simondelliott

The hidden cost of planned obsolescence

The postwar American industrial boom saw car sales take off. But by the time of the moon landings the car manufacturers had noticed that their sales were parked in a steady orbit and possibly were about to fall back to earth.

At that time the automotive industry attracted the most brilliant minds, and collectively they could not figure out why this fall in growth was happening. The most popular car manufacturers had complete control over the domestic car market, and yet their sales figures were falling. After some long and hard head scratching they realized that the reason for their poor performance was due to their past success.

The reason that sales had fallen off was quite simply because they had achieved market saturation. Everyone who wanted a car had a car. The only sales that the market leaders were making were due to the replacement of old worn out products.

As we all know shareholders demand growth and the market leading position was not sustainable.
So what was the solution?

Planned obsolescence

Quite simply the cars had to wear out faster so that they could be replaced faster and sales would start to rise again. Instead of engineering components to the highest quality they were machined to an adequate quality which caused them to expire in a known length of time. By today’s standards we consider this an environmental crime, however this practice and this method of controlling a market is a cornerstone of modern business practice.

Times and fashion change. Since the 80’s the ultrapreneurs and brilliant minds have been drawn into the world of computing.  But people are not the only thing that has migrated to the world of computing many of the working practices of the car industry have also made the leap into cyberspace.

How long will my software last?

For the past 10 years computer developers have been toying with the Toyota production system, many of the principles of kaizen are behind google, facebook and other modern world engineering feats.

But automotive business practices have also found a place in the new world of computing. When you look at the releases of windows you will see that closed source companies are clearly using their position as market leaders to make the most out of the principles of planned obsolescence.  All the languages, databases, office products and addon packs that they sell all have a shelf life. The next version of a computer language includes fixes for lots of issues, but in order for it to maintain a market leading position it must also introduce new issues.  This may sound a little unfair to the big software companies but they are not the only ones, planned obsolescence is a part of the very fabric of the IT market. Step back in time just a little further and you will see that everyone is doing the same thing.

It makes good business sense that your software is just good enough – not great, but just enough to last a couple of years before you need to buy the new more stylish, more secure, more better upgrade.

Take software depreciation into account.

The next time you look at new software think about how long that software is valid for and take the upgrade cost into account. Lots of packages offer free upgrades but do they offer free upgrades to the latest version? If you deploy a Windows 7 license what is the cost of the inevitable upgrade to windows 8, 9, 10 … ? Will your servers be running Oracle 11 for ever? How much will it cost you to change your business processes, how much do your people cost you, do you have to train every time you upgrade? Do you have to rewrite your application endlessly?

Comparing open source to closed source

Many governments and enterprises are looking into opensource as a possible route to cut costs. And I have been involved in a number of conversations looking at just how much an opensource alternative really costs.

The reality is that the short term costs are roughly similar. However when you look at the long term costs the equation becomes very different and this is because of the hidden cost of planned obsolescence.

Designed to fail.

My point of view is that it stands to reason that license revenue model software is deliberately designed to fail. It’s just good business.

However the practice of planned obsolescence is not only anti consumer;  wasting their time, resources and money, but it is also anti engineer.  If an engineer makes something using components of a computer language that are designed to fail over time then their products will also degrade, effecting the longevity of their product and the amount of time that their product can be retailed for.

I am primarily someone who makes a living by making and selling software, and for me this is the most compelling argument for using opensource throughout the whole delivery chain.

The reason I support opensource is not because it saves me money … it makes me money.

A list of some blogs I like to read

Some one asked me what blogs I read. It’s a bit like asking what your favorite films are (of which there are thousands, but I cannot think of one)

To answer the question, generally speaking, Try and get to the source of good thinking or good writing for example I would rather read Kent Beck’s thoughts about integration and development than IBM’s or Microsoft’s, simply because he was the inventor of so many modern practices.

A lot of people will recommend reading blogs by people such as Seth Goddin, Guy Kawasaki, John Medina. I find these too ego centric and way too American for my taste. However Clay Shirky is an exception, and is well worth a read (try and find the “hear comes everybody” video).

Avoid the blogs that have reactive commentary, it is often dull and uninspiring. The Cap Gemini and Gartner blogs fit into this category.

Here are some good links

Kent Beck
Software design and general development guru

http://www.threeriversinstitute.org/

Core 77
often show cases good student design (furniture and stuff), can take itself a little too seriously sometimes

http://www.core77.com/blog/news/inhabitat_fathers_day_green_gift_guide_13702.asp

Martin Fowler
Software design Goliath
http://martinfowler.com/bliki/

Fail Blog
Very very funny
http://failblog.org/

Wired UK
Editorial and commentary about all sorts of technology stuff
http://www.wired.co.uk/

Community Spark
Often insightful but mostly common sense about online communities
http://www.communityspark.com

Oreily
Fountain of all technical knowledge
http://radar.oreilly.com/

Charlie Booker
Writer of Nathan Barley and Screen wipe, very funny and quite angry man

http://www.guardian.co.uk/profile/charliebrooker

Top 10 companies that I would like to buy

Over the past year I have been keeping tabs companies that I have come across that I feel are really going places.
Here is my top ten list. To get on the list the company has to have a neat way of working or a great product. The company has to have a buisness model that will do well from the downturn and be in a position to benefit from acquisition or investment.

1. Sulake – the inventors of Habbo Hotel, and in my mind a great example of how to commercialize virtual worlds
2. emoderation – simply put … a great service. This company will police your online brand and protect it from damaging comments, contributors and content. This is precicly the kind of service that will grow and grow.
3. Intuit – a really simple online CRM system. This is the future of CRM within companies.
4. splash up – Faux Labs – this is to photoshop what google doc is to word. It is a great product and it works pretty well
5. ravelry – These guys are genius. They have jumped on to the expanding Knitting market and really made an awsome community product. There is alot that can be learned from how they have managed to scheive such a great product.
6. zoho – AdventNet – an online suite of applications including databases, CRM and many more standard corporate tools.
7. Madgex – awsome stuff on identity
8. Animoto – a leading innovation based company that is making some crazy little applications. Again its not their product that is as important as how they managed to make it.
9. Playfish – It took along time for me to decide to put this one into my top ten, It was only when I found myself and my son playing one of their games that I realized the power of their business model.
10. DimDim – a straight forward web conferencing solution

How to make a cultural change happen to a large audience

Sometimes you need a large number of people to behave in a new way. This is called a cultural change. Just about the best example I can give of this is the recent campaigns to stop people smoking. The overall thing that the anti smoking lobby wanted to achieve was to make a culture where smoking was socially unacceptable.

Looking at this from a media and marketing point of view you can apply basic tools to the “non smoking” product. Let me introduce you to the adoption life cycle.

1. unawareness of the product
2. awareness of the product
3. belif in the product or solution
4. attitude to view product favourably
5. intension to commit to product
6. commitment to product

If you want people to do something new, then you have to help move them along the 6 point adoption cycle

What marketers do is segment their target demographic into these groups, Specific tactics can be employed to address each group. Target the bottle necks if most people dont know about the product then educate them (1 to 2), for those that know about it instill a belief in the products effect (2-3), and so on.

This method was used to make drink driving socially unacceptable, to increase sales of ipods and to rebrand the conservative party

The crazy thing about marketing the “non smoking” product is that exactly the same tactics were used to market somking to us in the first place.

TV is Dead Long live the Stream!

Have any of you tried to use the internet in the UK around 20:00 in the evening?
Did you notice that the under 20 demographic dont discuss TV shows any more?
What do you think people are using the iPhone 3G’s to do ?

If you work for an ISP you may have access to the bandwidth usage metrics, and if you have seen them (as I have) you will notice that people are seriously into the iPlayer. The basic consumer TV behavior of settling into a TV programme is still there but the method of programme selection and distribution is totally different.

If you work for a telco and you dont manage to get your existing TV audience into the new streaming delivery then you will loose it to your competitors. As someone who has spent the last 15 years working in TV I dearly want this to not be true, but the tide has changed?

Marketing your products in a down turn

Remember how I said that the profile of tenders was going to change because of the downturn?
The bell curve of opportunity value compared to frequency of deals will be squished, out in two directions.

Lets take a look a just a single company.

A large company has to speculate to accumulate. This is reflected in the internal purchasing mechanisms of the company. Roughly speaking there are sign off boundaries, the most influential people at each of these boundary levels are indicated in the above diagram. Even though a VP may have to sign off a purchase of 300k it will probably be a couple of directors at a lower level who make the real decision.

The down turn will reduce costs and therefore the whole curve will be smaller. However operations must still go on. You will see that the directors now control most of the spending rather than the VP’s. Because directors are still intouch with the delivery and are younger you have to change your marketing.

• make it more funky – remember your playing to the google generation
• make it about delivery
• dont dress your sales materials in the old school terminology – i.e. have a summary instead an exec summary

List of products that have been successfully marketed using social networking

This is a list of things that social networking has successfully helped to market

• Knitting – and all the associated bits and bobs
• Scrabble – I dont care what any one says, facebook was good PR for scrabble
• Live Music – Its inconceivable to imagine a live gig that is not promoted by facebook and myspace
• Ubuntu – The support for this product and the Buzz is all on the social networks
• Print media – Although nearly every book is available online the cumulative effect of visual book shelf, amazon wish list, etc … is massive

The commonality is that the brand is not important, nor are any brands from the days of mass media in the list.

Do you enjoy adverts?

If you asked everyone
“If you had the choice, would you get rid of the TV adverts?”
the answer would be a resounding “YES” !

If you asked everyone
“Are there any adverts that you enjoy?”
the answer would also be yes (probably not so loud)

If you were to ask if there are any web adverts that you enjoy the answer would be a very loud “no”.
People do not enjoy them and do not react to them. Only a moron is going to have a purchasing decision influenced from something that is trying to get in the way of what they are reading.

The simple fact about web page adverts is that they are S*!T
If you want to attract someone, then you have to put something in it for them, the advert must create an emotional response.

PONG is more than just a game … its a way of life

Have you ever wanted to learn a new programming language?
Have you ever had to introduce a student to programming?
Have you ever had to teach a team how to code for a new platform?

Well if you have you will know that all these are difficult jobs, most seasoned professionals will have done them many many times.

Its difficult to learn these things straight from books, infact to get the real experience you neeed to professionally make software quickly when you dont have the skills inplace its downright impossible.

I have a standard approach … and too keep it all fun it involves pong
.

When Im setting up a team using a programming language that they dont know, I ask them to make pong, without using copy and paste.
Pong is a simplistic game that involves very few computing tricks. However it is also very challenging for the platform. You dont need a functional spec before you start codeing as everyone knows pong.

The ball has to travel quite quickly.
The bats have move slowly enough to make it a challenge
The AI of the computer opponent can not be too good.

If they can make a good imitation of the game on the platform then you know that have a good grasp of the programming language. It teaches them how to structure the code, the repository, the build procedure and also how to get the most from the platform. You would be surprised just how many platforms Ive worked on that simply cannot run a good pong game.

If you love pong / programming and working in a team then join my Facebook pong group

Thoughts on thought leadership

Thought leadership is good because …

1. The “thoughts” that are published are valuable to your company, as they will make you Faster, more efficient or introduce new products
2. The “thoughts” that are published are valuable to other companies, who will see benefits in deploying your thoughts, you will therefore have their respect.
3. The “thoughts” that are published are valuable to individuals as it increases their profile and therefore sense of self worth

Thought leadership is about

1. Having good thoughts
2. Having good publishing
3. Having an effective publishing feedback loop

If you want to get into thought leadership

1. You must create a distribution channel
2. You must create an editorial team that is empowered to publish
3. You must create a community of thought leaders

If  you want to beat your competitors

1. You must accept that this will not happen over night it will take at least a year
2. You must find a way to allow the editorial team to freedom to make technical changes to their site and to have skills and resource available (i.e. you must beat their media organisation)
3. You must encourage controversial views and livley debate under your brand (thought leaders ideas are not the same as every one else’s, so dont over govern them).

If you achieve this

1. You will notice the diference in sales and marketing, leads will come from diferent directions
2. You will have better staff retention
3. New opportunities will be presented to you far further down the sales process,

A good management strategy is … there go my people, I must follow them. Your organisation probably already has some great thought leaders, you can nurture their media and editorial talents and help them to better publicise their thoughts.