Tenets of Business 3.0

I have been around business systems for over 25 years, from implementing some of the largest and most advanced applications on the planet to shipping software products for small and medium sized businesses.  From punch cards to PC’s and timeshare to SaaS, some things change and some stay the same.  But now is a very exciting time for business.  There is an inflection point where the division between technology, function and human behavior fades away and the focus becomes execution.  Like in sports where an athlete wields a piece of technology, say a tennis racket or golf club, but neither focuses on the tools or how it came to be, but on the task at hand, a 100 MPH serve.

I believe we are approaching this point, globally, in business.  In the last 130 years we have evolved through 3 main iterations of information technology in business.  First we had the industrial revolution with the steam engine behemoth powering the factory, tremendous economies of scale and new management science organizing hundreds to account for the activities of the ever larger businesses.  This era grabbed onto the computing equivalent of a steam engine with the first generation of mainframes.  Then came the era of empowerment and division level autonomy that broke the centralized business mantra and ushered in client server computing which evolved through ever improving architectures to our current state of SOA loosely coupled heterogeneous systems of today.

In my personal experiences I have had the opportunity to see and be part of many business operations, some wonderful and some quite horrible.  So, this, combined with what I see going on globally in software solutions and business services, has led me to these tenets for Business 3.0.  Some exist, some are in process and some have been tried and tried again, but the nut has not been cracked.  These are just ideas, but this opens the conversation.  How are these tenets going to come to be?

·         The Composite Business

Today, you can assemble your business, online, with minimal capital.  Some services are outstanding and some are getting better.  In the first generation businesses leveraged their economies of scale to build out their own logistics and operations infrastructures, think Sears, Roebuck and Company or US Steel.  In the second generation large businesses outsource providers evolved such as Fed Ex and ADP.  Today, businesses of any size can outsource portions of their operations, or skip the high capitalization of infrastructure and rent their operations from new companies like ShipWire, Authoria, Perquest, Rearden Commerce and the incumbents like Amazon, eBay, and Yahoo!.

·         Scalable & Nimble

You have to be both.  Our first generation huge enterprises had to invent and build out their own infrastructure because the capabilities did not exist.  But the weight of their highly capitalized infrastructure also became a burden as new businesses emerged worldwide with less constraints and a new generation of capabilities.  So, just as your fixed costs drop through the floor and your margins become oh, so tasty, a new competitor appears and changes the business model.  Now, those tasty margins cause a bad case of cognitive dissonance and you dispel those new business models as being short lived fads.  Your great margins are eaten away by the new business model and you now don’t have the cash flow to leverage up and build new infrastructure.  Incumbent dies and new model wins.  But what if you pay for what you need and rent as you go.  Big AND agile.  It wins in any sport, and wins in any business too.  The offerings are neither affordable nor complete, but they will be.

·         Human Fabric

Now for the Web 2.0 / Enterprise 2.0 spin.  Humans are just plain useful.  They learn quick, are tremendously adaptive and given the proper incentive structure, are economical as well.  I spent 10 years of my life building workflow systems, neuronets and AI solutions to mechanize things that humans were actually pretty good at.  Result was, humans are better and cheaper, especially in business environments that are changing rapidly (which is about all of them today).  But, machine assisted humans are even better.  Allow humans to share knowledge, interact, collaborate, and persist their thoughts and shazaam, humans can scale, globally.    Search, Wikis, RSS feeds, RSS catchers, IMing, VOIP, Collaboration, OnlineMeetings, Review sites, Rankings, rent-a-resource, etc.  Let the business social begin.

·         Perfect Trust

Trust is the basis of business and relationship is the basis of trust.  But relationship does not scale.  It does not scale regionally, nationally or globally.  It is restricted by time for relationship building and is challenged by cultural divides.  Our current compliance crisis has resulted in us attempting to litigate trust back into business.  As a result CEO’s and CFO’s are going to jail and systems like Approva are being implemented to make sure jail is not on the horizon.  In many corporations, large vendor management organizations are essential to ensure vendors deliver and can be trusted.  Auditors verify financial reporting practices so that markets can trust the information pertaining to the businesses that they own.  But, today, we can be much more transparent.  We can collaborate regarding the quality of our vendors, shine a light on our financials, publish investment roll-ups and rank our competencies.  The history of business has been based on circles of trust that were tightly held in small relationship groups.  Trust is essential to allowing businesses to share services.  This is a greenfield for the next generation of business.

·         Ubiquitous Identity

If we are to share services, span systems from local devices to mobile devices, to global data centers, to local data centers, our machines must know who we are.  One of the essential elements of an ERP system is user authentication and then role definition.  Every feature, every piece of data and every action is controlled based on a user’s role.  Every security system for every business system is unique.  The scale integration of SaaS and business services will not occur until the integration barrier of identity is broken down.  One identity with a business role definition is essential.  Solutions like InfoCard and SXIP are essential, with business role context ( and multi-tenant corporate understanding as well).

·         Money is Data

I have my friends at IP Commerce to thank for this one.  Money is data that is inventoried by our respective governments.  Those inventory systems are under revision.  I am not a banking expert, so I will leave it at that for now.  Payment is changing, in big ways, and banks, as we know them, may or may not be included. 

·         Predictive Analytics

I could not resist.  This one has always been a dream of mine and perhaps I have spent just a little too much resource to achieve it.  As CTO of FRx Software for a while, I had the privilege of managing the construction of applications for financial reporting and budgeting.  But Budgeting always fascinated me.  Most organizations budget by taking last year’s budget and increasing it or decreasing it by X%, which may or may not have much to do with how you are going to spend the money next year.  But we have massive amounts of data in our ERP systems and when you consider the shared data of all the SaaS systems out there, holy cow, we have tons of data to look at.  The tools and technology exist to look at all that data, so let’s put some good design behind it and put it to good use.  It is about time that we moved past histograms and line charts.  When I watch my son play Halo I can’t help but think how he could use that same interactive skill to plow through piles of data and make decisions at a rate that is orders of magnitude beyond our current speed of business. 

·         Optimal Perfection

Quality used to be the driver behind productivity.  But now quality is not enough.  Design matters, as I chatted about before, and matters even more today.  From software services to steering wheels, many of the things we use today and will use tomorrow have been around for a long, long time.  With technology reducing the constraints of both the design process and manufacturing, creating tools that are easy to use is just as important as creating tools that are useable.  Everything from soup to SaaS is being designed to be easier to consume.  Thus, assuming existing quality practices and evolution, the premium is on design.  This is one of the most exciting and beneficial aspect of the current business revolution.

The end:

So, I finally got this out of my head.  Now to find the doers, the builders, the engineers, the creatives and the entrepreneurs who are going to build this new world of Business 3.0.  Fortunately it is my job to seek, find and interact with you, so please, let me hear from you, because we need better business.

Comments

[Diana]

Building a software is very difficult and getting authorised for that particular software is also important for selling it legally.Once the Business strategy has failed it takes decades to regain its market position i feel same thing happened to MAC thuogh its a great company.