I am headed out the door with our dog for a nice long hike in the fabulous sunshine and clean air of the southern Rockies at 7,000 ft elevation.  It occurred to me that it’s been too long since I took a few hours off and got some exercise… with a little reminder via the stern gaze and voiceless communication from Sophie….

time to get away from the machines for a while.. cheers, MM

Future of BI: Top Ten Business Intelligence Predictions for 2012, by Boris Evelson and Anjali Yakkundi with Stephen Powers and Shannon Coyne.

I have reviewed the brief paper, finding that I am in substantial agreement with the direction and predictions so I recommend the product, and I wanted to share a few additional thoughts.

One of the main themes in the report concerns expanding the use of BI throughout the organization, which essentially follows a proven management philosophy and strategy I have advocated my entire career due to a combination of logic, experience, and testing in many real-life cases.  In a broad sense this issue speaks to organizational awareness, or as too often has been the case; the lack thereof.

Whether missed opportunity or crisis prevention, the problem is not that organizations do not contain essential knowledge for good decision making—or even that accurate predictions are not transferred to digital form—indeed experience shows that digital red flags are commonly found that were appropriate, accurate, and in many cases followed rational policy. Rather, in the super majority of cases a combination of obstacles prevented the critical issues from reaching and/or influencing decision makers. It required more than a dozen years for related technologies to evolve and mature to the point of allowing our system to resolve this and other critical issues in near-real time, but that day has finally come.

I found it interesting that the paper acknowledges that BI has serious limitations, and that the next generation of technologies may turn traditional BI relationships “upside down”, to include business alignment. The Forrester team also warns clients about excessive control and the need for balance. Indeed our patented system provides fully adaptable modules to tailor to the specific mission and needs of the individual, group, and organization. Each organization requires the ability to tailor differentiation in easy to use modules based on standards that are cost efficient and adaptable for continual improvement.

Other highlights in the paper point to the benefits of a semantic layer based on standards and a well-deserved warning to avoid consultants and integrators who “love the old-fashioned BI” as it can result in “unending billable hours”. Of course this problem is not limited to just BI—a serious problem across the enterprise ecosystem that has resulted in a unified defense against any innovation that reduces costs and improves efficiency, leading to ‘lock-in’ and low levels of innovation in the enterprise.

Unfortunately for those who rely on inefficient systems and misalignment of interests, technology advances have come together with economic necessity at roughly the same time to form an inflection point at the confluence of organizational management and neural networks. That is to say that our internal R&D as well as considerable external evidence is in strong agreement with the advice the Forrester team provides clients in this report, including to “start embracing some of the latest BI trends — or risk falling behind”. That risk is currently significant, expanding quickly in 2012 and will no doubt impact outcomes for the foreseeable future. -MM

The business model in the early years of software was relatively simple. Whether an individual or enterprise, if the customer didn’t adopt the proprietary standard that provided interoperability, the customer was left behind and couldn’t compete—a no brainer—we all adopted. By winning the proprietary standard in any given software segment, market leaders were able to deliver amazing improvements in productivity at relatively low cost while maintaining some of the highest profit margins in the history of business. This model worked remarkably well for a generation, but as is often the case technology evolved more rapidly than business models and incumbent cultures could adapt, so incumbents relied on lock-in tactics to protect the corporation, profit, jobs, and perhaps in some cases national trade.

Imagine the challenge of a CEO today in a mature, publicly traded software company with a suite of products that is generating many billions of dollars in profits annually. In order to continue to grow and keep the job, the CEO would need to either rediscover the level of innovation of the early years—as very few have been able to do, play favorites by providing some customers with competitive advantage and others with commodities—occurring in the enterprise market but risky, or focus on milking the commoditized market power in developed nations while pushing for growth in developing countries. The latter has been the strategy of choice for most mature companies, of course.

Doing all of the above simultaneously is nearly impossible. Killer apps by definition must cannibalize cash cows and public company CEOs have a fiduciary responsibility to optimize profits while mitigating risk, so most CEOs in this position choose to remain ‘dairy farmers’ either until retirement or are forced to change from emergent competition. In discussing one such incumbent recently with one of the leading veterans in IT, he described such a CEO as “the caretaker”. For enterprise customers this type of caretaker can be similar to the one we hired a few years ago to protect our interests when we moved to the Bay area, returning to a property that was uninhabitable after messaging ‘all is fine’ (beware of the caretaker wolf in sheep’s clothing).

Now consider that software exports generate large, efficient import engines for currency in headquarter countries, thus placing those national governments in strategic alignment with the incumbents in the short-term (often dictated by short-term politics); and another entire dimension appears that is rarely discussed, yet very strongly influences organizations worldwide. This situation can influence governments in protecting and reinforcing perceived short-term benefits of commoditized market leaders over critical long-term needs of organizations, markets, and economies. It is not inaccurate to suggest that national security is occasionally misunderstood and/or misused in the decision process on related policy.

Monopoly cultures think and act alike, whether in the public or private sector, which is often (eventually) their undoing, unless of course they adopt intentional continuous improvement. This is why creative destruction is so essential, has been embraced internally by most progressive organizations in some form, and why customers should proactively support innovators and farm markets towards sustainable diversity. Despite what may appear to be the case, the interests of incumbents in enterprise software are often directly conflicting with the interests of the customer.

While the theory of creative destruction has roots in Marxism, the practice is a necessity for capitalism (or any other ism) today due to the natural migration of cultures and economies to seek security and protection, which in turn takes us away from the discipline required for continual rejuvenation. We embrace creative destruction in what has become modern global socialism simply because very little innovation would emerge otherwise. Competitive advantage for organizations cannot exist in rigid commoditization of organizational systems as we see in software. Simply put—whether at the individual, organizational, or societal level, we should embrace creative destruction for long-term survival, especially in light of our current unsustainable trajectory.

Which brings us to the present day emergent neural network economy. In our modern network economy we simply must have interoperable software and communications systems. The global economy cannot function properly otherwise, so this is in everyone’s interest, as I have been saying for 15 years now. The overpowering force of the network effect would place any proprietary standard in an extortion position to the entire global economy in short order. The current danger is that functional global standards still do not exist while national interests can align perfectly in the short-term with proprietary standards. That is not to say, however, that proprietary languages and applications should not be encouraged and adopted—quite the contrary—open source suffers similar challenges as standards in terms of competitive differentiation. Rather, it only means that proprietary technologies cannot become the de facto standard in a network economy.

In peering into the future from my perch in our small private lab and incubator in wilds of N AZ more than 15 years ago, the need for standardized structured data becomes evident, as does the need for easily adaptable software systems that manage relationships between entities. Combined with the data explosion that seems infinite, it was also obvious that filters would be required to manage the quality and quantity of data based on the profiles of entities. The platform would need to be secure, not trackable for many applications, reflect the formal relationships between entities, and set the foundation for accountability, the rule of law, and sustainable economics. In addition, in order to allow and incentivize differentiation beyond the software programmer community, thus permitting market economics to function, the neural network economy would require adaptability that is similar to that which takes place in the natural, physical world.

I suggest then while nascent and imperfect, semantics is the preferred method to achieve alignment of interests in the emergent neural network economy, for it represents the building blocks in structured data for meaning in the digital age, resting at the confluence of human and universal languages, and serving as the functional portal to the neural network economy.

Finally, as the humble founder and inventor, permit me then to suggest that Kyield is the optimal system to manage semantics as it intentionally achieves the necessary elements for organizations to align and optimize their digital assets with the mission of the organization, containing adaptable tools to manage the relationships between entities, including with and between each individual and workgroup.

May 2012 deliver more meaning to you, your organization, and by extension our collective future.

2012 Kyield Enterprise UML Diagram

Hindsight will prove 2012 to have been the inflection point for the semantic enterprise, representing a generational change at the confluence of information technology and organizational management.

Never underestimate the power of good will (or the human brain).

Happy Holidays and best in 2012!

Best of Kyield Blog Index.

We are now seeking clients to work in a collaborative manner to develop and test a fully functional prototype of our patented enterprise platform during 2012.

For a small group of well-matched organizations, we are prepared to offer exceptional benefits:

• Very attractive license terms of extended duration
• Extraordinary consulting in tailoring and optimizing the system
• Priority terms for future innovation, providing on-going competitive advantage

General target criteria for prototype / client partnership

Preffered entity of 500 to 10,000 knowledge workers

• Flexible depending on work type & intensity
• Can go much higher but not much lower
• No direct competitors
• Strategic partner organizations possible

Above average technical environment

• Create original digital work products
• Distributed, remote workers
• Place high value on invention & innovation
• High value on prevention of crises & litigation
• High priority on competitive advantage & differentiation
• Thought leader more important than market leader

English language work environment

• To interact efficiently with Kyield, not for internal files

The project will require CEO/COO buy-in for unit or organization

• The nature of the organization platform will likely require CEO leadership prior to engagement

If your organization or a client matches these general criteria for this opportunity, or you are aware of one that might, please contact Kyield’s CEO Mark Montgomery ( markm@kyield.com ) to explore in more detail. 

Kyield will not disclose identities of either the individuals or organizations until both parties agree.

Thank you!

~~~~~

About a year ago I contacted an old friend at a large multinational enterprise software company who has been following our work for many years with an update on Kyield, and asked what the best method might be to form some kind of alliance. Due to a combination of our emerging technology, macro trends, and discussions with many of their customers and partners, a near perfect match appeared to be forming.

My friend said that their company culture (company x) doesn’t deal well with IP, small companies, or entrepreneurs, so suggested that we start through official channels and attempt to work our way through the maze. We began with the certified partner route even though our company is an innovator with key IP, not an integrator or reseller, which was understood from inception.

Due to the importance of emerging technology and innovation, most companies have high level relationship managers who report to the CTO and/or CEO, including for managing relationships with universities, venture firms, national labs, and legal with IP licensing. In some cases to include competitors of company x, one email has resulted in a quick response from the appropriate corporate officer, which provides a good backgrounder to this story. For anyone attempting to better understand what’s wrong with our economy, this should be instructive.

Following is a summarized, accurate description of our attempt to partner with this company with minor narration intended to better communicate reality.

1) Our initial effort was with the certified partner process in the form of a conference call with young, inexperienced people who clearly had no authority and had no choice but to follow the rigid rules in partnering through the certified reseller process. They were pleasant people I enjoyed speaking with, but from a business perspective a complete waste of time, so I suffered through it.

2) We regrouped, I repeated what Kyield was and was not. My friend asked several people internally what our next step should be. Apparently, at that time our efforts were elevated at company x to senior management, although the identity of the individual was never confirmed. My assumption then was that it was a senior competitive intelligence manager, and that they had a file on us all along. Given past history, I would have been surprised and a little disappointed in company x if they did not.

3) A few weeks later my friend suggested that we contact SVP (a) on the business side who shared acquaintances in customers, partners, and staff at company x. I made contact. SVP (a) responded that he was “the wrong person to pitch this to”, suggesting an office on the tech side, but did not make an introduction or provide a name or contact of the person we should be talking to, only that my friend could make the introduction if appropriate. My friend didn’t know who else to contact.

Consider as I did during this time that this is a company that makes and sells software that a significant portion of the world’s economy depends on for operations, yet internally they had no idea who to contact for which reasons (or so they claimed); a problem basic software cured long ago. It was becoming quite clear that titles and stated relationships were much different from authority and decision processes. We were left sharing thoughts internally: “if their high-profile SVP doesn’t know who to contact for issues in areas they are responsible for, who does?”

4) I recalled multiple overlapping relationships with a board member of company x dating back many years to the person’s university days, did a search in my own address book and found the contact, so sent a brief email. In the message I described our challenge in partnering with company x and mentioned that tens of thousands of customers of their company had demonstrated various levels of interest in our IP, from downloading white papers to one on one discussions with chair of their board. Many of our prospects have said that they would prefer that company x partner with us to reduce cost and complexity. Some have blatantly told us that this company needs to work with us.

The board member at company x forwarded my email to another SVP (b) within the hour on a weekend who then responded the following Monday with a meeting request.

I accepted the meeting request a few weeks out and invested substantial time and money on the trip only to find that the meeting was not really with the company, but rather the one individual. In my extended meeting with this individual, who is a very likable in person, it became clear that he was challenged with his role, appeared to be looking for external opportunity, and seeking what appeared to be free consulting at our expense. He asked strategic questions that were the most important issues facing their company, representing potentially tens of billions of dollars in answers. I was polite, but deflected the questions. I am a former business consultant, but restrict pro-bono services to worthy causes, not multinationals (obviously), and my role here was as CEO of Kyield.

5) The following day, unknown to anyone at company x, I had a meeting with an old friend who was a director of one of their largest partners and customers. We spent a lot of time discussing the situation at company x. He suggested that I copy their director on every communication from then on, which I have done.

6) After returning to my office I followed up with the SVP (b) individual I met, copying their board member. No response, no follow-up. A couple of weeks later I sent a fairly detailed proposal to SVP (b) and the board member that clearly outlined a partnership that could be potentially worth billions of dollars to their company, and importantly provide much-needed functionality such as crisis prevention and enhanced innovation to their customers, which are not areas this company is known for, nor were we made aware of any competing products. Several months later I have never had a response to that proposal.

My friend at company x seemed as confused as we were, as did several others who were current and former managers. Something was clearly wrong. My reasoning and proposal was based on solid business logic, global business culture, and the rule of law with IP in our system of governance and international treaties—this was logic-based partnering driven by customer demand, matching IP, and optimizing alignment of interests. This situation was win/win/win, but it didn’t seem to matter.

7) Over the following weeks, we reached out to many current and former company x executives, including another SVP (c), customers, partners, etc. in attempt to navigate the confusing culture. Several weeks later we were told by one of several of company x partners we were in contact with that the person I met with—SVP (b)—had left the company.

8) After several more weeks with no coherent response from company x, I sent a follow-up message to the board member describing our challenges. About a week later we heard from a new person from company x who the board member had forwarded my message to. This person wanted to talk to me to learn more about our challenges in partnering with their company, but failed to offer any business reason for us to do so. They wanted me to spend my money and time to visit them and consult for free about their structural problems and our technology, but offered no value to us. It looked to me like a major competitive intelligence effort, not an attempt to partner in any way.

So I declined and suggested they talk to my friend at company x, who was on their payroll, a long-term employee and had been in the loop all along. This person did so, responded in email a few days later in the most decisive manner to date, saying that part of the problem was that we were dealing with the wrong people (we were dealing with the people company execs suggested, of course). This person copied a group of new contacts to include SVP (d) we had not talked to yet, suggesting that this was the right person. SVP (d) immediately responded and copied yet another SVP (e), suggesting that he was indeed the person who we should be talking to, and that it was “his job”. SVP (e) responded immediately in a decisive manner saying that he would do the leg work internally and then get back to us.

9) SVP (e) and I exchanged several emails that would be considered more professional between experienced executives trying to find a path to work together for the benefit of their respective companies and customers. However, after a couple of weeks, he did say that he and his group normally only work with other multinationals, not smaller companies—signaling that he either didn’t want accountability or wasn’t the right person after all, so he suggested that we meet with a person who worked very closely with two of the others we had been in contact with during the past year, including the SVP (b) I met with. I sent this new person a private message in an attempt to expedite. He has yet to respond.

10) About a week later, I received a meeting request from an executive assistant of SVP (e), but it had no proposed name, location, or agenda. I responded that I was flexible on dates as partnering with their company in some manner was a priority (it wasn’t essential for integration, just preferred), but I would need this information before confirming or making the trip. A week later the EA of SVP (e) responded, ignoring my request and copied another person we could not verify (the discussions had included multiple offices–without a location it wasn’t even possible to confirm meeting, obviously).

I repeated my request more firmly saying that I don’t normally meet with anyone who doesn’t mutually agree on names, location, and agenda, and I was surprised that they did (in fact it was the first time I had ever received such a blank meeting request and I’ve dealt with senior execs at most leading companies in this industry and many others).

SVP (e) responded within 24 hours suggesting a phone conference, providing clarity on proposed agenda, but the agenda was to learn about our company and product which one would expect of a sophisticated CI operation, not a legit attempt at partnering. I responded in a positive manner, thanked him for his professionalism, and agreed to a phone conference, suggesting that I could work around their schedules and to please just send me an invite. It never arrived.

Several days later, I contacted the lead executive for partnering who reports to their CEO, suggesting they had major problems in the partnering process, and that I would discuss if interested as he claimed privately to mutual acquaintances. I received a five word reply, followed up, and never heard back.

About a week later I received an email from SVP (e), copying SVP (d) and several of the others who had recently been in the loop, saying:

After further discussion with internal stakeholders, I wanted to reach back with some closure on our earlier email thread regarding company x/Kyield partnering opportunities. At this time, a (relationship) with Kyield does not make sense for company x due to overlaps with (our) offerings and ongoing collaboration we have had with customers over the past (many) months to deliver products in this area.

Thank you for your patience as I worked to track down internally the stakeholders with whom you engaged, and the resulting point of view from our (delete) organization. As I began setting up a follow-up discussion, it became clear that such a meeting did not make sense based on conclusions that had already been drawn.

We appreciate your interest in partnering with company x and wish you the very best success.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
My response:

Dear xxxxx,

I appreciate your response. It would have been ethical and perhaps wise for others to inform us that company x was in collaboration with customers in competing products during the entire time they were talking to us.

To not do so is a very serious mistake. Frankly you confirmed our worst fears. We’ll review with our attorneys and look forward to inspecting your future products for patent infringement.

Thank you,

Mark Montgomery

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Conclusions

One of the reasons I reached out to company x was in part because I don’t see how it’s possible for company x to thrive in the future without our IP, and I thought they would be smart enough to see it. Some of the individuals clearly were, but apparently the company shares the broader culture in enterprise software: “Why pay for something you can beg, borrow, or steal?”.  The answer to that of course is that beyond what their parents should have taught them at a young age about doing the right thing, there are repercussions for our actions, even if some are too blind to see it.  Granted, perhaps our system and their company lack sufficient accountability and penalties for this kind of behavior, but consequences still exist–legal, market, economic, trade, regulatory, relationships, careers–the list is long. More importantly is that this type of culture and behavior erodes our entire global economy, one experience at a time.

From a business consultant’s perspective, company x has enormous opportunity to improve the bottom line, functionality, and efficiency by reducing the number of VPs and SVPs significantly, and installing a functional internal address book with clear responsibilities. They badly need to install Kyield, which would cure this problem, but I’ve lost trust and respect for the company so we’ll focus our energy elsewhere.

In addition to poor morale and operational issues, not least of which is bloat, like many other multinationals in recent years, this company has an enormous liability problem, confirmed by very large legal losses. The aging business model still kicks off sufficient cash flow that (apparently) the board doesn’t care enough to change.

While many of the individuals are ‘nice’ people, the culture and governance is frankly toxic—the only word that comes to mind, not just to David and Goliath in this story, but frankly this experience drove a wedge in-between several important relationships with both companies. I observed no respect for the property of others, tested often but gained no trust, and witnessed systemic lack of accountability in what is obviously a dysfunctional governance structure. After this experience it’s easy to see why this company has suffered so many operational problems. Company x is a classic case of the type Bob Herbold discusses in his book What’s Holding You Back, which I reviewed in my previous post.

Note that speculation on who company x is may be wrong. Also of note, I offered this story to CIO Magazine (through an editor) and Forbes (through contributor/columnist). CIO Magazine declined and Forbes contributor did not respond. I suspect conflicting relationships is the underlying reason, but we’ll save that topic for another day.

As a previous business and organizational consultant with dozens of similar cases in my past, combined with years of pro-bono advisory for the public sector and non-profits, and recent partner negotiations with multinationals, I can confirm that the operational guidance throughout the book is spot on.

Indeed, many of the current economic challenges facing the U.S. and EU can be directly traced to the consensus cultures in large organizations of the type highlighted consistently in the business cases Bob shares. In case after case, he shows us how lack of accountability, fear of negative impact on careers, refusing to take decisive bold action meeting actual needs, and poor cultures for innovation have led to failure in our hyper competitive global economy. We know what works and what doesn’t, but the truth is what works is quite often very difficult and uncomfortable; not unlike team competition on the football field or climbing mountains.

I suspect that this book will clash sharply with the predominant idealism found in government, academia, unions, and multinationals that have sufficient market power to ignore competitive issues during the tenure of current management, or so many believed until very recently. For decades now the most common response to increased competition has been to circle the wagons and kick the can down the road for the next generation to worry about, which is of course why western economies in particular are suffering today.  However common and popular, any such culture and practice is failure by any credible definition of leadership. This is why most strong leaders agree that we are suffering from an era of leadership crisis; it’s impossible to conclude otherwise.

Some managers in consensus cultures might even consider Bob’s message as brutal, claiming that such a management philosophy is politically unacceptable in their organizational culture. Such a conclusion would be accurate in many organizations I’ve worked with, which is why crisis is so common today. The mathematical truth in a world with finite resources is indeed often perceived as brutal, particularly for those who have enjoyed a life of surplus and subsidy. These are precisely the cultures and managers who need to fully embrace the teachings offered by Bob, if for no other reason than everything such cultures claim to care about are being economically devastated by uncompetitive philosophies and practices. It is ironic that what’s holding our economy back are so many cultures and leaders who are refusing to follow the proven practices that work in the real economy and attempt to protect a world that no longer exists, rather than deal with the reality we face on planet earth today.

While I found a few items I could quibble with relating to my own specialty work in Kyield, they are minor compared to the much needed broader message. A few of my favorite conclusions include:

• Avoid commodity hell
• Staff for success
• Move weak performers out quickly
• Creativity and six sigma don’t mix
• Demand accountability and decisiveness
• Value ideas from anywhere
• Exploit inflection points

In each of these areas and many others, Bob provides some detail on how to execute, whether in large global companies like his role at P&G and Microsoft, or in business units dealing with many of the same issues.

Finally, I’d like to share a few personal thoughts. While I’ve never met Bob in person, as is often the case in business we do have multiple shared acquaintances in our past, so I pinged him when reading the book and we’ve exchanged a few emails since.  I often thought about Bob in his role as COO at Microsoft when his duties included dealing with the DOJ on one hand and Bill Gates on the other, which frankly must have been among the most difficult positions any modern executive has endured. The outcome for Bill Gates and Microsoft was exceptional by any known metric, which can be largely attributed to Bob Herbold in my view.

In a recent interview and podcast with the Puget Sound Business Journal (my old stomping ground), the editor asked Bob about his experience at Microsoft and why the company has not been more innovative. His answer was almost verbatim to my own in answering the same question for my late partner Dr. Russell Borland who was on the founding team of Word, and a key person in many of the early products that still deliver most of the profits for MSFT.

Paraphrasing the answer: “It’s very difficult to voluntarily cannibalize two of the most profitable products in the history of business (Office and Windows)”.

Frankly, this reality was not easy for Russell to digest, nor even myself who was an early booster to MS. However, based on fiduciary responsibility that requires quantitative reasoning to guide decision making, a CEO in a public company wouldn’t voluntarily cannibalize such cash cows, and Steve Ballmer hasn’t, so it’s up to customers and innovators–that’s why we need new companies; creative destruction and disruption are essential to our economy.

Unfortunately for the world, when companies who dominate our work environment with commoditized products fail to innovate, and fail to provide easily adaptable tools that enable differentiation and competitiveness, the risk of failure becomes systemic to the entire global economy, acting like a wet blanket to creativity and economic growth. That’s why we spent 15 years creating Kyield—organizations simply can’t afford commoditization of the digital workplace environment, and the world cannot afford not to embrace the rare generational leap Kyield represents.

If you are a senior executive in a mid to large size organization, you will hopefully already have this book, but if not—buy it for all of your managers, then call me and let’s talk about what it will take to install Kyield in your organization so that your organization can execute and optimize the lessons learned:

Optimizing Knowledge Yield in the Digital Workplace
A new system design for thriving in the data-intensive universe

From the abstract:

The purpose of this paper is threefold. First, it briefly describes how the digital
workplace evolved in an incremental manner. Second, it discusses related structural
technical and economic challenges for individuals and organizations in the digital
workplace. Lastly, it summarizes how Kyield’s novel approach can serve to provide
exponential performance improvement.