Decoding the new economy

Realising value from the internet of everything

How will businesses benefit from the internet of everything?

How much opportunity does connecting all our machines to the internet really offer businesses and society?

Cisco’s Internet of Everything index released last week looks at one of the great opportunities facing today’s managers in realising business value in these new technologies .

On Cisco’s calculations, the internet of everything is worth over $14.4 trillion to the world economy and nearly half the business benefits are going wasted.

Germany and Japan lead the pack and, as discussed yesterday, Australia wallows between China and Russia.

Despite German businesses being the leaders, Cisco estimates $33bn, or nearly 40% of the potential gains, isn’t being realised even in that country.

How different industries are using the internet of machines is notable as well, with Cisco claiming the biggest benefits currently being realised by the IT industry while the greatest potential lies in the service, logistics and manufacturing industries.

cisco-internet-of-everything-value-index-by-industry — Internet of everything value by industry

If anything, these projections could be on the conservative side with Cisco estimating fifty billion devices connected to the net by 2020. Given the rate of smartphone being sold and everything from vending machines to clothing being online, it may well be ten or even a hundred times that number.

The real challenge for businesses in all these projections is how individual organisations can realise this value in their operations.

For some businesses, there’s plenty of existing opportunities with well established services in areas like field services and logistics tracking the locations of staff and packages. These are relatively simple to incorporate into existing operations.

In other applications, businesses will find things more complex as the connected devices will tie into analytics and Big Data plays. These won’t be simple.

One particularly important area for the workforce as a whole in business process automation where many tasks currently done by humans can be carried out by machines talking to each other.

This is already happening in fields like fast moving consumer goods and hospitality where stock levels can be automatically monitored and replacement stock ordered in without staff being involved. As the technology becomes more widespread this will threaten the roles of many previously well paid managers.

Many of those managers though will be challenged anyway unless they’re prepared to deal with the changes that internet of things is bringing to their businesses.

How do you think the internet of everything will change your business?

Politics, business and leadership

Google’s hiring processes raise some important points about leadership.

I’ve covered the New York Times’ interview with Google’s senior vice president of people operations, Laszlo Bock previously in describing what the business has learned from its scientific method of hiring people.

One striking aspect of that story that deserves further discussion is Bock’s thoughts on leadership;

We found that, for leaders, it’s important that people know you are consistent and fair in how you think about making decisions and that there’s an element of predictability. If a leader is consistent, people on their teams experience tremendous freedom, because then they know that within certain parameters, they can do whatever they want. If your manager is all over the place, you’re never going to know what you can do, and you’re going to experience it as very restrictive.

This is something that applies in all walks of life — whether you’re coaching a kids’ football team, running a corporation or leading a nation.

Sadly in many of these fields we’re lacking the consistent leadership Laszlo Bock describes. That could turn out to be one of the greatest challenges for the 21st Century.

Re-inventing management with social media

Is social media changing how management works? It could be the case at Telstra.

Yesterday I went along to hear Telstra’s Paul Geason speak at the American Chamber of Commerce lunch in Sydney.

Geason, who is Group Managing Director for the company’s Enterprise and Government division, was speaking on some of the findings from Telstra’s Clever Australian program along with some of the technology trends he’s encountered in big business and public organisations.

The bulk of Geason’s presentation I reported in an article for Comms Day, and much of his observations about enterprise technology trends wouldn’t surprise keen observers of the industry or regular readers of this blog.

What did stand out though were his comments on how social media is changing management behaviour at Telstra where over 25,000 registered users of the company’s Yammer platform have direct access to the company’s CEO, David Thodey.

Social media is just going crazy. Within Telstra now we have over 25,000 of our staff registered on Yammer. It has been a phenomenon. It’s playing this really interesting role of breaking down the hierarchy in our organisation.

Which is not just because of the technology but it’s also got something to do with our CEO.

He is on Yammer just about every single day of the week. There is not an issue that hits that site that he won’t pick up and direct to the right place to get it to the right place and have it dealt with.

Our people love it, they would never have imagined they could get that level of access and input and intervention from the CEO.

There’s a certain transparency that has come to our organisation that didn’t exist previously which is really great for the levels of engagement of our people and very challenging for us as leaders in having to deal with that level of visibility that was not there before.

I think it’s really changing how organistations are operating.

Paul Geason’s comments are a good example of changing management structures. Not only does it bring accountability to executives, it also means organisations can respond quickly to changing marketplaces – something covered in the Future of Teamwork presentation back in 2010.

A few years ago, no-one would have thought of Telstra as being an open, collaborative organisation yet today it’s gone quite a way down the path to becoming one.

The key though to this is having senior management buying into the process. Without that leadership many companies might be facing a tough future.

Trolls never sleep – Social media and the twenty four hour business

Qantas Airlines learns the hard way that social media doesn’t sleep, unlike its marketing department.

One of the truths of social media is it gives idiots an opportunity to expose themselves for what they are.

For businesses using social media idiots posting stupid or offensive content on the company’s site or Facebook page can do a lot of damage to their brand and reputation.

This is the problem Australian airline Qantas faced last week when some fool posted a pornographic image to one of the company’s promotions pages.

As the Sydney Morning Herald reports, the father of an eight year old reported an inappropriate post to the airline after his son found the image while visiting the Qantas Wallabies page. He was allegedly told by the company’s social media staff “there was nothing we can do about it.”

The father points out correctly that both the airline and Facebook are 24 hour operations so claiming a post that is put up at midnight – one assumes Eastern Australian time – is out of hours seems to be disingenuous.

Until recently, businesses had given social media responsibilities over to the intern or the youngest person in the office. While organisations like Qantas have moved on from that, they largely leave these tasks with the marketing department.

While marketing is a valid place for social media responsibility – it’s probably the most obvious area to establish a return on the functions – it leaves organisations vulnerable to out of hours customer service and public relations problems.

Social media doesn’t knock off at 5pm and spend the evening a bar like the marketing department, it’s on all the time and customers are using it to complain about problems while twits and trolls are gleefully posting things to embarrass businesses.

For those businesses who do operate on a 24 hour basis, and probably all big corporations, it’s no longer good enough for the social media team to just operate during office hours.

Smaller businesses have a different problem – most don’t have the resources to keep a 24 hour watch on their Facebook page but the effects of a social media disaster could be proportionally far greater – so they shouldn’t be overlooking regular checks on what people have posted to their business sites.

What’s happening in social media is part of a broader trend in the global economy that’s been going on for thirty years as the pace of business has accelerated. It’s something that all managers, entrepreneurs and company owners need to understand.

Google’s simple recipe for management accountability

Does keeping things simple help Google’s managers?

One of the big challenges for larger organisations is giving managers the feedback they need to do their jobs properly. The New York Times interview with senior vice president of people operations at Google, Laszlo Bock, covers some interesting aspects of how accountability in the workplace helps executives.

Google surveys its staff twice a year on how they think their managers are performing in a Upward Feedback Survey that pulls together between twelve and eighteen different factors which the company then uses to measure how their leaders are performing.

That bottom-up, data driven approach has proved to be successful as Bock told the New York Times.

We’ve actually made it harder to be a bad manager. If you go back to somebody and say, “Look, you’re an eighth-percentile people manager at Google. This is what people say.” They might say, “Well, you know, I’m actually better than that.” And then I’ll say, “That’s how you feel. But these are the facts that people are reporting about how they experience you.”

You don’t actually have to do that much more. Because for most people, just knowing that information causes them to change their conduct. One of the applications of Big Data is giving people the facts, and getting them to understand that their own decision-making is not perfect. And that in itself causes them to change their behavior.

Accountability matters – who’d have thought?

The other thing that Bock and Google’s HR team have learned from their measuring management performance is just how effective consistency can be.

We found that, for leaders, it’s important that people know you are consistent and fair in how you think about making decisions and that there’s an element of predictability. If a leader is consistent, people on their teams experience tremendous freedom, because then they know that within certain parameters, they can do whatever they want. If your manager is all over the place, you’re never going to know what you can do, and you’re going to experience it as very restrictive.

Sometimes we make things too complex – and Google’s experience with managers shows that simple accountability and consistency are far more effective than complicated KPIs.

Image by ulrik at sxc.hu

When Venture Capital meets its own disruption

Falling barriers to entry are disrupting Venture Capital investors as much as incumbent managers.

Tech industry veteran Paul Graham always offers challenging thoughts about the Silicon Valley business environment on his Y Combinator blog.

Last month’s post looks at investment trends and how the venture capital industry itself is being disrupted as startups become cheaper to fund. He also touches on a profound change in the modern business environment.

Graham’s point is Venture Capital firms are finding their equity stakes eroding as it becomes easier and cheaper for founders to fund their business, as a result VC terms are steadily becoming less demanding.

An interesting observation from Graham is how the attitude of graduates towards starting up businesses has changed.

When I graduated from college in 1986, there were essentially two options: get a job or go to grad school. Now there’s a third: start your own company. That’s a big change. In principle it was possible to start your own company in 1986 too, but it didn’t seem like a real possibility. It seemed possible to start a consulting company, or a niche product company, but it didn’t seem possible to start a company that would become big.

That isn’t true – people like Michael Dell, Bill Gates and Steve Jobs were creating companies that were already successes by 1986 – the difference was that startup companies in the 1980s were founded by college dropouts, not graduates of Cornell or Harvard.

In the current dot com mania, it’s now acceptable for graduates of mainstream universities to look at starting up business. For this we can probably thank Sergey Brin and Larry Page for showing how graduates can create a massive success with Google.

One wonders though how long this will last, for many of the twenty and early thirty somethings taking a punt on some start ups the option of going back to work for a consulting firm is always there. Get in your late 30s or early 40s and suddenly options start running out if you haven’t hit that big home run and found a greater fool.

There’s also the risk that the current startup mania will run out of steam, right now it’s sexy but stories like 25 million dollar investments in businesses that are barely past their concept phase do indicate the current dot com boom is approaching its peak, if it isn’t there already.

Where Graham is spot on though is that the 19th and 20th Century methods of industrial organisation are evolving into something else as technology breaks down silos and conglomerates. This is something that current executives, and those at university hoping to be the next generation of managers, should keep in mind.

Category: management

Realising value from the internet of everything

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