Javier Cabrerizo

Why capitalism fails - The Boston Globe

2010-03-10T13:23:00.001+01:00

Why capitalism fails - The Boston Globe

Have you heard about Hyman Minsky? Well, you're not the only one.
This economist described with prescient clarity the unstable nature of capitalism. He claimed that the very nature of capitalism means that periods of economic stability set the stage for crises. As things go well, borrowers pay their debts on time. Lenders then start assuming bigger risks int he hope of making more money. "Succes breeds a disregard of the possibility of failure". Progressively more risky borrowers join the party (call them subprime mortgages, for example). Things continue to evolve with higher leverage, less attention to risk management, higher competitive pressure for lenders to assume more risk...Until one day a sudden fear starts to spread: people start to fail to pay their debts, asset prices start going down which forces more sales and a negative spiral in asset prices kicks in (sounds familiar with current real state bubbles). That marks the moment of spill over from a financial crisis into a real economy crisis and near collapse of the financial system.

Read his book, "Stabilizing an unstable economy" highly recommended

Edge Perspectives with John Hagel: Shifting Identities - From Consumer to Networked Creator

2010-03-10T13:06:00.000+01:00

Edge Perspectives with John Hagel: Shifting Identities - From Consumer to Networked Creator

I liked very much this post from John Hagel. I find that it describes smartly the shift that is occuring in front of our eyes: given the new tools available to everybody, people are finding ways to express themselves in ways that were unknown before. Not only creating to express yourself, but also sharing, which in turn connects you with more people that share your passion. This creates a positive feedback loop that only accelerates as you put more effort into it. Many more people can now find a connection deep inside to discover more and develop their talents.

This has transforming power and brings significant consequences.

Putting time and energy in creating things you feel passionate about can become a conflict with other parts of your personal identity, namely your firm's identity. You start to feel the broken link between your identity and your passion and in some cases feel pushed to convert your passion into your profession.
I feel that this is underlying a massive movement in the work force these days. Not to mention the way younger generations deal with social networking.

The conflict is served. If you cannot accomodate your passion with your work, you will have difficulty coping with the growing pressure and competitive forces. The challenge is to create organziations that allow us to merge our professional and personal identities, so people find the meaning and fulfilment that is needed.

Charlie Rose - Home

2009-11-11T19:10:00.000+01:00

Charlie Rose - Home

I found very interesting the interview at Charlie Rose site to Niall Ferguson.
Mr Ferguson, author of amongst others The Ascent of Money in his style, predicts the disaster to the US economy given the level of debt that it's accumulating, the risk of default, the raise in the interest rates as you loose credibility,...

Mr Rose pushes him with the inner feeling that America cannot default, that all economists working now in the recovery of the economy are not talking about that...

What I find wonderful is this debate is the following: the bigger the picture or the longer the period you consider in your analysis, the more gloomy, dark and risky the picture becomes. When historians like Ferguson look into the picture, they see a long trajectory that almost inevitably goes in very bad direction. It has to do with the dynamics of empires, the decadence of the system...

On the other hand, when you apply a shorter view things look much better. We're coming out of the woods with all the money pumped intot he system, bailouts,etc. Economy seems like is starting to grow again, people get more optimistic...

It would be interesting to apply a kind of technical analysis of the type that is used in financial markets, to country economies. What would the picture be for the US economy?

The Tech Sector Trumpets Signs of a Real Rebound - NYTimes.com

2009-11-11T18:50:00.001+01:00

The Tech Sector Trumpets Signs of a Real Rebound - NYTimes.com

Is technology going to lead the recovery? To answer that question we need to understand what is guiding the investment in technology, particularly IT in the corporate world these days. And the key factor of that spending is cost savings.

What companies are doing these days is invest in IT primarily to reduce costs, not only IT costs, but total operational costs. The impact of these measures is that the business improvements achieved via IT are sticky. That is, they will not go back to normal when the crisis is over. In other words, jobs cut and improved business processes will stay.

IT is going through the extended part of its development cycle: after the first 20 years of development, we had a big bubble burst. Now we are in the phase in which IT is penetrating all sectors of activity, all industries and although there may not be radical innovations, the cumulative improvements that it brings produce massive economic results.

The other fundamental trend that is happening in modern capitalism is that IT is becoming central to corporate strategy. It has evolved from being a tool to becoming a crucial component of the way business is done. From the operations of telecom operators, to banks, to new healthcare, including all e-government initiatives, technology is now at the heart of how products and services are delivered today. That's the other reason why IT is showing signs of strength.

Marc Faber Blog: The Lifestyle In The West Won`t Improve Meaningfully

2009-10-24T09:47:00.000+02:00

Marc Faber Blog: The Lifestyle In The West Won`t Improve Meaningfully

Where can the west go from here? With a GDP per capita in the region of USD 35,000, how is the life of the midle class going to change in the next 20 years?
Besides, Asian emerging countries with GDPs ranging from 1,000 to 3,000, where will they be in 20 years?

The argument is clear that in a global economy, emerging countries will catch up and benefit from the goods and services that are available in the world. Assuming the finance instruments to allow the consumption are there to support it of course.

But the assumption that the life of the standard western citizen is not going to improve dramatically is too short minded. Who coul dhave predicted what happened in the west in the last 30-40 years? From the development of the information technology and it's impact in all areas of economic activity, improved productivities, telecommunication, health, transportation,...What lies ahead of us in terms of innovation?

There is of course a big difference in the growth of developed countries versus developing countries. The latter just need to emulate and copy the innovation that others create. The former need to continue innovating in order to keep the growth. This is the most important task for governments in the west: ensure we have a framework and an incentive structure that keeps innovation alife so it can bring the growth and job creation that is needed.

Barack Obama and the Nobel peace prize: Even greater expectations | The Economist

2009-10-11T19:33:00.000+02:00

Barack Obama and the Nobel peace prize: Even greater expectations The Economist

A prize that recognised intentions, not achievements. This is bad for Mr Obama. It's bad for him because the expectation is now defying gravity. No matter what he achieves, there will likely be disappointment. Besides, I guess it will make it difficult for the US to use it's military power in the future, even in circumstances that justify it. Is this not an incentive that can ignite Iran or terrorists from around the world to attack the US? More so, in a weak economic circumstance that will make it more difficult to react.

Global government for a global crisis

2009-10-06T14:37:00.000+02:00

One of the topics I frequently discuss regarding the current crisis, is that we do have a global financial system, but we do not have a global government model. The implications are profound. The impact of the capital markets in everyday life are huge, and indeed they are not going to diminish.
However, there is an obvious need to define global coordinated actions. Yes, we do have G20, IMF and the like, which are adapting their governance models to a more balanced world, with bigger roles to superpowers like Brasil and China. But, I always struggle with one issue:
Q:what's in the agenda of a politician?
A.The next election.
Q: is this the best motivation to solve global and enduring issues like the global financial crisis?
A: obviously not.
Q: then, what are they going to do to solve the issues?
A: focus on what can give them an easy headline for domestic political consumption, i.e., limit bonuses of bankers, impose regulation to imports,...
You see what I mean.
I would like to see a bunch of technocrats designing a global solution and the politicians adhering to it, rather than the other way around. We could transfer legitimate power to a group of 10 that could design a solution, without immediate election results in mindset. Is that possible? Yes. Are we ready to do it. I guess not.

BBC NEWS | Special Reports | Global recession

2009-10-05T00:30:00.000+02:00

BBC NEWS Special Reports Global recession

In an interesting debate on BBC held in Istanbul after the IMF meeting, the two most important questions that remained with an unclear answer where:
- Are we going to see growth soon, and what type of growth will that be?
- Are we going to create jobs again soon, and what type of jobs?

Clearly, both questions are related. The conclusion was that in order for growth to resume and jobs to be created again, it needs to be driven by private sector. But, with unemployment on the rise and not a clear sign of when it's going to start declining as Greenspan said yesterday, expect consumption to be weak for a while.

This is the recipe for continued stimulus packages. Although most of the first package has not been utilized, some voices like Paul Krugman, start advocating for more stimulus. Clearly, we've not seen it all in terms of fiscal deficit.

The G20 and Why Export Dependency And Global Imbalances Matter | afoe | A Fistful of Euros | European Opinion

2009-10-02T17:20:00.000+02:00

The G20 and Why Export Dependency And Global Imbalances Matter afoe A Fistful of Euros European Opinion

In a previous post I mentioned that the post-crisis macromindset is going to be a very different one and that this is going be a multi year process. Now, here is an article that explains why the imbalances we've seen in the past need to change 180º before we see a recovery in the world economy that is not driven by the fiscal stimulus. In other words, only a coordinated more balanced economic growth in the future where surplus economies like China, Germany raise their domestic demand, and deficit countries like US reduce their budget and trade deficits.

The difficulty to execute this, is related to the lifecycle of savings. Countries with young adult median ages have a strong deficit fueled by domestic consumption and lending booms (US, Spain, Ireland, Eastern Europe,...). Countries with a mature median age have surpluses and their tendency to exports grows as the population ages (Germany, Japan, China,...).

This is the trick: how are we going to get surplus countries with ageing populations (in other words lower fertility rates) to increase their domestic demand? Anyone approaching retirement age in Germany is not going to start spending like crazy now. And for sure, they are not going to give birth to another kid.

What is the way out? Getting the young countries, with high fertility rates and high domestic demands to consume more. The name is Emerging Economies. The interesting challenge is how are we going to channel the lending funds that those countries need to absorb all the exports from the mature countries? Nice puzzle in the current re-regulation of the financial markets.

FT.com / In depth - Return of the old ways of thinking threatens recovery

2009-09-30T10:45:00.000+02:00

FT.com / In depth - Return of the old ways of thinking threatens recovery

This article from Mohamed El-Erian, really nails it. Are we seriously adapting our models to the new reality? Or does everybody think that this is over and we can carry on as before?

All evidence suggests that current growth is mainly driven by stimulus packages, rather than real demand. This graph shows the evolution up until April of corporate earnings. It shows how earnings have declined much faster in this recession than in previous ones.

Worldwide, the biggest transformation needed has not yet occured and it doesn't seem to be ocurring any time soon: the swap from excesive leverage and excesive consumption in the US, to a higher consumption and lower saving in China. The news coming from China about their excess capacity being built there are not sending the signals that this is happening as of yet.

This is a multiyear transformation process and the market pricing in a short term recovery is unrealistic.

The new normal - The McKinsey Quarterly - The new normal - Strategy - Strategic Thinking

2009-04-14T16:05:00.001+02:00

The new normal - The McKinsey Quarterly - The new normal - Strategy - Strategic Thinking

This is the return to normal capitalism, where productivity gains, technological innovations and creation of new markets have been the traditional sources of value creation.

The period where value creation was achieved by financial innovations and extremely high leverage (eg. 30-1 in some hedge funds) is over. The price of risk is going to be higher from now on.

Is this so difficult to understand and assume? I find this is back to normal. For management teams, it means refocusing on long term value creation through the creation and maintenance of unique capabilities. And defocusing from tyring to make up next quarter results.

Again, back to normal.

The Responsiveness Scorecard - Umair Haque - HarvardBusiness.org

2009-04-14T15:57:00.001+02:00

The Responsiveness Scorecard - Umair Haque - HarvardBusiness.org

I liked the idea of this post by Umair Haque in Harvard Business Publishing. This cosmic crisis is showing us the difficulties that financial institutions are experiencing. It's difficult to understand how have we been living for such a long time in such a mess, but that's a different topic.

The interest of Umair's post is that he highlights an important concept. It's not only banks that have been completely lost in recent years. It's also other industries.

Look at car makers: they have been for a long time loosing money (the US ones that is) and continued manufacturing the products that were not needed (who needs another SUV?). Or look at media, where a myriad of newspapers are struggling to define a viable business model that keeps them alive.

So, are banks just another example of a bigger trend that affects many other industries, one that shows their inability to adapt and respond to market changes? In other words, are we lacking a systematic method to question the validity of our strategy? Rather than asking how can we improve yet another % point of efficiency, are we asking the question of what will the consumers of tomorrow want and how is our industry being affected by the evolution of the market?

Pretty simple questions, but deep organizational challenge underlying. This is not an issue that leaders alone can solve. This is about creating a culture of constant challenging and reinvention that many executives in century old corporations would not like to start.

The return of Socialism?

2009-03-09T00:04:00.002+01:00

The Global Policy Institute: Home

I listened with great interest to the podcast form the Global Policy Institute where Prof Stefen Haseler talks about the book 'Meltdown - How the Masters of the Universe destroyed the West's Power and Prosperity'.

The interesting part I found was the analysis of the origin of the current crisis, which is seen as a financial crisis but in this book is positioned as ideological. The financial part of the crisis is, by now, fairly well identified:
1) Real incomes in the US where stagnating or decreasing in the last 20 years. Average Hourly Income, Average Real Wages where decreasing for the midle class
2) Consumption was growing though, to reach the level of 72% of GDP in 2007. The economic policy was clearly consumer driven
3) How can this differences be balanced: with mountains of debt.

The liberalization of capital markets and capital flows allowed for China's willingness to lend and Amercia's willingness to borrow to meet each other. Globalization allowed for lower cost centres, mainly in Asia to keep salaries down for midle class workers in US (and other places as well).

How could American citizens and the American State let go into such big debt? The response of the author is that, after the Fall of Comunism, the Liberal Democracy ideology was seemed to be the trimphant one. And America not only was the Superpower in financial terms, the reserve currency; it also adopted the Superpower view in Military actions, with the view of the Unipolar world and the Pentagon policy. 9/11 could only strengthen this position, when a deeply sceptical US public opinion, supported the wars initiated by the Administration. So, it is claimed, an ideological issue, the Liberal Democracy "End of History" type of thinking that allowed America to live beyond their means and to define policies to transform the world.

All this of course has collapsed in the last 18 months. And now the risk is that the nostalgics of the old communism bring the socialism susuration "we told you". This is what I read in the Financial Times: Communism: an alternative to capitalism once again?.

Because we are now seeing nationalised banks and a much tighter regulation in many places, there is a tendency to believe that what has failed is the Capitalist system and Socialism is going to save us. This is not correct. First, this traditional idelology approach is now not appropriate. Besides, no country would want to give away the increase in per capita GDP that free markets bring with them.

No. The conclusion from the author is more adequate in my view. For sure we are going to see, we are alrady seeing, a period of more state, more intervention, more regulation, more politics and a morale climate where fairness and social justice will take a primary role. We are also going to see, we are seeing, a move from the unipolar to the multipolar world, which reflects much better the reality of the world today (US represents 4% of population and 24% of GDP).

Op-Ed Columnist - Start Up the Risk-Takers - NYTimes.com

2009-02-23T00:26:00.001+01:00

Op-Ed Columnist - Start Up the Risk-Takers - NYTimes.com

Why would you want to use public money to subsidize the losers of the economy? Why not use the money to invest in more promising new industries, that can bring innovation and create new jobs instead of bailing out an industry like the automotive that has no plan to become profitable any time soon?

The reason obviously is that many of the new jobs that innovative industries (like green tech, bio tech, info tech,...) would create would not be for local citizens. Many of those jobs would be for people from India, China and other countries that have the knowledge, ambition and willingness to work hard and take the risks.

But then, are we in favor of free trade and movement of people or are we defending our countries' industries via protectionism, although history tells us that the best way to create economic wealth, growth and prosperity is through trade?

Hal Varian on how the Web challenges managers - The McKinsey Quarterly - Hal Varian web challenge managers - Strategy - Innovation

2009-02-16T15:54:00.001+01:00

Hal Varian on how the Web challenges managers - The McKinsey Quarterly - Hal Varian web challenge managers - Strategy - Innovation

Herein I found yet another quote on the very important topic of data analysis for modern corporations. Hal Varian says "I keep saying the sexy job in the next ten years will be statisticians...The ability to take data—to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it—that’s going to be a hugely important skill in the next decades, ... Because now we really do have essentially free and ubiquitous data. So the complimentary scarce factor is the ability to understand that data and extract value from it. "

Although data is free and ubiquitous, many corporations still do not have the habit of storing data about every aspect of their business. Businesses should start storing their history as accurately and completely as they possibly could: how much we invested in this campaign, where did we insert the add, how much more sales did we make because of it, how long did it take to close deals,...Evidence based and fact based management is becoming more important every day. So having the data to support decisions and the ability to interpret the data are becoming crucial assets to stay competitive. Start building your warehouse today and invest some effort in analyzing patterns that may not be visible at first sight. That is a secure source of competitive advantage for the future.

FT.com / Weekend / Reportage - A more humane way to measure progress

2009-02-09T23:36:00.001+01:00

FT.com / Weekend / Reportage - A more humane way to measure progress

In this interesting article about initiatives to measure the progress of countries beyond GDP, I found a fantastic quote that perfectly describes one of the most important issues we are facing today. The author quotes David Hand who speaks of the "awesome power" of statistics and says data will become "the corner stone of modern civilisation", stripping away layers of mystification and obscurity to reveal the truth and improve understanding. I subscribe to this point of view.

I frequently find myself in discussions about a topic, say the price of oil for example, where everybody has an opinion, normally based on other's opinions, but where you feel an important absence: the facts behind the argument. For example, you could read pages of articles in the news about the reasons why the price of oil would go beyond $200 a barrel. The reasons would be multiple: demand from China, futures markets, limited supply,...but when you scratch the surface, the fact is that nobody seem to have the facts. How much does China represent in the global demand for oil? how much of the price of oil is due to real market demand and how much is based on speculation? You can apply the same logic to everything, from the number of gay marriages (how many?) to the board discussions in any corporation nowadays (how much do you say that this market represents?). We need a much more factual world to eliminate dangeorus half-truths and wrong assumptions.

This is why I liked the Knowledge Concierge at the World Economic Forum web site this year. Through facts into the discussion and you immediately reduce misunderstanding and ambiguity. Debates based on the solid foundations of facts are much more objective and conclusions can be much more engaging.

McKinsey Global Survey Results: IT’s unmet potential - The McKinsey Quarterly - IT’s unmet potential - Business Technology - Organization

2009-02-09T22:37:00.001+01:00

McKinsey Global Survey Results: IT’s unmet potential - The McKinsey Quarterly - IT’s unmet potential - Business Technology - Organization

In their recent Survey published on December 2008, McKinsey Quarterly
highlights an important conclusion: the growing risks respondents face from
information- and technology-based disruptions and the corresponding increase in
importance of information and technology capabilities for improving business
performance and outperforming competitors.

The conclusions of the survey point in the direction of one of those
strange areas that modern management is still in its infancy: the use of
technology as a competitive weapon. It is fascinating how frequently IT issues
are managed separate from the business strategy as if IT was only a function to
support the business. As this report finds out, one of the desired functions
that IT can play is the creation of new products and services that leverage new
technological capabilities. The obstacle for doing so frequently lies in the
managers who show an old aversion to understanding technology and wht it can do
to the business.

One interesting initiative to try and bridge these two worlds is the Singularity University
For those familiar with Ray Kurzweil and his books The Age of Spiritual Machines and The Singularity is near, this is an attempt to " assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the development of exponentially advancing technologies and apply, focus and guide these tools to address humanity’s grand challenges". With backing from Google and NASA and a well known group of faculty it is well positioned to take the lead in educating leaders (business, governement and others) in the possibilities of applying technologies to solve the most challenging problems of today. Good luck in the effort!

FT.com / Columnists / Luke Johnson - All of the effort with none of the impact

2008-08-16T12:02:00.000+02:00

FT.com / Columnists / Luke Johnson - All of the effort with none of the impact

This was an interesting article that may have serious implications for public policy. Particularly for the entrepreneurial politics as I described in a previous post. The central thesis of the book described here (The Illusions of Entrepreneurship) is that "the entrepreneurs who matter economically are the select few who start innovative, super-successful firms. These tend to be the larger, well-capitalised projects planned by professional teams, not sole operators. All the other small new businesses created every year are pretty irrelevant in terms of job creation and value added."

If this is truth, government agencies trying to improve entrepeneurial spirit to accelerate the economic development of the country, should avoid encouraging people to start their own firms. Instead they should focus on backing the reduced number of firms that have the potential of becoming the next Google. All the other small firms contribution to growth and economic value is negligible.

What does it mean to the entrepreneur? It also appears that the standard of living and wealth created by the micro enterprises provides a standard of living that is worse than the entrepreneur had before. The message is that you better think twice if you're starting another me too enterprise. Rather, try to think big and focus on creating immense value. Yes, easier said than done.

That's why, I wonder if it is not true that you actually need an environment of entrepreneurial spirit, both small and big, success and failure, if you expect the new Google to emerge. Besides, there's always the argument of personal fulfilment, following ones' dreams,..., that impulses many entrepreneurs to be in the direction of creating their own firm.

Good thinking for policy makers and investors alike when deciding how to invest their funds.

Entrepreneurial politics

2008-07-27T23:02:00.004+02:00

We recently organized a panel at Insead Business School in Singapore to talk about the topic of Entrepreneurship in Singapore. My interest in organizing this came from what I've been learning about the development of Singapore in the last years. I was surprised to see how politicians in Singapore were defining very specific objectives for the country in terms of how they want to compete internationally; which areas of the economy they wanted to develop; how to attract talent;.. This is what I tagged as "entrepreneurial politics". Know where you want to go, what you want to do to transform a country and then, actually doing it.

Amongst the attendees to the event, we had Lee Yi Shyan, Minister of State for Trade and Industry with special responsibility for Entrepreneurship. The first thing that one notices is that there is a Minister with a responsibility for entrepreneurship. But then, it was fascinating to listen to him describe how they plan to develop Singapore into an entrepreneurial hub in the following years. Advantages go from providing visas to entrepreneurs without a job so they have time to launch their ventures, to equity funding that matches other private funding you may already have, to tax preferential conditions. But in addition, they are creating the culture of entrepreneurship by promoting the spirit of innovation, experimentation and risk taking.

This is a fascinating exercise that they are doing. We'll see in the following years how it evolves. One would only think of two important considerations. Singapore is in itself a small market for any venture, so by definition companies need to be global. And, the stock market is still small and this needs development in order to attract more companies to be established in Singapore.

Why economies don't grow faster?

2008-05-25T22:53:00.003+02:00

During a recent research project I was shocked when I discovered that economic growth in the last 100 years has shown a surprisingly consistent behavior: an almost constant rate of long run growth of GDP of 2,5-3% per year. This is traditionally known as the “technology frontier”, implying that for a developed economy to continue growing it must innovate, but that this innovation is only translated into economic growth via increased productivity, at the mentioned rate of 3% per year.

In contrast with this view of the growth rate of developed economies, we have the speed of technological innovation that can be seen across multiple industries like semiconductors, biotechnology, nanotechnology, genomics, IT, etc. In these and multiple other areas, the innovation rate is much faster than a 3% per year. In fact, in many cases we can see exponential growth rates with constant or even accelerating growth factors that multiply, not merely add, to the previous year situation. For example we can see how the Moore Law predicts double capacity of integrated circuits every 18 months (and this law has been happening for the last 20 years).
So why does it happen that the very fast technological innovation that we see across multiple industries is only translated into economic growth at a 3% per year?

In the end, technological innovation is at the center of economic growth. However, there seem to be significant differences between the speed at which different firms, sectors and countries adopt the same technologies.

For example, looking at the impact of IT in US and Europe, we see that during the period 1995-2001, in the US, productivity growth accelerated by 3.5 percentage points per annum in the ICT-using sectors (from 1.2 per cent p.a. pre-1995 to 4.7 per cent p.a. post 1995). This did not happen in Europe, which remained at a constant 2% growth rate in the same period. Since IT is available throughout the world at broadly similar prices– why were European firms not able to reap the same benefits from IT as their US counterparts?

The answer has to do with the market structures, institutions, protections and incentives to adoption that different firms have in different markets. If IT brings an increase in productivity and I'm in a competitive market, I'll adopt IT to remain competitive. If I'm in a protected market, why should I?

As many specialists have well described, it's not innovation per se what matters for economic development; it's innovation adoption within a country that will bring the growth for that country. This should be known for those countries that try to establish themselves as innovative. In some cases they would be much better off by simply improving conditions for adoption of existing innovations in their markets rather thah trying to establish themselves as the champions in innovation.

Bring on the Ratings (we already have them here) | AlwaysOn

2008-05-19T20:00:00.000+02:00

Bring on the Ratings (we already have them here) AlwaysOn

As more content becomes automatically filtered or personalized, rating will become an essential component of our interaction with information. It helps engines understand your interests and make smart decisions about the content that you may appreciate most.

With higher information volume you can expect: More volume, less attention, more selection mechanisms.

We pioneered this concept time ago (back in 2001 uff) as can be read in the Release 1.0 interview with Kevin Werbach.

Burton Group Catalyst Conference Europe 2007

2007-10-24T11:27:00.000+02:00

Burton Group Catalyst Conference Europe 2007

I'm attending the Burton conference in Barcelona. It has been a positive surprise to hear analysts from Burton talking about some of the topics I've been covering in this blog in the past.

I hear Craig Roth talking about an Enterprise Attention Management system. Wow! He's talking about attention fatigue in corporations and he is proposing ways to manage it. Even talking about some tools that can help here...Check out his blog here http://knowledgeforward.wordpress.com/

I also hear Guy Creese talking about Content Analytics. As I've blogged before, modern corporations should look at themselves as media companies, producing tons of content for their day to day operations and actually managing the production chain of that content. Guy was talking about just that and raising the importance of measuring the way they produce and consume content and the economic implications of that.

>Good areas to explore further

Attention, Synthesis and Communication

2007-10-02T10:34:00.000+02:00

I had a "deja vu" the other day when I was having a chat with an old friend of mine, who manages the strategic consulting group of a big services firm. He was complaining that the cost of sales in his organization was too high and that they did not reuse enough other people's experiences. Wow, this sounds so 90's; but still it is so difficult to optimize.

My reaction was to treat it from the attention management perspective once again. Let me explain. Everyone complains that in the Intranets, Document Management Systems, Portals,..., they have way too much information and it's hard to find the relevant one. I said, why don't you force people to do 2 things when they capture the project experience:
1- Synthesize. It's much harder to make it short, because it forces you to get deep in the analysis of why things happened, why you won a deal, ...
2- Write thinking on people who will need it in the future, not for yourself. Force yourself to understand in which business circumstances the piece of content you are creating will be useful.

Of course, then use technology to leverage and broadcast it. They are doing a basic trial and we will see the results shortly.

What's the conclusion of this: one of the effective ways to navigate the information overload is for people to behave like journalists and think of ways in which their ideas can find their way to the appropriate minds that are interested on them.

Information Relevance

2007-09-13T12:32:00.000+02:00

As I posted before I believe that we need to be extremely selfish with our attention. One very productive way to start doing so is by ranking the relevance of the information we get from our systems and from our peers. Think of it: do you have someone you trust whom you ask about the best movie to watch? Yes, you have that. And for restaurants and books to read...Now think again: do you have anything like that in your company? Do you have your trusted sources for the best information about your company products, the competitors, your sales numbers,...?

And now think about this: can you rank the relevance of the information in your corporate systems? And can you rank the relevance of different people as information sources related to specific topics? If I can do what?? mmm, so then how do you think you're optimizing your attention?

I was very glad to discover that the most relevant topic at Gartner's Portals, Content & Collaboration Summit in London last week was exactly Information Relevance. And the good news is that the use of Web 2.0 technologies and the combination of automatic and social relevance mechanisms are gaining ground: ratings, social networking, tagging, folksonomies,..., are now present in the discussion and generating great interest amongst users.

An attention economy inside the firm- end to the attention robbers!

2007-09-01T01:57:00.001+02:00

Information is growing at unprecedent volumes. Organizational complexity driven by the need to compete in global markets is also growing at very rapid pace. We're in the process of adapting our enterprise models to a new reality.

What is the scarcest resource in the new environment? Our attention.

I think that our companies should have a mechanism to punish the attention robbers. Here are some examples (you can think about the punish yourself):
1- Those who write endless emails, instead of taking the time and effort of making it short, clear and concise. Why do they assume we have the time to read them?
2- Those who cc everyone in the emails they send just to get noticed. Without asking for it, they require you to devote part of your attention to reading it and then deciding that it was useless for you.
3- Those who celebrate meetings where the outcome for you is zero. Why did they ask you to go in the first place?
4- Those who start the exposition of an issue to be solved with their opinion, instead of starting with the facts. Why don't you let me get to the conclusions myself? It's going to be shorter than listening to your conclusion and crawling back to understand the facts to then get to my own conclusion anyway.
5- Those who IM you or text you with no real issue. They force you to adopt defensive mechanisms like not using IM and just trusting that any real important stuff will find you.

One easy way to reduce your cost of coordinating a meeting

2007-09-01T01:44:00.000+02:00

Imagine you want to coordinate a meeting at the earliest possible day and you have two groups of people: 4 girls with ages around 14 years old and 4 PAs of corporate executives. Who do you think would get it first?
Probably by the time the 4 PAs have exchanged the 20 or so emails saying when each one of the executives can and cannot and which would be the best location...etc. the 4 girls are already finishing the dessert.

If you feel like the executive and the PA but want to react like the girls try this http://www.doodle.ch/main.html

The mystery of transaction costs, Information Management and Organizational Design

2007-09-01T00:25:00.000+02:00

....or why your company may not survive an era of Google outside and not inside.

The traditional Theory of the Firm used to explain that jobs performed inside the firm implied lower transaction costs than those performed outside. In essence, the firm avoids the necessity of using the price mechanism for performing its actions, and instead it is replaced by the direction of managers. The moment the cost of performing those actions inside the firm is bigger than performing them outside, then that transaction will be performed in the market. Two of the most relevant transaction costs are the cost of finding the relevant information and the cost of coordinating activities.

Today there are two dimensions that have significantly altered the relationships inside the firm and the associated transaction costs: (1) technology and (2) knowledge-intensive works.

1- We've seen the development of IT that has brought interaction costs down to nearly zero in the modern world. Talking to someone in a remote location, or accessing corporate information is today a very easy task. However, the difficulty of accessing the appropriate information inside an organization these days is growing all the time. We've all experienced situations in which finding information outside our company is much easier than finding it inside.

IT and Information Management are today disciplines that play a key role in maintaining the entity of the firm. If Search technologies, Enterprise Content Management, Business Intelligence systems are not effective inside the company, the cost of acquiring the relevant information simply goes to high and the reason to work for a firm looses a lot of sense.

2- Frequently in modern companies, knowledge-intensive complex and value added tasks need to be performed by groups of individuals that have to collaborate. However, the design of the organization does not make it easy to collaborate: silos, departmental walls, make it difficult to collaborate.

If organizational designs do not facilitate collaboration, sharing and interaction, another important cost of transaction goes high and another reason to keep the firm united disappears.

The two aspects mentioned above are probably the biggest threats to most of the modern corporations. I'm reading with interest the book "Mobilizing Minds" that explores some of the above mentioned issues and I hope it Will provide me with some answers.

INSEAD Knowledgecasts-Building Employee Commitment

2007-08-16T00:39:00.000+02:00

INSEAD Knowledgecasts

Building on my previous post about future of management in talent intensive worlds, I just found a great podcast from INSEAD Charles Galunic, Professor of Organisational Behaviour and Dean of the EMBA Programme called "Building Employee Commitment" (Knowledgecast nº 8).

Amongst other things, he reached to a similar conclusion to the one I mentioned. Based on some research they found that companies do two types of investments for their employees:
- Firm specific, very much related to the specific characteristics of that firm
- General investment, that in turn make people more mobile (I called it more employable) like general management, leadership development or technology.
They found out that investments made in more general things, actually secure more commitment from employees!!

Of course this is a much better way to put it, but we share the same underlying idea.

The Future of Work- and of management

2007-08-16T00:11:00.000+02:00

Javier Cabrerizo: The Future of Work

After my previous post on the future of work I realized about the following: in a few days I've come across the special report from Business Week "The Future of Work" , a new book from two McKinsey researchers under the title "Mobilizing Minds: Creating wealth from talent in the 21st century organization", and the Management Innovation Lab where a friend of mine acts as the executive director.

Obviously the theme of managing talent has been popular for a while but now it's becoming even more popular. And more serious research is being thrown into it, which is something to celebrate.

Based on experience in managing highly talented teams internationally I've come to one basic conclusion:

Employees are more committed and show less turnover or attrition rates when they feel the company is investing in their "employability". This is counter-intuitive but crucial: the more a company invests in employees (trainings, soft skills development, ...) the more value the employee perceives in staying with the company.

Now if you're managing a team of highly educated professionals, are you the type of person that's afraid of investing in developing their skills and capabilities because they may leave? Or are you the type of manager who understands that, in reality, that's precisely the only way to retain them?

I expect to see these ideas developed with the new research that is being conducted about the topic and I hope it will help change the mentality of obsolete managers that are just too abundant.

The Future of Work

2007-08-15T15:58:00.000+02:00

BusinessWeek Online: BW Magazine

I just came across this set of articles from Business Week about The Future of Work. In essence it explores the combination of globalization and technology and their impact in our work, today and in the future.

One of the most interesting articles analyzes the economic conditions of educated workers in America. And here are some intriguing conclusions:
- When adjusted for inflation, the real wages and salaries of U.S. workers with at least a bachelor's degree are barely higher than they were in 2000
- The wage stagnation, combined with the 60% rise in college tuitions since 2000, seems to be discouraging many young Americans from getting a college education. The percentage of 25- 29-year-olds with at least a bachelor's degree has actually fallen during this decade
- Employers are hiring workers with higher and higher levels of education, and jobs are demanding ever more sophistication. According to the Bureau of Labor Statistics, 34% of adult workers in the U.S. now have a bachelor's degree or better, up from 29% 10 years ago

In essence, employers are hiring educated people, but the salaries for those employees are not growing. I don't have the data at hand for Europe, but one would guess that the same can happen. Is this a consequence of what we call "the knowledge economy"?

I guess the answer is yes: as educated workers can be found in other places at lower cost, and they can be employed without negatively affecting efficiency and effectiveness, the impact for US and Europeans educated workers is lower salaries. The competition that glboalization brings is driving up prices in a wide range of commodities; but the one thing that is not rising is the cost of labor. The middle class in developed regions are paying high cost for globalization.

This reminder comes very timely as these days we're living the negative spiral in the financial markets of the subprime mortgages. Middle clases with lower salaries are spending more than ever (less than 1% of net income in the US)

So what's the strategy: either move upper in the knowledge chain or create a niche for yourself where you can leverage the local touch.

Edge Perspectives with John Hagel: Unanswered Questions at Supernova 2007

2007-07-22T00:46:00.000+02:00

Edge Perspectives with John Hagel: Unanswered Questions at Supernova 2007

In another great post from John Hagel, one can find some very deep questions in the intersection of business strategy and information technology. Willing to see the outcome of the Deloitte institute.

The areas I find most challenging as I have mentioned in my comment there, are the impacts on organizational design of non-equilibrium situations. If companies adopt a "wikipedia innovation model" that requires that products are launched half-baked, and letting others finish them, what are the implications for the firm?

Another area that I find very interesting is the role of companies as talent development machines. I think that companies will progressively become like hubs that attract talent because individuals can experiment with others that they won't be able to find in other places.

Finally, I find that the area dedicated to platform questions would be enriched if the need for Information Management was included. As I've written many times before, we're in our infancy in the way we measure the value of information both from the individual as well as the corporate perspective. SOA based architectures are fine from the technology perspective, but we need more. We also need means to normalize our information inside companies, but much more when interactions abound with external organizations and individuals.

Why customer service is the #1 priority and why it's so difficult to do it right

2007-07-08T01:01:00.000+02:00

I found it very interesting that in IDC's CEO priority list, Customer care/service appears as #1. And it's the second year in a row that this is the case.

I've been discussing this with some senior executives lately and here's why I believe this is the case. I find it normal that customer care is seen as a priority, but the most interesting question for me is why it's so difficult to achieve.

Why customer care/service is the key priority? The answer is because bigger competition, means, bigger risk of loosing customers. As simple as that. Consequently, you better not give them reasons to leave. As we have all experienced in most cities around the globe, customer service in restaurants has been deteriorating for some time. Would you change your place for lunch if someone offered a better customer service? I would. Which means that, treating your customers well when there is competition and they do it better, is critical. Take the example to your interactions with your bank, telecoms operator,...And just see how the industries where there is no competition, are the ones where customer service is just poor.

But let's move into the second question. Why is it so difficult to excel on it, or why most companies fail at it? I have come to the conclusion that there are some crucial elements that help explain it:
1- Today, most industries are applying multi-channel strategies, i.e., you are interacting with your bank via web, phone or branch. What does this mean? That the bank has a big nightmare simply keeping track of all your interactions and reacting accordingly. Have you had a conversation explaining to the person in the call center that you already explained her colleague one week ago what you did over the web and the problem has not yet been solved? You get the point.
2- Customers today can know more about your products and those of the competition than your own employees. Again, do you invest time comparing competitive product offerings in the web before deciding for a mortgage or an investment fund? What exactly is the value you get from the bank employee?

What does this mean. That companies are much slower at adopting best practices to manage customer information wisely than their customers are at adopting the most convenient channel. And also, that employees' knowledge evolves slower than customer knowledge because obviously the second has a vested interest.

IDC eXchange » Blog Archive » CEO Agenda for 2007: Customer Care and Innovation On Top Again

2007-07-08T00:56:00.000+02:00

IDC eXchange » Blog Archive » CEO Agenda for 2007: Customer Care and Innovation On Top Again

Just to reiterate the comments in my previous post, Innovation appears in this report from IDC as #2 in the CEO priority list in 2007.

After customer care/service that takes #1, product and service innovation takes #2: "The growing focus on greater (and faster) innovation in product and service offerings is directly tied to the growing competitive pressures of globalization"

This makes sense and is consistent with what we said before. The more an industry or a company is exposed to the pressures of globalization, the more it is going to need innovation to gain and maintain its competitive position.

The 2007 IBM Business Leadership Forum | AlwaysOn

2007-07-08T00:45:00.000+02:00

The 2007 IBM Business Leadership Forum AlwaysOn

A very interesting post about the IBM Business Leadership Forum. In this event, like in others before (Software 2007) and like in the recent Business Week article, Innovation is the key word. There's also a great book and conversation going on about the myths of innovation.

But let's go step by step. In the first post I mention, I like the concepts presented by Sam Palmisano at the opening session. Looks like Globalization and Innovation are two ideas that are converging: The key forces causing the world to converge around the subject of innovation are the realities of globalization. And the three pillars of Globalization from economics to expertise and openness, very well define in my view the process we're living.

The process of globalization started by the economic driver, in search for lower costs, is now followed by the expertise globalization. The access to bigger talent pools that are starting to become much more accessible, due to two factors: mobility and remote working capabilities.

The third factor mentioned, openness, is a good way of defining the idea of inter-operability, not only applied to software, but also to governments.

All this is very good. But why exactly is Innovation the key pillar for everything and how does it in reality relate to globalization? Furthermore, as also identified in the BLF, why is "business model innovation the most important form of innovation"?

The simple answer could very well be a very natural phenomenon: in the world of economic and information flows, the more agents in the field, and the interactions happen amongst them, the more probabilities you have of experiencing change. If we combine the three mentioned factors, economics, expertise and openness, we can perceive that the industries in which not only economic flows but also talent flows can happen, the level of change is accelerating. And this forces the incumbent players to be alert and ready to change if alternative models appear. The truth of the matter is that the higher strategic risk is probably continue too long doing the things that were right in the past.

As usual, how technology is used and how technology companies adapt to the market, is a fantastic way of observing these trends. As the very good report from McKinsey and Sand Hill shows, Software Innovation is ranked as the top priority from software customers, in the form of new products. If customers are saying this, what you can conclude is that they are needing new products to support and maintain their own industrial and organizational innovations. Companies in every industry segments, exposed to the forces of globalization are being forced to innovate. And in this push, they are asking technology companies to provide them with new products to support this race.

In other words, Innovation is fundamental, it is here to stay and it is deeply grounded in the fundamental changes that we're seeing in globalization. The more globalization we have, the more innovation we're going to see because the more changes are going to happen to the structures and ways of doing business.

The future of IT Professional Services

2007-06-18T01:10:00.000+02:00

Big Blue Wields the Knife Again

In a very good post talking about IBM Services business, Steve Hamm provides some interesting observations about the evolution of IT Services.

IBM remains the #1 services firm with a $48 billion/year business, but it's quickly loosing ground to the Indian competitors. Indian companies are delivering 30-40% quarterly growth while they maintain operating profits in the region of 25%.

The Indian model looks very robust and, according to analysts their exports in this industry will grow from $31b last year to around $60b in 2010.

How are other companies approaching the growth of Indian Services firms? An interesting one is the deal between EMC and Wipro by which "EMC also intends to help certify more than 1,000 Wipro practice resources on EMC technologies to support pre-sales, delivery, and solution development".

Is there a strategic alternative for Western IT services firms? Or is the cost factor so powerful that it will continue to press down margins of Western competitors until they are eliminated from the market?

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

2007-05-28T23:41:00.000+02:00

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

2007-05-28T23:24:00.000+02:00

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

2007-05-16T22:38:00.000+02:00

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

2007-05-16T09:26:00.000+02:00

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?

2007-05-16T09:08:00.000+02:00

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)

How IT works for your brand?

2007-04-23T00:15:00.000+02:00

I have posted before about the renewed strength of the Internet as a business channel. The other day I was listening to a conversation from a very important client and I realised about the following: the IT budget for the Internet Site was doing more for the brand of that company that the marketing department budget on itself.

As the FT report I previously mentioned (download here) very well covers, the corporate website is, in some business, mediating more transactions with clients, potential customers, partners and investors than any other channel is. This means that the customer experience that is built by a majority of users is happening through the web. Nothing new, I know. But, the question then is: Is this recognised by IT departments? And, is IT being recognised for this? And how is this changing the way things are done inside companies?

In this particular case, the IT team was participating in strategic committees to design and decide how the brand is protected and the customer experience augmented through the web. They are supposed to contribute with ideas that retain customers and deliver the value they are looking for. In that context, the discussion about creating social networks and using web 2.0 tools was a vivid one.

However, this is not always the case. How frequently is the IT department only implementing what someone has previously decided is what needs to be done? How useless can a discussion be, for example, about creating a customer community online if both (marketing and IT) teams are not discussing as peers?

It would be good to see IT people more frequently participating in strategic corporate discussions. And as a lateral effect, this will be good for IT aswell, as it will force them to think beyond the latest tech buzz and concentrate on serving the customers better.

The art of virtual communities for clients

2007-04-13T22:55:00.000+02:00

In a conversation with a colleague today an important topic has kept me thinking for a while: how do you create powerful virtual communities with your customers?
Yes, we've all heard about the powerful stories of creating communities on the web to attract and retain customers. But, the reality is a bit more complex. Here's why.

Why do you join a community? Normally, you have an interest, there is a strong passion that motivates you to join. Either you find it intellectually stimulating or you find it rewarding (think of your football club community, for example)

What is the value of the community? The fact that members regularly go there is only related to the positive equation attention invested x value obtained. That value normally comes from other people with similar views and interests that bring the value to you.

Why is this difficult in customer communities? Because companies creating customer communities are not perceived by members as a trusted members. They trust another member, but they don't trust the organization that's creating the space with the obvious intention of selling them something. I.e. their agenda is not the passion, the interest; it is the business. Hence, why is anyone going to be candid and open in his opinions when he knows they will be used to try to sell him something?

How to solve this problem? No magic words I'm afraid. But some simple advice to follow would be:
- concentrate in the long term- communities need momentum and creating it require time and dedication
- avoid the selling approach- concentrate in creating sense of belonging, obtaining value. Put your experts to discuss real issues with no marketing pitch
- listen- if you want to learn about your customers, read what they say and learn what motivates them. Use that to improve your products or services.

Synthesizing: the most important talent

2007-04-13T22:44:00.000+02:00

With the proliferation of information that we're all experiencing, we all struggle to find ways to extract the essence, simplify and define understandable patterns in the complexity of the world. I'm realising that the ability to synthesize and present the complexity in simple understandable terms is an extremely valuable asset.

When you become conscious of the limited attention capacity that you have, you tend to recognise and reward those who have the ability to synthesize for you. That's why I believe the ideas about the attention Economy and the concepts of Return on Attention are so relevant.

Do the exercise: Can you still sit in a meeting room and keep your attention as someone goes through 50 slides in a presentation? Don't you appreciate when someone comes with the basic points and conclusions and give them a structure that makes sense and allows for decision making?

It would be great if we could start recognizing synthesizing talent in the corporate and media world. Instead of celebrating the exhibitions of deep knowledge, I definitely celebrate more the exhibition of synthesizing. I hope more people do the same.

Wiki your sales playbook!

2007-03-30T00:10:00.000+02:00

Did you ever had the feeling that the sales playbook that marketing or product management was sending to the field, didn't really provided what you needed? All the nice graphs, competitive positioning, the wonders of your technology...they didn't really made it?
And then, you have a smart sales guy and you ask him, how do you position your company when you compete against "x,y,z" and you feel the "aha, that's it"?

Why don't use wikis to have your sales force contribute to the sales playbook?

Apart from the novelty of the technologies, the fact that you can benefit from collective editing for a document like a sales playbook, makes a lot of sense. The people who will actually be using it, can contribute with their own examples, customer quotes, reflections on how to sell and compete,...It can be collectively filtered in a process that will distill the best in a much better way than any product manager can do alone.

I like this because it's a very good example of how using basic technologies a company can start optimizing information intensive business process that have been thought as hierarchical, when in reality can benefit a lot if one looks at them as collaborative.

Just test it: create a wiki and give your sales forces the ability to contribute. Wait and see the results. You'll be impressed.

FT.com / Technology / Digital Business

2007-03-29T23:57:00.000+02:00

FT.com / Technology / Digital Business

In it's latest Digital Business Special Report, Financial Times runs a very interesting index that ranks the best corporate web sites in the world, according to the methodology of Bowen Cragg. The index requires paid subscription to FT, but can be downloaded from here.

This special report made me remember the old days of the Internet era. And this idea came to my mind: what if you tried to implement today all the ideas and business plans (ok, only the reasonable ones) that exploded in those days? The assumptions that were used then were over-optimistic and were assuming that they would be achieved much earlier than expected: penetration of bandwidth, number of users, investment in online publicity,...However, most of them are real today.

The other idea that came to my mind is this obsession I have with attention management: everything the methodology tries to measure is how the website maximizes your ROA (Return On Attention) by ensuring that with the minimum effort and number of clicks you get what you need.

And finally, I was interested in seeing how much Web 2.0 techniques and principles have been adopted in corporate sites. According to this index, not much. I believe this is one of the things that will change significantly in future versions of this index. As companies discover how to use the power of the communities that can be created around their websites (customers, shareholders, employee candidates,...) the adoption of web 2.0 methods will grow.

The McKinsey Quarterly: The new metrics of corporate performance: Profit per employee

2007-03-20T16:02:00.000+01:00

The McKinsey Quarterly: The new metrics of corporate performance: Profit per employee

This is a very interesting attempt to connect two worlds: the financial measurement with the work of information/knowledge workers.

If we agree that in advanced economies the majority of the work is performed by workers who contribute with their intellectual capital, it makes sense to then measure their contribution to the P&L of the company.

There are some very clear illustrations in this article that show how different companies compete today. And some interesting questions that emerge. For example, two companies making $1b revenue/year, one with $100k profit/employee and another one $220k profit/employee for sure are having very different strategies. Can two companies in the same sector have so different strategies and both survive? Yes, because in one case they lead by productivity and in the other case they lead by the size of workforce.

I tend to think there is a direct correlation between profit per employee and the degree and intensity of knowledge work performed by the employees. In other words, companies with lower profit/employee will probably rely less on their employees knowledge and more on the company process and automation.

Again, the topic of productivity arises. How is Information Management affecting productivity of high and low profit per employee companies? I'll need to ask the folks from McKinsey one of these days...

Measuring the Immeasurable

2007-03-19T00:49:00.000+01:00

Measuring the Immeasurable
Is it productive to investing in IT? And how much? This topic has generated a lot of literature from academics and researchers, and still there is no good answer to it. One tends to think that if it didn't, then why would it happen. Simply said I think not only that it brings productivity; I think that IT investment today is inevitable.

However, the important thing in my view is a bit different: if everybody else is doing it, are you going to get any competitive advantage by investing in IT? And here's where I think that we need a more profound distinction between Information and Technology.

"If it can be automated, it will". This is a very real fact. Hence, as technology advances and allows the automatization of more areas of productive work, the adoption of technology will continue.

However, it is in areas where people needs access to information and interacting with other people where the question gets more interesting. Here, IT does not replace; it augments capabilities of workers. In those cases, the secret sauce is in deeper elements. If your business is not easily automatizable, then your competitive advantage will surely rely on innovation: how fast you innovate and how fast you propagate that innovation to your employees and customers. The way you do this is related to the IT you use of course. But it is much more related to the way you structure and use your information.

A good study to be conducted by the Institute for Innovation and Information Productivity would be to compare how different practices on Information Architecture impact corporate productivity. Is there an impact on corporate productivity of the adoption of standard metadata models inside corporations? Can you improve corporate performance by adopting ECM platforms?

OK, let me know if I can help!

Information Architects wanted

2007-03-18T23:49:00.000+01:00

An ongoing theme for debate that I'm finding these days is the need of Information Architects within large corporations. If you follow some of the analysts of the IT industry, you will see this mentioned more and more.

What is an Information Architect? If you ask 3 different people, you can find 4 answers. But here's a simple way of looking at it: It is a person that knows how to organize information inside a company so it makes sense and is usable by all users.

This may sound trivial, but as anyone with some experience dealing with IT in large organizations can tell you, it's not. Anyone who has tried to implement a corporate intranet or portal has struggled with the basic difficulties of the problem: the same information has different meanings to different people in the organization. Some people like to see all information organized by customer name; some others by product line; then there is the discussion about the level of detail you use. There is always a trade off between ease of use and completeness.

Seriously looking at the information architecture of your company can be scary: if people are not talking the same language, chances are your systems are not either. The job of the information architect is to make sure that they do. Not an easy task.

I do believe that we need to think more closely about the way companies organize their information. I think this is a crucial part of the sustainable responsiveness and adaptability of corporations. I think however that the debate about information architects is far from easy and poses some fundamental questions to every organization:
- centralized or decentralized rights to structure and organize information?
- manual or automated processes for adding meta data?
- structured and unstructured data reconciliation or separate worlds?

As I've mentioned before I believe the best way to approach this issue is driven by a business purpose. And customer service is a very good candidate: start thinking about ways to improve customer service and you very quickly come to the conclusion that managing information about your customers in a more efficient way can have huge impacts on customer satisfaction. For example it can avoid that experience we all know, of being asked the same question by different people while they pass you to one another on the phone trying to solve your problem.

I can't see how an information architect can design a way to better use information without realy thinking on a business use. However I do see organizations doing e-Government and e-Banking that have made great progress in making all their information talk in an integrated way. And one sees in these cases a progressive merge of Business Intelligence and CRM with Enterprise Content Management and search. Something that makes a lot of sense.

ATM_Meeting_230207

2007-03-18T23:06:00.000+01:00

ATM_Meeting_230207

Although with some delay, I want to comment about the latest AIIM Europe Advisory Trade Member Meeting in London. John Mancini has blogged about it here.

I was asked to suggest three hiden 3 key “sleeper” issues I see in this market that you don’t think most people are focusing on. Here's my selection:

1- Customer service is one of the most difficult tasks in today’s business environment. Everyone is following a multi-channel strategy and wants to have a 360º view of the customer. The fact is, it’s extremely difficult to solve this problem: a customer has an integral view of his interactions with a company (bank, utilities, insurance,…). However, it is very hard to ensure that the company employees have that same integral perspective of the customer. I believe that we’ll see a trend to optimize customer service by ensuring an integral management of all unstructured information related to customers. This will have two dimensions:
a. Building a single unified infrastructure that ensures data integrity, including customer correspondence, marketing, customer reports from business applications, sales interactions, phones to call center,…consolidating internal systems, ensuring data integrity.
b. Moving more information to the customer online in self-service mode including access to historical data and archives

I think this will have an impact in two fundamental issues: (i) semantic reconciliation of existing systems and applications, and (ii) building of information architectures and SOA-interoperability of ECM systems.
Other areas will follow like product information, but customer service is the most relevant one.

2- Content analytics or text analytics. We are entering an era in which the need to analyze the use that our organization does of content is critical. The growth in volume inevitably brings the need for some kind of selection mechanism in the value of our content. As an example, companies today cannot answer trivial questions like:
a. which searches in our website produce no results? (that question is giving you a lot more information than the ones that get results). Or,
b. how do you define the relevance of information for different groups (some social tagging mechanisms can help here…). These should be based on user interactions, explicit rankings or tagging
c. pure, basic analytics on your content: who uses what, how long, what is not used,…, is still very difficult to achieve.

In essence, I think we will start to see a trend to associate value or relevance to the corporate information based on usage patterns and some form of social interaction. I think we will start to see combinations of BI techniques applied to content use and content interactions

3- Security. This one is pretty simple and straight-forward. The application of DRM or IRM techniques inside enterprise will grow. Data security, traceability and privacy concepts applied to documents and emails will become much more common place than they are today.

The social life of information

2007-02-12T00:24:00.000+01:00

Have you ever thought what was going to be the social life of an email you wrote? Or a project memo? Or a power point presentation?

I continue to be absorbed by this idea of companies as information creators and consumers and the way they manage the value chain of their information. As one continues to observe how large organizations manage it, one comes to the conclusion that there are several types of information assets in every organization (obvious) and that a good way to analyse them is to think about what I would call their social life (not so obvious). No, I don't mean the way this is treated in the famous book by John Seely Brown and Paul Duguid.

Think about the different types of information that exist in your organization: think of bills, invoices, HR resumes, financial reports, customer correspondence, internal project information, investors information,... You can think of all your type of information simply analysing which are going to be the interactions that it's going to have in its lifetime. For example, the accounts payable department is going to be dealing with invoices for a while, and afterwards forget them and archive in some place where they can find them later if needed. You can think that an invoice has a very limited social life: some interactions in a short period of time, and always with the same people. The piece of information will not change: everyone would be able to say that it's the same before and after the experience.

On the contrary, think about the life of the design document of a complex engineering piece. You can probably see it interacting with numerous people, some recurrent, some new, always adding something, always evolving. People would think that this piece of information has changed, it is not the same from the beginning. And herein, exactly lies the complexity.

Because, it is a different piece for different people, everyone would call it differently. That's one of the reasons why in your corporate search system it is so difficult to find things. Because you describe it with words that are very different from the words that others used when they stored it.

When talking about Information Management or the Life Cycle of Information, one should consider this question: what is going to be the social life of this piece of information? And accordingly design the mechanism that will increase it's findability when needed.

This is something I'm working on because I firmly believe that the creation of wealth is going to be increasingly dependent on our ability to create information that is valuable and on our ability to access the information that is valuable for us.

IBM - Expanding the Innovation Horizon Global CEO Study 2006 - United States

2007-02-12T00:16:00.000+01:00

IBM - Expanding the Innovation Horizon Global CEO Study 2006 - United States

In recent weeks I've found myself having some very interesting discussions about innovation in large corporations. Amongst them, I would remark one with the director for innovation of one of the leading bank in Europe and another one with the head of strategic consulting in a large professional services organization.

I normally recommend this study from IBM, as well as the Global CEO 2006 study . However, I found myself in both cases describing my own experience practicing with innovation and some of the lessons learned for a day to day effective management of innovation within large corporations. And since I've been asked in previous occasions to articulate these findings, here they go:
1- We had a structured approach to innovation. We clearly differentiated invention (a moment of magic inspiration) from innovation (a day to day obsession with improving results) and simply looked for ways to programmatically find new areas of improvement. A portfolio analysis of your business, using BCG matrix or Ansoff matrix can very well help to start with.
2- You want to have a model for decision making that incorporates all relevant stakeholders. You don't necessarily need to agree on everything, but everyone needs to agree on a model. Importantly, people must agree to disagree. In large corporations dealing with matrix like structures, with countries and divisions, this will be crucial.
3- Get the sponsoring of the senior management. Once the group has decided that an opportunity will be pursued, there will be times when other priorities will jeopardize the existence of the embryonic business. Senior management support helps ensure that there are frequent conversations at all levels that help rise visibility and monitor progress of the initiative.
4- Get an entrepreneur. Large organizations (and small) are inertial: you will need high levels of passion and energy to move the beast, so don't try to emulate: it won't work. Find someone passionate about the project, who knows about it, and can be credible about the topic.
5- Ensure focus and ownership. Once you decide for something, give someone full ownership for it. Give it 1, 2 years to see if it flies. If it doesn't, then kill it, but make sure that during the test time, there is full dedication to it. People in the organization will be too busy doing everything else they are doing now, so avoid the euphemism of 50% of time. Also, define clear boundaries and ownership; in other words: no where to hide for the good or bad.
6- Provide organizational support. Small things won't reach the needed critical mass to enter in the radar of large marketing organizations. Also, it will be immaterial in large P&L of regions or countries. You need to ensure a parallel organizational structure that ensures time, resources and support.
7- This is about innovation for results, so ensure regular reporting and business review. Again, it is important to distinguish here the invention and innovation worlds: you really want to bring results, so measure them. Don't accept the "We'll give it our best shot type of approach". Results are sacrosanct.

Yes, I know, nothing new. But with the fanfare about innovation that we frequently read, we forget that the whole purpose is to improve results. Rest assured that some people will not like this model. But that's exactly when you can start to distinguish the inventors from the innovators in the organization.

Information and it's value chain

2007-01-22T00:44:00.000+01:00

One of the topics I'm researching is the principles of the value chain and their impact to information inside enterprises. Somehow, every company today is like a big media conglomerate: they live for the content they create and use; they base their decisions on it; they invest massive amounts of money to improving it. Better said, in the technology to unbury it, to present it and to store it.

However, very little thinking is applied to the way information is created and used inside enterprises. I'm playing with this idea of the value chain of information compared to the industrial era concept of the physical value chain. Lean management techniques applied to the physical world have produced enormous improvements in corporate performance. Is there anything similar to be achieved in the world of information supply chain?

Calculating, reasoning and perceiving, and their impact in Enterprise 2.0

2007-01-22T00:04:00.000+01:00

During one of my workout sessions this weekend I discovered myself remembering a great book I read years ago when I started researching about the impact of Artificial Intelligence and Text Mining. The book is Robot, Mere machine to transcendent mind by Hans Moravec. Not because I was thinking about his visionary theories and predictions about intelligent robots, but because something that I've been thinking about since I read the book: "For machines, calculating is much easier than reasoning, and reasoning much easier than perceiving and acting". I know it sounds philosophical. But the reason this quote resonates again in my mind is because more and more I'm asking myself one question: what is the difference that technology plays in business functions that require pure calculation and those that require reasoning and perceiving? In other words, why technology has been successful in automating transactional interactions, but is only in it's infancy in relation to tacit interactions? This is the most important area of innovation in the era of Web 2.0 applies to the enterprise (the Enterprise 2.0)

Sounds to me that one of the biggest challenges that the business and technology worlds are facing today is the optimization of interactions where humans need to interact with other humans or use large volumes of information for decision making. Knowing how those processes operate and how to optimize them is, in my view, the most important business challenge of our time. I think this is the most important element to be considered in the Enterprise 2.0 world. Of course this has a lot to do with technology (SaaS, SOA, ) but I agree with Andrew McAfee that Enterprise 2.0 should be consider a term broader than only it's software underlying properties.

The reason why this is relevant and related to Moravec's quote and it's connotations for me is the following: what we're seeing in Enterprise 2.0 is a new way of approaching the complex issue of optimizing collective behavior; and the novelty it brings is a combination of IT and social aspects that so far, provides the best results. This way, web 2.0 applied to the enterprise, is helping achieve better results when an organized group of people in an enterprise, need to obtain an understanding of any given topic that spans beyond their own individual knowledge. This can only be achieved when wikis, blogs, tagging and other web 2.0 capabilities, combine the individual pieces of knowledge that they all have to produce a bigger, more comprehensive and better organized piece of knowledge that everyone can benefit from. Think for example on how a large corporation keeps track of all interactions with a business partner or a customer. There is no single individual that has the whole picture; but everyone benefits from a broader picture if it could be obtained. This is one of the reasons, in my view, why customer service is so difficult to optimize, but in the Enterprise 2.0 world it has the most promising of all attempts. (I'll post a blog entry about this topic soon)

This is reasoning and perceiving. And in this areas, for the time being, humans are proving to be more effective than machines. We will see if Moravec's predictions were true.

Passion and You- Time Magazine person of the year

2007-01-03T10:30:00.000+01:00

I just read the Time magazine "person of the year" online article. Very timely because builds on one of the topics of my previous entrance: Passion. Time hits the nail on its head when talking about the Web 2.0 growth and the social participation on the web these days they come back to passion. It is truth. Why is the consumer part of the web 2.0 that is exploding, and not the enterprise one (at least yet)? I think it has a lot to do with the fact that when you right your blog, or participate in second life or post your family video you do it for fun, you follow some kind of passion, you're not obliged to do it. How many of us do that at work? How many of us proactively participate, suggest, contribute in our working life? mmmm

That makes me think and revisit the past and I realize that for every person I've hired lately, I've always looked for individuals that are passionate about what they do. You can learn other things, but the level of dedication, interest and excelence that normally comes with passionate individuals, that's impossible to replicate.

Be passionate my friend!

Happiness and Economics

2007-01-02T12:00:00.000+01:00

Christmas and Year End give us some days for reflection. Most people tend to do a year balance and plans for next year: have I achieved by goals, am I prepared for next year? No surprise this is the time of the year when more people start new collections, join health club and other futile, short term initiatives than soon dilute in the day to day activity.

However, thinking about happiness is a good exercise, one that can be done these days or at any other moment though. Reading the article from Economist Happiness and Economics one thinks in the traditional but difficult terms of being vs having, or experiences vs commodities as the article puts it. Just by coincidence I'm reading the book "Success built to last" which touches some of the same deep aspects of success and happiness. And there's one quote that captures well the basic idea behind it: "you can never get enough of what you don't really need to make you happy".

As usual, the concept of happiness is frequently perceived as a relative one: Doing well is not enough: we also want to do better than our peers. Somehow I see this as a natural tool to protect ourselves. Passion, they say, is needed to excel at your job and enjoy it. And normally there is a defence angle to this: "you've got to love what you're doing or you can be sure there will be someone else who will".

In reality, how many people truly enjoy and are passionate about what they do, and how many are simply trading time for salary? In other words is work not just a way to pay the rent?. The lasting reference here continues to be the flow: "the best moments usually occur when a person's body or mind is stretched to its limits in a voluntary effort to accomplish something difficult and worthwhile"

I tend to think that this topic is elusive because there's no universal answer: some individuals will be just fine with a mediocre satisfaction level at work because the level of demand is tolerable. For some others though, exigent jobs are not a problem as long as they provide the internal or external level of applause and satisfaction they are aiming at. Also, I find that many times it is dependent on your position in the economic ladder: why is it easier to focus on what you really want, once economic independence is achieved? Why is it so hard to find the joy in your job being a waiter at a fast food restaurant?

Chaos by design- an inside story of Google

2006-10-12T22:08:00.000+02:00

http://money.cnn.com/magazines/fortune/fortune_archive/2006/10/02/8387489/index.htm?postversion=2006100210

I was about to name this post "innovation with no direction", which I believe is the most important managerial lesson we can get from this article. The guys at Google have got it right when it comes to innovation (and other things as well).
In today's world, innovation happens more outside organizations driven by self-assembling groups that pursue their own targets, than inside companies with a well dictated agenda for innovation. Why not try to make it as emergent inside as it is outside?
Well, you can do that if you're prepared to adapt your own business model depending on the results. That is not apt for most companies today. There must be a paradigm shift in the way we think of innovation. In the traditional model the innovation gets killed when it reaches the execution phase. In the new one, it gets killed if it does not fly; instead of death by management, projects can be death by natural selection. Managing innovation is supposed to be finding new ways to do something. Here we're talking about finding new things to do. And that's a different story.

Your investment to improve tacit interactions

2006-10-08T19:41:00.000+02:00

http://www.mckinseyquarterly.com/article_page.aspx?ar=1767&L2=18&L3=30

If 70% of your workers interactions are what McKinsey calls Tacit, did you ask yourself what percentage of your IT investment goes to support those interactions?

Reengineering and automating processes has taken companies to achieve great productivity improvements. But if we are to live in an era where interactions are more tacit than, transformational or transactional, what is going to be the contribution of IT to improve productivity in this environement?

There are two key areas in IT that companies look at in order to support the new nature of their work:
- Make information accesible. Despite the organizational structure, try to avoid silos in information. Allow the information flow in all directions and break down barriers, hierarchies to become porous.
- Make people accesible. Adopt mechanisms to increase the means you can access people, inside or outside the boundaries of the organization in real time. Provide as many channels as possible in order to maximize the bandwidth of communciation.

As you can read in one of the McKinsey articles mentioned in previous posts, "Tacit interactions reduce the importance of structure and elevate the importance of people and collaboration"

In further posts I explore the details on how to do this and how SOA and Web 2.0 converge.

The new workplace

2006-10-08T19:36:00.000+02:00

In this post I try to summarize some of the most important research published lately on the new dynamics of work and the emergence of a new workplace.

An old topic that was fancy in the late 90's is comign to the spotlight again. Judging by the number and quality of articles and research being published, for example by McKinsey Quarterly Journal and recently The Economist, one would argue that the workplace discussion is hot again.

The reasons are quite strong and they tell us that the debate is a very profound one with big implications for modern organizations.

The new interactions described by McKinsey essentially prove that we've entered a different type of economy. The article distinguishes between three types of interactions:
- Transformational- extracting raw materials or converting them into finished goods
- Transactional- Interactions that unfold in a generally rule-based manner and thus can be scripted or automated
- Tacit- More complex interactions requiring a higher level of judgement, involving ambiguity and drawing on tacit, or experiential, knowledge.
The facts are that 70% of jobs created in the US since 1998 are tacit jobs. And these jobs today count for 41% of labor market in the US.

One of the most important implications of this nature of jobs being created today is the difference in the productivity achieved by firms where the majority of the interactions are tacit. Another McKinsey research shows that "...the variability of company-level performance is more than 50 percent greater in tacit-based sectors than in manufacturing-based ones. Tacit activities are now a green pasture for improvement."

The latest contribution has come from The Economist. In it's recently published survey "The battle for brainpower" analyses in detail the new battles to build the "Empires of the Mind"

TIME.com: The Nation That Fell To Earth -- Sep. 11, 2006 -- Page 1

2006-09-17T18:42:00.000+02:00

TIME.com: The Nation That Fell To Earth -- Sep. 11, 2006 -- Page 1

I found this piece by Niall Ferguson an interesting view of global threats. One lesson to be learned here: modern wars are not necessarily between one state and another with territory occupation by infantry as we new it. Modern wars between democratic states and terrorism require not controlling other states, but controlling the physical and financial movements of terrorists. By invading a country western democracies will only find themselves trapped in another unpopular situation, while terrorists will continue to develop their capabilities at home in any one of our big western cities. When is our political system going to start limiting the right to be free of someone who wants to use that freedom to destroy the system?

Be worried about these global competitors

2006-08-19T19:08:00.000+02:00

New_Global_Challengers_May06.pdf (application/pdf Object)

This is the latest report I've read about the growing presence of new competitors coming from emerging countries. Through a consistent methodology it picks the 100 largest companies in BRIC and how they compete in the global turf. It is a must read for those who still think that competition from these countries will only be based on low wages. Reality is that these are huge markets themselves, where these companies learn to survive and develop creative solutions, and that enables them to compete with global incumbents.

If you've interacted with any of these companies in your business context, you can see how aggresive, hard-working and talented they are. So when they are pressed to globalize, they look abroad to find higher volumes, margins and revenues. That's where you find them. In the past, you didn't think you would be competing with one of these companies in your top-notch clients. Not any longer.

As you can learn in the report, these companies are taking their brands global, bringing their products to the international marketplace, leveraging the superscale they get from their own local markets. Under this premise, they can compete as a very good value for money alternative to established brands.

They are also becoming global innovation centers, leveraging very deep talent pools in their own countries. The level to which they can compete arbitraging costs remains to be seen, though. Today they are more attractive as an employer than their western competitors, but turnover rates are approaching 40% and pressure to grow salaries continues to raise.

The other important source of advantage is the way they monetize the natural resources, due to their ability to develop superior operating models for these markets. In addition to their home capabilities, they are in a shopping spree, acquiring companies abroad to create some of the biggest conglomerates with higher production capacity than their competitors.

The path looks clear and the analysis results are startling. According to the work by Goldman Sachs "Dreaming with BRICs : The path to 2050", in less than 40 years these economies together will be larger than the G6 in US dollar terms. This means that the relative importance of BRICs as an engine of new demand growth and spending power may shift more dramatically than expected. Greying populations and slower growth in advanced economies could be offset by the growth in these countries.

The name of the game is clearly changing. One of the most profitable exercises that every company could do today is find out which are their new competitors coming form these markets and defining a solid strategy for the new reality. Keep in mind that they are globalizing very fast and they are determined to conquer their market.

Entrepenurial charity

2006-06-27T09:42:00.000+02:00

FORTUNE Magazine: A conversation with Warren Buffett - Jun. 25, 2006
The second richest man in the world giving the majority of his money to the richest man in the world? Could sound funny. But this is a truly important movement for the years ahead.
The fact that the people with largest fortunes in the planet decide to leverage their piles of money and management capabilities to try to solve some of the world's biggest issues by any possible means is great. We're talking about AIDS, Malaria, Tuberculosis. Problems that affect millions all over the globe, and all of them have proven to be too connected with political aspects of governments to be easy to solve. There is always too big a temptation to trade public money donated by other governments for some type of political or economic favour.
For global scale problems like these, the approach of global foundations with great financial leverage and independence can prove to be a good one. One that can avoid the corruption of olygarchies and governments who make bad use of the donated money. In addition, the fact that they are managed with entrepreneurial and managerial styles, will make sure they concentrate on results and not so much on political interchanges.
Entrepreneurial spirit and financial independence applied to charity at global scale...very interesting times.

Web 2.0 for the Enterprise: Where the Action Is? (web2.wsj2.com)

2006-05-04T00:07:00.000+02:00

Web 2.0 for the Enterprise: Where the Action Is? (web2.wsj2.com)
Yet another good analysis about the same topic: will web 2.0 penetrate the enteprise? With the advent of SaaS, Ajax, WS-SOA most of the social/tacit interactions needed in an enterprise environment will be facilitated.

SW2006_Industry_Report.pdf (application/pdf Objeto)

2006-05-03T23:30:00.000+02:00

SW2006_Industry_Report.pdf (application/pdf Objeto)

In this frequently quoted report by McKinsey and Sandhill about the status of the Software industry in 2006, one very interesting observation (as he have discussed previously) says "many innovations, collectively termed web 2.0, will fully reach the enteprise- as in previous cycles, innovation developed for individual users will translate into substantial enterprise opportunities". True.

Web 2.0 for the enterprise will bring a combination of tools like blogs, wikis, search, tagging to the corporate user that can reduce the friction experienced today around the person to person multipoint collaboration activities.

After going through automation of business processes in all transactional interactions, the big opportunity in front of corporate productivity improvements come from an optimization of social/tacit interactions.

The McKinsey Quarterly: An executive take on the top business trends : A McKinsey Global Survey

2006-04-28T10:08:00.000+02:00

The McKinsey Quarterly: An executive take on the top business trends : A McKinsey Global Survey
Here it is again. Consistent with the IBM results posted in a previous entrance, this sample of 3470 CEO and other C-level executives conducted by McKinsey Worldwide through similar conclusions: "Innovation (products, services and business models)" and "greater ease of obtaining information and developing knowledge" are the two biggest factors that contribute to the accelerating pace of change in global business environments. This last one is as well the one trend that is perceived as having the biggest impact in profitability of companies.
As mentioned before in this blog, one of the biggest challenges for organizations today consists in combining the fact of global presence and speed of change with the ability to cooperate and communicate among teams inside and outside the main orgnization boundaries.
What the web has developed as Web 2.0 technologies with a great emphasis on social capabilities driven by technology standards, still needs to hit the corporate world.
A very good perspective of how these technologies can impact the corporate world and about the strategic thinking behind it cna befound in this excellent blog entry by John Hagel: SOA versus Web 2.0

Corporate search needs to heed workers, Google exec says | CNET News.com

2006-04-25T14:16:00.000+02:00

Corporate search needs to heed workers, Google exec says | CNET News.com
The most important statement in this article is when Dave Girouard says "consumers and employees are the same people". I entirely agree and that is the reason why I see the standards for corporate technology being set today by end user internet tools. Why exactly can't I get the Google experience inside my company? is a question that most end users do. The same goes for email, calendars, groupwork tools, instant messaging...Be bullish on corporate software as it will need to catch up quickly with the end-user experience employees get in the Internet.

Innovation: The View From The Top

2006-04-21T19:24:00.000+02:00

Innovation: The View From The Top
IBM' survey of CEOs this year topic: innovation. And the most interesting conclusion is that the challenge business leaders see is management innovation. Or innovation in their business models. With a lot of things commoditizing and competitors becoming global and moving online, the thing is how do you create and maintain a business model that differentiates from your competition? The holy grial of strategic thinking. Of course, the key element here is the collaboration or how to extract the maximum collective intelligence from your teams. More on this very soon.
For another view on the same topic, see John Hagel's post about Hamel on Innovation.

Wired 14.02: Would You Buy a Used Dotcom from this Man?

2006-04-21T19:08:00.000+02:00

Wired 14.02: Would You Buy a Used Dotcom from this Man?

I found this article as well as the research in this one particularly balanced and full of common sense. The Google effect is dragging a lot of other technology companies to the market, but with a much more rational approach this time than during the boom with it's crazy valuations. It is true that the Internet brought all the changes that those outdated business models where predicted. Only that it came a bit slower than we thought. Then, why not revisit those business models and see which would be valid now? Indeed, technology changes usually take longer to happen than we predict, but have more profound impacts than we expect.

TIME.com: TIME Poll: Global Warming -- Apr. 03, 2006 -- Page 1

2006-04-17T15:37:00.000+02:00

TIME.com: TIME Poll: Global Warming -- Apr. 03, 2006 -- Page 1
Global warming is one of those big issues that draw people's attention as they make the headlines but hardly changes behaviours from politicians due to unlikely impact in next elections' results. That is starting to change though, and for the good. Environmental concerns are now much more present in people's minds and they start to make decisions: from buying hybird cars to volunteering to limiting CO2 emissions. Companies and governments working for alternative energy sources will see a raise in their reputation...and stock prices

There's Not One Recipe for Success :: AO

2006-04-17T15:05:00.000+02:00

There's Not One Recipe for Success :: AO
For anyone in the business of technology and VC, this is a basic guideline on what to focus on when building a new company. If only it was that easy...! Stay tuned to upcoming posts

� The future transparency of the past�we live in glass houses | Tom Foremski: IMHO | ZDNet.com

2006-01-23T23:32:00.000+01:00

� The future transparency of the past�we live in glass houses Tom Foremski: IMHO ZDNet.com
Tom Foremski pushes the buttom of something we've all been thinking for a while: if more and more of your interactions are mediated by computers, all the information about those interactions are, or can be stored somewhere. In fact, Google is keeping track of every piece of information it comes across. My bet is that this will be a no brainer lock in effect. When almost all your interactions will be computer mediated, how much would you be willing to pay to make your profile accesible in a digital format for computers to act for you? In that case, what would be the value of your past history? Maybe, we should all start building our digital memory today

Visionaries and Luminaries :: AO

2006-01-23T23:09:00.000+01:00

Visionaries and Luminaries :: AO
I would definitely agree with John Doerr's vision that the investment in environment and life-science will create innovation and broad benefits across the globe. It has the forcefully impact of what "has to be". With the global impact in the environment and the progressively elder globe population, one could argue that those are safe bets. Of course the talent is in finding the right companies to invest in...but that has always been the strong point of skilled Doerr

2006-01-23T23:00:00.000+01:00

Philip Lay does an interesting analysis of the rationale for M&A in the tech business in his October issue of Under the Buzz Based on the technology adoption life cycle paradigm, he analysis 8 different reasons to acquire with good real-life examples of our days
If the success ratio of M&A is so low, you better think it through with care when you are either acquiring or preparing yourself up to be acquired

World's Worst Disease - Forbes.com

2006-01-23T22:39:00.000+01:00

World's Worst Disease - Forbes.com
Real progress always lies in non zero sum games. From global trade to every entrepreneurial initiative, the fact that others win with you defines success in a much more durable way than the fact that others loose what you win. As you can read in Non Zero, the logic of human destiny drives us to cooperation rather than confrontation. As the world gets smaller, where will we hide if we don't find a way to cooperate? if you're all in the same boat you'll tend to perish unless you are conducive to productive coordination.... Genetic evolution thus tends to create smoothly integrated organisms, and cultural evolution tends to create smoothly integrated groups of organisms

The Internet Stock Blog � Is AlexaDex a Useful Stock-Picking Tool Or Just A Fun Game?

2006-01-23T22:12:00.000+01:00

The Internet Stock Blog � Is AlexaDex a Useful Stock-Picking Tool Or Just A Fun Game?
Alexadex is a fun game that can be seen as an emulated page rank measuring only traffic and not inbound links. This can be a good sign of interest for links within a page for future search engines?

Google: Ten Golden Rules - Issues 2006 - MSNBC.com

2006-01-23T21:54:00.000+01:00

Google: Ten Golden Rules - Issues 2006 - MSNBC.com
Ten easy management rules that can make every group of knowledge workers more effective. Only thing I miss is a mention to ego-less design and respect fo the intellectual property of ideas

The constant charmer

2006-01-06T05:35:00.000+01:00

A rock celebrity lobyying politicians around the globe to end poverty. That should be the job of the politicians, right? But today a rock star is much more effective in doing so because people listen to him more than they listen to their representatives. And, if you are a public servant, why would you care about a long term issue if in 4 years you're gonna be out of job? Problem is, complex problems with long term solutions are first level priorities for us. Democracy is changing. I vote for Bono.