Playing Chess with
Companies
simon wardley
@swardley
@lefep
LEF
with text bubbles
DANGER!
Will Robinson
DANGER!
Alas this will be
complex ... ... so I've added some text bubbles
(orange).
Why?
How to?
So what?
Gameplay
Learning
What I'll
cover ...
strategy was the most critical
factor to their organizations
future
97% of Executives in HBR Study, Feb 2014
What people s...
STRATEGY
Most companies have
documents covering ...
Purchasing
Decisions
(Oracle vs SAP)
Rip out ...
Implementation
Details
(Private vs Public)
and ...
Operational
Details
(SLAs)
and ...
Tactical
Choices
(BYOT)
How?
What?
When?
Because this is
all ...
Why?
Vague
What is left is ...
Everyone else is!
67% of successful
companies do ...
Normally we do stuff as ...
Everyone else is!
67% of successful
companies do ...
Past was no different ...
1984
62 Companies for
you to emulate
Backward causality
If A does B and A is
successful ...
If you do B, you too will be
successful.
THEN
This is what
most str...
Q. Why does a
General bombard a
hill?
Ask yourself ...
... because 67%
of other successful
generals bombard
hills?
Err... no! In the
military we use ...
Where?
Maps tell us ...
Why?
Where?
Why?
Where?
How?
What?
When?
Where? Why?
Situational
Awareness
In Military ...
Where? Why?
Situational
Awareness
How?
What?
When?
Action
In Military ...
Where? Why? How?
What?
When?
In Business ...
67% of successful
companies do ...
Business is usually a
tyranny of action ov...
Does it
matter?
I’d rather have a first-rate
execution and second-rate
strategy any time
Jamie Dimon, CEO of
JPMorgan Chase
Typical busines...
execution is the key to a
strategy’s success - is as flawed
as it is popular.
Professor Roger L. Martin,
The ExecutionTrap,...
StrategicPlay
(AWARENESS)
Uses Open to Compete (ACTION)
I looked into this
problem in 2012 ...
StrategicPlay
(AWARENESS)
Uses Open to Compete (ACTION)
Bubbles size
represents number of
companies ...
StrategicPlay
(AWARENESS)
Uses Open to Compete (ACTION)
Players
+ve MRKT CAP
Over 7 years these
companies showed ...
StrategicPlay
(AWARENESS)
Uses Open to Compete (ACTION)
Chancers
-ve MRKT CAP
Players
+ve MRKT CAP
... whilst these didn't...
NB
97% of execs consider strategy to be critical
to future success
Lack of situational awareness has a negative
impact on ...
How do I
improve
situational
awareness?
Why?
How to?
Onto the next bit ...
xyz
xyz
xyz
xyz
xyz
xyz
xyz
xyz
xyz
1,2,3,4,5
1,2,3,4,5
1,2,3,4,5
People
Activities Practices
Data
Capital
xyz
xyz
xyz
xyz...
xyz
xyz
xyz
xyz
xyz
xyz
xyzxyzxyz
1,2,3,4,5
1,2,3,4,5
1,2,3,4,5
Organisation
Box and Wire
We usually try to
make sense of ...
Like this ...
Or this ...
Q. Strategy?
Problem is the box and wire diagrams tell
us nothing ... the meaning is within the text
of the boxes.
If you ...
Business
Speak
Technology
Speak
?&!A?
Alas we use multiple forms of box and
wire for the same organisation
... causing all...
Map
xyz
xyz
xyz
xyz
xyz
xyz
xyzxyzxyz
1,2,3,4,5
1,2,3,4,5
1,2,3,4,5
Organisation
What we want ...
How?
xyz
xyz
xyz
xyz
xyz
xyz
xyzxyzxyz
1,2,3,4,5
1,2,3,4,5
1,2,3,4,5
Organisation
ValueChain
ValueChain
ValueChain
Organisation...
Let's pretend your
business is making ..
ValueChainVisibleInvisible
User needs ... i.e. what
they want
Supplier needs ... i.e. what
you need to make it
happen.
ValueChainVisibleInvisible
USER
Needs
CUP	
  OF	
  TEA
User need is for a 'cup
of tea'
HenceYOU need to
have the capabilit...
ValueChainVisibleInvisible
USER
Needs
CUP	
  OF	
  TEA
Needs
HOT	
  WATER
TEA
Needs
But a cup of tea needs
many things (te...
ValueChainVisibleInvisible
USER
Needs
CUP	
  OF	
  TEA
Needs
HOT	
  WATER
TEA
Needs
KETTLE
Needs Needs
WATER
POWER
Needs
Y...
ValueChainVisibleInvisible
USER
Needs
CUP	
  OF	
  TEA
Needs
HOT	
  WATER
TEA
Needs
KETTLE
Needs Needs
WATER
POWER
Needs
W...
Photo Storage
Data Centre
Power
Payment
Web Site
Platform
Fotango
CRM
Image
Manipulation
Compute
2005
Company I used to
be...
ValueChainVisibleInvisible
Photo Storage
Payment
Fotango
Image
Manipulation
I took the box and wire
diagram and turned it ...
ValueChainVisibleInvisible
Photo Storage
Data Centre
Power
Compute
Payment
Web Site
Fotango
Image
Manipulation
Customer
Re...
Change!
The problem with
simply using value
chains is ...
Nokia
Nokia today is not the
same as Nokia yesterday
or Nokia Tomorrow
The problem with
change is new stuff
appears ...
Early Adopter
Laggards
Everett Rogers,
Diffusion of Innovation 1962
... and spreads.
It's
Random!
So,
change ...
Evolve
Not quite ...
Evolve
Things don't just
diffuse they evolve ...
A[1]
E.g. new thing
appears ...
A[1] A[2] A[3] A[4] A[5]
Evolution
... then we get
better versions of it.
Time
ApplicableMarket
100% adoption A[5]
100% adoption A[2]
100% adoption A[1]
100% adoption A[3]
100% adoption A[4]
Time ...
Time
ApplicableMarket
100% adoption A[5]
100% adoption A[2]
100% adoption A[1]
100% adoption A[3]
100% adoption A[4]
Time ...
Time
ApplicableMarket
100% adoption A[5]
100% adoption A[2]
100% adoption A[1]
100% adoption A[3]
100% adoption A[4]
Time ...
Maturity?
So can we
measure ...
It's
mature!
Not it's
not!
Difficult, if something is mature (e.g. a brick) we quickly agree but
ask is a 'smartphone matur...
Stacey Matrix
Best way of
understanding the
argument is ..
Stacey Matrix
Key is certainty.
Certainty?
So can we
measure ...
Certainty
Type I II (key) III (key) IV
Publication
Type
Refer to the
wonder of
the thing,
described in
terms of
impact
Ref...
Certainty
Ubiquity
Certainty = f (Volume Publications [Type II + III],
MatureVolume [II + III])
Ubiquity = f (Actual Marke...
0%
25.00%
50.00%
75.00%
100.00%
0% 25.00% 50.00% 75.00% 100.00%
... spend 6 months in
the British Library in
2007, repeati...
Certainty
Ubiquity
Custom Built
Commodity
Service
Product
Utility
Genesis Evolution
... confirm a pattern
first discussed at...
Certainty
Ubiquity
Emerging
Best
Good
Novel
Practice
Also applies
to ...
Certainty
Ubiquity
Divergent
Modelled
Convergent
Un-modelled
Data
Also applies
to ...
Certainty
Ubiquity
Hypothesis
Accepted
Theory
Concept
Knowledge
Also appears to
apply to ...
Correlation ≠ Causation
BUT ....
Certainty
Ubiquity
Demand
Supply
Competition
Turns out the entire
model is driven by ....
... both supply and
demand compe...
Value Chain
(describes organization)
Evolution
(describes change)
Now combine ...
ValueChainVisibleInvisible
Photo Storage
Data Centre
Power
Compute
Payment
Web Site
Fotango
Image
Manipulation
Customer
Re...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Photo Storage
Data Cent...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Online Photo
Storage
Da...
Why?
How to?
So what?
Onto the next
bit ...
1) Needs
So why care ...
Turns out maps are
great for identifying ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
User Need
Sell
Differen...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Supplier Need
User Need...
A random big - REALLY
BIG - Government
project ...
Big specification
documents and lots of
Box and Wire
Alas, no-one can cl...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
User
Spend an afternoon...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Need
... easy for
every...
2) Change
'Wardley' maps also
deal with change ...
PS. I call it Wardley maps because there are other things
calledValue C...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Take a map ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Competition
... everyth...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Uncharted
Everything st...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Chaotic
Uncertain
Unpre...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Ordered
Known
Measured
...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Uncharted
Chaotic
Uncer...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Lean
Uncharted Industri...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Lean
Uncharted Industri...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Future Survival
Innovat...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Future Survival
Innovat...
However, most
companies can't see the
landscape ...
SIX SIGMA
StrongWeak
AGILE
Strong Weak
OR
YoYoSo they tend to ...
"We're Agile" OR "We're Six Sigma"
Outsource
SIX SIGMA / OUTSOURCE
StrongWeak
Or they tend to ...
Apply strong methods
because they want to
"Know" what they ...
Outsource
Incur excessive
change control
costs
Some parts will be
efficient
SIX SIGMA / OUTSOURCE
StrongWeak
Of course, sam...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
3D Visualisation
Land R...
That map is from High
Speed Rail 2 (HS2) ...
3) Management
Which brings me onto ...
What they used to use to
manage HS2 with.
Q. How To
Manage? Difficult to answer with box and
wire ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
3D Visualisation
Land R...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
3D Visualisation
Land R...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
3D Visualisation
Land R...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
3D Visualisation
Land R...
4) Risk Management
Also maps help
with ....
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
User
Big project ...
ma...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Agile, In-
House
CO
Off...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Now it's important to
t...
Why? See ...
Complexity
Idea
Goodness
Problem is, people
have ideas
Goodness
Complexity
+ features They then expand
the idea ...
Goodness
Complexity
+ features
They then over
expand the idea ...
Goodness
Complexity
FIST
FIST counters this by breaking
large systems into fast,
inexpensive, simple and tiny ...
Condor Cluster
e.g. want to build a super
computer ...
1,753 PlayStation 3s
... build it with these.
Harvest Hawk,
idea to combat
operations in 18
months
FIST has been used in
many places ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
So treat components on
...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Don't treat large
syste...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Treat as a group of
sma...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Contract X
So when we l...
But ... specifications
and box and wire
wouldn't have
shown this
Only mapping did
5) Communication
Maps are also good
for ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Creative
Studios
Tradit...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Creative
Studios
Tradit...
Take a box and
wire ...
Expand it ... Do you know what this is?
or this?
A
E
B
C
D
I'll assume you don't know
exactly what those things
were, so I've recreated the
same box and wire but
using let...
Q. Outsource?
C
D
A
E
B
Outsourced
Should we do
this?
Now to ask two
questions ...
Why was this a
disaster?
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
E
B
C
D
Now turn the ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Q. Outsource?
A
E
B
C
D...
6) Scenario Planning
Maps are also
good for ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Access System
Authentic...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Access System
Authentic...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Access System
Biometric...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Access System
Authentic...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Access System
Authentic...
7) Comparison
Maps are also
good for ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Take a map ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
And another ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
And another ...
you can...
A
B
C
D
E
F
For example - a
process from a
company
Business Unit FR
A
B
C
D
E
F
One business unit in
France
Business Unit GB
A
C
D
E
F
One business unit in
Great Britain
Business Unit
FR & GB
A & A
B
E & E
D & D
F & F
C & C
Overlap them. It tells you
France does B which GB
doesn't
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
E
D
B
C
F
Business
Un...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
D
C
E
F
Business
Unit...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A & A
E
D
C & C
F
E
D
B...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A & A
E
D
C & C
F
E
D
B...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
E
D
F
E
D F
Differentia...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
E
D
F
E
D F
Differentia...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
E
D
F
E
D F
Differentia...
Business Unit
FR & GB
A & A
B
E & E
D & D
F & F
C & C
The box and wire didn't
tell you anything about
efficiencies, shared ...
Why?
How to?
So what?
Learning
Now the next bit ...
Maps are great for
learning, what
worked, what went
wrong ... this is
something most
organisation truly
suck at.
Pattern 1
Efficiency enables Innovation
You can use maps to
learning basic economic
lessons and patterns ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Interface
Agility
Effici...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Interface
Electric
Ligh...
Componentisation
Herbert Simon
This effect is
known as ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Interface
Future Worth
...
Creative Destruction
Joseph Schumpeter
This destruction of past and
creation of new future
sources of value is called ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Electricity
Computing
A...
Pattern 2
Choice is an illusion
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Interface
Agility
Effici...
Pressure
+efficiency
+agility
+worth
Trickle ...
If you're competing against someone more efficient, agile
and able to creat...
Quickly mounts up as more adapt
... FloodBecoming a
“Red Queen”
The need to constantly
evolve in order to stand still
relative to a surrounding
ecosystem
Prof.VanValen
This i...
$0
$7,500
$15,000
$22,500
$30,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Analyst Estimates for AWS Revenue
Mill...
$0
$7,500
$15,000
$22,500
$30,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Analyst Estimates for AWS Revenue
Mill...
$0
$7,500
$15,000
$22,500
$30,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Analyst Estimates for AWS Revenue
Mill...
Pattern 3
We have Inertia
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Past Success
Inertia
Pa...
Disruption of
Past Norms
Transition to
the New
Agency of the
New
Business Model
Change of business
relationship (loss of
s...
Disruption of
Past Norms
Transition to
the New
Agency of the
New
Business Model
Change of business
relationship (loss of
s...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Compute
(Product)
Take ...
Evolution
Compute
(Product)
I'm going to ignore the
value chain bit for a
moment, to make my
diagram easier
Evolution
Novel Practice
(Scale Up)
When compute was a
product we developed novel
architectural PRACTICES
e.g scale-up for...
Evolution
These spread ...
Evolution
Best Practice
(Scale Up)
... becoming best
practice.
Evolution
Compute
(Utility)
BUT the act of computing
evolved becoming more
of a commodity and
eventually provided as a
uti...
Evolution
Novel Practice
(Scale Out)
... this enabled novel practices
to appear ... e.g. scale-out for
capacity, "design f...
Evolution
These spread ...
Evolution
Product
Co-Evolution
Best Practice
Utility
Best Practice
... becoming best
practice.
NB Practices often
co-evolv...
Evolution
Legacy
Estate
New Estate
"DevOps"
Product
Best Practice
Utility
Best Practice
Legacy means
application built wit...
Evolution
Legacy
Estate
New Estate
"DevOps"
Cost
Product
Best Practice
Utility
Best Practice
We want the benefits of
the ne...
Pattern 4
Inertia Kills
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
DSC
Online
Photo
Digita...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Digital
Analog
Fulfilmen...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Guess who was first
with...
Pattern 5
Cycles
The economy has ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Peace
As an activity ev...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Peace
... they build up...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Peace
... the act becom...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
WarPeace
Punctuated
Equ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Interface
Peace War
Won...
Peace
War
Wonder
the pattern of wonder,
peace and war occurs
at both macro and
micro scales.
The Age of Electricity
The macro we call
'Ages' ...
... these don't start
with 'innovation'
but ...
G. Westinghouse,
1886
... commoditisation of
a pre-existing act.
Causing an explosion
of higher order
systems ...
Dreams of
magic, a time
of wonder
Creating a time of
wonder ...
Unless you're in the
'old' industry.
Pattern 6
Organisations Evolve
It's not just activities,
practices and data
that evolve ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Interface
Peace War
Won...
Evolution
Co-Evolution
Best Practice
Best Practice
Product Utility
We have co-evolution
of practice ...
Evolution
Estate
Peace
Product
Best Practice
... which means we
have the old world
with the old estate ...
Evolution
New Estate
Estate
Legacy
Product
Best Practice
Utility
Best Practice
War
... that becomes
legacy whilst a new
es...
Evolution
DIES
WINS
Utility
Best Practice
War
The old world then dies,
the new world wins ...
which means the new
practice...
Evolution
Utility
War
Electricity
Fordism
Hence every cycle
leads to a new form
of organisation.
Evolution
Utility
War
Compute
Next
Generation
Even today.
0%
10%
20%
30%
40%
We do not open that we
consider a source of differential
advantage
Next Gen
Traditional
Strongly
Disagr...
0%
20%
40%
60%
Next Gen
Traditional
Strongly
Disagree
Disagree Neutral Agree
Strongly
Agree
Our company deploys an open te...
Open source
Resilience
Failure Testing
Infrastructure
Learning
"Big" Data
Culture
Structure
Corporate Focus
Type
Strategy/...
Why?
How to?
So what?
Gameplay
Learning
Now the fun stuff ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Access System
Authentic...
Certainty
Ubiquity
Demand
Supply
Competition
Fortunately there are
many ways to
accelerate and
deaccelerate
competition
Certainty
Ubiquity
Demand
Supply
Open
Like Open Source
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
+competition
Open
A
B
C...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
B
Customers
Patents
+...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
B
Conditions
* Concep...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
B
C
+Marketing
Custom...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A
B
+Constraints
Custom...
The rest of this presentation was
examples of this and how to
exploit the situation. For those
who attended one of the
wor...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Ecosystem
Ecosystems ar...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Leverage
Commoditize
In...
Worth noting
Ecosystems if effectively used are
future sensing engines.
Be first to industrialise
but follow innovation
Uncharted Industrialized
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisibl...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
A1
A2
Ecosystem
Tower
M...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
+competition
+competiti...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Where?
You have multipl...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Platform
Why?
Mapping c...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
Platform
Compute
Platfo...
The only people who
can map a business
are people within the
business.
No consultants
Remember ...
ValueChain
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
VisibleInvisible
Online Photo
Storage
D...
Marquis De Condorcet,
1785
"each member of a voting group
is more likely than not to
make a correct decision,
the probabil...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible On the issue of
predict...
Uncharted Industrialized
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisibl...
There appears to exist an
uncertainty principle in the
economic cycle whereby
p(what) + p(when) ≈ 1
Not confirmed,
but ...
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisible
fitness function
fitness ...
Uncharted Industrialized
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisibl...
Uncharted Industrialized
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisibl...
Uncharted Industrialized
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisibl...
Uncharted Industrialized
Genesis Custom
Built
Product
(+ rental)
Commodity
(+ utility)
Evolution
ValueChainVisibleInvisibl...
+situational awareness
Units
+fitness functions
+fitness functions
Cells
(aptitude &
attitude)
Units Units
Executive
Attitud...
@swardley
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Playing chess with Companies

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Slides from OSCON tutorial covering basic situational awareness, mapping and gameplay.

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Playing chess with Companies

  1. 1. Playing Chess with Companies simon wardley @swardley @lefep LEF with text bubbles
  2. 2. DANGER! Will Robinson DANGER! Alas this will be complex ... ... so I've added some text bubbles (orange).
  3. 3. Why? How to? So what? Gameplay Learning What I'll cover ...
  4. 4. strategy was the most critical factor to their organizations future 97% of Executives in HBR Study, Feb 2014 What people say ..
  5. 5. STRATEGY Most companies have documents covering ...
  6. 6. Purchasing Decisions (Oracle vs SAP) Rip out ...
  7. 7. Implementation Details (Private vs Public) and ...
  8. 8. Operational Details (SLAs) and ...
  9. 9. Tactical Choices (BYOT)
  10. 10. How? What? When? Because this is all ...
  11. 11. Why? Vague What is left is ...
  12. 12. Everyone else is! 67% of successful companies do ... Normally we do stuff as ...
  13. 13. Everyone else is! 67% of successful companies do ... Past was no different ...
  14. 14. 1984 62 Companies for you to emulate
  15. 15. Backward causality If A does B and A is successful ... If you do B, you too will be successful. THEN This is what most strategy is ...
  16. 16. Q. Why does a General bombard a hill? Ask yourself ...
  17. 17. ... because 67% of other successful generals bombard hills?
  18. 18. Err... no! In the military we use ...
  19. 19. Where? Maps tell us ...
  20. 20. Why? Where?
  21. 21. Why? Where? How? What? When?
  22. 22. Where? Why? Situational Awareness In Military ...
  23. 23. Where? Why? Situational Awareness How? What? When? Action In Military ...
  24. 24. Where? Why? How? What? When? In Business ... 67% of successful companies do ... Business is usually a tyranny of action over situational awareness ...
  25. 25. Does it matter?
  26. 26. I’d rather have a first-rate execution and second-rate strategy any time Jamie Dimon, CEO of JPMorgan Chase Typical business doctrine ...
  27. 27. execution is the key to a strategy’s success - is as flawed as it is popular. Professor Roger L. Martin, The ExecutionTrap, 2009 How it stands up to scrutiny ...
  28. 28. StrategicPlay (AWARENESS) Uses Open to Compete (ACTION) I looked into this problem in 2012 ...
  29. 29. StrategicPlay (AWARENESS) Uses Open to Compete (ACTION) Bubbles size represents number of companies ...
  30. 30. StrategicPlay (AWARENESS) Uses Open to Compete (ACTION) Players +ve MRKT CAP Over 7 years these companies showed ...
  31. 31. StrategicPlay (AWARENESS) Uses Open to Compete (ACTION) Chancers -ve MRKT CAP Players +ve MRKT CAP ... whilst these didn't. Key was strategic play.
  32. 32. NB 97% of execs consider strategy to be critical to future success Lack of situational awareness has a negative impact on market cap Most business strategy is a tyranny of action over situational awareness
  33. 33. How do I improve situational awareness?
  34. 34. Why? How to? Onto the next bit ...
  35. 35. xyz xyz xyz xyz xyz xyz xyz xyz xyz 1,2,3,4,5 1,2,3,4,5 1,2,3,4,5 People Activities Practices Data Capital xyz xyz xyz xyz xyz xyz xyzxyzxyz 1,2,3,4,51,2,3,4,5 1,2,3,4,5 Organisation Organisations consist of ...
  36. 36. xyz xyz xyz xyz xyz xyz xyzxyzxyz 1,2,3,4,5 1,2,3,4,5 1,2,3,4,5 Organisation Box and Wire We usually try to make sense of this with ...
  37. 37. Like this ...
  38. 38. Or this ...
  39. 39. Q. Strategy? Problem is the box and wire diagrams tell us nothing ... the meaning is within the text of the boxes. If you don't know what a WPS is, then it's of no use.
  40. 40. Business Speak Technology Speak ?&!A? Alas we use multiple forms of box and wire for the same organisation ... causing all sorts of translation issues.
  41. 41. Map xyz xyz xyz xyz xyz xyz xyzxyzxyz 1,2,3,4,5 1,2,3,4,5 1,2,3,4,5 Organisation What we want ...
  42. 42. How?
  43. 43. xyz xyz xyz xyz xyz xyz xyzxyzxyz 1,2,3,4,5 1,2,3,4,5 1,2,3,4,5 Organisation ValueChain ValueChain ValueChain Organisations consist of ...
  44. 44. Let's pretend your business is making ..
  45. 45. ValueChainVisibleInvisible User needs ... i.e. what they want Supplier needs ... i.e. what you need to make it happen.
  46. 46. ValueChainVisibleInvisible USER Needs CUP  OF  TEA User need is for a 'cup of tea' HenceYOU need to have the capability to make a cup of tea ...
  47. 47. ValueChainVisibleInvisible USER Needs CUP  OF  TEA Needs HOT  WATER TEA Needs But a cup of tea needs many things (tea, hot water etc) ... there's a lot more but I'm keeping the diagram simple
  48. 48. ValueChainVisibleInvisible USER Needs CUP  OF  TEA Needs HOT  WATER TEA Needs KETTLE Needs Needs WATER POWER Needs You can build a chain of needs and the capabilities required to meet those needs.
  49. 49. ValueChainVisibleInvisible USER Needs CUP  OF  TEA Needs HOT  WATER TEA Needs KETTLE Needs Needs WATER POWER Needs What customer cares about ... If your power goes, the customer only cares that they don't get a 'cup of tea'.
  50. 50. Photo Storage Data Centre Power Payment Web Site Platform Fotango CRM Image Manipulation Compute 2005 Company I used to be CEO of ... Quite some time ago ...
  51. 51. ValueChainVisibleInvisible Photo Storage Payment Fotango Image Manipulation I took the box and wire diagram and turned it into a value chain ...
  52. 52. ValueChainVisibleInvisible Photo Storage Data Centre Power Compute Payment Web Site Fotango Image Manipulation Customer Relationship System (CRM) Platform
  53. 53. Change! The problem with simply using value chains is ...
  54. 54. Nokia Nokia today is not the same as Nokia yesterday or Nokia Tomorrow
  55. 55. The problem with change is new stuff appears ...
  56. 56. Early Adopter Laggards Everett Rogers, Diffusion of Innovation 1962 ... and spreads.
  57. 57. It's Random! So, change ...
  58. 58. Evolve Not quite ...
  59. 59. Evolve Things don't just diffuse they evolve ...
  60. 60. A[1] E.g. new thing appears ...
  61. 61. A[1] A[2] A[3] A[4] A[5] Evolution ... then we get better versions of it.
  62. 62. Time ApplicableMarket 100% adoption A[5] 100% adoption A[2] 100% adoption A[1] 100% adoption A[3] 100% adoption A[4] Time for A[5]Time for A[2] Evolution is hence multiple waves of diffusion for improving versions. Problem with diffusion curves is they have different applicable markets and time to diffuse.
  63. 63. Time ApplicableMarket 100% adoption A[5] 100% adoption A[2] 100% adoption A[1] 100% adoption A[3] 100% adoption A[4] Time for A[5]Time for A[2] Ubiquity of A1 to A5 However, as things evolve they become more ubiquitous ...
  64. 64. Time ApplicableMarket 100% adoption A[5] 100% adoption A[2] 100% adoption A[1] 100% adoption A[3] 100% adoption A[4] Time for A[5]Time for A[2] Maturity of A1 to A5 ... and more mature or 'fit for purpose', 'good enough'.
  65. 65. Maturity? So can we measure ...
  66. 66. It's mature! Not it's not! Difficult, if something is mature (e.g. a brick) we quickly agree but ask is a 'smartphone mature' and ... ... arguments break out.
  67. 67. Stacey Matrix Best way of understanding the argument is ..
  68. 68. Stacey Matrix Key is certainty.
  69. 69. Certainty? So can we measure ...
  70. 70. Certainty Type I II (key) III (key) IV Publication Type Refer to the wonder of the thing, described in terms of impact Refer to building, construction and awareness Refer to operation, maintenance and feature differences between different examples Dominated by use i.e. what is built with this or on top of this including guides for maximising use. Meaure Volume Volume Yes by looking at how publications change ...
  71. 71. Certainty Ubiquity Certainty = f (Volume Publications [Type II + III], MatureVolume [II + III]) Ubiquity = f (Actual Market Adoption, Mature Market Adoption) We can then measure ubiquity over certainty and ...
  72. 72. 0% 25.00% 50.00% 75.00% 100.00% 0% 25.00% 50.00% 75.00% 100.00% ... spend 6 months in the British Library in 2007, repeating this endless times for lots of activities. Then add back in the publication domains and ...
  73. 73. Certainty Ubiquity Custom Built Commodity Service Product Utility Genesis Evolution ... confirm a pattern first discussed at Foo Camp in 2004.
  74. 74. Certainty Ubiquity Emerging Best Good Novel Practice Also applies to ...
  75. 75. Certainty Ubiquity Divergent Modelled Convergent Un-modelled Data Also applies to ...
  76. 76. Certainty Ubiquity Hypothesis Accepted Theory Concept Knowledge Also appears to apply to ...
  77. 77. Correlation ≠ Causation BUT ....
  78. 78. Certainty Ubiquity Demand Supply Competition Turns out the entire model is driven by .... ... both supply and demand competition
  79. 79. Value Chain (describes organization) Evolution (describes change) Now combine ...
  80. 80. ValueChainVisibleInvisible Photo Storage Data Centre Power Compute Payment Web Site Fotango Image Manipulation Customer Relationship System (CRM) Platform
  81. 81. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Photo Storage Data Centre Power Compute Payment Web Site Platform Fotango Image Manipulation Customer Relationship System (CRM)
  82. 82. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Online Photo Storage Data Centre Power Payment Web Site Platform Fotango CRM Online Image Manipulation Compute Map 2005 My first map. Based upon my Foo Camp idea, admittedly before I knew if the evolution axis was real or not.
  83. 83. Why? How to? So what? Onto the next bit ...
  84. 84. 1) Needs So why care ... Turns out maps are great for identifying ...
  85. 85. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible User Need Sell Differentiate Like user needs ... they're at the top of the map! User needs are what we sell and try to differentiate on.
  86. 86. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Supplier Need User Need Sell Differentiate Consume Efficiency ... and supplier needs.
  87. 87. A random big - REALLY BIG - Government project ... Big specification documents and lots of Box and Wire Alas, no-one can clearly articulare the user needs ...
  88. 88. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible User Spend an afternoon to create a 'Wardley' map of the entire project ...
  89. 89. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Need ... easy for everyone to see user needs
  90. 90. 2) Change 'Wardley' maps also deal with change ... PS. I call it Wardley maps because there are other things calledValue Chain Maps / Strategy Maps / Digital Maps etc and it makes it easier for people to know who's to blame for this stuff.
  91. 91. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Take a map ...
  92. 92. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Competition ... everything changes due to competition.
  93. 93. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Uncharted Everything starts over here ...
  94. 94. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Chaotic Uncertain Unpredictable Changing Different Exciting Future Worth Differential Uncharted ... and has these properties.
  95. 95. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Ordered Known Measured Stable Standard Dull Low Margin Essential Industrialised ... and ends over here. ... with these properties.
  96. 96. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Uncharted Chaotic Uncertain Unpredictable Changing Different Exciting Future Worth Differential Industrialised Ordered Known Measured Stable Standard Dull Low Margin Essential Note, properties are polar opposites.
  97. 97. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Lean Uncharted Industrialised SIX SIGMA / OUTSOURCE StrongWeak AGILE / IN-HOUSE Strong Weak ... which is why there is no such thing as a one size fits all management method
  98. 98. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Lean Uncharted Industrialised SIX SIGMA / OUTSOURCE StrongWeak AGILE / IN-HOUSE Strong Weak Salamon and Storey Innovation Paradox This creates the ...
  99. 99. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Future Survival Innovation Agile, in-house i.e. future survival depends upon ...
  100. 100. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Future Survival Innovation Agile, in-house Surivial Today Six Sigma, Outsource Efficiency .... but surivial today depends upon NB. Polar Opposite methods
  101. 101. However, most companies can't see the landscape ...
  102. 102. SIX SIGMA StrongWeak AGILE Strong Weak OR YoYoSo they tend to ... "We're Agile" OR "We're Six Sigma"
  103. 103. Outsource SIX SIGMA / OUTSOURCE StrongWeak Or they tend to ... Apply strong methods because they want to "Know" what they are getting ...
  104. 104. Outsource Incur excessive change control costs Some parts will be efficient SIX SIGMA / OUTSOURCE StrongWeak Of course, same results happen for complex projects ...
  105. 105. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible 3D Visualisation Land Registry Data Centre Power Platform HR Customer GIS Customer Customer Compute ERPM Finance BIM Web site RISK CRM WISE PIMS Incur excessive change control costs Some parts will be efficient If you look at the underlying map you can see why ... This stuff is stable This stuff will change
  106. 106. That map is from High Speed Rail 2 (HS2) ...
  107. 107. 3) Management Which brings me onto ...
  108. 108. What they used to use to manage HS2 with.
  109. 109. Q. How To Manage? Difficult to answer with box and wire ...
  110. 110. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible 3D Visualisation Land Registry Data Centre Power Platform HR Customer GIS Customer Customer Compute ERPM Finance BIM Web site RISK CRM WISE PIMS So they mapped HS2 ...
  111. 111. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible 3D Visualisation Land Registry Data Centre Power Platform HR Customer GIS Customer Customer Compute PIMS ERPM Finance BIM Web site RISK CRM WISE outsource to utility suppliers LEGEND Sharepoint ... now its easy
  112. 112. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible 3D Visualisation Land Registry Data Centre Power Platform HR Customer GIS Customer Customer Compute PIMS ERPM Finance BIM Web site RISK CRM WISE outsource to utility suppliers use off the shelf products LEGEND Sharepoint
  113. 113. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible 3D Visualisation Land Registry Data Centre Power Platform HR Customer GIS Customer Customer Compute PIMS ERPM Finance BIM Web site RISK CRM WISE outsource to utility suppliers use off the shelf products build in-house with agile techniques LEGEND Sharepoint
  114. 114. 4) Risk Management Also maps help with ....
  115. 115. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible User Big project ... mapped ....
  116. 116. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Agile, In- House CO Off the Shelf Product Six Sigma, OutSource Sensible use of methods ...
  117. 117. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Now it's important to treat things as granular components ...
  118. 118. Why? See ...
  119. 119. Complexity Idea Goodness Problem is, people have ideas
  120. 120. Goodness Complexity + features They then expand the idea ...
  121. 121. Goodness Complexity + features They then over expand the idea ...
  122. 122. Goodness Complexity FIST FIST counters this by breaking large systems into fast, inexpensive, simple and tiny ...
  123. 123. Condor Cluster e.g. want to build a super computer ...
  124. 124. 1,753 PlayStation 3s ... build it with these.
  125. 125. Harvest Hawk, idea to combat operations in 18 months FIST has been used in many places ...
  126. 126. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible So treat components on your map individually ... You can even enforce this with rules like 'Two Pizza' (see Amazon)
  127. 127. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Don't treat large systems as one thing ...
  128. 128. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Treat as a group of smaller components ...
  129. 129. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Contract X So when we looked at the contract arrangement for the project ... This was too deep and wide
  130. 130. But ... specifications and box and wire wouldn't have shown this Only mapping did
  131. 131. 5) Communication Maps are also good for ...
  132. 132. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Creative Studios Traditional Media (DVDs etc) Customer Leisure TimeAggregator Branded Commissioned Acquired Internet Broadcast Artistic Direction Production Talent Production Systems Market Analysis Content Web Site Streaming Service Recommendation Engine CRM Web Server Compute Power Content Pipeline TV COMPANY maps make it easier to talk about what an organisation does ...
  133. 133. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Creative Studios Traditional Media (DVDs etc) Customer Leisure TimeAggregator Branded Commissioned Acquired Internet Broadcast Artistic Direction Production Talent Production Systems Market Analysis Content Web Site Streaming Service Recommendation Engine CRM Web Server Compute Power Content Pipeline TV COMPANY Q. Strategy? and to talk about ...
  134. 134. Take a box and wire ...
  135. 135. Expand it ... Do you know what this is? or this?
  136. 136. A E B C D I'll assume you don't know exactly what those things were, so I've recreated the same box and wire but using letters.
  137. 137. Q. Outsource? C D A E B Outsourced Should we do this? Now to ask two questions ... Why was this a disaster?
  138. 138. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A E B C D Now turn the diagram into a map ...
  139. 139. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Q. Outsource? A E B C D Outsourced Why was this a disaster? Should we do this? You can probably answer these now
  140. 140. 6) Scenario Planning Maps are also good for ...
  141. 141. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Access System Authentication Biometric 2 Factor User / Pwd Login Log History Compute Physical Servers Design for Failure Authorisation (ACL) Permission Monitoring Recommendation (VRM) Capability (Credentials) Trust Rule Based (2 way) Rule Based (1 way) User Reporting Identity (me) Identity (provider) Control System Customer Customer Security Company ...
  142. 142. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Access System Authentication Biometric 2 Factor User / Pwd Login Log History Compute Physical Servers Design for Failure Authorisation (ACL) Permission Monitoring Recommendation (VRM) Capability (Credentials) Trust Rule Based (2 way) Rule Based (1 way) User Reporting Identity (me) Identity (provider) Control System Customer Customer Play 1 - Commodity Identity Should I do this?
  143. 143. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Access System Biometric 2 Factor User / Pwd Login Log History Compute Physical Servers Design for Failure Authorisation (ACL) Permission Monitoring Recommendation (VRM) Capability (Credentials) Rule Based (2 way) Rule Based (1 way) User Reporting Identity (me) Identity (provider) Control System Customer Customer Authentication Trust Play 2 - Gamble on Trusted Authentication Or this? (actually high risk)
  144. 144. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Access System Authentication Biometric 2 Factor User / Pwd Login Log History Compute Physical Servers Design for Failure Authorisation (ACL) Permission Monitoring Recommendation (VRM) Capability (Credentials) Trust Rule Based (2 way) Rule Based (1 way) User Reporting Identity (me) Identity (provider) Control System Customer Customer Play 3 - Trust as a Service Or this? (actually very high risk)
  145. 145. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Access System Authentication Biometric 2 Factor User / Pwd Login Log History Compute Physical Servers Design for Failure Authorisation (ACL) Permission Monitoring Recommendation (VRM) Capability (Credentials) Trust Rule Based (2 way) Rule Based (1 way) User Reporting Identity (me) Identity (provider) Control System Customer Customer Maps help you work out a way of attacking a market, opportunities and 'what ifs'.
  146. 146. 7) Comparison Maps are also good for ...
  147. 147. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Take a map ...
  148. 148. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible And another ...
  149. 149. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible And another ... you can find opportunities between them
  150. 150. A B C D E F For example - a process from a company
  151. 151. Business Unit FR A B C D E F One business unit in France
  152. 152. Business Unit GB A C D E F One business unit in Great Britain
  153. 153. Business Unit FR & GB A & A B E & E D & D F & F C & C Overlap them. It tells you France does B which GB doesn't
  154. 154. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A E D B C F Business Unit FR Now take a map of French business unit
  155. 155. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A D C E F Business Unit GB Take a map of GB business unit
  156. 156. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A & A E D C & C F E D B F Business Unit FR & GB Overlap them ...
  157. 157. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A & A E D C & C F E D B F User Needs Business Unit FR & GB Take a look at user need. B is a differential that only FR does
  158. 158. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible E D F E D F Differential LEGEND B A & A C & C Business Unit FR & GB
  159. 159. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible E D F E D F Differential LEGEND Area of Efficiency B A & A C & C Business Unit FR & GB But also we have three potential areas of efficiency ...
  160. 160. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible E D F E D F Differential LEGEND Area of Efficiency Common / Shared B A & A C & C Business Unit FR & GB ... and two potential shared services.
  161. 161. Business Unit FR & GB A & A B E & E D & D F & F C & C The box and wire didn't tell you anything about efficiencies, shared services or what B was.
  162. 162. Why? How to? So what? Learning Now the next bit ...
  163. 163. Maps are great for learning, what worked, what went wrong ... this is something most organisation truly suck at.
  164. 164. Pattern 1 Efficiency enables Innovation You can use maps to learning basic economic lessons and patterns ...
  165. 165. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Interface Agility Efficiency Competition1) As things evolve through competition they become ... 2) But they also enable more complex systems to appear.
  166. 166. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Interface Electric Lighting Radio Television Electricity For example
  167. 167. Componentisation Herbert Simon This effect is known as ...
  168. 168. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Interface Future Worth PastValue 1) But these more complex systems are sources of future worth 2) the old less evolved approaches ... disappear.
  169. 169. Creative Destruction Joseph Schumpeter This destruction of past and creation of new future sources of value is called ...
  170. 170. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Electricity Computing Analytics Intelligent AgentsIt's essential for technological 'progress'
  171. 171. Pattern 2 Choice is an illusion
  172. 172. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Interface Agility Efficiency Competition Future Worth These are powerful forces ...
  173. 173. Pressure +efficiency +agility +worth Trickle ... If you're competing against someone more efficient, agile and able to create worth ... ... they create pressure for you to change. Alas, this pressure...
  174. 174. Quickly mounts up as more adapt
  175. 175. ... FloodBecoming a
  176. 176. “Red Queen” The need to constantly evolve in order to stand still relative to a surrounding ecosystem Prof.VanValen This is known as ...
  177. 177. $0 $7,500 $15,000 $22,500 $30,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Analyst Estimates for AWS Revenue Million 1.5% +8 yrs Take Cloud -Yuk. Look at AWS end quarter estimates and then x4 ... annual forward run rate. NB. Ben Black proposed the idea for EC2 to Bezos in 2003 By End 2011, forward run rate = 1.5% of server market.
  178. 178. $0 $7,500 $15,000 $22,500 $30,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Analyst Estimates for AWS Revenue Million 6% +10 yrs By End 2013, forward run rate = 6% of server market. Guess where end 2016 might be?
  179. 179. $0 $7,500 $15,000 $22,500 $30,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Analyst Estimates for AWS Revenue Million Punctuated Equilibrium +3 yrs 40-50%? This is known as a ... Just continue on the doubling rate ... slows down a bit later.
  180. 180. Pattern 3 We have Inertia
  181. 181. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Past Success Inertia Pass success always creates inertia to change ...
  182. 182. Disruption of Past Norms Transition to the New Agency of the New Business Model Change of business relationship (loss of social capital) Investment in knowledge capital Suitability Declining unit value Loss of existing financial or physical capital cost of acquiring new skillsets Lack of second sourcing options Data for Past Success counteracts Loss of political capital Investment in new business relationships Lack of pricing competition Resistance from rewards and culture Threat to barriers to entry Changes to governance, management and practices Loss of strategic control External financial markets reinforce existing models +Inertia Lots of different types of inertia - bit of research I did back in 2010.
  183. 183. Disruption of Past Norms Transition to the New Agency of the New Business Model Change of business relationship (loss of social capital) Investment in knowledge capital Suitability Declining unit value Loss of existing financial or physical capital cost of acquiring new skillsets Lack of second sourcing options Data for Past Success counteracts Loss of political capital Investment in new business relationships Lack of pricing competition Resistance from rewards and culture Threat to barriers to entry Changes to governance, management and practices Loss of strategic control External financial markets reinforce existing models +Inertia Lets look at this one
  184. 184. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Compute (Product) Take an activity ... like compute ... when it was a product
  185. 185. Evolution Compute (Product) I'm going to ignore the value chain bit for a moment, to make my diagram easier
  186. 186. Evolution Novel Practice (Scale Up) When compute was a product we developed novel architectural PRACTICES e.g scale-up for capacity, N +1 for resilience and disaster recovery tests for failure testing
  187. 187. Evolution These spread ...
  188. 188. Evolution Best Practice (Scale Up) ... becoming best practice.
  189. 189. Evolution Compute (Utility) BUT the act of computing evolved becoming more of a commodity and eventually provided as a utility ...
  190. 190. Evolution Novel Practice (Scale Out) ... this enabled novel practices to appear ... e.g. scale-out for capacity, "design for failure" for resiliences, chaos engines (e.g. monkeys / gorillas) for failure testing.
  191. 191. Evolution These spread ...
  192. 192. Evolution Product Co-Evolution Best Practice Utility Best Practice ... becoming best practice. NB Practices often co-evolve with the activity
  193. 193. Evolution Legacy Estate New Estate "DevOps" Product Best Practice Utility Best Practice Legacy means application built with best practice for a PRODUCT WORLD We gave this a name 'DEVOPS' New Estate means application built with best practice for a UTILITY WORLD
  194. 194. Evolution Legacy Estate New Estate "DevOps" Cost Product Best Practice Utility Best Practice We want the benefits of the new world ... efficiency, agility, new sources of worth ... But there is a 'cost' of re-architecting.
  195. 195. Pattern 4 Inertia Kills
  196. 196. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible DSC Online Photo Digital Analog As images changed from analog to digital, Kodak was first in with Digital Still Cameras and Online photos
  197. 197. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Digital Analog Fulfilment Inertia DSC Online Photo ... but it's fulfilment systems created inertia to the change
  198. 198. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Guess who was first with video on demand online and guess who had shops! Guess who failed to deal with this.
  199. 199. Pattern 5 Cycles The economy has ...
  200. 200. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Peace As an activity evolves we get a state of relatively 'peaceful' competition between big vendors ...
  201. 201. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Peace ... they build up inertia to change ...
  202. 202. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Peace ... the act becomes suitable for commodity (+ utility) provision ...
  203. 203. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible WarPeace Punctuated Equilibrium ... a new entrant (not encumbered by past) appears, a punctuated equilibrium occurs and a state of war with disruption of those stuck behind inertia barriers.
  204. 204. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Interface Peace War Wonder ... also you get an explosion of higher order systems (new sources of worth, value) ... a time of wonder.
  205. 205. Peace War Wonder the pattern of wonder, peace and war occurs at both macro and micro scales.
  206. 206. The Age of Electricity The macro we call 'Ages' ...
  207. 207. ... these don't start with 'innovation' but ...
  208. 208. G. Westinghouse, 1886 ... commoditisation of a pre-existing act.
  209. 209. Causing an explosion of higher order systems ...
  210. 210. Dreams of magic, a time of wonder Creating a time of wonder ...
  211. 211. Unless you're in the 'old' industry.
  212. 212. Pattern 6 Organisations Evolve It's not just activities, practices and data that evolve ...
  213. 213. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Interface Peace War Wonder Everytime we go through a cycle ...
  214. 214. Evolution Co-Evolution Best Practice Best Practice Product Utility We have co-evolution of practice ...
  215. 215. Evolution Estate Peace Product Best Practice ... which means we have the old world with the old estate ...
  216. 216. Evolution New Estate Estate Legacy Product Best Practice Utility Best Practice War ... that becomes legacy whilst a new estate is formed.
  217. 217. Evolution DIES WINS Utility Best Practice War The old world then dies, the new world wins ... which means the new practices / methods become dominant.
  218. 218. Evolution Utility War Electricity Fordism Hence every cycle leads to a new form of organisation.
  219. 219. Evolution Utility War Compute Next Generation Even today.
  220. 220. 0% 10% 20% 30% 40% We do not open that we consider a source of differential advantage Next Gen Traditional Strongly Disagree Disagree Neutral Agree Strongly Agree In some respects the new organisation are similar to the past ...
  221. 221. 0% 20% 40% 60% Next Gen Traditional Strongly Disagree Disagree Neutral Agree Strongly Agree Our company deploys an open technology approach as a means of outmaneouvering competitors In others they are vastly different.
  222. 222. Open source Resilience Failure Testing Infrastructure Learning "Big" Data Culture Structure Corporate Focus Type Strategy/TacticalOrganisationActivity Departmental Inertia Profit Cost Reduction N+1 Disaster Recovery Analysts Used Enterprise Class Service / Cell Fluid / Gameable Disruption Weapon Design For Failure Chaos Engines Ecosystem Driven By Commodity Traditional Next Generation Capacity Deployment Scale Up Change Control Scale-out Continuous Technique Single Mixed Practice This is the phenotype
  223. 223. Why? How to? So what? Gameplay Learning Now the fun stuff ...
  224. 224. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Access System Authentication Biometric 2 Factor User / Pwd Login Log History Compute Physical Servers Design for Failure Authorisation (ACL) Permission Monitoring Recommendation (VRM) Capability (Credentials) Trust Rule Based (2 way) Rule Based (1 way) User Reporting Identity (provider) Control System Customer Customer To play the game you need to move a piece ...
  225. 225. Certainty Ubiquity Demand Supply Competition Fortunately there are many ways to accelerate and deaccelerate competition
  226. 226. Certainty Ubiquity Demand Supply Open Like Open Source
  227. 227. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible +competition Open A B Customers So you can move pieces on the map ...
  228. 228. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A B Customers Patents +competition ... and you can slow them down.
  229. 229. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A B Conditions * Concept * Suitable * Technology * Attitude* Attitude Customers FUD +competition Through numerous ways ...
  230. 230. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A B C +Marketing Customers including attempting to create new 'needs'
  231. 231. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A B +Constraints Customers ... and exploiting constraints.
  232. 232. The rest of this presentation was examples of this and how to exploit the situation. For those who attended one of the workshops, a couple of diagrams for reminders ...
  233. 233. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Ecosystem Ecosystems are force multipliers ...
  234. 234. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Leverage Commoditize Innovate ... if correctly used. THINK - Innovate, Leverage, Commoditise
  235. 235. Worth noting Ecosystems if effectively used are future sensing engines. Be first to industrialise but follow innovation
  236. 236. Uncharted Industrialized Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible First Mover Fast Follower In other words, be first to create the industrialised service, allow others to innovate on top and mine consumption data.
  237. 237. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible A1 A2 Ecosystem Tower Moat B1 B2 C1 C2 Don't forget to exploit competitors - Tower & Moat.
  238. 238. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible +competition +competition +competitionSince everything evolves ...
  239. 239. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Where? You have multiple 'where' to attack
  240. 240. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Platform Why? Mapping can tell you why one where over another.
  241. 241. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Platform Compute Platform Utility Compute Utility Co-evolved management tools and practice (Devops) Physical Server Server OS Guest OS New Applications (Developers) 2008 This can have a powerful effect
  242. 242. The only people who can map a business are people within the business. No consultants Remember ...
  243. 243. ValueChain Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution VisibleInvisible Online Photo Storage Data Centre Power Payment Web Site Platform Fotango CRM Online Image Manipulation Compute Map Precision Due to ...
  244. 244. Marquis De Condorcet, 1785 "each member of a voting group is more likely than not to make a correct decision, the probability that the highest vote of the group is the correct decision increases as the number of members of the group increases" Wisdom of the Crowd
  245. 245. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible On the issue of predictability ...
  246. 246. Uncharted Industrialized Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Peace War A2 B1 A1 A5A3 A4 CompetitionWhat? What! What! When? When! When! Some things are, some things aren't ...
  247. 247. There appears to exist an uncertainty principle in the economic cycle whereby p(what) + p(when) ≈ 1 Not confirmed, but ...
  248. 248. Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible fitness function fitness function Cells Aptitude (finance + marketing) Unit (fitness function) We didn't get to organisation ... ... maps help with cell based structures ... Aptitude (finance + engineering)
  249. 249. Uncharted Industrialized Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible fitness function fitness function Cells Attitude? Attitude? Unit (fitness function) but there's an issue of attitude ...
  250. 250. Uncharted Industrialized Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible fitness function fitness function Cells Unit (fitness function) ... that allows for new forms of organisation Pioneers Settlers Town Planners Attitude
  251. 251. Uncharted Industrialized Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible fitness function fitness function Cells Pioneers Settlers Town Planners Unit (fitness function) Attitude + Aptitude (finance + engineering) Cell has + Attitude (Town Planning) + Fitness Function ... for example ...
  252. 252. Uncharted Industrialized Genesis Custom Built Product (+ rental) Commodity (+ utility) Evolution ValueChainVisibleInvisible Competition Steals from Steals from Unit (fitness function) ... that solve evolution by theft.
  253. 253. +situational awareness Units +fitness functions +fitness functions Cells (aptitude & attitude) Units Units Executive Attitude Attitude Attitude Chief Pioneer Chief Settler Chief Town Planner Finance Engineering Operations Marketing +fitness functions +populate +fitness functions steal from 3 x Cultures +enforces evolution Work +populate Preparation Aptitude Cells (aptitude & attitude) Leading to ...
  254. 254. @swardley
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