Cory Ondrejka Igate Insight Keynote 10.09

business 2020

cory ondrejka • [email protected] • http://ondrejka.net

90 minutes, 287 slides

90 minutes, 286 slides

(so we’ll be moving quickly)

90 minutes, 285 slides

(i hope you’ve had coffee)

30,000’ view

30,000’ view change accelerating increasing impact of digital/online time to react decreasing agile or dead

change accelerating

predictions trends stories

increasing impact of digital/online

digital consumers and customers b2b v. b2c technology, globalism, distance global v. niche

time to react decreasing

reduced barriers to entry innovation convergence and collaboration

agile or dead

changing organizations experimentation agile blueprint

the “so what?”

agility means understanding and capitalizing on change

ibm apple facebook pixar hulu zappos

first, a brief digression

us navy lockheed martin arcade games video games second life annenberg school for communication, usc emi music consulting, advising, and speaking

big, complex orgs us navy lockheed martin arcade games video games second life annenberg school for communication, usc emi music consulting, advising, and speaking

(I mention these to establish my non-hippy cred before talking about communities and collaboration)

small, agile us navy lockheed martin arcade games video games second life annenberg school for communication, usc emi music consulting, advising, and speaking

common themes

• creating products loved by customers • technology invention, development, deployment • cultural transformation • communication

all linked to creating something people will love

“product”

i’ve done this in programmer, marketing, executive, consultant, and board member roles

some questions for you

do you rely on •mobile •email •sms •social networking •twitter

do you regularly •post to a blog •update your status •play online games •spend time in virtual worlds

know anyone who still prints out email?

tell them the asteroid is coming

change accelerating

predictions trends stories

predictions

disclaimer

predictions are hard

(especially about the future)

partially because we’re poorly wired for long-term predictions

we predict linearly

starting from a few data points we can’t help but linearly extrapolate

starting from a few data points we can’t help but linearly extrapolate

starting from a few data points we can’t help but linearly extrapolate

reality is exponential

or, more correctly, innovation drives exponential changes

so what we thought was a linear trend was actually the early part of an exponential

so what we thought was a linear trend was actually the early part of an exponential

resulting in less short-term change, but greater long-term change

(perhaps causing us to ignore the trend)

so we get clobbered later

fairly predictable sequence

fairly predictable sequence “bob is telling us something”

fairly predictable sequence “nothing there, fire bob”

fairly predictable sequence “bob may have been on to something”

fairly predictable sequence “oh #$@!!”

just ask automakers

so, if predictions are hard, what do we do?

try to find trends driving the exponential change

and understand how they apply to your business

when doing this, important to ask is your company a technology company or one that needs to understand technology?

technology changes behavior and opportunity space

(usually by radically changing costs to do something)

3 trends that matter

•Moore’s Law •communication diversity •radical changes in cost structure

moore’s Law

18-month doubling is more than you might expect

10 years means 6 doublings

so 64 times cheaper, faster, longer lasting

1-2 orders of magnitude

64x is hard to imagine

64x is hard to imagine 64x mips, same size

64x is hard to imagine 64x mips, same size

64x is hard to imagine 64x smaller, same perf

64x is hard to imagine

64x more storage is > 2 terrabytes 64x battery life is 2 years of standby, 1 continuous month of talking

leads directly to channel diversity all those mobile computers are connected and always available

also leads to radical cost reductions

64x cheaper is $3

more broadly, anything with a computational or connection cost constraint, i.e. •storage •data transmission •CPU processing time

is getting much cheaper, much faster than you think practically free in many cases

allowing a host of platforms that further reduce product development costs by helping reach communities, process information, build websites, etc

driving additional trends

it is unlikely to ever be harder/more expensive than it is today...

• to move or store information • for customers to shape messages • for customers, partners, or competitors to create new channels

which takes the impact of moore’s law far beyond IT

so we see exponentials (and acceleration) everywhere

(NY Times)

5,000

4,000

Mobile

Fixed Line

3,000

2,000

1,000

0 1998

2000

2002

2004

2006

2008

changes happening so quickly, exponentials catch each other

100

Cellular

Internet

Mobile Broadband

75

50

25

0 1999

2001

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2007

100

Cellular

Internet

Mobile Broadband

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0 1999

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storytime

some examples of moore’s impact already on music media marketing

music

revenues peaked in 2000, generally declined since

pre 2000

post 2000

direct result of moore’s law driving decreased costs and increased connectivity this is a new world but change is hard to manage

CD revenues skyrocketing, new technology teams experimenting at some major record labels (EMI Massive Attack album delivered via stream) Internet bubble pulls tech talent and knowledge away (David Bowie’s “Hours” via download from EMI) Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Napster Recession begins Revenues decline

iTunes Guitar Hero EMI goes DRM free Rock Band/iPhone Games as music drivers iTunes rich digital packages

CD revenues skyrocketing, new technology teams experimenting at some major record labels (EMI Massive Attack album delivered via stream) Internet bubble pulls tech talent and knowledge away (David Bowie’s “Hours” via download from EMI) Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Napster Recession begins Revenues decline

iTunes Guitar Hero EMI goes DRM free Rock Band/iPhone Games as music drivers iTunes rich digital packages

CD revenues skyrocketing, new technology teams experimenting at some major record labels (EMI Massive Attack album delivered via stream) Internet bubble pulls tech talent and knowledge away (David Bowie’s “Hours” via download from EMI) Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Napster Recession begins Revenues decline

iTunes Guitar Hero EMI goes DRM free Rock Band/iPhone Games as music drivers iTunes rich digital packages

media

(newspapers)

image cc by:nc 2007 esther dyson

the gray lady

the gray lady

and some history

1851 101 pulitzers 1.5m circulation $4b advertising (1999)

versus craig

and some free stuff

1995 0 pulitzers sf classifieds incorporated (1999)

this should be easy

craig’s as threatening as

and seal problems are easy to solve

so we’d expect

craig

nyt

what really happened?

nyt

craig

2008 advertising down 63%

2008 #1 classified ad service 30 million ads/month

2008 advertising down 63%

and “little interest in maximizing profits”

Despite $500m from nyt.com

“customers” only becoming more engaged

second life

a moment about second life

• a user-generated, virtual world • game-like technology but not a game • 3D, persistent web • significant scale

what happens when your community has the keys to the kingdom?

user generated content

• almost unheard of in 2000, now well demonstrated • in SL’s case, drove economic and customer growth • produced enormously beneficial/long-lasting press

evergreen pr

evergreen pr

unexpected

really unexpected

interesting incentives

please do not view this as history the next moment of creative destruction is coming

gaps, especially during technological discontinuities, are very difficult to discover internally

both internal and external resources can help you find gaps

(gaps in core IP/business should ultimately be filled internally)

questions to think about who will first know if the rules change: customers, partners, or employees? who is responsible for capturing this knowledge? how will you collect it?

we’ve covered accelerating change (and hopefully scared you a bit)

increasing impact of digital/online

digital consumers and customers b2b v. b2c technology, globalism, distance global v. niche

digital consumers and employees

(you’ve probably noticed that customers are more connected)

a lot to learn from employees and customers

5,000

4,000

Mobile

Fixed Line

3,000

2,000

1,000

0 1998

2000

2002

2004

2006

2008

100

Cellular

Internet

Mobile Broadband

75

50

25

0 1999

2001

2003

2005

2007

customization and remix culture

second life

music

which demolishes the b2b/b2c distinction

in a remix world, where are the real boundaries of your business?

maybe they aren’t where you think

product

design

sales

customers

maybe they aren’t where you think?

product

design

sales

customers

edge of company?

are communities reviewing, recommending, or reselling?

product

design

sales

edge of company?

customers

are communities remixing?

product

design

edge of company?

sales

customers

where could you put the line?

product

design

sales

edge of company?

customers

if customers are acting as partners, need to recognize it and act on it

partners require different levels of trust, support, engagement, information, etc if they to succeed

benefits if you do collaborate what can you do with fully engaged customers?

negatively costed sales/support teams? crowdsourced product design? customer pr?

and all this is happening at a distance

technology, globalism, and distance

drivers are global

drivers are global (if delayed)

100

Cellular

Internet

Mobile Broadband

75

50

25

0 1999

2001

2003

2005

2007

100

Cellular (Developed)

Cellular (Developing)

75

50

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0 1999

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technologies driving communication and collaboration at a distance

twitter second life facebook flickr

(see, e.g. Iranian Elections)

but is there a dichotomy lurking?

globalism versus niche

customers are more engaged, connected, and powerful than ever before

reduced costs, increased capabilities lead to my favorite non-word “nichification”

“nichification” the act of creating multiple $0 billion markets from few multi-billion dollar markets

starts from “long tail”

this is usually a search and inventory discussion

especially in hit driven industries hits

everything else

but, the basic power-law curve applies elsewhere

long tail communities

sorted by size of community mass market

niche

or by targeting requirements untargeted

highly targeted

niche communities (due to lack of scale and need for targeting) are rarely well served

so in our moore’s law world, what’s a niche to do?

they serve themselves

fragmenting/ignoring the mass market along the way

so even while technology connects the global economy

communities within that global ecosystem can use the accelerating capabilities to customize based on what they want

this inverts how value is determined, taking it away from producers and suppliers and moving it into the communities themselves

since no one else effectively targets them, they will target themselves

(which can be a good thing)

(if you can move quickly enough)

time to react decreasing

reduced barriers to entry innovation convergence and collaboration

reduced barriers to entry

what stops people from trying?

risk

(monetary, experiential, reputation, legal, or otherwise)

moore’s law is radically reducing the capitol requirements to try (and trying online may help reduce experiential, regulatory and reputational risk as well)

not to mention all the great platforms out there

reduced risk means more participation

more experimentation

more trying

which means more innovation

(60 second innovation aside)

innovation is productized knowledge (engine of per capita growth)

relies on knowledge collisions where networks/organizations overlap

it is undirected

(that is to say, it is a random walk)

not

so, to maximize innovation lots of experiments inexpensive learning between tries

you want long tail innovation

otherwise it’s monkeys and typewriters

instead of exponentials (more on experiments in a moment)

convergence and collaboration

increased digital importance means more activities leave digital breadcrumbs

more chance the ever to know

•where are your customers? •what are they doing?

(with some details)

where •buying? •discovering? •using? •talking about? •complaining? •finding competitors?

doing •what you think they are doing •what you want them to be doing •what they think they are doing •what they want to be doing •what they are really doing

and the impacts can be rapid and far-reaching

are you using this data?

but a word of warning: both of the following statements are 100%, completely, incontrovertibly true

customers know exactly what they want customers don’t have a clue what they want

customers know exactly what they want customers don’t have a clue what they want

“know” and “want” could mean •they can tell you •they can show you •they are complaining •they are choosing a competitor •they are talking about your product on Facebook or Twitter

but it is very hard to know you want something when it’s an unknown or you’ve never had it before

question to ponder who is responsible for understanding what your customers want? are you gathering and using the data that is out there?

so, change is accelerating digital’s impact is increasing and time to react is shrinking

can you be agile enough?

agile or dead

changing organizations experimentation agile blueprint

changing organizations

more challenging than anything else I’ve talked about

because it is hard to be fearless

particularly to lead fearlessly

there is no description of cultural transformation that captures how difficult it is

historically, big change arrived every 7-10 years

this was already hard for organizations

problems with 10 years of latency • experts and stars build their reputation before the change but need to operate in the next • sometimes, experts are surfing a larger trend, and aren’t actually rockstars • or, the world is different, so expertise no longer applies

was this growth due to skill or an externalities?

does prior performance help you now?

are you bold enough to admit you aren’t the best leader can you get others to follow your example?

driving transformation •focus on business goals •admit reality •communication •find internal leaders •embrace agility

some companies have managed to repeatedly reinvent themselves (apple, ibm)

how to do this in an accelerating world?

experimentation

failure is a necessary part of an experimental culture

you have to be ready to

fail fast fail cheap fail publicly

few actions as expensive as a covered up failure

nota bene: “experimental culture” does not mean “just try stuff”

experiments need expectations, reporting, and measured outcomes to avoid burning a lot of money

and a willingness to be afraid of words like “expect”, “believe”

never been more opportunity to know but you have to be ready to be wrong

and not to punish smart tests that fail

the trick question who is allowed to experiment at your companies?

it also requires understanding the often uncomfortable difference between vanity metrics and those actually tied to the business

facebook friends youtube views twitter mentions? google search count average customer support wait time revenues

sexy, but maybe not important... facebook friends youtube views twitter mentions? google search count average customer support wait time revenues

(imho, social media alone not that interesting, social media + action very interesting)

facebook friends youtube views twitter mentions? google search count average customer support wait time revenues

the good (and bad) thing is that nearly every online/digital activity leaves some record

are you ready for terabytes a week of data?

building agile organizations

expect engaged customers, more data about them, more diversity of communication, and the need for more agility

eureka moment for me when i realized that marketing = product development

to a programmer product development is all about creating something customers will love to do that, you had better • understand your market and customers • be able to acquire/design/create products leveraging what you know • continuously improve products as a result of customer use and feedback

to a programmer marketer marketing

product development is all about creating something customers will love to do that, you had better • understand your market and customers • be able to acquire/design/create products leveraging what you know • continuously improve products as a result of customer use and feedback

sales promotion communications product creation

marketing

customers

market understanding customer needs analytics

so, bring agility to entire cycle

product creation

marketing

customers

recognizing that your customers are increasingly engaged and empowered

product creation

marketing

customers

which means you had better be able to detect the changes and respond quicker than competitors product creation

marketing

customers

first, kill all the silos

product creation

marketing

customers

if product developers need permission to see customer data or talk to marketing, you are introducing delays you can’t afford

product creation

marketing

customers

think about how to blend traditionally separate services

community management

customer support

marketing

agile development comes from the software world, but the ideas are broadly applicable

agile development means

• fail cheaply, fast, and publicly • regularly release to customers for feedback • build in testing and metrics

it’s all about staying out of the weeds, having the flexibility to try new things, and managing changing requirements

1 n

chance of building = the right piece of software

(where “n” is estimated time in weeks)

allow technology to help you

if social networks are proliferating...

when top level domains expand...

when customers are using dozens of different blogging and microblogging services...

when you need to reach customers on the social networks they already use...

when you need to analyze multi-terabyte datasets in realtime...

address business needs, not TLAs

businesses never need CRM or CMS

never

businesses need to reach customers manage and publish information effectively communicate etc

decide on these business needs first, then choose technology to solve them don’t pick the technology just ‘cause

beyond that, know where your IP needs to be be careful about building from scratch if you don’t need to

recognize that the drivers accelerating change should be helping you

adaption rate will be the key competitive advantage for the business of 2020

build for change rather than chasing it

because change is accelerating

any questions

cory ondrejka • [email protected] • http://ondrejka.net