Next Moves in a Global Economy: Podcasts from the 2007 Wharton Economic Summit - Knowledge@Wharton

Next Moves in a Global Economy: Podcasts from the 2007 Wharton Economic Summit - Knowledge@Wharton

Today, driving back home I was listening to one of the podcast available in this page from the Wharton Economic Summit. It was an interview with Shellye L. Archambeau, CEO of MetricStream and she was talking about the balance of life and work. I found her comments very valid and practical; here are some of the ideas:
- When it comes to life-work balance, there are integrators and there are segmentors. Integrators use technology to do things that were not possible before and by doing so, they integrate work in daily life. Segmentors, draw a hard line between life and work.
- Plan for help and put it in the budget. If you want to work hard, have a family and enjoy your life, you'll need some help. If needed, pay for that help and enjoy a smaller house.
- Be open and explicit regarding your commitments with family and work so they both know where is the line.

I personally adhere to the side of integrators. I believe in the augmenting power of technology. I do believe and practice the habit of morphing your working habits and adapting them to your family habits.

As I was listening to this podcast, I was thinking to myself that this is yet another example of attention economy in practice. The way you use your time and how you reach a combination of work and life that fits you, is essentially a choice of where are you extracting the maximum return to your attention. In some moment of the day you prioritize the quality time and attention devoted to your family. In some others the work gets the attention.

Bottomline: Decide what is the value that can be obtained from your attention and use technology to enable it!

Forrester Information and Knowledge Management: The New Software Industry – Forces At Play, Business In Motion

Forrester Information and Knowledge Management: The New Software Industry – Forces At Play, Business In Motion

This blog entry from Forrester brings back the discussion about the business model of the software industry. What is the impact of SaaS in the industry? Are mature software companies forced to increase the contribution of services to their revenue streams more than new licenses do?

The most important question to ask here, I believe is: what are customers buying? Do they buy tools or do they buy the outcome of using those tools?

If you think they continue to buy tools, the traditional packaged licensing model applies. If you think they buy the result of applying that software to their business, then it's not that clear.

The presentation from Michael Cusumano describes in detail the evolution of software firms and the combination of software and services. He appears to detect a rule that applies to software companies: when they reach the age of 23 years old, services (including maintenance) surpass license as the larges contributor to company revenue.

The interesting factor is that, although services can have positive contribution to the net profit, investors typically place too much value on products over services. Is this sustainable?

However, there is a terminology confusion with the "service" concept: do we talk about the services economy, or are we talking about IT-enabled services? One of the most attractive ways of looking at it is: when to "servitize" products and when to productize services.

Whenever you can codify or formalize specific actions, those can become IT executable services, with clearly defined rules of execution. That means you can "productize" a service. Whenever you need to add differentiation and pay for utilization not for capacity, you have an opportunity to "servitize".

The transformation in the software industry is notorious and fascinating. Can this be transplanted to other industries?

Dog Eat Dog, Andrew McAfee and Erik Brynjolfsson, Technology, Business Insight — a Joint Venture with The Wall Street Journal

Dog Eat Dog, Andrew McAfee and Erik Brynjolfsson, Technology, Business Insight — a Joint Venture with The Wall Street Journal

Recommended reading for anyone thinking about the impact of IT in business. As I have posted before, I'm a firm believer of the "IT does matter" argument.

One of the interesting things to observe in the conclusions of this research is that as companies buy more IT, their industries become more competitive. But, was it not the other way around? I thought I would obtain a competitive advantage if I invested in IT?

Well the key issue I believe is: if everyone else does the same, the fact that you invest in IT, only keeps you in the game and makes you more capable of accelerating change. In other words, you are acquiring via the IT that you are buying, the automation and innovation capabilities that affect the industries that produce the IT. Fascinating.

Now, look at it from this angle. What if you analyze the performance of companies related to their investment in different types of IT? It is very possible that the investments in IT follow waves: in the 90s companies invested in automating processes using ERP, SCM and CRM. That investment has leveled the competitive field and freed up resources that can now do more innovative things. More knowledge intensive work that require judgement and decision making. Now these new works require a different type of IT support or enablement. And as companies enter in more information intensive realms, the ability to replicate and automate processes is reduced.

We will need to wait another 5 years, but modern analysis of the results of new waves of investments after 2000 would bring new evidence. My bet is that only the companies that invest in Information Management technologies, including BI, ECM, Web 2.0,..., will be capable of innovating and staying competitive.

Entrepreneurs inside your company

Is it possible to have entrepreneurs inside large corporations? That's an interesting question.
I think the answer is YES.

Then, the next question is, are they going to last?. Mmm, that's a different story and how to make it happen is a very interesting managerial challenge.

In a recent conversation with someone who knows the technology industry very well, he mentioned: "this company is much more entrepreneurial than that other one.." Can an entrepreneurial culture retain entrepreneurs inside?

The fact of the matter is that entrepreneurs, at least my understanding of entrepreneurs, are motivated by two things: following their guts to transform reality and make money with it. Many companies with the so called "entrepreneurial spirit" can provide the freedom to do the first. But very few companies will also provide the second element.

One could argue that if you want to make money, you should go out and run the risk. True. However, I think there's a balance to be achieved here. It's in the interest of the company to identify and invest in new areas and to do that, they will be better off leveraging the entrepreneurial skills of employees. However, these will only be interested in pursuing the opportunity, if the associated compensation reflects the risks in their careers.

There is opportunity for creating the mechanisms that can recognize contribution to business growth through new endeavours inside large organizations. This recognition should come in the form of higher monetary premium. Of course, the risk-reward equation cannot be the same as if the opportunity was pursued outside the company. The same opportunity outside the umbrella of a large organization, should provide higher upside, simply because it also encompasses a higher downside.

The question then is: how many companies have the internal mechanisms that discriminate compensation according to achievements? Are successful entrepreneurs inside large companies capturing a bigger premium than their more static peers?

As Jack Welch has tirelessly explained, top performers should be making x2 or x3 what your average performers are doing. For enterprise entrepreneurs, that should be x10.

What should my children study?

Some months ago, a good friend of mine who's got a son aged 17, threw this question to me in the context of a discussion about the future. If I could give him any advice, what should I suggest him to study?

Now, that's a difficult one. For parents in their 50's, the traditional educational models worked out pretty well. The world was somehow predictable, you could find an area that you liked or felt passionate about, and you could read those reports that said "demand for lawyers in the next 5 years will grow by 10%..."

The problem today is quite a different one. First, every academic discipline evolves so fast, that when students graduate after 4-5 years, a significant portion of what they have learned is obsolete. Is this giving them the preparation they need?

Second, with the current trends in globalization, the fact that you become a doctor in, say France, does not guarantee that you will be taking a job as a doctor in France. It may very well happen that off shoring trends, take out to India a portion of the jobs for doctors in France.

So, in other words, the situation has changed now. We must move from a view of predictable, static jobs that require well defined skills to be performed, to a much more fluid environment, in which the skills needed evolve very fast and where globalization increases competition for everyone. If we cannot predict where a market is going to be in 5 years, how could we possibly predict which skills are going to be needed?

OK, so what do you tell your friend? I confess that I did not know what to reply, but I tried:

- Make sure you find an education institution that gives him mastery in some discipline, but more importantly, where he learns how to learn. As a corolary of this, you probably want to suggest that he studies the less volatile disciplines such as math or philosophy.
- Make sure he understands his education as a continuous flow and he takes ownership of it. i.e., forget your traditional model of thinking that your title would give you a job. That will not work. In this context, developing his intellectual curiosity will be important.
- Make sure he is conscious of the global dynamics. Understanding who else can do your job at a lower cost is important.

I hope this was valid for him. And I also hope it will be valid for my kids (and yours)