Do we need to kill “big data”?

 Design Thinking, innovation, Strategy, Web 2.0  No Responses »
Jan 182013
 

A recent article on Techcrunch made the argument that the term “big data” should be abandoned, on the basis that it has fallen into generic usage and, in any event, no longer represented how organisations are thinking about their data.

Organisations aren’t interested in amassing lots of data, the author – Leena Rao – opined. Rather, they want to derive insights from big data.

She has a good point.

There is a real risk that the "big data" movement will soon experience the same backlash that befell the CRM movement in the 90s.

The key problem is that too many people think of "big data" in terms of a technology purchase. The mind set is: "We will choose a big data vendor, install their solution and then – automagically – we will reap significant business benefit and advantage".

I always prefer to describe CRM as a "philosophy". Organisations need to embrace the key tenets of customer relationship management, which in turn requires making changes at multiple levels – technology (of course), employee training, internal policies and procedures, customer communications and, importantly, culture.

That is, to successfully embrace CRM, an organisation must ensure its day-to-day business operations and company culture fully reflect the tenets of CRM.

As such, it is a philosophy – a way of thinking/acting – as much as it is a technology solution.
Today, many organisational stakeholders are falling into the same "buy the technology, secure the prize" trap when it comes to big data.

Big data is actually worse, because it requires multiple kinds of technology purchases: solutions to handle data ingestion, validation, storage, management, aggregation, chunking, abstraction, querying, hypothesis testing, access controls, reporting, visualisation etc.

It also requires significantly wider changes to business practices, policies and procedures – often involving multiple external partners within a supply chain – to achieve even the slightest outcome.

Accelerating shift from marketing to product/service re-design

 Design Thinking, innovation, Media, Strategy, Web 2.0  1 Response »
Sep 192012
 

An interesting new study, conducted by Duke University on behalf of the American Marketing Association, has been published, and is well worth reading.

It provides a number of insights into factors influencing market development, growth strategies, fluctuations in marketing budgets and growth in social media marketing expenditure.

But the table below provides a real eye-opener for those unconvinced of the emerging influence of design thinking, and its related discipline, service design.

Key takeaway: Traditional advertising expenditure (that is, offline advertising) is expected to fall by 137.5%. Online spend will also fall by 10.2%.

What will Chief Marketing Officers be directing their marketing budgets to instead?

Designing and implementing better customer experiences (+26.8%) and, more tellingly, designing and developing new services (+52.4%).

Connectivity ‘lag’ & impact on digital business models

 innovation, Web 2.0  1 Response »
Jan 132009
 

I had one of those ‘gotcha’ moments today.

I’m in the process of moving and, despite my best efforts, find myself in a broadband ‘dead zone’. Not in the sense that I moved to the boondocks, but due to the time it is taking my provider (iiNet) to commission an ADSL2+ service at my new place.

So this week I find myself sitting in my office surrounded by packing boxes and limping along on my standby 1Gb 3G wireless service (via Three, connected @ 7.2Mbps). Normally I only use this when I find myself travelling and staying at hotels with outrageous broadband charges. Now I am trying to run a business and maintain a connection with the outside world.

And you know what…it is ridiculously difficult to get by on a 1Gb plan over a painfully slow wireless connection.

But that’s not the point of this post. My point is that for all the frustration this situation is causing me, I still have *greater* connectivity that most Australians.

That’s right…the majority of Australian households use Telstra’s cheapest broadband plans, with 200Mb per month quotas and barely-better-than-dialup speeds.

Which brings me to that ‘gotcha’ moment I experienced earlier today: how does this ‘connectivity lag’ impact your business and technology plans, and how will it impact your growth in the local market? If the average Australian household has ‘fraudband’, and your product/service assumes high connectivity, how does this shape your ability to serve the local market? How could you reshape your offering to target a broader section of the local market (at least until the connectivity lag reduces)?

Food for thought.

Risks of the ‘AntiCommons’ and the Gridlock Econony

 entrepreneurs, innovation, Web 2.0  No Responses »
Oct 242008
 

Michael Heller has just released an ebook Gridlock Economy: The Tragedy of the Anticommons, which provides a short overview of the thinking encapsulated in his new book by the same name.

It provides an interesting counter-point to the growing trend of co-creation and  co-ownership of various assets, from (physical) property through to software, knowledge and IP.

Private ownership usually creates wealth. But too much ownership has the opposite effect—it creates gridlock. When too many people own
pieces of one thing, cooperation breaks down, wealth disappears … everybody loses. Gridlock is a free market paradox.

Heller argues that current wealth creation strategies – particularly knowledge-related (e.g. patents and copyright) – are highly dependent on the ‘assembly’ model: taking bits and pieces of previously created knowledge and assembling them in new ways. A case in point is modern drug research. New discoveries are almost entirely reliant on earlier research activities, some of which may be covered by patents. Similarly, when researchers find new applications for existing drugs, they will almost certainly need to secure permission from the drug’s owner.

Successful ‘assembly’ business models can be tough, but not impossible, when assets are concentrated in the hands of a few. However, when ownership is heavily fragmented and where, as is often the case, a single hold-out can scuttle a deal, then ‘assembly’ business models become highly problematic (hence the term ‘gridlock’).

The ‘tragedy of the anticommons’ arises when ownership of a specific resource is divided among too many entities, with the result that it is under-utilised or lay unused. One example from Heller:

Consider the example of a brother and sister who jointly inherit the family home. “All of us as parents want to believe our children will be friendly when we’re gone,” says an estate planning expert, but leaving the house to the kids is “a sure recipe for disaster.” One wants to rent the house out; the other, tear it down. If they can’t strike a deal, neither can move forward. The house sits empty. That’s gridlock…Now imagine twenty or two hundred owners. If any one blocks the others, the resource is wasted. That’s gridlock writ large—a hidden tragedy of the anticommons. I say “hidden” because underuse is often hard to spot. For example, who can tell when dozens of patent owners are blocking a promising line of drug research? Innovators don’t advertise the projects they abandon. Lifesaving cures may be lost, invisibly, in a tragedy of the anticommons.

The next ‘re-intermediation’ business opportunity?

 entrepreneurs, innovation, Media, Strategy, Web 2.0  3 Responses »
Jul 302008
 

I recently had cause to investigate how you might use a utility/cloud computing service, like Amazon S3, to provide an efficient and modestly priced solution to serving up video-on-demand content services, as an alternative to the more traditional offerings of streaming video platform providers.

I was impressed by the level of intelligence behind not only the pricing of such services (just cheap enough so it makes more sense to outsource – Coase theorem at work), but also the dynamism reflected in the engineering of their underlying infrastructure.

Amazon, and others, provide some seriously ‘grunty’ utility/cloud infrastructure. The recent S3 outage notwithstanding, utility/cloud computing is here to stay. Its adoption by businesses is likely to be accelerated by the early successes of server virtualisation technology adoption by enterprise users, spearheaded by VMWare.

This points to an exciting new realm of opportunities for "middle men" to move this capability into the hands of consumers. Allow me to explain.

We are the last generation who will ever have to worry about launching an installation CD.

We are the last generation who will ever have to worry about disk (storage) capacity.

We are the last generation who will ever have to worry about CPU speeds.

Finally, but importantly, we are the last generation who will ever have to worry about bandwidth throughput (speed).

Imagine what you could do in a world when you’re free of these kinds of constraints.

We’re starting to see the potential indirectly, in the guise of the rapid proliferation of Facebook apps. These apps exist "out there". We don’t care where they reside. Importantly, we play no active role in their installation, configuration or management. Equally, these apps care little about the end user equipment/device or infrastructure being used to access and interact with them.

This is how software (and services-powered-by-software) will look for all users within the next decade.

The promise of utility/cloud computing infrastructure, then, is that it will finally hide the technology. And history tells us that when technology ceases being ‘technical’ – when technology shifts from the core of the experience to the periphery – immense behavioural changes follow.

Now back to the opportunity for middle men.

While utility/cloud computing infrastructure has hidden (or, at least, is starting to hide) the technology, it is still a fairly immature offering, in that – as a product offering – it is largely focused at technical users.

While it is easy to setup an Amazon S3 account, for instance, it is still quite difficult to configure and manage the services that you purchase/consume. This represents an unnecessary hurdle in the current environment, in which – thanks for ‘mashup’ services and the like – non-technical users are being increasingly encouraged to ‘develop’ software-based solutions to every day problems.

This creates a market for an intermediate layer: companies who take utility/cloud computing services and repackage them in a way that makes them accessible to non-technical users. Companies like Morph have taken a step in the right direction, but there is still plenty of scope for innovation in this new market niche.

Is ‘Born Global’ the new normal for software start-ups?

 entrepreneurs, innovation, Strategy, VC  5 Responses »
Jun 172008
 

A scan of recent activity in the Australian start-up sector suggests that, for many Australian new ventures, launch planning is rooted in a single, dominant objective: ensuring the business is “born global.” Nowhere is this mindset more apparent than among software-based start-ups, led by organisations such as Atlassian, Tangler, Freshview, and 3eep, among many.

Australian businesses have a long history of being export motivated. Nonetheless, the traditional approach to internationalisation required that companies first establish a solid local market position before commencing offshore activities. Even then, export market development tended to be a gradual process, following a series of incremental and sequential stages, with commitment decisions made according to a range of factors, including market perceptions, offshore experience, and management capacity.

What is driving the Born Global attitude?

A ‘born global’ business is one that starts international activities right from birth, entering overseas markets immediately, often multiple countries simultaneously.

What is causing new ventures to opt for such a potentially high risk strategy? This more aggressive approach to offshore market development has emerged for a number of reasons.

Chiefly, it is as a result of Australia’s size. While Australia’s economy is in good shape – it is currently valued in excess of $750 billion, was last in recession in 1991, and has averaged 3¼% growth in GDP since then – the fact remains that we are a relatively small population. We constitute less than 1/3 of 1% of global population, our economy is the 16th largest in the world, and we account for little more than 1% of global GDP.

With over 98% of global populations and global trade outside of Australia’s borders, a compelling argument exists for adopting a globalist perspective. Undoubtedly, those start-ups who choose to ‘leapfrog’ the traditional business growth cycle, and launch directly into international markets, see the world as their marketplace from the outset.

Additionally, over the past decade, we have seen significant developments in communications technologies. The rapid penetration of fixed, wireless, and mobile broadband services are not only enabling technologies for servicing a global market, but also a key driver of market demand for innovative software services.

Finally, Australia’s growing ex pat community is playing a role. Only a few decades ago it was quite rare for Australians to gain offshore work experience. Today, it is not only increasingly common; it is relatively easy for those still firmly rooted in Australia to tap into this network of experience.

Are Software Start-ups Unique?

Several other drivers peculiar to the software sector are shaping launch strategies:

  • Export market homogenisation – Since the demise of the Berlin Wall led to the broader embrace of free market ideologies, both Western and Eastern cultures have become increasingly homogenised by entertainment technologies and the activities of modern conglomerates. This market homogenisation makes for expanding global consumer segments with readily identifiable and uniform tastes, interests, and desires.
  • Operating system monocultures – While there are usually myriad OS offerings for any given hardware or device platform, the general trend is towards monocultures, where a single operating system has the dominant share (as Microsoft Windows does, for example, in corporate, home and online environments). The presence of software monocultures significantly expands the market for complementary software products while reducing development risks.
  • Open Source – The growing availability of robust Open Source software development tools and environments such as Ruby on Rails, MySQL and PHP, and the communities of interest they attract, has dramatically reduced the costs associated with launching software products capable of scaling to meet global market needs.

Two further factors can be isolated as having a disproportionate impact in fostering a globalist mindset among software entrepreneurs.

The first is lowering barriers to entry into the Australian market. Industry giants, such as Google, Yahoo!, and Microsoft, are serious competitors for any software start-up. Their existing audience reach, brand dominance, and capitalisation, together with mainstream consumers’ preference for ‘tried and tested’ companies, mean start-ups must assume offshore competitors will capture a large portion of the local market. One logical competitive response is to seek critical market mass by aggregating small pockets of customers across multiple markets.

The second is the desire by founders to position their start-ups to secure offshore investment. Australian entrepreneurs have long complained about the ‘immaturity’ of the local private equity market, pointing to the lack of money available for early-stage funding and less tolerance for risk among Australian VC firms. Attracting offshore investment is problematic, as investors prefer businesses with local market operations, the dynamics of which they are more familiar with. Positioning a start-up to enter attractive private equity markets, such as America or Europe, provides greater options for securing investment.

New Report – Eight new rules for creating and capturing value from innovative technologies

 innovation, Web 2.0  1 Response »
May 052008
 

IBM, via its Institute for Business Value, has released an interesting (though not particularly radical) report, titled Value 2.0 – Eight new rules for creating and capturing value from innovative technologies.

A separate, Executive Summary document, provides a concise overview of ‘the rules’:

RULE #1: Grab and monetize the long tail of demand.

RULE #2: Get ready – Your customers value digital content.

RULE #3: Jump in – Virtual worlds are real business.

RULE #4: Trust the network – It really does know more than you.

RULE #5: Embrace customers.

RULE #6: Use social networks to create solutions.

RULE #7: Embed flexibility in business models and information systems.

RULE #8: Foster rapid, collaborative innovation in the enterprise.

(You can access the Executive Summary here, and the Full Report here.)

As mentioned, there is nothing radical here. Much of the observations and recommendations articulated in the report cover ground that has already been well debated in both mainstream press articles + academic research over the past decade.

So why did IBM bother with the report?

The answer, I believe, lay with recognising who IBM’s core constituents are: conservative Fortune 500 companies.

It wasn’t all that long ago that IBM was viewed as the safest hands in the business (a view its marketing divisions certainly played to). The axiom on many technology purchasers’ minds was that "nobody ever got fired for buying IBM equipment".

(Of course, Big Blue had its own period out in the cold, as a result of a disastrous strategy it adopted in the early 90s to disaggregate the company in order to respond to the perceived obsolescence of mainframe computers – a strategy Lou Gerstner put the kibosh on in 1993 – but I digress…)

The point is that IBM remains one of the most reliable bellwethers of the conservative technology consumer segment.

When we see IBM starting to mimic the sorts of themes outlined in its Value 2.0 report, it is a good sign that this conservative segment of the technology ‘mass market’ is ready to embrace the kinds of change expounded.

The implication of this is that we are likely to see an accelerating adoption of digital channels as a fundamental component of business value networks (as distinct from ‘value chains’), as well as diminished resistance to the notion of allowing other ‘actors’ (including suppliers and consumers) to play a role in the development of new products and services delivered via these digital channels.

That has to be good news for ‘consumers’ (both B2B + B2C), as well as product/service and business innovation generally.

User-Led Innovation – New Report

 innovation  No Responses »
Apr 052008
 

Following up on my last post about the role of ‘lead users’ in the innovation process, two colleagues, Darren Sharp and Mandy Salomon from the Faculty of Life and Social Sciences of the Swinburne University of Technology, have released a very interesting and worthwhile report – User-led Innovation: A New Framework for Co-creating Business and Social Value.

The report seeks to answer three key questions:

  • What are the key drivers of user-led innovation?
  • How does user-led innovation affect organisations’ relationships with key stakeholders?
  • What are the most effective strategies to engage user participation?

The report explores in some detail how virtual environments like Second Life offer a glimpse of how lead-users innovate and co-create, and how these activities create real economic value.

Observing today to discover tomorrow

 innovation  No Responses »
Apr 042008
 

One of my favourite quotes, and one that I like to drop into any discussion about innovation and forecasting future trends, comes from William Gibson, a science-fiction author (who, somewhat ironically, until very recently still used a typewriter for preparing manuscripts):

The future is already here – it is just unevenly distributed.

What Gibson was getting at is that you can actually get glimpses of tomorrow by observing what people are doing today. This fringe behaviour – borne of a group of people with needs that are not yet met by products or services available in the marketplace – mainly goes unnoticed, yet is often destined to move over into mainstream society.

Identifying people engaged in so called ‘unusual behaviour’ (a group collectively known as ‘lead users’) is one of the least-risky paths to true innovation.

Whirlpool’s recent innovations in appliances provides a classic example of this.

As part of their internal R&D program, they placed webcams in college student residences to observe how students (the consumers of tomorrow) were using kitchen appliances. In addition to cataloging the rather bizarre cooking habits of students, they noticed something very odd: students were using microwave ovens to dry their clothes.

This behaviour, which would clearly horrify their mothers, pointed to a future opportunity in an entirely untapped market: small, dependable, low volume (i.e. several items only) dryers for consumers who wash infrequently but who required faster drying times.

This led to a whole new class of appliances – the microwave clothes dryer. Whirlpool filed and was granted a patent to the underlying technology in 1995.

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3D Concerts a sign of things to come

 innovation, Music  No Responses »
Jan 112008
 

GizMag published the following snippet in late December:

—8<—

U2 in first ever 3D concert beamed live to a cinema near you
Everyone is probably aware of the early attempts at 3D on the cinema screen using the flimsy cardboard goggles with the red and blue plastic lenses for each eye. This, while being a valid execution of the stereoscopic principle that is necessary to create the illusion of three-dimensional perspective, was in practice a monochromatic, uncomfortable and generally disappointing viewing experience. But the technology is now being dragged into the 21st century as Irish supergroup U2 follow film-maker James Cameron’s lead in embracing state-of-the-art digital 3D technology, with plans for a concert to be filmed live in 3D and then streamed in real time to digital cinemas around the world.

—8<—

This is a classic sign that the music industry is finally responding to the effect that digital music distribution is having on their traditional business model.

The music industry has primarily used live concerts as ‘loss leaders’. Concerts were designed to catalyze sales of albums. Now that digital distribution has blown a hole in the margin for albums/singles, the industry will soon be looking to invert this, with music “sales” being used as a ‘loss leader’ in the creation of a loyal fan base, with concerts and concert paraphernalia becoming the primary revenue source.

The key hurdle to this structural change to the standard business model was that – except for the most popular bands (who could charge a premium for concert tickets) – the math didn’t scale. You couldn’t pack enough people into a concert venue each night at average cover prices to make a decent profit – even if a band was prepared to tour full-time.

One solution is to dramatically scale the size of your potential audience, without a corresponding scale in production costs. 

The U2 experiment is about demonstrating that technology now exists to allow audiences to enjoy concert-quality experiences at multiple venues simultaneously, thus dramatically increasing your potential audience (and, thus, revenue) for each concert.

This trend will likely emerge in lock-step with the ‘digitisation’ of cinemas.

Cinemas are gradually moving to upgrade their projection technology, making way for the use of digital files distributed via satellite, rather than cumbersome (and expensive to ship) film reels.

Once a critical mass of cinemas are wired to receive content digitally, expect concert promoters and labels to start exploring how the cinema industry infrastructure can be co-opted for staging ‘mega-concerts’.

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