A recent article on remarks made by Hasso Plattner, former CEO of SAP, makes an interesting reading besides serving as an interesting barometer of the evolution in thinking in the software industry. Speaking at the launch of a school for design at the Hasso Plattner Institute, Hasso Plattner took the opportunity to comment on the changes in the business application software market particularly related to on-demand software. Of note was the fact that Dr. Plattner credited Google with having a significant impact on computing in general saying, 'Google has changed the world, and we all have to learn, and if we don't learn quickly enough and redesign our thinking ... then we might not be as successful as we were in the past."
For good measure, Plattner adds business software is the most hated product currently on the market and says that there's a surfeit of technology, but we have no clue how to develop user-centric products. SAP now recognizes that good design runs deeper than appearance. This clearly reflects the fundamental shift that’s happening in the minds of the industry leaders and by extension in the software market itself. As I wrote, the pressures of competition & pricing makes companies try out new models – these sometimes force companies to think for the customers as well – no more proof is needed to be convinced about massive changes that are bound to happen in the enterprise landscape. SAP was not an early embracer of SaaS model and for some time allowed other players to take the lead in the market. Hasso talked about the latest SAP on-demand initiative focused on SME segment. He is pretty insightful when he says,” “Software companies cannot dictate what is happening... If we can follow fast enough and get great new ideas and apply them, the market will decide..It is very hard to deviate from where you are successful. You have to maintain the success but you have to simultaneously think about the future.” The interesting challenge for the CRM software players is that while there is a wave of interest in on-demand software, enterprises are not so sure of completely switching towards embracing the on-demand model – this despite heavy duty push by high flying players like SFDC. Various studies show that the adoption rates of on-premise to on-demand in mature categories continue to be in the ratio of 4 :1 and is not showing signs of a reversal in the near future. Clearly both the models shall co-exist and customer may have a choice of moving between the models to meet growing business requirements. The best approach is to provide more choices so one may not cannibalize the other ( as Plattner seems to indicate) but could help in increasing the installed base. This way SAP gets the protection of not missing a shift in technology delivery models.
In his address to Apple employees, Steve Jobs says that the iPhone will change the mobile space forever. He said that when the Mac first came out, people talked about how some day, every computer would work that way, and the same would be true of the iPhone. The iPhone was driven by the fact that everyone hates their phones, and it's all about "core competence"—making all of the features easy-to-use and self-discoverable. The next part makes interesting reading : The iPhone, as per him is the third leg of Apple’s business. The first leg is the Mac business, which Steve addressed by saying that they have the "best Macs" in the new product pipeline ever right now, and that the stuff coming out in the next year is "off the charts." Wow, sounds juicy. The second leg is the iPod and iTunes marketplace, which we all know has been wildly successful. The third leg of the chair, Steve hopes, will be the iPhone business, which he hopes to grow into something as strong as the iPod. He added that he hopes for the fourth leg to become the Apple TV, but focus is on the iPhone for now.
Businessweek notes that the Apple ecosystem has morphed from a sad little high-tech shell into a global empire. Once known for defining the digital future but never fully capitalizing on it, Apple has been transformed into tech's most influential hit-maker. Steve - the real test will be whether Apple can change the way consumers think about a phone. Apple is for the first time entering a mass market, and incumbent players won’t leave the playing field empty – they will definitely come back at Apple – more aggressively and with more focus. A Broadened business model may not mean that the business will be strong across the board.
Former Fortune managing editor Eric Pooley caught with Rupert Murdoch while the negotiations with the Dow Jones board over editorial independence for the Wall Street Journal were being conducted
Its an interestig interview that reveals the mind of a sharp businessman inside Rupert Murdoch. The fact is that cChange was coming to the Journal whether Murdoch bought it or not. Like other newspapers, it has to change and adapt. And its relative inability to change and adapt until now certainly can't be blamed on Murdoch.When Murdoch talks about the future of newspapers, Ericn notes that it gives a sense of how contemporary he really is. Circulation and advertising revenues are ebbing away everywhere, he notes, proportional to broadband penetration.
Murdoch has a lot of interesting things to say :
The $5 billion price tag is easily absorbed by a company that earned $2.3 billion on sales of $25.3 billion last year and has little debt. But if the financials are simple, everything else about the deal is complicated. "The price of the Journal," says Murdoch, "is $60 plus vitriol."
Murdoch swears, that if he gets the newspaper, he has no plans to alter its journalism. "There'll be no change in the Journal's business coverage," he says flatly — but he does mean to expand its reach. He'd like the newspaper to be a national counterpoint to the New York Times in setting the country's agenda.
How does he respond to this bleak picture? By musing about investing even more in newspapers. "What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks. How long would it take for the advertising to come? It would be successful, it would work and you'd make … a little bit of money.
He also notes that the Journal leadership has tried to maintain the print circulation by not giving everything away online, but the percentage of heavily discounted print subscriptions is rising rapidly, a sign of ill health. WSJ.com has more than 900,000 subscribers, making it the largest paid-subscription site on the Web, but less profitable, Murdoch suspects, than it might be with a hybrid model — with free users driving ad sales and premium users willing to pay for high-end content. "But it needs to be studied carefully," he says. Murdoch sensed the power of the Web not so much as a user but as a businessman who watched the bottom line. In late 2004, he says, he "began to feel the erosion of advertising in print and even the stalling-out of ads on television and decided to pay better attention to this. He confirms having discussed with Terry Semel for a stake in Yahoo but with Terry gone, he may have to start discussions all over again, but in the tradition of Newscorp style, an undeterred MySpace goes ahead to launch MySpace TV to take on the likes of YouTube.
I was speaking to someone today and he called the silicon valley, the mecca of technology and as a valley veteran he holds the belief that its dominance in the tech arena shall continue to be so for some more time to come and he does not see any other location/ecosystem in the world gaining critical mass on its own to challenge the might of the silicon valley. One will have to agree on the fact that the Valley continues ot be the happening tech place in the world today.
Michael Vizard comes with a list of valley beliefs, those one won't find takers outside the valley. A funny list but definitely thought provoking. Some notable ones :
- SAAS Dominates All Every Sunday they go to church to listen to the latest software-as-a-service sermon from Marc Benioff, CEO of Salesforce.com - Google Is Always Good Google has no interest in dominating markets the way every other company with more than 80 percent market share has done before, because in California absolute power doesn’t corrupt absolutely. - Microsoft Is Irrelevant Microsoft is so large, bloated and morally bankrupt that it can no longer compete effectively. - IBM Is Shill for Consulting Despite the fact that IBM sells billions of dollars in software and hardware, its only real ambition is to fuel overpriced consulting hours for the people who work for IBM Global Consulting - Web 2.0 Rules All This is a return to the one true Internet religion focused on giving total freedom to users who want to own their own data. The original religion was corrupted by East Coast bankers that compromised the Wall Street financial analyst community.
One can have alternate views on all these - but cant deny that there is some truth that the valley folks really hold ideas like close to their heart, well captured here in a funny way. I named these as axioms(2007), as the list may be different in 2008. Read the full list here.
The BusinessWeek InfoTech 100 list makes interesting reading.
Reinvention is the common theme noticed by BWeek that unites the companies on the 2007 Information Technology 100, the magazine’s ranking of the top tech performers. The report also notes the convergence effect that the internet is forcing on the telecom players - it is effectively shattering the boundaries between formerly siloed industries like cable and telecom. The methodology of selection: Companies whose stock price has dropped more than 75%, whose sales shrank, or where other developments raised questions about future performance were eliminated from contention. Companies were ranked on four criteria: return on equity, shareholder return and revenue growth (which were given equal weight), and total revenues (which was weighted). Then the top 100 companies were reranked as a group.
Some of the exceptional stories of growth :
Nokia is recognized for its phenomenal growth: It has become the leading handset maker in India and China and is seeing strong growth in Africa and Latin America.
Amazon.com is seen as the ultimate example of transformation. First it moved beyond selling books to other media, then to electronics, and just about everything else. The next move is working on the next diversification play: offering other businesses spare computing and storage capacity, as well as leftover space in Amazon's huge distribution centers. The strategy has yet to deliver meaningful revenues, or any profits – reflecting a never-ending need to search for the next source of tech growth.
Notable Dropouts: Dell & SAP – Both of them dropped down significantly.
DELL : DELL was still the world's biggest PC maker in 2006, when Dell ranked No. 15 in the list. Since then, HP as bumped it aside, stealing sales and market share with clever advertising and crowd-pleasing products. Dell's traditional strengths - a low-cost model of selling gear over the Internet, a strong U.S. corporate customer base, and an emphasis on desktop computers- suddenly look like weaknesses in a world where laptops dominate and sales growth is strongest in U.S. consumer-oriented stores and in developing nations. Dell's preliminary 2006 sales totaled about $57.1 billion, up just 2% from 2005. That compares with a 19% growth rate in 2004.
SAP : A new line of software from SAP will let customers tap into programs on an SAP server and use SAP functions without installing and maintaining them on their own computers. The strategy could appeal to small and midsize companies that don't have big IT departments. But it also puts SAP into more direct competition with companies such as Salesforce.com and could suck sales from SAP's traditional software lines. Investors are nervous, knocking SAP's stock price down 12% since January and pushing it off the list, down from No. 39 last year.
The point to note here is even these two laggards, are also trying to reinvent themselves – so clearly the tech sector is undergoing a sense of transformation from within. As Fortune notes,the IT adoption of technology across the developing world is going to create a huge opportunity for growth for the tech players. Intel, Microsoft - all are gearing to tap the next wave of growth. Interesting times lay ahead for the tech sector.
Christopher Beam writes that if Facebook adds e-mail, IM, and RSS, it's one step closer to becoming as comprehensive as Yahoo! and as popular as MySpace. The rest of the Internet might as well surrender.I wrote about the Facebook phenomenon a few days back. With the Facebook platform in vogue, outside developers will fall over themselves to deliver great content to Facebook users. The site's growing audience, sterling reputation, and clean look are catnip for corporations. Marc Andreessen points out that veterans of the software industry have, hardcoded into their DNA, the assumption that in any fight between a platform and an application, the platform will always win. He explains,
"platform" is a system that can be reprogrammed and therefore customized by outside developers - users - and in that way, adapted to countless needs and niches that the platform's original developers could not have possibly contemplated, much less had time to accommodate. In contract an application cannot be reprogrammed by outside developers. It is a closed environment that does whatever its original developers intended it to do, and nothing more.
Fellow irregular Jeff Nolan writes about the new distribution ecosystem play that Facebook is pioneering. Facebook plans to add a "wallet" feature for processing online payments. But for the site to really take off, it needs to have an instant messaging system as easy to use as Google's, as well as an embeddable inbox that connects to Hotmail, Yahoo!, and the like. says christopher. The fact that Facebook hasn't introduced some sort of RSS feed for news—real news, not News Feed news—also borders on inexcusable, he argues - a point which, I fully agree with.
Mark elaborates that Facebook's viral distribution mechanism by which users became instantly aware of which applications their friends are using, can with one click start using those applications, and automatically spread them to their friends is the killer there. Happening in an environment with 24 million active users -- active users defined as users active on the site in the last 30 days. 50% of active users return to the site daily. 100,000 new users join per day. 45 billion page views per month and growing. 50 million users, and a lot more page views, predicted by the end of 2007. An application that takes off on Facebook is very quickly adopted by hundreds of thousands, and then millions - in days! - and then ultimately tens of millions of users.
The API’s released by most other players have mostly been for interacting with a web system from the outside, with limited abilities for . programmability and customizability enabled by a true platform – this makes a huge difference. In a recent meeting , I heard someone saying that MySpace is the next Microsoft and here comes the view that Facebook could overtake Google or Yahoo. I wont endorse either of the points, but I do think that Facebook has the potential to become big. Once cal also expect an IPO from them –that would be followed by buyouts of its competitors by other players or it can also buy players operating in proximate space,. The facebbok frenzy, for sure would create lasting impact in the world of social networks.
Traditionally business has chosen to outsource just certain aspects of their enterprise, often with different vendors managing different aspects of their business in order to achieve cost savings. But a new survey by the Brown-Wilson group indicates a growing trend away from outsourcing to outsourcing in which companies focus on fewer service providers and vendors expand into different services to better serve their clients.
The Black Book of Outsourcing survey aims to identify top outsourcing vendors and advisers, as well as industry trends, based on responses by outsourcing decision-makers (survey of over 117,000 invited outsourcing governance officers including CEOs, CFOs, Procurement and Purchasing Officers, CIOs, Human Resources Directors, Strategic Consultants, User Management and buyer decision makers. The focus of the survey is to draw out the outsourcing user experience concerning service providers globally). A quick view of the rankings published at the well researched, recently released report titled the state of the outsourcing industry.
The report sees reaching the point in the evolution of outsourcing where the “faster and cheaper” and the “better and most innovative” are about to cross critical paths. One key finding in this year's survey is a shifting focus from cheaper and faster performance to a focus on client satisfaction, with managers of client companies favoring outsourcing suppliers that provide better and more supportive innovations, such as responding quickly to help clients manage a crisis. Vendors that ranked high in prior years for saving their clients big money are now slipping lower because they're seen as putting their own company growth goals first, according to Douglas Brown and Scott Wilson of Brown-Wilson Group. Companies that performed best in the 2007 rankings focused on adapting to their clients' strategies rather than applying a cookie-cutter approach, they conclude. While China has seen a tremendous increase in outsourcing investment in the last year, Mr. Brown says it is interesting to note that Chinese companies scored very low levels of satisfaction in the survey.
Finally outsourcing is not just about offshoring . The distribution mix of revenues out of a total of around trillion dollars (expected to touch 1.5 trillion dollars given the growth rate of 30% annually): 4% to India 3% to China, Philippines & SE Asia 57% to United States 36% to global locations excluding US, India and China/Southeast Asia.
Read the full report - it has an excellent collection of data points, measured on various dimensions. A customer-imposed changing of the vendor guard forcing some old school Big 6 leaders to be replaced by a newly ruling set of global industry influencers means that the industry is in the cusp of a major change and with offshoring bringing some cases, the order of fifty percent saving, through well thought out mechanisms, this space will see lot more action for sometime to come.
Financial services are a pioneer of sorts in outsourcing and offshoring and about 40% plus contracts on outsourcing today come from the BFSI segment and generally the other verticals follow the BFSI trends and so its important to watch the performance of the sector and its next moves. I read the published parts of Deloitte's global financial services offshoring report 2007. The full report is available only for the participants of the survey. The report has good statistics about offshoring pertaining to the financial services industry:
- Offshoring has matured at a rapid pace. In 2001, less than 10 percent of major financial institutions had moved processes offshore in 2001. Five years later, over 75 percent of major financial institutions had operations offshore.
- The US and UK banking and capital market institutions continue to lead this shift, but mainland Europe is showing increasing interest.
- Most major financial institutions now operate a sizeable, low-cost offshore delivery function. The industry’s cumulative cost savings for the last four years have risen sharply, propelled by an 18-fold increase in offshore headcount1. Over 2006, average total headcount offshore doubled to six percent of total group staff. More than half of all financial institutions surveyed are now saving more than 40 percent for each business process offshored3.
- The range of savings is polarizing, and is now between 20 and 70 percent per business process.
- An handful of financial institutions are setting the pace in offshoring. They are beginning to outshine their offshoring competitors and achieving stellar performance through the application of best practices. This improvement in performance is conferring significant competitive advantage on these institutions.
- The best offshorers are seeing savings equivalent to 3% of the total cost base. However, at the other end of the spectrum, institutions that have failed to adopt best practices are experiencing a decline in operational performance.
- Relocating 5% of the workforce offshore seems to be the critical number to achieve. This, the report finds out enables business to build a platform for success. The best performing institutions offshore around 12% of group headcount and, on average, save 55% on each business process. The companies whose offshoring programmes are suffering, offshore less than 5% of headcount and typically save 32% per process. The most efficient offshorers take just 15 months to migrate each process, compared to around 25 months for poorer performers. A very interesting report with very relevant and useful statistics.
There's a mistaken belief, held for a long time that open source can foster innovation. Keith Sawyer writes, the open source model almost never generates breakthrough innovation. He points out that when Krzysztof Klincewicz, a management professor at the Tokyo Institute of Technology, analyzed the 500 top open source projects on SourceForge.net, he found that only 5 of the 500 - one percent - were examples of radical innovation.
Part of the attraction towards open source is that the old model of innovation was strong central management, hierarchical reporting lines, and a linear staged process from the R&D lab through to the production floor. His submission is that the open source model turns this on its head; no central control, and a distributed and diffused network of experts. The key to breakthrough innovation is to find the right balance between these two opposed models
I am fond of the statement by Larry McVoy, a close ally in the past to Linus Torvalds, creator of the open source Linux operating system, also an industry veteran who has developed operating system software at Sun Microsystems, Silicon Graphics.
- Open source as a business model, in isolation,is pretty much unsustainable.You have to have a business model that will let you recoup those costs. These arguments are exceedingly unpopular. Everyone wants everything to be free. No one can show how to build a software-development house and fund it off open source revenue. It can not be done !
- The open source guys can scrape together enough resources to reverse engineer stuff. That's easy. It's way cheaper to reverse engineer something than to create something new. But if the world goes to 100% open source, innovation goes to zero.
His view on where innovation would come from : source companies will make commodity knockoffs and eke out tiny profits, while traditional "closed source" companies will develop innovative products and earn fatter profits.
In my view, open source has a long way to go to become really core inside enterprises. Open-source products are a good solution in some circumstances. In the enterprise space, open-source offerings have limited revenue or installed base they are not a significant factor in the market, except in pockets of infrastructure space. Most organizations shy away from production deployment of pure open-source technology above the infrastructure stack without fool proof and proven models of product/maintenance/service needed for production deployment. As Michael Hickins shows, open-source community needs to get over its overweening sense of superiority and messianic inevitability, change gears and try things diferently. Its a long long battle ahead for open source movement to get stronger to be considered a candidate for fostering sustainable innovation
I admire Marc Andressen - a pioneer of sorts in many things of the internet revolution. I liked his earlier post on venture capitalists. I was a little taken aback when I read his advise on turnaround strategies for big companies(>5000 employees). I read it, re-read it - liked the style and respect the time and effort that has gone behing in coming with the post, but found the contents misaligned. In my view, turnaround strategies are far more involved and calls for more deep thinking and the best turnaround strategy may not prescriptive at all - if anything it has got to be lot more context specific involving industry trends, vision, execution skills, resource base etc. In this age of private equity, turnaround and transforamtion strategies tend to take very many different paths. Read the views of Zoli and Larry Dignan on this. But do read the response that Marc provides for the comments posted therein.
He starts by pointing out that life expectancy of American companies is declining, and that even some of America’s most respected firms are susceptible to failure. Jagdish argues that success too often breeds failure. He says he got thinking when Duane Ackerman, CEO of BellSouth asked him,how in less than five or six years, many of the companies praised inTom Peters’ book were in serious trouble—companies like IBM, Xerox, and Sears. He believed the tenets in the book—the ways for companies to be the best and posed a question why do good companies fail and seeded the idea of this lovely book.
Arie De Geus challenged the idea that companies must go through stages of life and eventually mature and fade away. Instead, he argued those that really succeed constantly adapt, having conserved the resources to allow that to occur
The book looks into how companies slip into "addiction" and slide off the rails,why some never turn around & how others achieve powerful turnarounds, moving on to unprecedented levels of success. Jag determines that the causes of corporate downfalls were often the self-destructive habits that companies had picked up on the road to success. He identifies seven bad practices that can lead to failure, including arrogance, complacency, competitive myopia and volume obsession. Each self-destructive behavior is illustrated by historical examples of once-successful corporations for whom the habit was their undoing. He then outlines strategies on how businesses can either prevent or break these habits
Jag postulates that six externalities bring about a change to business. They are regulation, capital markets, competition, technology, globalization and customers. When any of these external contexts changes radically and the company is either unable or unwilling to change, it often results in failure. The fastest moving externalities are regulation, competition, and capital markets, while the slowest moving ones are technology, customers, and, globalization.
He is very candid and insightful when he writes,” most companies come into existence by being opportunistic—call it entrepreneurial opportunity. They take all the credit, but it’s partly the environment and partly the individual. Company success is very much like human behavior—a result of nature and nurture. But managers refuse to say that they were blessed from above, and so they take all the credit for themselves. They succeed as long as the environment doesn’t change. The underlying theory is that many people in business succeed by accident and not by plan” The seven habits that are inherently self destructive that engulf orgnizations :
• The “cocoon” of denial Find it, admit it, assess it, and escape it • The stigma of arrogance Escape this fault that “breeds in a dark ,closed room” • The virus of complacency Six warning signs and five solutions • The curse of incumbency Stop your core competencies from blinding you to new opportunities • The threat of myopia Widen your view of your competitors—and the dangers they pose • The obsession of volume Get beyond “rising volumes and shrinking margins” • The territorial impulse Break down the silos, factions, fiefdoms, and ivory towers
Finally he reminds that change management is the key and highlights three dimensions therein: The first is mindset change. The second is some form of reorganization. This includes eliminating or restructuring leadership’s responsibilities and restructuring the organization. HP went from a country-by-country profit & loss organization to, for example, global product management reorganization. Finally, the most critical change is the reward system
To a fault, the data are based on press coverage or published events but the analysis and message make this a compelling read – one that should help business executives to reflect a lot while running successful business.
The event was video streamed over the Internet and is available here. The arguments are well worth the listening and reflects deep thinking of both the sides. Andrew has blogged about the event. The core difference is centered on whether the E2.0 is really something new, or whether it's just an incremental extension to existing set of technologies for collaboration, interaction, and information sharing.
From John Eckman’s transcript:
AM: These new technologies really have the potential to address some deep needs in enterprises. We don’t have good means to allow our people to collaborate or find each other. If someone did the same project last year in another division, how do I enable teams to find out that info? DF: Will this all get assimilated into SAP and Oracle, or will the myspace / myblog / mywiki approach overtake the system? TD: I’m not sure how much of an incremental functionality improvement blogs and wikis provide. Some of the emergent tools are interesting approaches, but they aren’t that fundamentally different that MS Sharepoint (I don’t know if this has been encased in the E2.0 hegemony yet) has for some time. It isn’t terribly exciting, but I bet more people are using Sharepoint today than blogs/wikis. DF: Is there any proof that [Enterprise 2.0] is enabling true changes? AM: No. But how many technologies can we really do this for. IT is a leap of faith. But that doesn’t stop us from spending millions/billions of dollars on IT. TD: I’d agree there isn’t much measurable benefit - that’s part of my concern with the revolutionary fervor in this space. My focus is now on analytics, and I can point to real examples - P&G, Harrah’s - they are seeing real benefits from applying this technology. AM: But we’ve been doing analytics forever. TD. Well, take Search, Links, Authoring, Tags, and Extensions - all of these have been around for some time as well. AM: Tagging? Social, emergent, metadata - that’s clearly new. TD: Well tagging is an old thing - but the way you’ve described it. So maybe some of this stuff is new - but not all of it. How long have these technologies been around. AM: True, but not combined in this way - innovation is not just invention. DF: What about the emergent audience for new technologies? What impact will the new generation(s) entering the workforce have on adoption of E2 technologies? AM: The short answer is we don’t know, but I think the impact of the new audience will be large. DF: Tom, will that have an impact? TD: I would like to think that they will. We really don’t know. Lots of people using Facebook, but what are they using it for? They will be used, but I think more for social purposes than for business purposes.
I watched the show and while I agree we’re at the very early stages of adoption, that’s not to say they’re a fad or an extension of what’s gone before. The new technologies are allowing us to think about how we collaborate, in what context and around which information. The power of social networks have multiplied in the last few quarters with huge advances in collaboration, ease of use & technical infrastructure like the internet and processing powers. Tom recently brought out a valid issue here on information consumption highlighting the unhealthy ratio of the overall information that we should be consuming, versus doing other things. He points out that most of the barriers that prevent knowledge from flowing freely in organizations – most of them cultural, manifested as hierarchy, misaligned performance management system all these transcend the power of technology in delivering desired results. McAfee’s point of view is that Enterprise 2.0 would be transformative for may organizations and the transforming culture is a significant challenge, and enlightened leadership would pave the way to Enterprise 2.0 deployments. He says that Enterprise 2.0 technologies would continue to pervade into corporates thereby accelerating technology absorption and the resultant culture changes would materialize. McAfee suggests that there is a real discontinuity from a technology perspective - the technology is capable of so much more than it was previously. It’s the fact that anyone can contribute to it - from anywhere in the organization - and the wisdom that comes out of the collective pattern which emerges which is the new thing. Free form, emergent, without structure added in at design time.
Dennis provides his views on debate.The consumerization of IT is a given fact.I agree with Tom on his view of existing technology’s capabilities but Andrew’s position looks more of the “In thing” so to say.
I land in the valley and see in a surprising move, Jerry Yang takes over as the CEO of Yahoo. Terry Semel’s exit was more or less a foregone conclusion, but co-founder Jerry taking the CEO role is a definite surprise.
Few months back, when Yahoo announced a new restructuring, I wrote, the market perception remains pretty much to be desired. I also noticed that the peanut butter manifesto has not been taken too seriously. Come to think of it,If Yahoo can undergo this turmoil, fate of the innumerable web wannabe's are best left to the imagaination of their backers.
Jerry Yang outlineshis vision of a Yahoo! that executes with speed, clarity and discipline. A Yahoo! that increases its focus on differentiating its products and investing in creativity and innovation. A Yahoo! that better monetizes its audience. A Yahoo! whose great talent is galvanized to address its challenges. And a Yahoo! that is better focused on what’s important to its users, customers, and employees.
Quite neat. Yahoo has massive assets. It has the best content, vertical portals and a good share of coloborative tools. It has a good brand image among its customers –but probably it is not aggressive enough on building the me-first or me-best image. It has sustainable critical mass in terms of content, infrastructure and advertiser base. There are incredible challenges in running the optimal mix of businesses, which we have identified as content, portal, search, marketplace/e-commerce, communications (IM, e-mail, VoIP), and payments. Mobile foray could potentially help Yahoo create a new niche. Better execution and top notch performance in leveraging its assets is the key.
Yahoo is a global brand - a very liked one at that. Like what Jerry says, Yahoo has massive potential, drive, determination and skills, and he and his team has to make sure that the external perception of Yahoo!(read performance)accurately reflects that reality. They may not have much time ahead to make this happen.
Fred Wilson clarifies on the age debate – “We have funded only one 20 something entrepreneur in close to 15 investments we've made so far in our fund. I am sure we'll do more but we are not going to be a fund focused on 25 year olds”.
I was first shocked when I read about this wholecontroversy. I completely agree with Dave Winer, in what he has said in his rebuttal . The clear truth is that age is mostly a matter of mind. I regularly see very active middle aged people and lazy youngsters and vice versa- in daily life, I see bright, average and mediocre people at all age levels. If anything contrasts abound in real life related to conventional thoughts.
I like to be in the company of bright youngsters – I like their enthusiasm, confidence and sometimes their zeal and beliefs. While there are really good & admirably enterprising young people, it is also the case that the younger lot are not burdened with the baggage of the past that comes in the way of radical innovation. Its both good and bad –the good is obvious, the bad is the naivety and innocence can also lead to costly mistakes. Age is clearly not the only determinant for lasting success. It has to be seen in combination with several other factors like passion, enthusiasm, commitment and perseverance with a binding vision. Age is mostly an enabling factor –to ensure ability to make action and thought stay aligned. As seen in success & growth mindset, the dogged determination to shape one’s own destiny, one’s beliefs in being ever hopeful, creating and distributing wealth all point to set of core beliefs – the likes of which are essential for entrepreneurship and growth. Truly successful people define new levels of success at all phases in life- while being young through middle aged to old life.
In an age where the accepted wisdom is IT Is Business, Andrew McAfee argues that productivity growth is a critical measure, but it's not the only one managers care about. He is right in pointing out that Productivity growth, in other words, doesn't tell us anything about competitive balances or competitive dynamics. And it's perfectly possible for IT to have no impact on aggregate productivity at the same time that it's having a substantial impact on competition.
The data analysis by MIT's Erik Brynjolfsson, HBS's Michael Sorell and Feng Zhu along with Andrew McAfee makes insightful reading. I agree with Andrew & Erik about their recommendations to executives as to how IT can be leveraged. For executives, the key lesson is to treat information-technology efforts as opportunities to define and deploy new ways of working, rather than just projects to install, configure or integrate systems. The three broad areas of focus for top managers: - First, they need to look at how the company should be doing business differently. That means deciding what new tasks should be enabled with technology, and how widely they should be deployed. - Second, managers need to lead the deployment of new procedures to success. People don't like changes to their jobs dictated from outside and embedded in software. Overcoming this inertia and resistance requires skillful leadership. - Third, managers need to foster innovation by encouraging experimentation, collaboration, dialogue and all of the other activities that generate good ideas. That means building a technology infrastructure and an accompanying set of practices that reduce the cost of creating and replicating process innovations. Good friend and fellow irregular, Jason Wood points out the updated views of Andrew on this theme and writes that the real-world fact that information technology is such a ubiquitous part of the economic model now that you HAVE to measure its impact through multiple, coincident variables. Fully agreed. As I see it, In today’s hypercompetitive world ,simply put innovation is non-negotiable and innovation streak is of very high value to enterprises and of course much of this would be mainly based on leveraging IT. Business and Technology are getting so integrated; calling by a different name simply does not matter. Absolute truth needs no attorney or an analyst to argue its case. Any productive discussion and insightful analyses such as above would help the cause of business and IT a lot better.
Globally, the human flow from rural to urban areas, from developing to industrialized countries continues to surge, defying police barriers, jail and laws. Developing countries that goes hard on immigration – particularly those whose demographics is not favorable or countries chasing big dreams and huge growth, face a losing battle – this is like defying gravity – one can do that but at enormous cost and as a short term phenomenon. Steven E. Landsburg writes that on balance immigrants don't harm Americans; virtually all economists agree that immigration makes us richer, not poorer. Every immigrant is a potential trading partner, a potential employee, and a potential customer. He bids down wages, but that's a two-edged sword: It's bad for his fellow workers, but it's good for employers and good for consumers. In the very short run, most of the gains go to employers, and a substantial fraction of those gains probably go to people named Walton. In the somewhat longer run, all that excess profit gets competed away and shows up in the form of lower prices for consumer goods. At that point, even the workers who took pay cuts can come out ahead: If your wage falls by 10 percent while prices fall by 20 percent, you're a winner.
As I see it, the twentieth century has seen the worst of wars and the best of immigration - millions have migrated around the world in the last century - perhaps the highest ever in any century that mankind has seen. Mostly it has benefitted those who accomodated the migrants. With cultural adjustments, it is clear that like money, water and anything else that humankind uses, overtime the law of demand and supply and the nature of flow would determine the immigrant movement.
While scary predictions have been made by experts on the oil situation, the oil industry seems to look at things differently. I always take the industry’s view as more correct and authoritative given my preference to admire people/entities that get things done as against people providing thoughts, howsoever well thought out those could be. Lee Raymond of Exxon Mobil oncesaid, Thirty to 40 years from now, the combination of price and new technology is going to make unconventional oils—heavy oil, tar sands—conventional. The BP statistical review of world energy 2007 makes interesting reading. The 55th in the series report notes that although real oil prices remained below the peak of the early 1980s,2005 saw the annual average price measured in nominal terms for a barrel of Brent crude oil exceed $50 a barrel for the first time, with an increase of more than 40% over the 2004 figure. Natural gas prices also rose around the world, with nominal average prices in the USA and UK exceeding $6 per million Btu for the first time. Although energy prices have increased, there has been no physical shortage of either oil or gas. The market has worked effectively in maintaining supplies, even after the dramatic and disruptive effects of the hurricanes that hit the US Gulf Coast in the summer – albeit at higher prices. The report also finds that the world primary energy consumption increased by 2.7% in 2005, below the previous year’s strong growth of 4.4% but still above the 10-yearaverage. Growth slowed from 2004 in every region and for every fuel. The strongest increase was again in the Asia Pacific region, which rose by 5.8%, while North America once more recorded the weakest growth, at 0.3%. US consumption fell slightly, while China accounted for more than half of global energy consumption growth. Time that the world looks at a radically different way to meet global energy demands in future.
Image Courtesy : BP Statistical Review Of World Energy
It looks like that the Facebook Frenzy is at its peak now. With the flexibility for third-party companies and developers enables to create custom applications for Facebook members to add to their profiles, building "Facebook apps" has become a top priority for many Web companies-particularly smaller ones looking to make it big by capitalizing on Facebook's large and loyal user base. Already we are hearing views that less than a month after its debut, however, Facebook Platform may be closing in on a saturation point. However, I must sya that the Facebook penetration in the market is happening very fast indeed. In this web 2.0 age, perhaps growth needs to be assessed perhaps on a daily basis? Courtesy of Rajesh saw this lovely comparison between Facebook & MySpace. The article concludes that Facebook in the clear winner in the comparison shootout. Talking of the comparison, it must be recognized that MySpace rapidly grew to be the largest site on the internet in terms of page views. In less than 3 years it surpassed yahoo in traffic volumes. Obviously to manage this fast growth, they’ve had to deal with scaling problems and their focus seems to be in slowly and steadily fixing the errors/server problems. Perhaps they are now working on new features and right now indications are that MySpace is atleast three times larger that Facebook world wide. Clearly we can expect to see some far reaching things happening in this space.
Michael Schrage once noted growing market competition, not growing R&D spending, is what drives innovation. For the tech industry, once the bets for the year are made in terms of what to go after, Innovation in ideas, in delivery, in business models etc would characterize its growth. Innovation should be seen as bringing creativity to a commonplace- ‘back to basics’ philosophy in place of looking at it as a glorified & high risk strategy. The best known innovators in the world today Google and Apple have a different approach towards innovation. Google, is known for generating and executing on new ideas with blistering speed. Apple, a high leverage innovator has a different approach, one that the Economist magazine captures succinctly: Read against the backdrop of iPhone launch (a segment that Apple is entering/creating depending on how one sees it) in the US, this makes interesting reading. Apple has at least four important wider lessons to teach other companies. Not invented here, and very welcome. The first is that innovation can come from without as well as within. Apple is widely assumed to be an innovator in the tradition of Thomas Edison or Bell Laboratories, locking its engineers away to cook up new ideas and basing products on their moments of inspiration. In fact, its real skill lies in stitching together its own ideas with technologies from outside and then wrapping the results in elegant software and stylish design. […] Apple is, in short, an orchestrator and integrator of technologies, unafraid to bring in ideas from outside but always adding its own twists. […] Second, Apple illustrates the importance of designing new products around the needs of the user, not the demands of the technology. […] Listening to customers is generally a good idea, but it is not the whole story. For all the talk of “user-centric innovation” and allowing feedback from customers to dictate new product designs, a third lesson from Apple is that smart companies should sometimes ignore what the market says it wants today. This is like focussing on the next practices and not the best practice(s)in benchmarking engagements. […] The fourth lesson from Apple is to “fail wisely”. […] The wider lesson is not to stigmatize failure but to tolerate it and learn from it: Europe’s inability to create a rival to Silicon Valley owes much to its tougher bankruptcy laws.
None of these things, of course, guarantees success: you can buy in clever ideas, pursue simplicity, ignore focus groups and fail wisely—and still go bust. But for the moment at least it is hard to think of a large company that better epitomizes the art of innovation than Apple. AMR recently named Apple in its TOP25 supply chain research study for its unparalleled demand-shaping capability that lets its supply chain record spectacular results without sweating costs like everyone else.True, an iconic company of our times has something to offer us in everything it does.
Just arrived in Australia to see IBM announcing the acquisition of Telelogic. An interesting buy – while many see it as a complementary purchase to Rational – it is much beyond that. Telelogic is a leading vendor in the areas of business requirements management and IT (object-oriented analysis and design) modeling and code generation with tools such as DOORS, TAU, Telelogic Modeler and Rhapsody. Quite recently, Telelogic acquired a leading BPA tool in Popkin's System Architect and has been integrating it into its portfolio in support of enterprise architecture and application development. Few quarters back, Telelogic announced the release of Telelogic Modeler, a free-of-charge UML design environment for engineers, designers and developers of embedded, real-time and enterprise IT applications. Telelogic Modeler has the potential to foster follow-on complementary sales for Telelogic's other model-driven development and application life cycle management tools, such as Tau, Rhapsody, Doors and Synergy. A study of these tools make interesting reading :
System Architect (SA) and Telelogic's other tools appeal to the architect category of buyers. SA also appeals to the BP and BPMS modeler categories of buyers. The requirements management capabilities of DOORS, coupled with the ability to feed models from SA to TAU or other leading IT modeling tools and BPM tools is a testimony to its versatility. SA was also known for its strong simulation capabilities that are instrumented for BAM feeds among all three BPA categories of buyers Recent estimates suggest that it had a little less than 10 % share of market revenue. Telelogic is seen as a good players and is seen as a visionary compared to several of it BPA peers. This continues the tradition of IBM cherrypicking good candidates from emerging spaces - Filenet, Maximo etc. With this acquisition, a reasonably priced one at that, I see IBM has armed itself well to storm into the BPA space with this acquisition. Other players like Ultimus, TIBCO and the like now have a formidable competitor to reckon with.
My colleague Chandra and a few others pointed me to Charlie Munger’s higly acclaimed commencement address at USC Law School recently. There are some people who in life would have reached identical levels in their chosen fields, irrespective of the discipline chosen or the start. Charles Munger is one amongst such great people, who have reached the highest possible realm of acheivement and hearing them speak out their governing ideas and mental models are very uplifting are are of inestimable value. Reportedly the 84 year old man’s first law school commencement address in his lifetime, it is full of great wisdom. His emphasis on trust – earning and keeping it and the need for constant learning that’s measured almost on a daily basis are amazing pieces of wisdom – one that every living person need to ponder upon. While I liked the whole speech like Atanu Dey, I particularly liked the opening part:
Deliver to the world what you would buy if you were on the other end.
There is huge pleasure in life to be obtained from getting deserved trust. And the way to get it is to deliver what you would want to buy if the circumstances were reversed.
I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.
…so if civilization can progress only with an advanced method of invention, you can progress only when you learn the method of learning.
Nothing has served me better in my long life than continuous learning.
I went through life constantly practicing (because if you don’t practice it, you lose it) the multi-disciplinary approach and I can’t tell you what that’s done for me. It’s made life more fun, it’s made me more constructive, its made me more helpful to others, its made me enormously rich. You name it, that attitude really helps
You’re outcome in life will be way more satisfactory and way better if you work under people you really admire
His caution on embracing extremely intense ideology deserves special mention : Extremely intense ideology should be avoided ideology because it cabbages up one’s mind. This business of not drifting into extreme ideology is a very, very important thing in life.
He points to Epectitus saying that every missed chance in life was an opportunity to behave well, every missed chance in life was an opportunity to learn something, and that your duty was not to be submerged in self-pity, but to utilize the terrible blow in constructive fashion.
His final piece of advice is the icing in the cake : "The highest form a civilization can reach is a seamless web of deserved trust".
Read the fulltranscript of a marvelous address, or the condensed Cheat Sheet – I read and reread the address, repeatedly and am sure would do countless number of times in future.
BusinessWeek's analysis of the US import price data reveals offshoring to low-cost countries is in fact creating "phantom GDP"--reported gains in GDP that don't correspond to any actual domestic production. The only question is the magnitude of the disconnect. The strong earnings growth of U.S.-based corporations is still real, but it may be that fewer of the gains are coming from improvements in domestic productivity. In fact, holding down costs by moving key tasks overseas could be having a greater impact on corporate earnings than anyone guessed-or measured.
By BusinessWeek's admittedly rough estimate, offshoring may have created about $66 billion in phantom GDP gains in the last three –four years. That would lower real GDP today by about half of 1%, which is substantial but not huge. But put another way, $66 billion would wipe out as much as 40% of the gains in manufacturing output over the same period
Dark matter and phantom GDP are related to each other. U.S. corporations help bring their foreign suppliers up to speed ("dark matter"), who then can ship low-cost goods back to the U.S. ("phantom GDP") This supply-chain loop is one of the realities of today's world but it's completely missed in the government data. Depending on your attitude toward offshoring, the existence of phantom GDP is either testimony to the power of globalization or confirmation of long-held fears.
My View :I hope that Michael Mandel has got his facts right and has used acceptable means in computing the data. The fact of the matter is that more than 50% of the profits on the S&P now come from overseas, this has gone up from 1/3 in 2002. Clearly international production outside of the US is the part that is growing. The reality is that the high profits as a result of low cost overseas capacity utilization has come in handy to cover up inefficiencies in planning, management, execution, personnel development. As this appears to be a relatively easy option( it’s deceptive to think that offshoring is easy), I think all these areas have deteriorated, because low cost labor is where the profit margin is, and the companies are chasing that over a cliff, sacrificing ignoring their latent strengths. That’s the key thing that the US enterprises need to focus on to create better quality growth for its stakeholders. A recently released Hackett study shows that the Fortune 500 could generate over $91 billion annually, or about $182 million on average per company, by strategically combining "Lift & Shift" efforts, which move back office processes overseas without first improving them, with "Transform & Shift" initiatives, where processes are optimized and then taken offshore. This way, the companies can potentially increase these savings by over 50 percent by selectively integrating transformation and process improvement efforts into their globalization initiatives Clearly, the U.S. economy no longer stops at the water's edge. Global corporations often provide their foreign suppliers and overseas subsidiaries with business knowledge, management practices, training, and all sorts of other intangible exports not picked up in the government data. In return, they get back cheap products. Generally speaking, part of the productivity enhancing effects from material offshore outsourcing is driven by firm-specific strategic elements such as increasing the focus on core competences.Its clearly time to think of the US ecocnomy as a global enterprise.This clearly takes precedence over every other point on this topic and any attendant issue need to be examined from this perspective.
Marc Andreessen, the well known cofounder of Netscape writes about the role of venture capitalists in the business society and about the divergent approaches of the VC industry. He is someone to listen to given that he has raised finance few times and is a limited partner in a number of funds. He starts by pointing out that any business that is built for leverage that could be sold or go public in 4 to 6 years should strongly consider raising professional venture capital, for three reasons: - First, you get the cash to invest in the business and grow it at the speed required to realize its full potential. - Second, you get that cash from a professional investor who invests in this kind of business as her full-time job and reason for existence in the world. - Third, in the best case, you will get help building your high-growth business from the venture capital partner you take money from
He pointsout that there are pros and cons to working with any of these kinds of partners. For example, VCs with operating experience are great when it comes to sitting down and talking about how to run a business, but sometimes they have less perspective (because their career was probably focused on one or two companies, whereas a professional VC has probably invested in 30+ companies), and they may have trouble keeping their hands off the steering wheel. The best VCs get to improve society in two ways: by helping new companies take shape and contribute new technologies and medical cures into the world, and by helping universities and foundations execute their missions to educate and improve people's lives. We should not only be thankful that we live in a world in which VCs exist, we should hope that VCs succeed and flourish for decades and centuries to come, because the companies they fund can do so much good in the world -- and as we have seen, a lot of the financial gains that result flow into the coffers of nonprofit institutions that themselves do huge good in the world.
This is slightly different from what Guy had to say about the venture cpaitalists. One would have to agree about the contributions made by VC in the growth of several industries and for multiplying business options for business, consumers and business expecutives. As I pointed out earlier, Reputable venture capital firms also play an information-brokerage role that is vital to young companies. In their early stages, companies are insecure and opt for secrecy to protect their competitive position. Venture capitalists, in their role as trusted intermediaries, can act in a variety of ways on behalf of the company--from assisting in recruiting executive officers to striking up strategic alliancesToday, enterprises want innovation. And enterprises continue to spend billions on IT products year after and there are still many unsolved problems in business computing & notes that there is a lot of innovation to come in this industry & predicts that the enterprise software companies that move to innovate and dominate today will be the most successful companies five years from now