The deep meaning of ‘social’ comes from social science, not social media

In a great HBR piece, Christian Madsbjerg and Mikkel B. Rasmussen dissect the way that businesses are applying social sciences in better sensemaking about customer phenomenology: how people experience life. This leaps past big data obsessions over small bore customer behaviors like how many Starbucks coffees they buy, or how many barmaids suggest a specific brand of beer. This article drills into the true challenge confronting enterprises — the growing complexity of their markets, and the difficulties in understanding what is going on, despite increasing amounts of data. As Anne Marie McEwan wrote recently,

In an information-rich world, we need to be able to ask better questions.

One case study in the HBR article is Legos:

Consider how the Lego Group used phenomenology to understand its customers’ deepest motivations. Eight years ago Lego had lost touch with its core customers and was bleeding cash; today it’s one of the largest and most respected toy makers in the world, the result of a remarkable turnaround driven in part by its commitment to sensemaking.

The company’s downward spiral was propelled by its determination to leverage the brand and move into new markets rather than to understand what its customers—young builders and their parents—really wanted from play with its products. Acting on mistaken assumptions, Lego branched into action figures and video games, believing that kids, increasingly scheduled and often distracted by faster-paced electronic games, no longer had the time or patience for its old-fashioned plastic bricks. So Lego products got a lot cooler and more aggressive looking, but they also required less time and creativity from the kids playing with them. Meanwhile, parents’ nostalgia for the old Legos began to dissipate, and with it their impulse to buy the bricks.

CEO Jørgen Vig Knudstorp understood that customers had lost their connection with the brand and that new product lines weren’t the solution. He realized that Lego needed to better understand the phenomenon of play. What is children’s experience when they play, what do they desire from it, and how could Lego serve that need?

To find out, the company embedded researchers with families in the United States and Germany. The researchers spent months collecting data, interviewing parents and children, creating photo and video diaries, shopping with families, and studying toy shops—in short, amassing a vast store of information. As the Lego team methodically sifted through the data, key insights began to emerge. Among them was that children play to escape their overly orchestrated lives and to hone a skill. This insight exposed the false assumption that kids were too busy to engage with Legos. In fact, it emerged, a subset of children have both the time and the desire to commit to the bricks and want to achieve mastery.

As Paal Smith-Meyer, then the head of Lego’s new-business group, explains, “Now we are making products that are proud of being Legos. If you look at a box, you know it’s Lego. You can’t force someone to play with the bricks. The research allowed us to make a decision about whom we wanted to reach. It was a decision that grew into a mantra: We’re going to start making Legos for people who like Legos for what Legos are.”

At the core here, is relearning how to think outside of market dynamics — products, messages, store shelves — and return to the mindset of an anthropologist: what are people actually doing, and why?

The example of BeerCo — an anonymized beer maker in the UK — that could not understand why its products did not fare well in bars is massively illustrative. Using an ethnographic approach, they discovered the following:

  • BeerCo’s promotional materials were considered junk by most bar staff, particularly female bar staff.
  • They found that female bar staff resented having to be flirtatious, and felt trapped in their jobs.
  • The female bar staff were key to sales, but knew little about BeerCo’s products, and were disinclined to learn more.

BeerCo changed it’s marketing totally, focusing on a more customized approach to promotional materials and bar relations. It trained its sales people to understand bars individually, and invented a tool to help bar owners run campaigns. BeerCo created in-workplace ‘academies’ to train waitstaff, and set up a program to pay for taxi rides for servers that worked late.

The company turned its bar sales around, through an ethnological approach. Note that they didn’t have to actually rethink the product — the formulation of the actual beer wasn’t the issue — or its messaging. What they changed was how they actually connected, socially, with the staff in bars, and took steps to actually help the staff change their behaviors, like recommending their products. That led to dramatically increased sales.

It’s also not clear to me that this approach lines up with social media tools. I doubt that the best social media listening tools would have gotten the same degree of deep sociological understanding of the microculture of bar work in the UK.

So, the term ‘social’ needs to be reconsidered and recast in our discussions and thinking, turned back to the more foundational ‘social’ as in social science, not the derivative social media sense of the term.

DuckDuckGo’s Gabriel Weinberg talks about ‘Inbound Hiring’

Last week, I contacted Gabriel Weinberg, the founder and CEO of the search company DuckDuckGo. I had heard about the company’s ‘inbound hiring’ model — where they basically hire almost exclusively from their community of open source contributors — and wanted to learn more about it.

Stowe Boyd: I read that DuckDuckGo is unusual in hiring approach — and perhaps sort of inspirational — in what you  call ‘inbound hiring’. I’d like you to summarize what that is, and how that became DuckDuckGo’s pattern.

Gabriel Weinberg: Sure. It really came about organically because the company started a bit unusually. I started DuckDuckGo myself, and ran it alone for several years. That’s unusual because people usually hire people right away or certainly within that time frame. With the kind of traction we had in that period of years, I had a bunch of people come in to me asking to help with the product, just out of interest in it. So, naturally, when I went to hire instead of going the traditional way and using a recruiter or posting a job online,  I already had these people in front of me that were super interested in our mission.  And they had already demonstrated that they were producing good output. It was pretty much a no brainer for the first few people for me to hire them right out of our community. That was so successful that we thought if we need to hire some more people in the next 6 months or so why don’t we try and replicate what worked really well. Thats where it crystallized into a process…

SB: it became institutionalized, in a sense…

GW: Right, exactly. That we are going to try and do this and see how far we can go with this.  That also combined really well with our [open source] DuckDuckHack platform. That is a natural place to send people who are interested over there to start working there. That made a natural kind of pipeline for new hires. Not everyone came that way. We had some very specific needs — like system administration, front-end, and javascript work — that was not related to that platform. So we let it be known in the community that we had some needs, and people outsid of the community showed up, and said they were interested in helping. And that led to part time work, which led to full time work.

SB: The idea that there were some roles that didn’t organically flow through inbound hiring begs the obvious question: what about companies that aren’t developing software with a community of software developers? How would that kind of inbound hiring work? Is it possible that another company — one not building software –could still use this model? Building a community as way to pull people into what the mission of the company? Even if that mission isn’t demonstrated clearly or as clearly if you were in a community generating source code?

GW: I think so. So, early on we had two non-tech hires,  and they both came early to this process.  It worked well for them as well. It wasn’t as a natural place for them to play, but we had a need. Again, we sent the message out to our community, and people would stand up and say I’m interested in doing that.  And we would give them a trial piece in their own section. Assuming that went well, we’d go to a part time arrangement for a while. And so I think that’s probably the answer: this mixture of a search in our community — if people are following you say on twitter or on other places reading your messages or your newsletter they’re going to be aware of our needs — they will say ‘Oh, I want to participate in that’.

SB: Right, fascinating . So, does that mean that companies have to build communities if they want to try inbound hiring? You’ve said elsewhere that being slow to hire means low attrition, ultimately, right?

GW: Yes, I think that the community — and the mission which generates a community — almost by necessity is essential for this. Because then you have no one to draw on otherwise. If you consider job hiring as a type of funnel, the funnel becomes your whole community.

SB: Right. Meanwhile we are seeing a great deal of fall out about unpaid internships in many industries.  It has gotten so bad that it’s kind of like indentured servitude. People start as an intern while they are in school, then continue with two or three unpaid internships later on. Businesses go along with the pattern, taking advantage of the situation. But now there seems to be an ideological shift taking place, where the practice is falling out of style, and media companies that have used interns for generations are switching to paid internships, or they don’t have internships at all. In this case, you are not exploiting people, you are attracting members of the community, and they get involved in the community for their own reasons, and then perhaps they work for you on a part time basis to see if it all works. A shake down cruise to see if everything is going to work. Have you had an instance where it didn’t work?

GW: We have had interns and they have all been paid. I have a strong belief in paid internships. We’re not trying to get free work from people. It follows in the open source style. Open source means people are contributing their time because they are interested in the mission.  And we’re not giving people any directed tasks — they are picking what to work on. The second we give people directed tasks that should be paid for, that’s work. Once they aren’t doing what’s fun for them they are no longer volunteering. That piece where they’re doing what they want might be a really short period of time, but it’s used as a filter for us.  A lot of people write in and say ‘Hey, I’m interested at DuckDuckGo’, and we say ‘Go do something that interests you over there’. And then we never hear from them again. So, it’s a filter for us because otherwise we don’t have enough time. By the time we take people on part time, it’s very likely they are a good candidate.

SB: Because they have gone down some kind of evaluation path?

GW: It’s funny, because even if they have worked only four or five hours on the open source code — most people won’t even work that 4 hours — it can quickly get to part time pay. But the part time paid work, we do for an extended period of time. I suppose another company who wanted to adopt inbound hiring would have to make it a very defined: you have to work for a week or two part time and see what happens. The way we adopted it has been for a longer time frame than that.

SB: Do you have any other science fiction business practices or is this the only one?

GW: I don’t know. We probably do. We are kind of a weird company. But I’m not sure totally what’s normal or not. The one thing that comes to mind is that we are mainly remote. We have a headquarters here in Pennsylvania, but there are only about five of us here. There are about 20 scattered around the world. It relates to the hiring thing. They can come from anywhere. Of the people who are here in Pennsylvania only two of them were from the state. So the majority of people working at our headquarters have moved here from elsewhere. That ends up being weirder, but I think it’s becoming more normal that people have remote work for their business.

SB: It’s less uncommon, surely. But if you look at the stats in American business it’s still relatively low.

GW: And its not 75% where we are. It may be about 20% or lower.

SB: Or people work at home one day a week, and the rest of the time is spent in the office. So its really like telework. It’s not remote so to speak. In a lot of tech startups I’ve talked to recently there are different ways of organizing work. In the development groups at Yammer and Asana, for example, they have a very different notion of how work is assigned. It isn’t assigned by managers to ‘subordinates’ — they are self selected teams and they break off the work in chunks that they define. And then they divide it amongst themselves and  collaborate amongst themselves: they really develop their own work patterns.

GW: Like Holacracy?

SB: Holacracy is a very elaborate way to fully distribute and decentralize management, even in these companies they have senior people setting strategy. But the way work is being done by the development team  dribbles out and influences the entire company.

GW: We’re kind of along those lines. There was a First Round Capital article about Asana, about their diffusion of responsibility (see Asana’s Justin Rosenstein on the One Quality Every Startup Needs to Survive). We were doing something like that. We already had adopted the Apple notion of Directly Responsible Individual, the DRI. Asana has a nice little tweak on it. They have what they call areas of responsibility. That’s how we do it. We’ve taken Asana’s ‘big list’ to heart as well. We have a big list in all the areas of the company, and someone is responsible for each area, and they are the decision maker on a day to day basis on what to do in that area. There’s oversight, but the idea is that they make decisions, so we aren’t bottlenecked by a small group making all the decisions.

SB: No one wants to go back to a spoke and wheel model, where every decision goes to the guy at the top.

GW: So, I don’t know how normal or not that is, but the concept is working really well for us. And I like it. Just theoretically, someone coming onboard, we know we can give them ownership of an area.

SB: I was talking to a friend of mine — Will McInnes —  about how his consulting firm works. The company is extremely transparent, so everyone knows how much people got paid, for example. I asked him what does it feel like working there? He said strangely enough everyone is much more responsible: they feel responsible. It becomes more serious when its clear who’s responsible for what. That’s kind of a sobering thought because its not exactly the first thing I would have thought of. The more empowered they are, the happier they are, yes. But it’s not a direct connection, but, yes, you are ultimately happier in that environment. In the end, I’m responsible for the stuff that I’ve been tasked or undertaken.

GW: That’s actually really interesting. I would say that we are a really serious place, and I wonder if its related.

SB: I think it is. Sort of a necessary outcome if you make these decisions then the others have to follow. I think this is one of the primary reasons that organizations like yours and Will’s the attrition rate goes way down.

GW: Yeah, because people feel empowered. That’s understandable.

SB: Thanks for your time.

GW: You’re welcome.

There are some important lessons here, for any company who wants an engaged workforce. There are many schools of thought regarding hiring. But one thing has become clear in recent years, now that companies are beginning to look at hiring dispassionately: companies are historically bad at hiring. I recently wrote about Google’s change of heart about hiring (see Lazlo Bock talks about hiring at Google, and why the GPA is irrelevant), and how they threw away almost all the norms that they had been using, like GPA and prestigious colleges.

DuckDuckGo’s community-based inbound hiring model is an alternative for any mission-driven company, and one that sidesteps the same pitfalls that Google avoids, but from a different tack. DuckDuckGo’s inbound part-timers demonstrate their coding chops in as short a time as a few hours, but demonstrating that they understand how to interact with the community and co-workers can take weeks or longer as part-time DDGers.

The biggest takeaway for me is that a slow path to hiring leads to much higher retention, and when people do come on-board, they can immediately become responsible for some area of focus since they have been working for the firm for weeks or months already.

Nadella’s Curse: He has a General Motors and needs a Tesla

If you were going to create a car company today, who would you look to for inspiration?
General Motors? The world beater of the 20th Century, that ‘led global vehicle sales for 77 consecutive years from 1931 to 2007’ (Wikipedia), and which is still one of the world’s largest car makers? The company makes cars in 37 countries under ten brands, some of which I had never heard of, like Wuling, Baojun, Jie Fang, along with the more familiar Chevrolet, Buick, Cadillac, Opel, and Vauxhall lines.
This sprawling mega-corporation has no central design vision uniting it’s efforts, and financial operations are the aspect of the company that actually holds it all together: a vast holding company sitting atop separate businesses.
At the other extreme is Tesla Motors, an America company founded 10 years ago that manufacture electric vehicles, founded by Elon Musk, one of the Paypal mafia and a prodigious inventor. He is also the founder of SpaceX, the commercial space transport company.
How good is the Tesla S? It won the 2013 “Motor Trend Car of the Year”, the 2013 “World Green Car”, Automobile Magazine’s 2013 “Car of the Year”, and Time Magazine Best 25 Inventions of the Year 2012 award. Consumer Reports calls the Tesla S ‘the best car ever tested’, receiving 99 out of 100 points.
The company showed its first profits in 2013.
You can argue that both of these extremes represent worthy achievements. However, one anecdote sheds light on why, today, at a time of great change, Tesla stands as a serious threat to GM and other car companies: a disruptor.

via Wikipedia
General Motors’ then-Vice Chairman Robert Lutz said in 2007 that the Tesla Roadster inspired him to push GM to develop the Chevrolet Volt, a plug-in hybrid sedan. In an August 2009 edition of The New Yorker, Lutz was quoted as saying, “All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us – and boom, along comes Tesla. So I said, ‘How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can’t?’ That was the crowbar that helped break up the log jam.”

This then, is Satya Nadella’s Curse: he has a Microsoft that is structured like a General Motors — and with the soul and spirit of a holding company — and he really needs a Tesla to complete in the 21st century.
As I said last summer about Ballmer’s reorganization, regarding the idea that no one seemed to own ‘social’ at Microsoft,

Yes, I know that Ballmer, Qi LU, and anyone else in authority at Microsoft will have to publicly stick to the party line — “Windows will continue to be a dominant operating platform for decades to come, we are turning the corner with Microsoft smartphones and tablets, yada yada yada” — but the numbers say different. Ballmer’s memo only mentioned PC four times, and mostly in retrospect, phone only three, and Internet Explorer zero. (I noticed that Surface’s price was dropped today by around $100. Too little, too late?)
However, behind the scenes, Qi Lu and his colleagues must be planning for a transformation to a very different operating model: a leading enterprise software company, integrating a collection of tools necessary for the functioning of business in the past decade, right up to the business of today. But the battle now is to contrive the software platform for the emergent company of next year, and the decade that follows. Qi Lu, with the people at Yammer, Office 365, Sharepoint, Exchange, and Skype, will have to connect the dots in a way that transitions to a very different tomorrow while delivering value at every today along the way.
Microsoft’s battle for the future is not other established mainline enterprise software players, like IBM, Oracle, and SAP, who are increasingly being sidelined into narrow functional areas — like manufacturing, and finance — or deriving more of their revenues from consulting services. The battle for the future is with Google, to a lesser extent Apple, and perhaps the rapid rise of upstart start-ups, like Dropbox. And in the weeks, months, and years to come, we will see that multidimensional, multiplayer game play on. This reorganization is a prelude, and not a finale.

To enlarge the discussion: Microsoft is the sort of place where the creative vision of an Elon Musk or a Jony Ive does not arise. It’s a collection of fiefdoms — Buick, Cadillac, Baojun — each pursuing market goals and design theories.
A week after assuming the CEO spot at Microsoft, I wonder if Nadella is thinking about how to get rid of some of these product lines, and forge the rest into a Tesla-like enterprise software and services business? Does he have a Ive in the wings who has a vision of what the family of products would be?
John Gruber thinks Nadella’s background in the Microsoft Server division positions him to be able to turn the corner:

Nadella’s Server division is the one part of Microsoft that seems designed for, and part of, the post-iOS, post-Android state of the industry. A division pushing toward the future, not the past.
Cloud computing is one potential path forward. The cloud is nascent, like the PC industry of 1980. In 30 years we’ll look back at our networked infrastructure of today and laugh, wondering how we got a damn thing done. The world is in need of high-quality, reliable, developer-friendly, trustworthy, privacy-guarding cloud computing platforms. Apple and Google each have glaring (and glaringly different) holes among that list of adjectives.

The three companies that really understand cloud-at-scale are Amazon, Google, and Microsoft (maybe IBM, too). So will Nadella pursue this new world, connecting the devices here in our hands, to the apps running there in the cloud, and connecting us, everywhere, through the information cascading across the world’s Internet nervous system? Can Microsoft become that foundational enterprise player in this here, there, everywhere world? Can he break this curse?

Update: 9:45am ET, 10 Feb 2014 — An hour after writing this post I was reading What the Heck is Happening to Windows by Paul Thurrott, and he used the same characterization of Microsoft as a General Motors, although in his case he’s just talking about Windows and Office apps.

Windows 8.1 Update 1 again proves that design by committee never works, and that by not strictly adhering to a singular product vision, the solution that is extruded out to customers on the other side is messy, convoluted, and compromised. Say what you will about Sinofsky, but Windows 8 was his baby. I can assure you that no one in Microsoft is particularly eager to claim this mess as their own. And Sinofsky must be beside himself with rage at what they’ve done to destroy what he created. More isn’t always better. Sometimes, it’s just … more.
I do have some advice for the Windows team. And it’s as obvious as it is necessary.
I always accepted the messy bits of Windows in the past because the system addressed such a large audience. But given the way things are going, Windows should evolve into a system that is laser targeted to the customers who will in fact continue using it regularly. That’s mostly business users, but even when you look at the consumers who will use Windows, that usage is almost entirely productivity related. Windows should focus on that. On getting work done. On an audience of doers. Job one should be productivity.
Everyone likes to compare Apple or the Mac to BMW and, you know what? Fair enough, and if that’s true then Windows is obviously GM, the overly-big messy GM of a decade ago. But Microsoft can’t afford for Windows to be like GM anymore—just like GM couldn’t, for whatever that’s worth. Maybe Windows needs to be more like GMC, the part of GM that only makes trucks (and truck-based SUVs). After all, while many people choose to use a truck for basic transportation, they’re really designed and optimized for work. You know, as should be Windows.
You can’t please everybody, Microsoft. So stop trying. It’s time to double down on the people who actually use your products, not some mythical group of consumers who will never stop using their simpler Android and iOS devices just because you wish they would.

Why are financial analysts so dumb about technology?

We are in a curious time of the year. Software companies in the US seem to delay product releases to miss the first few weeks of the year — perhaps because so many take time off at the holidays — so I have seen a number of product updates that are coming out soon, but which I have been asked not to talk about until they are released. So, the things that are top of mind will have to wait.

Recently, we’ve seen a lot of financial and market results that — once again — underscore the trend lines in the ‘computications’ device business (see How fast and far can Intel fall?):

  • Intel announced numbers this past week that indicated demand is at best flat for personal computer chips, and this led to a fall in the company’s stock, and — in combination with other data — the S&P fell over 7%, and companies in related niches — VMware and Citrix — fell in tandem. Intel also announced plans to cut its workforce 5% a few days later.
  • On the other side of the companion device/PC divide, Apple and Samsung are projecting huge numbers of tablets for 2014: 80-90 million units and 60-70 million units, respectively.

I don’t get why the market can be ‘surprised’ by the slumping fortunes of Intel or the dinosaurs that are trying to sell access to cloud computing that is premium priced relative to Amazon’s. This is one example of the way that financial analysts seem dumb. My bet is they think change is happening slower than it is, or as McLuhan said

We look at the present through a rear-view mirror. We march backwards into the future.

The analysts feel the future should be like the past, but nowadays that means whenever some news comes out, you’re surprised.

A second indicator of the trend toward  the me-ization of work: Dropbox announced a $250 million round of investment — which might actually be as high as $400 million — at a valuation of $10 billion (see Dropbox, now valued at $10B, raises $250M). When I reported this, several folks responded on Twitter that it seemed a bit bubblicious. But the Wall Street Journal reported that the company expected sales to rise over $200 million in 2013, which is 50X valuation, but not based totally on signups: it’s serious bank.

Dropbox’s round might step up the competition with Box, which raised $100 million last month at a $2 billion valuation.

A second example of how the financial analysts are dumb about technology: they don’t get Dropbox and its competitors. Douglas MacMillan of the Wall Street characterized Dropbox as an ‘online storage provider’, which is like calling Instagram a photo storage company.

Dropbox is worth so much because it backfills a flaw in today’s operating systems. It provides a virtual distributed operating system that is lacking in OS X, iOS, Android, and Windows. One of the companies making those OSs would be well served to step up and buy Dropbox for a premium above that $10B — which would  have to be $20B or more, I bet — to bring those capabilities back into the OS layer.

So when Google buys Dropbox for $25 billion, expect the financial analysts to be surprises that an ‘online storage provider’ could command such a price.

What we can learn from what didn’t happen at CES

Last week’s weekly update was entitled Things that didn’t happen, and what that means, which was directed toward 2013 in retrospect. I am keeping to that theme this week, and trying to read between the lines of the non-event that CES seemed to be last week. Here’s a tweet I posted on the 8th, where I said:

Screenshot 2014-01-13 08.14.27

[Note that the American Dialect Society chose that way of using ‘because’ as the word of the year. Ben Zimmer, the chairman of the New Word Committee said,

“No longer does ‘because’ have to be followed by of or a full clause,” he said in a statement. “Now one often sees tersely worded rationales like ‘because science’ or ‘because reasons.’ You might not go to a party ‘because tired.’ As one supporter put it, ‘because’ should be word of the year ‘because useful!’ ”

Also note that last year, Ben Zimmer was the one that did the sleuthing to determine that I was, in fact, the person who coined the term ‘hashtag’, as a result of discussions with Chris Messina and others about his ‘Twitter channels’ idea, now known as ‘hashtags’.

I am biased, but I think ‘hashtag’ is bigger than ‘because’, because hashtags.]

Notably absent from CES are the dominant players in the technologies that underlie the modern workforce, and which are impelling new changes in the structure and shape of work.

Microsoft wasn’t there, although it might have been a good place to announce a successor to Ballmer: the company seems to be endlessly circling the airport, running out of fuel, never landing. And the rumors about ‘Threshold’ — the next big release of Windows — underscore the terrible response they are getting to Windows 8:

Paul Thurrott, “Threshold” to be Called Windows 9, Ship in April 2015

Windows 8 is tanking harder than Microsoft is comfortable discussing in public, and the latest release, Windows 8.1, which is a substantial and free upgrade with major improvements over the original release, is in use on less than 25 million PCs at the moment. That’s a disaster, and Threshold needs to strike a better balance between meeting the needs of over a billion traditional PC users while enticing users to adopt this new Windows on new types of personal computing devices. In short, it needs to be everything that Windows 8 is not.


In some ways, the most interesting thing about Threshold is how it recasts Windows 8 as the next Vista. It’s an acknowledgment that what came before didn’t work, and didn’t resonate with customers. And though Microsoft will always be able to claim that Windows 9 wouldn’t have been possible without the important foundational work they had done first with Windows 8—just as was the case with Windows 7 and Windows Vista—there’s no way to sugarcoat this. Windows 8 has set back Microsoft, and Windows, by years, and possibly for good.

Two comments: 1/ Way too late to stem the defections of Windows users to iOS and Android tablet, and 2/ this is a canonical example of a dominant company being disrupted because it cannot stop trying to support the past successful model. If Microsoft is going to hold onto *any* territory in office applications — Word, Excel, Powerpoint — they need to get them on other platforms ASAP, and not pretend that companies and individuals will wait until April 2015 for Microsoft to really fix Windows 8.

This could be the end of Office, and that completely undercuts Microsoft’s potential role as a leader in the work management marketplace.

The weak market response to Xbox is not a direct impact on Microsoft’s enterprise solutions, but Sony’s strong lead in this generation’s console wars — selling three to one over Xbox — is an argument for spinning Xbox out as a separate company or selling it, and focusing away from consumer technology.

Last week Google stepped in it, with an unartful power play that opened up the possibility of Google+ users being able to send email to Google+ IDs that they didn’t have email addresses for. And they made it an opt out option (see Google’s broken social strategy with Google+ and Gmail). This had all the maladroit insensitivity that accompanied the conversion of Youtube comments to requiring Google+ IDs. It seems that Google has a plan to infiltrate Google+ into everything, even if we don’t want it forced down our throats.

I wrote about the rise of wearables and how that might play out in the workplace (see Bring Your Own Wearable), even though all the wearable that debuted at CES last week seem far too clunky and limited. I made the case that wearables will accelerate BYOD by increasing the value of smartphones without increasing their risks, and that this is going to also lead to an increased desire to move to the cloud, and decrease IT staff headcount. BYOW only awaits the arrival of iWatch and a few compelling android tools, like a low-cost, more mature Google Glass. This will be as large a change for the workforce and the way of work as the desktop revolution was in the ’90s.

A week of missteps and rumors instead of world-beating debuts and announcements, which suggests that CES is becoming just another Comdex, a conference that faded as the big players decided it was no longer cost effective, and stayed home or just rented suites to hold meetings. It appears the same is happening with CES, today.

Things that didn’t happen, and what it means

I’ve had a head cold for a few days, and paradoxically, that has me thinking in a backwards way about what went on last week. Or, actually, about things that didn’t happen last week, or during 2013, either.

Eric Schmidt, in a Bloomberg interview, says his biggest mistake was missing social:

Eric Schmidt’s 2014 Predictions via Bloomberg

The biggest mistake that I made was not anticipating the rise of the social networking phenomenon. Not a mistake we’re going to make again. I guess in our defense we were busy working on many other things, but we should have been in that area and I take responsibility for that.

But, as I suggested in Eric Schmidt admits his biggest mistake was missing social, Google is still making that mistake everyday. Google+ is an effort to solve that problem, perhaps. But the integration into Gmail, Calendar, and Google Apps feels like an intrusion, an effort to make people use Google+ in its full glory, and not a social addition to the existing functionality of those tools.

The second thing that didn’t happen in the last few days of 2014 — as had been widely discussed — was the long-awaited announcement of a replacement for Steve Ballmer, the soon-to-be-out CEO of Microsoft. The word is that many of the candidates are concerned about taking the job when Ballmer and Gates — two former CEOs of the company — would remain on the board. This sets up the context for really strange board dynamics.

In the past I argued that Microsoft might have to got through two CEOs after Ballmer before making the real changes necessary to turn the company in the right direction:

Stowe Boyd, One Microsoft CEO scenario is looking likely

I have been making a two CEO argument: someone is going to be appointed the new CEO, and more-or-less required to continue the current business plan, which is based on the Ballmer theory of fighting everywhere: the ‘devices and services’ plan he hatched last year and reorganized around. However, that CEO will have to be followed by another CEO, the one that will start making the real changes Microsoft needs to make to become a competitor in its growth area: enterprise software. The board is just not willing to accept the change that the ‘second coming’ implies.

So, now it seems that we may have to wait for the Microsoft board to get at least Ballmer off the board, if not both former CEOs. And getting Gates to leave may be impossible, considering that he has said he expects to spend considerable time working with the new CEO. That sounds like a tough row to hoe for any newcomer.

All of this is bad news for Microsoft, in a world where delay is a killer. And this is all compounded by the barrage of major strategic efforts that Ballmer has put into motion — a major reorg, purchasing Nokia’s handheld business, pushing aggressively  into tablets — all of which the newcomer will have to grapple with starting on Day One. So Microsoft is in a holding pattern, circling the airport, waiting for a James Bond type to skydive into the flight deck and save the day. All looking more and more difficult to pull off.

And the third thing that didn’t happen: work management market consolidation. There is no ‘winner’ in the work management (social business) marketplace. There are dozens of competitors — IBM, Microsoft, Jive, Podio — with amazingly similar approaches to what they call ‘collaboration’ — the context-based (projects, groups, departments, teams, etc.) sharing of digital assets, perhaps including some sort of ‘apps’, and perhaps supporting some sort of following of individuals, tags, or contexts — but we have not matured to the point where a few dominate 90% of the marketplace.

Perhaps that is a sign of the early days in the market, but I think it’s something more. I think there is a mismatch between the collaboration model and the actual way that work is getting done today. And the mismatch is one of the reasons that the idea of social business is causing anxiety in the enterprise. As McLuhan said,

Anxiety occurs when people try to do today’s jobs with yesterday’s tools.

This is a topic that I will returning to a great deal over the months ahead, I am sure.

Beneath the chatter about the Future Of Work lies a discontinuity

I have read at least ten articles and posts about the now-conventional notions about the future of work over the past few weeks. Perhaps this is because there is little breaking technology news in these vacation weeks, and the likewise conventional thinking that dominates year-endism, although in fact projections about what is coming over the horizon are appropriate at any point, really. But like New Year’s Eve, people want to pretend there is a point at which it’s time to say good-bye to the old and to start with the new.

Instead of conceptualizing the company as broken into managed units, with managers leading each unit and subordinates doing their piecework, we need to conceive of the company as a world — an ecology — built-up from each individual connecting to other individuals. And stringing these together into an interconnected whole involves associations like sets, and discernible elements like scenes, but increasingly, nothing like brigades and squads.

I’ve already called out some major trends in a piece last week (see The future of work: 4 trends for 2014) which forms part of a longer report, Tech trends for 2014. The short version:

  • The consumerization of work — A trend that might better be called Bring Your Own Mind, and which is part of a trend toward something more interesting than shiny devices with flat UIs on native, internet-aware apps. The larger trend though involves increased autonomy and self-reliance by the individual, the local set of workers involved in working socially, and larger social scenes with an organization devising their own work doctines. A key discontinuity in the work contract.
  • Dominance of mobile OS and the emergence of social OS — We are in a mobile-first world, now which is a break with the past, but not because of mobility. The break is two-part: 1/ these devices are always with us, with enormous societal and ultimately cultural implications, but, less discussed, 2/ the apps on these devices side-step the browser, and treat the internet and other people as primary, not secondary. This is a huge discontinuity.
  • Quantified self and the “me-ization” of productivity and performance — Individuals will use whatever tools they can get their hands on to better make sense of what is going on in their work sets. Note that the work set is a concept grounded in the idea that for each individual, they are the center of their own sphere of work: their set of contacts which who the individual interacts to get work done. Each person has distinctly different sets with who they work. Many sets overlap, but no two are the same, if only because the central node is different. So performance improvement, measurement, and analysis will become principally based at the individual. The concept of ‘teams’ and ‘departments’ — derived from top-down, hierarchical control theory — just gets in the way. What is going to replace it is performance at the individual, set, and scene levels of social scale. This is another discontinuity that will unmake convention Human Resources.
  • Algorithmic science displaces folklore: AI in the workplace — Another disruption is coming, where the folklore surrounding hiring, firing, and the like is replaced by algorithmic techniques now that science is pushing our noses in how bad we are in general at evaluating people’s likely success in work. Interviewing, is a total mess. Turning this over to Watson-level AI and data-mining algorithms will be one of the most critical disruptions in the break with the old bad ways of work. And it is inherently subversive, since this is hypothetically one of the things that executives are hypothetically good at doing, or the work culture of old at least asserts they are supposed to be.

The most technological disruption that is coming is the break with the so-called ‘collaborative’ architecture of work management solutions. The collaborative model of online sharing and communication is also based on hierarchical models (largely) of teams and departments, where owners of work contexts (‘spaces’, ‘projects’, etc.) invite others to become members, and to collectively keep and share information, but in general, keeping that information and maybe even the existence of the contexts hidden from non-members. The sharing is limited by and shaped by organizational controls, and not the shape of the work.

We will see more cooperative work, supported by loosely connected, small and simple apps, a break with the model of enterprise software vendors.
And broadly-conceived one-size-fits-all ‘collaborative’ software solutions will increasingly be viewed as something like the obligation to wear a company uniform to work rather than something to unleash creativity, cooperation, and innovation.

By the ‘shape of the work’ I mean two things: 1/ it doesn’t reflect the work activities or products, necessarily. Consider a piece of software under development in GitHub, or a magazine issue being developed in Adobe Creative Cloud: the environment for work is built-to-hand: it fits the form of the work being done. And 2/, it doesn’t necessarily reflect the way that each individual spins a working set of cooperators to get their own work done, and how these sets combine to form scenes, in which large numbers of overlapping sets are connected, socially, toward emergent ends.

We will see more cooperative work, supported by loosely connected, small and simple apps, a break with the model of enterprise software vendors. Not because people want apps that remind them of Snapchat or Foursquare, but because people are doing work at local social scale, not across an enterprise, in general.

Conventional thinking about the foundations of work are now in the process of quickly being turned inside out, or upside down. We are going through a time of accelerated change in this regard, like a state change from a frozen to a liquid form, and I sense a flood coming.

This is the largest discontinuity. Instead of conceptualizing the company as broken into managed units, with managers leading each unit and subordinates doing their piecework, we need to conceive of the company as a world — an ecology — built-up from each individual connecting to other individuals. And stringing these together into an interconnected whole involves associations like sets, and discernible elements like scenes, but increasingly, nothing like brigades and squads.

And broadly-conceived one-size-fits-all ‘collaborative’ software solutions will increasingly be viewed as something like the obligation to wear a company uniform to work rather than something to unleash creativity, cooperation, and innovation.

So, beneath the growing discourse about the future of work founded on adoption curves and culture change there is a looming discontinuity, a break: perhaps a revolution led by a global movement. But one thing is certain: conventional thinking about the foundations of work are now in the process of quickly being turned inside out, or upside down. We are going through a time of accelerated change in this regard, like a state change from a frozen to a liquid form, and I sense a flood coming.

A few trends that converge on a networked, unbundled, and connected world

William James once observed (although I can’t find the reference),

You can judge a man’s intelligence by how well he agrees with you.

This post is about some recent thoughts by two very smart people, by that measure. Williams also stated that

Our view of the world is truly shaped by what we decide to hear.

Which is presumably why you are reading this post in the first place, and why I read nearly everything by Fred Wilson and Benedict Evans.

Fred Wilson spoke recently at Le Web in Paris, and laid out three megatrends that his venture firm, Union Square Ventures, follows closely and which guide their investment philosophy. Niv Dror was there and captured his talk. The three trends are these:

  1. Networks
  2. Unbundling
  3. Smartphones

In brief, Wilson argues that bureaucratic (and inefficient) hierarchies everywhere — in business, in government, in all institutions — are being displaced by networks, and those networks are inherently based on internet communications technologies. His examples include Twitter disrupting the newspaper business, YouTube pushing aside the hollywood studio model, and Soundcloud (and now Beyoncé) bypassing the record labels.

This is reflected in the world of business, the internals and externals of business. The third way of work is predicated on exactly the same disruptive force: social networks that are fully reliant on internet communications — not just the ‘collaborative’ tools of the late 20th century and the first few years of the 21st — are corrosively unmaking the bureaucracies of business. And just as Fred is investing in the disruptors in media and entertainment, we can expect that upstarts like Dropbox, Box, Editorially, and Asana — to name only a few top-of-mind examples — will accelerate that trend, and displace the creaking, aging tools predicated on a very different form factor of work and shape of organization.

[Note that it’s important to make the distinction between the disruptive technologies being developed today that are based on the central role of social networks, and not the earlier collaboration technologies that often have no networks at all, but only hierarchies, based on groups, and fairly authoritarian models of work.]

Fred talked about the formerly high costs of bringing products and services to market, and how that led to bundling. For example, opening a bank branch was expensive, so it would be sensible for it to offer a wide spectrum of services in the same place: savings accounts, CDs, auto and home loans, and so on. But today, the internet explodes that, and we will see (are seeing) the unbundling of that, with examples like Lending Club (peer-to-peer lending) and C2FO (a global collaborative exchange for working capital).

In business technologies, we are seeing the shift from broad technology platforms and tools — like SAP, IBM, and Oracle suites — to narrow and deep tools, well suited for specific kinds of workers, like Github for developers, and Adobe Social for marketers. And in particular, the emergence of small-and simple tools — especially those that play well on companion devices (smartphones, tablets, and wearables) — is the next wave.

And that brings me to Wilson’s third point: smartphones, or more generally, companion devices. He polled the audience in Paris, asking if they had to choose between their laptop and smartphone — where they could only have one — what would they pick? Approximately 80% picked the phone.

And why? The sensors, the location-aware apps, and because we are always within three paces of it: it’s with us all the time. We are connected — for the first time — all the time. We are nodes in the global social network of connected people, all of the time, and that — as Wilson makes clear — is important. Or to my way of thinking, revolutionary.

Benedict Evans wrote an important post this week, too, in which he makes one observation about the meaning of mobile scale, one that paints a bright red line across the timeline of human civilization:

Some time in the next six months, the number of smartphones on earth will pass the number of PCs.

Screen Shot 2013-12-18 at 17.51.51

These inflection points are critical, because it means that we can make inferences about the entire civilization a few years from now based on the behaviors of those most involved in the use of the new technology, today. And the interactions between the two sorts of devices, because PCs, smartphones, tablets, and soon, wearables all interact.

As Evans points out, that graph shows an enormously expanded internet, one that has almost doubled in size since 2010. Yes, doubling in three years. And the chart suggests it could double again in the three years following.

And he points out that smartphones aren’t connected to the web — the browser– to any extent like the way PCs have been. We’ve seen an explosion of nation apps using the internet as their backbone, but operating outside the browser.

That alone may explain the interest in small startup enterprise apps that really get the mobile behaviors — like Orchestra’s purchase by Dropbox, or this week’s acquisition of by Cisco (see Cisco acquires, but not a peep about Webex Social).

2014 is really looking like the year of these trends all crash together, a perfect storm: an always connected population and workforce, new apps that fill the corners of our totally connected lives and work, and the dissolution of institutional hierarchy by the corrosive and subversive nature of networks.

The consumerization of work is accelerating, say the CEOs of Asana, Box, Evernote, and GitHub

“The number of requests we get for an on-premise solution is down 90%. It used to be one of the most common requests. Now it’s almost completely disappeared.” – Phil LibinI seldom miss moving away from San Francisco — aside from friends and food — but last week there was a get-together thrown there for analysts and reporters by some of the more consumerish work software companies. And I, alas, live in New York.

The participants included Aaron Levie of Box (soon to be featured in my New Visionaries series), Phil Libin of Evernote, GitHub’s Tom Preston-Werner, Asana’s Dustin Moskovitz, and Steve Sinofsky, the former Microsft executive who is now an advisor to Box.

The big takeaway: enterprises are moving at a fantastic rate toward the cloud. As Aaron Levie said, according to Matt Rosoff, who attended the event,

We don’t even have to lead with the advantages of cloud anymore in conversation,” Levie said. “The leverage you get via the cloud is understood, assumed, and appreciated by IT buyers. These are the Safeways of the world, the Chevrons of the world. As an IT leader, why would I not want hundreds of other companies, and thus thousands of employees, working on my behalf to make my company more productive, more agile?


I don’t think we’ll see much growth from legacy IT models. More blue chip companies, Fortune 500s — even if they’re not fundamentally in the software business, or the knowledge work business —  they realize they’re in the information business.

And Phil Libin chimes in,

The number of requests we get for an on-premise solution is down 90%. It used to be one of the most common requests. Now it’s almost completely disappeared.

Marcus Wohlsen writes, recounting the event,

Libin and crew say that their consumer-focused approach to business software is the wave of the future, a way to democratize IT that’s being driven by the same groundswell that forced chief information officers to open their companies’ networks to iPhones. Just like employees started bringing their preferred smartphones to work regardless of what IT said, these workers now want to use their own, mostly cloud-based apps that they feel offer a better user experience and make them more productive.

“Everyone in your organization is sort of like a scout for IT,” Moskovitz says. And IT, he and his fellow CEOs say, is responding.

“I don’t think we’ll see much growth from legacy IT models. More blue chip companies, Fortune 500s — even if they’re not fundamentally in the software business, or the knowledge work business — they realize they’re in the information business.” – Aaron LevieThe consumerization of work is happening at a blinding rate, primarily for three reasons:

  1. Cloud computing is dramatically cheaper for the enterprise, even before factoring the costs of IT staff. And now that security concerns are being resolved, the last objections seem to be falling.
  2. Cloud is inherently more resilient and agile. Companies cannot approach the levels of investment that these software companies can in backup, failover, and redundancy.
  3. End users want the highest-fidelity user experience which is generally found on the most recent update s from the leading vendors, and not software that was designed and shipped seven years ago.

Steve Sinofsky added the observation that companies need more agility in handling the changing workforce, which includes more contractors and freelancers:

That used to involve permissioning, provisioning — it was a crazy process. [With a cloud-based solution and robust permissions] you can kick people out when they stop being the vendor and [you] own the IP [intellectual property]. It inverts the whole thing.

So, confirmation for one of my predictions for 2014 (the report is in process, by the way): the consumerization of work will continue to accelerate at a blinding rate, and this will benefit the enterprise vendors best positioned to exploit it. As Levie put it, “We’re getting to the future faster.”

What Microsoft and CIOs have in common: they are stuck in the past

I’m struck by two trends and how they are actually reflections of each other, Microsoft and CIOs — long-time partners — now share a key weakness: they are stuck in the 20th century.

iPad Dominance In Business

“While a more popular platform than iOS globally, [Android] is seeing very low adoption rates in the enterprise overall, particularly with tablets, we believe that most IT managers are avoiding the platform for large-scale rollouts and support due in large part to malware concerns.” – Brian Blair

The rise of companion devices — the smartphones and tablets that define the mobility behind the always-on, connected, and social workforce — continues to be one of the abiding trends in the transition from a 20th century model of business operations into the mutating fast-and-loose business of today.

In recent days, there’s been more evidence that this is a continuing and accelerating trend, and a battlefield between the warring giants of computing:

  • Only a few weeks after announcing Amazon Workspaces — a cloud desktop running Windows and offering apps such as the Microsoft Office suite — Amazon last week released an iPad version (see Amazon Workspaces now on iPad). Initially available on Kindle, which was the first real attempt by Amazon to edge that device into the business world, the move to iPad is both obvious and destabilizing for its competitor, Microsoft. Microsoft has continued to play the Office card — keeping Office off of iPad and Android tablets — hoping that will stimulate sales of Surface and Nokia tablets. That effort by Microsoft seems not to be working well, and new offerings like Amazon’s Workspaces for iPad will continue to undermine it.
  • In case you thought Android’s growth in consumer companion devices would translate to demand in the business side, think again. Wedge Partners’ Brian Blair, a financial analyst tracking this sector closely wrote recently,

    While a more popular platform than iOS globally, [Android] is seeing very low adoption rates in the enterprise overall, particularly with tablets, we believe that most IT managers are avoiding the platform for large-scale rollouts and support due in large part to malware concerns.

    And he sees ‘tremendous momentum’ for iPad in the business sector in the next few months.

So, it looks good for iPad adoption in business, even without Microsoft bowing to the inevitable. In 2014, the new CEO of Microsoft will definitely make the call and deploy Office on iPad, or else. But at present, Microsoft is as out of sync with the new business agenda as… well, as out of sync as today’s CIOs.

CIOs Out Of Sync

In a November study from the Society for Information Management (see IT leaders are out of sync with the enterprise’s new prioritities) has pretty damning results regarding the disconnect between IT management and the IT concerns of the CEO. In a time when there is a business IT revolution going on — based on the vastly lower long-term costs of cloud computing and the rapid uptake of incredibly powerful and mobile companion devices — the CIO seems to be stuck in second gear, or 1995.

Screenshot 2013-12-05 10.16.27

Only 1 of the CEO’s top five IT concerns were in the top 5 of CIO’s, and that was aligning IT with the business: a self-referential concern, when you think about it. The top ten issues in the study show an enormous disconnect between the IT leadership and the actual requirements of business, which I summarize in this way: the new imperative for business is a necessarily leaner, more agile, and faster way of working, with an always-on, connected, and social workforce. And the IT leadership is spending their time contemplating their navels, or stuck on the tactics of the last war, instead of working to create the context for the new normal.

Two Sides Of The Same Coin

Once upon a time companies had a VP of Electricity, as the business moved from a pre-electrical form of operations. But once a few years had passed, and the oil lamps were all sold off, different groups bought their own electric pencil sharpeners and electric typewriters.

The rapid ascent of cloud computing, hosted enterprise software solutions, and the workforce adoption of companion devices is changing nearly everything in business. The needs of an always-on, connected, and social workforce are pushing faster than the powers-that-were in the old days — Microsoft and corporate IT leadership — can keep up. They are two sides of the same coin.

It’s no surprise that IT is increasingly being fragmented instead of centralized. Leaders closer to the edge of the business, in contact with customers, partners, competitors, and markets, need to move faster, and make local decisions in the near-term. So marketing and engineering and making their own decisions about software, signing up their people for cloud services, hiring substitutes for the help desk and tech support folks that IT used to provide.

In a world where everything is driven by software, how can it be good to centralize software decisions? Once upon a time companies had a VP of Electricity, as the business moved from a pre-electrical form of operations. But once a few years had passed, and the oil lamps were all sold off, different groups bought their own electric pencil sharpeners and electric typewriters. And at a certain point the adjective ‘electric’ was dropped. It’s time to drop ‘information technology’ when 90% of all work is passed through ‘computication’ devices (the computers we use to communicate).

This is the blunt prospect for the CIO. An era has passed, and it’s time for the role to diffuse. Just like the monopoly of Microsoft Word, Excel, and Powerpoint — which are nothing more than poorly described specifications of three file formats, when you think about it — the mystique and power that was once accorded to the CIO is now looking more like a specification of corporate imperatives that might be better implemented in a distributed, localized way by more independent groups. Certainly IT leaders are not doing a great job, and perhaps its not the role that needs to be terminated, rather than just hiring another person with the title.

And, regarding office, Microsoft’s delaying tactics are simply giving time to others — Google, Apple, and so on — to develop solutions that can import and export Office documents with high fidelity, and which play better on the most popular companion devices, like iPad. Microsoft is like angry, nay-saying CIOs telling us we can’t use the devices we want, we must use what they mandate.

There is no place for CIOs or companies like that, anymore.