IBM Is Missing A Disruptive Innovation In Her Own Hand

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With $80B revenue but a streak of 21 consecutive quarters of declining revenue, IBM has a big appetite for growth. The hungry of growth drives IBM investing billions into their AI business, namely IBM Watson Group. However, it also drives IBM away from a disruptive innovation even though it is in her own hand. The disruptive innovation in spotlight is Watson for Oncology. Continue reading

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How to Kill Bad Projects

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It is an open secret how hard to kill projects in development. In the Harvard Business Review article “Why Bad Projects Are So Hard to Kill“, professor Isabelle Royer says that many projects are hard to kill because of a “fervent and widespread belief among managers in the inevitability of their projects’s ultimate success.” The desire to believe in something is primal. The excitement and exuberance associated with a project typically originate with the project champion, whose unyielding conviction that the project will succeed is often based on a hunch rather than on strong evidence. The champion’s exuberance spreads because others also want to believe, especially if the champion is charismatic and well networked within the company. Continue reading

The Future Business Model of Payroll

 ADP Paypal
Money Movement  $1.7 trillion  $354 billion
Revenue  $12.21 billion  $11.27 billion
Profit  $1.75 billion  $1.42 billion
Market Cap  $43.3 billion  $59.7 billion
  • ADP revenue includes full HCM services besides payroll.

Notice something here? ADP moves a lot of money than Paypal, but makes less revenue on money movement (less the revenue from other HCM services). It has a smaller market cap too. Why? Well, ADP is in the business of solution shop and value add process while Paypal is a facilitated network. Continue reading

Choosing The Best Tools

India is one of few nations that can buy military equipment from both western world and Russia. When building their destroyers, India does take this advantage to install best sensors from multiple countries to their ships. However, this choosing-best-tools-for-each-problem approach is an engineering nightmare. It is extremely challenging to make sensors from Russia, Italy, France, India, etc. work smoothly together due to various compatibility issues.

The issues are not in each module itself. Essentially every large engineering project is an integration work. We can easily lose the big picture when we focus on the performance attributes of each module. So be careful next time when your architect shows you a system architecture like the below.

Disruptive Innovation: When and Where?

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In the theory of disruptive innovation, Clayton Christensen argues that the incumbent companies introduce new and improved products year-by-year with the sustaining innovations, which eventually overshoot the performance that some customers can use because companies innovate faster than customers’ lives change. Overshooting creates opportunities for firms to change the basis of competition in order to earn above-average profits. After functionality and reliability have become goo enough, for example, the next competition dimensions could be convenience, customization, and price, etc. Continue reading

Risk Aversion and Sunk Cost Fallacy

In his book Misbehaving, Richard H. Thaler tells an interesting story. In a class on decision-making to a group of executives from a company in the print media industry, Thaler puts the executives to a scenario: Suppose you were offered an investment opportunity for your division that will yield one of two payoffs. After the investment is made, there is a 50% chance it will make a profit of $2 million, and a 50% chance it will lose $1 million. When Thaler asked who would take on this project, only three of twenty-three executives would do it. Then he asked the CEO how many of the projects would he want to undertake (suppose all projects were independent, that is the success of one was unrelated to others), the answer is all of them! Continue reading

Agile Software Development: China Navy

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The best demonstration of agile software development is probably the modernization of China Navy. Following a “Run Swiftly in Small Steps” strategy, China Navy has undergone a stunning modernization push that puts it near parity with the US. Look below how China Navy has steadily improved each class of their destroyers in gradually shorter and shorter time. They are the grand master of agile development. Continue reading

Payroll: An Overlooked Area in FinTech

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A lot of brain power and money have been poured into FinTech, especially lending and payment areas. These are indeed exciting areas with new business models and technologies. On the other hand, people rarely associate the sexy FinTech with payroll services. Although it may sound boring, payroll is actually an overlooked gold mine for innovators. Traditionally, payroll service companies make money by service fees. New HCM service companies such as Zenefits work as insurance brokers while providing free payroll and HR services. But if we lean under the hood and look at the process, there is an interesting opportunity. Continue reading