Data is the engine of the fourth industrial revolution

“Data is the new oil and we are in the midst of the fourth industrial revolution that is driven by the internet of things. The old fossil fuelled industrial revolutions are in their dying days and we are seeing the birth of a new era that will reshape everything that we know.”
– Kate Carruthers

Last week at the 2018 Stanford University Women in Data Science Conference in UTS Sydney I spoke on a panel along with Theresa Anderson,  Ethel KarskensNicole Dyson , Aurelie Jacquet,  Joanne Cooper, and Angela Chin. 

As first speaker I got to set the scene for the remaining speakers, here is a summary of my remarks.

My remarks

One thought to start with. I am currently the Chief Data & Analytics Officer at UNSW Sydney, and this job did not exist when I left school, and this job did not exist when I graduated from university. So, do not worry about educating kids for the jobs of the future when we probably cannot even imagine what those jobs will be. We’re at an exciting point now where people can’t be trained for the jobs they’ll have in the future because they don’t exist yet. Of all the things that I have studied, history, philosophy and anthropology have been among the most useful. And they have actually been a good grounding for an unknown future.

Data is the new oil and we are in the midst of the fourth industrial revolution that is driven by the internet of things. The old fossil fuelled industrial revolutions are in their dying days and we are seeing the birth of a new era that will reshape everything that we know. We’ve had industrial revolutions before, this is just the next one.

Data scientists are the currently the new high priests, but not for long, as algorithms take over from them. Data engineers are the new coal miners, preparing the data ready for use in new applications which are only now emerging.

This is the next stage of the digital revolution. It includes VR/AR and the internet of things. Everything will change. Things that were impossible will become possible.

Things that will change

Among the things that will change are:

  • Education is on the brink of changes, and it will make the way that we were educated so divergent from the modern world. Technologies such as VR and AR will drive change in the place and nature of education and the role of educators are shifting from chalk and talk to technology and facilitation of discovery.
  • Science and Engineering will bring us new technologies such as quantum computing and CRISPR-Cas9 genome editing technology that will revolutionise everyday life.
  • Medicine is at the start of a new world of genomic medicine powered by data, AI and machine learning.
  • Home life with intelligent devices like Google Home and Alexa are reshaping how we manage our homes.
  • Autonomous vehicles are becoming a reality faster than I had imagined a few years back.
  • Jobs will change – some jobs will go, for example truck drivers, and new jobs will emerge as things like autonomous vehicles become the norm.

All of this is powered by data and enabled by the internet of things.

The people who are educated in data will be well placed in this new economy. Data science and cybersecurity grads will be well placed, and we are already seeing this in the graduate outcomes.

Challenges

We still face big challenges with things such as privacy and identity management. There is still no one ring to rule all in identity. The threats to privacy and data security are increasing. With biometric data being stored by companies in the cloud, our identities with our unchangeable features such as voice and finger prints, are now more at risk than ever.

Also, we face threats such as the increasing corporatisation and creation of proprietary goods from our data. As folks say if you’re not paying then you are the product.

And this means that old fashioned things like ethics will become increasingly important in both education and in business.

I’m particularly (and increasingly) interested in digital ethics. I think that we will need to develop customary practices that embed ethics into software development. Ideas like privacy by design and security by design will need to become commonplace.

There are huge opportunities offered by this new industrial revolution. There will be winner and losers. And the higher education sector has an important role in both inventing this future and in preparing young people to be a part of it. It is certainly an interesting time to be alive.

Thank you.

Image: By DARPA (Defense Advanced Research Projects Agency (DARPA)) [Public domain], via Wikimedia Commons

Data For Public Good

I’ve been meaning to share this discussion for ages: from the Constellation Research Conference last year on Data For Public Good.

Data data data everywhere but what to do with the deluge?

It was a wideranging discussion about how to extract the signal from the noise and ponder how data can be used for the public good. The panel discussed the power of data for health care, public sector, education, and society, and how organistions can tap in to the power of data and do good. It is clear that there is no guarantee that data will do good without our help.

Moderator: Doug Henschen
Chief Data Officer at UNSW Australia: Kate Carruthers
Director at NDSSL, Biocomplexity Institute of Virginia Tech: Madhav Marathe
Principal Digital Architect, ASRC/Federal Communications Commission: Andrew Nebus

Executive Exchange – Data For Public Good from Constellation Research on Vimeo.

Some thoughts on digital and data Ethics

‘We ask ethical questions whenever we think about how we should act. Being ethical is a part of what defines us as human beings.’
The Ethics Centre, Sydney

Humans have been thinking about the moral principles that govern our behaviour or the way in which we conduct ourselves for aeons. We are moving at lightspeed towards a new and exciting future that is built on algorithms, data, and digital technologies. Ethics is an area of increasing importance since we are barreling forward with the proliferation of data through digital and IoT and there seems to be little opportunity to slow things down.

I’ve been thinking about digital and data ethics since I joined Steve WilsonDavid BrayJohn Taschek, and R “Ray” Wang  on a Digital Ethics for the Future panel with in 2016.

5 propositions about data

  1. Data is not neutral – that is all data is subject to bias
  2. There is no such thing as raw data – that is, by the simple mechanism of selecting data, you have exercised judgment as to which data to include or exclude
  3. The signal to noise ratio has changed – we now have so much data that there is more noise than signal and it gets difficult to ascertain what is the signal
  4. Data is not inherently smart – it is our interpretation of data that adds value
  5. The more data we have the less anonymity – thus it becomes increasingly difficult to avoid identification

Why this is important

There have been numerous examples of data breaches for example the Australian Red Cross and the nation of Sweden. Every data breach is the result of some defect in the design, development or deployment of the technology. These breaches could be prevented by means of including some ethical frameworks into the design, build and deployment phases.

By the way, the World’s Biggest Data Breaches visualisation tool provides an excellent and mesmerising way to explore data breaches.

It is also interesting to recall the ease with which Microsoft’s Tay Twitter bot was trained to become rather nasty very quickly. Thus demonstrating the need to be sure of the training data one uses and to ponder the potential consequences of design and deployment decisions:  Twitter taught Microsoft’s AI chatbot to be a racist asshole in less than a day.

microsoft_tai-1024x575

And there is the recent example of bathroom soap dispensers having been designed to recognise white hands not coloured ones. This is obvious bias from the design and development team, and  an example of why diversity in teams is critical. The fact the average developer is white male means that it is likely that every design has as its default setting as a white male.

The issues of bias – both unconscious and conscious – are enormous.

Data is increasing at a vast rate, as demonstrated by this chart from the IDC Data Age 2025 study, and this means that we need to develop ethical frameworks to support the acquisition, management and analysis of large datasets .

Some existing approaches

Universities have a long history in managing ethics, but even they are struggling with the implications of the complex data sets and algorithms that they are dealing with.

Over the years the ICT industry has developed a number of codes of ethics and codes for professional practice, yet many developers and data scientists are mostly unaware of these. Some examples of these codes of practice include:

But realistically, if developers have not even heard of these codes then how can they possibly influence the design of solutions that avoid bias and other ethical issues?

Some newer approaches

“Privacy is an inherent human right, and a requirement for maintaining the human condition with dignity and respect.’

Bruce Schneier

There are the beginnings of some new approaches, such as the Accenture: 12 guidelines for developing data ethics codes. And recent initiatives such as the OWASP Security by Design Principles and the Privacy by Design might well provide a good starting point for thinking about how we can embed good practice into the design and building of data sets and algorithms.

There is some good discussion of these issues  in  Floridi, Taddeo What is Data Ethics? (2016), and as they note, we need to examine ethics in terms of the following categories:

  • data – including how we generate, record and share data, including issues of consent and unintended uses of the data
  • algorithms – how we interpret data via artificial intelligence, machine learning and robots
  • practices – devising responsible innovation and professional codes to guide this emerging science

There have been developments in the area of community based approaches to improving digital and data ethics, chiefly in the area of machine learning and AI. Here are some examples of groups working in this area:

Some new ways to think about digital and data ethics

‘Complexity is a defining feature of the digital era, and we are not adjusting our governance structures to manage it.’

Kent Aitken, Prime Ministers Fellow, Public Policy Forum Canada, 2017

We need to be clear that technology has no ethics. It is people who demonstrate ethics. And technology inherits the biases of its makers.   We need to develop ethical frameworks and governance practices that enable us to develop solutions that are better from an ethical perspective.

I believe that if we start from the principles of Privacy by Design and Security by Design that we have a fairly firm practical basis for the future.

One thing is certain at an institutional level, information security , privacy and data governance will need more work to form a solid foundation to enable better data ethics.

References

How the internet of things changes everything

The next generation of the internet is called the ‘internet of things’. Some people like to call it M2M or ‘machine to machine’ or ‘internet everywhere’. In any case it is here and it is about to shake things up.

The internet of things is where devices become connected and have embedded sensors that enable them to act and react in connected ways. It means that devices can talk to each other, can instruct and respond to each other in response to contextual stimuli. And by devices I mean any physical object that can have sensors and communications technology attached or embedded.

Objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models and disrupt existing business models.

The internet of things builds on the foundations of Web 2.0:

  1. Participation
  2. Standards
  3. Decentralization
  4. Openness
  5. Modularity
  6. User Control
  7. Identity

Source: Launching the Web 2.0 Framework, Ross Dawson, May 30, 2007

The technical plumbing that is needed to make the internet of things real is already in place: TCP/IP, wifi, Zigbee, Bluetooth, etc. Key factors are almost ubiquitous wireless internet connectivity and devices with connection capability. These are already in place across the world.

The other technology trend that is supporting the emergence of the internet of things is ‘big data’ and our enhanced ability to derive actionable insights from the collection and analysis of enormous amounts of data.

The convergence of big data and ubiquitously connected smart devices means that we can harness predictive capacity and enable things or objects to act in ways that are contextually relevant. It also means that we can finally start using this technology to market to an audience of one. That is, we can use technology to craft individually meaningful and relevant marketing messages and deliver them within a particular context to drive purchase behaviour for a particular individual. The entire marketing conversation can be automated and have human agency largely removed from it, while retaining human-like communication modes and styles of communication. It seems that Minority Report might not have gone far enough in conceptualising the future of marketing.

How big is the market opportunity from the internet of things?

There are many different estimates of the size of the internet of things market. One thing remains constant, business leaders who understand the concept are making big calls and are changing their business focus as a result. For example John Chambers from Cisco:

“The Internet of Things, I think will be the biggest leverage point for IT in the next 10 years, $14 trillion in profits from that one concept alone”
Cisco Chief Executive Officer John Chambers, AllThingsD D11 Conference May 2013
Source: Internet of Things Poses Big Questions, Ben Rooney, July 3, 2013

Where and how do the business opportunities arise?

The internet of things creates value that is not in the devices, rather it is in the new services that are related to the devices. Connected devices are transformed from a single purchase product into a service that generates recurring income.

A big part of the business opportunity is making it possible to bypass traditional aggregators of demand and access customers via peer-to-peer channels. Apps are key to this peer-to-peer landscape and they look to be an important multiplier in the growth of the internet of things marketplace.

“Between 2008 and 2017, Google Play and Apple’s App Store will be responsible for a mind- blowing number of mobile app downloads: 350 billion.”
Source: Decade of the 350 Billion App Downloads

New business models are emerging, and it is seems that open and collaborative models particularly lend themselves to this more interconnected landscape.

Some predictions:

  • Open models will rule the new landscape – organisations that try to control the entire vertically integrated supply chain will struggle unless they bring in partners to add diversity. A good example of this is Apple with their app store, which enables them to have a vertically integrated supply chain along with diversity via apps.
  • Collaboration and loose confederations – the barriers to entry that previously protected large players will begin to dissipate and provide opportunities for new entrants. Uber versus the taxi industry is a good example of this phenomenon.
  • Agile, change ready organisations will be best placed to adapt in this new highly connected world. Any organisation that needs two years to get a new product to market will be overtaken by those who can move faster. A good example of this is Nokia. Their new Lumia Windows phone is a great product that is two years too late to market. And the delay in getting to market means that they will need to find a niche to dominate rather than become a mass provider – perhaps they can dominate as a camera with connectivity rather than as a smartphone? Here Nokia’s decision to align themselves with the notoriously non-agile Microsoft Windows could be part of the problem.
  • Restructured supply chain – the internet of things offers enormous opportunities to restructure supply chains. Smart businesses will take advantage of this. In the 1990s ‘just in time’ inventory models revolutionised the cost base of doing business. The internet of things will provide similar opportunities.

What industries will be impacted?

All industries will be impacted but let’s examine the potential changes for a few that are interconnected:

  • Retail – already we are seeing shoppers use online and offline retail channels to find the best product for the best price. We can expect to see this intensify and put increased pressure on offline retail. Apparel shopping is one area that can expect disruption. Already shoppers are using terrestrial stores as places to check the fit of apparel items of interest, a practice known as ‘showrooming’. Some stores are fighting back by imposing a ‘trying on charge’ that is deducted if a purchase is made in store. But what if the in store retail experience became richer? What if the products started to sell themselves? What if the products knew that you were already wearing a particular brand and reached out to you and suggested complementary products? For example, a pair shoes could recognise that you are wearing a particular brand of jacket and offer you a special deal as a result. The convergence of ubiquitous connectivity, big data, and internet of things makes this scenario possible.
  • Transportation – We already have driverless transport with trains and Google is already showing us a glimpse of this future with their driverless car. But these new forms of transport require the development of new business models. For example, all that time we used to spend actually driving our cars will give rise to a new cognitive surplus – wonder what we’ll do with it? Play games, create art? Another example of new things that driverless vehicles will give rise to is smart intersections, because those new driverless cars will require smarter intersections that we currently deploy. The internet of things will make autonomous transport possible.

What does Leadership look like? Leadership, sexism, and misogyny

In recent times I have been feeling very depressed about the state of things including sexism, misogyny, and leadership. But a few days ago came a beacon of hope.

This beacon came from an unlikely source, the Australian Army. And the topic that this person addressed was the sombre one of sexism and demeaning treatment of women by serving military personnel.

Yet I was moved and inspired by an eloquent demonstration of leadership.

This is what a leader does.

A leader speaks out for the right things.
A leader connects values to behaviour.
A leader takes ownership of problems within their organisation.
A leader sets the standards of acceptable behaviour for members of their organisation.
A leader gets their leadership team to stand along with them to support those standards.
A leader makes it clear that people who will not do the right thing are not welcome.
A leader embraces diversity and recognises its contribution to the organisation.

As Lt Gen Morrison said: “The standard you walk past is the standard you accept.”

It appears that Lt Gen Morrison has form with this kind of thinking. In his talk on International Womens’ Day 2013 where he made his position clear:

“Any nexus between an Army such as the one I aspire to lead and sexual assault is absolutely unacceptable. I will take all necessary steps to stamp out any hint of it among my soldiers.”

He went on to say:

“Yes, we do need to bond our soldiers to one another and instil toughness and resilience into them. But when this goal is invoked to degrade and demonise women and minorities it is undermining rather than enhancing capability. We need to define the true meaning of teamwork to embrace a band of brothers and sisters.”

Organisations everywhere still allow sexist behaviour to prevail. And until their leaders take the same kind of uncompromising attitude that David Morrison has, then sexist behaviour will not disappear.

While organisational leaders are mostly men, it is time for all of our leaders to step up and show similar leadership to that demonstrated so admirably by Lt Gen Morrison.

Even Warren Buffett recently spoke out on this topic, saying:

“Fellow males, get onboard. The closer that America comes to fully employing the talents of all its citizens, the greater its output of goods and services will be. We’ve seen what can be accomplished when we use 50% of our human capacity. If you visualize what 100% can do, you’ll join me as an unbridled optimist about America’s future.”

I encourage all to view the message from the Chief of Army, Lieutenant General David Morrison, AO, to the Australian Army following the announcement on Thursday, 13 June 2013 of civilian police and Defence investigations into allegations of unacceptable behaviour by Army members.

I also recommend the PDF transcript of Lt Gen Morrison’s speech at the United Nations International Women’s Day Conference, New York, March 2013

What’s the big idea with social media? #media140

I was lucky enough to be invited to Media 140 in Perth recently to discuss what the ‘big idea’ is with social media.

The idea was for a context setting discussion about social media and how it is changing business and society.

DIGITAL REVOLUTION
We are living through a digital revolution that is changing the world we inhabit as absolutely and as irrevocably as the industrial revolution of the late eighteenth and early nineteenth centuries.

That previous industrial revolution changed our relationship with time, with money, and with people. It created the wage labourer that we know, and the unions whom we’ve to come know encapsulated by the term ‘organised labour’. It created a society governed by the mechanical clock and the notion of work versus non-work time.

The digital revolution is on a similar scale, and this scale is based on a remarkable shift in the means of production. The digital revolution has at its roots a democratization of access to the means of communication.

EXPECTATIONS AND ACCESS TO COMMUNICATIONS TECHNOLOGY
As a result we are seeing a shift in the expectations of ordinary people about communications technology and their access to that technology. Further, we are seeing a rapid evolution of behaviour in relation to communications technology – mainly in the use of smartphones and tablets.

All of this is leading us to significant shifts in society, and it is all fuelled by innovations in communications devices. The smartphone and almost ubiquitous access to the internet have created a new baseline expectation in people that they will always be connected. I have often argued that with Twitter we are seeing the genesis of the hive mind of humanity.

The digital divide is no longer about access to technology – as my friend Mark Pesce notes, even poor fishermen in Kerala have access – it’s about your willingness or desire to be connected.

However, people are finding enormous utility in being always connected. For example, the number of ereaders in the hands of people is growing enormously, doubling since July 2011. And an example of a behavioural shift afforded by the technology is the growth in women’s erotic fiction sales. Romance novels have always been a big business globally, but a recent sales data indicates a substantial growth in sales of erotica (the so-called ‘guilty pleasures’ factor) that has been fuelled by the anonymity offered by ereaders.

As long ago as 2008 Australia mobile phone subscribers outnumber people according to ACMA data. This means that individuals have more than one device connected to the mobile phone network.

SOCIAL MEDIA, SOCIAL BUSINESS
Along with this embrace of ubiquitous mobile connectivity we have seen the growth of social media and social networking. This growth of social media is part of the landscape that makes up the digital revolution. Social media is revolutionary because it empowers the populace with access to the means of communication that were once the province of rich media barons.

This growth in social media fuelled by mobile connectivity has also changed the business landscape in important ways. There is a shift from command-control and pipeline driven businesses to social business that is focused on continuous engagement and conversations.

The kind of new business opportunities enabled by this digital revolution include:

  • the ability to compete in a new geography without even opening a local store (like Amazon);
  • the opportunity to reduce complexity for customers and remove friction from business operations (like Telstra);
  • subverting traditional models like recruitment where businesses build online talent banks of people who are interested in working with them (like Deloitte).

However, the shifts in society are not limited to business and consumers. They are also changing some things that we have always accepted. For example, we have always assumed that there is a just and valid separation between the domains of public versus private, or between business versus personal. But now those verities are being shaken by social media and social networking.

Social media is blurring the boundaries between the public, private, business, and personal. We are still working out how to negotiate this new territory. But already we see reports of people turned down for jobs because their online reputation score was too low.

We are now seeing a world where reputation is created, maintained, and mediated by online channels. There are increasing tools for measuring reputation online, such as: Kred, Klout, and Peer Index. Bouncers are even reportedly using Facebook as an identification check for entry into nightspots according to the BBC.

SOCIAL WORKPLACES
Workplaces are changing too, partly in response to the digital revolution. Open plan offices with collaboration spaces and hot desks are enabled because of wifi and portable connected devices like laptops and tablets.

SOCIAL EDUCATION
Our schools and places of education are being swept along by this digital revolution as well. With schools handing out laptops to all students and wifi in schools, libraries, and on public transport our children inhabit an always connected landscape. A teen boy said to me recently of my complaints about the poor wifi in Sydney: “but it’s just in the air, it’s everywhere”. It is a good example of the world that our young people inhabit. They live in a world where the connectivity is just ‘in the air’ around them.

The physical changes in workplaces are being reflected in schools too. They are becoming focused on collaboration rather than rote learning of facts. Students are learning how to discover, assess, and synthesize information rather than memorize facts.

WTF?
When we put together the shifting physical nature of the workplace and schools together with the blurring boundaries between public- private-business-personal, and the always connected devices in the hands of individuals many opportunities and challenges arise.

It is an exciting time to live. We are living through a revolution. The real question is will we drive the revolution or let it just happen to us?

ANZAC 2012

I don’t think that many romanticise war too much these days. And there is something very poignant and compelling about seeing the fruits of war.Picardie-2010-Dec-074-225x300

In northern France and Belgium the unimaginable scale of loss wrought upon so many families in the great wars of the twentieth century is still visible at every step.

It was in north eastern France that I found some family graves. Here is the the resting place of young ANZAC Rupert Alexander, aged 31 years, along with his compatriots lost in France in 1917.

This poem by Gellert captures the melancholy of war:

Anzac Cove

There’s a lonely stretch of hillocks:
There’s a beach asleep and drear:
There’s a battered broken fort beside the sea.
There are sunken trampled graves:
And a little rotting pier:
And winding paths that wind unceasingly.
There’s a torn and silent valley:
There’s a tiny rivulet
With some blood upon the stones beside its mouth.
There are lines of buried bones:
There’s an unpaid waiting debt :
There’s a sound of gentle sobbing in the South.

By Leon Gellert

“They shall grow not old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning,
We will remember them”
Lest we forget

Authenticity online – not necessary, perhaps essential or Kitteh vs Chickin

This talk by Bitly’s Matt LeMay at Monki Gras entitled: Kitteh vs Chickin: How What We Share is Different from What we Click is important and is really worth watching.

This talk gives us some really important insights into the changed world we now inhabit.  The world in which our passing fancies and offhand comments were written on the wind has passed into history.  Now most things that we click or share online are recorded and ready for analysis.

Matt draws out the point that our real selves – the ones  who listen to Lady Gaga or Katie Perry and then delete them from our scrobbles – are revealed by our online activities.

As Jung suggested, it might be time to embrace our shadow (or as Matt LeMay suggests, learn to be okay with being a kitteh).

I commend this video to you, it presents important concepts in a really engaging way.

There’s a fraction too much friction! Customers, service, and staff.

While trawling around on YouTube recently I came across a 1980s video of Tim Finn’s There’s a Fraction too much Friction and it got me thinking about the things that annoy me  in dealing with businesses. I concluded that the source of my irritation is friction.

I have long observed that business has many things in common with war, and friction is probably the thing that most comes to mind as significant in both business and war.

The problem with friction is nicely put by Clausewitz:

“Everything in war is simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war.”

This description of the effects of friction in war are eerily reminiscent of dealing with a large business (say for example, one of our large telecommunications companies).

The huge opportunity that the digital revolution offers is to remove friction between different parts of businesses – between customers and staff, between operational silos within the organisation, between groups who are internal and external to the organisation.

Organisations that see and act on this opportunity are the ones that will triumph in the hyperconnected future.

People who see a dedicated niche that they can service seamlessly and effectively will grow their businesses almost without trying, and customers will flock to them.

In this milieu the one-stop-shops that try to do everything – those who previously leveraged scale and centralization – are likely to suffer.  This is because scale creates and does not reduce friction. Only in the past when the friction in having services and products delivered from many smaller suppliers was so great did the one-stop-shops have an advantage.

But now even small organisations can remove friction and deliver seamlessly to their customers using web and mobile applications.

Now organisations are liberated to serve customers in ways that were impossible before ubiquitous internet connected mobile devices.

Big companies that are not already offering effective online services are the new dinosaurs.  It will take only the slightest change in their terrestrial trading conditions for them to sicken and die. Two examples of this phenomenon  worth keeping an eye on are Harvey Norman and David Jones . It will be very interesting to see if they can evolve their business models sufficiently fast to survive.

Reduced information asymmetry is another opportunity offered by this reduction in friction.  In the past companies, especially retailers, had better information about pricing of the good they sold.  Now this asymmetry in access to pricing information is dying. A recent tweet from my friend Mark Pesce exemplifies this new trend

And US retailer J.C. Penney recently launched a new pricing model:

“J.C. Penney (JCP) is permanently marking down all of its merchandise by at least 40% so shoppers will no longer have to wait for a sale to get the lowest prices in its stores.

Penney said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. On Feb. 1, the retailer is rolling out a three-tiered strategy that offers “Every Day” low pricing daily, “Monthly Value” discounts on select merchandise each month and clearance deals called “Best Price” during the first and the third Friday of each month when many shoppers get paid.”

Source: Daily Finance, 25 Jan 2012 

The results of this pricing experiment are just starting to flow in.  There has been an initial drop in sales revenue but analysts note:

“We believe our findings demonstrate that the strategies announced to transform (Penney’s) business are the right actions to take and will resonate well with consumers over time” (Source: MSNBC, Penney’s pricing strategy takes a toll on sales, 30 Mar 2012)

Against this backdrop it is amusing to see an Australian retailer’s response to market conditions – “David Jones Outlines Strategic Plan to Cut Costs” along with their very late in the day online shopping initiatives. It is especially amusing when one observes one of their chief competitors, Net-a-Porter – saying:

“It’s very easy to copy the look and feel, which people have helped themselves generously to,” Massenet said. “But we have 12 years of building ahead [of other sites] and we are sending out 5,000 orders a day as opposed to 20 orders a day and I think it’s very difficult for a business to keep up with that operationally.”

Source: Sydney Morning Herald, How to create an e-empire, 29 Mar 2012

Net-a-Porter is an excellent example of an organisation that has nailed servicing a niche, delivering good product, and ensuring a good customer experience supported by excellent customer service.

The bar has well and truly been raised for traditional organisations. And only those who work out how to reduce friction and deliver seamless service will survive.