Archive for November, 2009

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Times article on open source eludes logic

Monday, November 30th, 2009

This article in the New York Times (”Open Source As A Model For Business Is Elusive“) suffers from the same blinkered viewpoint and desire to create a story out of thin air as the recent WSJ article on Wikipedia (”Volunteers Log Off as Wikipedia Ages“). Doc Searls today hammered at the WSJ article, and now I’ll take my shot at the Times piece.

Ashlee Vance writes in the Times:

…there is an open-source alternative, and usually a pretty good one, to just about every major commercial software product. In the last decade, these open-source wares have put tremendous pricing pressure on their proprietary rivals. Governments and corporations have welcomed this competition.

Whether open-source firms are practical as long-term businesses, however, is a much murkier question.

then this:

“There’s only one company making real money out of open source, and that’s Red Hat,” said Simon Crosby, the chief technology officer at Citrix Systems, which acquired the open-source software maker XenSource for $500 million in 2007. “Everyone else is in trouble.”

and this:

Many of the top open-source developers are anything but volunteers tinkering in their spare time. Companies like I.B.M., Google, Oracle and Intel pay these developers top salaries to work on open-source projects and further the companies’ strategic objectives.

finally this:

The larger technology companies have tended to buy these one-trick ponies for strategic purposes. With its core server business declining, Sun hoped it could piggy-back on MySQL’s momentum with Internet companies. In SpringSource, VMware acquired a company that had cultivated deep interest with software developers and helped VMware diversify beyond its virtualization roots.

The story’s lede says that open-source business success is elusive. Yet over and over again in the text Vance states that large companies viewed open-source providers as strategic – strategic enough to pay hundreds of millions of dollars to own them.

If I were lucky enough to build a business that a company would pay several hundred million to buy from me, I would consider that successful.

What Vance may be saying is that building a long-term standalone business atop one open source product is difficult – hence, companies like MySQL, SpringSource and XenSource selling out. I would counter that building a long-term standalone business with one product of any kind is also difficult. Open source has little or nothing to do with it.

Furthermore, the value of open source platforms (apart from, of course, the value to end-users) is the economic value to the platform’s ecosystem of developers, integrators, etc. Part of the benefit of open source is that it breaks down barriers of scale, by allowing small developers to build big products using open source as a basis.

If Vance would like to calculate the profitability of corporate ventures dependent on open source products (such as those from IBM, Accenture and countless other companies), that’s a story I’d like to read.

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Posted in information technology | Comments

Video review of Andrew McAfee’s “Enterprise 2.0″

Monday, November 30th, 2009

enterprise2.0TRANSCRIPT:

We’re here today to talk about “Enterprise 2.0” by Andrew McAfee. He is with MIT, used to be at Harvard Business School. Just switched over a couple of months ago. He writes an excellent blog on IT and business, that I’d recommend you read if you haven’t come across it yet. And so, he’s just produced his first book. To explain the title, Enterprise 2.0 is a term he coined to refer to using web 2.0 tools like Flickr, Facebook, YouTube, Twitter and similar tools in a business context.

The book is a lot like a recent book, “Groundswell,” that explained to general business people how social tools affected customers and markets and how to use those to communicate and listen. Communicating from inside the business to outside. “Enterprise 2.0″ performs a similar task, focusing on using those tools inside the business, more for collaboration and tapping the collective intelligence of employees. And so it takes this marginal topic and moves it to a general management-type discussion. Which I think is really important, to get it out of the IT discussion into the management discussion.

So as part of that objective he does a really good job of explaining how these tools work and also what ties them together because if you think about tools like Flickr or YouTube or a blogging platform or a messaging platform or a wiki there are a lot of differences among those but he’s tied together the common threads, using an acronym called SLATES (search, links, authoring, tags, extensions and signals). Signals, for example, like RSS that allows people who follow these platforms without having to log on to them every single hour to see what’s changed.

Another important part of the book is in putting the different tools into a context in terms of how useful they’d be for different organizational problems. He uses a bullseye metaphor focused on the strength of ties between colleagues to explain that. At the center of the bullseye are strongly-tied colleagues meaning people who work together in the same department, in the same location, all the way out to the edge of the bullseye. meaning colleagues who have no relationship at all. Different tools apply at different levels of the bullseye. In the center, people with strong ties would use tools like wikis, or collaborative development tools, like Google Docs.

Midway out the bullseye are colleagues with weak ties. People who know each other but don’t get together often, who don’t talk often, but would like to keep apprised of each other’s activities for the purposes of sharing knowledge, best practices, identifying solutions to problems, and so forth. For that ring of the bullseye, Facebook-like tools are very useful.

At the outer edge of the bullseye, where colleagues have no relationship other than that they work for the same company, a prediction market is a useful tool, that gathers people’s guesses about the possibility of certain things happening like a certain sales volume being reached or likelihood an innovation will succeed in the marketplace and aggregating that information to get a better answer than any individual would come up with themselves.

He doesn’t go overboard in terms of enthusiasm for how great these things are and how it’ll change companies overnight, and he has a pretty clear-eyed view of how difficult it is going to be to bring these tools to wide use. It just takes a long time -and he dwells on that at some extent – how long it takes for revolutionary innovations to take hold, and he doesn’t think this is any different, though he is optimistic that it’ll happen eventually.

And finally in the book he talks about kind of different management models or practices that work well with these tools, and by contrast he talks about typical Model 1 behaviors which are more command-and-control type behaviors, self-protecting behaviors and less-collaborative behaviors, which don’t go well with these new tools. To really utilize these new tools, people have to adopt what he calls Model 2 behaviors, which are collaborative, not so much focused on self-protection but looking out for the best interests of the company. Quite a different model than what most people have seen where they work. And I think that heaps underline the challenges in getting these systems adopted and in wide use.

It’s an excellent book, very well-organized and well-written. It takes an important topic and brings it into the mainstream. I really enjoyed it and I think you will too.

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Creative Destruction? #8

Monday, November 23rd, 2009

Another in a series of posts tracing the evolution of two vacated business sites.

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

Joseph Schumpeter

32nd and Market Streets, Camp Hill, PA, 16 November 2009

Video 7 0 00 07-22
The new Rite Aid is open. It’s been 15 months since we started following progress at the site – then, the T-Mobile store and the KFC were boarded up. Now, the site is back, adding to the economy.

Carlisle Pike, Silver Spring Township, PA, 16 November 2009

Video 8 0 00 18-16

No progress at the LB Smith dealership. We could do an entire series on former car dealerships that are now vacant. What will end up happening to all these sites?

Prior posts in this series:
Creative Destruction?
Creative Destruction? #2
Creative Destruction? #3
Creative Destruction? #4
Creative Destruction? #5
Creative Destruction? #6
Creative Destruction? #7

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Technology is great… and so is avoiding the acorns

Friday, November 20th, 2009

This 10-minute TED presentation from Tom Wujec demonstrates the astrolabe (an instrument used hundreds of years ago to tell time at night) and in doing so discusses what’s lost amidst technological advances. Wujec points out that simply knowing how to tell the time at night required one to deeply understand the geography of the night sky.

I’ve encountered something similar recently. For the last couple of months, I’ve been accompanying my son to school – both on rollerblades and on bike. That brief ride (about a mile) has acquainted me with the various elevation changes on the way (completely unnoticeable to an auto driver), and obstacles of various sorts that come from the mid-Atlantic autumn. Such as fallen acorns and leaf piles spilling onto the road.

So – technology is great. And from time to time, it’s good to re-engage with the world around us, too.

Related post:
Low tech and on the ground

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Posted in randomness | Comments

When innovating, seek out more, and more varied, ideas

Wednesday, November 18th, 2009

innovation tournamentsI’ve been reading the book “Innovation Tournaments” by Christian Terwiesch and Karl Ulrich of the Wharton School. The book sets out a methodology (the “tournament” of the title) for companies to generate and systematically winnow down innovation ideas to eliminate all but the most exceptional opportunities.

Two brief observations:

One, the authors suggest that almost any company’s innovation performance would be helped by increasing the number of ideas going into the top of the funnel. Early-stage evaluation (a la “Discovery-Driven Growth“) is cheap and fast, so the cost of, say, doubling the number of ideas reviewed isn’t significant when compared with an overall innovation budget.

[It was interesting to read today's post by tech venture capitalist Fred Wilson, in which he outlined his approach to finding new opportunities: (1) making public his strategies, ideas, and passions so that entrepreneurs know in advance what he's looking for, and (2) meeting with as many people as he can, every day. In short, a strategy to add lots of opportunities to the top of his funnel.]

Two, along with the sheer number of ideas, the variability of the ideas is important. High variability increases the possibility that a truly outstanding idea is found (given that truly outstanding ideas, like 7-footers with great athletic ability, are few and far between). In that event, increasing the number of ideas coming into the funnel increases the likelihood that a truly outstanding idea is looked at.

Ironically, methodologies like Six Sigma seek to limit the variability of processes. When (mis)applied to disciplines like innovation, they are very successful at impeding the success of the effort.

Related post:
On Discovery-Driven Growth
Processes as art and science

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Posted in innovation | Comments

Customers are talking: here comes “Broadcast Shopping”

Tuesday, November 17th, 2009

This week Doc Searls posted on an idea called “Personal RFP.” In this model, people wishing to buy a product would be able to put together an open “request for proposal” – essentially, a specification for what they want to buy, including budget, and solicit bids from suppliers wanting to sell it to them. [Nothing even approximately like this exists today, except perhaps Priceline, the reverse-auction travel broker, which is full of compromises to the Personal RFP model.]

Scott Adams of “Dilbert” fame made a similar proposal, and he created a catchy name for this type of service. He called it “Broadcast Shopping,” and described it like this:

The standard shopping model needs to be reversed. Instead of the shopper acting as hunter, and the product hiding as prey, you should be able to describe in your own words what sort of thing you are looking for, and the vendors should use those footprints to hunt you down and make their pitch.

For example, let’s say you’re looking for new patio furniture. The words you might use to describe your needs would be useless for Google. You might say, for example, “I want something that goes with a Mediterranean home. It will be sitting on stained concrete that is sort of amber colored. It needs to be easy to clean because the birds will be all over it. And I’m on a budget.”

Your description would be broadcast to all patio furniture makers, and those who believe they have good solutions could contact you, preferably by leaving comments on the web page where you posted your needs. You could easily ignore any robotic spam responses and consider only the personalized responses that include pictures.

This is something kind of revolutionary. “Customers are talking” has meant, by and large, customers responding and reacting to what companies do to them. Companies release a product, change a service, or make a promise, and customers, through their stories, say what they think about that. Those stories influence other buyers, competitors, regulators, and (hopefully) the company itself.

“Broadcast Shopping” is talking, too, but it’s active, not reactive. The customer sets the agenda, and companies respond.

In Searls’ terms, it’s a type of “Vendor Relationship Management” system, as opposed to the Customer Relationship Management systems that many companies utilize today to help them sell and service customers.

There are many profound implications of broadcast shopping. One that comes to mind immediately is this: it will greatly reduce the benefit companies get from distribution scale. If I am asking people to supply me, anyone can respond. Today, I have to seek out suppliers, and the bigger they are, the easier (by and large) they are to find.

Using Adams’ example, a small provider of patio furniture, who could provide a set meeting his specifications, would be on par with Wal-Mart from a distribution standpoint – they each could respond to the Personal RFP.

Broadcast Shopping also undermines traditional branding. Because any company could respond to a customer request, many choices are available, along with information that allows customers to evaluate the proposals independent of the brand identity of the product.

Broadcast Shopping doesn’t exist yet. But Searls is convinced it will, and soon. He writes:

All this is not only do-able, but inevitable….

Google should be interested because Advertising in Reverse, or Broadcast Shopping (a term I love, by the way), will either undermine or replace the company’s standing business model (which pays for all those freebies we enjoy).

Microsoft should be interested because this could give them something Google doesn’t have yet.

Yahoo should be interested because they need something new that’s a winning idea. Amazon and eBay should be interested because they’re already in that business, though in a silo’d way.

Oracle should be interested because it will sell more databases and Sun gear.

Apple should be interested because it’s one more area where they can push for new standards on which the range of innovation goes through the roof.

Every retailer and intermediary should be interested because the promise of the Net for buyers is not an infinite variety of closed silos, but a truly open marketplace where any buyer can do business with any seller — and on the buyer’s terms and not just the seller’s.

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Really need to learn? Conduct an interview

Monday, November 16th, 2009

headphonesI was inspired by Ford Harding’s post today on cross-selling, most of all by his suggestion of how to educate others in the company about one’s own services, including this idea:

Structure the session as an interview, rather than a presentation. Announce to the participants that they won’t learn anything about the featured practice, unless they ask about it. Then, don’t allow the person seeking to cross sell his service to say anything, except in response to his colleagues questions. If his colleagues aren’t interested or intelligent enough to ask good questions about the service, he is probably wasting his time anyway. This puts the responsibility on the listeners to extract the information they need, keeping them engaged in the conversation.

When I read this, I thought, “Eureka!” Like many, I would like to be a better listener than I am. I was on a call last week and caught myself preparing my next statement instead of listening to what my colleague was saying.

The idea of interviewing struck a chord because of some work I’ve done – twenty or so podcasts and a similar number of in-depth customer interviews. For those, I prepare questions in advance, and listen very carefully while the interview subject is speaking. Frequently, the answers inspire a different line of questioning or a surprising new direction. If I weren’t listening, I wouldn’t detect the change nor be able to adjust my questioning.

When an interview is done, I feel as if I’ve been immersed in the topic, more than engaging in a conversation. Moreover, I have the recording as a keepsake, to refer to again if I want to relive the interview. [My friend Laurie records conference calls and meetings - with prior approval - as a matter of course, so she can relisten later to pick up things she's missed. Another interesting idea.]

I learn far more from an interview than a standard call or presentation. I think Ford is onto something important here; interviewing as a way of learning. What do you think?

(Photo by Mulad via Flickr Creative Commons)

Related posts:
Shop Talk Podcasts
The art of the customer interview

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Posted in learning | Comments

My reading journal: Roger Martin’s “The Design of Business”

Wednesday, November 11th, 2009

design of business cover“The Design of Business: Why Design Thinking is the Next Competitive Advantage,” by Roger Martin. 2009: Harvard Business Press, 190pp.

When did you read it? November 2009.

Subject: Hot on the heels of Tim Brown’s “Change by Design,” Rotman School dean Roger Martin, author of “The Opposable Mind” discusses how design thinking can help businesses balance exploration (the search for new solutions) and exploitation (extracting value from existing solutions) to improve their innovative capability.

Did you like it? How many stars would you give it (1-5)? 4

Summary: Martin describes the process of innovation in three steps, something he calls the “knowledge funnel”: (1) staring into a mystery; (2) coming up with a heuristic, or rule of thumb, that allows you to address the mystery; (3) systematizing your solution – in Martin’s words, turning the heuristic into an algorithm. This process, to Martin, is design thinking.

He spends time discussing the preference business has for reliability (i.e., consistency and repeatability) over validity (meeting a desired objective). Validity is the starting point for innovation – the discovery of something new that helps illuminate a mystery. Since validity is not predictable or repeatable, and tends to rely on qualitative, intuitive assessments (i.e., pattern matching), companies that rely on quantitative measurement struggle with it. It was easiest for me to understand validity, as Martin uses it, as a synonym for “right-brained” or “artistic.” Successful businesses balance the desire for reliability with a relentless search for new validity.

As Martin described this process – taking mysteries, developing heuristics and then refining algorithms from it, it seemed quite simple. Why doesn’t every company do this? But I also thought that there are lots of mysteries that don’t lend themselves to heuristics, and lots of heuristics that can’t turn into algorithms. There are lots of failures on the way to the next great business algorithm. Not only that, there are lots of successful businesses built on heuristics alone [for example, your favorite restaurant, assuming it's not part of a chain]. Martin’s point, which is not stated explicitly, is that you can’t build large businesses without this transition to algorithms. You can’t have McDonald’s without a cooking and serving system. You couldn’t have Wal-mart without its distribution model.

There’s not a discussion of the cost of algorithmized businesses to society. On my last trip to downtown Boston I was hard pressed to find a business that was not part of a national chain; much different from when I Iived there in the 1990’s. But I digress – Martin isn’t writing as a social critic; he’s a business professor.

Favorite quotes:

“Vice President of Marketing” denotes a permanent position with a set of ongoing tasks…. As well suited as that construct is for running known heuristics and algorithms, it is not an effective way to move along the knowledge funnel. That activity is by definition a project; it is a finite effort to move something from mystery to heuristic or from heuristic to algorithm. pp.118-119

Designers produce prototypes for feedback, but managers are accustomed to delivering final products. p.121

Status comes from running large, high-revenue business units whose operations have been reduced to reasonably reliable algorithms that product results on time and on budget. Those are the highest goals, that is, the ones that command the highest compensation. That is why most executives prefer the known to the unknown. p.125

Was it similar to anything you have read before? Of course, there are echoes of “Change by Design” (Brown’s earlier HBR article is referenced). And the idea of “staring into mysteries” reminds me somewhat of “changing the inherent meaning of a product” from Roberto Verganti’s “Design Driven Innovation.” 2009 is definitely the year of design thinking in business!

Martin’s book is less ambitious than Verganti’s, but broader (in a good way) than Brown’s. And his ability to create a powerful, memorable metaphor remains intact (I think I’ll be using “knowledge funnel” and maybe even “validity vs. reliability” in the future).

Will this book end up on your bookshelf or in the library donation pile? The bookshelf.

Related posts:
On “The Opposable Mind”
Processes can be art or science
On “Design-Driven Innovation”
Reading journal: “Change By Design”

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Posted in innovation | Comments

Marketing messages are simply another bee in the hive

Tuesday, November 10th, 2009

Cynthia Kurtz starts off a recent blog post with a provocative statement: “Telling a story is not always the best way to tell a story.”

She continues:

There are no green fields in the land of stories; every available spot is occupied and contested. There are no story-free environments. When a new story is launched into the world, the stories it meets do not simply watch as the newcomer descends; they rise to meet it and swarm around it in complex, unpredictable and sometimes baffling ways. If an idealistic metaphor for telling a purposeful story is pulling a lever or pushing a button on a compliant machine, a more realistic metaphor is sending a bee into a hive.

I want to talk about what this means for marketing communications, especially in today’s world of proliferating social technologies.

Marcomm people have always been tasked with creating messages that can inform the public utterances of the company – be they press releases, speeches, interviews, advertisements, etc. For simplicity’s sake, let’s call these things “stories.” Here are some examples of very brief stories that companies have told over the years:

  • Budweiser is the King of Beers
  • Chevy is the Heartbeat of America
  • GE brings good things to life
  • Wal-Mart: always the low price

Those are the most public messages, but there are others, not explicitly stated, perhaps, but nurtured and supported by the marcomm folks:

  • Nobody ever got fired for buying IBM.
  • A Mercedes tells people, “I’ve arrived.”
  • Cool people shop at Target.

The official messages have always encountered other bees in the hive. Protesters, in some cases unions, and the press have offered counterstories to the company story – although one could argue that the press has often swallowed the company message and regurgitated it whole. (Quick aside – for the longest time I was amazed by how news stories profiling a musical artist would appear just a couple of days before a new album hit stores.) Here are some counterstories you may be familiar with:

  • GE’s industrial pollutants have damaged the environment at certain places where they had plants.
  • Wal-Mart achieves cheap prices by purchasing goods from overseas factories that exploit their workers.
  • GM cars have poor fit and finish and aren’t fun to drive.

By and large, though, the hive was pretty empty. Corporate messages were transmitted, and seeped into our consciousness pretty much unaltered. This was because mass public communication was expensive and exclusive.

Now we live in a different world. The hive is buzzing with voices. Communication is cheap and easy. Blogging, Tweeting, Facebooking, Yelping, Amazon-reviewing, etc., etc. The counterstories fly fast and furious (read this one contesting an oft-reported statistic that Wal-Mart prices save American families $3,100 per year).

More than once, the other hive members have swarmed all over a corporate story and killed it. Remember the Motrin Moms fiasco, or the short-lived new Tropicana packaging?

Marketers, it’s time to stop trying to control your message. It’s time to stop believing that if you spend a lot of money buying advertisements, sponsoring sporting events or creating publicity stunts, that people will automatically believe what you say.

Instead, you’re going to have to earn your positive messages. Sell great products, service them well, provide outstanding value, thrill your customers. Listen hard to what they’re saying. The deep values they espouse in the stories they tell are your messages. Feel free to retell those stories in your forums. Look in the negative ones for clues to things you can improve, or markets you simply don’t serve well.

But, most of all, stop thinking you’re in control.

(Photo from direct dish via Flickr Creative Commons)

Related posts:
The “Values Proposition”
Tropicana hears feedback, brings back old carton
Marketers, stop shouting

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Posted in marketing | Comments

Watch out for the Android

Monday, November 9th, 2009

droidFrom Merriam-Webster’s:

an-droid: noun. a mobile robot usually with a human form

In the case of Google’s Android operating system, the “robot” is morphing into lots of forms. First and foremost, as a mobile phone with now nearly a dozen implementations. And those phones are starting to win acclaim (and not only for the Motorola Droid).

But that’s not all: Barnes & Noble based its Nook e-reader on Android and Creative is building an Android-based iPod Touch competitor.

Which is bad news for Apple, right? I’m not sure about that, but it’s certainly bad news for Blackberry, Palm and Symbian, not to mention Windows Mobile (did you forget Microsoft also supplies micro OSes for phones and the like?).

In fact, as the marketplace begins to settle out, it’s starting to resemble the PC market, circa 1995. Apple is providing a closed, end-to-end experience, while its competitor is supplying its platform to lots of hardware vendors for them to install and sell. One difference: Google (Android’s biggest backer) is not charging a license fee for the platform and offers it open source.

As has been observed with other open-source projects such as Linux, Firefox and MySQL, Android will continue to become more feature-rich, with more apps available, as Android handsets begin to take hold in the market. In comparison, Palm’s, Blackberry’s and even Microsoft’s ability to keep up with the state of the art will suffer. [Gizmodo makes a powerful case for Android's potential in this post.]

My prediction: Apple will rule the smartphone roost for some time. Android will be a strong #2. Who will be #3? Does it matter?

(Photo: Motorola Droid via phandroid.com)

Related post:
Can you make money with free software?

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Posted in mobile | Comments

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