My favorite moments are when companies create harmony between the business and the experience; experience reinforces the business and the business reinforces the experience. This is the balance that makes the hair stand up on my neck. Nerdy and sad I know, but mark my words, this will outline the collective future of our economy.

Today, it’s rare to see such a clear symbiosis between the two parts, mostly because the two are never developed simultaneously. This will change, but really we’re in the dark ages. Either the business leads and the experiences plays catch up or you have an amazing experience with no business model

Not a new business, but I think this example of Getty Images really highlights a beautiful symbiosis. Getty Images managed to redesign their watermark and elevate their business model at the same time – brilliant.

Thanks to my colleague Scott Patterson for the find. Video is from FastCoCreate viewed here.

A lot of people seem to be using “big data” as a proxy for systems at scale and the data that comes with those systems. The general suggestion is that if you have a large system with lots of users, there must be patterns hidden in that data. And it follows that those hidden patterns must be worth something to somebody (right?)…so there’s gold in them there digital hills. (So many references to prospecting in the data world; mining, sharding, etc.)

I had the good fortune of hearing Cesar Hidalgo this week the Media Lab. He spends a lot of time thinking about networks and large data sets, and he had some great thoughts on the topic. In his talk, Hidalgo defined a nice framework to distinguish Big Data from a lot of data. He had three simple qualifying questions.

- Do you have size? – This is pretty relative to the problem you’re working on. But it’s usually in the hundreds of thousands/millions of records. You’ll need enough to provide some statistical significance across your population. But the greater the set of data the more edges you may be able to discover.

- Do you have resolution? – This brings some analysis to the data at hand. Just as all rock does not contain gold, all data does not contain (new) patterns. Low-fidelity data might be all customers transitions with order-level (total amount spent, etc). High-fidelity data would be all the customer transitions with item-level data, (the thing the customer purchased to make up the transaction.) Visa has the former and Amazon has the latter, and it’s no surprise Amazon knows you better. High-resolution data will illuminate new patterns, like Target’s recent misstep of identifying a pregnant teen before she could tell her father.

- Do you have scope? – This question starts to consider the reach of your data. Are you only gathering data against a very focused problem, or are you gathering data that will give you insight beyond your core business? Being able to understand patterns outside your immediate market will create new opportunities for understanding. As an example, Hidalgo spoke about telephone companies, who know your calling patterns, but also can also make determinations around mobility patterns because they know which cell towers you’ve used during your day.

So, though there’s a lot of noise around this space there’s a lot to be done here. And as the hardware, software, and services companies wind people up to capture more data, there will be more patterns to discover – this space is very self-fulfilling like that. Along those lines, this stat came up during the talk: 70% of all data captured about people it’s gathered by machines. So as we put more sensors in everything, we’ll push this ratio further.)

Getting beyond the hype, I’m excited to see what type of new patterns emerge from deeper analysis of data. There’s definitely space for data scientists to unearth new patterns that help designers create new experiences. But to be certain, the real opportunity isn’t in Big Data, it’s in gaining better resolution to the problems we’re trying to solve and the markets we’re trying to serve.

(If you’re into this sort of thing, here’s another talk by Cesar Hidalgo. It’s really nice, definitely worth your time.)

While it’s an honor to try my hand at writing for such a large/broad audience, it’s a lot more difficult than I expected. Feedback appreciated.

I kept seeing the same malware hack over and over. A bit of 64-encoded JavaScript somehow got embedded in my site and that code would embed a hidden frame collecting browser data. Google actually alerted me about the hack. I thought it was nice that they have a vested interest in my site staying virus free.

My old hosting provider, it turns out, didn’t really have the same vested interest in my site staying operable. It took days and days to get any support. There was a lot of veiled blaming that I caused the problem. Out of frustration, I even offer to pay extra for a malware repair service they offer – no response. I couldn’t even pay extra to get any one to help me. Around the third round of getting hacked, I discovered lots of people were having the same poor service and security. I’d used Dreamhost for 10 years (!). I was actually in denial that the service had gotten so bad, probably in my top 5 worst service experiences ever.

So, now with a new hosting partner, I’m angling for more posts and less hacks. The silver lining is that it’s all coming together just as I’ve started to fall in love with writing again.

In the design of the app, the developers must have really thought hard about people’s hesitance to share their location because they designed a timeline into each notification. So, if we were meeting somewhere and I was running late, I could send you a link that would display my location on map and that link would only work for a configurable amount of time, (say 30 minutes). During that time, as I moved around you could see where I was on the map. After 30 minutes, the link goes dead.

I’m pretty excited about this little bit of functionality because I think we’ve entered into a new phase of how we deal with our connected life. We have so much data and so many connections, sometimes the data or the connection would be better if it wasn’t permanent.

What if the systems that carry more temporal data really started to reflect that data’s ephemerality? Twitter is decent example of a designed to decay system, tweets only hang around for a handful of weeks. What if restaurant reviews created a year ago carried less weight than the ones made last week? What if past-date promotional emails just disappeared from my inbox? I have loads of weak Facebook connections that I wouldn’t miss if they just expired? (No offense, but that let’s me focus on the people I have greater connection with).

Right now we live at the end of the digital firehouse, everything just lands in our lap and we have to decide what to do with it. Some of The most meaningful online interactions mirror their real world counterparts. For the moments that matter now but not later, we will begin to have to design for disappearance.

Yesterday I was interviewing with a colleague of mine, Joe. Without realizing it, I think he blurted out a pretty perfect description of the idea of business design. He simply said, “we hack business models.”

I really love that statement because of all the implications of the idea of “hacking”. For me hacking implies that you’re working with an existing system and pushing and pulling on its boundaries to see what will happen. Tools can be crude and fast, but there is an eye to understanding and evolve the larger system. Hacking implies that what you’re doing isn’t a science, but there’s probably a lot of underlying laws ad principles involved. There’s no certification to be a hacker, but not everyone can do it. And to be a good hacker, you have to be pretty curious, confident, and inspired.

As I frame Business Design loosely as a hacking exercise, it also starts to draws some boundaries for what is and what isn’t business design to me. Businesses tweak their model all the time, and not every change is a design. If you increase the price for your goods, that’s not really design. If you change your entire pricing structure to communicate a new type of value, that’s probably business design. Netflix raising rates isn’t business design. Netflix launching a streaming-only pricing option is definitely the result of a lot of hacking and some pretty smart business design.

All this hacking leads me back to the idea of a system. Businesses after all are systems that create/provide value. That’s very academic sounding, but thinking of a business as a system that must remain in balance is sort of the first step to being able to frame and solve problems differently. (And there’s a ton of companies who think of a business as a kit of parts.) These systems have many interrelated parts (and people). As you add or remove some element of the business, a different component will be affected. As you design the customer experience, you have to design the business model that supports it. As you design the business model, you have to think about what sort of experience you can provide.

It’s all about the system; it’s all about balance.

At first, I was glazing over a little bit. The idea of ‘leaders of tomorrow’ is one of those phrases that’s been so co-opted by the business schools and business press of the world, it almost doesn’t mean anything anymore. But as the conversation continued, I started to realize just how massive of a challenge she was talking about.

The idea of leadership is a weird animal. It’s mostly internal personality characteristics that manifest themselves in significant ways. Good leaders see the world from a unique perspective, they get things done, they make people feel valuable. It’s easier to reflect that someone is a good leader, rather than project that they will be a good leader.

After a lot of thinking and conversations, I believe that what makes a ‘leader’ has to do with their levels of curiosity, confidence and inspiration. Of course there are lots of other characteristics at play, but those elements seem to be the three traits I see over and over that define people and how they become these strong leaders. There are many talents good leaders learn over time, these three feel a little more innate.

Now the interesting thing about these characteristics is that they don’t have formal outputs, they’re personality components. They drive how we react internally to our external environment. You see evidence if these characteristics through storytelling. These personal stories help explain the energy that moves people between moments, the ‘why’ not the ‘how’ or the ‘what’. For example, you spotted an opportunity somewhere because you are curious about the world you live in, you were able to attack a problem because your had confidence you could solve it, or you designed/built something because you were inspired and were moved to action. Etc, etc.

So, as the conversation continues, I start to realize just how curiosity, confidence, and inspiration work like the physical engine in a car or a virtual engine in a video game. They need inputs to produce outputs, and, depending on their design, they deliver radically different things.

This is the point at which I started to think about how the idea of leadership has changed. People that are twenty years old today grew up with massively different inputs than people who are forty, (and in someways we’re culturally trying to fit them into this classic leadership definition.) These people may lead in the same style, they make some of the same decisions, but the way they find their confidence, inspiration, and curiosity to make those decisions is so different, we can’t even know how it works yet.

Today, anyone curious and inspired enough can have massive amounts of data from completely different industries to consider, they have global networks they can learn from, and possibly most importantly, they can operate in near-real time. Our connected world is probably the greatest force in upending the classical definition of a leader. The problems they will tackle and outcomes they will know will probably be drastically different, but I still think those three characteristics will survive (they’ll just function very differently).

I’m definitely not doing the conversation justice, but You can see how it’s easy to focus on a lot of misleading elements when we try to identify leadership. It’s easy to go for major achievements and heroic moments, but the ‘why’ behind the ‘what’ always will tell a deeper tale.

There’s much more to think and write about here…this is sort of a beginning.

What do you think?

In my study sample of 150 businesses that ran Groupon promotions between June 2009 and August 2010, 42% said they would not run a Groupon promotion again. Their main reasons were that a significant proportion of Groupon redeemers are extremely price sensitive, barely spending beyond a discounted product’s face value. Not surprisingly, repeat-purchase rates at full price were also low — just 13% — for these businesses.

It goes without saying that Groupon could definitely design to solve this problem, but it’s going to take a different perspective that they have now.

Most of the social games we’re seeing today are largely about ‘grind and reward’; you have to farm to get a currency (grind) and then you can trade currency for that little special something to show off to your friends (reward). The props are different, but the mechanics are largely the same. The games are really approachable because anyone with enough patience and tenacity can grind out goods, and the experience is satisfying because in some small way, you’re earned for that reward. In a society of complex tasks and relationships its satisfying the same way cleaning your house might be, or working in your yard. From a distance its mockable, but the experience is real. There are millions of people grinding on virtual farms and frontiers even as you read this. The rewards are satisfying too; people pay real money to buy virtual currency to skip grinding out their rewards.

In certain circles, people have a problem with these sorts of games. You see when you have a grinding mechanic in a game and your repeat the same action over and over, it starts to feel like a little bit of an addictive mechanism. Players are sure to go back to their farms everyday to play and earn goods (and the games are designed to promote that). Just like mindlessly dropping tokens in a slot machine, players head back to their farms just after the cyber veggies have ripened to retrieve them and sell them. Zynga is the darling of the startup world because they’ve figured out how to do something no one else has; they’ve got an algorithm that makes people predictable.

Lately, I’ve been wondering if there’s a way to redesign some of these game mechanics. I’ve been wondering if there’s a way to navigate the tension of making the game exciting enough for people to play often, but make it rewarding and diverse enough and get rid of the grinding. I think if the game designers flipped the scarcity model in the game they could unlock something completely new, I’ll explain.

So in Farmville, the scarcity model is based on currency to purchase ‘things’. It takes time to earn this currency and this is where Zynga wins. They’re betting you’ll dump real money in the game so you won’t have to wait to get your reward. I’ve been wondering what it would look like if the game itself was ephemeral. What if every two weeks there was a new and different adventure in Farmville you could play? Like what if every two weeks they added a level? During this adventure, much of the game play could be the same, but you’d be playing because at some point that level will disappear. With the massive adoption of some of these games, you could imagine releasing new levels that would drive the same level of interest as Harry Potter movies. You could imagine developing rich story lines that rival Mad Men. As you push toward a serial model, you create social games that could be truly social events; everyone can celebrate because everyone starts the level at the same time. Now, instead of everyone experiencing Farmville in a sad cyber silo, they can post about the different activities or story lines going on in the level. They will have a reason to connect around content. Then much like Facebook itself, the experience will drive repeat visits, the community will help drive rewards the games can stop treating people like gambling junkies.

Right now social gaming seems to be about taking proven game mechanics and replicate them over many themes to drive growth. But if the beauty of social gaming is an easily deployable platform and a vast audience, why not create stronger communities around the games? Why not give players reasons to connect? Why not have challenges that players have to work together similar to boss fights in massive multiplayer games?

Trust me, this is the way this space will move forward. There is no way your friends mom is going to farm purple cows for the next 5 years. But if social gaming gives her a platform that she can connect with the story the same way she did that last season of Desperate Housewives, lets her connect with her friends about the experience, and walk away with unique badges that help her boast about being part of a community, that is the way forward.

I’ve always been a little live and let live around the pot issue; you like it fine, you don’t like it fine. I though it was novel that they might legalize the substance and tax it to help California climb out of the financial gutter. With that in mind, it didn’t seem like the worst thing in the world. It also seems like in some ways it could mellow out the drug war that we fund so ferociously on the border. Anyway, musings aside I started to think about what the business around the legalization would mean and it was sort of jaw dropping. The issue seems like a pretty crazy social iceberg.

Let’s play this through. Lets say Prop 19 passes (which by the way, looks like it won’t). If it were to pass, it would basically create an instant industry. I get that there are all sorts of illegal pot practices, but if it became legal large corporations like RJ Reynolds and Altria would immediately enter the space. They would set up shop with so much capital to operate you wouldn’t even remember it was supposed to be a local business growth initiative. If they can make a tobacco operation profitable, they would go bananas growing marijuana – much higher profit, much smaller operation. Much like factory food, they would systematize and standardize the product; it would eventually get cheaper and stronger, etc. And, if the measure held, they would lobby for national legalization. It would be pretty impossible to keep California from become the pot supplier to rest of the US. So even if it didn’t pass, people would buy it on the web.

As this all started to sink in, I realized that there’s just a massive irony to the story for me. This Proposition is sponsored by this progressive pro-pot activist in Oakland. (How he got thousands of pot-heads motivated to get enough signatures to force a state ballot proposition, I have no idea.) If that initiative passes, there’s a good chance he could create a market so appealing that bigger players would move in and put him right out of business. Most companies have a really hard time sizing new, untested markets. This markets been more or less sized through the war on drugs.

I don’t think I can think of any single event that has the potential to instantly create an industry. And to top it off, from a business perspective the measure seems like it would cause more problems for the people who hoped to benefit from it the most. We live in interesting times.