…for many of the companies which have announced or will soon announce layoffs, the current economic crisis is not necessarily the cause of their problems; it is simply what has exposed them. As intuitive as that argument may be, experts say that managers within the companies as well as analysts, investors and policymakers outside the business face the risk of putting too much, or even all, of the blame on the current economic crisis, rather than looking at deeper causes.

To put a slightly different twist on this, there’s a bunch of technology providers with fragile business models, creaking old products, or questionable commercial viability (I’m looking at you Web 2.0 startups) that have been convincing themselves of their genius over the last 5 or 6 years when it was actually an over-heated economy that was disguising those flaws.

So here’s my advice to all you CEOs of technology companies laying off staff or are planning to soon.

STOP BLAMING THE ECONOMY!

Because when you do you’re just fueling the fear that is only going to make the economic situation worse.

Instead, step up to the podium, clear your throat, wipe the bead of perspiration from your forehead and pronounce that you screwed things up. Tell everyone that you were blinded by an economy distorted by easy money, inflated asset values and unsustainable corporate profitability. And, as a result, you failed to consider how viable your products, supply and demand chains, and pricing models were under normal economic conditions.Then, in addition to the layoffs, tell everyone exactly what you’re going to do to get things back on track.

This won’t stop the haemorrhage of jobs. But at least you’ll be setting the right tone about what’s really going on.

I think this question is extremely pertinent in the light of our current economic fiasco.  At the moment we’re learning a very painful and very expensive lesson. To avoid the systemic collapse of an industry central to the function of the economy as a whole, governments must enact and enforce a meaningful regulatory framework. As we now know, laissez-faire policy and self-regulation is too risky in some industries. If key companies start failing the government is left holding the bag.

So let’s consider Google. Even Amazon for that matter. And not just the Google and Amazon of today but the Google and Amazon of the next 5 or 10 years. My colleague Jay Heiser made a very astute observation when he pointed out recently:

“You think its hard to unwind the investment positions underlying CDOs and CDO2s?  How could you ever determine all the dependencies within a hyper-virtualized, globally-distributed cloud hosting service? How could you ever find all the applications, and the data, and crank them back up in some other environment?  No escrow mechanism in the world can cope with something like that.

Nobody has ANY idea of how many applications are running inside of either of those two firms. Nobody CAN know, because so many cloud offerings are performed through an increasingly dynamic chain of providers, which is yet another of the amazing ambiguities of the cloud model.”

If it’s not already the case now then in the next few years these massive cloud service providers will be so central to the flow of information and data services through the economy that they can’t be allowed to fail.

So let’s face it. If a company like Google was faced with bankruptcy then the government would have little choice but to step in and nationalize the company.

And if that’s the case does the Cloud Computing industry need a healthy dose of government oversight in order to mitigate future risks to the taxpayer? If so, how would that look?

I’d really like to hear your thoughts. Over to you…

It was the late 80’s. I was a young man who had been working at Apple for nearly three years. Like so many young people I see in Silicon Valley today this was more than a job to me – it was a commitment, a lifestyle. As we used to say back then, when you cut me I bled six colors.

But things were not so rosy at Apple back then. As a result the company felt it necessary to undergo it’s first substantial RIF (or in non-euphemistic terms, a mass sacking). For anyone who’s gone through the process I don’t need to describe the tension floating through the halls of every campus building as you and your colleagues pretend to keep busy while hoping that your manager doesn’t stop by your cubicle and utter those fateful words, “can I see you in my office for a few minutes.”

Fortunately for me I dodged the bullet.

Later that day I was convening outside with some of my similarly lucky friends from work. We were discussing, as you do, who we knew that lost their job and the departments and projects which got hit the hardest.

Then we noticed him. In the parking lot was a man, hunched over the open trunk of his car, maneuvering a cardboard box full of the mementos and personal effects he’d accumulated over the years he must have been at Apple. I couldn’t see his face. But it wasn’t necessary. His body language did the talking. The slumped shoulders, the lethargic movement, the glances back up to the office building. You could feel the sadness, the embarrassment. You could sense his shame.

He closed the trunk and as he rounded the car to the driver-side door I saw it. There, on the back of his car, was a custom California license plate spelling out A-P-P-L-E-1.

Here was a guy even prouder than I was to be working for Apple – a company whose mission we believed was to change the world. Those plates, once meant as a public proclamation of his pride and personal affiliation with the company and its cause, had now become a public testament to his fall from grace. They were salt being rubbed into his wounds of his dismissal.

I vowed then never to put myself in a position were I would have to face the emotional devastation that man must have gone through. From that point forward I drew a clear line between the professional responsibilities and commitments I owed my employer and the way I defined myself as a professional. It was a huge lesson I learnt from the first mass redundancy I experienced.

You could argue that this was something everyone eventually learns as they mature. But I think there’s something more to this. American business in general,  and the IT industry in particular – is prone to a certain evangelical bent that most other cultures around the world consider crazy. The extent that this has evolved in many organizations was explored in a booked titled: Corporate Cults: The Insidious Lure Of The All Consuming Organization by Dave Arnott. In it he makes the following observation:

“My family is a throwback to the agrarian age of only 150 years ago when families found emotional closeness through working together. Industrialization separated the work-family relationship…In the Information Age, these social relationships are moving again, this time to the workplace, where employees are forming corporate cults.”

Far from praising this trend he astutely points out:

“That’s good for the organization but bad for the individual. It’s bad because it takes away the individual’s identity. Spending time and effort in the pursuit of organizational goals reduces the time and effort available to spend in pursuit of individual goals.”

The first mass layoff for an organization has a the same impact on the psyche of an organization as a first heartbreak has on the dew-eyed optimism of young love. Ultimately it breaks the magic spell that fosters cult-like loyalty. People start realizing that they are essentially expendable resources in the operation of a business, and not participants in some glorious experiment. Attitudes harden. Pragmatism reigns.

While this can be a particularly painful process for the people involved it is ultimately good for the individual. I’m not so sure I can say the same thing for the organization. When the corporate culture starts redefining itself around the more pragmatic realities of a business environment its a lot harder to get employees to log those long hours, to work over their holidays, and to attend all those team building events that cut into their personal lives.

Microsoft, through good management, has avoid this for over three decades. But things will be different now.

It turns out that the 7 grams of CO2 per search was a misquote from physicist Alex Wissner-Gross who has been working on a set of generalized stats on CO2 production coming from different computer related activities.

But I, for one, would like to implore Dr. Wissner-Gross to continue his noble work. And I think I’d be speaking for mankind as whole if I could insist he puts a greater emphasis on identifying the Co2 production associated with making PowerPoint slides. I’m hoping he’ll discover that 1 PowerPoint slide is equal to a day’s production of Nike sneakers from a coal-powered Chinese manufacturing facility.

Co2 analysis helps people understand the environmental costs of the decisions they make. Now, I’m not so sure we are searching the Internet too much. But I’m damn sure we’re making too many PowerPoint slides. It’s become the crutch bad speakers rely on to avoid public speaking classes.

Clearly the millions of glazed eyes in thousands of presentations conducted around the planet every day aren’t enough to convey the point that more PowerPoint slides do not a good presentation make. Maybe something will change if people realized that an hour presentation with more than say, 5 slides, is actually destroying the planet.

Let me explain why.

First off, IT has no charter to concern themselves with an individual’s work productivity – either specifically or as a group – unless it is their own. That is the responsibility of those people’s manager. In this regard IT departments would be well advised to heed some advice once provided to me by a sage manager – “organizations do not become more effective when their employees spend their time worrying about what other people need to do – they become more effective when the employees worry about what they themselves need to do.”

Secondly, how can you be certain that pure social interaction doesn’t support a business objective? If Jenny from sales is “friending” her prospect list or posting some videos on the fun wall of her clients are you really, really sure you want to stop this type of activity?

Now I’m guessing that most of you have been on a team building activity. Maybe gone to a company Christmas party. Perhaps you’ve even organized one. These types of activities are a whole lot more expensive and legally dangerous (particularly when a few drinks are involved) than Facebook. But we brave the risks because we understand that humans need a social framework to operate effectively.

But last, and most definitely not least, have you ever stopped to ask yourself exactly whose time you think these people are “wasting?” Hands up – who here puts in a strict 40-hour week? Anyone? Anyone?

I seriously doubt that many people are answering in the affirmative because for the vast majority of knowledge workers the 40-hour work week has gone the way of the employer-funded pension plan. In reality we’re probably logging something closer to 50-60 hours a week. And who helped empower this reality? You did Mr./Ms. IT person!

Funny, but I can’t seem to recall as much angst expressed by IT departments over the appropriation of employees’ personal time when laptops, email systems, Blackberry’s and VPNs were being deployed as I’m now hearing about the potential for Facebook to chew into work time.

Guess what? You have no moral basis to deny people the right to reclaim a semblance of a personal life that today’s professional existence makes so hard to achieve. Banging on about this is the Web 2.0 version of listening across the cube to see if anyone is using the company phone for personal reasons. If you’re so compelled to ban the use of Facebook just make sure you also whiteout any feel good statements about “work-life balance” from those mission statement plaques hanging up in your lobby.

Then again, methinks IT doth protest too much. Maybe, just maybe, you’re really just ticked off because users have gone and started using Facebook without your express permission. Maybe, just maybe, you’re really using this time wasting issue as an excuse to re-exert some authority over what these people can do with IT.

Hmmm, maybe.

"I don’t really understand their strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, ‘hey, we’ve just launched a new product that has no revenue model!’…I’m not sure that my investors would take that very well. But that’s kind of what Google’s telling their investors about Android."

I think Steve might be exercising some poetic license here. I’m pretty sure he clearly understands the strategy because it should look pretty familiar.

Remember the time Microsoft embedded Internet Explorer into Windows? Remember the time they packaged Microsoft Outlook into Microsoft Office? How about the time Microsoft added file and print management capabilities to Windows and created a competitive workgroup server?

Google’s doing the same thing. They’ve taken someone else’s discrete product, or core competency, and turned it into an embedded capability of a product that they’re in the best position to commercialize. They’ve taken a page from Microsoft’s own playbook.

So, Android is not a product. It is a free, open source, mobile operating system feature. It’s objective is to facilitate open access to information on the mobile web. Google doesn’t need to justify Android to their investors because their investors already understand the overall strategy. Android is simply an extension of the core business model.

So, in the current economic environment, we may be finding ourselves in a situation where cuts to IT budgets don’t accurately reflect to the true impact to IT use in most organizations – particularly if the cost of SaaS solutions are being paid from departmental budgets rather than those of IT.

Now, I don’t want to overplay this scenario. It’s not like SaaS is a massive component of everyone’s total IT spend. But the overall market numbers aren’t exactly insignificant. In the CRM space, Gartner estimates that SaaS accounts for roughly 15% of the total market. SaaS has significant market share in areas like e-Recruitment, employee performance management, enterprise feedback management and is growing quickly in areas like multi-channel campaign management. Overlay these growth rates with the extent to which business users are in the driver’s seat and I think we have an interesting phenomena.

At the heart of this is yet further proof of the desire of business users to take control of their own IT destiny. I know that this is a tough challenge for IT departments. But with IT budgets being squeezed at the same time that 80% of it is being used just to “keep the lights on” it might be making sense for IT departments to stop looking this gift horse in the mouth.

If there’s a silver lining on this dark credit crisis cloud hopefully it’s the demise of any of these topics being considered acceptable dinner conversation.

But we are all still slaves to human nature. Maslow laid it out for us. Once we have enough food, shelter, safety and sex we need esteem and self-actualization. Achieving those higher needs by making other people feel inferior is just frosting on the cake. So unless our lives end up looking like something out of a Steinbeck novel rest assured that dinner conversations in the era of tight credit will need a topic that fulfills the competitive spirit of middle-class suburbanites. But bragging about your bathroom extension to someone whose house is in the process of foreclosure is trés gauche darling.

Fear not! In an environment of massive personal and government debt, a seething resentment towards anyone whose job title is an acronym starting with the letter “C”, and a sincerely held concern that Al Gore is right this time around, we will rediscover our mojo. In the new world order, austerity will become a fashion statement. Our spending habits will be realigned to show our neighbours how thrifty, magnanimous and eco-friendly we are. Conspicuous consumption will morph into conspicuous frugality.

But don’t think for a minute think that I’m talking about an outbreak of anti-capitalist, deep green sentiment. The way we’ll be separating the have nots from the haves is by buying our claim to parsimony. Credit boom cool was all about the big house, the big bonus, the big $50,000 4Wheel Drive and the long overseas holiday. But to be credit crunch cool you’ll need a small mortgage, a work-from-home deal, a $110,000 Tesla Roadster and ample volunteer work. Credit crunch cool requires just as much money, professional prestige and the ultimate luxury – time – to achieve. The art is making it look like you have none of them.

“…if you go out five or ten years, this year there are about 125 million smart phones sold. I think if you go out five years, it’s going to be a billion smart phones. Ten years, someplace in there, it will be a billion smart phones sold. If it’s a billion smart phones sold, will it be primarily guys who build proprietary hardware/software stacks, or will it be primarily a world in which you have software and hardware innovation that proceeds separately?”

He goes on to say:

“That means, in a sense, I think, the Linux mobile guys, us, Symbian, maybe Google with Android as they get into the game, we’re kind of battling for the big part of the market. That doesn’t mean Apple and RIM won’t make a lot of money and have great success, but they’re probably restricted in some senses to a certain maximum. Even Nokia, the biggest guy in the phone market, only has, what, 33-34, something like that, percent of the market. And if you want to reach more people than that, you sort of have to separate the hardware and the software issue.”

Now, I’ll leave the commentary on the relative strengths and weaknesses of Windows Mobile vs. Symbian vs. iPhone vs. Android and hardware+software coupling to my colleagues Ken Dulaney, Robin Simpson and Nick Jones. But Ballmer’s comments really got me thinking about the merit of building market share as a focal point for a modern IT business model.

Naturally, from a financial perspective, I’d much rather be getting $10 for 200 items sold then $100 for ten items sold providing I can keep my costs roughly the same. But market share in the IT industry isn’t just about revenue. It’s about ubiquity. And ubiquity has been gold. It creates de-facto standards and attracts 3rd party developers whose solutions further attract users to my technology. If I get the equation right not only do I get a self-perpetuating franchise but I can even get away with charging $15 or $20 without any meaningful loss of market share.

Or so the system has gone.

But nowadays, market share also gets you something else – a big giant open source target on your back. Should my technology hegemony threaten others’ business they can act either in a unilateral or multilateral fashion to target my revenue with an open source alternative. Even better, if those other organizations can make their offerings more attractive by making my offering worthless then open source provides them the means to achieve that objective.

The mobile operating system space is merely the latest example of this trend. Android and Symbian don’t pose a market share challenge to Microsoft – they pose a revenue challenge to everyone in the segment. That $100 for ten items looks a lot better then making $0 for 200!

Commercializing ubiquity has become a very tricky game. As a result the emerging focus has been to move away from an obsession over market share leadership and towards market smarts leadership. Organizations focused on market smarts seem to be asking themselves three consistent questions:

• Have I innovated in a way that matters to my customer and is noticeably different to what’s available through open source options?
• Have I shielded my innovation from the commoditizing pull of open source by obtaining patent protection?
• How do I use open source to benefit from community participation while also perpetuating the core value proposition of my business model?

Getting these questions right may have little impact on overall market share but it sure does wonders to product margins. And in the current market that might just be the smartest move of all.

…one giant leap for me!

Now, I think this might be something like the 193,846,963^rd blog in the world. Luckily for me the Gartner branding affords me the luxury of being able to cut through a little bit of the noise your average blogger might face. So, I think I owe you a little perspective on how I’ll be tackling this blog.

An analyst’s relationship with technology can be compared to visiting a restaurant. Some analysts have very specific tastes. They order off the menu looking for the dishes that match their preferences. And, after accumulating a wealth of knowledge eating similar stuff, they can quickly rank the quality of any meal and the chef who cooked it. These are the a la carte analysts of the world.

Then you have those analysts that want a little taste of everything – in part because they can’t make up their minds and in part because they’re gluttons. That’s the buffet analyst. What these analysts lack in specific area of expertise they can hopefully make up in their ability to fuse diverse flavors into a new cuisine. I’m one of these types of analysts.

So while I’m prone to becoming infatuated with specific technologies, those infatuations are fleeting. On the other hand I find myself continually drawn to the confluence of non-technical stuff that shapes our industry and ultimately sets the scene for which specific technologies survive, flourish or evaporate. So what is it that I’m being drawn to nowadays? Here are a couple of issues I’ve been obsessing over lately:

The Future of Property & Ownership in the IT Industry

Who owns what and what’s worth owning? This is shaping up to be one of the most important questions facing every participant in the IT industry. Gartner has been seeing more and more organizations questioning the cost-benefit equation key technology. Many are now proactively working in conjunction with like-minded organizations to dissolve traditional ownership structures using open source. At the same time, important changes in the legal and legislative world are creating a new set of assets that directly impact IT. Like it or not, patents are allowing innovative ideas to have their own intrinsic value before they’ve actually been codified! At the heart of the upheaval is a growing understanding of what constitutes commodity vs. market differentiating technology and a desire to align cost and external relationship with the value delivered from each. The more this evolves the more we’re going to have to question some of the fundamental tenets that the IT industry has been built upon.

The Waning of the Engineer

A year or so ago I was watching an interview with the lead designer at Jaguar. She noted that the lack of respectable design in the automotive industry in the 70’s and 80’s was a result of engineers leading the product development process. Design was something done at the end of the process. There was a good reason for this – the market was putting value on stuff the engineers were good at doing. Specifically, creating fuel efficient engines to deal with rising gas prices, improving the performance of the 4 cylinder engines needed to increase fuel efficiency and then improving the safety of these new small, higher performance cars. That was until the 90’s. By that point the incremental engineering improvements in fuel efficiency, performance and safety were becoming less marketable then the emotional connection people had with their cars. As a result the automotive industry altered its development process front-loading designers and having engineers work to support design objectives. I am firmly of the view that the IT industry has reached a similar nexus. The incremental value of what engineers are doing is taking a back seat to the value that designers can add to the technology. Engineering will never go away. I’m just not sure they should be running the show anymore.

So, I hope I’ve been able to give you a taste of where I’m coming from. Now, off I go into the wild blog yonder…