The NSA, Privacy, Trust and Tribes of Trust

While I was writing Innovation Zeitgeist this summer (June and July), the only part of the book that I got some pushback on was the suggestion that the Internet was so important, but so difficult for even sophisticated users to manage (phishing, cybercrime, privacy issues) that I predicted that "tribes of trust" would emerge and that privacy would become a major point of differentiation for competitors. The idea behind a tribe of trust was that it represented a managed safe portion of the Internet where you would have higher confidence about information and transacting.

The recent announcements about the NSA and the cooperation of many companies with the NSA has confirmed the importance of digital trust.

I felt like I was going out on a limb when I suggested that there were roughly ten levels of policies on privacy that companies might adopt deliberately or accidentally, but they seem more accurate that I had anticipated. I wrote:

"Roughly speaking one might imagine companies in a market pursuing ten alternative strategies:

1.        Lie about what information is collected
2.        Don’t reveal what information is stored about the user
3.        Reveal policies and superficial description of information stored about the user
4.        Reveal partial information about what is stored
5.        Reveal all raw information stored about the user
6.        Reveal all raw and evaluative information stored about the user including connections to other users
7.        Allow editing and export of privacy information by user
8.        Pay user to use their stored information
9.        Make the information stored useful to the user
10.   .  Make the information stored useful to the user and charge for it as a service

Today, few companies have been aggressive in their use of privacy information as a differentiator. Perhaps an early sign of competitive use of privacy as a marketing weapon is an internal 2013 video developed by Microsoft (http://youtu.be/-Cr6AgUo764 ). Now leaked outside Microsoft, the video’s theme is that Google tracks everything you do so that it can make money off you. While it may not have been intended as an external marketing weapon, it does illustrate the kind of marketing campaign that might be pursued by aggressive companies in the future.

Some of the larger web sites reveal how long they retain information. But as I pointed out in an earlier chapter, innovation for digital content now includes bundling and unbundling of services, legal rights and methods of monetization. Privacy is, in a sense, no different than attaching the right to re-download a book more than once on an audio book service such as Audible. "

Source: Innovation Zeitgeist: Competing in a World of Too Many Competitors, Kindle, Amazon 2013

Moving Beyond Product Innovation

The much anticipated acquisition of Nokia's mobile phone business by Microsoft is a stellar example of the prediction in my recent book, Innovation Zeitgeist, of the importance of moving beyond narrowly defined product innovation to service and solution innovation.

Basically, smartphones are increasingly similar with differentiation becoming harder to achieve. Motorola's well received launch of its MotoX line is demonstrative of this trend. Mid-range hardware features (i.e. it's not worth competing on screen resolution or processor speed any more) with innovation along the user interface dimension.

By acquiring Nokia's business, Microsoft is doing what many companies do in a highly competitive market, using vertical integration to deal with low margins. Owning two layers in the value chain increases the value capture.

By acquiring Nokia, Microsoft also sends an important signal to those contemplating developing apps for the ecosystem. Microsoft is committing in a big way to its future in mobile devices and attempting to stake a claim to being one of the surviving ecosystems.

From a product perspective, Microsoft's mobile operating system was not growing sufficiently quickly to match Android's growing success or Apple's historical success. Redefining what constitutes a product from an operating system to a complete mobile solution, changes the game in the direction of a solution, rather than a horizontal slice that is part of a solution.

Even more importantly, Microsoft's fundamental strategy is not about mobile devices, rather it is about having a portfolio of capabilities that enable both individual and corporate users to use the device of their choice to interact with the data of their choice without necessarily having to actively manage the movement of data and content. This overarching strategy takes advantage of Microsoft's success in the living room with XBox and in corporations with a wide variety of integrated software. Whether you are using a PC or laptop, an ultrabook or hybrid tablet, smartphone or phablet, Microsoft's goal is to enable a seamless experience.

Microsoft is not the only company pursuing this strategy using the Internet and cloud storage/syncing to simplify users life, but it has a huge number of capabilities it can integrate.

Educational Warfare: A New Way of Thinking About War

Wars are expensive.

For example, most estimates of the cost of the Afghanistan and Iraq wars to the US put the cost above $3 trillion. (See for example, http://www.costsofwar.org ) And if you include borrowing on deficits used to finance military activity, the site estimates another $7 trillion over the period 2001-2013 when the cumulative costs 50 years out are included.

The truly hidden cost is what would $10 trillion do to improve the US economy (currently a $14 trillion in size)? One might suspect that $10 trillion invested in more positive activities might stimulate economic performance more than warfare.

So, when we consider how to influence other countries not to have civil wars or to go to war, the public debate tends to focus on issues of morality, theology, values and the saving of lives. While most people would agree that saving lives is a desirable goal, the reality is that wars are rarely stopped by such considerations. Would that they were.

So, here's a wild and crazy thought. What if we attempted to influence those about to go to war with clear communication of the economic impact of not going to war? Controlling the dialogue is important in winning debates. And how you frame the debate is in a sense educational warfare. It won't work every time. Fanatics are not rationale, but it would be an inexpensive way of influencing debate and influencing the shape of coalitions against war.

The idea is not a new idea. I recall reading a science fiction novel, whose name I forget a decade or so ago about introducing a computer game into the then Soviet Union so people could evaluate the virtues of different economic systems, thereby, laying the groundwork for liberal democracy. Isaac Asimov in The Foundation Trilogy plotted the use of embargoes and the desire of householders for household appliances unavailable from the Foundation embargo of the planet. The result: quick resolution.

Clearly, some wars are driven by the desire of a small controlling class to reap the benefits of power and rentier economics. Their trade-offs clearly look different than those of the rest of the population. But if democracy is about transforming diverse groups into a coalition to resist tyrants or oligopolies, then a common benefit should have benefit.

Say, for example, that several years ago, a model of the Syrian economy structured as a game allowed players to evaluate the consequences of war. Perhaps the chance of war might have been less today. The controlling group might even understand the potential benefit of devolution of power.

The dialogue might look different, less emotional, more rational. Perhaps this idea might not have worked in the past when computer usage was less and mobile devices less powerful, but in today's world, where fixed and mobile computing, gaming and simulations deserve attention as powerful ways of influencing the understanding of large swathes of the population.

Educational warfare. It's probably not perfect, but it's certainly a tool that we under-use or don't use at all.

Game Theory and NSA Practices

"Who shall watch the watchers themselves?" or "Quis custodiet ipsos custodes?" is an old question and certainly one raised by recent revelations about NSA practices.

But what the NSA situation reveals is the importance of a strategic perspective and the importance of governance models in making sure that the right strategy is being executed, resources are well allocated, and managers are held accountable by independent third parties.

The simplistic demagogic views falls into two categories:

1. Slippery slope: if a well meaning government has no constraints on monitoring, it lays the foundation for tyranny if or when the unethical are in charge.

2. National defense: we need to pursue terrorism to the maximum extent possible.

A more nuanced assessment might suggest that a different framing of the problem is required, The issues are really much more subtle,

Presumably, the ability to track terrorist and terrorist projects is desirable because practically everybody would prefer not to be blown up or injured by terrorist activity. But not all activities of monitoring lead to successful prevention of terrorism events or tracking down of terrorists after a terrorism event. There is, therefore, an important question of both effectiveness and cost effectiveness. Presumably we should all desire to prevent terrorism if it is effective, cost effective and does not risk tyranny. And we should avoid ineffective monitoring that raises risk of abuse.

However, data around effectiveness, cost effectiveness and potential for or actual abuse is not currently disclosed. In a business this would be equivalent to providing carte blanche to a department and not holding them accountable. I hypothesize there that it is possible to disclose performance and compliance information without jeopardizing the overall effectiveness. I would also suggest that assessment of the potential for abuse and tyranny is not possible without disclosure.

From a game theory perspective, politicians play in a game that is annoyingly short sighted.

If a politician is in power and a terrorism event occurs, the argument can be made by an opposition that the politician did not spend enough or pay enough attention. The criticism may or may not be true. The absence of disclosure ensures that any debate will be sterile.

If no terrorism event occurs while a politician is in office, then he/she will argue whatever program is in place must be good. Again, there is no way of assessing the value of the spending and the activities or the potential for abuse.

If a politician spends too much on programs for countering terrorism, there is little penalty for overspending.

If a politician cuts spending on anti-terrorism and no events occur, then the politician is still at risk of political attack for a visible decision to cut and no clarity on what may previously have been overspending.

The net result is that there are strong incentives for politicians, suppliers and government staff to continue to demand increased spending. Increased spending will typically lead to more monitoring activity. Presumably, more monitoring activity increases the potential for abuse.

And strangely, even those politicians who are anti-government, seem content to fund defense and security spending without significant disclosure, risk assessment or effectiveness measures.

In a :"Show me. I am from Missouri." universe, performance and operating data needs to be revealed. Without performance reporting we can have no assurance that money is being well spent or that practices are consistent with guidelines and governance processes that highlight and protect against abuse.

And as with any portfolio decision, investment in NSA activities needs to be compared with other approaches to preventing terrorism and its root causes. Bureaucratic budget holders are, like any budget holder, always reluctant to propose reductions of their own budget. If we knew for example, that the cost of preventing a terrorism event was $5B and we also knew that we could reduce the likelihood of equivalent terrorism in a country by investing in that country the same amount, it would frame the budget and performance decisions differently.

The American constitution is built upon the concept of separation of powers and authority. The same is true in corporations where auditors are supposed to be independent of the company. NSA monitoring of terrorist activity looks very different if there are no auditors or guardians of the guards.

Any claim that disclosure of activities would jeopardize the effectiveness of collection activities is too easy. It's highly unlikely that bad guys have not being going to the movies or reading newspapers, so I think we can safely bet that they know they are being monitored. And as in wars, there is a difference between immediate and eventual disclosure. Aggregated data can provide metrics on monitoring without disclosing significant secrets.

I am sure of one thing in this debate. Knee jerk assessments may not be the most effective way of assessing this complex task.

Jeff Bezos And The Washington Post

The conventional wisdom about the impact of digitization upon content businesses is that the music business is the model. Digitization makes illegal copying easier; revenues from digital advertising is lower than traditional advertising. Newspapers have had difficulty replacing both subscription revenue and advertising in a world where customers have become accustomed to getting their new for free.

But there is another interpretation. In digital businesses, the impact of scale is dramatic. After you have covered your fixed costs, the incremental profitability of an additional customer is high, verging upon 100%.

The reason scale is important is that traditionally newspaper brands, particularly in the US, have tended to be regional. But there is no intrinsic reason why newspaper should not be national in a world unconstrained by the need to deliver physical papers. We already have examples of national newspaper brands, the Wall Street Journal, the New York Times, and USA Today are the three leading examples of newspapers with national audiences. These newspaper superbrands, to which we can anticipate that the Washington Post will be added, represent a reordering of an industry. Old assumptions about scale and business models go out the window in a world of national newspaper brands vs. local newspapers.

As evidence of this, consider the following. The NY Times divested itself of the Boston Globe. Boston can be serviced with NY Times content plus some regionalization.The NY Times, the Wall Street Journal and the Washington Post all now have firewalls. Only Gannett's USA today lacks a firewall, perhaps because it has a different demographic and a head start as a national paper. The Economist, admittedly a weekly newspapers represents another example of the value of a national or international brand as does the Financial Times of London.

Most commentators about the acquisition have tended to focus upon the opportunities for synergy with Amazon and Kindle devices. There may well be opportunities but these opportunities will require a national newspaper with a wide range of content as a device for attracting the attention of Amazon buyers. It's a scale game. You can't create great content without high quality, diverse and local editorial content.

You can think of a consumer's attention as being equivalent to the shelf space in a supermarket. Owning one of the major national newspaper brands will likely prove a cost effective way of reaching customers and giving them more reasons to make Amazon a central part of their life.

The predictions from this conclusion are straightforward - a change in the scope of competition and dramatic competitive pressures on smaller newspapers. If you run a smaller newspaper, it's time to rethink your strategy and operating model.

Anecdotal Market Research for the Start-Up

Innovators often begin their process of innovation with inspiration from some experience they have had or observed. Keen observation can be very powerful for identifying opportunities, but it's also easy to go wrong and draw bad conclusions from faulty logic. I had this experience myself this week when my phone went wrong not once, but twice.

By way of background, let me begin my story by saying that I use Windows 7 and 8, have an Android tablet and Samsung S3 smartphone, and was very happy with my previous smartphone, an iPhone 4.

But being happy with a technology does not necessarily mean that it was reliable. I went through three iPhone 4s in my first six month of ownership because for some, never explained reason, two of my phones decided not to permit phone calls unless I also had 3G data turned on as well. Support people speculated it was a cell tower software problem, but my third phone did eventually work and be reliable. Now you may conclude that I might be upset with my carrrier AT&T or Apple, but I was not. I thought the service of the Apple store was superb and there was never any hesitation about replacing the phone on which I had purchased an extended warranty. And I am guessing that AT&T deserved some credit for fixing the cell tower.

This week my Samsung phone suddenly took upon itself to become erratic in terms of charging. After being charged all night, it only showed 7% power. And the problem showed up with different batteries, cables and chargers. Searching the Internet, I found this was not an uncommon problem. The local AT&T store acknowledged the problem and referred me to their maintenance center, where pleasant and friendly technicians handled me well. I ended up with a new phone, which promptly exhibited a pattern of switching itself off for no good reason, something I had also read about on the Internet. Returning the following day, AT&T acknowledged the problem and gave me my third Samsung Galaxy 3. It's annoying wasting several hours, but I have to say that AT&T's service was excellent and very friendly.

Because I write about technology, I took the opportunity to ask other customers waiting, what phones they had and what kind of problems they were having.

The first clear observation was that they all seemed to have Samsung phones. One person had a one week old Samsung Note 2 and all his phone calls were going to voice mail so he was getting no calls. A second person had a Samsung Galaxy S4 and the screen was unresponsive. A third person also had a Samsung Galaxy S4 and his screen had a defective column of pixels that only showed up in some screen color backgrounds.

So, what conclusions should I draw? I first caught myself thinking that Samsung seems to have a lot of quality problems, but then the error of my thinking occurred to me. Most people who have an iPhone will take it back to the local Apple store if there is one nearby. So any conclusions about failure rates will be biased for non-Apple phones in any area like Silicon Valley with multiple Apple stores.

Second, it's worth remembering that Samsung is on a tear and having huge success with its smart phones and phablets like the Galaxy Note. And given that all electronic devices have failure rates, the more you sell, the more units will come back with problems. It's just a percentage issue.

So, here is a lovely example of where anecdotal research is likely misleading without additional confirmation. There is data out there on the failure rate of phones, e.g. http://blog.fixya.com/pr/feb2013/smartphone-manufacturer-report.html and studies that purport to assess breakability for example, e.g. warranty vendor SquareTrade.com, http://squaretrading.wordpress.com/2013/05/08/how-breakable-is-the-new-samsung-galaxy-s4/ but that old stalwart of product ratings, Consumer Reports does not provide any useful information on reliability.

But it's worth pointing out that hidden assumptions about observational research need to be checked at every turn. This blog posting has said nice things about my interactions with both the AT&T store where I bought my phone and the service/support store. Consumer Reports is less favorable about AT&T. Its ratings are available at http://www.consumerreports.org/cro/electronics-computers/phones-mobile-devices/cell-phones-services/cell-phone-stores-ratings/ratings-overview.htm for subscribers. JD Powers in contrast, rates AT&T highest in overall satisfaction, e.g. http://www.pcmag.com/article2/0,2817,2422645,00.asp

So, what are my take-ways.

First, it's easy to leap to conclusions without realizing your logic may be faulty.

Second, observations should be backstopped with additional data. Small samples are pretty much meaningless.

Third, in fast changing markets, market research can get old very quickly. Past performance of a competitor is not necessarily predictive of their rate of improvement.

Fourth, customer perceptions of reliability are often affected by content that may or may not be accurate, significant or relevant. For example, one of the five odd reasons I switched from Apple to Samsung was a series of reports about paint chipping from iPhone 5s. It was not the key reason, but it did contribute to my decision.

Why Wargaming is Useful. The Bankruptcy of Detroit.

One of the major impacts of inexpensive computers is the ability to simulate and game business situations. If you have ever played, SimCity, an early success in the consumer gaming business, you may well have attempted to manage some of the cities that came predesigned in the game. Detroit was one of those cities. I have to admit I was never able to figure out a way to save the SimCity version of Detroit. But playing SimCity certainly honed my interest in and my understanding of urban planning.

Over the years, I have designed and delivered a number of simulations. My largest and most successful was a simulation designed to teach telecom executives about how to compete in a converging world, where fixed line, mobile, broadband data, broadband wireless and video were overlapping. An unusual wrinkle in the design was the idea that in a large corporation, it's not enough to compete with external competitors, you also need to cooperate with internal stakeholders. And just as importantly, you need to understand the different leads and lags that individual functions in the business operate under.

Surprisingly, even managers with long experience in an industry will often underestimate the impact of planning cycle differences. And it's very common for managers to underestimate the range of outcomes possible.

This need to push managers to consider wider extremes is one of the reasons that scenario analysis is talked about so much. But there is theological split in the world of scenario creation and use. Some scenario consultant are quite adamant that scenarios should be stories not numerical models. These professionals are reacting against the phenomenon that spreadsheet sensitivity analysis is sometimes confused with scenario analysis. The use scenario analysis to drag resistant managers kicking and screaming into considering the unthinkable, the Black Swan, and the fat tailed distributions or risk.

But if that battle has been won and managers now understand the vocabulary of  and the differences between sensitivity analysis and scenario analysis, then there is a next generation modeling opportunity, i.e. to translate the stories of a scenario into the impact upon a business.

The impact upon a business may like the wargame reveal not just the sensitivity changes under different scenarios, they may also imply more complex differences in states, e.g.

- what portfolio of IT projects works best over multiple different scenarios
- investments that need to be made before a contingency plan kicks in (as in "We needed to have done that yesterday or last year.")
- business investments that can be thought of as options on a capability, customer group, market or R&D.

In effect, the availability of low cost computing, modeling software and scenarios gives companies the ability to maintain an enterprise and market model as well as providing a vocabulary of stories about possible futures.

New Reviews of Innovation Zeitgeist by James Lau, Founder of Movesandshakes.com, and Vint Cerf, Google's Chief Internet Evangelist

Innovation Zeitgeist Reviewer Comments

Latest reviewer comments on Innovation Zeitgeist includes new comments from Australian James Lau, CEO and founder of the new startup, movesandshakes.com and Vint Cerf, VP and Chief Internet Evangelist at Google. Vint is sometimes referred to as the father of the Internet.

"Innovation Zeitgeist is a marvelous creation.  I love what Alistair Davidson has done.  I enjoy most the narrative style (feels more like a weekend read) and yet it is packed with facts, ideas, authority. There is more content here than an entire MBA course.  It's an MBA on digital" - James Lau, Founder movesandshakes.com

“Innovation Zeitgeist is thoughtful, pragmatic and comprehensive in its analysis of digital product and service opportunities. The business advice it offers is understandable, even to an engineer like me!” Vint Cerf, VP and Chief Internet Evangelist, Google

"Alistair Davidson has written an ambitious, encompassing, and down-to-earth treatise on the current digital transformation.  It’s the best description yet of the digital transformation engulfing us and what we should do about it, written in plain language and illustrated with his own photographs and questions for the reader after every chapter. An iconic, original contribution to the literature on digital transformation that is hard to put down. There is good advice and commonsense written on every page.  Must reading."  Stanley Abraham, Professor of Strategy and Entrepreneurship (Emeritus), Cal Poly Pomona University, author of “Strategic Planning: A Practical Guide for Competitive Success”.

"Innovation Zeitgeist is essential reading for any venture capitalist or startup. It forces the reader to consider what they are doing and what they must continue to do that is different than their many domestic or international competitors, a critical issue for successful startups and for high growth companies." Norm Fogelsong, General Partner, Institutional Venture Partners

“Alistair Davidson has produced an insightful analysis of innovation in the digital era.  This book is a must read for executives seeking survival and success in today's challenging competitive arena.” Robert Allio, founding editor of Strategy & Leadership magazine, former Dean of Rensselaer School of Management. Author of “Seven Faces of Leadership”.

 “A.T. Kearney's clients are all facing the issue of their business being transformed by digital technology.  Innovation Zeitgeist is a great resource for helping our Digital Business Forum clients understand how important it is to actively scope and manage the changes to their business, organizational structure, acquisition strategy, business model and required innovation approaches.” Michael Roemer, Partner and International Co-head of A.T. Kearney Digital Business Forum

“Mr. Davidson has a knack for bringing the thirty-thousand foot practice of strategy down to earth. His discussion of strategic considerations leads directly to an actionable planning structure. Strategy, then, can form a tactical plan. The benefit of the book is twofold: food for thought and a framework for action.” Bruce Rosebrugh, President, VPQ Scientific

"In Innovation Zeitgeist, Alistair zeroes in on many of the key issues we see our market research service-industry clients facing - rapidly changing customer expectations, the need for rapid service introductions, more competition, a need to rethink business models and the types of innovation pursued." Jim Hollingsworth, VP Finance and Security, Pacific Consulting Group

“Bravo! Innovation Zeitgeist offers deep yet pragmatic ideas to address today’s business challenges. Alistair Davidson’s depiction of trends dramatically altering the competitive landscape such as technology overabundance and customer attention scarcity hits the nail on the head.”  Adrian C. Ott, author, “The 24-Hour Customer”; CEO, Exponential Edge Inc.

 Press Release: 

Innovation Up, But Success Elusive

INNOVATION ZEITGEIST, a new book by Silicon Valley guru Alistair Davidson guides managers through a world where everybody is inventing the same products at the same time.

Business is entering the era of continuous innovation. Managers are under pressure to launch a perfect new product or service almost overnight. Many companies are doing it wrong.

As a result, by some measures the business environment is worse for innovation today than ever before. With so many companies making lots of little innovations customers are being overwhelmed by technologies that demand too much of their attention and don’t meet their needs.

Davidson’s guide for managers, Innovation Zeitgeist: Competing in a World With Too Many Competitors, Amazon Kindle, June 2013, offers startling insights.

It’s easier to innovate than ever before, but it’s harder to be successful. Current research suggests that 3 our of 4 venture capital investments don’t return the original investment to the VCs; as few as 1 in 10 meet the VC return goals, and only 6-7% of CEOs make it to the IPO or being acquired.

Most companies underestimate the number of competitors developing similar products. The strongest predictor of success is offering a differentiated high value product. Me-too products don’t cut it in a world of hyper-competition where innovation is taking place in both developed and developing countries.

Many so called innovations are just small improvements or uncreative reactions to customers’ “points of pain.” Competitors are likely rushing a duplicate product or service to market. The resulting net competitive advantage: zero.

Products may be seductive to people like engineers and programmers, but services and solutions are more likely to be money makers for many companies.

Companies that  ‘spec’ a new product and throw over the wall to developers, are going to become extinct. Your customers and their customers won’t actually know that they want until they use it, so you better involve them in the development process from the beginning. ‘Waterfall’ is out. Agile is in.

With so many copycat competitors, you better make sure that customers love and trust you. The top strategy for the rest of the decade will be acting on behalf of the customers, not selling them more features they don’t use. You can’t sell useless bells and whistles or behave badly to customers in a world where customers are tweeting, blogging and rating you.

Embedded device, appliance or platform – it’s a critical choice as Nokia and Blackberry have found. Misjudging the shift can blow your strategy apart.

While individual product owner may think their product is simple to use, the reality is that consumers are drowning in information, accounts, passwords, spam and malware. Think “Simplify!” or you will lose your customers to those who do.

If you are selling digital content (video, e-books, music, software, games), the new frontier in marketing is figuring out what rights and services to bundle or unbundle with the content. You used to buy a one-time right to download a piece of music. Today, when you buy music, it can be bundled with the right to download any time or stream from the cloud.

Inheritance is a big problem for digital content. Most consumers don’t realize that their huge MP3, e-book, audio-book, software and games are not transferable. Think upset consumer when a parent dies and their book collection is not transferable.

He identifies ten approaches to privacy that a company can select from to create a better relationship with customers and win them away from the competition.

The next round of privacy issues are going to make the current problems looks small. Big Data means that companies can not only know about what you have done, but can predict what your secrets are and what you will do in the future. That may be OK for what restaurant you are going to, but not so much if they can deduce your involvement in something taboo or embarrassing.

The Internet is so important to business and personal life today, that we can expect new ways of making the anonymous authenticated. He speculates that owning a certified identity, being part of a ‘Tribe of Trust’ will be critical for the Internet to remain useful.

Alistair Davidson consults on strategy and business development. He’s a veteran Silicon Valley entrepreneur who has built and commericalized numerous software products including planning, innovation and strategy tools. He is the author of four books on strategy and technology, and a contributing editor at Strategy & Leadership magazine.

                                                                                      

Alistair Davidson Contact Information:                      

Phone: +1-650-450-9011

E-mail: Alistair@eclicktick.com

Web site: www.eclicktick.com

Innovation Zeitgeist Amazon web page: http://www.amazon.com/Innovation-Zeitgeist-Transformation-Competitors-ebook/dp/B00DBCQC3I/ref=sr_1_2?s=books&ie=UTF8&qid=1372344844&sr=1-2

Amazon author web page: http://www.amazon.com/Alistair-Davidson/e/B000APSDS6/ref=ntt_dp_epwbk_0

Reviewer Comments

"Alistair Davidson has written an ambitious, encompassing, and down-to-earth treatise on the current digital transformation.  It’s the best description yet of the digital transformation engulfing us and what we should do about it, written in plain language and illustrated with his own photographs and questions for the reader after every chapter. An iconic, original contribution to the literature on digital transformation that is hard to put down. There is good advice and commonsense written on every page.  Must reading."  Stanley Abraham, Professor of Strategy and Entrepreneurship, Cal. State. Polytechnic University, author of “Strategic Planning: A Practical Guide for Competitive Success.

"Innovation Zeitgeist is essential reading for any venture capitalist or startup. It forces the reader to consider what they are doing and what they must continue to do that is different than their many domestic or international competitors, a critical issue for successful startups and for high growth companies." Norm Fogelsong, General Partner, Institutional Venture Partners

“Alistair Davidson has produced an insightful analysis of innovation in the digital era.  This book is a must read for executives seeking survival and success in today's challenging competitive arena.” Robert Allio, founding editor of Strategy & Leadership magazine, former Dean of Rensselaer School of Management. Author of Seven Faces of Leadership

A.T. Kearney's clients are all facing the issue of their business being transformed by digital technology.  Innovation Zeitgeist is a great resource for helping our Digital Business Forum clients understand how important it is to actively scope and manage the changes to their business, organizational structure, acquisition strategy, business model and required innovation approaches. 

Michael Roemer, Partner and International Co-head of A.T. Kearney, Digital Business Forum

"In Innovation Zeitgeist, Alistair zeroes in on many of the key issues we see our market research service-industry clients facing - rapidly changing customer expectations, the need for rapid service introductions, more competition, a need to rethink business models and the types of innovation pursued." Jim Hollingsworth, VP Finance and Security, Pacific Consulting Group

                                   

                                                                                                                                                                         

Techniques for Spotting Plagiarism

More discoveries about plagiarism. Well, having discovered one silly teenager (she goes by Ali Renee Royster or Alianna Rene'e on Facebook, and by Alianna Renee on poetry.com) who has been plagiarizing my poems, I have now discovered the big leagues of plagiarism -- Baidu.com and China.com. They have wholesale importation of content.

I have tried out a number of tools for plagiarism tracking, but the simplest and least expensive approach is to just pick a sentence with an unusual combination of words and search on it in Google. It also suggests to me the advantage of having some unique word in your text that you can search on, perhaps in a reference where it might be less obvious.

http://mashable.com/2012/08/29/plagiarism-online-services/ lists some tools for detecting plagiarism.

I enclose an example plagiarism search on the title and first stanza of the opening poem in Silicon Valley Poems, California Weaving using the metasearch engine ixquit.com

First three results

Poems 2000-1 - Alistair Davidson's Personal Web Site
www.alistairdavidson.com/poems_2001.htm - Proxy - Highlight
And grass turned golden against the bluesky. ... summerblossoms, the greentreesoasis-likein the goldenhills. The almostperpetualbluesky.
Silicon Valley Poems

www.alistairdavidson.com/SiliconValleyPoems.pdf - Proxy - Highlight
It beginswith the beauty Vegetation Grass, the springflowers, summerblossoms, the greentreesoasis-likein the goldenhillsThe almostperpetualbluesky.

Weaving <3, by Alianna Renee
www.poetry.com/poems/317063 - Proxy - Highlight
It begins with the beauty Vegetation Grass, the spring flowers, summer blossoms, the green trees oasis-like in the golden hills The almost perpetual blue sky.

Privacy as Product Differentiation

In past times, the amount of information that businesses held about an individual was relatively small. Today, the amount of information held about a user can be astonishingly large. Location information alone gives detailed granular information about somebody’s life and travels. In a hypercompetitive world, differentiation on the basis of privacy policies represents a range of positioning that can be used to gain competitive advantage and also to claim (and presumably deliver) different levels of ethical relationships with customers. 

Roughly speaking one might imagine companies in a market pursuing ten alternative strategies:

1. Lie about what information is collected
2. Don’t reveal what information is stored about the user
3. Reveal policies and superficial description of information stored about the user
4. Reveal partial information about what is stored
5. Reveal all raw information stored about the user
6. Reveal all raw and evaluative information stored about the user including connections to other users
7. Allow editing and export of privacy information by user
8. Pay user to use their stored information
9. Make the information stored useful to the user
10. Make the information stored useful to the user and charge for it as a service

Today, few companies have been aggressive in their use of privacy information as a differentiator. Though some are now beginning to realize that government surveillance experience may influence customer attitudes. Perhaps an early sign of competitive use of privacy as a marketing weapon is an internal 2013 video developed by Microsoft (http://youtu.be/-Cr6AgUo764 ). Now leaked outside Microsoft, the video’s theme is that Google tracks everything you do so that it can make money off you. While it may not have been intended as an external marketing weapon, it does illustrate the kind of marketing campaign that might be pursued by aggressive companies in the future.

One can easily imagine that in a highly competitive market, where differentiation is hard to achieve, or when a smaller player wishes to gain on a larger player, that trumpeting premium privacy policies might switch customers. The Dutch search engine, IxQuick.com differentiates on privacy in a market dominated by Google. In banking, one of the oldest information businesses, privacy has been a key product attribute for decades, if not centuries. And it is also reasonable to expect that those that collect information from customers will make counterarguments around collected information making the service more useful or permitting the service to be free.

Two other factors make it likely that privacy will become a more important marketing issue. First, governments have put in place, Freedom of Information (FOI) laws. In 2013, the US Federal government is being required to make the default for government files a machine readable open format to increase the transparency of government information and decisions. In the US, the Obama administration has suggested a Privacy Bill of Rights which includes

• Individual Control: Consumers have a right to exercise control over what personal data companies collect from them and how they use it.
• Transparency: Consumers have a right to easily understandable and accessible information about privacy and security practices.
• Respect for Context: Consumers have a right to expect that companies will collect, use and disclose personal data in ways that are consistent with the context in which consumers provide the data.
• Security: Consumers have a right to secure and responsible handling of personal data.
• Access and Accuracy: Consumers have a right to access and correct personal data in usable formats, in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data is inaccurate.
• Focused Collection: Consumers have a right to reasonable limits on the personal data that companies collect and retain.
• Accountability: Consumers have a right to have personal data handled by companies with appropriate measures in place to assure they adhere to the consumer-privacy bill of rights. 

Second, even if businesses in particular countries are able to prevent or modify legislated requirements for disclosure, market forces will, albeit slowly, move competitors to reveal more, and aggressive competitors to test and subsequently expand increased disclosure.

Increasing intelligence located in the “network” raises ethical issues in the same way that science fiction writer, Isaac Asimov raised them in thinking about the relationship between human and machine intelligences with his Three Laws of Robotics.

1.      “A robot may not injure a human being or, through inaction, allow a human being to come to harm.

2.      “A robot must obey the orders given to it by human beings, except where such orders would conflict with the First Law.

3.      “A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.”

In a sense, when businesses choose to store massive amounts of information, they take on a new responsibility not to damage the lives of those they serve. The responsibility is likely not merely ethical, but rather also a legal one. In the same way that we have slander and libel laws, and restrictions on disclosing medical records, unauthorized disclosure of private information will increasingly be exceptionally costly in terms of both legal suits and company reputational damage.

Even more thought provoking is the idea that a company may acquire, model or infer information that allows it make predictions about a user. Disclosure of such evaluative or predictive information, e.g. about financial condition, health, life expectancy, job prospects, political views, gender preference, proclivities around a taboo might be exceptionally damaging in some societies, a topic raised by another science fiction writer, Robert Heinlein as far back as 1939 in his short story, ”Life-Line”.

Copyright Alistair Davidson, alistair@eclicktick.com 2013, all rights reserved. Phone:  650 450 9011

Alistair Davidson is technology strategy consultant based in Silicon Valley. He is the author of four books on technology strategy, his latest being Zeitgeist Innovation: Digital Business Transformation in a World of Too Many Competitors, Amazon Kindle, June 2013 on which this article is based.

Brief Review of Extreme Trust by Don Peppers and Martha Rogers

Having just finished a book called Innovation Zeitgeist that suggests many people have the same idea at the same time, it should be no surprise to discover another pair of authors with similar ideas. In this case, the authors are the well known pair of Don Peppers and Martha Rogers who have written 10 books between them, primarily on the idea of one-to one-marketing, the concept that initially made their names famous.

The thesis of their book is that a high degree of customer trust, what they call "Extreme Trust" is a new requirement for success. The idea which is very similar to the notion of customer primacy or acting on behalf of the customer described in Innovation Zeitgeist shows very similar values for both books. Religions tend to have the rule: "Do unto others as you would, they would do unto you."  Both Extreme Trust and Innovation Zeitgeist share this core belief, whether you talk about it as a customer-centric perspective, an Outside-In perspective, or the role of a Chief Customer Officer/Chief Digital Officer.

Acting on behalf of the customer, Peppers and Rogers point out, is no longer optional in a world where bad behavior will get surfaced on social networks and via ratings. Practices that may be legal may not be adequate in a world where failing to meet customer expectations, gouging a customers or providing poor service is easily called out on Twitter, Facebook, rating sites and other social networks.

It's fascinating as an author to see how a different pair of writers, perhaps inspired by similar experiences, consulting projects, research data and observations can reach similar conclusions from different places and perspectives. I felt an immediate sense of intimacy with Extreme Trust, and admired the smoothly flowing writing and breadth of supporting research. In a subsequent phone conversation, Don and I hit it off immediately. It was a pleasure to meet an author whom I had followed since his first book.

All in all, I definitely recommend reading the book. Before or after Innovation Zeitgeist, it does not matter. The books have differences. Innovation Zeitgeist is more technology oriented, but the values, message and assessment of a digitized world have more in common than they have differently.

Blurbs: Reviewer Comments on Innovation Zeitgeist So Far

Part of the fun of publishing a book is getting feedback from readers for the back cover or page two in the Kindle edition. So here are the blurbs so far:

"Innovation Zeitgeist is essential reading for any venture capitalist or startup. It forces the reader to consider what they are doing and what they must continue to do that is different than their many domestic or international competitors, a critical issue for successful startups and for high growth companies." Norm Fogelsong, General Partner, Institutional Venture Partners

“Alistair Davidson has produced an insightful analysis of innovation in the digital era.  This book is a must read for executives seeking survival and success in today's challenging competitive arena.” Robert Allio, founding editor of Strategy & Leadership magazine, former Dean of Rensselaer School of Management. Author of “Seven Faces of Leadership”.

“A.T. Kearney's clients are all facing the issue of their business being transformed by digital technology.  Innovation Zeitgeist is a great resource for helping our Digital Business Forum clients understand how important it is to actively scope and manage the changes to their business, organizational structure, acquisition strategy, business model and required innovation approaches.” Michael Roemer, Partner and International Co-head of A.T. Kearney Digital Business Forum

“Mr. Davidson has a knack for bringing the thirty-thousand foot practice of strategy down to earth. His discussion of strategic considerations leads directly to an actionable planning structure. Strategy, then, can form a tactical plan. The benefit of the book is twofold: food for thought and a framework for action.” Bruce Rosebrugh, President, VPQ Scientific

"In Innovation Zeitgeist, Alistair zeroes in on many of the key issues we see our market research service-industry clients facing - rapidly changing customer expectations, the need for rapid service introductions, more competition, a need to rethink business models and the types of innovation pursued." Jim Hollingsworth, VP Finance and Security, Pacific Consulting Group

“Bravo! Innovation Zeitgeist offers deep yet pragmatic ideas to address today’s business challenges. Alistair Davidson’s depiction of trends dramatically altering the competitive landscape such as technology overabundance and customer attention scarcity hits the nail on the head.”  Adrian C. Ott, author, “The 24-Hour Customer”; CEO, Exponential Edge Inc.

"Alistair Davidson has written an ambitious, encompassing, and down-to-earth treatise on the current digital transformation.  It’s the best description yet of the digital transformation engulfing us and what we should do about it, written in plain language and illustrated with his own photographs and questions for the reader after every chapter. An iconic, original contribution to the literature on digital transformation that is hard to put down. There is good advice and commonsense written on every page.  Must reading."  Stanley Abraham, Professor of Strategy and Entrepreneurship (Emeritus), Cal Poly. Pomona University, author of “Strategic Planning: A Practical Guide for Competitive Success”.

Innovation Zeitgeist book now available on Amazon Kindle

Innovation Zeitgeist: Digital Business Transformation in a World of Too Many Competitors is now up and downloadable for $2.99 at Amazon as a Kindle book. I have also reformatted my first Kindle book, Silicon Valley Poems.

The genesis of this book was actually quite surprising to me. It was customer demand driven as opposed to author driven. I participate in a MeetUp group on Product Management run by Francis Kurupacheril. I put together a presentation on strategic product management (available at http://www.eclicktick.com/Davidson%20Strategic%20Product%20Management%20Presentation.pdf ) which I presented on April 9, 2013.

A friend, Jeremy Hill read the presentation and immediately suggested that I should turn it into a book and so two months later, it is published. Innovation Zeitgeist is my fifth book, four of which have been around strategy, technology and innovation. In some ways it's the most interesting because it represents a progression from my earlier books. My first book, Seizing the Future, dealt with the importance of technology in changing strategy and policy choices. My second book, Riding the Tiger, addressed the narrower question of information management strategy. It was particularly authoritative because one of the three authors, Harvey Gellman had been the first person to buy a computer in Canada, while my partner, Mary Chung and I had been doing interesting work in strategic planning tools and artificial intelligence. My third book, Turn Around! was focused on software development and business development choices for software companies.

Innovation Zeitgeist is more encompassing than Turn Around! or Riding the Tiger. It was triggered by a number of observation that I had made working with clients and startups over the past decade.

The first observation was that it was increasingly difficult to do a startup or develop a next generation product in a large business without running into the problem that many other organizations were developing similar products.

The second observation was that if you try to choose a product or service, increasingly it's a very challenging task. There are just too many to evaluate.

The third observation was that engineers and developers are often a poor model of a potential buyer. In many product categories, customers care little about the features that developers have sweated over. In many cases, the customer would prefer a service or a solution rather than buying a product.

The fourth observation, which I borrowed from Joe Pine, author of Mass Customization, is that for some product categories, experiential marketing is the most powerful way of influencing customers. REI offers courses to teach you about a sport and let you try out equipment. That's likely to be far more affecting than seeing a piece of equipment in a store.

The fifth observation was based upon research by Bob Cooper (McMaster University, author of Winning at New Products). His research has suggested over several decades of work that the most important predictor of new product success is offering a differentiated high product. Yet differentiation is the single most difficult task in a Zeitgeist world. New methods of differentiation need to be though about.

Innovation Zeitgeist: Digital Business Transformation in a World of Too Many Competitors, Amazon Kindle book released this past week.

It's not often I get to announce a book on my blog. This week I released my fifth book, Innovation Zeitgeist: Digital Business Transformation in a World of Too Many Competitors. It's my fourth business book.

The thesis of the book is actually quite simple. We are living in a age where many people are attempting similar innovations at the same time. As a result, entrepreneurs and product managers have to think more carefully about their strategies. 

A key take-off point for the book is the research of Robert Cooper (Winning at New Products), whose research suggests that the strongest predictor of innovation success is offering a differentiated high value product. The two ideas raise the central problem that the book addresses: "How do you achieve high value differentiation if lots of people are offering similar products?"

Innovation Zeitgeist attempts to answer that question and provide help to entrepreneurs and products managers who want to avoid having a me-too product.

In the book, I propose a number of ways of thinking about the problem. For example,

1. Instead of automatically thinking "product innovation", many companies need to think about migrating from product to service, from service to solution, from solution to experiential selling.

2. Instead of thinking only about selling a product, managers need to think about different ways of monetizing a product. The range includes sales and licensing, rental, subscription, advertising supported, sponsored and product placement as potential means of monetization.

3. In a digital age, many content products can have different rights and services attached to them than were attached to the physical version of the product. For example, you used to purchase music in an MP3 format with the right to download the music once. Now, many MP3 sales include cloud storage and streaming for the music purchased. Book content can be bought as a physical book, e-book, audio book or sometimes rented, or sometimes borrowable under a subscription program such as Amazon Prime. Even more interestingly, Amazon now offers some books in both Kindle and audio format with the ability to synchronize both media so that if you wish to continue listening to a book you have been reading in the car, you can switch seamlessly from visual to audio versions.

4. In an accident of timeliness, I also discuss who privacy can be used as a source of differentiation.

Innovation Zeitgest is priced at $2.99. Please read it and because it is published electronically, I plan on incorporating new content as suggestions and examples from readers are submitted to me.

The Death of the Father of the Daleks

Obituary in The Economist: http://www.economist.com/news/obituary/21572725-ray-cusick-designer-daleks-died-february-21st-aged-84-ray-cusick/email

Three amusing Dalek cartoons:

"Well, this certainly buggers our plan to conquer the Universe."
http://www.punchcartoons.com/product_info.php?products_id=1667

"My boyfriend paid for them."
http://cdn.spectator.co.uk/wp-content/uploads/2013/01/Daleks.jpg

Dalek march of progress
https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcScuVKT9PjDe7qJHSqAgLesVkZMewbOeN56OegFsEcQdPUZltvo8A

Working at Home

Yahoo's recent announcement about banning working at home has inspired many comments, many of which take a single view of the this multi-faceted problem.

I bring three sets of experience over the past twenty years to the question.

First, as a CEO of a software company, I increased the productivity of our development team by 20X over a three year period. There were, as one might expect multiple reasons for the performance improvement. We improved the quality of the development team by hiring better people. We changed tools and development methodologies which allowed up to build more robust code and eliminate about half of the work preveiously required. We moved to a solid object oriented development approach increasing configurability and reuse.

We also recognized that concentration matters. Every developer had an office and their productivity as a result increased. At their request, we let them work at home several days a week, which permitted them to avoid long commutes on those days. We believed that an interruption to a developer when they were deep in a problem might cause them to loose 40 minutes of time as they re-engaged with their problem and train of thought.

All in all, it was a successful approach in a small firm where output or lack of output was easy to see.

Second, as an associate of a large international consulting firm, I like many of my colleagues did significant amounts of work at home or at client sites. I would have to say, that for me, someone who had not grown up in the firm, it was difficult to make connections with such a mobile workforce. All in all, it was a difficult, and I would say an unproductive environment.

Third, as someone who frequently works at home for projects with clients today, I find a consistent client problem is distraction. In contrast, when I work at home developing e.g. a thought leadership piece or a report on a consulting project, I typically find myself developing material so quickly, I have to force myself to slow down and not send the material to the client until I have slept on it. Often I develop material in three hours that my clients would take three weeks or more to develop because of their distracted state.

So, my conclusion about working at home is three fold:

1. Dedicated teams with specific goals benefit significantly from the ability to isolate themselves. Cubicles don't really make isolation easy.

2. Group activities, social cohesion and innovations driven by formal and informal interactions are almost impossible to create with email, conference calls and video conferencing.

3. Using "at home" resources or people who can isolate themselves can be a powerful way of obtaining deliverables quickly.

Having done turnarounds,I have sympathy with Yahoo's new CEO, Marissa Mayer. She needs not only to make active change in the company, she also needs to use symbolic actions to signal the change.

In my limited experience with Yahoo, I found the organization unfocused and difficult to deal with. Yahoo has a track record of delivering interesting technology and then letting it flail in the wind. As a company, it appears to have been weakly managed and led in the past. It seemed to have suffered from a lack of strategic vision and focus, but also from a lack of day to day management. Introducing such elements into a company is not a small task and a tactical decision to ban working at home may well be needed to refocus the company.

Scale, China and the US

For some time, I have pointed out to clients that the rapid growth of the Chinese economy calls into question a fundamental assumption of American business advantage - scale.


Historically, one of the reasons that American businesses did well was because of the sheer size of the American market. It was typically the case that American companies could achieve economies of scale, and descend learning curves faster than companies operating out of smaller markets.


Even internationally scale of US multinationals mattered. In the 1960s, Servan-Schreiber wrote in his book, Le Defi Americain or The American Challenge in English that American companies were exploiting the integrating European market to achieve superior scale to nationally oriented European competitors. Scale matters.


The rapid growth of the Chinese market and the emergence of a large Chinese middle class raises for some industries concerns about scale. For example, the current policy of the Chinese national government is to build over 300 million units of housing in order to handle the migration from rural to urban locations. Put that in context, this figure is equivalent to the population of the US. But the plan is for building over ten years. Whether achieved or not, the consequence will be the emergence of local suppliers in hurry and potentially large internationally competitors.


The same has happened in technology. Lenovo, admittedly with a minority IBM ownership is now the third largest PC vendor in the world, primarily based upon its strong sales in China.  In January 2013, IDC reported that Huawei and  ZTE and Huawei arethird and fourth in mobile phone shipments, after Apple and Samsung. (http://www.informationweek.com/mobility/smart-phones/huawei-becomes-third-largest-smartphone/240147003).


Many companies see China as an opportunity for growth. Apple in its latest announcements broke out China as a separate business for the first time. But there are another reasons for being in China - to preempt unchallenged growth by potential Chinese competitors, to track their progress and product development, and to make sure that a Chinese competitor does not surprise the international competitor.