One of the very best presentations at last month’s Singularity Summit. And it comes from a European 😉
Lots of inspirarational slides and ideas, and – as a bonus – Jürgen is quite funny as well when presenting.
Editor-in-Chief, Wired
A conversation with the Editor-in-Chief of Wired Magazine and author of The Long Tail and Free: The Future of a Radical Price.
October 29, 2009 | In Business & Economics, Science & Tech, Media & Internet
You can see the 36 min video here.
The full transcript is also available. Some extracts and quotes (red highlights by me)
On “free”:
What happened with the Internet is that it took computers and storage and bandwidth, silicone chips, spinning metal platters, and fiber optics and put them together. It turns out that Moore’s law falls in price 50 percent every 18 months. Storage and bandwidth fall in price every 14 and 12 months, each by 50 percent and they’re accelerating their race to zero even faster than Moore’s law. You put all three together and you have this general rule that anything you do on the internet, whatever it costs today, it will cost half as much a year from now. This has relatively profound consequences. First, it makes zero – It makes free not really a marketing gimmick but kind of an inevitable price. Not to say that everything is going to be free. The greatest misunderstanding of free is that everything’s going to be free.
At the same time, they have iTunes, a very successful way to sell music. In that case, what they’re selling is convenience, not music.
On “infinities” (see also Peter Hinssen’s Innotribe Keynote on “exploring the limits.”
I think the most profound thing about turning products into digital products from my prospective is that price becomes arbitrary. In the traditional world, there’s a pretty strong correlation between the cost of a product to make and the price you can charge for it. You charge something that’s slightly above the cost and the more competition there is, the less you can charge. It tends to drive prices down to the marginal cost. In digital products where the marginal cost is zero, the price can be anywhere from zero to infinity.
On “Cloud Computing”:
We talk about lowering the barriers to entry but you also want to lower the barriers to exit so that people don’t feel like they’re risking everything.
Open ID and open apps are two examples. I think we’re seeing these two battles play out and although Jonathon is absolutely right, that this is a risk, I perhaps have more confidence in the power of the marketplace to sort this out. I think that the one thing we’re sure about in this era is that we have choice, lots and lots of choice. If Facebook gets it wrong or if Twitter gets it wrong, there are a thousand other companies in the wings just waiting to get it righter. Knowing that, I believe –and so true for Google the elephant in the room on this– I think knowing that their hold on the consumer is not permanent, it’s not cast in stone and is only permitted as long as they serve the consumer better than the obvious alternatives, I believe, will keep them doing the right thing.
About “monopolies”:
I can only hope that the regulators move slowly because I don’t think the answers are clear and any answer we give today will be wrong tomorrow. I mean, today, isn’t it sort of absurd the fuss we made over Microsoft, now, in retrospect? Now Microsoft looks like the underdog right? We were so worried about their monologist abuse of the desktop. I mean, desktop, when was the last time you even saw your desktop?
About “going after small or big business (the next 1B$ business):
That model distributed innovation. Letting the community sort of invent products, try them out at small scale, figure out the bugs, whether there is real demand, and then use the big company’s power to scale them up to mass markets. That feels about right.
See also my yesterday’s blog post about Failure is NOT an Option.
On “what upcoming technology will disrupt the industry ?”
The simple answer to your question is the most disruptive thing I can see right now is the fact that you and I are carrying GPS chips in our pocket. If you have an iPhone in your pocket or any other smart phone, you’ve got a GPS chip. Now we’re not doing much with them right now but we have, for the first time in history, the capacity to link our physical world, the world we live in, to the virtual world.
I think GPS and the internet combined is a game changer. Now I’ll add just one thing on top of that. The fact that your phone is not just GPS and internet connection, but also other sensors, accelerometers, it has proximity sensors, light sensors, things like that. It could have other sensors. You know, we’ll see what we do with that. To what extent could that be used for health care? To what extent can that be used for, sort of, environmental monitoring? I don’t know but we now have nodes. We have smart nodes in people’s pockets, in their hands, spread all around the world, connected to each other and the internet that know where they are. I think that’s a big deal.
Anderson is also mentioning a company called 37Signals. Ever heard of them ?
37signals is a different approach in that they are relatively lean and targeted. They are not trying to become Microsoft. They know who they are. They were kind of born on the web and, as a result, the products sort of feel organically web centric.
And finally, on “Small is the new big”
Lower transaction cost was the advantage of the firm. Now we’re in an era where it’s completely reversed. Now big companies have bureaucracy. They have red tape. They have long procedures. They have certain profit requirements. The transaction costs are actually higher inside the walls of a big company than they are outside.
Bill Joy famously said that the smarter people in the world for any given project don’t work for you. That’s a problem if you can only work with people that work with you. I mean, why are you working with this guy? Is he the best person in world?
No, he’s the closest person in the world. Now it’s incredible easy to find the best person in the world and to get them to work with you. The internet has provided a sort of global lowering of transaction and so we can now, it’s often more efficient to look outside your company and, you know, I’m joking on some level. The idea of finding the right person via Elance versus your internal HR is actually often easier to go outside and get things done. What that’s done is that it’s said we have a diseconomy of scale with big companies. The bigger they are, the harder it is to get things done. Small companies are nimble. They’re focused. The cost base is lower. They don’t need big markets so they can target more narrow opportunities.
Open source software, hosted solutions, all this cloud stuff, those will lower the cost of starting a company. The internet has lowered the barrier of reaching products. These global markets of talent have lowered the cost of finding people the right people to work on your project. All of it is really creating an army of competitors to the large company model. Large companies are still great at mass but there is a long tail. And large companies are bad at the long tail. Small companies are perfect for the long tail. And we’re not going to see a battle between the two.
Interesting blog straight from the Enterprise 2.0 Conference taking place this week in San Francisco. Wish i was there 
Integrations by SAP, Thoughtworks, and Novell. Boy, and knowing there are still people who don’t believe Wave is going to happen big time.
Watch till the end, where there is an BPEL export of the business process that was collaboraively edited on the Gravity canvas in a cross-company wave. Piece of cake !
More details here on the Enterprise 2.0 Blog.
Btw: thx to my good friend Roger, i got an invite for Wave. You can find me there at: p.vanderauwera@googlewave.com (don’t use as an email address 😉
A couple of weeks ago, i was attending the Web 2.0 Summit. Actually, it is the Web² Summit (read as Web Squared).
If you want to stay up-to-date a little bit, a must read is the Web Squared Whitepaper. You can read it online here or download it here.
One morning, i was taking the elevator to have breakfast. In front of me in the elevator was somebody i never met, but he had a conference badge. So i started a chat. By the time we got to the ground floor, i understood i was chatting with Don Dodge, Director Business Development Emerging Business Team at Microsoft. UPDATE: just learned via Don’s blog that he has left Microsoft
I identified myself as part of SWIFT’s Innovation Team, we got connected, and Don invited me to join him for breakfast.
We chatted about innovation cultures and where we were coming from. About our deep DNA of FNAO (Failure is not an Option), and how people in such culture usually feel reluctant to come up with idea of dare to take risks.
Don told me i gave him inspiration for a new blog post on The Next Big Thing.
Never thought he would do this, but hey ! Today i received from Don a mail with a link to his post. I have copied it here below in it’s entirety. Don’t hesitate to comment on this blog on on Don’s blog.
BTW: i have invited Don to be part of our Innotribe @ Sibos 2010 in Amsterdam in Oct 2010 :-). Hope he accepts.
PS-1: I am not an “Exec”. I am just part of SWIFT’s Innovation Team.
PS-2: “Make a mistake and you are fired” is of course a metaphor to indicate that an FNAO culture does not promote taking risks and being innovative. Sometime to the contrary. But that metaphor does not change anything to the important message Don has for big and small companies trying to innovate.
+++ start Quote from Don’s Blog
An exec at a large European financial company recently told me his former CEO believed “Failure is not an option”. Great, I thought. This means they will do whatever it takes to succeed, try five or ten different approaches until it works, get the whole company focused on the goal, etc. No, he told me. What it means is “Make a mistake and you are fired.” Wow! Another example of the difference between startups and big companies. I have worked most of my career in startups where you are always pushing the envelope, taking big risks, where there are no obvious answers, and you just keep trying until you find the combination that works.
Startups play poker, big companies play chess – This “failure is not an option” discussion reminded me of the huge differences between startups and big companies. Success is not easy in either case, but the approaches are radically different. Using a game analogy, startups are more like poker players. They take big risks, they bluff, they make quick decisions, change direction constantly, and they keep their competitors off balance. Poker is an aggressive game where if you play your cards right you win big, and win fast. If you lose a hand you can come back and double your money in the next hand. There is no time to wallow over a loss. You did your best. Move on and your luck will be better next time. Chess is a different game. Both require incredible skill and talent. A great poker player is rarely a good chess player.
Big companies think long term. Like chess players they think four or five moves (years) ahead. They protect their assets, play defensively, think strategically, and carefully consider the options before making a move. Big companies have a lot to lose, while small companies don’t. Big companies leverage their assets (conservatively) and flex their muscles where they can. They go for incremental improvements in position. Big company CEOs, like chess players, work a long term strategy. Each short term move plays a part in a longer term strategy that is not visible to the casual observer. In fact, their strategy is often kept secret, and they take care to make sure their short term moves don’t reveal their long term plan. Strategy is a competitive advantage.
There is another interesting topic on how to make the transition from startup to successful big company, but we will save that for another day.
Fail Fast – If you are going to fail, do it fast and move on to the next thing.More in depth thoughts here. The only thing better than a “Yes” is a quick “NO”. When you are raising money, selling a customer, or trying to get a deal done, it is the long drawn out process that never ends that will kill you. It is the same thing with startups. Being successful is always the goal, but if it is going to fail…Fail fast.
Bill Warner, founder of Avid Technologies, Wildfire Communications, etc, said recently “Some of you guys are so smart you turn what should have been a one year failure into a five year death march.” Entrepreneurs are resourceful, smart, and have that indomitable spirit that doesn’t allow them to quit. This can be good and bad. Sometimes it is better to “fold” and move on to the next game.
Hold ‘em or Fold ‘em? – “You got to know when to hold em, know when to fold em, know when to walk away, know when to run.” Kenny Rogers. The toughest decision any entrepreneur makes is giving up on a company. It just isn’t in their DNA to do it. In fact, they rarely decide to do it, it is the investors who finally make the call. How do they decide? It is really about passion and commitment – from the founders, investors, employees, and customers. If the passion is lost in any two of the four groups…it is probably time to “fold” and move on.
Fine line between success and failure – There are no easy and obvious answers. If it were easy everyone would have already done it. Timing and luck play a big part in success…bigger than most people will admit. There are four key elements to success in any business; great people, great idea, great timing, and luck. If you don’t have any two of the four…you are probably going to fail. I have seen startups with great people and a great idea that were too early (timing), or had bad luck on things they couldn’t control. They failed. The same idea tried five years later succeeded. Timing matters. The market needs to be ready to adopt your ideas. The answer is never obvious. You don’t know for sure until you try.
+++ End quote
Fantastic blog by Hutch Carpenter about The Passionate Creatives. His blog is always quality. Always new content. Feeling deeply the pulse of the Enterprise 2.0 wave.
A lot in Hutch’s blog post reminded me about the book – The Cultural Creatives – How 50 million people are changing the world. By Paul H. Ray & Cherry Ruth Anderson.
In his recent blog entry, Hutch talks about “Passionate Creatives”.
Especially about passionate creatives at the edges.
Passionate creatives are everywhere among us, but they are not evenly distributed. They tend to gather on the edges where unmet needs intersect with unexploited capabilities. Edges are fertile seedbeds for innovation.
Or also
Companies are best-served by allowing employees who are attracted to these changes to pursue innovative ways to address them. Why?
They get energy
They get an experimenter’s mentality. They get a happier workforce. Let employees exercise some form of self-organization to accomplish this.
The alternative may be incumbent staffers who have fallen into routines, or
have reason to protect
the status quo
This does not help companies address rising levels of volatility. Free the passionate creatives!
Makes me think of Red Monkey story by Jef Staes. I use it a lot. In every presentation about innovation. It’s where my audience does NOT loose me on my trip to the future.
Let me make another connection here. Just like Hutch, i would like to refer to A Labor Day Manifesto for a New World by John Hagel.
John Hagel founded the Deloitte Center for Edge Innovation. And is having a fantastic blog The Big Shift. I had the honor of meeting John Hagel in person during the last Web 2.0 Summit. We had a brief chat on his possible participation to next years Innotribe @ Sibos 2010 in Amsterdam.
Have a look at the whole Labor Day Manifesto, and more specifically at the last paragraph:
Stop and think about the last truly great person who left your organization. First think about what made that employee great. We bet you name such characteristics as action-oriented, driven, passionate, fun, and genuine.
Now think about where that worker went. Chances are, to a position with a perceived promise of putting his or her talents to better use—moving into a role with greater challenges and opportunities to learn and make a difference. It wasn’t about money.
What a great test for each organization !
And there is also the interesting innovation blog from Stefan Lindegaard. In his 5 oct post Job Opening- Senior Innovation Manager he describes how difficult it is to find a senior innovation job:
I am sad to say this is just not the time to seek such a job. I see this in the networks I facilitate where many innovation leaders have lost their jobs in the past year. I have been in touch with several of them discussing their options and trying to help them move on. Actually, last year some of them got a new job pretty fast, but this is not happening now. It takes longer – if at all.
Just to give you an idea of how bad the job situation looks like: There are less than 20 companies on Monster.com in the U.S looking for senior innovation managers and offering interesting challenges.
Somewhere in the middle there is a great advice for people wanting to work with innovation:
So my advice to all the people working with innovation right now is this: If you really want to work with innovation, then
your current job
is most likely the best chance to do this.
My dream scenario is that – in these times of crisis, with efficiency programs cutting out the best when focusing solely on efficiency and allowing managers to settle old bills with team members that took the risk to innovate – that the group of passionate creatives on the edges of every company will stand-up, claim their space, and fight to destruct the cynicism that reigns in some many companies.
The root cause for this unbearable cynicism are usually power-games between silos. These power games are putting a major barrier to success to any CEO shouting “change” at the top, as the change – or desire thereto – does not permeate into the lower echelons of the organization, and therefore remains nothing more than
a big illusion
This is the difference between old and new game.
In the new game, we don’t shoot at Red Monkeys, we don’t fire the guys who have the courage to take risk. On the contrary,
we protect them,
expose care, and
channel the energy
for the better of the company
I met a couple of those passionate creatives recently:
what an energy !
If only we could turn the negative cynicism energy into a positive creative energy.
Who feels energized by this ? Let’s join forces. Let me know who you and where you are.
Umair Haque has written an Open Letter to Google titled “Can Google take on Wall Street – and Win ?”
It starts with: “Dear Google,…”
and goes on with:
Every day, you handle more searches than the NYSE handles trades — and that difference, I’m guessing, is about to hit an order of magnitude more. Every day, you connect people, businesses, and communities in deeper and tighter ways than besuited beancounters do. From my tiny perspective, it seems that you just might be in the best position of any organization in the world to take on Finance 2.0.
Umair’s open letter is nothing more (or less) than
asking Google to implement
his Finance 2.0 Manifesto
written some months ago, and commented in this blog here. I strongly recommend to read the Manifesto.
And he continues:
What would a Googlier
finance industry resemble?
What would a more Googly set of capital markets look like? That’s the $12 trillion dollar question. After all, markets are just search engines — remember?
You still think you’re in the media business. You’re not. In the 21st century, everyone’s in the same business: the awesomeness business. It doesn’t matter what you make, as long as it offers maximum awesomeness. And right now, better finance would be pretty awesome.
Yesterday, you used to change the world. If you think a bit harder, a bit smarter, a bit more disruptively — you still can. If you don’t — well, the biggest catfish in a parched, dried up pond sure ain’t the smartest catfish.
And he gives some “leading” examples:
Tracked, ValueCruncher, StockTwits, and many more are the leading edge of a revolution — a revolution in what finance has been for the last several centuries, and what it must become in the 21st.
Something i don’t like in Umair’s post is the polarizing tone as if all in financials services is bad, and Google is “doing good” and Google being positioned as the solution to cure world hunger. Although i have already promoted many times on his blog that
polarization fosters innovation
Also, the “leading” examples offered above are putting Google in its traditional role of information manager, searcher of information.
I believe we could also look at Google as a utility. They have some great tools that could be applied in a big way to financial services. What if for example a neutral party would host a federated Google Wave as a SaaS solution for the financial market ? Running on a secure messaging platform like SWIFT ? Next generation person to person communication ? Or apply the same technology to do Collateral Margin calls for example ? Where every new call is a new Call “wave”. Think about it.
There is of course a lot i like in this article, especially the implicit push for extreme – even “impossible” innovation. Last week, i was attending the 11th European Conference on Creativity and Innovation. One of the keynotes came from Mark Raison, titled “The Power of Impossible”
Look at this presentation. Internalize it. And then let’s play-back Umair’s open letter with The Power of the Impossible in mind.
What would happen then ?
PS: Mark Raison is on my target speaker list for Innotribe @ Sibos 2010.
Via Nova Spivacks Twitter account: “See this video of flight in U2 to 70,000 feet. I went to nearly 90,000 in 1999. This gives a good feel for it. http://bit.ly/14WdGJ”
Space flights will be quite ordinary in 2025. That’s a little more than 15 years from now. I may still live then.
For our think tank long term future.
Petervan Studios 