Microsoft market performance
Competitive graph approach
The combination of the new Microsoft strategy and the ability to compete with other big players like Amazon AWS and Google Cloud will propel them into a new competitive space.
The combination of the new Microsoft strategy and the ability to compete with other big players like Amazon AWS and Google Cloud will propel them into a new competitive space.
Innovation is under scrutiny in the financial services world as global competitive pressures force organizations to rethink their business models and operating environments. A changing landscape sees the profiles of clientele changing too and banks need to ask themselves what kind of people their up and coming clients are.
The intense focus on meaning-making in society, coupled with the exponentially evolutionary nature of social systems and networking capabilities means the new generation has different needs to their predecessors. Money systems of the past are no longer adequate to deal with the requirements of current users, they demand individual attention, packages that suit their lifestyles, banks that provide an identity rather than a deposit box, and above all this new and connected generation wants a reason to use the services provided by a single out of many.
Banking and money lending may seem a straightforward affair, and indeed the concept behind money keeping, borrowing and lending is undemanding, so how does a financial services institution innovate radically with the goal to grow and keep with the fast paced nature of the landscape around it? Ecosystem and ecogenetic thinking suggest that everything is linked, and what we have begun to see is a rise in banking activities correlated to other societal shifts. Zopa, operating out of the UK, was one of the first peer-to-peer online money lending platforms, born out of the socially networked behavior of people; this type of lending negates more traditional modes of lending through a financial institution such as a bank.
In Bangladesh, Muhammad Yunus founded the Grameen Bank and in 2006 was awarded the Nobel Prize for Peace. The bank, in an attempt to provide a community service, allows its clients to take out small loans called microcredit which require no collateral, enabling the poor members of the Bangladeshi society to develop financially. The social behavior of society and the nature of systems of peer-pressure effectively allow this bank to exist by only lending to the poor.
Systems of monetary exchange are shifting, and it is obvious that insightful innovation implemented in the correct way may see a bank truly thrive, but how is this innovation achieved?
I once again ve’been running around London from meeting to meeting. The use of underground trains and forging your way through the masses of people from one important session to another; remind us that the consistency of delivery and predictability of basic service platforms provide comfort to the seasoned traveler. So, once in a while a situation occurs…
Coffee, the consumption of excellent coffee, has become a major topic of discussion in most metropolitan cities of the world (well, some cities). Starbucks is one of those that has made its mark with good quality delivery and absolute consistency worldwide. So, when you arrive at a coffee station (Starbucks at a station) and the quality is not absolutely perfect, what should happen?
Waiting for the production process at Waterloo station to have my Grande Cappuccino delivered; I observed that the barista is not as organized as usual. I only noticed the uncomfortable behavior as the normal delivery is extremely quick, consistent and the hand-over process is normally smooth.
As he hand me my beverage, a figure appeared and with a serious tone announced, “sorry sir we will be re-making that for you”. As I was in a hurry and did not want to wait the 2min for another manufacturing process, I uttered “don’t worry, I need to run”. A calm voice explained to me that the drink passed to me, will not be perfect and that the voucher (just handed to me) will make up for the experience.
Absolute paranoia on behalf of the “quality checker” barista, has won over my respect and admiration. I only found out some 4min later that the drink was not as I expected. He knew that I would be questioning the overall experience the next time round, unless he intervened NOW. Did I expect the invention of a coffee that is just made for me? Not at all; just the same’ol same’ol that keeps me going while on the move.
In the world of innovation; once you have found the “perfect” formula, make sure you have a way to deploy it and deliver on the expectation is often forgotten. It’s not always about the radical stuff, but the basics being done well while you re-invent the future.
Innovation processes come in various forms and shapes, but there is an overriding view that open innovation based approaches have simplified the concept. In some cases you need gates, funnels, check points, runways, pipelines, fuzzy front-ends, committees, review boards and other concepts to deliver on your innovation approach of choice. But, other times you need the process to be socialised, integrated and imbedded to deliver on your management mandate in a seamless way.
To drive this a process of Create, Rate, Collaborate and Review might just do the trick. Get people to participate through cycles of energy, then rank and rate what needs to be done socially, collaborate with various parts of the organization to get the job done; and finally find the successes and failures to either contribute, learn or avoid. Bring the shadow organization and the formal organization together by allowing ideas to flow freely, innovations to be implemented openly, and the benefits to be visible. Is this form of transparency paving the way for the future organization?
Two more examples of crowdsourcing approaches.
I’ve spoken quite a bit about innovation related communities and ecologies over the last months. One component that is needed to make innovations successful, is the ability to try and predict the future. Some predictions are described as scenarios and others can come from communities where the whole world participate in submitting predictions. The community, What the future holds plays to your need to leave a legacy where people in the future will see that you were able to predict the future.
Nostradamical: predict, publish, play “Essentially Nostradamical is a fun approach to a serious topic: The ability of ‘the crowd’ to predict events with better overall success than ‘the individual’.” The focus is on getting social communities to share information about the future. They are also working on a prediction engine that uses the data from the community to intelligently make predictions.
I find this particularly interesting as most of our clients would benefit from this approach when collecting complaints, recommendations, ideas, compliments, etc from their clients, staff, etc. We are entering an era where the classical MIS (management information system) approach is just not going to cut it. Real-time information is needed as crowds share ideas, change behaviours and shift markets. Integrating financial information from your bank, with tax information from the local authority, vehicle information from your car, mobile behavior from your cellphone, E-mail information from your E-mail provider, social information from your Facebook and Linkedin accounts… And, once integrated, you should be able to have recommendations made as to when to phone, where to drive, and what to do next for optimal performance. Is this taking it too far?
Here is another example, and something more practical…
We are embarking on a rethink of our brand, something that happens periodically. LogoTournament is a crowdsource based community where designers from all over the world can design logo’s for companies. It will cost you anything from about $250 to $5000 depending on the level of response required. So, why would you do this? The old way was to give your favorite agency a detailed brief, let them come up with something, and then you select an item. This is costly and everytime you want to change something it costs you money.
To crowdsource your design you need to provide the same kind of brief, and in some cases more detailed. You set the price tag and off you go. Designers from all over the world then submit their designs in pursuit of the relatively small fee for the design. Ranking systems are used to determine the kind of designs you like and don’t like. All of this happens interactively with a design community obsessed with making a name for themselves.
“Crowds don’t innovate–individuals do.” writes Dan Woods. Obviously, I think that Dan missed the point a bit as to what crowdsourcing really is!
Let’s look at the basics again:
“A crowd is a group of people. The crowd may have a common purpose or set of emotions, such as at a political rally, at a sports event, or during looting, or simply be made up of many people going about their business in a busy area (eg shopping).”
Crowds are groups of individuals with different backgrounds, preferences, opinions, skills, etc. What makes a crowd is when just one of these preferences coincide with preferences of others.
“Crowdsourcing is a neologism for the act of taking tasks traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people or community in the form of an open call.” “Crowdsourcing is a distributed problem-solving and production model. Problems are broadcast to an unknown group of solvers in the form of an open call for solutions.”
The key is “sourcing” in crowdsourcing, it refers to the concept of getting groups of people access to potentially solve a problem. It is not that the “crowd” can solve anything; it is that an individual that is already influenced by being part of a movement or community now has access to a platform where the most appropriate solution will be accepted.
In the era of market segmentation we focused on segmenting markets based on behavior, gender, preferences, etc and then tried to solve problems for the segment in a generic way. Concepts like mass customization pushed concept of allowing a “market” to change some of the variances in the product/service based on individual preferences. Customerization is when the marketing messages and produced product or service are customized simultaneously based on individual preferences.
So, my take on crowdsourcing is; it is a platform for customerization where both the supply-side and demand-side of the value network in the economic setting participate in the extraction of value. Value in this case refers to economic and other forms of value for example reputation building, education, societal causes.
There is a relationship between crowds and tribes. Tribes is defined as “the term to refer to societies organized largely on the basis of kinship”. Crowds are formed based on common properties, and in most cases when crowds are formed inside companies it happens due to kinship; hence the relationship with tribes.
Let’s look at an example:
If you want to crowdsource ideas to develop a new business idea, you would need to firstly have access to a crowd. This crowd could be your immediate social network, or some other community where the individuals in the crowd have similar interests (and possibly only one common interest). You would need to present a “request for ideas” to the crowd where individuals will then decide (individually) if it is worth their while to participate. If the incentive is for immediate gain; where you pay money for great ideas, or if the incentive is long term; where you pay once the idea has been implemented will be different between various parties. As the crowdsourced ideas get submitted, the crowd will assist in determining if these ideas can contribute to the problem that’s being solved. This rating and ranking approach is now well adopted by eBay, Digg, etc where crowds express their views by voting en mass.
The ability to communicate and integrate ideas in society will continue to fascinate the human race. My take is that crowdsourcing related activity is an evolutionary phenomena on the way to have a more efficiently integrated human-technology decision making landscape. We are influenced by our peers, networks, friends, etc which are all crowds and we use technology to remove the inefficiencies of this influence.
Idea management and the associated innovation processes to realize ideas are concepts now well implemented across many different global organizations. It is quite a cluttered landscape as organizations implement their own systems whilst others buy products. A few leading products have emerged with highly functional and comprehensive solutions. There is a shift in this landscape as these vendors try to capture SaaS (Software as a Service) value by offering various on-demand delivery options.
The SystemicLogic team is working on a report that will show the differences between these companies. An initial report should be available by January 2009. Consider this list of companies…
Mindmatters Technologies inc.
Planning innovation (power planning)
The use of community oriented idea management systems has emerged as the primary means of managing useful ideas from customers, employees, competitors, and any other networked member. Where is this leading? Have a look at these attempts to deal with idea management by organizations:
Starbucks uses this: “We know you’ve got ideas – big ideas, little ideas, maybe even totally revolutionary ideas – and we want to hear them all.”
BMW’s Virtual Innovation Agency uses a context setting mechanism to attract ideas. “If you have innovative solutions for our complex challenges, then you are on the right road with us.”
Dell uses IdeaStorm to elicit ideas from the public. “Where your ideas reign.”
SalesForce.com has Idea Exchange and uses it to obtain ideas and allow customers to interact with other customers’ ideas.
Cisco has their Human Network initiative; “When technology meets humanity on the human network, the way we work changes. The way we live changes. Everything changes.” For me this is the move towards the Human Mash-up.
Lego has “Creator” where members of the public can ask questions, design their own units and upload digital design ideas. It is a window into the design world of Lego.
Apple also has a number of approaches, but the Learning Interchange stands out as a great community based initiative. Ideas collected during teaching (well before and after is also needed) can result in great new products, business ideas and a number of other positive side effects.
Idea based Wiki’s are also emerging. IdeasGrande is a project to get creatives and practitioners from the advertising and marketing industry to share ideas through an unstructured wiki.
Internally oriented idea management systems (in contrast to the examples above) are challenged as they try to capture many different dimensions in getting new thoughts, concepts, proposed opportunities, etc into the every discourse of business execution. There are a number of companies selling these types of technologies; but most implementations are challenged. Some key issues with traditional Idea Management Systems:
1. It becomes an administration nightmare. The more enthusiastic the organization the bigger the problem. Hundreds of ideas and only a few people to check, review, approve and re-direct ideas.
2. Volumes of ideas that have nothing to do with the business or its current challenges.
3. Dependence on specifically skilled people and a review process that is overly controlling.
4. Little- or no- follow-through on ideas to the individuals that participated in capturing ideas; resulting in damaging any further idea generation campaigns.
So, if these are some of the problems experienced inside organizations, how successful are idea management systems that include a wider and more diverse community.
Three bits of news seconds from each other got my attention today. You figure out what this means in light of these three Innovation Strategies:
1. Design based innovation – being focused on design and ecosystem based offerings
2. Open collaborative innovation – using information and the participative customers to entice the economic customer
3. Innovate though protective barriers – use legal systems and threat based tactics to protect your market
From ZDNet Tech Update:
Apple beats estimates; credits iPhone sales
“Apple beats estimates; credits iPhone sales Sam Diaz: It’s not the past performance that investors want to know about, it’s the future. What are companies doing to ride the economic storm? Yesterday, Apple reported fiscal fourth quarter earnings of $1.14 billion, on revenue of $7.9 billion. The company credited the strong quarter partly to iPhone sales. “We sold more phones than RIM,” CEO Steve Jobs said.
Other highlights from the quarter:
* The company sold 6.9 million iPhones, taking the company passed its goal of 10 million sold for 2008 – with two months left in the year. The company said iPhone is now 39 percent of the total business.
* Apple shipped 2.61 million Mac computers, a 21 percent increase over the year-ago quarter. It set a company record for a single quarter.
* More than 11 million iPods were sold, up eight percent from a year ago. The company said it was record for a non-holiday quarter. It’s market share for portable music players remained above the 70 percent mark.
* The iTunes store has more than 65 million active accounts and a catalog of 8.5 million titles. It has just added more television shows, renewed its content deal with NBC and added high-def programming.
* The company has $25 billion in cash and zero debt. In a call with analysts, Jobs hinted that the financial position gives the company the “ability to invest our way through this downturn.”
* The iPhone App store expects to see its 200 millionth application downloaded by tomorrow, 102 days since the July launch.”
From CNET Reviews:
The Android is here
If you managed to miss the hype, here’s some news: T-Mobile’s G1 phone, which runs Google’s Android mobile platform, is here. The phone might not be perfect, but Google’s Android platform has the potential to make smartphones more personal and powerful. We’ve got full coverage, including a full review of the G1 phone itself, the latest news on Google Android, and a speed test that pits the G1 against the iPhone 3G. Dig in!
* Coders get 70 percent of Android Market revenue
Google officially opened its Android Market Wednesday and promised that beginning next year, programmers will get the lion’s share of revenue from applications sold on the download site for the company’s mobile phone operating system. The first incarnation of the Android Market has more than 50 applications available
Microsoft Flexes for Global Anti-Piracy Day
The selection of October 21 as Global Anti-Piracy Day may have been random, but Microsoft is tying its renewed emphasis on reducing the use of unlicensed and otherwise illegal software to the larger economic fears that businesses and end users alike are dealing with right now.
48: number of countries in which Microsoft is launching or relaunching anti-piracy education and enforcement actions today
5: number of continents on which those 48 countries can be found
20: number of resellers against which Microsoft announced legal action today, for allegedly selling pirated software
1/3: number of PCs globally, at minimum, that contain pirated, unlicensed or counterfeit software, according to Microsoft
$50 billion: Cost to businesses, globally, of pirated or unlicensed software in 2007
800-785-3448: telephone number customers can call to give Microsoft hot anti-piracy tips
120000: the number of open source projects actively working on solving this problem, Google is one of those companies with a few projects…
The role of the customer has evolved where the act of co-production plays a more dominant role than in the previous era. This has been a slow journey that went through evolutionary cycles of change. It will be impossible to describe this journey in simple terms where you define a simple set of rules of this multi-dimensional evolution. But there are some signs…
This story starts after the industrial era – evidence that modern businesses are shaped around productivity and new business models. Productivity results in automation and business model innovation results in contemporary revenue models.
Business Models are described in “first order” and “second order” business models:
– The first order model is the easy model to define and the economic customer is well defined and becomes the focus of most business activity.
– The second order business model relies on the participative customer to drive economic value through a different set of customers.
Google makes money by having participative customers use their community for free. Well largely for free, services like Google Earth, Sketchup, Documents, Business have a “free option” and various payment options where you get additional services (a combination of first and second order models). Economic customers on the other hand pay to have access to participative customers – and this is where the advertising revenue model intersects with the services revenue model/s.
Neopets allow access to its vast gaming site to kids for free and then allow large brand organizations to create games. They sold immersive advertising models to companies that include General Mills, McDonalds. Mattel, Wrigley, Heinz, M&M Mars, Disney, Campbell Soup, Hershey, Nestle, Procter & Gamble, Kraft Foods/Nabisco, Frito-Lay, and Lego, along with several entertainment clients.
Sellaband is a community site where a number of players share in the revenue that’s generated. Your efforts as a participative customer are rewarded economically. There are relationships formed to enhance the spread of customer networks. Sellaband and Amazon has a relationship that’s quite interesting.
…to be continued…