Ten graphs on organisational warfare

The presentations I've given over the last seven years have been a gentle introduction into the battle between companies. Unfortunately as an industry we're not only overwhelmed with glib phrases such as "culture eats strategy for breakfast / lunch" but also a paucity of data behind many of these statements.

Alas, competition isn't simple. Well more specifically, simple forces create a complex world and we inhabit that world. To demonstrate this and in honour of the general detritus that is "the ten habits of successful organisations", I thought I'd bring you Ten graphs on organisation warfare and why competition isn't simple.


It should be noted that whilst graph 1 has enough data that I'm happy to call it a weak hypothesis, this diminishes the further we go down the list. Take everything with a big pinch of salt.


Graph No. 1 - Evolution

First, I hope you're familiar with Everett Rogers work on the diffusion of innovation which was subsequently made popular by Geoffrey Moore in his book crossing the chasm. There are two things I'd like to highlight with Roger's work other than its startling brilliance.

First, it's time based and therefore despite popular notions, diffusion curves are not identical and in some cases there is significant initial lag. Secondly, it's all about diffusion and hence whilst it will tell us how a particular product spreads it won't tell us about how an activity will evolve. For example, electricity has evolved from the parthian battery to modern day utility provision - diffusion doesn't tell us about that process but it will tell you about how utility electricity provision has been adopted.

Unfortunately, we operate in a constantly evolving world so getting a handle on evolution is a pre-requisite for any form of strategy. The graph above provides a standard pathway for the evolution of any business activity based upon user and supply competition. It's not a time based sequence, the axis being ubiquity (how common something is) and certainty (how well understood and defined something is).

For reference, I've approximately marked onto the graph the positions of one activity - computing infrastructure - from the innovation of the Z3 to utility provision of EC2. For general reference, commoditisation is the commonly used term for this process of evolution.

Graph No. 2 - Evolution and Value Chains

Major changes in our society are rarely due to the introduction of some new activity. It almost always occurs because some previous existing activity become ubiquitous and well defined - whether it's nuts and bolts (Maudslay's screw cutting lathe), electricity (Westinghouse and Edison) or computing infrastructure (Amazon EC2).

The reason for this, is that the commoditised activity becomes a component of higher order systems e.g. nuts and bolts for machines, electricity for fridges etc. Herbert Simons showed that the provision of standard components rapidly accelerated agility and creation of new higher order systems. Hence, we have commoditisation enabling growth and agility of higher order systems.

Now all those higher order activities evolve through the same pathway as the lower order systems. We can actually break this down into three phases - chaotic, transitional and linear - based upon the characteristics the activity has.  For example, in the chaotic phase an activity will be uncertain but a potential source of future worth whereas in the linear phase the same activity will be more standardised and a cost of doing business.

Hence as a once valuable activity becomes a commodity, the margin associated with it tends to rapidly decline but at the same time it enables rapid formation of higher order systems which have potentially high future worth. Hence, it is the destruction of value in the old that enables the creation of value in the new higher orders. This is known as creative destruction by Joseph Schumpeter.

The consequence of this, is that the process of evolution continually drives up the value chain to higher order systems.


Graph No. 3 - Co-evolution of activities and practice

So far, I've talked about the evolution of activities but there's more to life than what we do (the activity), there's also how we do it (the practice). Practice and activity often co-evolve together.

Activities undergo a transformation from chaotic to linear involving stages such as genesis, custom built, product and commodity. Practices also undergo a transformation from chaotic to linear involving stages such as novel, emerging, good and best (the Cynefin framework).

The link between practice and activity is fairly simple and I'll use computing infrastructure to demonstrate. When computing infrastructure was provided as mainly products then novel architectural practices developed for scaling and resilience which became the best practice for a product world. These included concepts such a scale-up, N+1 and disaster recovery tests.

As computing infrastructure evolved to more a utility then novel architectural practices developed for scaling and resilience which are spreading and becoming the future best practice for this utility world. These include scale-out, design for failure and chaos engines (i.e. constant introduction of failure to ensure resilience).

In other words, best practice for the product world is not the same as best practice for a utility world.

Unfortunately this also creates a problem. As we build with certain types of practice we also incur a debt to that practice. For example, in the computing world when we built applications based upon architectural practices such as scale-up and N+1, the applications that resulted depended upon these architectural practices i.e. applications assumed the underlying infrastructure was resilient and could scale.

In a more utility world where highly resilient and specialised infrastructure is replaced with massive amounts of good enough components, the architectural assumptions of our legacy applications no longer holds. Hence along with a debt to past practice we have a cost of transition to the new architectural forms.

This cost of transition is one of many types of inertia to change and inertia is a critical controlling point in evolution.


Graph No. 4 - Inertia as the controlling point to change

Inertia breaks down into two principle forms - customer inertia to adopting a change (usually referred to as Risk) and vendor inertia to providing the more evolved form of the activity.

To explain this, I'm going to use a simplified version of value chain evolution and simply represent the change as a cycle of commoditisation enabling the genesis of new activities through componentisation. For this reason in the graph above, the value chain axis has disappeared.

When it comes to customer risks (i.e. inertia to adoption) which are generated by concerns over a changing market and technical debt, these can be categorised into :-

• disruption risks e.g. loss of political capital, previous investment, skillset changes
• transitional risks e.g. concerns over governance, transparency, trust in providers, security of supply
• agency risks e.g. pricing competition, loss of strategic control, lock-in.

When it comes to vendor inertia which is normally generated by past success, this can be categorised into :-

• Cultural e.g. past business models have become institutionalised, disbelief that the past the is not the future.
• Incentives e.g. reward systems are based upon delivery of past models
• External e.g. financial markets and analysts expecting continuation of the past.

Inertia can create quite a significant barrier to change, which is often why it is a company that is not encumbered by an existing business model that creates the change and produces the more evolved form of the activity. Hence it was Amazon, a retail company with no hosting business, that introduced computer utilities through EC2.

Once this happens, businesses who consume the more evolved form will find a triple whammy of benefits including :-

• Increased operational efficiency through use of utility services (commoditisation)
• Increased agility for higher order systems through use of standard components (componentisation)
• Increased ability to focus on creation of new activities, the new sources of wealth (creative destruction)

Due to competition, the more companies adopt and consume the new services then the more that pressure builds on others to adopt. What starts as a trickle rapidly becomes a flood.  This effect is known as the Red Queen Hypothesis and it is why all companies must continue to evolve in order to simply stand still relative to one another.

Inertia therefore acts as a gate to this flood and once broken, rapid change is inevitable. A by-product of this gate is that it creates three eras of economic change - build, peace and war.

The peace era, a time of products and product services, is one where competition between providers can be considered relative.  One day Nikon is in first position, the next day its Canon etc. This is a time where sustaining change tends to exceed disruptive change and the likelihood of a major player being wiped out tends to remain low (unless you're either unlucky or highly incompetent).  It's also a time of the highest margin, of increasing maturity of activities and practice and where feature differentiation is critical for competition. In this peaceful era, inertia to change is beneficial as it maintains the state between the providers.

Alas, as the activity becomes more widespread and defined then it becomes suitable for the next evolved state - a time of commodity and utility. All it takes is one player, not normally in that space, to kick of the war.

The introduction of more commodity approaches to providing the activity initiates a fight for survival. The incumbents are normally stuck behind inertia barriers and are hence in denial that their world might change (cultural inertia). Businesses start first to lightly consume the new service due to their own inertia (customer risks) but due to the Red Queen effect, a trickle becomes a flood. As margins reduce in this space and the focus becomes increasingly on operational efficiency, the incumbent providers often respond by trying to cost cut rather than trying to adapt - this is almost always fatal. Hence in the war era, disruption (both direct and indirect) tends to exceed sustaining change and many once proud names fail.

Along with the war, a build era occurs for the development of new higher order systems based upon the ubiquitous and well defined supply of a commodity. These higher orders are where capital flees to chase the new opportunities as the past is commoditised and future industries are created (see creative destruction). This is often a time of wonderment and amazement with new technological marvels.

These eras of build, peace and war can be localised to a specific industry or in certain circumstances be seen at the macro level in what are known as K-waves which are more commonly referred to as ages (e.g. the age of steel, electricity and heavy engineering).

One thing that is worth noting is the evolution of activity often involves co-evolution of practice and hence the formation of new forms of organisation. Hence in the age of electricity, new organisational forms appeared that exploited new practices resulting in what was called Fordism. In the internet age we had the Web 2.0. Today, cloud computing (which is all about commoditisation of discrete IT activities) is creating a next generation of organisation.

Finally, it is worth noting that each build era is often associated with rapid increases in un-modeled data and corresponding debates over how to manage this. The origin of this increase in data is a combination of commoditisation of past activities and creation of new activities. The modern example of this is known as Big Data.


Graph No. 5 - Ecosystem

Currently within information technology rich industries, we're undergoing one of those shift from peace to war and the formation of new organisations that exploit these practices. I provide this in much more detail on the LEF website covering areas such as new practices, use of open source as a competitive world, focus on disruption etc.

However, I thought as an aside I'd mention one of the changes that is occurring which relates to the use and exploitation of ecosystems. The principal model behind this is known as ILC - innovate, leverage and commoditise.

Under ILC, a company seeks to provide activities that it currently produces (or more likely consumes) as utility services provided through APIs in order for others to consume them. The focus is on developing a wide ecosystem of other customers.

Since, the activity is provided as a utility service then it enables others to reduce their cost of failure with any novel pursuit. This encourages genesis of new activities.

However, as those new activities diffuse, the provider of the utility services can detect this and leverage the ecosystem to identify early successes. By copying or acquiring such activities and commoditising to utility services then the provider can feed the ecosystem by enabling further genesis through componentisation effects.

The net result is the provider appears to be both highly innovative (by enabling others to create new activities), highly customer focused (by leveraging an ecosystem to identify future requirements) and is inherently efficient (through provision of utility). This triple whammy is counter to Porter's assertion that you can only do one of these things. It's what makes companies like Amazon so dangerous to their competitors.

Critical in all of this is the size of the ecosystem, the speed of feedback and the speed of action. Hence, you can create an ILC model in a product world but it's much more effective with utility services such as those provided through APIs today.

In many information technology industries, we're entering a world where it's not companies that compete but ecosystems.


Graph No. 6 - Profile

In the last section I referred to information technology industries because this enables me to introduce a concept known as profile.

Firstly, a company consists not of one activity but many. Even if you take a single type of activity such as IT, it will consist of many discrete IT activities. These activities are likely to be at different stages of evolution and hence not all IT is the same.  Some IT will be in the chaotic phase, some will be in the more linear.

This itself creates a huge problem, because each of the phases has different characteristics. Hence, when it comes to something simple like project management - the methods you use for an activity in the chaotic phase (where deviation is necessary and the activity is uncertain) are not the same methods that you would use for that same activity when it has reached a more evolved, linear phase (where deviation is undesireable and the activity is predictable).

This leads to the endless and pointless debates between methods such as Agile (or Scrum) vs Six Sigma (or Prince 2 or ITIL). The simple fact is that Agile methods are more suited to the chaotic phase whilst Six Sigma is more suited to the linear and seeing that IT consists of many activities at different phase which are all evolving then you need to use BOTH appropriately.


There is no such things as the one size fits all method because the underlying characteristics of the different phase are polar opposites.

This isn't just an IT thing it also applies to all other activities and hence we have other pointless debates such as push vs pull marketing (answer - you need both). Fortunately since we're all in competition, if we all apply one size fits all then no-one has an advantage. Alas, organisations have evolved beyond that point and so if you are doing this then you're already behind the game.

Now, if we plot frequency of activities across the evolutionary path we get a profile for a company. It's best to subdivide activities between those you supply to others and those you consume yourself. Not only do companies have a profile but industries do as well, hence a mining industry does not have the same profile as a media company. This is also why changes impact industries differently.

For example, cloud computing is likely to directly disrupt hosting companies, indirectly disrupt banking industries (through reduced barriers to entry) and it is unlikely to have a major impact (bar some efficiency gains and changes in relative position) for highly commoditised industries such as mining.

In the graph above I've also added an example value chain consisting of something that is sold which is built from multiple underlying components. Now, each activity in such a chain continuously evolves (due to supplier and user competition) and is effected by Porter's five forces.

For those needing a refresher, those five forces are supplier vs buyer power, new entrants, substitution and competition with others.


Graph No. 7 - Forces, Phase, Era, Evolution and Value Chain

At this point we can start stitching together many of the concepts covered in the previous graphs to discuss change.

Now each activity evolves due to supply and user competition and in the above one component activity of a value chain has changed phases from transitional (custom built, product and rental products) to linear (i.e. commodity and utility service). Along with initiating the war era for that activity where new entrants, substitution and disruption of incumbent suppliers becomes more likely it can also have more subtle effects by reducing barriers to entry for competitors into the supply chain.

For example, let us assume the top activity is news. The component activities might be the means of mass communication,  collation and editing. If we take newsprint then the means of mass communication was previously printing combined with a distribution channel both of which are capital intensive activities. The commoditisation of the means of mass communication would not only reduce operational costs of news organisations but also potentially reduce a barrier to entry into their space. This is exactly what the internet did leading to increased competition higher up the value chain.

Hence, the commoditisation of an activity and the initiation of war is not only directly disruptive to past providers because of the new entrants, substitution and inertia that the past incumbents have but it can also be indirectly disruptive higher up the value chain due to reduced barriers of entry.

Interestingly, as a buyer you always attempt to push component activities to more of a commodity (buyer pressure) but as the above examples shows this can actually have a negative effect by increasing competition in your main business.

There are a host of effects you need to concern yourself with regards to strategy :- evolution, value chains, buyer vs supplier pressure, barriers to entry, choke-points, inertia, profile, positioning, ecosystems, phase, era ... it's a long, long list of things. Managing this is complex, even though the premise that this all extends from evolution driven by user and supply competition is trivially simple.


Graph No. 8 - Who's running the show anyway?

Previously, I talked about how commoditisation of the means of mass communication has reduced barriers to entry into the "news" organisations value chain. This caused a rapid growth of competitors, one of which is the general public consumer through blogs, twitter and other social networks.

Now, a critically important point to consider when examining a strategy is who governs evolution?

When I talk about evolution being driven by user vs supply competition, the obvious question to ask is which user are we talking about? Do we mean an enterprise or a general public consumer?

Well, unfortunately the answer can be both and in these circumstances what matters is which group governs the process of evolution. Take for example, email.

Email was being used within Enterprise organisations for communication before it became popular with  the general public. At one point in time, most members of the public were first exposed to email through their workplace. Email services and products evolved in the workplace driven by the pursuit of ever more functionally complete systems with todo lists, calendars etc.

However, email also spilled out into the general public where it was aggressively commoditised by providers such as AOL then Yahoo and Google. A consequence of this is that in the general public space, highly commoditised services became the norm and most people found their public email service had more capacity at a lower cost than their workplace service. Eventually this created pressure for enterprises to adopt the more consumerised form and hence Google Mail (among others) became more common in work.

What happened here was that email switched from being governed by enterprise competition to being governed by consumer competition. Eventually Enterprises have to adopt these more consumerised services. This is the process of "consumerization", a term quoted by Doug Neal of LEF fame back in 2001.


Graph No. 9 - Structure and Ashby's

Given the mass of management complexity that evolution, profiles, value chains, economic eras, consumerisation, co-evolution and inertia creates - how can we ever hope to manage it? Well, we do so through structure and an interesting application of Ashby's law of Requisite Variety.

Ashby's law states that in order for a system to be stable then the number of states of its control mechanism must be greater than or equal to the number of states in the system being controlled.

Now there are two ways to solve this problem. Either you accept the complexity and variability of the management issues at hand and build a control system (i.e. the executive team) who are capable of dealing with it or you find someway of simplifying the complexity of what is being managed. Hence our tendency towards KPIs and traditional organisational structures.

Now simplifying the complexity doesn't mean effective or efficient management, it means simply making it more manageable. Fortunately we're all in competition, so as long as we all sacrifice efficiency and effectiveness for simplicity of management then no-one gains an advantage.

Alas, as we saw earlier organisations evolve and one of the noticeable patterns of the latest next generation organisation is their increasing ability to cope with change and the flow of activities from chaotic to linear.

I highlighted flow because whilst linear activities can be outsourced to utility providers and the genesis of chaotic activities can be achieved through exploiting ecosystems, what is increasingly critical to business sustainability of an organisation is how it manages the transition from chaotic (genesis) to linear (commodity).

Unfortunately our organisational structures aren't based upon concepts such as flow or even mindful of the constant process of evolution. We instead tend to organise by type (e.g. IT, finance, marketing).

Organising by type creates a host of problems such as alignment issues, one size fits mentality and ineffective outsourcing to name just a few. There are fortunately more effective organisational structures such as the more cell like structures of the two pizza method used by many of the next generation companies.

But two pizza, use of ecosystem isn't the end of the organisation story. A prototype of a pioneers, settlers and town planners structure demonstrated quite remarkable effects. In all cases, there are far better ways of managing flow than use of KPIs and traditional organisational structures and we're far from understanding an ideal structure.


Graph No. 10 - Entropy and Jevons'

... and so to my final graph. For this I'll return to value chain vs evolution path and overlay what I think are vastly more interesting than the meandering progress of activities - the end consequences.

The constant snake like progress of our economy through those k-wave ages of the industrial age, the age of steam, the age of electricity each with its own build, peace and war era is driving us further up the value chain with higher order systems continuously evolving from chaotic to linear.

We are continuously moving away from a disordered, primitive and information poor position to a highly ordered, sophisticated and information rich position. Now ignoring the fact that we waste energy, the shift to a more highly ordered position always requires more energy than the previous position. It also has some other consequences.

Firstly, as lower order systems become more efficient we also tend to consume vastly more of them in the pursuit of the higher order capabilities (Jevons' paradox). For example, computing resources are a million fold more economically efficient than 20 years ago but this doesn't mean we spend less on IT, instead we just do vastly more higher order stuff with it and hence we consume more.

Secondly, as we move to a higher position the lower order systems become less visible and consequentially we become vastly more dependent. The solar storm of 1859 known as the Carrington event had fairly minimal impacts on the society of its day. A similar storm today would impact many of those invisible, taken for granted, lower order subsystems that our society relies upon for its supply chains, production and computing. It would have a far greater impact.


Final comment

The above is just a tiny glimpse into the world of organisational warfare and how companies compete. Whilst no cats were harmed in the making of my presentations or blog post, tens of thousands of data point have been chomped through.

Some of the graphs are complex, which is also why I use a highly visual build up in presentations. The subject matter is built from simple rules but creates a complex environment. I will however look at finding simpler ways of representing the concepts.

The hypothesis above is pretty old and has become widespread enough that it is of limited value. Given this, I will probably now finish the book I've been meaning to do ... but then again.

Any given Tuesday

Back in 2005, I gave a presentation called "Any Given Tuesday" which describes two entirely different scenarios for the same day. In the first scenario :-

I wake up at 6:45 am, spend 10 minutes trying to find my watch, leave the house at 7:15 am, drive like a madman to the station, spend 30 minutes waiting for a train due to cancellation, get to London bridge at 9:15 am, get soaked because it is raining, rush to work missing my coffee, arrive at work 9:35, discover my CFO has been trying to call but I've left my phone at home, realise I have football today but no boots as I threw them away last week, my partner calls to remind me it's Mother's day and my Sister's birthday tomorrow - both of which I've done nothing about. Overall : I'm wet, late, had no coffee, I've annoyed my CFO, I'll miss out on football and I've still got to work out what to do about Mother's day and my sister. I'm hardly in the best mindset for work.

In the second scenario, I wake up fifteen minutes earlier at 6.30 am, pick up my watch and phone that are on the kitchen table, leave the house at 6.50 grabbing an umbrella from beside the door, arrive at the train station at 7:10 am and catch the 7:15 am, arrive at Canon Street at 8:20 am, pick up pre-ordered football boots from the sports store, grab a coffee, walk to work putting up my umbrella when it starts to rain, arrive at work 9:15 am, tell my CFO the reports been done and when my partner calls explain that I've sent my Mother flowers and my sister has a new ipod which will be delivered tomorrow as her last one broke. Overall : On time, dry, plus coffee, I'll be able to play football, mother and sister's presents are sorted and reports done. I'm in the right mindset for work.

Ok, so what happened between the two scenarios? Did I become Mr organised or learn the twenty seven secrets of successful people? No, it's all done with technology and asking a few simple questions.

First, everything is tagged, everything is online and everything is a network. My network of things knows it's a Tuesday, how long it takes me to get ready, what I need for work, where those things are and the weather forecast. It can interrogate the train stations network to get times and cancellation information, it knows where I need to be. It knows I play football on Tuesday and that I threw my boots away. It knows I like coffee, that it's Mothers day tomorrow, that I bought flowers last year. It can ask my Mother's network what sort of flowers she has and whether anyone is buying her flowers? It knows it's my Sister's birthday tomorrow, it can ask her network for suggestions. It now knows she broke her ipod, that she hasn't replaced it and what her favourite songs are and where she will be tomorrow. My network knows my CFO was in a meeting where they discussed a new way of analysing value from users.

My network of things can now, find a shop with the boots I need, find a coffee shop, pre-order, and calculate a route to work to pick up both. Calculate time for journeys and dynamically deal with cancellations. Sort out ipod and flowers. Analyse CFO meeting and determine most probable analysis to be done and who to contact.

All it now needs to do is ask me some basic questions :-

• Do I want to buy some new boots for £35 so I can play football tomorrow?
• Do I want to send my Mother flowers for Mother's day?
• My Sister's ipod is broken, do I want to buy her a new one for her birthday?
• The CFO is after an examination of user spend vs latency on the site, do you want me to prepare an initial analysis?

Then it needs to calculate my journey and wake me up when I need to be woken up. This is what I call augmented intelligence - ask the questions, take care of the details. All of this was technically feasible in one way or another back in 2005, just it was incredibly difficult and uneconomic to do so. However today, things are changing rapidly and it's all becoming much more economically feasible.

To start to really achieve the above, we need smart agents and this is more than just smart devices but instead devices which can record, analyse and start to interpret all the data exhaust we create. Our network needs mechanisms for sharing between agents i.e. the information that I'm prepared for my network to give to your network depends upon who you are.

All the components for this are coming into place. On the iphone we have SIRI on the android we have EVI.  We have compute utilities, analytics capabilities and Amazon has recently released a distributed task and decision manager in Amazon SWF. We have increasing use of printed active RFIDs and near field communication. We do need some security mechanisms but there are smart people like the Bromium crowd who are working on things which may well solve those relationships.

The world above is within spitting distance. This future of augmented intelligence goes way beyond popular misconceptions of heads up display information. There are also serious social implications but for now, I'll just say, that I think some people are seriously underestimating this.

The LEF is running a study tour on this issue later in the year because we think the subject is huge.

-- Update 26 January 2014

Seems like pre-ordering with Starbucks will soon be here.

Of false debates and Baronesses

One of the most popular and dubious techniques in debate is to create a false polarisation of subject in order to insert your view as the rational mid-ground. Baroness Warsi has done exactly this with the debate of religious freedoms vs militant secularism.

The two extremes of this imagined debate are a theocracy (where state is ruled by religion) and militant secularism. But what is militant secularism?

In order to be the opposite of a theocracy, we can only presume that militant secularism is supposed to represent a system whereby the state defines religion such as the banning of all religious thought i.e. none. No freedom of religion, no discussion of religion, no right of worship … nothing.

However such an approach would be opposed ferociously by secularists because secularism has never been about state interference or denial of religious beliefs but instead separation of the church from state.

But let us take up this inferred axis of theocracy (where religion governs state) vs a militant position (where state governs religion such as denies all religious belief). In such circumstances secularism is the mid-ground. Tolerance and acceptance of a wide range of religious beliefs whilst ensuring separation between the state and any church.

From the National Secular Society - "we campaign from a non-religious perspective for the separation of religion and state and promote secularism as the best means to create a society in which people of all religions or none can live together fairly and cohesively."

Baroness Warsi's entire debate rests on creating new extremes and attempts to portray secularism as connected to one of those extremes. It isn't. There is no secular group who wishes to outlaw all religious thought or wishes the state to define religion. There are no militant secularists.

Certainly you can probably drag up some loon who is willing to call themselves a secularist and say that they want to ban religious thought but then that person is not a secularist and never will be. That person would deny religious belief and that's not what secularism is all about.

Intellectually, the debate is dishonest - shame on Warsi, you're supposed to be a cabinet minister and above such things.

The most dangerous patent in the world?

I first started following the field of 3D printing around 1999. Subsequently as printed electronics formed, I took an interest in both areas.

Each year I used to write reports on the subject, though I haven't updated any of this since 2007

For reference, I've linked to an old report (2006) on the subject. It's completely out of date but the concepts are still probably valid. Don't expect any insights though, this stuff is widely known today.

For those completely new to the subject, it might provide some very generalist background info. However, be warned, being so old the industry is likely to have changed significantly.

Back around 2004, I came across something which I thought was truly dangerous for this future world. Unsurprisingly it's a patent but this patent is for the equivalent of soldering in the future manufacturing processes.

In search of Spime Script ...

Back in 2006, I gave a talk at Euro OSCON on the future of technology covering commoditisation with a specific focus on 3D printing. This was based upon research and talks I'd given many years earlier on the subject.

Our world is heading in a fairly clear direction in terms of continual evolution of business activities such as commoditisation of discrete IT components, creation of higher order systems, disruption of past industries, development and exploitation of ecosystems, co-evolution of practice and ... well, I've covered this lots.

The strategic use of open source as a weapon is also becoming more common along with the new forms of organisation that are necessary to cope with this more evolved world. We should see the development of higher order agents and hence augmented intelligence with Siri being a starting point on this journey. Increasingly organisation will learn to exploit flow, the natural evolutionary path of any activity from chaotic (genesis) to the more linearly ordered environments (commodity and utility services). Flow was a topic I touched up again in Strata last year.

The reactions of past industries (e.g. legal protection as barrier to entry), the inertia of many, the next wave of change (being commoditisation of the manufacturing process), explosions of un-modeled data, the confusion, the arguments  ... oh, it's the same cycle.

Don't worry if you're missing out in the buzz around today's hot topic (commoditisation of IT nee cloud) or tomorrow's (commoditisation of manufacturing nee 3D printing) as there's much more to come and invariably the giants of today will fail to cope with flow and new giants will appear to replace them.

The trends are already in motion and it's just a question of how the game plays out. To mangle one of Tim O'Reilly's favourite phrases - the future has been here for some time, it's just not uniformly distributed.

So, I want to return to one part of that 2006 presentation which I still find relevant - the formation of Spime Script. We're entering a phase where hardware will become increasingly as malleable as software which leads to a problem of choice - if I want to change the function of something, do I do this in software or hardware? The tendency today is obviously towards software because its more malleable  but the future is never the past. However this creates a problem of skill - will I need to become proficient in both software and CAD / electronic design?

In reality both CAD and whatever software language you use, compile down to instruction sets and the function of the device is the interaction of these instruction sets - one which is substantiated physically and the other which is substantiated digitally.

Turning this on its head then why not write the function of what you want, the function of the device. Compilers can therefore undertake the complex decision trees (which is what they're good at) required to determine what element of that function is encoded as physical and what element is digital.

A future language is needed, something whereby the output is both physical and digital and I describe merely the function of what I'm after.

A sort of ...

class smartphone : public phone, public camera, public calculator, public GPC

mydevice smartphone

mydevice.colour = blue, .os = android, .connection = wifi, .storage = cloud

mydevice inherit public walkie_talkie

mydevice inherit public watch

mydevice.format = wearable, .location = wrist, .materials = recyclable

Make(mydevice)

and let the complier work out the best way of making this. Maybe the watch will be digital, maybe it'll decide that a mechanical self winding element is required etc.

This may sound like crazy talk of the form "that'll never happen", "it's too complex", "technology could never do this" etc but I'm used to a world where today's impossible things become tomorrow's Walmart special offers.

Anyway, I'm interested in whether people are working in this space. It's about the right time for Spime Script to start emerging, so leave me a comment, pointers welcome.

--- Update 26 August 2014

Unfortunately the video of the talk from Euro OSCON 2006 has now been removed on blip.tv due to their wonderfully awful change of service. Thanks Blip.

So here are the original slides, now uploaded to slide share which is mainly based upon research I had done much earlier (varies between 1998-2004) with some updates for changes that were happening at the time.

Making the web of things from Simon Wardley

Moving onto new research ...

I'm just in the process of publishing my latest research for the LEF, so it's time to move on to a new area of research. Before I do, I thought I'd post something about the past research and a quick summary of a few of the points worth noting.

Explosions of industrial creativity rarely follow the invention, discovery or subsequent innovation of a technology but instead its commoditisation i.e. it wasn't the discovery of electricity but Edison's introduction of utility services for electricity that produced the creative boom that led to recorded music, modern movies, consumer electronics and even Silicon Valley. However, utility provision of electricity did more than just create a new world, it disrupted existing industries (both directly and through reduced barriers of entry), it also allowed for new practices and methods of working to emerge and even resulted in new economic forms - such as Henry Ford's Fordism.

This isn't a one off pattern. The cycle of innovation / commoditisation repeats throughout our industrial history, following a surprisingly consistent pathway. Understanding this pattern is critical to anticipating the changes emerging in our industry today - whether that's the web, cloud computing or the future changes that 3D printing will bring.

The actual cycle itself is rather simple but as with all things it creates complex interactions. I've tried to summarise some of the effect in figure 1 (below) and I'll go through it in the general notes.

General Notes

1. All business activities evolve through a common pathway. This pathway is defined by how ubiquitous and certain (i.e. well understood & defined) an activity is. The relationship between these two I have previously discussed on many occasions. What's important to remember is that activities evolve through domains including genesis, custom built examples, products (including rental services) and commodity (including utility services). What drives the process of evolution is user and vendor competition - i.e. the need for something and the desire to supply that need and outcompete others.

2. It's not just activities (what we do) that evolves but also practice (how we do something). Practices evolve through equivalent domains - novel, emerging, good and best (known as the cynefin framework). It's important to remember that practices can, and often do, co-evolve with activities. For example, best practice for resilience and scaling with computing infrastructure products (the activity) was N+1 and scale-up. As the activity evolved to more of a commodity this enabled emerging practices such as design for failure. These emerging practices will evolve over time to become best practice for a utility infrastructure world.

3. Practices and activities can themselves be grouped into three stages - chaotic, transitional and linear. Chaotic activities (i.e. genesis to custom built) are scarce by nature, poorly understood, uncertain, rapidly changing, deviation is desirable, serendipity matter and they are a source of future worth. Over time the same activity becomes abundant, well defined, predictable, measurable, deviation is undesirable and nothing more than a cost of doing business.

4. The process of evolution creates a cycle i.e. as activities become more of a commodity they enable new (higher order) activities to develop - i.e. utility provision of electricity lead to consumer electronics. This is standard componentisation and it often has a dramatic effect causing a rapid growth in genesis of new activities.

5. The cycle itself has different states - war (disruption), growth (build) and peace (margin). Each state is suitable for different strategies and approaches. For example in the peace state, competition between competitors is relative with sustaining change tending to exceed disruptive. In the war state, competition is a fight for survival and disruptive change exceeds sustaining. How much this impacts you depends upon the activity in question and whether you're directly effected (i.e. it's something you produce) or it's a barrier to entry into your business.

6. The cycle is controlled by inertia barriers for both customer and vendor. On the customer side these are normally referred to as "risks" such as disruption (loss of skillset, political capital etc), transition (trust in new suppliers, transparency, change in governance etc)  and agency (loss of strategic control, lock-in, lack of pricing competition etc). On the vendor side these inertia barriers are built upon from past success and include such things as culture, incentives, structure and external forces (such as financial markets). This is why the inertia barriers are often broken by a company that is not encumbered by the previous model (e.g. Amazon vs Hosting companies).

7. The cycle itself can be local to a specific industry (i.e. range of activities) or can have major macro-economic effects. Whether it does depends upon if the activity can be a component of future activities, the number of activities built up behind the inertia barriers and if the activity can enable others to cross the inertia barriers. The macro economic waves that we see are known as Kondratiev waves and we often refer to them as 'ages' - industrial age, mechanical age etc.

8. During the war state, new forms of organisation appear. These organisations have different strategies, practices and activities than previous organisations. Over time the practices of this next generation diffuse i.e. utility provision of electricity enabled the development of Fordism which spread to become a major influencing factor on most companies.

9. During each of the cycles, we see rapid increases in un-modelled data. It's not unstructured, simply we don't know how to model it as it's in the chaotic (i.e. uncertain, constantly changing) state. Over time we attempt to model this data generally leading to arguments over schemas and classification and technology etc. We've seen this in both Georgian (first industrial age) and Victorian ages (mechanical and railways age) and every subsequent age.

10. As additional points (i.e. this post is too long already) :-

* knowledge also diffuses through the same stages (chaotic to linear)

* there are multiple accelerators and de-accelerators to the process of evolution.
* there are forcing strategies which companies can deploy i.e. use of open source, network effects etc.
* there are many counter strategies which companies can deploy i.e. use of patents, branding, legal system and ownership of lower orders of the value chain.

* the characteristics of the stages are why no "one size fits all" methodology works i.e. in project management agile is most suited to the chaotic where deviation is desirable and structured methods (e.g. six sigma) are most suited to the linear where deviation is not desirable.

* there are multiple ways of exploiting the cycle to your advantage

* organisations consists of a mass of activities and therefore can be in different states of the cycle at the same time and even have multiple fronts at the same time (i.e. multiple parts in a state of war).

* this entire cycle occurs throughout an organisations value chain and hence from simple premises creates a complex world of management.
* linear activities tend to low margin but are stable whereas chaotic activities tend to high margin but are unstable. Creating a profitable and sustainable company requires a constant balance of both.

* many of the memes of modern management e.g. "business alignment" are consequences of how we structure ourselves and ignore the impact of evolution.
* the cycle is accelerating

We can see the effects of this model clearly today. For example, cloud computing which is simply the shift of various IT activities from a product to a utility service domain (a more evolved form) which has been initiated by companies not encumbered by the previous model (Amazon etc) and hence have broken the inertia barriers has instigated a state of war. The normal round of customer "risks" (trust, transparency, governance changes etc) have been raised along with resistance from past vendors (e.g. dismissing of cloud).  As a result of the state of war, new forms of organisation have emerged which have fundamentally different structures, strategies, practices and activities from the past. At the same time new architectural practices (resilience, scaling) relating to this activity (e.g. infrastructure) have co-evolved and are now diffusing. 

We have also seen the explosion of new activities built upon these commoditised component services along with increases of un-modelled data which the technology enables us to exploit (hence big data). We should increasingly see the disruption of past vendors who are stuck behind the inertia barriers due to their past success and hence have cultural, institutional and structural barriers to change. Equally the war will spread to other industries through the reduction of barriers to entry i.e. retail banking, insurance etc.

I could go on with formation of competitive markets, role of standards etc but it's almost a text book classic of the cycle. The only thing that is surprising is how many people are surprised by the changes.

Of course, cloud computing is based upon an underlying component which itself underwent this cycle. That component, which commoditised the means of mass communication, is the internet and it caused disruption (both direct and through reduced barriers to entry) of many industries from media to retail to travel. It also caused explosions of growth, un-modelled data, new practices and new forms of organisation - the web 2.0.  Naturally, their practices (e.g social media, social networks ...) diffused amongst those companies that survived and adapted to the new economic state.

That was also a text book classic of the cycle.

Of course, the internet is a component of the next cycle which refers to the commoditisation of the means of manufacturing - e.g. 3D printing, printed electronics etc. It will have exactly the same effects but then I covered this in talk between 2005-2007 (based upon earlier research) and it's just the same old thing.

The above is brief notes and this work was developed from my original models and research pre-2005 which I've used extensively in competition. It's only recently however that I've been able to extend the model to organisational evolution and obtain the volume of data necessary to be confident with the entire model. Its validation required a cycle of change. It'll still require another cycle before its predictive capabilities are fully tested though.

None of the above is new to anyone that has been following me over the last five years, in fact it's probably very dull having heard much of it so many times before. I still find the nuances interesting, i.e. why companies in a peace mode that find themselves in a war state often attempt to reduce cost to restore profitability and hence quicken their demise or why you have no choice over evolution (Red Queen) of the impacts of Jevons' paradox or ... well there's lot.

However, I'm moving on into how to really exploit evolution of the value chain and play the game. So I thought I'd just put this up here as a brief reminder to the work I've done.

Stop Online Piracy, NOW!!!!

If Congress (or anyone else) wants to stop online piracy, there's another way. Ban all content which is not creative commons or equivalently licensed material (e.g. GPL) from the internet.

This will kill online piracy as there will be nothing to pirate, only stuff you can copy. Well, almost, as some of that pesky material will still leak online. Hence any infraction should be treated as other security violations and made the responsibility of the copyright holder for not taking enough security measures to ensure that their content never reached the internet.

Certainly it'll make investigations into infringements easier (books and films usually take great pains to specify who wrote them) and you can imagine those future law enforcement conversations ...

"Now, sir. I see your film is available online and has been downloaded and copied 100,000 times. So if it's not a creative commons licensed film then that's a 100,000 security violations. Gosh, Mr CEO, that's going to be a huge fine and prison sentence. Won't you miss your jet and lavish lifestyle? Bet you wish you'd kept that film in a locked safe now don't you, silly billy. Now, are you sure your film wasn't creative commons license because if it was I wouldn't be able to charge you with anything?"

I'm quite convinced that by introducing the above scheme, the amount of people going to prison or being fined for copyright infringement will drastically reduce. We will have in effect stopped online piracy and the crime will cease to be.

Won't that destroy online films?

Of course not, people will still want easy access to content from a convenient and trusted source (such as NetFlix) and where there's demand, supply will follow. The trusted brand is all important and people will still pay a reasonable subscription for it. The content producers will just have to adapt to a world where they can still make money from abundantly used creative commons licensed content rather than scarcity.

Won't that destroy online journalism?

Of course not, people will still want easy access to content from a trusted and respected source which provides an analysis of what is happening. The trusted brand is again all important and advertisers will still want to promote their messages. Certainly, people will copy it, so you'll need to build a loyal following and look at those copying sites as free marketing.

Won't that destroy the online music industry?

Of course not, people will still want to hear their favourite bands live, attend gigs, buy merchandise from the band site and they'd still pay (either through subscription or advertising) for a trusted and useful service. Certainly others will copy it, so you'll need to do the usual - build a loyal following, focus on creating a strong trust relationship and think of those copying sites as free marketing.

Won't that destroy the past models of media?

Well the media industry always cries wolf over piracy and change but certainly forcing them to keep copyrighted material secure will make it difficult for them to distribute. However, since many don't seem willing to adapt to a new world (hence SOPA/PIPA) and the cost of introducing legislation to protect them will harm more future focused industries (i.e. the internet is a component of these) then maybe legislation may be needed to force change.

Even if the content is freely available, I'd still pay to have easy access to it through a useful and trusted service, I'll still want to attend gigs, attend lectures, buy merchandise (even books) and watch movies that include product endorsements etc.

Yes, it will be a different world but either the traditional Media companies adapt to a world where you make money from abundance or the US will need to sacrifice its future competitive position (by harming its internet industry).

It's not like those traditional companies haven't had almost two decades to prepare for this change. What have those media executives been doing - playing golf with Kodak? What did you honestly think that digitisation and the internet was going to do - increase your profits by reducing your distribution costs?

Banning copyrighted material is an extreme option and I do believe in a more balanced approach. However, if the traditional Media industries are going to try and use legislation to avoid change, then someone needs to start thinking about how to use legislation to force them to adapt. Otherwise the US tech companies will be constantly in a defensive, rear guard action against acts like SOPA / PIPA etc.

The best form of defense is a good offense.

Reprinted from G+ :-)

Mystic Me 5.0

I'm a bit late with my predictions for this year as a couple of components have already started and so I've had to re-write those parts. However better late than never and in any case this is mainly for my testing purposes. The normal rules apply, the predictions are built up of individual components and each and every component must be correct for the prediction to be correct.
Since, I managed to overshoot my target for last year, I've made the predictions even more detailed using well over 100 different components. I'm aiming for a 50% target (not higher and not lower) which is the ideal balance between usefulness and accuracy.
So, without any more egging of the custard, here goes :-
Predictions for 2012

1. Cloud:Open stack will gain further momentum in the popular press with multiple providers coming online to form a fledgling market. However debate will intensify over the wisdom of providing multiple APIs and whether Open Stack should focus more on being an AWS clone due to evidence of the growing success of Eucalyptus. This situation will be further complicated by Amazon launching a managed "Data Centre in a Container" product aimed at at large enterprises as an onramp to use of public AWS services.
   
   The adoption of cloud computing will continue to outstrip earlier analyst predictions and pundits will cite AWS as exceeding $2 billion in revenue.
   
   The confusion over "enterprise clouds" will grow due to marketing efforts promoting Enterprise Class vs Commodity based clouds, however there will be a backlash including some high profile customers declaring them as of dubious value. Platform as a service will have a strong year with CloudFoundry in particular growing significantly in both community involvement and media coverage.
   
   There will also be no let up in the pace of mergers and acquisitions in this industry with a particular focus on Devop and Management systems. Both ARM and Ubuntu will strengthen their positions in the cloud space. In particular, we will see increasing mention of a standard computing stack involving Ubuntu, OpenStack and CloudFoundry.
   
   Countering these developments will be an increased involvement of Gov bodies with the view of introducing legislation to the cloud with licensed cloud operators.
   
   Big Data will continue to rapidly grow in prominence, however the focus will switch more towards utility provision of big data systems and the importance of algorithms. In particular, data competitions will have a strong year and it will become increasingly clear that they are used not only for improving algorithms but as sources for recruitment of talent.
   
   There will be a number of high profile articles questioning when (not if) cloud will dominate financial ERP and more traditional Enterprise spaces with popular wisdom shifting towards the near future i.e. less than 5 yrs. However, what won't be clear in the first half of the year is which companies will dominate this space and instead concerns will be raised over whether existing software vendors can overcome internal inertia. By the end of the year, it will be clear that an outside player will dominate.


2. Environment:Total Arctic Ice volume will decline to the lowest level on record raising concerns that a tipping point has already been reached. The melting season will be considered to have extended again and the UK will suffer one of the most severe winters on record. Despite the unpopularity of nuclear power, there will be a number of high profile environmental articles highlighting it as a necessary evil in terms of combating climate change.


3. Economy:Despite assurances by the BOE (Bank of England) that inflation will reduce by the second half of the year, RPI will have increased on a year by year basis. The technical recession in the UK will turn into a full blown recession with increasing discussion in the BOE for another round of quantitative easing. Interest rates will be kept at their current historic low. The driving forces behind many of the UK actions will be from Europe.
   
   In detail, the sequence of events include :
   In the first half of the year there will be continued uncertainty over the European debt crisis and exposure of banks to financial instruments based upon this. There will be increasing calls for the ECB to act as the lender of last resort and underwrite individual countries debts across Europe but the ECB will initially refuse.
   
   With increasing social pressure within European countries, the core group of Europe will take drastic action. First, selected countries will default on the Gov debt but remain within the Euro causing increasing market reaction to Euro debt, weakening of the Euro and strengthening of UK gilts and GBP. As GBP strengthens, the FTSE will weaken (as foreign capital seeks to take profit) and to counter this the BOE will embark on a significant round of quantitative easing, possibly in excess of £500 bn depending upon how insane they are.
   
   At this point, the ECB will step in and consolidate the remaining Gov debt across the core Euro group into EuroBonds and act as the lender of last resort for future debt. Investors and rating agencies being caught flat footed will cry foul, however the strengthening of the core Euro group will cause both the Euro to rise and the debt crisis to recede in Europe. However, investors in those selected countries which have defaulted (i.e. banks etc) will be left with a realisation that they have been gamed. Legal actions will result but losses in those investors will be enormous.
   
   In the core European countries, those banks most impacted will be nationalised and it will become increasingly clear during the year that this had been planned as the most significant damage will be felt in the city of London. By the end of the year, the core Euro groups will start to re-define the single market agreement to be limited to a Eurozone. Faced with mounting debts, weakening of the financial market and the strengthening of the Euro market, the FTSE will start to fall significantly by the end of the year. The BOE will then again raise the spectre of even more QE.


4. Society :
   There will be continued protests in Europe over austerity measures in the first part of the year, however by the end of the year these will lessen. In the UK however the reverse will happen.
   
   Protests and strike action in the first part of the year will be mild, however by the end of the year with a massive increase in gov debt (due to QE3), rising inflation (due to QE3), weakening internal economy (due to QE3), isolation from Europe (due to Euro core and ECB action), further bail-out of the banking system (due to Euro core and ECB action) and increasing government austerity ... the mood will darken considerably.
   
   Someone, somewhere will write a popular but ridiculous press article on whether this is the "End of Britain?" By the end of the year, one member of the MPC will write an article explaining their concerns that they have got it wrong.


5. Politics :The year will show increasing tension between the coalition partners with a number of high profile spats. Despite this and with press pundits predicting a collapse of the coalition, the darkening public mood will convince both parties that an early election will lead to a rout. In their own interests, not in the interest of the country, no early election will be called.
   
   Despite the calls for more legislation of the internet and protection of vested interest, there will be a growing realisation that the UK must embrace a future which is not the past. Such calls will find a champion and increasingly the Government will talk about the end of large scale IT projects, embracing a more open future and a need for industry to adapt. Increasingly measures will be discussed to encourage high technology start-ups, to support open source, to end current Government purchasing practices and to limit IP effect on the wider industry.
   
   By the end of the year, despite the poor economic situation, the first glimmers of a bright future will appear as a number of high technology companies will openly discuss moving to the UK.


6. Technology:VMWare will clearly act as two operational divisions - one focused on infrastructure, the other on platform whilst VCE will be touted as a potential IPO for 2013.
   
   The dominance of Android on phones, tablets and TVs (as demonstrated by market share of units shipped) will increasingly raise speculation over Apple's future with several popular press articles asking whether this is a re-run of the Mac vs IBM PC.
   
   Amazon will also have an exceptional year in sales of their tablets with Amazon and Samsung being seen as as the two dominant players (by volume of units) in the tablet space.
   
   Google TV & Google Wallet will exceed expectations with G+ continuing to grow rapidly exceeding 350 million users by the end of the year. Despite hostility to the integration of G+ with Google Search, and the potential dangers of data gravity effects, Google will not discontinue the effort. As a consequence Facebook will buckle and start to adopt a more open approach to data.
   
   Early in the year pundits will discuss the potential for Twitter as 'the' worldwide real time messaging system and there will be, at least one, high profile attempt to acquire it. Twitter will both refuse acquisition attempts and refuse to integrate into G+. By the end of the year the pundits will change tune and articles will question whether Twitter is a "dead man walking".
   
   Mobile banking will also have a phenomenal year with pundits speculating whether this is the beginning of the end for many traditional retail banks.


7. Media :Despite early success, 2012 will be marked by an increasing "war" between past industries and the future. The battle of IP will cover many fronts simultaneously including legislation through Congress, further introduction of DRM on devices and attempts to reinforce Global IP laws.
   
   The battle in the US will turn particularly bleak as media companies aggressively fight a campaign through traditional media channels including assaults on the characters of many public opponents. The pro IP lobby will also find an unlikely ally in China. Due to expansionist policy, Chinese backed companies will increasingly become active in US IP law and provide funding to increasing IP / Copyright legislation. Opponents will highlight how China's policy in the US differs from its own home policy which will not strengthen such laws.
   
   Despite vocal public opposition the US Congress will continue to enact PIPA or an equivalent. By the end of the year, a number of leading Internet companies will have openly raised concerns that they may need to move out of the US. Media companies which have adapted to the new environment, such as NetFlix, will continue to grow rapidly but increasingly will find themselves dragged into the political battle with content providers.
   
   At the very end of the year, a high profile article (probably HBR) will be written concluding that the US has just handed the future of the internet to other nations.


8. Manufacturing :Both 3D printing and printed electronics will have a robust year in terms of growth and public awareness. There will be a marked rise in start-ups and funding in this space, with numerous public articles describing the technology as the future of manufacturing.
   
   The first hints of hybrid printers (both electronic and physical form) will surface along with technology articles questioning whether new forms of computing language will develop covering both physical and digital function.
   
   None of the major printing companies will make significant moves into this space during 2012.
   
   A number of articles will also raise concerns on the issue of security and whether this technology will lead to widespread piracy. These articles will conclude with the importance of DRM and a fledgling lobbyist organisation will form to promote these concerns in the US.


9. Things to Watch :The key watch words of 2012 are Ecosystem, Openness and "Do it yourself" IT.
   
   Increasingly there will be a clear separation between traditional organisations and a new form of next generation companies. Key characteristics of this next generation which will be highlighted throughout the year include :
   
   use of cultural strategy
   cell like organisational structures
   use of platforms to develop ecosystems with competition based upon ecosystems
   use of commodity components in IT
   emerging architectural practices (design for failure, chaos engines and distributed systems)
   extensive use of analytics and algorithmic regulation
   intensive focus on strategic gaming in competition
   use of open source as a tactical weapon against competitors
   a focus on disruption of existing industries as opposed to profit or expansion into geographical emerging markets.


10. MISOG's :Despite the best efforts of the Olympic Committee there will be endless grumblings about the Olympics in London covering the cost, the legacy, the exclusiveness of the event, ticketing, transportation issues, failure of IT systems, unpreparedness, rising costs of rent and excessive security. There will be some protests over the event with increasing concerns that the project costs have overrun and the UK could ill afford the event. Much of this will be couched in terms of the increasing economic gloom in the UK which will overshadow the event. Despite this, the UK will have a good event.

An open letter to Congress on SOPA / PIPA - from Aliens4SOPA

To understand the impact of SOPA / PIPA we need to get rid of some very basic misunderstandings.

First, explosions of industrial creativity DON'T follow the invention of a technology but its commoditisation i.e. it wasn't the invention of electricity but Edison's introduction of utility services for electricity that created an economic boom that led to recorded music, modern movies, consumer electronics and even Silicon Valley.

Electricity is an essential component of these industries and it had to be provided as a standard component before they could flourish.

Now the internet commoditises the means of mass communication i.e. mass communication existed beforehand but the internet turned it into a standard component. Hence we've seen an explosion of industrial creativity based upon this component i.e. Google, Facebook, Twitter etc.

Each time an activity - whether electricity or mass communication or trade - is commoditised, we see explosions of creativity, the formation of future industry and the disruption of past industry. As Edison commoditised electricity provision, new industries formed and past industries such as Gas lighting companies were disrupted.

Those past industries had a choice. They could either consolidate, acquire and adapt which is what they did or they could have tried to get Congress to pass legislation to stifle the electricity market. Had those Gas Lighting Companies succeeded in doing that, then Edison and those future industries such as Hollywood, Silicon Valley, General Electric would never have formed in the US. Instead they would have formed somewhere else and the US would be a fraction of the economic power that it is today.

SOPA is simply an attempt by past industries who face disruption AND refuse to adapt, to persuade Congress to legislate in favour of past models. Its effect will be the same as Gas Lighting companies persuading Congress to legislate against electricity. It's an economic blunder.

You live in global economic market and you compete against other nations. If because of concerns over piracy the US makes such an economic blunder, then as competing nations we will act like pirates by plundering your future. If we don't, China will.

We will happily take Silicon Valley off your hands. Send it to London, we would love it.

We will happily have those jobs, those future industries. If you don't want it, we do.

They key point to understand is the internet is an essential component for future industry just like electricity. Mess with that at your peril.

Of course, Media industries complain about a changing world, they've been crying wolf for decades : "8 track tapes and piracy will destroy recorded music", "video and piracy will destroy the film industry", "internet and piracy will destroy …" blah blah blah blah blah.

Adapt or die is all I'm going to say and if you don't want those future industries please send them to us where we would care for them. So as Alien from a competing nation, I'm all for Congress destroying the US economic future. Go for it.

As they say, fortune favours the brave or more aptly :-

"OUR FORTUNE IS FAVOURED BY CONGRESS CHARGING BLINDLY INTO AN ECONOMIC ABYSS"

We love you Congress.

PS if you could also persuade the Murdoch empire to shift permanently to the US that would be cool too. We've been giving them hints in the UK but I'm not sure they've got the message.

Review of Mystic Me 4.0

Before giving predictions for 2012, I'd better start by reviewing last years.

Of the 51 separate component predictions made (grouped into ten categories, see below) then :-

• 1 is yet undecided
• 4 are clearly incorrect
• 46 are demonstrable

This gives a 92% rate of accuracy for individual components. I'll publish the data when I get a spare moment and have completed the next round of predictions.

However, spotting individual components and trends is the easy bit (i.e. big data will become a hot topic etc). Combining it all together into a coherent story is the real trick.

When scoring a category, every single component prediction in that category must be accurate, timely, spot on etc for the story to be considered accurate. In other words, if a tiny part of the entire prediction for that category is wrong then the whole thing is wrong – no excuses.

I don't believe in the idea of "well I was 70% correct in my statement", it's simple binary - yes or no.

The results are as follows :-

#	Category	Notes	Score (0-1)
1	Cloud	All ten components are demonstrably correct	1
2	Environment	Of three components, two are demonstrable, one has yet to complete but can be considered likely to fail.	0
3	Economy	Of nine components, eight are demonstrable but one is clearly wrong (i.e. the FTSE did not drop below 3,000).	0
4	Society	All four components were demonstrably correct	1
5	Technology Business	Of seven components, two are not demonstrable (i.e. VMWare will increasingly act as two operational divisions and CPTN holdings will turn out to be a patent troll)	0
6	Media Technology	Of seven components, one was clearly wrong (i.e. government regulation to introduce censorship based services designed to "protect the most vulnerable")	0
7	Manufacturing Business	The one component prediction specified is demonstrable	1
8	Words to watch for	All five component predictions are demonstrable	1
9	Social Mobility	Both component predictions are demonstrable	1
10	MISOG's	All three component predictions are demonstrable	1

Overall this gives 60% accuracy but since the goal was to increase specificity to achieve a target of 50% accuracy then I can conclude that I overshot the prediction target and 2012's predictions will have to become even more demanding and more specific.

Hence the result is close but no cigar

For reference, the list of component predictions were:-

#	Category	Component Prediction for 2011
1	Cloud	Conventional wisdom within the popular press shifts towards seeing open source architectures dominating the cloud computing space
2	Cloud	Cost efficiency arguments around cloud computing will increasingly be replaced with customer innovation stories
3	Cloud	the adoption rates of cloud computing will outstrip many early analyst predictions
4	Cloud	Pundits will cite AWS as exceeding $1 billion in revenue
5	Cloud	Enterprise IT will increasingly focus on new value creation, architecture and vendor management techniques
6	Cloud	Increasing mention of terms like supply chain management and new business models based upon outcome
7	Cloud	Platform as a service (PaaS) will overtake Infrastructure as a service (IaaS) as the main buzz of cloud computing
8	Cloud	There will also be no let up in the pace of mergers and acquisitions in this industry
9	Cloud	Governments will also increasingly become engaged in discussing regulation of the cloud
10	Cloud	Some official will be talking up the idea of licensed cloud operators
11	Environment	Total Arctic Ice volume will decline to the lowest level on record
12	Environment	The melting season is considered to have extended by several weeks
13	Environment	The UK will suffer another cold winter.
14	Economy	Inflation, as measured by RPI, will continue to rise.
15	Economy	Because of instabilities in the recovery the MPC will hold interest rates low
16	Economy	BoE will implement a last gasp round of quantitative easing
17	Economy	London will experience a property bubble for high value residential property
18	Economy	The overall housing market, according to the Halifax House Price Index, will suffer a fall in prices
19	Economy	UK will fall back into recession
20	Economy	Instabilities will be driven by overexposure of banks to instruments based on sovereign debt
21	Economy	There will be increasing market attacks on sovereign debt and a drop in consumer confidence
22	Economy	The FTSE 100 will drop below 3,000 during the year.
23	Society	We will see increasing civil disobedience in many countries.
24	Society	UK will experience increasing protests and strike action
25	Society	Despite the necessity to reduce debt, the coalition (in particular the Liberal Party) will continue to wain in popularity polls
26	Society	Despite pundits predicting collapse of the coalition, it will muddle through.
27	Technology Business	VMWare will increasingly act as two operational divisions - one focused on infrastructure, the other on platform. Some public pundits will start to question whether one of the units will be sold.
28	Technology Business	CPTN holdings will turn out to be a patent troll, its target is not Android or FOSS specifically but Cloud in general.
29	Technology Business	We should see examples of companies trading on variability in cloud infrastructure prices through the provision of true brokerage services
30	Technology Business	The volume of tablet sales will sky rocket with new competitors flooding into the market
31	Technology Business	Existing industry will see a decline of traditional laptops
32	Technology Business	The concept of social searching will become increasingly important with a continuation of the plethora of start-ups providing new ways of ranking, mining and determining social reputation
33	Technology Business	Pundits discounting the future of Google will get a rude awakening
34	Media Technology	In the UK, there will be further high profiled efforts to carve up the Internet.
35	Media Technology	The use of government regulation to introduce censorship based services designed to "protect the most vulnerable"
36	Media Technology	Paywalls will continue to be the rage
37	Media Technology	Largest effect will come through the proliferation of devices with on-chip DRM
38	Media Technology	Media pundits will raise the question whether these devices and the introduction of two tier environments means the Internet can be effectively controlled for the average consumer
39	Media Technology	Online video will continue to grow exponentially
40	Media Technology	YouTube becoming increasingly seen as the future distribution channel of media
41	Manufacturing Business	Printed electronics will have a robust year in the popular press, with pundits talking up the potential for this technology especially when combined with 3D printing
42	Words to watch for:	Consumerization
43	Words to watch for:	Shadow IT
44	Words to watch for:	Ecosystem
45	Words to watch for:	Cloud computing will still cause confusion
46	Words to watch for:	There will be a continuation of marketing efforts to distinguish between enterprise and public cloud
47	Social Mobility	Increases in tax and a crackdown on tax avoidance
48	Social Mobility	No mass exodus of wealth from the UK.
49	MISOG's	There will be a considerable amount of grumbling over the Royal Wedding and how much coverage it's getting.
50	MISOG's	Unfortunately no private company will step upto the plate and offer to pay the bill
51	MISOG's	Someone, somewhere will write an article about how the cost of giving everyone an extra days holiday could stall the UK recovery

Future costs and Cloud

There are many subjects which I find tiresome but two which are starting to irritate me are the notion of Enterprise Cloud and Financial ERP. I'll deal with Enterprise Cloud in this post.

The shift from products to utility services inevitably incurs various forms of risks. These include disruption risks such as loss previous skillsets and political capital to transitional risks such as changes to governance and transparency of suppliers to outsourcing risks such as pricing competition and loss of strategic control.

A common, past method of dealing with transitional risks is the use of a hybrid model combining both public and private supplies. However, this is a transitional approach and should be undertaken with a view of moving to a future hybrid model of multiple public providers (i.e. a competitive market).

A transitional approach requires you to build in a way which is likely to be compatible with a future public market. For infrastructure this mean use of commodity components and in most scenarios an EC2 / S3 / EBS like interface. Hence my general support for open efforts like OpenStack (and to a lesser extent Eucalyptus).

Unfortunately, many applications are designed with the best practice for a product world i.e. scaling is about bigger machines, resilience is about N+1 and in general the focus is on reliable hardware. Best practice for a utility world involves resilience, scaling and failure modes built around software i.e. design for failure, distributed systems and chaos engines such as Netflix's chaos monkey approach. There is an inevitable cost of architectural transition from one set of best practices to another.

Obviously many companies don't like this architectural cost of change and hence want to minimise it which has given rise to the concept of the Enterprise cloud i.e. it's like cloud but without the commodity bit.

It should be noted that cloud is simply a result of a standard process of evolution that inevitably leads to operational efficiency through provision of a commodity. A consequence of this is it also enables higher rates of innovation for new business activities (such as big data) through the combined effects of componentisation and creative destruction. The upshot of this, is that you've never had a choice with cloud - it's just a question of when and the longer you leave it then the more you put yourself at a competitive disadvantage to others.

Whilst a commodity based private cloud (which can and should achieve much lower costs than public provision today) is a viable option in the short to mid term (depending upon scale), unfortunately Enterprise clouds don't move you along that architectural transition and here there's a real gotch'a. The problem is simply known as Jevons' paradox.

As competitors gain the benefits of more efficient commodity provision and higher rates of creation, this is unlikely to result in a reduction in IT budgets but instead more IT activities undertaken with everyone trying to keep up with each other. We've seen this for the last thirty years i.e. as IT has become more efficient, IT budgets haven't fallen but we've just ended up doing more stuff.

You therefore have to factor in that five to six years from now your architectural transition costs may well have spiralled by an order of magnitude due simply to the increased size of the estate. This can obviously be counter balanced with a simplification strategy, assuming your estate is already bloated but when considering Enterprise cloud, you must include this increase of architectural transition costs along with less efficient provision during that time due to a non commodity approach. Even private clouds are going to look dubious in this timeframe.

In most cases, Enterprise cloud will be a pretty unattractive option with ongoing and increasing costs.  It can however still be useful as part of a sweat and dump strategy for legacy environments i.e. you push the capital costs for legacy onto a provider with a view of dumping that part of the estate in the near term.

Why do I find this subject irksome? I simply hate repeating old ground and this has been covered many times before over many years. This is the last time.

-- 26th Nov 2013

Alas, I repeated myself.