Category Archives: The thoughtful manager

Competing online at Lorange

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.

Manufacturing is changing, and so is productivity

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.

What you can learn from your LinkedIn network

LinkedIn Maps is a fascinating service that lets you map out your contact network. Here is my first-level network, with 848 nodes (click for larger image):

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The colors are added automatically by LinkedIn, presumably by profile similarity and link to other networks. You have to add the labels yourself – they are reasonably precise, at least for the top five groups (listed according to size and, I presume, interconnectedness).

As can be seen, I am a gatekeeper between a network of consultants and researchers in the States (the orange group) and reasonably plugged into the IT industry, primarily Norwegian (the dark blue). The others are fairly obvious, with the exception of the last category, which happens to be an eclectic group that I interact with quite a lot, but which are hard to categorize, at least from their backgrounds.

Incidentally, the “shared” map, which takes away names, provides more information for analysis. Note the yellow nodes in my green network on the right: These are the people hired by BI to manage or teach in China. They are, not in nationality but in orientation, foreigners in their own organization.

My LinkedIn policy is to accept anyone I know (i.e. have had dealings with and would like in my network), which, naturally, includes a number of students (I will friend any student of my courses as long as I can remember them, though I must admit I am a bit sloppy there.)

What is missing? Two things stand out: I have many contacts in Norwegian media and in the international blogosphere, which isn’t here because, well, Norwegian media use Twitter or their own outlets, and bloggers use, well, their blogs. Hence, the commentariat is largely invisible in the LinkedIn world (except for Jill Walker Rettberg, who sicced me onto LinkedIn Maps). Also, a number of personal friends are not here, simply because LinkedIn is a professional network – and as such captures formal relationships, not your daily communications.

Now, what really would make me curious is what this map would look like for my Facebook, Twitter and Gmail accounts – and how they overlap. But the network in itself is interesting – and tells me that increasing the interaction between my USA network and the Norwegian IT industry wouldn’t hurt.

A lament for nickfromfulham

(or, why BBC should put their material on Youtube).

The future of TV is on the net. Too bad the leading TV producers don’t understand it.

imageThis year I am living in the US, without a TV. So far I have not missed it – we have Netflix for movies and Youtube for music and clips. Having to chose your programming yourself means zero hours channelsurfing on the sofa, and a delightful lack of background noise from breakfast TV shows and similar junk.

But – what to watch when you want a little fun? For my youngest daughter (she is here in Boston to take a year of US high school) and I Friday nights have been spent in front of our nice 23 inch monitor, wathing Never Mind the Buzzcocks, a great, wild, satirical quiz show about pop music. And when I want to relax by myself, there is the unsurpassable QI, a [deeply intelligent/self-indulgingly moronic] quiz show with a pop science bent. Or I can watch some of BBCs great series, such as Stephen Fry’s programs about the English language.

Through Youtube, I have come to know and appreciate comedians and actors such as Bill Bailey, Phill Jupitus, Jo Brand, Noel Fielding, Alan Davies, Jimmy Carr, Sean Lock, Rich Hall, John Sessions, Rob Brydon, David Mitchell and Dara Ó Briain, just to name a few. I have learned a lot and laughed even more. The episode where Emma Thompson describes how she used her body to terrify Stephen Fry to complete breakdown or where Jack Dee serves the mother of all putdowns to Sandy Toksvig and Ronni Ancona are complete jewels.

Which brings me to a sad point: The channel NickFromFulham, who (assuming there is a Nick and he is from Fulham) has put up all these videos, was recently shut down from Youtube. Where should we go now for our witty and intelligent entertainment? You see, almost none of the stuff that BBC produces is viewable outside the UK, except in short snippets, on DVDs, or on the anemic BBC America channel, for which we would have to get a TV, and then put up with programs that are both delayed and also watered down in terms of swearwords, sexual and scatological references and much of the Britishness that makes Britain both British and bearable.

The funny thing is, of course, that if it wasn’t for Youtube’s technical capability and NickfromFulham’s diligent uploading and characterization, I wouldn’t know much about QI and nothing about Buzzcocks. Which makes me wonder a) what else is out there, not just in BBCland but in many TV stations around the world, and b) why the heck doesn’t BBC (and NRK, its Norwegian state-funded equivalent and all others) put their stuff out in digital format?

To the first point: I gave a talk to NRK in June, about disruption in the media industries and so on. As part of the discussion of how to strategize for the future, I urged them to fill up available spots in their many channels with stuff like QI – quality shows that have a very local appeal, but in an increasingly global world will have global appeal without sacrificing quality. When you treat your viewers as intelligent, they will act intelligently. To quote David Foster Wallace, in his his brilliant essay E Unibus Pluram:

TV is not vulgar and prurient and dumb because the people who compose the audience are vulgar and dumb. Television is the way it is simply because people tend to be extremely similar in their vulgar and prurient and dumb interests and wildly different in their refined and aesthetic and noble interests.

The point being – with infinite channel capacity, you can attract a large audience, in many countries, by not pandering to the lowest common denominator. (The fact that QI is one of BBC’s most watched programs shows that the common denominator may, in fact, not be so low after all.)

The future of TV is on the net – but in order to attract people to the net, you have to release your best stuff, and gradually become the source and context of quality entertainment rather than a prison of old business models. And incidentally, slamming the door in the face of your biggest fans is not the way to go about it.

As for us? Well, my daughter is 17 and an accomplished net surfer. She can easily find and download the next episode of Buzzcocks from one of many pirate sites. Not that I like it, but what can I do? (Well, IP spoofing and going to BBC’s web site in the UK itself would be another option.) Or I can watch something else, which, of course, lowers the commercial value of all those actors and comedians participating in the things I would like to see.

Incidentally, here is one of the most watched Norwegian skits on Youtube. Let’s see if you understand it, even if it is in Norwegian (with subtitles):

Jeff Jarvis on his public parts

(taking notes from a presentation at Harvard Law School’s Berkman Center, December 6, 2011)

(David Weinberger has a much better writeup.)

Jeff Jarvis rake thin, grey-haired, dressed in black and bearded, and has had cancer, but any similarity with Steve Jobs stops there. His latest book, Public Parts, advocates more openness in a time concerned with privacy yet somehow unable to press that “like” button on Facebook.

His key point is that the tools of publicness need to be protected – and though privacy and publicness is not in opposition – and his fear that privacy concerns are misapplied and sometimes dangerous.

When Kodak was invented, there were articles written about “fiendish Kodakers” lying in wait, and the cameras were banned in some public parks. Anxiety about privacy goes back to the Gutenberg press, microphones, video cameras. Society is looking for norms, but legislates to keep the past, in terms of the past.

The tools of making publics: Habermas said public discourse started in coffee houses in the 18th century as a counterweight to government power. It was ruined by mass media. Now we have the tools of publicness, and we get things like Occupy Wall Street. Jeff started (after a few glasses of Pinot Noir) the #fuckyouwashington tag, which spawned a platform with more than 110,000 tweets.

The Gutenberg parentheses: Before Gutenberg, knowledge was non-linear, with Gutenberg it became linear, after Gutenberg it is non-linear and the knowledge we revere is the net. Danish professors arguing that the transition into Gutenberg was hard, and the transition out of it will be equally hard. Web content still shaped as analogues of the past.

Had to understand what privacy is – first take was that it had something to do with control. Came to think that privacy is an ethic. This means that publicness is also an ethic, an ethic of sharing information. Sharing his prostate cancer, including impotence, on the web. Hard to do, but got tremendous value out of it.  Various people contributed to the blog, telling things that the doctors won’t say, etc.

We need to learn from young people how to control sharing. Danah Boyd: COPA requires companies not to keep information about children younger than 13. But more than 50% of 12-year olds had Facebook – “on the internet everyone’s 14.” Sullivan principles (developed for apartheid) may help: Rules for companies to operate in South Africa.

Jarvis propose some principles:

  1. We have the right to connect.
  2. We have the right to speak.
  3. We have the right to assemble and to act.
  4. Privacy is an ethic of knowing
  5. Publicness is an ethic of sharing
  6. Our institutions’ information should be public by default, secret by necessity
  7. What is public is a public good
  8. All bits are created equal
  9. Internet must stay open and distributed

Fear that governments and companies will take this away.

Various questions in the question round – but the discussion didn’t really take off.

Jeff comes off somewhat like his books: Well articulated and with many interesting and well described examples, but I keep looking for some more analysis and less description. More depth, simply, not just a plea that openness is good and we need to develop norms on how to handle it. But the “history of the private and the public” part of his book is very good. And it does make for an interesting read.

Notes from Eric Schmidt at MIT

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

Hard technology talk in very civilized package

Cory Doctorow likes this talk by John Naughton – which, given how often he quotes Cory without mentioning him, is a bit surprising, but then Cory has always been a very open fellow. I did not find much new here, but the last couple of minutes, and the answers at question time are generally good (including the discussion of copyright and the future of teachers). Decent intro for folks who need an explanation of the Internet in clipped British tones, without PowerPoint and ideology.

And academic speakers in the UK get a bottle of whisky, which I cannot help but see as an improvement…

To quote Cory: Technology giveth, technology taketh away… And incidentally, the idea that the bumblebee shouldn’t be able to fly is a myth.

Steven Pinker on the decline of violence

Steven Pinker, just out with a new book (The Better Angels of Our Nature: Why Violence Has Declined), gives a talk outlining how rates of violence are falling in the world, and the causes of this. Excellent, highly recommended, and available for free in high resolution:

Progress is actually progress. Hans Rosling would agree.

Update March 30, 2012: I really should clean up my notes and add to this post, but this review by Peter Singer sums it all up nicely, so I won’t bother. But it is worth a read, 800 pages and all.

Epicurean financial readability

The Epicurean DealmakerThe Epicurean Dealmaker is one of my favorite blogs – witty, learned, topical, writing anonymously and eruditely on topics financial and others. That someone can profess to be an epicurean and at the same time an investment banker may seem like a contradiction in terms, but from his/her writings, the worthy blogger seems to pull it off. May he never be found out – or worse, may he not be found to be an out-of-work high school dropout with a Unix box, a Greek library and CTS.

Anyway, his latest missive on the continuing counterparty risk caused by investment banking consolidation and market monopolization is definitely worth your time and not inconsiderable effort. The causes of the last financial crisis are a alive and well, thank you very much. Lest you think the worthy Epicurean is an insider with an ax to grind, let me offer his elegant, is snarky, caveat emptor defense of the industry as well.

Investment banking and the whole “structured products” industry is so complicated that anyone can get lost – and most politicians and economists seem to avoid discussing it, much like most executives avoid discussing technological and network externalities. It simply is too hard, too complicated, and lacking in easy, sellable solutions. Better to not talk about it, at least not in detail.

By the way, he blames the lawyers for much of the complication of financial regulation. Hard to disagree.

Pitfalls for the US speaker in Scandinavia

This is an slight update of something I wrote in 2006, adding a few points and incorporating some of the (very good) comments from back then. [Notes: Small updates April 25, 2014. Some of the examples are getting a bit long in the tooth (incidentally, another expression that doesn’t travel well.)]

Here are some pointers for US management speakers wanting to avoid the most obvious pitfalls when visiting Scandinavia (or even Europe in general), in no particular order:

  • Don’t blindly use big-name US companies (Walmart, General Motors, General Electric) as examples without explaining who they are. Outside top management echelons, consulting companies and business schools faculties, most people will only know their brand names (incidentally, for GM in Scandinavia, that is largely Opel, in the UK, Vauxhall) and not the companies themselves. Some well known US companies frequently used as management examples (Nordstrom, Verizon, Comcast, Best Buy, AT&T, USAA, Sears, Netflix) do not operate outside the US, at least not with their normal brand names and standard business processes.)
  • Never use the US mobile telecommunications industry as an example of something good or advanced (or, at least, be very careful). Mobile communications in Scandinavia (and Europe) generally outshines the US mobile phone industry – you can essentially get into your car in Northern Norway and drive to Rome while continually being on your cellphone. Try that in the US. (This comparison isn’t fair (and the difference is shrinking), there are many pockets of innovation in the US cellphone industry, but most people will judge the industry in terms of connectivity and coverage when they go to the US themselves.)
  • Be very careful about using banking examples – US banking is seen as very backward by Europeans, because of the continued use of paper checks, something that disappeared in the 1980s and 90s in Europe. In reality, the US banking industry probably leads the world in technical innovations, but services between banks are not nearly as integrated as in Europe – and therefore are seen as backward. Plus, European banks have a wider range of services in the payment area – services that credit card companies and PayPal do in the US.
  • The same goes for airlines and trains – most Europeans don’t understand that the US railroad industry – in my opinion second to none in the world – transports goods, not people. And Europeans certainly don’t like US airlines. Not that most Americans do, either. (Yes, I know much of this has to do with government subsidies and lack of competition. But impressions are formed from actual use.)
  • Be careful that you don’t talk about Europe as a single country like the USA. There is much more variation between countries in Europe than between states in the US – language, history, culture, attitudes, economics, etc. Check each country on Wikipedia (particularly economics if you are speaking to a business audience) and make sure you know which country you’re in (and where your audience is from..)
  • Don’t refer to going to church (for example, refer to someone as “we belong to the same church” or similar). In Scandinavia less than 10% of the population goes to church regularly, and religion is a very personal thing. Openly referring to church will make many in the audience think you belong to some strange cult.
  • In general, Europeans are less inhibited in the off-color joke department than Americans –  not that it takes much – but there is considerable geographical variation. However, this apparent frivolity comes with subtle pitfalls: If you tell something that can be construed as demeaning to women, for instance, it will fall very flat even in an all-male audience. The telling of off-color jokes should not be attempted unless you really know your audience (or if you possess an English accent more pronounced than Stephen Fry’s.)
  • In general, Scandinavian business people are less formally dressed than Americans during daytime, but they dress up (or keep their business suits) for dinner. Quite the opposite from the US, so don’t change into jeans for that after-work bash. Unless you work in software, which is thoroughly Americanized. (This is changing – if in doubt, ask. Precede it with an “In the US we do this, what’s the custom here?”)
  • No US-only sports metaphors! (Which, incidentally, for most US speakers will mean no sports metaphors.) Though Europeans know what American football, baseball and basketball is (especially basketball, NBA has quite a following via cable and Internet), don’t rely on them to know them well enough to understand individual terms such as touch-down, loaded bases or rebound (though they might understand “slam-dunk” from context.) So, unless you are thoroughly familiar with soccer, handball, cricket (UK only) or – in Scandinavia – cross-country skiing, ski jumping or biathlon, don’t use sports metaphors. They simply are not used as much in Europe as in the USA.
  • Be careful about Star Trek and Star Wars and various references associated with US TV series – they may be known, but check that first (and this is changing). In the UK, the sci-fi cultural peg of choice is Dr. Who. Good luck to you.
  • Some opinions seen as merely “conservative” in the US are considered fascistic or simply crazy in most of Europe. The “right to carry arms”, anti-abortionist sentiments, or religiously based politics is viewed with distaste, if not horror, by most Europeans. Mentioning that you are a member of the NRA will (for those in the audience who knows what that is) position you as a person with a frighteningly loose grip on reality. (Nevertheless, some countries in Europe have more gun ownership than in the USA, but we are talking perceptions here.)
  • Never suggest union-busting or de-unionization or trying to stop people from forming unions as a strategy. It is illegal, against the culture, and against anything considered good management by almost every Scandinavian manager. In most companies in Scandinavia, relations with unions are cordial, collaborative and valued.
  • By the same token, saying that you should fire large groups of people (or, indeed, individuals) very often just isn’t practical advice. In most of Europe, you formally cannot fire people unless they are doing something seriously illegal or are underperforming by a really large margin. Moreover, you have to follow a lot of very time-consuming, legalistic procedures before you can get there. You simply have to work with people to a much larger degree. (And you may think it is stupid and limiting, but that is the way it is.)
  • Be a bit careful about naming prominent people as “friends” and referring to them by their first names. In Scandinavia, “friend” implies a fairly high level of intimacy, usually reserved for the private sphere – and then, you probably wouldn’t refer to them in a management speech. “Warren Buffett is a friend of mine, and…” or “As Steve Ballmer said the last time we met…” will tend to make you look boastful and leave people unimpressed – unless you can show that your conversation has made them change their behavior and that you really have influence.
  • The terms “corporate”, “company”, “enterprise”, “division” and SBU have fairly precise definitions in the US. Not so in Europe. Most Europeans do not understand the difference between Vice Presidents and Directors – as a consequence, most people called Directors (on their English-language business card) in Europe are actually VPs. The guy with the title “Director” might just be CEO. Or just a director.
  • Don’t expect to score points by mentioning your distant Norwegian ancestry (or even worse, Swedish when in Norway – ref. the Europe-is-not-one-country bullet). For some reason, this does not build much “common ground” with Norwegians. You can score points on your Nordic ancestry if you manage to be specific and show some actual knowledge, but the “my great grandfather migrated from Wormland, and it feels great to be back…” will just make you look out of touch.
  • The following concepts are not understood by most Norwegians: Gallons, feet, miles, mph, degrees Fahrenheit, Thanksgiving, the distinction between “state” and “federal”, TiVo, “right on red”. “Leverage” is a rather peculiar word: It has no good definition in Scandinavian languages (and it took me years to understand it and use it properly). The same with “ubiquitous” – so if you say “ubiquitous leverage”, nobody will have any idea what you are talking about. Not even you, methinks.

And there you are. All this being said, you will probably be fine even if you break a few of these. We are after all, quite forgiving and will refrain from complaining. Instead, you’ll just be branded an American, and your opinions and suggestions filtered a bit…

(For suggestions or comments, well, that’s what the comment field is about!)

IT in Norway: Industry and impact

As part of the Knowledge-based Norway project, I have been writing a report on the Norwegian IT industry, examining the industry as industry, but also its effect on business and government in Norway. You can find it here – and comments are more than welcome. Here is the executive summary:

Executive summary, with policy implications

This report describes and analyzes the Norwegian IT industry, focusing on two categories of companies: Those that provide information technology as a product largely developed by themselves, and those that provide information technology services – mostly by taking foreign technology and making it available to Norwegian companies and organizations.

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Contrary to Norway’s classic knowledge hubs – petroleum, maritime, seafood – the Norwegian IT industry, though large, profitable, and knowledge-based, does not see itself as a hub and does not act like one. With a few exceptions (Horten, Trondheim) the Norwegian IT industry is overwhelmingly located in the Oslo area: Along Akerselven, in the City centre, at Skøyen, Lysaker and Fornebu. Few Norwegian IT companies paint on a global canvas, and those that do tend to be acquired by large international companies when they reach a certain size or maturity – growing out of Norway, as it were. In some cases, the companies continue and thrive in place, usually when they address a very specific global (GE Vingmed) or local (Visma) need, in others, they gradually disappear, subsumed into the acquiring organization (FAST into Microsoft development center Norway, Tandberg becoming a unit of Cisco, Trolltech becoming a part of Nokia and then sold to a Finnish software company).

The IT industry’s main contribution to Norwegian society comes in two flavors: Firstly, it provides a group of companies (the large IT service providers and consultancies) with a body of knowledge on how to develop and implement information technology in Norway, increasing the country’s productivity through smart use of administrative and customer-facing systems. The relatively large size of the consulting industry and the extensive use of consultants both by the public sector and the larger companies ensures that the scarce knowledge of IT development and implementation both can be nurtured and rewarded as a core activity inside specialized organizations, and also makes sure that this knowledge is available in a more flexible form than the rather rigid hiring and firing practices of Norwegian working life.

imageSecondly, the technology provided by the large, international technology providers, by the open source movement, and by administrative software providers ensures an available infrastructure for entrepreneurs in almost any industry: Few, if any, new startups today do not spend time on systems development as a major activity. Furthermore, extensive use of IT lowers the bar for starting new companies, both in terms of their relationship to the public sector, in their mobilization of resources, and in their access to markets. Thus, IT is, at the same time, a competitive arena and a coordination facilitator – an industry as well as an enzyme – in terms of increasing Norwegian innovative performance, productivity and competitiveness.

Knowledge creation and dissemination

Knowledge comes into the IT industry from three main sources: From foreign technology providers, from companies’ own development work, and from academic research in Norway. The latter transfer mechanism happens largely through the production of graduates from computer science and engineering programs – the single-most scarce factor in the industry, underscored by practically anyone interviewed. Academic research in itself, with a few, celebrated examples such as Simula (University of Oslo) and search technology (from NTNU), is not tightly integrated with the industry. Companies are often started by students from the engineering schools and computer science departments, but faculty involvement is largely missing – with a few important exceptions – after the companies are formed. This is partially because contributing to industry goes against the culture of many academics – the universities and colleges do not recruit faculty with entrepreneurship in mind – and partly because company-specific knowledge quickly outruns the more general academic knowledge as soon as development speeds up.

Industry challenges

The IT industry provides a general purpose technology (Basu and Fernald 2008), where value creation is more visible in the industries that use it than in the technology industry itself. The industry is largely located in Oslo, finances its R&D out of own funds or general tax refund programs, and does not to a large degree partake in more long-term research funding. It is an industry where everyone competes and collaborates – there are few, if any, long-term collaborative patters. The IT industry scores relatively low on several cluster dimensions, in particular knowledge dynamics.

The industry needs to raise its profile in order to do better recruitment and increase its chances to enhance value creation, by jointly documenting and exemplifying how it creates value in the Norwegian society. In order to attract talent outside the traditional male, engineering-oriented candidate pool, the industry would benefit from trying to portray itself as urban, cool and interesting – a career choice not just for the technically inclined but for the ambitious and culturally dexterous candidate. Lastly, the industry needs to address the thorny problem of improving productivity – in particular, decision making productivity – in the public sector, by collectively taking a more proactive stance not just on technology direction, but also recommend actions to increase organizational efficiency and goal effectiveness.

Public policy implications

Public IT policy can be divided into policies directed towards the industry, and policies directed towards the use of information technology in public administration and public service companies.

Policies towards the IT industry have been characterized by a quite fruitful neglect: The industry has not (despite entreaties from its interest organizations) been offered much help, nor had many restrictions from the government. This is not necessarily a problem – the industry does not need much public help, since it is used to continual technology-driven change and regularly transforms itself.

A productive public policy of IT in Norway would need to recognize that value creation from IT happens outside the IT industry; that Norway is a very small country which does not necessarily need big systems (but can benefit from simplification of procedures and structures) The IT industry is best supported by addressing the problems felt by the industry (in particular, the talent shortage) rather than forcing it to
respond to relatively short-term political interests such as focus on particular technologies or geographical distribution.

The biggest opportunity for value creation with IT in Norway lies in increasing the productivity in public administration and service provisioning. Procedures and structures are still modeled on paper as a medium and geographical distance as a hindrance. While strides have been made in improving the interface between the public and the government, much remains to be done in the back office.

Norway’s challenge is to convert the enthusiasm with which the population adopts new technologies into an equally strong enthusiasm for government and business to adopt their processes and services to the new technology. Let the final recommendation for the government then be that a post of Minister of IT is created, empowered to reorganize, automate and digitize all aspects of public service provisioning, with a goal of making life better for every citizen and with the added benefit of enabling Norwegian IT companies to export the resulting knowledge and technology to countries less blessed with a strong economy and a technologically enthusiastic population.

Optimistic rationality – relief from the doomsayers

The Rational Optimist: How Prosperity EvolvesThe Rational Optimist: How Prosperity Evolves by Matt Ridley
My rating: 4 of 5 stars

Matt Ridley, science writer and commentator, delivers a blistering attack on the pessimists of the world, who extrapolate their way to doom and gloom, whether it be a new Ice Age, overpopulation, markets rather than hierarchies, energy crises, food scares and epidemics. He shows, with a wealth of examples (not always well referenced – especially the statistics) that the human race, due to its unique in its ability to trade goods, services and ideas with people outside the family or other small group, will succeed in overcoming challenges – including global warming.

For someone who grew up under the threat of nuclear annihilation (I remember thinking, as an 18-year old, that there would be little point in getting an education because we were all going to die in an atomic blast anyway) this is another of those books (Steven Pinker’s The Blank Slate, Dan Dennett’s Consciousness Explained and David S. Landes’ The Wealth and Poverty of Nations being others) that convincingly reinforces by trust in science, innovation and knowledge’s worth and ability to create the future – a future we have not chance of extrapolating ourselves into.

Enjoyable – a simple premise, well argued and organized. Recommended.

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

(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

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 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 Bjerkøe and Anders Sørbo 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 Bjerkøe og Sørbo.

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

Liberating the process followers

I highly recommend attending the following presentation at the Norwegian Polytechnic Society on Wednesday September 29th at 5 pm. In particular, I think anyone associated with creating systems for complex decision making, especially in the public sector, would find it interesting.

Update Oct.1: You will find a video of the talk here.

Innovative systems for public services: From process following to problem solving
Dr. Richard Pawson, Naked Objects Group

image Dr. Richard Pawson is founder of Naked Objects Group, and a former head of Research Services for Computer Sciences Corporation. He has 30 years experience in IT and related businesses, and has given presentations and consulted with companies all over the world. He holds a Ph.D. of computer science from Trinity University, Dublin, Ireland.

In this discussion, he will talk about how new innovative systems can change how case workers in public services do their job, transforming them from process followers to problem solvers. Richard has designed and implemented a large and very successful system for the Irish Department of Social and Family Affairs which, based on a Norwegian idea of object orientation, allows case workers ("saksbehandlere") to handle very complex problem situations under much larger degrees of freedom than previously possible.

Richard is a highly interesting and entertaining speaker with deep insight in the relationship between information technology and organizational issues. You can look forward to an eye-opening perspective on the organizational issues in public services and how innovative and advanced systems can contribute to solving them.

The economically ideal society

David S. Landes’ The Wealth and Poverty of Nations is my favorite book on economic evolution and economic history up to and including the industrial revolution. Its main question is “Why did England win world domination?” There were plenty of contenders – The Netherlands, France, Spain and Portugal all had colonies, military power and trade, for instance. But in the end it was the comparatively small island nation that won out and dominated until the first world war. Landes explores this in riveting detail, attributing the ascendancy of England to it being closer to an ideal growth-and-development state than the competition.

The central chapter, chapter 5, Landes lays out the ideal case on pages 217-218 – and quoting that is reason enough for a blog post (not to mention obligatory reading for anyone concerned with economic policy.):

Let us begin by delineating the ideal case, the society theoretically best suited to pursue material progress and general enrichment. Keep in mind that this is not necessarily a “better” or a “superior” society (words to be avoided), simply one fitter to produce goods and services. This ideal growth-and-development society would be one that

  1. Knew how to operate, manage, and build the instruments of production and to create, adapt and master new techniques on the technological frontier.
  2. Was able to impart this knowledge and know-how to the young, whether by formal education or apprenticeship training.
  3. Chose people for jobs by competence and relative merit; promoted and demoted on the basis of performance.
  4. Afforded opportunity to individual or collective enterprise; encouraged initiative, competition, and emulation.
  5. Allowed people to enjoy and employ the fruits of their labor and enterprise.

These standards imply corollaries: gender equality (thereby doubling the pool of talent); no discrimination on the basis of irrelevant criteria (race, sex, religion, etc.); also a preference for scientific (means-end) rationality over magic and superstition (irrationality).*

Such a society would also possess the kind of political and social institutions that favor the achievement of these larger goals; that would, for example,

  1. Secure rights of private property, the better to encourage saving and investment.
  2. Secure rights of personal liberty – secure them against both the abuse of tyranny and private disorder (crime and corruption).
  3. Enforce rights of contract, explicit and implicit.
  4. Provide stable government, not necessarily democratic, but itself governed by publicly known rules (a government of laws rather than men). If democratic, that is, based on periodic elections, the majority wins but does not violate the rights of the losers; while the losers accept their loss and look forward to another turn at the polls.
  5. Provide responsive government, one that will hear complaint and make redress.
  6. Provide honest government, such that economic actors are not moved to seek advantage and privilege inside or outside the marketplace. In economic jargon, there should be no rents to favor and position.
  7. Provide moderate, efficient, ungreedy government. The effect should be to hold taxes down, reduce the government’s claim on the social surplus, and avoid privilege.

This ideal society would also be honest. Such honesty would be enforced by law, but ideally, the law would not be needed. People would believe that honesty is right (also that it pays) and would live and act accordingly.

More corollaries: this society would be marked by geographical and social mobility. People would move about as they sought opportunity, and would rise and fall as they made something or nothing of themselves. This society would value new against old, youth as against experience, change and risk as against safety. It would not be a society of equal shares, because talents are not equal; but it would tend to a more even distribution of income than is found with privilege and favor. It would have a relatively large middle class. This greater equality would show in more homogeneous dress and easier manners across class lines.

No society on earth has ever matched this ideal. […]

————–

*The tenacity of superstition in an age of science and rationalism may surprise at first, bur insofar as it aims at controlling fate, it beats fatalism.  It is a resort of the hapless and incapable in the pursuit of good fortune and the avoidance of bad; also a psychological support for the insecure.  Hence persistent recourse to horoscopic readings and fortune telling, even in our day. […]

Sorry, I couldn’t resist including the footnote – direct language and linguistic surgical strikes abound – go get it! (And incidentally, the concluding paragraphs are highly quotable as well.)

Towards a theory of technology evolution

The Nature of Technology: What It Is and How It Evolves The Nature of Technology: What It Is and How It Evolves by W. Brian Arthur

My rating: 4 of 5 stars

Arthur sets out to articulate a theory of technology, and to a certain extend succeeds, at least in articulating the importance of technology and the layered, self-referencing and self-creating nature of its evolution.

The two main concepts I took away were the layered nature of technology, consisting of these three points:

  1. Technology is a combination of components.
  2. Each component is itself a technology.
  3. Each technology exploits an effect or phenomenon (and usually several)

Secondly, Arthur lays out, in four separate chapters, the four different ways technology evolves, as summarized on page 163 (my italics added):

There is no single mechanism, instead there are four more or less separate ones. Innovation consists in novel solutions being arrived at in standard engineering – the thousands of small advancements and fixes that cumulate to move practice forward. It consists in radically novel technologies being brought into being by the process of invention. It consists in these novel technologies developing by changing their internal parts or adding to them in the process of structural deepening. And it consists in whole bodies of technology emerging, building out over time, and creatively transforming the industries that encounter them. Each of these types of innovation is important. And each is perfectly tangible. Innovation is not something mysterious. Certainly it is not a matter of vaguely invoking something called “creativity.” Innovation is simply the accomplishing of the tasks of the economy by other means.”

I liked the book for its ambition, view of technology as something that evolves, and clear-headed way of thinking about and expressing a beginning grand theory. The concepts are intuitive and beguiling, but I did miss references to – and attempts to build on, or differentiate itself from – other valuable concepts of technology, such as sustaining vs. disruptive, competence-enhancing vs. competence-destroying, architectural vs. procedural, and so on. There is a lot of research going on in this area – we are about to break up the formerly black and mysterious box called innovation and show that it really comes down to subcategories and the interplay of quite understandable drivers. Arthur’s contribution here is significant – but it is, at least the way I read it, the way of the independent thinker who would have a lot more influence if some of the language and some of the categories were a bit closer to, or at least distinctively positioned in relation to, what others think and say.

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GTD

Getting Things Done: The Art of Stress-Free Productivity Getting Things Done: The Art of Stress-Free Productivity by David Allen

My rating: 4 of 5 stars I normally don’t like self-help books, but this one is low-key, immensely practical, and not tied to paying the author money or hiring him as a personal consultant (though the option is available). I have tried to implement some of his thoughts, using Evernote, and it is sort of working, at least when I force myself to be a little bit disciplined. I like the way David Allen leaves options open for individual variations – and his almost complete lack of self-promotion (for instance, he says that quite a few of his customers have become successful leaders, but attributes it more to their organizing and self-discipline skills than to his method, which he regards as a technology.

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