Randall Howard

nimble-startup-ant

20 Jul 2009

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Has Microsoft Morphed from “Hungry/Nimble” Startup to “Fat/Stupid” Behemoth?

Bunny: Don’t you think you’d better go? The tortoise has the lead.
Max Hare: Say, I’ve lots of time to play. My middle name is speed.
SOURCE: Tortoise and the Hare, Walt Disney/United Artists, 1935

While I typically leave reviews of even major new products to others, my personal experience in the much heralded Windows 7 Beta to launch process provides  some interesting observations on the difference between large and small companhies in early adopter customer engagement.

Having bought an early Asus eeePC netbook almost 2 years ago and finding that early product both intriguing yet frustrating, I purchased the newly launched HP 2140 HD netbook when it launched in late June. This is a well engineering product that has clearly crossed the useability threshhold for uber mobility.

Like most netbooks, it comes standard with Windows XP Home. This was just fine because I, like the majority of Windows desktop users, wisely passed on the miasma that is also known as Windows Vista.

However, having heard some reports that the Windows 7 Beta was showing some promise and recognizing that running an operating system originally launched in 2003 wasn’t a viable long term strategy, I decided to upgrade to the Windows 7 Beta (now Release Candidate).

Overall, apart from the bugs inherent in any Beta,

  • problems with Bluetooth headsets that worked flawlessly under XP,
  • weird security messages when I renamed my user name to correct a typo,

the system has a clean modern design, seems to perform well and certainly is in no way like the Vista fiasco.

Sadly, Microsoft, I quickly learned, made a choice to not provide any upgrade path from XP to Windows 7. Yes, you heard right. In spite of the fact that the majority of users sagely gave Windows Vista the miss, Microsoft chose to provide a seamless upgrade path only for Vista users. While Microsoft perhaps feels that Windows XP is now an obsolete product, remember that most netbook companies are still shipping XP, so XP is truly a current system that people continue to buy. What did this mean to my early adopter experience with Windows 7?

  1. Microsoft documentation proposed a work around called Easy Transfer which really was just a file copy, to another machine or drive, but that process did nothing to smooth the upgrade transition.
  2. Unbelievably, all of my Windows XP applications, settings, configuration, etc. were completely wiped out by the Windows 7 install.
  3. As I mentioned above, things (such as my Bluetooth headset support) that worked before ceased to work properly.
  4. My Outlook Address Book can no longer be accessed, making email composition challenging, because somehow installing Windows 7 RC corrupted my Outlook profile/configuration.
  5. And the list goes on, but this should give you the flavour. What should have been 30 minutes to one hour procedure has turned into weeks of tweaking and general frustration.

Even Nimble Startups Risk Aging into Fat and Stupid Behemoths

So, as one who works with young and hungry startups, I look at this decision through a management decision making lens. Would a startup chose to cause such pain and grief to the majority of their installed base? Not a chance!

However, I have noticed that somehow, and inexorably, nimble startups eventually ossify into larger and more mature enterprises. And the decision making becomes more about risk and ROI and less about the customer. Is this what’s happening at Microsoft?

The history at Microsoft is interesting. Bill Gates, from the earliest days, was paranoid about being eclipsed by the greater resources of companies like IBM. Today, as the desktop operating system become more irrelevant, Microsoft’s paranoia is aimed at other firms like Google, which interesting announced their own OS for Netbooks last week. Perhaps the transition from Bill Gates to Steve Ballmer at the helm, there is less acute customer focus? In any case, no startup would ever even conceive of disenfranchising a customer base so completely.

What do market statistics show us about the size of Microsoft’s problem? A Decmber 2008 report from OneStat indicates that for Operating Systems, Windows Vista has managed a mere 21% compared to Windows XP having a powerful 72% share which is 3 to 4 times larger. The fact the XP is good enough for most customers is a real problem for Microsoft, representing among other things, significant loss of revenue (and relevance).

Is an individual user’s frustrating experience something Microsoft should be looking at? Absolutely. Consider CNET’s recent discussion of respected analyst Garnter’s assertion that Vista probably has put Microsoft into its first major set of layoffs ever: Gartner: Blame Vista for Microsoft Layoffs. This excerpt says it all:

“”Windows Vista didn’t do well. Based on our data, a lot of clients are skipping Windows Vista,” said Neil McDonald, an analyst at Gartner. Indeed, nearly every other major analyst firm found a similar lack of Vista adoption, with Forrester Research likening the (operating system) to the failed New Coke.”

Even a big and market leader like Coke learned from their mistakes. Will Microsoft return to its roots and see the light with Windows 7?

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murray-shafer1

5 May 2009

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A “Rare” Tasting Menu by R Murray Shafer

“Dawn itself is the most neglected masterpiece of the modern world.” – R Murray Shafer

For those who don’t already know him, R Murray Shafer is the legendary superstar of the Canadian Musical avant garde – a great thinker, teacher, composer and all round renaissance man.

Having been a fan for over 30 years but with little local exposure, it was great to see his Harbingers of Spring: a rare soundwalk presented last week in Waterloo Region. I’ve had the great fortune to have experienced many of his masterworks, especially those from his ambitious, 12 part Patria series, including The Princess of the Stars, Ra and The Enchanted Forest. Each concert is a one of a kind, tour de force combining music, theatre, philosophy many times based on classic mythologies and almost always set in the natural environment.

The soundwalk event was really a set of mini-concerts stitched together during a 3 hour walk through the breathtaking, almost 1000 acre rare property at the confluence of the Speed and the Grand Rivers in Cambridge. First and foremost, a brilliant thought leader and writer, Shafer opened with some great concepts:

  • Sounds and music, never originated in the sterile, acoustically engineered, concert hall. Their natural habitat is outdoors.
  • Most early cultures could hear both nearby sounds, such as birds or the trees, but also far off sounds, (maybe even 20-30 km) by “putting their ear to the ground”.
  • Being acutely atuned to ambient sounds wasn’t just an aesthetic sense, it was also essential to  survival.
  • It is possible to hear even the sound of “trees growing in the woods”. This isn’t just the lovely sound of wind in leaves, but also the sound of sap rushing through the trees. Each species of tree has its own distinctive sound (music?) both in growing and in the way it interacts with the wind.
  • Sadly, our modern, urban population has lost its ability to hear more than the most immediate sounds – the white noise of traffic, car horns and the ubiquitous music such as in Starbucks drown out any ability to hear anything further afield. Along with this, perhaps we have lost our ability to “hear” the very ecosystem we inhabit.

Finally, Shafer concludes with his vision that re-connecting people with their audible environment might well be essential to the very survival of our environmentally challenged planet.

Including premieres and works inspired by Shafer’s engaging, nay idiosyncratic, style, some of the pieces included:

  • Radio Rare Woods (world premier) by Ellen and Michael Waterman, including first a live performance of the Nocturne for Solo Flute from Shafer’s Wolf Music, composed in 1996, followed by echoes played over several dozen radio receivers strategically arrayed thoughout the wood walk. Certainly, a juxtaposition of the urban and natural environments.
  • From the Bow a poem by Rae Crossman, set to clarinet music written by Murray Shafer.
  • Excerpts from The Enchanted Forest and Aubade for Solo Voice by Murray Shafer is a wonderful example of the music coming to life in the setting of a forest. The music elicits a live response from birds and other wildlife in a way that is more alive than anything seen in any concert hall. It was truly awe inspiring.
  • Transportation Transoformation in Shades of Rust (world premier) by Annette Urbschat and Todd Harrop presented an improvisation using a quintessential 20th century intruder, in the shape of a wrecked car, which acts both as set and source of musical instruments.
  • The Acoustic Locator (world premier) by Nina Leo was a large ear horn that could swivel through an entire 360 degree rotation enabling each audience member to connect with the audible landscape in a very intimate way indeed.

Open Ears Soundwalk - R Murray Shafer at RareIn closing, kudos to the organizers for their sense of promoting the power of partnership in the arts. Just like in for profit businesses, this kind of pairing can build a powerful gestalt where the sum is greater thant the parts.

The Soundwalk was presented as part of the Open Ears Festival of Music and Sound, which is an electic mix spanning avant garde to classical and electroacoustics to sound installations. The festival is a “spin-out” of the KW Symphony Orchestra under Artistic Director Peter Hatch and produced jointly with NUMUS. What was exciting was that this event was produced with a charitable natural reserve decicated to research. Like R Murray Shafer, the event was a fusion of togetherness of the arts and environment in Waterloo Region. This is exactly the kind of “big tent” strength through partnership envisaged by the September 2008 Prosperity Council of Waterloo Region: Task Force on Creative Enterprise.

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data-breach

1 May 2009

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Reverse Corporate Alchemy: Turning Gold into Lead

During the morning of Wednesday 29 April, 2009 I was flatly told, with no recourse, that my CIBC Aerogold Visa for Business card was being cancelled immediately because it, and many other cards, had been compromised by some unspecified third parties.

A quick web search indicates an almost endless litany of incursions by hackers into credit card processors, including Heartland Payment Systems or Another Unspecified Processor.  Although perhaps just bad luck for me, shouldn’t I be delighted that CIBC is looking out for my interests using its highly sophisticated fraud detection software and systems? Well, maybe, but …

As an almost 15 year business customer of CIBC Aerogold VISA, I chose this product because it claims to offer the highest level of customer service aimed at a global and sophisticated business travelling clientele. Based on that, my company uses that card heavily for both a travel and payment card, including many monthly recurring payments. As a long term customer, my assessment of the VISA response to a problem inside their own payments ecosystem was inadequate because:

  1. When I asked for further clarification, the VISA Fraud Department representative seemed quite  evasive. Surprisingly, there was an apparent inability to give background information which any customer would expect when their service relationship was curtailed. Simply saying “We’re terminating your card immediately, but it’s nothing to do with you” isn’t an acceptable customer response, particularly for a so-called Gold product.
  2. The lack of encryption and other security mechanisms in CIBC’s payment systems has been a longstanding gap. For example, the classic magstripe can be easily cloned. Against these threats, Smart/CHIP cards have been in use in Europe for a long time and by some processors in Canada for over 5 years. Why did CIBC take so long to catch up with the global security benchmark? As a footnote, on last year’s regular card replacement, I had only 1.5 years to expiration date, instead of the normal 3 or 4, presumably to allow CIBC to move to CHIP card technology. Adding insult to injury,  when I picked up my new card with new number today,  the expiry date remained what is now 5+ months in the future. This, too, is a major customer inconvenience as I will have to, once again, change all of my automated payments yet again, later this year.
  3. Probably the biggest customer service shortcoming was that my card was “shut off” between Wednesday and Friday, a period of almost 3 days that happens to be over the month change when most of my recurring business payments happen. Perhaps the only worse situation I could imagine is if this had occurred while I was travelling. In resolving their internal security problem, clearly CIBC Visa took no steps to escalate card replacements for their best customers. As I mentioned, their idea of customer service was to simply pass the problem onto their customers – in this case to me.
  4. There have been earlier instances of poor service from CIBC. One memorable case occurred at a hotel checkout in Berlin at 6:00 am at the end of an international conference when I was racing to get to the airport. My charge was denied by the hotel.  Apparently, the Fair Isaac (now FICO) fraud decision management software went a little hyperactive that day because it didn’t think I was in Berlin. Again, although I almost missed the window to get to the airport, VISA didn’t really give me the choice of a good workaround for a legitimate customer transaction.

To be clear, I support robust security measures and fraud detection in the payments industry. My problem stems from the way that these companies service their customers when things go wrong.

So, after almost 15 years with CIBC Aerogold VISA for Business, I’m looking at alternatives.

Does anyone have any great suggestions? Or perhaps you have your own credit card security horror stories. Feel free to comment…

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berlin-wall

21 Mar 2009

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Meeting Productivity: Central Planning Versus the Market

The 20th Century was defined by an ill-fated search for a better world, inspired by late 19th Century, Victorian thinking. The irony, then, is that the 20th Century turned out to be probably the most destructive in human history, based on often misguided applications of powerful new technologies.

If you define a utopian society as one where governments plan to have zero unemployment, stable economic growth and high personal well being, how have we done in planning for this world? Up to now, in a word, wretchedly.

A personal defining moment was when I journeyed behind the Berlin Wall to East Berlin in 1989. This was just before the Soviet Bloc, along with its vassal state the German Democratic Republic, spectacularly imploded on 9 November, 1989. While I had previously sympathized with the notion that a socialist government could plan to make the world a better place, the dismal comparison of the East and West that I saw then graphically disabused me, forever, of that notion. East Berlin was a drab, grey, unpainted city in which even the prominent public buildings still had 45 year old bullet holes from World War II.

Communism, coupled with its less extreme relation socialism, and fascism were the defining, centrally planned ideologies of the 20th Century. Then, everything was planned and and organized from the top down, from prime time television, to the Stalinist 5 year plan to the Nazi Thousand Year Reich. With that hopeless track record, will we ever figure out how to move closer to a utopian reality?

Today I will explore some of the innovations in our understanding that might lead to that end.The book Infotopia, by Cass R. Sunstein is a truly outstanding study of the power of democracy in decision making for our internet age. Rather counterintuitively, this insightful book presents a well-researched argument that in group decision making, Deliberation (or central planning) almost always produces inferior results to Democracy (the wisdom of many people, driven by markets, to reach the truth).

Some key insights are:

  • The Condorcet Jury Theorem, which says “that the probability of a correct answer by a majority of the group increases toward 100 per cent as the size of the group increases.”
  • Two key sources of failure by Deliberating groups are informational influences and social pressures, which might be paraphrased as browbeating and peer pressure, which among other things, tend to amplify, rather than remove, errors.
  • Polarization is a particular risk of digital media in which political (or other) views tend to be reinforced by people filtering out any information which contradicts their existing world view. Thus, rather than reaching consensus, digital technologies can make the right wingers more right wing and left wingers more left wing, leaving little middle ground.
  • Prediction Markets are a new paradigm which harness price signals of the market to help in decision making, based on the insight that people tend to make better decisions when price signals are involved.
  • The Web 2.0 trends of Wikis, Blog, and Open Source Software all provide great evidence for this new paradigm of the wisdom of the crowd which Sunstein has so ably analyzed.

This book should be mandatory reading for politicians, business leaders and anyone wanting to shape the world of the 21st Century. From how to conduct better meetings to how to make the world a better place, Infotopia provides a solid foundation of how to harness better decision making for the future.

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canadian-businessvc

15 Mar 2009

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Who Killed Canadian Venture Capital? A Peculiarly Canadian Implosion

“Fortes fortuna adiuvat” – “Fortune favours the bold” – Latin proverb

Where's the Venture Capital: Canadian Business

The current economic meltdown has unleashed brutal forces acting on all aspects of the business world, but certainly innovative startups in fields like software, web, wireless, green technologies and life sciences are at grave risk. In Canada, our startups have generally been world class innovators, but severely underfunded when benchmarked against US and leading European countries.

Not only has the credit crunch forced most Angel Investors to the sidelines, but the supply of Venture Capital (VC) in Canada has contracted almost to the vanishing point.

Tomorrow’s Canadian Business documents this very well in VC Financing: Cold Realities.

Having started my first software company in the mid-1980’s, I am well aware that although VC money was available and well established in the Silicon Valley, VC money for knowledge-based startups such as mine was then nonexistent in Canada. Through the 1990’s, however, Canada started to build a cadre of new funds that showed early promise of replicating a US style VC funding ecosystem

In the early millennium when Verdexus investigated raising a institutional fund to fill a gap in the Canadian market with our “hands on” model and accessing global capital sources. It gave our partners a chance to look to VC best practices on a global basis and figure out how to apply to the Canadian context. While we didn’t proceed at that time, I’ve had the good fortune to work on projects with top VCs from the US and several European countries, giving me a global perspective on how Canadian Venture Capital measures up.

Sadly, I believe that the 2000/2001 tech bubble, or dot com meltdown, stopped the maturation of our VC industry in its tracks, a body blow from which the industry has never recovered. It is to this time that the root causes of our current VC meltdown can be traced. A few of the main reasons holding the VC industry back can be summarized as follows:

  1. Impact of the Labour Sponsored Investment Fund model on our VC ecosystem.
  2. Lack of balance between financial and operational skills: The Banker Effect.
  3. Lack of International Funding discipline in our VC industry.

I will explore each of these causes in turn.

1. Labour Sponsored Investment Funds

Labour Sponsored Investment Funds (LSIFs, also known as Retail Venture Capital Funds), have been a particular sore spot, as a 2005 Globe and Mail Report on Business article “Labour-sponsored Love Lost” points out. Considered good public policy when launched in the late 1980’s, both Federal and Provincial governments gave individual (retail) investors a significant tax incentive (up to 35%)  to invest up to $5 000 with a minimum 8 year hold period. In essence, many funds totalling  hundreds of millions of dollars were raised by firms like VenGrowth, Covington and Growthworks as were numerous very small funds.

Lacking the inherent financial discipline imposed by typical venture capital structures, in which several “funds of funds” (legally dsignated as Limited Partners, or LPs) invest in a fund managed by a General Partner (or GP). The LPs in this sense have much leverage, not just in choosing their GPs, but also in ongoing oversight, not to mention the choice to re-invest in the next fund raised by the GPs. This LP/GP structure is the model employed world wide and has generally stood the test of time.

The thousands and thousands of retail investors in a typical LSIF exert no such control and hence we’ve seen Management Expense Ratios (MERs) as high as 4-6% versus the 2% private equity industry norm and Carried Interest (the portion of the investment gains shared by the fund) as high as 30% versus the 20% norm.

More importantly, although at its peak, more than half of Canadian VC money was in LSIF funds, returns were, as Doug Steiner says, “lousy.” How lousy? Studies show that average fund returns, also called Internal Rate of Return (IRR), are negative. The best fund appears to have produced a measly 1% IRR. In the US, funds aim for 30% and there is a long term track record of many funds in the 18-20% range.

Undoubtedly, individual investors didn’t have a lot at stake with those huge tax credits and it can be argued that LSIFs encouraged loads of job creation in the all important knowledge economy. All of that is true. My main concern is that the attraction of the LSIF model impaired the formation of a more mature VC ecosystem based on the normal LP/GP model mentioned above.

2. The Banker Effect

Credit: AIAlex.comCredit: AIAlex.com

In the US, both in California’s Silicon Valley and in the Route 128 area around Boston, the VC industry has always been populated by a healthy mix of the financially oriented fund managers coupled with serial entrepreneurs who have founded and build technology startups. The composition of the partners at Canadian VC funds has always been different than this international norm, having many more banker types than operators. The experiences Jonathan Geist relates in the Canadian Business article are symptomatic of this difference. Too much focus on the numbers is like looking in the rear view mirror when startups need to be focused on the future – building market share, refining partnerships and developing strong go-to-market execution.

Again, I believe that this gap can be attributed to us being a less mature VC and startup ecosystem. In the late 1980’s and 1990’s finding seasoned technology startup operators would have been almost impossible. Most were still building their first startup. However, had things unfolded as they should have, many of the startup founders from the 1980’s and 1990’s should now be partners at Canadian VC firms. That didn’t happen because the dot com meltdown appeared to remove the ability to the industry to make changes or take risks. Ironically, this exacerbated an already more conservative VC culture here in Canada, and this more risk averse approach actually contributed to the lower IRRs seen when Canadian VCs are compared to their US or European peers.

3. Lack of International Money

The fledgling LP/GP VC industry of the 1990’s was funded by a relatively small ecosystem of LPs, such as OMERs, Caisse de Depot, Teachers, CPP, BDC, etc. Thus every VC fund was essentially not differentiated by its LP composition. In essence, a closed group of Canadian fund of funds all were chasing this same relatively small asset class. Furthermore, the relaxation of Canadian content rules coupled with these aforementioned low IRRs, sent the Canadian LPs looking elsewhere (mostly abroad).

What is the right recipe to change this situation? Quite simply, access to more global sources of money. The thousands of US, European and Gulf institutional fund of funds investors have largely ignored investments in Canadian VC funds. This is partially because of the chicken and egg of lower IRR returns. But, more fundamentally, it is primarily because the Canadian startup and VC ecosystem had low visibility to these international funds. Several years ago, I spoke to a large €6 billion LP fund at EVCA in Barcelona, that had investments in 40 tier 1 VC firms in each of the US and Europe. Ironically, that LP’s sense of the Canadian technology scene was limted to Nortel. Since Nortel hasn’t really been a star for many years. Clearly we have a long way to go market our great technology stories to the world.

The Way Forward

Going Out of BusinessUnlike this sign, I don’t want to end this piece on a note of doom and gloom. Nor do I want to leave the impression that there aren’t very talented people in the Canadian VC industry. Nothing could be further from the truth – our long term VC gap arises from long term structural challenges, such as a lack of discipline as imposed by global LPs and not having reached the proper banker/operator mix. There are other factors, including the small population and large geography unique to Canada, but all can be and should be overcome with the proper model.

We already have a few outliers in our funding ecosystem. Being optimistic and entrepreneurial, I’m convinced that many talented individuals will find ways to, little by little, to invent and rebuild a healthy network of startup financing alternatives. As I’ve argued in other blog posts, there is a role for governments. However, that role isn’t to pick winners or to enter the VC business directly, rather it is to be a catalyst to the process by streamlining (securities) regulation and taxation.

As a stakeholder in the success of knowledge-based startups, what do you think?

Please share your comments.

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net-generation

6 Mar 2009

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Fail To Understand the Net Generation at Your Peril

The Net Generation (born 1977 to 1997), also known as Generation Y or the Millennials, is an ill understood lot. Don Tapscott, noted thought leader on digital technologies, is a real cheerleader for them in his recent book Grown Up Digital.

However, while some of his examples may represent the bleeding edge thought leaders of this generation, almost everything he says is well reasoned and researched. I would suggest this book is a must read for the rest of us who will watch this demographically dynamic  generation increasingly dominate all aspects of our society, including business, culture,  education, politics and entertainment.  Many of us are looking at this generation from the perspective of the previously dominant demographic group known as Baby Boomers or Boomers (born 1946-1964), also known as the TV Generation. I would note that already, the Net Generation outnumbers the Boomers.

Perhaps the defining characteristic of this group is that they are the first generation to have been immersed from birth in digital technologies, such as the internet, computers and online media. Because of this, they are sometimes labelled “digitals“, with others who find these technologies more challenging to even baffling being called “analogues”. The Digitals don’t even think about technology, it is just part of the landscape for them. Analogues, by contrast, either avoid it like latter day Luddites or struggle to keep up with the Net Geners.

I’m part of an interesting hybrid group of people who were born analogue but has adopted many of the digitals characteristics. In essence, people like me might be described as a digital immigrant. Consider my digital pedigree:

  • IBM 2741 Terminal for APLI first used computers at age 14, after being invited with a set of Math Contest winners to the University of Waterloo where I had the pleasure of using APL an early math-based timesharing system running on an IBM 360/44 . It is notable that, rather than learning the standard Fortran and programming on punch cards, I started programming using an IBM 2741, which is like an online IBM Selectric typewriter (typeball and all) connected via modem, with acoustic coupler, at 134.5 baud. Prior to this, I had read about computers and thought about them abstractly, but the plain truth is that computers were only accessible to a very small, privileged elite.
  • Honeywell 6050Recently, a friend sent me the directory listing of an old backup tape for the Honeywell 6050 TSS system which reminded me that I first used email in 1975. Yes, we even had mailbox and mbox files way back then. Of course, the email system only connected the almost 1000 users of this computer, yet barely two years later my friend Bill Pase then working at IP Sharp Associates, connected me into a truly global email system run by that pioneering firm. This is primarily of interest because many people I talk to assume that email began in the late 1990’s.
  • Celling at Capella SistinaAround 1990, while CEO at MKS, I remember being at an X/Open meeting in Rome (where ironically, I ran into the self same Don Tapscott at the Capella Sistina of all places) we were working to develop many of the standards that would shape our modern, connected digital world. I vividly recall after hours discussions with other attendees about my misgivings about how an always-on, multi-media world would impact our overall quality of life. As you can imagine, Rome was a fantastic place to have that debate. Even more important, what was esoteric futuristic thinking 20 years ago has largely come true, for better or worse.

So, like Don Tapscott, having grown up with a constant backdrop of technology and really having been part of making this cultural form, I too am a cheerleader for this emergent generation. However, many others, the most famous being Mark Bauerlein, take a much dimmer view of this generation. His book The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future (Or, Don’t Trust Anyone Under 30) might well be the NetGen equivalent to Reefer Madness for the boomers. For me, this shows that many people totally misunderstand this talented generation. Sure, this generation has its flaws like any other, but like Don Tapscott, I’m pretty optimistic about it.

To give a taste of how fundamental, not to mention transformational, the Net Generation culture is, I list the 8 norms that Don Tapscott found and validated through his research.  I would suggest that the following norms need to be underestand by the rest of society so that the generations can build bridges based on the strengths of each constituency. The alternative is to create a new generation gap based on misunderstandings, a neo-Luddite situation if you will.

Here are Don Tapscott’s 8 norms for the Net Generation:

  1. Freedom: this generation demands the freedom to choose at work, in education and the marketplace. And, for them, freedom is so ingrained that it is not an option.
  2. Cutomization: Growing up with computers and software, has made this the mashup generation. Everything from products to lifestyles can be customized. This generation is the living proof of Chris Anderson’s Long Tail phenomenon.
  3. Scrutiny: Living in the epicentre of the blogosphere, twitterverse, SPAM and nonstop marketing, high levels of filtering and scrutiny are the only defence of a generation which has made separating the signal from the noise an artform.
  4. Integrity: The laser beam clarity and transparency of an always-on, Google-indexed world has heightened this generation’s radar for anything that fails to ring true. When there is no place to hide, a lack of integrity becomes glaringly obvious with often severe consequences for people or companies who fail to understand this new reality.
  5. Collaboration: A generation that grew up on group work and online games, now has adopted global collaboration and teamwork like never before. The Net Generation’s digital connectivity likely are another nail in the coffin for command and control organizational design not to mention one-way traditional education models.
  6. Entertainment: Net Geners expect work to be fun and the line between work and play is much more blurry for this generation. This means that some of the pioneering approaches at the Googleplex, may well become mainstream in the coming years.
  7. Speed: Among fellow computer geeks, many used to pride themselves on speed and belittle the slower blink rate of the old fashioned world. Net Geners have taken this to extreme in their always-on, instantaneous world, expecting immediate feedback on everything they do. This could well be one of the biggest intergenerational challenges.
  8. Innovation: This is a generation of early adopters, living on the bleeding edge. Not content to have products and ideas pushed to them like 20th Century consumers, they push collaborative, user-generated approaches to even the products they consume.

In business, government or ordinary society, I think we ignore this tidal wave of new thinking totally at our own peril. The first step is to understand this generation. Then, and only then, can our generation harness the incredible energy, idealism, passion and drive to help us all build a better future.

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ontariocreativeage

15 Feb 2009

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Getting Creative – “Yes We Can” or “Mind the Gap”?

In today’s challenging economic times, it is extra important for governments, academics and individuals to plan our future economic prosperity. Thus, it is timely that Richard Florida and Roger Martin from the Martin Prosperity Institute, Rotman School of Management, University of Toronto this month published Ontario in the Creative Age, which provides a detailed future-oriented policy blueprint.

It sets a policy agenda to help us unleash our full potential in the Twenty-first Century where economic success is increasingly coming from creatively-oriented enterprise versus our traditional strength in routine physical and routine service occupations. The report is backed by research which highlights both our existing strengths and weaknesses including those in education, income and even the gap in our creative/routine job mix compared to our peers. Starting from the base of today, the agenda suggests four main focus areas to drive future prosperity:

  • “Harness the creative potential of Ontarians”, including businesses’ role in changing job mix, education and even marketing of our capabilities,
  • “Broaden our talent  base”, focused on  significant increases to our post secondary educational levels and broadening managerial capabilities,
  • “Establish new social safety nets”, including early childhood development, better utilization our key immigrant resource and retraining of older workers from declining occupational groups, and
  • “Build province-wide geographic advantage” which strengthens connections (physical and otherwise) within and beyond the mega-region spanning Waterloo-Toronto-Ottawa-Hamilton-Niagara-Rochester.

Having read this paper, it is encouraging to see such a forward thinking analysis that will certainly drive future governmental, business and economic decision and policy making. With that in mind, and being of an optimistic “yes we can” mentality, I was, however, struck by how very little attention was paid to the biggest gap of all — Funding this agenda.

Without proper funding, our ability to transform our economy in these wise and necessary ways, will go unfulfilled. I’ve written about this “funding gap” numerous times and from different perspectives:

I’m certainly not alone in this concern. Many others in positions of thought leadership have raised the issue of funding of investment, some with very specific policy proposals and others just highlighting the gap:

  • communitech-logoAvvey Peters from Waterloo’s Communitech blogged about Magic Words:  Economic Stimulus right before the Canada’s Januaray federal budget, and her post contains some very specific policy measures.
  • MaRS Discovery District - Where Great Minds MeetDr. Ilse Treurnicht, CEO of MaRS Discovery District, a leading Ontario driver of research and commercialization, provided a well-researched analysis of the major institutional and venture funding gaps of Canada compared to other jurisdictions in their latest newsletter.
  • Calliflower - A fresh approach to business conversationsAlec Saunders, CEO of one of Canada’s most promising web/mobile startups, Iotum, addressed the tech startup funding gap in the context of the proposed federal stimulus in his blog post Tech in Canada: Can We Do More Than Play Hockey? Also, a number of international discussions of technology competitiveness have been hosted on their innovative Calliflower service.
  • Peter Childs of BarCamp Ottawa & StartupOttawaPeter Childs, an Ottawa social media strategist and tech luminary, has laid out a framework Tech in Canada: Peter Child’s Framework  for Stimulus

Make no mistake, having surveyed funding sources for startups and social enterprise, Ontario (and Canada) significantly lags most regions in the US and Western Europe — our primary OECD comparables. The reasons for this are numerous and will be discussed in a separate posting, but this funding gap is our extra hurdle before we can be successful in driving the Florida/Martin challenge to transform Ontario to a creative economy.

And to be clear, this transition to the creative economy needs to be driven by the competitive, market economy. That implies that it will not the primary role of governments to provide the major funding for our transformation. Fundamentally, governments should not be picking winners and losers, but simply equiping market forces to go to work. And, given our long history and culture of relying on governments for answers, it is important to clarify that point. With the right framework in place, businesses and individuals will compete to drive the path to our future.

Thus, as their primary task, it is imperative that our federal and provincial governments develop a strong and co-ordinated policy framework, dealing with taxation, security regulation, and the like, to encourage the private sector to make such investments. And, in our current times of economic stimulus, the extra icing on the cake should be to channel some of those near term stimulus dollars toward growing the creative sector that is so essential to our future economic prosperity.

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balsillie-speaks-to-laurier

23 Jan 2009

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Attacking a Canadian Icon

While I’m hardly a shrinking violet, I generally shy away from newspaper coverage. That being said, after saying no several times to Gordon Pitts at the Globe and Mail, I finally agreed to be quoted. Here’s why.

Yesterday, Jim Balsillie won the Laurier Outstanding Business Leader of the Year Award. With his business, economic and philanthropic contributions to our area and Canada as a whole, I can’t imagine a more deserving recipient. It is truly inspirational to have people like Jim making a real difference to all of us.

In an unfortunate coincidence, on the same day, both Jim Balsillie and Mike Lazaridis were the subject of media coverage regarding a possible (and staggering) $100 million penalty regarding a stock options pricing case dating back to 1996.

In the current financial meltdown, many might believe that ever more zealous regulation is the answer, but this really isn’t the root issue here. And, bearing in mind that I don’t have all the facts that the OSC and SEC possess,  I present some key  points in questioning the motives of the timing and magnitude of this regulatory action:

  • from my reading of this case, the company, when made aware of the concerns, proactively launched a board-level investigation and, upon the release of the report, about $1.6 million was repaid, this being the estimated amount of gain based on the differential of pricing and dates of the option strike prices.
  • further, that committee, found that the mis-pricing was inadvertent and not done for the purposes of financial gain.
  • when compared to other securities regulation actions, this case seems minor, especially given the wealth most people have generated with RIM. In other words, there don’t seem to be any real victims here.
  • And yet, over the last 10 to 15 years, the OSC has been colossally impotent when it comes to prosecuting real shareholder frauds, such as:
    • the many cases of equity monetization that allowed senior management of many companies pocket tens or hundreds of millions while ordinary investors ended up suffering staggering losses.
    • real abuses and frauds around income trusts, such as is the case of the many people in my home town of Listowel who lost life savings on the fiasco in which a long term business,  SpinRite, was hollowed out in the process of becoming an income trust.
    • Diane Urquhart, an ex Bay Street investment banker and now expert shareholder crusader, is a great source to provide anyone who is interested the documented evidence of how much of a wussy our own OSC has been in stock market regulation.
  • Jim, and his partner Mike, have each given countless hours and hundreds and hundreds of millions of dollars to major philanthropic initiatives that, in addition to helping to transform Waterloo Region, have national and international stature.

It’s this background that left me feeling compelled to comment to Gordon at the Globe & Mail. Clearly, this feels like a desperate OSC acting on the basest political motives.

I’m not sure why Canadians feel that we have to attack our winners. At a time of economic meltdown and too few national champions left standing, why can’t we celebrate the great heroes we do have?

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social_media_chaos

17 Jan 2009

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Choices, Choices – Sorting Out Social Media

“Editor: a person employed by a newspaper, whose business it is to separate the wheat from the chaff, and to see that the chaff is printed.” – Elbert Hubbard

Being an inveterate early adopter, and loving the fusion of new research and web reach coming from the innovation in social media (see Science Fairs, Social Media & Fads – The New Science for the 21st Century), I decided to seek help of the blogosphere to sort out the social media wheat from the chaff.

Mark Evans recent tweet about Tumblr, made me try out yet another social media property. It could be interesting, but only time will tell.

And yet, with so many out there, I never know which are going to have personal value to me and, even more important, have staying power in a very crowded market. One thing is clear, especially in these lean times for tech financing, and that is that there will be long term consolidation. Therefore, I’d like to seek your help in predicting the ultimate winners and losers, and so . . .

PLEASE CAST YOUR VOTE:

[poll id=”3″]

[poll id=”2″]

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bites-the-dust

13 Jan 2009

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Another One Bites the Dust – and You Thought Business Was in Crisis Mode

“Another one bites the dust.
How do you think I’m going to get along,
Without you, when you’re gone”
Queen

This is a call to action where individual citizens can make a huge difference.

The recent loss of a local cultural gem, namely King Street Theatre:

Curtain Closes on Another Local Local Theatre

and the near death experience of the 87 year old cultural gem the Grand Philharmonic Choir, from cash flow challenges, has shone a spotlight on how the financial meltdown is already impacting the Waterloo area arts and cultural scene. As one who supported King Street Theatre’s original capital campaign, I feel this loss personally. Further, I am optimistic that many in our community share this sense of loss.

Many of the key funders who directly invest in our cultural sector, such as local foundations and individual donors, have seen their financial investments tank along with the rest of us. Given that 2009 contributions will largely be determined by 2008 investment returns, we are probably just seeing the tip of the iceberg.

The media cites lack of citizen interest or poor attendance as the root cause. Many business people working with social enterprises observe that many organizations lack the right management to deliver better results. While all true, I would posit that the challenges of the  cultural sector are much more complex.  I’m as much a believer in economic Darwinism, which dictates that in order to have real success, you also need to have failures. In fact, my recent post Playing the Lottery after the Meltdown underscores this notion in regard to the recent government led auto sector bail outs. Mark McArdle’s post What I Didn’t Get for Christmas makes an even stronger case for economic Darwinism.

That being said, much of the social sector, including arts, culture, the environment and many other social causes, have long operated in a marginal and underfunded state. This, for most organizations, trumps the above concerns about attendance or management quality. It is fortunate indeed that many community leaders met last September at the Prosperity Council of Waterloo Region: Task Force on Creative Enterprise to begin to put together a comprehensive, strategic initiative to invest in and develop our overall capabilities in the Creative and Cultural sphere. While from an early 2009 perspective, this might not at first appear to be the ideal time to launch such a big idea, we need to remember that such initiatives are long term and may need a number of years to properly gestate. Ideally, need to be ready so that our collective efforts can bear fruit in time for the next economic boom in the Waterloo area.

Meanwhile, I would call all citizens who care about the cultural future of the Waterloo area to respond with their support. While each of us may favour different organizations and ways to provide that support, we all need to do our part. The great community we live in depends on each of us to personally help to nurture and invest in its future.

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