Assembla Blog: Category Innovation

Build an online game in 7 days?

andy@assembla.com — Sat, 27 Jan 2007 11:34:29 +0000

This article on Gamasutra provides a variety of “juicy” hints and examples from “4 Grad Students Who Made Over 50 Games in 1 Semester.”|

My last article on Hyper-agile product development focused on managing a complex project for minimum time to market – a sort of top-down approach for managers and teams. This article is a great follow-on for the individuals involved, a bottom-up approach to prototyping and testing individual features.

Jon Udell Podcast: - A conversation with Andy Singleton about building global teams

andy@assembla.com — Sat, 20 May 2006 22:53:00 +0000

Jon Udell included me in his Friday podcast series this week with a conversation with Andy Singleton about building global teams . Jon has been putting up with me since 1993, when he edited some freelance articles that I wrote for Byte magazine. In 2003 he coined the term “dynamic development” to describe the work I was doing. He has recently been commenting on user innovation and the power of human networks to do work beyond open source sofware. In this conversation, he turns me on to Yochai Benkler’s The Wealth of Networks, and he cautions against a “walled garden”. Maybe we’ll be able to work together on a universally portable user profile.

Ancient Greek Craftsmanship for Software Teams

andy@assembla.com — Sat, 20 May 2006 21:16:00 +0000

I have been reading a book called The Greek Commonwealth â€“ Politics and Economics in Fifth Century Athens. Originally published in 1911, itâ€™s not out of date. According to the author, â€œit is natural for human beings to enjoy using their own best faculties. Men never felt that enjoyment so keenly, or put so much high effort into its attainment, as in the workshops of ancient Greece. If you seek a proof, go look through the shelves of our Greek museums. There is hardly an object that they made, however rude, but bears on it, sometimes faintly, sometimes with speaking clearness, the touch of the spirit of Art.â€? How can we bring that spirit to our work, every day?

This author (Alfred Zimmerman) also writes: â€œOur modern industrial system, with an ingenuity so wicked that one might believe it to be deliberate, has contrived to take the joy out of craftsmanship, and so to choke up the very springs of art. It has replaced, wherever possible, the delicate skill of the human hand by inhuman machinery, and the independent thought of the human brain by soulless organization. It has removed the maker or producer from all association with the public for whom he works, and substituted a deadening cash-nexus for the old personal relationship or sense of effort in a corporate cause. Above all, it has taken from him his liberty, and forced him to work for a master who is no artist.â€?

Alfred Zimmerman, a long-dead Oxford don, could lead a workshop on how to build modern, high-performing software teams and startups. Here are some of his observations about the craftsmen of ancient Greece:

When the Greek city states hired craftsmen, the foreman and the well-know artists received the same rate of pay as all of the other men on the crew, including the slaves. This rate was set for a long time at one drachma per day. There were no social barriers at work.

The most talented competed not for money, but for honors, which in Athens included a golden crown.

Competing craftsman clustered together, sharing their clientele, their stories, and their knowledge.

They had enough leisure time for stories, and aspired also to be citizens and soldiers.

Greek workshops tended to be small â€“ a craftsman and several apprentices â€“ and they were never bigger than 20 people. The master was always an artist, not a manager.

Like many before me, I believe that the pre-Christian philosophy of the ancient Greeks gives us vision of what a man can achieve on Earth, as a citizen and father. I draw inspiration from Odyssyus, the ultimate survivor. I am often amused by the goofy anecdotes of Herodotus. Sometimes I read the endless political debates of the democrats, demogogues, and tyrants, learning how great nations can be hijacked by small-minded men, and how the small-minded can eventually be cast off. That sounds relevant to my reading of the daily news.

What American cannot be inspired by the story of the war against Persia? The Greek citizens came out of their stone huts and small towns, and stood against the army of the greatest and wealthiest imperial power on the face of the earth. There was the last stand of the 300 Spartans, the desperate evacuation of Athens, the high-stakes maneuvering at Salamis. Then came victory, the Parthenon, and science as we know it. 2000 years later the minutemen had this very story on their minds as redcoats marched into Concord.
Emerson gives us the scene:

By the rude bridge that arched the flood,
Their flag to April’s breeze unfurled,
Here once the embattled farmers stood,
And fired the shot heard round the world.

What a turnaround! Software is now a terrific business

andy@assembla.com — Sat, 15 Apr 2006 13:22:00 +0000

Less than a year ago I wrote an article titled â€œIs the Enterprise Software Licensing Business Dyingâ€?. It was originally posted on IT Managers Journal, but it got picked up by Slashdot and various bloggers and podcasters. It pointed out that enterprise buyers had stopped buying software licenses â€“ the mainstay of the software industry. This caused years of misery for software professionals, years during which software was a bad business to be in. But the light at the end of the tunnel was apparent even then, in the form of new packaging and revenue models. Faster than I imagined, the prospects for the software industry have been transformed. We now have a wonderful alignment of good fundamentals â€“ increasing demand, declining costs, and rapid innovation.

Any industry with increasing demand, declining costs, and rapid innovation has got to be a great place to invest time and money.

INCREASING DEMAND

I recently did some research into market size for Assemblaâ€™s business plan, and what I was interested in was â€œon-demand softwareâ€? or â€œsoftware as a serviceâ€? – traditional enterprise applications packaged as subscription online service. Almost every company that I looked at was growing at more that 50% per year. This accounted for more than $3B in revenue. So while the overall enterprise software market may be flat, there are big categories inside it where business is better than ever â€“ better than in the 90â€™s boom. Revenue is actually growing faster, from a bigger base. Thatâ€™s the macro view. The micro view is that globalization has doubled the pool of available programmers in five years, and weâ€™re already running out of them.

DECLINING COSTS

At a presentation about social software at Harvard Business School, one of the questions the presenter asked was â€œwhy now?â€? Why are we seeing big, free social wikis, networking sites, blogging sites, classified markets, spaces? Why now and not 5 years ago? His answer was: because the basic costs are a lot lower now. The servers, server software, and network bandwidth are cheap enough to give away. Thatâ€™s why people can support bigger communities. Thatâ€™s why businesses give away free online services instead of hiring salespeople. Itâ€™s cheaper.

The cost of making the applications to run on this platform has declined even more. I estimate that my cost of building and launching an application is about 25% of what it was six years ago. Labor is much less expensive because we now shop globally. The productivity of that labor rises continuously as we adopt better tools and processes. We have more open source components to draw on, which has a big impact because studies show that code re-use is the single biggest contributor to increasing developer productivity.

Inside established software companies, lower costs mean higher margins. The margins rise faster if companies take a pro-active approach to moving customers to lower cost software as a service platforms â€“ or as a friend of mine dubs it, â€œlift, shift, and maximizeâ€?. Software investors have some challenges and some opportunities. One opportunity is to look at software as a cash producing business, doing LBOâ€™s, giving up on growth, and paying down debt and dividends with the cash not spent on new sales, marketing, and launch activities. A new generation of entrepreneurs is figuring that out. A challenge for software VCâ€™s is to figure out how to participate in a market with shrinking deal sizes. In theory, that means they can do more deals, and give another bump to innovation.

RAPID INNOVATION

Weâ€™re in the middle of a rapid burst of innovation that I call Wetware. Wetware is open source, globalization, Web 2.0, and user-generated-content. Itâ€™s the smart node in the stupid network. Itâ€™s people working together. Inevitably, they will accomplish great things.

Wetware is a relatively obscure burst of innovation because it is new. We used to follow Hardware. When computers first became big business, we measured innovation by the rate of new hardware introduction. Software was an obscure component. Then came software. We created Mooreâ€™s law for hardware, and software became a more interesting business. We followed platform launches and browser wars and client server and software as a service. Weâ€™re still in that phase. Here comes Wetware. We canâ€™t measure units of human innovation, and we donâ€™t measure the speed of organizational reconfiguration. But we should, and we will. Itâ€™s coming fast.

Max Planck said â€œscience advances one funeral at a time,â€? and so it is with this innovation. Todayâ€™s teenagers live their life in global networks, and spend a lot less time hanging out in parking lots than my contemporaries did. Theyâ€™re going to take over the workforce, one retirement at a time.

Where’s the innovation? Where should we place our bets?

andy — Tue, 23 Aug 2005 14:09:00 +0000

Houston, we have a problem. Innovation in aerospace stalled out and started losing altitude around 1970. Instead of jet packs and vacations on Mars, we have foam falling off the 30-year old space shuttle. Our life today isn’t anything like the twenty-first century life we imagined in 1970, extrapolating from the previous 35 years (1935-1970) of rapid change. It’s clear that innovation has slowed in many areas of industrial technology that are important for our daily lives.

This fact is going to be highlighted in a rumored article from Jonathan Huebner. You have probably already heard about it. Huebner counted major technological innovations, and found that the rate of innovation is declining, and the rate of innovation per person is rapidly declining. By this count, the rate of per-capita innovation peaked in 1873, and has now declined to the level that it was at in 1600.

Many do not agree. Clearly, a lot of discovery, both scientific and technological, is going on in the world. There have been a lot of rebuttals.

I personally believe that innovation is a fractal process. Each burst of innovation is likely to have an S curve of output (a bell curve of innovation rates, as noted by Huebner). So, any given space of innovation is bounded and runs out of steam. However, the bursts can be of any size, and start at unpredictable times. We are certainly coming to the end of the industrial revolution, but we may soon start an evolution revolution. Innovation has dropped off in aerospace, but it’s increasing in biotechnology. We need to keep changing our focus and placing our bets.

Evidence that innovation accelerates and decelerates comes from the oldest record of innovation we have- biological evolution. There was a huge burst of evolution / innovation at the time of the “Cambrian explosion” about 570 million years ago. This then tapered off into a very different kind of incremental evolution.

Whether you believe that the overall rate of innovation is decreasing, the fact that the rate of innovation does decrease and has decreased in many major industries has a practical applications for investors. We’re all investing in technology somehow – through our day job, through our education, or for some of us, through substantial portfolios of financial assets.

If you can figure out what industries will have increasing innovation, you can buy a diversified selection of participants, watch them grow and consolidate, and make a tremendous profit from the winners. If you catch one of the really big, Kondratieff-style, 50-year waves like oil, electricity, or computing, you can surf that wave for a lifetime.

What if we could figure out the difference between industries with increasing returns to innovation, and industries with decreasing returns to innovation? What if there were some essential indicators that would show the direction – increasing productivity driven by innovation, or decreasing productivity in spite of innovation?

I think these indicators exist.

Let’s consider one obvious factor – an increasing or decreasing size of the space of target solutions. You might be working on a problem for which each successful solution reduces the number of possible new solutions. This seems to be the case for drug discovery. There are a limited number of “targets” in a human body, and each time you find one, you reduce the number left. This leads to declining productivity of innovation.

On the other hand, you might be working on a problem for which a successful solution increases the number of possible solutions, or even the number of related problems, each with an increasing number of solutions. This is true if, instead of improving the health or efficiency of an existing system, you are actually constructing new things that have new uses. Each of those new uses opens up new opportunities for innovation. You make a microprocessor chip to go in a calculator, and then someone puts it in a personal computer, a telephone, etc. If you can use the personal computer to design new chips, you get another round of increasing returns.

The size of the solution space controls the return on innovation, even if innovation is rapid. I think of the impact of computing power on video games. The early video games, such as pong and space invaders, were fun. Modern video games have thousands of times more speed, memory, and resolution, and are only a little bit more fun. Computing capacity has diminishing returns if measured in terms of fun. This observation goes a long way toward derailing Ray Kurzweil’s hypothesis that, because computing power is rapidly increasing, we will all one day live in a computer-supported nirvana. That particular technology, no matter how good, has limits of applicability for humans

This is the problem with drug discovery. It doesn’t matter how much innovation gets thrown into the drug discover process. Vast amounts of new technology and ingenuity are being brought to bear. Yet, the drug discovery process gets less productive and more expensive every year.

Looking at biotechnology, we need to separate the dynamics of the inputs from the dynamics of the outputs. The input, biotechnology, is experiencing tremendous innovation, probably with increasing returns. The output, drug discovery, is experiencing little innovation and decreasing returns.

What about software? I think we have reached a point of saturation for most of the kinds of software that I work on. It’s like video games. Most of it is designed to improve the efficiency of humans and businesses, which gives it declining marginal returns. On the other hand, there are sure to be new domains where software essentially interacts with software. For instance, if we can make evolved software (genetic programming) we can apply that process to itself and get increasing returns.

By this measure, drug discovery is a loser. However, biotechnologies which actually construct new things, such as GMO’s, or synthetic biology, are likely to have increasing returns. I’m placing my bets with synthetic biology.

Democratizing Innovation shows how to make big breakthroughs

andy@assembla.com — Tue, 05 Jul 2005 17:43:00 +0000

User innovation, in the form of open source software, is one of the most powerful forces in the software business today. Will this force propel the software industry to yet another phase of bold innovation? Or, will it cripple commercial R&D organizations and lead to a future of stagnant, commoditized software?

In his book Democratizing Innovation (available online), Sloan School professor Eric Von Hippel shows user innovation at work in many industries, including sporting goods, surgical equipment, electronics manufacturing, and the 18th century mines of Cornwall. His finding is that innovations from users are often more lasting and important than innovations from vendors. Hippel finds that while vendors focus on incremental improvements to known capabilities, users are more likely to come up with new capabilities that have important future uses.

Hippel focuses on “lead users” – users with extreme needs that have not yet been encountered by most other users. A lead user might be a surgeon practicing a new technique, a systems administrator under persistent network attack, or a mountain biker exploring new terrain. Lead users are motivated to figure out how to build new things with existing products. And, this book demonstrates, they often have the ability to make substantial progress. A weekend kiteboarder might be an aerospace engineer during the week. A surgeon might be able to raise funding to manufacture new equipment. An electronics manufacturer certainly has the means to make extensive customizations to the equipment it uses on its primary assembly line.

In contrast, vendors doing market research for a new product typically focus on their mainstream users. They make improvements in the speed, size, convenience, availability, usability, and reliability of their products, as typically used. Each iteration of the vendor product is produced largely by the same engineers building the same product for the same customers, but in an improved version. That’s the groove or rut that I see most software companies climbing into.

Vendors also segment their users into just a few categories, hoping to simplify their product planning and production by making a high-quality, one-size-fits-all product. In doing so, they miss what Hippel calls “heterogeneity of need”. Users of a product often have many different needs. In one survey of Apache Web server administrators, Hippel found that there were 92 different security related functions requested, and that there was no clustering or pattern in their requests. Some of those requests come from lead users, but they are hard to identify in the vendors aggregate view.

The most eye-popping statistics in this book come from a study of product development at 3M, where certain product development teams were coached to use a “lead user” method for identifying new product opportunities. They looked at emerging market trends, and then they identified users that were at the leading edge of those trends (the lead users) and went to them for ideas. A different set of product development teams used traditional market research and R&D to design their products. At the end of this study, the traditional teams had generated 41 incremental improvements and 1 major new product line, with forecast annual sales of $18M per product. The “lead user” teams had generated zero incremental improvements and five major new product lines, with forecast annual sales of $146M per product.

The software business has both the motivation and the ability to advance with user innovation. Heterogeneity of need is so high for large enterprise systems that virtually every installation is customized. User communities have leading-edge collaboration techniques, and communities have substantial programming resources that often include vendor capabilities.

Hippel gives us a handy formula for figuring out the build/buy decision. Assuming that either the vendor and the user can build a product or innovation for the same cost, a vendor spending 50% of non-sales expenses on R&D, with a 25% cost of sales, will need to sell 3 copies of a system before making any money. If the market is smaller, users will need to pick up the development task. At a 75% cost of sales, the vendor needs to sell 9 copies. This calculation, along with the variation in needs, starts to explain why, as the cost of selling a new software license has risen to over 75% of revenue, users have shifted resources from packaged systems to building custom systems with offshore and open source building blocks. This shifts resources toward user innovation.

In this situation, software producers must learn to take advantage of user innovation. They can provide toolkits to users (for example, source code), so that users can add more value through innovation. They can share the work of innovation. They can create processes for bringing user modifications back into the mainline product. In short, they can be more like open source communities.

User innovation works well, but is it in the interests of users or vendors to participate in an innovation community? Why reveal and contribute code if it just helps the free riders who don’t contribute? In the open source world, there may be tens of thousands of users for every contributor. What explains the increasing volume of commercial open source contributions? Hippel approaches this question by observing that the “free revealing” of important commercial innovation is widespread in many industries. He cites examples ranging from 18th century mining engineers who started a journal to share advances in steam engine technology, to IBM, which “after a lag” recently revealed its important copper interconnect chipmaking technology to competitors. In most of these cases, free revealing “is the only practical option.” Competitors can reproduce an innovation if they observe it, and patent protection is weak in most fields. Furthermore, individuals (consultants and developers) often have a strong incentive to freely reveal innovations that advance their careers or their personal missions. Free revealing increases the pace of innovation and benefits the mission of the innovator. By controlling the timing and placement of freely revealed innovations, commercial organizations can build up their platforms, their industries, their customer and partner participation, and other types of competitive advantage.

Hippel concludes by observing that user innovation and free revealing lead to enhanced “social welfare”. It can make everyone better off. User innovation is a powerful force that can benefit both users and vendors. This book helps you understand how it works so that you can make it work for you.

This article also appeared in IT Managers Journal.