Category: Disruption

Transforming a dysfunctional company

Once dominant IBM is facing another major market transition, do they have the management skills the navigate that change?

Once dominant IBM is facing another major market transition, do they have the management skills the navigate that change?

Robert X. Cringely writes a depressing account of the company’s tactics in cutting its head count but the main thrust is how IBM are cobbling together a bunch of disparate products under umbrella brand names as a bloated, bureaucratic management puzzles with a marketplace change.

At the heart of everything is the question of what IBM’s customers really want, as Cringely points out.

The lesson in all this — a lesson certainly lost on Ginni Rometty and on Sam Palmisano before her — is that companies exist for customers, not Wall Street.  The customer buys products and services, not Wall Street.

While investors are important, businesses only exist if customers want to pay for their wares. If a company can’t convince people to buy their products, or find a way to subsidise it like the media industry did for most of the Twentieth Century, then there is no reason for the venture, or its industry, to exist.

For many technology companies this is the situation they are facing right now, many other industries aren’t far behind.

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Cracking open the black box

Cisco looks to life in the API economy

One of the things confronting technology vendors in the past five years has been the commoditization of hardware and the opening up of standards. As software has eaten the computer hardware industry, those companies are being forced to make their systems more open.

In that world of open systems, it’s the ecosystem of developers and products around platforms that drives success. The best example being the iPhone where the range of third party apps available made Apple’s product the most compelling on the market.

At Cisco Live in Melbourne last week Susie Wee, the company’s Vice President in charge of the company’s DevNet developer relations program, described how the networking company is opening their systems with Application Program Interfaces (APIs) to build an ecosystem.

“What we want to do is help people with this transition,” says Susie. “With the network, with the infrastructure and with the cloud we want people to get more out of it.”

Cisco, like most hardware companies, are finding the shift to opening their data streams to be wrenching. The business model of a decade ago involved mysterious black boxes running on proprietary software with the data dished out sparingly.

While the the ‘black boxes’ still remain, becoming a ‘platform’ and making data available to all comers is very much a cultural shift for once dominant hardware companies like Cisco.

The question for IT hardware companies is how long they can defend their proprietary software systems – the hardware side is already slowly declining as software defined equipment takes over – while establishing dominance with their software and data feeds.

Users too need to be treading carefully as those APIs and the data being fed through them is subject to the business imperatives of the

Cisco hopes they can achieve this through their current market power and business networks, it is a hard ask for them though. For the entire tech industry, the shift to an API driven marketplace is going to be testing.

Paul travelled to Cisco Live in Melbourne as a guest of Cisco

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The state of Australian technology – and journalism

Australia’s Tech Leaders conference brings together three industries that are being greatly disrupted.

Today I’m heading to the Blue Mountains just outside Sydney for the annual Tech Leaders conference.

With the conference bringing together tech industry vendors, public relations representatives and journalists, it’s an interesting snapshot of an industry in transition.

Technology vendors are dealing with the shift to cloud computing which destroys what were very comfortable and profitable business models.

Needless to say the journalists are the most disrupted group of all with most of the dwindling number now being freelancers and the few remaining staff reporters working under tough deadlines with few resources.

This leaves the Public Relations folk in the middle, as the traditional media channels decline they are having to work harder in getting their clients’ stories into the public domain. At the same time, the compressed margins for cloud affected vendors are cutting into PR budgets.

So Tech Leaders is interesting to see how three very different groups are dealing with their changing industries. I might also get to hear about some new technologies as well.

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When software ate the network

Software is eating the IT hardware industry which is a lesson for other businesses

I’m attending the Asia Pacific Cisco Live in Melbourne Australia this week which is starkley illustrating the shift in communications technologies and the business models around them.

To kick off the press program Cisco made a joint announcement with Australian incumbent telco Telstra on the rollout of a smart software defined networking product.

Software Defined Networking uses basic computer hardware, basically glorified personal computers, to do the jobs of the expensive routers, switches and network appliances that were insanely profitable for companies like Cisco a few years ago.

It wasn’t so long ago when Cisco executives were taking technology journalists out to earnestly explain how Software Defined Networking (SDN) was feasible.

Today, SDN is defining both the telco and communications industries as companies like Telstra look at bundling IT networking and software services into their offerings to prop up their falling margins. India’s Reliance Communications are a good example of how providers are trying to shift into new marketplaces.

For telcos, communications vendors  and IT hardware sellers the changing technologies illustrate what Silicon Valley entrepreneur Marc Andreesen meant when he described how “software will eat the world.’

Software is eating the IT hardware industry and telcos are seeing – hoping – it’s another lucrative opportunity. Businesses in other sectors should be thinking about how software is going to change their world.

Paul travelled to Melbourne for Cisco Live as a guest of Cisco

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The cost of media disruption

The price workers pay when an industry is disrupted shouldn’t be understated

What happens to journalists when no one wants to print their words anymore?

The Bill Moyers website has striking accounts of sexism, ageism and exploitation of younger journalists as the industry deals with its Twentieth Century business model collapsing.

Much of the dislocation Dale Maharidge describes could have been written about factory workers twenty years ago and will be probably written about a whole range of white collar occupations over the next two decades. The disruption being felt by journalists is not unique to the media industry.

While the media industry struggles to find the 21st Century’s David Sarnoff, the human cost is real. The price workers pay when an industry is disrupted shouldn’t be understated.

 

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Working in the gig economy

The motivations of demand economy contractors are varied and not without suspicion towards the services that employ them.

Just what do people think about the on-demand, or gig, economy? A survey by public relations company Burston-Marsteller looked at those who use and provide services for companies like Uber, AirBnB and Instagram.

Unsurprisingly the majority of users are have positive experiences with on-demand services which allows them to access product they couldn’t afford otherwise.

More important are the views of the contractors, and those who are doing these jobs for the flexibility are matched by those who’d rather have full time employment but can’t find a role.

Strikingly, the longer a contractor has worked for one of these services the more likely they are to find the company’s practices exploitative and more than half believe the platforms are gaming the regulations.

Overall, it shows participants in the ‘sharing economy’ have no illusions about the caring aspects of the services that employ them, unlike many of those touting the benefits from the sidelines.

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How the taxi industry lost its advantages

The struggles of the taxi industry show regulatory barriers won’t keep out competitors

In San Francisco, the Yellow Cab Company is filing for bankruptcy in the face of mounting insurance costs and competition from services like Uber and Lyft.

For most of the Twentieth Century, having a government controlled market was good for cab companies and those owning the rights to own taxis. In most places though it wasn’t good for drivers and passengers however as wages fell along with the quality the service.

In most cities, the taxi operators didn’t care as their industry was protected and customers didn’t have much choice. The problem was compounded by supine regulators who saw protecting the interests of industry incumbents as taking precedence over making sure operators provided a safe, reliable service.

With the arrival of Uber, this changed and passengers started voting with their wallets. Interestingly, despite Uber X and Uber Pool being illegal in most place, regulators and their political masters found public opinion was firmly against the taxi companies and owners who’d exploited them for so long.

To the horror of the taxi operators, they found the community and the market had shifted against them leaving them exposed to changes they had never expected. Now operators like San Francisco’s Yellow Cabs are paying the price for not focusing on providing a decent service.

For other industries, particularly those which have some sort of barrier to entry through government regulation, the taxi industry’s woes are an important lesson – focusing on service is the key to staying in business, not relying on keeping competitors out.

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