While yesterday’s discussion around the purchasing of professional services was certainly more Mayday than Bay Day, I am confident that the new middle is slowly emerging (or, at the very least, about to emerge) in the professional services space as well. But first, I need to spend some time setting the context on the evolving nature of information.

When I was young, information was scarce and expensive.  As a prairie farm boy, I was very fortunate that my parents were willing to spend a small fortune on Encyclopaedia Britannica and its much awaited Annuals.  Given the meagre resources of my three room schoolhouse and the absence of a community library, the Encyclopaedia Britannica was effectively my single accessible source of information.  While our family did have access to a couple of TV channels and a range of radio stations, the books and magazines in my house and school room (together with the knowledge of my parents, teachers, community, and, to a certain extent, siblings!) were the only sources of information on demand.

Fast forward to the world of my teenage daughter who has grown up in an era where information is free and readily accessible.  While she has ready access to treasure trove of books and other reference materials that would have would have both bewildered and delighted me at her age, her first reaction to any question is to “google it” or check the Wikipedia entry.  In this new world, it is both sobering and  fitting that Jorge Cauz, Britannica’s president, should announce in March of this year that  it would not produce any new print editions of its encyclopaedia.

So what does this evolution of information from “scarce and expensive” to “free and accessible” mean for the world of professional services and its new middle?  Since that will be my topic for the next couple of day, please stay tuned!

Let’s say that I now need to purchase professional services instead of shirts and shoes?  By way of example, suppose that I am a software engineer looking for a lawyer to help me with my new tech start-up.  Given that start-ups are inevitably resource constrained, you can count on me to have a clear focus on the price element of the value equation set out in my earlier post. But what about the trust element?

Unlike the retail new middle example which we explored yesterday, my sourcing of legal services will be a complex purchasing decisions characterized by a high degree of information asymmetry.  In fact, this is inevitably true for all current purchases of professional services (apart from corner cases where the buyer is a professional in the sourced service area) given the inherent information and knowledge gap between the buyer and the professional.

So how will I decide on legal services for my start-up? I might opt to simply ignore the legal information asymmetry and do it by myself while hoping for the best. Or I may find my lawyer based on the reputation of the law firm / lawyer, a referral from a friend or colleague, or a random decision. While the first two of these 3 R’s may prove to be a decent “trust” proxy, the current normative model for professional service purchasing decisions is largely (and in the case of the last R, entirely) a “leap of faith”.

Hmmm, sounds more Mayday than Bay Day….

Let’s now spend some time on consumer buying decisions in the retail context.  When I am shopping for a new shirt or pair of shoes, I usually set out with a pretty good idea of what I am looking for and my target price range.  When I find the item, or some equivalent item that grabs my attention, I will take the opportunity to try it on to see if it fits me and suits me.

While there may be certain product aspects where I have a knowledge gap – such as the durability of the item and the exact conditions under which it was both made and distributed – the balance of information between the store and me is generally symmetrical in this type of retail transaction.  In addition, the increasing presence of on line product reviews allows me to now obtain information on aspects like durability and product ease of care.  Furthermore, the roll-out of ethical guidelines and fair trade practices (such as those of the wonderful Bridgehead coffee operations here in Ottawa) give me much more insight into conditions of production and distribution.

So while I will continue to listen carefully to Bonnie Brooks’ radio ads for the Bay featured products, I am increasingly comfortable with the high degree of information symettry in the retail industry.  When I head off to the store, I feel that I have access to the information that I will need to make intelligent and informed retail buying decisions.

So what is this emerging “new middle”  and what does it mean? Starting with the retail context, it is clear that it no longer has anything to do with the typical income range of the declining middle class. Rather, the “retail new middle” is about “shared values around value” that span socio-economic groups.  This includes both customers reaching up from the big box and customers reaching down from the boutique in pursuit of such value.

Value, in the retail new middle, is all about the optimal balance between price and customer experience.  Returning to the department store example, it has the promise of combining competitive prices with excellent customer service, the quality assurances of a major brand, and the time efficiencies of “one stop shopping” in a carefully curated collection of name and house brands.  Or by way of example, the Bay is addressing the retail new middle by offering competitively priced products in an environment that  fosters trust.

At the risk of oversimplification, let me suggest, in closing, the following  definition of value for the retail new middle:

Value = price + trust

As my friends and colleagues will readily attest, I have been talking for some time [read: far too much!] about the “disappearance of the middle”.  As I reflected on my half century [plus] of life here in Canada, it is truly one of the most compelling trends that I have witnessed.  The decline of the middle class, the dismantling of many once vibrant community clubs and churches, and the disappearance of many medium sized businesses, have caused me to confidently pronounce that you need to be “boutique” or “big box” if want to succeed, or even survive, in this new era.  In other words, it was Mayday for the middle.

Perhaps it is fitting that my wake up call would come from the Bay, one of Canada’s most iconic and storied department stores.  Even as I was pronouncing that I wouldn’t want to be them (especially after the demise of that other iconic Canadian department store!), I found myself listening to radio ads by Bonnie Brooks (CEO) and returning to the Bay to seek out the featured items.  (By the way, I love my Hudson Room™ dress shirts and the HBC Collections!)

Ms. Brooks, I mean Bonnie, started me thinking that focusing on the “disappearance of the middle” had caused me to entirely overlook the “emergence of the new middle”.  I now realize that the Bay is an exciting and inspiring example of this new middle.  The Bay is bringing a renewed focus in Canadian retail to the fact that value is much more than price (its gauntlet to the big box).  Equally interesting is the Bay’s challenge, to the boutique value proposition, that price is an integral, and vitally important, element of value. While there are stormy seas ahead in Canadian retail, I am confident that the Bay has the right captain at its wheel.

In my planned series of posts, I will be exploring the themes of the new middle and value and their significance for professional services, including commons sourcing.  I look forward to having you along for this journey and would certainly welcome your feedback along the way.  And as a special thank you to Bonnie and the Bay. I proclaim today (and each day of this series) to be Bay Day and encourage you to literally “buy in” to this innovative force in Canadian retail!

Jordan Furlong’s pingback from his Law21 Rebundling the law firm post earlier today kindly and gently stirred me from my “Rip Van Winkle”-like blog slumber.  After reading my last three posts and wincing at the rusty dates (stretching way back to December, November, and August of 2010!), I am making a “somewhat clumsy and sheepish” Groundhog Day re-re-entry to this world.  While I was once again tempted to offer up some colourful and creative excuses for my most recent prolonged absence (abduction by aliens remains a favourite), the simple truth is that the last year and several months have continued to be a time of considerable professional (and personal) change and challenge.  In particular, I very recently wrapped up version 2.0 of my in-house counsel career and I am in the process of launching version 3.0 of my law firm career and returning to my n2one inc. start-up.

The last several weeks have been a time of great sadness as I said goodbye to many new and old friends and amazing colleagues at the wonderful technology company which so kindly welcomed me a year and a half ago.  Yet I have found great comfort in the quote, used in my farewell email, from Miranda in Peter Weir’s iconic Picnic at Hanging Rock film – “everything begins and ends at the exactly the right time and place”.  It is a time of great excitement for me to re-engage with the wider Ottawa (and global) hi tech community and I hope that my blog can be a way for me to give back, keep in touch, and say thank you.

I’m back once again yet again!  (And I am so very very glad to be back.)

In the midst of the busyness of this time of year, I was struck by a quote in a December 21 2010 tweet by Dion Almaer @dalmaer (retweeted by Markus Leutwyler @twtomcat earlier this week):

Google’s weapon of choice is more often open source and open standards.

Dion sourced the quote from an interesting post by Paul Buchheit entitled Four reasons Google is still Awesome. While I readily confess that I have not digested the rather polar range of comments generated by his post, I do want to take the time to explore the threads of competition and monopoly initially in this post and continuing in my follow-on posts.

I will start by quoting the entirety of the following response by Mark Sigal to Paul’s post:

Paul,

I’d challenge your assertion that Google competes in positive ways. If anything, their strategy is ripped from the Microsoft PC-era playbook; namely, commoditize the way your competition makes money so as to choke off its oxygen supply, while gaining you more market share in the way YOU make money (advertising, in Google’s case).

When Microsoft did this, we called it predatorial and monopolistic, yet you’d call it competing in positive ways?

Case in point, Android has enabled carriers to re-establish software and service fiefdoms that they were well on their way to losing, owing to the rise of iPhone. How does the consumer win in that case?

And is “open” Google all that open when it comes to making transparent and open their own proprietary differentiation? Hardly: think search index and keyword arbitrage.

Don’t get me wrong. Google is great at what they do, and on points 1,2 and 4, give them full props, but the company is every bit the assassin that Apple, Facebook, Amazon and the like are when it comes to competition.

Cheers,

Mark

On the competition point, I believe that competition is simply what business does and should be expected to do. Furthermore, competition is competition, whether open or closed, which is belied by Paul’s very selection of the phrase “weapon of choice”. What is particularly interesting about “open” competition is that it sometimes does not seem like competition at all given the intuitive appeal of the “level playing field”. In fact, the level playing field is frequently the preferred battle-ground for the dominant player since it offers no impediment to its continued dominance while offering a faint promise, if not illusion, of success to the other players and consumers.

In some ways, this parallels the challenge of formal equality in a just society.  In the famous words of Anatole France, “the law in its majesty prohibits rich and poor alike from sleeping under bridges”, and the same is unfortunately also true of formal equality and its promise of a level playing field.  While I am well aware of the many great perils of alternative approaches, I am increasing convinced that only true path to a just society is found in tilting that playing field to create substantive equality for the disadvantaged.  Thus ends my aside!

On the topic of monopoly, I am deeply concerned that the “open” we see from Google is most often peripheral in the sense that it is either at the ends of, or irrelevant to, the core Google monopoly (as flagged in Mark’s comment).   While I have no evidence that Google has violated any of its 10 core principles, including “You can make money without doing evil”, I am uneasy with the concentration of power that is inherent in Google’s stated goal “to bring all the world‘s information to people seeking answers”. Although I am no expert on monopolies and anti-trust, it seems to me that Google, in its current form, rivals anything that society faced from the Standard Oil, AT&T, or Microsoft at the zenith of their powers.  In many ways, the AT&T fact scenario, divestiture remedies, and lessons learned seem very apropos to the current situation with Google.

I often quip in my day job, that my role is to worry when my client is not worried and to be paranoid when my client is worried. These days, I simply worry about Google although there are times that I worry that I am not being paranoid!  Perhaps I worry most because the very government regulators that tackled the titans of monopolies past, seem oddly unconcerned. Although I confess that I am making a lot more use of Bing and Mapquest these days and that I have never had a gmail account, I share Paul aspiration that, “Hopefully I don’t come off as a hater or a fan boy, but simply an honest observer”.  Seasons Greetings!

Comments?

It has been almost three months since my last post and this is my somewhat clumsy and sheepish re-entry to this world.  While I spent time dreaming up colourful excuses for my absence (my current favourite is that I was abducted by aliens), the simple truth is that the last 86 days have been a time of considerable professional (and personal) change.  In particular, I wrapped up version 2.0 of my law firm career and returned to my corporate roots in version 2.0 of my in-house counsel career.

While it has been a time of great excitement, it has also been a time of great sadness.  I said farewell to a law firm which so kindly welcomed me back some three years ago and to my new and old friends both there and in the wider Ottawa hi tech community.  I hope that my return to my blog can be a way to both keep in touch and to say a simple thank you by giving back.

I’m back!  (And I am glad to be back.)

I recently came across John Brodkin’s  Microsoft: ‘We love open source’ article on InfoWorld. John’s excellent article probes the long and complex relationship between Microsoft and the “open source community”. While reading John’s article and reflecting on some parallel themes in my MicrOSoft series of posts, I found myself thinking of Bill Murray’s character in the iconic Groundhog Day film and it’s tagline: ” He’s having the [worst] day of his life… over, and over…”

In the film, Bill Murray plays Phil Connor, a Pittsburgh TV weatherman assigned to cover the annual Groundhog Day event in Punxsutawney, who finds himself living the same day over and over again. After indulging himself with impunity and then attempting suicide, Phil decides to use the time to become a better person.  The “spell” ends when he finally wins the heart of Rita (the TV station’s new producer).

Microsoft’s relationship with the open source software community has some striking parallels with the plot of this film.  In particular, while I believe that the company is sincere about its love of open source and is honestly working to improve itself in this area, it is pretty clear “MicrOSoft is  having the worst day of [its] life… over, and over…” I really wonder what it will take to break this spell!

It has been interesting to watch the buzz surrounding the recent MPEG-LA announcement on H.264 that I first read about yesterday in Eric Slivka’s  MPEG LA Declares H.264 Standard Permanently Royalty-Free post on MacRumors.  Having explored this area in my Party On – WebM & patents series of posts, I fully endorse the caution on Sean Hollister’s MPEG-LA makes H.264 video royalty-free forever, as long as it’s freely distributed Engadget post  that  “patent licensing is complicated stuff”!

So let’s start with Eric’s assessment that “Today’s announcement also paves the way for H.264 to become the standard video format for HTML5”.  For a more nuanced analysis of Eric’s perspective, let’s turn to Dana Bankenhorn’s excellent MPEG LA tries free as in beer against WebM | ZDNet post on ZDNet’s Linux and Open Source blog.  I believe that Dana would only agree that “Today’s announcement also paves the way for H.264 to become a standard video format for HTML5″ given his statements that “The current HTML5 standards document includes support code for H.264”  which is now “royalty free, and defended by a moat of lawyers”.

The more interesting question is whether HTML.5 will end up specifying the standard video format – the open standard starring role that WebM has been auditioning for.  As Dana notes, “WebM was created as a project that could be specified, being complete and free as in freedom.”  Since I agree with Dana’s assessment that the MPEG-LA announcement could result in decreased interest in the  WebM open source software project, I now see WebM as a bit of an underdog in that process.  Given Google’s dogged determination, only time will tell whether “free as in freedom” can trump “free as in beer”!