Polygraph Media Blog

Data Mining... a Primer for Marketers & Decision-Makers (Part 1)

A bit of a dry post today, unless you're a data geek like we are.

Since our launch, we've entered a few customer and partner conversations that would've been best served with an introductory primer in data mining.  I would estimate that a majority of marketers don't have a firm grasp on the requirements and/or what the opportunities are in the field of data & data-driven decision making.

So here's my "business guy shorthand" on data mining, what's available today, and the opportunities all of this affords.

First of all, content on the Internet has exploded as others have chronicled over the last few years. From the linked article above: 

"...compliments of Dave Turek, the guy in charge of supercomputer development at IBM: From the year 2003 and working backwards to the beginning of human history, we generated, according to IBM’s calculations, five exabytes–that’s five billion gigabytes–of information. By last year, we were cranking out that much data every two days. By next year, predicts Turek, we’ll be doing it every 10 minutes."

How did this happen, you ask?  Look no further than the social media movement, which democratized publishing to the web via blogs, put our videos online via YouTube and Vimeo, broadcasted our short-form opinions via Twitter, and chronicled our life through Facebook.  And alongside those services are a series of other services that all collectively help us chronicle our lives online.

I personally love this infographic below that illustrates just how much data we're all creating today.  It's a far cry from when we needed a web developer to post content for us.  Additionally, check out this compendium of stats from 2011.

In addition to the revolution in self-publishing, we've simultaneously had a revolution in the collection of data in the corporate realm.  Gone are the days of Day Timers, Day Minders, etc.  In with the world of Salesforce.com.  New Point of Sales (POS) systems are no longer analog but rather "digital", which allow for the collection much more data that can be analyzed and explained. Every part of a modern business can be digitized and recorded today for data analysis -- and smart businesses are doing just that even if they don't have the analysis capability just yet.

Additionally, government agencies are publishing data to the Internet now with increasing frequency -- making records public that were once published to books, stored on microfiche, or available only upon specific request in-person.

The greater point is that we're all creating data about ourselves every day -- personally, as citizens of our locality, as employees, etc.  Although the "quantified self" movement is relatively young, we're already uncovering introspective ways that we can get smarter about the things that we're doing using data as our guide.

Through collecting and analyzing data appropriately, all stakeholder groups can benefit.  A few quick examples...

• Self -- quantifying exercise, meals, etc. for better health. 
• Business -- quantifying operations to understand efficiencies in staff, travel, etc.  Mining customer data to understand market segments & purchase intent.
• Public Sector -- combing through the data to better isolate fraud potential.  Using data to optimize tax receipts.

The common term across all of them is "efficiency" -- using data to become more efficient.  In a hypercompetitive world, efficiency is the way to unlock more profits through decreased costs, increased revenues, and/or improved experiences.

Additionally, data can be predictive and prescriptive.  Let's say you are in a family of four and have bought two cars over the last 8 years.  You have a luxury car with 20,000 miles and an SUV with 200,000 miles.  It's a simplistic case, but the data in this example suggests that you might be in the market for an SUV soon and years away from another luxury car purchase.  That's the predictive part.

Odds are if you got the SUV serviced by a data-driven car dealership, you've heard from them recently about trading in that old clunker in exchange for a shiny, new SUV.  That's the prescriptive part -- send everyone likely to buy a new car a new advertisement.  Like it or not, but it happens all the time already... all while many corporate marketing departments are not fully optimized to take advantage of the opportunities available via data.

As we've talked with a number of companies about our work in big, social data, we've discovered a wide range of companies in terms of adoption of data analysis -- collection, normalizing, analysis, data-driven decision making.  Some are leading the way, and others still make analog decisions.  To be expected, although we do think the shift towards data is a long-term trend that will be impossible to ignore for most.

In the next blog post, I'll talk more about the mechanics of making sense of it all -- from data normalization to analysis and informed decision-making.

Polygraph Media - Adventures in Big Social Data

Sorry we've been so quiet lately - have been hard at work taking a product to the marketplace.  We are jumping into the big social data business feet first.  You can sign up for our private beta at http://www.polygraphmedia.com.

In addition, Tommy Perkins (who traveled with me to Denver) made some great observations in his blog post yesterday.  I encourage you to check it out.

All told, we are very excited about these new opportunities and we see a lot of potential in big social data.

8 Observations from #mashcon (Mashable Connect)

I was fortunate to attend Mashable Connect late last week -- a great conference down in Orlando.  I don't have a ton of time to write right now, but I thought I'd jot down some observations.  Here were my takeaways:

1. Surprisingly (to me at least), I didn't hear a lot of innovation from the speakers.  The bigger companies innovating were really just showing off or describing their incremental advances on the iPad and in social.  The agency folks didn't really share anything I hadn't heard before and the startups were "eh".  No big deal but I didn't hear anything earthshattering and that shocked me a bit.
2. I though Michael Lazerow (@lazerow) from Buddy Media had an interesting vision.  It was almost a mini-pivot in that Buddy is moving from customized Facebook apps (where FBML once provided a "moat" but with the iFrame no longer does) to Social ROI.  Who knows how that will work.
3. I did talk with a lot of "social media cheerleaders', which is fine but to me indicative of both the fact that I was indeed at an industry event and that we're in a bubble.  Bubbles occur in any industry where there is rampant optimism and where skeptics are unpopular and their opinions are almost shocking.  An interesting data point for me was when @districtjoe (great guy) pointed out that I'm skeptical about everything and that he doesn't hear that often.  It's called an echo chamber & most folks at the event were squarely in it.
4. I loved @steverubel's clarity -- overall his presentation was great.  His explanation of the cloverleaf really made a lot of sense to me -- I had seen the illustration before but had not heard it described so well.
5. As is typically the case, there are a few brands who are silently & humbly kicking ass.  You know who you are -- and you know far more about the business than many of the invited speakers.
6. @scrollmotion dragged me kicking and screaming into submission.  The iPad (and the "tablet movement") is indeed real and here to stay.  Really impressive stuff.
7. I heard a great argument for Twitter from @jkrohrs, a new friend I made from ExactTarget.  I am not sure I totally agree with his points that Twitter is better for marketing than Facebook, but I understand the argument better just from spending a few minutes with him.  Smart guy.
8. Finally, this one has been covered a bit but I'll say it again -- tech startups are starting to behave more like agencies and vice versa.  Agencies control customer relationships and are finding small development projects that can be productized.  Tech companies are realizing the limitations of a software business model & can be much more profitable if they include a services/consulting component.  That's a dirty word for a lot of VC-funded tech startups, but it may make them financially viable and it can work out that way faster than the alternative.
9. (bonus) I really like Gowalla's clarity now.  They seemed to get caught up in "check-in mania" last year & it confused their value proposition.  Now they are enhancing experiences with location and vice versa.  Much clearer.  Much better.  The messaging and the approach fits them.  I hope they succeed.

Congrats to the Mashable team for a great event -- I really enjoyed it (maybe at times too much!!).

 

Reviewing my 2009 predictions

It's time for the self-assessment of my predictions for the previous year.  Here goes...

Government 2.0 -- if the Obama administration earned a mandate of any kind, it is in the area of government intervention in the free market.  There will be opportunities in not just the modernization of government data systems/infrastructure, but also in helping government operate more efficiently and helping government help business.  I expect to see billions of public dollars move into areas where Web entrepreneurs can benefit.  This may be the biggest story in our industry in 2009.

Grade -- C 

Yes, modernization of government has been a key agenda item for the Obama administration.  But a few things made this somewhat of a non-story in 2009:

• Bigger problems in the economy and in unemployment,
• Government inertia despite the mandate,
• Policies driven to inject money into the economy quickly which (sadly) is counter to doing it efficiently.

The cycle begins to refresh -- the prospects for early-stage startups should improve throughout 2009.  Why?  We'll collectively snap out of the panic of 2008 and time will pass.  We'll all look ahead more optimistically to the future.  Remember, a lot of this panic has been the destruction of capital -- but a lot of it also has to do with capital sitting on the sidelines.  It will be increasingly unleashed throughout 2009.

Grade -- A-

By and large, I think this has happened.  Advances in real-time, social gaming, and social networking technologies have continued.  Economic value has been created.  In fact, a second tier of startups is emerging from these new platforms.  I don't think things have gotten crazy, but I do think that startup people are a lot more positive today than a year ago.

Forks in the road -- I don't remember a time when the major players in our industry all had tough strategic choices for the future.  Google needs a second trick.  Microsoft needs a way to make progress in advertising.  Facebook needs a business model.  Twitter needs a business model.  Loopt needs an acquirer?  Yahoo needs an acquirer.  Apple needs diversification beyond hardware.  Some will find the answers and there will be some consolidation.  The choices these major players make will determine quite a bit about the future of the Web.

Grade -- B-

Facebook and Twitter have largely figured out their business model issues.  Reportedly, Twitter is now profitable on the basis of the search engine deals and Facebook is rumored to be in a position to do $1 billion in revenue in 2010.  If that's true, WOW.

But the major players haven't really impressed me with their responses.  Clearly, Google is out in the front of the pack with a few innovations in local search and advertising that could respond to actions by the emerging social media giants.  Microsoft, Yahoo, and Apple have all done some rather incremental things to take advantage of social media in a big way -- but none have made big, bold moves to compete.  I am similarly waiting for Amazon to jump into the pool as well -- we shall see.

The cloud computing platform & developer attention fight intensifies -- "Use my API and host it on our cloud platform"  OK, I don't think we'll get to that point in 2009.  But the proliferation of web services and cloud computing platforms will only continue this year.  Open data has won just about everywhere on the Web.  Amazon Web Services will be joined by competitive offerings from Google and Microsoft.  What is common across all of this?  The need to win over early stage startups.

Grade -- C+

This has happened to some extent, although the battleground has been over social/local/geo data from startups and relatively new market entrants.  I do expect the battle over web application hosting to intensify -- just later.

All told, if I'm calculating my performance like a semester in school, I come up with a 2.68 GPA for 2009.  Eh.  The biggest issue here is my timing -- I was optimistic yet again about things happening fast.  We'll see.  Have a great remainder of your holiday!

Wanted: Entrepreneurs to Fix Federal Government

As I scanned my RSS feeds this AM, I tripped across an interesting article on Alan Greenspan's concern about U.S. debt.  Summarizing -- he sees an impending fiscal crisis (duh!) that can only be fixed by finding ways to reduce federal spending.

One proposal that he supports is the creation of a bipartisan commission to tackle issues of deficit reduction.

Here's an idea for you, Mr. Greenspan.  Let's set up a commission of entrepreneurs to find such opportunities.  Limit participation by lawmakers, lobbyists, and attorneys (no offense, people) as much as possible.

Entrepreneurs are probably the most qualified people around who can find inventive ways to do more with less.  Why?

1. We're broke and cost-sensitive.
2. We have to be great at finding inefficiencies and fixing them, otherwise we fail.
3. We have a lower sense of entitlement than other groups.
4. At worst, we'll funnel more resources to ourselves, which has potential economic benefits of its own.
5. We have no problem making people angry.

The more I think of this, the more I think it's actually a pretty good idea!

Believers and Non-Believers

Since leaving Microsoft just under 18 months ago, I've worked with a number of incumbent organizations to help them modernize their businesses with Web 2.0 themes:  social media, real-time, self-serve, collaboration, etc. I've worked with government folks, people in local media companies, publishers, consulting firms, major technology companies, auto manufacturers, etc. on consulting projects, social media implementations, new workflows/company policy, new business opportunities, and initiatives to improve efficiency.  I've spoken at industry events as a presenter, a panelist, and a moderator.

All these experiences have led me to believe that in business today, there is a big and increasing gap between "believers" and "non-believers" in change/modernization.

I would be painting with a broad brush if I were to say it is a generational gap.  It isn't at all.  Nor is it just a social media or Web 2.0 thing.  It's bigger than that.  It's generally a gap between folks who see that now, more than ever, business moves too fast to not think critically and make quick adjustments to take advantage of trends that will ultimately impact both the top and bottom line.

Let's step back and look at what is happening broadly in the economy.  Despite the rosy predictions, the fact is consumers are revisiting their personal spending today.  If we are going to even remotely revert to mean levels of debt in society, it will be at least a 3-5 year trend -- not just a mere blip on the radar.  Mish Shedlock touches on this theme of the Age of Frugality repeatedly in his fantastic blog that I highly recommend.  Like it or not, America (and the World for that matter) is going on a diet.  Collectively, we mortgaged the future for the present... and the future is now.

With lower consumer spending, there are increasing pressures to do more with less inside the corporation and perhaps redefine business for the future.  In this sense, big institutions of all kinds really have a lot more in common than anyone really thinks.  I touched on this a few months ago when I said that Microsoft's problems and those faced by the newspaper industry are pretty much the same, but today I'd say that large incumbents in a variety of industries are all in the same situation.

I don't know what to make of it just yet, nor do I know exactly how to profit from it at this moment.  But I've never seen people so divided in large organizations as they seem to be today -- people who bring about change vs. people who want to maintain the status quo.  I see a new example of it almost every day.

We are indeed living in an unprecedented time when the business landscape will be shaken to its core... where businesses will be redefined... where new brands will thrive... where old ones will fizzle... and where a lot of companies that can't adapt intelligently with limited information will die.  Now if someone could just tell us all what "adapt intelligently" means, we'd all be OK. ;-)

But there are no answers and there is not enough data to tell you exactly what to do.  There won't be -- technology, innovation, and advancement are by definition impossible to project into the future.  You have to feel your way through the jungle.

Social Media Permanence & Implications

I thought I'd briefly talk today about permanence as it relates to social media.  Specifically, the fact that once you obtain a friend/follower/fan, it's really hard to lose that person.  It is perhaps one of the most understated benefits of establishing a good presence for yourself or your brand while it is relatively easy.

Facebook and LinkedIn require a two-way handshake for people to identify each other as friends/trusted contacts.  The social contract of friending and acknowledging trust is an important one that happens at the point of first request.  Think about when someone friends you:  you get a notification over e-mail and you then have to decide what to do with it.  Does this person fit your "friending policy"?  Would you want to associate yourself with him/her?  And is this a contact who you will regret not friending some day if you are perhaps on the fence?  As I've pointed out before, most people start off with rigid rules then relax them after gray areas become more often than you'd think.

Twitter is a little different.  Following is a much more common and lower impact decision.  You get notifications from a person until you are tired of hearing from him/her.  As long as you're interested in the subject matter, you remain a follower.  If someone takes his pedestal too far, if he/she comments too often, or if he/she changes the purpose and/or mix of professional/personal Tweets, that may result in having fewer followers.  I think a lot of the same things are beginning to happen with Facebook Fan Pages.  Like Twitter, a Fan receives content from you on their News Feed on Facebook after they decide to associate with your business or brand.

What does all of this mean for personal and corporate social media strategy?  A few implications come to mind:

• It is relatively easy to establish a presence with followers/fans/friends today in large part because social media execution is not yet standard operating procedure.  It's like creating a powerful corporate Web site was in 1997... on the mind of a lot of companies but not yet in full execution mode everywhere.
• Therefore, it will get *harder* over time to set up an effective social media presence.  i.e. there will be no novelty in getting started with social media say in 2011.  Everyone will have a presence and most innovative ideas will likely have been explored by then.
• Permanence dictates that you won't "lose" friends/fans/follower that you get right now easily... unless you make a big mistake.  Make a friend/fan/follower today and you are likely to keep that person for awhile.  So investments today could pay off for many years to come.
• We are at the beginning of a several year phase where the real meaning of having a large # of fans/followers/friends will take shape.  Nobody knows where it is headed *today*.  But I do think it is relatively safe to say that monetization and ROI will become a lot clearer over time.  What you're doing today with social media is setting the stage for the future of effective advertisement -- you are lining up people who you may market to in the future.

This is the time for experimentation.  We are at a point in the history of the Web where people and brands will try a lot of different things to engage with customers effectively.  Make mistakes now while you can and learn.  You can get away with a lot more today than in the future.

Why we can't all get along on Twitter and what to do about it

Maybe I'm slow, maybe I don't think about these things in an academic sense, I don't know... but it recently occurred to me why Twitter sometimes annoys me.

1) it's every man/woman/bot for him/her/itself,

2) everyone has a different use of Twitter, be it personal, business, or rapidly generating a following,

3) everyone has a different perspective on what the rules are or what they should be,

4) everyone has a loudspeaker.  As @cheeky_geeky so eloquently puts it, Twitter isn't as much a conversational platform as it is a tool for one-way communication.  The only difference is that in real-life, you can occasionally opt to ignore even folks you ordinarily like to hear.

Let's face it.  Statistically, it has to be pretty hard for someone to use Twitter and not be turned off by something they see or someone they follow.

It might be the guy who follows everyone.  It may be the woman who refuses to follow you back when you "do her the favor" of following her.  It may be the shameless self-promoter.  It may be the person who won't stop promoting their business venture that is getting no traction at all.  It may be someone who airs dirty laundry.  It may be a serial flip-flopper... the ass-kisser... the shameless groupie that comments on every semi-insightful point made by "the Twitterati".  It may be someone who annoys you with their political views, which are clearly so important and impactful that they need to be shared with thousands of followers.  I could go on.

The lack of a shared ethos re: Twitter usage is quickly becoming a problem for the Industry's latest darling.

Think about other communication media for a moment.  We've developed accepted practices around e-mail.  We know to be careful with SMS because the recipient is charged a fee for received messages.  Facebook and LinkedIn are largely governed by how their platforms operate... i.e. both people in a "friendship" or "connection" have to accept the other.

In Twitter, the only rule is that everyone can follow anyone... which means that we all approach Twitter with different intentions.  It also means that over time, you can gain less and less insight from data Twitter currently provides.  For instance, at one time early in Twitter's life, you would gauge a User's popularity and/or importance in a community based on the # of followers he/she had.  Now it may just be an indication that someone is a Twitter whore.  ;-)  OK - maybe that is harsh.  It could be an indication that someone is trying to build a following perhaps for business development purposes, and doesn't discriminate when taking on new followers.  My point is that the correlation between followers and a User's reputation is certainly not what it used to be, and it is continuing to trend negatively.

So what does all of this mean?  If Twitter is to continue to thrive, Users will need a way to filter noise and both consume and contribute to the broader community.  Twitter is a pretty good way to follow a few hundred people, but can someone reasonably follow significantly more people?  Not at present.  It doesn't have to be fully conversational in my mind, but it does have to be occasionally conversational.  If it isn't, it won't survive as a means for everyone to hold a loudspeaker and shout things into a deserted forest.

It also means that we all need more insight into the people we choose to follow.  We don't necessarily have enough data to make informed decisions today, so we'll continue to waste time evaluating what we see and what we read.  I'm not sure that is going to last too long.  Maybe I'm wrong.

If you and/or your brand does want to be listened to in Twitter, it's more important than ever to establish a good reputation.  Provide useful content in as human a manner as possible.  Be consistent.  Commit to sharing unique or curated content on a regular cadence that your users can expect.  Rise above and don't annoy.  Set the rules of engagement and you will win, but do so as a trusted, valuable member of the community.

Quick Hits - June 7, 2009

Random musings on a Sunday morning:

• Perhaps it is a total illusion, but as an entrepreneur, I feel totally shielded from all the economic malaise.  In my experience, I admit I was a little anxious as I transitioned from "steady paycheck" to "eat what I kill".  But after the dust settles, you realize the endless sea of opportunity you are available to take... and that's cool.
• I am really, really impressed with Carol Bartz.  If she were at the helm of Yahoo a few years ago, I think the tech/social media/Web 2.0 space would feel a lot different than it does today.  So I just created a Yahoo tag for my tag cloud -- I get the impression I'll write more about them over time.
• After talking with folks re: social media over the last six months or so, I get the distinct impression we're getting into a Social Media 2.0 phase.  What do I mean by this?  Well, the early adopters have their takeaways after being the first to do things with social media.  Folks who have been reluctant to jump in are now catching up.  Adoption #s are now at a point where social media is becoming mainstream across multiple demographics.  Social media is already maturing, perhaps faster than other technologies... so get ready for changes.  More ideas on this later...
• Willingness to accept fast & repeated failure -- I'm beginning to believe this is the key to startup (and VC) success.  Like a baby, you have to let your startup get sick, fall, learn, find out who/what it is.  The more you force it to be something it is not, the less you will enjoy the outcome.
• On the consulting side of our business, our first Government 2.0 project is humming right along.  I think a lot of startup people will struggle with Government 2.0 -- especially people who have not had a bureaucratic corporate experience under their belts.  Entrepreneurs are generally skilled in operating in a "free" environment that allows anything to be done.  Larger organizations, like government that works "for the people", have a lot more to lose by taking risks.  The best Government 2.0 success stories will come from both entrepreneurs and government representatives who are willing and able to meet halfway.  Web 2.0 in the Government context doesn't work when the outcomes are antiseptic, nor does it work when the outcome infuriates the people being served.
• Finally, I still see *a lot* of business opportunities in/around Twitter.  Although it is certainly different, Twitter is as much a communication medium like the Fax, Phone, E-mail, etc. as it is a social network.  Plan your new ventures accordingly.
• The one thing that could kill Twitter is spam.  I'd say half the new followers I've earned over the last month have been spam.  This one will be an interesting one to watch over coming months.

Making sense of controversial City of Austin Web Project, Government 2.0, OpenAustin

Stepping back from industry developments for a moment, I thought I'd try to make some sense of recent developments in Austin following a recent award of a major web development contract to a company from California.

First, some context.  I'm still a relative outsider in the Austin community, having moved back to town 8 months ago after spending almost 4 years in Seattle.  I am just now getting to meet folks and establish myself and my business here in Austin.  Additionally, I have met a few of the folks involved in government contracting from the private sector *and* our company Notice Technologies recently won a small contract with the city to help the SBDP (Small Business Development Program) market local businesses through its ExploreLocalAustin.com web site.  I am not going to make any value judgments here as much as I am going to summarize what happened (as far as I can tell) and suggest solutions to the systemic problems behind the story.

So what happened?  In shorthand, the City put out an RFP for a major overhaul of its web sites, citing that the sites are built using 12 year-old Web technology.  Makes sense, the world is *a lot* different today than 12 years ago.

Three companies bid on the project, two from the Austin area and one from California.  The Austin companies bid a little more than $1.3 million while the California company came in at a significantly cheaper rate of just over $700k.  Who won?  The California company, of course -- I'll bet the cost difference was eye-opening.

All of this created quite a stink within the local Austin Web community.  Why?

1. Three companies bidding -- The first many folks heard of this large project was the uproar around its award.  The City of Austin says that over 200 companies were notified.  While I'm sure that is based in truth, I wonder exactly what notification really means in this sense.  Clearly the tactics used to communicate with the community at-large didn't work very well.  It doesn't make any sense that a contract this large would only attract the interest of two local companies, especially in the recession we're in.
2. Loss of business to California -- In the tech industry, folks here in Austin hear about how things are in some way more legitimate or more sophisticated on the West Coast.  In my experience, this is certainly true in some areas.  But there is certainly enough talent in town to build a Web publishing system for the City and its various departments.  There is enough social media talent here to figure out how to use new technologies to make communication more efficient.  Folks around town know this, which makes losing a contract to a company in another part of the country particularly painful.
3. Lack of community feedback? -- In part because of the small # of companies bidding on the project, I think a lot of folks jumped to the conclusion that the City hasn't been seeking help to put together the best plan to fix its Web Sites.  Well, the City has apparently been thinking about this for awhile... try 18 months plus.  The City first solicited the Public for feedback in November 2007.  If you scan the City's AustinGo web site, you'll find detailed information on the process, a supporting blog (that was updated minimally), Town Hall meetings, etc. As a taxpaying citizen, I am not entirely sure I want the City to take longer than 18 months to go through feedback, evaluation, planning, scoping, and vendor selection.  But the data suggests that the City did a really good job of documenting the entire process here.
4. Concern over evaluation criteria & qualifications of evaluators -- I've heard this mostly from folks in the private sector.  People are concerned that the City may not have the right people to make an informed evaluation of the proposals they see.  I can't & won't comment on this -- I don't know the people involved, their backgrounds, etc.  What I can say is that very few people have 1) done business with the City, and 2) seen all the proposals to make a qualitative judgment.  Similarly, there is no governance from the private sector (as far as I can tell) to ensure that the City personnel are indeed making the right decision.  I think this is where private sector folks get concerned.

Meanwhile, in this case folks in the private sector have responded with the OpenAustin initiative -- it's a collection of crowdsourced ideas of how to improve Austin & City operations.

Overall, this is a very interesting case for Government 2.0 broadly.  As Government institutions get more and more resources and as they modernize, there is more at stake for the private sector.  Ergo, I expect more private sector involvement and scrutiny of Government decisions.  Remember, folks in Government agencies are already limited by issues of fairness, equality, internal policy, limited budget, etc.  Public sector scrutiny may just make it that much more difficult for Government decision-makers to move quickly and be bold. 

So how can this be fixed to the satisfaction of all involved?  A few thoughts:

1. Official local government policy re: supporting local business/employment -- This can be an explicit policy or one enforced in proposal scorecards. (i.e. Is the proposer doing most work locally?  Yes -- high weight)  I think this works well in communities that have the existing talent to get the job done.  Going too aggressive would create negative outcomes as well, so there is a happy medium here.  In any event, I think each local government should have a policy regarding the use of local companies vs. companies that don't contribute meaningfully to the tax base.
2. Public/Private Partnerships -- Government personnel are not always going to be the most qualified people to assess private sector proposals.  Get people from the private sector to help with these assessments.  Note I did not say "get them to make the decision for you".  A private-sector board that is available to answer questions surrounding a proposal or Government 2.0 decision is a very valuable thing to have at your disposal.
3. Government Transparency in terms the private sector can understand -- Government language and process is very difficult for private sector people to understand.  Often times, folks in Government positions don't understand that this can be very difficult for businesspeople to navigate and plan around.
4. Patience in terms Government can understand -- Entrepreneurs and businesspeople are often used to making quick decisions and doing things in ways that help advance their business.  Agility & execution are keys to winning.  The same is true for Government, but within the confines of what is possible.  Government personnel are often under a microscope that entrepreneurs are never, ever under with respect to public outcry and overreaction.  So when dealing with Government, harken back to the most bureaucratic corporate job you've ever held... and empathize.

Government 2.0 is going to be a major league adjustment for all sides of the equation.  We're just getting started.  Buckle up. ;-)