All posts by Jim Muttram

Internet Economy

Bringing internet access to the world

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There was rather a poor article in the Observer today by John Naughton about Google and Facebook’s recent buying sprees. It wasn’t that there was anything particularly wrong with the analysis – it is just that it was lame, uncontentious and old hat.

The main conclusion was that Google and Facebook’s recent purchases of drone companies was driven by a desire to bring the internet to the 5 billion people without proper access and in the process to advance their own businesses and increase their profits. Neither company has made a secret of their ambition to widen access to the internet and it would be extraordinary indeed if they didn’t want to make a profit from the activity.

There was a missed opportunity here as I think there is an interesting story to tell about these acquisitions.

I will concentrate in this post on the drone acquisitions – I will write a further post about the other acquisitions later.

Google’s move into the provision of internet services (as opposed to merely services which run upon it) may actually be quite a bit more calculated than it at first appears to John Naughton.

Aral Balkan, the designer, programmer and entrepreneur,  gave at talk at the RSA on April 10th called “Free is a Lie” where he argued that Google’s business model is “the business model of corporate surveillance”. (The talk will appear here in due course – there is usually a small delay before they are posted. The talk has now been posted here.)

He argued quite persuasively that “free is a concealed barter” and that the “monopoly of the free business model is leading to digital feudalism”. The argument is that Google needs to know everything about you in order to squeeze all the economic value out of your data. This is why they developed Android (which you log into with your Gmail address) and why they have developed services like Google Now, and why Chrome’s features are so much richer if you log in. The provision of internet services is even better as you log into the web with your Gmail address so that everything you do (on whatever browser) is now tracked and usable.

Facebook has the same business model. It tries everything it can to make us default to public so that, again, the economic value can be extracted. The problem is, says Aral “if we make the default public then anything private has the association of guilt about it”.

“The cost of free is our human rights – which is too much to pay.” Whether you agree with this interpretation or not, it is a much more interesting story.

Internet Economy

To Glass or not to Glass

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It seems as if Google Glass has travelled quite a long way along its hype cycle even though it has yet to be launched as a finished product. The product was shown initially at the I/O conference in June 2012 and the first beta products (knows as the Explorer Edition) were made available to a select group of evangelists who paid $1,500 for the privilege in April 2013. Since then they have made all sorts outings on various conference stages around the world, been photographed in the New York subway and even been photographed in the shower (see photo of Robert Scoble).There have been endless reviews from the “explorers” such as this or this.

On the whole the tenor has been – revolutionary product, will take some getting used to but generally positive. Lately, though the tone has changed. Gizmodo calls out Google for getting defensive but not answering the real issues. And Mashable weighed in with its prediction that Android smart watches (specifically the Moto 360) will render Glass obsolete:Why the Moto 360 Smartwatch will Kill Google Glass.

I think this new-found pessimism is wrong on a number of counts. It is easier to see how a smart watch would be used – we already have watches and if it gives us a bit of what our phones give us we can get our heads round that.

But that is to miss the basic point. We are all now inseparable from the web. We use the internet as external memory and our smart phones are our current access point. But they are far from perfect – staring at your phone screen distracts from the task in hand and acts as a barrier to the real world. Smart watches will be better, but only just.

The real end-game is seamless access to the web directly overlaid on the world. Google Glass is the closest thing we have to that right now.

Sure, Glass is flawed (poor battery life, limited applications etc etc) and certainly it will take us a while to work out the correct etiquette around it.

But the Glass paradigm is a powerful one which is qualitatively different to all that has gone before it. And Moore’s law should take care of the shortcomings.

This summary from Wired is a pretty good round up of both the good and the bad. The conclusion is, I think, right on the money:

You can make fun of Glass, and the assholes (like me) who wear it. But here’s what I know: The future is on its way, and it is going to be on your face. We need to think about it and be ready for it in a way we weren’t with smartphones. Because while you (and I) may make fun of glassholes today, come tomorrow we’re all going to be right there with them, or at least very close by. Wearables are where we’re going. Let’s be ready.

Internet Economy

Is Yahoo’s move the first of many?

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This morning’s story in the Guardian about Yahoo’s decision to move its European headquarters to Ireland is I think very significant.

According to the Guardian, Home Secretary Theresa May summoned the company to a meeting to express the concerns of Scotland Yard that Yahoo will no longer be bound to co-operate with British anti-terrorism investigations once it completes is move to Ireland.

The story says Yahoo has been “horrified by some of the surveillance programmes revealed by Snowden and is understood to be relieved that it will be beyond the immediate reach of UK surveillance laws.”

Thus a giant company has chosen to move to a state with more favourable privacy/security regulations and practices – it will surely not be the last. I would not be surprised if we see European countries advertising themselves on the quality of their regulatory safeguards. And neither would I be surprised if the current Government insouciance at criticism of GCHQ oversight begins to crack when hard economic consequences are felt.

The internet has grown so fast and technology so powerful so quickly that the legal and regulatory framework in the West is way behind. This move by an internet giant (and potentially others to come) may be what it takes to start a grown up debate about the kinds of trade-offs and safeguards a modern society needs. So far it looks like indiscriminate tapping of the Yahoo messenger chats of millions of innocent citizens has occurred at the potential expense of a future lack of co-operation in the case of a genuine investigation into real suspects. Talk about own-goal.

Internet Economy

A new employer-employee compact

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The old “job for life” certainties have gone but the laissez-faire approach which has replaced them is neither good for companies, nor good for employees argue Reid Hoffman, Ben Casnocha and Chris Yeh in the Harvard Business Review.

For most of the 20th century, the compact between employers and employees in the developed world was all about stability…..careers progressed along an escalator of sorts, offering predictable advancement to employees who followed the rules. Corporations, for their part, enjoyed employee loyalty and low turnover.

The arrival of globalisation and the information destroyed all that, they argue. Adaptability and entrepreneurship became the key to achieving and sustaining success.

These changes demolished the traditional employer-employee compact and its accompanying career escalator in the U.S. private sector; they are in varying degrees of disarray elsewhere.

The result is a break-down of trust between companies and their employees with a “winner-take-all economy that may strike top management as fair but generates widespread disillusionment among the rest of the workforce.”

The answer, they argue, is to build a new kind of compact between employer and employee based on three things:

Hiring employees for explicit “tours of duty”
“A tour of duty serves as a personalised retention plan that gives a valued employee concrete compelling reasons to finish her tour and that establishes a clear time frame for discussing the future of the relationship. ” These typically would be between two and four years and the end of the “tour” needn’t necessarily lead to the employee leaving the company (though that could be the outcome) but it would mean signing up to a further two or four year “tour”.

“Work with employees to establish terms of their tours of duty, developing firm but time-limited mutual commitments with focussed goals and clear expectations. Ask ‘in this alliance how will both parties benefit and progress?'”

Encouraging employees to build networks and expertise outside the organisation
“To maximize diversity and thus innovation you need networks both inside and outside your company. Therefore, employers should encourage employees to build and maintain professional networks that involve the outside world. Essentially, you want to tell your workers, ‘We will provide you with time to build your network and will pay for you to attend events where you can extend it. In exchange, we ask that you leverage that network to help the company.’ “

Establishing active alumni networks to maintain career-long relationships
“The first thing you should do when a valuable employee tells you he is leaving is try to change his mind. The second is congratulate him on the new job and welcome him to your company’s alumni network.”The authors argue that having an extensive and active alumni network is extremely powerful.

“One obvious benefit of alumni networks is the opportunity to rehire former employees….They can share competitive information, effective business practices, emerging industry trends, and more. They understand how your organization works and are generally inclined to help you if they can.”

They recognise that this may sound counter-intuitive to many firms. “You might fear that running an alumni network is an admission of failure—a sign that your company can’t retain its best people. But your alumni are likely to form a network anyway; the only real question is whether your company will have a voice in it.”

They sum up:

The key to the new employer-employee compact we envision is that although it’s not based on loyalty, it’s not purely transactional, either. It’s an alliance between an organization and an individual that’s aimed at helping both succeed.

In the war for talent, such a pact can be the secret weapon that helps you fill your ranks with the creative, adaptive superstars everyone wants. These are the entrepreneurial employees who drive business success—and business success makes you even more attractive to entrepreneurial employees. 

 

Internet Economy

Sharing health data – safely

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In principle I think this is a great idea. Big data is transforming industry after industry as well as scientific enquiry and bringing this power to bear on the health of the nation is a noble goal.

Unfortunately, the implementation of the scheme was a disaster – it was poorly communicated and many of the details of how privacy was to be safeguarded were simply not there and concerns were brushed aside in a patronising and dismissive manor.

The consequence was a backlash from the privacy lobby – hardly surprising in the aftermath of the Snowden revelations on NSA and GCHQ (although perhaps the absence of a public outcry to these revelations emboldened the NHS data planners).

Now the scheme has been put on hold for six months while the NHS regroups and decides how to avoid a mass opt-out. Writing in The Guardian this morning Ben Goldacre argues strongly that idea of data sharing is a powerful force for good, but the safeguards need to be much better. He called on people not to opt out – yet.

Personally I opted out several weeks ago but I always intended to reconsider if the privacy safeguards were improved. I sincerely hope that happens because I believe strongly in the ideal.

Climate Change

Making hay while the snow melts

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Three articles in this morning’s Observer illustrate perfectly the paradoxes surrounding the climate change debate. 

First we had this piece on England’s wettest January for 250 years. The culprit is identified as global warming:

Flooding has been identified as the most dangerous impact of climate change for the UK and is hitting harder and faster than expected, according to scientists. Thousands of homes have been flooded since December, and much of the low-lying Somerset Levels remains under water.

It went on to detail the price to be paid both in flood defence expenditures and annual flood damage which will result from increasingly erratic weather patterns.

Then there was a piece in the Observer’s New York Times supplement entitled Industry Awakens to Threat of Climate Change which detailed the concerns that large US corporates like Coca-Cola and Nike are now expressing about the adverse effects of climate change on their businesses. 

“Increased droughts, more unpredictable variability, 100-year floods every two years,” said Jeffrey Seabright, Coke’s vice president for environment and water resources, listing the problems that he said were also disrupting the company’s supply of sugar cane and sugar beets, as well as citrus for its fruit juices. “When we look at our most essential ingredients, we see those events as threats.”

Finally, back in the main paper, this piece on the exciting opportunities which the melting of the polar icecap are opening up for the energy and shipping industries. The effects of climate change are being felt faster in the northern pole than elsewhere on the planet with the prospects that a northern sea route will open up and swathes of the arctic can be explored for oil, gas and minerals.

Confidence that the Arctic will become economically important is seen in the rush of countries and companies to claim a stake. Eleven countries, including Poland and Singapore, have appointed Arctic ambassadors to promote their national interests.

It is splendidly ironic that the burning of fossil fuels causes the planet to warm up so that the north pole melts and we can find more fossil fuels to burn, thus continuing the cycle. There is a wonderful comment in the comments thread of the article online which sums it up perfectly….

 And the New Yorker cartoon (above) earlier this week illustrated the short-termism appositely.

One thing is clear, until we price carbon correctly and align short term economic interests to the long term interests of the planet (and the human species) we will see more and more of this schizophrenic behaviour.

Product Management

How to tell if design thinking has taken hold in your organisation

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I am now on the fifth week of my Design Thinking course being run online by Dr Jeanne Liedtka. She summed up with some great advice for implementing design thinking:

  1. Pick the right challenge. Figure out who in the organisation cares about the problem you are thinking about. Pick a problem with urgency behind it. Frame your goals so they gel with what the organisation cares about.
  2. Think small. It’s easier to start small and scale over time that start big and risk a big failure
  3. Select and manage your team carefully. Diversity is the key. What you are after is collective wisdom and the more points of view you have, the better. You need all kinds of people – you need starters and you need finishers. 
  4. Manage your momentum. Speed is the number one momentum builder. Momentum runs on emotional highs. Speed doesn’t mean rushing a solution to the market before it is ready. What you are after is speed of learning – shortening the cycle times. 
  5. Be ready to ride the roller coaster of emotion (see above)
After all that, how can you tell if you have succeeded in creating a successful design thinking organisation? This was her answer…..
How to tell in design thinking has taken hold in your organisation
People talking about envisioning new possibilities together
or
 Still debating their individual recommendations
Listening to understand other people’s perspectives and build on them
or
 Listening for weaknesses in their opponents’ arguments
Sharing deep primary data gathered from those they wish to serve and mining this for new insights together
or
 Compiling web-based surveys that reveal only superficial attitudes and opinions
Spending time in meetings figuring out how to start small and learn as they go
or
 Trying to create the perfect plan before any action can be taken
Talking about designing marketplace experiments
or
 Arguing theory in conference rooms
Actively searching for disconfirming data
or
 Latching on to whatever data points supports their point of view
Internet Economy, Product Management

The boom in innovation

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I’ve spent the past couple of hours going through my feed reader catching up on all the stories I’ve missed over the past week or so and I was struck by the enormous number and inventiveness of the new apps and hardware being reported on.

It strikes me there are several things happening at once which have come together to create this explosion of creativity:

  • The emergence and ubiquity of powerful smartphone platforms – mainly IOS and Android at the moment, it has to be said – packed with sensors
  • Cheap and scaleable cloud computing platforms which makes initial costs low and encourages experimentation and lowers the financial bar
  • The coming of age of funding platforms like Kickstarter which combine easy access to crowd-sourced funding coupled with the rapid feedback of a social network (if you don’t get to the target amount, it’s a powerful message from the market)
  • The emergence of cheap 3D printing which makes prototyping much, much simpler and cheaper. (You can buy 3D printers in Maplin, a sure sign the technology has arrived!)
It may feel a bit like the bubble in 2000, but these enablers make things very, very different this time.
Internet Economy

The death of a business model

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A man came to the door last night to try to sell me a framed photograph of my house taken from his light plane.

Fifteen years ago, a couple of years after we moved in, the same thing happened. That time I was fascinated to see the image – I had never seen my house from that perspective before. I can’t remember what I paid, but it wasn’t cheap, and I was happy to pay.

This time I declined. I am now so used to seeing my house from the air there is no novelty anymore. What’s more, I’m confident that the image on the web will be updated regularly – not the case with the picture on the wall.

The doorstep seller argued that his photograph was much better quality and seemed a little cross that I wasn’t buying. I can only guess that is because he got the same reaction at every door. This is the innovators dilemma at work; web imagery is already good enough for most of us, and they will get better and better, that much we can be confident of.

 One more business model bites the dust….

Internet Economy

Why large organisations find it hard to innovate

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Large organisations find it so hard to innovate, according to Dr. Jeanne M. Liedtka, because of the “physics of growth”. Dr Liedtka, who is currently running an MOOC on Design Thinking which I am taking, says there are critical differences in the way VCs and large corporates approach innovation. VCs understand that their ability to predict success is poor (success rates of one or two ventures in 10 are typical). Therefore they adopt some key practices to improve their odds:

  1. Betting heavily on individuals with good experience of both success and failure 
  2. Keeping bets small and affordable until they have better data
  3. Making sure if they don’t succeed that they fail quickly
In contrast large organisations are optimised for execution. This means, she says, they love big ideas which makes sense from their perspective: focus and control are key and concentrating on one or two big things is much easier than on many small things.
But there are some terrible side-effects with this approach when in comes to encouraging genuine innovation:
  1. Big ideas, by their nature, tend to have been found by other competitors already
  2. Customers are terrible at envisioning things which don’t exist
  3. “If you insist on home runs you won’t get many singles, let alone home runs”
  4. When the ratio of resources invested gets too far ahead of knowledge possessed “bad things happen”
All of this discourages learning in managers – and learning is the key mindset for innovation. After all, she says, you don’t learn to juggle with flaming torches but with bean bags!
Large companies also thrive on analysis. But we don’t have enough data on genuinely new things to do any coherent analysis on. When managers are challenged to support a new big idea with past data the temptation is to make it up. 
All this leads, she says, to trapped managers in a kind of growth gridlock. 
The chart below summarises the two approaches. “Geoff’s” cycle (the VC or entrepreneur perspective) starts from an open mindset and is strong on varied experience and customer empathy – which means being deeply interested in the lives of customers are people. 
In contrast “George’s” cycle (the large corporate perspective) starts from a fixed mindset (aka deep expertise which is so successful in an execution setting) and relies on customer data. You can read the results for yourselves. 
This is one of the best descriptions of the fundamental mechanics of the innovation process that I have yet seen. The good news, according the Dr Liedtka, is that all of this can be taught and there are many examples of large corporates making innovation work in exactly this way. I’m looking forward to the rest of the syllabus.