Archive for April, 2008
The situation trap
Posted by jay in 03 Business Philosophy, 10 Uncontaminated Generation on April 25, 2008
Clayton M. Christensen calls is disruption. Abernathy and Clark calls it radical innovation. But, at the end of the day industries and companies find themselves in a situation trap. How can organziations reshape alternate models while the existing ones are successful?
We are all trapped in a terribly organized and immersive set of circumstances that cloud our thinking and stop us from seeing the future for what it could be. People often describe their situations as if they have nothing to do with the potential outcomes and future potential achievements that might turn them into great innovators or leaders. We need to have very deliberate and directed thinking initiatives that can assist us in breaking loose from our situation trap. These types of thinking activities are called reframing.
It is not just about how we think about the future, but how we recall the past. The past, and history as we know it, is hardly ever recorded objectively. Even our thoughts and memories of times gone by, are shaped around our thinking of the time, our situation trap. Getting our minds right to accept the plethora of possibilities presented to us throughout our lifetimes, is where reframing takes affect. We need to have the skills and capabilities to renew and rethink our skills and capabilities. Now, this is where higher levels of thinking can really help you.
Platform operating models and platform-as-a-service options
Posted by jay in 06 Age of Access, 11 Information Epistasis on April 22, 2008
The morphing of platform models and service models has resulted in a movement now focusing on platform-as-a-service. Platform operating models can be used in a number of ways that include:
- Platform can be used to serve your internal business needs (common business processes internally hosted)
- Platform can be used to service a closed community (electronic banking, trading)
- Platform can be used publicly where an open community participates (Google Apps, Salesforce.com Appexchange, Amazon Elastic Compute Cloud)
In one of my previous posts I wrote about 1st and 2nd order business models – one of the ways in which the platform model is evolving to allow for 2nd order based revenue models. We have done extensive work in financial services using the concept and found that there are major opportunities in creating a common global electronic platform where banks can “configure”, assemble or develop their own unique requirements. This might never happen seeing that integration with legacy systems and legislatory issues will prevent adoption.
This is the abstract of a paper we submitted in February to an academic conference:
Institutionalizing product line practices is a complex task, requiring thorough understanding of concepts, and change processes with strong business commitment. This research reveals that financial services organizations in South Africa, Australia and the United Kingdom have business models that focus on business autonomy and agility to ensure financial performance without much concern for understanding technology commonalities. Business pressures are forcing these organizations to find models that can assist with leveraging common technologies more effectively. Although the set of product line practices and patterns available provide comprehensive coverage of the paradigm, financial services organizations struggle to implement the concepts effectively. This paper describes a Platform Operating Model (POM) which is used as a globally deployable change framework aimed at multi-national financial services organizations. The approach, as implemented in a number of organizations, focuses on the simplification and adaptation of product line techniques without compromising the essentials associated with successful product line institutionalization and operation.
The relationship between the participative customer and economic customer
Posted by jay in 08 Participative Customer on April 19, 2008
The role of the customer has evolved where the act of co-production plays a more dominant role than in the previous era. This has been a slow journey that went through evolutionary cycles of change. It will be impossible to describe this journey in simple terms where you define a simple set of rules of this multi-dimensional evolution. But there are some signs…
This story starts after the industrial era – evidence that modern businesses are shaped around productivity and new business models. Productivity results in automation and business model innovation results in contemporary revenue models.
Business Models are described in “first order” and “second order” business models:
- The first order model is the easy model to define and the economic customer is well defined and becomes the focus of most business activity.
- The second order business model relies on the participative customer to drive economic value through a different set of customers.
Google makes money by having participative customers use their community for free. Well largely for free, services like Google Earth, Sketchup, Documents, Business have a “free option” and various payment options where you get additional services (a combination of first and second order models). Economic customers on the other hand pay to have access to participative customers – and this is where the advertising revenue model intersects with the services revenue model/s.
Neopets allow access to its vast gaming site to kids for free and then allow large brand organizations to create games. They sold immersive advertising models to companies that include General Mills, McDonalds. Mattel, Wrigley, Heinz, M&M Mars, Disney, Campbell Soup, Hershey, Nestle, Procter & Gamble, Kraft Foods/Nabisco, Frito-Lay, and Lego, along with several entertainment clients.
Sellaband is a community site where a number of players share in the revenue that’s generated. Your efforts as a participative customer are rewarded economically. There are relationships formed to enhance the spread of customer networks. Sellaband and Amazon has a relationship that’s quite interesting.
…to be continued…
Energy and Focus
Posted by jay in 03 Business Philosophy on April 18, 2008
If you’re in your own business, working in a corporate, or generally working on initiatives to make a difference – some key elements of a philosophy need to be considered. Sumantra Ghoshal wrote a paper some years back about “Energy and Focus” as the key drivers of management. The first time I read it, some ideas surfaced; but over time more and more of his ideas started to make sense to me. We have some ideas that we develop over time and sometimes these ideas just become dinner time conversational items. There are other ideas however that develop and make it into life and get the energy needed to make a difference.
There is one element of life that’s highly unpredictable though; the issue of how you work with people around you. You spend time mentoring and teaching individuals “that the act of entrepreneurship can transform a world where everybody are striving to make their mark on the social structures of the day”. This can either happen from within a corporate or from the outside where you try to be the scaffold (a metaphor I will unpack another time) that will allow people achieve great outcomes themselves.
Businesses go through cycles of change where the only surviving construct becomes the “dominant idea” of the business model. Theoretically it doesn’t matter if people come-and-go, but you need a certain number of key individuals with the energy to recover from cycles of change. Undirected energy is quite dangerous as resources can be wasted on non-revenue generating activities and actions that do not contribute to business success. There is a point at which people leave your business and start competing businesses – this is an unstoppable force where the only counter is to step up the energy to implement your dominant idea.
I’m looking at a badge on my desk “Get over it” – got it from my oldest daughter a few weeks ago after a business event that left me stunned. Investments in people development are always personal and when they leave to compete with you…
It all began some 20 years ago. I worked with some great people and learnt a lot about the basics of how to treat people (by no means a great “people” person yet). But sometimes the internal energy that makes individuals believe that they know “everything” overpower their abilities to achieve in the current context, so they need to spread their wings. This all got me to reason about some key questions:
- is entrepreneurship really good for a business that wants to retain people?
- can you retain people without promising the dream of entrepreneurship?
- how are people reminded of the energy needed to achieve great outcomes?
- vision, mission and objective statements are not enough to describe the focus of a business?
The Zimbabwe Effect and other perceptive influencers
Posted by jay in 05 Ecogenetic Changes, Exploring the World on April 15, 2008
I’ve been planning a trip to Zimbabwe (for Gordon Institute of Business Science or GIBS) for the last two months. Well, there wasn’t much planning involved other than the many discussions before the trip actually happened. For those that are not informed about Zimbabwe; it is a country lead by a dictatorial leader that’s been in power for the last 26+ years. The last elections, about two weeks go, did not go without the usual irregularities as seen in countries run by dictators. The result is that all my business colleagues, friends and family were warning me that it is not a good time to go.
So, the way I figured this blog needs to be written, while sitting in airport waiting to depart for Harare, is to give you a view on my thinking and then on my return to provide some feedback. I’m the eternal optimist; but I also get affected by constant bombardment of negative messages in mass market media (The Zimbabwe Effect). CNN, Sky, CNBC, etc all have provided a pretty gloomy picture of Zim and its current practices and situation. Is there something else happening in this country that we don’t know about?
My day tomorrow is with twelve bankers from a bank in Zimbabwe (with people from the region), and the topic is Innovation and Creativity in Banking. Africa is filled with people needing access to credit and other financial products, and yet the uptake of the unbanked is still pretty low. Social banking models “invented†in the first world have been in practice in this market for a long time. The concept of stokvel and community lending models have kept communities functioning. Much has been written about Grameen bank and their ability to capture the “bottom of the pyramid”.
Arriving at Harare Airport at 9pm on the 14th got me thinking about the dangers… Yet, I felt safer than arriving at O.R. Tambo (Johannesburg International Airport). The people are friendly and helpful and very chatty about the Zimbabwe situation. My driver was very informative as he explained that the people are disappointed about the current affairs and especially about Mbeki’s (south Africa’s president) comments about “What crisis?” – although I could understand why he would say that seeing that things are calm and orderly on the surface with police marching everywhere. Driving through the streets of Harare, clean and deserted, reminded me of what towns (in South Africa) looked like as a kid. I think that these well preserved 60-70′s style architectures have worked well for Africa.
Breakfast was paid for with Zim$351,000,000.00 or about US$5.00. The picture does not show the last three 0′s as there is no space… The quality of the picture is also not up to scratch – I used my cell phone’s camera. Journalists have been removed and jailed before for taking pictures.
I had a wonderful day with senior people from the bank and enjoyed their views and questions about the topic of innovation in banking and other industries. The morning kicked off with the CEO addressing his executives about their business and its future. Without giving away any secrets of this Afro centric executive leader;
I wrote this while listening to an inspiring monologue (as my thoughts went wondering):
I am inspired and embarrassed
I am inspired and proud to be allowed in Africa during these exciting times…
I am embarrassed that I have allowed people to influence my thinking about the possibilities for this continent, Africa…
I am inspired by the possibilities of innovation in the region…
I am embarrassed that I’ve not done more to facilitate this process…
Throughout the day we unpacked the issues of what innovation could mean to this part of the world. Africa can become the learning ground for trying to understand some of these critical questions:
- what are the innovations needed to reinvent the basics of human living standards
- what are the emergent social structures as regions go through change
- what are the beliefs and dogma that we need to reexamine to compete in this region
- what is the impact of a world obsessed with automation and efficiency
Throughout the day we heard fighter jets pass by and at one point heard some people making a noise in the streets below. The presence of police calmed things down and Harare was back to business as normal. Today was also a stay-away strike day in protest to the elections results not being communicated, so it was a particularly quiet day. There were not many cars on the roads and you saw people on foot working their way home as no public transport was operational.
I was reminded that the country had people that are calm… Zimbabwean’s know that the “old man” (a term used by many Zim people when talking about Robert Mugabe) needs to move onto retirement. He needs to hand over his reign to someone that will affect change and focus on economic reconstruction.
Cycles of convergence and divergence
Posted by jay in 02 Reframed Thinking, 09 Economies of Scope on April 12, 2008
There are cycles of convergence and divergence in the computer, consumer electronics, media and other industries that are confusing the general understanding of “convergence”. Convergence is seen as the act of adding more and more features to a particular class of product to the point where another class of product is created and the existing class is rendered obsolete. Service industries also go through cycles of innovation that get convergent cycles of consolidated business offering to the point where “breakups” are caused due to disruptive innovation models. Prosper is a divergent banking (from traditional banking) model, but convergent in the social media world (converging banking into social media phenomena).
Al Ries wrote the book “The Origin of Brands” a few years ago. It is a great book that uses the metaphor of evolution to describe how brands are developed.
Looking at Apple/Microsoft or the other technology companies that are now global businesses, they all started with their particular focus and over the years “feature load” and “competence extrapolations” allowed these innovative teams to create a range of exciting products with a cult like followings – even if their products do not fit the initial business idea. Their products have little to do with the computer business and more-and-more with media and lifestyle; look at Apple’s iPod etc, Microsoft’s Zune, xBox etc.
We can look at Aristotle’s Concept of the Prime Mover; The concept of movement or change is eternal – there cannot be a first or last change. “If nothing acted on A, then it would stay the same and not move. So if A is moving it must be being moved by B, which in turn is being moved by C, and so on.” But for us it means that as we go through cycles of convergence, competitive forces increase to the point where the converged concept implodes.
For business strategy it means this:
1. Understand the landscape
2. Reason about the cycles of divergence and convergence that created disruptions
3. Map your existing and future strategies onto this cycle
4. …execute…
Sounds simple? This is one of the most complex things to grasp in a modern business.
Case of Standard Bank: social media news on the go
Posted by jay in 09 Economies of Scope, 10 Uncontaminated Generation on April 9, 2008
Standard Bank has created a social news platform for their Pro20 series. It has the works; video, photos and the ability to make comments. Check this comment:
“By including an innovative social media strategy in this year’s Standard Bank Pro20 marketing campaign we believe we’ll reach a wider audience. More importantly, social media channels like blogs, Facebook, Twitter and YouTube mean that the supporters can actively get involved and create their own content.†– Bellinda Edge, Senior Manager, Direct and Online Marketing, Standard Bank
Looking good! It is a great step for banks to enter this field as people often become critical (or over-critical) about the implementation of social media concepts. Leaving it up to an open audience to rank and rate videos, pics and other media related artifacts can definitely win you some points with the “socialists”. The concern in South Africa is that the uptake of social networks by the mature individual (well, over 30/40′s ;- ) is still slow. They do however become great spectators while others (the younger ones) participate.
Banks like Macquarie has a different take on media where they use a controlled environment called Macquarie Digital. Well, it is different in that Standard Bank has launched their social media initiative in the context of sport. The concept of social media press releases is a recent phenomena and still needs some time to settle down and find its place in the overcrowded media landscape.
The Future of Media Report 2007 is a must-read as it provides great insights into the media landscape. Look on page 12 for some more information on the Macquarie Media business. The report also unveils that personalization is one of the major drivers of advertising value.
Some ramblings (not rumblings) about protection and freedom
Posted by jay in 06 Age of Access on April 8, 2008
Would the free culture movement change the intellectual property landscape? Are we killing creativity by over-protecting our creations, by not allowing people to alter, enhance and use our creative works? Are we creating an overly complex maize of interrelated, and incomprehensible laws, business systems and networks; forcing innovation to slow down?
Even the development of the “Peer to Patentâ€: Collective Intelligence and Intellectual Property Reform community project. People are working on a reform process that unlock more value for the masses of people that are excluded from various forms of creative activity. Look at unhappy birthday where communities like these are trying to make people aware of some facts that are not known to the general public.
Creative commons is very active in the copy left environment, where people can specify their own rules of copy protection. And, where it’s all done on-line.
Check this video explaining the Creative Commons concept:
Even a community like downhillbattle is working on “ending the major music monopoly” in a number of ways. Much of this was fueled by the challenges raised by Grey Tuesday events; also look at the Wikipedia entry on The Grey Album: “Grey Tuesday” was a day of coordinated electronic civil disobedience on February 24, 2004. Led by Downhill Battle, an activist group seeking to restructure the music industry..
I guess that we are in an era where legal reform is fought by two major groups; firstly the people that make money now, and secondly the people that want to make money from new innovations.
Intellectual property protection of marketplace platforms
Posted by jay in 05 Ecogenetic Changes, 11 Information Epistasis on April 7, 2008
Intellectual property protection (through patents) is always under scrutiny, and especially software patents. I started looking into “marketplace patents” recently and found a very confused and scattered landscape. Most of the patent applications are from 2001/2002 and some as recent as 2006. Even if you look at “Social Media” related patents there seems to be many overlaps between these types of patents.
I particularly like this patent by Yahoo: “An improved system and method for selecting and visualizing object metadata evolving over time is provided.” Have a look at Yahoo Pipes and you might get a glimpse of the configurability of web mash-ups (I will cover this at a later stage).
Look at this application from Sun Microsystems: “The invention provides a flexible, extensible and customizable architecture for supporting e-commerce applications. The system allows the integration of extensible modules with a software bus providing access to common e-commerce services. Thus, the invention eliminates the need for creating a custom architecture for supporting desired services.”
Then look at this application by Hip Consult: “An apparatus and method for transferring money or value, using a wide range of interfaces to initiate a transfer and a wide range of options for receiving the transfer, including receiving the transferred sum directly to the communication device/account of the receiver. The receiver can use the transferred sum as an airtime credit, to obtain cash or to pay for other goods or services.” I am quite intrigued by this application as it seems to overlap with so many of the full service banks today; not even to mention the emergent social on-line banking platforms like Prosper (to learn more look at Doc Prosper).
Have a look at this presentation by Chris Larsen from Prosper:
Prosper has an interesting angle as they allow you to download all their public data to perform analysis if you are an academic. Their Tools site allows you to download gigabytes of detailed data. They have an application for “Networked loan market and lending management system” patent. Does this mean that entrepreneurs wanting to enter this kind of business model are discouraged?
Where does this leave the inventor or entrepreneur wanting to start something new in the social network, social banking, networked platform, or any related concepts? Some tips before you embark on your community building project:
1. Have your community designed with the basic rules worked out.
2. Define the “emergent” properties and attributes that might change as you learn how to implement.
3. Have you tracking criteria worked out to define success in scope of usage and not scale (especially if your community is small).
4. Do a patent search for the concept you are about to develop; and be ready for a surprise as the multitude of patents either registered (or where applications have been filed) are vast.
5. Either rethink your model OR track down the patent owner and start negotiating.
6. Do nothing and miss the rush and create the next big thing…
Innovation journalism driving epistasis
Posted by jay in 10 Uncontaminated Generation, 11 Information Epistasis on April 6, 2008
I’ve been following the Innovation Journalism community since 2004; the reason – David Nordfors makes a compelling point that many of the innovations today are not popularized through journalism because of the lack of innovation, but journalism on the other hand is going through radical changes with social networks, blogs, on-line news sites, etc taking market share from traditional print… The Innovation Journalism community published their previous conference proceedings on-line for those interested in downloading the material.
Here is a video of David presenting and introduction to innovation journalism:
Information sources as input into journalism, and journalism as an information source are angles now widely reasoned about (thanks to this community). But at the end of the day its about timing and relevance – you will not get the latest information in a monthly periodical where bloggers write about pressing issues daily. Profiled and contextual content aimed at your likes and dislikes, fears and pleasures, and moods are radically influencing the innovation journalism field of study.
Check out monitor110′s new information dissemination cycle.
People are more aware of developments then ever before – the challenge is that too much information creates confusion and disorientation. Who should I listen to? What is really going on around me? All of these questions influence us to want the authentic experience; the need to see it with your own eyes… And then; what about the new generation that has this digital media experience already wired into its existence.
Where are seeing not convergence or divergence in the media and journalism world, but a form of epistasis. The genetic makeup of the industry has been altered by innovations from other fields. Epistasis is the interaction between genes (industry structures that can be expressed as genes). Epistasis takes place when the action of one gene (traditional media) is modified by one or several other genes (digital revolution, social media), which are sometimes called modifier genes. The gene whose phenotype (currently expressed properties) is expressed is said to be epistatic, while the phenotype altered or suppressed is said to be hypostatic. More on this later…
Reframing, reconfiguration and the road to co-production
Posted by jay in 02 Reframed Thinking on April 5, 2008
Richard Normann wrote a landmark book in the 90′s called Reframing Business. It had a profound impact on my thinking about business and on others like C.K. Prahalad that seems to be an avid follower of his philosophies. Much of his work is based on social sciences where the power of the individual and the emergence of the “collective” showed us that a new management science needs to be the focus of the future. Recurrent purposeful emergence, higher and lower systemic logic, pro-active ecogenesis, strategic paradigms, etc are some of the terms that Normann introduced to the world. Anyone with an imagination for business would be fascinated by the creative writing style and clarity of description.
Check this title of a book to be published in May this year: 
“The New Age of Innovation: Mobilizing Global Networks to Unlock Co-Created Value in Your Company”. Looking at the initial content, it will become a must-read for those interested in Normann and Raminez’s work. Co-design, co-creation, co-production, crowdsourcing, social networks, virtualized, have all become signs of the era we’re living in.
There are two major phenomena merging in this era; customerization and co-production. Customerization drives a strategy towards providing individualised marketing messages that are customised for the individual. And, drives production strategies towards ensuring that variances in product/service are catered for by the existing infrastructure. Hence the capability that an organization needs is the ability to continuously separate the commonalities from the variabilities (in both product/service and production).
C.K. Prahalad’s previous book on the Future of Competition presents a great collection of co-production related examples and models. He also focuses on the experience economy and the future role customers will play.