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Twice this week, people have relayed to me incredible promises for the power of blockchain and how it will change the way we do everything. This is quite some feat for a technology that few people understand, even in principle, and even fewer can describe with clarity.
I have a number of issues with this idea. It’s not that I don’t think blockchain has great potential. There’s a clear attraction in the robustness of its distributed nature and the potential for transparency that represents. I can see how it might be valuable for managing contracts and deeds — matters of public record that don’t necessarily have tight privacy concerns around them.
But blockchain is an architectural choice, not a technological solution in its own right. It is one way we might choose to tackle particular problems, and one of many. It is suited to some situations and not to others — like the storage of personal data.
However well encrypted it may be, you cannot store personal data in a blockchain-based system and comply with the General Data Protection Regulations (GDPR). The regulations may change, though I’m not totally convinced that they should. Even if they do, it will take a long time.
Why Blockchain is not like IoT or AI
It’s great that people are enthused by the idea of a technology and its potential applications. But blockchain is quite different to other technological buzzwords doing the rounds at the moment, like AI and IoT (internet of things).
These are much broader classifications of groups of technologies (at least in the way that the terms are commonly used — academics might object to broader uses of the term ‘AI’). This leads to criticism that they are nothing more than marketing terms, and sometimes that is fair. These terms don’t define single architectural choices, but rather opportunities to tackle new problems, or address old ones differently. Within these definitions your solution can be endlessly tailored to the challenge at hand.
But say you’re going to apply blockchain technology to a particular problem and you are dramatically narrowing your range of choices — perhaps beyond what is wise.
Blockchain will change some worlds
There will undoubtedly be some industries for which blockchain is a revolutionary technology. Some people will get incredibly rich off the back of it. Ultimately, perhaps it will prove to be a good basis for alternative currencies. But it isn’t some universal technological panacea that will solve everything. While it might changes some worlds, it won’t change every world.
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No item is more over-used in analogies than the humble Lego brick (I refused to call them ‘Legos’). I acknowledge that as a pre-emptive request for forgiveness for the cliche that follows. Because I have yet to find a better way of explaining the difference between being adaptable, and being optimal, than the comparison between a die cast toy car and a Lego model of the same vehicle.
Before I get to that though, some context. I believe we live in an age of high frequency change. This is distinct from more general accelerated change in that it acknowledges the big technological changes of the last century: the shift from horse and cart to car, the advent of international air travel, and the rise of domestic automation, to name but three. These were massive economic and cultural changes.
The internet may prove to be a change on the same order, but perhaps we don’t yet have the perspective to see it. What we can see is a rapid series of shocks that may not drive change on a global scale but that can individually disrupt whole industries. These generally result from the continuing rise in accessibility of new technologies and their subsequent application to new verticals.
In the context of this age of high frequency change, companies need to play the game of business rather differently. The longevity of a product, service, or operating model may be significantly shortened. Investment in optimising for that operation, beyond a certain point, may be wasted. Worse, it may lock the company into that particular operation. I call this ‘polishing the rut’. You may be able to move within that rut with ever less friction, but it will be damned hard to get out of it.
No excuse for friction
This isn’t to say that companies should be deliberately inefficient. I have had a few chats with web design and build agencies recently about licensing the Applied Futurist’s Toolkit. Many of them are being drawn from traditional design and build projects into digital transformation programmes for their SME clients. And they believe the Toolkit may help them. What’s shocking is that the challenges they uncover inside their clients are exactly the same as those I was coming across when I ran a digital agency a decade ago. There is still a massive deficit in the application of technology across UK business. Addressing this could have a dramatic impact on productivity.
But an excessive focus on efficiency, something we have seen in both public and private sectors over recent years, is antithetical to agility. There is such a thing as being too lean, too specialised.
And so companies and their leaders have a choice. Do you want to be hyper-optimised for today’s environment? Or do you want to build be agile so that you can adapt to tomorrow’s? You can’t be both.
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I spent much of Sunday morning scoring entries to the the Prolific North marketing awards. The best entries in the categories I was judging had a few things in common. One of them was how well they used data to target their audience.
Then I got a call to speak to TalkRadio this morning about the latest updates on the Facebook/Cambridge Analytica story. And again it was clear that really, I would be talking about marketing. The type of marketing that most consumer-facing organisations, of any scale, have been doing for years.
Data intelligence is bad
The brands and agencies entering the awards used a whole range of methods to better understand the beliefs, needs and desires of their audience: surveys, testing, focus groups, analysis of existing data sets. They then used this intelligence to shape the stories they told to maximise their effect.
These stories were told across a variety of media: television, Facebook posts, digital and print ads, PR campaigns. This is where they differ to Cambridge Analytica (CA): in all of the stories I’ve read so far, the data was only used to target advertising. This seems unlikely.
It appears that CA, and its alleged affiliate, AggregateIQ, fed back to clients about the personality types and hot issues affecting its audience’s decisions. We know that there has been a mass influx of fake news into Facebook and the Web in general: biased and often patently untrue stories designed to discredit people and ideas and reinforce existing — often wrong — beliefs. Given the apparent level of moral reasoning taking place inside CA, and inside the campaigns that it supported, it seems unlikely that its arsenal would have been limited to advertising. Though, as I say, no report I have read offers concrete examples of any materials produced off the back of the data and profiling that CA or AIQ developed.
…or is it?
You choice in marketing is to shout at people about how great you think your product, service, or candidate is, or to listen to what is important to them and respond to those needs. To understand their worldview and tailor your messages accordingly. Since few of us like being shouted at, and most of us have developed a level of filter to ignore such base marketing, it’s unsurprising that the latter approach is more effective.
For all the horror that this might engender in people, it’s still a relatively unsophisticated process, even in the most advanced campaigns. It doesn’t appear either CA or AIQ’s work fits that category. Nonetheless, it is effective enough to deliver an incredible return on investment, certainly for the brands whose award entries I’ve been examining. One pound spent on marketing might turn into two, five or ten pounds in revenue.
When I say it’s not sophisticated, what I mean is that the targeting is still far from precise. I’ve lost count of how many people have asked me about (or more often complained to me about) irrelevant advertisements pursuing them around the web. Or completely off-base recommendations for products based on other things they have bought.
Dear Amazon, I bought a toilet seat because I needed one. Necessity, not desire. I do not collect them. I am not a toilet seat addict. No matter how temptingly you email me, I’m not going to think, oh go on then, just one more toilet seat, I’ll treat myself.
But when it works, this targeting is incredibly effective. Why do ads pursue you around the web? Because retargeting (the official name for this) is incredibly effective — somewhere between 40 and 100% more effective than ads seen cold, depending on which study you look at.
Likewise recommendations: brands recommend things they think you might like because it works, boosting the size of your basket at checkout by maybe 20%.
Imagine how it will be when they are actually really good at this? Yes, you might feel like you’re being manipulated. But actually you will also feel like the brand is working to your agenda. Who doesn’t want a personalised experience when shopping? A site that does the searching for you and finds what you want with minimal clicks?
The answer, is very few people. All evidence suggests we love brands that personalise our experience and minimise the friction in our shopping process.
As for products, so for politics?
The question is, do we feel the same about politics? The furore around CA, AIQ and FB doesn’t seem to be about the data breach — if you can call it that: the data CA used was collected entirely legally and the way that it was then sold on used to be entirely commonplace, if still against both data protection laws and FB’s terms and conditions. We have another story about a large scale data breach each week, and it seems to slide off the back of the public, contributing only to a slightly heightened background level of technological fear.
No, the furore around this story is around the prospect that our decisions on something more vital than our next box of cereal or holiday destination may have been manipulated. Some don’t want to believe that they were manipulated. Some really want to believe that others were, as a way to explain decisions that they find incomprehensible.
Personally, I’m sceptical about the effect either CA or AIQ had on the Trump or Brexit campaigns. Their methodology is suspect and most analyses suggest they weren’t approaching the sophistication of the best brands.
What to do
How do we stop this happening again in the future, should we want to? There are two options.
The first is that we try to legislate against this type of behaviour around elections. But that for me is like trying to reseal Pandora’s box. We know there are bad actors with a desire to influence voting. Are they going to hold to the laws? Will the laws we establish be able to adapt to new techniques and technologies? Unlikely.
Instead, I think we have to make the process much more transparent. Everyone needs to know when and how their data is being used, and how they are being targeted.
This can’t be achieved by forcing the likes of Facebook to do a better job of releasing data they hold. Let’s be honest, who has the time to plough through all that? I haven’t even bothered downloading mine. There are no surprises in there for me.
If we want to avoid situations like this in the future, we must change the way our data is held and how we are rewarded for sharing our personal information. If we want to keep track of where it goes and how it is used, then we should be in control of it, and we should place a value on it being shared.
We clearly can’t do this on a case-by-case basis: just think how many times your data (in a very low-level, anonymised way) is accessed each day by brands targeting you with advertising. We need a policy system wrapped around our data that allows it to be accessed by others on demand, according to the policies we select. A level of machine learning would allow it to adapt based on our responses over time.
This won’t prevent us being targeted by campaigns looking to change our behaviour. But at least we will be in control of what we receive, and rewarded for sharing our data with those with commercial interests in our attention. At least it will be transparent: we will know who was targeting us, with what, and when.
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I am a bit obsessed with friction. I don’t mean it in the literal sense, but rather those failures of systems and processes in life that slow us down, cause us irritation, and force us to think about the mechanism rather than the experience.
Speaking to TalkRadio this morning about 5G, I tried to explain that a large part of the proposition for this new network technology is that it eliminates friction. We shouldn’t have to think about how and whether we are connected any more. We should just be able to focus on the experience: browsing the web, sending an email, streaming a video or playing a game — wherever we are. Yes, there will be enhancements to speed, latency and coverage, but the applications for these may take a couple more years to appear. In the meantime we’re paying for convenience, and I for one am more than happy with that.
Because I abhor friction. I don’t want to waste minutes logging on to a Wi-Fi network when I could be enjoying the latest comics on my digital subscription, or streaming the latest episode of Black Lightning on Netflix.
The type of friction that genuinely makes me lose my mind is unnecessary administration. I have outsourced everything I can to get away from having to deal with as much of this as possible, but sometimes it is unavoidable. Re-mortgaging last year was a particular low point, with both the mortgage provider and their legal intermediary apparently having failed to keep up with the last twenty years of technological progress, or to have paid any attention to the massive waste in their own systems design. The only conclusion I could reach was that one or both of them must benefit from the systems being so utterly unfriendly to the customer.
But this is rarely the case. Friction in a business context, just like friction in physics, requires two bodies. And under friction, both suffer.
Take the example of a client of mine currently. I have now been waiting 71 days for them to pay a not insignificant amount of money. It took 58 days for the finance team to respond to my invoices and tell me they wouldn’t honour my normal payment terms and that they pay at 60 days. They also couldn’t pay until I was on their supplier database. This took the filling out of two forms, which themselves required research on my part to complete. Then, to check the status of my payments I had to log in to their supplier management system, an utterly terrible piece of webware. Only to find they had processed the same invoice twice, rejecting one of them, and failing to process the second.
Throughout this process, as you can imagine, I have been chasing the client, constantly. Like most of my clients, it’s a large organisation. My contacts are both geographically and hierarchically well-separated from the people causing the friction. Not only has the whole process consumed a huge amount of my time, effort, and good nature, it has consumed time from both my direct contacts and the finance team.
The result? However much the company may have saved by extending payment terms, both formally and artificially through its hideously complex processes, it has almost certainly wasted more in the lost time — and lost good will — of its own employees. The only difference is in the visibility of the two types of costs.
Find the friction in your organisation
Friction breeds frustration, which has the advantage of making it easy to find. One of the first things I do when I begin consulting with clients is ask people at all levels of the organisation, and their customers, is what frustrates them. What makes their day actively worse? What wastes time and stops them doing their best work?
The answers to these questions are usually great guides to what competitors will do better to beat them. If you want to know how to improve your business, how to eliminate friction, go ask your staff, your partners, and your customers: what winds you up? Frank answers will only help you.
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“It’s the realisation of ideas, the translation of possibility into material value. The old adage about 99% perspiration is true in my experience through a number of start-ups. The idea is the easy bit. Making it real takes sweat, and investment.”
This was my answer when asked by TheBusinessDesk recently what innovation meant to me. But I realised it was one of many possible answers.
Innovation is something that every almost company seems to be chasing at the moment, driven in part by excitement about what is possible, and in equal measure by fear of impending disruption. These are equally valid motivations. No-one wants to be blown away by Schumpeter’s gale, and that weather front seems to be approaching every organisation, if it hasn’t already hit.
It’s easy to be cynical when there is so much buzz around an idea, particularly in business where fads seem to fly past faster than new fashions. But I genuinely believe that high frequency change (as distinct from a more generic argument for accelerated change) justifies renewed focus on innovation, in proposition, process, and culture.
So what is innovation? And what is it not?
For me, what it is not, is exclusively new ideas. Ideas are frankly ten a penny. Great ideas may be rarer, but to be honest, there are plenty floating around out there. What is generally lacking, is application. Whether it’s a new idea, an old one, or often one borrowed from another place, the key to innovation is making it count.
Innovation is not always about success either. ‘Fail fast’ has become another over-used term, often with too much emphasis on the ‘fail’ and not enough on the ‘fast’. Because ‘fast’ in this context also means ‘cheap’.
We are better equipped than ever to experiment and every business should encourage its people to do so, but only within a framework that maximises the chances of success and learns lessons from the natural proportion of failures. Failing fast without learning lessons is just wasting time.
Creating a culture
Innovation may be cheaper now, but it’s not free. That’s why innovation needs support from leadership, and committed expenditure. There is a natural overhead that comes with change, and every company focused on sustainable success should be budgeting for it.
Putting budget aside is a great starting point for a culture of innovation. It says that you are committed. Package this budget in a framework that encourages feedback, speculation, and experimentation, and you are beginning to create the right environment.
Iteration & recombination
Innovation also doesn’t have to be about big steps. Many smaller steps can be just as valuable, if not more so. This is particularly true in organisations that have lacked a culture of innovation, and where assembling financial and political support for major change can be time-consuming and draining.
Smaller steps can start to build up a track record of evidence, demonstrating progress and value. And these small steps particularly don’t need to be about original ideas: small iterations of existing processes and structures can rapidly improve efficiency and customer experience, and eliminate frustration.
One of the cheapest and easiest forms of innovation is the application of other people’s innovations to your organisation. Cloud applications are particularly easy to bolt-on to existing processes, and while uncontrolled, this type of ad-hoc procurement risks a future IT nightmare, it can be a great tool for rapid prototyping.
What does innovation mean to you?
Ultimately, innovation is about survival. As Schumpeter said, “[Capitalism] is by nature a form or method of economic change and not only never is but never can be stationary.”
If you want your organisation to survive and thrive then innovation is critical. Create a culture of innovation by assigning clear budgets to it, by inviting contributions from across the organisation, and by creating a framework within which ideas can be tested, evaluated and applied or discarded as appropriate, rapidly and cheaply.
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