chris horn's blog

A couple of weeks ago on the last Saturday of March, the Irish Times, a popular broadsheet here in Ireland, included a full paper reproduction of the 4 pages of its very first edition, from 150 years ago and launched on the 28th March 1859. It is a fascinating read, not least because the entire front page is given over to advertisements. I also found the style of writing captivating - archaic but nevertheless highly articulate. The editorial contains the opening paragraph:

"The appearance of another Journal in the field on Irish politics demands a brief explanation from its projectors. It will be asked - Where is the room for this new competitor for public favour ? Is there any definite set of opinions which is not already represented in the Irish Press ? From the silly Radicalism of the Phoenix Club to the dense Toryism of the Orange lodge, what doctrine lacks an exponent, what party an organ ? If no deficiency be felt, is the multiplication of newspapers a good, per se, that the proprietors of the Irish Times think fit to add one voice more the existing Babel ?"

The editor, Laurence Knox - who personally signed the inaugural edition - goes on to justify the appearance of the new newspaper as a voice independent of politics or partisismship. Reminiscent of Deng's famous assertion a century later - "No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat" - Knox goes on to assert "Every year sees a larger and larger proportion of our population indifferent to the manoeuvres of faction...They are anxious for good government, but care little in whose hands the government may be placed".

The contemporary Irish Times commentator Fintan O'Toole recently wrote an excellent assessment of the then national context in which the Irish Times was launched. He believes that Knox's aspirations were perhaps a heroic denial of the political climate, but that from the lengthy perspective of 150 years later, Knox was perhaps not as naive as first imagined.

Ironically the same issue of the Irish Times (on 28th March 2009) also contained a topical assessment of the newspaper industry, from the paper's America based correspondent Denis Staunton. He discussed Maryland's Senator Ben Cardin's initiative to use tax policy to try and save what is left of the US newspaper industry. Cardin is of the view that it is in the US national interest, for good governance and for democracy, that at least some newspapers survive.

Devoting the entire front page to advertising may have worked well in 1859, but with advertising revenue now under immense pressure and readers migrating to free global news sources on the internet, something has to change. Web based newspaper subscriptions in general have not been particularly successful. Web based advertising is a challenging model for newspapers, in the face of Google.

What can be the future of the Irish Times, and newspapers like it ? Perhaps tongue in cheek, last January I responded to a request from the Irish Times for some crystal ball gazing - what was the company to watch in 2009 - by identifying the Irish Times itself! Will the Irish Times, and newspapers worldwide like it, survive in its current form by January 2010 ?

In my view, there are three major aspects of the essential content of a newspaper: reporting, investigation, and commentary.

The role of reporting news and events would seem well fulfilled by the density of the web itself. Timely notification of events can be reported almost by anyone: the use of Twitter by Jim Hanran, an ordinary member of the public, to first report on the crash landing of US Airways 1549 in the Hudson is an obvious example. What therefore does the traditional news reporter bring to the web ? The general answer should surely be honesty: readers are generally attracted to reputable reporting, despite occasional reporters such as The News York Times' Jayson Blair. Honesty on the web is always difficult to certify, but other web based systems leverage reputable participation - eBay auctions come to mind, perhaps also Wikipedia's consensus mechanism. However honest and reputable reporting on the web certainly is not the sole domain of newspaper reporters.

What about investigative reporting ? Most democracies can point to occasions when an investigative reporter brought malpractice to light. The Washington Post reporters Bob Woodward and Carl Bernstein's exposure of the Watergate scandal is possiby the most renowned. Here in Ireland we still mourn the Sunday Independent's Veronica Guerin, assassinated for her investigative reporting of drug trafficking.

Investigative reporting surely serves the public good. Will our democracies come under threat if there is no longer a business model for newspapers to exploit, and thus no money for investigative reporting ? This thinking seems to overlook the integrity of most members of the public: ethical employees can be appalled by what they see in their organisations, and can and do speak out. Sherron Watkins at Enron blew the whistle on her employer's malpractice. In Ireland, James Gogarty's whistleblowing led to the Mahon tribunal to investigate payments to corrupt politicians. With the internet, whistleblowers can quickly bring concerns to global public attention - India now has several public web sites (eg corruption in india, and whistleblowers) devoted to whistleblowing, particularly following the murder of Sri Satyendra Dubey. Democracy and accountability is probably best supported by well considered whistleblowing processes, which both protect a valid whistleblower but also protect an organisation from inaccurate allegations. Democracy need not rely on the finances of newspapers to underwrite investigative reporters.

Commentary, opinion and analysis is perhaps where great newspapers add most value, separate the significant from the trivial, and correlate patterns to extract observations. But there appears no inherent reason why articulate observation should just be the preserve of a newspaper: the online community and bloggers can equally serve society at large.

Clay Shirky recently blogged that the current business model of newspapers seems doomed, and replacement models have yet - if ever - to appear. Jeff Jarvis argued back in 2005 that saving newspapers is not the same as saving newspaper jobs. Perhaps it really is time to confront the unthinkable: the newspaper, as we know it, may be doomed.

Does the internet really signify the demise of the newspaper ?

Most newspapers do serve the public good. Senator Ben Cardin's Newspaper Revitalisation Act would enable US newspapers, if they so chose, to become not-for-profit organisations, thus benefitting from tax exempt advertising and subscription revenue. Members of the public could make tax deductible contributions to their favourite newspapers. I understand that public service broadcasting is similarly tax exempt in the US. Using the tax code in this way may be an approach, but I do wonder how effective newspapers may be able to operate if they come to rely on regular voluntary donations from their reading public to cover their costs of distribution and of professional staffing.

Are there any other different business models for those online newspapers which do serve the public good ? In Ireland, we have a national license which every TV set owner is supposed to pay to the Government, which in turn is used to support public service broadcasting. Could there be an online tax for public service newspapers ? Perhaps a Government could impose a tax on all internet service providers nationally, since they represent the national access points by the public to the internet: then directly, or via a neutral third party agency - use the money collected to allocate to online public service newspapers. An interesting thought perhaps, but I'm unsure the economics would really work: would internet users really accept what would amount to a personal daily tax of several euros just to support online newspapers ?

Some have given thought to a micropayment model for individual newspaper contributions. This would presumably operate something akin to iTunes: individual newspaper articles could be disaggregated - like tracks from a music CD - and made individually readable and paid for. But a musical track is a marketing teaser to promote itself: if you hear a piece of music and like it, you'll want to hear it again (and perhaps again and again) and so may be tempted to buy it from an online store. A newspaper article is typically by contrast a singular experience: having read it, you are unlikely in most cases to seek to read that particular article again.

As I reflected on the demise of the newspaper, I also reminded myself that a newspaper is a mirror held up to reflect society and the world to the eyes of its readership. It informs its readers about what is happening, and tells them something about themselves and their community, in the terms and ways to which they relate. If newspapers were to disappear due to the impact of the internet on their business model, what could be done on the internet to replace these lost mirrors on society and the world ?

In a newspaper, a selected few contribute articles and news, with feedback from ordinary members of the public filtered through the letters to the editor page. In the internet world, everyone can openly contribute. We can read posts and comments and blogs and emails and tweets from anyone. We can use Google to try and find interesting items, but even then it is easy to get lost in the morass, and perhaps miss what we ourselves find particularly interesting and significant. The specific newspapers we buy by contrast in general do a good job in only presenting articles which we ourselves find interesting and significant, filtering out the mundane, and presenting information and comment which in general match our own particular ethos and values. Any online replacement of a newspaper is going to have to do something similar.

In my view, wiki technology already provides the basis. A wiki is a web site in which not only can anyone read its content, but anyone can also edit the content, as result of Ward Cunningham's work in the 1990. At first this sounds extraordinary - what prevents somebody from editing accurate content and defacing it ? In fact, the answer is nothing, and defacement happens - however, the wiki keeps a record of who edited what, and what was the previous version (and the previous version to that and so on). Anarchists and political pundits can quickly be identified by the community of like-minded readers, isolated from the wiki so that the wiki refuses to accept any further edits from these rogues, and the maverick changes made by these fraudsters are quickly unwound.

The consequence is that the community of bona-fide contributors work together to make the wiki better and better, capturing the best inputs from everyone, and discarding the weaker edits. The system becomes Darwinian - in the view of a specific community, the best survives for that community, and the weakest is dropped. A wiki thus captures the "wisdom of a crowd" - the collective wisdom of a particular community of readers and contributors.

Social networking sites - such as Facebook, LinkedIn and others facilitate loosely coupled communities to evolve. Communities of people with common interests can quickly emerge.

Is it not possible to think of online newspapers evolving to become social newsworking ? A (potentially large) group of people with common interests and ethos could share their reflections on society and the world at large using technology derived from the current generation of wiki support and of social networking. Different social newsworks would of course emerge, reflecting the diverse opinions across societies. Each social newswork would combine - as today's paper based newspapers do - reporting of news and events, including of an investigative nature, with analysis and comment. But unlike a newspaper of today, a social newswork can reflect the wisdom of an entire community of like-minded individuals, rather than just of its editor, its staff and its contributors to its letters pages.

Social newsworking as a concept is not novel. Apart from user contributed newsites such as Reddit and Digg, one of the most interesting from the my perspective is Newsvine. Anyone can write articles, and discuss items submitted by anyone, including by professional journalists, but unlike a wiki cannot update in place previously submitted text. But in my view and as I understand it, Newsvine just aggregates and links articles together, but does not merge and synthesise. Some newspapers - such as The Washington Post and The New York Times - also actively link to internet articles outside of their own web site, and thus attempt to aggregate: but there is no merge and synthesis.

Wikinews is another social newsworking site, and does allow users to edit and update the text of others, just as for Wikipedia encyclopedia entries. However Wikinews itself aspires to offer a neutral perspective, and to be even handed.

My own view is that social newsworking can only succeed if each site in fact does not try to be even handed and neutral, but instead biased towards the ethos and philosophy of its community! Misinformation and sensationalism arguably thrive on sites such as Digg and Reddit because anyone can post, and anyone or small group can contrive to vote specific postings up or down the popularity charts. On the other hand, wiki technology could be used by a group of like minded individuals to ensure that only postings which match their ethos survive the evolutionary editing process. Rather than trying to be all things to all people and thus neutral - such as wikinews - it is probably more pragmatic to instead focus a social newsworking site around a community of like minded people who can reinforce their particular beliefs. After all, in my view, that's what our current newspapers already try to do.

A social newsworking site can of course be a free service to its community. However, an online community of like minded souls is more likely to be a successful opportunity for targeted advertisements, which raises the possibility of an effective and focussed business model. Perhaps the advertisements themselves could even become wiki based, and thus allow the content of an advertisement itself to be updated and edited by the community of its consumers. A social newsworking site could, in my view, have a viable business model if so desired, despite competition from majors such as Google or even Craigslist.

Laurence Knox, the first editor of the Irish Times, saw in 1859 - perhaps pretentiously - that his newspaper would represent a particular section of Irish society, distinguishing itself from others sets of opinions already available in the Irish press, and perhaps severely limiting his market (!):

"On intention, in short, is to make the Irish Times a first rate Irish newspaper, complete in its details, sagacious and consistent in its policy, and faithfully reflecting the opinions of the most independent, intelligent, and truly progressive portion of Irish society."

Social newsworking has the intriguing possibility to combine focussed audiences with a wider democratic reflection on the presentation and analysis of news, than can today's newspapers which are hampered by advertising based and subscription business models and in almost all cases, their shareholder returns to their owners.

There's some considerable debate here in Ireland about the need to "up skill" our economy, in the light of loss of jobs to lower cost economies. I however contend that there is not so much a need to "up skill", but to "core skill" - to get back to fundamentals and thus ensure that we have a solid foundation of lifetime skills.

One of the key attractions which as a nation have used to attract and retain our comparatively high levels of foreign direct investment in Ireland has been the availability of a talented, well educated and technically oriented workforce. If we in Ireland aspire to build a future for our own young people as a leading nation for innovation; with high value services; succeeding as a knowledge-fuelled economy; having good, stable and well paid jobs; and with the ability to afford high quality social support for the weaker members of our society, then education in core intellectual skills are inextricably intertwined with our future.

Our young people should be able to reason, to deduce and derive, to correlate and spot patterns, to explore and to be inquisitive, and to be articulate and confident. In my humble view, these are more life centric skills than learning facts and perspectives by rote: knowing something off by heart, but not understanding why, why not, and so what. Skills taught in schools should be for life. There are many things which can be learnt during adulthood, but some skills which are difficult to learn without a solid foundation during the teens and 20s.

Without these skills, we will have little to offer the 21st century global economy. If our young people are weak in core skills, many of them may not find well paid careers in Ireland nor overseas: these jobs will go to other nationals in other economies.

In my view, and I admit as an elderly grey traditionalist, mathematics is a critical catalyst to careful reasoning and deduction. Mathematics is too vast to be learnt by rote and instead requires insightful thinking and intellectual clarity. Taught well, it enables core intellectual skills for life. It also makes learning easier, not just for mathematics, but many other subjects, since understanding comes from reasoning, rather than learning by rote.

The decline in the Irish attainment of mathematics and core sciences has been gradual. It has perhaps gone unnoticed by many, but major employers across a range of business sectors of strategic importance to Ireland are seriously concerned to see substantial decreases in the number of our students taking technology courses, and in particular the fall off in those taking mathematics. If we all aspire to build a future for our young people as outlined above, then competence in mathematics is a cornerstone. Competence in mathematics underpins not just engineering and the physical sciences, but also sectors such as alternative energy and green systems, financial services, medical research, and cross disciplinary areas such as bio-engineering. For so many areas of our potential national prosperity and quality of society, competence in mathematics is critical.

With further government budget cuts imminent, there is a very serious risk that teaching in mathematics and the core sciences will dramatically suffer further. This is especially so at secondary school (high school, in Ireland) level, since these subjects are perceived as resource intensive and difficult to teach. The Principals of eleven secondary schools of one Irish county have recently jointly written an open letter to all the parents of all their students stating that in view of Government cutbacks, they may no longer be in a position to teach honours mathematics and sciences at all in their schools. There is further anecdotal evidence of schools consciously cutting their teaching programmes in areas which are nevertheless critical to the future of our nation, as their way of meeting newly imposed budgetary constraints.

Incredibly, almost 20% of our schools no longer offer honours mathematics to their students. In 2007, only 14% of Irish university applicants to honours degrees had achieved honours mathematics capability in school.

It is also widely accepted that several factors need to be urgently and collectively addressed to resolve this issue: the professional development and inspiration of mathematics teachers; the teaching and examination methods of honours Mathematics; and other implicit disincentives to students such as points, grading and curriculum factors.

Points, in particular, deserve mention. In Ireland, we have a highly unfortunate and ill-conceived national system of awarding points in our school examinations for grades obtained, regardless of the intellectual difficulty of any particular subject. Earning points by studying honours mathematics is widely projected as overly difficult when equivalent points could be earned for less effort elsewhere. Students are in some cases explicitly advised by some teachers and advisers to take a cluster of subjects which together may overlap in content and collectively make points accumulation easier, regardless of career aspirations. Students who score particularly high totals of points, are under considerable pressure to undertake university degrees which require high numbers of points to apply, regardless of their career aspirations: "don't waste your points". University courses with limited places (due to resource constraints) usually require high levels of points. Courses which offer wonderful career opportunities do not necessarily require extremely high points, and high scoring students usually as a result do not take them.

Examinations are ill constructed. Substantial question choice enables teachers to omit major sections of a course syllabus, thus focussing students on a more limited syllabus which is likely to be sufficient to earn examination points. I'm aware of university professors aghast that some first year university students, ostensibly with high numbers of points, arrive into technology degree courses without any knowledge, for example, of trigonometry: some teachers omit trigonometry from their teaching, correctly believing that high points can still be achieved by filtering out questions during an examination.

In my view, our economy can no longer afford to be impartial in the content of its educational services. Some topics available at our schools can be learnt at any stage in life: others are much more difficult to do so.

Teachers should be encouraged to foster reasoning, deduction, derivation, correlation, exploration and curiosity, intellectual clarity and insight, fluency and confidence. Mathematics and the core sciences are clear catalysts. Teachers who achieve consistent success in their students in these subjects should not only be acclaimed but also receive fiscal reward - if this cannot be done through Government pay, it may be possible to do via industry sponsored competitions. Teachers whose own core skills are weak should be offered re-skilling and professional development. Considerably more use should be made of the web - including podcasts and vidcasts to complement the music on students' personal players - to cultivate dynamic, current, interesting course material: social free educational networking can compensate to some extent weaknesses in any specific teacher in a particular school.

Our country needs to get back to basics: core skills taught well, rather than nebulous "up skills". Mathematics and the core sciences are one critical foundation.

Dell finally announced yesterday that they are winding up their manufacturing operations in Limerick, and instead focussing their European manufacturing investments in Lodz, Poland.

Dell has been a major employer in Ireland, responsible for 5% of GNP according to one estimate. The immediate loss of jobs in the Limerick plant will be 1,900; and with estimates of consequences for a further 1,500 jobs which in firms which directly supply the plant, and a further 7,000 jobs in other industries at risk.

Although the demise of Dell's manufacturing was not a surprise, I was frankly surprised and disappointed by aspects of the way the announcement was made. Dell quite rightly insisted that they would tell their own staff first before anyone else. However I believe it was unprofessional and pusillanimous of Michael Dell, the Dell CEO, not to make the announcement in person himself in Limerick in front of his own staff. He instead sent his VP Operations, EMEA. Michael has been the beneficiary not only of professional work by his own manufacturing staff in Limerick, but also personally of the plaudits by the local community on his several visits to Limerick over the years, not least an honorary degree from the University of Limerick. He was a gentleman enough to receive these accolades, but not man enough to deliver his savage news in person to his own staff.

I was also astonished that the Minister for the Department of Enterprise, Trade and Employment (DETE) and co-incidently also the Tanaiste (Vice Prime Minister), Mary Coughlan chose not to appear in person in Limerick. Instead she relied on the local Limerick Minister, the Minister of Defence Willie O'Dea, to be present. In my recollection, previous Ministers of DETE have usually been on hand at the times of major job losses. In fact, as a result of her absence and residence in Dublin Mary Coughlan may have sent the Irish public a not so subtle message: maybe she does not support Willie O'Dea in Limerick and his statements about the future prospects with Dell.

Mary Coughlan is apparently due to travel with the Taoiseach (Prime Minister) Brian Cowen to Japan next week to lead a trade delegation from the Irish business community. The timing of this trip could probably not be worse relative to the Dell announcement and the general poor economic condition. One can only hope that Brian Cowen and Mary Coughlan will return to Ireland with very major significant positive news of substantial Japanese investment and business contracts: presumably that is why they are still travelling despite the rapidly deteriorating domestic economic situation and the anxious Irish public.

I said in my opening statement above "finally announced". I think there was a strong fear for some time - maybe even two years or longer - that Dell would stop its Irish manufacturing sooner or later. That being said, I personally do believe the stated Dell corporate position that the decision was only made within the last week, despite some Irish media accusations to the contrary. In a public company, such major announcements are generally material, from the legal perspective, to the public investor community. Public announcement of a major decision thus usually follows immediately after the decision itself: otherwise there is a danger of leaks and the strong possibility of criminal "insider trading". The actual decision was therefore in fact almost certainly only made very recently.

Nevertheless, there was indeed a fear and suspicion for some considerable time that Dell would stop its Irish manufacturing. It is surprising therefore that our Government appears to have poorly handled the announcement. There was plenty of time to prepare a well considered contingency plan, and immediately initiate it. Indeed, I suspect that such a plan was almost certainly prepared by agencies such as the IDA, Forfas and Enterprise Ireland - they are staffed by competent professionals. Perhaps the apparent mismanagement of the consequences of the announcement by the Cabinet and Ministers is symptomatic of a much deeper issue: the Cabinet is overcome by the tsunami of bad economic news, does not know what agencies and advisors to work with or even trust, and is frankly paralysed and frozen in the headlights of the media and of public anxiety.

A senior civil servant today commented to me that it is amazing to consider the turn around in Prime Minister Brown's performance and public perception in the UK. From a period just last July, when he faced a back benchers revolt and the opposition leader David Cameron looked to be the inevitable victor, Brown has executed a stunning turnaround and is now neck and neck with Cameron, if not ahead.

Prime Minister Brown is performing. He is taking visible and urgent actions and steps, and has set out a direction to lead his people...

Looking ahead here in Ireland, it is very clear that we cannot rely on manufacturing activities to sustain our economy. We do have very valuable operations continuing here, not least in IBM, Intel, Apple and HP. The challenge is whether we can nurture our own cohort of Irish companies to leverage such multinationals as a global distribution channel. Are there products and services which we can supply to these companies regardless of where they happen to currently position their own manufacturing operations (hopefully yes in Ireland, but not guaranteed to continue to be so) ? What new products and services can we build, offer, license to them that add value regardless of where they happen to have their operations ?

The answers of course include both new innovations and more efficiently produced current products and services. But amongst the answers is also the strong possibility of building businesses by sublicensing results from the multinationals themselves, with early and nascent markets - I wrote about this in an earlier article.

Our enterprise strategy must evolve - quickly - in Ireland. We need to focus increasingly hard on innovation in Ireland, and building our own companies by exploiting the opportunities which the presence of the multinationals here create.

The doomsday is that Ireland deteriorates to become a domestically traded services economy: services sold within Ireland to support the goods and services we import.

We do not need to "up-skill" so much as "core-skill". "Upskilling" is nice political camouflage, but frankly a shallow aspiration. We instead need to ensure that we have a strong foundation in the core skills - not the "up" skills whatever they are - which are necessary for innovation, insight, and the development of a true indigenous enterprise culture.

A few weeks ago I posted a link to an article which I had written for the Irish Times Innovation monthly magazine.

I'm becoming an occasional columnist for it, and another article appears here in today's edition. The spelling mistake in the title of the online version is their mistake, not mine!

Happy New Year , and thanks for watching my blog..

I was on a long haul flight last weekend, from Hong Kong to San Francisco – one of those wonderful flights where you land before you take off – on the way to the next installment of the Leadership For growth programme being run by Stanford Graduate Business School and Enterprise Ireland – see one of my previous posts for the background. Picked up the current issue of The Economist at Hong Kong airport, which I read on an occasional basis, the issue with Tony Blair on the front cover, to pass the time. There’s an interesting article on business schools, and how they are beginning to regain their lost vogue from earlier this decade.

I was the Chairperson of the Irish Management Institute a few years back, which was a little strange because I have no formal background whatsoever in business management, economics or finance! One of the raging discussions we had at the board level of the IMI was what should be the future of executive education in Ireland, including the relevancy or not of business school teaching to the needs of modern entrepreneurship and global business development. I found The Economist article thus particularly interesting, since it alluded to discussions about whether international business schools have lost their way and value.

Then, by coincidence, Monday’s Financial Times had a supplement on Business Education, including its international ranking of the top global executive education schools. It carried several very interesting articles suggesting that the top schools have changed their product from business education to business advice, and almost to management consulting. Customisation of curricula and classes lead to faculty not so much teaching, but instead providing insight in a discussion about specifically how to address issues within a client company, and/or specifically how to apply a particular idea or theory within a client company.

One of the things I had asked myself during my years at the IMI was whether there can be such a thing as a management profession. A profession, by definition, implies some core knowledge, which may be expanded and refined over time by appropriate research and in the light of experience; a way of asserting that an individual has attained a particular level of competence in that knowledge, and therefore can be admitted to the profession; and a code of ethics particularly as to service to the public, including appropriate disciplinary actions if these should be broken (The Economist article makes similar comments). As a professional engineer in Ireland, I am comfortable that Engineers Ireland operates our national engineering profession accordingly. The medical and legal professions are of course similar examples.

But can there be a management or business profession ? Is there a body of knowledge, an admissions procedure, a code of ethics and a disciplinary mechanism ? Can there be a guardian organization for the profession ? In fact should there not be one, so as to protect the public and including shareholders and investors ? However would such an organized profession stifle innovation and entrepreneurship ? As The Economist observes, Bill Gates dropped out of university and would presumably never have made the grade to become a “professional business manager”.

Hmmm. So what is executive education all about ? Can business management ever become a profession ?

I hesitate to comment further in general for all industries, but I do have some views more specifically as applies to the software industry.

In the mid 90s I had the sincere pleasure of having John Cullinane on the board of directors of IONA. John, as I am sure you know, founded and ran the first software company to file an IPO, the first billion dollar software company, and the first company to do a Super-Bowl ad! His company Cullinet was well known during the 1970s and 1980s. John has written an excellent summary of some of his lessons from those years, which I believe are as applicable today to software companies as they were then, in his book “The Entrepreneurs Survival Guide: 101 Tips for Managing in Good Times and Bad”.

One of the things John said to me early on as a board member at IONA was “You know Chris, managing a software company is actually easy”. I did a double-take when he said this to me, but he explained what he meant and I now basically believe he is right. Certainly compared to companies with manufacturing operations, managing a pure play software company would appear easier. I personally believe – and I sure some may wish to disagree with me – that the key operations of a software company (in no particular order) - engineering and software development processes; distribution channels and sales management, including compensation structures and channel conflict resolution; market segmentation analysis and product marketing; product management; professional services fulfillment; pre-sales technical support; after-sales support; product maintenance and upgrades; financial management, including financial planning and administration; internal IT systems; HR management, staff compensation, and gaining staff commitment; corporate marketing and PR; corporate governance; board procedures; management metrics and key performance indicator analysis; customer care and stratification; even M&A post-integration – in summary, all the functions of a modern software company are now reasonably well understood. There is – arguably – a body of knowledge out there which I suspect many of us in the industry would agree represents best practice in the industry, accumulated over the several decades of the pure play software industry since Cullinet. Listening and participating in the year long Leadership for Growth Programme here at Stanford has re-enforced my view. Perhaps somebody should write a book some time to capture this current body of practical knowledge – how to run a software company.

I guess if what I suggest above is true, then in principle two rival companies with very similar product offerings, and very similar strategies, and of very similar sizes, in principle should be unable to out-execute each other. That is a controversial claim, since execution is key to the success of any software company: but I do believe that a professional experienced software CEO is unlikely to make mistakes in execution, since what is needed in execution is actually now reasonably understood across the industry.

Competitive advantage then in the software industry is increasingly unlikely to come from execution alone. Instead, in my view, advantage comes from strategic insight and analysis, from new products and new business models. Advantage comes from understanding the current state within a particular segment of the industry, and leveraging that to introduce new products and services, perhaps in new ways, and which add sufficient value to motivate the market to invest and customers to buy.

“Success is 10 per cent inspiration and 90 per cent perspiration” said Edison. I think that the 10 per cent inspiration to conceive of a new idea is perhaps right; the 90 per cent comes not from actual execution, but from analysis and consideration of whether that new idea is actually worth executing upon – building a strategic plan and getting comfortable with it. If the strategic plan is worth executing on, then the steps to actually execute, given the body of knowledge about modern software company operations, are reasonably straight forward to identify: it should be reasonably obvious what needs to be done, and it becomes a matter of trying to actually do it.

An accepted body of knowledge will not, in my view, stifle innovation. Bill Gates would not have suffocated had such a pragmatic tome been available to him.

Perhaps I’m just representing a personal bias. I get excited by discussions on the state and direction of the industry, and where the current leverage points and opportunities are. I get less excited by discussions about operational issues, which of course are important and critical, but reasonably obvious in what needs to be done. Innovation in the industry creates competitive advantage; sheer execution is increasingly unlikely to do so.

I’m open to counter-persuasion. Flame suit on. What do you think ?