We're not going to get to Level 5 autonomy anytime soon for a whole host of reasons. That's why it's interesting to see a new idea about self-driving cars.

Car manufacturers have carefully studied the pain points for drivers and, I'm guessing by using Jobs To Be Done Theory, have set out to solve an exponentially simpler problem that point-to-point or start-to-finish autonomous travel. They're concentrating on highway driving only, in what they call on-ramp to off-ramp. The basic premise is to allow the car to take control as it gets on to the highway and relinquish the same as you move off the highway.

As a majority of distance and time spent driving in the US involves highway driving, this is an opportunity to reduce friction for drivers without overly complicating the technology required to achieve the goal.

Autonomous driving will not happen overnight, it’ll take a generation or two to fully get used to the prospect of cars deciding what they do on a road, and this is a very good way to help,take part on that change management.

9 November 2019 — French West Indies

A long, but informative article, on redef from Matthew Ball. Really worth the read.

I was thinking about this and other ideas around Fortnite. 12 Million people attended a Marshmello concert hosted by Fortnite. Then 12 hours later, they did it again with almost as many people attending.

Think about that for a minute. A 12 million person concert! In less than 24 hours it was possibly something like 20 mIllion. That’s phenomenal, for the phenomenon called Fortnite.

I began wondering what it’d be like to hold more educative or informative events based on the same idea. Not only could it reach more people, but precisely because it could reach more people it could make more money. The biggest Conferences attract tens of thousands of people. A similar structure to the one used by Marshmello could provide a rich conference experience to millions.

Instead of buying a 10$ dance or a 10$ outfit, how about a 10$ concert?

We’re living in interesting times.

8 November 2019 — French West Indies

… Just look at what it happening in the world of photography.

Digital camera sales have fallen off a cliff and are unlikely to rebound to the highs of 2008 to 2011.

Why?

Smartphones are a simple answer. Smartphone photography has gotten better and better in recent years, with advances in lens and sensor technology allowing them to almost compete with quality DSLR cameras.

It’s the next wave that has already started that shows us what to expect.

Computational photography is here, and it is getting better results out of technically limited hardware. With computational photography, you no longer need to understand the photography triangle to produce stunning images. You no longer need a fast lens (read: expensive) to produce sharpness and bokeh that make your photos pop.

And very soon, computational photography will produce compositions that are not far off those of all but the most talented. All in a device that were buying anyway because it does so much more than take photos.

The computational in the sentence is the most essential part.

Self-serving cars are the computational-driving of driving, and it will be a better driver than you, me and everyone else other than the most highly skilled and trained drivers. Manual car sales will fall off a cliff when it happens.

But as with cameras, boutique or specialised models will become valuable and highly sought after, allowing the development of niche markets for these products. There will probably be driving leisure centres springing up in or around large cities that, for a fee, will allow you to drive a “real” car for fun.

The industrialisation of the combustion engine did this for horses, digitalisation is already having an effect on photography and computation will have this effect on cars.

7 November 2019 — French West Indies

A rant about the semantics and meaning

A little different today, but bear with me as I climb on to my soapbox to rant about Digital Transformation. 😉

Upfront, I apologise, I’m sorry.

On to the update/rant.

The phrase Digital Transformation, and why it is misused

I understand the lure; honestly, I do. It’s a snappy phrase and something that evokes moving forward and resolving problems, but boy do I dislike the phrase Digital Transformation! Odd indeed for a consultant that has created a business solely to help companies with their Digital Transformations!

Why do I dislike the phrase then, when it’s contributing to feeding the family? Surely I should embrace the phrase, lean in and exploit its use the maximum amount of advantage to my business? That would be the most obvious thing to do os course. But I’ve never been simple, or standard. I’m an Englishman in the French West Indies for Christ’s sake!

I have no liking, nor affection for the phrase “Digital Transformation” because of what it has become and what it means to most people. I'm a little melodramatic of course, but let me explain, but first a short history for context.

When we first started this journey computerising and digitalising businesses, we had clear goals and clear objectives that were easily measured: "13% productivity increase in the process", "240% increase in efficiency". It was simple; solutions existed, or solutions were created quickly to respond to easily identifiable business problems.

Neumann’s calculating machine, albeit discussed in an academic paper, proved that simple calculations repeatedly exercised regularly in business, automated easily with significant gains in productivity. Something that took teams of “Meatware” hours or days to perform could be done in minutes and hours. The benefits were obvious. The imagined savings only served to facilitate the implementation of the computers that would eventually hit the market.

The introduction of more powerful computers and ultimately Smartphones had had profound effects on how businesses operate today, from the 1960s when IBM introduced the System 360 to today’s tablet/PC hybrid computers that are always-on, always mobile and always connected to the network, be it wifi, LTE or the coming 5G. Business processes are now performed, managed and analysed in near-realtime, anywhere on the planet and at any time. This shift in paradigm is hugely important to understand when you undertake your business operations transformations.

My discussion is leading to where there is much to do, Business Operations. Digital Transformation has been hijacked by marketing and opportunists to mean something that it is not, or more accurately, something smaller than it is in reality.

If we look at one of the better definitions (in my opinion), Digital Transformation is:

Digital Transformation is the methodology in which organizations transform and create new business models and culture with digital technologies.

First and foremost, a “methodology”, not a project, not a product and certainly not a service, you cannot buy twelve kilos of Digital Transformation from your local Digital Transformation Supermarket … for a good reason! Methodologies are developed, tested and refined on an ongoing basis, in situ within an organisation that is in the midst of transformation.

Secondly, organisational transformation — implying change — is hard, very hard. And transformation takes time and effort from all stakeholders, but when that change is Digital Transformation, it is exponentially more difficult. It requires a shift in mindset and is fraught with difficulties and traps all along the journey.

The third, and arguably one of the most critical elements in the definition, is the word new. New implies innovation, in the sense that we invent something new. Please don’t confuse it with revolution though. Innovation, as I’ve previously discussed, is a process where we look at existing ways of doing something and using tools and methodologies, and we construct a better way to — at the very least — achieve the same thing. Sometimes Innovation leads us to change the process, enabling hitherto unknown benefits. Structure, methodology and one other thing allow this.

That last thing is Culture. You have to change Culture to succeed in Digital Transformation, which is why, in 2013, McKinsey estimated that around 70% of all Digital Transformation projects were bound to fail and why Constellation Research’s annual Digital Transformation study for 2018 (published in January 2019) showed that 58% of internal staff were resistant to change, entailing an impediment to successful Digital Transformation. Respondents of the same survey returned that 67% of Leadership in any organisation was concerned and preoccupied with the change to organisational culture that would be required. But it’s not all bad news …

Of the projects for Digital Transformation that were completed successfully in 2018, 68% yielded a positive ROI, with only 9% responding that they didn’t. What do we conclude from this? Well, Digital Transformation is hard, something I’ve discussed at length, but the benefits are there, and they are achievable with the right help, methodologies and processes. Regardless of the reason for Digital Transformation, be it efficiency gains, building a competitive advantage in a market, innovating and creating a new market, the advantages to changing culture are repeatable and reusable benefits for all involved.

But I haven’t explained as yet why I dislike the phrase so much.

The phrase has been hijacked to mean digital marketing. Organisations around the globe are popping up offering “Digital Transformation” Services. When I look into this in detail, they are almost always digital marketing offices. Their services are valuable, and their services are necessary — in case you thought there were sour grapes —, but their services only respond to one small side of the requirements, and in some case resolve nothing.

Take, for example, an organisation that wants to develop a better, more flexible and efficient way of collecting data and displaying that information in a way that creates value for them and their clients. I’m currently working with one such company on a project whose goal is to do just that. We’ve been developing an interactive dashboard of decisional data that enables assessment of the efficiency of their third-party suppliers, their clients’ operations. Soon, we aim to be capable of predicting with reasonable accuracy the life span of the vital equipment in their clients’ sites. This is a business process, and no level of marketing input will change the fundamental operations digital transformation required. Ultimately, digital marketing will help us generalise, educate and sell our services to a broader market, but the fundamentals of the business must initially transform.

Another client of mine has an even more fundamental business process issue. They currently use much paper — stored for ten years — to plan, execute and record time spent on projects that are just screaming out for innovation using Digital Transformation. I’m setting up a small pilot project to assess whether my recommendations will bring the benefits estimated (I’m quietly confident incidentally).

There are hundreds of thousands of businesses out there in the Caribbean alone, that require, no need, help in transforming digitally.

Be a good citizen. Please forward this email on to them, talk to them and get them on board with a small (inexpensive) project for them to see the value of Digital Transformation immediately. Often, we can use mostly un-used but existing tools to achieve meaningful results.

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I said I didn’t like the phrase Digital Transformation, but secretly, I love it. Shhh, don’t tell anyone. Let me know how you get on.

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:

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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.

Orange, Canal+ and Netflix going toe to toe

Sometimes these newsletters virtually write themselves. Other times it’s a struggle because the topic is so big or so complicated that I can only hope to scratch at the surface, doing a poor job at that.

I’ll let you guess which type this one is 😢

On to the update.

China, Venezuela and The Cloud

With the recent kerfuffle between China and the NBA, China and the Trump administration and then Apple (or more precisely the App Store and China), I thought it would be interesting to analyse a little of what is happening and how companies are starting to do rewind years of work entering China.

Firstly, some background. The Houston Rockets General Manager, Daryl Storey, tweeted and quickly deleted, in support of the protests that had been raging in the former British colony of Hong Kong since the proposal for extraditions from Hong Kong to mainland China was introduced.

The fact that the Rockets Chief’s tweet solicited such reaction is due in part to the drafting of Yao Ming in 2002. He’s become a legendary figure in the Houston Rockets and the NBA as a whole. Yao Ming is a Chinese national and has single-handedly popularised the sport in China to the degree that the country boasts more fans of the sport than the home nation, the U.S.A. The NBA additionally marketed itself to the market to take advantage of the opportunity.

The backlash in China meant that pre-season games went played un-televised, a first for China. It had an immediate effect on the advertising and rights revenues of the NBA. Estimates put it at around 500 million Chinese that have watched at least one NBA game last season, that’s many eyes to market products and services.

Cutting a long story short, it became clear that China’s power and influence were starting to have an effect on internal affairs and attitudes within the United States and elsewhere around the globe. Some even called for boycotts of Chinese products, with the affair enabling political heavyweights to dive into condemning the superpower. A Democratic candidate tweeted that the U.S. 

“must lead with our values and speak out for pro-democracy protesters in Hong Kong, and not allow American citizens to be bullied by an authoritarian government.” - Julián Castro:

Apple’s involvement was more pedestrian and garnered criticism only because Apple did something, pulled back, then did something again. All in a short space of time and with a particularly lousy explanation of their indecisiveness. The issue surrounded their denial-approval-denial of an app that was used to help people understand where protests were happening in Hong Kong (see above).

In another example of the difficulty of internationally offering services, Adobe — or more crucially the users of Adobe’s services — fell victim to the U.S. Government’s sanctions in Venezuela. Users suddenly found themselves without access to the Creative Cloud Suite (Photoshop, Lightroom, amongst others) from today. Adobe has offered refunds for services paid for but unconsumed only after an outcry from users that had the rug pulled from underneath them. However, in a blog post earlier this week, Adobe says they have reached an agreement with the U.S. Administration to keep serving its Venezuelan customers, effective immediately.

If you run a business like that the generates a meaningful part of your income, or you rely on services of this nature to get your professional work done, then this is not a comfort at all and has highlighted the risks of the cloud computing model. The wind (read: political) direction can suddenly change, leaving you without revenue or the tools of your trade. That is a business risk that is possibly too much to bear for some. It is the genesis of why some businesses are starting to devise ways of protecting their revenue and even providing better value-add. However, as for any business, adversity is often an opportunity well disguised.

Microsoft’s sovereignty and de-risking problem

If we look at Microsoft and their pivot from selling desktop and server software that was licensed on a perpetual basis — installed on computers and servers located in the companies who signed agreements with Microsoft — to what is basically renting software installed and maintained in Microsoft’s own Datacenters , we see that Microsoft's initial idea revolved around mutualising as much data as possible in one datacenter. The idea obviously, to lower COGS that directly affect profit margin.

Microsoft started with a couple of what it calls regions — datacenter located in a specific geographic location that serves one or more countries locally, think Europe, with Datacenters in London and Dublin serving France, Belgium, Germany, and others —, and has expanded rapidly over the years from market pressure and sovereignty issues. In Europe, Germany was one of the first countries to mandate that data relating to its citizens reside within the confines of the country. Something that forced Microsoft to build out a new region in Germany, for Germans. At great expense, I might add. Other countries followed suit, France, Switzerland and of course, China.

Source: https://azure.microsoft.com/en-us/global-infrastructure/regions/

Not only did this have the effect of complying with the sovereignty requests of some European and Eastern regulations, but it has the added benefit of reducing outage risks when a Datacenter failure only affects the particular region. In the case of Germany, a failure in its region only affects German customers and those who rely on the German Datacenter. Albeit at enormous cost, but a cost that can only be described as the cost of doing business in that region. It also had a side benefit of allowing Microsoft to compete in highly sensitive Government projects tag would otherwise be out of reach for the American multi-national. Look at the recently awarded contract of 10 billion dollars for the Pentagon.

What we also know is that the potential for cloud computing is only just beginning. Potential in terms of what can be done, but the potential in pure market opportunity numbers. The low hanging fruit of the simple workloads has all but migrated to the cloud already — email, basic operations tasks, data warehousing, basic office computing and others. The next big opportunity is moving the integrated and intricate workloads of large and complex ERP systems and creating value by linking them to those already-migrated primary workloads. Microsoft was first in developing the hybrid model when AWS and others were “all-in” on the cloud paving nothing for existing local workloads. Microsoft’s efforts were basic and often complex, but offered the opportunity to not throw the baby out with the bathwater. Now Amazon and Google have understood this and are structuring their businesses to compete in this area.

The foreseeable future looks bright for the cloud business.

CANAL+ and Netflix’s (new) Maitresse

Hot on the heels of the announcement that Netflix had inked a deal to provide its content through (a paid-for extra) Canal+, Orange — the European telecoms giant — announced and advertised that it too could provide Netflix to its customers. The deal was initially signed in 2014, yes five years ago, and was resigned in 2017 to reinforce the offer of programming "originally" created by Netflix and distributed to its worldwide customer base, with particular focus on Europe and Africa.

However, this has just changed, and it seems, in direct response to the Canal+ offering. Previously Orange downplayed the fact they were distributing Netflix Originals, only publicising the program and film titles, now the full Netflix subscription is available directly on the set-top box. Nothing new and extraordinary for Netflix, as they have been bundling their player software on televisions and set-top boxes for many years. What is interesting is that Orange had to react immediately to the Netflix threat (not from Netflix but Canal+) and did so quickly and simply by activating a Netflix player app on their set-top box, which incidentally accepts existing Netflix accounts and subscriptions. Now they too, "have Netflix".

The takeaway from this is that Canal+ thought it was in a stronger position than Netflix when Netflix entered the market through Orange. It was up until that point practically the only distributor of original content (aside from terrestrial television)1, something that differentiated it from Orange and others in the market. It was, however, a miscalculation because people don’t want to see a program or a film because it is from one distributor or another, they want to see great content regardless of where it originates. That is what Netflix already understood, and is reason why Netflix continues to invest in “Original" programming to the tune of a few billion dollars a year. Netflix was always going to have leverage because it is an aggregate and has zero marginal costs relative to Canal+. Boutiques, boxes and after-sales service cost much money; and despite Netflix having increasing COGS, but they are nowhere near what Canal+ would require for the same investments in original content. Canal+ was doomed to open the door to Netflix. It was just a matter of time.

Oh, how disruption makes even the mightiest dance around to the tune of the disrupter, or should I say, Aggregator?

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.

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