When I entered
the sector, operating an ISP (Singapore, 1991) - looking back ISPs were the
first disruptor (telcos) - I got to interact with the early global internet
industry and user community. I found the
participants atypical, strange even, the way they got things done, interact…remarkably
open, social, highly collaborative, participative, unusually transparent. And oddly after paying for internet access,
everything else appears to be free! It seems
at once contrarian yet effective, not a combination we are used to. Piqued, I have been tracking its effects
since.
That behaviour
is no more strange.
This is my take
on a digital mindset.
I’ll look at
three of its characteristics; openness, customer-centricity and
data-consciousness. And begin with
culture.
Culture begets behaviour;
collective behaviour governs the organisation
Some 18 years
later when I began deliberately to look at the changes being wrought by the
internet, of which the internet startups were in the front seat, the first
thing I noticed was that the startups operate differently.
What struck me
is that they have similarities of behaviour that I encountered back in the
early 90’s.
“Free and open’ was what made the internet work then, and it’s a
critical principle now. I didn’t have to ask permission to build my first
websites. I had unfettered access to
material that helped me teach myself how to code. As I learned more, I quickly
came to understand that the internet was so much more than a network of cables
and wires that connected computers around the world. It was a platform for the
purest expression of freedom, openness and possibility that I had experienced
in my life” – Chad Dickerson, founder
of Etsy
“The Internet is characterized by openness and collaboration.”
- Pony Ma, CEO of TenCent quoted in the China Daily,
18 Dec 2015
“…transforming this 146-year-old institution will take more than
just talk. And so to win its place, Goldman Sachs is starting to open itself up
in ways that once would have been unimaginable. It’s letting in outsiders,
forging new partnerships, and showing its vulnerabilities—even learning to
become less secretive.” – ‘What does it mean for Wall Street that a rising number of tech
companies have no plans to go public?’, Bloomberg, 18 Mar 2016
Openness was a
common theme as I waded through the cases.
Closed vs open
A true short story….
In the early
1990’s we, operators of ISPs, then the only visible internet industry
participant, attends annually a conference, INET. During evening drinks, a ritual was to share statistics
on the growth of data traffic out of a country among a group of regulars from
different nations. It increased yearly
relative to telephony traffic. We knew change
was coming but the telco executives I spoke to merely swept that aside.
The early
participants – the ISPs were, in fact, the first disruptor, of the telco
space. Today telco infrastructure is
essentially IP (same technology as ISPs) including fibre/4G/5G/6G. Their main source of revenue is broadband
(data plans in celco-speak), not telephony.
The transformation is ongoing and at this point, many still cannot quite
figure out the digital economy - how they can work within it - stuck in the old
ways.
‘Convergence went through a mini-5G
hype in the ’90s. But it struggled. Until the internet. Isn’t broadband a converged ‘telco’ pipe for
text, voice, video? The difference is that
the telco does not control the services around it. And to think triple-play was and is still a key telco strategy when consumers
prefer the flexibility to mix and match what they like, when they like through
the internet. [With triple-play, a telco
offers converged bundle of services - telephony, text and video (cable tv)
delivered through the telco cable in your home.]
Old telco is
classically top-down. They controlled
the entire ecosystem that offered telephony++, the rationale for triple-play. Partners were few and they had to adhere to
strict rules. They command-controlled
everything. They are a closed system.
In contrast, the
ISP ecosystem is different, opposite actually.
ISPs rely on partners by definition (internet = internet of networks)
ie. other ISPs in order to function. The
interconnection model of old telco (the reason international calls are costly)
does not apply as the ISP model is based on cooperation. If an ISP is roughly of the same size, the
partner ISP would interconnect at no cost, this in contrast to the telco model
where payment is in the algorithm. They
are a more open system.
Telcos would
adjust better to become a serious player in the digital space if they think
open, and act it and play by the rules of the digital economy. After all, the ISP is really the foundation
of the new ‘telco’ (re-read para. 3).
Triple-play, I’ll wager will lose major telcos a bundle, a costly
experiment in the wrong era.
Open models lead to collaborative
ecosystems & new ways of getting things done
Banks are going
through the same journey. Like telcos
they are famously closed. Fintech is
forcing a more partner-centric model, directly or being prodded to by
progressive regulators. Thus we have
banks working with fintech and banks adopting open API. I’m not sure how many banks realise the
future of banking is cooperation but regulators seem to.
If you think
through these two examples, you’ll find similarities of old vs new in your
industry. The way the internet
transformed the telco industry is modernising banking and other sectors now.
Back to my short
story…in those early days, the command-control mode was still there but watered
down. I sense it was
peer-levelling. When we needed help,
there was then zero internet expertise in Singapore, they readily offered,
gratis, whilst the norm was to pay for it.
The team developed the skills required to operate an ISP through the ISP
community treated as one peer to another.
Openness is the
operative trait of new (digital) culture.
It leads to new ways of getting things done.
Perhaps
triggering a shift in thinking …..
Internalisation vs
externalisation
Along with a
closed (‘er) culture, organisations are traditionally tasked internally. It’s changing gradually. This may be one reason.
“No matter who you are, most of the smartest
people work for someone else”
Bill Joy, co-founder of Sun Microsystems
The internet
connects, with massive reach, to information and resources that were once nigh
impossible to locate. A partner, an
expert or …. a community may be less expensive and better for a specific task
than an internal resource. The
community-driven approach, a crowdsourcing method can even be more impactful.
Take software,
the second sector after telcos to be disrupted.
Open source software power just about the entire global internet and are
used by most of the startups including the largest. It is orders of magnitude cheaper than
traditional software, in part because they are community developed. To a user, this is good software at low
costs. But unconventional!
Having an open
mind helps.
‘John Fluevog, a designer of high-end shoes created open source
footwear by allowing customers to submit designs. They get to put their names
on the shoes. The best ones get put into
production’
To a brand like
Mr Fluevog, crowdsourcing is an effective technique. With the ‘crowd’ participating by
co-designing the shoes, he gains fresh ideas, knows what customer wants
(instead of best guess), gets plugged in to the latest trends. And it doesn’t cost him extra designers.
Print media,
classically internalised can benefit from without. Traditionally articles are written
internally. They are top-down,
command-controlled operators. Editors
decide what readers should read. Until
the internet, they were in the best position.
Reddit, where it is the readers, shows an alternative way forward. New media like Medium, Quora and YouTube
practice Bill Joy’s principle. Indeed
their business models are built out of externalisation (next para.). But as with anything, it should be a mix and
I note, until the industry finds a fix for fake news like they did for spam
years back, the pendulum has swung a degree back towards traditional print
media.
I call all these
‘externalisation’, use of external resources that includes open API to engage
partners, crowdsourcing to encourage customers and the public to partake in
aspects of day-to-day operations. And an
externalised (vs internalised) culture for those that can both see the benefit
and practice it for suitable tasks. Such
as practitioners of the sharing economy with a business model that is largely
based on the crowd.
Most of us will
readily agree with Bill Joy but how many will practice what he’s
suggesting? It’s a mindset thing,
difficult for habits to change. Which is
too bad for some!
‘While Facebook focused on creating a robust platform that allowed
third-party developers to build new applications, MySpace did everything
itself. MySpace cofounder DeWolfe later acknowledged that its decision to keep
all development in-house was ill-advised at best’
- “Innovation, Openness & Platform
Control”, Geoffrey Parker, 3 Dec 2013, IDE/MIT
An open,
externalised strategy it seems worked for Facebook.
It also worked for Google.
Google’s PageRank mirrors the internal versus external
argument. Instead of a committee
categorising content (internally, like Yahoo originally did), PageRank hands
the role to algorithms and websites (outsiders) - websites
will only link to another if the content is good ie. by linking to one another,
websites rank each other and those with more links equates to better content,
thus the superior results of Google search - winning the search engine
war.
It’s a challenge
for traditional firms to think up something like this, what more, use of
unconventional (for now) ways....but have the mind set along the lines of
peer-to-peer (model, vs centralised) and externalisation. Cultivate an open outlook! Imagine the number of internal staff required
to categorise the world’s websites ie. savings through externalisation!
Allied to
externalisation is new respect for partners, customers
and the public.
In the next
post, we’ll discuss customer-centricity, an important strategy for firms
battling it out in the digital era.
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