[Part one of a two part series – I am half way through, but have some thoughts to share]
Lately, I have been geeking out, reading a lot about how the internet, and specifically social media has exposed companies in all kinds of ways. So, reading Josh Klein’s Reputation Economics has been somewhat refreshing….
Because, really what Klein is getting at, is that for good or for ill, the internet exposes all of us. Both in ways we choose (reviews of products, blogs like this, LinkedIn) and in ways we don’t (geotagging, search histories, product purchases) Klein argues that although currently companies still have the upper hand in ownership of this kind of information, it is becoming increasingly democratised. Over time, we will all be able to access a whole lot of information about everybody else.
So the focus on reputation in Klein’s title means more than we would initially think. Not only does it mean reputation in the traditional sense (what I think about you, your trustworthiness etc.) but it also means your characteristics: what you like, what you worry about, what you know about. Reputation comes to encompass who you are, or at least what other people can make out of who you are, based on the increasing amount of information made public about you.
Klein argues that in many ways this is akin to historical forms of engagement. In a village, people knew about each other and bartering, information exchange and favours were, to a large extent based on what they knew. Well, yes and no. Yes, people in the village would know about your ‘traditional’ reputation. They would know if others had trusted you in the past and what the result of that trust – positive or negative – had been. But I imagine, in most traditional villages very few people would have had access to your inner thoughts (which I would call Klein’s postmodern understanding of ‘reputation’) the way that the internet does. My guess is that, just as today, people in these villages selectively shared their worries and dreams with a small, select group of people. Only today are they available – sometimes for a price, sometimes for free – in the global marketplace. And only today do you have no idea who is accessing them, how, when and for what reasons.
Also, in the view of Reputation Economics, reputation is increasingly based on a ‘democratic ideal’. Institutions, companies and individuals who are perceived to be more transparent and open to sharing and co-developing new ideas improve their reputations. Protection of intellectual property is out, collaboration is in. Creativity is valued above all else. Well, again, yes and no. Yes, probably, for intangible products, like software (and this is where Klein’s background as hacker comes in). Here, cost of entry has been minimised, expertise can be leveraged across locations and time zones, all culminating in one product, developed in the cloud.
But what about when your product relies on stuff, that works? Klein talks a lot about 3D printing, which can replicate a chair. But, as yet, 3D printing can’t replicate a car, or a computer, or an oil rig. These things still need to utilise technical expertise and build a thing (accepting that supply chains are now global) which is eventually manufactured in one place. And although in some ways cost of entry to these fields has fallen in recent years (some widgets are cheaper, some activities can be automated) other costs have risen (non-automated labour, for instance) and the number of manufacturing companies going bust, year on year, shows us that not only the cost of entry, but the cost of operations remains prohibitive for most. You could see that these industries cannot be fully transparent, and must maintain some level of IP to compete in the marketplace. Could they share best practice better? Absolutely. Could they share everything and still operate with sufficient profit margin? Probably not.
And this is where Klein seems to be getting ahead of himself. Undoubtedly, the internet has challenged the previously unrivalled ascendancy of money and financial markets in the transactional sphere. It has allowed us to recognise previously intangible or unreachable information around reputation, interests etc. But money still makes the world go around. Bitcoins are fashionable and may yet become ubiquitous, but at present they are nothing more than a philosophical challenge to the primacy of financial markets. The Top Ten Companies in the Fortune 500 all trade in tangible goods. And fundamentally, Klein is still arguing that reputation, as well as having personal value earns you money.
Now, I accept I am only halfway through this book, and I may want to come back in a few days (and indeed after I have seen Klein speak tomorrow) and eat some or all of my words. But I just wanted to share my thoughts with you at this stage, and empty my busy brain.