Sunday, 3 January 2016

Connecting Dots (aka Combinatorial Innovation)

I am a big believer in the value of 'connecting the dots'. The work I do for Quirk currently, is doing this from a sales perspective (more on sales creativity in another post).

In my experience (5+ years working in a creative business) any and all kinds of creativity are a function of the brain being able to connect seemingly disparate ideas, methods, and facts, in new and unique ways. And in my mind, innovation is merely a subset of 'creativity'.

There is abundant literature on this topic and how it relates to innovation, specifically, "combinatorial innovation". I have lifted a few ideas from others to bookmark this point.

"Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people. Unfortunately, that’s too rare a commodity. A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem. The broader one’s understanding of the human experience, the better design we will have."
I, Steve: Steve Jobs In His Own Words

James Webb Young, author of the famous book about generating ideas (published 1940!), talks about 2 principles in forming new ideas, which I agree with:
  1. "an idea is nothing more or less than a new combination of old elements"
  2. "bring old elements into new combinations depends largely on the ability to see relationships."
So the relationship between ideas is likely more important than ideas themselves and isolation.

Here, Nancy Andreasen from The Atlantic, nails the success in creativity - namely, connecting some dots that doesnt exist yet. I have first hand experience of this having seen my boss, Rob Stokes, continually and (mostly) correctly predict the market that has lead to our hypergrowth at Quirk for the last 5 years. Having also worked with some of our industry's best creative people, who make their living from exactly this, reaffirms my belief in this:

"Creative people are better at recognizing relationships, making associations and connections, and seeing things in an original way—seeing things that others cannot see. … Having too many ideas can be dangerous. Part of what comes with seeing connections no one else sees is that not all of these connections actually exist."
Secrets of the Creative Brain

Monday, 14 September 2015

Tuesday, 1 September 2015

Apple & the Innovators Dilemma

According to Christensen, to innovate and keep the business healthy over the long term, you almost always need to eat your existing business. Here is Tim Cook's view, which is enlightened and explains much of Apple's continued success:

"Our core philosophy is to never fear cannibalization. If we don't do it, someone else will. We know that iPhone has cannibalized some of our iPod business. That doesn't worry us. We know that iPad will cannibalize some Macs. But that’s not a concern. On iPad in particular, we have the mother of all opportunities because the Windows market is much, much larger than the Mac market. It is clear that it is already cannibalizing some. I still believe the tablet market will be larger than the PC market at some point. You can see by the growth in tablets and pressure on PCs that those lines are beginning to converge."

(Source: Q1 2013 earnings report)

Sunday, 1 February 2015

The Economic Machine | Ray Dalio

Ray Dalio is a giant in the Hedge Fund world. But this isnt a post about the social utility of Hedge Funds nor his place in it. Suffice to say, he has a unique investment philosophy that has built him a fortune of circa $15bn, a very unique company culture around radical transparency, he meditates daily and has Tony Robbins as his business coach.

What I really love is his articulation of macro economics in this 30 minute video. It's simplicity is genius and I think everyone in business should watch it.

Here is my summary:
- he has created an economic framework by which to understand the world of money, what he calls "the template"
- this template has 3 levers: productivity, short term debt cycle and long term debt cycle, which in the long run all have to intersect and be in equilibrium.
- any two people can agree to create credit and all credit is the creation of money
- credit creates debt. It allows greater spending by transferring the saving to consumption. this borrowing is a way of pulling spending forward, ie, borrowing from your future self, which implies less spending in the future.
- productivity matters most in the long run
- credit matters most in the short run
- debt cycles occur in two cycles: 5-8 years andd 75-100 years. these cycles are overspending and then deleveraging to the meet the productivity increases
- credit is bad when it promotes over consumption (spending that cant be paid back)
- credit is good when it promotes investment, ie, buying assets that produce an income
- credit can stimulate income and asset growth, through inflation. people then borrow more. eventually debt repayments exceed income, so they cut spending. this can become deflationary.
- long term debt cycles need a deleveraging people cut spending, incomes fall, credit dries up and borrowers are forced to sell assets as spending falls. markets fall and collateral also falls, making the debt even more painful and increasing the inability to repay such debt.
- in deleveraging  of a long term cycles is problematic because interest rates usually go close to zero therefore inability to stimulate the economy. debt becomes greater than the asset values.  no one wants to borrow anymore.
- 4 ways to deal with this:

  1. spending is cut - people, biz and govt (aka austerity) - this causes income to fall and so the debt burden can become greater
  2. debts are reduced - defaults increase and asset valuations fall further and wealth falls too! debt restructuring occurs which reduces debt.
  3. wealth is redistributed - low income groups need to be supported by more tax dollars. but tax dollars are falling in line with incomes. so usually taxes on the wealthy increase.
  4. central bank prints money and then buys financial assets - govt bonds - so then the central bank lends money to govt which allows the govt to boost spending and people's incomes

- people often mistake credit for money, so when credit dries up, money disappears.
- policy makers need to balance the 4 ways to rebalance the economy - a "beautiful deleveraging"
- and to fix things, policymakers need to ensure income growth is greater than debt growth


Friday, 2 January 2015

Peter Thiel | coordination costs and red flags

This was a lecture given by Peter Thiel at Stanford. (Disclosure: I am a huge fan.)

Cant agree more. I have experienced the internal coordination diseconomies first hand at two businesses I have worked in.

"Companies exist because they optimally address internal and external coordination costs [Ed: economies of scale]. In general, as an entity grows, so do its internal coordination costs. But its external coordination costs fall…

Size and internal vs. external coordination costs matter a lot. North of 100 people in a company, employees don’t all know each other. Politics become important. Incentives change. Signaling that work is being done may become more important than actually doing work [Ed: even having to update multiple stakeholders often is inertia. Then add the politics and it's a receipe for decline].

These costs are almost always underestimated. Yet they are so prevalent that professional investors should and do seriously reconsider before investing in companies that have more than one office.

Severe coordination problems may stem from something as seemingly trivial or innocuous as a company having a multi-floor office. Hiring consultants and trying to outsource key development projects are, for similar reasons, serious red flags [Ed: This is a sure sign that the company is racing to the bottom. Get out]."

These lectures lead to Thiel's book, "Zero to One" which I recommend.

Monday, 24 November 2014

The Slope of Enlightenment

Recently I have spoken to some well know marketers and none of them knew what the "Garnter Hype Cycle" was. So here is the latest for the digital marketing.

Essentially, it is a framework where Gartner maps out all the latest technologies against the current hype and their level of adoption. It's famous in the ICT space - we referred to it all the time when talking to our clients at Internet Solutions - and I suspect it would bevery useful for marketers as we increasingly take CIO budgets into CMO budgets.

The idea behind it is that technologies usually take a while to become useful, or as Gartner puts it, "productive". As agencies, we want to be riding the wave up the "Slope of Enlightenment" in delivering services and technology for our clients. As marketers, this is a nice way to map our strategies for customer touch points.

Source: Gartner, 2014 - Digital Marketing.

Sunday, 21 September 2014

Vacliv Smil | atoms to bits?

This gave me a great deal of food for thought. It is assumed thinking these days that there is a great dematerialisation of economy activity, often cited as "atoms to bits". But maybe we should relook at our assumptions...

In his latest book, Making the Modern World, he cites computer-aided design. The Boeing 747, designed in the 1960s, required 75,000 drawings with a total weight of eight tonnes. Using CAD for the 767 in the 1990s did away with all that paper, and cut costs and design time. However, as Prof Smil points out, the CAD system required computers, data storage, communications, screens and electricity to run it. Given the complexity of the systems involved, it is far from obvious that the switch to CAD cut US use of materials overall.


Sunday, 14 September 2014

Peter Thiel | funding startups insight

- substance over process in funding decision making. in other words, dont follow investing frameworks blindly
- 3 key ingredients to understand 1. team, 2. technology & 3. biz strategy 

Sunday, 17 August 2014

Dare to Disagree [Antidotes to Willful Blindness]

I loved this talk by Margaret Heffernan:

It seems "willful blindless" is a human condition, ie, it is not a function of intelligence, upbringing or culture. Specifically, most people are hard wired to be obedient, and we know from bystander theory that the more people who see something going wrong, the less likely someone is to intervene. 

In her research, over 85-percent of people surveyed at companies claim they are either afraid to speak up or believe it is futile. So is the job of the leader to create conditions in which the smart employees are willing and able to speak up if they see something wrong? I think so. If we do this, we have lower the chance of making life threatening business decisions.

Some of her suggested antidotes to willful blindness:

  1. Hire for real diversity, not just political correctness. Bias has a biological basis. Our brains prefer information and people that are familiar. We are confident in people who are like us; they confirm us and our beliefs, but what we really need is people who are different than us with different thinking styles and backgrounds.
  2. Humility: Leadership that is humble and confident enough to listen those who speak out intelligentally.
  3. Curiosity: In execution mode, we develop tunnel vision, especially if we are surrounding by people who think like us. We also need curious people – people whose minds wander and whose brains are supple.
  4. Nurture safe environments to allow people to ask hard questions and enable structured debate around answering those.

Tuesday, 20 May 2014

Insight: leaked NYT Innovation Report

So the management commissioned a team to look at innovation, specifically around "new media", at the New York Times. This report leaked and Nieman Journalism Lab has pulled out the key parts.

Here are some of the insights I found most interesting:

- "When it takes 20 months to build one thing, your skill set becomes less about innovation and more about navigating bureaucracy."

- The value of the homepage is decreasing. “Only a third of our readers ever visit it. And those who do visit are spending less time: page views and minutes spent per reader dropped by double-digit percentages last year.”

- Newsroom needs to get involved in the business side. No longer can journalists not be involved in pushing the product: "at The Times, discovery, promotion and engagement have been pushed to the margins, typically left to our business-side colleagues or handed to small teams... [the] newsroom needs to claim its seat at the table because packaging, promoting and sharing our journalism requires editorial oversight.”

- Need to approach the "new media" as software developers; build tools that scale: “We have a tendency to pour resources into big one-time projects and work through the one-time fixes needed to create them and overlook the less glamorous work of creating tools, templates and permanent fixes that cumulatively can have a bigger impact by saving our digital journalists time and elevating the whole report. We greatly undervalue replicability.” They point out that competitors like Vox and BuzzFeed view innovating with their platforms as a key function and allow them to create products like BuzzFeed’s quizzes — incredibly popular, but also easy to create over and over again.

- Need a stronger "big data" approach: “Without better tagging, we are hamstrung in our ability to allow readers to follow developing stories, discover nearby restaurants that we have reviewed or even have our photos show up on search engines.” And, "“Just adding structured data, for example, immediately increased traffic to our recipes from search engines by 52 percent."

- This is just dumb. so easy to fix: "Overall, less than 10 percent of Times traffic comes from social, compared to 60 percent at BuzzFeed."

- Comments sections suck: “Only one percent of readers write comments and only three percent of readers read comments. Our trusted-commenter system, which we hoped would increase engagement, includes just a few hundred readers.”

- Live events for media companies can be big, Atlantic's was cited: “There is no reason that the space filled by TED Talks, with tickets costing $7,500, could not have been created by the Times. ‘One of our biggest concerns is that someone like The Times will start a real conference program,’ said a TED executive.”

- The age old creative and business dont mix: ‘Everyone is a little paranoid about being seen as too close to the business side.’

- Innovators Dilemma en route. The people with power and vested interests in the past kill innovation: In the triangle of business side, Reader Experience, and newsroom, the newsroom is often seen as defensive or risk averse. “One reason for our caution is that the newsroom tends to view questions through the lens of worst-case scenarios,” the report puts it. “And the newsroom has historically reacted defensively by watering down or blocking changes, prompting a phrase that echoes almost daily around the business side: ‘The newsroom would never allow that.’”

- Trying to find the innovators solution... The big question: How can the Times become more digital while still maintaining a print presence, and what has to change? “That means aggressively questioning many of our print-based traditions and their demands on our time, and determining which can be abandoned to free up resources for digital work.”

Wednesday, 18 December 2013

9 Contradictory Traits of Creative People

One of my favourite books is Mihaly's book on Creativity.

I read this again the other day on the web and lifted it for reference. As a business guy trying to build business models around creativity, I often hit a dead end just as I think I have cracked it. That's because of the deep paradox that exits in great creative output. Mihaly describes 9 contradictory traits that are frequently present in creative people:

1. Most creative people have a great deal of physical energy, but are often quiet and at rest. They can work long hours at great concentration.

2. Most creative people tend to be smart and naive at the same time. “It involves fluency, or the ability to generate a great quantity of ideas; flexibility, or the ability to switch from one perspective to another; and originality in picking unusual associations of ideas. These are the dimensions of thinking that most creativity tests measure, and that most creativity workshops try to enhance.”

3. Most creative people combine both playfulness and productivity, which can sometimes mean both responsibility and irresponsibility. “Despite the carefree air that many creative people affect, most of them work late into the night and persist when less driven individuals would not.” Usually this perseverance occurs at the expense of other responsibilities, or other people.

4. Most creative people alternate fluently between imagination and fantasy, and a rooted sense of reality. In both art and science, movement forward involves a leap of imagination, a leap into a world that is different from our present. Interestingly, this visionary imagination works in conjunction with a hyperawareness of reality. Attention to real details allows a creative person to imagine ways to improve them.

5. Most creative people tend to be both introverted and extroverted. Many people tend toward one extreme or the other, but highly creative people are a balance of both simultaneously.

6. Most creative people are genuinely humble and display a strong sense of pride at the same time.

7. Most creative people are both rebellious and conservative. “It is impossible to be creative without having first internalized an area of culture. So it’s difficult to see how a person can be creative without being both traditional and conservative and at the same time rebellious and iconoclastic.”

8. Most creative people are very passionate about their work, but remain extremely objective about it as well. They are able to admit when something they have made is not very good.

9. Most creative people’s openness and sensitivity exposes them to a large amount of suffering and pain, but joy and life in the midst of that suffering. “Perhaps the most important quality, the one that is most consistently present in all creative individuals, is the ability to enjoy the process of creation for its own sake. Without this trait, poets would give up striving for perfection and would write commercial jingles, economists would work for banks where they would earn at least twice as much as they do at universities, and physicists would stop doing basic research and join industrial laboratories where the conditions are better and the expectations more predictable.”

Tuesday, 5 November 2013

Think Different

The "Think Different" Campaign (1997), marked the return of Steve Jobs to Apple and is my favourite Ad campaign of all time. (Which, interestingly, only received a Silver at the Clios!?)

Fascinating behind the scenes take on this campaign by Rob Stiltanen, part of Lee Clow's creative team who put together this campaign for Apple while at Chiat/Day: I love how Jobs initially thought the script was "shit". He is descrived as a mix of "Michelangelo, Mies van der Rohe and Henry Ford—with some John McEnroe and Machiavelli thrown in".

"Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. 
And they have no respect for the status quo.

You can praise them, disagree with them, quote them, disbelieve them, glorify or vilify them. About the only thing you can’t do is ignore them.

Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.

Maybe they have to be crazy. How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels? While some see them as the crazy ones, we see genius.

Because the people who are crazy enough to think they can change the world, are the ones who do."

Wednesday, 25 September 2013

Strategies vs. Taktika

love this. cant remember where I read it unfortunately:

"You can’t have strategy without tactics… if you do it’s called dreaming. You can’t have tactics without strategy… if you do it’s called chaos."

Friday, 16 August 2013

trading analogue dollars for digital pennies

Well put, Economist:

Hollywood loathed the VCR (comparing it to the Boston Strangler); the networks hated cable TV; sheet-music publishers feared the phonograph; Socrates was sceptical about writing (not interactive enough, apparently). Yet nearly always two things happen: the old media survive (people are still buying vinyl records and even the odd printed magazine), and the new media expand the market.

Sunday, 30 June 2013

Ad Peacocking: The Waste can be Good

I love this research about human irrationality.

Ad Peackcocking, or more euphemistically, showing your "Brand Fitness" takes its cues from the "handicap principle" in biology whereby animals use wasteful movement and appearance to show biological superiority. 

From a marketing point of view, Ad Peackocking ("wasteful" ad spend) appears to embue trust (the product is safe) and dominance (the product is popular). The dominance provides a short-cut heauristic for popularity and, "how can everyone be wrong? it must be good" halo effect. Yet another example of the behavioural sciences holding the key to the economic kingdom. 

Of course, it still reamins very difficult to convince the C-Suite about this kind of thing. Multi Channel Attribution and Multiple Touchpoints do not fit into the excel cell titled "Total". It forces them to have faith and patience which is diametrically opposed to the very short-term requirements of shareholders. I wear both hats and I know the answer isnt easy. But shareholder short-termism is for another post.

Thursday, 21 March 2013

Longer walks & Elevator mirrors

I love this. Kill people's perception of waiting and eliminate frustration. Humans are strange creatures indeed. Obviously applicable to web design....

Why Waiting Is Torture | NYT

Passengers were lodging an inordinate number of complaints about the long waits at baggage claim...

So the airport decided on a new approach: instead of reducing wait times, it moved the arrival gates away from the main terminal and routed bags to the outermost carousel. Passengers now had to walk six times longer to get their bags. Complaints dropped to near zero.

Sunday, 11 November 2012

Work-Life Balance is Bullshit

I agree with Alain.

The concept of work-life balance is a false dichotomy.

First, it presumes that work is in opposition to life.  It is assumes that the problem is binary - it's not.  The fact is that work is a fundamental part of life; who we are and what we do both define us, sometimes with good and bad results.  Work-life balance is not a state.  It is a fluid goal and while the pursuit of it is great, it doesn't really exist. Strive to add other parts to your life to "balance" the work part but don't kill yourself when you don't get this ephemeral balance. I worry that people berate themselves for never having balance, which is another kind of stress, guilt, equally bad as high work stress. so my view: pursue it, but don't fixate on the state.

Second, long hours are not necessarily a problem.  Some people get enjoyment working long hours: "work is more fun, than fun", said Noel Coward. It all depends on the person's frame of reference too. do you have kids? 50+ hours is likely dumb. but I for one (with no kids - yet) love working long hours in my current job. it is where I get most of my "Flow" (Csikszentmihalyi). and this makes sense, because achievement is high on the list of what makes most people happy. I find mine in the job that I do. so we need to be careful: long hours are not *necessarily* bad.

And Orson sums it up beautifully here: 
"The two things arent separated in my mind...  Work is an expression of life"

"The heights by great men reached and kept
Were not attained by sudden flight,
But they, while their companions slept,
Were toiling upward in the night."

- Longfellow

“If you find a job you really love, you’ll never work again"

"It's about work- life harmony"
- Bezos

Wednesday, 7 November 2012

CMO Budgets: Classical vs. Digital

Sure, the data is a little old (2010), but interesting to see how the all the splits are morphing...

Sunday, 4 November 2012

McLuhan vs. Shirky

An Anthropologically very powerful message, especially for people in the marketing and sales space.  McLuhan was the first to say it, Shirky the first to relate it to The Internet.



Saturday, 3 November 2012

Viva Long Copy | IBM's 4 Page Ad

I love this ad.

IBM publishes a celebratory 2,592-word four-page ad. The ad was featured for one day in U.S. issues of the Wall Street Journal, New York Times and Washington Post and now is accessible only online.

add in pdf format here:

I particularly love the message: long term business thinking counts.  I like the stark contrast to teh increasingly loud Schumpeterian Gale - destruction of large companies, highlighted by the IBM ad.

"Nearly all the companies our grandparents admired have disappeared. Of the top 25 industrial corporations in the United States in 1900, only two remained on that list at the start of the 1960s. And of the top 25 companies on the Fortune 500 in 1961, only six remain there today"

Wednesday, 31 October 2012

Hegarty on Advertising

Quotes from the book:
- creativity is not an occupation, it is a preoccupation
- ideas are the most egalitarian thing we do. They can be done by anyone at anytime
- advertising: putting one culture against the other, seeing radical, innovative ideas sublimate convention
- on ideas: the more you process it, like food, the blander it gets

Sunday, 28 October 2012

Too Busy to Meditate

Most well read business executives at least appreciate the benefits of meditation - the art of being mindful and present.  Many of us want to meditate or learn to do so, but it is always for tomorrow's to-do list.  It really is hard to justify.  But HBR justifies it by saying it makes you more productive.  This got me listening.

What really seems to have convinced me was this section:

Research shows that an ability to resist urges will improve your relationships, increase your dependability, and raise your performance. If you can resist your urges, you can make better, more thoughtful decisions. You can be more intentional about what you say and how you say it. You can think about the outcome of your actions before following through on them.

Friday, 12 October 2012

Buying Adwords & Crowdsourcing your Book Title

I really dont rate the book (The 4-Hour Work Week), but I really love this case study.  I was chatting to someone the other day and they hadnt heard of it, so I have decided to lay it down for people's reference.

So the idea kicked off when Wal-Mart vetoed his original title: ‘Drug Dealing for Fun and Profit’ because it was too contentious.

Tim Ferris took 6 prospective titles for his first book, 3 of which were:

  • 'Broadband and White Sand', 
  • 'Millionaire Chameleon' 
  • 'The 4-Hour Workweek'

He then setup a Google Adwords account, bidding on "keywords" related to the book's content including '401k' and 'language learning': when those keywords formed part of someone's search on Google the prospective title popped up as a headline and the advertisement text would be the subtitle. 

Ferriss was interested to see which of the sponsored links would be clicked on most, knowing that he needed his title to compete with over 200k books published in the US each year. Within one week and for less than $200 he knew that "The 4-Hour Workweek" had the best click-through rate by far and he went with that title.

Lastly, Ferris decided to test various covers by printing them on high quality paper and placing them on existing similar sized books in the new non-fiction rack at Borders, Palo Alto. He sat with a coffee and observed, learning which cover really was most appealing.

Monday, 10 September 2012

IP: Intellectual Property or Insider Privilege?

With the recent Apple over Samsung patent win, a debate ensued between Khaya and myself about Intellectual Property rights.  He was defending patent laws (Apple) and I, not (ostensibly supporting Samsung, Android, et. al., but in reality, not).

What I think was missed (and where twitter fails), was conveying the nuanced and complex.  I am a big Apple fan.  I love that aesthetic and beauty has become central to technology and Apple deserves kudos for that.  But do they deserve a payout based on ideas?  I would argue, no.

The reason I dont like the judgement is twofold:
1. Apple "borrowed" much of their early technologies from other inventors.  The mouse and the GUI (graphical user interface) were taken from PARC (Palo Alto Research Centre), owned by Xerox.  But this was just the start of lengthy borrowing spree.  For the iPod, Apple used the mp3 format to deliver its songs.  For its operating system OSX, it uses a unix kernel.  I could go on.
2. The fact is, the PC and The Internet boom were built on the back of "open source" ideas - programming languages and networking protocols like UNIX, HTML and TCP/IP.  Ideas that could have easily been patented but if they had been, I would argue, would have killed Personal Computing and the world wide web before they even got started.

But the best person to unpack this complex and nuanced debate is Russell Lamberti.  A young, formidable and increasingly influential South African economist.

(Bold mine, for the "attention challenged".)

IP: Intellectual Property or Insider Privilege?

By Russell Lamberti

Last week a US court ruled that Samsung Electronics had to pay $1 billion to Apple Inc. for patent infringement. Samsung made a cool $6 billion profit in the 2nd quarter of 2012 on revenue of nearly $50 billion, so $1 billion, in the final analysis, is pretty manageable.  But that’s not the point.  The Apple-Samsung patent war, which – sadly – is probably far from over, raises once again the broader question over the basic efficacy and legitimacy of intellectual property law.  Is patent and copyright protection socially beneficial?  Is it even legitimate property right?  Although this is a divisive issue, most people regard intellectual property rights, specifically patent and copyright, as legitimate property rights.  Most people are wrong, and below I’ll show why.


Intellectual property rights are a suite of privileges granted by the state to successful applicants trying to secure patent, copyright, trademark or trade secret protection.  In the case of patents and copyright, people are essentially granted property rights over ideas or patterns of ideas.  Patents for example grant an inventor a limited monopoly on the manufacture, use and sale of his invention or process.  Copyright is granted to creators of “original” works and grants exclusive right to the creator to reproduce, sell, and perform those works publicly.

The supposed legitimacy of patents and copyright in IP policy discourse essentially rests on two core pillars:

  1. that creation is sufficient basis for property rights, and
  2. that higher levels of investment (time and resources) in innovative and creative processes can be achieved if innovators/creators are granted the opportunity to earn exclusive monopoly profits for a period of time.

It is relatively easy to demonstrate that proposition 1 is logically false.  If I break into my neighbour’s garage, steal some items belonging to him, and fashion a product from those items, is the product I created my property?  Of course not – once caught I would immediately have my creation confiscated and the component parts returned to my neighbor.  Creation is clearly therefore not a sufficient condition for property ownership.  Moreover, creation is also not anecessary condition for property ownership since property – say, land – can come to be owned by acquisition in voluntary exchange (gift or purchase) or by first possession (original homesteading).

‘Property rights’ granted exclusively on the basis of creation are therefore illegitimate.

What then is the correct basis for determining property rights?  To get to an answer to this we must ask another question: why do any property rights exist at all?  Asked in another way, what purpose do property rights serve for mankind?  It is clear that property rights exist first and foremost to eliminate conflict over scarce resources.  There is no property right over the air we breathe since practically it is non-scarce.  In contrast there are property rights in physical resources since these are scarce.  If there was no scarcity, i.e. all the finished consumer goods and services humans could possibly desire were infinitely supplied and appropriated for use at zero marginal cost or effort, there would not only be no need for property rights but no ‘economic problem’ at all.

Therefore, the raison d’etre for any right to property is scarcity.

Without scarcity there is no need for a property right.

Therefore, since the ‘creation’ of an idea is an inadequate basis solely on which to establish property rights in ideas, proponents of intellectual property rights must somehow show that, at the very least, ideas are economically scarce goods.  However, ideas are clearly non-scarce.  One person’s idea can be adopted by another person without the first person’s use of the idea being affected in any way.  While my use of certain physical resources necessarily excludes someone else from using those very same resources, ideas or patterns of ideas are not subject to this same constraint.

If creation is neither a necessary nor sufficient basis for property rights, and if ideas are non-scarce, then intellectual property rights, particularly those embodied in patents and copyright, are nothing more than illegitimate monopoly privileges granted arbitrarily by the state.

Sensing this inherent problem, many IP rights advocates revert to the utilitarian argument of core pillar number 2 which essentially states that: "more innovation is better, and IP rights lead to more innovation".  Although this is one of the most popular defenses of a regime of intellectual property rights, it fails miserably on a number of levels.

1. The first is empirical:  There is scant evidence to show that rates of innovation are higher under IP regimes.  In fact, most studies are either inconclusive or show that IP laws actually hinder innovation.  See hereherehereherehere, and here.

2. Cost-Benefit Analysis: There is also very little understanding of the human and financial capital costs of creating, maintaining, administering and enforcing the patent and copyright system.  How much money and man hours is spent on litigation, fines, licensing fees, legal experts and filing patents and copyrights with patent and copyright offices?  These ‘direct costs’ are seldom considered by utilitarian IP supporters, let alone measured in a rigorous cost-benefit analysis.

3. Progress in Industries without IP Protection: The utilitarian argument also fails to explain how and why innovation took place prior to the advent of modern IP law and how some industries, most notably the fashion industry, remain highly innovative, dynamic and profitable with almost no meaningful IP protection.

4. Non-Protected Rewards from Innovation: The utilitarian viewpoint also grossly underestimates, if not ignores outright, the ability of innovators to reap handsome rewards from their innovations without IP protection by being first to market, using secret, hard to replicate formulas, innovative branding strategies, and the erection of other legitimate barriers to entry such as signing long term service contracts with clients or creating spin-off products that are exclusively compatible or highly complementary (ironically as Apple Inc. has done).  Such rewards can be, and have historically been in certain instances, substantial.

5. Giant Leaps vs. Incremental Innovation: In addition, the utilitarian argument ignores the ability of innovative processes to proceed along an incremental path as opposed to a process that proceeds in large leaps forward every few years.  The assumption of pro-IP utilitarians is that inventors need to commit enormous resources and effort into research and development and therefore require the potential to earn protected, exclusive monopoly rewards.  But in a non-IP world in which information and ideas are replicable and easily assimilated at much lower cost into existing R&D efforts, it is entirely conceivable, indeed likely, that innovation would proceed on a far more incremental, fluid, and, importantly, lower cost basis, requiring lower rewards in the market place to clear investment return hurdles.

6. Malinvestment or Overinvestment: Finally, this line of thinking assumes falsely that more R&D, invention and creation is necessarily better.  Austrian business cycle theory has shown that when certain market prices are artificially distorted for any meaningful period of time, serious ‘malinvestments’ can occur, leading to widespread entrepreneurial error that must eventually result in a painful bust and reallocation of productive resources to the production of goods and services most desired by consumers.  More R&D, if it is the result of price incentives that would not necessarily have arisen in a free market (i.e. arising from state-granted IP rights), and especially once it finds expression in actual physical capital investment, can be economically harmful and set in motion distortive forces within an economy that ultimately reduces or hampers overall subjective welfare.

Even if we were to concede for the sake of argument that there was merit in the utilitarian view, the IP rights advocate would still have to concede that in order to achieve such utilitarian ends a society would need to abandon the fundamental basis of property rights and require the state to enforce and uphold special privileged monopoly rights.  It is strange therefore that many libertarians support the enforcing and protection of intellectual property rights, particularly in respect of patents and copyright, which require strong subversion of legitimate principles of property rights and a high degree of state intervention.

But this is not all.  The following are even more reasons why we need to ditch intellectual property rights, especially as they are embodied in patents and copyright:

1. Legally arbitrary: Legal purists should shudder at the thought of IP law regimes.  The legislation and regulation governing patents and copyrights is entirely arbitrary.  Why is copyright protected for 21 years and not 14 years, or 14 months?  Who decides and on what sound juridicial basis?  What constitutes something original?  Isn’t everything a remix?  Is it the first to file a patent or the first to invent?  How do you prove the latter beyond reasonable doubt?  What is ‘enough’ time to be allowed to profit exclusively from an invention?  What if someone else independently invents something already patented?  The sore truth is that IP advocates cannot answer these questions with any legal rigour.  The reason they cannot is that patents and copyright are bogus legal constructs.

2. Diminishes Real Property Rights: It gets worse.  By granting illegitimate property rights in non-scarce things (ideas or patterns of ideas), the state grants patent holders, for example, the right to effectively take control over other people’s physical, scarce property.  How?  By allowing a patent holder the right to prevent others from copying his product ideas by using their own physical property, IP rights create a perverse unnatural extension of coercive property rights over the physical property of others.  We can safely say therefore, that IP rights are not only illegitimate property rights in and of themselves, but they actually diminish true property rights within society.

3. Creates New Pseudo-Property Rights: The granting of pseudo-rights in the case of most intellectual property law begets yet more pseudo-rights.  Patents and copyright for example imply the right to some future commercial value derived from inventions/creations, but since commercial market value is determined by subjective valuations of customers, this right would have to imply control over other people’s value judgments which is entirely erroneous.  Asserting a right to future commercial value purely on the basis of creation runs into the fallacy of the communist labour theory of value by suggesting that the mere act of work or labour establishes value.

4. Retards Economic Progress by Creating Artificial Scarcity: The very essence of economic progress is the elimination of scarcity through an ever greater division of labour.  Since human needs and wants are practically unlimited, the elimination (or near-elimination to be precise) of scarcity in some goods allows us to channel time, effort and resources into meeting new, previously unmet needs, allowing us to live a more pleasurable existence.  This process entails bringing to bear non-scarce knowledge onto scarce resources in order to arrange those resources in such a way as to achieve the highest valued ends in the most efficient ways.  Without non-scarce knowledge resource use would be highly myopic and inefficient and the division of labour would scarcely be possible.  The non-scarcity of ideas is the ONLY reason we are able to achieve any degree of prosperity in our natural, causal world of real resource scarcity.  IP rights are therefore nothing more than an attempt to artificially establish scarcity where it does not naturally exist.  This can only retard economic progress.
Apple Inc.’s ‘victory’ over Samsung Electronics last week is really a victory for illegitimate state-granted monopoly privilege over dynamic competitive enterprise.  There is neither a sound ethical, legal, economic, or utilitarian basis for upholding a patent and copyright system.

Copying isn’t theft.

The world is worse off for the system of intellectual privilege that may directly benefit a privileged few in the short run, but unambiguously harms us all in the long run.

Monday, 20 August 2012

Twitter: Why I might not follow you back

It can hurt if you follow someone on twitter and they dont follow you back.  Certainly if you know them.

Often I torment over whether I should follow someone when they follow me.  Sometimes I will err on giving them a temporary follow but reserve the right to unfollow them later if their twitter stream (what they tweet) is noisy or not interesting to me.  One often feels compelled to do the decent thing and reciprocate with a follow.  In the early days of twitter it used to be good manners to follow back, especially as we felt kindred being early adopters of this strange service.  Now, not so much.

The problem is, twitter is only useful if the content is interesting to you.  And I personally get diminishing marginal utility on anything past 250 follows (people I follow).  Past this number it becomes too noisy.

So this gets me onto the point of this post: Just because I dont follow you, doesnt mean i dont like you.  Hell, I may even love and adore you.  in person.  on twitter, not so much.  So please do not take offense.

So what are the reasons I dont follow people on twitter:

  1. What you have to say on twitter is not of interest to me.  This doesnt mean you dont have valuable things to say.  Likely you do, just not to me.
  2. You dont tweet content, only conversation.  I'm not into conversing on twitter.  it is the wrong medium for this type of communication in my opinion
  3. You are only a voyeur, not a participant.  That is fine, but clearly there is no point following you
  4. You tweet too much.  This would make my twitter stream too noisy if I were to follow you.  Very few people get away with this.  Kaya Dlanga is the very rare exception.  He has taken on the role of a social commentator and seemingly speaks for an important demographic of South Africa.  Be warned, you are unlikely to be successful doing this.
  5. You self promote.  This used to work in the early day of twitter.  The humblebrag was par for the course back then.  Now, not so much.
Any other reasons?  Please let me know and I will add them if I agree.

Thursday, 28 June 2012

CMO's to spend more on tech than CIO's

“By 2017, the CMO will spend more on IT than the CIO,” Gartner.

This will sound amazing to people outside the digital marketing sector, but for those of us inside, it is obvious.  It is what has been pushing revenue growth in the sector for the last 5 years and likely will continue to keep those growth rates double digit for the next 5 years.

There is a great piece done by Razorfish that explains this shift in detail.  

In summary it is happening because of three powerful technology trends that will eventually transform every business: 
  1. "big data" - as customer interactions increasingly become digitised and accumulate exponentially, companies find themselves sitting on massive, potentially valuable, data mines.  the challenge is finding the gold.  much easier said than done. 
  2. "cloud computing" (aka ubiquitous computing) - Ostensibly this is about all of our devices (laptops through to TVs) being tethered to a central repository, stored in "The Cloud" (internet), of our information and files.  It is really a story about the mobile device, however.  The mobile device is radically transforming the way we interact with our customers.  the story is far from complete, but for now just think of how many times you interact with your mobile device each day.  research varies from almost 40 to over 100 times every day.  in marketing, this what is known a "touch point" and in yesteryear it was thought that three touch points lead to sale.  now it is likely more with the torrent of information that confronts us but even if it is double that, the potential to reach customers and *engage* them is significantly greater and the potential ROI significantly higher.  Certainly much more intimate than the shotgun broadcast messaging of classical advertising.  And herein lies the rub of shifting marketing budgets from classical to digital marketing.
  3. "realtime customer data" - allowing businesses to make revenue and cost decisions today, rather than the traditional quarterly strategic change or monthly operational shifts.  interactions now provide deep insights in the digitally savvy organisation.  Amazon looks at over 500 customer metrics daily.  And Amazon is not alone.
All of these trends have been building momentum for many years, but are now becoming hot topics in the mainstream.  (Incidentally, this shift budget is one of the main reasons I felt comfortable moving from the network and data centre sector to marketing.)  Technology's primary focus is no longer about risk mitigation (traditionally the chief role of a CIO), but rather about taking calculated market risks, based on insights, to improve business performance.  Marketers and CIO's who dont get this, will lose their jobs.  CEO's who dont get this will eventually lose their businesses.

Thursday, 10 May 2012

The Science of Successful Teamwork: Communication

High performance teamwork has very little to do with their performance track record.  According to this piece, it is all about the volume of communication and the variety of which.  The non-verbal communications being extremely important too.  In my experience, I think this is true and it's important to have the data that supports it:

According to our data, it's as true for humans as for bees: How we communicate turns out to be the most important predictor of team success, and as important as all other factors combined, including intelligence, personality, skill, and content of discussions. The old adage that it's not what you say, but how you say it, turns out to be mathematically correct.
The Hard Science of Teamwork
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