Author Archives: Espen

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Economics and philosophy

Brad DeLong is thinking about a course in economics and philosophy, soliciting ideas for a reading list, leading to a number of comments. Some of the commenters argue that Marx should be on the list, but I wonder if not something history-oriented, would serve better. My chief quibble is the lack of a technology perspective on the list – so here are my two cents’ worth of additions:


  • Landes, D. S. (1998). The Wealth and Poverty of Nations. New York, Abacus. Best explanation of the linking between government policy, culture and economic development I have read (but see below)

  • Diamond, J. (1998). Guns, Germs and Steel: The Fate of Human Societies. New York, Norton. Preparation for Landes, interesting argument about technology evolution and how technology evolves both as cause and consequence of changes in society.

  • Hobsbawm, E. (1994). The Age of Extremes. New York, Vintage Books. (or, though much of that is covered in Landes, Hobsbawm’s The Age of Revolution or The Age of Capital may be referenced as well. “Extremes” is very good in its analysis of communism’s promise and failures, however, making the point that communism was really designed for German society, not Russia – and underscoring its historical context.

  • Bolter, J. D. (1984). Turing’s Man: Western Culture in the Computer Age. Old Woking, Surrey, UK, Unwin Brothers Ltd. Discusses the evolving concept of man as a consequence of evolving technology – humans have always pictured themselves in terms of the technology of the times.

  • Utterback, J. M. (1994). Mastering the Dynamics of Innovation. Boston, MA, Harvard Business School Press. Excellent on the mechanisms of technology evolution and how it affects markets, the historical backdrop to Christensen’s Innovator’s Dilemma.

  • Beniger, J. R. (1986). The Control Revolution: Technological and Economic Origins of the Information Society. Cambridge, MA, Harvard University Press. Excellent on how technology has evolved to allow us to have more control – and hence, larger and more structured organizations. This is definitely a book to read before you start thinking about why mobile phones are popular and what their impact on society will be, for instance.


Oh well, is this economics and philosophy? Maybe I am just adding books I like and think everyone should read…..

Software as bottled water and the importance of open file formats

The CIO Staff call on open source software (previously blogged here) turned out to be a lively and very instructive teleconference – it is my distinct impression that Open Source software is turning into a real factor in corporate IT, and that the next year will see some very interesting developments that should give a number of proprietary software vendors reason to start thinking about their value proposition. There are a number of large international corporations that are trying out Linux on the desktop as a new standard, a number of software platforms and packages are expected to go open source, and the legal situation (which, indidentally, is the major reason for delaying open sourcing of existing stuff) is getting disentangled.
Bill Vass had an interesting analogy to open source software: Bottled water. You can bottle your own water if you like, but if you buy it from a company you get the guarantee that it is OK by their standards. And you get someone you can sue.
Most of all, I think the difference between Open Source software and free software (i.e., that one is not necessarily the other) is increasingly understood in large corporations. Secondly, the very key point that having open file formats – and everyone toeing the line and not creating proprietary or undocumented extensions to them – is more important than open sourcing of the programs themselves.
Other little tidbits:
– beware of companies offering software that will only run under certain versions of Linux – that probably means they have proprietary extensions to Linux that can lock you in later
– indemnification is important – a serious Open Source vendor will guarantee you that their “IP is clean”, to quote Eirik Chambe-Eng
– China has purchased a staggering number of Linux “seats”
– The development model works in some cases – the spell checker for openoffice.org was proprietary for a while, until a Taiwanese university wrote oen (in several languages) as a graduate CS student excercise
– otherwise, don’t expect the community to develop the software for you (but they will do QA)
– Linux is showing up in a number of devices, such as the TiVO or the Buffalo Linkstation – one question is whether this furthers the development of the software, since most users of these devices won’t even know that they are running Linux
To me, this looks like the year of Open Source and Linux. Or maybe next year, again. But this is definitely coming…..

How to start a business (the Stephenson version)

My students persistently demand instruction in how to write a business plan for a startup company. I think their demand is fair – in fact, I think every MBA student should write at least two full business plans during their MBA program, simply because doing so requires them to think through most of their course literature and how to apply it to a practical situation. Nothing like exercise…
Which gives me the problem of how to teach them to do it. There are the usual sites that provide outlines and examples, of course, but for a number of reasons (including that it is never to late to teach people to read) I tend to give them an excerpt from Neal Stephenson’s brilliant novel Cryptonomicon, in which my favorite (and not altogether facetious) description of a business plan is given (page 238ff.):

Epiphyte Corp.’s business plan is about an inch thick, neither fat nor skinny as these things go. The interior pages are slickly and groovily desktop-published out of Avi’s laptop. The covers are rugged hand-laid paper of rice chaff, bamboo tailings, free-range hemp, and crystalline glacial meltwater made by wizened artisans operating out of a mist-shrouded temple hewn from living volcanic rock on some island known only to aerobically gifted, Spandex-sheathed Left Coast travel bores. An impressionistic map of the South China Sea has been dashed across these covers by molecularly reconstructed Ming Dynasty calligraphers using brushes of combed unicorn mane dipped into ink made by grinding down charcoal slabs fashioned by blind stylite monks from hand-charred fragments of the the True Cross.
The actual contents of the business plan hews to a logical structure straight out of the Principia Mathematica. Lesser entrepreneurs purchase business-plan-writing software: packages of boilerplate text and spreadsheets, craftily linked together so that you need only go through and fill in a few blanks. Avi and Beryl have written enough business plans between the two of them that they can smash them out from brute memory. Avi’s business plans tend to go something like this:
MISSION: At [name of company], it is our conviction that [to do the stuff we want to do] and to increase shareholder value are not merely complementary activities — they are inextricably linked.
PURPOSE: To increase shareholder value by [doing stuff].
EXTREMELY SERIOUS WARNING (printed out on a separate page, in red letters on a yellow background): Unless you are as smart as Johann Karl Friedrich Gauss, savvy as a half-blind Calcutta bootblack, tough as General William Tecumseh Sherman, rich as the Queen of England, emotionally resilient as a Red Sox fan, and as generally able to take care of yourself as the average nuclear submarine commander, you should never have been allowed near this document. Please dispose of it as you would any piece of high-level radioactive waste and then arrange with a qualified surgeon to amputate your arms at the elbows and gouge your eyes from their sockets. This warning is necessary because once, a hundred years ago, a little old lady in Kentucky put a hundred dollars into a dry goods company that went belly-up and returned her only ninety-nine dollars. Ever since, the government has been on our asses. If you ignore this warning, read on at your peril — you are dead certain to lose everything you’ve got and live out your final decades beating back waves of termites in a Mississippi Delta leper colony.
Still reading? Great. Now that we’ve scared off the lightweights, let’s get down to business.
EXECUTIVE SUMMARY: We will raise [some money], then [do some stuff] and increase shareholder value. Want details? Read on.
INTRODUCTION: [This trend], which everyone knows about, and [that trend], which is so incredibly arcane that you probably didn’t know about it until just now, and [this other trend over here] which might seem, at first blush, to be completely unrelated, when all taken together, lead us to the (proprietary, secret, heavily patented, trademarked, and NDAed) insight that we could increase shareholder value by [doing stuff]. We will need $ [a large number] and after [not too long] we will be able to realize an increase in value to $ [an even larger number], unless [hell freezes over in midsummer].
DETAILS:
Phase 1: After taking vows of celibacy and abstinence and foregoing all of our material possessions for homespun robes, we (viz. appended resumes) will move into a modest complex of scavenged refrigerator boxes in the central Gobi Desert, where real estate is so cheap that we are actually being paid to occupy it, thereby enhancing shareholder value even before we have actually done anything. On a daily ration consisting of a handful of uncooked rice and a ladleful of water, we will [begin to do stuff].
Phase 2, 3, 4, . . . , n – 1: We will [do more stuff, steadily enhancing shareholder value in the process] unless [the earth is struck by an asteroid a thousand miles in diameter, in which case certain assumptions will have to be readjusted; refer to Spreadsheets 397-413 ].
Phase n: Before the ink on our Nobel Prize certificates is dry, we will confiscate the property of our competitors, including anyone foolish enough to have invested in their pathetic companies. We will sell all of these people into slavery. All proceeds will be redistributed among our shareholders, who will hardly notice, since Spreadsheet 265 demonstrates that, by this time, the company will be larger than the British Empire at its zenith.
SPREADSHEETS: [Pages and pages of numbers in tiny print, conveniently summarized by graphs that all seem to be exponential curves screaming heavenward, albeit with enough pseudo-random noise in them to lend plausibility.]
RESUMES: Just recall the opening reel of “The Magnificent Seven”, and you won’t have to bother with this part; you should crawl to us on hands and knees, and beg us for the privilege of paying our salaries.

Moreover, the purpose of the business plan inside the company is nicely explained – this is the way it is supposed to be in real life, as opposed to the way it frequently is, where the business plan goes into a drawer after the monez has come in. After all, the only thing you know for sure with a business plan is that you will rewrite it (p. 240):

To Randy and the others, the business plan functions as Torah, master calendar, motivational text, philosophical treatise. It is a dynamic document. Its spreadsheets are palimpsests, linked to the company accounts and financial records so that they automatically adjust whenever money flows in or out. Beryl handles that stuff. Avi handles the words – the underlying, abstract plan, and the concrete details, that inform those spreadsheets – interpreting the numbers. Avi’s part of the plan mutates too, from week to week, as he gets new input from articles in the Asian Wall Street Journal, conversations with government officials in flyblown Shenzen karaoke bars, remote-sensing data pouring in from satellites, and obscure technical journals analyzing the latest advances in optical fiber technology. Avi’s brain also digests the ideas of Randy and the other members of the group and incorporates them into the plan. Every quarter, they take a snapshot of the business plan in its current state, trowels some Maybelline onto it, and ship out new copies to investors.

Beryl, mentioned twice in these excerpts (Avi is the CEO, incidentally, Randy is the programmer and one of the main protagonists of the novel) is an important person, and someone perhaps more difficult to find than the more showcasey CEO types. To often, she is missing from the startup company – especially in Norway, I should note (p. 187):

A woman comes into the room, burdened with tote bags, and beams an apology for being late. Beryl Hagen looks like a Norman Rockwell aunt, an apron-wearing, apple-pie-toting type. In twenty years, she has been the chief financial officer of twelve different small high-tech companies. Ten of them have gone out of business. Except in the case of the second one, this was through no fault of Beryl’s. The sixth was Randy’s Second Business Foray. One was absorbed by Microsoft, one became a successful, independent company in its own right. Beryl made enough money from the latter two to retire. She consults and writes while she is looking for something interesting enough to draw her back into action, and her presence in the room suggests that Epiphyte(2) Corp. must not be completely bogus.

(Incidentally, here is an interview with Stephenson where he talks about the novel and the business plan.)

So – do you have a business plan according to these specs, that everyone in the company understands and have contributed to, and someone experienced to hold the pursestrings? Seems like you’re in business….

Open Source business models

Open Source as a commercial strategy is interesting – on April 29, I will (depending on travel schedule) participate in a Concours group teleconference on the use of Open Source by large companies. Leading the call will be Jay Williams, and the featured guests will be by William Vass, Vice President, Corporate Software Services, Information Technology, at Sun Microsystems, and Eirik Chambe-Eng, CEO of Trolltech.
Eirik previously participated in a Polytechnic Society meeting I organized on the use of Open Source, and showed a sophisticated understanding of when Open Source works and when it doesn’t. Dan Bricklin, in a recent essay on starting a software company on Open Source, discusses this question as well.
To me it boils down to the depth of the software (what people chose to do with it, meaning to what extent they are locked into it and have an incentive to further develop it,) uncertainty about how it is used (so that there is value to the developing company of having rapid and good feedback from users,) and to what extent you can identify whether the software has been used or not (for instance, Moveable Type can readily identify whether someone has been using their software, as well as the nature of the use; Trolltech can see whether their libraries have been used in commercial software and enforce their license that way.)
My thoughts are not yet well developed on this subject, so I am looking forward to the teleconference. Provided I can make it.

Growing up on cotton

John Grisham (2001): A Painted House. New York: Dell.
Interesting portrait of life in the early 1950s in a cotton-farming community in Arkansas, as told through an increasingly precocious 7 year old boy. One gets the feeling that Grisham wanted to write To Kill a Mockingbird but couldn’t quite stop being a thriller writer – consequently, a lot happens (love, birth, violence, wheather, natural disasters) in this area where nothing really happens. Still, I liked it a lot – the writing is exceptional, especially the slightly tongue-in-cheek descriptions of how news spread through the small farming community and the touching concern of the family with with their son who is in away in the Korean war. Recommended.

Memories of flying

James Spencer (2003), The Pilots, New York: Berkley Books.
This was a fast read – a sort of naïvistic Catch-22 written by someone who has read a lot of Hemingway – but I liked it. The author claims to be a WWII bomber pilot who has written a novel – more of a series of short stories with a linked set of participants, again like Hemingway – based on his remembrances. The main protagonist is a fighter ace, batting it out with Japanese Zero pilots and seeing the gruesome details of a war that, at least in the beginning, can seem noble and distant.
I was a bit surprised to see this novel panned on Amazon.com, but people looking for the more traditional, technical and heroic type of war novel, with much detail on weapons and history, will be a bit disappointed. The fairly modern language and style detracts a little from the authenticity – you sometimes wonder whether the author really was a pilot or merely a student of one. But the personalities come out through the sketches and the author mercifully avoids clear-cut endings – such as whether the ambitious flight captain taking chances to become the top ace really is evil or merely confused. Excellent last chapter on how people deal with their experiences back in civilian life, when the young pilots come home to the GI bill and the occasional question about their experiences. Recommended.

Death and corruption in Venice

Donna Leon (2003) Uniform Justice, New York: Penguin
This is the third book in a series about the Italian police commissario Brunetti, trying to solve a case of either suicide or murder in a military school for the elitistic (or, rather, fascistic) offspring of the top brass. An honest politician (and if the political landscape of Italy is anything like it is described in this book, that is a very rare catch indeed) is under threat from people whom his investigations into military procurement practices may uncover.
The whole thing is rather formulaic, from the politicised boss, the psychologist wife, and the computer-wizard female assistant who can dig up anything by accessing, legally or not, various computer registers. The book is set in Venice, and I was a little surprised at how the police uses gondolas or their own launch to move about – but I have never been there, so I can’t vouch for the authenticity. This is Sjöwall & Wahlöö set in Italy, a bit repetitious, in fact. Not sure I’ll bother reading any more from this series.

Bill Bryson travels through science and natural history

Bill Bryson (2003). A Short History of Nearly Everything. New York, Broadway Books.
Any fan of Bill Bryson (and how can you be anything else after having read all his books) will see that he is, behind all his middle-aged-and-comically-disillusioned image, a closet academic. His books tend to pose as simple-minded reflections on travel and language, but he is betrayed (especially in In a sunburned country and his two books on the English language (Mother Tongue and Made in America) by his precise descriptions of history and natural science, and his careful references.
A Short History of Nearly Everything is the best popular science book I have read so far – and this is a popular book. As a child, I got as a gift a picture book on nuclear physics called Our Friend the Atom, which despite what I later realized was a rather simplistic (it was put together by Disney) in its view of the consequences of atomic energy, had the inestimable quality of making science interesting. Bryson’s latest has the ability to do the same, but to adults – managing to make us fascinated about science and nature without for an instant succumbing to naïve “science marches on” clichés.
The book aims to give an overview of natural science, organized in six parts: Lost in the cosmos (about space and how our models of it have developed), The size of the earth (the development of our understanding of the physical aspects of the earth and the solar system); A new age dawns (Einstein, atoms, subatomic particles, quantum theory); Dangerous planet (a delightful diversion into naturalistic paranoia, explaining the many ways in which the Earth is vulnerable – volcanoes, asteroids, and earthquakes, to name a few); Life itself (the main part of the book, explaining life as a system from the atmosphere to the cell and eventually to DNA) and finally The road to us (human evolution – including paleontology, which turns out to be based to a surprising degree on conjecture.)
Throughout everything, Bryson describes not just the various theories, but also the people who developed them, using his trademark powers of one-line characterization (Iowa is “stratigraphically uneventful”, for instance) to show that science, at a certain level, is as much a competition of opinion as a rational search for truth (and boy, does this make it more interesting!)
The references and explanations are, as far as I can tell, impeccable. My only quirk was that I was little surprised to see Bryson subscribe what I thought was an urban myth, the one about how glass is a kind of liquid, as evidenced by the oft-told story about antique window panes being thicker at the bottom. Physics aside, I always thought that the thicker-at-bottom phenomenon, if it indeed is true, could more plausibly be explained by ancient glassmakers not being able to produce flat glass, and window makers consistently putting the thickest side at the bottom (which is what I would have done, anyway). Bryson is also a little bit wide-eyed when it comes to some of the “dangers” of natural disasters such as the possible explosion of the Yellowstone caldera, but I ascribe that more to a fascination with possible dangers than to lack of scientific truth in storytelling. (Nevertheless, anyone can become a bit thoughtful after those chapters – the trouble is, who should you bequeath your possessions to when there is no one left?)
This is a book I would give to any young person wondering about science and any adult who feels that Discovery Channel is becoming a bit repetitive. Highly recommended. Just what is needed to make people interested in science and nature again.

The final countdown

The final day of the seminar, March 30 2004, featured a panel debate on the theme Where is the Internet going and what will the killer applications for retailing, banking, and customer service be?. On the panel were Susan Duggan of the Silicon Valley World Internet Center, Paul Oh of Sun Microsystems, and Philip Gordon from Haas School of Business. The discussion was led by Peder Inge Furseth from the Norwegian School of Management BI.

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Gift giving online

Red Envelope
Allison May, President and CEO
Summary: Pure-play gift company, market leader, building its own fulfillment capacity and growing sales by making gift giving easy.
(notes for this posting were taken by Mats Flatland)

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A department store online

Macy’s.com
Gene Domecus, SVP/CFO at Macys.com
Summary: Overview of history and strategy for an on-line part of a company that pursues a differentiated strategy, with only parts of the assortment of the regular stores available online. Good experience observations on what it takes to build a solid and popular web online store.
(notes for this posting were taken by Mats Flatland)

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Innovation management is really easy

Creating Innovation
Dr. Philip Gordon, Executive Director, Fisher Center of IT and Marketplace Transformation, Haas School of Business
UC Berkeley
March 30, 2004
Summary: Philip presented a framework of how to manage innovation – and maintained that managing innovation is, in fact, not hard.
(notes for this posting were taken by Mats Flatland)

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Putting some zip into realty

zipRealty
Scott Kucirek, President and cofounder of zipRealty, Inc
March 26, 2004
Scott presented his company, zipRealty, a very successful realty company enabled by Internet technology.

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Exit information assymetries

The Power of Information: How the Internet destroys and creates profit opportunities
March 26, 2004
Florian Zettelmeyer, Associate Professor, Haas Marketing Group, Haas School of Business, UC Berkeley
Summary (and conclusion): Profitability in the information age can no longer rely on customer knowing the market less well than firms do. Instead, profitability results because firms know the customer better than the market does.

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B2C, B2B, and what we learned from the dot com boom

New Perspectives on Innovation for Retailers and Banks
John Freeman, Helzel Professor of Entrepreneurship and Innovation, Haas School of Business, UC Berkeley
March 26, 2004
Summary: This was a look-back on the dot com bubble and an analysis of what venture capitalists are looking for in a startup company as opposed to what type of innovations corporations are good at. Key remark: “Retailing is as much theatre as it is commerce.”

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MacReady?

I am writing this using a Powerbook G4 17” at the Apple store in San Francisco, a “flagship” store with lots of very neatly looking technology. Came here to look for the new mini-iPods, they’re not available but the G4 is.
It is a handsome machine, but there are some idiosyncracies that can be infuriating until you get used to them. The keyboard is excellent, the machine is heavy, and the front plate large enough that my watch is scratching it, even when standing. Not that that hasn’t happened on my regular Toshiba machine, but still, it would probably mean not wearing a watch while typing.
The screen is outstanding – wide and sharp. I suppose my best bet would be the 15”, just because of the size. Then there are applications.
The trouble with Apple products remain price/performance, the fact that they require quite a few accessories that are pricey (but elegant), and perhaps lack of applications, though that shouldn’t be much of a problem with emulation. The visuals, on the other hand, are stunning, and according to a friend of mine, who bought an iMac for his children, that’s the only machine they use.
Next time, perhaps. This machine is really elegant….

Visit to Microsoft’s Technology Center, Mountain View

March 26, 2003
This session was a presentation of Microsoft’s retail vision, as well as a tour of one of Microsoft’s Technology Centers in Mountain View.
Microsoft is positioning itself in the retail systems market, the activity is headquartered in Charlotte with representation in Europe. $1b business in retail and hospitality industry. The focus in the industry is on differentiation – WalMart eats everyone up – in California they will have 40 hypermalls by 2008. Retail model is changing from a mall model more towards superstores and online reatiling.
Microsoft’s offerings in this area, which contained many acronyms nicely displayed on blue boxes, were divided into three main categories: Smarter shopping, tools to enhance the in-store shopping experience. Smarter selling, tools to create sharper sales people, and Smarter operations. Microsoft is active in supporting a number of standards and tries to position their service tools, Biztalk, and various terminals together to offer a complete and fairly open solution. The competition from Open Source software was apparent – the speaker was keen to stress that Microsoft would work with anyone and anything in the retail area.
The Microsoft Technology Center was primarily used for three things: Scenario-based demonstrations for non-technical audiences of what Microsoft systems could do (in a showroom tableau’ing a company with a San Francisco and Hong Kong office); Small design rooms for scoping out and designing applications, and Proof-of-Concept application development projects. This was run on a number of different server and storage platforms, including Intel Itanium 64-bit processors.

Kirthi Kalyanam on Multi-Channel Retail Strategies

Multi-Channel Retail Strategies
Kirthi Kalyanam, J.C. Penney Research Professor, Leavey School of Business, Santa Clara University
March 26, 2004
Summary: Hands-on talk with a stage framework of multi-channel sophistication and good case examples. Key message was that you need not only to have an integrated multi-channel strategy, but move on to leverage one channel to another and then onto optimizing the two channels together. Very well received.

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Gartner on Integrated CRM

Online Channel: Best Practices For Integrated CRM
Adam Sarner, CRM Analyst, Gartner
March 25, 2004
Summary: eMarketing and sales becoming more integrated, moving from tools to suites, main thrust is in using the online channel to inform and influence the off-line channel.
Three main points:
– eMarketing and sell side eCommerce is coming together: Focus on message, not just operation
– the online channel is an important enabler of offline activity
– users should shift from low level tools built on top of platforms to packaged applications and custom configurations

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Multi-channel transformation: Monica Gout on Gateway’s web integration

The Multi-Channel Experience: Understanding the Role of Your Channels
Monica Gout, VP of e-commerce for Gateway
Summary: A case of multi-channel transformation – taking a company from direct seller of PCs through product diversification to home computing and media integration.

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