Code Halos, book review: The theory and practice of business success in the internet age

What's a 'code halo'? The way its authors see the world, this review is part of the code halo around their book Code Halos: How the Digital Lives of People, Things, and Organizations are Changing the Rules of Business. If you leave a comment below, that will also become part of it — along with the book's sales rank on Amazon, any tweets of this review, discussion of it on Google Plus, 'likes' for the authors on Facebook or the LinkedIn page for the Cognizant Center for the Future of Work where the authors are employed.

Usually we call that something like a 'digital footprint'. 'Halo' is a similar metaphor, but the authors pick 'code' to go with it, rather than 'digital' or 'online', because they believe that decoding that halo of data, opinions and connections will give businesses that get it right a huge advantage.

It's an ambitious thesis. Amazon displacing Borders wasn't about books, Netflix killing Blockbuster wasn't about renting movies and Apple pushing BlackBerry out of the smartphone market wasn't about phones at all. Instead, it was companies changing business models by creating and managing code halos — in other words, getting more value from the field of information around a person or product or place than from the actual entity itself.

"Wrapping widgets with digits" is the catchy phrase to explain why an established brand — with customers, extensive distribution, management experience, R&D labs and all the other business advantages you can think of — gets steamrollered by something new.

The answer has to be more than getting social networking, cloud computing and mobile device strategies right, or using analytics well — even though these are key components. For the authors of Code Halos, it's about making customised, individual experiences for customers, and making a business out of that. Apple didn't just make desirable hardware, runs the argument; it made desirable hardware that became an expression of you because of the way iTunes and the App Store deliver a unique experience. It wasn't that Netflix was faster and more convenient, it was the recommendations and the way you could manage the queue of movies you wanted to see.

The Crossroads Model

Much of the book seeks to take the principles of big-data-driven consumer services like Facebook and Netflix and suggest ways that ordinary businesses can apply them, with frequent references to the way the Internet of Things (IoT) will supply everyone with big data. What's most likely to be useful is the five-stage Crossroads Model that goes from the 'ionisation' stage (when your business needs to recognise that lightning is building up and disruption is likely), though the 'spark' of opportunity that's required to start a big enough fire to reach the 'enrichment' stage, where big data flips you beyond the 'crossroads' to where the personalised code-halo-driven 'rush' creates more market relevance and value.

You don't have to be completely convinced by the underlying theory to find the second half of the book extremely useful.

The metaphors here are a little strained. If you're not already thinking about enterprise social networking as a way of improving business processes, then saying that "old business processes melt under the heat of new insights and remold as digitized and digitally enabled constructs" could be a bit mystifying until you get further into the book. Classifying different approaches to using big data and code halos is more useful, as are the lessons businesses can learn from Google, Skype, Facebook, LinkedIn and Amazon.

These boil down to not caring about where the information lives, not seeing long-distance communication as special or expensive, building relationships without being in the same place, finding the expertise available from business connections and getting a better customer experience without having customer-service people involved most of the time. That's a business primer that might be worth the cost of the book alone, if you've not thought about those ideas before.

You may not quite buy the code-halo explanation for the success of companies like Amazon, Apple, Facebook, Google and Netflix, and the failure of Motorola, HMV and AOL. The promise of Disney's MagicBand bracelet for guiding you through a customised day at the theme park, or Propeller Health's asthma inhaler tracker, sound more game-changing than Amazon letting you tune product recommendations — although that may be because we're so familiar with the innovations that helped today's big names become successful. Several interesting ideas are mentioned with tantalisingly little detail. How exactly is Google trying to improve its HR system by mining employee feedback? How does P&G design better products by using external designers rather than its in-house team? Elsewhere, well-known products like the Nest thermostat are explained in over-long detail.

Practical business advice

But you don't have to be completely convinced by the underlying theory to find the second half of the book extremely useful. The advice for taking advantage of code halos applies even if you think Amazon's ability in logistics is as important as its recommendation algorithms, or that Facebook succeeds because of network effects rather than the way it filters your news feed based on big data.

It's good to see an emphasis on the importance of design that doesn't simply say 'be like Apple', and there's also an excellent chapter on privacy and transparency.

For anyone in IT wondering how to access this brave new world, there are some useful principles for migrating from legacy systems to the sort of efficiency that makes time for business-building innovation. This involves partitioning IT into what you need to build the foundation, what you need to run the business and what you need to create the future of the business.

Crucially, there's a good section on the steps you can follow to change attitudes and processes in a company, and how to create, implement and measure strategies for customer experience, big data and the other trends the authors include in the code halo idea. We're not sure 'wirearchy' will catch on any more than 'holocracy' has, but we may need a new vocabulary to describe the shift away from familiar business hierarchies to more networked setups, and Code Halos takes a pragmatic approach to what this means in practice.

It's good to see an emphasis on the importance of design that doesn't simply say 'be like Apple', and there's also an excellent chapter on privacy and transparency. This looks clearly and calmly at the issues that are going to arise as companies start mining the data generated by our increasingly digital lives, and suggests some customer-friendly strategies for spotting the creepy line before you cross it.

If you're finding the changing nature of work more of a problem than an opportunity, there's some useful advice on how to decide whether the problem is with you or your company. If you're used to thinking of work as the yolk in the fried egg of your life, with your personal life as the surrounding egg white, then seeing work-life balance as a scrambled egg, with both parts mixed together, can be helpful — especially as the authors point out that it's up to you to take advantage of the flexibility of the new approach.

When it gets away from a theory that tries a little too hard to pull together all the business and technology trends of the last decade, Code Halos is a practical guide to bringing your business into the 21st century. It's not going to turn your company into Facebook or Google, but it could stop you from being Borders, Tower Records or any of the once-dominant companies that failed to adapt to the internet era.

Further reading

IT out in the cold? Why wearables could warm things up for tech teams