Category: Four pillars

My grandfather appears to have grown up in a village in southern India, attended university in what was then Madras, worked as “private secretary” to one of India’s richest men and biggest landowners, the Maharaja of Darbhanga, all on his way to founding a weekly magazine, called Indian Finance, in Calcutta in 1928. He died when I was sixteen months old, and he was succeeded by my father. So I grew up in a home full of books, where reading and writing and publishing put food on the table and, occasionally, even paid the bill.

It was an interesting business, with some very unusual approaches to vertical integration. The family owned the printing press. Made sense. If your livelihood depending on somebody printing, publishing and distributing what you write, then you’d want to own a printing press: the internet hadn’t been built as yet. The family also appeared to have significant stakes, perhaps ownership, in a canteen. You employ a lot of people, they need subsidised food, it made sense to own what must have been a precursor to the modern office cafeteria. But it didn’t appear to be that common in small family-owned businesses in the ’60s.

And there was an ad agency stuck in there somewhere. For the life of me I could not figure out whether we owned the agency, had shares in it, had a strategic alliance, or what, but there was a relationship. So when I was growing up, it looked like we “owned” a magazine, a printing press, a canteen and an ad agency. The set-up gave me some firsthand experience of what Ronald Coase was on about, in terms of the theory of the firm, transaction costs and vertical integration. [Amazingly, Ronald Coase is still alive. I would so love to meet him and talk to him!].

Which brings me to the point of this post.

As a child I used to have the run of the place, driving people insane with my constant questions “Why?”. I couldn’t help it, I was curious. One of the things I was curious about was the fact that every now and then, a parcel would arrive from Air India. And it contained tickets. Which was very strange, because I’d never known anyone who worked for Indian Finance travel abroad. And Air India did nothing but travel abroad, domestic travel used to be the sole domain of Indian Airlines in those days. So why were we buying the tickets? For what and for whom?

Nobody there seemed to know. Which meant that I had to ask my dad. It wasn’t the asking that was difficult, it was the remembering to ask. So many questions, so little time. Yet one day I did.

It turned out that the answer was simple. We wanted Air India to advertise in the magazine. They didn’t have the budget to do it…. as long as we wanted to be paid in cash. They were short cash. And they were long airline seats. So if we were prepared to be paid in airline seats, they would advertise. And so they did.

I have no idea whether my father pitched it to them or whether they pitched it to us, but the deal was done. And we kept getting tickets. Which somehow got used up.

Years later I went to university. Studied economics. Started writing stuff about banking and finance. Tripped and fell into computing in 1980. And here I am, 32 years later.

Fast forward to the 1990s. Lots of stuff published about the internet, increasing-returns models, “holonic” organisations, incubators and ecosystems. That’s when I first met Don Tapscott and read Paradigm Shift, a fabulous book. I think the firm he was with was called something like DMR Consulting, an interesting Canadian outfit. That’s when I fell in love with what Ken Ohmae described as the Borderless World. That’s when I really got into the works of W Brian Arthur.

More influenced by Dr Arthur’s work than anything else, overlaid on my childhood and education, I began to view economies the same way I viewed companies, a network of smaller organisations trading with each other. That view led me to observing the way companies did business with each other through different lenses, applying personal, often warped, interpretations of transaction cost theory to the whole network of companies.

It was a theme that had already been influenced by my exposure to EDI and SITPRO in the early 1980s; it was a theme that continued throughout my time in capital markets; it was a theme I continued to see elsewhere, in other industry sectors, as when Covisint was formed.

The theme was simple. What causes friction between companies in a market? How can that friction be reduced or removed altogether? What can be done with the resources that are freed up by removal of the friction? It may sound boring to many of you, but I enjoyed thinking about it and talking to friends and colleagues about it. Most of the time, in a post-trade world, frictions are caused by “reference data” mismatches: names, addresses, that sort of thing. Low-volatility data are incredibly important in capital markets; vast sums of money are spent in seeking to keep them accurate and up-to-date; and yet errors related to such data continue to be immense sources of friction within that trading environment.

So when I moved to Salesforce.com, I was fascinated to hear about the existence of what would soon become data.com.

Since joining the company, I’ve had the opportunity to watch the Social Enterprise concept emerge and take form; how important it was to connect customers and distribution and supply chain and staff, how an ecosystem of companies would evolve as a result, how this was really a fractal representation of the market and the global economy.

In the past, much of my thinking about this was in a post-trade context. Since the middle of 2010, I’ve been working on a book on Designing For Loss Of Control, and for the last year or so, I’ve been thinking about all this from a pre-trade perspective. What makes it difficult for companies to agree to trade with each other? What would happen if this barrier, this friction, was removed? How would we go about removing the friction?

Probably influenced by my time in capital markets, and probably underpinned by the environment I grew up in, I started thinking of pre-contract frictions as “mismatches” of some sort of other, sophisticated versions of what Air India faced when dealing with the family business. Long one thing, short another, willing to trade only if a way could be found. Again, influenced by capital markets and trading terminology, I kept seeing all this as flows, and as barriers to flow. This whole mindset was reinforced by repeated exposure to the research of John Hagel, John Seely Brown and Lang Davison, in The Big Shift and, prior to that, The Only Sustainable Edge. [And even before that, I felt the same sense and imagery of flow while reading JSB and Paul Duguid on The Social Life Of Information]. How could labour productivity have doubled since 1965 while return on assets dropped precipitously? And would the stocks-to-flows shift reverse that? If so why?

Influenced by all this, I began to visualise the possibility of radical changes in how companies contracted with each other, how risk was transferred, how gains and losses were crystallised. I began to visualise API-like structures connecting firms together, with each pair of connections choosing the best “currency” to execute the trade in, something that happened to suit both sides, some sort of barter 2.0. [Yes, I know that our systems of accounting and valuing what we do are way incapable of dealing with all this; but then some would say they appear to be way incapable of dealing with “normal” business today….] If you contracted with a haulage firm, the measure of success would be in volume of goods carried over distance; with a telco, it might be new customers gained; and so on. Some way of having a shared risk and reward system, such that both parties got paid out only when successful against some commonly agreed measure or baseline.

A part of me gave up on that thought stream, thinking that it would be too complex to agree the terms….. friction in the contracting process would not be reduced unless it was simple to agree the currency and the baseline, and unless it was difficult to game or subvert.

That remained the case until I came across the work of Geoffrey West on cities. How some things experienced superlinearity in comparison to population, while others had sublinear relationships. I had the chance to talk to him at TED Global last year, and understood he was driving the research into the corporate world as well.

And that made me think. For each company-pair, if we could identify something desirable, something that had a simple superlinear relationship to something else that was easy to measure and hard to game, we could simplify the contracting process and de-risk it for both sides.

All this stems from a sense that the way firms contract with each other today is a static stocks-based view of the world. That the world of the cloud is radically different, flexible, elastic, dynamic. That as companies continue to connect with their customers and supply chain, as trust is created through transparency, as information flows faster and faster, as low-volatility data becomes more reliable, we’re going to see new forms of contracting. And new forms of currency. In a typically William-Gibsonian manner, this is happening already.

The social enterprise will accelerate all this. It’s about flow. Not just in the Hagel-Seely Brown-Davison sense. But also in the Mihaly Czikszentmihalyi sense.

Thoughts? Views? Or is this all too much for a Saturday night?

As an adolescent I loved number theory, particularly prime numbers; but that did not stop me looking into some other, apparently mundane aspects of numbers. And finding them fascinating.

Take decimal fractions as an example. I must have been around 14 when I first came across the concept of “circulating” decimals. I understood that some common (or “vulgar”) fractions were easy to express in decimal form: 1/2 was 0.5, and 3/4 was 0.75, and so on. I understood that some common fractions were a little harder to express in decimal form: 2/3 was 0.66666…  and 5/6 was 0.833333…. and so on. But it took me a while to appreciate why. That all this was related to the base we worked on, 10, which led to our using the term “decimal”. That common fractions “terminated” only when the denominator consisted of factors of the base, factors of the number 10. That whenever the denominator contained factors other than 2 or 5, the fraction could not “terminate”. It “recurred”. That “recurring” decimals came in two forms, classic recurring (as in 1/3) and “circulating” (as in 1/11 or 1/13, where a sequence of numbers repeats rather than just a number).

And as I got deeper into circulating decimals, there was a growing sense of magic. As I learnt that circulating decimals had a “period of recurrence”, the length of the sequence of numbers that repeat. So 7 and 13 had periods of recurrence of 6: for example 1/7 was 0.142857142857142857…. where the numbers 142857 repeated in sequence. [Note: there’s a lot more to 1/7 represented in decimal form, but that’s for a different post some other time…. 1/7 is .142857 recurring, 2/7 is .285714, 3/7 is 428571, and so on, the same six digits but with different start points; as triples e.g. 285 and 714 they always add to 999, as doubles e.g. 28 and 57 and 14 they always add to 99…]

The magic began when my teacher let slip that 1/97 had a period of recurrence of 96. That every 96 digits, the same sequence started off again. It continued when the teacher followed it up by saying “Think about it. The period of recurrence of a circulating decimal can never equal the denominator, the maximum is one less than the denominator”. And then he asked me to go and prove it.

As a class we were just beginning to learn about modular arithmetic at the time, so the teacher knew precisely what he was doing by asking me for the proof. The aha moment was not long in coming, in realising that, regardless of the value of the numerator in the fraction, there were a finite number of unique residues possible. That the maximum number of unique residues is one less than the denominator itself. That 1/97 could not have more than 96 different residues.

The joy was not in being told that 1/97 had a period of recurrence of 96; it was in realising that I could work out why. For myself.

Maybe that’s what Richard Feynman was trying to tell all of us when he said “What I cannot create I do not understand“.  Or what Albert Einstein meant when he said “If I can’t picture it I can’t understand it“.

We all have our aha moments, and that’s when real learning takes place. And good teachers make that possible. I’m grateful that I spent time at a school where they understood this. Thank you St Xavier’s!

Recently I had reason to revisit some of the work of W. Brian Arthur, one of my favourite economists; while doing that, I couldn’t help but re-read his excellent The Nature of Technology. In that book, he makes the point that invention happens for two reasons: someone identifies a need to be filled, as in building jet engines rather than propellor-driven ones;  or someone observes an effect that can be used for something else, as in the discovery of penicillin.

While reading the book, I began to realise that learning itself is a form of invention: as I learn something, I create something inside me. I began to realise that the learning that takes place follows the same path as Brian Arthur’s classification of inventions: sometimes I learn by identifying a need and then trying to meet that need, and sometimes I learn by observing an effect and figuring out how to put that effect to good use.

That then took me down a different route, reminding me of something I’d heard George Gilder say: Every economic era is characterised by new abundances and new scarcities. Successful companies will recognise the abundances as well as the scarcities.

I couldn’t resist conflating these ideas, mashing them up. Could I start considering Brian Arthur’s “needs” as Gilder’s “scarcities”, and his “observed effects” as Gilder’s “abundances”? Could I go further and consider “learning” to be a specific instance of “invention”? Then I reminded myself, I live in the age of the web. I could blog about it, share my ideas, and get feedback. Refine and enrich my understanding. Learn. Hence this post.

Learning as a form of invention. Abundances and scarcities as stimuli for learning. Now I was getting somewhere, even if I didn’t know precisely where this was heading. I then began to think about all this in the context of enterprise software, particularly social software. And came to the following conclusions:

• There are an increasing number of knowledge workers in the workplace.
• With the passage of time, more and more of those knowledge workers will be drawn from the Maker Generation.
• Worker productivity will be influenced heavily by the propensity of the work environment to enable and encourage learning.
• Learning will be stimulated by the discovery of scarcities as well as abundances.
• The environment will therefore have to be designed to help surface those scarcities and abundances.
• The likelihood of this happening will follow Linus’s Law.

Most of you know by now that I work for Salesforce.com. Most of you know that I’m fascinated by that strange space where enterprise software meets collaboration and learning. Most of you will understand why I chose to work there.

Companies that learn to connect their staff, their customers, their distribution networks, their supply webs, their products, to each other…… companies that learn to do this on an infrastructure that helps them identify the new scarcities, discover the new abundances…… companies that realise that there’s a very powerful community effect in place here…. companies that understand how to harness all this for invention and innovation….. those are the companies that will succeed in the economic era we’re entering.

An era where connectivity and compute power and mobility are abundant. An era where customers use this power to create other, newer abundances: the ability to act in groups, the ability to share activity and intention.

An era where privacy and trust are scarce, where there are many demands on a customer’s attention. Where openness and transparency form the foundations of a new, sustainable, trust.

The era of the Social Enterprise.

 

 

 

Some years ago, incensed by the jiggery-pokery of the “copyright industries”, I wrote a post seeking to expose the way they went about making the most outrageous claims when it came to the volume of illegal downloads prevalent. I described them as Numbers of Mass Distraction.

It is clear that recent events surrounding SOPA do not represent the end of the war waged by the copyright industries; at most it’s a skirmish they will concede, albeit very grudgingly, as lost. Judging from the experiences we faced in the UK with The Digital Economy Bill (I covered some of those shenanigans here in Musing About Downloads In The UK) dealing with SOPA (and PIPA) is going to be a long hard war of attrition. A war where every one of us needs to understand the weapons being used against us, as well as the absolute flimsiness of the ammunition.

I intended to write another long post on this flimsiness, then found that someone else had done a far better job than I could’ve. So what I shall do instead is to link to the wonderful post on the subject by research fellow Julian Sanchez at the Cato Institute. Headlined How Copyright Industries Con Congress, it’s a must-read. While you’re at it, it’s also worth reading Julian’s earlier piece on the subject in Ars Technica. The elevator version is as follows: numbers related to the value of illegal downloads as well as numbers related to the number of jobs affected are at best wild unsubstantiated estimates, and at worst devious attempts to flim-flam a legislature crying out to be flim-flammed. The $200-$250 billion number, while it came from a sidebar in a reputable magazine, was actually an unsourced estimate of the value of all counterfeit and pirated goods worldwide, and was clearly stated in the magazine as such. And the 750,000 jobs lost number was taken from a 1986 speech by the then Secretary of Commerce, a number that has never been endorsed by the Department of Commerce.

Julian also reminds us that to make matters worse for the pedlars and purveyors of such phony pap, in April 2010, the United States Government Accountability Office released a report titled Intellectual Property: Observations on Efforts to Quantify The Economic Effects Of Counterfeit and Pirated Goods. Here’s what it says on the first page:

Incidentally, if you still don’t know what SOPA threatens to do, then this Khan Academy video is a good place to start.

Tim O’Reilly has repeatedly cited the lack of sound, independently verifiable, evidence on actual loss in the context of illegal downloads. It is not in the interest of the copyright-industries-lobby to participate in or support any activity aimed at filling this important gap. So more Numbers of Mass Distraction will continue to fly around, seeking to encourage lawmakers to enact first and ask questions much, much later.

We need to keep doing as much as we can to educate all and sundry about all this.

 

….because sometimes they do matter.

I’ve been fascinated by what people share, when they share it and how they share it for some time now. And for even longer, I’ve been thinking about why we share what we share. [Those of you who’re interested may want to read some of my earlier posts. Why We Share: A sideways look at privacy and Musing About Sharing And Privacy are two that come immediately to mind.

Take this post. The trigger for my writing it was StumbleUpon (I’m a fan!), who wrote to me saying they thought I’d like a particular set of sites. One of which I loved. Because it contained illustrations like the two below:

 

You guessed it. Someone has spent time taking the world map and reassembling it in order to depict the twelve signs of the Chinese Zodiac. He’s a graphic artist called Kentaro Nagai, you can see the entire work, entitled Twelve Animals: Piece Together for Peace, here.

I loved it. And thought I should share it with you. Because somewhere out there there may be one person whose day becomes brighter by reading this. Because somewhere out there there may be one person inspired to do something about something as a result.

That’s what matters. We’re human beings, social animals who look to each other for friendship, support, camaraderie, motivation, inspiration, whatever.

When I started writing blogs I had some very deep-seated views about what I shared, when and why. When I started on Facebook I had some similarly deep-seated views about the whys and wherefores. By the time I started using Twitter around five years ago, I’d figured out how little I knew about all this, my views were no longer as well-formed or as deep-seated as when I began.

Take Twitter. When I started tweeting, I said to myself “Share only when you have a clear idea how it would be valuable to someone. Even if occasionally that someone is you.” As I learnt more about the phenomenon, those views changed.

Now, I tell myself, “Share as long as you know it will not cause someone else harm”. It was arrogant of me to presume I would know how something would be valuable to someone else, and to filter everything else out.  I realised that the “do no harm” filter was a better one to use. Is it perfect? Certainly not. I rely on your feedback to tell me when I do harm. I will make mistakes. But this way it is more likely that through the organic process of people reading posts like this one, someone somewhere who needed to read this gets to read this.

Life is about abundances and scarcities. For most of my life I’ve seen stuff like bad news and negativity and criticism and cynicism regularly in abundance, and things like good news and encouragement and building people up and saying well done and smiling and making someone happy, all in scarcity.

For some reason, it appeared that what we term as mainstream media tended to focus on the negative, apparently because it “sells”. I can never figure out why. Time we inverted that. And maybe it’s happening.

I find social media in general much more upbeat, more focused on the positive, more willing to thank, to encourage, to support, to enthuse, to motivate. I don’t have a rose-coloured spectacle view of the web, about social networks or about social media: I am acutely aware of how dark a place it can be, how evil cyberbullying can be, how truth can be twisted, how people can subvert the web to nefarious purpose.

But still, overall, I find the web to be an uplifting place where people can and do support each other. It’s something they put in the water. And it’s one of the reasons I share what I share.

Why do you share what you share? Let me know, I’m interested. Fascinated.

I love being human. And I love human beings.

I’m constantly amazed by human ingenuity. How our brains appear to work. How we construct mental models of things. How we observe, imitate, learn. How we repeat that cycle to augment learning. How, once we learn something, we show the capability to extend that learning in new ways. How we share what we do, how we use feedback loops from the people around us to adjust, to improve, to refine.

To learn.

I read somewhere that human children spend the most dependent on their parents and guardians, when compared to the offspring of other creatures. Dependent for food, for clothing, for shelter, even for mobility. Apparently we do this for a reason. To observe; to imitate where possible; to build mental models.

To learn.

Watching. Copying. Trying it out. Failing. Trying it out again. And again.

Learning.

• Learning takes place when you’re given the opportunity to observe how something “works”.
• Learning takes place when you’re given access to the raw materials used to “make” something.
• Learning takes place when you’re given the tools to mix those raw materials up in ways no one else has done before.
• Learning takes place when you’re given the opportunity to share that output with others, and to receive feedback from them.
• Learning takes place by watching, copying, making, sharing, listening, changing, watching, copying….

I spend a lot of time thinking about food. Planning meals. Getting the ingredients. Cooking the meals. Eating. Sharing what I’ve cooked, literally as well as figuratively. Listening to feedback. Adjusting, refining, sometimes even abandoning it altogether, starting again from scratch.

Cooking is one of the ways I learn. I watch programmes (usually on YouTube or similar); read recipes (usually online, like when I want to make dobin mushi); root around for special ingredients (usually online, like when I want to find out where to obtain good matsutake); cook and share that process, using tools like Instagram and epicurious.

All this is possible because generations of human beings have shared what they have observed and learned. I’ve been able to learn from them, to observe how something is done, to try it out, to hear from others how well I’m doing, to adjust and learn.

All this is possible because I have access to the raw materials, the tools, the market, feedback loops.

Last week I was reading about a few modern cooking “inventions”. Someone who really liked the taste, texture, look and feel of chocolate brownies that came from the edge of the pan designed a pan that made only brownies with edges:

Someone else liked their cereal crunchy, and didn’t like what happened when you added milk to a bowl of cereal: only the first few spoonsful were crunchy, the rest ran to sog. So they invented this:

Which was designed to do this:

 

 

Human beings have been doing this forever. I like growing a beard every now and then, and wish I had easy access to something like this: a moustache-cup for drinking:

It’s not just about food either. There’s always someone coming up with a new way of doing something, or new things that help you do something. Take a look at this:

There have been few barriers to cooking, other than the natural laws of demand and supply. Of course people have tried to subvert that law in the usual ways: creating monopolies, controlling supply by hoarding, cartelising prices, that sort of thing. But by and large the world of cooking has been open to innovation. And our lives have been enriched as a result.

This hasn’t been true in the world of manufacturing: access to raw materials, designs, tools to manufacture, has been somewhat less than democratic. But that’s changing, with opensource hardware and software and patterns and specifications. Multipurpose materials like this will soon be freely available:

 

The freedom to model something physical will soon be connected with the freedom to make copies of that something, which is what 3D printers are about:

The raw materials will improve in their versatility and durability; prices will drop; access will become universal. The same will happen to 3D printers. We’re heading for a time when you can “fax” over a physical object from one place to another, even an object you designed for the first time. Especially objects you designed for the first time.

This is not just about stuff for gadget freaks and people who like messing about in labs. Human beings make things for one of four reasons:

• to learn
• to enjoy
• to solve a problem
• because they can

So this sort of invention and innovation takes place everywhere, at work and at home, in the West and in the East. Let’s look at what’s happening at work. Most of you know I work at Salesforce.com. Here’s an example of what can be done when human beings have access to open platforms and tools and data:

A couple of salesforce.com engineers, frustrated with the times when printers are out of paper, or when paper stocks run out, built a simple tool, using open components, to make sure it wouldn’t happen again. Others in the company used the same tools to try and solve problems to do with green buildings and energy consumption:

These are just two examples of what incredible things can be done when human beings have access to the right materials and tools.

This ingenuity is seen in the physical world, in the design and manufacture of objects. It is seen in the world where physical and digital integrate, as in the “internet of things”.

And of course it is seen in the digital world, where the internet is the ultimate copy machine.

Give people the raw material of open data. Give them the tools of the internet. And hey presto you have “inventions” like this:

Someone thought it would be good if you could find out when your garbage was to be collected. And so they did something about it. Someone else thought it would be good to build tools for handling open data:

It’s not just about solving problems and reducing human latency or saving energy or being efficient. It’s not just about the sustenance and pleasure of preparing, cooking and consuming food. It’s deeper than that, this streak of ingenuity is in all parts of our human culture.

Watch this video: A MIDI fretboard on an iPhone.

 

Humans have been observing, imitating, sharing, learning, refining and making stuff forever. Cooking. Making. Creating. Thinking.

Without Shakespeare sharing Romeo and Juliet with us, there would be no West Side Story. Without Shaw sharing Pygmalion with us, there would be no My Fair Lady. Without Joyce Kilmer sharing Trees with us, we wouldn’t have been able to enjoy Ogden Nash‘s parody,  The Song Of The Open Road:

Without the internet, without the Web, without Wikipedia, without Google, I would not have been able to write this post.

Without YouTube I would not have been able to share the ingenuity of some of my colleagues.

Without Tim O’Reilly’s gigaOm interview on why he’s fighting SOPA, I would not have been catalysed into writing this post.

The intellectual property rights environment needs fixing for sure. But SOPA and PIPA are not the solution.

Human ingenuity is a precious thing. We need that ingenuity to solve the problems we face, problems that cannot be solved by the paradigms that created them. We need that ingenuity to be unleashed to observe what’s happening without censorship. We need that ingenuity to have access to the data and the tools related to the problems; we need that ingenuity to be able to share the learning, to learn, to adjust, to learn again.

We need this in all walks of life, in the office and at home, in private and in public, at work and at play, alone and together.

We need this to move us forward in education, in healthcare, in government. We need this to solve problems with climate change, disease control, nutrition, poverty.

We need this in our art and in our culture.

We need this.