Facebook’s Oversight Board
I wanted to like Kara Swisher’s piece in the New York Times about Facebook’s attempt to wrestle with its daemons, but I can’t because it feels too much like self-delusion. To cut to the chase, Facebook announced it was forming an oversight board that will eventually have about 40 members with responsibilities for policing its domain and reducing or even eliminating the fake news and propagandistic uses the service has been subjected to at least since the 2016 election cycle.
I am not impressed.
I am not swayed because it appears to me that the company can’t or won’t come to terms with a valid definition of the problem. Facebook has a quality control problem and building structures that chase after bad actors and their content once they’ve had a chance to pollute social media doesn’t work. If it was a manufacturer with defective products, we’d all quickly conclude that the way to improve product quality is to build it in and not to attempt to add it after the fact, which is what the oversight board would do.
The auto industry of the 1970s provided all of the case study information you need. American car companies tried to improve the quality of their products after they were built shunting aside cars that needed rework. The Japanese in contrast broke down the assembly process and tried to improve every aspect of it to drive error out and build quality in. During the 1970 and 1980s Detroit lost roughly half of its market share to foreign competition that just built better cars and it has not recovered.
Social media is a bit different. Bad actors are building defects into social media so that any policing strategy or oversight board will always be a day late and a dollar short. Social media, and Facebook in particular, need to face the fact that products once intended for private individuals to communicate with have been adopted by government and industry for other purposes because they represent a commoditization of other modes of communication. They’re cheap and effective and nothing attracts government and business like cheap and effective.
Right now, you could call yourself Neil Armstrong and launch a page that said the moon landing was faked and you’d be off to the races. Social media companies want to be able to wash their hands of responsibility for the misinformation except that they also want to capture revenue from it. This is a two-tier business model mascaraing as one: they are platform and apps. Solving the social media problem requires a model that separates ownership and requires commercial and government users to demonstrate a fundamental understanding of the tools and resources including their proper use. Penalties for misusing the services would be a big plus.
Lots of people will call this draconian and a violation of imagined rights, but it is the way we’ve regulated other businesses for a long time. Every plumber, electrician, beautician, doctor, dentist, lawyer and many more professions have to sit for licensing exams before they’re allowed to practice on the public. This sets up a reasonable malpractice regimen too. Social media use by commercial and government entities should face the same regulation.
Regulating at the user level would do a lot to reduce or even eliminate bad actors and misinformation it would effectively add quality to an industry that was once a good idea but is increasingly becoming a cesspool with geopolitical ramifications.
So, I am not a fan of an oversight board for Facebook and, with due respect, Kara, you should know better.
Zoho’s Catalyst to growth
Now would be a good time to put Zoho on your radar if for some reason it isn’t there already. Today the Austin based company announced Catalyst, a developer environment that helps programmers and others to quickly develop apps and microservices with capabilities inherited from Zoho’s apps portfolio. The easiest way to understand this is to say the Catalyst is based on the company’s internal development tools which affords users with a way to make apps that are contiguous with what they buy from the vendor.
With this Zoho joins a small club of software houses that have exposed their own developer tools to outside customers using its platform. Part software tools, part infrastructure play, Catalyst layers on top of an infrastructure service that for the last 13 years has enabled over 200,000 developers to build and deploy 26 million functions.
Beginning with OCR (optical character recognition) and object detection additional services including anomaly detection and prediction analysis will be announced soon. With over 45 business apps now available and more on the way, Zoho presents the developer community with a big selection of tools and functions that programmers can pick from to accelerate their application development.
So what’s so important here?
Zoho has a reputation for being a low-cost provider. The 7,000-person company has 14 offices worldwide as well as international headquarters in Chennai, India. In an industry that is rapidly commoditizing, it represents, perhaps, a second generation of commoditizers. The first generation is domiciled largely in the US and Silicon Valley where competition for talented developers has driven up labor rates. But the privately held Zoho, has kept its costs low by locating development centers in emerging parts of the world where there are large talent pools that simply need better access to the marketplace. Those locations also have significant demand, too.
It should be no surprise then that Zoho’s customers are counted in the millions in markets where publicly traded American companies have a hard time competing due to a greater need for standardized prices.
I’ve written about Zoho before noting their technology and approach to the market and I have also advised them on occasion, FYI. Their strategy has been to focus on smaller to medium sized companies but there is nothing about their technology or market approach that limits their ambition.
At the moment they’re not the biggest player in the US market but we’ve seen this kind of approach before and Clay Christenson wrote eloquently about it in his classic book, “The Innovator’s Dilemma.” According to him, a grassroots strategy is often effective at capturing parts of a market that are less desirable to the incumbent market leaders. Innovation by challengers is sometimes enough to overcome obstacles and turn a challenger into a leader. The best example of this approach for the last 20 years has been Salesforce which dethroned Siebel Systems, once the CRM market leader and muscled out and out lasted others.
But everyone should pay attention here because a grassroots strategy isn’t easy to pull off and often fails because incumbents remember where they came from. Also, as markets mature it’s hard to find a little white space to plant a new idea. Companies like SAP and Oracle have been in the enterprise space for a long time and are trying to navigate the challenges of cloud computing. So far, their technologies are good, but they face an uphill challenge from the likes of Amazon’s AWS for instance which caters to smaller users.
Salesforce, on the other hand, never really left the grassroots. They’re spending bigly (to coin a phrase, ha!) every year to provide products to small and emerging companies while also going after the biggest enterprises, often in an attempt to take customers away from the likes of SAP, Oracle, and Microsoft. Salesforce’s approach to managing the labor costs of building software has been to encourage customers to foot the bill or to build up a cadre of knowledgeable users through its Trailhead program. Oracle recently announced a similar venture by providing free development environments to almost anyone.
So, things change, and the innovator’s so-called dilemma won’t be playing out today as it had when the book was first written. Nonetheless, a company like Zoho can capture market share even in the most crowded places. We’ve entered an era when it’s almost impossible for a new CRM system to emerge because competition is so intense and the same might be said for development tools. It takes money and other resources to launch a new company and investors may have concluded that the CRM market isn’t the most promising anymore.
Zoho is a different animal. It’s private, profitable and self-funding. It has the maturity to become one of the handful of vendors in an IT oligopoly because it also has the necessary pieces to fit into a marketplace that’s rapidly commoditizing and coming to resemble a utility. Releasing Catalyst is a significant down payment.
Bloomberg Businessweek recently ran an article describing Oracle’s struggle to enter the cloud infrastructure market. The company had been late to orient itself to cloud computing, joining the fray after competitors like Microsoft and Salesforce had established dominant positions and the newcomer Amazon Web Services went from a standing start to a position of dominance. Amazon is so strong in the cloud that it is on the cusp of extinguishing the last challenges to its win of the ten-year $10 billion Pentagon JEDI procurement.
At least that’s what a cursory look at the data shows. Certainly, the news isn’t great for Oracle, but the Businessweek piece might be a tad bit too pessimistic, though it’s not unexpected. The piece said in part,
Oracle’s journey to the cloud has been a Sisyphean saga, with the software giant bruised by false starts, dead ends, and internal feuds. The company’s challenge to remodel its business for the modern age has led to hiring binges, followed by large rounds of worker firings, sagging employee morale, and the resignation of Thomas Kurian, an influential executive once seen as Ellison’s technological heir.
It’s all true but I think it errs by taking a financial analysis perspective without considering others. Financial analysts go to many of the same conferences that I do and they even ask similar questions about the technologies we follow but their focus is usually the next quarter and whether or not a company will meet the expectations of Wall Street thus preserving its share price.
So by financial analysis, the company might wish it was in a better place. But hold on, the tech space still moves so swiftly that it’s impossible to count any vendor out or even to say they’re on the ropes. Consider Microsoft which in the 1990s flooded the market with its browser, Internet Explorer. It was an attempt to gain control of a valuable new market and governments on both sides of the Atlantic came down hard on Seattle’s finest. A popular parlor game in some financial circles (after the Kevin Bacon game) asked what would they do if they couldn’t dominate the Internet? But 25 or so years later the company is doing fine and has made a niche for itself in cloud computing, just not in the way originally envisioned.
Microsoft and the Internet is a classic lemons to lemonade story, one door closed and another opened. Fill in your own favorite cliché. When a good company reaches a roadblock, it figures out a workaround. Said workaround might not materialize for some time but perseverance is key. So, what spare parts might Oracle have lying around that it can turn into an appealing succotash?
For starters, at OpenWorld the company announced plans to deploy 20 new hyper-centers in the next year a goal that would give it more datacenters than Amazon. The Businessweek piece said that “…some of those data centers are rented facilities within larger server farms owned by other businesses.” To which the logical next question is, and? It sounds like something some savant might say after entering a McDonald’s and asking to weigh a Quarter Pounder.
Oracle has acknowledged that it won’t replace Amazon Web Services and that its main mission is to remain competitive in databases and applications and it has a credible suite of offerings starting with its autonomous database and associated AI/ML driven security and data warehouse offerings. It’s still early days but the autonomous feature is a game changer in my humble opinion.
To that suite of new takes on old products, at OpenWorld Oracle added Autonomous Linux. The product is a freebee and many financial types might scoff at investing in and launching such a product, but it has legs and not simply as a gamechanger for capturing market share.
Work with me on this. The future of IT is the formation of a utility like many of the utilities that bring us products and services that originated in the late 19th and 20th centuries. The list includes telephone, cable, and electricity, of course, but also water, sanitary, and natural gas services. Today numerous tech product and service companies act like over-indulged children in need of Mary Poppins; it’s a phase that industries go through on the way to becoming well-behaved members of utilities.
Cloud computing is the ultimate commoditization of IT and commoditization precedes utility formation. The same could be said about social media. What’s standing in the way of utility formation is appropriate standards and controls that would set up regulation before government steps in. But in order to do that the industry needs order of magnitude improvements in up time and security and those are things that Oracle’s autonomous suite can bring to the conversation.
The autonomous products can run undeterred on Oracle hardware supported by a self-patching, self-configuring, and self-upgrading operating system and database combination. But that won’t be enough. Oracle needs like-minded partners and it appears to be working to build alliances. This year Oracle and Microsoft announced they’d work together to connect their cloud services, an important milestone. It also announced cooperation agreements with VMware and others.
If you’re thinking about utility formation, the best model might be the so-called electric grid which is really made up of multiple grids and producers adhering to a set of standards that, in the end, provide the appearance of a grid. That’s what the future IT utility might look like in my estimation.
So what about all those datacenters Oracle is bringing up? They’re necessary. Oracle has a big installed base that needs to get to the cloud. Will they all go to Oracle? Probably not. But the company is positioning itself as a premium provider able to supply the needs of the biggest enterprises, the ones that can see the value of becoming part of the IT utility.
Oracle’s ongoing issue to deal with is its outreach to customers. It has reoriented toward the customer in the last few years and the results are obvious, but they might not be enough to cause people with long memories to forget about the bad old days of software audits and litigation but Oracle is making progress. The company needs to continue on its customer first strategy.
My two bits
Larry Ellison’s dream of dominating the cloud was probably never realistic. Back in the hardware days, roughly the 1980s, many people observed that the leaders in one form of computing, say mainframes, were not the ones to lead in the next, in this case minicomputers. And a whole raft of startups carved up the microcomputer market in the 1990s.
The same thing might be happening in software. Oracle was one of the leaders of the relational database revolution and it successfully carried that mantle from the 1970s to the cloud computing era (lots of cloud apps run on Oracle). It’s not going to dominate enterprise cloud computing infrastructure though with 36 hyper-centers it will recapture a lot of its customers who are now running on-premise systems.
Oracle’s next opportunity might be, could be, maybe even ought to be, defining the IT utility structure which will be with us for decades.
The growing importance of all stakeholders
Over the summer the Business Roundtable (BR) released a new statement on what it views as the purpose of a corporation. Because the statement comes from them, it has significance in the marketplace; the group is sort of a non-profit think tank made up of CEOs and it publishes a variety of business research from the perspective of its members. It has issued this kind of statement before on subjects like corporate governance. So the latest statement can be viewed as a check on how the role of the corporation changes over time.
Back in the 1960s and 1970s when Milton Friedman ruled economic opinion it was strongly believed that the role of the corporation was making profits for shareholders and nothing else. That was not the only opinion; in the same era, Management guru Peter Drucker, opined that a corporation’s main job was to make a customer. But that’s a difference of degree at most and this monolithic view has been in decline in recent years.
As government has eased off its role as the ultimate provider of a variety social services, many people have sought other sources and philanthropy has tried to step up to the challenge and this ties in the BRT’s most recent statement on the role of a corporation in today’s society.
The statement on the role of the corporation, signed by 181 CEOs, seeks to reach out to stakeholders including shareholders but also employees, customers, suppliers and communities. Their statement on the role of the corporation follows.
- Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
Almost as soon as the statement made the wires, business savvy people began wondering what it would take to turn many of the prescriptions into actions, would there be follow through?
Around the same time, Accenture and the UN Global Compact, released their own report that examines CEO attitudes. Their report, “The Decade to Deliver: A Call to Business Action,” surveyed 1,000 CEOs globally.
The UN-Accenture study looked for answers about follow through in two important areas, climate change and inequality. Inequality is the tip of the spear when discussing corporate social responsibility. It encompasses employee pay, including executive compensation, how a corporation works within its local community, and even how the corporation organizes itself toward climate change. Many people argue that pollution is a legitimate part of the discussion because corporations make profits from polluting the environment but usually fail to pay for cleanup leaving the society diminished.
The UN-Accenture report identified three goals or “calls to action”
- Raising ambition and impact in CEO’s own companies
- Changing how we collaborate with more honesty about the challenges”
- Defining responsible leadership”
Obviously, there’s great variability among the CEOs of global corporations due to geography, type of business, sector, and much more. But the survey results indicate that the CEOs are ahead of their investors. From the UN-Accenture study:
“In 2016, business leaders’ attitudes toward sustainability reached a peak as CEOs saw opportunity to recalibrate their sustainability efforts in line with global milestones. This is not exactly the case three years later. Despite clear opportunity, CEOs in 2019 acknowledge that business execution is not measuring up to the size of the challenge of the Global Goals—or to their previous ambition.
The sticking point is investors. The old school Milton Friedman purpose of a corporation still obtains. According to the Harvard Business Review article,
“No matter what the BRT statement says, most companies won’t act aggressively unless they believe investors value their sustainability efforts. And while there is actual movement in the investor community of late, as CEO of EDF Energy, Simone Rossi, says ‘There is a great disparity between the public statements put out by banks and investors and their apathy towards sustainability behind closed doors.’ No wonder only 12% of the CEOs cite pressure from shareholders as a motivation.”
My two bits
All of this paints a challenging picture for philanthropy. Unless, or more likely until, the investment community sees issues of sustainability and inequality as significant issues of our time–issues that they can play a role in changing–it’s likely that we will see some very good individual efforts by corporations that will have some effect in different locations. But the challenges ahead of us are global and require a global effort. What to do? Clearly individuals can do two things.
First, they can spend their consumption money with businesses that reflect their concerns. But also, as consumers of financial services, individuals can be selective in which services they use in the conduct of their economic lives. As consumers of financial services too, CEOs can and if the UN-Accenture report is any indication, will, select their financial partners with more care.
History is littered with examples of movements that channeled financial support to reward behaviors by global businesses. It’s possible we might be at the start of another such era.
DevOps and platform strategy
The software development lifecycle has always reminded me of the proverb of the three blind people confronting an elephant. One grabs the trunk and says it’s a snake, another a tusk and says it’s a spear while the third feels its side and calls it a wall. The moral of the proverb is that perception has a lot to do with perspective.
For a long time, the perspective on software was that it was a cost, a necessary cost for sure, but other considerations like how users experience it and how employees work with it, as determined by its quality, were secondary. That perception was handed down pretty much intact from the mainframe days and as long as cloud computing and subscription services didn’t exist, it was good enough.
But when cloud computing and subscriptions became mainstream the definitions of profit and ROI also changed. Profit shrank on a per-transaction basis though vendors knew they had to excel at small interactions to keep customers coming back. ROI was once a one and done phenomenon in which a new system paid for itself through cost savings that eliminated some labor from business processes through automation that let customers self-serve.
Today ROI has changed because the return on a software investment is much less about automating to save money and much more about using software driven business processes to capture opportunities that pop up in the business world. So calculating the return is much more about time to market or time to value than ever. With that change, business needs to speed delivery of software but also, importantly, deliver software that works, is error-free, and gets a vendor there first to capture those ephemeral opportunities.
It’s the old better-faster-cheaper conundrum but it’s no longer acceptable to get two out of three. We’re playing for all of the marbles here.
Into this milieu we’ve launched numerous intellectual tools and a few software of the software variety. The brain tools go by names like Agile, Scrum, Lean and more. The software tools are code generators, clicks instead of code development, and embedded functions like analytics, workflow, security, and integration services that the code generators weave together into a working application. Significantly, all of this lives on the modern software platform.
In my humble opinion I don’t see how you can operate a modern application development shop without a platform. Many, if not most, vendors offer a platform or platform-like environment and a new approach to development called DevOps has been percolating in the IT space.
A recent article in Harvard Business Review by Melody Meckfessel, VP of Engineering, Google Cloud, provides a thorough grounding in DevOps for executives wanting to understand more about yet another thing that has landed on their plates. A successful DevOps rollout in your organization will require some executive involvement because at its heart it is a culture change moving from silos to collaboration, transparency, and sharing. Check out Meckfessel’s article for more.
Key values of DevOps
Unlike the values of earlier programming paradigms, like lowering costs, a DevOps strategy orients toward time to value. I’ve been researching the topic over the summer and will have a detailed report soon but for now let it suffice to say that a well-articulated DevOps strategy can lower costs significantly while empowering employees to take reasonable chances when conceiving and delivering their work products.
Most importantly for the business, DevOps, along with a software development platform that generates running code, is essential to any attempt at digital disruption. Gathering customer data and analyzing it will generate useful information, but a major part of the information needs to be incorporated into the software that supports new or enhanced business processes. So, I like to suggest an equivalence that says: software flexibility drives business agility, which drives profits in the modern enterprise.
And what drives software flexibility? The close-in answer is the platform but the less obvious companion is DevOps. According the Harvard Business Review Analytic Services study mentioned above, 86 percent of those surveyed say that it is important for their company to develop and put new software into production quickly. But it goes without saying that the code has to work and be error free and that’s where platform is needed.
It’s not too late
If you’re feeling left out because your business is struggling with building and delivering software quickly, don’t be. The same study says only 10 percent of respondents say their company is very successful at rapid development and deployment. There’s a vast middle of respondents or 61 percent, who report being neutral or somewhat successful at rapid deployment and implementation.
There’s more to this though. How do we determine what’s fast and what’s just average practice? Earlier data from my research suggests that leaders just getting into modern platform-based CRM think that rapid change is something that’s done as many as four times per year. But people who are in the middle of the transformation are shooting for being able to change their applications’ behavior nearly continuously deploying weekly or faster.
My two bits
Clearly, such rapid iteration needs both tools and approaches and that’s why DevOps is becoming such a big deal. Your approach to DevOps will be significantly different if you’re using a platform. For instance, issues surrounding operating systems and databases can evaporate if your platform deals with those issues thus enabling you to encounter DevOps at a higher level from the outset. From there on, DevOps is largely about supporting people, encouraging sharing and transparency and involving users. It’s an important part of your future especially if you’re trying to figure out if the rest of your business is successful, more so if you’re looking for ways to improve.