Understanding your Digital Business Model by its Business Functional Requirements for Operational Technology

Andy Mulholland

Vice President and Principal Analyst, Constellation Research
Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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Part 2; The role of existing business functions and technology provisioning when Digital Business adds new business functions and technology provisioning Digital Business models stress agile, dynamic, and responsive to external opportunities using sense and respond. Is this just adding a new technology operation to the Front Office? Its difficult to see how the Back Office IT model built for optimization of internal operations can support such a flexible business-operating model without some changes at least. Its time to re-examine and identify the business functions and what and how technologies provide them.

Slowly but surely all enterprises have become dependent on technology to operate their internal processes, but now with new externally oriented market processes bringing a new dependency on even more technologies its time for a serious review of the integrated Digital enterprises functions

Part I ended with a diagram that identified just how different the operational environments of the Front and Back Office are, and why it’s not only the technologies that are different but also the provisioning. In Part 2 the starting point is to identify the core Business functions and from this examine how they should be provisioned to align with the Business requirement for that function.

The diagram below outlines eight core functional operating areas each with different business requirements leading to different technologies operations.

In explaining the principle behind this type of functional analysis it is perhaps easiest to start with the three functions in the bottom layer of the diagram working from left to right.

Non-Differentiating Business Processes are those that have to be performed, usually for compliance reasons, but do not provide any competitive differentiation other than by the cost and efficiency with which they are carried out. Invoicing and HR are two common examples where the entire business operation is outsourced with payment based on a business metric such as per invoice, or per employee.

Interestingly Business Process Outsource, or BPO, is an existing example of shifting from CapEx overhead to OpEx operational expenditure and therefore totally aligned to the Digital Business goals of attributable cost, agility and flexibility. New Cloud based service capabilities are widening the range and types of Business Operations that can be outsourced on an OpEx business.

It makes sense to re consider exactly what could or should be moved to Business Process Outsourcing and in particular to think through the whole book to bill cycle and its relationship to your enterprises external digital business. Before doing this it helps to firmly identify exactly what makes up the functional block of ‘Core Competencies in Production and Fulfillment’

These are the activities that actually create the products that make up the enterprises business to sell with associated activities that fulfill orders, and as such are the basic competitive activities that keep an enterprise in business. Whether orders come from existing ‘traditional’ channels, or as part of new ‘digital business’ models.

Some two decades of applying IT expertise to ‘Core Competencies in Production and Fulfillment’ to optimizing processes and integrating data, etc. lie behind the original mission statement of IT, and ERP, in producing Competitive Differentiation. But for many enterprise mission creep’ has led to this vital activity becoming almost obscured behind a morass of other IT services. Hence the need to rethink competitive focus versus distracting operations better outsourced!

Returning to Business Process Outsourcing functions and re considering what to outsource by function against this criteria should result in fresh critical analysis. Add to this a further checklist of questions; should it be directly cost attributable to their activities and volume; is this now competitively available through Cloud based Services; and most significantly, who uses the function defined by where in the Business and Technology model there activities are primarily located.

Digital Business is usually seen in terms of using technology outside the enterprise IT systems and firewall to do business in new ways with Clouds, Mobility, and Services at the heart of the new capabilities. It makes sense to question if non-differentiating activities in support such as Book to Bill, and others, should not be provided in a similar manner as Cloud based BPO functions.

The usual arguments will of course be made as to preservation of the statue quo, and there are of course functions and activities where this is the right action. Here the two traditional outsource functionalities illustrated in the diagram provide the answers, but as the topic of traditional outsourcing has been argued in full in many places it does not necessary to provide a further airing here.

Its tempting to accept the continuation of the current status, but its difficult to see how without some really careful and strategic thinking a transformed Front Office using new technologies and deployment models can be made to work in a new, and reset, competitive market places with out some impacts in the rest of the enterprise and its business functions.

Digital Business Transformation must, by definition, mean a wider consideration of exactly how an enterprise does functional operate when its business model becomes based not only on Technology, but also on external Technology and Services provided by new deployment models.

This is not an argument for the chaos of Enterprise wide transformation in response to the introduction of IT, and PCs and ERP technologies as in the past. Instead it is an argument for managing a graceful change by letting go of non-core activities and re focusing on what will increase competitive differentiation in support of Digital Business.

Part 3 of this series; will focus on examining the functions of the Front Office and its aligned technology model. Part 1 can be found here

Visual Influencer Marketing Is On The Rise, But Is It Worth The Investment?

Partner, Sensei Marketing
Partner, Sensei Marketing

Sales & marketing veteran with almost 30 years’ experience and now 1800 digital projects to his credit for clients including Morgan Stanley, AOL, Hyatt Gaming Management, Snyder's of Hanover, Hitachi, the Home Depot, Kraft Foods, Drees Homes, American Idol, and hundreds more, including leading agencies around the North America.     ...

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Images, videos, infographics, and other visual content have become increasingly popular forms of digital expression for individuals and content marketing fodder for bloggers and marketers.  This content has spurred the growth of social networks in which such content is produced and shared such as Vine, Pinterest, and Instagram.  So it should be no surprise that advertisers and brands are once again seeking to capitalize on perceived “influencers” within these sites despite the fact that these social networks are still in their infancy.  There’s no question that visual influencer marketing is on the rise, but is it worth the investment at this point?

“Beyond YouTube, the new visual influencer marketplace is anything but established or mature,” said Weber Shandwick’s global president of digital Chris Perry. “It’s growing and fragmenting across newer networks like Instagram, Vine and others as we speak. And access to cheap production apps and networks are fueling more content being created and shared.”  Current estimates have the PR firm dedicating approximately 20% of some client’s PR budgets to  engaging social media influencers in these networks.

As with the now largely discredited social scoring platform Klout, there’s a new crop of influence marketing platforms emerging that claim to identify, engage, and in some cases act as talent agents for those people who have amassed large followings in these visual networks. While some agencies like Weber Shandwick build their own relationships with popular social celebrities, many, such as Staples, Clinique, and Nordstrom are turning to third party influencer managers and software for a short cut.

What’s In An App?

According to Wall Street Journal writer Nathalie Tadena, “Social media celebrities can not only help brands generate enormous buzz but can also help advertisers and agencies who are less experienced with a certain platform craft content that will thrive on these specific web sites.”

HelloSociety, for example, is one new firm that focuses on connecting “Pinterest influencers” with brand marketers and/or their agencies.  Another service growing in popularity is Niche. Founded in 2013, this company is expected to generate more than $8 million in revenue this year. One of Niche’s clients is HP, which worked with Niche-identified influencers on Vine to create six-second videos featuring a new HP notebook that could turn into a tablet.

Sponsored Post or Influencer Marketing?

Social networks are businesses and as such, require revenue to keep their investors and shareholders happy. Paid advertising is the fastest way to generate that revenue once the network has accumulated large daily engagement by members. Pinterest, for example, has developed an audience of nearly 70 million unique visitors per month, according to comScore.  Pinterest allows members to “pin” an image of an item, webpage, website, etc. to one of many visual bookmarks (known as “boards”) that they’ve created within their profiles. Other members can search, like, and comment on other people’s boards and pinned images.  Pinterest now allows brands to purchase “promoted pins” on the network in order to have their images displayed to more people on the popular network.

Yet, for the most part, people shun blatant advertising and broadcast messages from advertisers within their social media channels. As a result, it’s not surprising to see more brands attempting to directly engage those with large followings on these networks in hopes that they will promote the brand to their followers. It’s also not surprising to see a new crop of influencer marketing services like Niche and HelloSociety pop up to take advantage of the opportunity.

Influencer marketing is in direct competition with the paid advertising programs that social networks like Twitter, Pinterest and Facebook offer. For example, brands including Tommy Hilfiger, VH1, and Benjamin Moore have all advertised in Pinterest recently, but none of them have purchased promoted pins. These firms – and others like them – have spent from mid-five figures to seven-figure budgets with influencer marketing services like Niche, which get popular and well-followed “pinners” to subtly promote the brands’ wares.

Something New or More of the Same?

Now that social media channels have allowed individuals to amass followings that compete with some popular television programs and magazine circulations, advertisers must pay attention. However, I’m not convinced that those embarking on these paid influencer marketing schemes will meet the expectations of the C-Suite approving the budgets.

I’ve been critical of many social media influencer schemes in the past, including Klout and to a lesser degree Kred and PeerIndex. However, I’ve always seen the value in the concept of influencer marketing, when done well. Danny Brown and I outlined that value in detail when we authored Influence Marketing: How to Create, Manage, and Measure Brand Influencers in Social Media Marketing for Pearson Publishing.

The reality is that while advertisers who engage influencer marketing companies and software in hopes of encouraging socially popular individuals to shill for their brands may be generating buzz, there’s still no correlation between the buzz generated and direct sales made when these brands are engaged. The metrics of mentions and likes are still soft metrics. Further, there’s little connection between the lead generation effort and how they affect customer lifetime value, something that businesses must be increasingly cognizant of in our multi-channel, multi-media, multi-touch world.

We still recommend that agencies turn to social media analytics companies such as Sysomos to first gauge which content creators are the most engaging around a certain topic, how their audiences match up to the demographics of highly convertible prospects, and then generate specific influencer marketing content and campaigns that target those in the buying cycle.  Alternatively, for smaller businesses, we’ve found success in working with social relationship software firms like Nimble, which can identify and monitor the conversations of those who are most likely to buy specific products at a specific time by monitoring social conversations occurring among those targeted in the contact list.

That said, we’re definitely seeing improvement in influencer marketing programs like Niche, which help brands and influencers create content that will most likely engage their target audiences. At the end of the day, even the most engaging content won’t guarantee that the content will be seen by those in the appropriate stage of the buying cycle. If you plan to engage these services, be sure you’re able to segment the audience that will be targeted to be sure they’re your “most likely buyers.” Next, ensure the campaign drives those targeted to brand-owned properties where individual profiles can be captured for better performance tracking.

For retailers and CPG staying alive means living on the edge

pending

Guy Courtin was formerly Vice President and Principal Analyst at Constellation Research covering Matrix Commerce and how the Internet of Things drives the evolution of commerce.  Guy has over 15 years experience in the technology space and specifically in the supply chain space. Most recently he was the Vice President of Research at SCM World. Where he focused on the service providers that empowered supply chains. Prior to SCM World, Guy held numerous senior positions. He was responsible for product marketing at RSi, a retail supply chain solution provider. There managed RSi’s go to market strategy around their leading cloud based supply chain solutions. He also spear headed Progress Software’s supply chain group. Where he was responsible for driving revenue and market share as well…...

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A common thread I heard last week at the NRF Big Show, was the importance of the edges of the network. "Edge" in retail speak refers to pushing relevant and actionable data closer to the customer touch points – to the edges of the retailer’s network. I wrote in my #NRF15 recap about the importance of pushing data, insights and decision making to the edges of the network, click here for post. There is another aspect of the network edge that wasn’t prevalent last week in New York, but probably isn’t ready for prime time yet, and that is an enhanced ability to execute at the network's edge. When it comes to that extended level of execution, think 3-d printing, better usage of hardware and software to better service customers…at the edges of the retail network.

The one advantage brick and mortar retailers have over the likes of Amazon and Alibaba is also what has been seen as their weakness – their physical stores. Stores offer a host of issues that are well documented – inventory carrying cost, limited SKUs due to the physical constraints of a store, overhead associated with labor as well as having real estate. However this disadvantage may have a silver lining – face to face interaction. The challenge for retailers is how to make that face to face more attractive to consumers than their laptops or mobile devices to transact. That is where being able to offer greater personalized and flexible solutions is paramount for retailers. How can retailers address this?

• Greater personalization…kind of like your online experience! We all know that the power of transaction online, other than being able to do so in your pajamas, is how customized the experience is tailored for us.  One reason Amazon is so entrenched in our consumer life is that they know what we want…sometimes before we are even aware of it! The power of Google is that they will place those banner ads based on what they know we have been looking at and interested in. Online experiences with the likes of Nordstrom or Banana Republic are littered with suggestions on what else we need. Looking for a a new Peacoat? May we suggest these styles and brands. Oh and if you like that item…you might like this other item that compliments it. Of course this is possible because in the eCommerce world our digital finger prints are everywhere and can be captured with much more ease than in the physical world. This is starting to change. Slowly. As more service providers are focused on helping retailers capture, analyze and provide insights on all the consumer related data sources, physical retail stores will have the potential to be “smarter” in their customer interactions. Companies like Oracle look to offer their retail customers the ability to empower the edges of their network, with the data and consumer persona necessary to transform the in-store experience more on par with the online world. Oracle, like other service providers, realizes for retailers to protect their brand must understand how customers want to research – interact – transact. This can only be achieved with a more complete view of the customer. There is also the need to perform greater levels of analytics at the edge of the network – brick and mortar retailers cannot afford the potential latency associated with having to push data back to a centralized location. For example, Cisco is working on providing the communication hardware, platform and necessary analytics at the edge of the network. Don’t move the data unless you have to. That ensures that the data, and the analytics, are done as close to the customer and execution point as possible. Again, when we transact online there is not much latency when it comes to our profiles and what is being suggested. Retailers are striving to bring some online shopping experience to the store front. But what about getting your product?
• Fulfillment moved out of the traditional channels and pushed to the edges of the network. Having greater understanding of your customer and more insights at the edges of the network is wonderful, but if you cannot offer the inventory diversity or fulfill at that node, what have you gained? If retailers cannot fulfill better their stores not only become showrooms, but your store associates also become pitchmen. Not what you want in the brick and mortar world! I expect retailers to continue to focus on more flexible and intelligent manners to fulfill their customers’ demand. The first step for better fulfillment is being more savvy about your inventory. I was speaking with a former P&G executive while I was at NRF and the one issue he stated is still a headache is understanding inventory positions within a store – what is on the shelf, what is in the stock room and what item is about to have a stock out? All classic issues CPG and retailers struggle with. But to fulfill better, these need to be solved, and they cannot be solved by just looking at inventory data from your POS or warehouse system. Retailers must have greater and more reliable view of their inventory. That means being more digital with the in store management of the inventory. Service providers like Panasonic are bring such shelf level visibility to the market, something I wrote about in my last post. But it is not just about greater visibility of what is available to your customer – what about greater flexibility on delivering the customized product your customer wants? The story of how Coca Cola has rolled out their Freestyle machines, that puts a tremendous amount of control at the edge of the network, with the consumer. Other CPG companies like Maille mustard and vinegar has stores that allow you to come in and fulfill your mustard and vinegar condiments in the store. These are examples of more flexible inventory and product mix being provided at the edge. There is also the infusion of digital technologies such as 3d printing. Confectionery companies like Hersheys are rolling out 3d printing – need a special chocolate for your kid’s birthday party, have it printed in the store. Luxury retailers, such as jewelry stores, can offer on site 3d printed pieces – for customized jewelery. American Pearl is offering consumers the ability to have customized pieces created via their 3d printers. Granted they are doing this via their online channel, but brick and mortar channels could offer consumers the ability to have a design rapidly prototyped in the store and then produced. That would certainly make events like purchasing a wedding ring less stressful…well maybe not.

Whether it is better visibility and greater analytics or being more savvy in product delivery at the edges, retailers must focus here to maintain relevance for their physical stores. Simple truth – at the edges is where you find the customer. Retailers must make sure that they meet customers needs: eliminate the friction between demand, relationship, fulfillment and after sales.

Tagged: CPG, Digital Disruption, Matrix Commerce, NRF15, Retail, Supply Chain

NRF15: retail looks to streamline customer experience

pending

Guy Courtin was formerly Vice President and Principal Analyst at Constellation Research covering Matrix Commerce and how the Internet of Things drives the evolution of commerce.  Guy has over 15 years experience in the technology space and specifically in the supply chain space. Most recently he was the Vice President of Research at SCM World. Where he focused on the service providers that empowered supply chains. Prior to SCM World, Guy held numerous senior positions. He was responsible for product marketing at RSi, a retail supply chain solution provider. There managed RSi’s go to market strategy around their leading cloud based supply chain solutions. He also spear headed Progress Software’s supply chain group. Where he was responsible for driving revenue and market share as well…...

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The NRF Big Show once again did not disappoint in terms of the sheer volume of attendees as well velocity of ideas being exchanged. The 104th edition of Retail’s Big Show, saw 33,000 attendees descend on the west side of Manhattan. It seems every January after NRF my head is spinning from 48 hours of back to back meetings, hoofing around the Javits Center and meeting a number of fantastic and interesting people and companies. It felt like the last two years The Big Show was picking up momentum again after hitting some slow downs due to the general economic malaise of a few years ago.

Once again I was impressed with the number of companies on the main floor as well as the lower floors. I recall being at NRF events were the lower levels would be hosting a different conference – no longer. The big idea talks I was able to attend focused on the next generation for retail – many high lighted the new touch points that will be truly customer centric. Of course where I gained the most insights were from my numerous meetings and hallway conversations. Here are the take aways from my time spent in the Big Apple:

• Push data to the edge of the network. How refreshing it was to not be inundated with Big Data messaging and marketing, okay it did seep its way into some conversations, but fortunately it did not dominate. What was discussed was the ability to push the relevant and actionable data closer to the customer touch points – to the edges of the retailer’s network. Companies like Infosys and Zebra, showcased how they were leveraging a number of devices from handhelds to smart phones to Google glass to bring a higher degree of intelligence and insight at the store level (during the show it was announced that Google glass was being mothballed, whether it is Google glass or another wearable the concept is out of the genies bottle). Think about using an item such as Google glass, or a similar device, to allow your store associates to better service the store shelf. By simply looking and speaking in front of the shelf, the device can give you instant access to see if you have inventory in the backroom or when it will be replenished. Other service providers such as Epicor spoke at length about how they are working to provide a robust front end platform to provide the most complete retailer view, at the edges of the network. By leveraging their platform that ties in all the solutions retailers need to run their commerce, those sitting at the edges of the network have greater intelligence in their hands, or in their tablets and smartphones. Which is crucial for better customer service. Retailers are aware that in order to compete with the online channels, they must empower their brick and mortar presences with the data, analytics and insight to provide the best customer experience. This needs to have information and analytics at the edge of the network – on the ground of the retailer.
• Hardware is cool again. Think smart mirrors, intelligent store shelves, wearables, RFID and IoT. I was impressed with the hardware Panasonic had on display. From smarter cash registers which employed front facing cameras with facial recognition to sophisticated store cameras and audio devices. What I was really excited about was what they have to transform your store shelves from dumb to smart. Panasonic demonstrated a full turn key solution to bring beacons, shelf sensors, smarter pricing tags and video displays. The solution offers retailers the ability to have a view of what is happening at the store shelf based on a digital signal, not relying on constant human monitoring (which we know is not necessarily accurate or timely). With a smarter store shelf, the retailer and their CPG partners will get closer to a real time view of what is really happening at the shelf. Service provider Checkpoint also displayed their RFID technology, which comes from their OATsystems acquisition. The ability to leverage RFID for better monitoring of shipments is one use case. However, the potential use case for retailers is in more accurate order assembly. As an ever increasing number of consumers are looking to order online and pick up in the store, the need for accurately assembled orders by the store takes on greater degree of importance. There was also the smart mirror that Zebra demonstrated. The mirror brings some online retail functionality to the brick and mortar store. Not only will the mirror allow you to “see” merchandise on the patron, but based on what merchandise you are trying on, the mirror is smart enough to start suggesting other products. Just like the experience when we are online and get suggestions based on what we have on our basket. Talk about cross sell and up sell…and impulse buys! These are a few examples of how hardware is becoming cool again. The evolution in hardware is bringing more flexibility, intelligence and online experience functionality to the brick and mortar stores.
• Better servicing of the customer life cycle. With customers wanting to engage anywhere and from any devices, the need for a more complete understanding of the customer is paramount. Whether this is from the fulfillment, marketing or personalization point of view. I met with many service providers that were all tackling the customer life cycle from these angles. One of the key impacts of the JDA – IBM partnership is to have a more complete view of how to manage customer fulfillment. The offering from the partnership is tackling more efficient retail fulfillment – ensuring greater customer life cycle management from the fulfillment angle. Other service providers such a Engage.cx tackle the customer life cycle needs from the CRM perspective. I think that the term CRM does not properly describe what the service provider is offering. The basic premise of pulling customer data from the wide source of available information (regardless of where it was created) and offering a richer customer profile – like what we try to do in our legacy CRM systems – is vital for next generation retail. There are also service providers such as MomentFeed that are tackling the customer life cycle from the focused marketing angle. Retailers strive to have a better profile of their customers, but also to have a more precise way in which to target these customers with their marketing efforts. Focusing on targeted campaigns and leveraging mobility, the offering is addressing a key component of the customer life cycle: making it actionable at the most precise touch point. These are just some examples of solutions that address the growing need for richer and more complete view of the entire customer life cycle. Retailers need to be savvy about how the better fulfill, manage and target their consumers. We are truly driving to personalized retail.

These observations and trends I was able to experience during my time at NRF is all driving at the same goal – reduce the friction between demand, fulfillment, relationship and after sales. Retailers must strive to this seamless relationship between themselves and their consumers. The importance is of paramount importance when it comes to competing with online merchants, who, as we all know, have created massive digital disruption in retail. Retail channels with brick and mortar presences are looking to find solutions that will allow them to compete with the eCommerce players but more importantly pivot their position in the retail landscape and dare I say recapture some of their mojo vis-a-vis the likes of Amazon and Alibaba.

Tagged: New York City, NRF, NRF15, Retail, Supply Chain, The Big Show

It’s Like Facebook For Work. Wait It Is Facebook For Work

Alan Lepofsky

Vice President & Principal Analyst
Constellation Research

Alan Lepofsky - VP and Principal Analyst, Constellation Research. With almost two decades of experience in the collaboration software industry, Lepofsky helps organizations improve the way their employees work together to get their jobs done. Lepofsky’s primary research area The Future of Work, focuses on: integrating collaboration and business processes (Purposeful Collaboration), structuring work via Social Task Management, leveraging analytics and digital assistants to work more productively, the strategic impact of mobile computing on business transformation, and measuring workforce culture based on Digital Proficiency instead of age. Twitter: @alanlepoLinkedIn: https://ca.linkedin.com/in/alanlepo     , Title: Big IdeasIntelligent Collaboration: The Intersection of…...

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On Jan 14th, Facebook officially announced their much rumoured Facebook at Work offering. This private version of the popular social network is designed to provide employees a place to collaborate securely with their colleagues. This sounds like a great idea, if it were still 2010.

In the late 2000s a shift began taking place that was commonly referred to as Enterprise 2.0, or E20. In E20 companies began adopting "social tools" such as blogs, wikis and activity streams to enable employees to communicate and collaborate more openly than they were doing via email. To explain this shift to potential buyers, early vendors such as Socialtext (where I was Director of Marketing), Yammer, SocialCast, Jive Software and others would use the analogy “It’s like a Facebook for the Enterprise". Even though forums and communities have been around since the 70s (the Well, AOL, Compuserve, etc.) a great deal of credit goes to Facebook, for popularising the modern era of social networking.

Around 2011/12 the theme os “Facebook for the Enterprise” began to evolve, as it was not resonating well with executives. They assumed this type of behaviour at work would be a waste of time, sating things like "Why would I want employees sharing pictures of what they had for lunch?" The lack of understanding of how social network could benefit businesses lead to my introducing of the theme of Purposeful Collaboration, where social features were integrated directly into the business tools people use to get their jobs done. Organizations realised that employees need social to be part of the way people work, not a separate destination to go to. This has led to vendors such as SAP, Oracle, Salesforce, Infor, IBM, Microsoft (who acquired Yammer) and others have made sharing, commenting and liking native features of their CRM, ERP, HR and other business applications.

Fast forward to today, where Google has struggled to gain mainstream enterprise adoption of Google+ and vendors like Slack, Glip, Hall, Unify (formerly Siemens) and Cisco have started to blend collaboration and unified communication. So, is Facebook's announcement too little, too late? Not necessarily. Below are a few of the pros and cons of Facebook at Work.

Opportunities

- Name Recognition: Facebook is "the standard" when it comes to social networking. Like it or not, it's a household name. You know the saying "fish where the fish are", well almost everyone is familiar with Facebook to some degree. Sure the demographics are changing and younger people are avoiding Facebook because it's for old people... but those "old people" are the workers of today so why not provide them Facebook at Work?
- Familiar User Experience: Yes, Facebook has had several hiccups when it comes to the design of their timeline, but they remain one of the key influencers on how people use activity streams/news feeds. Since people are already familiar with it, employers can save time and money by avoiding education and training on a new tool. As my colleague Holger Mueller points out, Facebook's popularity forces other vendors to improve their products, which is a win for users.
- Large Partner Ecosystem: Perhaps the biggest plus Facebook has going is the massive ecosystem of developers than know their API and can build add-on tools. While most of the current apps are games, it's not a far stretch to image a shift from Farmville and Candy Crush integration to add-ons for SAP, Salesforce, file sharing, web-conferencing, and other business tools.
- Bridging Employee to Customer engagement: Today many companies already have a "business relationship" with Facebook via their company's Facebook Page. Facebook could provide a compelling solution that bridges private employees conversations with the ones taking place with customers. So for example, a support team could see a question on the company Facebook page and route it to the right product manager to get an answer. Note: I'm not saying this bridging exists today, I'm saying it could be a useful feature if Facebook delivered it.
- Application Assets: Facebook has several applications outside of the news feed that could provide the foundation for a useful business platform. These include: Messenger (for chatting/voip/video calls), Instagram (photos and videos), Paper (displaying news/content) and Events (calendar).
- Massive Mobile Usage: a very high percentage of Facebook usage comes from mobile devices such as phones and tablets. Facebook's experience in this area could be a strong selling point to organizations who's employees require anytime/anywhere access.


Challenges

- Enterprise Software Is Not Consumer Software: Often when consumer companies try and break into the business world they fail to understand that companies have different requirements than individuals. Organizations have to deal with things like auditing and compliance, accessibility, multiple language support, directory integration, administration of people and groups and billing/usage reports. Facebook will need to show that they can meet these business requirements before business will use them for work.
- No Purposeful Collaboration: As mentioned above, companies have shifted away from just wanting a social networking to wanting collaboration tools that integrate with the tools employees use to do their jobs. For Facebook at Work to be successful, they are going to need to provide integration with CRM, ERP, HR, Customer Service/Support, Marketing, Finance and other business software. They will also need to have integrated with functions such as project/task management, file sharing, and web conferencing. This con can be linked to the pro above of partner ecosystem, as the lack of these things provides opportunity for partners to fill in the gaps. The Facebook Custom Stories platform (Open Graph) already has the framework for these integrations, no people just need to build them.
- Lack of Vertical Expertise: It's not enough to just provide a single collaboration platform and try and have it fit all use-cases. Winning collaboration vendors understand the specific needs of industries such as Healthcare, Finance Services, Legal, Manufacturing, Entertainment, Government, etc.  Facebook will need to build teams in each of these areas if they hope to sell into specific industries.
- Privacy Concerns: Warranted or not, most people have concerns about what Facebook does with their information. While Facebook has stated that you will have to switch IDs between personal and work, they still have a lot of work to do to convince organizations that their sensitive and confidential corporate data will be safe on Facebook's servers. The last thing a company wants is an employee "accidentally" posting something publically that they thought was being posted internally.
- Insufficient Search: One of the most important aspects of enterprise software is search. Employees need to be able to find the people, content and conversations they need to get their jobs done. While Facebook is steadily improving their search, it is still very cumbersome compared to most enterprise software. Contrast that to the type of analytics based search and filtering that companies like Microsoft and IBM are now offering, and Facebook has a lot of catching up to do. That said, Facebook's Graph Search has the potential to be quite powerful, so let's see where Facebook takes this in their At Work offering.
- Go To Market Channel: While many business today are using Facebook for marketing, the people who are paying for those Ads and managing Brand pages are not the same people that will be purchasing enterprise wide collaboration licenses. Facebook will need to find a way to reach people with buying authority, whether they reside in IT, LOB, or the executive office.
- Customer Support:   Today Facebook support is primarily an online help knowledge base. They will need a much more robust support organization in order for organizations to feel comfortable using them for critical business communications.
- Pricing: Currently no pricing has been set, but if organizations are already paying for something like Microsoft Office 365 or Google Apps (both of which include social networking) then they will be weary of spending additional funds.
- Competition: Perhaps the biggest hurdle is that there are already so many collaboration solutions available. The list I maintain of social software vendors contains over 50 companies, and (sadly) it is very out of date. Many of these vendors have a decade or more experience providing collaboration solutions, so Facebook may have a considerable challenge on their hands winning deals against these vendors. On the other hand, even after a decade of tools being available the market is so fragmented and no one vendor dominates the space. So perhaps Facebook can capitalise on their name recognition and win a decent percentage of deals. Time will tell.

MyPOV

Overall, I support Facebook entering the business market. They have a product already used by a billion plus people at home, certainly some percentage of those people will be happy also using it for work. I think they chose the right name, "At Work" versus something like "Facebook for the Enterprise", as I don't predict any large organizations will adopt this. There are just too many other choices for them that are better suited to meet the needs or large companies.  However, the millions of small businesses that don't have IT departments and may already be using Facebook as part of their marketing efforts may be quite happy using Facebook for secure employee collaboration.

My advice to Facebook, spend 2015 partnering with large enterprise software vendors so that you can announce integrations that prove the validity of Facebook at Work as a platform people can really use to get their jobs done.

Constellation Research realises that this is just the first release, and we look forward to working with Facebook and their business customers to help move their collaboration offerings forward.
 

The Brave New World of Information InSecurity: Trade PII not privacy

Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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Originally published on December 13, 2011. Updated for relevancy January 14, 2014. 

There is an orthodoxy that privacy is willingly traded by people in return for some sort of reward. Try Googling "trade privacy for" (with the quote marks). I got 181,000 hits! Among other things, people are said to trade their "privacy" for convenience, security, safety, cheaper loans and free phones.

Yet there's a category error here, one we really need to be aware of, in the interests of clear thinking and good policy.

Increasingly what consumers are doing is trading their Personal Information for a gain of some sort. And in principle, that's actually fine by me, and by most privacy advocates. Because privacy and Personal Information are not the same kind of stuff.

Amongst the digerati there is a popular view that most people these days are smart enough to know what they're doing when they sign up for loyalty programs or provide their details when they enter a competition. That view may or may not be right, but it is a sensible position. The important thing is people can and should retain their privacy in the process -- because privacy and Personal Information (or PII) are different things. Data privacy is a state where parties that hold information about you respect that information, and are restrained in what they do with it. Privacy means they refrain from knowing more about you than is necessary, and from re-using PII collected for one purpose for some other purpose.

There is no inherent problem in bargaining your PII with others who happen to value it, but to preserve privacy in these transactions, we need greater visibility from retailers et al of what they intend to do with the PII they collect. We need more sophisticated tools so consumers can fully comprehend what's going on in these data transactions. And we need more precision and rigor in the way we talk about privacy. Let's be clear: there can and should be a fair trade in Personal Information, but not in privacy.

By analogy, we trade money for goods without necessarily losing value, unless the trade in question is unfair. So this is all about transparency, negotiation and fairness -- the same things consumers care about in any transaction.

One of the deep gripes privacy advocates have about today's digital businesses is their opacity. Facebook and the like harvest vast amounts of PII, without committing themselves to any Use Limitation at all, and without even telling their users what they're up to. For example, Facebook's privacy policy is silent on what they do with facial recognition in the background and with biometric templates. Infomopolies make inordinate amounts of money on the back of personal data collected from us without ever acknowledging its true value, let alone negotiating the trade.

And that's the sneaky one-sided bargain at the heart of most social media.

Facebook and LinkedIn tackle the enterprise – what are the implications for the Future of Work?

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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In not really surprising lockstep social network giants Facebook and LinkedIn announced enterprise offerings. For Facebook it is ‘Facebook at Work’ – bringing all the social tools of feeds, posts, messages etc. to the world of the enterprise, limited to the employees of the same enterprise. For LinkedIn it is initially about allowing employees of the same enterprise to send InMails to each other, and then create enterprise level groups to foster content sharing.

 

Implications, Implications…

• Social in the enterprises goes in round 2 – The first round and hype of social in the enterprise is over. The aftermath of the first round has left users and vendors exhausted. Good to see a new spark into this key area of productivity. The way how business users interact, share content, collaborate is ironically more fragmented and likely broken that in the world of a consumer. A Facebook user, a Skype user has likely better communication and collaboration options at their disposal than the enterprise user. Ironic and time to change that.

• Consumerization of Enterprise software finds the next gear – If Facebook and LinkedIn are serious to put their muscle behind this, it will rev up the level of ease of use for enterprise users. Good news certainly, as despite all the talk, most enterprise solutions have not (yet) reached the same level of usability as consumer grade applications. 

• Users may win – Especially the Facebook offering will be a big win for users. The 1B+ Facebook users are ‘suddenly’ familiar with their enterprise communication and collaboration tool. Adoption, comfort levels could reach a new height for enterprise users. 

• Practitioners face challenges – For the HR practitioner this will be initial headaches, as another system will have to be maintained, updated and monitored. And the blur of private and professional – with all its pros – has some chunky cons, too. 

• Established vendors need to step up – Assuming both Facebook and LinkedIn will not focus elsewhere soon – then ease of use and pricing of established vendors will be under pressure. While Facebook and LinkedIn ultimately need to find monetization alleys for this offering – they can take a more relaxed approach than the established vendors. 

• Partnerships on the horizon – There should be no surprise of some smaller enterprise vendors and adjacent vendors (e.g. in Content Management) will gladly defer and partner with LinkedIn and Facebook as their core communication and collaboration vendor. This will help them to focus R&D investments and Facebook and LinkedIn get a step up into enterprise and open new revenue alleys. 

MyPOV

The real question is – what took Facebook and LinkedIn so long? One can argue they had to solidify their leadership position with consumers, but that as not really anymore a contest for Facebook overall and for LinkedIn for business consumers. As I have blogged earlier, LinkedIn is de-facto probably the number #2 or #3 HCM vendor already – through its personal and recruiting subscription revenues – but did not act like a HCM vendor.

Overall I see this as a good change for the Future of Work, as it will spark new life into both usability, adoption and the overall a little sleepy social market for enterprise. It also will start a new conversation on identity, something that the traditional enterprise vendors with the notable exception of Salesforce.com (Identity Connect) have largely ignored. But in the short term it creates new headache for HCM practitioners, who have another network and user setup to manage. If Facebook and LinkedIn will leave it with the personal productivity, communication functions will remain to be seen. Exciting times ahead.

My colleague Alan Lepofsky has a great take on Facebook's new offering, too - please visit his blog post here.

What is your POV? Please share!

Internet of Things; what happens when ‘sense’ needs the ‘respond’ to come from an existing ‘legacy’ enterprise application?

Andy Mulholland

Vice President and Principal Analyst, Constellation Research
Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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There seems to be a belief that the value lies in the data, the information as to what has changed or is happening, and that may be so, but surely the ‘sense’ part will only provide business value if coupled with a ‘respond’? It’s likely that this requires the IoT data to assessed, and then used as an input to start an existing internal, or Back Office, enterprise application set of processes.

Research report now available: The Foundational Elements for the Internet of Things (IoT)

The whole point of IoT is to create new, additional value to a business, and its operations, a point made in the previous blog entitled ‘Internet of Things; Enterprise Value = Integration, Automation and Scale’. The opening observation I this blog stated “Standalone IOT reporting Services have the same challenge as standalone online Web based ecommerce systems a few years back. Great for pilots and proof of concepts, but sooner, or later a victim of their own success and requiring proper integration into existing order systems”.

This blog then drew attention to the Salesforce approach to IoT integration as a ‘Front Office’ activity, best delivered within the integrated Front Office ‘services’ environment using Salesforce products and methods to ensure optimum Business alignment.

It’s an approach that makes perfect sense, certainly for a Service based industry sector where their own product will probably also be a ‘Service’. However that’s not right for every business as SAP were quick to point out in their pre Christmas briefing on the SAP approach with its focuses on a different set of industry sectors and business models.

SAP point out that there are a lot of Industry sectors with Business models that require the ‘respond’ to a fulfillment provided by a complex set of internal Enterprise processes; think of Manufacturing, Mining, or even compliance centric activities such as Insurance.

Again it’s an approach that makes perfect sense providing, as indeed does the Salesforce approach, because each offers something very different to cater for a very different business model. What this does show is just how careful an assessment is required of exactly what your business model is, and does requires in terms of functions, before considering the technology capabilities required.

This is most decidedly not making the case for everything to continue ‘as is’ with Business requirement management by IT in the familiar manner. But it is making the case for a more thoughtful approach to where and how an  Enterprise IoT strategy will add value to the business model.

The topic of rethinking enterprise wide business functions in a genuine Digital Business model is a separate issue dealt with in the blog series; ‘Understanding your Digital Business Model by its Business Functional Requirements for Operational Technology’. In this blog the focus remains on out lining the SAP approach to IOT integration with Enterprise Applications, and of course ERP.

The opening statement reflected on the value of data coming from IoT sensing, and that for SAP means HANA, but it means more than the role of HANA as the classic provider of Big Data Business Intelligence.

In the mass of data that IoT sensors will pour into the enterprise lies a ‘real time’ challenge to process and sort out the ‘wheat from the chaff’, i.e. the valuable grain from the mass of straw.

SAP say that this is exactly what HANA is designed to excel in providing with its exceptional processing rates. In the IoT and Digital Business front office environment the goal for HANA is deliver ‘Smart Data’ meaning small highly valuable easily understood ‘triggers’ to people, or processes. The SAP integration model makes use of these smart data ‘triggers’ to both assess what applications and processes should be launched, as well as providing the data as the input to start the process.  Now the existing internal ERP, or other applications can provide the enterprise ‘respond’ capabilities from the existing optimized capabilities.

SAP has some excellent case studies to show how their approach works when the requirement requires fulfillment from the enterprise ERP. Two excellent examples are; Real time operations management through integrating IoT to Back Office ERP integration at Hamburg Port Authority, or HPA, and transformation of manufacturing at Harley Davidson.

HPA use IoT to sense more than 400 critical points in their port operations, which are connected to their SAP Connected Logistics enterprise ERP package. The resulting understanding of exactly what is happening ‘on the ground’ around the port has resulted in significant gains in the through put time taken to handle containers passing through the port. The result is the ability to handle more revenue-producing container through put with the same port faculties.

But the real case study that should make any senior executive realize how a well-integrated Digital Business is transformed in both its competitive capability, as well as its output, is Harley Davidson. An iconic brand that is driven by purchasers wanting their customized dream motor bike.

Harley Davidson claims to be manufacturing 25% more Motorbikes with delivery times for custom builds down from 21 days to 6 hours by integrating IoT sensing of critical points with their SAP Connected Manufacturing application.

These SAP case studies, like those of Salesforce, illustrate the huge importance that IoT to making Digital Business a reality in terms of creating a genuinely new competitive landscape. They show IoT being applied in different industry sectors, in different businesses, and in different ways, but what they all have in common is a deep understanding of the role IoT with the other new technologies can play to transform competitive, or operational, capabilities.

Today there are a selection of Case studies available that reveal much about the need to fully understand what is meant by the Digital Business transformation, and its more, much more, than just adding a set of new offerings either ‘bolted on’ to the current ‘Back Office’ IT systems, or even as a standalone ‘digital’ business operation. 

Research report now available: The Foundational Elements for the Internet of Things (IoT)

Ben & Jerry’s: Aggressive Customer Acquisition During “Low Season”

Partner, Sensei Marketing
Partner, Sensei Marketing

Sales & marketing veteran with almost 30 years’ experience and now 1800 digital projects to his credit for clients including Morgan Stanley, AOL, Hyatt Gaming Management, Snyder's of Hanover, Hitachi, the Home Depot, Kraft Foods, Drees Homes, American Idol, and hundreds more, including leading agencies around the North America.     ...

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You think your business has customer acquisition issues? Consider the plight of ice cream manufacturers and retailers during the winter months!  Eating ice cream – let alone buying it – during the cold winter months is about as counterintuitive as buying sunglasses in London, England, where clouds and rain are permanent symbols on the weather forecast.  Yet January to March is an important time of the year for supermarkets selling ice cream and even more so for manufacturers.

Supermarkets and manufacturers like to keep freezer shelves stocked with ice cream during the winter months as a form of advertising; the consistency of seeing the ice cream labels during low season increases product desire when the weather heats up.

It’s Hot to be Cold

Many manufacturers lay low and cut costs during the low season. Toy makers, for example, hold most (if not all) of their marketing budgets for the Thanksgiving to Christmas time period. The “strike when the iron’s hot” strategy seems to work for them. However, what  revenue or opportunity is left on the table by not actively attempting to acquire new customers during the rest of the year?

For manufacturers like Ben & Jerry’s, the low season of January to March is seen as the perfect time to acquire new customers.  Where many firms use the low season to cut costs by decreasing activity, Ben & Jerry’s becomes more aggressive. Each year it introduces new specialty flavors during the winter months to entice reticent consumers to purchase their cold treats.

Today, Ben & Jerry’s announced the launch of three new flavors, which join the brand’s existing “core” lineup of ice creams that have such fillings as fudge, caramel, and raspberry jam. The new products are Boom Chocolatta! Cookie Core, Peanut Buttah Cookie Core, and Spectacular Speculoos Cookie Core. The center of the ice cream has a texture that’s kind of like cookie dough, but crunchier, says John Henry Siedlecki, senior brand manager at Ben & Jerry’s.

Buy When the Market is Down

Real estate and financial moguls will tell you that the secret to success is  buying or investing when the market is poor, not when the market is booming.  For manufacturers, those moments when the competition is lying low or periods when a product or service is less convenient might be the optimal time to be more aggressive with customer acquisition budgets and strategies.

Low season is also a good time to experiment with new products or service offerings, which can help differentiate the brand.  At a minimum, the strategy will help maintain an ongoing dialogue with customers, just when their attention would otherwise be diverted elsewhere. When the product is back in season, the brand is top of mind.

Sensei Debates

Marketing in low season is too expensive and too risky for the possible rewards. Agree/ Disagree? Why?
Join the conversation in the comments below.

A Radical Manifesto for Tech Pioneers: Peter Thiel's Zero To One is Thomas Paine's Common Sense

Constellation Orbits
Marketer & Storyteller

Anurag Wadehra has led marketing at several private and public software companies in the technology areas of mobile, eCommerce, advertising and data management: such as at LivePerson (LPSN) and Siperian (acquired by Informatica INFA) among others. Prior to that, Anurag was CEO & Co-founder of Chingari, a software company designed to help businesses improve success rates of new product launches. Additionally, he served in senior marketing positions at Kraft Foods and Procter & Gamble. Anurag has an MBA from the University of Chicago and B.Tech in Electrical Engineering from the Indian Institute of Technology. He is a lead mentor at Stanford's accelerator StartX and an avid film buff. ...

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Building a new world order from technology requires covert operations of today’s revolutionaries. 

In his provocative book, Zero To One, Peter Thiel offers a view of entrepreneurship that is radical, in the original sense of the word. That is, it goes to the root of entrepreneurship: how to take bold risks to create a better future. Thiel believes that an entrepreneur should build a lasting company, not merely a successful one. One that is, by his definition, a defensible and durable monopoly and generates significant future cash flow. In this context, monopoly is not a pejorative term but a definition of sustainable business advantage over time. And what kind of entrepreneurs are needed to build such companies? Those who have a revolutionary zeal to pursue their goals matched with the ability to bend nature and consumers to their will. This is not a hand book for building a run-of-the-mill company to cash in on the latest tech trend. It is a pamphlet for tech founders who aim to pioneer new industries and conquer new worlds in some cases literally as in Elon Musk’s ambition to colonize Mars.

 

And as pamphlets go, Thiel’s Zero To One has a few elements in common to the Thomas Paine’s Common Sense. Once you get past the obvious differences in form, content and style between the two pamphlets, you notice a common purpose: to persuade the reader to question the conventions of current rulers, to come down from the fence and embrace a new, radical order. For Paine, the purpose of his pamphlet was to rid monarchy and gain support for constitutional democracy based on liberty. He crafted his message to appeal to the commoners of his era. Similarly, Zero To One has the polemical style designed to appeal to today’s revolutionaries: the entrepreneurs. Thiel rails against the culture of risk aversion and the current obsession among founders with incremental innovations (“We wanted flying cars, instead we got 140 characters”). He asks for a bold future in which technology pioneers run global, monopolistic companies to improve and extend human life. Like Paine, Thiel offers a recipe on how to achieve this future.  

 

In brief, here is Thiel's manifesto, as I interpret it, for the tech pioneers of today. 

 

Begin with an secret

Thiel begins with an insight on how to identify the kind of company nobody else is building.  Unlike most investors who ask founders to start with a vision, he asks them to be begin with a secret. He is right in that a vision is a dangerously vacuous endeavor. When asked to espouse one, most founders are prone to hyperbole of market trends ("social meets cloud meets internet of things, kind of like Uber for mono-cyclists)”.  Others simply extrapolate their product into the future.  In most cases, the founder's vision is simply an imagined set of uses of inflated product features targeted at all and sundry.

 

However, Thiel defines a secret in more precise terms. A secret is as an insight shared by the founder about the state of the future which is not generally accepted by others, and often contrary to popular beliefs prevailing in the market. There are of two kinds of secrets uncovered by an entrepreneur: those of nature (e.g. Shockley et al invented transistor) and those of people (e.g. Zuckerberg perfected how humans share photos online).  So, the founder must invent or discover a secret, as the first step; then develop a definitive view of how the secret shall affect the future. Not surprisingly, most entrepreneurs fall short here since they are not pioneers. They would rather build a product than an industry.  

 

Build a cabal 

For the pioneer with a newly minted secret, the next step is to attract others who agree with the truth of the secret. According to Thiel, “a startup is the largest group of people you can convince of a plan to build a different future.” This shared view of a different future is what animates the cabal of early employees, investors and customers. It is the unique way the startup solves the problem that offers the basis of building a long-term monopoly - and a happy company. Happy as in successful: well payed employees, richly rewarded investors and satisfied customers. Again, think Google, Facebook and Tesla. The mantra is: "All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.” But how exactly does a startup engineer a monopoly? 

 

Run a covert operation

Thiel lists four characteristics of a technology-based company that can create a monopoly position. Of course, the foundation should be the technology; it must be an order of magnitude better than available alternatives - and it must be proprietary. To be ten times better is a good rule of thumb in most industries. The second factor is to generate network effect; that is, the technology should be adopted rapidly among consumers through word of mouth and social recommendations, or in case of business, through enterprise endorsements and references. Ultimately, the evidence of network effect is that the value of technology increases with adoption of its usage by every new member. But to achieve this effect, Thiel suggests that founders should bootstrap companies in a niche. They should fine-tune, prove and build the positive effect of networks in a niche market for which the technology is ideally suited before casting it wider to broader but less suitable audiences. This shall keep the company under the radar, away from competitive attention. Third, once the technology and its adoption is underway, the company should build the economy of scale - that is, expand with lowest cost curve - with the goal to deepen its competitive moat. And, finally, the company should build and defend its brand to become the de facto standard for the category. While Thiel doesn’t state this, it is clear that the order of things matter. Building a brand comes last, building a 10X technology comes first. The main idea is that the company builds these operations covertly to create a monopoly position while staying away from limelight as long as possible. 

Stay in the shadows

Thiel suggests that a company hide in plain sight. Its secret should attract only the few who believe in it; its operations must run lean until it is ready to draw attention. And, as an interesting corollary, it must ignore competition and not use large established companies as foil. “The act of creation is far more important than the old industries that might not like what you create,” he writes. He observes an interesting use of signaling theory where in "monopolies disguise their monopoly by framing their market as union of several large markets” in order to appear smaller in scale and influence. As evidence, Microsoft and Google in every antitrust suit define their respective markets much more broadly to show their share of it as low as possible. Also, burgeoning monopolies don’t toot their horn and are secretive about their plans.  Incidentally, the opposite is true as well: "non-monopolist exaggerate their distinction by defining their market as the intersection of various smaller markets,” to inflate their influence in them.  They chase the sizzle, make noise in advance of success and often claim “we’re in a league of our own”.  

Aim for a new world order

Finally, Thiel’s advice for those seeking to build a new future is to keep an eye on the prize: the end game. He quotes grandmaster Jose Raul Casablanca: "to succeed, you must study the end game before anything else”.  A pioneer should aim not to be the first in the market but to be the last one standing when the game finishes, and the new order has emerged. This means understanding not just the technology innovation, but the entire ecosystem of partners who come to complement the innovation.

 

In summary, Thiel’s Zero To One is nothing short of a blueprint to build a hegemony of technology titans. Like any call to arms, most entrepreneurs - and their companies - shall never fit the bill since most innovations are derivative in nature. But for the few radical technology pioneers who wish to emblazon a bold future, this is the essential playbook.