Strategic IT Alignment in 2012: Leverage Semantics and Avoid the Caretaker

A very interesting development occurred on the way to the neural network economy: The interests of the software vendor and the customer diverged, circled back and then collided, leaving many executives stunned and confused.

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.


Best of Kyield Blog Index

I created an index page containing links to the best articles in our blog with personal ratings:

Best of Kyield Blog Index.

Kyield is seeking select organizations to partner on enterprise prototype


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

Must be interested in improving:

  • Crisis prevention
  • Innovation
  • Productivity
  • Decision making

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 ( ) to explore in more detail. 

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

Thank you!

The Perils of Partnering in Enterprise IT – A Sad, True Tale

Note– this article is presented as an actual business case much like dozens of private organizational audits I have performed earlier in my career as a business consultant–for boards, investors, courts, and others. Those without experience as executive board members, audit, governance, and finance committees, or serving as an expert adviser to same, may not be in a position to understand and appreciate this case. Readers who are not expert on these issues (such as IT consultants) should learn from the case–that’s the reason for sharing it–market education surrounding the structural issues in enterprise software. While we cover technical issues in this blog, we also cover macro economics, business, governance, innovation and organizational management (among others). This article deals with advanced organizational issues; directed at corporate directors, CEOs, COOs, CFOs, the few CIOs who serve on boards of large organizations and their most trusted advisers. — MM


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).

(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



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.

Book Review: What’s Holding You Back? — By Robert J. Herbold

While I rarely seem to have time for book reviews, the timing, content, and match to current needs of Bob Herbold’s new book is even more rare, so I wanted to share some thoughts while fresh. I read the book while on annual vacation in the San Juan Mountains with my wife at the end of September.

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:

What’s Holding You Back?
10 Bold Steps That Define Gutsy Leaders
By Robert J. Herbold

Background of patent #8005778

I am working on multiple articles relating to the patent I was issued last week, at least one of which will be posted here in the next few days, but in the interim I thought some might be interested in the common English portion of the patent. I hadn’t visited this section in some time–from early 2006.

Patent #8005778

Title: Modular System for Optimizing Knowledge Yield In the Digital Workplace (USPTO link to patent)


The invention relates to the management of human intellectual capital within computer networked organizations, and more particularly to managing the quantity and quality of digital work flow of individual knowledge workers and work groups for the purpose of increasing knowledge yield, or output.


The volume of data transfer and related human consumption of information is growing exponentially in the network era, resulting in a condition commonly referred to as information overload. The result for the modern organization is an ever increasing challenge to manage the quantity and quality of information being transferred, consumed, and stored within computer networks.

Enormous amounts of structured and unstructured information is being consumed by knowledge workers that is redundant or irrelevant to the knowledge worker’s job, or the mission of the organization, creating serious challenges for organizations while reducing the return on investment for information technologies and knowledge workers.

Systems deployed previously attempting to reduce information overload and increase knowledge worker productivity have been designed primarily to address either the symptoms of the problem, or a specific portion thereof; including desktop productivity suites, higher performance search engines, and reducing unsolicited e-mail.

In recent years, computer standards bodies have been approaching the challenge by improving machine to machine automation and structure to documents with XML, RDF, SOAP, and OWL, commonly referred to as the Semantic Web.

Emerging positions within networked organizations attempting to optimize the digital workplace include the Chief Knowledge Officer (hereinafter “CKO”) who is responsible for improving the value of human and intellectual capital to better achieve the organization’s mission.

Despite these individual and collective efforts, the problems associated with information overload continue to grow exponentially. According to research firms IDC and Delphi Group, the average knowledge worker spends about a quarter of his or her day looking for information.

A related serious problem for knowledge workers affecting productivity and innovation is that intellectual property converted to digital form is simple to copy and distribute, providing disincentives for creative problem solving, the sharing of knowledge and intellectual property, and therefore improving work quality.

Given the complexities of the digital workplace environment, it would be beneficial for organizations to employ a holistic metadata system including modules to manage the knowledge yield for the entire organization, for each work group within the organization, and each individual member of the organization so they can continually optimize his/her knowledge yield for the continuously changing work environment.

Key patent issued

My key patent for Kyield was issued today by the USPTO as scheduled earlier this month.

Title: Modular system for optimizing knowledge yield in the digital workplace

Abstract: A networked computer system, architecture, and method are provided for optimizing human and intellectual capital in the digital workplace environment.

To view our press release go here

To view the actual patent  go here

I will post an article when time allows on the importance of this technology and IP, and perhaps one on the experience with the patent system. Thanks, MM

Clarifying Disruption: Operations vs. Innovation

Part 1 of Series

The word disruption has multiple meanings in global business with the most commonly used definition some variation of “the act of interrupting continuity”.  Within the context of logistics, supply chain, manufacturing, IT, and other business operations, disruption is obviously an experience managers work diligently to avoid.  A good example of a recent operational disruption was caused by the Sendai quake and tsunami; a natural disaster which was unpreventable, but predictable and therefore can be mitigated with careful risk management planning.

In the context of innovation, however, and long-term economic survival, disruption can be paradoxical when “the act of interrupting continuity” of tightly controlled markets, stale products, and outdated business models is not an evil, but rather can be a savior to businesses, ecosystems, and economies, preventing eventual operational disruption, or as we’ve seen in many cases—complete failure.

Animal Instincts

Central to the theme of disruption in innovation is the nature of our species.  We humans tend to be creatures of habit even when presented with evidence that the behavior is self-destructive in the long-term.  In similar fashion, individuals and organized groups such as governments and corporations often refuse to change behavior even when continually presented with evidence that the cost of the short-term comfort zone may well be long-term survival, and of course fear and greed are ever present.

While resistance to change is often strongest in absolute monopolies, similar cultures are commonly found anywhere deep disequilibrium exists in the tension between security and progress, speaking to the need for competition.  Entire industries or regions can become static relative to the world quickly today, displaying little evidence of awareness in decision making.  Mix in a heavy dose of risk averse corporate cultures, conflicting (real and perceived) interests internally and externally, a bit of PR spin, and regional translation leakage between multiple native languages, confusion surrounding the issue of disruption becomes the norm rather than the exception.

History is overflowing with examples of the high costs of failing to intentionally disrupt the status quo with innovation.  A few recent cases that come to mind include:


  • Failure to disrupt poor U.S. fiscal management and lack of accountability (in part with innovation) over a long period now threatens operational disruption

  • Failure to disrupt the U.S. healthcare and public educational system has greatly exacerbated the U.S. fiscal challenge, reflecting why prevention of negative spirals with continual improvement is so important

Mobile Technology

  • Nokia’s failure to maintain leadership in smart phones is now significantly impacting not just Nokia, but Finland’s national economy

  • Rim’s response to the iPad, which seemed unable to take the risk to cannibalize, failed to physically disrupt by tethering the Playbook with the Blackberry phone

  • Border’s failure to embrace disruptive digital publishing ended with liquidation

Offensive and Defensive Strategies

The need to disrupt static cultures, reform or replace decaying business models, and introduce competitive products is well known in management circles of course, so many kinds of offensive strategies, tactics, and systems have been crafted to overcome this age-old challenge, including motivational techniques, educational tools, recruitment practices, incentives, internal R&D, outsourcing, partnering, spin-offs, join ventures, acquisitions, IP licensing, and strategic venture capital. Quite a few companies have prospered through multiple business cycles employing a variation of all of the above in a persistent quest to achieve and maintain an optimal balance between growth and risk over the short-term and long.  The number of companies achieving mediocrity upon maturity is far greater, however.

One common method of defense is the formation of cartels, particularly with commodities or commoditized products that are susceptible to innovative new comers or companies moving into their markets.  Cartels and oligopolies can generate high margins for long periods of time and form very strong barriers to innovation, but eventually market and trade imbalances combined with innovation and conflicting interests of the members begin to fragment the cartel and erode market power, opening a window for competition that has proven to be healthy for incumbents, markets, and economies.  When economies stagnate, it’s generally a sign that incumbents have too much market power, usually achieved in part by manipulating the political processes, which is just one reason of many why corruption should be avoided.

The word cannibalism is sometimes used to describe what is often a difficult internal corporate process of intentionally replacing aging products that are still providing a significant portion of cash flow, with more competitive products. Another term used to describe disruptive innovation in the broader economy is creative destruction, popularized by Joseph Schumpeter in the 1940s, which describes the theory of replacing the old with the new in the entrepreneurial process. In the modern global economy, situations and cultures that allow progress without disrupting entrenched interests are quite rare.

In part 2 of the series, we’ll explore how innovation is beginning to revolutionize the innovation process in the digital enterprise.

On Her 235th Birthday, America Desperately Needs Lean, Open, and Secure Governance

Baby boomers like myself clearly recall the tumultuous years leading up to the Bicentennial of the United States.  The world we grew up in was near the peak of the industrial revolution, dominated by the aftermath of the Great Depression, WW2, and the Cold War.  We were raised in a culture that had witnessed first-hand the power of a unified government, which led to the victory of fascism in our parent’s generation, followed by a round trip to the moon in our own. In the childhood of my generation, nothing was impossible with sufficient government power.

By 1976, however,  America had endured the 1960s cultural revolution, the Vietnam War,  a serious energy crisis, stagflation, and Watergate.  We were experiencing the shocking end to the post war boom, with new revelations that success had a price, military power had limits, government was not always trustworthy, and our industrial economy had a soft underbelly leaking oil.

By the late 1970s, interest rates were skyrocketing, inflation seemed out of control, the Cold War was threatening to become white hot, and U.S. public debt had risen to the shocking level of $900 billion, representing one third of U.S. GDP.  During the next decade of economic expansion led largely by financial engineering and services, the U.S. debt more than tripled in dollar terms, rising to nearly 60% of GDP.

During the 1990s, with the commercialization of the Internet and exponential adoption of computer networking worldwide, the global economy began to shift, but the information revolution did not result in taming the industrial revolution—at least in the short-term, but rather acted as a catalyst in shifting heavy industry from West to East in our never ending quest for growth and scale. The dot-com bubble provided a very brief respite from accumulating debt in the form of capital gains, but it was a one-time gain.

By the late 1990s it became apparent that the unfettered Internet, in ironic contrast to the core message in The Wealth of Nations, offered such disruptive efficiency that many industries would be radically transformed, including the service economy that had become dominant in the U.S.

Meanwhile, global companies became too big to fail, increasingly divorcing themselves from U.S.interests in what became the primary global strategy for risk reduction and growth, which only compounded the challenges facing the U.S. economy.  By extension, regional and national economies dependent on the industrial revolution or services would also need to adopt the efficiencies offered by the new medium in order to avoid eventual bankruptcy.  In modern parlance, the trajectory of our national budget was increasingly in misalignment with the needs of our economy, the super majority of our citizens, and our collective future.

Rather than downsize to meet the new reality and future obligations, the post 9/11 economy witnessed increased liquidity that  “saved the economy” (Alan Greenspan), combined with post war guarantees in banking, systemic corruption, and ideological activism to enable the mega housing bubble, followed by the inevitable correction and almost certain economic depression if not for historic levels of Keynesian intervention. Rather than invest massive stimulus in converting to a sustainable trajectory, however, most of the spending was targeted at populist programs that continued to expand government overhead, thus increasing long-term liabilities, primarily in very temporary form that now leaves regional economies facing an even more challenging future, and citizens faced with much greater national debt; short, mid, and long-term.  The promises made by government during and after the Great Depression were obviously not only unfunded, but increasingly unfundable.

The most recent example of kicking the can down the road has been unprecedented life support from the FRB in financing 70% of the U.S. debt in QE2, while once again warning Congress and the White House to get its long-term fiscal house in order.  The result, once again, was to witness excess liquidity flow to the most speculative markets, not the fundamental investments required to transition to a sustainable economy, confirming that we have yet to address the underlying structural problems.  The cost of avoiding another Great Depression by stimulus and liquidity has been to advance U.S. insolvency by more than a decade; and quite probably more than two.

Port of Call in the Voyage of Fiscal Denial

Regardless of how one interprets the voyage, the destination that our culture is finally beginning to awaken to is tragic. Under what most believe to be an optimistic forecast, the Congressional Budget Office (CBO) warns us that public debt will rise from around 70% of GDP currently to 84% by 2035, with interest payments rising to 4% of GDP from 1% at current levels. This “extended-baseline” scenario is dependent upon a great many things that have not occurred in the past, however, nor are expected by most, including low inflation and a relatively disciplined Congress. The more consensus forecast, or “alternative fiscal scenario”, projects public debt to rise to 100% of GDP by 2021 and 190% by 2035. However, anyone observing financial crises can attest that these events do not occur on an even gradual basis, but rather reach a tipping point.

The warning I offer today is that economists have based their forecasting on comparable situations in very small economies relative to the U.S., not the world’s largest that also manages the global currency, not to mention the only global military power.  Every forecast, scenario, and metric I have observed in economics is based on a very different history than the situation we face today, all of which assumes the post war experience of a stable U.S. economy.

To capture the situation, consider that while each have proposed different remedies, the best economic forecasters of our time, to include investors, Nobel Laureates, current and past FRB chairs, and regardless of party or ideology, all essentially agree that this unsustainable trajectory has nearly reached its pinnacle.  All are raising red flags, and none can (or have to my knowledge) deny that when the herd finally changes course in bond markets, as we’ve seen most recently in Greece, the stampede is swift and brutal.

Lean, Open, and Secure Governance = The Semantic Enterprise

The Levin–Coburn Report found that the financial crisis was the “result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”

The U.S. Financial Crisis Inquiry concluded that the crisis was caused by:

  • “Widespread failures in financial regulation, including the FRB’s failure to stem the tide of toxic mortgages”

  • “Dramatic breakdowns in corporate governance”

  • Key policy makers “ill prepared for the crisis, lacking a full understanding of the financial system they oversaw”

  • “Systemic breaches in accountability and ethics at all levels”

In early January of 2008, former GAO Director David Walker suggested that four types of deficits caused the underlying fiscal problem: budget, trade, savings, and leadership. While these four causal factors are without question, I suggest that all of our deficits depend upon the integrity of governance structure, including our increasing deficits in knowledge, competitiveness, security, and happiness.

The only reliable method to achieve a sustainable governance infrastructure in the network economy is with semantic enterprise architecture, which is based on many years of research and testing. For a brief video description of the semantic enterprise, see my elevator pitch, and for a more in-depth discussion, view this keynote at the recent SemTech conference by Dennis Wisnosky on the transformation of the DoD.

Data Integrity: The Cornerstone for BI in the Decision Process

When studying methods of decision making in organizations, mature professionals with an objective posture often walk away wondering how individuals, organizations, and even our species have survived this long. When studying large systemic crises, it can truly be a game changer in the sport of life, providing motivation that extends well beyond immediate personal gratification.

Structural integrity in organizations, increasingly reflected by data in computer networking, has never been more important. The decision dimension is expanding exponentially due to data volume, global interconnectedness, and increased complexity, thus requiring much richer context, well-engineered structure, far more automation, and increasingly sophisticated techniques.

At the intersection of the consumer realm, powerful new social tools are available worldwide that have proven valuable in affecting change, but blind passion is ever-present, as is self-serving activism from all manner of guild. Ideology surrounding the medium plays a disproportionate role in phase 3 of the Internet era, to include crowdsourcing, social networking, and mainstream journalism. Sentiment can be measured more precisely today, but alignment is allusive, durability questionable, and integrity rare.

Within the enterprise, managers are dealing with unprecedented change, stealthy risk, and compounding complexity driven in no small part by technology. Multi-billion dollar lapses sourced from multiple directions have become common, including a combination of dysfunctional decision processes, group/herding error, self-destructive compensation models, conflicting interests, and poorly designed enterprise architecture relative to actual need.

Specifically to enterprise software, lack of flexibility, commoditization, high maintenance costs, and difficulty in tailoring has created serious challenges for crisis prevention, innovation, differentiation, and global competitiveness. It is not surprising then, given exponential growth of data, which often manifests in poor decisions in complex environments, Business Intelligence (BI) is a top priority in organizations of all types. BI is still very much in its infancy, however, often locked in the nursery, subjecting business analysts to dependency on varying degrees of IT functionality to unlock the gate to the data store.

Given the importance of meaningful, accurate data to the mission of the analyst and future of the organization, recent track records in decision making, and challenges within the organization and IT industry, it is not surprising that analysts would turn to consultants and cloud applications seeking alternative methods, even when aware of extending the vicious cycle of data silos.

Unfortunately, while treating the fragmented symptoms of chronic enterprise maladies may provide brief episodic relief, only a holistic approach specifically designed to address the underlying root causes is capable of satisfying the future needs of high performance organizations.

The dirty dozen fault lines to look for in structural integrity of data

  1. Does your EA automatically validate the identity of the source in a credible manner? (Y/N)

  2. Is your IT security redundant, encrypted, bio protected, networked, and physical?  (Y/N)

  3. Are your data languages interoperable internally and externally? (Y/N)

  4. Is the enterprise fully integrated with customers, partners, social networking, and communications? (Y/N)

  5. Do you have a clear path for preventing future lock-in from causing unnecessary cost, complexity, and risk?  (Y/N)

  6. Are data rating systems tailored to specific needs of the individual, business unit, and organization? (Y/N)

  7. Are original work products of k-workers protected with pragmatic, automated permission settings? (Y/N)

  8. Does each knowledge worker have access to organizational data essential to their mission? (Y/N)

  9. Are compensation models driving mid to long-term goals, and well aligned with lowering systemic risk? (Y/N)

  10. Is counter party risk integrated with internal systems as well as best available external data sources? (Y/N)

  11. Does your organization have enterprise-wide, business unit, and individual data optimization tools? (Y/N)

  12. Are advanced analytics and predictive technologies plug and play? (Y/N)

If you answered yes (Y) to all of these questions, then your organization is well ahead of the pack; even if perhaps a bit lonely. If you answered no (N) to any of these questions, then your organization likely has existing fault lines in structural integrity that will need to be addressed in the near future.  The fault lines may or may not be visible even to the trained professional, until the next crisis of course, at which time it becomes challenging for management to focus on anything else.