A very nice talk from Ellen Levy – VP of Strategic Initiatives at LinkedIn – at the Business Innovation Factory’s Collaborative Innovation Summit in 2007 on pulling resources together to solve tough problems. Levy talks about her experience as Director of Industry Collaboration and Research for MediaX at Stanford University. In her role, Levy wired together companies wanting to solve tough problems with interdisciplinary faculty members at the Stanford.
Anyway, here’s the talk.
Big Data as a source of competitive advantage at Bank of America – Abhishek Mehta at Hadoop World 2010
Data as the new competitive advantage
My favorite insight from the presentation follows:
The last piece of it, which kind of goes with the fact that Data Quants [or Data Scientists] are really undervalued in the market today, was the fact that Modeling Quants are overvalued …
Our learning was this: [Algorithms] are only as good as what you feed in them. So if you truly had a discipline built around data – collected over multiple sources, structured and unstructured, many variables going back many years – the [algorithms] become less important. Because simple models over Big Data are more powerful than the most complex model using some approximation behind it. And we fully believe in it.
Secondly, with this massive democratization of data and the tools around it – and the next phase of it being the algorithms also probably following the same track. Most of the best [algorithms] that you need to use are already open-sourced – they have been written. So the algorithms, or the art of writing algorithms, is no longer proprietary. That is NOT your competitive advantage. The advantage you have is going to be how you apply the algorithm to a particular business problem, and that’s going to be the competitive differentiator.
Now that’s very interesting stuff.
In reference to the above slide, Mehta has this to say:
As an example, the graph algorithm – the same algorithm:
- Powers the People You May Know app at LinkedIn
- Can be used and deployed to classify people into behavioral tribes, or behavioral networks
- And the same algorithm can be used to look at risk concentration ratios
The algorithm has already been written in MapReduce. … But which problem you apply it to – between people you may know, marketing tribes or risk concentrations – is what is going to be the competitive advantage.
So we spend a lot more time in building what I call Data Algorithms, or data modeling, than actually in writing algorithms. And that is a massive change in the science around data, and big data.
Data Factories – the next Industrial Revolution
The closing segment of Mehta’s talk begins with the following slide:
And he has some provocative thoughts on the topic:
I believe that we are witnessing the birth of the next industrial revolution. It’s going to be powered by data. It’s already begun. It’s still very early, but it’s already begun.
And the concept around data factories, of the ability to take data in, automate – just like factories do today – automate the data pipeline, and produce data products then can then be fed to solve multiple problems, is truly game changing. What we are building at Bank of America is the first data factory in financial services – to do exactly that.
Now data factories exist today. … Google and Facebook are some of the well-known data factories, as I classify them. Some of the not-so-well-known ones are comScore and Zynga. They do the exact same thing. Data is their core asset. They know how to monetize it, and they’ve tried to build an automated process to take raw data and push it forward.
… Buy into the fact that [Big Data] is going to change the world, and massively disrupt existing economic models. I look at Hadoop today as Linux was 20 years ago. We all have seen what Linux has done in the enteprise software space. It’s been massively disruptive. Hadoop will do the same. It’s not a question of if, it’s a question of when … across all verticals, not just in web properties.
John Hagel on the Power of Pull – speaking at the Haas School of Business, UC Berkeley in April 2010
I had mentioned in a previous post today that I have just recently become introduced to the thinking of John Hagel, the co-chairman of Deloitte’s Center for the Edge. From 1984 to 2000, Hagel was a principal at McKinsey, where he was leader of the strategy practice. And he also founded and led McKinsey’s electronic practice from 1993 to 2000. Not a bad CV I’d say.
In the video below, Hagel speaks at the Haas School of Business @ UC Berkeley in April 2010 about his recent book The Power of Pull. He begins his address with the following provocative statement: “The management practices that we’ve been pursuing for decades – and maybe even a century or more – and indeed our institutions – and in particular our business institutions, but all our institutions – are fundamentally broken.“.
With that setup, here’s the video:
If you find Hagel’s talk interesting, you may also want to check out Shift Index 2010 report, as well browse The Edge Map page. If you want to follow Hagel’s work, please check out his Edge Perspectives blog, as well as his Big Shift blog at HBR.
I just had the opportunity to watch a fantastic panel from TechCrunch Disrupt 2010 titled Evolve or Die: The Evolution of Music, TV, and Publishing. This panel discussion can be viewed below:Vodpod videos no longer available.
The panel is moderated by Michael Wolf (who does a very nice job BTW). Participating in the panel are:
- Sarah Chubb – Then-President of Conde Nast Digital
- Fred Davis – Founding Partner, Code Advisors
- John Hagel – Co-chairman, Center for the Edge @ Deloitte
- Avner Ronen – CEO, Boxee
But for me the highlight is absolutely John Hagel, whom I actually hadn’t heard of before. Hagel is co-chairman of Deloitte’s Center for the Edge, a center created to help executives make sense of profound shifts in the competitive landscape. He has co-authored with John Seely Brown The Power of Pull How Smart Moves, Smartly Made, can set Big Things in motion, and is a contributor to the Big Shift blog, along with John Seely Brown, at the Harvard Business Review site.
I’m going to quote several powerful segments from Hagel during this panel, along with comment form Sarah Chubb of Conde Nasah. These comments speak to profound changes traditional media companies are currently facing.
The transition from a product-centric to a customer-centric mindset
Here’s John Hagel providing his thoughts on how traditional media companies are transitioning to the digital world:
I think there’s definitely opportunity for the large companies to still make a go of it. They’ve got extraordinary assets to deploy in terms of relationships, brands – relationships both with audience and with creative talent.
So I think the challenge is just understanding the changes that are going on. And part of the issue, from my experience, is that the changes are just so fundamental that it’s no longer about skills, it’s not even about economics, it’s really about basic assumptions about what is required for success. And when you get to that level it becomes very challenging to make the transition.
I would say one of the key transitions for large media companies is to move from a “product business mindset” to a “customer business mindset”. And I think most media companies when I talk to them would say “Of course we’re a customer business; that’s our franchise.”
On the other hand, there are some basic questions you can ask that quickly put that into question. One is, “If customers are your focus, who has the power within your organization? Is it the product people? Or the customer people – the executives that own customer relationships vs. the executives that own product development?”
[By Customer People, I mean] people that are really focused on building relationships with customers – ongoing relationships focused on getting to know these audiences not just as segments, but as individual audience members. Who has the power? When there’s a conflict that emerges in the organization, who wins?
Second question is “How do you measure profitability?” If audience is so important to you, do you measure profitability based on product profitability or audience profitability? Most media companies still are very focused on product profitability. A fundamental mindset shift required.
Finally, brand promise. What’s your brand promise? Is your brand promise “Come to us because we have extraordinary product?” Or is your brand promise “Come to us, because we know you as an individual audience member – again not as a segment, but as an individual audience member – better than anybody else, and you can trust us to bring together the right media content resources for your needs.
And I think that’s kind of the shift really necessary to make this transition. And I think that’s where the large media companies are still struggling.
Later in the panel, Sarah Chubb elaborates on the same theme, and the role that audience engagement through social media:
It actually does go to what [John Hagel] was saying about moving from a product-centric point of view to a customer-centric point of view, which is certainly a transition that our company has been going through.
We are in the audience business. The quality of your audience, and the level of engagement and how good you are at monetizing that, determines how profitable you are, and long term how healthy your business is.
There’s monetization and value in the audience relationship with the consumer revenue stream. And if you’re very good at selling and packaging and marketing, which we tend to be, there’s the advertising revenue stream as well.
Social is critical to that, because what “social” has taught us is, even if you’re in an authority position – and many of our magazines like a Vogue or Architectural Digest are – the conversation that’s going on as a result of that authority position is maybe more important than your point of view. It’s at least equally as important.
Chubb also poses an interesting question around what role in the company “owns” the responsibility for the social media relationship with audiences:
Well and that’s another ownership question, right? Who owns the social media relationship? Is it the consumer marketing department? Is it the PR department? Is it the Editor of the magazine? And that’s a rich conversation.
The Future Profitability of Traditional Media Businesses in the crossover to Digital
Moderator Michael Wolf beings a segment in the discussion by posing the following question:
There’s a lot of discussion in what we’re talking about – this idea of “crossover”. And it’s certainly what’s on the minds of a lot of media executives, which is that there’s a moment at which the very profitable business model of today becomes one which, in the intermediate period, may not be all that profitable. Where do you all see the crossover?
Hagel’s response is provocative:
I believe over time what we’re seeing in the media business – and it will accelerate – is an unbundling of media businesses into 3 different types of businesses: (i) product businesses, (ii) customer businesses, and (iii) infrastructure businesses.
Profit historically has been in the product business. I think over time it will be in the customer business and the infrastructure business. Those economies of scale, economies of scope become huge generators of profitability.
It’s going to be a very difficult transition. And I think to [Avner Ronen’s] point about the competition of content and quality content, there’s more and more content competing.
So if you are a product company, you’re going to be competing in a more and more fragmented world. And a world where it’s harder and harder to sustain position based on product superiority. There’s going to always be some more creative talent out there that comes after you.
So that’s the challenge for a very large company that’s been a product business historically. How do you cope with that fragmentation and difficulty in sustaining, and if possible how do you make the transition to one of those two other business types?
When Wolf asks Sarah Chubb how she’s managing this transition at Conde Nast, here’s her reply:
The one sort of visual I would use is that you have many, many, many too many plates in the air at the same time, right? So you have an existing, very profitable, very solid and cash-generating business that is in transition. And where to take the value out of it, and leverage the value without losing what’s generating the cash at the moment.
And one of the things that we think we’re going to see happen is the importance of brands – to your point – there’s so much stuff out there, we know that our brands are valued.
That doesn’t mean the way they’ve been embodied forever will continue – you know, 10 years from now will still be the thing throwing off the cash. We’re actually are urgently looking at everything we possibly can to figure out where the value is in those brands, to add adjacent products, to create new products.
You know, what is it about that relationship with the Vanity Fair brand that makes people want to embrace it? And are there 10 other things that you might want to buy from me that tap into that passion that you have for the brand?
And what that requires from us as a large media company is to be ruthless about past feelings and past ways of doing things much, much faster than we’ve ever been. And we’ve learned a lot from the Web. So as much as I wish the CPMs on the Web were anywhere close to what they are in print, and it’s much harder to make serious money without enormous scale online …
We’ve learned so much from Epicurious and Wired and Reddit, and even from the sites that we have for our magazines that are relatively smaller that we think it’s happening fuel the evolution into faster and hopefully more profitable things. And you’ll see products from us for the phone and for the new devices that come out that will compete with the iPad, and we love the iPad. You’ll see more things from us that are faster turnaround, that are maybe less than the cost of a subscription, but tap into that passion that people have for the brand.
Summing up …
Some very interesting insights shared in this panel. Also some really good thoughts on the role of social games in the future of media.
Before I wrap up this post, while I’m trumpeting the horn for John Hagel, I also enjoyed the following 3-minute clip from Hagel speaking at 14th Annual Wharton Leadership Conference.
He address an important concept from his Power of Pull book, which is knowledge stocks vs. knowledge flows. Anyway, I find Hagel to be an interesting “big-picture” thinker.
Bill Moggridge and Interaction Design
Bill Moggridge is a bit of a legend in the Design world, having co-founded IDEO, and authored the wonderful book Designing Interactions. I recently watched a video of a presentation that Moggridge gave at Stanford in 2007 on this book, which can be viewed below:
Design’s role in a Business Innovation
Like many folks in the Design world these days (see here and here), Moggridge also speaks of Design in the context of Business Design. In the slide deck from his recent presentation, Moggridge presents an interesting model/framework for business innovation, which is shown below:
I really like this simple visual, which positions Business Innovation at the intersection of Business, Design, and Technology.
Business Architecture – another view of the intersection of Business and Technology
This diagram reminded me a lot of another diagram which shows the confluence of three disciplines that span business and technology. The diagram below is from an IBM whitepaper, which positions Business Architecture at the intersection of 3 key core enterprise disciplines – Strategic Planning, Business Execution (or operationalizing Business Strategy), and IT:
Like Moggridge’s Business Innovation framework, this visual crucially positions Business and Technology as overlapping concerns – from both a strategic and operational vantage point. But unlike Moggridge’s framework, it leaves out Design as a strategic consideration in and over-arching Business Design framework. Increasingly, I think this will prove to be an important omission.
Bill Buxton would concur
Buxton says he’s working more these days to help Microsoft redesign its organization and processes that on product design.
Secondly, and this is very fascinating to me, Microsoft is developing an approach to business innovation and product development it calls BXT – Business eXperience Technology. That is, Microsoft feels it needs to bring business thinkers and doers, technology thinkers and doers, and design thinkers and doers, and have them work together in a cohesive fashion around business innovation and product development. Buxton talks a bit about this approach in a piece he wrote for Business Week in 2009.
Here again we see Buxton and Microsoft treating the intersection of business, design, and technology as strategic to business innovation.
I think Moggridge and Buxton are definitely onto something here.
Dave Gray of XPLANE has a new book out titled Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers – a book that he has co-authored with Sunni Brown and James Macanufo.
Gamestorming is a book about creating an environment for creativity and innovation in organizations through playing team-oriented games. I currently have the book on order, so I can write about it yet. But here’s the blog that inspired the book. And here’s a wonderful video of Dave Gray at IxD10 presenting the ideas that motivate the book:
There is one segment of the video that I particularly like, starting around 26:40 – and it’s on the topic of Artifacts. Here’s Dave Gray:
What is an Artifact? Usually an artifact is something we find in an archeological dig. … But artifacts are usually portable, as opposed to the Parthenon. An artifact is usually something that people have imbued with meaning of some kind and we may or may not know what is it. But it’s an object that has meaning to people, that meant something, and they used it to carry meaning around, like we do with our laptops or books.
So what Artifacts do for us in knowledge games, is artifacts give us a way to make information tangible, so we can put our meaning into motion and make it portable.
So when you’re trying to have a meeting, and all the stuff is just floating around in the air and people are just talking about it and there are no tangible artifacts … you’re expecting everyone to hold all this information in their head, and it’s very hard [for people] to actually think what they want to do with this information, when they’re just trying to track it.
In a nutshell, artifacts “anchor” meaning so that it’s tangible, explicit and can be communicated/shared.
I’ll update this post once I’ve had a chance to read the book.