Category Technology

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Incrementalism, exploration, exploitation

Apr 10, ’12 2:17 PM

A friend/colleague/friend tweeted this from an IBM ‘innovation discovery client briefing’, from IBM research in Switzerland: “Incrementalism is the enemy of innovation.” -Nick Negraponte

Which, ok, part of Negraponte’s gig is to go to things like an IBM innovation discovery client briefing. Sounds nice. But the other part of this is the actual assertion. Is incrementalism, in fact, the enemy of innovation?

At the level of what Negraponte is saying, his assertion is pure pap. Why? Because sometimes incrementalism is the enemy of innovation, and sometimes it isn’t. You don’t get to the bottom of the Mariana Trench by ignoring every innovation that came before you; sometimes you build on existing designs, and sometimes you think about new designs. His point is possibly closest to being something real if by incrementalism he means that any existing solution to a problem gains stakeholders who are tied to that solution; and then innovative solutions that dislodge those stakeholders are more difficult. It just depends so much more on what you’re talking about. To just be an evangelist for innovation is awesome for IBM meetings, but unhelpful for the rest of us.

I’m intensely interested in questions like these, and they dot (and sometimes define) the fields of organizations, political science, sociology, social movements, social studies of science and technology.

If we are talking about institutional change, then the answer to the innovation/incrementalism solution is a combination of: 1) Lis Clemens’ insight that institutional changes work best when they are wrapped in the language and form of existing institutions (that is, they are transformed, sometimes radically, via creep); and 2) Steve Barley’s insight that external shocks (‘technologies’ for him, in the broadest meaning of the term) disrupt existing patterns of behavior and meaning, and then those patterns are potentially and really reconstituted. That’s my answer, at least.

If we are talking about socio-technical change, I think the SCOT studies folks basically have it right, that a given technology creates relevant social groups, which rally around particular meanings and structures for that technology; which makes for interpretive flexibility; which creates theoretical closure around a particular solution that technology solves (what could have been many possible solutions is transformed into one solution and a bunch of solutions that ‘don’t work’). Depending on whether this is an open field, or a field with a dominant solution and some alternatives, or a couple/few/many dominant solutions, the dynamics will play out somewhat differently. But the underlying structure is the same.

In the marketplace for consumer products, the problem is a tricky one. Some have argued that Apple’s giant innovations are often innovations built on a surprisingly large amount of incremental improvement that only looks massively innovative in retrospect. This is where the best source for your money is James March’s argument about exploration vs. exploitation (seemingly ungated .pdf is here).

His argument is that organizations trade off between exploring new opportunities and exploiting existing ones. Via a simulation experiment, he argues that organizations ‘learn’ through their members (via creation of capabilities, routines, culture, knowledge management); and members learn through their organization (via socialization). But the more people just accept the organization’s way of doing things, the less likely the organization will see the world for what it is – endless exploitation means you are eventually in trouble.

What’s worse is that the payoff of exploration is highly uncertain and off into the future, so organizations tend to instead focus on reliability and exploitation, which is more proximate. Ultimately, in typically-quixotic fashion, March concludes that “the development of knowledge may depend on maintaining an influx of the naive and ignorant, and that competitive victory does not reliably go to the properly educated” (March 1991: 85). So ok, if this is what we mean in saying that incrementalism is the enemy of innovation, then perhaps I’m on board.

There’s an old talk by Paul Depodesta at a CSFB ‘thought leader’ conference which is also on the subject of disruption, innovation, and incrementalism – through the Moneyball-type transformation of the A’s. Totally worth looking at, if you are at all interested in these things.

And finally, a clip from the Moneyball film, which puts it so nicely.

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Paying for it

Jun 1, ’11 9:21 AM

Oliver Reichenstein’s take on ‘business class’ for news is really interesting. The working analogy is airline ticketing, distinguishing between coach and business class:

online news still doesn’t make enough money it seems. Some newspapers try to tackle the financial problem by erecting pay walls. “You want information? You pay!” But, as many have noted before, that’s a tough sell in a medium where information exists in overflow. The strategic problems with pay walls have been discussed back and forth:

  1. There is no information shortage online—if I can’t read this article, I’ll read another.
  2. Pay walls weaken the main attractor (content) of your site and complicates the user experience (login on different platforms). Some leave social media back doors for pro users, but that’s not a good long term strategy either, as more and more people are using social media to find content.
  3. Often pay walled news sites feature the same amount of marketing noise as free sites. Paying customers of course are more attractive clientele, but… Paying for news and then dealing with a silly blinking bonanza while reading doesn’t seem like a fair deal.

To be clear: content pay walls are not what we are suggesting. Remember, whether you fly Economy or Business: the result is the same (you travel from a to b), and only the experience differs. And likewise Business Class and Economy class seats on news sites should deliver the same content.

The idea of creating a business class for online news where is not about buying information, but buying better experience, it’s about service and customer experience. That’s right: Customer (paying), not user (free).

I like the idea, though it relies on the fact that the modal experience of flying really sucks. It reminds me of Erin Kissane’s awesome little book The Elements of Content Strategy, which Kieran turned me on to. Her description of content as being wrapped in layers after layer of annoying, sidetracking, distancing marketing is spot-on. And that we press on despite this is as surprising as, well, the fact that we continue to fly coach. Stripping this down, it’s something of a sad state when any client/consumer/customer experience devolves to a version of ‘crap’, for which a premium, better experience could be differentiated.

Nevertheless, this seems to be a new-ish model in the news/media/data space. The first is to institute some sort of paywall (WSJ, NYT, Financial Times, most proprietary library databases, New Yorker). The idea is to force users to pay for content. But as many people have commented, we live in an era of information glut rather than scarcity. And the web is social – walled gardens are necessarily going to be excluded from wider environments. Although I haven’t been active in a while on this blog, the fact is that I read the NYT less and link to it almost never in the post-paywall world.

The second model consists of organizations, and news organizations in particular, that have gone for ‘premium content.’ I mean, Glenn Beck gives his subscribers ‘behind the scenes’ content, and Bloomberg Professional has both (free) news and data feeds that have become a de facto part of the finance community. So you give subscribers additional content that they can choose to pay for. Kickstarter, it seems to me, employs a form of this. If the Ai Weiwei documentary gets funded, we can all see it. But donating more to the project gets you bonuses in the form of special access, special recognition, etc. Maybe I’m eliding multiple models contained in this one approach, but the idea is that there is addition rather than subtraction based on paying vs. not-paying.

The first-class vs. coach idea is slightly different. It assumes that content is universally ‘free’, but that users might pay a premium for a better user experience. Looking at the two NYT pages side-by-side, it certainly makes a cogent case for the user experience being more central to content than we normally credit. What’s interesting about content is that the wrapper matters more than in many other kinds of goods/services. This is not ‘just’ better packaging, like putting an Arby’s sandwich on china, but with content, the medium and message are tied so much more closely together.

Of course, there are already tools to extract the content wheat from the advertising chaff, as it were. Readability, Instapaper, and of course ad-blockers like Adblock all do the job of making your content easier to read. Some reformat the content for you, while others pull out the advertising from the websites you are browsing, leaving you just that sweet, sweet content. So ultimately, I’m still not sure that users would be willing to pay for something that they can already get for free. But I certainly like the attempt to innovate here.

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Organizational Jurisdiction, or Apple’s iPhone Breast Problem

Jan 31, ’11 11:14 AM

As a now-finished-with-breastfeeding friend noted to me, nobody knows what to do with breasts. What she means is that breasts – nursing breasts, actually – occupy a space in between OB/Gynecology and Pediatrics. This is immediately understood by any of the adult, childbearing, breastfeeding women in the contemporary Western world, and particularly by anyone who is diagnosed with thrush. Thrush is a yeast infection that moves back and forth between the baby’s mouth and the mother’s breast. Treat one, and it is re-infected by the other. So you need to treat both breast and baby simultaneously.

And this presents a problem. Show your OB your baby, and she’ll back away, nice and slowly, to prevent that crazy little thing from going off. Show your breasts to your pediatrician, and he’ll do the same.

Organizational jurisdiction is slightly different from the institutional jurisdiction that Carol Heimer talks about in her article on competing institutions (do yourself a favor and read that article some time. The chart on p. 35 is great).

I realized this most recently when I went to purchase an iPhone for my partner. I had bought one for myself a month back, and I wanted to add her phone (and her 847 area code) to my account. A family plan. Accomplishing this required: 1) a trip to the Apple retail store; 2) a call from Apple store to AT&T customer service; 3) a trip to the AT&T retail store; 4) a second trip to the AT&T retail store; 5) a second call to AT&T customer service; 6) a third trip to the AT&T retail store; 7) a second trip to the Apple retail store. Seriously, 7 different interactions, over the course of 3+ hours and 2 days.

Why? Because first of all, carrier and tech provider each do not know what the other does, and they compete for business. And second of all, because AT&T wireless has a system whereby individual accounts are linked to a geographic location. Trying to ‘combine’ two different geographic locations results in an error (e.g., linking two NYC and a Chicago area codes into one family plan).

As a result, the moron at the Apple store tells me that my wife has to change her cell number that she’s had for 10 years, because there is just nothing they can do. “And it happens to people every day.” He continues by telling me that the idiots at AT&T would do well to let Apple take over the whole business. Meanwhile, over at the AT&T store, the moron salesperson tells me that the idiots at Apple would be able to solve these kinds of problems if they would either learn the AT&T system or else just send customers directly to AT&T to begin with.

Interestingly, though, in this battle of morons, there are no winners, but AT&T actually is the bigger loser (Apple is close, because the smugness their employees exude when speaking about non-Apple stuff makes them a hair more insufferable than the always-defensive, never-experts at A&T).

Why is AT&T worse? Because their organizational jurisdiction is fractal – not only does the iPhone fall into the cracks, but their assignment of area codes across accounts also falls into the cracks. See, they have 2 breast problems.

I learned this when, finally, I realized that I needed to change my account type from a personal, geographic one, to a national business plan. Because national businesses can add whatever area codes they want to a single account. So really, I’m getting stuck over an internal, outdated dip switch internal to AT&T, that the people at Apple don’t know about. And that the people at AT&T also can’t figure out.

For those who like resolution, it went like this. Finally called the AT&T customer service number, explained my problem, and learned that I needed to speak to the NBI department (national business something). But there is no direct number to NBI. So you need to call Business Customer Care, and ask to be internally transferred to the NBI department. Once there, they can flip the dip switch on your account from MNY (geographic NYC) to NBI. And then, the people at the AT&T store can add two different area codes to the same family plan.

As a coda to this, when I asked the nice man in NBI why they didn’t just do away with geographic area code designations, in an era of mobile technology, he noted that this is indeed the direction AT&T wants to go. I then suggested as a starting point, that they make it possible for inbound calls to reach his department. He sheepishly replied that this might be a valid point.

The Apple store morons are still morons, because when I finally went back there to transfer my wife’s G1 Android phone contacts to her Apple iPhone, the supposed expert looked at the phone like he’d never seen any kind of Apple competitor phone in his life, and had no idea at all how to move the existing photos/files to the new phone. And no suggestions. It was something like, ‘huh, so that’s an Android phone. I don’t know how they work at all. All I have is this machine that transfers contacts, and I don’t really even know what cable to use. That G1 sure is poorly designed.’ Um, right.

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Lateral thinking and business intelligence, pt. 1

Jan 4, ’11 9:36 PM

If you have a couple of hours to spare, there are far worse things you can do than to watch the 10-part D&D extravaganza, Acquisitions Incorporated (pt one is here. First, it will raise your nerd cred so high you won’t ever be forgiven by your spouse/students/friends who ever thought that maybe, just maybe, you might be a little cool. Second, there is extra Will Wheaton awesomeness, including the line “Wheaton’s vicious cod-punch of furious anger.”

And third, you will see at least one fantasti-magical example of lateral thinking (in part 7.

The setup: the adventurers have found themselves on a nether plane. They discovered a semi-docile hell-cow, wandering about, chewing on some volcanic rock. The hell-cow delivered them to the mouth of a castle, where they spend their time attacking the baddies. One of the characters (Mike Krahulik, who does the art behind Penny Arcade), sees a minion running away with a chest of jewels. He initially thinks about trying to cast a spell to control the beast. But then he does something very different. Instead of casting a control spell on the beast, he decides to cast a prestidigitation spell on the minion running away, making him appear to be volcanic rock, hell-cow’s favorite food.

The description doesn’t do it justice. Take a watch from about 7:44 to about 11:38.

I’ve been thinking a lot about the prestidigitation play, it connects with some of my interests in automated trading, algorithms, and data mining. With regard to financial markets, as Felix Salmon reports, we are living in an computer-driven, algorithm world (“We may be able to slow it down, but we can never contain, control, or comprehend it. It’s the machines’ market now; we just trade in it”). But it is more than this, I think. Data-driven analysis, the strategy manifestation of quantification, is a force to be reckoned with.

But data-driven analysis can also be stupid. That is to say, data-driven analysis – what Hans Peter Luhn dubbed “business intelligence” in 1958 – has become more intelligence in the ‘fact gathering’ sense than intelligence in the lateral thinking sense.

This sets the context for speaking about this post on business intelligence and human-centric analysis, but as my brain power is working at 35% nowadays, I’m separating this into a couple/few posts before I can make a point.

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Dave Eggers, deep sea writing, and lemonade

Jan 3, ’11 6:39 AM

Two things about this old interview from March strike me as worth more attention. The first is the role of technology and its pernicious effects on long-form writing:

He thinks it’s possible that his huge appetite for work – for juggling a publishing company with philanthropy and writing – comes from a sense of how short life is. His parents were in their 50s when they died; his older sister, Beth, killed herself when she was 33. “Having lost people when they were young, you feel intimately acquainted with mortality, I guess. Though I procrastinate worse than anybody.” Writing is so hard. “I need eight hours to get maybe 20 minutes of work done. I had one of those yesterday: seven hours of self-loathing. I used to write in the middle of the night. I suppose I was surprised by the sedentary nature of writing: like, wow, most of this is sitting down and typing! So I used to add a bit of adventure by starting at midnight and working until five. That was excitement! But now I have two kids [he is married to the novelist Vendela Vida, with whom he wrote the screenplay for the Sam Mendes film, Away We Go; she also edits another of their projects, The Believer, a literary magazine]. So it’s bankers hours for me.”

At home, where he writes, he no longer has internet access. A four-month stint with wi-fi proved “deadly” for his productivity and having no access at all ensures that he is not tempted to “look at Kajagoogoo videos and old ads for Wrigley’s Spearmint Gum” on YouTube. “Writing is a deep-sea dive. You need hours just to get into it: down, down, down. If you’re called back to the surface every couple of minutes by an email, you can’t ever get back down. I have a great friend who became a Twitterer and he says he hasn’t written anything for a year.”

I’m in that distracted world now, but less because of technology and more because of a changed family situation. But still I like the imagery of a deep-sea dive. I have had the idea of a long-form article about the importance of creativity and lateral thinking in the emerging world of data-modeling and -mining. But every time I go to write it, I’m distracted by my RSS feed reader…

The second, more positive piece of the article comes a bit later, in talking about the 826 stores. We live down the block from the superhero supply shop (826 Brooklyn), and it’s pretty cool:

When Eggers and his team signed the lease at 826 Valencia Street in 2002, the landlord told them the building was zoned for retail; they could put their tutoring centre at the back but out front they would have to sell something. Eggers hit on the idea of pirate store. Not a kitschy place about pirates; a store for pirates. Every 826 now has a shop up front: they’re welcoming, the children love them and they raise funds (in Brooklyn, it’s a superhero supply store; in Boston, it’s a Bigfoot research centre).

I love the make lemonade element of this anecdote. The ability for some people to transform obstacles into opportunities is something I kind of suck at, but want to get better about. The turning of the tutor centers into a retail store with a secret tutoring back entrance makes my heart sing a little.

Comments (1)

Peter Levin – since 1995

Aug 27, ’10 3:20 PM

That’s right, man. I designed and built this site in 1995, and that baby is still up on the USC internet. And it probably will continue to be up there until the end of time.

Also, yes, that’s right, I did both the yellow circle image and the tight-roping stick figure. And the tiling, I remember being so happy about the marble tiling.

Finally, there’s an end-of-year picnic in West Wilshire park. It’s on May 4, 1996. Please RSVP.

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businesses & social networking

Aug 5, ’10 5:32 PM

After struggling with the internet over the course two decades for self-determination, businesses have decided that their best bet is to toss in (careful, that’s a .pdf) with Twitter and Facebook.
Yes, yes, we should outsource our communications with our customers to Twitter!
I mean, what could possibly go wrong? (that last one is a .pdf)

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dropbox

Aug 4, ’10 7:20 AM

I just want to let you know that if you are not using dropbox, you are making your life harder than it needs to be. This program has now saved my bacon at least thrice, and it is the most awesome kind of working cloud program – it is smart, so you can be dumb. Basically it just looks like a local drive, but manages and syncs your files across computers, on this crazy thing people are calling “the internet”!

If you let me know, and I refer you, they give me more space (yay!), which would be nice. But I don’t even care if you are referred or not, just go try it.

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my social media strategy

Aug 2, ’10 6:14 PM

Sure, this is more appropriate for my twitter account, but part of my social media strategy is to keep my Twitter followers under 15, and to post there only once a month or so…

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Performativ…stupidity, ATP Oil & Gas edition

Jul 22, ’10 9:36 AM

From Felix Salmon (whose blog is so good it makes me not want to write anything, just point a big finger at him) comes a story that pops up from time to time. Usually it is some kind of technical snafu, when a trader sits on the keyboard or accidentally keys in a sell rather than a buy order.

Though as a total aside, the recent May incident where P&G dumped 1/3 of its value, then rebounded (from $60 to $40 back to $60) in 4 1/2 minutes seems more complicated than an accidental trade. In fact, the joint SEC-CFTC report (that’s a .pdf) is something of a doozy:

The quantitative evidence presented above suggest that a confluence of economic events, market forces, and trading system functionality led to a significant dislocation of liquidity in the June 2010 E-mini S&P 500 futures contract sometime between 2:30 p.m. and 3:00 p.m. on May 6, 2010.

Prior to that time, a number of economic events and market developments led to a broad-based market desire to lessen risk exposures. This translated into a downward movement in prices across financial markets in conjunction with significant trading volume. At or about 2:30 p.m., the electronic limit order book in the E-mini S&P 500 futures market exhibited a significant imbalance of sell orders and buy orders. In the backdrop of declining prices, this imbalance appears to have contributed to a sudden liquidity dislocation despite increased trading volume. At approximately 2:45 p.m., several sell orders executed deep into the limit order book, which coincided with a significant loss of depth, triggering the Stop Logic functionality. The Stop Logic functionality in the E-mini S&P 500 contract has been triggered a number of times in the past few years, including several times during the financial crisis in the fall of 2008, when market conditions may have resembled those seen on May 6, 2010. Activation of the Stop Logic functionality on May 6, 2010, initiated a five second pause in trading in the E-mini S&P 500 futures contract. After the five second pause, the limit order book became more balanced, which is its typical state, and the price of the E-mini S&P 500 futures contract recovered.

This is being called the Flash Crash of May 6, 2010.

Anyhoozle, the ATP Oil & Gas Corporation. The analyst for JP Morgan who covers the company, named Joseph Allman (in case you want to know whose work you can’t trust down the road), calculated that the company would need $500 million in additional capital, more than its entire market capitalization. You can see what happened, on June 13, 2010:

That’s end of trading day Monday. On Thursday, JP Morgan put out a second note, as Salmon quotes: “In our July 13 note, we stated that it appeared that ATPG would need $500MM of external capital. This model corrects that error and reduces that need to $50MM.”

Oops.

The lessons Salmon draws are things like, yep, people read sell-side research and act on it, and yep, stocks are hella volatile nowadays, and you betcha, listening to sell-side research without doing your own homework is hazardous to your wealth.

To me, what’s amazing here is how time horizons are highly shortened, and market reflexes are hair-trigger, and trading technologies are tightly coupled. Add people, mix, and there will inevitably be periodic blowups.

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