Strategy

Attended what was so far the best Smart City conference I have been to yesterday, the "How Scary are Smart Cities" session put on by The Edge and hosted at Buro Happold in London. It was probably the best I've been to, firstly because The Edge curated an audience with a vastly increased number of rational people, from a large number of disciplines, rather than (in my experience of past conferences, anyway) a surfeit of cool-tech kool-aid drinkers and various socio-whatever dreamers all peddling their particular urban socio-utopias. Secondly, the sessions had a large amount of time for debate at breakout tables, which was very high quality (read: tended to sort the wheat from the chaff).

Now I am a technologist first and foremost, but I find some of the Smart City/Internet of Things techie-utopia thinking ("We can monitor everything! Yay!") dangerously naive. I think if Orwell ever wrote a prequel to 1984 it would show how the road to Big Brother was paved with well intentioned sensors by earnest "do no evil" geeks. As to the various blue-sky-with-pies-in utopias peddled, well it was ever thus. The rotting tombstones of all past future utopias litter every major city, yet still they come. As one speaker noted, Google "Smart City" and look at the Images that come up, and you will see one glaring ommission - people. At any rate, I thought this was the first conference I'd been to where I felt a "wisdom of crowds" effect started to emerge. Not that everyone agreed with each other - not by a long chalk - but the boundaries to the "art of the possible and desirable" began to emerge:

Anyway, here are my notes, my take-away themes, somewhat expurgated, about the art of the possible and the emerging boundaries that came out again and again:

1. What is "Sustainability" and how does "Smart" help this - Efficiency vs Resilience

- People tend to put into Smart and Sustainable what they want, too many conflicting objectives result
- City infrastructure is a longer cycle than party politics, economic boom/bust and tech cycles, causes du jour etc
- You can't predict what a city needs in 1, 2, 3, 10 generations - redundancy and resilience are far more sustainable than any current "sustainability" fads, which will all be different in 10 years
- Focussing on only carbon footprint reduction (one major "Smart city Utopia" trope du jour) can work against resilience
- There are layers of smartness - sewerage is smart, road safety is smart, hospitals are smart. Need to maintain existing ones as well as build new ones
- Dense (hive) cities are the most efficient, but that is not what most people want (Tower block utopias lie rotting in every city you care to mention)
- Proponents of various Smart New Things need to prove that they have a more workable plan than what is possible with a bit of technology augmentation to a "dumb city", that can achieve 80% of desired impact at 20% of costs (eg favela cable cars in Medilin, above)

2. Future Proofing is critical (a subset of Sustainability but worth looking at on its own, as it impacts how we think about Smart Technologies today)

- Humans spend a lot of time thinking about the future but we are very bad at actually predicting and anticipating it.
- Future proofing - must be built on open platforms, not proprietary technlogy
- It's not about IT and Technology - these platforms rest on earlier platforms, all must interwork
- Open spaces were the first open platforms
- Future proof by having simpler buildings, easy to reconfigure
- Must understand materials and design - long term sustainable rather than short term fashion, and easy to pull down and rebuild if we make blunders (example: glass tower architecture - very expensive to cool and heat)
- Need to be honest and cull "fashionable" new approaches that aren't working - eg private battery car service providers are setting up proprietary spaces in cities, reducing the commons space and reducing network effects of integrating all transport effects

3. Ordinary people must buy into "Smart" if is to succeed

- Too often what is deemed as worthy is very educated (Western) middle class view, not what ordinary people want. Smart is just the latest potential victim
- "Smart" technology already means the relationship between citizen and infrastructure is changing, harder to impose worthies' views
- Citizen initiated (and managed?) infrastructure
- People should own the smart city - innovation by the 95% not for the 95%
- User centred design key
- Most "smart" systems today are really irritating, do not model what people do properly

4. Huge Potential...

- Key is using technology to liberate human brain cycles, eg Open Innovation and peer production, but this attacks the professions so tends to be downplayed
- Major savings from co-ordinating currently un-linked services, self servicing of many things etc
- The case for the urban commons - lean thinking in space and time needed, space cannot have precise functions (aka multi-use), "non spaces" are becoming more important
- the "electric agora" as well as the physical one are driving collaboration, creativity etc

5. ...but we can't ignore the potential for Data Dystopia

- Data vs privacy huge nettle to grasp - widespread ignorance of data danger, even (especially?) among techies
- Very seductive - Informed and Lefty types all hate Amazon, Facebook surveillance etc - but all use it.
- Wide area surveillance drones, mashing Facebook to number plates, Visa can predict divorce with 90% accuracy etc. All possible, all useful, all risky
- Huge opportunities for behavioural data sucked off eg mobile phone (data often coming from war on terror technology and laws) - but huge implications for privacy invasion
- ICT does not have the capability of reflection, needs governance.
- Beware Siren calls for smart tech to be engaging, gamified etc - and drive behavioural change. Test first and long
- Too many of the Smart New Things have no smart planning - no tax, regulation, etc of these - could easily see mistakes of the past repeated
- Too many have naive views on "happy collaboration", also need to think about dealing with underhand citizens, criminals and cheats

6. Good Governance is the main factor in long term sucess

- You can take 2 cities of equal inputs - GDP, wealth, tech levels etc - and see huge differences in outcome just a few years later, never mind decades
- Large amount of local control tends to drive success of cities
- Level of financial control / tax revenue is a good proxy for local control, tells you about who has power and what the city can do
- Smart Cities will rely even more on good underlying infrastructure, sound laws, low corruption etc.
- Key is to make many people buy in (not just the "actives")
- Senses of Community and Trust are essential
- So challenge is to "create technology that increases trust and empathy"

There was a very useful concept of data being "translucent", and not transparent, to overcome the potential Data dystopia. But I think the best one line summary of these trends, for me, was by the participant who said he saw 2 main themes in the day:

1. Appropriateness - Smart technologies must be Appropriate technologies (there were various Schumacherian allusions during the day but to my mind this is an area of thought that really needs expanding on)
2. Appropriated - if the citizens fail to control the technology and its controllers, they most certainly will be.

Another thread that is useful to pull out is the emerging problem in the UK Cityscape for rest of the 2010s

- Although cities usually over perform vs. the country economically, in the UK this is only true for London as the UK ignores 2nd Tier cities
- countries (eg UK) that overinvest in the major city vs 2nd tier cities underperform overall
- Current UK politics drives conflicting objectives, gives impossible circles for City Halls to square, as the Future City must:

- drive economic development
- give everyone and equitable quality of life
- can't harm the environment
- And must be sustainable, resilient, affordable, equal, transparent etc etc

- But in UK, 80%+ of the City infrastructure has already been built, and much is old and expensive to maintain
- Digital Exclusion - reduced savings from Smart Tech unless all nearly can be be weaned off old systems, so how do we deal with the last 20%?
- And UK social spend is already not sustainable for legal welfare/social service obligations, never mind discretionary ones, so some very hard choices will have to be made soon
- All governments shy away from these hard choices, tend to wait until cliff appears. Cliff probably has appeared re benefits - people increasingly not supporting generous welfare, 60 to 23% over last c 2 decades
- Even so, UK will have to increase private sector finance as there is no more public sector money
- Need to blend state and market, need to have structures that allow entrepreneurs, Market, public sector stepping in where there is Market failure
- This is risky, interests are not aligned - so need good City governance - Not all these needs will self organise, not all needs will be profitable, not all suppliers will be trustworthy
- UK has to shift relationship between city and state, more decisions at city level

As one person summed it up, in the UK "smart technology is very likely to be mainly deployed to help us pick our way through our crumbling infrastructure"

To start at the beginning - the backstory here is best covered by the Huffington Post, which also helpfully points to all the other stories covering it on the Web (the backstory to the backstory is best covered here, on Jezebel):

British newspaper The Observer found itself embroiled in controversy on Monday after it was forced to withdraw an incendiary op-ed about transgender people. The piece, [in the "Comment is Free" section] by controversial British commentator Julie Burchill, was titled "Transsexuals should cut it out." It was an attempted defense of Burchill's friend Suzanne Moore, who had aroused the ire of some by making a crack about "Brazilian transsexuals" in a column. But Moore could hardly have asked for a worse defense.

Burchill heaped on piles of bile, calling transgender people "screaming mimis", "bed-wetters in bad wigs" and "dicks in chicks' clothing," among other choice phrases. The trans community exploded with anger. A government minister called it "bigoted vomit."

And that was just the tip of it (follow the links for the rest)!

But that wasn't what interested me - Burchill is well known for her "controversial" approach (Belle de Jour more forthrightly called her a troll journalist), so that was all very predictable. No, what is interesting is what was going on behind this story.

The Observer is a Sunday paper that is owned by the Guardian Media group, which also owns the Guardian daily newspaper and the Media Guardian website. The company chose to put the article online onto said overall Guardian website, where the firestorm really kicked off - to quote said Guardian:

The online version of Burchill's column had attracted several thousands comments by Monday lunchtime, with the majority opposing the writer, while the argument on Twitter raged for and against her.

Never mind Monday lunchtime, there were about a thousand (mainly very angry) comments by Sunday lunchtime, and petitions were already being raised, polls being put up, complaint forms being syndicated all Sunday afternoon....and to say that the Twitter argument raged "for and against her" is somewhat disingenuous, on Twitter too (and every single poll going) the vast majority of people opposed the article, vehemently, from the get-go.

So, the key question is "why even put it online, and then, given the firestorm, why keep it there? The reason, (eventually) given by the Observer's editor late on Monday afternoon, was that it was all a huge misjudgement. But does this argument pass muster?

It didn't take more than a cursory read, even by a comparative editorial amateur like me, to see that the article was wildly over the top, was going to be massively offensive to far more than just the trans-gender community, and so soon into the Leveson Age to boot. Maybe I'm a bit more online savvy and could do something they couldn't, ie work out that online it would be seen by far more people than a few grumpy Observer readers - but I doubt it. Yet they still pasted it up online.

And then, when the complaints started pouring in on Sunday, It didn't take a genius to realise this was going to "trend" on Twitter, and for very negative reasons. Yet on Sunday the Guardian newspaper's Editor kept on repeating "it's not us, honest, it's those Observer people" and they still didn't take it down, despite said Guardian Editor also being a member of the board of Guardian News and Media, of the main board of the Guardian Media Group and of the Scott Trust, which owns The Guardian and The Observer,. I also doubt it was technically impossible to take it down, so there was either indecision, or a decision to leave it up on Sunday. (And those Observer people stayed under the radar all Sunday - odd that, for an entire organisation full of Journos who normally live their lives on Twitter, you would think).

And up it stayed all Monday, before finally being taken down in the late afternoon.

So, in effect a very respectable newspaper has played the sort of card that said well respected newspapers usually look down their noses at the more excitable blogs for playing, ie to "say or write deliberately provocative things in order to attract attention* " (to quote Belle du Jour again). Now why else, apart from misjudgement and indecison by some normally very media savvy and usually very decisive people, might one do such a thing, I hear you ask?

One other hypothesis that fits the facts as to why they left it up was to go for the hitz - the traffic spike must have been immense. The other possible hypothesis, that they were unable to take it down technically before Monday evening, is unlikely - there is no way that the Guardian website is left un-managed all Sunday, never mind all Monday - I'd bet real money that it could have been taken down at a few moment's notice, at worst within hours of the complaints rolling in.

Thus the really, really interesting question is this one - what is the cost/benefit analysis on playing for the hits, no matter how objectionable the content? Will the hits be seen to have been worth it in this case? In other words, even if done by misjudgement this time round, does this tactic pay, even for "respectable" online media?

If it was considered to be a success (under Wilde's Law, there is no such thing as bad publicity) we can probably expect a lot more "Controversial Op-Ed* "-as-journalism, even from "respectable" organs.

And if so, how long before they lose that respect, and - ultimately - does respect actually pay the bills? On that question hinges the future of the respected traditiional media.

Watch this space......

Interestingly, after it was pulled down, it has upset all the Free Speech-at-any-cost advocates too - so is this a dose of bad karma, or is more bad publicity a Wilde's Law second bite at the cherry?

(Personally I'm not sure it could have stayed up, as far as I can see quite a bit of it contravenes a bunch of the UK's laws - they would never have got away with this article if it was slating race, religion or (non-trans) gender, and I think it possibly could also get pursued under the incitement to hatred laws too - we shall see what happens to the Observer newspaper piece, which cannot be pulled down.)

Update - the Torygraph, arch-ideological enemy to the Guardian, has now republished the whole thing over here - all in the interests of Free Speech, you understand. Perish the thought that Trollonomics came into it

*aka "trolling"

London's Tuttle Club has relocated to the Royal Festival Hall, and as (for the first time in a few years) I wasn't busy on Friday morning I went along for the traditional coffee and off-the-wall conversation. And, as it always does at Tuttle, the conversation touched on many things very quickly - it went from integrating quadcopters, to virtual museums, to wearable computing. There was a general sense that (as there is with robotics) the size/cost/reliability of the sorts of componenents that go into wearable computing are now at the level that makes them almost feasible as an early mass market product - in fact, as Helen Keegan has noted, it may be becoming the New Black.

The problem, as always, is where to put everythng you need (for e.g. where do you put the power source for those powerful AR-glasses, as Helen and I were discussing) and how would you connect it reliably, so that - even with plenty of wear and tear - it continues to stay reliably connected. The answer is that ideally you need a single garment that can carry everything in it, like a large coat. But a coat is not always wearable, and neither can it easily carry the head to toe wires and sensors you will need for the Completely Quantified Self

After a bit more coffee and consideration, the answer was clear - the Onesie (above)

A garment that is a single integrated structure, so the computing systems could literally be woven into it, that can be worn 24x7, and is appropriate and welcome anywhere (as you can see clearly see above)....you just know that in The Future, we will all be wearing Onesies*

(For those of you who hoped Near Future fashions would be more like Logan's Run, this is going to come as a something of a shock....)

*And we will definitely need those powerful Alternative Reality glasses to project better clothing images onto their neutral bright blue and green Onesies

With the deflation of the Social Media bubble, people have been asking us where the next bubble is going to be. One that is starting to froth is the "Makers" movement - ever since Chris Anderson's latest book, Makers*, the area has been rocketing up our Bubblewatch, overtaking Internet of Things and Quantified Self. The claims for this area are becoming truly hyperbolic - Chris Anderson in the Grauniad recently:

The nascent Maker movement offers a path to reboot manufacturing – not by returning to the giant factories of old, with their armies of employees, but by creating a new kind of manufacturing economy, one shaped more like the web itself: bottom-up, broadly distributed, and highly entrepreneurial. The image of a few smart people changing the world with little more than an internet connection and an idea increasingly describes manufacturing of the future, too.

It's almost a cliche that anyone with a sufficiently good software idea can create a fabulously successful company on the web. That's because there are practically no barriers preventing entry to entrepreneurship online: if you've got a laptop and a credit card, you're in business. Manufacturing has traditionally been regarded as something else entirely. But over the past few years, something remarkable has begun to happen. The process of making physical stuff has started to look more like the process of making digital stuff.

The problem with a "new kind of manufacturing, shaped more like the web" is that manufacturing "stuff" is a different game entirely, with very different economics in key areas that makes it very very different to Web software. Manufacturing economics is very well understood by those in manufacturing, but sadly seems to have been largely ignored by the prophets of this New New Thing. The key factors to keep in mind are the following:

- Raw Materials - cost money, and have lead times. There is nothing in Webworld like them
- Cost of production of product Numbers 2 to 2 billion is not zero. Its not like software, where a copy is just a "Save As" away. Making something takes large amounts of labour, material, machines, consumables, square footage and energy.
- Machinery and Methods - these vary hugely depending on the size, materials, complexity - and most critically, the volume required
- Stock (or Inventory, if you are American). You don't just press a button and off it goes over t'InterWebz. Ships, Trucks, Roads, Warehouses, Stores etc al are required to shift it from Maker to User

Now to be sure, some of the above applies to ICT products, but it is nothing like the scale of capital required and complexity in manufacturing systems.

To demonstrate, let me look at one example of the Maker Revolution, as it is the one that it is obligatory to quote - the 3D Printer. This is going to revolutionise manufacturing, apparently, by allowing grass roots Makers to produce their own stuff in the Rich West, so no longer do we have to buy mass produced goods from China and India et al.

Lets get very boring and look at the basics of production economics though. Firstly, the good old Product - Process matrix:



What this says is that the more commoditised an item is, the less you are able to price for value, and it is increasingly about lowest cost - which inevitably means mass production techniques, and it is always cheaper to run dedicated equipment flat out in lowest cost economies to make commodities. It also has a corollary - in order to make beautifully crafted or highly personalised artisanal work, you have to be able to charge added value prices to pay for the added costs. But there are limits to how many people will buy the high value (read: up-market) goods and how much they will pay.

So the Product/Process matrix predicts that 3D Printed goods will mainly be low volume, fairly high value goods. Value, of course, does not just mean "above average quality" - people will pay more for the item being available, here, now - or even just available. But there have always been two ways of ensuring something is "here, now" - to wit:

- "Make it here", and
- "Buy it in and stock it here"

The interplay here is between the cost differences of making it here via this 3D process, vs the cost of buying something made far more cheaply elsewhere and keeping it in stock, over here. This is an interplay between the higher cost of production here, vs higher costs of shipping something cheaper from elsewhere and storing it here. Suffice to say that the hollowing out of UK (and US) manufacturing from the 1990's onwards has been due to the costs of "importing and storing" being better than the cost of "making it here". Attractive though the idea of "low cost craftsmen" is, 3D printing is not per se a cheaper way of making something if you look at it as "just another producton device" - i.e. look at it in terms of it's setup time, run time per unit, % downtime, scrap levels - all that boring old fashioned Industrial Engineering stuff the new groovers hatez. It becomes clear then that the labour used has not got any cheaper, unless 3D printing shops are to rely on Freeconomic labour like Open Source (or Music) does these days, ie doing it for free while working or claiming benefits on someone else's ticket. These machines are no more reliable than any others (probably less as they are both early day machines and also very flexible) so will waste (expensive) labour in setup, downtime and maintenance, they will still need to sit in (expensive) real estate (it's not clear there is any great space saving either) and they will still consume (expensive, not bought in bulk) raw materials. The argument that 3D printers use less raw material only applies if you assume either that (i) material cost is a significant component of cost or (ii) your low cost competitor will not use the same 3D printers where appropriate, with their lower labour, land, and overhead costs, and not buy materials in bulk.

In other words, its not a slam dunk that just making it "here" vs "there" will yield an automatic advantage. Just ask the hundreds of British and US manufacturers who have gone to the wall in the last 20 years, or replaced in-country manufacture with out-country imports.

Then there is the "good enoughs" to deal with - you can lovingly craft a 3D printout of that item, but if I can make a "different-but-does-the same-job" similar item using different materials, and if mine is way cheaper for no discernable reduction in utility, I win.

The other challenge 3D printing has is that it is limited to one manufacturing process - deposition and (for metals) follow on sintering (now renamed as "additive manufacturing", I note...) - and currently only a small selection of plastics, resins and sintered metal powders are usable in 3D printing. Many products are made in other ways, of other materials, or of composite materials. Even products potentially made by these 3D materials may need to have them treated in different ways (for example, it is not enough to be able to make an aircraft turbine blade shape, as in this Economist article - you also have to be able to get the correct properties of the titanium for jet blade use, from pre and post working the metal. You do not want a turbine blade coming unstuck in midflight because a 3D printer-layered metal lattice does not have the strength of a properly formed one.

So in summary, yes, 3D Printing is a fascinating new technology, and will be highly effective in certain niches, and will surely get better over time - but it is not going to facilitate a "second industrial revolution" anytime soon, if ever - there is a vast arena of manufacturing processes it cannot do, materials it cannot work, and products it cannot make. There will remain a vast number of products it can make, but that can be made better/cheaper/faster in another way or place. My bet is the biggest medium term sales will be in areas where its damn difficult to get essential spare parts, for artisanal "uniques" where user involvement in design is a huge part of the value proposition, and in large manufacturing plants who will use some 3D printers as flexible and/or prototyping capacity (as with other CNC machines, the minute something is worth making in volume, you set up a dedicated production system of simpler and cheaper gear).

What is far more likely to facilitate any "second industrial revolution" is the increasing cost of "cheap" labour in those offshore countries, so the economics of making it in China plus long shipping lead times and logistics costs - ships, trucks and sheds - plus teaching your competitors how to copy your stuff, starts looking a lot worse an option than bringing it back home. That is what is driving the current "re-shoring" dynamic. And smart OECD States or regions may perhaps start looking at creating "bring it home" incentives in these straightened times....

*Anderson, you may remember, also proseletysed the Freeconomics concept, which we debunked. 3D Printing, like Freeconomics, is something with limited applicability and only works in certain environments, not a new paradigm shift. It is interesting to note that he has moved from editing Wired to making DiY Drones. I happen to think that is going to be a growth industry, but I would argue that it has little to do with new "Maker" style manufacturing economics and everything to do with mass production of cheap, small and light motors, batteries, GPS and other computing systems, which enable the "Internet of Flying Things", as we have discussed before.

Update - actually, DiY Drones are a good illustration of the limitations of the 3D printer and "maker" logic. There is very little on a Drone you would print rather than use another process, and many of its components need significant assembly as well (eg a motor or a PCB card), and they would cost a fortune to make as one-offs. A Drone also has a significant final assembly cost. Anderson's compamy is seling to the early adopter enthusiast today, who is selling his or her time for free to do the drone building - but I'd bet if this takes off - - they will be going for bulk manufacture and assembly of kits in low wage countries.

When I was younger, Michael Porter's books on strategy were seen as The Last Word. Now it would seem that his consulting company, Monitor, has gone under. Does this count as "the end of Porterism" - Forbes

Was Monitor’s demise something that happened unexpectedly like a bolt from the blue? Well, not exactly. The death spiral has been going on for some time. In 2008, Monitor’s consulting work slowed dramatically during the financial crisis. In 2009, the firm’s partners had to advance $4.5 million to the company and pass on $20 million in bonuses. Then Monitor borrowed a further $51 million from private equity firm, Caltius Capital Management. Beginning in September 2012, the company was unable to pay monthly rent on its Cambridge, Mass., headquarters. In November 2012, Monitor also missed an interest payment to Caltius, putting the notes in default and driving the firm into bankruptcy.

2008 was a tough year for consultancies, from small ones to very big ones, so this is not as surprising as it may seem, the ones with big fixed overheads really struggled (my main project a year later was to turn one around - succesfully, I may add - but we learned all about the carnage at some other fairly well known names, and a lot of boutiques folded). But the article's gist is that in essence Porter's strategic solution relied on creating unbreachable barriers to entry rather than making stuff people actually wanted to buy, and therein lay the seeds of the demise of Porterism as:

(i) High Barriers to entry cannot protect you forever if you make crap products and/or services that no one wants to buy

(ii) This is especially true if Globalisation creates new, better competitors you didn't expect and...

(iii) The internet rips up many of those carefully created barriers to entry

In short, Porterism only works in the narrow confines of a national, internet-less corporate environment in the 1960's/70's in which it was bred - but by then it had gathered intellectual steam, even though the basic underlying assumptions were shifting. Forbes again:

There was just one snag. What was the intellectual basis of this now vast enterprise of locating sustainable competitive advantage? As [Matthew} Stewart notes, it was “lacking any foundation in fact or logic.” Except where generated by government regulation, sustainable competitive advantage simply doesn’t exist.

Porter might have pursued sustainable business models. Or he might have pursued ways to achieve above-average profits. But sustainable above-average profits that can be deduced from the structure of the sector? Here we are in the realm of unicorns and phlogiston. Ironically, like the search for Holy Grail, the fact that the goal is so mysterious and elusive ironically drove executives onward to continue the quest.

Hype, spin, impenetrable prose and abstruse mathematics, along with talk of “rigorous analysis”, “tough-minded decisions” and “hard choices” all combined to hide the fact that there was no evidence that sustainable competitive advantage could be created in advance by studying the structure of an industry.

But in my observation, the problem of all companies that have found a golden goose, is that it is always very hard to kill it off and eat it when the eggs it lays are no longer fresh. In short, Monitor did not change its approach as fast as the market was moving.

It is only recently that Porter’s writing has begun to include any awareness that creating safe havens for businesses with unending above average profits protected by structural barriers is not good for customers and society, with his advocacy of shared value. This recognition has come, however, without yet jettisoning any of the toxic baggage of sustainable competitive advantage.

So after a while their customers deserted them.

Monitor wasn’t killed by any of the five forces of competitive rivalry. Ultimately what killed Monitor was the fact that its customers were no longer willing to buy what Monitor was selling. Monitor was crushed by the single dominant force in today’s marketplace: the customer.

There is no doubt validity in the above, plus the actual Consulting market is itself being disrupted, but my experience of turning companies around would tell me that yes, this is probably all true, but its all a medium term game. I'd be prepared to bet there was also something far more prosaic going on - costs crept up and fat crept in, and they were unable (or unwilling - I can imagine there were loads of "next year will be better again" platitudes until far too late) to structurally reduce them quickly enough after 2008/9.

Both the FT and the Grauniad have opined, dewy eyed, on the stupendous lessons for future successful management from the Olympics. The Grauniad's effort is entitles "Olympics: the key to our success can rebuild Britain's economy" and has its core thesis is that success is a mix of infrastructure investment and private elan, that of course the Grauniad's oppoenents (the Conservatives) don't understand this:

...we need to sustain these principles so they become structurally and culturally embedded for continuing Olympic success, but they should also be applied elsewhere. The problem is that they are born of an ideological hybrid that wrong-foots our political class. They are mostly rooted in liberal social democratic values that understand the importance of public investment, public organisation and institution-building. But they also involve an unashamed recognition that in the end individual application, resolve and will to win are indispensable.

David Cameron and London mayor Boris Johnson are happy to celebrate the element that is rooted in competition, elitism and individual effort. But they flounder the instant the conversation moves to the role of public investment and the necessity of understanding and sustaining our unique sport ecosystem, just as nearly every Labour politician flounders the other way round.

Now the Grauniad is fairly left of UK centre, but the FT is ver "small c" (and probably large) conservative to a T (or "C") but it too thinks amazing lessons can be learned (I'm not allowed to cut and paste what they say, as the T&C's are "Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights").

Anyway, they too waxed lyrical on the Legacy, and the benefits of running with large numbers of (lowly paid) volunteers, and that Vancouver got improved transportation, more affordable housing, and top notch athletic facilities. But, we got Zil lanes, people thrown out of their flats by landlords, and the unedifying spectacle of 2 football clubs scrapping over what bargain basement price the "top notch athletic facilities" would be flogged off for afterwards.

Now don't get me wrong - the London Olympics were a superb example of a very complex project, delivered to a very high quality, brought in on time. And the Team GB athletes performed superbly, and the Volunteer Army were superb, and won everyone's hearts. But it was certainly not on budget (even with all those near-free Volunteers) - that went up from c £4bn to c £12bn - so you'd kind of expect the delivery quality would be Rolls Royce class! And, what we also got was gold medal quality finessing of commercial greed, and there are some very searching questions that need to be asked about the ticketing, the pricing, the giveaways to commercial sponsors, the pursuit of perfectly innocent people on trademark etc infringement, and changes made to British laws to make this happen. However, they probably won't ever happen because the Olympics comes around once every 2 generations or so, so all lessons will be forgotten - and Britain had a very good Games, so it will likely all be brushed under the carpet in the carefully cultivated ensuing euphoria.

So, for the truly ambitious manager of Machiavellian mind on the make, we leave this post to posterity to ensure that the real Olympic lessons of success are not lost - and without further ado, here they are:


THE 10 REAL MANAGEMENT LESSONS FROM THE OLYMPIC GAMES

1. Massively underestimate the costs of your project

2. Massively overstate the benefits of your project

3. Get VIP/Celebrity support in early - the Chatterati will then write reams of breathless copy, and the few sceptics are drowned out

4. Find a sponsor with Very Deep Pockets (a national Government, say) and then ensure that their reputation is on the line, so if anything goes wrong it is their problem. From now on you can't lose - and can overspend till the cows come home.

5. Use free or cheap labour wherever possible, and fire them up to believe they are involved in a great enterprise. Bonus points if you can make them pay to work.

6. Ensure that your Commercial Sponsors can privatise their profits while your large backer can tax their citizens to make all the huge losses public

7. Give those Commercial Sponsors the keys to the kingdom in terms of enforcement of commercial privileges. Close parish magazines, sue mom and pop bakeries, trademark 1000 year old words in the English language - all good stuff

8. When the huuuuuge overspend becomes public, argue that it would have been even bigger, but for the heroic efforts of The Brave Management

9. Scalp the paying punter - create artificial shortages that increase desperation and inflate access prices in all ways you can.

10. Fireworks. LOTS of Fireworks. And lots of celebrities, and feelgood about ourself stuff - so everyone goes Yay, Paaaarty and completely forgets about points 1 to 9

Here endeth the Lesson. See you in Rio

(Update: Matt Schofield points out Lesson 11: Win way more golds than expected. Success has a thousand fathers....)

Yes, we told you it would crash, in June 2011.

I twt'd this on Friday:

"the Groupon biz model is to use Other People's Money to grab eyeballs, then IPO the f*cker before it comes crashing down - Dotcom II"

And then worse came out the woodwork with their filing. Seems they are technically insolvent and the bigger they get, the more they lose, along with the fact that later investors were paying for earlier investors' exits, and the IPO will no doubt pay for the current investors' exits. Greater Fool Theory in full technicolour! (In fact some have been more direct, calling it a Ponzi scheme)

We can only apologise to the readers of our Bubblewatch series, in that we never predicted an attempt to IPO a Greater Fool Theory dotcom business before the big one had gone out. Move the notch up one (see chart above). DotCom II is nearly here now....But a whole bunch of dumb pension funds will invest - with your money. And This Time It Is Different, as everyone seemed to arguing at D9.

Of course it is...........

There is nothing wrong intrinsically with an online coupon business, there was something seriously wrong with one at that starting valuation.

But the reason we are not writing this blog from our own Caribbean island is that its a lot harder to predict exactly When.

An interesting argument that scientific innovation is probably linear, and certainly not exponential - Cogntive Social Web:

The resources that we devote to science have been exploding throughout history. The world population of scientists has been doubling roughly every 50 years from 1500 to 1900 [4], and has kept an exponential rate throughout the 20th century also, by what seems to be a factor of 10 every 50 years [5] (it is however unclear whether that growth is still being sustained now [5], and even if still exponential the rate has evidently gotten slower). Likewise the number of papers and patents has followed exponential growth during the past century, unsurprisingly since average paper count per scientist is unlikely to change significantly.

Besides available researcher brains, the computing resources available to science have followed exponential growth as well (Moore’s law) in the past 50 years.

Furthermore, each new scientific discovery accelerates the pace of science to some extent, because it gives future researcher a better understanding of the field considered, as well as new tools to work with. That’s “accelerating returns”. You get to stand on the shoulders of giants.

The author also found (as we did when we looked at it) that it waxes - and wanes

And yet despite all this, if you look at the actual understanding of the world that we have achieved, if you look at real impact rather mere volume, the general impression you get is that scientific progress has really been linear. We didn’t “get” physics 50 times better in 1990 compared to 1940. The 1940-1990 progress of physics might even have been slightly less significant than the 1890-1940 one, actually. is

Even in a new, ultra-fast growing field such as computer science, most of the state of the art algorithms currently around date back from the 60s and 70s. Our computers may be 10^6 faster now than in 1960, but our knowledge is only a few times broader, our algorithm libraries only a few times better. Likewise neuroscience and AI have followed slow, noticeably linear growth since the 50s.

The question is why is this happening. .... view is its all about the peanut butter, the increasing friction in any system as it grows:

A widely-noticed empirical fact about science is that within a given field, making an impact is getting exponentially more difficult over time. Just look: the big discoveries in quantum physics had all been reaped by 1930. Most of what could be said in Newtonian physics had been said by Newton himself. Information Theory researchers will never surpass in impact the single 1948 paper that founded their field, no matter how long and fruitful their career. The list could go on.

In essence, the argument is that the first people into a new field grab all the low hanging fruit, ie the good old Pareto Principle is at work. So, as exponentially more people come in it gets exponentially harder to find, leading to a near-linear advance going forward.

So what about the rate of increase of New Fields? The author talks about these as "Paradigm Shifts" that open up the new field:

....in real life the paradigms on which scientific fields get founded tend to evolve over time, which means that the set of available discoveries that researchers can “chose from” will tend to expand over time. Paradigm shifts increase the scope of research that can be done. For instance, inventing transistors opened up the entirely new field of what to do with them. Or coming up with the basics of quantum physics. And so on.

I’d like to argue that these paradigm shifts can be modeled using the exact same model that I used for discovery. Yay for recursive models! We start with a finite pool of possible paradigm shifts, we devote exponentially increasing resources to finding them (“resources” meaning “researchers”, since each researcher tries a little to find out-of-the box ideas), and what happens is that 1) shift volume explodes over time, like papers published did earlier, because they’re a linear function of resources, and 2), the real impact at large of each shift decreases exponentially. Resulting in a linear growth of shift impact… which means in turn that the pool of available potential scientific discoveries increases merely linearly.

What interested me is that he built mathematical models of both the rate of new innovations in a field (as you'd expect, it yielded a power law of decreasing rate of returns), and of paradignm shifts. The Paradigm Shift was what really interested me (see graph at top) as it described exacly what my research showed, ie we advance by pushes forward, then pauses. I usually describe it as layers of S curves (S curves are the running totals of power law curves), so the linear model is interesting.

Anyway, for all the ambitious New Scientists and Innovators among you....

(i) Science advances linearly given exploding resources, and thus its pace will slow down in the future as the resources that we devote to it dwindle. Keep that in mind when choosing a field.

(ii) A piece of advice: as a researcher, you’ve got to work at the 2nd level of discovery, the paradigm level, because it’s so much more impact-efficient. Don’t devote your energy to discovering tiny new things within the old paradigm you inherited from your thesis advisor, rather discover broad news ideas entirely. Be imaginative.

(iii) Do not rely solely on your intelligence and hard work to make an impact on this world, or even luck, it’s not going to work. After all the total quantity of intelligence and hard work available around is millionfold what you can provide —you’re just a drop of water in the ocean. Rather use your imagination, the one thing that makes you a beautiful unique snowflake. Intelligence and hard work should be merely at the service of our imagination. Think outside of the box.

Caveat - as the author writes, "this is not a paper and I don’t have time for this. Take my model for what it’s worth: as something you’ve read on a random blog. If you’ve got a comment, or want to prove me wrong, be sure to post here or send me an email at francois.chollet@wysp.ws!"

But often a model like this is worth a million words.

Interesting article in the NYT "Bits" section about Facebook having an inside track on emerging trends:

When the company saw a staggering spike of Instagram photos flowing into Facebook, it knew it had to act quickly. It bought the photo service for $1 billion before Twitter or Google could make a move.

Facebook can also use its superpower to experiment with who wins and who loses online. This was evident on April 24 when Facebook started highlighting a number of apps, including Socialcam and Viddy, both new video-sharing services that had been growing modestly. Each had a few million users. Just one week after Facebook began highlighting these apps, Viddy and Socialcam had close to 20 million active users.

Now this looks partly like an "honest, it isn't a bubbletime thing" justification of the Instagram purchase, but it is true that Facebook will see emerging trends on its ecosystem first, and to an extent can drive success:

Facebook has so much power online that they have the ability to buy something at a low price and then make it go high by directing traffic accordingly,” said Jonathan Zittrain, a professor at Harvard Law School and a co-founder of the Berkman Center for Internet and Society. “Sociologically, this is called the Matthew effect, where the rich get richer and the poor get poorer.” (He notes that the term comes from a line in the Gospel of Matthew.) In other words, Facebook can create its future.

But that is true of Google search as well, so no doubt we will soon have an army of white and black (and other colour) hatted Facebook Engine Optimisers. But, as Google found, with great power comes great legislative probing:

Facebook may need to worry that competitors don’t see evidence that it uses its power unfairly. Eric Talley, a law professor at the University of California, Berkeley, said that although Facebook could be accused of market manipulation or anticompetitive practices, the company could defend itself by saying that others monitored the same data and that Facebook simply did the job better.

He said that Facebook might also have to worry that if it highlights content from companies it owns, it could face antitrust claims with the Doctrine of Tying.

Also, I think there is something that the article didn't cover - by definition, Facebook sees the world through a Facebook coloured lens. And just as a google coloured lens didn't (and still can't) clearly see social networking, a Facebook coloured lens won't see the New new things that do not use a Facebook style ecosystem.

A few years ago we collaborated in a piece of work for NESTA on the extraordinary innovation that US companies formed in the Depression showed. It seems that being born and surviving in that cauldron gave them an extraordinary resilience. Hewlett Packard (HP) was one of them, and was mentioned (along with quite a few of the other Depression era companies) in the 1982 book In Search of Excellence. Sadly along with many others, inclusion in that book was a sort of death knell.

HP has had a tough last 15 years or so, and has had a succession of unfortunate CEO choices. Now its just been confirmed that Meg Whitman (ex eBay) is the new CEO - AllThingsD:

The board of HP, which has had its own series of blunders in recent years, is hoping Whitman can help turn that around, especially as its competitors — such as Oracle, IBM and others — increase the pressure.

Whitman herself will need a lot of help. She has had a successful career in the consumer Internet space, but has little experience in enterprise and hardware, which are at the heart of HP’s big businesses. Among the most immediate issues to deal with: Coming up with a clear strategic plan; reevaluating Apotheker’s move to spin off its consumer PC business and shutter its webOS device development; reassuring rattled employees and restoring morale; and, most of all, calming disgruntled shareholders and getting the stock moving in an upward direction.

Other than that, Mrs. Whitman…

Good luck....she will certainly need it! Will this end a run of unfortunate CE choices? I'm not particulalrly optimistic as apart from her (in)experience in this space, this is a long mismanagede company in a decining industry, to pull out of and it seems to me that the HP board - which surely must be seen by now as a major liability - is still in situ. Still, if a biscuit hustler* could pull IBM around, there is hope for HP.

*I haven't done any research on this, but I wonder if there is a higher success rate for bringing in CEOs from outsuide the industry - I have certainly found it works well at middle and senior management level.