Category: innovation | 革新 | 독창성 | 改変

Innovation, alongside disruption are two of the most overused words in business at the moment. Like obscenity, many people have their own idea of what innovation is.

Judy Estrin wrote one of the best books about the subject and describes it in terms of hard and soft innovation.

  • Hard innovation is companies like Intel or Qualcomm at the cutting edge of computer science, materials science and physics
  • Soft innovation would be companies like Facebook or Yahoo!. Companies that might create new software but didn’t really add to the corpus of innovation

Silicon Valley has moved from hard to soft innovation as it moved away from actually making things. Santa Clara country no longer deserves its Silicon Valley appellation any more than it deserved the previous ‘garden of delights’ as the apricot orchards turned into factories, office campus buildings and suburbs. It’s probably no coincidence that that expertise has moved east to Taiwan due to globalisation.

It can also be more process orientated shaking up an industry. Years ago I worked at an agency at the time of writing is now called WE Worldwide. At the time the client base was predominantly in business technology, consumer technology and pharmaceutical clients.

The company was looking to build a dedicated presence in consumer marketing. One of the business executives brings along a new business opportunity. The company made fancy crisps (chips in the American parlance). They did so using a virtual model. Having private label manufacturers make to the snacks to their recipe and specification. This went down badly with one of the agency’s founders saying ‘I don’t see what’s innovative about that’. She’d worked exclusively in the IT space and thought any software widget was an innovation. She couldn’t appreciate how this start-ups approach challenged the likes of P&G or Kraft Foods.

  • 20th anniversary: A Declaration of the Independence of Cyberspace

    Back on February 9, 1996, John Perry Barlow wrote his declaration of of the independence of cyberspace. The declaration pointed out the folly of trying to govern something thought to be virtually ungovernable at the time.
    Cyberspace and is smart fusion really smart ?
    Barlow first came to prominence writing lyrics for The Grateful Dead. His ethos came from the libertarian do your own thing ethic that underpinned much of the hippy movement. This probably come more naturally to Barlow than other people having grown up on a cattle ranch and being the son of the Republican politician.

    By the time he wrote the about the independence of cyberspace; he was already had published extensively about the internet. He was on the board of directors of The WELL – an online community that sprang out of Stewart Brand’s back to the land influence catalogue of useful things The Whole Earth Catalog (The WELL stands for The Whole Earth eLectronic Link). He contributed to Wired magazine (founded by aging hippies Kevin Kelly and Stewart Brand), Barlow’s essay Economy of Ideas published in the March 1994 issue provides a clear view of the thinking that prompted him to write the declaration. He had already founded The Electronic Frontier Foundation with by John Gilmore and Mitch Kapor in response to a series of actions by law enforcement agencies that led them to conclude that the authorities were gravely uninformed about emerging forms of online communication.

    The declaration was a reactionary document, brought upon by the 1996 Telecommunications Act in the US. The act eventually resulted in consolidation of US media ownership.

    I suspect the similarities in style between the declaration and the Doc Searl’s et al later Cluetrain Manifesto are an intentional nod to Barlow on cyberspace.

    A Declaration of the Independence of Cyberspace

    by John Perry Barlow <barlow@eff.org>

    Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.

    We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear.

    Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think that you can build it, as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions.

    You have not engaged in our great and gathering conversation, nor did you create the wealth of our marketplaces. You do not know our culture, our ethics, or the unwritten codes that already provide our society more order than could be obtained by any of your impositions.

    You claim there are problems among us that you need to solve. You use this claim as an excuse to invade our precincts. Many of these problems don’t exist. Where there are real conflicts, where there are wrongs, we will identify them and address them by our means. We are forming our own Social Contract . This governance will arise according to the conditions of our world, not yours. Our world is different.

    Cyberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live.

    We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.

    We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.

    Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.

    Our identities have no bodies, so, unlike you, we cannot obtain order by physical coercion. We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge . Our identities may be distributed across many of your jurisdictions. The only law that all our constituent cultures would generally recognize is the Golden Rule. We hope we will be able to build our particular solutions on that basis. But we cannot accept the solutions you are attempting to impose.

    In the United States, you have today created a law, the Telecommunications Reform Act, which repudiates your own Constitution and insults the dreams of Jefferson, Washington, Mill, Madison, DeToqueville, and Brandeis. These dreams must now be born anew in us.

    You are terrified of your own children, since they are natives in a world where you will always be immigrants. Because you fear them, you entrust your bureaucracies with the parental responsibilities you are too cowardly to confront yourselves. In our world, all the sentiments and expressions of humanity, from the debasing to the angelic, are parts of a seamless whole, the global conversation of bits. We cannot separate the air that chokes from the air upon which wings beat.

    In China, Germany, France, Russia, Singapore, Italy and the United States, you are trying to ward off the virus of liberty by erecting guard posts at the frontiers of Cyberspace. These may keep out the contagion for a small time, but they will not work in a world that will soon be blanketed in bit-bearing media.

    Your increasingly obsolete information industries would perpetuate themselves by proposing laws, in America and elsewhere, that claim to own speech itself throughout the world. These laws would declare ideas to be another industrial product, no more noble than pig iron. In our world, whatever the human mind may create can be reproduced and distributed infinitely at no cost. The global conveyance of thought no longer requires your factories to accomplish.

    These increasingly hostile and colonial measures place us in the same position as those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers. We must declare our virtual selves immune to your sovereignty, even as we continue to consent to your rule over our bodies. We will spread ourselves across the Planet so that no one can arrest our thoughts.

    We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.

    Davos, Switzerland

    February 8, 1996

    So two decades later, how does Barlow’s declaration stand in comparison that what’s actually happened? At first blush not very well. The digital economy outside China is dominated by an oligarchy of four main players: Amazon, Apple, Facebook and Google.

    Scott Galloway’s presentation at DLD conference this year, highlights the winner take all nature of the online world. This is partially down to the nature of the online platform. Amazon grew to critical mass in the US as for a critical amount of time buyers didn’t need to pay state sales tax until state legislation started to catch up.

    Zuckerberg and his peers marked a changing of the guard in Silicon Valley as yuppies took over from the the hippies.

    Inside China there is a similar state-directed oligarchy of Alibaba, Tencent, Netease and Sina.

    The oligarchy impact has been most pronounced in Europe, where consumer demand and a lack of effective competition saw Google go to 90+ percent in market share across the EU, when the US market share was less than 70 percent at the time.

    Futurist and science fiction author Bruce Sterling summed it up rather well:

    “Globalization” is over for 2016. We have entered an era of Internet Counter-Revolution. The events of 1989 feel almost as distant as those of 1789. The globalizing, flat-world, small-pieces-loosely-joined Internet is behind us, it’s history. The elite geek Internet could not resist those repeated tsunamis of incoming users.

    It turned out that normal people like the “social” in social media a lot better than they ever liked the raw potential of media technology. In Russia and China in 2016, digital media is an arm of the state. Internet has zero revolutionary potential within those societies, but all kinds of potential for exported cyberwar. The Chinese police spy and firewall model, much scoffed at in the 1990s, is now the dominant paradigm. The Chinese have prospered with their authoritarian approach, while those who bought into borderless friction-free data have been immiserated by the ultra-rich.

    In the USA it’s an older American story: the apparent freedom of Henry Ford’s personal flivver has briskly yielded to the new Detroit Big Five of Google, Apple, Facebook, Amazon, and, in last place, Microsoft.

    In 2016, everything that looks like digital innovation, “big data,” “the cloud,” the “Internet of Things,” are actually promotional slogans that play into the hands of the GAFAM “Big Five.” Anybody who lacks broadband and a mobile OS is in deadly peril, especially the digital old-school likes of IBM, Cisco, Hewlett-Packard, Oracle… and the hapless TV networks, whose median viewer age is now in the 60s.

    The GAFAM Big Five, the “Stacks,” will turn their wrath on the victims closest to them, well before they complete their lunge for control of cars and thermostats. However, their destiny is obvious. The rebels of the 1990s are America’s new mega-conglomerates. Google is “Alphabet,” Apple pruned the “computer” from its name, Amazon is the Washington Post. In 2016, that’s how it is, and in 2017, 189, 19, much more so.

    So the not-evil guys are the new evil guys, but don’t be scared by this. It’s quite like watching the 1960s Space Age crumble from giant-leaps-for-mankind to launching low-orbit gizmos for profit. It’s comprehensible, it can be dealt with. Sure, it’s tragic if your head was in the noosphere, but if you have any historical awareness of previous industrial revolutions, this is really easy to understand. It’s already in your pocket and purse, it’s written on every screen you look at It could scarcely be more obvious.

    Yes, Internet Counterrevolution is coming, much of it is here already, and it’s properly considered a big deal, but it’s not permanent. This too shall pass.

    And this post hasn’t even touched on how government has looked to plug itself into all facets of online life in the interest of discovering terrorist plots, organised crime or paedophile rings. Assaults on cyberspace sovereignty are numerous, from Pakistan’s special editable version of YouTube to several governments looking for cryptographic backdoors.

    At DLD 2016, you have a German politician talking about the mechanism of how the government needed to rollback citizen rights to privacy to give German start-ups a chance. In this winner takes all world, the beneficiaries are likely to be Google, Facebook Amazon and Microsoft rather than a local champion.

    I started on this post in mid-January and scheduled it to go out on February 8, 2016. danah boyd also published on the declaration of Cyberspace and I recommend you go and check out here. More privacy related content here.

    More information
    Economy of Ideas | Wired 
    The Cluetrain Manifesto
    A Declaration of the Independence of Cyberspace | EFF
    Bruce Sterling & Jon Lebkowsky: State of the World 2016 | The WELL
    Pakistan lifts ban on YouTube after launch of own version | The Daily Star
    John Perry Barlow 2.0 | Reason

  • Twitter troubles

    You can read elsewhere about Twitter troubles, I have linked to some of the best analyses I found out there at the bottom of this article.
    Twitter
    If you don’t have time to go through the the analyses around Twitter troubles, here’s the ‘CliffsNotes’ version:

    • Management turnover. Three different heads of engineering in 18 months, five different product leads in the past two years, three CFOs in 18 months and 2 COOs (mainly because the role was left vacant for over 12 months)
    • Growth in user numbers has been stagnant in the U.S.. The three published quarters of 2015 showed U.S. active users at 66 million. The last two quarters of 2014 were steady at 64 million
    • Growth in user numbers globally has been a modest 11 percent. Growth outside the U.S. was just 13% year on year in quarter three of 2015

    James Whatley and Marshall Manson called the user number plateau ‘Twitter Zero’.

    There have been product-related Twitter troubles:

    • The ‘Promoted Moments’ advertising option is confusing to look at
    • Will it, won’t move beyond 140 characters
    • Algorithmic filtering of the timeline
    • Utility of the news feed is becoming diminished for the digerati
    • Likely reduction in user engagement
    • Likely uptake in bot content publication
    • Inability to deal with community issues like #Gamergate
    • Twitter’s auto-playing videos are barely more than a rounding error in the battle between YouTube and Facebook for video supremacy

    What less people are talking about is what Twitter troubles means beyond Twitter.

    Advertising purchases are a near-zero sum game. Facebook and other high growth native advertising platforms gain from Twitter troubles. But for marketers this is not all good news. Facebook is poor at giving marketers actionable insights and intelligence. There is no Facebook firehouse of data. Facebook only provides aggregated data.

    The OTT (Over The Top) messaging platforms (WhatsApp, WeChat, LINE, KakaoTalk, Kik) are data black holes. Commercial dashboards on some accounts allow you to see how your account is doing. There is no insight of what is happening across accounts. There is no measure of influence beyond follower numbers and click-throughs.

    Twitter troubles with declining relevance, has a direct effect on social media monitoring and analytics platforms.

    Social media analysis of Twitter data is widespread. From consumer insights / passive market research to brand measurement and financial trading models.

    I had seen data which showed a direct correlation between brand related market research conducted by respected market research firms and social media analysis using Twitter data. The implication of this was that Twitter data could provide a more cost effective alternative.

    All of these research benefits are moot if Twitter is in decline or becoming irrelevant.

    Twitter data has its use beyond market research. It is the source of breaking news for the western media. Twitter’s firehouse also goes into making smarter phones. Apple’s Siri sources Twitter content to answer news-related requests.
    Siri using Twitter as news
    A poor performing Twitter has implications across the tech sector beyond online advertising. There are no obvious substitute solutions for its data waiting in the wings.

    Perhaps Twitter’s earning’s call on February 10 will give a hint of improvements at the company. But I wouldn’t bet on it. More related content here.

    More information

    Twitter Inc. quarterly results
    How Facebook Squashed Twitter – Stratechery by Ben Thompson
    Can Twitter turn stagnation into progress, or has it hit the wall? | Technology | The Guardian
    Twitter’s Fiscal 2015: Up, Flat, And Down | TechCrunch
    Twitter is teetering because it has turned into one big pyramid scheme | Andrew Smith
    Twitter Might Ditch The 140-Character Limit: What This Means For Marketers | SocialTimes
    Daily Report: The Tough Realities of a Twitter Turnaround – NYTimes.com
    Next Twitter boss faces complex challenges, says departing Dick Costolo | The Guardian
    Twitter data show that a few powerful users can control the conversation – Quartz
    Twitter’s Jakarta office is now open. Here are 6 reasons why Costolo is focusing on Indonesia | Techinasia
    Inside Twitter’s plan to fix itself
    How efficient is Twitter’s Business Model?
    Black Widow | Dustin Curtis – interesting analysis of Twitter and a warning about APIs

  • PrivaTegrity: the flawed model of distributed keys

    Dave Chaum’s PrivaTegrity – an idea to to try and balance between state actors demand for internet sovereignty and the defacto end of citizen privacy. Whilst also addressing the need to deal with emotive causes such as terrorism, paedophile rings and organised crime got a lot of attention from Wired magazine.

    Backdoors are considered problematic by privacy advocates and seem to be a panacea for governments who all want unrestricted access.
    Yesterday evening on a bus stop in Bow
    The principle behind PrivaTegrity is that there would be a backdoor, but the back door could only be opened with a nine-part key. The parts would be distributed internationally to try and reduce the ability of a single state actor to force access.

    However it has a number of flaws to it:

    • It assumes that bad people will use a  cryptographic system with a known backdoor. They won’t they will look elsewhere for the technology
    • It has a known backdoor, there is no guarantee that it can’t be opened in a way that the developers hadn’t thought of
    • Nine people will decide what’s evil
    • If you’re a state actor or a coalition of state actors, you know that you have nine targets to go after in order to obtain access by hook-or-by-crook. It was only Edward Snowden who showed us how extraordinarily powerful companies where bent to the will of the US government. The UK government is about to grant itself extra-territorial legal powers to compel access. There is no reason why a form of extra-ordinary rendition couldn’t be used to compel access, rather like Sauron in The Lord of the Rings bending the ring bearers to his will. Think of it as Operation Neptune Spear meets a Dungeons & Dragon quest held at a black site. Even if the US wouldn’t consider it a viable option, who is to say that other countries with capability wouldn’t do it. That group of countries with sufficient capability would likely include: UK, Kingdom of Saudi Arabia, United Arab Emirates, People’s Republic of China, Russian Federation, France, India, Pakistan, Turkey, Israel. All that these countries would need is intent

    More information
    The Father of Online Anonymity Has a Plan to End the Crypto War | WIRED
    Privategrity

    More privacy related content here.

  • The smartphone market and Huawei

    It is hard for anyone reading the media to believe that Huawei’s rise in the smartphone market was anything short of miraculous. In reality the roots of this rise go back at least six years. Back in 2010, Huawei was already shipping 3,000,000 smartphones. However since that time, the year-on-year percentage growth in consumer devices shipped by the company reduced from 82 per cent year-on-year growth to about 8 per cent growth in 2014.  This growth was initially driven by less sexy products like feature phones for China Mobile, DSL routers and 3G/LTE dongles.
    Huawei numbers
    In fact if we go back further to 2007, feature phones drove a 757 per cent growth in consumer devices shipped.

    2010 is quite crucial, Huawei Consumer Devices suffered a 32 drop in year-on-year growth in revenue / device going from $56 per device in 2009 to $38 in 2010. The margins per device then began to climb again during period from 2010 – 2014.

    January’s numbers discussed at CES don’t give us the total numbers of devices shipped by Huawei, but only smartphone numbers, so I haven’t calculated revenues for 2015, but they would represent a significant upswing from the 20+% growth enjoyed in previous years.

    Reading the Huawei coverage one would believe that the growth is being driven by developed markets and premium devices, but the truth according to the numbers found seem to be less clear. In between the years 2014 and 2015, the percentage revenue derived from Western Europe dropped from 11.3% to 10%, even as overall revenues grew. Much of this is driven by Southern European markets that had been hit hardest during the 2008 recession. It will be interesting to see how Huawei looks to crack Germany, the UK, France and the US.

    So what does this all mean?
    Huawei smartphones and watches are firstly just the most visible aspect of the company and not likely even the most profitable. Huawei equipment likely runs at least part of the internet network that brought you this page. They power mobile networks around the world (outside the US). They provide storage (very large boxes of hard disks) to banks and businesses around the world.

    Huawei Consumer Device numbers are reflective of wider technological change. In the space of the nine years that I looked, you could see the peak of the feature phone business, where Huawei was predominantly a domestic supplier. The rise of the mobile dongle to fill the gaps in free wi-fi networks and the rise of the smartphone/phablet which negated some of the mobile working laptops did around email, but also acted as tethered modems reducing the need of dongles.

    Huawei’s numbers are indicative of a successful fast follower strategy. Huawei learned the smartphone trade by first of all making badge engineered Android phones for T-Mobile. It then went out on its own. Each generation of phone improved in terms of industrial design and they built a direct to consumer channel over time.

    Xiaomi’s direct-to-consumer e-commerce strategy was transformative in the Chinese market and something that Huawei replicated with the Honor brand. Huawei hasn’t tried to build services in the same way that Xiaomi has and hasn’t ventured as deeply into the smart home.

    In terms of device numbers the company has successfully managed to displace both Samsung and Xiaomi in markets, but despite the ‘premium positioning’ it has taken a while to build the average revenue per device (ARPD). If the 20 billion dollar annual revenue announced at CES, only represents smartphone devices, then the ARPD (of $188) is still less than a third of what Apple enjoys with the iPhone.

    The smartphone market like dongles and DSL modems before it is moving rapidly towards maturity and lower growth. It will be interesting to see where Huawei’s business strategy goes next.

    How I got the data?
    The data quoted is based on numbers given out in Huawei’s annual reports from 2006 – 2014 and the Huawei Consumer Device press room where Consumer Device started to break out some of their own numbers. The types of numbers talked about vary from year to year. You can see a copy of my collated and calculated numbers here. When converting CNY to US dollars, I assumed an exchange rate of 1 yuan is 15 cents.

    More information
    Huawei annual report page
    Huawei Ships 108 Million Smartphones in 2015, Contributing to Annual Revenue Exceeding $20 Billion USD
    Total order value of Huawei Consumer in Western Europe exceeds 2 billion dollars
    Huawei Consumer Business Group Announces 1H 2015 Financial Performance
    Huawei Consumer Business Group Announces 2014 Financial Performance
    Huawei Consumer Business Group Announces Q3 2014 Financial Results
    Huawei Consumer Business Group Announces 1H 2014 Business Performance
    Huawei Consumer Business Group Ranked Third in Global Smartphone Shipments in 2013

  • The internet of heavier things

    I started to think about the internet of heavier things after I spent a bit of time with my Dad. We talked about work, engineering stuff in general and technology in general.
    IMGP0606.JPG
    My Dad has a pragmatic approach to technology, it’s ok so long as it fills three distinct criteria:

    • It’s useful
    • It’s efficient in what it does and how you use it
    • It doesn’t get in the way of product serviceability

    The last point is probably something that we tend to think about least, but my Dad considers it as he is a time served mechanical fitter.  Just prior to Christmas one of the gears went in my parents Singer sowing machine. The machine has been in the family for about 50 years. I managed to buy the relevant cog from a website for just under a tenner.

    Contrast this with most electronic goods where you tend not to be able to replace products at a component level. Even if you did, trying to find 50 year old standard catalogue processors, let alone a custom ASIC (application specific integrated circuit) would be a thankless task.

    We got to talking about a concept I read in EE Times earlier that month; the internet of heavier things (IoHT). IoHT basically means wiring  up or making smart fixed infrastructure and machinery. Venture capital firm KPCB think that the IoHT will generate $14.2 trillion of global output by 2030.

    The boosters for it like KCPB think that this opportunity revolves around a number of use cases:

    • Being able to flag up when preventative servicing is required. (For a lot of manufacturing machinery, companies like Foxboro Instruments – (Now Foxboro by Schneider Electric and Invensys Foxboro respectively) – had been doing this prior to the widespread implementation of TCP-IP network protocols). It is the bread and butter of SCADA systems. But it could be bridges and viaducts indicating that they need work done
    • MRI machines and other medical equipment that are financed on a per scan unit rather than as a capital cost. Basically extending the enterprise photocopier model into capital equipment expenditure
    • Machinery that is continuously re-designed based on user feedback

    Kicking it around with my Dad got some interesting answers:

    Flagging up items for servicing was seen to be a positive thing, however, how would this work with the reality of life in a manufacturing plant. Take a continuous process, say something like an oil refinery or food production line where the whole line needs to be shut down to enact changes, which is the reason why maintenance is scheduled in well in advance, on an annual or semi-annual basis. The process needs to take into account the whole supply chain beyond the factory and both shutdown and start-up are likely to be a complex undertaking. When I worked in the petrochemical industry before going to college; the planning process for a shutdown took six to nine months. Secondly, there was redundancy built into some of the plant so certain things that might need to be taken off line on a regular basis could be. A second consideration is that plants are often not off-the-peg but require a good deal of tailoring to the site. Plants generally aren’t new, there is a thriving market in pre-owned equipment. In the places I worked this included equipment such as such as pressure vessels, electric motors and valves – all of this would have implications for interoperability.

    Lastly, what would be the implications when when the ethereal nature of technology underpinning the internet of heavier things met infrastructure that has a realistic life of a hundred plus years in the case of bridges or buildings?

    Looking at the defence industry, we can see how maintenance costs and upgrading technology drives much of the spending on weapons systems – a bridge will generally last longer than a B52 bomber or a Hercules transport plane (both are 60 years old systems).

    Financing on a per-use unit cost. This was discussed less, the general consensus was that this could dampen innovation as the likes of GE Medical would become finance houses rather than health technology companies, in the similar direction to what happened with Xerox or an early 21st century Sony.

    Machinery that is continually redesigned on user feedback sparked a mix of concern and derision from my Dad. It seemed to be based on a premise that products aren’t evolved already – they are changed. The pace of change is a compromise between user feedback, component supply issues and backward serviceability. Moving to an ‘always beta’ model like consumer software development could have a negative impact on product quality, safety and product life due to issues with serviceability of equipment.

    More info
    Introducing the IoHT (Internet of Heavier Things) | EE Times
    The Industrial Awakening: The Internet of Heavier Things | KCPB
    What does technology adoption really mean?
    Old 2.0: interfaces and use cases
    Old 2.0: adventures in retail
    Old 2.0: On the virtual road
    On the road 2
    On the road
    Web 2.old