Dispatch from Davos I: More Disruption Ahead

This week, Ketchum President Rob Flaherty is attending the annual meeting of the World Economic Forum — which brings together 2,500 CEOs and government leaders in Davos, Switzerland — and is reporting his observations. On Jan. 31, he will host a special webinar open to the public, “Davos 2011: An Insider’s Guide to Key Insights,” in which he will recap his experiences.
The first full day of the World Economic Forum got off to a brisk start with a discussion and debate among mobile technology and social network experts.

At a session titled “Connectedness: An Update,” participants heard from Sean Parker (made famous by Justin Timberlake’s portrayal of him in The Social Network), Wang Jianzhou, chairman of China Mobile, and Jeff Jarvis, CUNY Professor and editor of the blog BuzzMachine, among others. Here are some of the highlights of the session.

An Aside on the Size of China
During the session, Wang pointed out that his talk can be heard on the summit of Mount Everest because one of his company’s 650,000 base stations is more than halfway up the great mountain. Turning to Parker, he pointed out that China Mobile now has 600 million subscribers, about equal to Facebook users.

Disruption as the New Normal
Parker, a highly successful venture capitalist, predicted more disruption like the impact of digital music and the iPod on recorded music, which reduced that industry from $45 billion in 2001 to $12 billion in 2010. Underlining this point, fellow panelist and venture capitalist Jim Breyer from Accel Partners said that his firm “wants to back brilliant, seminal entrepreneurs that are attacking industries that are closed and proprietary, with high fixed costs and bureaucratic structures.” Sounds to me like an explicit warning to most existing companies today.

Breyer also asserted something that can be thought-provoking for Ketchum and our clients. He said, “New disruptive businesses cannot be created while defending the balance sheet of a large company.” That’s why he looks at young entrepreneurs for truly disruptive new models. But what if you’re an established business? “You need to set up a tiger team of entrepreneurial employees at a different location with somewhat different compensation models,” he said.

Apps and the Web
There was much debate about the increasing role and pervasiveness of mobile apps: Are apps, many of which are more closed and less connected, damaging the open culture enabled by the Web? Parker denied this, pointing out that the ways people embrace and use the best apps are fostering an evolution from initial, closed tools to social, open platforms.

The Next Facebook
For years, young entrepreneurs have come to him hoping they have the “the next great platform,” the next Facebook. He called this the “Field of Dreams” approach: If you build it, they will come. Instead he advises them to build on a set of apps that everyone already wants and develop them into the next great disruptive platform — as opposed to aiming for the next big thing from the start.

Moderator Jarvis called this dynamic the “link economy.” His explanation is useful to everyone at Ketchum and our client firms, as it emphasizes the importance of connections and building on the successes of others. “We always said ‘content is king,'” he said. “Today, content without links has no value.”