Fabian Schonholz’s Blog

How does innovation happen? Not just in technology, but in general. I think that the question can be answered easily with the next three statements:

• Necessity is the mother of all inventions. We create it because there is a need.
• Build a better mouse trap. Paraphrasing Einstein: “I stand on the shoulders of giants”
• This is such a great idea! Somebody comes up with a completely novel idea, and as such, with a complete new problem to solve.

These statements however, deal with concepts in the abstract, and while some form of these happen in real life — we see them all the time: the internet, flip cap toothpaste tops and velcro — they do not directly deal with how to grow market share and revenue through innovation.

At some point in their life, companies experience a plateau in innovation. The idea mill dries up and nothing new comes out. This is not readily apparent as companies may be putting out new products, most of which will be leveraging existing ones, but not “creating” new ones. While I think this is not only a smart approach to “new” product development, but a MUST, regardless of the innovation problem, this approach has a limited life. You can not repurpose existing products forever without the introduction of new ones. It is similar to inbreeding. The reason I support repurposing existing products by morphing them, or combining a few of them together, is because this not only extends the shelf life of each product with the positive financial ramifications that the extension mean, but also, because it extends an ecosystem which users are familiar with and provides a launching board for new products that either extend the existing products, further complements them or completely changes them.

If the idea mill is dry, it needs to be wetted again. There are different ways to “wet” the idea mill and all include getting new blood. Probably the fastest is to acquire new companies, start-ups in particular, as they present either brand new technologies or better mouse traps. And yes, in some cases even new ideas altogether. The advantage of acquiring another company is that the “new” idea and the “new” product are developed, have some level of market traction and by it, an apparent lower barrier to entry. What remains is integrating into the existing product suite. This is easier said than done.

In some cases, a company is acquired not for the product, but for the people. The idea in general may not have much weight in the market, but the employees bring a tremendous potential and this is also a smart move, a possible good investment.

Another way to bring new blood is to hire new people. Yes, companies hire as a matter of course, but it is to increase throughput in existing projects or to alleviate resource constraints. The regular hiring process is not intended to rock the boat, but rather to steady the boat. This practice, in a way, contributes to the idea mill drying up. So, in the case of hiring new blood, some hand-picked hires MUST be chartered with rocking the boat and shaking things up. However, if you hire somebody in that capacity too soon, you risk tearing the organization apart. I have seen it happened and it is not pretty.

There are two cases I would like to explore: Google and Yahoo! (we could also look at Amazon, Microsoft, Apple and others, but for the sake of clarity let’s just look at these two.) Both companies have had a similar start and in a way, have had the same corporate development path. Before I go into it, I just want to also say that the following words are based on my observations as an outsider to both companies and as such are just my opinion (I wanted to say something else, but I am hardly self defacing )

It is not clear to me if Google is in a situation where the idea mill has dried up. On the one hand the indicators are there: acquiring companies and (based on rumors) copying other companies. On the other, acquiring these companies may be just part of expanding market share and protecting itself - the YouTube acquisition comes to mind - and for all we know, the gPhone and opening up the API set were part of the plan all along. More specifically about opening up the API set: Although the timing makes it seem as a response to Facebook, I have more faith in Google than that. I suspect the plan might have been accelerated due to Facebook. Furthermore, other rumors point to the fact that Google’s strategy is wider than we think, creating a great deal of fuel to power the idea mill. Now the question rests in execution and wheather Google is over extending itself.

In the case of Yahoo! I think the idea mill has been dried up for a while. Like Google, Yahoo! has been buying companies but has not been able to catch up to Google and the perception is that it is loosing ground to Facebook. It even seems to be falling behind new comers such as Facebook and MySpace. It is not that Yahoo! executives are not smart or intelligent, they are, but it may be that the culture of innovation might be dried as well and not just the idea mill. In this case, all the acquisitions will not be positively leveraged and/or integrated and instead of breathing new life, the new blood is creating more drag.

The following is an image I found on the web. It showcases the current M&A landscape which, in a way, also showcases how in the last few years companies not only have transformed themselves but also have gone about getting new blood and keeping the idea mill fresh:

A few weeks ago I was playing with Facebook and I did not get it. I wrote the template for this post and called it “I Do Not Get Facebook”, because I truly did not get it and was not impressed with what they have done … what was the hoopla all about? But now I get it. It is very clever and they have a shot a beating Google at their own game, or at least giving them a run for their money: Online Operating Systems.

When I first read Facebook had opened up to external application development, I was not too impressed. After all Google had had APIs for a long time. And even before Google, I built for Pictage a system that allowed functionality to be exported to other websites, as well as for Hoodiny Entertainment Group. Actually for Hoodiny I designed and architected a system where other people could build entire applications and websites based on published functionality. So … again, what’s the big deal?

The big deal is not at the technical level but at the strategic level. Google’s entire strategy, it seems, is to provide an off-site application operating environment. Vis-a-vis an Operating System. Google does not just provide search, but provides spread-sheets, word processing, an ad network, email, video, social media, different content, maps, hybrid apps that require web connectivity and live half in the web and much much more. They are also bidding for the 700Mhz frequency for cellular communication and are in the process of laying cable to Australia. Moreover, there are rumors that Google wants to take over Sirius, the satellite radio provider - I do not think it is just an experimental platform for Google’s radio ad network, but there is more there than meets the eye.

Over all, Google is providing all the underpinnings and tools needed to have thinner clients. In other words, if Google provided you with all the business applications you will need as an individual and/or enterprise; if Google had all your data; if Google provided you with connectivity everywhere; if Google provided you with other public domain data or pay-for-access data (online books, reports, etc.), and everything else you needed, then … why would you need a full blown desktop? And why wouldn’t you have a more mobile platform for your personal and business use? The answer to that is simple: you absolutely would. Google is presenting to users the ultimate in SaaS (software as a service.)

There are other companies that are on the same track. Amazon being one of them, Microsoft too with Live, Yahoo! and definitely Facebook. But not all are at the same level of development and market penetration or even strategically looking toward the same goal.

As opposed to Google, Facebook took a different approach: “We are not going to build it but our partners will. We will just provide the platform, the traffic and the way to monetize it.” Or at least it seems that way. Google recently decided, based on some postings on the web, to take a similar approach. But by not being there first, they open up to risk. Let’s face it, Google is not a startup anymore and it will have a lag in responding to market needs or changes. Facebook remains more nimble and thus, can respond to market “demands” faster, but not necessarily better. Additionally, not being first to market does mean a lot, but, what is does not mean is that you are dealt out of it.

So … who will win?

I am not sure. I definitely get Facebook now. I get it A LOT. I still do not find much usability for the site myself, but the fact remains, they are doing the right things in my eyes, at least strategically. It is lacking an even basic office productivity suite like a word processor - at least that I can find - or a spread-sheet or presentation, but they have a solid foundation. Google on the other hand, if the rumors are true, is about to open up. The real question is: Facebook has had a great deal of adoption and with the fbFund they will be able to get some of the missing pieces … so … who is playing catch up? Google or Facebook?

In the last few years, Virtual Worlds (VW) have become more common place. It all started with Massive Online Multi-Player Games (MOMPG) and to a large extent, the virtual worlds are extensions of them. Second Life, Club Penguin, Toon Town, to name just a few, are gathering a following. But the questions really revolve around the business model and usability of these tools. And of course, how these environments can be used in the future.

There were a few posts on TechCrunch referring to this very topic and my comments to the posts were that I very strongly feel that VW will constitute a very strong eCommerce force and platform in the future. But also my comments alluded to the fact that the interfaces to these tools must change. It is not just about making them more fun or interactive, but more intuitive and efficient.

A while back I signed-up at Second Life and spent a couple of days - on and off - trying to figure out the system. Now, I am a very savvy computer user and normally do not need to read a manual to figure out how to use software or electronic equipment in expert mode or close to it. But Second Life presented a problem and I was just not interested enough to solve it. It was kind of cool, but the usability barriers got in the way of my interest.

A few weeks later the iPhone was released to the market, and of course I bought one. I had an epiphany and realized that it was a revolution. You do not have to agree or see it, but there is a revolution underway. Maybe not overt and maybe not conscious, but there is one. The revolution is about user interfaces. How humans interact with computers. I actually wrote a post about it (click here for the post) where I began, very superficially, to explore why the iPhone and now iPod Touch are ushering a new era in UIs.

As user friendly and intuitive as the iPhone interface is, it still has a keyboard. It should not and I think that is what Apple and other companies are trying to figure out. How to write without a keyboard. Yes, you can say “voice recognition”, but it is not the most efficient interface either. In other words, how would I write this blog if there was no keyboard. Besides writing, on the other hand, there are other activities we conduct on a computer, so, even if we could not find a way to express the written word without a keyboard, there are plenty of things we can do that do not require a keyboard.

So, very much like hardware manufacturers are trying to crack the keyboard-less computer nut, software producers should focus some attention on the problem too — specially when it comes to VWs. Yes yes yes yes … the hardware guys are doing it through software but since they also control the hardware they have a slightly different tool and problem set.

During 1996 and 1997 I worked for Disney Online. I was responsible for the registration and security system for a very ambitious project, a distributed desktop environment for kids. The idea was to create a sort of virtual world where kids could interact with each other to create communities where they could help each other with homework, for example, through avatars. The project never really reached any momentum and was abandoned, but the idea remained with me. This was just too early an idea for the time, but was the beginning of VWs.

What can you do in VWs? The answer is simple, anything you want. For real, anything. Yes, that too!! If you look at the MOMPGs and how users behave you will have the proof to my answer and my assertions of eCommerce. These games also present alternative economies that transfer to the real world. Some of us have heard or read stories about a virtual property in some game being bought for 1000’s of Dollars. Stories about offline transactions for online goods abound. Why could it not be the other way?

One thing is true, eCommerce keeps on growing, and the challenge is presentation. How do you present the good so you entice the user to buy. VWs can resolve that problem easily; say that you are selling cloths, why not have a virtual store in Second Life where you have 3D representations of your wears. If I had a true 3D representation of myself, then I could try online a particular item and pay with a virtual credit card, connected to my bank or real work credit card, and the item could be shipped to me. Similarly, since the 3D representation of myself is accurate, if the item needs to be tailored, the measurements can be taken also online; the modifications executed and then shipped to me.

The scenario above is doable and probably the low hanging fruit in a series of ideas. A silly example to illustrate how it could work.

There was a movie a while back, Disclosure, with Michael Douglas and Demi Moore. In the movie the interface to the VW was a visor, a globe and sort of multidirectional treadmill. The system showcased a virtual storage system where it was easy to find stored documents. In 1994, when the movie premiered, Yahoo!! and Google did not exist!! But the idea of search did. And why not a virtual search?

There are other applications beyond entertainment for VWs. The movie, or the online virtual store, or even doing homework, are short term ideas. But why not education, or medicine, or conferences, or even war? The sky is the limit, the real problem remains: What is the best interface?

My wife, for her birthday, wanted a video camera and since I am such a good husband I bought her one. I am into photography and never really thought about getting a video camera; moreover, most of the digital cameras we own have video capabilities that we never use. The rational for buying yet another camera was: (1) the wife wanted it and (2) I figured it would be fun to play with another media medium. So … I bought her a camera for her birthday.

Yesterday I videoed Jared’s soccer match and using iMovie HD put together a little movie. I had already done a short and quick clip of one of my fishing trips, but this time I was undertaking a much bigger task. I shot a bunch of short clips during the match and last night I imported them and put together the short video enclosed at the end of this post. I am now a filmmaker, albeit not a good one, but for my first time around, really, I would think not a bad effort. Ed Wood would be proud.

Movie making aside, technology has always caught me off guard and surprised me. Mind you that I make my living with technology and on a regular basis I am exposed to really advanced and new technologies. One of my trademarks is being an innovator, always staying as current as possible with bleeding edge technology and using those technologies to solve business problems. But iMovie HD is an application that comes bundled with every Mac; in other words, it is consumer grade software that works superbly on a stock computer. Anybody can now be a filmmaker and produce videos with some level of quality. Technology to some extent is being demystified.

What keeps on surprising me is the contrast that I have experienced in my career. For the last 25 years, actually a little more, I have seen a tremendous change. When I first started with computers I had an HP 41C programmable calculator. To this day I think that it was the greatest. I also had a Commodore 64 and access to an Apple II and then an Apple IIc. I also had access to ORT’s data center, which, the first year I had access to it, still used punch cards. The second year punch cards had gotten replaced. Nonetheless, the machinery used at that data center occupied half a floor and did not have that much computational power.

Fast forward 25+ years and I am writing this Blog entry on a MacBook Pro that has a gizillion more times computational power that the first data center I set foot in. Not only that, my kids, both have MacBooks and individually they have more computational power than those first data centers as well. Computing machines have evolved so much in the last 50 years. From computers that would occupy entire buildings used to perform ballistic calculations, to laptops solving problems way more complex problems than ballistic equations. You can always quote Moore’s law to me, but Moore’s law does not take into consideration the direction of the innovation.

On TechCrunch, last night, there was an article about the future of commerce. On the post it was reported that ICANN CEO Paul Twomey stated at a conference that virtual worlds are the future of global commerce. Virtual Worlds?? Amazing. I agree. Not only I agree, I am certain. But the problem is the interface semantics. The current interface semantics is wrong. Going back to Apple for a moment, what they are doing with the iPhone and iPod Touch is remarkable. They are not only introducing a new interface to the market, but I can guaranty you that they are coming up with a way to write this blog without a keyboard. Call it dictation or some other form. With their current devices they are experimenting with a change if semantics and paradigms. Eventually, somebody will fully figure it out and not only devices like the iPhone, but also Virtual Worlds will be more life changing than imagined before.

From computers taking entire buildings to house them, to iPhones, to Virtual Worlds. What an extraordinary trip. I wonder what the next 25 to 50 years will bring us.

Software Development Methodologies have been at the core for solving problems with computer software. There are many reasons why a methodology is important, but mostly, because it gives projects a beginning, a middle and an end. Projects are like stories and as such, they can have good or bad endings.

Let’s define what a Software Development Methodology is (I will be broad to serve the purpose of this post):

“A Development Methodology is a repeatable series of steps followed in order to complete a project involving the development of computer programs.”

Development methodologies are particularly important when there is a team working on a project. If just one person is working on the project, then the methodology is simple: just crank the code out. But when more than one person are working together then the level of complexity also increases proportional to the number of individuals involved in the project. Additionally, after the number reaches critical mass (defined as the absolute number of people with the right skill sets assigned to the project), one more person increases the complexity in an exponential manner. This WILL derail the project and the more people are added, the worse the project will fair. The proverbial “Mythical Man Month”.

The way I like to organize teams is as follows:

• Developers: Lead by a development manager, this group is responsible for coding. There can be more than one development team working on different components, products, releases, etc.
• Integration and Release: Lead also by a manager, this team is responsible for engineering the release during its different stages and for completing the release altogether.
• QA: lead by a QA team leader, this group is responsible for the engineering of tools used for automating regression and basic use cases.
• User Acceptance Testers (UAT): Also led by a team leader, they are responsible for functional testing. In other words, they look at the functional spec and press buttons to verify the application works as expected.

I left out two very important roles, project management and architecture.

I am normally heavily involved in architecture. I have some very definite ideas on how to architect massive distributed systems and I am not yet willing to relinquish that responsibility, but when I do, architecture and design are more general management areas than production. They do ensure that the product is built right, but that is true across all products being built. Also, the responsibilities of an architect extent pass the boundaries of projects into integration with outside products and services.

Project management, even though it is an incredibly important function, I see it as external to development as well. Indeed, it does set the mood, pace and organization of development, but still, I feel very strongly that it is more a part of management and administration than development.

Incidentally, I have the best Project Manager working for me: Sue Christensen. She rocks. She is the best and to boot, she complements me very well, specially when we do not see eye to eye.

Similarly to the way I like to set teams up, I like to set up operating environments in the following manner:

• Development: This represents each one of the developers’ workstations. Each developer should have a scaled down version of the application. The code is kept locally for the purpose of development, but it MUST be checked into a code repository like CVS or SVN on a regular basis, provided the code compiles.
• QA: This is a separate environment where the code is deployed for load testing, regression testing and other automated tests. There are multiples of these environments so different releases or components can be tested simultaneously. These multiple environments are key to the pipeline.
• Staging: This environment is a facsimile of production but scaled down. It needs to accurately represent production configuration so similar problems are manifested and they can be addressed before the release goes live.
• Production or Live: This environment is SACRED. It is the environment that is used to operate the company.

The Pipeline

I see software development as a manufacturing process. Do not be mistaken though, I am very much into innovation and I see it core to my functions and what, as a CTO, I bring to the party; but innovation should happen outside of production and brought into production as part of a product rollout. In a sense, it is similar to architecture, design and project management. They are all external to the actual production and manufacturing of a technology product.

But what is the pipeline?

The concept of a pipeline is to carry out no less than a release per week. Ideally releases would happen every day, except for Fridays, but definitely not less than one. Each of these releases can be a bug fix, enhancements or even new products. But for each release to be put into the release pipeline a process needs to be followed.

This process is simple. Let’s take a new product for example. The product development group is responsible for writing the business, which should explore and document the business logic for the given product. In a perfect world the business requirements will be closed and complete, which is a pretty way to say there should be no holes in the document. This document is given to the project management group for review.

The project management group develops the functional specifications, which are sent to the development group for review. Of course there are consultations between the product and the project managers as the functional specs are written. Once development has a chance to review, a Joint Application Development (JAD) session is conducted. All concerns are brought up at the JAD session and documents modified. After a quick get together and making sure all is good, development starts. In some organizations before development starts there is a very formal process where the documents are approved and signed-off. I think it is too formal a step and should be avoided.

Development should work towards quickly building a functional prototype. The prototype should be bare bones of what the final product will be, but it should start showcasing the beginnings of that product. As development proceeds new versions of the prototype are deployed into a QA environment for everybody to start playing with each new version. Each one of the prototypes cycles should take no more than a week. Sure, there will be some features that will take longer to develop, thus they should either get developed as part of the initial prototype; or in a different branch and merged into the release branch once ready.

There are some very tangible benefits to having these prototypes rolled out early:

1) Transparency. Everybody can see how the project is shaping up.
2) Expectation Management. If there is slippage, it will become apparent immediately. Also if a feature is less than expected, it will become apparent as well.
3) Market Deviations. If a product takes too long to develop the market it was going to serve might have changed. Early prototypes allow product managers and management in general to measure the developing product against the market and make the necessary changes without derailing the timelines too much.
4) Mood. Developers see their work materialize faster. They get happier and work faster.
5) QA. The QA team can start building and running automated test cases against the prototypes and provide early feedback to developers, minimizing the QA and bug fix time at the end of the project.
6) UAT. The UAT team can also start setting up the right cases and start exercising them so as to get readier when the time to execute comes. Also, UAT can double up as a documentation team during the early stages.

As the process moves forward more and more of the product is showcased through the prototype cycles, until one day it is ready for the final push and QA, UAT and development get the product into the pipeline and finally out the door.

In what I outlined above there is nothing new. Except, if you have noticed, there is an active role for everybody. Nobody is waiting. Release cycles happen quickly from the conception of the product through the final release. The philosophy is: “Do not chew more than you can swallow and if the piece is too big break it in smaller parts. And it you can not, then in parallel, pick at it one bit at a time.”

Develop small pieces, fast, integrate all the time and continuously test. The prototypes are key to this. Get QA in early, generating feedback along the way. Fix bugs early, do not wait until the end where there is a greater chance to have regression problems.

The same process can be applied to enhancements, except that if it takes longer than 2 weeks to develop an enhancement, then it should be considered a product release. Furthermore, there should be a team dedicated to bug fixes and patches where they crank a few bugs every day. The process remains the same, except in shorter increments of time and business requirements are replaced by bug reports.

The pipeline is the form that development takes once you have a high degree of parallelism in your technical organization. And if you can achieve a pipeline, then development will happen faster, with better quality, meeting your market on better footing and at the end, it should help you get ahead of your market. It does take a great deal of effort to set up the pipeline, but once in action, technology as a whole becomes easier to manage.

I often argue that what drives a company is a product strategy that is far seeing. In other words, a 10 to 20 years product roadmap that represents what a company wants to be, how it wants to be perceived in the market and what market position it wants to enjoy through execution of the product strategy. Most likely, however, in 10 or 20 years the company would be a different beast than what we can imagine today. I do not suggest that today we set in stone what products would be developed in 10 years, but I am indeed suggesting that a well documented plan needs to be in place. A well-documented plan drives overall company strategy and it allows, with a good process, change to meet the market in a very non-disruptive manner to the company.

For start-ups, on the other hand, they need to remain nimble, so a product plan should probably be 6 to 9 months worth; and as the company develops, the plan should expand. And eventually, if the company resolves the question of survivability, the product road map extends to encompass a wider more strategic scope.

So, here comes Apple with the iPhone. I think it is a great product. And on June 29th I got one. I was probably one of the first ones to get it in Los Angeles. But as great a product it is, it has problems. But those problems don’t really matter, what matters is that Apple took a pretty sizable risk. And if you think I am talking about going into the cellular telephony market, then you are mistaken.

There is a user-machine-interface paradigm change happening before our very eyes. New computing devices are appearing in the market that will forever change how users interact with computers and workstations. Microsoft Surface, a tabletop computing device is a good example. But it will not be available to consumers at home for a while. Multi-touch interfaces (go to this URL for a cool video of an application: http://www.ted.com/index.php/talks/view/id/65) is another good example of this paradigm change. Again, this technology will not make it to consumers for a while … but … wait a minute, the iPhone.

The iPhone is the first such device that has gotten massive consumer distribution; massive not because a lot of consumers bought it, but massive because it was targeted with a mass-market message.

For Apple, the iPhone was a well-calculated risk and there is nothing to loose from it. First of all, it was subsidized with an exclusive with AT&T. So, the R&D cost and probably a good chunk of the production cost is covered. Second, it is a great market research tool: deliver to consumers a product that they are used to, the iPod, but with a new interface and see how the market reacts. If the reaction is good, then the same interface can be deployed in more mainstream products, laptops or desktops, and we can say that the reaction has been very good for the most part. Third, it is clear that mobility in computing is core to their product road map. A mobile computing device, however incomplete, is also a step in the right direction and helps Apple morph its market position. It totally leapfrogged Microsoft.

With the iPhone, Apple is ushering and hastening the adoption on the new paradigm. There is no stopping the change, but whoever gets it right first, or at least almost right, will be in a great market position. And Apple is getting many things right to boot. But right does not mean success and the iPhone not making it huge is probably not too much of a concern for Apple.

A question that follows is whether Apple is the right company to bring this change. The answer, at least to me, is a resounding “YES”. Why?

If you look at Apple’s history of innovation you will get the answer to why I think it is indeed the right company. Apple brought most of the form and function changes that we enjoy today to market. Starting with the mouse, following with the Lisa, the Newton, workstation designs, Mac OSX (yes, I know, it is NeXTOS, I used to own one), the iPod and finally the iPhone; and in between all these, a bunch of incremental or leaping innovations and changes. Even within a product line, the iPod, the click wheel was significant change.

Does Apple care if the iPhone fails? Of course it does, what company would not? But probably what Apple cares the most is what the next 10 to 20 years will bring. The iPhone is a foray into those cares. A foray into deciding what kind of a company Apple wants to be in 10 to 20 years; into what products it will be offering and how it wants users to interact with its products. It is probably safe to say that the “hardware” keyboard is soon to be in our past. The thinner keyboards Apple is offering right now are just a calculated step into a software keyboard.

But what comes next?

I try to imagine how I would “write” in my Blog if there was no keyboard. To be honest, the only answer to that is dictation, and that has existed for a long time. So, I am sorry to disappoint you with, at least for the moment, with my lack of imagination. The change is coming, that is for sure.

Update:

The latest updates on Apple’s product line support some of my assumption in this post. They are using touch screen as a way to shift user-machine-interfaces paradigm.

As a technology executive I am always faced with the decision to build vs. buy. For each feature and for each project, for each component that is implemented, the decision has to be made. And it is seldom easy. There are many factors that play into making a decision and it is not always clear what the long-term effects are. One of the bigger factors is time-to-market, and not less important is integrability. So, how do I make the build vs. buy calls?

Company type is important. Different companies have different needs. And those needs should be fulfilled in different ways. A technology company is different from a service company or financial institution or factory. But because they are different does not mean the way they look at technology differently from each other. The question of technology usage has to do with the purpose of it.

It seems obvious that a technology company will tend to build most of what it uses. But that may not be the case. Similarly, a service company, we would think, would buy and integrate what they use to conduct business every day. And again, that may not be the case. It is all in what is core to the company and what can be best leveraged on a financial event – M&A or IPO.

The way I look at it is that if technology is core to the value of the company and intrinsic to the company itself, then you build it. It is an investment that will pay big dividends. And all ancillary technology should be bought. For a non-financial company it makes no sense to build a general ledger. There are some good accessible products that will do just fine. For a financial company may be worth reinventing the proverbial wheel if they have some new paradigm they want to implement, but if they do not, then most likely it would be fine with a tool like Oracle Financials – I will let the CIO/CTO for such a company decide.

But a company’s technology does not need to be build from the very beginning. Proof of concepts can be constructed on top of canned software. There are a myriad of sites that implement different business all built on top of Drupal, a content management system. The only concept these sites have in common is the fact that they are content rich and that content needs to be managed. But how the content is displayed or monetized, that is different. Drupal is a great tool that can get you going fast, meet your market on a short amount of time, with as little as possible development investment. And then what? Then, again, if owning 100% of the core of your technology is important from a valuation point of view, you start re-implementing and replacing little by little the bought components.

At the end you build if your technology adds to the valuation. Else, you buy. Nobody wants to buy or invest in a company that does not own its most precious asset, technology. Nobody wants to buy or invest in a company that is at the mercy of some third party technology producer.

For large established companies I propose a very similar argument, but with a more macroscopic approach. Larger established companies should be on the lookout for small or large companies that complement them and help expand and cement their position on the market. These acquired products may remain on the periphery or become core.

But, what about their internal technology folks? These established companies have core products that they own, that got them to where they are. These folks work on that and keep on building new version of the core products. Also, they build more core products that the company would own and would positively affect the value of the company as a whole. The companies that they buy in combination with the core products create a more powerful market offering.

In the end, it turns to be a balancing act between core values to the company, existence of quality products, time to market, budget and what strategy the company follows.

As I look at my job and what I do, I am continuously confronted with the task of developing and completing projects to meet the ever-growing company’s market. We continue to expand our needs and as the company grows and we meet our market opportunities, so do the risks and execution complexities. Expediency becomes central to execution. In other words: how do we do more with less and faster?

In my opinion there are three ways to approach technology development and company growth, whether for a start-up or an established company. These approaches are about the business of technology and not the technology of the business. They are about technology as a business tool and technology as a business process.

Just like everything, each one of them has pros and cons:

1 – Purist. The purist approach is based on having all the answers before hand. No opportunity is pursued unless all is known about that opportunity and an existing product is 100% ready to answer the opportunity.

Development cycles are long and tedious and innovation is not the order of the day or the charter of the technology group. On the other hand, all processes are highly repeatable and steady. Also, priorities are SET IN STONE.

I do not think this model works at all. It is too rigid and stifling. For a start-up it spells dead and for progressive companies, it means “getting stuck in the mud”. It is important to note, however, that there are companies that follow this approach very closely and are VERY successful. These are companies not only with deep pockets, but with really long term visions and strategies and are largely unaffected by market changes. Also, their competition behaves in similar ways and innovation is “acquired”.

2 – Opportunity. The opportunistic approach is based on letting the company flow as opportunities develop. Business development seeks out opportunities on areas that are related to the company’s market, but they may or may not be close to it. As opportunities present themselves new products are developed to fulfill the opportunity. And if the company has an interesting idea that solves a good problem, these opportunities come faster than they can be handled. And if the company is a dud, then being driven by opportunities that do not exist generates a quick exit, however, not a successful one.

Development cycles are all over the place. Priorities change on a regular basis and many projects get started and never fully finished. And there are more products/projects to do that can be done. Thus, the continuous change in priorities and lack of 100% completion on projects.

For start-ups this is not such a bad approach. It is very eroding and risky, but ultimately success comes from being able to reign in the opportunities, priorities and products together at more less the right time. The problem is that this creates many one-offs that are hard to integrated with each other and sometimes the quality of the code is not the best – no matter how good the developers are – and documentation is lacking.

For established companies, this is probably one of the worse methods to follow. As a company goes from start-up to the growth face, the issues of priorities must be resolved and productivity needs to be managed and understood. Product road maps must be respected and business development needs to focus. This focus is not about not looking for opportunities outside of the core, but it is about looking for opportunities that do not represent too much of a change to the products and priorities and that are inline with the growth strategy the company is following.

3 – Growth. The growth approach is based on looking at a company in a continuous strategic manner. Products and projects are selected based on a crafted road-map and business development targets opportunities very close to the company’s core products and/or services. Additionally, all development is done in a fashion where high reusability is ALLWAYS achieved.

The key for growth is reusability. In other words: leverage what you have so to reduce cost of new product development reusing existing frameworks. New product development does not just mean cost of technology development, but full product development cycles, which include technology. Also, reusing does not mean lack of innovation, if anything it all about innovation, but on the shoulders of existing products and services.

Another key to growth is full understanding of the market the company plays in and other markets into which the company can expand. But these markets should have similarities as to be able to reuse not only technology, but also the business models, and by extending the company’s business model as well. This understanding produces successful and flexible strategies that propel companies forward.

So … what is the right model to develop and keep a company growing? My inclination is to choose a combination of Opportunity and Growth, although, I would still err on the Growth side. But that is for startups. It is hard to ignore opportunities, especially early stage when the company is still looking for an identity and trying out the idea that created the company against the market. Flexibility for an early stage company is paramount. But sometimes flexibility gets us in trouble and produces lack of focus. In the end, lack of focus is the biggest killer of any startup.

For companies that are past early stage, Growth is the best way, again in my opinion. The growth stage is where companies make it long term. Growth is about understanding the market forces and incorporating them into the strategy. And that strategy turn into a long-term plan that include “what-ifs” scenarios. It is also during this stage where technology is re-factored, possibly rewritten and new products are built to update existing ones using the same and expanded API set.

For companies that are well established I think that a middle ground between Purist and Growth should be the model. Innovation MUST be a focus of an established company. It is the only way to keep an edge and to stay competitive, but existing products need to be maintained and updated. So, long existing products should have a steady release schedule and roadmap, while other areas should, again, focus on innovation and leapfrogging the competition.

One more point I would like to make: The stage of growth and development of each company should dictate what is the most optimal method or approach is best for each company. Each company has different cultures and obstacles to overcome to keep on growing, so, to think that one method will apply to ALL companies is silly. Best practices or writings like this, whether you agree or not, are just guidelines and at the end, each company has to find its own way.

Over the last 50 years or so, technology has evolved and expanded into many aspects of our lives. Among the most dramatic is the use of technology in business. Business today can hardly be conducted without the use of technology; more specifically, without the use of computers and workstations.

But it is not just about workstations; the use of tools such as Microsoft Office or Star Office, for those like me that like Open Source tools, or email readers, or other specialized tools like Photoshop and the likes. It is about the entire set of tools needed to run a company, large and small. It is about the infrastructure that supports today’s business and the applications used to gain efficiencies. It is about the tools that we use to communicate ideas and experiences; the tools that we use to work out problems and come up with their solutions; the tools to track and coordinate. And in what is about, the role of the Chief Technology Office (CTO) is defined.

But before going further let’s define a concept. CTO is a role, not a title (although it is also a title). In many cases the VP of Technology or VP of Engineering are the titles, but their roles is such as the CTO’s. So, more specifically what is the role/responsibility of the CTO? Oded Noy (Zag.com’s CTO) stated it well:

1. Understand the business
2. Get the talent and retain it
3. Align the talent with the business.

As powerful as these statements are and for as much respect as I have for Oded, I think these are incomplete. Actually, let me rephrase it: these statements are complete and a closed system provided that you are talking about the Technology of the Business; but if you are talking about the Business of Technology then there are a great many other role statements missing:

4. Create innovative products
5. Create innovative technologies that can be leveraged on an M&A or IPO
6. Protect the company’s assets
7. Develop growth strategies
8. Understand the market and product marketability
9. Understand the competition and the gap advantages or disadvantages
10. Understand and help define the processes and procedures across departments.

(Number 10 is often shared with the COO, but there are inherited processes and procedures in technology that must include other departments. e.i.: collecting business requirements, coming up with creative elements, marketing campaigns, etc.; and more so in technology companies.)

The technology of the business has to do with the technologies and applications to create, grow and run a business. It has to do with the features of those applications and the implementation of those features. It is a tactical approach to developing solutions and it is rooted in the here and now and answers day-to-day needs. It is, in many ways, highly focused and execution oriented.

The technology of the business answers immediate needs and is very REACTIONARY to market fluctuations.

The business of technology is about looking at both, the short term needs and long term strategies. It is about what’s needed to run the company today and very much focused on execution, but at the same time it is about plotting courses. It is about, in the case of technology companies or companies with strong technology components, building equity and technology assets that can be leveraged. It is about value, value and value. It is about answering questions like:

• How is the market going to change and what can I do to change with it, not after it?
• How can I get ahead of my market and competition by reducing time to market?
• How can I lead my market with the most innovative products?
• Where do I want to be in 12 months, 24, 48, etc.?
• What products should we develop and what is the product roadmap
• What are the priorities derived from the product roadmap
• Who do I need to hire now, in 6 months and so on?

These are just a few of the questions that are about the business of technology.

It is true that with startup the mode is about the technology of the business, or at least that is what we have been taught to think and that is how we act. But it does not need to be like that. Time to market is very much a concern that we all have, but what is the point on rushing to market with a half baked product that then our competition can pick apart and improve upon it, while we burnt our brand? Or worse yet, what is the point of rushing to market a product that will be obsolete in 6 months? Specially in a startup, where resources are always scarce, plotting the right strategy, not “rushing”, coming up with a flexible product roadmap and priorities will get a company closer to success with less headaches and technologies and products can be easily reused and repurposed.

For late-stage startup and midsize companies, taking a strategic and business centric approach to technology should produce better and faster results and faster growth.

And finally for larger companies, it will make them more agile and not so slow to react to market changes. Thus, deep pockets will remain deep.

A while back I heard the CFO of a company, I believe it was EMC. They were rolling out a new product that had the potential to cannibalize the existing product line. Of course the analysts recognized the potential and presented a scenario where the new product, at a lower price tag, definitely cannibalized existing revenue. The CFO very calmly answered: Better us than our competition. I never followed up to see how the strategy developed and what happen to products and revenues. But EMC is still around. This is a clear case of the business of technology.
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