Weeknote 192: Easter Bunnies

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Achievements this week included:

- further advances on the Brick Lane adventure
- publishing the 4th #socialCEO report
- once again postponing the most postponed meeting of my career
- getting praise for my writing from a proper writer
- but getting a few more in the diary for next week
- a catch up with Jerry and his new gig
- and a good chinwag with @mbrit

Next week: a round of lunches.

 

What’s in a name?

I’ve heard from a few sources recently that there is a move afoot in Whitehall to replace CIOs (Chief Information Officers) in government departments with CTOs (Chief Technology Officers) and CDOs (Chief Digital Officers). I don’t know the validity of that story, but it strikes me as credible as an attempt to shift the technology agenda from internal systems facing to external customer (or taxpayer, or citizen) facing.

People in tech, though, can get a bit sniffy about such branding changes. It’s easy to see it all as superficial.

What’s sometimes missed, though, is that if you want to do things differently, you need to not only change your actions but also your uniforms. If something looks like it used to, it’s much harder for others to accept that it has changed. If you want to get away from old-school IT, part of the change is to stop calling it IT and stop running it through a CIO. Changing names is only part of the puzzle – but shouldn’t be overlooked.

I had one of my regular put the world to rights sessions with Matt Baxter-Reynolds last night, and we were talking about this topic. It dawned on me that these issues of nomenclature impact on the supplier side of the industry too. Specifically, would Windows 8 have been more successful if it had been called, say, Microsoft Tiles?

Now put aside for the moment the question of whether “Tiles” is a good brand name or not – focus though on would the act of changing the brand (maybe to be strap-lined as “with Windows inside”) have made acceptance of the new product easer than it being identified as “merely” an incremental new version of a known entity? Was much of the cognitive dissonance that was caused by the user interface previously known as Metro as a result of it saying “Windows” on the box?

Certainly Apple didn’t have die-hard Mac users complaining at the time of the iPad coming out about it not being MacOS-enough. If the iPad had been known as the MacSlate, I wonder if it would have been the success it has been?

the continuing adventures of the #socialCEO

stamp-red.pngThis morning I published the fourth edition of the stamp #socialCEO report. Ten months or so after the first piece of analysis (little more than a blog post, if truth be told), it’s been enlightening to explore the ways in which our leading companies, and their Chief Executives, are engaging (or not) with the world of social networks.

Underlying the report are few things.

Firstly, that in the business world social networks have become social media and therefore primarily the preserve of marketers. Despite endless chat about conversations, the marketing world really struggles to think of anything other than traditional “broadcasting” mass media.

Secondly, as a result, many people in business have lost sight of social networks as being a two-way communication channel, and at a personal level therefore struggle to understand how they might add value.

Thirdly that “networking” still has negative connotations for many, and as a result many people don’t know how they do it, or understand what it might mean to improve. Therefore, they bimble through it all, never really feeling in control. Social network technologies just then exacerbate the problem (like the way that email for many has become an uncontrollable deluge).

Finally, leaders in organisations role model behaviours that get adopted elsewhere. If business do things, others with ape them. If they don’t, they won’t (“I didn’t get to where I am today…”)

Four quarters in, and the FTSE100 CEO community has become distinctly less socially-networked. Partially this is as a result of Burberry’s Angela Ahrendts’ departure last month to Apple. With her she takes 64% of all of the followers that the entire FTSE100 CEO community had between them. Ironically, her social communication has pretty much stopped since the announcement of her role in Cupertino back in the Autumn of  last year. Apple is a very secretive place, it seems.

But every quarter some CEOs leave, some join, and overall the new boys (and girl – Moya Greene at the Post Office) are a pretty unconnected bunch online.

Is this typical of 50-something, mostly white, men? I don’t know. There are plenty of that demographic in my own social feeds (particularly on LinkedIn) – but that’s of course a crap sample. I have to say, on a day-to-day basis,  it’s rare now to meet with someone who isn’t on LinkedIn. There again, the most senior person I’ve met in the past few weeks (a middle aged, white CIO with European-wide responsibilities) was absent.

Maybe they’re all just working too hard and just too busy to work with this social stuff? Well, maybe. But if they aren’t engaging, I do worry about how they can make decisions in the social networking space because I’m sure they don’t appreciate what it is without engaging. And for the CEOs of ITV, Vodafone, BT, Sky, the Post Office, all of the major high-street banks, that strikes me as bad news.

Anyway, where there’s inactivity there’s opportunity. You can draw your own conclusions – the report is now available for download without registration from here.

Digital business models

For some time now I’ve been using the example of the recorded music distribution world as a metaphor for how organisations might change and adapt into the world in which we find ourselves. Initially I talked in terms of Spotify or iTunes, but this is the fuller-nuanced version.

There’s no one right way in which an organisation should organise itself to adapt to our increasingly digital world. Looking at what has happened in the music industry can provide some ideas for different pathways…

The Our Price model – do nothing

To be fair to Our Price, a shop in which I spent many hours of my youth, they weren’t around by the time that electronic distribution of music was about. They’d been taken over by Virgin, which in turn mutated into Zavvi. Zavvi died a horrible digital-related death.

Doing nothing in the face of how Internet, Social and smart devices are changing the world is not an option. Our Price (and its successors) couldn’t continue to be merely mass-market providers of all sorts of music in shops on the high street. That market disappeared.

The Record Store model – develop a niche, extend to digital

Record stores, small, independent operations selling CDs, vinyl, even cassettes, are enjoying something of a renaissance. There aren’t many of them left, and those that are whilst ostensibly doing much of what they used to, are now serving new markets. Vinyl is for the hipster collecting obsessive, willing to pay a premium for the physical object and the larger artwork. The store itself is an experience to be savoured, rather than merely a place to buy music. The store might specialise by genre. They probably have online presence to extend their service beyond their physical presence. They’re probably not “on the high street”.

This is the decluttering and repositioning of a form that is akin to how cinema shed newsreels and B-movies with the rise of television. And many record stores have closed along the way (as many cinemas did before them).

The Amazon Model – move the physical online

These days, of course, Amazon sell digital as well as physical forms of content. But it was the moving of physical distribution sales from the high street to the Internet, warehouse and postal service that saw the first great decline in record shops from the late 1990s onwards. Amazon took the selling part, made it cheaper, slightly less immediate, but maybe more convenient, and cleaned up.

The iTunes model – remodel the physical, digitally

Cleaned up, it has to be said, until iTunes really cleaned up. With the rise in broadband combined with the improved fidelity and compression offered MP3 and other formats, a pure digital model for music selling and distribution arose – typified by iTunes. You could still by an album, or just an individual track, but this time you’d receive a file over the network rather than a box through the post.

The Napster model – everything is free

The same dynamics of cheaper, faster networks combined with improved audio compression technology meant that Napster and other filesharing platforms arose with no business model. Once the cost of distribution and replication of something becomes practically zero, there will tend to be pressure for the price to become zero. Illegal filesharing (although Napster did develop into a legitimate business model later) became rife.

The Spotify model – free at the point of delivery

If you are competing with “free”, then new models need to emerge to balance off customers’ desire for low costs against IP owners desire to have a business of some sort. With low- or zero-cost distribution the free to play (if you want limited service or advertising or both), or subscription models that the likes of Spotify, Deezer and Rdio have implemented are a further step away from the record shops of old.

The innovative power of combination

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There’s been an image of an early 1980s Byte Magazine cover that’s been doing the rounds on Twitter aligned to a story by Harry McCracken on Time’s website about the trouble with futurology.

It’s all been irking me, and I’m trying to work out why.

The first reason it irks me is that lots of the tweeting sends to be missing the point. Byte’s covers were allegorical stories painted by Robert Tinney in a style so favoured at the time. They were metaphors, yet there seems to be an air of “look how silly those people on the past were thinking that wearables would have teeny tiny floppy disk drives and unusable keyboards”. It’s so easy to be smug in hindsight, as I was only yesterday.

McCracken’s article doesn’t miss the metaphorical nature of the artwork. However he argues that

… most of all, the Tinney watch is a wonderful visual explanation of why human beings–most of us, anyhow–aren’t very good at predicting the future of technology. We tend to think that new products will be a lot like the ones we know. We shoehorn existing concepts where they don’t belong. Oftentimes, we don’t dream big enough.

(One classic example: When it became clear that Apple was working on an “iPhone,” almost all the speculation involved something that was either a lot like an iPod, or a lot like other phones of the time. As far as I know, nobody expected anything remotely like the epoch-shifting device Apple released.)

Let’s deal with the second part first. The iPhone wasn’t such a big leap- it was an HP Jornada with telephone capability which used a finger instead of a stylus. I’m not saying it’s not a great product, just that it was (like most things) a repackaging and recombination of ideas that had come before. All wrapped up in a design language from the 1920s.

But, moreover, innovation is about new things that are a lot like the ones we know. Look at early cars. Look at the fact that, despite their touchscreens, smartphones still have qwerty keyboards.

Thirty years after the Byte cover we have devices coming to market that look a bit like it. Just as how 35 years after Alan Kaye came up with the Dynabook concept we had Amazon Kindle. The future generally looks a lot more like the present than futurologists would like us to believe. Most of us still aren’t wearing silver suits.

Obfuscation

Obfuscation is currently one of my favourite words. It seems to express something that seems to happen in so many circumstances, and it also is one of those few words that you are actually, to some extent, doing by using it.

It also is a word that perfectly sums up the pricing strategies of telecoms companies.

Earlier this year I got so hacked off with changes in BT’s pricing structure that I resolved to find a new supplier when our current contract came to a close. It’s now about that time, and so I’ve been investigating, and also trying to find out if my current supplier will get anywhere near to providing a better offer than that that’s currently on the table.

When you look in detail at the way in which telcos price their services, it’s very difficult to not come to the conclusion that they are implicitly colluding. That’s not the same, of course, as explicitly getting around a table and jointly agreeing how their are going to price things. But nonetheless…

We currently have a fibre broadband connection with unlimited (within fair use guidelines) data transfer per month, and telephone calls on a weekday evening and weekend inclusive tariff. That’s inclusive of geographic numbers, but not mobile numbers or premium rates. Given that both my wife and I work from home a fair bit, we’d like to get unlimited calls at any time. Other than that, we don’t want to change anything (and we don’t want TV services – Freeview and the catch up services we can access through our Samsung SmarTV are fine).

Here’s the breakdown of what’s currently on offer:

TalkTalk Sky Virgin John Lewis Plusnet EE Primus BT New customer Existing BT Cust
Line Rental £15.95 £15.40 £15.99 £13.50 £14.50 £15.40 £14.90 £15.99 £15.99
Broadband £13.50 £20.00 £15.50 £25.00 £19.99 £26.00 £16.00 £23.00 £23.00
Anytime calls £5.50 £5.00 £8.00 £5.00 £5.00 £5.00 £5.00 £7.00 £7.00
Setup £0.00 £2.18 £0.00 £0.00 £5.99 £25.00 £27.95 £30.00 £0.00
Discount £0.00 £75.00 £45.00 £0.00 £0.00 £0.00 £24.00 £102.00 £0.00
Total Year 1 £419.40 £411.98 £428.88 £522.00 £479.87 £581.80 £434.75 £479.88 £551.88
Total 18 month cost £629.10 £654.38 £665.82 £783.00 £716.81 £860.20 £650.15 £755.82 £827.82
Total contract cost £629.10 £411.98 £665.82 £522.00 £716.81 £860.20 £650.15 £755.82 £551.88
Av monthly cost £34.95 £34.33 £36.99 £43.50 £39.82 £47.79 £36.12 £41.99 £45.99
Contract length 18 months 12 months 18 months 12 months 18 months 18 months 18 months 18 Months 12 months
Notes £20/month basic call allowance Weekends only basic call allowance Don’t provide unlimited fibre plans Discounted to EE mobile customers Discount is 8/month for 6 months + £60 Sainsbury’s voucher

Observations as follows:

Most suppliers are now moving to 18 month minimum contracts. That sucks. Most suppliers also no longer give weekend and weekday evening inclusive call deals – they offer weekend calls, or anytime.  EE is the most expensive on this comparison, but that’s because you only get a reasonable deal if you also have an EE mobile phone. Finally, on paper, loyalty to a supplier is not rewarded.

Given all of this I decided to give BT a call and see what they could do. After all, the difference between what they were asking for and the cheapest best deal available by shifting supplier was around £140. That call was the very definition of banging a head against a brick wall. Not only was the best that was on offer £7 a month more than we currently pay, but there was frequent talk about how BT were more expensive because they offered greater “value”.

Greater value like having “free” BT Sport. Which I don’t watch. Or having “free” internet security software, which I don’t need because I have a Chromebook. Or “free” wifi which I don’t need because whereever I go these days to work seems to have free “free”  wifi. £140 is a lot to pay for things that are free.

Next up I thought I’d test to see if BT’s social networking channels are a bypass to “computer says no” intransigence. The answer these days, it appears, is no. After a Twitter conversation over the course of several days I eventually got a phone call from a chap who put me through to exactly the same sales centre that I spoke to before, to have the exact same meaningless conversation about value.

So a new telco, here we come.

It’s clear today that telephone companies base their pricing on consumer laziness. Retention of customers is not seen as a priority in comparison to luring new ones, because rates of churn obviously mean it’s not worth it.

As information becomes easier to obtain, and methods to switch suppliers easier and more reliable, it will be interesting to see for how long that remains the case. In the banking sector, TSB are already marketing themselves as offering the same rates to existing customers as to new. Ovo Energy is a new brand in the power supply world doing the same. Will we the same emerge at some point in telephones and broadband?

The last big bubble burst

“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”

Bill Gates

Bill’s observation about our ability to over-hype the near future and underplay the long term really holds true in bullish markets. You can see it at the moment, both in the hype surrounding next waves of computing technology (Big Data, Wearables, but still sadly not hover boards), and also in the valuations of companies currently being acquired by the “big boys” (WhatsApp being the poster child there).

But in a bear market? After a crash? Re-reading John Cassidy’s Dot.Con: Greatest Story Ever Sold it seems a different set of rules might apply. Something along the lines of “Meh. It’s all shit.”

Cassidy’s book unpicks the events leading from the foundation of the Internet, the involvement of various politicians in the establishment of the Information Superhighway (hands up if you’re old enough to remember that phrase?), through to the thing that, in retrospect, is either referred to as Web 1.0 or The Dot Com Bubble – culminating in the collapse of the market in the spring of 2000 and the subsequent challenges in the years after.

It’s fascinating as a near-historical description of events. Cassidy wrote the book in late 2001, and it was published at the beginning of 2002, just as the world was trying to make sense of the implications of the World Trade Centre and Pentagon attacks. It’s even more fascinating as a historical artefact of how moods were swinging away from the hype of the Internet in the post-burst period.

The overriding mood of the book isn’t “how crazy we were to be taken in by a stock-market bubble”, but “how crazy we were to be taken in by the Internet”. Take, for example, this scathing dismissal of Nicholas Negroponte’s Being Digital:

Negroponte appeared to be deadly serious. He predicted that within a few years The New York Times and The Boston Globe would be usurped by The Daily Me, an online newspaper that would scour the Internet for stories of interest to the individual reader. Video stores like Blockbuster “will go out of business in less than ten years,” Negroponte asserted. Michael Crichton will “make more more money selling his books direct” to readers online. And the information superhighway, while it “may be mostly hype today,” will prove to be “an understatement about tomorrow. It will exist beyond people’s wildest predictions.”

The timings might have been a little to cock, but in that seems to cover off services like Flipchart, NetFlix and Kindle. Amazingly, in the next paragraph Cassidy goes on to castigate Negroponte and the rest of the Wired magazine crowd because they

…missed the significance of the Internet. Caught up in elusive visions of telecomputers and information superhighways, they looked down on the anarchic text-based network.

Ah, the blessings of hindsight. It’s easy to sneer, just as easy as it was for Cassidy to do so at the time. And of course retrospectively looking at successful predictions is a folly – Negroponte was very wrong about a number of things in his book, in particular the importance of how new technologies would generate entirely new formats of media (I’d argue that that simply hasn’t been the case (yet)). The pain of the market collapse, however, was significantly impacting on the predictive abilities for Cassidy, who at the time was strongly of the view of the Internet as (at best) a sideline new medium.

Re-reading Dot Con has made me reflect on my own bearish tendencies. Whilst I do believe that we are living through a new tech bubble at the moment, i guess speculative bubbles are part and parcel of the lifecycle of any particular marketplace. In Dot Com times, the bubble speculation seemed to be across all sorts of shareholders (private as well as institutional) and the losses when they came were all the more significant as a result.

This time around, the speculation is in different form – corporates are either involved at an early stage with the headlong rush into incubator and accelerator-type activities, or at late stage with the enormous sums being paid by Google and Facebook in particular to acquire technology start-ups. In comparison to the last time around, there seem comparatively few big IPOs. Exit strategies for many pure tech startups are to be acquired by one of the companies that either survived Dot Com times (Microsoft, Apple, Amazon), or have emerged to positions of dominance since (Google, Facebook, Twitter).

Individuals are involved in the gold rush by starting up – the costs of entry to becoming a tech business these days are so much lower than the first time around. Cloud services from the likes of Amazon mean you can be up and running without investment in infrastructure, and that lower barrier to entry means its much easier to play in the start up world this time around.

From a technology perspective, however, what I’ve learned from Cassidy’s book is how important it is to separate the exuberance or stupidity of a bull market from the underlying long-term value of the technology. Cassidy fell into a trap that linked the two – the irrational tech stock valuations (rising and falling) was proof that the value in the underlying technology was itself irrational. Quotes that litter the book show how, looking back, that was crazy. That markets are irrational means that there is possibly little or no correlation between bubbles and what happens after. Gold is still valuable, as is technology. Tulips, however…

 

Matt Ballantine's thoughts about technology, marketing, management and other stuff…

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