Why Traditional Business Doesn't Get Online Initiatives

I'm familiar with befuddled stares.

This is what happens when I try to explain online to traditional business folks. And I had to think about why.

Almost every business class, business seminar, business anything is built upon the concept of scarcity and control.

This is why companies like Verizon are suing to stop the sale of 700mhz band that Google's interested in buying (and others). If there is an open band that cell phones can access, all the barrier to entry of building a multi-billion dollar cellular network to play is gone, opening up competition and lowering prices. I don't blame them - that's all they know.

The web rarely about scarcity - there are a million places to get information. So many people come to me and tell me they have some killer idea that's never been done or thought of before - and I can guarantee you, it probably has. The question is: Has it been done well? Is it a good user experience? These are higher-level marketing items that quite frankly, many CEOs have never delved into. There are plenty of CMOs who don't even really use the Internet. I've met them. I've cringed. Multi-billion dollar companies regularly completely kill any chance of online success because they strangle success in the cradle of a fifty-person committee meeting, coming out of it with a weak, watered-down, and ultimately useless attempt at manufacturing cool (free hint to those folks: if you can't build cool, sponsor cool).

The secret online is in how you pull that information together, how it's packaged, and in some cases, what entertainment value you can provide to get an audience to follow you and spend money with you or your sponsors. I think of the"Will It Blend?" by Blendtec. GENIUS. We're talking about a $399 blender (base model), and I know plenty of people it's convinced to buy it. There are a million and one blenders out there, especially cheaper than it, but talk about showing instant value as well as being entertaining and viral. If it can blend an iPhone, I'm sure it can handle my daiquiri just fine.

On the other hand, we have Walmart with their fake-blogging and Facebook fiasco - continually trying to manufacture cool with a brand that, frankly, simply is not.

It's why some people are hesitant about new media and the web - "you mean I need to give it away something for free to get something? And it has to be good?"

There is some truth to what Seth Godin says about the web - either be the best or don't bother doing it. Why? Because there are a million other people trying to do what you do. In some ways, it's hyper-competitive - and in other ways, it's not - because unlike other mediums, there is a tendency that if your content is REALLY good, it will rise to the top.

I also look at the rise of Facebook - I won't say fall of MySpace - but Facebook undoubtedly is gaining steam very quickly. Why? It's for a myriad of reasons, including clean interface, coolness, etc. but also key to the story is that instead of closing development of applications, add-ons and widgets to enhance the user experience, like some sites do - Facebook has an open API. So does Digg.com. They give it away, whereas in the old model you'd have to pay to play.

This creates ownership - and why I think Facebook is less susceptible to people "moving on" to the next social service, as you have users - key mavens, in fact - who have personally invested in it through the creation of unique tools.

It's becoming very clear that there will be two classes of companies: Companies that get it, and then companies that don't who will suffer for it as the people who live in this new online world, and use as an integral part of their lives, gain more and more spending power.

p.s.- I realize that in this post I've use the word "multi-billion" more than one normally would. I apologize for this. However, I figured it illustrated the point better than "gigantic," "gargantuan," or "fat-walleted."