Business Models of Social Networking sites

Business Models of Social Networking sites:

Social Networking, which is one of the most widely used web 2.0 technologies, has gain prominence since 2007. These are very new platforms yet have millions of users and their revenues are counted in billions of US dollars. No other business have showed enormous growth in a very few years.

Staying in business and making revenues are certainly not the business models of all social networking sites because some of them have not started for commercial purpose. Falch et al (2009) says, at a point of time, however, if a social network grows beyond its immediate social setting, the issue will be raised how money is to be made – if not for other purposes then for covering the costs of maintaining and developing the network. But some authors argue that business model is not designed merely to generate revenues but it describes the design or architecture of the value creation, delivery, and capture mechanisms it employs (Teece, 2010). Linder & Cantrell (2000) define a business model as “the organisation’s core logic for creating value”. Magretta (2002) simply views it as a “story that explains how an enterprise works”. Nevertheless, she also goes one step further discriminating the Business Model concept from the strategy concept. Thus, she explains that business models describe, as a system, how the pieces of a business fit together, but do not factor in one critical dimension of performance, usually competition, as strategy does.

Social Networking sites such as facebook are not designed specifically to raise revenues rather; its founder Mark Zuckerberg designed it as a platform which is used for communication and information services to the offline community at Harvard University. But now facebook has more than 300 million users making it the fourth largest website in the world.

Facebook now provides a social network for all PC users and recently also mobile users. Due to the developments in mobile technologies such as 3g, facebook designed a mobile business model and more than 68 million people now use facebook through their mobiles every day. The most important feature that made facebook very popular is the applications that they made available to the users. Unlike its competitors such as twitter and orkut, facebook provides users with thousands of applications. Facebook’s revenue generation is through advertising, selling space for applications and also because of its rapid growth, angel investors are investing hefty amounts in Facebook Inc. The reasons behind advertisers and application developers trying to invest more in facebook are the volume of the users it has and also the other main factor being the amount of time users spend on facebook. Facebook has been constantly updating its features making it more and more user friendly. Analysts predict that the facebook boom might pose a threat to the email culture.

Apart from these facebook also makes money by selling the information of its users to the advertisers. But it keeps the names anonymous following the data protection acts and privacy rules. The major online game developer Zinga pays around $50 million to facebook every year and facebook signed a $150 million ad deal with Microsoft.

The technicality aspect is one of the key factors for the growth of facebook. Teece (2010) argues that the concept of a business model has no established theoretical grounding in economics or in business studies. He supports his argument saying that there is no single scientific paper in the mainstream economic journals that analyses or discuss business models in the sense they are defined. There is no contradiction to his statement in this context. Facebook was never designed to be in this position, there are some technical factors and design features which have made facebook popular. Facebook might have adopted a business model after gaining popularity to raise revenues and to gain competitive edge over its competitors. A business model is more generic than a business strategy. Coupling strategy and business model analysis is needed to protect competitive advantage resulting from new business model design. (Chesbrough and Rosenbloom, 2002)

Unlike facebook the photo sharing website Flicker has a business model. The Flickr business model (which actually evolved from gaming to on-line photo sharing, harnessing user feedback generated through blogs) essentially gives away the services that amateur photographers want most: photo sharing, on-line storage, indexing and tagging. Shuen (2008) notes that low cost on-line distribution and marketing and investment are associated with ‘revenue from multiple streams, including value-added premium services and customer acquisition.’ Flickr’s multiple revenue stream business model involves collecting subscription fees, charging advertisers for contextual advertising, and receiving sponsorship and revenue-sharing fees from partnerships with retail chains and complementary photo service companies. Yahoo bought Flickr in March 2005 for tens of millions of dollars.

According to O’Reilly( 2005), the business models of web 2.0 technologies are advanced and are much reliable. The reason he gives us are web 2.0 technologies offer services, not packaged software with cost-effective scalability, control over unique, hard-to-recreate data sources that get richer as more people use them, trusting users as co-developers, harnessing collective intelligence, leveraging the long tail through customer self-service, software above the level of a single device, lightweight user interfaces and development models. Clearly comparing O’Reilly’s definition of a web 2.0 business model, one can say that facebook has a perfect web 2.0 business model. One can also say that to be the pioneer one have to change the business models according to the market needs and standards.

Thus Facebook initially may not have a business model but to gain competitive edge and to generate revenues it might have designed or adopted a business model. The features and the design with its enormous volume of users makes facebook not only the best social networking website but also a standing example for a good business model.

References:

Chesbrough,H and Rosenbloom. R. S (2002). The role of the business model in capturing value from innovation: Evidence from Xerox corporation’s technology, Industrial and Corporate Change

Falch,M., Henten.A. , Tadayoni. R, and Windekilde. I, (2009). Business Models in Social Networking, CMI International Conference: Social Networking and Communities 26-17 November

Linder, J.C. and Cantrell, S. (2000) Changing Business Models: Surveying the Landscape, Institute for Strategic Change, Accenture.

Magretta, J. (2002) Why Business Models Matter, Harvard Business Review, May Pg 88-92

O’Reilly, T (2005) . What is web 2.0: design Patterns and Business Models for the next generation of software. Available on line at: http://oreilly.com/web2/archive/what-is-web-20.html

Shuen, Web 2.0: A Strategy Guide, O’Reilly, Sebastopol, (2008) p. 2.

Teece, D. J. (2010) Business Models, Business Strategy and Innovation: Long Range Planning pg 172-194

WEB 2.0 TECHNOLOGIES TO SUPPORT KMS

WEB 2.0 TECHNOLOGIES TO SUPPORT KMS

Knowledge consists of different types, such as know what, know how, know why

and know who. (MA Chatti et al, 2007)

Know What- Know information about the problems they face.

Know How - Through web2.0 technologies like wiki’s and blogs.

Know Why- To gain competitive edge and customer satisfaction.

Know Who- All the employees of an organisation.

Use of Technology for Knowledge Sharing: (Web 2.0)

In any organisation, knowledge sharing plays a key role in the whole development of the organisation. We see that knowledge should be shared and maintained for any organisations overall development. Through proper knowledge sharing we gain competitive edge and customer satisfaction which keeps us in business. So, to help our employees share knowledge they have, we are introducing wiki and blogging to our organisation so that both codification and personalisation strategies can be implemented. These are one of the best platforms to share knowledge and are cheap compared to other technologies.

Technology for knowledge sharing can be explained clearly with a example and some specific problems in that organisation. Let me introduce to you Albion Fabrics for which I with my team have designed a KMS and supported it with the help of Web 2.0 technologies.

Albion is a fabric company whose clients are supermarket chains and they outsource their projects to industries in other countries where the goods can be made cheaper. The problem is Albion’s staff doesn’t have enough knowledge about the industries they work with so it takes a lot of time and the decision taken cannot be judged properly. For this we designed a KMS and supported it with Web 2.0 technologies. We used Wiki’s, blogging to reduce this specific problem.

Use of Wiki:

A wiki is a website where information and knowledge can be stored and every user can contribute to it. Albion’s wiki is only made available for the staff in the intranet where every person of the staff can share their knowledge and experience with particular industries. Wiki works as a repository in our organisation. Each group or individual staff will contribute to the wiki and constant monitoring and moderation will be present to check if the information provided is true or not. We also keep a track record of the all the industries and experiences with each and this information will be available on the wiki. We use wiki as a tool for collaborative environment to make good use of the knowledge we have and form a virtual CoP.

This is effective because it helps the process of codification strategy and wiki is easy to access and with a search engine in it, it helps employees to access information and gain knowledge easily which in turn reduces time for making decisions. But there are some problems with wiki such as anyone using it can upload information which may be untrue sometimes. But this causes a huge problem to the organisation. So here comes the process called “Darwikinism” where unfit sections are culled, edited or replaced which results in high quality wiki. So, a wiki is a simple and user-friendly platform where employees share their knowledge and make it explicit. (www.biomedcentral.com)

This method of sharing knowledge is effective because there is a wide scope for learning, past mistakes won’t be repeated, also works as a centralised organisational unit for organisational learning. FAQ’s can be answered readily and makes knowledge transfer easy.

Google is an example of organisation that use wiki’s and blogs for knowledge sharing. There is a strong sharing culture at Google since the very beginning. Google’s intranet is made of numerous different tools but it is articulated around a big wiki. All employees are pushed to share freely and to learn from each other (the opposite of the company’s interaction with the outside world), no isolated team (no silo), and open communication is the rule. The company tries to hire smart people who are nice to work with, with an open mind suitable with the sharing practices. “Everybody from engineering to sales to folks who sweep the floors can read about and create commentary on anything in database. This is one of the issues that made Google a pioneer in its field of work.

Use of Blogs:

Blogging, a web2.0 technology has become very popular these days. We in our organisation encourage every member of the staff to have their own blog and publish posts about their experiences with a particular industry and its work behaviour regularly so that every employee goes through it, post comments and share their tacit knowledge.

Knowledge workers use blogs to capture and use information, to document individual thoughts, to reflect and to convey with others. This way, some of their tacit knowledge becomes explicit. This way of knowledge sharing is effective because it involves less money and effort. It also helps increasing the communication between individuals and there by resulting a friendly work environment.

In Albion, we think that using wiki’s and blogs give our company and our employees a specific edge that we are currently looking for and also solve our problems like problems regarding the industries . Apart from this using web2.0 also helps solving some of our knowledge management problems with training, staff turnover, thereby creating a friendly work environment with a free flow of knowledge.

Let me make it clear to you by giving a example. Our organisation got a order from Marks and Spencer to get them 10000 pieces of cotton shirts with different designs. The team associated to Marks and Spencer started looking at different industries in India which manufacture good quality cotton shirts. The team looks at other aspects as well such as specifications given by the designer and the capability of the industry to manufacture such kind of shirts. To get all this information, it takes so much time for the team to decide for any particular industry. Now, with the wiki’s having records of every industry it will be easy for them to find the particular industry they are looking for. To know much about the industry and the problem they may face there, the team looks at blogs of other employees who wrote about their experiences with the chosen industry. This way Blogs and Wiki helps the employees and eventually the organisation for knowledge sharing.

References:

MA Chatti, M Jarke, D Frosch-Wilke ; 2007, International Journal of knowledge and Learning

Maged N Kamel Boulos, Inocencio Maramba, Steve Wheeler; 2006, Retrieved on 11 march 2009 from www.biomedcentral.com

Michel Buffa; 2006, Intranet Wikis, Retrieved on 23 march 2009 from www-sop.inria.fr

KNOWLEDGE CREATION AND MANAGEMENT IN ORGANIZATION

KNOWLEDGE CREATION AND MANAGEMENT IN ORGANIZATION

Certain elements are important for an organizations survival and development. One of them is Knowledge Management, which is also the vital aspect in organizations of any kind. Before we go into why Organizational Knowledge should be managed and how it is done, we should know what organizational knowledge is? Organizational knowledge is the knowledge possessed and used by the organization as a whole to gain competitive advantage and customer satisfaction. Organizational knowledge can also be defined as the sum of the knowledge possessed by the employees, knowledge workers, the management and the knowledge available to them through experience of the organization which is justified. But Bhatt (2001) totally disagree with my definition of Organizational KM. He says that Individual knowledge is necessary for developing the organizational knowledge base; however, organizational knowledge is not a simple sum of the individual knowledge. Organizational knowledge is formed through unique patterns of interactions between technologies, techniques, and people, which cannot be easily imitated by other organizations, because these interactions are shaped by the organization’s unique history and culture.

Organizational knowledge management is the process where knowledge is created, gained, managed, moderated, distributed and utilized collectively among the employees of an organization. The main steps of organizational knowledge management are creation, managing and distribution. Knowledge can be created or gained in different ways. There can be different ways an organization can acquire knowledge. They can be attained by focusing on issues such as why we have gained a project or why have we lost it, current features of the market, observing competitors and most importantly knowing who knows what.

Nonaka I (1994) says that there are four modes for knowledge creation and knowledge can be created when it goes from tacit to explicit. Socialization, Externalization, Internalization and Combination are the four steps where knowledge can be created in an organization. In these processes Knowledge flows in every form i.e.: from tacit to tacit, tacit to explicit, explicit to tacit and from explicit to explicit. Stephen McLaughlin (2007) explains more about how knowledge is created and shared.

Knowledge Transfer Mechanism	Desired Outcome	Impact
Tacit to Tacit	Innovation	Creative thinking, cross-organizational team-working, improved team-working, and the generation of new knowledge
Tacit to Explicit	Standardisation	Standardise data formats, common understanding of presented information
Explicit to Explicit	Control	Dissemination of information across organisation, better (centralised) decision making based on accessible information, improved access control of information, data manipulation
Explicit to Tacit	Empowerment	Better real-time (distributed) decision making based on accessible information, improved data analysis

I see that certain factors such as organisational culture, work environment and time plays vital role in knowledge creation process because knowledge is created by knowledge sharing. According to my opinion new knowledge is created by ones’ personal interpretation of the information gained. This knowledge can be useful for organisational development. Apart from this knowledge can also be created via social networking both on a personal and organisational level.

Knowledge gained will be useless if not managed properly. There should be certain knowledge management strategies which should align with the organizations core strategies, objectives and its culture. These strategies are to be customized based on the organizations basic needs. An organization should have its own Knowledge management system which supports its Knowledge management strategies. We should design the knowledge management systems by keeping in mind the sources of knowledge we have in our organization. They are the employees, expertise, experiences, etc, .The knowledge from all the sources should be integrated, its quality tested and justified. It should be in such a form so that it can be readily used whenever necessary.

We can also employ suitable tools such as IT, web 2.0, etc to support these systems and can be made available to each and every employee of the organization.

One good example for this will be one of the success stories of KM in Siemens sharenet . The backbone of ShareNet is an intranet that facilitates knowledge transfer by allowing for three processes: the capturing; developing; and reusing of knowledge. The system covers two types of knowledge: Tacit and Explicit. ShareNet helps people to access the required knowledge at the any time. The updating of the knowledge base involves a continuous self-assessment and conscious focus on the process. So employees are encouraged to reflect on the sales process post and ask “which knowledge would have been useful at the beginning?” and “What source materials would I have needed?” The answers to these questions can be used to ensure re-use of valuable knowledge. But, the system is only as good as the knowledge within it and one of the main tasks was to assure the reliability and value of the content in ShareNet. Another task was to motivate people to actively share knowledge. These problems should deal to achieve the main goals of ShareNet: saving time, reducing costs, increasing quality, increasing sales and increasing profit. (Bernhard BN and Francesco C, 2003)

So I can conclude by saying that Organisational KM is very important and gives good competitive edge and customer satisfaction to a organisation when used effectively.

REFERENCES:

· Bhatt G D, 2001; KM in organisations: Examining the Interaction between Technologies, Techniques and People.

· Ikujiro N; 1994; A Dynamic Theory of Organisational Knowledge Creation: Organisation Science; volume-5; number-1

· McLaughlin S; 2007; Managing Knowledge for Success, Engineering Management; Retrieved on 1 April 2009 from www.theiet.org/management

· Bo B Nielsen and Ciabuschi F; 2003; Siemens Sharenet: Knowledge Management in Practise: Business Strategy Review, volume-13, Issue 2, pp 33-40

KNOWLEDGE MANAGEMENT SYSTEMS

KNOWLEDGE MANAGEMENT SYSTEMS

Knowledge management is gaining more and more attention now- a- days. It has become one of the important factors for an organisations growth because knowledge has become an organisational asset. So, what is a Knowledge management system? A Knowledge management system is an information system used to share, process and integrate the knowledge in an organisation. A KM system is the integration of knowledge acquired, shared and the technologies which support them. Through proper KM system the face of the organisation changes. KM systems can be tailor made or we can even adopt the best practises.

As we all know Knowledge Management is the process of creating, acquiring, processing and sharing knowledge in an organisation, a KM system is used to support this process in a particular way such that knowledge will be available at any time for every staff of the organisation. While designing a KM system, a organisation should bear in mind its clear and specific goals and its strategy to achieve them because they have to align with the KM strategies in the system. Knowledge flow in an organisation involves two strategies. They are personalisation and codification. Knowledge flows in a personal level or codified level or both depending on the structure and culture of the organisation. The major challenge of managing knowledge is less its creation and more its capture and integration (Davenport, 1997). According to Davenport new knowledge creation is not so important, he emphasizes on capturing knowledge from others expenses and experiences. Integration of knowledge that is available from different sources and making it more meaningful is important in a KMS.

Knowledge is of limited organizational value if it is not shared. The ability to integrate and apply specialized knowledge of organizational members is fundamental to a firm’s ability to create and sustain competitive advantage (Grant, 1996). Grant specifies that there is keen need for expertise in an organisation and knowledge creation happens through integration and application of specialised knowledge which gives the organisation competitive advantage. But in my view, if I am concerned I don’t agree with either of the authors because knowledge creation is very important in my view and new ways of doing a work gives a organisation the needed competitive advantage and I dont think that only through expertise does knowledge creation occurs. Knowledge will be tacit in every employees mind. It is the principle of the KMS to make it explicit and by integration does new knowledge is created.

Culture of an organisation is important for any KMS to work efficiently. The culture should be in such a way that there should be no hierarchies and work environment should be open and the flow of knowledge and information should be free. From the view of the culture-based perspective of knowledge management, managers associated knowledge management with learning (primarily from an organizational perspective), communication, and intellectual property cultivation. Some suggested that the information/technology component of knowledge management was only 20% of the concept whereas the cultural and managerial aspects accounted for the bulk of the issue. (Alavi M and Leidner D E, 1999).

Knowledge Management system provides continuous learning in an organisation where lessons learned are related to problems that the employees may face certainly, FAQ’s, and the solutions will be given by their colleagues and expertise who are experienced. An ideal KMS should have a good CKO, knowledge workers, repositories of knowledge, friendly environment in the organisation so that knowledge flow will have no barriers and there should be support of Information Technology so that knowledge can be made available to every employee in an organisation at any time. An ideal KMS should have all these characteristics and their goals can be achieved through proper support of Information technology or any other user- friendly technologies.

I found my argument identical to Davenport et al (1998) where he specified some factors which contribute to knowledge project success. They are

· Technical and organisational infrastructure

· Standard flexible knowledge structure

· Knowledge friendly culture

· Multiple channels for knowledge transfer

· Senior management support

Thus Knowledge Management systems play a vital role in giving the company the required features and making all its employees knowledgeable and helping in gaining competitive advantage and customer satisfaction.

REFERENCES:

1. Davenport, T. H. (1997), Knowledge Management at Ernst and Young,1997, http://knowman.bus.utexas.edu/E&Y.htm

2. Grant, R.M. (1996), ”Prospering in Dynamically-Competitive Environments: Organizational Capability as Knowledge Integration", Organization Science, pp. 375-387.

3. Alavi M and Leidner D E. (1999), “Knowledge Management systems: Issues, Challenges and benefits”, Communication of AIS, volume 1, article 7.

4. Thomas H D, David W De L, Micheal C B (1998), “Successful Knowledge Management Projects”, Sloan Management review, Winter

PROBLEMS OF KM

PROBLEMS AND QUESTIONS RAISED:

• Michael Zack in 2000 wrote a book titled "If knowledge management is the solution,What is the problem?"
• What are the systematic structure ,processes and incentives that work together in shaping effective knowledge management practices?
  

• How should the Knowledge barriers such as knowledge acquisition,integration,transfer mitigated?
• How to acquire the knowledge to solve the knowledge management problems?
  

• Is it through coordination,experience or is there anything else that we need to do?
• How to increase the effectiveness of a CoP for sharing knowledge?
  

KNOWLEDGE COORDINATION PARTLY ANSWERED:
Individuals or groups face this knowledge coordination problems when the knowledge needed to diagnose and solve a problem or make an appropriate decision exists,but know about its existence or location is not available to individual or group.Knowledge management problem requires a search for expertise and are aided by an understanding of patterns of knowledge distribution of who knows what and who can be asked for help.(Subramani,sambamurthy,2005)

Personally I think the people who are seeking help should approach the repositories or posting the problem on the intra net or discussing it in a CoP.
PROBLEM OF KNOWLEDGE TRANSFER:
Knowledge transfer problem can be solved only after the knowledge coordination problem is solved.If the knowledge is not coordinated or acquired properly,the concept of knowledge transfer is meaningless.
"Knowledge is found to be sticky and contextualized as a result of which it might not be easily transferable"(Szulanski 2000)
The ability of a individual or a group or a organisation to absorb or understand or adapt the knowledge that is transfered depends on their individual outlook at a problem.
PROBLEM OF KNOWLEDGE REUSE:
There are problems of motivation and reward related to the reuse of knowledge(Markus 2001).
This occurs when individuals or groups may prefer to devise a unique solution to a problem rather than reuse the standard knowledge available in repositories.Recognizing individuals or rewarding them for being helpful appear to paradoxically create disincentives to reuse of knowledge.(Sambamurthy,Subramani,2005)

COMMUNITY OF PRACTICE

"A group of people or groups who share a concern or passion about a topic who deepen their knowledge and expertise by interacting on an outgoing basis" (wenger at al,2002)
Groups or people having different goals,working in different platforms,adopting different strategies for the same goals can also form a CoP.

According to Etienne Wenger (c 2007), three elements are crucial in distinguishing a community of practice from other groups and communities:

The Domain:

A community of practice is is something more than a club of friends or a network of connections between people. 'It has an identity defined by a shared domain of interest. Membership therefore implies a commitment to the domain, and therefore a shared competence that distinguishes members from other people.

The Community:

In pursuing their interest in their domain, members engage in joint activities and discussions, help each other, and share information. They build relationships that enable them to learn from each other.

The Practice:

Members of a community of practice are practitioners. They develop a shared repertoire of resources, experiences, stories, tools, ways of addressing recurring problems in short a shared practice. This takes time and sustained interaction.

THE REAL COLOR OF CoP's:
I have been reading a lot about CoP's now a days.First I thought CoP 's are a great platform to share and acquire knowledge.But whats is going on with CoP's in reality?

• Are they really as effective as they seem to be?

• Does a ideal CoP exist in reality?

I agree that CoP's are effective with in the organisations and there are success stories for intra-organisational CoP's.But what about the Inter-organisational CoP's?
While thinking about the CoP's my mind is flooded with a stream of questions that i cant answer neither the books nor the websites I referred answered me those questions.

• How can CoP's exist in IT field where every company is a competition to other?

• How can they exchange the knowledge that have been acquired through great effort?

• Will any organisation help other competitors so that they can perform better?

Let me make it clear to you by giving an example.

• The biggest software companies in the whole world are Microsoft,IBM and Oracle corporation.They are the biggest competitors.There is no way they share the knowledge they acquire or the one in their repositories.All the projects or information are highly secured.So,what is the point of a CoP here?

• The organisation that I'm presently working with is our KMS where we are assigned to do some research and present our ideas in a perspective.Our superiors told us to comment on others articles so that we can develop a CoP and share knowledge.But what exactly happening is some people din't even post anything on their blogs and there is no question of commenting on them.I din't even receive a single comment and I dint even get a reply for the comments I made.I dont know whats the reason.The reasons may be they dont want to present their idea for the fear of failing,they feel that others might copy from thier blogs,they want to surprise all of us.But I know that everyone will be having thier content on their blogs on thursday.Their might be other reasons involved such as culture,background or may be to show their superiority.I don't think the CoP in our organisation is working effectively.This is my idea but other people might think differently.
• LEARNING IS IN THE RELATIONSHIPS BETWEEN PEOPLE-McDermott(in Murphy 1997:17)

• The best example I can give is the CoP's in NGO's.

When I'm doing my B.Tech in INDIA,where child labor prevails,I took a boy who is a orphan and homeless to a NGO.But to my utter surprise they said they wont be admitting him as he is not suffering from any disability or disease.I asked them if they can take the responsibility of sending him to other homes which they can do easily.But they said they couldn't do that as they are not related to any other NGO.I went all around.Some said that the boy should be a Christian,some said that they treat only AIDS patients.But no NGO took the responsibility.
I have heard a lot about NGO's such as Oxfam, CARE, World Vision, Save the Children whose revenues exceed billions of dollars every year.But they only work in countries where they have their own networks.They are not associated with other NGO's.Some work for relief programs,some for tumor affected,some for old people but no organisation works for everyone.I know it is not possible to work for everyone.But they can form a CoP and serve the people in a better way.
The concept of CoP's are good but when they are put into real practice,they will be better.
"An ideal CoP should be a platform where everyone strive hard to develop their respective or chosen field."
REFERENCES:
Wenger,Etienne.(2007),Communities of Practise,http://www.infed.org/biblio/communities_of_practice.htm.Accessed febuary 11,2009.