The week was pretty much dominated by the launch of Facebook Places, but a few other things happened too…including a $7B acquisition by Intel that I only partially get as a lot of dollars must have gone for parts of Intuit’s business that’s far afield from Intel’s chip business. But who am I to judge. Anyway, here’s this week’s list:

1. I really liked this article on how to identify productive, creative types (hat tip to Forrester analyst Mike Gaultieri).
2. Yet another travel search contender with a quirky name and a unique twist on presentation of results – Hipmunk.  Ding-dong, the fare matrix is dead? Check ‘em out and decide for yourself.  Pretty ballsy to start up a company like this, just weeks after Google buys the leader in the space.
3. Excellent analysis and insight into the Oracle-Google patent fight from RoughlyDrafted. This is not the simplistic money-grab as one might think. So if Google has to pay royalties for Java, can they still give Android away for free?
4. It’s looking more and more like NFC is coming to the iPhone next year and other devices. I’m still not sold on the use case.
5. The opening weekend didn’t go so well for RIM’s Blackberry Torch? Should RIM start marketing the Torch as a “Limited Edition”?
6. The list of iPad-versaries continues to build. Up next: what I’m calling the “EvilPad” from Google and Verizon. The twist? It’s based on Google’s much anticipated Chrome OS, not Android. I wonder if Verizon will prioritize traffic for EvilPad users J
7. Facebook announces Places.  This is perhaps the most reported announcement of the week and there are a ton of articles about what it means, but the best was probably from Altimiter Group’s Charlene Li.  Much of the initial focus was on what this means for Foursquare or Gowalla (and perhaps how quickly they can sell themselves to Google, Apple or Microsoft), but others think that Yelp has the most to fear. From a travel perspective, you can find good insights from Tnooz and Troy Thompson at the Travel 2.0 blog.
8. Intel buys McAfee for $7.68 Billion…that’s with a “B”.  I can understand the need to add security directly onto the chip, but that’s a pretty penny to pay for it and so much of McAfee’s revenues seem off-task for Intel. It certainly can’t be that Intel felt they needed to augment their brand recognition. Maybe they just felt they needed the deal to remind people that they’re still here?
9. Travel rewards startup Topguest, which only went into beta a few weeks ago, is the first travel related company to integrate with Facebook Places.
10. Product quality is a big issue and there are a number of ways to improve it.  CIO Magazine’s Thomas Wallgum recaps 7 steps to improve software quality from Forrester’s latest report.

Sometimes in summer it can be tough to find 10 things, but this week there’s some IPO news,  a flight attendant snaps and Google sells out the web:

1. Skype files for an IPO. I know they’re only trying to raise a $100M, but the financial numbers look bad. Low margins, less than 2% of registered users are paying customers. The plan is still to convert more users from free to pay, but hasn’t that been the plan for years? What’s the definition of insanity?
2. This story takes crazy to new heights. Not sure what’s going on with unruly passengers. Had a similar situation on a recent US Air flight with a COMPLETELY crazy passenger who was dancing, crying, cursing, drinking all through the flight and then tried to get up while the plane was still taxiing. But in this case the flight attendants did nothing, while my wife had to step in as we were traveling with our six-year-old daughter.  Advertising Age talks about the difficulties JetBlue is having dealing with the popularity of the renegade flight attendant in social media.
3. Plenty of people had things to say about the Google-Verizon Net Neutrality proposal, but Wired had the best headline by far.
4. Time Magazine details their Top10 Travel Trends. Not much new here for those of us in the travel industry, or even those who travel a lot, but I always think it’s interesting to see through the prism of what the rest of the people (i.e. actual customers) will believe are the top trends because someone like Time tells them so.
5. Spend Matters’ Jason Busch analyzes the recent deal between Rearden Commerce and Southwest Airlines.  Busch feels “Southwest is clearly making a statement that this chosen partner is fundamentally different than others in the market”, and part of a strategy to increase its business travel revenues.
6. Delta launches “Ticket Window” on Facebook. It seems not to provide any more functionality than the Delta.com site or take advantage of any truly social aspects or Facebook’s OpenGraph. PhoCusWright’s Douglas Quinby was surprised that there was no additional functionality, but as I tweeted back to him, it shows the still fairly large gap between being on social platforms like Facebook and having an actual social strategy that is tightly integrated and aligned with the rest of the corporate strategy. This is still a pretty common position for many brands. So kudos for Delta’s initiative, but there’s still plenty of work to be done…much like with their “revamped” website.
7. Oracle sues Google of patent infringement over the use of Java-related IP in Android. The suit stems from Oracle’s acquisition of Sun Microsystems last year and with it Java.  Oracle claims that Android competes with Java as a mobile device OS and so the suit. A ploy to get some cash from Google? If Google does indeed have to pay Oracle for Java – it was only a few years back that Sun got Microsoft to cough up $1.6B – will they be able to continue to give away Android for free? This should be fun to watch.
8. Expedia to power Yahoo! Travel in Europe. Interesting to see the progeny of Microsoft do a deal with Yahoo!
9. Will the most fuel efficient airlines get a boost in sales? Is it a coincidence that the airlines who lead in MPG also have the best reputations for service?
10. In other IPO-related news, Makemytrip.com, India’s largest online travel company, went public with a bang. MMT had the strongest first day gain for a US IPO since 2007, surging almost 90%.  TechCrunch’s Sarah Lacy gives some tips on what other Indian entrepreneurs (inside and outside of travel) should learn from MMT’s success.

Let’s see what came up:

1. Forrester analyst John Rymer’s take on Oracle’s Cloud strategy. And for a bonus, a slightly different interpretation by fellow Forrester analyst Stefan Reid.
2. Dion Hinchcliffe, ZDnet: The Facebook imperative for enterprise software.  Hinchliffe is great. Longish articles at times, but good insight. Riffing off Benioff’s recent proclamation that enterprise software should look like Facebook (not sure I want my enterprise software UI changing every 3 months), he asks important questions like “Should Enterprises be Social” and has a Top 5 list of why IT should be social (I certainly won’t limit to IT).  But I think that social is critical for organizations, particularly global organizations, who want to innovate.  R&D has gone global and the best way to harness that is to make sure those teams are social with each other, collaborating and sharing.
3. David Linthicum: Cloud Provider Roulette.  Bottom line: If you are evaluating cloud computing technology today, you have to consider that your choice could be bought up this year or next. That means you need to make sure your legal agreements are rock-solid and spell out what happens if your provider is acquired
4. Wyndham Hacked for Third Time. Not good. Wyndham please talk to me about security testing.  Related article noting that recent research shows that the hospitality industry is hit hardest by hackers, with the natural focus on payment card information.
5. Tnooz: Will Priceline come back to the field?  The concentration of revenue in the OTA (online travel agency) business is pretty staggering.  It’s the Pareto Principle on steroids.
6. Tnooz: TripIt maps employee travel with TripIt groups.  Pretty cool way to keep tabs on the organization. Would be very helpful in case of a crisis and there was a need to know/get in contact with employees at a moments notice.
7. Daring Fireball: Thoughts on Windows Phone 7 by John Gruber (not related, but I’d be somewhat glad if people confused him with me. Would certainly help me get gigs on the speaking circuit)
8. Keeping in the iPad theme this TechCrunch article on Apple’s HTC patent Lawsuit indicates that the real focus of Apple’s ire is (spoiler alert) Google’s Android OS (ok, not really a spoiler).
9. Three theories why Google pushed Buzz out the door.  What’s more interesting to me is that it seems that the Buzz experience is vastly different on an Android device, with all it’s location-based goodness, than on a web client. Is this really targeted more at Foursquare than Twitter?
10. And last but not least: Ballmer’s really committing Microsoft to the Cloud. Yet somehow I still don’t quite believe it.

Last week I saw a tweet from Oracle OTN architect Bob Rhubart pointing me to a post from the Jake Kuramoto at Oracle AppsLab entitled “Do users want innovation?“  [Editorial note: in the rest of the post I will refer to "users" as "customers".  I think the psychological implications of how you look at the people who buy your products – users = necessary evil, versus customers who you value – is important...at least to me.]  Now without reading the full post, my initial reactions was: “users want value. true #innovation usually = value. But most new features masquerade as innovation but not valuable.”

I thought I’d take the opportunity now to amplifying my thought, especially after closely reading the Oracle blog post.

Too Much Energy Used to ‘Keep the Lights On’

Kuramoto rightly points out the tension in every product development organization: how do I effectively split my resources between:

• fixing yesterdays problems (fixing bugs)
• adapting to environmental factors (e.g. updates to code for regulatory changes)
• finishing what you started (features that didn’t get into the current release); and
• introducing honest-to-goodness innovations.

According to a number of different research sources, the cost of ‘keeping the lights on’ (the first three bullets) can take up in excess of 80-90% of R&D budgets.  That’s a terribly inefficient use of resources (especially in this economic environment).  It ties up resources that would be better used to build tomorrow’s next hit product and adds to margin pressures.  More importantly, it’s not seen as valuable by customers and doesn’t add value to the company – yet it’s where software companies spend most of their money.  These are things that you have to do, but don’t really have much impact on existing customers’ satisfaction or increase the perceived value they’re getting from what they bought.  Yes you’re fixing bugs, but they didn’t want bugs.  They wanted software that worked in the first place!  And more importantly, none of these activities really help attract new customers. Already today many enterprise application companies are looking at Maintenance : New License revenue ratios of 4:1 or higher.  If companies could just convert, even 5% of R&D expenditures to truly innovative, new product development imagine the impact on new license sales and margins.

You Can’t Ask Users to Tell You What they Want

There’s another aspect of the AppsLab post that troubles me.  Kuramoto writes: “So, we yearn to push the envelope and experiment with new technologies, but all our users really want is incremental improvement.”  There are two elements to this statement that I want to address:

1. The first part of the sentence reads as if “innovation” is about experimenting with new technologies.  First let me say that I’m a big fan of experimentation…no matter the subject…and feel that it’s an integral part of developing innovations.  But I think the statement misses a crucial point about innovation.  The biggest innovations have much less to do with technology as they do with behavioral change.  The VCR (or for those of you under 25, the DVR) was a huge success because it enabled viewers to record and watch shows when it was convenient for them, not because they were looking for a replacement for 8mm video to watch home movies. Technology is often an enabler of innovation.  But in the software industry too often the focus is on the technology for it’s own sake, so be sure that you’re stepping back and re-evaluate what you’re doing in terms of meeting your customers’ needs.  This is probably also a good time to differentiate between inventions and innovations.  An invention is a new idea, concept or product, but doesn’t have any intrinsic value.  An innovation is an invention that you can monetize.  If you can’t monetize it, it means that no one sees enough value from the idea to spend money on it and therefore you shouldn’t either.  If you’re consistently wasting time working on things that no one wants to buy, that should tell you something.
2. The back half of the sentence is the other aspect that product managers need to think about.  Of course your product’s current users want minor changes that they may have seen on a competitors’ product or something that is an obvious extension of how they’re using your product today.  Most users of any product can’t see three feet in front of themselves or at least can’t readily articulate what they really want.  So to say that “users really want incremental improvement” doesn’t mean that they don’t want innovation.  I go back to my tweet: Users do want innovation because innovation usually means a significant improvement in the value that they get from the product they own.  But incremental improvements (I’m not even sure that people should use the term incremental innovation anymore – it’s oxymoronic) don’t meet that threshold.  So you need to interpret what changes in behavior will mean for the way they want to use your product.  Look at how they are using your product (and not using it), don’t listen to what they’re telling you.  Especially with SaaS/Web/Cloud-based software, there’s reams of clickstream data that can give you insight to what users want to do.

I think the AppsLab post draws the wrong conclusions from the examples cited, such as Facebook and the integration of social technologies into enterprise applications (nee Enterprise 2.0) .  Facebook’s (and similarly Twitter’s) dramatic success was due to the way that these applications allowed people to interact and engage with others (of similar interests or long-lost friends).  The backlash against Facebook’s redesigns had more to do with the fact that they forced new behaviors and a small element of re-training that seemed to provide no additional value to them (not to mention the associated TOS and data ownership issues).

So I encourage all product managers, CTOs and heads of R&D to find a way to put more resources towards true innovative enhancements to your products and don’t get intellectually trapped by the things your customers vocalize.  Similarly don’t get trapped by waiting for the mega idea.  Clayton Christensen coined the term ‘disruptive innovation’, but not everything has to be truly disruptive to be valuable.  If you think that you have a great idea go for it.  Otherwise you’ll be stuck with empty marketing messages promoting “new and improved” features masquerading as innovation.  It doesn’t often work in consumer packaged goods and frankly most tech buyers are much more knowledgeable about the technology they buy for work versus the laundry detergent they buy at home (Can any of you tell me why Tide is better than Cheer?  I have no clue).

But you can’t wait for your customers to tell you what innovation is.  By the time they do, your competitor has already built it.  The truth is that for most of your customers, innovation is like the judicial definition of pornography…they will know it when they see it – and the market will reward you for it.