Saturday, July 25, 2009

Interesting Books to Read on Knowledge Management and Value Networks.

Below are some great books, referred to me recently by my friend John Maloney of the KM Cluster. The list is alphabetical order by author as they are all on target and worthwhile. All titles available on where you will find more details.

The Future of Knowledge: Increasing Prosperity through Value Networks, Verna Allee, Butterworth Heinemann, 2002.

Net Work: A Practical Guide to Creating and Sustaining Networks at Work and In the World, Patti Anklam, Butterworth Heinemann, 2007.

The Wealth of Networks: How Social Markets Transform Production and Freedom, Yochai Benkler, Yale University Press, 2006

The Rise of the Network Society (The Information Age: Economy, Society and Culture, Volume 1), 2nd Edition, Manuel Castells, Wiley-Blackwell, 2000.

Open Business Models: How to Thrive in the New Innovation Landscape, Henry Chesbrough, Harvard Business School Press, 2006.

The Innovator’s Solution: Creating and Sustaining Successful Growth, Clayton Christensen and Michael Raynor, Harvard Business School Press, 2003.

Driving Results through Social Networks: How Top Organizations Leverage Networks for Performance and Growth, Rob Cross and Robert Thomas, Jossey-Bass, 2009.

The Hidden Power of Social Networks: Understanding How Work Really Gets Done in Organizations, Rob Cross and Andrew Parker, Harvard Business School Press, 2004.

The Organizational Sweet Spot: Engaging the Innovative Dynamics of Your Social Networks, Charles Ehin, Springer 2009.

IT Governance in a Networked World: Multi-Sourcing Strategies and Social Capital in Corporate Computing, Laurence Lock Lee, Information Science Reference 2009.

The Keystone Advantage: What the Dynamics of Business Ecosystems Mean for Strategy, Innovation and Sustainability, Marco Iansiti and Roy Levien, Harvard Business School Press, 2004.

The Moment of Complexity: Emerging Network Culture. Mark C. Taylor, University of Chicago Press, 2003.

Sunday, July 19, 2009

Innovation means Effective Employee Engagement

As the recession drags on, although there is now some optimism building in the Canadian markets, many in the USA are projecting a later recovery into Q4, 2010. Due to the current economic outlook, organizations start to drive more cost sensitive approaches to investments, change, innovation and also increase their internal communication practices to keep valued employees informed of their near term business realities.

With increased tensions in the external markets, internal tensions naturally also rise. In more difficult times, leaders start to intensify their focus on performance and results.

Recruiters say the single most critical means of managing through a downturn is the engagement of employees - a term often used and equally elusive. In tough times, when morale is low and people are looking potentially over their shoulders, employee engagement often suffers and gets reflected on the bottom line.

Employee engagement, confidence and positive energy is one of the single most reliable indicators of business performance. The basic concept is simple, but the implications are anything but.

A recent survey by Hiring Smart shows that the top 16% of performers in a company generate about 60% of the organization's revenues, while the bottom 16% cost the company about 20% in revenues.

An estimated 23% payroll expenses is unproductive because of low engagement, with only 20% of employees considering themselves "fully engaged" at work.

Getting employees and talent engaged effectively requires a considerable investment in human capital investment in key strategies that enable employee engagement ranging from effective intranet communication, ease of knowledge sharing, sourcing talent on demand easily leverage searcheable profiles linked to process ownership areas, to leveraging effective leadership development and training support opportunities.

There are many factors that have to be planned out effectively that understand the support systems of talent at different stages of career growth with any given manager, team, job and organization.

Organizations that understand that top management and top performers are the talent that are going to carry you through the tough times.

Talent spotting is as much as an art as a science and smart business leaders value their HR leaders and place demands on them to ensure effective employee engagement practices and processes are in place. When it comes to developing high potential talent, leaders need to be grounded and connected to lowers levels in their organizations.

A good read for managers is Leaders at All Levels by Ram Charan to help managers who lack the skills to spot top talent.

In summary, tough times call for employees who are committed to generating results - however, the solution is not adding more pressure on the precious talented workforce but removing barriers, and setting up support systems that allow them to remain energized, focused and committed during difficult times.

Thursday, July 16, 2009

Virtual Worlds and Innovation(s).

We have spent the last two years researching, and developing virtual world experiences in numerous experiments internally and with clients - all with the goal to understand how Generation Virtuals will change and impact the future consumer/customer landscape.

Some of the interesting findings that we have determined are:

1.) Generation Virtuals (children ages 3-14) socialized on Habbo Hotel, Club Penguin, or WebKinz look at virtual worlds as an extension to their real worlds.
2.) Generation Virtuals will continue to have multiple personas intergrated into both their virtual experiences and real life experiences.
3.) Generation Virtuals love the multi-media, colorful and rich 3D interactive experiences and find 2D experiences on the web boring and lacking "fun factors."
4.) Generation Virtuals will choose customer experiences that leverage 3D "fun" experiences into traditional purchasing experiences.

The Entertainment Economy is rapidly evolving as Virtual Worlds continue to integrate with real world and digital intelligence content and distribution models(mobile, web, etc).

From our research, the Asian communities are rapidly leading in this evolution and for Innovation to occur more rapidly in Canada - Canadians must rapidly understand entertainment, artistic design, and social media experiences integrated into traditional processes. Governments are stimulating national policy to promote V worlds for eLearning and new solution delivery models, in particular in Singapore.

What we have seen in the Canadian environment is a very weak receptivity to Virtual Worlds in leveraging how these solutions can add value to the enterprise for eLearning, recruiting, employee on-boarding experiences, product development and many other solutions.

There are some bright lights slowly starting to emerge as companies like Rogers experiment with Virtual worlds to train their distributors in Second Life, the ten pound gorilla. Other companies like IBM are the most prolific in this space in Canada globally with over 33 islands. They are also leading the global virtual standards movements so objects developed in diverse virtual world environments can easily be transported from one VW platform to another to achieve increased ubequity.

The Ontario Government have also been successfully experimenting for recruiting new employees using second life learning experiences, however their continued marketing of their investments and community building efforts are not up to par to drive traffic to their websites and create sustainable community participation.

Helix is very committed to helping our clients develop successful business models that tap future capabilities. Virtual Worlds is one key enabling solution that as Canadians striving for increased innovation capacity need to learn 4 key things:

1.) What are these solutions?
2.) How can they be applied to the enterprise?
3.) What are the best practices,and lessons learned?
4.) How do I successfully get started?

We have recently issued our NEW Virtual World Research Report and it is available for purchase now at our new publishing center.

We also have developed a conference center that our clients can experiment in to learn how to use these solutions in a low risk learning lab environment, with instructional guides or event planning resources to support learning and growth for leveraging these new solutions.

Helix has also developed a NEW virtual worlds community to help our clients learn more about these capabilities.

We hope you will join us...and together we can learn how these new business models will shift current and future business models.

Call us at(647)477-6254 to learn more or post a blog comment.

Friday, July 3, 2009

Virtual World Valuation Perspectives on Second Life.

Analyst firm Next Up Research just published an extensive report on Linden Lab, the San Francisco company behind virtual world Second Life. Highlights are summarized below:

The research is based on aggregate data and is available on SharesPost, a site set up to trade shares of privately held companies (if you register, you can download the report for free from that page, or you can find other valuation reports on companies like Facebook and LinkedIn). The report goes rather deep into the valuation of the Linden Lab, which it pegs at somewhere between $658 million and 700 million.

Now that Linden Lab has been around for nearly 10 years, and with its product Second Life celebrating its sixth birthday since launching publicly in June 2003, we thought it would be a good idea to take a close look at the report and see how the company’s doing according to the analysts.

First of all, you may be wondering if anyone is still using Second Life at all. The answer is yes, and users are very active on there. During the past 30 days, one million users logged in, according to Second Life’s own statistics. In average time spent per user per week, Second Life in fact trounces all other MMORPGs, including World of Warcraft and Civilization IV. In another testament to the service’s apparent stickiness, the number of hours users spend on Second Life has been increasing steadily and is currently at historic highs, totaling approximately 124 million hours in the first quarter of this year.

More importantly, Next Up says in-world transactions have recovered after a significant drop in September 2007 - when gambling was banned in the virtual world - and has been steadily increasing ever since December 2007.

Which brings us to the valuation, or at least the estimated value Next Up claims Linden Lab is worth after running a couple of calculations. Using publicly-traded online gaming companies as a proxy, Next Up pegs the median enterprise value (EV)/ Revenue multiple for that group at 7.2x off of 2009 revenues. Subsequently applying this self-proclaimed “conservative” multiple of 7x to the estimated revenue of Linden Lab ($100 million for this year), the current target valuation amounts up to $700 million.

That seems like a stretch. In November 2007, the last time we asked ourselves how much Second Life is worth, we came out somewhere between $500 million and $1 billion. The current estimated enterprise value calculated by Next Up falls pretty much right into the middle of that range.

Next Up defends the 7x multiple variable by referring to a two-year-old M&A deal. When Disney acquired Club Penguin for $350 million in cash back in August 2007, it paid out at least a comparable multiple based on Vlub PEnguin’s projected revenue for the year (between $50 and $65 million), despite the fact that it reaches a narrower demographic profile. But things have changed since then: stocks have tanked, valuations have dropped, the IPO market has pretty much dried up and VC-backed liquidity is at a record low. So that implies a major discount, with a valuation between $300 million to $500 million, which is decent but not spectacular, assuming Next Up’s revenue projection is accurate.

Here’s what else Next Up says could have a negative impact on Second Life’s valuation:

- the aging population of its main target markets (U.S. and Europe) and less of a presence in developing nations where its main target audience (people from 13 to 45) is quickly gaining in size.
- limited amount of premium subscriptions (about 1% or 170,000 users)
- possible taxation on virtual monetary transactions in a variety of countries
- cost and complexity of running the technical infrastructure behind the virtual world

Based on our own Helix Commerce Research on Virtual Worlds, and Gartner Group predictions Fortune 500 companies focused on innovation need to execute experiments in Virtual Worlds to be ready not for the Gen X and Gen Yers but the Generation Virtuals who are growing up on solutions like WebKinz and Club Penguin or Habbo Hotel. We now have our first generation of Virtuals.

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