Subba’s Serendipitous moments

September 23, 2009

Netflix’s “crowdsourcing” approach is a success

I have been following Netflix unique experiment to improve its Web site’s movie recommendation system. This week Netflix announced the winner of a three year contest with the winner BellKore comprising of statisticians, computer scientists, data mining experts netting a cool million dollars.

The rules of the competition was fairly straightforward. The qualification for the prize was that the winning team has to improve by at least 10% the prediction of what movies customers would like as measured against the actual ratings. The teams were grappling with a huge data set of more than 100 million movie ratings.

Over the past three years there have been 44,014 entries from 5,169 teams in 186 countries vying for the top prize

I think with this experiment and with Google’s experiment with crowdsourcing described here, there will be a significant shift towards innovation management. The fact that there exists more intelligence and wisdom and the collective effort outside the company’s eco-system has gained credibility. I expect many such organizations embarking on the contest mode to solve intractable problems.

There are a number of lessons that this contest brings about.

First, it indicates that there can be a marketplace for innovation where companies could post their product development challenges and for an interesting contest, the best brains are willing to compete. It sharpens their own abilities.

Second as the BellKore team and other teams demonstrated there is a willingness for disparate people to actively collaborate. While cooperation and collaboration within many organizations has been challenging, I wonder how such disparate people could come together and collaborate easily for a bigger goal.

Third, for people who believed in having an inhouse R&D and saw that as a competitive advantage, this experiment seeks to blow that myth away.

Note: Netflix Prize 2 would challenge competitors to recommend movies based on demographic and behavioral data.

August 20, 2009

How to build a successful innovation team?

Recently I delivered a talk on business innovation. My main thesis was why that offers a competitive advantage and offers the best barrier to entry. There were interesting questions, but the question that flummoxed me was asked by a young MBA student and it went as follows: How to build a successful innovation team?

Not having worked in R&D or an innovation team, I had to admit my ignorance. I promised that I will think about it and revert. I asked several HR managers, consultants and even some innovation experts. I was not satisfied with most of the responses because they talked about examining past track records, achievements and so on. That doesn’t say much and I don’t necessarily agree with experience being a true predictor.. So here’s what I have come up with:

  • Hire someone who doesn’t care much for stability, hierarchy, order and predictability. Every problem is unique and will need a different thinking approach.
  • Find someone who appreciates and thrives on ambiguity. Ambiguity often has negative connotations, but to me to be able to appreciate the grey area and to live in the mental conflict zone is key to finding the breakthrough.
  • A deep competency is good, but the person should be genuinely interested in other things. It is when you are looking at something else with genuine interest, a serendipity play converts the competency to a breakthrough.
  • Have the ability to “abstractize” a practical problem and see a practical problem and hence an opportunity in an abstract thought. This calls for people who can have their feet on the ground and the head in the cloud and span the space between them.
  • Finally and I think this is the most important: The last thing a team needs is finding another clone. Stop looking for something similar to what you already have. You need to fill gaps that are in your team and complement the competency and hence the more of the same doesn’t always make it successful.

(I am assuming that there exists some amount of passion, enthusiasm, respect for people and inter-personal communication strengths.)

It would be difficult to expect all this in an individual. However collectively the team should have these qualities. Whether they become successful or not is a different question. It depends on the mindset and a whole range of factors. But at least you know that we have a good capable team of cracking a problem.

Does anyone have a competency model to build innovation teams?

August 4, 2009

Google and Apple are now confirmed rivals

If there was any doubt about the relationship between Google and Apple, the abrupt resignation of Eric Schmidt — Google CEO from the Apple Board should lay it to rest.

I wonder whether the FCC’s investigation of Apple yanking out Google Voice has something to do it. I wrote about their possible rivalry here, but before I could even conceive of possible actions, the resignation was announced. Coming to think of it, Google and Apple are bracing to compete with each other. Google’s Android which will soon be adopted by many device vendors will be in direct competition with Apple’s iPhone. And the Chrome OS will be competing with the Mac OSX.

But is this new? These moves have been going on for the past few years and while the conflict of interest wasn’t that sharp the yanking of Google Voice seems to have brought all that into the open.

I admire both companies. Both Steve and Eric are respected Valley veterans. They have been role models for me. Nonetheless I have to say they always had antithetical approaches to shaping the future of the consumer experience. Some day there was bound to be a conflict.

Apple believes in creating cool products, but being a walled garden. It has fans, not customers. Even though the iPhone is supposed to be open, every application must be approved by Apple. I had talked about the walled garden approach here and it seems to have worked very well for Apple.

Google has adherents. It believed in openness and its whole purpose (even for its Chrome OS) was to reduce the significance of devices in favor of applications that will reside in the cloud. And once the cloud becomes the organizing system, the devices — be it the phones or the laptops do not matter.

Google crowdsourced its innovation. Apple built an innovation value chain in-house. Both models were successful. Yet I think at the core there is a deep philosophical conflict which manifests as a fight between the open and proprietary approaches.  I wrote about it in the mobile phone industry here and hence am not surprised that a rivalry has come about.

The Google Voice episode is just the beginning. The FCC enquiry may reveal more.

And if the Google-Microsoft war and the Apple-Microsoft war, wasn’t interesting enough, we will see a third war — the Google-Apple war.

August 2, 2009

Who is Google’s rival — Is it AT&T or Apple?

By now everyone is aware of how Apple managed to yank out Google Voice applications from the App Store. iPhone users will not have access to this application. This has caused an uproar in the blog world with some reputed bloggers mincing no words. The mainstream media has been quiet, proving once again that the blogging community is increasingly taking the lead in breaking news.

Unfortunately everyone who is involved — Google, Apple and AT&T have maintained a conspicuous silence.

Google Voice is clearly a major disruption. Through Google Voice, people can have one number for all of their phones, free long distance calling, and free text messaging. Two of these would obviously cut into AT&T’s bottom line, since users would no longer have to pay AT&T’s exorbitant service charges for messaging and cellular long distance.

It also is apparently easier to use than the dialer application from Apple itself.

So, in this case has AT&T been firing from Apple’s shoulder? I would believe so but for the fact that the Google Voice software works on Blackberry and so are other VoIP applications. I am not sure though whether the VoIP applications are allowed to run on AT&T’s networks though I am sure many other devices will be able to run Google Voice applications once Android phones are released in the market, which should be soon.

So, I am not entirely sure that it is AT&T which is exerting the influence to reject the Google Voice application from Apple’s Appstore.

Can it be Apple then? The only plausible claim that Apple can make is that it is a duplication of functionality as far as the dialer is concerned and that it could leave the customers “confused”. Clearly the AppStore is owned by Apple, and what it allows on the Appstore is their prerogative, but yet such a poor defence dents into Apple’s credibility. It cannot use a near monopoly position to thwart fair competition.

So, who is it that wants to block Google Voice? For those who do not know Google’s CEO — Eric Schmidt sits on the Apple board.

I think the players owe an explanation. Does it not become a fit case for the regulator (in this case the FCC) to investigate?

July 25, 2009

Singapore’s research institutes — suffering from split personality?

Is there a synergy between advanced technology R&D and standard training to mid career professionals so that they could garner yet another certification?

Or is it merely a case of making some revenues to cover their costs?

Or worse still, is it a way for the R&D institute to do some “notional national service” when there’s no local company to use the outputs produced by the R&D organization?

The strategies adopted by Singapore’s R&D institutions especially in the IT sector has always confounded me. The latest one is the Data Storage Institute and while on the one hand they claim they do cutting edge research, they are also offering standard training courses which can lead to industry certification (SNIA).

The milestones listed doesn’t talk about any breakthroughs in research or development but merely administrative or routine events. Has DSI lost it completely?

Well as an organization, sure they have resources to do both, but should they be doing both in the first place?

The data storage industry has changed significantly over the years and if DSI doesn’t find a clear and compelling reason to exist, they should redirect their strengths somewhere. It seems to me that there’s a huge disconnect between their areas of research and the aspirations of the local industry. The result — it is research for research sake and if at all there’s any benefit, it is for the MNCs who in any case can source such research from anywhere in the world.

This leads to the question — Does DSI have a compelling reason to exist?

Long timers in Singapore would possibly recognize that the Institute of Systems Science or ISS as it was popularly known had always a confused identity– It was a research institute, training institute, did consulting projects and many other things. It used multiple identities to its advantage sometimes, but despite being given dollops of dollars, it didn’t produce anything outstanding — be in in research, consulting or training. Finally it divested its research activities and became a training service provider. It does provide good training, but the courses it offers can be provided by any training service provider in the private sector.

Looks like DSI is going the same way as ISS?

Sometime back I wrote that Singapore’s research and development needs a rethink. It led to several interesting discussions amongst friends and quite a few work in the R&D sector. The surprising thing is that they do agree that it needs a rethink.

So, when will this happen?

April 24, 2008

Enterprise software –Is there a misalignment?

Filed under: Business,Perspective,Strategy — Subbaraman Iyer @ 11:53 pm
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Vinnie Mirchandani — ex Gartner and a respected blogger dislikes the fact that the tech industry spends so little in R&D and asks a rather pointed question: “If your favorite charity only contributed 10% towards needy causes, you would not spend them much the next year”

I did some analysis last year of the R&D spend and the SG&A spend of the 40 top Enterprise software companies (excluding IBM and Microsoft). This is what I found:

The industry average for SG&A: R&D spend is about 2.5:1. Here’s how it breaks up segment wise:

Annual revenues > $ 1 Billion : SG&A: R&D = 2.4: 1

Annual revenues $500 M- $ 1 Billion : SG&A: R&D = 3.2: 1

Annual revenues $250M- $ $500 million : SG&A: R&D = 3.2: 1

Annual revenues < 250 Million : SG&A: R&D = 2.7: 1

If one recognizes that even in the R&D spend, there is more development spend than research. I would suspect that the development spend is almost 60% of the R&D spend, which means that the last place one has to look for innovation is the software companies.

Vinnie makes a valid point that the start ups probably spend more on research. True, but even these start ups once they begin to scale up, have to spend more on SG&A.

Is the industry structure, with their practices inherently broken and cannot be fixed? I wonder!

My advice to CIOs would be to build their own innovation teams and do things that are relevant for their challenges rather than live in the hope that the Enterprise software world has the complete perfect solution for them.

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