Tuesday, June 23, 2015

Position, Flow and Movement

Given some of the comments on my last post on "Why Agile, Lean and Six Sigma must die" ... I thought I'd take some time to clear up another misunderstanding in the difference between position, flow and movement.

Let us assume you've examined a line of business, starting from the point of user needs and developed a value chain. I'll assume you've also mapped this over evolution. Beyond the obvious of breaking down a system into components and the interfaces between them then there are three things to consider.

Position : the position of components simply relates to how things are connected and how visible they are to the user need. The value chain itself is a chain of needs i.e. this needs that etc. At the top of the value chain these needs are exposed as meeting user needs (i.e. customers) and can often be expressed in terms of the customer journey. This doesn't mean the lower components aren't essential but a user who wants a cup of tea doesn't care about the power provider you use to boil the water. They only care about a piping hot cup of tea.

Flow : whenever you look at a map (an example is provided in figures 1 & 2) then there are multiple flows within the value chain. These flow can cover things such as information, risk, finance and materials. Sometimes one flow is more viable than another and financial models based upon flow can be developed (see figure 3). Sometimes a flow may be inefficient because it'll have bottlenecks and improvements can be made. There's all sorts of important things to be consider from inventory to capacity to variability and time.

Figure 1 - A flow within a value chain (a TV company)

Figure 2 - Another flow within a value chain (a TV company)

Figure 3 - Analysis of a flow.

Movement : Understanding position and flow is a good start but unfortunately value chains aren't static, they evolve. Fortunately the process of evolution is fairly well defined across activities, practices, data and knowledge and there are many common economic patterns, weak signals and gameplay which can be used to anticipate and manage this. There's however little point in understanding the value chain and managing the flow efficiently if you are treating most of the components as custom built when the market treats them as commodity. You have to accept that everything in your value chain will evolve (i.e. move across the map) and therefore you might be efficiently managing the flow in your value chain but at the same time being ineffective because you're treating components in the wrong way.  

Understanding position and flow is critical for efficient provision of an in-situ situation however understanding movement and position is critical for strategic gameplay, anticipation and effectiveness. 

To give an example of this, I'll use the box and wire diagram from the previous post (figure 4). Do remember that box and wire diagrams (IT systems diagrams, Business Process Maps, Value Stream Maps etc) all have their purpose but they only show you connectedness of components (not necessarily even position relative to the user) and can only be used to analyse flow.

Figure 4 - A typical box and wire

Looking at the box and wire above. The questions you need to ask are :-

a) I outsourced B and it was a disaster. Why was it a disaster?
b) Should I outsource A?
c) What components are most directly visible to its consumer?
d) What methods (i.e. doctrine) should I use for each component? Agile, Six Sigma or Lean?

Now, whilst I can't answer these question, I can examine different flows in the box and wire (e.g. the one I've highlighted in blue is C, F, D, A). I can look at it for bottlenecks and mechanisms to improve efficiency and certainly if I have multiple box and wire diagrams then I can look for duplication. But of course, I don't know whether one of those components is representing the visible user need and hence I don't know the travel of flow towards the user unless I add arrows. I also don't know how evolved those components are i.e. if the duplicated components are suitable for provision as platform components?

Exactly the same diagram is provided in figure 5 below but in this case I've added movement represented by an evolution axis. I can now not only examine the flow but answer all the above questions.  I can even anticipate how things will change (I've added some lines for competition effects but in reality all components are likely to be moving).

Figure 5 - A map of the same process

With multiple maps I can remove bias in treatment (people custom building what is a commodity) and find not only duplication but identify those components suitable for provision as a platform.

Furthermore using the above map I can identify where we will have inertia, potential threats from disruption that can be anticipated, co-evolution of practice and even repeatable mechanisms for how I can manipulate the market (i.e. organisational learning). I can determine the appropriate methods both project management and purchasing and even determine appropriate structure. See the previous post for help on some basics or this post for a general introduction to the technique.

Hence with the above map, I can anticipate a future state (figure 6).

Figure 6 - Future State

Hopefully I won't have done the daft thing of outsourcing B but instead I will have moved from using an Agile approach to using Lean to build it (assuming I'm the one building). As for component C, then I'd probably be looking to build that as a utility service for others (ideally with a six sigma style approach) or use some sort of cloud service. With component F then I'd be anticipating to outsource it along with the hopefully already outsourced A.

I still have the same flow C, F, D, A (along with the other flows in the diagram) but the characteristics and the manner in which this flow is provided has evolved. If I'm stuck making the flow efficient using C, F, D all as products (as it used to be) then as efficient as I am, I'm likely to be outcompeted by the market. I can also see from the map that I don't really have anything differentiating me from others, so I'll probably be taking a few gambles to create components that meet others needs built on the components that I already have.

Gamble? Did I say gamble? Yes ... alas with a map, there are some things you can plan but a lot of spaces in which you have to experiment. Remember that evolution axis is determined from ubiquity vs certainty and the uncharted spaces are not only rare ... wait for it ... they're uncertain (see figure 7). Of course, that doesn't mean we can't mark on a map that we suspect something is over there in the uncharted space (a gut feel, an intuition etc). We might even give it a name, we just don't know what it really is yet or even if it'll be successful. Of course, if it is then over time it'll become more defined, it'll become more certain ... you get the picture.

Figure 7 - Plan vs Experiment.

Anyway, the point of this post is rather simple. Position and Flow can only get you so far - even if I've build a customer journey between high level needs. If you really want to learn strategic play and to become efficient and effective then you're going to need to understand Movement (i.e. how things evolve).

Remember ALL maps are imperfect and they are simply communication tools used to describe an environment. They enable collaboration, communication and gameplay but you still have to apply thought. These maps are by no means the ideal way of visualising, they are more like Babylonian clay tablets as opposed to ordinance survey. Mapping business is a field in its infancy but even these are better than no maps.

However, trying to describe an environment based upon position and flow and not allowing for movement prevents you from determining direction and applying any concept of strategic manoeuvring for both yourself and opponents. Unfortunately these box and wire concepts are exactly what most company strategy is built upon normally mixed in with SWOTS, meme copying and other story telling devices.

I cannot emphasise enough how fsck'd your company is if you come up against a player that knows what they're doing when you're trying to use old approaches. I've seen examples of vendors who've taken a beating with Government in the recent past and still haven't clocked why. This is only going to get worse for those companies if they don't adapt, focus on user needs, sell components appropriately and don't try the old "outsource everything" game. I know many departments that are getting better at situational awareness and gameplay. The days of Government being a soft touch are slowly (very slowly) disappearing.

Saturday, June 20, 2015

Why Agile, Lean and Six Sigma must die ...

Every large system (whether a line of business or specific IT project) contains multiple components. Those components have a relationship with each other (known as position) but they're also evolving. 

Every components start as something novel and poorly understood - the uncharted space of the new e.g. the first telephone - and over time through demand and supply competition becomes widespread and well defined or in other words industrialised. The properties of these two extremes are polar opposites. As Salamon & Storey said in 2002, any structure needs to manage both of these polar opposites. Before you shout "Bimodal" or "Two Speed" or "Dual Operating System", there's also the issue of the transition between the two but we've covered that in previous posts.

If you start with user needs, you can map this landscape out in the form of a Wardley Map - named after me! Well, I've been doing this for over a decade now and I did invent the technique, so fair enough. What's interesting with maps is that they not only give you position (the relationship between things) and movement (how things are evolving) which is essential for any form of strategic play but you also find that different techniques and methods (i.e. doctrine) whether it's project management or purchasing are stronger at different parts of the map. None of this is new.

In figure 1, I've provided a map showing the position and movement and how maps can enable you to determine where to attack. In figure 2, I've shown how different methods (including insourcing and outsourcing) can be applied to areas of the map. In figure 3, I've provided a map with different methods applied.

Figure 1 - A Map

Figure 2 - Techniques and Changing Properties

Figure 3 - A map with techniques applied. High Speed Rail

Maps are mainly communication vehicles but they're also useful for organisational learning. However, when it comes to doctrine (e.g. techniques & methods) in IT, let us emphasise the following.

In one part of the map you'll tend you use Agile techniques (with XP or SCRUM) focused on exploring the uncharted and reducing the cost of change. As Michael O. Church points out, agile is best in situations when "dealing with finicky clients who don’t know what they want" i.e. when exploring the uncharted space where no-one knows what is wanted.

Of course, as an act is explored and becomes more widespread and well defined (i.e. we start to understand it) then the focus changes. We start aiming to build a product, sometime in era of custom built examples. Whilst we may continue to use underlying techniques such as XP or SCRUM, our focus is on reducing waste and creating a minimal viable product and improving measurements. Lean rules the waves here.

Of course, as the act continues to evolve becoming more widespread and defined then we're now into the world of volume operations. It's increasingly heading towards commodity and our focus is mass production of good enough which means reducing deviation. At this point, Six Sigma rules the waves.

However, any significant project (as show in figure 3) has components in all these stages. Those components aren't static but evolving and as they become more commodity like they enable rapid development of new higher order systems. But, at any one moment in time, you'll have components at all stages and you will need to use a mix of agile, lean and six sigma throughout the project.

Of course, most companies have no map of their environment and so are forced to plummet for a one size fits all method e.g. all agile, all lean, all six sigma. All of these methods will have their devotees and so regular arguments of agile vs lean, lean vs six sigma, agile vs six sigma break out along with various attempts to create new magic one size fits all methods which combine different stages e.g. lean six sigma or agile lean or prince agile etc. 

This has been going on in one guise or another for a decade now. Suck it up. There's no one size fits all method. [Cue endless rants from agile, lean or six sigma devotees].

You need to use the appropriate methods according to how evolved the component is. Since most companies have no form of maps (i.e. no understanding of position AND movement) or confuse box and wire diagrams (e.g. IT systems diagram, Value Stream maps, Business process maps, Kaplan Strategy Maps - which all have uses) with maps then generally there is no hope of this happening. If you're going to insist on acting blindly and picking a one size fits all method then choose Lean. It's far from ideal but better than focusing on the other extremes.

Personally, I'd learn to map and use all the methods. Personally, I think the idea of being ALL agile, ALL lean or ALL six sigma should die.

I know it won't. A decade of using maps, speaking and writing articles in various publications that point out the need for multiple methods has taught me one thing. In a decade from now, I'll still be hearing people arguing over whether agile, lean, six sigma or some equivalent method is better everywhere. It isn't. It'll never be. Alas, there are two solutions to Ashby's Law of Requisite Variety in management - you either accept the complexity and manage it or you pretend that what is being managed is simple and apply single methods or simple KPIs. The latter tends to rule because the former is hard.

Before I go, some quick notes on the question of strategic thought and mapping. The two most basic properties of a map are position and movement. It doesn't matter whether this is a physical map or a chessboard, they show you where things are and how they can move. More complex maps can include other details. For example in a Wardley map, along with position and movement then you can look at the flow of information, risk and finance in an existing value chain (NB. Value Stream maps also do this but they only show flow within the value chain and not movement i.e. how components will evolve). Without position and movement though, strategic play is guess work.

Hence, look at table 1, print it out and tick off each area that your business knows well or undertakes.

Table 1 - Understanding of the Purpose, Climate, Landscape and Doctrine.

If you haven't ticked off ALL of the first seven steps then any strategy you have is most likely meme copying others. You're running blind and you don't have a hope of understanding where to attack and hence determining why here over there. I strongly suggest you throw away your strategy and replace it with the following ...

Our strategy is to try and understand what we do, for whom, why we do it, what they need and what's involved as efficiently and as effectively as possible without breaking the bank.

... or at worst, don't pay consultants for any future strategy - just click the link here. It'll auto generate you a strategy based upon the common memes around. It's useless but it's free rather than being useless and costing a fortune.

Until you can do the most basic stuff of understanding purpose, landscape (map) and doctrine (methods, techniques etc), there is no point in talking strategy. Anything you'll do is just simply shooting in the dark.

Oh, and to really rub it in, I'm going to emphasise the point about the importance of movement. I've taken a simple process diagram, replaced the terms with letters and provided this glorious BOX and WIRE diagram in figure 4.

Figure 4 - Box and Wire

Now, in the above you can clearly see the relationship between things but I've got four simple questions for you to think about.

a) I outsourced B and it was a disaster. Why was it a disaster?
b) Should I outsource A?
c) What components are most directly visible to its consumer?
d) What methods (i.e. doctrine) should I use for each component? Agile, Six Sigma or Lean?

Can you answer these? I can't. For your interest, in corporations around the world people are trying to manage stuff and answer these questions with diagrams just like the above.

Ok, I've now provided exactly the same diagram in mapping form in figure 5. No additional information was added other than position and movement.

Figure 5 - Map

Now, try answering those questions. If you need help, look at figure 2 above again. It should be trivial.

If you want to know how to organise around this. Start here.
If you're entirely new to mapping then this set of posts should help.

If you're thinking ... "is this mapping the answer!" Let me emphasise that we're roughly at the Babylonian clay tablet stage and not the ordinance survey stage of business mapping. This technique will give you a better map than no map.

Finally ... the only people who can map a business are those that operate in that business i.e. no consultants. The technique is all creative commons share alike, so you've got everything you need to get started.

Wednesday, May 27, 2015

On the impossibility of precognition and whether it's science

Back in the early 1990s, I worked in the field of genetics. Back then we understood the importance of epigenetic effects (i.e. cross generational inheritance of environmental effects or acquired characteristics) but the field was overtaken by a tyranny of the sequence. Why? Well, possibly due to the abundance of vendors selling costly sequencing machines or just an enthusiasm for the sequence. Still, over time we've come to understand the importance of the wider system and epigenetic effects are back with a vengeance.

Despite our pretence of understanding, we understand very little of how the human body works, especially the mind. Most view the brains operations through simply electrical signals however we're discovering all sorts of acoustic propagation or action waves.

I generally try to keep an open mind and not to dismiss things out of hand no matter how unlikely they are unless we have observations that it doesn't happen. Into this mix, I was recently asked whether I thought precognition was possible with reference in particular to the experiments of Dean Radin.

Now, I'll freely admit to having a bias against some of the work but I won't dismiss it out of hand. So let us take Dean Radin's  paper on 'Electrodermal Presentiments of Future Emotions' and precognition in humans, a subject which has garnered some interest of late. The experiment describes how subjects experienced a physical reaction upto 4 seconds in advance of an event happening. Now, naturally we should be highly skeptical of such work but is it impossible given our weak understanding of the human system or could a scenario be imagined where it might be possible?

First, we should have no doubt that any mechanism of precognition - a sense of danger before the danger - carries huge evolutionary advantages. But is such a mechanism even remotely feasible?

Let us invoke a set of proteins that contain part of a entangled pair and a mechanism to transmit and receive information through some form of interference pattern. Let us now assume one of the pair (the transmitter) remains attached to the neuron whilst the other (the receiver) travels around the circulatory system and attaches to the neuron periodically.  With an approximate speed of 0.1 m/s for a period of 20 years, this gives us a time dilation effect of around 2 seconds. Let us assume that at any moment in time that some neurons have both members of these pairs attached (the 'attached pair'). As neurons fire in response to some event, all the normally attached transmitters send a signal to their receiver. In the case of the 'attached pair' the receiver will receive the signal a full 2 seconds before the transmitter sends. The receiver causes the neuron through some other mechanism to activate prior to when the main signal is received. Time travelling information over an entangled pair? Well, maybe.

We can therefore imagine a scenario that enables some of the neurons associated with a response to 'spontaneously fire' prior to the event that triggers that response creating a sense of forewarning. However to do this you'd have to invoke mechanisms of entanglement, mechanisms of transmission / receiving information, time dilation effects and overturn the 'No communication theorem'. To compound the problem, there is absolutely no evidence that such a system exists or even is remotely possible.

Our imaginations can often run wild of what is possible, hence we have the glorious world of science fiction.

That's the problem with such imaginary scenarios, they are easy to construct despite being nonsense. Invoking such a scenario as a possibility would be a ridiculous stretch and there are numerous more likely explanations of the effects reported by Radin and others including error in experimental design, expectation bias, confirmation bias in the observer to statistical error or maybe the 'anticipatory effect' is simply an aberration caused by the brain using 'pre-played' templates.

The question therefore becomes about the quality of the experimental effects. Are there statistically significant results? Is there a rigorous methodology that can be independently tested and reproduced providing consistent results? Is there a reasonable sample size with a strong enough effect or is this statistical noise? As far I'm aware, the answer to all of these is no.

However, I don't agree with simply dismissing precognition as impossible out of hand because you could create conjecture (regardless of how fantastically implausible) on why it might occur. But without evidence that such a system or effect exists, though precognition might not be 'impossible', it firmly remains in the realm of science fiction.

Tuesday, May 26, 2015

What is a map, what isn't?

I was asked recently what makes a map? There are two important aspects of a map [when used for gameplay against competitors or a market, see comment by Alex below] and these are position and movement.

1) Position gives you the relationship between things.
2) Movement shows you how things can change.

Hence when you look at a Chessboard, you can see the position of pieces and where they can move. When you look at a battlefield map, you can see the position of pieces and where they can move. Equally when you look at Wardley Map (see figure 1), you can see the position (i.e. relationship between components in the value chain) and where they can move (i.e. how they can evolve). From this you can determine where to attack etc.

Figure 1 - A Map

What makes a map? Position and movement are fundamental. They provide a means of viewing the landscape and determining direction. Whilst maps are an extremely useful learning tool, they don't give you the answer (for that you apply thought) but instead they show you the landscape.

However, what isn't a map? Anything which doesn't have position and movement isn't a map in my opinion. You do get numerous things called maps but they're normally box and wire diagrams giving relationships between things but no movement (e.g. business process diagram, IT systems diagram) or some form of flow diagram (i.e. flow of things through a value chain, it provides an in-situ examination but has no aspect of movement or change). This doesn't mean they're not useful, they are in their own contexts. Just when it comes to improving situational awareness and strategic play then they are less than ideal.

Thursday, May 21, 2015

The Chief Internet of Things Officer

Back in 2006, I gave a talk at EuroOSCON on Making the Web of Things which covered manufacturing methods from 3D printing to devices connected to services over the internet. I had an interest in this field and the consequences of it in every day life and used to describe its effect through a scenario known as "Any Given Tuesday" which gave a comparison of today's life against the future. I was also involved in a number of side projects (you can't learn unless you get your hands dirty) from a paper book with printed electronics (i.e. turning a paper book into an interactive device) to various animatronic experiments.

For Background (general interest) ...

A background on the combination of physical and digital including future languages e.g. Spimescript is provided here. The presentation from EuroFoo is below.

The scenario for Any Given Tuesday is provided here. There is a slidedeck from 2005 for this and at some point I'll post it, however it's not necessary.

For the interactive book (physical + electronics), then the following video from 2008 gives a good enough description.

You'll also find discussion on the future of books along with various reports of mine (from 2002 to 2006) on 3D printing and techniques behind this e.g.

So, back to today ...

These days we call the Web of Things the Internet of Things. We still haven't invented SpimeScript though some are getting close. We're seeing more interaction in physical devices and the continued growth of 3D printing including hybrid forms of physical and electronics. It's all very exciting ... well, some of it is. I'm a bit of an old hand and so parts of this change (especially endless pontifications by consultants / analysts) tend to send me to sleep - it's a bit like the cloud crowd - some good, some "blah, blah, blah".

However, there's something I do want to point out with this change and why everyone who can should attend the O'Reilly Solid conference

Most organisations are terrible at coping with change. You're not designed to cope. You don't exist in adaptive structures that deal with evolution. You have to bolt on new things as a new structure and somehow muddle through the mess it creates. You're probably doing this now by adding a Chief Digital Officer. You're probably adding on Agile or Lean or even worse yo-yoing from one extreme (e.g. six sigma) to another. You might even have done something daft like organising by dual structure in the "hope" that this fixes you p.s. it won't. Yes, we have extremes but the key is how to organise to include the transition between the extremes.

So, what's this got to do with Solid and IoT.

Well, unfortunately IoT requires a different set of practices (from design to construction), a different set of techniques and a mix of attitude from "pioneer" to "settler". The underlying components might be quite commodity but what is being built with these is often a process of discovery and exploration. Though there are common lessons, there's a very different mindset and value chain relationships to IoT which is built from experience. What I'm saying is Physical + Digital is not the same as Digital.

Now, if you're one of those very lucky organisations that have a strategic CIO then you're ok, they'll adapt and muddle through. If you're not and you've had to bolt on a Chief Digital Officer then you might have a problem. Digital is not the same as IoT and unfortunately I've met quite a few Chief Digital Officers that are about as un-strategic as the CIOs they were mean't to replace. If you've got one of these (and don't be surprised if you do) then you'll going to need a Chief Internet of Things Officer (CITO). As Venture Beat says 'The most important CxO you haven't hired'  and they're spot on, until the next change of this type and the next bolt on.

So, get yourself along to Solid and start scouting. Learn a little about the wonder of the combination of physical & digital and if you're lucky, hire some talent.

Personally, if you want to avoid adding more CxOs then I'd recommend creating an adaptive organisation able to cope with change. But that requires extremely high levels of situational awareness which alone is way beyond most companies. It's also often unnecessary unless you're competing against such adaptive structures (which in the commercial world seems rare). Hence it's usually easier to simply bolt on and deal with some of the conflict that this will create. Cue endless bunfights between CIO vs CDO vs CMO vs CITO and proclamations of death of one over the other.

Of course that means we're going to get endless Chief Internet of Things Officer societies, institutes, awards, proclamations of greatness, the CITO is the new CIO or CDO or whatever along with  blah, blah, blah. That's life.

Tuesday, May 19, 2015

The probable problem with Watson

I like IBM Watson. It seems likely to be a roaring success. But there is a future problem in my opinion.

The issue with such 'reasoning' and interpretive capabilities (unlike machine learning through patterns) is that they are relatively novel and we're still in a mode of discovery. During this time Watson will grow, it will become more refined and IBM will build a successful product and rental business.

However, around 2030 (see figure 1) then such 'intelligent' agents will be on the cusp of industrialisation (the 'war' phase of economic change, the shift from product to commodity). New entrants not encumbered by an existing business will launch a range of highly industrialised services (most likely Amazon - and yes, I see no reason why they won't be around by then, bigger than ever). In the following 10-15 years the previous players all encumbered by existing and successful businesses will be taken out of the game unless they adapt.

Figure 1 - The Wars

This pattern (known as the peace, war and wonder cycle) occurs relentlessly throughout history. Those who develop and build the field rarely reap the rewards of industrialisation. IBM is no different. As has happened to it in the past, IBM tends to develop the field, grow a successful business and then is forced to reinvent itself.

The timeframe today for this process (which is affected by commoditisation of means of communication) is currently around 20-30 years from genesis to point of industrialisation (the onset of war) and 10-15 years for the previous industry to be taken down.

To counter this pattern then you need to have enough situational awareness that you can industrialise yourself before your opponents do. There are two forms of disruption and this type can be anticipated through awareness and weak signals. However such awareness which is created through the use of maps and weak signal detection is rare and normally confined to Government circles.

Mapping of economic landscapes is itself on a journey and is only ten years down the path. It'll be another 10-20 years before maps get to the point of industrialisation in which case businesses built around sharing maps, use of industry maps and changes to the whole field of strategic play may well occur. Those too will take a further 10-15 years to develop.

Unfortunately, at the point IBM will need to industrialise Watson then it will have many of the 16 different forms of inertia to change (including pre-existing business) but in all likelihood it'll lack the situational awareness needed to know when to industrialise. The odds don't appear in its favour here.

If you want a timeline then .... well there isn't one. The future depends upon actors actions, it's an uncertainty barrier we can't see through and you can't pre-determine action but instead only look at possible scenarios.

In one scenario ...

IBM by 2025 should be a very different beast due to the changes in cloud. It'll be a shadow of its former might in infrastructure but still significant in terms of specific application services (e.g. healthcare) and the platform arena of cloud (e.g. Bluemix Cloud Foundry). The idea that IBM built hardware will become a fading memory. The building of an ecosystem around Watson will help it to grow and evolve and you should have no doubt that IBM will create a successful product and rental business in this space. This is why I've said that you shouldn't count them out. However the problem with IBM is its constant reinvention. It's a great company but it fails to learn the game and tends to get industrialised out of a space. It might like to view this as exiting a commoditising space but those commoditising spaces (e.g. cloud) can and do provide huge ecosystem advantages.  

The industrialisation of the intelligent agent space will kick in (around 2030), started by a player like Amazon. In the first instance IBM will dismiss the new approaches. By 8-10 years (2040) then the new player services will be less than 3% of the market. By 2045, they will be 50%+. The game will be over.

Watson will have created new glory but it will now be in decline as industrialised forms take over. Watson is also likely to have sapped strength from the platform effort whilst building inertia to its own industrialisation. IBM will be facing a new crisis of reinvention against much larger and much deadlier foes. It won't be the case of the giant IBM being taken on and losing to the minnow of Amazon ($125 Bn vs $15 Bn, as it was in 2006) but instead the minnow of IBM losing a core revenue stream to the giant of Amazon.

Of course, the future depends upon actors actions and it doesn't have to be like this. 

In another scenario, IBM could play this game to its favour but to do so it would need to capture those industrialised spaces and play fragmentation games against competitors. It will need to exploit constraints and the platform play has to be at the heart of this. To achieve this, it should already be working on how to industrialise Watson into a commodity service. This is more than just providing a rental service but looking at how to use Watson to create that industrialised future. It should be building upon competitors services and using this to cut them out of data flows and diminish their ability to sense the future. This a tough road to travel because success with products and rental services will constantly provide data against making such a move.

So which way will it go?

Alas, the incentive just isn't there for long term play with most commercial companies. Many of us will retire and some of us will have died through old age before this game plays out. However, if we could travel in time then I'd suspect we will see a new group of IBM execs facing a future of reinventing IBM as another pillar gets taken away. Of course, every now and then, you get someone who can play the game to its advantage - a Jeff Bezos, a Tim Cook etc. Every now and then, even companies get lucky.

However, the one thing I've learned after 25 years in business is that companies are singularly bad at long term gameplay and constantly get taken out by changes that can be anticipated and defended against. The only thing I know of which is worse than long term company gameplay is my ability to bet correctly on individual actors' actions. 

That said, if I was a betting man (and no, I'm not) then I'd plummet for a cup of tea on 2040-2045 as when IBM finally expires. For me Watson is not only its future but its doom. Of course, I could be wrong ... I frequently am.

Friday, May 15, 2015

On 61 different forms of gameplay

Over the next year, through a series of 61 posts, I'm going to go through in some detail various forms of gameplay that can be used when you have a map of a business environment

I need to emphasise Sun Tzu's five factors in competition - purpose, climate, landscape, leadership and doctrine - however unfortunately most ignore climate & landscape (a bit like trying to use Boyd's OODA loop but ignoring the observe & orientate bit). The problem with this is that whilst the game plays can help you manipulate the landscape, if you can't see the environment then they can be downright dangerous. It's always a good idea to look where you're shooting before you fire the rifle.

In normal circumstances, you will use your map with multiple of these game plays in concert. Of course, you'll need to have used your map to determine your direction of travel and where you wish to attack first. This is often an iterative process itself known as scenario planning.

The complete set of plays that I'll be covering are provided in figure 1. NB, I've shaded the plays according to how 'evil' or 'good' they are using AD&D terminology. I've provided some basic summary descriptions below and as I post the details then I'll add links to make it easy to navigate.

Figure 1 - The plays.

Basic Operations
These forms are about improving the organisation itself.
  • Focus on user needs
    A key aspect of mapping is to focus the organisation on user needs rather than internal needs. Often this process enables unmet needs (opportunities) to be discovered and friction to be removed from the process of dealing with customers.
  • Situational Awareness
    The act of mapping tends to remove alignment issues between business, IT and other groups by providing a common language. It enables the development of a common purpose and empowers groups to take advantage of their part of the map whilst understanding the whole.
  • Effective & Efficient
    Removal of bias and duplication within an organisation along with the use of appropriate methods for management and purchasing. Do not underestimate the potential savings possible, cost reductions of 90-95% are not uncommon.
  • Structure & Culture
    Implementation of cell based & PST structures along with multiple cultures to deal with aptitude and attitude. Both autonomy and mastery can be enabled by these forms of structure and they avoid the silos and inertia created by traditional structures.
  • Optimising Flow
    Risk, performance, information and financial flow can be analysed and improved through mapping. This is necessary for increasing margin, removing friction and increasing speed.
  • Channel Conflict
    Exploiting new channels and conflict within existing channels to create favourable terms.

User Perception
These forms are about influencing the end user view of the world.
  • Education
    Overcoming user inertia to a change through education. There are 16 different forms of inertia and many can be overcome directly with education. Don't underestimate this.
  • Bundling
    Hiding a disadvantageous change by bundling the change with other needs.
  • Creating artificial needs
    Creating and elevating an artificial need through marketing and behavioural influence. Take a rock and make it a pet etc.
  • Confusion of Choice
    Preventing users from making rational decisions by overwhelming them with choice.
  • FUD
    Creating fear, uncertainty and doubt over a change in order to slow it down.
  • Artificial competition
    Creating two competing bodies to become the focus of competition and in effect driving oxygen out of a market.
  • Lobbying
    Persuading Government of a favourable position.

These enable you to accelerate the process of evolution.
  • Market Enablement
    Encouraging the development of competition in a market
  • Open Approaches
    Encouraging competition through open source, open data, open APIs, open processes by removing barriers to adoption and encouraging a focus for competition.
  • Exploiting Network Effects
    Techniques which increases the marginal value of something with increased number of users.
  • Co-operation
    Working with others. Sounds easy, actually it's not.
  • Industrial Policy
    Government investment in a field.

These enable you to slow down the process of evolution
  • Exploiting existing constraints
    Finding a constraint and reinforcing it through supply or demand manipulation.
  • Patents & IPR
    Preventing competitors from developing a space including ring fencing a competitor.
  • Creating constraints
    Supply chain manipulation with a view of creating a new constraint where none existed.
  • Limitation of competition
    Through regulatory or other means including erecting barriers to prevent or limit competitors.

Dealing with toxicity
Elements of your value chain will be irrelevant with evolution over time, there's numerous ways of dealing with this especially as the inertia created can become toxic.
  • Disposal of liability
    Overcoming the internal inertia to disposal. Your own organisation is likely to fight you even when you're trying to get rid of the toxic.
  • Sweat & Dump
    Exploiting a 3rd party to take over operating the toxic asset whilst you prepare to remove yourself.
  • Pig in a poke
    Creating a situation where others believe the toxic asset has long term value and disposing of it through sale before the toxicity reveals itself.

Standard ways of playing in the market
  • Differentiation
    Creating a visible difference through user needs.
  • Pricing policy
    Exploiting supply and demand effects including price elasticity, Jevons paradox and constraints including fragmentation plays.
  • Exploiting buyer / supplier power
    Creating a position of strength for yourself.
  • Harvesting
    Allowing others to develop upon your offerings and harvesting those that are successful. Techniques for ensuring harvesting creates positive signals rather than creating an environment others avoid.
  • Standards game
    Driving a market to a standard to create a cost of transition for others or remove the ability of others to differentiate.
  • Signal distortion
    Exploiting commonly used signals in the market by manipulation of analysts to create a perception of change.

Standard ways of protecting your market position
  • Threat acquisition
    Buying up those companies that may threaten your market.
  • Raising barriers to entry
    Increasing expectations within a market for a range of user needs to be met in order to prevent others entering the market.
  • Procrastination
    Do nothing and allowing competition to drive a system to a more evolved form.
  • Defensive regulation
    Using Government's to create protection for your market and slow down competitors.

Standard ways of attacking a market change
  • Directed investment
    VC approach to a specific or identified future change.
  • Experimentation
    Use of specialists groups, hackdays and other mechanisms of experimentation.
  • Creating centres of gravity
    Creating a focus of talent to encourage a market focus on your organisation.
  • Undermining barriers to entry
    Identifying a barrier to entry into a market and reducing it to encourage competition.
  • Fool's mate
    Using a constraint to force industrialisation of a higher order system.

Using others to help achieve your goals.
  • Alliances
    Working with other companies to drive evolution of a specific activity, practice or data set.
  • Co-creation
    Working with end users to drive evolution of a specific activity, practice or data set.
  • Sensing Engines (ILC)
    Using consumption data to detect future success.
  • Tower and Moat
    Dominating a future position and prevent future competitors from creating any differential.
  • Two factor
    Bringing together consumers and producers and exploiting the relationship between them.
  • Co-opting
    Copying competitors move and undermining any ecosystem advantage by interrupting data flows.
  • Embrace & Extend
    Capturing an existing ecosystem.

Dealing with the opposition if you can't work with them
  • Tech Drops
    Creating a 'follow me' situation and dropping large technology changes onto the market.
  • Fragmentation
    Exploiting pricing effects, constraints and co-opting to fragment a competitor's market.
  • Reinforcing inertia
    Identifying inertia within a competitor and forcing market changes that reinforce this.
  • Sapping
    Opening up multiple fronts on a competitor to weaken their ability to react.
  • Misdirection
    Sending false signals to competitors or future competitors including investment focused on the wrong direction.
  • Restriction
    Limiting a competitors ability to adapt.
  • Talent Raid
    Removing core talent from a competitor either directly or indirectly.

General forms of playing with the future market
  • Land grab
    Identifying and position a company to capture a future market space.
  • First mover
    Exploiting first mover advantage especially with industrialisation to component services.
  • Fast follower
    Exploiting fast follower advantage into uncharted spaces.
  • Weak Signal
    Use of common economic patterns to identify where and when to attack.

General forms of preventing others playing with the future market. If you can't capture then poison it.
  • Licensing
    Use of licensing to prevent future competitor moves.
  • Insertion
    Either through talent or misdirection, encouraging false moves in a competitor.
  • Design to fail
    Removing potential future threats by poisoning a market space before anyone attempts to establish it.

As mentioned above, the techniques are normally used in combination plays e.g. you might be a first mover to industrialise a specific component and use this to establish an ILC type ecosystem whilst exploiting competitors' inertia and misdirecting any would be threats.

These are not the full list of plays but the ones that I think it's reasonable I can cover over a period of one year. There are some other plays but I'll leave that to a future date.

Again, I cannot emphasise the importance of situational awareness before using some of these plays. It is trivially easy to create a disaster e.g. being a first mover to try and build an ILC ecosystem around a relatively novel activity and harvesting aggressively. This will just end up destroying your ability to create an ecosystem leaving you with a bad reputation in a field which might at a later date become suitable for the same sort of play. Some of the plays are also downright evil, so be warned. Understand the environment, learn to play the game and build with experience.

Saturday, May 09, 2015

Dear IBM, HP, ORACLE, SAP, CISCO ... v2.0


Since my last letter, we have heard it is not Oracle or SAP or Microsoft that is interested in buying Salesforce. Maybe that's just bluster, maybe no-one is interested in buying (or merging) or maybe it's one of you or maybe it's someone irrelevant. All of these are good options for you.

However, on the off chance that someone is actually bidding for Salesforce and it's not any of you. Can I kindly suggest you consider getting together in order to buy it between you as a consortium. 

There is one company (Amazon) that you should not want to get their hands on Salesforce no matter how unlikely the possibility is.  You should examine the value chains that Salesforce is involved in, compare this to Amazon and consider how Amazon could bring its ecosystem experience whilst exploiting the enterprise position of Salesforce. You should consider what Amazon already knows about the platform business of Heroku (through consumption data). You should review what combination possibilities exist and WHERE your own inertia can be used against you.

Even if it is highly unlikely, the remote possibility of this pairing should be sending shivers down your spine. You do not want to find yourself in this position. Hence, unless you have information to the contrary, I would consider doing something about it.

Maybe you'll be lucky. Maybe it's someone irrelevant. Maybe it's no-one.

This is a friendly warning.


Simon W

P.S. I've been harping on about this threat for many years. I know it's unlikely but if I was Bezos then this is the move that I'd make.

I am Old Labour

I am Old Labour.

I am a social capitalist.

I view that social cohesion, competition and the common interest are of paramount and intertwined importance.

I view that our purpose should be a better and fairer society for all. To create political freedom, I reject the notions of economic and social subservience. I hold to a view of  common interest above self interest. I do not view the market as a source of 'good' or our goal but a tool to be used and exploited to achieve our purpose.

For me, the market is a mechanism to achieve common interests and encourage competition. It is simply an economic tool.

For me, competition is a necessity to progress, to evolve, to adapt and to better our national standing.

For me, social cohesion requires compassion, mobility, opportunity, autonomy and purpose for all. Without social cohesion our future competitive interests are undermined.

I do not care if "the cat is white or black, as long as it catches mice". I reject the ideological for the practical. I would use all tools available to further our common & national interests.

I reject the extremes of Marx and Friedman. The myths of 'trickle down', of small Government, of laissez faire, of centrally planned, of privatisation of infrastructural services to monopolies and nationalisation of that best served by a market.

I hold to the centre ground where market and government are both of importance for competition. I hold to that centre of Adam Smith, Hayek and Keynes.

I take the position that we should exploit fiscal, monetary and industrial policy to our common benefit. We should not fear to change the market to achieve our purpose.

I view that Government waste (of which there is much) should be reduced but Government itself should not be. For every £1 saved through efficiency, I would have £1 invested through Government towards our future including measures of direct investment, R&D and reduction of past debt.

I view that we are capable of dealing with complexity of competition and that our civil service has only be hampered by past management dogma of one size fits all solutions - outsource everything, agile everywhere and the market knows best.

I reject the extremes of social ideology within the Conservatives but agree with many of their fiscal policies. For me, they don't go far enough.

I reject the extremes of financial imprudence within New Labour but agree with many of their social policies. For me, they don't go far enough.

I am more Red than Red, more Blue than Blue.

My party passed into history in May 1994. One day, it might return. Until such time, I have no-one to vote for.

I am a social capitalist.

I am Old Labour.

Monday, May 04, 2015

Five key indicators for success

When competing in business, there are five key indicators for success that I'm aware of.

1) Purpose : That which causes others to desire to follow you without fear and to have harmony with your goal.

2) Climate : The interaction of  the business with the economic climate and common economic patterns. The conduct of operations with this in mind.

3) Situational Awareness : Understanding of the landscape and the exploitations of this to your advantage through strategic play.

4) Leadership : The ability to set a direction of travel and be followed. These include the virtues of leadership - sincerity, humanity, courage, firmness and wisdom.

5) Doctrine : The organisation itself, the mechanisms of control, the level of appropriate autonomy, the structures used, the mechanisms of governance, the different cultural forms and the methods applied. 

I have yet to discover five indicators that are better. The above indicators were written about by Sun Tzu, approximately 2,500 years ago. They were called moral influence, weather, terrain, command and doctrine. I've been asked for a list of top 100 strategy books that I recommend reading. After careful consideration, I've now updated my list.

@swardley's top 100 management strategy books

1. Sun Tzu, The Art of War.
2. Read another translation of The Art of War.
3. Read another translation of The Art of War.
4. Read another translation of The Art of War.
5. Re-read any of the above again paying even closer attention to it.
6. Read another translation of The Art of War.
7. Read another translation of The Art of War.
8. Read another translation of The Art of War.
9. Re-read any of the above again paying even closer attention to it.
100. Everything else.

Seriously, I do recommend reading & re-reading multiple translations of the Art of War / Warfare.

Friday, May 01, 2015

Things which come for free with a map

When you map, you get certain things for free (other than the technique being creative commons).  These "free" things are provided in the figure and they include :-

1. User Needs. Key to mapping is to focus on user needs.

2. Components. Maps are built from components (covering activities, practices, data and knowledge) along with interfaces. People talk about building a composable enterprises, a map will take you a long way towards it. They're also extremely useful for organising contract structures.

3. Flows. Maps contain chains of needs through which money, risk and work flows. Maps are great for examining flows, fault tree analysis, optimising revenue flow and increasing stability.

4. Context. Critical to mapping is the context provided by the evolution axis. You can use this to determine appropriate methods and techniques (e.g. agile, lean and six sigma or insource and outsource etc) and avoid all the one size fits all pitfalls. You learn how to explore the uncharted and plan for the industrialised. If you want to be composable but you want each component to have the right context then use a map.

5. Cells. With maps, organising into cell based structures is relatively trivial. Even better you can organise into cell based structures with the right context. In such an environment you can give people not only purpose (i.e. the map and the strategic play) but also autonomy (the cell) and mastery (the context). You also learn how you need multiple cultures not one.

6. Strategy. Key to strategy is situational awareness and that requires position and movement. Maps give you the ability to identify where you should attack, why you should attack one space over another and determine direction of travel. You can also use maps to learn and building an arsenal of tactical game plays along with learning common economic patterns, how there's multiple of disruption, how to anticipate change with weak signals and how to use and exploit ecosystems.

7. Communication. Maps are excellent tools for communication between groups - all the business / IT / purchasing alignment stuff is just an artefact of existing methods. They also provide learning environments (i.e. you can learn what works, what doesn't) along with mechanisms to remove silos, duplication & bias, increase collaboration and deal with inertia.

When people talk to me about composable, context, user needs, cell based structure, strategy, communication, alignment, contract management, risk management, financial flows, appropriate methods, efficiency, exploration, weak signals, disruption, ecosystems, culture, organisational learning ... actually lots of things ... I normally ask for a map. If they don't have one then I prepare myself for a delightful session of blah, blah, blah on subjects they barely know anything about. This is why I tend to only work in interesting organisations where competition is really important.

You can tell, I've just had to listen to another one of those ... blah, blah, strategy, blah, blah, disruption, blah, blah, innovation, blah, blah, story .... sessions without an ounce of situational awareness to be seen.



On the off chance that someone is actually bidding for Salesforce and it's not any of you. Can I kindly suggest you get together and buy it between you as a consortium. There is one company (you already know who) that you should not want to get their hands on Salesforce. Even if it is unlikely, the remote possibility of this should be sending shivers down your spine unless you've got inside info. 


PS. Check your value chains, take a good look at inertia.