Re-imagining Business Through Integration

14 Nov

(I’m cross-posting this from the Fujitsu RunMyProcess blog where I am now a regular contributor).

Just a commentary in response to a post I found by by Peter Evans-Greenwood on the potential for business re-engineering based on presence-based technologies such as Apple’s iBeacon. While I don’t want to talk about this subject specifically, Peter uses a couple of very clear examples in terms of retail purchasing that illustrate the power of re-imagining desirable outcomes from the consumer’s perspective – as opposed to a technology perspective – and the resulting need to pursue consumer-focused integration of business capabilities to give them what they need.

These themes resonated with me this morning as I gave a talk at the Eurocloud congress recently in which I berated people for not “thinking big” about the potential of cloud in combination with other technologies. At the moment there is so much discussion and argument about whose VM is better or the benefits (or not) of making VMs more ‘enterprisey’ that everyone seems to be missing the ‘moon shot’ opportunity of integrating, simplifying and putting technology platforms into the hands of everyone. This problem only becomes more acute as you broaden your view to all of the other silo arguments raging across other areas of technology evolution. From this perspective Peter’s examples of design-led, consumer-oriented thinking were very similar to the challenge I tried to lay down to congress attendees.

Effectively I believe that the IT challenge of our generation is to package diverse technologies into much higher level platforms that humanise technology and empower less technical people to solve real problems – i.e. to enable them to use modelling and simplified domain languages to scalably and reliably address the huge opportunities that technology can deliver to science, business and society. It’s a shock to many IT people but more often than not it’s actually other people who have the domain knowledge required to change the world – which is why they don’t have the time to learn the technology. From their perspective everything related to traditional IT is a form of tax, a significant driver of risk and delay and at worst an insurmountable barrier to their activities. These problems become more acute as you scale down the size of organisation under consideration – to the point at which the vast majority of smart people are locked out of the ability to bring their expertise to bear in new digital business models.

humanizing technology to realise new digital value chains

If we take Peter’s examples of placing the consumer – rather than technology – at the heart of our endeavours then it feels to me as if many seemingly “hot” IT trends fail on this basic test and are simply a reflection of technology-led thinking. Doing isolated things better because we can – e.g. like Peter’s NFC example – is really just a way of increasing the efficiency of something that brings no benefit to the customer and is therefore just pointless when you step back and reflect. In Peter’s example the ‘customer’ from the technology provider’s perspective may have been the cashiers, the people who support payment systems or even the CIO. When you shift to an outside-in perspective, however, the obvious question is why make payment at the cash desk more efficient when there is no need to queue to pay at all?

I know it’s a difficult discussion but in a similar sense businesses rather than IT staff are the true customers of IT and their intent is ultimately to deliver new and valuable outcomes as quickly as possible – they really couldn’t care less whether your infrastructure is virtualised, what middleware is or whether the pointless technical activity required to undertake these tasks is managed by operations staff or developers. While they still have to ‘queue’ unnecessarily to get their outcomes it makes no material difference to their poor experience or the lack of empowerment offered by technology platforms. By stepping back we can see that most of the activity in cloud at the moment is not focused on re-imagining how we integrate and simplify IT to support the rapid achievement of new and customer-led business models but rather on how we provide tools and approaches to increase the efficiency of the people who have traditionally implemented IT. Again, this might make worthless tasks more efficient but effectively it’s like the payment example mentioned by Peter – in the same way that using NFC misses the opportunity for a wholesale rethink of the customer’s payment experience, I feel that most cloud activity (and certainly noise) is focused on achieving efficiency increases within the vast swathes of traditional IT activity which could be wholly eliminated using a design-led, outcome-centric approach.

In this context I believe that the major responsibility of cloud platform providers is to provide a simplified way of creating business solutions that span all of the different technologies, business capabilities and channels that are meaningful to the creation of business models. Essentially we need to enable businesses to ‘compose’ internal and external capabilities into new value webs supporting innovative new business models – all at a higher level of abstraction. I call this concept of rapid business model creation, integration and adaptation composite business. Essentially there should be no need for anyone other than cloud platform providers to understand the complexity of the different underlying technologies necessary to create, deliver and monetise systems that digitally encode business IP for such composite business models.

Realising a business platform for the support of composite business models requires the consideration of two different dimensions of integration and simplification:

  1. Firstly composite business platforms need to provide a cohesive experience to their users by integrating and simplifying all of the technologies, processes and tools required to deliver value outcomes via multi-layer business composition; such platforms cannot simply be a loose and low level collection of technologies and middleware that require ongoing integration, configuration and management by technical users.
  2. Secondly the platform itself needs to provide high leverage tools that a range of stakeholders can use to quickly capture, deliver, monetise and distribute their business IP as composite business and technology services.  In this context a composite business platform needs to facilitate the simplified creation of solutions that integrate distributed and heterogeneous assets into new value webs – while hiding the technical complexity required to enable it.

In stepping back we need to realise the essentially pointless nature of technology implementation and management as an end in itself and focus on the ways in which we can make it disappear behind tools that simplify the realisation of valuable business outcomes. Such a re-imagining has never been more feasible – we now have a foundation of open networks, open protocols and open technologies that enable the creation of new and higher order platforms for value creation. From my perspective this is the responsibility of platform companies in the emerging business ecosystem and we only have to step back to see the opportunities.

Aspects of Integration

In this context ‘cloud integration’ transforms from being a technical issue to an enabler to the rapid linkage of business and technology assets into new, consumer-centric value webs that can span industry boundaries and deliver new personalised services.

Furthermore while I believe that this shift has the short term potential to improve services from companies and organisations operating within settled industry boundaries, the outstanding business opportunities of our age are to put high leverage cloud platforms into the hands of the maximum number of people to democratise technology and allow organisations to pursue wholesale specialisation and the aggressive re-drawing of existing industry and social boundaries around value. I believe that we truly are on the verge of not just a new information industrial revolution that impacts IT companies but rather a whole new business revolution that will leverage the shift to utility platforms to change the basis of on which businesses compete.  As the technology platform coheres,  enterprises will increasingly be able to specialise, integrate and then focus their joint efforts around value to the end consumer rather than on maximising the utilisation of their own capabilities in pursuit of scale and efficiency (something that represents a ‘punctuated equilibrium’ in evolutionary terms – as I’ll continue to explore in part II of my recent post on this subject). As value webs can be quickly created, evolved and realigned to ‘pull’ everything into the experience required by the consumer, the old model of ‘pushing’ industrially or functionally siloed products and services from large and tightly integrated companies becomes insupportable.

So I would encourage you to read Peter’s post – to see some simple and concrete examples of design thinking in action – and then think about the ‘moonshot’ opportunity of a wholesale re-imagining of technology. With all of the myriad technology advances that we are seeing it has never been easier to create a simplified and reliable platform for the modelling, execution and monetisation of new kinds of business.

Finally, also take the time to really reflect on all of these opportunities in the context of your role and the ways in which you can truly add value in this new environment. If you are working in an enterprise then think hard about whether you really need to control the technology in order to realise business value for your organisation (hint – uh, no). On the other hand if you’re working in an IT company then think about how to hide the technology and enable IT groups to focus purely on business IP capture, management and distribution.

Evolution and the IT Industry – Part I

25 Oct

(I’m cross-posting this from the Fujitsu RunMyProcess blog where I am now a regular contributor).

A few years ago I wrote a (rather long) post about evolution in the context of business and in particular the use of emerging business architecture techniques to increase the chances of successfully navigating its influence.

Prompted by two recent posts on this blog, however – ‘Software Darwinism’ by Malcolm Haslam and ‘The Death and Rebirth of Outsourcing’ by Massimo Cappato – I thought I would simplify my original piece to create a much shorter and more IT-centric two part set of observations on this theme.  I basically wanted to pick up on the concept of evolution raised by Malcolm and use this as a vehicle to explore the potential impact on businesses and IT of the disruption described by Massimo; how have we arrived at the landscape of today and what can we learn from evolutionary processes about the likely impact of the disruption on the businesses paying large amounts of money for ‘artificially alive’ systems.

In part 1 I will introduce some ideas about evolution and discuss the current state of businesses in this context.  In part 2 I will continue the theme to discuss the way in which current disruptions represent a ‘punctuated equilibrium’ that demands rapid business evolution – or creates a high likelihood of extinction.

Evolution as an Algorithm

A fascinating book I once read about ‘complexity economics’ described evolution as an algorithm for exploring very large design spaces.  In this interpretation the ‘evolutionary algorithm’  allows the evaluation of a potentially infinite number of random designs against the selection criteria of a given environment. Those characteristics that are judged as ‘fit’ are amplified – through propagation and combination – while those which are not die out.

In the natural world evolution throws up organisms that have many component traits and success is judged – often brutally – by how well the combination of traits enables an animal to survive in the environment in which it exists.  For instance individuals of a particular colour or camouflage may survive due to their relative invisibility while others are eaten. Furthermore this is an ongoing process – individuals  with desirable traits will be better equipped to survive and the mating of such individuals will combine – and hence amplify – their desirable traits within their offspring.  Over time the propagation and combination of the most effective traits will increase in the population overall and where this happens quickly enough a species will evolve successfully for the environment..

Punctuated Equilibrium

Another interesting aspect of evolutionary systems is that they often exhibit long periods of relative stability until some set of external changes creates a ‘punctuated equilibrium’; that is a change to the environment which brings new selection criteria to the fore.  Such changes can have a devastating effect on species which have evolved successfully within the previous environment and lead to new periods of dominance or success for new or previously less successful species whose traits make them better adapted to the new selection criteria that result from the change.  Such species then continue to evolve towards mastery of their environment while others which are too specialised to adapt simply die out.

A particularly dramatic example of this process was the extinction of the dinosaurs, where a change in the environment lowered temperatures and destroyed the lush foliage they depended upon.  This led them from masters of the world to extinction in a relatively short period – the combination of traits that previously made them highly successful was no longer well aligned to the selection criteria of the new environment.

Markets as Evolutionary Systems

It has been argued that the complexity of markets (in terms of their scale, their breadth of participation and the differing intents of the participants) means that they can effectively be viewed as evolutionary systems.  Markets are essentially an environment in which we participate rather than something that can be clearly understood or designed in advance.  They are effectively a very large design space where the characteristics for success are often not known in advance and must be discovered through experimentation and adaptation.

When we look at businesses in an evolutionary context we can therefore hypothesize that those which converge over time  towards successful combinations of traits – as judged by their stakeholders through a process of interaction and adaptation – will be the ones best adapted  to market needs and thus chosen by consumers.  These traits – whether they are talent strategies, process strategies or technology strategies – are then copied by other businesses, replicating and amplifying successful traits within the economic system.

The Influence of IT

If we focus specifically on IT,  we can see that even today IT systems have a large influence on the quality of the business capabilities that underpin a company’s offerings.  Every business is competing for selection against competitors with other applications – and software is increasingly moving to the core as business becomes ‘digital’; as a result it is clear that IT is a major (and increasing) factor in deciding the ‘fitness’ of any particular business versus another.  In this context we can see that the degree to which IT helps or hinders a business makes a huge difference to the quality of its ‘traits’ – both individually and in aggregation.  IT can therefore be a significant influence on whether a business’s offerings are ‘fit’ when judged by the evolutionary algorithm of the market.

Competition in an Age of Universally Bad IT

Despite the illusion of change over the last 30 years, at the macro level things have actually been relatively static from  a technology perspective.  While we have moved from mainframes to client-server and from client-server to the Web the fundamental roles of business and IT have remained unchanged (i.e. firms exist to minimise the transaction costs of doing business by building scale and such businesses spend a lot of money on owning and operating IT in pursuit of efficiencies and consistency across their large scale operations).  In reality most IT investment has therefore been inward facing and viewed as a cost of doing business (a ‘tax’ as Massimo would describe it) rather than a platform for the delivery of innovation and differentiation from an external perspective.

Under this model we have seen large businesses use their scale to pay for IT products and services that are inaccessible to smaller organisations.  Over time -because the focus has often been on efficiencies and standardisation – many IT estates have tended to converge around similar packaged applications and technology.  This convergence has all but wiped out the flexibility required for business differentiation while simultaneously placing organisations functionally and temporally in lockstep (as a concrete example it is no surprise that all companies are facing huge challenges as a result of mobility or that their challenges are more or less the same).  Together these developments have led to a broadly static business environment in which a smaller number of large companies dominate each market segment, providing mediocre levels of innovation and service while dictating both the shape of industries and the kinds of offerings consumers can expect  from each.

As a result while IT has enabled large scale efficiencies, it has led to the situation outlined by Massimo – a situation in which businesses have huge investment responsibilities, a crushing burden from bloated support and delivery organisations and a limited ability to evolve quickly (if at all).  The irony is that it has done this equally to all organisations who could afford it, however,while simultaneously acting as a competitive barrier by limiting the economies of scale that can be achieved by organisations who could not.  As a result the costs, complexity, inflexibility and balkanisation around industry boundaries – along with a lack of innovation and customer-centricity – have become part of the settled fabric of business.

While this has not been a significant issue for large organisations during an extended period of relative stability, it does however threaten to create significant challenges as a result of any disruption to the status quo.  It is perhaps interesting to think of today’s businesses as the dinosaurs of the modern age – large and perfectly adapted to the warm and plant rich environment in which they exist unchallenged.

A Punctuated Equilibrium for Business?

Over the last few years, however, we have seen the genesis of a major disruption – a disruption that is going to change the evaluation criteria of the market and require the development of wholly different traits to succeed.  As cloud delivery models, large scale mobility and the mass sharing of content in social graphs converge I believe that they herald a ‘punctuated equilibrium’ whose effects on business will be profound.  These are not just technology changes but rather a change to the fundamental environment in which we all work, play and socialise – and a signal that business models and even industry boundaries are up for radical change.

The possibilities that these advances create in tandem are akin to an emerging ice age for large businesses and their technology providers – an age in which businesses must fight for every customer and must mutate their organisations, business models and technology to attain a new definition of ‘fitness’.  The easy days of domination through mass and an abundance of low hanging cash to be grazed are passing.

In part 2 of this post I will therefore talk more about the nature of this punctuated equilibrium and my personal views on the shifts in business and technology models that will be required to survive it.

Your Business Needs to Become a Platform

22 Oct

(I’m cross-posting a version of this from the Fujitsu RunMyProcess blog where I am now a regular contributor).

One of my colleagues recently re-circulated a Google+ post that first did the rounds about two years ago.  I thought I would use it to address a fundamental point about my attitude towards cloud and business.

http://siliconangle.com/furrier/2011/10/12/google-engineer-accidently-shares-his-internal-memo-about-google-platform/

Basically this post was by a Googler who was frustrated by the degree of ‘platform thinking’ present in the company and who wanted to make a point about the need for Google to think in platforms rather than in terms of products and services.  I think that this post deserves to be read again and in particular I would like to make some additional points about the nature of ‘platforms’ in a cloud era.

What is a platform?

Many of us who work in IT have the tendency to use the word ‘platform’ in a relatively narrow way.  Essentially when we say platform we generally mean infrastructure platforms or middleware platforms that form the underlying foundations necessary for the creation of databases, applications and business services. Such platforms are certainly an increasingly critical element of the emerging business ecosystem as technology is simplified, commoditised and moved into the cloud.

On the other hand the above Google+ post – rightly – extends this definition to include the services that your company offers to others.  Essentially  anything that forms a foundation on which others can build higher order value can be considered a platform if it is created and managed with this mindset.  Traditionally platforms have topped out at middleware due to the paucity of opportunities to reuse business capabilities within one organisation, but the cloud is giving us new opportunities to go further due to the ability to share functionality with others.

Your Business as a Platform

The increasing ease with which we can expose, integrate and manage APIs is leading to a new model of “business as a platform”.  Effectively in the same way that computing platforms use APIs as a route to building an ecosystem, so too can businesses expose their services to the Web via APIs in order to participate in ecosystems of their own.  Making business capabilities available beyond the bounds of a single organisation opens up opportunities for them to be leveraged by many organisations, effectively turning them into a platform for others to build upon.  In this sense ‘platforms’ aren’t only about the technology and middleware your organisation needs to use but rather about turning everything your business does into a ‘platform’ for others to leverage – often in unforeseen ways that create completely new kinds of revenue streams.  This seems so very obvious but often comes as a shock to people.  Effectively one of the biggest shifts occurring is the need for businesses to digitize and share their core capabilities in new ways – in this sense IT systems that capture important and differentiating IP are no longer just “operational support” but are in fact becoming the de facto expression of what a business does.  I explored this topic a bit deeper in a recent article.

Most importantly, focusing on exposing your services  to such an extended ecosystem can tell you a lot about which services constitute the real value of your organisation and which ones don’t – the hint is basically in which services you offer to customers and which are only used within your organisation to support these.  By reversing the process of API provision – i.e. looking from the outside in – you can also then think about replacing your non-differentiating services by integrating business APIs provided by others.  By doing this you can build new and dynamic digital supply chains that simultaneously reduce costs, increase adaptability and improve offering quality.

Computing Platform –> Business Platform

At the moment, however, many of these implications are hidden beneath the mountain of infrastructure-oriented obsessions that are dominating cloud debate – in most cases the discussions continue to be about ‘how’ to do things at a technical level without really stopping to consider the broader issue of new business models and the kind of ecosystems that technology simplification could ultimately enable.

As a result when thinking about ‘platforms’ there are two aspects you need to consider:

  1. Does my cloud platform enable me to capture, deploy, integrate and deliver my business IP quickly, adaptably and reliably? and
  2. Does my cloud platform enable my solutions to become part of a scalable and  higher order “business platform” that can be shared to generate new revenue, new efficiencies and new innovation?

This is why I have always been focused on advocating using modelling, integration and automation to enable our customers and partners to rapidly and flexibly achieve their aims – building, integrating and delivering solutions spanning people, processes and technologies existing  both on and off premise.

Why, What, How (or NIST, WTF)

9 Jan

It’s that time of year again where I realise that I need to resolve to start blogging again.  Luckily this year my inspiration was provided on new years day by a conversation on twitter sparked by Randy Bias over whether NIST is a fail or not (contained in his excellent cloud retrospective post).

I completely agreed with Simon Wardley’s view that as a mechanistic description NIST wholly fails to address the fundamental reasons cloud is important, summarised by these two tweets from the discussion:

The definition helped to try and identify what is cloud but did nothing to explain why. It was pure mechanistic drivel…”

“… and that’s the real problem. If you think you understand cloud from reading NIST, you’re going to make horrendous mistakes.”

Falling transaction costs, the melting of enterprise boundaries, the shift to service business models and accelerating commoditisation – as examples of the ‘why’ of cloud – are not covered at all and therefore it would be all too easy to take these mechanistic descriptions and implement something that looks like them but which has not been created to address such wider business imperatives.

Without understanding why you need to address the impacts of cloud it is all too easy to re-name your existing stuff or build something that appears the right shape without actually creating something that meets the extraordinary business challenges that cloud is unfolding.  Such efforts invariably become about polishing existing enterprise IT models and not about a re-evaluation of your enterprise business models backed up by new technology architectures to leverage the fundamental disruption in the way business capabilities are supplied and consumed.  This is also my fundamental issue with many private cloud implementations – most have nothing whatsoever to do with ‘cloud’ as a disruption but are merely mechanistic implementations driven by people who don’t understand the why.

Simon (and indeed Randy in his original post) are completely correct to point out that definitions that purport to ‘define’ cloud without providing the context to enable you to understand the ‘why’ (and therefore the potential impacts and necessary business strategy required to respond) are in my view not just a fail but fundamentally dangerous.  For me this danger exists at both the micro and macro levels – at the micro level single organisations will implement stupid solutions due to misplaced confidence and a  lack of understanding of the forces they are facing, while at the macro level vast numbers of organisations will waste 1000s of years of effort and billions in investment building the wrong things or generating hot air discussing pointless virtualisation and infrastructure topics (often considered de facto as “cloud” due to the lack of a sufficiently multifaceted understanding of what cloud actually represents.)

All of this comes back to the need to think about why, what and how and the interplay between them.  Simplistically we can consider that why shapes what you need to deliver and what shapes the scope of your how.  From my experiences in business architecture I can say that most organisations seem mired in the endless management of hows and have lost sight of both what and why – from that perspective being given a set of abstract whats to fulfil by an organisation like NIST would appear to be a good start as it at least allows people to realign their hows to fit the definition and declare “cloud” success.

This is the overwhelming danger, however, and the reason I would agree that the NIST cloud definition is a fail.  In reality “successes” declared as a result of simply aligning to the NIST definitions will be massive failures of strategy without either an independently developed, deep understanding of the broader disruption or a startling case of serendipity.

The reality of cloud is the accelerating disruption of every industry as commoditisation and a shift to service models plays out; simply rebadging your existing IT or meeting your existing challenges with investment in ‘better’ technology will simply not cut it.

This is why NIST is fundamentally a fail from my perspective – not because of the definitions per se but because they present a structure to act without understanding.  Structuring your cloud efforts around a mechanical definition without fundamentally understanding the wider disruption that makes your existing models obsolete will just consume a lot of expense to deliver outcomes with wholly the wrong profiles – leading me to genuinely question whether some organisations who do this could founder.

I guess in some respects people may feel it is unfair to brand the NIST definitions a fail for these reasons and point to the failure of consuming organisations to properly understand the context in which they should be applied – there may be some truth to this rebuke but organisations are often ‘stupid’ (or at least blind to change) as they were designed for a different purpose.  From this perspective providing a definition that can seemingly be satisfied with a polished status quo  – especially given entrenched interests within the IT department and some suppliers – without forcing people to confront the dire consequences could be considered irresponsible.  Given the state of the art, the position of NIST, the ambivalence of many incumbent technology suppliers and the maturity of adopting enterprises, taking such a position seems to me a little like blaming blast damage on a toddler who is given a gun rather than the adult who hands it over.  With great power does indeed come great responsibility, lol.

So the core lesson for me is that people need models and taxonomies that place the elements of cloud into some kind of framework for describing both why and what in order to enable understanding, reasoned separation of business models and discussions about innovation in the how.  It has saddened me over the last few years how few people – like Randy, Simon and Krishnan in their twitter conversation and wider writings – are truly wrestling with the difficult why of cloud vs the slightly larger number of worthies thinking out of context about the what of cloud vs the vast number of rudderless and noisy idiots who have flooded the web with the half-arsed, contextless how of cloud (which inevitably has something to do with virtualisation, sigh).

UPDATE: After my original post I had an interesting debate with Christofer Hoff who had used the same ‘why, what and how’ structure to argue the complete opposite point in a blog post I missed.  I’d recommend reading his “When A FAIL is A WIN” post as well to see the other side of the argument.

My Definition of Cloud

28 Jul

I was asked last year to define my view of cloud in one sentence. Given my broad interpretation of cloud this is what I came up with:

“Cloud enables individuals and institutions to create pull-based business models through the consumption of network-based business and technology services on a needs basis.”

Still think it holds good for me.

Net Neutrality, News International and the Future of Open Information

13 Jul

This might seem slightly left field under the circumstances but the recent shameful revelations about the practices of the News of the World – and more importantly the increasing concerns about the possible distorting influence of News International on UK public life – have led me to think again about my concerns in terms of net neutrality.  Essentially the governments decision not to act on this issue last year left me deeply troubled and in many ways recent events have only crystalised this concern (as I will discuss later in the post).  Before getting to that, however, I’d like to discuss the issues of net neutrality more generally in order to set the scene.

ISPs Are Not the Web

In the link above an article in the Telegraph asks whether the Web should be ‘treated as a utility’.  This question falls into the usual trap of shaping completely the wrong context through a lack of precision.  Whilst the ‘Web’ (as in the myriad of sites available) is obviously not a utility due to its diversity, ISPs (including telecoms, mobile and media companies) clearly should be as they provide a purely infrastructural service that’s analogous to water pipes.  As such they should recognise that they do not have a ‘relationship’ with me, they are not my ‘trusted service provider’ and I don’t want them to ‘manage my experience’ on my behalf.  More broadly, questioning whether the ‘Web is a utility’ displays a lack of precision that often clouds the debate, since access (i.e. unhindered connectivity without any kind of gate keeping for commercial purposes up to the bandwidth allowance I pay for) should be a utility whereas the Web itself is an open ecosystem rich in services that I want to evaluate and configure for myself without interference or hindrance.   They’re different – and that’s the whole point.

Increasing Interference

Essentially the issue is that internet providers are increasingly trying to act as ‘portals’ to the Web and bundle all kinds of content and services with my network connection in order to find new revenue opportunities.  The problem is that having the independence to assist me in finding things I would actually like (irrespective of commercial interests) is a business model that exists in a completely different economic sphere to that of acting as the dumb pipe that enables me to get the bandwidth I need to gain access to such content and services (i.e. relationship business models vs infrastructural business models).  As a result they provide value in totally different ways.

I expect to trust a “relationship business” to be focused on my specific interests and benefits and to recommend the best possible services irrespective of where they come from – to be trusted they have to be independent.  In a financial sense think of MoneySavingExpert.com or perhaps your GP in a more personal scenario.

Conversely I expect an “infrastructure business” to provide me with a reliable utility at the lowest possible cost and otherwise stay out of the way.  Think electricity or water suppliers who have to provide service without discrimination and where the capital requirements are huge and they need to concentrate on efficiency and economies of scale (and so don’t have time for building individual relationships).

Importantly, allowing unfettered growth of ‘vertically integrated’ providers who can mix these two – as we appear to have been doing – is a recipe for disaster.  Building an infrastructure business is generally capitally intensive, hard work and low margin – even though the business model is highly reliable and sustainable for those that succeed.  On the other hand, subverting a privileged position as a gateway to the Web in order to drive customers towards economically attractive content and services (from the provider or selected paying content partners) is substantially easier.  The future danger is that using anti-competitive practices to squeeze a captive group of consumers into increasingly walled gardens to monetise their attention will become an alternative to investment in the network (or at least a lucrative adjunct).  Furthermore if bandwidth issues continue to become proportionally worse due to an explosion in service demand unmatched by network growth these practices could slowly expand to give preference to websites and services that are commercially attractive to the provider rather than to the consumer, leading providers to charge extra for – or even entirely block – competing services.  And they’ll justify this using crazy arguments.

Crazy Infrastructure Providers

To show the absurdity of the attempts of infrastructure providers to start managing my experiences, imagine if electricity providers started to say they were going to prioritise power to Sony televisions over Tesco branded ones (because Sony shared revenue with them) or water suppliers were going to prioritise water for flushing toilets to certain bathroom brands for the same reason.  Perhaps the electricity company would use the excuse that Tesco had contributed to a rise in television sales by providing low cost sets and were therefore acting as ‘parasites’ on ‘their’ network by creating a demand for electricity without paying anything towards the cost of providing it.  And what if electricity providers had the gall to use what should be a source of shame – i.e. the disgraceful fact that they were so incompetent at managing a utility that there had to be rationing and brownouts – to justify shaping such rationing in a way which maximised their own profits – by only allowing power to the televisions manufactured by ‘carefully selected partners’ – rather than the benefits to consumers.  To match the gall of ISPs and mobile providers, however, I guess they would have to go even further and insist that customers take expensive television sets with restricted channel availability as a condition of getting an electricity service at all.

Breaking the Chain

The underlying reality is that a utility provider should have no role in determining the use to which consumers put the commodity they provide – and allowing them to mess with it (at best) only leads to anti-consumer behaviour and a suppression of innovation.  This is the core of the argument about net neutrality – organisations which are effectively utilities should have no right to influence what we do with the capacity we pay for; any other BS about bandwidth or different types of content is a red herring.  While people who use more bandwidth should undoubtedly have to pay more (perhaps a lot more to fairly reflect usage) this has nothing to do with net neutrality – the core argument is that having paid for their bandwidth they should be allowed equal access to all services on the Web without discrimination and not be forced – through various obvious and subtle means – to use only those services that meet with the approval of – or maximise the profits of – their infrastructure provider.  Rather than concentrating on taking the easy option and prioritising profitable content or restricting our choices to bolster their revenue sheets, such companies should be focusing all of their attention on providing their actual utility value proposition and overcoming the issues that they claim force shaping in the first place (i.e. creating sufficient capacity).  At the very time that we need a new digital platform for wealth creation that accelerates knowledge flows and replaces declining and vanished industries, it is ridiculous that we stand by and watch telecoms companies, ISPs and mobile providers preparing to test anti-competitive behaviours for short term gain rather than condemning, cajoling and engaging them in dialogue about how we can work together to help them provide the competitive infrastructure the country desperately needs to generate wealth.

In this context I believe we need a definitive commitment to net neutrality from the government backed by codes of practice to ensure separation of these different businesses.  Essentially companies should be forced to split their businesses into wholly independent organisations concentrating on infrastructure and relationships (i.e. content aggregation) separately to protect consumers; in essence I should be able to subscribe to the best infrastructure provider to get my bandwidth and then when online – and via the open Web – register for the ‘relationship’ or ‘content’ services of BT / Sky / Vodafone / Whoever if I deem that they deliver sufficiently attractive services in these business types.  To be successful such services would need to bring content of specific interest to my attention or else I would be more likely to go to other relationship and content providers.  The essential point is that I should be able to choose these things independently should I _want_ a trusted provider to give me a portal that helps me to navigate the Web or find interesting content (in my case I find them all worthless and annoying).  I shouldn’t have them a) forced upon me as a by-product of needing something else (i.e. a connection) and b) prioritised over things that might actually be better for me.

The Bigger Picture

Bringing this all the way back to my original point, many people question the extent to which net neutrality is really an issue for equal opportunities, democratic society and truly open markets.

I genuinely believe that there is a serious issue at stake here.  Moreover it is one that could have a devastating effect on the future openness of society, the competitiveness of our businesses and the long term health of our nation.

Whilst it may be true that companies like BT, Sky or Virgin would always give equal promotion to their competitors’ content and services (and make it easy for us to access whatever we decided was best without penalty or hindrance) we can never be too vigilant in protecting our rights; should gate keepers start to distort our access – and the incentives to do so could be high in a non-separated model – they would have huge power to shape perception within their ecosystem, subtly denying us basic freedoms to choose and turning us into passive consumers of the most lucrative commercially chosen messages and content.  If we use traditional media as an historical precedent, it is even feasible that such companies could prioritise the political content and messages of the party whose policies best reflect the interests of the provider.  While this may sound alarmist the increasing revelations about News International are demonstrating the distorting influence that powerful media groups can have on decision making by politicians due to their overwhelming ability to influence the opinions of large sections of the population.  In the non-digital sphere, however, people can at least choose other newspapers, radio stations or television channels.  What happens, though, when all of your media is delivered electronically through a single pipe by a provider with an economic interest in driving you towards particular content and services?  At that point it would be like having a road with high embankments that only allowed you to walk to shops that sold a particular newspaper or at least made it very hard for you to do otherwise without considerable effort and expense.  When you consider the oft quoted ‘tyranny of the default’ it is easy to see that even small barriers can make a big difference in shaping people’s behaviours – and the dangers of exclusion and exploitation are particularly prevalent for the most vulnerable.

People who are not technology savvy or do not have the money or knowledge to realise they are being manipulated or to overcome the subtle blocks put up by providers’ “content appliances” and traffic shaping practices will be easy targets, leading to an unacceptable imbalance of power between large providers and a large constituency of consumers.  In the current climate are we really sure that business ethics are a sufficient protection against such potential abuse?

At the same time whilst often positioned as some kind of ‘liberal’ or ‘anti-market’ cause the reality is that net neutrality is a deeply market-oriented concept, creating a level playing field for businesses, a platform for innovation and a barrier to uncompetitive behaviour by large incumbent organisations who could use their power to distort the market through cross-subsidy or outright prioritisation of their other services.  In this sense net neutrality provides powerful protection against market as well as societal manipulation.

Taking Action

There is currently a real danger that we will see increasing fragmentation of the Web and a growth of walled gardens driven by commercial interests (e.g. across electronics companies, social networks, content providers and telecoms companies), cutting people off from other areas of the internet and serving the needs of particular organisations rather than those of consumers and society.  The strength and the power of the Web lies in its diversity and its essentially democratic nature; anyone can create content and services and be on an equal footing with anyone else, creating a platform that supports free speech, debate and wealth creation.  Failing to protect the principles of equal access and guard against the potential manipulation of access by service providers could destroy one of the most vital and liberating platforms for learning, collaboration and wealth creation the world has ever seen.

The current events surrounding News International provide us with an opportunity to step back and think deeply about the ways in which we can foster an open and fair society; my belief is that we should extend this thinking into the realm of the digital world that we will increasingly be inhabiting and not simply stop at dealing with a single newspaper, media group or industry.  If the opportunity has existed for powerful media groups to distort public debate in the age of ‘old media’ then how much greater are the opportunities for them to do so in a digital age where information flow is increasingly consolidated into a single pipe?

Effectively separating commercial interests between the provision of access and the provision of content seems to me a key weapon in creating an open society and market.  To do otherwise merely provides the platforms and incentives within which vertically integrated media companies can pursue the subversion of access as a feasible and attractive strategy.

Net neutrality for me is a core principle in securing freedoms – both social and commercial – by forcing infrastructure providers to respect this split as we increasingly move beyond traditional media and into the digital age.  To stand aside and allow people to prioritise content, manipulate behaviour and disrupt the business of competitors – by not holding ISPs to their infrastructural responsibilities and allowing vertical integration across business types – is a dangerous game that risks the benefits of the Web for individuals, businesses and ultimately society.

Is Social Media Rubbish?

8 Jul

I’ve read a few interesting posts recently relating to Social Media and ‘Enterprise 2.0’.  First up was Peter Evans-Greenwood talking about the myth of social organisations given their incompatibility with current structures and the lack of business cases for many efforts.  From there I followed links out to Martin Linssen and Dennis Howlett – both of whom commented on the current state of Enterprise 2.0 and social business, in particular their lack of clarity (i.e. are they primarily about tools, people or marketing efforts), the often ironic lack of focus on people in favour of technology and the paucity of compelling business cases.  Furthermore they also highlighted the continued migration of traditional vendors from one hot topic to another (e.g. from ECM to Enterprise 2.0 to Social Business) in order to support updated positioning for products, creating confusion and distraction by suggesting that success comes from owning specific tools rather than from particular ways of working.

Most damningly of all I found a link (courtesy of @adamson) to some strong commentry from David Chalke of Quantum Market Research suggesting that:

Social media: ‘Oversold, misused and in decline’

All of these discussions made me think a bit about my own feelings about these topics at the moment.

The first thing to state is that it seems clear to me that in the broadest sense businesses will increasingly exist in extended value webs of customers and partners.  From that perspective ‘business sociability’ – i.e. the ability to take up a specialised position within a complex value web of complementary partners and to collaborate across organisational and geographical boundaries – will be critical.  The strength of an organisation’s network will increasingly define the strength of their capabilities.  Social tools that support people in building useful networks and in collaborating across boundaries – like social networks, micro-blogs, blogs, wikis, forums etc – will be coupled with new architectures and approaches – like SOA, open APIs and cloud computing – as the necessary technical foundations for “opening up” a business and allowing it to participate in wider value creation networks.  As I’ve discussed before, however, tooling will only exist to support talented people undertaking creative processes within the context of broader networks of codified and automated processes.

Whilst therefore having the potential to support increasing participation in extended value webs, develop knowledge and support the work of our most talented people, it’s clear that throwing random combinations of tools at the majority of existing business models without significant analysis of this broader picture is both pointless but also extremely distracting and potentially ultimately very damaging (as failed, ill thought through initiatives can lead to an opportunity for entrenched interests to ignore the broader change for longer).

Most of the organisations I have worked with are failing to see the bigger picture outlined above, however.  For them ‘social tools’ are either all about the way in which they make themselves ‘cooler’ or ‘more relevant’ by ‘engaging’ in social media platforms for marketing or customer support (looking externally) or something vaguely threatening and of marginal interest that undermines organisational structures and leads to staff wasting time outside the restrictions of their job role (looking internally).  To date they seem to be less interested in how these tools relate to a wider transformation to more ‘social’ (i.e.  specialised and interconnected) business models.  As with the SOA inertia I discussed in a previous blog post there is no heartfelt internal urgency for the business model reconfiguration required to really take social thinking to the heart of the organisation.  Like SOA, social tools drive componentisation and specialisation along with networked collaboration and hence the changes required for one are pretty similar to the changes required for the other.  As with SOA it may take the emergence of superior external service providers built from the ground up to be open, social and designed for composition to really start to trigger internal change.

In lieu of reflecting on the deeper and more meaningful trends towards ‘business model sociability’ that are eroding the effectiveness of their existing organisation, then, many are currently trying to bolt ‘sociability’ onto the edge of their current model as simply another channel for PR activity.  Whilst this often goes wrong it can also add terrific value if done honestly or with a clear business purpose.  Mostly it is done with little or no business case – it is after all an imperative to be more social, isn’t it? – and for each accidental success that occurs because a company’s unarticulated business model happens to be right for such channels there are also many failures (because it isn’t).

The reality is that the value of social tools will depend on the primary business model you follow (and increasingly the business model of each individual business capability in your value web, both internal and external – something I discussed in more detail here).

I think my current feeling is therefore that we have a set of circumstances that go kind of like this:

  1. There is an emerging business disruption that will drive organisational specialisation around a set of ‘business model types’ but which isn’t yet broadly understood or seen by the majority of people who are busy doing real work;
  2. We have a broad set of useful tools that can be used to create enormous value by fostering collaboration amongst groups of people across departmental, organisational and geographic boundaries; and
  3. There are a small number of organisations who – often through serendipity – have happened to make a success of using a subset of these tools with particular consumer groups due to the accidental fit of their primary business model with the project and tools selected.

As a result although most people’s reptilian brain instinctively feels that ‘something’ big is happening, instead of:

  • focusing on understanding their future business model (1) before
  • selecting useful tools to amplify this business model (2) and then
  • using them to engage with appropriate groups in a culturally appropriate way (3)

People are actually:

  • trying to blindly replicate others serendipitous success (3)
  • with whatever tools seems ‘coolest’ or most in use (2) and
  • no hope of fundamentally addressing the disruptions to their business model (1)

Effectively most people are therefore coming at the problem from entirely the wrong direction and wasting time, money and – potentially – the good opinion of their customers.

More clearly – rather than looking at their business as a collection of different business models and trying to work out how social tools can help in each different context, companies are all trying to use a single approach based largely on herd behaviour when their business model often has nothing directly to do with the target audience.  Until we separate the kinds of capabilities that require the application of creative or networking talent, understand the business models that underpin them and then analyse the resulting ‘types’ of work (and hence outcomes) to be enabled by tooling we will never gain significant value or leverage from the whole Enterprise 2.0 / social business / whatever field.

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