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Mar 2001 / from the editor :: email this story to a friend

What Civic Leaders can Learn from the New Economy
By Brian H. Marston

Like it or not, technology changes everything. It quickly transforms social, political, and economic systems. Politicians, activists, non-profit organizations, government agencies, and ordinary citizens are generally slow to embrace the changes technology leaves in its wake. St. Louis' civic leaders could learn some lessons from the dot-com world that would help them more effectively accomplish their goals.

Information Wants to be Free
Given all the communication channels at people's disposal these days, any secret will find a way to get out. Sneaky doesn't work anymore. In a networked world, there's nowhere for information to hide. With a few keystrokes, it can be exposed to thousands of people.

Given that everybody who's interested is going to find out what they're up to anyway, it would behoove civic leaders to do everything publicly, out in the open, and above the table from the start. Backroom deals are pathetically old economy. All meetings should be open. Agendas and minutes should be distributed as widely as possible. You should strive to ensure that no one could ever legitimately claim that you're trying to hide something.

It may take longer up front to publicly lay out your plans and solicit input, but by building a broad base of support, you'll avoid a time-consuming backlash at the end of the process.

The Importance of Linking
The whole point of the Web is that you can link from one page to another. Don't reinvent the wheel; link to it. Form as many partnerships as possible.

You don't have to personally like a person or group to form a mutually beneficial partnership with them. Enlightened self-interest makes the world go 'round.

Case in point: Microsoft and Apple have a long-standing hatred for one another. The Windows-versus-Mac operating system debate that's been raging since the '80s often takes on an oddly religious tone among the companies' CEOs and devotees alike. Yet in August of 1997, Bill Gates and Steve Jobs announced that Microsoft would create a version of Office 98 for the Mac and invest $150 million dollars in Apple. In return, Apple agreed to bundle Microsoft's Web browser with the Mac operating system.

Business relationships in the new economy are rarely as simple as Us versus Them. Don't be afraid to partner with a perceived competitor if you can both get something out of it. At the very least, it'll make things more interesting.

Viral Marketing
Guerrilla marketing (holding signs on overpasses, chalking sidewalks, posting flyers, etc.) is a fun, grassrootsy thing to do that can give your message street cred. However, viral marketing is an even more effective way to spread the word.

The idea is that you tell two friends, and they tell two friends, and so on, and so on, and so on.... Viral marketing (AKA word of mouth) is very simple, but potentially very powerful. In effect, you're using other people to do your marketing for you. In order for it to work, the message that you're trying to propagate has to be compelling and easy to forward.

dancing baby

The Internet is the perfect distribution channel for viral marketing. Remember the dancing baby. As the even more inexplicable popularity of the All Your Base are Belong to Us catchphrase shows, your message doesn't even have to make much sense to spread like wildfire.

Virtuous Cycles
Bob Metcalfe, the inventor of Ethernet, has given an elegant mathematical description of the power inherent in a network, whether it is a network of computers or a network of civic activists. Metcalfe's Law states that the value of any network increases as the square of the number of nodes (participants) on the network. As the number of participants in a network increases arithmetically, the value of the network increases exponentially. Thus, adding a few more members can dramatically increase the value of the network shared by all the members. And when the value of the network goes up, more new members are attracted to it.

Stated more colloquially, nothing attracts a crowd like a crowd. One telephone is useless. There's no one to call. Add a few more phones and things start to get interesting. Add a bunch more phones and you have a communications revolution.

Much of the new economy is based on virtuous cycles and laws of increasing, rather than diminishing, returns. The overriding rule of most dot-com business plans is to get big fast at any cost. The race for mindshare in the quest to become The Standard drives AOL, Yahoo!,, Microsoft and countless other companies. The idea is to grow a network to achieve a critical mass of users before anyone else has a chance to get a foot in the door.

In contrast, many civic groups are content to always rely on the same go-to people. Unless they actively reach out to bring new people with new perspectives into their organizations, they will never be able to tap into the power of the network. No matter how much power or money they have initially, such closed groups will eventually be outrun by more open ones.

Metcalfe's Law also implies that losing a few people from your network can dramatically decrease its value. Good businesses and good civic organizations focus on retention as much as recruitment. They seek to build long-term relationships with their supporters and offer a sense of community.

The Need for Speed
Dot-coms are all about speed. When you're running on Internet time, impatience is a virtue. Production cycles at software companies are measured in months, not years. If public sector entities hope to compete for people's attention, they need to pick up their typically glacial pace.

The corollary to the need for speed is the need for flexibility. New economy businesses are willing to completely reinvent themselves to remain relevant. If something's not working, they fix it — fast. Companies like Netscape and even Microsoft are willing and able to change direction on a dime. Many non-profit organizations are so fixated on doing things the way they've always done them that they let great opportunities for change pass them by.

Reevaluating Failure
Part of being flexible is being able to admit when you've made a mistake. One of the great lessons of the new economy is that mistakes will be made, and that's OK. In fact, it's better than OK. Failure is a mark of experience, not shame. Serial entrepreneurs wear their failures on their sleeves as badges of honor. Making mistakes and learning from them increases the chances that you'll get it right the next time. Failure is a necessary precursor to success. Venture capitalists know that the vast majority of the startups they invest in will fail miserably, but the few that go public make it all worthwhile.

If you take this advice to heart and your dot-org makes it big, send some non-profit stock options my way.

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