Since then, Umair has become the Director of the Havas Media Lab at Harvard, and I just came across a recent presentation of his that is a must see.

http://www.daytona.se/sessions/vol2/umair

Basically, this global crisis we are witnessing is not just a financial crisis – it’s an “interaction crisis”. The principles that have been driving capitalism through the 20th century have ultimately maxed out, and Umair proposes 5 new principles that will guide the 21st century – that *must* guide 21st century capitalism lest mankind dig it’s own grave.

I’ll share these 5 principles here more for my own notes, but you should really watch the presentation – it really just skims the top of changes to come. (20th century capitalist principle → 21st century principle):

• Exploitation → Renewal
• War → Peace
• Domination → Equity
• Value → Meaning
• Command → Democracy

And the tag-lines for these principles:

“tomorrow is today”
“people, not product”
“connections, not transactions”
“creativity, not productivity”
“outcomes, not incomes”

In organizing his visit, I received a lot of push-back from superiors because they felt the content of Umair’s talk was too … ‘amorphous’. Too ‘vague’. They couldn’t grasp it. It was too new, using terms and concepts previously unheard of. I argued that Umair was on to something; that I may not be able to explain it in detail, but that was the point of inviting him and letting him speak. Sony’s engineers, marketers, product planners, etc. needed to be exposed to agenda-setting thinking.

The challenge was that I had never met Umair before in person, and only knew him through his blog posts. Blogging was just being accepted within Sony as a viable medium for sharing information, and this became the first time anyone in Sony had invited a speaker – from another continent, no less – to present to core Sony employees essentially based on blog posts. On top of that, I was just some young English-speaking staff employee who used a 12″ PowerBook in Sony Headquarters :) Anyone who has worked inside Sony knows how difficult it is to bring an unknown “outsider” to an official event, let alone one cloaked in secrecy even to internal employees. So to bring Umair – known to nobody in Sony, and found only through clicking links and landing on his blog – to Sony and share his economic perspectives in person, was a big deal to me. It was a big risk too, politically more than anything else.

So imagine my delight in finding out Umair is now at Harvard as “Director of the Havas Media Lab, a new kind of strategic advisor that helps investors, entrepreneurs, and firms experiment with, craft, and drive radical management, business model, and strategic innovation.”

Good luck Umair, and post some videos take with that Sony HD handycam you made off with :)

Readers of M@Blog may recall a few entries I posted while working in Sony’s Audio Codec Development Group – the folks responsible for ATRAC.

- Sony get a hint
- ATRAC vs the world

The sad part of all this is that many of the engineers will simply be shuffled around to other groups (and the smart ones will be cherry picked by other companies), when what’s needed is a clean sweep of 20% of the C- and VP-level “managers”.

In fact, who cares?  Sony should keep the old farts and “decision makers”; that leaves more for us startups :)

So imagine my amusement when I read from SeekingAlpha that Yahoo! Japan is encroaching further into Sony’s living room:

Yahoo Japan said it has licensed Mediabolic’s software to develop the Yahoo! Digital Home Engine, a technology that will enable consumers to access web-based content directly from televisions or stereos.

Sony continues to announce cool gadgets but with proprietary means of interconnecting – which in the past was just fine when options were sparse and technology wasn’t as intertwined in users’ daily lives.  Most people didn’t have a need to connect their one computer to their tv to their digital camera to their mobile phone.  Now there are hundreds of options a customer can consider for almost any given technology gadget – Sony should have been able to forecast this shift and focus away from box making towards service integration.  After all, at one point not all that long ago there was a large and loyal base of Sony customers.  Why not create a platform for them to communicate not just amongst themselves (which is what Grouper’s acquisition is essentially about) but with the larger as-yet-unconvinced or still-considering community?

As Sony reverts back towards its box making days, choosing to control all aspects of a products use, the competition, realizing most people need to connect a variety of brands’ products, comes in and tries to solve this problem.  And where there’s a problem to be solved, there’s often money – good money – to be made.

Before I briefly demonstrate flickr and 30Boxes as good implementations of “2.0 thinking” (and I’m quite aware of the many other services which demonstrate the paradigm well), think about how they:

• incentivize
• give ownership/control
• harness

For “incentivize,” I want you to think about how the service creates an incentive in the user to hand-over their data. Think about why someone would want to give a part of their personal collection (of anything – photos, music, information) to a service, and how that service creates a positive outcome from the user’s perspective for doing so.

For “give ownership/control,” think about how the service instills confidence in the user that not only is their data safe, but is actually still owned and controlled by the user. Even after a user gives their data to some service, said service makes clear that the user can still set permissions, copyright control, and privacy.

Finally for “harness,” think about how each service attempts to utilize the power of the development community to build on and expand the core of the service. The key admission each service must make is to humbly accept that there is someone smarter who, given the right tools and motivation, could adopt your service and make it even more appealing.

So, keep those three key points in mind – incentivize, ownership/control, harness – as you read through the following two brief demonstrations of quickly expanding web-based services.

Flickr

Flickr incentivizes its users to continue uploading their photos in a multitude of ways, and it’s clear they understand this by the following 4 links in the righthand column on any user’s main page: “Most views”, “Most ‘favorites’”, “Most comments”, and “Most interesting”. Users want to know what others think of their work, what people have to say, how people react to their “contributions” (well, some things may arguably be “detractions” :). Users get a one-click kick in gauging community reactions to their photos. And it doesn’t just stop at comments – people can leave notes right on the photo! That’s pure fun.

At the same time, Flickr is good at letting the user set licensing restrictions and permissions – from completely private to a combination of friends and family, and finally to the entire public. Check underneath the following two pictures – one flagged for public viewing, the flagged for friends and family only. The designation is clear. There is no forced usage of any kind, which instills a certain level of confidence in the user, realizing “hey, I can just use this for backup if I want.” That’s just considerate.

Finally, Flickr harnesses the development community through the obvious – an open API. An interesting bonus for Flickr is not just more applications built on Flickr’s API, but the great number of wrappers around the API in the many other development languages out there. If you follow the links for Perl, PHP, etc., you’ll notice Flickr doesn’t manage any of them – it’s all handled by the development community!

By realizing there are many more creative and inspired minds out there, Flickr is able to harness the community to their advantage, leading to cool gimmicks as ColrPickr and Retrievr (which is based on a fascinating SIGGRAPH 1995 paper), and viable businesses as QOOP. This is just awesome.

30Boxes

30Boxes is still very much a new-comer to the game but has already evidenced clear understanding of the three principles underlying “2.0 thinking”. 30Boxes incentivizes users by making it extremely easy to access personal and contacts’ calendering information from any browser. The service gives control by letting users determine what appointments are viewable – seems obvious, but the extent to which tags are used to customize and exemplify this fact is quite impressive. Finally, 30Boxes harnesses by opening their API as well as making the interface “skinnable” with themes.

Perhaps what is most telling of both services’ confidence is the extent to which they allow users to “take the data and run.” Both Flickr and 30Boxes provide “badges” for users to post desired data anywhere else on the web they want. Nobody has to ever see a Flickr logo or a 30Boxes logo to enjoy the data; both could be relegated to the back-end of another service. And yet, they continue to support this. Fascinating.

So why are these three points so important? As it turns out, any service supporting feedback, control, and integration has the ingredients to create a platform which leads to an expanding service, and every business is at least thinking about how to grow, if not now then somewhere down the line.

Conclusion

Tying all this back to work, if Sony can figure out how to extrapolate these three points to its current development environment (even better, completely flip the environment to best harness the community), then I believe we will once again see truly interesting and innovative products the user community will enjoy. As the internet helps Jon and Jane Doe find more and more satisfying alternatives for products and services, companies with 60 year histories of ignorance and arrogance cannot afford to be so much longer.

Thing is, with hiring policies like these, there’s still a lot of change needed.  Are these numbers caps or targets? With a policy of hiring to find a job rather than hiring to fill a job, HR is only perpetuating the problems which have led to an overabundance of products, product lines, and people.  Once again, we see a clear example of process trumping principle.

Imagine an executive, constrained by fiduciary duty, who knows that a soon-to-be-laid-off colleague is about to buy an expensive house. Should he warn his friend?

What do you think? I found myself in such a situation this afternoon with 3 Japanese managers on one side of a meeting table and an American consultant and myself on the other. Months of preparation had been put into creating a growth strategy, and two presentations to “top management” later there is still no clear message on how they wish us to procede. We peppered them with questions, each answer a few words shorter than the one before. Eventually it was just a blank stare and a sigh.

The analogy places myself and the consultant as the “soon-to-be-laid-off colleague” of course, but in this situation we have at least an inkling of what is going on. There is important information that is not being shared, perhaps importantly so. But all this inaction and vagueness simply wastes everyone’s time.

When an employee must inevitably be asked to leave, the sooner you tell them, the greater the favor you’re doing for them. No? Of course, being a permanent employee in a Japanese company means the chances of being laid-off are close to zero. Unfortunately with so much difficulty instituting change, that also means the profits will be close to zero too.

This got me thinking about a time when Sony had a superior hardware format succumb to the “ease-of-use” aspect of an inferior format: the classic Betamax vs. VHS. While Betamax produced higher visual quality recorded images – and is still used by many production studios – VHS won out in the consumer space in large part because of its longer recording times. Nobody wanted to fuss with replacing a tape 1/2 way into a football game; push the record button and return from dinner two hours later to have an entire show – or two – in its entirety on a single tape, no interruptions. Add the budget-conscious porno industry selecting VHS for low overhead costs and the rest, as they say, is history.

SCE fanatics will argue of course that comparing the PSP to the viPod is like comparing oranges to apples (…). The PSP has numerous features over the viPod – screen quality, wifi capability, game selection, and a standardized “USB peripherals” interface to name a few. There’s no way I would trade my PSP for a viPod. But the tedious process to get only a handful of shows onto a dinky memorystick of only 1GB max is not something I cheer about. And I don’t expect any division within Sony to be selling a reasonably priced UMD writer any time soon either. If a porn studio wanted to sell content for mobile devices do you think they will pay the extra licensing costs for UMD production for a market they’re not entirely sure of yet? Probably not, especially now that there’s a cheaper online-distribution option.

While many anticipate a PSP with a harddrive (already 3rd party produced) which would resolve one of the drawbacks the PSP has to the viPod, at the moment the competition – if you’re willing to call it that – between the two seems eerily similar to the hardware-quality vs. “ease-of-use” comparison that presented itself in Betamax vs. VHS.

Funny thing is, another space this product war will likely play itself out is the PS3 vs. XBox360 (or Nintendo Revolution, for that matter). From where I’m standing, Microsoft has a compelling online/internet strategy for their console – something seriously lacking in anything I’ve seen from SCE to date.

While I support the engineers in their effort to provide a freely accessible binary ATRAC library, I would like to clarify to the remaining parties some observations from having spent the past year working with the Open Source Software community. My explanations are kept short and concise with only a few examples; many more can be found on the internet, or by becoming involved with an open source project directly.

Timing and access are paramount

Developers love to tinker. They must be able to test, prod, and try out their hypothesis. This is part of everyone’s favorite term – INNOVATION. Immediate access to relevant information makes a developer happy. Waiting for code, patches, and documentation does not. An unrestricted and open online forum are good. Logins and passwords are not.

Why is this important for ATRAC? Because even now, it is still too difficult for a developer to obtain an ATRAC SDK. A Google search shows nothing on the first page. Independent and “small-shop” developers are *extremely* important. Let us not forget how the iPod came to be.

Developers don’t like to branch software

Splinter groups are generally disliked for core parts of major projects, even by open source developers. It creates a maintenance headache at first, and considerable confusion soon after. Sometimes a branch may happen to test a hypothesis, but usually the effort is merged (or abandoned).

Why is this important for ATRAC? Because a common concern is control – many here feel it will be impossible for Sony to control the source code once it becomes open. This thinking is the wrong approach. Open source projects pit innovation above control. But developers are (generally) smart enough to realize mis-management does not lead to innovation. If Sony does not trust the community, why should the community trust Sony? As long as an agreeable forum, format, and framework is put in place, Sony will easily have the final word on open source development of its own projects. Sony owns the factories and builds the hardware, afterall!

IM, Blogs, VoIP (Vonage vs. Skype), browser progression (Netscape – IE – Mozilla – Firefox)

The biggest connection between currently popular applications in IM, VoIP, blogs, and browsers is that they are all “free”. Free to download. Free to experiment. Free to share. No logins and registrations (beyond the obvious), no multiple incongruous versions, and plenty of (free!) online support. The VoIP service Vonage was introduced before Skype – but one service requires a registration while the other is a simple (free!) download. It is no wonder Skype is so popular now.

Why is this important for ATRAC? In an era of cheap and virtually limitless internet connections, distribution speed is paramount. The key operative business paradigm is “switching costs”. Create a big user base, and it costs more for the customer to switch to another platform. But caution: if you annoy that user base, they may find it costs less to switch than to deal with you. The exodus from IE to Firefox. The exodus from AOL to local ISPs. The iPod. Even, Gillette. In the first two cases, customers found it cheaper to switch than to handle the annoyance of the former. For the iPod, while the mp3 format was dominant, Apple understood they needed to clarify the switching cost when introducing iTMS – guaranteed sound quality, guaranteed service, guaranteed easy of use, guaranteed accessibility. ATRAC only offers one.

OS X: a 20 year old BSD core

A hardware’s life-span is finite. Software’s is virtually infinite. (Recall the Church-Turing thesis, which states that, in a technical sense, any operating system can be emulated within another.) Let us not forget the “Y2K” bug fiasco, COBOL, etc. Currently we are witnessing the appeal of Apple’s OS X, an operating system built on a core developed decades ago. Name me a piece of computing hardware developed 20 years ago which still generates lucrative buzz.

Why is this important for ATRAC? To recognize two points. 1) It may benefit Sony to release the ATRAC source code as a last resort. 2) We may not see the result for a number of years, but if and when we do, we will have the 10+ years of development experience from when ATRAC was first born, not to mention the intellectual capital and intangible assets.

So many options, so little time to hesitate

A final point. Surveying the market and considering your options is an obvious step in any process. Nobody likes to be locked in and bound to some other entity. Before the internet allowed anyone to share their resources and knowledge, big companies *seemed* to guarantee a level of consistency which out-weighed the cost of being bound to them.

Why is this important for ATRAC? There are now numerous options easily accessible and comparable. If a user does not like one option, it costs them next to nothing to try a different one. Nobody likes their time wasted. If there is any doubt a format may survive, why should a customer bother to use it over a freely available, widely adopted, publicly managed alternative?