Business, the Web, and the Balance of Power


Image Source: webwizzard

Business has changed significantly over the last twenty years, particularly with the advent of the Internet and the World Wide Web, resulting in fundamental changes to the way business is conducted, as disruptive new business models replace industry norms.  The Internet and the Web have connected people and businesses in ways never before imaginable, creating significant new opportunities to create value and disrupt existing markets, as Google did to advertising, Amazon did to retail, and Netflix did to Blockbuster and the home DVD market.  It appears that many U.S. corporations exist in the space between the traditional business models of the 20th century and emergent business models characterized by fundamentally different consumer behaviors, and are likely to experience significant business disruption by both competitors and consumers alike that take advantage of a new balance of power inherent on the Web.

The Relationship between the Web and Power

         The Web has made revolutionary changes to people’s relationship with each other and with information, as the Web has become the de facto standard for communication and information access in our time (Smith, 2010).   Allowing people to communicate in ways never before imagined, the Web has also changed people’s relationship with media from largely a consumption culture to more of a participatory culture, where individuals are both consumers and producers of media (Shirky, 2009).  The change to a participatory culture has had profound implications on the way consumers interact with each other and with government and corporate institutions, as mainstream media institutions are no longer the sole gatekeepers of information, rather individuals and institutions are free to organize, collaborate, share, and develop media according to their own wants and needs (Shirky, 2009).  The result is that millions upon millions of people, or the crowd, are using the combined power of access to information and the ability to organize to gain power over government and corporate institutions.  Hanley (2010), describes the transformational nature of the web as a constant power struggle “in a constant ebb and flow of winners and losers” between individuals and governments, between consumers and corporations, and even between corporations, or between governments.

Naha Tug of War - Pentax 645D Full Size JPEG

However, it is not enough to note the power struggles without understanding the unique, power-sharing, nature of the web.

Power to Change Dominant Hierarchies

              The Web has demonstrated a significant range of capability to shift power balances or completely upend existing dominant hierarchies, and Social Dominance Theory is a useful lens to evaluate the power of the Web to create change.  Social Dominance Theory (SDT) is a general theory that explains the stability of social inequality in societies with an economic surplus, arguing that three systems, age, gender, and an arbitrary set, oriented on religion, race, nationality, class, ethnicity, or otherwise, combine to maintain dominant hierarchies (Sidanius & Pratto, 1999).  SDT argues the maintenance of inequality occurs not only with the application of force, intimidation, or discrimination practiced by dominants against subordinates, but rather, “the decisions and behaviours of individuals, the formation of new social practices, and the operations of institutions are shaped by legitimising myths…consensually held values, attitudes, beliefs, stereotypes, and cultural ideologies” (Pratto, Sidanius, & Levin, 2006, p. 275).   Legitimizing myths provide a means of justifying, either morally or intellectually, dominating behavior (Pratto, et al., 2006).  For example, a legitimizing myth about Mexican illegal aliens is that they are do not pay taxes, use an unequal share of social services, have higher rates of criminal activity, and take American jobs; a myth that was used to gain passage of the controversial Arizona law, SB1070 (Rock, 2011d).  How then, given the complex interplay between individual behaviors, institutional and societal practices, and cohesive power of legitimizing myths, are the power of dominant hierarchies changed by people using the Internet and the Web?

What is Different about the Web

            Dominant hierarchies are maintained with myths that focus on the trimorphic systems of differences, age, gender, and arbitrary differences like race, class, or ethnicity (Pratto, et al., 2006).  However, on the Web, identities are amorphous, sometimes anonymous, and crafted by individuals (Baym, 2010), eroding the power of the arbitrary-set system to dominate, by allowing individuals to choose which acculturation to accept or shed on a moment’s notice.  Simply put, individuals can shape their personas and this is a key difference from the physical world, that expects behaviors aligned with age, gender, and arbitrary-set systems.

The Web also serves to erode the power of legitimizing myths because the more than a quarter of the world’s population (Hanly, 2010) has access to the what amounts to the sum of human knowledge (Wesch, 2010).   Wesch describes the new media landscape as “ubiquitous computing, ubiquitous communication, ubiquitous information, about unlimited speed about everything, everywhere, from anywhere on all kinds of devices and this makes it ridiculously easy to connect, organize, share, collect, collaborate and publish” (Wesch, 2010).  Ubiquitous access to information makes it very difficult for myth to exist as anything but a myth, because facts and reality and the impact of legitimizing myths are spread across the web at blazing speeds in the form of images and videos that cannot hide fundamental truth, while the diffusion of the net resists attempts to suppress information.  Gilmore (2011) described the nature of the networks treatment of information as “the net interprets censorship as damage and routes around it”.   In the virtual environment, information flows freely and individuals and groups are able to challenge the assumptions of legitimizing myths will information, while circumventing the information control efforts of dominant hierarchy institutions, acting as gatekeepers, that may attempt to control information flow.   Examples of people using the Web to challenge dominant hierarchies are everywhere, including the Chinese people’s challenge to the government during the Sichaun earthquake (Shirky, 2009), the Iranian people’s challenge to the government following the 2009 Iranian Presidential Election (Hanly, 2010), and the recent Arab Spring in the Middle East that has overturned many existing regimes (Rock, 2011b).  The Web is a great equalizer that erodes the power of dominant hierarchies and changes the power dynamics between individuals and institutions, moderating the impact of dominant institutions, or in extreme examples, seizing control of dominant institutions.  While recent events have highlighted the effects of the Web on the balance of power between citizens and governments, what is the impact on business world?

The Web and Corporate Power

             It will come as no surprise to anyone that the business world is about profit.  To the extent that a corporation can dominate a market or industry, a corporation can expect to grow and pass along profits to its shareholders and the greater the profit, the greater the earnings of shareholders and corporate officers.   As noted in the introduction, the Web is having a disruptive affect on the corporate world, where some corporations are seeing their business models and practices challenged, and others are attempting to harness the Web to reach new customers and commoditize existing marketplace leaders.  What differentiates the businesses that take advantage of the new medium versus those that diminish?  What business characteristics allowed Amazon to disrupt first Borders and now Best Buy?  How did Netflix destroy Blockbuster so quickly?  What prevented Blockbuster and Borders, both companies with dominant market positions, significant capital, and great brand recognition, from capitalizing on the opportunity the Web provides?  Perhaps most importantly, what can companies with dominant market positions learn about the changing balance of power?

Corporations that dominate their respective markets are targets for disruption, because marketplace leaders have the highest expectations on their performance.  Well-run companies deliver consistent earnings by using technology to “transform labor, capital, materials, and information into products and services of greater value” (Christensen, 2000, p. xiii).  In the book, The Innovator’s Dilemma, Christensen (2000) argues that well-run companies avoid disruptive technology because disruptive technologies tend to have lower profit, smaller initial markets, and address customer’s future, rather than current, needs, and therefore, good business leaders are reluctant to invest.  Put another way, the investment is fraught with risk.  Were Blockbuster and Borders simply risk-averse organizations in a traditional innovator’s dilemma, or did Amazon, for example, have other advantages besides technical innovation?  To answer this question, we need to look to the equalizing power of the Web.

Image Source: Pink Sherbet Photography

As we examined earlier, ubiquitous access to information has an empowering quality and in the business world, the crowd of consumers can not only access more product and service information than ever before, but can also produce product and service information, creating far more consumer power than existed in previous generations.  Amazon is a great example of a company that harnesses the power of the crowd to provide product information in a metaphor that now dominates the retail industry as companies like Walmart, Best Buy, and others attempt to replicate the transparency and engagement Amazon provides.  In addition, Amazon recognized that the Web offered greater customer reach and the ability to commoditize brick and mortar stores that required expensive storefronts and the labor to operate them.  The result was compelling, as Amazon consumers were offered more information and cheaper products, but more importantly because consumers were offered product insights from other consumers.  Amazon understood that the Web could change the relationship between consumers and products and built a platform that enabled the consumers to engage in a direct relationship with product manufacturers in a show of both altruism and activism; altruistic when sharing positive product experiences, and active when sharing negative experiences.  In short, Amazon built its business on an understanding of changing consumer behavior enabled by the Web.

Risk and Opportunity: A Progressive Example

Image Source: khalid Albalh

In order to understand the changing power dynamics of the Web, I conducted an experiment that simply pitted a consumer and customer, namely me, against a dominant corporation, in this case Progressive Insurance Company.  The opportunity presented quite naturally as it simply required a corporation to behave in its own interests, rather than the interests of a single customer, a situation not terribly difficult to find.  I recently had a family outing on our boat and found that it was losing power and taking on water.  We quickly got the boat out of the water and found that the engine ruined because a mechanical malfunction allowed salt water into the engine.  After filing a claim with Progressive, the claims investigator took the claim information and determined that they would likely deny the claim.  I saw the opportunity to explore the power of social media and to observe what affect it might have.  I put up a blog on WordPress and registered the domain name of Progressivefail.org, putting the story of Progressive’s impending denial on the Web.  Next, I began posting links to existing customer stories of claim problems and consumer satisfaction surveys on Progressive’s track record of paying claims and published the posts via Facebook and Twitter (Rock, 2011c).  I also posted links to Progressives Facebook and Twitter sites and received an immediate response from Progressive’s Twitter account indicating they would look into it.  Within a day, the blog had 87 views and was the first hit on Google when searching for the term “progressive fail; within four days I had received 242 views and the check was in my hands.

The Progressive example highlights how the Web can shift the balance of power between a corporation and their customers.  By simply sharing customer stories on Progressive’s social network, a nearly immediate change took place.  The surprising element of the example is not the immediate payment, but the implication that a single consumer was able to use the Web and Progressive’s own social network to potentially inflict brand damage far beyond the monetary scope of the initial claim.  While Progressive likely intended their use of Facebook and Twitter to open a positive two-way asymmetrical dialogue with their customers, they opened themselves up to significant risk by simultaneously providing consumers with the ability to damage their brand and reputation.  In this example, Progressive is the dominant hierarchy and the legitimizing myth is that of capitalism; it is more necessary for Progressive to profit than to address the specific need of a single customer.

The implication is that a corporation that opens a two-way dialogue with customers on the Web has both risk and opportunity.  If the corporation treats its customers fairly, the Web will work in its favor, while the reverse holds true; should a corporation be perceived as unfair, customers have the power to negatively affect a corporation’s brand and either way, the Web has given consumers far more power over corporations than ever before.

Conclusion

Image Source: Maia C

Individuals, corporations, and governments are all part of a major transformation afforded by the Internet and the World Wide Web, characterized by ubiquitous access to all the information of human society.  Serious implications exist that have yet to be fully understood, or explored; notions of privacy, intellectual property, ownership, relationship, consumer, and producer are all being challenged and reinvented on the Web.  Corporations and governments both have a significant opportunity to take advantage of the Web to build better versions of their selves as they engage the power of the crowd; but they need to beware, because 20th century intentions and behaviors are transparent to the crowd.  Corporations that use the Web to engage customers, need to recognize that social networks are not simply another channel to reach additional customers, rather that use of social networks require ethical business models, because the crowd is vocal. Corporations can no longer exist in the space between the traditional business models of the 20th century and emergent business models, and are likely to experience significant business disruption by both competitors and consumers alike that take advantage of the new balance of power inherent on the Web.

References

Baym, N. K. (2010). Personal connections in the digital age. Cambridge, UK ; Malden, MA: Polity.

Christensen, C. M. (2000). The innovator’s dilemma : when new technologies cause great firms to fail (1st HarperBusiness ed.). New York: HarperBusiness.

Gilmore, J. (2011). John Gilmore’s Home Page  Retrieved September 3, 2011, from http://www.toad.com/gnu/

Hanly, F. (Writer). (2010). Programme 2: Enemy of the State? [Internet]. In R. Barnes (Producer), The Virtual Revolution. U.K.

Ingram, M. (2011, September 2, 2011). Is journalism as we know it becoming obsolete?  Retrieved September 4, 2011, 2011, from http://gigaom.com/2011/09/02/is-journalism-as-we-know-it-becoming-obsolete/

Pratto, F., Sidanius, J., & Levin, S. (2006). Social Dominance Theory and the Dynamics of Intergroup Relations: Taking Stock and Looking Forward. European Review of Social Psychology, 17, 271-320. doi: 10.1080/10463280601055772

Rock, R. (2011a, September 4, 2011). journey24pointoh. journey24pointoh  Retrieved September 4, 2011, 2011, from https://journey24pointoh.com/

Rock, R. (2011b, August 30, 2011). New Media, New Perspectives. journey24pointoh  Retrieved September 3, 2011, 2011, from https://journey24pointoh.com/2011/08/30/new-media-new-perspectives/

Rock, R. (2011c, August 30, 2011). Progressive Fail. progressivefail  Retrieved September 3, 2011, 2011, from http://www.progressivefail.org

Rock, R. (2011d, September 1, 2011). Social Dominance Theory: The U.S. Minority Experience. journey24pointoh  Retrieved September 3, 2011, 2011, from https://journey24pointoh.com/2011/09/04/social-dominance-theory-the-u-s-minority-experience/

Shirky, C. (Producer). (2009, July 23, 2011). How Social Media Can Make History. Talks. Retrieved from http://www.ted.com/talks/clay_shirky_how_cellphones_twitter_facebook_can_make_history.html

Sidanius, J., & Pratto, F. (1999). Social dominance : an intergroup theory of social hierarchy and oppression (Vol. x, 403 p.). Cambridge, UK ; New York: Cambridge University Press.

Smith, P. (Writer). (2010). Programme 1: The Great Leveling? [Internet]. In R. Barnes (Producer), The Virtual Revolution. U.K.

Wesch, M. (2010). From knowledeable to knowledge-able. Kansas City: TEDxKC.

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Social Media, Social Change: How the National Council of La Raza Uses Social Media to Advance Latino Issue


The national debate on immigration reform has fueled anti-Latino sentiment in the United States, particularly in the southwest Border States, with new laws like Arizona SB1070 that critics argue encourage racial profiling.  The divisive debate has created a racist climate for Latino-Americans as groups like the Federation for American Immigration Reform argue that the countries economic woes are a result of the influx of Latino immigrants that take American jobs, don’t pay taxes, and cost taxpayers money with pervasive use of U.S. social services and high rates of criminal activity (Rock, 2011).  The National Council of La Raza (2011a), a Latino social justice organization born out of the civil rights movement, seeks to combat discrimination and advocate for Latino rights, using social media to educate the Latino community, challenge discriminatory stereotypes, and help the community take action, using effective techniques firmly grounded in modern communication theory.

Community Education

            NCLR is active across a variety of issue that impact the Latino community, including advocacy, education, immigration, civil rights, the economy, and wealth-building, to name but a few (2011c).  While each program or issue is treated individually based on its unique requirements, NCLR uses its web site to frame each issue and publicize supporting research to educate the public.  Some of the more engaging media on the site including use of embedded YouTube video that links to the NCLR You Tube channel for sponsored public service announcements.  A more interesting educational technique employed by NCLR is the use of online video games to education Latinos on money-management and wealth building.  One such game is Farm Blitz, an interactive game with social elements, that use the metaphor of farming to educate players on the best way to use both credit and savings to maximize wealth and avoid overextension (Doorways2Dreams Fund, 2011).  Using games, NCLR helps players to “gain a fresh perspective on material and can potentially engage them in that content in more complex and nuanced ways” (Johnson, Smith, Willis, Levine, & Haywood, 2011, p. 21), helping to make the content more accessible for a young, Latino, audience.  NCLR uses sophisticated techniques and a number of channels to frame issues of collective importance to the Latino community.

Challenging Pervasive Stereotypes

            The National Association of Hispanic Journalists conducts annual studies of the coverage and treatment of Latinos on the evening network news broadcasts.  The most recent report published in 2006 found that “Latinos make up 14.5 percent of the U.S. population but less than one percent of stories on the network evening news” (Montalvo & Torres, 2006, p. 5).  Montalvo and Torres also found more than 30% of stories included unidentifiable groups of Latinos that go unnamed and do not speak in the segments, typically in a story on immigration, where “images of day laborers standing in a parking lot or immigrants crossing the border often provide viewers with a negative, menacing and stereotypical depiction of Latinos” (2006, p. 13).   NCLR seeks to combat the pervasive use of Latino stereotypes in a variety of ways, by providing alternative, positive, views of Latinos as leaders and role models.  One such example is through public service announcements that use Latino role models from sports, politics, and entertainment.  Another example is through the hosting of the ALMA Awards, a nationally televised awards program that honors Latino entertainers, and promotes ” fair, accurate, and representative portrayals of Latinos in entertainment” (Murgia, 2011, p. 1).  Viewers that witness the opposing portrayals of Latinos, as criminals or immigrants, and as role models or leaders, like experience a cognitive dissonance and will seek to resolve it to achieve consonance.

Direct Action Using Social Media

            One of the most crucial goals of NCLR’s media use is to motivate people to take action either through volunteer or fundraising efforts.   Waters (2007) describes a two-way symmetrical model as being most effective for e-philanthropy efforts that create a dialogue with potential donors and NCLR uses a variety of techniques to do that.  NCLR links out to their Twitter and Facebook pages.  While Twitter appears to be used as a one-way dialogue, NCLRs use of Facebook is clearly a two-way dialogue where comments are not only welcomed, but responded to as well.  Waters (2007) additionally noted that successful online fundraisers typical allowed for a variety of donation type that included both one-time, recurring, and planned donations.  NCLR use all three methods and also allows donations to be made in honor or memory of an individual (National Council of La Raza, 2011b).  Additionally, NCLR incorporates donation tiers with varied levels of recognition according to tier (National Council of La Raza, 2011b).

Another important element of NCLRs presence is the ability to subscribe to their action network.  NCLR uses geographical information to inform the public on the voting record of lawmakers on key issues impacting Latinos.  Additionally, the public can subscribe to the NCLR Action Network via both email and text, in order to be informed of campaigns and events that use direct action to influence change.

Conclusion

            The Latino community is under fire because of politicians, the media, and special interest groups that favor immigration reform are using the national media to reinforce negative stereotypes of Latinos and attempt to link U.S. economic woes to Latino immigrants.  The National Council of La Raza makes effective use of social media in a two-way symmetrical model to combat discrimination, advocate for Latino rights, educate the Latino community, challenge discriminatory stereotypes, and help the community take direct action.

References

Doorways2Dreams Fund. (2011). Farm Blitz | Financial Entertainment. NCLR  Retrieved August 26, 2011, 2011, from http://nclr.financialentertainment.org/play/farmblitz.html

Johnson, L., Smith, R., Willis, H., Levine, A., & Haywood, K. (2011). The 2011 horizon report (pp. 1-36). Austin, Texas.

Montalvo, D., & Torres, J. (2006). 2006 network brownout report: The portrayal of Latinos and Latino issues on network television news, 2005. In N. A. o. H. Journalists (Ed.), Network Brownout Report (pp. 1-24). Washington DC: National Association of Hispanic Journalists.

Murgia, J. (2011). ALMA Awards 2011  Retrieved August 26, 2011, 2011, from http://www.almaawards2011.com/about_the_alma_awards.html

National Council of La Raza. (2011a). National Council of La Raza | About Us. NCLR  Retrieved August 26, 2011, 2011, from http://www.nclr.org/index.php/about_us/

National Council of La Raza. (2011b). National Council of La Raza | Donate Now. NCLR  Retrieved August 26, 2011, 2011, from http://www.nclr.org/index.php/take_action/donate_now-1/

National Council of La Raza. (2011c). National Council of La Raza | Issues and Programs. NCLR  Retrieved August 26, 2011, 2011, from http://www.nclr.org/index.php/issues_and_programs/

Rock, R. (2011, August 15, 2011). Immigration Lack of Debate. journey24pointoh  Retrieved August 26, 2011, 2011, from https://journey24pointoh.com/2011/08/15/immigration-lack-of-debate/

Waters, R. D. (2007). Nonprofit organizations’ use of the internet: A content analysis of communication trends on the internet sites of the philanthropy 400. [Article]. Nonprofit Management & Leadership, 18(1), 59-76. doi: 10.1002/nml.171

 

 


New Media, New Perspectives


Image from : Patrick Hoesly

In an era characterized by technologies that enabled one-to-one and one-to-many communication, media studies have been dominated by the relationship between producers and consumers of information, focusing on the effects of media.  Digital media, whose communication paradigm includes one-to-one and one-to-many, also includes many-to-many communication, forcing those involved in media studies to reconsider commonly held beliefs and theoretical frameworks in light of the new technology (Quinn, 2011).  Which theoretical approaches are most useful to cultivate in accounting for the fundamental changes brought about by new media, and conversely, which theoretical approaches may no longer be relevant?  In order to account for the fundamental changes that have occurred and are likely to occur, it is useful to consider the media ecology to understand the how changes in the media technology may alter society as a new equilibrium is achieved.  Already, the introduction of digital media has wrought unanticipated changes in the ecology and had a surprising impact on the world.

The introduction of many-to-many relationships in media is based on the internet; ubiquitous, global, social, and cheap, digital media allows consumers to also be producers and share information in ways not possible in the era of broadcast (Shirky, 2009).   Additionally, the number of possible interactions in the network is the number of participants squared; meaning the number of interactions will larger than ever before in human history (Shirky, 2009).  Symbolic interactionism states that meaning is created as a process negotiated through interaction between people (Nelson, 1998).  As the number of interactions grows, what new meaning will be created and what possible impacts can it have on society?

Photograph: Magharebia / Creative Commons

Consider the recent Arab Spring, where millions of people across many countries in the Middle East and Northern Africa, organized, protested, in most cases created significant social change, both intended and unintended.  “It all started with a desperate Tunisian shopkeeper who set himself on fire, which activated a transnational network of citizens exhausted by authoritarian rule. Within weeks, digitally-enabled protesters in Tunisia tossed out their dictator” (Nelson, 1998, p. 1).   Suddenly, people throughout the region were sharing their discontent and inspiration via social media, and in the process, circumventing traditional state-sponsored media entirely.  What new meaning did the image of the shopkeeper convey and how did it galvanize a country and ultimately an entire region?  A recent report from the Dubai School of Government found “empirical evidence suggesting that the growth of social media in the region and the shift in usage trends have played a critical role in mobilization, empowerment, shaping opinions, and influencing change” (Dubai School of Government, 2011, p. 24).  The democratization of media ultimately led to the democratization of some countries long known for autocratic rule.

When viewed through a lens of media ecology, it appears that in certain autocracies, like Egypt and Tunisia, digital media has given people a capability to circumvent traditional broadcast media, ultimately becoming an agent of social change. What new equilibrium will come about as governments grapple with digital media?  Will governments embrace social media to develop a more participatory political process or perhaps seek new media technologies that allow them to control or shape the new flow of meaning?  Of course, both are already occurring in different parts of the world.  Shirkey described President Obama using social media to mobilize his base of supporters and engage them in the political process during his campaign and described China’s wholesale shutdown of Twitter on the 20th anniversary of Tiananmen Square in an attempt to control the risk of digital media.   It is clear that both governments and mainstream media will seek ways to tap into the vast flows of meaning that span the network interactions in an attempt to either harness, subvert, or control digital media in an effort to maintain their gatekeeper role.

Image: curiouslee via Creative Commons

Given that digital media has begun to erode the power of traditional media gatekeepers, what of the gatekeeper theory, associated theories like agenda-setting, framing, and semantics and their relevance for the future?  Some suggest the internet has rendered gatekeeping passé (Williams & Carpini, 2000), however, gatekeeping will likely remain relevant as along as mainstream media are part of the media ecology, albeit with less significance given that information flows freely.  Additionally, gatekeeping will likely remain relevant in media-savvy countries like China that maintain tight control of all media.

It is clear that digital media will be a revolution in media unlike any the world has seen.  Perhaps generations from now, media historians will discuss digital media as more revolutionary than even the printing press.  Those in media studies have an unparalleled opportunity to rethink existing media theory in light of the changes taking place all over the world as society comes to terms with the new technology.  Many existing perspectives, like media ecology and symbolic interactionism, will continue to provide useful insights to media scholars, while others, like gatekeeping may become less germane.

References

Dubai School of Government. (2011). Civil Movements: The Impact of Facebook and Twitter Arab Social Media Report (Vol. 1, pp. 1-30). Dubai: Dubai School of Government.

Nelson, L. D. (1998). Herbert Blumer’s Symbolic Interactionsm  Retrieved July 23, 2011, from http://www.colorado.edu/communication/meta-discourses/Papers/App_Papers/Nelson.htm

Quinn, S. (2011). Module 2: theoretical perspectives and challenges of digital communication, from http://csuglobal.blackboard.com/courses/1/FALL11A-8-COM305-1/content/_320329_1/dir_xid-44757_2/com305_2.html

Shirky, C. (Producer). (2009, July 23, 2011). How Social Media Can Make History. Talks. Retrieved from http://www.ted.com/talks/clay_shirky_how_cellphones_twitter_facebook_can_make_history.html

Williams, B. A., & Carpini, M. X. D. (2000). Unchained reaction: the collapse of media gatekeeping and the Clinton-Lewinsky scandal. Journalism, 1(1), 61-85.


Out of a Job: Offshore Labor, Outsourcing or Something Else Entirely?


Image from: vlima.com

As the United States economy rebounds from the effects of the latest recession, many in the media are calling the recovery another jobless recovery, citing the growth of the gross domestic product coupled with a high unemployment rate.  Both the media and politicians frequently suggest that the trend to outsource manufacturing and move service jobs offshore is the culprit for our economic woes.  As a result, legislators are attempting to stem the tide of offshore labor and outsourcing through protectionist policies that mandate the use of American goods and services, tax corporations that use offshore resources or other draconian measures (Sealover, 2011).  Both the media and politicians are spending their time and energy on the wrong problem.  According to some estimates, offshored jobs will only make up 2% of the jobs lost by 15 million Americans annually (Lael & Robert, 2004).  If outsourcing and offshore labor are not the cause of job loss, who or what is the real culprit?  In short, the culprit is good-old-fashioned, American know-how.

Since before the creation of the Computing- Tabulating- Recording Company in 1911, the predecessor to IBM (“IBM Archives: 1900s,”), businesses in the United States have sought the means to improve business performance through the use of technology.  From advanced robotics and computers on the factory floor to self-service kiosks at airports and grocery stores, automation has displaced far more United States workers than have migrated offshore (Collins & Ryan, 2007).   Daniel Drezner, Associate Professor of Political Science at the University of Chicago also sees technology innovation as the root cause (2004):

There is no denying that the number of manufacturing jobs has fallen dramatically in recent years, but this has very little do with outsourcing and almost everything to do with technological innovation. As with agriculture a century ago, productivity gains have outstripped demand, so fewer and fewer workers are needed for manufacturing. (p. 27)

Former Secretary of Labor, Robert Reich described a tour taken at a U.S. factory, where the entire plant was run by two employees instructing more than 400 robots on the factory floor (Reich, 2009).

The capitalistic process of creative destruction, first described by Engels and Marx is alive and well as new industries consume the flesh of the old (Marx & Engels, 1974).  For example, the newspaper business is a shadow of its former self because of Internet technologies.  It would stand to reason that if millions of jobs and whole industries were destroyed via the relentless advance of technology throughout the last 30 years, then the total number of jobs in the United States would be shrinking.  Yet, even given the current unemployment rate of 9.6% for 2010, the United States has added nearly 47 million jobs over the last 30 years of technology innovation and achievement; therefore additional contributing factors are likely at work (Bureau of Labor Statistics, 2011).

“Historically, the number of jobs has closely followed the growth of the labor force, despite major increases in foreign trade and the advent of a host of new job-displacing technologies” (Lael & Robert, 2004, p. 3).  U.S. Bureau of Labor Statistics historical data for the since 1980 confirms that the labor force has grown at an annual rate of 1.18% while the number of employed workers has grown at a corresponding rate of 1.09% (Bureau of Labor Statistics, 2011).  “When the U.S. economy gets back on track, many routine jobs won’t be returning–but new jobs will take their place. A quarter of all Americans now work in jobs that weren’t listed in the Census Bureau’s occupation codes in 1967” (Reich, 2009).

It is in the nature of journalists to make the public aware of problems.  Equally so, it is in the nature of politicians to attempt legislative solutions.  Henry Louis Mencken once wrote, “There is always an easy solution to every human problem—neat, plausible, and wrong” (Mencken, 1949, p. 443).  The backlash against offshore and outsourcing is the classic example of focusing on the wrong problem.  Instead of focusing on the relatively few jobs moving to lower cost labor pools, the United States should focus on quickly retraining workers displaced because of innovation.  So the next time your hear the media blast the evils of outsourcing or your local politician suggest some new form of protectionist policy to prevent the use of offshore labor; picture them as the Dutch boy with a finger in the dike, trying to stem the tide of innovation, progress and good-old-fashioned, American know-how.

References

Bureau of Labor Statistics, U. S. (2011). Employment status of the civilian noninstitutional population, 1940 to date. In cpsaat1.pdf (Ed.). Washington D.C.: United States Department of Labor.

Collins, D., T. , & Ryan, M. H. (2007). The strategic implications of technology on job loss. Academy of Strategic Management Journal, 6, 27.

Drezner, D. W. (2004). The outsourcing bogeyman. [Article]. Foreign Affairs, 83(3), 22-34.

. IBM Archives: 1900s. IBM – United States  Retrieved May 11, 2011, from http://www-03.ibm.com/ibm/history/history/decade_1900.html

Lael, B., & Robert, E. L. (2004). Services offshoring: Bane or boon and what to do? Brookings Policy Brief(132), 3.

Marx, K., & Engels, F. (1974). The Communist manifesto. Belmont, Mass.: American Opinion.

Mencken, H. L. (1949). A Mencken chrestomathy ([1st ed.). New York,: A. A. Knopf.

Reich, R. B. (2009). Manufacturing jobs are never coming back. Forbes. Retrieved from Forbes.com website: http://www.forbes.com/2009/05/28/robert-reich-manufacturing-business-economy.html

Sealover, E. (2011). Colorado House kills bill about overseas jobs. Denver Business Journal. Retrieved from Denver Business Journal website: http://www.bizjournals.com/denver/news/2011/05/04/house-kills-bill-about-overseas-jobs.html

 

 


Hypothesis: Liminal business


Major U.S. corporations that predate the Internet are liminal businesses that exist in the space between the traditional economics of the 20th century and an emergent economy characterized by fundamentally different human behaviors and values; as a result, many are likely to experience significant business disruption by new competitors that understand how the world is changing and have the flexibility to align their products and services to the new value system.

In a nutshell, I think that many mainstream businesses are embracing social media as tools without necessarily having an understanding of how human behavior is changing as a result.  Examples are all over the place, of people getting together in unique ways with their own agenda for change.
  • Open source versus corporate built: Linux, Wikipedia, Firefox, Shareware, Freeware
  • Product-service systems versus product manufacturers: hardware and software solutions versus SaaS
  • redistribution versus hyperconsumption
  • carrot and stick versus autonomy, mastery and purpose
  • peer recommended versus brand identity
  • trusted behaviors versus credit report
  • friction versus flow
  • me versus we
  • and on and on.
Early in the class I was struck by symbolic interactionism and the implication of the idea that meaning is created through the interaction between people.  What does that mean for a society that has developed an exponential capability to interact through many-to-many communication mechanisms when interaction volumes increase astronomically?  I suspect it means a period of rapid change where new ideas take hold and are implemented by people rather than institutions (open source, arab spring, collaborative consumption, etc), simply because of rapid growth of cognitive surplus applied in altruistic ways (e.g. microfinancing) to address pervasive problems that mainstream institutions can’t seem to solve.  I think there is evidence (on web sites) that many businesses do not understand how fundamental the changes are and simply view social media as a new set of tools by which to market, advertise, and reach people, rather than applying social media strategically to address fundamental shifts in behavior and values.

Theoretical and Historical Perspectives on the Digital Music Revolution


I did a fun assignment in my Communication class, where I had to reflect on historical and theoretical perspectives of the digital music revolution.  I used a combination of video, photos, music, and screen recordings together in what is hopefully both an informative and entertaining post.  Let me know what you think.