Situation Normal Everything Must Change

A summary of my OSCON 3 hr Tutorial on ...

Situation Normal,
Everything Must
Change

Leading Edge Forum March 2011

Situation Normal, Everything Must Change ...

1 2 3

Business/IT Business/IT Relationship The Consumerization of
Co-evolution Management IT
How are business and How can Enterprise IT How are consumer
IT changing each other? add more value to the technologies and the
organization? Internet affecting both
the firm and central IT?

4 5 6

Organizing IT for the The Changing Nature of Business
Future Work Sustainability
What will the retained How will management, How can IT be used
central IT function employees and the to help make firms
look like? culture of the firm need more
to change? environmentally
... this is what I do ... friendly?


... Starting with diffusion ...
Everett Rogers
Rate of adoption

1960s
Geoffrey A. Moore
Crossing the Chasm

Time

Total Adoption
Diffusion Curve

Everett Rogers
Diffusion of Innovations, 1962
Cumulative

... and
diffusion
curves ...

Time

Total Adoption

Telephony

+ Mature

... we can hint
Evolution at a pattern of
evolution ...

Time

... by abolishing
Ubiquity
time, we can clearly Utility Service
see that pattern.
Now, we have
correlation, data ... Commodity

Product Service

Custom built
Innovation
Certainty

Ubiquity
Demand
(user competition)

io n
at
it is
o d ... and

m m causation ...

Co
Improvement
(supply competition)

Certainty

No Data No Causation No Correlation

Cloud
Web
Client Server

Mainframe

... unlike those who just make this
stuff up ...

Ubiquity
Attitude
Technology
Factors
Concept
Suitability

... unfortunately we How NOT
can't say when things when ...
will change (we abolished
time). Fortunately

barriers exist, ...
Certainty

... Unfortunately IT isn't
Ubiquity
N. Carr one thing ...

Cost of Doing
Business

Competitive
Advantage
P. Strassmann
Certainty

Consumption
Ubiquity

"Perspective"

... and there is a difference
between consumer and Brand
producer perspective ... (+ lifestyle)

Production
"Perspective"

Certainty

... even the creative
process can have Commodities
Operational Advantage
different effects ... don't become
innovations ...

"Creative Process" Feature
Differentiation
Invention
Novel practice
Idea creates ...
Genesis

Discovery

Future Worth
∝
... and there is an inherent
link between future worth
1
Certainty

and uncertainty ...

Time keeper
Camera Phone
Ubiquity
Address book

Calculator
Internet

Digital music player
Radio

GIS

Social Network

Augmented Reality

...
Social Gaming and many devices
ID Card
bundle multiple
activities ...
Health Monitor

Certainty

DANGER!
Complexity
DANGER!
... which is why examining evolution is
complex ...

... Fortunately
Ubiquity
Economies of scale (volume operations)
Focus on core (outsource)
evolution creates
Pay per use (utility) common beneﬁts ...

efﬁciency

consumption
Agility (Self Service)
Opportunity (long tail, co-evolution, price elasticity)
Innovation (creative destruction, componentisation)

William Stanley Jevons, 1865

Certainty

Joseph A. Schumpeter
Ubiquity
... and consequences ... (1883 - 1950)

+ Efﬁciency
(not reduced budgets)

Accelerated
Innovation

+ Agility
Herbert A. Simon
(1916 - 2001)

Certainty

... these impacts
Ubiquity
Software
Less Visible Platform
increase as you
move to higher
Infrastructure order systems ...

Stronger
Accelerated
Innovation
Big Data
Mash-ups
Certainty

Ubiquity Transition
Confusion
Governance
Trust
Security
Transparency Outsourcing
Suitability

Disruption Competition
Lock-in
Relationships
Second Source
Skills
Control
Political Capital
Investment
... but evolution
also creates
standard risks ...
Certainty

... then again you
Ubiquity
Market have no choice ...

Pay per use

ure
Focus on core

ss
Pre
Prof. Van Valen Economies of scale
“Red Queen Hypothesis”
Speed to market
The need to constantly
evolve in order to stand
still relative to a You
surrounding ecosystem

Transition Costs Vs Operational Disadvantage

Certainty

Consumerization
... and sometimes
this can impact you
from an outside
ecosystem ...

Enterprise Ecosystem

Aggresive
commoditisation
Consumer Ecosystem

Ubiquity
Disruptive to Existing
Vendors
Effect make originate
outside competitive
ecosystem
+ Efﬁciency
(not reduced budgets)

... but in general ... Accelerated
Innovation

+ Agility Reduced Barriers to
Entry in other
industries

Certainty

... of course, organisations deal with
Frequency

many activities and hence they have a
shape ...

Innovation Custom built Product Commodity

Frequency

Dynamic Repeatable
Deviation Standard
Uncertain Known
Emergent Predictable
Serendipity Procedural
Worth CODB

Chaotic Linear
... the extremes of which have
Innovation
different properties ...
Custom built Product Commodity

... evolution in effect creates a
Frequency

virtuous circle ...

Commoditisation
User & Supply Competition

Innovation
Creative Destruction
Componentisation


H. Pixii, 1832 National Grid, ‘30s

Turing ‘36 PowerEdge, ‘02
IBM 650, ‘54

Z3 ‘41
Amazon EC2 ‘06

Siebel SIS ’94
DBM ’80s

Customer Salesforce ’02 (10.6%)
Centric ‘70s

... which we all
MyDex ‘08
experience ...
VRM ‘06


Chaotic Transition Linear

Lists Siebel SIS ’94

Customer DBM ’80s Salesforce ’02
Centric ‘70s
... of course, as an activity
evolves, its characteristics
change ...

Frequency

6 Sigma
... which is why
one size doesn't
ﬁt all ...

Reduce
Reduce Deviation
Deviation

... ditto ...
Frequency

Agile

Encourages
Deviation Encourages
Deviation

VS
Survival Tomorrow Survival Today
Innovation Paradox
Survival today requires ‘coherence, coordination and stability’.

Survival tomorrow requires the replacement of these erstwhile
virtues.
... there are no Salaman & Storey
viable magic
Innovation ... Custom built
bullets Product Commodity

... and typical
1. One size ﬁts all problems are caused
by trying to use
2. But it worked for them? bullets ...
magic

3. Outsourcing failures.
... your methods
4. Business Alignment. need to adapt
as the activity
5. Management Yo-Yo's. evolves ...

6. Innovation vs Efﬁciency.


Grow
Die Competitor
Your Compete
Company Evolve
... and your company
Consume
is more like an
Produce organism competing
Reproduce in an ecosystem ...

Business
Environment Competitor

... you have energy stores,
actors and activities ...
Agents
Capital
Financial
Physical
Activities
Human
Social

... and everything is in
ﬂux ...

DANGER!
Complexity
DANGER!
... which is why management is complex ...

Frequency

... to fully manage how
activities evolve you need
to understand both
consumption and
Consume

production perspective ...
Produce


... and how consumption
Frequency
Chaotic Transition
of an activity can co- Linear
evolve with production ... Architecture (how we consume)
and infrastructure (what we
Best Architectural Practice
consume) co-evolve
(scale-up, N+1)

Infrastructure
Consume

Cyneﬁn

Novel Practice (distributed
Best Practice
system, design for failure)
Produce

Infrastructure


... and how a new activty
Frequency
(novel practice) can create an
operational advantage ...

Raw
Old Best Practice Ingredients
Furnace &
Grinding
Consume

Float Glass
Novel Practice
Produce

Operational Advantage
Window

.... with this we can identify what practices ﬁt ...
Frequency

Experiment ROI Best Practice

Customer
Adapt Standardise
Focus

Take Risks Avoid Risk
Market Driven
Fail Quick Price vs QoS

Network Ecosystem Regiment

No, I don't
know its ROI

.... and why we
go wrong ...

.... and why we can't avoid
gambling (uncertainty), despite
Lifecycle ... our best efforts ...

= hypecycle

+ Value Curve ... creates expectation curve

... because advantage only
occurs before the "slope of
enlightenment" ...

Ad
van
tag
+
e+

e-
tag

-
=N ull
van

tage
A dvan
Ad

... but we can exploit
these relationship to
create more effective
patterns of
Commoditise
Undifferentiated
organisation ... to Utility Services

Innovate
Worth
∝ 1

Certainty

Leverage
Adoption (Ecosystem)


Innovate Adapt

Experiment
Leverage
to identify future patterns
Take Risks
Customer Market
Focus Driven
Network

Best
Practice Commoditise
Price vs
Standardise
QoS
... we see these
patterns in the
cloud ... enable next wave

+ High rates of Innovation

Speed + Reduced cost of gamble

+ Efﬁciency
(identify & commoditise)

... and new
factors appear
Size to be critical
(increases innovation) for success ...

Feed
(Sustain)

... but cloud isn't just
about new patterns. Utility
As competition crosses a Service
boundary it is almost
always disruptive ... Always disruptive

A B
Sometimes disruptive


"Success is a lousy teacher"
Bill Gates
... because past success
creates inertia barriers
to change ...

Personal Success
AMZN not
encumbered by
Organisation previous business
models in
Institutional Markets infrastructure


... and in this disruptive
phase, new tactical
games are also being
played ...
Core (CRM)

ILC

Barrier to
Entry

Social CRM
differential


... including Tower (new
core revenue) & Moat (area
devoid of differential value with
high barriers to entry) ...

Tower

Moat


... the use of open
source as a tactical
weapon ...

Infrastructure

aims to create a
competitive
marketplace with a
larger ecosystem


Broker

Exchange

Assurance

... even side stepping
an oncoming
barrier ...

Steve Jobs

Jeff Bezos

Creative Disruptive
Leadership Leadership

... which leads to the
question of
leadership ...

... even when factors
are in place & beneﬁts
are clear, it's not only Factors
vendor inertia which
slows the change ... + Efﬁciency
Vendors

Success
+ Innovation

+ Agility


Transition
Disruption

... but customer inertia Outsourcing
through perceived
risks ...


... so activities often Pressure
build up behind
these barriers until
breached by an
organisation not
encumbered by
Cluster
previous models
initiating a ﬂood of Resistance
disruption, a state of
war, ...
disruption / war


Creative Leadership Disruptive Leadership

disruption / war
margin / peace

growth / build

... one of three states:-
Build (creative leadership),
Peace (margin),
Innovation Custom built War
Product (disruptive Commodity
leadership)

... each with different characteristics
i.e. those inertia barriers are beneﬁcial
in the state of Peace ...

Margin


... and the largest examples
of these state changes can
be seen as K-Waves ...

Margin

Disruption

Growth

"War" CEO
"Peace"
CEO

"Build"
... this leads
some to talk
about "Peacetime" vs
"Wartime" CEO ...


Frequency

... but large organisations
produce many activities and
hence have multiple fronts
many in different state
(build / peace / war) ...
Consume
Produce


IT
Frequency

... the situation is only made
Admin more complex by how we
organise ourselves (generally by
Business type of activity i.e. business / IT ) ...


... and attempts to
create homogenous
structures ...
Lifecycle

Lifecycle

We are IT.

Lifecycle

Experiment
... from people who
Take Risks themselves have Lifecycle
different
characteristics ...
Network

Lifecycle

Pioneer

Lifecycle

Best Practice

Avoid Risk
Lifecycle

... polar opposites ...
Regiment

Lifecycle

Town Planners

Lifecycle

Lifecycle

ROI

... creating
structures with
Experiment internal conﬂict Best Practice
Lifecycle

that are further
highlighted by
virtual teams ...

Lifecycle

Pioneers Settlers Town Planners
Frequency

... Hence, by organising along lifecycle
(innovation, custom built, product, commodity),

not only does evolution become clear ...
Consume
Produce


... and management is one
of controlling ﬂows and
barriers ...

Town
Pioneers
Planners
Settlers



"War"
"Peace"

"Build" ... even the phases should
become more
controllable ...



Creative Disruptive
Leadership Leadership

... and the right styles of
leadership can be
applied ...


Frequency

Experiment ROI Best Practice

Customer
Adapt Standardise
Focus

Take Risks Avoid Risk
... along with the right
Market Driven
Fail Quick methods Price vs QoS
...

Network Ecosystem Regiment


Pioneers Innovate

Settlers Leverage

Town Planners
Commoditise

... the right patterns ...


Broker

Exchange

Assurance

... enabling more effective
tactical plays ...

1. One size ﬁts all ... and avoiding the
mistakes of the
2. But it worked for them? past ...

3. Outsourcing failures.

4. Business Alignment.

5. Management Yo-Yo's.

6. Innovation vs Efﬁciency.


... problem is, doing this makes management hard ...

Requisite Variety
The system must be able to equal the number of states
in the input with at least an equivalent number of states
in the regulatory process
Ashby’s Law

Solutions. Either
a) Make Management complex
b) Pretend everything is the
same.

... BUT the process of simpliﬁcation (e.g. one size ﬁts all,
KPIs everywhere) only works if we all agree to do this

(therefore no-one gains an advantage) ...

Same
We suck at
management here

... fortunately we don't live in a world of ...

Situation Normal,
Everything Stays
the Same.


... but ...

Situation Normal,
Everything Must
Change


... here we looked at how different organisation can
exploit these factors to their advantage ...

Summary ...
... if you weren't there, you missed it ... and no,
there's no video, book or whitepaper because ...

... I might be a "researcher", talk about the
tactical use of open source & give conference talks
on how to disrupt others but in reality ...

swardley@csc.com
twitter : @swardley
... I'm an arms dealer in organisational tactics and
management weaponry aka organisational warfare.

... this presentation is just basics.

Situation Normal Everything Must Change

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