Monday, February 2, 2015
Silicon Valley, the southern region of the San Francisco Bay Area, is a darling of the world. It is mysterious. It is sexy. It is rich. Every other city around the world wants to be like Silicon Valley. Everyday there is a delegation of government officials or entrepreneurs visiting Silicon Valley to understand how it works. The French president was here last year. The Swedish royals will be here next week. Most big European and Asian technology companies have outposts in Silicon Valley just so that someone can organize meetings for their executives with Stanford, Google, and Facebook. There are people who have made careers out of "innovation tourism" and telling people how to create a startup and how Silicon Valley works.
Despite many popular theories like Silicon Valley is an accident or all you need is a “lean startup” (that is, don’t spend too much money before you understand customer needs), the best way to understand how Silicon Valley works is by understanding evolution. Evolution works through the principles of replication with variation and selection with competition. Genes get replicated from one generation to the next and each copy is a little bit different than the original. Then the copies compete with each other and the best ones get to reproduce and so on.
Silicon Valley has an environment that enables evolution’s replication with variation, and selection with competition. Think of a gene as an idea that gets "hot". A lot of people jump on that idea and create startups. There are at least 50 dating startups in Silicon Valley today. Since the culture is open, people talk to each other and they pitch their ideas all the time. Each startup adjusts and creates a variance from other startups. Venture capitalists like investing in what's hot, so many variations of the same idea get funded. There were at least thirty search engine startups around when Google started. These startups compete with each other and eventually one of them succeeds in becoming the dominant player or in getting acquired by a big corporation. For example, after Google came about, Yahoo acquired Alta Vista and many search-related startups were acquired by Microsoft to be rolled into Bing.
The fate of the other startups is not as bad as for genes. A lot of startups get acquired by another startup that is getting bigger or becoming the most successful. Facebook acquired ConnectU, FriendFeed and many other social networking-related startups. Even if your startup does not get acquired, the chances of you getting a job with the successful startup are high because you have experience in the new domain. So, if you are in the right category, the risk of doing a startup is not that high.
If you are a region that wants economic growth, how do you apply this understanding of the workings of Silicon Valley? You can’t change your culture overnight. And, Silicon Valley is a hub for the world not just for the US. No other region has the scale of Silicon Valley in terms of startups and access to capital. So, it is extremely tough to create a mini-Silicon Valley.
When I worked with Swedish government agencies in the southern part of Sweden (Region Skåne), my recommendation to them was to focus on what they are good at and not try to do what Silicon Valley is doing which is mainly software. Since Region Skåne does not have the scale to do replication with variation and selection with competition in many domains, I advised them to select one domain and focus all of their resources and capital on that. Region Skåne excels at wireless communication technologies. Bluetooth and the first Smartphone came out of that region. Furthermore, the region has a history in medical innovation. The first artificial respirator and the first artificial kidney were invented in Region Skåne.
Sweden has the added benefit and competitive advantage, that one central organization, Region Skåne Public Healthcare System, is responsible for $7B in healthcare spending every year. So, the domain that makes sense for them is mobile health (mHealth) because of the local talent available in wireless communication technologies and medical technologies and the economic opportunities mHealth creates. mHealth connects wireless technologies with healthcare systems to make healthcare prevention-focused rather than cure-focused as it is today. One practical application is the data, heart-rate and calories burned from your fitness bracelet could go directly to your doctor and you would be warned by the doctor when a change in your patterns is noticed. Additionally, Silicon Valley will have a tough time excelling in this space because of the complexities of the US healthcare system.
In an effort to replicate with variation the success of Silicon Valley, you must determine what your region excels at and create competition within the domain you excel at. Good luck!
This article was originally published on Forbes.com on January 18th, 2015.
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The Internet has dramatically changed how I and the three billion people, who have access to the Internet, live our lives. It has created new jobs, provided unprecedented access to information, made people more productive, facilitated global trade and political expression, and reduced inequality all over the world. It is tough to imagine life without the Internet today. When I go to online dating sites where I have to answer what are the top five things I cannot live without, usually the iPhone (access to the Internet everywhere) is on the top of my list.
Telecommunication companies like AT&T, Verizon, and Comcast have done a great job building the infrastructure that enables us to access the Internet. There is a fundamental rule about the Internet called Net Neutrality that treats all traffic as equal, i.e., a telecommunication company cannot give preferential treatment to traffic. For example, Forbes and Fortune are treated equally as users.
Now, some of these telecommunications companies (telcos) are lobbying to be able to create a tiered system for the Internet – a virtual fast lane and slow lane. If things go according to the telcos’ plans, a company like Fortune can pay to Verizon, to have its traffic on the fast lane resulting in a better user-experience. Then, Forbes will have no choice but to pay up to Verizon. So, in this imagined world, the telecommunication companies make more money and the costs for content providers like Forbes will go up. How will the content companies recoup these costs? They will charge their customers more. You and I will pay more for everything on the Internet. What if you are a startup that wants to compete with Forbes and Fortune? How will you compete? You will have to pay up to Comcast as well. The costs of starting a new business will go up. And, that means less competition for existing players and less innovation. Do you see why you should care about Net Neutrality?
I can see why telecommunication companies want to maximize their profits and returns to shareholders. All companies do that so they are not doing anything unusual. The crux of the debate is what's good for corporations vs. what's good for citizens of this nation and the world.
I recently sat down with the Honorable Terry Kramer, former US Ambassador and telecommunication executive, to get his views on Net Neutrality. I have known Terry for five years and we served on the World Affairs Council board together. Following are the edited excerpts from a telephone interview:
Chander: What is Net Neutrality?
Terry: In essence, Net Neutrality is the idea that all traffic on the Internet should be treated equally. Carriers of Internet traffic (telecommunication companies) should not be able to decide if some traffic is better than other traffic or charge for the delivery of data traffic globally. This was a position we advocated globally while I was leading the U.S. delegation to the ITU World Conference on International Telecommunications.
Chander: Is there a difference between how Net Neutrality is applied to wireline networks vs. wireless networks?
Terry: The basic idea is the same; that is, all traffic should be treated equally. However, wireless networks are more dynamic in nature. The coverage and speeds you get depend on your physical location and how many other people are using the network. Wireless networks are much more limited in capacity since they use specific airwaves to carry the traffic and these airwaves are in short supply.
In the US, wireless telecommunication operators like AT&T and Verizon now have metered plans, that is, you can only use a certain amount of data with your monthly subscription. You pay more to use more. This is done to overcome the capacity issue. On the other hand, the wireline operators, like Comcast, charge different rates based on the speed you get for the Internet connection. In addition, the extra cost of delivering Internet traffic on a wireline network is not the same as it is for a wireless network.
The US system is not broken and we have to take steps to protect it!
Chander: Well, The US is number 33 in the latest Ookla speed rankings for wireless broadband download and number 28 in wireline broadband download. Small countries like Estonia are ahead of us. I think we can do better. Moving on, in a world without Net Neutrality, how will the next Google or Facebook get started?
Terry: Without Net Neutrality, small companies and NGOs (Non-Governmental Organizations) could be harmed the most. And that is not the spirit of our country's political and economic beliefs. Without Net Neutrality, content companies could be forced to pay by the amount of traffic they generate. Small players and NGOs do not have the ability to pay these costs. A result? We may see a reduction in Internet traffic. This would hurt both telcos and Internet companies. While it's understandable the telcos are seeking to protect the current and future investments they need to make, I believe everyone wants to avoid the "slippery slope" of introducing more and more fees for content players to deliver their traffic and in essence risk the future vitality of these businesses-many of whom are small and growing today.
For startups, the lack of Net Neutrality could increase the costs of raising capital since the predictability of startup costs decreases. Hence, we might see less venture capital going to Internet startups.
Enabling startups and small businesses is a competitive advantage of the United States. We don't want to risk losing that.
Chander: Recently, President Obama weighed in on Net Neutrality. What exactly did the President tell the Federal Communications Commission (FCC)?
Terry: The FCC does not take "orders" from the President as an independent regulatory agency. Given the importance of this issue to the National interest, the President presented his view to the FCC. However, the FCC is still deciding on its approach to this issue. .
Currently, broadband is classified as an information service and as a result, the FCC has limited authority over what it can tell the telecommunication companies to do. Verizon took the FCC to court on this matter and the FCC lost. The FCC is an independent agency and its job is to regulate and protect the interest of Americans. In order for the FCC to have authority over the Internet, the Internet must be reclassified as Title II of the Telecom Act of 1934. Wireline telephone service is governed under this jurisdiction. Until this reclassification, there will continue to be court cases and no one is going to win.
Chander: China’s ecommerce is bigger than ours. What you do think China's views are on Net Neutrality?
Terry: During our ITU negotiations, China seemed more interested in the "political side" of the Internet than the commercial side. The Chinese government was more focused on the ability monitor traffic flows--in essence what many would be concerned represents censorship. . They seemed more focused on traffic monitoring than they did the economics of charging for delivery of traffic.
Chander: Why don't we make broadband a utility like the electricity?
Terry: It will inhibit investment. I am pro Net Neutrality but I do realize that regulation can be overdone. If broadband is regulated like a utility, it could discourage network investment, competition and innovation amongst the telecommunications companies. . It wouldn't be good for consumers in the long run. What we need is a set of rules of engagement from the FCC that fosters competition and brings innovation and choice to consumers.
Chander: You have worked for the US State Department, for a telecommunication company [Vodafone], for startups, and you live in the San Francisco Bay Area where much of the innovation happens as it relates to the Internet. Hence, you have a very unique perspective on the Net Neutrality issue. The telecommunication companies and the Internet startups in the Bay Area are on the opposite ends of the debate. How did you pick the pro Net Neutrality side of the debate?
Terry: You cannot look at Net Neutrality in a polarized way. Overall, everyone has benefited from Net Neutrality. The Internet has been the single biggest driver of job growth in the US. The increased Internet traffic flows have helped the telecommunications companies. The Internet is reducing income inequality, increasing innovation and capital investments. Also, it is making life easier for consumers. It is also giving consumers more choice and making employees more productive. Why would you want to mess up such a great thing [Net Neutrality] for our country?
This article was originally published on Forbes.com on December 16th, 2014.
Thursday, December 18, 2014
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Sunday, December 7, 2014
I frequently speak at conferences on many topics including innovation, leadership, and the future of mobile technologies. At these conferences, young people often ask me for career advice. I am reminded of my younger days when I was looking for the same. Wisdom from a few people has greatly influenced my thinking and actions. Please keep in mind there are no silver bullets. But if you are willing to work hard, be patient and open your mind, you may achieve more than you ever dreamed possible.
Following are the seven guiding principles I’ve used for happiness and success.
Following are the seven guiding principles I’ve used for happiness and success.
1. Learn. You have to be learning all the time. Don’t just learn about the job you are in. Learn how the business operates. Learn about the value-chain your company is a part of. Learn how your competitors do things differently. Think about how technologies can disrupt your industry. Understand your learning style. Do you learn more from sitting in a class, reading a book, doing, or listening to stories? Test what you learn by applying it to the real world.
This article was originally published on Forbes.com on November 28th, 2014.
Thursday, November 27, 2014
The tech industry produces thousands of new products every year. How many products do you notice? How many wow you? Not many. The first iPhone wowed me. Google Search was awesome. Prezi was so cool. After these few examples, I really have to think hard on memorable products. The tech industry employs millions of very smart people worldwide. Most tech companies have a lot of cash. So, how is it that very smart people with a lot of money produce so many unmemorable and even bad products?
To understand, we have to examine how product development works in big tech environments . I have lead product development for many goods in the tech world. Let me take you behind the scenes.
In any big organization, division of labor is in full force. Marketing and engineering are the two main groups involved in product development. To get started, someone in the marketing group writes a document called an MRD - Marketing Requirements Document. This document is supposed to show what the market needs are and what customers want. Someone on the engineering team converts the MRD into a PRD – Product Requirements Document. This document is supposed to have the product features, timelines, cost, etc. to show how engineering will create the product to meet the market needs. To make it all work a project manager or program manager (PM) is assigned to launch the product. The program manager measures three things:
1. Product Features
2. Deadlines (time)
3. Budget (money)
Are you confused yet – MRD, PRD, PM?
A lot gets lost in translation between the marketing and the engineering teams. Feature specifications, time, and money are all estimates in both documents. Marketing teams often put in as many features as they can think of, without any reason to include them other than to avoid being blamed for missing out on customer needs. I know people people who have never met a customer and who have written market requirements. The engineering team certainly doesn’t meet the customer and they interpret marketing’s ideas through a technical lens. Misinterpretation and misunderstanding has already begun.
|Amazon Kindle Fire Smartphone- Do you know anyone who has one?|
There is quite a wide variation in terminology depending on whether the tech company is making hardware, software, or both. The basic process is the same, though. Someone captures what the market needs and someone else figures out what the company can deliver. How that happens varies widely as well. In all cases, what is measured by the PM is Product features, time, and money. I have never seen everything run according to the plan. What happens when the plan isn’t met? Most people are reasonable so they make compromises to meet money, time, and product feature targets. Incentive plans in big organizations are based on meeting targets so people work toward that. You can meet all the product features, time, and money targets and still produce a bad product. Which happens often. Look at Samsung Gear, a Smart watch. It has all the features, it came out on time and still nobody is buying it because it is aesthetically unpleasant and difficult to use. Or, the Amazon Kindle Fire phone. All the features in the world. Came out when the company wanted it to. And, even with an almost unlimited marketing budget, a huge built-in customer-base and Amazon virtually giving it way, it has very few adopters. Why? It’s a product that fulfills Amazon’s needs, but not their customers’.
|Samsung Gear - Searching for a market|
To resolve the product mediocrity disconnect, the new thing in big organizations is innovation teams. These team members are supposed to be creative thinkers, have empathy for consumers, have the freedom to dream up new products and are not bound by quarterly revenue targets. Sounds like a good idea? Sadly, it never works. People on these teams do not understand the company’s products and the company’s core-competencies. They are hired from the outside and kind of remain outside the company. They think the answer to everything is post-it notes and design thinking. The product teams never listen to them because of they perceive the innovation team as lacking depth and understanding of their company’s products and customers. The innovation teams remain in their bubble and make fancy presentations for the executives, but have little to no impact on the ultimate product development.
|What if any of this worked?|
Unless you have someone like Steve Jobs who is obsessed with design and the User Experience, the product you get is a sum of compromises. It is a measurement problem. People measure the number of features, deadlines, and budget. Nobody measures the User Experience (UX). How do you measure UX? It is really hard to do. It is similar to the “what is good art” debate. The best way to measure UX is to do a lot of usability testing with the users. Observe their reactions, their emotions, their body language. Ask the right questions. Find harmony amongst aesthetics, intuitiveness, and function. You can’t squeeze UX into a feature-set. Test, Observe, and Iterate has to be the approach.
Excellent products are almost always a result of the vision of one person and not a compromise of many people. Tesla, which is a car company, but considered a tech company in the Silicon Valley, has an autocratic CEO, Elon Musk, who, like Steve Jobs, dictates the UX. Both the iPhone and the Tesla are category defining products. People stand in lines, or wait for months to get these beautiful, useful, ground-breaking, delight-inducing products.
Whoever is responsible for product development has to dictate the UX and try different iterations of the product internally before the product is launched in the market. The fashion industry is dependent on producing many, many new products every year. All the clothing and accessories you see are ultimately the vision of a single designer. Designers try a lot of designs and only some of them become appealing to the users. I realize that it is hard to do this in the tech world given the enormous costs of developing hardware and software. However, this philosophy of the product being the vision of one person and trying different iterations can and should be applied to tech to create superior products that the market and customers so desperately crave.
This article was originally published on Forbes.com on November 12th, 2014.