News – 06/06/03
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
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:
relatively safe nutrient environment.
levels of diversity and complexity in terms of the elements
to be self-organized.
at the edge of chaos, in a word nothing will happen if everything
is sitting like a lump.
inner drive towards improvement, hence if you are an atom it
would be useful to get together with another atom to become
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,
Sometimes being small helps
(Monet Mobile Networks has unwired Midwest cities
like Duluth, Eau Claire, and Sioux Falls for $60 a month – see
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
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,
- 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
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
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
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
- 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.
- RIM Forced To Pay Royalties:
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.