Today is a special day in the AMP program, fully dedicated to Technology. We have three speakers very well versed with technology and a panel discussion. I had the privilege of introducing one of the speakers, Prof. David Yoffie, to our class. In case you did not know, Prof. Yoffie is on the board of my company, MindTree.
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| Partha introducing Prof. David Yoffie |
Our first session was by Prof. Thomas Eisenmann. Amazingly energetic and fascinating person. Writing a few lines about these professors is quite difficult, as they have achieved so much. I will anyway try ... Prof. Eisenmann is part of the Entrepreneurial Management Unit at the Harvard Business School. He studies lean start ups and management challenges in platform-based businesses that exploit network effects. He teaches Launching Technology Ventures in the MBA Elective Curriculum and recently served as co-course head of The Entrepreneurial Manager in the MBA Required Curriculum. Professor Eisenmann received his DBA ('98), MBA ('83), and BA ('79) from Harvard University. Prior to entering the HBS Doctoral Program, Eisenmann spent eleven years as a management consultant at McKinsey & Company.
The session was on Google and the characteristics of the search business. Just to set the context of Google, it is worthwhile to see what they have achieved in 5 years from 2004 to 2009 : revenues have grown from $3b to $24b, cash reserves have grown from $2b to $24b, employee base has grown from 3000 to 21,000. Spectacular is an understatement to describe this kind of growth. Is Google going to be dominating the technology space, similar to what Microsoft and IBM did before ? Time will tell. The picture says it all !
What is Google's business ? They claim that they are in the business of organizing the world's information - but of course they are more than than. They are more of an advertiser, who are also in the search business. Their market share in search has gone from ~37% to over 65% in 5 years, at the cost of both Yahoo and Microsoft. The search business is a "winner take all" kind of business, because of specific reasons:
- Scale economy
- Switching cost for customers is very low
- No differentiation - especially on pricing
- Monopoly business
- Most important is the twin feedback loops
- More searches means more advertisers; and small advertisers don't advertise in multiple sites (multi-homing), which means they effectively shut competition out
- More advertisers means more searches - which is the network effect that we talked about in one of my earlier blogs.
All these technology companies are wanting to dominate in what is called as three screens: TV, Computers and Mobile. In attempting this, Google faces many bottlenecks from Microsoft, telcos and TV broadcasters. What are the choices and how has Google responded to this ?
- Play nice : OpenSocial, Open Handset Alliance/Android, Google TV open source platform
- Play rough : Google Apps + Chrome browser, Orkut, Nexus One, Bid for Spectrum, YouTube
- Some of these are threats to Microsoft and directly so: Browser, Gmail, Google Docs, Google Calendar, etc
- Google clearly is worried about Facebook and their response has also been quite weak.
- Response to Apple has been terrific - Android based phones sell more than iPhones
- Fight over Cable TV and Internet TV will be interesting - especially with Sony and Google tying up
Prof. David Yoffie gave us a fantastic glimpse of technology titled - Technology Today, Drivers of tomorrow. He shared some interesting, but mind boggling statistics on text messages, users of social media, time spent on social media, etc. Three areas that are big today:
- Mobile devices are exploding :Smart phones, Tablets, eBooks and Netbooks
- The power of the PC in 2001 is in the smart phone of today at half the price
- Apple's iPad has created a new space - and Samsung, RIM and Dell will have competitive products soon
- Cloud computing is here to stay - in spite of security concerns
- Is the next step in providing IT services
- Cloud is already here for Music (iTunes, Amazon, etc) , Photos (Picassa, Flikr, etc) , Video (YouTube) and Apps (Facebook, etc)
- These consumers clouds (FaceBook, etc) are morphing into Consumer Platforms - where people can develop on top
- Security, Performance, availability continues to be a challenge
- Social Media is exploding - in usages and more organizations are using it for Marketing
The final session was by Prof. Karim Lakhani, who talked about new perspectives on Innovation. This was based on the article in MITSLoan Management Review, co-authored by him titled, "How to Manage Outside Innovation".
- Core idea need not reside within the company - and can come from outside
- Good example is when Pepsi put out an ad contest, consumers voted for the best ad and it was aired in SuperBowl
- Bill Joy, the co-founder of Sun Micro systems said, " No matter who you are, most of the smartest people work for others" ! There could be two explanations to this:
- Knowledge is unevenly distributed in society
- Knowledge is sticky
- While many companies have an idea management system, the idea funnel is far from ideal - both quantity and variety of ideas are critical to innovation success
- In order to increase the quantity and variety of ideas, companies need to employ many people - which they cannot afford; and hence they need to look outside for ideas
- Either through competitions or collaborations - and many do both
- InnoCentive - is a company where organizations—corporations, large and small, not-for-profits and governments—turn when they have important problems that need solving.
- What is the motivation for people to participate and solve problems ?
- Highly creative people, fun, show skills, freedom and need, increase knowledge, money, drudgery at work
- Who are these people
- Mostly professional, moonlighting
We ended the day with a panel discussion (more a panel presentation, than a discussion) by some AMPers , which was facilitated by Prof. David Yoffie. We had presentations from Toshiba, MentorGraphics and BoltBlue (UK's largest Wireless Social Media company).
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