Big Data is Coming to Get You

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Big data is what high tech companies are calling collecting massive amounts of data about their users. For Google, this includes all the trips you’ve taken, the places you’ve driven, where you’ve driven, your email (if you use Gmail), your searches, Google Now preferences, articles you’e posted to Google+, your pictures, and the list goes on. The idea is to use algorithms to mine this data for useful tidbits about user habits so products and services can be recommended just as you need it. These data can tell companies a great deal about the user including who their friends are.

However, what isn’t clear is who owns the data. Companies assume they own the data, which because you agreed to their terms of service, is true, even though you didn’t read them. However, with the recent re-categorization of fitness apps and trackers at medical devices a wrench has been thrown in the works. Data associated with Medical Devices is typically assumed to be Personal Health Information, which is protected under HIPAA. Which means that companies can’t really sell them AND that you are able to control what happens with the data. It’s the reason why doctors are required to share information with other healthcare professionals.

I believe that this is just the first step towards making our data more portable. In Europe you can already request a transcript of all the data Facebook collects of you, however they do not say you have control over what FB does with that data. Obama, is pushing to help increase privacy of personal information, but will only work if the companies feel like they have a stake or a penalty if they do not adequately protect data. Whenever they are an effective monopoly such as Apple or Google is of your data (through lock-in effects) their incentives to fully respective privacy is reduced because of the cost of switching to another monopoly.

Restrictions Can Drive Innovation

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As a Lean process improvement guy as well as someone that really loves reading about innovation I’ve always taught my students that regulations, limitations, and restrictions on processes, equipment, and activities offer us an opportunity to innovate around those rules. The way that I describe it is that rules place you in a box, but within that box you can move up and down and diagonal and develop some really interesting ideas because of what you can’t do. However, you don’t focus on what you can’t do as much as focusing on how you can avoid that and what you CAN do.

I saw a picture to a great discussion about how gluten free diets are forcing, at least one chef, to be more innovative in their cooking. I’d post it, but the image is so large it’d take up the entire post, so I linked it above. Essentially the chef had a dish with polenta on it and a base that was all glutenous flour, but he figured out a way to make it all polenta, which actually created a unique dining experience that he felt offered a superior taste.

Another area where regulation has been the root of many innovation is the financial sector. They complain the most about regulations because it’s “bad for the economy” or something like that. However, CDO’s and everything that caused the last collapse was in response TO regulations. They figured out how to work around the regulations and make even more money than before. In fact, many banks started to follow suit because they weren’t able to post as high of profits and were getting hit by Wall Street for under performing comparatively.

This is one of the reasons why I personally don’t see value in fighting regulation other than to shape it in one direction or the other. The companies that are able to exploit the regulation the best are going to end up being first to market or extremely fast followers. Meaning they will make a great deal of money and likely dominate the market. If you look at regulation as a “disruptor” and an opportunity to disrupt the regulation, you’re going to do really well as a business.

When Piracy is Easy, How Do You Compete?

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Popcorn Time is something that I’ve been hearing about for a while now but I’ve never really looked into. Effectively it’s a tool that gives you an easy to use User Interface to find Torrents for your favorite TV shows and movies. Torrents, by the way are a type of file and download methodology. Effectively you get tiny bits and pieces from a large number of different users across the internet. This makes it harder to track the individual files, prevents it from easily being removed from the web, and helps manage internet usage across the multiple users. In the days of Kazaa, you directly downloaded from a single peer, now you’re downloading from multiple users, so if one goes offline or reduces the bandwidth they are sending the file to you it has minimal impact.

Torrents are what’s called “piracy” and are on the pirate bay and any number of other sites that share those files. Since they do not have to follow strict contracting like Netflix, Comcast, Hulu, HBO, and other streaming services you have access to the movies you want whenever you want them. For instance, Netflix recently lost access to the Avengers, probably because of the cost of keeping in their library and Disney trying to create artificial scarcity of the legal product. You can find extremely high quality torrents out there to watch it if you can’t get it for free. In fact I’m sure it’s on Popcorn Time right now.

Because of these difference and the historic complexity and risks of downloading a torrent, Netflix had positioned itself as a way to prevent piracy. Now this might not be the case, as Netflix is beginning to see Popcorn Time as a legitimate threat to their business model. I’m not surprised that Netflix sees risk here and I think that this is a good thing for Netflix. It means they are expecting their business to be disrupted and that they can take proactive steps to address it.

What can they do to keep their business afloat and continue to fight piracy? Well, since they are essentially seen as a cash cow on two fronts – ISPs and Content producers (MPAA and TV companies), they need to clearly articulate the amount of piracy that was reduced once the content was put onto Netflix and then show the increase in piracy after the content was pulled from Netflix for contractual reason. If Netflix can’t afford to keep it on their network, then with an easy to use app like Popcorn Time, the content will be pirated, which means that any revenue artificial scarcity was hoping to drive or to be extracted from Netflix at an elevated price goes out the window and the content will still be consumed.

In some cases piracy will happen regardless, but if the trend continues were people are switching back and forth between cord cutting and going back to cable because of rising costs of apps, then apps like Popcorn Time will become more popular because they can completely replace Hulu, Amazon Prime Videos, HBO Go, Netflix, etc.. You could be a cord cutter with this and pay for one app to get your live sports and be good to go. Content producers will begin to lose out again, because they are trying to squeeze the companies that provide easy, relatively cheap access to their content. I’d rather not go back to that, but if my costs keep rising because the companies I choose to support can’t afford the content that I want, then I’d have no choice.

The Innovation machine – This is a “how to” guide for Innovation management

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As many of my blog readers know I’m an innovation reading junky. I’ve read many of the books on how to manage, from a individual’s perspective, creating an innovation or even at a high level how to run an innovation project. However, this if the first book that looks at things in a very systematic manner utilizing a lot of case studies. The Innovation Machine by Rolf-Christian Wentz is a fantastic introduction into a series of case studies of the most innovative companies in the world.

Books like the Innovator’s Dilemma are a lot more prescriptive in what a business should do or how a given business has been disrupted. Typically they focus on the smaller entrants that enter a market and beat the incumbents. The Innovation Machine on the other hand looks at the incumbents and analyzes what the organization did culturally to enable innovation. I believe books like Innovator’s Method and the Lean Startup address a different need: how to take an innovative idea to market. This book touches on those things, but looks at how the whole organization can enable those Lean startups within the organization and use it’s size to maximize the results.

The Innovation Machine also touches on the portfolio management aspect as well as some of the best ways to fund projects, staff projects (2 is best, a small room is next, anything else is doomed to fail), and finally how to integrate the project teams back into the larger business as a whole. No book that I’ve read has really discussed how to do this. All these topics are covered with clear case studies of some of the most innovative companies. He includes discussions of Google, Toyota, GE, P&G, SC Johnson, BMW, Microsoft, Whirlpool, and a litany of others. The stories are referenced as he details the concepts that were leveraged by the companies in his case study.

I believe that this book is a must read for a CEO or a leader that values innovation. Especially since he calls out the massive differences between managing Incremental Innovation and Disruptive Innovation – he gives very clear practical examples and methods for managing them separately. I believe these are powerful and will help me identify projects I work on more easily as disruptive or incremental.

AMD, What Are You Doing?

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The past few months haven’t been kind to AMD. First Lisa Su, the first female CEO, ousted Rory Read. Now three leaders have left including the General Manager John Byrnes, CMO Colette LaForce and Chief Strategist Rajan Naik. Furthermore, it’s pretty clear that the remaining two leaders long term leaders, Mark Papermaster CTO and Devindar Kumar were sort of bribed to stay with restricted stock. This is on top of delays in their desktop, graphics, and mobile chipset and layoffs.

I think it’s pretty clear that AMD no longer has a clear strategy. AMD, while I was working there, was starting to put out some cool stuff that could really define the future of computing. Their APUs were best in class and could have been deployed in a lot of really cool applications. However, those never appeared to have materialized and now Intel is starting to attack the SoC market. While Intel’s Iris graphic chipset is way behind AMD in pure power, I think it’s going to play a serious role in the up coming years especially since Intel is leveraging a similar enough design that they are able to use the Open Compute Language that AMD championed.

Another area of concern for AMD fans is that John Byrne, shortly before his departure, announced at CES that AMD was steering clear of the IoT phenomenon. Which I found surprising considering that their strategy, only a year and a half ago, was to conquer the embedded computing space. Since they restructured again, that’s about 4 times in the past 4 years, they have clearly decided to forego that space. The IoT chipsets are likely going to be a disruptive technology to computing. For instance, this computer you can dock and upgrade every year for about $200, while Intel released a full Windows computer on an HDMI stick for $150. In the past I wrote that I thought that the dockable phone that would turn into a full computer would be the long term future, but these are the incremental steps to get us there.

AMD clearly doesn’t see these spaces the future. They are currently looking at where the market is now and not truly planning for the future. I was excited whenever AMD announced the partnership with Gizmosphere hoping it could compete head to head with the Raspberry Pi, but AMD is clearly failing to embrace that movement, since those devices would be powering the IoT and the maker movement. On the otherhand Intel is rushing to embrace these groups and sees these people as the way into attacking Qualcomm, Samsung, ARM, and Apple’s designs.

Low power is going to be vital for the future expecting a smaller and smaller niche of applications. In these applications, excepting graphics chips, AMD is getting crushed. Even in the graphics space AMD is starting to flounder with poor quality, as @NipnopsTV reported with his year old or so 7970 card.

All of these should be a concern for AMD fans. The company is not investing in the disruptive technology hitting their industry, their market cap is only $2.06B and their shares are at $2.66. They may be positioning themselves to get bought or could be at risk for a hostile take over for their IP or pushed into bankruptcy since their IP might be worth more than the company operating as it is. Look at Nortel to as an example where it’s IP was sold for $4.5B while everything else was just ditched.

Could we eventually see a Samsung R290 and a Samsung Kaveri processor? They gobbled up a ton of AMD’s engineers in 2013 definitely could happen.