Category Archives: The thoughtful manager

Singularity redux

From Danny Hillis: The Pattern on the Stone, which I am currently reading hunting for simple explanations of technological things:

Because computers can do some things that seem very much like human thinking, people often worry that they are threatening our unique position as rational beings, and there are some who seek reassurance in mathematical proofs of the limits of computers. There have been analogous controversies in human history. It was once considered important that the Earth be at the center of the universe, and our imagined position at the center was emblematic of our worth. The discovery that we occupied no central position – that  our planet was just one of a number of planets in orbit around the Sun – was deeply disturbing to many people at the time, and the philosophical implications of astronomy became a topic of heated debate. A similar controversy arose over evolutionary theory, which also appeared as a threat to humankind’s uniqueness. At the root of these earlier philosophical rises was a misplaced judgment of the source of human worth. I am convinced that most of the current philosophical discussions about the limits of computers are based on a similar misjudgment.

And that, I think, is one way to think about the future and intelligence, natural and artificial. Works for me, for now. No idea, of course, whether this still is Danny’s position, but I rather think it is.

Sapiens unite!

Sapiens: A Brief History of HumankindSapiens: A Brief History of Humankind by Yuval Noah Harari

My rating: 4 of 5 stars

This book (recommended by Grady Booch in his recent talk) attempts to give a brief history of mankind – specifically, Homo Sapiens, as opposed to Neanderthals and other hominids – in one book (a bit reminicent of Geoffrey Blainey’s A Short History of the World.) As such it is interesting, especially the early parts about the transition from hominids to collaborating humans and the cognitive revolution 70000 years ago. It is very clearly written – for instance, the chapter on capitalism and the importance of credit and creditworthiness is something I could hand out to my students directly as a brief explanation of what the fuzz is all about.) The book has been a success, and deservedly so – very rationalist, well informed, if a bit narrow in perspective here and there. The author seems to have a soft spot for hunter-gatherer societies (leading him to describe the agricultural revolution as a step backward for individuals, if not for the human race) and a digression on whether humans are more or less happy now (has historical progress done anything to our serotonine levels (answer: no, it hasn’t, which sort of renders the argument about agrarianism mot) veers towards ranting.

The best part is the way the author describes how much of history and out place in it now is based on inter-subjective fantasies – such as money, religion and states, which exist purely in our minds, because we agree between ourselves that they do.

And easy read, entertaining, and with quite a few very quotable passages here and there, for instance these on our bioengineered future:

Biologists the world over are locked in battle with the intelligent-design movement, which opposes the teaching of Darwinian evolution in schools and claims that biological complexity proves there must be a creator who thought out all biological details in advance. The biologists are right about the past, but the proponents of intelligent design might, ironically, be right about the future.

Most of the organisms now being engineered are those with the weakest political lobbies – plants, fungi, bacteria and insects.

Recommended.

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The disrupted history professor

Jill Lepore, Harvard HistorianProfessor Jill Lepore, chair of Harvard’s History and Literature program, has published an essay in the New Yorker, sharply critical of Clayton Christensen and his theory of disruptive innovations. The essay has generated quite some stir, including a rather head-shaking analysis by Will Oremus in Slate.

I find Lepore’s essay rather puzzling, and, quite frankly, unworthy of a professor of history, Harvard or not. At this point, I should say that I am not an unbiased observer here – clayClay is a personal friend of mine, we went through the doctoral program at Harvard Business School together (he started a year before me), he was on my thesis committee (having graduated three years ahead of me) and we have kept in touch, including him coming to Norway for a few visits and one family vacation including a great trip on Hurtigruten. Clay is commonly known as the “gentle giant” and one of the most considerate, open and thoughtful people I know, and seeing him subjected to vituperating commentary from morons quite frankly pains me.

Professor Lepore’s essay has one very valid point: Like any management idea, disruptive innovation is overapplied, with every technology company or web startup claiming that their offering is disruptive and therefore investment-worthy. As I previously have written: If a product is described as disruptive, it probably isn’t. A disruptive product is something your customers don’t care about, with worse performance than what you have, and with lower profit expectations. Why in the world would you want to describe your offering as disruptive?

That being said, professor Lepore’s (I will not call her Jill, because that seems to be a big issue for some people. But since I have met Clay (most recently last week, actually), I will refer to him as Clay)  essay shows some remarkable jumps to non-conclusions: She starts out with a very fine summary of what the theory of disruption says:

Christensen was interested in why companies fail. In his 1997 book, “The Innovator’s Dilemma,” he argued that, very often, it isn’t because their executives made bad decisions but because they made good decisions, the same kind of good decisions that had made those companies successful for decades. (The “innovator’s dilemma” is that “doing the right thing is the wrong thing.”) As Christensen saw it, the problem was the velocity of history, and it wasn’t so much a problem as a missed opportunity, like a plane that takes off without you, except that you didn’t even know there was a plane, and had wandered onto the airfield, which you thought was a meadow, and the plane ran you over during takeoff. Manufacturers of mainframe computers made good decisions about making and selling mainframe computers and devising important refinements to them in their R. & D. departments—“sustaining innovations,” Christensen called them—but, busy pleasing their mainframe customers, one tinker at a time, they missed what an entirely untapped customer wanted, personal computers, the market for which was created by what Christensen called “disruptive innovation”: the selling of a cheaper, poorer-quality product that initially reaches less profitable customers but eventually takes over and devours an entire industry.

She then goes on to say that the theory is mis- and overapplied, and I (and certainly Clay) couldn’t agree more. Everyone and their brother is on an innovation bandwagon and way too many consulting companies are peddling disruption just like they were peddling business process reengineering back in the nineties (I worked for CSC Index and caught the tail end of that mania. Following this, she points out that Clay’s work is based on cases (it is), is theory-building rather than theory-confirming (yep) and that you can find plenty of cases of things that were meant to be disruptive that weren’t, or companies that were disruptive but still didn’t succeed. All very well, though, I should say, much of this is addressed in Clay’s later books and various publications, including a special issue of Journal of Product Innovation Management.

(Curiously, she mentions that she has worked as an assistant to Michael Porter‘s assistant, apparently having a good time and seeing him as a real professor. She then goes on to criticise the theory of disruptive innovation as having no predictive power – but the framework that Porter is most famous for, the five forces, has no predictive power either: It is a very good way to describe the competitive situation in an industry by offers zero guidance as to what you actually should do if you are, say, in the airline industry, which scores very badly on all five dimensions. There is a current controversy between Clay and Michael Porter on where the Harvard Business School (and, by implication, business education in general) should go. The controversy is, according to Clay, mostly “ginned up” in order to make the Times article interesting, but I do wonder what professor Lepore’s stakes are here.)

The trouble with management ideas is that while they can be easily dismissed when commoditized and overapplied, most of them actually start out as very good ideas within their bounds. Lepore feels threatened by innovation, especially the disruptive kind, because it shows up both in her journalistic (she is a staff writer with the New Yorker) and academic career. I happen to think that the framework fits rather well in the newspaper industry, but then again, I have spent a lot of time with Schibsted, the only media company in the world that has managed to make it through the digital transition with top- and bottom-line growth, largely by applying Clay’s ideas. But for Lepore, innovation is a problem because it is a) unopposed by intellectuals, b) happening too fast, without giving said intellectuals time to think, and c) done by the wrong kind of people (that is, youngsters slouching on sofas, doing little work since most of their attention is spent on their insanely complicated coffee machines, which “look like dollhouse-size factories”.) I am reminded of “In the beginning…was the command line.”, Neal Stephenson‘s beautiful essay about technology and culture, where he points out that in

… the heyday of Communism and Socialism, [the] bourgeoisie were hated from both ends: by the proles, because they had all the money, and by the intelligentsia, because of their tendency to spend it on lawn ornaments.

And then Lepore turns bizarre, saying that disruptive innovation does not apply in journalism (and, by extention, academia) because “that doesn’t make them industries, which turn things into commodities and sell them for gain.” Apparently, newspapers and academia should be exempt from economic laws because, well, because they should. (I have had quite a few discussions with Norwegian publishing executives, who seem to think so for their industry, too.)

I think newspapers and academic institutions are industries – knowledge industries, operating in a knowledge economy, where things are very much turned into commodities these days, by rapidly advancing technology for generating, storing, finding and communicating information. The increased productivity of knowledge generation will mean that we will need fewer, but better, knowledge institutions. Some of the old ones will survive, even prosper. Some will be disrupted. Treating disruptive innovation as a myth certainly is one option, but I wish professor Lepore would base that decision on something more than what appears to be rhetorical comments, a not very careful reading of the real literature, and, quite frankly, wishful thinking.

But I guess time – if not the Times – will show us what happens in the future. As for disruption, I would rather be the disruptor than the disruptee. I would have less money and honor, but more fun. And I would get to write the epitaph.

But then again, I have an insanely complicated coffee machine. And now it is time to go and clean it.

Interview by Peter Lorange


Peter Lorange has posted an interview (in German) with me on his blog. (Trust me, I don’t speak much German beyond “Bitte, bitte Kellner, noch ein Bier.” I can sort of read it, though.) I will be teaching a class (with Margherita Pagani) at his institute in a couple weeks.

I am posting the English version of the interview below – good questions, and I am happy with the answers, too.

1. There is no single business which is not affected by information technology in whatsoever way. Is there a general rule of thumb to follow in the e-commerce?

No – except, possibly, don’t ignore it or treat it as an afterthought to your regular business. E-commerce is increasingly the “normal” way to do things, and companies that are successful devote much time and resource to making sure that their value proposition online is as well thought out and delivered as anything else they do.

A persistent problem in many businesses is that, faced with new, Internet-enabled competition, they try to preserve their existing distribution channels and business models by mimicking them online. In some instances, this is the right thing to do, but surprisingly often, doing so leaves you open to competitors that have no existing business to defend. Competition online is often subject to strong network effects, meaning that it can be extremely important to establish a dominant position early – before the economics of the market financially justifies it.

2. Some businesses are quite successful although they are not working with the newest, latest technology. Why, to quote the title of one of your papers, does the best technology not always win?

My point about the best technology not always winning is more directed at technologists – who often things that the technology that is “best” in a technical sense (most advanced, say, or most adherent to the principles of technology the technologist believes in) deserves to win. If it doesn’t, the technologist concludes that this is due to a conspiracy, most commonly arranged by whoever ended up winning the market – be it Microsoft, Google, Facebook, or whoever.

For every new technology that comes along, you will always find a number of initiatives and companies that didn’t quite cut it, even though their ideas were right and the implementation beautiful. Perhaps their timing was wrong. Perhaps they chose the wrong initial market. Perhaps they were part of a larger company that didn’t understand the importance of the new technology or were fearful of its consequences. Or perhaps they just had bad luck.

3. Conversion is a keyword in today’s e-commerce. How can a merchant convert visits on his website into sales?

To a large extent, what makes you successful online no different from what makes you successful in any business: Offering a good product or service at a price the customer is willing to pay. Being online, however, allows plenty of opportunities to surround your existing product or service with electronically enabled experiences and extensions.

A big problem with many online offerings, in addition, is that they impose complicated procedures for the customer, especially around payment. Sometimes these complications are deliberate – to make sure online sales do not harm traditional sales, for instance. Sometimes they are a result of thinking too much about security. Sometimes they come from an insistence on making electronic commerce simple for the company rather than the customer. Small differences in design, especially of the process the customer has to go through, can make a big difference.

4. Design is not just what it looks like. Design is how it works, said Apple co-founder Steve Jobs. You claim that the presence on the web is no longer determined by having a nice web site only. And yet, contemporary web-based design can be used to generate business. Where do you see specific triggers at the interface between design, usability and conversion?

In general, design of a web site matters – but content matters more than colors, pictures and logos. Specifically, many companies forget that customers will enter their web site not through the front door – i.e., through the home page – but directly into any page visible, often through search engines. This means that you must design your web page not just to be esthetically pleasant – it must also be logical in its structure, be consistent in its message and quality no matter where the customers come from, and, most importantly, easy to find and link to for customers. If you type in the name of your product or your product category in a search engine, your site better be the one that pops up on top – or you have done something wrong.

5. For a few years already another buzzword has been on everyone’s lips: social media. In brief, where do you see the most poignant relation between higher sales and social media – if there is any at all?

Social media can be important – especially if you sell branded, high-end goods and services. They can enhance your value offering by providing customers contact with each other –many technology companies, for instance, use electronic forums to let customers help each other use, fix and even extend their offerings. They can also be a threat – news travels extremely fast on social networks, and you certainly don’t want to be the company whose poor service or stiff prices everyone is talking about. That being said, social networks offer you a chance to quickly fix mistakes – and to communicate how fast you fixed them. In short, social media offers you and your reputation everything a small town offers – only on a much larger and much faster scale.

6. Online business and e-commerce promises opportunities. On the downside, like everything, ecommerce is not only related with opportunities, but also with threats.

For most companies, e-commerce is a good opportunity, but for many it can be the first chink in the armor, the first sign that an industry upheaval is on its way. For the music industry, for publishers, for newspapers and for anyone selling access to information or entertainment, e-commerce can, long-term, be a threat to the company’s whole existence. The key lies in recognizing this threat early and turning the digital marketplace into an opportunity. For every industry facing a disruptive innovation threat such as e-commerce, there are companies that go out of existence, but also existing companies that seize the initiative and thrive in a digital environment. Often, these companies owe their existence to executives who had the foresight to see what was going to happen before it showed up in the financial results – and the legitimacy with their shareholders and their workforce to take action before everyone could see that it was necessary. Surprisingly often, these executives were not technical specialists – but they understood their business thoroughly, and that makes all the difference.

MIT CISR Research Briefing on Enterprise Search

imageLast year I had the pleasure of spending time as a visiting scholar at MIT Center for Information Systems Research, and here is one of the results, now available from CISR’s website (free, but you have to register. Absolutely worth it, lots of great material):

Research Briefing: Making Enterprise Search Work: From Simple Search Box to Big Data Navigation; Andersen; Nov 15, 2012

Most executives believe that their companies would perform better if “we only knew what we knew.” One path to such an objective is enhanced enterprise search. In this month’s briefing, “Making Enterprise Search Work: From Simple Search Box to Big Data Navigation,” Visiting Scholar Espen Andersen highlights findings from his research on enterprise search. He notes that enterprise search plays a different role from general web or site-specific searches and it comes with its own unique set of challenges – most notably privacy. But companies trying to capitalize on their knowledge will invariably find search an essential tool. Espen offers practical advice on how to develop a more powerful search capability in your firm.

The political process of getting innovation done

Innovation is often about politics. Together with my excellent colleague Ragnvald Sannes I run a course called Strategic Business Development and Innovation (it is done in Norwegian, but if you are interested, we would be glad to export the concept, in English), where we take groups of students through an innovation process (with their own, very real, projects) over two semesters. The course is done in cooperation with Accenture’s Technology Lab in Sophia Antipolis and is one of the most enjoyable things I do as a teacher.

Anyway. This note is to discuss something which came up in a web conference today – the political side of doing innovation. Many of the students we have come from public organizations, from the health care industry, or from educational or research-based institutions. In all of them (well, actually, in all organizations, but more so in those where profit is not the yardstick that trumps everything) politics are important, to the point where a project’s success depends on it. Since a number of our students also are engineers and/or IT people, with a very straightforward and rationalistic view of how things should be done (if the solution is better than the current one, well, then why don’t we adopt it?), I need to explain the nature of political processes in organizations.

I am not an expert in that particular field, but I have been involved in a few projects where politics have been important – and have found the work of March, Cohen and Olsen very useful – not just as theory, but also as a very practical checklist. These three professors are famous for the Garbage Can Model, explained in the classic article Cohen, M. D., J. G. March and J. P. Olsen (1972). “A Garbage Can Model of Organizational Choice.” Administrative Science Quarterly 17(1). This article (which can be found here) is cited more than 6000 times and makes a lot of sense to me, but the it is not easy to understand (and that is not just because the specification of the model is in Fortran source code.) It posits that politically oriented organizations (they studied universities in particular, which for most purposes are anarchies) makes decisions by constructing “garbage cans” (one for each decision) and that the garbage can is a meeting point for choices, problems, solutions, and decision makers (participants), heavily dependent on energy. Decisions seek decision makers, solutions seek problems, and vice versa. Getting things done in such an environment means constructing these garbage cans and filling them with the right combination of problems, solutions, choices and participants.

This sounds rather theoretical, and is. Fortunately, March and Olsen wrote an (in my opinion) excellent book (Cohen, M. D. and J. G. March (1986). Leadership and Ambiguity: The American College President. Boston, MA, Harvard Business School Press.) a few years later, with less theory and more application. Based on interviews with a number of university presidents as well as their garbage can model, they discuss the nature of getting things done in a university environment, where there is ambiguity of purpose, power, experience and success. They finish with a list of eight basic tactics for getting things done – probably at the instigation of Harvard Business School Press, which primarily caters to business people and want applicability, not just description.

I have found this list tremendously useful when trying to get decisions made – and have observed others doing this both very well and very badly. Here it is, with their points in boldface and my (probably imperfect, it is a few years since I read this) interpretation appended:

  1. Spend time. Getting things done will take time – you need to talk to people, create language, make people see your point. If you are not willing to spend that time, you might make some decisions, but people will not follow them. Decision making is social, so decision makers in these environments need to be. The winners in political organizations are often those with the most time – which is why many universities are dominated by the administration rather than the faculty, who have other calls for their time and do not come in to the office every day. (See this cartoon for an excellent description).
  2. Persist. One of the most frustrating things (I have seen this when businessmen come in to lead political organizations, several times) in a political setting is the decisions seldom seem to really be taken – there might be a decision, but every time it comes up, it get revisited. In other words, a decision made can always be raised again – so never give up, you can always get the organization to reconsider, either the same decision directly or the same decision dressed up in new language.
  3. Exchange status for substance. As someone said at some point, it is amazing what you can get done if you are prepared to forgo recognition for it. There are many leaders who want to look good and make decisions, but don’t have the knowledge or energy to do so. Make decisions easy for them – you can get a lot done if you make decision-makers look good in the process.
  4. Facilitate opposition participation. Rather than trying to overpower the opposition, find ways for them to participate in the new way of doing things. This is one of the reason why processes and fields frequently get renamed – to allow groups to continue doing what they are doing or want to do, but in new contexts.
  5. Overload the system (to change decision making style). Decision-making time expands to fill the entire time available (alternatively, a normal meeting is over when everything is said, an academic meeting is over when everything has been said by everyone.) By giving the system lots of decisions to make (i.e., many ), this style changes – and you can get your decision through because nobody has enough time or energy to give it the full treatment.
  6. Provide garbage cans. Provide arenas for discussion as distractions, to consume energy from decision-makers.
  7. Manage unobtrusively. You can get things changed by changing small things, and in succession. I have seen examples where you get a strategic goal set up that everyone can agree to but few define (“make us a more knowledge-based organization”), get resources allocated to it, and then propose lots of projects under this heading – which now is about fulfillment of a strategy (albeit redefined) rather than an entirely new strategic direction.
  8. Interpret history. Volunteer to write meeting minutes, and distribute them late enough that most participants have forgotten the details. History, traditionally, is written by the winners (except, perhaps, for the Spanish Civil War,) but you can make it the other way around – that you become the winner by writing history.

(After writing most of this I found this blog post by David Maister which summarizes this much better than me, in the context of professional service firms): Understanding politics is very much about recognizing these tactics and using them. It may seem Machiavellian, but then Machiavelli was one of the first political theorists and knew what he was talking about.

And now I feel a need to see the next episode of House of Cards on Netflix. Garbage cans in action…