Can service design become media’s secret weapon?

This article appeared in the American Press Institute’s “Need to Know” newsletter.

Professor Jennifer Pybus, a senior lecturer at the London College of Communication, studies the political economy and architecture of third party applications. In her view, one of media’s main challenges can be found in the algorithmic literacy of its users:

“People don’t necessarily want to be challenged. If they see something that confirms their ideological position, they feel more comfortable.”

Producers of media services face a double challenge: first, their users should be aware of the flaws inherent in algorithms which are made by humans, may include their biases and, in the words of Vint Cerf, co-inventor of the internet protocol, “may not work exactly the way they were intended or the way we expect them to.” Secondly, how do we develop the critical thinking to understand the innards of our algorithmic digital life?

Maybe Spotify highlighting music that conforms our general tastes is harmless: Discover Weekly, Related Artists and Recommended Songs all fill this user need–but in the news ecosystem, the same algorithm might enhance our confirmation bias and work against core creeds of media literacy.

What do Leave.EU, #MAGA and conversion rate have common? 

In the “transition from mass to micro media”, as Pybus describes the digitisation journey of advertising, consumers benefit from micro-targeting and “appreciate being served only ads that are just for them”. However, the mechanics of micro-targeting are contrary to the information needs of informed citizens, who need to see all the views – not just the ones they like. “There’s a missing link back to the society we live in–a tension that need exist to provide context”, Pybus observes. The example helps illustrate the titanic ethical challenges in media service design.

In a sense, both the “Leave.EU” and “Make America Great Again!” campaigns were service experiences. Both campaigns made innovative use of data-driven psychometric micro-targeting to find “hot-button topics that got people mad enough to get out the door and vote”, in the words of professor and award-winning data-journalist Jonathan Albright. He calls this “the new data-industrial complex” and points to how a deft combination of available technologies, platforms and strategic data mining were deployed to galvanise users (in this case, passive voters). 

Video Killed the Radio Star – by awesome service design

Of late, a trove of experience-guided digital services have been deployed inside and outside media organisations to address some of the industry’s specific risks. AllSides curates centre, right and left perspectives in a visually compelling way to expose bias and provide multiple angles on the same story. BuzzFeed’s “Outside Your Bubble” allows users to see what people outside their social networks are saying about a news item–although not everyone’s on board; the app ReadAcrossTheAisle presents a colour-coded newsfeed that goes from moderate to partisan. At the bottom of the app you see a dial indicating in which part of the spectrum your daily news diet falls. Then, much like a sports app, as the days goes by, it suggests you “escape your bubble”, offering news that will give you a more balanced view.

Syria Deeply–part of new media company News Deeply–explores new models of storytelling around a global crisis. The media service founded by journalist Lara Setrakian, is underpinned by three deeply service-oriented insights: citizens need news built on deep domain knowledge; media needs a Hippocratic Oath, a pledge to do no harm, so it can continue to fulfil its role as a public service; and it needs to “embrace complexity”, as this is the truest representation of the world.

As Setrakian explains in this TEDNYC talk, “simple isn’t accurate and news is adult education.” Other user-centric initiatives include Archant’s print newspaper The New European, launched two weeks after Brexit and focused on the 48 percent of voters who did not support it. It was intended as a pop-up with a four week life. However, it has performed well, leading to indefinite continuation and a digital edition. 

What can media take from the service designer’s toolkit?

Service design offers an ambidextrous approach to improve or innovate service experiences. It has become more relevant as more of the products we consume exist across channels in ways that are invisible to consumers. Digitisation and an omni-channel presence have accelerated this process–by allowing users to communicate through their preferred medium, crossing from one touch point to the next while expecting seamless experiences everywhere. 

Service design “combines customer experience, operational model design and design thinking methodologies as tools. It considers the end to end service journey across all channels and touchpoints not only from a customer, but also from an organisational perspective”, as described by Jani Modig of Deloitte.

Delivering consistently good experiences on every channel is key–as this consistency aligns the customer experience to their perception of the brand. Service design does this by taking a multidisciplinary approach that enables organisations to enhance strategies and operations. By building back-office activities focused on service experience excellence, it prepares organisations to prioritise on this above all other issues. 

The above selection shows how a focus on service design may help bring about innovative media experiences. Their common virtues rest on the focus on implicit and explicit needs of news consumers. Media organisations can explore how aligning their strategies and operations to embrace service design principles will help them deliver innovative and sustainable services.

In later posts we will explore core competences and methodologies of service design focused organisations.

Further reading and resources

Stanford’s d.school

Service Design Network

What is service design & who uses it

The Principles of Service Design Thinking–Building Better Services

The Trust Project: media’s call to arms

Over its one and half years of life, the Trust Project has been collecting insight from audiences through a direct dialogue aimed at designing media for trust. Its goal is to help digital news audiences differentiate authentic from inauthentic news by creating signals or “trust indicators”. The Trust Project is composed of a coalition of 70 organisations including BBC, Google, Financial Times, Vox Media, The Washington Post or Zeit Online.

Finding out what the public values in the news; what helps people trust news; what has broken their trust or how these experiences and feelings intersect with the mission and values of journalism are some of the questions fuelling the Trust Project.

Its director Sally Lehrman, whose journalistic credentials include a Peabody Award and a John S. Knight Fellowship, started the New Media Executive Roundtable and Online Credibility Watch in 1997. Maybe she foresaw a world where fake news could affect the outcome of a US election and where 81 percent of Americans would get at least some of their news through websites, apps or social networks. She explains:

“News organisations make a lot of assumptions about their audiences and are not always analysing issues around trustworthiness or credibility”

The coalition has started to work on these insights to identify a set of critical signals that could then be converted by technologists into tangible indicators. For a user it could be many things: a visualisation, a feature, a search facility, an algorithm, a form, a service, and so on. These would let audiences know something about the trustworthiness underlying a news item and its producer. With trust in media and journalism at an all time low, the mission could not be more timely.

While working on ways to convey signals of trust to news audiences, Lehrman confesses that a lot of the media partners underwent aha moments:

“We may have great practices as journalists, but the public is not always aware of them”

Finding a correction on a news website, a visible author bio or references to an ethics policy can be an uphill battle.

Crafting trust signals – one artifact at a time

So far, 38 trust indicators have been roughed out, from which eight will be built. They include a suite of Best Practices; Citations and References; Label Story Type; Author ID/Bio; Original Reporting; Diverse Voices; Actionable Feedback (engagement); Local.

The two most complex ones, in Lehrman’s view, are diversity and public engagement.

  • Diversity indicators: How can a news organisation signify its levels of diversity in the digital news ecosystem? Diversity, Lehrman says, “has been an aspiration of the news industry, but it has not done so well on it”. Diversity signaling should be able to address issues around plurality of voices; news organisations can become complacent, relying on the same people or institutions more for convenience than as part of a search for truth; they should be rewarded for seeking out and exploiting a diverse range of sources.
  • Public engagement: when experimenting in this area, any system of evaluation should recognise news organisations that find creative ways to promote searchability, visualisation, interactivity and mining of user-generated data.

If you have ideas or insights on these two indicators, be sure to share them with the team at the Trust Project and engage with the initiative and its partners.

Ethical digital products

Promising pilots are underway. These include a simple citation template that can be easily integrated into a reporter’s workflow (Vox); a methodology template to inform users of the reporting that underpins a story (Toronto Globe & Mail, The Taken) and a process to fact-check selected coverage on a specific topic sphere, such as politics or government (API/Pittsburgh Post-Gazette).

At a hackathon held in London in late November 2016 and co-hosted by the BBC, new trust indicating tools took shape:

  • Mirror group developed a tool to identify if a news organisation and an author stick to the Trust Project’s guidelines.
  • BBC News Lab came up with a way to make information collected by journalists during research visible to others.
  • The Guardian designed a tool that gets people outside their social filter bubbles offering opposing news items for them to read.
  • La Stampa worked on a way to identify the level of trust enjoyed by an author by looking at similar stories they have written.
  • WashingtonPost/BuzzFeed developed a tool to scan articles and find links and sources, making them visible to users.

Digital monetisation could follow quality content

By shining a light of high-quality news and journalism in the chaotic digital news ecosystem, the Trust Project could set the stage for high quality content business models to thrive. News organisations with a focus on quality would be able to reclaim disenfranchised digital monetisation models: people pay large sums of money to dine at Michelin-starred restaurants.

Two trends which can be found in the Reuters Institute Digital News Report 2016 support this link between reputation and profit. Firstly, “it seems that trust in the news is almost synonymous with trust in news brands.” Secondly, in countries where individual payments for online news are common, average amounts paid are comparatively low.

Take Norway, for contrast, where 27 percent pay (£41 annually) for online news, the highest payment levels of all the Digital News Report countries. Norway has average levels of trust, but newspaper readership and subscription levels have traditionally been high, helping the online transition. Although there is no correlation between perceived trustworthiness and willingness to pay for online news, it is fair to say that if trust declines, revenues will fall. News organisations should check out the Trust Project for their own ‘aha moment’.

Getting involved with the Trust Project

The Trust Project website

Contribute to this living list of trust indicators

The Trust Project Newsletters

Sally Lehrman on Twitter @journethics

Agile manifesto meets strategy formulation

The Manifesto for Agile Software Development came to life in the Wasatch Mountains of Utah in 2001, driven by self-proclaimed “organisational anarchists” from all walks of the software development industry, from extreme programming to SCRUM to Crystal to Pragmatic Programming.

By putting their minds together, they have managed to change the paradigm in software development processes. Thumbs up to these inquisitive souls. The manifesto, which supports an alternative to documentation driven, heavyweight software development processes, has the following core values, meaning that those on the left are valued more and are desirable

  • Individuals and interactions over processes and tools
  • Working software over comprehensive documentation
  • Customer collaboration over contract negotiation
  • Responding to change over following a plan

You’re probably wondering what all this has to do with strategy formulation. At Vaibmu, we strive to apply these values to the strategy formulation process, constantly experimenting and discovering better ways to bring agility into our projects. On a high level, and in terms of the four values of the agile manifesto, we could map the approach we use in our customer cases as follows:

Individuals over interactions

We start each case trying to make sure that we identify those parts which are based on assumptions and not facts, and find ways to test them (very much in the spirit of Eric Ries). Big eyes and big ears. Listen. Observe. Ask. Explore. Understand. Over one or many sessions where the issues are located and where the stakeholders are based, we communicate as much and as candidly as possible to fully understand their needs. Direct interaction, exploration, fluid and direct communication are key. Without this transparency, we cannot even begin to think about what process to follow (if any!) or which tools to use.

Working software (or outcomes, or strategies)

We want to build a working strategy, one that will solve our customer’s challenge with flying colours, not an expensive, verbose, complex, biased or unrealistic one. Our task is not to make a terabyte of slideware. Our goal is to build a winning, well informed strategy for our customers. We will seek the critical information, not all the information; focusing on the strategic items as well as those that will assist in removing bias and myopia is critical and will eliminate a lot of non-strategic work, freeing up everyone’s time for the important parts and a case or prototype that can be tested and validated at low-cost and low-fidelity.

Customer collaboration

Nobody knows better their business and their market than our customers, but they can also benefit from new ways of looking at their business; they also benefit from more voices from different areas of their business having a say and sharing their needs. For this reason, throughout our project, a candid, fluid and ongoing collaboration will be instrumental to reach great outcomes, to build trust and an understanding of the business which is key to formulate strategy. Focusing on solving problems together and bringing in stakeholders from the customer’s business from multiple areas will overrule bargaining for each project milestone. Solutions, new insights and an enriched foresight will be our currency in the process of exploring, testing and validating strategy.

Responding to change

Agile practitioners around the world understand the virtue of deferring decisions. Late decision making is excellent when there is uncertainty. As a result, late decisions may prove better decisions based on more fact and less speculation. As Mary Poppendieck writes in her brilliant book Lean Software Development: An Agile Toolkit, “in an evolving market, keeping design options open is more valuable than committing early. A key strategy for delaying commitments when developing a complex system is to build capacity for change into the system”. Building this adaptability into our customer projects is a cornerstone of our approach.

Selling a small food company–a short story

Last July, we signed the Share Purchase Agreement for 100% of the shares of a small food importer and e-retailer I founded 3 years ago in Helsinki, Finland. It was an exciting, happy-end-to-my-venture yet humbling experience. The process taught me a few lessons about negotiation, organisation and expectations management. So here’s the little story, as it might be of interest to other entrepreneurs undergoing a similar process.

Background: the motivation to sell or terminate a business

The process started from my desire to focus my energy on my research and consultancy business. While running the latter, I had launched and managed to grow, part-time and with the help of highly competent and committed people, a little gourmet food business. However, my cost-of-opportunity meter was telling me to focus, and while I enjoyed the gourmet food experience, my heart was calling me in another direction. Then, my husband was offered a job in London, and this gave the final tilt: I was determined to sell or close the business ahead of leaving Finland in the summer. Sometimes events outside our control will make the final push, sometimes you just have to ensure to follow through and re-align your focus where you want it to be.

The steps once the ball gets rolling

Alambique Oy products in a Finnish retailer

At first, I was not even thinking to advertise the business for sale (it was such a personal enterprise; placed in a small niche and -last but not least-, I have a tendency, like many, to undervalue the fruits of my own efforts). Besides, I did not even know where to put an ad for it in Finland! Then one evening, almost as a reflex movement in my local expat community, I made a quick post in the Españoles en Finlandia Facebook group. There, against all my expectations, more than 8 different people showed signs of interest. I guess I posted there thinking that, an SME that already has a loyal customer base and positive cash-flow and deals with producers in Spain with whom it has exclusive agreements would be interesting, first and foremost, to Spanish people in Finland with entrepreneurial interests and/or a need for self-employment. As in most small affluent Western countries, in Finland foreigners’ employment prospects are not always as clear as they are for locals, in spite of qualifications.

So, when this momentum in the Spanish community started to build, I had to switch to selling mode:

First, I built a thoughtful and comprehensive presentation of the company for a prospective buyer, including all the important data (marketing and sales strategies, financials, cash-flow analysis, supplier agreements, trends, background, statistics on clients, customers, suppliers, partners…). It is a lot to tell, even for a tiny and young SME, and it is critical that it comes in a clear, transparent and attractive way.

I also made sure to share a bit of my vision going ahead. I did not want to sell the business on the cheap, as, in the right hands, it has a bright future. By sharing ideas, vision, experiences and expectations, you can help build the relationship with a potential buyer, whetting their appetite to take on a challenge and not only fight for the best price. It is not a bad strategy to share all the growth ideas and hacks you had in mind with your prospective buyer (but only when you’re farther ahead in the negotiations and have confidentiality built-in the information). Sharing creative and positive future opportunities helps build trust with a target buyer and will heighten the chances – all other items being in good order-, of building rapport and pre-purchase loyalty and (ideally!) closing a better sale.

On this matter it is of critical importance that, if you love your business and want it to thrive going forward, you really choose to whom you sell it! For me this issue was solved as I took the negotiations forward only with the people I considered suitable and competent. (Another post about selecting the right buyer might follow…)

Finally, preparing myself for a last sharing phase with the buyer, I started to list and describe all the company assets and tools (this spans anything from invoicing and inventory management systems, e-commerce and warehouse process, to CRM SaaS to warehousing rules and agreements to contracts with suppliers and partners and also things like our newsletter software or even our social media tools and overall strategies)… everything that makes the business run. Basically, this provides a good overview of the key aspects of the operations and their cost and helps in the closing phase of the negotiation. When well documented and carefully described, this documentation is a valuable handbook for the handover process.

The lessons learnt

One thing you don’t want in your little bag of tricks is to be rushed. Impatience is a bad enemy for a good negotiation. Another bad ally is any form of reactive emotional response in the process. If you become impatient or restless, you will weaken your position. Impatience may be caused by many factors, including a tight calendar on your side or a patchy process of decision-making on the buyer’s side (which looks like the norm in these small business transactions!). There is a high likeliness that everyone is in this process for the first time, so keeping your cool and a wide-angle view is the number one asset. This does not imply being a weak negotiator, it just means:

  • eliminate impatience. Being impatient or taking things personally in this process
    is a natural response to be avoided like the pest
  • read between the lines and map out all possible scenarios of “why” your prospective buyer is taking X or Y stance at any given moment
  • never be suspicious or take anything personally, but rather, as above, make your own mind-map of why your buyer could be suggesting different issues and address them with options that offer clarification and a clear solution or roadmap for issue at hand. Think of it almost as making mini case-studies, since the learning angle will already be helping the buyer to think from the driver’s seat
  • It is likely that your prospective buyer is investing their own money into your business. You have to put yourself in their skin and understand they need all the guarantees they can get and your role is to build-up trust in every step.

This post has no claims to being comprehensive, normative or a guide. It’s a simple comment on a personal experience selling a small yet profitable and growing business. 

Alambique Oy opened its doors with support from the Instituto de Comercio Exterior de España (ICEX) and Spain’s leading kitchenware shop and cooking school Alambique, SL.

Street Food behind the scenes. Do good!

Recently we celebrated Streat Helsinki, a great festival on a mission, Streat Helsinki “develops diversity in food culture”. It sees street food and its makers as a part of the city food chain and as a part of a lively, inspiring city. In addition to events and yummy street food, it concentrates on street food development in Finland. It also has many interesting workshops and adjacent events. In one of those we had a chance to listen and talk to one of the world’s street food pioneers, Geetika Agrawal of San Franciso’s La Cocina.

LaCocina

La Cocina is the non-profit behind the arch-famous San Francisco Street Food Festival.

The mission of La Cocina is to cultivate low-income female food entrepreneurs as they formalise and grow their businesses. This is done by providing affordable commercial kitchen space, industry-specific technical assistance and access to market opportunities. La Cocina’s vision is that entrepreneurs gain financial security by doing what they love to do: “creating an innovative, vibrant and inclusive economic landscape”.

The food industry has a high cost of entry: the fees for licensed and insured commercial kitchens, the start-up costs to open a restaurant, the standards set to compete for shelf space at specialty stores and large retailers… food entrepreneurs face an uphill battle for success (take it from me, been there!). And it’s an uber-crowded market. La Cocina provides a platform for these motivated people to hone their skills and successfully transition into the highly regulated and competitive food industry.

For this, it follows the model of a business incubator, providing community resources and an array of industry-specific services (e.g. affordable commercial kitchen-space, technical and legal assistance, business expertise) to these low-income women entrepreneurs in order to launch, grow and formalise a food business.

Incubating great food entrepreneurs. Simply delicious

At La Cocina, each qualified kitchen user is a separate business entity. This means that each business must have its own license, insurance, staff, business records or tax returns and each business owner will also be responsible for complying with the city, state and federal regulations concerning licensing, food safety and sanitation, taxes, employment. And so forth.

The cycle of the incubator model looks something like this:

1. Application and Enrolment; 2. Qualified Applicants selected; 3. They join the Pre-Incubation: A 6-month period where program participants receive technical assistance to establish the foundations of their business in the areas of Product, Marketing, Finances, and Operations; 4. Incubation: Program participants whose first 6 months have been successful continue to receive technical assistance in all of those areas and have access to affordable commercial kitchen space to grow their sales; 5. Graduation and Alumni: Program participants reach all established incubation benchmarks and expand their business out of La Cocina’s kitchen while remaining part of the alumni community.

Creating market access… by the numbers!

What La Cocina is in effect doing for these women entrepreneurs is lower entry barriers (costs), bring market opportunities and help create high-value sales. In parallel, they provide expert food business consulting at affordable prices, training and access to capital. Let’s have a look at the numbers to understand the value it delivers. The average cost to start a restaurant business in the San Francisco Bay Area is $750K; there is a three year wait to get a stall at a farmer’s market; 70% of food business owners are men; it costs $35 an hour to rent commercial kitchen space vs $13 at La Cocina’s kitchen; 5-8 permits are needed to operate a food business in San Francisco and, oh… 100% of contracts are in English (don’t forget La Cocina works mainly with immigrant women entrepreneurs, many of which lack English language skills).

So, in comes La Cocina’s support. They bring down start up costs by offering massive savings in kitchen space rentals ($22 per hour in savings); they bring capital via partnerships with community development institutions and find investors (almost $1M annual in investor capital); they connect business to sales opportunities (stores, farmer’s markets or popups, more than 270 market access opportunities last year alone!) and, of course, they train: over 140 volunteers train entrepreneurs and assist them in design, cooking, accounting, legal issues, business development, and many other areas.

Clearly, it works. In 2014 La Cocina’s 41 businesses generated a revenue of $3.6M and 155 jobs. They operate in over 100 stores all over the US, including WholeFoods Market and the SFO airport and are present in 12 farmers markets in the San Francisco Bay Area. Impressive!

Street food development came as a natural extension of the work conducted at La Cocina, with an innovative goal of bringing together diverse people “Anyone, Anywhere”, building “Connection & Community” and fostering “Diversity & Creativity”. The result, a food festival that assists the development of a vibrant economy and the making of “Great Cities”. In their own words, “street food has the power to tell stories, create opportunities for all, connect diverse people and shape our cities”.

The movement is growing and is a fascinating example of ingenuity, solidarity and business savvy put to good (and tasty) endeavours. Stay tuned with them on Facebook and Twitter and also watch out for Finland’s street food development following Streat Helsinki on Facebook. Bon appétit!

Atlassian wins by: “Open culture, no bullshit”

Post by Andrés Moreno

At Vaibmu, we are working with great researchers and developers on U-Qasar, an open and flexible solution for integrating quality monitoring data that comes from developing software (Software Quality Assurance or SQA). U-Qasar has starteas a European funded project (FP7), and it is the goal of the consortium that the knowledge and product created in the project lives after the project ends on September of this year. Vaibmu’s role in this project is to help the consortium decide how to make U-Qasar sustainable in a way that it brings value to companies using it. As many other companies and initiatives starting up, we are using Atlassian solutions, a Confluence wiki to manage the project and a Jira instance to track the software development process. How did Atlassian solutions become so universal? This blog post will try to explain it, and at the same time help us clarify our thoughts about possible ways forward for U-Qasar.

Atlassian is an Australian company funded  by college friends Mike Cannon-Brookes and Scott Farquhar in 2002. Back then, their goal was to do something more interesting than what their college was offering, with humble financial expectations: to earn as much as a junior consultant. It took them a couple of years to even earn that much. In this period, they found out that they wanted to enter the enterprise market, and disrupt it with a different business model.

Their first product to reach the market was Jira. Originally a bug-tracking software to compete with Bugzilla, from Mozilla, in the enterprise market. From the need to document the knowledge around Jira, they developed a wiki, which they quickly sold, and still do, to customers under the name of Confluence.

They realised that they had to lower the overhead of distributing their software. Enterprise software is costly and requires salespeople to close deals. Atlassian could not hire salespeople, and instead focused on a transparent pricing model. Everything could be bought straight from the internet and no secret discounts could be found elsewhere. What now seems to be the desirable, even expected model, was very uncommon then for enterprise software.

As they could not hire salespeople to sell expensive software, they lowered the price. Thus, it all boiled down to simple facts: to make profit they had to sell more licenses. Thus, both the web and Atlassian’s open culture were paramount to their success in equal doses. Those two factors helped them to reach more and more customers. These satisfied customers could easily refer more people to Atlassian software, who could go online and buy the software with a simple clic. No phone calls or email conversations with sales managers.

They also tried to combine this word of mouth mechanism with another revenue source: OEM sales. It did not succeed. By making their software part of a bigger package, and sold under a different name, word of mouth ceased to work.

Laser focus on target customers

Later, as the company grew, they saw that only companies with 20+ employees were buying their software. How could they attract smaller companies? The solution came after a fundraising gala for Room to Read, an NGO building libraries across the world. Atlassian would support startups and small companies with a cheaper starter license ($10), which they would donate in its entirety to Room to Read. In this simple action, they signed up thousands of smaller companies to a paying service, and fulfilled their social commitment.

As promised, Atlassian has all the pricing online, and only provides clearly marked discounts to academic institutions. Also, NGOs and Open Source initiatives can get Atlassian software for free. However, the complexity of enterprise software has crept in with matrices that give you the cost of, e.g., Jira: depending on the number of users, the software it will have, and the add-ons you will need.

Common to other SaaS providers, Atlassian offers two ways of licensing their products: 1) in their cloud with monthly fees, 2) in customer’s servers with perpetual server licenses. The first option is great if you want to avoid setting up and maintaining a server to host the product. The second option requires your own server, but comes with more flexibility as Atlassian provides the source code to the product under a development license.

For example, a Jira license for a server costs $1,200 for 25 users, and $16,000 for 2,000 users. The cloud option costs $100/month for 25 users, and $1,200/month for 2,000 users. However, the server options can take more than 10,000 users, while the cloud is limited to 2,000 users.

The killer business model: transparency + ease of use

Add-ons are available in the Atlassian Marketplace for both solutions. Atlassian has committed to the marketplace by doing two important things: 1) allowing easy access to the data hosted by Atlassian products to add-ons developers, and 2) making it easy for users to install and pay for these add-ons. Currently, there are about 1,700 add-ons. Add-ons provide from simple functionality for editing text to complex solutions for software testing management.

The resulting vibrant marketplace is an important way to provide additional value to its users.

Now, Atlassian has a billionaire valuation (3,3B$ one year ago), when it had a yearly revenue of 215M$. They have achieved these impressive numbers by a constant focus on improving their products, involving their users in the process through their open approach, and making it very easy for people to buy the software. Along the way, they had to fight conventional wisdom on enterprise software, and brought common sense to the table. Their software is still expensive, but cheaper by an order of magnitude to other enterprise software, as it’s expensive to develop products that can scale well and then to provide the support that companies need.

The information for this post has been compiled from lots of sources around the web. However, the one we found more interesting is the great talk that Scott Farquhar gave at the conference Business of Software in 2010. Other interesting links:

http://techcrunch.com/2014/08/22/will-developer-tools-startups-ever-find-investors/
http://www.afr.com/it-pro/how-atlassians-scott-farquhar-and-mike-cannonbrookes-became-software-titans-20140725-jy3tq
http://www.managementexchange.com/story/its-culture-stupid-how-permeating-information-culture-leads-corporate-success
http://businessofsoftware.org/2011/09/from-0-100million-with-no-sales-people-the-atlassian-10-commandments-for-startups/
http://www.businessinsider.com.au/atlassian-the-untold-story-how-two-australian-young-guns-built-a-company-headed-for-a-billion-dollar-ipo-2014-2

Are you running lean?

One of our research projects, U-QASAR, has the mission of creating a flexible Quality Assurance, Control and Measurement Methodology to measure the quality of Internet-related software development projects and their resulting products. We are in the last year of the project and focused on making a business case to turn our consortium’s extensive research, methodology and platform into a commercial product.
In this process, we recently started to use Ash Maurya’s Lean Canvas (from his book “Running Lean: Iterate from Plan A to a Plan That Works”).

“Most of the answers lie outside the building -not in your computer, or in the lab. You have to get out and directly engage customers”

In Maurya’s approach to business model canvassing (this term comes from the excellent book “Business Model Generation” by Alexander Osterwalder & Yves Pigneur) the key is approaching a business as a problem to be solved. This is an ideal way to start working on defining the solution from the start. Asking yourself first what are the top 3 problems and then what would be the top 3 features / services that would make up the solution provides a quick framework to rapidly test from.

When applied to a customer segment (remember that the elements of a business model may have pretty wild fluctuations based on different customer segments!) you have a good start to dig into the rest of the canvas. Then, empirical work should begin. As soon as you have a quick draft or inkling of your service, you can supercharge yourself to the potential customers and start gathering insights and feedback. Customer centric business modelling is at its best when you can bring the potential customers in as early as possible and benefit from their views.

For now, I will describe Maurya’s canvas and it’s 9 building blocks. The order, as becomes apparent in this reading, is critical.

1. We start with a problem: define your top 3 problems

2. Then, customer segments should be identified: who are your target customers?

3. In the third area of the canvas, we describe our unique value proposition: a single, clear and compelling message that states why you are different and worth buying

4. Solution: now, with a customer segment and value proposition in hand, we can attack the key issue: what are the 3 key features that will provide a solution to the problem stated in point 1

5. At this stage, we can focus on the channels to get them there: describe your path to customers

6. Revenue streams anyone? At this time, you may go into describing your revenue model, lifetime value, revenue and gross margin targets

7. Now, look at the cost structure: define customer acquisition costs, distribution costs, hosting, staff…

8. Having reached this point, you might want to enumerate the key activities to measure and set some KPIs for the business

9. And finally, on canvas, we have unfair advantage: can your solution be easily copied or bought?

Think about this approach to business modelling: SOLVING A PROBLEM. It is compelling and, in combination with a clear definition of your customer segment, may provide a powerful driver for your modelling endeavours. We will start putting them into use with real practitioners and consortium partners in a workshop in Bremen in February 2015 and keep you posted!

How your mind really works: strategic intuition

In the course of a delightful and lively chat on strategic routes, our friends over at Synnovatia provided a very insightful document on how traditional approaches to problem solving in the US Army have been, to a certain extent, trying hard to “separate” two ways of thought and analysis which are, as Neuroscience has proven in the past decade, inextricably interrelated. Analytical thinking and strategic intuition, or what Carl von Clausewitz in the early 19th Century described as coup d’oeil. As he articulately explained, “if one is to get safely through this perpetual conflict with the unexpected, two qualities are indispensable.” The first is figuratively expressed by the French phrase coup d’oeil. The other is resolution. For Clausewitz, coup d’oeil is “the rapid discovery of a truth which to the ordinary mind is either not visible at all or only becomes so after long examination and reflection.”

We read in William Duggan’s research that Army planning takes three main forms: Army problem solving, the military decision-making process (MDMP), and troop leading procedures (TLP). In all three forms, “the planning process structures the thinking of commanders and staff while supporting their insight, creativity, and initiative”. On the surface, he claims, there is nothing wrong with this statement. “But look deeper, and you find the old model of the brain: structured analysis on one side, and unstructured insight and creativity on the other”.

Analysis vs Creativity?

George Smith Patton, Jr.Strategic intuition, in contrast,“blends analysis, structure, insight, and creativity so thoroughly that you cannot unravel them.” Army problem solving “provides a standard, systematic approach to define and analyse a problem, develop and analyse possible solutions, choose the best solution, and implement a plan of action that solves the problem.” This four-step sequence is a classic statement of analytical problem solving. We cannot trace where the sequence came from,“but it seems logical, so it is rare for anyone to question it or ask its origin.” But we know now that strategic intuition does not follow this four-step sequence.

Why this seems of special interest is that it points to some major shifts in what we take to be the most illuminated forms of decision-making, putting individual coup d’oeil, resolution, presence of mind and experience (not only one’s own, but that which comes from the analysis of human history), at the center of decision-making. This is what cognitive psychologist Gary Klein calls “expert intuition.”

Recent advances in how the mind works have overturned the old idea that analysis and intuition are two separate functions taking place in two different parts of the brain. In the new view,“analysis and intuition are so intertwined that it is impossible to sort them out. There is no good analysis without intuition, and no good intuition without analysis.” (Duggan) They go together in all situations. Some scientists call the new model of the brain “intelligent memory,” where analysis puts elements into your brain and intuition pulls them out and combines them into action.

However, “our most-accepted approach to problem solving is grounded in an incorrect premise about the source of creativity in the brain” (Duggan). As we now know (refer to Nobel Price winner Eric Kandel if in doubt!) “there is no left brain; there is no right. There is only learning and recall, in various combinations, throughout the entire brain.”

Intuition = Search + Combine

Neuroscientist Barry Gordon, shows us this newer model by portraying the everyday intelligent memory of human beings “as the greatest inventory system on earth.” From the moment you’re born, your brain takes things in, breaks them down, and puts them on shelves. As new information comes in, your brain does a search to see how it fits with other information already stored in your memory. When it finds a match, the previous memories come off the shelf and combine with the new, and the result is a thought. The breaking down and storing process is analysis. The searching and combining is intuition. Both are necessary for all kinds of thought. Even a mathematical calculation requires the intuition part, to recall the symbols and formula previously learned in order to apply them to the problem (Gordon).

When the pieces come off the shelf smoothly, in familiar patterns — such as that simple sum you’ve done many times — you don’t even realise it has happened. When lots of different pieces combine into a new pattern, you feel it as a flash of insight, the famous “aha!” moment. But the mental mechanism works the same way in both cases (Gordon).

So, based on this, what about a bold proposal: Just as the intelligent memory concept has replaced the old two-sided brain theory in Neuroscience, do companies need to replace brainstorming with methods that reflect more accurately how creative ideas actually form in the mind?

They don’t need to start from scratch, once we understand how intelligent memory works, we find several existing techniques that fit. Another post on this might follow.

References: Coup d’oeil: Strategic Intuition in Army Planning, William Duggan, 2005. How Aha! Really Happens, William Duggan, Strategy and Business, 2010. Cognitive Neuroscience and the Study of Memory, Brenda Milner, Larry Squire, and Eric Kandel. Neuron, 1998. On War, Carl von Clausewitz, 1831 (unfinished in his lifetime). Sources of Power: How People Make Decisions, Gary Klein, 1999. Intelligent Memory: Improve the Memory That Makes You Smarter, Barry Gordon, 2003

Blue Ocean vs Shaping Strategy–let’s compare

Post by Pardeep Maheshwaree

The two concepts provide complementary but distinct views about positioning a company in a business landscape at a place which is not only profitable but also less contested. Both of these concepts have roots in the reconstructionist approach, which defends the ‘strategy shapes the structure of industry’ paradigm.

Blue ocean strategy refers to a school of strategic thinking where one escapes competition by making it irrelevant, essentially by focusing on delivering value which no one is currently offering effectively in the market. This is attained by tapping into latent demand of customers or by shifting the ‘value’ parameters in the industry e.g. as done by Apple in smartphones by moving the emphasis from technological advancements to user-experience, thus shifting the industry paradigm. However, providing more value (differentiation) alone does not necessarily guarantee success in the long run, one also has to lower the cost structure at the same time. Thus, by pursuing differentiation as well as a low-cost strategy and delivering value (based on untapped demand) companies can reconstruct the market.

In order to find a blue oceans, companies need to break-away from contemporary strategic thinking which has over-emphasised competition benchmarking. This is not to suggest that companies should avoid benchmarking competitors, but rather they have to focus more on customer needs and novel value-creation opportunities. Blue ocean strategies are not necessarily about technological innovation but often the novelty in linking of technologies to buyer’s value. These strategies typically accompany a different business model and this is why they cannot be easily imitated. It is always hard to imitate completely new business models due to the cognitive barriers of incumbents to novel approaches. Thus, competition is more likely to respond by strengthening their existing business model and lose share in the renewed market.

High value of shaping strategies

In contrast, SHAPING STRATEGIES are focused not on the strategic moves to create a new market but on orchestrating a business ecosystem where all the participants benefit. As suggested by Hagel et al. (2008) this can be achieved by companies which could: communicate a shaping view (future view of the industry with opportunities for all participants), develop a shaping platform (a set of standards and practices that organise and support participants’ activities) and shaping acts & assets (signalling their capabilities for success through their own acts). Ikea’s success is a good example of a shaping strategy. The shaping view that Ikea brought forth was a new way of doing business –by re-conceptualising the whole furniture businesses through a novel value system. Ikea also created a platform for its partners to operate on, by a) supporting suppliers with equipment and technical assistance in order to improve their business infrastructure and manufacturing standards and b) providing customers easy to use instructions to assemble their own furniture, thereby lowering costs. Ikea’s acts and assets include its orchestration capabilities, efficient warehousing and logistics, customer support and store layout amongst others, all of which strengthen its vision and reliability.

In an era where technological advancements have created immense opportunities, it is imperative that value systems be reconfigured. It will be the market-shapers who will have the most profitable position in the reconstructed markets. The prerequisite for it is a shift in strategy practitioners’ belief system from strategy following structure to strategy shaping structure.

References: Kim, W.C. & Mauborgne, R. 2004. Blue Ocean Strategy, Harvard Business Review, 82(10), pp. 76-84. Hagel, J. Brown, J.S., & Davison, L. 2008. Shaping Strategy in a World of Constant Disruption, Harvard Business Review, October, pp. 81-89