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Re: thoughts on disruptive innovation as synthesis between incumbent and startup

2004-12-23 02:59:36

----- Original Message ----- From: "Meng Weng Wong" <mengwong(_at_)dumbo(_dot_)pobox(_dot_)com>
To: <spf-discuss(_at_)v2(_dot_)listbox(_dot_)com>
Sent: Wednesday, December 22, 2004 12:25 AM
Subject: [spf-discuss] thoughts on disruptive innovation as synthesis between incumbent and startup


background: phishing leads to direct losses in the
$500,000,000/y range.  I argue that given $500,000 in
funding we can make a significant dent in that figure.
Investments in antispam standards development pays society
back at something like a 10,000% rate of return --- it's the
same kind of public good as, say, electricity, an effective
legal system, or running water and sewage.  without it,
things fall apart.

This is why I've been working on finding funding to take
SPF+SRS+SES+DK to the next level.  I have already seem some
verbal commitments in the five-figure range from big
enlightened companies.  Yahoo, for example, is to be
applauded.  I am also seeking funding from government
bodies, eg. HSARPA and ida.gov.sg.

But if funding never shows up, at a macroeconomic level,
what that really means is that the world wants to retire
email and move on to the next new messaging infrastructure
which can generate new fortunes --- for example, p2p email
is probably 12 to 24 months away.

And will cost 20 times as much or more. SMTP *cannot* be simply retired, it's too woven into much software and business policy and even some small amount of legal structure now.

You would think that a rational bank manager would spend $X
to save $Y, as long as $X < $Y.  In practice, two things get
in the way of that decision.  First, there is an uncertainty
discount because we're only about 20% confident that the
plan will work and $Y will be saved.  Second, budgeting
creates domains of irrationality.  The bank manager is not
actually motivated to act in the interest of the overall
firm; he is motivated to act in the interest of his
division, and his division (technology development) is in
direct competition with the other division (risk management
and fraud) for resources.  So the internal competition model
of the firm is a failure, at least in this case.  As an
industry we haven't crossed the Prigoginian boundary of
complexity yet where competition gives way to cooperation.

Well, yes. The classical example in the geek world is LCD monitors. In most cases, they're a fabulous investment, because they take less very expensive desk space (which means more usable desk work space instead of buying bigger desks), less eye strain, less trouble shipping and handling and installing larger CRT monitors to get the same performance, and most important of all, less heating and cooling costs. Usually they more than pay for themselves in 2 years.

But that money comes from a different pocket, and the larger expense of a monitor up front (over $500 for a good LCD monitor) turns it into a capital equipment request, which is a paperwork nightmare and means you have to do weird things with it in your budget for 3 years. It's.... painful and often requires another signature. So managers avoid doing it, and leave their capital equipment budget for more critical tools such as tape libraries and servers and department-wide printers.

This is the sort of thing that drives the engine of
disruptive technologies and brings innovations to market.
Stupid, selfish incumbents caught on the horns of the
innovator's dilemma are a necessary antithesis to the
technology startup.  They are both essential ingredients of
innovation.

Oh, I wouldn't call them essential. Common ingredients of the business models to get innovation into play, sure. But innovation can also come from things like the Japanese model of "doing the little incremental changes on the factory floor that just make it slightly more usable and don't cost a lot to do", which is how the Discman became such a damned good design. That doesn't take the "big vision" thing, just listening to the actual users and the people on the factory floor who know how the tools work.