Is a comment I have made to a few US executives recently.
As part of my book project this summer I had the chance to interview several German insurance, auto, logistics and other companies. And in each case I would compare them to their US/UK peers and would come away impressed with the technology they were implementing in their product and customer centric areas. I also spoke to several of their academics about Industrie 4.0, mass customization, security and data privacy trends across Germany’s economy – and saw a level of world-class sophistication.
In the last couple of weeks we have seen glimpses of that in the US
Mercedes has launched its CLA class of sedans with a base price under $ 30,000 (and a very effective commercial where Willem Dafoe as devil tries to tempt a young man with the car till he realizes he can afford it on his own). Imagine the cartwheels Daimler has done to launch a car at that price point.
T-Mobile announced this week it was getting rid of international data roaming fees altogether and offering a simple, cheap plan for international voice service. Innovative – not really – till you realize how the stodgy telecom industry hates to give up on high margin business like that.
Siemens Enterprise Communications, rebranded Unify, showed off Ansible, a SaaS based communications and collaboration platform. Big deal? Yes, when you consider the software and services transition for a PBX and other big iron vendor and when the value prop is “Future of Work”, not speeds and feeds.
Oh, they will stumble.
People are already nitpicking the CLA for a cheesy interior. Unify had an embarrassing web streaming failure during its launch. T-Mobile is a weak 4th US mobile player.
But based on my research this summer, Chancellor Angela Merkel has created quite an innovative dynamo in the past few years. Underestimate at your own peril.
On the anniversary of GE’s launch of the Industrial Internet, CEO Jeff Immelt presented an update last week in Chicago. You can watch his full talk here.
Couple of things stood out from an outsourcing industry POV
As I wrote during the launch last year, GE is the biggest outsourcer (and software company) most of us have never heard of. And it is delivering services not as much with armies of humans but with a growing number of its "brilliant machines". An example is its 2.5-120 wind turbine. Analyzing tens of thousands of data points every second, the turbine integrates energy storage and advanced forecasting algorithms while communicating seamlessly with neighboring turbines, service technicians, and customers.
The other thing is GE announced Amazon Web Services, Kaggle and Accenture as three of its II partners. Amazon has pioneered infrastructure as a service and Kaggle is pioneering crowdsourced talent as a new type of outsourcing. The Accenture here is not the SAP SI of old. This is a joint venture with them called Taleris which leverages GE Aviation’s predictive analytics technology to make recommendations based on this analysis to optimize aircraft maintenance and flight operations.
Also, notice who is missing. The Indian outsourcers. That is striking because GE more than other company in the world contributed to formative growth at Infosys, Wipro, Genpath and many others . It still leverages a number of Indian providers for its internal IT but - not yet anyways – for external facing opportunities.
Finally, look at the likely impact on the software industry as its medical devices, locomotives, appliances and countless other products incorporate algortihms and commuunicate with each other and the world and allow for predictive maintenance, performance monitoring etc. A GE executive I interviewed this summer said "The greatest software companies in the world don't sell software". Indeed.
The big irony about India is it has produced tens of thousands of software engineers, but hardly any successful software or web services companies. The reasons are many – its successful services firms like TCS and Infosys invest heavily in recruiting and training armies and while they talk about non-linear growth (not tied to staff headcount growth) they do not invest much in building intellectual capital or in cloud capex. They offer young professionals a safe career path and a chance to explore the world. In contrast, the angel/VC ecosystem in India is nowhere near as robust as that in Silicon Valley to encourage software entrepreneurs. So, in some ways you could argue NASSCOM, the India trade body has a redundant S – it has always been much more about services than software.
And that is coming to a boil as this story in LiveMint suggests:
“If Nasscom has to stay relevant, it must collapse its “large-format”, five-star conferencing programmes, used successfully over the years with bigger member firms, and listen better to a small, but growing community of software product entrepreneurs who are dreaming to create India’s Google Inc. and Microsoft Corp.
These software product firms are led by a mix of veteran and newer maverick CEOs such as Sridhar Vembu of online office software maker Zoho Corp., who just don’t relate with anything Nasscom. Vembu spends time shuttling between his Silicon Valley office and Zoho’s development centre in Chennai all year. Unlike the software services business that’s used to multi-million dollar projects and large payrolls, software products require deeper engagements with fewer customers. And instead of broad-based industry lobbying, these firms need discussions around intellectual property apart from establishing links with potential customers in India and overseas.
So it was no surprise when last week that some 30 software product firms, including homegrown accounting software maker Tally Solutions Pvt. Ltd along with several product veterans such as former head of Yahoo Inc.’s R&D facility Sharad Sharma and InMobi founder Naveen Tewari, formed a separate forum called the Indian Software Product Industry Round Table, or iSpirt.”
This time of the year brings even more memories of the UK. I met Margaret during a posting in London in 1989. We go back often and Margaret took Tommy to the London Olympics and to Cambridge and Oxford this summer. We still get plenty of holiday cards from friends there and Margaret is very good about calling her cousins and friends for long holiday chats.
This year though I have noticed even more how the US and the UK keep drifting apart.
It is one of the few years where we have had both Thanksgiving and Christmas at home, and I noticed our Christmas dinner was a bit more elaborate than our Thanksgiving dinner. Margaret’s Irish/English upbringing at play where the Christmas turkey is the most important meal of the year.
I watch BBC and notice Boxing Day is still the most important shopping day in the UK. We have moved to Black Friday, Cyber Monday and who knows what else as days to splurge.
I watch CNN and notice how incensed Piers Morgan is on the gun control issue. Many Americans want to deport him, not realizing that most other Brits would bring a similar sense of pride at how their tighter gun controls work and ours do not.
I watch the movie Love Actually, a family favorite this time of the year and watch Hugh Grant as British Prime Minister stand up to a bully of Billy Bob Thornton as US President (a superbly lecherous cameo role).
Yes, the two countries still have a “special relationship” but we have been drifting apart for a while, and will drift apart more so as the US looks more West to the Pacific in the next few decades.
Through it all we still enjoy all the holiday cards, visits to London, and am particularly proud our kids have spent more time in the UK and Ireland than any other part of the world.
In Walter Isaacsonʼs biography of Steve Jobs, Isaacson describes the time that Jobs cold called Wendell Weeks, the CEO of Corning, Inc., to learn about Gorilla Glass (which is now used in more than 500 devices). Weeksʼ assistant refused to put him through, but offered to take a message. Jobs described that as “typical East Coast B.S.” In response, when Weeks returned the call, he was told by Apple’s receptionist to put his request in writing and to fax it.
The story ended well for both Apple and Corning, but it did highlight cultural differences between East Coast (and other) Fortune 500 companies and Silicon Valley.
At yesterday’s GE event, I saw several hints of that.
a) “Software is eating the world”
Chris Anderson of Wired asked Marc Andreessen on a panel to elaborate on the theme of his famous WSJ column, and Marc talked plenty of the Valley’s superb software capabilities . Jeff Immelt of GE said hardware, software, analytics and deep domain expertise are all important. And to emphasize hardware is far from dead, there was a giant, GEnx engine on stage (see photo of Tom Foremski at event – he is at least 6 ft and is dwarfed by it). Immelt looked at it with as much love as Steve Jobs used to when he showed off a new Apple device. With 20 sensors it can generate 1 TB of flight data a day. And Immelt talked about 250,000 intelligent pieces of hardware in other industries – scanners, turbines etc. Finally, he commented in his 30 year GE career, he has seen the world come full circle on the importance of manufacturing. The GEnx engine with its precision machining and material science advances are just one example of that.
b) Horizontal versus vertical
The Valley knows extremely well how to scale horizontally – it has given the world IT infrastructure, back office applications and plenty of other technologies which work well across industries. Immelt and the customers showcased yesterday (see this post) were all about verticalization. Deep domain knowledge with massive operational payback.
c) Investment Money versus Customer Revenue
Andreessen commented what a great job VCs have. They learn from portfolio companies and prospects all day long because “ we can write checks”. Immelt in appealing for Valley firms to come partner with GE, only casually mentioned an investment fund. But he repeatedly promised customer access – the opportunity to work on real life challenges in some of the most complex and demanding customers in the world. It reminded me of the expression I heard when I had my own startup: “Customer revenue is mother’s milk, VC money is sugared water”
d) My heroes have always been…
The Valley worships Jobs, Zuckerberg, Page, Ellison, Chambers – local company executives who have made it big. Immelt talked about peer Fortune 500 companies like Caterpillar which sell complex equipment. He could have also mentioned Siemens, Emerson, Deere, Komatsu and others who are also rolling out data intensive service offerings around their equipment.
e) It’s a small world after all
At various points during the day Immelt invoked Emirates Air, Etihad Airways, Qatar Airways and Korean companies in his comments. Apple, HP, other Valley companies are no global slouches, but few have the global intensity of GE. During a break I was talking to one of Immelt’s staff about his global travels. He has met with Putin, Cameron, Merkel, most other global leaders.
Watching the GE team in action yesterday, I was reminded of the late 49ers coach Bill Walsh springing his West Coast offense on the NFL. Only in reverse. The Valley has not seen much like Immelt and GE.
The Opening Ceremony with the Queen/James Bond skydive. Michael Phelps. The Jamaican sweep of the Men’s 200. British Cycling. US Ladies Soccer. Gabby Douglas. Misty and Kerri in beach volleyball. So much more. To me, London was the best Olympics ever.
It certainly was my most-watched. I probably spent a total of 10 hours on each of the previous Olympics. I spent considerably more time on the London Games. And used my time to watch lesser known events from lesser known places (e.g. Montenegro playing Water Polo).
The NBC web streaming helped. Baby sitting my beagle while the family was in Europe also helped. But most of all, I was dazzled with all the technology and innovation I could catalog on the New Florence blog.
Take a quick glance at the 30 posts – lots of interesting nuggets whether you think they were the best Games or not.
Brent Rose at Gizmodo summarizes the anger many of my tech savvy colleagues feel about NBC for its delayed broadcast of many of the Olympics events (there is a hilarious Twitter account @NBCDelayed which has been tweeting world events years and decades after they happened to make the point).
I am in contrast, a pig in mud, with my cable account-enabled access to the NBC Olympics site. I can go look at any of the 302 medal events, live or archived.
I am being guided by 3 principles beyond the must-see USA Basketball, Phelps/Lockte/Franklin events
a) Spend a few minutes on every sport
I hope to see spend a little time on each of the 32 sports (NBC’s definition which is slightly different from that of the IOC). My family, while athletically not Olympic quality by a long shot, has played in 15 of the sports. The kids have fenced, rowed, played Taekwondo. I have played table tennis and badminton. It is fascinating to see the best athletes in each sport.
b) Expand my geography
My family has traveled to over 60 countries. I am the big contributor with 51 countries on my passports and I am embarrassed that’s only a quarter of the 204 countries at the Games. If I can vicariously enjoy a trip to Montenegro or Kazakhstan through their athletes, so much the better.
c) Explore how technology has evolved each sport
I had to do a double take when I saw a field hockey game. From what I remember the turf was natural and green, not blue astroturf. The ball was white, not yellow. The goalie did not have baseball size gloves. I am fascinated with the “fast pool” at the London aquatic center – how much design elegance and technology it incorporates and blogged about it on New Florence. I see the 5 and 2 meter light beams which have replaced the traditional cones in water polo, and I go Googling for more information on the technology.
My wife and son got to go the Aquatic Center in person for the Saturday swimming heats. I was jealous for a total of 5 minutes. Then I went back to thanking NBC for expanding my horizons in so many dimensions.