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

13%

return on assets
11%

top quartile
-15% 1965

bottom quartile

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 neutrality • access to resources 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
3,000

Fixed Line

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 n

odds of building = the right piece of 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