Since further posts here will describe different scenarios of friction, it is timely to recap now and elaborate on its different forms.

In the context of business ecosystems, friction simply refers to those barriers that slow down or otherwise hinder normal business. Most people will recognize as friction those factors that hinder the day-to-day or month-to-month operations of an individual business, but it is important to acknowledge the friction that directly impacts the strategic decision making of companies, and the forms that affect the behaviour of whole industry sectors.

The are three basic types of friction.

Type 1 refers to the most visible impediments to day-to-day activities, and can also be called transactional (or operational) friction. These are the often annoying idiosynchracies of e-business transactions. The fact that not all of your dealings with customers or trading partners work the same way, or involve time-consuming manual steps. This form of friction can also prevent an organisation from responding or adapting to environmental changes in real time.

Having to manually enter your credit card details every time you order something online is a trivial example, as is standing in a queue with a hand-written form, or having to seek out a manager for her signature on purchase orders over $1000 in value.

(Note that governance is often associated with friction, but they are definitely not the same thing – or at least they should not be.  It is possible to have robust, auditable governance practices without crippling convoluted processes that prevent good work from being done.)

Type 1 friction can be addressed in a variety of ways, including process streamlining, well-implemented complex event processing (CEP), creative and new mechanisms for bypassing traditional roadblocks, and the establishment and adoption of business standards.

Type 2 friction is a little higher on the food chain and is the collection of factors that make it hard to deliver on medium-term objectives, like the implementation of new business programs and initiatives, and therefore could also be called execution or program delivery friction. It can also be anything that prevents your business responding rapidly to seasonal changes in the market or the short-term differences in customer behaviour, and includes structural and process factors and occasionally strategic or cultural ones. A classic example is the development of a new internal business system (why is it so hard to go from a set of business requirements to the delivery of a software system that satisfies those requirements?). Another is the enablement of your sales force with hand-held devices for use in the field, or the migration of an internal data centre to a cloud computing platform.

Solutions to this form often involve the use of robust methodologies, but can also be affected by having the right skills in key staff.

Type 3 is the hardest to get a handle on. It includes structural factors that apply to a whole industry sector (like vested interests) and the collective and general behaviours in your customer population, like their ability and inclination to use the web for enquiries and transactions rather than a costly physical branch or a call centre. It certainly also includes business strategy, and cultural factors in personnel, especially as they apply to very large organisations that arguably have the most significant challenges when it comes to cultural change and management.

Some examples were mentioned in a previous post about vested interests for broader business ecosystems. Other examples that come to mind include the apparent difficulty that the traditional media behemoths are having in coming to terms with the new distribution models enabled by the web, and the failure of the Polaroid company to respond to the ‘new’ market movement to digital photography.

There is no one succinct alternative term I’ve heard for this form, although  organisational drag or rust (as in Neil Young’s “Rust Never Sleeps”) might fit some circumstances.

Just as this form of friction is the hardest to articulate, it is also the hardest to fix. Unlike Types 1 and 2, having good processes, the right technical skills and methodologies in your teams are mostly unimportant to overcoming Type 3 friction. Maybe it requires a good dose of serendipity as well as strong planning and vision. I suspect the most important elements are the right type of leadership and organisational culture, and these are indeed rare commodities.

There are vast numbers of other examples of business friction out there, although fewer general solutions to the different types.  I invite others to share such examples, especially those that are quite different in nature to the others described here.

(NB: By general solutions I mean the class or category of the mechanisms to overcome an example of friction, as opposed to specific product names. Of course, specific vendor offerings can be used as examples to help describe the category.)

We have patent applications working through the system and certainly want to see the technology reach commercial maturity and success.

But to get there requires an all-important step: Validation of the solution in an industry context.

We’ve done plenty of trials based on hypothetical scenarios run in our lab, and these have helped us refine the prototype and re-affirm our confidence that we’re onto something good here.  But what we need to move ahead is a real business scenario – an example business system with high performance characteristics and risks associated with failure of its component services.  Examples might come from a telco’s operations support system or business support system, integrated services within a banking environment or trading exchange, or other complex service environments.

Such an engagement would most likely involve as a first step us simulating the target system in our secure environment (or it could also be on our partner’s premises), at no cost and no risk, in order to ‘prove the concept’.  Assuming this were successful, the next step might be to plan for a production scale trial.  By the time we attain commercial maturity and success, we would of course expect our first validation customers to receive privileged terms for continued use of the technology.

But for now, it’s that first engagement that we’re chasing.  If this description does not sound like it matches needs within your organisation, perhaps you know someone for whom it does.  If so, spreading the word would be appreciated!

Thanks.

In many cases, the inability to respond to a single such event is not significant enough to damage the company.  But over a period of time, a lack of responsiveness will eventually erode the competitiveness of the organisation and it will be forced to change –either for the better, or by shifting focus to a different market, or by disappearing altogether.

When Mark Hurd was the CEO of NCR Teradata (he now heads up HP), I once heard him speak about how their technology helped Walmart respond to an overwhelming surge in demand for American flags on September 11, 2001.  Every flag on every supermarket shelf in the US was sold that day, but it is what happened on September 12 that is interesting in demonstrating business agility. Apparently the responsiveness of Walmart’s data warehouse software and their business processes allowed them to spot the need and restock faster than any other retailer.  They quickly ordered all remaining stocks from suppliers and had them on Walmart shelves the next morning.  The only places you could buy an American flag on Sept 12 2001 were Walmart stores and they sold out again – this time twice as many as they sold on Sept 11.

This is a somewhat simplified example but, while one could argue that Sept 11 was definitely a rare event, I would imagine that for big retailers unexpected surges and drops in demand for different products happen very frequently (if not as dramatically).  They might even respond to these changes as best they can by riding through them and adjusting their supplier orders on a rather routine cycle.  But I bet they don’t have a perfectly-matched response.  Similarly, most other business types, whether they are moving physical products or providing a service, won’t have a real-time sense-and-respond information infrastructure that would drastically reduce this form of friction.

We know that there are vendors and technologies out there now that address parts of this problem, but certainly many of the questions are still unanswered.  NICTA’s Business Adaptation researchers are working now on some of these challenges, focussing on how to bake automated, real-time responsiveness into existing business processes and systems.  To progress this research, we’re on the look-out for relevant industry challenges that we can apply our prototypes to in the lab, before preparing them for productisation.  Please let us know if you can help!