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SA475: Trends in Technology

Presented forBlueCross BlueShield of South Carolina

By

The Rushing CenterFurman University

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Key Learning Outcomes

When you complete this course you will be able to:1) Contrast the evolutionary versus the revolutionary approach to

technological innovation.2) Distinguish between sustaining and disruptive technologies and

innovations 3) Discuss the elements of an innovation strategy.4) Give a brief description of the following emerging

technologies/innovations: Grid (distributed/utility) computing Virtualization The Cloud Crowdsourcing Social Networking and Social Analytics Context Aware Computing Data mining Nanotechnology Quantum computing Bio Technology in computing

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CONTENTS

Module 1: Evolutionary vs. Revolutionary Change Module 2: Sustaining vs. Disruptive Innovations Module 3: Some Emerging Technologies/Innovations Module 4: The Innovators Dilemma Module 5: Elements of an Innovation Strategy References

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Evolutionary vs. Revolutionary Change

BlueCross and BlueShield of South Carolina

The Rushing Center

Furman University

MODULE 1

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Organizational Agility

Kathy Harris, Vice President and Distinguished Analyst in Gartner's Executive Leadership and Innovation team, recently made the following observation:

“Agility is an organization’s ability to sense changes and to respond efficiently and effectively to them.  In 2009, if there’s one thing that organizations need, it’s agility. Our economy and the business environment are a steady stream of ups, downs and rapid change; in such an environment, the ability to sense, respond and react are true survival skills! … Aim to make your organization agile throughout – this means ensuring that people, processes and technology are flexible and adaptable to change.”

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Being a Change Leader

Peter Drucker, who has written extensively about innovation and change, declares that it is “a central 21st-century challenge that [organizations] become change leaders.”

He further asserts that change leader organizations will see change as opportunity, and hence will actively seek out the right kind of change for the organization.

While we might be tempted to assume that such organizations would embrace bold and daring steps to establish themselves as change leaders, the process Drucker describes for doing this is an evolutionary as opposed to a revolutionary one. He advocates an analytical and systematic approach focused on creating continuous improvement as the primary basis for becoming a change leader.

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Good to Great

In his book, Good to Great, Jim Collins also finds evidence of the value of an evolutionary approach to change. In his study of companies that rose from good to great he found no pattern of singularly identifiable, transforming moments to which they could attribute their remarkable success.

He writes, “revolutionary leaps in (company) results were evident, but not by revolutionary process.” In other words, he found that, consistent with Drucker’s assertions, evolutionary, not revolutionary, processes were at work.

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Revolutionary Results

Total I/S Staffing Levels: 1993-2008

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Revolutionary Results

Total Online Transactions: 1993-2008

Evolution, Not Revolution in I/S

The BCBSSC Information System Division has taken a unique, evolutionary, and systematic approach in the development and implementation of its administrative and operational practices over the past 20 years.

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I/S Management Practices Manual

I/S Organizational Architecture: OSD-IT Model

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External Influencing Factors

IT Industry

Client Business Environment

• IT Skill Sets

• Computer Technology

• Best Practices

• Customers

• Client Business Definition

• Client

• UserOutcomes

Choices

Mission

Guiding Principles

Strategies to Influence External Environment

Goals & Objectives

Organizational Structure

Organizational Culture

A model-based evolutionary and systematic approach in the development and implementation of an IT Organization’s administrative and operational practices.

Advantages of the Evolutionary Approach- Balancing Change and Continuity -

This approach has resulted in the creation of innovative, function-rich, and award-winning healthcare administrative systems based on a standard, yet flexible systems architecture which incorporates current and future business requirements that can be leveraged across various business segments.

It has also provided the benefits of increased technological economies of scale by leveraging technical capabilities within an effective IT Service Management framework across various business segments to efficiently handle increased operational volumes.

And most importantly, it has provided the ability to integrate IT staff as required while ensuring management philosophies and administrative and operational practices remain intact.

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I/S Management Practices Manual

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The Nature of Innovation

Sustained improvements over time lead naturally to process and product innovations.

Drucker has advocated that innovation is much more the product of systematic hard work – what he calls the practice of innovation – than of flashes of insight and genius.

He expresses it as follows. “To be effective, an innovation has to be simple, and it has to be focused. The greatest praise an innovation can receive is for people to say, ‘This is obvious! Why didn’t I think of it? It’s so simple!’ By contrast, grandiose ideas for things that will ‘revolutionize an industry’ are unlikely to work.”

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The Practice of Innovation

The process of systematically anticipating and pro-actively responding to change is very closely aligned with the practice of innovation.

An innovation is more than a brilliant new idea. An innovation is accomplished by creating something

new that also proves to be appropriate and useful for some purpose.

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Technology Brokering

Andrew Hargadon explores the idea of innovation as systematic work in his book How Breakthroughs Happen.

Based on ten years of study into the origins of historic inventions and modern innovations the book’s findings reinforce that innovations do not usually result from flashes of brilliance.

Instead, innovations are much more likely to come about from the creative combination of ideas, concepts, and products from existing technologies in ways that spark new technological initiatives.

Hargadon calls this process technology brokering.

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Hargadon’s “Rules”

The future is already here In other words, organizations that seek to anticipate

and exploit change will do well to consider carefully the activities, products, and services they and others are focused on in the present.

It is almost always the baseline of present activities that allows organizations to make the insightful moves that position them as change leaders in their industry.

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Hargadon’s “Rules”

Analogy trumps invention Instead of searching for insights and flashes of brilliance that no

one else has thought about or considered, a more promising approach is to look for successful ideas and inventions in other areas and think creatively about how to combine them, modify them, and apply them to the opportunity or problem you have at hand.

This approach has more promise simply because it is much easier to recognize the similarities between two situations than to come up with something neither you nor anyone else has ever thought of before.

In this approach, you attempt to think inside other boxes, to use Hargadon’s phrase, instead of trying to follow the more common advice of thinking “outside the box.”

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I/S Guiding Principles

Technology itself is never a primary cause of either greatness or decline in a business. Avoid technology fads and bandwagons. Recognize that you cannot make good use of technology until you know which technology is relevant to the business it supports.

Technology can accelerate business momentum, but not create it. Therefore, you need the discipline to say no to the use of technology. Crawl, walk, run is a very effective approach to technology change!

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I/S Guiding Principles

Keep your eye on the goal. Inventing the “Next Big Thing” is not the goal. Building the “Current Big Thing” better than anyone else is the goal. We are not Alpha inventors, we are Beta improvers!

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I/S Guiding Principles

If you start with a blank sheet of paper, you’re dead. “Thinking outside the box” has come to mean thinking of a solution that is somehow outside of what you already know and do, and coming up with something wholly new. Pushing people to think outside the box doesn’t work. Instead, our approach to innovation is to take an idea or solution that has been used somewhere else, combine a number of existing ideas or solutions, and introduce them as a solution never seen before.

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I/S Guiding Principles

Maintain an attitude of healthy discontent. Sound management requires a probing, inquiring mind. Satisfaction with the status quo should be avoided. As you carry out your responsibilities as a manager, intelligently question existing practices and procedures. Ensure the most effective, up-to-date methods are being used. Actions based on the rationale, “that's the way we've always done it" should be examined closely. As a manager, you must not be afraid to challenge precedent. Be alert for antiquated or improper practices, which must be changed.

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Team Exercise

1) Can you identify some examples of evolutionary innovations that the I/S Division has implemented?

2) Can you identify some examples of attempted revolutionary change in the IT industry that didn’t work out so well?

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Sustaining vs. Disruptive Innovations

BlueCross and BlueShield of South Carolina

The Rushing Center

Furman University

MODULE 2

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Group Exercise: Case Study of DEC

Listen to the first part of the lecture by Clayton Christensen.

What happened to DEC? How did this happen? Could it have been avoided? What would it have taken to do this?

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Sustaining Technology/InnovationA sustaining technology/innovation is a technology or innovation employed to improve a company’s product or service to better meet their customers’ needs.

Sustaining innovations can be:

• evolutionary• revolutionary

• incremental and gradual• discontinuous and dramatic

The distinction is not about the innovation itself but rather what it is used to do.

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Disruptive Technology/Innovation

A disruptive technology/innovation is a technology or innovation employed to appeal to or even create a new market.

Disruptive technologies and innovations are often characterized (at least at first) by:

• inferior performance• lack of appeal to established customer base• lower profit margins

• convenience• appeal to a select group of potential customers• lower cost

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+

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Sustaining or Disruptive?

Microsoft’s development of Internet Explorer Open-source software (like Linux) More fuel-efficient cars Electric cars The personal computer Selling computers via the Internet Selling stocks via the Internet Education via the Internet Online banking Insurance claims processing via the Internet

Sustaining vs. disruptive can depend on your perspective

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Market for Disruptive Innovations? The personal computer (in the early 1980s)

PDAs Electric cars Buying computers via the Internet Buying stocks via the Internet Open-source software (like Linux) Online banking Digital goods (books, music, movies, newspapers) via the

Internet Books & travel via the Internet

How can such markets change over time?

How might the rate of potential change differ for these examples?

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Markets and Technology Innovations

performance that market can absorb

timeAdapted from The Innovator’s Dilemma, Clayton Christensen

sustaining

disruptive

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Group Exercise

1) Identify some sustaining technologies or innovations that BCBS of SC has implemented.

2) Would you classify any of these as potentially disruptive technologies/innovations for others?

3) Can you identify potential future disruptive technologies or innovations for the company?

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Some Emerging Technologies/Innovations

BlueCross and BlueShield of South Carolina

The Rushing Center

Furman University

MODULE 3

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Some Emerging TechnologiesGrid (distributed/utility) computingVirtualizationThe CloudCrowdsourcing Social Networking and Social Analytics Context Aware ComputingData miningNanotechnologyQuantum computingBio Technology in computing

Emerging Technologies, MIT Technology ReviewPhoto by Randall Schwanke

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Grid (Distributed/Utility) Computing

Computing grids pool together and manage resources from isolated systems to form a new type of low-cost supercomputer

Makes supercomputing available where economics would otherwise prevent this

Grids remained a bit of an oddity in the domain of researchers for many years

Sustaining or disruptive?

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Grid Computing: Non-commercial Uses Most well-known example is the SETI@home

project (more than 5,000,000 volunteers and more than 2,000,000 computing-years of CPU time volunteered)

Oxford and Intel-United Devices cancer research project is another example (over 3,000,000 volunteers)

IBM sponsors an effort called World Community Grid that connects volunteers with worthy scientific projects that could benefit humankind (relatively new, 50,000+ members thus far)

All of these involve: Volunteer efforts You sign up your computer and download a screensaver

which runs background processing whenever the computer is idle

Photo by Jenny Rollo

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Grid Computing: Commercialization

Sun President, Jonathan Schwartz, compared grid computing to history of the electric power industry:

“The world does not need 5,000 different custom electrical generators with 5 million electricians customizing the distribution of electricity. ... The industry around IT will likely go through the same transformation that the electric industry did about a hundred years ago.“

Bill Gates told InformationWeek six years ago that grid computing is “the holy grail of computing.”

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Grid Computing: An Example

Burlington Coat Factory Warehouse Corporation has deployed an enterprise Grid computing infrastructure utilizing Oracle 10g software. The retailer's adoption of an Oracle Grid computing solution has begun the enablement to deliver higher application service levels, improve Information Technology (IT) resource utilization, and allow for scalability of IT systems to support future growth.

"Grid computing is viable with Oracle 10g," said Michael Prince, CTO, Burlington Coat Factory. "Oracle 10g does away with the complexity related to deploying and managing a grid. Our grid is automated, redundant, and delivers a pool of IT resources large enough to deal with the spikes in demand that occur."

"Our Grid infrastructure allows us to maximize the use of our hardware and software infrastructure which is key to our ability to support mixed workloads," said Brad Friedman, CIO, Burlington Coat Factory. "With a grid at our disposal, we can run transactional, decision support and administrative operations simultaneously while maintaining high levels of system availability and performance."

Video

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The Cloud

The latest state of grid computing commercialization is often referred to as cloud computing, or simply the cloud.

The name apparently derives from the fact that cloud computing involves software that resides in the “clouds” of the Internet.

According to Vinton Cerf (one of the creators of the Internet and VP and Chief Internet Evangelist at Google):

“At Google we operate a number of data centers around the world, each of which contains a large number of computers linked to one another in clusters. In turn, the data centers are linked through a high-speed private network. The data centers support applications and services that users can access over the Internet to tap into virtually unlimited computing power on demand, a process known as cloud computing.”

What is Cloud ComputingWhy Cloud Computing

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The Cloud (cont’d) Conceptually a cloud operates by creating virtual

machines (VMs) on servers. These VMs can be created and configured in an instant, and disappear just as fast when no longer needed.

These dynamically allocated VMs give users access to essentially as much computing power as they need for a very low price, compared to what it would cost for them to provide the same computing power on their own.

In addition to a low price, the user is relieved of all maintenance issues.

The analogy with the electric grid captures the concept very closely.

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The Cloud (cont’d)

For example, Gmail, Twitter and Facebook are all cloud applications.

The load and performance demands of each of these are unpredictable and vary considerably over time.

The almost-immediate expansion capabilities of the cloud makes applications like these robust at a reasonable cost.

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The Cloud (cont’d) Amazon, IBM, Microsoft, Sun, Salesforce and others are

implementing and experimenting with systems similar to the one that Google has developed.

Currently, all these clouds operate in isolation communicating only with their users.

Cerf suggests that one of the great challenges for cloud computing is to create ways for the clouds to communicate with each other, giving users the option of moving data form one cloud to another without first downloading it and then uploading it again to another cloud.

Cloud computing service providers offer server space and processing and often operate these servers for many businesses

Computing in the Cloud

Cloud computing includes three main areas of service: Infrastructure as a Service (IaaS)

Delivery of a networked computing structure over the Internet

Platform as a Service (PaaS) Delivery of a computing platform over the Internet

Software as a Service (SaaS) Delivery of software applications over the Internet

Cloud computing is more cost-effective

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The 3 Ways to Cloud Compute

Infrastructure as a Service: Virtualization

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Using virtualization, one host machine can operate as if it were several smaller servers

Video

Virtualization can generate huge savings. Some studies have shown that on average, conventional data centers run at 15 percent or less of their maximum capacity. Data centers using virtualization software have increased utilization to 80 percent or more

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PaaS facilitate deployment of applications without the cost and complexity of buying and managing the underlying hardware and software and hosting capabilities. PaaS provide all of the facilities required to support the complete life cycle of building and delivering web applications and services entirely available from the Internet.

Platform as a Service:Application Development in the Cloud

Platform as a Service:Application Development in the Cloud

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Azure

Google App Engine

Force.com video

Azure Video

Software-as-a-Service Software-as-a-service (SaaS) – delivery model

for software in which you pay for software on a pay-per-use basis instead of buying the software outright Use any device anywhere to do anything Pay a small fee and store files on the Web Access those files later with your “regular” computer Makes use of an application service provider

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Force.com video dashboards

Consumer Applications in the Cloud Cloud computing makes it possible for companies to offer Web-based versions of popular personal computer programs Google Apps - Replace Microsoft office?

Gmail, Google Calendar and Google Docs Google Calendar

Share your scheduleGet your calendar from your phoneGet event reminders via email or have text messages sent right to your mobile phone.

Gmail Google Docs Google Reader

Stay up to date: Google Reader constantly checks your favorite news sites and blogs for new content.

Share with your friends: Use Google Reader's built-in public page to easily share interesting items with other people

Use it anywhere, for free: Google Reader is free and works in most modern browsers, without any software to install.

Google Sites ZohoWriter Microsoft Office Live

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Business Applications in the Cloud The Salesforce Service Cloud allows businesses to

pay as they use services, instead of owning comparable software.

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Force.com video customer service

Application Programmable Interface (API) Specifies the programming interfaces required

for software applications to interact with other applications Much as a user interface specifies menus, screen

layouts, and other aspects of how people interact with software applications

APIs are software modules that enables software applications to interact with each other.

Web services are APIs that Web applications can request to run over the Internet

Creating New Applications from Data in the Cloud Mashups are Web applications that combine content or data from

multiple online sources into new Web applications Contents are continually updated Content for mashups often comes from Web feeds and Web services Amazon uses mashup technologies to aggregate product descriptions

with partner sites and user profiles, commentaries, and images. Travel sites, such as Travelocity, Kayak, Matador, and Travature,

integrate standard content (such as airfare search engines, travel guides, maps, and hotel reviews) with comments, ratings, and images from users.

Creating mashups usually requires significant Web development experience

Mapping mashups are the most popular type of mashup HousingMaps.com SpotCrime.com

SpotCrime displays the locations of criminal incident reports on a Google Map to illustrate where crime takes place in a neighborhood.

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Mashups

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The Cloud – Security Issues

In cloud computing, thousands of different clients use the same hardware on a large scale – the key to the efficiency of the cloud in providing such low cost services.

However, security researchers have demonstrated that when two programs are running simultaneously on the same operating system, an attacker can steal data by using an eavesdropping program to analyze the way those programs share memory space.

Could this same technique be used in clouds when different virtual machines (VMs) run on the same server?

Several researchers recently demonstrated that this could in fact happen utilizing Amazon’s Elastic Compute Cloud.

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The Cloud – Security Issues (cont’d) In 2008, a single corrupted bit in messages between

servers used by Amazon’s Simple Storage Service which provides online data storage by the gigabyte, forced the system to shut down for several hours.

In 2009, a hacker who correctly guessed the answer to a Twitter employee’s email security question was able to grab all the documents in the Google Apps account the employee used.

Also in 2009, a bug comprised the sharing restrictions placed on some users’ documents in Google Docs. Distinctions were erased: anyone with whom you shared document access could also see documents you shared with anyone else.

Late in 2009, a million T-Mobile Sidekick smart phones lost data after a server failure at Danger, a subsidiary of Microsoft that provided the storage.

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The Future of the Cloud

Amazon’s cloud customers include the New York Times and Pfizer.

The City of Los Angeles uses Google Apps for email and other routine applications.

The White House recently launched www.apps.gov to encourage federal agencies to utilize cloud services.

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The Future of the Cloud (cont’d) According to the Gartner Group:

“By 2011, early technology adopters will forgo capital expenditures and instead purchase 40 percent of their IT infrastructure as a service,”

“Increased high-speed bandwidth makes it practical to locate infrastructure at other sites and still receive the same response times."

69 % of America’s Internet users are using some form of Internet-based computing, such as web-based e-mail or photo storage, according to a study by Pew Research Center.

By 2013, 12 % of the world software market will be Internet based forms of SaaS and cloud computing, according to Merrill Lynch.

What impact will a long-term, global recession have on cloud computing? A survey by ScanSafe, a SaaS provider of security services, revealed that

78% of IT managers believe economic uncertainty makes SaaS more appealing.

"A move towards clouds signals a fundamental shift in how we handle information," writes Stephen Baker in Business Week. "At the most basic level, it's the computing equivalent of the evolution in electricity a century ago when farms and businesses shut down their own generators and bought power instead from efficient. industrial utilities."

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The Future of the Cloud (cont’d)

The focus of IT innovation has shifted from hardware to software applications. Many of these applications are going on at a blistering pace, and cloud computing is going to be a great facilitative technology for a lot of these people.

Dale Jorgenson, Harvard Economist and expert on the role of IT in national productivity

Clouds are systems. And with systems, you have to think hard and know how to deal with issues in that environment. The scale is so much bigger, and you don’t have the physical control. But we think people should be optimistic about what we can do here. If we are clever about deploying cloud computing with a clear-eyed notion of what the risk models are, maybe we can actually save the economy through technology.

Peter Mell, Leader Cloud Security Team National Institute of Standards and Technology (NIST)

Crowdsourcing

Crowdsourcing organizations (involve their users in the design and marketing of their products.

Shoe startup company RYZ (see next slide) sponsors shoe design contests to help it understand which shoes to create and how to market those designs.

• Example: Netflix announcement of reward for technology solution to its movie recommendation

Crowdsourcing combines social networking, viral marketing, and open-source design, saving considerable cost while cultivating customers.

With crowdsourcing, the crowd performs classic in-house market research and development and does so in such a way that customers are being set up to buy.

Video

Design by Crowdsourcing

The Future of Social Technology

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Gartner predicts that by 2016, social technologies will be integrated with most business applications.

Companies should bring together their social CRM, internal communications and collaboration, and public social site initiatives into a coordinated strategy.

Social Networking in Business•Businesses can use these tools to reach out and market to potential new customers. • Many businesses have Facebook sites to market their

product to specific groups on Facebook.• They can use these tools to support and give added

value to existing customers. • A software company could have a blog that discusses in-

depth use of a software product. •Businesses can use these tools within their company to communicate between departments and share knowledge. •Wiki – allows you (as a visitor) to create, edit, change, and often eliminate content

• A company wiki could be set up as a repository of expert information.

How Can Businesses Utilize Social Networking Applications?

Social networking application A computer program that interacts with and

processes information in a social network Examples:

Survey Hurricane, a Facebook application created by Infinistorm (www.infinistorm.com).

Users who install that application on their page can survey their friends on topics of interest.

Applications for buying and selling items, comparing movies, and so on

Social Analytics

These interactions may occur on social software applications used in the workplace, or on the social Web.

Social analytics is an umbrella term that includes a number of specialized analysis techniques such as: social filtering,

techniques that identify information a user might be interested in used to create "recommendation systems" that can, for example, enhance your

experience on a Web site by suggesting music or movies that you might like social-network analysis, sentiment analysis social-media analytics.

Social network analysis tools are useful for examining social structure and interdependencies as well as the work patterns of individuals, groups or organizations.

Social network analysis involves collecting data from multiple sources, identifying relationships, and evaluating the impact, quality or effectiveness of a relationship.

Social analytics describes the process of measuring, analyzing and interpreting the results of interactions and associations among people, topics and ideas

Wikipedia defines sentiment analysis as the process that “aims to determine the attitude of a speaker or a writer with respect to some topic.”

Automated sentiment analysis is the process of training a computer to identify sentiment within content through Natural Language Processing (NLP). (Google Translate)

Various sentiment measurement platforms employ different techniques and statistical methodologies to evaluate sentiment across the web. Some rely 100% on automated sentiment, some employ humans to analyze sentiment, and some use a hybrid system.

The social media health of a brand is how it’s public sentiment compares to that of its competitors. If your sentiment is 20% negative, is that bad? The answer is, it

depends. However, if you see your competitors with a roughly 50% positive and

10% negative sentiment, while yours is 20% negative, that probably merits investigation to understand the drivers of these opinions.

Sentiment Analysis VideoWeb Site

Context Aware Computing

The end user may be a customer, business partner or employee.

A contextually aware system anticipates the user's needs and proactively serves up the most appropriate and customized content, product or service.

Gartner predicts that by 2013, more than half of Fortune 500 companies will have context-aware computing initiatives, and by 2016, one-third of worldwide mobile consumer marketing will be context-awareness-based

Using information about an end user’s environment, activities, connections and preferences to improve the quality of interaction with that end user.

Context aware computing discussion

Context aware computing in the future

Video

For instance, sensors attached to a TV remote control can collect data on how the remote is held by different users and build profiles based on that. Such a remote, of which Intel showed a prototype at the conference, could identify who’s holding the remote and offer recommendations for TV shows based on that

Web 3.0•Web 3.0 is the vision of the next generation of the Web in which all of the information available on the Web is woven together into a single experience.

•The related movement called the Semantic Web is a collaborative effort to add a layer of meaning to existing information to reduce the amount of human time spent in searching and processing that information.

•This potentially could have huge effects on businesses as simple analysis becomes mechanized, requiring fewer humans to perform this basic task.

Linking Data in Context: A Prelude to Web 3.0 and Beyond

Web 3.0 is the name that is being used to describe emerging trends that allow people and machines to link information in new way Personal Web assistants called Agents can make

decisions and take actions based on a user’s preferences

Many describe Web 3.0 as the rise of the Semantic Web Intelligent software tools can read Web pages and

discern useful information from them.

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Linking Data in Context: A Prelude to Web 3.0 and Beyond

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Linking Data in Context: A Prelude to Web 3.0 and Beyond

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Data Mining

We hear a lot about information overload

Information overload is often more accurately data overload

Utilizing vast amounts of data requires smarter methods for extracting information from data

Bioinformatics and the human genome project is a prime example

Data mining is the technology developed to attack such problems

Photo by Elvis Santana

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Data Mining

Data mining relies on advances in machine learning

The goal is to create a program that can automatically analyze large data sets and decide what information is most relevant for a particular problem domain

This distilled information can then be used to automatically make predictions or to help people make decisions faster and more accurately

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Data Mining: Two Models Predictive models can be used to forecast unknown or

unseen values, based on patterns determined from known results

Also called supervised data mining

Model developed before analysis

For example, from a database of customers who have already responded to a particular offer, a model can be built that predicts which prospects are likeliest to respond to the same offer

Statistical techniques used to estimate parameters

Examples

Regression analysis – measures impact of set of variables on one another

Used for making predictions

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Data Mining: Two Models Descriptive models describe patterns or

underlying processes in existing data, and are generally used to create meaningful subgroups such as demographic clusters

Also called unsupervised data mining Apply data mining techniques and observe results Analysts create hypotheses after analysis to explain patterns

found No prior model about the patterns and relationships that might

exist

Common statistical technique used: Cluster analysis to find groups of similar customers from

customer order and demographic data.

Regression AnalysisCellphoneWeekendMinutes = 12 + (17.5 * CustomerAge) +

(23.7 * NumberMonthsOfAccount)

Using this equation, analysts can predict number of minutes of weekend cell phone use by summing 12, plus 17.5 times the customer’s age, plus 23.7 times the number of months of the account.

Considerable skill is required to interpret the quality of such a model

Uses of Regression Analysis:• Predicting sales amounts of new product based on

advertising expenditure.• Predicting wind velocities as a function of temperature,

humidity, air pressure, etc.• Time series prediction of stock market indices.

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Data Mining: Sampling of Business Applications

Market segmentation Error detection Evaluation of sales patterns Credit risk analysis Ad revenue forecasting Claims processing Credit risk analysis Cross-marketing Customer profiling Customer retention Electronic commerce Exception reports Food-service menu analysis

Fraud detection Government policy setting Hiring profiles Market basket analysis Medical management Member enrollment New product development Pharmaceutical research Process control Quality control Shelf management Targeted marketing Warranty analysis

Video

Neural Networks

Neural networks Popular supervised data-mining technique used to

predict values and make classifications such as “good prospect” or “poor prospect” customers

Complicated set of nonlinear equations See kdnuggets.com to learn more

NN Video

2020? Through data mining, companies, known as “data

aggregators”, will know more about your purchasing psyche than you, your mother, or your analyst.

If you use your card to purchase “secondhand clothing, retread tires, bail bond services, massages, casino gambling or betting” you alert the credit card company of potential financial problems and, as a result, it may cancel your card or reduce your credit limit.

Absent laws to the contrary, by 2020 your credit card data will be fully integrated with personal and family data maintained by the data aggregators (like Acxiom and ChoicePoint).

By 2020, some online retailers will know a lot more about you, data aggregators, and most consumer’s purchases than we’ll know ourselves.

Semantic Security Security is a difficult problem

Unintended release of protected information

Physical security Protect through passwords and permissions Delivery system must be secure

Semantic security Unintended release of protected information

through release of unprotected reports Equally serious and more problematic

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Nanotechnology Ability to manufacture extremely small devices

“Smart” nanodust may be combined with wireless technologies to provide new environmental monitoring systems

Current approach – start big and squeeze, press, slice, and dice to make things small

Nanotechnology approach – start with the smallest element possible (i.e., atom) and build up

This nanomechanical structure fabricated by a team of physicists at Boston University consists of a central silicon beam, 10.7 microns long and 400 nm wide, that bears a paddle-array 500 nm long and 200 nm wide along each side. This antenna-like structure oscillated at 1.49 gigahertz or 1.49 billion times per second, making it the fastest moving nanostructure yet created.

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Nanotechnology Impact

Pharmaceuticals Drug delivery encapsulated in “nano-spheres”

Electronics Faster, smaller processors Immense storage capacities

Material Science Stronger materials Super conductivity

Buckyball from Wikipedia

Video Video2

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Quantum Computing Many believe that quantum computing systems represent the

next major revolution in computing

Quantum computers will be exponentially faster than today’s fastest supercomputers

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Quantum Computing

Quantum computing uses qubits instead of transistors (bits)

A single qubit (utilizing particle spin) stores and processes twice as much information as a regular bit.

Combining qubits delivers exponential improvement Two qubits are four times more powerful than two bits A 64-qubit computer would theoretically be 264 (=18 billion trillion)

times more powerful than the latest 64-bit computers! The first prototype quantum computer (with two qubits) was created in

1998

In 2001, Almaden Research Center demonstrated a 7-qubit machine (using 10 billion billion atoms) that could factor the number 15

In early February 2007, D-Wave Systems, Inc., a privately-held Canadian firm headquartered near Vancouver, announced: “the world’s first commercially viable quantum computer”

Video

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Quantum Computing and Security

RSA (public key) encryption is the basis for securing data across networks today

The integrity of RSA encryption systems depends on the practical difficulty of factoring the product of two large primes

The incredible speed of quantum computers could render this defense against unauthorized decryption useless

But the news isn’t all bad, some researchers believe new encryption methods depending on characteristics of quantum computing could provide the solution

Biometric Security

Best security is 3-step1. What you know (password)

2. What you have (card of some sort)

3. Who you are (biometric) Today’s systems (ATMs for example) use only

the first two One reason why identity theft is so high

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Integrating Biometrics with Transaction Processing

TPS – captures events of a transaction Video Biometric processing system – captures

information about you, perhaps… Weight loss Pregnancy Use of drugs Alcohol level Vitamin deficiencies

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Integrating Biometrics with Transaction Processing

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Integrating Biometrics with Transaction Processing

Is this ethical? Can banks use ATMs and determine if you’ve

been drinking? How will businesses of the future use biometric

information? Ethically? Or otherwise?

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Biometric Self Tracking Tools Monitoring tools now used in hospital ICU’s will be

wearable gadgets Automatically send data to wearer’s cell phone or

computer around the clock. Blood pressure Hear rhythms Mood

Compared to doctor office visit . Could reveal a person’s health in context

Currently available to track REM sleep patterns Diet - diabetes

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Big Data, Data Analytics and Hadoop

What is Big Data

What is Hadoop More about Hadoop

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The nature of the industry: Online RetailersBI Applications• Analysis of clickstream data • Customer profitability analysis• Customer segmentation analysis• Product recommendations• Campaign management• Pricing• Forecasting• Dashboards

Online retailers like Amazon.com and Overstock.com are examples of high volume operations who rely on analytics to compete. As soon as you enter, their sites a cookie is placed on your PC and all clicks are recorded. Based on your clicks and any search terms, recommendation engines decide what products to display. After you purchase an item, they have additional information that is used in marketing campaigns. Customer segmentation analysis is used in deciding what promotions to send you. How profitable you are influences how the customer care center treats you. A pricing team helps set prices and decides what prices are needed to clear out merchandise. Forecasting models are used to decide how many items to order for inventory. Dashboards monitor all aspects of organizational performance

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The Innovators Dilemma

BlueCross and BlueShield of South Carolina

The Rushing Center

Furman University

MODULE 4

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View the Lecture

The Opportunity and Threat of Disruptive Technologies

Professor Clayton Christensen

Harvard Business School

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Group Exercise

1. Do you see disruptive technologies looming in your industry?

2. Are these threats or opportunities?

3. What are the key characteristics of the disruptive technologies that your company faces?

4. Are the technologies strategically significant?

5. What are their initial markets?

6. How could your company address these disruptive technologies?

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Innovation Strategy

BlueCross and BlueShield of South Carolina

The Rushing Center

Furman University

MODULE 5

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Elements of an Innovation Strategy I

Look for growth outside of, but not too far from, your core business What jobs can existing customers not do? Who are your worst customers? Where are the barriers that constrain consumption?

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Elements of an Innovation Strategy II How can we serve this market?

Existing solutions are too expensive, too complicated or do not quite do the job

The solution is good enough along traditional dimensions, but superior in dimensions that matter more to the customer

The business model has low overhead and high asset utilization, and therefore allows lower prices or smaller markets

Powerful incumbents are not interested in pursuing the strategy initially

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Elements of an Innovation Strategy III Pursue innovative opportunities

Create specific opportunities Focus on patterns rather than numbers

Make “number of zeros” estimates – Guess at impact Execute and adapt

Good enough can be great Step, don’t leap The right kind of failure is success.

Video

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Group Exercise: Innovation and Organization

1. Does having an organization that utilizes specialists contribute to innovation?

2. Do you think a company could better promote innovation if it had a group specifically devoted to innovation?

3. What are some of the pros and cons of having such a group?

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Key Learning Outcomes

When you complete this course you will be able to:1) Contrast the evolutionary versus the revolutionary approach to

technological innovation.2) Distinguish between sustaining and disruptive technologies and

innovations 3) Discuss the elements of an innovation strategy.4) Give a brief description of the following emerging

technologies/innovations: Grid (distributed/utility) computing The Cloud Crowdsourcing and Social Technology Web 3.0 Data mining Nanotechnology Quantum computing Biometric Security

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WRAPPING UP!

Review of our original key learning outcomes

Questions?

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References

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How Breakthroughs Happen, Andrew Hargadon, Harvard Business School Press, 2003.

“The Change Leader,” Chapter 3 in Management Challenges for the 21st Century, Peter Drucker, Harper Business, New York, 2001.

Andrew Hargadon, an interview with the ACM online journal Ubiquity, at http://www.acm.org/ubiquity/interviews/v4i30_hargadon.html

Kathy Harris, Article on Gartner Blog found at: http://blogs.gartner.com/kathy_harris/2009/04/28/innovation-and-

agility-two-do%E2%80%99s/ “Security in the Ether," David Talbot, MIT Technology

Review, February 2010.

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The Innovators Dilemma, Clayton Christensen, HarperBusiness Essentials, 2002 (originally published in 1997 by the Harvard Business School Press).

The Innovators Solution, Clayton Christensen and Michael Raynor, Harvard Business School Press, 2003.

"The Rules of Innovation," Clayton Christensen, MIT Technology Review, June 2002.

"Disruptive Innovation: A New Diagnosis for Health Care's 'Financial Flu'." Healthcare Financial Management, John Kenagy and Clayton Christensen, May 2002.