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Be on the wave or under it™

The News – 06/06/03

In this Issue:

Recommended Reading

I realize this is the only newsletter you’ll ever need, but if you want more in-depth detail, check out:

Stan Hustad’s
The Coaching Connection

Management Signature's
The Express Read

The Cheap Revolution, part 2

Last issue I took off from some comments made at George Gilder and Forbes’ recent Storewidth conference, at which Gilder and other industry luminaries, including Innovators Dilemma author Clayton Christensen, extolled the virtues of cheap technology. Now that this burgeoning cheapniz trend has been duly christened as a buzzword —The Cheap Revolution — we can expect it to start getting press beyond Forbes’ pages (Forbes: here, here, here, here, and here; Everyone else: here, here).

Geez, this trend is at least two months old already, and I feel like I’m late to discover it. What does that say about the pace of change in today’s world (weary SNS readers will remember I’ve written and spoken before about Ray Kurzweil’s assertion that the rate of change is changing at an exponential rate.) That brings me to a quality that is very closely associated today with Cheap: Fast.

Going Cheap lets businesses respond fast to changing technology currents. Google got eschewed the big, expensive iron to run on 12,000 Cheap commodity PCs. When one goes down, they don’t even bother to troubleshoot it. They just throw it out and plug another in its place. That’s agile. That’s lots of eggs in lots of baskets. And it's somewhat future-proof. If PC technology were to take a big disruptive leap, Google has a choice: modernize as PCs in its farm wear out, or bite the bullet and spend a Cheap million or so to plow them under and bring in a new crop.

Fast, Cheap, and Out of Control

So this pairing of Cheap and Fast got me thinking. Fast and Cheap have a wild and crazy brother: Out of Control. Usually OOC is an anathema to corporate governance, especially in this age of the MBA. While many companies recognize the futility of the five year plan, the vast majority still plan at least on a yearly basis.

This was an irritant to me even back in 1997 (the year the movie Fast, Cheap & Out of Control was released) while I was at ACNielsen. A brief example will illustrate: After a successful rollout of a Web product called SalesNET (no, not that one; marketing didn’t trademark the name; don’t ask) with a major ACNielsen client, the client requested that we roll it out internationally. The revenue upside was seven figures, but we needed some unbudgeted development money to capture that revenue. Sorry, not in the budget for this year, I was told. “But, Daaaaad! We’ll make six or seven times that in revenue!” It was no use. There was great ROI, a significant upside in pleasing a major client, but no dice: The budget was the budget.

An agile enterprise would have been able to capture that revenue – and that good will. The key would have been to be at least a little bit out of control. Not full tilt bozo chaotic, but not rigidly, MBA spreadsheeting anal either.

One of the key principals under the covers of the Cheap Revolution is the idea of autonomic systems. An autonomic system is self-governing and self-repairing, like its namesake human nervous system. This type of behavior is called self-organizing and it is an important emerging field, encompassing everything from Smart Dust (fast, cheap intelligence devices that self-organize intelligence networks) to enterprise servers (IBM’s autonomic computing initiative, which is closely allied to their grid computing effort).

There’s even a school of thought that proposes businesses adopt self-organizing features. Harrison Owen, proponent of Open Space Technology, says self-organizing systems are the rule in nature, and man’s organizational structures are an exception.

I have a growing, perhaps nagging, suspicion that there is no such thing as a non-self-organizing system, at least in the natural world, which would include us. Should this be true, then much of what we are currently doing under the heading of "getting organized" is rather a waste of time, and the potential implications are fairly mind-boggling. Regardless of the accuracy of my nagging suspicion, I feel quite confident that the phenomenon of self-organization lies at the heart of Open Space.

Owen builds on biologist Stuart Kaufmann’s insights into Complex Adaptive Systems to formulate rules for self-organizing systems:

The essential preconditions [for self-organizing systems] are:

1.       A relatively safe nutrient environment.

2.       High levels of diversity and complexity in terms of the elements to be self-organized.

3.       Living at the edge of chaos, in a word nothing will happen if everything is sitting like a lump.

4.       An inner drive towards improvement, hence if you are an atom it would be useful to get together with another atom to become a molecule.

5.       Sparsity of connections This one is a little hard to visualize and was a real surprise to me. Kaufmann is suggesting that self-organization will only occur if there are few prior connections between the elements, indeed he says no more than two. In retrospect, it seems to make sense. If everything is hardwired in advance how could it self organize?

Owen relates these conditions to his concept of Open Space:

Open Space is appropriate in any situation where there is a real business issue to be solved marked by High levels of complexity, in terms of the issues to be resolved, High levels of Diversity in terms of the people needed to solve it, High levels of conflict (potential or actual), and there is a Decision time of yesterday. Given these conditions, Open space is not only appropriate, but always seems to work.

This sounds like a pretty accurate description of business challenges in many industries today. Yet our business organizational style is becoming more and more analytical, rigid and controlled (Six Sigma, anyone?).

We have been taught forever it seems, that the essence of management is control, and if you are out of control, you are out of a job. Not terribly long ago, the function of management was described as making the plan, managing to the plan, and meeting the plan. All of that adds up to control. It now turns out that we can make any plan we want to, but managing to that plan is an act of frustration, and meeting that (original) plan is not only impossible, but probably inadvisable. Worst of all (perhaps best of all) it turns out that the systems we are supposed to control, to say nothing of the environment in which they exist, are so horribly complex as to defy comprehension. And what you can’t comprehend is very difficult to control.

All this makes me think back to Clayton Christensen’s remark about the death of innovation at Sony: They hired their first MBA. It also resonated clearly during CNN’s recent feature on the management of the Iraq war. CNN had a camera crew following the action in the Coalition’s command center in Kuwait. The general in charge at one point says, “Don’t fight the plan, fight the enemy.” In other words, if the plan’s not working due to changing conditions, be agile.

Sometimes being small helps (Monet Mobile Networks has unwired Midwest cities like Duluth, Eau Claire, and Sioux Falls for $60 a month – see previous SNS). But in many cases smallness just equates to agility.

Sometimes being fast helps (check out how fast the top 50 most wanted Iraqi decks of cards showed up on eBay). But United States Playing Cards, whose trademarked HOYLE® joker design the military inadvertently stole for its original decks, may not be the company that profits the most.

Sometimes being out of control helps (the US Forest Service hosted 224 people representing 65 organizations – from the Sierra Club to timber companies to the National Nude Sunbathing Society – to meet on the issue of access to public land. In less than an hour, they created 62 task forces and managed the conference themselves for two days. The resulting 200-page report of their findings was called too detailed to assimilate.) But being out of control only works for self-organizing entities.

What’s It All Mean, Mr. Natural?

What it means is this:

  • The future’s coming fast, fast, faster. Smart companies won’t fight it.
  • As the information delivery apparatus disappears into the fabric and becomes Cheap, the value of the insights it delivers depends on harnessing the intellectual might of all your workers, not just your senior staff.
  • Just as top-heavy information architectures will wither in the face of the Cheap Grid, salary-heavy, hierarchical leadership structures will be bested by Fast, Cheap & Out of Control.
  • The stock value of Internet companies is resurging because of their disruptive innovation, which is finally bearing fruit by making companies like Amazon, Google, and Yahoo more able to profit in rapidly changing times.
  • As the dinosaurs mate and combine into ever larger organizations, they run the risk of becoming vulnerable due to an increasing inability to absorb and capitalize on change (see AOL Time Warner for an example). The numerous (Cheap), fast, and out of control mammals will eat their eggs.
  • It may just be that we’re not fundamentally wired for optimum performance in groups larger than hunter/gatherer tribes. Becoming an agile organization might mean finding a way to unlock the innovation potential of groups under a hundred.

If you think that last century’s answer to productivity – organize into larger and larger units to make things cheaper – will work this century, well, good on ya. It’s always possible that Mr. Natural’s answer to Flakey Foont’s existential headline is the true one: “Don’t mean sheeit, kid.”

Part 1

Briefly Noted

  • Shameless Self-Promotion Dept.: My feature article, Grid Computing Takes Off in the Enterprise, was published in the inaugural issue of Fawcette Technical Publications’ Enterprise Architect magazine. (Registration required to view.)

    My article, “Innovative Marketers Target Unwired Customers” was published in the NetSuds newsletter.

    Coming Soon: A new eBook, Be On the Wave Or Under It™ will collect the best of SNS’ insights over the last couple of years, along with additional material from CTOMentor white papers and new material. It will make a great gift (Father’s Day?) for associates and friends in need of a guide to the latest and greatest technology. Watch for more information in upcoming SNS issues.

    I was quoted extensively on eLearning in a recent issue of the Minneapolis magazine, Upsize, which is aimed at growing businesses.

    A couple issues ago I debuted SNS Begware, an opportunity for you, gentle reader, to express your appreciation by tipping your server via PayPal. See the sidebar for more info. Total in the kitty so far: $46.48. Thanks, Mike!

    I’ve reworked the TrendSpot and Opinion sections, adding a Prediction Tracking page to track the various predictions I’ve made, and also added a Stuff I Said page with some quotes of things I said a decade or so ago on the Net.

    I repurposed and adapted an article about the wireless service known as Short Messaging Service (SMS) for the Reside newsletter. It’s entitled, Wherever they go, there you are and it points out how marketers can use – carefully – this new way to contact their customers.

    I’m featured in Manyworlds’ Thought Leader Showcase, which lists a few of the white papers I’ve done. I’ve also added their fancy icon to the StratVantage site.

  • Give the Spectrum Away: You know, in light of the recent moves taken by the FCC and its chairman, Michael Powell (Colin's kid), this somewhat extreme suggestion by smartguy lawyer Lawrence Lessig doesn’t seem out of the question. Lessig proposed that the airwaves, which after all belong to all of us, should be shared and not sold to the highest bidders. “Rather than property, spectrum should be left in a ‘commons’—or in a public space. Like a freeway, or a public park, use of a spectrum commons would neither be regulated nor propertized. Its use would, instead, be free for anyone, subject only to a few simple rules about devices.”

    The advent of frequency hopping technology (co-invented, as I am always wont to remind you, by 40s
    Hollywood actress, Hedy Lamarr) makes it possible to reconsider the strict frequency boundaries required by simpler communications devices. In fact, the newest, hottest wireless technology, Ultra Wide Band (UWB), involves using all frequencies to achieve stunning throughput.

    Lessig thinks Powell gets this. Perhaps Powell will get to live the ultimate Republican wet dream: the dismantling of a government regulatory agency.
    CIO Insight

  • RIM Forced To Pay Royalties: A U.S. District Judge has sided with NTP Software in a suit against BlackBerry maker Research in Motion (RIM). The judge ordered RIM to pay NTP $8.9 million in damages plus a royalty of 8.6 percent on every wireless handheld it sells for infringing on NTP’s wireless email patents.

    This is such a rich case of karma coming back around. Back in 2001, RIM got a patent on the idea of combining email boxes for delivery to a single device, and tried enforcing it on its competitors. I mean, come on. A patent on the idea of combining email boxes? Talk about obvious. RIM’s getting what’s coming to them. Paybacks are a bitch.

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About The Author

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Can’t Get Enough of ME?

In the unlikely event that you want more of my opinions, I’ve started a Weblog. It’s the fashionable thing for pundits to do, and I’m doing it too. A Weblog is a datestamped collection of somewhat random thoughts and ideas assembled on a Web page. If you’d like to subject the world to your thoughts, as I do, you can create your own Weblog. You need to have a Web site that allows you FTP access, and the free software from This allows you to right click on a Web page and append your pithy thoughts to your Weblog.

I’ve dubbed my Weblog entries “Stratlets”, and they are available at Let me know what you think.

Also check out the TrendSpot for ranking of the latest emerging trends.

In Memoriam

Gerald M. Ellsworth

March 14, 1928 - July 5, 2003

In Memoriam

Jane C. Ellsworth

July 20, 1928 - July 20, 2003