Current Blog Entries by Larry Fry, CCP, MBA

Another WordPress weblog for my Business, Energy, Investing, IT, and Travel blog entries!

Posts Tagged ‘Business Models

Web Data Mining and Orwellian Risks for Abuse at the Private Individual Level

leave a comment »

This posting consists of my comments per a guest post published on Forbes.com by Chris Taylor, a technologist with TIBCO Software, founder of successfullworkplace.com, & fellow member of LinkedIn group ‘Disruptive Technologies’.

The ever burgeoning data explosion and the resulting technologies being developed to interpret meaningful information from it (e.g., Data Mining; interpretive/predictive analytics; etc.) are here to stay.  The competitive advantages which stand to be gained by companies and the military/security sectors of governments that can effectively glean valuable information from the morass of personal data now available on the world-wide web is immense.  Personal data that is gathered and analyzed/stored at a sector group level seems to present less of a threat to each individual’s personal privacy when used in traditional ways (e.g., company marketing studies).  But the “Orwellian” risks for abuse at the private individual level as the current data mining technologies in use become increasingly more sophisticated cannot be ignored.  Furthermore, the judicial systems of developed countries have not been keeping pace with the burgeoning privacy violation ramifications of the information revolution that is currently taking place.  Exacerbating all of this is the fact that for increased revenue purposes, social networking users are being urged by the likes of Facebook’s Mark Zuckerberg to become more transparent by revealing more of their personal information on these sites; a factor which is serving to make personal transparency in public forums a current “popular culture dynamic”.  So the genie is definitely out of the bottle here, which should behoove users of all social networking sites to become more familiar with the “primitive” privacy settings made available by the provider and use them to tailor who gets to see what parts of their personal information that gets generated as time goes by.

Finally, to effectively manage the increasingly sophisticated video parsing technologies currently being utilized by data mining entities, the use of iconic “monikers” in lieu of facial snapshots for one’s social networking sites would be the best option to use in order to remain anonymous per the analysis of video data by companies (and unscrupulous governments, where they may exist).  In addition, video and photo tagging on social networking sites should also be meticulously controlled via one’s privacy settings as well.

Link to Chris Taylor’s article “While You Slept Last Night: Big Data, Privacy, and the Public Square” – http://www.forbes.com/sites/kashmirhill/2012/08/28/while-you-slept-last-night-big-data-privacy-and-the-public-square/

Chris Taylor’s twitter handle is @Successful Work.

Interested LinkedIn readers are invited to join ‘Disruptive Technologies’ group for discussions on this & similar issues!

Impact of Disruptive Innovations on Existing Business Models

leave a comment »

One factor to consider in the disruptive technology genre is the impact of the new technology (or innovations) on the existing business model.  It seems as if many disruptive innovations are really not “disruptive” in terms of the technological challenges presented, but are disruptive from the standpoint of the resulting business model challenges that don’t get managed properly.  Polaroid’s handling of the digital imaging technology when it was new is a real good example of this (see Case below).  It lends creedence to the premise that promising new technologies can end up falling through the cracks due to the failure of their supporting business models (and companies).  As a result, the necessary business model changes also need to be considered and implemented whenever a  new disruptive technology is being implemented in order to be successful.

Case -> Comparisons of Polaroid’s Film-Based Business Model with Apple’s iTunes Model –

I).   Being a technology driven company at the time, Polaroid was all about the technological challenges presented by the instant photo processing industry at the expense of the marketing challenges involved, thus resulting in its eventual bankruptcy filing.  When digital imaging technology came onto the scene Polaroid was able to deal with it from a technological standpoint, but it could not change its existing film-based business model (i.e., polaroid film sales) over to one based on digital imaging and processing (i.e., with no film involved).  As a result, the arrival of digital imaging technology served as a very disruptive innovation from a business model standpoint for Polaroid as it went from a state of being very profitable to a state of experiencing quickly collapsing revenues over a short period of time.  This was primarily due to Polaroid’s propensity to view the new digital imaging technology as representing a technological challenge only, thus ignoring the key business model challenges presented by this disruptive-innovation change.  The key point here is that the disruptive innovation dilemma not only involves technological challenges, but also represents critical business-model challenges as well if the disruptive innovation is not managed competently.

Note:  In Polaroid’s defense, there were numerous major hurdles involved with the restructuring of its overall business model which consisted of the following -> 1). re-educating its employees; 2). initial lower profitability; 3). current product-line cannibalization; 4). increased management/stakeholder/customer based conflicts; 5). complex organizational changes (i.e., corporate culture issues); and 6). inherent conflicts with its traditional (successful) core competencies. In effect, technology driven firms like Polaroid (and Kodak as well) would be better served if they were to also become driven to defiining the new business model(s) that need to be implemented in order to help propagate their disruptive-innovation based product lines (e.g., like Apple currently does).

II).  Also being a technology driven company, Apple too is driven by the technological challenges presented by the computer and electronics industries. But unlike Polaroid, Apple is also driven by defining the new business models that need to be adopted in order to help propagate its “disruptive innovation” types of products.  Apple’s iTune has basically turned the recording (or record) industry “on its head” in that consumers can now purchase and download individual songs at home instead of having to pay for entire albums of songs bundled onto CDs at record stores.  As a result of this “disruptive” business model, record stores are now a thing of the past as iTunes has revolutionized the music industry at the retail level due to its lower costs, increased conveniences,  and more desirable product selection changes.  As a result, some retail record stores have moved over to the movie/DVD side of the industry, but it is just a matter of time before this extended business model meets its demise too due to the arrival of even more disruptive innovations in the movie industry.  These innovations will primarily be based on new delivery technologies (e.g. better internet streaming methods, et al).

Interested LinkedIn members are invited to join the ”Disruptive Technologies” professional group (URL below):

http://www.linkedin.com/groups?about=&gid=1027037&trk=anet_ug_grppro

Will Apple’s ‘Disruptive Innovation’ Product Strategy Continue On?

leave a comment »

The following is a very insightful ‘Disruptive Innovation’ genre quote per Apple Computers from the 24/7 Wall St. blog article ‘Apple Clobbers the Competition: The Carnage of Apple’s Spectacular Success’ (by Ashley Allen & Douglas McIntyre, 2010).  http://www.marketwatch.com/story/apples-destructive-power-2010-09-24?pagenumber=2 

“Apple is an anomaly.  It has the disruptive force of a startup and the consistent message of a mature company.  It is one of the largest tech companies, and yet it is a darling of Wall Street.  It is a hardware company that is also software company, content company and now consumer-electronics company.  It has manufactured not one but three revolutionary consumer products back-to-back, and all on a content distribution model that seems to evolve with the needs of the product.  It’s a killer because it continues to be the first to market and often times the only game in town”.

Being a technology driven company, Apple is driven by the technological challenges presented by the computer and electronics industry sectors.  But Apple is also driven by defining the new business models that need to be adopted in order to help propagate its disruptive-innovation based products.  Apple’s iTune has basically turned the recording (or record) industry on its head in that consumers can now purchase and download individual songs at home instead of having to pay for entire albums of songs bundled onto CDs at record stores.  As a result of this disruptive business model, record stores are now a thing of the past as iTunes has revolutionized the music industry at the retail level due to its lower costs, increased conveniences, and more desirable product selection changes.  As a response to this, many retail record stores then moved over to the movie/DVD side of the industry, but this extended business model has now met its demise as well due to the arrival of even more disruptive innovations in the movie industry per new online delivery technologies (e.g., better internet streaming methods immediately come to mind).

I’d now like to expound on the premise that Apple has been a real master at disrupting the environmental scanning attempts of its competitors via a “sleight of hand” (or misdirection) strategy favored by the late Steve Jobs.  This strategy has always caused much consternation with Apple’s competitors and industry analysts alike in their attempts to interpret and follow the product-line direction that Apple (as industry leader) is heading.  Apple is also willing to canibalize its own existing product lines as part of this misdirection strategy, which is disruptive from the standpoint that most competitors find themselves unable to continue following Apple’s lead due to the fact that they cannot cost-effectively canabalize their own product line while following and competing with the industry leader.  In effect, this “follow-the-leader” strategy becomes cost-prohibitive for Apple’s more cash-strapped competitors, who then either phase down or abandon entirely the particular product line that they are competing with for market share (e.g., HP’s Tablet product-line immediately comes to mind).  Apple’s huge cash position basically enables it to “toy” with its product-line competitors and weed out those who cannot afford to stay in the game with them (i.e., just about everyone). But I’m sure that the remaining competitors are now reassessing (i.e., retooling) their competing product-line strategies in the wake of Steve Jobs’ unfortunate demise as Apple may no longer be able to disruptively innovate without him.

NOTE:  Interested LinkedIn members are invited to join LinkedIn DT Group ‘Disruptive  Technologies’  http://www.linkedin.com/groups?about=&gid=1027037&trk=anet_ug_grppro .

Does Predictive Analytics (BI) Field Represent a Potentially Major Disruptive Innovation?

with 6 comments

Does the burgeoning field of Predictive Analytics (PA) and the competitive advantage that it can potentially reap represent a potentially major disruptive technology of the near future?  Or will it go by the wayside (i.e., in terms of being disruptive) in the same manner that Artificial Intelligence (AI) computer technology and applications did in the 1980s and 90s?

Several big name companies like IBM and SAIC are making serious runs at developing PA based software applications as their major business models.  IBM is pulling out all the stops here as it recently bought out Cognos and SSPS for their PA assets and high levels of expertise in order to build up its new PA consulting model for its Global Business Services consulting group.  In addition, engineering firm SAIC has recently announced a major PA application system that is now market ready (i.e., SAIC plans to market this new PA application on a worldwide basis alongside its hardware and consulting services).

To elaborate, SAIC’s new “Distribution Monitoring System” is designed to proactively predict the occurrence of failures in distribution and transmission systems in a matter of days, weeks, or even months before they occur.  The utilization of a “complex-event” processing engine evaluates masses of data (i.e., data mining) against rules laying out the relationship between specific, fairly obvious events in the life of a particular device and the likelihood that such a device will fail (and when it will fail).  Millions of records containing event driven data can be run either daily or in real time against these rules of thumb (or indicators) that have been designed to identify potential failure points and the timing of their occurrence.  This process then utilizes a knowledge database that can correlate  faults and failures (i.e., it learns to proactively detect problems that can cause failures).  A neural network is then utilized which can determine whether a failure will occur at some point and can also assess, with a stated probability, when the failure will occur.

In support of the above premise that PA could become a major disruptive technology in the near future, a recent study by McKinsey Consulting Group infers that corporations are going to have to embrace disruptive technologies that will shape the new economic terrain that is evolving out of the latest global economic downturn.  As economies around the world emerge from the recent economic downturn, many companies are starting to grasp that what follows most likely won’t be just another typical turn of the business cycle.  The resulting new economic terrain will undoubtedly be shaped by persistent uncertainty, tighter credit, lower consumer spending, greater consumer saving, and more pronounced government involvement in business (i.e., McKinsey terms this as being the “new normal”).  The use of powerful PA and Business Intelligence (BI) technologies may be the difference maker for companies in terms of removing the persistent uncertainty factor and, as a result, being better able to proactively address potentially serious problems before they become detrimental to the bottom line (i.e., a distinct competitive advantage).  The premise here is that those organizations that don’t invest heavily (or effectively) in PA and BI technologies may be left behind the “eight ball” in the currently evolving new economic order.

So the key question here is, does the burgeoning field of Predictive Analytics and the competitive advantage that it can potentially generate represent a major disruptive technology of the near future (i.e., in terms of dominant business models and profitability)?  Or does it represent just another trendy (and costly) “fad” that will go by the wayside without much impact?  My bet is on the former.

Addendum:  One factor to consider in the disruptive technology genre is the impact of the new technology (or innovations) on the existing business model.  It seems as if many disruptive innovations are really not “disruptive” in terms of the technological challenges presented, but are disruptive from the standpoint of the resulting business model challenges that don’t get managed properly.  Polaroid’s handling of the digital imaging technology when it was new is a real good example of this (see Case below).  It lends creedence to the premise that promising new technologies can end up falling through the cracks due to the failure of their supporting business models (and companies).  As a result, the necessary business model changes also need to be considered and implemented whenever a  new disruptive technology is being implemented in order to be successful.

 Case -> Comparing Polaroid’s Film-Based Business Model with Apple’s iTunes Model –

I).  Being a technology driven company, Polaroid was all about the technological “challenges” presented by the instant photo processing industry at the expense of marketing challenges involved (resulting in Polaroid’s eventual bankruptcy filing).  When digital imaging came on the scene Polaroid was able to deal with it from a technological standpoint, but it could not change its existing film-based business model based on polaroid film sales over to one based on digital imaging/processing  (i.e.,  no film involved).  As a result, the arrival of digital imaging technology served as a very disruptive innovation from a business model standpoint for Polaroid as it went from being very profitable to “collapsing” revenues in a short period of time.  This was evidently due to Polaroid’s propensity to view the new digital imaging technology as a technological challenge only, while ignoring the business model challenges presented by the technological change.  The key point here is that disruptive innovations are not primarily technological challenges, but actually business model challenges instead if not managed competently.  

Footnote:   In Polaroid’s defense, there are numerous hurdles involved in restructuring business models, which include  a). re-educating employees;  b). initial lower profitability;  c). current product cannibalization;  d). increased  management/stakeholder/customer conflicts;  e). complex organizational changes (including culture, etc.);  and f). conflict with traditional (i.e., successful) core competencies. 

 II).  Also being a technology driven company, Apple too is driven by the technological challenges presented by the computer and electronics industries. But unlike Polaroid, Apple is also driven by defining the new business models that need to be adopted in order to help propagate its ”disruptive innovation” types of products.  Apple’s iTune has basically turned the recording (or record) industry “on its head” in that consumers can now purchase and download individual songs at home instead of having to pay for entire albums of songs bundled onto CDs at record stores.  As a result of this “disruptive” business model, record stores are now a thing of the past as iTunes has revolutionized the music industry at the retail level due to its lower costs, increased conveniences,  and more desirable product selection changes.  As a result, some retail record stores have moved over to the movie/DVD side of the industry, but it is just a matter of time before this extended business model meets its demise too due to the arrival of even more disruptive innovations in the movie industry.  These innovations will primarily be based on new delivery technologies (e.g. better internet streaming methods, et al).

NOTE:  Interested LinkedIn members having disruptive technology interests are invited to join LinkedIn Group ”Disruptive Technologies” http://www.linkedin.com/groups?about=&gid=1027037&trk=anet_ug_grppro .

The Political/Economic Costs of Being a Debtor Nation

leave a comment »

Per President Obama’s trip to the People’s Republic of China, Karl Marx did say that we free-capitalists would sell his ideologues the rope they would use to hang us with.  Perhaps he was right in that we are doing that exact thing with China right now.  By being our primary financial benefactor these days, China pretty much owns us and is also beating us at our own game via its controlled (or state) version of capitalism (i.e., definitely a competitive edge for the Chinese government-owned businesses).  So in the end, it might take the “nationalizing” of China’s huge investments in US Treasury securities and Dollars in order to get the rope removed from the vicinity of our proverbial neck.  And if things do take a turn for the worse, then why not;  other debtor nations tend to invoke the “nationalizing” card on our investments in them quite frequently once the timing is right.

Written by Larry Fry, CCP, MBA

November 18, 2009 at 12:30 am

Ford Motors: Still Doing Things the Right Way!

leave a comment »

Speaking of a continuing American success story, Ford Motors is still doing things the right way and deserves all of the kudos that it has been getting as of late.  From a company standpoint, the Ford name still invokes American pride, workmanship, and quality, and shows that free-enterprise can still get the job done both efficiently and effectively. On the flip side, the fiasco with GM is an embarrassment and, quite frankly, it is probably best that it has been pawned off to the government types to determine its final fate.

Written by Larry Fry, CCP, MBA

November 2, 2009 at 11:49 am

Deregulated Market Marginalizes Gazprom’s Gas Supplier Monopoly Attempt in Europe

leave a comment »

Per Washington Post columnist George Will’s recent editorial on the punishment of highly excessive corporate behavior by deregulated markets (i.e., his expounding upon economist David Harrington’s argument per the same), Gazprom’s natural gas supply/transportation strategy (business model) for Europe serves as an excellent example of this fairly non-intuitive concept.  Harrington argues that sellers of goods who initially price their products on the extreme high end are often forced to relinquish these same goods at deep discounts later on due to the efficiencies of deregulated markets.  As a result, global regulation (or re-regulation) on the part of governments becomes unnecessary over the long run.  This is because the efficiencies of the deregulated markets that set in over time cause these markets to become more transparent in nature, thus resulting in better informed buyers, as well as more options being made available to these buyers.  In addition, there is the time decay of the value of the goods that occurs as time passes on as well, which is somewhat similar to what happens to the value of call options as they approach their expiration dates (i.e., the “theta” concept).  As a result, price gougers such as Gazprom become the victims of their own marketing (or  pricing) ploys in the end as they are unable to overcome the inevitable deregulated market adjustments that occur over time. 

Gazprom’s recent attempt to secure a monopoly over the supplying of natural gas to European countries has been marginalized by deregulated market forces, which have adjusted to Gazprom’s excessively high prices by reducing the demand for the product, thus resulting in lower natural gas prices (on a global level).  This coupled with the current economic downturn across the world has contributed to the demise in the global demand for natural gas since less of it is being consumed now.  And while attempting to establish a European based gas supplier monopoly, Gazprom became committed to long-term contracts for gas from Central Asian suppliers at a cost which is now far in excess of the current (or resulting) global natural gas prices.  As a result, Gazprom is now sitting on huge contractual amounts of over-valued natural gas supplies that it must continue to purchase from Central Asian suppliers and then sell at large losses.  This could conceivably result in years of major losses for Gazprom if the world’s natural gas prices continue to moderate, thus resulting in the decimation of both its current business model and its influence (i.e., Russia’s influence) as a major player in the global economy.  And based on Vice President Biden’s recent “blistering criticisms” of Russia per its failing economy, loss of face, and a lack of effective leadership, the Kremlin’s declining influence within the global economy (and power) structure is becoming apparent among the world’s leaders.  But all of this is still not stopping the Kremlin from attempting to forge a gas supplier monopoly in Europe in order to use it as a foreign policy “tool” with its neighbors during times of political conflicts, etc.

Note:  The invoking of some type of  eleventh-hour “force majeure” clause could be a last resort action taken by Gazprom in an effort to extract itself from having to contractually purchase high priced gas from Central Asian suppliers and then sell at large losses to European buyers.