This summer I took time to re-read an oft-overlooked volume that I believe to be the essential to anyone working in marketing and innovation. In this review, I’ll provide a few examples of why this book needs more attention, particularly here in Canada where we definitely need to up our game in marketing of innovation and technology.
Clayton Christensen, as Associate Professor of Business Administration at Harvard Business School, is a leading academic researcher on innovation. Yet, he still manages to provide practical and pragmatic strategies that real companies can use. And, most importantly, his theoretical groundwork is based on extensive, data intensive research over longer period of time with real companies and markets going through disruptive innovation.
The latter term is often thrown around lightly in technology company circles. A Disruptive technology (or innovation) typically has worse product performance in mainstream markets while having key features that interest fringe and merging markets. By contrast, sustaining technologies provide improved product performance (and often price) in mainstream markets.
The book covers real markets, including the various generations of disk drives starting with 14″ drives in the 1970’s to today’s 2.5″ (and smaller) drives. By studying hundreds of companies that emerged, thrived and failed over a 25 year period, some clear patterns emerge. Further examples across a broad range of markets, include he microprocessor market, the transition from cable diggers to hydraulic “backhoes”, accounting software and even the transition of industrial motor controllers from mechanical to electronic programmable models.
The key message of the book is that the playbook for normal (“sustaining”) technology innovation must be thrown away for disruptive technologies. Disruptive technologies break traditional rules in many, often counter-intuitive ways:
Financial – typically disruptive technologies are more expensive and have lower performance than existing products. This effect causes financial managers to kill many such innovations.
Marketing: the normal rule to “listen to your customers” must be thrown away – instead many educated guesses with repeated failures are the only path forward.
Organization: given the ability of normal strategies to reject disruptive innovations, such practices as heavyweight teams (which silo the team with more autonomy) and even spin-outs are the order of the day.
Entrepreneurial writings, not to mention my own experience, encourage us to celebrate failure. Beyond the power of learning by trial and error, The Innovator’s Dilemma, for the first time, provides an analytical framework as to why such failure is so critical in new markets.
One area where the book could provide more guidance is that of differentiating disruptive from sustaining technologies. Such discrimination is absolutely critical to ensure the right strategic approach to the new technology is adopted. Generally easy with the benefit of hindsight, such determination can be very tricky, and error prone, when first confronted with such new technologies.
This is a book that anyone working with products in fast moving markets needs to re-read regularly. It surprises me that, 15 years after publication, how few product marketers and senior executives appear to have benefited from the deep wisdom Christensen imparts.
Building larger technology companies is critical for our future economic well being, yet somehow we seem to pay more attention to the seed and startup phase. This post and a subsequent missive, Wisdom from Recent Waterloo Technology Acquisitions, aim to analyze some recipes for building technology businesses to scale first from the perspective of recent companies and then specifically through the lens of local acquisitions. This pair of posts will be based on extensive data, but the findings are intended to start discussion rather than be the last word.
The importance of building new, innovative, and large, companies can’t be underestimated regionally, provincially and nationally. Here in Waterloo, with perhaps 10 000 jobs at a single behemoth, Research in Motion, the notion of job creation is particularly topical simply to lessen our dependency on such a large company.
My sense is that, of late, most of the focus centres around making startups: small, energetic and entrepreneurial software, web and mobile companies, some simply building a mobile application. And, even with the current notion of Lean Startups or our Venture 2.0approach, there is no question that building such early stage companies is probably an order of magnitude cheaper than it was back in the 1990’s While undoubtedly a good thing for all concerned – founders, investors and consumers all have so much more choice – has this led to a corresponding increase in new major businesses in the technology sector?
I see this as more of a discussion than a simple answer, and thus to start, I include the following table of my sense of how the numbers have changed over time. The following table provides some idea of how company formation has trended over the last 25 years, through the lens of scale rather than acquisitions:
[table “” not found /]
NOTES ON DATA:
Sources: public records, internet, personal recollections and interviews with 20 key ecosystem participants.
The definition of “big” is purposely somewhat arbitrary (and perhaps vague). I am using a threshold of 50 employees or $10 million in revenues, which is probably more indicative of these startups becoming mid-sized businesses.
INITIAL INSIGHTS:
This data, while helpful, can never provide a complete answer. However, it can guide the conversation around what I see to be an important economic mission for our region and country – that is, building more significant technology businesses. I’m sure there are no easy answers, but in shaping policy, it is important to base decisions on informed debate and research.
To that end, I would offer the following thoughts:
The current plethora of “lean startups” does not (necessarily) represent a clear path to growing those startups into larger businesses.
I suspect that, in some ways, multiplying small startups can retard the growth of larger companies. That said, the data are insufficient to prove cause and effect.
At the ecosystem level, we need to focus resource allocation beyond simple startup creation to include building more long term, and larger, technology businesses. Instead of spreading talent and other resources thinly, key gaps in senior management talent (especially marketing) and access to capital (B rounds and beyond) need to be resolved.
Even in day to day discussion, the narrative must shift so that entrepreneurism isn’t just about startups, to make company building cool again.
Canada holds many smart, creative and hardworking entrepreneurs who will undoubtedly rise to the challenge of building our next generation economy. Meanwhile, I’d welcome comments, suggestions and feedback on how we can build dozens or more, instead of a handful, of larger technology companies in our region.
A marvellous exploration of a research and innovation powerhouse that, even viewed from this age of innovation, surprisingly anticipated many approaches we think of as modern breakthroughs. I’ve long admired Bell Labs and feel that many of its researchers and innovations interacted with an impacting my own career. While in University, the notion of working with or at Bell Labs was the highest aspiration for top thinkers in many fields. The Idea Factory is an engaging read and showed me how limited my understanding of that institution really was.
First of all, from the 1920s to the 1980s, it was way ahead of its time as an agent of innovation. The approaches were brilliant and could be applied today, including the notion of building architecture and organization structures to encourage interdisciplinary collaboration. Breaking down “knowledge silos” was definitely countercultural in a century known for specialization.
Secondly, the sheer number of transformational inventions, including the laser, transistor, fibre optics, satellite communications, the cellular mobile network, integrated circuits and the notion of information as digital that came from a single institution is both surprising and would be impossible in today’s world. Sadly, in the modern competitive marketplace, there is likely no room for a monolithic regulated monopoly, as was AT&T, to support such a single engine of innovation and basic research.
My primary connection with Bell Labs was through computer science with innovations such as UNIX and C Programming Language. The historical context this book outlines shows how surprising this is because AT&T was, by regulatory decree, precluded from entering the computer industry. That said, it is ironic that most of the inventions of Bell Labs, collectively contrived to make telecommunications as a separate industry obsolete. Instead, as predicted as early as 1948 by the remarkable information age seer, Claude Shannon, much of the modern economy has by transformed by our current digital age of networked and pervasive computing.
Lastly, Gertner explores the culture of those who drove innovation. Often eccentric, and to outsiders perhaps impossible or unemployable individuals, had the sheer force of will and brainpower to achieve breakthroughs that others either hadn’t even considered or thought impossible. Given my own small town origins, the deliberate strategy of finding these small town prodigies to populate the largest research-oriented brain trust in the world resonated.
All too often, societies believe that they are the first to master innovation. Sometimes we should stop and consider successful strategies from the past. Far from being solely a modern preoccupation, innovation has always been a hallmark of human advancement. Yet, with no clear place for a lucrative and regulated monopoly to fund pure research, where will the fundamental research of the future originate?
The book cites John Mayo, a former Bell Labs chief,
“Bell Labs substantial innovations, account for a large fraction of the jobs in this country and around the world”
In a world driven by global markets and the quarterly thinking of Wall Street, we really do need to consider how our next leap of fundamental research will be unleashed. John Pierce, another Bell Labs chief summarized the “Bell Labs formula” in four main points:
“A technically competent management all the way to the top. Researchers who didn’t have to raise funds. Research on a topic or system could be, and was, supported for years. Research could be terminated without damning the researcher.”
Beyond learning from the wisdom of the leading research institution, where will we find the vision and resources to enable innovation on such a transformational scale? Beyond the Venture Capital and now Angel funded technology startup ecosystem, perhaps exemplars like Mike Lazaridis‘s pioneering Perimeter Institute of Theoretical Physicswill chart a course for the 21st century.
I’ve always had the luxury to work in jobs in which I’ve had great passion for the core mission. I’ve come to realize how rare that is. And, with the twenty-first century making career and personal choices an ever more complex labyrinth, that fact is indeed a shame.
With this in mind, I was so pleased to be pointed to a book by Clay Christensen, one of the leading gurus of innovation with fresh insights on the topic of individual choices. As befits the author of The Innovator’s Dilemma, Christensen brings a fresh and personal perspective to the assist people in shaping their life to match personal motivation with life, relationship and career choices. I was pleased to see the issue of personal integrity covered in this book. What distinguishes this book from typical self help tomes is that, instead of providing generic answers, it defines a strategic framework for navigating the increasingly complex and personalized world.
The book is well informed by his existing recipes for strategic innovation, an example being the balance of emergent strategy with deliberate strategy. Where else could Christensen’s unique notion of “the job to be done” speak to the notion of empathy, as in intersponal relationships? Sometimes new concepts do come from other fields. In this case, the leading Harvard Business School commentary on innovation brings a new approach to an old topic.
I strongly recommend that people read this slim, yet insightful, work.
It is notable that much of the recent trend towards Social Innovation has come from people who began their careers in technology startups, in Silicon Valley or other technology clusters. Some notable examples include:
Bill Gates, partly at the instigation of Warren Buffet who added his personal fortune to that of Gates, left Microsoft, the company he built, to dedicate his life to innovative solutions to large world issues such as global health and world literacy through the Bill and Melinda Gates Foundation
Started by Paul Brainerd, Seattle-based Social Venture Partners International is innovating at the intersection of technology and venture capital, with Venture Philanthropy. Paul sold Aldus Corporation (an innovator in desktop publishing applications, including Pagemaker) to Adobe in the mid 1990s. In his mid-40’s at the time of the Adobe acquisition, he was young enough to seek a significant and active social purpose in his life.
Waterloo’s own Mike Lazaridis aims to transform our understanding of the universe itself by investing hundreds of millions of dollars into Perimeter Institute for Theoretical Physicsn and Institute for Quantum Computing, effectively innovating a new mechanism of education and discovery. Notable is that this area of investment is one that may well take years, possibly decades, to show what breakthroughs, if any, are discovered.
Whether or not always attributtable to this connection with technology entrepreneurs, increasingly Social Sector organizations are starting to become much more like the entrepreneurial startups so familiar in the world of high technology. I’ve personally witnessed some of this change, and would like to suggest, that while there remain big differences, the parallels are strengthening over time. The following concepts represent just a small sampling of the key areas of similarity:
1. Founders Versus Artists
Stories are legion of smart, brash (and even mercurial) technology company founders who transform a business sector through the sheer strength of their wills. Many of these founders are “control freaks” and might find employment in conventional jobs a difficult proposition. Venture capital and angel investors have learned to be wary of such founders, citing numerous examples of founderitis – in which uncoachable founders, in a case of “my way or the highway” would rather maintain control than bend to ideas from often more experienced mentors, board members and investors.
Such personalities also exist in the Social Sector. For example, many arts organizations are founded by bright and innovative artistic directors. And yet, many of these same organizations come unravelled by the same mercurial nature that prevents the organization from being properly governed and accountable to funders (investors). With my background on both sides of this divide, the parallels are hauntingly striking.
Since such founders strengths can also be their undoing (or that of their organization), a conscious Board level assessment of such situations is always wise.
2. Running on Empty
Notwithstanding the media coverage of a few lucky technology startups such as Facebook orGoogle, most technology startups run of little or no significant funding. Many seek to change the world with very small amounts of capital, sometimes no more than several million dollars. The recent trend towards building such small capitalization organizations is called the Lean Startup movement. The challenges inherent in their undercapitalization is often the top complaint of such startups. However, Sergy Brin, the Google co-founder has insightfully observed that “constraints breed creativity” to describe how an underfunded state has led to the discovery of innovative ways to build companies and deliver their products.
Likewise, from my experience the vast majority of charities and nonprofits complain about being undercapitalized, and the reality is that most are. It is a fact of life in the social sector. Only now are we starting to see the emergence of social ventures, which by stealing a page from underfunded technology startups are exploring new business models and ways to deliver social change, often leveraging IT or a different process to vastly reduce costs of program delivery.
3. Technology Changes Everything
We’ve seen the emergence of a world where all information is stored in digital form and people are connected, even while mobile, the role of the web and technology can’t be underestimated. Technology-based startups, because they are small and start from scratch, often approach traditional problems in very non-traditional ways. Revenue and funding models change, as do fundamental ways to organize a business or social enterprise. Social media allows ideas to spread in a viral fashion. We have already seen how organizations like Avaaz can mobilize hundreds of thousands or even millions of supporters globally for both local and international issues of social injustices and poverty. This is a direct analogue to how many people now rely on Twitter or Facebook, rather than a printed newspaper, for much of their news and information.
4. Mission Creep – or the path forward
Technology startups have come to learn that success depends on laser sharp focus, attention to detail and execution of a “pure play” strategy (ie. only do one thing well). Thatparticular discipline has time and time again proven to be effective in a sector where technology change is moving rapidly and most startups are generally considered to be underfunded.
Likewise, Social Enterprisesmust adopt similar approaches to deal with underfunding and change. Even in today’s more fluid and fast-changing environment, to avoid deadly Mission Creep, Board and management must have developed a complete Theory of Change roadmap to enable Manage to Outcomes.
First of all, I would like to congratulate Phil Deck, Michael Harris and the entire team for finding both a fabulous new home for MKS, but also one which represents a significant strategic financial transaction, valuing MKS at just over 4 times estimated FY2011 sales.
Many people have asked for my perspective. In short, I continue to view the acquisition as favourable to customers, employees, Waterloo and its shareholders. To delve further, this article, written from my own perspective, gives both background and some lasting observations and universal lessons from MKS.
Over the last decade, MKS largely sat out the wave of consolidations in Applications Lifecycle Management (ALM, that builds on the earlier category of Software Configuration Management), for example:
IBM acquiring Rational Software for $2.1 billion on 6 December, 2002,
Mercury Interactive acquiring Kintana for $225 million on 10 December, 2003,
Serena Software acquiring Merant on 3 March, 2004 for $380 million, followed by
Silver Lake Partners, a private equity firm, acquiring Serena Software for $1.2 billion on 11 November, 2005,
IBM acquiring Telelogic (which had earlier bought MKS competitor Continuus Software) for $745 million during April 2008
The aforementioned almost $5 billion acquisition binge represented a huge shift in the ALM market dynamics. By 2011, a new driver for acquisitions had emerged. As engineered products start to contain more software value than traditional hardware, customers requirements in the Product Lifecycle Management space started to converge with the Application Lifecycle Management space. This blending and merging of categories, fuelled by the trend to software being the dominant product differentiator, led to the acquisition of MKS by PTC and may portend more activity as these spaces continue to consolidate. Because PTC is moving into a new, but adjacent market category, that means that the domain expertise from the MKS product teams will be critical to PTC‘s long term success.
Could MKS have remained independent? My sense is, in the longer term, no. In the 1990s, a company could IPO on the NASDAQ at around $20 million revenues. Today, that number is over $100 million, and MKS at acquisition had about $75 million revenues. Perhaps further acquisitions might have accelerated getting to scale, but without a NASDAQ public currency that would have been difficult. Therefore, that’s a key reason why the PTC acquisition is such a home run win for MKS.
MKS built great value as a significant global software business over its 27 years of pre-acquisition existence. I’m very pleased that, unlike some early stage start up acquisitions, this likely means that PTC will continue to see Waterloo as a base for further expansion based around the solid product R&D team. In that sense, it’s great news for the region’s economy and something I’m very happy to see.
I wanted to reflect on a few themes that I’ve seen play out over MKS‘ long history – both lessons learned and some principles that might help some of the current crop of start ups grow into global businesses headquartered in Waterloo.
PIVOTS
MKS definitely was a company that had the proverbial “9 lives”. Using the au courant start up lingo, these were critical “pivots”. The number of pivots arises partly because MKS was a multi-product company and even more so because MKS was a first generation of software company in Canada, before clear rules to build such a knowledge based business had been formulated. Achieving company growth means many battles fought (and not all successfully) to win the war of business success. I’ve also come to learn that timing can trump even the most gifted product strategy work or execution attempts. As a result, ultimate success can be seasoned by many failures along the way to that success.
The following summarizes some of those 9 lives inside MKS:
The original name of MKS Inc. was MorticeKern Systems Inc. – not taken, as often supposed from an aging and curmudgeonly New York accountant, but rather inspired by two typesetting terms that connote a sort of Zen in the ancient arta of hot lead typesetting. The pre-incorporation business plan for MKS to be the first to develop and commercialize the then state of the art, full page desktop publishing. When the US technique seeking venture capital to fund this exposed that venture capital hadn’t yet begun in Canada, the company moved on to a bootstrap mode (which is oddly similar to the state of many startups and financing today).
As mentioned, to have the resources to develop products, we put out a shingle to do contract development work for such major companies as Imperial Oil, Westinghouse, Ontario Ministry of Education and Commodore. Using a portion of the millions of revenues this generated, and with learnings from development and cross-development on the naked IBM PC and MS-DOS, we started to create our first product.
MKS Toolkit was, as mentioned, directly inspired by a gap in the market, and by 1985 was shipping its first products. MKS Toolkit thrives, in morphed form, to this day, and more important has spawned many of the later product directions over the next 25 years.
InterOpen emerged from my recognition that POSIX (and later x/OPEN) was being cast as Federal Information Processing Standards (FIPS, from National Institute of Standards and Technology) that meant that all existing, non-UNIX systems (we called them proprietary back then) must adopt POSIX compliant interfaces and tools. InterOpen ultimately, over many years, generated $50 million or more of OEM licensing revenues for MKS. InterOpen technology instrumental in IBM Open Edition MVS, HP MPE/ix, DEC VAX/VMS, Fujitsu SureSystem and many others.
By 1988, we had taken an add-0n to MKS Toolkit, and named it MKS RCS which was the first generation software management system product, built around revision (version) control for software development projects.
In 1992, another tool arising from MKS Toolkit (uucp), along with an innovation proposal from Dale Gass, led to the creation of MKS Internet Anywhere. Prior to Windows 95, with no TCP/IP stack or internet functionality, this was a consumer-grade suite bundling everything from browser, FTP, email client with the necessary stack for the market. With the battle by Microsoft to kill Netscape still in the future, this division along with a dozen including some of our most talented staff, was sold off to Open Text Corporation in 1994.
By 1993, MKS had re-built from scratch the original MKS RCS into its first enterprise-grade product – a suite now branded as MKS Source Integrity. From then on, this was the highest growth key focus for the company, although it took some time to be profitable, being cross-subsidized by the high margin successes of MKS Toolkit and InterOpen.
By 1995, another key MKS employee, David Rowley, drove the creation of MKS Web Integrity, which I believe to be the first ever enterprise web content management system. Although licensed into the Netscape SuiteSpot Server, along withInformixdatablades and Verity search technology, perhaps the focus (and Venture Capital financing) of a pure play strategy might have given it more ammunition against early competitors like Interwoven and Vignette.
Eventually, the need to clearly position the enterprise software management products as the sole focus of the company, and to distance from some confusion with the tools and developer-based MKS Toolkit product line, an attempt was made to separate and brand as Vertical Sky. Whether or not this might have worked at a different time, the Dot Com meltdown of 2000 meant that it was impossible to raise investment to finance such a roll out. Ultimately, Phil Deck and the new management did continue the separation and promotion of MKS Source Integrity to full enterprise grade, but without the added costs of the Vertical Sky rebranding.
Although there were many more than the above sample 9 lives, I think that the twists and turns to build a real business are a critical lesson for today’s companies. At Verdexus we today ascribe to the pure play strategy for startups (less capital required, more focus and easier to explain to investors). Nonetheless, there is much to be said for building a strong base around multiple product innovation.
WORLD CLASS TEAM
While the players have changed over the years, MKS has been blessed by an amazing group of employees, and not just in senior management. For example, at the time of our proposed NASDAQ IPO in early 1997, the investment bankers from Hambrecht & Quist in San Francisco mentioned, upon meeting our senior team, that this was amongst the strongest they have ever seen. Part of this came from hiring both from US and Canada (See GLOBAL APPROACH below) and that includes non-Canadian executives such as Tobi Moriarty, Mike Day, Holger Schmeidefeldt and Frank Schröder. We really did take to heart the maxim that great leadership came from a strong team, as I discussed in “The Power of Two (Or Three)“.
A positive environment led to better gender balance and better results. For example, in 1996 the senior management team of 7, included 3 women. Such a balance, sadly rare even today, led to enhanced results and sense of opportunity across the entire staff.
(l->r) Ralph Deiterding, Eric Palmer, Ruth Songhurst, [TSX VP], Randall Howard, Tobi Moriarty, Mike Day, David Rowley
I am most pleased by the many talented employees at MKS, from co-op students onwards, who have gone on to incredible heights of achievement. I am continually discovering another company that has been built by talent that got its first state of the software business at MKS. I think one approach that has real merit, was the notion to bring top global talent into the business, in part for the mentoring effect this has on other employees. Considering the Waterloo ecosystem in the 1990s, this was particularly helpful in building previously thin functional areas such as marketing and product management.
MKS Team (circa 1992) – Old Post Office, Waterloo
Finally, given recent media attention to weak and/or non-independent boards, I was pleased to have a board that was both global and always able to hold management accountable. As CEO, I can remember many uncomfortable moments when I, or other management team members, were seriously challenged, and that is exactly how it should be.
GLOBAL APPROACH
Perhaps because I had my first software start up experience in the US (building Coherent), it only seemed natural to focus on the entire North American market, and ignore conventional advice to start with the local region, province or country. Even in the very earliest days of MKS Toolkit, when products were shipped by mail and advertised in physical magazines, we realized that every promotional dollar went much farther in the US versus just focusing on Canada. The led to perhaps the first customer of MKS Toolkit being AT&T Bell Labs, which I believe contributed to MKS becoming known across North America in developer circles. The use of 800 toll free numbers across US and Canada, coupled with email, allowed us to work and act like a US company. To me, it always felt similar to the Israeli model for tech companies.
By the 1990s, although we had distributors in Europe (and a small few in Asia), we decided invest heavily in the European market, first from a beachhead in Germany and then the UK. By 2000, Europe represented about 35% of the company’s revenues which later proved a strong hedge to the US-centric meltdown that started in 2000.
CAPITAL
Although MKS pre-dated Canadian venture capital, it did access the capital markets through various vehicles, such as the Special Warrant and IPO, that were common in the 1990s. During my tenure, about $40 million was raised, and I believe that the whole lifecycle raise was in excess of $50 million. During the 1990s, this was the normal cost to build a major entrprise software company to full scale. Today, while our Venture 2.0 methodology and the Lean Startup approach lessens the capital requirements, I still believe that, over the longer term, building a significant business takes much more capital than people realize.
One consequence of this, coupled with the more limited capital available in Canada (at least Ontario), is the tendency of technology companies to exit early – when they are partly built start ups rather than full businesses. In a way, this means that acquiring companies are really only getting a product and development team in a form of outsourced innovation. The downside of this model would seem to me to be the creation and maintenance of far fewer jobs in our region. I would love to see a rigorous study of this effect. In fact, my next post will explore the stage and timing of significant Waterloo region technology company acquisitions.
GROWTH BY ACQUISITIONS
Although MKS never had the NASDAQ public currency, being public on the TSX enabled the 7 acquisitions I was involved in. I would say that acquiring companies was a real learning curve. On balance, we managed to increase our acquisition capabilities over time, but always the results took longer than expected. For example, the acquisition of the AS/400 business from Silvon brought MKS many of today’s largest customers (e.g. HSBC), but the anticipated synergies took 2-3 years or more rather than the predicted 18 months to materialize.
The bigger issue, beyond building M&A expertise, is that today it is harder for companies to go public and have market liquidity for acquisitions than in the 1990s. I’m not sure if 21st century capital markets will ever return to a state where that is again possible.
FUN AND CAMARADERIE
Last, but definitely not least, most days whether travelling to engage the world or back in the office, people had a lot of fun while building a great business. The right mix of “work hard, play hard” can lead to a better overall experience that, in so many ways, enhances overall performance. And, we had some pretty great parties, whether at product launches in California or Europe or simply back home celebrating key milestones for MKS.
SUMMARY
The above observations represent but a small taste of my thoughts regarding the recent MKS acquisition. My hope is that the Waterloo tech ecosystem will witness many more companies being able to transcend the start up phase to become globally leading businesses. The future of our country and region depends on it.
“How You Gonna Keep ‘Em Down On The Farm” (excerpt) by Andrew Bird
Oh, how ya gonna keep ’em down? Oh no, oh no Oh, how ya gonna keep ’em down? How ya gonna keep ’em away from Broadway? Jazzin’ around and painting the town? How ya gonna keep ’em away from harm? That’s the mystery
______________________
This week, my 18 month old Blackberry finally bit the dust. Out of this came a realization that led me to the challenge I issue at the end of this post.
Please don’t view my device failure to be a reflection on the reliability, or lack thereof, of Blackberry handsets. Rather, as a heavy user, I’ve found that the half life of my handsets is typically 18 to 24 months before things start to degrade – indeed, mobile devices do take a beating.
The obsolescence of one device is, however, a great opportunity to reflect on the age-old question: What do I acquire next? That is the subject of this posting, which focuses on the quantum changes in the mobile and smartphone market over the last couple of years.
I’ll start with a description of my smartphone usage patterns. Note that, in a later post, I plan to discuss how all this fits into a personal, multi-year odyssey toward greater mobile productivity across a range of converged devices and leveraging the cloud. Clearly, my smartphone use is just a part of that.
I’ve had Blackberry devices since the first RIM 957, and typically upgrade every year or so. I’ve watched the progression from simple push email, to pushing calendars and contacts, improved attachment support and viewing, even adding the “phone feature”. For years, the Blackberry has really focused on the core Enterprise functions of secure email, contacts and calendar and, quite frankly, delivered a seamless solution that just works, is secure and fast. It is for that reason that, up to the present day, my core, mission critical device has been a Blackberry. Over the last few years, I’ve added to that various other smartphone devices that have particular strengths, including the Nokia N95 (powered by Symbian OS), various Android devices and, my current other device, the ubiquitous Apple iPhone.
My current device usage pattern sees a Blackberry as my core device for traditional functions such as email, contacts and phone and my iPhone for for the newer, media-centric use cases of web browsing, social media, testing and using applications, and so on. Far from being rare, such carrying of two mobile devices seems to be the norm amongst many early adopters. Some even call it their “guilty secret.”
Over the recent past, I’ve seen my expectations of the mobile experience dramatically escalate. In reality, the term smartphone is a bit of a misnomer as the phonefunction is becoming just one application among many in a complex, highly functional, personal, mobile computing device. The state of the art in converged mobile devices (smartphones and, increasingly, tablets) has indeed crossed the Rubicon. I believe that this new mobile universe is as big a break with the past for the mobile industry as was the rise of the internet (particularly the web) to the older desktop computing industry. Indeed, in several markets, 2010 is the year when smartphones outsell laptops and desktops (combined).
To summarize this new palette of capabilities of this new mobile computing generation, they fall into several areas:
rich web browsing experience, typically powered by WebKit technology, which ironically was pioneered by ReqWireless (acquired by Google) right here in Waterloo. With the advent of HMTL5, many such as Google, view the browser as the new applications platform for consumer and business applications,
robust applications ecosystem, with simple AppStore function to buy, install and update. iPhone and Android are pretty solid in this regard. Blackberry’s ill fated AppWorld is an entirely different matter. For me, it was hard to find, not being on my Home Screen, application availability seemed to be (counterintuitively) dependent on the Blackberry model I was using, and also the OS memory security didn’t seem up to the applications actually working reliability. (Translation, I found that loading applications onto my Blackberry made the device slower and less reliable, so ended up removing most applications). Whatever the reasons, the iPhone AppStore has 250,000 applications with 5 billion downloads. Android Market has over 80,000 applications and Blackberry AppWorld lags signfiicantly behind this.
user friendly multi-media interface, including viewing of web, media, and images, drop & drop and stretch & pinch capabilities. So far, touch screen technologies used in both iPhone and Android seem to have won the race against competing keyboard-only or stylus-based alternatives. Personally, I believe there are still huge opportunities to innovate interfaces optimized for small screens and mobile usage, so I will remain open to the emergence of alternative and competing technologies. I’m convinced that one use case scenario doesn’t fit all.
a secure, modern & scalable operating system on which to build all of the above and to drive the future path of mobile computing. Given my heritage in the UNIX world starting in the 1970’s, it is interesting to me that all modern smartphones seem to be built around a UNIX/LINUX variant (iOS is derived from BSD UNIX and Android from Linux) which provides a proven, scalable and efficient platform for secure computing from mobiles to desktops to servers. Blackberry OS, by contrast, appears to be a victim of its long heritage, starting life less as a real operating system, but more a TCP/IP stack bundled with a Java framwork that morphed over time (it sounds reminiscient of the DOS to Windows migration, doesn’t it?). To be fair, Microsoft’s Windows Phone OS also suffers from its slavish attempt to emulate Windows metaphors on smaller, lower power devices and the translation doesn’t work well.
I want to stress an important point. This is not solely a criticism of Blackberry being slow to move to the next mobile generation. In fact, some of the original smartphone pioneers are struggling to adapt to this new world order as well. My first smart phone was the Nokia 9000 Communicator, similar to the device pictured on the left, and first launched in 1996. Until recently, Nokia with their Symbian OS Platform was the leader in global smartphone market share. Likewise, Microsoft adapted their Windows CE Pocket PC OS, also first released in 1996, for mobile computing market earlier in this decade, and that effort is now called Windows Phone, shown on the right. Both vendors just seem to have lost the playbook for success, but continue to thrive as businesses because smartphones represent a relatively small fraction of their overall businesses. However, respectively, feature phones and desktop OS and applications, are hardly likely to continue to be the growth drivers they once were.
I need to stress another point mentioned earlier. There will be competing approaches to platform, user interface, and design. While it is possible that Android could commoditize the smartphone device market in the way that Wintel commoditized the mass PC desktop and laptop marketplace, I suspect that being ubiquitous, personal and mobile, these next generation smartphones are likely to evolve into disparate usage patterns and form factors. That said, there will be certainly be signficant OS and platform consolidation as the market matures.
At last I get to my challenge. As an avowed early adopter, I have aggressively worked at productivity in a “mobile nomadic” workstyle which leverages open interfaces, use of the cloud and many different techniques. Even I am surprised by the huge enabling effect of modern hardware, communications and applications infrastructure in the mobile realm. Essentially, very few tasks remain that I am forced back to my desktop or laptop to accomplish. However, the sad fact is that the current Blackberry devices (also Nokia/Symbian and Microsoft) fail to measure up in this new world. Hence the comment about Farms and Paris. The new mobile reality is Paris.
My challenge comes in two parts:
What device should replace my current Blackberry?
Since the above article doesn’t paint a very pro Blackberry picture, what is RIM doing about this huge problem?
I should point out that I have every reason to want and hope that my next device is a Blackberry. RIM is a great company and a key economic driver for Canada and I happen to live and work in the Waterloo area. Furthermore, I know from personal experience that RIM has some of the smartest and most innovative people in their various product design groups, not to mention having gazillions of dollars that could fund any development. Rather, I would direct my comments at the Boardroom and C-Suite level, as I am baffled why they have taken so long to address the above strategic challenges which have already re-written the smartphone landscape. Remember that iPhone first shipped in Janaury 2007 and the 3G version over 2 years ago, so it’s not new news. Android is a bit slower out of the gate, but has achieved real traction, particularly in the last few quarters. And, to be clear, I’m not alone in this – see “Android Sales Overtake iPhone in the US” – which goes on to show the the majority of Blackberry users plan to upgrade to something other than Blackberry. The lack of strategic response, or the huge delays to do so, remains an astonishing misstep.
Therefore, if anyone senior from RIM is reading this, please help me to come to a different conclusion. I very much would like to continue carrying Blackberry products now and into the foreseeable future.
For other readeers, please comment with your thoughts. What device would you carry, and more importantly, why?
[NOTE: this post was written a week before today’s launch of the Blackberry 9800 Torch with OS 6. There are definitely some promising things in this design, but it remains to be seen if, indeed, this device represents the quantum leap that the new marketplace reality requires]
“Nature is by and large to be found out of doors, a location where, it cannot be argued, there are never enough comfortable chairs.” – Fran Lebowitz
I’m a believer that Location Based Services (LBS), coupled with the latest smartphones, will evolve a number of indispensible, and unexpected, killer applications.
That said, it’s pretty clear that those mission critical applications remain to be found. Essentially, the whole LBS opportunity, is a social experiment that early adopters are collaboratively helping to clarify.
It was with those thoughts in mind when I decided to start using some of the popular LBS social media applications, or should I say social games? These included FourSquare, Yelp and Gowalla.
Let me put this in context of other social media applications with which I’ve experimented. Back in 2007, I decided to try microblogging service Twitter, that was then in its infancy, I had low expectations. In fact, I expected to hate it, but mentally committed to give it a two week trial just for the purposes of self education. Over 3 years later, I’m still using it, love it and have found many applications which Twitter excels at – personal clipping service, early information and a sense of what my universe of followees is up to are among them.
FourSquare, although popular, hasn’t (yet) passed my personal usefulness test. And, I suspect most others still consider it more a game than a mission critical application. While there is an element of fun, it seems to be the sort of thing you could easily drop without much loss.
In that context, it surprises me that FourSquare recently pushed a new version (1.7.1) to my iPhone that checked my actual proximity to locations Since then, almost half of my check ins fail to pass this new proximity test, even though I was physically at the location in question. Below, I have re-posted my support request that gives more background.
But, suffice it to say, an application change that, on the surface, seemed sensible, made the application way less attractive to me. That’s doubly deadly in a space which is still finding it’s spot. I’m interested in comments on both the major issue (startups alienating early adopters) and even the specific issue.
I’m surprised the FourSquare has re-written the rules of an emerging LBS service without any notification. I am referring, of course, to the latest upgrade on my iPhone on which checkins deemed too distant from the intended location (by an undocumented and new algorithm) are suddenly deemed ineligible to accumulated points or badges. Because it is so fundamental, I’ve also decided to re-blog this as well, because it illustrates how the law of unintended consequenes can have a huge impact on a young service’s future prospect. Translation: this wasn’t a well thought out change in so many ways.
Why do I saw this? Here are just a few reasons: 1. For those of us who live in rural areas where cellular tower infrastructure is typically much more widely spaced (and often in the 850MHz band vs. the 1900 MHz band for broader coverage at lower densities), the inherent accuracy of locations reported by mobile devices is much lower. For example, at locations near to me, it is not uncommon to have the phone’s margin of error be as much as 4500 m to 6000 m. Although FourSquare doesn’t divulge their required closeness, I think it may be something like 500 m. With that in mind, it is almost by definition that most rural “check ins” will be, starting this week, flagged as ineligible. And, that’s the behaviour I’m seeing. Of course, in many instances GPS lowers this error, but it is surprising how many locations don’t have great GPS reception, such as indoors or in an automobile. 2. By changing the rules of the game on the fly, FourSquare has penalized those checking into locations that weren’t located that accurately in the first place – whether because of the reasons in #1 or because people weren’t told they had to define the location within a certain minimum delta of the actual location. For example, I suspect that people actually defined the location as they were walking toward the actual location, knowing that FourSquare didn’t care where the real actual location physically was. I find this behaviour in about 30-50% of the check ins I’m doing since the change.
FourSquare was an experiment for me, but given these new rules which appear to not have been well thought out for large swathes of geography, I’m considering shutting down my personal FourSquare use.. For something that still provides no direct utility, I really don’t want to have to go back to re-enter all locations information from scratch.
This week I had the pleasure to be the luncheon speaker during the Ignite Entrepreneurship course put on by Guelph Partnership for Innovation, aimed at University of Guelph graduate students from various technical fields including biology, life sciences, materials, agribusiness, etc.
It’s always a thrill to get into a room with 40 or so energetic and bright grad students who are considering going into business. And, kudos to GPI for hosting this.
As an experiment, I broadcast the 3 questions out into social media-verse (Facebook, LinkedIn, Twitter) and got some great UGC that I factored into the presentation.
Here are the questions regarding Money and Startups that I attempted to address:
Do you really need it?
Where will it come from? and
What will you do with it?
I’d be delighted if any of you could comment on the topic as well. It’s an extraordinarily challenging time to startups to find funding right now, and the importance of a healthy pipeline of new companies to our future well being, has led me to dedicate a fair portfion of my social enterprise/sharing time to the issue of the serious funding gap for startups.
Note that while much of this is of global relevance, part of the advice is very specific to the startup funding landscape in Ontario.
“It is sobering to reflect on the extent to which the structure of our business processes has been dictated by the limitations of the file folder.”
-Michael Hammer and James Champy, Reengineering Your Business
Recently, I unearthed a 10 year old book by Bill Gates, Business @ the Speed of Thought and took a bit of time to re-scan that 1999 book. On the first day of 2010, it seems appropriate to study technology trends to help give perspective to the future of the digital revolution.
Far from being an overtly partisan paen to Microsoft, the passion and enthusiam for change reflective both Bill Gates personality and the thinking of that era, shine through.
What is being presented is a prescription for a world, focused primarily on business, where mass adoption of networked computing unleashes a digital, knowledge-based revolution.
In the 1990’s, Information Technology (“IT”) was considered a “necessary evil” in business, being viewed largely as a cost centre, and consigned to report to the CFO with a major focus on cost control. Although we’ve made some progress in the last decade, there is still a huge need to educate all business people on how essential IT is to creating competitive advantage, mitigating risk and enabling new products and services. In essence, IT and the modern business, are inseparably intertwined. He suggests the notion of a “Digital Nervous System” as shorthand for a set of best practices for business to use. Although this short hand hasn’t really caught on, the ideas behind it remain.
And yet, it is easy to dismiss much of this early prosletyzing as impractical dreaming, a fact that the “dot com meltdown” probably exacerbated. So, how much of the 1990’s vision makes sense today?
Somewhat surprisingly, the answer is most of it. While some trends were completely unticipated by Bill Gates, and most of his peers in the 1990’s:
cloud computing, driven by virtualization, in which vast arrays of commodity computing power is outsourced and interconnected with high bandwidth network connectivity wasn’t considered at all. The 1990’s ethos was company controlled, in house, server farms.
social networking and social media weren’t even thought of. Driven by recent research into how ideas can spread and and recent breakthroughs in the science of social networks, coupled with cheap, pervasive and always connected computing, this is a real paradigm shift from the 1990’s world view.
outsourcing and offshoring, in which large companies access “clouds” of talent and hence are looser federations of people, is perhaps only foreshadowed. The power of individual contractors and smaller businesses has been signficantly enhanced, thus levelling the playing field in our modern digital economy.
many of the predictions and recommendations remain true or have gone from vision to reality:
Web 2.0 can be viewed as many pre-bubble Web 1.0 concepts finally coming to reality in the fullness of time. Whereas there used to be much talk about “bricks” versus “clicks”, the modern company is fully integrated with the Web as a part of the distribution strategy. Companies that were simply a “web veneer”, like Webvan or Pets.com are gone and long forgotten.
The Paperless Office, long envisaged as part of the digital revolution, is finally starting to arrive. While some days I personally seem to be unable to keep the paper monster under control, many companies have made great strides. For example, Gore Mutual Insurance Company where I recently joined the Board, has completed a transformation to paperless insurance making Canada’s oldest insurance company one of the first in North America to go paperless.
Disintermediation, or the death of the middleman, has accelerated recently. It could be argued that only highly differentiated specialist travel agents survive and the plight of the newspapers (when compared to the wildly successful wire services) are two great examples of this prediction coming true.
Knowledge Based Management Style has been driven to a much more open and collaborative one, largely by the force of the digital revolution. Although exceptions exist, every company needs to encourage the “bad news” to flow up to the top. The days of the hubristic CEO who stifles the “inconvenient truth” or fires the naysayer are surely numbered. When almost every business starts to look like a knowledge business, and information is power, cultural or procedural barriers to real time information flow become a serious competitive disadvantage.
Social Enterprise is being transformed by the digital revolution, and it would appear that BIll Gates was ahead of the curve in seeing this important trend. While much of government, healthcare and education remain in the 20th Century paradigm, IT has driven a remarkable change, such that the boundaries between for profit, not for profit and government enterprises has blurred signficantly. This transformation is an area of personal interest and enthusiam.
Customer Centred Business is both enabled by, and made essential, in the digital age. The importance of using technology to understand, serve and delight customers remains a key strategic advantage for businesses. Of course, there remain issues and concerns. Specifically, greater customer profiling, can lead to privacy concerns and we still are seeking the right balance. Furthermore, some first generation customers like call centres, have left businesses with their only interpersonal touchpoints being unpleasant. Anyone who has dealt with a Rogers call centre will immediately respond to an environment where siloed IT systems and nonempowered call centre employees create customer alienation. Competition and continuous technological improvement should resolve this over time.
In summary, much of the 1990’s technological vision was spot on. Obviously, it has taken far longer to bring into practice than people then suggested. However, compared to other societal changes, the march of digital technologies has been ligthening fast.
Although it is less fashionable to be a technology visionary today, I believe we still need to look ahead to our future. There remain many unsolved issues IT and, even more important, there are countless opportunities that future digital technologies will be able to deliver. Business leaders, governments and concerned citizens all need to understand and contribute to shaping a future world that will be both efficient, yet retain a good quality of life for us all. A long term perspective remains important because business investments and decisions have a surprisingly long lifespan.
Thus, the promise of the digital revolution continues, and it will be improved by thinkers who can help us to shape our desired future.
Bill Gates, partly at the instigation of Warren Buffet who added his personal fortune to that of Gates, left Microsoft, the company he built, to dedicate his life to innovative solutions to large world issues such as global health and world literacy through the 
Started by Paul Brainerd, Seattle-based 
Jeffrey Skoll, a Canadian-born billionaire living in Los Angeles and an early employee of 
Waterloo’s own Mike Lazaridis aims to transform our understanding of the universe itself by investing hundreds of millions of dollars into 
(l->r) Ralph Deiterding, Eric Palmer, Ruth Songhurst, [TSX VP], Randall Howard, Tobi Moriarty, Mike Day, David Rowley
MKS Team (circa 1992) – Old Post Office, Waterloo
My current device usage pattern sees a Blackberry as my core device for traditional functions such as email, contacts and phone and my iPhone for for the newer, media-centric use cases of web browsing, social media, testing and using applications, and so on. Far from being rare, such carrying of two mobile devices seems to be the norm amongst many early adopters. Some even call it their “guilty secret.”
cloud computing, driven by virtualization, in which vast arrays of commodity computing power is outsourced and interconnected with high bandwidth network connectivity wasn’t considered at all. The 1990’s ethos was company controlled, in house, server farms.
Web 2.0 can be viewed as many pre-bubble Web 1.0 concepts finally coming to reality in the fullness of time. Whereas there used to be much talk about “bricks” versus “clicks”, the modern company is fully integrated with the Web as a part of the distribution strategy. Companies that were simply a “web veneer”, like Webvan or Pets.com are gone and long forgotten.
2 Sep 2012
0 Comments[Book Review]: The Innovator’s Dilemma
The innovator’s dilemma by Clayton M. Christensen
Published by HarperBusiness
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This summer I took time to re-read an oft-overlooked volume that I believe to be the essential to anyone working in marketing and innovation. In this review, I’ll provide a few examples of why this book needs more attention, particularly here in Canada where we definitely need to up our game in marketing of innovation and technology.
Clayton Christensen, as Associate Professor of Business Administration at Harvard Business School, is a leading academic researcher on innovation. Yet, he still manages to provide practical and pragmatic strategies that real companies can use. And, most importantly, his theoretical groundwork is based on extensive, data intensive research over longer period of time with real companies and markets going through disruptive innovation.
The latter term is often thrown around lightly in technology company circles. A Disruptive technology (or innovation) typically has worse product performance in mainstream markets while having key features that interest fringe and merging markets. By contrast, sustaining technologies provide improved product performance (and often price) in mainstream markets.
The book covers real markets, including the various generations of disk drives starting with 14″ drives in the 1970’s to today’s 2.5″ (and smaller) drives. By studying hundreds of companies that emerged, thrived and failed over a 25 year period, some clear patterns emerge. Further examples across a broad range of markets, include he microprocessor market, the transition from cable diggers to hydraulic “backhoes”, accounting software and even the transition of industrial motor controllers from mechanical to electronic programmable models.
The key message of the book is that the playbook for normal (“sustaining”) technology innovation must be thrown away for disruptive technologies. Disruptive technologies break traditional rules in many, often counter-intuitive ways:
Entrepreneurial writings, not to mention my own experience, encourage us to celebrate failure. Beyond the power of learning by trial and error, The Innovator’s Dilemma, for the first time, provides an analytical framework as to why such failure is so critical in new markets.
One area where the book could provide more guidance is that of differentiating disruptive from sustaining technologies. Such discrimination is absolutely critical to ensure the right strategic approach to the new technology is adopted. Generally easy with the benefit of hindsight, such determination can be very tricky, and error prone, when first confronted with such new technologies.
This is a book that anyone working with products in fast moving markets needs to re-read regularly. It surprises me that, 15 years after publication, how few product marketers and senior executives appear to have benefited from the deep wisdom Christensen imparts.