Tag Archive for 'technology'

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Vote for my SXSW presentation!

I’ve submitted to do a presentation at SXSW, which is the Internet and technology industry’s biggest conference. I attended my first SXSW this year and was blown away by the people, the passion and the ideas. However something that bugged me, was that a lot of people submitted panels with agendas: they either snuck buzzwords into their panel description, to be thinly veiled attempt in getting an audience for themselves (despite no substance in the content). More common were panels that were based around something with a clear motivation to promote their company or business. It was tiring and I know a lot of people were annoyed by that.

Only about 300 people will get accepted for SXSW 2010, with a large part of the decision being decided by people voting on 2200 submissions. I hope I get to do my presentation, because I want to propose a new economic model that will help people understand opportunities for businesses in the Information economy. (It will also be the first public attempt to really explain data portability business models.) I’m also going to synthesise 50 years of technology development, and explain where things are evolving.

My goal is not to self-promote any agenda of mine, but quite simply, to get people excited about the future as much as I am. Because after all, it takes driven passionate people to build new businesses and to create growth is this troubled economy.

So click here, login and vote for me. I *promise* I’ll make it awesome.

An invention that could transform online privacy and media

The University of Washington announced today of an invention that allows digital information to expire and “self-destruct”. After a set time period, electronic communications such as e-mail, Facebook posts, word documents, and chat messages would automatically be deleted and becoming irretrievable. Not even the sender will be able the retrieve them, and any copy of the message (like backup tapes) will also have the information unavilable.

GmailEncapsulated

Vanish is designed to give people control over the lifetime of personal data stored on the web or in the cloud. All copies of Vanish encrypted data — even archived or cached copies — will become permanently unreadable at a specific time, without any action on the part of a person, third party or centralised service.

As the New York Times notes, the technology of being able to destruct digital data is nothing new. However this particular implementation uses a novel way that combines a time limit and more uniquely, peer-to-peer file sharing that degrades a “key” over time. Its been made available as open source on the Mozilla Firefox browser. Details of the technical implementation can be found on the team’s press release, which includes a demo video.

FacebookEncapsulated

Implications
Advances like this could have a huge impact on the world, from controlling unauthorised assess to information to reinforcing content-creators copyright. Scenario’s where this technology could benefit

  • Content. As I’ve argued in the past, news derives its value from how quickly it can be accessed. However, legacy news items can also have value as an archive. By controlling the distribution of unique content like news, publishers have a way of controlling usage of their product – so that they can subsequently monetise the news if used for a different purpose (ie, companies researching the past for information as opposed to being informed by the latest news for day to day decision making)
  • Identity. Over at the DataPortability Project, we are in the finishing touches of creating our conceptial overview for a standard set of EULA and ToS that companies can adopt. This means, having companies respect your rights to your personal information in a standardised way – think how the Creative Commons has done for your content creations. An important conceptual decision we made, is that a person should have the right to delete their personal information and content – as true portability of your data is more than just reusing it in a different content. Technologies like this allow consumers to control their personal information, despite the fact they may not have possession, as their data resides in the cloud.
  • Security. Communications between people is so that we can inform each other in the ‘now’. This new world with the Internet capturing all of our conversations (such as chat logs and emails threads) is having us lose control of our privacy. The ability to have chat transcripts and email discussions automatically expire is a big step forward. Better still, if a company’s internal documents are leaked (as was the case with Twitter recently), it can rely on more avenues to limit damage beyond using the court system that would issue injunctions.

GoogleDocsEncapsulated

There’s a lot more work to be performed on technologies like this. Implementation issues aside, the inline encryption of the information doesn’t make this look sexy. But with a few user interface tweaks, it gives us a strong insight into real solutions for present day problems with the digital age. Even if we simply get companies like Facebook, Google, Microsoft ad Yahoo to agree on a common standard, it will transform the online world dramatically.

Google Wave will take a generation

google wave logoChris Saad used to ask me questions about tech in enterprise due to my history (I’ve got the battle scars rolling out web2.0 at PwC), but he asked me after he wrote this post. So instead of telling him he’s wrong by email (ironic given the topic), I’m going to shame him to the world!

Why Google Wave will take over ten years to turn into a trending wave
As I previously wrote when the news of Google’s new technology was announced, there is a hidden detail Google hasn’t announced to the world: it requires massive computational power to pull off. It doesn’t take a brain to realise it either – anyone thats used a bloated Instant Messenger (like Lotus Same Time) probably understands this. All that rich media, group chat, real time – Jesus, how many fans are we going to need now to blow the steam generated by our computer processors? Mozilla pioneered tabbed browsing – and it’s still trying to pioneer on the same idea – from your computer crashing when you have more than a few tabs open!

Don’t get me wrong, Google Wave is phenomenal. But it’s only the beginning. The fact Google has opened this up to the world is a good thing. But we need to be realistic, because even if this technology is distributed (like how email is), the question I want to know is how many users can one server support? I’d be surprised at these early stages if it’s more than a dozen (the demo itself showed there’s still a lot of work to be done). Do I have inside knowledge? No – just common sense and experience with every other technology I’ve used to date.

Why Google Wave won’t hit the enterprise in the next 12 months
Now to the point where Saad is *really* wrong. “20% of enterprise users will be using wave in the first 12 months for more than 50% of their comms (replacing email and wiki)“.

chris saad google wave

Yeah right. It’s going to take at least three years, with a stable and mature technology, for this to work. Email sucks, but it also works. IT departments, especially in this economy, are not going to try a new form of communication that’s half working and is not a mass adopted technology (wiki’s are a new thing – there’s a cultural battle still being fought within enterprises).

The real time nature potentially might even scare communications departments. Entire divisions exist in firms like mine, to control the message sent to employees. If you are revealing a message before the final message has been crafted, you’ve given away control to that message – the process now becomes just as important as the final message. I understand this functionality can be turned off, but I’m raising it to highlight how enterprises think.

Google Wave rocks
Again, don’t get me wrong. Google Wave blows my mind. But let’s be realistic here – big ideas take time. It took a while for Google the search engine to domiante. Heck, Gmail has taken nearly a decade to get to the point of being called dominant. And you can fix bugs, deploy software, and roll out sales teams – but sometimes with big ideas, it’s a generational thing.

Wave will dominate our world communications – one day. But not for a while.

Google Wave’s dirty little secret

google wave logoGoogle has announced a new technology that is arguably the boldest invention and most innovative idea to come out in recent years for the Internet (full announcement here).

It has the potential to replace email, instant messenging, and create a new technical category for collaboration and interactivity in the broadest sense. However hidden in the details, is a dirty little secret about the practicality of this project.

Google Wave is transformative, but it also is a technical challenge. If adopted, it will entrench cloud computing and ultimately Google’s fate as the most dominant company in the world.

The challenge in its development
For the last two years, the Google Sydney office has been working on a “secret project”. It got to the stage where the office – which runs the Google Maps product (another Sydney invention) – was competing for resources and had half the office dedicated to developing it. So secret was the project, that only the highest level of Google’s management team in Mountain View knew about it. Googler’s in other parts of the world either didn’t know about it, or people like me in the local tech scene, knew it was something big but didn’t know what exactly.

However although I didn’t know what exactly it was, I was aware of the challenge. And basically, it boils down to this: it’s a difficult engineering feat to pull off. The real time collaboration, which is at the core of what this technology provides, requires computationally a huge amount of resources for it to work.

It needs everyone to use it
Although we are all digging into the details, one thing I know for a fact, is that Google wants to make this as open as possible. It wants competitors like Microsoft, Yahoo and the entire development community to not just use it – but be a big driver in its adoption. For collaboration to work, you need people – and it makes little sense to restrict it to only a segment of the Internet population (much the same like email). Google’s openness isn’t being driven out of charity, but pure economic sense: it needs broad-based market adoption for this to work.

federation_diagram_fixed2

Only few can do it
However, with lots of people using it comes another fact: only those with massive cloud computing capabilities will be able to do this. Google practically invented and popularised the most important trend in computing right now. A trend where the industrial age’s economies of scale has come to play – reminding us that there are aspects of the Information Economy that are not entirely different from the past. What Google’s Wave technology does, is give a practical application that relies on cloud computing for its execution. And if the Wave protocol becomes as ubiquitous as email and Instant Messaging – and goes further to become core to global communications – then we will see the final innings to who now runs this world.

Wave is an amazing technology, and I am excited to see it evolve. But mark my words: this open technology requires a very expensive setup behind the scenes. And those that will meet this setup, will be our masters of tomorrow. Google has come to own us due to its innovation in information management – now watch Act II as it does the same for communications.

Google should acquire Friendfeed, the leader in the real time web

May is real time month: everyone is now saying the latest trend for innovation is the real time web. Today, we hear that Larry Page, co-founder of Google, confirming to Loic Le Meur that real time search was overlooked by Google and is now a focus for their future innovation.

With all this talk of Google acquiring Twitter, I’m now wondering why isn’t Friendfeed seen as the best candidate to ramp up Google’s real time potential.

Friendfeed does real time better than anyone else. Facebook rules when it comes to the activity stream of a person ‚Äì meaning, tracking an individuals life and to some extent media sharing. Twitter rules for sentiment, as it’s like one massive chat room, and to some extent link sharing. But Friendfeed, quite frankly, craps all over Facebook and Twitter in real time search.

Why? Three reasons:

1) It‚Äôs an aggregator. The fundamental premise of the service is in aggregating people‚Äôs lives and their streams. People don‚Äôt even have to ever visit Friendfeed other than an initial sign up. Once someone confirms their data sources, Friendeed has a crawler constantly checking an individuals life stream AND that’s been validated as their own. It doesn‚Äôt rely on a person Tweeting a link, or sharing a video ‚Äì it‚Äôs done automatically through RSS.

2) It’s better suited for discovery. The communities for Twitter, Facebook, and Friendfeed are as radically different as America, Europe, and Asia are in cultures. People that use Friendfeed literally sit there discovering new content, ranking it with their “likes” and expanding it with their comments to items. It’s a social media powerhouse.

3) It’s better technology. Don’t get me wrong, Facebook has an amazing team. But they don’t have the same focus. With less people and less money – but with a stricter focus – Friendfeed actually has a superior product specifically when it comes to real time search. Their entire service is built around maximizing it.

Up until now, I‚Äôve been wondering about Friendfeed’s future. It has a brilliant team rolling out features I didn‚Äôt even realise I needed or could have. But I couldn’t see the value proposition ‚Äì or rather, I don‚Äôt have the time to get the value out of Friendfeed because I have a job that distracts me from monitoring that stream!

But now it‚Äôs clear to me that Friendfeed is a leader in the pack – a pack that’s now shaping into a key trend of innovation. And given the fact the creator of Gmail and Adsense is one of the co-founders, I couldn‚Äôt imagine a better fit for Google.

Why open wins

Open standards matter, but so does the water; and just like water is not what creates a Mona Lisa or a Hoover Dam alone, so too do open standards not really matter that much to what we are trying to do with the DataPortability Project in the longer term. But they matter for the industry, which is why we advocate for them. Here’s why.

Hoover dam

Bill Washburn is one of the soft-spoken individuals that has driven a lot of change, like leading the charge to open government technology (the Internet as we know it) to the rest of the world. He’s been around long enough to see trends, so I asked him: why does open always win? What is it about the walled garden that makes it only temporary?

Bill gave me two reasons: technologies need to be easy to implement and they also need to be cheap. It may sound obvious, but below I offer my interpretation why in the context of standards

1) Easy to implement
If you are a developer constantly implementing a standard, you want the easiest one to implement. Having to learn a new standard each time you need to do something is a burden – you want to learn how to do something once and that’s it. And if there is a choice to implement two standards that do the same thing, guess which one will win?

That’s why you will see the technically inferior RSS dominate over ATOM. Both allow syndication and give the end-user the same experience, but for a developer trying to parse it, ATOM is an absolute pain in the buttocks. Compare also JSON and XML – the former being a data structure that’s not even really a standard, and the latter which is one of the older data format standards on Internet. JSON wins out for using asynchronous technologies in the web2.0 world, because it’s just easier to do. Grassroots driven micro-formats and W3C endorsed RDF? Same deal. RDF academically is brilliant – but academic isn’t real world.

2) Cheap to implement
This is fairly obvious – imagine if you had two ways of performing something that did the same thing, but one was free and the other had licensing costs – what do you think a developer or company will use? Companies don’t want to pay licensing fees, especially for non-core activities; and developers can’t afford license fees for a new technology. Entities will bias their choices to the cheaper of the two, like free.

I think an interesting observation can be made about developer communities. Look at people that are the .Net community, compared to say something like Python advocates. You tend to find Python people are more open to collaboration, meetups, and other idea exchanges rather than the .Net developers who keep to themselves (a proprietary language). With the Microsoft owned .Net suite requiring a lot more costs to implement, it actually holds back the adoption of the technology to dominate the market. If people aren’t collaborating as much when compared to rival technologies, that means less innovation, more costs to learning – a longer term barrier to market adoption.

The most important point to make is on the actual companies that push these standards. Let’s say you are Facebook pushing your own standard, which although free, could only be modified by and adapted by the Facebook team. That’s going to cost resources – at the very least, a developer overseeing it. Maybe a team of evangelists to promote your way of thinking; a supervisor to manage this team. If you are the sole organisation in charge of something, it’s going to cost you (not anyone else) a lot of money.

Bridge being built on the Hoover dam

Compare that to an open community effort, where lots of companies and people pool their resources. Instead of one entity bearing the cost, it’s hundreds of entities bearing the cost. On a singular basis, it’s actually cheaper to create a community driven standard. And honestly, when you think about it, why a company fights over what standard gets implemented has nothing to do with their core strategic objectives. Sure they might get some marketing out of it (as the Wikipedia page says “this company created this standard”), but realistically, it’s rewarding more the individuals within these companies who can now put on their resume “I created this technology that everyone is using now”.

Why Open wins
In the short run, open doesn’t win because it’s a longer process, that in part relies on an industry reacting to a proprietary approach. In the long run, Internet history has proven that the above two factors always come to dominate. Why? Because infrastructure is expensive to build and maintain, and usually, it’s better to pool our efforts to build that infrastructure. You don’t want to spend your money on something that’s for the public benefit, only to have no one in the public using it – do you, Mr Corporate Vice-President?

Understanding entrepreneurs

Lachlan Hardy the other week was saying to Mick Liubinskas, myself, and others at the Sydney weekly Official Friday Drinks, that he doesn’t like “entrepreneurs” or at least people that call themselves that because he thinks it’s a silly term. We ended up having a lively debate and explored if there truly is value in an “entrepreneurs” degree. I thought I’d dig into what exactly an entrepreneur is because it’s an interesting term as Lachlan and the boys got me thinking.

Kid entrepreneur

I’ve had the label ‘entrepreneur’ slapped on me twice before without me even realising I was. The first time, I was 15 and lining up in the bank after school. The fat uniform shop lady from my school told me that she needed to get ahead of me, as she obviously had a lot more money to deposit over what she probably thought was me emptying out my piggy bank of $50 in coins. When it finally got to my turn, the bank teller remarked where did I manage to collect all that money (I think it was $5000). I told her I was organising my schools semi-formal, and I was collecting the ticket money. Just after I said that, the fat uniform shop lady waddled past me and quipped: “no – it’s because he’s an entrepreneur” and gave me a look and smile as if to say ‘you smart little bugger‘.

The second time I was called that was at work. In 2006 I pitched a proposal to have social media technologies implemented into the core operation of my rather large firm, which two years on, has successfully occurred. Early on, maybe six months into the roll-out, my home business unit (who would eventually use the technology but had no idea what I was doing behind the scenes in other parts of the firm) gave me an award in front of a few hundred people. As my skinny business unit leader described the story he said the “networking” award which I was being awarded is not appropriate, and instead should be regarded as an “entrepreneurs” award because that’s really what I am.

Weird eh? In the spirit of community, I organised a party for my school mates. Due to frustrations with my workflow, I attempted to make my workplace more efficient. Both those instances, were recognised as entrepreneurial. Fat lady called me an entrepreneur because I had a stack of cash in my hand; my stick-man boss’s boss called me an entrepreneur because I managed to convince senior management though contacts I developed to implement my idea.

What’s the common link?

What is this “Entrepreneur” that you speak of, sire?
According to WordNet, an entrepreneur is: “someone who organizes a business venture and assumes the risk for it“. Or the Oxford dictionary which states: “a person who sets up a business or businesses”.

This is very much in line with how people view the word – but there’s a problem with this definition. Let’s have a high-level look at the types of entrepreneurs.

Immrant entrepreneur

There’s the glorified king of them all – ‘The Entrepreneur’ – who starts a business and then lists on the stock exchange or gets bought out for one-hundred million dollars and makes it as Times person of the year. WordNet and Oxford definition’s through and through.

A second type, the intrapreneur, is an entrepreneur stuck in a big company but displays the same traits as a ‘real’ entrepreneur. The defining difference being they don’t take the same risk of capital loss as their ‘real’ buddies. And correspondingly, don’t get the same rewards.

A third type, is the social entrepreneur like my friend Donnie Maclurcan who started up Project Australia. This is an emerging type, but when people hear about them there’s a bit of confusion. I mean, how does a non-profit venture yield, um, profit – isn’t that what entrepreneurialism is about?

All the above are entrepreneurial, but they don’t match the definition because of a misguided understanding: we are using money to measure it.

Entrepreneurialism is more like a combination of a risk-taker (different from gambler) and passionate expert, who generates value in our society. It’s almost like a function in our society – some people are conductors, others are saxophonists, and others play the violin. Different people pick their specialty: the violinists are playing music according to their function and develop accordingly; the conductors similarly according to their function. Extend the definition with people that love to be employees, and others that love to be managers. There is a different skill class required, and quite often, people in one class don’t want to be in the other (like how some computer developers who love their trade, get pulled away from their passion into management which they call admin). An entrepreneur, like an bridge engineer, is someones who’s flagged ‘I’m on the lookout to build structures of value’ except the former is building structures for markets as opposed to the latter who is building structures for transportation.

The traditional definitions we use are inconsistent. How can you describe something using such a one-dimensional view as finance when really what we are describing are components to a job function or perhaps even a type of labour class. They are almost like an artist, trying to perfect the synthesis of the four factors of production: land, labour, capital, enterprise. With the rise of the corporation as the dominant institution in our society, we’ve forgotten that our society was built by individuals who would otherwise be called an entrepreneur: sole traders selling to a market. We now group ourselves in a collective (a company) for the apparent ‘economies of scale’, as we can minimise our transaction costs.

Here’s an illustration with how the definition is at conflict with how we use it from the “risk” point of view. Most family businesses, like the local fruit-shop when they started, raised capital in the form of a bank loan. They very much are taking a risk there (the risk of bankruptcy) – but we probably don’t spare a moment in thinking the risk they took makes them “entrepreneurs”.

Contrast that to people innovating in technology. Typically a college kid comes up with a great new idea, and he then goes and raises funding from angel investors and then venture capital. What’s the risk there? If the venture fails, the money does not get enforced on the entrepreneur to be paid. People simply pack up shop with low heads and that’s it. In the upside, sure the entrepreneur needs to share profits. But if the only loss they face is the feeling of disappointment and perhaps, the $2 in capital they contributed to start the company, does this mean they are not entrepreneurs?

A better definition
This definition is from my favourite Frenchman, or at least, the guy that made me stop hating the French – and that’s saying something! (Greek waiters and French chefs do not work well under the same roof!)
Twitter _ Loic Le Meur_ _entrepreneur_
Loic says it’s simply someone who moves resources from lower yield areas to higher yielding ones. The man that coined this was an admirer of Adam Smith’s “Wealth of Nations” but felt Smith underplayed the role of an entrepreneur in capitalism. So if you have a fan in your house cooling a room where no one is sitting, it’s moving that fan to the room where there are 20 people that are boiling hot due to the hot weather. It’s a person who has the initiative to reallocate a resource to where the demand and appreciation of that resource is. Bringing it back to economics, entrepreneurs are one of the major reasons our market economy works – and the market economy, despite it’s weaknesses in some areas, is a brilliant system at organising our society.

The WordNet definition is the typical interpretation of an entrepreneur in society, whilst the Loic interpretation is truer to the source of the word. Reconsidered in this light, I’ve now come to appreciate that as annoying entrepreneurs can be (it takes a certain kind- very much a me, me, me view on things; mavericks who upset the order – which sounds heroic but the reality is that they are a real pain in the arse; and the “shut-the-hell-up-Ive-already-heard-you-talk-about-that-idea-a-hundred-times” trait), we certainly shouldn’t diminish their role in society. And if someone identifies themselves as one, I would say they are simply flagging their place in the personality tree: don’t mock it, be aware of it.

Organisations need to be a size 12

Last week at the top 100 web applications launch, Ross Dawson made a brief remark that I feel should not go ignored. He said that technology aside, companies like the ones in the top 100 list have a huge impact on our society; They are redefining our society as a whole, with new ways of doing things such as how organisations are structured. On that same panel Duncan Riley was crying out foul about the problem with Australia is that venture capital money is nothing like how it is in the US (which is offered for riskier ideas, at a quicker turnaround, and with bigger amounts) – but a retort made by Phil Morle brought this common whine in the Australian industry to a different level: “You don’t need to be a billion dollar company to be successful.”

In the context of the discussion, this can be taken in several ways about the state of the venture capital industry and its interaction with Internet start-ups, but take a step out of that mindset and instead explore the opportunity with the point made by Ross. Organisations, like incorporated companies of today, are something we should and can re-examine because a billion dollar company is not what the goal should be. Why? I’ll show you.

(Dis)economies of scale

Economic theory proclaims that the larger a company, the better. In the literature, this is regarded as ‘economies of scale ‘ whereby things become cheaper the bigger firms become. For example, the cost of capital is cheaper for a large a company (for those without a financial background, that simply means things like the interest on a bank loan or how much a shareholder expects as a return in dividends or share-price growth) . Operating costs can also fall, which if you think about how retailers will offer discounts on bulk buys – if you are a bigger company, you buy more and therefore get those deals (as well as have influence to create those deals).

Even if you don’t have an economics background, I am sure you are familiar with the concept given the ‘growth’ obsession we have in our world: bigger is better or more is more. However something we should be equally aware of is the ugly cousin: diseconomies of scale . Even economic theory recognises that you can get to a stage where you are just too big, where in fact each extra increase is no longer creating economies but the opposite. It’s a bit like trying to carry the shopping from your car boot: some people can carry a half dozen bags to save on multiple trips; however there is a point where they are carrying too many bags, and the extra benefit of less trips back to the car is in fact outweighed by the increased risk of dropping the bags and hurting their back.

We live in a world, where the growth obsession of our world fails to recognise the ugly cousin. We constantly hear about growth, but what goes up must come down – we never seem to hear when a company is “big enough”. Building on Ross’s point, maybe the answer to that is not that we need to identify the point on the continuum where the diseconomies kick in; instead, the new opportunities offered by technology can instead determine how we can organise resources with the least amount of size.

I have a client that is regarded as one of the biggest advertising agencies in the world. I’m sure anyone with experience with the internal operation of ad agencies will recall how damn complicated they can be – which I think has to do with the ego prominence of the creative industries. Everyone needs differentiation in those industries (and so, the one company is in fact a group of multiple agencies like their own mini empire or stand alone business unit). The complex organisational structure that my client operates in, made me think this is what modern day socialism is like: create a large organisation that becomes so complex, that no one understands it – and in the process, have multiple over-lapping jobs filling functions that are not needed. Giving people jobs for the sake of it. As a case in point, one of the guys in the finance department told me how there was a girl that no one knew what she did. One day she resigned, and whilst one would expect strain on a group with one less staff member, what actually happened was that no one noticed any difference in the output of the team!

Little did I realise however that soon afterwards as I performed a internal (non-client facing) role that this advertising agency wasn’t unique with its socialism. Aside from the fact I’ve met people at my firm that I still couldn’t tell you what they do, my experiences had me see another bigger negative about a big organisation that can be summed up in one word: people. And just like how people by nature are complicated, so too will my answer as to why.

My firm employs 140,000+ globally and about 5,000 in Australia. Whilst that is a high number, more remarkable is the fact it’s a professional services firm: we are not talking about 140,000 high school drop outs but a well educated work-force. As a consulting firm, client facing staff like myself can be in a group as big as 200 people (in each city). There are effectively another dozen or so people with exactly the same skill set and job role as me, but we are just resources that go out to different clients, so ultimately we are doing the same work. That side of my job at my firm has seen me experience a very efficient, lean machine with the fundamental economic concept of “allocating scarce resources” brutally evident with the language of how we run our projects (I even just called myself a resource above, not a employee). However it’s that internal role which had me see the supporting ecosystem for client-facing groups like mine and which made me realise the weaknesses of a big company. I couldn’t tell you how many of the 140,000 people are supporting the client-facing professionals, but I would hazard a rough guess to be about 20%. The nice way of saying it, is that in Porter’s model , that 20% are the support staff to help execute our primary revenue-generating activities. Another way of putting it: that 20% are the overhead.

Overhead matters for two reasons in this discussion: it slows down an organisation (ie, decisions) and it can definie its existence (ie, costs). Each of these points are worth looking at separately.

lego men

“Frustration” defined: the sum of all people you need to work with to get something done in the last month

People and decisions

That internal role I discussed above, was about implementing a new technology at my firm. I could write a book about the experience, but suffice to say I can recall one incident which is a perfect reflection of something I learned about getting something done in a big company.

This particular technology allows you to add extensions that can drastically alter the functionality of the product. These ‘plugins’ are remarkably simple – we are talking about uploading a single file that is perhaps 50kb (smaller than a typical word document) – and once uploaded via an admin interface it can be activated for immediate effect (with documentation fully provided on the web). Indeed, in the early days of the technology’s roll out, I would often add new plugins as I felt the need arose, but that quickly ended when I was forced to concede that’s not the right way to do things (as it’s not my job). So therefore, if I ever wanted a plugin, I would have to e-mail the IT guys, who would then review it, test it, and then upload it. This is fair enough because adding a plugin could destabilise the system losing valuable data.

I might also add whenever I sent those e-mails after I no longer installed those plugins myself, I would follow up a few weeks later only to find no one had got around to doing it.

Why the significance of this story? Something that I could do in 30 seconds instead takes weeks because I work in a large organisation. For example:

– write an e-mail asking for the request explaining why: 30 minutes

– following up on the status of my request: 60 minutes of e-mails, listening to justifications for inaction, etc

– escalating to a superior when I felt things were taking too long: 60 minutes of meetings and e-mails, as I stressed the importance of a particular plugin for the productivity of one of our pilot groups

…And that’s in raw effort. That’s not accounting for the time stretch of a few weeks (actualy months in one of the cases).

Even though I had the skills, understanding, access, and ability to do this – I couldn’t due to lines in the sand of what I was allowed to do. And because I couldn’t, what would take 30 seconds for a small start-up using the same product, it would in fact take me hours upon weeks to get another few people whose “job” it is to do it.

This example is more humourous than harmful, but when it comes to large organisations, it’s a perfect characterisation of how things get done. I can assure you, all big companies work like this – by definition, a company that is Sarbanes Oxley compliant has so many segregation of duties it will make you cry with laughter. If I shared with you some other stories, that laughter will turn to shock, when you come to the truth of how companies actually operate.

People and cost

At another one of my clients, they have been undergoing some massive growth over the last few years, with a large organisational re-shuffling as this rapidly growing company took shape. A guy I’ve got to know that’s been there a while (and which I might add, we have no idea what’s he actually does as a job despite his title) told me something quite funny. His observations over the years, is that as a company increases in size, so does a corresponding increase in headcount irrespective of any other factor. By example, he explained that lets say a new person is appointed to lead a new team – they now require a personal assistant. And that new team now needs a dedicated IT guy. And then an HR representative. And the list goes on – rather then a company consolidating on its size (ie, merging job roles to avoid duplicity), what he thinks is that as the company has grown over the years, there is always a corresponding increase in head count regardless without any obvious reason why. It’s almost like a natural externality of growth is headcount.

Payroll is a significant cost for any company which can be up to 80% of the total expense of an organisation (my former headmaster told me that, that being a knowledge intensive organisation: a school). So as my above discussion highlights, I obviously find it amazing how such a significant cost is not controlled because management don’t actually understand what staff they have (and as an aside, current enterprise social networking technologies specifically target the real need of documenting what expertise a company’s staff actually has because no one knows). Whilst this may seem like an important point from a controlling costs point of view, I wish to raise it’s actually a hell of a lot more significant.

Let’s say a company needs one million dollars a week to pay for things like wages, electricity, office rent etc. In other words, a company needs sales of minimum $1million a week purely to stay alive – to pay for the stuff that in theory is meant to help it make money in the first place. This is without regard to meeting profit targets as expected by a company’s owners and other such factors. If that company can’t cover that $1million, it is technically insolvent. Meaning, jail time for the directors and senior management for running such a company.

So if a company has these commitments, it ties their hand. They suddenly become very risk-averse; where experimenting with a better way of doing something may threaten their ability of making that $1 million a week. Couple that with the fact that most organisation’s single biggest expense is payroll, with lists of employees that no one person exactly knows what they are doing, and it makes you wonder. Companies effectively exist to cover their expenses, but if they actually dug down, they’d realise those expenses may not even be something that require. In effect, a company’s entire strategy and positioning in the market (ie, prices that take into account enough to cover overhead) may be dictated by something that might not be needed. A big company exists purely to feed the beast, making decisions that may not be what a company should be making if it didn’t have to worry about its overhead.

small is the new big

Small is the new big

The power of 12

Going back to how technology is enabling us new ways of organising, if the only reason why a company needs to get big so it can get economies of scale, why don’t we flip it? We no longer live in the industrial era where economies of scale are the goal. Instead, the biggest cost we have now is time; if the expertise is in the people we employ, we need to scale operations so as to give them money and working conditions that suit their lives. This isn’t relevant only for professional services, but for any web service – the fact you provide a service and not a manufactured good means its driven by people not metals.

Of course, a company’s strategy can either be cost-competitive (like Dell) or differentiation (like Apple). But this doesn’t negate the fact, that a company should only have costs that directly add value for the customer (which is why we have innovations like activity-based costings which allocate overhead directly to customer activities, but that’s another story). Given that people are the biggest expense in companies now, we need to question, do we really need that many people to provide that value?

I have a rule I follow in life which has grown out of my experience with how things go wrong: complexity. The more factors, the more likely something is going to fail. For example, if you are driving to a wedding – the more traffic lights, the more likely it is going to slow you down. The longer you have to drive, the more likely you will get involved in a car accident. If you need to drop something off on the way to the wedding venue, if you need to make two separate stop-offs, the more likely you will be late as opposed to one drop off (regardless of the distance, but based purely on unforeseen variables). So basically, you need to minimise the ‘nodes’ in the line. Even when things look they are fine, the more variables to success, the increased risk of something happening that will distract that goal.

However, I am willing to concede, you can’t be a minimalist for everything, which is why I am settling for the number 12 – keep your variables, especially people, to a maximum of 12. Aside from religious connotations which makes the number so omnipresent in our lives, the reason I like it is for the same reason it’s the base number of measurement systems used through history , like the still dominant imperial measurement system. That reason being, it’s one of the most versatile numbers. Versatility and agility to the market is what success is now; not economies of scale.

If designing an organisation, you want a core team of 12 people. Those 12 people together, should be able to do everything that needs to be done to meet the needs of the customer. And if the organisation needs to scale for whatever reason, then those 12 people should have specific functions that they own. The number 12 is magical, because for the same reason it was used in the measurement systems in the past, it is so versatile: you can re-group your 12 people into even teams of two, three, four or six. Don’t underestimate the impact team dynamics like that can have – or using a term that Mick Liubinskas says as often as a nun does her Hail Mary: it emphasises the importance of “focus”, in an agile way that can easily adapt to situations. Yet at the same time, you will find with 12 you can get almost anything done if you truly have a talented team. Still don’t get 12?

The number twelve, a highly composite , is the smallest number with four non-trivial factors (2, 3, 4, 6), and the smallest to include as factors all four numbers (1 to 4) within the subitizing range. As a result of this increased factorability of the radix and its divisibility by a wide range of the most elemental numbers (whereas ten has only two non-trivial factors: 2 and 5, with neither 3 nor 4), duodecimal representations fit more easily than decimal ones into many common patterns

Source: Wikipedia

There are dozens and dozens (whoops, was that 12?) of companies that are small but successful . Challenge yourself: does world domination really equate to a 15,000 person workforce? Focus on getting 12 highly capable people, and you will avoid entering the trap of the big companies today that are slaves to their own existence. We have technology today that could design a radically different organisation in 2010 completely foreign to how traditional business operates. If you explore what smart people have said to complement what Ross originally meant by his comment, you now might also realise that those top 100 web applications represent more than meets the eye.

Information overload: we need a supply side solution

About a month ago, I went to a conference filled with journalists and I couldn’t help but ask them what they thought about blogs and its impact on their profession. Predictably, they weren’t too happy about it. Unpredictably however, were the reasons for it. It wasn’t just a rant, but a genuine care about journalism as a concept – and how the blogging “news industry” is digging a hole for everyone.

Bloggers and social media are replacing the newspaper industry as a source of breaking news. What they still lack, is quality – as there have been multiple examples of blogs breaking news that in the rush to publish it, turns out it was in fact fallacious . Personally, I think as blogging evolves (as a form of journalism) the checks and balances will be developed – such as big names blogs with their brands, effectively acting like a traditional masthead. And when a brand is developed, more care is put into quality.

Regardless, the infancy of blogging highlights the broader concern of “quality”. With the freedom for anyone to create, the Information Age has seen us overload with information despite our finite ability to take it all in. The relationship between the producer of news and consumer of news, not only is blurring – but it’s also radically transforming the dynamics that is impacting even the offline world.

Traditionally, the concept of “information overload” has been relegated as a simple analysis of lower costs to entry as a producer of content (anyone can create a blog on wordpress.com and away you go). However what I am starting to realise, is the issue isn’t so much the technological ability for anyone to create their own media empire, but instead, the incentive system we’ve inherited from the offline world.

Whilst there have been numerous companies trying to solve the problem from the demand side with “personalisation” of content (on the desktop , as an aggregator , and about another 1000 different spins), what we really need are attempts on the supply side, from the actual content creators themselves.

info overload

Too much signal, can make it all look like noise

Information overload: we need a supply side solution
Marshall Kirkpatrick , along with his boss Richard McManus , are some of the best thinkers in the industry. The fact they can write, makes them not journalists in the traditional sense, but analysts with the ability to clearly communicate their thoughts. Add to the mix Techcrunch don Michael Arrington , and his amazing team – they are analysts that give us amazing insight into the industry. I value what they write; but when they feel the stress of their industry to write more, they are not only doing a disservice to themselves, but also to the humble reader they write to. Quality is not something you can automate – there’s a fixed amount a writer can do not because of their typing skills but because quality is a factor of self-reflection and research.

The problem is that whilst they want, can and do write analysis – their incentive system is biased towards a numbers system driven by popularity. The more people that read and the more content created (which creates more potential to get readers) means more pageviews and therefore money in the bank as advertisers pay on number of impressions. The conflict of the leading blogs churning out content , is that their incentive system is based on a flawed system in the pre-digital world, which is known as circulation offline, and is now known as pageviews online.

A newspaper primarily makes money through their circulation: the amount of physical newspapers they sell, but also the audited figures of how many people read their newspaper (readership can have a factor of up to three times the physical circulation ). With the latter, a newspaper can sell space based on their proven circulation: the higher the readership, the higher the premium. The reason for this is that in the mass media world, the concept of advertising was about hitting as many people as possible. I liken it to the image of flying a plane over a piece of land, and dropping leaflets with the blind faith that of those 100,000 pamphlets, at least 1000 people catch them.

It sounds stupid why an advertiser would blindly drop pamphlets, but they had to: it was the only way they could effectively advertise. For them to make sales, they need the ability to target buyers and create exposure of the product. The only mechanism available for this was the mass media as it was a captured audience, and at best, an advertiser could places ads on specialist publications hoping to getter better return on their investment (dropping pamphlets about water bottles over a desert, makes more sense than over a group of people in a tropical rainforest). Nevertheless, this advertising was done on mass – the technology limited the ability to target.

catch the advert

Advertising in the mass media: dropping messages, hoping the right person catches them

On the Internet, it is a completely new way to publish. The technology enables a relationship with a consumer of content, a vendor, a producer of content unlike anything else previously in the world. The end goal of a vendor advertising is about sales and they no longer need to drop pamphlets – they can now build a one on one relationship with that consumer. They can now knock on your door (after you’ve flagged you want them to), sit down with you, and have a meaningful conversion on buying the product.

“Pageviews” are pamphlets being dropped – a flawed system that we used purely due to technological limitations. We now have the opportunity for a new way of doing advertising, but we fail to recognise it – and so our new media content creators are being driven by an old media revenue model.

It’s not technology that holds us back, but perception
Vendor Relationship Management or (VRM) is a fascinating new way of looking at advertising, where the above scenario is possible. A person can contain this bank of personal information about themselves, as well as flagging their intention of what products they want to buy – and vendors don’t need to resort to advertising to sell their product, but by building a relationship with these potential buyers one on one. If an advertiser knows you are a potential customer (by virtue of knowing your personal information – which might I add under VRM, is something the consumer controls), they can focus their efforts on you rather than blindly advertising on the other 80% of people that would never buy their product). In a world like this, advertising as we know it is dead because we know longer need it.

VRM requires a cultural change in our world of understanding a future like this. Key to this is the ability for companies to recognise the value of a user controlling their personal data is in fact allowing us new opportunities for advertising. Companies currently believe by accumulating data about a user, they are builder a richer profile of someone and therefore can better ‘target’ advertising. But companies succeeding technologically on this front, are being booed down in a big way from privacy advocates and the mainstream public. The cost of holding this rich data is too much. Privacy by obscurity is no longer possible, and people demand the right of privacy due to an electronic age where disparate pieces of their life can be linked online

One of the biggest things the DataPortability Project is doing, is transforming the notion that a company somehow has a competitive advantage by controlling a users data. The political pressure, education, and advocacy of this group is going to allow things like VRM. When I spoke to a room of Australia’s leading technologists at BarCamp Sydney about DataPortability, what I realised is that they failed to recognise what we are doing is not a technological transformation (we are advocating existing open standards that already exist, not new ones) but a cultural transformation of a users relationship with their data. We are changing perceptions, not building new technology.

money on the plate

To fix a problem, you need to look at the source that feeds the beast

How the content business will change with VRM
One day, when users control their data and have data portability, and we can have VRM – the content-generating business will find a light to the hole currently being dug. Advertising on a “hits” model will no longer be relevant. The page view will be dead.

Instead, what we may see is an evolution to a subscription model. Rather than content producers measuring success based on how many people viewed their content, they can now focus less on hits and more on quality as their incentive system will not be driven by the pageview. Instead, consumers can build up ‘credits’ under a VRM system for participating (my independent view, not a VRM idea), and can then use those credits to purchase access to content they come across online. Such a model allows content creators to be rewarded for quality, not numbers. They will need to focus on their brand managing their audiences expectations of what they create, and in return, a user can subscribe with regular payments of credits they earned in the VRM system.

Content producers can then follow whatever content strategy they want (news, analysis, entertainment ) and will no longer be held captive by the legacy world system that drives reward for number of people not types of people.

Will this happen any time soon? With DataPortability, yes – but once we all realise we need to work together towards a new future. But until we get that broad recognition, I’m just going to have to keep hitting “read all” in my feed reader because I can’t keep up with the amount of content being generated; whilst the poor content creators strain their lives, in the hope of working in a flawed system that doesn’t reward their brilliance.

Facebook’s privacy is smart on technology but stupid in thought

I’ve had to neglect this blog because I have been insanely busy with work and my studies, and will continue to do so for the rest of the year. But I thought I’d post a quick observation I made today, that I found interesting. Even more interesting, because I rarely notice details!

Whenever Facebook notifies you of an e-mail – like for example when a friend messages you – it will actually show you their e-mail. An example is in the screen shot below, which would enable me to click ‘reply’ to their e-mail and it would go directly to their personal e-mail. (I’ve noticed however, that this will only occur if you have already added the person as a friend.)

direct e-mail

This raises some interesting issues regarding privacy. The first being, why the heck is Facebook allowing this? Am I going to reply to my friends asking them what did they say in the message?! Privacy is my right to determine when people can see information about me when I want to – and I don’t want my friends seeing my e-mail. I can think of an example when a friend collected my e-mail from my profile, and adding me to a forward list of chain e-mails. Unlike the postal system for snail mail, where people pay for sending me a message with a stamp, e-mail forces the user to pay when they receive a message through their time. Before I didn’t have a choice, but now with new ways of communicating, I can control what gets sent to me.

This actually is a bit deeper. I’ve seen fake profiles friend request me – I always deny people I don’t know, but I know that lots of my friends usually add people blindly (I remember asking a friend who a friend requester was when I noticed she was a mutual friend with him, to which he replied: “No idea, but she’s hot!”). This now just became a very easy way to obtain someones e-mail – certainly, not as easy as harvesting e-mails from a public facing website, but still another means. The concerns however is not spam but identity threats.

A crucial thing to understand about privacy, is the concept of identifiable data. Corporations can collect data about me until their heart is content and I wouldn’t mind- but only on the basis they can’t specifically identify me. An e-mail address is what I regard as identifiable information: the e-mail I use on various web services that hold different data about me, can be easily linked purely through my e-mail address.

I’ve previously said how social networking sites are a new type of communications, that are far better than e-mail. E-mail is one of the worlds most powerful technologies but also one of the most dangerous. Whilst most would think it is because of e-mail overload and spam, what I really mean is how a single e-mail address can do so much damage if used by someone trying to investigate you and your life.

As our digital world becomes more sophisticated (and scary), lets be clear of some things. People no longer need e-mail to contact you; they can instead contact your ‘identity’ which is far superior (I discussed this in the posting I linked to just above). However with this advancement, also comes the opportunity to regard what your e-mail address really is: a key piece of identifiable data that can link your multiple identity’s across the digital world into one mega profile.