The Next Organization

Why and how companies should be prepared for technology proliferation, even of the one they helped to create

No time in history before, technology is changing at the pace we are experiencing now. As the world is connected, network effect accelerates technology adoption and drives proliferation and commoditization very quickly. Once technology is everywhere, it is no longer a tool, but becomes the state of the environment that organizations operate on. Technology however is becoming embedded in our lives and therefore changes human behaviors. These fundamental shifts demand organizations not only to learn how to use technology, but to adapt to new environment and behaviors. The question therefore is not "how to use the technology", but "what my organization should be" given technology is the environment.

Let's look at a couple of examples to see how the fundamental shifts happen and change the rule of the game.

Just more than 10 years back, when doing commerce on the Internet was still very rare, most companies were trying to learn how to use it. The dotcom bubble motivated massive number of fiber optic cables to be laid, which literary commoditized the bandwidth. Enabling financial services flowering and quickly became readily available with minimal cost. Application vendors also made online transaction a standard part of their offerings, sometimes even free. For companies, the word eCommerce seems to disappear. However, companies had to go through a phase of redefining themselves given that the majority of their suppliers, customers and competitors now have the ability to do business using the net. Making it worst, many customers are getting used to it, thereby changing their purchasing behavior and refuse to do business otherwise.

Let's use government as another case. Governments within about one of two decades years back started to bring more PC into their business. The idea at the beginning was to automate their administrative works. However, as PCs and network are available at most of the citizens and organizations they are dealing with, the purpose of eGovernment changed. It's now how government should operate when parties they are dealing with are using and gradually demanding using PCs and network in their transactions. Peer pressure from governments in the same groups is another force to drive this change. Unfortunately, many didn't understand this and spent their money investing into technology without rethinking the way they organize and work. The disaster of the CP 112 program in Vietnam is one painful example of this.

The third example is different in the sense that it's about the company that created the "technology" itself. Founded in 1994, Monster.com was the first Internet job board. Since then, the company has grown to 75 million resumes on file and covers now 36 countries in the world. The new industry was so successful that it even increased the job changing wave in the United States, according to Stevenson's "The Impact of the Internet on Worker Flows" report. The concept and especially behavior changed leading to implementation of Internet recruiting solution in large companies themselves. More importantly, companies have to pay more attention to recruiting and retaining their talents to survive the new wave.

Trend Toward SaaS & Microsoft's Hybrid Web-based Strategy

In response to the increasing adoption of Software as a Service (SaaS), Microsoft has announced its new hybrid business model strategy. The move is a careful step amid the software industry's shift in licensing and delivery models to meet growing desire for new ways of paying for services rather than software licenses.

In the recent years, SaaS is gaining more acceptance from customers, though still in limited scale. CIO Insight's survey indicated that 51% of its respondent said their companies used or would soon deploy SaaS. Half of those deployments, however, are within specific business units, functions or geographic regions; fewer are companywide. Most companies use SaaS and application service providers on a case-by-case, application-by-application basis. In addition, there is still significant concern regarding security and skepticism in the possibility of total cost reduction.

Microsoft is well aware of SaaS trend. Ray Ozzie, Microsoft’s chief software architect, has also accepted that “today the transformation toward services is the most significant one in the software industry.” However, Microsoft is still in a position not to believe that the trend will be big. They want to move into the new space while minimizing cannibalization of its existing cash-cow software market.

Web 2.0 Business Models (Part 2 of 2)

My last post covered the first five types of service categories, namely:

1. Virtual world, virtual goods
2. Online tools
3. Market broker platforms
4. Social media sites
5. Social networking sites

In this post, I will analyze the business models for other categories of services and point out some of my observations concerning the economy of attention, the long-tail, light-weight business model, young people's opportunities and the issue of partial attention.

Again, the list is not exhaustive and service categorization is mainly for the purpose of business model analysis. I would like to invite readers to add and give me comments.

Web 2.0 Business Models (Part 1 of 2)

Web 2.0, the new set of Web, or more accurately, hosted services was featured by O'Reilly Media in 2003 as having lightweight business model. After a few years of development, the concept is still quite valid, but in more detail examination, Web 2.0 has been dominant an economy of sharing, attention and creativeness.

I did a quick summary of the major types of Web 2.0 services, benefits and business models and came up with a summary as in the picture below:

a more detailed version with examples can be downloaded here:

Download web_2.0 Business Models - a quick survey.pdf

Google’s YouTube headache, or there is still no model for social media sites

Last year, I wrote a block entry indicating that there was no good business model behind the social network sites. yet. Recent events, including Viacom and CBS’s pulling videos from YouTube and recent news that Viacom filed a $1B lawsuit against Google. Apparently, only deep-pocket, fast-growing companies like Google would pay such a price for a tiny revenue and no investor even cared. However, the share of attention that Google executives paying to YouTube may be too much. If it had been acquired by a media company, YouTube might have had less legal cases, but the business model is still not clear how copyrighted materials to be tracked and revenue to be shared with the owner.

Anything-on-the-go and the iPod economy

I was amazed to know that my colleagues at SAP could bring the whole contents of a demo scenario on a Linux server blade to a big drive, then dump it on any standard PC and start immediately. Recently, RingCube has commercialized its software to allow mirroring software into a small storage device and start it again in a Windows-based machine. It seems that mobile computing may not only bring computing devices around, but also as simple as a small storage device... and one of the popular device that people bring along anyway is iPod.

Talking about iPod, on my trip to Vienna, I stayed in le Meridien and guess what, I saw iPod rental on the wall. Strolling last week in Saturn, a electronics chain similar to Circuit City or CompUSA in Germany, I encountered dictionaries for iPod, which are similar to Merriam-Webster's here.

What I can see from these two different sets of events is the iPod-economy no longer stops at music- or video-on-the-go. It has been and will be more as new technologies enable anything go mobile, from telephone, PC, dictionary to map, calendar, and God knows what next... Welcome to the new world, where anything is on-the-go, and how many devices do you still have? I see some day, human will carry only a single tiny, easy-to-use, lightweight device with smart (but no need to be powerful) computing capability and a lot of storage. Maybe, I will go and buy Apple's share now.

Uploaded in Heidelberg.

Business model for media-related social networking sites

Does being acquired with tens billion dollars prove a new business model for media-related social networking sites like MySpace and YouTube? Not quite. The recent legal suit against MySpace   for copyright infringement by Universal Music Group (UMG), UMG’s licensing agreement   with You Tube, and YouTube’s deal with Warner Music Group to distribute the latter’s music video catalog emphasize the importance of copyright to those sites. Even for acquiring company like News Corp. and Google, finding out a way to solve this issue is quite a challenge. Law suits have once brought down Napster is the threat if they fail to do so. Technology to keep track of the video and audio contents is not at all easy and such an investment requires a good return. In theory, the companies can use these sites to provide ads and its own or contracted copyrighted contents. However, reduction of number of users, and problem of collecting money from its users are big headaches. More importantly, if this cannot be resolved, it can loom the ever-high enthusiasm for similar ideas in the future.