Sunday, June 5, 2011

Getting Innovation Right for Government Organizaitons

A recent article in Information Week outlined 4 Steps To Spark Innovation.  In summary they are:
  1. Foster Openness To Innovation
  2.  Expand The Pipeline Of New Ideas
  3.  Triage The Most Promising Ideas
  4. Adopt A ‘Test And Learn’ Approach

Assuming that these are relevant and mostly correct, what do these mean in the context of a typical government IT organization?  What are the limiting factors?  What other approaches can be used to improve innovative thinking and action?  I will address each one in turn.

Fostering openness is a difficult challenge in many organizations, but it can be especially difficult for a government organization.  There are several factors:
  1. Many government organizations have a mix of government and contractor staffs, with the contractor staff potentially being separated into several of groups based on function and associated contracts.   This fragmentation does not necessarily enable good communication of ideas and can make competing groups with conflicts of interest.
  2. Contractor staff may have a good idea, but the structure of the environment may not have a mechanism for these ideas to come to attention to the appropriate government leadership for action.  For example, the contractor may report to one part of the organization, but not to the leadership that could take action.
  3.  The government executes IT as programs.  In general, programs get scoped, awarded for execution, and then execute as planned.  However, when compared to the rate of changes in IT technology and approaches, what gets delivered by the program may already be pushing obsolescence.  Government program managers and their contractors are generally on the hook for delivering against the program and expending funds.  Changes jeopardize both.

Solution: Organizational leadership has to set goals for government program managers correctly.  New ideas that could improve IT functions, increase customer satisfaction, reduce costs need to be part of each program.  Programs have to be measured on a periodic basis on what feedback and new ideas have been incorporated into the program’s execution.

Expanding the pipeline of new ideas is critical, but again both in the government and in commercial enterprises, this can be an organizational challenge.
  1.  Most internal organizations do not see their IT environment as a set of services managed as a portfolio by a set of portfolio managers.  Many ideas may be generated, but there may be no focal point for the reception of the new ideas from users or developers, or a mechanism to begin the process of incorporating these ideas into new service releases.
  2.  Left to operations or even an engineering group, ideas are generally not welcome as they deviate from documented procedures or from the already reviewed and agreed upon system requirements.   In many cases the pipeline is crushed before the ideas can flow to someone that can take action (assuming there is such a person).

Solution: Create a technology forum that represents itself as a brainstorming session.  Here no ideas are incorrect and all inputs are initially treated as equal regardless of the sources (e.g., contractor, vendor, government).

Triaging the good ideas is important, assuming that the pipeline generated some ideas and there was a person, set of persons, or an organization that is able to take the ideas and perform some preliminary analysis.  Again, in my experience, the introduction of new capabilities or technology to solve a problem can meet significant pushback.  Many ideas affect a series of people where the following occurs:

  1.  Who put this list together?  I don’t agree?  I would have prioritized it differently, etc.
  2.  If we do that, then my organization will have to re-train people.
  3.  If we fix that, then my organization will not need as many people.
  4.  That was not invented here.  We are the engineering group and we decide how to implement.

I have written previously about organizational ideas to foster innovation.  The concept there reflects that organizations generally have some significant pressures to resist change (i.e., there is either leadership or responsibility dysfunction in the organization) and that a compensating organizational structural approach may help.

Solution: As proposed in my previous blog, organizations need a focal point for new ideas.  This group needs to help create and functionally support the idea brainstorming environment and needs to be competent in both the technical aspects and business aspects needed to make independent benefit analysis as well as cost and program impact assessments.  One realization of this is to create a CTO’s group with enough non-conflicted staff to be able to make the assessments and then authority to drive changes into program activities.

The Test and Learn approach is ultimately the right approach.  Being able to try ideas quickly in a lab environment and quickly get a stable test version for field evaluation is critical.  However, this needs to be a strategic capability and expectation of the organization.  

  1. An ad hoc approach to this will only lead to frustration as the implementation of these ideas will be seen in an engineering group as a change to requirements and the operations group as a change of procedure.  By the time the idea makes its way to the end-user the whole concept may be overcome by other events.
  2.  It’s great to believe that the organization will take risks, but ultimately the fear of risk, whether it is performance, security, or cost, has driven government IT organizations and their approach to delivering services to be a requirements-based, heavily-reviewed set of processes.
Solution:  Realized by a CTO group, rapid proof-of-concept work is essential.  By reducing risk of new ideas, preliminary testing and learning will occur without constant disruption to executing programs (which will eventually cause program managers to do everything they can do to ignore new ideas).  Leading by example helps get rid of bad ideas and helps organizational executive leadership to see the value of a new concept and the program managers in charge have a better context in which to understand the benefits and impacts to their programs.



Monday, May 16, 2011

What some people, including I, may have been missing about the Microsoft Skypedeal

Buried on page 97 of the Skype S-1 filing March 4, 2011 is the little tidbit of where Skype currently gets its revenue. 

Right now, Skype revenues are approximately $900 million per year.  The average revenue of $100 per paying customer represents around 9 million paying customers, which is nothing to write home about.   This revenue is virtually 100% from customers that use SkypeOut minutes (that is minutes of voice non-Skype termination).   Although not exactly representative, Vonage’s revenue for 2010 was approximately $890 million with an average $360 annual revenue per customer.

So, what is the difference?  More than 83% of Skype’s revenue is from sources outside of the USA.  This may be the target that Microsoft was actually looking to capture.  International customers are apparently trying to reduce their cost for international calls, using Skype as a mechanism.

Microsoft could be trying to exploit this in one of several ways (some of which have been discussed elsewhere).  Here are a couple of ideas:
  • Drive international Xbox sales and Xbox-Live:  My kids use Xbox-Live to chat with their friends.  Being able to impulse call their friends’ phone numbers when they are not online will drive up the number of Xbox-Live points purchased.
  • Continue the Services Push: Use Skype drive into the international audio, video, and Web conferencing business.  Make this seamless on mobile devices, Xbox, smart TVs, desktop, and Microsoft 365.
  • Unified Communications: Push Skype as the best method to connect business communication systems to the public voice network (PSTN doesn’t seem to be the right acronym anymore) and integrate into mobile device directories.  The idea is that a company could contract with Skype for all international voice services in the countries where it operates without having to deal with multiple service providers.

All combined, Microsoft could use this to make a set of integrated international services.  By Skype for:
  • Voice termination for a company’s VoIP environment, in virtually any country
  • Audio and video conferencing, and Web collaboration
  • Seamless directory services between corporate VoIP and employee mobile devices
  • Expand the capabilities of Microsoft “Cloud”-based offering to tie communications with applications

However, even with the rosiest estimates of paying subscriber growth, Microsoft will lose billions of dollars simply because of the cost of money used to by Skype.  The upside is going to have to be pretty substantial to eventually recover this cost as well as the initial investment and additional investment in development, integration, and marketing.

On another topic, this is another analysis (albeit from Macworld) on the state of RIM and Blackberry is here.  It is very much consistent on my previous post on this issue.