More Risk: Resilience, Amazon’s Snafu, and the Cloud

Posted on July 3, 2012 by Nigel Cameron

Clouds (Photo credit: richardcox8592)

It’s good to know that most of Amazon’s backup power generators were working at the end of last week as some seriously bad weather hit the most internet-infested part of the planet, aka the DC area. But it is far from good enough. If we are to succeed in shifting data storage to the Cloud, with the vast benefits that many believe will flow, we need to have security-conscious grown-ups making resilience decisions. Else all we are doing is continuing the trend of porting our most valuable data assets into increasingly insecure locations.

Some months back I was invited to visit the Network Operating Center of one of our major corporations, located in Northern Virginia, and got a taste of what it takes to ensure resiliency. They have two separate power access points; an oil-fired generator that is constantly run in readiness; and a huge battery backup. And aside from redundant server capacity on site, they have two more complete operations in another state. Any one of them can be switched in seconds. They have never been down for more than a few.

Cloud suppliers need as a minimum to offer this kind of redundancy to ensure resilience, and to game “two-war” situations in which a major hack attack comes at the same time as a natural disaster (weather, earthquake) or the outbreak of an infectious disease that takes out many of their personnel. Seems to me that unless standards are that rigorous, neither commercial nor government agencies are going to entrust their data, and the Cloud will continue to be – as it is now – on the fringe of data storage and management.

The experience of the past few days raises other issues of resiliency. It is astonishing that the area where the most powerful people in the world reside can’t get its power utility to bury its cables (Europeans are routinely shocked to discover U.S. practice, which is defensible in scattered rural and semi-rural areas, but reeks of the Third World in suburban centers).

And all that before we start talking about the prospect of an EMP (electro-magnetic pulse), which could essentially reproduce the results of the weekend storm right up the East coast and take a year to fix. But I hear a movie is in the works about the Carrington Event, the mid-19th century EMP that melted telegraph wires. Perhaps that will wake up legislators, regulators, and utilities. And consumers.

Amazon Explains Cloud Computing Snafu – Digits – WSJ.

Cloud Redundancy: How Amazon Should Repair Credibility (broadbandconvergent.com)
Thoughts on the AWS outage: making the cloud more resilient to failure (cloudflare.com)

More Facebook Malarkey: Why?

Posted on July 3, 2012 by Nigel Cameron

Rupert Murdoch and Wendi Murdoch at the Vanity Fair party celebrating the 10th anniversary of the Tribeca Film Festival. (Photo credit: Wikipedia)

Mark Zuckerberg, founder and CEO of Facebook (Photo credit: Wikipedia)

If Facebook were looking for further ways to undermine user and (by implication) investor confidence, it is on a roll.

The big story has been their switching 900 million default emails to their own system; with an adjunct (and even nastier) effect in some phones of changing contact lists also. This latter is put down to a bug that is being fixed, though the fact remains that scads of emails will have ended up in Facebook mailboxes rather than where they were intended to go.

There are two other stories floating around. One is that Facebook staff have what has been referred to as a private (anti-) stalking capacity, so they know who checks their own pages. Another is that Facebook has created bogus Facebook pages for non-users.

The basic email switching issue, unlike various others, is not a “privacy” issue. Much of the discussion around Facebook’s approach to its users has centered on what are seen by some as competing ideas of privacy. This decision suggests an overbearing disregard of consumer choice, and, back of that, a failure of judgment and governance. These failures, which become more egregious all the time, are illustrated by the privacy concerns. But they are more fundamental, and now that Facebook is a public company are revealing flaws that need to be taken seriously by the market as well as users.

It seems to me there are, at root, two.

1. Facebook’s governance culture, and the structure which in the post-IPO situation has grown out of it, are distinctive and would much better fit the “old economy” companies that flourished in the 20th century than one prepared for the 21st. Not to go over old ground: The board’s lack of diversity is well recognized (adding one woman has been good but is a marginal shift since she is is an exec who reports to Zuckerberg). And the shareholder governance structure gives Zuckerberg supreme command, in a model reflected most publicly in current business by Rupert Murdoch’s family control of News Corp. It may be a good model for some companies; that is not my point. But no-one would argue that it represents the cutting-edge of governance designed to navigate the Moore’s-Law-driven rapids facing a digital behemoth in the 21st century.

2. There is a dramatic discontinuity between Facebook’s de facto emergence as the world’s major social network, and governance structures that would seem to be utterly unaffected by any interest in, well, “social.” One could mount a more radical argument and suggest that social networks will best be governed using models of shared, stakeholder governance, that will require distinctive corporate and financing structures – either reflecting mutualization or the non-profit status of Wikipedia; or developing innovative models that are both for-profit and multi-stakeholder in nature.

Point here is more limited. Just as the most visionary companies around are slowly learning now to use social engagement to align values and decisions with their customers, the leading social platform doesn’t seem to give a fig for what they think about their own email access.

All of which suggests to me that, qua company, Facebook is aging fast.

Is Facebook Doomed?

Is #Facebook Doomed?

On diversity:

Facebook, Diversity, and Leadership in the C21 Corporation

Facebook’s Email Change Results in Changed Address Books, Fix on Way – ABC News.

Risk, Risk, Risk: Competitive Advantage, Value, and Knowledge in C21

Posted on June 29, 2012 by Nigel Cameron

A recent HBR blog post from Ernst and Young helpfully summarizes research that shows the increased profitability over time of companies with “mature” risk management functions – engaged with strategic risk and integrated with strategic decision-making. It’s a good read with some solid data behind it.

Here’s another slant. Plainly, in times of general stasis, when technologies, markets, other factors, are changing little, risks are comparatively low. The risk function in major companies, and risk itself as a para-profession, developed in such times. The rapid uptick in disruptive change powered chiefly by the digital revolution (aka Moore’s Law) and (directly and indirectly) related factors such as globalization and the furious growth rates of some less-developed economies have changed everything. Risk has moved from the edges of the business (traditional trade-offs between insurance and self-insurance, data backups, leadership transition planning – the many aspects of prudent housekeeping) to the heart of the enterprise – and its competitive advantage.

The sorry tale that came to a head on Wall Street in 2008 has underlined this in rather crass terms. But the tale is being told in many companies, most recently the effective collapse of Kodak and now RIM – companies built largely around a single product and technology (Kodak) or merely product (RIM) that have suddenly gone the way of the dodo and the travel agent. In an oped for the Sydney Morning Post during my visit to Australia’s finance powerhouse AMP last year I described Groupthink as public enemy number 1. Groupthink, from a specifically risk perspective, is of course about the fundamental mis-rating of risk; a consensus lock-step in ignorance that by understating risk balloons it into 2008 proportions. (I shall paste the piece below.)

Point here: The Risk Management team is the C Suite. The Chief Risk officer is the CEO. Together with certain core functions, like hiring top executives and directing corporate strategy, the key risk function is not one that can be delegated. While this may not always have been true, as we climb the curve of disruptive and often destructive innovation in the second decade of C21 it is now not only true but urgent, vital to the flourishing – and survival – of every business. While finance and banking do not deliver all the best bad risk stories (we have noted RIM and Kodak; we could add BP and Susan Komen), the gearing is much higher and the disasters unravel more dramatically and with more strategic impact. So J.P. Morgan’s Jamie Dimon apologized for letting $2bn slip through inadvertence; a week or two later it now looks closer to $9bn. And Barclays, with other banks, have just been revealed fraudulently manipulating the LIBOR rate. On it goes.

The CEO is Chief Risk Officer. And as I have argued elsewhere (summary in the oped below) one essential risk management tool is the assembling and respecting of widely diverse opinions in every strategic conversation. It’s true of the board; of the executive team; of every context in which – essentially – ideas are put into the furnace to create value and competitive advantage. The further we ascend the Moore’s Law slope, the higher the risks, and the more diverse and respected such voices need to be.

How Mature is Your Risk Management? – Michael Herrinton – Harvard Business Review.

Groupthink – public enemy number 1 as we face the future

Posted on June 8, 2012

Groupthink hasn’t worked, it’s time to embrace the maverick

Giving credence to the outlier thinkers in our midst might have avoided things like the Wall Street crash. Photo: AP

As the Arab spring continues to unravel into an Arab summer, the most important lesson is that hardly anyone knew it was coming. Much like the collapse of the Soviet Union, and Wall Street could it be that as much as conventional wisdom may be conventional it is not always reliably wise?

I recently hosted a conference in Washington on the future of nanotechnology. All kinds of experts were round the table talking tech and policy and business. Then one of them made a stunning statement. She was there on behalf of a big, mainstream environmentalist group. “I have never,” she stated, “been on such a diverse panel in Washington.”

There was a brief but palpable intake of air around the room. I thanked her for the compliment before adding that I was now more concerned for Washington than I was before.

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Whom do we invite round the table when the questions are big and the stakes high? It tends to be those in the centre; the mainstream thinker whose wisdom is regarded as conventional.

When will we ever learn? We are still paying for the lesson we learned from Wall Street in 2008.

Conventional wisdom can be dead wrong, even in the hands of the smartest people because they tend to agree with each other. People with way-out views are kept at arm’s-length.

Whatever the issue, if your views deviate too far from the mean, however articulate you may be, you are unlikely to get invited, funded or promoted.

We have learned a lot this past generation about the value of diversity in age, gender, and ethnicity but we have learned little about the enormous and growing value of diversity of opinion.

Of course, we do disagree about a lot of things. With friends, and with co-workers. But we live in communities of ideas that set boundaries around acceptable diversity of thinking, and make sure we keep out those who challenge our shared assumptions.

We don’t want to rehash old issues we regard as closed. We don’t want to give room to opinions we find deeply objectionable – or threatening. Most of us find it challenging to take forward our thinking when there is someone in the room always, always asking why?

So our natural tendency is to put unconscious faith in Groupthink, the tendency for everyone’s thinking to move in the same direction to the exclusion of any serious questioning.

People in management know all about this as a problem for work groups and other teams. But it is more insidious and far more dangerous on the grand scale.

What brought Wall Street down, and with it threatened the entire global order? The G-word. And on smaller scales: what led Monsanto into huge losses in the late 1990s and ensured that Europe rejected genetically-modified food? What led Detroit to near-oblivion as they insisted on producing 1950s-style autos into the 21st century? What about the power company TEPCO and the nuclear disaster that the entirely predictable tsunami sparked in Japan?

Knowledge is building very fast, disciplines are converging, globalisation is changing the ground-rules of everything. Change powered by Moore’s Law, the digitisation process and the revolution in communication is driving shifts in the technical, economic and social order that most of us strain to grasp. Yet the faster change takes place and the greater its disruptive, innovative power, the harder it will be to make good choices.

So who should be party to the conversation? This is where the outliers come in; people who are articulate and serious, but outside the mainstream assumptions that generally drive conversations. Experts tend to resist the participation of thosewith unorthodox opinions. It needs to become the norm for them to sit round the table in every discussion. All articulate voices round the table; all the time.

This approach is hardly new. The century before last, US poet, essayist and journalist Walt Whitman asked the question his own way. “Have you learned the lessons only of those who admired you, and were tender with you, and stood aside for you? Have you not learned great lessons from those who braced themselves against you, and disputed passage with you?” In the 21st century, great value lies at the extremities of opinion; and we need to harvest it as we move through change faster than we have ever known before.

First appeared in the Sydney Morning Herald, June 9, 2011.

The Law of Digital Instability

Aside

The collapse of RIM’s sales and postponement of its latest model, hard on the heels of what have seemed to be less than adroit management changes, underline a principle that seems obvious enough even though it is generally being ignored.

Digital-age companies, to the extent that their technologies are digitally powered, and to the extent that they essentially are built around one technology, are inherently unstable and liable to rapid collapse.

This directly follows from the profoundly disruptive impact of Moore’s Law over relatively short periods of time.

But it is not widely noted. Which is why during IBM’s centennial year there was speculation about which great contemporary companies would be around in a century. Which is why the valuation of companies such as Facebook is so high – and that applies also to Google, for example, even though it has a much lower P/E ratio. Both Facebook and Google, despite their best best efforts (especially on Google’s part) are essentially one-tech digitally-driven companies – with, which is of course a separate point, one dominant business model and product.

It’s the Law of Digital Instability. The sooner we build it into our valuations, the better. And the sooner companies in its grip realize (as Google gives evidence of realizing) how risky is their position over time, the more likely they will find ways to broaden their product/tech/biz mode base.

IS FACEBOOK DOOMED? https://futureofbiz.org/2012/06/04/is-facebook-doomed/

RIM earnings: BlackBerry maker plans to slash 5,000 jobs, new devices delayed until 2013 | FP Tech Desk | Financial Post.

Spreading the Word: Knowledge Diffusion now we’re Digital

Aside

I recently addressed a conference on global education, and was asked to look in my keynote at the special situation of “resource-poor” areas. I don’t think my approach went down very well (one senior figure in the room, a former UN official, described it sweetly as “crap”), but I still think I’m right!

What I said was that the digital revolution, combining the digitization of books and the spread of mobile in Africa, was re-weighting educational resources; and would soon allow the delivery of high-level educational programs with almost none of the traditional resource pre-requisites in place.

Here’s a case in point: Nice report on the use of e-books in exactly that situation. At the other end of the opportunity scale we have the new programs being launched by Stanford, MIT, and Harvard. But we have just made a very small beginning. In general, education has been very slow to be disrupted, and my sense is it will change very rapidly over the next 10 years – on the same scale as publishing at the moment. This will not all be good, but it will be enormously good for distance delivery at very low cost of what have been expensive western educational perquisites.

Worldreader: An E-Book Revolution for Africa? – WSJ.com.

Tomorrow’s leadership will be predominantly female

Aside

HR Magazine has a brief report on a study of the respective strengths of women and men in leadership. No great surprises here; indeed mostly statements of the proverbial bleedin’ obvious.

But note that’s going on. The writer is making the best of men’s “strengths,” though they are more strategic weaknesses. Two picked out are making a good first impression, and being good at getting their careers to progress. Yes, well.

By contrast, woman excel at completing projects on time, inter-personal relations, planning, organizing, listening, and on and on.

What the article does not highlight is that these “women” key skills are in higher demand in the context of change. And what’s the watchword of century 21? Exactly. Exponential, disruptive change. So men’s key skills which were a good fit with most aspects of the Fordist mass-production, bureaucratic age (which of course they devised) are now increasingly being marginalized. Which is why the push for diversity in executive leadership and the boardroom does not need to be focused on equity, simply on alignment with the central focus of 21st century business. Diversity as such is more significant in change contexts, but the distinctly female traits are key. That’s where competitive advantage and value will lie.

Sorry, guys.

HR Magazine – Employers urged to recognise men and women tend to excel in different aspects of leadership.

10 Amazing Facts about Twitter

Posted on June 16, 2012 by Nigel Cameron

10 Amazing Facts about Twitter

1. It is far simpler than Facebook and yet has far more uses.

2. It is accessible from almost any point on earth and at any time.

3. It connects people and knowledge seamlessly.

4. You can have one-on-one chats with friends and strangers 24 hours a day, either in semi-public through @ messages or in private with DM.

5. It supplies me with a free staff of hundreds of expert researchers and communicators, whose chief delight day by day is to tell me what’s new and what to make of it.

6. Twitter relationships can lead quickly to real-life connections, and when you meet a Twitter friend IRL it’s remarkable how much you already know of each other. Whitney Johnson, author of Dare Dream Do, has called this TWIRL – Twitter – In Real Life. Twirl can be an amazing experience. That’s how I met Whitney! @johnsonwhitney

7. As knowledge is expanding exponentially – faster every day – only one thing can enable us to digest, focus, grasp, what’s new and important: The Miracle of Reciprocal Curation. Each of us scans what’s new for each other, in a mutual gift relationship that has enormous power. Twitter is the best mechanism for it we have yet devised. It’s a Reciprocal Knowledge Engine.

8. A Reciprocal Knowledge Engine is key to enabling us to scan the future, as the future is coming in faster every day.

9. Every corporation and government can use Twitter to engage one-on-one with customers, prospects, and citizens. Forget focus groups and traditional market research. And turn elections from 2-yearly, 4-yearly events into continuous engagement.

10. Twitter opens the organizational boundary of the corporation. We now have two-way communication – the key to transformation in every institution, as the values of customers and employees sync – and customer needs reshape corporate culture.