Institute for Innovation & Information Productivity

The world’s largest SW company doesn’t understand innovation or productivity

Michael LoBue writes: The title of this post may seem like a blinding glimpse at the obvious, but Microsoft’s CEO Steve Balmer told InformationWeek’s John Foley on October 3rd that he believes that Windows 7 Enterprise will contribute to innovation and productivity — but he can't back it up! Could it be that the largest software company in the world doesn't have a "productivity model" for their products? The same ones that they claim are essential to growing the world's economy!

InformationWeek: One of the things your 'new efficiency' message implies is that businesses can drive through this economy by investing in IT, which is kind of a bold statement.
 
Ballmer: I do believe that very strongly. It may not be the only answer, but at the end of the day the only way for the economy to grow isn't going to be from debt, it's going to be from productivity and innovation. If you look at the source is of innovation in many industries, IT is fundamental. It's fundamental to new exploration, new invention, new science. IT is a fundamental part of the innovation process, so I think it part of the new efficiency in that sense. And certainly from a productivity perspective, the only provable source of systemic productivity gains in the world economy over the last 30 years has come from IT.

page 4 of InfoWeek article

Maybe MS has to loose a little more market share to realize they should be a bit more deterministic around innovation and productivity with their products.

Okun's Law: Another Industrial Age Measure Goes Down

Dan Rasmus writes: As further evidence that this recession may lead to a rethinking of economic measures, another, albeit minor, measure of health has proven as frail as the job market it was intended to model. The August 10, 2009 BusinessWeek Executive Summary section (Why Joblessness Is Proving So Stubborn) describes how the measure of joblessness (a mathematical relationship between output and unemployment, under which for every percentage-point decrease in gross domestic product, the jobless rate would rise by half a percentage point) is now off by 1.5 percent, a huge disparity when it comes to unemployment.

The article suggests a lack of labor hording in this recession , over aggressive reductions or a general pessimistic view of future economic growth may be the cause. I think the cause is two fold. First, we have substituted information technology for people in new ways. One example is the plethora of self-service options from airport check-in to online banking and bill pay. The second factor is the fluidity of the workforce. We know that many younger and some older individuals don’t have a desire for long term employment commitments, or at least don’t require one, so the workforce becomes effectively reconfigurable based on need. Why hire and retain people when most of the job reductions can be done by the transitory part of the workforce? If you need people, call Kelly or Manpower and they will fill the slot quickly. This suggests the need for skills maintenance is being pushed to individuals or agencies, and away from hiring firms, thus further reducing costs and need for non-core competencies like training.

These shifts require a new models of measurement, and new economic theories. We are going headlong into a fundamental economic shift and we will find the road rather bumpy because we don’t have a map of the terrain.

Cross posted at: http://danielwrasmus.com/blog.aspx.

Clouding Innovation

C. Warren Axelrod writes: Judging from the 45 readers’ comments in response to the July 20, 2009 Op-Ed article “Lost in the Cloud” by Jonathan Zittrain, he hit a number of raw nerves. Zittrain is a Harvard law professor and author of “The Future of the Internet – And How to Stop It.”

Alongside his valid concerns regarding privacy and security in the cloud, Zittrain makes the questionable statement that “… the most difficult challenge – both to grasp and to solve – of the cloud is its effect on our freedom to innovate.”

The basic arguments for Professor Zittrain’s case against the cloud, and in favor of personal computers, are roughly as follows:

• Anyone can write code for the PC and sell it or give it away
• The competition from other producers of word processors and browsers, for example, keeps Microsoft honest
• Thousands of applications are developed by “tinkerers and hackers” (hackers?) on their PCs

Zittrain argues that the cloud environment does not permit the above activities, since companies such as Facebook, Apple and, to a lesser extent, Google, are crimping innovation through their restrictiveness.

Even though Zittrain mentions that Amazon.com offers a cloud infrastructure, which allows customers the freedom to develop their own software, his major focus is on those companies that are considered to be protective of their proprietary environments.

It is very difficult to anticipate which types of service providers will dominate the cloud. In the opinion of one of the commenters, the cloud “… is simply a revamp of ASP (as was seen around 2000).” According to another, it is “… [full circle back to … timesharing off mainframes.” To some extent they are correct. And I didn’t notice a slowing down of innovation because of timesharing … quite the reverse.

The current wisdom is that the cloud does (and will) offer a wide range of services, including software, platform and infrastructure services, only the first of which threatens to restrict what developers may do. But this is not new. There have been, and continue to be, proprietary software service vendors and they have clearly not hampered innovation in the past.

A similar set of arguments surrounds “net neutrality.” Proponents suggest that any restrictions or preferential treatment on the Internet will be detrimental to innovation as the larger players will dominate the Web and push out smaller start-ups. Interestingly, the so-called destroyers of innovation in the net-neutrality case are seen to be the large telecommunications companies, such as AT&T, Verizon and Comcast, who oppose net neutrality and want to impose various tiers of online service, which they would control and charge for. The supporters of net neutrality include many of the large Web presences, such as Google, and its subsidiary YouTube, Amazon and Yahoo. Facebook carries a “causes” site for the support of net neutrality.

So what’s wrong with this picture? On the one hand, a number of large Web providers, who are jockeying for cloud business, are for net neutrality, which is claimed to promote innovation, but those same companies are seen as restrictive with respect to what they will allow into their cloud software services, which stymies innovation according to Zittrain.

The truth of the matter is that innovation will flourish whether or not the Internet is “neutral” and whether or not cloud software-as-a-service providers restrict the applications that they accept for their platforms. Man’s creativity will inevitably work around any barriers to progress. In particular, the cloud does offer a range of services, from software to platforms to infrastructure, which enable small and start-up companies to access vast computing resources, which heretofore were way beyond their reach, on a pay-for-use basis. This is, in my view, an innovation enabler of unprecedented power. And, furthermore, the local PC model is not going away for many years to come, so that, even if you believe, which I don’t, that the transfer to the cloud will inhibit innovation in the long run, there will still remain many choices well into the future. And by then an entirely new model will likely prevail.

Computational Social Science & Innovation and Productivity

Michael LoBue writes: Last Friday the venerable magazine SCIENCE published an article entitled Computational Social Science; one of the co-authors is Sinan Aral, IIIP Academic Advisor and professor at NYU’s Stern School of Business.

Why does this matter? Why is this an event worth commenting on? Well, for the co-authors it is important to bring attention to an emerging field of scientific and scholarly investigation. For society at large it represents important advances in approaches to more deeply understand how people collaborate to achieve outcomes that matter to them — in other words, we can peel back more layers of the onion that underpins innovation in small and large groups, especially large groups, and gain deeper understanding about redefining and measuring productivity in our massively connected world.

The authors pose a set of critical questions in this article, some of which relate to:

• Who should own the data being generated by online activity?
• Should there be restrictions on how such data is used?
• What interaction patterns predict highly productive groups and individuals?
• Can the diversity of news and content we receive predict our power or performance?

If you’re interested in understanding the potential for this new area of research and the obstacles confronting these pioneers, you should get this article from the SCIENCE Magazines site (click here…).

The Big Paradox from the 2008 Innovation Confidence Index

Michael LoBue writes: Today the Institute releases the 2008 Innovation Confidence Index, the second annual report of global consumer confidence in innovation to improve one's life.

If you haven’t downloaded the report, you can do so — the results are almost certain to surprise!

Page 9 of the report contains the Innovation Confidence Index ranking for each of the 25 countries in the 2008 study. The rankings might surprise — but read the paragraph beneath the table and the charts that follow on page 10.

The Great Paradox of the 2008 Innovation Confidence Index
The Innovation Confidence Index correlates highly a nation’s communal values, an index developed by the World Values Survey. About this Principal Investigator Levie writes:

” This variable is based on five indicators that capture different, but highly correlated, dimensions of communal values, including religiosity, patriotism, need to respect authority, teaching goals (obedience versus independence), and family values. It is usually portrayed as varying from “traditional” communal values to “secular/rational” communal values.” [pg. 9]

Levie questions the seeming paradoxical nature of this finding, asking: “Why would Innovation Confidence be high in countries with strong traditional values, like South American countries, the United States and Ireland, and low in countries where secularism is valued, such as the Netherlands, Finland and Japan? Shouldn’t it be high in countries that are known to be innovative?”

In short, this finding is simply counterintuitive. Levie sums it up this way:

”In summary, it is perhaps an irony that new products and services are welcomed most vigorously by people whose societies are most traditional. New products and services may represent a way of escaping from community rules, because the rules were invented without anticipating such products and services. Individuals in these countries may be less discerning in their cost/benefit analysis of new products and services, because novelty has more value to them than it has to those living in secular/rational societies.” [pg. 10]