— SimonWaldman.net

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Disruption

One of the interesting things about Twitter when you’re giving a talk is the immediate crowdsourced selection of your best soundbites. Sometimes, these are the bits you were expecting – sometimes not. It’s not scientific, but it’s the only way you can find the bits that make some kind of impact, rather than the bits that are funny, or – if you’re getting any editorial coverage – deemed ‘newsworthy’.

I do very little speaking these days, but last week I did a slot at IAB Engage – on digital disruption the next 20 years. Rather than make you endure the whole lot – these are the bits that got tweeted.

‘Success in the digital world has a half life of two years’

I saw a piece on slashdot by a tech recruiter saying that tech skills have a half life of two years. It made me think that in my experience the same is true of success in almost any digital environment. If you keep doing the same things, you’ll find they’re half as successful after two years. Which means you either have to do twice as much, or come up with something new.

Games consoles are the Trojan horses of disruption in our living room

It’s been remarkable watching the uptake of LOVEFiLM’s PS3 service. These devices are so, so powerful – and I think with the coming Xbox launch we’re only just scratching the surface of the disruption they might cause.

‘The best internet businesses make magic seem normal’

I’ve said this before, and it seems to strike a chord. Since I first typed it, I’ve been thinking about how some businesses fail to really break through to the mass market, because they do something that’s magic, but it still feels like magic. Augmented reality is one example. I may be way off the mark, but Siri might just be another..

The one I forgot to say..

‘Great digital work is forged by creativity and honed by data’

I’ll come back to that later..

Oh and my biggest laugh…

[Providing a bit of context for 1991, the year that the web was opened to the public]

1991 saw the death of Freddie Mercury and the birth of Pixie Lott…that wasn’t a very good deal, was it..?

Yes, I think my stand up career can be put on hold for now..

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If the internet has been the technology story of the last 20 years; disruption has been the business story. And I see no reason why both of these stories won’t continue in their intertwined way for another 20 or 30 years to come.

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Evans cycles yesterday completely lived up to their promise of price-matching for me. As an early Xmas/ birthday treat I went in to buy a pair of winter cycling boots, that I knew were £20 cheaper on wiggle, but I really had to try on.

In true modern shopping style, I phoned up Evans to find the exact pair I needed were in stock; went to the store, tried them on – then whipped out my phone to show them cheaper on wiggle, and they instantly (and I should add very happily) matched the price; and did the same for a pair of cleats that went with them.

On one level – good for them. Great service – and I’ll happily shop that way again. But ouch on those margins.

 

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In a few weeks time I’m giving a talk at IAB Engage on ‘Digital Disruption: The next 20 years’. At the same time, I’m also thinking back at my book, and how things have changed a year on.

So, I’m on the hunt quotes and insights from people who are much smarter than me.

First came Marc Andreessen’s Software is Eating The World; and now comes this neat piece in McKinsey Quarterly about the digital world as ‘The Second Economy‘.

I particularly like this description – and the words I’ve put in bold..

I’d say it is vast, silent, connected, unseen, and autonomous (meaning that human beings may design it but are not directly involved in running it). It is remotely executing and global, always on, and endlessly configurable. It is concurrent—a great computer expression—which means that everything happens in parallel. It is self-configuring, meaning it constantly reconfigures itself on the fly, and increasingly it is also self-organizing, self-architecting, and self-healing.

These last descriptors sound biological—and they are. In fact, I’m beginning to think of this second economy, which is under the surface of the physical economy, as a huge interconnected root system, very much like the root system for aspen trees. For every acre of aspen trees above the ground, there’s about ten miles of roots underneath, all interconnected with one another, “communicating” with each other.

via The second economy – McKinsey Quarterly – Strategy – Growth.

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This is my latest column for new media age. Their version appears here.

On Sunday morning, with my children insisting on watching the DVD of Horton Hears a Who for the gazillionth time, I watched the England v Georgia world cup rugby match on my laptop.

There was no fanfare. I didn’t need an instruction manual. I just searched for ‘ITV world cup rugby’, clicked and played. legal, live stream came all the way from New Zealand into my kitchen in rural Surrey. Magic.

Even though I spend my entire life online, there was something about the sheer ease and normality of this, and the way it ‘just worked’ that slightly took me back.

As my children were not at all interested in this, I tweeted, saying that ‘I’m still amazed when things like this actually work’; at which point the Guardian’s Josh Holliday responded ‘Me too…when it’s ITV’.

A bit snarky? Yes – but also an important point. We’re no longer in the world where only the BBC can a)feel the need to do a live internet stream of a big event b)be able to justify it financially and c)actually deliver it.

Good for ITV. Good for us as consumers.

Arthur C Clarke famously said that ‘any sufficiently advanced technology is indistinguishable from magic’. And, yes, after 20 years of the world wide web, the internet has reached that zone previously held by TV and radio and indeed electricity itself, where it is both completely magical and completely normal at the same time.

We take it completely for granted that you can type in any phrase, and instantly be told where it appears among the petabytes of data on servers across the world.

E-commerce, done well, has a feel of magic around it. You think. You search. You click. And the next day anything from a bag of pet-food to a sofa appears at your door.

Reading books on your kindle; downloading music onto your iPod; streaming movies through your games console; getting all the benefits of the internet in the palm of your hand, wherever you are in the world; or looking at a 360 degree view of a hotel room online, booking it and arriving and finding that everything has actually worked:  all of these have a bit of magic to them, but all of them now also feel incredibly normal.

And all of the great businesses of our era: especially Apple, Amazon and Google are great, because day-in, day-out they succeed in making magic normal for millions of people around the world.

[Compare to the fallen idols of AOL and Yahoo! who now just make the normal seem, well, really quite normal]

All of this matters because huge, disruptive change is not the result of a small gang of bleeding edge technologists playing with the latest gadgets and gizmos.

It is the result of hundreds of millions of people around the world changing their everyday behaviour: they way they communicate, shop, and how they consume and create media.

These individual acts seem quite normal when they happen, but when they get put together they have the power to be massively disruptive.

Every mother-in-law who decides to do their Christmas shopping online, every plumber who uses Google Ad Words instead of Yell,  every mum who watches a rom com through her PS3 [using LOVEFiLM, of course]: this is the stuff of change. And, there is much much more of it down the line.

Back to my children. They are now aged six and four. They don’t know what they internet is, just as they don’t know what electricity is. But they can find their way round the CBeebies website just as they can turn on a light or switch on the TV.

They use tablets and smartphones not because they’re new gadgets, or because they’re Apple or Android fans, but because they just enjoy the games. My daughter spends hours on Moshi Monsters not because she is into social networks, or interested in gamification, but because she just thinks the monsters and moshlings are cute.

This is all as much a part of their lives as running around in the playground, eating ice cream and demanding to have whatever plastic monstrosity they have just seen advertised on Nickleodeon or Boomerang.

This is their normal. Just as watching live rugby on a laptop is now mine. It is all a huge change from the world I once new, but I suspect it is just a pencil sketch of the world that we’re still heading towards.

There is still plenty of magic ahead.

 

 

 

 

 

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From Enders latest report on [UK advertising slows to a crawl] . A generally quite gloomy picture for everything  except digital. But especially for press [newspapers, magazines and directories], including this gem..

Total press generated £7.6 billion in 2002, and generated 52% of all UK media advertising. Ten years later we estimate press will generate £4.2 billion, representing 26% of total advertising.

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via 365 Things That Make Me Happy.

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US newspaper ad revenues looked pretty horrific a year or so ago when I last looked at them, but nothing seems to be getting any better. As PaidContent reports

Combined online and print newspaper ad revenues fell 6.9 percent to $5.9 billion in Q2, marking the 20th consecutive decline for the industry, according to the latest figures from the Newspaper Association of America.

The consecutive decreases began in Q306, when combined print and online ad dollars declined a mere 1.5 percent to $11.7 billion. Since that point, newspaper ad dollars have fallen 48.8 percent, and there is no sign of a comeback.

To put that in cash terms, about $7bn a quarter has been taken out of the industry. Classified  is down by closer to 70% over the period.

Online’s inability to help pay the bills becomes all too clear when you see that between H1 2006, and H1 this year, total print revenues fell by $7.4bn. Total online revenues meanwhile grew by $0.4bn. Or, if my maths is correct, for every dollar gained online, $18.5 dollars have been lost in print.

This is hardcore, brutal disruption in action. It’s not the fault of executives not ‘getting it’. It’s not because newspapers didn’t get blogging/ social/open quickly enough or tried to protect their print sales. The human factor might nudge things a few per centage points each way, but the overall trend is more like a force of nature.

Oh, and completely co-incidentally, if US newspapers ad revenues are down by about $7bn a quarter since 2006, guess how much Google’s quarterly revenues have gone up by since then – yes, approximately $7bn. [well, $6.6bn to be precise: $2.4bn Q2 2006, $9.0bn Q2 2011].

via NAA: Newspapers Have Had 20 Quarters Of Consecutive Ad Rev Declines | paidContent.

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This is something that’s been rattling round my brain. Not complete – but it follows on from some of the work in my book, and might form part of my possible new project.

What’s a given here is that a disruption has happened – ie a shift in technology or regulation has enabled a new way for their market to be served. The question is – will company X be able to deal with it as opposed to company Y.

Your thoughts very welcome…

1. The core of the business [ie 80% or more of profit] comes from a single, high-margin product

This makes decision making incredibly difficult. Any decision to disrupt yourself is potentially an all or nothing gamble. Any disruptive play here will cause enormous ‘cannibalisation anxiety’. Combined with a ‘Killer P’s’ culture [see point 6], it will take years before there is any decisive action.

2. The history of innovations brought to market is always within a very narrow band – designed to sustain the core. 

This is the crucial qualifier to number one. All ‘innovation brought to market’ is essentially done to make the core product grow and/or operate more efficiently. There may be lots of smart R&D happening within the business, but there is no real focus on discovering the next big business [this relates to Clayton Christensen's terminology of 'sustaining' technology vs disruptive'] . Amazon, Google, Apple are all proving to be masters of this kind of inbuilt renewal.

3. The market they operate in is fiercely competitive – there is a constant fight for share

Newspapers, music retailers, book publishers etc are all used to operating in a market with a lot of businesses that are essentially clones of each other [in terms of overall cost and revenue structure]. This is what ‘competition’ means to them. It is a world away from the sort of asymmetric warfare involved in dealing with a new, disruptive force – which will initially seem too small to even bother with compared to your traditional rivals. [eg: Craigslist vs Big Newspaper Co/ Play.com vs HMV/ Netflix vs Blockbuster]

4. There is a long and proud habit of promoting from within – senior executives will almost always have worked their way up through the business

Kodak. IBM. Regional newspapers. Corporate success is the result of being able to run the business as it was 10 years ago.

5. There is a ‘here and now’ crisis

More distraction – albeit of the very important kind. An economic downturn. A price war [Kodak vs Fuji in the late 90s]. Newspaper format changes [UK broadsheets c. 2005]. This kind of old-school challenge galvinises management, but a focus on the urgent and important

6. There is a killer P’s culture: Politics, Powerpoint, Procrastination

Do I really need to add anything to this? The result is corporate sclerosis: bureaucracy and bloat. Half the business knows exactly what needs to be done. The other half is hell bent on stopping the doing it.

 

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