Jason Bates (@JasonBates) tipped me off about the concept of “Approximately correct strategy”, from an interview with by Dick Harrington (former CEO of Thomson Reuters) by HBR columnist Anthony Tjan:

Recently, I had dinner with Dick Harrington, former CEO of Thomson Reuters

We talked about his three most significant lessons learned over his very successful 25+ year career as a Fortune 250 executive.

Dick Harrington (DH): First, you have to have an “approximately correct” strategy — you have to know where you are going, but directionally correct is the key. Two, you have to be highly focused and intensely execute that strategy by motivating and aligning the troops you have. And three, it always comes back to the customers and the fact that you have to manically know your customers and drive everything from that.

TT: Nicely done. So let’s start with the first point. People often worry about architecting a perfect business plan or strategy and then get lost in the minutia. How do you know when you are “approximately correct,” as you say?

DH: You want to be approximately correct instead of precisely incorrect. There is a point at which additional information or research will not change the basics of your strategy. When you get your strategy there, you have to “Nike it” – you just do it. If you continue to refine and refine, you’ll never get into action, and the incremental value of research just won’t be worth the time and money. Schedule time frames and be religious about them to launch, get feedback, and see if the strategy is acceptable to the customer or if you need to adjust.  

From: http://blogs.hbr.org/tjan/2009/08/lessons-learned-from-30-years.html

From Conceptual Trends Current Topics:

“This is interesting. A fairly detailed taxonomy of the existing business models for web sites. The breakdown is here. Using their taxonomy the researches than examined one Top 100 web app list for 2008 and found that:

34% use Advertising, 12% a Variable Subscription model, and 8% each for Virtual Products (typically digital downloads), Related Products (typically a large software company offering a free product to attract you to their platform) and Pay-Per-Use.

The graphic pie-chart display of those results look like this.
(I.T.A = Advertising”

Via Conceptual Trends and Current Topics.

“Particularly in hard times, it’s crucial to make the right assumptions in strategic planning. Despite claims that the current recession is “unprecedented,” it seems to be following many of the same patterns the four previous ones did—patterns that may offer insights into the performance of sectors in the coming months and years. All four recessions, like the current one, began with falling sales and EBITA in the consumer discretionary sector and three with similar declines in IT. Consumer staples didn’t suffer significantly in the last three or health care in the last two. The energy sector was among the latest to be hit in three of the recessions, though it was among the latest to recover in all four of them. The exhibit shows the sequence of decline and recovery in these and other sectors.”

From McKinsey Chart Focus

Jason Scott savages Cloud Computing in an entertaining if an little bit angry rant/manifesto

ASCII by Jason Scott / FUCK THE CLOUD

Taylor Davidson has put together a lovely list of “25 Secrets Learned through Failure“. It is definitely worth a read. Here is the intro…

I started to write about the keys of success for entrepreneurs and startups, but as I wrote I realized that while I’ve seen companies fail, projects flounder and ideas die, I’ve had little first-hand experience with success. My ideas on the keys to success remain just that: ideas.

But I’ve learned a lot through failure. Close observation and unfortunate first-hand personal experiences have taught me many lessons about why companies fail.

Let’s be clear: this is intended to be an assessment of the 25 most important lessons I have learned through failure, not a comprehensive analysis of all the reasons entrepreneurs and startups fail (and trust me, this is the shortened version: I’ve learned more than 25).

The first sixteen primarily address strategic and operational issues while the last nine deal more with management and organizational issues. Since I believe the three most important factors for any company are people, product and market, I’m not sure that I’ve come up with the “appropriate” ratio of ways to fail, but perhaps you’ll have ideas that will bring the ratio more in line. I’m looking forward to hearing about the secrets you’ve learned through failure.

Here are a few of my faves…

1. Dither, dither, dither; plan, plan, plan.
Instead: Fail fast. Fire, aim, repeat.6. Focus on the long-term.
Instead: Focus on the short-term.

7. Build prototypes, mockups and samples.
Instead: Start building in a format and medium as close to the finished product as possible, and iterate, iterate, iterate.

9. Give customers everything they want.
Instead: Listen to customers, then throw (almost) all of it away.

10. “New, New, New!”
Instead: F*** new. What’s different? What’s better?

15. “We can build a successful business by capturing just X% of the market.”
Instead: Sell to one customer. Repeat. Repeat. Repeat.

22. Meet to discuss.
Instead: Meet to decide.

Read on here.

My fellow blogger and Communications Director at DNS Europe, Steve Hurford,  has put together a great position statement on the future of Cloud Computing and its relationship to Grids. Here is an excerpt:

Grids are the building blocks of future clouds

Without knowing today exactly what the future of cloud computing will look like, customers are faced with the decision of what choices to make that give real commercial benefits today and greatest flexibility for tomorrow. As we see it, future clouds will be formed from and accessible by those customers which adopt grid hosting infrastructures, develop multi-tennant applications and offer services that are not tethered by specific location, operating system, physical resources or other geographical constraints. Not only will they be able to integrate with future clouds but they will be best placed to take advantage of other cloud-enabled services and to offer their own services to other cloud contributors.

Clouds should not and will not be “owned”

The term cloud computing is today being used by many providers who, in fact, are actually offering Grid Hosting. Taking Google and Amazon as examples, they have opened up their own infrastructure for customers to deploy their own applications on their “clouds” and use their compute resources for a measured service fee. More correctly, these infrastructures should be called “grids” and the services called “Utility Computing”. Where these offerings substantially differ from our believe of what Cloud Computing will become is in their attempt to own the cloud. Ultimately we believe that this is a futile effort due to the pace of change of market requirements and their restricted service platform development capabilities. Provided that they eventually adopt the principles of open platform integration, they will however become very serious components of the future of cloud computing.

From grids to clouds

Under perhaps the simplest model for differentiating grids and clouds, grids are essentially building blocks, or discrete physical resources that will one day make up, or enable, clouds. One of the key drivers for businesses must therefore be to invest in a technology which facilitates the easiest transition from one to the other. A technology which will enable real cost savings today with open opportunities for tomorrow. A technology which provides a birthing ground for new application and service architectures which will one day fly the nest and reach full maturity in “the cloud”.

From: http://www.dnseurope.net/cloud_computing.html

We are always keen to hear from anyone that has some ideas about all this, so please feel free to contact Steve with your feedback via the contact form here or on the DNS Europe website.

I recently came across Reuven Cohen’s (CEO of Enomaly) “8 Rules for Bootstrapping your Startup“. It is a good list and there is no doubt that Enomaly is the rising star in the Cloud Computing startup field, earning themselves backing from Intel and the superb PR that such backing affords.

In many ways Enomaly and my company are similar (Consulting companies that have transformed into Cloud Computing start-ups).

I will be keeping an eye on these guys.

Is the hallmark of a great company its ability to resist half-heartedly attempting to implement good ideas, but rather to focus on perfectly implementing a few of the best? Steve Jobs thinks so. From Bob Sutton “Wisdom From Steve Jobs: The Importance of Killing Good Ideas”:

[Steve] Jobs’ argument went something like this: What is really hard – and a hallmark of great companies – is that they kill at lot of good ideas. Sure, this is tough on people who have come-up with the good ideas as they love them and don’t want to see them die. But that for any single good idea to succeed, it needs a lot of resources, time, and attention, and so only a few ideas can be developed fully. Successful companies are tough enough to kill a lot of good ideas so those few that survive have a chance of reaching their full potential and being implemented properly. I would also add that this approach also applies to good product and experience design. If every good idea is thrown into a product, then the result is a terrible and confusing experience. (This seems to be the problem with the latest version of Microsoft word, it does everything, so therefore is very annoying and confusing to use.)

If you take this argument to its logical conclusion, it means that innovative companies might keep track of these two metrics:

1. How many good ideas are killed? (If this number isn’t high enough, that is a bad sign.)

2. Are people complaining – even leaving – because too many of their good ideas are killed? (The idea here is that if no one is complaining about this problem, then there aren’t enough being killed. The complaining, and even people leaving, is bad. But if no one is complaining, it is a worse sign. Creating this kind of frustration is an unfortunate byproduct of an effective innovation process and if your people don’t have enough pride and confidence to get upset when their innovative ideas are killed, then something is wrong with them — or your culture.)

These weird metrics may or may not work, but they make sense given Jobs’ argument (which I find quite compelling). His argument also resonates with our experience teaching in the d.school — the groups that often do the worst work have too many pet ideas and can’t bring themselves to kill enough of them, so they don’t do a decent job on any of them. Groups that can’t kill enough ideas also often suffer from bad group dynamics, either because multiple members won’t allow the group to kill their pet ideas, or because the group avoids difficult conversations about which ideas (and therefore whose ideas) to kill, and instead, tries to develop too many ideas (None of which are developed well — which results in collective failure.) As Perry tells our students, there comes a point in the process where you have to kill the ideas you have nurtured and come to love, even though it hurts.

It was only a matter of time before pre-war apocalyptic poetry started being quoted in Financial Crisis reporting, but I am happy to see it is by Paul Krugman, and in a very interesting article that all of us interested in emerging markets need to heed.

From The Widening Gyre – NYTimes.com:

Economic data rarely inspire poetic thoughts. But as I was contemplating the latest set of numbers, I realized that I had William Butler Yeats running through my head: “Turning and turning in the widening gyre / The falcon cannot hear the falconer; / Things fall apart; the center cannot hold.”

The widening gyre, in this case, would be the feedback loops (so much for poetry) causing the financial crisis to spin ever further out of control. The hapless falconer would, I guess, be Henry Paulson, the Treasury secretary.

And the gyre continues to widen in new and scary ways. Even as Mr. Paulson and his counterparts in other countries moved to rescue the banks, fresh disasters mounted on other fronts.

Some of these disasters were more or less anticipated. Economists have wondered for some time why hedge funds weren’t suffering more amid the financial carnage. They need wonder no longer: investors are pulling their money out of these funds, forcing fund managers to raise cash with fire sales of stocks and other assets.

The really shocking thing, however, is the way the crisis is spreading to emerging markets — countries like Russia, Korea and Brazil.

These countries were at the core of the last global financial crisis, in the late 1990s (which seemed like a big deal at the time, but was a day at the beach compared with what we’re going through now). They responded to that experience by building up huge war chests of dollars and euros, which were supposed to protect them in the event of any future emergency. And not long ago everyone was talking about “decoupling,” the supposed ability of emerging market economies to keep growing even if the United States fell into recession. “Decoupling is no myth,” The Economist assured its readers back in March. “Indeed, it may yet save the world economy.”

That was then. Now the emerging markets are in big trouble. In fact, says Stephen Jen, the chief currency economist at Morgan Stanley, the “hard landing” in emerging markets may become the “second epicenter” of the global crisis. (U.S. financial markets were the first.)

What happened? In the 1990s, emerging market governments were vulnerable because they had made a habit of borrowing abroad; when the inflow of dollars dried up, they were pushed to the brink. Since then they have been careful to borrow mainly in domestic markets, while building up lots of dollar reserves. But all their caution was undone by the private sector’s obliviousness to risk.

In Russia, for example, banks and corporations rushed to borrow abroad, because dollar interest rates were lower than ruble rates. So while the Russian government was accumulating an impressive hoard of foreign exchange, Russian corporations and banks were running up equally impressive foreign debts. Now their credit lines have been cut off, and they’re in desperate straits.

Needless to say, the existing troubles in the banking system, plus the new troubles at hedge funds and in emerging markets, are all mutually reinforcing. Bad news begets bad news, and the circle of pain just keeps getting wider.

The faculty at Executive Rockstar have a great video introduction to Issue Decomposition, one of the most useful tools in the consultant’s toolkit.

Issue Decomposition is essentially a modified and structured Socratic interrogation (iterative interrogative loop)  that has its modern origins in Cold War strategic thinking and its resultant field of Game Theory.

It was developed to help with high stakes multilateral negotiations, like Nuclear Arms Reduction, by clarifying the core issues and elements of any problem or situation.

It has evolved into one of the best but least known about decision support systems.

It is both very simple and powerful tool that can liberate those bedevilled by a lack of clarity or confusion.

Check out Phil’s introduction over at the Executive Rockstar Secrets Blog:

Executive Rockstar Issue Decomposition Crystal Clear Thinking | Secrets Of Executive Rockstars