disruption | Paul Wallbank - Communications Professional

Making Chief Transformation Officers work

Business and governments around the world are appointing Chief Transformation, Digital Officers. Do these positions work?

As the scale of technological change facing organisations becomes apparent, managements are appointing Chief Digital Officers to deal with the adjustment. Is this a good idea or just window dressing?

Last week the Australian Federal government became the latest administration to announce they will appoint an executive to manage the process.

Communications Minister Malcolm Turnbull said the Digital Transformation Office will be charged to co-ordinate the adoption of online services across agencies and state governments.

“The DTO will comprise a small team of developers, designers, researchers and content specialists working across government to develop and coordinate the delivery of digital services,” the Minister’s announcement stated. “The DTO will operate more like a start-up than a traditional government agency, focussing on end-user needs in developing digital services. ”

Minister Turnbull hopes to emulate the UK Office of the Chief Technology Officer which was launched with the intention of delivering streamlined sign ons, simplified government websites and easier access to online services in Britain; although the experience has not been a great success so far.

What’s notable about the UK experience is the CTO came with high level support within cabinet, which gave the agency a mandate within the public service to drive change.

A job without a budget

That the Australian CTO has no budget – its UK equivalent has over £58 million this year – indicates it will not have a similar mandate and will struggle to be little more than a letterhead.

When Digital Officer do have the support of senior executives and ministers, it’s possible to achieve substantial returns. Vivek Kundra, former Chief Information Officer in the Obama administration described to me in an interview two years ago how his office had created a dashboard to monitor government IT projects.

Kundra learned this lesson from his time as the US Government’s CIO where he built an IT Dashboard that gave projects a green, yellow or red light depending upon their status.

Some of these government projects were ten years late and way over budget, the dashboard gave the Obama administration the information required to identify and cut over $3 billion worth of poorly performing contracts in six months.

This is low hanging fruit that a well resourced group with the support of senior management can drive.

Looking beyond end users

A concern though with these CIO positions is they are only looking at part of the problem with the UK, US and Australian teams all focusing on end-users.

While no-one should discount the need for easy to use online services for customers or government users; digital transformation has far greater effects on private and public sector organisations with all aspects of business being dramatically changed.

In Germany a survey last year by management consultants PwC found eighty percent of manufacturers expected their supply chains would be fully digitised by the end of the decade, almost every industry can expect a similar degree of change.

The risk for CTOs focused on how well websites work is they may find the digital transformation within their organisations turns out to be the greater challenge.

Indeed it may well be the whole concept of Chief Transformation, or Digital, Officers is flawed as digital transformation is pervasive; it affects all aspect of business through HR and procurement to management itself.

Passing the buck

The great risk for organisations appointing a CTO or CDO is that other c-level executives may then believe those individuals are responsible for the effects of digital transformation on their divisions.

While Chief Digital, or Transformation, Officers can have an important role in keeping an organisation’s board or a government aware of the opportunities and challenges in a rapidly changing world, they can’t assume the responsibilities of adapting diverse businesses or government agencies to a digital economy.

Done well with proper resources and management buy in, a good CTO could genuinely transform a business and be a catalyst for change.

Regardless of the responsibilities a CTO or CDO assumes within an organisation, for the role to be effective the position needs the full support of senior management and adequate resources.

If a company or government wants to pay more than lip service to digital transformation then a poorly resourced figurehead is needed to drive change.

Yahoo! Directory comes to an early end

Yahoo! closes down its directory service five days early with a warning for today’s internet giants

After twenty years the Yahoo! Directory closed down five days early reports Search Engine Land.

The rise and and fall of Yahoo!’s core product illustrates both the volatility of the web and how the underlying dynamics of the internet has changed; at the time Yahoo! Directory was launched, we were struggling the task of keeping track of all the information being posted online.

Even in those early days it was clear that task was becoming unmanageable and this was the problem Google set out to solve and its success destroyed the directory business along with a whole range of other industries.

Yahoo! Directories’ demise needs to be noted by today’s web and social media giants; just as these technologies are disrupting old industries, new businesses aren’t immune to those changes.

Kodak and the smartphone

The Kodak brand makes a comeback on a smartphone

On reading the Verge’s story that UK tough smartphone company Bullitt would realease a Kodak branded phone in the new year my first though was “Aren’t Kodak out of business?”

As it turns out Kodak are still in business having come out of Chapter 11 administration last year with the company focusing on commercial printing, cinematography and the odd bit of revenue from licensing out their name.

Bullitt on the other hand does that licensing with their main product being a range of tough smartphones marketed under the Caterpillar name which doesn’t seem to be a bad niche given the importance of connectivity to farmers, miners and construction workers.

It’s difficult though to see exactly what the Kodak name is going to bring to smartphones; the brand has long fallen out of favour and is irrelevant to today’s digital photographers, the only way conceivable way the Kodak name could be a selling point is if the devices offer something additional in the way of processing digital photographs or offers some advanced camera features.

From the media release that doesn’t seem to the be the case, however in a marketplace increasingly dominated by cheap Android phones having an additional selling point is useful in locking in higher margins.

Both Bullitt and Kodak though will both be happy for the publicity, in one way it’s good to know the brand is still around.

A dog fight in the clouds

Microsoft’s network of distributors is the company’s greatest defence believes Corporate Vice President John Case

“Productivity is our life blood,” says John Case, Microsoft’s Corporate VP for the company’s Office product line. “It’s part of the company that we say is our mission.”

Case was speaking at a media briefing ahead of Microsoft’s launch of their Australian Cloud Solution Provider program for resellers with the company making the case for integrators and IT support businesses to sell the Microsoft Cloud Services.

For Microsoft this is part of the evolution from the 1990s “PC on every desk” strategy to a mobile and cloud first service.

This shift doesn’t come without pain for Microsoft and it’s resellers, the cloud is a fiendishly competitive space with Amazon regularly dropping prices and Google steadily eating into the productivity suite market.

Making matters worse for Microsoft are that Google are moving into their hosted server space with the announcement that Google’s Cloud Platform now supports Microsoft Server.

Case though is sanguine though about the threats from Google, particularly the increased commissions being paid to resellers which will only put more pressure on Microsoft as resellers consider the options.

Probably the toughest part of the shift for Microsoft are the reduced margins – although for resellers the change is far more wrenching as the profits from cloud services are far lower than installing servers.

For Microsoft the key to success in the cloud depends upon the confidence of customers; security and trust are going to make and break all cloud services, something that Case acknowledges.

Ultimately though Case sees Microsoft’s network of resellers and partners as being the company’s best defense against Google and the shift to the cloud. Whether that network is strong enough to overcome a structural shift in the market place remains to be seen.

Productivity may be the lifeblood of Microsoft’s business but as margins erode, it may be that that market is not longer lucrative enough to sustain a $400 billion dollar business. Microsoft’s fight for survival is on in the cloud.

Acknowledging the human costs of disruption

Disruption and change come at a human cost that we need to acknowledge

As we talk of the dramatic changes facing business and society today it’s worthwhile noting a much greater displacement happened in the Twentieth Century as electricity, the motor car and communications drove the greatest increase in standards of living that humans have ever seen.

Our great-great grandparents lived through a period of change far greater than that we will see as their lives and communities were radically transformed.

Many common jobs in the early 1900s had ceased to exist by the middle of the century as cars replaced horses, mains electricity replaced town gas and refrigeration changed shopping habits. In the second half of the century affordable motor vehicles and television saw our cities reshaped around suburban life, a process now being reversed.

The structural change to economies saw a shift in population and jobs; a hundred years ago thirty percent of the US labor force was employed in agriculture, today it’s around two percent. Despite the shift, jobs were eventually found for those displaced from farms.

Shifting from an agricultural economy to an industrial society didn’t come without costs however, the price paid by the affected communities and individuals was huge as documented by Steinbeck’s Grapes of Wrath and Dorothea Lange’s photos.

While it’s unlikely we’ll see the deprivation of The Great Depression repeated in a modern welfare state, it’s important to recognise the real human costs of technological change. For politicians and community leaders it could define how history judges them.

Old business and new tech

When old businesses embrace new tech they have to be thinking of their customers’ problems, not theirs.

The payments war has been well and truly on as companies like Stripe, Apple and PayPal battle it out to control the next generation of currency.

One of the more hapless bystanders in this has been the CurrentC consortium, a group of US retailers set up to take advantage of mobile technology and bypass merchant fees.

This weekend news leaked out that some of the consortium members have disabled Near Field Communications functions in their store Point of Sale systems to prevent Apple Pay and Google Wallet from working while they wait to roll out CurrentC.

In a deep dive review of CurrentC, Tech Crunch looks at how the service works and its limitations. One of the things that jumps out in Tech Crunch’s review is just how cumbersome the system is compared to its competitors.

Despite being founded in 2011 and having the backing of some of America’s biggest companies, CurrentC is two, or possibly three, iterations behind other services which illustrates the problem of incumbents trying to innovate their way out of problems.

No doubt the committee model of CurrentC hasn’t helped the development process along with the aim being addressing the consortium’s fixation with merchant fees rather than making things easier for customers.

It’s hard not to conclude that CurrentC is doomed and the actions of retailers in blocking competitor’s products is only staving off the inevitable. When old businesses embrace new tech they have to be thinking of their customers’ problems, not theirs.

On being a digital anthropologist — brian solis on technology disrupting buiness

Innovating within a business can be hard work says Brian Solis

“Technology is part of the solution, but it’s also part of the problem,” says Brian Solis, the

Brian Solis describes himself as a digital anthropologist who looks for how businesses are being disrupted. We talk about digital darwinism, how businesses can approach change and the role of individual changemakers within organisations.

“My primary responsibility is to study disruptive technology and its impacts on business,” says Solis. “I look at emerging technology and try to determine which one is going to become disruptive.”

To identify what technologies are likely to disrupt businesses it’s necessary to understand the human factors, Solis believes.

One of the problems Solis sees is the magnitude of change required within organisations and particularly the load this puts on individuals, citing the story of one pharmaceutical worker who tried to change her employer.

“Her mistake was thinking this was a short race, she thought everyone could see the opportunity inherent in innovation and change when in fact it was a marathon. She burned herself out”

“What that means is to bring about change you really have to dig yourself in because you’re ready to do your part. You can’t do it alone, you have to do change in small portions and win over the right people.”

Rise and fall

We live in rapidly changing times. Incumbents and market leaders shouldn’t assume their positions are safe.

Twenty years ago UK supermarket chain Tesco was an also ran.

A decade ago it was the market leader.

Today Tesco is in trouble again as low cost European competitors like Aldi and Lidl have chipped away the British majors’ market share.

A few weeks later, Tesco shares plummeted on revelations the company’s profit guidance had been overtstated by 250 million pounds with the company’s chief executive Dave Lewis announcing several executives have been stood down as auditors investigate the descrepencies.

Tesco is a very good example of how quickly how competitors can come from behind in today’s marketplaces; first Tesco itself during its 1990s rise and then its crash in recent years.

We live in rapidly changing times. Incumbents and market leaders shouldn’t assume their positions are safe.

Frenemies in the age of tectonic shifts

In an age where business is changing dramatically it’s worth keeping your rivals close.

“Apple lives in an ecosystem,” Steve Jobs told the 1997 MacWorld conference. “It helps other partners and it needs the help of other partners.”

A few minutes later Jobs unveiled Apple’s deal with Microsoft, much to the disgust of many of the company’s true believers in the audience – something not helped by Bill Gates appearing on video midway through the presentation.

“We have to let go of the idea that for Apple to win, Microsoft has to lose;” said Jobs after the booing died down.

I was reminded of Jobs’ and Gates’ deal when talking to Pat Gelsinger, the CEO of virtualisation software company VM Ware at their annual VM World conference in San Francisco this week.

Gelsinger was discussing the myriad deals VM Ware has made with companies that are their superficially their rivals as markets radically change. The company has even gone as far to embrace the open source Open Stack that was originally set up as competition to VM Ware’s proprietary technology.

“The idea of frenemies – or co-competition – isn’t new to the IT industry.” Said Gelsinger, “as we are in this period that we’ve called the tectonic shifts that are underway.”

“All of us need to be somewhat careful about who’s our friends and who’s our enemies as we go through that period and be as nice as we can to everybody because who’s our friends and who’s our enemies in six months or twelve months could change a whole lot.”

That lesson has been harsh in the IT industry as various unstoppable businesses have found the market has shifted rapidly against them. A process that’s accelerating as cloud computing changes the software industry.

“I always quip that ten years ago or fifteen years ago Sun would have been buying Oracle. Those shifts can occur quite rapidly,” Gelsinger says.

VM Ware itself is on the brunt of one of those shifts as its core business of creating virtual services in company’s data centres is being disrupted by cloud computing companies like Amazon, Google and – ironically – Microsoft.

Adapting to that changing market is the key task for Gelsinger and VM Ware’s management team, “our philosophy has been about doing the right thing that technology enables us to do.” Gesliner states, “do the right things for our customers and enable the ecosystem to join us on the journey.”

For companies like VM Ware and Microsoft no-one predicted that one of their biggest threats would come from an online book retailer, yet Amazon Web Services has upended the entire software industry.

The challenges for VM Ware today or Apple nearly two decades ago are being repeated in many other industries as competitors appear from unexpected directions, which is why it’s important not to ignore and sometimes co-operate with your competitors.

We shouldn’t also ignore the other main reason why companies like Apple, Microsoft and, possibly, VM Ware have survived massive market shifts over time – a deep and loyal customer base.

Understanding and responding to your customers’ needs is possibly the greatest management skill needed in every business today. Are you listening to what your market is telling you?

Paul travelled to VM World in San Francisco as a guest of VM Ware

Picture of Steve Jobs and Bill Gates via Joi Ito on Flickr

Uber looks to sending taxis and lyft ride sharing service to the deadpool

Uber is to launched a new service that further disrupts the taxi industry

In its latest move to reinvent the taxi industry, Uber has launched a new service caused Uberpool reports Techcrunch.

Uberpool allows customers to split fares with other passengers, making the service cheaper. This threatens both taxis and and ride sharing services like Lyft.

It also shows what deep pockets can buy, with plenty of venture capital funding Uber can afford to experiment with these services. Those resources makes it hard to compete against Uber.

For Lyft and many of the other hire car startups, Uber is doing everything it can to drive their businesses into the deadpool.

Amazon learns that profits matter

One of the leaders of the disruptive economy, Amazon, feeling the heat as other deep pocketed rivals put pressure on its businesses.

It’s typical for a new businesses to go several years making losses but Amazon has barely made a profit over the last twenty years despite being valued at $150 billion by the stockmarket.

That luck could be running out though as the Amazon’s stock fell nearly 10% last week after the company announced it had slipped back into losses last quarter.

Amazon’s losses are largely due to Google starting a price war on web services which is a warning that other deep pocketed web giants are now lining up for the company.

Google’s actions in crippling Amazon are somewhat ironic given how Amazon disrupted the publishing industry by using its deep pockets to subsidise its loss making bookselling business.

Amazon’s problem is it operates in commoditised industries where deep pocketed players are prepared to challenge the company’s market position.

Companies like Google and Apple have incredibly profitable products like Adwords and the iPhone while Amazon relies on the largesse of investors hoping to turn a future profit, that is a clear weakness against strong, well funded businesses.

For a tech company, twenty years is clearly the future and now Amazon has to define exactly where the profits are in its business.

Sometimes, just being a disruptor isn’t enough.