The US Election results and the process have created worldwide impact. Not only it was noticed for electing someone for arguably the most powerful office in the world, it brings along with it many innovations and advances. In 2008, when Mr. Obama won the elections for the first time, it was very clear that technology played a substantial role in his assuming office. We saw in 2008, that online world was leveraged in a big way in the campaigns for a very successful outcome,. In the just concluded 2012 election, clearly data, data insights and data centric predictions played a very big role in shaping the election outcome. Lot of deserved kudos went in the direction of Nate Silver for his super accurate predictions of the election results based on data insights. Many people looked at it from different perspectives. Media industry focused on how works like this will in an of itself influence the media coverage of elections and assessment of preference trends in election. Nate is the author of Amazon best-selling book, “The Signal and the Noise: The Art and Science of Prediction“. In the days leading up to the election, he was on every major media show, explaining how a detailed analysis of huge amounts of data, distilled from many different sources, enabled him and his team to predict with a fair degree of confidence and certainty what would happen district by district in the US elections (It’s actually a great reward to see this appearance of Nate Silver, on Stephen Colbert’s story show, reported by the LA Times). Very clearly, he was accurate to the last level of detail, in an election when the swings were noticed by both and in the days close to the election, the “momentum vote ” of the challenger was supposed to be mucking the trends.
A lovely article by John McDermott at AdAge brings out that Silver’s work will help transform the shift the “touch and feel aspects” of reporting to reporting that is anchored in data - facts & statistics. The article quotes ComScore’s Online traffic analyst Andrew Lipsman as saying , “Now that people have seen [data analysis centered political analysis] proven over a couple of cycles, people will be more grounded in the numbers.” Chatter in the online world quoting Bloomberg as the source suggested that , Barack Obama’s site was placing 87 tracking cookies on people’s computers who access the site. Mitt Romney’s site was placing 48 tracking cookies on people’s compute.
Tarun Wadhwa reports at Forbes that the power of big data has finally been realized in the US political process:
“Beyond just personal vindication, Silver has proven to the public the power of Big Data in transforming our electoral process. We already rely on statistical models to do everything from flying our airplanes to predicting the weather. This serves as yet another example of computers showing their ability to be better at handling the unknown than loud-talking experts. By winning ‘the nerdiest election in the history of the American Republic,’ Barack Obama has cemented the role of Big Data in every aspect of the campaigning process. His ultimate success came from the work of historic get-out-the-vote efforts dominated by targeted messaging and digital behavioral tracking.” This election has proven that the field of “political data science” is now more than just a concept – it’s a proven, election-winning approach that will continue to revolutionize the way campaigns are run for decades to come. It is common knowledge that the campaign had been heavily leveraging the web platform in very many sophisticated ways. The campaign spectacularly succeeded in integrating political infrastructure with the web infrastructure that they managed to create. A peer-to-peer, bottoms up campaign seemed to be the strategy that finally delivered results. Volunteer participation, feedback synthesis and citizen vote drives were successfully brought out in massive scale hitherto unknown with the web platform. The campaign heavily shaped by the power of social networks and internet energized the youth power in unimaginable ways signifying the triumph of technology power. It’s a treat to watch : Mobile, Social and Big Data coming together and making an impact in this presidential election 2012.
Let’s look at the complexities involved in this exercise : There was a notable shift of demographics in America resulted in the traditional vote bases being less influential (this trend will continue dramatically in the future) – the absolute numbers may not have come down but the proportion in the votable base lowered somewhat –leaving the destiny in the hands of newly emerging swing voter base. Technology played a significant role in doing the rigorous fact checking – imagine during a presidential debate – typical citizens were looking at fact checking analysis in their other screens while watching the debate on the television. Pew research found that many were looking at dual screens while watching the debate. All well, till one looks at the paradox here – as more and more effort is made and money is spent to flood the media with political messages, the impact is significantly less, as people don’t rely on a single news source. Many American homes today are getting to embrace the “four screen” world (TV, laptop, tablet and phone, all use in tandem for everything in our lives) and so the ability to create impact on any promotion is actually becoming tougher and tougher (to create positive impact).
This is observed along with the fact that the U.S is also undergoing a deep structural and institutional change, affecting every walk of the American Life. While the online world is growing, it’s a common citing in the cities and downtowns where one can see established chains closing shops, unable to hold on to competition striking at them from the cyberworld. Trends like this clearly influence the economic role played by different industries, trends in wealth creation, job creation, city growth etc. Younger voters are more clued by default to these changing trends and their impact and so begin to think of their prospects from a different prism compared to older voters, who generally hold conventional views and so this further creates a deeper strata within the society.
Time Magazine has Michael Scherer doing an in-depth assessment on the role big data and data mining played in Obama’s campaign as well. Campaign manager Jim Messina, Scherer writes, “promised a totally different, metric-driven kind of campaign in which politics was the goal but political instincts might not be the means” and employed a massive number of data crunchers to establish an analytics edge to the campaign. The campaign team put together a massive database that pulled information from all areas of the campaign — social media, pollsters, consumer databases, fundraisers, etc. — and merged them into one central location. The current US President’s (Mr.Obama) campaign believed that biggest institutional advantage over its opponent’s campaign was its data and went out of its way to keep the data team away from the glare and made them work in windowless rooms and each of the team members were given codenames. That in and of itself signifies the importance the campaign attached to “Data – Big Data”- that’s!
Scherer adds: “The new megafile didn’t just tell the campaign how to find voters and get their attention; it also allowed the number crunchers to run tests predicting which types of people would be persuaded by certain kinds of appeals.” Scherer’s piece is an astoundingly fascinating look at how data was put to use in a successful presidential campaign. The election results are in a way a big victory for the nerds and big data. Similarly, some time back there was a sensational article on how Target figured a teenage girl was pregnant even before her father could find it. Inside enterprises, there must be big advocates to create frameworks to get to we are big advocates of the “know everything” through the world of data and align the business to succeed.
Large-scale data gathering and analytics are quickly becoming a new frontier of competitive differentiation. While the moves of online business leaders like Amazon.com, Google, and Netflix get noted, many traditional companies are quietly making progress as well. In fact, companies in industries ranging from pharmaceuticals to retailing to telecommunications to insurance have begun moving forward with big data strategies recently. Inside business enterprises, there’s a similar revolution happening – collection of very fine grained data and making them available for analyses in near real time. This helps enterprises learn about the preferences of an individual customer and personalize the offerings for that particular customer /unique customer experience that would make them come back again and again to do more business. Practically speaking, one of the largest transformations that has happened to large enterprises, has involved implementing systems, like ERP, enterprise resource planning; CRM, customer relationship management; or SCM, supply chain management—those large enterprise systems that companies have spent huge swathe of dollars on. These systems typically manage operations extremely well and then set the stage for enterprises to gain business intelligence and learn how they could be managed differently. That’s where Big Data frameworks come in handy and it’s up to business now to seize that opportunity and take advantage of this very fine-grained data that just didn’t exist in similar forms previously. Too few enterprises today fully grasp big data’s potential in their businesses, the data assets and liabilities of those businesses, or the strategic choices they must make to start leveraging big data. By focusing on these issues, enterprises can help their organizations build a data-driven competitive edge, which in this age is clearly a very powerful determinant of success.
I woke up this morning to see significant developments.
MOSOLOCO – Mobile, Social, Local, Commerce, a term getting popularized by Jason Maynard is really brimming with lot of activities now. We are now seeing that four proximate but distinctive trends are converging to change the way consumers interact, explore, transact and putting pressure on businesses to keep pace and in some cases create entirely new business opportunities.
Amazon is now fully charged to muscle into the Android Ecosystem. Am not just talking about the Amazon Appstore. With the launch of the new Cloud Drive and Cloud Player joining the Amazon Appstore , the strategy is clearly to parade as a full scale service shopping destination for Android device users. With the new Cloud Drive, Amazon in essence has got an update to the Amazon MP3 app for Android, bringing cloud storage into the music buying scheme, and further adds the Cloud Player to Amazon MP3 for streaming the user’s music to any Android device or web computer. This multi device rendering is a key tenet of success for the Kindle platform and Amazon is clearly focused on building on this strength. I know that one other formidable cloud giant has all got everything ready to roll out – may be they were waiting to launch it in the developer’s conference in May. Now Look at what all Amazon can do with their superior personalization and ecommerce capabilities – the value of the platform is beginning to unfold here. Amazon is essentially taking a step forward in the consumerization of Amazon web services.
Tracking another development, CapLinked, a social platform for private investing, announces exponential growth of its platform with over $1 billion now available in potential investment activity. The company claims to have seen an exponential increase in user base sincee Jan 1 2011, with a total of 5500 dealmakers, investors and entrepreneurs now on the platform. This news comes on the heels of CapLinked’s angel funding totaling $900k, led by PayPal alums Peter Thiel, Dave McClure, Joe Lonsdale and Aman Verjee as well as David Anderson of 7th Rig.This rapid growth shows confirms the power of platform and communities - essentially in this case investors and businesses need a common platform to connect – and it is happening now on CapLinked, the LinkedIn-meets-Salesforce for private investing,” says Eric Jackson, CEO of CapLinked and former PayPal Vice President. He adds that In addition, the new CRM tools will help identify potential deals, share information and get the right deals done faster.
Caplinked sees the trillion dollar a year private investing still using old, inefficient technology and points out to the fact most of these enterprises have been stuck in the email-and-spreadsheet mindset for too long. This gives them an opportunity to focus on bringing innovation in the form of social, cloud based, secure software to the world of private investment. The objective is to get investors, advisors, and companies the tools they need to better manage making connections and handling deal flow, due diligence, closings, and company reporting. Both the entrepreneur and investor are brought together in the same platform. For entrepreneurs raising capital, the tool makes it easier to be transparent and share information. That makes it easier to get money in the door, and keep investors happy for follow on investments. For investors, this helps track their investments in one place, and have an idea of what is going on with their companies. Added to that, this is not a pay-to-play service, the claim here is that by letting entrepreneurs access the social graph, the value increases and so to get more strong social signals, the service strives to keep this platform free for entrepreneurs to raise capital.
We will actually see more and more innovation and success stories in the MOSOLOCO world.
An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.
The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The pressures would mean more business begin to seriously look at SaaS, re-negotiating license terms, focusing on rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.
The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.
Let’s for a moment assess this theme from a security perspective - a dominant concern business expresses when it comes to clouds. While assessing security requirements in public clouds,we see the recognition that a whole host of chnages need to be done at application architecture levels, the need to accomodate specific compliance requirements, privacy provisions in the public cloud etc.
Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.
Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!
Google published the first ever “Google’s Economic Impact” report, which estimates that in 2009, Google generated $54 billion of economic activity for advertisers, publishers, and non-profit bodies in the United States. This is done using the AdSense & AdWords frameworks and delivered via paid search clicks, natural search clicks, AdSense revenue sharing, and Google Grants aka charitable donations. The report reveals that Google’s US revenue in 2009 was $11 billion; the $54 billion figure is Google's computation on how much value Google creates for its partners. The methodology used therein is quite a pioneering one, given that this is the first time that someone is attempting to assess the economic impact of online ads at this scale : the whole internet and who else is better qualified than Google to attempt this.
This is an interesting report, the implications of which will be felt more and more in the years to come. If we reason out that search engines (Google)are in many senses replacing displacing traditional media ad spends, it may be difficult to agree with Google’s $54 billion estimate for its direct economic impact but we have to concede a few things. This is a new growing media, the media, by nature brings in more participation from new class of users and one that may be potentially more ready to spend and the flexibility this provides to advertisers - they can cap daily ad spend and can look at in realtime extending or suspending ads based on clicks and reach. Google's report primarily depends on the assumption that clicks on natural results drive five times as many leads for businesses as clicks on paid results. However, we believe the indirect impact may be much much more.
I have seen estimates suggesting that Google's Traffic Acquisition Cost payments to US publisher websites, (as assessed by analysts) at about $3 billion, for an revenue of 11 billion dollars which is now being projected by Google to have an advertiser impact of about $50 plus billion. Lets look at the calculation : Google calculates the advertiser impact of its search service by assuming that for every dollar spent by an advertiser, the advertiser generates two dollars in sales (and one dollar in “sales minus marketing expense”, which the report calls “profits”) from consumers clicking on the purchased search result, and a further seven dollars in “profits” from consumers clicking on natural search results for the same advertiser, creating an 8X multiplier effect. Thus, claims the report, $7 billion in US-owned and operated revenue should drive $56 billion in economic impact
Now the difficult part: - Google says that businesses receive an average of five clicks on search results for companies as ads, and by its own conservative standards, estimates that search clicks are about 70 percent as commercially relevant and valuable as ad clicks, and thereby calculates that advertisers receive a total of eight times in surplus what they spend in AdWords. Look carefully here:
- Google assumes that people clicking on links are as inclined to purchase. Any benefit from link clicks has nothing at all to do with having ads. The two are separate events, and a company gets the benefit from search engine optimization and all the work of having a Web site, rapidly increasing the effective cost of using the ads.
- As the Jansen and Spink study states, “More than 80% of web queries are informational in nature and approximately 10% aretransactional, and 10% navigational.” This may lead one to think that the vast majority of clicks need not convert into sales (this is understandable) and so the impact may be less than what is assumed herein.
Thinking deep, it occurs to me it would be tough to embrace or discard Google’s estimated multiplier effect .As noted earlier, Google calculates the advertiser impact of its search service by assuming that for every dollar spent by an advertiser, the advertiser generates one dollar in “sales minus marketing expense” from consumers clicking on the purchased search result, and a further seven dollars from consumers clicking on natural search results for the same advertiser, creating an 8X multiplier effect. Google estimates that one dollar spent on search generates two dollars in advertiser sales via consumer clicks on paid search results. This assessment is centered on the methodology devised by Hal Varian, its Chief Economist, which in its core, assumes that advertisers are spending rationally to buy a certain keyword ranking rather than a higher or lower ranking, and then deriving the implied value which advertisers place on a click. I would think that this resonates well with my intuitive reasoning. Google estimates that one dollar spent on search corresponds to seven dollars in advertiser revenue via consumer clicks on natural search results.
Ideally , Google should have attempted a Lifetime Value assessment to derive the economic impact but rightfuly chooses to center these on transaction basis given the characteristics of the internet media and its limited lifespan. I talked to a few power users of these services (corporate and SMB) and find that for many interenet centric revenue generators, the proportion of their online centric revenue coming out of search engines on an average hover around upwards of 20% in their established and growing phase of business. The informal estimates from such sources point to 40-20-40 ratio - direct traffic,keyword centric and natural search referrals. For startups and early life enterprises, the ratio could be 25-35-40 pointing to a near 6X ratio. The swing across the range hovers between 4x to 6x ratio.
Without search engine, Google acknowledges advertisers would find other means of reaching consumers. We have to concede that search engines are not just merely capturing existing consumer spending rather they stimulate additional consumer spending(any online purchaser can vouch for this - they tend to buy more , owing to the dramatic increase in efficiencies and the smoothness of the operation). To be fair, Google’s true “economic impact” on a community should likely be measured in a way that balances the economic patterns it disrupts with the new-model of business it generates. Online ads and Google being the dominant player there are directly influencing the sale and retail mechanisms in a big way and are bound to increase their influence and hopefully, we will see the economic impact assessment methods improve a lot more along with the results.
Charlene Li and Forrester’s Josh Bernoff earlier gave the pioneering book, “Groundswell: Winning in a World Transformed by Social Technologies”, which provided business a leg up to understand social technologies and consumer behaviors. (For the record : Charlene was amongst the well known Forrester Star who quit to start her own venture Altimeter Group with other partners) Among other things the book laid out the now widely used, the four-step process for developing a social media strategy. A lot has changed since then – the most noticeable one includes, blogging meeting its match as a popular social technology with the exploding popularity of social tools like Facebook ,Twitter, Ning etc. I was delighted to when I got the chance to review Charlene Li’s to be released book – “Open Leadership – How Social Technology Can Transform The Way You Lead” (Release planned May 24, 2010) .
To begin, let’s look at the business world and leadership challenges therein as it exists today: As is now widely recognized, the contours of leadership inside business are changing. Business in this era are discovering that the command -and-control leadership methods of the last century are a misnomer in this age where changes happen too fast, ten year old organizations scale up to support multiples of tens of billion dollars in market cap, business can go global at such a terrific pace that virtually every business that operate in the free market edifice becomes global in nature. Advances in social media impose a huge influence in the way stakeholders come together in running the business. In these circumstances, to attract and retain employees and all other stakeholders to get them to contribute their best to make business grow is a challenge being grappled by all organizations. Working styles and enriching work environments becomes a clarion need and the traditional models of centralized leadership is slowly (some would say that is too swiftly) giving way to more social(open) leadership. In its classical command-and control leadership style, the leadership was identified by its position, authority and power, whereas in this new age – this paradigm has suffered a lot – resulting in lack of innovation, participation and creativity, passion and accountability. The new positioning is for business to recreate leaders embracing open leadership who see themselves more as coaches, facilitators, investors and partners. The boundaries inside an organization have become more permeable; knowledge and innovations can easily transfer inward and outward. All involved elements in the organization participate and influence decisions in the process helping these companies to perform better than their rivals on employee retention and morale, and other performance measures like innovation, profitability and market leadership. A very towering presence serves as the backdrop for this change: your business does not embrace social media – its social media that embraces your business and creates a huge perturbation effect so to say! Every organization is becoming a social organization. The challenges organization faces is how to evolve into a social organization. This evolution will affect individual staff, internal processes, and the structure and culture of the organization association – every part of the organization gets affected and that includes leadership within the organization.
Simple and appealing right ? No, not that easy for all business to embrace such things so easily. As they say in organizational change management, hard change( say process, technology) is soft and soft change( human beaviour) is hard. Ask the question why is social hard ? Charlene has the answer: It’s because real relationship requires you to cede control and win by influence! She explains, having the confidence and humility to give up the need to be in control, while inspiring commitment from people to accomplish goals is the basic tenet of open leadership. Open leadership is coming to organizations—companies, non-profits, governments, schools—because we are in the middle of a fundamental shift in power, one in which individuals have the ability to broadcast their views to the world. It means that the person at the top no longer controls the flow of information, and without that the leader is no longer the best person to make all the decisions. To be open, you need to let go of the need to be in control. You need to develop the confidence—to develop the trust—that when you let go of control, the people to whom you pass the power will act responsibly. Leaders who are unable to let go in this new world of social media will eventually find themselves at the head of a sorry band of unimaginative time-servers.
Open Leadership argues that a new organizational structure is required to accommodate and benefit from the culture of sharing that social media has fueled over the last few years. Charlene’s new book, “Open Leadership: How Social Technology Can Transform the Way You Lead”, is essentially about how leaders can tap into the power of the social technology revolution and how to be “open” while still maintaining control. Does it sound paradoxical? No! Not at all. Charlene argues for openness but cautions toprovide for disciplined control. Practically speaking, this is being more grounded on reality – open leadership is not like laissez-fair leadership. While this may look like a natural progression in the business scheme of embracing technology advances, the reality is that there is a huge challenge for executives and leadership teams to embrace openness while maintaining control. Charlene helps provide that framework with her new book - this is relevant to all business that are exploring the new social web and creating/refining an approach towards effectively embracing them. This has come at the right moment, when almost all business – big and small have been confronted with this challenge /opportunity of embracing the social web actively and in an effective manner.
And, now about the structure of the book: I like the fact the book is organized into three sections – 1. Upside of giving up control. 2. Crafting Your Open Strategy, 3.Redefining Relationships. The book starts with a persuasive argument as to why giving up control is non-negotiable and goes on to define ten characteristics of being open (In my view, openness is a journey – difficult to define in a scientific way, but can only be characterized – the more we travel this route, the more enriching the characteristics become). Section two helps delineate the methods of custom creating open strategy - with means to initializing with determinations of how open to be, followed by understanding benefits and measuring the value of being open. The idea of “Sandbox Covenants” is a very powerful metaphor and can act as a tool for strategizing openness and executing the strategy. Creating a robust mechanism for social graphic profile definitions – the steps include Social Audit, Engagement Audit and Influence Audit is a powerful tool and as told by Charlene in the chapter of orchestrating your own social strategy is a very powerful message and a robust mechanism for business to follow with a social fabric while on the open leadership path. The framework of organic, centralized, co-ordinated forms of openness is an important advance in the study and practice of openness. Part three focuses on the mind set changes and skills, executives need to learn to foster a climate of openness inside their business and means to nurture openness, imperative of failures and transformational case studies centered on organizations like Cisco, Dell and Proctor & Gamble.
Very rich and well known examples and case studies from an array of organizations have been included and widely quoted within the book – Best Buy, Cisco, Google, Kodak, Microsoft, The State Bank Of India, United Airlines, U.S.Department Of State, etc I like the book’s structure and presentation for three reasons :
A.Its about strategy but highly actionable Refreshingly, most chapters come with actionable lists.
B. The examples are of Large corporate behemoths – the Fortune 500 types and this shows the power, reach and results of openness as we can all see. (Charlene must be complemented for this – by relating to examples that all can find out with some efforts and research adds to the credibility) and the need to embrace failure where needed and learn from those.
C. The very easy to read style and the fact the actionable frameworks can be applied to business of all sizes, shape and color.
Needless to say, this is a good read for leaders planning to effectively embrace openness and leverage social technologies inside their organizations.
The Global Information Industry of the UCSD has put together statistics about how much information gets consumed by Americans every day. Two previous studies, by Peter Lyman and Hal Varian in 2000 and 2003, analyzed the quantity of original content created, rather than what was consumed. A more recent study measured consumption, but estimated that only .3 zettabytes were consumed worldwide in 2007. In 2008, Americans consumed information for about 1.3 trillion hours, an average of almost 12 hours per day. Consumption totaled 3.6 zettabytes and 10,845 trillion words, corresponding to 100,500 words and 34 gigabytes for an average person on an average day. A zettabyte is 10 to the 21st power bytes, a million million gigabytes. Hours of information consumption grew at 2.6 percent per year from 1980 to 2008, due to a combination of population growth and increasing hours per capita, from 7.4 to 11.8. More surprising is that information consumption in bytes increased at only 5.4 percent per year. Yet the capacity to process data has been driven by Moore's Law, rising at least 30 percent per year. One reason for the slow growth in bytes is that color TV changed little over that period. High-definition TV is increasing the number of bytes in TV programs, but slowly. Additional stats to note: The traditional media of radio and TV still dominate our consumption per day, with a total of 60 percent of the hours. In total, more than three-quarters of U.S. households' information time is spent with non-computer sources. Despite this, computers have had major effects on some aspects of information consumption. In the past, information consumption was overwhelmingly passive, with telephone being the only interactive medium. Thanks to computers, a full third of words and more than half of bytes are now received interactively. Reading, which was in decline due to the growth of television, tripled from 1980 to 2008, because it is the overwhelmingly preferred way to receive words on the Internet. a. The average person spends 2 hours a day on the computer b. 100,000 words are read each day. Clearly, in this world, there is just too much of information. Notwithstanding the normal channels such as email, friends to stay in touch with, meetings to attend to, research papers that one needs to stay on top of, books to read, Tivo recordings and so forth. With Social media, RSS feeds, one could have literally hundreds of posts each day from highly selective sources coming through feed aggregators. To make matters worse, people are now finding ways to take non-textual informational sources such as audio files (e.g. podcasting) and even video files and tying that to RSS. A large fraction of the people one interacts with are walking around with their eyes glazed, seemingly on auto-pilot, speaking a mile a minute about this blog they read, this documentary they Tivo'd, this video they saw on the Net, this new startup company that's hot. The Rise of Interaction : Most sources of information in the past were consumed passively. Listening to music on the radio, for example, does not require any interaction beyond selecting a channel, nor any attention thereafter. Telephone calls were the only interactive form of information, and they are only 5 percent of words and a negligible fraction of bytes. However, the arrival of home computers has dramatically changed this as computer games are highly interactive. Most home computer programs (such as writing or working with user generated content) are as well. Arguably, web use is also highly interactive, with multiple decisions each minute about what to click on next. 1/3rd of information is today received interactively.. This is an overwhelming transformation, and it is not surprising if it causes some cognitive changes. These changes may not all be good, but they will be widespread.
An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.
The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The The pressures would mean more begin to seriously look at SaaS, re-negotiating license terms, rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.
The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.
Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!
I was in a meeting with a CIO in New York on Friday where he outlined the onslaught of disruptive innovation in his industry and the broad set of challenges faced therein. The magnitude of the change that his organization needed to face was mindboggling! Just before, I entered to join the meet in the lounge saw this very interesting interview over the television. Jeff Zucker, President and CEO of NBC Universal, has succinctly captured what is going on in the media industry, with his widely quoted comment that the new digital business models are turning media revenues from analog dollars into digital dimes. As he puts it, the key problem for established media companies is thus to come up with new, innovative business models that will enable them to make money and survive as their industry accelerates the transition from a business model based mostly on analog dollars into one based mostly on digital dimes. The ongoing tussle on online advertising is yet another example of the pain transitions bring on.
What a difficult/interesting situation to be in : Lets see how typically leading enterprises face issues centered around disruptive models where the effects –positive if handled well can be far reaching and can turn disastrous when affected negatively. How do well run business handle the shift ? In my view, while it is tempting to look at acting all things material in a startup mode to tide over the situation – reality shows that this would be next to impossible to make it happen. Would-be innovators know that one of their biggest challenges is systematically identifying the innovations with the greatest likelihood of creating disruptive growth. Pick the wrong one, and squander a year or more of focus and investment. It is not by luck based on the draw anymore. By conducting a series of diagnostics, companies in any industry can quickly identify the most promising opportunities. By conducting customer, portfolio, and competitor diagnostics to pinpoint the highest-potential opportunities and the best business models for bringing them to market. Successful approach to make a positive spin around the disruption could be centered around figuring out how to leverage the new innovations to evolve its organization, culture and business models into the future. Too often solution points revolve around assessment and leverage of skills and capabilities of the enterprise in adapting to new changed realities. The challenge would be in figuring out how to leverage existing relationships and expand the adoption quotient across the enterprise ecosystem. A judicious assessment of what part of existing organization could be useful and what needs to ripped, replaced or retired need to be carried out in the most objective manner. Preparing leadership internally to get ready to manage the disruption is a prerequisite to succeed,
In reality, these seemingly ordinary questions/concerns may become the most tough one to crack, but no point in trying to avoid facing reality. In many cases, matter of fact cultural impediments may overshadow other set of concerns in managing the transition. There is no other way forward – except to properly manage the delicate balance between winning, excelling in its current operations, and quickly embracing disruptive innovations and lay a solid plan for growth.
As IT's importance grows inside organizations, with more competition and concerns about ROI and BVIT, pressures on resourcing, offshoring strategies and heightened sense of expectations from IT by business, all enterprises undergo such changes and an appropriate framework with a three year rolling plan perspective for IT strategy and planning is absolutely essential for any medium sized to large sized IT user organizations.
Just read this nice interview in the WSJ of MIT’s Peter Weill on IT Savvy, his (excellent) recent book, co-authored with Jeanne Ross. A nice interview –in essence this covers the main ideas of the book, standardization for innovation, IT as strategic asset vs. liability, creating digital platforms, and the importance of connecting projects. A couple of excerpts:
BUSINESS INSIGHT:Your newest book is about IT-savvy companies. How do you define IT savvy? DR. WEILL: IT-savvy companies make information technology a strategic asset. The opposite of a strategic asset, of course, is a strategic liability. And there are many companies who feel their IT is a strategic liability. In those companies, the IT landscape is siloed, expensive and slow to change, and managers can't get the data they want. IT-savvy companies are just the opposite. They use their technology not only to reduce costs today by standardizing and digitizing their core processes, but the information they summarize from that gives them ideas about where to innovate in the future. A third element is that IT-savvy companies use their digital platform to collaborate with other companies in their ecosystem of customers and suppliers. So, IT-savvy companies are not just about savvy IT departments. It's about the whole company thinking digitally. BUSINESS INSIGHT: You've done some research that suggests IT-savvy companies are more profitable than others. Tell me a bit about that. DR. WEILL: The IT-savvy companies are 21% more profitable than non-IT-savvy companies. And the profitability shows up in two ways. One is that IT-savvy companies have identified the best way to run their core day-to-day processes. Think about UPS or Southwest Airlines or Amazon: They run those core processes flawlessly, 24 hours a day. The second thing is that IT-savvy companies are faster to market with new products and services that are add-ons, because their innovations are so much easier to integrate than in a company with siloed technology architecture, where you have to glue together everything and test it and make sure that it all works. We call that the agility paradox—the companies that have more standardized and digitized business processes are faster to market and get more revenue from new products. Those are the two sources of their greater profitability: lower costs for running existing business processes, and faster innovation. DR. WEILL: The real secret to IT-savvy companies is that each project links together—like Lego blocks—to create a reusable platform. IT-savvy companies think reuse first. When they have a new idea, the first question they ask is: Can we use existing data, applications and infrastructure to get that idea to market fast? When we look at the impact of reusing processes and applications, we see measurable benefits in the top and bottom lines.
The book also covers defining your operating model, revamping your IT funding model, allocating decision rights and accountability, driving value from IT and leading an IT Savvy firm.
This is a book highly regarded by the cognoscenti and it starts by asking what does being IT savvy mean and answers as the ability to use IT to consistently improve firm performance. The book encapsulates very powerful observations and statements that matter:
- You have to stop thinking about IT as a set of solutions and start thinking about integration and standardization. Because IT does integration and standardization well.
- IT Savvy firms have 20% higher margins than their competitors.
- An operating model is a pre-requisite before committing sound investments in IT
- IT funding is important, as systems become the firm's legacy that influence, constrain or dictate how business processes are performed. IT funding decision are long term strategic decision that implement the operating model
IT Savvy is based on three main ideas with some commentary from the reviewer.
1- Fix what is broken about IT, which concentrates on having a clear vision on how IT will support business operations and a well-understood funding model. In most places, IT is delegated and benignly neglected in the enterprise with disastrous consequences of underperformance/poor leverage.
2- Build a digitized platform to standardize and automate the processes that are not going to change so focus shifts on the elements that do change. The platform idea is a powerful one and can drive significant margin, operational and strategic advantage.
3- Exploit the platform for growth by focusing on leading organization changes that drive value from the platform. With a platform built for scale, leverage efficiencies that scale can deliver. Ironically many enterprises fail to do one of these two!
Don’t miss the IT Savvy assessment methodology and over all a very important book to be must read.
I have always followed Booz Allen’s annual innovation study for the last several years and have written about it as well here, here etc.. This year’s study looks refreshing and asks the question how do smart companies spending good money &effort on innovation approach spending when the economy is down? The answer: Most of the leading innovators are actually accelerating their innovation efforts in the recession – in doing so they are actually betting that customers will demand new products and services as the economy gets out of the downturn. Many of the corporate decision makers in the list who control/manage budgets for innovation – running into hundreds of billion dollars of business every year believe that innovation is critical as they prepare for the upturn, and a majority have maintained or expanded their portfolios and are pursuing new products to improve growth and margins. Practically everyone wants to be as focused and result oriented as could be The recent trends, observed over the last few years suggest that as a rule, companies are performing less pure and applied research. Instead, they are concentrating their R&D budgets on product development and engineering. The software sector is now brimming with new strength on SaaS & Cloud centric products and services while behemoths like SAP struggling to maintain growth and leadership! Apple had the best quarters when the global economy was perhaps at its lowest ebb last few quarters! I found it interesting to see an IBM executive’s statement suggesting that in a recession or downturn "...that really drives a need for innovation and a level of creativity that you might no otherwise have in normal times." I thought that the new normal is that normalcy is a product of bygone era! The reality is that last two decades have seen more changes in growth /slowdown and indications are that this may become the new normal – so downturn or upswing ought to marginally influence yearly spend on innovation – particularly when product development cycles can run into multiple years. If anything the sensitivity could prove itself in reverse direction of spending more/differently in a downturn, Read Applied material’s dilemma – the revenues are down significantly this year. Yet it’s customers continue to demand innovative new products to maintain their own competitive positions. The stronger companies want to stay on the same innovation page so that at the end of the cycle, they have a stronger competitive position. Taking a long view of economy, markets and relating to the context are done differently by different companies. The top three spenders on R&D in the world happen to be non-american companies! Matter of fact in many industries today, predicting the economy for the next few years and its implication for them may become the most coveted job and an art for its executive board. In fact, I would think that not being able to predict and adjust to an ever changing economic environment may become a disadvantage for any enterprise – being able to constantly test the assumptions about economic environment may have to become a top item for corporate strategy planning, adjusting internally and to succeed in the marketplace.
Lets look at how this would impact executives inside the organization. Business needs to look at talent horizontally across the business classified as per the roles and not necessarily as per the organizational norms and this would be the key in effectively harnessing talent inside enterprises. The differences ought to be expressed in terms of talent valuation - that is, such attributes as knowledge, experience, skills, and personal interaction capabilities - and not in terms of organizational structures (such as business units) or in human resources management terms (such as age, education, seniority, or compensation). In an age where the rules and procedures of an organization can be an obstacle to segmentation and a force for “averaging” the treatment of individuals’ roles, and in a situation where organizations need to offer very specialized services, definitely a radical new look at the way talent gets categorized, nurtured and reviewed are called for and on an ongoing basis, needs to be reviewed to provide a definitively fresh and dynamic approach. After all winning the people war is a crucial determinant of success for any organization. In most of the knowledge business, the future values of enterprises are centered on building seemingly intangible assets vs the conventional measures of capital assets. That’s where good, capable people, well aligned team, well conceived strategy and top quality leadership matters. With all these in place, the cutting edge would from innovation - in all its forms starting from management innovation to disruptive innovation to innovation of the incremental kind. The ability to recruit/ mould the leaders that will be able to create the future innovations that will make enterprise more successful is a major responsibility & talent management in many ways will determine the organization’s growth as much as the overall business strategies will. This will shape organizations in a significant way and if organizations get this right along with purposeful innovation models, competitiveness increases and success would follow.
The responsibilities of the CIO span a spectrum of managerial tasks, with one end of the spectrum as "supply" - the delivery of IT resources and services to support business functions - and the other end of the spectrum as "demand" -the task of helping the business innovate through its use of technology. Many CIOs admit that balancing both demand and supply is a difficult task. Fortunately, the CIO has a range of new opportunities and tools to help him manage and order these competing priorities. The process starts with an understanding of how new sourcing models can liberate internal resources and funding for strategic business enablement and innovation.
While every CIO plans aligning IT and business strategy, the irony is that they don't have enough time for effective strategic planning. Usually they blame it on demand-side pressures.Look at the challenges confronting the CIO: The business side complains that their CIOs aren't up to speed on issues confronting the business and can't think through the implications of systems trade-offs, on a business-unit level, for planned implementations or proposed IT investments. At the same time, the business side usually gets confused in making assessments of the relevance of new technologies to safeguard their business competitiveness. More often than not, business leaders say that their CIOs are not proactively bringing them new ideas about how technology can help them compete more effectively.
Part of the problem stems from the inherent conflict of managing supply and shaping demand. CIOs often must meet requirements to reduce total IT spending, for instance, while making investments to support future scenarios-even though these upgrades will increase IT operating costs. It's indeed a tough job - trying to be both a cost cutter and an innovator - and the CIO sometimes compromises one role. Structural issues whereby parts of the organization are under the control of other executives also complicate the job. Business-unit leaders want more IT leadership, but they are wary of CIOs who don't tread carefully along business leaders' boundaries. Strategic IT management calls for making improvements on the demand side. Managing the demand side of the equation broadly covers: - The financial understanding of costs and benefits, - Business accountability for IT and - Clear framework for investments in technologies. CIOs shift their attention to different aspects of these three core components. As part of the evolution the CIOs shift focus: once operations are stabilized and business credibility has been achieved, emphasis shifts toward working more closely with business leading to opportunities to contribute to strategic initiatives and direction.
In practice, it can be seen that CIOs who meet and exceed business expectations get rewarded with greater participation in their enterprise's business strategy, higher budgets and become favorites with the business side. In most cases, these CIOs tend to have the ear of the CEO through a direct reporting relationship. CIOs need to know not only what the differences are but also how to time the shift; move too soon or too late and credibility with business leaders will suffer.
This month IBM released its findings from the new global study of more than 2,500 chief information officers (CIOs), covering 19 industruesindustries and spread across 78 countries. The study confirms the strategic role played by CIO’s in making their business become visionary leaders of innovation and financial growth. Many CIO’s are getting much more actively engaged in setting strategy, enabling flexibility and change, and solving business problems, not just IT problems
The report replete with innumerable insights is an excellent collection and I started by looking at understanding some themes and associated metrics that preoccupy the CIO’s the most . I was startled to find that more and more CIO’s appear to be genuinely focusing on getting the growth lever of IT and business fire by rightly turning their attention in increased measures towards innovation. Someone quips overtime the role of the CIO is less and less about technology and more and more about strategy. Really hitting the nail on the head. As the role of the CIO itself transforms so do the types of projects they lead across their enterprises, which will allow CIOs to focus less time and resources on running internal infrastructure, and more time on transformation to help their companies grow revenue. CIOs are transforming their infrastructure to focus more on innovation and business value, rather than simply running IT. The report finds that today’s CIOs spend an impressive 55 percent of their time on activities that spur innovation. These activities include generating buy-in for innovative plans, implementing new technologies and managing non-technology business issues. The remaining 45 percent is spent on essential, more traditional CIO tasks related to managing the ongoing technology environment. This includes reducing IT costs, mitigating enterprise risks and leveraging automation to lower costs elsewhere in the business. Obviously not every CIO would make the cut. It’s reported that High-growth CIOs actively integrate business and IT across the organization 94 percent more often than Low-growth CIOs. The study notes that CIOs spend about 20 percent of their time creating and generating buy-in for innovative plans. But High-growth CIOs do certain things more often than Low-growth CIOs: they co-create innovation with the business, proactively suggest better ways to use data and encourage innovation through awards and recognition. 56 percent of High-growth CIOs use third-party business or IT services, versus 46 percent of Low-growth CIOs. The study also found that High-growth CIOs actively use collaboration and partnering technology within the IT organization 60 percent more often than Low-growth CIOs. Even more impressive, High-growth CIOs used such technology for the entire organization 86 percent more often than Low-growth CIOs Successful CIO’s , the report notes actually blend three pairs of roles. At any given time, a CIO is: • An Insightful Visionary and an Able Pragmatist • A Savvy Value Creator and a Relentless Cost Cutter • A Collaborative Business Leader and an Inspiring IT Manager
Adjusting the mix one pair at a time, the study reports make the CIO’s perform tasks that make innovation real, raise the ROI of IT and expand the business impact.
Other key findings of the survey: • CIOs are continuing on the path to dramatically lower energy costs, with 78 percent undergoing or planning virtualization projects • 76 percent of CIOs anticipate building a strongly centralized infrastructure in the next five years. IBM's CIO Pat Toole has this to say about the findings. In addition to the detailed personal feedback, IBM also incorporated financial metrics and detailed statistical analysis into the findings.The report also highlights a number of recommendations from strategic business actions and use of key technologies that IBM has identified that CIOs can implement, based on CIO feedback from the study.
Dell plans to acquire Perot systems. The momentum picks up! Dell expects this deal to position itself as a more formidable player parading both its hardware and services expertise given the fast changing nature of the business and the faster adoption of cloud computing. Dell was as always seen as a laggard when it to comes to services and given that its principal competitors – HP & IBM are now very big in services, Dell had to anyway bite the bullet of acquiring some big service player. Perot’s strengths are mostly in Banking, Financial Services, Healthcare & Government and would to a limited extent help Dell directly with its footprint. The capabilities of Perot system may be more useful to Dell compared to its current customer base. Perot systems customers would have to factor in the new reality of Perot systems ownership changing to Dell, though the existing CEO would continue to run the business. Two things struck me:
A. Dell must have acquired a services company at least two - three years back when it confronted serious growth troubles – At around the same time, HP muscled in to acquire EDS. I predicted that HP may buy EDS in years before ithappened.
B. Perot has limited scale compared to the other global service players and India headquartered service players. Perot’s offshore capability also is generally seen to be quite limited compared to other traditional global players. Valuation looks interesting here: 2.8 billion USD revenue gets a valuation of 3.9USD billion after providing a substantial premium to last quoted trade.
I am not too sure if this move by Dell would perturb IBM or HP given the lack of scale of Perot's operations, while this may give some limited upside to Dell. The corporate integration may get accomplished easily given that both companies are headquartered in Texas. I was actually expecting Dell to make a serious move to get into smartphone market - say by acquiring Palm. It may happen in the future - we will have to wait and see. It would be interesting to see how Oracle (which recently acquired Sun) looks at this development. I am very keen to watch what Cisco does now – it has entered into the more competitive server business (big competition to Dell , IBM, HP) and has more ambitions in unified computing. Cisco cash position and appetite for acquisition is well known and in the recent past there had been rumors of Cisco looking at acquiring Accenture.While am not clear about how this acquisition may decisively benefit Dell, I do believe that Dell’s move may trigger a new momentum in Cisco’s next acquisition move as well!
MR Rangaswami opens up a refreshing discussion on software’s billion dollar question, The article - highly recommended for reading points to possibilities of new billion dollars emerging (while some are skeptical of such large software companies coming out in the near future). I, for one firmly believe that possibilities of new billion dollar software companies are very bright. Lets examine the why and how of such a scenario. The business dependence on digitized processes are getting more and more pronounced. The warp and the weft of business processes are firmly centered around technology . With increasing complexity of enterprise applications, we see that the dilemma of business in supporting existing tech investments which keep increasing on the one hand and the pressure to gain more yields from such investments to make the business more competitive. This challenge is in many ways pushing the business to look for and invest in more and more innovative technology centric solutions. With large software vendors respond slowly to the changing realities or have their own delivery program schedules for providing such solutions, many best-of-breed vendors would be able to move in and begin to provide relief. This demand will provide the fodder for the growth and sustenance of many more billion dollar software companies albeit with varying means of delivery.
The enterprise2.0 technologies are providing huge opportunities for enhancing business competitiveness and the bottoms up participation centric approach of technology and tools of the enterprise 2.0 era enables a new trajectory and momentum for organizations to leverage technology in very many innovative ways. Surveys find that technology buyers are highly socially active, and software vendors are matching their appetite by being in the forefront of selling social media centric solutions. Today in the consumer driven technology age, technology buyers inside enterprises encompassing both the business and IT users are highly switched onto the social media and use/tend to use many of these tools in their business. The key here is to help create enterprises go after and attain tangible and sustainable value. Lets build this further and see one or two instances where this could create a huge market opportunity for software vendors.The enterprise 2.0 technologies provide firms with the mechanisms to create value by inviting many stakeholders to interact real time and enhance the value creation process with its openness and timeliness. There are examples of social networks that help business manage the entire product development processes and an interactive one enables it to be enriching and more valuable.
There are many bright spots where opportunities for new software that can pay back enterprises in very short time exist. For example in the cusp of collaboration technology and supply chain software we see the advent of new innovations like demand signal management. Here we see that enterprises replace relying on internal data such as order and shipment records with analyzing weekly and even daily point-of-sale data from retailers so they can better see what's selling where. Sustained efforts to exploit the growing importance of complex interactions could well generate durable competitive advantages and this can be done only by a new set of enabling software – and these are all big ticket opportunities. In all these leading edge opportunities, unarguably, small vendors and upstarts tend to move faster and therein lays the growth opportunities for software vendors to create billion dollar enterprises. The contours of such emerging software companies are clearly there to be seen.
Close on the heels of Barry Diller’s Lay Off The Layoffs talk, comes a brilliant note form Mark Hurd. Faced with a deep slowdown and disappointing growth numbers, he highlights the challenges for HP and his plan of action. From a productivity standpoint, you’re supposed to reduce headcount on par with declining revenue. If you believe the environment isn’t going to improve, you should take a bigger cut to get in front of the problems. Confronted with the challenge of 20% revenue down, he argues that a company wide level restructuring /retrenchment is not the solution as he believes that he does not see a structural problem of that magnitude(to reduce 20% workforce). In his words, he sees HP as fundamentally sound, and when the economy picks up, he wants HP to be strong, and to take share and to outgrow the market. Proposed action : Further variablize our cost structure by reducing base pay and some benefits across HP. CEO base pay will be reduced by 20 percent. The base pay of Executive Council members will be reduced by 15 percent. The base pay of other executives will be reduced by 10 percent. The base pay of all other exempt employees will be reduced by 5 percent. For non-exempt employees, base pay will be reduced by two-and-a-half percent. Additional efficiencies, including changes to the US 401(K) plan and the share ownership plan, will also be implemented. and all of these actions would be subject to compliance with local laws and regulations. In an age when the corporate chieftains believe in laying off as a safe and acceptable option, it requires real courage and determination to hold on to your people on changed terms , motivate them to contribute more for a fast recovery and eventual growth. Looks simple but 90% plus organizations do not think that way – they act without class and no doubt – Losers!
Courtesy of Techmeme,I saw this nice piece by Mathew Ingram on the Times move to make their digitial presence as a platform, extensible via API’s. Basically the NYT team has accumulated quite a few blocks/articles over the last 28 years — all of them tagged and labeled. This means programmers can now easily access 2.8 million news articles starting from 1981 and more importantly thanks to the great effort of the Times team - sort them based on 28 different tags, keywords and fields. The richness of the data and its organization looks mind-boggling – Derek Gottfrid claims that the Times articles can be searched using the 35 searchable fields Content is data at its core –properly parsed and efficiently indexed content can be made available in various formats and can be put to a variety of use. The newspaper industry is reeling under call kinds of pressures. There are calls for bailout of the industry! The Times initiative is indeed a pioneering one. At a time when there is a widely held view about the demise of the newspaper industry, pioneers show how by embracing instead of resisting the technology change, they can retain their pioneer status. Clearly the newspaper industry’s problems are similar in nature to that of the music industry’s challenges before Apple i-Pod days. The thought of buying a complete album looks outdated in this i-Pod age where once can safely buy good songs at much reduced prices. This forced the music industry in large measures to transform their business model around iPod/MySpace. The print media needs to look at similar moves and the NYT move is commendable – for its vision and execution. Clearly this will pave the way for the evolution of a new future for digital newspaper industry.
Michael Arrington, joins issue with Loic about American vs. European entrepreneurs, the controversy picked up at the Le Web conference. Loic responds back . As someone who has gone around the world many times and has met with hundreds of entrepreneurs, here are my thoughts. Michael points out :
"...the joy of life is great, but all these two hour lunches over a bottle or two of great wine and general unwillingness to do whatever it takes to compete and win is the reason why all the big public Internet companies are U.S. based. And those European startups that do manage to break through cultural and tax hurdles and find success are quickly gobbled up by those U.S. companies. Skype (acquired by eBay ) and MySQL (acquired by Sun ) are recent examples. The crowd jeered but the stark reality of it all is unavoidable. And the fact that the panelists on stage, all either American or living in America, suggested that you can somehow succeed with a startup while maintaining a healthy work-life balance is unfortunate. Too many people choose to be entrepreneurs as a lifestyle, without realizing that it takes everything you have and more to win. And if you aren’t in it to win, why not just take that nice job down the street that gives you five weeks of vacation."
In my view, Mike is spot on. Entrepreneurship is going to be more global and demanding and the fact remains that in the internet age, the valley has consistently provided/sustained large scale enterprises. I can’t even recall a single european startup name that looks significant enough to challenge the valley players in the internet age. The valley is the poster child for tech entrepreneurs around the world and that is clearly not going to change! Loic is somewhat right when he says that iIt is the McDonalds fast culture against the highest rare quality possible talking about Guy Savoy but he completely misses the difference when he writes:
"There is a huge difference between being lazy and taking time to know each other. It is one of the main cultural differences I feel everyday as I moved to Silicon Valley: every minute, every coffee, every phone call must have a point. When you call someone in Silicon Valley for anything you will likely get "why are you calling me?" ... ...Don't even think about starting a conversation in Silicon Valley by "how was your week-end" or "how are your kids", they all want you to go straight to the point and no time to lose. I never thought inviting someone I really liked to know better to dinner would get me an email from his assistant "why would you like to invite him to dinner?". I do not think europeans are lazy taking the time to know each other and build deep long term friendships that are not limited to business and I do not think this hurts Europe in any way. On the contrary."
One will have to differ with you Loic! Mike is mostly right if not spot on!
Update : Zoho's Sridhar Vembu writes on worklife in Japan - a very neat description indeed. I have seen identical things happening in Japan for several years.
Bruce Schneier, the noted digital security expert writes that today we chat in e-mail, over SMS and IM, and on social networking websites like Facebook, MySpace, and LiveJournal. We blog and we Twitter. Noting that ephemeral conversations are becoming a taboo in government circles at the highest levels, he points out that conversation is not the same thing as correspondence.Today's mobile converged device is more likely to run software considerably more advanced and versatile than desktop systems just 10 years ago. That versatility is an enemy of security is granted,given that it turns the underlying security architecture on its head. No doubt, it’s also a myth that communications are encrypted from end to end.
Lets look beyond this. As Bruce notes, technology makes our conversations less ephemeral, we need laws to step in and safeguard ephemeral conversation. We need a comprehensive data privacy law, protecting our data and communications regardless of where it is stored or how it is processed.
Commenting on the ban on Blackberry usage for the US president elect ,he highlights that with the Internet the younger generation chats digitally, and the older generation treats those chats as written correspondence. Until our CEOs blog, our Congressmen Twitter, and our world leaders send each other LOLcats – until we have a Presidential election where both candidates have a complete history on social networking sites from before they were teenagers– we aren't fully an information age society.
Intense efforts by mobile operators to increase their data subscribers in order to drive higher average revenues per user (ARPU), resulting in higher handset subsidies compared to traditional handsets.
The widespread usage and penetration is further aided by the fact that • Lower component costs have enabled availability of more affordable smartphone devices • The frenzied consumer appetite for mobile applications such as traditional Internet access, wireless email, GPS applications, and gaming.
Within the next three – four years, analysts estimate that we are likely to see around 40% smartphone penetration in North America and in Western Europe. With all these happenings, I can’t agree more with Bruce Schneier’s view that the people in the younger side of the internet generation gap need not be necessarily operating under the rules written by the older side and lets try and make sure that it does not take another generation before society's tolerance for digital ephemera changes.
Barack Obama's victory creates historic global demand for web content. In the US, almost everyone talks about how Obama managed his campaign in an extraordinary way in the last eighteen months. I first heard face-to-face the impressive strategy behind Barack Obama’s social networking leverage from his web strategists and advisors in the forbes leadership network last month in the valley – particularly the part where they focused on first building the community and how the money raising mechanism got fired up in the primaries. Jeremiah Owyang captures details of the momentum that the campaign gained with the social networks. It is common knowledge that the campaign had been heavily leveraging the web platform in very many sophisticated ways. The campaign spectacularly succeeded in integrating political infrastructure with the web infrastructure that they managed to create. A peer-to-peer, bottoms up campaign seemed to be the strategy that finally delivered results. Volunteer participation, feedback synthesis and citizen vote drives were successfully brought out in massive scale hithertho unknown with the web platform. The campaign heavily shaped by the power of social networks and internet energized the youth power in unimaginable ways signifying the triumph of technology power. Obama's online success outclassed his opponents and there were 150,000 or so campaign-related events over the course of the campaign, aided by more than 35,000 groups related by affinities like geographical proximity and shared pop-cultural interests. With 1.5 million accounts Obama campaign raised a record-breaking $600 million in contributions from more than three million people, many of whom donated through the web. That reflected in building record war chest of contributions to the campaign – and in many ways engaging the millennials in unknown ways. It is now clear that the young voted for him in droves. It is the conventional view that IT is Business. Now comes an extension, IT shall also become almost the nerve center for presidential campaigns. With all this the new president elect has a big job ahead.
Update : The Internet As A Force In Politics: “Obama Would Not Have Won Without The Internet” .”The Internet played a disruptive role in the 2008 election in the same way television played a disruptive role in the 1960 election of John F. Kennedy to president. Neither medium was new in the respective elections, but both “came of age” and swung the election towards the winning candidate”.
While the fabled "RIP Good Times" Sequoia presentation made a huge impact, Benchmark and few others followed. Look at John Doer's dull advice to startups. The irony is that these forceful negativity helps create the very downturn that venture capitalists are warning their companies to defend themselves against, perpetuating a sort of vicious cycle downward. Sequoia highlighted Salesforce.com Vs Siebel performance between 2000-2005 in their presentation as a sign of almost tracking financial indicators. Today's SF chronicle has a nice interview with Marc Benioff where he refers to the Sequoia slides and has something very interesting to say - how he approached Sequoia thrice to raise capital and failed all the three times! I agree with Marc and my feelings are with him - when it comes to enterprise software in Marc's own words,
"During the last cycle, we were one of the companies that was very successful. Sequoia and every other venture capital firm turned us down for funding. We raised $65 million to start Salesforce.com almost entirely on our own from individuals, from myself, from Larry Ellison and from others. And those VCs didn't - they never helped us. Those venture capitalists, in many times they A. overreact; and B. get it wrong.When I saw that presentation, I think that you have to separate the wheat from the chaff on that. Which is that yes, we're in difficult times, but in difficult times, some companies will struggle but others will be very successful and you have to decide if you're going to be one of those companies"
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As I see it, we need more daring and courageous approach based on a more balanced perspective here. Take contrarian approaches-like what Warren Buffet is demonstrating -"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful". The uncertainty is also an opportunity for some to breakout into a success spiral in the backdrop of negative sentiments. Therein likes the key for the turnaround and make good of this troubled times.
Forrester Research CEO George Colony, argues that the impact of current economic crisis on tech may be milder than anticipated compared to what happened seven years back with the dot com burst. His primary argument is that tech spending is currently hovering around 6% whereas it used to be double that in the last tech downturn. He points out that tech is more centrestage and pervasive that what it was at the start of this century. Mobile penetrations have tripled in the US, online business is surging around the world. It confirms the earlier notion that IT is business. A well articulated argument here shows that the impact may not be felt where the deployment is critical to business and bound to strengthen additional investments. Tom Sullivan compiles the view that startups could particularly get affected due to the credit crisis. I liked the logic that George has taken in constructing his idea. Besides the enterprises, the younger generation have their world more or less centered on tech in many ways. As I see it, the millennial generation has emerged as a powerful political and social force. Currently including young people up to 29 years of age, the millennials are the largest generation in history; they are independent-politically, socially, and philosophically-and they are spearheading a period of sweeping change in America and around the world and are clearly more tech centric that what was the case few years back. The Green efforts that many forward looking enterprises are embracing are going to further embed tech into core business. Global rollouts, instances consolidations and the likes provide IT with unimaginable importance within enterprises. Its impossible to think of the birth of some sectors like what we see today without conceding a central role to IT. A Fedex, Walmart or trading rings as we see them today, can’t be even thought of without IT. The web has stroked the fire and the dot.com companies( or their peak valuations in their heydays!!), no doubt made people sit . I heard someone say that if their enterprise systems fail to perform for a few days, their entire annual earnings would be wiped away. Sensible boards insist on a credible CIO to get hired and no wonder we see that CIO’s also get fired faster. As I see across verticals, increasingly the competitive edge is just going to come out of Innovation and IT would play much more significant role in making this happen. In practice, I see that firms that are under investing in technology lose their edge over a period of time. I am not saying that every major initiative would directly contribute to competitiveness, but not trying would definitely harm them. Though there may be a potential dip in tech interest for a few quarters due to credit squeeze and overall economic slowdown, I see tech playing a much bigger role in the global business bounce back, when it happens. The tough environment would force tech ecosystem to innovate more and do it fast. No doubt - more of the same won't work for ever and the tech sector is not immune to this. Resource allocation challenges may abound, but in many instances, IT investments deliver more value to a company’s top and bottom lines—by creating distinct efficiencies and increasing revenues—than any potential/real savings gained from the more traditional IT cost cutting. Downturns give companies a chance to buck conventional wisdom and increase their IT investments. Savvy enterprises know that focussed initiatives in many areas can generate more efficiencies and contribute to revenue growth that would outshine potential savings from peanut butter spread model of direct cost reductions applied to IT as part of across the board cost reduction. Yesterday, I was in a meeting, where the discussions were hovering around specific areas where tech can play a major role in the transformation of the financial services business. Clearly, it is not a panic situation – in a few quarters the difference would be seen by all.
Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld "All views expressed are my personal views are not related in any way to my employer"
