Software can accelerate the stresses of transient advantage

From Snap’s S-1, via Ben:

In a world where anyone can distribute products instantly and provide them for free, the best way to compete is by innovating to create the most engaging products. That’s because it’s difficult to use distribution or cost as a competitive advantage—new software is available to users immediately, and for free. We believe this means that our industry favors companies that innovate, because people will use their products.

Link

“[E]verybody likes growth in someone else’s backyard”

So, long run growth comes from one thing, and one thing only: Productivity. New and better ways of doing things. New and better products, new and better companies. It doesn’t come from 90% of the things that we talk about. So, the Federal Reserve, stimulus programs, even anti-inequality programs–over 10-20 years, it’s about productivity. Our ancestors may have, you know, you might have had a grandparent who dug coal with a pickaxe; and how did you get so much richer? Not by your union getting him higher wages and he still digs coal with a pickaxe at 20 cents an hour, not 10 cents. It’s because one guy left and he uses a bulldozer. Right? Growth comes from productivity. And productivity–everybody likes growth in someone else’s backyard. Productivity comes from new companies, doing things new ways, and making life very uncomfortable for everybody else. Uber is the great example. Uber is–that’s a great productivity enhancement. It’s putting a lot of people to work who otherwise couldn’t go to work. And the taxi companies hate it. And most of economic regulation is designed to stop growth. It’s designed to protect the old ways of doing things. So, what we need for growth-oriented policies is exactly that kind of innovation, that kind of new companies coming in an upending the status quo, that make everybody uncomfortable and run to their politician to say, ‘You’ve got to stop this.’

I don’t know the politics of economics enough to figure out if that’s a dick thing to say or not, but it sure makes grim-sense. The rest of the interview has some fun mental gymnastics and suave “turns out”’ing.

(And check out the show notes! That’s some intimidating work.)

Source: “EconTalk: John Cochrane on Economic Growth and Changing the Policy Debate”

Creativity: not much needed at your job

Capabilities such as creativity and sensing emotions are core to the human experience and also difficult to automate. The amount of time that workers spend on activities requiring these capabilities, though, appears to be surprisingly low. Just 4 percent of the work activities across the US economy require creativity at a median human level of performance. Similarly, only 29 percent of work activities require a median human level of performance in sensing emotion.

Four fundamentals of workplace automation

Calculating the ROI on IT Innovation

Many IT professionals believe innovation in IT pays for itself. But a surprising number of companies I visit aren’t in a position to prove this hypothesis. They typically don’t know what it costs to provide their IT services and can’t quite put a figure on the benefits of IT innovation projects. Without these key data points, they have a hard time quantifying the ROI or payback on any IT project—making it difficult for IT to compete internally with other departments for scarce business funding.

The rest has many considerations for planning our ROI, plus contingencies to muck about with.

For much more detail, see Mindy Cancila’s write-up over at Gartner from earlier this year.

Source: Calculating the ROI on IT Innovation

A nice description of why large, business case driven companies innovate less

But this can be a toxic formula. The financial optimization algorithm always prioritizes the known over the unknown since the known can be measured and is assigned a quantum of value while the unknown is “discounted” with a steep hurdle rate, and assigned a near zero net present value. Thus the financial algorithm leads to promoting efficiency at the expense of creation. Efficiency may be the right priority when times are difficult and resources are scarce but creativity is the right priority in a time of plenty. And abundance is what being big is all about.

Priorities in a time of plenty

IT: Think Digital, Think Business, Think Big

n=250 survey that shows people want more from IT, but they feel IT is not up to the task: “A mere 43 percent agreed their IT department were successfully becoming more strategic, responsive, and valued as a partner; 58 percent rated IT as poor or making only moderate steps, the report said.”

IT: Think Digital, Think Business, Think Big

The Three P’s

I always like a good three p’s explanation:

We found three key elements that consistently drive innovation: people, processes and philosophies (what we call the 3Ps). We found that highly innovative organisations built their people, processes and philosophies around five fundamental “discovery skills”. Innovators ask provocative questions that challenge the status quo. They observe the world like anthropologists to detect new ways of doing things. They network with people who don’t think like them to gain radically different perspectives. They experiment to test new ideas and experiences. Finally, these behaviours trigger new associations which lead them to connect the unconnected, thereby producing disruptive ideas. An organisation’s investment in and ability to leverage these three facets of innovation sets it apart.

Gartner Says Bimodal IT Projects Require New Project Management Styles

A system of record is a core system that an organization uses to run its business, such as finance applications or email provision. While a system of record is vital to the operations of the company, it provides no competitive advantage. Systems of record are classically Mode 1. These projects tend to be more knowable both in clear outcomes and clear approaches to achieving these outcomes, which ultimately amounts to doing the process as well as any competitor. Once this is achieved, there is little incentive to improve further or change the process unless conditions or regulations change.

Systems of differentiation are generally Mode 2 projects, because their value resides in providing capabilities that competitors don’t have. Since the nature of competition is that competitors will copy successful innovations, these capabilities need to constantly improve. The project will likely have a long-term goal that is achieved through several iterative steps that build on one another as success is demonstrated. The exploratory nature of Mode 2 projects is important to their long-term success.

A system of innovation is essentially an experiment. It needs a Mode 2 approach because it is a brand-new idea and there is no established way to plan the details of what will be done.

Gartner Says Bimodal IT Projects Require New Project Management Styles