The Pace of Change

My travels in Japan included lectures in Tokyo and Kyoto, sharing lessons learned from the US health information technology national efforts.    I highlighted that the Office of the National Coordinator has to balance the desire for innovation with a pace of change that vendors and clinicians can tolerate.

This led me to think about the pace of change that CIOs are experiencing right now.  The IT innovations of the past few years have been dizzying and the cycle between the peak of hype to the trough of obsolescence is now measured in months, not years.

Some examples of rise and fall

1.  Blackberry - I was one of the earliest adopters of Blackberry technology, using a small pager-like device for short text messages.  As each new model was announced, I welcomed the innovations - the evolution from thumbwheel to joystick to track pad, larger color screens, cameras, video features, and voice memo recording.   However, in 2011, my mobile device needs have outpaced Blackberry's engineering.  I now need a full featured web browser, a book reader, the ability to zoom/drag via touch screen, and a robust App Store.   Until 2010, Blackberry seemed to be unstoppable in the corporate messaging world.  Now it is laying of 2500 people as the iPhone and Android devices rapidly replace Blackberries in consumer and business settings.   They tried very hard to introduce new devices such as the Storm, the Playbook, and the Torch, but came up short as customer expectations exceed their pace of innovation.

2.  MySpace - Remember when personalized portals were hot? At its height, social networking company MySpace had 1500 employees.   It was purchased in 2005 by Rupert Murdock for $580 million.   It was recently sold for $35 million.   At this point, MySpace does not appear on lists of popular social networking destinations.    Given that the value of most websites is based on usage and thus potential for selling advertising, shifts in the market can occur almost instantly.   Who knows, in a year or two surfing to today's popular sites such as twitter.com may yield the error "URL not found"

3.  Google Health - Google is a great company and I have no doubt that it will continue to succeed.  Google+ is a wonderful social networking site that is likely to steal some of Facebook's market share.   However, like most technology companies, Google now has to deal with the mire of maintenance that comes with a mature set of highly used applications.  More resources are spent on operations and less are available for pure innovation.   Smaller, more nimble companies are likely to outpace Google and will either be acquired by Google or erode Google's leadership position.   Many of my friends and colleagues who joined Google a few years ago (when it was considered unstoppable) have now left Google as the company has matured and its culture has changed.   The closing of Google Health is just one symptom of the changes in focus that occur when a company is faced with the maintenance and regulatory burdens of maturing products.

4.  Microsoft Windows - In 1995, I remember standing in line at midnight in a Torrance, California electronics store to buy one of the first copies of Windows 95.   My early Dell computer (a 386 processor) ran DOS and Windows 3.1, so Windows 95/Office 95 was a remarkable innovation.   It was stable  and easy to use.   Windows 98 Second Edition included built in internet features and was remarkably fast and reliable.   Thereafter, Microsoft has introduced new features, but not achieved the same kind of game changing innovation that occurred 1995-2000.  How many people stood in line at midnight to buy Microsoft Vista?  How eagerly anticipated was Windows 7?  How many people brag about their Windows Phone or Windows mobile device?  The market share numbers tell the story - as of 2011, the majority of Windows computers in the world still run XP.  Microsoft is a great investment - its stock price is low and its product line is very broad.  It's Kinect device was the top selling consumer electronics product over the past year.   However, the burden of maintaining compatibility with an operating system developed for the IBM XT era has led Microsoft to lose its edge in a cloud-based, mobile centric world.

5.  Cisco -  The CareGroup network outage of 2002 taught me many lessons about network architecture.  In response, we installed an updated end to end Cisco infrastructure, embraced Cisco technical services, and worked closely with Cisco salespeople to plan the lifecycle of the network.   Since then, the purchase and maintenance costs of end to end Cisco networks have outpaced Cisco innovation and other companies such as Juniper and HP offer better value on some components.   Cisco is laying off 20,000, closing entire businesses such as the Flip camera (a wonderful technology company that Cisco acquired in 2009 for 500 million dollars, then shut down in 2011) and is rethinking its entire consumer product strategy.  By becoming a sprawling company and attempting to maintain very high margins, Cisco lost control of its core business.   Its competitors are more agile and cost effective.

The general theme is that it's very hard for CIOs to skate where the puck will be when last year's shrewd investment becomes this year's white elephant.  A side effect of this accelerating market change is that customer expectations for constant innovation are higher than ever.  The CIO gets credit for change, but does not receive kudos for impeccable stability, reliability and security of the existing infrastructure and application stack.

While I was in Japan I had lunch with a leading Japanese business thinker, Professor Ikujiro Nonaka.  He told me "If you are doing business as usual, you are falling behind."

Put another way, no matter how good your daily operations, customers in 2011 measure your performance based on the pace of change.

Later this month, I'll take a few of my senior staff to dinner so we can reflect on this challenge.  How can we deliver infrastructure and applications services at an accelerating pace of change for reasonable cost while maintaining staff morale, quality, and compliance with escalating regulatory complexity?   I'll let you know what we decide.