Category Archives: Business as unusual

A value chain at work

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This old footage (via egmCartTech) of the 1936 production process at Chevrolet’s plant in Flint, Michigan, shows a value chain at work – i.e., a process where value is added in small, repeatable, sequential steps. This is how many people still see companies…

It is notable for many things – the relative imprecision of the production (dents in parts being marked for later fixes), the simple design of the cars (two-box design built on a frame, soon to be overtaken by the monocoque design already introduced with Chryslers’ 1934 Airflow), and the notion of the human as the servant of the machine, doing simple things repetitively and to be attempted replaced by robots in the 70s and 80s as production became increasingly componentized. Toyota eventually introduced the Kan-Ban principle, where each worker is responsible for the quality control of previous work and can stop the process. But no wonder GM had quality problem as designs got more complex…

Competing online at Lorange

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I have just finished (as a matter of fact, I am writing this from the classroom while the students are taking their exam) teaching a two-day seminar called Competing online at Lorange Institute of Business, located in Horgen, a small town about half an hour south of Zürich in Switzerland. Teaching is normally quite tiring, but this time it was a breeze – firstly because it was only 9 students, secondly because they all had interesting experiences and viewpoints on how to use the Internet and Web 2.0 for business and personal purposes. As a consequence, I could run the class as an informal discussion, with less lecturing and quite a bit of learning for me as well as the students.

The diversity of backgrounds was quite interesting – we had three people that owned their own companies (technical textile manufacturing, logistics, and personal credit), three from pharmaceuticals and health companies, one from sports event marketing, one executive from a hotel company, and, last but not least, Isabella Löwengrip, who with her blog Blondinbella could provide very interesting perspectives on how to establish and promote a business on Web 2.0. She did, of course, blog (here and here and here) and Tweet about the experience, occasionally in real time – and she took the pictures you see here.

Linus Murphy, lively and inspiring CEO of Masterstudies.com, was the main case under discussion after lunch on the first day – and he did a great job talking about the importance of making your company findable on Google. To do this, you have to make sure your content is fresh and not duplicated, that each page is about one thing only (so the search engine is not confused) and design the structure and context of the web site before handing it over to be made pretty by a designer. When most of your traffic is driven by search, you must be both findable and searchable.

Norwegian Data Inspectorate outlaws Google App use

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In a letter (reported at digi.no) to the Narvik Municipality (which has started to use Google Mail and other cloud-based applications, effectively putting much of its infrastructure in the Cloud) the Norwegian Data Inspectorate (http://www.datatilsynet.no/English/), a government watchdog for privacy issues, effectively prohibits use of Google Apps, at least for communication of personal information. A key point in this decision seems to be that Google will not tell where in the world the data is stored, and, under the Patriot Act, the US government can access the data without a court order.

Companies and government organizations in Norway are required to follow the Norwegian privacy laws, which, amongst other things, requires that “personal information” (of which much can be communicated between a citizen and municipal tax, health and social service authorities) should be secured, and that personal information collected for one purpose may not be used for other purposes without the owner’s expressed permission.

This has interesting implications for cloud computing – many European countries have similar watchdogs as Norway, and many public and private organizations are interested in using Google’s services for their communication needs. My guess is that Google will need to offer some sort of reassurance that the data is outside of US jurisdiction, or effectively forgo this market to other competitors, such as Microsoft of some of the local consulting companies, which are busy building their own private clouds. Should be an interesting discussion at Google – the Data Inspectorate is a quite popular watchdog, Norway has some of the strongest privacy protection laws in the world (though, for some reason, it publishes people’s income and tax details), and Google’s motto of “Don’t be evil” might be put to the test here – national laws limiting global infrastructures.

Manufacturing is changing, and so is productivity

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Two excellent articles on increasing productivity, and why this will not result in many new jobs:

Davison describes the new kind of manufacturing, where everything is done by multi-step, highly complex machines, producing small series, requiring very high-skilled workers with rather sophisticated education. But they also need unskilled workers doing simple things, like moving parts between machines. The problem is, the pay scale for the second type is very low, and the difference in training to get to the skilled level so high, that no company will provide it:

For Maddie to achieve her dreams—to own her own home, to take her family on vacation to the coast, to have enough saved up so her children can go to college—she’d need to become one of the advanced Level 2s. A decade ago, a smart, hard-working Level 1 might have persuaded management to provide on-the-job training in Level-2 skills. But these days, the gap between a Level 1 and a 2 is so wide that it doesn’t make financial sense for Standard to spend years training someone who might not be able to pick up the skills or might take that training to a competing factory.

It feels cruel to point out all the Level-2 concepts Maddie doesn’t know, although Maddie is quite open about these shortcomings. She doesn’t know the computer-programming language that runs the machines she operates; in fact, she was surprised to learn they are run by a specialized computer language. She doesn’t know trigonometry or calculus, and she’s never studied the properties of cutting tools or metals. She doesn’t know how to maintain a tolerance of 0.25 microns, or what tolerance means in this context, or what a micron is.

The reason Maddie – hardworking and dedicated – has a job is simply one of distance: Shipping fragile parts to China for the unskilled operations is too risky and expensive. So Maddie has a job, but not career prospects. And the company’s management is facing very hard competition – their customers see them as a distributor – and is constantly scanning for things that can be outsourced or bought from another vendor.

Mandel describes the differences in productivity increases from improving productivity in domestic production – doing things smarter – and lowering cost by bargaining and optimizing the supply chain before it reaches the domestic organization. Both show up as productivity improvements, but have vastly different effects on domestic jobs:

But here’s the rub: both of these corporate strategies— domestic productivity improvements and global supply chain management—show up as productivity gains in U.S. economic records. When federal statisticians calculate the nation’s economic output, what they are actually measuring is domestic “value added”—the dollar value of all sales minus the dollar value of all imports. “Productivity” is then calculated by dividing the quantity of value added by the number of American workers. American workers, however, often have little to do with the gains in productivity attributed to them. For instance, if Company A saves $250,000 simply by switching from a Japanese sprocket supplier to a much cheaper Chinese sprocket supplier, that change shows up as an increase in American productivity—just as if the company had saved $250,000 by making its warehouse operation in Chicago more efficient.

This is known as import bias, and may be a problem, as it overestimates domestic productivity increases. Mandel goes on to show that this bias affect both left and right, and the difference in views is largely one about how to effectuate a change: Stimulus or tax relief.

Both authors advocate better data and better education as a way out, but quick fixes they aren’t. This is a real puzzler.

Fulfilling the status role of books

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Espen Andersen (Photo: Nard Schreurs)In my office at BI Norwegian Business School I have many books, accumulated over the years. In my living room I have even more, having spent time building bookshelves and defending the wall space against family members who think it could be put to better use. And in my basement I have stacks of cartons with even more books, which I do not have the heart to throw out – hey, I might get around to reading the complete works of Hermann Hesse, in German, some day – but not the space to display.

The book collection is nice – I like books, I can remember almost viscerally where most of them are, and often all that is necessary to remember what is in them is just to take them out of the shelf. And they do tell everyone around me that I am a bona fide intellectual, should anyone wonder.

But I (almost) don’t read books on paper any more – I buy them and read them on my Kindle or PC or iPad. Electronic books are searchable, weightless, cheap, accessible and cost nothing to store. But nobody can see how many books I have on my PC or Kindle. Having many books signals status, to the point where there are companies that will fill you bookshelves for you, in any color and style you want, for a fee. The usefulness of books as status signals will diminish over time, however, just as what has happened with CD racks, which you don’t display anymore, unless you have thousands of vinyl records and cross the threshold from music lover to music fanatic. So, what to do?

The Norwegian publishing and bookselling industry, an astonishingly backward group of companies when it comes to anything digital, yesterday introduced a new concept for e-books that, even for them, is rather harebrained. They want to sell e-book tablets where you can buy books not as downloads (well, you can do that, too) but as files loaded on small plastic memory cards, to be inserted into the reader [article in Norwegian]. This preserves their business model (though they can probably stop using trucks and start using bicycles for distribution). According to their not very convincing market analysis, this is aimed at the segment of the book buying market who do not want to download books from the net (but, for some reason, seem to want to read books electronically.)

imageI initially thought I would make a joke about having to replace my bookshelves with neat little minishelves for the plastic cards, when it dawned on me that perhaps we have the solution here – i.e., a model where we could get the accessibility of digital books with the status display of the paper version. Why couldn’t the publishing industry sell you a digital book (for downloading, if you please) bundled with a cardboard book model, with binding and all, to put in your bookshelf? This would look great, allow you to effortlessly project your intellectualism and elevated taste, while avoiding the weight, dust, and (since these books would only need to be a in inch or two deep) space nuisances of traditional books. You could even avoid physical distribution by letting the customer self-print and cut and fold the “shelf-book” in the right format.

You could even electronically link the two, so that you cold pick your cardboard book from the shelf, wave it in the direction of the e-book tablet (using transponder, 2D barcoding or other identifying techniques) and the book would show up in your reader. If you really wanted to show off, you could add a little color coded bar indicated how far you were in each book, much like a download bar for your computer, to be displayed on each book. Moreover, such as book could be lent from one reader to another.

I recently bought Don DeLillo’s Underworld for my Kindle. Imagine if it came with with nice little book spine, leather as an expensive option, with a barcode and a “read” bar as illustrated here…status, spatial memory, interior decoration, and a way to gradually replace the paper library with an electronic one without disruption.

Remember, you saw it here first!

(In case you wondered: Yes, I am being facetious.)

Human-computer interaction, indeed

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This event was great fun – fun as a show, but also impressive in what both the student teams (well, MIT didn’t do that well…) and the computer could do. Jeopardy is a very complicated game, relies on wordplay (In the category “presidential rhymes”, the answer is “George W.’s bottoms”, the question “What is Bush’es tushes), obscure knowledge and word combinations (such as combining two movie titles into a new one, as in “Millon Dollar Baby Boom”).

If only the HBS team hadn’t played it safe towards the end – they bet just enough money so that they would not lose to MIT if they missed the last question – we would have had the first instance where the computer had lost to a human team. Oh well…

Addendum: A perspective from Stacey Higginbotham: Why Watson can’t talk to Siri. (I wonder if they used the same questions at that event, since Chile was an answer in the HBS one, too. Doesn’t mean they are cheating, though – it is quite easy to make a computer forget…

Notes from Eric Schmidt at MIT

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After the jump, my notes from Eric Schmidt’s talk at MIT today. I am sure this will be available as a video at some point. I found the the whole exercise a bit pat – he didn’t really say anything new, but there were a few nuggets of interest here and there (and my notes are not complete.)

Update 17. nov: MIT writeup.

Continue reading →

Computers taking over: Examples

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I am currently thinking about how computers are taking over more and more of what we humans can do, in ways we did not think about just a few years ago. The impetus for this, of course, is Brynjolfsson og McAfee’s recent e-book Race Against The Machine, where the main examples given are Google’s driverless cars, instant translation software, and automated paralegal research. I’ll use this blog post as a repository for examples of this, so here goes:

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The Digital Economist Index

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The Economist has long had the Big Mac index, a surprisingly useful index for all kinds of things (though the magazine use it primarily to track over/undervaluation of a local currency. The Big Mac is a useful indicator because it is locally produced with local labor, but subject to stringent standards in terms of production and provisioning.

The digital version of the Economist, on the other hand, should be the diametrical opposite of the Big Mac – it is the same all over the world (the Economist does relatively little tailoring of its product, seeing its customers are globalists) and the price for delivering it is, of course, the same in all countries (with some provision for sales taxes.) Consequently, you would expect the product to have one price, all over the world.

Alas, that is not the case.

Continue reading →

Norwegian Air Shuttle: Using IT to lower costs, increase revenue, and start new businesses

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(This case was written for an BSG Concours/nGenera report in March 2008, but never used. I found it while writing a report on the Norwegian IT industry, and publish it here because, well, I need a place to put it. And it is interesting – it succinctly exemplifies a company that uses IT for lowering cost (increasing the bottom line), for expanding in its current market (expanding the top line), and for creating new businesses.)

Norwegian Air Shuttle is the fastest growing low-cost airline in Europe. Its growth is built on smart market moves – supported by even smarter IT applications and use.

A Norwegian plane - white paint is cheap

Norwegian Air Shuttle was originally a small airline company leasing planes and crew – called a "wet lease" in the business – to Braathen’s, Norway’s second largest airline. When Braathen’s was acquired by industry leader SAS in 2001, it looked like the game was over for Norwegian – it had funding for less than three months’ operations.

clip_image005Bjrn Kjos, lawyer and former fighter pilot, had agreed to help the company through what everyone thought was going to be a managed bankruptcy. Instead, Kjos sought out new investors – Norwegian fishing fleet owners, accustomed to high risk and equally high rewards. With his background as a pilot and sanguine, jovial personality, Kjos personified opposition to the somewhat bureaucratic and monopolistic SAS and became popular both with his employees, the public and the regulating politicians.

The new company’s strategy was simple: To offer direct flights between city-pairs not served by SAS, and keep costs low through efficient processes and a flexible organization. Kjos was not a proponent of information technology, but knew he needed a CIO, and in 2002 hired Hans Petter Aanby, an experienced IT manager from SAS.

Hans Petter AanbyAanby needed to establish IT as a contributor to the business, and so set out to first harvest the low-hanging fruit. First of all, the company’s distribution costs were too high: Most sales came over the telephone or through travel agents, with average transaction cost of more than $35 per ticket. Aanby moved the whole process online in April 2003, removing anything confusing from the web site. The company was one of the first in the business to have customers print out their own (bar-coded) boarding passes, which simplified check-in and saved boarding time. Eventually, 85% of orders would come over the web, and only 1% through the call center. This was achieved with a small IT department and smart use of small consulting companies.

image Having demonstrated an ability to lower costs, Aanby now, with the title of CIO and EVP of Business Development, set out to increase sales. A new architecture that would allow growth in complexity without growth in costs was proposed to the board in late 2003. Airline prices vary, but it can be very hard for customers to see when it is cheap to fly. Many airlines make it hard for customers to find the cheap flights, but Aanby went the other way, giving the customers a calendar-based view of flights with prices shown. Since flight reservation systems are not set up for this kind of information extraction – each query is treated as a potential booking, thus influencing demand figures – Norwegian had to build their own database of flights and prices extracted from the transaction-oriented Amadeus reservation system. The customers responded enthusiastically, since it made it easy to change travel plans to take advantage of lower prices. The application was sold to Amadeus, and the competition eventually had to follow Norwegian’s lead and provide their own low-price calendars.

As Norwegian expanded (eventually flying more passengers outside Norway than inside,) the next step was to establish a new business out of their customer base and transaction platform: Bank Norwegian, an Internet bank that went into operation in the Fall of 2007. Drawing on a satisfied customer set, an experienced IT capability and a sophisticated, yet lean architecture, Norwegian figures it can take the transaction growth and reliability demands a banking application requires.

Kjos, now a converted IT buff, constantly talks about how Norwegian’s IT infrastructure allows the company to expand without growing costs. In August 2007, with a fleet of 22 airplanes, the company placed an order for 42 new Boeing 737 airplanes, for delivery over a five year period.

Norwegian continues to look for areas where IT can make a difference. The airline industry is extremely competitive, and the game is all about being low-cost, yet effective in how talent is employed. Norwegian consciously trains its employees to be capable of performing many tasks – any flight attendant can also do check-in or reservations, for instance, thus enabling the company to use the labor outside the 600-700 hours in the air regular flight personnel can work.

For Norwegian, the trick has to flood the company with IT support before anyone has had time to hire people. And as Aanby has put it: In Norwegian, there are really only two employee categories that are paid above market average: Pilots – and IT people.

In 2007, Hans-Petter Aanby was rewarded for his efforts by being awarded the title CIO of the Year by the Norwegian IT Magazine Computerworld.no – and Norwegian has continued to grow since, now profitably expanding its business while most of its competitors, particularly the traditional airlines, are struggling.

Record companies lose, artists gain

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In early September, two of my M.Sc. students handed in their thesis, which has created quite a stir in the Norwegian music industry. I think this has applicability outside Norway, so here is a translation (and light edit) of the Norwegian-language press release and a link to the full link to the full report (PDF, 3,4Mb):

After 10 years of digitalization of music, the average (Norwegian) musician’s income has increased by 66%. As a group, the only losers in digital music seems to be the record companies. This is the conclusion of a M.Sc. study done by students Richard Bjerke and Anders Srbo at the Norwegian School of Management BI in Oslo.

The thesis "The Norwegian Music Industry in the Age of Digitalization" shows that the musicians’ income increase is due to increased income from concerts, various collection agencies and stipends from the government in the period from 1999 to 2009. During the same period, record sales have decreased by about 50%. The fall in income from record sales is less important for the musicians, however, since, on average, they only receive 15% of record sales, whereas they receive on average 50% from concerts and 80% from collection agencies (who collects provisions from radio play and other uses of the artists’ productions.)

- In the interviews we have done with a number of musicians and music producers, the musicians say they are losing money on digitalization, but the numers show that it is the record companies, not the artists, who are losing, says Bjerke og Srbo.

- The fall in record sales also means that record companies are becoming less important as launchpads for new artists, and that records to a larger degree become “business cards” – i.e., a marketing tool – to attract audiences to concerts.

Espen Andersen, associate professor at the Norwegian School of Management, has been the faculty advisor for the thesis. He thinks the results show that artists in the future will have more of their income from concerts and by being played on the radio, TV or Internet streaming services. Musicians will also, to a larger extent, have to take responsibility for their own marketing. The future of the record companies is uncertain and they will need to redefine their role in the music industry.

Facts:

  • Income from concerts has increased, on average, 136% from 1999 to 2009
  • Income from collection organizations such as TONO, Gramo and others has increased 108% from 1999 to 2009
  • stipends and other supports from the government has increased 154% from 1999 to 2009
  • The number of registered active musicians has increased by about 28% during this period
  • All figures have been adjusted for inflation.

For questions, please contact

  • Richard Bjerke, +47 9181 8686, rbjerkoe@gmail.com
  • Anders Srbo, +47 9284 0098, anders.sorbo@no.experian.com
  • Espen Andersen, +47 4641 0452, self@espen.com

Newton as master detective

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I am currently working from home, laid somewhat lower than usual by a persistent cold. One way to pass the time in between attempting to do actual work is padding through some of the bookmarks of "things I will read when I have time." Here is one gem I marked four months back – Thomas Levenson‘s brilliant talk on his book about Isaac Newton‘s tenure as Master of the Royal Mint, where he had to deal with counterfeiters (particularly William Chaloner) by setting up his own detective force:

http://mitworld.mit.edu/flash/player/Main.swf?host=cp58255.edgefcs.net&flv=mitw-01207-writing-newton-levenson-06oct2009&preview=http://mitworld.mit.edu//uploads/mitwstill01207writingnewtonlevenson06oct2009.jpg

Levenson draws lines to modern economy and shows how Newton had a quite sophisticated understanding of modern economy, was a smart investor, particularly in the South Sea bubble in 1720, and then fell victim to his own greed. Highly recommended!

7 hour train journey via Bittorrent

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The Norwegian broadcaster NRK recently made a 7 hour program about the very scenic train journey from Bergen to Oslo. The program was hugely successful despite the rather slow subject, offering long views from the front of the train interspersed with interviews and various other happenings along the ride). Here is a selection:

The raw film from the front camera is now being offered as a free Bittorrent download under a CC license. There is even a competition (in Norwegian only) for best reuse of the footage.

Kudos to the people behind NRK Beta, the experimental part of NRK, who again come up with interesting ways of making their material available!

Update 20.12: Boingboinged!

Reflections on Accenture’s Technology Lab

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I am writing this from Accenture’s Sophia Antipolis location, where I am visiting with a group of executive students taking a course called Strategic Business Development and Innovation (the second time, incidentally, last year’s notes are here). Much of this course is around how to use technology (in a very wide sense of the word) to do innovation in organizations. To turn this into practice, my colleague Ragnvald Sannes and I run the course as an innovation process in itself – the students declare an innovation project early in the course, and we take them through the whole process from idea to implementation plan. To further make this concrete, we collaborate with Accenture (chiefly with Kirsti Kierulf, Director of Innovation in Norway) to show the students some of the technologies that are available.

Accenture Technology Labs is a world-wide, relatively small part of Accenture’s systems integration and technology practice, charged with developing showcases and prototypes in the early stage where Accenture’s clients are not yet willing to fund development. While most consulting companies have this kind of activity, I like Accenture’s approach because they are very focused on putting technology into context – they don’t develop Powerpoints (well, they do that, too) but prototypes, which they can show customers. I see the effect on my students: I can explain technology to them (such as mobility, biometrics, collaboration platforms) but they don’t see the importance until it is packaged into, say, the Next Generation Bank Branch or an automated passport control gate.

Making things concrete – telling a story through hands-on examples – is more important than what most companies think. When it comes to technology, this is relatively simple: You take either your own technology, if you are a technology provider, and build example applications of it. If you are vendor-agnostic, like Accenture, you take technology from many vendors and showcase the integration. If your technology is software-based, or consists of process innovations, then you showcase your own uses of it. Here in Sophia we have seen how Accenture uses collaboration platforms internally in the organization, for instance. (Otherwise known as eating your own dog food.)

Having a physical location is also very important. At the Norwegian School of Management, we have a library that we like to showcase – a "library of the future" where the students have flexible work areas, wireless access to all kinds of information, in an attractive setting. This looks nice on brochures, but also allows us to highlight that the school is about learning and research, and allows us to tell that story in a coherent manner. I see Accenture as doing the same thing with their labs – they develop technology, but also showcase the activity and its results to the rest of the world. The showcasing has perceived utility, generating the funds and managerial attention (or, perhaps, inattention) necessary to sustain the prototype-producing capability.

Quite a difference from slides and lunch meetings, I say. And rather refreshing. An example that more companies should follow.

GRA6821 Eleventh lecture: Search technology and innovation

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(Friday 13th November – 0830-about 1200, room A2-075)

FAST is a Norwegian software company that was acquired by Microsoft about a year and a half ago. In this class (held with an EMBA class, we will hear presentations from people in FAST, from Accenture, and from BI. The idea is to showcase a research initiative, to learn something about search technology, and to see how a software company accesses the market in cooperation with partners.

To prepare for this meeting, it is a good idea to read up on search technology, both from a technical and business perspective. Do this by looking for literature on your own – but here are a few pointers, both to individual articles, blogs, and other resources:

Articles:

  • How search engines work: Start with Wikipedia on web search engines, go from there.
  • Brin, S. and L. Page (1998). The Anatomy of a Large-Scale Hypertextual Web Search Engine. Seventh International WWW Conference, Brisbane, Australia. (PDF). The paper that started Google.
  • Rangaswamy, A., C. L. Giles, et al. (2009). "A Strategic Perspective on Search Engines: Thought Candies for Practitioners and Researchers." Journal of Interactive Marketing 23: 49-60. (in Blackboard). Excellent overview of some strategic issues around search technology.
  • Ghemawat, S., H. Gobioff, et al. (2003). The Google File System. ACM Symposium on Operating Systems Principles, ACM. (this is medium-to-heavy-duty computer science – I don’t expect you to understand this in detail, but not the difference of this system to a normal database system: The search system is optimized towards an enormous number of queries (reads) but relatively few insertions of data (writes), as opposed to a database, which is optimized towards handling data insertion fast and well.)
  • These articles on Google and others.

Blogs

Others

Longer stuff, such as books:

  • Barroso, L. A. and U. Hölzle (2009). The Datacenter as a Computer: An Introduction to the Design of Warehouse-Scale Machines. Synthesis Lectures on Computer Architecture. M. D. Hill, Morgan & Claypool. (Excellent piece on how to design a warehouse-scale data center – i.e., how do these Google-monsters really work?)
  • Weinberger, D. (2007). Everything is Miscellaneous: The Power of the New Digital Disorder. New York, Henry Holt and Company. Brilliant on how the availability of search changes our relationship to information.
  • Morville, P. (2005). Ambient Findability, O’Reilly. See this blog post.
  • Batelle, J. (2005). The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture. London, UK, Penguin Portfolio. See this blog post.

Say what you will about the Gubernator…

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Some years ago I talked with a Berkeley professor who first was shocked when Arnold Schwarzenegger was elected guvenor of California – then, a year later, had to grudgingly concede that he wasn’t all that bad – especially in that he took on the State Assembly, which is incredibly conservative in its vested-interest radicalism. The following message recently sent to the State Assembly shows that he (or someone on his staff) has a sense of humor, too:

image

How I wish the underlying messages of other political emissions where equally clear…

(Via boingboing, which, true to form, spends most of the comments on calculating whether this was a coincidence or not…)

Messy works magically

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Craigslist is a mess that is currently taking the mickey out of eBay and irritating Google, according to a fun article in Wired. I am not surprised. The value of a meeting place is not what happens there, but who is there – and by minimizing controls and keeping most transactions face-to-face, Cragslist is eeking out the value from the network with minimal investment and a business model that really isn’t a business model.

As for the messy design, well, it is quick, and you learn very fast where to click to get what you want.

The funny thing is that in Norway, the most popular website by far is vgnett.no, the online version of the biggest tabloid paper – or, rather, an online paper that shares the name, but not must else, with VG, the paper paper. The online version has its own editorial office and their design is evolved, evolving, and the perennial joke with web designers for its busy organization and ratty typeface. They would love to replace it with something akin to Aftenposten or New York Times, where order, quality and completeness reigns. VGnett would beg to offer – they know the use patterns of their audience and serve it, messy or not.

Network externalities in plain view, in other words.

Fixing and fixability as attribute and philosophy

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Matthew Crawford’s The Case for Working With Your Hands has made the top of the NY Times website, and well deservedly so. His argument is that physical work, especially diagnostic worked involved in solving technical problems, are as fulfilling and intellectually stimulating as any desk job, though the hours may be longer and your fingers dirtier. For instance, you have think about your angle of attack not just in terms of the likelihood of being right, but the cost of finding out:

The attractiveness of any hypothesis is determined in part by physical circumstances that have no logical connection to the diagnostic problem at hand. The mechanic’s proper response to the situation cannot be anticipated by a set of rules or algorithms.

There probably aren’t many jobs that can be reduced to rule-following and still be done well. But in many jobs there is an attempt to do just this, and the perversity of it may go unnoticed by those who design the work process. Mechanics face something like this problem in the factory service manuals that we use. These manuals tell you to be systematic in eliminating variables, presenting an idealized image of diagnostic work. But they never take into account the risks of working on old machines. So you put the manual away and consider the facts before you. You do this because ultimately you are responsible to the motorcycle and its owner, not to some procedure.

Sounds like a good consultant to me. And the right kind of academic.

Buying an old Mercedes has certainly taught me something about expertise. I first tried taking it to the largest Mercedes dealer in Boston, whose reps took in the car wearing white coats and were utterly useless: The customer service rep had never heard of this particular model (it was the flagship at the time,) the computer system could not deal with cars before 1982, and come to think of it, the rep didn’t know much about cars in general. The mechanics seemed to be looking for a place to stick the computer diagnostic tool, nearly destroyed the suspension and tried to solve problems by "Easter Egging" – i.e., replacing parts until the problem disappears. Eventually I found a company that had both the knowledge of the car and the diagnostic philosophy required – to listen to the problem and determine what it is based on the few symptoms a car really has to give. What a relief – and what a fulfilling job it must be to work like that.

A colleague of mine remarked, a few weeks ago, that "nobody repairs anything anymore." A few years ago I bought my wife a nice everyday watch, a Seiko with a stainless steel chain. The chain broke, she took it in, and was told that the cost of fixing the chain would be so high that it would be better to just replace the watch. The watch was not designed to be repaired.

What little work I have been able to do on my old Mercedes has been joyful, since the car is designed to be fixed – the screws are solid (no plastic clips that rot over time) and accessible, everything is laid out with some logic, and if you sit down and think about it, you can figure the technology out (with, for me, the exception of the automatic gear boxes, which I don’t understand and wouldn’t have the tools and space to do anything with anyway.)

Crawford continues:

Some diagnostic situations contain a lot of variables. Any given symptom may have several possible causes, and further, these causes may interact with one another and therefore be difficult to isolate. In deciding how to proceed, there often comes a point where you have to step back and get a larger gestalt. Have a cigarette and walk around the lift. The gap between theory and practice stretches out in front of you, and this is where it gets interesting. What you need now is the kind of judgment that arises only from experience; hunches rather than rules. For me, at least, there is more real thinking going on in the bike shop than there was in the think tank.

Put differently, mechanical work has required me to cultivate different intellectual habits. Further, habits of mind have an ethical dimension that we don’t often think about. Good diagnosis requires attentiveness to the machine, almost a conversation with it, rather than assertiveness, as in the position papers produced on K Street. Cognitive psychologists speak of “metacognition,” which is the activity of stepping back and thinking about your own thinking. It is what you do when you stop for a moment in your pursuit of a solution, and wonder whether your understanding of the problem is adequate.

This is one reason I sometimes envy people who do "mere" programming for a living – the ability to have problems that have solutions, tell you when they are solved, and reward the laser-like focus both on the detail and the broader reflection (and abstraction) necessary to see the bigger picture. The problem-solving I am involved with on a daily basis is less a question of understanding what to do than it is a question of finding a way to express the solution in a way that convinces those who hold the key to it to actually do it. Assertiveness certainly helps, but, boy, would I love to just tinker for a while.

Anyway, I have but scratched the beginning of Crawford’s argument, but hey, I think I have gotten the gist of it. The rest I leave you to read on your own.

The datacenter is the new mainframe

Posted by Espen on

From Greg Linden comes a link and a reference to a very interesting book by two Google engineers: The Datacenter as a Computer: An Introduction to the Design of Warehouse-Scale Machines (PDF, 2.8Mb) by Luiz André Barroso and Urs Hölzle. This is a fascinating introduction to data center design, with useful discussions of architecture, how to do cooling and reduce power use (it turns out, for instance, that getting computers that use power proportionally to their level of use is extremely important).

I suspect that even highly experienced data center designers will find something useful here. The book is written for someone with some degree of technical expertise, but you do not need a deep background in computer science to find much here that is interesting and useful.

One of my recurring ideas (and I am by no means alone in thinking this) is that the Norwegian west coast, with its cool climate, relatively abundant hydroelectric energy and underused industrial infrastructure (we used to have lots of electrochemical and electrometallurgical plants) could be a great place to do most of Europe’s computing. Currently we sell our electric energy to Europe through power lines, which incurs a large energy loss. Moving data centers to Norway and distributing their functionality through fiberoptic cables seems a much more effective way of doing things to me, especially since that region of the country has a reasonable supply both of energy engineers and industrial workers with the skill set and discipline to run that kind of operation.

Now, if I could only find some investors…