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IoT and Vendor Lock-in
I was researching an idea last weekend and stumbled across something unexpected. My personal view on IoT has been that it provides a framework to support a rich ecosystem of hardware and software products. That flexibility and extensibility foster innovation, which in turn fosters greater use and ultimately adoption of the best products. It was quite a surprise to discover that IoT was being used to do just the opposite.
My initial finding was a YouTube video about “Tractor Hacking” to allow farmers to make their own repairs. That seemed like an odd video to appear in my search results, but midway or so through the video it made sense. There is a discussion about not having access to software, replacement components not working because they are not registered with that tractor’s serial number and that the only alternative is costly transportation of the equipment to a Dealership to have a costly component installed.
My initial thoughts were that there had to be more to the story, as I found it hard to believe that a major vendor in any industry would intentionally do something like this. That led me to an article from nearly two years earlier that contained the following:
“IoT to completely transform their business model” and
“John Deere was looking for ways to change their business model and extend their products and service offering, allowing for a more constant flow of revenue from a single customer. The IoT allows them to do just that.”
That article closed with the assertion:
“Moreover, only allowing John Deere products access to the ecosystem creates a buyer lock-in for the farmers. Once they own John Deere equipment and make use of their services, it will be very expensive to switch to another supplier, thus strengthening John Deere’s strategic position.”
While any technology – especially platforms, has the potential for vendor lock-in, the majority of vendors offer some form of openness, such as:
- Supporting open standards, APIs and processes that support portability and third-party product access.
- Providing simple ways to unload your own data in at least one of several commonly used non-proprietary formats.
Some buyers may deliberately make the decision to implement systems that support non-standard technology and extensions because they believe the long-term benefits of a tightly coupled system outweigh the risks of being locked-into a vendor’s proprietary stack. But, there are almost always several competitive options available so it is a fully informed decision.
Less technology-savvy buyers may never even consider asking questions like this when making a purchasing decision. Even technologically savvy people may not consider IoT as a key component of some everyday items, failing to recognize the implications of a closed system for their purchase. It will be interesting to see if this type of deliberate business strategy changes due to competitive pressure, social pressure, or legislation over the coming few years.
In the meantime, the principle of caveat emptor may be truer than ever in this age of connected everything and the Internet of Things.
The Value Created by a Strong Team
One of the best team-building exercises that I have participated in was as a Board Member for the Children’s Hospital Foundation of Wisconsin. We were going down a path that led to a decision on whether or not to invest $150M in a new addition. The CEO at the time, Jon Vice, wisely determined that strong teams were needed for each committee in order to thoroughly vet the idea from every possible perspective.
The process started by being given a book to read (“Now, Discover Your Strengths” by Marcus Buckingham & Donald O. Clifton, Ph.D.), and then completing the “Strengthsfinder” assessment using a code provided in the book. The goal was to understand gaps in perception (how you view yourself vs. how others view you) so that you could truly understand your own strengths and weaknesses. Then, teams were created with people having complementary skills to help eliminate weaknesses from the overall team perspective. The results were impressive.
Over my career, I have been involved in many team-building exercises and events – some of which provide useful insights, but most failed to pull the findings together in a way that was concrete, had context, and offered actionable recommendations. Key areas that consistently omitted were around Organizational Culture, Organizational Politics, and Leadership. Those three areas have a significant impact on value creation vis-à-vis team effectiveness and commitment.
When I had my consulting company we had a small core team of business and technology consultants and would leverage subcontractors and an outsourcing company to allow us to take on more concurrent projects as well as larger, more complex projects. This approach worked for three reasons:
- We had developed a High-Performance Culture that was based on:
- Purpose: A common vision of success, and understanding of why that mattered, and an understanding of specifically how that was defined and measured.
- Ownership: Taking responsibility for something and being accountable for the outcome. This included responsibility for the extended team of contractors. Standardized procedures helped ensure consistency and make it easier for each person to accept responsibility for “their team.”
- Trust: Everyone understood that they not only needed to trust and support each other but in order to be effective and responsive the others would need to trust their judgment. If there was a concern we would focus on the context and process improvements to understand what happened and implement changes based on lessons learned. Personal attacks were avoided for the good of the entire team.
- Empowerment: Everyone understood that there was risk associated with decision making, while at the same time realizing that delaying an important decision could be costly and create more risk. Therefore, it was incumbent upon each member to make good decisions as needed and then communicate changes to the rest of the team.
- Clear and Open Communication: People on the team were very transparent and honest. When there was an issue they would attempt to resolve it first with that person, and then escalating if the two people could not reach an agreement and decided to seek the consensus of the team. Everything was out in the open and done in the spirit of being constructive and collaborating. Divisiveness is the antithesis of this tenet.
People who were not a good fit would quickly wash out, so our core team consisted of trusted experts. There was a friendly competition that helped raise the bar for the entire team, but when needed the other team members became a safety net for each other.
We were all focused on the same goal, and everyone realized that the only way to be successful was to work together for the success of the team. Win or lose, we did it together. The strength of our team created tremendous value – internally and for our customers that we sustained for several years. That value included innovation, higher levels of profitability, and an extremely high success rate.
This approach can work at a Business Unit or Department level but is most effective when it starts at the top. When employees see the leaders of their company behaving in this manner it provides the model and sets expectations for everyone under them. If there is dysfunction within an organization it often starts at the top – by promoting or accepting behaviors that do not benefit the whole of the organization. But, with a strong and positive organizational culture, the value of strong teams is multiplied and becomes an incredible competitive advantage.
Good Article on Why AI Projects Fail
Today I ran across this article that was very good as it focused on lessons learned, which potentially helps everyone interested in these topics. It contained a good mix of problems at a non-technical level.
Below is the link to the article, as well as commentary on the Top 3 items listed from my perspective.
https://www.cio.com/article/3429177/6-reasons-why-ai-projects-fail.html
Item #1:
The article starts by discussing how the “problem” being evaluated was misstated using technical terms. It led me to believe that at least some of these efforts are conducted “in a vacuum.” That was a surprise given the cost and strategic importance of getting these early-adopter AI projects right.
In Sales and Marketing you start the question, “What problem are we trying to solve?” and evolve that to, “How would customers or prospects describe this problem in their own words?” Without that understanding, you can neither initially vet the solution nor quickly qualify the need for your solution when speaking with those customers or prospects. That leaves a lot of room for error when transitioning from strategy to execution.
Increased collaboration with Business would likely have helped. This was touched on at the end of the article under “Cultural challenges,” but the importance seemed to be downplayed. Lessons learned are valuable – especially when you are able to learn from the mistakes of others. To me, this should have been called out early as a major lesson learned.
Item #2:
This second area had to do with the perspective of the data, whether that was the angle of the subject in photographs (overhead from a drone vs horizontal from the shoreline) or the type of customer data evaluated (such as from a single source) used to train the ML algorithm.
That was interesting because it appears that assumptions may have played a part in overlooking other aspects of the problem, or that the teams may have been overly confident about obtaining the correct results using the data available. In the examples cited those teams did figure those problems out and took corrective action. A follow-on article describing the process used to make their root cause determination in each case would be very interesting.
As an aside, from my perspective, this is why Explainable AI is so important. There are times that you just don’t know what you don’t know (the unknown unknowns). Being able to understand why and on what the AI is basing its decisions should help with providing better quality curated data up-front, as well as being able to identify potential drifts in the wrong direction while it is still early enough to make corrections without impacting deadlines or deliverables.
Item #3:
This didn’t surprise me but should be a cause for concern as advances are made at faster rates and potentially less validation is made as organizations race to be first to market with some AI-based competitive advantage. The last paragraph under ‘Training data bias’ stated that based on a PWC survey, “only 25 percent of respondents said they would prioritize the ethical implications of an AI solution before implementing it.”
Bonus Item:
The discussion about the value of unstructured data was very interesting, especially when you consider:
- The potential for NLU (natural language understanding) products in conjunction with ML and AI.
- This is a great NLU-pipeline diagram from North Side Inc. in Canada, one of the pioneers in this space.
- The importance of semantic data analysis relative to any ML effort.
- The incredible value that products like MarkLogic’s database or Franz’s AllegroGraph provide over standard Analytics Database products.
- I personally believe that the biggest exception to assertion this will be from GPU databases (like OmniSci) that easily handle streaming data, can accomplish extreme computational feats well beyond those of traditional CPU based products, and have geospatial capabilities that provide an additional dimension of insight to the problem being solved.
Update: This is a link to a related article that discusses trends in areas of implementation, important considerations, and the potential ROI of AI projects: https://www.fastcompany.com/90387050/reduce-the-hype-and-find-a-plan-how-to-adopt-an-ai-strategy
This is definitely an exciting space that will experience significant growth over the next 3-5 years. The more information, experiences, and lessons learned shared the better it will be for everyone.
Apollo 11 50th Anniversary – Interesting photos & article link
I still remember my parents allowing me to stay up late to watch the first moonwalk. It was 9:30 pm, I was 5 years old, and we were huddled around an old “black and white” television that had a circular viewing area. My parents tried to convey how important and monumental that moment was – telling me that I would be telling this story to my children someday.
What I remember most was being amazed seeing the astronauts hop around with ease 
and not understating how that could be. We had watched the launch on TV and were getting updates nightly from Walter Cronkite on the evening news. Normally my dad would sit at a TV table to eat dinner and watch the news as my mom sat with my sister and me at our kitchen table, but this week was different.
With all of the news this past week on the 50th 
Anniversary of the first moonwalk it triggered a couple of memories. One of them was that I had a collectible item that I purchased in 2005 at the annual Children’s Circle of Care leadership conference in San Diego, CA. There was a luncheon held on the deck of the USS Midway Museum and afterward, I took a tour. It is an incredible place to visit if you are ever near San Diego.
Before leaving that day I went to the gift shop to get a few trinkets for my wife and children. What I found was a beautiful display, which I immediately purchased and had shipped home. This display was taken to school a couple of times for “show and tell.” It hung on my office wall for 3 years or so and then went into storage with other artwork. It then sat for the past decade and I almost forgot that I had it.
To me, this display is both beautiful to see and very inspirational as well. Human creativity is an incredible thing! As an aside, I have never seen anything like this display so I thought I would share it with you.
Today I also ran across a good article regarding this event that provided information that I had not seen before. It is very interesting and can be found here: https://go.usa.gov/xyVGh
Edit: This was another good article that discusses the advanced flight control computer used at the time – https://www.linkedin.com/pulse/apollo-11-moon-landings-fourth-crew-member-computer-far-fishman/
This anniversary is a great reminder of the power of individuals, teams, and partnerships when they are mission-focused. I find people like the men and women of NASA to be extremely motivational, and the few that I have met have all been very friendly people as well. They are the Humble Heros!
Commentary on an HBR article about Start-ups & Entrepreneurship
A friend posted this article on LinkedIn.com. Due to character limitations for comments, I decided to post my response here. Below is a link to the article referenced: https://hbr.org/2019/07/building-a-startup-that-will-last
The article is interesting, but the emphasis on “second and third acts” assumes that the start-up will successfully navigate the first act. Even with addressing what the author views as key points this is still a very big assumption. The reasons for Longevity and Success are far more complex and multi-dimensional, but it does place a spotlight on some of the more important areas of focus.
Long-term success requires several things: The right combination of having a unique goal that has the potential to make a big impact (think “No software” from Salesforce.com); Innovative ideas to achieve that goal; A diverse team to build the product (a mix of visionaries, insightful “translators,” technical experts, designers, planners, adept doers, etc.); Very good sales / business development / marketing to describe a better way of doing things and converting that to new business; and ultimately a management team focused on sustainable and scalable growth.
The point made about the need to, “Articulate a value framework oriented toward societal impact, not just financial achievement” seems a bit superficial and too tactical in nature.
First, there are unintended consequences to most new technologies. Social Media is a recent example, but Genetic Editing and AI are two areas that are likely to provide more examples over the next decade. Not every societal impact will be positive, and having a negative impact could very well lead to the untimely demise of that company.
Second, the two ideas (societal impact and financial achievement) are not mutually exclusive. When I owned my consulting company we had a goal of funding $1M worth of medical research that would find a cure for Arthritis. We allocated half of our net profits for this goal. Every employee was on-board with this because there was a tangible example of why it mattered (my daughter). We invested $500K, helped launch a few careers for some brilliant MD/Ph.Ds and at least one national protocol came out of their research.
Mission and Vision are so important to a company, yet so many companies fail to view this as anything more than a marketing effort. Those companies fail to realize that this is as much to motivate and inspire their employees, as it is to grab the attention of a prospective customer. These should be both inspirational and aspirational, such as the “BHAG” (Big Hairy Audacious Goals) that Collins and Porras wrote about 25 years ago.
Regarding Endurance and the assertion that “…the best businesses are intrinsically 
aligned with the long-term interests of society,” my take is slightly different. The best businesses are always looking for trends and opportunities in an ever-changing global competitive landscape – as opposed to looking to their competitors and trying to ride on their coattails. Companies with a culture of fostering innovation as a way to learn and grow (Amazon and Google are two great examples) are able to find that intersection of “good business” and “positive societal impact.” It is much more complex than a simple one-dimensional outlook.
But, it was a good article to help reframe ideas and assumptions around growth.
One Successful Approach to Innovation that worked for an SMB
When I owned a consulting company we viewed innovation as an imperative. It was the main thing that created differentiation, credibility, and opportunity. We had an innovation budget, solicited ideas from the team, and evaluated those ideas quarterly.
Almost as important to me was that this was fun. It gave everyone on the team the chance to suggest ideas and participate in the process. That was meaningful and supported the collaborative, high-performance culture that had developed. The team was inspired and empowered to make a difference, and that led to an ever-increasing sense of ownership for each employee.
The team also had a vested interest in having the process work, as quarterly bonuses were paid based on their contributions to the company’s profitability. There was a direct cause and effect correlation with tangible benefits for every member of the team.
We developed the following 10 questions qualify & quantify the potential of new ideas:
- What will this new thing do?
- It is important to be very detailed as this was used to create a common vision of success based on the idea being presented.
- What problem(s) does this solve and how so?
- This seems obvious, but if you are not solving a problem (which could be something like “lack of organic expansion”) or addressing a pain point then selling this new product will be an uphill challenge.
- What type of organizations have those problems and why?
- This was fundamental to understanding if a fix was possible from a practical perspective, what the value of that fix might be for the target buyer, and how much market potential existed to scale this new offering.
- What other companies have created solutions or are working on solutions to this problem?
- The lack of competition today does not mean that you are the first one to attack this problem. Due diligence can help avoid repeating the failure of others, and potentially provide lessons learned by others and help you avoid similar pitfalls.
- Will this expand our existing business, or does it have the potential to open up a new market for us?
- There are upsides and downsides to each answer, but breaking into a new market can take more time and be more difficult, time-consuming, and expensive to achieve.
- Is this Strategic, Tactical, or Opportunistic?
- An idea may fall into multiple categories. When Sarbanes-Oxley (SOX) Act became law we viewed a new service offering as both a tactical means to protect our managed services business as well as an opportunistic means to acquire new customers and grow the business.
- What are the Cost, Time, and Skill estimates for developing a Minimally Viable Product (MVP) or Service?
- What are the Financial Projections for the first year?
- Cost to develop and go-to-market.
- Target selling price, factoring-in early adopter discounts.
- Estimated Contribution Margin Ratio (for comparison with other ideas being considered).
- Break-even point.
- Would we be able to get an existing customer to pre-purchase this?
- A company that is willing to provide a PO that commits to making a purchase of that MVP within a specific timeframe increased our confidence in the viability of the idea.
- What are the specific Critical Success Factors to be used for evaluation purposes?
- This was an important lesson learned over time that helped minimize emotional attachment to the idea or project, as well as providing objective milestones for critical go / no-go decision making.
This process was purposeful, agile, lean, and somewhat aggressive. We believed it gave our company a competitive advantage over larger companies that tended to respond slower to new opportunities and smaller competitors that did not want to venture outside their wheelhouse.
With each project, we learned and became more efficient and effective, and made better investment decisions that positively impacted our success. We monitored progress on an ongoing basis relative to our defined success criteria, and adjusted or sunset an offering if it stopped providing the required value.
The process was not perfect…
For example, we passed on a couple of leading-edge ideas such as a “Support Robot” in 2003 that was essentially an interactive program that used a machine-learning algorithm. It was to be trained using historical log files, could quickly and safely be tested in a production environment, refined as needed and ultimately validated.
This automation could have been used with our existing managed services and Remote DBA customers to further mitigate the risk of unplanned outages. Most importantly, it would have provided leverage to take-on new business without jeopardizing quality or adding staff – thereby increasing revenue and profit margin.
At the time we believed this would be too difficult to sell to prospective customers (“pipe dream” and “snake oil” were some of the adjectives we envisioned), so it appeared to lack a few items required by the process. Live and learn.
In summary, having a defined approach for something as important as business needs innovation to grow and prosper, as best demonstrated by market leaders like Amazon and Google (read the 10-K Annual Reports to gain a better understanding of their competitive growth strategies that are largely based on innovation).
Implementing this type of approach within a larger organization requires additional steps, such as getting the buy-in from a variety of stakeholders and aligning with existing product roadmaps, but is still the key to scalable growth for most businesses.
Creating Customers for Life (4 minute read)
This should be the goal for any business, regardless of the products you sell or services you provide. The idea is to create a mutually beneficial relationship that motivates people to want to continue working with you, despite the availability of competitive products and/or the possible concerns or objections of others (e.g., those pushing for a “Corporate Standard” involving another product.)
The best part is that this concept applies to all companies and all Product Life Cycle stages. Whether your company is on a rapid growth trajectory towards ‘Unicorn status,’ your offerings are mature and may be viewed as ‘less exciting,’ or your products are on the decline and you are seeking the ‘longest tail’ possible – this will help. At each phase there are credible threats from competitors that seek to grow through the erosion of your business.
Several years ago I was responsible for two product lines in two major geographic regions (Americas and APAC/Japan). Our attrition rate (“churn”) had traditionally been slightly below the industry average. We began seeing an increase in churn and a corresponding slight decrease in organic growth. Both were indicators that something needed to change.
After discussions about tactical approaches to address this, our small leadership team agreed that this was a strategic issue that we needed to address. The result was an understanding that we needed to create ‘Customers for Life.’ Everyone agreed with the concept, but due to a variety of differences (culture, who our customer was – end customer vs. channel partner, buying patterns, etc.) we agreed to try what was best for our own businesses and share the results and lessons learned.
My approach was to focus on developing strong relationships that fostered collaboration and ultimately led to growth and success for both parties. The basic premise was simple:
- People tend to buy from people they like, respect, and trust. Become one of those people for your customers.
- Helping companies achieve better outcomes leads to greater success for both our customers and us.
How did we do it? It was a systematic process that included the following:
- Develop simple profiles for each customer (e.g., products used, date of first purchase, size of footprint, usage and payment trends, industry).
- A minimum size – based on either the size of the product footprint, annual amount spent with us, or size of the company, was used to prioritize companies and organizations having the greatest potential impact.
- Make contact multiple times each year, and not just when you wanted money.
- These “out of cycle” contacts turned became very important.
- Ask questions about key initiatives, milestones, and concerns.
- The responses were documented, and that helped seed following conversations and demonstrate interest in what they were doing.
- Follow-up!
- Request meetings to understand how they are using our products and get a brief update on what our company has been doing.
- Meeting people face-to-face is always good.
- Learning more about their business, systems, goals and challenges created opportunities to really add value.
- Look at what they were doing with our products and offer suggestions to do more, do something better or more efficiently, call out potential problems and offer suggestions and discuss best practices. Often, I would have a technical expert follow-up and provide an hour or two of free assistance relating to those findings.
- Look for opportunities to congratulate them.
- It demonstrates that they are important enough that you are paying attention.
- Google Alerts made this easy.
- Regularly ask our customers if there is anything that we could do to help them.
- They would often reciprocate, which led to an increase in references and referrals.
- Continual improvement – Analyze the results and refine the process as needed.
As I met with our Customers and Channel Partners I would explain what ‘Customer for Life’ meant to us, and the potential benefits to them. Prior to the meeting I would check to see if we had (or they wanted) a NDA in-place so that they could speak freely without having concern that this information would be shared with potential competitors. It was a good step towards developing trust and helping them feel comfortable in disclosing information that would help us understand their situation.
Prior to the meeting I spent an hour or two researching the company, their history, major events for that company and within their industry, identify their top 2-3 competitors and then contrast our customer with those competitors. This is where my consulting background really came in handy. Showing interest and understanding created credibility, allowing conversations to progress to substantive issues in much less time.
Over the course of two years my team and I helped our customers innovate by providing different perspectives and ideas, modernize (e.g., move to spatial analytics to get a more granular understanding of their own business), improve their systems and grow their businesses. We also received feedback that helped us improve a variety of processes – something that benefits all customers. Collaboration and success created strong relationships with many of those customers.
From a business perspective our customer churn decreased by 50% over the same period, and organic growth increased slightly more than 20%. We had achieved our objectives and improved our bottom line. The concepts behind Strategic Account Management, Voice of Customer, Customer Loyalty and Customer Success had blended into a practical approach that was not burdensome and provided a great ROI.
One of my biggest lessons learned was that adopting this mindset and creating a repeatable process is something that can be done anytime, and should be done sooner than later.
Every day that you are not creating your own ‘Customers for life’ there is a good chance that your competition is.
