Who's in control?

In this week’s NY Times it was mentioned that badly needed legislation is considered to tighten the security of personal data. Clearly we need safeguards for the protection of personal data. However, it is time to take it a step further.

Given the state of technology we should relook at privacy and ownership of personal data. Let’s start with laying down the first principle: you own your personal data and you may grant others (like Facebook, the Government, credit card companies, your doctor) the right to use this data for purposes that you agree with. The second principle is that, if you opt for it, you should be notified when someone accesses your data. Today 75% of the population in the USA has broadband Internet (85% in the Netherlands) and by 2013 mobile phone penetration is expected to be 100%. This doesn’t seem to be much of a barrier to implementing low cost notification by SMS or email.

Your health record falls under your personal data. You own your record and are responsible for maintaining it. It is your life. That doesn’t mean that you have to type in whatever you have just learned from your doctor at your last visit. You should delegate this to trusted sources, like your general practitioner, home town pharmacy or community hospital. I have tried to follow the discussion around the electronic patient dossier in the Netherlands and it was obvious why a centralized, government driven approach will not work. In the Netherlands the government still plays a paternalistic role (they call it “father state”) with cradle to grave support of its citizens. Times they are a-changing. Many people just don’t trust the government to create a working central system and guarantee the privacy of their data. Fortunately there are viable alternatives.

While establishing a standard for electronic patient records may not be the hardest part – there are many working examples in the market like the Continuity of Care Document- the security of these records is slightly more complicated. We should look at that treasure trove of free options: the open source world. There is a well established standard for user identification and authentication, OpenID, which is supported by companies like Google, IBM, Paypal and Yahoo. If it’s good enough for the largest online companies in the world, it’s probably good enough for this purpose. We can also leverage standards that help ensure that data is stored in encrypted format at locations that are certified to be genuine. A “security provisioning service” can facilitate the enrollment of users and the assignment of “read and write” rights of the records. A directory service can contain a list of approved medical staff.

One of the weak links remains the fact that currently most the information is password protected. This can be strengthened by One Time Passwords sent to a registered mobile, or generated by a dedicated device. A robust system may require the option of biometric authentication to uniquely identify the user. The government could provide authentication services through public devices. The latter can be done by setting up identification and authentication centers (for instance in post offices) and possibly leveraging the major banks ATM networks (they own most of teh big banks anyway). One might even consider iris-recognition for highly secure transactions like reporting identity theft.

In bustling, chaotic India the government has just embarked on a huge program to provide every of their 1.2 odd billion (nobody knows exactly how many) citizens with a unique identification number. They use fingerprints as the authentication mechanism. In the Netherlands fingerprinting is now mandatory to obtain a passport. If India can deal with this problem on the scale of billions then the Netherlands should be able to handle 16 million users.

A decentralized approach using data and security standards will be much easier to implement than any centralized approach that requires huge databases and complex integration. In the banking world, decentralized solutions based on standards have worked well for the last twenty years or so. You can withdraw money at virtually any ATM around the world. This is not because there is one centralized ATM network with a huge database, but because there are established standards for data exchange, security and settlements between financial institutions that hold the data of their clients. Once you enter your card and PIN, the ATM will send encrypted identification and authentication information over the network to your bank, who returns an approval (if you have sufficient balance), which prompts the ATM to dispense money and your account getting debited.

Similarly the general practitioner, pharmacy or emergency room should be able to access relevant parts of your record over the Internet, if you have authorized them to do so. They can add observations, treatment information and prescriptions to your record to maintain a holistic view. If you would like to support the progress of science you can allow certain qualified institutions to use your medical data, stripped from your personal information, for analytical purposes. They will need to notify you when they do this for which purpose.

A combination of private and public initiatives is the way forward. Once standards are agreed, there could be multiple systems that a patient can choose from to store her record. For instance, the patient can delegate this to her community hospital, because she trusts them to look out for her interests. She can authorize her local pharmacy to access relevant parts of her record and update this when she picks up her prescription. This can be totally browser-based without the need for extensive system integration or an overbearing government. The user manages her demographic data and authorized organizations can be notified of any updates, like change of employer and insurance or change of address.

This approach puts the onus of ownership and control on the user, limits the role of the government to support of standardization and certification and leaves the implementation to private organizations that have the biggest stake in making this a success.

The Chasm

Some IT organizations think they have the wherewithal to do everything in-house. They manage their projects, hire some consultants and run their own datacenters. Around 80% of the IT budget is allocated to keeping existing systems running, which has little or no impact on company growth. Managing legacy applications is labor intensive, as it typically involves a Babylon of languages, applications and systems. The fact that this hodgepodge functions at all can be called a miracle. If a business process changes or a new product is introduced to the market, the IT department takes months, sometimes years, to bring about the necessary changes. There are too many dependencies and complexity is too high to have the application-base adapt rapidly. The transition to ERP packages such as SAP and Oracle did not the resolve the flexibility issue. Implementing SAP is seen by many as “pouring super expensive concrete in the foundation of the corporation”. Rich in functionality, high in cost, but agility is not a characteristic. Most organizations are better served by simplification and modernization of their existing systems, rather than the addition of new features (this also applies to Microsoft Office).

Large software projects remain unpredictable. The root causes of projects that are running way over budget and over time can be typically found on the fault-line of business and technology. If CIOs continue to behave like true cost center managers and keep holding on to a technology view of the world, IT will remain neutral at best and a value drain at worst. The technology providers that can provide relief are few and far between, as they tend to suffer from the “hammer syndrome”, i.e. they see every problem as a technology problem that can be killed by throwing more abbreviations at it. SOA, BI and BPM are all helpful tools, but only if they are used in the proper business context. “The business hasn’t given us clear requirements; they keep changing their minds all the time”. This type of statements indicates a chasm between business and IT. In 2008 the Hackett Group published a report which showed that companies where the IT discipline is weaved into the fabric of the organization have 40% higher margins than their peers who don’t. According to Faisal Hoque, of the BTM Corporation, the convergence of business and IT is a key driver for growth and profitability. This implies that every IT person understands the business value of the application she is working on and every executive has a grasp of the importance of technology for the company direction. Key technology decisions are business decisions. IT is managed using financial models that continuously measure value added to the organization. Applications are grouped in portfolios and directed on value, cost and risk.

In the last couple of years we have seen some dramatic changes in the IT world. A new generation of applications built for the Web and utilizing open source and collaborative development models, are allowing companies to implement flexible applications much faster and cheaper. Applications like Salesorce.com are shared among multiple companies (so called multi-tenant systems) and offer a web-based platform to integrate with existing systems. Applications that “live in the Cloud”, as this is euphemistically referred to, negate the need to manage infrastructure. In general it doesn’t make sense for most companies to own and manage their own technology infrastructure. They lack the expertise and scale to do this effectively. This is better left to specialists like HP and IBM or new players like Amazon.

Web technologies allow organizations to interact and exchange knowledge effectively. Business analysts, architects and project managers will remain close to the business, but there is no need to have developers, testers and configuration managers within the walls of your organization. Using collaborative development tools and methodologies it is possible to get the right talent at the right moment, independent of location and time-zone. When the project is well managed and scope and specifications are under control it doesn’t matter if the code is being cut in Bangor, Maine or Bangalore, India.

To sum it up, there is a plethora of wonderful new models and tools to make IT more efficient. In the end it’s only going to be effective if the barrier between business and IT disappears and IT becomes a true enabler of business value.

Facebook knows more about you than you do

So you have added hundreds of people to your Facebook account, from your closest friends to vague acquaintances or even people you have never met. You interact with them on topics that interest you, you post, tweet and twitter to make sure everyone knows you exist or just for the fun of it. You play some games or do quizzes; the ones that compare you to animals or famous people. Innocent stuff, right? Maybe.

Facebook knows your employer, education, sexual orientation, friends and your interests. You use FB on your iPhone as well and thanks to the GPS in your phone everyone is aware of your whereabouts. And these quizzes you take? They are neatly packaged psychological tests that try to glean information about you, thereby taking profiling to the next level. Using behavioral analytics, all this data is being compared with three hundred million people (a user-base the size of the entire population of the US) to find patterns. Knowing who is like you, they now can fairly accurately predict what is next. In essence they create a model of you and use this to target advertising. Moreover, they can aggregate information over all these users and apply “social sensors” to see if tastes or moods are changing among certain groups. This is powerful knowledge…People who are more cynical than me can probably come up with some horror scenarios.

According to ACLU, California’s Civil Liberties organization, most people don’t know that Facebook's default privacy settings allow full access to a user's information. It is actually worse.. every time one of a user's friends takes a quiz, the quiz has access to that user's profile information. Of course that has not gone unnoticed and some users sued FB, alleging that the social networking site violates several state laws aimed at protecting consumers' privacy. According to the WSJ, the complaint accuses FB of failing to compensate its users for harvesting their personal data and for violating laws that protect consumers from having information they upload to the site shared with third parties, such as advertisers. Hopefully Facebook will strengthen the privacy of personal data, but it seems that the floodgates have opened.

Interestingly, when I talk to my kids they are not that concerned. They have grown up with Facebook and actually use it as a tool to position themselves, to basically promote the “brand me”. They have become incredibly clever in manipulating the way they are being perceived from their Facebook presence. It of course begs the question what is the reality content of what they post? As Daniel Hollinger writes in an excellent article in today’s WSJ: “it's getting harder to know what's real and unreal in a world that always seems to be slipping slightly out of focus.” Probably, the word “reality” itself has lost its meaning a while back when the Dutch Endemol group launched the first reality show, aptly named “Big Brother”.

Netflix found a cheap fix for innovation

Netflix started its business as a DVD rental company a couple of years back. They cleverly combine a net-based ordering system with a well thought-out physical distribution approach for the flicks on DVD. You select your movies from their website and put them in a queue. Every time you send a DVD back, by dropping it in a pre-addressed, pre-paid envelop in your mailbox, you get a new one. No late fees. Great for people like me who want to bring DVDs on a trip or just forget about them. Last year they introduced movies online to watch either on your PC or TV, via a small WiFi connected box. Guess what? They actually have old Dutch favorites like Soldier of Orange and countless other non-mainstream movies.

When you log on the first screen that comes up is “Movies you’ll love”. I have rated around 400 movies so far (nowhere near the guy who rated 5,000 movies in one day). The ratings vary from 1 to 5 and I generously bestowed Ben Hur, Citizen Kane and The Godfather with the maximum number of stars. My ratings are continually compared with people who have similar tastes and by applying some complex algorithm they predict which movies I might be interested in. They show both the overall rating and the one they believe I will give the movies I am considering for watching. Interestingly these two are rarely the same and my ratings are consistently close to their predictions.

A while back Netflix invited anyone with a beautiful mind to participate in a contest with $ 1 million prize money to come up with an algorithm that would improve the accuracy of their current system by more than 10%. In order to do so they made millions of data records available and tested the algorithms submitted against the actual ratings submitted by customers. According to Business Week, the winning team, which includes scientists from AT&T (T) Research, Yahoo's (YHOO) Israel lab, and computer scientists from Austria and Canada, blended more than 700 different statistical models into their formula. The next contest will be for algorithms that predict the popularity of new movies, based on your rental history, demographics and other profile attributes.

Netflix has stared into the future and seen what is happening in the media world. As content proliferates and the lines between user and producer blur, it will get harder and harder to separate the wheat from the chaff. While the studios will continue to generate blockbusters with big stars and maybe even come up with an original plot, instead of a comic book rewrite, we can expect more and more interesting low budget movies for smaller audiences. Movie business is even worse than the fashion industry and the few hits have to make up for multiple misses. But Netflix has something the studios don’t: a thorough understanding of their customers’ tastes and interests down to the individual level. Shortly, they will have a way to predict whether a movie will make it or flop. And they pay only $500K to get there, while the big studios keep shooting in the dark.

Netflix has understood that they don’t need to hire armies of PhD’s in statistical analysis to get what they need. They just “crowd source” their innovation. According to the New York Times, thousands of teams from 186 countries made submissions. The winning group is a merger of different smaller teams, who initially competed against each other. A Survivor-like situation emerged with different individuals and groups trying to form alliances to beat the others.

Google, Amazon and Netflix run highly profitable, multi-billion businesses based on a simple principle: attract as many users as possible and have them interact on your site, gain a detailed understanding of their needs and interests and analyze this against huge quantities of data on their peers to create the best value propositions. There are some lessons here.

Nothing endures but change

It is a cliché to state that globalization has been a tremendous force of change in the last decades. Never before have economies, markets and supply chains in different parts of the world been so entwined. This has led to unprecedented growth of the world economy. It allowed China to lift around 500M people out of poverty since the country opened up in the late seventies. It turned India from a socialist, autarkic backwater into an economic power and helped another 122(!) countries to grow more than 4% in 2007.

But there is a flip side: the resulting interdependence has brought complexity and instability. The butterfly effect applies: “small variations of the initial condition of a dynamical system may produce large variations in the long term behavior of the system”.

When the financial markets collapsed the repercussions were felt around the globe and as a consequence most western countries will experience a shrinking economy in 2009. The causes are manifold. There were the financial managers, whose short term oriented decisions were guided by multi-million bonuses. Then the compulsive consumers on a spending spree, high on cheap credit, supported by the huge trade deficits with China. Lax regulation, opacity and complexity of markets also played a role. All was well until the bubble burst and the walls came crumbling down. For a brief period Europe was basking in schadenfreude and then quickly governments had to step in to rescue their local banks. Iceland’s financial products -too good to be true- turned out to be that way. Within a couple of weeks this pristine country’s stock exchange lost 90% of its value.

I guess by now everyone realizes that financial markets operate 24 hours a day, around the globe. They have become more dynamic and complex and evolve faster than most people can grasp. Nassim Taleb, who writes about what to do with a world we don’t understand in the Black Swan (published before the crash): “Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse.” Some of the world’s leading financial gurus, including Alan Greenspan and Warren Buffett, have openly admitted that they failed to see what was happening. Buffett states in his letter to shareholders: “I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.” On the theoretical front, Nobel Prize winner Paul Krugman puts it as follows: “much of the past 30 years of macroeconomics was spectacularly useless at best, and positively harmful at worst.”

Other industries may not show the same dynamics as the Financial Services, but acceleration of change is happening in IT, healthcare, automotive and media.

The IT industry has always been prone to change. What happened to Wordstar, Visicalc, Wang and DEC, just to name a few of the hundreds of brands that disappeared? Given the steady onslaught of open source and cloud services, where will the companies go that sell expensive software with outrageous maintenance contracts and the need for armies of specialists to install and keep it running? Successful product companies like Apple have focused on design and online services. They don’t own any factories. Google has built their business model around getting huge numbers of users and mining their data on the largest imaginable scale. Those providing software services can no longer depend on their proprietary knowledge, as there is currently more and better technology information in the public domain than in any of these companies. Those without a substantial workforce in emerging economies like India, China, Philippines or Argentina will soon find themselves out of work.

Oil prices have been fluctuating wildly. Last summer in a matter of weeks the price at the pump doubled. At the same time the discussion on global warming moved to the foreground. Gas guzzlers like the Hummer suddenly lost their coolness. Although years in the making, the decline of the Detroit Big Three became clear to all. Ford managed to fight its way back to profitability but Chrysler and GM had to be bailed out by the government. They didn’t act quickly and resolutely enough. Western car markets have shrunk by almost 20%. Meanwhile the car markets in India and China were alive and well. Tata launched a revolutionary $2,500 car that competes not only with low end cars but also motor bikes. Meanwhile countries like Australia and Israel are working on an electric car infrastructure. This is an industry in transformation.

The media industry is struggling. The sales of CDs is in terminal decline. Though paid-for downloads are increasing steadily, more and more kids are listening to personalized Internet radio and are no longer interested in owning songs. In the last year hundreds of newspapers went bankrupt, losing the battle with their online competition. Open source models are appearing to compete with traditional publishing and Google is putting millions of books online. Youtube is replacing television as the most important entertainment medium. Time to rethink business models in this industry.

Most companies react to change by reorganizations or mergers and acquisitions. It is harder to have the companies’ business models and processes adapt to new customer needs, competition or regulation. One of the reasons is that the key processes are supported by software applications and a technology infrastructure, suffering from change resistance. Business models also have the tendency to assume a linear world, rather than one in which sudden events and disruptions become more rule than exception.

The fashion industry always had to deal with fickle consumer tastes that could change on a dime. For most apparel companies it is hit or miss. In contrast, the Spanish company Zara has built their business model around customer insight and agility. According to the Harvard Business Review: “Zara has developed a superresponsive supply chain. The company can design, produce, and deliver a new garment and put it on display in its stores worldwide in a mere 15 days. Such a pace is unheard-of in the fashion business, where designers typically spend months planning for the next season.” Zara operates 1,500 stores in 71 countries. They aim to be as close as possible to the customer. Every day they collect sales data from all of their stores. These data are analyzed and related to inventories and other operational data. Slow moving inventory in one store can be moved to a fast moving store. They use a team-based approach in which designers and product managers work closely together to continually evolve their clothing lines, based on the information they receive about sales as well as input from store managers. Most products have very short life cycles. This gives their clothes a level of exclusivity and forces the consumer to buy today, because it may be gone tomorrow. Accurate forecasting is not required: they adjust as they go along. The company has a vertically integrated supply chain, keeping half of the work in-house, and a network of partners and subcontractors. Its supply chain is built around speed of operation. The CEO of Zara: “you need to have five fingers touching the factory and five touching the customer.”

Like Zara, who captures customer information in every store every day, companies that have a strong engagement with their customers tend to do better. They react faster and have more influence on customer needs. Many consumer goods and apparel companies who sell their products through distributors have to make assumptions about their client needs, as they lack a direct channel and timely data. But current technology allows these companies to get in touch with their clients directly, without the need to invest in a large retail network. They should set up highly interactive portals to promote information exchange between their stakeholders. Clients in different markets are prompted to share experiences. Forums on product customization or service improvement allow insight in customer needs. Events, both online and offline, can be organized to rally the fan base. All this interaction may be analyzed to glean information on current and future customer needs. While this will not generate the next breakthrough product, it gives input on product improvement and generally strengthens the ties between supplier and consumer. It will give the company an early warning system for changing behavior.

Successful companies constantly monitor the environment and assess the potential impact of changes on the company’s business. One of the largest Investment Banks has created online dependency maps of the companies they invested in, similar to the ones you can find at News Dots. It visualizes the most recent topics in the news as a giant network, highlighting “hot areas”, that may require action. So when GM got in the news about their issues it immediately showed which companies had substantial subcontracting relationships. New technologies that search large quantities of data and find patterns and associations, can highlight early warning for impending change. Obviously dealing the right way with that change is a matter of leadership and organizational agility. More on that topic in my next blog.

Open Source Ingrained in Ingres

Roger Burkhardt, an Oxford educated, technically savvy Brit, is leading the US software company Ingres. I learned about Ingres when I was attending university. They had developed one of the first relational databases. At that time its use was confined to labs and not yet ready for prime time. Subsequently Ingres became widely adopted and thousands of customers used the database products for their applications. Computer Associates acquired Ingres in 1995. The company was subsequently relaunched as an open source company in 2006. Roger took over as CEO, after a 6 year stint as Chief Technology Office of the New York Stock Exchange.

He comments: “Most concepts that are fine in theory don’t work in practice. With open source it is the other way around. It goes against all organizational principles, but turns out to be highly effective”. He and his team have developed a network of thousands of users, developers and contributors. They created a lively community committed to keep the Ingres products at the forefront of technology. The business model has evolved from a traditional licensing model, which aims to lock in clients and have them charge for annual maintenance fees, to one of implementation, optimization and support. Ingres technology is freely available as a download and the company makes money selling a support subscription to users who are running mission critical workloads.

Roger is particularly excited about “Open Innovation”. They started working with the Amsterdam-based on Centrum Wiskunde & Informatica (Centre for Mathematics and Computer Science) on the next generation of database servers. Their starting point was that the architecture of database software was based on the 20 year old technology and that the explosion of stored data with its 50-100% annual growth required fresh thinking. CWI and Ingres invited a community of scientists to work on a project dubbed “Vectorwise Computing”. In essence they redesigned the software to take advantage of the very large number of transistors packed on today’s Intel chips and to resolve the fact that memory has become a major bottleneck. The global team, of which many members have never met face-to-face, is led by two of Ingres top engineers and two of CWI scientists as well as leading researchers from around the world. Ingres ensures that the end result is a commercially viable product, available to the development community as open source.

For their internal technology needs, Roger decided to move away from in-house developed, managed and operated systems. He felt that the company needed a flexible application base that would allow them to rapidly integrate the acquisitions they had planned and be able to scale with the volume of business. His direction was to use “Software as a Service”, where viable. The obvious advantages of this approach are short implementation cycles, flexible cost with low upfront investment and minimal operational management. The potential downside is lock-in and dependency on the provider. He is increasingly looking for open source software that runs in the Cloud, to get the benefits of the service and avoid the risks of vendor dependency. Currently his core business applications are obtained as a service from Salesforce.com and Intact for ERP.

Since Roger has actively lived the tremendous innovation and opportunities spawned by the open standards and open source movement in the Internet space, he is a staunch believer in applying the same concepts to one of the biggest issues facing us: global warming. He is working with a number of organizations to accelerate the speed of innovation in green technology.

Open Source is becoming a phenomenon that extends well beyond software. Its collaboration model with large groups of people around the globe contributing on the Internet to common solutions, is making inroads in education, healthcare and now green technology. The organizations that know how to tap into these opportunities by leveraging web tools and engaging key stakeholders will set themselves apart.

A visit to the doctor

A couple of days ago I paid a visit to the dermatologist. The receptionist gave me a faded yellow form and I duly filled in my personal data and a largely incomplete and inaccurate health history. And what was the name again of these pills I am taking daily? The form disappeared into a solid looking metal cabinet spilling over with similar records containing similar half truths. A little later the doctor handed me an unreadable handwritten note that could be exchanged for a tube with pills at the pharmacy a couple of miles down the road.

What is going on? The US spends a whopping 17% of its GDP on health care and, according to McKinsey, around $650Bn more than necessary and more than any other developed country in the world. However, the life expectancy is higher and infant mortality lower in most of these countries. You may find the most sophisticated health care available to those who can pay, but on aggregate the US doesn't compare well. Nearly a 100,000 people die in the US each year of medical mistakes.

There are many reasons for the exorbitant costs, starting with the strange system of care providers passing the cost to insurance companies who pass it on to companies and finally to the consumers, who believe that their company is paying. The relative administrative cost is twice as high as the next country at the bottom of the list (bureaucratic France). Medicare spending and results vary widely among areas with little difference in outcomes, which points to huge inefficiencies. There are no incentives to work more efficiently and that shows. Americans also pay on average 50% more on drugs than other developed countries. Apparently the pharma industry has great a lobby on K-Street. Then of course there is the issue of 46 million uninsured. And the strangely litigious legal system.

Economists rarely agree, but there is consensus that fixing health care is critical to fixing the economy. To highlight this point: according to The Economist, GM spends more on health care than on the steel for its cars. This is a complex beast and more politicians have failed than succeeded in tackling the myriad of issues. But the population is graying and medical costs show worrisome inflation rates. Since 1999 the average cost of a policy for a family of four has doubled. It now equals a full quarter of the median household income. According to a report of Obama's Council of Economic Advisors, any reform that slowed the annual growth rate of health costs by 1.5% would boost America’s economic output by over 2% and increase the average household’s income by $2,600 in 2020. The Obama Administration is tackling health care with top priority and a focus to extend benefits to all, while reigning in the costs.

Here's a place to start: less than 20% of care delivery organizations have electronic patient records. While there are notable exceptions, like Kaiser Permanente and the Mayo clinic in Minnesota (check out their website!), efficiency in this industry has been lagging way behind. I can do all my banking at home or on the road using my iPhone and get cash at any ATM around the world (with the notable exception of Cuba as I experienced last month), without any intrusion of my privacy. Banks around the world are interconnected and information exchange has been standardized for ages. An electronic patient administration, information sharing and data analysis are essential for efficiency improvement. When information is exchanged between organizations instantly and without errors the quality of the treatment will improve. This is especially relevant in emergency situations.

Rolling out large scale projects, like a standardized patient administration, is a daunting task. It is not so much the technology that makes it hard, but the required changes in the business processes, organization structure and, last but not least, the company culture. Add the political sensitivity on top of it and you will see the combustibility of it all. But the urgency should override inertia.

While medical research has made tremendous strides in the last years, there are still many unknowns on the results that drugs in different combinations may have on treatment. Large scale data analysis can provide valuable insights. Using Web 2.0 technology, doctors can tap into the collective wisdom of their peers when dealing with a difficult prognosis. Patients can be automatically reminded of their check-ups and appointments. The same technologies are now bringing about a change in the traditionally paternalistic relationship between doctor and patient. Most people go online to find information about their health. New websites have sprung up that are focused on sharing information and experience about diseases, symptoms, treatments and side effects. Patienslikeme.com and inspire.com already have hundreds of thousands of members actively communicating amongst each other and with the doctors that are participating. Even the pharmaceutical industry is weighing in. Novartis is learning from the effects of their drugs and more importantly trying to understand more before they launch a new drug. They are actively recruiting for clinical trials on these sites. Why wait for your doctor to get your records integrated, organized and analyzed? Both Google and Microsoft are getting into the game and offer DIY tools to manage your health. Microsoft even calls it Health Vault to highlight security and privacy of data.

Besides looking for obvious technology solutions you would expect a focus on creative sourcing solutions. However less than 3% of all work supported in India comes from this industry (compared to 41% financial services). The US spends $91Bn more than necessary on administration. There is no reason why large parts of the administrative work can not be performed more cost effectively by creating shared services centers in low cost locations. There are already several successful engagements with hospitals in India, that analyze X-rays and lab reports. Google “teleradiology” and dozens of companies offering the service pop up. The next step may be an Indian doctor performing remote surgery. Or if that is too far fetched, the patient can travel to Asia to have the treatment delivered in one of the world class hospitals over there. My son was born at Bumrungrad hospital in Bangkok. He was the only blond baby in a room of 40 dark skinned babies. The doctor who delivered him was educated in Germany. My wife had a huge private room with a seating area and a kitchenette, as well as 24 hour private nurse. This was in 1991 and we were about the first westerners there. Last year this hospital treated 400,000 patients from 150 countries, many covered by their insurance! Cuba has been training world class doctors for the last 40 years and once this country opens, it may become a major destination for “medical tourism”.

Expect major surgery to be performed on health care policies, structures and processes. This has to become a global industry, supported by state-of-the- art technology and operational processes that are being measured and continually improved. And maybe the per person cost one day comes down to Canada's level, which is 50% of the US per capita spending.

Taking the paper out of the newspaper

In the hit show The Soprano's we frequently saw Tony dressed in a robe walking out of his suburban mansion to pick up his newspaper from the driveway. Many people, thugs and undersigned included, are used to this daily ritual of reading the paper at the breakfast table. But I have decided to cancel my paper newspaper. After years of struggling with keeping it together while reading and unable to ever fold it back the way it was, I have thrown in the towel. From now on I will only read the news online. No need to cut down trees, fuel the printing presses and transport hundreds of pages to our home. I will have my news served sustainably. I now read the New York Times on my PC and iPhone, but I have ordered the Kindle so I can swallow the opinion page together with my bowl of cereal. No more rain swept tracks to the driveway to look for a soaked blue plastic bag that contains a wet bundle with news already slightly staled during its journey down to Connecticut.

Some people like the smell of the ink and the rustle of paper. I don't. This is a relic of the past. Who is reading the 25 pages of financial data? Who is interested what the weather in the Mid West was yesterday? Who looks at classifieds when you have Craigslist? What I have done instead is create a MyYahoo page which combines the news of about ten dailies and weeklies with RSS feeds for columns of my favorite commentators, organized by major topics. This is physically impossible with paper. It used to be that you read one or maybe two newspapers a day. Now you can access a wide array of sources and zoom in on what you're interested in. I regularly watch related videos, link through for background information and participate in discussions. I mark articles for later reading on my iPhone and check the most emailed or discussed articles to find something that may surprise me.

Like any other industry that is uprooted by new technologies and innovations, newspapers are struggling to deal with this change. Some close shop, others pursue online models more aggressively. The bottomline is that this industry is in dire need to radically reinvent itself. Maureen Dowd wrote a column in the NY Times with the heading “Slouching to oblivion”. She mentions that Sam “The Sham” Zell called his purchase of The L.A. Times and The Chicago Tribune “a mistake,”. He said, “It’s very obvious that the newspaper model in its current form does not work and the sooner we all acknowledge that, the better.” In an article named “The rebirth of news” The Economist reports that in Britain around 70 local papers have shut down since the beginning of 2008.

The music industry has gone through a period of angst when people started downloading music. Like the paper, the CD as medium was becoming rapidly cumbersome and the pricing model completely out of wack. You rarely like all the songs on an album. The ipod and iTunes changed this. Most grown ups now buy only the songs they are interested in for 99 cents each. But in the meantime the music industry also has to deal with artists directly communicating with their audiences, without the need for big business. Another example of disintermediation. Layers of management only work when they truly add value. So it goes with the papers. Reprinting a Reuters or AP article may make sense in the physical world, yet it doesn't in the online world when you get breaking news directly streamed from these news agencies into your browser. But many people are willing to pay for news analysis, sound journalism and commentary. The Wall Street Journal has over a million paying online users. Three newspapers — The New York Times, The Washington Post and The Boston Globe — will offer a reduced price on the Kindle in exchange for a long-term subscription. But they still need to pay for their physical delivery and haven't fully figured out a sound model for online only.

The online newspaper model will follow the same principles as any other online business. First the value offered should be obvious to the users with a high level of convenience and ease of access (tailored to different types of devices). In addition, there has to be true engagement. This means that publishing is becoming more interactive. Leading columnists now analyze the feedback they get on their posts, engage in discussions and exchange notes and ideas with their readers. Those readers themselves are becoming micro publishers. They write comments and challenge factual content of news items. During the presidential race much of the fact checking was a collaborative effort between experienced journalists and smart amateurs. Today's major issues are global and complex. The written word does not always suffice to explain all aspects succinctly. An online “paper” should provide a true multimedia experience, leveraging the web's rich tools for visualization of complex concepts. Lastly, through establishing direct feedback loops with their subscribers (or rather community members?) the news services can fine tune their content and packaging and get true insight in the readers interests. This should be translated in new advertising models. Rather than offering bland ads based on some aggregate view of its readers it can advertise in Google or Facebook manner: highly personalized messages reflecting the way you click and the content you read.

All this points to a new experience. It means more focus on multimedia presentation, investigative journalism, analysis and commentary. One of the key objectives of a news paper is to obtain, organize, analyze and package the news. A new objective is to engage its readers to become community members. Newsworthy items can be solicited from its members and stories collaboratively developed. Most people are willing to financially support the communities they belong to. It seems that Web 2.0 Times has arrived.

From Outsourcing to Crowdsourcing

Most companies become conservative in an economic depression. They focus on cost cutting and cancel projects that don't show immediate returns. Stove-piped organization structures, with separate fiefdoms for sales, marketing, products design and operations, make it hard to react to changing market conditions.

Lean and mean companies have already organized themselves around their core business processes and outsourced parts of these processes to create flexibility. If demand increases they expand rapidly without large capital infusions; if demand decreases they reduce volume without staff reductions. Outsourcers have the economies of scale and support multiple clients in different markets, thereby spreading the risk. But outsourcing is more or less of the same; it is not a tool for innovation. Outsourcing typically covers the operational aspects of commodity processes. Despite the claims of outsourcers that they add substantial value to these processes, the realityis that they show little agility, let alone innovation.

In a recession new cards are dealt and new players join the game. Microsoft and Oracle were born in the difficult early eighties. Google and Amazon rose from the ashes of the dot com meltdown. For open organizations the recession can be the opportunity for creative reconstruction. New products and business models are considered. One of the concepts that is winning in popularity is “crowdsourcing”. In its simplest form a problem is decomposed into self-contained components and individuals, teams and companies around the globe are invited to provide solutions using web tools.

Apple, Toyota, P&G and Vodafone, all four on BusinnessWeek's list of 25 most innovative companies, make use of open innovation and crowdsourcing. The iPhone's success is partly due to the large library of iPhone Apps: applications that anyone, after validation, can sell on Apple's iTunes store. Currently the most successful application, Stickwars, was developed in a month by a single person. Users rates these applications online and their assessment determines its fate. Stickwars has 1,100 reviews. This week the billionth app was downloaded. With on average 27 applications on each iPhone, Apple has created true stickiness for their device. Vodafone launched a website www.betavine.net that invites software developers around the globe to bid on the best solutions for widgets (mini-applications) that Vodafone requires to keep their phone platform competitive. They provide participants with the development tools and guidelines. Winners are awarded with prize money (which can be substantial) and in return they get to keep the rights to the solution. Close ties, open knowledge sharing and strong collaboration with their subcontractors allowed Toyota to bring better cars at a lower cost to the market than their American competitors. P&G leverages extensive innovation networks and apply their Connect & Develop methodology to the effect that over 50% of their innovation is now obtained from outside the company boundaries, reducing speed and cost to bring new products to the market. InnoCentive, spun out of Eli Lilly, mediated solutions to its network of 170,000+ participants for over 400 problems posted by various companies. It has developed a reward system, team-based collaboration platform and governance structure to speed problem solving along. Interestingly they found that diversity increases the probability of finding solutions.

Web 2.0 technologies allow these companies to do faster and cheaper R&D, product design and software development, but also to strengthen their relationships with key customers. Engaging the most important stakeholders in the evolution of existing products or the design of future products strengthens the bond and creates word of mouth marketing opportunities on social networks like Facebook.

Outsourcers should seriously consider to become crowdsourcers. This is the time to turn companies inside out and build stronger connections with the world outside the company walls: leverage the collective problem solving capabilities of open networks, make customers part of the extended organization and switch to open source software. Open, innovative organizations will be the winners in the post-recession world.

Crowdsourcing at the bottom of the pyramid

In 1998, when our company MphasiS was only a handful of believers crammed in two tiny offices in LA and Mumbai, we got our first real consulting gig. ICICI was at that time a semi-government Indian bank primarily operating in the corporate market. The company was managed by the charismatic K.V. Kamath, who set the Bank on a new course in the relatively uncharted waters of retail banking. This market was dominated by State bank of India, then a horror of bureaucracy. Foreign banks like Citibank and HSBC had made inroads and introduced modern products and services, but they were severely constrained by regulations. Kamath laid out a vision to bring state-of-the-art banking services to all Indians. He put Shika Sharma in charge and hired Jerry Rao and myself to help realize his consumer banking strategy. Years before, Jerry, as a young Citibank executive, had done the unthinkable: he had introduced two-wheeler loans. This was the first product for a market segment largely ignored by other banks. It changed India. Suddenly millions of people could afford a motor cycle and have their self confidence and mobility dramatically improved. Now Kamath wanted to do something similar on a larger scale: create a bank that could ultimately serve hundreds of millions of customers. And..have the foundation up and running in nine months! So Jerry and I went to work on the program plan. We proposed a “broad and thin” presence with focus on customer relationships and products that fit with the different market segments. Kamath wanted to leverage technology as much as possible: from branded phone booths and simple ATMs to flag ship branches in the metro areas.

It was clear that, while many of the concepts from the USA could be applied, the implementation had to fit with the specifics of the Indian market. The initial focus was on addressing the growing middle class, obviously an attractive market segment. Our company, MphasiS, built a call center infrastructure, online capabilities and mobile banking in a matter of months to allow for easy access to banking services. For the major products, like current and savings accounts, deposits, cards and loans existing software packaged were obtained and tied together with a common customer relationship management system. As India has no credit bureaus, databases and algorithms had to be built from the ground up. The “Personal Financial Services” went live as planned. This was a testimony of the tremendous execution capabilities of Shika and her team, backed by the ICICI leadership.

But while there is a sizeable emerging middle class in India, the majority of the Indians are living near or below poverty levels. ICICI had to completely rethink its products and the delivery mechanism to spread its reach and to profitably address the lower echelons of the market. Kamath: “We need to invent a new business model where we can create a distribution base effectively in 600,000 villages in India, and to learn to do that at one-tenth the cost of urban India.”

In his excellent book “The Fortune at the Bottom of the Pyramid”, C.K. Prahalad, claims that "If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up." He points out that the poor are actually paying a “poverty premium”, which can be a factor of 50 or more in financial services. When he did his research, annual interest rates in Mumbai's shanty town, Dharavi (of Slumdog Millionaire fame), were between 600-1000%, while the more affluent paid 12-18%. A model based on low ticket products, high volumes and extremely low delivery cost, would not only present a viable business opportunity but also financially improve the conditions of the poor.

Rather than building a huge organization ICICI decided to tap into local entrepreneurship to acquire clients and collect on loans. They also relied heavily on information technology to keep the delivery cost down. Following the model applied by the Bank of Madura, which ICICI acquired in 2000, they based the business on a core management unit, called the Self Help Group. This is a group of around twenty members (primarily women) who collectively acquire and manage the clients. The Bank doesn't lend to individuals but rather to the Groups who then manage the allocation and collection of the loans. This gives the Group a strong sense of ownership. Products have evolved from micro credit to micro savings (using smart card tech) and insurance. For its technology ICICI teamed up with n-Logue, who placed Internet kiosks in the villages leveraging low cost wireless connections. The kiosk is owned by local entrepreneurs and financed by ICICI. With Internet access the village can now not only start using modern financial services at market rates, they can also get real-time market information, communicate and collaborate to bundle buying and selling power. This has spawned new economic activity in rural areas.

Enlisting a large network of local entrepreneurs to design, market and support products tailored is a formula that not only works for companies in developed economies, it can actually be a way to bring dignity and financial independence to the billions at the bottom of the pyramid.

Resource Efficiency 2.0

In 1972 the Club of Rome published its controversial “Limits to growth” report. The authors concluded that “If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years”. At our home and school the report was widely discussed. The Club of Rome started a first wave of consciousness about the environment and the threat of gradually depleting resources. The following year, in reaction to the West's support of Israel in the Yom Kippur war, the OAPEC stopped supplying oil to these countries, which led to a huge increase in oil prices and ultimately an economic recession. In Holland many belt-tightening measures were introduced. The best of these was the “car-less Sunday”, which allowed us to rollerblade on the highway. In the US the Government launched a conservation program, called ''Don't Be Fuelish,'' urging the public not only to use less gasoline, by reducing the speed limit to 55 miles an hour (yes that's the explanation), but also to cut back on heating and air-conditioning. Shortly after being elected in 1977, President Jimmy Carter, sitting fireside in a beige wool cardigan, told the nation to “tighten our belts, turn down the heat and wear a sweater”. We were asked to reduce, reuse and recycle. Emission standards for cars were set, waste was being sorted for recycling and “green” political parties were founded to pursue an environmentally and ecolologically responsible agenda. The first wave of resource efficient products hit the market in the late seventies. Then it went quiet.

Decades later, in 2006 Al Gore's Oscar/ Nobel Prize winning An Incovenient Truth made an impact on virtually everyone who wanted to listen. The documentary warned us, in a much better researched and packaged presentation than “Limits to Growth”, that the end is neigh: “Humanity is sitting on a ticking time bomb. If the vast majority of the world's scientists are right, we have just ten years to avert a major catastrophe that could send our entire planet into a tail-spin of epic destruction involving extreme weather, floods, droughts, epidemics and killer heat waves beyond anything we have ever experienced. “ Tom Friedman published “Hot, Flat and Crowded”, a call to arms to deal with the challenges and opportunities of global warming, growing population and expanding middle class. Darn...even George W. Bush pleaded with Americans to conserve gasoline by driving less and issued a directive for all federal agencies to cut their own energy use and to encourage employees to use public transportation. And this week Obama said that the US must move quickly to develop clean and innovative sources of energy after years of delay. "We've seen enough. We can remain the world's leading importer of foreign oil, or we can become the world's leading exporter of renewable energy."

Nowadays the concept of “sustainability” has full credibility, almost to a point of becoming fashionable (like Jimmy Carter's cardigan ). We have come to learn about sustainable development, housing, agriculture and even the sustainable South Bronx. The facts are that “the average American generates about 15,000 pounds of carbon dioxide every year from personal transportation, home energy use and from the energy used to produce all of the products and services we consume”. The energy consumption of the average American is almost twice that of a German and three times that of a Pole. Playing on people's conscience may help change behavior. We can trade in our SUVs (disclosure: I am driving a Lexus Rx400h), turn off some lights and empty the jacuzzi (the biggest consumer of electricity). The real change though will come from solutions that not only address these huge issues, but make business sense as well. And there is light on the horizon. Huge companies like General Electric and IBM have developed solutions for the “smart grid”. Highly entrepreneurial green enterprises are getting substantial investor attention. Examples are companies like Better Place, which has launched a new businessmodel for electronic cars, or Tendril, which develops smart grid software.

Infomation Technology is at the heart of the solutions that aim to optimize our scarce resources. IBM claims that “if the U.S. grid alone were just 5% more efficient, it would be like permanently eliminating the fuel and greenhouse gas emissions from 53 million cars. Billions of dollars are wasted on energy that never reaches a single lightbulb.” Tendril has a solution that uses smart plugs containing sensors. A transceiver sends information about energy consumption and patterns. The data gets analyzed and instructions are sent back to the the plug to switch the appliance on or off. This can easily save 10-15% in power consumption at the home or office. Every kilowatt saved in the home saves three at the generating station. Even Google has stepped into the game with their PowerMeter doing what they do best: collecting information, applying analytics and providing users tools to make decisions to reduce energy consumption. Rolls Royce now tracks the performance of 3,500 jet engines around the world in real time, as data is beamed satellite to the company's control room. By analyzing the data it has steadily improved fuel efficiency and over the past 30 years has extended the operating life of engines tenfold. These systems are fairly straightforward control loops: gather the data, analyze it and adjust the settings.

CK Prahalad suggests that government, civil society and companies collaborate to tackle this new phase of resource optimization. The government should contribute with focused investments and regulation, civil society with ideas and grass root approaches and companies with the entrepreneurial and operational capabilities to create commercially viable products. There are big opportunities to improve the supply chains of WalMart (importing over $20Bn in goods from China alone each year) and other large retailers from a green perspective, applying concepts like reverse logistics and extended supplier responsibility. Civil society should look at Walmart as a potential ally rather than a big bad capitalist.

But Sharon Begley writes in this week's Newsweek: “while you're doing all that to reduce the world's energy use and cut emissions of greenhouse gases, keep this in mind: even if we scale up existing technologies to mind-bending levels, such as finishing one nuclear plant every other day for the next 40 years, we'll still fall short of how much low-carbon energy will be needed to keep atmospheric levels of carbon dioxide below what scientists now recognize as the point of no return.” We need profound breakthroughs. Money should flow to where we have the highest chance of finding these and bringing them rapidly to industrial scale. This should be the number one priority after the financial system is cleansed.

By the way, don't forget to turn the lights off for an hour on Earth Day

Have we hit rock bottom?

We are all standing in amazement how fast and furious the decline has set in. No corner of the globe is spared. In China factories stand empty and twenty million workers got on the train back to the rural villages they fled years back. Once looked upon as economic miracles, the illustrious duo Iceland and Ireland have nose dived and are facing double-digit contracting economies. PIGS (Portugal, Italy, Greece and Spain) cannot fly and these countries came crashing down. Many large banks, including the financial behemoths Citgroup and RBS, bastions of capitalism, have been taken over by national governments in a desperate effort to keep liquidity in the economy. Large companies are collapsing under their own weight. Household names like Circuit City disappeared and the GMs of this world will shortly cease to exist (but not before burning billions of federal aid). This must be a wake up call. As Tom Friedman writes in the NY Times: “ What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: No more. “

It is the time for creative reconstruction. Most companies become conservative in the face of a downturn. They focus on relentless cost cutting and stop “discretionary spending” on innovative projects. While that may be necessary to remain afloat, at the same time new products and business models should be pursued. Like the famous Dutch soccer coach and philosopher Johan Cruijf (Holland's own Yogi Berra) proclaimed: “Every disadvantage also has an advantage”. Instead of putting moribund companies on life preservers, stimulus should be directed to “sustainable” innovation, aimed at long term growth without depleting the globe's rapidly diminishing resources. In a downturn, more than ever, should we get entrepreneurial instead of risk averse. We need agile local businesses in large global networks instead of huge, heavy weight multi-national companies.

I attended a round table with CK Prahalad last week to discuss sustainable solutions for a planet in distress. As a staunch believer in the positive forces of capitalism he pointed out the opportunities of green solutions, such as “extended producer responsibility” or “reverse logistics”. These concepts look at extending the life cycle of products and giving the producer responsibility from cradle to grave. So, old PCs or cars will be returned to the manufacturer who can re-use and recycle. Tom Friedman has been writing regularly about the need for the US to be become a global leader in green energy. Buildings, cars and appliances will be equiped with networks of sensors that continuously monitor resource usage to optimize and replace parts in time. New business models will be built around true resource optimization.

You can not regulate yourself out of a recession. Nor will unfocused stimulus have the required effect. Money has start flowing to the companies that have the entrepreneurial and innovative capability to create long term wealth, while doing good. Economic nationalism and protectionism, fanned by populist slogans such as “Buy American” or “British jobs for British Workers”, are counterproductive and will prolong the recession. The limitation of H1-B visas as part of the bail-out is an economic blunder. Half of Silicon Valleys companies are founded by entrepeneurs born outside the US. Globalization has helped emerging economies to charge ahead and create a large middle class, which in turn fuels the global economy.

We clearly need a jump start, but the engine will keep sputtering and it will surely die again if we give in to conservative, myopic impulses. Money thrown at dying industries is unrecyclable waste. The future is in solutions that not only turn the global economy around but also the earth's decline.

The Truth...Nothing but the Truth

Early January Satyam, “truth” in Sankrit, admitted that $1.4Bn had been siphoned away from the company. No one knows what Mr Raju, the soft spoken CEO, thought when he held the coveted Golden Peacock Award for Corporate Governance in his hands. It is easier to imagine the reaction of the former prime ministers of Canada and Sweden, who were leading the Jury. Obviously the Satyam Fraud raised many questions. How is it possible that there is such a gaping hole between the business process documentation and reality? Why didn't the Board and PwC, who are supposed to audit the books, smell a rat? Is this cooking of the books a regular phenomenon in India? What is the impact on offshoring?

That looks can deceive we all know. Fraud and mismanagement are not confined to India and whistleblowers have a better track record in uncovering corporate wrongdoings than highly paid accountants. Satyam is also listed on the New York Stock Exchange and exposed to US regulation (no comment). My experience as vice chairman of the Board of MphasiS is that corporate governance in India is not better or worse than in Western markets. Every quarter one can expect probing questions from both auditors and analysts. Companies like Infosys are known for squeaky clean books and robust management practices.

Though irregularities from time to time surface in companies that are majority owned by promotors (founders and their family), the Satyam case seems to be more of an exception than a rule. The company was managed in typical “George W. Bush style”. Raju and his tightly knit circle of family members and loyalists ran the company in a centralized manner. Frances Karamouzis of Gartner comments in the NY Times that “Satyam was slow to transform, in part perhaps because of Mr. Raju’s management style. He was very old school management, very parochial and didn’t embrace change or implement anything differently.” Customers had complaints. “We are tired of being required to call up the top guy in India to get things resolved,” one Satyam client told Gartner in 2005. The Times of India reports that “ The customer list of Satyam during Raju times was a top secret that even senior company executives had no access to.” Maybe Raju suffered from deluded views brought on by power. According to The Economic Times he owned 320 pair of shoes and thousand tailored suits in addition to houses in 63 countries (!). Whatever the cause of his behavior, it is clear that management style and company culture make a difference. As this is hard to measure it is an often downplayed part of the vendor selection process.

What happens to the clients who have their IT managed by Satyam? While Satyam's new board is highly respectable, continuity remains in jeopardy. The company will not stay in its current form and will most probably be acquired by another Indian company. As cash is running out there is no investment in client relationships and the best talent is busy packing their bags. Moving vendors may be as hard as moving banks (according to a survey in the US you are more likely to divorce your partner than move your bank account, but that may have changed recently). Still it is advised to approach Infosys, TCS, HP or IBM and start a transition plan. These companies have the processes and people in place to migrate the work currently performed by Satyam. “Outsourcing” and “offshoring” carry inherent risk and “continuity of business” plans apply to operations as well as vendors.

The truth was revealed at Satyam and we have become the wiser. Despite this drama and a business pause, India will remain the most important destination for offshore IT and BPO work. Nowhere on the globe can you find the combination of scale, skill, service innovation and cost advantage. Companies will continue to source work from this vibrant country, as the advantages far outweigh the risks.

Eyeless in Gaza

As the Israeli's didn't allow any press into the Gaza strip, we didn't have our formal “eyes and ears”. Instead both the Israelis and Hamas blasted the Internet with blogs, videos and Twitter to shape public opinion. The war was being fought on two fronts: on the ground and in cyber space. The Israel Defense Force maintains a YouTube channel and the Israel consulate in New York held a press conference exclusively on Twitter. For a while this 140-character-at-a-time medium seemed more important than the message: the chatter on Twitter got quite a bit of coverage. But now the dust has settled it seems that Israel was outsmarted on the Internet, not by Hamas, but by ordinary folks uploading real time reports. Despite its understanding of the Internet channel, superb technology and clever PR machine, the Israelis couldn't weigh in on the avalanche of blogs, videos and messages.

It used to be that we got our news neatly packaged from a limited number of sources such as CNN, Reuters and AP, now it comes from thousands of people, reporting on the ground as events unfold. These reports may be raw, grainy and emotional, but they can hit their target because they are more passionate and immediate.

Here are some examples of how Internet is being used to shape opinion. We Will Not Go Down (Song for Gaza) has been viewed on YouTube by over half a million people and has become the rallying cry at pro-Palestinian demonstrations. QassamCount, tracks the number of Qassam rockets fired into Israel by Hamas. It has both a Facebook and Twitter account that provides real-time updates. Yesterday, this was posted on Twitter: “5:22pm: 2 rockets hit Israel on Sunday after Hamas announced an immediate ceasefire #gaza”. (Note the #gaza, which is a so called “hashtag”, a tag or label that allows broadcasting of the message to the group “Gaza” so that everyone with an interest in the conflict can get this message.) Pictures of destruction by the Israeli army can be found on Flickr. On http://www.israel-vs-palestine.com/ anyone can vote on their position. While this reduces the conflict to it simplest black-and-white form and strips out any nuance, it prompted around 1M people to cast their vote. It is questionable what, if any, impact a site like this may have, but it is clear that we're seeing the first steps toward engagement with conflicts by using the Internet. Conflict 2.0 in its infancy.

I am currently working with European Center of Conflict Prevention and their partner NGO's, such as Oxfam/ Novib, Warchild and Cordaid, on a technology platform that aims to bring together information from the stakeholders: the different party's spokespersons, aid organizations, the press and observers on the ground. The objective is to give the fullest possible picture, provide analysis and prompt action, which may either help preempt conflicts or resolve existing ones. The platform should make it easy for people around the world to connect, exchange notes and to collaborate. We will leverage the same tools that play such important role in today's conflicts.

Last month, Machiel Salomons, an officer with UNHCR, wrote on my blog: “video footage is beamed nowadays through mobile phones to UN Agency heads in New York and Geneva. It helps decision makers, is instrumental in raising funds, mobilizes opinions and contributes towards an early resolution of major problems and challenges. Evidence is found in the fact that the world really has become a saver place.” While information technology is neutral, it can play a major role in resolving armed conflicts.