“carriers are swapping dumb pipes for dumb cloud”

Indeed they are,  dumb is dumb.  A commodity is a commodity. Can you fluke some differentiation? Yes (just look at bottled water ), but generally speaking, it is going to stay a commodity.

Carrier’s need a slap. Strategically and culturally they just need to get with it.

Moving to cloud is a good idea, virtualisation is in a carriers blood, so is scale.  Doing it the carrier way is bad.  In what world do you think building services like you have always done is a good idea (the slow, massively robust, integrated from day 1, using trusted vendors kit approach).

Think that through. So you are buying servers and software off the same folks you always have (who are incidentally  themselves struggling with the cloud), banking on procurement scale to give you the price differential you need when you competitors have utterly commoditised this space. Buying commodity components, creating software or using open-source . And thats not the worst of it, you are probably using the same vendors (the ones with large PS businesses) to integrate it all together, and reverse integrating that new stuff into the cluster F#*k of your old OSS/BSS systems. You know, the ones that have held you back on your existing commodity services…..

How about doing something that adds value? Not bolting to the next commoditised market. How about a different approach, maybe even a cloud driven one (disruptive i know). Aggregation? PasS? Partnership?  All could deliver quite different results.  But to do that you need to get over yourself

• Your old “lock the customer in mentality”
• Your “we must own the customer” mentality
• We need to have the same margins (headsup carriers, only oil, winning pharmaceuticals and illicit drugs get the same margins you are used too)
• We will leverage our existing investments like OSS/BSS. (here’s a hint, while you talk about these things like they should be differentiators, ask yourselves if they really are)
• You won’t break our delivery models
• You won’t break the process
• Everything is delivered up front because iteration is bad…
• Get the same people to do the integration work.

Try something new, if not you are gonna get what you already have. Dumb is dumb…

The first type of innovation is incremental innovation. The is the stuff that most companies are built to deliver (in some cases not!). The tweaks and product improvements that we expect. In fact, any enhancement that increases performance of the current business (using Druckers definition) would fall into that category.  Its the stuff that gets talked about in universities a lot with the theoretical ‘when we hit the maturity phase we’ll keep growing by adding features or selling to a new segment’ type stuff.

You need this type of innovation when you are a mature company. In fact without this kind of constant evolution, you will in the end become obsolete (Red Queen‘s hypothesis )

“It takes all the running you can do, to keep in the same place.”

As a senior manager, your job is to truthfully evaluate the companies performance. There are sign’s when you are doing this kind of innovation well enough, and when you aren’t.

Clearly those peer organisations on the right aren’t keeping up. I have no doubt they are expending lots of energy trying, but clearly its not working. And senior people should be seriously asking why its not working, what can be done differently and how can they get better returns on their effort (see my previous post on translating strategy into reality)

“Faced with the choice between changing the way we do things or finding facts to refute the strategy, most people get busy finding facts.” My take on a quote by John Kenneth Galbraith

The second type of innovation is disruptive innovation. Nirvana, the one big hit everyone strives for. This is way harder to do (this blog is littered with posts about it).  Essentially you are trying to launch a new product category (walkman’s, cloud computing) or targeting new segments of consumers (mobile phones).

In doing this inside a mature business you are battling everything.

• The culture “the way we do things”,
• Process’s – we build things this way…
• The resource allocation process ” must make the same margins, must hit the investment hurdles”
• The skills of the company ” we’ve lost the skill innovation ” ahem Google / Cisco
• Priority – the rule of large numbers always wins
• Personal agenda’s – mid-managers putting forward risky bets

And don’t forget, you still have to battle the market! Actually build and launch that product, convince customers to buy it, recommend it…  Like is said, this is tough,

And it takes time.  My observations of senior leaders is that they treat innovation like kids treat Xmas toys, they are over the excitement of the idea by day 2.  Want to know how much time? And for that matter, want to know WHY you would even bother given its sooooo hard… check this  graph out

Yeah i know, its Apple. But here are some other companies that have done this. Nokia (when they went from pulp to phones), Lego (themes!), Amazon (books to cloud!), Caterpillar (shoes)….

“We also found that business model innovation tended to generate bigger gains than product or process innovation”

Jens-Olaf Berwig, Nathan Marston, Lauri Pukkinen, and Lothar Stein – McKinsey & Co

In other words, if you are the CEO and want to seriously change the total shareholder returns, you need a disruptive growth plan.

Also, if you are shareholder, and you don’t hear the CEO talking about this, don’t have decent visibility of what the company is investing in…then you are investing with the herd…  maybe keeping up, maybe (Sony, Google, Cisco???)

The only problem with compromise is just that, you don’t have clarity, you have a compromise. A middle ground of nothingness, a buggars muddle.

Strategy is determined by what comes out of the resource allocation process, not by intentions and processes that go into it. Clayton Christensen

As a strategy guy, I’m not a fan of compromise. I’ve seen too many good strategies get watered down by compromise. People insert wriggle room into the plan and you end up with a half baked delivery… Steve Job’s was a lot of things, uncompromising one of them, yet you can’t argue with the success he drove… is there a correlation? Apparently yes according to McKinsey‘s.

In a startling finding [that is sarcasm] , apparently if you adjust your resources depending on the initiatives relative market potential (that is put your resources behind the strategy, not everywhere) you get good results…. like 40% better total shareholder return. Empirical fact based evidence that compromise is bad for business.

So go forth, stay true to the direction, make choices!!!   be uncompromising,   get better results

You make it hard with laws like the patriot act meaning adoption of some of your services is tricky due to my own laws.

You make it impossible by not launching your services to us, the other 95% of the worlds population,

You make it illegal,  by creating artificial barriers to me giving you money.

Why? Why do you do that?  Surely a much bigger market is a good thing?  The Internet connects us all, we are now all your market.  Why keep us out?

Honestly right now it feels like apartheid (yes racial separation), we outsiders can all look in. We’ve got our faces pressed up against the glass window of the shop. We can see how the other half lives and what they can buy…

So I ask again, America, don’t you want my money?

Reality.

Reality is important because it frames your worldview. Time and time again I see senior people ignore reality. You want some examples? RIM:” no seismic change” required? Hello, dude you are screwed!! ‘manage decline”, what kind of obscene statement is that? I mean first up, you are basically stating it’s ok to loose, worse that you have some magic trump card that allows you to control market shifts.  This is poison because your staff know its total rubbish and it sets people up for failure. . . . trust me I’ve seen people try to do this for years and I can attest to the fact that any ‘management’ of decline only happens in the minds of strategists and accountant. The rest is luck.

Choice.

People think they make choices every day, but the reality is they do it without fully considering the true impacts.  Take global warming, its is kind of hard to ignore the fact base that it is happening. At a personal level i don’t think people understand what they do to contribute or change this, they haven’t really had the choices explained to them….

“Combustion of one US gallon of gasoline produces about 19.4 pounds (8.8 kg) of carbon dioxide (converts to 2.33 kg/litre), a greenhouse gas.^[4][5]”

Did you know that? that is a lot of C0!!!. How about wording the choices this way.. “you can keep driving your car and contributing to the pollution of the petri dish we call home, or you can find alternate transport, you choose”

Cigarette smoking – “you can keep smoking cigarettes, but you know that it causes all sorts of bad stuff to happen and if you get sick because of it, there won’t be any government or private health insurance to support you”

Business – man, so many examples ( dilbert lives on this stuff)

“We can’t decide what we are going to do” (which is a form of non-choice),  the impact of this is there is no guiding principles to make good choices about so companies will attempt to deliver everything… which means nothing gets done and everyone is unhappy

“we need to change, become more agile and cost effective”, but we will do this with the existing processes and cost base…. without a plan to address process and cultural overheads, this just won’t happen

“…most often the very skills that propel an organization to succeed in sustaining circumstances systematically bungle the best ideas for disruptive growth. An organization’s capabilities become its disabilities when disruption is afoot.” – Clayton Christensen, The Innovator’s Solution

“We need to be more innovative”, so you either choose to learn about / invest in innovation, sponsor, support and nurture new projects …or don’t.  One of these approaches has much more chance of success than the other

“you can launch that new thing, but you need to avoid canabalisation”   you just choose to waste your time and money. That new thing ain’t going anywhere. Good companies (like Apple) acknowledge canabalisation, then don’t get stopped by it because its actually just part product lifecyle

Another choice “lets cut costs but culling headcount” but we will do it before / without fixing the underlying systems and processes, all this means is that a smaller number of people are going to end up doing the same amount of work….  With the obvious results in output, quality and staff satisfaction…

Finally a segway into alignment “we want focus, here are five separate targets. “

Alignment .

Getting the company in motion, by ensuring that everyone is working in the same direction…. Sound so simple, but so often it never happens.

Multiple targets – a recipe for disaster… classics include hit your revenue and EBIT targets… or how about maintain share and price? Sound familiar?

What about different parts of the business being aligned? How many of you out there have given operations a cost reduction target while simultaneously giving product or sales an uplift? This causes conflict at best, it also hamstrings your growth. Some managers call this ‘healthy tension”… which is management school bullocks for misalignment

Finally my personal favourite piece of target tripe… manage decline in legacy business (ie maintain the status quo as best are you can) while simultaneously driving radical simplification…. That’s like saying go to war but don’t use guns … what are you supposed to do? Batchslap them into submission?  Have them laugh themselves to death by showing them your impossible targets?

Combine reality, true choice and alignment and you get simplicity and organisational alignment. Trust me (most) people have decent BS meters. They will naturally see if a plan, driver or goal is aligned with what they are targeted with or are doing. To quote Jason Jennings “in great companies everyone knows the strategy, and everyone thinks and acts like an owner”

Now before I get burnt at the stake, let me explain and support my statement with some real life examples. I should also say that as an employee i have experienced the good and bad of employment law and HR policy … (aka i’ve been ripped off).

But I still think my thoughts below have some potential First up let me describe first hand some examples we have to (by law) go through to dismiss someone.

Item one. It should be noted that in NZ it is just as important to follow the exacting process. That is its not just having proof or cause for dismissal. You have to follow the correct process, in the correct order, and in some cases say the correct things. If you don’t then you can end up in employment court.

Example. We Have a staff member who is continuing to under perform, wanted to take 5 weeks leave to go offshore, which we declined , who hasn’t resigned, but is now abandoned the job. Simple you say, fire them and move on! Nope sorry. Because we know they are off-shore we cannot assume abandonment, we cannot hire a replacement because that we pre-meditate their dismissal, and that’s illegal. So we have to wait for them to return (ie run short staffed and under productive) and then go through the process

That process is thus. Have evidence that they’ve done wrong. Invite them to a disciplinary meeting and ask them to bring a support person Explain to them that we are thinking of dismissing them. Ask them what they think of that, how do they feel about the decision. Take that feedback on-board and have a minimum 24 hr “thinking time” (cool down period). Then and only then can we dismiss them. I’ve shortcut this, but this is the process you have to abide by for any “automatic” dismissal according to the dept of labor.

Item two. Restrucutures. In big companies, they have the above issue multiple times. So they save them all up and deal with it through restructures. So instead of dealing with the problem people in a discrete, timely and targeted way, we save them up. Collectively living with the underperformance until such time as we then disrupt large sections of the company with restructures in order to get rid of a few errant performances (and potentially deal with organisations efficiencies, but i’m too cynical to believe that is actually the case)

What if we created processes that meant we as employers could continually cull out underperforming staff? What then? How about better performing business because you have good staff, capably doing the tasks required of them. I think you’d have more motivated staff too. We all know who the dead wood is, and those who create more problems than they solve. In a small business they are poison.  I think most people would cheer the thought of not having to carry them. We’d also benefit from significantly less HR cost, perhaps they could focus more on organisational development then instead?

Good theory, is there evidence? Well yes (more)… “These results suggest that adoption of dismissal protections altered short-run production choices and caused employers to retain unproductive workers, leading to a reduction in technical efficiency”

My own experience of working in the UK and Australia supports this. Those nations rapidly address underperformance in their companies. The result was you don’t have to carry the dead weight, live with the consequence of their often poor decisions and delivery, and a better work environment and bottom line..

Now i’m not proposing Chinese style work environment. The causality of high growth and a lack of workforce regulation and unions is evident, but that to me is exploitative. However I am challenging the need for too much regulation.

I love the post, it took cahones. It also summed up some of the things wrong with economics in my opinion…the pathalogical craving for growth, at the expense of everything else….

Then today I read Umair Haque’s blog on HBR, a post that i wish i had written, and that i think mirrors my one for a couple of months back and it got me thinking that perhaps even Ben’s stance needs challenging.

Perhaps what we, as investors need first and foremost is an moral or philosophical yardstick, then a commercial driver. Think thru some this years big IPO’s, all they do is exacerbate the rampant consumerism Umair describes. Groupon, i’m looking at you. Many others just drive the same outcome more efficiently, like Jive.

What would happen if we diverted out resources to solving genuinely big issues rather than perpetuating what appears to be a failing economic model? Things like clean energy like Google, alternate fuel, food surety, sustainable fishing, water security, education, health, disease control or eradication, population growth, population extinction ….

Am I the only one that thinks that in comparison to those challenges, a gamified business app is completely unimportant, the next iPhone game? Or another daily deal shopping play that only satisfies our consumerism addiction (I have visions of needles).

Predictably there was plenty of hype. And then the carriers put out their plan details (see NBR). Lance Wiggs put it bluntly, “Vodafone’s iPhone 4S plans seem to have forgotten data”. The interesting thing is why.

They’ve had a monopoloy on the coolest device this decade, they must know what this does to ARPU …and yet they do this?

Could it be that in their analysis, they’ve uncovered a nasty fact? That they are killing their network with these devices?

Sounds silly but have a look at this mobile data growth chart

Given growth is nearly flat, prices are flat or falling… maybe it just wasn’t economic? Could they actually want to bleed these data hogging customers.

Remember Telecom and 2Degrees both have shinny new networks, i’m guessing they have uddles of capacity…maybe Vodafone doesn’t…after all they still have 2G in patches

Like is said, almost as interesting as the announcement itself

I should explain why i’ve been absent online. My hiatus from blogging has been for several reasons, it lost its appeal when work decided I should blog for them, more importantly I was disillusioned by how  trivial most of the topics were. I call it the sucking mehness….

I was attending conferences that were still explaining what cloud computing was, arguing about the definitions of what cloud is, whether it was secure …. All the while the world around us was undergoing such rapid turmoil… it just didn’t feel right.

Compared to the major events like the Arab spring, climate change, the Christchurch and Japanese earthquakes, the absurdity or the US default crisis, the European debt crisis and the social change drive by the occupy movement,  I couldn’t muster the enthusiasm to blog about technology. I was worried, worried about this globe of ours and worried about what world my children will live in…

Coupled with that, I’ve been researching some thought provoking topics. Ken Robinson’s the element, Clayton Christensen, HBR, Dan Pink and several others….They all share similar characteristics. They challenge the status quo, but from a point of view of changing the world….

All of this has been going around in my head for a while, and I can’t help thinking that at its highest level, the system is broken…

That the rich get richer is more than a proverb, it is a proven fact, but the hidden subtext is that the rich are also consolidating power.  The age old societal promises are breaking down, and I hope more people like me are starting to question their role in this process, and ask if there is a different way.

I think we seriously need to question many of our underlying assumptions.

Do we truly live in democracies, or is most of it a charade, more an exercise in mass crowd control… and if we seriously question this would we like what we see scenarios like  the police shooting rubber bullets at peaceful protestors in the US being barely newsworthy, and how is that different to the Arab states?

Is all the time effort and rhetoric of organisations like the WTO, UN etc even worth the effort when clearly they are so politically influenced (or compromised, again and again )…

Should companies focus on profits, what role do I play in the many bad behaviours we see because i’m a shareholder expecting ever higher returns

Why aren’t we seriously tackling the role of advertising on our society? Are we really ok with the subtext that they portray and what it does to our children, women and society…

What impact have unions really had over the last 100 years? Apparently nothing, why?

Why do we pay CEO’s so much money based on a promise, and yet marginalise their employees who actually deliver?

I don’t have the answers.  I do have some thoughts

Lets get real. Openly acknowledging political systems for what they are, same is true for the financial systems.

Seriously look at lobbying and the impact of business on politics. This is a form of corruption. End of story.

In fact seriously look at politics FULL STOP. Any system that perversely rewards itself (if i make poor decisions that you like, you will keep me in my high paid important position) should be changed..

If you run a company, having openly states goals wider than profit that you are held accountable too might be a start.. i don’t know for sure. Start it up with equality in mind. Not exploitation

If you own shares, think about what your expectations as an owner are actually driving. You cannot seriously demand increasing profits then moan when another company downsizes, cuts costs at locals expense, takes cheaper inputs with dubious environmental impacts …

Also recognise that if the person in charge of the company tells you that they are going to grow, and most will, they are most probably lying to you (statistically and possibly overtly)… the numbers suggest it will not happen so why demand it?

How about viewing education differently, not the product line that churns out people with the same skills and thought processes who end up competing for the same jobs and coincidently end up creating companies with …you guessed it the same approaches. If you want differentiation, try mixing it up.  Clayton Christensen describes the impact of MBA’s on companies like Sony  in several of his books and articles.

The renaissance drove astounding change, huge culture and societal benefit…and was driven by the arts and most importantly, the diverse thinking the arts provides… yet our policy makers are forcing the education system to eliminate both…. SERIOUSLY is there any wonder that true innovation has slowed and everything is becoming the same.  (hear the sucking now???)

Acknowledge that people are people… they will protect their interests above all else. Why waste your time fighting that?

Put things in perspective. In the scheme of things does arguing about cloud definitions make a monkey’s difference?

Manage your own consumerism… I’m battling this daily. It isn’t easy, but I personally find distinguishing between needs and wants is valuable.

Accept responsibility for your own actions….. Greece borrowed a tonne of money, so has the US and many other nations, apparently feed by consumerism, not assets acquisition…. Why shouldn’t they face hard times fixing their poor decision making?  Smoking kills, its well known… in my country there is government funded insurance / healthcare provided to these people who decided to ignore the overwhelming evidence and still smoke… why?

Question seriously advertising. Not just the above the line message but the deep subtext… it doesn’t feel right that products make people feel insecure or captialise on it…Educate people about what advertising does and how they are impacted on it.

While we at it, how about turning the thing on its head and use advertising to raise self esteem, celebrate those, like teachers who, with the right resources can and do reall make a difference.

I’m sure there is more….