Facebook: September 1 (2)

Business Models Understanding “New Power”

The crowd is challenging traditional leadership.

Here’s how to harness its energy. .............. Power clearly isn’t what it used to be. We see Goliaths being toppled by Davids all around us, from the networked drivers of Uber to the crowdfunded creatives of Kickstarter. But it’s difficult to understand what power actually is in this changed world, and how to gain more of it. ........... Old power, the authors argue, works like a currency. It is held by few and is zero-sum. Once gained, it is jealously guarded, and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. .......

New power operates differently, like a current. It is made by many. It is open, participatory, and peer-driven. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.

.......... Twitter supposedly toppled a dictator in Egypt, but another simply popped up in his place. We gush over the latest sharing-economy start-up, but the most powerful companies and people seem only to get more powerful. ..........

The battle and the balancing between old and new power will be a defining feature of society and business in the coming years.

........ New power models are enabled by peer coordination and the agency of the crowd—without participation, they are just empty vessels. ....... new power taps into people’s growing capacity—and desire—to participate in ways that go beyond consumption. These behaviors, laid out in the exhibit “The Participation Scale,” include sharing (taking other people’s content and sharing it with audiences), shaping (remixing or adapting existing content or assets with a new message or flavor), funding (endorsing with money), producing (creating content or delivering products and services within a peer community such as YouTube, Etsy, or Airbnb), and co-owning (as seen in models like Wikipedia and open source software). ......... Facebook is the classic example of a new power model based on sharing and shaping. Some 500 million people now share and shape 30 billion pieces of content each month on the platform, a truly astonishing level of participation upon which Facebook’s survival depends. ..........

The crowdfunding poster child Kiva, for example, reports that some 1.3 million borrowers living in 76 countries have collectively received more than half a billion dollars in loans.

........... Instead of donating via a big institution like United Way that parcels out money on donors’ behalf, people can support a specific family in a specific place affected by a specific problem. ........ Platforms like Wefunder allow start-ups to access funding from thousands of small investors rather than rely on a handful of very big ones. One inventor just set a new record on Kickstarter, raising more than $13 million from 62,000 investors. ............ crowdfunding puts on steroids the human tendency to favor the immediate, visceral, and emotional rather than the strategic, impactful, or long-term. ........ YouTube creators, Etsy artisans, and TaskRabbit errand-runners are all examples of people who participate by producing. ........ Wikipedia and Linux, the open source software operating system, are both driven by co-ownership behaviors and have had a huge impact on their sectors. .............. The Alpha Course is a template for introducing people to Christian beliefs. Anyone wishing to host a course can freely use its materials and basic format—10 meetings devoted to the central questions of life—with no need to gather in a church. Catalyzed by a model that empowers local leaders, the course has reached 24 million people in living rooms and cafés in almost every country in the world. ............... Power is not just flowing differently; people are feeling and thinking differently about it. A teenager with her own YouTube channel engages as a content creator rather than as a passive recipient of someone else’s ideas. A borrower on the peer-to-peer finance platform Lending Club can disintermediate that oldest of old power institutions, the bank. A Lyft user experiences consumption as a kind of sharing and subtly shifts his view of asset ownership. ............ they strengthen norms around collaboration and make the case that we can do just fine without

the old power middlemen that dominated the 20th century

........... Among those heavily engaged with new power—particularly

people under 30 (more than half the world’s population)

—a common assumption is emerging: We all have an inalienable right to participate. ............. New power favors informal, networked approaches to governance and decision making. The new power crowd would not have invented the United Nations, for instance; rather, it gravitates toward the view that

big social problems can be solved without state action or bureaucracy

. ............ new power is more flash mob and less General Assembly. ......... New power models, at their best, reinforce the human instinct to cooperate (rather than compete) by rewarding those who share their own ideas, spread those of others, or build on existing ideas to make them better. Sharing-economy models, for example, are driven by the accumulated verdict of the community. They rely on reputation systems that ensure that, say, rude or messy guests on Airbnb have trouble finding their next places to stay. .......... The heroes in new power are “makers” who produce their own content, grow their own food, or build their own gadgets. ............ Traditional notions of privacy are being replaced by a kind of permanent transparency as young people live their lives on social media. ........ while people with a new power mindset are quick to join or share (and thanks to new power models, “joining” is easier than ever), they are reluctant to swear allegiance. ........ New power is fast—but it is also fickle. .......... New power can easily veer in the direction of a Tea Party or an Occupy Wall Street. (We assume that most people think at least one of these is a bad thing.) .......... the Tea Party, which has a strong, decentralized grassroots network but wields its influence in highly traditional corridors of power. Players in this quadrant tend toward “smoke-filled room” values while relying on a “made by many” model .......... having a Facebook page is not the same thing as having a new power strategy ............ Today, the wisest organizations will be those engaging in the most painfully honest conversations, inside and outside, about their impact. ........ A key new power question for all organizations is “Who will really show up for you?” ....... Organizations that rely on new power can be easily intoxicated by the energy of their crowds and fail to recognize that to effect real change, they too might need to adapt. ........... If old power organizations should fear being occupied, new power organizations should fear being deserted. ........... For all new power’s progress, it is not yet making much of a dent in society’s old power superstructure. Khan Academy is the darling of the digerati, but our education systems remain largely unchanged, with school timetables still built around family lifestyles of the 1800s. Lawrence Lessig, a leading new power thinker, wants to overhaul campaign finance laws in the United States, but he has realized that the best way to “end all super PACS” is with a super PAC. .............. Arianna Huffington, for example, has built a platform that comprises

a network of 50,000 self-publishing bloggers

, but she also skillfully wields an old power Rolodex. ............. the big question is whether new power can genuinely serve the common good and confront society’s most intractable problems. Strategy and tactics are important, but the ultimate questions are ethical.

“For all of its democratizing power, the Internet, in its current form, has simply replaced the old boss with a new boss,” warns Fred Wilson, a partner at Union Square Ventures. “And these new bosses have market power that, in time, will be vastly larger than that of the old boss.”

............. The greatest test for the conductors of new power will be their willingness to engage with the challenges of the least powerful.