Sunday Oct 07, 2007

Why Web 3.0?

As Tim O'Reilly admitted recently, the Web 2.0 meme was created to help businesses get over the dotcom crash. There was no way of getting investors to put money in the web, so it was important to rebrand. Mike Bergman - and many others - may not like it, and quite reasonably so, but this was probably a business necessity. The web of course never died and clearly never will. But since "Web" got associated with bust, Crash, 911 and what not, it was important to emphasize that everything did not end, there was a new beginning. There was a life after Pet Shop stores. This is the point of Web 2.0, and Tim O'Reilly did a great job with his article "What is Web 2.0?" in emphasizing this evolution.

The rebranding was extremely successful. But with success often comes conceit, and it became obvious that major evolutions were being left out of the Web 2.0 sphere. And, as this recent article by Tim indicates, "Today's Web 3.0 Nonsense Blogstorm", the key proponents of 2.0 do not feel like allowing those technologies in, either because they don't understand them, or because they have enough on their plate, or because they find it difficult to speak about it to their investors, or a combination of all of those. It is difficult to explain since as I showed in a recent article that Semantic Web technologies very nicely complement O'Reilly's Web 2.0 patterns. Whatever the reasons for this rejection, it is clear that there is an after Web 2.0 building up, and so the best way to name it is Web 3.0. For some reason this after seems to be unpleasant to the 2.0 folks. Of course since it probably limits the capital they have access too. Competition does that. But it is a limit that they are imposing on themselves. Was it because it was easier for them to build momentum for their ideas? Starting small is a good strategy. But no one can own the whole future. It evolves, and idea that Nova Spivack defends very clearly, and for which he is rewarded by having some clever investors.

In fact we should be glad there is the Web 2.0 crowd and that Tim manages to argue so well at keeping them there, and frightening them from coming over here. Without this boundary it would be much more difficult to explain what is new, and we would end up being overwhelmed by a me too crowd intent on latching onto the latest. (There are a few of those already here, btw.) So yes. Web 3.0 is the future, but it is a risky one. On the other hand as the Web 2.0 space fills up, life will be getting more and more difficult in the red ocean of intense competition, witness the never ending new social networking startups. Inevitably the risks of going three are going to be outweighed by the difficulty of staying in me 2 land.

But if all of this still makes the hair rise up on your head, I suggest using the web n+1 shorthand. That puts you at the bleeding edge always, in a politically correct way. And for the whole thing explained with a lot more humour, see Web 3.0 I$ About Money.

Monday Aug 20, 2007

Purple Ocean Strategy

A few weeks ago I read through "Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant", By W. Chan Kim and Renée Mauborgne of the Insead business school. This book has sold millions of copies since its publication. It is very easy to read, and contains a lot of clear and entertaining business cases by way of illustration, from the growth of the Cirque du Soleil via the story of the turnaround of crime in New York under the leadership of Bill Braton, all the way to Apple's phenomenal success with the iPod.

The Blue Ocean the book refers to is opposed to the Red Ocean of competition in well established markets where optimization and distinction on well understood, standardized criteria matter. The Blue Ocean stands for the new markets created by businesses where there are no predefined standards, no predefined audience, where no industrial feet have yet been placed; in short the sought after space where there is no competition, where huge fortunes can be made. One of the very nice things about this book is how it shows just how much the blue ocean markets can be created in every walk of life, not just where one expects it the most, in technology driven industries.

The aim of the book is to show how these oceans of innovation are created. The tools it develops to make it possible to understand this are very easy to grasp, and make a lot of sense. One point it makes, and that every creator knows, is that you cannot find a Blue Ocean by asking your customers what they want, or by doing simple market studies. Of course these spaces are created by responding to something people really wanted, and feeling for your customers is an important aspect of seeing new possibilities emerge. But the business owner, the entrepreneur - as opposed to the manager ( the book does not make this distinction ) - is the creator of a new value space which cannot be comprehended by the market ahead of time. More so even since by creating something new, the entrepreneur is redefining the boundaries of the established market, and so redefining the audience. The Cirque du Soleil for example changed both the definition of what a circus was and what theater was. In doing that the Cirque du Soleil became a competitor of not just theater and circuses, but also other night time activities people might have enjoyed in their place. The Cirque du Soleil did that but seemed also to appear out of nowhere.

Blue is the symbol of Liberty. The French flag is blue, white and red: Liberty, Equality, Fraternity. Blue in Europe is also associated with conservatism. The history of color associations in the USA is more complex and currently has the reverse association in part due to the stigma attached to the color red in the battle against Communism. Just as with the colors the book presents what are probably very complex ideas in an amazingly simple way. It separates the strands of thought the way a crystal separates light. Like a beat of electronic music it drums these distinctions into the readers mind, so that there is probably no need to re-read the book twice: reading it once is to read it three times. So my following criticism or thoughts will probably be just very facile remerging of what was separated for clarity.

Following the internet and computer industries I have noticed an element of the relation between red and blue that this book fails to make. As our CEO Jonathan Schwartz often mentions on his blog, it is not because one is in a commodity market that one cannot make a huge profit. The electric plug in your house, voltage, wire sizes and many other parts of the electricity industry are standardized. Those are commodity markets. Yet companies like General Electric or Siemens that produce huge generators for large dams or other electrical installations are in some very profitable markets. Without the standardization of the plugs and voltages, the electricity industry could never have grown so big. Standardization I have noticed, can be a stepping stone to building a Blue Ocean, the blue can build on the red.

To illustrate let me take one example from the book: Apple's huge success in recent years. One of the conceptual tools put forward by Blue Ocean Strategy, is that one has to create a new value curve. Remove some aspects of cost and value from a product (no animals in the Cirque du Soleil), change other aspects of value (price), create something new (artistic dance show). One way Apple reduced cost was by adopting open standards. By building on the Unix Operating system developed and used in Universities world wide they removed the major research cost of developing an Operating System whilst gained a huge pool of ready and highly qualified experts worldwide, and all the software that had been built in an Open Source way over time. The default compiler of OSX is Gnu CC. Think of the huge cost reductions that flow from being able to build in such a way on the works of others. By adding the one thing that had been missing from that system, an artistically coherent and beautiful end user experience, Apple gained those people's hearts and support and gave them a unique value proposition, bringing a very important community to Apple that would never have touched it before. By building on these open standards Apple also brings value to the community, if only in the existential example that it can be done, but certainly also over time in feeding back the improvements to the community. Simon Phipps explains how this works in full detail in "The Zen of Free". The same forces at work also lead Sun Microsystems down a similar path to its logical conclusion: by Opening up all of the software stack. As a result Sun and Apple are able to cooperate in numerous ways that would otherwise have been impossible. By working on a standard base Apple can gain award winning technologies such as ZFS at very low cost, allowing it to focus on differentiating itself where its user base's value is: simple packaging, beauty and fluid end user experience. Apple's switch last year to Intel is a similar move, building this time on an industrial de facto standard.
In all these cases reducing costs is not removing something completely from the system as proposed by Blue Ocean (removing the lions), but building on the commoditization and standardization of one layer, thereby bringing the costs down to close to zero. Building on the Red Ocean of community ownership a Blue Ocean of innovation and creativity, in a way that respects the value of the Red Ocean, is what I would like to call here, on my little blog at the end of the universe, Purple Ocean Strategy.

Having gotten this far it may be necessary to enlarge the notion of what is Red all the way to Green. If Red is what is socially established, fraternal ownership, then further along there is what is common to all living things, the biosphere, the Green. A strategy that took this into account would be looking for how to use and build in a sustainable way on that space. It is clear that not taking this into account can be extremely damaging, as the unfolding drama of Beijing Olympics is revealing. How to take it into account effectlively, may get us to the Turquoise Ocean Strategy.

Thursday Apr 19, 2007

Supply Networks

The Supply Chain is dead. Long live the Supply Network!

Ok, that's my take on a very interesting presentation that was given by two young researchers at the Semantic Desktop Workshop in Berlin I attended last week (as attested by numerous photos posted on flickr). In their Amerigo presentation, Sonja Pajkovska-Goceva and Fanny Kozanecki, made a very clear point: in the interconnected world we live in, speaking of supply chains is old hat - companies have complex interrelated supply networks, where one supplier depends on another which in turns depends on a further one, some or more of which may depend on each other. The quality of the network is important in many different ways, perhaps the most topical being to do with the environment. It is no good to outsource your pollution to third world countries; a company is responsible not only for their pollution, but for the pollution of all the players in their supply network: that is their direct suppliers, but also the suppliers of their suppliers, and so on. Being green would be too easy if one could just outsource the dirty part of one's business to Africa...

So in their presentation Sonja and Fanny worked on putting together an ontology for a supply chain network using the Protege Ontology editor. Starting with very little knowledge of the Semantic Web, they have been able to put together a small ontology quite quickly as a proof of concept. Protege is still rough around the edges at times. There are other editors out there such as SWOOP or Top Braid Composer, but none of them are as slick as tools that Java Programmers are used to such as NetBeans or IntelliJ. Still that they got this far is a good sign as to how far we have come. (Btw. I still prefer to edit ontologies by hand using N3 and vim, but I only recommend that with care).

Tools aside, having developed such an ontology, it is easy to see how in the future every product every company will produce will have its own URL, describing what it is made of (further urls) and where it was shipped and to whom. You think we are being open now? Wait until every product, and every action has one too! What we have now is a like a grimy yellowed window compared to the transparency to come.

The Semantic Web is clickable data.

Monday Nov 13, 2006

New York Times Article on Web 3.0

In Entrepreneurs See a Web Guided by Common Sense the New York Times has launched what I think is the beginning of the breakthrough of the Semantic Web into public consciousness. Now public consciousness is a huge force that moves according to its own rules, with its own language, and follows its own logic. It is a force that is difficult to contain when unleashed. I hope we will be able to control the wilder expressions of it, keep it moving in a reasonable path, towards this quite amazing goal. Here is a short extract:

Their goal is to add a layer of meaning on top of the existing Web that would make it less of a catalog and more of a guide — and even provide the foundation for systems that can reason in a human fashion. That level of artificial intelligence, with machines doing the thinking instead of simply following commands, has eluded researchers for more than half a century.

Referred to as Web 3.0, the effort is in its infancy, and the very idea has given rise to skeptics who have called it an unobtainable vision. But the underlying technologies are rapidly gaining adherents, at big companies like I.B.M. and Google as well as small ones. Their projects often center on simple, practical uses, from producing vacation recommendations to predicting the next hit song.

But in the future, more powerful systems could act as personal advisers in areas as diverse as financial planning, with an intelligent system mapping out a retirement plan for a couple, for instance, or educational consulting, with the Web helping a high school student identify the right college.

This is very good in that it clearly states how this is working with the vision of Web 2.0, of simple services, easy to understand and manipulate data (served in a RESTful manner). The vision will lead to amazingly powerful systems. But the steps to get there should be very simple. The first step is for companies to open up their databases, the way I recently showed by exposing the Roller blogger engine, and so profit from the network effect (see Metcalf's law) as the data about their products becomes more and more easy to combine in novel ways with other information out on the web.

It is good to see how the Semantic Web community is being careful to control the hype. Here are some responses worth reading by key members of the community:

Having said that, we do need a little hype. If only to avoid people unnecessarily reinventing the wheel as happened recently when the CEO of mysql gave a talk where he set out a vision that is pretty much identical to the Semantic Web, oblivious to the 8 years of intense work that have been going on quietly at the W3C.

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