The 2nd Derivative of Innovation

This week I was fortunate to attend a private conference of telecommunications and Internet executives from around the world.  A group of CEOs and senior executives from device and equipment manufacturers, global carriers, venture financiers, and entrepreneurs assembled for 24-hours to share views, discuss trends, compare industry interactions, network, and learn.

My own awareness was heightened – and I share a summary of my thoughts here:

  • Positive 2nd Derivative of Innovation – The rate of change in the word of ICT is increasing at an increasing rate.  As astute as we are, and as aware as we think we are of the magnitude of upheaval before us, we will inevitably underestimate the unprecedented changes before us as our globally connected world is instantly aware of every innovation, and every innovation is instantly consumed, begetting ever new innovation at an ever increasing rate.

    The first derivative of innovation has been positive since Gutenberg enabled mechanical reproduction, distribution, and consumption of knowledge.  It wasn’t until the industrial revolution and the harnessing of mechanical energy that the 2nd Derivative of Innovation, the increasing rate of the change of innovation, took a positive turn.  We are now far enough up the curves of Moore and Metcalf that the rate of change of innovation facilitated by compute and transmit is visibly positive.  The rate of change innovation itself increases with each innovation – and innovation is happening at a massive global scale.
  • Distance to the Future is Shortening – As corporate entities, we nearly always underestimate the future.  If for a moment, we hold the “future” to be a fixed point in the distance, a positive 2nd Derivative of Innovation means that each step in time we take toward that future point will decrease the distance to that point by more than the length of the step.  As we approach the future, the rate of change that defines that future state increases; and therefore, the future we envisioned becomes closer to us than the distance away we perceive the future to be as we move toward it.

    The future we historically underestimate will become nearer to our present at an increasing rate – and we will increasingly underestimate the time it will take for our expectation of the future state to arriveRecognition of this fact is a critical enabler for grappling with the changes before us.  We must train ourselves to operate with a postitive 2nd Derivative of Innovation.
  • Deregulation was nothing in comparison to what’s occurring in ICT now –

    • “Phone” will cease to mean phone.  The industry has maintained control over customers’ devices, despite deregulation, through strict enforcement of standards and with closed and closely controlled markets (in the case of mobile devices).

      That control is nearly gone – Mobile handsets are transitioning to mobile computing devices. Open operating systems change the relationship from carrier-customer to developer-user.

      The word “phone” will come to mean small computer.  Our children will ask for to use your Droid, your iTouch/Pad, your Pre.  And odds are high they won’t be using it for a ‘phone’ call.
    • Handheld computers will connect to any network.   The “carrier” network will move from monopoly provider, to provider of convenience.  Though carriers will sell devices that will attempt to connect to their own networks by default, the devices will be able to connect to multiple wireless data networks using various protocols.
    • Applications will be network aware.  Applications will have the ability to choose from available networks and behave differently depending on available network resources.  They already do.  SIP handset applications preferentially connect to Wi-Fi networks today.  Verizon phones connect to the “Skype virtual netwdork.”  We can conceive of today a point in the future when devices preferentially make connections to the “Google Voice Network.”
    • Customer will become users.  Customers will leave the carrier-controlled communications environment, abandoning their carriers’ carefully created handsets and opting instead for their own preferred hand-held computing device and then choosing from a variety of over-the-top services that meet their needs whether or not provided by the carrier.  This will happen.  This is happening.
    • Voice is a choice.  There is a future without TDM voice (albeit, TDM will hold its own for a very long time).  I just travelled from San Francisco through London to Berlin, stayed three nights in a hotel, and returned to San Francisco logging hours of asynchronous and synchronous communication using three different devices, with text, voice, and video – and never once used the TDM network.   This has happened.
    • Consumers are like rain drops.  They fall everywhere, seek the lowest cost path to their destination, and flow past points of friction freely.  For many, the hand-held computer with open OS and unconstrained choice of network will be the path of least friction.
    • The “voice plan” will disappear.  AT&T is already there.  Unlimited voice is included with a choice of data plan.  That the two are itemized on my bill is a legacy.  It would make just as much sense to me to have a choice of (1) a data plan with video and (2) a data plan without video.  Think of it as the choice between a Big Mac and a Quarter Pounder.  They both come with a wrapper.  Voice is the wrapper to data.

  • Brace for change:
    • Praise and fear the company that:
      • Makes Data the platform.
      • Makes Voice an application on the Data platform.
      • Positions Voice as the ‘wrapper’ for higher value menu items.
    • Prepare for “handset” makers to look like Dell, HP, or Sony
    • Measure the transition to “Voice as a Choice”
    • Anticipate the affect of a Positive 2nd Order Derivative of Innovation
    • Experiment with ‘mobile home phones’ – hand-held computers without TDM voice
    • Expose TDM identities in the all-IP world
    • Embrace the next generation’s use of the word “phone” to mean computer
    • Acknowledge that communication will all be done in software.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s