Marina Gorbis's Blog, page 1589

IT in the Cloud Era

An interview with Aaron Levie, cofounder and CEO of Box. Follow him on Twitter at @levie.

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A written transcript will be available by July 8.

New Research: You're Doing Customer Experience Innovation Wrong

"Innovation" has become a buzzword in the customer experience field.

In a recent Forrester survey of 100 customer experience professionals, nearly half of respondents said that their executive team's strategy for customer experience is market differentiation. And an ambitious 13% said that they'll settle for nothing less than having the best customer experience across every industry — in other words, these companies want to be the next Apple, Disney, or Zappos.

They also believe that innovation will help them achieve these lofty goals — and they're investing accordingly. Sixty-nine percent of these respondents report that their companies have dedicated personnel for customer experience innovation. Sixty-four percent have allocated time to innovation activities. And 55% have dedicated innovation budgets.

Are their investments paying off? A whopping 73% of interviewees say they plan to launch innovative customer experiences in the upcoming year — and two-thirds believe that they already have.

These numbers sound promising — but they just don't add up.

If this much innovation work is really happening, then why don't we see customer experiences that are actually innovative gushing forth from nearly every organization? Why haven't we seen more and more companies earning excellent scores in Forrester's Customer Experience Index? In 2013, only 8% of the companies in this annual benchmarking survey received a top grade from their customers — and that's a pathetically low number in comparison to the amount of professed innovation in the industry.

Here's the problem: Everyone talks about customer experience innovation, but no one knows quite what it is or how to attain it. In fact, when we ask customer experience professionals how they're driving their innovation efforts, we find several misguided approaches that actually thwart differentiation and waste massive amounts of time and money in the process.

Many companies simply try to keep up with the Joneses. Fifty-eight percent of our respondents said that their firms drive customer experience innovations by watching what their direct competitors are doing. A full 72% look to copy companies in other industries. For example, Citibank wanted to copy the Apple store so badly that it actually hired the same architects responsible for the Apple store concept to design its bank of the future. Not surprisingly, it wound up with a bank that looks like an Apple store. Imitation may be the highest form of flattery — but it's not innovation. In fact, it's the very definition of parity.

Other companies pray that technology can save them. Sixty-two percent of our panelists report that technology advancements drive their firms' innovation activities. But technology for technology's sake can end in disaster. Consider the multinational auto insurance company that invested in a new mobile app and expensive back-end integration to connect customers in an emergency with a call center agent. While it looked good on paper, the plan failed to account for the fact that drivers didn't download the app in anticipation of getting into a car crash — and had more pressing things on their minds than browsing an app store once an accident occurred. Result? Another so-called innovation that failed to produce business results.

In order to change approaches like these, companies must first have a clear understanding of what it is they're aiming for. Forrester defines customer experience innovation as: The creation of new customer experiences that drive differentiation and long-term value.

Customer experience innovation requires a structured approach that goes beyond traditional find-and-fix methods and helps firms identify and create experiences that really matter. To put their innovation efforts on the right track, customer experience professionals must do three things.

Reframe innovation opportunities. Companies need to start their innovation initiatives with an outside-in approach that frames their business challenges within the context of customers' unmet needs. To identify new opportunities, for example, Philips Healthcare mapped out a typical day in the life of a radiologist, a key purchase influencer, regardless of whether those activities involved Philips. This approach enabled the team to identify a key pain point in radiologists' daily work — an inability to compare one patient's scan with those of others — that Philips already had the data for and capability to solve but hadn't considered productizing.
Ground innovations in the business model. To sustain new types of interactions and ward off copycats, companies need to connect innovations to the mechanics of their underlying business model. Mobile operator giffgaff's customers discover, evaluate, buy, and get support online and in social forums — the direct result of a cost structure that includes only a handful of employees. And Zipcar's car-sharing business model drove a need for keycard (and then mobile phone) vehicle entry — new types of interactions that traditional rental companies never envisioned. Customer experience professionals should explicitly map out the mechanics of possible new business models — like resources, activities, and revenue structure — using a tool like the business model canvas. This visualization can help teams see how core business activities can fuel new types of customer interactions — and support them in the long run.
Infuse innovations with the brand. Ikea Systems' cartoon furniture assembly instructions, Mini Cooper's retro-inspired dashboard, and the cheerful chirp of a Zappos customer service rep — the qualities of these customer experiences create strong associations with their brands. And the more a new customer interaction looks, feels, smells, sounds, and tastes like a specific brand, the harder it will be for competitors to copy. That's why design and innovation consultancy Continuum created mood boards when developing a new restaurant concept for Bertucci's called 2ovens. A collage of carefully chosen photos depicted the desired 2ovens vibe; helped align internal Bertucci's stakeholders; guided the design of touchpoints as diverse as the dining space, menu, and website; and even shaped the company's hiring policies.

Customer experience innovation happens at the intersection of consumer needs, business model, and brand. Companies that neglect one or more pieces of this innovation puzzle will be forever relegated to customer experience mediocrity, on par with throngs of other companies desperate to fix their experience issues and retain customers. But by following the steps above, firms can increase the likelihood that their customer experience innovation initiatives will drive differentiation and long-term value.

Entrepreneurs Get Better with Age

When my mother turned forty, we threw her a tongue-in-cheek funeral-themed surprise party, festooning the living room with paper tombstones engraved with Rest in Peace. That party theme is now a laughable conceit — forty then was older than forty now. Almost. In today's world, there is still a bias against older people — employers in particular often think (in their mind) what Shark Tank's Kevin O'Leary is fond of saying to entrepreneurs he doesn't like, "You are dead to me." If we're being honest, we probably agree with O'Leary. Who of us hasn't said, "I'm looking for someone young and hungry." The implication is clear: If you aren't young, you have nothing to contribute.

According to famed developmental psychologist Erik Erikson, as we grow older, hunger for meaning animates us, making us more alive. His theory explains that each healthy human passes through eight stages of development from infancy to adulthood. The seventh stage of development typically takes places between the ages 40-64 and centers around generativity, a period not of stagnation, but of productivity and creativity, including a strong commitment to mentoring and shoring up the next generation. Individuals in this developmental stage are supremely motivated to generate value, not just for themselves, but for others, asking the question: What can I do to make my life really count?

There are loads of both anecdotal and empirical data to support this idea of accelerating creativity in our middle years. Take Cheryl Kellond, for example, one of forty women we recently profiled in 40 Women Over 40 to Watch. Kellond, 43, founded Bia Sport, a GPS sports watch that records time, current heart rate, sending the data straight to an online profile. It also comes with a panic button that gives women who work out alone peace of mind. With traditional sources of financing unavailable, Kellond raised her first round of capital ($408,000) on Kickstarter — the ultimate in creative financing. Then there's Linda Avey, who at age 46 started breakout company 23 and Me, a direct-to-consumer company that gives people access to their genetic data. At age 53, Avey is on her second start-up, Curious, a tool that gives people tools to ask questions about their health through data aggregation and sharing.



Research suggests Kellond and Avey aren't one-offs. "The average age of a successful entrepreneur in high-growth industries such as computers, health care, and aerospace is 40. Twice as many successful entrepreneurs are over 50 as under 25. The vast majority — 75 percent — have more than six years of industry experience and half have more than 10 years when they create their startup," says Duke University scholar Vivek Wadhwa, who studied 549 successful technology ventures. Meanwhile, data from the Kauffman Foundation indicates the highest rate of entrepreneurship in America has shifted to the 55-64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34.

The over-40 crowd is also more likely to do work that matters not just for themselves, but also future generations. For example, Jacki Zehner, 47, the youngest woman to become a partner at Goldman Sachs, is pouring her post-forty life into philanthropy on behalf of women and girls as CEO of Women Moving Millions. Carol Fox, 69, has devoted her golden years to the China-U.S. Philanthropy project, teaching Chinese billionaires how to extend their circle of caring beyond family. While photojournalist Paola Gianturco, 73, igniting an activist grandmother movement, inspiring grandmothers across the world to become involved in education, health and human rights. In learning about these inspiring individuals, it's easy to see why research indicates that a 55-year-old and even a 65-year-old have more innovation potential than a 25-year-old: innovators really do get better with age.

Just as larger businesses provide economic stability to society in the form of higher pay, better medical care, and retirement, experienced workers provide intellectual and emotional ballast in the workplace including innovation expertise. Think about it — disruptive innovation is about playing where no one wants to play (low-end), or has thought of playing (new market). As individuals move into Erikson's seventh developmental stage, creating something new isn't just a "nice thing to do" — it is a psychological imperative. The urge to create, to generate a life that counts impels people to innovate, even when it's lonely and scary. Data notwithstanding, some of the companies among us will continue allow these individuals to fall into the arms of independent work, if we don't give them the boot first. The smart companies — and my money is on you — will harness this hunger of the underserved, ready-to-serve corp of talent, and upend the competition.

Making Virtual Teams Work: Ten Basic Principles

Consider this now familiar view from the field:

"I've run a virtual team for the past 18 months in the development and launch of [a website.] I am located in Toronto, Canada. The website was designed in Zagreb, Croatia. The software was developed in St. John's, Newfoundland; Zagreb, Croatia; Delhi, India; and Los Angeles, USA. Most of the communication was via email with periodic discussions via Skype. I had one face-to-face meeting with the team lead for the technology development this past December."

Could this be you? Virtual teams have become a fact of business life, so what does it take to make them work effectively? On June 10, 2013, I launched a discussion around this question on LinkedIn. The result was an outpouring of experience and advice for making virtual teams work. (I define "virtual teams" as work groups which (1) have some core members who interact primarily through electronic means, and (2) are engaged in interdependent tasks — i.e. are truly teams and not just groups of independent workers). I distilled the results and combined them with my own work, which focuses on how new leaders should assess and align their teams in their first 90 days. Because that's really when it's most important to lay the foundation for superior performance in teams — virtual or otherwise. Here are ten basic principles for making this happen:

1. Get the team together physically early-on. It may seem paradoxical to say in a post on virtual teams, but face-to-face communication is still better than virtual when it comes to building relationships and fostering trust, an essential foundation for effective team work. If you can't do it, it's not the end of the world (focus on doing some virtual team building). But if you can get the team together, use the time to help team members get to know each other better, personally and professionally, as well to create a shared vision and a set of guiding principles for how the team will work. Schedule the in-person meeting early on, and reconnect regularly (semi-annually or annually) if possible.

2. Clarify tasks and processes, not just goals and roles. All new leaders need to align their team on goals, roles and responsibilities in the first 90 days. With virtual teams, however, coordination is inherently more of a challenge because people are not co-located. So it's important to focus more attention on the details of task design and the processes that will be used to complete them. Simplify the work to the greatest extent possible, ideally so tasks are assigned to sub-groups of two or three team members. And make sure that there is clarity about work process, with specifics about who does what and when. Then periodically do "after-action reviews" to evaluate how things are going and identify process adjustments and training needs.

3. Commit to a communication charter. Communication on virtual teams is often less frequent, and always is less rich than face-to-face interaction, which provides more contextual cues and information about emotional states — such as engagement or lack thereof. The only way to avoid the pitfalls is to be extremely clear and disciplined about how the team will communicate. Create a charter that establishes norms of behavior when participating in virtual meetings, such as limiting background noise and side conversations, talking clearly and at a reasonable pace, listening attentively and not dominating the conversation, and so on. The charter also should include guidelines on which communication modes to use in which circumstances, for example when to reply via email versus picking up the phone versus taking the time to create and share a document.

4. Leverage the best communication technologies. Developments in collaborative technologies — ranging from shared workspaces to multi-point video conferencing — unquestionably are making virtual teaming easier. However, selecting the "best" technologies does not necessarily mean going with the newest or most feature-laden. It's essential not to sacrifice reliability in a quest to be on the cutting edge. If the team has to struggle to get connected or wastes time making elements of the collaboration suite work, it undermines the whole endeavor. So err on the side of robustness. Also be willing to sacrifice some features in the name of having everyone on the same systems. Otherwise, you risk creating second-class team members and undermining effectiveness.

5. Build a team with rhythm. When some or all the members of a team are working separately, it's all-too-easy to get disconnected from the normal rhythms of work life. One antidote is to be disciplined in creating and enforcing rhythms in virtual team work. This means, for example, having regular meetings, ideally same day and time each week. It also means establishing and sharing meeting agenda in advance, having clear agreements on communication protocols, and starting and finishing on time. If you have team members working in different time zones, don't place all the time-zone burden on some team members; rather, establish a regular rotation of meeting times to spread the load equitably.

6. Agree on a shared language. Virtual teams often also are cross-cultural teams, and this magnifies the communication challenges — especially when members think they are speaking the same language, but actually are not. The playwright George Bernard Shaw famously described Americans and the British as "two nations divided by a common language." His quip captures the challenge of sustaining shared understanding across cultures. When the domain of team work is technical, then the languages of science and engineering often provide a solid foundation for effective communication. However, when teams work on tasks involving more ambiguity, for example generating ideas or solving problems, the potential for divergent interpretations is a real danger (see for example this Anglo-Dutch translation guide). Take the time to explicitly negotiate agreement on shared interpretations of important words and phrases, for example, when we say "yes," we mean... and when we say "no" we mean...and post this in the shared workspace.

7. Create a "virtual water cooler." The image of co-workers gathering around a water cooler is a metaphor for informal interactions that share information and reinforce social bonds. Absent explicit efforts to create a "virtual water cooler," team meetings tend to become very task-focused; this means important information may not be shared and team cohesion may weaken. One simple way to avoid this: start each meeting with a check-in, having each member take a couple of minutes to discuss what they are doing, what's going well and what's challenging. Regular virtual team-building exercises are another way to inject a bit more fun into the proceedings. Also enterprise collaboration platforms increasingly are combining shared workspaces with social networking features that can help team members to feel more connected.

8. Clarify and track commitments. In a classic HBR article "Management Time, Who's got the Monkey?" William Oncken and Donald L. Wass use the who-has-the-monkey-on-their-back metaphor to exhort leaders to push accountability down to their teams. When teams work remotely, however, it's inherently more difficult to do this, because there is no easy way to observe engagement and productivity. As above, this can be partly addressed by carefully designing tasks and having regular status meetings. Beyond that, it helps to be explicit in getting team members to commit to define intermediate milestones and track their progress. One useful tool: a "deliverables dashboard" that is visible to all team members on whatever collaborative hub they are using. If you create this, though, take care not to end up practicing virtual micro-management. There is a fine line between appropriate tracking of commitments and overbearing (and demotivating) oversight.

9. Foster shared leadership. Defining deliverables and tracking commitments provides "push" to keep team members focused and productive; shared leadership provides crucial "pull." Find ways to involve others in leading the team. Examples include: assigning responsibility for special projects, such as identifying and sharing best practices; or getting members to coach others in their areas of expertise; or assigning them as mentors to help on-board new team members; or asking them to run a virtual team-building exercise. By sharing leadership, you will not only increase engagement, but will also take some of the burden off your shoulders.

10. Don't forget the 1:1s. Leaders' one-to-one performance management and coaching interactions with their team members are a fundamental part of making any team work. Make these interactions a regular part of the virtual team rhythm, using them not only to check status and provide feedback, but to keep members connected to the vision and to highlight their part of "the story" of what you are doing together.

Finally, if you are inheriting a team, take the time to understand how your predecessor led it. It's essential that newly appointed leaders do this, whether their teams are virtual or not. Because, as Confucius put it, you must "study the past if you would define the future." It's even more important to do this homework when you inherit a virtual team, because the structures and processes used to manage communication and coordinate work have such an inordinate impact on team performance. You can use these ten principles as a checklist for diagnosing how the previous leader ran the team, and help identify and prioritize what you need to do in the first 90 days.

Fewer U.S. Males Are Working, and It's Not Just Because of the Economy

Disability is contributing to a steady decline in the number of men in the American workforce: In 2012, 3.1% of working-age males were receiving federal disability benefits, up from 1.9% in 1982, according to National Academy of Social Insurance data cited by CNN. Other factors in the decline, aside from recession and downsizing, include increasing rates of incarceration. Just 88% of men ages 25 to 54 are participating in the workforce today, down from 97% in 1956.

Why Executive Teams Shouldn't Write "Culture Decks"

Boston is teeming with entrepreneurship. The "startup renaissance" that followed the financial crisis of 2009 has led to as many acquisitions as it has public companies.

For the founders and CEOs of many startups, the recent influx of additional tech giants to Boston like Amazon, eBay, and Twitter means that hiring—especially when it comes to engineers—will become even more challenging. With far deeper pockets than early- and mid-stage startups, these tech giants will be vying for the same talent our startup ecosystem has been fostering.

How can young startups continue to attract and retain great talent? One of the keys may lie in culture.

Companies are creating "culture decks" to answer the question, "why should I work here?" In Boston and beyond, companies large and small are publishing more and more of these. Some are impressive, clearly well thought out, and critical to recruiting strategies. However, many end up sounding strangely similar—mentioning something about vacation policies, a beer fridge, and how the company is structured. More often than not, these culture decks come across as pre-canned.

Culture decks are becoming as mundane as missions statements. Upon reflection in recently creating our culture deck here at Nanigans, the reason for this seems rooted in two core points:

How companies define culture
Who is behind the creation of these culture decks

Culture is a rich term, used historically to describe civilizations and people, but in the business context it's often reduced to "org structure," "mission statements," and "employee incentives." Defining culture in this way in the workplace—mapping it to corporate goals—is much behind the reason why many culture decks feel forced.

Perhaps they also come across this way because most are created by founders, CEOs or select members of executive teams. By definition they are much less in tune with what happens on a daily basis on the ground than employees themselves. A company's founders and executives know what they're on a mission to accomplish. They're in tune with corporate goals and how the company should ideally be projected to evoke success to investors and customers alike. However, this also contributes to the elements of culture being focused on mission statements, organizational structure, and top-line incentives.

Yet authentic culture is not dictated from the top down. Authentic culture emanates from people—a natural expression of who they are, and arises out of shared experiences together inside and outside the office.

Do founders and executive teams affect culture? Absolutely. Top-down created culture decks aren't necessarily wrong or bad; however, more often than not, they're simply not in tune with reality.

In witnessing and being a part of an incredibly vibrant startup culture, from a 15-person early stage startup 2 years ago with no venture funding to our now 100+ person company, I know the real elements of company culture aren't reflected in the traditional definition nor the top-down approach to culture decks.

When we decided to create a culture deck at Nanigans, we took a different approach. In fact, we didn't even set out to create such a deck. Instead, it was the product of a branding exercise.

We held one-on-one, hour-long conversations with almost all of our employees about company pillars like industry, product, customers, and culture. We asked each thirty-five different questions, such as the following:

What defines a successful company?
What transitions us from provider to strategic partner?
What words best describe our product?
Why do our customers need us?
What about Nanigans scares competing firms?
What's most critical for us to do now to continue to grow, fast?
What trends and commonalities unite our employees?

As our project was coming to an end and pitch decks and new positioning were created, we kept finding ourselves back to the consistency and passion with which people spoke when discussing our culture—it came through when we talked about our product, industry and customers as much as it came through when we talked specifically about culture.

Despite this, I struggled while putting together our "culture deck." It felt wrong to package up our authentic culture into a set of slides. In my mind, imposing words and images devalued how special and organic our culture truly was.

Then an executive who'd come to Nanigans from a place replete with a top-down culture deck reacted to my hesitancy by saying, "This is exactly why an executive should never create a culture deck." Instead of interpreting other employees' answers to our questions, I began using the real words and imagery they'd used in those conversations. The culture deck came together seamlessly thereafter. The result is a presentation created by every single employee at Nanigans. And upon showing it to executives, their only feedback was, "Keep it exactly as it is."

There is no cookie-cutter framework or five-step process to creating a meaningful culture deck, just like there is no simple formula for creating great company culture.

Genuine culture is organic, not imposed. It's why our executive team didn't write our culture deck, and it's why we fear not the looming hiring challenges that Boston tech companies face. Culture is what keeps people at Nanigans—not our mission statement or how our teams are structured.

Our culture deck is a guide for company hiring and fit, as much as it is a signature of what's made us so successful to date:

Culture at Nanigans from Nanigans

Obama Gave a Monumental Climate Change Speech, But It's Still Not Enough

Yesterday, President Barack Obama gave what Al Gore called the "best presidential address on climate change ever." It's true: the actions President Obama outlined will likely reduce our contribution to climate change, possibly by quite a lot. And while the plan will have large impacts on business, it's not a big enough vision to meet the scale of our climate challenge.

The majority of the speech focused on the mitigation of emissions — spewing less stuff into the air — and fell into four key areas:

Enforcing the Clean Air Act rules, which mainly means more strict emission rules on new and existing power plants which are responsible for one-third of our emissions (this is something the Supreme Court gave the EPA power to do six years ago). President Obama made it crystal clear that greenhouse gas emissions are a pollutant subject to regulations — he used the phrase "carbon pollution" about 30 times.
What the White House called "doubling down on" clean energy. The president wants to double the share of electricity coming from renewables (wind and sun mainly), after already doubling this percentage in his first four years.
Improving energy efficiency standards for things like appliances and federal buildings, a worthy follow up to the aggressive auto fuel efficiency standards passed last year.
Attacking "other" greenhouse gases, those that can be much more powerful warming agents than CO2, such as methane (which comes from animals/farms, natural gas leaks, and landfills) and HFCs (the class of chemicals used in refrigerants). Oddly, none of this was in the final text of the speech, but a White House briefing call I sat in on (while at the Corporate EcoForum) mentioned this category of action, and the full plan online features this category.

So what does this all actually mean for business?

Carbon-based energy will be more expensive and clean energy will be cheaper. The largest, glaring gap in the speech was any mention of a price on carbon, by far the most effective action we can take to tackle climate change. But when all the elements of the president's plans are combined, carbon energy will less appealing relative to cleaner options. More restrictions on coal could raise dirty energy costs if utilities can't reduce emissions profitably (which they're already doing).

In other words, costs for energy will potentially rise if your power is heavily coal-dependent. Nationally, the percentage of coal feeding our grid has been dropping fast (to 37% in 2012), but there are major regional differences. But costs per kilowatt-hour don't mean spending more if you're getting efficient quickly enough and buying your own renewables (which many companies, for their part, are also already doing).

Still, if you're dependent on coal-powered energy — or your value chain is — it's time to rethink your energy strategy and reconsider the payback periods on clean energy investments.

Business will feel government action on many fronts. During the briefing call I sat in on, the White House called it a "whole of government approach," with many agencies applying pressure or affecting markets in numerous ways. Regulations are just one path. Raising standards on appliances and cars another. But perhaps more importantly, many government entities are affecting markets, in a very good way, as customers — they're buying cleaner economy products in large quantities.

The Department of Defense is one of the largest purchasers of biofuels (for Navy planes) and invests heavily in solar for forward Marine bases in Afghanistan and Air Force bases at home. The General Services Administration (GSA), with $500 billion of purchasing of its own, will continue prioritizing greener products in many areas. The President didn't talk yesterday about this kind of purchasing power specifically, but he (and his predecessors) have issued executive orders before.

Business (outside of coal plants) will be leveraged as a partner. The President name checked Walmart, GM, and Nike, and for very good reasons. Walmart is the largest private user of solar power in the country, and has set goals to increase that amount 6-fold by 2020. GM and Nike (and 500 other companies including Starbucks, Swiss Re, and Unilever) have signed onto Ceres' Climate Declaration, calling for much more action. These companies are doing important work, if nothing else because they provide the president cover from those claiming falsely that business hates climate action.

The president's plan is extensive — with many elements I didn't get to in the full outline — and it will accomplish a great deal. But the plan we have on the table isn't fully up to the task we face. Our national goals (17% reduction from 2005 by 2020) fall short of what the science facts — and reports from number crunchers at McKinsey, PwC, and WWF/CDP — are telling us we have to do (and, importantly, can do profitably). As Al Gore put it, "The hard truth is that the maximum that now seems politically feasible still falls short of the minimum necessary to actually solve the climate crisis."

We're operating in a "what can we get done" mentality, which is what passes for vision in Washington these days. There's also still a disturbing reliance on the "all of the above" energy theme — the president mentioned how great it is that we're producing our own oil, which, regardless of the geopolitical benefits, is the opposite of fighting climate change.

I had hoped that a second term president could raise the stakes and firmly grab all those third rails. Talk about the need to price carbon so our markets can function correctly. Talk about our deep need to change how we operate fundamentally, but for the better.

The president is right to identify business has a partner in this, but he could go much, much further. We should be honest about the hard truth that there will be losers — like fossil fuel companies that can't (or won't) make the transition to a clean economy. But I'd like to see our political leaders really grasp the opportunity here. It's not just innovation to avoid regulations — that's old school. Instead, there are multitrillion-dollar markets in play — efficiency in general, but also entire sectors in buildings, transportation, and energy — and vast wealth creation opportunities available to the countries and companies that go for it aggressively (like China).

President Obama's speech outlines the best plan we've ever had, though it's more like playing defense. Still, with this very real push and help from Washington, business can go on the attack, building a massive clean economy much faster. And it should.

How to Compete When IT Is Abundant

"You only gain an edge over rivals by having or doing something that they can't have or do," wrote Nicholas Carr ten years ago in his controversial HBR article, "IT Doesn't Matter."



Carr predicted that an organization's ability to compete through investing in information technology was about to change dramatically. When "the core functions of IT — data storage, data processing, and data transport — have become available and affordable to all," he wrote, IT would cease to be a source of competitive advantage.



This was not yet reality at the time of Carr's article. The IT boom of the 1980s and early '90s had brought information technology to the corporate masses, unleashing the first full-scale technology revolution in the enterprise. To stay competitive, businesses rapidly embraced PCs, and the subsequent transition to the client/server era.



The original IT department was formed to centralize a unique expertise that could purchase, implement, and manage technology in the enterprise. And given the complexities involved in building up competitive IT weaponry, businesses won by out-spending and out-resourcing their opponents. Only the largest of enterprises could afford the best technologies, and even for those with the largest bank accounts, IT strategies were limited to basics like CRM, ERP, or email.



Today, though, Carr's prediction is coming true. We're in the early days of yet another seismic shift in IT, this time driven by mobile devices, the cloud, and a demand for technology experiences that match the simplicity of the consumer world. We are moving abruptly from an era of IT scarcity to one of abundance.



This end of IT scarcity begs an interesting and important question. How do companies differentiate in a world where access to technology is no longer a competitive advantage?

Information Eats the Enterprise

With the swipe of a credit card, the customer support team can move to Zendesk or Desk.com; the HR team lives on Workday; the business intelligence group moves to GoodData or Domo; the finance team logs into Netsuite; the marketing department orbits around Marketo and Salesforce's marketing cloud. Whereas in the client/server world managing these disparate systems would have taken up the vast majority of a company's IT budget and time, today an organization can be on dozens of job-specific, tailored solutions in days. The cloud enables enterprises to efficiently implement best-of-breed services while serving the varied needs of a business.

But here's the surprise twist: Whereas many feared — and Carr more or less predicted — that the cloud would drive the extinction of the IT organization, the sudden avalanche of technology is actually making the IT function more important than ever before. Rather than serving as an adjunct to the core business, or merely a cost center, IT is becoming intrinsic to the very products and services that every company offers.



Why is this? Mainly because, as Marc Andreessen puts it, "software is eating the world." A recent Accenture report concurs, claiming that every business is now a digital business:

Every industry is now software driven; as such, every company must adopt IT as one of its core competencies ... Here is Nike using wireless sensors and Web technology to create a performance-tracking system that allows it to create new services to monitor, and to improve and create new training routines for athletes. There is Ford, using sensor data to monitor both how a car operates and the driver's behavior, and seeking to apply analytics to improve the experience for the next generation.

As software eats the world, information is eating the enterprise. Access to the right information at the right time from anywhere will transform every business and every industry. Competitiveness in IT will come from connecting employees and partners in meaningful ways to bring products to market faster (how does a supply chain process shrink from days to minutes?), supporting customers with new experiences (can my thermostat talk to my energy provider?), and surfacing the right people and knowledge to generate better ideas (how do I find experts across my organization that I'm not connected to?).

IT abundance will affect every job, product, and customer interaction. We're seeing retail outlets supply store employees with iPads chock full of product catalogs to improve in-store consultation, enabling them to be instant experts on the latest goods and services. Flextronics uses Workday to provide visibility into its global workforce of 200,000 employees, allowing it to move around talent and projects at a moment's notice. Kimberly Clark utilizes Salesforce's Chatter to connect to its customers for development of products. Education publishing businesses are digitizing their entire supply chain, creating an end-to-end experience that connects everything from the creative and production process to the delivery and interaction with students.

In this transition from a world of IT scarcity to abundance, competitive advantage has little to do with unique access to technology, and everything to do with unique access to — and use of — information. When technology is near-ubiquitous, it's the connection between people and information that drives business forward. Organizations that capitalize on this trend will ensure that as information eats the enterprise, they'll be the ones satiated.

Airbnb: A Spare Room for Debate

In the early days of the Internet, services such as eBay and Craigslist revolutionized secondary markets, making it easy for individuals to buy and sell used goods. Among other devastating results, the classified ad went the way of the dodo (and with it much of the revenue that subsidized printed newspapers). Now we're in the midst of the next generation of such services, which make it possible for individuals not just to dispose of used assets but to rent, lease, or loan their belongings to other consumers, without the need for much if any corporate infrastructure.

This idea of peer-to-peer commerce, or the "sharing economy" as it is sometimes known, has spawned a new breed of innovations. Start-ups are now facilitating short-term borrowing of such expensive but often under-utilized possessions as apartments and homes, cars (or just a ride), power tools, and even, on sites such as TaskRabbit, personal expertise.

An existential issue looms over them: Is the sharing economy even legal? And if not, should laws and regulations be reformed to allow it to exist?

These are not rhetorical questions. Regulators — often spurred into action by incumbents threatened by the new competition — have cast jaundiced looks in the direction of every one of the new sharing economy services, in some cases ruling them in violation of long-standing laws. In some cities, for example, sharing economy services have been banned under laws that prohibit unlicensed hotels, taxicabs, and other professional services.

Airbnb, an accommodation matching service first launched in 2008, has recently come under heavy fire just as — not coincidentally — its revenue is taking off.

The site's early ambitions were modest — provide a website for cash-strapped out-of-towners to find cheap places to crash, a form of budget travel known as couch-surfing. But casual rental of part or all of a "host" house or apartment is now big business. Airbnb growth has been doubling in shorter intervals for some time; last year, it booked 12 to 15 million "spaces."

A recent study found that Airbnb and similar services have gone from gimmick to disruptor in record time, offering real competition for traditional hotels with rates that average 20-50% below market price in most cities. The company now operates in 190 countries and 28,000 cities, and its founders expect the service to grow to 100 million annual bookings and revenue of $1 billion. (The site charges both host and guest service fees for each stay, based on a percentage of the total price.)

Those numbers have been a wake-up call for the hospitality industry, and for the local regulators who are responsible for ensuring lodgings are licensed and taxed, and meet minimal standards for health, safety, and hygiene. Airbnb's hosts aren't subjected to any of these rules, the industry complains, and should be.

Like other sharing economy innovators, Airbnb is now at the center of a legal maelstrom in cities around the world. In Airbnb's home town of San Francisco, tax collectors say hosts haven't paid any of an estimated $1.4 million in hotel taxes or registered as businesses. And New Orleans considers Airbnb listings in the French Quarter to violate laws against "rentals" of less than 60 days.

Last month, the service suffered a serious blow when New York's Environmental Control Board ruled that an Airbnb host had violated the city's transient hotel law, which prohibits the rental of rooms or apartments for less than 30 days. (The New York case is ironic in that the 2011 law was enacted to stop landlords from converting apartments into more lucrative hotel rooms — to protect tenants, in other words.)

If the ruling stands and the city takes a more aggressive approach to enforcing the law, it could spell the end of Airbnb in New York. Though the company wasn't a party to the proceeding, its lawyers appeared at the hearing to argue on behalf of the host. Airbnb and the host plan to appeal.

Whatever the outcome in New York and other cities where the service is under attack, the bigger legal questions about Airbnb can't be answered easily. Should individuals be allowed to occasionally rent out their apartments or spare rooms without any legal oversight? Or should they be subject to the full suite of laws that govern hotels and other full-time lodging services, including "real" B&B's?

On the one hand, laws that require licensing and regulation for temporary lodgings were designed to protect travelers from being ripped off, or being subjected to unsafe or unsanitary conditions (fire codes, public health codes, etc.). Enforcing these legal standards is an expensive task for city governments, on that depends on the collection of hospitality taxes.

On the other hand, as often happens, laws aimed at protecting hotel consumers have morphed into rules that protect the regulated hotel industry from some forms of competition, either with each other or, as here, with a new form of more casual lodging.

For its part, Airbnb says its hosts and guests are already well-protected. But in the absence of any licensing, standards, or inspections, how can the company be so confident that abuses aren't already taking place or won't in the future?

In part, the answer comes from applying more technology.

Airbnb, it turns out, isn't simply matching buyers and sellers. The service also requires hosts to provide verifiable identification, and offers guests 24/7 customer service in case anything goes wrong. Users also rate and review each other. Payments go directly to Airbnb, not the host. And the company provides a $1,000,000 insurance policy against damage caused by guests. These are precisely the kind of quality and safety controls that city regulators enforce for traditional lodgings, and for which they collect taxes. But using the same technology that makes the service possible, Airbnb has replicated much of the regulatory structure in what is arguably a more efficient format.

But is that enough? And shouldn't governments, in any case, have some say over whether new kinds of transactions are exempt from old rules, or whether Airbnb's technology-based regulation is sufficient? Or do individuals have the right to opt-in to alternate systems of private government, unless and until something goes very wrong?

Given the inefficiency and protectionist features of traditional rules, I'm inclined to grant the sharing economy broad latitude to test its innovative approach to improving asset efficiency. For one thing, the success of disruptive innovators often inspires incumbents to implement long-overdue innovations of their own. And regulated incumbents are especially prone to inertia — inertia shared by regulators, who are even less likely to look for opportunities to improve their efficiency.

Still, it's worth remembering that traditional laws, at least in principle, are designed not only to protect individual consumers but also to create public perceptions that someone is watching out for those at risk — to minimize what economists call "negative externalities."

There may be such a thing as too much efficiency, for example. Venice in the summer now resembles an amusement park more than a city, with visitors packed so tightly that no one actually gets to experience the charm they all came for. In the case of lodgings, residents who rely for income on the tourist industry have a strong interest in ensuring that visitors don't have a bad experience, no matter where they stay. There's some value to regulations that maintain that sense of well-being, in other words, even if they aren't implemented in the most cost-effective way.

Perhaps consenting guests should be free to accept any conditions at an appropriate price. But don't bet on local authorities or the services they have long regulated to disappear or transform overnight. For every transaction cost the sharing economy eliminates, expect two or three new ones to appear in the form of legal obstacles — even if they're only transient.

Consumers Don't Want to Cook, But Want to Feel as If They're Cooking

Prepared-food products that require a few preparatory steps appeal to customers who want to feel as though they're actually cooking dinner, rather than just opening a package, says the Wall Street Journal. One group of women studied by Kraft Foods Group made it clear they wanted to spend at least 15 to 30 minutes peeling or chopping, "to have it count," says Risa Schwartz, the food company's associate director of consumer insights and strategy. ConAgra says the most popular day for use of some of its frozen-meal brands is Wednesday, a day of the week that the Journal describes as the "cooking-from-scratch low point for most households."