Category Archives: strategy

Using Scenario Analysis to Predict the Future of the Semantic Web

Next week I will have the privilege of speaking to the Special Libraries Association (SLA) once again. The SLA audience is always interested and engaging, and I always have a lot of fun. I’m really excited to get another chance to talk two topics I really enjoy: the semantic web and scenario analysis.

The “semantic web” is a nebulous and imprecise term. It is generally intended to apply to a collection of technologies that unify digital content with meaningful meta-data. The semantic web makes it possible for computers to process textual or spoken information the way computers have traditionally processed numerical data. Semantic technologies make it possible for computers to “understand” the concepts that are embedded in written and spoken language.

The semantic web is a truly disruptive technology. It will make new products and services possible, many of which are futuristic or unimaginable today. Apple’s Siri, IBM’s Watson and the Wolfram Alpha search engine are contemporary examples of semantic technologies. Readers may be aware of the quirks and limitations of these tools. Disruptive technologies improve on logarithmic or exponential scale. Most critics assume that these technologies will improve on the same linear scale that defines most incumbent technologies.

The role of the information professional changed with the introduction of quality search engines, e.g. Google. Search engines made it easier for non-experts to find information. For librarians the search engine was a disruptive technology. The semantic web will make it possible for computers and search engines can understand the meaning of digital content. This will make sophisticated search, retrieval and processing of information possible for non-experts.

Scenario analysis is one of my favorite competitive intelligence and strategy tools. It’s a very advanced method for developing a vision about the future and enriching strategic dialog. Scenario analysis cuts through cognitive biases that hobble many organizations when they try to plan for long-term futures. When it is used well a scenario analysis can inform a robust set of early warning activities.

Is the semantic web a threat or an opportunity for information professionals? Anyone who wants to dig in their heels and protest the technology is likely to lose that battle. So how information professionals align their skills with the change the semantic web will bring? These are the questions my audience and I will explore. We’ll apply the tools of scenario analysis to create a view on four possible futures for the semantic web.

I hope to see you at SLA 2012 in Chicago.

If you are unable to see the SlideShare embed please feel free to download the PDF.

Noreena Hertz’ TED Talk on How to Use Experts

This is a great new TED talk from Noreena Hertz on how we can use experts in our modern world. She discusses how fMRIs show that listeners’ critical thinking regions of the brain shut down when they hear experts speak. She makes a compelling case about how we all (including experts) must maintain our skepticism and engage in managed dissent. I especially appreciate her points towards the end about the import of nuance, uncertainty and doubt. Think of all of the messes we as individuals and as a society would not find ourselves in if we followed this advice.

The Level(3) – Comcast Spat is not About Net Neutrality

Recently there has been a lot of coverage about a disagreement between Comcast and Level(3) related to carriage of streaming video from Netflix.  On November 29 Level(3) issued a press release that claimed “Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content.”  These claims confuse peering with network neutrality.  This is also an interesting clash of two competitors’ distinct strategies.

Netflix Picks Level(3) for their Content Delivery Network

In  November Level(3) won a contract to become the primary Content Delivery Network (CDN) provider for Netflix (Reuters Canada Report).  Previously Akamai was Netflix’s primary CDN.  The switch to Level(3) is a BIG deal because Netflix streaming content can represent up to 20% of all downstream Internet traffic during primetime television watching hours.  That estimation comes from this report from network policy solutions provider Sandvine issued in October.

The FCC and pundits took much interest in Level(3)’s claims.  This attention comes at a sensitive time for broadband providers in general and Comcast specifically:

Comcast sent a letter to the FCC (pdf) explaining their perspective on the disagreement.  Comcast counterclaims “Level 3 is trying to game the process of peering – one that has worked well and consensually, without government interference, for over a decade – in order to gain a unique and unfair advantage for its own expanding CDN service.”

Everything You Could Ever Possibly Want to Know about CDNs

CDNs like Akamai, Level(3), Amazon, AT&T and Limewire deliver high-volume, delay intolerant Internet traffic faster than can be provided over a general purpose Internet backbone.  Your Netflix streaming movie, your YouTube video, your friends’ photos on Facebook and your iTunes download all rely on CDNs.  Generally CDNs consist of the following 3 components:

  1. CDN-owned Internetworking Protocol (IP)-based backbones that employ traffic prioritization technologies such as MPLS and DiffServ.  These technologies are used in corporate Internet backbones to differentiate the performance and priority of various types of traffic.
  2. Distributed servers that duplicate content with high-volumes of downloads  by end users.  When you click on today’s most-read article from the New York Times or “The History of Dance” on YouTube the content is being served up by a CDN server instead of the New York Times or YouTube servers.
  3. Interconnection with broadband providers.  The closer these interconnects are to the user requesting the content the faster and more efficiently the content can be served.  These interconnects are commercial arrangements between the CDNs and broadband providers.  The more interconnects a CDN has the more reliable the content delivery.  These interconnects are based on standard peering agreements (see more about peering below).

CDNs Improve the End User ExperienceThe purpose behind CDNs is to distribute infrastructure to achieve efficiency and improve end users’ experience.  Building a CDN is a capital expense, and there is a direct relationship between the capital deployed, network efficiency and the end user experience.  The better CDNs charge more to cover the up-front capital costs of building their superior CDN and can demand a premium because of the end user experience they are able to deliver.

Being Judged by a Jury of Your Internet Backbone Peers

Most people know that the Internet is a network of networks that use the Internetworking Protocol.  These include public nets, private nets, long-haul nets, metropolitan nets, local nets, fat nets, skinny nets, nets that climb on rocks…

Two nodes on the Internet do not have to be connected to the same network to exchange traffic.  As users access Google, Netflix, Facebook or any other sources of content available via the Internet the traffic to and from those sources traverses multiple networks.  Each “hop” comes with a (usually very minor) delay.

Networks are constantly trading traffic back and forth with one another.  Networks that exchange a lot of traffic with establish private peering interconnections to facilitate those exchanges.  The idea is that peers Network Provider A and Network Provider B will move roughly equivalent amounts of traffic over one another’s network.  If Network Provider B puts a lot of traffic onto Network Provider A’s network and carries a much smaller amount of traffic for Network Provider A, then Network Provider B will compensate Network Provider A.  Network Provider A incurs real and opportunity costs to deploy and manage additional Internet backbone capacity to carry Network Provider B’s traffic.

Peering is an industry-led balance of payments regime formulated to ensure fairness in an interconnected network infrastructure.  A balance of payments for terminating international telephone calls serves as a decades-old precedent and model for this approach.

Level(3) Needs More Interconnects to Serve Netflix Content to Comcast’s Customers

Prior to their winning the Comcast traffic, Level(3) was not a leading CDN, having only acquired the relatively small CDN business from Savvis in 2006 to augment their own wholesale Internet offerings.  Level(3) have not made major capital investments to their CDN by building the large number of interconnects with other Internet providers to provide a high-quality CDN.  Level(3)’s Internet backbone business was so much larger than their CDN business that peer Internet providers, including Comcast, usually compensated Level(3) because of the deficit in traffic they carried for Level(3) compared to the Internet traffic Level(3) carried for them.  Level(3)’s CDN was not putting anywhere near as much traffic onto Comcast’s networks as Comcast’s customers were putting on Level(3)’s backbone.

Akamai is far and away the leading CDN with network assets deployed very close to end users to minimize the number of network hops any of its customers’ content must make to reach end users.  CDN is Akamai’s core business.  In strategic terms, Akamai differentiate themselves by focus and differentiation based quality, while Level(3) pursue a cost leadership strategy.

When Netflix sought bids for a new CDN, Level(3) offered a low-cost alternative to Akamai.  No doubt the Netflix RFP specified service level agreement (SLA) including metrics of end users’ experience.  I am a Netflix customer, and often after I watch streaming content I receive an e-mail from Netflix asking me about the quality of the experience.  I can only imagine that one of the metrics to which Netflix CDN partners must abide is a percentage of customer respondents confirming an excellent or acceptable viewing experience.

I do not know whether or not the Level(3) team realized the capital investment that would be required to deliver those SLAs.  According to Ars Technica, Level(3) asked Comcast to eat the cost of nearly 30 additional CDN interconnects.  The Comcast team agreed that 6 new interconnects would address their peering traffic deficit with Level(3).  Additional interconnects and traffic would turn Comcast’s traffic deficit with Level(3) into a surplus and thus require Level(3) to compensate Comcast accordingly.  It was in response to this point that Level(3) issued their press release and sought relief from the FCC by claiming that Comcast was seeking to block its customers from accessing Netflix’s streaming media services.  Netflix is the lead in cutting edge services that are challenging traditional television program models such as Comcast’s cable television business.  Level(3) were suggesting that Comcast was using its market power in their broadband business to protect their cable television business.

Conclusion and What’s Next

What did Level(3) hope to achieve with their complaint?  I cannot say for certain.  Based on the long-standing peering regime I cannot imagine that the leadership at Level(3) assumed that there was any legitimacy to their claims.  There is no FCC action warranted in this circumstance, and no consideration of Level(3)’s complaint should be considered in the FCC and DoJ’s review of the Comcast merger with NBC Universal.

As I was considering this blog entry I wrote a series of tweets that outlined my arguments.  Fellow Titterer Pranav Desai commented that it’s perhaps time to re-examine the peering regime and that we will see more cases like the Level(3) – Comcast conflict as “over the top” television services compete with the television services offered by cable and telecommunications providers.  These are great points, and I really appreciate the discussion.

On the point of re-examining peering I can offer a definitive “maybe.”  It is not for Level(3) to unilaterally re-define a decade-old industry self-governing regime.  Level(3) undercut a competitor and then sought to offload the cost of delivering on their Netflix contract onto Comcast.  That’s not right.

What dimensions of competition will come to play as over-the-top media services such as Netflix, Hulu, iTunes and others eat into traditional television programming offered by Comcast, Verizon (my employer) and others who provide both television programming and broadband Internet connectivity?  The Netflix-Level(3)-Comcast dust-up is an example of the conflicts we might see in the coming years.

Words of Wisdom: Jacqueline Novogratz on Recognizing Indispensable People

Somewhere near the top of the pile of books I am slowly getting around to reading is Linchpin by Seth Godin.  The premise of the book, from what I hear in interviews with Seth and the interwebs chatter is how to be indispensable.  I’ve enjoyed several of Seth’s earlier books, and I’m intrigued by this topic.  When employment seems more fleeting than it has ever been in our collective life memories, creating a favorable differentiation for yourself can be critical to career success.

Several notable personalities have done their own brief interviews for Seth about how important it is to be a linchpin or how to be indispensable.  Jacqueline Novogratz, CEO of the Acumen Fund, gives this short explanation of how she recognizes indispensable people.  This is a great short summary of individual and organizational leadership.  Jacqueline talks about some of the same concepts that other intelligence professionals and I have been discussing, namely the ability of organizations to recognize new realities, experiment, iterate, tolerate risk and mistakes with the appropriate accountability and capablity to learn from smart mistakes.

Scenario Analysis: Planning for Uncertain Futures

As a follow-up to my presentation on scenario analysis in Shanghai last November, tonight I delivered a modified presentation to the Washington, DC chapter of the Society of Competitive Intelligence Professionals.

Scenario analysis is a method for creating strategic foresight that overcomes the shortcomings of traditional forecasting methods. It helps strategists and decision makers create a shared vocabulary and baseline for quality strategic planning.

I’ve developed some surprising insights using this method. In this presentation I used rural broadband as a use case for the method. Even in a quick one-man scenario analysis (which breaks one of my cardinal rules for scenario analysis) I’ve created an intriguing picture of four possible futures for the rural broadband market. To that point, if you happen to have expertise in this topic, I would like to hear your opinion. Let’s keep the strategic conversation going!

My Pecha Kucha from the October 22 Intelligence Collaborative Event

You’ve seen the preview, now see the actual live and in-person Intelligence Collaborative Call to Action from the inaugural event we held in Washington, DC on October 22.  Special thanks to Eric Garland for working his digital video magic and making this video possible.

Intelligence Collaborative Inaugural Event 10/22 in Washington, DC

If you’re going to be in Washington, DC on the evening of Thursday, October 22 please join us for the inaugural event of the Intelligence Collaborative.  The title and the topic are “Social Media and Next Generation Intelligence.”  You can read more about the event and register here.

The Intelligence Collaborative is a nascent professional collaboration and networking group for intelligence professionals and those in related fields.  We are purposefully casting a very wide net in this group’s mission.  Our target audience encompasses professionals engaged or interested in commercial intelligence, government intelligence, military intelligence, investigative journalism, strategists of all flavors, fraud investigators and librarians.  I’m sure I’m leaving some people out in that summary, and if you feel remotely interested feel free to check things out.  The event is free, and you can read more about the concept originally launched by my friend Eric Garland on the Competitive Intelligence Community on Ning.  You can also take a view of Eric’s video introduction to the Intelligence Collaborative here:

There will be a brief set of presentations at tomorrow’s event.  One of the reasons these events will be brief is because we will be using the Pecha Kucha format: 20 slides that auto-advance every 20 seconds.  This has in itself been a great learning experience for me, because 20 seconds is NOT a lot of time.  You’ve got to be concise, get your points across very quickly and think very carefully about how you will pull everything together.  And you’ve got to practice like nobody’s business.  You can see a preview of my presentation here:

Cross Post: Strategic Secrecy and Excellence

I am going to be a lazy blogger today and cross-post a forum discussion topic that I posted in the Competitive Intelligence community on Ning that explores the concept of Apple’s strategic secrecy.  My hypothesis is that Apple and other companies earn the privilege to be strategically secret (note: not completely opaque) by delivering customer value and excellent products or services.  Some executives may begin to look at Apple’s secrecy and conclude post hoc ergo proctor hoc that strategic secrecy alone will bring them success.  On the contrary, I argue, secrecy without excellence is a sign of either corporate egotism or incompetence.

Feel free to comment here or head over to the Ning discussion to share your thoughts.

I always look forward to Ken Sawka and company’s “Looking Out” newsletter in my e-mail in-box. The articles are usually very challenging and expand my own understanding of the relevance of curren business and political happenings to competitive intelligence. In this morning’s newsletter Ken poses a question about one of my favorite companies, Apple. Speaking of Apple’s track record for secrecy when the cultural trend is pulling in the direction of openness and transparency: Is Apple’s obsession with secrecy good business?

This article resonates with me because very recently I finished reading the Jeff Jarvis book What Would Google Do. This book touches on themes of openness and transparency and lays out a set of rules for how to be Googley and succeed in our modern business environment that favors “ecosystems” and “platforms” over stand-alone companies. A great video summary of the book is at readitfor.me.

In WWGD Jarvis puts Apple forward as the unGoogle and asks how it is Apple can break all of the rules of being a modern technology company and still be as successful as they are. It is clear that Apple are playing a clever game of chess about when to be transparent and when to be completely opaque. A few examples of Apple’s openness: adoption of the USB port for peripheral connectivity, support for the MP3 file format on the iPod (Sony chose to support only proprietary music formats and effectively ceded the portable music market they had owned for nearly two decades) and what I consider to be deliberate “mistakes” in updating the code of Apple web pages to pique interest in pending product releases.

Jarvis makes the case that Apple get away with this because their products and services are truly excellent. Early this week Jarvis posted an entry to his blog that named The Economist as the Apple of the news media industry. The Economist is able to break almost all of the rules of modern news business (charging for on-line content, no writer bylines) and is much better positioned than most other news media properties to innovate into the new age that is clearly upon us. Apple and The Economist can be rule breakers because, Jarvis posits, the products they deliver are so clearly excellent and in-line with what customers really want.

Part of the key to effective strategic secrecy and overall success in the marketplace is excellence in the eyes of your customers. While this seems self-evident, how many companies and governments have we seen that don’t deliver quality products or services yet remain opaque? How do we regard their secrecy? I tend to regard it as a sign of poor processes and a clear misunderstanding or disregard for the needs of their customers or constituents, indications of either laziness or self-interest.

Many executives, I am afraid, will take the wrong lesson away from Apple’s strategic secrecy and put the cart before the horse. “Now we’re going to be cagey about our widgets and then the cash will just come rolling in!” The freedom to be opaque must be earned.

As always, I am interested in the thoughts of the community here assembled. How do you perceive strategic secrecy and excellence as competitive differentiators? What criteria do you believe (if any) are required before a company gets to break the rules in its industry? What are other companies that are delivering excellence or applying strategic secrecy? Can you have the latter without the former?

New TED Video: Bruce Bueno de Mesquita On Predicting Decision-Maker Actions

In recent months there has been some great material on predicting the moved of players and decision-makers.  The McKinsey Quarterly ran a great article in January “How companies can understand competitors’ moves” that detailed the results of a recent survey of corporate strategists (subscription required).  My comments on the article can be found at the Ning Competitive Intelligence social network here.  In this month’s Harvard Business Review there is an article Predicting Your Competitor’s Reaction by Kevin Koyne and John Horn (two co-authors also of the previously mentioned McKinsey Quarterly article).  This attention to predicting competitor moves and reactions for strategic insights is heartening to this competitive intelligence professional.  Another great example of a framework for predicting courses of action through a relatively simply mathematical analysis of the decision markers’ attributes.  This framework is described by Bruce Bueno de Mesquita of New York University and the Hoover Institution.  He applies his framework to the potential for Iran to develop a nuclear weapon.

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While he doesn’t reference the specific study, Bueno de Mesquita claims that a CIA study has shown his prediction model to be 90% accurate even when the experts that provided the data inputs into the model got it wrong.  This claim took me several attempts to properly parse– it’s not to say that the data input into the model can be wrong and still return the proper results, because the law of universal conservation of garbage in/garbage out must be maintained.  Rather, the claim is that experts that provide data input into Bueno de Mesquita game theory-based model can make mistakes using their expertise-based prediction methods, presumably with the very same data that they input into the game theory model.  Certainly we’ve seen some recent literature on the power of quantitative analytical models over intuitive or expert opinion-driven prediction models– one example being Ian Ayres’ compelling SuperCrunchers.  That book has several examples of breaking down expert-driven data requirements to get to some small number of variables that are highly predictive in a large majority of instances.  A compelling example is a diagnostic framework for cardiac-related emergency room visits that can predict with high certainty the likelihood of cardiac arrest using a small handful of seeming low-relevance variables.

Bueno de Mesquita provides excellent detail of his framework and the important attributes of decision makers that are incorporated into his model:

  1. An analysis of the individuals that have a stake in the decision.
  2. What is their stated preference.  This is an important distinction because Bueno de Mesquita actively dismisses the notion that we would need to know what individuals want in their heart of hearts.  Their stated preferences are strategic choices that reflect their full analysis of the decisions that need to be made and the circumstances.  Intuitively this makes sense because in the case of a corporate decision interested parties’ statements will tend to reflect their assessment of their own political standing and interests inside the organization.
  3. How salient or important is the issue for them?  In other words, how willing is the decision maker to drop everything else or put other issues or decisions on hold for this one issue.  This seems in me to be related in part to the decision maker’s willingness to take risk related to the issue at hand.
  4. Probably the most important question is how much influence each decision maker has on the situation.  This attribute is important to distinguish between influencers and ultimate decision makers.

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picture-2One of the more interesting elements of Bueno de Mesquita’s framework is the importance of where each party falls on the Outcome – Credit framework.  I have to admit this is always a difficult one for me to grasp, and I think this is related to the second attribute mentioned above: that stated opinion incorporates not only a person’s preference for a specific approach or outcome (more or less) and also an assessment of the organizational politics.  As an ENTJ (off the charts on the N and the T) I tend to be very outcome-oriented.  I suspect the Thinking – Feeling attribute of the Myers-Briggs has some relationship here, and I would be interested in knowing what others think of this and other methods analysts might be able to use to determine where influencers and decision-makers’ fall on this spectrum.  Could the individuals corporate function play a role as well, and how might a person move along the Outcome-Credit spectrum over their career?

With these inputs, Bueno de Mesquita argues, we can apply a game theory analysis to determine the following:

  1. What choices are available for the decision that needs to be made?
  2. What risks or chances are the decision makers and influencers willing to take?
  3. What values do they hold?
  4. What are the decision makers’ beliefs about other people?

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Bueno de Mesquita’s framework presents some very interesting possibilities for scenario analysis– perhaps a more reelable alternative to war games and Delphi surveys.  His assertion about stated preferences has real implications for the government intelligence practice, because it places higher value over the statements available more generally from open sources (OSINT) and de-emphasizes the tradition priority for human intelligence (HUMINT) or signals intelligence (SIGINT).

Excellent Video Summary of Clay Shirky’s “Here Comes Everybody”

While I was in my MBA program I amassed a daunting pile of books. The book I was most eager to pull off the pile and read was Clay Shirky’s “Here Comes Everybody: The Power of Organizing without Organizations.”

The lucid thesis Shirky lays out for the power of the Internet and what he calls the read/write web to reduce the transaction costs of organizing group efforts is definitely transformational. The sometimes flighty and breathless discussions of web 2.0 (I am sure I am guilty of this) intuit some of the concepts that Shirky so clearly describes in a manner that clarifies why these changes are so relevant for business, government and organizations of all kinds.

Rather than present a vision of a freelancer’s paradise utopia, Shirky doesn’t hide from the fact that sometimes the consequences of these lowered transactions costs are that communities united in shared interests that are looked down upon in the broader society. One very troubling example is sufferers of anorexia uniting not to overcome the condition but to provide moral support and advice on how to continue to deprive themselves of food. This is very sad and a clear example that not everything associated with web 2.0 is for the better.

A twitter connection Steve Cunningham of Polar Unlimited has been creating a great series of video summaries of leading business books called readitfor.me. This week he reviews “Here Comes Everybody” at my suggestion, and I’m grateful for the shout-out at the beginning of his podcast.

So here is my advice:

  1. Watch Steve’s video summary of “Here Comes Everybody”
  2. Run out and buy “Here Comes Everybody” or download it to your Kindle.
  3. Read it.
  4. Do something great with the power of lowered organizational and managerial transaction costs.
  5. Don’t be afraid to do a lot of different things and fail at some (or even most of them).
  6. Learn from your fast failures.
  7. Do something even better.
  8. Lather.
  9. Rinse.
  10. Repeat.