thingamy

Increase profits by working less

What's taking up most of your working day?

Add up the time spent on the following:

• Receiving tasks from superiors
• Distributing tasks to subordinates
• Discussing these tasks to get more knowledge and clarify
• Emailing
• Phone and Skype calls
• Searching for information
• Shuffling paper or looking for paper, documents and forms
• Meetings (non-single task meetings)
• Budgeting
• Fretting over deadlines
• Planning work
• Updating plans
• Reporting
• Keeping to-do lists up to date

How many percent of your daily time would that be? 30%? 40%? 50%? 60%?

All of the above have no other purpose than "frameworking" you own (and sometimes other's) work flow. And that's a must, no flow of any kind can exist without a framework even if the framework is as iffy as a to-do list or yourself reminding you to answer some email. Like a river needs a riverbed you and your co-workers need some framework.

What if you had an alternative framework, like Thingamy (that's the essence of what it is, a framework for work flows and any other process), so all of the above Dilbertesque moments disappeared? 

Less annoying and more meaningful work might ensue, but if you're a shareholder in a typical services firm (advertising, law, consulting, health) this will happen:

Assuming plentiful work and 20% profit margin your profit would increase as follows when work shifted to value creating work from different levels of time spent on "frameworking":

Time spent on frameworking	Increase in net profits
10%	29.6 %
20%	55.2 %
30%	77.4 %
40%	97.0 %
50%	114.3 %

And that's the annual gain even before you find out that you can change and better your business model!

What's your alternative ROIs by the way?

[Bonus: This would not be the first time, in 1913 Mr. Ford did the same "frameworking" thing for a set of typically Easily Repeatable Processes for the typical ad hoc workshop work by adding a physical framework; the assembly line. In six months they went from 70 man hours per car to 7!]

[30megs.com]

Solutions creates problems

Thingamy's first business task is to create problems. 

Worse, Thingamy's business is to create problems for the daily work of most people! 

Sounds like a rather bad business purpose or what? 

Not so, it's more to it:

Solving problems is the foremost driver of new products, services and economic growth. That we're taught.

What nobody teaches you is that you need a solution before a state becomes a problem.

Do you wake up every day thinking "ouch, ouch, I'm going to die one day, must fix that problem!"?

You don't. That you eventually will die from old age has no solution hence is not a problem, just the inevitable fate of being human so enjoy it while it lasts.

Now, straight from the spiritual to the mundane - daily work:

Meetings, phone calls, budget processes, paper shuffling, firing up multiple applications, enter figures, travel - in short all that will bog down you and Dilbert every day. Is this a problem? Not really, just the inevitable nuisance of working in an organisation knowing that the only alternative is to go Bedouin and leave the cubicle farm.

Now add politics to meetings, wrong people at the wrong time on the line, lost papers, bugs to applications and cancelled flights - now we see problems! And of course such problems have solutions; focus on agenda, install CRM, KMS, support desks and conduct online meetings fixes problems.

But the meetings, phone calls etc. are still there taking up most of our days minimising our creative and work output while leaving a somewhat bitter aftertaste of much time lost. But that's as inevitable as death at a ripe old age leaving us to went the frustrations on Twitter and at the water cooler instead.

Enter Thingamy, it offers a real alternative by making much of those time-wasting issues moot.

There's the dilemma - this hugely counterproductive state is not seen as a problem so we have a solution to fate and not a problem!

Luckily there's a way out: Show the solution and the state of things becomes a highly visible problem!

So there we go building business flows disregarding how things are done today, show how it works as a natural flow without much use of meetings, phone calls, lost documents and other issues. Suddenly the inevitable becomes a visible problem that can be solved, not quite on par with an offer of eternal life but still extremely helpful to all.

Hence our initial business is to create problems.

http://30megs.com/

Stop managing

If you like the occasional blinding flash of the obvious there's a book out - Management rewired: Why feedback doesn't work and other surprising lessons from the latest brain science by Charles S. Jacobs. Basically takeaway is that the annual performance review is for the birds, and boss pressure is of dubious value. When I was involved in running companies I always found employees telling about their latest work successes and solutions like new algorithms or graphical UIs at lunch. Not bragging to a boss but discussing and getting much ahhs and ooohs from their peers. Peer strokes and peer pressure is good. Simple as that, it's pretty obvious and we know it. But alas most management experts don't for whatever reasons. Another issue is motivation. How come the military see their crew risk life and work long and hard hours? How come small startups have employees working nights and days without complaining? They have simple and clear goals, goals that are easy to understand and for some to get aligned with - purpose and belonging that at the end will entice us to give our utmost. What would be a common denominator for these obvious facts? Transparency. Let your peers see what you do and allow you to see what and why all is happening. Simple, obvious and presumably easy to implement even in a cubicle farm. Except of course, that current enterprise systems and even E 2.0 stuff are designed as tools for specific organisational and process silos. And as we all know, sitting inside a silo hampers transparency big time. So, silos away and let the sun shine on the workers again.

Go to market by Extreme Business Planning

Don't know if this is an effort to make own behaviour plausible, but so what...

When entering a market the GAMP (Generally Accepted Marketing Practices) has to be right, as in getting certain stuff right:

• Target market
• Price
• Packaging
• Channel
• Story
• And the rest of it

But one forgets, there are two ways to enter a market:

A. By GAMP

1. Spend days and weeks in the boardroom trying to outguess your potential customers as to who, how, what and when they will use your product.
2. Set the choices in stone, get the channel onboard, set the message and story, price it and colour your product.
3. Go.

Result? Binary. Uncontrolled and rigid outcome. But fast. Success or crash and burn in the fast lane.

B. By EBP (Extreme Business Planning)

1. Keep everything open with two exceptions; build your product so it can be changed and tweaked easily, ditto for your organisation and cash burn.
2. Go.
3. Let the potential customers decide who, how, what and when. Adjust accordingly.

Result? Analogue. Controlled and continuous movement. But slower. Slow and deliberate right hand lane driving.

Think I like B. better. Doable? But of course as long as you question the assumptions you do not know you're making.

Bonus question: Which method would the time-constrained VC board members push for?

The conceptual failure of business software and why nobody bothers

If you're in business you'll soon find the need for some business software...

When you forget to follow up potential clients that's when you find a need to "manage" your leads and call the CRM vendor.

When you need to know when and by whom to fill up your warehouse with bits, parts or whatever you invest in SCM and SRM. And so forth ad infinitum.

Now, imagine you're running a shipping company; your purpose is to deliver goods from Europe to the US, the economy is in shambles and you need to get better and earn more money.

There are two things you can do:

1. Make your ships faster and more economical, and/or
2. revisit your purpose, the core value delivered, and explore airfreight, logistics and more.

Now draw a parallel to your need for business software:

1. Analyse the specific needs of existing processes and tasks and invest to make those faster and more economical, or
2. revisit your purpose and explore different processes and tasks.

That would be theoretical. Airplane and truck makers exist so the shipper have the freedom to do what he wants, but the business software buyer will only be offered tools to make specific and existing processes more efficient. Not much software to enable easy change to his business are on offer. (Need proof? Read out loud the full names of CRM, SCM, HCM etc.. See? All process specific.)

This is when business get stuck and where software developers fail miserably.

Maybe the blame should be with the oft repeated advise to entrepreneurs to "find a need and offer a solution"? Do not offer him an alternative (an easy way to explore alternative processes) so he'll be stuck with simple needs to increase efficiency instead. And simple needs are easier to fix and to sell into. Bad laziness. Self fulfilling prophecy. 

The vendor wins short term and the buyer loses long term.

The age of heretics and sceptics

Busy times on the Côte d'Azur. A 20 minutes bike ride along the coast towards west and I reach the Croisette and the glamour of the Cannes film festival, if I ride towards east I pass the Hotel du Cap after ten minutes and a pack of paparazzi sitting on their scooters smoking and chatting while waiting for some celebrity to go for a morning run. Do they do that?

Even more to the east, about 90 minutes ride, you get to Monaco and the F1 circus of last week.

The glamour, the expensive cars, the champagne, the often intended jaw dropping appearance of the opposite sex - all interesting to watch, all in all quite a contrarian display these days. 

Nuff said, the more interesting issue was pointed out in NYT/IHT on Saturday - namely how the new and scrappy teams are beating the shit out of the well funded, well managed old teams. How Brawn and Toro Rosso beats the MacLarens, Williams and Ferraris.

In a way it's an image of how dramatic times changes the rules, in particular how the established and their ways that works like a dream during stable and good times then lets the heretics and sceptics win when the rules changes. And the rules are changing. Big time.

It's happening everywhere, just ask anybody at any big corporations. It's far beyond an issue of cutting costs and realigning, it's about much bigger changes. And for that we need sceptics and heretics. 

Heretic - somebody holding an opinion at odds with what is generally accepted.

Sceptic - somebody inclined to question or doubt all accepted opinions.

Attitudes, both two sides of the same issue, that are made for times like these. Perhaps they're even instrumental in pushing the rule changes?

But as attitudes goes, attitude comes from the heart. A sceptic reacts instinctively, a heretic has no fear of being rebuffed. Nothing you can add to your personality palette by reading the latest "10 rules to...". A sceptic child is called quarrelsome, a heretic child is a disrespectful one. Some survive the attempts to being conditioned and good is that.

And the results of being a sceptic and heretic are well... eh... results. You cannot be say a contrarian, that would lead nowhere. It's the sceptic that might choose to act in a contrarian fashion and become a heretic. That's contrarianism with meaning. And only meaning gives... eh... meaning.

Too much saving caused the economic crisis

Let me expand on the claim by asking "what really is saving?" 

Initially it was about stashing away some food for a rainy day. That the fresh meat could rot had to be accepted, losing some was still better than outright starving later.

On the other side, if there is an opportunity to invest in an increased output of useful products or services using less resources then a return could be negotiated. But if no increase in the rate of value creation is obtainable there is no need for funds nor would there be a yield to be had.

If I have 9 cows and a bull and the yield is 1 calf per year, year after year, there is no reason why I should borrow anything. But if, by building a shelter, I could increase that to 2 calves per year it would make sense to borrow and build. But only if interest, annual principal repayment and my living expenses added up to less than 2 calves. 

You are at all times free to stash away for a rainy day, no return on those savings of course, most probably negative earnings. Still your sole prerogative.

But if you want a return on your savings you have to find somebody, directly or indirectly, that has a way to invest in increased rate of value creation. Such savings cannot be pushed, it has to be pulled, that privilege is the borrower's.

In other words saving is either: 

1. Stashing away while accepting loss of value or 
2. investment in increased output of useful products and services.

But at some point of time we got used to getting a return, to the point where we're now hardwired to believe that we can save at any time and get a return from the savings. But as opportunities to invest in increased value creation comes in leaps and bounds, like when a new technology or method is invented, saving with a return should not always to be had.

That opened for new professions to create "saving forms" decoupled from investing in increased value creation. In other words, savings that mostly could be termed humbug. 

And the humbug could take three forms:

1. Investment in scarcity. Expensive watches, art, real estate, gold. Investing in a flat on Manhattan makes sense as long as there is increasing value creation elsewhere in the society, wealth that flows into New York eventually in the form of people moving there. But soon that could turn and the zero-sum game becomes a reality. And I'm not saying art and the other scarce products do not have a value, they have, but they do not increase the value creation and should not yield a real return. Having been conditioned to believe something does not necessarily make it true. "Gold? Dig it up, then bury it, then dig it up, and bury it again, so where's the value creation?" 
2. Power leverage. You're sitting on excess funds today while the younger generation struggles. That creates an opportunity for you to lend it to the younger generation for their consumption today, then sit back and see them work twice as hard as you had to in order to pay back with interest. They have little choice, you can push through high interest, hence the power leverage. (In fact much of the scarcity investing is a version of this, sell your inflated value big house to a young family and you get the point.)
3. Schemes and fakes. Read any paper from last nine months and take your pick among the disaster "instruments" for further study.

There is only one way out of this crisis and the saving-investment need mismatch; find the balance. That can be had by less saving or increases in value creation. Everything else is a waste of time or at best band-aiding a broken leg. 

In the latter part of the last century the US personal saving rate was much higher than today, but then it was a period of huge investment needs world-wide in infrastructure, new manufacturing methods and equipment including IT - all increasing the world's value creation. The last few years we've seen much lower saving rates, more matching the lack of opportunities to invest in value creation increases. But then, typically China and the oil producing countries saved huge amounts that increased the imbalance tremendously despite low saving rates in the US.

Good thing that the world's governments seems to be well underway to do their part in the investment bit, hope is that it's towards real increases in value creation. Bad thing is that saving is increasing as well.

At the end of the day, the way to find the balance is to remove the universal notion that we have a prerogative to save with a return while exposing the "humbug" saving for what it really is. That would be the only long term fix.

[Hat tip to my friend Pete (url free alas) who prompted the discussion.]

SAP and more on clarity

Léo Apotheker wrote an article in Forbes today where he calls for clarity - transparency, accountability and control.

Nice one and quite their new tag line worthy.

I of course, would suggest he forgot two core issues; less complexity and time to dump double-entry bookkeeping.

Until that happens clarity will only become slightly less opaque...

Sapphire 09 from afar

First time in years that I missed this despite SAP being so kind to invite me again. Too much busyness on my side I'm afraid.

Kind of interesting not to be there, sitting here slurping live videos, sniffing at tweets and reading blog posts by my friends.

Did I learn anything? Well, I definitely and sorely missed being there and seeing all my friends, but still, here are a few takeaways from afar:

SAP shows the usual tenacity in regards Business By Design, and I applaud them. Here my fellow Irregular Josh debunks a critic with aplomb giving you the gist of how they proceed and accept reality despite what I could imagine being cries of desperation from a marketing department.

SAP has no qualms about telling it as it is. In the otherwise very geeky and highly enjoyable keynote by Professor Plattner he even showed how the sales curve hit the wall last year, even telling about customers who acted up and said things along the line of "sure we have a contract but we will never pay".

By the way, Professor Plattner stressed that he was not speaking as an employee, merely an academic, then merrily using "we" about SAP in every other sentence. Quite the natural thing to do, humanised keynote behaviour we all know to appreciate. 

SAP know what they want. Despite crisis, despite competitors acquiring each others, SAP shows the long term commitment to enterprises despite any small stuff a nitpicking critic can dig up. And that long term attitude is what makes a difference. Here's Pascal Brosset, as good as always, explaining another EI friend, Vinnie, what SAP's vision of the future is. 

And last but not least, it seems we can say good bye to the "The best-run companies run SAP" on a full size image of some anonymous person at all European airports. Now it's "Clear New World". And I have to admit I like it. Oops seems the old one has been relocated to fine print next to the logo, ah well...

But they got it right with the new tag line, IT means less resource use if used right and that ends up not only on the bottom line, but used to full extent it can move any corporation closer to sustainability. I've been chirping on that theme since my very first post herein more than four years ago so how could I not like it?

Have to admit my first thought was to rip their new tag line and tweak it to "Brave New World" for my own enterprise framework, but after remembering the somewhat warped content of Mr. Huxley's book I had second thoughts :)

Breaking down corporate brick walls?

My good friend and fellow Enterprise Irregular Dennis Howlett raised an issue in regards adoption of (or lack thereof) Enterprise 2.0 software: 

"my experience suggests that while there are plenty of gr8 ideas 'enterprise' represents a daunting brick wall for many entrepreneurs. I'd like to help break that down if I can."

Two important terms should be noted; "brick wall" and "break that down".

The wall is there for a reason; to defend status quo and keep things quiet so we can leave our offices early and in general have as little upheaval as possible. 

That said, fellows like Dennis and myself are of the kind that immediately want to break down stupid walls, good for us, but there are smarter ways:

Mr. Tzu (first name Sun) would have told us to avoid the wall. That's built to defend. Walk around it. Avoid it altogether. 

Secondly Mr. Tzu would have said something along the lines of "if you want to avoid detection and move quietly around the defence you must not approach with drums and flags and masses of troops".

Did large corporate sales departments knock on CEO doors supported by big noisy campaigns trying to push e-mail to the corporate world? Quiet, bottom up, around-the-wall, don't ask for permission easier to ask for forgiveness, under the radar, back door - that worked without a word in the papers.

In practice: 

• One must solicit the aid of those who's daily life is bettered and not ask the powers for permission.
• Implementation must be incremental.
• Costs must be under-the-radar and coffee budget sized.
• Don't try to take hostages, they hate that and it'll only bog you down. 

In other words, getting new stuff that would challenge the status quo into corporations requires such to be designed following these rules:

• Deliver instant and daily value for the end user. Forget about ROI and other mumbo-jumbo meant for the higher ups. Instant value for me as a user rules. (See e-mail example).
• Start small anywhere, grow in any direction at any time whenever the users are ready for it. Up front analysis by armies of consultants and any whiff of waterfall will hit the wall.
• Puny per user costs, no binding, not even contracts to be signed is ideal. Let the growth in number of users take care of income over time. Heck I could live nicely on the coffee budget of a corporate conference or any Wall Street HQ.
• All data must be portable, it's their data, their IP, let them extract it at any time and be free to leave you at any time. 

My two cents (that I have to live by) knowing very well about the solid brick walls called "official IT policy" and such... 

Don't fight anything, make the defence irrelevant, that option is yours!

France, law makers and the Internet - scary

I'm quite fond of my adopted homeland, France. Sometimes their quirks and ways deserves some vigourous shaking of head (but what country does not?) and sometimes one may get annoyed (same for most places). But mostly they serve great lunches and in general behave very civilised, in short a good place to be.

But this time I'm scared stiff by the lack of understanding by the lawmakers, and if they keep it up I might very well be out of here sooner than later:

I'm talking about the "three strike law" regarding download of copyrighted material. No courts involved, all in the hands of an "above-the-law" agency that can shut down your access to internet based on the instructions from the music and film industry.

My concern is not about the legality or lack thereof if downloading copyrighted material, neither do I oppose a democracy to impose law and order as they please.

But...

The internet has become the backbone of almost all commerce and industry as well as private life. It's the core of many people's social life, aka communication, and no corporation can exist without being able to connect plants, offices, people, suppliers and customers.

If I break the law of the road when driving they will give me a slap or a fine. I can even be a danger to other people's life by driving all too fast and still get away with a mere € 50 fine. Loosing the right to drive requires a very serious offence and the courts will be involved.

Now, if you insult or trespass the "rules" as the music/film distributors see fit they'll take away the road, not only the right to drive, gone will be the access to road and pathways. For all use, walking, getting to school, cycling, everything, lock you up basically. And no court involved, just a rather powerful bureaucrat. Those will soon rank among the most feared and powerful in the land, parallels to the Inquisition will be easy to summon.

The days of bossnapping and suing your employer will be a thing of the (popular) past in France, instead any disgruntled employee will start downloading pirated music or movies in short time effectively putting his employer out of business without much effort nor risk.

Cool eh?

If you in any form or fashion are involved in any commercial activity in France; better be keeping an eye on that legislation now, you might have to think about moving.

[Update May 7: The EU parliament is more sensible... here are some quotes:

"The European Parliament on Wednesday rejected a long-planned revision of the Continent’s telecommunications laws because of a controversial provision to punish Internet pirates.
In Strasbourg, the Parliament’s lower house, by a vote of 404 to 56, passed an amendment to the telecommunications package making it illegal for any E.U. country to sever Internet service unless a citizen is found guilty in court, effectively blocking the broad revision."...
“The Parliament has taken a stand against the arbitrary cut-off of Internet service to E.U. citizens,” said Alexander Alvaro, a German lawmaker from Bonn. “This is something we simply cannot allow to happen in Europe, allowing punishment to be assessed before a trial takes place.”...
"“The legal precedent that would be set — that one is penalized before being tried — is a troubling statement,” said Francisco Mingorance, the European policy director in Brussels for The Business Software Alliance, which represents software makers."

Precisely.]

[Update May 11: Work at French television (largest, private) + disagree with the law proposal + send mail to your MP = lose job. Nice one!]

Context over Dogma

Context: "The circumstances that form the setting for any event, statement or idea, and in terms of which it can be fully understood and assessed."

Dogma: "An authoritative principle, belief or statement of opinion, especially one considered to be absolutely true regardless of evidence, or without evidence to support it."

In other words "fully understand why something happens versus an unchallenged belief in what causes an event", two counterpoints in how we handle reality. One or the other is behind every method and principle that runs our daily life.

There are four issues regarding context versus dogma that should interest us:

1. Organisational events are difficult to understand and model, thus business and government operations (management) got fraught with dogma. 
2. Dogmas are the simplest and most obvious barriers to further development and when accepted will continue to limit wealth creation in business, governments and society as a whole.
3. Replacing dogmas with context is potentially the most powerful and efficient form of innovation - large and instant gains from very little resource and time spend.
4. An important aspect of a dogma is it's inherent absolutism, infallibility, irrefutability, unquestioned acceptance (among adherents) and anti-scepticism. In other words it has self-defence built in.

Interestingly enough, the latter phenomena yields the best indication that an idea or principle in fact is a dogma: Challenge the current ways, and the more vicious the defence is, the higher the probability that you are facing a dogma. On the surface some of the defence might sound plausible, but often the defence is in the form of "that's how we always did it", "it works as it is" and "don't rock the boat".   

Hence the most efficient path towards enhanced wealth creation for business and government is to find and challenge the dogmas and create alternative operational ways based on context. Let context win over dogma.

On the surface it does not look easy - first to find real dogmas, then to device a context so you can introduce alternative ways.

But nothing is easy if you do not recognise the barriers (dogmas). Passing a wall is not possible unless you recognise it as a wall. But when you recognise it, it may not be that difficult after all. The scaling or circumventing process would certainly be more enjoyable in daylight than repeatedly bumping into it in the dark!

Here's my usual list of organisational dogmas, or rather the practical implementation of such. Enough to keep anybody busy for awhile and certainly enough to create a huge leap in wealth creation if replaced with context based methods:

1. The Organisational Hierarchy. It's old, it's been developed during times of no technology to speak of. It's clearly fraught with problems and it is always strongly defended.
2. Organising by tree-structures. Sadly, but expected, Carl von Linnae did beat Comte de Buffon as the two-dimensional organising methods beat out the three-dimensional and relations based method. But that was about 300 years ago when handling three dimensions using paper was a bit too much to ask.
3. That managing is a requirement. Managing as in controlling and as a theory of organisational functions, the practical and theoretical umbrella for most of the dogmas on this list.
4. That double-entry book keeping is the only way to gather economic information. With only paper-based ledgers it was certainly a stroke of genius 515 years ago. But we do have developed technology-wise since the bound wad of paper.
5. That budgets are a must. At least a dogma under siege; many large multinationals have abandoned this already and are doing better for it.
6. That meetings are unavoidable. Meetings as in exchange of ideas still make a lot of sense, but as a forum for dissection and dissemination of tasks I would question it as there are other widely used and efficient communication methods available.
7. That documents and forms are the best information format. Simple, easy to understand, easy to handle - but they are also a source of data complexity, reconciliation issues and errors. There should be no need today to keep all of layout, object data, transactions and time context in one and same format. Yet another methodology sourced from the paper-only days.

If you disagree and believe the above list is the best methods life can offer organisations, please give this (my usual) argument a chance: The Roman army and their finely tuned organisational hierarchy found that ten subordinates per supervisor was perfect. Thus their system of decurions and centurions. Now, two thousand years later, hundred years of Harvard Business School, 40,000 management books in print at any given time, we have found that the number most probably should be eight. With that kind of development progress using that kind of resources and time, there surely must be something wrong with the base (organisational hierarchy and management theory) or what? 

By the way, as a last parting thought: The vigourous defence against changes that is to be expected, and indeed is an intrinsic part of dogmas, will keep most from doing anything. Hence the first movers will be doubly rewarded with competitiveness and profits.

Go challenge dogmas and create wealth now.

P.S. Thingamy can directly and immediately replace dogma based methods with context based methods in 1, 2, 4, 6 and 7.

Graphical semantic reports

I might have mentioned it, but Thingamy (that run your business thing) is using "Semantic web" methods - in particular the concept of N-triples as a core when you build a model of your business.

Just added some obvious use for that core functionality: Graphical view of objects and their relations in addition to those boring standard listing or other types of reports. 

See what relates to what, click on another object see what happens there and so forth. Fits my messy brain, jumping from thing to next related thing gaining "knowledge" in the process :)

(Hat tip to Plato who helped out and defined "knowledge as how objects relate to other objects" - my kind of chap that.)

Very early still but working and allows us to play with the interaction between presentation and representation - i.e. how the core data model and the reports are dependent on each other (but should not be the same as in the ubiquitous use of documents and forms)!

Fancy front ends or tons of functions on the report side does not help much, they can never be better than the underlying data model!

Luckily that part of Thingamy - create your own model of your environment  - is a core part. Do a proper job there and no limits for the useful knowledge available at the back end!

Here's a two minutes video of this early version in a simple "build":

BTW, no Flash, just Javascripts and Common Lisp involved here - rough but simple. Could have been prettier (and will be) and MS IE 6 is a no-no I guess.

Journalists and the business of publishing

I do not subscribe to many paper based publications, but to avoid coffee and crumbles in my keyboard I like a newspaper for breakfast.

My breakfast entertainment is International Herald Tribune (NYT), the occasional lunch reading material is Business Week. And after years of consumer experience I cannot but conclude that they both have a problem; an internal clash between two kinds of interests and knowledge, between journalists and business people.

One group is well versed in modern trends, they might even have read the Cluetrain manifesto and understood it, they're smart and they deliver. That would be the journalist, the columnists, the cartoonists - the good folks that provide the stuff I pay for; the content. 

The other group has no clue. That would be the marketing and business people of said organisations. Sadly enough they have a say in the product crafting, rearranging the layout every now and then thinking it will spur more sales. Suspect they have little to do, or rather little else they can do. Take last year when IHT added a "Style magazine" on Fridays. Precisely the kind of reading material I always missed! At last I can see those expensive watch ads in full glamour on proper paper (BTW, who wears a watch these days?). Surely a big hit image-wise that consume-with-both-hands magazine in these neo-puritanism times. Well done.

Then we have the administration of us lowly consumers (don't you love the term Customer Relation Management?): Once a year I try to pay my IHT renewal online. Forget it, French check to the Paris office preferably delivered by homing pigeon, or cash transfer by pouch and donkey (no pony express in France).

Last December my IHT subscription expired, apparently I missed the renewal deadline - suspect the donkey got stuck in a snowstorm in the Alps (I live south of them). So I called Paris. Yep, the money was received two days prior to the end of the old subscription but it takes two weeks from bank notification internally to get the notice over to the subscription department. Pigeon from Paris to Le Havre, steamship from there to New York harbour?

At last the paper started to arrive again, and adding insult to injury they sent me a "first time subscriber" present, hand delivered: A small calendar with IHT in gold letters on fake leather, you know one of those with a week on two pages things that nobody has seen for at least fifteen years, presumed to be an extinct specie. What's the use I wonder, not easy to recycle either with it's fake leather.

But NYT/IHT is not alone,  the other day, the cash strapped and panicking marketing people at Business Week sent me an email (at least they're only lagging by a decennium) offering me a rebate if I renewed now. Almost stumbled into the finely crafted trap - sending mails during the night between Friday and Saturday hoping to catch the customer with only half a functioning brain.  

Luckily I checked with my last receipt and found that I was not even half way through my one year paid subscription! What cheeky buggers.

I would suggest that the journalists take over these otherwise fine publications and throw out the business people. And please do it now, my patience is running thin.

Risk modelling versus transparency

"All models are wrong, but some are useful." George Box 30 years ago. 

Abstractions of reality, models, are created when we need to interact with a reality that is beyond our immediate grasp - like physics, weather and economy.

To get a grasp on and predict what those puny atoms are up to we use models from nuclear physics. But we do not bother much about elaborate models for the movements of a football, a toddler grasps quickly how it rolls and changes direction. He can see it, he can interact with it, he understands and knows soon enough where to place himself to catch the trajectory.

But beware, not seeing while trusting a model that invariably will be proven wrong will clearly lead us astray. Alan Greenspan, a man who's work day often was relying on models said this a year ago in the Financial Times:

"We will never be able to anticipate all discontinuities in financial markets. Discontinuities are, of necessity, a surprise. Anticipated events are arbitraged away. But if, as I strongly suspect, periods of euphoria are very difficult to suppress as they build, they will not collapse until the speculative fever breaks on its own. Paradoxically, to the extent risk management succeeds in identifying such episodes, it can prolong and enlarge the period of euphoria. But risk management can never reach perfection. It will eventually fail and a disturbing reality will be laid bare, prompting an unexpected and sharp discontinuous response."

And for those who call for more regulation in the economy, please remember this: Control and regulation equals slapping another model (PID anyone?) onto the other model - the proverbial adding insult to injury.

We must be allowed to do the occasional stupid thing, have mishaps or the straight out failures in an economy, otherwise all would come to a screeching halt. But if the stupid actions, the mishaps and the failures were as obvious and transparent as a football in a field, then even a three year old would understand the ongoing and place himself for a good game. 

Calls for more regulation and more or better models seems to me to be classic barking up the wrong tree. Focus on how to implement real and practical transparency should be the obvious way to go.

Regulation versus transparency

With the financial meltdown comes the palpable call for more regulation.

Does that make sense? Or is that simply a basic human knee-jerk reaction? A basic human urge for control so we can feel safer? 

Really, it makes little sense. In itself it does not fix anything, it merely patches something broken, and we know it. In addition it hampers natural development towards something better.

To fix something one has to recognise the root cause, then do something about that.

Gather a group of people around a table, leave 10 € on the table saying it's yours. Would anybody pinch it in front of all? Not.

Now let the public freely wander through the same room at any time, would the money still be there next morning? Probably not.

Now tell the same public group that if they increase their holdings with 10 € within the next hour they will be paid another 10 € as a bonus. How long would the money remain on the table? Three minutes tops.

Transparency delivers instant ethical behaviour. Lack of transparency leaves all up to the individual. Lack of transparency combined with stupid bonus schemes, well, we know what happens then. 

Focus on transparency, regulating the life out of everything is counterproductive.

Looking for the root cause for lack of transparency? In my view double-entry book keeping can be seen as the biggest supplier of opacity. So I would suggest replacing that.

Double-entry fog clouding the view...

Tinkering with real world BRPs (Barely Repeatable Processes)

The other day I was asked to framework a neat and natural flow that could sort out a daily but important practice for a large organisation. Currently the practice is, as usual, only supported by a sprinkle of request and bug tracking systems, email, calls and meetings.

(Note: Thingamy is a framework and comes empty, each business practice or process must be built bespoke. Luckily nothing that takes much time, two to five hours for even complicated practices.)

OK, here's the issue: In any organisation you have machinery, equipment, computers, software, people and processes - and amazingly enough, not everything works all the time. Duh.

At least that's how we users see it. Reading the manual is for sissies, things should work like we're used to dammit.

And stuff does not have to be broken, annoying is as bad. Time consuming or plain stupid processes makes me go "arghhh!" as well.

Of course stuff has stickers with help line numbers to call where you can listen to muzak, software has bug reporting systems where everything can be dumped into the lap of frustrated developers. And as a last resort you have a supervisor who nods and promises "to do something about it".

See the problem here?

Help-lines who have to struggle with people who forgot to plug in the monitor, bug reports that could have been solved by RTFM. And supervisors who has to go to his boss, who has to go to his boss before the issue transcends the organisational silos to where it perhaps could be solved. As if that ever worked.

Now you see it?

So, taking a cue from real life practices, like hospital emergency receptions, we built a proper flow from report to solution using a system of appropriate triages - allowing for any kind of problem from "oops forgot to plug it in" to good ideas for changes to business processes to be appropriately addressed by the right person at the right time. And once started nothing can stop it while all can see what's up, so no way to avoid accountability and pressure to fix asap.

The best part was that I found yet another business practice that is amazingly similar across utterly different types of business or size of organisations.

For me that means a "template" that I can easily tweak to become bespoke. Almost like having a out-of-the-box application using our framework. Does not matter if you're in production, transport, services, software, tech, whatever, stuff breaks apart everywhere. And, come to think of it, any random group of co-workers at lunch will always bitch about something that needs fixing, so why not have a proper system in place so the fix will happen?

BTW, if you're not easily bored, here's a 8 minute demo of one version.

The new business consultants

Just spent a few days up in Scandinavia, those European outliers from where I originally hail, and was positively reminded of a few things.

Cold misty weather of course... 

Despite going against the grain of the classic growth theories of most other countries the Scandinavian countries are constantly on top of GDP per inhabitant statistics year after year despite (or because of?) being highly egalitarian and having a wide social security net built in. Highest taxes and highest level of living standards, wasn't supposed to be like that. 

Ditto for the work environment. Again more of that egalitarian, flat organisations and a distinct lack of positions-based power still proving to be highly efficient.

Combine those two and this does not come as a surprise: A new kind of business consulting is emerging up there (and I'm sure, elsewhere as well).

Not the classic write-invoices-with-both-hands, create big fancy reports to be used internal-strategically by top management (sorry McK and BCG, don't take it personally), but another kind that actually is rooted in real life need to address strategic business issues.

I see a trend where the purveyors of all kinds of business services, after finding that much of their work will have little success without addressing strategic issues, have accepted reality and added a Business Consulting group to their palette.

Seth Godin mentioned something along those lines the other day when he wrote about PR versus publicity:

"PR is the strategic crafting of your story. It's the focused examination of your interactions and tactics and products and pricing that, when combined, determine what and how people talk about you."

Exactly, pretty much a business consulting gig if you ask me.

If you're in advertising should it not be the same? Is Apple's message the one you find on the wall of bus station shelters? Is it not the products, the presentations, the packaging, the pricing, the shops, in short the whole combined shebang? 

If you're in product design, ditto. Nothing matters unless rooted in the overall strategy.

If you're in investment banking tinkering with mergers & acquisitions is that anything but business consulting? How could you ever get a deal going unless you address the overall strategy of your client?

If you're a lawyer drafting contracts or Terms Of Service is that not as strategically important to the client as packaging, pricing, colours, design and distribution channel? Ask Facebook's lawyers after their little TOS mishap the other week!

If you're in enterprise IT, how could you not be concerned with overall strategy? Heck, the stuff you deliver sets the processes and how products are delivered, how customers are handled and how margins are distributed, nothing but strategic that.

Nope, at the end of the day, in these increasingly holistic and transparent times, everything is Business Consulting, the rest only the implementation of parts.

So why don't more business suppliers and services do what some modern Scandinavian firms do; raise the flag proudly with a proper Business Consulting group as a natural part of their offering?

And in the same genre, why should not purchasers of advertising, PR, design, IT, legal services and so forth invite those to the strategy sessions while demanding real strategic insight?

They should, and they will. 

A Government Dilemma

Been head down in Keynote lately. Busy producing presentations and other non-blog content. 

Usually I have nothing but contempt for the format, at least as it's too often used - one dash PowerPoint template, one dollop overcrowding of bullet points then then use as manuscript with back to audience. My yawn reflex kicks in automatically when I see the cables being plugged in and with the first 11 points coming up I slide out from the deck for some networking and coffee.

At least that used to be my modus operandi.

But lo and behold, starting to like the blasted thing again, it allows a certain freedom in rhythm that is hard to attain otherwise. And the images of course, but that can certainly be overdone as well.

So now, please allow me to indulge in an experiment; a slide deck instead of a post. Be warned, no cute images, mashed up "old" ideas and points-of-view as well as the usual lead-out to own wares coming up in this A Government Dilemma deck:

Ownership, the secret ingredient

Inject the most secret, largely misunderstood but highly efficient ingredient into your company. Daring recipe to follow, only for the brave. 

"My football team won!"  "We did that!"  "That's my house!"

Ownership (in human terms) does not require a deed or contract, it applies to your ideas or the task you helped finish. Even tangible stuff can be "owned" without a deed; the car you lease is still "your" car even if the registration papers says otherwise.

The opposite is true as well, you might well hold the deed to the thing or property but if you have no say then legal ownership has only a marginal effect. If I have to ask for permission to change a picture on the wall, if I was decreed by somebody to mow the lawn on Saturday at 10 am, if the arrival and departure of guests was set in a calendar by somebody else - would I feel that the house was "mine"? No amount of deeds and keys would help, it would not be "mine".

"That's my work!"  "I did that!"  "I Made it!"

Accomplishment, the pride in sealing the ownership to work well done. 

So why bother with ownership and pride? 

Because we're all involved in communal undertakings - groups of all kinds including commercial undertakings. 

If the participants (see employees and partners) are strongly driven in a coherent way, preferably getting much joy from the drive, well then the chances of success would be much higher! 

Ownership is the strongest driver of them all, love and hunger aside (albeit pretty futile to try using those).

Ah, but we have bonus and stock-options to drive our fine leaders you say?

Study this light hearted decision tree for bonus and pay challenged bank executives receiving state support, as suggested by Business Week in their Feb 23 issue. 

Despite the humorous poke it's still logical or what?

Pure monetary incentives are almost useless, strong perhaps, but inevitably short term interests clashes with long term and morality and principles are easily compromised. 

Look no further than the current crisis and how the "incentives and bonuses" have wreaked havoc. 

Option schemes, share ownership for employees - all nice and dandy as a principle, but totally off the mark if the purpose is to create a feeling of ownership. Unless the shareholders get a direct say as well you could just as well disburse with cash, same diff.

Does a small shareholder in a large corporation feel the ownership? Would you feel the ownership if some little clique of managers has taken charge of the whole thing, informing you occasionally through Wall Street Journal or an annual report while jetting around on your penny?

True ownership on the other hand has meaning, balances short and long term purposes and yields true pleasure. It binds, it drives, it makes sense, in short it's basically human - but only ownership that transcends the legal meaning of the word.

I can only think of a few examples that have included some of the right meaning of ownership: One would be Berkshire Hathaway. The leader shows in all he does that he's merely the leader of the pack but that you're all in it together. His letter to shareholders, his hours of Q&A at the annual shareholder's meeting, his openness towards fellow shareholders - it's all there and I bet you if you ask a long term shareholder he might very well utter "our company" when he talks about it on his flight back from Omaha.

Still it's hard to include thousands and thousands in a two way discussion and for decisions. Especially when letters and physical meetings were the only means, still Mr Buffet managed to get it more right than others.

The Open Source movement is another story, differing from Berkshire Hathaway in only two aspects - one being they have no commercial interests directly in the product thus no need for equity shares, secondly they use the modern networking technologies in contrast to letters and annual get-togethers.

In other words the strongest possible incentive for working hard and smart while offering great pleasure and true meaning is open to be used by commercial enterprises. The technology that could make it possible is available, but it will only work if those with power dare. And therein lies the issue for the current owners and management; dare to open up, dare to be transparent, dare to include, dare to be one of us - dare to include the owner community in decisions! 

And those that one day will dare will win big. Unleash and use one of the strongest motivators there is for commercial purposes and I think you will drive past your competition. No pun intended.

Where's your Capital?

If you're in "industry" your Capital will mostly be solidly bolted down as assembly lines, production facilities, distribution channels and your "Brand". Altogether making the basis for the entirety of your value and wealth creation.

If you're in "services" the same basis for your value and wealth creation will be solidly lodged in the brains of your employees, who, by the way, could leave by lunch tomorrow. Bye, bye Capital.

Industrial Capital can be used to it's full extent and almost instantly by the newly hired.

Intellectual Capital on the other hands, requires years of training, workshops and mentoring before the newly hired can use it fully to create value and wealth.

In other words, we have a two-lane economy.

One fast lane, one extremely slow lane.

The crazy thing is that the wealth and value created in the slow lane (as expressed in world wide GDP) is twice the amount that is created in the fast lane.

Imagine what would happen if the slow lane became a fast lane!

Thus time to challenge the assumption that the two types of Capital has to be treated differently and try a new set of "ground rules":

1. "How you do things" is the core - call it what you will, "Industrial" or "Intellectual", it's all Capital.

2. Ownership and retainability must be the same for both types of Capital. 

3. Time-to-full-productivity and speed of growth of both types of Capital should be the same.

To ensure better use of Intellectual Capital all knowledge work and practices must be sufficiently, albeit not suffocatingly, structured so the paths and choices - "how you do things" - becomes tangible: 

1. The Intellectual Capital must be embedded in every task as it's delivered with all pertinent information and the required tools allowing the Capital to be instantly used to full effect with little or no training.

2. The process must have real time visibility and real choices, again reflecting the Intellectual Capital, in order to amplify the value of the human creativity and it's use of the Capital.

3. Every step, every word, every choice must be captured real time (and historically) thus building the Intellectual Capital continuously and keeping it for the future.

Some "systems" do actually try to deliver these kind of effects - BPM comes to mind, CRM, KM systems and Enterprise 2.0 tries it's best as well. Common though is that these are restricted to certain limited practices / processes, and whatever the sales pitch says, precious little holistic process structure is offered. While "Capital" is all-encompassing and can only be fully utilised by holistic solutions.

[Disclosure: This issue is one of many that we (try to) address with Thingamy.]

Software developers and vendors; a request

My friend, fellow cyclist and Enterprise Irregular Thomas (@vendorprisey) needs your help!

If you're a professional in the software industry your input would be very valuable to him as he's preparing his Ph.D thesis.

He's now at about 500 but bumping that to more than 1,000 would allow him to refine the study further by categories like experience, country etc.

So go here.

Actually you will also find the questions to be a bit of an eye opener when you do, and the larger his survey basis is the more useful it'll be for you as well. A classic win-win situation. So go there and help Thomas now ;)

Does enterprise software induce sadness?

Sitting here watching the SAP Business Suite 7 launch by webcast while watching a twitter stream full of #bs7.

Thank god for a gentleman named Ian - he's having fun. And he should as this is the coolest I've seen from SAP. Mind you "seen", not lived with, nor analysed or studied closer, leave it at "seen". 

Ian, sadly, seems to be the only one - everybody else is sombre, serious, even gloomy. Yes I know there's a crisis out there but why do you have to show the economy respect as if you were at a funeral?

Yes I know "enterprise software" is serious stuff, important stuff, pompous and certainly not to be made fun of. But so is life damned it! And life is always better if we have fun, are passionate and do not wander around fearing being hit by the next bus.

Business, enterprise is all about creating value, helping people, making people happy, safe, richer, fed, cured and all that great and positive stuff - so where the heck is the passion and the fun when one is instrumental in all of this positiveness??

Sigh...

Sir Richard, could you please take a break from consumer services and pop over to the enterprise software market and give it one of your thorough shake ups? 

What they miss out on in Davos

Good thing about working from home is that I can watch webstreams from conferences - these days it's the fun they're having up in Davos.

Obviously much is about the crisis, what happened, how to fix it and how the heck did it happen. More and better regulation being one of the main themes of course, following the human inclination to grab more control when things goes... ehh.... out of control!

But one thing is missing from the discussion - finding the root cause for it all. Is there a single thing that lies behind it all? If found all would be much easier, at least the issue of how to avoid such calamities again.

Is there a root cause? And if so, why is it not discussed?

So why is it not discussed? Because sometimes we take some things for granted, we cannot imagine the world without that something, we in fact forget or even cannot answer this simple question:

What assumptions are we making that we do not know we're making?

And the root cause could be what? Allow me to posit that it is:

Double Entry Book Keeping.

Not the accounting reports as such, I'm fine with those, it's the method of capture and representation of facts that I see as the culprit.

That's a method that we take for granted, that is never questioned, that we assume we need, an assumption we do not know we make every day.

Let me ask: Do you really think that a method created 515 years ago in Venice, based on a technology called "bound paper" as in ledgers, will stand a chance on Wall Street using fibre optics to disseminate information to all corners of the world?

I think a snowball in hell has a better chance to be of use.

At least question it. Challenge the unknown assumption.

Double Entry Book Keeping uses transaction representation to capture and store "what happened", the ubiquitous invoices, bank statements and many more types of paper based or electronic documents. When captured the representation is assigned as per accounting principles and rules to a single "account", or slot if you will. Those principles and rules are differing from place to place of course making it all so much easier (insert hollow laughter).

This how far that technology has come in 515 years.

With that in hand reports can be produced - cash flows, P&Ls, balance sheets and more. 

But...

• That is how the gentlemen at Parmalat could use Tipp-Ex on a piece of paper and suddenly show that they had in excess of € 4 Billion on some Cayman bank account. Except a few extra naughts on one piece of paper does not make much sense the day you need the cash.
• That is how a few well placed misplacements or closed eyes at Satyam could make them pretend to be much richer than they were.
• That is how reports has errors, always, and is delayed, always, making the whole thing a charade similar to driving a car by a dirty and cracked rear view mirror.
• That is how layers of rubber stamping or at best, wild guessing using statistics, by rating agencies is needed to give a whiff of reality for the nifty Wall Street repackaged packages - the quality of which we now know too well.
• That is why changes to a house owner's economic status never have a chance to trickle through the layers of CDOs and whatnots all the way to the holder of the debt in some far away municipality on the other side of the world.
• When you keep the same information in different places, in different formats, you will, and be in no doubt - you will have errors and doubt. To fight that queasiness we have the usual band aid mechanism named CPAs, reconciliation and regulation.

If we ever think we should be able to address the crisis and make this world a better place we have to throw that thinking and those methods out the window, and that asap.

Instead we need a direct and dynamic representation of the "transactions", something that is real time and where changes anywhere in the chain are precisely and immediately reflected everywhere independent on principles and rules.

Believe me, it's doable now. It's even simple.

Blame it on JP and Susan!

I've been tagged, recently by Susan when I tried to duck and pretend not being home, but then JP found me as well so I have to accept hiding does not work and get down to it...

BTW, I was tagged a year ago - assuming it takes on average half a week to get it out we should have at least 7.8 * 10^87 "tagged" blog posts by now. Somebody's cheating!

The tag requires me to:

(1) republish these rules

• Link to your original tagger(s) and list these rules in your post.
• Share seven facts about yourself in the post.
• Tag seven people at the end of your post by leaving their names and the links to their blogs.
• Let them know they’ve been tagged.

(2) share seven (preferably less well-known) facts about myself:

• I don't own a car, haven't for a long time. Sixt car rental should love me, and I love trying new models every month. Bonus is that I never have to wash'em either.
• When I was younger I was a dog in disguise, sniffing the air I could detect the exact vegetation beyond the horizon when ocean sailing, walking a forest path I could find wild strawberries hundred of meters away by scent only. Woof, woof.
• I don't smoke, tried but it didn't stick. Using Swedish snuff though.
• Since university I only had one job for somebody else, Dow Chemical in Tarragona, Spain, for all of 11 months. Found myself to be the best employer I could find although pay is spotty and hours are law-breaking.
• I started doing LBOs before the term was coined, but then the highest P/E we paid for the first ones was 1.4. Paying off all acquisition debt in three months was kind of nice too.
• You might think I'm in enterprise software, try to run organisations better and such, but underneath lurks a side-effect and evil plan: Getting rid of double-entry book-keeping once and for all, the core culprit in my mind for the crisis we find ourselves in just now. And unless replaced, the source of many a crisis' to come.
• I break rules, especially unwritten ones that all follows for unknown reasons. Usually knowing if it's worth breaking or not, drive on the right side of the road (unless I'm in the UK) I find useful.

(3) Tag seven people. Here goes:

Hah, now I'll use the last of the seven facts - the one about breaking rules - so here goes, I'm breaking the last rule here! No tagging, so thank me, you, you, you and you :)

Goodbye VCs, it's been a pleasure

New ventures, start ups, whatever you call them are unique and extremely important to us all: Every company, every commercial value-adder, the core of wealth creation, started up once. And it would be safe to assume that much of the shareholder's wealth is created in the early growth phase.

Thus start ups should have a central and unique position in the fabric of the world's economy. Still, so far their funding needs beyond friends, family and the occasional angel have only been served by the Venture Capital firms, a niche in the financial services industry.

As is rather clear these days, the financial industry sector suffers from systemic flaws so what about those VCs?

Let me take one step back and start with some recent discussions:

First one would be Tim O'Reilly's post aptly named "Work on Stuff that Matters: First Principles".

The principles are rather of the banal kind, but well argued, here are some of my takeaways:

1. Work on something that matters to you more than money.

Whatever you do, think about what you really value. 
Don't be afraid to think big. 
Don't be afraid to fail.

2. Create more value than you capture.

Focusing on big goals rather than on making money, and on creating more value than you capture are closely related principles. The first one is a test that applies to those starting something new; the second is the harder test that you must pass in order to create something enduring.

And he mentions the one's with BHAGs:

Take Microsoft. They started out with a big goal, "a computer on every desk and in every home," and for many years unquestionably created more value than they captured.

Or take Google. Again, a huge goal: "Organize all the world's information." And like Microsoft in its early years, they are enabling others while making a pile of money for themselves. 

3. Take the long view.

...a time like this, when the bubble is bursting, is a great time to see how important it is to think about the big picture, and what matters not just to us, but to building a sustainable economy in a sustainable world. 

The audacious goals of Microsoft and Google leads nicely to a recent Business Week article - "Whatever Happened to Silicon Valley Innovation?"

A couple of highlights:

Venture capitalists' taste for risk has changed for a number of reasons, including the difficulty of taking tech companies public or selling them for lucrative paydays. The result is that venture firms are putting much less money into tech startups than in the past, and the money they do invest goes into less expensive, less risky deals, including social networking startups such as Facebook, Twitter, Yelp, and Digg. These so-called Web 2.0 companies are creating exciting new forms of socialization, information sharing, and entertainment. But some of the Valley's old guard are skeptical they'll grow big and important enough to deliver sizable productivity gains for business and the nation or to produce an upswell in new core technologies. Today's startups "give us refinements, not breakthroughs," says Andy Grove, former chief executive of Intel (INTC).

"These Web 2.0 companies are surfing on the old wave. They're not creating the next one," says analyst Navi Radjou of Forrester Research (FORR).

And my favourite - Andy Grove and the "payday" mentioned above: 

What really infuriates him is the concept of the "exit strategy." "Intel never had an exit strategy," Grove says. "These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can't build an empire out of this kind of concoction. You don't even try."

Did Microsoft, Google, Intel, Dell and Amazon spend time on "exit strategies"? Doubt it.

My beef with the question is that it's so revealing, it basically precludes the value focus mentioned by O'Reilly - and in essence it proves that the investor is in the business of betting on a market. "How can we dress up the bride for a market that might happen when we need to make our payday?". Betting on markets is not business building, it's not innovation, it's financial crap shooting.

Worse of course is if the entrepreneur is of the same mind, "build to flip" is a bit sad really.

But why this? In my humble view it's due to two issues:

1. VCs are part of the financial industry, serving the needs of investors.
2. Their funding is time stamped, return of principal and gain is on a set date. 

This creates an unfortunate focus on end date and market mechanisms for when the investment has to be unloaded.

Here's a simplified scenario for illustration purposes:

1. Let's say I raise a 10 year fund for my VC, then go about it to vet and analyse investment proposals.
2. I decide to invest in your new venture in year three. Now we have seven years left.
3. To give myself a bit of leeway I should dump you in six years, which means that you should be well into profitability by end of year five from now.
4. That again means that you should pass break-even in year three or so starting today.
5. To get there we all have to plan accordingly meaning hiring marketing and sales people asap and ramp up that infrastructure to match the planned future volume.
6. The problem of course for any new venture with a great product or service is that the market is fickle in the sense that it's almost impossible to outguess it in any way, it's more normal to have your product used by somebody else and for different purposes than planned than not. Not to mention betting the farm on a theoretical growth curve.
7. Knowing that this upfront blind target shooting will kill off most, I'll use my background in statistics and invest in 10 companies to allow two to become potential huge successes within my given time-frame while the others are written off. Your chance of failure is thus 80%, sorry.

I'm not against delivering the best possible value to the venture investors, quite on the contrary, but there should not be any doubt that the best shareholder values delivered over time have consistently been delivered by those who can create a great value for their customers while keeping a good margin.

And the customer is the start-up, the VC is the vehicle and the investor is the passenger. The passengers are always much better off if the driver keeps his eyes peeled on the road.

With this in mind I decided to poke some VC friends to see where they're at these days. My little enquête, although statistically insignificant, seemed to give one clear answer: VCs are moving to the other areas of Private Equity.

The bigger European VCs seems to be moving away from early stage investing, i.e. Venture, into Growth Capital. Mid autumn I counted five who still invested in early stage among the large European VCs, in December I counted four, last week I was down to three.

I sympathise, given their focus - the markets are hard to make any kind of bet on these days - so now they are soliciting established enterprises who suddenly are much more willing to shore up their capital base at much more reasonable valuations.

This in so many ways reminds me of what was called Private Equity in the nineties, the days they had a meaning; consolidate the small and grow the laggards. Now PEs have left that idea behind to become pure asset players shuffling ownership even between themselves (disclosure - did much M&A work with PEs in the nineties).

Thus, dear VCs, it's been a pleasure having you around, sorry to see you all leave but that's all fine by me, it's time for something new, something that'll work better.

Disclosure: This equals a huge opportunity, the biggest I've seen in a long time, and I'm not letting it go without a serious stab. Watch this space in the near future...

Intuitive interfaces are bad for you

OK, perhaps not short term, but long term they could be bad, very bad.

I'm the first one to be annoyed if I cannot find the navigation or the interesting links within milliseconds. Being confused by what to do next is not my favourite either.

Interesting though, the way I use 'intuitive' is equal to 'seen it before' or 'the way I'm used to'. Fair enough, makes life easier etc etc.

But...

If we keep on doing what we did yesterday, in the same manner, then we will never move forward and the world will slowly grind to a halt.

In truth, 'evolution' requires the 'counter-intuitive'.

I'm currently hitting this issue with Thingamy, and it's not about colour schemes or navigation-bar-placement:

We are used to be the work-flow structure ourselves; we have to remember what to do, spend time on finding task-relevant information and fire up many different applications or websites. That ruins any notion of flow, limits our creativity and is bad for business. Nevertheless that is what we're used to and have accepted as a given - thus any application or system that work in this workshop'ish mode is deemed intuitive.

Thingamy is the work-flow structure by itself - you (or somebody else) starts a 'flow' when the customer calls, a patient arrives or whatever that initiates your value-adding activities. After that everything is automatic, tasks are delivered immediately when the previous task is done, it's delivered to the right person and all information and tools are delivered in the same instance still allowing for participant-induced changes to the flow-path. 

This is confusing for most (which surprises me no end), and rightly criticised as counter-intuitive. "Where is the button I can click to start my next task, where is the dashboard where I can find all my applications?" - is what I hear. That the task-link is ready to go and waiting patiently smack in the middle of the 'Home' webpage seems to be overshadowed by old habits. 

But I'm sure that a user who's used to a private secretary and a butler would have no problem, getting everything delivered at the right moment would be quite intuitive!

I'm no easy push-over so I'm trying all tricks and careful coaching, no old habits shall block natural progression is my credo. 

Hard work this, and if you have a suggestion as how to make the transition easier, please tell me!

Jazz, Zen and enterprise life

Read this post at Presentation Zen (a blog worth following) on Jazz and Zen, and enjoy Garr's summary that included such (obvious after all) nuggets:

In structure there is freedom and spontaneity.
Restraints and limitations can be great liberators.
Simplicity is supremely beautiful, yet difficult to obtain.
Remove the clutter, strive for absolute clarity.

I do "see" it, being a fan of Miles Davis, Keith Jarret and many others - I do "hear" the underlying structure and how it allows them to improvise.

But I also sense the importance of the same principles in my daily life, mostly from the negative impact of daily clutter on my creative time and how trying to remember what I should remember stresses me out.

When you have to remember, when you have to find the information, when you have to tell - in short when you are the structure, when you are the framework for the work flow, your creativity and productivity will suffer and you cannot be a full knowledge worker.

When you have to be the context, you cannot be free.

On the positive side I do know that when I have a grip of a situation, when I know the boundaries and limitations, that is when I become creative.

When I can leave the structure to somebody or something else I thrive. When I can go with the flow and be a part of some other context I deliver faster and better.

But to go with the flow requires a flow, and a flow requires a riverbed.

In the last decades we have seen a tremendous bettering of work related communication methods; from email to collaboration systems and everything 2.0. But easy communication only accentuates the problem, same lack of time context exists - the increasing avalanche of emails messes even more with my head, the increased number of tools, applications and websites that I must remember to fire up to get work done just increases the stress.

And we know this. Still all the focus is on "easier finding of information", "more intuitive interfaces" and "better communication" - nary a word about work flow structure.

Where is that flow-of-work structure? Where is the time context that will do away with my todo list? Where is that private secretary that could be my "context" and pop in at the right moment and tell me what my next task is while giving me that neat binder with all pertinent information?

Precisely the issue we try to address with Thingamy. Forget about "business applications" and all such nonsense - it's all about supplying a time based work flow structure for the people working in an organisation so it will liberate them from the todos, deadlines, budgets, clutter, stress and having to be the context. Thus spontaneity and creativity could be allowed to flourish. It's about recreating that private secretary so we can focus on the important stuff and be the best.

Beyond the crisis - the importance of wealth creation and enterprise software

2009 looks bleak, people are nervous, businesses have found the handbrake and sounds of changing gears without using the clutch can be heard.

But a crisis has a side effect; it spurs changes and new ideas that moves society forward. Even stronger, it cries out for changes and new ideas, just cost-cutting your way forward does not cut it.

As I said to my EI friend Dennis the other day - you have two choices:

1. Try to understand what's happening and get a grip on the future so you can prepare a defence (futile on all counts I would say), or 
2. put on your best running shoes, a headlamp and a big smile as you venture out into the dark in search for opportunities.

I'm more inclined to the latter approach.

So let's put on the headlamp and do some nocturnal orienteering:

The credit crunch is scary, the loss of share and house values is devastating for pension plans and of course the loss of jobs is heart wrenching. But they're all inevitable results of the mechanism in how society works; either by the downs in the natural up-and-down imbalanced nature of things, or by the bigger shifts in "ways".

Imbalances and natural ups-and-downs are only surface effects, the core issue is how fast and efficient "real" wealth is created in the society as a whole. An increase in "real" wealth creation will affect us long term and should balance imbalances in short term, so that's where we should focus.

We've done the big leaps from hunter-gatherer to agriculture, and agriculture to industry moves - so not much to find there, and ICT has done it's job over the last 30 years in organisations/enterprises (the hubs of wealth creation), or so it "seems".

I use the term "seems" as I'm not so sure it's potential has been exhausted.

Academic studies are a bit vague as to specific figures, but while digging around I found at least irrevocable signs that IT in the industrial enterprise did have a serious impact on wealth creation, and maybe more interesting, it was an accelerator for the impact of other capital investments and labour. This should not come as a surprise as we have seen the IT enhanced efficiency of industrial production, logistics and other near-linear processes.

A surprise was the indication that IT did not have a similar impact on the services sector, there's even talk about an initial negative impact moving towards a neutral impact over time.  

Why this? IT applied to linear and physical processes is what has been deployed, it's the kind of software that can run most of the industrial core and thus their main value creation processes. It's the software that some vendors have grown big by, SAP and Oracle being two good examples. In broad terms this enterprise software market is about 228 Bn $ per year.

On the other hand the services sector (and in parts of the industry sector), where the processes are much less linear, where people are involved, processes changes paths all the time. Such processes are called practices, exceptions, ad-hoc, knowledge worker or manual processes - and the software delivered is almost without exception non-process based. These are mostly ad-hoc application (linked or not) to aid ad-hoc writing, analysis, communication, keeping and sorting knowledge and recording of the ongoing. 

More or less the only process based software that is trying to add some structure here would be BPM systems, still a fledgling and small market at 1.5 Bn $ per year. Beyond that, the processes are mostly run by "technologies" like organisational hierarchies, budgets, deadlines, email and meetings (methods that are accepted as a "given" and subsequently modelled by BPM, thus effectively limiting that IT solution long term in my view).

These types of processes are what I call, as you would expect if you've been here before, ERP (Easily Repeatable Process) and BRP (Barely Repeatable Process).

Now to something interesting: If you take world wide GDP (for the lack of better) as a reasonable measure of wealth creation for different sectors, then adjust it with some rough estimates as to where ERP and BRP type of activities happen you could deduce that ERPs stands for about 32% of world's wealth creation while BRPs stand for roughly 64%. [Note below] 

So now we have this situation while we enter 2009 looking for the "yet to be used" wealth creation acceleration methods:

ERP, IT and wealth creation:

- 32% of world wide wealth creation.

- 228 Bn $ of software delivered per year.

- Mature technologies, widespread use.

BRP, IT and wealth creation.

- 64% of world wide wealth creation.

- 1.5 Bn $ of software delivered per year.

- Early or inexistent technologies, very early adoption.

If IT could do wonders for past world wide wealth creation by handling ERP better, why should it not have at least the same impact on future wealth creation if it could handle BRP better? In fact why should it not have twice the impact? Of course it could, it just have to be done and should thus be a worthwhile activity to focus on in 2009 and beyond.

As you would/might know, supplying an overall BRP solution is my particular area of interest and activity so I am definitely biased, but quite happy to do my bit to prove if I'm right or wrong.

[Note: GDP per sector: Agriculture: 4%, Industry: 32 %, Services: 64 %.

Estimated percentage of a sector's people processes being BRP: Using GM in 2007 as a measuring stick with 7.5% in Admin costs -> let's assume that 2/3rd of that is non-linear or BRP -> 5% BRP and 2.5% ERP on top of 92.5% core ERP or BRP.

Thus W-W ERP GDP share would be: 32% x 0.95 + 64% x 0.025 ≈ 32 %

And W-W BRP GDP could be: 32% x 0.05 + 64% x 0.975 ≈ 64 %]

Anatomy of a financial crisis - where are we going?

"How could this happen?" - the big question in two parts: 

- What was wrong prior to the crisis.

- What triggered the crisis.

Why bother with "what triggered it"; is it not fair that you react and sell all your too expensive shares when you find out? When you're oblivious then see the obvious shall you not act quickly? And anyway, any reasonable construct should withstand a sneeze.

As a good friend of mine puts it - "why all this use of "Panic"? It's nothing but good sense kicking in!"

What was wrong is slightly more interesting. Of course something was skewed, off-balance, out-of-whack: In 87 share prices had gone up faster than ever and to scary P/E ratios, in 1998 many Asian states were into bubbly growth with precious little currency reserves to withstand even the smallest pin prick, the dot-coms and their eyeballs became eventually too ridiculous for common sense, as did 100% mortgages without a credit check this last time.

But then, nothing new in that, off-balance is the normal, it is the nature of things and the reason for having markets. Actually off-balance drives us forward so do not change that.

In reality there is the only one important question that should be posed:

- Who were confused by the sudden reality shift and how did they get out of confused mode again?

Confusion often leads to participants acting alone and against each other. Confusion leads to short term action steered by self-interest without taking the usual long term or global views into account.

In 1987 it was the investors and share "market" that got confused and yelled "sell, sell, sell" even if it pushed all prices even further down. Financial institutions and governments kept a reasonably cool head and the whole thing stabilised itself in short time when the confusing lags in the systems were overcome and new and reasonable price levels were established.   

In 1998 it was the financial institutions that became bewildered and confused. The process took far longer than in 1987 as financial institutions played, undermined and gamed against each others for a long while (as they're supposed to do). The turning point seemed to be when the US authorities (cool heads) pressured the largest Wall Street players to sit down, physically in one room, and bail out Long-Term Capital Management in a concerted effort.

In 2008 the confusion took one more step up the ladder, this time the governments became bewildered by the need for an immediate de-leveraging of a huge imbalance, and confusion ensued as politics entered the game. Financial institutions had to be saved and money supply increased (only universal consistent acts so far). But then the local industries became an issue, crisis-wise irrelevant but politically even more important. And that's when I see the parallel to the earlier crisis' when the players acted with short term self interest that inevitably worked against the interest of others and ultimately themselves in the long term - something that prolonged the crisis every time.

I wish I could read about something else than bailout of local industries (inevitably counter to the interest of other countries) or dramatic one-sided lowering of VAT (again, same potential negative effect on other countries).

 

When I hear no more "local or national interests", only about concerted global actions without a trace of short term self interest I'll declare the crisis as over.

Long Tail and Long Snout strategies

The Long Tail is a great image for a strategy to get the most out of large and mature markets like music and books.

But what about new and virgin markets? When a product is new and unknown and uptake depends on understanding, which is inherently slow? When the product "creates" the "new" market so to speak?

Like the car that did not "take off" until (with the T-Ford) 30 years after the first patented automobile. Like Lotus Notes that took about 7 years in the market and version 4 before they started to talk about "explosive growth". 

What could be the image for this strategy be (if indeed any strategy existed)?

That's what I'd call "The Long Snout".

[Hat tip to Thomas who got me thinking this morning]

[Update: Not to be confused with the classic "Hockey Stick" that all start-ups show VCs - the snout has a "rather" longer time scale required to "create" a new market, not merely getting sales and distribution up to speed. Serving a "snout" would send the start-up packing.]

Economic growth - what's next?

What's the most repeated word we hear these days? 

GDP.

If it goes down a recession is declared and all hunker down, stock markets tumble and worse happens.

GDP is defined as the total market value of all final goods and services produced within the country in a given period of time. It includes government as well of course. By the way, GDP is in principle same as GNP, differs only in how the import - export equation is worked out.

So how to stop a recession from happening? Simple, very simple, here's the answer:

1. You write a paper (you choose the theme, it does not matter what) and call it a Report. Slap an invoice (any sum, big is fine) onto it and send it to me.
2. Upon receipt of your "Report" I'll add some notes and scribbles on the bottom. Then I'll send it back to you with another invoice for "services rendered". Your invoice is balanced by my invoice by the way.
3. Now you slap more notes to the thing, add another invoice and send it to me again.
4. Rinse and repeat as fast as we can.
5. At the end of the quarter we'll add up all the invoices and send them to whoever do the GDP calculations.

Voilà, GDP miraculously increased and we've done our duty. 

Obviously this is not what an economist would suggest, too easy to criticise. No, some have a much better idea: Consume more!

1. You hire me to produce some consumer goods and pay me for that.
2. I use the pay to buy the product I just produced so you have funds to pay me next month.
3. Rinse and repeat.

Voilà, we all do our duty.

To help kick start such cycles Mr Darling of the UK has lowered the VAT and his colleagues in the US are using all the tools in their tool box to get the US consumers going. And all rejoice when the not-too-bad numbers from Black Friday came in.

  

Not the smartest of moves this, pure self delusion to be honest, but what to do?

Wealth creation is the crux, real increase in wealth creation is even better.

Go back in time and see what really made a difference in wealth creation: Every time we did a leap in productivity. Every time the equation of value created per resource unit spent increased.

It happened when agriculture and domestication of animals started, it happened when industrialisation happened, it happened when IT made it's impact on production and logistics.

And now, in one dramatic moment everybody stopped up, is looking around declaring loudly "we have to rethink our strategy", "we have to revisit our plans", "we have to do things differently". And the best part, corporate purchase-on-autopilot just because we always did is history.

Excellent. Bravo. That's what it's all about, do things differently.

Better agriculture, slicker production or tweaking IT to refine logistics or sales processes will not deliver the needed leap any more. They've done what they can. Thank you, but now is the time to look elsewhere.

We've done what we can with how we plough and harvest, with how we move stuff around efficiently, in how we produce with less resources, in how we move people into shops to keep the money flowing ever faster. All good, but we left one small item behind: How people work, how they spend their time, how to increase knowledge and it's use (aka innovation), how to create much more in less time while making the resources (people) even more enthusiastic and happy so they'll become even better.

Funny really, as that is where most of the resources go - not only when you're at the office, after all you have to live and consume when not working as well. We cannot shut you off after work hours and save resources. So getting more out of people while they work is a double whammy - and I'm not talking longer office hours, I'm thinking of innovation, less waste of time, smarter decisions, smarter processes, less fluff and much more.

There are billions of people delivering services - directly as a value to the consumer, to other firms or to their own firm. And they all work using paper based methodologies in millenniums old frameworks. And with "paper based methodologies" I include current crop of IT as they're still documents and forms based, include business rules and hierarchies, and reports by transactions as has been the method for hundred of years.

Business Models (as in how to use resources to deliver a value), workflows and methods are in for a change.

The best part is that not only is it the objective right way to move, it's now subjectively seen as the right way as other alternatives do not have the promise required in such scary times, and most important, the lull allows for the time and space to give it a go. When all was at 100% of capacity and nary a cloud was in sight nobody wanted to do anything different, neither did they have time for it.

With the cold shower and dark clouds all over all of that evaporated and a new tune can be heard.

I'm elated as suddenly the obvious becomes visible. And now, roll up your sleeves and get going.

Luckily my little project is built for precisely that, so I'm reasonably happy. 

Business framework explained - the true version

Business is about process, typically starting with a customer calling, then proceeding through a sequence of tasks and activities ending with the delivery of some value.

No process exists unless there is a framework. And for that reason business have a framework, an old and proven one. Here's a condensed list of it's most important parts and how they work, in no particular order:

Meetings:

So we can get together, listen and pounce on presentations or remarks made by those we do not like. Actually meant to be a place where work is distributed and then later dissected.

Budgets:

AKA the elevator. This nickname is due to the fact that the boss wants higher sales and lower costs while you want higher costs and lower sales to make your life easier. Thus the budget process involves sending up, sending down, sending up, until you agree on something in the middle that nobody will be happy with. The result usually have a "© Walt Disney Inc" in invisible ink in the bottom right hand corner.

Deadlines:

This is important so you can keep your eyes focused at the end of a process and avoid having to focus on the beginning of a process as this might lead to immediate action that will ruin your already busy schedule (emailing, meetings, creating charts and bullets). Beside the excellent time-wasting method of meetings this is one of the best ways to limit profits, it's built in.

Business rules:

This allows the top managers to avoid unauthorised thinking among subordinates knowing that all purchase requests over ten grand will pass through their inbox, or that no credit check applies to returning customers. The credo being; less thinking is good for the company.

Organisational charts:

Maps out who can direct who, who's to talk to who and other dream-like concepts regarding human behaviour.

Here's a good example from Fortune magazine in June 2006, left side is the official dream-world chart, right side maps the actual interactions over time: 

Now, add a sprinkling of important support tools and you'll have the business-in-a-nutshell:

Email:

If we're not in meetings we receive and distribute work per email. Sometimes we cc to bosses so they can see how busy we are, or to remind the recipient that the "boss is looking". The Inbox is where about 1730 unread emails are kept safe as we usually read mails under the table on a BlackBerry while in meetings or at dinners.

Spreadsheets:

This is how we try to make sense of data. All programs and large systems that produces data have a spigot on the side into which you can connect your spreadsheet program and suck out meaningless data. Then you can apply some meaning to the data, your own meaning of course, before you go to a meeting to show the resulting fancy pie charts. Then somebody will hook up their spreadsheets to the projector and show more and very different charts, made from the same data but with their instead of your meaning applied. Jolly good fun.

Powerpoint:

This is when you'd like to convince a group of people. Very useful as most such programs comes with templates. Just fill in the blanks with sentences you'll find in other places and charts from your spreadsheets. Then at the meeting you can keep your back to the audience and recite from the bullets, no eye-contact nor rehearsing required.

Accounting:

A method where incoming papers regarding any kind of money - going out or coming in - is read and interpreted by highly trained people in the so-called accounting department. When they have made up their minds, they slot the amount into a specific "drawer" called an "account". Every now and then an outside interpreter arrives to see if the right drawers were chosen. More frequently the managers of other departments pays them a visit and try to convince them that certain sums should be in different drawers. This because the change will make them look better and give them extra bonus. Sometimes they're able to talk the accounting staff into it, sometimes not, it's after all a matter of guesstimating inside very elaborate and vague rules written in non-human-compatible languages.

In sum, despite the light hearted tone, this is in fact the very core of the business framework. If I suggest it's a buggy framework I would be off the mark. In truth it's truly, sincerely bad.

Worse, this is the framework accepted as the basis for most business software, believe it or not. Frame-working a bad framework is the result.

If you consider implementing some enterprise software, do the acid test: Does it reflect the organisational chart? Does it have business rules? Does it pivot around meetings? Does it interact with email? Does it rely on dumping data to spreadsheets to make sense? Any yes would indicate you have a system at hand that will try to manage a bad framework in order to manage a process, that's like driving a car by driving the driver. Not smart.

Are there better ways you might ask. To which I say, yes, there is.

Simple; business software shall model reality not the existing non-IT-based model.

The story of our times - time to abolish accounting as we know it

Imagine this, you're out driving... [Reality references in brackets at the bottom of the post]

But the windshield is not there, instead you have a standardised set of reports [1] coming up on a "dashboard" in front of you [2].

The reports are supposed to give you an idea as to where you are heading and what dangers might lurk, or jump out from the kerb.

The reporters are not in the cabin, they're under the bonnet somewhere, peeking out through the grille [3] delivering information to your windscreen-replacing dashboard. And they're trained to interpret what they see, or think they see, armed with thick manuals of standardised interpretation methods. Every now and then an inspector [4] joins the ride to check if their reports last quarter more or less reflected the standardised interpretation manuals.

(Image from idashboard.com)

Obviously the lag is bad for your driving prowess, but luckily you're allowed to roll down the window so you can stick your head out every now and then and get a fleeting glimpse of what's happening [5]. Coming back to the "dashboard" again you're often able to correlate that with what you saw. The best drivers are often the ones that stick their heads out frequently.

Obviously the speed of your vehicle is seriously hampered by this and an Elk jumping out of the woods would often hit your windscreen in full force, an occurrence often termed a "Black Swan" these days despite the fact that Elks do this all the time. 

But you have masters, the owners of the truck [6], and they pay you well for speed and volume of goods delivered. This will inevitably lead to you convincing the masters that they should give you funds to buy a bigger van [7], preferably with a bigger engine and more refined dashboards to give at least an illusion of control. And the masters often comply while your driving expertise increases over time.

With speed and size Elks are flattened and other little wild animal corpses simply get stuck in the grille. But the size and speed increase makes sudden bends in the road harder to handle, although as long as the road is straight and the maps are good, it works. 

Some drivers are in the business of fuel delivery [8], and their trucks used to be small and nimble driving at low speeds where the driver would have his head out the window all the time [9]. In those days the dashboard was not electronic, it was paper-based [10] and delivered by hand, so keeping the head in the wind was a must.

But with new dashboard technology [11] the fuel trucks grew in size to huge juggernauts, the speed increased to warp speed [12] - and for awhile the masters were happy while the driver's [13] bonus made them very rich men (mostly men I'm afraid, manly business such truck-driving).

The inspectors being soon overwhelmed, cozied up to the masters and the drivers crossing their fingers and hoping the maps where good. The traffic cops [14] and some traffic analysts [15] on the other hands saw a different world out there, almost blown off the road when the juggernauts passed at warp speed. Some started complaining, but as things stood, few legislators [16] were keen to do much as the speed and volume of fuel distributed was overwhelming and all were happy and able to live in big mansions and drive big trucks themselves. And BTW, the police chiefs and legislators saw even less of the reality than the drivers or the traffic cops.

Until some mid autumn day when the first truck hit a tree [17] and went up in flames, then another were saved in the nick of time [18], and another [19] and soon all the fuel trucks went into a crawl. The other trucks, delivering normal goods soon realised that they too had to slam on the brakes to avoid the suddenly obvious dangers out there, then move slowly forward to save fuel that instantly increased in price [20].

The traffic cops blew their whistles, and some entered some of the biggest trucks and took over the steering wheels as the drivers had been reduced from cocky one-hand-on-the-wheel road cowboys to shaking bundles of nerves. Even a new and unblemished police chief [21] was called in, increasing hopes for a solution. We have yet to see if he'll be radical enough, perhaps we'll only see more traffic cops?

 

And that's where we are today. And now we're trying to find out what went wrong and what to do.

Would lower speed and smaller trucks been better? Of course. Would more traffic cops out there been helpful? To a certain degree, but only very limited unless they took over the wheels which might have reduced the interest of the masters to put up money for the bigger trucks.

Nope, the answer then as today can be found in the driver's (and everybody else's) ability to see reality as it is. The dashboard reporting system that was developed for paper based technology worked adequately at low speed, with small trucks with drivers hanging out the windows. But not anymore if we want to grow the economy.

What we need is a transparent windscreen where the driver can see reality without a filter. And we need it now.

So forget the discussion about "more traffic cops" or more "traffic rules" or even smaller trucks at lower speeds. The discussion must focus on the way the drivers are given access to reality.

The indirect representation of reality by proxy, the transactions, in today's reporting and management systems has to go, it must be replaced with a representation of reality directly.

[1] Accounting rules, GAAP, IFRS

[2] Management systems, accounting

[3] Accounting departments

[4] CPA

[5] Visit customers, people at the front lines and in the plants

[6] Shareholders

[7] Capital increase, IPO

[8] Financial institutions

[9] Your local bank that knew all the townspeople

[10] Good old bound ledgers

[11] Enterprise software

[12] Derivatives and other creative financial instruments

[13] Wall Street workers

[14] SEC et al.

[15] Analysts (duh)

[16] Washington, Brussels, Westminster etc. workers

[17] Lehman Brothers

[18] AIG

[19] Fannie Mae, Freddie Mac

[20] TED Spread

[21] Barack Obama

The crisis: Which companies might prosper - two questions

The other day I got a newsletter from my old business school, INSEAD. The first paragraph was all about how serious they were about the current crisis, their dramatic and immediate cuts in travel costs given as a prime example. Then the newsletter proceeded to pitch an assorted number of conferences, all requiring travel over vast distances for the rest of us.

Unintended I'm sure, but nevertheless a perfect example of "grab the helmet and dive into the ditch" that is apparent everywhere. Jump first, think later and hope that it pleases the investors and saves the day. Action more important than thinking.

This not without reason as investors everywhere are asking themselves (and others) "what companies show resolute behaviour in the face of the difficulties?" as well as "what industries or companies could be recession proof?". 

And it's not only investors that are asking, employees and vendors are in the same boat.

I think the questions are the wrong ones. This is not a "normal" downturn, most agree that this is a systemic failure. 

Thus the first question must be if the "system" has infiltrated a specific company.

As discussed earlier, with "system" I allude to gaming the quarterly results, having off-balance items or any other structure created to make things look better, leveraging anything but core activities - in short the creative use of double-entry book keeping.

Take your local bank that has lent money to home owners and local businesses for decades using local knowledge keeping the loans on their books and a keen eye on what their creditors are up to. Now they're doing it the "new" way where loans are bundled and sent off leaving the local bank to earn money from placing loans without any risk. So now the local bank are good at pushing loans but have forgotten it's former core knowledge. In other words the "system" has taken over.

Do big conglomerates need to have "three legs" of which one is "investment" - hard to understand for an investor, employee or client and a funding volume far outstripping what the original value-creation required?

Spreading the "credit risks" or "enhancing the return on free cash" becomes quickly entangled in the "system" that has failed, so a "yes" to the question should be a warning signal.

The second question would be if the company is willing to face changes to customer behaviour, now.

As mentioned earlier, I do not think a "need" disappear when a customer becomes shell-shocked, but I'm sure his behaviour might change.

Plans for expensive family vacations being replaced with budget camping trips could be the first step. Second step could be that the kids loved it and it becomes the favourite summer activity.

The luxury hotels that have cut their costs waiting for all to go back to "normal" might never see "normal" again while camping outfitters will be hugely surprised and perhaps not geared to grab the sudden opportunity.

That would be the second clue I would be looking for - is the particular company I'm looking at revisiting it's strategies, are they in fact spending time with their customers and even new potential customers to try and understand what opportunities lies ahead? Or have they merely grabbed their helmet and is now carefully peeking out of the ditch?

In sum I would look for companies with these traits:

1. No-nonsense reporting, zero gaming of financial parameters, simple and visible value delivery.
2. Clear signals that the strategy is being re-visited.

I will be sceptical if I see:

1. Non-core financial engineering and/or too smooth results reporting.
2. Ditch-diving and blind cost-cutting unless the strategy has been re-visited and re-engineered already. 

Obviously there are many more questions to be asked, but this would be my first filter.

Contrarian or not? A consensus that consensus is wrong.

As the world has it's pangs of panic and licks it's wounds, many have their helmet on or at least wonders what went wrong; one message comes up more and more frequent: Consensus is dangerous, be a contrarian.

Fred Wilson's recent post "Conventional Wisdom Will Be Wrong" is not alone. 

Mind you, I do agree, I'm merely a sceptic smelling yet another consensus; this time that contrarian is good, a consensus that consensus is wrong. Spot the Paradox I say.

Taleb (of Black Swan fame) is often called upon as witness, but to me it seems one fact is all too often forgotten: Taleb is not simply contrarian in principle, he's a sceptic in principle. And he had some very practical ideas as how to translate his scepticism into action. Even in his book, long time before the latest downturn his hedging was described as based on two issues: Unexpected big dips in the market will occur and a sudden market fall is faster and steeper than a market rise. And lo and behold, that worked.

My point being:

Being contrarian as a principle does nothing, that would be rather confusing.

Being contrarian based on specific understanding, now that makes sense.

Being a sceptic leads to becoming a contrarian in specific cases, no shortcut available there.

In fact Fred partly acknowledges the point by saying "Read everything you can. And then come to your own conclusions. It is better to be contrarian in times like these. But do it wisely and don't bet the farm." But he should have added - start out as a sceptic!

Understanding "everything" is a bit too much to request, where shall I start looking, what signals shall I attune my radar to? That would be the crux of the whole exercise.

Here's a suggested sceptical method, mentioned a few years ago on this blog:

"The more I hear a 'Truth' the more I'm sure it's wrong"

It's based on some very basic human traits:

Intuition, gut feeling, often "knows" a long time before our conscious brain, and sometimes we get faint warning signals from somewhere deep down. But signals are not signals unless they differ from our conscious attitudes and actions, thus you've been handed an internal and personal conflict.

Thing is, we do not like conflicts, but we know the simplest way to handle it; smother it, overwhelm it with peer consensus. Repeat your conscious convictions and solicit agreement, the more the merrier and with that the internal voice of conflict is muffled. Much backslapping and nodding happens and the annoying gut feeling slowly loosens it's grip.

As an outsider my radar goes bip, bip, bip when I hear statements of some "Truth" being repeated. I smell conflict between intuitions and current beliefs, a clear call to challenge that "Truth". And believe me, that has led to many eye-opening discoveries over time (not always right I might add, but still). Discoveries, ideas or theories that are frowned upon of course, that comes with the territory.

I'd suggest you try it, not a bad path to some contrarianism with meaning.  

The BPM path - a blind alley

Another not-so-meek enterprise software view, stubbornly inviting more head shaking. This time about the rising wave of BPM and similar products:

ERP and other classic "back office" systems could lean on (actual or virtual) physical frameworks - an assembly line, pipes and pumps in a plant, point A and point B in a logistics scenario leaving the choices to be limited to "by sea" or "by air". Stuff happening underway was appropriately termed and handled as "exceptions".

But with such process software pushing maturity while customers calls for systems to help running all the other processes, BPM and similar systems stands out as perhaps the most important "new" offering by the big vendors and small alike. Not unexpected this, as "all other processes" are the processes involving people, massively dwarfing the linear processes in value-added while under-supported by IT. 

Again, the current framework as described in my last post (organisational hierarchies, meetings, budgets etc.), is simply accepted as the architectural underpinning for the BPM effort. 

Note the M (manage or even modelling) in BPM, a tell-it-all: It sets out to manage (model) the given framework in order to run and control the processes. Budgets, business rules, organisational roles, transactions, meetings - all important parameters for the BPM.

If work was like a water flow and the given framework was the pipe it flows through, then BPM would be the system whereby pipes were shifted from side to side and valves opened and shut to direct changes to the flows. Good enough if the flow is water.

Not so good if the water molecules had a mind of their own and actually were able to make directional decisions underway. Funny thing, people can. And more; it's wanted because people are smarter than machines and that's why you hired them. Ever broken business rules or botched the main systems just so you actually can get your job done? But of course you have. Ever noticed that BPM descriptions mostly are limited to rather linear snippets of the overall flow and never the whole shebang? 

Another framework is called for: A framework that allows the participants to choose the best path while still allowing focus on the task at hand - and with no cracks for work to disappear into! The framework must also reflect and describe the overall strategy so all can see beyond their own stretch and into any bend further down the hill. A riverbed with full view to the whole river instead of a closed and managed pipeline.

That's when the full potential of groups of humans with a common purpose - aka organisations - will be unleashed. 

And in my view, for that purpose BPM is built on false premises, it will simply not do. Department of blind alleys.

PS: BPM implementation costs of 100 - 500 k $ are mentioned, while still giving 100-200% ROI - and that despite the limitations. Says something about the potential for an alternative path forward that does not end in a wall.

[The Obvious Disclosure: That's the stuff I'm tinkering with, a framework in itself running any process directly.]

The Everything 2.0 discussion - the real issue

Been itching to jump into the 2.0 discussion but have held back as I am a bit counter-every-theory... but why the heck not, risking much head shaking allow me a quick brain dump on one aspect of everything 2.0:

Work is a process, tasks in a sequence. Any type of process requires a framework, just like water will have to find the riverbed to become a river. No framework no process, even if the framework only resides in your head when doing the weekend chores. 

The framework we have for people processes/manual processes/knowledge work/Barely Repeatable Processes is first of all the organisational hierarchy to distribute and control work, plus the usual building blocks like deadlines, budgets, meetings (the most important cornerstone) and double-entry-bookkeeping (basis for the ubiquitous "data models"). 

With that framework controlling the processes, delivering work and organising feedback we have system which youngest part is only 514 year old, oldest harks back to before pen and paper. And the framework-science; management theory, has not made huge strides since the Roman Army despite Harvard Business School, McKinsey, BCG and 40,000 management handbooks in print at any time. Dilbert is not the only one unhappy with that framework.

With Everything 2.0 hope arrived, and many threw themselves onto it seeing how these methods often allows work to happen outside the hierarchical framework. It felt good for awhile, and everybody talked about the dawn of something new. 

In 2005 Hugh told us "somebody asked me to explain why corporate blogging works" talking about the membranes surrounding different parts of the organisation and suggested that "Blogs punch holes in membranes like like it was Swiss cheese". Precisely. 

But:

There is one thing missing; such methods do not deliver a new framework. And without a framework no process. And without process, no enterprise. 

Take a wiki - I often use the term "sandbox", fascinating place to be, but not much process-wise; little or no process ownership and thus no progress accountability. Excellent though as single task, single question, single write-up methodology - Wikipedia, SAP's SDN/BPX and in my early Linux days; the butt-saving newsgroups.

Actually, being even more "counter" than Dennis who in a guest post solicited this comment from Tim O'Reilly: "Dennis, this post demonstrates a shocking ignorance of what Web 2.0 is really all about. It’s the move to the internet as platform..." 

In my reality Dennis understands very well what it's about - an ignorance for what enterprise is about; a social group with a purpose that requires sequential tasks. An environment that is fully dependent on a process framework - the context and process he calls for - and the Web 2.0 does not deliver that. At best it is a set of nice and useful single-task tools and the "internet as platform" is pretty much a non-core issue and beside the point.

Ah, well, just had to pipe in...  :)

SAP TechEd Berlin - surprisingly different and an invigorated SAP

For the newshounds among us it might have been a less interesting TechEd than usual as last minute mails stated that "The event has undergone some changes in the past few days as a number of SAP executives that were planning to attend will no longer be in Berlin". Thus not many "fireside chats" with executives for us bloggers.

But over the days, having more time with all rungs of management and the usual suspects with ears to the ground, an interesting picture started to take form in my head. By all means probably not entirely right, but still...

1. There's a "spring cleaning" taking place, new world situation adaption seen as an opportunity and not entirely a bad thing.
2. The maturity level of the platform is accepted, defence of the old seems to be shifting towards a new openness to the future.

Invigorating - spring cleaning always is.

When I first saw the messages about instant and dramatic budget cuts my first thought was "typical panic button, put on the helmet and duck behind the desk hoping for better times to return". But not so much when I started to poke around, seems the "freeze" can be seen as a natural extension of changes set in motion this spring.

"This is the best thing that could happen, at last an excuse to clean out bad (and expensive) habits, move people around perhaps even loose a few" was mentioned in hushed voices, eyes roaming around for unwanted eavesdroppers. First one voice, then another and soon I sensed a hushed chorus happy with what was happening.

But it did not start or stop there, seems this has been going on since Sapphire this spring, gathering speed in the current financial crisis.

"This is not a reorganisation!" - was made abundantly clear - "re-allocation of resources" is better. That might explain the lack of dramatic messages from within and why I really did not "get it" until business cards were swapped and new interesting lines of reporting were described. New and fresh and smart faces popped up all over the place, and many of my old friends (I only have smart friends ;)) could report about changes to their immediate org structure and much new energy flowing.

Surprising - no more blind defence of status quo, rather a keen willingness to pose questions and listen.

Sucking in and analysing a combination of Léo Apotheker's keynote, browsing the sessions programs and just walking and talking my way through the halls - I would say the current focus seems to be some kind of "pluck the lowest hanging fruit": New and nifty UIs, more and more useful composition tools, flexibility added where none existed, but as a "big path" forward it hardly makes anyone wide-eyed.

Looking for some signs of new "big pictures' being painted the only brief moment of "aha!" came with Leo's last slide regarding the "future architecture" that included a full width blob named "Semantic Layer". That sent me (yet again) out on a chase to look for real radical core stuff. After much running around I found Gunther Stuhec, the same chap I found one year ago after even more journalistic footwork. He has now been elevated to a full quarter of the "future architecture" slide!

Image by Prashant Rai

Although, when drilling down, not quite a "Dramatic Future Technology": Even if W3C's standards are used,and some very cool stuff regarding the semantic part of the "semantics" is delivered, it still does not question the underlying data-model - which would have been truly dramatic of course - an area where I think the real value of the W3C methodology lies. Translation and better handling of different semantics is the name of the game, don't touch the existing base, a layer as in a "coating" or at most as in "glue".

At last SAP and I agree fully that what they call "manual processes", others call "knowledge worker" and I term as BRP is in fact a bigger (and barely explored) market than the Easily Repeatable Processes - thus much good work is put into the BPM area. In fact it was when I dipped into that area that I started to have real fun (thanks Marilyn for all the nudges!). Here I found people open for radical views, here I found a former unheard of willingness to explore and discuss. Not much need to defend status quo as this area is reasonable new to SAP, combined with some interesting changes to the organisation mentioned above in the Spring Cleaning section.

I think the credit crunch came in the nick of time, it seems to have given SAP an "excuse" to reinvigorate the important parts of their organisation and opened up for a new and unheard of willingness to drop the defence mode and start talking reality with an open mind.

SAP, despite budget cuts, were kind enough to cover my, and my fellow bloggers, travel and accommodation costs, then allowing us unfettered access to all and everybody - thank you SAP and in particular Mike (and Stacey) that works so hard while putting up with us! It certainly displays an organisational self-confidence and maturity not found in many other large organisations, especially in times like these.

Add openness to new realities and a new energy emerging, my belief in SAP is only strengthened. Gonna be interesting this.

Forget deadlines, increase profit and enjoy life.

We all take deadlines for granted. They're annoying of course, but unquestionable and untouchable.

Forget that. Deadlines are bad, foolish and in most cases basically counterproductive. And there are better ways.

Does a farmer have deadlines? Nope, he knows the sequence of things very well, and all activities are initiated by weather, the growth and whatever else nature has in store for him. Rising early; first thing is to check the weather to allow ploughing or harvesting, then he checks his crop for growth and infestations. No deadlines, milestones of Gantt charts - only a starting point immediately followed by a get-the-job-done.

(Note though: He's well prepared, just waiting for the start signal, it being a weather window or a change of hue.)

Spending a weekend on a spring clean, do you organise by project management tools? Gutters cleaned by 10:35, Saturday?

What do you think happens when somebody has a deadline in two weeks? He'll deliver on deadline, if good. Rather a chance that it will be later.

How do you think that will affect your bottom line? No chance in hell it'll be better than planned-by-deadlines-resource-use, only some chance that it'll be worse.

What does a ten days out deadline do to you personally? More often than not it might play out like this: Two days of "got plenty of time", six days of ever increasing bad conscience that you have not started yet, culminating in two days all in a fluster.

Stop the folly. Now.

OK, I hear ya; trains have to be met, product delivery have been promised, people have to meet up, so what's the alternative?

First step: Rewire your brain back to natural mode; think start not end.

Things always begins with the start, duh. Focus on the end is like focus on the ditch when you're out cycling, you'll end up in it. Then when a task ends the next one in the sequence starts, that's how stuff happens. Unless you're in an organisational setting. Or have to catch a train.

Second step: Ask questions.

Do not take a deadline imposed at face value, find out what's the real need. We're so used to deadlines that we invent them all the time. I need the curtains to be finished by Wednesday, production will start on the 11th, sometimes for real, sometimes estimates, sometimes pure fiction. Find out what real and not so real constraints are.

Third step: Have a "Conductor".

Let the process be a live one with a "conductor". Just like an orchestra where each violin or oboe will follow the given sequence and speed as conducted. Trust the conductor to have experience to know roughly what's required, let the conductor speed up things knowing well what it takes in changes to priorities, path or sequence and what should be cut. Be the "farmer".

Fourth step: Real-time run and transparency tool.

Have a real-time tool to run the process for real-time feedback and change distribution - just like a conductor would stand in front of the orchestra will full overview and ears all open while all can see him and all his signs. The good old hierarchy, budget, management system or Gantt chart will not cut it - real-time running with real-time transparency and reporting is a must.

Once again, deadlines are bad for profit. Deadlines are not needed. Awast ye scurvy "deadlines".