Pardon My Disruption: March Edition

I’m a little late getting this post up here — we recorded the session a little over a week ago — but better late than never.  And for the second time in a row, snow interrupted our plans so instead of recording with a live audience at the Stamford Innovation Center, we participated remotely (using Google+ hangouts).  I do need to work on my video skills. Despite having two lamps just out of camera range, my lighting is suboptimal.  Then again, my pretty face is never going to carry the day… 🙂

For those of you who want to watch the full video (an hour), you can find it here.  This month, we talked about:

  • Yahoo and Marissa Mayer’s work-from-the-office edict
  • Groupon’s CEO resignation
  • The new Facebook feed
  • Microsoft’s EU fine
  • iWatch (we didn’t really talk about this in the video here but I’ve got a few observations)

Yahoo and Working from Home

This is odd, coming from someone who has spent large portions of the last 20 years working from home and who is such a big believer in collaborative technologies, but I totally understand and support Marissa Mayer’s decision to require Yahoo employees to work from the office.  Fundamentally, she inherited a broken company.  I’m a member of a group called the Internet Oldtimers and one of the group’s members described the scenario perfectly.  He said that good people in a bad system become bad people whereas bad people in a good system become immediately evident.  Yahoo had a bad system which encouraged even the best of people to perform at substandard levels.  How do we know Yahoo had a bad system?  Mayer came from Google, as data-driven an organization as I’ve ever encountered, and simply, she went to the data.  It would be one thing if people were working diligently from home but the data just showed another story.  Mayer looked at the VPN logins and quickly discovered that people weren’t connecting to the company’s internal network.  It’s one thing to say collaborative tools enable remote working.  It’s a whole other scenario when your workers aren’t using the collaborative tools!  They didn’t even bother to fake working very well.  Yes, the system was broken.  You could argue that this is a draconian step and that it will cost Yahoo in terms of current employees and ability to recruit new staff.  That may be true but the bigger challenge is reorienting the organization and bold, decisive moves are required.  I don’t expect this to be a permanent work condition but until and unless Mayer showed her commitment to a new Yahoo, she would have been merely rearranging deck chairs on the old Yahoo.  I applaud and support the move.

Groupon’s CEO Resigns

Too much of this story has been about Groupon’s ex-CEO Andrew Mason and his polarizing style, his company accounting challenges and his flamboyant resignation (refreshing in its candor). I actually wrote about Groupon over two years ago, questioning their business, and in the intervening time, I think their challenges have only grown larger.  Here are the fundamental problems for their business (and not just theirs, but LivingSocial and many other daily deals purveyors):

  • The deals are not great for merchants.  They’re indiscriminate, send a bad message, encourage “bad” business, don’t help the merchant’s information-gathering and give the merchant almost no control.  Other than that, they’re great. LOL
  • The wrong party is in control.  Deals should be structured, offered and managed by the merchant itself.  You should be able to offer deals whenever you want to whomever you want.  My favorite talking point here is to use the example of a donut shop.  Let’s say you’ve had a slow day and it’s looking like you’re going to have to throw out a bunch of donuts.  Wouldn’t you want to run a deal at the last minute, just in time for the evening rush hour, offering a special? You could make this look like a customer incentive for your best customers instead of the existing model where you’re discounting products/services that your loyal customers have been paying full price for.  You could make this decision at 4 p.m., instead of weeks or months in advance.  You could do this every time your inventory is high instead of once every few months.  This is a fundamental problem of approach for Groupon and its ilk, and not one a new CEO is going to solve.
  • To feed the public market appetite for growth, Groupon moved from daily deals into an adjacent market, Groupon Goods.  I’ll never understand why companies move into businesses that jettison much of what’s attractive in their legacy business.  The great thing about the daily deal business is that you have no inventory.  Your only three cost buckets are technology, marketing, and your sales commissions.  This is a business with minimal risk as you can align costs relatively easily to revenues.  With Groupon Goods, you’re now taking possession of inventory.  If you don’t sell it, you’re stuck with it…or you have to lower prices, cutting your margins.  Before this, Groupon could have been run out of a phone booth.  Your servers were in the cloud, your salespeople were on the phone or on the road, your inventory was totally digital.  Instead of pushing, and fixing, the core business, Groupon went broader.  Big mistake in my mind.

The New Facebook Feed

Facebook is rolling out a new look and feel.  Again.  I wrote about this challenge even longer ago, almost four years back now.  Back then, the challenge was competing with Twitter and its real-time impact.  That challenge remains to this day and we’re now hearing of Facebook’s plans to incorporate hashtags, mimicking yet another Twitter feature.  Facebook is now fighting battles on multiple fronts.  In addition to Twitter, there’s now a battle for approach and design with Pinterest and Instagram.  Yes, I know Facebook now owns Instagram but if you look at Instagram, Pinterest and even Microsoft’s new platforms, you’ll see a more richly graphical approach.  I won’t get into this approach…well, maybe I will, briefly.  I think much of this is eye candy at the cost of value, information and time.  A picture may be worth a thousand words in some contexts, but in a lot of these instances, I’d rather see the thousand words or at least something that conveys greater value than just an image and a text headline.  I think a lot of the motivation behind this approach is to get people to actually click through on something.  More clicks = more opportunities to display ads or at least pump up your metrics.  For the user — at least for me — more clicks = more time to get to value.  I really don’t like the approach.  But Facebook seems to be embracing the approach, whether it’s to increase its advertising footprint or contain Pinterest.  There are laudable goals in the redesign — more easily connect users with the information they want to connect with — but I’m not convinced this is the real motivation or, if it is, that this redesign accomplishes that goal.  But as always, we’re stuck with it.  Expect to see tons of posts from your friends decrying the new approach…until we accept that this is the way it’s going to be.  Oh well.  At least maybe they’ll fix the multi-columnar approach, the logic of which I still can’t figure out.

Microsoft’s EU Fine

Microsoft was fined $731 million by the European Union.  Why? Because it didn’t fully implement its deal to open up the browser market to competition, a deal struck in 2009.  At that time, Microsoft had a near-dominant share of almost 80% of the desktop market.  We all know what’s happened since then. Despite not keeping up its bargain, Microsoft’s share has steadily decreased and it now represents only about half of the desktop market and, if you factor in mobile, considerably less than half.  In fast-moving markets like technology, somehow markets do a better job of adapting to competitive situations than governmental remedies.  I’m not saying that the EU’s fine was misguided — they have to enforce their agreements — I’m just saying that the EU sanctions were, and continue to be, largely ineffective.  Fining someone for four year old behavior (several generations in Internet time) while failing to act on current issues is, unfortunately, what we’ve come to expect from governmental bodies.  I’m not advocating that they go sue Google but if they’re genuinely concerned with fostering real competition, going against emerging and existing monopolists with sanctions with real teeth would be much more impressive than what amounts to a (soft) slap on the wrist to a former monopolist.  If anything, this action would encourage me if I were considering a current offense.  If this is the timeframe and scale over which remedies will be extracted, it’s no deterrent at all.

iWatch

Somehow I can’t get excited about this one.  Perhaps Apple’s going to surprise me.  Again.  But I just don’t see an iWatch as the product which is going to reinvigorate Apple’s prospects.  Back at the beginning of the year, I said their big opportunity is the digital home, and I stand by that belief.  Yeah, yeah, the watch market is a $60 billion market.  But if you’re under about 28, you probably don’t wear a watch.  Can Apple make it cool?  Probably.  But the trend is to bigger screens, not smaller, and I’m just not convinced that anyone can make a watch a compelling companion to my smartphone, and make no mistake about it, this will be a companion product.  I feel bad enough when I have to shell out $100 with every new phone for screen protectors, batteries and the like.  Is it that much more powerful to have reminders on my wrist instead of in my pocket?  Perhaps it could be a little more interesting if it incorporates the emerging niche category of activity monitors like Jawbone’s Up.  We’ll just have to wait and see.

What’s perhaps most problematic for Apple is that their time to market advantage may be non-existent.  Apple has had huge market advantages when it has launched its category-defining products, with competitive responses often lagging by a year or more.  Not so with the watch.  In fact, while the Apple iWatch remains merely a rumor, Samsung has come public with its intention to do one, and its indication that it has been working on it for a long time.  While I question how genuine that effort was prior to the Apple rumors, it’s clearly a different world when a rumored Apple product introduction is met by immediate competitive responses, not stunned gasps of “they did it again.”

What’s Next

In addition to these timely news items, we talked about a couple of larger thematic subjects:

  • The “IT-ization of consumers”
  • What’s next, after social, mobile and cloud

I’m not going to get into these here and now — this blog post is already long enough — but i’m going to write at greater length about these topics in the coming weeks.  I identified social, mobile and cloud as my three disruptive trends, over five years ago.  As they begin to coalesce as I predicted, people started to ask me “so what’s next?”  For a long time, I answered that with “more commercialization and better integration of those pillars.”  We still have a long way to go there. But I already see the seeds of the next big transformation which will, once again, change the face of technology and business.  I just love that about this business; it’s never static…even while we all struggle to keep up with the pace of change and have to fight to incorporate new technologies and approaches.  But the next change is coming and I’ll start surfacing that soon.  (If you want a head start on your competition, you know where to find me.)

 

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Social Media Week: The Perversion of Social Media

The 5th Annual Social Media Week concludes today in New York and around the world.  This should be a celebration of the power and the breadth of all that we call social media but instead, the marketers have taken over.  It really should have been called New Ways of Selling You Something Week.  Not that there weren’t sessions reflecting the breadth and beauty of social media — there largely were — but if social media is about connecting people to people and people to information, the dominant thread was connecting people to products.  Selling them something.  How can we divine their intention? How we can we measure how much of their intention we’ve captured?  The marketers have moved in.

We’ve seen this loss of innocence before.  The early Internet was a people’s playground.  Remember a world before there were banner ads, where search engines, well, helped you search instead of were vehicles to compile a huge dossier on your preferences, locations and intentions.  I’m not here to suggest that the way the Internet has evolved is a bad thing.  Quite the contrary.  It’s a rather amazing place and it’s hard to remember how we lived without it.  Clearly this is in large measure because of the economic potential that was realized through marketers.  Their economic windfall has enabled us to continue to have this open playground.

Thus, my fault is not with the marketers, not even with the Social Media Week organizers who are actually sincere and profoundly well-motivated.  Rather, I see this as a call to arms.  A time to declare the emperor has no clothes.  Social media is not just about looking for selling cues and divining that next insightful piece of information about a customer or a series of customers.  In many ways, I actually view that as a fool’s chase.  It’s the old story about people in a dark room trying to figure out what’s there by touching it.

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Sometimes the best approach is the simplest one:  why don’t you just ask it?  That doesn’t work so well when it comes to elephants but it works much better when it comes to humans.  You perhaps know that I’ve been enamored for a long time of VRM, Vendor Relationship Management, the concept  that we’ll flip CRM on its head and put users at the center of the marketing relationship.  It’s perhaps no coincidence that VRM was first espoused by Doc Searls, the creator of the Cluetrain Mainfesto, that first generation Internet call to arms that was so powerful…before the marketers moved in.  So I think this focus by Social Media Week, and social media in general, on selling is just a short-term perversion of the concept by marketers.  They’ll derive value, sure, but the real impact will be much more transformational than helping them sell and the monetization of social media.

More than this, too.  Social media isn’t just about commerce, whether buying or selling.  It is, and will only be more so, transformational in the way we work and play.  The way we connect with each other as people, not as commercial entities.  The way we create, find and share information.

Yes, this was all there at Social Media Week if you looked. There was a discussion with Rachel Haot, the passionate Chief Digital Officer of New York City, who has the support of a visionary Mayor and herself has the passion to enhance and maybe even change the relationship a city has with its citizens.  There was a discussion with Dale Dougherty, the founder of Make Magazine and, one could argue, the champion of a “maker revolution” that threatens to change the way we, well, make things.

I would, if I could, eliminate all those marketing sessions from Social Media Week.  There are plenty of venues for that kind of information. The marketers will always find their outlet.  Let us not forget that social media is not (just) about selling or buying.  It’s not just about measuring and monetizing.  It’s not just about more big data. (You know how I feel about that one.) At one point during the week, I observed on Twitter how almost ironically Social Media Week had become very unsocial. I was in a room full of people and they were all heads down, staring at their small screens and tweeting.

Is this what social media has become??  I don’t think so.  As has always been the case with technological advances, we go through some ebbs and flows when it comes to adoption and disruption.  We often first enhance existing processes and approaches with the new capabilities.  Only then do we realize there are new and better and different, and disruptive, approaches to what we’re trying to do.  We’ll get there.  There is not a shred of doubt in my mind.  But the state of social media today, as demonstrated by this Social Media Week, isn’t there yet. I appreciate what you marketers are trying to do.  I really do. But I hope this is the beginning of the end for your perversion of Social Media Week, and social media.  Social media is so much more than selling and buying.  Change is coming.  And your time of defining the landscape is coming to an end.

Pardon My Disruption, Episode 3

Pardon My Disruption, Snowbound Edition

I have been working with the Stamford Innovation Center to produce a monthly show I call “Pardon My Disruption.” I am a big fan of the ESPN show “Pardon the Interruption” in which two literate sportscasters (no, not an oxymoron but clearly a small universe) banter about and debate the news issues of the day.  If you’ve never seen an episode of PTI, you can watch it here.  It’s a great format and if you’re interested in sponsoring this for technology in a big way, get in touch with me.  I’m really going to see if I can get this done.  Until then, I’m taking this tentative first step with the Center’s Marketing Director, Peter Propp.  We generally do this live the second Friday of every month at the Innovation Center but with Nemo hitting the region last Friday, we did the session remotely (using Google+ Hangouts).  You can enjoy the show at the link which opens this post.

Our subjects this time included:

  • Meetup.com
  • Dell goes private
  • IBM Connect trip report
  • The New York Times gets hacked: Cybersecurity

Meetup.com

Meetup is one of the best kept secrets of social media.  Some of you may remember the blockbuster 1988 business book Megatrends by John Naisbitt.  That was one of the very first business books that captivated me and to this day, I remember Naisbitt promulgating a “high tech/high touch” philosophy.  (This wasn’t the dominant theme of the book but is one of the points that sticks with me to this day.) Remember, at this time, technology was nowhere as prevalent in our lives as it is today.  At this point, Windows was still a new product, the Mac was still in its infancy and the leading PC manufacturers were Compaq and IBM.  Anyhow, Naisbitt’s point was that the more technology invaded our human lives, the more we would have need for a human touch to counter the impersonal nature of computer interactions.  Even as we move more interactions to social platforms, email and other technology-based platforms, it would be folly to forget Naisbitt’s forecast.  Tweetups — where Twitter users actually get together in a physical location — and Meetup are two of the more obvious manifestations of this phenomenon and bring with them a power that’s not present in virtual-only communities. We’ve seen this with getting Pardon My Disruption off the ground.  We tweet about, we Facebook and LinkedIn it, but the largest driver of traffic to the physical event is Meetup.  If you haven’t looked at Meetup, you should.  Some of my best meetings of a month are Meetup groups (New York Tech Meetup, New York Enterprise Tech Meetup) and I find a fair number of social activities there as well (e.g., the Bucket List Bunch).  The New York Tech Meetup is a powerful force in the New York tech community and gathers over 700 people to an NYU auditorium every month.  Getting tickets to it is akin to getting tickets to a Springsteen concert on Ticketmaster; you have to keep clicking refresh on your browser and get tickets in the first 10 minutes they’re available or basically they’re sold out.  A powerful platform to bring people together physically.  How quaint in this virtual world.

Dell

I’ve often chided Google for being a one-trick pony…but it’s a damn good trick.  Dell (nee PCs Limited) came up with a great trick 30 years ago — build PCs to order.  In the intervening years, even slow-moving behemoths like HP have caught up with that trick and it’s now an industry standard.  Meanwhile, Dell has tried to change the story, moving upstream into servers, networking and services.  But it has been a slow slog. In today’s next quarter obsessed world, it’s hard to make radical surgery on a company.  And make no mistake about it, Dell needs radical surgery.  Going private doesn’t solve their problems, by a long stretch.  Even as a public company, Dell has, charitably, underperformed in its efforts to remake itself.  You just have to scratch your head and wonder how so many tech stalwarts managed to miss the mobile and cloud revolutions. And Microsoft’s involvement in the Dell financing only complicates matters or, more troublingly, sends the message that Dell’s “reinvention” won’t be so different from today’s Dell. And this deal leaves Michael Dell firmly in charge and one has to wonder if he’s the man to lead the reinvention.  Dell has largely been off my radar screen for a decade.  We’ll see if this move leads to a more disruptive Dell or just incremental, and insufficient, changes.

IBM Connect

I’ve posted recently about IBM Connect and the remake of IBM so I won’t say much here.  The only thing I’ll add here is a few thoughts about the impact of its Smarter initiatives internally.  While suggesting that the external market may not be precisely aligned with the way IBM is selling its collaborative solutions, there’s no ignoring the fact that the Smarter message has served to focus and align the company internally.  It’s almost nauseating  how universal IBM people talk about Smarter this or that.  It permeates all levels and functions of the organization.  One of the challenges of large companies in a fast-moving world is getting all facets of an organization focused on a consistent and aggregated message.  IBM’s ability to get the disparate business units aligned around consistent messaging and even more, deep product integration is a truly remarkable accomplishment.  If customers start to align with IBM’s messaging, IBM is unassailable. No one can deliver what IBM is delivering.  It’s a big if, but as a long-time IBM watcher, a fascinating story to watch unfold.

Security

As much of a technology lover as I am, in my rare dark moments, I have grave concerns about the fragility of the systems we’re building.  Quite simply, no one really understands how they all work and so that leaves us vulnerable in some deeply troubling ways. From what can only be called state-sponsored cyberwarfare down to more mundane financial theft, we live in fragile and troubling times.  The solution is not simple, complicated by the disgusting politicization of this issue in Washington. I won’t turn this into a political screed but instead in the webcast, we focused on what we as individuals can do.  Bottom line:  you need better password practices.  It used to be that we didn’t want to write our passwords down because the biggest risk was someone sitting down at our computer and stealing things.  Now the biggest risk comes from someone who steals your password over the Internet.  For those of us who can’t be bothered to have different passwords for different sites, once they’ve got your password, they can harvest it in myriad ways.  So, do what I’ve done.  Get a password manager — I use Dashlane — and make sure you have strong passwords and different ones for every site.  And if you’re concerned about the security of the password vault, and it’s a legitimate concern, write your passwords down…or get used to the “reset password” function of your web sites.

—–

See you March 8 at the Innovation Center.

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IBM Connect Trip Report: Moving Up the Organization, Uneasily

IBM has celebrated its 20th anniversary of Lotusphere…by renaming it. Nearly 10,000 people are in Orlando this week at the newly-renamed IBM Connect to hear IBM’s social story.   It’s a fascinating story and Lotusphere…er, Connect…demonstrates that opportunity and tension beautifully.

I find the agenda this year to actually be fascinating.  Loutsphere used to really be a geek-fest.  All of the sessions were deeply technical and dressed up attendees wore t-shirts without holes in them.  Now, those people are still here but there’s a significant presence of people in business functions, often wearing blazers and even ties.  This clearly reflects the evolution of technology from something for geeks to something that solves business problems.  IBM has obviously embraced this with their Smarter Everything mantra.  This speaks directly to the CxO level and very little if at all to the deep technology person.

So, have they been able to pull this “social biz” thing off?  Well, first, let’s just say they’re no Salesforce.  Dreamforce was part technology conference, part evangelical fervor (http://www.hfsresearch.com/Social-Business-Goes-Mainstream).  IBM Connect is, well, IBM.   IBM’s actually in a fascinating position.  On the one hand, I love the vision.  IBM is promising and, to a large extent, delivering a solution that only IBM could deliver.  Their product portfolio is comprehensive, second to none, and surrounded by a complete set of services.  On the other hand, this is a market that’s still building bottoms up, where IBM is very, very weak.  They talk about how they have no problems getting into to talk to the C-suite but I’m not sure that that’s delivering commensurate business results.  This Smarter Everything approach requires buy-in at very high levels and that surely lengthens their deal time.  There are others who raise legitimate questions about whether IBM’s getting the return on its software investments so far. http://www.businessweek.com/articles/2013-01-22/ibm-makes-more-money-selling-less-of-what-people-want  Basically, IBM is making a big bet that the future of technology is a huge, high level business solution, which clearly moves it far afield from its traditional Lotus customer, and brand.

It has been interesting to note this week that IBM is making a big play with its Kenexa acquisition.  Kenexa and Smarter Workforce mentions have been ubiquitous.  It was so over the top that I asked a senior IBM person if this was part of the corporate-mandated talking points for everyone.  He actually found it an interesting observation, noting that while it was not a corporate mandate, Kenexa was the “new shiny thing” and that therefore, it naturally got a lot of attention, especially at that billion dollar price point.  Kenexa is certainly a noteworthy acquisition for IBM but the attention it got this week was overstated.  We can expect to find more normal positioning for Kenexa as the bloom comes off the flower…or when IBM makes its next big acquisition.

We analysts love situations where what vendors are saying drifts very far from what they’re really selling, and what the customer is buying.  IBM is dangerously close to that situation.  But I understand, and support, what they’re trying to do.  This market is undergoing a long-term evolution and it’s hard to turn battleships, both IBM’s and its customers’.  IBM is going to have to keep telling this story over and over until it sticks.  It will lead in the short term to situations like this conference, where there’s an uneasy connection between the past and the future, between the legacy technologists and the new business approach.  Each year, though, it will get a little easier and a little more cohesive.

IBM and Microsoft: Random Interesting Observation

I am down at IBM Connect (formerly Lotusphere) and was having lunch with four gentlemen from Sogeti, the global consulting company. We were talking about the evolution of IBM ‘s business.

I’ve been following IBM and Microsoft professionally for 25-1/2 years now. It dawned on me during this conversation that IBM had undergone an almost complete transformation while Microsoft has done none. Microsoft, then and now, is a Windows and Office company. They’ve increasingly become a provider of enterprise solutions, but still, it’s Windows and Office. Ironic, isn’t it, that the historic champion of the user, has become slow moving and enterprise-focused even while the market has embraced the consumerization of IT.

Meanwhile, the IBM I first knew was… well, at least the mainstream is a constant. But they’ve moved from hardware to services and software. From big enterprise systems (e.g., DB2) to a vast array of tools, middleware and platforms. (As an aside, it delights me that my spell checker accepts “middleware,” as I was in the room at Gartner when that term was coined.) And even the things they’ve always done have been refreshed and repositioned, although they might argue that the more things change, the more they remain the same.

Anyhow, it’s interesting to think that the company we think of as the innovative upstart — Microsoft — is actually the stagnant one, while the one we think of as the stodgy old company –IBM — it’s probably the best example of a big company transforming and continually reinventing itself. Master narratives are slow to change. Maybe it’s time to rewrite this one.

Apple: Missing the Bigger Issues

As is so often the case, the Wall Street conversation about Apple’s “miss” generally misses the bigger issues.  You know I have issues with Apple’s general approach to business and you might think therefore that I’m going to gloat about a 10% drop in their stock price.  If you thought that, you’d be wrong.  Not being an investor in Apple, the stock price doesn’t terribly impact me, probably you and really, the way they do business.  Apple’s stock price doesn’t really impact its business.  Sure, some employees might go work elsewhere if the stock doesn’t continue growing robustly though Apple has always been more of a “let’s change the world” kind of place.  It can influence their ability to buy other companies but really, with over $137 billion cash on hand — that’s greater than Vietnam’s GDP — financing acquisitions is the least of their problems.

So, what do I think is interesting here?

  • Apple has always been a new hit kind of company.  Back in the late 80’s, my then-boss Doug Cayne, when talking about Apple, would talk about how much of their revenue was generated by products introduced in the last year.  (How quaint it seems that vendors actually generated considerable revenue from products that were over a year old.  Not in today’s world.) Thinking of it this way shows the problem starkly.  The iPhone was introduced in 2007, the iPad was introduced in 2010.  That’s an easy sequence to figure out.  Is there a new product coming in 2013 to reinvigorate growth.  (More on this in a bit.) In the absence of this new product, it’s somehow not surprising that slowing momentum in older products is impacting Apple’s results.
  • Older products + greater competition = lower margins.  Even a “success” like the iPad Mini came at a hit to margins as at least some of those sales cannibalized higher margin big iPad sales.  This is not yet an Apple strategy but rather just a result of aging product mix.  If Apple introduces lower-priced iPhones, then we’ll know they’re pursuing a lower margin strategy.  Until then, I view this as just a product mix and age issue.
  • Those who are against a lower margin strategy miss an important point.  Apple’s revenues and margins are not exclusively from their hardware sales.  Not remotely.  Via the iPhone Store, Apple gains considerable, and highly profitable, follow-on revenue for every device sold.  The whole ecosystem produces one of those virtuous cycles for which this industry is legendary.  If I have one regret, as an Android user, it’s that application developers for the most part favor the Apple platform first with Android typically a second, and sometimes distant second, platform.  Given the fact that Android unit volumes are greater than iOS, why is this?  It’s because iPhone users are much more likely to buy applications and services than Android users, who are overall at the lower end of the economic spectrum.  If Apple doesn’t play at lower ends, at some point Android’s growing market share will result in a shift in application developer priorities and thus it’s prudent for Apple to move downmarket.
  • An interesting way for Apple to play in this space would be for it to start supporting non-Apple devices.  Apple today offers certain software products for Windows (e.g., iTunes).  At what point to they consider it lucrative and important to support Android? Increasing the urgency for this are the inroads Google’s making onto the iOS platform.  I don’t need to point out the whole maps disaster and YouTube on iOS is a major player.  (Psy’s Gangnam Style video alone generated $8 million in revenue for Google.)  Thus, from a defensive and offensive position, I think we’ll see Apple begin to embrace Android to bound the competitive threat.
  • More importantly, the telecom industry has talked for some years now about “the next billion.”  Growth in this industry is going to come from emerging markets which have two important characteristics:  with lower GDPs, they’re much more price-sensitive and they’re often going to be users whose only computing device is their phone, unlike the Western world, where we typically have at least one computer to go along with our phone (and MP3 player and camera).  Despite my recent note about the single converged device, this new market may not have the money for multiple devices and thus the phone is it.  Growth is coming in this market.  It’s prudent for Apple to play in it to cement leadership in a post-PC world.
  • Overlooked in Apple’s financials is the fact that they as much as anyone are being impacted by this post-PC world.  Mac sales were down over 20%.  That Innovator’s Dilemma is a tough mistress.
  • Back to the new product question, this is a fascinating topic on which to ruminate.  It’s also difficult. Who before the iPhone and iPad predicted that Apple was going to revolutionize those categories?  So what’s next?  Conventional wisdom for some time has said an Apple TV is next.  Not the existing Apple TV small box.  I have a Samsung SmartTV, a Tivo and a Roku and all of those demonstrate both the opportunity and challenge for Apple.  The existing Apple TV box is not materially different than any of those, not enough to be the ground-breaker that saves the company.  And merely building those into the TV box itself is not the answer either.  Here’s actually where Apple may miss Steve Jobs.    Jobs had a great record in beating industry executives into submission around the iPod (music labels), iPhone (carriers, starting with AT&T) and, to a lesser extent, iPad (content providers).  The video (TV and movie) industry saw what happened to those others and was ready, willing and, so far, able to resist Apple.  To redefine the viewing experience, Apple needs their cooperation and so far that hasn’t been forthcoming.  Could Jobs have convinced some operator, network and/or studio to capitulate?  I guess we’ll never know.
  • So, if Apple TV isn’t the 2013 savior for growth and increased power, what’s left?  If Apple’s going to surprise us, I would expect it would relate to something around the living room.  The TV is just one part of a broader home ecosystem that includes entertainment, environmentals, games and more.  Existing systems right now are insanely expensive and massively compromised.  Apple alumni are already showing what’s possible in the space — the NEST thermostat, which Apple is already selling.  Apple has the vision, the human factors, the gadgets and the resources to nail this one.  If I were advising Apple, I’d say own the home before you go about redefining the TV.  It’s the classic market for Apple.  Lots of people have been dabbling in it for years, with terrible implementations.  Apple can swoop in and everyone will laud them for inventing yet another market. </end sarcasm>  But seriously, doesn’t this scream Apple?  No more talk of the Xbox being Microsoft’s trojan horse in the home.  It’s Apple’s market to own.

There you have it.  Ignore the stock market reaction.  Apple had an amazing quarter by the standards of anything other than Apple’s previous quarters.  But there are big questions for Apple going forward.

  • What’s its “next billion” strategy?  Apple on Android?
  • What’s its next big idea? Not the TV. The home.

“Big Data” is Wrong on So Many Levels

For almost six years now, I have defined my “disruptive troika” as the intersection of social, mobile and cloud. Four years or so ago, I made a note to myself to add “big data” to that list. I never did that.  Even as “big data” has taken off as a subject of discussion, I’ve resisted adding it to my list (although I’ve occasionally dabbled with “analytics” if only because it makes for such a good acronym: SMAC — social, mobile, analytics and cloud).  Today I’m going to cement my position.  I’m not going to include big data in my list of disruptive technologies. Or maybe I should, because in focusing on “big data,” so many people are missing the point.  Big data has been co-opted by vendors wanting to sell more and bigger iron and more and bigger software, rather than more and better customer solutions.

She Done Him Wrong

She Done Him Wrong (Photo credit: Wikipedia)

Let me state my biases up front.  I think the world is divided into two fundamentally different kinds of people, the quals and the quants.  The qualitative types would rely on judgment, analysis and experience.  The quants believe there’s truth in the numbers.  Despite being the son of a CPA, I lean strongly towards the qualitative side.  I look for data to inform my judgments and support my positions but I begin with a hypothesis and then look for supporting (or contradictory) data rather than beginning with the data.

So where does the problem lie?  Or, rather, where do the problems, plural, lie?

  • I have an immediate and strong negative visceral reaction to use of the term “data.”  In about 1971, I had a summer job at IBM’s Data Processing Division headquarters at 1133 Westchester Avenue in White Plains, NY.  Back then, it was fair to characterize what we did with computers as data processing.  We have spent the last 40+ years trying to move up the information hierarchy from data to information to knowledge to wisdom.

So how is it that after 40 years of progress, we blow everything up and talk about the lowest level, the lowest value, the largest in volume?  The focus is wrong.

  • More data is rarely the solution to a problem.  In general, we find that we’ve got all the data we need, and then some.  To use a politically incorrect example, on 9/12/01, we were able to trace the history of all of the terrorists back for years.  We knew where they came from, what flight schools they went to, how they moved around and so on.  We actually had all of that data on 9/10, and before.  The problem wasn’t the data, the problem was drawing predictive insights from it.  Nassim Taleb, author of the Black Swan, actually makes the provocative argument that data is toxic in large volumes, that it increases the noise in our signal-to-noise ratio.
  • Vendors have co-opted the term to sell everything from in-memory databases to massive storage systems to faster networks to more sensors.  All of these may have a role in your organization but chasing technology in the name of “big data” is just a license to spend money.  Badly.

So, if more data isn’t the right focus nor the solution, what is?  Actually, this isn’t a new problem/solution.  Back in the early 90’s, I’d talk frequently about how Benetton transformed the fashion industry.  It’s quaint to think of now but back then, retailers typically planned and deployed their fashions long in advance of the season.  Some time in the spring, a retailer would order and a manufacturer make all of the items they were going to carry in their store in the fall or even the following spring.  If they bet wrong, they had massive excess inventory.  If they bet wrong the other direction, and something became much bigger than they had forecast, they just had to hope that trend continued into the next buying cycle, a year hence.  Benetton had the radical, for the time, notion of not ordering everything in advance but instead would change orders in season.  If something was hot, they’d deploy more.  If something was cold, they’d just shut it down.  (It’s ironic that Benetton was done in by competitors who proved even more nimble than they, further shortening time to market.)

Using timely data to inform critical business decisions and transforming supply chain decisions based on that.  That’s what we were talking about then and what’s what we should be talking about today.  The change isn’t so much in the volume of data, though that’s readily apparent, but rather the velocity and shelf-life of data.  We used to receive data daily, monthly or even quarterly.  Now we receive it instantaneously.  And data used to have a long shelf life.  Now, much of the data we can receive (e.g., location data) has value that’s measured sometimes in seconds.  Use it or lose it(s value).

So, what do we need to do differently?

  1. Focus on velocity, not volume.  You need to shorten time-to-decision.  And having reached a decision, you need to shorten time-to-evaluation.  Is your strategy working?  If not, change it.  Quickly.
  2. Test hypotheses. The volume of data is so large that the ability to “find truth” in the data is much akin to finding a needle in a haystack.  If one of the famous lines from The Graduate was “plastics,” the secret today is “mathematics.”  Hal Varian, chief economist at Google and Cal Berkely academician, has said for over five years now that mathematics will be the growth profession of the century as those skills will be necessary to build the models that will make sense of, or at least test, the volumes of data that we’re generating.
  3. Business 101.  Make sure you understand your business rationale for chasing an information solution.  Can you act meaningfully on the information and will it drive better business outcomes.  I’ve talked to too many people where, when I ask “what will you do differently if you could answer that question,” their answer basically is “well, nothing.”

I’m not saying that we can’t improve business processes or outcomes.  I’m a strong believer in our ability to take data and transform it into real business value, and tend to reject Taleb’s position, even while it delivers a cautionary note.  But if we continue this fool’s chase for Big Data and don’t transform it into better and faster actionable insight, we will have wasted money and competitive opportunity.  The focus must be on action and velocity, not volume.

 

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