Higher Education can’t Keep Up: Online Retailers Need to Hire Experience, not Diplomas

It’s pretty hard for anyone to admit it but it’s true: universities can’t keep up with the times. They cannot deliver qualified individuals for the growing online retail segment because there is nothing to be qualified on. Of course, there are some courses that cover some successful business models but truth be told there is no use in knowing Amazon’s business model as long as there is already one Amazon on the market.

The original college drop-out overachiever.
The original college drop-out overachiever.

How did it come to this? When did this pillars of economic evolution start to lose ground? Let’s have a look at some of the potential causes and some answers on how to hire and develop the right individuals for the online retail segment.

Universities teach rules. On the internet rules are meant to be broken.

The whole concept behind higher education was that one might benefit from (1) a few extra education years, (2) access to some very experienced professors and most important although not usually talked about – (3) a network of like minded, probably successful colleagues. These three factors don’t really apply to online business in general and online retail in particular:

  1. with wonder kids such as Mark Zuckerberg and the Google Duo, dot-com entrepreneurs are expected to be successful before their early thirties. Spending too much time in the academia is not really the best choice if you are an aspiring young millionaire. Have a look at this M. Zuckerberg’s interview back when Facebook was Thefacebook.com. The thing you should be thinking about – how can someone driven, ambitious and aware can stay in college for 4 years when he feels ” ‘near future’ being like anytime in the next seven or eight days.” Remember – this guy is a Harvard drop-out.
  2. as for the “very experienced professors” – there is no way they can actually be that experienced unless their name is somewhere along the lines of Jeff Bezos or Jack Ma. The high education fees and the time spent in conventional education facilities are not really that useful when it comes to innovation. Professors are not really the most adaptable types. Most of them are still trying to understand and explain the Dot.com Bubble. They are historians rather than explorers. Of course, understanding our past can save us from some trouble but it can also lead to a certain lack of innovation, a thing the internet thrives on.
  3. the network of like minded, probably successful colleagues is not really spending that much time in the classroom. They are studying, alright, they are building networks and they are building stuff. Just not where you would expect them to do that. They hang out in technology hubs, they read books on their Kindle and their laboratory is probably a Macbook.

Unfortunately a college diploma shows only that the individual can remember some things and can obey rules. That’s great for middle management and below but what do you do when you need to hire talent? Where can you find people that can turn Brick and Mortar stores into online retailers?

How to attract talent that can develop Online Retail Companies?

No matter how big your company is – you will be always faced with recruiting issues. How to look for the right candidates, how to attract them and how to keep them are always distinctively  difficult issues.

Some of the larger companies, such as Walmart, have chosen the path I believe works best: buying entrepreneurs. When I say buying  – think more than cash. The large pay check is one type of incentive, but not the only one. The right kind of people need a purpose, a direction and the freedom to choose their own teams. They will be motivated by a large vision, a goal to strive to and a team that can help them achieve that goal.

Here’s how Walmart CEO Mike Duke managed to lure ex-eBay engineer Jeremy King, now CTO of Walmart. Notice how Mike Duke had already decided that although ecommerce is not really the biggest piece of the pie – it is the key to continue Walmart’s development in the future.

After years of seeing his company lag online, Duke swore that digital was now a priority for Walmart. Duke had restructured the company, placing e-commerce on equal footing with Walmart’s other, much larger divisions. He had made serious investments in high-tech talent, acquiring several startups.

Hire experience – any kind of experience.

Remember – what did you do when you first tried to ride a bike? Chances are that unless you were an unusually talented  child or a late learner you got a few bruises out of your first try. However, due to those slightly annoying incidents, you managed to learn what to do and what not to do.

As an online retail business owner or manager you should be looking for experience. Experience doesn’t come easy. As I said earlier in the article – there is no one there to teach young professionals what to do and what not to do. So far, at least. As such you will be dealing with people that failed, struggled, tried again and again and eventually learnt a thing or two about online retail.

In time, education will adapt to this changing landscape and it will offer better suited courses. In the same time online retail will develop into a mature industry and things will start to get rusty again, just as it had happened to classic retail. Then you will be able to hire diplomas again. Until then – keep you eyes open for experience.

Does internet help education?

“The printing press helped education”. It’s pretty hard to argue with that. When Johannes Gutenberg invented the printing press he had a simple idea in his mind: to help more people read the Bible. Also – make some money out of it (Gutenberg was a goldsmith so we might assume he had some economic motivations).

The printing press helped Europe escape the Dark Ages

 

The printing press

Back then The Church held a monopoly on Bible printing and distribution. Most of the Bibles were hand written in Latin and it was frowned upon, to say the least, to translate or own one. There were few people able to read, let alone read Latin, so the Church held the absolute truth as priests were able to interpret the Bible in any way they found it appropriate.

Johannes Gutenberg changes all that in 1440 with his invention of the printing press. He is credited with having printed the world’s first movable type book, a 42 line Bible.

The context was favorable as Europe was seeing a post-medieval rise in learning, the early notions of capitalism appeared and manifested themselves through a high interest in product efficiency. In just a few decades the printing press spread throughout Europe. This is not as impressive now as we take book publishing  and distribution for granted, we read our books on tablets or the Kindle but back then it was unheard of any technology to spread that fast. In under 4 centuries the book printing output rose from one million to over one billion books.

Soon people began printing more than Bibles. Authorship actually started meaning something. Back when the printing press did not exist the author was not really important. A copy of Platon’s Republic in Paris may have been entirely different from the one in London. Authors where sometimes unknown and most didn’t find any interested in writing something that brought no profit or recognition in return.

The sciences blossomed as people were able to exchange ideas in writing. The arts started blossoming as literature was finding its way to the masses. The first newspaper was printed in 1620, almost 200 years after the invention of the printing press. Illiteracy dropped as educational means were now available and the life quality increased.

We may never know how important the printing press actually was to the evolution of mankind but  we can guess that were it not for the printing press we might still be living in the dark ages.

There was a time when we didn’t have internet access

Imagine the world without internet. It’s pretty hard to do that now as you have probably spent at least an hour today sending and receiving emails, using Google, shopping online or reading the news on your favorite news portal. If you are older than 25 you might remember a time when the Internet was something closer to science-fiction than everyday utility. There was a time when you actually had to wait more then a few days to send a letter to someone across the globe.

How did the Internet came to be?

ARPANET

Back in 1950 a point to point computer communication between mainframe computers and terminals was developed. A decade later this led to the development of several networks and in 1970 one of these networks, the ARPANET, a military developed network, developed the concept of internetworking, basically a network of network. 1982 saw the implementation of TCP/IP, a protocol to allow interconnection. A few years later ARPANET was decommissioned and in 1995 the internet was commercialized.

Bam! Everything exploded! Well – not actually. At that young age the internet was still mainly used for scientific purposes and information exchange.

Soon, though, people started experimenting with email systems, eCommerce, self-publishing, and others such.

A big breakthrough in research and education were the search engines. Before Google there was Altavista and Yahoo. Yahoo was actually a web directory that helped users find websites based on interests. The development of Google meant people didn’t need to browse for hours to find what they were looking for (we might remember the days when a 64kbs dial-up connection was considered a luxury).

The internet and education.

Altavista

Now we can find almost any kind of information online. The search engines crawl billions of webpages on a daily basis, everyone with an access to a computer and  internet can easily publish an article and Amazon is already selling more instant-delivery eBooks everywhere in the world.

Some of the most important universities in the world now have free access to online courses. Have a look at this list to get a glimpse into how much information is available to anyone willing to spend the time to learn.

As  mobile internet consumption rises new education approaches emerge. Apple launched iTunes U, a collection of higher education courses in audio or readable format.  Hard to reach populations are actively taught through mobile internet connections.

Some of the most prestigious universities in the world have online courses that offer a degree with lower education costs for those in less economically stable areas.

The Wikipedia

Yes, “THE” Wikipedia is probably the greatest education feat in the human history. Human knowledge is now accessible for free to those that want to learn more, understand more. It features more than 4 million English articles and is available in 278 languages.

Wikipedia drove the paid print version of Encyclopedia Britannica to extinction as generous article contributors have made Wikipedia the go-to place for fast research.

Internet has changed many things for the better but education is the field that changed most. Never in our history has so much information been available to so many. I believe in a future where individuals are empowered, informed, educated. Internet has mad that possible as education and information became publicly available.

 

Gift economy – an idea to change the world

We live in a society organized on the principles of scarcity as driver for profit and social recognition. Our free market system works on a pretty simple principle: people exchange goods with each other with the help of a monetary system. As a result the ones that are better at playing this game get more social recognition, live longer, better and attract better mates.

Open markets vs Centralized planning.
Capitalism vs. Communism

The last hundred years proved that the open market is a better response to people’s needs and wants than the communist economic theory. Communism failed to deliver the results it promised. Centralized economic planning eventually lead to mass social movements, frustration and eventual destruction of communist regimes. The communist governments were parasitic in essence, planned the economic development and backed their decisions through military force.

There are still some communist states at the moment and the highest profile is clearly China. With a booming economy one might wonder what did China do and other communist states (such as the former Soviet Union) did not.  First of all, given time, the Chinese regime will have to change its approach to governance. It already started doing so. Right now China is not as communist as we expect it to be. Collective ownership and central planning are rarely found in China’s economy as every business is at least partly private.

Although there is still just a single party, the almighty Communist Party, the economy is a mixture between capitalism and communism, with very few Marxist methods. Local leaders are evaluated based on economic growth indicators and are encouraged to find innovative ways of fostering growth.

Therefore – the one communist regime that did make it is not that communist to start with. Basically the Chinese government managed to reach a smooth transition to capitalism.

We can see that capitalism was a better bet than communism but is there something better than capitalism? I believe so and we can see this in a very old type of economy that resurfaced in the Internet Age: the gift economy.

The gift economy

Think about the the post you are reading right now – you are getting information that was distributed freely. It is hosted on a free blogging platform, developed as open-source software, based on an open-source programming language, having data stored in an open source database. This is an example of how “free” and “open” can happen. You are able to read this because I wanted to share this information with others, some people thought of the idea of hosting blogs for free, some other people contributed freely to the blogging software and some other people developed the tools to make this happen. Asking nothing more in return than gratitude and recognition.

“I can’t buy food with gratitude and recognition”. Of course you can’t but you gratitude and recognition mean prestige and prestige is a very good way to land a good job or deal.

Have a look at what some of the best developers in the world are doing: they write free software, they get recognition, they get people using their free services and then get founded by venture capitalists to expand their software into large companies. Take Facebook for example: it charges nothing, its prototype was built and distributed freely by Mark Zuckerberg. In time the social network made Mark very rich and it all started with a gift he offered to the world.

If you think about it, what we call wealth is basically a recognition of our contribution to the world. We provide a service or product, the price people agree to pay for this is just quantified recognition. That’s basically the whole basis for our current economy.

If we were to take out the monetary system we would basically have a gift economy that would cycle through groups of individuals.

Why did the internet develop a gift economy?

I believe the Internet is not just a technology. It is a world in itself. It has its own rules, its own citizens, its own localized governing groups (highly influential internet users that can provide leadership for their friends or fans). It must develop its own economy. As this economy does not (yet) have a specific largely spread monetary system (we still use offline payment methods) we needed to find a way to address this issue.

Books and ideas as gifts: Paolo Coelho allows people to pirate his work.

Gifts are the solution and intellectual property is exactly the kind of product we can offer without losing anything and at the same time gaining prestige and recognition. Best selling writer Paulo Coelho was talking about piracy and the S.O.P.A. (Stop Online Piracy Act) in some terms we would not expect from someone that makes a living (actually a fortune) from selling his books:

As an author, I should be defending ‘intellectual property’, but I’m not.

Pirates of the world, unite and pirate everything I’ve ever written!

The good old days, when each idea had an owner, are gone forever.
First, because all anyone ever does is recycle the same four themes: a love story between two people, a love triangle, the struggle for power, and the story of a journey.
Second, because all writers want what they write to be read, whether in a newspaper, blog, pamphlet, or on a wall.

If we think about it his actions are actually very sound in terms of business: he wouldn’t sell anything unless people would know about his work. The more people know about his work, the more prone to buying they are. Behavior economics principles state that we care about other people think and we are prone to do the right thing. We know about the writer as we have read his books online. So did our friends. We know that he should get some kind of financial incentive for the work he put into writing the books. The easiest way to do that is to buy the books.

As a result Paolo Coelho, a writer that somehow pirates his own books, has sold more than 100 million books. “This has nothing to do with giving away your work for free” you might think. Yes it does. Uploading a free Russian translation of his book “The Alchemist” resulted in an increase in book sales from 1000 to 1 000 000 books per year.

Shockingly … Africa still has a poverty issue.

Piracy and Gift Economy

Piracy is an issue of great debate this days. Supposedly this form of information sharing is harming the media industry. I guess piracy plays its part. However, piracy is the cause AND effect of increasing knowledge, curiosity and need to access information.

Wealth distribution inequality

Wealth is not distributed equally. Not by a long shot and the gap is increasing fast. Here are just a few facts (Sources: The Conference Board of Canada, Fight Poverty):

  • 42 % of world income is distributed among the first 10% of world’s richest people
  • 1 % of world income goes to the poorest 10% 
  • half the world’s population lives with under 2 $ per day
  • 20% of the population consumes 86% of world’s goods

Those numbers are astonishing and poverty is not going to go  away unless we do something about it. Foreign aids do not help as corruption seems to go hand in hand with poverty. State loans don’t help either as the poorest countries seem to be the ones most prone to impose the repayment of loans to their already impoverished citizens. Humanitarian donations and philanthropic concerts performed by Bono don’t work either as they usually help the ones that need it less: the rich and powerful.

There is however something that does work: education. Studies showed that education is very effective in fighting poverty. Educated individuals improve their own life quality and help economic development.

Empowered, informed, educated

Empowered, informed, educated should be the three words on any agenda that addresses poverty issues. With the proper infrastructure anyone in the world can have access to information that can make the difference between famine and prosperity.

The gift economy can help those in need more than money can. Right now the motivated individual can find all kinds of information online regarding all sorts of topics from survival techniques to quantum physics and advanced health courses.

India GDP Growth
Source: http://www.marketresearchanalyst.com/2008/01/06/indian-civil-aviation-market-posed-for-growth/

Internet is already helping lives. The information should be free if we are serious about addressing world issues. Piracy helps. Software companies are outsourcing their IT departments to countries like India thus lowering costs. Fun fact: piracy rate in India is 64%. Do you see a correlation there? I do. Those people needed to learn  and increase their revenue before they could pay for software. If they would not have had access to software and information they would have never had the kind of skills that allows India to have the economic growth it has (see chart).

Looking at numbers and charts we cannot fully understand the impact gift economy and information sharing has had on countries like India. But think about the numbers of lives that were saved, the millions of people that could afford to eat each day and the impact this has on the future to better understand the bigger picture.

Gift economy is changing the world

Many people are worried about the impact gift economy has, the way information sharing is changing the world. That’s why we are seeing more and more talks regarding things like SOPA, ACTA or other intellectual property management acts. The media is changing, software is changing, access to information is changing and that means less money for those in control right now. It also means a better future, a future where everyone actually stands a chance at living a decent life.

There are 7 billion people in the world right now and the numbers are growing fast. Relying on centralized organizations to improve life is not the way to go. The individuals need to be empowered, informed and educated if we are to survive the next millennium. The gift economy is still in its youth but things are moving fast in the age of Internet. Ideas spread fast and the gift economy is the kind of idea that changes civilizations. As Voltaire said:

“An invasion of armies can be resisted, but not an idea whose time has come.”