Thursday, June 20, 2013

A guide to mapping

Whilst there are many methods and mental models that can be used for mapping a business environment, the act of mapping is a critical step in determining strategy. I'm always surprised by how many companies create strategy with what can only be described as poor situational awareness.

I've created a basic video in which I went through a process of mapping that I use and covered some of the fairly basic principles.

Link to Basic Introduction Video

I've been meaning to turn this into a mini-series covering the following - alas, I haven't found time. Someday, maybe I'll get to the full list ...
  • Strategy and why it matters (the why)
  • General principles of mapping (the where, viewing the chessboard)
  • Detailed principles of mapping (eg. a step by step guide from needs to map)
  • Diffusion vs Evolution
  • Value chains as a way of describing organisations
  • Changing characteristics (uncharted to industrialised) and why one size doesn't fit all.
  • Componentisation and Creative Destruction
  • Co-evolution of practice with activity
  • Inertia (a very basic introduction to the concept)
  • Red Queen Effect (the need to adapt)
  • Economic cycles (peace, war and wonder)
  • Formation of New organisations (characteristics of the Next Generation)
  • Use of ecosystems (e.g. ILC)
  • Basic manipulation of the environment (e.g. impact of open, a defensive play of attacking the why)
  • Various strategic & tactical plays (tower and moat, the dark arts, the practice of using open as a weapon, bayesian approaches, using constraints, barriers to entry etc)
  • Finer points of playing the game (e.g. volume effects & Jevons paradox, degeneracy, sustainability, resilience and systemic failures, power relationships, loss of control points through commoditisation, the different forms of capital inertia, limits created by the Red Queen effect, measuring opportunity, industrial profiles, demand and worth based techniques, Salaman and Storey Paradox, Ashby's Law of Requisite Variety)
  • Different types of systems (simple, complex and chaotic)
  • Different types of ecosystem (e.g. two factor markets, competitive utility markets, supply vs consumer ecosystems, consumerisation and switching the control of evolution from one ecosystem to another
  • Impact on organisational structure (e.g. organisational profile, focus of the firm, structure - pioneers, settlers and town planners, the fallacy of business alignment, building on theft)
  • Need for multiple cultures in a single organisation
  • Question of predictability (e.g. finding weak signals, what is and what isn't predictable)
  • Managing flow (feedback loops, OODA, rapid increases in un-modelled data etc). 
  • Macro economic policy (Why Hayek and Keynes are both right, gaming the macro environment)
There are many ways of mapping and there are lots of interesting posts out there covering mapping in one form or another.  Whichever method you use, it's worth remember you won't be able to determine the why of action (why is a relative statement of why here over there) without first identifying where you can attack.  It doesn't matter whether you're building a line of business or looking at a specific project - mapping should always be a starting point.

Finally, yes I'm writing the whole lot up into a book. It's currently 260 pages, needs a lot more work (when I can find time) and lacks the attention of an editor.  None of this stuff is new, it's more about survival than gaining advantage.  Anyway, I will eventually finish it off and at which point, you'll be able to see how deep this particular rabbit hole goes.

Saturday, June 08, 2013

On Prism

The intertubes are all aghast at the news of US intelligence surveillance. There's ample discussion on the EU needing strong data protection laws (which we already have) and counter examples of why it won't work.

There is a far simpler and better solution depending upon your goals. Prism shouldn't be viewed as a calamity but an opportunity and we should learn from China and game the market. Regardless of the trade agreements in place, parliamentary sovereignty of EU and the various nation states is absolute and there is no reason why given a will to do so that a ban on US internet giants (even if only temporary) cannot be applied. This would naturally create a vacuum for these services which then could be filled by local EU services with appropriate funding.  From a national and EU security stand point this is beneficial along with providing a welcome boost to local economies remembering that many of these giants have been accused of paying little taxation in parts of the EU.

Hence my suggestion on how to exploit the saga is as follows :-

1. Declare outrage at the unwarranted intrusion of PRISM on privacy and declare this as a breach of trust.

2. Introduce EU wide legislation temporarily banning US internet service giants and removing any obligation under trade agreements due to the breach of trust.

3. Introduce an EU Venture Capital fund of 100 Billion euro's to act as seed capital for building of equivalent services. Develop EU's own technology capability, ensure technology that is built is open source, provide funds in small grants and encourage a growth in start-ups which can then be supported by the normal VC route.

4. Strengthen our data protection laws and change the rules of corporate ownership thereby ensuring that critical infrastructure (as opposed to normal goods and service through the market) is owned by EU based companies. By critical, I also mean communication mechanisms along with computing infrastructure, power, roads, military etc. You may as well obliterate IPR in this area as more of a hindrance.

5. Once any local services have grown to a large enough scale to out-compete the US equivalents then relax the ban and related rules, so our own industries can expand outwards.

Under the above, the goal would be to build our own tech industries, operating under EU law, taxed under an EU jurisdiction and encouraging the future development of our own capabilities. Yes it would be a nuisance, yes it would be painful at points but it's better to do this now than to let our dependency grow and weaken our strategic position further in this global game.

Prism is not a negative but an opportunity to be ruthlessly exploited. The reasons for the game can be explained to the citizen's of Europe. Most will understand the benefits to our economy, to our industry, to privacy, to protection and national security for not being dependent and most will accept the inconvenience for a few years if the EU is open and transparent about this and new services flourish.

Is it time for the EU to show some teeth, to game the market to its favour and to act more like pirates? It singularly failed to do so in the economic crash, should it let this opportunity go wanting? At the very least the EU could threaten this in order to bring a more favourable outcome in terms of legislation, tax and the economy.

Finally, the irony that I'm using G+ & Blogger to argue this is not lost on me. We could really do with our own EU equivalents and a functioning market to limit our dependency. Imagine telling a non EU company to pay tax when a chunk of your critical economic infrastructure runs on their servers with nowhere to go.  It's not a strategically strong position.

Stop thinking of PRISM as a calamity but as a golden opportunity for the EU to exploit.

--- Added 8th June

Just in case there is some confusion over my views here, I thought I'd clarify a few things.  I'm a supporter of the work the UK Intelligence Services do though obviously this needs public Judicial and Parliamentary oversight.  I'm also a big fan of Google but despite this, I'm even more in favour of the EU taking advantage of a situation, even if that requires threatening (and following through on) a ban and investment fund. Privacy is simply the vehicle to gaming a more desirable outcome including privacy, taxation and our economic position.

You never negotiate from a position in which you inherently declare yourself as weak or that you're bluffing.  Equally you never let slip an opportunity to change a market in your favour. PRISM is an opportunity to exploit and exploited it should be.

In the past, to take such action would be fairly declared as protectionism because there was no other reason. Fortunately in this case, PRISM gives us all the reason and allows for the EU to declare a 'Breach of Trust' even if EU states were using it (it's easy to say we were misguided, didn't realise there were secret courts etc).  The approach is not therefore blanket protectionism but a targeted approach to a specific industry to resolve this and other issues (taxation) to our favour.  I'd like to see certain companies next time they stand before Margaret Hodge and the Public Accounts Committee worried that if things go bad, it could go really bad across Europe.

In the global game of politics and economics you have to be willing to engage in a bit of rough and tumble unless you intend to be a doormat.  You can say two wrongs don't make a right, leaving the way open for your opposite number to commit both wrongs ... sorry, but I prefer my politicians to have a bit more ruthlessness and cunning to them.  Oh, and if that means EU nations using PRISM or providing processing for PRISM whilst at the same time beating up US companies for being part of PRISM or threatening bans and introduced VC funds (or acting upon it) then ...  all good for me.

Politicians should always be pirates working in our favour.  This is a gift horse which has been handed to us, an own goal by the US administration and we should take full economic advantage in the same way that the EU should have ruthlessly exploited the banking crisis.

Thursday, June 06, 2013

IBM buys SoftLayer

My first comment is bold move. When it was raised that IBM might buy $RAX, I was very unsure as to whether IBM had this fight within them.  Looks like Rometty is having some effect.  

My second comment is ... CloudStack.

I certainly don't hold with the increasingly common view that OpenStack has won and is the way forward.  In the very early days I was extremely positive but that quickly degenerated.  I hold a different view, in my world without signifiant levels of investment and overcoming the collective prisoner dilemma then the market around OpenStack will not form and this is a wasted opportunity.  That is why I called OpenStack a dead duck and I haven't changed my position.  I'd like them to succeed and in my honest opinion the problem is not with the community and engineers but how this project has been led and especially the nonsense on differentiation with Amazon.

Still, I regularly get people telling me I'm wrong and that OpenStack will rule or is ruling depending upon how fervent the believer is. Bah humbug. 

BUT did IBM just skip buying into one of the founders of the OpenStack world and instead plummet for a major CloudStack shop?  Did IBM really chuck $2Bn in investment into a rip and replace rather than $5Bn into Rackspace? Yes, the team at SoftLayer is focused heavily on commodity provision, they have that automation background, they have solid revenues but this doesn't sound quite right. 

Now, the IBM press release says "IBM intends to expand SoftLayer cloud offerings to include OpenStack capabilities" which means ... nothing at all.  If you've made a big commitment to OpenStack  then you're going to say that you "intend" no matter what.

I know what the press release says but this feels like a hedge. It'll be interesting to see what IBM does next.  Anyway, congratulations to SoftLayer and IBM.