Citations

Introduction
1 Forbes counted 22 accounting scandals alone that year, and that’s not including insider trading and other bad behavior.
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2 They were featured in outlets from 60 Minutes to Wired, whose term for them, “New Media Peacocks” both summed up their craving for the spotlight and the intense media skepticism around the company.
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3 And our case didn’t seem like an exception. In an interview at the time, Ned Stringham, the chief executive officer (CEO) of SBI Group, Razorfish’s new owner, summed up the level of enthusiasm for the brand: “We’re going to continue using Razorfish for a little while longer.”
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5 As one article summed up: “The grand old game has brought itself to the point where it can face the same challenge as thousands of other big businesses: how to harness the Web channel for revenue, marketing, and enhanced customer experiences... at least Major League Baseball finally recognizes the Internet as a channel to serve the one part of the sport that ultimately matters most: the fan.”
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5 By 2012, MLB.com was bringing in about $620 million from tickets, mobile apps, and streaming subscriptions, according to an article in Fast Company. If it had gone public as its owners had discussed, the article stated, the IPO would have been worth about $2.5 billion. “Baseball’s digital arm,” the author wrote, “has quietly proven itself to be New York’s top tech startup of the last decade.”
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7 Our success at creating both marketing experiences and technology solutions and products has led to recognition from numerous industry publications such as Advertising Age, who named us an A-List agency in both 2011 and 2012
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7 and analysts like Gartner and Forrester, the latter of which called us a business transformer in their 2012 New Interactive Agency Landscape report.
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Chapter 1
11 As New York Times columnist Thomas Friedman wrote years ago, “Today, more than ever, the traditional boundaries between politics, culture, technology, finance, national security, and ecology are disappearing.”

The Lexus and The Olive Tree Page 20
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13 In business, writes David Aaker in Spanning Silos, a silo is “a metaphor for organizational units that contain their own management team and talent and lack the motivation or desire to work with or even communicate with other organizational units.” He wrote, “Spanning silos, in my view, is the marketing challenge of our time.” That was in 2008.
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16 Sony Ericsson predicts that there will be more than 3 billion smartphone subscriptions by 2017, increasing data traffic to 15 times what it is today. That means a little less than half the world will be walking around with a level of computing in their pocket that would have been unthinkable just 15 years ago.
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16 The program gave Tesco Home plus the lead in online sales, which grew 130 percent and helped close the gap offline with market leader E-Mart, despite not having as many stores.
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19 Facebook has 1 billion users
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19 More than 10 billion Apple Apps have been downloaded
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19 Android has majority of mobile os market share
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21 When Ron Johnson was retail chief, he had no say over inventory. That was then–chief operations officer, and now-CEO, Tim Cook’s department. “Specialization,” writes Fortune’s Lashinsky, “is the norm at Apple, and as a result, Apple employees aren’t exposed to functions outside their area of expertise.”
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21 The Medici Effect, a 2006 book by Frans Johansson, catalogs success stories where just this sort of cross-fertilization happens. He writes, “When you step into an intersection of fields, disciplines, or cultures, you can combine existing concepts into a large number of extraordinary new ideas.”
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22 Corning and Associative Barriers
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Chapter 2
27 When you consider that Microsoft’s desktop platform still drives over 80 percent of the earth’s computers, building on
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28 As Frank Rose wrote in The Art of Immersion, “People have always wanted to in some way inhabit the stories that move them. The only variable is whether technology gives them that opportunity.”
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28 Windows 7, for instance, sold more than 700 million licenses.
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28 Through March of last year, more than 365 million iOS devices had been sold.
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28 Facebook has 1 billion users
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34 Last year Forrester called for marketers to dump the lead agency model. “Campaign planning that starts with the 30-second ad and tries to force-fit it to the Web blunts interactive possibilities,”
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34 Procter & Gamble, by way of example, used what it calls the brand agency leader model, establishing a single point of contact for each of its brands who then act as general contractors changed with hiring other agencies and partners as needed. The leader isn’t expected to do all the work but rather to find potential collaborators.
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34 Last year, Chevrolet demanded that rivals Interpublic and Omnicom form a joint venture called Commonwealth for its new agency.
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35 For Apple, there have been more downloads of apps than music (reported by ASYMCO on July 13, 2011)
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35 Last September, Google and Apple made interesting announcements about the state of their app stores. Apple went first, announcing there were currently 700,000 applications available worldwide.
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35 Google then countered with its own figure: 675,000 were available in its store.
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39 Axe Anarchy
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40 Mein Burger
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41 Boing Boing
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41 Brain Pickings
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42 Egos, too, are jettisoned because the best idea comes from anywhere in its network. “We’re trying to create a new operating system for the advertising industry,” said John Winsor, founder of Victors & Spoils. “We’re trying to create a meritocracy.” It’s a sexy idea for a lot of brands, something that the holding company Havas cottoned to: It bought Victors & Spoils last year for an unknown sum.
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44 My Special K
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45 As of last August, the website ProgrammableWeb
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45 Mercedes-Benz Tweet Race
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47 A useful mantra here comes from Eric Ries’s book, The Lean Startup: “Lean thinking defines value as providing benefit to the consumer; anything else is just waste.” The reference here is to agile methodology, a way of thinking about your processes that we’ll discuss more in the final chapters. The key thing to remember is customer-centricity.
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Chapter 3
49 President Obama rode to reelection on the strength of his campaign’s ability to organize and crunch large amounts of voter data.
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49 Blogger Nate Silver, whose statistical acumen had just predicted the state-by-state outcome of a second presidential election, was getting about as many kudos as the reelected Obama.
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49 The Giants won the World Series for the second time in three years, a mini-dynasty in part attributable to a state-of-the-art system that tracks how well fielders play hit balls and make throws. Incidentally, the team’s commitment to tech is long term—they were also first to have Wi-Fi in their stadium and invest in iPads for the locker room. And one of their key executives is a guy named Yeshayah Goldfarb, who possesses a very un-baseball-like title: director of minor league operations/quantitative analysis.
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50 The Harvard Business Review, in an issue that featured big data on the cover, called the data scientist “the sexiest job of the twenty-first century.”
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50 With more than 2.5 exabytes of data created each day, a number that’s doubling every 40 months, there is quite literally a glut of information about the world that can inform every decision that a business makes.
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50-51 Hesitancy remains to really engage with data-driven programs despite early indications that there is a correlation between being data-driven and positive business performance, as shown by a recent MIT survey of executives at 330 public companies.
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51 A McKinsey study has asserted that big data could also enable retailers to increase their operating margins by as much as 60 percent. At one of our retail clients, the company saw a 25 percent lift after simply adding data-driven recommended products.
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51 Data crunching has led to improved promotions, resulting in 30 percent fewer gaps on store shelves. Predicting weather and understanding how it affects consumer behavior has meant £6 million less of food wastage in the summer, £50 million less worth of stock in warehouses, and optimization of store operations that resulted in £30 million less waste.
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  All the processing once took eight weeks because the data had to be ported in from various warehouses, meaning the insights often got stale. To speed things up, it built a Hadoop cluster to store incoming data from all brands and analyzed the cluster directly in a manner that was much faster and more precise. Time required dropped from eight weeks to one.
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52 “Big data changed our entire dynamics,” said Williams-Sonoma CIO John Strain in 2012. “We can calculate hundreds of predictive attributes and leverage our spending to each channel.”
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52 A study last year by the Columbia Business School and New York American Marketing Association found that almost all of the senior marketing executives surveyed believe that successful brands use data to drive decision making.
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54 They tell you what creative output works when and with whom. The trick is getting the creative directors to go along with data-driven insights. As BuzzFeed’s Peretti has said, “There’s art and science to it. The math helps you have better understanding and helps you have more creative ideas, but you can’t replace the creative ideas.” c03.
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55 Here how the problem netted out, according to Slate: “They had records on 170 million potential voters, 13 million online supporters, 3 million campaign donors and at least as many volunteers—but no way of knowing who among them were the same people.”
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55 Obama’s reelection campaign effort began with a clean slate datawise, and created, according to Time magazine, “a single massive system that could merge the information collected from pollsters, fund-raisers, field workers, and consumer databases as well as social-media and mobile contacts with the main Democratic voter files in the swing states.” Moreover, that database was available to anyone in the campaign.
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57 Wrote ProPublica: “To pinpoint voters who might actually change their minds, the Obama campaign conducted randomized experiments. ... Voters received phone calls in which they were asked to rate their support for the president, and then engaged in a conversation about different policy issues.
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57 Another key figure was campaign manager Jim Messina, whose commonsense approach to data set the tone. “You have to test every single thing, to challenge every assumption, and to make sure that everything we do is provable,” Messina said. “That’s why I love numbers. Because you know good or bad whether what you’re doing is working.” The campaign put money where its mouth was, investing $100 million in IT, widely believed to be unparalleled in politics.
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58 Rather than empower the Romney ground game, it decimated its volunteers’ morale. Wrote one volunteer on his blog, “So, the end result was that 30,000+ of the most active and fired-up volunteers were wandering around confused and frustrated when they could have been doing anything else to help. Like driving people to the polls, phone-banking, walking door-to-door, etc. We lost by fairly small margins in Florida, Virginia, Ohio and Colorado. If this had worked could it have closed the gap? I sure hope not for my sanity’s sake.”
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58 Wrote John Dickerson in a postmortem for Slate: “In the final 10 days of the race, a split started to emerge in the two campaigns. The Obama team would shower you with a flurry of data— specific, measurable, and they’d show you the way they did the math. Any request for written proof was immediately filled.
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60 There are any number of ways to articulate the data deluge. There’s Walmart’s 1 million customer transactions every hour, filling databases already teeming with more than 2.5 petabytes of data.
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61 the 571 new websites created, or the 100 terabytes of data uploaded to Facebook on a daily basis.
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62 Here’s behavioral economist Dan Ariely on focus groups: “Think about what a strange idea it is that we take 10 people who know basically nothing about your project and you put them in the room and you let them talk for a while and then you take the ... whatever they came up with, as a consequence of these two hours of random thinking and you base your strategy on it, to a large degree.”
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63 This veritable cornucopia of smart recommendations is what has made Amazon the $102 billion company it is today.
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63 As much as 30 percent of the company’s sales have been attributed to its recommendation engine, which, while far from perfect, is a central part of the Amazon experience.
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Chapter 4
77 In recent years, big-brand marketers have learned that if they want to get their money’s worth from the Super Bowl—a shade under $3 million for 30 seconds and rising—then they had better create a robust program that created interest in the run-up to the big game.
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80 Oddly enough, one of the first important books to look at the cloud barely mentioned it. In 2008’s The Big Switch, IT iconoclast Nicholas Carr observed that “private computer systems, built and operating by private companies, are being supplanted by services provided over a common grid—the Internet—by centralized data plants. ... Computing is being turned into a utility.”
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81 The analysts at Forrester have predicted that the global market for cloud computing will go from $40 billion in 2011 to more than $241 billion in 2020.
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81 The term cloud means a lot of different things to a lot of different people, so once again we should begin by presenting our terms. The government has called it “a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”
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83 Amazon has become the leader in cloud services for enterprises. Revenue and market share for its cloud business isn’t public, but Gartner has called it a “de facto monopoly,” despite all the competition it faces. And to think that just a few years ago its cloud business didn’t exist.
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83 Here’s how BusinessWeek described the moment: “Its service: cheap, raw computing power that could be tapped on demand over the Internet just like electricity. In less than five hours, hundreds of programmers, hoping to use the service to power their MySpace and Google wannabes, snapped up all the test slots. One desperate latecomer instant-messaged a $10,000 offer for a slot to a lucky winner, who declined to give it up.”
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84-85 “At this point, JPL’s data centers are filled to capacity, so we’re looking for ways to cost effectively expand the computational horsepower that we have at our disposal,” JPL data services manager Khawaja Shams told the Los Angeles Times. “Cloud computing is giving us that opportunity.”
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85 Then there are media companies such as Newsweek/Daily Beast and PBS, with its more than one petabyte of streaming video each month. There are institutions such as the Harvard Medical School, which is using Amazon to host a database for genome analysis. There are business disruptors such as Foursquare and Yelp. And, increasingly, there are large enterprises such as Virgin Atlantic and Netflix.
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85 Pinterest, which hit 10 million monthly users faster than any site in the history
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85 Pinterest, which hit 10 million monthly users faster than any site in the history of the Web, runs on a variety of Amazon services, including S3 and Elastic Cloud Compute. Between August 2011 and April 2012, Pinterest’s use of Amazon’s S3 grew by a factor of 10, and its use of Amazon’s EC2 grew by a factor of 3. The company now has about 80 million objects stored in S3, which holds about 410 terabytes of user data.
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85 In 2011, Netflix was the biggest source of Web traffic in the United States, despite losing all those customers during the Qwikster crisis.
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86 Even some very public missteps haven’t changed its path. Last June, a power outage knocked out an Availability Zone—Amazonian lingo for a subregion of servers—and triggered a problem with load balancing that caused Netflix, Instagram, Pinterest, and a host of other sites to experience significant downtime. Amazon immediately came clean, taking the blame and resolving to improve its processes.
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86 Netflix executives affirmed their faith in the cloud, stating that since it made the move from a private data center approach, “We found that our overall availability over the past several years has steadily improved.” In other words, despite the high-profile outage, Netflix uptime was on the whole improved since heading to the cloud.
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86 Rock-solid relationships with companies such as Netflix has helped make Amazon the best-known and largest cloud provider. Estimates put its cloud operation at $6 billion. But it’s far from the only player. Rackspace did over $1 billion in gross revenue in 2011.
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86 Rackspace did over $1 billion in gross revenue in 2011. Salesforce is making more inroads in the cloud, as are familiar faces such as Microsoft and Google.
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86-87 In the early hours of April 29, 2011, tens of millions of people around the world took to the Internet to watch the wedding of Prince William and Kate Middleton. About 6 million of them stopped by the Official Royal Wedding site, where they clicked on about 15 million pages. All credit goes to Google, whose Google App Engine bore all that traffic on its shoulders without so much as a slouch. Although the App Engine differs in many ways, think of it as similar to Amazon Web Services and EC2: They’re both ways to host Web applications. When Clarence House—that’s the official residence of the Prince of Wales—hired Google to get the site built, there was a four-week deadline. Because of App Engine and Google’s infrastructure, there was no need for a massive amount of on-premises servers. Taking full advantage of the cloud, Google could apply a bunch of tools like page pregeneration and load balancing in order to ensure that it could handle all the traffic.
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88 Last year, when Amazon dropped the prices on a number of its services, it was the nineteenth such cut in six years. Following the price cut, a small website hosted on Amazon that cost $876 per year using pay-as-you-go, on-demand pricing in 2006 would cost $250 with a contract. Meanwhile, Google and Microsoft followed suit with cuts of their own.
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88 We’re just now starting to see the impact of all this in terms of rate of ROI to enterprises. A powerful International Data Corporation (IDC) study, despite being commissioned by AWS, was conducted independently. This study found an average five-year return on investment of 626 percent and received $2.5 million per application in benefit.
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90 IDC projects that the digital universe will reach 30 zettabytes (ZB) by 2020.
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90 Etsy hit the scene in 2005 and quickly became a media darling as a place for hobbyists and professional artists to sell handmade or vintage items. The company, which makes money by charging a small listing fee for each item and by taking a 3.5 percent cut of every sale, has experienced heady growth. By 2007, Etsy made its one-millionth sale. By 2010, it had a valuation of $300 million. The following year it crossed the half-billion dollar threshold for sales, and by 2012 it was raising funds for a global expansion.
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90 A Wired magazine article suggested that Etsy’s success, even through the economic downturn, results from its focus on customization and personalization, something the Web has taught us to like. Wrote columnist Clive Thompson, “After years of molding the digital world to suit our style, is it any wonder we want to do the same to the physical realm?” A big part of that customized experience is made possible by the cloud and how Etsy uses it to make sense of large amounts of customer data created by its community.
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91 “With more data and the ability to process it, companies can see more, they can learn more, they can do more,” said Hadoop developer Doug Cutting to Computerworld in 2011. “[With Hadoop] you can start to do all sorts of analyses that just weren’t practical before. You can start to look at patterns over years, over seasons, across demographics.”
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92 One is that security is overwhelmingly the biggest source of anxiety among tech decision makers as they think about the cloud. Example: A survey from IDC in September 2011 discovered that less than a third of IT executives feel that the benefi ts of cloud computing outweigh its risks.
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93 At a GigaOM conference last year, Juergen Urbanski of Deutsche Telekom’s T-Systems confi rmed that security was the number one cloud-related concern, but he added: “If you peel back the onion a little bit, about 90 percent of those concerns are really perception versus reality—in other words, it’s evident to everyone that your money is better off in the bank, but with data, people are like ‘is it really safer in the cloud?’”
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93 The assertion that private data centers are more secure than the public cloud is a common one, despite the absence of empirical support. It doesn’t help that the cloud has been bedeviled by a few high-profi le instances of hacking, including the sad story of a Wired reporter who had a massive chunk of his personal information wiped out by a digital ne’er-do-well. His story is a consumer cloud story, not an enterprise one, and so only partially on point, but on a perceptual level it does suggest some of the issues that cloud adoption faces.
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94 The Honan affair “wasn’t a cloud security failure,” wrote the blogger Rodney Brown. “It was human error, and that will keep happening whether attacks are aimed at the cloud or an on-premise IT structure—as long as businesses just pay lip service to the training and tools needed to prevent it.”
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94 One belief is that many security breaches come from the internal teams who have contact with the servers. Back in 2001, a Network World article said that it was as high as 80 percent.
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95 A survey of almost 1,500 IT professionals in October 2012 revealed that the most popular barrier to cloud adoption wasn’t security but sunk costs. Of those respondents who weren’t on the cloud, 38.1 percent said that “they had delayed the adoption of cloud services and applications because they had already invested too much capital in internal IT infrastructure solutions.” Private clouds and colocation providers have early exit penalties that could cut the benefi ts of moving to the cloud.
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96 This issue popped up a couple years ago when the relationship between Eli Lilly, an early cloud adopter, and Amazon Web Services got a bit choppy. Eli Lilly had been rather public about its use of AWS for some data-processing needs. On one occasion the company needed 25 servers to crunch a lot of data very quickly
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97 In early 2011, the federal government adopted a cloud-first policy, meaning that all agencies needed to evaluate a cloud strategy before making investments in private data centers. It was a key initiative of the federal government’s first CIO, Vivek Kundra, who explained it all in a strategy document that consists of 43 well-written pages that hold up as a strong primer on the cloud.
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Chapter 5
103 While e-commerce continues to grow—as we write, comScore has just announced the twelfth consecutive quarter of year-over-year growth—huge challenges loom for the biggest retailers.
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105 Audi City
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107 Uptake has been slower than many would like, but midway through 2012 Gartner was predicting that mobile payments would reach about $171 billion, up from about $106 billion, year over year.
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108 Although e-commerce’s growth has been heady, even through the recession, physical stores accounted for nearly 93 percent of sales of products that could also be bought online during the first quarter of 2012, according to Internet Retailer.
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108 The persistence of the in-store experience can best be summed up by Walmart, for which only 1 to 2 percent of total sales is from e-commerce.
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108 The rise of mobile hasn’t done much to change that either, although mobile commerce sales, at about $10 billion in 2011, were expected to double in 2012, to $20 billion.
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110 Although books were excluded, the promotion raised the ire of novelist Richard Russo, who published a New York Times op-ed piece headlined “Amazon’s Jungle Logic.”
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110 In particular, the authors were very uncomfortable with the idea of using such an app in mom-and-pop stores and harming their sales. A headline on Forbes.com went one step further: “Amazon’s Price Check May Be Evil, But It’s the Way of the Future.”
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110 comScore says about 4 in 10 shoppers check out products in-store and then buy elsewhere—especially online—for a cheaper price.
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110 As of last summer, almost half of U.S. consumers had smartphones and 58 percent of them had used the phone for store-related shopping, per a study by Deloitte.
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111 Macy’s has said that 90 percent of its customers research online at least occasionally before buying in the store.
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111 Edgell Knowledge Network (EKN) and eBay Local researchers found that retailers are well aware of the problem and that 8 in 10 expected it to have a negative impact on sales during the 2012 holiday season, with an average of a 5 percent loss. Deloitte, meanwhile, found that about 5.1 percent of U.S. retail sales, about $158 billion, are influenced by mobile and predicted that this number would be 20 percent by 2016. Compare that to a projection of only $5 billion in mobile sales for 2012.
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114 Last year, Retail Systems Research (RSR) released a benchmark report on how retailers were measuring up to the goal of omnichannel commerce.
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115 Macy’s, having decided it can’t afford to have its inventory segregated between online and in-store, has announced plans to equip 292 of its more than 800 stores with backroom distribution centers, blurring the once bright line between store and warehouse and allowing the retailer to apply inventory against demand at any touchpoint.
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116 E-commerce is no different from any other touchpoint. When it was new, the incubator model made sense. Now online is core to a retailer: While 5 to 7 percent of sales happen on the e-commerce engine, 50 percent of sales in the retail store started in the e-commerce engine.
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116 At Shop.org’s annual conference last year, Jamie Nordstrom, president of Nordstrom Direct and great-grandson of Nordstrom’s founder John Nordstrom, gave an illuminating talk about the company’s move toward integration.
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118 Nordstrom’s Innovation Lab, described by its team as a “lean startup inside a Fortune 500 company,” uses human-centered design thinking and agile and lean processes to rapid prototype potential solutions that might improve the customer experience.
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118 In its San Jose store, Walmart is testing a service that allows shoppers to search for the exact location of a particular item, which could be a real improvement of the shopping experience in a 100,000-square-foot store.
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120 Plus, it’s clear that Starbucks mobile is paying off. In its first year of offering mobile payments, it did 26 million such payments.
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121 As of last year, orders placed on Moosejaw.com are responsible for 10 percent of store sales.
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121 Moosejaw associates are quite taken with the new technology. “The employees love the mobile POS and have dubbed it ‘The Future Toaster,’” Moosejaw CEO Eoin Comerford told Apparel.
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Chapter 6
125 A post on the company blog written by marketing executive Jessie Becker announced that Netflix was doing away with its current pricing plan, which gave customers unlimited streaming and unlimited DVDs for just $9.99 a month.
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126-127 Two months later, Netflix’s crisis deepened when the company once again took to its blog. This one was from Reed Hastings, who offered up an apology for how the first announcement was handled and then revealed that the strategy would remain unchanged.
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127 By mid-October, Hastings announced that the company had killed off Qwikster, but the damage was already done.
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127 Netflix lost 800,000 subscribers and 77 percent of its market value in four months. There was even a Saturday Night Live parody of the crisis to enshrine the moment in pop culture history. A year after the crisis began, Netflix had lost about two-thirds of its value and the company was still apologizing for the moves.
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128 Back in 1999, Rick Levine, Christopher Locke, Doc Searls, and David Weinberger laid it out in The Cluetrain Manifesto, the well-known compilation of theses about how the Internet would change business:
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129 You might even say we’ve become a bit spoiled. The comedian Louis CK has a great bit on YouTube called, “Everything’s amazing and nobody’s happy.”
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130 At your typical supermarket, the average number of items sold exploded from about 10,000 in 1977 to more than 38,000 today, according to the Food Marketing Institute.
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130-131 In 2011, Walmart reversed course on a SKU rationalization program that in addition to reducing product clutter on store shelves led to a same-store sales decline. In the average store, Walmart headquarters (in Bentonville, Arkansas) had to add back 8,500 SKUs, many of which were slapped with a promotional sign, “It’s back.” Overall, SKUs would go up by 11 percent. If this is what’s going at the world’s largest retailer, then you know there are very few areas where consumers don’t have some degree of choice.
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131-132 To see this, look at the analyst Mary Meeker’s comparison of consumer time spent with different media with the amount of advertising in each.
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132 For instance, Deloitte, setting a low bar that few still manage to clear, has found that only 20 percent of apps have been downloaded more than 1,000 times.
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133 Here’s an example: Going into November 2010, people were spending more time on portals than on social networks by a small margin of a few minutes per day. Within a month, according to comScore, this had changed so that people were spending equal amounts in each.
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133 Consider how quickly the loss of the most important reference of social traffic to retailers changed. In the first quarter of 2011, Facebook was tops, supplying 88 percent of traffic. Pinterest was at just 1 percent. Within a year, Facebook had dropped to 60 percent, while Pinterest had surged to 26 percent.
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135 Deregulation in 1984 led to vast infrastructure building and programming development. By the end of the decade, nearly 53 million households subscribed to cable, and cable program networks had increased from 28 in 1980 to 79 by 1989. By the spring of 1998, the number of national cable video networks had grown to 171. By 2002, about 280 nationally delivered cable networks were available, with that number growing steadily.
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135-136 In 1952–1953, I Love Lucy garnered a 67.3 rating, capturing more than two-thirds of the TV-viewing public as measured by Nielsen. In that decade there were two other shows that received more than a 40 percent share— The $64,000 Question and Gunsmoke. It’s been downhill since then. In the 1970s and 1980s, must-watch TV like All in the Family and The Cosby Show could be counted on to bring in 30-share audiences. But when Cliff Huxtable turned in his sweaters, that was it for regular programming that might capture anything close to onethird of the nation’s TV watchers.
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136 American Idol topped the list with an 8.1 share of viewers older than two years.
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136 In 2007, the average household tuned in to only 16 channels of the 118 channels available, according to Nielsen estimates.
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136 Wrong. Between 1980 and 2011, network prime-time CPMs more than quadrupled, from $4.80 to $22.24. Over that same period of time, the average price of a gallon of gas only increased from $1.19 to about $3. Looked at in the short term, growth rates can far outpace infl ation: From 2000 to 2005, inflation grew 13.4 percent but the network was up 50 percent and spot TV CPMs grew 35 percent. In recent years, TV sellers have continued to see steep increases. Here’s how Jack Poor, vice president of strategic planning at the trade association TVB, explained it to Media Life Magazine (June 15, 2001): “The scarcity of network rating points has actually driven network CPM growth as demand has outgrown supply. Based on the double-digit increases achieved by the networks in this year’s upfront, it looks like spot TV’s cost efficiency advantage versus network will continue well into 2012.”
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137 That would mean holding them in mid-September, not May, a switch that would cause a cascade of changes for programmers, whose new season would be backed up to January. He told Ad Age: “To commit in May or June six to eight months out, in terms of clients already knowing what their marketing position is going to be and what their true fall year planning is going to be, is quite premature. ... Basically, what’s broken is that decisions are being made much more in a vacuum and with less business intelligence.”
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138 “Hits don’t always lead to revenue,” Jonah Peretti told Ad Age in a follow-up story about the diffi culty of translating virality to revenue. “It’s a paradox of online publishing that the moments that generate the most excitement and traffic usually yield the lowest ad rates or go unsold.”
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141-142 Originally, there were no plans to air the ad on TV, in part because TV advertising is not what Chipotle does. The brand grew to prominence based on word of mouth and some irreverent but small-budget campaigns. Its ambivalence about advertising could be seen in its tricky relationships with ad agencies. It went through four in five years (as reported in Advertising Age, September 29, 2011).
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142 Wrote a Time magazine critic, “The most enjoyable musical thing I saw last night was not a live performance at all. It was a Chipotle ad.”
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143 The first redesign in seven years helped to turn Coke into a publisher, with its digital and social media team “re-formed in the last year to look more like an editorial team at a long-lead magazine ... with a production schedule and an editorial calendar,” as director Ashley Brown told the New York Times. Brown added: “We are acting as newshounds in the organization. It’s very much like at a newspaper or a magazine.”
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144 Razorfish: Smart Car Poop Tweet
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Chapter 7
149 When, in spring 2012, Google released its concept video for a new project that would embed a computer in a pair of eyeglasses, you would be forgiven if you were a doubter. The prospect of a pair of glasses that doubled as a display for messages and performed searches and took photographs was not only too good to be true, it sounded like something plucked out of a mid-century science fi ction novel.
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150 As the months wore on, it became clear that reviewers were starting to fall in love with the device. Time put Google Glasses on its list of the best inventions of 2012, calling it “the device that will make augmented reality part of our daily lives.”
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151 Wrote Nick Bilton, in the New York Times, “I had a brief opportunity to try the glasses, and the experience was as mesmerizing as when I saw the iPhone for the fi rst time.”
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151 It may even be available by the time you pick up this book. The time is right, as John Seely Brown said to Tech News Daily in late 2010. Seely Brown is cochair at the Center for the Edge, and a former Xerox PARC researcher who helped coin the phrase ubiquitous computing. So he knows how much hype has surrounded the term. “Prototypes are easy to make, but you have to wait for the magic moment, the special confl uence when these things can hum without being a pain in the ass. And we’re there now. We have a magic moment, a synergy, between the cloud, between how we build batteries, between how we use screens. All these different inventions are aligned now in a way that makes this a pretty exciting time.”
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154 The electronics giant Philips recently debuted Hue, an LED lightbulb studded with a tiny microprocessor that allows users to control brightness levels and colors in an ultragranular way through mobile apps.
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154 Then there’s Twine, a puck-sized object loaded with sensors that helps users to monitor their home environment. Twine, with Wi-Fi, temperature and orientation sensors, and connectors for even more sensors, also boasts a Web app that’s intuitive and requires no programming ability for setup.
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154 The Nest Learning Thermostat allows you to control your heating and cooling system through its elegantly designed wall device—that’s the boring way—or it can be controlled remotely through a smartphone that accesses a digital profi le that reveals insightful information about energy use that’s shareable over social media (Figure 7.3 ).
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155-156 Nike has continued the digital integration initiated with Nike+ years ago, launching new extensions including Nike+ Basketball and Nike+ FuelBand.
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157 GlowCaps are Wi-Fi–enabled replacement caps for prescription medicine bottles that help with compliance, a big issue in health care because patients are often less than reliable when it comes to taking their medication. GlowCaps, which essentially put a computer atop most standard prescription bottles, are meant to fix this.
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157 GlowCaps were even featured in a Museum of Modern Art exhibit about design in 2011.
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157-158 “Until recently, the ability to manufacture was reserved for those who owned factories. What’s happened over the last fi ve years is that we’ve brought the Web’s democratizing power to manufacturing. Today, you can manufacture with the push of a button.” This is Chris Anderson talking to Time magazine (October 1, 2012 1) about the rise of three-dimensional printers, which have been referred to as desktop factories that democratize the manufacturing process.
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159 “The past 10 years have been about discovering new ways to work together and offer services on the Web,” he wrote in The Guardian. “The next 10 years will, I believe, be about applying those lessons to the real world. It means that the future doesn’t just belong to Internet businesses founded on virtual principles but to ones that are firmly rooted in the physical world.”
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159 By inserting electronics into previously “dumb” appliances, a whole world opens up for autonomous or connected prototypes that are shared online, presented at the Maker Faire (the Woodstock of DIY), or funded for mass production on Kickstarter.
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160 The Pebble e-watch grabbed headlines when it became the largest Kickstarter project ever, raising more than $10 million from 68,000 backers. Its inventor, Eric Migicovsky, came up with the idea in Y Combinator, the well-known business incubator program, but was unable to raise funds for it from the usual venture capital sources. After putting it on Kickstarter last April, the initial fund-raising goal of $100,000 was reached in just 2 hours.
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160 Three-dimensional printing technologies coupled with open innovation-sharing platforms such as Thingiverse enable the digi tization of all things physical. As soon as someone creates the three-dimensional blueprint of an object and shares it digitally, others can do the same.
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160 Similarly, the Arduino movement is coupled with code-sharing sites such as GitHub and others, enabling the digital logic for creating new objects.
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162 A great example of the digitized environment is the AT&T flagship store in Chicago. In its 10,000-square-foot space there are 150 synchronized displays, including a 20-foot interactive wall, creating a wall-to-wall interactive experience. This store does a great job of showing how technology enhances the customer experience across the AT&T products and services available to their customers.
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164 Razorfish’s own 5D platform is another example of fluid content, enabling consumers to effortlessly engage with retail brands across multiple devices.
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Chapter 8
170 Zappos has always taken an unconventional approach to customer service. Rather than have a scripted customer service team or a hard to find phone number, Zappos has broken the mold. A quick Internet search will show dozens of amazing customer service stories, everything from sending flowers to customers on their birthdays to overnighting—for free shoes to a best man who forgot his shoes for his buddy’s wedding. All of this happens because Tony has the quiet leadership to create happy employees who result in happy customers.
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171 In fact, Tony has said his approach is to take dollars that would have traditionally been spend on paid advertising and marketing and apply them to the customer experience.
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171 And to make sure they are committed to the company goals, they are offered $2,000 to quit a week into the training. Supposedly only 2 to 3 percent take Tony up on it, but the offer is more about setting the tone of the culture.
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173 Ford CMO Jim Farley has talked about how he looked to the video game industry for inspiration and observed how prelaunch strategies for big games could do the same for his model launches.
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176 “The three-month road map is about the best horizon you can be thinking about coherently,” Box founder Aaron Levie has said.
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Chapter 9
181 Gartner predicts that by 2015, 25 percent of organizations will have added the role to their C-suite.
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181 In March 2012, Starbucks created the CDO role, reporting directly to CEO Howard Schultz and responsible for core digital businesses across Web, mobile, social media, card, loyalty, e-commerce, and Wi-Fi. Adam Brotman will also lead the company’s emerging in-store digital and entertainment teams. At the time of this announcement, Starbucks was pretty far from clueless when it came to digital. Starbucks was already doing a heady business in mobile payments and it had a strong social media presence. But Brotman’s presence took innovation to the next level. It followed quickly with big bang news: a $25 million investment in Square along with an agreement that would have the payments provider handle all its debit and credit card transactions. In November, this rolled out to 7,000 stores. Before you knew it, Starbucks was the subject of headlines that called it a tech company.
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181 “Right now, there’s a lot of excitement among combined digital teams for the opportunity to innovate and build upon a foundation that started with My Starbucks Idea and exploded through social media,” Brotman told VentureBeat in June 2012. “The true opportunity is in how we combine all these things. One group... one direction.”
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185 As a way of illustrating collaboration in action, Johansson talked to us about Dice, the video game publisher known for the Battlefield series. After one of the company’s animators read The Medici Effect, Dice began implementing some of its principles.
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Chapter 11
197 A simple truth of software development is that it often fails. As reported in its 2012 Chaos Report, the Standish Group found that between 2002 and 2010, only 37 percent of software projects were successful, where success is defined as delivering the desired functionality on time and on budget. Twenty-one percent of those projects failed, and 42 percent were deemed challenged. Those are pretty bad numbers.
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198 Scrum is a reference to an earlier paper from pair of Japanese theorists who looked at a few successful industrial cases in which cross-functional teams moved forward as a rugby team does. “Under the rugby approach, the product development process emerges from the constant interaction of a handpicked, multidisciplinary team whose members work together from start to finish. Rather than moving in defined, highly structured stages, the process is borne out of the team members’ interplay.”
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198 In 2001, the Agile Manifesto was published after 17 developers gathered at a ski resort in Utah to chat about how a slow, documentationdriven software development process could be made over. They came up with an 11-point plan, the first of which sums everything up: “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.”
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198-199 Why has agile become popular? Because it works. In cases where the waterfall process was being used, the success rate was only 14 percent, according to Standish. In cases in which agile was applied, success was three times more likely: 42 percent. And the failure rate declined, precipitously too, from 29 percent under waterfall to 9 percent under agile. That’s a decade’s worth of data to show that agile is a more efficient way to go about software development.
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199 It’s often a difficult reality to swallow, but nothing speaks more loudly than real-world analytics. With studies from respected companies such as the Standish Group showing that 64 percent of designed functionality rarely or never gets used, it’s easy to see that the big bang approach to building digital products and marketing experiences wastes a lot of time and money
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203 Computer science graduation rates have slowly been decreasing over the last 10 years and needs have not been shrinking accordingly (see, for instance, “America’s Tech Talent Crunch,” by Dice
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205 Educate yourself. By this point, there are hundreds of books on agile, not to mention workshops, webinars, and other educational resources. Become a scrum master or a product manager through a scrumalliance.org course
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