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Keynote

 Address
Open  &  Agile:    Accelerating  Change  &  
Institutional  Incompetence
Cory  Ondrejka,  Network  Culture  Project,  USC  Annenberg
open and agile

cory ondrejka • cory.ondrejka@gmail.com


http://twitter.com/coryondrejka • http://ondrejka.net
next 45 minutes
next 45 minutes

agility as key competence


next 45 minutes

agility crucial to better


institutions in the face of:

accelerating change
institutional incompetence
the “so what”
agility is our abilities to detect,
understand and capitalize on change
better and more agile institutions detect,
understand and capitalize on change
(which ain’t easy)
because even though we like graphs like this
institutional performance tends to look like
this
5%

3.5%

2%

0.5%
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
45 minutes, 273 more slides
(hope you’ve had your coffee)
this is going to be fast
100% agreement == FAIL
/me
us navy
lockheed martin
arcade games
video games
second life
annenberg school for communication, usc
emi music
entrepreneur, board members, advisor
big, complex orgs
us navy
lockheed martin
arcade games
video games
second life
annenberg school for communication, usc
emi music
entrepreneur, board members, advisor
I mention these to establish
my East Coast cred
before talking about
communities and collaboration
small, agile
us navy
lockheed martin
arcade games
video games
second life
annenberg school for communication, usc
emi music
entrepreneur, board members, advisor
some common elements
using technology invention, development,
cultural transformation
communication
to create products people love
/you
i will assume you rely on

mobile
email
sms
social networking
twitter
do you regularly

post to a blog
update your status
play online games
spend time in virtual worlds
know anyone who
still prints out email?
tell them the asteroid is coming
open government, innovations
and
agility
wtf is agility?
a 30 second tour
developed in response to waterfall and
other a priori development techniques
assumes you don’t and can’t know what
you want at the start of a project
but this can be scary
there is comfort in having
reams of text, design documents,
RFPs, DFDs, and many other TLAs
of following the standard
(in my time, it was DOD STD 2167A)
beware process theater
if a process leads to failed projects,
it is madness to continue
using that process
so develop as little as you can at a time,
test the results with customers before
moving forward, rinse and repeat
agility is about building the best
products for your customers

even when your customers don’t


really know what they want
requires a certain fearlessness
ability to experiment
comfort with (little) failures
when I talk to government agencies
about agility, I often get
“we can’t do that”
want to focus on the tools of government
and how to be agile within them
first, the tools
data
regulation
bully pulpit
getting out of the way
and the institutional hacking
skills to let you try
find oxygen
don’t start with sacred dinosaurs
spread the wealth
engage patrons
going to talk about these
in terms of the most innovative
institution I know
wait, not that version
need to go back a few years
specifically, one Matthew Fontaine Maury

(thanks to Prof. Dr. Herbert Bukert,


University of St. Gallen,
for introduction to this history)
joined Navy in 1825
spent 14 years sailing
Atlantic and Pacific Oceans
using the standard FAQ of the time
Bowditch’s Practical Navigator
Maury was frustrated
Bowditch didn’t answer the
right navigation questions
what’s the fastest way home?
safest?
easiest?
so Maury looked to see what the
kids were using
and discovered the Ruby on Rails
equivalent for his time
spherical geometry
which he began applying to
navigation and practical exams
with predictable results
it went over the heads of his examiners
and his naval career stalled
then things got worse
stuck ashore, frustrated with the
status quo, what was
Lieutenant Maury to do?
he started blogging
he wrote a series of articles entitled
“scraps from the lucky bag”
where he argued for the establishment of a
Naval Academy to promote professional
training, better process, and need for
improved navigational tools
(this will shock those in government)
his bosses didn’t like his blogging
they exiled him to the
Navy Depot of Charts and Instruments
(there wasn’t yet a Naval base in Adak)
punishing innovation is not
unusual institutional behavior
(we’ll come back to Maury in a moment)
gaps, especially during technological
discontinuities, are very difficult to
discover internally
for the Navy of the mid-1800s,
better mathematics and
observations were available
today, it’s Moore’s Law
every 18 months the number of
transistors on a chip doubles
10 years of Moore’s Law == ?
120 months
= 6.667 doublings
18 months/double

6.667
2 = 101.59
2 orders of magnitude
100
times
cheaper, faster, longer lasting
100x is hard to imagine
100x mips,
same size
100x mips,
same size
100x smaller,
same perf
100x more storage is > 2 terrabytes
100x bandwidth is 100 mbits/s
100x battery life is 2 years of standby,
1 continuous month of talking
also leads to radical cost reductions

100x cheaper is $2
all those computers
are connected,
mobile, and always
available, driving
even greater change
which means anything that relies computation,
communication, and storage is getting radically
cheaper faster than you expect
do you understand how this change
effects your mission?
within your organization...
who will detect change first?
customers? partners? employees?

who is responsible for capturing this knowledge?

how will you collect it?


how will you act on it?
or do you respond to change
by killing the messenger?
how are institutions handling change today?
first, some definitions
in this context,
“change” == “change in productivity”
which is measured across the economy

2.5%

2%

1.5%

1%
60’s 70’s 80’s 90’s 00’s

the 2009 shift index, hagel et al


for institutions, I’ll use return on assets

this measures how effectively


a business uses what it has
so, recall that we’re seeing change

2.5%

2%

1.5%

1%
60’s 70’s 80’s 90’s 00’s

the 2009 shift index, hagel et al


our economy is more productive, so we’d
expect to see institutions also increasing
their performance
not even close
5%

3.5%

2%

0.5%
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

the 2009 shift index, hagel et al


75% drop in RoA in 40 years
institutional incompetence
accelerating institutional incompetence
return on assets
13%

11%

top quartile bottom quartile

-15%
1965 1981 2008

the 2009 shift index, hagel et al


and lest winners feel confident
of the 25 largest companies in 1999
8 are still in top 25 today
on the plus side, it appears that we do
collective recognize the problem
where “we” == “public markets”
6% annual growth in volatility
0.025

0.02

0.015

0.01

0.005
72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

the 2009 shift index, hagel et al


so where has this value gone?
5%

3.5%

2%

0.5%
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

the 2009 shift index, hagel et al


consumers
high value employees
radically decreasing technology costs
mean barriers to entry are vanishing
competitive advantages harder to maintain
quick review of competitive advantages
economies of scale
• distributing fixed costs
• network effects
customer captivity
• habit
• switching costs
• search costs
cost
• proprietary tech
• learning
• access to resources
government protection
Moore’s Law doesn’t help most of these
economies of scale
• distributing fixed costs
• network effects
customer captivity
• habit
• switching costs
• search costs
cost
• proprietary tech
• learning
• access to resources
government protection
economies of scale
• distributing fixed costs
• network effects connected devices, the
customer captivity Internet, and Google all
• habit make building really big
• switching costs communities easier
• search costs
cost
• proprietary tech
• learning
• access to resources
government protection
economies of scale
• distributing fixed costs
• network effects
customer captivity
• habit
• switching costs
• search costs
cost
• proprietary tech this only stays true if
• learning we don’t get network
• access to resources neutrality
government protection
makes sense for
telcos/cable to fight it
worse, it tempts betting on sham sources of
competitive advantage

deep pockets
brands
first mover
talent
• creative
• managerial

but that’s another talk


(or read “Curse of the Mogul”
by Knee, Greenwald, and Seave)
combined with a proliferation of tools
to help, it is easier than ever before to
remix, aggregate, and compete
cheaply
institutions aren’t keeping up
just like the Navy didn’t
keep up with Maury
stuck ashore, crippled, career over
banished to the most distant corner
the Navy could find
except the depot
stored more than
old navigational
equipment
brings us to our first tool of government:
data
and first institutional hack:
finding oxygen
governments collect data
and
nobody cared what Maury did with it
every US Navy ship was required to
submit its logs at the end of a voyage
thousands
of ship’s logs
location, weather, wind, and current for
every day each US Naval vessel was at sea
and he was free to
start collating
he found patterns
and in an inspired bit of institutional
hacking, what did he do?
Maury blogged his results
he avoided sacred dinosaurs and spread the wealth

instead of taking on Bowditch directly, he published


data that made all navigators better and ultimately
converted Bowditch into a fierce supporter
so, in 1844, we have a national project
creating value from the aggregation of
previously valueless data
by understanding and measuring the actions
his customers were already taking and then
sharing those measurements, Maury created
new products that helped them
let’s contrast that with a modern example
say, the record labels
revenues peaked in 2000,
generally declined since
pre 2000
post 2000
direct result of Moore’s Law
annihilating sources of
competitive advantage

plus, change is hard to manage


CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away


(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers


iTunes rich digital packages
CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away


(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers


iTunes rich digital packages
CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away


(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers


iTunes rich digital packages
CD revenues skyrocketing, new technology teams
experimenting at some major record labels
(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away


(David Bowie’s “Hours” via download from EMI)

Revenues peak

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Napster
Recession begins
Revenues decline
iTunes

Guitar Hero
EMI goes DRM free

Rock Band/iPhone Games as music drivers


iTunes rich digital packages
what could have been learned and
built from this trend?
or telecommunications adoption rates
5,000

4,000

Mobile Fixed Line


3,000

2,000

1,000

0
1998 2000 2002 2004 2006 2008
in the future, will we communicate by
a) cell?
b) fixed-line broadband?
100

Cellular Internet Mobile Broadband

75

50

25

0
1999 2001 2003 2005 2007
or, c) mobile broadband?
what are users telling us?
speaking of telecom,
second tool: regulation
Maury realized how much
better the results could be
he saw great value in publishing the data
"in such a manner that each may have before
him, at a glance, the experience of all"
and found an interested patron
(our final institutional hack)
John Quincy Adams was
arguing that Congress
should fund lighthouses and
support more effective
navigation
Maury wrote to Adams, proposing standards
for reporting meteorological data

Adams responded by endowing


the Naval Observatory
so collation was easier and more accurate
his data got better
a lesson here:
when at all possible,
make it easier to get more data,
write less code
quick question: who’s cheaper,
a computer or an employee?
especially if you can get data more easily
(google talks about this a lot)
let technology help you,
get more data
third tool of government:
bully pulpit
Maury had all of the US Navy data,
but wanted more
so he did what anyone would
do in this situation
he created a conference and
gave the keynote
where he offered his data to any
nation that submitted their ships’
logs in his standardized
meteorological format
within 5 years, nearly the entire
world was sharing their data with
the Naval Observatory vai Maury’s
meteorology API
(quite literal example of
rising tide raising all boats)
and gives a clue about what future
institutions need to look like
especially boundaries
traditional institutional thinking

us
traditional institutional thinking

us them
traditional institutional thinking

us them
if you worry less about us and them,
maybe you can do less work
and get more data

us them
or even eliminate the distinction entirely

us

them
(think about where the value goes
when you write a blog post
that Google indexes)
if customers are acting as partners,
need to recognize it and act on it
partners require different levels of
trust, support, engagement,
information, etc
if they are to succeed
benefits if you do collaborate

what can you do with fully


engaged partners?

what can you learn?


100

Cellular Internet Mobile Broadband

75

50

25

0
1999 2001 2003 2005 2007
what technologies matter to them?
bringing into the workplace?
second life?
skype?
facebook?
twitter?
gmail?
are you trying to run a
closed desktop ecosystem?
(good luck)
and you’re missing a
chance to learn!
(think universities and walkways)
but if you really want to
live on the edge
follow Maury’s lead,
expect your customers
to also be creators
(obvious example is second life)
user generated content

almost unheard of in 2000, now well demonstrated


in SL’s case, drove economic and customer growth
produced enormously beneficial/long-lasting press
the keys to the kingdom
the unexpected
really unexpected
and more
sharing data created a network
effect and high virality, granting Maury access
to more and more data
it brought agility into his system
ensuring a cycle of data collection, release,
measurement, and improvement
all with feedback from customers
of course, more data and Maury’s
obsessive eye for detail let to
unexpected consequences
studying harpoon designs he found
that many whales in the Pacific had
been previously harpooned in the
Atlantic (and vice versa)
he saw this as strong evidence of a
navigable Northwest Passage
he was correct, of course
(he just had to wait for global
warming to open the passage in
2006 and 2008)
in 1845, not so much
which didn’t go well for Sir John Franklin,
HMS Erubus, or HMS Terror
but the search for the Northwest
Passage was only one example of new
data leading to commercial excitement
and Maury had engaged the 4th tool
of government by sharing the data:
getting out of the way
more than anyone, one group of
captains needed to go faster
the ’49-ers racing around Cape Horn to
connect New York City and San Francisco
at the start of the gold rush
New York to San Francisco
took 200 days
contests and challenges were published
focusing on the 3 month barrier
within 5 years, the time
had been cut in half
1854 the Flying Cloud
(89 days, 8 hours)
a record that stood for 136 years
Flying Cloud’s navigator was unusual
first, her name was Eleanor Cressy
second, she read Maury’s blog
she understood Maury’s data and
bet her life and Flying Cloud on it
Eleanor Cressy drove
institutional change
more challenging than
anything else I’ve talked about
there is no description of
institutional transformation that
captures how difficult it is
because it is hard to be fearless
particularly to lead fearlessly
leading across discontinuities hard
if you (or your boss) were
a rockstar here
are you still the best
person for the job today?
are you bold enough to admit
you aren’t the best leader?

can you get others to


follow your example?
experienced navigators in 1854
didn’t believe they needed Maury
Cressy wasn’t limited by old thinking
Flying Cloud cut the New York to
San Francisco time in half
so how can we keep up in an
accelerating world?
Moore’s Law drives
exponential change
(which we’re bad at understanding)
we’re poorly wired for
exponential change
we predict linearly
starting from a few data points we
can’t help but linearly extrapolate
starting from a few data points we
can’t help but linearly extrapolate
starting from a few data points we
can’t help but linearly extrapolate
reality is exponential
so what we thought was a linear trend was
actually the early part of an exponential
resulting in less short-term change
but greater long-term change
leading to a fairly predictable sequence
“Bob says his friends
are using facebook”
“nothing there,
fire Bob”
“that Zuckerberg kid was
on 60 Minutes, Bob may
have been on to something”
“oh #$@!!”
just ask automakers
you manage change with
constant experimentation
which is hard
because failure is a necessary part
of an experimental culture
you have to be ready to
fail fast
fail cheaply
fail publicly
it’s all about staying out of the weeds,
having the flexibility to try new things,
and managing changing requirements
(my rule of thumb for software development)

1 odds of building
= the right piece of
n software

(where “n” is estimated time in weeks)


avoiding the temptation to
punish all failure
few actions as expensive
as a covered-up failure
nota bene:
“experimental culture”
does not mean
“just try stuff”
experiments need expectations,
reporting, and measured outcomes
to avoid burning a lot of money
and a refusal to accept

“my 30 years of experience means...”


“look, we have thousands of followers...”
“all opinions are just as valid...”
recognition that the
plural of anecdote is not evidence
which Maury and Cressy did
so, if the US Navy of the mid-19th century
can leverage viral marketing, metadata, and
government to change the world
used standards, openness, and sharing to
create increasing value for
everyone in the network
adapted to change and surmounted
institutional incompetence to apply agility
“we can’t do that” is
no longer an acceptable answer
how are you going to use
the tools of government
data
regulation
bully pulpit
getting out of the way
and institutional hacking
find oxygen
avoid sacred dinosaurs
spread the wealth
engage patrons
what are you going to do?
stop talking now

any questions?
cory ondrejka • cory.ondrejka@gmail.com
http://twitter.com/coryondrejka • http://ondrejka.net