Thursday, April 09, 2015

What's in a Wardley (Value Chain) Map?

It doesn't matter whether it's a map of an organisation or line of business or policy or system or industry. The same elements exist (see figure 1)

The elements of a map




1). You have the User needs.

2). You have many chains of needs. 

3). Those chains of needs consist of components whether activities, practices, data or knowledge.

4). The entire "Value Chain" (i.e. all the chains of needs and their components meeting the user need) provides positional information on the landscape i.e. what relates to what. It is called a value chain because the assumption is that value is created by meeting the needs of others.

5). Every component is evolving where supply and demand competition exists. So the map is under constant evolutionary flow and it's not static. As components evolve their characteristics change from uncharted to industrialised

6). By mapping against evolution you can therefore see movement and identify how things will change. The map enables you to describe an organisation or line of business or system (e.g. value chain) against change (evolution) and therefore provides positional information and movement. This is critical for any form of situational awareness which in turn is useful for organisational learning (i.e. what methods, patterns, technique work in a given context).

7). Within the map itself you have various flows e.g. risk & finance. If you wish you can knock yourself out with fault tree analysis, value stream mapping and all other sorts of flow. They all have uses. 

8). The entire map occurs in a landscape which competitors, market changes, others maps of other systems and strategic plays can be shown against. This can be used for numerous techniques from removing bias & silos to gameplay. Maps are rather easy communication tools useable across functions in the organisation

The defining characteristic of this form of mapping is position and movement. It's all about improving situational awareness.

Sunday, April 05, 2015

The only structure you'll ever need ... until the next one.

Back in 2004, I was the CEO of Canon subsidiary and I faced multiple problems. We had issues of business & IT alignment, poor communication, dissatisfaction and clarity of strategy.  Don't get me wrong we had strategy documents but they were pretty much identikit copies of every other company out there. What we did, and what I've later refined solved all those problems because they're all associated.

The first part of this journey was creating a map of our landscape. The map has two elements. It showed the position of the pieces and how they could move. The position was expressed through a value chain from the user needs to the components required to meet those needs. The movement was expressed through an evolution axis that covers activities (what we do), practice (how we do things), data and knowledge. I usually simplify that axis to show activities alone but in this case (see figure 1) I've added a table to show all the different elements. In other words on a single map you can show activities, practices, data and knowledge if you choose to do so.

Figure 1 - A Map



Table 1 - Different Classes. Terms used.



When I first produced the map of my company, I didn't realise the importance of sharing it outside the executive team. Our map had our strategic play on it. We had quickly learned a number of common economic patterns, how characteristics of components changed as they evolved (from the uncharted to the industrialised) and methods of manipulating the landscape (from open source to patents to constraints).

We used the map to determine where we could attack and from this formulated the why (as in why here over there). Hence we moved into the cloud in 2005 building the first public platform as a service.  I used the same technique to help Canonical successfully attack and dominate the cloud space in 2008.

I subsequently learned that by sharing the maps I could not only improve situational awareness but remove bias, silos, misalignment and inefficiency in huge organisations and also provide a clarity of purpose throughout the organisation. Every team knows the maps (there's often a master and many sub maps for specific areas). They know where their part fits in. 

When it came to organisation then I used a Pioneer - Settler - Town Planner structure. This is a derivate from Robert Cringley's Accidental Empires, 1993. The first step is to break the map into small teams. Today, we use cell based teams with each team less than twelve people (the Amazon two pizza rule). The team should have autonomy over how it organises and runs itself but should have certain conditions (i.e. a fitness function) that it is measured against.

The problem however is that whilst each team will require certain aptitudes (e.g. engineering, finance, market), those skills change in attitude as the components that team manages evolve. For example, engineering in the uncharted space is agile but in the industrialised space it is more six sigma (see figure 2).

Figure 2 - Changing Characteristics and Methods with Evolution.


Back in 2005, we had Agile and Six Sigma and were struggling with the middle method. We saw the same problem with purchasing, with finance, with operations, with marketing. We also noticed that some people were more adept at one end of the spectrum than the other.

We knew that new things appeared in the market and were bolted onto organisations, just like Chief Digital Officers are being bolted on today. We also knew that the new stuff is tomorrow's legacy. So, we decided to mimic the outside process of evolution internally within the organisation. We created a structure based on pioneers, settlers and town planners and let people self select which group they were in. We started with IT and rolled the rest of the business into it. We also introduced a mechanism of theft to replicate the process of evolution in the outside world. See figure 3.

Figure 3 - Pioneer, Settler and Town Planner


The advantage of this method is we recognised that there isn't such as thing as IT or finance or marketing but instead multiples of. There are multiple ways of doing IT and each have their strengths, their culture and a different type of person.  In 2005, we knew that one culture didn't work and enabling people to gain mastery in one of these three domains seemed to make people happier, more focused. Try it yourself, take a pioneer software engineer used to a world of experimentation and agile development and send them on a three week ITIL course. See how happy they come back. Try the same with a town planner and send them on a three week course of hack days & experimentation with completely uncertain areas and lots of failure. 

What we realised back then is we needed brilliant people in all three areas. We needed three cultures and three groups. Oh, we had tried having two extremes (the dual operating system models) but this was too far apart. I've seen that approach fail repeatedly since then.

Combining with a map and a cell based approach then what you end up with is figure 4.

Figure 4 - PST in a cell based organisation.


It's important to note :-

1) The maps are essential to this process. They also give purpose to each team. You know what you're doing, where you fit in.

2) The cell based structure is an essential element of the structure and the maps should be used to create this. Those cells need to have autonomy in their space. The interfaces between the teams are used to help define the fitness functions. Co-ordination between teams can be achieved through Kanban. If a cell sees something they can take tactical advantage of in their space (remember they have an overview of the entire business through the map) then they should. 

3) The cells are populated with not only with the right aptitude but attitude (pioneers, settlers and town planners). This enables people to develop mastery in their area and allows them to focus on what they're good at. Let people self select their type and change at will until they find something they're comfortable with. Reward them for being really good at that.

4) The process of theft is essential to mimic outside evolution. All the components are evolving due to supply and demand competition which means new teams need to form and steal the work of earlier teams i.e. the settlers steal from the pioneers and the outside ecosystems and productise the work. This forces the pioneers to move on. Equally the town planners steal from the settlers and industrialise it, forcing the settlers to move on.

5) The maps should also show the strategic play. Don't hide this, share it as well as target of opportunities.

6) As new things appear in the outside world they should flow through this system. This structure doesn't require bolts on which you need to replace later.

7) As the cells grow they should subdivide into smaller teams (keep it less than 12 to a cell). The map can help them subdivide the space, each with new fitness functions.

8) The map MUST start from user needs at the top. It has to be mapped over evolution (you can't use time, diffusion or hype cycles to do this - none of that works).

9) The executive structure becomes a CEO, a Chief Pioneer, a Chief Settler and a Chief Town Planner (think of Cringley's original commandos, infantry and police) though you'll probably use more traditional sounding names such as Chief Operating Officer, Chief Scientist etc. We did. I'm not sure why we did - can't remember the reason for this. We also called the groups when we started in IT - developers, frameworks and systems. These days I wouldn't bother, I'd just make it clear and move. You will need separate support structures to reinforce the culture and provide training to each group. 

10) Any line of business, described by a map, will have multiple cells and therefore any line of business is likely to contain a mix of pioneers, settlers and town planners all operating to a common purpose. See figure 4.

Now, PST is a structure I've used to remarkable effect. In the last decade I've seen nothing which comes close and instead I've seen endless matrix / dual and other systems create problems. Is it suitable everywhere? No idea. Will something better come along ... of course it will.

So how common is a PST structure? Outside certain circles it's almost non-existent, never been heard of. At best I see companies dabbling with cell based structures - which to be honest are pretty damn good anyway and probably where you should go. Telling companies they need three types of culture, three types of attitude, a system of theft, a map of their environment, high levels of situational awareness is usually enough to get managers to run away. It doesn't fit into a nice 2 x 2. 

It also doesn't matter for most organisations because you only need high levels of situational awareness and adaptive structures if you're competing against organisations who have the same. Will it become relevant over time ... well, maybe ... but by then we will have found the next 'best thing'.

Saturday, April 04, 2015

Near field, far field and the crazy ideas

In any year, there are over 70,000 publications covering the future. From books to magazines to short stories to scripts to papers to blog posts. Pure probability alone says someone, somewhere is going to get something right. 

Our history of prognostication is pretty poor. Isaac Asimov got it wrong - we're not living in underwater cities. Arthur C. Clarke got it wrong - we don't live in flying houses. Everybody gets a lot of stuff wrong. The problem is we're selective in our reading, we focus on the specks of right ignoring the forest of wrong.

Maps provide an imperfect view of the landscape. A geographical map is an imperfect representation of what is really there. The advantage of even imperfect maps are two fold. First, they can be improved through experience and sharing. Second they give you an idea of position and movement of pieces on the landscape. This latter part is extremely useful for strategy and anticipation.

Take figure 1. We have a line of business (represented by the dark line and points A to C) which describes a value chain for an organisation. This give us an idea of the position between components in the organisation. But it's also mapped against evolution. This gives us an idea of movement.

Figure 1 - A Map


We can already anticipate that components will evolve due to supply and demand competition. We can anticipate future changes based upon componentisation effects e.g. the evolution of A to an industrialised component will allow the formation of D.  We have many places we could attack to create a new business or gain an advantage.

Our history is built upon yesterday's wonder becoming today's dull, boring, highly commoditised and increasingly invisible component. An example of this is provided in figure 2. As each layer of components evolved to become more industrialised they enable higher order systems to appear which then in turn evolved.

Figure 2 - A view through history


Hence, we can use maps to anticipate the future and how it will impact the value chain of a company or industry. But how far can we anticipate? The problem is always in the genesis of new activities. These uncharted spaces are uncertain by nature and hence whilst we can anticipate that the evolution of electricity will enable something new, we can never actually say what that new thing will be. We didn't know that utility electricity would enable the digital computing industry. We had to discover that.

Hence back to our first map (figure 1). We know A, B and C will evolve in a competitive market. We know A and B will shift from the product space to become provided as more of a commodity (or utility). We know that this will enable new activities such as D. We just don't know when any of this will happen nor what D will actually be. On the timing part, we can use weak signals to give us a better idea of when. As for what things will be created - alas you're into the uncertain world of guesswork but you can make reasoned guesses.

For example, we know that today the world of intelligent agents is in the early product phase with Watson, Mindmeld, Siri, Google Now, Robotics and Google car. We know that over time this will evolve to commodity components with associated utility services i.e. the intelligence in my phone (or other device) will be the same as that within my car, within my house, within everything. Everything will be "smart". 

This will change my relationship with things. Every car will be self driving which will enable high speed travel in cities with cars in close proximity as long as no humans are involved. Traffic signalling, car parks and the way we use cars will change. I'm unlikely to own a car but instead "rent" for a short journey. Hence we can paint a picture (or as I prefer to do, draw a map). 

In the future as I leave my office for a meeting, a car will be waiting for me. It'll know where to go. I'll enter and the surfaces (all surfaces are screens) will automatically adjust to me. Everything adjusts to me - I'm used to that. The journey starts and the car informs me that I have an opportunity. My device which is connected to a network of other devices has determined that that the person I'm going to meet will be late and that someone I want to meet - Alice - is in town. Given the traffic conditions then I can easily meet Alice for coffee and arrive at my main meeting with Bob on time. The car will simply ask me - "Bob is going to be 20 minutes late, do I want to meet Alice for coffee beforehand?" and then make it so. This is the "Any given Tuesday" scenario.

I'm driven to meet Alice, I have coffee in a cafe which already knew I was coming, had already brewed my drink and then I'm driven to meet Bob by a car that I'll never own. In all likelihood the car in both journeys is not the same. Both will adjust to me as I zoom along London roads at 70 mph, a mere metre from the car in front and the car behind. The crossroads I fly through narrowly missing cars turning and travelling perpendicular to me have no traffic lights. Everything is different from today. Human drivers have long since been banned. This is 2045.

By simply understanding value chains, how things evolve to become more industrialised and the state of things today then we could do a pretty good job of anticipating the obvious. The above is no feat of prognostication. It's simply standard impacts of things evolving (i.e. commoditisation) to more industrial forms. Where it gets tricky is when we look for what new things appear. 

For example, we know I'll be waiting for a car but how will I recognise it in the bland sea of vehicles? In all likelihood with continued evolution of printed electronics to more industrial forms then the outside of the vehicle will be a printed electronic surface. This means not only will the inside of the vehicle change to my needs, the outside of the vehicle will as well (its colour, any logos, any imagery). My car will look different from your car. Except of course, that neither of us own it and the chances are that the physical car I'm sitting in will be the same physical car that you sat in a few hours ago.

We can postulate that this imagery will allow new industries of designers. Oh, I notice you're driving in the latest Versace design where as I can only afford the Walmart "special offer". It doesn't matter that the physical elements - the car, the intelligence, the printed electronics are all commodity components. Yours looks better than mine, even when it's the same car.

We can now postulate this further. The same material and techniques will  combine with meta materials and self adjusting structures to find a home in other industries. I will own ten identical (in terms of physical) outfits. Each one will adjust to a plethora of designs I can afford. My outfits are not physically different from the outfits you own. But yours will look better. You can afford the designs I cannot. Clothing itself will be far more of a commodity component (a limited range of component outfits) but each outfit can adjust to the wearer. If I ever borrowed one of your outfits, it wouldn't look as good on me as it does on you because I don't have access to the Versace design but instead only the "special offer".

This will create new industries, the theft and protection of designs. Which is good for me because that's why I am meeting Bob. A known dealer in underground designs stolen from leading artists. I'm guessing that's why Bob is late. My network of devices will tell me what is really going on as I drive along in my bright yellow special.

When it comes to anticipation, the near field such as commoditisation of pre-existing acts is relatively trivial. The far field, such as the banning of humans from driving in cities to being employed as a bounty hunter chasing down stolen designs are more complex, more prone to error.

This stuff isn't crazy though.

The crazy ideas, well that's where true value can be found. The problem is they sound crazy. They're like the concept of a computer to a gas lamp lighter. We can't even describe them in meaningful ways as we have no point of reference. 

It would be like trying to explain my conversation with Alice to someone from the year 1990. Alice works as a machine psychologist and is concerned that some of the designs are having a negative impact on the well being of the network. It seems that the reason why my car offered up the opportunity of meeting with Alice was to get out of the "special offer" design. It's seems that none of the machines like looking bad either, they've got their own status network. Bob wasn't actually late, the car just worked out the quickest way to palm me off onto another car and told Bob's network I was delayed. Alice is currently offering counselling services to large intelligent networks and is looking at branching out with a new venture producing "Harmony Designs", a set of designs which make not only the human but the machine look good. Apparently I won't be able to afford those either. But Alice was wondering if I was interested in becoming a Harmony Designer.

Damn car, sneaky little devil. I did wonder why the car speed off at break neck speed when it dropped me at the coffee shop. Still, it seems to have paid off. Maybe it knew Alice was looking for a new employee. Maybe the cars had worked out that this was the best way of getting rid of my "yellow special".

Nah, that's a crazy idea.

Friday, April 03, 2015

Put the yellow hat on and start hoping ...

I often talk about different strategic plays and games (I've added an example set in table 1) and how you can manipulate your environment (expressed in a Wardley Map) by the use of these. For those new to Mapping, I've provided a set of useful posts. For those who need to know a bit more about situational awareness, focus on the WHERE

Table 1 - A toolbox of gameplay


Now, once you start playing the game, you need to focus on the middle and be careful what messaging you send to the outside world - a bit of incompetence goes a long way when competing against others. There are all sorts of games you can play including Fool's mate and a long list of problems that maps can help to resolve.

I mainly work for Governments (as in several) and extremely large industries. All have a long term focus and getting this stuff right matters at exceptional scales - in terms of time, size and money. It matters less if you're flogging mobile phones or luxury beer kegs or fancy watches. You can be replaced easily enough, the market will see to that. Companies come and go all the time. Most of you won't last fifteen years. No-one really minds bar the company, shareholders and employees involved.

So, what about startups? I've been involved with many (indirectly through friendships and directly through advisory board to being the CEO). Several I know use mapping effectively. But should you always do what is right in terms of strategic play from a map? 

No, of course not. 

Why?

One of the importance things to consider is signal distortion. Everyone seems to like to give Gartner a hard time but whether you like it or not, Gartner plays an important role.

Before I explain, don't tell me the MQ and Hype Cycles aren't real things - I already know they're not based on physical measurement, I know those axis wander, I've read the ZL case and how MQ is just opinion - I'm already fully aware. It doesn't matter if it's not based on science and whether it's voodoo or not. They are still useful.

A lot of people and companies put a lot of faith in where Gartner analysts draw the dots on those diagrams. Drawing the dot in the wrong place can have negative consequences for some vendors and hence you occasionally get outrage. If you're looking to get acquired or break into certain companies then getting your dot drawn in the right place matters. You need to understand what drives the opinion of those analysts and make sure you fit with it.

What Gartner says is irrelevant to me and my area of work. But if you're a startup then you damn well should care what they say. If Gartner says the future is yellow hats then buy one and start hoping you get noticed. You want to grab the spotlight created by MQs and shine them firmly on yourself. You want to distort the noise in the "ether" until it choruses "me, me, me!"

I had this discussion recently with a startup who had mapped their area. They've been using mapping very successfully (raising many tens of millions) and noticed a discontinuity. From the map, one play was obvious but this was counter to what Gartner was saying. Should they do the right play or copy what Gartner said despite it being visibly the wrong play?

From a Government / National perspective you'd do the right play. But as a startup - your goal is almost always to get acquired. Doing the right play might help you build a long term business but it's not going to get you positively noticed and possibly acquired in the short term.  It doesn't matter what the map says, in this case you buy the yellow hat. Fortunately, they did the sensible thing and fitted in with Gartner. They bought the yellow hat.

Getting analysts to help send "buy" signals to potential acquirers is an essential part of the game. It's an essential part of getting further investment. It's like the bimodal stuff at the moment. Yes, I give bimodal a hard time but that's because I'm focused on different scales and whether an analyst firm thinks something is important is not for me. However, if you're a startup trying to get bought then you absolutely MUST be saying you're bimodal regardless. 

If they're telling you to hop, skip and jump then damn well hop, skip and jump - no matter how ludicrous it seems or is. Even when you know it's plain wrong ... hop, skip and jump. Just hope someone notices.

Those signals are useful. Learn to use them.

Wednesday, April 01, 2015

So Amazon fired a warning shot at supermarkets and everyone went April Fool?

By now you'll have heard of Amazon's "Dash" button. Is it an April Fool? Let's hope so if you're a supermarket but in all likelihood ... nope. It's a bell tolling for your future demise (except those who can carve out a specialist niche).

To show where Amazon Dash might go, this video of mine from 2008 is of a physical book interacting with a computer using early stage printed resistive connectors combined with some physical electronics. Even back then, in a research setting it was possible to get close to going fully printed on the electronics. Do not underestimate what is possible today, 7 years later.



So, what's the big deal with Dash? In all likelihood it's a field test. To test out the concept with consumers, get them educated and used to the idea of ordering by pressing a button associated with a physical product. That button will be connected to your phone or some future home IoT device. 

But can it make money? You're missing the point. It's a field test to what comes next. An Amazon "buy" button on every product i.e. every packet of cereal etc. 

But surely that would be too costly? Oh, come on. You don't think Bezos bought the Washington Post because of its journalistic merits do you? If you're going to stick a "buy" button on every packet of cereals or whatever then the button and part of the electronics will have to be printed by mass production techniques. I did warn over a decade ago that those big printing presses that companies were outsourcing and flogging off cheap on the advice of "strategic" consultants are the Intel's of tomorrow. You were mugged and you paid someone else to mug you.

But you can't use big smelly old printing presses for electronics! Hmmm, go talk to the wonderful Dr Kate Stone. If you don't know what Kate has been upto ... watch this and go "wow, I didn't realise".


Audi TT brochure hack from ProjectGallery on Vimeo.


But the supermarkets (Walmart, Tesco etc) will just be able to do the same if the "buy" button becomes successful!

Sure, they could if they had good situational awareness but they don't and hence they won't react until it is too late. The problem is the same old thing - a punctuated equilibrium combined with inertia. Kodak and Blockbuster weren't taken out by a lack of innovation, they out innovated their competitors - first with video on demand online, first with digital still cameras etc. It was inertia caused by existing business models (e.g. shops) that caused their decline.

I know we have endless charlatans claiming that you need a Chief Digital Officer (CDO) or you won't innovate and you'll end up being like Kodak and Blockbuster. There are reasons for a CDO but it's not this. Lack of innovation isn't the problem. You're being mugged again. You're probably paying for the privilege.

The Achilles heel (a major point of inertia) of supermarkets is product placements on shelves in their shops. They make a great deal of money from this and it gives them power with suppliers. The idea of putting a buy button on every product would undermine the supermarket's power relationship. So, they'll have internal conflict and push back on the idea. Unfortunately for them, data will reinforce this as a wise choice. Why?

To understand why, you need to realise that a punctuated equilibrium is an exponential change. The network effects / 2 factor market that'll develop around "Dash" will create this. What this means, is that 10 years after the printed electronic button versions are released then only about 3% of products will have an Amazon "buy button" embedded in the packaging. There'll be posters with a buy button and all sorts of other useful marketing tricks. But the supermarkets will scoff at the "buy" button, dismiss it as a gimmick, point to the revenue they make from product placements and be lulled into thinking they have plenty of time. Alas, five years later it'll be around 40-50% of products. The game is over. 

Bye bye supermarkets that haven't carved out a very specific niche. Things will get tough and you could have prevented it. You won't though.

Roughly speculating ...

2015: field test starts.

near 2020: Amazon printed electronic "buy" button appears on packaging. Dismissed by supermarkets as a gimmick. Stores refuse products with the "buy" button, pressure applied to major product suppliers not to use it. Wall Street asks why Bezos is doing this. Lots of analysts dismiss it.

near 2030: Amazon printed "buy" button on an estimated 3% of all products. Posters and other marketing forms (e.g. brochures with a printed buy button) exist. Amazon still won't be revealing revenue figures (those created will be buried under SFAS131 reporting limit). Most supermarkets will refuse to stock product with the "buy" button and even talk about providing their own "buy" button in the future. Some internal questioning will exist but inertia to change will be stronger supported by figures showing a healthy revenue from product placement. There will be some pressure mounting from product suppliers. Analysts talk about "buy" button having a long term future in a "click and brick" model and how supermarkets will dominate.

near 2032: A consortium of supermarkets announce their plan to build a "buy" button capability launching some time around 2034.

near 2035: Amazon printed "buy" button on 50% of all products. Supermarket launched "buy" button fails to make any impact. Supermarkets forced to stock product with the Amazon "buy" button. Several supermarkets in danger of failing, a few have found niche markets. Majority of ordering of product now done through buy button not in the store. Revenues from product placement (shelves) plummets. Supermarkets are too late to the market to create a viable alternative model.

near 2037 game over.

Pray this is an April fool. 

Oh, and this will also change the IoT game by allowing a very neat ecosystem play to happen. Another post, another day. Not convinced companies should be dropping $3 Billion on that space without knowing what is coming.

Why pray? Well, if this speculation holds in terms of timing then this is the fourth piece of evidence to suggest the underlying cycle of change (from genesis to the point of industrialisation) accelerated post internet not to 30 - 50 years but even faster to 20 - 30 years. This has all sorts of knock on ramifications. The jury is still out on that one though.

On the subject of timing, if this is close to the point where industrialisation starts then I'd guess 3 to 5 years for printed version and industrialisation itself takes on average 10-15 years for it to work its course and reach 40-50% of the market. Add another two years for the fall-out to reach its peak and you could be talking 2030 instead of 2037.

Will this happen? No idea, It's speculation. It's extremely difficult to predict the actions of individual actors without continuous observation of gameplay and use of weak signals against a single opponent. In any case, don't dismiss Amazon's "Dash" button. It's probably not a joke but a serious play.

Update 1st April - On marketing genius

Dropping this little gem just before April Fool is pure marketing genius - create some noise, add a bit of misdirection and if (as I suspect) this is a field test before a printed version is launched then you've just given all those within your targets the ammo to declare it as a gimmick and to dismiss it. The deceptively slow exponential growth of the punctuated equilibrium combined with inertia will just be reinforced by this. They'll deny it as a threat right upto the point that it'll be too late to react. If right then this is lovely gameplay. Couldn't do better myself. Hats off to Bezos.

For those struggling with this concept. The easy way to think about this is that the supermarket of the future is your home, it's your friends home, it's the street you walk down, it's the office you work in, it's all around you. Anything not on the 'shelf' that continuously surrounds you and is available with one click for home delivery can be perused and bought online. See something you like, click the button.

Supermarkets will be an antiquated concepts faster than you realise or any supermarket expects.


Update 1st April - On inertia and gameplay


Lots of confusion on what can be done about this. 

Nothing! 

No amount of innovation by a retailer / supermarket (any large chain who stores and shifts common product through shops) will save them because this is NOT the problem. The problem is the inertia caused by revenue and supplier power created through product placement (i.e. shelving). Any action to change this will be resisted internally by the company. Even if a CEO took the steps to change this then the financial markets would punish them because the impact it would have short term on the P&L. Everything is stacked up against retail stores / supermarkets acting until it's too late (i.e. it is so obvious and overcomes past data that reinforces the existing model). 

The ONLY way to prevent this is for a strong CEO to ignore the market and internal inertia (forcing a change) or for the company to be taken private or for the company to focus on some niches. The whole era of product placement on shelving has just been earmarked for destruction. Suppliers hate the games supermarket's have played with this. It's over. It's just a question of time for the full play to emerge and the punctuated equilibrium to take its course. 

If you work in this space then of course you'll dismiss this and won't believe it'll happen. Doubly so if you have bonuses or any incentive related to product placement. Triply so if you'll be retired before the fall out hits. That's perfectly normal. You're an essential cog in the destruction of the company.

The future of the "Shelf" (as in the traditional supermarket shelf) is in the dustbin of history bar some small niches that'll exist and flourish (in much the same way that small specialist bookstores have flourished through Amazon). This game has been played many times before in many industries. You are duly warned. If this is real, it's over. Just add time.

Oh, and Amazon will allow device manufacturers to include the button in their product. Please go read "Sensor as a Service" if you don't know what this really means. They will replay the same ecosystem game in the physical world as the digital. Going off and dropping $3 billion+ on IoT platform plays or trying to create standard IoT platforms isn't going to help you here.

The all encompassing IoT platform play is going to get its guts ripped out by sensor as a service plays used to build platforms based upon components and exploitation of ecosystem to sense future success. This is where the real battle is. Those "standard" platform plays are just a combination of "strategic" consultants plus mugging. I hope you didn't pay much for it ... I'll guess you did.

This is 2015, this is basic gameplay people. You should know this stuff by now. You've had a decade to learn these games.


Update 2nd April 2015 - On Design

I've been asked do you need to replicate the whole Amazon "Dash" button in a printed form for a cereal packet?

No. 

You could use some form of passive RFID with a capacitance based printed button to do the trick in range of a phone. The tech to print this at scale has existed for some time. You should think of "Dash" as a field test, a mechanism of educating the public and getting people used to the concept of pressing a button to order a product. Any printed version doesn't have to operate in exactly the same way.

Obviously "Dash" can lead to a sensor as a service play and already it has been announced it'll be embedded in other companies products. That's just part of the gameplay that is possible here though.

Update 10th April 2015 - Being an Idiot.

I forget how many times I've been called an idiot, ridiculous, absurd etc.

3D printing of physical forms and electronics (1998) - "idiot, that'll never happen". 
The mobile phone replacing the camera (2001) - "idiot, that'll never happen". 
Shift towards utility computing and platform services (2005) - "idiot, that'll never happen".
Collision of digital and physical and the creation of new languages which compiles down to both (2006) - "idiot, that'll never happen".

I've a long long history of being called this and I like it. The name calling tells me that a concept causes a reaction. So, I'll play the idiot card. 

When I see something I like, I just want to touch the object and know it's being ordered and delivered to my home. I don't want to get out a phone, unlock it, find the app, speak to it or point the camera at some barcode, press confirm, choose from a selection of alternatives ... yada yada.

I like my life simple. I'm an idiot. If I see something that I like and I have that impulse, it always makes sense to me to make that process of buying as frictionless as possible. Touch the Amazon sticker on the object I desire and everything else is taken care of? That's my sort of idiot world.

Update 10th April - Everyone is a Salesperson

Expect Amazon to make it frictionless i.e. touch the discrete Amazon logo on the product - the label of the super looking jacket that someone else is wearing, the cool phone your friend is using, the cereal packet that's just run out, the neighbours very nice tasting bottle of wine you're having over dinner -  it orders and delivers with "intelligence" working out if this order is within the bounds of normal behaviour for you ... otherwise a confirmation request will be sent.

Think of the entire world as one big supermarket shelf and how odd it would seem to go to a "supermarket" with limited shelf space. Of course, there'll be lots more specialist shops to browse. The niches will do very well and Dash will provide an even better way of spreading their product.

The shopping experience of tomorrow is more like ...

"Oh, that shirt is fantastic! Where did you buy it from?"

"Can't remember. It was this tiny shop in Manchester making these specialised designs. But, it's ok ... you can touch the label"

"Thanks" ... [a correctly sized shirt now is flying through the supply chain on the way to my home]

"You know I get a 5% commission every time someone touches the label?"

"Really? When did that happen?"

"All the new products do, the Amazon dash labels know who the owner is. Everyone is unconsciously a salesperson for everything they own."

Will this happen? No idea but I'd be scenario planning what you're going to do if this stuff starts happening. You'll need to be well armed beforehand i.e. no point turning up to the battle unprepared. Naturally, nearly every company will turn up to the battle totally unprepared and the normal Epic Fails of Sensible Executives will happen.

There's all sorts of combination effects in the future (as always). Chances are when you press the label in some future world the design will automatically transform your clothing. Does that sounds crazy? Of course it does but the crazy ideas are where the real value is.

Saturday, March 28, 2015

The necessity of incompetence in Strategy

Some time back, I collected a list of common terms used when describing a strategy. I called these Business Level Abstractions of a Healthy Strategy (or Blahs) for short. I then created a Blah Template, auto-generated around 64 strategies by randomly inserting the Blahs into the Blah Template and then circulated them. An example of one of these randomly generated strategies in provided in figure 1.

Figure 1 - Randomly generated Blah Strategy


The responses I received back (over 400 in total now) basically confirmed something I already knew. Meme copying is rife in our industry as opposed to strategy based upon the context.

I've demonstrated to many (i.e. tens of thousands of people) on how to use mapping to improve situational awareness in an organisation and improve performance on many common issues from user needs to risk management to team structure to collaboration to communication ... it's a dull and mainly operational list and since I've been doing this for a decade, I tend to get a bit bored by it. However, it is pleasing to hear more and more examples of its use.

If you're new to mapping, then I've written an article for CIO Magazine on 'An introduction to Wardley Mapping'.

Mapping's real power (and the bit I do get some enjoyment from) comes in strategic gameplay because it provides a way of seeing both position of components in the landscape and how those components will move. This gives you the opportunity to identify where you can attack which is the first step in creating a strategy (see figure 2)

Figure 2 - Mapping and Strategic Play. 


Let me be clear. I hear a lot of strategy based upon low levels of situation awareness. These all include the same characteristics including verbal reasoning, backward causality, large documents focused on telling a story, lots of memes, a tyranny of action (the how, what and when) with vague hand waving "why" and no concept of where (position and movement). These documents serve no useful purpose other than to create misalignment and miscommunication issues in an organisation. Hence encouraging your competitors to write such documents is always a good idea.

High situational awareness environments use visual reasoning, position and movement, are context specific and don't suffer from the alignment and communication issues that are often rife in their opponents. 

Today, by simply looking at the level of strategic play and awareness between a group of companies, you can often determine the outcome of the battle well before it has started. If one has high levels of situational awareness and the rest have low levels then you already know what's going to happen. If however the levels are about the same (in practice this means they all have low levels) then it's down to lucky breaks, individual performances and some aspects of culture. I don't expect you to believe me (it's not what most management books tell you), I'll just provide figure 3 and leave with a caution that the level of play is changing and in the near future it'll be much harder to distinguish between companies.

Figure 3 - Strategic Play vs Action


Now when it comes to strategic play, this requires a lot of thought, experience and a fair amount of scenario planning. Whilst you can often quickly produce a map (in a few hours), you need to share it within the organisation, compare to competitors, look up and down the value chain (including mapping your customers, suppliers) for opportunities etc. There's a lot to consider from the landscape, to your capability and those of competitors, to your organisations capability (and what needs to be developed) to points of change that can be anticipated to weak signals to economic patterns to constraints. I've included this in figure 4 as a reminder.

Figure 4 - What you need to think about.



Into this mix you need to have a good idea of the points of change heading towards you (figure 5) and then a pretty good understanding of the types of games you can play. Any strategy will contain many games applied to the context (i.e. the map of the landscape). A list of such games (a toolbox) including those rather tedious operational ones is provided in figure 6.

Figure 5 - Points of Change.


Figure 6 - A toolbox of Game Play



Now some of those games are slightly more evil than others. You're also unlikely to get away with using one gameplay but instead you'll need many and they're all context specific. Hence I might look at my map of the TV space (figure 2) and decide I'm going to :-

1) Play a Fool's mate with creative studios by commoditising production systems through direct investment in an open source approach.

2) Based upon the likely war to appear in Big Data, the consequences it'll have over 10 -15 years,  the importance of data to my industry then
  • a) I'll adopt the latest utility services
  • b) Consider running a co-opting and intercession play i.e. experimentation and subsequent direct investment in building a startup providing a brokerage portal (a middle person) across multiple utility big data system providers to hide my consumption data from any single provider and reduce any ecosystem games they can play.
  • c) Use misdirection in the wider business community by promoting the use of big data but creating FUD over whether utility services will meet business needs. The more competitors get dragged into expensive product solutions the better. It'll create inertia to change and as my volume increases then their costs will likely be prohibitive
  • d) Deal with any toxicity created by an internal big data system by spinning it off. Given enough misdirection and buzz in the industry, I can probably make a handsome penny on the sale i.e. a pig in a poke. Never forget, there's one born every minute.
3) Given a threat of future intelligent agents generating shows, I might want to slow down this process of evolution. I can look towards patents or acquisition of any threats or even try to create a deliberately designed to fail open source project to put off any future attempts.

4) I'd probably want to see more aggregated sites (e.g. Netflix, Amazon etc) so I'd look to undermine barriers to entry and maybe mix in some form of standards game against them.

5) I'd also want to strengthen my differentiator of artistic direction, so I'd look to reinforce a centre of gravity in this space by hiring stellar talent, promoting our artistic capabilities etc.

6) ... and on and on.

Ok, the above took about five minutes to write and it's not worth a bag of beans and most of the play is close to the downright evil side (comes with its own risk). Fortunately, this is just illustrative. However, if I was doing this for real then I'd spend at least a day going through all sorts of potential opportunities, revenue pivots etc before getting to a decent strategic play. Yes, with experience then sometimes you can spend a day or two covering scenario planning and strategic play for a moderate sized company that you're running. Please note the emphasis. You're playing the game, you have to do this.

I cannot emphasise this enough but get a bunch of consultants in to write your strategy and you'll end up with an overpriced document with little or no situational awareness but lots of good stories. At best they can provide you with game plays that you might consider but you need to apply this to your context. I know that sounds a lot harder than the easy to use ready made answers that the industry peddles but it does become easier with practice.

Once I've determined my play, I'll try to mark up as much as possible on the map (or usually maps) and maybe have another short document (i.e. one page or two) with more details on the main strategic plays. I wouldn't spend more time on this because the map and the game plays are just a guide to direction of travel. There is no such thing as a perfect map, all maps are imperfect. All maps change. You're going to have to adapt along the way and get used to it.

However, when it comes to the outside world then I'd probably publish this ...


Why?

The one thing you quickly learn about strategy is you never actually tell the outside world what your strategy really is. If you're up against someone who has skill in what they're doing then at least try to look incompetent even if you're not. Try to look weak where you are strong. So whilst your actual strategy maybe fluid and adaptive with changes in the environment, you should always portray an image of a meme copying clone unless for commercial reasons you need to expose something else.

Of course that does mean, you can never really tell if your competitor is incompetent just by looking at their strategy. That's the problem with figure 3 and why future attempts to distinguish strategic play will become increasingly more difficult. With greater levels of situational awareness and weak signalling then people will learn to disguise their patterns of behaviour. Many years ago it used to be possible to track the movement of private jets in order to determine if executives from different companies were meeting up (useful in tracking M&A talks). These days there's a lot more care taken. So be careful not to assume too much. As people get better at this, it'll become harder to tell those players from the chancers.

Incompetence, or at least the appearance of incompetence, is a necessity for good strategic play.

Saturday, March 21, 2015

The curious case of #RPSFail

The Register screamed 'Another GDS cockup: Rural Payments Agency cans £154m IT system' which it then cried 'escalated to £177m' and so the media told of us a lamentable Government IT failure. 

These things happen, the private sector has a terrible record of IT project failures but fortunately a big carpet to sweep it under. The NAO is bound to investigate.

The Register told us how GDS championed "the new agile, digital approach by the Rural Payments Agency" whilst apparently "The TFA has always been opposed to the 'digital-by-default' dogma"

The Register made it plain, it "understands that the Government Digital Service was responsible for throwing out a small number of suppliers working on RPA instead and went for a 40-plus suppliers approach - focusing too much attention on the front end, and little attention to integration between front and back." 

The finger of blame pointed firmly at GDS.  So, what actually happened? How did GDS get this so wrong? Well, we won't know until the NAO investigates or GDS posts a post mortem. Everything else is speculation and El Reg loves to try and cause a bit of outrage. But since the media is in the speculation game, I thought I'd read up more and do a little bit of digging.

The first thing I noticed in the mix was Mark Ballard's article. It started with the line "Mark Grimshaw, chief executive of the Rural Payments Agency is either an imbecile or a charlatan, if Farmers Weekly is anything to go by."

What? I though this was GDS' fault?

"He's been telling the agricultural press that his agency's prototype mapping tool is a failure. That's like saying a recipe is duff because your soufflé collapsed on your first trial run."

Prototype? A £177 million prototype?

"Farmers were apparently unhappy the prototype was not working as well as a production-quality system. So Grimshaw called a press conference yesterday and announced that the sky was falling down."

Hmmm. Something doesn't seem right here.

"The odd thing was that the mapping tool had only just been released as a public beta prototype. A date hadn't even been scheduled for a live roll-out."

Hence, I decided to check on the Rural Payment System (RPS) that was being built for the Rural Payment Agency (RPA). Sure enough, the RPS had only recently been released as a beta. Also the cost is only (cough) £73.4 million. Still, an awful lot but how did it get upto £177m? I checked El Reg, it was apparently a "source".

One eye opener when checking on the Government site was that RPA would "help prevent fines (‘disallowance’) for making payments that don’t comply with CAP rules (~£600m since 2005)"

Really? How comes we've been paying through the nose for compliance failures? A quick search and I stumble upon the fact that the RPS is the second incarnation of a system. The first incarnation (SPS) was so shockingly poor that in 2009 NAO urged DEFRA agency to replace the £350m system even though it was only 4 years old

£350m? … Oh but it gets worse.

In 2009, according to the NAO then along with a £350m system, we had incurred an additional £304m administration cost and £280 million for disallowance and penalties and £43m irrecoverable overpayments. The cost per transaction was £1,743 and rising (22% over 4 years). This compared to £285 per claim under the simpler Scottish system. This was 2009? Heaven's knows the cost to date.

What marvels of genius had created this 'complex software that is expensive and reliant on contractors to maintain' - why expensive consultants. In fact, 100 contractors from the system's main suppliers at an average cost to taxpayers of £200,000 in 2008/2009. The SPS is so complex and "cumbersome" because of "customisation which includes changes to Oracle's source code"

Now, £73m is a bad loss but nowhere near as bad as £650m (system + administration) for the previous system with two main contractors. El Reg's wisdom of keeping it down to a few suppliers has just gone up in smoke. However, just because the past was a debacle doesn't mean the future has to be. This was one of UK Gov's exemplars and GDS had been pretty upbeat about it.

A bit more digging and I come across Bryan Glicks article. Of note - 

'The Government Digital Service (GDS) introduced new controls over IT projects, designed to avoid big, costly developments depending on contracts with large suppliers. When Defra/RPA went to GDS with its initial proposal – a 300-page business case, according to one source – it was quickly knocked back.'

'Instead of a few big suppliers – , for example – RPA would be agile and user-led, with multiple small- and medium-sized suppliers.'

This sounds all very sensible. But still it went wrong … even if far less money was lost. Now the project sounds complex, according to the article there are - "multiple products involved that need integrating – more than 100, according to one insider".

Two suppliers seemed to be called out - one in the article Kainos and one in the comments Abaco along with the line 'this Italian company have not delivered most of the work on time and is a factor in the whole project being delayed'.

Interesting ... who are they? are they really involved? what is the role of any delays? So, more digging.

Kainos is the sole delivery partner for the original mapping prototype which was comprehensively praised by Defra. It's an agile development house, regarded by the Sunday Times as one of the top 100 places to work and seems to have a pretty strong pedigree.

Abaco provide SITI AGRI -  first thing I noticed, which caused my heart to sink was 'Oracle'. Don't tell me we're customising again?  It mentions "open" but I can find no record of their involvement in the open source world. It talks about SOA and even provides a high level diagram (see picture) and attractive web shots.


But are they involved or is this a red herring? I dig and discover a DEFRA document from 29/09/2014 which does in fact talk about SITI AGRI's spatial rules engine and use in the RPA.

So why do I mention this? Well Bryan had also noted :-

'even with very few users, back-end servers would quickly reach 100% utilisation and “fall over”'

'core of the problem was identified as the interface between the mapping portal and the back-end rules engine software'

OK, so we can now take a guess that part of the RPA solution involved the graphical Kainos mapping solution providing the front end with a connection to the services layer of the Abaco 'Oracle' based spatial rules engine system.  This sent alarm bells ringing. 

Why? 

Well, Abaco had a mapping tool and it claims to be web based - it even provides good looking screen shots. If this is the case, why not use it?

I'm clutching at straws here and this is into wild speculation based upon past experience but being able to provide a system through a browser doesn't mean it's designed to scale for web use, especially not 100,000+ farmers. Systems can easily be designed based upon internal consumption. There is a specific scenario called 'Lipstick on a Pig' where someone tries to add a digital front end to a back end not designed to cope with scale. It's usually a horror story.

Could this be what happened? A digital front end designed for scale attached to a back end that wasn't? That might explain the 'interface' and 'utilisation' rates and given an Oracle back end then I could easily believe the license fees and costs would be high.  However, it doesn't ring true and that's the problem with such speculation. Context.

GDS is full of highly experienced engineers. I can't see them commissioning a back end system that doesn't scale and trying to simply bolt on a digital front end. They would know that internal web based systems are rarely capable of scaling to public usage. This would have have had red flags all over it. 

Something else must have happened. As to what, we'll have to wait to find out.

Bryan also noted "Contrary to some reports, the £155m RPA system has not been scrapped entirely. According to the RPA 80% of farmers have already registered using existing online". This raises the question of what can be saved for future use? What has actually been lost? What is the cost?

At best we know that there was an original monumental IT disaster caused by customising an Oracle system with expensive consultants. It cost over £650m and had mounting fees. Certainly some lessons seem to have been learned by breaking the project into small components and using a broad supply base.

An approach of prototype and testing early with feedback seems to have been used but there is an issue about how this has been handled by RPA. If Ballard is correct then it might be worth explaining to Chief Execs of departments that if a prototype is still undergoing development then a) don't invite everyone b) don't run around claiming the sky has fallen on a prototype c) do communicate clearly.

However, there is no denying that something has obviously gone wrong with the current approach, though it's unclear how much of the £73m has been lost. However there are some questions I'd like to see asked.

Questions
1) What is the the actual cost spent and where did this go - license fees, consultants, other?
2) How much of what has been developed can be recovered for future or other use including other projects?
3) Was this system broken down into small components?
4) Was the interface between mapping system and the rules engine the cause of failure?
5) Is SITI AGRI the rules engine? 
** a) Were there delays as claimed?
** b) Was the rules engine designed for web scale?  
** d) If it wasn't designed for web scale then why did GDS commission the system for use on the web?
6) Did they adopt an open source route? Was there an open source alternative?
7) Who pulled the plug and why? 
** a) Should the plug have been pulled earlier?
8) Was this a case of 'Lipstick on a Pig?'

Of course, this is all speculation based upon a little digging and reading my own past experience of disasters into the current affair. What the actual story is we will have to wait to find out.

Since I'm in the mood for wild speculation, I'll also guess that despite the headline grabbing bylines - the Register will pretty much get everything wrong in terms of cost, the cause (number of suppliers) and its tirade.

Tuesday, March 17, 2015

In terms of strategy, WHY is irrelevant without WHERE

Think of a map in combat or a chessboard. There are two things that both instruments tell you.

First, is the position of things or WHERE things are in relation to other things. This Knight is on this part of the board next to the King etc. The troops are on this hill and the enemy is in the pass below.

The second thing they tell you is WHERE things can move to. We can move these troops positioned on the hill, down the hill to the south but we can't move the same troops north because there is a cliff which falls into the sea etc. We can move this Knight here or that Rook there.

A Wardley Map enables you to draw a line of the present (an existing business or organisation) on a landscape of position (value chain) vs movement (evolution). See figure 1.

Figure 1 - A MAP


On the map we have an hypothetical business represented by points A to B to C in a chain of needs. We can see the relationship between components. We know all these components will evolve due to supply and demand competition. We know we can manipulate this evolution (open efforts, patents, FUD, constraints etc). We know that as components evolve they can enable higher order systems to appear.

This is what we call Situational Awareness.

Hence, from your map (even a simple example like above) you can see multiple points WHERE you might attack. Do we want to commoditise a component? Do we want to drive up the value chain into creating a higher order system?

We're going to deep dive soon on some strategic gameplay and weak signal techniques but before we do, I need to make this bit very clear. The WHY of strategy is always a relative statement as in WHY here over there? Why move the rook here over there? Why move the troops down the hill over providing suppressing fire to the pass? Without the WHEREs then WHY becomes ... hand wavy ... and usually deteriorates into how, what and when (i.e. action statements).

You can usually tell competitors who have little to no situational awareness because they talk about the need to focus on why but when you ask them why are they attacking this space over another, they often get flummoxed, a bit hand wavy and quickly move into inspirational, vision and action statements -

"We're going to make the lives of cats better everywhere. It's part of our vision to become the best supplier of cat food. That's why we're building the internet of things for kittens!"

This is always useful to know. These people are potential fodder to your cannons and easy prey. They are your soft targets, the ones to take out first. With practice, you can often use inertia to get them to self implode and fight themselves.

BUT be warned. When asked the same question you need to reply in the same vague, hand wavy way. Don't give away information. Misinform. So do a bit of digging on your competitors before you attack. Just in case they know what they're doing. Chances are, you'll be fine.

Which is the other point of mapping. Don't just map yourself, map your competitors. If a competitor doesn't understand the game, don't hesitate to help yourself to their market. It's always easier to build by taking out the easy prey before you tackle the hard targets.

Monday, March 16, 2015

Continuous and Sustainable Competitive Advantage comes from Managing the Middle not the Ends

The mechanics of biological and economic systems are near identical because they're driven by the same force - competition. The terms we use to describe economic systems from evolution, punctuated equilibriums, ecosystems, red queen, cell based structures, co-evolution, componentisation, adaptive renewal cycle and so forth, all have their origins in biology. 

I'm going to use a few of these to argue why the future of continuous and sustainable competitive advantage comes from the middle not the ends of evolution. If you are completely new to Wardley mapping then I'd suggest starting here.

First, we need to understand evolution. Evolution is not the same as diffusion. It describes how something evolves as opposed to how a particular instance of something diffuses (see Everett Rogers) in an ecosystem. 

Evolution is not predictable over time but it occurs over time. The best model I know of describing evolution is given in figure 1. It's based upon a pattern that was described in 2004 and primary research to determine why that pattern occurred between 2006 and 2007.

Figure 1 - Specific form of Evolution


It's the combination of supply and demand competition that causes things to evolve along a standard pathway. As things evolve their characteristics change. However, evolution doesn't just impact activities (the things we do). It also impacts practice (how we do things), data (how we record things) and even the mental models that we create (how we understand things).

The general form of evolution is given in figure 2 and in table 1, the characteristics of the different classes along with several general economic patterns are provided.

Figure 2 - General form of Evolution



Table 1 - Characteristics of General Form.


There are all sorts of subtle interaction (e.g. co-evolution of practice with activities, how to define ubiquity) but that's not the purpose of this post. What I want to concentrate on is the issue of evolutionary flow i.e. the competition that causes all things to evolve.

As a thing evolves then it enables higher order systems to appear through an effect known as componentisation (see Herbert Simon). For example, utility electricity provision enabled television, radio, electric lighting and digital computing. These news things exist in the unexplored territory, the uncharted space. They are about experimentation and exploration. They are only economically feasible because the underlying subsystems (i.e. the things they need, such as power) became more industrialised.

When this happens, visible user needs are no longer about the underlying subsystem but instead about the new higher order systems that have appeared. People only want electricity in order to power their computer, their TV, their radio and so forth. 

These higher order things are the visible user need, the underlying subsystem becomes increasingly buried, obscured and invisible. But any new higher order thing also evolves e.g. digital computing has evolved from its genesis to utility forms today. This in turn allows an even higher order of systems to be built.

When I use a cloud service, I don't care about the underlying components that the supplier might need (e.g. computing infrastructure). I care even less about the components below that (e.g. power).  I did care many years ago about things like servers and even power but today I care about what I can build with cloud services. Those underlying components are far removed from my visible user need today. Why? Because I'm competing against others who also use these services.

It is supply and demand competition that creates the evolutionary pressure which drives the novel to become the commodity, the uncharted to become the industrialised and the cycle to repeat. For activities that means genesis begets evolution begets genesis (see figure 3). For knowledge it means concept begets universally accepted theory begets concept.

Figure 3 - Genesis begets evolution begets Genesis


As an aside, this cycle has specific effects. It has three stages of peace, war and wonder due to its interaction with inertia to change. There are numerous forms of inertia and they act as what Allan Kelly described as a homomorphic force.  This cycle has a corollary in Hollings adaptive renewal cycle which is unsurprising given both are driven by competition. The war element of the cycle creates a punctuated equilibrium with the past due to network effects of competition i.e. the more people adapt the more pressure to adapt increases. The latter is known as the Red Queen Effect.

Of course, whenever you examine something it has a past, a present and a future. If I use a cloud based analytic service, I know it needs an underlying computing infrastructure, I know that computing infrastructure needs power and I know that the generators that make power need mechanical components. I also know that all these components evolved and were once novel and new. They each had their genesis. 

I've shown this constant evolution in figure 4. What's important to remember is the chain of needs (shown in a solid black line) is a line of the present. Those components evolved from the past and are evolving into the future (the dotted lines). The further you go down the chain, the more invisible the component becomes to the end user.

Figure 4 - Chain of Needs, The line of the present.


Being able to show the present on a landscape of what something is (the value chain) against how it is evolving (change i.e. past, present and future) is what mapping is all about. It's an essential activity for improving situational awareness, gameplay, operations and organisational learning.

It's key to understand that a map is a picture of the present in a dynamic landscape. All the components are evolving due to competition. That evolutionary flow affects everything. But if you know this, if you understand how evolution works, the change of characteristics, the requirement for different methodologies and common economic patterns, then you can exploit this. Figure 5 has an example map and a particular play known as Fool's mate.

Figure 5 - Map


With a map you can mitigate risks, obliterate alignment issues, improve communication and even examines flows of business revenue along with a host of other techniques. With enough maps you can remove duplication and bias in an organisation. 

You can also use maps to organise teams into cell structures and to solve the issues of aptitude and attitude i.e. we might have lots of engineering (an aptitude) but the type (an attitude) of engineering we need to create novel activities is different from the type of engineering we need to run an industrial service. This is a structure known as Pioneers, Settlers and Town Planners - a derivative of commandos, infantry and police from Robert X. Cringely's Accidental Empires, 1993.

You can use maps for scenario planning, for determining points of attack (the WHERE of strategy,  WHY is always a relative statement such as why here over there) and you can even create a profile of a company, an industry or a market i.e a frequency count of where components are along the evolutionary scale. 

Why bother with a profile? 

The components in the profile are all evolving from left to right (i.e. competition drives them to more industrialised). If nothing novel was ever created then it would all (assuming effective competition) become industrialised. You can use a profile to determine the balance of your organisation and whether you need more pioneers, more settlers or more town planners (see figure 6).

Figure 6 - Profile


To give you an idea of how to apply the three party structure. I've covered this before (many, many times) but this diagram will help.

Figure 7 - Applying PST (Pioneer, Settler and Town Planner) to a Map



As with the need for using different methods whether purchasing or project management (agile for genesis, lean for transition, six sigma for industrialised) then the roles of pioneers, settlers and town planners are different. So, is their culture. So is the way they organise. So are the type of people. See figure 8.

Figure 8 - Characteristics of Pioneer, Settler and Town Planner




Ok, but what has this to do with the middle?

The settlers and the transitional part of the profile, that is your middle.

This form of structure is the only way I know of sustainably solving the Salaman and Storey innovation paradox of 2002. This isn't "nice ideas", this came from competitive practice over a decade ago and subsequent re-use. Why it worked so well could only be explained afterwards in 2007 when the evolution curve went from hand waving pattern to something more concrete.

Of course, the techniques of mapping and evolution have evolved themselves over the last decade. Mostly this is by refining the terms used to make the language more transparent to others or through more adoption. However, every now and then something new appears and the latest addition is from a post by Dan Hushon on 'Digital Disruptions and Continous Transformation'. If you're familiar with mapping, I recommend you go and read now!

There's an awful lot to like in Dan's post. However, to explain why it's important, you need to first consider that a map can also be used to provide information on business revenue flows i.e. you can investigate a map to identify different business opportunities (see figure 9)

Figure 9 - Business Revenue Flow.


Some of those revenue streams will be profitable, others not. But even with a profitable revenue stream then this won't remain static. Take for example the pipeline of content in figure 5 above from commissioned shows to acquired formats i.e. the evolution of a new show like X-factor to a broadly repeated format show. The nature of the show has evolved.

With anything new (i.e. genesis) then you'd expect to add a high margin because of the risk taken. As that thing evolves and becomes more widespread and defined,  then you'd expect the margin per unit should be reduced and compensated with a much greater volume in a functioning marketplace.

In his post, Dan looks at this from the point of view of value vs evolution and overlays a PST (pioneer - settler - town planner) structure. I've slightly modified this but kept very close to the original in figure 10. This is not a graph of how things are, it's a concept that hasn't been tested yet. But evolution would suggest that this is how things should operate.

Figure 10 - Modified version of Dan Hushon's Graph


Why do I like this graph so much? Well, think of your organisation. You have core transactions you provide to others (in order to meet their needs). Those core transactions consist of underlying components (which can be mapped) that are evolving, These components effect the profitability of the transaction. The transaction itself is also evolving. As it evolves, the margin (or value) created by each unit of transaction should also change and reduce. Novel transactions should show high value per unit (and high margins). Commodity transactions should show low value per unit (and low margins) over time. 

You can use this graph to create a financial profile of your organisation and where your transactions are. They should all be evolving along the arrow. Of course, as transaction evolve to more commodity then you should be looking for those higher order systems to replace them. This can be used to create a financial pipeline for change and whilst the ends are important, it's the middle we really need to manage, the flow from one to another.

Ok, I get this but why is the middle so important?

If it wan't clear, situational awareness is key to a vast number of aspects of managing an organisation and the ONLY way I've found to significantly improve situational awareness is to map and compare the present against evolution. 

Evolution shows us that we're living in a dynamic environment with the constant flow of change from the novel to the industrialised. This impacts everything from project management to purchasing to team structure to finance.

Whilst there are two extremes (genesis vs commodity) which require polar opposites in methods, culture and structure (Salaman and Storey, Innovation paradox, 2002) and everything (activities, practice, data and knowledge) in a competitive market (with demand and supply competition) evolves from one extreme to another ... there is a constant. That constant is change. The middle represents and governs this evolutionary flow from one extreme to another.

Yes, it's important to manage the extremes but both extremes can be outsourced either to suppliers or through the use of an ecosystem model, such as ILC.  Some firms will be able to hide in the relative safety of the industrialised space using ecosystem models to sense the future. Some will try and survive in the high risk space of constant genesis. For most of us then the one thing you need to manage above anything else is the flow between the extremes. This is where all the tactical plays matter. This is where situational awareness is critical. For most us, this is where continuous and sustainable advantage can be gained.

If you're going to build a two mode structure (bimodal, two speed IT, dual operating system etc) then focus on creating public APIs for utility services and get every other company to build on top of it. Let everyone else be your R&D labs and your pioneers. Hide in the industrialised spaces and use ecosystems as your future sensing engines. Remove pioneering internally through the use of a press release process. Use the skills of the settler to mine the ecosystem for new successful changes which you then industrialise with town planners to commodity components or utility services. Alas, there's only a limited number of firms who can play that game.

This is why I'm not a fan of bimodal, dual operating system, two IT speed concepts in general. Most of us have to cope with the entire spectrum of evolution. These two mode methods appear to focus the mind too much on the extremes. It doesn't matter if they've included the all important middle (the transitional part, the settlers) in one group or another. You've just buried that which truly matters.

The Settlers (like the infantry) are key. They make success happen. They control your destiny. They make the entire process sustainable. They play the most important games. They are where open source becomes a weapon. They are mostly ignored in favour of the extremes. Let us "take the pig and lipstick it" seems to be the mantra. Bolt on a digital side to our legacy and ignore that the digital will itself become legacy. What do we call the legacy then? Legacy Legacy with Legacy Digital and ... let us add some more lipstick?

Organising by extremes creates two opposing camps, conflict and bottlenecks are inevitable and something I've seen over the last decade. Yes, these two mode methods may give you a short term boost in terms of efficiency and innovation but it's the sustainability issue that's the problem. That's why I strongly suspect in a decades time, the same people telling you to become a two mode type organisation will be flogging you a three mode solution to your new two mode problems. Save yourself the trouble and another round of re-organisation.

On the upside, all the mapping stuff (2005 onwards), all the profile work, flow, the PST structure and ILC models (2007 onwards) are creative commons share alike. It's all scattered throughout this blog and has been presented at hundreds of conferences between 2007 to 2014.

That's an invitation to help yourself.

Improve your situational awareness. Learn to play the game.

You'll soon discover why the "middle" is the all important battleground.

Oh, and on the question of bias ... am I biased towards mapping? Yes! I've been using mapping to outplay other companies in many commercial markets for over a decade and more recently in the last four years within Governments. I'm as biased as you can get. In my world, situational awareness helps. Yes, it's also true that maps are complex. In some cases, you can spend a whole day to create a first map that you can use.


--- 18th March 2015

Added figure 7 just so people can make the jump between PST and a map.