There is life beyond apps - New Venture Showcase

The New Venture Showcase at the NYU Stern School of Business is a premier event where carefully screened (peer reviewed applications!) start-ups get to present their idea or new business. I don't know why I have only heard about it this year, but I am glad I finally did.

Some 38 start-ups were present, competing for $200K in venture money. You obviously find plenty of apps and marketplaces; but not too many. And even those that were there are quite innovative, such as one helping you to train your voice to sound better during presentations and not loose it altogether after an all day event (Speech Empowerment).

What I found truly exciting however, were those entrepreneurs that created whole solutions made up of physical components, engineering models, technical infrastructure, service elements and the business model as the glue to hold it all together. My favorite thus has to be EdenWorks: Build a small farm with IKEA-ease and use the waste from fish (Talapia!) as nutrition for the produce. Restaurant owners redefine 'farm-to-table' when a 'farm comes to the table'.

Another one that doesn't go the easy route of staying all virtual would be Spruce. It's a good idea to create a marketplace for sellers and buyers of higher quality furniture - especially in NYC. It's another good idea to build an app that makes it easy to list and to find stuff. But going all the way and collecting, storing, and delivering the sofas, tables etc. is a different endeavor. That requires warehouse space, trucks, insurance, security and everything else that lives not just in the virtual, but the physical world.

Obviously, there were many more. Like K-Tram, a clever simulation that let's cable owners (power cables, submarine telecommunications cables etc.) optimize their power consumption. Atikus, a B2B insurance for lenders of Microloans especially in Africa, making the business model of lenders more cost effective and thus broadening the portfolio of loans. A curated site for fashionable fitness and sports apparel, Haute:Athletics (for women: how to do sports and look good. for men: how to do sports and not look silly). Skinesiology, where you wear fitness tights to increase the resistance of your day-to-day activities, transforming a walk into a workout. And even a venture that raises awareness for AIDS by organizing not just a 3 week bike ride through South Africa, but also making sure that all the learnings from interactions during that ride with locals are being followed-up on.

So as much as I like the digital world, seeing young innovators bringing ideas to life that work directly with real world elements is exciting. We must not all chase another app, just because somebody spent $18B on one.

Information infrastructure cost and performance

Whenever I see the bill for Internet access, TV, fixed and mobile phones from my parents in Germany, it drives tears into my eyes as I have to compare it to what we pay in New York. While over here it is practically impossible to pay less than $100/month for net, TV and phone (or just net and phone for that matter), they pay a third of that - and the same is true for wireless phone&data. In addition, network speeds and reliability appear to be better as well, even at lower costs. So I was curious to understand more when Netflix published a recent analysis of network performance for the countries they operate in to provide insights into a real world application: Watch streaming movies.

The original Netflix data highlights how pathetic the performance is in the US compared to nearly every other country served by Netflix, especially when you see a decline while every other country sees an improvement. So even though Germany is not on the list, it certainly proves my perception of having to endure a rather mediocre performance.

So how does it look when you factor price in?

To come up with a comparable graph, I picked a provider from Netflix' detail list for each country. Not the very best one, but from the top 5 and checked their monthly cost for the base package (which for Finland is 100Mbps). Normalize that against US dollars (Jan 14th exchange rates) and plot it against the performance achieved in the most recent Netflix survey (October 2013 data).

Not unexpected, the US is again at the bottom of the pile, and they are by a wide margin. Only Ireland "keeps up", but they had other problems over the past few years, even though their knowledge economy does require better and more cost effective infrastructure if the return to growth should be sustainable. And my Norwegian is not good enough to figure out how much more one might get for the price (which could be significant, as the Energy utility is also the Internet provider).

As an expat I am always amazed what people here keep up with. So I am keen to put some additional light on the stories and perception by adding real live data. This is one. Another will be healthcare in a later post.

Techweek Roundup

October 17th was the day when Techweek NYC took over 82Mercer in SoHo. As I was on a panel in the morning and wanted to see the FashionTech Show in the evening, I ended up staying the whole day, observing good talks and enjoying even better conversations.

Social Summit

UNIFIED was the prime sponsor and thus plenty of their team was present at the event. Especially as they drove the morning 'Social Media Summit', kicked off by CEO Sheldon Owen. Though set up on very short notice it was well attended with plenty of folks having to stand. As we warmed up for our panel in the 'green room', the discussion 'How Social Impacts Organizations' with panelists from Edelman, GE, HRBlock and Microsoft went on, so I didn't get to hear them.

However, in a chat with one of the panelists, we touched upon an interesting development in the media & advertisement ecosystem: The disaggregation of agencies thanks to advancements in adtech. Companies such as UNIFIED offer more and more of their services direct to marketeers, accessed via online portals and delivered from the cloud. That quickly defies the need for an intermediary as well as it does open the door for more specialization. As transaction costs for smaller service providers (from analytics to boutique agencies) are shrinking on both the provisioning and the receiving ends, the traditional full-service agency will have a harder and harder time to justify the premium price of their solution package. Thus you see brands working closely with adtech or innovative, domain focused creatives, while keeping the benefits of bundled procurement power that the big guys can provide.

Conversing

During the panel on 'How Social Impacts Tech etc' I was joined by Dave Tuner, Salman Ansari, and Tony Katsur while Jonathan Yarmis took the task of moderating, appearing as Dr Disruptive.
During the 30 min on stage we rallied from why Big Data is not 'Smart Data' (Jonathan), that a 'Data Tsunami' (Dave) is on its way, all the way to that it's really about the culture, not the tech (Tony), even though it is mature enough to make things happen (Salman), if only the people could.

The discussion I enjoyed the most however, was as we explored the opportunity of conversations. There has always been communications, but the nature of social media is to host conversations, i.e. multiple communications advancing a common topic. Technology (or the infamous Big Data) lets a brand analyze millions of those conversations and participate in them. However, technology goes only so far to make that a valuable exercise. It needs a strategy where the objective of that action is clear and the goal of an agreement that is followed by a commercial transaction is a pre-planned outcome. The smart company works that out before it dives into social interactions and uses big data to guide its way.

More

The main sessions started at noon, split between the main stage where the Social Summit took place and a second stage right next to the start-up booths. The proximity of booths and 2nd stage made it near impossible to understand what the presenters there said, if you didn't press your head against the speaker. And that looks silly, so I didn't get to hear any of that.
However, the main stage provided plenty of opportunity to follow insightful presentations, when there wasn't a circumstantial conversation with interesting people happening at the same time which took precedence for me.

BING - yes, BING

Stefan Weitz from Microsoft told a fascinating story of how search is evolving under the BING umbrella of products. I was surprised to be surprised. But many things are really coming together to make the experience of search, discovery and exploration in the virtual world exciting and fulfilling. While the semantic web today is mostly a collection of standards to allow a structuring of the content on the Internet, Stefan goes so far as to say that Microsoft is "trying to recreate the real world in the digital world". For them that requires clearly defining:

•  Entities such as user profiles (1.2B today) or real world objects like restaurants, 
• Geospacial Knowledge from photos (in 153PB) or 3D models (250,000), and
• Natural User Interfaces to make all of that accessible

and then building myriads of models connecting all the dots.

A couple of years ago it seemed as if the bottom up creation of virtual worlds through platforms like SecondLife, combined with 3D modeling and the semantic web would get us to the most representative digital version of the real world. But each aspect stalled, probably primarily due to users loosing interest and patience to knit everything together manually, which consequentially also killed underlying business models.
However, if Microsoft (and Google and ... ?) can keep the ball rolling by recombining results from many different successful business models and user activities, we might get to amazing results.

Launch Competition

Not to be missed at any conference like this is the competition for the best pitch from a start-up. Here we mostly saw entrepreneurs showcasing offerings that just opened to the market. That showed in the maturity and thus clarity of their value proposition and uniqueness of the solution (let alone robustness). While some were much more interesting from the standpoint of how they might positively impact the world, such as overcoming typical hurdles in health care where, when unsupported, people quickly become non-compliant in their goal pursuance (e.g. eat well, stay fit etc), others seemed robust and pragmatic as they offer to solve a very clear process problem. The latter category then logically offered the winner with Seamless Docs:

A solution that translates forms from any legacy format into HTML to make it easy to fill them in and send them away.

and else

At the very end the FashionShow was a bit of a let down, as it took the models just 10-15 min to show what they had to show. I would have loved to see more of how tech and fashion fuses together and the stage was all set up for it. Maybe next time?!
But plenty of introductions and entertaining discussions made the day very worthwhile, even though my voice started to give up as I had to overcome the noise level during the whole day. (Thanks for the advice Steve Shaheen, to actively breath in while talking)

and last

... who would have thought that 'silking' spiders in Madagascar makes it economical to use their silk as an innovative ingredient for fashion as well as healthcare...

How Ecosystem Collaboration Enables Successful Innovation

Many people believe that it is always competition that drives innovation in business. While that might often be true, it is certainly not in all cases - and very much not true in industries and ecosystems that are heavily entrenched in their current complexity, like healthcare or media.

One such innovation that has all the ingredients to be quite successful thanks to a very collaborative ecosystem is Magine TV, a 'cable TV in the cloud', or 'Spotify for TV', that originates from Sweden. While Magine TV technically does not do much else than what Aero or Boxee (acquired by Samsung) offer as a cloud based personal digital video recorder as a third part over-the-top (OTT) service, they found an ecosystem of TV providers open to collaboration (though still in beta). First in Sweden and then in Germany and Spain plenty of providers, like CNN, BBC, Eurosport, National Geographic etc, are willing to let Magine TV distribute their content in the most consumer friendly way:

• Cheap: less than $15/month
• Convenient: works on any device
• Compelling: strong, live content

Obviously, for the large broadcasters to agree, the technology needs to be secure from pirating and compatible with existing advertising and media processes.

The other ecosystem happy to work with Magine TV is the consumer electronics industry, especially the TV manufacturers. As they have created platforms within the TV that allow for apps to operate seamlessly in the TV user experience, for Samsung, LG, Panasonic and TP Vision to bring this innovative solution into their boxes is a straightforward approach.

Over here in the US, the broadcaster ecosystem is the opposite from collaborative and innovators are quickly confrontational, as visible in the case of Aero that is in constant legal battle with Fox, CBS and NBC. While such confrontation might be the nurturing ground for more inventions to circumvent the manifold barriers to change, successful innovation (i.e. inventions that are broadly commercialized) is slowed down dramatically.

It seems like a sensible approach to analyze the state of an ecosystem in regards to its ability to collaborate to assess the opportunity for change - and with that the success of companies operating there.

The other ecosystem to look at through this lens is healthcare. But more on that later.

(most insight gained from the report at The Register)

The case for a Chief Digital Officer

When nobody in the corporation owns the strategy to exploit the consumer data the way the supply chain data is exploited for the benefit of the business, there might be a case for a Chief Digital Officer

Hagen Wenzek, 2013-06-26

In the early 2000s a major disruption swept through industrial companies and retailers: what started out as the Internet bubble became e-business and made all of their supply chains incredibly transparent. As a result, suppliers were forced to benchmark their prices against competition all over the world. They had to operate inventories at the client's site and open their manufacturing methods and show their costs. The benefits promised to a company that embraced that change were so great, that they took every effort to transform their operations, re-align their suppliers on a global level (including outsourcing to e.g. China) and innovated their products faster than ever before.

What has become mainstream on the supply side over the course of the last decade appeared also on the sell side. Here it is the transparency of the customer that provides tremendous opportunity. Consumers are handing their most private data to advertisers. Every one of their moves online or offline can be tracked and traced. And few clever advertisers provide most precisely targeted ads at every demography - since the tablet revolution even to most affluent consumers - and achieve up to 90% profit margin on their transactions.

However, that promise has not started a widespread transformation of operations, sales nor even marketing. Most of the time that 'Big Data' sits in big databases and might clumsily be harvested by individual data scientists using good old Excel. What is missing is a comprehensive strategy to exploit the sell side data in the same way as it was developed and executed on the supply side years ago. This lack is even more surprising given the advances in technology, especially thanks to cloud computing with its principles of scalability, self-service and drastically reduced costs. Developing such a strategy with the certainty that it can be executed successfully requires an understanding of marketing, technology, customer behavior, and the digital ecosystem paired with strategic thinking and execution capabilities.

The owner and driver of this strategic space is often referred to as the Chief Digital Officer, or, as visionary thinker and transformative doer Irving Wladawsky-Berger likes to say,"essentially the senior executive responsible for helping the organization transition into the 21st century digital economy and digital society".

Do you have somebody like this in your company?

Get to Know Your Customer

Get to know your customer:

How to use big data to improve decisions, when it is the CMO who owns it, the CIO who builds it and the innovator who disrupts it.

Hagen Wenzek, 2013-06-13

• Big Data makes the customer transparent, but nobody really knows how to use that knowledge 
• The CMO owns the relationship with the customer and wants to improve it using technology
• The CIO can make it happen by working with innovative startups

The emperor has lost his clothes, so how do you use what you see without getting blind?

Big Data promises to make the transparent consumer actionable with algorithms that can analyze all personal, contextual and operational data available about them. In the virtual world all of that data is collected by cookies, trackers and e.g. Facebook and one can easily be identified by an email address. That and credit or loyalty card transactions link the virtual world seamlessly to the physical world and via customer records to enterprise systems.

The big promise of Big Data is to process all that consumer data and facilitate better business decisions. In marketing and sales, that seems to be obvious, as such insight enables the right message to be sent at the right time and cheaper than ever before.

However, there are also better decisions to be made in product development and innovation, when instead of asking just a few focus groups what they want from a new product, one can continuously observe all customers and learn from their behavior.

And even in many other functions of the enterprise like supply chain management where data about the consumer originating in marketing has been notoriously suspicious for its doubtful quality, in procurement, manufacturing, and logistics, better decisions can be made based on really trustworthy consumer data. For example, a global chemical supply company is looking to leverage marketing data about consumers that is collected in the context of their clients, i.e. a consumer packaged goods (CPG) company like P&G or Unilever. Armed with that insight they can optimize their negotiations and supply chain as they sell ingredients for soap to that very CPG company, because now they can forecast what their client might need based on the marketing they do as well as what they see of the consumers’ responses.

 

Generally we can identify three big clusters of data:

• Transactional Data that gets collected when the consumer navigates or does transactions on the web. Those are the trackers and cookies that precisely identify a consumer as well as many more metrics

• Operational Data that comes from enterprise systems of records such as customer relationship management, sales, supply chain management etc.

• Research Data that aggregates consumer information and provides insights or presents audiences. Nielsen or Facebook fall in that category – though one might argue Facebook is moving into the first category

Today all of that data sits in individual siloes and is managed separately – if it is being collected at all – , but its real value comes from integration. Thus the question becomes obvious: who is responsible for the data itself and who for its management?

Traditionally the Chief Marketing Officer (CMO) and her/his department own the relationship with the consumer. Their expertise lies in the reduction of complexity to the simplest possible message and finding creative ways to transport that message to the consumer. The better they do that, the higher the brand value. On the other hand, neither managing a complex system that makes consumer data available is the core competency of a marketer, nor is in most cases the very analytical thinking that leverages detailed information. The latter leads to potentially risky behavior when oversimplification favors visualizing correlations over understanding causations.

Here is an example from a dashboard for a large consumer company where the media buyers wanted to know when to buy more ads on Facebook or what other events are related to certain spikes in reaching more friends. You can easily recognize the danger in that type of visualization, as it makes it very easy to ‘see’ a correlation. The dilemma is that dashboards that are any more complex are not being used at all.

Where the CMO's team is strong in simplification and creativity, it is the CIO who manages complexity and is process centric. Therefore, it should naturally be the IT department that builds and maintains the Big Data solution. However, to be successful, there are certain competencies that need to be strengthened at IT. Three of those appear to be most critical:

1.      The relationship with the CMO

2.      Partnering with service providers for scale and

3.      Working with start-ups for innovation

(1) Forging the CMO – CIO Relationship

The first important aspect is forging a good relationship with the CMO. Just like in large infrastructure projects, bridging a gap is often more a political challenge than the actual engineering problem. CIOs have over the past decade broadly succeeded in gaining trust by most functions in an enterprise, such as sales, manufacturing, finance as well as the office of the CEO. Therefore, they should be able to achieve the same with the CMO. There are distinct aspects that stand out to be considered: Outcome, small steps and storytelling.

• As mentioned above, reducing complexity is marketing’s core competency. Thus CIOs needs to avoid talking about how the system works, as that is necessarily a very complex undertaking. The risk to be misunderstood and seen as miscommunicating is high. What counts is explaining the outcome, talking about the ‘What’, not the ‘How’. Succeeding with that communication style immediately frees the IT team up to get the engineering work done.

• Small steps can already be big. What a seasoned IT executive might think is just a small step, can already be a very big one for somebody else. While having a vision and architecture for an end-to-end automated infrastructure that provides detailed consumer data synchronized with the supply chain management system to accelerate sales and product innovation is absolutely doable these days, just indicating for what product category advertisement dollars are being spent on a weekly basis can be a great improvement. Therefore, don’t be too ambitious.

• Learn to tell stories. Great marketing is all about telling stories, as people naturally understand and remember stories. Therefore, wrapping the value proposition of a big data solution into a story e.g. about how a client, competitor or already somebody within the company used this newly found consumer insight and was successful with it can be much more powerful than the usual formulation learned in engineering class or even business school.

(2) Partner for Scalability

The second aspect of creating a big data platform is already well known to an IT department: Picking a partner that provides robust scalability for the main components of the infrastructure. By definition, big data is BIG, therefore a trusted partner needs to be able to deliver at scale and do so globally if your business has global exposure. All the major players in IT are also offering strong big data solutions and choosing the right one is no different than choosing the right partner for most other major IT enterprise solutions. Those companies that lead also in cloud computing and have consumer domain expertise occupy the sweet spot and are the best candidates for a successful consumer transparency solution.

(3) Working with Start-ups

Lastly, real differentiation against competition where practically everybody uses the same data and large-scale infrastructure happens through distinct innovation. The most disruptive innovation in the digital domains can be found at nimble start-ups. However, finding and working with one poses a real challenge as neither party is well equipped to do so. The methods to select an enterprise IT partner like a Gartner ‘magic quadrant’ and other frameworks typically do not exist for niche players or they do not apply. And some frameworks that are available, such as the LUMAscapes from LUMA partners do offer a very comprehensive overview of solutions and companies, but are hard to navigate without help.

Let’s examine three less obvious aspects to this challenge: Choosing the right perspective, making a decision and looking at the right place.

• Through creative eyes, start-ups can be seen as an outsourced R&D department: A dedicated, highly ambitious team that comes up with an idea and has funding to take an invention to the next level – just that the enterprise does not have to hire and manage the people and their infrastructure nor cope with much of the risk of an innovation portfolio. Thinking of a start-up as R&D provides a perspective of openness and trust, that is different than when viewing a traditional, established supplier.

• Actually selecting a partner and leveraging an innovative solution in a critical business infrastructure will drag on for far too long when the paradigm of ‘best of breed’ is overstretched. ‘Innovation’ and ‘disruption’ do not lend themselves to the usual assessment of risk and leadership. Most of the time, the difference between different solutions by similar start-ups is small, while the gap to the existing capability is large. Thus, choosing one of the ‘good’ players in a certain domain and quickly deploying their solution will quite certainly trump spending a lot of additional time trying to select ‘the best’.

• Just like in the early 2000’s when practically every company went to China to search for a manufacturing partner or to India for call centers, Silicon Valley is praised as the silver bullet for technology innovation and for their start-ups. However, the culture in that closed ecosystem is quite unique and might often not be a good fit for an enterprise on the US East Coast, Europe or let alone Asia. And if you follow the advice to view innovators like an outsourced R&D function, cultural fit especially with their management team is critical for success. So not to repeat the disappointment of those companies that had to detract from China and India, one might rather take a close look at the start-up scene in New York, Barcelona, Berlin or Tel Aviv.

Conclusion

Big Data holds a big promise when insight from any consumer can be translated into superior business decisions. However, to make that promise real requires flexibility and openness to new approaches, especially by the CIO. Establishing a strong relationship with the CMO is critical. Picking an enterprise IT partner for scale makes for solid business. And using a niche innovator leads to competitive differentiation. If these components are all brought together, the transparent consumer can be spotted through technical lenses that make for better business decisions, and don’t make you blind.