The Webquarters

In data we trust...

2011-09-21T07:40:00.000-07:00

To counter accusations of unfairness, Google should rely on the most trustworthy ally: Data

Becoming everybody’s prime gateway to the internet has its drawbacks, as Google is finding out. People are bound to suggest that a company that enjoys such a pre-eminent status misuses that privileged position.

In countering this accusation during a US Senate Judiciary Committee hearing scheduled for later today, Google Chairman Dr. Eric Schmidt should rely on the most obvious and trustworthy ally: data. He should display a table that summarizes the results of a few hundred sample searches, and makes it plain that Google serves up results that do not “favor its own content” (as they’re accused of doing).

For dramatic effect, he can actually demonstrate a few searches online during the hearing, that attest to the above. Of course, he should be prepared for committee members to suggest their own searches, and should have verified in advance that there really isn’t any bias in Google results !

On the committee’s part, one hopes they recognize the most basic principle of fairness in justice: the burden of proof lies squarely on the accuser.

Google’s Motorola buy: Searching for more robust results…

2011-08-16T09:49:00.001-07:00

With its latest acquisition, Google seeks to escape a one-trick pony fate.

Many a rationale has been advanced for Google’s headline-grabbing buy of Motorola Mobility. These attribute the buy, variously, to a defensive move by Google to protect Android from patent litigation, and to Google searching for a more vertically integrated mobile phone strategy a la Apple. While there may be truth to these attributions, I think most people have just forgotten the simplest rationale: a search for revenue streams beyond search-based advertising.

Google is a marvelously innovative company. However, I’ve frequently derided Google for being a one-trick pony (as have many others), deriving more than 95 percent of its revenues from a single source: search-based advertising. And, as I've written elsewhere, such a model is enormously vulnerable to disruption. Which means, the company just hasn’t been able to convert its vaunted innovative prowess into hard cash.

But isn't it a terrible idea to become a competitor to your own customers, as Google must now compete with other handset manufacturers who have pitched in their lot with Android, such as Samsung, HTC, and Sony Ericsson? You bet it is. However, Google is adroitly straddling a fine tradeoff here – it seems to have decided that the risk of antagonizing a few customers is outweighed by the benefits. The move derisks Google and makes its business model more robust by creating an entirely new revenue stream.

And for a Google desperate to escape a one-trick pony fate, the $12 billion or so extra revenues from Motorola’s handset sales, even at low profitability, can scarcely hurt. As an added benefit, the integration gives a revenue model for Android, something it has lacked despite obvious popularity. Overall, it must be stated that this is an audacious and welcome move on Google's part as it seeks to become a strong mobile industry player. Google sure has a right to feel lucky with this one.

A standard too poor to judge nations by

2011-08-12T05:21:00.000-07:00

Sovereign ratings such as those awarded by Standard and Poor’s are deeply flawed.

The recent downgrade of the US sovereign debt by Standard & Poor’s has three intriguing implications. First, it sends the message that like mere individuals, companies and lesser states, the US government too cannot live beyond its means. Second, S&P’s action suggests that the US is no longer the world’s prime economic mover, a status it has enjoyed for well over a century.

The former message is welcome, but the latter is less so. Just as a bunch of unruly schoolkids needs a strong chaperone, the world’s nations need a strong and credible leader to play an anchor role, particularly in terms of crisis. Institutions such as G7, G20, the EU and the IMF are too weak, too decrepit or simply do not enjoy the widespread trust needed to play that leadership role credibly. An America, however weakened, is better than no leader at all. The world economy without a firm hand on the rudder is not a pleasant prospect.

The third interesting observation from the downgrade and the events that followed is that it’s possible for a private company to take a decision that shakes the world’s most powerful governments. Nations and governments have traditionally enjoyed huge power over the private sector, and until recently it would have been unthinkable that one private company could take one decision that reverberated thru the world economy and left the world’s most powerful government scrambling to salvage it’s reputation.

But just how reliable are the sovereign ratings, and do changes in those ratings merit such mayhem? To see the answer, one has to look no further than the list of S&P’s AAA rated countries. If you could invest a million bucks in Guernsey, Isle of Man or the US, would you choose either of the first two? Yet those countries continue to retain their AAA ratings! Austria, Australia, Liechtenstein, Luxembourg, France and the UK are well-run countries, but would you really choose all of those above the US for your investments?

The US is still the largest, most diversified and most vibrant economy in the world. Whatever it lacks in quality of political leadership, it makes up in terms of these factors. America also has the world's largest private sector (which as observed earlier is steadily gaining importance). Also, America’s political process is fairly transparent so the risk of idiosyncratic or whimsical policy making is low – during the recent debt ceiling negotiations, every move was ruthlessly scrutinized by the world’s media. Many of the countries in the AAA list above have policy-making that’s opaque, run by a few individuals such as a President, Prime Minister or Finance Minister or by coteries. In addition, the US dollar is the world’s reserve currency. So as long as Uncle Sam runs the world’s money printing press, the likelihood of its defaulting is virtually nil.

Let me hasten to add that I’m no fan of the US or any other nation’s economic management – hubris, maneuvering for narrow political ends, lobbying etc. are rampant in America as in most other places. All the horse sense view is saying is, if the US is demoted from the top trustworthiness rating, so should every other AAA country be. If that doesn’t happen soon we can safely conclude that the sovereign debt rating process lacks integrity.

And let’s not forget that these ratings are being awarded by agencies that played a starring role in the financial crisis - by awarding stellar ratings to mortgage-backed securities that nearly allowed financial institutions to bring down the entire financial system, they failed investors and the financial system at large.

So, particularly given the psychological impact of these ratings, it’s incumbent upon the rating agencies to devise much more sophisticated rating methodologies that span a much wider range of factors.

To market, to market..and don't dally on the way..!

2011-06-04T01:07:00.000-07:00

The longer Facebook delays its IPO, the more it loses.

Without a doubt, Facebook is one of today’s hottest internet properties. It's the second most visited website on the planet with 600 million users – a tenth of the world’s population ! The Wall Street Journal places its market value as high as $100 Billion.

Those figures are probably absurd overestimates, but that's beside the point here. The point is, most of that wealth remains on paper until the company actually goes public. While the company has announced plans to do an IPO, it has also shelved those plans until at least 2012. Why do I believe this is a mistake? Two reasons.

1. Facebook, today’s social networking leader, runs a real risk of turning into a social networking also-ran. Facebook has barely scraped the surface of the humongous beast that social networking is. It’s merely the vanguard of an entire new generation of software tools that’ll have social networking at their core. And these next generation social networking tools will automate entire work processes and personal activities - those breathtaking possibilities are barely a glimmer in the eye for even today's most advanced social networking software makers.

So in the emerging social networking universe, Facebook cannot take its leadership for granted – it can easily be overtaken by hungrier rivals and even relegated to being a marginal player. In a marathon race, the runner who leads after the first few meters has no guarantee of winning (and in fact rarely wins). That’s the stage where the social networking race is at right now.

Admittedly Facebook’s huge 600 million user base will be an asset difficult for other tools to replicate. However, they may not need to – many experts believe that the future of social networking tools is in catering to specialized audiences in focused niches.

(This is why, as I’ve written elsewhere, Google Chairman Eric Schmidt is wrong to believe he has missed the boat on social networking. Agonizing in this manner, reconciling to second-best status and taking a narrow view of social networking as being confined to little more than chatting and sharing photos is only likely to discourage Googlers from pursuing the vast unexplored vistas of social networking I've highlighted in that post. But that’s a separate discussion).

2. The markets may lose their exuberance for internet properties soon. We’re in the midst of a bubble as far as internet IPOs are concerned. As an example, Groupon which has a business model that can at best be described as unproven, has an IPO in the works that values that company at upto $30 billion ! (which makes you wonder if Groupon isn’t going to be the next Boo.com – a poster child for a burst bubble). Reality should assert itself pretty soon, and by 2012 that bubble may well be past.

And a time when people are mopping up the remnants of a recently-burst bubble would scarcely be opportune for approaching the markets.

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* Facebook's ownership wrangles may be part reason for the delayed IPO.

As geography returns to history, capitalism lives on..

2010-09-07T10:33:00.001-07:00

Financial crises will come and go, as the world rebalances. But reports of the death of capitalism are greatly exaggerated.

A couple of very intriguing questions: How healthy is the world economy? And how will it evolve over the next several years?

The first question is the topic du jour; the second however is almost wholly ignored in public discourse. I believe both are important; the second perhaps more so, if we are not to repeat the often-nasty and always costly economic surprises of recent years.

Here are my thoughts on both these questions:

How healthy is the world economy (today and over the next 3 years) ?

The basic capitalist fabric upon which the world's economic superstructure is built has been stretched badly by the events of the past 7-8 years, but not torn. The process of recovery from the recession began in July 2009 (as I wrote it would in April 2009, based on these five factors - a view that was markedly against the tide of expert opinion at the time), and is plodding on resolutely. The US recovery has cooled somewhat since March 2010 for a variety of reasons (some enumerated in the blog post below), but the probability of a double-dip in the US, European Union or any other major economic entity is vanishingly small (less than 10%). The world economy will continue to be in rude health (barring any unforeseen cataclysmic event – by definition, an extremely unlikely eventuality).

This doesn't mean the recovery will be painless: Jobs have been marching away from the developed world to China, India, etc. and so the West will have to get used to steady-state unemployment rates of near 10%. These unemployed folks will suffer and get poorer but nothing much will be done to help them (political fulminations notwithstanding).

However cries of the Death of Capitalism, another Great Depression, and so forth which we heard in late 2008 / early 2009 (and some of which came from respected Gurus of the establishment) have proven unfounded. Europe is doing quite well - the brouhaha about collapse of the EU, death of the Euro currency and so forth was similarly an overreaction.

How will the world economy evolve over the next 4 - 15 years?

Capitalism is not decrepit, but it’s been flogged by unscrupulous businesses intent on testing its limits nearly to breaking point. Regulators who were expected to rein in this reckless behavior looked on benignly (or fecklessly). The Gurus and thought leaders who should have sounded warning bells were trapped in ivory towers, rendering themselves essentially irrelevant.

More importantly, No lessons have been learnt from the recent financial crisis. Regulatory changes such as the Dodd-Frank Act are too weak, abstract or low on specifics to deter further recklessness. Cycles are an inherent economic phenomenon (despite what many naively believed during the halcyon dotcom days and the boom of 2003-2007); weak regulation will ensure that some cycles will go far enough to engender full-blown crises. So there will be more financial crises in the next 5-15 years (and we probably won't learn much from those either).

These crises will be most likely to originate in the US or China. Europe will continue its disciplined march and play a steadily smaller role in world affairs. India will grow (albeit quite rockily) but will be unlikely to create problems outside its own borders.

A hapless world will reel in response to each crisis. However, while we won’t get much better at preventing crises, we’ll continue to learn to manage these crises better. Crisis responses will (hopefully) be as admirably coordinated and effective as the response to the 2008 financial crisis was.

Few would argue today that the regulatory failures that cause free markets to occasionally plunge headlong into crises justify a switch to the opposite extreme – the abandonment of capitalist free enterprise[i]. However, the lines between Government and free markets will need some redrawing.

Capitalism will continue to thrive, partly because all alternatives have self-destructed. The major bastions of Communism and Socialism – in the Soviet Bloc and China – have fallen. A fragmented, fractious and adversarial worldview fostered in the Cold War era has allowed these totalitarian ideologies to survive in small pockets in Asia, Africa and Latin America long after having proven decrepit in the lands of their origin. However these final holdouts are merely the last vestiges of these once-powerful ideologies, and they too are crumbling.

But capitalism will thrive mainly because it has worked (but, it must be admitted, for the occasional crisis). Free-market democracies have emerged as the most effective method to unleash the creative and entrepreneurial energies of the human race. They have promoted widespread wealth and well-being. The new generation’s aspiration for freedom - of expression and enterprise - can only be met by the liberal pluralism that only free-market democracies can provide[ii]. In the annals of ideological battles, the market is the undisputed winner.

So the real battles will shift to social, cultural and technological issues – medical ethics, the propriety of creating clones and artificial life forms, energy security, the right response to changing world demographics, and so forth. These battles will largely be devoid of ideological content, and focus on pragmatic aspects.

Meanwhile, the inexorable forces rebalancing the world will soldier on. The historical anomaly of Western dominance set in motion by the Industrial revolution and the colonial era, and kept in place by the Cold War will be erased. In 2025 the world will look more like it did in the late 19^th century (in terms of relative apportioning of wealth between the geographical East-West, not in terms of absolute standards of living or technological advancement) !

Of course this rebalancing will not be painless as the newly emerging nations (China, India, Brazil,..) seek roles in world affairs proportionate to their growing economic clout.

So the world will hardly be devoid of conflict. But the conflicts of the next 15 years – and their resolution – will be guided by the invisible hand of Adam Smith, rather than by the ideological fist of Karl Marx. And we’ll continue to live in interesting times.

[i] The fact that regulatory failure played such a big role in fostering recent financial crises is an argument against, and not for, more government.

[ii] This is why China will face issues as it transitions to a true capitalist free-market society. Currently it must be considered a work-in-process, as it attempts to make this transition without a corresponding transition to democracy. It is this disconnect that may provide fodder for incipient crises. Almost inevitably however, the country will move in the general direction of providing greater representation for its people, in the democratic spirit.

Drachma drama or Dragon's dance?

2010-05-28T01:46:00.000-07:00

While concerns remain, recent roilings in Greece and Europe are no threat to global economic recovery.

I had written in April 2009 that the US and global economies would begin their recovery from the recession in July 2009. This opinion was based on five factors, all publicly known. The opinion was however at considerable odds with prevailing expert opinion at the time: Uber-gurus Paul Krugman (winner of the 2008 Nobel Prize for Economics) and Robert Reich (a key member of President Clinton's cabinet and recently ranked by the Wall Street Journal among America's Top Ten Business Thinkers) were predicting another Great Depression; the IMF was in March 2009 foreseeing a recovery for the world economy only in 2010 and the OECD was forecasting a recovery in early 2010.

Subsequent developments suggest the July 2009 date for the beginning of the recovery was remarkably accurate – expert opinion has increasingly been veering round to such a view. The IMF rapidly revised it's view and declared on July 8th 2009 that the world economy had "begun to pull out of recession". The OECD followed suit in September 2009, stating that "the global recession is coming to an end faster than thought a few months ago and may already be over". Dr. Alan Greenspan said August 3rd 2009 that the economy had begun to grow “from the middle of July”. This guest column I've written in CEO World magazine in February 2010 summarizes this and draws some inferences.

However, there remains on the street even today (nearly a year later) some skepticism regarding the strength of the recovery. The reason is primarily that the job market hasn't revived strongly.

In hindsight if I can be accused of anything, it's for being overoptimistic in using the word "strong" in April 2009 to characterize the impending recovery. However, the US GDP growth figures for the 3 quarters beginning July 2009 have read 2.2%, 5.4% and 3% - figures that can hardly be characterized as weak (and in fact the best growth figures in about 6 years ) ! The tenacious will doubtless argue here that GDP is an inadequate measure of human well-being, but that's a diferent debate altogether. Even the apparently moribund US job market has begun a significant uptick.

Do all the events in Europe that have roiled world markets in recent weeks disprove the recovery thesis? I've been keeping a log of events, economic data, news reports etc. over the past year, and more closely since the European "crisis" hit. The objective data is quite unequivocally in favor of continuing recovery. Significantly, the OECD upped global GDP growth projections a couple of days ago. The US growth estimate was raised to 3.2 percent this year and 3.2 percent next year. That was higher than a forecast made last November of 2.5 percent this year and 2.8 percent in 2011. Euro-area growth was estimated at 1.2 percent this year and 1.8 percent next year - an improvement from the November figure of 0.9 percent this year and 1.7 percent next year. The IMF in April 2010 raised it's global growth forecast for 2010 to 4.2%. Prof. Eswar Prasad of Cornell University and the Brookings Institution writes in May 2010 that the global economy has been in recovery since mid-2009; the Financial Times is tracking the recovery using his TIGER index.

And of course the five factors remain valid as ever. Markets are understandably spooked but much of the talk of double-dip, breakup of the EU, long-drawn out economic malaise etc. is based on unjustified extrapolation, unconvincing hunches and / or grandstanding by a few people. In fact this thinking is a product of the same lack of clearsightedness alluded to in the CEO World guest column - when things are rollicking along people will brook no bad news, but when things are looking bad even the slightest bad news spawns Armageddon-like foreboding. Given the general gloom that recessions engender, few brave souls would risk standing out like a sore thumb, making light-hearted proclamations of sunny recovery.

We also need to get used to the idea that in the post-crisis era the world has become far more inter-connected than ever before. Our existing worldview fashioned in the fragmented, fractious and adversarial Cold War era is hopelessly inadequate to understand the full effects of this new
inter-dependence. So the new hyperconnected world will be a rocky place for sometime to come, punctuated by periodic ripples, minor panics etc. However these should not detract from the fact that the underlying economic firmament (that was apparently ripped by the financial crisis) is on firm ground.

A somewhat larger and more credible threat to the world economy is from potential rumblings in the Chinese economy, with China's currency peg* being of particular concern. These rumblings are muted as of now, and there isn't much reason to doubt the ability of the Chinese leadership to handle them; however this is a region that will bear watching. Overall at this point there is, in my assessment, a probability of less than 10% for a relapse into recession for the US, 15-20% for Europe and below 5% for Asia.

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Update Jun 9th 2010: Should the admittedly dismal US jobs report for May, released June 4th, cause us to abandon belief in the recovery? While it does give pause for thought, it is but a single data point and hardly constitutes sufficient evidence to declare a slide back into recession. A more reliable jobs indicator would be the 3-month moving average of jobs created - this figure for the last 3 months is way above the 150,000 threshold u

sually used to indicate recovery.

US Fed Chairman Dr. Ben Bernanke also said on June 7th that the US recovery probably began sometime late last summer, and that consumer spending and business investments appear to be taking over from the fading government stimulus in lifting the economy. In today's testimony to the House Budget Committee he said the US economy will grow at around 3.5% this year, and that he expected significant private sector job creation going forward. He also said he didn't expect a major impact from Europe's debt crisis on the US economy - the exact word he used was "modest". US Treasury secretary Tim Geithner is convinced there's a "modest but solid recovery in place". So the poor May US jobs report (and the Eurozone troubles), though disquieting, are likely the inevitable ripples as the post-crisis world structurally readjusts to a changed reality, are no reason to question our faith in the five factors, and don't detract from a recovery that remains firmly on track.
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Update June 21st 2010: China's contentious currency peg (which I've referred to above as of particular concern to the global economy's health) has officially begun to be loosened from today. The timing appears somewhat dubious, and suggests this may just be posturing for the benefit of the G20 meeting this weekend. However if China is indeed serious about this move (and there are many reasons to believe it is), it signals Chinese confidence in the global economy, as Goldman economist Jim O'Neill among others thinks.

More importantly, if China does deliver on the implicitly promised upward valuation of the Yuan, then a major distortion of market forces in the global economy will be reduced over the coming months. That scenario diminishes a major threat to the world economy, and virtually banishes the fears of a relapse of Eurosclerosis. And in that case, the probabilities of an early relapse into recession then fall to below 5% for the US, between 5 and 10% for the Eurozone and well below 5% for Asia. (If you'd like to see a more detailed computation of these probabilities, drop me a mail).

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* a levee.

A Digital “Generational divide”

2010-05-20T08:42:00.000-07:00

Musings on how technology divides the generations, and Facebook’s recent privacy pangs.

Issues on the technology-lifestyle interface frequently get polarized along generational lines. The younger generation tends to adopt new technologies for lifestyle use very quickly. And the older generation almost always disapproves, despairing that the younger generation is ruining itself in the use of these technologies. (an interesting blog entry points out how Facebook privacy is a battleground between generations).

This “generational divide” applies to almost any technology that has lifestyle uses – digital music, video games, social web,…Part of the reason for this divide is that the younger generation tends to take to new technologies like a fish to water and find all kinds of innovative uses for them, while the older generation is much more circumspect. The resulting differential speed of adoption widens the “generation gap” that has existed for decades.

I also believe this differential adoption speed applies to E-readers – they will never really get traction with the generation that’s currently in adulthood, but will be absorbed avidly by the generation that’s now in it’s teens. Whether this worsens the generational divide remains to be seen.

Coming back to Facebook’s recent privacy shenanigans, I’m not sure whether they are a misfortune or a boon for that company. They have certainly brought Facebook lots of free publicity – a search on Google News for the keywords ‘Facebook privacy’ throws up 5,000 news articles in the past day alone ! So does Facebook believe, as P. T. Barnum is reputed to have said, that "Any publicity is good publicity"? Whatever the answer to that question, one thing's certain: Surely the free publicity Facebook is getting is worth more mindshare than a truckload of dollars can buy.

Lessons from Google's China experience (and China's Google experience)

2010-03-23T09:06:00.000-07:00

In information censorship, success may be worse than failure.

Opinion is divided as to whether Google's exit from the China internet search market is brilliant strategy (because it wins huge mindshare, particularly among young Chinese) or disastrous (as it vacates the world's largest internet market to entrenched rival Baidu).

That's a question that only time will answer. Meanwhile, Google's action brings into stark view two sobering lessons for all aspiring internet censors. Read those lessons in my post on the Fast Company blog: In a hubless world, there's little room for hubris.

So, muzzling information seekers by erecting walls is a no-win game. When such a wall fails, it creates obvious problems. And when it succeeds, it often creates bigger problems. The great firewall of China carries huge pitfalls either way.

A serious foresight deficit

2010-02-16T08:31:00.000-08:00

Neither the recession nor its end should have come as a surprise

I've written earlier of a Technology foresight deficit in business and society.

The foresight deficit however is hardly confined to technology. Consider this: Most business and world leaders and even eminent economists failed to foresee correctly the recent upheavals in the global economy - the financial crisis of late 2008, the recession that followed, and the subsequent recovery.

However, neither the recession nor its end should have come as a surprise. The surprises happened because signals in plain sight were steadfastly ignored ! *

For details, read my guest column in CEO World magazine, The recession has ended and other surprises.

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* which suggests that the foresight deficit may largely be simply a common sense deficit, but that's a subject for a separate discussion !

A tepid effort to stave off global warming

2009-12-23T08:14:00.000-08:00

Humankind’s ability to get together to solve complex problems was on test at Copenhagen. It failed.

Being a climate change skeptic of long standing, I am not easily given to deploring any unsuccessful effort to combat global warming. Yet the lack of a definitive outcome at COP15 (the 12-day UN summit on climate change held at Copenhagen from December 7th thru 18th 2009) was a loss. But not necessarily because it failed to meet it's purported aim of saving planet Earth from a death-by-warming fate.

While the world’s survival may not exactly have hinged on a positive outcome at Copenhagen, the summit nevertheless represented a test of humankind's ability to hammer out solutions to complex problems, many of which are certainly going to crop up in future. It is for this reason that Copenhagen’s failure to produce a definitive outcome is a pity.

Read my detailed opinion on How (not) to save the world in 12 days.

The Recession Has Begun to Recede

2009-07-11T01:41:00.000-07:00

Economic recovery has begun

I wrote in April that we need to be optimistic about a recovery in the world economy in 2009, and that there are likely to be concrete signs as early as July. At the time this statement appeared to be at odds with what many leading experts including senior government officials, economists and CEOs were saying (see details here).

How has the economy been faring since then, and what's the latest prognosis? The Conference Board's Leading Economic Index showed a rise of 1.2% in May - the largest in many years. This and other bright signs prompted Business Week to state on June 18th that the worst is over in the economy.

Perhaps most tellingly, the IMF - hardly known for taking an overly sanguine view on matters economic - declared on July 8th that "the world economy has begun to pull out of the recession".

Of course, the optimism needs to be tempered. There are still many indicators that are in the red. Large tracts of the world's leading economies remain steeped in weakness. The reverberations from the financial crisis and resulting credit crunch are yet to work themselves out fully, although they have gone past their trough. Unemployment remains high in the US and other Western economies. The IMF itself has released mixed figures for its growth prognosis over the next few quarters. Uber-Guru Warren Buffet remains skeptical about recovery anytime soon.

None of these points however can detract from the assertion, backed by the factors I had listed and now supported by the Conference Board and the IMFs' findings, that the recession has begun to blow over. What the observations in the foregoing paragraph do mean is that the slope of recovery is likely to be excruciatingly slow.

It thus appears safe to state that the world economy has definitively begun it's journey out of the quagmire of recession.

Update, July 19th 2009: Newsweek magazine, citing expert sources, has on July 14th declared that The Recession is Over.

Of Risk and Reward - and Rationality

2009-05-14T07:41:00.000-07:00

Why is human response to risk so frequently irrational?

Harvard Business Review editor Scott Berinato makes a highly pertinent point: Society's response to risk should be rational. In particular, he says, when confronted by admittedly horrendous possibilities such as those the Swine Flu scare threw up, overreaction is likely to result in wasted resources that could have been better used elsewhere.

I agree that resources should be allocated in perfect consonance with the risk-reward equation. However this is easy to say but very hard to do. In most real-world cases it is difficult to conclude whether a threat response was commensurate with the threat, even in hindsight.

Read my full opinion here.

Swallowing Sun, Oracle Casts a Longer Shadow Over the Tech Industry

2009-04-27T08:45:00.000-07:00

As the sun sets on one of the companies that created the technology industry as we know it, the landscape has changed forever

Oracle's purchase of Sun, while hardly a record-breaking deal in pure financial terms, is nevertheless among the most transformational events the technology industry has ever seen. With it, Oracle has just advanced its already-considerable credentials as a heavy-hitting titan of the technology industry.

The deal also represents a landmark move towards greater industry consolidation as IBM, Microsoft, Oracle, SAP and the eternal wild card - Google - slug it out in their ongoing efforts to emerge as undisputed leader of the industry.

What specific developments does the deal portend for Oracle, and for the industry at large? Read my opinion here.

I can't help feeling a certain sense of loss as one of the companies that created the industry as we know it rides away into the sunset. However, as I have observed before, the tech industry is no place to be sentimental.

And so, as the technology landscape is transformed by this mammoth union, times get more interesting than ever.

The Clouds of Recession: Blowing Over?

2009-04-16T08:11:00.000-07:00

Recovery is in sight for the world economy

Many of us have undoubtedbly wondered over the past few months as to when the world economy will shift into a decided phase of recovery from the current doldrums it is steeped in. I've certainly believed at least since late December that recovery will not be long in coming, and may even come as early as July 2009. Perplexingly, this cheery outlook has been at odds with most Gurus of economics and business, who have prophesied start dates for a definitive recovery typically in 2010. See here for a partial list of such prognostications from Dr Ben Bernanke, Steve Ballmer, the G7 Finance Ministers and the IMF.

And why have I been so filled with hope and cheer? The same post above explains five reasons.

To Be Simple is To Be Sublime

2009-02-18T08:04:00.000-08:00

The move towards simplicity gathers momentum.

Harvard's Prof. Rosabeth Moss Kanter writes that the next big thing is simplicity itself. This view is absolutely spot-on - and right after my heart. I've long lamented the propensity of companies - particularly in the technology industry - to overengineer their products, and predicted that the tide will turn decisively toward simplicity. The trend towards simplicity has begun a while ago, and has been gathering momentum for some time now. Quite simply, that's the way to go.

A State of 'Perpetual' Disruption?

2009-02-13T23:02:00.000-08:00

We live in disruptive times.

John Hagel, John Seely Brown and Lang Davison have recently advanced an intriguing proposition: That, driven by constant changes in technology, regulation, globalization and so forth, the historical 'punctuated equilibrium' worldview is now just that - history. In other words, they aver, the world is entering a state of permanent disruption. If this is true, all of us - economists, business folks, and common folk - will have to reconcile to a new reality where events are continuously disruptive, and businesses and institutions are always in a state of flux.

As expected, the horse sense view on this 'Perpetual Disruption' suggestion would be that we should, at the very least, seek much stronger evidence before we admit such a possibility. See my full take on this new idea here.

What Goes Around Comes Around

2008-11-28T23:14:00.000-08:00

Outsourcing and the circle of life

The ongoing financial crisis, and the economic downturn it seems certain to engender, is likely to bring job loss in America to the fore. Among other things, the outcry against outsourcing appears certain to rise to a crescendo over the next few months. Now, here's a new take that should make this outcy less worrisome. This comes in the form of a book called The Venturesome Economy - How Innovation Sustains Prosperity in a More Connected World.

The book by Prof. Amar Bhide, the Lawrence D. Glaubinger Professor of Business at Columbia University, argues that technological innovation is a complex, multiplayer game in which America still leads the world by a long way. American scientific, technological and economic pre-eminence are thus not going away anytime soon. The book goes on to argue that "neo-protectionist" fears are unwarranted, and shows how they will probably undermine America's economic might in the long run.

For my full review of the book see here.

As I've written in the review, the book while making its excellent and comprehensive thesis, misses out my favorite argument for why America should not discourage outsourcing. A lot of the prosperity that 'leaks away' from developed economies via outsourcing comes right back in the form of demand for products and services. As an example, Indian IT outsourcing companies are perhaps the largest airline customers in the world, as tens of thousands of workers travel each year between India and the countries where clients are located. These airlines such as United and Lufthansa are mostly headquartered in developed countries. Similarly, the same India-based outsourcers lap up the laptops, PCs, servers and networking equipment made by Dell, Sun and Cisco. They are huge buyers of software produced by Microsoft, IBM, Oracle and SAP. These companies (and their employees) can safely be assumed to have an insatiable appetite for the latest cellular phones and so forth from the likes of Apple, Nokia and RIM. These companies also employ legions of workers at or close to client locations - workers who pay taxes and pump money into local economies. Many of these companies are listed on US and European stock exchanges, allowing people there to participate in their wealth creation. Thus, prosperity 'leaking' abroad contributes to prosperity in the developed economies - not in some nebulous, long-term sense but in a way that is direct and almost immediate.

Another piece of reassurance for those exercised over job losses in America thru outsourcing come from this Booz study released on Oct. 21, 2008, which found that the U.S. was the leading recipient of R&D investment from abroad. So, other nations are outsourcing large amounts of R&D to Americans!

Clear evidence that what goes round does come around.

A New World Financial Order

2008-11-04T07:57:00.000-08:00

What is the "right" level of financial regulation?

The intensity of financial regulation has been in decline since the Reagan-Thatcher 1970s era of the currency deregulation, oil shock. and stagflation. But now, with the financial crisis having unmasked the general dereliction of duties on the part of regulators everywhere, that intensity is set to go up again. How far should it go?

I am going to outline some principles that should help define the "right" level of regulation. These are based on our novel concept of the levee in business.

This blog entry is an opener (the actual principles will follow in Part 2 of that entry).

Containing the Contagion on Wall Street

2008-09-24T08:49:00.000-07:00

As risk comes home to roost, devastation results. But we should be careful not to go overboard.

Those of us who haven't been living under a rock know the cataclysmic upheavals that have been shaking the world of finance of late. With cautious optimism, I declare that I had written on this very blog back in March 2007 that there were good grounds for apprehension as to the robustness of the world's financial markets.

But now that the death-defying daredevilry has gone awry, and the high-flying financial whizzes are feeling rather low these days, what is the right way to look to the future of the world's financial markets? Everybody (and their uncle) has their opinion. Read mine here.

China's Great Leap Forward on the Internet

2008-07-26T00:23:00.000-07:00

The Web goes Chinese, Part 2

China has been building a formidable presence on the World Wide Web for some time now, in just about every sense of the word. Now, we may be witnessing a tipping point being crossed: the IHT reported yesterday that China has overtaken the US as the country with the largest number of internet users.

And 253 million users is no mean number - it's more than the population of all but a handful of countries.

Maybe it's time for us to start learning Chinese.

The Peripatetic Professional

2008-07-25T23:19:00.000-07:00

Our notion of the professional career is set to change.

The vast majority of today's organizations rely primarily on fulltime employees to get their work done. However, there is a small fraction of professionals who work for organizations, but not as fulltime employees: they take on an assignment with specified deliverables for a company, complete that assignment, and move on to the next, usually with a different company.

Although people who work like like this are hardly unknown, we don't even have a name for someone who works in this mode. The closest names are probably 'consultant', 'contractor', or 'temp', but each of these words has many meanings and none of them really captures the essence of this type of professional.

Only a tiny fraction of professionals in any field today work in this manner. But they're the vanguard of a new brand of professionals who will emerge over the next few years, and who will change our notion of the professional career forever.

Why will this change happen? I've outlined the reasons, and painted my vision of how the professional career of the future will look, in this column.

We've come a long way from the notion of cradle-to-grave employment. Now, get ready to live purely from one assignment to the other.

A Distinctive Trend in the World of Technology

2008-06-07T23:46:00.000-07:00

Technology products are (at last) becoming more natural and intuitive

"The price of reliability is the pursuit of utmost simplicity. It is a price which the very rich find hard to pay" -- C.A.R. Hoare*

Sure enough, simplicity is really difficult to achieve in building technology products. Yet, there is ample reason to believe that there's a big move towards simplicity in the technology world. So, writing on this blog in January 2007, I had labeled simplicity as the defining technology trend of 2007.

The thought recently crossed my mind that I should evaluate how correct (or wrong) this prediction was. Some research I've done over the past couple of weeks to investigate whether there indeed was a move towards simplicity during the past year appears here. It is plain that not only did simplicity emerge as a distinctive technology trend in the past year, but that trend continues well into 2008. In fact, I make bold to say that simplicity and ease of use are set to be dominant themes in the technology world for the next few years.

That perhaps sounds heartening to Bjarne Stroustrup, the legendary inventor of the C++ language, who is known to have said, "There's an old story about the person who wished his computer were as easy to use as his telephone. That wish has come true, since I no longer know how to use my telephone".

The march towards simplicity has gathered steam. We can look forward to a steady stream of tech products that Dr. Stroustrup will find easier to use. Not to mention you and me. And the millions of novice technology users that the rapidly flattening world brings in each year.

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* in "The Emperor's Old Clothes", Turing Award lecture (1980).

Twitter: Strictly for the Twits?

2008-05-30T23:19:00.000-07:00

Twitter is being hailed as a revolutionary social networking technology. Can these claims hold hold water?

Twitter is yet another of the social networking techologies that seem to be proliferating with alarming regularity these days. For the incognoscenti, Twitter is essentially a technology that allows multicasting of SMS (Short Messaging Service) messages, i.e., sending SMSs to groups of people.

One can be forgiven if their first impression when told about this technology is one of complete inanity (as indeed, mine was !).

However, the technology does seem to have assembled a fairly formidable phalanx of support. Business Week seems to think it matters . It has been subjected to some fairly elaborate analysis. And (with some hyperbole), it has been hailed as the most important development on the web in 2008 .

The horse sense view would be that while the technology has been put to some serious uses, it still has a long way to go to prove its credentials as anything much more than a mechanism that supports leisure and keeping up with gossip. And oh, such a development is quite consistent with the need of a telecommunications industry that faces maturity, and is in search of new avenues for gleaning revenues.

And so, the impression of inanity appears set to persist for some time to come.

A Recce on the Recession

2008-05-26T06:31:00.001-07:00

Have fears of recession receded?

The past few months have seen great disquiet being expressed on just about every aspect of the economy. Pundits have averred that the US - and hence the world - economy is teetering on the brink of a recession. Learned observers have even prophesied the worst economic recession in many decades.

However, I have been getting a sneaking suspicion in the last couple of weeks that talk of recession has been flagging. To check whether this feeling is true, I decided to do some reconnaissance.

The New York Times opines today that "the most dire recession fears have started to abate". CNBC says that indicators show a weak economy, but no recession. Forbes assures us there is technically no recession so far (we would have felt more reassured if that article's title was not qualifed by the word 'technically' !). The White House, of course, continues to insist there is no recession*.

Google Trends shows searches for the word 'recession' peaking in late January 2008 and falling off since, with a decided downtrend since early April 2008. (Interestingly, the word 'subprime' too shows a declining trend since early April 2008).

So, have recession fears truly receded? It does appear so - but not so fast. The hallowed Wall Street Journal says there is likely to be a 'sort of' recession, but that the economy is going to hang in there, if barely. Warrent Buffet goes much further, saying the US economy is already in recession!

And then there are those who, somewhat stoically, say it doesn't really matter - that economic growth in most major world economies has slowed down so much that the person on the street is feeling the bite. And as long as that's true, the technicalities don't matter a great deal.

The horse sense view tends to agree.
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* but then, they also say there never was one, and never will be!

Every Customer, a King...

2008-03-07T00:40:00.000-08:00

Verily. But what of the Innovator's Dilemma?

It has widely come to be accepted that the 'closed', go-it-alone approach to innovation is no longer as potent as it used to be. The best way to unleash innovation is to unplug it, by dissolving conventional boundaries.

In particular, unplugged approaches that emphasize blurring barriers with customers, such as Co-creation and User-centric innovation, hold that innovating in close interaction with customers results in enhanced value for all participants.

At a cursory look, there appears to be something of a contradiction between the above and what Professor Clayton Christensen, arguably one of the greatest living thinkers on innovation, says. In his seminal 1997 book, The Innovator's Dilemma, Christensen has shown that leading companies routinely pass up the opportunity to bring radical, disruptive innovations to market, as these innovations often don't appeal to their current customers. At the time such disruptive products are introduced, their appeal is usually confined to downmarket customers - those whose needs, and pocket books, are too humble to merit the attentions of mighty corporations.

Analyzing the behavior of a phalanx of great companies including Xerox, Digital and Western Union when confronted by radical innovations, Christensen writes,

"Precisely because these firms listened to their customers, .. they lost their positions of leadership."
(The Innovator's Dilemma, Introduction, p. xv) * .

Digital Equipment Corporation (DEC), for example, strode the minicomputer industry like a colossus, but faltered when faced with the opportunity to make Personal Computers(PCs), which were a disruptive technology at the time. The reason was that the large corporations that DEC served had little use for the puny PC. Xerox was a behemoth in the market for large, sophisticated photocopiers, but failed to see the market for small tabletop copiers. Again the pattern was the same - tabletop copiers were not a product that held appeal for the enterprise market that Xerox had striven all its life to serve.

Indeed, recent Harvard Business School research findings say (with a bit of hyperbole, perhaps!) , "companies that do radical innovation do not listen to users" !

A Co-creator's Dilemma?

So, are we to conclude that truly disruptive innovations must be conceived and developed safely out of sight, where customers cannot see them? That co-creating with customers and users confines companies to improvements that are merely incremental, and keeps them from making innovations that are path-breaking, radical or disruptive?

In other words, is there a Co-creator's Dilemma which goes, "To create successful new products, you must get close to customers. However, if the product is truly path-breaking or disruptive, getting too close to customers may be a sure-fire way of overlooking the market for the product." ?

To find an answer, let's look at two of Christensen's prescriptions for how established companies should respond when presented with an opportunity to bring a disruptive innovation to market:

1. If the disruptive innovation is not going to be attractive to large customers, don't ditch the innovation. Instead, place the responsibility for its development with an entity whose customers will want to use it - a spinoff division, whose customers will (at least initially) be precisely those downmarket customers.

Of course, this essentially amounts to developing the product "safely out of sight" of some customers - those large customers who would not find the new product attractive.

2. Don't listen passively to customers, engage them in a process of mutual discovery. Recounting the example of how, in the 1960s, Honda discovered the market for smaller, off-the-road motorcycles in North America, Christensen says,

"Such discoveries often come from watching how people use products, not by listening to what they say" (p. 182)

Further, he says,

"neither manufacturers nor customers know how or why (new or disruptive) products will be used, and hence do not know what specific features of the product will or will not ultimately be valued. Building such markets entails a process of mutual discovery by customers and manufacturers" (p. 150/151)

So as long as the above two prescriptions are kept in mind, the Co-creator's Dilemma should be no hindrance for creating innovative products, whether incremental or radically disruptive !

Thus, the Co-Creator's Dilemma stands substantially diminished. However, while it has been shown to be not as intimidating or forbidding as it first appeared, it has perhaps not been entirely vanquished. But more about that later.

And so, in the annals of innovation, the customer (at least for the time being) firmly remains King. _________________________________________________________________________________________________________ * All page numbers refer to the paperback edition published by Harper Business Essentials, New York, 2003.

Discovering New, Untapped Markets

2008-02-21T01:55:00.000-08:00

What's common between Southwest Airlines, McDonalds and SUVs?!

The promise of new, untapped markets is something of a holy grail for every business. It conjures up dramatic growth opportunities from creating products that serve unfulfilled needs of existing customers, or attract new customers.

As will be their wont (!), management thinkers have devoted enormous energies toward creating frameworks and approaches that help practitioners innovate in opening up such untapped markets.

One leading body of management thought that has emerged in recent years, that aims to help companies fan out into hitherto undiscovered markets is Blue Ocean Strategy. Created by the famed duo of W. Chan Kim and Renee Mauborgne of INSEAD, France, this is a set of frameworks and techniques for opening up such new markets.

The horse sense view on this topic, however, is that it should be possible to keenly observe some innovative new products, and discern a few simple themes that led to the discovery of the previously untapped markets that those products were introduced to serve.

Such a 'simple theme that leads to the discovery of a previously untapped market' must, in my view, meet at least the following criteria:

- it should be shown to have led to truly successful products
- it should preferably have been used by innovating companies spanning a variety of industries, and
- it should be simple to for a innovation-hopeful company to implement.

One such theme that I have discerned, by observing a few innovative products that have emerged in various industries over the past several years, is what may be called innovating in the interstices. Simply put, it means that you target the interstices between existing, adjacent markets.

Hyatt was using similar thinking when it launched it's Hyatt Place brand of hotels in 2006, to blur the distinction between business and leisure hotels. The Premium Economy class of travel offered by many airlines, designed to cater to passengers whose preference (and affordability) lies in between regular economy and business class is another example.

And as I show in my post on the Infosys blog, such an approach has been used with great success by Southwest Airlines, McDonald's, the Indian auto major Tata Group, and other innovators.

And so, one may not need to look into the wild blue yonder for those blue oceans - they may be much closer, in the white spaces between familiar, adjacent markets!

Unleashing Innovation, the Unplugged Way

2008-02-08T03:05:00.000-08:00

In the lexicon of modern-day business, innovation and isolation are firm opposites

A strong lesson that efforts at innovation have taught in recent years is, don't go it alone. In fact, innovation is best done by opening out, inviting fresh perspectives, admitting new participants, and allowing new combinations.

Most of the major new approaches to innovation that have emerged over the past few years - Open Innovation, "Crowdsourcing", Co-creation, User-centric Innovation - embody this more-the-merrier feature. The development of the fabled iPod, Proctor and Gamble's Connect-and-Develop initiative, IBM' s innovation ecosystem and Intel's lablets and corporate venturing approach, Innocentive, the Collaborative drug discovery project , IDEO's design philosophy, IKEA's fabulously successful approach to furniture design, the creation of the Linux operating system, all exemplify one or other of the above approaches in action.

Because these approaches to innovation - Open Innovation, "Crowdsourcing", Co-creation, User-centric Innovation - have a similar principle underlying them, I thought it's a good idea to collect them under one umbrella term - Unplugged Innovation. To better understand why such a new term is needed, and how companies can thrive in this brave new world of unplugged innovation, see my post on the Infosys blog.

This unplugged approach is one central theme that has emerged in innovation over the past few years. There are two more such themes, which I will elaborate on over the next few weeks on that blog.

And so, the lone innovator is firmly a thing of the past. If you want to unleash innovation, unplug it!

Extreme Open Innovation

2007-12-21T02:59:00.000-08:00

The open approach to drug discovery gets a healthy fillip. Big pharma should pay attention.

Humankind's continued well-being depends strongly on creating new life-saving drugs. However, the ability of the big pharma companies to innovate new drugs has been showing signs of waning, resulting in drug pipelines that are not exactly brimming.

'Open' Research & Development for discovering new drugs has been mooted for some time as a cure for ailing drug pipelines. One promising instance of such open-source drug discovery is the Collaborative Drug Discovery project backed by, among others, eBay founder Pierre Omidyar's Omidyar Network.

Now comes an initiative that has the potential to take the open drug discovery phenomenon to an altogether new level. The Council for Scientific and Industrial Research (CSIR), the apex research body of the Indian government, is planning to harness the brains of drug researchers across the world in solving drug development problems. Problems identified by CSIR will be made publicly available on a website, and any researcher will be able to suggest solutions and receive cash awards.

This initiative is novel, if not necessarily in concept, in sheer scale. This is the first time an open drug discovery initiative is receiving the backing of a government, and the incentives involved can be expected to be suitably large. It is also likely to have the clout that goes with government backing. It carries with it the promise of access to gigantic emerging markets. It is audacious, having the potential to fundamentally alter the way the multi-billion dollar pharma industry looks at innovation.

In short, it's open innovation on a massive scale. That's why, at some risk of sounding hyperbolic, I am terming this initiative as Extreme Open Innovation.

While the initiative is highly promising, and it is heartening to see such a step being taken by a government, it is too early to think of this approach as a panacea for all the ills of new drug discovery. Any new drug designs resulting from this program will be in the public domain, with scant protection for the creator. This runs counter to a basic precept on which much drug research has been based: the exclusive ability to monetize a new drug. For this reason, big pharma can be expected to, at least initially, ignore the initiative.

A lot will depend on how much backing the Indian government provides, in terms of financial investment and program management, and in terms of using its persuasive skills to convince big pharma to participate.

There are risks associated with the success of such an initiative too. Big pharma may be unable to compete in pricing with a drug discovered thru the open route. Thus, it is possible that the moment a disease is listed on the open drug discovery database, big pharma will abandon work on finding cures for that disease.

Open Innovation in Action
The generic principle on which such open drug discovery is based is that of the 'Open innovation' approach or its close cousin, crowdsourcing . Open innovation has in general come to be accepted widely, with Innocentive and Proctor and Gamble's Connect and Develop approach being two of the best known initiatives.

And the open approach to innovation clearly appears to have gained traction at the cost of internal R&D. The Economist, quoting IBM's "Global CEO study 2006", says that internal R&D was reported as a significant source of innovative ideas by less than 20% of companies. It ranked a low eighth in the list of major sources of innovative ideas, and only above academia, which brought up the rear.

If the CSIR's Open drug discovery initiative succeeds, it can greatly reduce the costs of new drug development*. It will also provide a stellar example of how the internet and social computing technologies can help innovation thrive, by removing barriers to knowledge flow. It can thus represent a major leap forward for open innovation, and for improving the human condition.

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* Many observers believe that big pharma's cost of drug development is too high because of inefficiencies, and because some companies may exaggerate drug development costs in order to price drugs higher. If this is true, then the lack of transparency in drug R&D costs may be a good example of a levee in business that big pharma is sheltering behind - a levee which open drug discovery may be capable of shattering.

A Somewhat Surprising Price Rise

2007-12-13T00:40:00.000-08:00

The road to alternative energy hits an unexpected bump

China's inflation has rocketed to a 11-year high, primarily on the back of rising food prices, which have risen a whopping 18.2% over the year. Britain is seeing the highest gain in food prices since 1993 . And in the US, according to Labor Department statistics, food costs are on track for an annual gain of 7.5%, the biggest since 1980.

The Economist attributes two reasons for the unexpected rise in the price of food - rising incomes in the world's developing countries, and subsidies on ethanol fuels. The first - rising incomes in the developing world - contributes to food price rise in two ways. The obvious way is that, as more people come out of poverty, they increase the amount of food they eat, thus raising demand for food in general. Somewhat less obviously, people also shift to a diet with more meat content, which multiplies the demand for foodgrain (it takes several calories of grain to make one calorie of meat).

Thus, while the first reason for this "agflation" is simply the result of a lifestyle choice being exercised by millions of people, the second reason stems from a policy choice by the US government - to subsidize ethanol-based fuels. This is causing causing US farmers to divert more farmland to growing the corn that goes into making ethanol, thus reducing the land under cultivation for foodgrain. The natural effect of this is to raise foodgrain prices. It is thus being argued that such subsidies effectively translate into a tax on the poor.

Of course, not everybody is buying the ethanol-subsidy-as-a-culprit theory. A recent study based on 20 years of price data shows that corn prices have minimal impact on the U.S. Consumer Price Index for food.

Overall, it is fairly clear that a strong link has emerged between cereal and energy prices - both because transporting cereals takes energy, and because rising energy prices mean more land being diverted to growing grain for ethanol production, thus reducing the land under foodgrain cultivation.

All this goes to show that the effort to move away from conventional fossil fuels and toward alternative energy sources is more complex than it appears. All the more support for our approach toward foreseeing the potential of an emerging technology (by our definition, an alternative energy source counts as an emerging technology), which takes a wide variety of factors into consideration.

The Levee in Business: What do Expedia, Wikipedia, Skype and Wal-Mart know that you don't?

2007-10-22T05:33:00.000-07:00

A novel concept that has ramifications for strengthening a business model, as well as for innovating new business models

Digital Equipment Corporation (DEC) was a hallowed name in the technology industry during the 1960s and ’70s. However, faced with open technologies from IBM, Microsoft, DEC went into a decline from which it never recovered.

In the mid-1990s, Dell Computer introduced its direct sales, build-to-order model for selling PCs, bypassing resellers, retailers, and other industry intermediaries with resounding success. Within a few years, Dell grew into a mighty, multibillion dollar company.

Can you tell what's the common phenomenon underlying these two apparently diverse sequences of events? It is the levee in business - the abstract and often subtle “wall” that inhibits the free play of market forces, and holds environmental pressures from being transmitted to a business.

As the two examples hint, the levee in business is two-sided. Left unattended, the levee can be a disruptor to business performance. However there’s another, more exciting, reason to learn
about levees: used creatively, the levee can also serve as a basis for innovation. We’ve found that significant business-model innovation is often driven by would-be marketplace entrants or
audacious challengers breaking down the levees shielding entrenched players.

Although the levee in business is a new abstraction being defined by us, it is clear that Expedia, Travelocity, Wikipedia, Skype, Zopa, Wal-Mart and Dell are just a few of the companies that have innovated by using the principles underlying this concept. For details, read our article in Business Strategy Review (needs subscription*), or in Consulting magazine.

Levees of the nature we describe currently receive very little focus in organizational discourse. That needs to change.
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* Or drop me a line and I will check if it is feasible to get you access to this article.

The Technology Foresight Deficit, Revisited

2007-09-12T00:47:00.000-07:00

The importance of collaboration, and towards a more energetic future

As I've written earlier, I have been working on understanding the factors that drive the emergence of emerging technologies, and trying to create a methodology for gauging the potential of an emerging technology. Such a methodology should go a long way towards conquering humankind's technology foresight deficit.

One insight we have recently got* indicates the importance of collaboration in bringing new technologies to market. Most modern technologies are far too complex to be brought to a stage where they are ready for business use entirely on the strength of one company, however formidable that company's innovative prowess may be. It is when the innovating company collaborates judiciously with other companies that an emerging technology has the greatest chance of seeing the light of day**. Such collaboration may be "horizontal" (between players in the same segment of the industry value chain), or "vertical"(between players in different segments of the value chain). Most standards, such as 3G for mobile telecommunications or XBRL***, represent what I call horizontal collaboration. Organizations often exist to facilitate such collaboration - the World Wide Web consortium (W3C), or the Object Management Group (OMG) are examples. Equally important, although less structured and typically more difficult to achieve, is vertical collaboration. Companies that master both forms of collaboration will be the most successful innovators in the coming years.

Technology's Future in Energy, and Vice-versa

The very essence of technology is that it usually enables humans to achieve a task with less energy. But every technology of any note also consumes energy. And since having technology at hand also means that people will undertake lots more tasks than they otherwise would have, the net effect of using technology is an overall increase in the use of energy. This is also borne out by the monotonic increase in humankind's use of energy over the millenia, which has coincided with the increasing use of technology.

Ensuring sufficient generation of energy for the world while reducing dependence on fossil fuels is thus high on the agenda. Studying a plethora of non-conventional energy sources - solar, wind, geothermal, wave and tidal, our assessment**** showed that the future of solar energy is perhaps brightest, while wind energy is sailing along smoothly. Perhaps what's most heartening is that the combined prospects for the various non-conventional sources add up to a very healthy figure. And, at a time when the prospects for conventional energy sources over the next few decades appear somewhat cloudy, that finding augurs well for the future of technology, energy and society.
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* This insight was largely a consequence of work done by Chantrelle Nielsen, MBA candidate at MIT Sloan School who interned with me as part of our InStep program.

** These findings are consistent with Henry Chesbrough's widely accepted "Open Innovation" paradigm, which holds that companies increasingly need to look outside their own walls for both ideas to seed innovation, as well as routes to bring that innovation to market.

*** eXtensible Business Reporting Language, a XML standard for the electronic communication of business and financial data.

**** This work was done with intern Andres Pacheco, who is working towards his BS at Swarthmore College.

iPhone, Therefore i Am (...i Think!)

2007-09-08T00:53:00.000-07:00

In which we ponder what appears to be an existential dilemma thrown up by Apple's baffling moves...

There can scarcely be any doubt that Apple's iPhone is among the most celebrated technology products in history. This admittedly ingenious little device can lay claim to several superlatives - coolest (great interface), most keenly awaited(announcing it 6 months ahead was a brilliant ploy), most innovatively marketed (they leveraged technology to the fullest, and let the media and the user community do most of the marketing - viral marketing at its best).

And sure enough, its post launch sales appeared healthy. Which is why Apple's latest move to cut the iPhone's price by a whopping $200 are puzzling at best. Equally baffling is the withdrawal of the lower priced 4GB phone from the market.

Although the price cut has been partially rolled back, and Steve Jobs has apologized to miffed iPhone owners, I must say that I find these moves utterly confounding. As a general rule, it is bad strategy to cut the price of any product, for several reasons: A price cut may be interpreted as signaling financial distress or desperation on the manufacturer's part. It can lay a manufacturer open to accusations of opportunism. It can arouse suspicions that the manufacturer's own faith in the product has been undermined, perhaps due to defects that have been discovered. It may cause unease among buyers, due to a feeling that the manufacturer knows something about impending market or regulatory moves that may undermine sales of the product. Or it may signal an overly aggressive posture to competitors, provoking a possible price war. This is not to say that a company can never cut the price of its products, but that such a cut should be effected only after really, really deep thought.

But the most important reason not to reduce prices is that customers who have already bought the product are likely to feel cheated. And it is poor strategy indeed to give an impression of betraying your customers' trust, however tenuous or unfounded that impression may be.

So what has prompted this apparently confused move from a company otherwise known for its razor-sharp strategy and very keen sense of what its customers want?

Jobs' explanation that this is how technology markets work is not entirely convincing. Even in the high-tech space, manufacturers do not cut prices of a product while it is still top-of-the-line - if they must, they wait at least until after it has been superseded by a more advanced product. And when that product has been in the market scarcely for 3 months, having prospective customers wait for a heavily hyped six months, a price cut looks even sillier.

The widely pilloried move, followed by the partial rollback and apology clearly show that the company has faltered. Of course, the apology does show that Apple's heart is in the right place, but then it is a half-hearted apology at best, tempered with admonitons that this is a risk that customers must expect when they buy technology products. Can it be that the company has lost its fabled touch? Is the appearance of an existential waffle a la Descartes justified, or is that reading too much into it? We can expect lots of analysis, both scholarly and otherwise, that tries to get at the bottom of the move.

For the moment, the horse sense view would appear to be that iPhone sales momentum is slowing as the initial hype and heady expectations ebb. And Apple is worried the iPhone will be a forgotten product by the time the all-important holiday season rolls around. And therein lies one lesson that we can most certainly take away from this development - that in the technology world, hype dies early, and yesterday's star quickly becomes today's also-ran. As the legendary Intel pioneer Andrew Grove said, it's a good idea to be paranoid.

An OPEC Less Opaque

2007-08-30T22:44:00.000-07:00

Do oil prices always have to be a matter of surprise?

The price of oil has always been a subject of great debate, analysis, and not least, fascination. And not surprisingly so, given the importance of that simple little number to the world economy. However, oil prices seem to have a remarkable propensity to confound the bravest of predictions. Real oil Prices began an upturn in late 2002, and trebled by mid-2005*, leading to predictions of $100 oil over the next few years. While the nightmare $100-a-barrel predictions have not materialized - and don't appear very likely to do so anytime soon** - the fact remains that a price rise that appeared to be a temporary spike does seem to have led to a more or less permanent plateau.

What's more, as the US DoE's graph shows, the behavior of oil prices over the past 30-some years can hardly be described as monotonic. And each time it lurched up or down, it is not difficult to imagine the wide-ranging impact on the fortunes of nations, governments, industries and individuals.

The benefits of steady oil are thus not far to seek. But can the price of oil be steadied, or at least made to move in more predictable ways over the short- as well as long-term?

Clearly, this is an immensely difficult question to answer. Many factors are at work. The prices of even the staidest of commodities are volatile at the best of times. And oil can hardly be described as a staid commodity. It's price is affected by a heady mix of geopolitical considerations, speculation, regulatory moves, and so forth. Also, as the DoE graph shows, the price trajectory has been punctuated by various events which caused the price to react sharply, most of which were quite unpredictable at the time. And against this backdrop of formidable factors, it appears there isn't really much any single entity, such as one government or one institution, can do to steady the price.

More transparency
But make no mistake- there is an awful lot that one particular organization can do - if it has the will. This organization is, not surprisingly, the Organization of Petroleum Exporting Countries (OPEC). Headquartered in a deceptively unassuming building in central Vienna, OPEC still wields enormous clout in deciding the world's energy future. Of course, it's record of influencing the oil price since the oil price shock has been somewhat less than stellar, particularly after Saudi Arabia abandoned the swing producer role in 1986.

The world oil industry is beset by lack of good data (and probably some obfuscation) on production figures - actual output as well as capacity. Similarly, there is rarely much clarity on oil reserves. OPEC can make a big difference by evolving better mechanisms to govern output and reporting.

This sentiment is not exactly new - a US Joint Economic Committee press release dated 2005 says, "Much more transparency in OPEC oil production is needed, as noted by the International Energy Agency and others".

Price gyrations are clearly not good for anybody. And OPEC suffers almost as much from high prices as consumers do. High prices can severely crimp demand, particularly if measures such as gasoline taxes imposed to control the environmental impact of oil use gain wide traction. Consistently high prices can also encourage research into technologies to produce alternative energy*** (although these are not without concerns of their own.). And so OPEC will do itself a favor by becoming more transparent. And it will greatly help the world economy avoid getting onto a slippery slope.

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* the US Dept. of Energy has a nice graph that traces the prices of oil (nominal as well as real) over the period 1970-2006.

** interestingly, $100 oil predictions are still going strong.

*** More on alternative energy technologies in my next post, where I'll also be talking about how we applied our methodology for foreseeing emerging technologies to the problem of guaging the potential of technologies that produce energy from solar, wind and other sources.

What REALLY Works..umm..well, sort of..!

2007-08-25T00:37:00.000-07:00

Is there a secret sauce for corporate success?

The Halo Effect is a cognitive bias whereby the perception of a particular trait (for example, of an individual) is influenced by a general impression (of that individual). This effect was first postulated by Edward L. Thorndike, an American psychologist who conducted research into how World War I soldiers were appraised by their superiors. He found high cross-correlation between all positive and all negative traits - in plainspeak, that means that soldiers who were found to be good on one or two traits were rated as good on all other traits as well, while those who were seen to be bad on one or two traits were rated poorly on all other traits as well.

Lest we think that this is an affliction confined to senior World War I army officers, it isn't. Pretty much all human beings suffer from this bias - apparently it is a mechanism used by the human brain to manage the complexity of the world. This, for example, is why celebrity endorsement of products works, even when it is fairly apparent that the celebrity has no credentials - or credibility - to endorse those products.

Most of us also seem to intuitively realize the existence of this effect - for example, this is why people go to extraordinary lengths to put on their best behavior in the presence of somebody in authority.

Now, a book called The Halo Effect ... and the Eight Other Business Delusions that Deceive Managers, published in February 2007 by Free Press, sets out show how this effect may color our perceptions of company performance. At first glance, this is the book the business world was waiting for, and didn't know it. It's a good, down-to-earth look at the various studies, scholarly and otherwise, that have claimed over the years to uncover the secret sauce that drives great companies. This is a book full of solid horse sense - the most refreshing book in years in a genre notorious for pompous claims and buzzphrases.

It dedicates itself to debunking simplistic "theories" that purport to answer the core question of what really determines corporate performance. The core argument of the Halo Effect is that when a company performs well, we shower glowing ratings on every one of it's management traits such as leadership, culture, strategy, execution, et al. When the company performs poorly, we promptly buckle over to the other extreme, demonizing the very same leadership, culture, etc.*!

Along the way, the book unveils eight other "delusions" that frequently afflict attempts to answer this question. In buttressing its arguments, the book quotes from authorities as varied as George Bernard Shaw and the legendary Nobel Laureate Richard Feynman.

The book comes with cast-iron credentials - the author is Prof. Phil Rozenzweig, who is a PhD from the Wharton School at the University of Pennsylvania, and has taught at Harvard Business School and IMD, Switzerland. His candor is incredibly refreshing, and the fact that most of the authorities on this subject that he takes on are people of his "own" - business school professors - shows admirable boldness.

The other delusions include the old statistician's chestnut - mistaking correlation for causality. Another one relates to the quest for single, over-arching explanations for good performance where in reality there may be multiple factors at work. Yet another delusion deals with the fact that company performance is often seen in absolute terms (reduction of inventory costs, for example) while it should really be seen in relative terms (for example, market share, or change in inventory costs relative to those of the competition).

I thought one delusion, the 'delusion of rigorous research' is rather inaptly named. It holds that it doesn't matter how rigorous our research methodology is if it uses data that isn't of good quality. True enough, but this delusion would probablybe better named so as to direct the focus on the poor data quality.

Personally, perhaps the best takeaway from this book was the exhortation that one should not select a sample for study based on the dependent variable - for example, if you want to study if a new technque for teaching mathematics to children works, you should study how kids who were taught using that technique fared, but you should also look at children who weren't taught that technique! **

One criticism that may be leveled at the book is that it is sometimes too quick to assume that the data used by various studies were "contaminated" by halos; it seems to me that this is too facile, and perhaps unfair, a conclusion. We should probably credit the authors of those studies, the references they consulted, and the subjects they interviewed with a greater degree of discretion and diligence than that. Another thing I found myself wishing the author would refrain from is the extent to which he bases evidence for the delusions on news reports in the business press, such as BusinessWeek, Fortune and The Wall Street Journal. These are written by reporters under stifling deadlines, often under pressure to sensationalize the mundane - a fact that does not escape most discerning readers. There can be a smattering of these, but the author would probably have done better to focus his considerable energies on well-funded studies done over a long period of time, with purport of scholarly rigor, and papers and books*** based on such studies. The readers of such reports, papers and books are typically asked to suspend common sense and prior experience, and submit to scholarly authority derived from apparent academic rigor, and it is these for which the greatest disapprobation should be reserved.

So, what does work, according to the author? Well, he concludes, somewhat disappointingly, that it's the right strategic choice, and good execution!

But this is not to take away from the otherwise excellent content of the book. It's job is not to give us formulas. It's purport is to caution us that business performance is far more complex, and far less amenable to simplistic analysis than we tend to think, and it achieves that goal with admirable panache!
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* I have referred to this "binary" thinking as the Extreme Tendency elsewhere, albeit in a somewhat different context - that of foreseeing the prospects of emerging technologies!

** Later in the book Rozenzweig shows that even observing this precept doesn't help much in uncovering what drives corporate success, but it's a very important principle to keep in mind nonetheless.

*** That, without openly claiming anything of the kind, actually intend to expand the fame of their authors as management Gurus, not to say anything of their pockets!

In Search of Senselessness

2007-08-19T00:33:00.000-07:00

Internet search disputes are beginning to veer toward the outlandish

Advertising has always brought out the most competitive side of companies. Which is understandable, given the huge stakes involved. Advertising is a key mechanism for creating and monetizing consumer mindshare, and is thus bound to be an arena where companies fight tooth-and-nail. Sportspersons and organizers of major sports events, for example, have long had to contend with sponsor companies attempting to bar rival companies' advertising, on grounds of conflict of interest.

In internet advertising too, such conflicts have sprung up from time to time. Now, Google is being sued because searches on its engine using keywords that are trademarked return results that are sponsored by the trademark-holders' rivals. Specifically, American Airlines claims that a search such as one using the keyword 'Aadvantage', a word trademarked by it, returns rival airlines' website links under sponsored results, thus allowing those rivals to get a "free ride on American Airlines" (not sure if the pun is intended or not).

American Airlines is a mighty company and is probably better off focusing its considerable energies on higher payoff areas. One hopes wiser counsel will prevail at that admirable company. But it'll be interesting to see how Google can / will respond.

So, what recourse does Google have? It can

- refuse to allow searches using keywords that are trademarked by a company. Clearly not advisable as many users do want to search by such keywords.

- 'sanitize' search results to ensure that the results (sponsored or otherwise) being thrown up do not belong to rival companies. This has a number of operational difficulties - for example, a search string may have several keywords, only one of which is trademarked. In such a case, it leaves the searcher poorer, as s/he is deprived of results that they may really be looking for.

- do as above, but only for sponsored results. This still has problems - for example, it may open Google to accusations of discriminating against those rival companies.

As for Google, it innovates constantly on various aspects of its advertising initiatives. But developments such as these are indicator of how complex something as relatively straightfoward as serving up internet ads can be.

Welcome Rumblings in the World Economy

2007-08-18T00:01:00.000-07:00

Home loan lending excesses of the past are coming home to roost, but there may be a heartening side to these rumblings.

The past few weeks have seen major tremors reverberating through world financial markets. The Dow Jones Industrial Average fell precipitously on July 26th , and again on on August 14th. It continued to fall for the next two days. Merril Lynch said Countrywide Financial, the largest US mortgage lender, could go bankrupt. Hedge funds operated by Bear Stearns were said to be teetering dangerously. BNP Paribas caused a flutter by announcing that it was halting redemptions from 3 securities funds, effectively freezing a total of $2.2 Billion in assets.

All these developments were traceable to the subprime home lending excesses that have been happening for years. The US Federal Reserve, which had maintained that the subprime issue did not need its intervention, cut its discount rate on August 17th, signalling that it was worried and willing to act to contain the damage.

Why are these admittedly bleak developments welcome?
As I wrote here in March, risk is being underpriced in the world economy. These developments may be an indicator of that situation beginning to get corrected. Hank Paulson called the July 26th fall of global markets a "repricing of risk"*. Lenders all over the world are waking up to the fact that there have been excesses in lending, particularly on the home loan front, and these excesses need to be corrected.

Another reason for "cheer" is that the extent of these rumblings are showing just how far-flung the effects of the subprime excesses had spread. Few expected that the first bank to go under would be a German bank (IKB Deutsche Industriebank), and a French bank (BNP Paribas) would be among the first to press the panic button by freezing its funds. This global spread of risk was suspected, but now there is data to confirm it, and that can only be good - at least it will encourage more diligence and discipline in financial matters.

A third reason why these events may be positive is that they may indicate that the subprime excesses have happened worldwide, and are not just a US phenomenon, they are apparently thought to be.

Large risks remain - the subprime mortgage mess in the US is still far from over, the fragility of the Chinese financial system is a cause for concern, and much of the mechanics of the world economy remain poorly understood. So, a widespread appreciation of the extent and magnitude of risk in the world economy can scarcely be anything but welcome.

All this also goes to show that nasty surprises are not always a bad thing. As long as the rumblings are just the sound of risk being more realistically assessed, we should be happy to hear them. They're just the sound of a soft landing.

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* he also said subprime was nothing to worry about, a statement which was belied on August 17th when the Fed cut its discount rate.

On the notion of 'Agile Capability'

2007-07-06T02:21:00.000-07:00

In which we ponder the question, "What makes an individual (or an organization) agile?"

Today’s business environment is characterized by a rapidly changing technology landscape, rising customer expectations, and accelerating competition. Thus, agility, which can be described as the ability to respond quickly and effectively to environmental change, is a critical imperative for organizations today.

So far, so good. But do we really know what being agile means in practice? What qualities constitute agility?* Most practicing managers, if asked to enumerate these qualities, would be able to list a few intellectual and mental faculties such as receptiveness to change, and the ability to learn continuously. But this is at best a partial list.

One key to answering this vexing question (what qualities constitute agility?) is to realize that while agility certainly is a function of mindset, it is also a function of many attributes that have little to do with mindset. To get an idea of what these other attributes may be, let us posit a first-cut, working definition of what we might call 'agile capability':

'Agile capability' is the ability of an individual (or organization) that allows that individual (or organization) to transition into, and become adept in, a new discipline.

Let us pause for a minute to consider the implications of this definition. Does being 'agile' mean that we expect a person adept in the discipline of software engineering to become a great bridge-builder? Instead, agility here would probably mean an ability to continue to be an excellent software engineer even as new technology platforms, development methodologies and tools come into vogue. Thus, agility is not an ability to transition effortlessly across massively diverse, utterly unrelated disciplines**. In other words, the notions of agility and agile capability have meaning only when delimited by the context of a specific discipline, or perhaps a few closely related disciplines.

We can thus update our definition as follows:

'Agile capability' is the ability of an individual (or organization) that allows that individual (or organization) to deliver continued high performance in their chosen discipline in the face of change, or to transition into a related discipline.

This of course means that the notion of agility is inextricable from the specific, pertinent discipline; it is unrealistic, perhaps even utopian, to define a generic concept of agility that encompasses the ability to transition effortlessly across disparate disciplines.

The capability to be agile must thus be defined in terms of a bundle of competencies, some relating to subject knowledge of the relevant discipline, some to the skills required to excel at tasks demanded by the discipline, and others to mindset.

We have embarked on the task of deconstructing the capability to be agile into its constituent qualities. The result is an Agile Capability 'Stack' that represents the various competencies that collectively make up the capability to be agile. The results are being published in a forthcoming issue of OD (Organization Development) Journal. If you are interested in learning more, send me a mail and I will send you a reprint of the article when it appears (expected in late July).

The ingredients that go to make up 'agile capability' have long been known to great companies that have thrived in the face of business and technological change. Think Intel transitioning from a RAM maker to a world-leading maker of microprocssors. Or Canon transitioning into digital photography as conventional photography has faded away. Or IBM retooling itself to emerge a formidable competitor in Information Technology services. However, collecting these ingredients under the ambit of one concept, concretizing that concept, and according it the status of an explicit capability - 'agile capability' - will enable agility to be consciously recognized and cultivated.

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* it is worth noting that the term 'agile' is used in the general sense of being adaptive to change, and is not to be confused with the connotation common in the software world, where 'agile' often refers to a class of lightweight software development methodologies that emphasise speed, rapid development and so forth.

** Such an ability, perhaps, would not be agility but alchemy!

Sizing up Innovation

2007-06-20T04:04:00.000-07:00

Towards an "Innovation Scorecard"

Innovation has emerged as a vital ingredient for building prosperous businesses, generating greater societal wealth, raising individual well-being, and improving the human condition. One illustration of just how important innovation has become is that the US government (the Dept. of Commerce, to be exact) is now trying to put in place a framework to measure innovation at the firm-level, as well as the economy-level. The endeavor, christened "Measuring Innovation in the 21st Century", is led by a committee that the US commerce secretary has set up. This committee has also invited public comments on how innovation can be measured.

I have given my comments, in essence opining that given the complexity and multi-faceted nature of innovation, it is unrealistic to expect that innovation can be reduced to one single measure. Instead, I have recommended that innovation be measured by means of an "Innovation Scorecard", consisting of the following dimensions:

- Commitment to Innovation
- Innovation Output
- Market Success
- Culture of Change
- Collaboration

Along each dimension, a set of simple, easy-to-measure metrics are then defined.

Read what the committee is trying to do on it's website, http://www.innovationmetrics.gov/, or read my comments directly by clicking here.

Measuring How Emerging Technologies Emerge

2007-05-25T10:12:00.000-07:00

Conquering the Technology Foresight Deficit

I have been making the case that innovation of the technological variety is not as esoteric and serendipity-ridden as popular conception would have us believe. It can be, and often is, a disciplined and well-managed process. And like any disciplined process, the rate of progress of any innovation-focused initiative should be foreseeable.

However, for a variety of reasons, some of which I have discussed in my articles here and here, we continue to be trapped in a "technology foresight deficit", or a chronic inability to foresee emerging technologies correctly. Having been extremely dissatisfied - if not irked - by this state of affairs, I have been working towards creating a solution. I presented an early version of a methodology for foreseeing the potential of emerging technologies at the IRMA conference in Vancouver earlier this week, and the response was heartening. I was helped considerably in creating the methodology by Shiv Mahajan, an extraordinarily enterprising Stanford undergraduate.

The conference, where I also chaired a session, was smoothly run and a fruitful experience. And presenting a seminal methodology for foreseeing innovation in Vancouver, one of the world's most modern and livable cities, and one which has won several awards for innovation in its own right, was fitting.

Get a (Second) Life!

2007-04-30T23:23:00.000-07:00

Businesses should devote serious thought to creating a virtual world strategy (and perhaps learn from cats)

"Virtual worlds" such as Second Life hold out a promise that is dramatic, liberating and irresistible to most: a parallel, electronic world where people can conduct their lives unencumbered by many real-world constraints and botherations. But is this promise merely a phenomenon conjured up by over-zealous marketers , technology buffs and varied commercial interests, or is it backed by true capabilities?

Let's look at some facts. Second Life, the most popular virtual world environment, certainly appears to have crossed the early adopter stage. It lists the total number of its users at a significant 5.8 Million, of which about 1.78 Million are active users.

More importantly, many leading companies have got together a Second Life act. Adidas Reebok , Nissan, Mazda, Toyota and Starwood Hotels are all deeply engaged in Second Life initiatives. Dell sells PCs there. IBM, Sun are active. IBM CEO Sam Palmisano visited and held a meeting in second life recently. The company has reputedly even set up a business group t o address Second Life forays. Reuters has a news bureau in second life. Harvard Law School has offered a course there.

Perhaps a key sign that a technology has arrived is when governments start adopting it. The Swedish government is setting up an embassy in Second Life, thru the Swedish institute, an affiliate of it's foreign ministry. The City council of Manchester, UK has taken a few Second Life islands .

All is, of course, not hunky-dory. Numerous observers have counseled caution on various grounds. There is a need to look at success metrics that go beyond usage numbers. A very down-to-earth caution is that the products and services that real world companies can offer may appear mundane in the context of the fantastic, imagination-stretching possibilities that seem easy in cyberspace. In an environment where people seem able to jump tall buildings, air sole shoes can hardly be termed as exciting.

Nevertheless, a virtual world offers people enormous possibilities to break out from real world constraints and do things impossible in the real world. With increasing familiarity and access to technology, people will welcome the chance to use this new-found freedom in realizing their potential in ways that they could previously only imagine. Even more fundamentally, it is not inconceivable that many people will see this as an opportunity to create from the ground up, a new identity that they always wished for but could never have in real life. Thus it can safely be expected that virtual worlds such as Second Life will see widespread traction and uptake from people of all ages and persuasions. The sociological ramifications of such a blurring between the real and imaginary worlds can be staggering, but that is a subject for a different day.

So, how serious a note should businesses take of this phenomenon? Smart companies go where people go. If people are flocking towards the virtual world, then companies need to go there too. If they want to show they are tech-savvy, and get mindshare with the young crowd , who make up the market of the future. They can also actually generate revenues (sell products and services) thru this route . As with any endeavor that needs to catch people's imagination and fire up large numbers of people, first-mover advantages are obvious.

Is the road ahead paved with Silicon? While that may be overstating things somewhat, it seems clear that the lives of large numbers of people alive today will increasingly involve excursions into the wild blue yonder of worlds that exist only in computer-enhanced reality. In the meanwhile, it appears inescapable that every company worth it's salt should busy itself thinking up a Second Life strategy - even if that strategy is only an informed wait-and-watch.

The most apt approach is perhaps to be like a cat - wait and watch with great care, but be ready to jump when the time is ripe. But unlike cats, companies (and people) are not naturally endowed with nine lives, and so should welcome the opportunity to be granted a lease into a second life.

Hark! Did Somebody Say Eureka!?

2007-04-11T03:44:00.000-07:00

Our track record of foreseeing technology's future is abysmal. Can we improve it?

The automatic calculator was invented in the 1950s. Mobile telephones were invented in the early 1970s. Agree?

If you agreed with either statement above, you were off by only a few centuries in the first case, and a few decades in the second. IBM, Bell Punch and Sharp pioneered electronic calculators in the 1950s, but automated devices for performing numerical calculations have existed, in concept as well as in actual physical form, since the 17th century, when Wilhelm Schickard and later Blaise Pascal built the first mechanical calculators. AT&T and Southwestern Bell introduced the first commercial mobile radio-telephone service to private customers as early as 1946. Bell Labs received the patent for cellular telephony in 1972.

Surprised? You are far from being alone. In fact, this fits what appears to be a general - and generally wrong - pattern of how we view the process of technological innovation. We tend to underestimate the time it takes for a technology to be born and gain widespread use. I call this pattern the "Creative Burst Fallacy".

But before we talk any more about the creative burst fallacy, why do we need to be aware of it at all? Knowing it is of great practical interest. In fact, this belief is one of the reasons for what I call the human race's Technology Foresight Deficit - our inability, demonstrated time and again, to correctly foresee the potential of upcoming technologies. Thomas J Watson, no less than the Chairman of IBM, opined in 1943 that the world would need no more than 5 computers. 3G, or third-generation telecommunications technologies, were projected to become the wireless communication technology of choice by the early 2000s - they are yet to take off in any big way in any part of the world. This was a costly mis-judgement indeed: ask the companies that paid billions for the rights to roll out 3G. The days of the dot.com bubble saw legions of such technologies being touted as the panacea for a wide range of business and consumer problems. At the same time, many technologies fly "under the radar", or remain unrecognized. Using these and other examples, I have written elsewhere how we can Re-engineer our Crystal Ball, or learn to look at emerging technologies more realistically.

So, Here's the Creative Burst Fallacy. The popular view of how technolgies evolve typically includes the belief that a new technology takes birth in a burst - or a series of bursts - of creative energy. The reality is usually far more prosaic. Technologies are rarely conceived in a "Eureka!" moment - the birth of a technology is typically a deliberate, painstaking and well-thought out process. Further, once having been born, most technologies spend months, or even years, before they reach a stage where they get widespread attention and use.

Then why this fallacious belief? As with most erroneous beliefs that are widely held, this one has some very good reasons for it's existence. I outline some reasons in my article, "Did Somebody Say Eureka!?", in the March 2007 issue of R&D Magazine, and show some patterns which drive how technology takes shape in reality.

Overcoming the creative burst fallacy is an important part of improving our ability to foresee emerging technologies correctly, and of overcoming humankind's technology foresight deficit.

Charity of the Intellectual Variety

2007-03-29T01:27:00.000-07:00

The gentle art of rehabilitating "orphan" patents

IT is generally assumed that companies amass patents with the intention of putting to business use the intellectual advances that those patents protect. However, this belief contrasts rather starkly with the reality, which is that a very large number of patents (by some estimates, upto 95%) lie unused. These idle patents have come to be christened by a rather quaint, if faintly inappropriate, name: orphan patents.

Given the not insignificant cost of earning (and maintaining) a patent, one would correctly be surprised that businesses could be so obtuse as to put them to so little use. How does one explain behavior so apparently wasteful as to be almost apalling? One way would be to realize that patents are often obtained purely for defensive reasons, or simply to prevent a competitor from claiming ownership of whatever intellectual content the patent protects. Thus, even in idleness the patents serve a legitimate business purpose - that of staking out intellectual territory*.

Be that as it may, many companies rightly chafe at the idling of wealth that orphan patents represents. It is thus that a novel form of knowledge transfer has emerged in recent years - that of patent donation. Since the US government also allowed tax deductions for such donations, the practice had become widespread by the 1990s.

And it was a marriage made in heaven - since the patent was unused anyway, the cost to the patent giver was low, and the benefits for the recipient could potentially be very high. And the tax breaks helped. Some companies even took equity in the recipient companies, so that they would benefit if the recipient - typically a startup - made it big. A true win-win.

Why am I speaking of this in the past tense? Because a change in US tax laws in 2004 effectively removed the tax breaks, thus putting the brakes on this practice. The reason for removing the tax concession was apparently misuse by many companies, by inflating the value of patents donated. Such overuse of the donation tax concessions was even systematic, with many consulting companies springing up to "help" make this happen better.

In any case, the practice has clearly dwindled to a trickle. The only major such act of donation in the past couple of years appears to be IBM's initiative, where it threw 500 patents primarily in Open Source technologies, into the public domain.

Should patent donations continue? Obviously they are a good thing, as in addition to the benefits to both donor and recipient outlined above, they help mobilize knowledge that may otherwise lie essentially idle.

Will they? The answer appears to hinge substantially on whether the tax breaks will be reinstated. A Duke Law school paper argues eloquently for changing tax policy to help this practice.

And any right thinking person with an interest in freeing up knowledge and seeing it mobilized in the service of humanity can scarcely disagree: any move that spurs the rehabilitation of orphan patents is welcome.

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* in this respect, we in modern society specializing in intellectual wealth generation are not much different from wild animals or primitive humans staking out terrritory. A sobering thought.

That Tiny Screen just got Tinier

2007-03-24T00:35:00.000-07:00

Your cellphone is set to be assailed by ads very soon

Advertising is a wonderful industry. It employs some of the most creative folks on earth. It makes us aware of lots of useful products and services we may otherwise not know about. And without it, newspapers, magazines, and TV shows wouldn't exist as we know them. And it is often very entertaining too.

But most people will also agree that advertising can be an irritant at times. That is why I am somewhat disconcerted by the prospect of advertising on cell phones taking off in a big way, as it appears set to do. Yahoo, Google have both shown extreme keenness to cash in on this new form of revenue generation.

Why is this a bad idea? Because displaying an ad on a small cellphone screen will shrink the effective display area to an even smaller size. Although I use a Blackberry, which has one of the larger screens around, I would hate to have any more clutter on that screen than there absolutely needs to be. And I can only sympathize with people who have regular cellphone screens. But it is bad for an even more insidious reason: while print ads can be ignored, and TV ads can generally be sidestepped by changing channels or using recording technologies such as TiVo, it will be well nigh impossible to escape the ads being pushed to your cellphone screen.

If proof were needed that people don't welcome cellphone ads, a survey found that 64 percent of Europeans polled said they had "zero tolerance" for mobile phone advertising in any form.

Here's the horse sense view on this: Pushing ads in this manner helps the interests of cellphone services providers (a new revenue stream), cellphone makers (increased demand for cell phones with larger screens), and advertisers (presumably, increased revenues). Given this formidable alignment of interests, sheer commercial pressure will ensure that this phenomenon will grow. Expect lots of irrated cellphone users. Over time, things will improve as advertisers get smarter, and cellphone screens get bigger. And users will just learn to live with a feature that derives its legitimacy not from genuine user need, but from the commercial compulsions of the various entities that exist to serve that user need.

The Long Arm of the Laws of Economics

2007-03-02T02:07:00.000-08:00

Risk is being underpriced. Can this last?

Since prehistoric times, a simple principle has held true: if you lent money to somebody, you would demand a return high enough to justify the risk of that person defaulting on the loan. As financial systems evolved, this fundamental truth has continued to hold - lending rates are always closely calibrated to the borrower's credit-worthiness.

This principle is so fundamental to the way we think about lending and borrowing that it's disquieting to learn that in the past decade or so, this link appears to have weakened. One measure of this "risk premium" is the spread, or difference in yield, between US treasury securities (generally regarded as the safest kind of debt to invest in), and "junk" bonds, issued by sub-investment grade issuers, and so called because most people don't want the risk of owning them.

There is evidence that the risk premium on junk bonds has sunk to its lowest in 10 years. Last month, investors demanded only an extra 2.69 percentage points in yield on average to own junk bonds instead of U.S. Treasury securities.

There are many reasons for this, including the fact that interest rates in general have fallen world over. However, it does add strong credence to a belief that has been growing in recent times, that risk is being underpriced in the world economy. To be sure, there is a heartening angle to this: financial innovations have thrown up instruments that truly enable risk to be treated in a sophisticated way. But these instruments have also introduced a great deal of complexity, and hence opacity, in the way risk is being priced.

To hear The Economist say it,

"..slicing and dicing of risk using sophisticated instruments such as
collateralised debt obligations and credit default swaps. Banks have used these
to shed credit risk, but it is not clear where all that risk now lies".

Business Week echoes this, saying,

"many are depending on instruments that are highly leveraged, numbingly complex,
and untested by a market downturn".

While underpriced (Cheap) risk is good for borrowers in the short term, in the long term it can undermine the health of the entire financial system. Thus there are good grounds for apprehension as to the robustness of the world's financial markets.

Many subprime mortgage lenders in the US, who have been lending to the riskiest borrowers, are already going belly up.

And there is evidence that world financial markets are jittery. Last tuesday the Dow Jones Industrial average had it's biggest fall since September 11, 2001. This was accompanied by similarly large drops on most of the world's stock exchanges.

That drop was driven by many factors, including a meltdown on the Shanghai stock exchange. But it may just go to show that if you try to defy the laws of economics, the law of gravity may catch up with you.

A Chill Wind from China

2007-02-28T02:14:00.000-08:00

The Web goes Chinese

As we all know, in the 13th and 14th centuries, China led the world in printing, the leading 'information technology' of the time. But with the renaissance and later the industrial revolution, Europe drew ahead. In the 20th century of course, America strode the technology arena like a colossus. And in the 21st century, China is still way behind in what is one of the leading information technologies of today, the world wide web. And that's easily explained - they're a developing country with education and income levels substantially lower than in the West. And they are disadvantaged by a lack of familiarity with the English language, the lingua franca of today's Web. So, of course they are well behind in adoption and use of the world wide web.

Or so conventional wisdom says.

Well, conventional wisdom can be wrong. While researching for a presentation recently, I visited Alexa.com, which tracks world-wide web traffic. I pulled up the list of top 25 websites by traffic, fully expecting to find the usual suspects - Yahoo, Google, Myspace etc. Sure enough, there they were. But surprise, there was Baidu.com at #5. And qq.com, apparently a Chinese portal, at #9. The top 25 list was rounded off by 5 more Chinese websites.

Think about it. This means that fully a quarter of the 25 most popular sites on the web are written in Chinese, for Chinese users. And China is big on internet penetration too - according to reports, they may already have more broadband users than the US. Of course, China is not far behind in internet activity of the more nefarious kind - the country is one of the top sources of spam and phishing sites.

So, China is an awesome force on the world wide web. Couple this with their already phenomenal domination in IT hardware (much of the world's supply of computers, including IBM-Lenovo, and almost the entire gamut of electronics hardware, including iPods, are being made in that country), and you have a fairly staggering picture of just how influential this country has become.

And if you agree, as I do, that the world wide web is powerfully shaping social megatrends, then all of us had better accept that China is going to play a far bigger role in deciding how technology and society will evolve in the coming decades.

Who says the Chinese need to learn English?

The Developing World's Latest Export: Inflation?

2007-02-12T00:51:00.000-08:00

Managing the world's economies just got tougher

Trepidation has been widespread among many quarters in America and the EU at the wave of exports emanating out of China and, to a lesser extent, India. Here are a couple of news items from the past week that are likely to bring a fresh outbreak of sweat on the brows of the hallowed folks who manage the world's leading economies.

China, reports Bloomberg, is planning to allow its currency to strengthen as a way of checking the unbridled rise in its foreign exchange reserves (which have crossed the staggering figure of a trillion dollars). The Indian government too has recently indicated its inclination to allow the Rupee to rise .

Is this bad? In fact, isn't it (at least in China's case) precisely what lawmakers in the US have been seeking to achieve?

Perhaps, but the effect of these two government's decisions to allow their respective currencies to strengthen is that their exports will get costlier for countries that buy them. And, in doing so, China and India are bringing to a halt the low-cost foreign goods and services the citizens of America and the EU enjoyed for the past several years. In other words, these countries will now begin exporting inflation to the West.

And so, while many in the West will exult to see these countries's exports get more expensive, they would do well to consider this aspect as well. Goes to show that it isn't always great to get your wish!

A Defining Technology Trend for 2007?

2007-01-11T21:51:00.000-08:00

The sublime sweetness of simplicity

Technology has pervaded (some would say invaded) our personal lives irreversibly. While in the Orwellian 1980s this statement would have assumed ominous dimensions, today it merely causes most people to drool at the thought of the next cool device that is poised to hit the market.

Sure enough, there'll be plenty of sleek, gleaming devices that will come on the market this year, and they'll be jampacked with enough functionality to keep the most inveterate gadget freaks among us drooling well into the next year. And of course, they'll be ever smaller, cheaper and more powerful. But is there one defining trend that will dictate how technology products will evolve over the year?

I believe there is. And that trend is an inexorable march towards simplicity. Of making technology products, notorious today for being clunky, difficult and even intimidating, simpler to learn and use. Simplicity has long been something the customer has hankered after, and at last producers of tech products are beginning to listen and respond.

What is so profound about simplicity, one may ask, and isn't it obvious that products must be simple to learn and use? Well, for a start, they aren't! Creators of technology products have always had a propensity to overengineer their products, in a well-meaning but mistaken quest to pump in tons of functionality and the newest features. But that has begun to change over the last few years, and will change a lot more this year. What makes me think so?

The trend of simplicity and ease of use assuming such centrality is partly a logical consequence of the increasing socialization of technology, or the rapid rise in the use of technology to meet social needs - collaboration, sharing, getting together, interacting with family and friends, and so forth. This trend has seen technology being enthusisatically embraced by ever-younger people, and first-time users who tend to be unfamiliar with technology - constituencies that are far more likely to demand ease of learning and use than the traditional geeks and 'early adopters'. Also seen from a demand side, ease of use is one of 3 key determinants of success of a personal technology.

There are good supply side reasons as well, chief among which is that in a rapidly saturating market, growth goes to the player who wins more of those demanding, first-time users. (That is why innovation has increasingly come to mean delivering simple, easy to use products).

But there are massive supply-side constraints too. Think how much complex functionality a typical device - even the humble cell phone or digital camera - encapsulates. Often these are functionalities that did not exist even a few years ago. Just 10 or 12 years ago, talking on a telephone or surfing the internet for most of us meant sitting in one place, or at best being confined to one room. Today those activities are completely untethered. Less than a decade ago, getting your birthday party photographs meant waiting at least a day or two, and several trips to the studio. Today you can not only get those photos instantly, but you can even edit them yourself, and all for a fraction of the cost! Creating those new functionalities in just a period of a few years has meant that many complex technologies - from storage, display, communication to batteries - be mastered individually, and then integrated. Doing these well and delivering a package that is simple at the end of it is clearly a daunting task.

Perhaps more fundamentally, Moore's law relentlessly drives devices to grow smaller, cheaper and more powerful - what it does not do is drive devices to get simpler, or for diverse technologies to integrate better. (That is why innovation is so hard!).

Who are the gurus and pioneers of simplicity? Google has always been emblematic of minimality, a close cousin of simplicity. Google's Marisa Mayer likens their design philosophy to a Swiss Army Knife - neat, easy to carry, but possessing an enormous array of functionality*. Google is now turning it's attention to making web site design easy.

Apple has of course been the beacon of all designers who strive to make products that are elegant and easy to use. First there was the iconic iPod. Now, the iPhone (never mind the dubious monicker) has all the makings of a deserving descendant of this heritage by encapsulating a phenomenal range of functions in one neat package, to the point where commentators are calling it practically a full-fledged computer. It is now even being expected to carry on it's elegant shoulders the burden of bringing innovation, wrested away by Asia and Europe in recent years, back to the US.

Philips has wholeheartedly embraced the simplicity mantra. Sony and Canon have, without getting much credit for it, delivered for years some superbly engineered products. Motorola and Nokia are beginning to get it.

There are less fancied players too, who have hit the simplicity sweet spot. RIM's BlackBerry is widely regarded as a joy to use. The Open Source browser Firefox has fired the imagination of lots of users with its simple yet powerful set of features - it has garnered about 14% of the browser market and a fan following in the bargain.

Making a complex technology product easy to use is clearly a task that is far from easy. But the fact that vendors are trying hard to make their products easy to use is welcome news for consumers everywhere!
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*However, the original minimalist look arose out of necessity.

The Increasing 'Socialization' of Technology...

2006-12-28T20:53:00.000-08:00

The Most Significant Technology Trend of 2006

Well, it sure was an incredible year for technology.The ghosts of the tech bubble burst of 2000 were well and truly buried this year. While much of the 1980s were spent in apprehension of technology (thanks primarily to the cold war and George Orwell's 1984), and much of the 1990s were spent in irrational exuberance over the prospects for technology (thanks mainly to the rise of the internet), this decade seems to be the one where the world finally came to terms with technology, and a balanced outlook on technology emerged. And if one year is to be singled out where this maturity gained the most, it was 2006.

Exuberance there certainly was. Companies in the technology space grew and grew. People talked and talked about technology (and mostly used spanking new cellphones, wireless devices, and VoIP to do the talking). But it was exuberance of a much more understated variety than the unbridled euphoria of the late 1990s. And it was grounded in, and tempered by, a firm grip on reality. And oh, tech companies did make blowout profits - yes, real cash profits. And those profits generated real cash flow which those companies used to buy real things, including other companies.

In this last post of the year, I thought I would place my vote for the most important tech trend of 2006. Without hesitation, I plonk my vote down firmly in favor of the increasing 'socialization' of technology. I refer, of course, to the rapid increase in the use of technology to meet social needs - collaboration, sharing, getting together, interacting with family and friends, and so forth.

The defining moment for this trend was, of course, when Time magazine, with somewhat characteristic hyperbole, named 'You' as its Person of the Year.

However, going beyond the hyperbole, it can be seen that technology indeeed is coming to be harnessed for social needs. This was not something that magically appeared out of nothingness this year - it is merely the culmination of developments that had been afoot for avery long time, perhaps since the industrial revolution. In fact, perhaps the most important technology trend of the last century was that technology came off its high perch as something used only by giant corporations and governments, to something that helped common folks meet everyday needs. This trend may be labeled as technology moving from 'corporate' to 'personal' uses. Next, people discovered that the newly 'personal' technology could be used to meet a very imporant personal need, that of interacting with other folks. Thus, as the trend played out, its logical continuation was to create 'social' uses for technology.

And so, whether it was digital photography, communication technologies, wireless or entertainment technologies, people found uses that served social needs. More deals were cut for cellphone- based access to social networking sites such as Myspace. Manufacturers from Nokia to Microsoft designed their products for facilitating social uses. The Zune made swapping songs wirelessly its USP.

The terms that people search for on the internet, which should certainly count as a significant index of what's important, figured many terms that indicated social needs - Myspace , Wiki, Wikipedia, Radioblog, Podcasting all figured in Google's list of Top 10 searches of 2006.*

And in 2007 ? More power to the people...!
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* It is worth noting that each of these terms not only represents a social use of technology, but the fact that people are searching for these terms on the internet itself indicates the use of a technology (internet search) for meeting a social need!

Google: Time for Some Soul-searching?

2006-12-05T01:44:00.001-08:00

The world-leader in search should find a way to make innovation pay

The now-famous "Peanut Butter" memo at Yahoo undoubtedly holds lessons for the wider world of business, and one of those lessons is, don't spread yourself thin and thus lose focus. And don't be scared to pull the plug on parts of the business that aren't pulling their weight.

Now Google is, quite possibly, the most innovative and exciting company of our times. But do they need those two lessons? You bet they do.

In a recent interview with Fortune magazine, a senior Google exec was asked how long Google Finance can ignore making money. Her response: "Theoretically, forever" is admirable for its forthrightness, and shows the immense confidence Google has in itself. But the response also smacks very faintly of dot.com-style hubris. In the real world, a product or service can be given only so much time and resources before it's asked to start pulling it's weight on the top- and bottom-line.

Does this mean Google should stay happy being a one-trick pony? Of course not - they must innovate, and are doing a great job of starting new services. Now, all they need to do is figure out how to make sure those new services bring in loads of cash - or shut them down.

For all its admirable innovation prowess, Google is yet to show a really spectacular new product or service after web search. Even those who have no particular liking for Google would surely not want to see it becoming a latter-day version of the fabled Xerox PARC - a poster child for marvelous innovation that never made it to market.

And even in search (or at least making search pay), there are smart and nimble new rivals catching up.

Are the folks at Google listening? Apparently, Yes!

The fact that Google Answers has been discontinued last week shows that the need to make services pay up or pack up has been realized at Google. See what the LA Times news report on this said:

Google admitted this year that its internal audits discovered that the company had been spending too much time on new services to the detriment of its core search engine.

Perhaps not the greatest news for people who had come to like Google Answers, but comforting evidence that the folks at Google have their hearts (and brains) in the right place!

A Mid-life Crisis for Yahoo! - and a wake-up call for the world of Business!

2006-11-24T01:11:00.000-08:00

Serious lessons for everyone with an interest in how businesses are run.

One of the more sensational developments in the world of technology and business last week has been the leaking of the internal memo in which Yahoo Senior VP Brad Garlinghouse accuses the company, among other things, of spreading its talent too thin and trying to follow every innovation on the Web, rather than focusing on its strengths.

Yahoo, on it's part, must be commended for promptly acknowledging and responding very appropriately: CEO Terry Semel said that the company is narrowing its focus on boosting search and graphical ad sales and on prioritizing social media, video and mobile.

My first reaction to reading about this memo was, Gosh, How on earth did such an explosive memo leak to the outside world? I think that's a question Yahoo should ask as part of the soul-searching that has clearly been initiated by this event.

My second thought was, Welcome to the real world! To understand what I mean, just read the excerpts I've taken from the memo below and ask, how many of these could apply to companies anywhere - in any industry, in any country,..?

"We want to do everything and be everything -- to everyone. We...talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive. We are separated into silos that don't talk to each other. And when we do talk, it isn't to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics".

"Massive redundancy that exists throughout the organization. We now operate in an organizational structure -- admittedly created with the best of intentions -- that has become overly bureaucratic".

"Product, marketing, engineering, corporate strategy, financial operations... there are so many people in charge (or believe that they are in charge) that it's not clear if anyone is in charge".
"We are held hostage by our analysis paralysis".

"Our compensation systems don't align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren't adequately recognized for their efforts".

In all the rash of comment this memo has generated, I didn't see anyone picking up on this thread - that we must resist the temptation to lambast Yahoo for suffering these problems, and instead ask, why does such apparently dysfunctional behavior exist in most companies?

I am not for a moment saying that Yahoo mustn't take this situation seriously. They must do their soul-searching. What I am saying is that, the rest of us should see the wider issues this memo has brought out: namely, do businesses have to be this way, and what can the rest of the world of business learn from these revelations about how to run companies better?

Disquiet on the Economic Front

2006-11-23T00:08:00.000-08:00

We know less and less about what's driving the world economy. (And technology is in part responsible for that...)

A not-too-heartening corollary of the fact that the US no longer pulls the reins that drive the world economy is that nobody really seems to be in charge. Central bankers and such other venerable economic boffins are finding to their dismay that their ability to influence economic events is limited by their poor understanding of the forces at work in the global economy.

What's happening in the US is pretty much emblematic - the degree of control that the Fed exercises over the US economy is in decline. Business Week asks in a recent cover story, Can anyone steeer this economy?, and opines that the US govt's policy interventions are no longer able to influence the course of the economy as they did in the past - they are swamped by global forces that are pretty much out of anybody's control.

On a similar note, Fed Vice Chairman Donald L. Kohn said recently that "our understanding of the inflation process is limited".

By the way, technology has no mean role to play in this sequence of events: Fed Chairman Ben Bernanke recently told a conference of central bankers in Frankfurt that financial and technological innovations have altered the traditional relationships between money supply, economic activity and inflation, hobbling the ability of policymakers everywhere to influence economic events.

While this is overall a perplexing state of affairs, it is of far greater than academic significance: if, for example, the best economic experts among us no longer understand the forces at work in the world economy, what does that augur for their ability to manage crises? Will they have the policy wherewithal to respond to gyrations in capital markets or currency rates unleashed by these very forces? Will the drumbeat of varied economic malaises of the past - stagflation, eurosclerosis, irrational exuberance - replay in a macabre display of economic history repeating itself? And what about that most unholy of economic nightmares -the spectre of hyper-inflation?

Certainly, a matter for grave disquiet.

More Bang for the Innovation Buck?

2006-11-17T00:11:00.000-08:00

A new study confirms the weak link between R&D spend and innovation output

As I had pointed out in an entry on this blog in March, measuring a company's success in innovation by looking at the size of it's R&D budget is pretty much futile. If confirmation of this was required, here it is: A survey released on November 13th by management consulting firm Booz Allen Hamilton, reported in Business Week, finds that

"there are no significant statistical relationships between R&D spending and the primary measures of financial or corporate success: sales and earnings growth, gross and operating profitability, market capitalization growth, and total shareholder returns."

An interesting discovery of this survey is that there are some 'high leverage' innovators - companies that spend, on average, half as much on R&D as their industry peers but perform two to three times better. The study identifies companies from diverse industrries -Kellogg, Apple, Boston Scientific, Tata Motors, Christian Dior and Kobe Steel - that have the ability to do this.

How do they do this? As may be expected, there is no single answer. The study concludes that these companies are noted for their distinctive skill in at least one element of the innovation process - such as generating ideas (Google), developing new products and processes (Toyota) and customer understanding (Apple).

One thing common to all high leverage innovators: they listen closely to their customers across the entire innovation cycle.

So it appears the customer, after all, is King.

Cisco's Transatlantic Move?*

2006-11-09T22:05:00.000-08:00

A world-leading builder of network equipment flattens the world.

Phew! This "world-flattening" stuff sure is gathering steam. It's just a few days since Wisden, that great cricketing icon, said it is moving the global headquarters of Cricinfo ("the home of cricket on the internet"), from London to Bangalore.

Now, here's bigger news for world-flatteners everywhere (it sure had me flattened!): Steve Hamm, BusinessWeek's admirable technology writer, reports in his new blog on speculation that Cisco will soon announce it's second global headquarters in...you guessed it, Bangalore. Says the worthy gentleman,

"This is the first time that a major US technology company has established a corporate headquarters in India, and it's yet another sign of the growing importance of India on the world technology map".

Breathtaking** and heady stuff indeed. But before we break out the bubbly, here's some cause for pause: a spokesperson for Cisco India was asked if this is true. Here's his clarification:

"Cisco's corporate headquarters remain out of San Jose, California. We have made no announcement on the change of status in our corporate headquarters. What we have stated is that Wim Elfrink, senior VP, customer advocacy, will be relocating to India at the beginning of the calendar year to help lead Cisco's commitment and investments in India."

Cisco is a company whose influence stretches well beyond just commercial clout. US House Speaker-designate Nance Pelosi has said that Cisco CEO John Chambers will likely be one of the industry leaders that she will "consult regularly".

And by building a good deal of the equipment that powers the internet, Cisco can claim to have contributed much to the world-flattening that the internet has brought about. Now, will they go the whole hog? I guess we'll just have to wait for an answer. It's going to be an interesting wait.

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* Couldn't help noticing a wee bit of irony here. Cis is a Latin word meaning "on this side of", and is the opposite of trans, which means "across" or "on the other side of". Tongue-in-cheek suggestion: maybe they should first change their name to Transco..

** If you're in Bangalore (as I am), you may want to go a bit easy on the "breathtaking" part: the air quality is none too great these days... (tongue in cheek..just tongue in cheek...!!)

The New Economic Engines

2006-10-31T03:19:00.001-08:00

An answer to the question of economic pre-eminence?

In my last post dated Sep. 15th, (admittedly a long time ago - I have been traveling on business and on vacation over the past 3 weeks) , I pointed to data suggesting that the US has perhaps ceased to be the world's economic engine, and posed the question as to which nation can lay claim to that status.

It now appears* that the venerable Economist has been pondering along the same lines. It says in an article dated Oct. 19th, 2006:

According to conventional wisdom, American consumers have single-handedly kept the world economy chugging along, whereas cautious Europeans and Asians have preferred to save. Yet the importance of America's role in global growth is often exaggerated.....The real driver of the world economy has been Asia, which has accounted for over half of the world's growth since 2001. Even in current dollar terms, rather than PPP, Asia's 21% contribution to the increase in world GDP exceeded America's 19%.

It concludes that "a sharp slowdown in the American economy could be offset by the growing and largely unrecognised power of Asia's consumers", and goes on to crown China and India as The New Titans that are set to give the world economy its biggest boost in history.

So, it would appear that the Economist has answered the question I had posed - the nations that will have a pre-eminent influence on world economic affairs are China and India (or at least these are the strongest candidates).

This also appears to lay at rest any further basis for my lament in the last post , that these two countries did not so much as find a mention as candidates for economic supremacy in earlier analyses of the same question.

But not so fast.

Before we crown China and India as the logical supremos of the coming economic era, we mustn't forget that each of these countries is beset by myriad problems (largely internal and of their own making), that may hobble their ability to achieve this grand status on the world economic stage. In addition, it would be foolish to ignore the strength that an enlarged and revitalised EU can easily muster over the coming years. And leave us not forget Japan, which has demonstrated stunning competitiveness, and an ability to take the rest of the world by the scruff of its collective neck too many times to be written off as a weakling or an also-ran in the coming economic order.

But most of all, we mustn't forget the enormous financial clout that America continues to wield, simply by virtue of its stranglehold on world financial markets. The Economist says it all:

When America sneezes, the rest of the world's economies may no longer catch a cold; but if Wall Street shivers, global tremors will still be widely felt.

And mighty tremors those may well be. We will continue to live in interesting times.
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*By sheer coincidence of course..I am far too modest to suggest that this line of thought could have been provoked by my piece!

The World is Global

2006-09-15T01:28:00.000-07:00

As US economic dominance wanes, the world becomes truly multi-polar.

Here are two things the IMF had to say in its World Economic Outlook released yesterday:

Global output will rise 5.1 percent this year and 4.9 percent in 2007. Both
forecasts are 0.2 percentage point higher than the April predictions. This is
attributed to faster-than- anticipated growth in China, India, the EU and
Russia.
For the US, the 2007 growth forecast is cut to 2.9 percent from 3.3 percent.

Now why are these two facts interesting? Because the above data conceal a staggering revelation. Note that the forecast for the world's economic growth has been raised upwards, while that for the US has been lowered. This means that the rest of the world's economic prospects are now diverging from those of the US. Does this mean that, perhaps for the first time in a century or more, the US has ceased to be the world's economic engine?

Evidently it does. NOt only because of the divergence noted above, but because, as the GDP growth figures above reveal, the US is now lagging the world in economic growth.

This should not come as terribly surprising to anybody who has been following global events for the past 5 years, but nonetheless is noteworthy as this is perhaps the first time there is hard data to this effect.

Is there a Crown Prince?
In 2001, Time magazine ran a feature titled, Who Will Drive... The World Economy? The article examined as the US ceases to be the predominant economy, which countries could lay claim to economic pre-eminence. The article considered Europe and Japan but neither China nor India find so much as a mention**.

And the nation listed in that 2001 article as the biggest potential threat to world economic well-being - Russia - is comfortably ensconced in the IMF's list released yesterday of countries that are chugging cheerfully along!

The best answer to the succession question probably is that there is no "successor" to the US - it's simply a global world now.
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**There is a mention of "the developing nations of Asia and Latin America, which depend on foreign capital" though. Perhaps China and India are to be found within that august group?

Big Blue: In The Pink....

2006-08-29T22:54:00.000-07:00

It's software business is thundering along, but is that a bit of gray showing on the services side..?

IBM, that hoary 90-something giant of the computer industry, has been through it all. After pioneering the 3rd generation of mainframe computing with its stupendously successful IBM System 360, it strode the computing world like a colossus thru the 1960s and 70s. Then, when the world went the PC way - a revolution IBM itself helped trigger - it appeared IBM's heyday was over. Until the 1990s brought a marvelous transition under the leadership of Lou Gerstner - to being a services company.

Challenges to its software business also continued - for example, in the key relational database market, Oracle grew strongly thru the 1990s to match (or overtake, depending on whom you ask!) IBM's sales of its flagship DB2 product. The services business received a further fillip when it bought PriceWaterhouseCoopers (PWC)'s consulting unit in 2004 for $3.5 Billion*.

Then in a surprise move towards the end of 2004, they jettisoned the PC business, citing a desire to focus on high margin businesses such as software and services. During this period, they also became the largest technology services provider in the world.

Now, IBM is poised at an interesting juncture - there are indications that services growth has tapered off. The latest quarter (June 2006) results show revenues from software sales are growing faster, and are also contributing more to profits, says Business Week.

Of course, IBM's official position is that portraying their business focus as software vs. services is a false dichotomy - in reality, both businesses reinforce each other. While that is undoubtedly correct, here's something intriguing that I found myself dwelling on for a bit: IBM has added its latest purchase - Internet Security Systems (ISS), a security software company it has bought last week - to its services business rather than to its software group! This departure from the norm suggests that they feel they could use the extra revenues to boost services performance!

Perhaps IBM's services group will come back with renewed vigor to overtake software sales again, or perhaps it will cease to matter as hardware, software and services increasingly meld into one unified technology solution offering. Any which way, it will be interesting to watch the continued march of IBM, in the third century of it's existence**.

P.S. By the way, if you've been in the industry for a couple of decades, you will recall the constant cries of the impending death of the mainframe. Listen to this: said Mark Loughridge, the IBM CFO while announcing the results for the June quarter of 2006, "The most profitable business segments in the second quarter were software, microelectronics and IBM's System z mainframe computers". And so the mainframe lives.
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*incidentally, a song compared to what others had tried to buy the same unit for earlier. How much was that, you ask? Hold your hat - Hewlett Packard (HP) had bid $18 Billion for PwC !! Talk about the Winner's curse!.

** the company was founded in 1888 (although it was incorporated only in 1911 - hence the "90-something" reference earlier!).

Long Live the Long Tail

2006-08-08T01:11:00.000-07:00

Serving the small guy has become big business

Until not so long ago, the words "long tail" only conjured up images of the Long-tailed Langur, a rather loose-limbed, lanky monkey found on the Indian subcontinent. Or if you were mathematically inclined, it probably made you think of Power Law distributions.

Well, those words may just be the hottest two words in business right now. Since the 2004 article of the same name by Chris Anderson, a former writer for The Economist, and now the chief editor of Wired magazine, and more recently, his book, The Long Tail: Why the Future of Business is Selling Less of More.

Sure enough, the concept is based on the same principle as power law distributions, which govern how sales of most products are distributed. For example, most publishing house revenues are represented by a few best-seller books, while a large number of smaller-selling books contribute just a tiny fraction of revenues. At its heart, the long tail concept holds that the conventional focus that businesses have placed on selling big hits, or selling to big customers, is essentially an artifact of constraints on storage space, information and distribution. With the web and attendant technologies breaking down those constraints, not-so-big hits and smaller customers get to be in the limelight too. Businesses can thus focus down the long tail of the power law distribution.

And it's getting lots of attention. No less a person than Eric Schmidt, CEO of Google, has said that the long tail concept has "influence(d) Google’s strategic thinking in a profound way", and refers to Google's mission as "serving the long tail".

Anderson even furnishes credible arguments to show that the celebrated 80/20 rule, or the Pareto Principle, that states that "80% of the revenues come from 20% of the products" is really a consequence of similar constraints, and will in time give way to something that is more like a 50/50 rule.

There is a long tail for software as well: the variety of software needed to automate a large number of highly customised processes within businesses.

Big business has traditionally scoffed at small customers. Now with the arrival of the long tail phenomenon, perhaps the meek shall indeed inherit the earth - or at least get to preen in the attentions of lots of marketers .

Google and the Circle of Life

2006-06-15T21:25:00.000-07:00

Exit Silicon Graphics, enter Google: And life goes on..

Google's mystique only increases. Can you think of another company whose headquarters has been the subject of so much hype, speculation and rumor? If a latter-day, corporate version of historic Xanadu* exists, surely the storied Googleplex is a strong claimant for that title.

Need evidence to believe? A Google search for "Googleplex" produces 900,000 hits. Time has recently done a photoessay on life in the Googleplex**.

And now comes a report that Google is building a hush-hush piece of its Googleplex on the windswept Oregon-Washington border. How hush-hush, you say? Reports the IHT,

The design and even the nature of the Google center in this industrial and agricultural outpost 80 miles east of Portland, Oregon, has been a closely guarded corporate secret. Many local officials in The Dalles, including the city attorney and the city manager, said they could not comment on
the Google data center project, referred to locally as Project 02, because they signed confidentiality agreements with the company last year.
"No one says the 'G' word," said Diane Sherwood, who, as executive director of the Port of Klickitat, Washington, directly across the river from The Dalles, is not bound by such agreements. "It's a little bit like 'He-Who-Must-Not-Be-Named' in Harry Potter."

But one thing about the Googleplex struck me as a poignant irony: it leases buildings that are owned by, and formerly housed, that great Silicon Valley giant of yesteryear, Silicon Graphics. Now that SGI is in bankruptcy, Google is in the process of buying those buildings. Says the
San Jose Business Journal:

If SGI's bankruptcy goes through, Google expects the transaction to close no later than the end of June.

The circle of life. Sigh.
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* Xanadu was the fabled summer capital of Kublai Khan, the wonders of which were extolled to Europeans by Western explorers such as Marco Polo

** there is a "factory tour" of the plex among the superb set of Google videos linked from the Google blog here.

YAPOO (Yet Another Premature and Obnoxious Obituary)

2006-06-07T03:08:00.000-07:00

Premature Obituaries are flying thick and fast

The human race appears to have a peculiar fixation with proclamations of death (including its own - I recall at least a dozen predictions of the end of the world from the 1970s thru the 1990s - complete with precise date and time!).

I wrote a couple of days ago about the premature reports of the death of serendipity. Well, the latest occupant of the deathbed appears to be the Wikipedia. Nicholas Carr writes,

"
Wikipedia, the encyclopedia that "anyone can edit," was a nice experiment in the "democratization" of publishing, but it didn't quite work out. Wikipedia is dead. There was a time when, indeed, pretty much anyone could edit pretty much anything on Wikipedia. A few months ago,... the Wikipedian powers-that-be abandoned the work's founding ideal of being the "ULTIMATE 'open' format" and tightened the restrictions on editing. The administrators adopted an "official policy" of what they called, in good Orwellian fashion, "semi-protection" to prevent "vandals" (also known as people) from messing with their open encyclopedia. The end came last Friday. That's when Wikipedia's founder, Jimmy Wales, proposed "that we eliminate the requirement that semi-protected articles have to announce themselves as such to the general public."
"

This suggestion has, predictably enough, been widely and vociferously pilloried. Let me share my view: As I wrote in the Wisdom of the Wiki, it appears easy to scoff at the notion of an encyclopedia - which by definition is supposed to be the epitome of accuracy, authority, and accountability - that was created in such an apparently loose, disorganized and open manner, allowing any unschooled person with an internet connection to update it. However, amazing as it may seem, we must accept that the Wikipedia has come to be a truly reliable and authoritative source of knowledge - anyone who goes thru it in any degree of detail will be able to attest to that.

Thus, proclamations of its death, if any, must be done based on establishing that it no longer serves the purpose of providing a reliable reference source, or at least that it has abandoned the spirit of what constitutes a 'wiki'. Proclaiming its death based on a change in the administrative procedure that makes it somewhat less 'open' is, apart from being unnecessarily alarmist, completely unjustified, given that it continues to be as reliable as ever, and continues to be a wiki in spirit.

In addition, the change in administrative procedure is not surprising or unfamiliar to anyone who has created such a repository that depends on submissions from a large number of contributors: in the initial stages, the focus is on getting a large volume of content, and so you allow a very high degree of openness. As the volume of content builds up, the focus steadily shifts toward quality, and so you tighten the contribution mechanism. And that is what seems to be happening at the greatest Wiki of 'em all.

The Late Lamented Serendipity?

2006-06-05T04:09:00.000-07:00

Reports that the internet has killed serendipity are greatly exaggerated

A vigorous debate* has been sparked off by an op-ed article written by a University of Florida Professor, which in essence argues that the internet has made information so easy to find that the joy of stumbling on information that you didn't know existed has been killed off.

I recommend the following to anybody who thinks the internet has consigned serendipity** to the dustbin: next time you visit any website, just look around at the various links on whichever page you are on. You are certain to see at least one or two links that, while being unrelated to your current search, look like they may offer something interesting enough to check out. Use the "Open link in new window" feature to open the page to which that link leads without distracting you from whatever topic you are currently trying to get information on. Later on, when you have some leisure on your hands, you can go back to these windows lying open on your desktop and read those pages. I do this all the time, and because of this, end up getting information on far more topics from each surfing session than I ever set out to get. Long live Serendipity.

Further evidence that serendipity is hale and hearty in the age of the internet is that the new ubergurus of the internet, the folks at Google, have a service called Serendipity on their radar***.

Nevertheless, the perception that serendipity has lost out in the internet age has, in my opinion, some basis. The reasons have to do with both technology and mindset:

1. Low bandwidth ensures that the cost of "internet digression" such as the above is often prohibitive.
2. Newer web access devices such as handhelds, mobile phones, etc. suffer from limitations that make it difficult to digress in the above manner.
3. Above all, the attention deficit nature of our society ensures that we just do not want to digress as above. In the old days when we used to visit libraries to dig for information, we were just more willing to allow ourselves to digress. And that is the real reason for the perceived loss of serendipity.

As with many other developments - technological or otherwise - that we regard as the bane of society, it is not so much that things around us have changed - it is that we have changed!
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* See, for example, Nicholas Carr's blog

** Incidentally, the word serendipity comes from an old name for the island of Sri Lanka, Serendip.

*** In fact, they already have a service called Google Suggest which partially acts as a mechanism to find sites you weren't really looking for (or were, but may not have found thru conventional search)!.

The Rise and Rise of Social Computing

2006-05-25T02:43:00.000-07:00

Power to the people

Social Computing is the name given to a slew of technologies that collectively allow people to pool their knowledge, keep in touch with and interact better with others who belong to their community. Two key principles of social computing (or social software) are that it is highly participatory, and it is evolutionary – which taken together mean content that constantly moves in such a direction as to better reflect the knowledge, beliefs, opinions and /or aspirations of a community. Wikis, blogs, sites that allow sharing such as flickr.com, networking sites such as ryze.com and linkedin.com, and sites that allow more complex social interactions, such as myspace.com are increasingly being seen as the 'Killer-app' of Web 2.0, much as email - itself a key enabler of social computing - was to the original Web.

The stellar rise in the popularity of email in the 90s (the number of users skyrocketed from a few thousand at the beginning of that decade, to several hundred million at the end of it) clearly provides a pointer to the potential that social computing has - people are ever eager to take up technologies that will help them meet their social needs better.

Another sign of coming of age of a new technology bubbling up from the masses is large corporations taking note of that technology. And sure enough, Yahoo is doing its bit on the social computing front, having acquired sites such as del.ici.ous. Now, the real big 'un is weighing in. Says Business Week,

"Microsoft's Office SharePoint Server 2007, due in October, will include a new technology called Knowledge Network, designed to help co-workers find colleagues with the expertise they need. For workers who opt in, Knowledge Network automatically scans their contact lists, e-mails, and e-mail distribution lists to create a profile. That way, co-workers can search for expertise among their colleagues to gain specific knowledge that can help with business decision-making".

This of course, is nothing new to the Knowledge Management (KM) fraternity, which has always striven to support people-to-people sharing techologies. Sure enough, a lot of what has been learnt and practised by KM thinkers and practitioners over the past few years is finding expression now in the traction that social computing is getting. So, it's no surprise that the Economist Intelligence Unit, in its report, Foresight 2020: Economic, Industrial and Corporate Trends identifies Knowledge Management as one of the 5 trends that will shape the world of business and economy in the coming 15 years.

In sum, all of this goes to show that technology is making progress towards meeting its basic premise, which is more power to the people!

A Virtuous "Cyc"le

2006-05-18T03:11:00.001-07:00

How Common Sense is Uncommon, and Why Computers Need it Badly

When I first learnt about computers in college in 1982, it seemed logical to me that computers must have common sense. However, that turned out to be far from true. I was astounded at the level of detail that a computer programmer must get down to, in writing a program to solve even the most trivial problem. While things have improved in the intervening two-and-a-half decades, programming computers to solve problems remains a task for people with specialized knowledge, and so-called 'High-level' programming languages remain far, far less sophisticated than natural languages.

That state of affairs, however, is not due to lack of effort by the Computer Science research community. Much work has focused on Natural-language (NL) processing, or figuring out how to make computers smart enough to allow humans to interact with them as though they were other people. This may sound easy enough, but has turned out to be stupefyingly complex - for example, there probably isn't a computer in the world today that could read and understand the previous sentence (the greatest difficulty it would find would be to understand that the word "they" in that sentence refers to computers, and not humans, which is the immediately preceding noun in that sentence!).

NL processing is crucial if we are to ever make computers truly easier for humans to use, in applications ranging from teaching kids to making cars easier to drive.

It is thus that the story of Cyc, a brainchild of former Stanford Professor Michael Lenat, is staggering. This project has soldiered on for two whole decades in search of the laudable goal of imparting common sense to computers. An excerpt from their site:

"Natural-language (NL) processing is among the most studied -- and most intractable -- challenges of software engineering. Consider the following pair of sentences:
Fred saw the plane flying over Zurich.
Fred saw the mountains flying over Zurich.
Humans have little difficulty in recognizing that in the first sentence, "flying" probably refers to the plane, while in the second sentence, "flying" almost certainly refers to Fred. Traditional NL systems will have difficulty resolving this syntactic ambiguity, but because Cyc knows that planes fly and mountains do not, it will be able to reject nonsensical interpretations. It's difficult to see how this could be done without relying on a large database of common sense."

Cyc has two things: a Knowledge Base (KB), which consists of what Cyc "knows", and an Inference Engine(IE), which Cyc uses to make sense of what it knows. The Cyc KB contains nearly two hundred thousand terms and several hundred thousand assertions, or rules, connecting these terms. New assertions are continually added to the KB by human workers. The whole project is still far from achieving it's goal, but it's making progress.

MIT's Open Mind Project is another example of an initiative directed towards making computers understand things that human beings take for granted.

It has been said that common sense is uncommon (even among humans). But that is no excuse for computers not to have plenty of it. Maybe one of these days, we'll actually see a computer that talks - and listens to - common sense!

2006-05-12T03:30:00.001-07:00

A Competitiveness "Paradox"
What's the link between the competitiveness of nations and economic growth?

IMD's World Competitiveness Rankings 2006, released this week, ranks China 19th and India 29th in global competitiveness. Hold on. Aren't those the fastest growing among the large economies of the world? I was intrigued enough to think deeper about the correlation between "competitiveness" and growth.

So I looked up the World Economic Forum (WEF)'s Global Competitiveness 2005 Report, which is pretty much the definitive work in this area. The results were no less intriguing. It ranks the US, Sweden and Denmark within the top 5 in competitiveness. I then looked at The Economist's predictions for GDP growth of these countries - the predicted growth for 2006 /2007 was in the range of 3.1% - 3.3% for each of these. And China and India, ranked 46th and 55th respectively in competitiveness by the WEF, are projected to grow at 8% - 10% ! There appears to be no relationship (if anything, the figures here even suggest an inverse relationship!) between competitiveness and economic growth. Admittedly there are many other countries in the list, but these examples are glaring enough to need an explanation in their own right.

What's wrong? Can it be that the notion of Competitiveness is entirely unrelated to growth? Not so. The WEF Competitiveness rankings report begins with the assertion that their aim is
"to shed light on the question of why some countries are able to grow on a sustained basis for prolonged periods of time..".

But this is where it gets difficult: How can countries that are not "competitive" grow the fastest, while the ones that are the most "competitive" grow much more slowly?!

In an attempt to find answers, I decided to see what the world's foremost authority on competitiveness (be it of companies or nations), Professor Michael Porter has to say. Prof. Porter, University Professor at Harvard, states in The Competitive Advantage of Nations:

"We must abandon the whole notion of a "competitive nation" as a term having much meaning for economic prosperity. The principal economic goal of a nation is to produce a high and rising standard of living for its citizens. The ability to do so depends not on the amorphous notion of "competitiveness" but on the productivity with which a nation's resources (labor and capital) are employed. Productivity is the value of the output produced by a unit of labor or capital."

Harvard Business School's Institute for Strategy and Competitiveness says on its website,

"Competitiveness..is based on the productivity with which a nation produces goods and services. Competitiveness is rooted in a nation’s microeconomic fundamentals—the sophistication of company operations and strategies and the quality of the microeconomic business environment in which companies compete."

Also, in ranking the competitiveness of nations, WEF uses quality of the macroeconomic environment, the state of a country’s public institutions, and, a country’s technological readiness. IMD uses Economic performance, government efficiency, business efficiency and infrastructure.

So, all the above makes things look a little better. It appears that the notion of competitiveness of a nation embraces a gamut of parameters, none of which can easily be correlated to GDP growth (and it may be simpistic to even try to do so).

However, the basic horse sense view would still be that a nation that scores highly on the competitiveness parameters - whether productivity and microeconomic fundamentals as the Harvard group avers, or the WEF or IMD's parameters - the economy of that nation must grow faster. In other words, to escape being a notion of purely intellectual significance, whatever we define as "competitiveness" must correlate well with growth.

Can it be that the GDP figures we are looking at are for the short term (2006/07), while "competitiveness", being a more holistic concept, determines growth in the longer term? Even this appears less than convincing. See what the Economist Intelligence Unit (EIU) projects for the period upto 2020: the EU will grow at 2%, and the US will grow at 2.9%, while China and India will grow at 5.9-6.0%!

That leaves a final explanation: the current low competitiveness rankings for China and India reflect the fact that these countries have historically been abysmally insular and inefficient. Even this theory looks less than bulletproof at first, because these countries' growth hasn't taken off dramatically in the last one or two years - they have been the fastest growing economies for much of the last decade, even while holding bottom-rankings in competitiveness. But this theory is somewhat vindicated by the fact that these countries' competitiveness rankings have steadily risen in the last few years. So the inverse correlation appears to be reducing, which at least raises the possibility of a trend towards a positive correlation in the next few years.

So, the paradox has been somewhat demystified, but survives unscathed!

2006-05-04T02:26:00.000-07:00

Act Before You Must
Do things long before they become necessary; by then they may be life-threatening*

Test yourself. Over the past one year, in whatever business or activity that you have responsibility for, what is your degree of agreement with each of the three statements below?

- All customer complaints arose due to factors that were completely beyond control.
- All deadline overruns happened due to reasons that just could not have been planned for.
- Every crisis that happened was truly unforeseeable.

If you agree completely with each statement above, congratulations! You perhaps truly have no headroom for improvement. However, I suspect a vast majority of readers will, upon reflection, feel compelled to disagree with at least one of the three statements (as I do!).

Jack Welch, Former Chairman and CEO, GE, counsels in his book Winning: “You need to change, preferably before you have to.” Louis Gerstner, Former Chairman and CEO, IBM said in his autobiography, Who Says Elephants Can’t Dance?: “I hate surprises”.

Most of us know from painful experience that the above advice is very true indeed. Yet, why do we resist doing the difficult stuff, such as meticulous planning, even when we know it's really important to do so?

One reason: Action has romantic appeal; preparing for action doesn’t. The folklore that we grew up with lionizes the hero who swings into action in a flash, and not “the system”, which imposes constraints that cramp his style. (If the hero, in the course of his good deeds, breaks a few rules and incurs the wrath of the system, so much the better.. !)

For a deeper insight into the reasons why we are often not very proactive, and some ways to overcome that situation, read my piece Act Before You Must, which talks of the importance of proactivity in organizations.

A tongue-in-cheek corollary of the celebrated Murphy’s Law goes: “There’s never time to do it right, but there's always time to do it over “. What would you rather spend your time on: doing it right or doing it over?
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* By the time the Doctor peers grimly at your examination report and orders a crash diet, it’s probably too late – you should never have put on that weight in the first place!

2006-04-15T23:02:00.000-07:00

The Importance of Computer Science
Computer Science is becoming fundamental to Science

Anybody who has more than a passing interest in computers will hardly be surprised to know that their importance to how we manage business and society is growing.

However, a group of internationally respected scientists has now produced a report that goes further than just saying computers are becoming more important. Indeed, much further. The report - Towards 2020 Science - suggests that computer science is on the way to becoming as fundamental to science as mathematics already is.

The group, led by Professor Stephen Emmott of Microsoft Research, Cambridge, UK, focused primarily in the natural sciences rather than engineering or physical sciences. However, their conclusions have startling implications for science in general. They posit that, driven by advances in computer science and computing, scientific knowledge is set to grow more rapidly than ever. Since most natural systems can be modeled as information processing systems, computing advances such as Multicore CPUs, Peer-to-Peer and Service-oriented architectures, and Data Analysis tools will have dramatically accelerating effects on the rate at which science develops.

Databases, for instance, have virtually become indispensable to the scientific method - to gather data, manage it, draw inferences, and verify conclusions. Advances in computers have made statistical techniques and numerical methods much more powerful.

And their findings are not being taken lightly. The Economist and Nature, always unflappable, have gone into dignified raptures over the earth-shaking possibilities being thrown up by this report.

One thought that surfaced irresistibly while reading the report and the learned commentarites: perhaps many of the conclusions are valid for the world of business as well. Just substitute the word 'business' for 'science' above and you can scarcely disagree.

2006-04-07T04:31:00.000-07:00

Innovation Moves Centerstage
Companies are moving to become more innovative

There can be scarcely any doubt what the hottest mantra on the corporate landscape is, and will be for the next few years: innovation. Creating new products, services, business models faster - and more smartly - has rapidly climbed to the top of the corporate agenda.

Why is this happening now? Innovation has of course always been important in business. However, the world of business has arguably never been as competitive, and customers have never been as demanding as they are now. This means that any company that keeps serving up what is seen as "yesterday's" product is doomed. Simple cost efficiencies have become hygiene - what differentiates is the ability to create things that meet new needs, faster and better than the opposition can.

Also, the role of technology, even in the staidest of industries, is not to be discounted. Many activities we perform - banking, travel reservations, communicating with loved ones - have changed more in the last 10 years than they had in the previous 100. All these changes have primarily been driven by technology. The effect of this on the underlying industries - banking, travel, posts and telegraphs, telephone services - has been profound, and the companies that have survived have been the ones that innovated hard and fast.

As noted in my earlier post, innovation is today probably the most arcane of corporate skills - the one that is least understood, least structured and least algorithmic. Of course, it will not remain so for ever - with all the attention innovation is getting, this skill is bound to get more structured, and companies will figure out how to make innovation better managed, more predictable, measurable, repetitive, etc.

Already there are some new paradigms of innovation emerging, which promise to make it vastly more effective. Open innovation, which seeks to dissolve the impregnable walls of the corporate research laboratory that has traditionally been the stronghold of innovation, is gaining traction. In this model, innovations move both ways across corporate boundaries - the company imports ideas from outside, and also is more free in giving out ideas developed within. Procter & Gamble's Huston and Hakkab expound on their marvelously successful Connect and Develop paradigm, which leverages online networks of experts from all over the world, in last month's Harvard Business Review.

Many corporate shibboleths are being dispensed with. As Business Week says, companies are increasingly internalizing the truism that "If you don't fail occasionally, you're not pushing hard enough". This may just become the defining mantra of the new-age company.

Companies are also becoming more agile - the same Business Week article refers to a company that runs a restaurant chain, which has no corporate headquarters at all - the management simply meets in one of their restaurants! Fortune's Innovation Forum talks of how Boeing is speeding up design by using innovative collaboration techniques.

However, all this refers to a small minority of exceptionally enlightened (or exceptionally burnt) companies, and the bulk of companies are still mired in ways of doing things that have changed little in decades.

So, innovation will move over one day to cede the corporate throne to some new magnificent obsession, but that day is not likely to dawn anytime soon.

2006-03-24T04:10:00.000-08:00

On Measuring the Ability to Innovate
It may help to keep a simple principle in mind

Bruce Nussbaum of Business Week provides an example of how Wall street is hopelessly amiss in the knowledge economy. Apparently, Apple Computer is being considered to be flagging in its innovativeness, because it's R&D budget has been declining as a percentage of revenues!

This got me thinking. Admittedly, analysts need yardsticks to evaluate companies, but these yardsticks must truly measure whatever is being sought to be measured, and not just the closest possible proxy. A "something is better than nothing" approach simply does not work!

The Horse Sense take on this would be that, measuring success in innovation by looking at the size of the R&D budget is like figuring out how successful a song (or a film or a book) will be by measuring how long the creator took to write it.

An approach such as the above fails because it assumes that, while measuring a company's ability, output is "proportional" to input. This may be true for attributes that are fairly stable and well-understood - for example, if you are a car manufacturer, spending more to buy raw steel of higher quality would probably be expected to result in cars that are stronger or safer. This is because most manufacturers can be expected to be pretty similar in terms of how they use the raw steel to make the car - in other words, different manufacturers wouldn't differ much on "how well" they use the raw steel.

However, such an approach breaks down when the attribute under consideration can be considered a "differentiator" for the company, as then by definition, "how well" the company uses the input becomes critical. Thus, throwing big money to recruit the best designers may not necessarily help a car manufacturer produce cars that are superbly designed - that would depend on "how well" the company uses the design talent it recruits!!

Further, the "how well" principle holds more strongly as the attribute under consideration becomes less well-understood, less well-structured, and less algorithmic. In other words, as you measure an ability that is less well-structured, the "output-is-proportional-to-input" argument grows increasingly weaker.

And the principle perhaps applies most strongly while measuring innovation, which is arguably the most arcane of corporate skills today!

2006-03-17T02:47:00.000-08:00

The Wisdom of the Wiki
What's the secret of Wikipedia's success?

The Wikipedia is a manifestation of a concept that seems astonishing at first: an encyclopedia that consists entirely of entries written and edited by volunteer, anonymous contributors. But isn't that almost a contradiction in terms? Aren't encyclopedias (or encyclopediae to be precise) supposed to be the epitome of accuracy, authority, and accountability? Welcome to the world of social computing, which eschews hierarchical, centrally-driven ways of doing things, instead valuing interactions between peers.

Take a look at the Wikipedia statistics: it appears in 215 languages, has 83000 contributors (up from 10 in Jan 2001), features 2.6 Million articles, and adds 6000 new articles per day. A search for 'wikipedia' on Google produces 361 Million hits. These are hardly statistics that represent a product that is struggling to get off the ground - indeed, they offer ample proof that the Wikipedia has taken off and gained a huge following. It crossed the 500,000-article milestone two years ago, in February 2004 - date that can thus roughly be taken to represent the "take-off" stage for the project.

Opinion on the success of the Wikipedia is, of course, not undivided. The concept has many detractors. Reams of newsprint, websites and blogs have been dedicated to arguing its merits and otherwise. It is of course prone to malicious use too.

Here's the horse sense view: The wikipedia is a phenomenal source of information - arguably the single best source of information on any topic under the sun. It has gotten to the stage where, when looking for information on many topics, I often look directly in it rather than first do a Google search (which is of course the default way to look for information!). The only caveat is that, if you're researching material for an article or business report then it may be a good idea to treat what you find in Wikipedia as only a starting point and then verify it independently, but otherwise the material in Wikipedia is good enough for most uses.

What's the secret of its success? At one level, it's success is simply the success of social computing in general - the steady march of advances in computing that have put more computing power in the hands of the masses, allowing them to use it to achieve ends that they truly consider useful. At another level, its the 'Wisdom of Crowds' phenomenon - a large number of people tend to be smarter than a few individuals, no matter how qualified.

In the final analysis, however, the Wikipedia is emblematic of the steady powershift that technology itself embodies - from Governments, large institutions and organizations to the individual. Nobody decides on behalf of the user - the user is in charge, for better or worse. This stunningly simple principle is what has made Wikipedia, and indeed wikis in general, a phenomenon so powerful that it can be termed a profound social megatrend.

2006-03-02T02:36:00.000-08:00

Google: Searching for More...
Can Google be more than a one-trick pony?

Google is undoubtedly one of the most innovative companies around. However, despite several laudable initiatives, the company still remains woefully dependent on one source for its revenues - getting people to click on ads embedded in web pages.

I find such a business model less than inspiring - personally I have clicked on such embedded ads perhaps less than 10 times in the thousands of sites I have surfed. Why should I, when I know it will only open one more window on my already-cluttered desktop, sidetrack me from the task I was accessing the Web for in the first place, and probably only try to sell me something I don't really need?! To get me to set myself up like that, the ad would need to say or show something very alluring indeed - and that's not easy, given that the average embedded ad in a web page occupies perhaps a few square inches.
Print ads do not suffer from at least the first two of these drawbacks - the whole ad is already present right there on the page of the newspaper or magazine you're reading, and it can also be quite large, giving more play to the copywriter's creativity.

Besides, the click-thru revenue model is rife with fraud - people can spoof, use bots, etc. to artificially boost or skew such clickstream data. Google can - for no fault of its own - find its credibility undermined by such fraud. And the fraudsters, whoever they may be, are only likely to get better at it.

Tuesday's sell-off appears to confirm that the belief, widely held until a few months ago, that Google has huge upside was overblown.

Admittedly, Google has many aces up its sleeve, but one only wishes they would convert these into actual revenue streams as fast as they can.

2006-02-22T02:05:00.000-08:00

Do You Know Who Owns Your Company?
Globalization and the Law of Unintended Consequences

The acquisition of a British company by a Dubai-based company this month has US lawmakers in a tizzy. Why?

The British company is the Peninsular and Oriental Steam Navigation Company (better known as P&O), which is being acquired by Dubai Ports World for $6.8 Billion. And no, the brouhaha has nothing to do with sentiment, although P&O is a hoary old company and one of the great names in shipping. It is because this acquisition will give DP World control over significant operations at six major US ports.

A similar lather resulted when a Chinese company tried to buy the US company Unocal recently. These are however cases where tracing true ownership was fairly straightforward. As globalization goes deeper, this is likely to change.

This brings home the sobering lesson: In an increasingly globalized world, corporate ownership will get more and more opaque. Who knows who owns the company which is headquartered in a tax haven, and that just bought 3% of your equity?

This is one more big challenge (not that they needed any more) for company promoters, regulators, shareholders, and anyone with a stake in good corporate governance.

2006-02-02T02:33:00.000-08:00

The Crystal Ball - in Need of Fixing!
Our ability to foresee emerging technologies is amiss. Can we do something about it?

We've all heard of Cassandra, Pollyanna and Rip van Winkle, right*? And we thought they were mythical characters, or at the very least, existed in dark, unenlightened times. Well, we may just need to do a rethink on that.

It's not very edifying to know this, but we in modern science, technology and business, make mistakes in foreseeing emerging developments - particularly of the technological kind - that fit into patterns that uncannily resemble these hoary old mythical characters! And with all the latest knowledge at our disposal!

Read how in my Computerworld column, Re-engineering the Crystal Ball . The piece also proffers simple, easy-to-use pointers on overcoming our deficiences in foreseeing emerging technologies.
Some technologies currently in the exuberance phase that appear less alluring when subjected to this scrutiny include eXtreme Programming, Utility Computing or Software-as-a-service, Open Source, the Tablet PC, Agent technologies and the Semantic web. A few technologies which, based on these pointers, are shown to merit strong consideration for widespread corporate adoption: Wikis, Micropayment technology, Grid computing, Podcasting, the iPod, VoIP-based collaboration technologies, Human speech recognition, Electronic auctions and Prediction markets.

Foreseeing - technologies or any other developments for that matter - has always been an exercise of the hit and miss kind - see a couple of pieces that agree, here , here and here. I'd like to think that I've done my mite in bringing some badly-needed horse sense to this crucial activity!
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* In case you haven't, or have forgotten: Cassandra was the one known for making baleful predictions. Pollyanna was the opposite - always cheerful. And Mr. van Winkle - well, he was just oblivious to what was happening in the world around him.

2006-01-20T04:46:00.000-08:00

Corporate Longevity (Revisited)
Of declining companies and brands (but maybe not the big ones?)

In an earlier post, I wrote about once-mighty icons of the technology industry - Digital, Sperry, Burroughs, Compaq - who are but mere memories today. However, here's a scary fact from the McKinsey Quarterly in its Ten Trends to watch in 2006: it says that the probability that a company in an industry's top revenue quartile will not be there in five years is as high as 30 percent! So clearly, the phenomenon of high mortality is not confined to the technology industry but is applicable to the corporate world in general.

And what's more, this has been an accelerating trend for decades. Back in 1999, Marina Whitman wrote in the Harvard Business Press book New World, New Rules: The Changing Role of the American Corporation:

"Only about 4 percent of the Fortune 500—the largest U.S. industrial companies—had turned over annually during the 1960s and 1970s, but by the 1980s the average annual rate of turnover had doubled to 8 percent".

Also, James Surowiecki writes in Wired magazine , that while the number of brands on US grocery store shelves has trebled since 1991, customer loyalty to brands has been on a precipitous decline, and even the loyal ones are less willing to pay hefty premiums for brands perceived as high quality.

So, it's no big wonder that companies decline and die with alarming regularity. Don't get too wedded to your favorite newspaper or brand of toothpaste - you may be forced to change it every few years!

However, all is not lost - here is a heartening observation: Surprisingly, since the Fortune 500 list of the largest American corporations was first published in 1954, only 3 companies - General Motors, Exxon Mobil and Walmart - have held the No. 1 position. BusinessWeek's Mike Mandel also finds some evidence in the labor statistics that big companies account for a greater share of job creation.

So maybe there's some truth to the belief that size means stability!

2005-11-30T00:35:00.000-08:00

The Incredibly Shrinking Printed Word
The printing industry, once the victim of powerful resistance, is today itself resisting change.

This sounds a bit like another of those apocalyptic predictions of doom / gloom that we see all too often, but the demise of the printed word appears to be at hand (or at least, visible on the distant horizon). Amazon has introduced Amazon Upgrade which enables online access to a book that is purchased. Microsoft is helping the British Library to digitize and make available via MSN Book Search, 25 million pages (roughly 100,000 books) from the British Library’s collection over the next year. The most well-known - and widely feared - initiative on this front is of course, the Google Print (now Google Book Search) initiative.

Why is it happening now? Because the technological capability is only now beginning to become available - to scan, store, index, and deliver online the humongous content locked up in the world's books would have been unimaginable a few years ago.

This flurry of digitization of content is shaking the foundations of publishing as we have known it for the last couple of centuries. Will this mean that authors and publishers will no longer be able to control who accesses their creations? How will revenue be earned on published content? The economics of the publishing industry, and also the very concept of copyrights and ownership of Intellectual Property rights to published content, are being threatened.

There is, of course, huge resistance from the publishing industry, which can hardly be expected to take such a threat to its revenues, and its very future, lying down. Ironically, this is a throwback to the resistance that emanated, particularly from the Church, to Gutenberg's invention of the printing press. The irony is that this time around, the resistance comes not from the those who are afraid of printing, but the printing industry itself! So the printing industry has come full circle, from being the fugitives to the entrenched interests resisting change.

It is widely expected that all the resistance is going to see some scaling back of most of these initiatives.

Overall, the horse sense view on this would be that, any initiative that helps information flow more freely, and releases knowledge from its silos is to be lauded. After all, history teaches us that the darkest ages were those where knowledge was the most monopolised by powerful interests. And I'm sure most of us have had the disconcerting experience of searching for a term or a concept on the internet, only to find that the precise information we want is locked up in some printed book or journal. An added benefit is that we no longer need fear that the priceless works of ancient and medieval authors will be forever lost one day.

I guess those of us in the technology industry should also see this as further proof of how, as technology advances, it inexorably impacts the social and cultural fabric of life too.

It's going to be a big, game-changing battle. But what it is, at the bottom of it all, is Power to the People. And one can scarcely argue with that!

2005-11-10T22:27:00.000-08:00

VoIP and Valhalla
A true "killer-app" in the making

VoIP (Voice over Internet Protocol) has already been hailed as the death knell for POTS (Plain Old Telephone Services). But there is another application of VoIP that makes simple, one-to-one voice communication seem pale in comparison. And that is, web-based collaboration using VoIP.

Ok, what's so life-enhancing about web-based collaboration, and what does VoIP have to do with it anyway? Web-based collaboration is, of course, groups of people located at geographically separate distances working as a team to achieve a common goal. It's happening now, but a big barrier is the cost of communication. And that's where VoIP comes in - by reducing the cost of voice communication to almost nothing, it's going to open up a great deal of new areas. Imagine the possibilities - medicine-at-a-distance (the services of expert surgeons can be utlised anywhere in the world); learning (likewise the services of tutors); leisure (family and friends can be virtually together for as long as they want to be); after-sales service; consultancy and advisory services of various kinds ...in short, it will be a giant leap towards the long-proclaimed 'death of distance'.

What the lowered cost does is, it allows these things, which may be happening in pockets now, to happen on a really large scale, and render distance almost irrelevant. Of course, it will take a while for VoIP to really become free, and another void to be filled is that collaboration software needs improvements. But we can really begin to see these things in 2-3 years' time.

It is, at least partly, for this reason that VoIP companies have become the hottest property on the planet. No wonder eBay paid an astronomical price (up to $ 4 Billion) for Skype. Microsoft too is acquiring VoIP companies by the handful.

In a lighter vein, with all the talk of killer-apps and VoIP-induced death, one can't help feeling that Valhalla, that great hall in the sky where the glorious dead feast all night, had better start thinking about expansion plans.

2005-10-18T02:08:00.000-07:00

A Hazy Picture for Home Entertainment
Sadly, sometimes the price of technological innovation is confusion

There is perhaps no aspect of life where technological innovation is set to produce more flux than the home entertainment space. And I'm not talking about the video iPod. I'm talking about how the humble home has become the battleground in the fight between all the behemoths of the technology and entertainment industry. And all because of the blazing speed of technological innovation.

Cable service providers are getting into providing telephony, and telecom service providers are in turn getting into TV-over -IP (or IPTV). BusinessWeek writes that "The new holy grail of the communications industry is the triple play: the ability to offer customers data, video, and voice".

In the broader home entertainment space, competing visions have emerged. Computer industry stalwarts such as Microsoft and Intel are pitching a scenario where the PC will be the entertainment hub which will house, and control the flow of, all content such as songs, films and TV programs. Media and content companies such as recording companies, film and TV studios are recalcitrant about such a picture, as they foresee large-scale piracy and potential loss of revenue from content. They would like to see content being housed on disks, as it is today, with plenty of technological bells and whistles to ensure that it is not pirated.

The real battle that is assuming Armageddon-like proportions is one that has all the giants of the technology and entertainment industry arrayed: the DVD wars. This pits Sony's Blu-Ray format in one corner with Toshiba's HD-DVD format in the other. This battle royale is for who will control the next generation DVD format. At stake, aside from multi-billion dollar revenues, is nothing short of the future of Sony and Toshiba as powerful players in the home electronics space, and perhaps that of Microsoft and Intel as potential rulers in this space.

In the midst of it all, of course, and quite forgotten, is the hapless consumer. Can you imagine the fate of the poor bloke who plonks down his hard-earned cash (or credit!) to buy a player supporting the format that will end up on the losing side of this battle? At all costs, all the companies concerned must ensure that only one standard makes it to market.

For consumers, the advice is: unless you are a pioneer, or 'early adopter', and willing to risk being saddled with potentially useless devices, wait until there is more clarity in this space before you make any investment

2005-09-23T02:53:00.000-07:00

eBay's Skype buy: Not Just a Recipe for Hype....

Does this deal signal the next logical step in the evolution of ecommerce?

Even as the dust settles on eBay's purchase of Skype, there is considerable befuddlement among analysts and observers as to the strategic motivation behind the buy. The consternation arises not only from what people see as an apparent lack of synergy between online auctions and IP telephony, but also from the seemingly exorbitant price paid - upto $4.1 Billion. Some may be tempted to wonder whether eBay hasn't landed itself with a winner's curse!*.

Surprising as the deal initially appeared, a semblance of rationale is beginning to emerge. For one thing, this deal is entirely consistent with eBay's aspirations of being one of the internet honchos, along with Amazon, Yahoo and Google.

More fundamentally, it may be the logical next step in the evolution of ecommerce. How?

- By allowing buyers and sellers to communicate instantly, an integrated eBay-Skype platform could smoothen buyer-seller interaction which is a critical component for ecommerce.

- By allowing real-time, synchronous online auctions – these would be just like regular auctions where aspiring buyers attempt to outbid each other, with one difference – the bidders may be sitting in different continents and bidding via telephones / videoconferencing equipment. Achieving this using conventional telephony is prohibitively expensive, but costs virtually nothing using VoIP.

eBay hasn't said this is in the roadmap, but it appears likely.

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* defined by the wikipedia as a phenomenon that occurs in auctions, where the person who bids the highest frequently ends up paying a price that is more than the "true" value (or at least worries that he has done so). People have researched the winner's curse phenomenon in eBay auctions.

2005-09-19T23:09:00.000-07:00

An Enlightening Initiative from IBM

IBM's program to help science education is an object lesson to the tech industry at large, but perhaps conceals an inadvertent irony.

Many have decried the declining trend of math and science education, and have sounded dire warnings that the technology industry will grind to a halt if something is not done about it. Luckily, some are now putting their money where their mouths are.

IBM has this week begun a program that supports its employees in the US who want to transition into science teaching. The new program, says MSNBC, "reflects tech industry fears that U.S. students are falling behind peers from Bangalore to Beijing in the sciences". Of course, IBM is not the first to act. Microsoft has an "Innovative Teachers" professional development program, which includes $50 million in software grants for educational institutions.

Not surprisingly, these two companies also rank at the top of the most favored places to work in the tech industry. Perhaps it just goes to show that comapanies that take an enlightened approach to their role in society take an enlightened approach to their employees as well. Stanley Litow, head of the IBM Foundation, says that many other companies are watching keenly and may follow suit.

Such programs are particularly valuable as the US tech industry is clearly down from its halcyon days of untrammeled growth - starting salaries for college graduates have shown marked declines between 2001-05, the biggest decline being in Electrical and Computer Science & Engineering.

But where's the irony? Litow's comment that "Over a quarter-million math and science teachers are needed, and it's hard to tell where the pipeline is", got me thinking. Perhaps the pipeline is precisely in those locations which the US is concerned about being overtaken by!

Think about it. It is now possible for students in the US being taught online by tutors sitting in Bangalore or Manila. And it's already happening. And given the obvious pecuniary advantages, it is not unlikely that teachers in these countries would gravitate to such an occupation in larger numbers.

The irony is that, it is not inconceivable that in the near future, outsourcing destinations for tech jobs such as India may find their growth stifled by a scarcity of high quality tech graduates. This scarcity will be caused in good measure by good science teachers being preoccupied with training students overseas. And what will allow the teachers to thus divert their skills? The same technology and forces of globalization that drove the offshoring of jobs from the West, and created demand for tech jobs in India in the first place! Now, why do I have the feeling that this is not the last irony that this new, globablized world is going to serve up?

2005-09-16T04:26:00.000-07:00

Oracle's Strategy: Shrink-SAPped Software?

Oracle's acquisition binge sets up a two-horse race in the packaged software business

As I noted in an earlier post, mergers are happening at a breakneck pace, particularly in the technology space, where the coffers are overflowing. Oracle's Siebel buyout is the latest big-ticket deal. As with the PeopleSoft buy, this deal marks a home-coming of sorts (both PeopleSoft and Siebel were started by ex-Oracle execs).

With this string of acquisitions, Oracle has emerged as a behemoth in the business, and is increasingly positioned to combat Germany's SAP, the industry leader. This business is thus increasingly turning into a two-horse race (IBM does not play in this space, while Microsoft appears content to be a bit player (although it considered acquiring SAP at one time).

For its part, SAP appears unruffled for now. SAP CEO Henning Kagermann says in Business Week that this as a desperate (and futile) catch-up strategy by Larry Ellison. And he mayhave a point. Oracle has just bought up a complex set of offerings, with conflicting and overlapping features and technologies. It has a big challenge on its hands figuring out how to integrate them, and may not necessarily get them all to work well together. In the meanwhile, unless Oracle provides clarity on what its future porfolio is going to look like (something it hasn't yet done), existing and potential customers are going to be jittery, wondering if what they have bought, or are planning to buy, will be discontinued. Strategically too, Oracle will be preoccupied for a while with its internal integration issues. SAP, on the other hand, has a better chance of being seen as consistent and coherent in its strategy.

Consolidation in the enterprise packaged software business has been driven primarily by - apart from overflowing money bins - the fact that customers are tiring of the "best of breed" (often euphemism for a mongrel!) approach, and expect a single vendor to take full responsibility for their entire IT applications portfolio. Another driver is the big players' hunger for revenue growth. A notable irony is that during the 1990s the packaged enterprise software business (then called ERP), was widely expected to replace custom, or bespoke application development. The acquisitions suggest the opposite - they seem to bear out Peter Drucker's classic observation that acquisitions are a sign of an industry in search of growth.

The IT landscape thus continues to churn, and not just with acquisitions. China is making its presence felt (the IBM - Lenovo deal), and so is India, with its offshore powerhouses. Neither are all the acquisitions blockbusters - there are smaller, less noticed ones too, such as Seagate's buyout of Mirra.

There may be a pattern to all the churn. The entire IT industry appears headed towards what The Economist referred to sometime back as the platform wars. As customers increasingly look for vendors who can take responsibility for the entire IT portfolio, they choose to rally round big players — interestingly, this seems a bit like a return to the old days of proprietary, closed computing platforms, albeit with a different reason - the need for fewer integration headaches.

In this great end-game, four big industry players - IBM, Microsoft, Oracle and SAP - seem destined to be the stars, with everyone else assigned bit roles. Will it really pan out this way, and who will win?

2005-09-08T05:00:00.000-07:00

Apple of our iPods

I am not normally inclined to write about the achievements of individuals - less so in eulogizing terms, and even less so when they are alive. Neither am I particularly enamoured of the Apple breed of computers or the iPod, having hardly used either.

However, there comes a time when exceptions to general rules must be made, and this is such a time. Beyond a doubt, one of the most amazing - and inspiring - tales in the annals of the technology industry is that of Steve Jobs. Let me hasten to add that I know almost nothing of him as a person - for all I know, he may be cold, aloof and unfriendly (and perhaps he even snores!). However, I do not care about those things - based on the public record of his achievements alone, he is clearly one of the most incredible role models for anyone with more than a passing interest in technology.

Let's count the ways. He pioneered an entire industry (Personal Computers), started a very successful company (Apple), actually managed to get thrown out of the very company he started (surely a feat achieved by the rarest few!), and then started another pioneering company (Pixar). He then proceeded to make a comeback to Apple more than a decade later, battled and defeated cancer, and then refashioned Apple, which many had written off, all over again into a powerhouse of innovation. Business Week reports that today, "Apple makes wildly imaginative products with a consistency few companies rival".

My favorite part of this story is of course, the history of how Apple started. Steve Wozniak and Jobs's garage-to-riches story is now the stuff of legend. These guys had, between them, the foresight to realize that there would indeed be a market for low-cost personal computers (virtually unknown at the time), the technical wizardry to create a working PC, and the business acumen to build an industry. Along the way, they pioneered some of the most well-known concepts in personal computing.

A window into his life which is both poignant and revealing is this year's commencement address he gave at Stanford University - Stay Hungry, Stay Foolish. Reading the transcript, we realize why getting evicted from the company he founded didn't faze him one bit, as none other than his own mother had rejected him (and even before he was born, to boot!). We see the beginnings of his business acumen, in that he managed to survive with virtually no income after dropping out of college. We note his incredible ability to live the hard life - he used to get one good meal a week, and only by walking 7 miles to the Hare Krishna temple. He even talks about the lessons that getting fired from his own company taught him! His near-death brush with cancer is recounted.

As with many other people who were legends in their lifetime, we see an ability to compress many lifetimes into one.

2005-09-01T00:36:00.000-07:00

An Informed Technology Consumer Be

What is the link between Information Technology and productivity?

Information Technology's beneficial effects on business are myriad. It has not only enabled mightily successful businesses such as ebay, Amazon and Yahoo!, but has allowed us to discover and take advantage of amazing phenomena such as the "Long Tail", first posited by Chris Andersen of Wired magazine.

However, let's focus on a pointed question: how much, if at all, has information technology (IT) contributed to the productivity of businesses? Productivity is the efficiency with which output is produced by a given set of inputs - so, for example, if the productivity of a bus factory is increasing, it means the factory is able to crank out more buses per worker (or per hour or per dollar). IT's effect on productivity has been a matter of considerable debate, both academic and popular.

Before answering this question, let us ask, What is technology?* The most general definition is, "the sum total of knowledge, skills, techniques and tools available to humankind". Defined in this way, it is hardly surprising that technology should boost productivity - that is merely another way of saying that better knowledge, skill and so forth improves our ability to squeeze more output from whatever we put in. In fact, this has been true since the stone age (if not earlier)!

Of course, here we are restricting ourselves to Information Technology, which we may define (specializing the above) as, "the application of knowledge, skills, techniques and tools to create, store and use information". By common understanding, IT includes computing, networking and communication technologies. Let's examine some evidence.

A paper by the Research and Market Analysis group of the New York Federal Reserve finds that productivity did increase across US industries during 1995-99** in comparison to the previous 5 years, and while the entire gain in productivity could not be attributed to techology, there was a "robust link" between the two (these US Fed folks have a wonderful penchant for using the right word - I am a great admirer of the language they use!).

Business Week's Michael Mandel sees the unmistakable hand of technology in the strong growth of US multifactor productivity in the last two years. A study by the McKinsey Global Institute is more circumspect, concluding that IT boosts productivity, but only when tailored to an organization's business processes. It also discovers that innovation is a strong driver of productivity growth, and IT boosts productivity to the extent that it enables this innovation. MIT Sloan School's Professor Erik Brynjolfsson finds that the amount of IT used in a company correlates well with it's overall productivity, and notes an emerging agreement among economists that "IT has been the biggest single factor driving the productivity resurgence, although debate continues about the exact magnitude of its contribution". He cautions that IT helps only when combined with judicious, complementary investments. Christopher Koch of CIO magazine echoes this cautious sentiment.

Taking another tack, outsourcing, which has enabled companies to achieve the same output with fewer inputs (of labor, primarily), is itself strongly facilitated by IT - both because automated business processes are more amenable to being done remotely, and because the outsourcing itself is carried out using networking and communication technologies. Here too, the experience is replete with admonitions to the effect that outsourcing realises its avowed benefits only when done judiciously, with a strategic perspective.

So, the answer to our question is: IT has certainly been a strong (if not the strongest) driver of productivity growth in business. However (and such conclusions usually include a 'however'!), IT really delivers benefits only when integrated well into the organization's business context and processes. As with anything else, it helps to be an informed buyer.

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* In keeping with the "horse sense" tradition, we revisit the basics.

** Given the amount of data such studies need to ferret out and crunch, detailed analyses of productivity gains tend to come only with a lag of a few years.

2005-08-25T23:33:00.000-07:00

Surging Profits, Booming Markets
(...and Frowning Prophets?!)
Or, Is It All Too Good To Last?

Companies all over the world have been seeing bumper profits over the last year. The Economist reports that corporate profits have been outpacing GDP growth on both sides of the Atlantic, as well as in the Asia-Pacific. Business Week informs us that companies all over have surpassed profit growth expectations, and are flush with over a trillion dollars in cash. Technology companies are especially doing well - Microsoft, Dell, Intel, Oracle alone have amassed large surpluses.

What factors have led to this? Outsourcing to cheaper destinations is producing savings that go straight to the bottomline. Low-cost goods and services from China and India are keeping inflation low, freeing up spending money in consumers' hands which shows up as increased demand for all types of products that companies sell. Better use of technology is helping too, as companies have got smarter and more finicky about how well they use technology.

Meanwhile, the China-India effect* is helping produce some related, and largely pleasant, macroeconomic developments:
- the low inflation, caused by these countries "exporting deflation", is also keeping interest rates low worldwide
- thanks to more money in consumers' hands and low interest rates, people are investing in asset-building with renewed vigor - particularly in stocks and houses
- this in turn is leading to steep rises in asset prices and, most economists agree, asset price bubbles in most countries
- the resulting 'wealth effect' (people feel richer as their stock portfolios and real estate values shoot up) is further spurring consumer spending, as people spend more when they feel wealthier!

Can this last, and what can go wrong? This is admittedly a happy state of affairs. But while profits and asset prices are soaring, some worries are rising too.

- the asset price bubble can burst (or at least deflate)
- continued sluggishness and job growth stagnation in the EU countries can drag down world GDP growth
- economic policy responses from Governments need to be right (low-cost products can keep inflation low only in the short term - in the long term, only macroeconomic policy matters)
- consumer spending may slowdown in the US, the current engine of growth
- resistance to outsourcing can build up (on grounds of job losses, security concerns,...)
- worrisome or cataclysmic geopolitical events can happen (such as energy supply volatility, terrorism, nuclear arsenal buildup etc.)
- imbalances have been accumulating in the world economy, setting up stresses which may get released in unexpected ways and at unexpected times. (China's recent re-evaluation of the Yuan, although widely criticized as too little and too late, is a welcome step towards reducing one such imbalance). However even Alan Greenspan, that doyen of economic prophets, has admitted that there are forces at work in the world economy that we do not fully understand. Indian Finance Minister P Chidambaram said last week that he would be "worried" if the Bombay Stock Exchange's key Sensex did not stop its rampaging rise soon (the market duly lost some of its ardor).

If anything, all of this shows the world of business and economics has been changing - and so far, the positive effects outnumber the negatives. In general, history teaches that happy positive cycles such as the above tend to be fragile (and often too good to be true). This one looks robust, but how long it can last, only time will tell. Meanwhile, let us hope that we do all the right things to prolong the boom as long as possible, and cushion the fall when it comes.
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* The China-India buzz has been getting hotter. Business Week ran a cover story on the two countries recently. Business Week's Mike Mandel is also addressing the question of how the US should perceive the two countries' ascendant R&D prowess.

2005-08-20T00:32:00.000-07:00

Blogging: Just How Much of a Phenomenon?

Towards a measure for the success of blogging

In a previous post , I talked about blogging’s future. Here we will try and arrive at a “measure" for how successful blogging has become, and how much more it is capable of achieving.

It is pertinent to note that we are not talking about measuring the success of a specific blog, but of blogging as a phenomenon.

Before tackling the admittedly difficult question of measuring its success, let’s pause and ask, What is blogging? At one level, it is a tool which individuals use for communication and self-expression. Indeed, this was the only use conceived initially. As its usage soared, it also emerged as a tool for on-line 'communities' to interact and disseminate news or useful information. The most recent emerging use (completely unanticipated in the early years of blogging's existence) is for commercial organizations to interact with various stakeholders.

Thus, a reasonably general definition of blogging would appear to be, a technology that lends itself for use by individuals, communities or organizations as a means of communication, information dissemination or interaction.

How do we go about establishing a measure of the success of anything? One way is to identify its "potential", and measure what proportion of that potential has been achieved. For example, if your company sells flat-panel TVs, the potential market would probably be equal to the number of households in the world having a household income of more than a certain figure. If you are trying to popularize a new 'world language' that you have invented, the potential probably corresponds to every human in the world speaking the language. If you sell beer, the potential sales would probably correspond to each adult in the world drinking 150 liters a year!*

However, it is frequently difficult to assess potential in this manner. A surrogate, more practical approach would be to identify the 'best' achieved by anybody so far. If you are an athlete, your 'best achievable' may be the current world record in your event. In the TV example above, the ‘best achievable’ may be the sales volume achieved by the market-leading company.

Thus, the problem reduces to discovering the 'best achievable' usage of blogging. To do this, we must stretch our imagination a bit and ask, what are the "best" technologies** that meet roughly the same needs that blogging does, and what is the usage they have achieved? The “best” technologies we have that allow communication, information dissemination or interaction are probably telephones, email, and conventional web sites.

The number of telephone lines (fixed and mobile) in the world is estimated at around 2.1 billion. Similarly, the number of email users is in the region of 600 million.

How many websites exist in the world? Yahoo indexes 19 billion web pages, while Google indexes about 9 billion. Taking the smaller of the two, and assuming the average website has around 20 pages, the number of websites may be approximated as about 500 million.

Let’s be conservative, taking the smallest of the 3 figures (for telephones, email users and websites) which is 500 million. To be play it even safer, let us assume that many websites represent uses that blogs just cannot. So let us say that the figure of 500 million overstates the figure we are looking for by 90%. This leaves 250 million (assuming many websites are defunct, etc.). It appears safe to say that this represents the usage that blogging must achieve. Thus, the “best achievable” number of blogs is, at the very least, 250 million. The current number of around 80 million thus suggests that blogging has covered about a third of the distance to its “best achievable” usage.

Of course, we will be shortchanging blogging if we end this analysis without considering time frames. While telephones have taken 20+ years to reach their current usage (counting only from the time mobile phones were invented), email has taken 15+ years, and the web 10+ years, blogging has been around only 6 years or so.

To dwell a bit on how technologies evolve over time, let us look at an elegant concept, the 'S' curve. What this says, very simply, is that every technology has an initial period during which it grows very slowly. As it improves and gains usage, it crosses an 'inflexion point', beyond which growth takes off rapidly***. Further down, the technology reaches a maturity stage where growth once again slackens. Metcalfe's Law, which holds that the usefulness of something goes up exponentially with the number of its users, applies during the high growth section.

Thus, in S- curve terms, blogging can be thought of as having crossed the inflexion point, and being about 30% of the way to the peak. In other words, 70% of its potential is yet to be achieved.
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* If that sounds high, the Czech are reputed to drink 167 liters per capita per year!

** As is clear from the context, we use ‘best’ not as an indicator of quality but to mean ‘the one that has achieved the greatest or most widespread use’.

*** Not all technologies, of course, actually cross the inflexion point - many (indeed, most) die out well before they reach that point.

2005-08-08T09:02:00.000-07:00

Excitement in the Ether
An intriguing suggestion (dismissed as a rumor by Nokia) has appeared over the weekend - that Cisco is eyeing an acquisition of Nokia, evidently driven by a desire to strengthen its wireless infrastructure business. At a superficial level, this sounds plausible - companies worldwide have amassed unprecedented cash hoards (see, for example, The Economist and Business Week), due in part to central bankers' generosity in keeping real interest rates at historic lows, and we can well expect to see a rash of acquisitions in the near future. Also, Cisco certainly is one of the cash-rich giants around, and has amply proven its acquistion credentials.
However, we must pause and ask, how much business sense does this make? As Marek Pawlowski points out, Nokia's business is in making handsets more than wireless networking equipment, and Cisco will be hard put to rationalize buying all of Nokia just to get its wireless infrastructure manufacturing business.
Neither does such a deal appear to make a lot of sense for Nokia, which does not strike me as an overly enthusiastic acquisition target - at 34% of the world market, its handsets outsell those of the nearest competitor (Motorola/Samsung) by 2 to 1. And that is hardly a market that is shrinking - worldwide handset shipments are likely to double over the next 5 years to 1.2 billion.
The backdrop is not very promising either - recent megamergers in the tech space have hardly been stellar. HP / Compaq and AOL / Time Warner come to mind.
And given the size of the deal, even a veteran with Cisco's admittedly high 'Acquisition Quotient' is likely to be overreaching with this buy.

2005-08-05T05:08:00.000-07:00

Blogging's Future: Up, Up and Away?

Beyond a doubt, blogging has a bright future. It's tempting to get carried away by all the exuberance being generated.

Bill Gates says blogging "will fundamentally change how we document our lives". Technorati's CEO David Sifry says that there are 11 blog posts being made every second!

While this may well be true, we must resist the temptation to get carried away. Let's analyze blogging's prospects as a 'personal technology', or a technology that individuals use to improve their effectiveness or productivity, or simply to have fun.

All successful personal technologies that gain widespread use (be it the humble pen, the telephone or the iPod), bear certain hallmarks: they are easy to use, fulfil a basic need, and provide a new way to express an existing behavior or habit. Technologies that make the cut on these three respects tend to 'take-off', with their use surging steeply*.

Blogging certainly fulfils a basic need, the need for self-expression and social interaction. It is also more powerful in many respects than other technologies that meet similar needs - the telephone, email or online chatting - in that it is more 'permanent', and allows visibility to anyone who can access the Web. It also provides a new way to exercise our natural propensity to form groups with like-minded folks, by allowing us to form 'virtual communities' on the Web. It also allows people to 'discover' others with similar tastes, wherever they may be in the world.

Well, that leaves ease of use. I am afraid blogging is somewhat less stellar in this respect - while it is simpler than creating personal Web pages, it still lags far behind the telephone and email in ease of use. So, ease of use is the first thing that needs to improve about blogs (I hope the blog tool-makers are listening).

If one is tempted to argue that blogging is already very successful, one only needs to pause to consider the numbers: by most estimates there are around 80 million blogs in the world as of today, while the number of telephones world-wide (fixed-line and mobile) is around 2 billion. This is not to take anything away from the success of blogging, but only to establish (an admittedly somewhat crude) benchmark!

However, we've looked at only half the picture so far - becoming successful. Success brings its own problems, and sure enough, blogging too will need to overcome a couple of challenges that success brings with it:

Better ways to manage 'blog clutter'.
Even with the current number of blogs out there, it is becoming difficult for people to navigate the blogosphere. Telephones or email don't need to solve this problem as they are 'push' technologies, which means that you *want* to restrict who can contact you using these technologies. However, if blogs are to truly live up to their promise of allowing the 'discovery' of like-minded folks, then blog search engines should (and will) get smarter.
Search is of course not the only way to manage clutter - for example, Business Week's Heather Green talks about creating 'influential blogger' lists.

Blogging needs to find ways to enable diverse communication needs
Blogging tools already do a half-decent job of allowing the sharing of digital content. However, as camera phones proliferate, sharing pictures and movies will increasingly become mainstream. Also blogging from heterogenous devices (phones and home appliances come to mind) is likely to need support.

Of course, this piece only addresses blogging as a 'personal technology'. Analysis of its prospects in business - which are fledgling at the moment - is the subject of a different discussion altogether!

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*This is driven by Metcalfe's Law, which holds that the usefulness of something increases exponentially as the number of users goes up.

2005-08-02T23:46:00.000-07:00

The End of Corporate Computing and other Fables

Nicholas Carr is back and at his contrarian best with The End of Corporate Computing in this Spring's MIT Sloan Review*. He posits that Information Technology (IT) is in transition: from an asset owned and hosted by corporations for their own use, to a utility that is supplied centrally by specialized companies. His argument takes the concept of utility computing to its logical extreme, and holds that the corporate data center will go the way of the dodo.

Nick is wonderfully eloquent, and his argumentative skills are admirable. His case would have been very persuasive, had it been based more solidly in reality. As with his earlier article IT Doesn't Matter, he overstates his case here too. Business software often automates complex and firm-specific business processes, and does not easily lend itself to centralization with a utility supplier. It is difficult to imagine a car factory carrying out its manufacturing planning or control thru a subscribed utility, or an investment bank performing securities analysis on a vendor's computer sitting hundreds of miles away. The author's vision may, however be seen as providing a general direction in which computing will evolve.
Summing up, the horse sense view is: It appears far-fetched to state that utility computing will render the conventional model of each firm hosting its own IT applications extinct, or even that it will become the dominant mode of IT use in corporations. Utility computing may gain traction over the next few years for applications that are not highly firm-specific, where business-criticality and security requirements are moderate / low, and where speed of response is not highly material.
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* Francis Fukuyama's epochal The End of History seems to have caught everybody's imagination so much that it has spawned an entire genre that is going strong even 15 years on! I remember lapping it up the article as a young, gawky research scholar, and the furore that followed it's publication!

2005-07-29T03:12:00.000-07:00

Corporate Icons...and longevity.

My first post is on a somewhat poignant note. The Economist, in its Feb 17th 2005 issue stated that Verizon’s buyout of MCI will result in a combined firm with sales of $90 billion. A couple of issues earlier the same magazine, in its superbly written article on AT&T’s changing fortunes had declared that the SBC-AT&T merger, with combined revenues of $70 billion, “creates America's largest telecoms firm”. Looks like SBC got to rejoice for a whole two weeks.

More soberingly, this brings home the increasing rapidity with which things change in the technology industry – AT&T’s reign as the big boy on the block had lasted several decades during the last century.

Another fallout from the imminent (?) demise of AT&T as an independent firm is the loss of a corporate icon - one of America’s greatest and most enduring. For that reason at least, let us hope that SBC-AT&T decides to badge itself as AT&T. Otherwise, AT&T will join a list of hallowed technology names that are now mere memories – Digital, Sperry, Burroughs, Compaq,… The high-tech industry sure is no place to be sentimental.

2005-07-29T02:24:00.000-07:00

Welcome to my World Wide Webquarters! I hope to make this a place where Business and Technology intersect with plain, good horse sense! Having been somewhat hopelessly opinionated all my life, I've finally found this great tool to snare hapless strangers into reading my views on just about every topic under the sun (and a few beyond). I'll unabashedly air my views on the challenges facing today's organizations, how technology impacts business and society, why people behave as they do,....ad infinitum*.

A wise soul has said that how much you benefit from what comes out of a horse depends on which end of it you are standing. Though I'm a late arrival on the blogging scene, I promise to make up for the lateness in diligence, prolificity - and.... yes, sheer equine intelligence.

So read on, hapless stranger, and may your tribe (and wisdom) increase!

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* but not, it is hoped, ad nauseum!