Category Archives: Service Design

Book Review: Irene Ng’s “Value and Worth: Creating New Markets in the Digital Economy”

ValueWorthWhat follows is my January 14, 2013 Amazon.com review of Irene Ng’s latest book, Value and Worth:  Creating New Markets in the Digital Economy.  The review article was entitled:  The Tao of Value Creation and Growth for Businesses in Our New Digital World.

Irene Ng’s lucid and accessible book, “Value and Worth: Creating New Markets in the Digital Economy,” is a remarkable accomplishment, a work that should not be overlooked (that is, it most certainly should be read!) by current and prospective business managers, leaders, and entrepreneurs in every economic sector.

As national and world economies become more and more “digitized,” the opportunities/horizons for “business value creation” are expanding at a phenomenal rate. However, identifying and capitalizing on these new opportunities (i.e., new markets served by new business models) will be very difficult or impossible if we do not “update” our own “mental software” for construing and exploiting such opportunities. Ng’s book provides such an “upgrade path,” by taking us on an intellectual journey that leads us, as business people in the 21st century, to many new, useful vantage points that will significantly influence our business planning and practice.

The book is very extensive in its coverage and development of new ways of looking at value creation, markets and business models in an increasingly digitized world, so in this review it is only possible to illustrate that with a couple of examples.

Ng explicates her own perspective on the concept of “value” vs. the concept of “worth” as foundational to all her other analysis and commentary on business in a digitized world. “Value” is that which is beneficially realized by people or organizations as “use” [of something] in one or many specific contexts (for example, I use and benefit from my mobile phone and phone service while driving home from work, in an emergency situation, etc.). “Worth,” on the other hand, is what is assessed in the act of exchange (purchase, barter, et al), most often within a market (for example, I will pay $300 for the ownership of a mobile phone and the use of the mobile communications network service). By drawing this dichotomy of “value” and “worth,” Ng clarifies the somewhat elusive concept of “value co-created in context” from the more visible concept of entering into an “exchange relationship or transaction.” While exchange relationships/transactions have undergone significant digitization over the past few decades (credit cards, electronic payments, new payment or exchange methods (PayPal, eBay, etc.), the digitization of the world of individuals and organizations using their own “agency” and “resources at hand” (including products and service they have purchased) to “co-create” “value in context” is only starting to get underway. CIT (communications and information technology), mobile platforms, and social networks and media are among the world-wide developments that are opening up the possibility to discover and create new value (in context) and additional amounts and forms of worth (in exchange)that were not possible pre-digital.

Based on these fundamental principles, Ng explores, analyzes, and explains the many different ways and different models of how value can be created in an increasingly digitized world (value which consumers or organizations and businesses can grow and realize through “use in context” and through “worth-based exchanges, including markets). Often the ways of thinking, offered up by Ng’s framework, seem to depart from those we have inherited/adopted based on our classical economics education and assumptions, but once we begin to apply the central concept of “value in use/in context,” we begin to realize that “exchange and markets” can come back into play in surprising ways.

For example, Ng discusses the (by-now-well-known) phenomenon of “big data.” Ng points out that the current conventional concept of “big data” as massive amounts of anonymous data of consumer, use, behavior patterns–that can be used by businesses to serve customers–may be limiting and sub-optimal. If there is a market/exchange structure in which consumers/users retain rights to conceal or reveal (i.e., trade/exchange their own individual behavioral information), then we might have a scenario in which total aggregate economic value and worth (for both consumers/users and businesses)may exceed the aggregate economic value and worth that could be realized if “big data” is anonymized (i.e., excludes lower levels of behavioral information about individual users’/consumers’ realization of “value in use/context”). This is just one example of the many ways the journey, which Ng accompanies us on and guides us on, brings us to new and opportunity-rich vantage points and perspectives.

“Value and Worth: Creating New Markets in the Digital Economy” is an incredible work that has been carefully and very effectively designed, for our intellectual and business benefit, by a unique, extraordinarily insightful individual who has integrated and delivered on her many years of experience and expertise as a business executive, a management science researcher/scholar, a university and business educator, a consumer, and a person. The “worth” (price) of the book is clear and established, and I am fully confident that every reader (current and prospective business managers, leaders, and entrepreneurs) will realize (as I have/am) a “value” that very far exceeds the “worth” (the monetary expenditure/payment) of the “exchange transaction,” thus yielding an extraordinary reader ROI.

Where There’s Smoke, There’s Fire: Radical Change in the Academic Publishing Ecosystem

Sniff, sniff.

A recent Forbes article, “Elsevier’s Publishing Model Might be About to Go Up in Smoke,” returns to the discussion  of the potential self-immolation of traditional academic publishers, as many fail to respond to rapidly shifting conditions, especially technology disintermediation and new platform business models.

“No,” the article states,  “there isn’t a monopoly on scientific journal publishing: but there is on the last 50 to 60 years’ worth of papers that have been published and are now copyright of said publisher. This is leveraged into the power to make college libraries pay eyewatering amounts for subscriptions. … There’s not much new about this analysis and investors in Reed Elsevier, the owners of Elsevier, either do or should know all of this. … However, there’s something happening that might change this, for Reed Elsevier shareholders, quite delightful position. That is, a revolt of the academics who provide both the papers and the readership.”

Sniff.

As new potential channels for publication and distribution occur, academics (who are tired of giving up value to commercial interests and who are generally not stupid people) are not surprisingly seizing the opportunity to “go direct” to “the market.”

As I noted in my recent post, prominent academic researcher/platform economist, David S. Evans, has risen to the occasion to eschew traditional publishing rigmarole and has decided to simply release a compendium of segments of his research directly into the public domain.  The quote from the preface of his publication ( “Platform Economics: Essays on Multi-sided Businesses” ), circulating as a PDF in the public domain, is quite remarkable:

Given the subject of this collection, there is some irony in how I’ve chosen to bring these essays to you. Publishing has traditionally been a two-sided model. Publishers get authors and readers together. They typically make their money by charging the reader and giving some fraction of the earnings to the author as royalties.
 This 20th century model of publishing doesn’t serve authors of academic books well. Often, publishers set the price of academic books relatively high, expecting to earn the greatest profits from libraries and a handful of aficionados. For most books that aren’t aimed towards a popular audience, including most academic books, royalties are quite small. Optimistically, I might have been able to buy a pretty good new bicycle if I had published these essays in the traditional fashion, but I’d rather have more people read my work than collect the chump change from royalties.
 Therefore, the two-sided publishing model fails in two ways: the author doesn’t make much money, and the author doesn’t get read by very many people. Moreover, most publishers in my experience are still using 20th century technology to produce and distribute books. It can take many months—if not years—from a book’s conception to its appearance in a reader’s hands.
And therein lies the paradox. In order to bring my work into the 21st century, I have decided to publish my collection of essays about two-sided markets in a one-sided way. I ditched the intermediary and chose to connect directly with likely readers. I’m sure some of you would prefer the feel of paper and leather but hopefully the price is right. It was easy for me to decide to make this volume free (a bit more on Amazon) because it cost almost nothing to produce and distribute it.
 An earlier version of this book appeared in 2010. It consisted of a series of urls (website addresses) that took readers to the original papers which they could then download. I promised a real e-book in the early part of 2011. At least I got the year right which for an economist is pretty good.

Change is evident here (sniff).

In some of my previous blog posts, I have discussed business and social issues related to ongoing transformation of the general domain of publishing/news and information/media industries, key sectors of our economy and our society.   These have included: (1)  “The Huffington Post: A short course in platform business economics?,” (2)  “Huffington Post (Redux): Not just business as usual…,”   (3) “In The News: Platform/Other Business Model Transformation Underway in News Publishing/Media,” (4)   “From Supply Chain to Publishing:  Changing the Way Publishing Works.”

Another of my posts (sniff), “The Business Model for Distributing “Scientific Publications” — A “Peer Review” Finds a “Canary in the Coal Mine,”” discusses the specific, unique domain of “academic and scientific publishing” and some of the implications of the changes we may need to address as the traditional model gives way to something new.  While such changes promise greater freedom of publication and distribution, the resulting openness may lead us to confront a different set of issues that will impact how science is done and what are the standards and measures of its validity. 

So while change is evident (sniff), it is clearly non-linear.

Study: What are Business Platforms and why they represent the future of outsourcing

HfS Research, an outsourcing industry research firm, recently published a new study that reports continued rising interest in “Business Platform” approaches to business process outsourcing (BPO).   The actual report in PDF format can be found via a link at the bottom of this article:  “What are Business Platforms and why they represent the future of outsourcing‘”

The article and the report contain some excellent insights into the development of this approach to business process outsourcing, a phenomenon HfS defines — for the outsourcing domain/empirical context — as follows:  “Business Platforms, enabled by the fusion of Cloud Computing, SaaS and BPO innovations in an integrated singular managed service, are emerging rapidly as the desired “one-to-many” utility service provision for providers and a new source of value for outsourcing buyers. ”  This HfS definition of the approach emphasizes a drive toward efficient process standardization through IT and other mechanisms, but does not emphasize properties of aggregation and network effects (which I think can often be present in such models).

In the past, these approaches have sometimes been referred to as “Platform BPO.”  In my recent working paper/taxonomy– posted at “Platform “Language Games” –  a working paper on how we understand platform“–I discussed “Platform BPO” as a kind of sub-category/special instance of “Enterprise Platforms” as follows:

Certainly, there is some overlap in what is encompassed by the definitions of “enterprise platforms,” “domain/function platforms,” and “technology platforms.” However, I would argue that there is little or no overlap of the categories “enterprise platforms” and “product platforms,” unless, as we shall see, the enterprise and its platform are geared toward providing (information or other) services, not products (and in this case, the “enterprise platform” does indeed become analogous to a “product platform” to the extent that the platform becomes the means for developing and supporting derivative and new service offerings, while maintaining high levels of standardization and efficiency). One good example of such a case is the phenomenon of “Platform BPO” (see: http://www.outsourcing-center.com/2011-08-how-amcor-achieved-it-business-transformation-by-standardizing-processes-in-10-countries-using-sap-and-a-local-provider-article-45050.html , http://www.outsourcing-center.com/2011-02-business-process-as-a-service-the-next-wave-of-bpo-delivery-article-42948.html ). However, many other examples, of different kinds, could be cited.

In other words, “Platform BPO” (or what HfS calls a “Business Platform” BPO), as a special kind of “enterprise platform” in the service sector domain, has properties that are similar to a traditional “product platform” (to the extent that the platform becomes the means for developing and supporting derivative and new service offerings, while maintaining high levels of standardization and efficiency).  At the same time, this kind of platform remains very much within the definition of an “enterprise platform” (albeit specialized).   But — at least as defined  by HfS as a “Business Platform” — it is significantly different from what I and others have referred to as “Platform Businesses” (see: Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes or The Age of the Platform: Phil Simon Serves An Epic Feast To Business Readers), a new kind of business model structure embodied in companies like Apple, Amazon, etc. and their customer and partner ecosystems.  However, I do believe a closer look at some of these emerging “Platform BPO” businesses will reveal additional properties of the more complex and extensive “Platform Business” model (especially in the areas of service aggregation, supply chain intermediation, network effects, and customer experience management).

 

Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes

Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes is the first of two parts in which I explore the relevance of Service Science to understanding “modern platforms” and, with this backdrop, attempt to comment meaningfully on some of the less-discussed mechanisms, interests, and outcomes associated with such platforms.

Part 1 focuses on how Service Science, and its concepts of “service-dominant logic,” “value co-creation,” “service systems,” “value-creation networks,” et al, can provide a framework through which we can illuminate and better understand the new and still emerging phenomena of “modern platforms.” Part 2 will be focused on some of the less-discussed operant mechanisms in “modern platforms,” on the diverse interests that can come into play, and on some potential outcomes, both positive and negative.

In Part 1, I have suggested that Service Science offers a perspective and conceptual framework that can illuminate and enhance our understanding of “modern platforms.” I have further suggested that what we observe today in the real world (and refer to as “modern platforms)” are “artificial” constructs or entities which consist of certain protocols, mechanisms, rules, regulations, etc. that define and govern interactions among “service systems” (organizations and individuals) within “value-creation networks.”  I believe that, in this context, there is much, much more that we can study and learn about what we are calling “platforms,” how they can arise, how they can function, and how they may spawn different outcomes overall in aggregate across a realized “value-creation network” as well as for the different, specific, networked “service systems.”

Link to PDF: Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes

“Connecting the dots” between Service Design and Service Science

I highly recommend, Service Design – a conceptualization of an emerging practice, Katarina Wetter Edman’s licentiate thesis.   This is a much-needed and superbly articulated study of the relationship and potential positive interaction between two important emerging disciplines, Service Design practice and  Service Science theory. 

Abstract from study: Service design is an emerging design practice with an interdisciplinary heritage. Most previous research has been based on what service designers do; with the increased academic interest in service design over the past decade, the time has come to conceptualize the underlying discourses. The main purpose of this thesis is to contribute knowledge to the emerging service design discourse through conceptual comparisons of key concepts in the design and service management literatures…. The conceptual framework encompasses areas of design research, including design thinking, service design and design management. These areas are related to management research, with a specific focus on service marketing/management,including Service-Dominant logic and service innovation. The thesis includes an interdisciplinary literature review with a specific focus on how user involvement is conceptualized in service design and service management respectively, and develops a conceptual framework of service design based in descriptions of service design practice in the literature. The framework presents service design through five characteristics, as an 1) interdisciplinary practice, using 2) visualization & prototyping, and 3) participation as means fordeveloping the design object, seen as 4) transformation, and 5) value creation. This framework leads to an understanding of service design practice as a continuously repositioning activity. The thesis argues that the relation between service marketing/management and service design is complementary, particularly in tools and methods for user involvement and co-creation,and therefore the relation is mutually productive. It further argues that design practice can help realize Service Dominant logic, and a service perspective can help open up new positions fordesign practice. In sum, this thesis contributes knowledge that enriches the understanding and relevance ofservice marketing/management for the design discourse and vice versa.

“Platform ‘Language Games’ ” – A working paper on how we understand “platforms”

My focus on “platform” phenomena in business and other domains has led me to wonder about how we (as people trying to comprehend the world in late 2011) use and understand the term and concept “platform” .  That is how I came to work on this write-up, (link to PDF)  “Platform ‘Language Games:’ Is Clearly Defining and Classifying What We Are Studying A Serious Or Trivial Pursuit For The Research Community?

“Platform” is a term that has appeared — ever more frequently over the past 25 years or so — in literature and discourse within economics and management science research, business management, scientific, and government circles, technology marketing, and business, scientific, and popular press and media.  “Platforms” are much discussed, today, in errantly-released internal Google emails, in a recent informative business book of Phil Simon (proclaiming that we have entered The Age of the Platform).  “Platforms” are being discussed in conference rooms by managers, investors, and entrepreneurs as well as written about and talked about in the trade and popular press and social media. 

“Platforms” have been and continue to be analyzed and discussed by economic and management science researchers, who are responsible for our achieving a scientific understanding and knowledge of “platforms,” even as the term/concept “platform” proliferates and evolves and various “platforms” (communication, publishing, social media) lead to an intermingling of discourse in the research community, the professional community (e.g. business practitioners, et al), and the general public. 

So while my write-up is addressed to the research community, it may also be of interest to others in business and other disciplines (though I am doubtful that it will be looked at, to say nothing of read through, by many in even these communities).  While I realize few will find it of any interest, I am hopeful that it may be helpful to some in thinking about how we understand “platforms” in late 2011.

I start my write-up, tongue-in-cheek, with the paradoxical quote by Wittgenstein, “Wovon man nicht sprechen kann, darüber muss man schweigen” (“Of that which one cannot speak, one must remain silent”).  There seems to be no shortage of those who will speak about “platforms” within different contexts, and we are speaking about “platforms” in different ways. 

Has our speaking about this captivating phenomenon/idea outrun our clear understanding? If so,  I’m not sure if this gap is of interest or considered to have any importance to anyone besides me.  In any case, my write-up is available to be read and reviewed, and I welcome all comments and suggestions.

Link to PDF: Platform “Language Games”

Almost Part 2: How Will Our Business Models Change–Now? And Why?

Since I wrote the post, Part 1:  How Will Our Business Models Change–Now?  And Why?, I have been intending to write Part 2.  Part 1 was basically an overview of business model change dynamics, based on IBM’s study “Seize the Advantage:  When and How to Innovate Your Business Model.”  This study showed “technological factors” as climbing in importance as a reason cited by all kinds of CEOs for changing business models.

My basic assertion in Part 2 is going to be that there are two major transformations affecting all or most business models at this time. These transformations, grounded primarily in information technology,  can be referred to as  “platformitization” and “servitization.”

The term “platformitization” refers to the emergence of new economic, business, industry models referred to–sometimes ambiguously– as  “platforms.”  As noted by Phil Simon in his new book, The Age of the Platform, “Beyond the debate of ‘What is a book in 2011?’ comes the discussion about which platform will win the book wars. Will it be Amazon’s Kindle? Apple’s iBooks? Barnes & Noble’s Nook? Kobo? A new platform we haven’t seen yet?  Sadly, the discourse has been largely misplaced. Far too many people are focusing on the hardware instead of the platform behind the hardware.”   The platform/ecosystem model is emerging across many markets and–often rapidly–radically transforming basic economic models (units and structures, like firms and industries) into wholly different patterns of production and consumption and creation and distribution of value.

The term “servitization” refers to a basic actual and conceptual/paradigmatic shift in economic activity toward “service.”  In once respect, we see a growing “service sector” (financial services, logistics services, et al) as well as the increasing importance of “services” in the business models of all kinds of product/ manufacturing firms (just one well-known example, Apple and iTunes/AppStore).  Beyond this, we are seeing the rise of technology-enabled “information services” as well as information technology itself being transformed into a service (long ago starting with telecommunications and now with things like IaaS, PaaS, SaaS, etc.).  Phenomena indicating a trend of servitization are many, but there is also a framework of thinking which is gaining in relevance.  That is the framework of “Service Science,” arising around 2005, when it was significantly shaped by Stephen Vargo and Robert Lusch with their marketing-based research and theorizing of “Service-Dominant Logic” and further catalyzed by Henry Chesbrough and Jim Spohrer in their  publication “A Research Manifesto For Services Science.”

More discussion to follow on business model transformation along the lines of “platformitization” and “servitization” as powered by information technology.

From Supply Chain to Platform: Changing the Way Publishing Works

How and why are technology-enabled platform businesses clearly and rapidly disrupting and transforming traditional publishing and certain other industries?   As noted in many recent news reports (such as “Publishers: What are you doing while Amazon eats your lunch?” ), Amazon is continuing its transformation and “platformitization” (if I may coin a neologism) of book publishing–one of the various transformations and disruptions rippling through the publishing industry for years now (in books, news, magazines,music, movies, etc.).  

The traditional publishing industry has been one of those industries that seems to have become particularly vulnerable to disintermediation by new, “platform and technology savvy”  market entrants (such as Google, Huffington Post, Netflix, et al) who are able to leverage technology-based platform business models in innovative and disruptive ways to unlock and redistribute capturable value and change the shape of the industry. 

I suppose it should seem obvious that industries whose core has been the trade of information and media content are likely to be the most vulnerable to such transformations and, it seems–as fate would have it , in many cases (unlike manufacturers and distributors, for example)–the least prepared to adapt, innovate, reposition, and survive.  Some incumbent firms will cross the chasm, but most probably won’t.  I suspect this predetermined vulnerability has a basis, to some extent, in these industries’ entrenched supply chain business models and the inability to reinvent into platform and ecosystem models (as FT, Guardian, NYT are trying to do)–models, which I think confer practioners with overwhelming advantages in satisfying needs of the “traditionally organized” customers and suppliers. 

Why this inflexibility exists is another questions:  I suspect here it is a matter of the industries’ and firms’ built up stock of competencies and assets (which are probably both not well-aligned to platform models and technology) as well as the industries’ and firms’– to some degree — “change-resistant” values and structures (imbued originally for good reasons to promote standards of objectivity or quality, etc, but in some ways now a straightjacket). 

 It seems like all of these questions could be formulated into testable hypotheses and the opportunity to study the unfolding of these phenomenon in a real world laboratory exists for the interested researcher (to empirically establish what factors determine success or failure of firms, business models, etc.).   Of course, we (the simply curious and interested) can–unlike the publishers–casually stand-by  and observe how it all shakes out in coming years and make our own judgments as to why.  And we all can bear in mind how the cited article admonishes traditional book publishers:

Here’s a hint for book publishers: take a lesson from the music industry, and don’t spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.
 
 
 

Google Doesn’t Get Platforms, According to Google’s Steve Yegge

Is Google an “un-platform”  by design or by default–and falling hopelessly behind in the “platform wars” by short-sightedly pursuing a “product one-off strategy?” An extremely interesting post by Danny Sullivan at Search Engine Land (The “Google Doesn’t Get Platforms” Family Intervention Memo) reports an accidental email disclosure, in which Google Staff Engineer Steve Yegge shares his spirited, critical views on Google’s pursuit of success as platform business.

Sullivan’s informative post, also treats, at some length, questions and characteristics of Google’s internal culture (+ and -), so I am filtering out that commentary and focusing here on  re-publishing the matters most directly related to platform models (not to say that far-ranging internal dynamics and culture, besides strategy and leadership are unimportant).  That said, I’d really like to read Yegge’s original email; he seems to have some penetrating insights into platform models, which he sees must be pursued purposely and early from a design and strategy standpoint.  Whether the strategy and approach to Google’s business will continue to prove enormously successful and whether it is or is becoming a platform business are questions which remain to be answered.

Sullivan introduces the subject: “Google now has its own version of the Yahoo “peanut butter” manifesto, where Google staff software engineer Steve Yegge wrote a “family intervention” memo about Google’s failure to build accessible platforms, leaving it vulnerable to the likes of Facebook. ”  Sullivan goes on to trace Yegge’s argument, which compares Google to Amazon (and also Microsoft), to this basic assertion: “Google is failing to be a platform, something he [Yegge] considers the ‘the most important thing in the computing world.'”    Sullivan further quotes Yegge as writing:

That one last thing that Google doesn’t do well is Platforms. We don’t understand platforms. We don’t “get” platforms. Some of you do, but you are the minority. This has become painfully clear to me over the past six years. I was kind of hoping that competitive pressure from Microsoft and Amazon and more recently Facebook would make us wake up collectively and start doing universal services. Not in some sort of ad-hoc, half-assed way, but in more or less the same way Amazon did it: all at once, for real, no cheating, and treating it as our top priority from now on.

But no. No, it’s like our tenth or eleventh priority. Or fifteenth, I don’t know. It’s pretty low. There are a few teams who treat the idea very seriously, but most teams either don’t think about it all, ever, or only a small percentage of them think about it in a very small way.

Yegge cites Google+, as a follow-on, reactive move, consistent with Google’s  “un-platform” business strategy:

Google+ is a prime example of our complete failure to understand platforms from the very highest levels of executive leadership (hi Larry, Sergey, Eric, Vic, howdy howdy) down to the very lowest leaf workers (hey yo). We all don’t get it. The Golden Rule of platforms is that you Eat Your Own Dogfood. The Google+ platform is a pathetic afterthought. We had no API at all at launch, and last I checked, we had one measly API call. One of the team members marched in and told me about it when they launched, and I asked: “So is it the Stalker API?” She got all glum and said “Yeah.” I mean, I was joking, but no… the only API call we offer is to get someone’s stream. So I guess the joke was on me.

Sullivan also summarizes Yegge’s critique further:  “Soon after, Yegge calls Google+ a “knee-jerk” response to Facebook, which seems to fit in with his larger theme that rather than let a developer community access Google+ and help it grow, Google seems to have taken a top-down it’ll control how Google+ grows attitude. That would be fine perhaps if Google had a Steve Jobs person who knew what consumers should be given.”

According to Sullivan, Yegge appears to see Jeff Bezo of Amazon (like Jobs) as a very authoritarian leader, but one who commanded a strategy and set of policies to design an open technical environment and cultivate an integrated, thriving developer ecosystem: Bezo’s core mandate went something along these lines:

1) All teams will henceforth expose their data and functionality through service interfaces.
2) Teams must communicate with each other through these interfaces.
3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.
4) It doesn’t matter what technology they use. HTTP, Corba, Pubsub, custom protocols — doesn’t matter. Bezos doesn’t care.
5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions
 

Yegge further faults Google in its reactionary and tops-down approach and not engaging in a process of co-creation with its customers and ecosystem partners:

Google+ is a knee-jerk reaction, a study in short-term thinking, predicated on the incorrect notion that Facebook is successful because they built a great product. But that’s not why they are successful. Facebook is successful because they built an entire constellation of products by allowing other people to do the work. So Facebook is different for everyone. Some people spend all their time on Mafia Wars. Some spend all their time on Farmville. There are hundreds or maybe thousands of different high-quality time sinks available, so there’s something there for everyone. Our Google+ team took a look at the aftermarket and said: “Gosh, it looks like we need some games. Let’s go contract someone to, um, write some games for us.” Do you begin to see how incredibly wrong that thinking is now? The problem is that we are trying to predict what people want and deliver it for them. You can’t do that. Not really. Not reliably. There have been precious few people in the world, over the entire history of computing, who have been able to do it reliably. Steve Jobs was one of them. We don’t have a Steve Jobs here. I’m sorry, but we don’t.

Yegge continues his critique, training his aim on the issue of platform and data accessibility:

I apologize to those (many) of you for whom all this stuff I’m saying is incredibly obvious, because yeah. It’s incredibly frigging obvious. Except we’re not doing it. We don’t get Platforms, and we don’t get Accessibility. The two are basically the same thing, because platforms solve accessibility. A platform is accessibility.

So yeah, Microsoft gets it. And you know as well as I do how surprising that is, because they don’t “get” much of anything, really. But they understand platforms as a purely accidental outgrowth of having started life in the business of providing platforms. So they have thirty-plus years of learning in this space. And if you go to msdn.com, and spend some time browsing, and you’ve never seen it before, prepare to be amazed. Because it’s staggeringly huge. They have thousands, and thousands, and THOUSANDS of API calls. They have a HUGE platform. Too big in fact, because they can’t design for squat, but at least they’re doing it.

Amazon gets it. Amazon’s AWS (aws.amazon.com) is incredible. Just go look at it. Click around. It’s embarrassing. We don’t have any of that stuff.

Apple gets it, obviously. They’ve made some fundamentally non-open choices, particularly around their mobile platform. But they understand accessibility and they understand the power of third-party development and they eat their dogfood. And you know what? They make pretty good dogfood. Their APIs are a hell of a lot cleaner than Microsoft’s, and have been since time immemorial.

Facebook gets it. That’s what really worries me. That’s what got me off my lazy but to write this thing. I hate blogging. I hate… plussing, or whatever it’s called when you do a massive rant in Google+ even though it’s a terrible venue for it but you do it anyway because in the end you really do want Google to be successful. And I do! I mean, Facebook wants me there, and it’d be pretty easy to just go. But Google is home, so I’m insisting that we have this little family intervention, uncomfortable as it might be.

Oh, sorry, I allowed a little bit of the dirty laundry to drape over the wall into my blogger’s “clean room.”  In any case, clearly Yegge’s motivations for his observations and comments are honest and sincere, and he does a thorough job calling Google to task for not following the “platform strategies” of Microsoft, Amazon, and Facebook.

After you’ve marveled at the platform offerings of Microsoft and Amazon, and Facebook I guess (I didn’t look because I didn’t want to get too depressed), head over to developers.google.com and browse a little. Pretty big difference, eh? It’s like what your fifth-grade nephew might mock up if he were doing an assignment to demonstrate what a big powerful platform company might be building if all they had, resource-wise, was one fifth grader.

Please don’t get me wrong here — I know for a fact that the dev-rel team has had to FIGHT to get even this much available externally. They’re kicking ass as far as I’m concerned, because they DO get platforms, and they are struggling heroically to try to create one in an environment that is at best platform-apathetic, and at worst often openly hostile to the idea.

I’m just frankly describing what developers.google.com looks like to an outsider. It looks childish. Where’s the Maps APIs in there for Christ’s sake? Some of the things in there are labs projects. And the APIs for everything I clicked were… they were paltry. They were obviously dog food. Not even good organic stuff. Compared to our internal APIs it’s all snouts and horse hooves.

And also don’t get me wrong about Google+. They’re far from the only offenders. This is a cultural thing. What we have going on internally is basically a war, with the underdog minority Platformers fighting a more or less losing battle against the Mighty Funded Confident Producters.

And so, the essence of Yegge’s condemnation of Google as a business:

The problem is that we’re a Product Company through and through. We built a successful product with broad appeal — our search, that is — and that wild success has biased us.

Amazon was a product company too, so it took an out-of-band force to make Bezos understand the need for a platform. That force was their evaporating margins; he was cornered and had to think of a way out. But all he had was a bunch of engineers and all these computers… if only they could be monetized somehow… you can see how he arrived at AWS, in hindsight.

Microsoft started out as a platform, so they’ve just had lots of practice at it.

Facebook, though: they worry me. I’m no expert, but I’m pretty sure they started off as a Product and they rode that success pretty far. So I’m not sure exactly how they made the transition to a platform. It was a relatively long time ago, since they had to be a platform before (now very old) things like Mafia Wars could come along.

Maybe they just looked at us and asked: “How can we beat Google? What are they missing?”

The problem we face is pretty huge, because it will take a dramatic cultural change in order for us to start catching up. We don’t do internal service-oriented platforms, and we just as equally don’t do external ones. This means that the “not getting it” is endemic across the company: the PMs don’t get it, the engineers don’t get it, the product teams don’t get it, nobody gets it. Even if individuals do, even if YOU do, it doesn’t matter one bit unless we’re treating it as an all-hands-on-deck emergency. We can’t keep launching products and pretending we’ll turn them into magical beautiful extensible platforms later. We’ve tried that and it’s not working.

The Golden Rule of Platforms, “Eat Your Own Dogfood”, can be rephrased as “Start with a Platform, and Then Use it for Everything.” You can’t just bolt it on later. Certainly not easily at any rate — ask anyone who worked on platformizing MS Office. Or anyone who worked on platformizing Amazon. If you delay it, it’ll be ten times as much work as just doing it correctly up front. You can’t cheat. You can’t have secret back doors for internal apps to get special priority access, not for ANY reason. You need to solve the hard problems up front.

All the questions Yegge raises are good ones and, I think, pretty clear

  • The most fundamental one seems to be:  Is Google pursuing a product vs a platform strategy, and will this ultimately be a detriment to its business success?  After all, platforms are not the only business models that are successful, even today.
  • What are the essential characteristics that make a platform business a platform business?  Open design of technology and functionality for others to utilize/leverage, accessibility, cultivation of development and other ecosystem communities, evolutionary co-creation of valuable offerings with customers and partners….  Others?

Yegge clearly wants Google to be a platform business (similar in form to Amazon, Microsoft, Facebook) because he holds a strong conviction that this is best (only?) path to Google’s business success.  We are living in a time of rapidly evolving business models and emerging innovative platform businesses.  It will be extremely interesting to follow this–analyze, predict, and speculate–and, some years from now, see how this particular set of businesses has evolved and manifested.

Any predictions anyone?

 

“In The News:” Platform/Other Business Model Transformation Underway in News Publishing/Media

In some of my previous posts, I have discussed business and social issues related to ongoing transformation of the publishing/news and information/media industries, key sectors of our economy and our society.   These have included:  “The Huffington Post: A short course in platform business economics?,”   “Huffington Post (Redux): Not just business as usual…,”   and “The Business Model for Distributing “Scientific Publications” — A “Peer Review” Finds a “Canary in the Coal Mine”.”

An article recently published in GigaCom by Matthew Ingram (obliquely titled, “Memo to media: A Facebook app is not innovation”) presents some additional observations on this general subject of transformation in the news-content publishing/distribution/media industry, where traditional business models have come under crushing pressure to evolve.  Link to  article

The articles nicely summarizes some responses by traditional news  industry players (a subset of responses along part of the overall potential range of responses).   From one such summary of  The Guardian’s (UK)  response to evolutionary pressures bears quoting here:

Why not think of your paper as a platform?

But The Guardian has taken by far the most dramatic steps of any newspaper in rethinking what its business consists of, with what the paper called its “open platform” project, which launched last year. Instead of spending all its time trying to put walls or sandbags around its content and control where it appeared, the Guardian released an open API that allowed outside developers to make use of its content — provided they agreed to either pay for the data, or form an advertising partnership with the paper. Instead of doing a deal just with one platform vendor like Facebook, they made it possible for anyone to become a partner.

More importantly, The Guardian‘s approach — along with other innovations like the crowdsourcing effort behind its feature on MP expenses in 2009 — was driven by a fundamental rewiring of the way it thought about its purpose and function as a newspaper. Editor Alan Rusbridger has talked about a “mutualised” newspaper, one that includes its readers as partners in discovering and reporting the news, and one that doesn’t think about itself in terms of what particular medium it uses to distribute that news. In other words, not a “news-paper” company at all, but just a news-distribution company.

For this and several other observations of current developments, the article (and many of its comments) is a good read for those following the evolution of business models in new publishing/distribution/media.