Tag Archives: The Economist

Innovation [2009-10-05]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

From doctrine to dogma: when did a good idea become the only idea

When does a good method become the only method? The one true approach to solving a problem; the approach which will bind them all. The last few decades has seen radical change in our social and business environments, while the practice of business seems to have changed relatively little since the birth of the corporation. The problem of running a business, the problem we work every day to solve, has changed so much that the best practice of yesterday has become an albatross. The methods and practices that have brought us to the current level of performance are also one of the larger impediments to achieving the next level. When did the yesterday’s doctrine become today’s dogma? And what can we do about it?

Our methodologies and practices have been carefully designed to help steer our leviathan ships of industry, tuning their performance to with five and three year plans. The newspapers of today, for example, hold a marked resemblance to the news papers of 100 years ago, structured as large content factories churning out the stories with some ads slapped in the page next to them.

The best practices evident in companies today represent the culmination of generations of effort in building, running and improving our businesses. The doctrine embodied in each industry in a huge, a immensely valuable body of knowledge, tuned to solving the problem of business as we know it.

doctrine |ˈdäktrin|
noun
a belief or set of beliefs held and taught by a church, political party, or other group : the doctrine of predestination.
• a stated principle of government policy, mainly in foreign or military affairs: the Monroe Doctrine.
ORIGIN late Middle English : from Old French, from Latin doctrina ‘teaching, learning,’ from doctor ‘teacher,’ from docere ‘teach.’

OS X Dictionary, © Apple 2007

However, a number of fundamental changes have taken hold in recent years. The pace of business has increased markedly; what used to take years now takes months, or even weeks. The role of technology in business has changed as applications have become ubiquitous and commoditized. The assumptions which existing doctrine were developed under no longer hold.

Today, most (if not all) newspapers are watching their as revenue is eroded by the likes of Craigslist, who have used modern web technology to come up with a new take on the decades (if not centuries) old classified ad.

Let’s look at Craiglist. I’ve heard people estimate that they are doing close to $100mm in annual revenues at this point. Many say, “they could be doing so much more”. But the Craigslist profit equation is interesting. They apparently have less than 30 employees. That’s about $4mm/year in employee costs. Let’s assume that they spend another $6mm per year on hosting and bandwidth costs and other costs. So it’s very possible that Craigslist’s annual costs are around $10mm/year. Their value equation then is 10 x (100-10) = $900mm. That’s almost a billion dollars in value for a company with only 30 employees.

Fred Wilson, A VC

Craigslist has taken a fresh look at what it means to be in the business of classified ads, and used technology in a new way to help create business value, rather than restrict it to controlling costs and delivering process effencies; an approach Forrester have labeled Business-Technology.

The challenge is to acknowledge that the rules of business have changed, and modify our best practices to suit the new business environment because, as Albert Einstein pointed out “insanity is doing the same thing over and over again and expecting different results.” If we can’t change our best practices to suit, then our valuable doctrine has become worthless dogma.

dogma |ˈdôgmə|
noun
a principle or set of principles laid down by an authority as incontrovertibly true: the Christian dogma of the Trinity | the rejection of political dogma.
ORIGIN mid 16th cent.: via late Latin from Greek dogma ‘opinion,’ from dokein ‘seem good, think.’

OS X Dictionary, © Apple 2007

Enterprise architecture (EA) is prime example. As a doctrine, enterprise architecture has a proud history all the way back to John Zachman’s work in the 70s and the architecture framework which carries his name. EA has leveraged large, multi-year transformation programs to deliver huge operational effencies into the business. These programs have delivered a level of business performance unimaginable just a generation ago.

The pace of business has accelerated so much in recent years that the multiyear engagement model these transformations imply is no longer appropriate. What use is a five or three year plan in a world that changes every quarter? Transformation projects have been struggling recently. Some recent transformations edge across the line, at which point everyone moves onto the next project exhausted, and the promised benefits are neither identified or realized. Some transformations are simply declared a success after an appropriate effort has been applied, allowing the team to move on. A few explode, often quite publicly.

This approach made sense a decade or more ago, where IT was focused on delivering the next big IT asset into the enterprise. It’s application strategy, rather than technology strategy. However, the business and technology environment has changed radically recently since the emergence of the Internet as a public utility. The IT departments we’ve created as application factories have become an albatross for the business; making us incapable of engaging anything but a multiyear project worth tens of millions of dollars. They actively prevent the business from leveraging in innovative solutions or business opportunities. Even when there is a compelling reason to do so.

Simply put, the value created by enterprise architecture has moved, and the doctrine, or at least our approach to applying it, hasn’t kept up. For example, a common practice when establishing a new EA team seems to involve hiring architects to fill each role defined TOGAF’s IT Architecture Role and Skill Definitions to provide us with complete skills coverage. Driving this is a desire to align ourselves with best practice, and ensure we do the job properly.

Some of TOGAFs IT Architecture Role and Skill Definitions
Some of TOGAF's IT Architecture Role and Skill Definitions

Most companies don’t need, nor can they can afford, a complete toolbox of enterprise architecture skills inside the business. A strict approach to the the doctrine will result in a larger EA team than the company can sustain. A smarter approach is to balance the demands and available resources of the company against the skill requirements and possible outcomes. We can tune our approach by aligning it with new techniques, tools and capabilities, or integrating elements from other doctrines—agile or business planning techniques, for example—to create a broader pallet of tools to solve our problem with. This might involve new engagement models. We can buy some skills while renting others. Some skills might be sustainable at a lower levels. It is also possible multi-skill, playing the role of both enterprise and solution architect. Similarly, leveraging software as a service (SaaS) solutions can also force changes in our engagement model, as a methodology suitable for scoping a three year and $50 million investment in on-premises CRM might not be appropriate for a SaaS solution which only requires 10% of the effort and investment as the on-premises solution.

Treating doctrine as prescriptive converts it into dogma. As John Boyd pointed out, we should assume that all doctrine is not right—that it’s incomplete or incorrect to some extent. You need to challenge all assumptions and look outside your own doctrine for new ideas.

Our own, personal resistance to change is the strongest thing holding us back. It seems that we learn something in our early to mid twenties, and then spend the rest of our career happily doing the same thing over and over again. We define ourselves in terms of what we did yesterday. If we create an environment where we define ourselves in terms of how we will help the organization evolve, rather than in terms of the assets we manage or doctrine we apply, then we can convert change from an enemy into an opportunity.

There is light at the end of the tunnel. For all the talk of the end of newspapers, some journalists are banding together to create new business models which can hold their own in a post-Craigslist world. Some old school journalists have taken a fresh look at what it means to be a newspaper. Young but growing strong and profitable, Politico’s news room is 100 strong and they have more people in the white house bureau than any other brand.

As TechCrunch pointed out:

Journalists still matter. A lot. Especially the good ones.

The challenge is to focus on what really matters, get close to your customers and find what really drives your business, question all the common sense (which is neither common or sensible in many cases) in your industry’s doctrine, look into the doctrine of other industries to see what they are doing that you can use, and use technology to create a business which their more traditional competitors will find it impossible to compete against.

The rules of the game are changing

Can China beat the U.S.A. at customer service? Not quite yet according to The Economist, but they do seem to be getting there. If Chinese businesses can start to out perform the West in front office processes then China would start to be the front line seller, not the back office producer. And China has a massive, and rapidly maturing, domestic market to experiment on as it tries to get these processes right.

The Economist’s article provides us with a real sense of the shift in global business that that the current financial crises only seems to be accelerating. I’m a big believer that there’s nothing particularly special about the people in any particular country. I’ve been lucky enough to work on most of the continents and with a diverse enough range of nationalities to understand that we’re all equally intelligent, creative and innovative given half a chance. If we’re all as smart as each other then ultimately success (or not) of a country will come down to the size of its talent pool (population) and the willingness of its businesses to invest. China and India, with their massive populations, and drive to modernize are well positioned to tip the balance in their favor, if they can sort their domestic markets out. This appears to be happening.

Our current assumptions seem to be that the East (China and India) will manufacture products designed in the West (the U.S.A. and Europe) and which are sold to western customers. Most of the value is generated and captured in the West. This makes sense at the moment as the West (and the US in particular) is the largest, homogenous and rich market in the world. Western companies have the advantage of a large domestic market, and overseas companies all target the West as it offers the largest potential to grow their businesses.

However, China’s move into the front office has the potential to flip the entire balance. Western companies could be manufacturing Chinese designs for western domestic markets, with the cash generated in the West and value captured in the East. With its huge internal population Chinese business will have access to the talent it needs to invent and design new products and services. It has have a large domestic population to grow a business and tune its offering. As costs rise and the advantages of labour arbitrage are eroded, manufacturing will slowly migrate from East to West to be close to the client where it avoids currency risk (similar to how various Japanese car companies established factories in the American south).

The question on all of our lips, though, is “How does this effect me?”

The world is a more complex place than we first assumed. Not only is the business cycle accelerating, but globalization and the global financial crisis seem to be changing the underlying rules which drive the business cycle. Global supply chains are becoming yet more complex, and we’re even more tightly integrated into the global village. Plowing the same farrow as last year is no longer a viable strategy if we want to survive. We all need to think quite carefully about not just how we’re going to create good businesses in our local market, but what is going to provide out businesses with the originality they need to survive in a global market as we come under increasing pressure from competitors from all around the globe.

Suddenly it seems like The World is Flat  only scratched the tip of the iceberg.

Innovation [2009-01-12]

Another week and another collection of interesting ideas from around the Internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

Innovation [2008-12-15]

Another week and another collection of interesting ideas from around the Internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

  • What Apple learned from Kodak [BusinessWeek]
    Sometimes repeating what was done in the past is the best path to innovation.
  • Miyamoto unplugged [Edge Online]
    Back before the Wii was released no one took them seriously, but Nintendo’s focus on simply making fun games has paid off and they see no need to change strategy now.
  • The role of business in society [John Kay]
    Sometimes the best approach to success is to approach it indirectly. Apple focused on making products they themselves would love to use, while Nintendo wants to make fun games everyone can enjoy. Obliquity might be the best approach to innovation: try and be the best you can, rather than trying to be the most innovative.
  • In which innovation leads to injury [Wondermark]
    Not all ideas work out the way we expect.

Innovation [2008-12-01]

Another week and another collection of interesting ideas from around the Internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

  • Engineers rule [Forbes]
    At American auto companies, finance guys and marketers rise to the top. Not at Honda.
  • China’s long road to innovation [strategy+business]
    Beijing is mandating an increase in home-grown R&D, but Chinese companies face long odds in meeting international standards of innovation.
  • Cisco CEO John Chambers on speeding up innovation [BusinessWeek]
    In Chambers’ view, business is on the verge—not in the midst—of a dramatic transformation, a huge leap forward in productivity built on collaboration made possible by Web 2.0-style tools similar to YouTube, FaceBook, and Wikipedia but adapted to the corporate environment. “Our children, with their social network[ing], have presented us with the future of productivity,” he emphatically told the crowd of about 4,500 executives.
  • The kids are alright [Economist]
    Worries about the damage the internet may be doing to young people has produced a mountain of books—a suitably old technology in which to express concerns about the new. Robert Bly claims that, thanks to the internet, the “neo-cortex is finally eating itself”. Today’s youth may be web-savvy, but they also stand accused of being unread, bad at communicating, socially inept, shameless, dishonest, work-shy, narcissistic and
    indifferent to the needs of others.