business 2020

cory ondrejka • cory.ondrejka@gmail.com • http://ondrejka.net

90 minutes, 312 slides
90 minutes, 311 slides

(so we’ll be moving quickly)

90 minutes, 310 slides

(i hope you’ve had coffee)

30,000’ view
30,000’ view

agile or dead
 agile or dead

change accelerating
increasing impact of digital/online
time to react decreasing
change accelerating

predictions
trends
stories
increasing impact of digital/online

digital consumers and customers

b2b v. b2c
technology, globalism, distance
global v. niche
 time to react decreasing

reduced barriers to entry

innovation
convergence and collaboration
 agile or dead

changing organizations
experimentation
agile blueprint
the “so what?”
agility means understanding and
capitalizing on change
 ibm
apple
cisco
facebook
pixar
hulu
zappos
or your business can simply try to
react to change, to keep up
first, a brief digression
us navy
lockheed martin
arcade games
video games
second life
annenberg school for communication, usc
emi music
entrepreneur, board members, advisor
 big, complex orgs
us navy
lockheed martin
arcade games
video games
second life
annenberg school for communication, usc
emi music
entrepreneur, board members, advisor
(I mention these to establish my
non-hippy cred before talking
about communities and
collaboration)
 small, agile
us navy
lockheed martin
arcade games
video games
second life
annenberg school for communication, usc
emi music
entrepreneur, board members, advisor
 common themes

• creating products loved by customers

• technology invention, development, deployment
• cultural transformation
• communication
 all linked to creating
something people will love
“product”
 and lest we get caught up in
programmers v. everyone else
issues...
 i’ve done this in programmer,
marketing, executive, consultant,
and board member roles
some questions for you
 do you rely on

•mobile
•email
•sms
•social networking
•twitter
 do you regularly

•post to a blog
•update your status
•play online games
•spend time in virtual worlds
 know anyone who
still prints out email?
tell them the asteroid is coming
change accelerating
predictions
trends
stories
predictions
disclaimer
predictions are hard
(especially about the future)
 partially because
we’re poorly wired
for long-term predictions
we predict linearly
starting from a few data points we
can’t help but linearly extrapolate
starting from a few data points we
can’t help but linearly extrapolate
starting from a few data points we
can’t help but linearly extrapolate
reality is exponential
or, more correctly, innovation
drives exponential changes
so what we thought was a linear trend was
actually the early part of an exponential
so what we thought was a linear trend was
actually the early part of an exponential
resulting in less short-term change,
but greater long-term change
(perhaps causing us to ignore the trend)
so we get clobbered later
fairly predictable sequence
 fairly predictable sequence

“bob is
telling us
something”
fairly predictable sequence

“nothing there,
fire bob”
fairly predictable sequence

“bob may have

been on to
something”
fairly predictable sequence
“oh #$@!!”
just ask automakers
so, if predictions are hard,
what do we do?
try to find trends driving the
exponential change
and understand how they
apply to your business
 when doing this, important to ask

is your company a technology company

or
one that needs to understand technology?
technology changes behavior
and opportunity space
(usually by radically changing
costs to do something)
 3 trends that matter

•Moore’s Law
•communication diversity
•radical changes in cost structure
moore’s Law
 18-month doubling is
more than you might expect
10 years means 6 doublings
 so 64
times
cheaper, faster, longer lasting
1-2 orders of magnitude
64x is hard to imagine
64x is hard to imagine

64x mips,
same size
64x is hard to imagine

64x mips,
same size
64x is hard to imagine

64x smaller,
same perf
64x is hard to imagine

64x more storage is > 2 terrabytes

64x battery life is 2 years of standby,
1 continuous month of talking
leads directly to channel diversity

all those mobile

computers are
connected and
always available
also leads to radical cost reductions

64x cheaper is $3
more broadly, anything with a
computational or connection
cost constraint,
i.e.
•storage
•data transmission
•CPU processing time
is getting
much cheaper,
much faster
than you think

practically free in many cases

allowing a host of platforms that further
reduce product development costs by
helping reach communities, process
information, build websites, etc
driving additional trends
it is unlikely to ever be harder/more
expensive than it is today...

• to move or store information

• for customers to shape messages
• for customers, partners, or
competitors to create new channels
which takes the impact of moore’s
law far beyond IT
so we see exponentials
(and acceleration)
everywhere
(NY Times)
5,000

4,000

Mobile Fixed Line

3,000

2,000

1,000

0
1998 2000 2002 2004 2006 2008
changes happening so quickly,
exponentials catch each other
 100

Cellular Internet Mobile Broadband

75

50

25

0
1999 2001 2003 2005 2007
 100

Cellular Internet Mobile Broadband

75

50

25

0
1999 2001 2003 2005 2007
storytime
some examples of moore’s
impact already on

music
media
marketing
music
revenues peaked in 2000,
generally declined since
pre 2000
post 2000
direct result of moore’s law
driving decreased costs and
increased connectivity

this is a new world

but change is hard to manage

 CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away

(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers

iTunes rich digital packages
 CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away

(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers

iTunes rich digital packages
 CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away

(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers

iTunes rich digital packages
media
(newspapers)

image cc by:nc 2007 esther dyson

the gray lady
the gray lady
and some history

1851
101 pulitzers
1.5m circulation
$4b advertising
(1999)
versus craig
 and some free stuff

1995
0 pulitzers
sf classifieds
incorporated
(1999)
this should be easy
craig’s as threatening as
and seal problems
are easy to solve
so we’d expect
craig nyt
what really happened?
nyt craig
 2008
advertising down 63%
 2008
2008
#1 classified ad service
advertising down 63%
30 million ads/month
 and
“little interest in Despite $500m
maximizing profits” from nyt.com
“customers” only becoming more engaged
second life
what is second life?
a user-generated virtual world
game-like technology,
but not a game
3d, persistent web
blending virtual
and real
 built by a multinational,
gender-balanced audience
 user generated content

• almost unheard of in 2000, now well demonstrated

• in SL’s case, drove economic and customer growth
• produced enormously beneficial/long-lasting press
the keys to the kingdom?
evergreen pr
evergreen pr
unexpected
really unexpected
interesting incentives
please do not view this as history

the next moment of creative

destruction is coming
gaps, especially during technological
discontinuities, are very difficult to
discover internally
 both internal and external
resources can help you find gaps
(gaps in core IP/business should
ultimately be filled internally)
 questions to think about

who will first know if the rules change:

customers, partners, or employees?

who is responsible for capturing this knowledge?

how will you collect it?

we’ve covered accelerating change

(and hopefully scared you a bit)

increasing impact of digital/online
digital consumers and customers
b2b v. b2c
technology, globalism, distance
global v. niche
digital consumers and employees
 (you’ve probably noticed that
customers are more connected)
a lot to learn from employees and customers
5,000

4,000

Mobile Fixed Line

3,000

2,000

1,000

0
1998 2000 2002 2004 2006 2008
 100

Cellular Internet Mobile Broadband

75

50

25

0
1999 2001 2003 2005 2007
 what technologies are they
bringing into the workplace?
second life?
skype?
facebook?
twitter?
gmail?
 are you trying to run a
closed desktop ecosystem?
(good luck)
customization and remix culture
second life
music
which demolishes the b2b/b2c distinction
in a remix world, where are the real
boundaries of your business?
 maybe they aren’t where you think

product design sales customers

 maybe they aren’t where you think?

product design sales customers

edge of
company?
 are communities reviewing,
recommending, or reselling?

product design sales customers

edge of
company?
 are communities remixing?

product design sales customers

edge of
company?
 where could you put the line?

product design sales customers

edge of company?
if customers are acting as partners,
need to recognize it and act on it
partners require different levels of
trust, support, engagement,
information, etc
if they to succeed
benefits if you do collaborate

what can you do with fully

engaged customers?
negatively costed sales/support teams?
crowdsourced product design?
customer pr?
and all this is happening at a distance
technology, globalism, and distance
drivers are global
drivers are global
(if delayed)
 100

Cellular Internet Mobile Broadband

75

50

25

0
1999 2001 2003 2005 2007
 100

Cellular (Developed) Cellular (Developing)

75

50

25

0
1999 2001 2003 2005 2007
 technologies driving
communication and collaboration
at a distance
 twitter
second life
facebook
flickr
(see, e.g. Iranian Elections)
but is there a dichotomy lurking?
globalism versus niche
customers are more
engaged, connected,
and powerful
than ever before
reduced costs, increased capabilities
lead to my favorite non-word
“nichification”
 “nichification”
the act of creating multiple $0 billion
markets from few multi-billion dollar
markets
(recall Craig v. NYT?)
starts from “long tail”
 this is usually a search
and inventory discussion
 especially in hit driven industries
hits

everything else
but, the basic power-law
curve applies elsewhere
long tail communities
 sorted by size of community
mass market

niche
 or by targeting requirements
untargeted

highly targeted
 niche communities
(due to lack of scale and need for targeting)
are rarely well served
so in our moore’s law world,
what’s a niche to do?
they serve themselves
fragmenting/ignoring
the mass market
along the way
 so even while technology
connects the global economy
communities within that global ecosystem
can use the accelerating capabilities to
customize based on what they want
this inverts how value is determined,
taking it away from producers and
suppliers and moving it into the
communities themselves
since no one else effectively targets
them, they will target themselves
(which can be a good thing)
(if you can move quickly enough)
time to react decreasing
 reduced barriers to entry
innovation
convergence and collaboration
reduced barriers to entry
what stops people from trying?
risk
 (monetary, experiential,
reputation, legal, or otherwise)
moore’s law
is radically reducing the capitol
requirements to try

(and trying online may help reduce

experiential, regulatory and reputational
risk as well)
 not to mention all the
great platforms out there
just look at second life
reduced risk means more
participation
more experimentation
more trying
which means more innovation
(60 second innovation aside)
innovation is productized knowledge
(engine of per capita growth)
 relies on knowledge collisions
where networks/organizations overlap
it is undirected
not
 which means
“hiring the innovators”
won’t work
because you know innovation when
you find it, not when you start
 so, to maximize innovation

lots of experiments
inexpensive learning between tries
you want long tail innovation
otherwise it’s monkeys and typewriters
 instead of exponentials
(more on experiments in a moment)
 (again, we can ask the automakers)
us automakers toyota us suppliers toyota suppliers

1960 1980 2000

convergence and collaboration
increased digital importance means more
activities leave digital breadcrumbs
more chance the ever to know

•where are your customers?

•what are they doing?
(with some details)
 where

•buying?
•discovering?
•using?
•talking about?
•complaining?
•finding competitors?
 doing

•what you think they are doing

•what you want them to be doing

•what they think they are doing

•what they want to be doing

•what they are really doing

 beware

think want

reality
and the impacts can be rapid and far-reaching
are you using this data?
 but a word of warning:
both of the following statements are
100%, completely, incontrovertibly true
 customers know exactly what they want

customers don’t have a clue what they want

 customers know exactly what they want

customers don’t have a clue what they want

“know” and “want” could mean

•they can tell you

•they can show you
•they are complaining
•they are choosing a competitor
•they are talking about your
product on Facebook or Twitter
but it is very hard to know you want
something when it’s an unknown
or you’ve never had it before
 question to ponder

who is responsible for understanding

what your customers want?

are you gathering and using

the data that is out there?
 so, change is accelerating
digital’s impact is increasing
and time to react is shrinking
can you be agile enough?
 agile or dead

changing organizations
experimentation
agile blueprint
changing organizations
 more challenging than
anything else I’ve talked about
 there is no description of
cultural transformation that
captures how difficult it is
because it is hard to be fearless
particularly to lead fearlessly
leading across discontinuities hard
 problems with latency
• experts and stars build their reputation before the
change but need to operate in the next
• sometimes, experts are surfing a larger trend, and aren’t
actually rockstars
• or, the world is different, so expertise no longer applies
was this growth due to
skill or an externalities?
does prior performance
help you now?
are you bold enough to admit
you aren’t the best leader?

can you get others to

follow your example?
driving transformation

•focus on business goals

•admit reality
•communication
•find internal leaders
•embrace agility
 some companies have managed
to repeatedly reinvent themselves
(apple, ibm, cisco)
 how to do this
in an accelerating world?
experimentation
failure is a necessary part
of an experimental culture
you have to be ready to
 fail fast
fail cheap
fail publicly
few actions as expensive as a covered up failure
 nota bene:
“experimental culture”
does not mean
“just try stuff”
 experiments need expectations,
reporting, and measured outcomes
to avoid burning a lot of money
 and a willingness to challenge

“my 30 years of experience means...”

“we think next quarter will be...”
“my opinion is just as valid...”
never been more opportunity to know

but you have to be ready to be wrong

and not to punish smart tests that fail
 the trick question

who is allowed to experiment

at your companies?
 it also requires understanding the often
uncomfortable difference between vanity
metrics and those actually tied to the business
 facebook friends
youtube views
twitter mentions?
google search count
average customer support wait time
revenues
sexy, but maybe not important...

facebook friends
youtube views
twitter mentions?
google search count
average customer support wait time
revenues
(imho, social media alone not that interesting,
social media + action very interesting)

facebook friends
youtube views
twitter mentions?
google search count
average customer support wait time
revenues
the good (and bad) thing is that nearly every
online/digital activity leaves some record
are you ready for terabytes a week of data?
building agile organizations
 expect engaged customers,
more data about them, more
diversity of communication, and
the need for more agility
 eureka moment for me when
i realized that
marketing = product development
 to a programmer
product development is all about creating
something customers will love

to do that, you had better

• understand your market and customers
• be able to acquire/design/create products
leveraging what you know
• continuously improve products as a result of
customer use and feedback
 to a programmer
marketing
marketer
product development is all about creating
something customers will love

to do that, you had better

• understand your market and customers
• be able to acquire/design/create products
leveraging what you know
• continuously improve products as a result of
customer use and feedback
 sales
promotion
communications
product
marketing customers
creation

market understanding
customer needs
analytics
so, bring agility to entire cycle

product
marketing customers
creation
 recognizing that your
customers are increasingly
engaged and empowered

product
marketing customers
creation
 which means you had better be
able to detect the changes and
respond quicker than competitors

product
marketing customers
creation
 first, kill all the silos

product
marketing customers
creation
if product developers need permission to see
customer data or talk to marketing, you are
introducing delays you can’t afford

product
marketing customers
creation
 think about how to blend
traditionally separate services

community
marketing
management

customer
support
agile development comes from the
software world, but the ideas are
broadly applicable
 agile development means

• fail cheaply, fast, and publicly

• regularly release to customers for feedback
• build in testing and metrics
it’s all about staying out of the weeds,
having the flexibility to try new things,
and managing changing requirements
 1 odds of building
= the right piece of
n software

(where “n” is estimated time in weeks)

when at all possible,
write less code
especially if you can get data more easily
(google talks about this a lot)
allow technology
to help you
if social networks are proliferating...
when top level domains expand...
when customers are using dozens of different
blogging and microblogging services...
when you need to reach customers on the
social networks they already use...
when you need to analyze multi-terabyte
datasets in realtime...
 travel costs are skyrocketing and
you’re under pressure to be greener?
use virtual worlds for your meetings
(as ibm discovered)
address business needs, not TLAs
businesses never need CRM or CMS
never
businesses need to reach customers
manage and publish information
effectively communicate
etc
 decide on these business needs first,
then choose technology to solve them

don’t pick the technology just ‘cause

 beyond that, know where
your IP needs to be

be careful about building from

scratch if you don’t need to
recognize that the drivers accelerating
change should be helping you
 adaption rate will be the
key competitive advantage
for the business of 2020
so IT’s job is to allow the business to
experiment and execute more quickly
build for change rather than chasing it
because change is accelerating
 any questions?

cory ondrejka • cory.ondrejka@gmail.com • http://ondrejka.net