Category: Four pillars

It looks like I’ve been found out.

I’d been interested in blogging ever since I discovered the emergent blogosphere many years ago, egged on by RageBoy, Halley, Doc, Dan, Kevin et al. And sometime in 2003 I started toying with the process, after a dinner organised by Doc and Halley in New York that May.

Sometime after that, I started blogging in earnest, but only “internally”, keeping my blog within the firm’s boundaries. We were (and still are) a regulated institution, and we had to make sure we understood what it meant for us to blog externally, and this took time. And by late last year, we had a few external bloggers, principal amongst them Sean at Park Paradigm and Malc at Accidental Light.

Then, Julie Meyer asked me to contribute a piece for her company’s 5th Anniversary with a theme of Building Society for the 21st Century. Which I duly did. And her reaction when she read it was to convince me to blog. So I did. Thanks, Julie.
I decided to concentrate on the subject of information and its enabling technologies, paying particular attention to the enterprise context.

All that was a long time ago. And Confused Of Calcutta was born.
It looks like a few more people I know and like and trust have now discovered that piece, and blogged about it; Gordon and Doc are recent examples; thanks for your encouragement, guys.
So here it is, in full, for those of you who haven’t seen it elsewhere. (comments welcome):

Building Society for the 21st Century

Economic models that succeed tend to take advantage of the abundances as well as the shortages that characterise a particular economic era. Traditionally, the primary factors of production used to be land, labour and capital; much of this was in “institutional” rather than individual hands, and as a result, attempts to create efficiencies in the use of these factors tended to create institutional models as a basis for reducing transaction costs.
Land ownership has changed; while governments, churches and firms still own land, there is far more individual ownership of land than ever before. Labour is no longer bonded, and the ability to migrate between firms and even countries has never been greater. Capital is also more mobile, with deregulated markets and dematerialised securities and electronic cash; when many individuals have better credit ratings than the institutions they bank with, the definition of what a bank does changes.
The nature of asset creation has also changed, with intangibles forming a growing proportion of GDP worldwide; we now impute monetary value on talent and skill and knowledge and network and brand and reputation.
The Agricultural Revolution transformed our ability to produce food cheaply; the Industrial Revolution helped us reduce plant and equipment production costs, as well as those of core infrastructure providing heating, lighting and transportation. There were also major demographic and societal changes: barriers based on race and sex began to erode, infant mortality was lowered and people began to live longer.
The Information Age heralded the dawn of a true Services Revolution as human capital grew in importance and communications costs reduced sharply. Technological advances a la Moore, Metcalfe and Gilder continued their relentless march, as price-performance improved, network effects were realised and everybody started getting connected.
Despite major technological advances over the past fifty years or so, one thing has not changed as appreciably: man’s longevity. And, since assets were increasingly based on intangibles, this created, and continues to create, a war for talent. Institutions have found it increasingly difficult to attract, retain and develop talent.
Every institution had to take steps to value and protect human time. Simplicity and convenience became important, “dial-tone” services became important, design and usability mattered. Technology adoption curves became inverted: historically, adoption was driven by those with the largest R&D budgets – defence, aerospace, high-end manufacturing and automobiles, sophisticated capital markets. Products trialled in these sectors slowly drifted towards mainstream commerce and much later towards consumers.
What inverted? The age of the early adopter changed, which moved startlingly from 35-40 years old towards 12-21 years old. When you look at mobile phones, texting, instant messaging, downloads, Skype, the iPod and iTunes phenomena, multifunction devices, the standards for these are all set by youth. And this trend is now moving towards changing the functionality of “established” web firms such as Google and Amazon, eBay and Yahoo.
It was this shift, when youth became the early adopters, which signalled a real change from institutional to individual capitalism; not having been exposed to how organisations worked and not caring about how governments operated, youth began to set the agenda.
Peer respect became more important than the power of hierarchical authority; relationships and trust returned to prominence after a long time in the wilderness; there were no longer any taboos about asking why things were the way they were, and challenging the status quo.
Today is their Sixties. And, in a vicarious way, ours too; The Age of the Individual.
Empowered and free from hierarchy, jealous about personal time, keen on relationships and trust, inquisitive about values and ethics, with the power of the web to change their perceptions of time and distance and organisations and government.
What does this mean for firms and governments? Another inversion. Now, as such institutions fight to hold on to their piece of the talent pool, they realise that historical carrots and sticks have no meaning to the new generation. People migrate to institutions that reflect the values they hold and make it possible for individuals to make a difference. “Ask not what your country can do for you, ask what you can do for your country” has subtly shifted. Do ask what your country/company will allow you to do for them, before choosing.
This is not as shocking as it sounds. We already have odd critical masses developed over the years, such as shipping registration in Panama or company incorporation in Delaware or high-net-worth individuals domiciled in tax havens. It has been suggested that European IPOs grew as a result of Sarbanes-Oxley, as new entrants railed against increased regulation.
Human beings can now withhold their talent, their time, and their taxes, in ways that could not have been imagined before. Flash mobbing and IM and texting and blogs and wikis and video allow people to communicate in ways we could not have foreseen. The assembly-line approach that characterised our schools, hospitals, companies and governments is failing, as people choose to be different. Any colour you like, so long as it’s black, does not rule any more.
Assembly line approaches focus on consolidating volume and ensuring homogeneity, low standard deviation and uniformity. All citizens the same. All students the same. All the same.
The web is about diversity, individuality, personal-ness. People want to be connected, not channelled, to choose their experiences and to co-create them with peers they respect and trust.
As innovation democratises, and open-source ideas get shared and enriched and mutated, people behave differently. Diversity is no longer suppressed but celebrated.
We used to hate looking at someone else’s holiday movies and snapshots, but now we love Flickr. Why? Because we choose the time and place. Connected, not channelled.
Alumnus gatherings didn’t always work and were often lifeless, now they’re Friends Reunited. Why? Because we have transparency of information, simpler ways to discover the who and the where, and choice as to the relationships we grow. Connected, not channelled.
We choose the schools we go to, the courses we take at university, the firms we work for, the countries where we live, what we do with our time.  When we work and when we sleep. We choose our relationships and who we spend time with. Connected, not channelled.
As the Cluetrain guys said, markets are conversations. They do not happen hierarchically. Even our Assembly Line software applications have disaggregated. All we have left is subscriptions to syndicated content, heuristically enhanced non-deterministic search, support for fulfilment and a framework to enable trust and collaboration.
Governments and firms are left feeling helpless, as central control diminishes and the power of the individual rises, and they need to recognise that bell curves now have very long tails.
As these changes come about, with individual capitalism and the subversion of institutions, we need new business models. What should these models do? One, make a clear stance on values and ethics. Two, allow relationships and collaboration to take place, rather than control the relationships. Three, intermediate to enable trust and fulfilment rather than channel towards lock-in. Four, recognise that the customer wants to create and co-create value rather than just receive.
Use what you stand for to attract the customer. Use what you do to retain the customer’s trust. Ensure that the customer is always free to leave, and paradoxically he or she will stay. Who is this customer? Your family. Your friend. Your employee. Your business partner. Your client. Your citizen.
In a world of empowered individuals, everyone’s a customer.
There are barriers in the way, and serious ones at that. There is a need to overhaul everything to do with Intellectual Property Rights, be they patents or trademarks or copyright or DRM or whatever. There is a need to avoid over-regulation, the creation of bad law driven by institutional values.  This is particularly true for every form of communication, affecting big media, telcos, “content producers”, and the publishing industry in general.
This is going to be difficult, and often humorous, since these are tremendous changes. Witness what happened to Sony’s DRM or Hollywood’s attempts to send copies of Munich to the BAFTA judges. Witness what happened to Skype.
Connected, not channelled.

Malcolm was talking to me about an article he’d read in the Times; since then he’s blogged about it. And something about it made me feel uneasy. And it wasn’t what he said or thought, just something I could’t pin down.

Then today I was doing my usual trawl around the blogs of people I like reading. While I have my netvibes set up the way I want, and I love it, I still like an old-fashioned wander every now and then. RSS aggregators are great at showing “latest” and “today” and “now” and “unread” and all that jazz, but sometimes I want the apparent serendipity of walking across to someone’s blog and just wandering around. Following links almost randomly.

Today it was Steven Johnson’s turn. And through his blog, in a roundabout way, I went to Rebel Sell, with a small diversion to SquareSpace and to Nollind Whachell then back.

And reading reviews of Rebel Sell, my unease returned. I began to understand why I felt the way I did when I read the Times article referred to by Malcolm.

It’s simple.

I think we make a big mistake when we use terms like counterculture and rebel and deviant loosely. They’ve had it as terms. Defunct. Finito. Past their sell-by-date.

Because every time we do that, we paint a big red X across the backs of the people we so describe and put the firm’s immune system on full alert. And the rebels are toast.

Which is often a shame. Because they weren’t rebels. Or deviants. Or counterculture whatevers.

They were doing their job. Trying to find a better way of doing things. [In a strange way, I think that Malcolm’s feeling for consultants is related. When a “consultant” finds a better way of doing things firms roll out the green carpet, papered with spondulicks; when someone in the organisation quietly does the same thing,  he’s a deviant…]

• When I was 15, we had a new maths teacher. He walked into class and stated first off that he would personally award the Nobel Prize to anyone in his class who managed to fail GCE O Level Mathematics-With-Additional-Mathematics. Then proceeded to ask us “What is the maximum number of electrons in the nth orbit of an atom?”. Hands went up, the answer was provided. He then gave the answerer a piece of chalk and said “Prove it”. The proof, based on permutations and combinations and induction, was provided.
• He then looked at all of us and said “You think I’m impressed? Not one bit. You want to impress me, don’t give me the right answer. Ask the right question. From today you will be judged not by the answers you give, but by the questions you ask.”
  

Asking questions is important. Asking the right questions is even more important. And sometimes, asking the right questions requires some investigation, some experimentation.

And we let everyone down when we start labelling people adept at doing this as rebels and deviants. Or by labelling that class of activity as counterculture. Because the terms have been hollowed out and trashed.

Call it emergence. Call it democratised innovation. Call it something. Probably not even opensource any more, because the six-degrees-of-meaning approach has already connected opensource with pinko and lefty and rebel and deviant and counterculture.

Just don’t call it deviant.

Generation M is not innately rebellious or deviant or even countercultural. They have new tools they understand better than we do. They don’t have some of the shackles and frames and anchors and tunnel vision we have. And they are asking why? in a number of ways and in a number of places. And they need to be encouraged.

The act of downloading music off the Net is in no way rebellious or deviant. Just a better way of accessing and acquiring music. Buying books, ordering groceries, looking for cheap flights and hotels, watching homemade videos, these are not intrinsically deviant or rebellious activities. Combining things and seeing (or hearing) what happens is not fundamentally rebellious.

We have to be careful. Words have power. Let us use them wisely.

I’ve never driven a car in my life. I need to learn how to. I will, soon.

In India, when I was growing up, if you were rich enough to have a car, you were rich enough to have a driver. So I didn’t drive. My father never drove, neither did my grandfather.

But my daughter does. My wife does. My other children will, when they come of age. And I will. Soon.

Even though I didn’t drive, I spent hours fascinated by Indian car mechanics. Many of them didn’t speak English that well, I was used to hearing words and phrases like “radiowater” and “jugger-bugger” and wondering what they meant. It took me a while (well, I was eight at the time) to figure out they meant “radiator” and “shock absorber”.

They made cars work. Without manuals or directions or even spare parts. They cannibalised and adapted and fashioned from scrap and made from scratch. Amazing stuff. So, although eight cars in ten in Calcutta in the 1960s were Hindustan Ambassadors (modelled on the Austin Ambassador of a decade earlier) I grew up with the following:

I’m a big fan of Richard Corrigan, and of the Lindsay House. I’ve known him for more than a decade now, and think his attitude and approach to food, to cooking, to the entire experience of eating food in a restaurant, it’s something close to my heart. A passion for what he does, the talent and flair to do it, yet the ability to avoid taking himself too seriously while he does it. He so obviously enjoys what he does, it’s a pleasure to watch him at work.

What does this have to do with innovation? Here’s a sideways look, akin to my long-ago post about the Meringue Moment. Something serendipitous and creative takes place when a consumer seeks to apply someone else’s innovation.

Think of an innovation as a recipe. It has some ingredients, some directions, some advice. And an expected outcome. Of course, when the innovator is as talented as a Richard Corrigan, the outcome is worthy of a Fritz Brenner. [BTW, thank you Wikipedia. Only Wikipedia could possibly have given me a reference to Rex Stout’s fictional detective Nero Wolfe’s cook, the man of 289 cookbooks. Bravo!]

Many years ago, I intended to have a number of close friends over for dinner, and wanted to cook them a Sea Bass with Coriander a la Corrigan. I really wanted to cook that particular dish, had done it a few times, but that particular time I had a problem. I knew that two of the guests didn’t like coriander, which they called cilantro, while the others absolutely loved it.

I happened to be at Lindsay House, and late that evening, mentioned my problem to Richard. His answer was predictable. You’re not cooking it, I am. And so he did. Dinner for eight chez JP prepared by the irrepressible Richard. What he also did was to tell me how the ingredients fitted together, so that I could play with that dish as much as I liked later. Which I did, and continue to. Wish I had more time to do it, though.
In similar vein, I was watching one of those interminable Cooking-On-Television programmes over Christmas many years ago, if gentle snoring and the occasional raised eyebrow could be termed watching. And then I sat up. There was a guy talking about things to do with leftover turkey. Boring. This particular time, he was talking about making a variant of the classic takeaway peking duck with hoi sin sauce and pancakes. Also boring. If it walks like a turkey and talks like a turkey, it’s a turkey.

What got my attention was that he moved to the subject of making pancakes. And how to make them as thin as the takeaway restaurants make them. He said, Roll the flour/water into a long snakeline cylinder maybe half an inch in diameter. Nothing new there. Cut the cylinder into half-inch segments. Done that, worn the T-shirt. Cut each segment into half again. Card-carrying member. Now take each pair of quarter-inch segments, place a little oil between them and then stick them back together and roll out the compound half-inch double segment into a flat disc. Aha. He had my attention. Steam the double disc and separate into superbly thin pancakes after steaming. OK! He had solved my problem.
The point was, I wasn’t interested in cooking pancakes but chapatis. I wasn’t interested in steaming the chapatis. I wanted to cook really thin chapatis but they kept tearing, despite strenuous experimentation in the flour used, the amount of water, the fineness of the flour, whatever. And the technique worked, and my chapatis were thin rather than doorstop-like.

The technique was the innovation. As a consumer I could apply that technique to whatever I felt like, and creativity could flow. Innovation happens when the consumer applies an innovative technique to work on  purposes that were not considered by the originator of the technique.

Much of teaching maths at school works on a similar principle. The first time my maths teacher asked the class “128 players. Knockout tournament. Assume no draws or replays, that every match has a result. How many matches in the tournament?”. And the class went 64+32+16 etc etc. Then he said. “Think about it. Only one winner. How many losers? So how many matches?“. Once we’d seen the technique, we could apply it in myriad ways.

Much of innovation is in creating a new perspective on an old thing. Much of the value of the innovation is taking that perspective and applying it to unplanned horizons and landscapes. That’s what customers do.

Some people think that issues like Net Neutrality and DOPA are confined to the US, and don’t understand why I (and many like me) think this is a global issue, and that everyone should get involved.

Let me try to explain why:

• The internet, whatever you define it as, is global
• The internet allows us an opportunity to innovate on a grand scale, and make a real impact on issues ranging from poverty thru healthcare thru education thru climate change thru to many other things important to all of us, including business
• The value of innovation is derived primarily by consumers
• US consumers are critical to the global innovation process, regardless of where the innovation is  “created”
• Anything that pollutes the path of the end-to-end internet stifles this innovation

Now that may sound altruistic-pinko-utopia to some of you; when you read the rest of this post, I hope to have changed a little bit of your mind.
The latest issue of the Economist referred me to a fascinating paper, via this article. [Oh frabjous day calloo callay, the article has not been DRMed to death].
The article refers to a paper presented by Amar Bhide at the CESifo and Centre on Capitalism and Society Conference in Venice (I shall resist the temptation to add Italy as a suffix :-) ). You can download the entire paper yourself via this site.

I quote from the Economist article:

The most important part of innovation may be the willingness of consumers, whether individuals or firms, to try new products and services, says Mr Bhide. In his view, it is America’s venturesome consumers that drive the country’s leadership in innovation. Particularly important has been the venturesome consumption of new innovations by American firms. Although America has a lowish overall investment rate compared wih other rich countries, it has a very high rate of adoption of information technology (IT).

Read the article and the paper for yourself. There are a few things I’m not sure about, there’s much I don’t know enough about, but one thing’s for sure. Innovation is about consumers and not innovators. This is not new, it’s been a while since I first heard Michael Schrage say it. What Schrage actually said was:

Innovation isn’t what innovators do….it’s what customers and clients adopt.

The US is the biggest capital market in the world. It has the most “venturesome consumers”. It is critical to global innovation, particular web-related innovation. Global innovation is critical to our attempting to solve many of the long-standing problems we face. [Before you say it, I agree. Innovation is necessary but not sufficient to solve these problems, we have political and philosophical and spiritual and economic and cultural barriers as well. Or maybe I should just say Fear and Greed and be done with it).

So that’s why I care about doing everything I can to make sure that people understand the problems in the Net Neutrality Bill(s) and DOPA. And why we should all care.

These are not easy issues. But the consequences of getting them wrong don’t bear thinking about. So get involved.