How Can Australia Weather the Financial Storm?

Image via WikipediaAustralia, like the rest of the world, is coming under some battering from the financial crisis. It is worth looking at whether we can take advantage of the situation to make drastic improvements to the overall economy. Let’s begin by looking at where things stand.

Simple version is that the world is heading for recession and demand for Australian goods and services will go down. Various commentators and the Government have talked up China’s growth as keeping Australia from slipping into recession. I don’t think this is going to work. Wall Street Journal has reported a 4% drop in electricity consumption in China in October. Production of goods and services will fall due to the weakening demand in US and Europe, China’s key export markets which will mean China has less need for mineral commodities which has been the engine of Australia for the last few years.

The other idea floating around is that China and India’s middle class will continue to consume. Two problems with that, 1) Chinese and India’s middle class while big is not on the same scale in terms of consumption to replace the demand of the West and 2) much of the middle class in India and China are dependent on jobs that supply goods and services to Western consumers so as demand in the West falls expect to see the number of Chinese and Indian middle class fall. A lot of people don’t understand how the world’s growth has been due to the debt-fuelled consumption of the West. There is nothing to replace that demand.

As to weakening demand in the West a few simple yard sticks indicate that the de-leveraging still has away to go. House prices are still 3 times the average household income and household debt is still much greater than disposable income. In fact we still have yet to feel the effect of unsecured lending and credit card debt.
Unfortunately for Australia, the Government’s hasty and badly contrive deposit guarantee introduce instability into an otherwise stable financial system.

I expect that Australia will fall into recession and while the recession may not last very long the economy will remain flat until the system has de-leveraged itself back to more realistic levels. Golden years are over for now.

But...but this crisis is the single greatest opportunity Australia has to make a rapid shift, a quantum leap if you will, to a low carbon sustainable economy. Taking advantage of the crisis requires short, medium and long term initiatives by the Government, which meld together to shift people into green jobs, reduce per-capita energy consumption and prepare the ground for a low carbon economy by investing in key infrastructure.
Short term, Australia’s already had the fiscal stimulus (by short term I mean right now). That will hopefully keep things from falling off the cliff. Problem with giving money is a lot will go into paying down debt and less into consumption. An additional short term measure is to expand the solar hot water and solar power programs for household. This program already has the management systems in place and has been “closed” due to wild adoption. Simply by adding several hundred million dollars to the program, the number of installations can be increased creating jobs and reducing carbon creation.

Medium term (six months to a year) there are the tax cuts in July 2009. That won’t be enough and although the Government has talked about a 2nd stimulus package, that same money would be better spent focusing on the following initiatives:

• Paying for low income and pension households to double glaze and insulate the homes, install solar hot water and high-efficiency air-conditioning;
• Provide up-front income contingent loans to other households to do the same;
• Fund the installation of solar panels and solar hot water on all government buildings and schools across Australia;
• Soft loans to small business and commercial real-estate owners to install insulation, double glaze windows, install solar hot water and solar panels and purchase new high-efficiency machinery;
• Revamp the car bail-out to allow people to trade to the government low millage cars for hybrid and electric cars;
• Begin construction of a national conduit system across towns and cities starting in regional towns. The single biggest cost of laying fibre broadband is having to dig up the road. By creating a conduit system that anyone can get right of access to will allow new competitors to provide super fast (100+ Mbps symmetrical) to households. Additionally, conduits are standard so the contracts can be tendered to a wide range of construction companies creating short term jobs that are localised.

These initiatives will create green jobs, reduce the per-capita energy carbon energy consumption of Australia while also freeing up household income as utility bills are reduced. Again this income will initially go to paying down loans but then in about one year the income will move into demand replacing the spending of the Government initiatives.

Long term initiatives are everyone’s favourite infrastructure projects. The projects I see as having the best long term pay off are:

• Fund a High Speed Rail on the East Coast initially connecting Sydney, Canberra and Melbourne with an option to Brisbane using TGV standard;
• Fund the development of light rail in the major capital cities and regional centres;
• Fund the development of DC High Voltage transmission lines that connect the centre of regional Australia to the major cities and regional towns.

All three of these initiatives would create a range of jobs over several years. They would also reduce the carbon footprint of the economy. The DC high voltage lines are important as they make large-scale solar more viable by providing an effective, low loss method of getting solar generated power to the cities. HSR can be started quickly by utilising the existing TGV standard and designing to support 500 km/h speeds.

The financial crisis offers the single greatest opportunity to cross the tipping point to a low carbon sustainable economy. A bit of fore thought and planning the Government (or Opposition) can make a huge difference to the country.

In support of James’ Cloud

Image by Simon Cast via FlickrJames Governor recently did a re-run of his 15 Ways to Tell Its Not Cloud Computing with a post addressing some of the critical reaction he has got in a post 15 Ways I Am Wrong About Enterprise Cloud Computing. I broadly support James’ original thesis and I’ll explain why.

Definitions of Cloud Computing abound and some are really wordy and well confusing. When I think of Cloud Computing I keep it to the following definition:

“Cloud Computing abstracts the where and how of computing to allow users to focus on the what”

By this I mean that developers no longer need to worry about the details of how computing is delivered or where the computing is located (i.e. what server) instead they can focus on making sure their application achieves what they want and is reliable.

So a Cloud is more than simply a grid or utility computing as it also needs to support software stacks without the developer worrying about how it is done. A full on cloud negates many of the low level management requirements and simply provides computing and storage resource that is on-demand and easy to use, like booting an OS and running an application.

Now what we will have is internal and external clouds to an enterprise. Think Internet versus Intranet. The reason for deploying an internal cloud is to reduce the hardware capital inefficiency most enterprises face along with providing internal developers access to the benefits of Cloud Computing will still meeting the desire for security and control of data and applications.

Companies like Sun, IBM and HP will rollout “cloud-in-a-box” that allow Enterprises to replace existing hardware with Clouds. Will the enterprise own each server that makes up the “cloud-in-a-box”? Probably not. Instead they will own the “cloud” with a maintenance contract that sees the vendor swap out the hardware regularly to keep the computing capability of the cloud growing.

The reason for enterprises to deploy internal clouds is simple – it increases capital efficiency of IT while allowing developers and system administrators to focus on the application and less on keeping a mass of hardware and low-level software running and up-to-date. External clouds will work for many businesses that don’t need massive internal applications. It isn’t a really an either/or proposition.

James notes at the end of his reply they he is half-right and half wrong. I agree with the caveat that I think he is more than half-right and less than half-wrong. Until enterprises can tick off his 15 points they will not be taking full advantage of the potential of Cloud Computing.

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Optimisation of Workflow and Collaboration Platforms

Image by Simon Cast via FlickrOptimisation of workflow is the aim of the game. We want to reach the goal with as little expenditure of resources as possible. Unfortunately, much of the optimisation game has been played at the level of the individual action, which usually results in a destabilised system. This post in the series on collaboration and workflow will look at how workflow should be optimised and the role that collaboration platforms can play.

Reasonable question to start with is why optimise? Optimising or improving workflow increases the throughput. More simply, optimising workflow means more gets down with fewer resources. For business it means they can focus on producing the most value without wasting resources.

Optimisation of workflow is not about making a single action overly productive but instead about balancing the various actions in a workflow to produce the best overall throughput. It is about making the system robust rather than optimising for a particular scenario. “The Goal” by Goldratt provides a useful case study on optimising workflow.

Actions within a workflow can be re-arranged, removed, melded together and improved. The key is the modification of actions within the workflow all needs to focus on improving the overall workflow throughput. This may mean that while an individual action’s throughput can be increased from say 80 to 90%, there is no point in doing this if it does not increase the overall throughput of the workflow.
So where do collaboration platforms come in? Collaboration platforms have two functions (1) they serve as a framework within which to improve workflow and (2) they offer a way of improving individual actions.
The improvement of individual actions is a tried and tested use of collaboration frameworks. Think parallel editing of a client document and the management of tasks for a project. The improvement of individual actions is a well developed use of collaboration platforms but this only works so far as it does not optimise the action in context of the wider throughput of the workflow in question.

The framework aspect of collaboration platforms is very under developed and in terms of overall impact on business this is where changes will have the most dramatic impact on a workflow. The collaboration framework allows users to optimise and control actions within the context of the overall workflow.
The idea of a framework is to allow users to build a workflow from individual actions, examine how this workflow works and selectively change (add, remove, optimise) actions all with the aim to improve the overall workflow. It is like using plant control software to change various flow rates and values in order to change the amount of a chemical produced.

To illustrate what I mean let us look at the example of putting on an event. An event requires the coordination and completion of a series of actions such as booking and managing the venue, managing attendance and paying various entities. Each of the activities would be arranged as required into a workflow with the collaboration platform ensuring the smooth handoff between activities. None of the activities need to be powered by the platform rather they are coordinated and controlled using the collaboration platform in order to achieve the goal of the workflow. Using real world companies the venue would be booked and managed through BookingBug, RegOnline handles the registration and attendance management, Moo.com produces the tickets and ID, PayPal is used to manage payments to various entities and Huddle coordinates all these activities and manages the communication and information between the event organisers. The event organiser can focus on creating a compelling event that runs smoothly.

It is the coordination and control of actions that produces the dramatic improvement in workflow and consequently the value created by the business. As workflow now and increasingly extends across multiple organisations coordination is key to ensuring that workflow is as effective as possible. At the same time, as collaboration platforms improve the coordination of workflow then increasingly workflow will become made up of various groups working on the actions to which they add the greatest value (think of the example above). It is a positive feedback back cycle – improved collaboration increases the value of various groups working together which in turn drives improvement in collaboration and so on.

We are seeing the rise of workflow specific platforms such as Amiando and RegOnline in the case of event management. I suspect this trend will continue but there is a lack of flexibility to this approach. The real revolution will happen as the current crop of collaboration platforms along with new entrants evolve towards workflow coordination platforms that support the plug-in and specialist modules. Most groups require more than a single workflow to operate and I expect single workflow services such as Amiando and RegOnline will work within generalised coordination and collaboration platforms.

Understanding Workflow

In the first post, Collaboration Reformation, of this series on collaboration and workflow, I made the statement about the transformation of collaboration from resources to activities. It is worthwhile looking at activities, or more accurately workflow, specifically before moving on to further discussion on collaboration and workflow.

Workflow is essentially a series of discrete actions that when group together produce a desired outcome. The obvious example is a manufacturing assembly line. A series of actions such as screwing on a door and adding an engine are arranged together in a line in order to assemble a car. Manufacturing assembly lines are obvious but don’t become hooked on the assembly line example. Workflow is simply a series of discrete actions performed together to achieve a goal. The goal can easily be the development and roll out of new features for a web service as it is the assembly of a car.

Goals can range from a product or service (say a car or a massage) to something more intangible (say increasing support for a candidate). For most of the post I will focus on the product and service goals but it applies equally to intangibles as well.

Workflow can be broken down into three categories: operational, development and overhead. Operational is the workflow that delivers the goal. Development is workflow that is necessary to create, improve or fix a goal. Overhead is workflow necessary to keep the organisation and group going in order that it can achieve the operational and development workflow. There is overlap between the three categories of workflow and you can represent it as a Venn diagram.

The workflows necessary to complete a goal are unlikely to be fully contained within a single group. A car maker doesn’t make the bolts or wires that go into a car. Toyota recognised this which is why The Toyota Production System works to coordinate workflow in suppliers not only within a Toyota plant.

Each workflow is made up of lots of different actions. Optimising an action without consideration for the workflow de-stabilises the whole workflow and produces counter-productive results. It is no good having one action of a workflow produce more than can be processed by downstream actions. In “The Goal” Goldratt provides a series of good examples of what happens when optimising a single action versus optimisation across the workflow.

In the next of this series, we’ll look at how optimisation can be achieved and look in more detail at how collaboration platforms are a part of this optimisation.

Could the Guardian Media Group be the New York Time’s white knight?

I was talking to Seamus McCauley last night about newspaper problems with specific reference to New York Times problem. Today Silicon Alley Insider has an interesting post looking at New York Times financial problems.

One of the points made last night was the shift to global news brands that are less tied to specific media channel. The BBC and the Guardian Media Group are both representative of this trend. New York Times faces a tough choice about how to pull itself out of the hole that it finds itself in.

One possible remedy is sale of New York Times but there are few other media companies around with the general strength to save the New York Times. Guardian Media Group (GMG) is one of the few. A purchase of New York Times by GMG would fit with the expressed desire of GMG to expand its US presence and the New York Times would provide GMG with a strong US news brand with the attendant benefits.

New York Times would benefit from the GMG’s unusual corporate structure and becoming part of a news group pursuing an interesting and innovative multi-platform strategy for news.

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Keywords from Questions

In a recent article Google Search Quality Tech Lead Daniel Russell talks about an example of a user using keywords to find ferry timetable. What struck me as interesting was how the user didn’t hit upon using the keyword “ferry” until further in through their search task.

I suspect this was caused by the user starting with a question with words to the effect of “When does the ferry leave San Francisco to Larkspur?” and then attempting to turn this into a series of keywords by knocking out works such as does, when etc. The word “ferry” got knocked out of the user’s first run of keywords as it was a generic reference to ferry. In this case ferry was thought of as a common noun rather a proper noun.

If my hypothesis is reasonable then quality of keywords is going to depend on how the user first structures the question in their mind. For example if the user had used the following structure for the question “When does the San Francisco to Larkspur Ferry leave?” the word “ferry” would have been used as a keyword.

The potential importance to the way a user structures their initial question mentally points to a severe limitation to keyword and ranking search paradigm. The speed and quality of the search experience is heavily dependent on the user structuring the initial question so as to readily identify effective keywords, something that the search engines can do little to effect.

On the other hand question and fact paradigm based search engines, such as True Knowledge, will not suffer this problem.

Micro-startups in a Collaboration and Coordinating world

Image by Simon Cast via FlickrIn Jason Calacanis’s recent email missive, he explores where the value for start-ups lie. Two points “The Age of the Micro-startup” and “The Try Everything Era” touches on the long on-going battle between features versus products. Put succinctly, many start-ups are little more than a feature (albeit useful) and in and of itself not a sustainable product.

Jason’s theme is that the high capital efficiency of today’s web will allow features to blossom and expand on existing services. I remain sceptical of feature companies’ (micro-startup in Jason’s terminology) as a standalone going concern but I see the value that these micro-startups can create in a collaboration and coordination world.

Collaboration and coordination platforms will enable micro-startup’s to create value by increasing the overall value of the platform by adding functionality. The advantage for the micro-startups is that the value of their feature is increased by being coordinated with various other features allowing users to achieve a goal. The value of the whole is more than the sum of its parts. Further they get access to a framework that simplifies coordination and business operations (e.g. getting revenue).

For collaboration and coordination platforms also benefit from the multiplicative effective as well as allowing features to be added to the platform cheaply and in response to demand. While they could build a lot of the features, the development resources needed that would limit what and how quickly new features can be rolled out. Micro-startups form a eco-system that is self organising about what to build and the resources to devote to it.

This differs from existing platforms, Facebook and OpenSocial, in that these platforms are about building micro-apps that have little to no coordination with other applications on the platform. The applications are standalone. These platforms essentially act as a hosting service with access to a social graph.
Coordination and Collaboration platforms are about coordinating actions (features) in order to achieve something. Achieving a goal is going to produce greater value in the long run and produce more value producing companies than simply tapping a social graph.

Resources versus Answers – Asking a Question of Search

Image via WikipediaSearch is very broad in meaning and it is easy to lose sight that search actually consists of two distinct sub-sets of queries. Both sub-sets aim to find something; one is looking for resource and another for an answer. At this time we use the same approach – keywords matched in a document that is ranked for relevancy via some method (human and/or algorithm) – across both of these sub-sets of queries. This works somewhat but we are rapidly approaching the limit of effectiveness for this approach. This limit is Marissa Mayers 80/20 problem of search.

The first sub-set is finding resources (e.g. documents). The current keyword and ranking method works well for this type of query. This is what has fuelled Google’s growth. Keyword and ranking when a user is looking for one or more resources on a topic such as blog posts talking about an election. Where it falls down is answering specific queries such as “How old is the Eiffel Tower?” The user in this case is looking for a fact. Users have gotten around this problem by using the returned resources from a search as the basis to find the answer they are looking for, a human adaptation to a systemic problem.

Finding answers is the second sub-set. While we currently rely on keywords and ranking to navigate to an answer it is cumbersome and not effective. Instead the paradigm of keywords and ranking needs to be tossed out. Finding answers works better with a question and fact. A question (as opposed to queries) allows the system to quantify what fact is being asked about. For example the question “How old is the Eiffel Tower?” focuses the particular answer to be found to the age instead of potentially the location, who built it, what it is made of etc.

Using the question and fact paradigm to find answers creates new approaches to using web services and usefulness of the web to everyday life. This isn’t to say that question and fact will replace keyword and ranking rather it is complimentary and produces better results for a sub-set of search.

Consider the example of finding flights for a holiday. Using keyword and ranking the user would type in something along the lines of “flights cheap [destination]”. The engine would then return a series of web sites that match those keywords. The user then navigates to those pages and then drills through the pages to find the answer to their question. If, however, question and fact is used the user would type in “What is the cheapest flight to [destination] leaving on the 21st of December?” The web then returns the fact that flight y priced at x leaving at 10 am on the 21st is the cheapest flight. How much quicker and easier is that to understand?

For many people the web and search are still too difficult to use. But they know how to ask a question and this opens up the utility of search and the web to a whole range of users that are intimidated by it. It is worth repeating that question and fact will not replace keyword and ranking. There are queries with which question and fact doesn’t work for just as there are queries for which keyword and ranking doesn’t work for. They are complimentary.

Question and fact does have the potential to boost the growth of paid search results. The boost arises from question and fact providing a better signal of the user’s intention and so improves the targeting of advertising that better answers the query. For example a user asks the question “what is the cheapest holiday for a 16 year old girl in Mexico?” it a very reasonable to assume the intent is to find a holiday for a 16 year old girl in Mexico. A keyword and ranking would produce results about holiday’s in Mexico without any knowledge of whom or why he is searching although an assumption could be made that the person is looking for themselves. Interestingly, through in demographics and/or behavioural data and the system will produce completely the wrong answer. Say for example the person is 52 year old male in which case the system is likely to return Mexico holidays for a 52 year old man when his intention was to find a holiday for his 16 year old daughter.

Question and fact will go a long way to addressing the 20% of search remaining. Many web services implement crude methods for asking a question, ones that are frankly laborious and time consuming to use. The key to unlocking the power of question and fact is to make it as easy as possible to ask the questions. The pitfall to implementing question and fact is knowing when to use it. Question and fact works when the question can be answered by a fact e.g. “How old is the Eiffel Tower?” It doesn’t work when the answer is not a fact e.g. “What is the best holiday in Mexico?”