Tuesday, July 29, 2014

Call it a gardener

In response to James Urquhart's post on the 'Enterprise Architect as an Enterprise Ecologist' and the following discussions on whether this is an Ecosystem ecologist or Enterprise ecologist, I'll repost a part of my January 2013 post on Ecosystems.

In essence the supplier encourages others to innovate, leverages the ecosystem to spot diffusion of successful changes and then commoditizes rapidly to component services. The cycle of Innovation – Leverage – Commoditise (ILC) is then repeated for subsequent higher order systems.

The component services are in effect your “platform” (though I prefer the term “garden”) around which you carefully nurture and grow an ecosystem. Like any gardener you’d have to balance this eating (or harvesting) of the ecosystem with the benefits that new components bring in growing it and the overall health of the garden (i.e. level of disquiet over the occasional munching session). 


If you're going to call the role something ... call it Gardener.

Sunday, July 27, 2014

When strategy makes me sad ...

Many years ago, I was CEO of a Canon subsidiary (between 2003 to 2007 having formerly been the CIO). Under my stewardship this profitable SME had developed the first PaaS (2005), an internal private IaaS (2003) and was involved in technology from the use of mobiles phones as cameras to 3D printing to online photo storage to ... well, there was a long list. There was an awful lot of future industry that Canon was poised to have a shot at owning.

However, these and a host of other capabilities including arguably one of the finest development teams in the world were all lost when the parent company decided to focus on 3D televisions, remove its European R&D capability and outsource all our services. Many of the areas of technology that I've subsequently been involved in over the years - from Cloud to Devops to Gov to Mapping - were strongly influenced by that group in Old Street, London. Of course, this was when Old Street was barren of technology companies bar that one troublesome, open source focused, hack day driven, agile company - Fotango.

So, what makes me sad? This report on "Canon Inc. Corporate Strategy Conference 2014". You see, I still have some fond memories of Canon and this report is disturbing reading.

First, the language is weak throughout - "Creating Outstanding Hit Products", "Concentrate on Technological Themes that will Lead the Way to the Future", "Develop game-changing products", "Capture needs of people that desire to take even better pictures" and "Secure overwhelming advantage" are more cries for help than actionable insight. The elements on developing a sales network in emerging markets reinforce this and seem to be one of those epic fails of sensible CEOs.

There are some good bits here, DNA diagnosis to immersive tech to PLED tech are all interesting spaces. It's also finally good to see 3D printing make a mention but given that I wrote my first report on 3D printing technology for Canon in 2003, it's over a decade late.  However, despite the good bits there is no obvious coherence to this. It's more a 'nice story' than a surgical strike.

I do worry about Canon. Substitution effects of smart phones, liquid lenses and other changes heading their way are going to be harsh. I met Fujio Mitarai all those years ago on the Canon Corporate Executive development program (Oct 2003) and immediately got into a warm discussion over the future of 3D printing etc. He is a really interesting person to talk to, a pleasant chap but I do fear for their future. I imagine it's going to be a tough old decade for them.

How to navigate without a map?

People often talk about competition between companies as being like playing a game of chess. Unfortunately it's a game of chess in which few are able to see the board i.e. the landscape that an organisation operates within. For the last decade, I've been using a mapping technique to describe competitive environments and exploited them accordingly.

But what if you don't have a map? What if all you have are box and wire diagrams like IT systems or business process diagrams? Well, without a map then the most common technique for strategy appears to be copy others (i.e. backward causality). Without a map, the most common technique for describing such a strategy is story telling.

There's actually a lot of precedents in the physical world. Before people had maps they often described the routes of long journeys through story telling. A recent example of this to come to light is the use of astronomical markers in Aboriginal songs.

So, how do you navigate without a map? Well, you tell a story.

Saturday, July 26, 2014

Four things that annoy me with strategy.

On Disruptive Innovation.
There are two major forms of disruption.

The first form is disruption by unpredictable change such as product to product substitution. This is tough to defend against because of inertia that we might have to the change (due to past business success etc) and because the speed at which change happens. Such disruption is a classic case of Innovator's dilemma.

The second form is disruption by predictable change such as product to utility substitution (e.g. cloud). This is easy to defend against because of the timespan and because inertia is solvable given time. However, companies still get disrupted because executives often have poor situational awareness and can't protect against the clearly visible storm despite getting warning notes ten years before its arrival. Disruption here is not a classic case of the Innovator's dilemma but instead a classic case of "the CEO is a muppet". 

The two are not the same. Calling everything disruptive innovation might make the execs feel better but there are two forms - classic innovator's dilemma and the CEO is a muppet. Don't confuse the two.

CEOs Playing Chess.
We all know that activities evolve but you'd be horrified to discover how shockingly poor strategic gameplay is in some companies. Ok, I'll spill the beans - beyond UK & some other Govs, some high tech and other large organisations then I rarely see an organisation that has a clue what it is doing. Some don't even know their users' needs. Of course, a company will have a large strategy document but generally those documents are hopeless. Situational awareness? Forget it, why do you think so many companies are being disrupted by predictable changes like cloud? 

I usually laugh out loud every time I read HBR (Harvard Business Review, a hopeless rag IMHO) and someone proclaims that companies are moving beyond playing chess. It's utter tosh. Most companies can't even see the board. Why do you think someone like me can walk in, take over the entire cloud market for a couple of $100K and steal the future from a company worth billions. That's exactly what I did with Ubuntu vs RedHat and every other operating system out there. Oh, and by the way - RedHat is a much better player than most companies in their industry. CEOs Playing Chess? A few definitely but most aren't. 

I happen to use a mapping technique based on user needs to visualise the environment (a talk and slideshow on this from OSCON 2014 can be found here), though there are other techniques out there. It's almost a decade old (circa 2005) and I developed / refined it with a good friend of mine James Duncan.

Oh, people often say aren't I being rude to CEOs here? I created the technique when I was CEO of a high tech company (acquired by Canon) because I new full well that our strategy was just made up horseshit albeit with a lot of common memes for the time. We had no way of visualising the environment. We weren't playing chess. No-one was.

Most of my counter parts knew their strategies were just as bad. We've all listened to endless twaddle by strategy consultants and read endless gibberish on management strategy. The simple truth is that if you can't visualise the environment then you're not playing chess, you're simply shooting in the dark.

The mapping technique is all creative commons licensed and is being used in UK Gov and other places.

Figure 1 - A Map


Have you heard about the new Platform play?
We all know that as activities evolve to more of a commodity they become suitable for provision as services as part of a platform play. Platforms are simply the tool by which you grow and exploit ecosystems and in certain industries it's no longer businesses that compete but ecosystems. There are many different methods of exploiting ecosystems from 2 factor markets to ILC methods and the use of ecosystems as future sensing engines. 

Figure 2 - ILC.

These games were being played pre 2003 but somehow the concept of 'Platform' is becoming 'new' again. Guessing there's a bunch of bored academics / consultants wanting to make a name for themselves. 

Ok, a piece of advice. If the following concepts :-

1) Using a platform to build and exploit an ecosystem in order to sense future changes.
2) Using open as a means to manipulate the market.
3) Using IT as a weapon

... don't fill you with boredom then get a broom and apply for a job as a janitor. If any of these concepts seem vaguely interesting or new, as opposed to well rehearsed, well repeated tactical plays then please don't attempt to do anything with the word strategy in it. Did you just decide fifteen years ago that you would stop learning? Because you're not a strategist, you're a laggard, a dinosaur and so far behind the curve that you should not endanger your company any more. 

We should be a composable enterprise.
If the idea of building an enterprise with components in a 'composable' fashion in any way seems new then please read more ... seriously, I mean read more books. If you've somehow missed this idea over the last twenty years then you've probably missed an awful lot of stuff. Switch off the TV, read more. However whilst the concept is old, the timing over the last five years is about right and so examples of good practice should start to emerge.

Tuesday, July 22, 2014

Notes on organisation - Aptitude and Attitude

This is something I'll return to but I'll put this up as a starting point. It relates to the use of pioneers, settlers and town planners within an organisation and is the bit I missed from my tutorial at OSCON. It's also something I'm working on actively at the moment. 

Be warned ... these are rough notes.

When looking at a new line of business, I tend to prefer to describe the entire line of business as a Unit. Normally, I'd expect to see a well defined fitness function (describing rules of engagement, what it does, how it is to be measured, measures against user needs etc) and some form of cell based structure (e.g. Amazon two pizza rule) with each cell described by its own fitness function. Please note, this approach is based fundamentally on a focus on user needs (i.e. maps) as opposed to financial value.

Each cell is autonomous (within the fitness function) and the fitness function is defined, measured and evaluated by the executive in charge of the unit. If there are too many cells in one unit, I'd normally expect to see this broken down into multiple units each containing cells with autonomy & separation between both cells and different units.

General rules are :-
  • All work is defined by fitness functions (rules of engagement, user needs, mechanism of measurement etc)
  • All work is done by small cells (i.e. teams of less than 12) providing services / products etc to others. Each cell is covered by its own fitness function and has total autonomy over how it does things. 
  • All interaction is through service / product interfaces. These act as the boundary, the promises one group makes to others.
  • A unit is a logical grouping of one or more cells. It has an executive responsible.
  • The executive in charge of a unit is responsible for measuring, defining and refining fitness functions of all cells within their unit.
  • As cells become too big (i.e. greater than 12), they are subdivided into new cells within the unit. Each cell will have their own fitness functions.
  • As a unit becomes too big it is subdivided into new units, each with their own executive and fitness function.  
In figure 1, I'll apply these principles to a map of a new business. I'll assume you're familiar with mapping, if not then start here.

Figure 1 - Basic structure, derived from a map.

Now obviously each cell is going to require different skills (i.e. aptitudes or capabilities if you wish). It's the cells responsibility to ensure it has the right skills.

However, there's another factor in here. Attitude. When we look at a map, we know that activities evolve from uncharted to industrialised and the methods, techniques, type of people and even culture changes. The type of engineering you need to build a highly novel act (i.e. genesis) requires experimentation and agile techniques. The type of engineering you need to build a highly industrialised act requires a focus on volume operations and six sigma.

Figure 2 - Different Methods


Hence, when looking at your environment then along with aptitude (finance, engineering, network, marketing etc), attitude also matters.

Figure 3 - Importance of Attitude.


To resolve this problem, you need to populate the cells with different types of people - pioneers, settlers and town planners. All are important. It's not realistic to think that everyone has the same attitude, some are much more capable of living in a world of chaos, experimentation and failure whilst others are much more capable of dealing with intensive modelling, the rigours of volume operations and measurement.

Figure 3 - Populate by Attitude.


One of the things that populating by attitude enables is a process of theft in order to mimic evolution and the natural effects of competition i.e. settlers steal from pioneers, town planners steal from settlers and pioneers build on the service that town planners create.

Figure 4 - Mimicking evolution through theft.


But how do you populate the cells? The cells have autonomy after all. Well, again the use of maps makes it easy for everyone to understand and challenge the type of attitude needed. The cells obviously need access to people with the right aptitude and attitudes. The net effect of this is you end up with two branches of an organisation, both defined by fitness function. One branch is focused on work through a cell based structure, the other branch is focused on preparation (the development of aptitude, attitude and cultures to support this).

So,

A) The work is divided into units and cells, defined by fitness functions (as above) with each cell having autonomy and separated from others through services or products produced or delivered.

B) The preparation side has different responsibilities. First, it is subdivided into the three structures necessary to enable three culture covering the different types of attitude. I know everyone says an organisation needs one culture, I fundamentally disagree. It needs three.

Each of those structures (Pioneers, Settlers and Town Planners) have multiple aptitudes (finance, HR, engineering etc) and an executive in charge (a chief pioneer, a chief settler etc). The responsibilities of the executive in charge of each attitude are threefold.

1) developing the necessary culture and skill required for that particular attitude i.e. for pioneer engineers a focus on agile and experimentation whilst for town planner engineers a focus on extensive mathematical modelling and six sigma.

2) ensuring that required skills (of the right attitude and aptitude) are available to cells & units.

3) identifying opportunities for theft i.e. the job of the chief settler is to identify all those 'pioneer' cells whose work is becoming suitable for productisation and hence to steal from them by creating a new cell to meet the fitness function and replace the existing cell, forcing its pioneers to move on to more 'pioneering'. Ditto the chief town planner whose role includes industrialising all the 'settler' cells to more utility services.

Figure 5 - Overall structure.


The matrix structure of aptitude and attitude is used in preparation (i.e. creating the right culture & training in order to create effective cells). The executives in charge of the training function are responsible for ensuring this preparation and that a process of theft occurs within the working environment forcing cells to evolve. This enforces adaptation in terms of evolution.

The working environment consists of cells (grouped into units) delivering against defined fitness functions and growing (as per a starfish model) to occupy the required space. As they create new cells, they steal from the preparation side any people they need. The cells control their work themselves (within the confines of a fitness function) and the only time they lose control is when a more appropriate cell (as in attitude) comes along and steals their work from them. The role of the executive function on the work side is in creating, monitoring and refining those fitness function. To spell it out one more time, the role of the executive side is not to tell the cells of work how to run themselves or how to organise themselves etc. The role of the executive function is to understand the environment and to adapt fitness functions according to any outside threat.

If you want a military analogy then think of the preparation side as administrative division (e.g. Divisions, Regiments or Battalions) where certain culture, attitudes and aptitudes are developed. Now, think of the units (the working function) as a tactical battle group, an independent fighting force consisting of smaller units made up from members from the administrative divisions. It's not a perfect analogy but it's close enough.

Now this model also complements platform approaches and the whole ILC technique for development and exploitation of ecosystems with town planners building the core services, pioneers developing new concepts on this and settlers exploiting both internal and external work (through the use of consumption data) to identify successful changes to be introduced. It also helps when it comes to the question of open source and how to implement 'open source on purpose' i.e. town planners have an incentive to industrialise components and push activities to open.

Parts of the structure are or have been implemented in different places. No single organisation seems to have covered both elements of aptitude & attitude combined with the needs of cell based structure. This is simply an area I'm exploring because I don't agree that our existing organisational structures (even Amazon's) represent the pinnacle of organisation. They are simply just a lot better than what most companies use.

Playing chess with companies

From my OSCON tutorial, I've added some basic slides on what we covered.

Also added my keynote from OSCON 2014



A few things to note.

The mapping technique described above is used to create what are now becoming commonly called 'Wardley Maps' (to avoid confusion with other value chain maps / strategy map techniques). The technique is creative commons share alike. This doesn't mean you have to make your own company maps creative commons but rather that no-one is going to turn up and say you have to pay some license fee to a strategy consultancy for building one. I would ask that if you use this stuff then cite the technique as creative commons share alike. An example map is given in figure 1.

Figure 1 - An example map


The best way to learn about mapping is to start to build one and share it with others. I recommend just picking a system or line of business and having a go. Don't worry about making the map perfect, it's far more important to get feedback from others. I have a step guide here on the process of building a map and an earlier attempt at writing a book (actually the 3rd attempt) which starts here. Don't expect a book soon, I alas have very little time to write one. By all means, gain some experience in mapping and write your own.

I've been doing this form of mapping from 2005 (almost a decade now) since I first developed the technique. Yes, it'll take time to gain experience in manipulating an environment but remember maps enable people to discuss an environment, they are not just about management techniques and scenario planning but organisational learning. I can't emphasise enough how important it's to just get started, once you get good then comparison between maps (both different business units and against competitors) is always useful.

Mark Thompson and Jerry Fishenden have written a book on digitizing government which has a section on Wardley mapping and is being published in November. Whilst I conducted the early research behind mapping, formalising the evolution curve, determining the driving forces of competition and examining common economic patterns, a co-conspirator of mine was James Duncan. If you do find the technique useful, it would be great if you could drop myself and James a note telling us so. My twitter handle is @swardley

I don't provide consultancy work on mapping as I work for a private members only research organisation known as the LEF. If you are using mapping then I'd love to hear about it. You can either ping me on twitter or if you're happy to talk about experiences in public then leave a comment here.

For those who missed the tutorial, I'll submit to do another talk at OSCON in 2015 - fingers crossed. Thanks also for all those who scored my tutorial and keynote. I'm very humbled by this and the kind comments. This is very much appreciated.

Thursday, July 17, 2014

IBM ... a cunning fox?

In the battle between companies, ecosystems are force multipliers. Correctly used, they can increase rates of innovation, customer focus and efficiency simultaneously. The trick to doing this is a focus on consumption data.

Now, IBM has initially played a poor game in cloud and the battle for IaaS was lost. My eyebrows were raised however when it announced bluemix. This was a good move which enables them to to build a platform (ideally over several infrastructure providers) or even a market of platform providers and later on play substitution games in the IaaS space. However, this move could just be luck.

Next up is the deal with Apple. At first glance, this would seem to be in the long term favour of Apple as the applications provided in the store would feed consumption data into Apple. Admittedly Apple is not the best ecosystem player out there but the advantage would be to Cook. In order to swing the game in IBM's favour then you'd have to ensure that IBM collected the consumption data and Apple only had a generalised view. I will admit that when I first read an article on the deal, I discounted the possibility of IBM doing this and thought that IBM should push for a merge. I didn't think IBM was canny enough to play the game.
To create such a swing in IBM's favour then you would need to have all the applications provided on a bluemix service provided by IBM. Turns out I was wrong to discount IBM. This seems to be the plan. This is smart. Very smart. The advantage long term seems to be with IBM and not Apple.

As the old adage goes "Lightning doesn't strike the same place twice". You don't make good moves like this through luck. I don't know what has changed in IBM or who they've hired but somehow they seem to be making the right moves. The question is whether in the heart of IBM is a extremely dangerous and cunning strategist? Has IBM found its own Themistocles?

I'm certainly not going to underestimate their moves again. IBM is definitely one to watch and with such play, then anything is possible. The future for IBM has just got a lot brighter in my opinion.

--- Update 17th July

I was just asked a rather interesting question of the form that this is only two events and since any two points make a line then you can't extrapolate. Alas, this isn't a measurement of physical properties and correlation between but a question of probabilities. If someone wins the lottery one week and then wins the lottery the next week, the probability of such is extremely low and it is perfectly reasonable to ask questions. You don't need them to win the lottery fifteen weeks in a row in order to draw a line. The probability of making a good move by random is relatively low in business due to the wide variety of permutations of choice and action. Two good moves are unlikely to be purely by chance, not impossible just unlikely.

Monday, July 14, 2014

Micro Services - the necessity of memes

In 2002, Fotango (the subsidiary that I was CEO of) embarked on a program to introduce component web services throughout the organisation. By 2005, we had component web services, our own private infrastructure service combined with configuration management and deployment systems (known as Borg), we had BYOD, continuous deployment & automated testing systems. We were agile, we extensively used and contributed to open source, we had started mapping, and we were launching our own platform as a service etc. Of course, we then had the usual big name consultants persuade the parent company that the stuff we were doing - 3D printing, mobile phones as cameras, utility computing - was not the future and the future was 3D Television ... duh. 

Anyhow, this is what I don't get. Micro services has become a big thing - good. But micro services has also become a 'new' thing. Why? These concepts aren't new. Building organisations with small components provided through services is circa 2002 and the concepts existed well before this. So, why do we have to continuously create 'new' terms to describe what is already happening.

I've seen this so many times - Enterprise 2.0, Cloud, DevOps - that I assume there is a necessity in creating a new meme for pre-existing and often fairly well established practices or concepts. It's a though we need the meme to crystallise action around a concept but of course that concept has to be spread before the meme can establish.

I would be interested in knowing if anyone is working on the necessity of memes?

Friday, July 11, 2014

A quick route to building a strategy ...

Need a strategy? Can't be bothered to understand your landscape? Don't care about situational awareness or gameplay? Need it fast? Minimal effort? No problem!

Take all the following words ...

digital first, agile, open, innovative, efficiency, competitive advantage, ecosystem, networked, collaborative,  learning organisation, social media, revolution, cloud based, big data, secure, internet of things, growth, value, customer focused, digital business, disruptive, data leaders, big data, insight from data, platform, sustainable, revolution, culture.

... then add some other words in-between and you're done! 

Sounds too hard?  Ok, just add the words here.

Our strategy is [..]. We will lead a [..] effort of the market through our use of [..] and [..]  to build a [..]. By being both [..] and [..], our [..] approach will drive [..] throughout the organisation. Synergies between our [..] and [..] will enable us to capture the upside by becoming [..] in a [..] world. These transformations combined with [..] due to our [..] will create a [..] through [..] and [..].

Still too hard? Ok, these are some I made earlier. Pick one.

Strategy 1
Our strategy is customer focused. We will lead a disruptive effort of the market through our use of innovative social media and big data to build a collaborative cloud based ecosystem. By being both digital first and agile, our open approach will drive efficiency throughout the organisation. Synergies between our culture revolution and networked learning organisation will enable us to capture the upside by becoming data leaders in a digital business world. These transformations combined with insight from data due to our internet of things platform will create a sustainable competitive advantage through growth and value.

OR

Strategy 2
Our strategy is collaborative growth. We will lead a customer focused effort of the market through our use of digital business and internet of things ecosystem to build a cloud based revolution. By being both innovative and open, our social media approach will drive competitive advantage throughout the organisation. Synergies between our data leaders and agile culture will enable us to capture the upside by becoming networked in a big data world. These transformations combined with disruptive insight from data due to our digital first platform will create a learning organisation through  value  and efficiency.

OR

Strategy 3
Our strategy is innovative revolution. We will lead a growth effort of the market through our use of customer focused competitive advantage and disruptive social media to build a collaborative digital business. By being both data leaders and cloud based, our ecosystem approach will drive insight from data  throughout the organisation. Synergies between our platform and open culture will enable us to capture the upside by becoming digital first in a networked world. These transformations combined with value due to our efficiency will create a sustainable learning organisation through agile and big data.

Worried it's not big enough? Print some random posts, reports and graphs from the internet, add a couple of pages from the Art of War, call it background material.

Worried it has no value? Send a random person a gargantuan cheque with a note on which strategy you liked. As soon as they cash it, record it as 'consultancy fees' and assume whatever you want. As we all know, the bigger the cheque the more value ... right?

... my work is done.

Or alternatively, try and understand your landscape BEFORE building a strategy.


--- Saturday 12th July

What started as a joke has struck a bit of a nerve with a couple of people. I've already received some examples of real company strategy that seem painfully close. If you're aware of a real company strategy that mimics the above then please let me know. You can DM me on twitter. No need to reveal the company name, I'm interested in the content and how pervasive the duplication of memes / phrases and other terms are. I'll publish any conclusions I find here.

Also, thanks to Benoit I've been made aware of this HBR article on 'How to Execute a 15-Word Strategy Statement'. Now, there's nothing wrong with brevity, in fact brief and specific statements with clear understanding of the landscape are good - "Hold the Persians at the hot gates and cut off retreat with a naval assault".

However, brief and vague statements without an understanding of the landscape, where to attack and why one space over another are not helpful even if they are fifteen words long  - "Let us be agile, fight more efficiently and use innovation to disrupt the Persian army"

--- Tuesday 22nd July

This is brilliant, an auto strategy generator created by Bill West. Guaranteed to mimic most others competitors :-)

Monday, July 07, 2014

Prime ... to be or not to be?

I happen to use Ocado for my weekly shop.

I happen to use Netflix for video streaming.

I happen to use O2 for my mobile.

I'm avid fan of all of these services but they have a cost for provision. When I combine all those costs together it adds up to quite a monthly sum. I recently looked at the use of Amazon Prime. It has some aspects of a free kindle book rental, videos and free next day delivery but as an addition the total cost becomes too pricey for me. 

For me, it's more a question of substitution and my loyalty can be bought by meeting my needs. Amazon is apparently going to be launching Fresh in the UK.  Amazon is launching Fire though in the UK we have to 'stay turned' for the moment. At that point, Prime might become very attractive indeed. 

But will competitors combine in some form to make an attractive counter offer? A Netflix / Ocado  / O2 bundle has appeal (for me) - should the price be reasonable and should it be easy to manage. This begs a question - where are the consumer brokers providing a bundle of services between multiple companies at a single affordable price?

From banking to power to video streaming to my weekly shop, there seems to be ample scope for consolidation. Maybe it's too complex. However, as with our electricity grid where we have a separation between utility companies and generators ... does an opportunity for such bundles and brokers exist or will I just end up eventually choosing Prime?

On Pseudo science

I read a post today by Dave Snowden on the followers of Elliott Jacques and the Requisite Organisation. The post talked about pseudoscience, acolyte syndrome and cultism and the language seemed pretty strong to me.

One of the comments to this post was 'I get accused of this (Acolyte Syndrome) by my wife, all the time, in reference to Cynefin' which made me think, as useful as Cynefin might be - is it falsifiable? Does it predict? Is it not pseudo science itself?

The demarcation between science and pseudo science is a long fraught affair with numerous luminaries from Karl Popper to Paul Thagard. Now this boundary is permeable. Activities often move from science to pseudo science and vice versa over time. It's not a question of what is right or what is more useful but instead what is science.

Falsifiability is an important part of that question both for Popper and Thagard. It's fair enough to say it is central to Popper but even Thagard asks whether the supporters of a concept 'actively attempt confirmation or disconfirmation?' 

Now, I'm not aware of any predictive capabilities of Cynefin. It's a sense making framework, a classification system to understand an environment. Without any predictive capabilities, how can you test it? How can you measure it? For me, it falls on the pseudo science line but then so do many useful management concepts and theories.

Hence, I thought the original post was a bit rich and called it out.
What followed was an interesting conversation which covered some statements on predictability
and some personal views
Now, this is interesting for two reasons. First, pseudoscience is simply a classification and many useful things are pseudoscience (e.g. a lot of economic debate is in this camp). In my experience, whether something is viewed as derogatory depends mainly upon the perspective of the viewer.

The second interesting point is that though Snowden claims Cynefin has no predictive capability (which means it is not falsifiable) other supporters of Cynefin claim it is scientific.
So, I asked Dave

To which, I received the response
To be honest, I found it difficult to get a simple 'yes' or 'no' answer and Dave has kindly agreed to write a post to explain this and why I'm wrong.

So what is Cynefin? Well, I happen to view it as useful way of examining an environment but given it's not predictive then it's not falsifiable nor scientific. Now whilst Snowden makes no claim to it being scientific, his supporters do.  Hence, I'm going to put this into my pseudo science classification.  I don't see this as a negative but instead what something is. There's a lot of useful and often subjective concepts in that classification e.g. Gartner Hype Cycle.

--- Update 7th July

I just came across this excellent post by Tom Graves on whether 'Cynefin is a cult'. It describes how Cyenfin fails the 'science' test which is a paradox because 'most of us find that Cynefin is a very useful tool'. It provides a pretty hefty set of questions to be asked from isolation to non-falsifiability.

Overall the post is a fascinating read which concludes with 'Is Cynefin a pseudoscience, a cult? Short answer, as we’ve seen above, is “probably not” – but you’ll probably need a little bit of magic to help you prove it!'

For me, this is personally interesting because I have that same paradox. I find Cynefin useful but not scientific despite any claims made by supporters. In the same way I find the Hype Cycle useful despite knowing it's not based upon any physical measurement but instead aggregated opinion. The reason why I find them both useful is that they help encourage discussion.

I do understand Dave Snowden's view that 'pseudoscience' is uniformly derogatory, though I don't share that opinion and I certainly don't express this for that reason. His original post raised some questions in my mind over what is and isn't science. There maybe a missing 'useful but not quite scientific' category out there e.g. a proto-science.

Sunday, July 06, 2014

Tower and Moat

I've just read this VentureBeat article on 'Why old-school tech giants need M&A to stay relevant' in which it talks about the importance of mergers and acquisition to companies like SAP. I don't know much about VentureBeat or whether this article is try to drum up business but there's a big warning here.

Before going on an M&A spree then you better know your competitors, especially if you're up against someone with a tower and moat play (which I suspect Salesforce is using). To summarise the tower and moat, I'll use the map from an earlier post on epic fails of sensible executives.

Figure 1 - Map


Notes on map.
  • A[1] to A[2] represents the change of an activity from product to utility. Let us suppose our business has established around selling a product A[1]  whilst the new entrant has introduced the more industrialised form A[2]. As per normal there is inertia to the change caused by changing practices, business models and capital (knowledge, social etc).
  • The competitor is running an ILC model around A[2] and hence it is building an ecosystem. Along with efficiency benefits this will enable them to accurately identify (through consumption data) future successful changes such as C[1] and then industrialise such changes to additional components (e.g. C[2]). An ILC model will cause the competitor's innovation rate, efficiency and customer focus to increase simultaneously with the size of the ecosystem.
  • There is an emerging market which is less advanced in terms of provision of the activity, hence we could sell A[1] to the emerging market. However, this won't deal with the issue that A[1] is going to be replaced with the more evolved form of A[2]. Concentrating on the emerging market will simply lay the groundwork for the competitor to enter that emerging market.
  • We could try to recreate past profitability around A[1] through cost cutting but again this doesn't deal with the issue that A[1] is going to be replaced with the more evolved form of A[2]. All that cost cutting is likely to do is create a spiral of death for us.   
  • We could attempt to 'innovate' by trying to create a high risk and uncertain differential B[1] or by  acquiring a company that provides this. However the competitor can simply copy us and then aim to provide it in a more industrialised form B[2]. This is particularly dangerous as part of a tower and moat play.  
  • So what is the tower and moat? A cunning competitor will try to build a tower of revenue around A[2] and build a moat devoid of any and all potential differentials (e.g. B[2] and C[2]) that surrounds it.  Every time we try to 'innovate' (e.g. B[1]) whether through acquisition or our own efforts, then the competitor will industrialise the act and provide it for free.  The danger to us of this play is that as their ecosystem grows they exploit both it and our own efforts to bolster their moat. Once we eventually realise that the future is not A[1] or trying to sell A[1] to emerging markets but instead it's about competing around A[2] then our problem becomes that the competitor has a large ecosystem around its core revenue and there is little to no room left to differentiate. It's basically game over for us.

So, now back to the VentureBeat article. M&A can be important in a counter play against someone running a tower and moat but you have to know what you're doing. It's extremely easy to spend hundreds of millions on buying up so called 'differentials' (e.g. B[1]) and find yourself still in a worsening position as the competitor copies you, growing their moat whilst their tower (and related ecosystem) expands.

The article talks about SAP 'augmenting its offerings' and buildings its 'competitive advantage' through acquisitions.  From my perspective, I'm not sure SAP realises how much trouble it is in. As far as I can see, its future positioning is poor, it's up against a tower and moat and random acquisitions aren't going to help it.