Tuesday, September 15, 2015

How commodity is something?

tl;dr There are a number of different ways you can refine your maps but in most cases, it's rare that you should go beyond aggregated views. Most of the benefit can be gained by a group of people sitting around sharing and discussing the map

Everything (whether activities, practices, data or knowledge) evolves through the application of competition (supply and demand side). Each instance of an evolving act diffuses through a market over time and hence evolution can be seen as a series of diffusion curves (often many hundreds) with each diffusion curve having its own chasm

Those diffusion curves however have different markets and different time spans i.e. diffusion of the first phones was not the same as diffusion of later, more evolved, more mature phones. So when examining an act (A) which is evolving through ever more mature examples of the act (A1 to A5) then you see a diffusion patterns that looks like figure 1.

Figure 1 - Diffusion of an activity A

At any moment in time in the market you may have many examples of the act in existence i.e. older phones to modern phones to the latest phone can all exist in the market at the same time. You cannot simply look at a market and see 50% of households having something and make a claim over how evolved it is. Whilst evolution contains many diffusion curves, evolution does not equal diffusion and you don't know which diffusion curve you're on.

However, there is a pattern to evolution which you can measure by examining the ubiquity and the certainty (i.e. maturity and completeness) of a thing. Unfortunately, the measurement can only be done for the past. Something has to become a commodity before its past can be measured accurately. This means that whilst I know the direction of travel of something (e.g. the genesis of an act becomes custom built becomes product becomes a commodity - see figure 2), I can not directly measure where something is but only where it was.

Figure 2 - Evolution

The reason for this is certainty axis itself and the role of individual actors in the market. I can only say where something is with certainty once it becomes certain. The future unfortunately acts as an information barrier and until something has become certain (and I can therefore measure its past) then I have to guess unless I invoke some form of crystal ball.

Now this evolution curve provides the x-axis used in mapping. So, how do I know where to place something (e.g. activity A) on the x-axis if I can't measure it? (see figure 3).

Figure 3 - Where on the map is it?

There are a number of techniques you can use.

Ask yourself what this thing is.
The first step is to ask yourself is this thing :-
a) rare and poorly understood i.e. genesis?
b) uncommon and somewhat understood, normally provided by custom built examples often built by consultants?
c) quite common and reasonably understood, often provided as product or rental service through product vendors?
d) well understood and ubiquitous provided via utility services or as undifferentiated commodities?

If you take a number of people (say 2-4) with experience of the field then you can get a better answer by asking the group. This is also helps when there's arguments because that usually signals the act consists of several components at different stages of evolution.

Look at the properties of the thing
The second step is to examine the characteristics of the thing. As it evolves its characteristics will change from the uncharted space to the industrialised (with a transitional space in between). See figure 4.

Figure 4 - Characteristics.

Hence look at the activity for example and ask yourself :- Is this rapidly changing? Is this a differential? Is this exciting? Is it stable? Does it seems chaotic? Is this well defined? Am I experimenting? etc.

Look at other maps.
Obviously everyone has bias, hence ideally you should use a group to determine how evolved something is. However, if you have several maps then you can use a aggregated view (i.e. a summary of common points on different maps) to determine how this thing should be treated. You do this by looking for clusters in order to remove bias (see figure 5).

Figure 5 - Aggregated View

The above graphic is a great way of removing duplication in an organisation and stopping groups from custom building the sort of thing which should be a commodity e.g. user registration

Look at publication types.
At this point I'd probably say you're going overboard. You don't need to get maps this accurate in order for them to be useful tools for organisational learning, collaboration, communication, scenario planning and strategic gameplay. However, if you want to go the extra mile then start examining the publication types (see figure 6).

Figure 6 - Publication Types

E.g. examine the frequency of different key publication types to determine roughly where you are. Please note, even this measure is rough until the act has become well defined (i.e. certain) and in which case the volume of publication types can be used to determine where it was (past tense) on the certainty axis. However, you can use this as a weak signal but I mostly use this in anticipating future change. 

NB. You have to be careful when examining publication type because certain words / phrases appear in multiple stages. For example people talk about platforms when describing a product (i.e. you can build on my product) and they also talk about platforms when describing utility services. The two are not the same.

At this point you're definitely going overboard and trying to create a perfect map. Don't bother, your map will change and you shouldn't spend more than a few hours to a day creating it. The only time you should be stepping into weak signals is when you're into anticipating a very specific change and working out when to roughly attack a market. 

There are a number of signals that can be used, for example when crossing a boundary you need to overcome inertia and that requires a number of factors to be in place - concept, suitability, technology and attitude.

For example in figure 7, we have an evolving act and every time it evolves from one stage (e.g. custom) to another (e.g. product) and hence crosses a boundary then there's inertia to the change created by the incumbent group. Hence the originator (for genesis to custom), consultants (for custom to product) and product vendors (for product to commodity) all resist a change that impacts their market. The size of the inertia barrier increases as the act becomes more evolved (and more established). 

Figure 7 - evolution and inertia.

In order to overcome an inertia barrier you need the four factors in place. The concept of providing the act in the next stage must exist. It has to be suitable (i.e. widespread and defined enough). The technology to achieve this must exist and finally there must be an attitude of acceptance for such a change by the customers. The latter is normally represented by the customers being dissatisfied with the existing arrangement.

You can go further into weak signals, for example the rate at which higher order systems can be built from lower components accelerates as the underlying systems become more industrialised. You can even use timing based upon common economic cycles such as peace, war and wonder (see figure 8). However, these are overkill for a simple mapping exercise and are more suitable when directing an attack.

Figure 8 - Economic cycles & speed of building higher order systems.

There are a number of different ways you can refine your maps but in most cases, it's rare that you should go beyond aggregated views. Most of the benefit can be gained by a group of people sitting around sharing and discussing the map.

Wednesday, September 09, 2015

The art of strategy ... it doesn't matter.

Strategy is fundamentally about answering the question of "Why?"

But "Why" is a relative statement as in "Why here over there?"

But "Here over there?" requires you to understand "Where you could attack"

And this requires situational awareness.

The process of strategy is inherently iterative. You start by roughly understanding your purpose including your scope, how you interact with others and your users. You then expand into situational awareness by understanding your users' needs, your value chains and their context (i.e. a map of the environment). You then apply doctrine including tactical approaches such as removing duplication, bias, improving flow and using appropriate methods. You learn about the environment, your competitors, the common repeatable economic patterns and forms of gameplay. You structure yourself around this including your capabilities. 

You then set a direction through a mixture of anticipation and scenario planning and through acting you refine your purpose, your situational awareness, your use of doctrine and your learning. You constantly repeat this process of observing (purpose, situational awareness including the landscape and climatic patterns impacting this), orientating around the landscape (doctrine), decision (strategic play) and action. This is summarised in figure 1.

Figure 1 - Strategic Play (simplified)

Except you probably don't live in that sort of organisation, there's less than a 0.5% chance that you do. For most of you, I can happily describe your organisation without even meeting you.

Your organisation has :-
  • A weak definition of purpose often not widely understood by people in your organisation
  • Little to no clear understanding of your users and their needs
  • Little to no situational awareness including any detailed understanding of the value chains in your market and how they are evolving
  • Significant amounts of duplication and waste, you frequently discover the same projects being built by different teams.
  • Considerable misapplication of doctrine from the inappropriate use of outsourcing or agile or six sigma and a tendency towards one size fits all methods.
  • No effective mechanism of organisational learning particularly for common economic patterns and repeatable gameplay. You're probably nervous of being disrupted but don't even realise there are multiple forms.
  • Endless talk on data, on being hypothesis driven and how your company uses this but you'll have this nagging feeling of "how do we know if this is the right data?"
  • A non adaptive structure requiring endless bolt-ons for new capabilities e.g. digital
  • A tendency to yo-yo between innovation and efficiency with internal programs.
  • Significant internal inertia to change without a clear understanding of the causes and yet somehow a belief that your systems are as efficient if not better than competitors.
  • A strategy based upon backward causality (i.e. meme copying others especially in the Tech field whether its ecosystems or open source or uberize the economy), gut feel and with little direction or anticipation (beyond gut feel). It's probably represented with volumes of papers to cover up its weakness.
  • A vague notion of your culture but awareness that it's really important. You probably tell yourself that culture eats strategy for breakfast.
Your process of strategy (if you're in the Tech industry) is more likely to be akin to figure 2 (even though this is said in jest). Though you'll probably deny it due to the considerable amount of effort and time expended on this, you'll add in a few more steps, write a business case, create a SWOT, mention something about capabilities and justify to yourself that it works.

Figure 2 - Your strategy process

Without situational awareness then you are simply waiting around for some company to take an interest in your space and then take you out. Fortunately your competitors are usually in the same boat and so ... the art of strategy ... it doesn't matter. Focus on execution, work on gut feel, copy those memes, listen to the analysts, get yourself in their magic quadrants, sell a good story, focus on your vague notions of culture (or at least tell everyone that's really important to you) and run away from those competitors that you suspect play a different game. 

As long as you build a product that is vaguely useful then you can survive for a considerable amount of time on gut feel, copying others and just by executing well. It's ok to suck as long as your competitors do. However, just because the art of strategy doesn't matter that much today, that doesn't mean it won't matter tomorrow. Slowly but surely, there are signs that companies are getting better at this. As more adapt then it'll become harder to survive just by copying the memes of others.

Tuesday, September 08, 2015

The continued search for Spime Script

Back in 2006, I gave a talk on the likely development of a future language - Spime Script - that would encode both digital and physical structure. This would enable a developer to describe the function of something and allow a compiler to determine what should be expressed physically and what should be expressed digitally. In other words, I describe the function of a smart watch and a compiler expresses this through 3D printed physical form, printed electronics and digital code. The compiler decides what bits of the function are expressed in what form and it's the interaction of those forms that create the function we're looking for. I regularly keep an eye out for this and how the industry is progressing slowly in that direction

A key part of this change is the development of hybrid printers capable of creating both physical form and electronic structure. There's a couple of things to note. According to weak signals then the span of time at which hybrid printing becomes industrialised (i.e. the printers become widespread, well understood and commodity like) should be around 2035-2040 - see table 1.

Table 1 - Point of Industrialisation (the war)

This might seem a long way off but we're only talking 20 years and this is bang on course for the current pace of evolution which stands at 20-30 years from genesis to point of industrialisation (post 2012). The first hybrid 3D printers capable of physical and electronic printing were circa 2006.

Now, I know everyone thinks that in this "digital" age that everything goes superfast but that's mainly an illusion created by the overlap of many points of industrialisation (the wars) across many activities and value chains. Yes, the pace of evolution accelerates with industrialisation of the means of communication to more commodity forms (printing press, postage stamp, telephone, the internet etc) and yes, it has recently accelerated from around 30-60 years to around 20-30 years but that's all. Do remember that the first 3D printer in a research setting was in 1967. We've got many rounds of product development for hybrid printers until they become widespread and well defined enough to become suitable for more industrial (i.e. commodity) provision.

The second thing to note is the common characteristics of the point of industrialisation (i.e. the "war"). These common characteristics include :-

1) A punctuated equilibrium as we move from product to more commodity forms. This means a non linear pattern of change, an exponential growth pattern. Hence in the first 5-10 years though the adoption will be exponential, by the end of a decade then these hybrid printers will only represent 3% -5% of the market (somewhere between 2040-2050). It's in the next five years in which they grow to 30%-50% of the market that catches everyone out.

2) An explosion of higher order system i.e. new more complex systems built with these industrialised hybrid printers.

3) A co-evolution of practice in the manufacturing industry i.e. new methods and new techniques based upon more industrialised provision.

4) Disruption of past vendors stuck behind inertia barriers i.e. existing incumbents in the manufacturing industry that are hampered by their existing business models, practices, political and financial capital and can't see the change until it's too late to react. The new entrants in this space almost always become the future giants.

There are many others characteristics but we'll leave it at those four.

The third thing to note is from the above list, the co-evolution of practice leading to new methods and new techniques. This is where Spime Script will come into play. An entire new development language that will compile to both physical and digital form. We'll probably even create a whole new meme for this change - I hope it isn't ManuOps or something daft. 

Now, as with all such changes the seeds of change are set will in advance. Hence whilst SpimeScript (or whatever it's called) will emerge and then dominate this change impacting value chains everywhere circa 2035-2055, the origin of Spime Script will start much earlier. 

When this change hits, have no doubt that its impact will be astronomical in terms of our quality of life and economics. This change impacts almost every value chain and it'll make cloud computing, the internet and most other things look like small potatoes. Everything we build and all the related industries and supply chains will alter. Basically, everything is impacted from agriculture to industry to services - from the cars you drive (or will be driven for you) to the house you live in to the gadgets you use.

Bizarrely, it looks like this change is going to hit at the same time when bio manufacturing and aspects of meta material science (other reasonably large changes) start to industrialise and so that period 2035-2040 is set to become rather spectacular, a time of notable 'wonder'. You'll have all forgotten about this "digital" stuff by then anyway and what's left of that will have become legacy.

So, in rough order

2015 - 2035 : we should see continued product development of hybrid printers including potential minor waves of disruption from product vs product substitution.
2035 - 2040 : we should see new entrants providing more industrialised forms of hybrid printers, an explosion of new activities built on this, co-evolution of practice including the rise of a new language (e.g. SpimeScript) and exponential change.
2040 - 2050 : the new entrants should achieve 3-5% of the market, a meme will exist for the new form of manufacturing, past incumbents will show visible signs of inertia and be generally dismissive.
2045 - 2055 : the new form of manufacturing will dominate all value chains, past incumbents will be disrupted.

Alas, by the end of this time, I'll be in my seventies at the youngest. So, there's every chance that I won't be around to see what should be one of the most spectacular changes in the history of mankind. Robots, drone, AI, big data ... bah humbug, small fry ... components of a much larger change that includes the entire process of how we make stuff. 

Hence my interest in finding Spime Script earlier, it should be fascinating to watch it grow.

P.S on the off chance that you don't know what a Spime is then please go read Bruce Sterling's book.

Sunday, September 06, 2015

Somethings are different, some remain the same.

Back in 2011, I published a population study of companies showing that a next generation of company seemed to be emerging with a different phenotype. Details of this can be found here. I've summarised the main changes in table 1.

Table 1 - Differences between Traditional vs Next Generation. 

NB, these characteristics describe what was significantly different between the populations at that time and of course, we will only be able to tell whether these characteristics become universal with the application of more time. However, despite the differences there were many things that remained the same i.e. did not distinguish between populations. A selection of these "neutral" characteristics that remained the same are included in table 2.

Table 2 - Similarities between Traditional vs Next Generation. 

I mention this because I've noticed a tendency of people to bundle all sorts of characteristics under the title "digital" and claim fairly definitively that this is the future of the firm. Before embarking on such exercises, I would suggest that you understand both the concepts of evolution & co-evolution, along with common repeating economic patterns that tend to form new organisational structures and then do some population studies to confirm / reject your hypothesis across numerous characteristics. Once you've done this, you now have to wait many years to see if a characteristic turns out to be a pointless fad or the consequence of an echo chamber (i.e. it won't become supported in the wider environment).

Whether it's social media to blogging CEOs to culture to structure to adoption of specific methods then there's quite a few trendy ideas which seem to be on questionable grounds. I'm not saying these things aren't without any merit and certainly we should experiment but that's a far cry from picking a characteristic from a couple of "leading companies" and declaring it as the future of all firms. You need to be wary of backward causality and just because Uber uses "surge pricing" then that doesn't mean it's the future of all.

What my study showed was whilst there were differences, there were many more similarities between the traditional and the next generation. As time passes, the traditional will adapt even on the small number of characteristics that showed any significant difference. Of course for me that's important because in a decade or so time, I'll be able to go back and confirm whether a next generation did truly emerge or was it some other aberration. 

Friday, September 04, 2015

VMware, EMC ... the rumour mill is in fine flow.

In a discussion over China and the USA, the conversation turned to all the tech rumours floating around VMware & EMC. I shrugged my shoulders and said I retired from cloud almost five years ago and I have very little interest. 

Alas, people kept needling the point. 

Eventually, I added that I thought EMC had left it late to jettison VMware. I'd have looked to maximise the capital last year.  I had an old "Escape button" bet from 2009 that...

By the end of 2014, VMWare will have divided into two companies, one focused on existing virtualisation technology (IaaS Group) and the other focused on PaaS technology. The IaaS group will have been sold off to another company.

Now whilst I don't expect to win the bets, I do intend to get the direction of travel roughly right. Alas, whilst I expected an open source platform play and this to be broken out as a separate group which has happened with Pivotal, there has been no clear movement on spinning out the virtualisation business. Hence my bet was lost. I'm no fortune teller and so don't ask me what is going on with EMC and VMware.

Alas, people kept needling the point.

In annoyance, I explained that I took the view that EMC must suspect that everything from the virtualisation business to storage would be heading towards the cliff. I had anticipated that VCE would be a potential vehicle to extract EMC from this but alas that didn't gain traction. The timing a year ago seemed right with all the marketing about private and hybrid cloud being the future. This looked like a perfect pig in a poke play i.e. take a business that you anticipate will be disrupted, dress it up as the future and sell it for as much as possible. Nothing happened. As I said, I'm no fortune teller. When it comes to the rumours floating around VMware and EMC ... don't ask me, I haven't got a clue. 

Alas, people kept needling the point.

In frustration, I started drawing maps with endless muttering under my breath. I explained that if I was in Joe Tucci's position then I'd probably try something even more ambitious at this stage. Despite what you might think, a lot of the market is based upon sentiment about the future and if you make the story big enough then people can get carried away with it. The problem with just spinning out VMware is the market might well be suspicious. You'd need a reason, a conflict, a message - something like your own IaaS play creating conflict with the existing business. You'd need to somehow portray an image that you really want to hold onto it but alas, reluctantly you have to let it go. 

When I look around, there are a number of companies that I don't personally consider to be well positioned for the future - VMware, the storage components of EMC, Cisco, RedHat and HP. Most of these I view rather uncharitably as drowning men who don't just know it yet. However, just because I don't think they're well positioned doesn't mean I can't find a way of maximising return with a good enough story.

So, after about ten minutes I finished my scribbles and muttering. I looked up and said "Dry land is not just our destination, it is our destiny!"

In the film Waterworld, the Dean muttered these immortal worlds because with a good enough story, you can get everyone rowing in the right direction without anyone asking the awkward questions. For me, that story would be around converged infrastructure. 

Behind the scenes I'd be working on a play for a merger between VMware, Cisco and the soon to be split off Enterprise component of HP combined with an acquisition of EMC storage and EMC stock in VMware and possibly even acquisition of RedHat all funded through debt. Well, if you're going to go all out then make it as large a play as possible.

For me, this gets EMC off the hook at top dollar and the new vehicle portrays a big enough story that the market will get excited about the beast without considering that many of the components are going to have a tough time in cloud. I could spin the story of synergy between the groups, converged infrastructure, one stop shop, large enterprise customer base, efficiency, hybrid environments combining HP, Cisco and VMware capabilities and a host of other reasons under a tagline of the future. I could do this until the cows come home which by my reckoning means in the next 18 months, before the cloud battle gets too horrific. I could craft a story here that the Dean would be proud of, the troops would get excited about and just hide the map from prying eyes.

Do I think it would be a good idea? Of course not and for two reasons. Firstly, I spent about ten minutes on it. Secondly, even that ten minutes told me it is about as daft as you can get in my book. Drowning men grabbing hold of each other doesn't solve the problem of drowning. But could I sell the story to the market and get away with it? Probably.

But then I'm not involved in any of those companies nor do I have any idea of what plans they might have or not. As far I can tell, the stories about VMware and EMC are all rumours and I've little interest in investigating. At best, you can consider the rumours to be nothing more than a weak signal that someone, somewhere is exploring something. Who, what? ... no idea, don't care. Ask a fortune teller.