Intellectual Property and China

I found an interesting question on Medium about how to protect your IP in China. Here is my longer answer:

DON’T even attempt to protect your idea in China — or anywhere for that matter.

The Chinese culture is about free access to knowledge and ideas and understands the fact that it’s all about execution very well. Just imagine we stop IP protection radically and just turn our ideas into reality as fast as possible. Imagine we no longer feel safe because of some highly expensive and questionable patents but instead focus all our energy on execution — competing with the copy cats for even better execution and win a market because of our skills not our 1 microsecond brain spark.

WHAT CUSTOMERS SAY

I applied for a patent once, had some of the best lawyer Silicon Valley has and got a rock solid IP protection nobody could circumvent. Guess what customers said: “Good for you but really want solutions where we have options and are not locked in.

THE VALUE OF NOT HAVING A PATENT

Having a patent protects only you. But without a patent you get something that everybody is actually seeking for lifetime: “Market Leadership”. You can only be a leader if you have followers. No follower — no leader. Competition is the best lubrication for well run machines. If you have no competition, you never know if you are really the best or not. Now look around and look for any product that is fully patent protected and you say ‘yes, this is the coolest product on earth’ — even if you find one it is just not really that cool.

RESEARCH & DEVELOPMENT PROTECTION

Ok ok ok — there are products that are extremely hard to develop, very hard and costly to test and if they don’t get protection, they won’t develop it. Well if it is so hard to develop, let followers find their way, have them do their own clinical tests and so forth. At the end even in those cases it broils down to execution.

KNOWLEDGE SHOULD BE FREE

I’m not Chinese and not a particular fan of China even though I very much admire their advances, but I definitely go with their philosophy: Knowledge should be free. And today China is on their way to top Silicon Valley because the communicate even faster, even wider and are even more open than good ol’ SV.

Dear Mr. President Obama

I’m concerned. With a defense budget of $690 Billion, the US spends more money on defense and armor than China ($129B), India ($44B), Russia ($64B), UK ($57B), France ($58B), Germany ($43B), Korea… all together. That means that every US family is paying $6,200 per year to defend – what?

In contrast, the US education budget is only $69B, infrastructure and everything else is even less.

If you restructure the budget, keep $250B for defense, you are still bigger than China, India, Russia combined, or bigger than all Europe and have $440B for making the US the nation with the biggest education budget, the biggest science budget, the biggest economic stimulation, the biggest traffic infrastructure development and make it the leading nation – again. And still have a few billion to revitalize a Space program.

I believe the most significant defense program for 2014 is to defend US internal poverty, under education and economic meltdown.

I wish you and all Americans a happy and prosperous 2014

A democracy’s top priority

With the ongoing struggle of the US economy, the inner unhappiness and the many questions arising every day in the public web, I was thinking back and forth over the past 2 years about the essence of democracy and the top priorities of a democratic leader. The list is obviously almost with no end. But running a country is all about focus and complexity management.

 

I think there are three things a well run democracy provides for their citizens:

1) Education

Lowest cost possible education is essential. Education drives innovation and innovation drives the economy. Nobody can predict who are the next innovators. But one thing is for sure: limiting top education to a top class in the society is reducing the amount of possible innovation by order of magnitude. Most of the big tech leader and tech innovations in the US were essentially stemmed by people from middle class or lower families. If a country can’t support broad education it cripples its ability to innovate and as such it essentially reduces its competitiveness on a global scale.

2) Infrastructure

An omnipresent basic infrastructure for clean water, energy, public transportation and communication (i.e. mobile networks and Internet) is essential for a society to work and deliver a high value to the society. Communication, knowledge transfer and interaction via the Internet and mobile communication is in today’s world as important as air traffic was in the 60’s and 70’s. If you can’t go there easily you decouple yourself from the rest of the business world. If you don’t make it easy and encourage people to leverage the global Internet you disconnect yourself from the global business flow.

3) Common sense law

A law is helping citizen to collaborate and live with each other, keep freedom and prosperity. However like education models and infrastructure if it is not well maintained, there is a high risk of permutation that makes the law not the law for the people but against the people. The Headline in Wire Magazine a year or so ago: “Need cash – sue Google” is a funny yet devastating testimony for a law that is out of control.

All the other key needs including Jobs, Healthcare, Freedom…. will fall into its place if the above is a top priority. To the contrary if any one of the above responsibilities are a low priority, there is a high risk a society is at jeopardy.

Separation of state and capital

Very much like the separation of state and church back in the 1700’s a modern society need to care about the separation between state and capital. Societies in capitalistic nations are particularly at risk to outbalance democracy in a way where poor get ever poorer and less and less people get ever richer to a degree that the capital eventually controls what happens in a country and not an elected government.

 

Plausibility check

Jobs & Innovation

If we have many well educated kids from all kinds of levels of our society we will see a lot of creativity and start-ups driving the creativity to new business and new jobs. Jobs can’t be “created” for people to have a job. Jobs can only be created by demand to do things we haven’t done before. Innovation means developing the ability on a global scale and build more than we can consume ourselves.

Health Care

If we have jobs we can pay for healthcare and if we have agile and creative people, they find new ways to make health care more affordable, less complicated, more variety and more option. We can’t “generate” healthcare unless we put it back to a government function.

Prosperity

If the laws of a country help keeping the balance between a young generations innovation and mature capital we alleviate the risk of monopolies and support the growth of a middle class – which is essential for a stable and well balanced economy. If like in some countries over 80% of the food supply is concentrated in 350 brands that are essentially owned by 10 companies who have all one major shareholder in common, we live in a very dangerous system that allowed the prosperity development to get out of synch. It doesn’t make sense to finger point to people and call the greedy – when the system is build to make it happen.

Well – is our democratic model no longer working? No – our world and it’s needs and haves have evolved dramatically and our democratic answers need to evolve as well. Public companies for instance were a great innovation about 100 years ago to let the public participate in the gains of larger companies. Today public companies ruin more individuals than other investment opportunities, or no longer even give access to many citizens and investments have grown to a level of complication that it just doesn’t make sense any longer. Neither the laws to protect investors or businesses nor the laws and rules to run businesses kept up with the evolution of our globally connected business world.

Summary

While this is all very complex, if we distill it down to Education, Infrastructure and Law we can start working on it and get out of trouble easily within a few years.  Just thinking

Axel
http://XeeMe.com/AxelS

 

A thought provoking interview about capitalism

I learned from my grandmother: “At one point in time capitalism is identically to communism. It is at the time when a tiny group of people control most of the assets of that society.” Are we there?

I think raising minimum wage is only one more action where the small group takes control. The free flow of economic forces has stopped. And now the worst thing is that the 99% point fingers to the 1% as the bad guys. In my opinion the real problem is a system that just have seen its days. To fix that it actually takes the 99% and not the 1%. But here is the real problem: zero political education for generations. The 99% does only know little to nothing about macroeconomic, economy dynamics…

Yes, No Question

Take five chimpanzees. Put them in a big cage. Suspend some bananas from the roof of the cage and provide the chimpanzees with a stepladder. NOW – add a proximity detector, so that when a chimp goes near the banana, a water hose opens and the whole cage is thoroughly soaked.

Soon, the chimps learn that the bananas and the stepladder are best ignored.

Now remove one chimp, and replace it with a fresh one. That chimp knows nothing about the hoses. He sees the banana, notices the stepladder, and because he is a smart primate, he envisions himself stepping on the stepladder to reach the bananas. The moment he is trying to grab the stepladder… the four other chimps spring on him and beat him squarely. He soon learns to ignore the stepladder.

Then, remove another chimp and replace it with a fresh one. The scenario occurs again; when he grabs the stepladder, he gets mauled by the four other chimps — yes, including the previous “fresh” chimp. He has integrated the notion of “thou shall not touch the stepladder”.

Iterate. After some operations, you have five chimps who are ready to punch any chimp who would dare touching the stepladder — and none of them knows why.

  • We fight against same sex marriage, only because we get beaten from somebody who is telling us that this is bad.
  • We send our sons and daughters to war only because somebody telling us that war is for freedom – even if 100,000 die
  • We buy products on black Friday because somebody tells us: that day things which are otherwise more expensive are now magically cheap
  • We support “No child left behind”, not even wondering if now all children are behind

We don’t like the nay sayer (and I do too) but is there a risk to become too much of a follower?

Let’s create leadership in education and innovation, not world domination and war

Yes, we lost the leadership but maybe in the future there is no more single world leader. Maybe there are different leaders in different areas. We don’t need a global leader we need global collaboration. With connections across all countries we develop friends across all countries. And with friends across all countries we are less likely to start yet another war just to make the weapons industry happy. There are over 300 Million Americans who no longer want war, instead want to see the tax money put into education and innovation, both being the no.1 driver for jobs and wealth.

2020 and beyond

I was recently asked by members of the European Commission about my thoughts when looking beyond 2020. And since I love thinking about long term development, I felt I should share, at least an extract, publicly.

2020 and beyond

Going beyond 2020 I see three plus one major developments. Two are already quite apparent one not so much. You may say there is no way to predict the future that far out. Well it isn’t actually that difficult. The foundation for Personal Computers were laid in 1973 – 10 years before IBM introduced the IBM PC which was revolutionizing the computer world. Internet was created in the 60’s with arpa net even longer before the launch of the public Internet as we know it. Social Media started with groups and forums long before 2003/2004 when LinkedIn and Facebook opened their doors. Cell phones gained huge popularity in the 90’s but my father had a mobile phone already in the late 70’s. In other words nothing that comes “out of the blue” and changed the world actually came out of the blue – but was invented at least 10 years earlier. The art is to identify those and predict the development of those existing technologies and their impact on the world.

Now – I don’t mention energy or environmental development in here because that is one of the challenges we are going through already today and it’s evolution is too obvious and will be a mainstream topic by 2020 – if it isn’t already today.

 

1) Democratization of influence

Our society is undergoing a massive change – probably bigger than any other change in history. With tools like social media but also and more importantly an urge to more individualism and more autonomy our society is influencing itself across all levels and traditional influence from industry or government leaders is rapidly diminishing. Co-creation of our future like co-creation of products today will have a significant impact on our political and economic landscape. The fear of creating an anarchy is pretty unsubstantiated – but the fear of missteps, failure in the experimentation phase is quite realistic. Governments will be challenged to stay involved in the democratization of influence and actually leverage the evolutionary development rather than fighting it in fear of loosing “control”. Governments, more than ever, need to be very clear about their responsibility as a function FOR the public and not a power in itself. By 2020 the democratization of influence will be in full swing and in the following decade democracy will be re-invented. There will be nations benefiting from this development and others will fail to create an integrated democratic model where the government’s role is more of a conductor orchestrating a societies development than leading it or even worst, controlling it.

 

2) Distributed Production & Service Networks

In several keynotes I described a “New Enterprise”. Already today we see the evolutionary development of distributed and rather “linking independent businesses” then “owning a complete process”. For instance: Code is developed by a software shop in India, a reception maybe managed by a “virtual assistance” who could work in Ireland, some of the production is in China and so forth. More and more of those functions get outsources to third parties. The antenna design of most cell phones was created and even patented by a small and creative shop. More and more start-ups and emerging businesses are leveraging those high energy, highly creative and highly productive small businesses, integrating them into their own product strategy. Reseller channels is an old technique to sell but in today’a age even more relevant than ever before. A company like Nokia could be as agile as a company like Apple if they would focus on market needs and designs and not on their own, old and very traditional company structure. A cellphone company doesn’t need to be more than 5,000 employees – Apple has approximately 10,000 in their iPhone group – Nokia has over 100,000. Running a business as a distributed production network means selecting the most creative people – most of them are not employable anyway, selecting teams when they are needed, selecting resources that are required while a project or a product is in high demand and needing to “keep people busy” because you have them on your payroll. It’s part of the human nature that we are thriving towards more individualism, autonomy, independence and freedom.  Significant growth in entrepreneurship is just one facet of that trend. All indications are there that in the next decades Distributed Production & Service Networks will dominate our industries. Businesses and governments should be prepared for that evolution.

 

3) Age Revolution

Fact is that our live expectancy is notably accelerating since around 1900. Fact is that within the last 50 years the acceleration level actually doubled – creating a hockey stick effect. It is more likely than not, that we are on our way to get significantly older than any previous generation. There is a good likelihood that in the next 20 to 50 years we may expect people turning 140 or 150. If average live expectancy continues to grow at current rates – we will see a growth from 80 to 120 years in the next 50 years. The implications are enormous. Somebody retiring at age of 65 would have possibly another 55 years to live – which is longer than the live expectancy 150 years ago. 2020 and beyond Age will be one of the most challenging topics our society, economy and government is facing. While people may say I don’t want to become that old – the trend shows a different development and we just will get much older.

This will change the way we work, we live, we get educated, we adopt changes and the way we think. It may allow much longer term projects, will create a massive experience pool we could not develop in the past but equally a massive problem as much of the experience from the past is no longer relevant. It will change retirement planning, work live cycles, age care and many other things.

 

The next big thing on Technology

Things like social media, Internet, smart phones, TV, Radio, Automobile never came with a big bang. It took years to create the base for the technology, years for making early market entrants successful and than finally we are talking about the big thing. The next big thing can be considered as such when three things are happening: A larger part of the population declares it as a hype that will go away, large consulting firms caution industry leaders that companies will loose billions of dollars because of it and one group of people get very laud about the security risks.

Continue reading “2020 and beyond”

Recession 2.0

This is my personal observation on our current economic situation. (2007)

We call an economic melt down “Recession”, when we don’t know the origin of the situation.

We call a Recession a ”Depression” if we failed to find the reason and continue the way we did in the past

We don’t know what we don’t know
The oil crisis or energy crisis had a name because we knew what the issues are. The Internet bubble had a name because we knew the cause and could deal with it. The current “recessive behavior of economy” seems unknown to many and have a real vague reason for some. It is pretty easy to point to the financial institutes who in turn point to politicians, and argue about interest rate definitions, manipulation of a free economy etc. But what do we say about the automobile industry and their issues? What do we say why HighTech consumption is declining? Why even consumer goods are declining before the “Financial hammer” was hitting? The list is as long as our Industry SIC codes.

Businesses around the glob will suffer 10% – 20% decrease in revenue. This causes layoffs and a dramatic increase in unemployment rate. Now this will really accelerate recessive revenues and a decrease in consumption and the spiral goes further down.

We don’t know the real origin of the revenue recessiveness
Why the layoffs in the first place? Because all we know is that consumption is going down. But too many don’t know why or have false assumptions. And hence a stimulus package would only absorb additional liquidity without helping “reform” our macro economic landscape.

Analyzing the details of recessive revenue
Try to buy a car. What is happening? You feel ripped off by that car dealer which probably has the worst reputation in the sales guild. A friend of ours found the perfect car. But the sales guy was so pushy and so aggressive that she left the store. It took another month until she found the equivalent car and be prepared through online research so she exactly knew what to buy, where to buy and what to pay. As a result she bought much later than she planned to. And so many of us have seen this same behavior with friends and with ourselves.

I tried to add an additional cable TV connection at another place. Not only that the customer unfriendly voice recognition system and out sourced call centers are rather incompetent, the available plans are so complicated and vary every day that I hung up and it took me two more month until I finally ordered it because I really had to. Just forget about some cool extras – many of us just buy what you absolutely need. And this is not because we have no money – but because we just don’t want to deal with those companies. Again you buy less and much later.

Try by a cell phone. The sales information, the plans and the sales methods are like 25 years old. Buy an Apple iPhone and you need to stand in artificially created lines to activate the phone to make it look more attractive. How can just a few weeks later people download millions of gadgets when only a few 20 per store can get activated? Better wait until the artificial hype is over and be treated as a welcome customer. Purchase delayed by 2-3 month.

Want to book a vacation. Ohhh what a drama. You wait until you know it is really about time because all those offers are so complicated and since there is no such thing called travel agency who has some friendly local representatives, you order online – cheap – late.

Buy some new clothes. You only can get what the industry is producing right now, dependent of the season, dependent on surveyed fashion trends and based on regional aspects of their purchasing departments. So the selection is highly limited, optimized, maximized in accordance to some business process automation suggestion. You simply buy less.

Now buy food. Grocery store consolidation has reduced the product variety, quality has shrunk and with less consumption the personal is now less and cheaper. You buy what you find and many get fancy by going to WholeFoods and Trader Joe’s despite the higher price. But isn’t it interesting that the super expensive Whole Food is very successful?

I can go on and on and see one interesting pattern across the board – purchases are made later by approximately one or two month at least. A delay of 2 month or 1/6th of a year translates to 16% reduction in revenue. But that is only for the goods and services we HAVE TO HAVE – or believe so. Now add the other little things that we buy or not buy and never buy just because we are sick of the bad service that is provided. An over all revenue reduction of 20% for an economy that is used to think in 3 or more percent growth – that is RECESSIVE and if we don’t wake up it will get DEPRESSIVE!

Now think about the initial customer contacts:
Call a business and you will need to dial 2 – dial 6 – dial 7 – dial 1 then land at an  outsourced call center that hardly speaks English and only has a repertoire of some 20 – 30 questions. As a customer or prospect I just feel how much I’m worth to the company I try to contact. THAT CAN BE CHANGED – RIGHT?

Business Process Automation
BPI is one of the main topics of most companies. Business processes are so deeply optimized that as a customer or prospect I’m hardly playing any role. It’s all about the internal processes. The focus then includes quickly compliance issues, information flow, disclaimers and who can provide what information. At the end nobody can say anything. Corporations became so closed that again a business relationship is hardly possible. I’ve seen user groups collecting contact information from a vendors sales people to get in touch with them. It sounds unbelievable but even the customers can’t talk to sales people to buy updates (A still multi B$ telecommunication company). THAT CAN BE CHANGED – RIGHT?

Information Flow
While businesses make it much harder to get to relevant information, users are forced to dig through forums, blogs, communities to find information. The only information flow is mass emails, advertising, sponsored link with all the same – excuse me – bullshit nobody really want’s to read. I asked participants in an event “who trusts or even just cares about advertising?” all I got as an answer was a laughter. Still approximately 1 Trillion Dollar is spend in advertising and advertising related initiatives – unfortunately it’s no longer bringing any results. In general business simply lost the sense for their most precious good – customers. THAT CAN BE CHANGED – RIGHT?

Product Design, Production, Marketing, Sales, Support
We build products that are neither verified nor wanted by the market. And while customers scream about their needs in forums and user groups, producers are not even aware what they say. Businesses spend 3-5% on advertising that nobody cares anymore, they loose 3-5% of their profit right here. Sales is purely trained, and under such pressure to sell that it scares customers away. If purchase is delayed about a month translating to 8.33% reduction in revenue it often represents another loss of 4% profitability. Support is so underpowered and the leverage from knowledgeable users is simply ignored which cost another 2-5% profitability. And if we add all up our business in some cases looses even more than the average 5-10 but more like 20% soon. People get laid off to keep the company going – keep the status quo – which drives the company further down.

What on earth has all that to do with the “financial crisis”?
When businesses around the world loose their customers because the customers loose interest in those products and services, what has that to do with the prime rate? NOTHING. Why are a few companies thriving? Sheer luck? Absolutely NO. Can companies produce, market and sell products in a crisis? Yes, as long as we live, eat, move, search for new opportunities, create new opportunities, build more attractive products, provide better service, spend less on advertising nobody cares about and do what customers really are interested in.

For Even if you think – this is stupid, this is too easy, this is superficial, and I have absolutely no clue. Wouldn’t it make sense to improve your business anyway?

1) First off all re-architect your first impression:
– Stop the outsourced call centers and put less but well trained customer focused people on the phone
– Move your advertising budget towards customer relevant initiatives like blogs, communities, forums
– Seriously redefine your information policy – your shareholders rather have results than an over compliant closed company.

2) Rethink your product / service / pricing model:
– Work with product management on more transparent pricing models – the old customer rip off didn’t fly
– Listen to your customers and simply build what they ask for – if you don’t do it someone else will
– Take green and social serious. It’s not a hype it’s what the majority of customers care about.

3) Redefine your corporate values (if you have any)
– Make the ones who pay you (customers) not silly Kings but seriously valued Advisors and Advocates
– Measure, manage and control customer reflection on you not by anonymous endless surveys but by tangible activities in your ecosystem
– As CEO erase “Shareholder value” from your list of priorities. Shareholder value comes automatically and for free if your customers are happy and buy more products. Instead make market relevance the one and only goal for your business. Market relevance is when more people consider you important, trustful and buy your products, services and buy into your vision.

I’ve never been in a real recession before, so I can’t tell if this one is different or if our tools and information flow is so much better that we can analyze the issues. But it is very obvious to me that if people are less motivated to buy, mostly disappointed with the resources and services the seller provides them, that consumption goes down.

Plausibility Check:
1) Personal Experience
look at the last 6 months where you as a consumer bought things whether it was a new or used car, stereo, TV, video games, phone services, homes, food, clothes, booked a vacation… what ever, how happy where you with the service, hoe easy was it to buy it, how compelling was the offer.
2) Influence
Now check: what or who were the influencing factors for said purchases, how important was advertising for any of them, how important were past experience, suggestions from friends or what kind of other influences would you name as important
3) Behavior
Try to remember what would you have purchased either faster or more of in the last 12 month if the offer would have been more compelling, if the producer or reseller would have been more trustful and if the whole business experience would have been more attractive. Whatever dollar amount you come up with from the last 12 month multiply it by 300 Million (US population) and you get the “Recession value”. For instance if you would have purchased stuff worth of $1,000 in the last 12 month as an average citizen – The “Recession Value” for the US economy would be 3 Trillion Dollar. A lot of tax dollars our country is loosing too.

Well – this is just a short and superficial glimpse into our super complex economic network. But hopefully enough to get you thinking “What can I do to create a better business experience for my customers, prospects and partners”.