Data, data, data

Good day everyone. As promised, back to a practical issue, this time less generalist and more centred on purely digital initiatives. Hope you enjoy it, let me know, don’t be shy.

On to this issue.

Data is the new oil

If nothing else, Digital Transformation is inseparable from data, not just any data, but good data and data that can be exploited in the short term as well as the long term. 

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. On the other extreme, data is not God, so some restraint and sensible treatment is necessary. I’m getting ahead of myself, so let us look at data and how we can, firstly, identify data to capture then develop data capture strategies.

Where is the data coming from?

Before digital systems were the norm, captured data was organised and designed in a systematic manner, with businesses specifically thinking about what it was they wanted to retain. Investments in the tools necessary to measure data were onerous and notoriously unreliable. 

First Building Management Systems (BMS) developed by the likes of Sauter and Johnson Controls amongst others, were simple systems based on Programmable Logic Controllers or PLCs. A far-off thermostat would send (infrequently often) a signal to the central until that would apply a simple logic then actuate the command on another basic module to apply the remedial action. High temperature in the main meeting room due to human activity would trip the thermostat to send a signal to the central until which would in turn look at the PLC code to send the start fans and send cool air to the room (I’ve highly simplified it here, but you get the picture):

IF HIGH TEMP THEN OPEN COLDWATER VALVE AND START COOLING FANS

In more operations roles, data would be extracted from systems such as the Payroll and in some cases specific market surveys were published to generate data, but nothing like the amount of data we produce in the modern world. In fact, data is being produced not only in vastly larger quantities, but that data is being generated automatically whether we want it or not.

The applications, devices and sensors that have been deployed since the early 2000s, there is a near constant avalanche of data being produced on anything from the length of time you slept to detailed nuances of the movement of people in a particular corridor of a shopping mall. Social Media additionally generates tons and tons of information about us and our surroundings. The whole supply chain from development to the final death of a product is sourcing data all the time.

The indications are that this rate of increase is not slowing but increasing. What was benign data may be turned in to extremely valuable data in a short period of time. The Facebooks and Googles of the world know this and are making it easier to capture and analyse data internally and making much of their tools available for the general public.

The difference between then and now

The data projects of the past were designed and implemented to strict rules and guidelines and the data produced was subsequently structured and used to fulfil basic objectives. To give you an idea of exactly what structured data is let’s first look at its definition according to techopedia.com:

Data conform to fixed fields. That means those utilizing data can anticipate having fixed-length pieces of information and consistent models in order to process that information.

We can see that structured data has specific attributes that let us or our computers know beforehand how that data will appear, allowing us to apply processing easily. Examples of structured data are elements such as the information on your Passport; Name, Age, Place of Birth, Expiry Date and other basic simple fixed data types.

Modern data, on the other hand, is unstructured and is defined by techopedia.com as:

Unstructured data represents any data that does not have a recognizable structure. It is unorganized and raw and can be non-textual or textual. Unstructured data also may be identified as loosely structured data, wherein the data sources include a structure, but not all data in a data set follow the same structure.

Examples of unstructured include the data generated by corporate Customer Relationship Management (CRM) systems or the previously mentioned Social Media applications like LinkedIn, Twitter and Facebook. Although the data generated is classified (name, amount spent, next call-back date etc) the data is loosely tagged rather than forced in to specific lines and columns in a spreadsheet. In fact many modern systems deliberately unstructured data to push the boundaries of what can be extrapolated with these datasets, sometimes producing surprising results.

Data capture strategies

Let’s first look at some of the places you can find data relevant to your business. There are many sources and clearly, I can’t list them all and quite frankly I don’t know of all of them either. But there are some basic examples to help you get started on your own data research.

Google Trends

Google Trends is probably one of the most well-known. It’s a free service to all comers, and you don’t even need a Google account to benefit from its information. Simple to use, the interface is about as Google as you can get. Type a word or two and Google Trends will tell you how they are trending in Internet search over the last several years. Google Trends ranks its data on a scale from 0 to 100. 100 being peak interest on the subject and 0 either meaning 0 interest or no data was available. In the following example, I searched Digital Transformation and set the time span to “2004 - present”. This was the result:

Source : Google Trends

Digital Transformation is at peak interest currently, which is logical, but didn’t start becoming of interest until around 2014. That in and of itself is an interesting data point, Digital Transformation is a fairly new phenomenon. Additionally, you can pit search term against search term to gain insights in their comparative interest. Useful to judge interest in one type of product versus another. Being that this is not a lesson in how to use Google Trends, I won’t go into too much detail, but you should know that the data can be displayed by region and you are automatically suggested related queries, again giving you an idea of the things people are searching for.

LinkedIn

Being the professional network with over 500 million users, LinkedIn holds an enormous amount of data on companies and employees. Whist there is no direct simple to use interface aside from LinkedIn itself, tools are available to extract data directly from LinkedIn for manipulation in other systems. One such example is LinkedIn Connection Analytics Dashboard from Vishal Pawar, Chief Architect at Aptude. This uses a PowerBI template to analyse the data exported from LinkedIn. There’s plenty more information from the link.

Source : https://www.linkedin.com/pulse/brand-new-perform-free-linkedin-connection-analytics-vishal-pawar/

Don’t forget good old data exports from legacy applications. These data can be useful when integrated in an analytics application like PowerBI or Google Analytics, even some basic statistical analysis in tools like Microsoft Excel can provide useful information.

Cloud Applications or Software as a Service (SaaS)

The value of cloud applications goes beyond the initial promises of yesterday. Most SaaS applications like Office 365 and Google Apps were sold on the promise that they entailed no upfront costs and offloaded the day-to-day operations management freeing the client to concentrate on the real value-added aspects of the business. Whilst this is somewhat true, it is incredibly short-sighted. The ‘real’ value of cloud-based apps is their data generation that can be collected, integrated, joined and exploited by all sorts of systems providing value that is greater than the sum of its parts.

Take for example a small business that has fairly standard needs for operations software, accounting, CRM and project planning. In the past the business would purchase a dedicated accounting application like Sage. A dedicated CRM, Salesforce for example and probably use Microsoft Project. These applications created silos that largely prevented the use of information between the systems. In actual fact, a very well remunerated job in the pas was that of a data integrator who had skills to “join” systems in a very basic manner to try to extract value of multiple systems rather than individual ones.

Today, my advice for a small business would be to go completely SaaS but choose the systems that offer data integration APIs or connections. Modern SaaS applications often allow linkage to platforms such as Office 365, CRM software like Hubspot, through mailing list management software (did anyone say MailChimp?) right through to accounting and billing. A client created in the CRM as a prospect should automatically appear in the project management system and be created as a client in the accounting software regardless if it has purchased anything or not. The value generated understanding through the different systems when, why, how, how much etc has enormous potential.

Linking these data sources usually happens through one of two paths, either directly by the applications interface where data connections are exposed directly, i.e., from one application you log in to the other application and grant access to data. The second path is a little more long-winded, but often achieves the same thing and can often provide even more capabilities. There are three well-known systems tax fit this description. Let’s have a quick look at each one.

Microsoft Flow

For a business with significant investment in Microsoft and particularly Office 365 and its components, the obvious choice is Microsoft’s own workflow management tool, Flow. It allows you to turn multi-step repetitive processes in to true workflows rich in data. Not limited to only Microsoft applications, Flow allows links to other SaaS platforms like MailChimp, Facebook, Google and Slack. Microsoft Flow is free to use with options for Premium connections and workflows.

IFTTT

If This Then That is considered the granddaddy of the initial wave of workflow applications and is still one of the most popular. Its real value is in the consumer SaaS space where it allows, like Flow, the linking together of hundreds of different platforms controlling lights to sending emails when there’s a tweet with a particular keyword. IFTTT is free to use.

Zapier

Zapier is probably the most sophisticated and consequently the most complicated to use of the three, but don’t let that discourage you. It’s the most accomplished and reliable workflow application I’ve used. I personally use it to link data between my CRM, Time tracking system, accounting software and various social networks.

As you can see, data is all around us and reasonably easily exploitable with a little help from tools like those I’ve highlighted here. If you want some help with your own needs, get in touch I’d be happy to help.

In the next part I’ll look at more data collection and introduce notions of simple data usage with powerful analytical tools. I look forward to publishing the next issue.

Recommended Reading

Measure what Matters, whilst not strictly about data collection and analysis, is a good book to get you thinking about the right type of data collection strategies with achievable outcomes (Key Results). It has a forward from Larry Page, one of the cofounders of Google who starts off by saying:

I wish I had this book nineteen years ago, when we founded Google.

Reading List

Will Artificial Intelligence Enhance or Hack Humanity? - Wired

A really interesting interview with Yuval Noah Harari, Fei-Fei Li by Nicholas Thompson of Wired.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested. The more the merrier.

Thanks for being a supporter, have a great day.

And Digicel's missed opportunity for Digital Transformation

Good day everyone. Today’s Issue is a follow-up from Issue 12, Management in the Digital Age. Let’s get straight to it.

Don’t forget to listen to the podcast I was a guest on ;) 

Kadia Francis (@digitaljamaican) asked me a question on twitter, I thought was very interesting:

@TFIDNewsletter Absolutely loved this. In terms of obsoletion isn't the same true for companies reluctant to incorporate technology into their business operations? We are in complete agreement that the future is digital, I say it all the time so stubbornness in that regard would be fatal.

Operations and their role in the digital future 

The question was in response to Issue 12 where I talked about management obesity, in the sense that, not only has the definition of management changed, but the quantity of managers necessary to operate a business these days had been constantly on the rise. This paradigm shift has produced a fundamental change in the structure of businesses:

This change in manufacturing layer has brought about a change in company structure. Low-skilled low-pay jobs are being replaced by highly skilled jobs paying higher salaries. But it’s not just salaries, responsibilities have also increased. As a line manager for a spindle maker, the responsibility was limited to the line and the workers occupying it. In the new plants, managers are responsible for much more and decisions have more implications for both productivity and efficiency, with knock-on effects that may cause the loss of hundreds of thousands of dollars. And, being that there are no low-skilled workers anymore, everyone has essentially become a manager. This is what I termed Management Obesity, a factory with only managers and no workers.

We’ve gone from a pyramid structure of management and workers to one with a portlier girth.

The old management structure versus today’s

It’s not limited to only manufacturing either. In much of the service industry, offices have become more and more staffed by managers of things and processes and not necessarily people. Many of today’s tasks in modern offices didn’t even exist 5 years ago, Marketing, Social Media Manager, Community Manager, Technical Officers, Environmental Departments, I could go on.

This issue was largely targeted at the production side of a business, but as Kadia rightly points out, operations are also ripe for digital transformation. Let’s look at the various parts that make up an organisation and I’ll attempt to show how digital transformation is or will affect them.

The best approximation of the various elements of a business can be found in the value chain. I introduced and talked about it in Issue 11:

Investopedia defines the Value Chain as:

A value chain is a business model that describes the full range of activities needed to create a product or service. For companies that produce goods, a value chain comprises the steps that involve bringing a product from conception to distribution, and everything in between—such as procuring raw materials, manufacturing functions, and marketing activities.

A company conducts a value-chain analysis by evaluating the detailed procedures involved in each step of its business. The purpose of value-chain analyses is to increase production efficiency so that a company may deliver maximum value for the least possible cost.

Essentially, Michael Porter’s Value Chain model allows you to break down your business into sections and attribute to each section their relative value and contribution to the end result, the value add of your products and services. As an example, someone who sells fruits and vegetables may have a fairly simple value chain where elements like logistics and marketing are the principle value creators of the business. A product like Apple iPhone, I think we can all see, is a very different proposition, with and extremely complex value chain.

The value chain is represented as a graphic where all the distinct parts contribute to the right-hand side, which is the profit. This graphic shows the most common representation of the value chain:

Denis Fadeev CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)

There are two distinct sections; Support Activities, Primary Activities that are in play in any business that generate value helping generate revenue, and hence margin.

Looking at the support activities like the firm infrastructure, which include HR, Accounting, Finance, Legal, PR etc., it is easy to see in areas such as HR, digital transformation has not only started, but has started to gain some real traction. An example is the use of the LinkedIn platform. Integrating it in to your business not only as a corporate rolodex, but as an essential tool for recruitment provides benefits that are over and above that of traditional recruiters. LinkedIn allows targeted advertising, peer recommendations, full (up-to-date) CVs — as long as you’re willing to accept that they are not formatted in the old-school way — and most importantly the networks in which potential staff revolve in. This is done in minutes compared to hours/days, if at all, in the past.

With Accounting — and by the way, I’m very fearful for the long term future of basic accountants — today’s software is available for free for basic skills to a percentage cut on invoices for advanced services, allowing even the most reticent and incapable, of posting to the correct account and consolidating accounts in a matter of minutes. And it is here we find the opportunity for accountants in the future, but I’ll leave that hanging for a while…

Most accounting software in the cloud allows for uploading of receipts, with AI image processing applied, can automatically post to the correct account for your expenses, parking, fuel, purchases and so forth. Gone is the manual entry and the keeping (almost certainly) badly organised piles of paper.

For Legal, it will be the same. Basic legal questions will be answered by machines capable of determining the right advice for simple solutions. This frees up business that would ordinarily wait for Legal to get back to them. Again, the opportunity for value-add by the lawyers is enormous.

In the primary activities of a business, procurement, manufacturing, logistics, marketing and sales and service, we see much transformation already taking place. 

Procurement is undergoing fundamental changes in the processes with automation of orders 

I talked about manufacturing and operations in Issue 12: Management in the Digital Age, talk a minute to read it if you haven’t already. Marketing and Sales have been revolutionised by digital technologies and continue to strive forward almost faster than the other parts of any organisation. In fact, when I talk about digital transformation to most businesses and people, they think in terms of marketing strategies using Facebook and Instagram, but this is only one side of a multi-sided problem.

So, you see the same shift and reduction in the obese middle is taking place not only at the production side of a business, but at its very core of operations throughout the enterprise. It’s a point I wanted to get across but didn’t articulate it very well at the time.

Digicel, cost-cutting and a missed opportunity for Digital Transformation

The OECS Business Focus site reports that Digicel has announced a partnership with fastforward.ai to “… accelerate its vision to become the digital lifestyle partner for its customers …”.

Right off the bat I’ll note my scepticism in how this will play out for Digicel. To me it looks more like a cost-cutting exercise dressed up as a new and revolutionary offer for their clients. To illustrate why I think this and what I think will play out, let’s look at the current position of Digicel and the offer that is fastforwrd.ai.

Digicel has for a number of years been struggling financially. Revenues are not growing, and costs are increasing. Looking at the since withdrawn F-1 filed in June 2015 prior to their attempt at listing on the NYSE, we can see a company that is having difficulties with debt — estimated at around 6 billion USD —, risks and cashflow.

In 2015, its revenue was made up of 60% voice communications, this has since fallen off a cliff as far as anyone can tell, and it is unclear whether or not data services will replace the lost revenue stream. In fact, Digicel’s revenue in 2013, 2014 and 2015 was stable at around 2.7B USD but it made a Net Loss in 2013 and 2015 with only a bright spot in 2014 where it made a Net Profit with some of this attributed to Finance Income. I’m not a financial analyst, so I don’t want to go into too much detail, but suffice to say, things are not easy for Digicel.

Digicel has a number of strengths that are non-negligible, and it is these Digicel should develop their innovations going forward. They currently boast 14 million subscribers in the regions they are implanted (Latin America and the South Pacific). They have built strong direct to customer relationships and their products supply lots of data about usage and habits.

They have, like most businesses, a few weaknesses too. The prepay/post-paid ratio is lower than in European or American markets — to be fair, this is a symptom of the zones they are present rather than a failing on their part —, they’re facing rising costs (5G anyone?), with tighter margins due to a nose-dive in lucrative voice services. And as they admitted in the F-1, they face “significant competition” in its markets.

Fastforward.ai turns out not to be what I’d hoped. When I first saw the announcement, I thought that Digicel was expanding in to digital payments, something that is badly lacking in the Caribbean and as a result a massive opportunity for an established player with experience in transaction businesses and a direct-to-customer relationship. Much online commerce relies on digital payments and development is just starting in the Caribbean Fastforward.ai is a platform that allows marketing on social media platforms like Facebook and Twitter and is used to automate of customer support and promote offers direct to users. Hence why I feel this is more cost-cutting rather than innovation.

Perhaps I’ve misunderstood the opportunity for Digicel with this partnership, but I can’t quite see how it will replace its falling revenues from the cash cow voice services with this initiative. Noted for review in the future.

Reading List

Digital Transformation Strategy to Launch Shortly in St. Kitts & Nevis - OECS Business Focus

Source : OECS

I’m Looking forward to learning about the details of this strategy in the coming months. One to watch.

In South-East Asia, Grab and Gojek bring banking to the masses - The Economist

Source : The Economist

This is a follow-up too. We talked about ride-hailing in the Caribbean and one of the difficulties highlighted was the lack of bank accounts held on the islands and the (virtually none) use of digital payments. This article highlights the opportunities identified in South-East Asia and I think it is a model worth adapting to our context. What do you think?

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, Have a great day.

Have a list to Michele's excellent podcast, where we talk about ride-hailing and its potential as a complementary service in the Caribbean

Hi everyone. Just a quick note to let you know that I was a guest on Michele Marius’ excellent podcast, the ICT Pulse Podcast.

You can listen to it from the link above, or find it in your favourite podcast client. Just search for “ICT Pulse”.

I think the discussion turned out really well, I hope you enjoy it and i hope it gets the brain juices flowing 😄. Discuss it on Twitter or on the dedicated Slack channel (email for an invite if you wish to participate).

My best,

Matthew

Continuing with an external analysis

Good day everyone, I hope you’re all doing well and had a great week.

In any project that requires change on a large scale, an inescapable part of that process is the initial diagnostic. I’ve written about the PESTEL tool and how you can use it to analyse the external environment and how the Value Chain helps you understand the component parts of your business and the value each link brings towards your final profit.

In this issue, I continue the diagnostic to better understand the market in which you operate or are targeting. This article assumes you’ve read the previous articles and that you know or have determined your segmentation — the specific, detailed definition of your customers or potential customers. I know it is another blob of theory, but it’s important to start with the fundamentals, whether you’re are digital or not! The digital specific stuff is coming soon, I promise 😄.

On to the issue. Remember you can discuss it on the Slack. Have a good weekend.

Photo by William Iven on Unsplash

When you operate a business, detailed knowledge of the market in which you reside is important to have on an ongoing basis, particularly with Digital Transformation, as by definition, Digital Transformation is constantly evolving.

Digital Transformation more closely resembles a penalty shootout whereby not only the goalposts move, but the participating teams are constantly changing, and the rules of the shootout are modified in relation to the who scored or not, when and how. 

The framework I introduce in this issue is, once again from Michael Porter who else? It’s called the Fire Forces Framework, first published in the HBR in 1979 and it is as relevant today as it was then. Broken down into five components the Five Forces Framework (5F) is sometimes used with a 6th component and renamed 5F+1. Here I look at each component in detail.

Threat of new entrants

Unless your business has a serious moat to prevent attacks from competitors, you are under threat. Any market that generates profits for businesses will automatically be subject to the potential threat of a new entrant. In this scenario, there are only two outcomes, either the market expands or is already big enough to support several businesses providing the same products or services, or the competitor will eat away at your market, reducing your profits. If profitability falls to zero, a situation called perfect competition, the industry will eventually cease to exist or run at a bare minimum.

A good example of this effect can be seen in the PC industry. The original IBM PC was a premium device and commanded healthy profits for IBM. The commoditisation of the PC industry — for reasons I’ll not discuss here although suffice to say the widespread availability of designs and OSes played their part — led the industry to the inevitable path of lower and lower costs to the client, which were financed by lower and lower costs of sales (COS) and hence lower and lower quality of the final product.

So, what are some of the threats you need to take into account, and how do you counteract them?

Some markets inherently have barriers to entry — i.e. start-up costs, certifications, regulations etc. — like those of professional services (Lawyers, Accountants for example) and markets where regulation are a necessity. The drug industry is highly regulated for obvious reasons and a recent example of how that industry is ‘protected’ (and rightly so) is the scandal of Theranos (1). The book Bad Blood does a remarkable job of telling the story, thoroughly recommended.

Some industries are approved monopolies, like government institutions, and others just require huge start-up costs. Where Digital Transformation is disruptive is that it enables businesses to start up with much lower costs and have a presence that is comparable even the largest corporation on the planet. If your business is a brick and mortar business you should be examining in detail how new digital businesses might be able to provide the same thing as you, only with lower COS.

Another area to examine is the network effect and the switching costs that businesses like Facebook enjoy. Because of the network effect — all your friends are on it and any new acquaintances are probably on it — Facebook benefits from the fact that you’ll find it hard to quit Facebook because you will essentially isolate yourself. In a less nefarious representation, a business that develops and expands its moat providing value to the customer will reap the benefits of sales and profit.

Threat of substitutes

Any industry has its potential substitutes, for example, the telephony industry started out with landlines, but today’s landscape offers users with alternatives using a different technology, mobile phones using cellular technology and in some cases satellite technology.

When analysing your products and services with respect to substitutes or potential substitutes, a number of factors need to be considered. For example, a buyer’s susceptibility or readiness to purchase a substitute may be based on brand loyalty but legal barriers may exist — think Huawei. The US 5G market is just getting started and built out. Huawei has been outright banned from providing critical infrastructure in the US (and other regions like Australia and Japan) because of its links to the Chinese government.

As in the case of the threat of new entrants, switching costs are to be considered here. In fact, a great example is the ride-hailing services first developed in large US cities, like Lyft and Uber. The existing taxi companies relied too much on the barriers to entry being immutable, regulation. Once regulation allowed for individuals to supply transport services for the general public, their industry imploded. It cost nothing to try an Uber over an existing cab service, in fact in most cases it was cheaper and faster. The average percentage of riders waiting less than 5 minutes for a traditional taxi was around 37%, with Uber that figure jumped to 90% (2).

Bargaining power of customers

The bargaining power of customers is best understood as the power consumers of the product or service have to put the business under pressure. The antidote businesses employ to counter this pressure are designed to reduce buyer power and often imply sophisticated fidelity programs, increasing value for the customer and other moats as describes above. The thing to remember most is that a customer who has many choices is a powerful customer.

Things to consider from a digital perspective are those factors that influence your potential buyers’ decision to purchase from you or not. Unfortunately, in a digital world selling purely digital goods, your competition is international by definition. Customers are inherently more powerful than say a small shop in a village all alone where customers have but no choice than to frequent it. If you are selling physical goods using online methods, considering the value you bring to your customers, your differentiation vis a vis the competition and the impact of your COGS amongst others is important to analyse and determine. The Value Chain analysis can help you do this, particularly if you extend the analysis beyond your business, by understanding where you fit in a large value chain of goods and services.

Bargaining power of suppliers

Just like the bargaining power of customers, it’s best to think of suppliers in terms of their potential to exercise pressure on your business. It’s additionally important to define what suppliers are should be included in this analysis. Suppliers are not just the distributor from whom you purchase your raw materials or packaged goods for resale, your suppliers are also your employees who supply services for a price (often intangible like working conditions, work hours, holiday days etc.). Many of the same factors discussed above are just as relevant here, however, you need to look at them from the supplier perspective.

Competitive rivalry

Now that I’ve discussed the factors that influence the specific market being analysed, the competitive rivalry is fairly simple to determine by using the knowledge gained above we can determine for example, how many competitors there are in the market, their relative power, whether the market can support multiple rivals or just one monopoly, whether the moats are deep and wide or shallow and narrow. As an overview, it should tell you about the attractiveness in your market. If you’re thinking of opening a general store on a strip mall of general stores (an extreme example I grant you) it should be obvious that the competitive rivalry is going to be intense, and don’t forget will almost certainly entrain the death of one or more general stores in the same area. Alternatively, if your product or service is sufficiently distinguished and the business model adapted to provide value for the customer with relatively few or no competitors, the rivalry is low to inexistent. But beware! I mentioned in the opening, things change, and with Digital Transformation, things change fast. This analysis needs to be kept up-to-date frequently.

The +1 — Public Powers

Although mentioned in the threat of new entrants and substitutes, public powers, i.e., the state and its various structures that may make it more difficult for you and your competition to operate. The food industry is a good example where state laws about the cleanliness, the cold chain and other rules ensure safety for the consumers but inversely put up barriers to entry for potential businesses. These legal constraints should be separated from the powers and threats as they are not dependent upon the industry and can change for political reasons and not necessarily other concerns. Keeping them in mind when analysing your market can help you identify potential future risks, just look at the Uber/Taxi business mentioned above.

Last Word

Remember, the forces being exerted on each of the above components can be both positive and negative. If you, for example, are an incumbent in the telephony industry and government regulations are strengthened, your first thought may be that it is an inconvenience and a cost for you, but deeper analysis will probably show that it is even more of a difficulty for potential competition and will defect strengthen your position. The GDPR regulations will do nothing but strengthen Facebook’s position. I’ll not do a deep dive as to why, suffice to say that GDPR requires infrastructure and software development beyond the means of smaller social networks, thus making Facebook even more resistant to competition.

Diagrammatically represented, the Porter 5F model typically looks like this:

As ever, feel free to use this as a starting point for your own analysis, or call me.

Reading List

Pros and cons of countries going cashless - ICT Pulse

Photo by Gerd Altmann on Pixabay

A good article on the strengths and weaknesses of a cashless economy. Michele Marius’s site is a great resource to get an overview of what iOS happening in the ICT world in the Caribbean. She additionally has a podcast and I will be a guest on it in the near future. I’ll link to it once it is released.

5G is here! Can it deliver on Affordable Access to close the digital divide? - Web Foundation

Talking about substitutes in the Porter 5F model, 5G could be considered a substitute for traditional broadband services using ADSL. The promise of 5G is faster speeds, lower latency, better density (a big problem for 3/4G) and further distance coverage. This article looks at its impact in developing regions and how it may or may not help those regions catch up or even surpass the existing infrastructures in developed regions. I’m sceptical, but admit the potential is there.

Photo by Mario Caruso on Unsplash

A 'Blockchain Bandit' Is Guessing Private Keys and Scoring Millions - Wired

A fascinating story of the theft of “secure” blockchain protected cryptocurrencies.

Bednarek tried putting a dollar's worth of ether into a weak key address that the thief had previously emptied. Within seconds, it was snatched up and transferred to the bandit's account. Bednarek then tried putting a dollar into a new, previously unused weak key address. It, too, was emptied in seconds, this time transferred into an account that held just a few thousand dollars worth of ether. But Bednarek could see in the pending transactions on the Ethereum blockchain that the more successful ether bandit had attempted to grab it as well. Someone had beaten him to it by mere milliseconds. The thieves seemed to have a vast, pre-generated list of keys, and were scanning them with inhuman, automated speed.

Photo by Stanislaw Zarychta on Unsplash

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, I wish you an excellent day.

1 No, not Thanos!

2 Source: Hit Refresh

... and its obesity problem

Hello everyone.

Back on track today after an eventful few weeks. I’m really happy to be writing this and hope you like this weeks’ discussion. As I mentioned in the recap Issue a couple of weeks back, this Issue is about a thought I’ve have had for quite some time. In fact, if I’m honest it started some time in the 1980s. I was on a day trip from school visit to an automated car assembly line in the West Midlands in the UK. We were asked to think about how automated manufacturing was likely to change the workforce. But I couldn’t stop thinking about how … well, let’s get in to that in this Issue.

Thank you.

The technology that changed everything

Since man started building things to sell for profit, he’s found more ingenious ways to accelerate the task, which in turn generates more revenue, better profits and larger sales distribution. In early manufacturing more people meant more productivity, a simple equation that brought immediate returns. The mills of the north of England are testament to that simplistic philosophy, as the mills grew bigger so did their output. Their slow automation during the Industrial Revolution and the introduction of technology like the Multiple Spindle Jenny (invented in 1764) increased the production capacity of a single worker. Richard Roberts’ power loom first appeared in 1830 and provided a semi-automatic loom that took productivity even further. By 1894, even this loom had been modified to become almost fully automated with extra functionality invented and tacked on.

Robots

As technology advanced, we were able to design and build human replacement robots to assemble products. Some of the most revolutionary of the time were semi-automated car assembly lines like the one I visited in the 1980s. They required less manual staff and more skilled workers to operate, control and optimise the robots that were, in place of humans, picking things up off the supply rack, positioning and finally welding.

Welding robots in a Ford plant in Germany circa 1980 - Source CNN

We see here the first shoots of my argument; semi-skilled workers have all but replaced skilled/specialised workers to operate the machines.

These types of robots were installed at a cost of around $100K each but had a long lifetime and were able to work shift hours much longer than humans, allowing an amortisation over just a few years, despite high maintenance costs. Unimation was the first company to commercialise industrial robots in 1962, the fruit of work from John Devon who in 1954 patented the first designs of what were then called Programmable Transfer Machines.

Robots were quickly popularised in Europe by the likes of ABB Robotics and KUKA Robotics in about 1973. Use cases at the time included bending, polishing and grinding pipes. They were particularly useful in cleanroom environments where they could operate without all the constraints that are placed upon humans to prevent dust ingress. ABB’s robots were the first to be controlled by electrical microprocessors (see Issue 2) but soon the entire robotics industry caught up, producing fully software-controlled robots in the early 1980s. 

Advanced Manufacturing Robots

Despite their having many successes in manufacturing and other manually repeatable tasks, robots have had and continue to have notable failures. One that comes to mind is the beautiful plant Steve Jobs had built to assemble his new computer, called the NeXT, in Palo Alto, a stone’s throw away from his old employer Apple.

Just take a look at this promotional video produced by NeXT, entitled The Machine to Build the Machines.

https://www.youtube.com/watch?v=sT6aphdX0rI

NeXT’s Surface Mount technology Industrial Robots in action - Source: NeXT

All very impressive, but multiple failures and the personal capriciousness of Steve Jobs rendered the plant inefficient with it not fully living up to its promise of beating the Japanese plants of the time. Declining sales hit the final nail in the coffin of the futuristic plant without it ever being tested to capacity in real life production. It did show however, that it was possible and in a few short years robotic manufacturing plants became virtually fully automated. This had the effect that jobs in the lower-skilled bracket were displaced and abandoned, with high skillsets required to operate and maintain assembly lines.

However, in typical Apple fashion the latest generation robots used, not in the building process, but in the destruction and recycling process, are second to none in the world and subject to study by academics and other businesses researching how to better recycle modern electronics goods. This article at CNET talks about it in detail.

Software Is Eating the World

In the Wall Street Journal on August 20th in 2011, Marc Andreessen of Andreessen Horowitz wrote an essay entitled Why Software Is Eating the World:

More and more major businesses and industries are being run on software and delivered as online services — from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not. 

Why is this happening now?

Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.

As humans, we’ve gone from fully manual processes being developed and standardised, moving through semi-automated systems aiding humans perform tasks more efficiently and effectively, to semi-automated robots replacing manual tasks right up to today’s fully software driven robots eliminating, in many cases, the need for humans in the manufacturing process. The next level of automation is in the use of Artificial Intelligence (AI).

At the two levels top and bottom the source components and finished products have essentially stayed unchanged — of course the products produced today have no relation to those products hundreds of years ago — but the fact that humans had stuff and made stuff has not changed in thousands of years. The layer in between, the manufacturing layer, has conversely seen change upon change as technology has developed. I’ve attempted to depict this in the diagram below:

The Change in the Manufacturing Layer

This change in manufacturing layer has brought about a change in company structure. Low-skilled low-pay jobs are being replaced by highly skilled jobs paying higher salaries. But it’s not just salaries, responsibilities have also increased. As a line manager for a spindle maker, the responsibility was limited to the line and the workers occupying it. In the new plants, managers are responsible for much more and decisions have more implications for both productivity and efficiency, with knock-on effects that may cause the loss of hundreds of thousands of dollars. And, being that there are no low-skilled workers anymore, everyone has essentially become a manager. This is what I termed Management Obesity, a factory with only managers and no workers.

We’ve gone from a pyramid structure of management and workers to one with a portlier girth.

The old management structure versus today’s

It’s not limited to only manufacturing either. In much of the service industry, offices have become more and more staffed by managers of things and processes and not necessarily people. Many of today’s tasks in modern offices didn’t even exist 5 years ago, Marketing, Social Media Manager, Community Manager, Technical Officers, Environmental Departments, I could go on. These jobs often involve skills that are, as we can see in the table below, ripe for replacement by AI.

Potential for automation - Source: Fortune.com (McKinsey&Company)

But it’s not all bad news. Truly human skills are still desired, and it is in these that you need to develop alongside your Digital Transformation process as referenced in the table of desired skills and threatened skills in the AI age.

Wtih thanks to JF Nantel, ESSEC Business School

It’s been a long-winded way to say that today’s Management Obesity is about to be disrupted by AI and it is the management layer that will take the brunt of the change. With much of the manual labour already removed, the next layer up in the stack is the natural target. And because software is eating the world, anyone who is not developing, supporting or otherwise facilitating the use of software will find it increasingly more difficult to find employment in the future. This is what I saw back in the 80s.

Side Note - Issac Asimov’s Robot Laws

The science fiction writer and scientist Isaac Asimov invented what he termed “The Three Laws of Robotics”. A novel entitled “Runaround” introduced the rules and they subhave subsequently been used as underlying themes in all of his robotic tales, like the successful film adaptation “I, Robot”.

First Law: A robot may not injure a human being or, through inaction, allow a human being to come to harm.

Second Law: A robot must obey the orders given it by human beings except where such orders would conflict with the First Law.

Third Law: A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.

Recommended Reading

Player Piano, Kurt Vonnegut. It’s a novel about this future, I’ll let you discover it.

Reading List

Apple iPhones get recycled in this secretive lab. Now it's opening up - CNET

Source: cnet.com

Speaking of robots, I couldn’t pass up on this article that clearly articulates how, in some cases, robots can have an extremely positive effect. Sit back and enjoy the article.

Will AI kill developing world growth? - BBC

Source: BBC

A thoughtful piece about the impacts of technology and specifically AI in going economies. Worth your time.

Caribbean voices rising in global Internet governance - SightLine

SightLine is a really good resource to learn about Internet Infrastructure related news. This article is a great report on the recent ARIN meeting held in Barbados on the 10th to the 11th of April 2019.

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