Category: Management

Fast Company writes about Google and how it keeps growing:

It is a joint founded by geeks and run by geeks. It is a collection of 650 really smart people who are almost frighteningly single-minded. “These are people who think they are creating something that’s the best in the world,” says Peter Norvig, a Google engineering director. “And that product is changing people’s lives.”

At Google, building and then following the traffic makes perfect sense. It’s central to the company’s culture and its operating logic. Consider this: For the first 18 months of its existence, Google didn’t make a penny from its basic Web-search service. Only then did it make the transition from great technology to great technology with a critical mass of users.

And Google was able to package that traffic in ways that seem both ingenious and completely synchronous. The search service itself remained free. But Google has, for example, sold untold numbers of ads pegged to specific search keywords.

Advertisers don’t just pay a set rate, or even a cost per thousand viewers. They bid on the search term. The more an advertiser is willing to pay, the higher its ad will be positioned. But if the ad doesn’t get clicks, its rank will decline over time, regardless of how much has been bid. If an ad is persistently irrelevant, Google will remove it: It’s not working for the advertiser, it’s not serving users, and it’s taking up server capacity.

A recent article in Business Week on the search engines estimated Google’s revenues to be about USD 375 million, with EBIDTA of about USD 150 million. Quite remarkable, compared with Yahoo’s revenues of just over USD 1 billion.

McKinsey Quarterly writes about how companies can maximise their gains from their IT spends:

The first is to identify the productivity levers offering the greatest opportunity for competitive differentiation: Targeting the few specific levers that could well create a competitive advantage produces results more reliably than striving for improvement everywhere. The most promising IT initiatives usually evolve along with related business processes and build on an organization’s operational strengths. When taking this route, companies should beware the siren song of IT success stories from other industries, because the levers that matter in one sector may be irrelevant in another.

The second priority is to master the sequence and timing of investments. Many technology-based advantages, particularly those that don’t involve fundamental business changes, have a limited life because they diffuse rapidly through the sector. Timing is therefore critical if IT investments are to generate returns. Companies that get it right develop a clear understanding of how IT-enabled competition is evolving in their sectors. Investing ahead of the pack makes sense if the technology is hard to mimic, continues to yield benefits even if imitated, or offers great near-term value. Otherwise, companies can often hold down their spending and boost their returns by diving in only after others have made investments–and mistakes.

Kevin Werbach writes about the likely winners in the converging world of computing and communications: Microsoft, Sony, Nokia (all three mentioned in the WSJ article I just posted), IBM, AT&T and some of the dotcoms. The list excludes the content and IT hardware companies.

His introduction is something every tech entrepreneur should read, memorise and live (emphasis mine):

In a network-centric world of relentless commoditization, there are only two ways to thrive for an extended period: Go small or go big. Small means building a defensible niche product that that doesn’t threaten anyone. Apple represents the upper bound for this strategy. It can be a comfortable life, but your upside is limited. The big option is really, really hard. Any competitive advantage and source of profits today could be someone else’s free giveaway tomorrow. Just look at how Microsoft decimated Netscape. The only way to win is to develop a core asset that becomes a platform. As I wrote three years ago in the Harvard Business Review, that means providing that platform to others instead of holding it close to the vest.

Build a platform, and get others to build on it. That is what we have to do in Emergic and BlogStreet.

Ole Eichorn writes about the six rules for avoiding email tyranny:

1. Turn your email client off. Pick the moment at which you’ll be interrupted.
2. Never criticize anyone in email, and avoid technical debates. Use face-to-face meetings or ‘phone calls instead.
3. Be judicious in who you send email to, and who you copy on emails.
4. Observing some formality is important.
5. Don’t hesitate to review and revise important emails.
6. Remember that email is a public and permanent record.

He adds a “one big rule and four guidelines” for being productive:

Big Rule: It takes three hours to get anything done.

Guidelines:
1. Turn off your email client, put your ‘phone in “do not disturb”.
2. Isolate yourself. Get good headphones. Warn colleagues when you’re “in the zone”, to minimize their interrupts.
3. Minimize meetings and schedule them to avoid three-hour windows.
4. Become self-aware about warping off and try to un-stuck yourself.

David Kirkpatrick writes in Fortune about what one can learn from Stelios Haji-Ioannou’s EasyGroup [via Anand Patwardhan]:

Look for services with high fixed costs, price elasticity–meaning that consumers will typically buy more if prices drop–and the ability to be ordered over the Internet. Then create a frill-free offering that gives consumers few if any choices. EasyJet has only one class of service; EasyInternetcafe ditched its printers because they demanded too much maintenance; EasyCar rents only one class of car and requires that it be returned, clean, to the same location. Says EasyGroup chief technology officer Phil Jones: “We don’t aspire to be all things to all people. We do one thing very well at low cost.”

At lunch recently Stelios bubbled over with new ideas. Consumers today are even more interested in low-price services, he says, and the technology that makes it all possible has never been cheaper. He hopes to open the first EasyCinema outside London shortly. It will have few employees; customers will print out tickets at home or from lobby terminals and will be admitted by a bar-code scanner. Pricing will vary not by age but by showtime and how far in advance viewers purchase. Holding him up is the resistance of the movie studios; Stelios says he anticipates a legal battle. Other new ideas include a low-cost hotel chain called EasyDorm, an EasyBus service, and EasyCruise. “It’s a great time to have a clean sheet of paper and some know-how rather than a lot of infrastructure already in place,” he says. That was a common theme in the late ’90s; it’s truer than ever now.

Some good ideas for our thinking at Emergic.

Economist writes about the breadth and depth of Sony’s ambitions:

[Sony’s] are in many ways even bolder than those of the other media giants. Like them, it believes that the spread of broadband and the shift from analogue to digital require media firms to find new ways to sell their content to consumersin Sony’s case, mostly music, films and video games.

More importantly, however, Sony is pursuing the other big idea in the media giants’ growth strategy: vertical integration. But once again, it is doing it in its own way. The difference is that Sony is reaching much further down the chain, to what Mr Idei believes really matters: the televisions, personal computers, game consoles and hand-held devices through which all of that wonderful content will one day be streaming.

Sony’s networking strategy assumes that these audio-visual and computer devices, besides talking to one another, will also share content with a wide range of smaller gadgets, from its cameras and music players to its mobile phones and hand-held computers.

Mr Idei believes that, by continuing to link together devices such as these, Sony can carry on both selling new gadgets and encouraging people to keep paying for music and videos.

Continue reading Sony’s Dreams

Sun and AOL seem to be the favourites in the media in terms of suggestion on what’s wrong with them and what they need to do to fix their problems. This time, its the NYTimes on Sun:

Cost-cutting is the order of the day for corporate customers. And servers based on low-cost technology from the personal computer world – Intel-compatible microprocessors – are eating into Sun’s business.

Sun’s quandary is that its business appears to be alarmingly dependent on high-cost, proprietary hardware at a time when technology trends and customers seem to be headed in the other direction – toward inexpensive, PC-based hardware that is more like an industrial commodity, the computer equivalent of a piston ring.

Linux poses the more imminent threat to Sun because both Sun’s Solaris and Linux share the Unix heritage, easing the way for companies to move to Linux and the inexpensive hardware on which it runs.

Many industry experts say the trend toward commodity-like computer hardware is unstoppable. The profitability in computing, they say, will move to software and services, the direction I.B.M. has charted and Hewlett-Packard has begun following. Hardware, they add, will be a brutal business, with the main winner likely to be Dell Computer, a hyperefficient packager and distributor of technology.

Sun executives see their company as neither a hardware nor a software maker, but as a “systems” producer.

Sun’s strategy is the following, according to the article:

Bundle into the Solaris operating system increasing amounts of the software that corporate data centers need as they try to automate more operations and communications with suppliers and with employees.

A hard push to promote Solaris on inexpensive Intel-based computers as well as on Sun machines that run on its Sparc microprocessor.

Continue reading One More Sun Article

It is sad when much-admired companies run into problems. Reuters is one such company. They seemed quite visionary in the early days of the Internet. But the past few years have not been good. WSJ writes about Reuter’s problems:

In the 1970s and 1980s, Reuters was among the few companies with both access to financial data and the technological ability to deliver it instantly to trading floors around the world. Many traders simply couldn’t have done their jobs without a Reuters terminal. But the Internet made it much easier for start-ups to gather and repackage all kinds of data on the cheap. Their arrival split the data market in two: the high-end, dominated by Bloomberg, with its fancy technology and instant messaging; and the commodity business, served by low-cost suppliers. Reuters, bureaucratic and riven into fiefs, was left floundering in the middle.

If there is one company I’d like to see survive and thrive, it has to be Sun. But the challenges they face are daunting. They are getting squished between IBm, HP/Compaq and Microsoft, still quite unable to decide whether they should focus more on hardware or software. Sun has always surprised, but now, the odds seem stacked against them. Some advice from two commentators:

Cringely: “Sun can either find a merger partner to take the company out of its predicament or it can find its own strategy to achieve the same result. Either way, this is a time for Scott McNealy to literally bet the company…One way to do that is through a merger, but the logical merger partner isn’t Apple, it is Sony.”

Charles Cooper writes on the challenges facing Sun with the Linux-on-Intel combo: “With prices on Linux-Intel systems falling, the pressure is on a higher value company like Sun to justify the higher prices it charges for systems comprising proprietary Unix operating systems on RISC processors. Corporate data managers are especially anxious about reducing hardware costs. What’s more, they know the migration to Linux from an existing proprietary Unix platform reuses a lot of the existing code and skills.”

Continue reading Sun’s Challenges

Pip Coburn of UBS Warburg writes about “Cold Technologies” (as opposed to Hot Tech):

A cold technology issue is one that commands a major portion of the agenda while having neutral revenue or even anti revenue attributes. A hot technology has the potential to generate revs. So, in 1980, whether one was a fan of the PC or not, both would agree that if the PC took off the tech pie would expand

The PC was a hot technology. Linux is a cold technology. It will shrink the pie. Cold technologies often are issues that are not product related but gain a disproportionate share of the agenda. The migration of the food chain into China is a cold technology issue.

There is another interesting point made: “Ideas are cheap. Innovation is revenue generation. Innovation is implementation. There is little of that to be found today.”

I like the notion of “cold technologies” – this is what the emerging markets need. All the ideas that we are working on – the 5KPC with open-source software, an integrated ebusiness suite for SMEs – are cold technologies. In many ways, disruptive innovations are cold technologies – they are cheaper and simpler, even as they address new technologies.