Here’s to the bat crazy

I’m a big believer in constantly stretching myself. I seek out projects to do that, I read stuff about those who I admire, and I try to meet up with others who have been successul.

I’m inspired by folks like Richard Branson, Greg Cross (powerbyproxi), Ben Kepes, Vaughan Rowsell.  All successful, but all doing much much more, be it doing their best to change the world, supporting sports, doing impossible challenges or taking the path less trodden.

Now a confession, for a while now i’ve been talking about how much i’d like to do startup…by a while it might be more like 5 or so years. I don ‘t even write it down when I do my annual career planning, choosing instead to keep it a bit of a secrete.  Around this time of the year I beat myself up a bit and tell myself maybe next year.

Added to that are post by Ben, Rowan Simpson and others about what they are actually doing in the start up / investment space… I got a bit down on myself

So the truth is I’m a wisher…”i wish i could do a start up”. Read Ken Robinson’s book the element, in that he tells a story about how as a kid he said to a guy “man i wish i could play the guitar like you”… to which the guitarist said ” no you don’t, because if you REALLY did, you would practice every day, you are just saying that”…

I’m a 40 something, with 3 kids and a mortgage. I may never do the start up, as Mark Suster says its harder when you are in that demographic,  but i’m coming to terms with it.

On the other hand, at sub 21 you have the ability to swing for the fences…..  When you’re 40, have 3 kids and a mortgage this is much harder.

Lately though i’ve realised that my path might be a differfent one.  My partner and I are on our 5th business (seems a mad number), over which I think we’ve employeed around 100 people over the years.  Three times! Yes THREE times we’ve bought these businesses when our children were weeks old – not recommended unless you are clinically insane. Added to that iv’e done one small investment with Appsecute, started and ran a martial arts club and ….managed to work full time through it all.

I think this list is more conservative than some of the other folks i’ve listed, maybe less so because of them…. for without these guys leading and showing us the way, we dont reach higher.

So here’s to the bat crazy.

the First rule of strategy is have an appetitie to do it.

I like strategy, when I see it developed and executed it’s a thing of beauty.  I love the game play and like deciphering what the competition is doing – incidentally imho Simon Wardley’s work is as ground breaking as it is simple)

But what is apparent to me is that a lot of companies talk about strategy, but actually have no appetite for it.

let me explain.  Recently I’ve recently had the fortune to have some catch ups with some of my old strategy colleagues. They have all cycled out of the business and for various reasons are now back ..they’ve come back wiser and with energy and lots of opinions… and many of the discussions we have (strategy being collaborative and benefiting from the network effect) often have a flavour of “ this business should”…. I’m listening to them, and its good thinking, but i know that the chance of it actually happening are virtually zero.

I know this because the moment i hear the world “should”, i know it won’t happen.  Should is a word we use to beat ourselves up.  It’s a forever word, one day maybe we’ll get onto that, a word that disempowers you… “i should go to the gym”… “I should spend more time with the kids”… “we should do that”.. “i should cycle in today”.  Well I can tell you, the days I cycle in are the ones I choose too, even when its subzero outside or raining.  There’s no question, no choice, I just do it.

I bet runners like Ben Kepes don’t say ” i should run today, they just plan it and do it. Founders of companies don’t say ” i have a good idea, i should do something about it”. They just get going and working on the idea.

Delivering on a strategy is the same.  Unless the business is up for it, focussed on that (and not the next fire / deal or trinket) the chances of success are very limited.

Next big question is how to get the business up for it.

 

Embracing Commoditisation

Today saw the double announcement that Salesforce and Rackspace (and hints that Amazon) are entering the mobile app development space. In fact actively commoditising it.

Outside of the hyperbole about how mobile is the platform de jour, what struck me about this is it was entirely predictable.  I’ve fast become a big fan of the work of Simon Wardely. if you read his latest series of posts, you will see what I mean about predictability.

Firstly, everything evolves, and the commoditisation of mobile app development is no different.  Today’s announcement probably saw a rapid movement up the curve for some companies, the ones still in the custom build phase, however the SDK’s are now a product bordering on a commodity.

Simon Wardley's evolution model

Simon Wardley’s evolution model

The second reason this was predictable was using Simon’s ILC model. My view on this is that in the greater game of strategy, it is always in someones interests to be doing the commoditising, as opposed to being commoditised.  And in the new world of cloud computing, the big guys in this space have figured out models that actively target sectors to target. (see Simon’s post on Amazon)

Simon Wardley's Innovate, leverage Commoditise model (ILC)

Simon Wardley’s Innovate, leverage Commoditise model (ILC)

The thing is, in actively commoditising other industries, these cloud players drive scale onto their platforms, create ecosystems of developers wedded to their platforms, drive more integration into their core offering (SFDC) and can see the new breed of winning plays in which to acquire.  Then rinse & repeat.

Now, I know what it is to live in a company that is being disrupted, you worry about today’s numbers and how you marginally improve your portfolio day in and day out… and I know that it is easy to look back in hindsight and say “that was predictable”.  The trick for us all, and i think the true message in Simon’s serious of recent posts,  is that we owe it to our companies or ourselves to undertake the process of predicting what will happen to our company and jobs and take the appropriate steps to react.

It’s that lack of understanding [of] Why which will almost certainly be behind the highly probable and unnecessary disruption of once great companies such as HP, Dell, IBM, Oracle and SAP by a predictable market change such as cloud computing. These companies by right of their position should never face disruption by a predictable market change. They should only be disrupted by an unpredictable market change

In fact Simon is pretty scathing on companies who fail to react to what is predictable (more on this in another post)

Who trapped VMWare in the innovators dilemma …and how do they get out

A great post on techcrunch by Ben Kepes highlighted just how trapped by their business model incumbents can become.

Who trapped VMWare? To me the answer is 3 fold.

  • Bad buyers

IT departments within large organization – are, generally speaking, paying little more than lip-service to the growing calls of a new generation of technology

Buyers, traditionally the IT department are rewarded to maintain the status quo, particularly with Cloud computing – a form of outsourcing.  This response is due to cludge of drivers….Reliability demands – any change pretty much leads to outages, having kit means having a job, arrogance – we know better than you, and fear or comfort with a current technology set, there is also some pretty nefarious stuff that goes on.  People with specific technology skills have made a lifelong career in being the only person who can make an app work…

The problem with lagard IT, is it reinforces to vendors not to change, and in some instances they will actively come out and sell against the new paradigm (Oracle anyone?). HT to Simon Wardley on the above adoption cycle

Unfortunately this leaves gaps in the market for new entrants…and this leads to disruption.

  • Bad management

Listening blindly to your customer, using dated strategy or financial models to new situations or simply telling your bosses what they want to hear, not what they need to hear all lead to reinforcing the incumbent business model.  Listening to the customer, particularly the ones above creates a false sense of security.  Eventually even the IT dept will adopt the new, with cloud its because they will eventually end up at a financial disadvantage, and then you are stuffed… and in the mean time, your mid-level managers have been vetting out any ‘radical’ new business idea, so by the time you need them, well its too late.  If you look at your bench-strength and its full of MBA’s…you are screwed. They are indoctrinated with the same playbook as everyone else (there is no differentiation when its the same)…. instead you should look for outliers, rogue elements because they are the ones who will create something truely new

Senior management is also guilty of not being true stewards of their companies.

“CEO’s are doing the best they can under the circumstances, but there are units in their organization that need to be protected, prices that need to be supported, sacred cows that can’t be touched …….Which is great, unless your competition doesn’t agree. …. When you are competing against someone who doesn’t have to worry about an existing business, they will almost always defeat you.” Seth Godin

Taking a short term view, protecting the old… taking the overt or covert approach of ‘walking back slowly’ you are ceding the future market and opening yourself to disruption…. true leaders stand up, make hard calls and do the right thing for the company long term….

Apple CEO, Tablets will canabalise PC‘s

SAP has said the same, Amazon has done it.    Get the point, great companies bite the bullet

  • The sharemarket

The incessant demands of the sharemarket to protect or grow existing revenues is idiotic.  The analysts community can’t deal with new business lines … “hard to value that new thing, not used to it”.  Shares slide on news that companies are investing in non-core business.  You guys need to take a look at yourself,  the GFC (which I hold shareholders at least partially culpable) proved the point that incessant demands for more drives bad behavior… and then if you don’t like what the CEO is doing, you agitate to reinforce the status quo… numpties.

  • How can they get out?
  1. Start planning for the future – look for the areas that are commoditising and build an ecosystem on top of it.  Get a lot of developers to innovate on top of that (cos you DO NOT have the skills to build the new thing) and watch for the winners. Cloudfoundry looks like a winner to me
  2. Stop listening to your customers…. start WATCHING your non-customers. They are likely already using precursor’s of the thing that will be your death nell
  3. Get an innovation program in place – agree to the incremental risk and potentially spend (not always), and distribute your effort across core, adjacent and transformational innovations
  4. Get different people with different skills working on this different initiatives. Your rogue elements are probably already leading the way, just give them direction and focus
  5. Capture ideas from the source, and get them unvetted.  This is normally the front line helpdesk.
  6. Allocate resources to innovation, stay the course – its a long game,  and don’t compromise. If it is annoying people you are on the right track
  7. Get to grips with canabalisation, internally and externally. The alternative is extinction.
  8. Be prepared to fail, don’t encourage it but do not penalize it either.  When you do, get another group of smart folks to look at the remnants, dollars to doughnuts there is something there, maybe they can make it work

 

 

So, i’m having a crisis of identity

Maybe not identity… but i’m 39 years old, i’ve spent the last ..4-5 years in steadfast battle against middle aged spread. I’ve been determined to fight it…

But lately, man its hard.  After 20 years of Martial arts i finally retired last year.  I’ve developed arthritis and have now chronic back injuries, but i loved it, teaching and training was gold for me…. i’ve backed off…started ‘managing’ myself… But i don’t like what i see in the mirror, in fact i dispair

I look at the feats of Ben Kepes, Dan Fowlie George Reese and Chris Quin who post their running times distances and think…. 21km?  Dude drive!!!

Ben Christian, another friend recently biked the tour De France and does a cycle training session 5 days a week!!  Who’s got time for that!!!

I’ve ‘decided’ not to  run because of the arthritis.. i try to get to the gym, however lately the demands of work have severely impacts my ability to get there…. wow-ah’s me…its all hard..

Its not how hard you can hit, its how hard you can be hit and keep going forward”  – A line from whatever was the last ever Rocky movie

My real world martial arts experience says this is true, winners really do this…you can see the moment in any fight when someones breaks, something inside gives up

Feels like i’m being hit hard at the moment…. giving up looks quite attractive, and thats not me at all…

investing for value not money…

Ben Kepes wrote a great post the other day, castigising some of the digerati for ignoring the ma and pa businesses that drive our nation and creating an ethos of investment elitism… that is myopically focusing on the next big thing and ignoring the noble organic growth many businesses take…ok my take anyway, my blog so deal with it 🙂

I love the post, it took cahones. It also summed up some of the things wrong with economics in my opinion…the pathalogical craving for growth, at the expense of everything else….

Then today I read Umair Haque’s blog on HBR, a post that i wish i had written, and that i think mirrors my one for a couple of months back and it got me thinking that perhaps even Ben’s stance needs challenging.

Perhaps what we, as investors need first and foremost is an moral or philosophical yardstick, then a commercial driver. Think thru some this years big IPO’s, all they do is exacerbate the rampant consumerism Umair describes. Groupon, i’m looking at you. Many others just drive the same outcome more efficiently, like Jive.

What would happen if we diverted out resources to solving genuinely big issues rather than perpetuating what appears to be a failing economic model? Things like clean energy like Google, alternate fuel, food surety, sustainable fishing, water security, education, health, disease control or eradication, population growth, population extinction ….

Am I the only one that thinks that in comparison to those challenges, a gamified business app is completely unimportant, the next iPhone game? Or another daily deal shopping play that only satisfies our consumerism addiction (I have visions of needles).

The ‘what’ is easy, try taking on the ‘how’ and ‘why’

I'm a veracious reader of blogs, perhaps not like a Robert Scoble , but nearly everyday I'm looking for tit-bits of knowledge.  More often that not this follows a process of eliminating noise and zeroing in on a few blogs a day, maybe 2 from hundreds.

Thinking about what makes me focus on those two blogs in that day, they fall primarily into the  'what' category, and ever so rarely the 'how'.

'What' blogs tell me stuff, IBM taking on Amazon for instance. Interesting but with out a lot of context.

 The 'how' blogs are much more useful. By learning from those who have gone before I don't have to make the same mistakes. Blogs like Ben Kepes and Phil Wainewright's on Ariba's journey through disruption provide huge insight for people.

The third pillar of knowledge is the 'why'.   As a strategist I hold tenaciously  to the belief (knowing sometimes i'm dreaming) that companies do things for a reason. Understanding those reasons is critical to decoding what is going on.

These three facets form the pillars of knowledge, and to my way of thinking, they increase in value as you move down that list.

 So my challenge to you all out there, if you are going to take the time to blog, provide your readers with value. Get past the what, move into the how and why….

 

 

PS – I set out to make this a 'how' and 'why' post…. did you find more value in it?

Darwinism

My partner and I have been talking about Darwinism a lot with respect to our businesses.  We think  this recession represents a huge opportunity to well operated business.

Think about it, in really good times, just about anyone can survive, make money and stay in business. But when the environment becomes more difficult, only those businesses who are business who are best suited to the conditions will survive. Best suited can mean a lot of things, ability to adapt, better run, have a stockpile of resources etc.

An analogy describes this in natural terms. Two Lion’s share one hunting ground when times are good and there is plenty of game around. When drought hits, the weaker Lion falters and eventually starves. The stronger Lion survives because they’re better suited and now has the entire hunting ground to themselves. When the drought breaks, this Lion still has that entire patch.  

The point is, that if you play this right, you can not only ‘survive’, you can come out the other side in a much much stronger position.

Applying this theoretical approach to the real world, take Ben Kepes sarcastic post about SAP. If a competitor like Netsuite could prove to the market that they are by far a better proposition and actually put SAP out of business or so severely damage them that they retrench to a niche. The upside is huge, only one player in the field to win all the business. (I’m not suggesting this is likely BTW).

If you buy into the SaaS proposition, then this is the opportunity this ‘recession’ now affords you.  Check yourself out, do you have what it takes to not only survive, but to profit from this situation?

If you are in old world businesses like my partner and I, how does this apply? Are your nearest competitors struggling? If so, what can you do to make it even tougher so that when the tide turns you are the only game in town.

Some might view this as harsh, but survival of the fittest binary.  Which one are you going to be?

Zoho – another approach to sustainable growth

Phil Wainewright put up a very thought provoking post this morning, speculating if Zoho could outgrow Salesforce.com. A worthwhile read, the stand out bit being his summation.

 

A disruptive model? Just as Salesforce.com’s CEO Marc Benioff dismisses conventional software vendors such as Oracle and SAP as dinosaurs on the verge of extinction, so Vembu looks on Salesforce.com’s high-cost, premium-priced model (in comparison to Zoho’s) as a throwback to the days of old-fashioned enterprise software.…. Meanwhile, Zoho’s decision not to turn to advertising as a source of revenue is also appropriate for the business market and a useful differentiator against Google, the other big player making headway in that mass SMB sector. On balance, Zoho’s model offers enough value to an underserved market to qualify as disruptive and its state of preparedness for a difficult economic environment could well see it emerge the other side of the coming recession as a leading player.

This got me to thinking. So far most of the we dialogue on financial models has been based around a number of streams

  • Freemium models seem to be getting the most coverage, facebook.com is an example. I was never that impressed (Ben Kepes has a good piece here on why), with the credit crunch i’m even less inclined to believe in this and tbh i’d be amazed to see this one survive in any meaningful way.
  • Advertising supported  – Google is the poster child
  • Traditional pay as you go models – Salesforce.com

There is another way to get scale, then monetise internet assets, funnily enough it’s a variant on the Google model and its being used by Zoho.This approach is to use an existing revenue engine to fund the growth of the start-up, in Zoho case its Adventnet who are funding Zoho.The interesting dynamic here is the financial impacts. No credit you see, organic growth but with no debt. I don’t believe people fully understand the economics at play here. The scale challenges a startup have to conquer are enormous, but when you get there your marginal costs plummet and accordingly your profits go up.  Check this from Zoho. Google and Microsoft have clearly reached scale (in their own markets), Salesforce.com hasn’t… yet. I’m told that their PaaS play is starting to really reap benefits, huge customers signing up, customers putting Tb’s of Data thru a day. All driving EoS.

Back to Zoho, the more i look at it, the more i like the model. Self fund to scale, charge for premium services, consider a slow introduction of pay as you go later (i’d put in an easy migration path for those who aren’t ever going to pay). And keep in scaling. Its Amazon’s mantra all over again, ‘GBF’ “Get Big Fast”, but without the debt and a fairly logical path to monetisation.

 

I won’t be using Chrome.

A couple of reasons. Firstly unlike Firefox and Safari and of course the corporate supported IE, it doesn’t seem to get past the companies proxy server.  Second, and most importantly to me I’m not prepared to give Google any more information about myself.

 Don’t get my wrong, I’m a happy user of 3 Google services – mail, reader and analytics . But that’s about all i want Google to know about me. Read Write Web has a good history and synopsis of Google’s privacy  stance. To me, reading that I get uneasy… real uneasy.  Ben Kepes and I have debated this before, I can summarise his position as more trusting than mine. Simple as that.

 I know that Google has a stated position of “do no evil”. I also know what happens in companies when they get squeeze for revenue and profit. Not always the right things.  Reason number 1.

 Another way to think about this. Google is a company of nearly 20 000 people, they’re like a small city in terms of population. And even small cities have bad people.  In the US 1 in every 136 people have been caught and convicted of a crime, if you extrapolate that out it means you would expect a company the size of Google to have 147 bad people.  147 people who could mis-use all that data that they now have the potential to access.

 End of the day its your choice, but you should be aware of the privacy issues associated with cloud services.

  

PS I’ve dropped Firefox and moved to Safari as my browser of choice. I’ll let you know how it goes.