ChoicePoint, which aggregates records all across the U.S., is trying to claim that the problem is limited to California. What some of the articles covering this story fail to mention is that the only reason Californians were notified, is that there is a state law requiring companies to notify customers whose computerized data has been compromised. So according to ChoicePoint, the problem is limited to California, simply because that’s the only state where they actually have to admit they left the door open to hackers. I’m sure the hackers, while pillaging the database, were doing geographic selects on California. Don’t worry if you live in Ohio. They don’ t have to report there, so there’s no problem. Trust me.

Second, a spokesperson for ChoicePoint claims they’re not even really sure that any data was compromised. That’s comforting. You mean, you’re collecting sensitive data on hundreds of thousands of customers, and you don’t even know when those records have been hacked? So, um, if you can’t tell whether data has *actually* been compromised, how are you able to say the problem is limited to California?

I’m one of those people who believes that sharing consumer information is a necessary part of an information economy. I’m also one of those people who believes regulation is not the best first line of defense. But when I see companies like ChoicePoint, I really start to question my judgement. If it weren’t for a California law requiring them to come clean or face open-ended damages for their security lapse, no consumers would even know they were at risk for having their identity stolen.

But this is the really scary part. On the day they are being flogged for failing to secure the crown jewels, on the day they are openly, shall we say, equivocating about the scope of the problem… wait for it… THEIR STOCK IS CLIMBING.

Every time I’m tempted to short Google’s stock, they do something that impresses me.  I’m not talking about their new map, which is cool technology, or their library project, which is certainly ambitious. I’m talking about the kind of stuff that’s happening in the bowels of the company that you don’t hear about in the news. Management stuff. The stuff that actually helps a company generate revenue.

A lot of my clients are involved in some level of search engine positioning. 80% of all Web traffic begins at a search engine. If your company appears on the first page of results for a search phrase relevant to your business, it can drive your sales through the roof. But keeping your company’s raw listing prominently ranked is a big investment in time and money.

Not too long ago, Google added paid search listings. The idea is that you buy the rights to certain key phrases in an auction scheme. When those key words are searched, you get a small advertisment listed on the results page, guaranteeing that you’ll serve up an impression without all the hassle of SEO. Without getting into the ROI comparison between paid listings and raw rankings, this was a great move for Google. They created an economy around search engine results–one that nets them a lot of revenue. But there was a problem.

Google’s AdWords were so popular that demand skyrocketed (I wonder-how much of the demand had to do with eliminating the confusion of SEO). And what happens when demand goes through the roof? So does the price. For some really popular search phrases, you could spend $1, $10, even $20 or more for *every click*, driving the cost-per-lead up to the point where many companies started to curb their enthusiasm–not to mention pop a few tums over the notion of competitors or cynical customers clicking their ads just to drill them for a few bucks. But that’s just the dynamics of a rapidly evolving market. The real problem was something else.

One of my colleagues is the VP of Marketing at a mid-size retail software company that sells their product online. As you can imagine, driving Web traffic has an immediate impact on their sales revenue, so they keep pretty current on SEO and paid search. But a few months back, when she called Google to place a $30,000 order for paid search, she got the cold shoulder. No one would return her phone calls. It seems that demand was so high, as well as orders, that my colleague wasn’t a big enough fish for Google to bother with. Her frustration made me start wondering if they were growing too fast. Hearing a customer with 30k to drop saying: "They won’t take my money," doesn’t sound very good to an investor.

But today I got a phone call from Google. A sales rep in New York saw Cymbic online, checked our search rankings for various phrases and found us lacking, and called to offer a helpful program to improve our performance. For my company, search engines aren’t the best use of money. We have a highly targeted clientele that we reach directly; I really don’t need another RFP from Qatar, or Poland, or India. But I was impressed because obviously Google is taking the pulse of its operations and making adjustments. That may not be the basis for a $200 stock valuation, but it says a lot to me about the health of the company. 

Sometimes I hate software. Actually, it’s really that I
hate the makers of software, who can be so incredibly smart sometimes they
turn out to be completely clueless. Which, if you know anything about software engineers
is actually quite common. Why am I launching on a rant so early in the day?

I’m trying to import a lot of my old articles into a
directory on my blog. No big deal, but it’s a lot of file management. All I
want to do is to point my Web editor (Dreamweaver MX) to a directory
so it can create a list of hyperlinks to the files in the directory. This isn’t
rocket science, Web servers do this automatically. But after poking around for
an hour in Dreamweaver, I still can’t get the stupid thing to do something so simple.
I’ve gotten to the point where it will allow me to actually drag a file from a
directory onto my index page, but it inexplicably embeds the link to an image
in that directory instead.

I’m pulling my hair out because this is classic software
development stupidity. There are 15 million bells and whistles built into
Dreamweaver that I will never use. But one basic, bonehead utility that would
actually be useful to many people (ie: Create a Site Map) doesn’t work, and
doesn’t have any obvious reference in the online help, unless you count the quasi-Visio
Site Map creator that is impossible to figure out without digesting the manual,
but looks nothing like an actual *Site Map* that you would find on any of a
billion sites you would visit on the Web. And what kills me is that this
functionality used to work as simply as you would expect in the old Home Site
engine that Macromedia digested when they upgraded Dreamweaver.

So, by “improving” Dreamweaver for the core of diehard
koolaid drinkers, they’ve made it less usable for most people. To me, it’s like
buying a car and then not being able to drive it because you need a mechanic’s license to figure out how to start it. 

Update:

Instead of wading through online forums and references, I
hacked my way out in a way that always makes me appreciate the unsung valor of
basic tools: I put all of my files into a new directory without an index page;
uploaded the directory to a Web server and turned off the default page for
directories with no index. When I navigated to the directory, a default
directory index appeared with html links to all of my files. I cut and pasted
the Web page into Word (which retains the hyperlinks) and saved the file as an
HTML document. I opened the document in a browser, viewed source, and cut and
pasted all the code, with HTML links, back into word, where I used Word’s Find
and Replace to quickly wipeout all the extraneous code. That left me with a
long list of clean html hyperlinks to the files in my directory, in about 5
minutes. An ugly process, but better than battling Dreamweaver to do something
so basic.