broadstuff

Anyone who has made the most cursory study of human systems knows that one on the up finds a model that works, rises by it and then eventually dies by it as the world changes but all the organically grown, self reinforcing bits of the system - its DNA if you like - keep on reproducing the same system.

Anyone familiar with evolutionary theory knows why - this is the classic evolution to a lower peak in a fitness landscape - its not the true peak, but moving from the sub optimal peak would kill the organism soonest, so it chooses to cling to its hilltop and slowly wither away.

Of course, a huge amount of work - from academics and other professional pundits to snake oil salesmen - has been done on helping corporates stuck up these faux foothills to find the colour of their paradigms shift, and one of the Big Things To Do in the Noughties has been to Foster Innovation - in a safe, predictable, corporate-sanitised way of course.

Sadly, it probably isn't working - three things caught my eye today, all in their own way the arrival at the bleeding obvious by fairly circuitous outes:

(i) This article in the NYT pointing out the blinding insight that Innovative Minds Don't Think Alike (and nor do they think linearly, sequentially or to order). The fascinating thing about this article is that it articulates the extraordinary lengths corporates will go to rediscover what every Medieval King's court Jester and Machiavelli knew - you have to have people "embedded" in the system who would continually poke at it.

(ii) Stowe Boyd pointing to Gary Hamel (he of the Corporate Re-Engineering fame and launcher of a thousand corporate shipwrecks*) who underwent a Damascene Conversion and argued that companies need to start managing themselves less and not necessarily from the centre - Stowe reckons he is becoming a Management Guru Pariah, because he is arguing that Business Schools do not necessarily produce the best and most innovative managers (well there's a surprise...).

(iii) This article in The Register rationally articulating the heart rending saga of the Professional Craftsman Photographer (aka the Lane Hartwell Lament), and in essence how awful it is that user generated media is ruining their livelihood. This ruination of the shutterbugs is (accurately) likened to the Industrial Revolution, but the obvious lesson is ignored - many of the crafts of yesteryear are gone, and many of todays' will go, due to technology. The trick is not to Seize Yesterday, but to Look Out, Here Comes Tomorrow.

Anyway, the common thread (and the RIAA set course for oblivion we talked about yesterday) all point to the same issue - All structures exist to replicate themselves.

Pushing the Evolutionary analogy a bit farther, I wonder if it is possible to push any one particular corporate DNA too far off its track - to Innovate Inside as it were - just as cross-breeds of related animal species typically are infertile, and it is often new species from left field that compete and capture new niches.....

*By this I don't mean that Hamel et al personally ruined these companies, just that some appalling stuff was done ostensibly in the name of Business Process Re-Engineering.

Anyone who has made the most cursory study of human systems knows that one on the up finds a model that works, rises by it and then eventually dies by it as the world changes but all the organically grown, self reinforcing bits of the system - its DNA if you like - keep on reproducing the same system.

Anyone familiar with evolutionary theory knows why - this is the classic evolution to a lower peak in a fitness landscape - its not the true peak, but moving from the sub optimal peak would kill the organism soonest, so it chooses to cling to its hilltop and slowly wither away.

Of course, a huge amount of work - from academics and other professional pundits to snake oil salesmen - has been done on helping corporates stuck up these faux foothills to find the colour of their paradigms shift, and one of the Big Things To Do in the Noughties has been to Foster Innovation - in a safe, predictable, corporate-sanitised way of course.

Sadly, it probably isn't working - three things caught my eye today, all in their own way the arrival at the bleeding obvious by fairly circuitous outes:

(i) This article in the NYT pointing out the blinding insight that Innovative Minds Don't Think Alike (and nor do they think linearly, sequentially or to order). The fascinating thing about this article is that it articulates the extraordinary lengths corporates will go to rediscover what every Medieval King's court Jester and Machiavelli knew - you have to have people "embedded" in the system who would continually poke at it.

(ii) Stowe Boyd pointing to Gary Hamel (he of the Corporate Re-Engineering fame and launcher of a thousand corporate shipwrecks*) who underwent a Damascene Conversion and argued that companies need to start managing themselves less and not necessarily from the centre - Stowe reckons he is becoming a Management Guru Pariah, because he is arguing that Business Schools do not necessarily produce the best and most innovative managers (well there's a surprise...).

(iii) This article in The Register rationally articulating the heart rending saga of the Professional Craftsman Photographer (aka the Lane Hartwell Lament), and in essence how awful it is that user generated media is ruining their livelihood. This ruination of the shutterbugs is (accurately) likened to the Industrial Revolution, but the obvious lesson is ignored - many of the crafts of yesteryear are gone, and many of todays' will go, due to technology. The trick is not to Seize Yesterday, but to Look Out, Here Comes Tomorrow.

Anyway, the common thread (and the RIAA set course for oblivion we talked about yesterday) all point to the same issue - All structures exist to replicate themselves.

Pushing the Evolutionary analogy a bit farther, I wonder if it is possible to push any one particular corporate DNA too far off its track - to Innovate Inside as it were - just as cross-breeds of related animal species typically are infertile, and it is often new species from left field that compete and capture new niches.....

*By this I don't mean that Hamel et al personally ruined these companies, just that some appalling stuff was done ostensibly in the name of Business Process Re-Engineering.

Anyone who has made the most cursory study of human systems knows that one on the up finds a model that works, rises by it and then eventually dies by it as the world changes but all the organically grown, self reinforcing bits of the system - its DNA if you like - keep on reproducing the same system.

Anyone familiar with evolutionary theory knows why - this is the classic evolution to a lower peak in a fitness landscape - its not the true peak, but moving from the sub optimal peak would kill the organism soonest, so it chooses to cling to its hilltop and slowly wither away.

Of course, a huge amount of work - from academics and other professional pundits to snake oil salesmen - has been done on helping corporates stuck up these faux foothills to find the colour of their paradigms shift, and one of the Big Things To Do in the Noughties has been to Foster Innovation - in a safe, predictable, corporate-sanitised way of course.

Sadly, it probably isn't working - three things caught my eye today, all in their own way the arrival at the bleeding obvious by fairly circuitous outes:

(i) This article in the NYT pointing out the blinding insight that Innovative Minds Don't Think Alike (and nor do they think linearly, sequentially or to order). The fascinating thing about this article is that it articulates the extraordinary lengths corporates will go to rediscover what every Medieval King's court Jester and Machiavelli knew - you have to have people "embedded" in the system who would continually poke at it.

(ii) Stowe Boyd pointing to Gary Hamel (he of the Corporate Re-Engineering fame and launcher of a thousand corporate shipwrecks*) who underwent a Damascene Conversion and argued that companies need to start managing themselves less and not necessarily from the centre - Stowe reckons he is becoming a Management Guru Pariah, because he is arguing that Business Schools do not necessarily produce the best and most innovative managers (well there's a surprise...).

(iii) This article in The Register rationally articulating the heart rending saga of the Professional Craftsman Photographer (aka the Lane Hartwell Lament), and in essence how awful it is that user generated media is ruining their livelihood. This ruination of the shutterbugs is (accurately) likened to the Industrial Revolution, but the obvious lesson is ignored - many of the crafts of yesteryear are gone, and many of todays' will go, due to technology. The trick is not to Seize Yesterday, but to Look Out, Here Comes Tomorrow.

Anyway, the common thread (and the RIAA set course for oblivion we talked about yesterday) all point to the same issue - All structures exist to replicate themselves.

Pushing the Evolutionary analogy a bit farther, I wonder if it is possible to push any one particular corporate DNA too far off its track - to Innovate Inside as it were - just as cross-breeds of related animal species typically are infertile, and it is often new species from left field that compete and capture new niches.....

*By this I don't mean that Hamel et al personally ruined these companies, just that some appalling stuff was done ostensibly in the name of Business Process Re-Engineering.

We have opined before on the "Equity Gap", that amount of money - c $0.5 to $2k- between comfortable Angel funding and comfortable "trad" VC funding that the New Techspace is increasingly spotlighting, since the New New Technology also has some New New Economics:

(i) Moore's law and Open Source software has dropped the Capex spend for any startup by 1-2 orders of magnitude
(ii) Modern hosting, bandwidth cost reductions and offshoring software development has dropped Opex costs
(iii) Much higher online penetration and higher willingness to spend - plus better transaction processing - means companies can attract customers far earlier in the lifestage, so they become self funding far earlier.

Net-net this means that the amount of funding such companies require is lower than VC's traditionally put in, and they (theoretically*) need to change their business models to reduce the cost of doing deals at these order-of-magnitude lower funding levels.

Others have already spotted the gap - Y Combinator and Charles River Ventures for example; and now comes the WSJ with an analysis of how Peter Thiel has been operating:

Mr. Thiel, the former CEO of online-payment company PayPal, is making waves in Silicon Valley with an investment strategy that differs significantly from the traditional approach. His company invests only modest amounts of money, sometimes just a few hundred thousand dollars, and focuses on entrepreneurs Mr. Thiel and his partners often know personally. He also takes an uncharacteristically hands-off approach to company management.

Already, the gambit has yielded several potential winners like Facebook.

The venture-capital world "definitely needs to be shaken up," says the 40-year-old Mr. Thiel...

The approach of hands off is no doubt necessary so the transaction costs of bankrolling any one company do not push the deal into deficit. However, there is also a shift in power between The Money and The Talent in Small Companydom, as in many other areas when surplus cash floods in:

Most traditional VC companies want to invest larger sums, several million dollars, say, for large stakes in start-ups and then exert control over the companies' operations. Some demand "liquidation preferences," or guaranteed returns if companies are sold.

But.....

With so much money chasing deals in Silicon Valley these days, start-ups can afford to be choosy in picking their financial backers. They are increasingly turning to companies like his that offer less of a "command and control" model, he says.

Added to that is the issue of adding value in a low budget world - old models no longer work as the costs are too high:

Venture capitalists often can be too quick to fire start-up founders and replace them with professional managers, Mr. Thiel says. He blames a cultural divide: Many VCs "have these very cushy jobs, they get paid a lot," and often can't relate to founders, he says.

However, to us this is the fiddling at the edges, any moderately smart VC could adapt to this world - the real shift is in allowing Entrepreneurs to partially avoid the lousy game theory of being a founder - aka the Founders Discount

Significantly, the fund often buys only a 5% or 10% stake in a company and sets up a special class of stock that start-up founders can sell while they are building their companies -- and before venture-capital investors see profits. That way, the thinking goes, the company founders can reap some financial reward and stay motivated to build the company before an IPO or company sale, which can take years.

Now that is revolutionary, as a prime tenet over the years has been for funders to rig the game so the Entrepreneur (and their house if possible) is lashed to the helm of the Enterprise. Shifting the game makes startups attractive to a whole new group of people - ie those very talented people who until recently could actually do better by being in employment, or were strapped to family needs etc.

This world is going to get very interesting now methinks.....

*Theoretically......our experience is the hassle for a $50k Angel deal can be as time consuming as a $500k or even a $5m deal

From the Washington Post via TechCrunch:

The RIAA has lodged documents in the ongoing case of the Record Industry vs Jeffrey Howell that argues that ripping music from legally purchased CD’s is illegal.

If the Judge rules that the RIAA is right, any person in United States who has ever ripped a legally purchased CD will become a copyright thief and a potential target of the RIAA, and that means just about every iPod owner in the country.

We were discussing this today....the issues are twofold for the RIAA:

(i) They are going to criminalise large portions of the US music loving public...
(ii) ...the law is unenforceable unless there is a concomittant iPod Police capability set up

History tells us that laws the criminalise large swathes of the public and are practically unenforceable are not likely to succeed (cf Prohibition)....so it's probably more a reflection of the RIAA's desperation than anything else.

The case itself may not find in favor of defendant but not rule that CD ripping is illegal. Howell is accused of sharing files via Kazaa, but his sole defense is that he did not share those files and they were for personal use only, hence the RIAA’s disturbing argument.

There is a big difference between this, and asserting that re-recording bought music for own-use is illegal however.

But as TechCrunch notes, the people pushing for the Clampdown are far better organised and funded than the amorphous collection of opponents, and its not clear right now that the US Government is backing its citizens.

The worrying thing is if it does actually get a positive ruling, because this, along with the various attempts at extending copyright and IP law into areas it was never intended to go shows a level of intellectual protectionism that is certainly bad news for new innovators, and probably bad news for the US economy overall - any information economy relies on creation, not ossification.

This must be one of the most self absorbed and silliest "serious" posts of 2007. The event - the assassination of Benazir Bhutto. The post - about the proven business utility of Twitter in spreading and discussing the news.

If anyone needed convincing of Twitter’s business utility, today is that day.

As I write this post, the Twittersphere is going nuts over the assassination of Benazir Bhutto which occurred around 5.15am Pacific Time. Bhutto was a Pakistani opposition political leader whose charisma and family history made her a world figure. The repurcussions of this tragedy have yet to unfold but in what appears to be a chaotic situation, there is plenty of speculation.

The British BBC has been broadcasting live coverage and some Twitterers, including myself have quoted out of the broadcast comments. Some have posted to GoogleReader and out to Twitter. Predictions08 is already there with thoughts about what this means for world events.

What’s interesting is how this story is spreading around the world at lightning speed. Dave Winer for example is picking up on reports from MSNBC and I imagine it will only be a matter of time before others chime in.

Sorry, (and at the risk of bad karma) but this is total crap. The whole internet is full of this event, not just Twitter, and has been a long time before the California pundits all woke up - I've seen it on email, Yahoo discussion groups, and sms text.

For what its worth my first information came via email to mobile direct from the BBC, and the next was from first look at the Web, long before any Twitternut that I know of picked it up.

And sorry again, but Twitterers twitting BBC bulletins to each other is an after-the-fact media event.

Good article on GigaOm re privacy and gradations of paranoia:

Feeling Practical But Not Paranoid?

Do not use desktop search tools like Google Desktop or Microsoft Desktop Search. A full index of every keyword on your hard drive in the hands of marketers is very useful for the purposes of targeted advertising.

Do not use webmail from a service provider like AT&T, Google or Microsoft. Same reason as above, except here it applies to every email you send or receive.

Do not use browser toolbars or desktop gadgets. Both of these types of add-ons from companies like Yahoo and Google are known to gather information on your online activity for marketing purposes.

Remove all social network accounts. There is loads of good information there that can be used for targeting and correlation. At the very least, remove all personal information and have a username that does not give any clues to your true identity.

Which is no doubt why certain SocNets want Real Identities

Clear your browser cookies after every session. Alternatively, only search using Ask.com and enable AskEraser. To take erasing your footprint a step further, do not accept any browser cookies by default. This additional step will make web surfing slower and more intrusive as you will have to manually accept or deny cookies. That being said, if you surf for an hour without accepting cookies by default you will become much more aware of them, and that in and of itself could prove enlightening.

It is indeed enlightning......I don't know if y'all have ever tried CrapCleaner but its a nice little package for cleansing the system.

Change your local username daily. Browsers and other software have been known to pass local usernames to servers as part of their operation. If your username is something like “first.lastname” this is clearly useful information for data collection purposes.

Use Opera. With Opera, you can mimic another browser’s identification string, which helps mask your browser’s settings and reduces the information that you send to a web site when you visit.

Must say, I don't do these last two....

Paranoid and Happy to Admit It:

Do not make international phone calls. Even if warrantless wiretapping by the NSA does not concern you, you need to be aware of Echelon.

Do not have a home broadband connection. If you have a home broadband connection, a network service provider can map your name to your IP address to your physical location. Again, your name, where you live and your Internet activity is all useful information for marketers.

Use free Wi-Fi. If you don’t have a home broadband connection but you will still want to be connected, find a free wireless access point at a local coffee shop. To further hide your existence, every time your computer associates with a wireless access point, manually change your MAC address.

Install a host-based Intrusion Detection System (IDS) like OSSEC. Assuming that you are already using a personal firewall, anti-spam and anti-spy software, a host-based IDS will ensure your computer isn’t being used without your knowledge. For an additional level of security, you could block all Internet traffic except for HTTP (port 80) and then log and trap anything else.

It will be interesting to see how long it takes for obfuscating routers and MAC address auto-switchers to emerge. And if you are certain they are out to get you...

If you’re not satisfied being paranoid and want to venture into the land of Ted Kaczynski, you should give up on email, not have a home phone, use a pre-paid mobile phone that you change frequently, get all of your physical mail at a P.O. box and do every transaction (including buying a home or cabin in the woods) with cash.

From Mediapost, (pointer by Ars Technica):

A year's worth of research from Simmons, a media consultancy, shows that Internet video watchers are 47 percent more engaged by the advertising they watched than were traditional TV viewers, according to MediaPost. The same study found that viewers were 25 percent more engaged in the content on the shows as well.

Its good to have this confirmed with data, our instinctive (and empirical) observation is the same. Clearly over time this difference will probably wane, but its a good thing to have in a fledgling industry.

And as Ars Technica notes, the flow of Ad dollars online is still occurring......

Mike Butcher gives Sarah Lacy a good Fisking on her article re European startups over in gay Paris - my take is that this Euro-optimism is still somewhat premature, and may still be a cul-de-sac.

There is a sense here of deja vu, 2000 style in fact, ne c'est pas?

Anyway, there have been many theories advanced as to why Euroland has lagged the US - social welfare, tax differences, better corporate employment options, less money, smaller economies, VC's are accountants not tech people, dollar exchange rates etc etc have all been advanced as reasons, and despite all the joie de vivre I haven't seen any great lessening in the cries of Go West, Young man in 2007.

I think something else needs to happen:

Esther Dyson, asked about her view of the US vs EU startup community earler this year, noted.

In essence, US VC's back "insane ideas" like, oh, YouTube or MySpace early and often - you get funding, but so do lots of other people. Its far, far harder to get funding in Europe for any New New Thing, but if you can its great as there is usually no competition.

.

In other words the big issue is the US (West Coast mainly, it must be said) has - in my observation anyway - a different attitude to Option Theory, or Probability, or - to put it another way - just taking a Punt.

Now both Sarah and Mike feel that a new generation of second-time EUntrepreneurs are ready to back the next EU-Tube, and that is good as if they do so then more conservative ones will have to fund or die.

But I also think we need to be a bit strategic in our thinking and do what is more likely to work. In my observation, 3 key areas are:

(i) Local language rip-offs of US ideas - market is validated, language is a barrier to entry - good news is you may be a national champion and sell to a US behemoth - bad news is you probably won't be the next Google unless perhaps its a Chinese language play

(ii) Go where transaction costs are low - webservices, common standards, direct to customer - penetrating the US national market if you need US salesforces, distribution channels etc is always going to put a European company at a disadvantage.

(iii) Rich Media - we Europeans bat above our weight on this area, and as the broadband internet gets bigger and more people globally come onstream, it plays to our strengths.

I'd like to say Mobile as well, but my perception is that in 2006/7 the sclerotic Euromobile industry has started to fall behind the US (at least that's where an increasing amount of innovation appears to be happening). If EU regulators can prise the oligopolies open it would be a welcome - and probably necessary - step to get Euromobile back in front.

Hugh MacLeod has written a piece on the New New Marketing - he sums it up acutely here:

"The New Marketing" came about because of two unstoppable forces: [A] The invention of the internet and [B] the beginning of the demise of what Seth Godin calls the "TV-Industrial Complex". Thanks to the internet, as Clay Shirky famously stated in 2004, "the cost and difficulty of publishing absolutely anything, by anyone, into a global medium, just got a whole lot lower. And the effects of that increased pool of potential producers is going to be vast." While this was going on, large companies found out that people were starting to ignore their ads. We have too many choices, too many good choices, and we've gotten too good at ignoring messages.

ie Lots of Customers x Lowered Transaction costs = a whole New Paradigm

The TV-Industrial Complex is an interesting point btw - we have recently completed a survey on the state of the UK broadband multimedia market, and a comment by one of the people we interviewed resonated with this - he noted that most of the big Ad / PR / Marketing agencies today started in the "TV boom" of the 20th century Q3, and have 4-5 decades of DNA that is just so different to what is evolving in today's online fitness landscape. This builds on Hugh's point re:

Why is it so hard to explain The New Marketing to large companies? Because the people who work there are simply not prepared to relinquish the idea of control. Live by metrics, die by metrics etc.

Other interesting points Hugh makes:

If I had one big insight from the last year, is how The New Marketing has everything to do with how your product or service acts as a "Social Object". Kudos to Jyri Engestrom for turning me on to it.

Jyri's PhD is on Social Objects in SocNets I understand (I hope Google gives him time to finish it), and I found that this idea resonated with something we were working on, in how Intimacy will work in increasing the nuance in SocNets online - ie its not the nodes, or the links between the nodes, but what sort of link it is that really matters. Understanding the "link object" imho makes it far easier to attach some form of rules / policy to manage intimacy in a way that is easier to automate, but does not get clogged up with user maintenance nor gives too many false results.

My second big insight from this year was learning that, even with a fairly everyday product, you can create social objects simply by using your products to make social gestures. That's what we did with Stormhoek. The message wasn't, "Here's why you should buy our wine". The message was, "We think you're kinda cool, and we like what you're doing. We'd like to be part of it, somehow." And much to everyone's surprise, it worked rather well.

I wonder if Soap Powder would have worked quite so well though, Hugh? One of the things I have noticed over the years in consulting is that the product you make can drive the company culture (and the customer response) to a surprising degree. One can imagine a sort of 2x2 for this game, say "commodity / not commodity" on one axis and "liked / necessary evil" on the other - SA blended wine may be a commodity, but being liked helps.

Blogs were the big story for 2005. YouTube for 2006. Facebook for 2007. What's the big story for 2008? I have no idea. Nor do I think it matters. For the big story, really, is always going to be the same. Websites comes and go, but "Cheap, Easy, Global, Hyperlinked Media" will be with us forever, save for Nuclear Holocaust.

Actually, I think a big story for 2008 will be the impact of "Cheap, Easy, Global, Hyperlinked Media" on "Expensive, Hard, Local, Non Linked Media Companies" - The tensions building up are huge, and I know from the work we are doing that the tipping points for large companies are lower than you imagine, as they can't easily banish their cost bases overnight - so relatively small drops in revenue can push them into loss.

A lot of what fuels The New Marketing is quite simply, the most important word in the English Language: "Love". It's hard to get someone to read your website if you're not passionate about your subject matter.

I'm not sure.....Facebook for e.g. doesn't love its users a lot as far as I can see - though they certainly are passionate about their product. No matter what you think about the ethics, it is beautifully engineered for its purpose - and the punters love it anyway.

Thus the theme song for the New New Marketing - in practice - seems to be not just "All you need is Love", but maybe a bit more like Sir Bob's Great Song of Indifference than one would like........

I don't mind about people's fears
Authority no longer hears
Send a social engineer
And I don't mind at all

Or something "Old Marketing" like that......................