These are subscription revenue driven SaaS businesses with low to no-growth and early-stage valuation rounds that contained growth expectations that have failed to materialize. These Zombies lurch forward in niche markets as once novel tools or with weak business models. You can't shoot these Zombies in the head like you would a normal Zombie; SaaS Zombies can survive without a CEO, and I'm seeing a growing number of headless SaaS Zombies.     

SaaS Zombies stay alive because their subscription revenues keep the cash and revenue flowing for a period of time, just not at the levels hoped for or invested in. Data from the Kauffman Foundation shows that early stage high-tech companies actually start subtracting from the labor market after 5 years as they move on from the frenzy of their early growth years. High-tech start-ups are great job creators when they are starting-up, not so much when they start to mature.  

A SaaS Zombie can't raise capital at ever-increasing valuation levels, but it can survive by doing the same things that no-growth big companies do; focus on productivity and consolidation and pray for innovation. As the data above shows, this is exactly what early stage tech companies do, eliminate jobs. Doing the same with less, that's a productivity boost although it usually doesn't feel like one for the people left doing the boosting, but that's how the math works.        

Like any company, SaaS Zombies who cut their workforce can stop burning cash and scale to their level of recurring revenues to stay alive for long periods of time. Working against this however is the ability to innovate, product cannibalization by a competitive market and customer/employee flight. These companies frequently have MRR churn in the 2% range and are struggling to acquire customers and grow existing accounts.  

Some Zombies can survive by eating other Zombies, in the hopes that they find some growth synergies as industry rollups or complimentary product combinations. Zombie financing rounds from existing investors, also known as "dead money walking," or down financing rounds are already trending, but these businesses face hard operational decisions that aren't a part of their DNA.   

Eventually, some Zombies will be sold, but at much lower valuations than expected—it's a buyer's market and will remain one for these companies. IPO's will be difficult to impossible without a growth story and eventually many Zombies can and will die, but at least they will have kept their chances for some kind of an exit alive—and when the Zombies are running rampant, staying alive is the name of the game.

"D-IN-K-A" is the acronym for what I call the Big Data Lifecycle of Data-Information-Knowledge-Action. This is the process of taking the mountains of digital data appearing everywhere and converting them into something meaningful that can be acted upon. 

The secret of Big Data is that it is a process—it lives and it has a lifecycle, including an expiration date. This process is summarized by the 6 Immutable Laws of Big Data: 

#6 - Not all Data is relevant

#5 - To be relevant, Data must be accurate

#4 - Data is worth more today, than tomorrow 

#3 - Data is only as useful as people's ability to make use of it

#2 - Data not acted upon is worthless

#1 - Data gets more valuable as it moves through it's lifecycle 

So whether you are a fan of Big Data, or a Jimmy Durante fan, a little "Inka D-IN-K-A Doo" will help you unleash the power of Big Data.

2016 is the year of technology driven business transformation  

A lot of technology tools created over the last several years will hit the mainstream. Which means in 2016 we'll see many of these technologies suddenly "appear" as they get rolled out and transform the products, services and how we engage with the organizations that we choose to do business with.  

You can also call it the year of the use case, but creativity will abound in how these tools change the day-to-day world of business. Business has also figured out that better technology can drive revenue and productivity which means they know there is money at stake, and nothing motivates business more.    

As with many things, it takes the alignment of multiple factors to really see mainstream business disruption. Here's what will drive this:.   

Mobile Has Swallowed The Galaxy - Driven by many convergent developments but juiced by a high dose of performance enhancing IoT, mobile first, only and always takes over as spatially and temporally relevant value propositions deliver a lot more value for end-users. Companies, products and services that do not deliver a mobile first proposition will lose, and lose big in 2016. Thanks to smartphones, there's latent demand for better mobile business technology because we're all now more technologically proficient than the companies that serve us—there's a mobile technology vacuum to be filled

Leadership Answers The Cybersecurity Wake Up Call - This medicine is being forced down, but the patient will nonetheless start to feel better. Recent  developments on a coordinated public-private effort towards cybersecurity including the recent proposed bill to require US Boards to disclose cybersecurity competence in the Boardroom, will force corporate leadership to finally pay attention to this critical issue. With cybersecurity, we'll start to see fewer top tier brands with headline cybersecurity stories, although attacks will be refocused on the laggards, who will be toast. This will have a transformative derivative effect as it will bring the IT strategy and competitive advantage conversation front and center for many leadership teams. 

The Shiny Object - Drones, virtual reality and the driverless car already dominate the headlines. But these aren't ready for prime time—they'll be relegated to niche use cases throughout 2016. Don't get distracted by the shiny object, the focus of 2016 will be sustainable technology driven business transformation. I like anything that changes end-user engagement and drives productivity—so real time communications, IoT and of course mobile are all in my sweet spot for 2016. Demand and tastes are changing because of technology, how companies respond to and fulfill these changes with technology enabled products, services and propositions is now the 2016 ante for business. 

We've voted with our technology wallets and we now want business to deliver with theirs. This is where the day-to-day work takes place and real value gets created. Happy 2016! 

New technologies present businesses with opportunities to craft new value propositions—to change the game by creating new sources of value for their customers, and along the way capture some of this value for themselves in the form of revenue and profits.  

The TCS Global Trend Study 2015 reports a 16% revenue increase by companies in areas where IoT was being deployed with around 9% of firms reporting revenue increases in the 60% range. There's a lot of revenue, and profit at stake with the IoT—here's why.    

The Internet of Things (IoT) creates new data collection and distribution points everywhere. These end points are becoming an integral part of our global interconnectedness, building real time engagement not just with each other, but with and throughout our surroundings. And it's not just data, it's real time engagement with video, voice, chat, presence, screen sharing and co-browsing. By meshing real time data, with real time information, knowledge and engagement what can't we reimagine and improve upon?    

IoT bridges the last mile of real time connectivity. What can  we do better, faster and cheaper with this capability? Can we create products that markets find more attractive, increase supply chain and field service efficiency, improve customer service efficiency and the entire customer experience...the use cases are endless. From healthcare, hospitality, industrial machines to consumer products this technology presents unlimited opportunity to reengineer where value gets created, and how it gets captured.    

There are BILLIONS of dollars going towards figuring this out from old school industrial companies like GE to the technology innovators like Salesforce.com who announced their IoT Cloud last week. 

This technology excels at eliminating massive inefficiencies that exist all over a value chain to release, create and capture value. Always on real time and location specific connectivity requires value propositions to move from periodic interactions to pervasive engagement. But companies have never had the luxury, or burden, of having to engineer and manage their products, services, organizations or customer relationships in this manner.  

The TCS Study cites strategic and cultural barriers as the two biggest hurdles to realizing these gains. This technology is roaring ahead, but business is lagging behind. The floundering that's been on display as companies have dealt with real time customer sentiment and feedback for the first time through social media is testament to how far most businesses need to go to deal with a real time world.  

The consumerization of expectations has changed what we define as valuable and what we're willing to spend money on. The companies that get this, will redefine their competitive playing field.       

IoT is a game changer—revenue, profit and competitive advantage are at stake. You can't spell opportunity without IoT either.

With an onslaught of bad cyber news this week, is cyber even worth the risk and how should corporate Directors be looking at this issue? This week saw the high profile breach of 4 million employee records at the U.S. Office of Personnel Management by alleged Chinese hackers and the news that even the security experts are getting hacked, with Kaspersky Labs reporting a breach supposedly committed by a nation state.  

American President Barack Obama also made cyber security an emphasis of his G7 talks in Germany this week commenting that the US government needs to be more "nimble, aggressive and well-resourced" to combat this ongoing threat. He also urged the U.S. Congress to pass the 2015 Cybersecurity Information Sharing Act, a first step in a coordinated and systemic public/private response to cyber risks.  

And the attacks show no signs of slowing down. PwC's 2015 Global State of Information Security Survey indicates a compound annual growth rate of 66% for cyber incidents since 2009. The 10,000 respondents to their survey reported almost 43m detected incidents during 2014 alone—or 117,339 incoming attacks, every day of the year.  

Is cyber worth the risk? Yes, but with a caveat. Without a doubt the many innovations currently taking place with today's information technologies open up many new vulnerabilities. Risks are now difficult to isolate, and a protect and defend model is not effective against the systemic risks inherent across any corporate ecosystem.   

Attacks can also come from a growing list of sources including hacktivists, foreign and domestic nation states, customers, employees, partners, consultants, competitors, organized crime and the bored neighbors kid living in the basement and surviving on a diet of Cheetos, Red Bull and your weak IT security infrastructure. The direct and indirect costs of mounting an effective cyber security defense are only getting more expensive and the risks are only increasing. 

Despite this, these technologies also have an upside—a significant one as they are now competitive table stakes, as new business tools always are. These tools are changing market dynamics and customer preferences and the technologies embody distinct economic advantages such as the lowering of transaction and engagement costs. Business models and competitive advantages are changing as a result of these tools.

These tools are shaping and defining business success, but the risks are holding many companies back. Which takes us to the caveat. The upside of these technologies outweighs the downside.  

Cyber is worth the risk, but Boards, Directors and Managers need to be actively looking to exploit the business advantages of these tools, while at the same time mounting a "a nimble, aggressive and well resourced" approach to mitigating these incessant risks.    

This is easier said than done; 89% of companies listed on the Fortune 500 in 1955 are no longer on the list. Business cannibalizes the companies that can't capitalize on the opportunities presented by changing market conditions, including new technologies.

Directors need to be diligent in overseeing cyber risk as part of a comprehensive IT governance and enterprise risk management approach. But they also need to be on top of governing cyber opportunity—that's the only way that they can make cyber security risk worth it.

The internet has done an incredible job of connecting people with people, people with information, people with advertisers (ugh) and increasingly, people with the things around them.

But there's been one glaring gap in these interactions; they've been asynchronous. For the most part, there's a time lag in the connections, interactions and information that gets exchanged through the internet. We post something at one point in time, and it gets consumed in another.  

IT'S ALL ABOUT USER EXPERIENCE

This is all changing, and here's why I'm really excited about this as it applies to me as a customer, employee and business leader. The ability to interact on a real time basis through the internet with the people, information and companies we choose to do business with will create a much, much better user experience. That's great for me as an employee or consumer and it's a great opportunity for any company as they can drive revenue and reduce costs by delivering a better user experience.

Think about Amazon's Mayday button which gives their Kindle users the ability to launch an immediate one click video chat and co-browsing session with tech support.  Who likes calling an 800 number for customer support and getting into the hellacious experience of interactive voice response? Not one person on the planet that's who—no one. 

The internet as a rich and synchronous multi-media platform changes this. Real time interactions that are embedded in any business process that offer video, voice and chat with the ability to co-browse and identify user presence offers the ability to do so much more, and so much more better.  

Thousands of Use Cases

-Customer service and support can use video, co-browsing and presence to improve net promoter scores that can drive revenue, and at the same time lower costs relative to legacy network costs.  

-Using live video through a shopping cart can reduce cart abandonment and up-sell opportunities. 

-Embedding real time player interactions in online gaming can enhance, deepen and prolong the gaming experience in multi-player environments.

-Connecting employees through real time multi-media communication channels can improve field service or how people team to get their jobs accomplished more effectively.    

There are thousands of applications from telemedicine, the connected car, connected banking, virtual concierge for hotels and gaming, etc. Bring your industry and bring your business process because real time communications has no boundaries and it doesn't discriminate. 

THE BOND THAT UNITES US ALL

Google got the ball rolling with Web RTC, but bringing this to life at scale requires integration with legacy communications infrastructures. I'm working on Genband's www.kandy.io PaaS and this is exactly what we're delivering—federated and embedded real time communications, anywhere and everywhere.

In short, I'm blowing up the internet as we know it because this is a better way of connecting with each other and the world around us.       

Mary Meeker of Kleiner Perkins recently released her 2014 Internet Trends Report and amongst the data rich content, one slide really stuck out to me. It’s an important slide that reinforces a key element of the Bloomfire business model; our customers do not pay for digital storage. It’s free.

And for good reason—because it is in fact virtually free. According to Ms. Meeker’s data, since 1992 the cost of a gigabyte of storage has declined by 99.9965% from $569 per gigabyte in 1992 to 2 cents a gigabyte in 2012.

Digital storage is cheap, and continuing to get even more inexpensive. But digital storage frequently just sits there. The content, information and knowledge that resides in these online repositories often lies dormant—gathering dust like the odds and ends that fill the storage container from your last move that you still pay $59/month for but have long since forgotten.

But digital storage with Bloomfire is different. The content on Bloomfire lives and breathes. The data, information and knowledge assets that our customers have on Bloomfire are living assets that people and teams use to get their jobs done. Any content, anywhere can be brought back to life through Bloomfire. The communities and collaboration that takes place through the information assets on Bloomfire help make teams smarter and more productive. Teams sell more, service customers better, engage employees more effectively and in general just perform better.

We don’t charge for storage because it is in fact so inexpensive. Collaboration is what matters, so why pay for something that’s basically free. We’ll give our customers digital storage for free, because it’s the collaboration that they find truly priceless. 

Last week I attended the Global Innovation Summit in Silicon Valley put on by Victor Hwang (@rainforestbook) and his T2VC team.  That's me on the right together with the Kauffman Fellows team. "Vital Blooming Mountains" is an anagram for "Global Innovation Summit" that I think pretty effectively summarizes what the objective of the week was.  

Officially, the events stated mandate was to answer the question "How do we design entire ecosystems to drive entrepreneurship, technology, and economic impact?" I was excited to experience #GISW14  and help sow the seeds of innovation in the environments that I work across.  

My table had quite an eclectic group of participants that hailed from Saudi Arabia, Australia, Illinois, Iowa, DC, Silicon Valley and LA.  We had Burning Man, APLU, Aramco, Skoolbo, Purdue University, Stanford, The Gazette Company and Somark (a company that tattoos mice) represented.  I was happy to share my thoughts on the early childhood education ecosystem we are creating with www.skoolbo.com.  Skoolbo's challenge is to replicate the success we've had in Singapore with our game based social learning platform throughout the other 159 countries where we have over 300,000 users.    

It was an atypical event, creatively done with very strong participation from the attendees.   Here are my key takeaways:

-Systemic innovation doesn't happen on it's own

Serendipitous innovation can deliver the occasional breakthrough, but systemic progress over time needs help—it is possible, and necessary, to design and architect for this.  

-One size doesn't fit all

Picking up the Silicon Valley model and replicating it isn't the answer.  Creating a unique ecosystem where innovation thrives over time is specific to the surroundings and environment that it exists within.  Every economy, city, or company is unique—and their own innovation ecosystems will be as well.   

-Innovation doesn't always happen at scale

Sometimes innovation is small, but a lot of small innovations can add up to entirely new ways to approach and do things.  I think we're seeing this today with the Internet of Things.  IoT is the convergence of a lot of complimentary tools, technologies and developments that are starting to change the way that we interact with each other, products, services and our environments— bit by bit, piece by piece.

-Things can be much better than they are, and they need to be

The world isn't exactly hitting it out of the park.  There was a universal (although obviously biased) belief that we can run ourselves, our planet, our businesses, our governments, our economies MUCH, MUCH better than we are.   This group believes that the future is much better than the past, and is working to make that happen.  

Want to create your own vital, blooming mountain of innovation?  Then join in and help us spread the word.   

 

There's more to social than meets the eye. But "trivial" is a word I still hear frequently from business executives to describe the popular social technologies that have been so pervasive over the last decade.

But there is something else starting to happen as these tools are starting to be recognized for what they are really good at—improving intellectual productivity.  

In-tel-li-gence: the ability to acquire and apply knowledge and skills.

These tools are helping organizations and their employees become much smarter together, than they are apart. These tools are amplifying the collective intelligence of a group or a workforce.  

Do You Know What You Know, or More? 

"Knowing what you know" and then leveraging it for any corporate application has always been a challenge for business, or for any group of people for that matter. The bigger the group, the more difficult this gets—the high engagement and transaction costs between people get in the way. And moreover, many of the business management approaches that have evolved over the last century compound the problem. That is, they can act to even "dumb down" the group. 

Small groups can sometimes mute these effects if given enough time. For example my wife of 30 years and I know very well what skills, information and knowledge the other one has i.e., we've built up meta-data information about each other's knowledge and skills just from the sheer brute force of having spent 30 years together.  

We can leverage and apply our collective skills and knowledge more effectively together, than we can individually. Together, we're more than the sum of our individual skills, knowledge and intellects. But bring a 3rd, 30th or 300th person into this equation, and it quickly breaks down. That's always been the challenge for any business—until now.  

Intelligence As A Service

Social technology changes this by eliminating the engagement and transaction costs between large groups of people. Social tools can enable group intelligence—at scale.  

IaaS or "Intelligence as a Service" is the killer app of social technology—enabling companies and larger groups to finally harness and deploy collective intelligence. The ability to encode, store, retrieve and amplify the individual intellects within a group, instantly and without regard to distance, is the "secret sauce" behind social technology.  

This capability is a game changer for business, and the world for that matter. For companies, this has long been the holy grail of business management, but it's proven to be just as elusive. Being smarter is good for any company.  It allows businesses to sell more, innovate better, improve operationally, compete more effectively, be more profitable, etc.    

Social knowledge management is not a gargantuan digital data repository, but a competitive advantage and enabling concept that can deliver and amplify the knowledge and intelligence of the "group mind." This is a phrase used to describe what a new tool called Jelly does, announced by Twitter founder, Biz Stone at CES recently.         

A software company out of Austin, Bloomfire is also directly addressing this issue in the corporate enterprise market.   

The New Collective Intelligence

The problem of enabling collective intelligence ultimately thrusts itself upon any organization, it happens as a natural consequence inherent in group engagement between people. The bigger a group gets, the more difficult it becomes to deploy and amplify it's collective brainpower.  

But now an entirely new toolset is available to overcome these limitations.  Biz Stone calls it Jelly, Craig Malloy, Bloomfire's CEO calls it...well... Bloomfire. I call it by what it's capable of truly delivering IaaS, or Intelligence as a Service.                  

The future of business is much smarter than it's past, and it needs to be.  

 

Some of the first news of the New Year in the U.S. has been that over 2 million people have now registered for insurance under the Affordable Care Act...finally...once the web site started working.  

I didn't want to let the entire HealthCare.gov story vanish without revisiting it one last time to see what it can teach the business world in 2014. So here are the top 5 lessons that CEO's, Boards and businesses can learn from the very public implementation failure of the HealthCare.gov site.

#5 - Given Enough Time, Money and Resources; Almost Any IT Problem Can Be Fixed

Unfortunately, for-profit businesses don't have the seemingly bottomless pit of resources that governments can deploy. Getting IT projects right the first time, on budget and on schedule matters in business. For those of us in the IT business, this implementation failure wasn't all that surprising. Research shows that 1 out of 6 IT projects is deemed a "black swan" that exceeds budgeted cost by 200% and schedule by 70% — IT projects regularly fail...and fail big.  

But this abysmal performance history is becoming much less acceptable or tolerable for businesses — to understand why, see lesson #4.

#4 - There Are Some Really Big Business Consequences To Getting IT Wrong 

While HealthCare.gov eventually came on line and is now supporting enrollment for millions, the changing business consequences of IT failure are much more dire. Sure costs and schedule overruns are bad, but the really BIG consequences are the business continuity and strategic consequences that IT now has for every company. If a similar project literally shut down a business for 3 months, like enrollment was shut down, a company may never recover. Moreover, the strategic impact of a misaligned or mismanaged IT project can cripple companies like never before, making them or their business model irrelevant in a rapidly evolving IT driven world.   

Your company's future is dependent upon what you do with some significant technology developments taking place all around us today. Make the wrong calls or screw up a critical implementation to this degree and your future will be at stake.  

#3 - In Business, Screwed Up IT Projects Will Get C-Level People Fired

Despite the fact that heads did not roll for the failed HealthCare.gov implementation, the for-profit world won't be as forgiving. Boards, CEO's and CIO's will be held accountable as the "black swan" business implications of IT continue to grow into mutant proportions.  

HealthCare.gov publicly demonstrated what can go horribly wrong with today's IT—businesses, their leaders and their shareholders are now on notice.     

#2 - IT Projects Are Not Getting Any Easier

These projects are getting bigger and more complex and the risk profile of IT in business is changing dramatically. Information technology is rapidly evolving, complexity abounds with integrations everywhere,  third party dependency creates many new risks, security is an animal all to itself,  user requirements are rapidly evolving and fickle, dependency and pressure on the underlying infrastructure adds uncertainty and risk, etc. etc.  

The most public IT implementation failure of all time just illustrated how difficult IT has become, for all to see.     

#1 - IT Governance Matters

In early December ABC News reported:

That's IT governance 101.  

I've been writing and speaking about the value protection and creation opportunities that IT governance can bring to business for several years now. It seems like Boards and CEO's might be starting to wake up to the fact that they need IT executives in the corporate boardroom—although my honest assessment is that this is still not moving fast enough to keep pace with the rapidly changing IT landscape.   

An IT disaster of the magnitude of HealthCare.gov is out there in business, the project is probably already underway. The best CEO's and Boards will act now from an IT governance perspective, not when this lurking mutant black-swan finally forces them to.       

Here's to better corporate IT governance in 2014.  

 

What is your company?   At it's basic level it's a bunch of people working in some sort of organized fashion to create and capture as much value as possible—cooperating (usually) to achieve some common objective.  

But that's part of the problem—cooperation works but only up to a point.  

Collaboration is what companies aspire to and what they think they have, but they sabotage themselves with antiquated views and business management practices that give them cooperation when they want collaboration.  

Cooperation is a stitched together series of parts and activities that hopes to create a pre-determined outcome.  It's a hierarchical division of labor, much like the assembly line thinking it was modeled upon, hoping to achieve a desired objective.   Unfortunately this frequently doesn't work out as planned which unleashes havoc and dysfunction in the most well-intended environments.  

Collaboration Is Much Better Than Cooperation 

Collaboration on the other hand, which is what most companies want, and frequently think they have, is a collective undertaking that produces a shared outcome.   People working in unison and creating a truly integrated and mutual outcome.  Collaboration can only be accomplished jointly.  

Cooperation can take place in isolation on an assigned task that when accomplished, get's added to a bunch of other tasks to hopefully add up to the desired outcome.  Because of this, it will never achieve what collaboration can achieve.  

Frankenstein's monster is the result of a cooperative model.  A baby on the other hand, that's pure collaboration.  

Cooperation as a business management model has delivered all it is capable of.  It's had a good run, but the future is about collaboration at scale. And finally, we have the tools to enable a truly collaborative work environment.  That's what today's social technology brings to business management.    

Collaborative Systems Drive Innovation

Every company, whether they realize it or not, is now a computer based interactive system that has the potential for breakthrough collaboration within it. The real time and spatial relevance that your social technology enabled employees, customers, partners and investors are and will increasingly demand, presents this opportunity and also requires that you view your company along these lines.  

The experience that you deliver to your markets through these tools means your entire organization now needs to work and function like a collaborative real time system, not a cooperative assembly line—chugging along producing widget after widget with each corporate silo completing it's assigned task.    

Customer experience is no longer about "have a nice day" it's about "have an integrated one." Creating seamless engagement, interaction, connectivity and unique experiences throughout the computer based interactive system that is your company is the next business management paradigm that leaders need to understand and embrace.   

If You're Not SOCIAL, What Are You? 

The ability for your markets to enable collective action in real time has created a permanent shift in market power away from every company.   The only way to fight this shift is with the very same technology that created it.  

Today's social technologies enable you to control new domains—the last mile of connectivity has been bridged with space and time based relevancy through these new tools.  What can you do differently and what can you do better to enhance the experience that your collaborative organization brings to your markets through these technologies and new domains?

Hanging onto a cooperative model won't give you the potential for breakthrough innovation and will eventually create havoc everywhere.  However, the collaborative computer based interactive system that is inside every company, and wanting to come out, will create innovation and happy markets everywhere.   

 

What comes first?  The IT implementation disaster or the IT governance failure?   Time's up—the IT governance failure comes first.   But not everyone appreciates this or even knows what IT governance is. That's about to change but unfortunately it's only because of the HealthCare.gov implementation disaster. But first, a quick definition.  My favorite IT governance framework is the King III Report on Corporate Governance out of South Africa which added an IT governance provision in 2009 that says:     

IT Implementation Failures Are The Norm

For those who are new to the IT governance and implementation conversation, according to some relatively recent research published in HBR one in six IT implementation projects is a colossal disaster.  That is, the IT implementation project goes over financial budget by 200% and scheduled budget by 70%.  This compares to an average project cost overrun of "only" 27%.  

Another analysis by the NACD and Oliver Wyman (disclosure: I'm on the NACD SoCal Board) indicates that the world's top 500 companies lose more than $14 billion dollars because of failed IT projects–a year.  This same research indicates that nearly half (47%) of the corporate board members surveyed are dissatisfied with their boards ability to provide IT risk oversight.           

So the situation can be summarized as follows:  IT projects usually underperform and are cataclysmic disasters almost 20% of the time.  Moreover, over half of corporate board members don't think their boards can adequately govern IT risk.  I haven't even mentioned the compounding IT and user complexity issues surrounding today's social technology, business model risks, complex security issues, mobile device and date complications, the recent SEC ruling allowing financial disclosure on social networking sites, big data implications, etc. etc.  

All of which means that the IT governance challenge isn't getting easier.   In summary, the status quo sounds like a recipe for ongoing IT disasters to me.  Given this track record, I'm not actually surprised by what we've seen with HealthCare.gov.  Fortunately, things may be getting better. 

FT Agenda To The Rescue! 

There's hope!   

The Financial Times Agenda just released the results of a comprehensive project to identify the top 50 IT board candidates who can fix the IT governance shortcoming in the corporate boardroom and beyond with their report "Agenda Digital 50 - Board Candidates With Skills In New Technologies."  

This list of 50 executives/board members and candidates represents the fifty leading IT governance professionals capable of helping govern the current and evolving risks and opportunities around information technology for companies and organizations everywhere.  I'm very proud to have been selected to the list.     

Here's a recent blog post  and a link to a conversation on the current IT governance challenge from my role as Senior Fellow, Governance Center at The Conference Board.  I've been blogging about corporate governance and the implications around today's social technology innovations for several years and I've spent the last 25 years on a wide range of IT projects including fixing some of these types of implementation failures.  And I'm not alone in my desire to help corporations and organizations everywhere get better at IT.    

The solution to the systemic IT implementation issue is easy—the fix is better IT governance. Fortunately, the way to fix the IT governance problem is also an easy one.  Get qualified people into the boardroom who understand these issues.  Fix the IT governance problem and lower risk and lower cost IT implementations will follow.   

There are skilled board level IT professionals standing by who are, can and want to serve in the boardroom to reduce the risk of future IT problems and disasters.  Thank you to the FT Agenda for their leadership on this issue and for a big step forward in closing this critical boardroom skills gap.    

 

Almost 600 years ago the mass produced written word was enabled by a new and innovative social technology—the printing press.  This innovation changed how we connected, communicated, collaborated and shaped our communities.   Attributed to Johannes Gutenberg in 1436 the printing press also had a dramatic impact on literacy for one very simple reason.  The cost to becoming literate dropped dramatically because the cost of access to the written word also dropped significantly.  

Lower book prices by 60 or 70% meant that more people could access the written word. Learning how to read and becoming literate was not only possible for many more people because they now had access to the written word, but it was also dramatically less expensive.   

The World Runs On Literacy

The explosion in literacy that followed in the years after Gutenberg's invention also had a very positive economic impact.  Economic growth in the economies that were early adopters of the printing press was almost 400% greater than in other economies.  Literacy was clearly good for society and good for business.   

Fast forward six centuries and the OECD just backed this up with an extensive study on the value of high levels of adult literacy.   In short, there are incredible social outcomes that can be attributable to high levels of literacy from high wages, to political efficacy, to employment and social tolerance and trust.  These outcomes are much more likely when there are high levels of literacy by an order of magnitude of 200%-300%, i.e., at a level of 4/5.  Thank you Mr. Gutenberg and thank you in advance, to today's social technology as well.      

How Low Can We Go

But here's the bad news.  According to UNESCO there are still almost 1 billion people on the planet who cannot read—that's one out of every seven people.  And moreover, the OECD report also emphasizes how low existing levels of literacy are amongst adults age 16-65 in many countries around the world.  The low levels of literacy proficiency are surprisingly low.  In the United States, 50% of adults have a literacy proficiency level rated below level 3 on the OECD's 5 point scale.  In Italy, the number approaches 79%.  The most literacy proficient country in the world is is Japan, but still a surprising 28% of adult Japanese are at a low proficiency level in literacy, i.e., below Level 3.     

Here's what a proficiency level of 3 gets us.  Remember, the OECD has the majority of adults below this level in many countries.   But is even Level 3 good enough?  I don't think so, especially in a world that is exploding with new data and information thanks to today's social and information technology innovations.  

Our future is increasingly dependent on our ability to understand, use and engage the proliferation of text and new information that is now all around us.  The need to be highly literate, has never been more vital—for individuals, families, communities, cities, economies, companies, organizations, countries and the planet.  The inability to participate in this information driven world will create a new kind of poverty, one driven by the information haves and have nots and low or no levels of literacy.          

Curing Illiteracy With Social Technology, Again

Fortunately there are new social technology solutions emerging that take Gutenberg's invention to new levels.  I'm working with an innovative social enterprise e-learning company named Skoolbo.com, that is tackling the illiteracy problem head on.  This innovator delivers learning sprints around a literacy and numeracy based curriculum (health and fitness is also in the works) that is common core aligned that is having an amazing impact on improving children's learning outcomes.  

We've seen improvement results of +50% which is absolutely amazing.  Skoolbo delivers a creative learning approach through today's social technology that taps into the individual learning DNA of students aged 4-12.  Highly engaging—the more that kids use Skoolbo, the better they do. And even better, Skoolbo is FREE.  

We believe that Skoolbo can be an effective learning tool for children all over the planet to help them learn to read and to ultimately improve literacy levels at a cost of only 10 cents a person.  This type of solution is only possible because of today's social technology.  Much like Gutenberg did, we have lowered the cost of becoming literate to as low as it's ever been.  Our ability to reach people and to teach effectively through these technologies is unprecedented, and the results that are starting to come back are amazing.  We have a brand new tool in the war against illiteracy and it's name is Skoolbo.    

The future belongs to the highly literate, the past teaches us this.  We've made some decent strides in literacy throughout the course of history, but we can do much, much better and we must because the stakes are getting higher due to today's information technology.  The future is a new ballgame because Information now drives the world, literacy is it's fuel.     

Join The Team

If you are an individual, company or organization that wants to join us in our war against illiteracy, contact me.  The smartest kids go to Skoolbo, get it for free.        

 

Is Twitter's IPO the end of social?   Or the beginning of something else?  If you're a student of how social technologies have evolved throughout history, you'll know that the Twitter IPO is an important milestone in the development of this latest group of social technologies.  

It does indeed signal the end—but the end of the beginning.  And the next part of the evolutionary journey of today's social technology is where the really exciting stuff starts to happen.      

The 4C's Change Everything

Twitter's IPO, like Facebook's, LinkedIn's and the many other tools that have recently been created to change the way we connect, communicate, collaborate and create and shape communities (the 4C's) brings sustainability to these technologies.   Not just a fad (which is exactly what people called the landline telephone over 130 years ago) an IPO demonstrates that the market validates the inherent value within the tool to improve on the 4C's. These tools work in new ways and are an improvement over what we were using before to enable the 4C's.  Tools that impact the 4C's in a foundational way, stay around for a very, very long time and force us to rethink the way that pretty much everything gets done and how we shape our world.  

Further Development Ahead! 

And most importantly, the IPO's fund further development of the tools and guarantee that the technology will remain around for the foreseeable future.  Social isn't going away anytime soon, in fact it is morphing right before our very eyes because we're onto something.        

In the beginning stages of any social technology there are always skeptics who don't understand the tool and what is foundationally changing, i.e., the 4C's.   What's unique about these latest tools, including Twitter, is that there are billions of people using them.  We are the early adopter pool and it's gigantic!   The laggards are not usually who you suspect when a new transformation and productivity tool presents itself—business is the social technology laggard.   

The secret signal within the Twitter IPO is the same as it was with Facebook's IPO—Twitter isn't going away anytime soon.   Business is starting to get that.  When companies lift and shift the ability to change the 4C's into the context of work and getting things done within a business, change happens in a big way and in a good way.   

The customer is always right is a an overused business cliche.  But customers everywhere are telling business that this technology is better than what they had before.  

The secret signal in the Twitter IPO is another wake up call for business about the value inherent in social technology—it's time to go to work with these tools.  

 

I spoke recently to the Southern California Chapter of the IAOP—International Association of Outsourcing Professionals about the impact that today's social technology will have on the practice of outsourcing. In short, history teaches us that outsourcing will not only continue to flourish, but it will explode as a practice and move up the value chain, all because of today's social technology.  

Not just a labor or cost arbitrage play anymore, outsourcing will take on more of a value creation mandate as tightly linked ecosystems will work seamlessly together to not only drive productivity but also to drive innovation—with the following caveat.  This will only happen if these ecosystems are enabled through the efficient use and application of today's social technology.     

The Late, Great Diminishing Firm

Why do companies exist?   What's the economic rationale for their existence?  Ronald Coase answered this question in 1937.  They exist because it's a more efficient way to organize resources when compared to transacting with the external market.  At least it was in 1937, when all manner of costs existed in transactions between different unrelated parties, e.g., slow information flow, slow and expensive travel, misalignment of incentives, poor communication quality and velocity, high search costs, cumbersome contracting processes, etc. etc.  

The world of business today is much more efficient and the world of engagement between parties is becoming even more efficient.           

Now, enter today's social technology.  When business has an economic incentive to do something, it will be exploited.  Today's social technology embeds intellectual and productivity advantages in it's ability to change how we connect, communicate, collaborate and create community between people and between companies.  Exploiting these economic advantages will drive a new wave of outsourcing and create tightly integrated ecosystems from the individual contract employee to the outsourced IT function, where a monolithic corporation existed before.     

Outsourcing For Innovation

As engagement costs continue to drop, transacting with the external market becomes easier, less expensive and increasingly seamless.   The need to organize and control resources under a corporate umbrella goes away—there's no longer an economic incentive to do this.  However, there is an economic incentive inherent in getting more out of the business partners that support your company.  From the individual contractor, to the IT outsourcer, to your extended suppliers there is unrealized value in these networks.  Your company and your business partners are a contextual social network, with one thing in common, your business success.   

Outsourcing will not only continue to exploit cost arbitrage opportunities but as a practice it will start to be viewed upon as an untapped source of innovation.   Service providers will be seen as an under leveraged wellspring of ideas and innovations.  As a result, they'll start to be more tightly integrated and entwined with the buyers of their services—but this will only happen through today's social technologies—because it's the most efficient way to do it.    

The Whole Ecosystem As A Value Creator

The whole will be greater than the sum of the parts in these social technology enabled corporate ecosystems.  The self-employed who understand this will be able to link in and out of different ecosystems through social technology with a level of efficiency that will drive high levels of engagement, interaction and creativity.  Service providers and suppliers who start to socially re-imagine how they engage with the buyers of their products and services will provide a new source of competitive advantage around their offerings.  One focused on value creation, not just cost arbitrage.    

The economics of the corporation tell us that when transaction costs with the market decrease, the size of the firm will as well because there's no longer an economic disadvantage to engaging with the market.   This isn't your grandpappy's 1937 anymore, it's the future.  And the future of outsourcing has never been brighter.  Want more value creation in your business?  Your business partners are waiting and social technology is your ticket to leveraging them.  

Thank you to the IAOP for having me and also to the sponsors and hosts of the event Toyota, Avasant, HCL, Morrison-Foerster and CGI.  Here's my Prezi from the meeting.   

Value Creation Rocks! 

Value creation is what REALLY matters.  

Unfortunately, the last twenty years of business management theory and practice have focused on value redistribution.  Anyone can, and anyone has outsourced, offshored, laid off, sold, bought, scaled, monopolized, duopolized, oligopolized, etc. etc. their way to corporate profitability.  It's no surprise that in America when corporate profits are up, wages are down, and vice versa.  Taking from Peter to reward Paul Inc. is a time honored and proven management tactic.  Here's a recent blog post I did on this issue, with the data that backs it up.  

Now don't get me wrong, doing things more productively is not something I'm against. Productivity gains, i.e., getting things done with less are an important and vital part of the overall equation. But they are only one part of the equation—and business leaders everywhere have been overly focused on this one dimension of business management, at the expense of it's counterpart, value creation.  Why?  Because, it's comparatively easy to do, it has short term impact and they are handsomely rewarded for it through stock based compensation.            

Steve Jobs?  He was obsessed with value creation.  Steve played the long game.  As far back as his iconic 1985 Playboy interview, he told us as much.  

Larry Ellison just referred to Steve Jobs as "..our Edison. He was our Picasso." in his interview Tuesday with Charlie Rose.  The world of business needs more Edison's, more Picasso's, more Steve Jobs.  We need fewer Chainsaw Al Dunlap's.  Remember that guy?  

The Duality Of Economic Growth

Here's why.  Economic growth only comes from an incessant focus on BOTH doing things with less, AND by doing things better.  Economist Paul Romer explains this with a an effective metaphor from the kitchen that I particularly like:

What's passed as business management and leadership for much of the past few decades has been focused on the practice of redistributing value, not creating it—except for the few, like Steve Jobs.   Mr. Jobs and the company he built have created new tools and techniques that have changed the world in many fascinating and unpredictable ways.  These innovations will continue to wash over us, influence our lives and most importantly enable all of us to think of new ways to do things better, not just with less.  Today's social technology is not just a productivity engine, it's an innovation engine for every company, everywhere.  

The Future Of Business

The future of business belongs to those leaders and the companies who can create value, not just redistribute it—value creation has no boundaries, value redistribution does.  Steve Jobs incessant focus on creating value, is his lasting legacy.  

Fortunately, he's not only shown us the way, he's created some incredible tools that every company should be exploiting to rethink how they deliver an experience to their customers, employees, investors and suppliers.  Today's social technology like the iPhone, software from other companies like Salesforce.com's Chatter, the entire cloud, the infrastructure of the internet and yes even tools likes Twitter and Facebook, are all pieces of an incredibly powerful new social technology landscape that is changing human behavior in foundational ways.  When human behavior changes, business changes.  These tools introduce new ways to engage with your markets, design your products and services, make money, save money, save time, etc. etc.  These tools are competitive weapons for businesses that understand them, like Steve Jobs did.         

Steve Jobs believed in himself and the power of value creation.  More importantly, he believed in you.  What are you waiting for?  Let's get cooking and create some value.  

Big Data—it's a term searched more than 673,000 times a month globally according to Google.  SAS, SAP, IBM, McKinsey and my old firm, PwC show up at the top of paid and unpaid search results for Big Data.    

But I never liked the term Big Data.  Big piles of data turning into big mountains of data have no intrinsic value in and of themselves.  And "Big" is only half of the story.

What's really interesting is that there is NEW data in the mountains of data that are building everywhere.  Data that is now spatially and temporally relevant. This is the first time business has had data that is relevant to space and time—the last mile of connectivity, if you will, has been breached.    

Converting this big and NEW data into big and NEW information, and then into big and NEW knowledge is the new conversation that we should be having.  The future is about the NEW knowledge frontier that we are embarking upon—one where space and time driven relevancy will deliver real time intimacy and insights that were never before possible. 

GE Loves Big and NEW Knowledge

I literally just had a service call from a GE technician at my house to fix a routine problem with an ice maker and a squeaky clothes dryer.  Dude shows up, and he's wired to the nines.  My entire field service experience was actually pretty good.  From booking the appointment on-line, him being on time, getting the problem diagnosed and solved and then paying him, everything happened very efficiently and effectively.  

Throughout the service call he was connected through his "Tough Book" like PC (nice old school antenna) and he immediately provided me with a detailed estimate.  I was peeking over his shoulder and saw that he had a detailed knowledge base he was referencing to identify my specific model and to identify the parts he needed.  

He spent more time huddled over his PC, than he actually did fixing the problem.  

Which reminds me of the old service tech joke:

A technician hands his client an invoice for $100 after having fixed his washing machine, which only took 5 minutes, and only required one screw.   

The customer is shocked, and says "$100!!! To fix that?  You were only here for 5 minutes and only used one screw." 

The technician doesn't say a word, takes the invoice and writes his client a new one, still for $100 and hands it back to his customer.  

The new invoice says: 

$1 - Replacement screw.

 $99 - Knowing where to put it.

GE gets this, it's why they are spending over $1B on what they call the industrial web which I wrote about recently.   

The tab for my service call?   Here it is.   GE's obviously figured out how to capture much of this value for themselves, and to do it efficiently.  The technician was in my home for about an hour, and once he closed my call out, his dispatch knew he was available for another call, and where he was at.  Improving utilization drives huge profits in field service.    

Value Comes From Big and NEW Knowledge

Knowledge—that's where the value is at, it always has been.   Big and new data is creating new information that can yield new knowledge.   Today's social technology is providing us with the means to gather this new data, as well as the means to make sense out of it, deploy it in new ways and to create new knowledge frontiers that drive competitive advantages.    

Competition is now being driven by information supply, and how companies turn this information into useful knowledge will determine their future.    

When companies are connected with consumers, employees, suppliers and shareholders in a real time and location specific manner the challenge becomes one of learning from and adapting to this new level of intimacy?  How can your value proposition be enhanced with these new insights, and how can you capture some of this value for yourself?   What are you learning about customer behavior, network relationships, influence and dynamics, supplier synchronization, shareholder sentiment?  

Your markets are talking to you in a new language with today's social technology, how does your business evolve to understand and reflect the new knowledge that can be created from these tools?   The nature of these interactions and this new level of engagement makes the experience of dealing with any brand through these tools a paramount part of any competitive business model.  

The future of business is not about the big data, it's about what you learn from it that counts.  

 

Where does social go from here, how does it get there, and why?  

It feels like the hype around social is waning, but this is actually a signal for those who can hear it—and it's also predictable. Other social technologies have all gone through this step.  

Here is the 2020 vision for social technology and why it has nothing to do with your 12 year-old's version of social.        

Bye Bye Social Networking, Hello Social Business

Social networking will disappear, but social engagement will be everywhere, because social technology always fragments.  Here's why—the tools of techniques of social engagement work. They work by reducing engagement costs around connecting, communicating, collaborating and helping us shape our many different communities. This means they are a productivity tool, and business loves productivity tools. 

Fragmentation occurs when the tools and techniques of social engagement are shifted into niche domains.  An example of this is Skoolbo, the world's largest game based early childhood education platform.  Skoolbo creates social engagement between early learners, their teachers, parents, and their grandparents to help children with core skills development.    

The Future Is Here

Brands everywhere are creating direct engagement with their markets because they finally can. This is really the first time companies have been able to directly connect with individual consumers and business partners because of the intimacy afforded by social technology. Innovative firms are also using these tools to connect their employees in new ways, change the way they interact with their suppliers and even their investor communities.

Engagement has never been so engaging. As a social technology empowered force, the markets have spoken and we want to use these tools to enhance the experience of our lives and our interactions with each other and with the companies we choose to deal with. 

You've probably heard of big data, but the real news is new data. The location and time based data that social technology generates is driving big data and new data.  But it's really the big and new information and then the big and new knowledge that will come from this data that matters the most.    

We Can Learn From The Social Past

Prior social technologies like the printing press and the landline telephone did the same thing–they made us smarter and more productive. Massive waves of economic growth and innovation followed these innovations and we're now at the cusp of a social technology fueled wave that some of us are already riding. Economies that adopted the printing press grew almost 4x as fast as those that did not.      

The more context there is in social engagement, the better the tools work—business is the future of social for this reason. You can thank your 12 year-old for getting the world up the social technology learning curve, the really disruptive stuff is only now beginning.

The world will be all social, all the time by 2020, and this time, you'll love it.   

 

I spent a good part of my Tuesday this week with some students at one of the King-Chavez schools in San Diego with the Founder of Skoolbo, Shane Hill.   Skoolbo is an educational software company that is focused on childhood (K-6) literacy, numeracy, health and fitness/wellness and other subjects like geography and languages.      

The Skoolbo platform is the world's leading interactive learning system that uses game dynamics to engage early learners and to teach efficiently and effectively. WOW! Does it ever. The students at King-Chavez have answered over 500,000 questions on Skoolbo through their iPads since it's beta release a year ago.   While Skoolbo is only getting started, over 22 million questions have been answered on the platform globally by users in over 140 countries.  

Here's what I learned from the class of 3rd graders we spent much of the day with—childhood education is dramatically better, faster and more efficient with this technology. 

Early Learners Are Natural Innovators

Early learners want to learn, and these tools are natural vehicles that tap into these latent desires.  Skoolbo is the next generation of online learning beyond online courses, it’s actual online instruction and learning.

With Skoolbo, students are learning based upon their individual skill levels at a volume and with a level of quality never before possible.  At the King-Chavez school they are answering questions targeted to their skill level at an average rate of 18 a minute, and some are answering at rates well in excess of this level, e.g., 50+.  

Practicing and interacting with a wide range of math and reading activities Skoolbo delivers sixty second “learning sprints” that result in a targeted experience that a teacher couldn’t possibly replicate at the individual level.  With this much data, teachers also use Skoolbo to understand specific skill gaps at the individual level that they then use to modify their curriculum.  Teachers have never had this level of visibility before into the individual students capability.  Students learn more effectively and teachers teach more effectively because of these tools.       

Self-Guided Learning Yields Impressive Results

Two students in the class have self-guided themselves and answered over 30,000 questions each, through the platform—remember these are 8 year olds.  They’ve essentially lifted up their own skill levels by using a tool that can be self-initiated and that can keep up with their desire for rapid iteration, and infinite interaction.   All while not feeling singled out, or left behind because of peer or teacher constraints in a group setting.   Sergio’s teacher told us he's lifted himself up at least a grade level in terms of his reading comprehension and his math skills through his own initiatives and use of the Skoolbo tool. 

Studies show that closing skills gaps in early childhood education yields enormous individual and social value.  Economist and Nobel laureate Dr. James Heckman from The University of Chicago has done extensive research on this issue.  

Early learners have a new toolset that can reach and engage them like nothing has before.   The King–Chavez students are in a lower income demographic and Skoolbo’s global mission is to use this technology to eradicate illiteracy across the planet at a cost of no more than 10 cents a child.  That goal is now achievable and only because of this technology. 

A new threshold of learning is at hand for early childhood learners and teachers because of today’s technology.   The 8 year-olds I spent the day with taught me that they want to learn and that they want to use this technology to learn with—they taught me that our future will be much smarter than our past.

Join The Movement And Spread The Word

Skoolbo is also working with Microsoft and Peace One Day to bring together 5 million early learners in September 2013 at www.friendourworld.org.  Join the movement and help us spread the word.