Emergent Business Networks

For years I have had a crudely drawn quadrant on the wall next to my desk to remind me what to look for in a start-up:

On one axis – Impact

On the other axis – Ease of Adoption

This used to be a trade off. Before Windows, ease of adoption was unheard of. Microsoft got the adoption by riding on the PC manufacturers. Then Google barged right into the top right hand corner with massive impact and totally easy adoption. There was a view that ease of adoption without lock-in is inherently a weak and unsustainable position but the lack of traction of all the Google challengers seem to be proving that this is not the case.

Classic enterprise software was in the big impact/hard to adopt category. This was where there was a trade off. You could build something that fitted into another vendor’s ecosystem – easy adoption but limited impact – or you could work to create something that became an ecosystem by getting totally entrenched into major companies.

I believe those days are over. The new wave of Net Native Enterprise 2.0 software makes adoption much simpler and organic. There is much less need to (as Steve Jobs calls it) “crawl through the corporate orifice” to get adoption. You won’t get VC to fund a “storm the barricades” type of frontal assault with big sales and marketing budgets.

This will probably limit impact, unless there is a network effect, however I see fewer sustainable network effects leading to Windows type dominance in future. For example, WordPress and other blogging tools attempt this but I think it is a weak concept (much as I love WordPress) as no blogging tool will get dominance and nobody wants to limit their network to one arbitrary set of bloggers.

That is probably the reality of Enterprise 2.0. Despite the great efforts of marketing departments to drum up new paradigms, we are simply into a very long and sustained roll-out of Net native versions of what we have always had in the enterprise. This will lift the boats of every enterprise software player that plays well in that environment and enables some new niche players to emerge, but I doubt we will see anything of the scale of Oracle or SAP emerge.

Most of the Web 2.0 start-ups that I am seeing fall into the low impact/easy to adopt quadrant. I am sure that statement will raise a lot of hackles and I am not trying to offend. I have worked in many start-ups and I am very aware that any traction looks like massive impact for a start-up and should be shouted from the rooftops. I am certainly not trying to rain on any parade.

The barriers to entry are now so incredibly low – use Amazon S3/EC2 for infrastructure, mashup code and deploy online, use RentACoder to get cheap brains. Get it out into the Blogosphere and let the widgets propagate virally. So no problems on the ease of adoption front.

But big impact? Go outside the Web 2.0 Bubble (I am not referring to financial bubble more like “boy in the bubble”) and ask a random selection of ordinary people what recent innovations on the Net have made an impact on their lives? It is a bit sobering.

Usually massive impact means that the solution is solving some huge “pain point”. Personally I think the Web works pretty well. Sure there are some minor annoyances but not anything that I would spend any money to fix. I can see some Web 2.0 tools making life easier, but in small incremental ways, not really life changing ways – not like the PC, email and search.

The reality is that the massive impact deals only come about every decade or so. I don’t believe the next one will be in IT and I say that as somebody who has made his career in IT. The massive impact ones have to be addressing real “pain”. There are plenty of pain points out there – disease and global warming come to mind – and the Web will have a massive impact on helping with these big problems by spreading knowledge. These are all about big science. Fix the problem and adoption ain’t your problem (a real cure for cancer won’t need a marketing budget).

Of course there is a ton of money to be made in media niches and office/Net productivity tools. YouTube is entertaining, like those best of home videos on cable, but changing the world? It is the breathless we are changing the world hype of a lot of Web 2.0 that is a bit old.

The one thing that stands out as big impact is social networking, whether for dates (younger crowd) or deals (mortgage payers). It fulfills as basic a need as email did. I suspect we are at the early stages of social networking and something new will emerge that makes it more sustainable. I do not buy the notion of the “social graph” as the new platform. I believe that Social Networks actually have a reverse scale effect. When there are too many people in one network it loses the whole point of a relationship, it just feels like a big anonymous place and we avoid it to look for more personal ways (online and offline) to build and maintain those relationships.

The Internet is The Platform and nobody controls that. Thats just fine with me.

The Internet Changes Everything. The Ease of Adoption/Impact quadrant is no longer applicable. Possibly Crossing The Chasm is out of date (I am still figuring that one out). In an open “services” Internet, the idea of a dominant platform is almost certainly dead.

As a newcomer to blogging – this is my second post – and somebody who is old enough to remember using a Telex machine to send a proposal, I needed to use something that was pretty intuitive. After about an hour working with WordPress I can say that WordPress is as good as it gets; it is as close to “free, perfect and now” as I have seen. I can see that there is tons of functionality that I have not yet used and I am motivated to experiment and learn more as my experience to date indicates that my frustration level will be low.

During 30 years in the software business, I have got used to the idea that software is mostly pretty bad – no, lets be frank very bad. Pre the PC I learnt that software was monumentally hard to develop, always (I mean always) over budget and and the green screen text stuff was for people in back offices and data centers only. My first hands-on experience was with a Mac (great) and then decades of frustrations with Windows. (Full Disclosure, I love how bad Windows is, as the support problems enable companies like iYogi – where I am a co-founder – to thrive).

WordPress is part of a new wave of software that looks like it may actually get it right. This looks like second generation Net native software. The first generation of Net native got the “wow” factor but rather the same way one goes wow when you see a dog walking on its hind legs (amazing that Rufus can do it, but he still does it very badly). The second generation takes Net native as a given and really focuses on usability. It has to be usable as adoption is based on thousands of individuals voting every minute with their mouse.

This is not how the Enterprise works. Somebody makes a decision and everybody has to use the clunky monstrosity. Of course people do still vote with their mouse but in destructive, passive aggressive ways that derail the project. These are the projects where the CFO at the post-mortem meeting asks “So are are you telling me that after 3 years and $x million we are facing a write-off decision? Can somebody tell me how we got here?”

I can see how systems like WordPress can avoid this by growing more organically. Add a few colleagues/partners as posters. Add some traditional semi-static pages. Add some social network, a bit of video and a podcast or two. Pretty soon I have a modern CMS, with minimal implementation costs and all on a pay as you go basis.

This is what the analysts are touting as Enterprise 2.0. At a 30,000 foot level it makes sense. History has a way of repeating itself and Web 1.0 went from individual to Enterprise and the big Enterprise Net roll-out is still in full swing. Does that mean WordPress type companies should hire some hot-shot sales guys to knock on CIO doors? As somebody who has knocked on a lot of CIO doors, I think not. The possibly vicious cycle goes like this:

1. Get VC by writing a Business Plan with aggressive revenue projections
2. Hire expensive sales guys who will promise whatever it takes to get that revenue target
3. Build whatever clients want/demand without the time to design it right
4. Clunky monstrosity here we come

This can end fine with a trade sale, everybody walks with some money vowing to do it right next time. Actually I think we have a lot of teams with precisely those scars who are determined to do it right this time.

The Net has not only changed the way we deliver software. More importantly it has changed the way people buy software. The enterprise gatekeepers have less power. The gatekeepers still have veto power but only if the software breaks the rules on privacy and security. It is not just start-ups buying this way, it is self-managed teams and departments. Try it free and use the credit card to buy a bit and expense it; the credit card vendors do a good job at expense tracking and those miles and other benefits are nice bonus.

Then at some level of usage, the corporate department may come in to give it the blessing and negotiate volume discounts. The trick is not letting those negotiations drive the featuritis that becomes spaghetti code (as in “we will buy 500 copies if you add xyz feature now”).

I am hopeful that this is a genuinely new era for software and that the teams who have enough experience with the old ways will stick to their design vision and keep it growing with Einstein’s famous phrase in mind:

“Everything should be made as simple as possible, but not one bit simpler.”