Blogs are the new books.  They are not ebooks or virtual books - they are still blogs but the audience has changed and so too has the content. Just 3 years ago people would blog about their family and friends - that traffic has moved to MySpace and Facebook.  They would blog about their profession - that traffic has moved to Linkedin.  They would blog about current affairs and humour - that traffic has moved to YouTube.  They would blog about what they are doing and where they are heading right now - that traffic has moved to Twitter.

Blogs, blogging, and bloggers have matured - it is now the content not the conversation that is important.  The medium is no longer the message - the message is the message.

The key question today is simple - what is your business architecture? 

The core architecture is your revenue model.  Do you have a passive income stream?  Is it detached from your primary activity?  Do you have a direct income stream?  Is it attached to your primary activity?  How easily could you reconfigure your revenue model?  What other revenue models does your business connect or partner with - do you use outsourced systems or services?  How typical is your revenue model within your industry?  What are the trends with revenue models around the globe in yours and related industries or activities? 

The core facilitator of your revenue model is your technology platform.  Your technology has to remain flexible - at the global issue the aim is to automate and at the local issue the aim is to network.  The trap most businesses fall into too easily is to use technology to update moribund processes.  The reason is these processes are vital to maintain the revenue model.  This is where we see major technology projects that fail to deliver anything like the planned benefits - these projects are the ones that over-run time and budgets.  The technology platform has to remain stable and secure - then it has to be flexible enough to be state of the art in outcome.

So what is your business architecture?   Is it well understood by all who rely upon it to generate revenue?  Is it flexible enough to lower business costs?  It is flexible enough to deliver better quality products and services?  Is it geared to generating new customer demand?  Is it transparent?  It is easily accessible by your best competitors' customers?

Innovation is at your core.......  If this is true then you are currently having a great time of it....  If this is true then your workspace is a buzz of excitement....  If this is true then you do not know what the world's problems are right now - you are too busy with your own ideas, models, prototypes, etc.

Innovation is an Action. It is hard to talk and to write about Actions.  You can tell stories about successful innovations but it is difficult to foreshadow their success by raving on about Strategy, Process, etc, etc.... these are indeed the things that innovation is not about.

Innovation is a Disrupter. It is extremely difficult to enact innovation without being disruptive to Strategy, Process, etc, etc....

Innovation is an action that disrupts with purpose. It is almost impossible to take an action that disrupts with purpose unless and until you have funds - take the story of Silicon Valley as an example.  Silicon Valley is funded by venture capital and thus each start-up venture has a 'burn rate' that most mature businesses can not sustain. In any start-up the resultant innovations have a clear and present purpose - usually that is to disrupt a whole industry or at least a market leader within an industry.

Innovation is a tolerable Action if, and only if, it is not at odds with the prevailing revenue model. This is why most innovators fail - they end up butting their innovative genius up against the business strategy and process that underpins their revenue model.

Google is often quoted in stories about innovation - the picture painted is that Google is a buzz with innovators with great ideas and those great ideas attract the talent needed to convert them into successful outcomes.   I believe Google attracts innovators not because the ideas are so much better at the Googleplex in Mountain View than elsewhere but because Googlers are generously funded both in time (free time at work) and money (liberal burn rates for projects) to innovate, to disrupt, and to find a new purpose (within the confines of Search).

Why is Google so good at sponsoring innovators? Simple question with a simple answer. Google has detached it revenue model from its core activity - the more you innovate Search at Google or iGoogle the more opportunities you will garner for its passive income from click through advertising.

Finally, today's organisations are transmogrifying into digital networks with clusters of workers who form natural beehives of innovation. If the workers in these clusters understand their current revenue model and have an ample burn rate and enough free or unencumbered time they will take actions that will disrupt their industry. In other words they ensure that innovation exists at the core of their business entity.

"We are a technology company" says John Hofmeister the retiring head of Shell in America.  What does he mean?  Surely his company is purely and simply a petroleum producer and distributor.  Well no they are much more than we think they are!  He insists they are a technology company with long-term plans to convert new technologies into socially responsible products that produce good profits.  He goes on to list Shell's investments in solar, wind, hydrogen, bio-fuels, etc as proof that they are not simply a petroleum company.  But he also insists they are still a producer and distributor of oil based products and will continue to be so for a long time into the future.

It raises two key questions for me.

First, what is your core technology?  Is it your intellect?  Is it a process that you have mastered?  Is it a technique for sales or marketing?  What is it exactly?  I urge you to think about the nature, maturity, and longevity of your core technology.

Second how does your core technology sustain your current revenue model?  Is your revenue model integrated into your core technology?  Is your current revenue model detachable from your core technology?

For two decades I had one asset - the outsiders' advantage.  I was the outsider.  I could see things anew.  I could point to changes that could and needed to be made.  I could do that simply because I was not part of the culture - not part of the way things are done around here.

In 2008 I have lost my greatest asset.  Why?  Because there is no advantage in being an outsider.  The advantage only holds when your organisation is based on the exclusion principle (see earlier riffs on this idea).  Success today is based on the inclusion principle - there is no outsiders' advantage.

I could claim to have the outsiders' advantage when it comes to Twitter because I do not use it.  But those who do use it are not excluding me or anyone else from its use - it is pretty much freely available the world over.  Those who form part of the Chattering Clusters on Twitter can gain no insights into their use of this technology from me simply because of my presumed outsiders' advantage. 

The thing here is Twitters are forming networks not organisations.  They are building trust by being in constant contact with the other members of their Twitter Clan.  The culture and the mores of their Twitter Clan is forming and reforming constantly to fit the conversations that bind these people into a cluster.  Well that is my best guess as to what is happening.  The pertinent fact is I will not really know what happens within a Twitter Clan unless and until I join in and chatter with them.  If what is happening there has use value then it will expand as a network but if not it will shrink and perhaps die.

The outsiders' advantage that most consultants rely upon to make a living has left the network. 

There is a new economy coming to a local community near you.  It will bring with it a heap of jobs.  These jobs are different - they are local.  These jobs are a throw back to an earlier time in the sense that they are community based.  The local community has some needs that can best be met by local services.  As we all strive to reduce our carbon footprints the local job market will expand.  Some of these community based jobs will be related to the expansion of new industries such as solar energy, wind power, retro fitting homes with low energy profiles, etc.  These jobs are at the core of the new flat world of the web.  They are sustainable and they are a new fixture of local communities.

The other side of this new economy is an entirely different story.  Global production will be networked and thus it will source people and skills from anywhere and everywhere.  Jobs in these global networks will expand so long as their core 'industry' expands.  Workers will be asked to migrate from here to there to everywhere as they follow their employers' needs.  These networks will become highly efficient and effective as they augment people skills with machine to machine transfers of core information and services.

Please click on the image below ........

In the early 1980s I went to NASA armed with my simple theory - that is, all organisations are combinations of continuity, crisis, and discontinuity all the time.

Most organisations get locked into one of those three elements from time to time.  Most organisations try to stay in the continuity mode - that is where most of their people feel most valued and productive.  NASA was suppose to be transforming the Shuttle Program from discontinuity to continuity - it wasn't capable of doing that so it was headed for a disaster.  I could predict the disaster but I could not predict the precise nature or timing of it.  I was able to convince the head of the Shuttle Program that he was headed for a disaster - it took me less than two minutes.  The simple diagram below is what I drew for him to explain why and how I knew what I was talking about...  Click on it to see it......

(This is in large part a repeat of an earlier riff - it makes a slightly different point here - don't you just love it when one piece of work does more than one job for you!)

Obama is not a Brand.....  Brands are dead and Obama is proof positive of that fact... Obama is a new type of entity in politics that works equally well in business - he is relevant and remarkable. He has become relevant and remarkable because he has put himself outside the Brand, Value Add, Strategy, etc paradigms.

What Obama brings, like him or not, is not as simplistic as a new Brand or a new Spin on politics - he brings something much more complex and interesting. He brings a presence that appeals to youth and cynical people alike - interestingly most of these people do not yet really know why he appeals so much to them...

What is Obama's appeal across race, gender, age, and wealth?

Obama has a relevant and a remarkable message - 'Change we can believe in'......

Obama has found the key to new age politics - it is about ideas not experience.

Obama raises his funds online from the masses not from the usual players in politics - it is about inclusion not exclusion.

Obama is a preacher not a doer - it is about inspiration not perspiration.

Obama has a message based on faith in a world of doom and gloom - it is about what you think can be done not what is currently being done.

Obama talks about his faults and weaknesses because he knows himself well - it is about transparency in thought and action not image.

Obama has tapped into the aspirational conversations of his electorate - it is about what people aspire to be not what they are told they are.

Obama offers his electors a new sense of hope - it is a time for new beginnings not a time to refine old continuities.

These are tough times for everyone.  Most people have not yet adjusted to them properly - including me or is that especially me.

I work for myself so I should be able to adjust quickly.  But I have been so slow to do so.  However after a conversation with a good friend earlier today I have begun to take my own good advice.  Today I slashed my fees by 66%. 

Why so much and why today?  Because the market will not pay me today what it would yesterday and it certainly will not pay anything like that rate over the next 12 months.  Am I less valuable today than yesterday?  No!  I am actually more valuable and I have a better quality service/product BUT the sticker price is too high.

Services like mine have been over priced for the past 3-5 years - just like house prices.  Our costs are relatively low and can be trimmed even further now that the internet has gone global.  Yeah the flat world of the internet has changed everything within my industry too.  There are millions of new players in my market space.  They all claim to be as good as me at what I do and they charge very little for their services - so I have to go meet the market.  Are they as good as me?  Some maybe far better and there is the rub I do not know and neither do my potential clients.  So price is an important variable again. 

My rational for all businesses right now - including my own - is to slash prices.  Take price out of the equation when you tender your product or service.  Then work as hard, if not harder, on your product or service to make it better.  How can we do that?  We can start by making all our offerings more relevant and more remarkable.  In general it is very very difficult to be both 'relevant and remarkable' in your own community - that is why prices are about to be slashed.

At the global level prices are also about to be slashed but for a very different reason.  At the global level prices will begin to fall again because of the impact of network economics.  When you have millions of customers that you can treat as individuals then you can slash your prices and still make huge profits - Google, Amazon, Skype, etc have all proved the point.

Being both 'relevant and remarkable' starts when you also slash the number of things in your offering.  Most of the things in your current offering could now be priced as free goods or services.  Why?  Because they do not add value.  Indeed some of them are of no 'use value' to your customer unless or until they are free.

My prices are down below where they were 10 years ago.  Where are your prices and what can you do to improve your 'use value' to your customers?

The issue of security versus privacy on the net is certain to be a hot topic within 5 years. For example, as health care data moves from doctor's notes to electronic patient records (on the net) this issue will boil over. Most patients will perceive a security risk but what they will face is a privacy issue. Security of electronic records will be the equal if not better than paper records. Privacy however is a more subtle issue - who seeks what, when, and why? As we move into stem cell medicine and genetic based diagnosis and prognosis then more "outsiders" (employers, fellow workers, lovers, etc) will have a vested interest in breeching your privacy.

Can privacy be assured? Of course it can in most instances - but if someone is determined to find out your 'health' or 'other' secrets that are stored, sorted, and downloaded from the net then they probably will. Nevertheless for the net to continue to serve as a social positive in our world we need a 90/10 rule. We need to let everyone see 90% of the information on the net - 10% is held back because it is a 'secret'.

Under this system most 'secrets' belong to someone else and are held in trust. For example, a foreign nation provides us with information they deem 'secret' for some reason - it is not for us to dispute that fact rather it is our role to honour that provision as a matter of trust.

My 90/10 rule will enable most information to roam free - it will go a long way to ensuring 'net neutrality' in practice.

May you live in interesting times AND know about it.... 

Often wondered what it must have been like to have lived through some of the most interesting times of change in human history.....  The old saying is if you remember the 1960s you weren't there...  Well it seems to me that most people live through historic times - like now - as if they weren't there.  This is an historic time of change - there is just no doubt about it.  How can you tell?  There is more complexity in news stories than there is clarity.  There is peak oil, climate change, sub-prime meltdown, Iraq, Iran, China, India, nuclear power/proliferation, stem cell medicine, genetic engineering, digital technologies in business, etc.  There is more interest in the politics than we have seen in a generation or two.  The issues are big and bold and full of potents for change.

Here is how I see it - trust or a lack of it is the key factor in most of this change.  If you have a business with high levels of trust then you are in good shape to handle the changes coming at you - if not then these are truly interesting times.

The new architecture of business is like a big game of Scrabble - it looks something like this.....
   
You 2 People (one to many)        Systems 2 You  (many to one)  

                       You 2 Systems (one to many)

Systems 2 Systems (a networked mass)    Group 2 Group (many to many)          

You pick what you need from all that then design and build the customer/consumer demand you need to sustain it and you will easily cope with all the complexity in those issues listed above.

Oh yeah and, Good Luck!

To see the following diagram - click on it.  All copyrights reserved by Richard Lipscombe @ 2008.

The flat world of the internet has produced a strange new era of customer demand.   The web is delivered to a touch screen - its information is then transmitted by the Chattering Clusters to their Clans.  Clans have mavens, pulsetakers, and other types of facilitators who consolidate trust through habits, mantras, and behaviours.  Trust shapes demand - it is a by-product of a new version of 'group think' - this one is 'clan or cluster think'.   Clans form purpose-driven groups and then transmogrify into Tribes. Tribes are long-term entities - they could help shape demand for a decade or more.

To see the diagram simply click on it....  All copyrights are reserved by Richard Lipscombe @ 2008....

Webs hang off the world wide web. They are important because they reduce the cost of business. They are often machine-to-machine. They have one asset and it is virtual - information.

Clusters form when web connections are strong. They can be global or local. They are not online communities, they are not communities of interest, and they are not based on collaboration. They are based on trust - trust shapes clan and tribal behaviours.

Demand is concentrated in clan and tribal behaviours. It is either global or local but not both at the same time. It is customised. It is customer defined not business defined. It is informed by webs and clusters - not by marketing. It is based on viral marketing much more than ever before. It is sophisticated yet crude. It is cost based.

Please click on the image to see it.  This was a breakthrough diagram for me.  The world wide web has changed the essence of business and not in the ways I had expected nor the experts had predicted.  The web has introduced complexities to business - complexities like those we are experiencing through our collective exposure to the sub-prime debacle.  Business will never be the same again it is fair to say.  Perhaps this simple diagram will help you appreciate why that is so........

My work is simple - I design and build consumer architecture.

The new given is business has shifted from being all about supply to being all about demand.  Why?  Web based information and services has networked the economy - this means business is forced to be inclusive not exclusive.  Inclusive of whom?  There is the rub - the new inclusion is through tribes, trust, and networks.

People want to join tribes - this is why twitter, facebook, and myspace work so well.  These technologies connect people with similar tastes, loves, ailments, afflictions, needs, wants, etc.  They twitter each other because they want to belong to the tribe.  I call these twittering tribes - Chattering Clusters.  These tribes are nomadic, 24/7, based on individuals not groups, and live.

They cultivate them on facebook - there they dissect them into Demand Clusters.  These Demand Clusters have a shared purpose.  So you can be a member of my facebook tribe but not necessarily share the purpose of all 150+ gathered in my tribe.  Your own tribe is also 150+ but it simply overlaps mine - it is not a replica of mine.  The key to maintaining your own focus, purpose, and tribal ways is trust.  Your trust is based on your love of the same things as me rather than on a sense of being faithful or keeping secrets.  Trust is a bond - the bond could be as simple as being a  consummate fan of The Blackeyed Peas.  Trust is given freely but it is nonetheless essential.

People maintain their tribal traits by networking their Facilitated Clusters.  Facilitated Clusters are networks inspired by a thought leader - it could be you.  You challenge the tribe to extend deeper and deeper into their demand for The Blackeyed Peas.  You do this in various ways - eventually you become the maven (respected know all) within the tribe.  You may also become the pulsetaker - the one who keeps tabs on the mood within the tribe.  Facilitated Clusters have their thought leaders who keep the network active.

Tribes, trust, and networks - its a wonderful new world of business out there...... 

These are exciting times in business if and only if you have a passion for change.  We often talk about change but it is just 'talk'.

2008 is the perfect time to do some heavy lifting as we change the core architecture of organisations.  This is going to be fun and agony - it will be fun for those who are doing the changing and agony for those who are having the changes inflicted upon them.

The bulwark to change is ideology - the problem is ideologues 'stick to the knitting' long after the wool has run out.  The biggest fault line in business today is the ideology that people are our greatest asset.  It was true last century when the core architecture of an entity was people based  - indeed most public service entities are still that way today.  The big challenge now is to get beyond people-based architecture.

At the global level this means automation of processes - it means replacing people processes with machine-to-machine networks.  The purpose here is ruthless cost reductions - often to the point where services are provided free.  Ruthless cost cutting through automation must be done in ways that lead us all to lower our individual and collective carbon footprints. Automation circumvents the old push economics of mass production, mass marketing, and mass distribution - it lowers our carbon dependencies and thus our carbon footprint.

The old economies of scale are revisited once the focus becomes you - the customer.  When the customer is the key asset of a global business then pull economics apply - the customer has infinite choice online but finally decides on a 1: 1 transaction with an automated delivery process.  Gone are all the wasteful steps of the so called 'value chain' - a great swathe is cut through the traditional supply chain as many links become redundant.

At the local level ruthless cost cutting will prove more complex and difficult.  The problem here is you have weigh cost cutting and automation up against the need to provide a great customer experience.  Local businesses have to serve their local communities as best they can so there will be ruthless cost cutting but there will also be inexplicable expenditure on key people who provide wonderful customer experiences.  Community based business must cut costs, boost quality, and innovate the offerings.  These businesses have to become cutting edge in carbon free thinking and use new technologies wisely.  These businesses have to facilitate customer experience that suit individuals who are very particular about everything they purchase - they are also wired into networks of friends via Twitter, Facebook, or Myspace so their immediate experience can be quickly shared by 150+ people.  If their experience is relevant and remarkable the business gets an instant boost - if not then......

Cut costs deeply - be ruthless!  Then make sure the customer experience is the best it can possibly be - make it low cost, high quality, and laced with pleasant surprises.

I walked into a small room in the administration building behind the main factory - my client's office was just down the hallway.  Beyond the hallway were the accounts people doing their numbers.  It was all very low key and very unfashionable. 

My room had a white board, pens, and eraser - what else could you want if you were there to help them save their business?

They walked into the room without any chatter - they were all apprehensive.  It was written on their faces: "I hope this won't take too long I have so much to do today".  They were all thinking about other things.  "I won't keep you long", I heard myself say.  "I have one thing and only one thing to say"  I had their attention as if I had switched on a light in each of their brains.  "Tomorrow I want you to come into this room with bold ideas - if you think your idea is bold test it on some else around the place and if they are not truly shocked by it then don't bring it here".  "Right!"  They looked stunned like kids who are let out of school for no apparent or good reason.  "Oh one other thing, my bold idea is that we will win new business here because we understand our customer's customer"......  They stopped just before the door and then went off to ponder what the hell I was on about.

All day and into the night I spent huddled over reports - alarming reports - about how poorly they serviced their customer.  There was no saving grace in any of it. 

I walked into the room at 8.15am the next morning.  "Right listen up", they were chatting excitedly to each other, "I went through all the marketing, contractual, and service delivery information pertaining to our customer that I could find".  "It is truly sickening stuff to read!" they were all fully attentive now.   "So my big idea is we forget the past with this customer and start as if we are a new company - we have to win them from scratch with relevant and remarkable ideas".  They looked at each other in disbelief.  "Did I hear you correctly Richard?" asks Tony.  "Yes, now let's go round the room for your ideas if you will".  It took ten minutes and I let them go.

We had met for a total of around 15 minutes over the first two days and we had set the framework for a revolution within this business.

Bold ideas was what I asked for and bold ideas was what I got.  Today it is not me asking them for bold ideas it is their customer's customer.