Jeff Jarvis runs the internet and media blog, writes about media for The Guardian, teaches at the City University of New York’s Graduate School of Journalism, and is the author of What Would Google Do? (our book review here). We spoke with Jarvis recently about his book and how he sees the world as changing in the 12 months since its publication. The transcript of the interview follows.

IESE/IME: Could you tell us a little bit about your book, and what you hoped the impact of your book would be?

Jeff Jarvis: The idea behind What Would Google Do? was not to write about Google so much as to write about the changes in our world. I believe that we’re going through something much more than a recession right now, we’re going through a fundamental shift from an industrial economy to whatever follows, a digital-based economy that operates very, very differently. My real thought was that one could try to understand that by looking at companies that are succeeding in this new reality, that understand this new reality, and who better than Google. I didn’t really want to report on Google, the story’s been told before, but I think that you can start to deconstruct or reverse-engineer a company’s success in this world and figure out how they see the world differently. So what I really hope is that whatever industry you’re in—I had a blog post today somebody sent me about how they’re trying to reimagine the timeshare industry, I’ve had some ministers sent me about how you reimagine a church in Googly terms—it really just says that the world operates differently, the economics of this world are different in fundamental ways, and if you understand that, you’ll find the opportunity in it. If you’re in a large, old legacy company and industry, your reflex is to protect what you have and that’s the worst possible strategy, protection is not a strategy for the future. So I hope that people will see the world with new lenses and then operate differently.

IESE/IME: Do you find that, in the 12 months since the publication of your book, the world has moved in the direction your book advocates?

Jarvis: I’d like to think so, to a certain extent. Twelve months is in a sense not a very long time, but I suppose in Internet time it is indeed a long time. I think we’ve seen some industries that have now realized more and more that they’re screwed. Look at newspapers and magazines and media. A year ago, certainly two, three years ago there was a lot of denial and protest that no, no, no, this is just a temporary thing, we can change this. Look at the auto industry, look at banking. Retail has changed markedly. So it has nothing to do with the book, but the reality of tectonic change is now more obvious to more people, and that turns them around and they say, what the hell do I do now? And that’s why I think that Google is a good model, to ask, what would they do?

IESE/IME: You say in the book: “Yahoo! is the last old-media company. Google is the first post-media company.” Could you explain that for us?

Jarvis: Yahoo operates under the old media model, which is pretty obvious and straightforward. We own or control content, whether we make it or license it, whatever, we own and control it. We then market to get people to come to us. We make as much money as we can with you while we have you, until you go away. That’s the old media model, it’s true of newspapers, magazines, any part of media. In Google, they try to go to where you are. And so AdSense is all across the Internet. They also changed the economic model of advertising and media fundamentally. In old media, we sold scarcity. I have only so many spots, on my page, I have only so many eyeballs, buy it while you can, I’ll charge what the market will bear, and I’ll make the advertiser take the risk. Google did something very different. By selling performance, clicks, they shared the risk, and they were motivated, their motivation was now aligned with that of the advertiser, because if the ad didn’t perform, both the advertiser and Google suffer. So Google wants ever better ads, ever more performing ads and so was motivated not to sell a scarcity but to create an abundance. That’s why it created AdSense, so there’d be more and more opportunities to advertise across the whole Web, with ever better relevance, ever better performance, ever better profitability, and both win. Those are big changes in media and I think that the media companies ignore that, and they think that Google just has this search magic, and that’s how they do it. No, Google changed the value equation with its customers.

IESE/IME: And that makes it a post-media company?

Jarvis: Right, because media assumes that it’s a destination, it’s something we go to, that media is a creation of a media company. Well, Facebook now causes more clicks to media properties than Google News. At some point, the audience becomes the distributor and the audience becomes bigger than the media, and becomes a critical part of the chain. So the old media model is, you create a destination, people have to come to you. The new media model is, you go to where the people are, and you account for the fact that they create media as well.

IESE/IME: You say the future belongs to entrepreneurs and call for an end to organizations and institutions. Yet Google is a large company. Are you saying Google should go away?

Jarvis: I’m not calling for an end to institutions. What I’m saying is that the future is entrepreneurial rather than institutional. That is to say that innovation and change is probably not going to come from institutions, it’s more likely to come from entrepreneurs. I was naïve to think that in media, in the 15 years since the commercial browser came out, I thought that media could update itself, I worked in media to do that. In fact it’s too hard for them to shrink down. A small company, an entrepreneurial company can build from the ground up with a lot more ease and speed, a lot less risk and cost, than a big company can shrink down, it has to go through a lot of cost, shutdown cost, it has to go through a great, cataclysmic cultural change. So what I’m saying here is that the more likely source for innovation and risk and invention is from the entrepreneurs rather than the institutions. The institutions will either buy those entrepreneurs and artificially inseminate innovation in their stream, or they will die. Some will manage to remake themselves but I think they’ll have to go through things like bankruptcy to do so.

Now, there’s still a place for big. One of the cheap lines I use in the book that Seth Godin has as a book title is that “small is the new big.” It doesn’t mean that everything is small. There’s still—Walmart gets money out of critical mass, Amazon out of critical mass, Google out of critical mass. I think that industries will get replaced by a three-layer structure. The base is platforms. Those platforms enable entrepreneurial building, imagine all kinds of dots atop that. But then those scattered entrepreneurial efforts still need to reach critical mass, so there will be networks—you need critical mass for purchasing or promotion or to go to sell to advertisers, or to find an audience. So, three layers. Platform makes it very cheap and easy for entrepreneurial efforts to start. Entrepreneurial efforts still do need big, but they don’t get to big by being bought up, they can create networks.

IESE/IME: Google’s model of innovation is one of constant experimentation and iteration, where users determine what works and what doesn’t. This is often contrasted with Apple’s model, which is more hardware-related and therefore more reliant on getting a perfect product the first time around. Which of these do you see as a more useful model for most companies?

Jarvis: In my book I talk about the concept of the beta. When Google releases a beta it is saying to its public, this product is imperfect, it’s unfinished, thus it is an invitation to collaboration. It says, help us finish this. And I don’t want, mind you, my new beta jet engine or a beta car, but I do think that the more you are open to your public as you make your product the smarter you’re going to be, the better the product is going to be, the more it will be answerable to its market. The easy example I give is that I’m frustrated when I get in my car that I can’t just plug in my iPod or my Walkman before it. You can starting now but we the customers would’ve told auto companies years ago, ten years ago, to do this and they had no way to listen to us. The beta is a way to listen. It also acknowledges that I think we’re more of a process-based than a product-based world. Indeed, Apple makes great products. Here I have my Apple iPhone. I love this thing. It’s not perfect. And in fact it gets better every time it gets an update. I hate to tell you this but I have some belt and suspenders…I have my Nexus One. This last Friday got an update from Google; it made it better. Now contrast that with Toyota, and the problems it has right now with recalls. My son’s Prius I is going through one. Well, it’s a software problem. So rather than saying—the myth of the industrial age is “this product is perfect, we worked for years to tool up and it’s perfect” and you put it out there, of course it’s not—if instead the understanding is, this product is a process, as best we can make it. Replacing a brake pedal, that’s a problem, but giving a software update to always improve the car, just like these phones, why not? But car companies don’t think like that. So Apple I think is a grand exception to many rules because Apple is just so damn good, and I’ll buy it because I love it. But even Apple is not perfect, and wouldn’t say so.

IESE/IME: In your book you champion getting away from “atoms” and focusing on “bits.” In the current issue of Wired Chris Anderson talks about atoms being the new bits, in the sense that people can send digital files to factories in China which do customized work and ship back real products. Also recently, Google ran an ad in the Super Bowl, whereas Pepsi didn’t. Pepsi is spending on a digital and social media marketing strategy—the Refresh Project. The question is: Do these examples suggest that it might be useful to move beyond “old versus new” oppositions and treat digital as a complementary rather than contrasting strategy?

Jarvis: Yes and no. I think some things are just necessarily atoms. There are new ways to deal with that; you can create the updatable product, and that’s a good way to do it, to deal with the atoms but then to take advantage of what the bits enable. I think the essence of the value shift we see here is in information. That by gathering more information, by knowing more about your market, by knowing more about your product and how it behaves, by knowing more about the needs of your market and how they use your product, by knowing better how to find the right people with better relevance, and the market more efficiently, you will take advantage of all that data and all that information to make your business more efficient. And what’s going to happen I think is it’s actually going to lower prices, it’s going to have a deflationary effect, because you’re also in transparent marketplaces, where to sell the opaqueness of pricing isn’t going to work anymore for commodity products, or products that act like commodity products. So, absolutely, digital is a complement to the physical. However, you can also start purely digital businesses today: Google. Media is going to become purely digital and escape the high cost barrier that existed before, that before was the advantage. The advantage of being the only person in town who owned a press is now the albatross around your neck, it is now a cost burden. So where you can shift to a digital business, it’s good, where you can take advantage of the information that comes from the digital age and the ability to aggregate information and learn more and be targeted, it’s good. You also have to recognize that you’re in a transparent market, which is going to affect your prices, but you’re also going to have the ability to find suppliers around the world, which is going to affect your costs. So I think what happens is that businesses get smaller but remain profitable in new ways.

IESE/IME: And regarding Google’s Super Bowl ad?

Jarvis: Well, I was disappointed. What I really wished they’d done was remake the old Apple 1984 ad but this time Steve Jobs was on the screen for being such a control freak. They didn’t do that. I also thought it was very odd that they chose to do an ad about romance in France in the Super Bowl, but I’ve had people yell at me on Twitter that this was good for women who were watching the Super Bowl, A, and B, that some people cried at the end of it. I didn’t. I’ve also heard—I do a podcast for The Guardian called Media Talk USA—and one of the guests today, Fred Graver, said that what it really was, was Google saying to the world, they’re speaking to advertisers, and they’re saying “OK, we’re here, big deal, but you gotta be with us.” And I think that’s true, because what Google has is relevance; mass TV has no relevance.