Archive for September, 2013|Monthly archive page

Cloud computing comes of age

Despite having come of age in just a few short years, not everyone is convinced cloud computing is IT’s silver bullet.

At a recent IT industry event, Apple co-founder Steve Wozniak intimated, “I want to feel that I own things. A lot of people feel, ‘Oh, everything is really on my computer,’ but I say the more we transfer everything onto the web, onto the cloud, the less we’re going to have control over it.”

Others point to possible technical issues.  According to ElectronicDesign.com, the Cloud could be vulnerable to network traffic jams given the anticipated growth of Big Data.  The digital universe is forecasted to double every two years (or approximately 41% per year), with much of this data expected to reside in a cloud.   This growth is significantly faster than the network connections’ bandwidth, which grew just 11% in 2012.

Businesses may unwittingly increase their business risk when they move to the cloud unless they are satisfied with data ownership rights, the conditions by which data can be released (e.g., by government subpoena) and the responsibility for liabilities arising from a third party’s use of the information. Since many cloud players are new, what happens when the critical data is trapped in a company that fails or suffers a major technical failure?

Finally, some companies will have their own challenges around integrating different systems, optimizing internal workflows or reaching target ROI that may make change painful.

Yet for each of these potential pitfalls, there are numerous advantages to using the Cloud Computing. Its ecosystem and technology has matured to the point where it can now transform the way most organizations purchase and use IT resources. Firms that are able to leverage Cloud 2.0 will benefit from a 15-33% reduction in IT costs, as well as faster, more flexible business performance.

A brave, new world

Many companies are beginning to realize earlier concerns related to the Cloud’s security, culture and uptime were exaggerated.  Large amounts of sensitive data have resided in the cloud for years without major security breaches.  Early adopters have worked through the organizational hiccups and established cloud-enabling management systems.  Finally, cloud models have shown they can beat the uptime records of large internal IT systems by a wide margin.

Just as important, cloud vendors are beginning to reap the benefits of billions of dollars in product and infrastructure investment. For example, evolving open standards around security and infrastructure management have allayed security concerns, driven interoperability and lowered switching costs.  The cloud can now support critical and non-critical tasks across the entire organization, whether it is a small business or a global enterprise.

Companies now have proven options to leverage the cloud.  They can choose between: accessing public clouds like Amazon, Microsoft or IBM to quicken time to value and scalability; running their own private clouds to guarantee control and security or; deploying a hybrid public/private cloud model that gives firms the best of both worlds.

Finally, all the pieces needed to deploy a complete technology and service solution by one vendor is now available. As an example, two recent IBM moves — a $2-billion purchase of cloud-service vendor SoftLayer, and the launch of a $200-million Cloud Leadership Data Centre (CLDC) in Barrie, Ont. — enhances the company’s cloud infrastructure, network and security capabilities enabling it to better target growing markets, such as mobile, gaming and analytics. “You only need to look at the accelerated level of investment,” says Aldo Gallone, director of Cloud Computing for IBM Canada, “to know that the Cloud is now mainstream.”

Rebooting growth

A maturing cloud market is expected to lead to higher adoption. Gartner predicts the 2013 worldwide market for cloud computing to grow $18.5 to $131-billion.  A study by 451 Research reported more than 60% of IT leaders expect their year-over-year cloud-enterprise spending to increase in both 2013 and 2014.

Organizations that can work through the remaining hurdles of cloud computing will benefit from Cloud 2.0’s promise of significantly lower IT costs as well as improved business continuity, agility and IT scalability. Those firms that keep their head in the sand run the risk of diminished market performance and financial results.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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Strategic planning with game theory

If they haven’t done so already, many companies will soon head into their 2014 strategy and capital planning season. Whether driven top-down or bottom up, a planning process can be difficult and contentious due to conflicting strategic goals, a lack of data, as well as insufficient resources and time.  Furthermore, managers naturally manoeuver to get their projects funded and existing budgets protected.  Inevitably, there will be winners and losers.  This zero-sum environment can easily lead to strife, and quite often, poor investment decisions.   Fortunately, there is a better way to make these vital decisions.

Planning challenges

Strategic planning in large enterprises is rife with obvious and hidden problems.  Organizational dynamics create inherent punishments and incentives that can lead to spending distortions like ‘empire building’ (asking for more resources than are currently required) or ‘under counting’ (purposely underestimating the true cost or resources needed to get a project started).

There are also issues at the people level.  In 20+ years of executive facilitation, I have regularly seen leaders exhibit stubbornness,  uncooperative behaviour and parochialism. These negative behaviours can make it very difficult to reach a supportive consensus, let alone make the right decisions.  Even if agreement is reached, individuals may consciously or unconsciously undermine the implementation of the plan because they never really bought into the choices in the first place.

Enter game theory

A little while ago, we were engaged by the CEO of a products company to help provide analytical and planning support for his firm’s annual strategy development exercise.  He felt their traditional process was not effectively allocating scare capital to the highest revenue/lowest risk initiatives and getting sufficient buy-in during and coming out of the process.  Moreover, the CEO wanted to avoid win-lose outcomes that inevitably trigger management in-fighting and reduce execution speed.

Early in the engagement, we saw many similarities between the company’s challenges and game theory principles.  Game theory is the use of mathematical modelling of conflict and cooperation between decision-makers. At its core, issues with strategic planning resemble one game, the prisoner’s dilemma.  A prisoner’s dilemma is a situation in which multiple players have options whose outcome depends on the simultaneous choice made by the other; this scenario is often expressed in terms of two prisoners separately deciding whether to confess to a crime based on possible punishments.  In an organizational context, various managers or business groups compete for the same finite pie (read: capital, resources) through different initiatives that have various payoffs and risks. This competitive situation breeds mistrust and a misunderstanding of future cash flows/challenges, often resulting in poor strategic choices and inefficiencies, rather than cooperation and rational decision-making — which maximizes the outcomes for all.

Making it work

To break this behavioural and analytical logjam, we took leaders from across the organization through our Game Theory tool kit.  This process is designed to facilitate better strategic and financial decisions by bringing organizational and business issues into the open; fostering math-driven, rational decision-making and securing alignment around final decisions.  We define alignment as a condition where each leader or division is maximizing his or her own corporate and personal interests while having no unilateral incentive to deviate (or sabotage) the plan, since his or her strategy is the best they can do given what others are doing.

Through a series of workshops, we led management through the following (simplified) approach:

  • Establish the goals of the exercise, choose the internal players and align around the current internal and market state
  • Clarify the strategic options, with estimated payoffs and risks
  • Select the appropriate game(s) to run
  • Model a number of strategic and investment options i.e. have the leaders/ teams play the game with the consultant acting as a neutral facilitator.
  • Align around the “best” decisions

Overlaying game theory methods into the planning process worked well for this client.  Our systematic, logic-based analysis helped the leaders come to rational funding decisions that met long-term corporate and managerial needs.  Using game theory minimized the impact of negative individual and cultural factors, especially in ‘give and take’  situations where management bias and hubris can skew decisions. Finally, the use of computer modelling was essential to performing a thorough analysis of multiple strategic options, easily keeping track of hundreds of different internal and external variables.

Yes, but…

Utilizing game theory is not a slam-dunk.  When poorly understood or executed, game theory can be distracting  and lead to flawed analytical results. Furthermore, these tools require a resource that is comfortable with advanced math, facilitation and modelling.  However, these issues are not deal-breakers.  Our game theory experience with multiple clients proves that there is no better way to tackle complicated strategic decisions, increase “issue” visibility and secure executive alignment.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Lady Gaga, social media queen

The inspiration for this week’s column comes from my daughter.  I was musing out loud about what to write in an upcoming column. While dancing to a YouTube video, she said, “Dad, why don’t you write about Lady Gaga.  She’s cool and all over the Internet.”  It just so happens my daughter was on to something. Much of Lady Gaga’s success can trace to her skill as a digital marketer;  her approach holds many lessons for marketers looking to quickly build strong and compelling brands online.

Lady Gaga exploded from relative obscurity in 2007 to become one of the biggest pop acts in the world, selling millions of songs and performing in front of millions of admirers.   She did it with a combination of talent and showmanship plus an adroit use of social media.  Today, Lady Gaga is an online heavyweight with roughly 19 million Twitter followers and 48 million Facebook followers.  Her total number of YouTube views has exceeded 2 billion.

What is her secret?

Lady Gaga pursues a social media strategy we call “mass intimacy.”   This approach looks to build an emotional connection with fans by leveraging a unique brand identity, regular communications and exclusive, web-friendly content.

Keep it personal

When it comes to her fans, Lady Gaga is anything but a poker face.  She strives to create emotional relationship with her fans.  One way she does this is by telling her “little monsters” (the affectionate name she gives her fans) stories about her life and values, in particular about her challenges growing up. Lady Gaga comes across as candid, approachable and authentic in all interactions. Fans can easily relate to her and be inspired by her.

Embrace your loyal fan base

Lady Gaga prioritizes her devotees and tries to make them feel special.  She typically does not use publicists or canned content, preferring to connect directly and personally by regularly tweeting and replying to tweets. Through all channels, Lady Gaga communicates to fans as if they are part of her team or family (i.e. using the plural “we”) as opposed to them being outsiders (i.e. using the singular “I”).  Finding new online connections is not as important to her as cultivating her existing fan relationships and turning them into ambassadors for her music and message on empowerment, acceptance etc.At the same time, Lady Gaga encourages her “little monsters” to participate in her career.  In one case, she asked her fans to upload videos of them singing and dancing to a newly released song. These clips were compiled, edited and premiered during her performance at a Saturday Night Live season finale.

Regularly offer unique content

Lady Gaga uses social media like the vast majority of her fans:  to update her friends, share her thoughts or ask questions (as opposed to promoting products and bragging about her success). Lady Gaga treats her social media friends better, in many cases, than the media.  Friends often get compelling content not always available elsewhere.  This includes regular news updates, announcements, prizes special features and exclusive interviews, all of which help to prevent the relationship from getting stale. Finally, many of Lady Gaga’s music videos appear tailored for the Web.  Some of her web-only videos are almost nine minutes long (instead of the standard four-minute clips produced for traditional radio and TV).

Align with a cause

Consumers respond positively to brands that care about something more than their commercial interests.  Lady Gaga is a pioneer in linking her social media activity with good causes.  In 2010 she pledged to stop updating her social media platforms until $1 million was raised for Alicia Keys’ ‘Keep a Child Alive’ charity.  In addition, she actively promotes tolerance through publicizing her Born this Way foundation on Facebook and Twitter.

Her strategy

Unlike many artists in the mid 2000s, Lady Gaga quickly embraced the potential of the Internet.  As the brand custodian, she is personally involved in all social media and branding decisions.  Working with an agency, she built an informative and appealing website, habitually engaged fans through MySpace, Facebook and Twitter and communicated her message via 50 interviews with popular online bloggers.  Lady Gaga accelerated her web coverage by forging strategic promotional partnerships with a variety of firms including Starbucks, iTunes, VEVO, HBO and Zing.  Finally, she looks to have all her marketing channels working together through a single brand “voice” and marketing message.

Obviously, Lady Gaga’s experience will be not be relevant for many firms.  However, it does show that employing a winning formula — having a strong brand identity, understanding social media’s key success factors and delivering compelling value — can rapidly propel and differentiate a  new or existing product.  When it comes to social media, Lady Gaga may not have been born this way but she learned quickly.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.