My husband and I were musing, as we drove past a White Castle round about lunchtime, about the inverse correlation within a culture between the average body size of its citizenry and the availability of high quality food. In Paris, I don't recall seeing any overweight locals. I also didn't see diet aids or artificial sweeteners. Contrast most of the US: unprecedented numbers of obese children, a wide selection of no-cal sweeteners on every restaurant table, which is sized amply to receive the family-sized platters each brimming with what passes for a single serving. The only conclusion we could draw is that poorer quality food doesn't satisfy, so people eat more, hoping that they will eventually feel sated.
Returning to my desk, I was delighted to find Philippe Winthrop's posting, "Apple Is The New McDonald's." He's commenting on Apple's AppStore selling its one billionth app, and asking his readers to consider the relative values of quantity and quality in technology applications. There are a couple angles here - the control inherent to Apple's business model vs the democratization inherent to the AppStore model is an interesting one, but I'm interested today in the cultural phenomenon of the 'app.' The $0.99 application is to software development what YouTube is to film making or what Twitter is to Dinner with Andre. Or, what chicken nuggets are to coq au vin. With a steady diet of fast-food technology, the consumer starts to think it's the real thing, and the real thing is seen as elitist and over-priced.
Increasingly, software is seen as something that can be hacked out by teenagers who cut and paste code very quickly and very cheaply. It is seen as ubiquitous -- if the last app crashed, there's lots to choose from - download another! User expectations fall with the standards. Originally conceived as a means to protect the robustness of systems while extending their flexibility, apps are clogging telecom arteries and bloating systems while weakening them.
Making good software is hard. Every hacker with an SDK can't do it well. Even best-in-class developers do their best work working within the rules of a professional technology organization, where they are accountable for creating software that innovatively meets users' needs while ensuring stability not only of its system but also the systems it is designed to interface. Yet, that's not the answer anyone wants to hear these days. Cheaper, faster, cuter -- that's what the market wants to hear. Oh yeah, and if it has a half-life of about 3 days -- all the better. There's always more to choose from. Hungry yet?
Monday, April 27, 2009
Monday, April 20, 2009
Seventh Generation Thinking
David Korten posts a great question in a blog today: "The System is Broken. Will B-Schools Help Fix It?" His pessimism evident in his title selection, Korten is less than sanguine although he has a personal teaching experience that argues the potential for business schools. He last taught a course at Harvard Business School in 1975:
The class was a big hit with students, not so much with the school, which didn't take seriously the invitation to move away from its closed-system, bottom-line focused curriculum. The filmmakers Mark Achbar and Jennifer Abbott, who created the 2004 documentary "The Corporation," would probably argue that this is necessarily so: corporations are obligated to make decisions based on increasing profitability. They are not altruistic. They exist to generate profit. Business schools, whose relative value is tied to the graduate's return on investment (as measured by post-graduation salary attained), would necessarily focus primarily on maximizing short-term returns for their constituencies: their students and the companies who will employ them. I'd expect most if not all business schools have been very customer-focused in this regard: creating and maintaining curricula that directly meet the needs of students (to be employable) and businesses (who rely on graduates to manage and lead).
That's trade school mentality. Whether they own up to it or not, business schools have not distinguished themselves as anything but, and their marketing has definitely played up the value of the diploma itself. Try searching the term 'MBA': how many links talk up developing innovative strategic skills to solve the problems of tomorrow? I think you'll find, as I just did, that the proposition is instead financial enrichment. Educational disciplines (like, ahem, liberal arts) that cannot rely on ROI for their students to generate interest actually do a better job of developing the student beyond the acquisition of short-term marketable skills. An Elizabethan Studies professor, for instance, cannot expect that students are on a career track to teach Shakespeare and Marlowe - how many of these does a society need? Rather, the professor should expect that students have a need to use critical thinking skills, increase their language skills, be inquisitive about cultures not their own, and be willing to challenge their written and verbal communication abilities. Can a student profit from these skills? Surely; many do, in private industry and public service. And their skills pay off increasingly over a life's work, if the individual has internalized the lesson that learning is life-long, not circumscribed by the duration of a degree plan.
Let's say you have a choice between hiring someone with well-developed innovative leadership skills, and someone with well-institutionalized knowledge of finance and business strategy: which is the better candidate to create your business as it will be 15 years from now? Now, how likely is it that the candidate graduated from a business school institution? A company that relies on b-school graduates to fill its top management positions probably expects that its leaders in 2024 will own recently minted MBAs. With the expected churn in management, who hires the talent today who will create the 2024 company?
Yet, how does a company stay in business for more than a (human) generation if it only acts on its interests within a 3 - 5 year horizon? Until the recent financial collapse, companies were not facing this head-on; the short-term paradigm seemed sustainable and even profitable. Although we are now seeing some dialogue on the issue, I continue to witness an entrenched reluctance to let go of old paradigms. This is understandable: if the people strategizing in the board room are unlikely to be working in a generation, their self-interest doesn't necessarily intersect with the interests of the corporation. When corporations start to use time horizons of a human generation, not a technology generation, to scope their long term planning, we will know we've made the necessary break with the past and that leaders have learned that their most significant contribution is to create value that lives beyond their tenure.
(A note on the title: I picked this up from Seventh Generation, whose website states:
I'm not so ambitious. Just one will do.)
The last course I taught at the school was one of my own design titled "Management and the Future." The course engaged students in addressing a basic question: How would we manage business firms differently if we took seriously the idea that for the market to allocate efficiently, all costs must be internalized by the firm, economic power must be equitably distributed, and overall human consumption must be in balance with earth's ecosystem?
That's trade school mentality. Whether they own up to it or not, business schools have not distinguished themselves as anything but, and their marketing has definitely played up the value of the diploma itself. Try searching the term 'MBA': how many links talk up developing innovative strategic skills to solve the problems of tomorrow? I think you'll find, as I just did, that the proposition is instead financial enrichment. Educational disciplines (like, ahem, liberal arts) that cannot rely on ROI for their students to generate interest actually do a better job of developing the student beyond the acquisition of short-term marketable skills. An Elizabethan Studies professor, for instance, cannot expect that students are on a career track to teach Shakespeare and Marlowe - how many of these does a society need? Rather, the professor should expect that students have a need to use critical thinking skills, increase their language skills, be inquisitive about cultures not their own, and be willing to challenge their written and verbal communication abilities. Can a student profit from these skills? Surely; many do, in private industry and public service. And their skills pay off increasingly over a life's work, if the individual has internalized the lesson that learning is life-long, not circumscribed by the duration of a degree plan.
Let's say you have a choice between hiring someone with well-developed innovative leadership skills, and someone with well-institutionalized knowledge of finance and business strategy: which is the better candidate to create your business as it will be 15 years from now? Now, how likely is it that the candidate graduated from a business school institution? A company that relies on b-school graduates to fill its top management positions probably expects that its leaders in 2024 will own recently minted MBAs. With the expected churn in management, who hires the talent today who will create the 2024 company?
Yet, how does a company stay in business for more than a (human) generation if it only acts on its interests within a 3 - 5 year horizon? Until the recent financial collapse, companies were not facing this head-on; the short-term paradigm seemed sustainable and even profitable. Although we are now seeing some dialogue on the issue, I continue to witness an entrenched reluctance to let go of old paradigms. This is understandable: if the people strategizing in the board room are unlikely to be working in a generation, their self-interest doesn't necessarily intersect with the interests of the corporation. When corporations start to use time horizons of a human generation, not a technology generation, to scope their long term planning, we will know we've made the necessary break with the past and that leaders have learned that their most significant contribution is to create value that lives beyond their tenure.
(A note on the title: I picked this up from Seventh Generation, whose website states:
The company derives its name from the Great Law of the Iroquois that states, "In our every deliberation, we must consider the impact of our decisions on the next seven generations."
I'm not so ambitious. Just one will do.)
Thursday, April 16, 2009
How much can they get?
Fascinating confluence of ideas today. Time Warner Cable announced that it's backing off (for now) its plans to charge download caps for its customers. This from Ryan Singel's post today on wired.com:
The interesting bit of that quote is "Some industry experts contend..." -- interesting because, you see, it's all a big secret. The government had to ask because the industry players refuse to release the data on which their pricing is based. Even more interesting is that text messaging is a special kind of service. Its costs do not correlate to normal bandwidth costs, because the SMS message rides for free, like a hobo riding the rails. These short messages are sized so that the packets can travel at no cost in blank spaces between larger packets. The carrier does not pay for queuing, storage, or bandwidth. There is no transaction cost, just a heck of a lot of revenue opportunity by convincing consumers that use correlates to cost. Not so.
So I've been thinking about all of this, and then listened to an interesting interview with Umair Haque on Harvard Business Review. Haque has been writing about the transformation businesses must make in their leadership. We need to quit thinking about making incremental differences -- in product design, pricing, delivery -- using old business models. We need to think about where the market is going to be, and think how it would be possible to meet those challenges. This is radically different than asking how can we get more out of the markets we serve (like text messaging, or cable Internet subscriptions...). Consumers are fed up, and US business is almost without exception refusing to acknowledge that they must provide real and lasting value by transforming the way they even think about the value chain. I'm seeing lots of innovation happening outside the US borders, with companies who are addressing emerging markets and anticipating where the world is going to be, not where it is today.
It's time to get our heads in the game. The playing field has changed. Throw away the old rule book and let's write some new ones.
The company's rationales never made sense to customers — or us, for that matter. For one thing the company's balance sheet shows that in 2008 its cost for bandwidth fell by more than 10 percent, even as it gained customers and increased revenue.
In a statement, TWC made clear isn't giving up on the idea -- it just lost a public relations battle, saying that it was "shelving the trials while the customer education process continues."
Indeed, there's no cost basis for the plans to charge more; this is just a 'how much can we get' moment. But more than that - if consumers are downloading more with Web 2.0, aren't the omnipresent, intrusive, Flash-based ads significant contributors to the increase in bandwidth traffic? I always figured that suffering these obnoxious ads were the price I had to pay for the non-fee-based content that I read and watch. I thought that was the deal, and was willing to accept it. If I wanted to check out MSNBC.com's content, I watched their ads. Charging consumers more for the privilege of downloading a company's advertising assault is just too much.
This is all too reminiscent of text message pricing by the wireless carriers. Back in September, Cnet.com reported that Congress was questioning the wireless carriers about their pricing of texting plans. The price of texting doubled over the prior 3 years industry-wide. The following is from Sen. Herb Kohl, chairing the Antitrust Subcommittee in the Senate Judiciary Committee:
"Some industry experts contend that these increased rates do not appear to be justified by any increases in the costs associated with text messaging services, but may instead be a reflection of a decrease in competition, and an increase in market power, among your four companies," Kohl said in the letter.
The interesting bit of that quote is "Some industry experts contend..." -- interesting because, you see, it's all a big secret. The government had to ask because the industry players refuse to release the data on which their pricing is based. Even more interesting is that text messaging is a special kind of service. Its costs do not correlate to normal bandwidth costs, because the SMS message rides for free, like a hobo riding the rails. These short messages are sized so that the packets can travel at no cost in blank spaces between larger packets. The carrier does not pay for queuing, storage, or bandwidth. There is no transaction cost, just a heck of a lot of revenue opportunity by convincing consumers that use correlates to cost. Not so.
So I've been thinking about all of this, and then listened to an interesting interview with Umair Haque on Harvard Business Review. Haque has been writing about the transformation businesses must make in their leadership. We need to quit thinking about making incremental differences -- in product design, pricing, delivery -- using old business models. We need to think about where the market is going to be, and think how it would be possible to meet those challenges. This is radically different than asking how can we get more out of the markets we serve (like text messaging, or cable Internet subscriptions...). Consumers are fed up, and US business is almost without exception refusing to acknowledge that they must provide real and lasting value by transforming the way they even think about the value chain. I'm seeing lots of innovation happening outside the US borders, with companies who are addressing emerging markets and anticipating where the world is going to be, not where it is today.
It's time to get our heads in the game. The playing field has changed. Throw away the old rule book and let's write some new ones.
Monday, April 13, 2009
Open Source, Open Mind
Christopher Meyer posted an interesting article on the Harvard Business Review, "Why the Stimulus Should Support Open-Source Systems." I found this an interesting perspective:
Open standards are an essential enabler in the development of any shared infrastructure — sixty-cycle alternating current and common plugs for electricity, or a limited number of track gauges for railroads. But the habits of mind that lead to open platforms are not yet widespread with respect to software, and the interests of those with proprietary solutions to sell are very strong.
If you travel, you may question the narrow definition of the 'shared infrastructure' he cites. The fact that your electrical devices can't connect in another country without adaptors and converters is more than irritating; it's a reminder of the insular thought process that humans bring to innovation. In a perfect world, everyone would use a single standard for power supply and plug design. So why doesn't this happen? The simple answer is the logistics of getting every stake holder together to set standards, on a time table that suits the needs of everyone, is more than daunting. We see this in the little microcosms where we work. It always seems easier to get the people in your immediate area together to make a quick decision, than to involve every possible stake holder, intersecting horizontally and vertically through the company, to discuss all viewpoints and create a single strategy. People do this even though they know intellectually that the more comprehensive solution is always better than the narrow one devised by a couple people who share a perspective. Because, hey, it's easier and satisfyingly quicker.
I think there's something else going on, which is instructive for the larger theme of Meyer's post. We seemingly have an inability to accept that exclusivity is not an enduring value proposition, regardless the context. Consider the wide array of power plug configurations. Think of the cost borne by manufacturers of electrical appliances and devices who must cater to each of these variations. There's no apparent advantage of one design over another, yet the design forces cost on the supply chain. Just what advantage did exclusivity confer? Since people and goods crossed international borders before electrical infrastructures were created, we have to assume nations were in the same situation as we find ourselves now: either a belief that others don't matter (insularity) or that our way is better (exclusivity) takes hold and confines the imagination to a short-sighted, self-serving solution.
Meyer argues that when the stakes are high enough (as they are with energy and health care), we have to open ourselves up to being inclusive and sharing technology advancements and standards. I think you can take the argument much farther. Counter-intuitive though it may be to businesses, acting inclusively is always better than protecting exclusivity. We must move beyond the belief that value is derived from owning something no one else has. This is as false as the belief that owning currency -- the bills in your wallet, for instance -- actually has an inherent value. The thing itself has no value; things derive value from the use people make of them.
Imagine we had learned this fundamental lesson as the web was being constructed. It started as a shared resource for programmers and academics using Unix servers. What if the software companies that started connecting to the web also took open source as a fundamental design principle? Designing, coding and testing new applications would be completely different. Software would be robust. Applications would naturally and seamlessly (that paragon of virtue that every software company touts but none deliver) work together. Development would be very rapid, and version releases would be pain-free. OK, so there wouldn't have been a market for system integrators; there were some short-term gains for some companies that would not have existed. But, there are other revenue streams that would have opened up in this alternative reality: how much has it cost the technology industry (and the industries of their clients) for technology to lag market need, for poor implementations and embattled upgrades to cause loss of client loyalty and resistance to upgrades?
Software manufacturers may believe that their value is in the intellectual property of their code. Funny thing, I never knew of a customer who viewed it that way. With every software selection, it comes down to a couple of people looking at each other across a table, with the potential customer trying to answer these questions: Do they understand my business? Can I trust them? In the end, it's just about people, as it always is.
Saturday, April 4, 2009
What She Didn't Need
A recent blog by Virginia Heffernan in the NY Times Magazine ("I Hate My iPhone") is a great book-end to my last post ("What You Need"). My daughter and I read Heffernan's post last night on my Blackberry, and it just slayed us both.
However, the conclusion - though ironic - rings a false note. With the iPhone's influence on mobile technology, expect to see the industry march in lockstep, whether it's your beat or not.
However, the conclusion - though ironic - rings a false note. With the iPhone's influence on mobile technology, expect to see the industry march in lockstep, whether it's your beat or not.
Wednesday, April 1, 2009
What You Need
I'm breaking in a new laptop. (Sigh) Once upon a time it was fun to get a new machine. Of course it was always a drag to transfer files, reinstall software, and set up all of the networking connections. But, the upside was huge: it was a NEW machine, and it did NEW stuff. Back in the day, even the work laptop was a toy. If I had to describe it to a teenager today, I'd have to liken it to getting a new mobile phone. Laptops used to be fun like smartphones are today.
As I go through the grind of transferring to the new machine, I wonder how this once-fun and cool toy has become just a tool. It's really an amazing bit of technology, but it's also hard to appreciate that. Oddly enough, the design breakthroughs in the past couple years have been not in making more sophisticated premium machines, but in making really cheap, really stripped-down machines (One Laptop Per Child, Wal-Mart breaking the < $300 price point, and netbooks are examples). All of the bells and whistles are being designed for mobile phones. Despite the fact that handheld design confronts the physical limitations of human hand size and vision capabilities, innovation seems to be abandoning the laptop, which is much more accommodating to us physically. The market is moving inexorably in one trajectory, guided by the maxim that smaller is better.
Some (male) colleagues today were joking about the luggage-sized dimensions of women's handbags; the women in the room chuckled too but not one would give up the function, storage, and fashion of the bag she carries to downsize to a wallet and the storage capacity of a pants pocket. Smaller and more convenient, yes. Better? Nope.
I do love my Blackberry. I enjoy the convenience of having the Internet at my fingertips wherever I go. I love our custom apps that keep me updated on the business wherever I am. But any user's needs are more complex than the distilled analysis of a marketing study. I just don't see evidence that the companies who design consumer technology envision the diversity that exists in their markets. It definitely feels like we're being herded in the direction they want us to go.
Here's a thought for those who are designing tomorrow's technology. Go to your (or your partner's) closet and pull out every handbag. Line them up. I bet it creates a diorama of the diversity that exists within a single human. Multiply that by the size of your market. Now, do you really think the next-gen iPhone clone is really all we need? It's maybe a piece, but only a piece, of what you need.
As I go through the grind of transferring to the new machine, I wonder how this once-fun and cool toy has become just a tool. It's really an amazing bit of technology, but it's also hard to appreciate that. Oddly enough, the design breakthroughs in the past couple years have been not in making more sophisticated premium machines, but in making really cheap, really stripped-down machines (One Laptop Per Child, Wal-Mart breaking the < $300 price point, and netbooks are examples). All of the bells and whistles are being designed for mobile phones. Despite the fact that handheld design confronts the physical limitations of human hand size and vision capabilities, innovation seems to be abandoning the laptop, which is much more accommodating to us physically. The market is moving inexorably in one trajectory, guided by the maxim that smaller is better.
Some (male) colleagues today were joking about the luggage-sized dimensions of women's handbags; the women in the room chuckled too but not one would give up the function, storage, and fashion of the bag she carries to downsize to a wallet and the storage capacity of a pants pocket. Smaller and more convenient, yes. Better? Nope.
I do love my Blackberry. I enjoy the convenience of having the Internet at my fingertips wherever I go. I love our custom apps that keep me updated on the business wherever I am. But any user's needs are more complex than the distilled analysis of a marketing study. I just don't see evidence that the companies who design consumer technology envision the diversity that exists in their markets. It definitely feels like we're being herded in the direction they want us to go.
Here's a thought for those who are designing tomorrow's technology. Go to your (or your partner's) closet and pull out every handbag. Line them up. I bet it creates a diorama of the diversity that exists within a single human. Multiply that by the size of your market. Now, do you really think the next-gen iPhone clone is really all we need? It's maybe a piece, but only a piece, of what you need.
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