Tag Archives: software

Software Isn’t Going to Eat the World

Software Isn't Going to Eat the World

GUEST POST from Greg Satell

In 2011, technology pioneer Marc Andreessen declared that software is eating the world. “With lower start-up costs and a vastly expanded market for online services,” he wrote, “the result is a global economy that for the first time will be fully digitally wired — the dream of every cyber-visionary of the early 1990s, finally delivered, a full generation later.

Yet as Derek Thompson recently pointed out in The Atlantic, the euphoria of Andreessen and his Silicon Valley brethren seems to have been misplaced. Former unicorns like Uber, Lyft, and Peloton have seen their value crash, while WeWork saw its IPO self-destruct. Hardly “the dream of every cyber-visionary.”

The truth is that we still live in a world of atoms, not bits and most of the value is created by making things we live in, wear, eat and ride in. For all of the tech world’s astounding success, it still makes up only a small fraction of the overall economy. So, taking a software centric view, while it has served Silicon Valley well in the past, may be its Achilles heel in the future.

The Silicon Valley Myth

The Silicon Valley way of doing business got its start in 1968, when an investor named Arthur Rock backed executives from Fairchild Semiconductor to start a new company, which would become known as Intel. Unlike back east, where businesses depended on stodgy banks for finance, on the west coast venture capitalists, many of whom were former engineers themselves, would decide which technology companies got funded.

Over the years, a virtuous cycle ensued. Successful tech companies created fabulously wealthy entrepreneurs and executives, who would in turn invest in new ventures. Things shifted into hyperdrive when the company Andreessen founded, Netscape, quadrupled its value on its first day of trading, kicking off the dotcom boom.

While the dotcom bubble would crash in 2000, it wasn’t all based on pixie dust. As the economist W. Brian Arthur explained in Harvard Business Review, while traditional industrial companies were subject to diminishing returns, software companies with negligible marginal costs could achieve increasing returns powered by network effects.

Yet even as real value was being created and fabulous new technology businesses prospered, an underlying myth began to take hold. Rather than treating software business as a special case, many came to believe that the Silicon Valley model could be applied to any business. In other words, that software would eat the world.

The Productivity Paradox (Redux)

One reason that so many outside of Silicon Valley were skeptical of the technology boom for a long time was a longstanding productivity paradox. Although throughout the 1970s and 80s, business investment in computer technology was increasing by more than 20% per year, productivity growth had diminished during the same period.

In the late 90s, however, this trend reversed itself and productivity began to soar. It seemed that Andreessen and his fellow “cyber-visionaries were redeemed. No longer considered outcasts, they became the darlings of corporate America. It appeared that a new day was dawning and the Silicon Valley ethos took hold.

While the dotcom crash deflated the bubble in 2000, the Silicon Valley machine was soon rolling again. Web 2.0 unleashed the social web, smartphones initiated the mobile era and then IBM’s Watson’s defeat of human champions on the game show Jeopardy! heralded a new age of artificial intelligence.

Yet still, we find ourselves in a new productivity paradox. By 2005, productivity growth had disappeared once again and has remained diminished ever since. To paraphrase economist Robert Solow, we see software everywhere except in the productivity statistics.

The Platform Fallacy

Today, pundits are touting a new rosy scenario. They point out that Uber, the world’s largest taxi company, owns no vehicles. Airbnb, the largest accommodation provider, owns no real estate. Facebook, the most popular media owner, creates no content and so on. The implicit assumption is that it is better to build software that makes matches than to invest in assets.

Yet platform-based businesses have three inherent weaknesses that aren’t always immediately obvious. First, they lack barriers to entry, which makes it difficult to create a sustainable competitive advantage. Second, they tend to create “winner-take-all” markets so for every fabulous success like Facebook, you can have thousands of failures. Finally, rabid competition leads to high costs.

The most important thing to understand about platforms is that they give us access to ecosystems of talent, technology and information and it is in those ecosystems where the greatest potential for value creation lies. That’s why, to become profitable, platform businesses eventually need to invest in real assets.

Consider Amazon: Almost two thirds of Amazon’s profits come from its cloud computing unit, AWS, which provides computing infrastructure for other organizations. More recently, it bought Whole Foods and began opening Amazon Go retail stores. The more that you look, Amazon looks less like a platform and more like a traditional pipeline business.

Reimagining Innovation for a World of Atoms

The truth is that the digital revolution, for all of the excitement and nifty gadgets it has produced, has been somewhat of a disappointment. Since personal computers first became available in the 1970’s we’ve had less than ten years of elevated productivity growth. Compare that to the 50-year boom in productivity created in the wake of electricity and internal combustion and it’s clear that digital technology falls short.

In a sense though, the lack of impact shouldn’t be that surprising. Even at this late stage, information and communication technologies only make up for about 6% of GDP in advanced economies. Clearly, that’s not enough to swallow the world. As we have seen, it’s barely enough to make a dent.

Yet still, there is great potential in the other 94% of the economy and there may be brighter days ahead in using computing technology to drive advancement in the physical world. Exciting new fields, such as synthetic biology and materials science may very well revolutionize industries like manufacturing, healthcare, energy and agriculture.

So, we are now likely embarking on a new era of innovation that will be very different than the digital age. Rather than focused on one technology, concentrated in one geographical area and dominated by a handful of industry giants, it will be widely dispersed and made up of a diverse group of interlocking ecosystems of talent, technology and information.

Make no mistake. The future will not be digital. Instead, we will need to learn how to integrate a diverse set of technologies to reimagine atoms in the physical world.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Top 10 Human-Centered Change & Innovation Articles of July 2022

Top 10 Human-Centered Change & Innovation Articles of July 2022Drum roll please…

At the beginning of each month we will profile the ten articles from the previous month that generated the most traffic to Human-Centered Change & Innovation. Did your favorite make the cut?

But enough delay, here are July’s ten most popular innovation posts:

  1. What Latest Research Reveals About Innovation Management Software — by Jesse Nieminen
  2. Top Five Reasons Customers Don’t Return — by Shep Hyken
  3. Five Myths That Kill Change and Transformation — by Greg Satell
  4. How the Customer in 9C Saved Continental Airlines from Bankruptcy — by Howard Tiersky
  5. Changing Your Innovator’s DNA — by Arlen Meyers, M.D.
  6. Why Stupid Questions Are Important to Innovation — by Greg Satell
  7. We Must Rethink the Future of Technology — by Greg Satell
  8. Creating Employee Connection Innovations in the HR, People & Culture Space — by Chris Rollins
  9. Sickcare AI Field Notes — by Arlen Meyers, M.D.
  10. Cultivate Innovation by Managing with Empathy — by Douglas Ferguson

BONUS – Here are five more strong articles published in June that continue to resonate with people:

If you’re not familiar with Human-Centered Change & Innovation, we publish 4-7 new articles every week built around innovation and transformation insights from our roster of contributing authors and ad hoc submissions from community members. Get the articles right in your Facebook, Twitter or Linkedin feeds too!

Have something to contribute?

Human-Centered Change & Innovation is open to contributions from any and all innovation and transformation professionals out there (practitioners, professors, researchers, consultants, authors, etc.) who have valuable human-centered change and innovation insights to share with everyone for the greater good. If you’d like to contribute, please contact me.

P.S. Here are our Top 40 Innovation Bloggers lists from the last two years:

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Transform Your Business with a Change Success Manager

Transform Your Business with a Change Success Manager

“Stealing the role of customer success manager from the world of SaaS is the key to making your digital transformation efforts a success.”

I was speaking with a headhunter recently about some of the roles she was recruiting for and there was one that captured my attention. It was a posting she had for a customer success manager at one of your favorite three letter software companies. And, as she extolled the merits of the role I found myself thinking that the management practice of organizational change is still so immature. There are still so many missing tools and mindsets in the organizational behavior area of management science.

What I found so captivating about the responsibilities of a customer success manager, is that the kinds of tasks she described are exactly the kinds of activities that need to be performed as part of any organizational change effort. The difference is that software companies have recognized that they need to have people dedicated, ideally from the very beginning of the process, to help connect the cross-functional dots for the customer behind the scenes, actively manage expectations and outcomes, ensure a mutual understanding of what success looks like, and to make sure that it is ultimately achieved.

Technology companies everywhere seem to be racing to embrace the role of customer success manager as a new member of their army of service professionals. And, the customer success manager, above all else, strives to ensure that every customer moves beyond purchase, beyond installation, beyond first use, to productive use, deepening engagement, and the holy grail of retention and referral.

And retention is key in SaaS businesses because the churn rate (13% per year on adverage) is higher than other subscription type businesses (6-8% per year according to Recurly Research), but lower than the churn rate for some wireless carriers (which averages between 1-3% per month). Churn rate is a statistic measuring those customers who choose not to renew their service, or to switch their service to another subscription provider. A churned customer doesn’t write you a check for next year, or future years either.

The main reason SaaS customers churn, especially after their first year, is that the perceived value of the subscription is insufficient relative to the price to justify renewing it. They may have bought the software but didn’t install it, installed it but never really got up and running with it, or just found it too hard to get the value out of the software that they were promised. The old technology sales model didn’t care about these situations. Tech companies just focused on closing the sale, recognizing the revenue and moving on to close the next prospect. With the SaaS model, sales are no longer king, adoption and engagement are king. If the customer doesn’t adopt, engage and expand their footprint with your SaaS offering then it is easy for them to switch to an offering of a competitor.

So, if customer success managers are so instrumental to the success of technology companies in the era of the cloud, why shouldn’t they also be considered instrumental inside of our organizations as the key to successful change?

The problem is that too many organizations are still stuck in an upside-down paradigm where change management is seen as a bolt on to project management, instead of truly architecting our organizations for successful change.

Companies that want to be successful over the long term understand that change is not an event but a constant. They strategically select those capabilities and competencies needed for the next phase of their evolution, plan a portfolio of change initiatives that executes upon their strategy, and understand that change saturation and change readiness must always be considered. Companies that succeed in this era of unending change will constantly manage the expectations of their people around each change initiative and how the process will work and what the technology can and can’t do.

It is not surprising that companies would first embrace a role that adds tremendous value on the revenue generating side of the business first. Technology companies have determined customer success managers are critical to helping customer organizations adopt changes imposed by new technologies while ultimately increasing the lifetime value of each new customer. But for similar reasons internal to the organization, companies must also now embrace the need for a role I’d like to call the change success manager.

A change success manager is a change manager on steroids. However, in today’s business climate most people think of a change manager as the person a project manager brings in near the end of a software implementation project that does the training or communications. That may be how companies are doing the so-called people side of change today, but it is wrong!

This new role of change success manager is intended to lead each change initiative inside the organization from beginning to end. A change success manager is brought in at the beginning of the process to reach across the organization and identify a cross functional team specific to the needs of each change initiative for the purposes of convene as part of a change planning workshop. This change planning team will facilitate each change planning workshop using tools like the Change Planning Toolkit™ to identify the change leadership team that will take decisions and remove roadblocks for the change management team that will facilitate the actions necessary to advance the change initiative to its desired outcomes.

And, unlike the current model of change that many organizations follow, a change success manager will have one or more project managers on their change management team to identify the appropriate pace for the project, and the right size for the work packages, in order to maintain momentum across the entire duration of the change initiative and increase the adoption of internal change – just like a customer success manager increases the adoption of external changes!

This article originally appeared on CIO.com


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Microsoft’s Seeing AI Glasses

Microsoft Seeing AI Glasses

Saqib Shaikh lives is blind, lives in London, and is a core Microsoft developer. He lost the use of his eyes at age 7. Saqib found inspiration in software development and is helping build Seeing AI, a research project helping blind or visually impaired people to better understand who and what is around them. The app is built using intelligence APIs from Microsoft Cognitive Services.

Pretty amazing that an app can use a camera to capture an image or a video feed, and using artificial intelligence, to analyze the scene and vocalize to the user what it sees. In this example this is being done for the benefit of a human user, but imagine what could be possible if one computer program is used to serve instead, another computer program as the user of the analysis. What might that make possible?

How might you or your organization make use of technology like this?

What direction do you think technology like this will take?

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Microsoft’s Latest Vision of Future Productivity

Microsoft's Latest Vision of Future ProductivityI came across the latest vision of future productivity from Microsoft today and thought I would share it with you, along with a whole series of previous videos from Microsoft taking a look at the same subject area, ranging from 2009-2015. It is interesting to see what has changed and what has stayed the same over those six years in their view of the future.

So, here is Microsoft’s latest vision of future productivity:

And here is a closer in, more present-oriented view of changes in how people think about technology, collaboration, and productivity from Julia White, General Manager, WW Office Marketing, Microsoft:

(sorry, someone made this video private)

It can also be interesting to see how visions of the future evolve over time, so here is Microsoft’s vision of the future from October 2011:

And their 2009 vision:

Does anything jump out that has either worked its way into Microsoft’s vision of the future of productivity or worked its way out of their vision that is notable?

I’d be curious to hear your thoughts and reactions to this series of videos and where you think things are going in the near term and longer term.


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Software Design Challenge – Less is More

Software Design Challenge - Less is MoreI originally posed this software design challenge to application developers in September 2008 based on an InfoWorld article that warmed my heart, but have yet to see any major changes in how most software applications are designed.

For far too long, especially on the PC, software developers have been building applications with a feature arms race mentality. Because of rapidly expanding memory and hard disk space on customers’ machines, developers have not had to write tight code in the same way they had to in the early days of the PC.

Now, hopefully Symantec’s focus on creating Norton applications that install in under a minute and consume far less memory will spread to other industry players. Just because I have 4gb of RAM and 160gb of hard disk space does not give software developers the right to consume it thoughtlessly or to make my computer run slower.

Why can’t software developers give us adaptive software?

If I don’t use a feature of a product in 30 days, it should uninstall itself.

Why can’t I choose lean and mean (give me only the basic features) as an install option?

Software should be smart enough to minimize its footprint, while at the same time giving you the opportunity to add a feature easily later. So, an unused feature should get uninstalled, and simplify the menus as a result. But, if I hold the bottom of the menu it should expand to show uninstalled menu features in grey. If I select a greyed out feature it should tell me it is going to re-install it and then do so automatically.

I can only imagine how much smaller Vista, Office, Photoshop, and other applications would get if they were designed in this way.

If you know of applications designed in this way, please feel free to let me know by commenting on this article.

What do you think?

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