photo credit: B Rosen

I remember my first real grownup and serious web project outside of the university environment. It was 1994 and SSL was a novelty. People were making insane predictions that one day up to $600 million (think Dr. Evil) worth of consumer goods would be sold on the web worldwide. In 2007, just Canadian B2C sales were US$12.9 Billion.

Some folks, especially startups and smaller companies, saw the web as an opportunity to shake up the established order and establish a new sales channel or an entirely new business model. They invested what they could in building the first of what became known as e-commerce sites. Among established players, and some more conservative smaller players, there was initial hostility toward the new medium. When in 1994 I proposed to Ameritech (now part of SBC/AT&T) that they bring their lucrative print yellowpages online, I was run out of Hoffman Estates on a rail.

The con arguments ran as follows:

1. Investing in the web will increase our IT costs and require us to support lots of new and different technologies.
2. It will spoil our existing business model.
3. The platform is unproven. We have a proven client/server (desktop, etc., etc.) solution which is far better than some primitive web site.

These were all valid points. And if the web was just the idea of some crazed developer, then it could have been safely ignored.

But the web was being rapidly adopted by both consumers and businesses, knocking down barriers to entry wherever it went. The network effect was about to slap the entrenched players upside the head.

Now we're seeing much the same thing in the world of mobile, which right now means mostly iPhone but will at some point include more players such as Android and perhaps Blackberry devices. The same objections are being raised towards the iPhone -- more IT costs, spoils our business, unproven/not capable -- and the answer is still the same: if you ignore iPhone/mobile, then the network effect is going to knock you upside the head.

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photo credit: belgianchocolate

In my last post about innovation I referred to Clayton Christensen and his concepts of sustaining versus disruptive innovation. It reminded me a little bit of the concept of punctuated equilibrium in evolution.

The idea is simple: suppose you have a bunch of monkeys working in an office. You have the executive monkeys who eat healthy meals and exercise at lunch time. Then you have the office drone monkeys who go outside into the rain and cold for smoke breaks and eat gyros and fries for breakfast. The executive monkeys have nice glossy coats, get the best mates and have nice condos in desirable parts of town. The drone monkeys...not so much.

While the executive monkeys only evolve slowly, as various members drop dead of coronaries before being able to reproduce, the smoke break monkeys are exposed to much harsher conditions, evolve in some surprising and menacing ways, then stage a bolshevik revolution (punctuation!!) and eat the executive monkeys' brains.

They then become executive monkeys, kick the smoking habit, suppress the surviving executive monkeys into the role of office drone, and the whole thing happens all over again.

Now innovation isn't genetics, but the concepts are surprisingly similar. Sustaining innovation is gradual, while disruptive innovation enters into the market at the low end before moving up market and displacing the incumbents.

So, the next time you're tempted to scoff at your small fry competition, pause for thought. They may be evolving more quickly than you are.

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photo credit: sanchom

In some past posts I've looked at some of the cultural, organizational and process issues on why large companies find it hard to innovate with new, quality software. Today I want to take that process a step further and look at why established players have such a hard time innovating in general.

First two anecdotes, where I will combine the topics of Susan Boyle, chess and the Kindle. First, chess and the Kindle.

So I now am the proud owner of two Kindles, the small format Kindle 2 and the large format DX. It's great for reading novels, less so for reading reference books where you jump around a lot (even setting and using bookmarks in a small 30 page PDF is a pain). There are two areas where the Kindle falls short: there are very few chess books for it and there are even fever German language books. Hopefully that will change with the advent of the international Kindles and soon amazon.de will start selling ebooks.

Until such a time as more chess books are published for the Kindle, however, I have buy from Amazon the old paper way or go to my local Borders and Barnes & Noble to browse chess books (yes, there are playable ebooks from ChessBase and the great ChessPublishing.com, but not everything is best consumed with a laptop and a chess engine). Yesterday I stepped into Barnes & Noble to see what they carried in their chess section. The two small shelves were stocked with crap. How to Beat your Dad at Chess was probably the most sophisticated title. I went over to information and asked them what was up with the chess section. A nice young man told me that they had recently "optimized" their store, and they had reduced the chess section to the titles that actually sold.

Now I buy a lot of books. I buy fewer physical books these days because of the Kindle, and I buy more books from Amazon than anywhere else, but I still buy a fair number of expensive books in stores (such as technical books on software development). As a result of this "optimization", when I make my decision on which bookstore to visit to buy the latest GWT tome (because it's not so great reading reference books on a Kindle), I'll say "well, maybe I'll swing by the chess section and see what they have." So that now means Borders, as B&N's chess section has gone from bad to crap.

B&N has pretty much lost me as a customer, and that means that the next time they "optimize" their store, they'll narrow down their selection even further until the only customers they have left are those whose tastes are the broadest or the most bestseller driven. They've gone down market and become Walden or B. Dalton.

Contrast this depressing tale of retailing myopia with the success of Susan Boyle's debut album. Her's is the most successful female debut album of all time in the United States -- more successful than Beyonce or Madonna. This improbable feat was achieved with mostly physical CD sales, as her "more mature" audience (read "old luddites") still buys albums rather than buying singles off of iTunes. Some industry folks are seeing this as a sign that all may not be lost for their industry, that by appealing to a broad audience and "optimizing" their product for baby boomer tastes will save their industry. I see it as something else: the last gasp of a dying business model.

Ok, finally we get around to the innovation angle: these two anecdotes illustrate why it is so difficult for established players to innovate: because innovation is risky. True revolutionary innovation risks upsetting the established order of things -- an established order where you're on top -- and throwing everything into chaos (think travel agents, newspapers and...record publishers). Rather, established players are focused on improving or "optimizing" their products along one or two parameters that they think matters to their existing customers.

This certainly isn't an original insight on my part. If you're interested in exploring this idea further, you need look no further than another HBS professor: Clayton Christensen. From his site:

Because companies tend to innovate faster than their customers’ lives change, most organizations eventually end up producing products or services that are too good, too expensive, and too inconvenient for many customers.  By only pursuing “sustaining innovations” that perpetuate what has historically helped them succeed, companies unwittingly open the door to “disruptive innovations”.

We see this often when we work with large companies to bring out new versions of an existing software product. Too often they fail to see that their competitors aren't eating into their market share because their products are "flashier" or "webified." Rather, these competitors are changing the business model by changing the marketplace -- making the product or service available to a whole new audience -- or changing the business model -- operating effectively under lower gross profit margins. (Often there are changes in their customers' marketplace as well.) Being the product manager that put the company's core business at risk is not a way to ensure job security.

The only way revolutionary or disruptive innovation can happen in larger companies is if the commitment to change comes from the very top. In our experience, the companies that succeed in innovating new software and changing and often abandoning their old business are the ones where the CEO is directly and personally involved in seeing through these changes.

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photo credit: dno1967

There's a good article over at the Guardian entitled Memories of a Paywall Pioneer by former Salon.com managing editor Scott Rosenberg. He reflects on Salon's experiences with various subscription and advertising strategies and muses on how Rupert Murdoch's move to charge for content is likely to play out. I especially like this succinct formulation of the bad business strategy being followed by "old media":

I start with the assumption that internet-based media will gradually come to dominate news distribution and consumption over the next, say, quarter-century. TV and print won't vanish but they will steadily lose readers, influence and revenue. They ought to be using their "legacy" revenue to fund the expansion of their online presence and experiments; instead, they seem today to be eager to squeeze their online operations for revenue to subsidize the old newsroom. It's the same kind of short-term thinking that has already allowed so many newcomers and interlopers to seize their readers and advertisers.

His point that once readers get it in their heads that your site is "closed" to them, they hardly ever come back, should give Rupert pause.

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photo credit: Ian Muttoo

A whole lot of years ago, maybe back in 1992, I went over to Gary Becker's home to install a gopher client on his mac. I remember it was one of those brick macs, though those were already being supplanted by newer mac models. I also remember making a decision to install an early web browser on his mac, even though there wasn't a whole lot of content there compared to gopher. I talked his ear off about how it was so easy to put in actual links to other documents, sort of like citations that would take you to the other documents instantaneously. I thought at the time that this would change the very nature of how people would read and use written materials. Given how little text was actually online at the time, this seemed pretty far fetched. Witness that I got fired from a project in 1994 for having the temerity to suggest that Ameritech put it's Yellow Pages online. Well, it turns out that I was right.

Fast forward 16 years. Now that same Gary Becker is sharing a blog with the well known Federal Appeals Court judge Richard Posner. In a post from this past June 23rd, Judge Posner takes on the accelerating decline of the newspaper industry and proposes some legal solutions to the crisis. The nutgraph is this:

[I]t is much easier to create a web site and free ride on other sites than to create a print newspaper and free ride on other print newspapers, in part because of the lag in print publication; what is staler than last week's news. Expanding copyright law to bar online access to copyrighted materials without the copyright holder's consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder's consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

Judge Posner's assessment of the situation and his proposed solution constitute a cognitive, practical and freedom of speech failure.

Cognitive: He Doesn't Know What He's Talking About

Posner's use of the term "free ride" gives you some sense of what he thinks the problem is. The reason that newspapers are failing is because people are reading blogs and other sites that are linking to and paraphrasing the newspaper articles and therefore are getting revenue from the newspaper's work. First, this betrays an ignorance of what the most widely read blogs offer their readers. While there are some posts that link to newspaper articles and other content, most of these top and second level blogs produce their own original content, some of it at a par or even higher level than that of newspapers. Take the example of Talking Points Memo, a blog that has grown into a source for original investigative reporting and original political commentary. Some blogs are now full on political action and fundraising institutions and media criticism organization. Posner blithely paints these with the brush of derivative and worthless me too journalism.

Having disposed of his "me too in pajamas" view of those dern freeriding bloggers, the linking and paraphrasing aspect makes even less sense. First, links drive traffic to a site. Period. End of story. Fewer links mean fewer visits, less ad revenue. Lower google rankings. Less ad revenue. Paraphrasing is a bit different, in that it has more to do with how the newspaper industry has failed to adapt to changing times.

Having spent some ten years working with newspaper web sites, I have a somewhat more skeptical and, dare I say, informed view of the failure of the newspaper industry. Gary Becker may want to share some concepts with Posner, such as barriers to entry. If more people are getting their news online, then the printing and distribution costs that prevented other organizations from entering the news, information and opinion marketplace, are no longer effective barriers to entry. Marketing costs are still there, of course, but they are a far less effective barrier to entry.

So, who has entered, and what has it meant for the newspaper industry?

• Classifieds got coopted early in the history of the web. Chomp. That represented 60% of a newspaper's revenues that are never coming back.
• Opinion journalism is cheap and has been coopted as well. Politico is merely the latest example of mainstream journalists striking out on their own. Chomp. More revenue gone.

While it's clear from their very name that newspapers are based on paper, it's maybe less clear that their very business models and ways of working are built on the weight and cost of paper. In order to be profitable, a newspaper has to have some percentage of it's surface covered with ads. That number has fluctuated over time, but let's pick 70% as a reasonably accurate estimate. If I can sell 100 pages at 70% ad coverage, that's how many pages of news I will have. It doesn't have anything to do with how much news happened that day or how big my newsroom staff is. If I can't sell more than 100 pages of ads, I won't print more news.

On the web the economics are different. The cost to deliver another page view is minimal and I don't have anywhere near 70% of the surface of my site covered in ads. Therefore, the more content I have, the more page views I have, the more money I make. Ideally, I'd want those columnists who are now writing fairly lengthy columns once or twice a week writing lots of little blog posts every day. More page views, more money. Those sites, like google news, that are paraphrasing or abstracting the newspaper articles and linking to them, are merely meeting a reader demand that newspapers cannot or will not meet.

I could go on and on, but let's move to the practicality aspect of the argument.

Practical: It Won't Work

Preventing paraphrasing and linking won't save the newspaper industry because it doesn't address it's fundamental problem. They are losing money not because others are stealing their content but because they are being out-competed by other more nimble organizations. I go to EveryBlock's crime data because they've invented a better mousetrap than either of Chicago's two big newspapers, not because they are stealing content or ideas. If the newspapers are being out-competed on the national level and the local level in specialized areas, will making them a protected class and preventing linking and paraphrasing save them? Clearly no.

Freedom of Speech: He Who Must Not Be Named

A link is a reference to something else. In a web browser, it can be clicked on and that click will take you to that referenced document. Is Posner recommending that we prevent linking or prevent the inclusion of references? Clearly you can't be against references, otherwise meaningful writing, including the practice of journalism, would not be possible.

This is one of those places where technology makes a mockery of the law. New technologies that can let you view the content of referenced articles without the need for a link will make all of these silly ideas around regulating technology appear like the technology ignorant bumblings that they are. Newspapers are but the latest in a long line of dying industries that are trying to lobby and sue their way to survival. The VCR's didn't kill the movie industry, the music download did kill the record store. The newspapers are dying, but there are already replacements, in whole or in part, for what they provide. They are not leaving behind a news vacuum, regardless of what Judge Posner may think reading over his morning New York Times.

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Daring Fireball had another insightful article on the contrasting product strategies of Microsoft and Apple last week. Well worth a read in it's entirety if you're thinking about your own product strategy.

A few observations were particularly trenchant and relevant to me in light of my own recent experience:

Microsoft is no longer ignoring Apple’s market share gains and successful “Get a Mac” ad campaign. But the crux of these ads from Apple is that Macs are better; Microsoft’s response is a message that everyone already knows — that Windows PCs are cheaper. Their marketing and retail executives publicly espouse the opinion that, now that everyone sees Apple computers as cool, Microsoft has Apple right where they want them.

They’re a software company whose primary platform no longer appeals to people who like computers the most. Their executives are either in denial of, or do not perceive, that there has emerged a consensus — not just among nerds but among a growing number of regular just-plain users — that Windows PCs are second-rate. They still dominate in terms of unit-sale market share, yes, but not because people don’t recognize Windows as second-rate, but because they don’t care, in the same way millions of people buy metric tons of second-rate products from Wal-Mart every hour of every day.

That’s the business Wal-Mart wants to be in — selling a zillion cheap low-margin items and turning a profit on volume. That’s not the business Microsoft is in.

The truth of this was particularly relevant to me because just a few hours before reading this, I had spilled a full glass of water all over the keyboard of my laptop. An occupational hazard of talking a lot with your hands, but one I'd successfully resisted for the last two years, since my last such incident. It's a still rather painful memory.

I had spilled half a glass of wine on my pc, thanks to my one year old daughter's enthusiastic hand waving (it runs in the family.) As I frantically tried to sop up the spilled liquid while turning off the pc, I heard the hiss and crackle that told me I was in trouble. The next day I went in and had one of our infrastructure folks see what they could do, while trying to restore onto one of our spare pcs from my backup. It was very frustrating, wasted about two days of my time and quite a few hours from our staff, but I eventually got back up and running, minus a half day's and an evening's work that had been on my laptop.

Contrast that with my experience last week: I had since switched to a mac, have loved it, and switched my wife to a mac as well. My wife loves it, and I now hardly ever hear her calling "hon, it's not working" from her home office, something which happened at least a few nights a week when she had a pc. My experience last week just reinforced what a good decision it was. When the spill happened (a nearly full glass of water, all over my keyboard) I did the same thing as last time, shut down the computer, sopped up the wetness, turned the laptop over and called support. No sizzle. Within an hour, I was back up and running on one of our spare macs with practically no data loss, thanks to my continuous Time Machine backup. Worth the extra money? For both me and my company, the answer is a resounding YES!

Related Services: Custom Software Development, User Experience Design

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The video does not have a lot of production value, but its got humor, harmony, cheesy mustaches and sombreros. And it’s gotten over 2.6 million views over the last six days. Not bad for a band whose previous top video got about 25 thousand.

What does all of this have to do with software development? 

Some of the same things that make the video a runaway success will help you in developing software that’s a runaway success:

1. Solve your own problems. They’re their own target audience.  They know the subject, what’s important, and what’s not.  own subject.   They know they’re not alone, so lots of other people have this problem.  They’re passionate and that’s the best way to get others to feel passionate about it too.   As it turns out, their problem is shared by millions, and their solution literally strikes a chord with millions.
2. Be yourself. If they had been lawyers, they might have looked to start a class action lawsuit.  But they’re a band that plays whimsical, fun country music, and so they made a song about it.  They’re talented, not pretentious, and the song is catchy.
3. What’s the big idea? It’s pretty simple - United breaks guitars, and they don’t care.  The song has a simple vision, and it takes sides.
4. Have an enemy. Pretty self explanatory in this case, but it’s equally applicable to software:  “One bonus you get from having an enemy is a very clear marketing message. People are stoked by conflict. And they also understand a product by comparing it to others. With a chosen enemy, you're feeding people a story they want to hear. Not only will they understand your product better and faster, they'll take sides. And that's a sure-fire way to get attention and ignite passion.”^*
5. Essentials only. The video production qualities are low, the marketing budget was probably nil, but the song is funny, the tune is catchy, the harmonies are sweet, and the message is dead on.

None of this is a guarantee of success, but it sure helps.

Sounds a lot like Getting Real, doesn’t it?

^* Have an Enemy, in Getting Real by 37 Signals.

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Although I’ve seen so many players rise and fall over the years, what has inspired this post is the irony of what is happening to Microsoft. In the early years of my technology career it was Microsoft’s ownership of the PC O/S market that primarily allowed other compatible hardware manufacturers to create innovation and eventually marginalize IBM’s dominance of that market.

In the early years of PCs, the applications on top of the O/S weren’t even Microsoft applications. It was only later that Microsoft started developing their own applications and with them the predatory practice of squeezing out other application providers to rule the desktop.

Fast forward twenty years, and In many ways, they're a textbook case for two phenomena:  suffering the effects of incumbency (in Clayton Christensen's theory of disruptive innovation as articulated in The Innovator's Dilemma)  as well as case of technical debt.

Through some of their strong-handed practices and deep pockets Microsoft has been able to fend off and delay some of the threats from other vendors in the past but, in my opinion, it’s just a matter of time before that convergence of competitive forces brings them down a notch or two. In fact in my opinion it has already been happening on a number of fronts.

On the desktop and especially the mobile side Apple is making significant inroads. The iPhone is taking the high-end cellular phone market by storm, as essentially what will become a PC in a smaller handheld package and certainly owns the “cool factor” now. Although Apple on the desktop and laptop market still is primarily run only on its own hardware, it has adopted the Intel hardware architecture allowing Leopard to run LINUX or Windows under a VM.

The option of running legacy applications under a VM affords users more flexibility of applications while maintaining legacy ties. This is eroding the market for Microsoft’s Desktop Suites, as Open Office and other less expensive alternatives have matured and provide that basic functionality.

Microsoft’s gargantuan O/S suffers immensely from Worm and Viruses and from the negative effects imposed but the software layered on top to offer protection from those ills. On the server side Microsoft long-ago squeezed out Novell years ago but LINUX is still gaining market share here as well as a less expensive, more reliable, and more efficient O/S with less “bloatware”.

As far as the pressure from the Internet side of the equation, Steve Balmer said last week in Chicago that if he had one do over, it would be in the area of search technologies. Google and Amazon, both facilitated by the availability of Internet access from virtually everywhere, are in the process of moving as much functionality as possible to the Internet or the cloud.  Bing is a step in the right direction for Microsoft, but the jury is still out on whether it's too little too late.

While things are certainly changing, Microsoft is still very dominant player now and I’m not advocating that Microsoft is irrelevant or will be soon irrelevant any time soon. What I am saying is there is more than one player on the field now and it is having an impact regarding Microsoft’s market share and what Microsoft is able to charge for their applications. If not for Microsoft’s response to the competition that was initially started by Netscape, I doubt we’d be looking the fact today that any Vendor’s Browsers are free to download. Microsoft isn’t really falling but just losing its stranglehold on the IT world.

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Recent events in the newspaper industry got me thinking about some of what Adrian has been saying on the subject.

Adrian, as some of you may know, developed an influential early mashup called chicagocrime.org that combined crime data from the Chicago police department with Google maps, and after a stint with the Washington Post, started Everyblock with a grant from the Knight Foundation.

Everyblock takes the concept of chicagocrime.org to it's logical conclusion, as a geographic filter that aims to collect all the news and civic goings-on that have happened recently in your city, and make it simple for you to keep track of news in particular areas. They collect information ranging from crime data, restaurant inspections and building permits to news stories and craigslist lost and found posts to help you answer the question "what's happening in my neighborhood?"

It's what newspapers everywhere have been trying to tackle with their hyperlocal strategy, but from a different perspective: The data is just as important as the story, if not more so.

That local data is what Newspapers are in a better position to collect than almost anyone else, if they made it their focus.  Instead it's a means to an end for them, an end that is rapidly looking grimmer and grimmer.  Meanwhile, folks for whom data collection, aggregation and synthesis are the end and not a means (like Everyblock,  or business focused aggregators like IMS, Lexis Nexis, Factiva, Choicepoint and Thomson) look to have a much brighter present and future.  Just another missed opportunity for Newspapers, I guess.

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• Amazon EC2 is offering Windows on EC2, with the pricing at $0.125 per hour for a small instance running Windows Server (as compared to $0.10 for a Linux instance). You can run SQL Server Express at no extra charge. The SQL Server Standard smallest instance (Stadard Large) rings in at $1.10 per hour, however, which ain't such a good deal.
• Microsoft's Azure Services Platform. It's still in community evaluation mode, but there is one thing that is already clear about it: it's as confusing as all git out. One of the advantages of Amazon's services like S3 and EC2 is that they are simple and can form the building blocks for other applications and services.

If I'm provisioning a web application, I'm pretty comfortable thinking in terms of virtual servers or instances. Not sure how to think about scaling and cost with Azure. I think MS would have done better to start out with a KISS approach to drive adoption. Time will tell if their "it can cure cancer" approach will work out.

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Granted, that's only one location, but based on all of the annecdotal evidence I have, as well as how well the T-Mobile folks were trained to deal with the iPhone switch (not only on my request, but on my wife's similar call last week) I am expecting some pretty strong numbers form Apple tomorrow.

I'm also expecting decent G phone numbers for Q4, but I'm not sure how well they'll hold up later.

Update: It looks like Apple's Q4 iPhone sales topped 6.9 million, about 800,000 units more than RIM's 6.1 million in the equivalent period, beating most analyst expectations by a mile.

Interesting discussion on this over at Daring Fireball (of course) as well as a piece on Fortune on traditional analysts versus bloggers on Apple sales and earnings.  The bloggers got the iPhone numbers better than the analysts, but everyone missed on mac sales.

Related Services: iPhone Application Development, Custom Software Development

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Server-on-demand providers like Amazon's EC2, Joyent,
and others have reduced the capital necessary to launch scalable,
server intensive businesses. Google has just launched a similar
on-demand service, and companies like RightScale and CohesiveFT are building mature businesses around managing EC2 configurations.

...

Facebook applications are just the most extreme example of business initiatives that can be scaled on demand from $70/month on one EC2 server to $10,000/month on many dozens of servers running web, application and database server clusters and farms. Compare that with the old school of investing in a large data center with a significant fraction of the hardware and bandwidth that you might need if your business is a success. What used to cost $100k in capital can now be done with just a few hundreds of dollars.

...

And it's all possible as long as you are using a unix variant - Linux for the most part - to power your apps. So there is a whole class of companies out there using Linux that can out compete their Windows-using rivals - again, the capital they need to launch is much smaller because of cloud computing. That means Linux will win among the class of young entrepreneurial businesses that are so vital to the US economy.

It seems that Microsoft has spotted this gaping vulnerability and is seeking to close it. From the Amazon announcement on support for Windows on EC2:

Starting later this Fall, Amazon Elastic Compute Cloud (Amazon EC2) will offer you the ability to run Microsoft Windows Server or Microsoft SQL Server.

...

Customers will only pay for as much or little as they actually use; of course the actual price will be higher than Linux-based instances, due to the cost of Windows licenses. We’ll announce specific pricing when we make the service broadly available later this Fall.

Combine this with the announcement earlier this month that you could officially run Oracle on EC2 (though you still have to license it rather than pay as you go), and it's clear that commercial software vendors are feeling the preasure of SaaCS (Software as a Commodity Service).

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Jason Fried from 37Signals spoke yesterday at the ITA "Speaking of Success" event, about the history of 37Signals, their philosophy and culture, and the critical business decisions they've made to get them where they are today.

The software biz is fundamentally broken. Too many products fail because of the obsession of adding more and more, and trying to do too much.

Jason went on to say that the approach of adding more and more only works for companies that have lots of money and lots of time, but that for the average company the main goal should be to build something that is "good enough," get it out to the users, and improve the design based on their feedback. The challenge of which features to include, and which to say "No" to, is covered well in the "The Innovator's Dilemma," which he said "everyone in this room should have read." The book resonates the core philosophy of 37Signals, which is evident from their blogs, their book "Getting Real," and the design of the Rails framework. As an example of the "Good Enough" philosophy, Jason used his laptop and its basic webcam to stream the Q&A session out over justin.tv and send out a text to the 37signals Twitter group. "The quality probably isn't that great, but its good enough," and with that quick setup he had now broadened the audience by 1,000 users or so. (I searched for the video archive at justin.tv, but didn't find it yet.)

"Our products do less than the competition"

While this quote isn't new, I still find that its worth digesting, particularly as it relates to product planning and product design. I'm a big fan of Agile and iterative development, and the idea that we don't have to have the full product requirements solidified before we can get started. I like to take a product vision to market quickly, improve on the design, and add features as their necessity becomes more clear.

I found that the things that Jason mentioned that resonated with me the most were closely in line with what I liked about DHH's Q&A session at last week's WindyCityRails conference in Chicago. I think a big part of 37Signals success is due to the fact that its two primary partners are totally on the same page.

Working at a consulting company like Pathfinder presents two major challenges in this area. First, the customer most likely doesn't know anything about Agile, nor do they really care about it. They want to see results and the details of how those results come about may not be something they care to explore. Secondly, our customer cares deeply about the design of the product, and the features that absolutely HAVE to be in for the release. The idea of going to market with "less" is a difficult concept to swallow. I've found that the more the design process explicitly involves the actual end user, the easier it is to investigate the importance of a given feature, ask them about it, prototype it, and figure out if its going to make things better for them. Conversely, if the end-user isn't closely involved in the design process, feature priority is more of a guess, and out of fear and lack of certainty features are included because "yeah, we might need that too". So when the question is raised, "Which is a higher priority, feature A, or feature B?", the answer is often an unequivocal "BOTH!"

On this point Jason had two elegant explanations that I hope to draw from. First, doing "less" really means covering the "essentials" of what is needed, and doing those "fewer" things better. He mentioned their products as being like a tool, with a specific, focused purpose.

"A hammer is a tool, its very focused, and has a clean, simple interface."

It strikes me as a perfect example of clarity and focus, because no one is screaming for a hammer that measures distance, cuts wood, or tightens nuts & bolts. Its intended use is clear, it doesn't need to do more than that.

"We like to think of ourselves as curator's of the product. A curator at a museum chooses which pieces of Art should be included in the collection. They say "No" to many things. A building full of lots of Art that isn't carefully selected isn't a museum, its a warehouse"

I've certainly seen applications that were a "warehouse" of features in need of greater focus and "tasteful selection" for what should be included. My mission now is to find a better way to deliver the message that "less is more," and that in most cases, its better to get the application out to the users quickly, and leave room to iterate and improve on the design, than it is to try to build and release the perfect product all in one shot.

How do you deal with this issue in your day to day work? What effective techniques have you found for bringing clarity to the design of a product?

Photo Credit:
Darren Hester
under a Creative Commons Attribution License

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3. Your SDLC or Your Product – You Decide

Monopsony - the market condition that exists when there is only one buyer.

We all have heard the term "monopoly" and even know a little bit of what it means - a market where there is only one seller. But the related term "monopsony," a market where there is only one buyer, is not as well known and it's dangers not as well understood.

Certainly both monopolies and monopsonies will reduce competition, innovation and consumer choice, but they further constitute a big risk for the sellers. For businesses on the seller side a monopsony can be the kiss of death. Just ask Walmart's suppliers how good it's been for them.

Not all monopsonies are as obvious or as overtly damaging to suppliers as that of Walmart, but Apple's iPhone and iTunes appstore looks like a benign monopsony. A monopsony in that although the iphone consumer is the ultimate buyer, Apple determines what is permitted in it's appstore, and benign in the fact that Apple hasn't flexed that restrictive muscle more than a few times.

But for the business launching an iPhone app this monopsony - benign or not - presents a real concern, a real business risk. What happens if Apple decides to compete in your space? The evidence on what happens right now is not encouraging. Take the recent example of the podcasting application that was excluded from the AppStore. The reason for it's exclusion?

Since Podcaster assists in the distribution of podcasts, it duplicates the functionality of the Podcast section of iTunes.

That's the desktop version of iTunes versus an application on the iPhone that you can use without a PC or Mac. Presumably, if people don't have to use iTunes to get their podcasts, then there's less reason to use iTunes and consequently less chance that they'll actually spend money with Apple.

Since you only find out whether your application will be approved in the last step, i.e. after all of the hard development work has been done, that's a lot of risk to take. How to minimize it? One approach to minimizing risk might go as follows:

• Distribute an application with an initial pretty minimal set of functionality. Quick to produce and get the yes/no appstore answer.
• Design your application so that it supports and embedded language runtime, such as Ruby or JavaScript, and a capability to push additional modules of functionality to the application independent of the appstore.
• Extend your application using the above distribution mechanism. The only time you'll have to push a new version of the app is when the underlying iPhone platform changes and you'd like your embedded layer to take advantage of new features.

Of course Apple is known to have a "kill switch" to turn off apps that have already been downloaded to a phone, so even the above approach may not insulate you from risk. So, if you are developing for the iPhone, have a care on whether your application will run into competition from Apple. You may find your application unceremoniously rejected or killed.

Update: Looks like Apple has  banned another application, MailWrangler, that competes with it's own email application.

Related Services: iPhone Application Development, Custom Software Development

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If you can dream it, you can do it.

-- Walt Disney

You have a great idea, an idea that is going to transform an industry. You've turned a venture capitalist's head with your presentation and now you just need a software development firm to translate your vision into reality. This is where the trouble starts.

If you move in startup VC circles, you see enough of these deals go sideways or never get off the dime. Investors see hundreds of thousands or millions of dollars plowed into software development without a usable product or service coming to light. Fingers are pointed; tears are shed. For every success there are a half dozen failures. Why is that?

In my experience it all comes back to that word, "vision" as in "translate your vision into reality." What the heck is vision? If you've ever cracked a book on software project management (or just general project management), there's usually a section about having a project charter and a vision statement. As a young developer I would wince and turn to the next chapter. After all, I thought, isn't vision the same thing as what you're going to build? Isn't scope or, more basically, a list of things your are going to build, the same thing as "vision?" Why blather on in consultant speak about vision statements when a more concrete and practical project description could be had?

And this is where the trouble starts. If you don't have a clear idea of what you are building but have a bright and effective development team, you may still come up with a plausible list of things to build. You'll crank along, iteration after iteration, turning out software -- that is, after all, what a good development team does -- but you are likely not developing the right software.

Poor Vision: Are We Building a Spreadsheet or a Word Processor?

Poor vision is not the same thing as bad vision. You may have a very clear idea of what you want to build but it may suck, like the company that wanted to build a laptop software management suite based on cc:Mail in the face of the burgeoning web. No, poor vision means that you have a poor or incorrect notion of what you want to build.

Hopefully most of these ambiguities have  been cleared up by the heartless venture capitalists, but just in case, let's do an exercise. Answer the following questions about your proposed software:

• Do you know who your customers are? Not just traders, but day traders above a certain trading volume in options and futures.
• What is your value proposition? Why would someone actually use your software? Don't use "wonderful" or "joy" in your description.
• What specifically will your users be doing with your application? Don't use abstract verbs like "collaborate" to describe their actions.

If you can't put together a one or two paragraph description of your software that answers these questions, you just have a cool idea, not a vision. As a friend of mine likes to say, "that's crap...it's not something you can develop software from."

At this point you may be scratching your head and wondering what kind of idiot would launch into development without a good vision. It seems so obvious. The truth is that coming up with game changing business ideas is hard work, and in conceptualizing the business opportunity, you may fail to articulate a precise vision. Whatever the reason, software project launching with poor vision is all too common.

Poor Vision: The Version 2 Problem

There are other types of vision problems beyond a lack of clarity and focus. One common case is the "version 2 problem." This is where the stakeholder just focuses on the "new" things that are to be present in version 2 and ignores all the hard work that has to be recapitulated just to get them to where version 1 was. Asking the question "what are we building?" should lead you to realize that what the stakeholder is expecting is enhancements to version 1, not a complete rewrite or redesign. The why are they talking about a "version 2?" Ideally this should lead to a discussion that clarifies vision and expectations.

Poor Vision: Integrating the Wrong Systems

Poor vision isn't just limited to custom software development. Sometime the job calls for customization or integration of existing software packages. The vision problem here is that sometimes stakeholders will look at the feature list of an application and the fact that it has an API and conclude that tweaking the beast into your ideal solution is a piece of cake.

Here the solution is simple: make the stakeholders get their hands dirty. Force them to use the system in question -- no, vendor demos are not enough -- to accomplish some non-trivial tasks. This exercise, combined with an analysis of the power and expressiveness of the API, should resolve any vision dissonance.

The Perils of Agile Development

Poor vision is a problem that can strike any project and any method ("methodology" is the study of methods, right?). Agile development, however, is especially susceptible to it's chaotic effects. Why is that? The great strength of Agile development is that teams start developing and delivering software right away so that the client-developer feedback loop can operate early and often. If that feedback is useless -- as it is when you have poor vision -- the Agile development process can turn into a meandering mess, with features being scrapped, redeveloped and re-redeveloped.

How do you avoid this trouble? Simple: if your vision is poor, don't develop software.

Software development is a surprisingly expensive way to do product definition.

Waterfall, by comparison, is marginally better in this regard (but worse in most others), since the right thing to do in the face of poor vision is to not develop software until that vision has been clarified, and waterfall is excellent at not developing software until pretty late in the project.

That's not to say that you can't get stung by poor vision in waterfall projects (and stung by a number of waterfall's other shortcomings), but you've got more of a chance to catch the problem before expensive developer teams are deployed.

Fixing Poor Vision: Product Definition

The best way we've found of fixing poor vision is by going through a product definition phase. It can still be iterative and agile, so don't worry that you're slipping into a waterfall requirements phase. Just do some of the user research and product conceptualization up front. Use wire-frames and the like rather than code to spitball ideas and narrow in on a definitive product concept.

I'll have more to say on product definition in subsequent posts. For now, I hope I've convinced you of the importance of having a clear vision if you expect to succeed with software product development.

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The changes underway with groups have some positive and negative attributes. First, as a negative, LinkedIn is imposing a cap of 50 groups that any member can belong to. Changes have already started but effective 9/12/2008 if you haven’t already reduced the number of groups down to 50 LinkedIn will do it for you based on the sequence of when you originally joined various groups. While 50 may sound like a lot to some people, I was in 1,351 groups and deciding which groups to keep has been difficult, especially since I initiated and sponsored over 10 groups myself.

On the positive side groups will now have the ability within LinkedIn to support discussion groups, blogs. That means for a lot of groups you won’t need a Yahoo Group or something akin to that as a base and although the feature set may be more limited you’ll have tighter integration. Another negative is that LinkedIn could ultimately control your group since they control membership in LinkedIn. Stay tuned for updates as to how this is progressing.

If you haven't experienced what's available in terms of groups from LinkedIn, here's a way to check it out. Groups are free to join and when you perform a LinkedIn search, you can specifically search within specific groups. Support Chicago’s 2016 Olympic bid by clicking the link below and Joining the Chicago 2016 LinkedIn Supporters Group:
http://www.linkedin.com/e/gis/54811

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in Technical Blogs

The self licking ice cream cone that is blog awards has dripped on Agile Ajax. We've gotten a nod from Computer Weekly for the IT Blog Awards 08 as one of the best programming and development blogs. Funny thing, it's a list for the UK, and we've got offices in Chicago and New York.

To curry favor with the voters, we'll start blogging about tyre's and setting colour in CSS. What is it they say? Two peoples divided by a common language?

Anyhow, the self licking ice cream cone part. Go and vote for your favorite. Unfortunately, since we didn't make the short list, you can't stuff the ballot box for us.

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One of the major barriers to entry for companies offering services around processing healthcare data has been access to data. Who has the data? Typically the insurance companies. At least they have it in the kind of quantities that makes doing serious data analysis worthwhile. Managed care organizations are in second place, but from there you get to piddling amounts quickly. As you move from the heavily consolidated payer end of the industry to the heavily fragmented provider end, the comprehensive data view of the patient is balkanized to the point of uselessness.

This data problem even effects the valuation of companies. I've seen healthcare analytics companies that provide services to hospitals and clinics valued at less than $10 million, while another company that provides the exact same services to insurance firms is valued at ten times that price. Here, as in all things, follow the money.

There have been public/private efforts to consolidate healthcare data in a central store, such as Regional Health Information Organizations (RHIOs). The architects of the RHIOs realized that doing a national information organization would be too unwieldy and smack a little bit too much of Big Brother, but the regional ones have been bad enough, turning into debating societies between vendors, technocrats, and politicians. This has lead many regional health organizations and hospital networks to start their own pseudo-RHIOs. Still, service vendors would have to strike deals with these local entities to get access to data.

Google Health seeks to level the playing field by providing a data repository for personal health data. Individuals would access a Google Health aware service by granting it access to their data. Provided that enough individuals join and enough provider organizations make it easy to import your data, the battlefield now moves from getting data to getting customers. Bring your data, we'll tell you if your doctor is any good or if that surgery is really necessary. We'll help you find the best Medicare prescription plan based on your actual health data and identify generic alternatives instead of the pricey medication that some former-college-cheerleader-turned-pharma-salesperson pitched your doctor.

Some other nice things about Google Health is that it has support for SNOMED. SNOMED is a newer form of encoding clinical data than what is typically used in the US today. There's a whole host of reasons to prefer SNOMED over our current systems (yes, more than one) of encoding today. One example would be that most clinical data that gets collected today is all about getting paid by the insurance companies. What do providers get paid for? Procedures, not diagnoses. Very often in clinical claims data you will run across individuals who have been diagnoses with something like asthma, just so the provider can be paid for treating them. There's no concept like "I am working this individual up on suspicion that they have asthma, but he may not actually have asthma." So the clinical record is littered with expedient diagnoses made just for purposes of getting paid. You can imaging the havoc this plays with doing meaningful data analysis. Anyhow, SNOMED has a richer set of codes that would enable providers to express these sorts of concepts.

Of course Google isn't alone in trying to crack the healthcare data puzzle -- Microsoft is pushing its HealthVault and WebMD and various health insurers with their own PHR (Personal Health Record) walled gardens may yet open them up to other service providers. Regardless, I think the next 5 years promise to be exciting for those of us that develop healthcare software. Finally, the chance for something besides Ajax and social networking to come out of the Web 2.0 cauldron.

---

Read more about Pathfinder's Healthcare Analytics Practince

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Competition is the keen cutting edge of business, always shaving away at costs.

-- Henry Ford

I've been working with Java and Microsoft technologies -- .NET most recently -- in one form or another for quite some time. My company, now headquartered in Chicago with an office in NYC, was actually founded in Seattle by a group of four developers that had met around developing an Exchange-based bulk email system to replace the sendmail-based ones that Microsoft was using at the time. In that span, despite all of the food fights about total cost of ownership (TCO), etc., I haven't seen any evidence that Linux, Windows, Mac, Java, .NET, etc., puts you at a significant business advantage one way or the other. Until now.

The reason? Server-on-demand providers like Amazon's EC2, Joyent,
and others have reduced the capital necessary to launch scalable,
server intensive businesses. Google has just launched a similar
on-demand service, and companies like RightScale and CohesiveFT are building mature businesses around managing EC2 configurations.

Facebook applications are just the most extreme example of business initiatives
that can be scaled on demand from $70/month on one EC2 server to
$10,000/month on many dozens of servers running web, application and
database server clusters and farms. Compare that with the old school of
investing in a large data center with a significant fraction of the
hardware and bandwidth that you might need if your business is a
success. What used to cost $100k in capital can now be done with just a
few hundreds of dollars.

And it's all possible as long as you are using a unix variant -- Linux for the most part -- to power your apps. So there is a whole class of companies out there using Linux that can out compete their Windows-using rivals -- again, the capital they need to launch is much smaller because of cloud computing. That means Linux will win among the class of young entrepreneurial businesses that are so vital to the US economy.

Before the flames start raining down from the sky, please understand that I'm not bashing Windows and
.NET. This isn't about the inherent advantage of one operating system or platform over another. Oracle, IBM and other providers of enterprise software will also feel the pinch as mysql and postgresql outcompete Oracle and DB2 among startups.

There are a whole class of companies that cannot or will not use on-demand computing for security and other reasons. Health care, financial services and other industries that have high security requirements will likely maintain their own data centers for the foreseeable future. But that leaves the majority
of US and World businesses open to the benefits of on-demand servers. (Truly huge comsumers of cpu and bandwidth will be able to get better deals by maintaining their own data centers, but at that point they
will have "made it.")

Microsoft need to follow through on their promise to enter the world of cloud computing (and not this kind of BS "cloud computing"), or all the good they have done with .NET 3.5 will be wiped out. Their Live Mesh doesn't seem to be the answer (more about the desktop and collaboration that cloud computing). Steve Balmer and company have a lot of thinking to do if they're going to square Microsoft's price per CPU model with the price-per-hour model of on-demand computing.

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