Explaining Disruptive Innovation and asking the question about its relevance in our markets.

I had a great weekend and got a lot done for once. I’m still writing up the show report from my visit to the UK, but the week’s events turned my attention to a different topic.

On to the update.

Disruption Theory

Since the death of Clayton Christensen, I’ve been spending a little time looking over his works and particularly the theory of disruption, or Disruptive Innovation. The theory describes a repeatable mechanism whereby small newcomers to a market provide a good-enough product or service, often cheaper, that gains initial traction, enticing those same users away from the incumbent. As time passes the improvements to those less-costly products and services develop to rival the large corporations’ offerings such that the corporation can no longer compete, thereby forcing the incumbent to search higher up the market. This cycle often repeats itself, with the disruptor eventually being disrupted itself.

To explain the theory better, let’s look at a couple of examples; Mills in the Steel Industry and Uber.

Steel Mills

Christensen goes into much more detail in his book The Innovator’s Solution (recommended read), but the basic premise is that large-scale integrated Steel Mills were forced to look up to the higher-end of the market to continue to make the profits and achieve the growth required when faced with the low-end disruption provided by small-scale minimills.

Until that point, large steel mills were the suppliers of most of the world’s steel in installations that reacted the ingredients (ore, coke and limestone) in large blast furnaces. A process that was first industrialised not too far from my place of birth in 1709 by Abraham Darby, birthing the industrial revolution. The fact that mills cost enormous sums of money to build kept competition at bay. Minimills melted scrap metal in electric furnaces and can produce steel 20% cheaper than traditional mills. Minimills attacked the notoriously competitive rebar market, something the large mills left alone due to the decreasing margins. By producing steel at a 20% cheaper cost, the minimills’ margins were attractive compared to the large mills. As the margins plummeted in the rebar market, minimills moved up the stack to attack what was the large mills’ domain, having left the rebar (strengthening rods used in concrete) market to the minimills. But by having a 20% cheaper cost structure, minimills having innovated to produce competitive steel, they then attacked this market too, pushing the large mills further up the chain, and so on.

Source: HBR

The minimills used two advantages to the large mills, their lower cost structure and their innovative capacity to climb up the chain until they became a ferocious competition to the large mills. The large mills had no response because they were forced with either going upmarket or investing in the low-end that was the least attractive to them in terms revenue and profit, but the most attractive for the minimills.

Uber

Uber is often characterised as the archetypal disruptor, but the theory of disruption doesn’t quite fit. Disruptive innovation starts with the disruptor taking advantage of a low-end foothold in a market, providing just good-enough products and services and exploiting that opportunity until iterative and incremental improvements mean that product or service eventually competes directly with the incumbents’ offerings.

Uber hasn’t revolutionised the essential practice of hailing a cab. It has merely simplified and increased demand, attracting customers that would use alternatives (or substitutions to use Michael Porter’s terminology) rather than taxis. The initial beginnings of Uber in San Francisco served customers that were already used to hailing cabs. It started at the high-end and expanded downwards to increase its target segment.

Disruptive innovations are, as we saw earlier, considered “good enough”, or putting it another way, inferior to the market’s standards. Uber’s service was superior to the incumbents’, not inferior. Virtually no incremental innovative modifications to the core services of Uber have been made. Using Uber today is like it was at its inception.

What you should notice in these examples is that disruption is not merely releasing a product or service that is cheaper than the original function, that is targeting a low-end market with what is always a lower-quality alternative to the current choice. If you look at some of the cheap hotel chains like Ibis in Europe, or Travelodge in the UK, their product is not a competitor to the likes of Sofitel. Why? Because for Ibis to offer the same level of service and quality it would no longer be cheaper to provide. It would in fact cost the same as Sofitel. No disruption.

 I am aware that Sofitel is in the same group of brands as Ibis and many others, all being part of the Accor group. This goes to serve my point, in that Accor has divided up the market from low-cost to high-end, placing specific branded hotels targeted to the demographic they’re focusing.

When I think of this theory, I’m often lead to wonder if this is not something that we can capture to use in much smaller circumstances. The theory lends itself to the large companies or collectives, like taxis getting disrupted by Uber or the Marriott’s of the world getting disrupted by Airbnb. These are the disruptions that get media attention and have such an impact around the world as a whole. But are they the only disruptions taking place? If not, where and how do micro-disruptions take place and can we understand them to use them in our own business.

I want to look at two possible contexts for disruption; internal and external. But first, I wanted to see if the scale has any bearing on the outcome of disruption. If you work for an SMB and your market is measured in the thousands and not millions, is it considered disruptive if you manage to create an innovation that has profound effects on that market?

I would say yes. The fact that on a small-scale, a market changes as a result of a lower-end offering forcing the incumbents to search the higher-end proves the market is being disrupted in some way. Their search relies on the fact they need to look for margins and growth. As an example, I wanted to discuss a new entry into the mobile communications sector in the French West Indies, Wizzee.

Wizzee, a disruptor in the making?

As I write this article, I spent less than 10 minutes signing up for a new mobile contract for my son, who until recently had 1 GB of data per month on what is an out-of-touch mobile contract. He’ll now get 50 GB per month for 4 euros per month less than the current subscription. I save 4€, and he gets, for all intents and purposes, all you can eat data. Why is this important? For two reasons that I want to explain here.

The first thing that struck me from my initial awareness of the new Mobile Virtual Network Operator (MVNO) was that unlike Orange’s attempt at a similar strategy, it understood and offered a package that is aligned to how the younger generation uses phones today.

Orange’s offer was initially acceptable, in the sense that it offered a mobile subscription with a little data thrown in for good, for a very reasonable price. Few options existed to extend the amount of data, and each one was scandalously expensive. I’m surprised authorities allowed this to pass, but that’s a different discussion.

Millennials and the younger generation of users use their phones is very different ways to the older generation. In my study on the impact of digital in the Caribbean, I noted that around 40% of all Internet traffic was flowing through mobile phones and that this was steadily increasing. What I didn’t explain is why. These later generations are fuelling that mobile data growth because of their communications choices.

We grew up calling people and talking to them one-to-one. The limitations of this method are, of course, availability. It works when both parties are available, and consequently, when one is not, it doesn’t. The Millennial generation doesn’t worry about this as their chosen communications methods are un-linked from time and availability constraints. They prefer to use text or video/speech communications in WhatsApp and other popular services. These services are Internet-connected and mobile data-driven.

And so, a subscription that targets that generation has to completely flip on its head the model of mobile phone subscriptions by offering data with a choice of voice and SMS (Millennials don’t use SMS), which, as you have no doubt noted, opposite to today’s standard mobile subscriptions that are voice with data tacked on. Wizzee is simply aligned to the reality of the mobile market today, unlike Orange (including Sosh, its MVNO) and SFR.

Secondly, just look again at my opening statement; I spent less than 10 minutes on a Sunday morning signing up to the service. It was “Fingers in ze nose”, as they say in France. It’s a digital product and has successfully rethought the process of signing up from A to Z. Simple, efficient and quick. You do the setup from your mobile phone or on the website. I decided to use the phone. After downloading the app, you follow the clear, easy to understand and well-explained instructions. The process of transferring your number from an old subscription is simplified. The app additionally provides help where it is needed without you having to search for it.

Digicel has done the work necessary to develop the service in line with Jobs to be Done Theory. This is Digital Transformation! The question is, however, is Wizzee a disruptor, well, yes and no?

Yes, in the sense that the product is aligned with the modern era, that is it simple, accessible and digital by nature. It is a good-enough product without bells and whistles, and the business unit has the cost structure to ensure its offering per GB is less expensive than Orange’s, for example. Orange operates 25 boutiques over the French West Indies with a staff measured in the hundreds. Wizzee has 0 boutiques and a team of less than 20, I’m guessing!

However, it is not in the sense that Digicel is still only selling access to a mobile network and that has not fundamentally changed in tens of years, much like Uber hasn’t changed the service of hailing a cab. Additionally, nothing Wizzee has built would stop an incumbent offering precisely the same thing. Of course, Orange won’t, or at least they won’t be as generous in their offerings as the larger companies rely on the luxury of brand power and trust. 

Wizzee has no moat.

My thanks to HBR and Clayton Christensen’s books for the inspiration of this post.

The Future is Digital Newsletter is intended for anyone interested in Digital Technologies and how it affects their business. I strongly encourage you to forward it to people you feel may be interested. If this email was forwarded to you, I’d love to see you onboard. You can sign up here:

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A personal journey with a truly disruptive product and person

The iPad has turned 10 years old; here’s a personal relationship with the product. Additionally, Clayton Christensen died recently. His influence will be felt for years to come.

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Photo: Apple

This week a phenomenally successful product turned ten years old. In January 2010, on the stage of the Yerba Buena Center for the Arts in California, Steve Jobs announced the iPad in what is oft-regarded as one of the best product introductions by a company in years. It doesn't quite top the iPhone introduction (“… an iPod, a phone and an Internet communicator, get it”) but it is not far off. Just to give you an idea why I called it successful when virtually the entire media set doesn’t, is that currently, the iPad represents around 20 billion $ per year in revenue for Apple. It’s the same size as its Mac business, the same business that put Apple on the map all those years ago. Because we see revenues from the iPhone dwarfing this, we lose track of just how significant the other components in the Apple ecosystem are. (/rant).

It's such a good introduction and presentation of a product for the same reasons I recently wrote about the new MacBook Pro. It almost perfectly answers the jobs to be done questions and provides a simple solution to basic questions. Interestingly, I and many others feel that Apple have recently gone a little off the rails lately. I'll discuss that later in this article.

My personal iPad story

In some ways, my iPad story starts with the iPhone. The moment I saw the iPhone, I knew that this device, as limited as it was then, was to take over the world of mobile telephones. It was so evident to me that during a trip back to my native island, I had to get hold of an iPhone from the one Apple Store that existed at the time, in central London.

Immediately on getting back to my brother’s flat, I embarked on the witchcraft necessary to make the phone usable on my phone companies network despite it not being authorised for such use. A process that was known as jail-breaking — evoking the old westerns where then unjustifiably locked up villain is bust out of jail by explosives, horses pulling bars, any means necessary — that unlocked the phone from the shackles of its native network in the U.K.

It was a perilous process and one not without risk. If I remember correctly, it took two or three attempts and a sinking feeling that I’d “bricked” £500 worth of telecoms equipment. When it did boot and then connect via roaming to the network I was ecstatic, I had an original iPhone in working condition and was one of the first in my adopted island at the time. I still have that phone today... and it still works.

But back to the iPad. Having been completely smitten with the iPhone and many of Apple’s products since the original Macintoshes, I kept a close eye on the announcements and demos of their products. I’d created time in my calendar to watch what was, and then turned out to be, a seminal event. I encourage you to watch the demo for yourselves. If you have to present products and services in your day job, you could do no worse than learn from a master like Jobs.

The iPad was announced, and the world of tech was stunned. Not only did the device ticks the boxes for multiple use cases, but it was at a price that was almost derisory, $499 sans tax.

Through a stroke of good fortune and not the only one as you’ll learn, I was invited to a large conference for one of the most advanced and respected software companies in business software at the time. The conference was to take place in Las Vegas, a place I’d never visited and one I wanted to see for myself at some point. So I was excited from the bat.

Apple’s announcement of availability coincided perfectly with my upcoming trip, so fate was sealed. I would grab one from the store whilst travelling, done! It turned out to be a little more complicated than that. Apparently, I wasn’t the only one in the world that wanted an iPad.

The journey from Martinique to Las Vegas at that time was not fast. Leaving the island at around 8 am arriving in Las Vegas at roughly 9 pm local time, I had previously studied where the Apple Store was — there was only two close by in 2010 — and how long it took to get there, what time it closed and the estimated time of arrival of my plane. It was possible but by the skin of my teeth.

I arrived in Las Vegas, tired and wanting to sleep after a laborious journey, but something in the air (Oxygen?) whilst walking through the Casino woke me up. The MGM Grand forces you to walk through the Casino to get to your room, like most hotels in Las Vegas I subsequently discovered. I checked in dropped my bags, ran downstairs jumped in a cab and hot-footed it to Ceaser’s Palace with around 10 minutes to spare before closing time at 11 pm.

I found a salesperson and requested an iPad, but to my dismay, they had all sold out that morning. It was back-ordered, but delivery was unknown. I gave up. But the salesman suggested I put my name on a waiting list. He suggested that even if I had left the country, it wouldn’t matter as it would get reallocated to the next one on the list.

I’m not a gambler, not even for 1 cent. WTF was I doing in Las Vegas? I was definitely out of my comfort zone to be fair. I thought it was a gamble and hence not worth it as I would lose, but something said to do it regardless. I guess the fact that it was free and had no harmful consequences I thought why not. So Sunday night at nearly 11 pm I added my name to a list of people waiting for an iPad, a list that was already more than 20 people long. It was a long shot and one I was convinced I’d never have a chance. So I promptly forgot about it and quickly mourned on what could have been.

The conference started Monday morning, and I was learning lots of great stuff. It will go down as one of the best conferences I have ever attended. Then on Tuesday morning, I received an email from Apple letting me know there was an iPad waiting for me if I wanted it, and that I had 24 hours to recover it. It didn’t take me 24 hours.

I got back to the hotel where the conference was staged, unboxed and booted up the iPad. Logged in through my Apple ID and went back downstairs to the conference, iPad in tow. That day, I took more notes than I had previously taken in all the conferences I’d attended. Something about the device was perfect for the way I worked at conferences and in meetings.

I have never been without my iPad in a meeting or a conference in 10 years.

The father of Jobs to be Done Theory (and others) dies

Clayton Christensen died last Thursday the 23rd January 2020.

From the FT:

Clayton Christensen, the management thinker who conceived and developed the idea of “disruptive innovation” and influenced generations of business students and entrepreneurs, has died, aged 67. Universally known as “Clay”, he passed away on Thursday as a result of complications from leukaemia.

Christensen was best known for the ideas he laid out in his seminal book The Innovator’s Dilemma, published in 1997, which described how incumbents who neglected the lower end of their market could be disrupted by new and innovative products. One core example was how “mini-mills” sprang up to challenge traditional steel companies.

This central idea — including the suggestion that companies should disrupt themselves to escape the fate of complacent incumbents — inspired Silicon Valley’s innovators.

I was introduced to his work through several sources at the same time, so I can’t credit one person in particular with the exposure. However, one person has been particularly influential in my ongoing discovery of his work, Ben Thompson (Stratechery). It was through his writing that I first discovered the Jobs to be Done theory that has been and continues to be so successful in helping businesses create value from products and services. I wrote about some of the subject matter in one of Christensen’s books, The Innovators Dilemma, in March last year:

This is a common threat when you are dealing with digital products and services. By definition, digital goods are easier to distribute and copy but more importantly, if your clients see a new product or service and that their sunk costs are sufficiently low as to avoid the sunk cost fallacy.

In that issue, I was trying to explain the democratisation of innovation and the reduction in risk in innovating with digital-only products and services. It’s worth reading if you haven’t as yet.

Jobs to be Done Theory is the starting point to innovation and something I use virtually daily to understand how well processes are working and develop innovative suggestions for my clients. Thinking about how something works starting from the “use” point provides insights that are so often lost when we overthink about the desired result.

Clayton Christensen concluded that Apple didn’t focus on profits when developing products such as the iPad, iPhone and others. Let’s not kid ourselves; profits are a big part of the desired outcomes for Apple. What is different from other companies is their restraint in releasing technology only when it is ready and when it can address the JTBD adequately enough to disrupt the early vendors. Apple is generally one of the last to use technology in its products, but when it does, they are so well-conceived that you feel it has always been this way.

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Back from a tiring transatlantic trip, I delve in to how Facebook collects data, an update in the ongoing newspaper media failings and a surprise profit-making store related to digital media

I got back late Sunday night from a trip to London to take in the wonderfully tasty Curry Houses that are everywhere there, but most importantly, to participate in the Microsoft Ignite The Tour Conference. I’m preparing a show report for the newsletter, but I haven’t finished it yet. Meanwhile, I thought you might be interested in the data practices of Facebook and an update on what’s happening to the newspaper industry in the Caribbean.

Have fun!

PS: Please share this article on Twitter or your favourite social media channel, the share icon is near my name below the subtitle 🙏 … or here.

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What data Facebook collects and how they use it

From Wired.com;

It won't come as much of a surprise that Facebook tracks you on its platform—that's why it can resurface your birthday photos from five years ago—but you might not yet realize the scope and the depth of its tracking all across the internet.

Of course, if you signed up and actively use Facebook, it will come as no surprise that the mass surveillance capitalism machine collects information about you. What most don’t realise however, is that Facebook collects data on anyone on the Internet and creates what we call “shadow profiles”.

Shadow Profiles are like vaccinations rates. Let me explain.

With the invention of vaccines, we quickly understood that a 100% vaccination rate in the target population was not necessary to provide community immunity. In fact, a percentage of something like 95% for measles (it is not the same percentage for each disease) offers sufficient protection for all persons purely from the statistics that show an unvaccinated person is unlikely to be exposed to a porter of the virus. Thus the term “herd immunity” was coined.

R being the reproduction number and S, the proportion of the population susceptible to infection.

Facebook Profiles, too, work like this. Facebook wishes a maximum of the populate to have a real profile, for it to extrapolate all the non-users of its services and create profiles of these people to monetise them, in the same way, signed up users are.

Facebook is not quite there yet, but they are putting a lot of effort to get there. The purchase of Instagram, WhatsApp and other “initiatives”, have one, and only one goal. More users with profiles on the grand database of personal information, and by extraction, more people in the non-users database.

Wired’s article goes on to explain what data is collected and how you can limit the collection of data — limit, not eliminate. It’s the deal for signing up with the..., er, Facebook — to prevent hyper-targeted advertising and Facebook knowing your most private information. However, as I inferred earlier, much of what Facebook collects has nothing to do with Facebook directly or at least is not the collection of data from sites owned and operated by them.

Facebook has developed and extended involved and deep relations with a multitude of marketing and ad agencies, essentially paying them to give up your data for their monetisation purposes. True to form, Facebook offers a tool called “Off-Facebook Activity” that dissociates the collected data from what you do on the site or in the app. 

Note, they do not stop collecting data, that only unlink it from activity.

Note also, that using the technique I mentioned above, despite not having a Facebook account, your data is still collected by systems like the Facebook Pixel. Its egregious activities don’t stop there either. Even if you have disabled location tracking in the mobile app, Facebook still notes your approximate location by using IP addresses, data which is allegedly stored in the profile for later use.

One other technique used by the likes of Facebook and Google is the dissemination of Polls and Surveys that ask basic questions such as your Star Wars Age. Unwitting users fill in the information in online surveys only for that personal data to be harvested and used, yes, for advertising.

I want to clarify a myth that persists concerning what Facebook does with the data (your data) it collects; Facebook does not sell the data. It’s more nuanced than that. What Facebook does is harvest as much information as possible and then make that data available to hyper-target advertising. What that means is that the back-end data stays with Facebook, but users of Facebook advertising systems can see the number of people that would receive an ad based on the attributes requested. Demographic information, of course, but also purchasing habits, interests (when you fill in what you like you’re feeding this table in the database) and a whole host of other information.

Unlike my experience in many companies around the Caribbean;

"Data is the new oil in the digital economy

Although there is some dispute in the reality of the phrase, with some reasoning that it’s not, the phrase holds true for many businesses looking towards digital transformation. Businesses produce data all the time, but it is mostly lost, stored but not accessed or downright under-exploited. We are data-rich but analysis-poor, and it’s to our detriment.

Facebook is possibly one of the best organisations that are using and monetising data, excepting perhaps, Google. It’s interesting that they use it for such shady purposes sometimes.

If you think about it, their resource is the data they collect — data being the new oil. If Facebook sold that data and thus gave up on the possibility of reselling it to the same party again, it would very quickly be left with no resources to market. The fact that advertisers come back time and time again to punt another product, matching it to their target audience using the matching tools of Facebook is entirely the reason Facebook makes $22.1B from a revenue of $55.8B according to CNN Money.

Is Emmanuel Macron about to save the newspapers in the French West Indies?

In The slow demise of France-Antilles and Newspapers in the Caribbean, I wrote:

On the 2nd of August a tender was issued to find a buyer for the failing media business, and its close date is in less than two weeks. Currently there are no offers on the table and there may not be any serious long-term buyers either. For what its worth, I think they’ll find a buyer, but it’ll be a short-term, utterly-ignorant-of-the-reality-in-the-digital-world benefactor that will continue to (try to) sell what is essentially free information printed on dead trees.

Remember, France-Antilles, and other newspaper publishers around the Caribbean have been slow and downright ignorant of the reality of the digital world for a long time.

Three major factors have led to the current situation; ads have become easy and cheap to set up using the online platforms — with feedback obtained from the online platforms out-manoeuvring what a static mass-market ads could ever achieve —, the distribution of bits rather than atoms became essentially free and the targeting and the quality of information naturally decreases with abundance.

Easier, better and cheaper will always win out over difficult, inferior and expensive. The ad market for newspapers was completely disrupted and was only noticed by the industry when it was too late.

These two images tell us everything we need to know:

Source: mondaynote.com

Emmanuel Macron has hinted at the possibility to help the press in the overseas territories with aid for distribution or specific political measures.

It is a sad state of affairs that a government feels the need to intervene to prop up a failing business model, notwithstanding the risk of being accused of government bias in future articles; Quid Pro Quo? Now let me make it very clear, I am not suggesting that there is or will be any such agreement, not for an instant! But it leaves one open to accusations, and in a world where accusations are multiplied and legitimised by social media at the speed of light, both the newspapers and the government need to be careful.

Currently, in an equivalent of Chapter 10, France-Antilles should know its fate on the 30th of January, although this too is not sure, being that previous decision deadlines were extended. Not only that, but the proposition that is likely to succeed is none other than the same group that spectacularly failed the newspaper with its lack of vision, foresight and digital transformation.

It has secured pledges of 3M€ from the state, 3M€ from investors and is currently looking for another million or so to get their proposal off the ground — which incidentally, cuts staff from 236 to 125. They’re putting a plaster on a broken leg, and in the plans’ current guise and without radical change, it is doomed to fail, and I’ll be writing about it in a couple of years, if not sooner.

Digital publishing is profitable now!

Axios reports:

Digital publishing is doing something it hasn't done en masse since the dawn of the Internet: make money. 

Perhaps this falls at just the right time for France-Antilles and the rest of the industry in the Caribbean.

According to Axios several measures relating to copyright, new mediums becoming more popular (Podcasts, I’m looking at you) and monetisable are contributing to the inflow of cash to digital media companies. But it is not just that, privacy or at least visibility and control over what companies can do with the data coupled with the fact that these market places are murky and inscrutable for businesses to properly asses advertising costs, has provoked a drop in their use and the favouring of using direct-to-customer advertising from the digital media companies.

Copyright rules have cut off at the tap the wholesale “piracy” but the big tech giants republishing works from online sites like the Times, Guardian, etc., and funnelled that money to the media companies, contributing to their 1st-time profits in the digital media space. The war is not over yet, and we’ll have to watch to see what happens in the future, but for now, it is an encouraging sign.

The Future is Digital Newsletter is intended for anyone interested in Digital Technologies and how it affects their business. I strongly encourage you to forward it to people you feel may be interested. If this email was forwarded to you, I’d love to see you onboard. You can sign up here:

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Visit the website to read all my articles and continue the discussion in the Slack group.

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Where did they start out and how do they work?

I wanted to get this out earlier in the week, but I’ve been busy finishing off projects from 2019, preparing 2020 and flying out on a trip. I’m in a technical conference next week and my plan is to report back on what I learned over the coming weeks. 

On to the subject of the day… I spend a lot of time researching and writing about Digital Transformation and its immediate impacts on business. I thought it would, however, be a nice change of pace to talk about some of the more social aspects of these new technologies and the way we work with them.

I thought I’d focus on collaboration, and particularly, how it is becoming the new standard interface for knowledge workers, first line workers and backend operations. Home users are also becoming more ad more enticed by their charmes and possibilities, to the point that their overlay supplants the importance of the traditional operating systems like Windows, Linux and macOS.

Enjoy the ramble.

Photo by Kaleidico on Unsplash

Collaboration and its use in the workforce

There are two big shifts in personal and business computing currently taking place. These changes are not just limited to computing but are now touching almost every aspect of our lives. Firstly, Digital Transformation is changing the way we interact with the everyday services we rely on, changing the way we even live and work. Secondly, Collaboration is fast-becoming the new norm for generations that follow on from Generation X.

Collaboration didn’t start in productivity focus groups, in fact, as humans we’ve been collaborating for thousands and thousands of years. Looking more recently, if we look at how music is produced these days, we find that many artists in today’s popular music are collaborating with other artists, and these are the type of artists that would be considered competitions or rivals in the early 70’s and 80’s. Just look at the list of singles on Apple Music, Spotify and YouTube and you’ll see that it is one artist featuring or “&” another. Maître Gims & Sting, Shawn Mendes & Camilla Cabello to name a couple.

Music was previously sold in Album form and was a bundled package of several products (songs). You purchased the album because it was both cheaper than buying the individual tracks and the product often had a added benefit of a poster or a lyrics sheet. Some took the concept to the extreme and produced highly curated artwork to incite the buyer with the promise of a collectors item. This incentive supported the solo artist or the group as it rewarded artists uniquely from sales numbers. The collapse of profits going directly to artists has forced groups to tour, sell merchandise and club memberships amongst other revenue streams.

Physical goods are no longer offered and hence the competition is not the same. Bands collaborate all the time where previously they would compete. Collaboration is feasible today compared to yesterday, because the unbundling of music as promoted by Apple in the early 2000s, developed new business models for artists that sell their personal brand, regardless of how it is consumed.

What this means in simple terms is that a new generation of the young working population that have inherently different ideals around competition and collaboration. This generation prefers to share its work as evidenced by their prolific use of social networks.

The foundations of collaborative software

Collaboration really began a long time ago, as I noted above, but collaboration in today’s guise is a modern take on old ways born out of the industrial revolution and the subsequent deployment of computers in virtually every organisation. As more and more processes were being digitised, the need to integrate processes so employees could efficiently work together on large projects required a shift in computing paradigms. Paradigms that have only just started to look feasible.

In the early computing days mainframe terminals started life out as single user interfaces to the processing capabilities of the machines. Eventually processor power and architecture design allowed multiple terminals to use the same central computer simultaneously. That’s not quite true however, as the original shared mainframes like the VAX, only gave the illusion of concurrent use. They, in fact, time shared the processor out to each terminal fast and efficiently, making it all but imperceptible to several users that they alone were using the computers back in the IT room. It took only a few lines of code to break that illusion, slowing the mainframe enough to show up its trickery. I had much fun in those days doing this at University.

At this stage, computers were essentially processing terminals with rudimentary applications to code, calculate, email and sometimes help in writing term papers. The next evolution came when personal computers (PCs) started to become ubiquitous in offices and small businesses. The democratisation of the PC enabled businesses to benefit from their efficiency, and enabled software houses to push the boundaries of what coud be accomplished on a computer. And it is here that the first attempts at collaboration software got started.

However, before we get into the weeds, It would be remise of me not to talk about collaboration in isolation of productivity. One of the main reasons for implementing collaboration is to increase and enable better productivity for business. They are inseparable in this context, even if they are two different things. Because we couldn’t quite get to the dream of realtime interactive collaboration in those days, much of the focus was on productivity, and it was out of this desire that the first wave of “Office” type applications and suites were developed.

The original productivity application was VisiCalc — it was a huge success, and gave rise to the moniker “killer application”, i.e., an application that is so useful, it literally sells the computer in order for the user to get a hold of the application. VisiCalc is what we call a Spreadsheet today. At its introduction, minds were blown. That it could automatically and instantly recalculate rows and columns and totals by adjusting one cell was pure science fiction until then. It helped businesses produce accurate financial information for better decision making.

Not too long after that, another killer application category emerged, the Word Processor. Again, it was staggering that an application could help you write multiple pages of text and allow simple edits, and in somes cases provide pointers for better spelling and grammar. Previously one would have to re-write the text, or try to white-out and type over the top of mistakes to produce a final copy. Major mistakes required complete re-writes. The Word Processor eliminated this, and as a consequence, allowed the sharing of the document to multiple parties allowing them to either add content or edit and control content. So although these applications were primarily aimed at productivity, collaboration was a natural result and a natural evolution in use and hence a target for software developers to explore.

Bundled together, these applications came to be known as Office Applications. Email and Presentation software joined this group soon after they became institutional in business.

The early collaboration platforms

Once basic office-type applications were widely used, software giants of the time, like Corel and Lotus, noticed the potential to further develop collaboration and efforts were quickly directed to realise that vision. Lotus Development Corporation (subsequently purchased by IBM), most notably, developed and marketed what was ultimately the first real suite of collaboration tools with its release in December 1998 of version 1 of Lotus Notes. Lotus Notes comprised of collaborative tools to help workers use the existing office-type applications, providing services such as email, calendar and contact control and a rich client/server database engine that was programmable by experienced engineers. This provided substantial benefits to international corporations as they were able to now communicate and collaborate on projects the world over in a simple but efficient manner. The programmable database system also allowed corporations to build and deploy line of business application within their business units and many small and independent consultant businesses were created and fed handsomely on this new opportunity.

As Notes grew in popularity (changing its name to Domino by IBM in 1996) its core differentiating services became commoditised and simplified by software giants like Microsoft. Which is where we found the next wave in collaborative efforts, email. Email is derided today because of scams and spam, but in the 1990s email was the must-have collaborative tool. Now you could email ideas, documents, pictures, just about anything you could imagine all in the search of better productivity. For a while this worked great, as email is an asynchronous medium, meaning the other end doesn’t have to be logged on for you to be able to send a message to him or her.

As change management predicts, once a user gets used to the new thing expectations are reset and tolerances are lowered giving rise and desire for a new faster and better thing. And indeed it came, in what is possibly one of the most revolutionary tools in modern business that has been totally ignored by analysis of its impact; Instant Messaging or IM for short.

IM started life in the non-business world and was popularised by AOL with their AIM platform. Hours per day were spent by teenagers with unlimited dialup telephone lines chatting about their life over this new medium. Businesses were slow to adopt this new form of communication and it wasn’t until Microsoft implemented it for free in their wildly popular Exchange Server (an email system) that businesses started to see the benefits. You see, communication and collaboration are not one dimensional things, different mediums of communications are suited for different scenarios and different contexts. The one size fits all of email just doesn’t work for mature modern collaboration.

Collaboration today

Which brings me to the state of collaboration today. What we’re seeing today is specialised collaboration and productivity being developed that take us away from the general purpose collaborative apps we have now. There are myriad applications for collaboration, but the two most popular and most known are Slack and Microsoft Teams. If you want to know more about them, search for reviews online. Suffice to say that both claim several millions of Daily Active Users (DAUs).

Image: Microsoft

These apps are immensely popular in business and are very advanced collaborative platforms in their own right. When implemented well, they take a central role in the day-to-day interactions for people on their computers, and Microsoft literally stated that its Team app is where work starts and ends. Both Slack and Teams provide messaging, calendar integration and the usual list of emoji support, upvoting, GIFs and the like. 

Image: fastcompany.com

That being said, they still only provide basic omni-communications channels of discussion. Integration is limited to applications in the same ecosystem or third party applications (always SaaS) that provide APIs. And whilst that list is growing, we aren’t quite yet in the situation where the circle has been completed to allow communications and collaboration universally.

It’s important to note that businesses, whilst getting on the SaaS train, are not quite there yet. Many of the organisations I work with use software that can only be described favourably as “legacy”. And while others are more advanced using online systems like Google’s G Suite and Microsoft’s Office 365, most of their backend operations software is either locally stored on Windows/Linux servers with no API access available or any way to bridge to the application from thees online services. Most worrying too, is the fact that often when you choose one ecosystem, the competing ecosystem does everything it can to lock you out of collaboration between these systems. Both short-sighted and customer penalising!

Why collaboration software works

In my role as a consultant I’m finding more and more business use cases for the wholesale implementation of collaborative software in operations. The new platforms, being open, allow for a simple and easy-to-use window towards getting work done efficiently. More over, getting that work done through collaboration.

Great collaboration, as several studies seem to suggest, leads to better outcomes. Is like diversity in your organisation, it automatically generates the environment that challenges the status quo, allowing better visibility from all angles, leading to better solutions.

Further explanation is required, I’ll get to this at a later date. Thanks for reading.

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Digital Transformation in training, decision-making and modelling, using 3D, AR and VR

Let me first start by wishing you a very Happy New Decade, The Twenties! Finally, we can call it something intelligent!

In this edition, I took time with Nicolas Augustin of DevOxyz here in Martinique, to ask him about his work, the challenges and how Digital Transformation is helping his clients. It’s an appealing look at how small businesses can use digital tools to not only create products and services but serve the globe from a small island in the Caribbean. I hope you enjoy it.

My gratitude to Nicolas for lending me time for the interview.

Note: I have lightly edited Nicolas’s answers for clarity.

On to the interview:

DevOxyz, a digital company with digital products, built for a digital world

Can you introduce yourself to let us get to know you better?

I’m Nicolas, owner at DevOxyz since 2008. We design and develop bespoke serious game applications helping our professional customers leveraging the power of Real-time 3D, Virtual and Augmented Reality to solve their decision making and training challenges.

Tell me a little about your background and how you got to where you are currently?

I have a computer programming training with a computer graphics programming specialisation. Between 1998 and 2008 I was part of a great team in a company called Virtools (acquired by Dassault Systèmes in 2005). As solving professional challenges using 3D is a real and deep passion, I started DevOxyz in 2008.

So you started DevOxyz in 2008, and you are looking to extend your reach more globally — currently, a majority of clients are overseas, but you’d like to do more, I understand. Can you tell me a little more about what you do and what it is you’re trying to achieve?

DevOxyz has been focused on international development from the start with final clients like Procter & Gamble, EDF R&D and Le Musée du Louvres. We constantly look for niche markets where 3D technologies, 3D storytelling and training can help our customers. We actually search for customer pains in various traditional domains (industry, architecture, safety, ...), everywhere there could be “I did not see it like this on the paper blueprints” or “this could better be understood if our employees could experience it and train beforehand” issues.

We are also looking for international partners to handle customer detection and customer relationship. On several projects, we generally have a middle-sized company (our client) who have a good relationship with a much bigger client like Siemens or Microsoft. We wish to streamline this way of working having region partners that have access to key accounts.

I’m interested in diving in a bit more about solving customer pains. As you’ve noticed in my writing in this newsletter, I have a big interest in the idea that products and services can be deliberately designed to resolve pain points and reduce friction. Can you describe a project that really got to the heart of this? What pains did the project resolve, how did you go about discerning the pains? What was the final measurable outcome?

Well, sometimes the pain is inherent to what the project is about. For example, in the VR Driver safety application, I did for a client, we could not, of course, create actual car accidents in training. The client had to come with a solution that would keep the trainee safe but also immerse him/her in a vivid experience. As you can guess, we wanted to avoid the classic presentation-based training with trainees just listening and taking notes, at best. Virtual Reality was the perfect solution for this: the trainee is immersed, living the training and we could create road danger situations and car accidents that we could not have done in real life. Here the outcome was that VR allowed living this that are not possible living otherwise.

Sometimes the pain is clearly explained by the client after discussing his process hurdles with him.

But sometimes, while exploring a technical subject the client and I find an improvement, an added value, like this time I had to convert a 3D file format to another with a pre-processing step and I discovered that the pre-processing step was not mandatory and that I could convert the 3D file format in real-time. The outcome here was automation: we have removed a step in a production process using code.

What would you say have been or currently are the main challenges?

Well, there are 2 main challenges: find niche markets customers and find international partners that can relay our offer.

Can you expand on that? The niche market is obviously difficult to enter as much is based on reputation and word of mouth, do you specialise in any particular niche?

Yes, I focus on 3D data and metadata conversion plugins into industries: PLM/CAD and AEC/BIM. For example, I recently created an Autodesk Revit export plugin to a client custom 3D file format. I constantly make efforts to add special ingredients to what I deliver. In the Autodesk Revit case, I focused on converting and exporting Autodesk materials to the client's PBR (Physically Based Rendering) materials. With the client giving me access to its BRDF (Bidirectional Reflectance Distribution Function) code, I could really deliver bespoke conversion code. I feel I just got carried away there for our non-technical readers, but in a nutshell, I constantly look for the high added value that would make my client happy, beyond basic requirements. It's just like I'm constantly looking for the niche in the niche.

No, no, that’s great. Get as technical as you like 😀. Getting back to you looking for international partners. What is it you’re specifically looking for in potential partners/clients?

I'm looking for Business developers that have close relationships with companies that already use real-time 3D technologies to solve their challenges in the PLM/CAD and AEC/BIM industries. I came to a realisation that most technical 3D challenges can be solved but there is a missing link, someone that can "hunt" for technical challenges. Using my 3D math, 3D data structure and real-time 3D skill sets, I can help final clients quicker than they imagine.

The final client is often a big company whose decision-making process is time-consuming. My added value here is based on development time flexibility and high-quality 3D code.

In terms of structural challenges, what have been the most difficult to overcome, and how did you overcome them?

Our main structural challenge is our location. While we have the technical and Internet-based tools to produce 3D applications remotely, most of our clients are located in the USA and in Europe. We have to reach these clients and maintain good relationships.

The main challenges are not technical as one may think (our more than 20 years experience in 3D and linear algebra helps a lot here) but rather in terms of customer identification and relationship. However, this challenge is turned into a competitive advantage: we constantly make efforts to deliver the best possible technical products to our niche markets customers. We generally solve this challenge by being recommended by clients.

Financially, getting a startup off the ground not only takes a lot of time and passion, but finance is clearly needed. How did you start out?

One word here: bootstrapping. Using that method forces us to choose customers to maintain the best possible profitability and customer value. At one point, we may look for private funding to move the company to another level.

Haha! I feel exactly the same thing. I’ve bootstrapped my business for the simple reason I wanted complete control and to be judged early on by my quality. I developed a unique business model in consulting to avoid the wet and dry seasons as it were. How do you price and bill your projects, is it on an ad-hoc basis?

Our bespoke 3D development service rate is generally between €600 and €750 per day. This rate can vary depending on the project since we perform an in-depth evaluation for our customers to get the best service at the best price.

One of the difficulties in providing “virtual” services is the justification of value. Can you tell me a little more about your experiences?

I generally have clients who are aware of the technical challenges I address because they are tech-savvy. For those who have less understanding of what development is, there are 2 cases: the first case is that they kind of freak out because they don't understand how it works and this induces tension in the business relationship. In the other case, a trust relationship exists between the client and the contractor. This trust is key. It's our responsibility as a service provider to demonstrate that our solutions solve their customer pains or needs.

To build that trust, I tend to build a "before/after" scheme, by showing them what they had before my service VS what they have after my service. Maybe it's easier in computer graphics because they see, on-screen (or in a VR headset) the result of the work.

Another way to build trust can sometimes be splitting the project into small units to demonstrate value. In a nutshell, for some difficult clients, it's our responsibility to build trust.

Can you tell us more about the technical aspect? How does it work?

To keep it simple, high-end video games, CAD software, Architecture and BIM software all use the same technological low-level layer (3D APIs). Therefore, the same programming and mathematical techniques can be used to fight a giant spider, have a stakeholder review of his new plant organisation, train to a new safety procedure in a high-risk industrial site.

As for the application subject itself, we interview experts to build the actual interactivity, “injecting” knowledge and information in the bespoke 3D application. The application can then be used on a desktop computer screen, on a mobile device for Augmented Reality or in a VR headset for Virtual Reality applications.

Yes, and about Virtual Reality, how can professional challenges be solved using it?

VR is now the best way to experience 3D. Hardware costs of VR headsets have dropped along the years. This is the perfect time to leverage something particular with VR: full body and mind immersion. The “trick” here is that the stakeholder or the trainee is inside the 3D world, he/she can look around and move around inside the simulation. After only a few minutes in the VR world, the user is totally focused on the experience or his task. There is a kind of direct access to his mind as his/her 3D vision system (otherwise known as eyes and brain) and his entire body are implied in the experience at real scale. There is no better way to review a building, train to a procedure or treat a phobia, for example.

That’s great stuff, Nicholas. Your work highlights an aspect of Digital Transformation that is both practical in many uses, but also very tangible for clients to understand the benefits of using those digital technologies. It goes without saying that the fact you can be based in Martinique and work internationally without too much of an issue is a real benefit of the digital world.

Thank you so much for taking the time to answer my questions, I look forward to following up with you in the coming years to see how tomorrow’s developments have helped you grow. Best of luck!

You can learn more about his services here: http://www.devoxyz.com

The Future is Digital Newsletter is intended for anyone interesting in learning about Digital Transformation and how it affects their business. I strongly encourage you to forward it to people you feel may be interested. If this email was forwarded to you, I’d love to see you onboard. You can sign up here:

Sign up now

Visit the website to read all my articles and continue the discussion in the Slack group.

Thanks for being a supporter, have a great day.