sellitbuyitswapit.com brings no cost listing for business's on the
internet, a very small percentage fee is payable when you sell an
item.For individuals low cost listing fees coupled with no final value
fees means more of the sale stays with the lister. [PRWEB Aug 28,
2004]
A new style of trading for both business and individuals on the internet has arrived
Grok Headline matches for A new style of trading for both business and individuals on the internet has arrived
E-Mail Security Services for Small Business and Individuals
E-Mail Security Services for Small Business and Individuals01/07/2004 01:53 PM A number of vendors offer managed e-mail services for enterprise.
However, now individuals and small businesses owners can find services
for spam and virus protection, and at a very reasonable cost.
Special Release Discount Price for Profinacci the Fibonacci Course for Commodity Trading, Stock Trading, Futures Trading & Forex Trading.
Reach More of the Right People Faster
with Less Effort. Business is under pressure now more than ever to do
more with less — bigger, better, cheaper, faster. But at what cost?
At the cost of human relationships? It doesn't have to be. The
internet offers powerful tools to help you find the right people,
connect with them, build trust and rapport, and collaborate with them
quickly and cost-effectively. This is a good guide with some fine
resources. This has been added to my white paper Online Social Networking.
Napster: From Trading Music To Trading on the Stock Exchange
Napster: From Trading Music To Trading on the Stock Exchange09/19/2004 09:28 AM Like a phoenix from the ashes, Napster has come back not once, but
twice it seems. Since Roxio bought the Napster name and logo a couple
years ago at a bankruptcy auction, Napster received a new "lease
on life". This time around Napster isn't just a service, it's to
become a public company and will be traded on the stock exchange.
Roxio has recently sold off it's CD-burning software business in a
move to concentrate solely on selling music online. Using Napster as
it's company name, it will allow Roxio to compete with other online
music delivery services from the likes of Microsoft, Yahoo!, and
Apple.
Roxio's sale of its software business landed them a cool $80 million
in cash and stocks which will give Napster a cash base of more than
$100 million once the deal closes, expected by year's end.
"One of the most important questions for our investors is, 'Does
Napster have the staying power to stay and thrive?' Having the cash
answers that question," said Chris Gorog, chief executive and
chairman of Roxio.
It will be more than enough to cover Napster until it becomes
profitable, Gorog said, "and we're on a clear path to do
that."
MTPredictor launches unique Real-time Trading Software for Risk/Reward trading using the Isolation Approach to Elliott Wave
MTPredictor launches unique Real-time Trading Software for Risk/Reward trading using the Isolation Approach to Elliott Wave06/02/2004 02:19 AM This is a brand new real-time program from the UK software developer
MTPredictor Ltd. It is designed exclusively to identify exceptional
trade set-ups, evaluate their Risk/Reward outlook, control risk by
position-sizing and manage trades consistently on-screen. Partnering
with eSignal for data, Real-time 4.0 is for global stocks, futures,
indices, currencies and commodities. [PRWEB Jun 2, 2004]
Union Capital offers free internet - browse in stock trading
TRANSCENDING THE TECHNOLOGY CONSTRAINTS TO RAPID BUSINESS GROWTH: How Emerging and Midsize Companies Use Integrated Internet Business Systems to Improve Profits and Manage Change While Reducing the Costs and Risks of Expansion
TRANSCENDING THE TECHNOLOGY CONSTRAINTS TO RAPID BUSINESS GROWTH: How Emerging and Midsize Companies Use Integrated Internet Business Systems to Improve Profits and Manage Change While Reducing the Costs and Risks of Expansion06/23/2004 03:08 AM It’s a myth that the information technology (IT) requirements of
emerging and midsize businesses are simpler than those of large
enterprises. Virtually every day, we interact with the technology and
business leaders of midsize companies whose IT demands not only rival
the requirements of much larger companies, but in many cases exceed
them.Fortunately, emerging and midsize businesses can resolve the
dilemma of updating their outmoded IT infrastructure without massive
one-time investments in technology. New technologies, such as
Microsoft® .NET, enable companies to leverage previous investments in
technology while step-by-step integrating their business systems to
enable an efficient, cost-effective, and flexible solution to driving
and managing growth. Learn
Morehttp://www.verndale.com/News/WhitePapers.asp-or-Request the
Following White
Paper:http://www.verndale.com/News/WhitePapers.asp?functype=whitepaper
form&WhitePaperID=1 [PRWEB Jun 23, 2004]
In last week's column, I suggested that individuals and
corporations should be the authoritative sources of basic
information about
themselves. That way, if an application needs my name, address, and
phone
number, I can refer it to a source that I control and guarantee to
be correct.
But how many applications really need my name, address, and phone
number?
Capturing the identity of individuals, along with personal
information about
them, has become a habit. In a climate of increasing concern about
privacy,
it's a bad habit we must learn to resist. [Full story at
InfoWorld.com]
As I mention in this week's column, the notion of selective
disclosure is a
core value of
href="http://shibboleth.internet2.edu/">Shibboleth, an Internet2
project
that's gaining some real traction in the higher-ed world.
What's up with the name 'Shibboleth'? Here's the scoop:
A shibboleth is a kind
of
linguistic password: A way of speaking (a pronunciation, or the use
of a
particular expression) that identifies one as a member of an 'in'
group. The
purpose of a shibboleth is exclusionary as much as inclusionary: A
person
whose way of speaking violates a shibboleth is identified as an
outsider and
thereby excluded by the group. (This phenomenon is part of the
"Judge a book
by its cover" tendency apparently embedded in human cognition, and
the use of
language to distinguish social groups).
The story behind the
word is
recorded in the biblical Book of Judges. The word shibboleth in
ancient Hebrew
dialects meant 'ear of grain' (or, some say, 'stream'). Some groups
pronounced
it with a sh sound, but speakers of related dialects pronounced it
with an s.
[Suzanne
Kemmer]
The federated identity system called
Shibboleth deals
with group membership, rather than individual identity. It's
interesting to
think about use cases, outside higher ed, that don't require the
identification
of individuals. Consider website registration. The New York Times, or InfoWorld, or other
media
sites that want to qualify readers to their advertisers, don't really
need to
know me as an individual. They just need to aggregate readers into
groups. From
the Times' perspective, I'm a member of the group of American male
writers who
work in Media/Publishing/Broadcasting and who read the Times regularly
but do
not subscribe. From InfoWorld's perspective, I'm a member of the group
of
consultants (Technical) working in the area of Tech: Publishing who
strategize
about (but do not directly purchase) IT assets.
What if it were possible -- and convenient -- to affiliate with
these groups
without giving up personally identifying information? In reaction to
registration regimes that are too granular, the bugmenot.c
om
hack abolishes granularity. But maybe there's a middle ground.
A few interesting articles on
innovation, knowledge and the future of business - worth a read:
Distribute
d
Social Software, by Eric Gradman via Seb Paquet at Many
2 Many: A grad student surveys the current generation of social
software and agrees with
me that it needs to be simpler, less centralized and more
personal.
Life
in
2010 - Home and Work, by Patrick Dixon: A futurist who sees that
new technologies are going to be smaller, more portable, more
specialized, easier-to-use and more personal. Some excellent thinking
here.
Webl
ogs
and Journalism (jump to pg 59 of this pdf), features 18 articles
by
bloggers and journalists, that I've mentioned before, but are worth a
second read because of their broader implications for the use of
weblogs and other personal content management and personal publishing
apps in business.
WL
Gore & Associates, per this case study by Cyndy Payne of the
Foundation for Enterprise Development, is not only one of the world's
most innovative companies (they invented waterproof, breathable,
Gore-Tex fabric and a whole bunch of high-tech materials you've
probably never heard of), but also are a prime example of a true
partnership of equals (what they call a Non-Hierarchical Corporation
and what I've called a New
Collaborative Enterprise).
Four
years ago I wrote a well-received paper entitled A Prescription for Business Innovation:
Creating
Technologies that Solve Basic Human Needs. I've updated it,
broken it into three manageable pieces, and present the first part
below. The remaining parts will follow on successive Tuesdays.
Introduction:
Why I'm Here
My modest objective in this presentation is first,
to tell you some
new, interesting and useful things about innovation, and, second, to
persuade you that innovation is the most important determinant of
every
business' success, and perhaps even the quality of our lives. I want
to
convince you that in your business, whether it employs one person or
one million, innovation is probably the solution to whatever is
currently keeping you awake at night -- whether that be sales growth,
cost control, customer satisfaction, employee retention, or maximizing
shareholder value.
And if you, like me, spend some of your sleepless hours worrying about
things more altruistic than your personal and business success, I want
to convince you that innovation is probably also the solution to most
of the problems that have befallen our suffering planet, in part
because past innovations have created many of these problems.
And finally, if I'm successful in this evangelical task, I want you to
leave today not only with renewed hope about the future of your
company
and our world, but with some new tools to make innovation happen in
your business.
I would like to ask you to listen to these ideas with an open mind,
suspend briefly your disbelief, and give this your full attention. If
this was that easy to explain, someone much smarter than I would have
done it years ago.
One:
Learning from our past: How Need Drives Innovation
The advent of a new millennium has recently given
many business,
political and economic thinkers pause to consider what will be, as
most
put it, the 'Next Big Thing':
A New Economy Forum sponsored by Credit Suisse First
Boston
attempted to develop a 'synthesis' of leading thinkers' innovation
models that might answer that question.
Forward-thinking
publications like Fast Company and Wired
have presented
alternative visions of the future from some extraordinary minds in
many
different disciplines.
And conferences of world political,
social and business
leaders
like the Davos World Economic Forum try to grapple with the
bigger questions of how the holders of power can make the world a
better place, while helping out their particular stakeholders
in the process.
The catch-phrases of these business-driven thought
leadership events
are not new: competitive advantage, sustainable development, the
connected knowledge economy, globalization, convergence, digitization,
moving at the speed of thought. What is new is that there are now
three
divergent models being used to predict our future, fighting for
audience attention (the names assigned to them are mine):
Acceleration Model: The future will be a continuation of
the recent
past, only much faster
Chaos Model: The future will be utterly
unlike the past, driven by
radically new and discontinuous events
Evolutionary Model: The future will be, like the past, a continuous
series of mostly predictable changes
From the perspective of business innovation this matters
because almost
everyone agrees that the successful businesses of the future will be
complex, adaptive, agile, proactive, and creative -- they will not
wait
for market demands to change them, but will instead continuously
reinvent their companies, anticipate future demands, and make
strategic, risky, value-creating investments and decisions, what John
Kotter calls Leading Change.
In order to do this -- to make intelligent
decisions and investments before demand is articulated, to view
risk-taking and the creation of future options for action as
essential,
not foolhardy -- requires at least some consensus about 'where the
future
is headed'. Selecting one of the above three theories about the future
is an important start in doing so.
Technophiles who favour the Acceleration Model tend to
be infatuated with artifacts of the
last thirty years: more digital, faster, smaller, lighter. Advocates
of the Chaos Model, on the other hand, believe there are no
rules for our brave new world of the 21st century. Their advice for
business and other leaders is to be opportunistic and think
short-term.
I lean towards the Evolutionary
Model. I believe that using an
understanding of the past, with the right perspective, can help
businesses anticipate the future with exceptional clarity and
probability of success. There are two reasons I hold this belief, and
they form the basis for much of the rest of this presentation:
Technology is Not Evil: Technology was, is, and
always will be, about improving the quality of human life (though it
has had some disastrous, unintended consequences), and
People Change Reluctantly: People change much more
slowly than technology, and ultimately won't accept, adopt, or pay for
any technology that they aren't yet ready for, or which doesn't fill a
real human need.
The report of the 1999 Credit Suisse First Boston New Economy Forum
draws together some very powerful innovation models, into a single
synthesized model that can be used
to explain how technologies have impacted society and civilization
since it began about thirty millennia ago:
Figure One: How Fundamental
Needs spawn Innovations & Technologies
(Adapted from Credit Suisse First Boston New Economy Forum 1999
Synthesis)
According
to this model, innovations like crop cultivation, the printing press,
and the harnessing of solar energy, have always arisen in response to
an urgent human need -- overcoming the sudden food scarcity after the
Ice Age, bringing literacy to the masses, and solving the energy
crisis
respectively in these three examples. Technologies are applications of these innovations.
The intriguing organic-looking ovals for each technology are also from
the Credit Suisse Synthesis,
which proposes are technologies are best developed using the following
process:
Figure Two: Development
Process for Technologies
(from Credit Suisse First Boston New Economy Forum 1999
Synthesis)
Let's now take a look at this synthesis model in more detail, to test
whether it represents the way in which historical innovations have
occurred, and then what this might tell us about innovations of the
future.
Two: Man's Earliest Innovations: A Brief History of
Technology
The first humans to walk on our planet, according to
most
anthropologists, were not the mighty hunters most of us might picture.
In fact we were particularly disadvantaged, lacking both keen senses
and a hide adapted to changing climates and weather. As a result,
early
humans were scavengers, ignominiously surviving off the leftovers of
creatures with better innate hunting 'equipment'. In the first scene
of 2001: A
Space Odyssey, Kubrick
& Clarke hypothesize that a carrion bone was the first human tool.
Marshall McLuhan explained in his book Understanding Media that this
early human was using the bone, this very first tool or technology, as
an extension of his hand, giving it strength, reach and durability his
hand alone did not have. McLuhan argued that all technologies are
extensions of the human body and the human senses, and it is these
technologies that have allowed the poor, badly-pelted,
sensory-deprived
human species to buck Darwin's odds and survive.
So picture our poor shivering proto-human looking among the bones of a
wolf's recent meal for new tools beside the greasy bone, and thinking,
in true McLuhanesque and 20th century economics terms: 'If the bone as
an extension of my hand helps me to compensate for my competitive
disadvantage in the hunter-gatherer marketplace, why can I not use
other tools similarly? Then, lacking the appropriate scientific
training but still intoxicated over his first innovation, he or she
comes across a dead wolf and considers the following applications of
this technological insight:
If I put the wolf's head on my head, will I gain the wolf's acute
senses, wiles and powers? (Not that different from the thinking
applied
many centuries later by the Ford Motor Company in the naming of cars
and design of hood ornaments after various fierce animals)
If I eat the dead wolf, will I gain the wolf's acute senses, wiles
and powers? (Many cultures still eat powdered horn and animal
genitalia based on this 'logic')
If I strap a live wolf to myself, will the wolf and I become one
creature, with both the wolf's senses, wiles and powers and my
brilliant and innovative mind?
Of course, the correct answer is (c), which, except for the use of a
leash or harness instead of a tight strap, remains one of the most
important technologies in our short human
history: animal domestication. Interestingly, the development of a
non-choking animal harness, and a stirrup for riding larger animals,
took centuries, according to a review in the Economist of the
last millennium's greatest inventions. What's more, it occurred first
in China, possibly enabling their civilization to develop much more
quickly than Western civilization, until, for reasons only hinted at
in
the Economist , China
suddenly stopped developing new technologies in
the 15th century.
Without animal domestication and crop cultivation, we as a species
might well not have survived to come up with newer and more
sophisticated innovations like the wheel, paper and the computer.
Three: Six Principles about the Innovation Process
The first humans used
precisely the process shown in Figure Two to
develop and 'commercialize' the technology applications of the
innovations of animal domestication and crop cultivation. It is the
same
commercialization process taught in business schools today. However,
the success of the process is only as good as the idea, the
innovation,
that lies at its front end. Business schools are actually very good at
explaining the recipe, but they, and most educational and business
institutions, are absolutely terrible at teaching people how to find
the essential new ingredients -- the 'grey matter' at the left side of
Figure Two, the ideas & innovations that make the recipe work. The
problem isn't a scarcity of good ideas either -- it is the lack of
rigour
and investment in infrastructure to surface, capture, develop and
qualify new ideas
prior to commercialization.
Figure
Two also recognizes that many innovations and technologies are derived
from other innovations and technologies, and often come from applying
an
idea or a technology from one application domain, or from nature, to
an
unrelated application domain. The BBC/Discovery program Connections
made this point very powerfully, and its author James Burke continues
to develop both examples of such non-obvious connections, and
exercises
to help us learn to discover more -- in essence, to become more
innovative. Burke's latest book explains how a problem with the
irrigation of Italian gardens led to the invention of the carburetor,
for example.
Furthermore, Figure Two acknowledges the importance of
the story in the
successful commercialization of innovations. It is hard to pick up a
business book or attend a business conference these days without being
lectured on the importance of story-telling, but the idea is neither
new nor complicated: Stories convey the context for the application,
they explain how it can be used in the user's or
developer's day to day life. Knowledge transfer is an essential
precondition to commercialization. The easiest way to transfer
knowledge, i.e. to explain or persuade, is to do so in a way that lets
the learner internalize what they are hearing i.e. to fit it into
their
own mental models of how things work. And the simplest way to enable
internalization is by telling a story, be it a Utopia or Future State
Vision, a parable with a built in lesson, or a simple recounting of
processes and events that lets the learner relive the teacher's
experience as if it were their own.
From all this we can derive six basic principles about the Innovation
Process (again, the names given to them are mine), to add to the two
espoused earlier about cultural resistance to innovation:
Need Drives Innovation: Necessity is the mother of
invention, and as the fundamental human needs listed in the top row of
Figure One above illustrate, the important innovations and
technologies
of human history have addressed the greatest human needs of their
age. Without an urgent human need, a burning platform, a Business
Case,
there will be no innovation, since the preconditions for it, as John
Kotter explains in Leading
Change, do not exist. An obvious corollary
of this principle is:
Innovation Starts with the Customer: If successful
innovations must address an urgent human need, then the front-end of
the innovation process should be situated at the point of contact with
the humans expressing that need, i.e. the sales and customer service
people in businesses, not the R&D laboratory or the marketing
department. With some notable exceptions where the need for the
innovation was only identified later, innovations coming from R&D
tend to be solutions in search of problems, and those coming
from Marketing tend to be solutions for which needs need to be
artificially created through advertising.
Innovation Drives Technology:
The solutions
developed by companies' products and services are all technologies
that
apply one or more innovations.This is equally true of pregnancy test
kits, tax preparation software, satellite-and-computer-based learning
courses, futures options, automobiles and corn (whether genetically
modified or not). So-called 'competitive advantage' comes either from
offerings that better satisfy human needs (faster, better, cheaper
etc.), or from new technology applications of new innovations that
render the old offerings obsolete i.e. 'reinvent' the market. But as
much as
business would like to turn the model on its head (develop the
offering, then use technologies and marketing to create a need for
it),
real needs like the ones at the top of Figure One cannot be created.
They can be recognized, and they can change as more fundamental needs
are solved, but they cannot be created. Need drives Innovation and
Innovation drives Technology.
Innovations are Interconnected: Innovation is not a
mystical creative process, explains Edward de Bono in Serious
Creativity. It is a learnable, repeatable process. Great minds
and great companies can
learn to 'see the connections', provided they don't narrow their scan
(across time and across different disciplines of business and thought)
too much. Here's a great example of how broad scanning engenders
innovation, an example which also shows how many innovations exist in
nature awaiting our discovery, if we don't destroy them
first:: Scientists have recently discovered that butterfly wings
contain
no pigment. They are covered by overlapping 'tiles' 50 times thinner
than a human hair. Each tile contains multiple layers of cells,
separated by air gaps. When the light bounces off the tiles, the
layers
reflect colors with an iridescent sheen. There is a whole industry of
thin-film coatings, whose products are used in everything from
spacecraft hulls to anti-counterfeiting devices on paper currency,
that
may be revolutionized by application of this innovative colouring
technology.
Stories Transfer Knowledge:
If you want to teach, or
if you want to set up a killer database that everyone will contribute
to and use, make sure your subject-matter is stories. Distilling
stories
to 'lessons' destroys the essence of
their value by disabling the learner's ability to internalize, digest,
and learn from, the contextualized experience of the teacher.
Innovation Requires Discipline & Patience: The strange
fish-like
organism pictured in Figure Two is the process by which almost all
successful ideas are commercialized. It is a journey that, even for
most great ideas, is rarely completed. It is essential to have the
discipline, patience, and courage to follow this process
rigorously.Without such rigour, a great idea can easily be buried by
premature skepticism, unscientific criticism, dangerous complacency
and
fear of risk. The process works.
(Next
Tuesday: Part Two:
Innovation & Society, and The Structure & Culture of
Innovative
Organizations (with six additional Innovation Principles to add to the
eight above); The Following Tuesday: Part Three: A 15-step
Prescription
for an Innovative Organization, with some examples.)
AVOIDING THE LANDMINES IN ENTREPRENEURIAL BUSINESS
Today, the average North
American entrepreneurial business lasts just four years, the average
sole proprietorship even less. Yet entrepreneurship is not rocket
science; it's nothing more (or less) than making a living for yourself
with your business partners, instead of depending on some indifferent
corporation to provide you with a living wage. Running a business is
certainly no more difficult than raising a family, or landing a job
and
building a career with a big company. The essentials of
entrepreneurship could easily be taught in every school, and there'd
still be plenty of time left for the rest of the school curriculum.
But, perhaps because big corporations and the governments they control
want the 'labour force' to be meek, subservient, fearful and insecure,
most people have come to perceive entrepreneurship as a complex and
difficult art, fraught with danger, unprofitable, emotionally
scarring,
and demanding of enormous courage and energy. "It's certainly not for
everyone", I keep hearing.
Entrepreneurship requires self-knowledge of what you're happy doing,
what
you're especially good at,
how much you're willing to put into your enterprise and what you
expect
to get out of it. Without this self-knowledge, you're likely to be as
miserable in your own business as working for some unappreciative
boss,
and that unhappiness will bear directly on its success. Beyond that,
all you need are common sense, self-confidence, and a modicum of four
key, learnable skills:
creativity (the ability to discover and apply new
ideas),
communication (written and oral),
information processing (the ability to distil,
analyze and interpret it), and
Then it's simply a matter of learning and following the process that
every entrepreneur has learned by trial and error, to set up and
operate your own business successfully, on your own terms, and
actually
have fun doing it.
One of the 15 steps in the process of establishing and running an
enterprise is avoiding the
landmines.
In MBA school they now call this Risk Management. This article
identifies ten of the major landmines for entrepreneurs, using some
real-life examples. I don't believe any of the enterprises described
below is still in business (though some of the entrepreneurs have
moved
on, learned their lesson, and succeeded in other businesses):
Copycat businesses: Thirty years ago I did some
financial consulting for a small start-up cruise
ship operation. They acquired and
completely renovated a ship, which was lovely, got the licenses,
hired the appropriate staff, set up the business systems, and then
waited for the customers to roll in. After all, the competing
operations on the same run were all fully booked. But this operation
was an unknown quantity, and before they realized that just being
similar to a successful and busy business wasn't enough to succeed,
they sailed off into the sunset, empty. Franchisees beware.
Over-estimating the market:
Consultants love to sell you spreadsheets that will 'forecast' your
income and cash flow. An inventor friend of mine used one of these to
persuade himself to produce and sell a new organic nutritional
supplement he had developed. His research showed that the annual sales
of this type of product North America-wide was $X billion. The
spreadsheet encouraged him to plug this number in, along with his
estimate of what share of this market he could capture over three
years. Needless to say, he never sold anywhere close to this amount of
product, because that's not how you go about forecasting sales.
Being too far ahead of or behind the market: A
client of mine bought the North American rights to a new technology
that would extrude a rugged, colour-fast plastic that could be used in
decking, fencing, and other outdoor applications. He spent a fortune
setting up the manufacturing plant. Problem is, he did this in the
1980s, when plastics were distrusted as 'cheap', wood was
cheap, and creosote in pressure-treated lumber was not yet known to be
a carcinogen. Being 10-15 years ahead of the market cost him his life
savings.
Biting off too much:
A company that I was brought in to help liquidate had been doubling
its
sales and employee headcount every nine months. They were providing
turnkey computer networking equipment and installations to mid-size
companies, and had recently moved upscale to large corporations,
school
boards and government departments. As its receivables and inventories
soared, it started paying more money for qualified talent, and its
suppliers and bank both put it on short leash. Finally, despite record
monthly sales, it simply ran out of cash. The owner turned down two
very opportunistic 'investors', who wanted control of the business in
return for working capital, and the bank pulled the plug.
Not listening to the customer, or offering a solution in search
of a problem:
A lot of entrepreneurs are inventors, scientists, artists, artisans,
administrators, teachers or managers. Sales is not their forte, and
they're more comfortable working with ideas, materials, plans or
systems than with those pesky people called customers.
If you're not at home spending a lot of face time with customers,
better partner with someone who is. If you want to see what happens if
you don't, just browse any of the free software sites on the Web and
see how many downloads most of them have. Some of them are quite
intriguing, but because they don't meet a customer need, they'll never
be more than that. Great prescription for a hobby, deadly for a
business.
Not consulting with or listening to the right advisors:
A client of our firm in the early 1990s, a company which had been in
the commercial printing business for 80 years, brought us in for some
technology and corporate finance consulting. As we learned about the
business it became obvious, first, that they could not afford the new
equipment they proposed to buy, and secondly, that their profit
margins
were going through the floor. They had built their reputation on high
quality printing work, but the market was no longer willing to pay for
it. The new equipment would allow them to automate and eliminate some
labour costs (and keep up with newer competitors with no sunk costs),
but the cost of the new equipment would exceed the savings. We advised
the company they needed to find some new markets, new higher-margin
products, and new customers who would pay more for their quality work,
or else drastically cut costs. They were convinced their customers
would stay loyal, and the market for quality printing would rebound.
They didn't, and the company shut its doors two years later.
Blowing the budget:
As most women will tell you (but many men seem unable to fathom),
budgeting is simply a matter of ensuring that the cash going out
doesn't exceed the cash coming in. The problem is, every start up
costs
more -- sometimes two or three times more -- than initially expected.
It takes enormous self-discipline, patience, pacing, and sometimes
financial creativity, to mete out dollars at a rate that will ensure
there is enough cash to launch the business under the worst case scenario. I
know of a dozen businesses that closed before they opened because they
failed to do so, and others that lost control of their business
unwillingly because that was the price for a late cash infusion. 'Risk
Capital' might be more accurately called 'Heartbreak Capital' -- it is
obscenely expensive.
Groupthink:
Back in the 1970s I was appointed Deputy Receiver for a computer and
peripherals distributor. They had been put on 'close watch' by the
bank, and I had to get authorization for, and sign, every cheque.
While
I was there I attended and took notes at management meetings. I was
assailed at each meeting when I presented my factual reports on profit
and cash flow. I was nicknamed The Undertaker for my 'relentless
pessimism', and almost physically ejected when I questioned the
validity of some unsupported fees that had been paid by the much-loved
CFO, who was on leave of absence looking after a very sick relative.
The six-man management team, intact since the start of the company and
each heavily personally invested in the company, used to come out of
their meetings with cheers and high fives, confident, contrary to all
logic, that the company was poised for turnaround and sales 'in the
pipeline' would soon bring a return to happy days. They would feed off each others' boundless
optimism. They just needed to work
harder. Happier
days never came, and the CFO, it turns out, had defrauded the company
to pay for his relative's substantial medical bills.
Litigation:
A small biotech company whose CEO I met at a conference a few years
ago
was bemoaning the huge cost of registering and defending patents. He
said they had been forced to sell off one promising product to a
competitor in order to pay their legal bills to defend their other
intellectual capital. That had slowed them down to the point they now
feared that another competitor would beat them to market, rendering
the
results of the litigation largely moot. Big companies can afford
armies
of expensive lawyers. For small companies, significant litigation can
spell disaster. The competitive advantage of the entrepreneur is
agility -- when products get mired in legal wrangles, it may be better
to cut bait and move on to other ventures than to fight adversaries
with much deeper pockets in court.
Buying the MBA hype:
Graduates of business school are taught how to be middle managers of
large enterprises. Unfortunately, that knowledge often don't translate
well to entrepreneurial businesses. A client of mine brought in a
young, very successful MBA grad (he had his own daily spot on one of
the local radio stations), who had, it appeared, no experience at all
with entrepreneurial business. The company, which was modestly
profitable, bought the young man's well-delivered 'grow or die'
message
and decided to 'go upscale'. They spent a small fortune on
advertising,
and set up a sales office and warehouse in another country.
Unfortunately, the media in which the ads appeared were not the ones
used by the company's customers, and there was not enough money to
properly penetrate the foreign market. The expenses produced almost no
growth and almost sank the company. They salvaged the situation, and
their business, by finding an enterprising competitor in the foreign
country who took over the hemorrhaging 'branch plant', and then
striking a reciprocal marketing alliance with them.
Many entrepreneurs I know feel very lonely, exposed, and helpless. The
big consulting firms aren't interested in them until they grow bigger
or go public. The smaller firms are selling one or two specific
products, and rarely have entrepreneurial skills to share. And these
suppliers are expensive. The government is cheaper, but with a few
notable exceptions they aren't very helpful either. As a result, many
entrepreneurs have formed their own 'support groups', helping each other
to avoid the landmines, and learning from each other's experiences and
failures. Retired entrepreneurs are another good source of advice, and
a quarterly business breakfast with a trusted entrepreneur or advisor
with some experience in the trenches can be an excellent investment.
These breakfasts don't need an agenda -- they're run as an informal
'interview', with the advisor asking pertinent, open-ended questions
and listening and offering counsel and options and ideas. They are a
critical element of what my new business, The Caring Enterprise Coach,
offers.
Another technique entrepreneurs can employ to alert themselves to
potential landmines is establishing an Advisory Board made up of
people
who have well-rounded business experience, knowledge of markets, and
skills the entrepreneur and his partners lack. Such Advisory Boards
are
often reciprocal, offering mutual support and advice in lieu of fees.
I
am constantly surprised how few entrepreneurs use such 'support
groups', relying instead on their own instincts, the counsel of
inexperienced and costly 'professional advisors', and others (bankers,
customers, franchisors, and various 'agencies') who have only a
nominal, and purely financial, interest in the entrepreneur's success.
Some 'support groups' and networks have been set up as money-making
ventures, but these tend to be unwieldy and their members terribly
needy -- ten people looking for advice and new customers for every one
capable of offering useful information or counsel in return. It's best
to create your own.
The problem, of course, is that most entrepreneurs are paradoxically
too busy fighting fires and avoiding landmines, to be able to invest
time finding and networking with support groups and other valuable
advisors who can help them avoid the next round of fires and landmines. But, despite the
failings of the first generation Social Networking tools, such
tools hold enormous promise. Although Shoshana Zuboff coined the term
The Support Economy
to refer to federations of businesses working together to support
their
shared customers, the first true Support Economy may well be
entrepreneurs supporting each other.
Four
years ago I wrote a well-received paper entitled A Prescription for Business Innovation:
Creating
Technologies that Solve Basic Human Needs. I've updated it,
broken it into three manageable pieces, and present the second part
below. The first part, which reviewed the history of human innovation
and technology, is here
and the third part will follow next Tuesday.
Four:
Innovation & Society: How Technologies Limit Freedom, Human Nature
Confounds Innovation, and Consumer Decision Tools Doom
Marketing
Those
of you with HR backgrounds are probably wondering why I have not
spoken
about non-individual, community aspects of civilization and why and
how
these arose if the innovative individual is perfectly able to do it
all
him- or herself. These issues are relevant because of the role of
teams, organizations and other social constructs in the process of
innovation.
Let's take another look at our proto-human, now equipped with the six
basic types of manually powered machine (lever, wheel, screw, pulley,
plane, and wedge -- the latter in the form of flint-head arrows), plus
other early innovations like controlled fire, animal domestication and
crop cultivation. Like other creatures he's adopted the family unit as
a social convention, but now he's experimenting with a more
sophisticated social construct, the tribe.
Question is, why? Is it Darwinian -- Did humans that banded together
have a higher likelihood of survival than loners? Or is it purely
social -- Do humans, like other creatures, have a basic need for
social
contact with others that goes beyond family? Whichever it is -- a
survival need or a social need, it required innovations to make it
work, innovations like a code of laws and behaviours to prevent and
resolve disputes between individuals, and shared language.
At this point, in the view of some anthropologists, a tug-of-war began
between our essential individual, autonomous nature and the perceived
benefits of increasingly advanced, abstract and restrictive
'technologies' like division of labour, specialization, private and
communal property, governments and other hierarchical social
organizations, including the modern corporation. All these
social
'technologies' limit individuals' freedom, and much of our
civilization
has been about trying to find a delicate balance between individual
'rights' and the apparent benefits afforded by technologies that
compromise them. This tug-of-war continues to play out today, in our
suspicion of government, the existence of 'militias', libertarian
movements, evolution of privacy laws, and struggles over property
ownership. The battle is far from over, with slavery, one particularly
extreme social construct favouring hierarchical efficiency over
individual liberty, still practiced in many countries, and women,
children and animals treated as property with no rights or freedoms
whatsoever in many others.
This tension also plays out in the modern corporation, itself a feudal
social construct which is neither egalitarian nor democratic.
Corporate
efficiencies have produced technologies that have massively improved
material wealth and (most believe) quality of life in the few
centuries
since they were invented. But these advantages have come with a huge
cost of personal freedom -- In many countries employees are virtual
slaves of their employers, with no hope of realizing their full
personal potential. In many companies promotion and remuneration have
nothing to do with performance or competency.
Here are some of the consequences for innovation of this
individual/collective tension, in today's companies:
Employees hoard rather than sharing knowledge, including
knowledge that could yield innovation, to protect their position and
rank in the company
Employees rarely volunteer new ideas,
fearing ridicule,
retribution, being ignored, or having credit for the idea stolen by
their boss if it succeeds
Managers safely and instinctively
squelch innovative 'crazy ideas' of subordinates
Managers,
fearing the wrath of shareholders (today's
'absentee owners'), are risk averse, preferring to buy ideas once they
have been successfully developed by others, over incubating the
company's own ideas, even though the latter is cheaper and more
effective
Employees compete for credit rather than sharing
it
Employees, since they are rated on their individual
performance, consider teamwork and collaborative activities less
important than individual, solitary ones
Managers
instinctively delegate tasks in a project to
individuals rather than teams (since it's easier that way to place
blame if something goes wrong), and individuals usually prefer being
given individual rather than team assignments as well
If people are social by nature, why are corporations so unable to tap
into this to leverage the power of teams to enhance innovation? The
answer may be simple. In The Hidden
Life of Dogs,
author Elizabeth Marshall Thomas explains that most animals have an
inherent desire to socialize with their peers, that seems totally
unrelated to survival needs. In fact, dogs that wander from homes
where
they are well-fed and cared for appear to be looking for social
contact
with other dogs for its own sake, just as children like to hang out
with others doing things they can do just as effectively alone. At the
same time, both dogs and children often become extremely jealous,
competitive, possessive and unsociable when these same fellow
creatures
impose on their personal 'territory': family, toys, food bowl, and
members of the opposite sex.
Perhaps this is a universal trait that we need to consider when
designing innovation programs: Everyone loves to engage in social
activities that are fun, challenging and unthreatening, but when the
social activity impinges on individual 'territory' or property, or on
scarce resources, social and collaborative behaviour ceases and
confrontational, competitive behaviour takes over.
But isn't competitive behaviour exactly what business thrives on?
Doesn't the rush of adrenaline and testosterone in the quest for
competitive advantage and 'winning' yield high productivity, sharpened
customer focus, and more new ideas?
I would argue that competition is at best a neutral factor in
engendering innovation, and may in fact be detrimental. Most of the
books on teamwork, such as The
Wisdom of Teams, stress two essential preconditions to
effective team behaviour:
A specific, defined problem agreed to and shared by all
team-members, and
A sense of urgency that imposes a short-term
deadline that the team-members can work towards
There are other factors that affect a team's success, of course, such
as the competencies and access to knowledge of the team members, and
the effectiveness of the processes by which the team works. What is
important here is that nowhere is a competitive threat, competitive
challenge or competition of any kind considered essential to team
effectiveness. Even in sports, the best teams focus on what they do
well (the attributes of their team's excellence) and the achievement
of
specific objectives (like scoring points) rather than being distracted
by competing with the other team, 'winning' and exploiting the other
team's weaknesses. Good teams usually take solace in having played
well
even in a losing cause, and are alarmed when they play badly but still
manage to win. In fact, a major competitive tactic in business is to
force one's competitors to shift their focus to your agenda, to take
their eye off their team's goal to instead compete with you.
Furthermore, many businesses are now reaching out to involve
customers,
alliance partners and even competitors in their problem-solving teams,
because they help bring different points of view to the creative
process, and because these external partners share both the defined
problem and the sense of urgency with the internal team. In a world of
accelerating change, no competitive advantage is sustainable --
innovations and new technologies can almost instantly reinvent
industries, products, services, and offerings, and eliminate any
competitive advantage the old ones may have had. Despite massive and
sustained oligopolistic efforts to prevent it, customers are beginning
to wrest absolute control of business direction and success from
almost
every industry's producers, management strategists and marketers, and
now set the agenda and reward companies that respond to their
needs and build new serving capability, not those that bash the
competition, sue their customers, or create barriers to competitive
offerings. The Bush regime's corporatist agenda has been only a
temporary setback in this inexorable trend.
A side-note about branding: Many marketing people, lamenting over the
passage of market control from producer to consumer, cite the
increasing importance of branding as an organizational strategy, and
of
brand loyalty as a success factor. For this reason, they argue,
aggressive, proactive marketing is not dead. They fail to appreciate
that consumers, faced with the severe scarcity of (a) time to assess
product alternatives and (b) objective comparative analysis like
Consumer Reports, tend to use 'brand' as an unsatisfactory surrogate
decision-making tool. If you as a consumer want to buy a car, or
select
a television program to watch, the ideal decision-making process would be:
Find an analytical tool that identifies all of the
relevant
selection criteria, rates all of the available alternative products
against these criteria, and allows you to identify and 'weight' the
criteria that are important to you. This tool would 'remember' and
start with the criteria and weightings you used the last time you made
a similar decision.
Use the tool to generate a 'first cut'
list of alternatives
ranked by your personal criteria, and show the sensitivity of the
ranking to changes in your criteria weightings (some days you may like
to watch a thought-provoking program, and on others you may prefer
something light and funny; one year you may want a practical car, and
the next something sportier).
Find a tool that uses 'neural
network' technology to draw
upon your past choices for these and other products, correlate them
against the choices of other people whom you trust or who have a
history of making similar choices to yours, and generate a second list
of alternatives, ranked by the collective consensus of your peer
group.
This tool would 'learn' from past choices and from your evaluations of
them.
Integrate the two lists and use subjective overrides to
make your final selection.
In the case of a big-ticket selection like a car, you would probably
invest significant time in making the final decision. In a
small-ticket
selection like a television program, the final decision could be
greatly simplified or even fully automated, so your television would
automatically go to the highest-ranked program in the two lists, and
signal to you a 'score' showing the computed probability you will like
it (since your ultimate decision may be not to watch anything).
Tools like these exist today (Consumer Reports is an example of the
former; the Recommendations Lists of Amazon.com are an example of the
latter), but they are not yet very robust or reliable. In their
absence, brands and brand loyalty are the surrogates: 'I always buy
Chrysler products' or 'I usually watch CSI on Thursday nights' is your
brain's way of substituting brand for the more ideal tools noted
above.
Once these tools exist (and the Information Age is ripe for them),
product brands will simply become community-identification brands ('I
drive Chrysler products because they reflect who I am and I want
others
to see that and associate with me, or not, because of that
identification'). At this point, brand community-association becomes
merely one more selection criterion of the analytical tool. With the
advent of the near-perfect consumer information these tools provide,
traditional marketing has no remaining role, and the knowledge-driven
transition of power from producer to consumer is complete.
Five:
The Structure & Culture of Innovative Organizations: Business Gets
Feminine and Consumers Seize Power from Producers
It is now accepted wisdom that
the organization of the future must be flatter, more empowering, less
hierarchical and more networked, in order to be sufficiently agile and
responsive to the ever-more-powerful customer's needs. Much has been
written about organizational 'ecology' and the ability of communities
of practice to self-organize to solve identified common problems more
quickly and effectively than command-and-control driven organizational
structures. There is a growing awareness that self-organizing
communities operate best when their leadership uses what are usually
considered 'female' modes of operation rather than the traditional
'male' ones:
Decisions are made by democratic consensus rather than
by fiat
Persuasion and change occurs by engaging
decision-makers in
thought processes and finding shared mental models, rather than the
wielding of power and authority
Problem-solving teams select
(and when necessary, change) their own leader(s) rather than having
one imposed on them
Problem-solving teams form themselves,
drawing on
individuals' networks, and disband themselves when the problem has
been
solved, much the way the human body's immune system organizes itself
to
fight infection
Rather than formal permanent roles, positions,
and
'up-or-out' career paths, individuals move laterally from project to
project, wherever their skills and experiences are best suited, and
often wear multiple hats on simultaneously-running projects, rather
than having a single title
Rewards and remuneration are based
on the depth of
developed skills, experiences and networks, the things that have value
to the organization in the future, rather then on past performance
(which is rewarded with one-time bonuses at the completion of a
project) or on seniority or title
'Management' at the top is
replaced by 'Improvisational Strategizing' at the centre of the
organization
The real contention over this new organizational culture is whether it
is efficient enough to justify a new organizational structure to
support it, or whether instead some kind of balance between
hierarchical and autonomous structures is needed. Is it empowering, or
is it naïve, to believe that if an organization sets specific
strategies and goals and then 'gets out of the way', the employees
will
effectively figure out the best way to achieve them? Can the tools,
the
infrastructure of technologies, knowledge-bases and equipment, needed
to achieve organizational and project objectives, be left up to
project
teams to develop as needed and ad hoc, or must they be rationalized
and
inventoried and efficiently 'managed'? Who controls the purse-strings,
and approves allocation of budgets and resources for each project --
can project teams really do this themselves or do these resources also
need to be centrally 'managed'?
These issues are important to the future of business innovation. We
must decide whether an organization saddled with the structures and
controls of an old 'management' style can hope to be sufficiently
agile, responsive to customers, creative and focused on new product
development, to survive when that survival depends on strategic
improvisation and continuous innovation.
There are two huge and contradictory trends occurring in
organizational
structure today: globalization and fragmentation. Globalization is
occurring because small organizations cannot achieve the scale and
resource capacity needed to be viable, and fragmentation, the spinning
off and incubation of small, narrowly focused 'best of class'
companies, is occurring because large organizations are too unwieldy,
inefficient and inflexible to be innovative and respond to customers'
rapidly evolving needs. So we have today the worst of both worlds:
large, fat, unresponsive global companies and emaciated unscalable
small ones. Furthermore, because of today's concentration of money and
power in the hands of increasing global corporate giants, this system
is in disequilibrium, with dysfunctional non value-added consequences
such as these:
Once-innovative companies like Microsoft are being
besieged by antitrust authorities
Companies acquire other companies simply to break
them up and close them down
New start-ups are designed
expressly to be bought out before they actually produce
anything
Investment analysts claim that synergies from
corporate
acquisitions create new value, and that subsequent break-ups into more
focused and specialized companies also create value
Large
organizations are rewarded for cruelly exploiting
weak social and environmental laws in their subsidiary companies'
countries and simultaneously creating unemployment at home, when they
'offshore' production to those countries
The recent macro-economic review by Credit Suisse First Boston,
echoing
the prognostications voiced by many economists at recent economic
summits, foresees the evolution of today's corporate structures into
three new, prevailing types of enterprise, which could fix the above
dysfunctions (since different economists use different names for
these,
I've used my own):
Global Utilities: Large organizations that provide
world-class large-scale communication, asset management and
distribution infrastructure.
Producers: Small organizations
that assemble resources and
'build to spec' technologies, tools, products and offerings, for
entrepreneurs, project teams and consumers.
Innovators: Small
organizations that study human problems and needs and create, discover
and design solutions to them.
The Global Utilities would be either publicly owned or tightly
regulated, operated on a not-for-profit basis. They would be measured
on efficiency. The Producers and Innovators would be entrepreneurial
partnerships, very project focused. Producers would be measured on
agility, quality and customization, and Innovators on creativity,
quality and quality-of-life improvement. All three types of enterprise
would be measured additionally, of course, on customer satisfaction.
None would be hierarchical, and few would spend an entire career with
a
single organization. I have argued elsewhere that, in fact, with
today's technologies there is no need for any of us to have to work
more than a few hours a week to provide a high level of well-being for
everyone anyway -- the fact that we do work so unnecessarily hard and
long is a function of the sustained myths of our modern Western
culture
and the extravagant and unsustainable wastefulness of our
civilization.
Those with an entrepreneurial bent would form, or join, one or more
Producer or Innovator enterprises over their working life. Those with
a
productivity bent would gravitate towards the Global Utilities. Many
others would be self-employed, providing niche advisory services to
all
three types of enterprise.
You may think this is a very idealistic view of how 'organizations
should be reorganized', but it is also a very logical one, and one
that
could easily be achieved today because of growing dissatisfaction with
the dysfunctionality of today's organizational structures, and the
ability, thanks to the Internet and other powerful new 'organizing'
infrastructure technologies, to bring this 'reorganization of
organizations' about. Only a poverty of imagination, opposition from
elite vested interests, and the inequitable distribution of power and
resources, all of them well within human capability to rectify, are
preventing us from realizing this potentially liberating, perhaps even
Earth-saving, reorganization. In fact, this customer-driven revolution
is already happening, quickly, quietly, and non-violently, its first
manifestation being what Shoshana Zuboff in her best-seller calls
The Support Economy: Why Corporations Are Failing Individuals
and The Next Episode of Capitalism.
The advent of a New Economy, with Innovators focused intently and
exclusively on solving real human needs and problems (and not on the
hyper-marketed, artificial incrementalism and 'copycat' and 'sequel'
new product development that today's risk-averse oligopolies have our
most creative minds fruitlessly working on) offers the potential of
astounding acceleration of innovation and resolution of seemingly
intractable human problems: pollution, over-population, unemployment,
inequality, human and animal suffering, disease prevention, war and
cruelty, biodegradation, mental illness. Some would say it's not a
moment too soon.
What does all this mean for today's company looking to jump-start its
innovation programs and processes, and today's individual looking to
participate in making his or her own, or his or her employer's,
enterprise more innovative? From the discussion above we can add six
principles of innovation strategy to the eight principles developed
earlier:
Hierarchy and Autocracy are the Enemies of Innovation:
There is a strong creative tension between individuals and the
communities they elect to or are asked to be part of, caused by
divergent needs, drivers, and behaviours. Each individual and each
community needs its own space. Flat, small, responsive, democratic
organizations are inherently more innovative.
Innovation Needs an Urgent Problem:
True innovation only occurs where there is consensus that there is an
important problem to solve and a sense of urgency to solve
it.
Cooperation is Replacing Competition:
Competition is now dysfunctional, a vestige of earlier times of
resource scarcity, and cooperation is now essential to effective
innovation.
The Customer Rules:
The customer is now king and needs only better decision making tools
to
become the sole driver of economic activity, rendering obsolete the
need for marketing, branding, and other producer-driven mechanisms of
influencing customer actions.
Female Organizational Style is More Innovative Than
Male:
As shown in the table below, organizational structures, processes and
behaviours more commonly associated with businesses run by women are
gaining traction in the New Economy, and that bodes well for
innovation.
The Emerging New Economy Will Accelerate Innovation:
Despite the current waves of globalization, corporatism and increased
concentration of wealth and power, the Internet and other new
technologies will inexorably break the strangle-hold of riak-averse
oligopolies and unleash a new age of astonishing innovation.
Attribute
Female Organization
Male Organization
Organizational
Structure
Networked
Hierarchical
Decision-Making
Process
Consensual
Command-and-Control
Team Operation
Process
Self-Selected,
Self-Directed
Appointed, Managed
Leadership Selection
Process
Self-Selected
Imposed
Leadership Style
Unassuming,
Demonstrative, Responsive
Dictatorial,
Self-Aggrandizing, Condescending
Employment Model
Project to Project
Up or Out
What Gets Rewarded
Potential Value of
Skills, Experiences, Relationships
Past Performance
Who Makes Enterprise
Decisions
Small, Improvisational
'Centre'
Disconnected 'Top'
Key Advantage
Flexible
Efficient
Attributes of 'Female' versus
'Male' Organization Structures
(Adapted from Imperato &
Harari, 'Jumping the Curve')
So now we have fourteen principles to guide us in creating innovative
organizations.
Next Tuesday: In the final
part
of this paper, a prescription that draws on these principles, that
organizations can use to evolve themselves into innovative companies.
It will also explain the new 8-step Innovation Process diagram at the
top of this post.
A PRESCRIPTION FOR BUSINESS INNOVATION - PART THREE
Four
years ago I wrote a well-received paper entitled A Prescription for Business Innovation:
Creating
Technologies that Solve Basic Human Needs. I've updated it,
broken it into three manageable pieces, and present the third part
below. The first part, which reviewed the history of human innovation
and technology, is here,
the second part, which described the current environment for
innovation, is here.
Six:
Prescription for an
Innovative Organization
The
first four years of the century have seen some serious setbacks in
business innovation. The corporatist-backed Bush administration has
introduced legislation to reduce corporate liability to consumers, and
has been extremely lax in enforcing social and environmental laws.
Organizations like the RIAA and Nike have showed that the courts will
allow large corporations great latitude to sue customers (including
infringing on their privacy rights) and to lie to customers in their
advertising (about sweatshop operations, offshoring etc.) Corporations
like Enron have abused public trust and destroyed thousands of
families' livelihoods and life savings. And massive defense and
security expenditures have siphoned off funds that might have been
invested in innovation, and have made corporations and lenders nervous
about any investment while governments and corporations are so
seriously overextended and exposed to interest rate fluctuations. The
result is a climate of great animosity between corporations and
customers, and unprecedented risk aversion.
At the same time, recent surveys indicate a growing corporate
awareness
that "you cannot cut (or offshore) your way to greatness", that the
limit to improving profitability by reducing costs and margins has now
more or less been reached, and that innovation must again move to the
forefront if corporations are to have any hope of sustaining that
profitability.
So corporations are looking for low-cost, effective ways to develop
new
products, new processes, new delivery channels and new technologies
that will meet important human needs, provide real value to customers,
and be affordable by those customers. This challenge occurs at a time
when the distribution of wealth among customers is massively skewed,
both within and between nations, towards a tiny elite, when many
governments and most corporations and individuals are buried under a
crushing debt load, and when the need for innovation to solve critical
environmental, social and political problems has never been higher.
Simply put, we are living in an age when we cannot afford innovation,
and cannot afford to be without it. Perhaps
the most critical innovation need therefore is for creative mechanisms
to finance, price and pay for the costs of innovation itself.
Funding, pricing, and cost management are now inseparable parts of the
innovation process.
The prescription I propose draws on a wide variety of innovation
processes that have been advanced by thought leaders on the subject,
especially during the 1990s when the appetite for investment in
innovation peaked, including Peter Drucker's, Cap Gemini's, Credit
Suisse's, Gary Hamel's, and others listed in the bibliography below.
This prescription draws as well from several innovation processes that
I am personally aware of from my years working with Ernst & Young
and its clients, and some lessons from how nature, which has been
innovating since long before we appeared on the planet, goes about it.
This prescription has eighteen steps in eight stages illustrated in
the chart above: Listen,
Understand, Organize, Create, Experiment, Listen
Again, Design, and
Implement. The three
stages shown in blue -- Understanding, Organizing and Implementing --
are analytical
processes, well-suited to the left-brained deductive thinkers who
predominate in most organizations. The three stages shown in green --
Creating, Experimenting, and Designing -- are creative
processes, better suited to right-brained inductive thinkers who are
relatively scarce in most organizations. The two Listening stages
shown
in red are communication
processes, that need to involve customers and other stakeholders, and
everyone in the organization involved in the innovation process.
Assigning (or contracting) the right people for each stage in the
process is essential to its effectiveness, and to its affordability.
If
it's done well, it can draw on the strengths of everyone inside and
outside the organization who has a stake in a successful innovation
effort.
Here are the eighteen steps. They are in reasonably sequential order,
but are somewhat recursive: For example, as part of creating
alternative solutions (step 12) it may be necessary to go back and
scan
for some additional ideas (step 1). Who
should do each step depends to some extent on the industry and size of
your organization: Large organizations may benefit from having a
dedicated Innovation Team responsible for this, while in a very small
organization it may be a scheduled part-time task of the whole
management team, drawing as well on the diverse backgrounds and ideas
of an informal Advisory Board.
Listen
1. Listen
broadly for ideas: Appoint your Innovation Team and have them
set up an 'environmental scan' that systematically looks for
innovations and
connections not only in your industry but also outside it, outside
your country, outside of
business entirely. Have the Team read about, learn about,
and meet with people from the broadest possible spectrum of human
enterprise and natural discovery. Subscribe to journals like
Innovation, and the RSS
feeds of periodicals and websites that report ideas and new
technologies from a wide range of
disciplines. Reward members of the Team for serendipitous readings and
meetings, debrief with them promptly and regularly, filter, refine and
inventory their ideas and learnings for consideration at the Understand, Create and Design stages of the innovation process. Inputs: readings, newsfeeds,
conferences, interviews, meetings. Outputs:
a manageable inventory of ideas and insights (categorized and
contextualized appropriately so that they can be simply understood and
practically applied).
2. Listen to
'pathfinder' customers, competitors, and colleagues: Plug
yourself in to the 'voice of the customer'. Set a
minimum time quota for everyone
in your organization to spend
face-to-face with business customers, or with customers' customers or
end consumers. Identify 'pathfinder' customers -- those who are
most
attuned to their organization's future direction and its need to
change. Employ a 'Think the Customer Ahead' program that engenders
effective listening, elicitation skills, story-telling skills, and
creative
thinking skills , a capacity explained in Imparato & Harari's book
Jumping the Curve. Often the
customer isn't able to articulate his or her needs in a way
that lends itself to quick technology solution development. Listening
to the customer is an iterative process, that entails learning about
the customer's business, understanding the things that keep them
awake at night, suggesting a lot of 'what if's', proffering
opportunities, points-of-view and
possibilities, not just asking baldly about needs and offering
off-the-shelf solutions. Connect with customers indirectly as well,
using all the media at your disposal -- phone surveys, e-mail, website
surveys, customer satisfaction surveys (with lots of open-ended
questions), self-diagnostic tools, videoconferences, etc., to capture
as much information as you can about your customers, their customers,
and their markets. Inputs:
conversations, interviews, surveys. Outputs: needs, ideas, stories, industry future state
visions, five-forces and SWOT analyses.
3. Listen to
the front lines:
Talk with the people who hear directly from customers and other
stakeholders every day -- people in sales, customer service, even
delivery and reception staff. Ask them what they're hearing, and what
they
think most needs improvement or rethinking. Create 'space' -- physical
and electronic -- where everyone in the organization can surface,
discuss and advance problems, needs and ideas collaboratively. Let
anyone 'subscribe' to the inventory of news and ideas created in step
1
above. Consider maintaining a running list of the company's Top 10
Challenges to encourage focus and creative thought from everyone in
the
organization. Make sure top-level executive sponsorship for innovation
is visible to everyone on the front lines. Give people time off
their
'regular work' to focus on organized innovation projects, and tools
and
process guidance to use that time effectively. Reward front-line
people
for new product and other innovative ideas that they surface from
their
conversations with customers and others. Inputs: conversations, idea & collaboration
spaces, interviews. Outputs:
needs, ideas, stories.
Understand
4. Understand
who your actual and potential customers are: Study companies
like The Body Shop
that know their customers, their needs, their buying preferences and
criteria intimately. These are companies that spend a lot of face time
with customers and have rigorous processes in place to capture what
they learn, probe what they need, and explore the potential market for
new innovations. And identify and get out and meet with potential customers as well, to
understand why they're not already
customers and what could change that. And then have your Innovation
Team cast a wider net and ask who might be customers that are
currently
not served by either your company or your competitors. Learn the
lessons of Christensen's The
Innovator's Dilemmaand The Innovator's Solution
-- how disruptive innovations can (sometimes inadvertently) transform
whole industries, and how that presents your company with both threats
and opportunities that could completely change the profile or even
definition of your customers. Inputs/Outputs:
list of actual and potential customers and what they currently buy,
could be buying, and will and won't be buying in the future, and
why.
5. Understand
and respect what end-consumers want and need: and based on
that 6. Understand
what immediate customers will need:
Start with the end-consumer of your products and services, and the
end-consumer of the products of your immediate customers. Their buying
patterns, needs and preferences will determine the success of your
customers, and that will in turn determine their
buying patterns, needs and preferences. The end-consumer has the
ultimate power, and, unlike corporations', their buying decisions are
based on broader and more subjective criteria than business need and
affordability. They buy things they want,
not just things they need. If you sell to the auto industry, you need
to understand why consumers, against all logic, buy SUVs. And if your
company is making money from sweatshop labour or old growth forests,
better come clean now. Business needs to end its abusive relationship
with consumers -- overcharging them, misleading them, suing them, and
selling them inferior, imported merchandise and services. Once
consumers realize their true marketplace power, they will get back at
adversarial suppliers with a vengeance. Business needs to respect
them,
respond to them, and be responsible members of the communities in
which
they operate. The Reputation Economy isn't here yet, but it's coming.
If you cause consumers to dislike you or distrust you, you'll soon be
dead. Inputs/Outputs:
current state analysis and future state vision of wants and needs for
both current and future immediate customers, and end-consumers, and a
resultant future state vision and emerging needs profile for your
industry.
7. Understand
why these wants and needs aren't already met:
Here's the hard part. Things are usually the way they are for a
reason.
You know there are wants and needs that aren't being met. The
challenge
is not to throw in the towel when you find out why. The technology
doesn't exist? The solution would be very costly or risky to develop?
The solution is not affordable to customers? The solution is too
radical for customers to accept or too complex for them to understand?
The organization currently lacks the capacity or competencies to
produce the solution? That's what innovation is about. Take up the
challenge with your eyes open about what must be overcome, but take up
the challenge. If it was easy someone else would have already done it.
Inputs/Outputs: list of
challenges.
Organize
8. Organize
those with a stake in solving the problem:
Now you know what needs to be done, the next step is to organize the
troops. Who can help solve the problem, assess the alternatives,
provide the needed resources? Outputs:
project team member list, including 'pathfinder' customers and other
outsiders. (Note that the project team is responsible for solving a
specific problem or need, while the Innovation Team has oversight over
the entire innovation effort of the organization -- they aren't the
same group).
9. Organize
the program for solving the problem:
There are a lot of techniques and methods that you can use to break
through a problem and come up with solutions. The bibliography below
is
replete with them. In my experience, creative minds need a very broad
framework (schedule, budget, high-level process) and a lot of freedom
to figure out how to solve the problem within that framework.
Self-organizing, self-managed innovation project teams seem to work
well in some organizations but not in others. If you insist on
imposing
more discipline on the process, more hoops to jump through, control
points and early-stage go/no-go filters, make sure the people you're
imposing it on see the value in these constraints, and that they don't
squeeze the boldest and potentially most successful ideas out in the
process. Outputs: project
schedule, budget, program.
10. Organize
the resources needed to solve the problem:
The project team needs sufficient tools and knowledge to be able to
understand the problem, the customer need, and the variables that
could
impact the potential solutions. Inputs: all the Outputs from steps 1-7 above,
redrafted into a cogent and digestible form.
Create
11. Create an
environment and capability for innovation:
Give the Innovation Team and the project teams permission to fail, and
teach them how to fail early and inexpensively. Prevent executives
from
pushing their 'pet' projects to the detriment of others. Don't let the
'black hats' deep-six good, hairy, audacious ideas prematurely, and
ensure that 'black hat' behaviours are not rewarded by senior
management. Help the team avoid slipping into excessive caution or
incrementalism. Keep the marketing group from unduly influencing the
process with antiquated ideas for 'creating market demand' and
launching products with press releases and self-serving promotional
and
advertising campaigns -- In the emerging customer-driven market these
techniques will no longer make a mediocre product a success. Provide
rewards and incentives for team members, and for other contributors to
the innovation effort. Don't tolerate hoarding of ideas and knowledge,
or inter-department 'charges' that block knowledge transfer and
cross-functional collaboration. Share credit for good ideas and
successes, and don't make innovation an area of internal competition.
Help bright, creative, quiet people find their voice, and let people
promote 'crazy' ideas without fear of ridicule. Teach the Innovation
Team and the project teams (and others in the organization who show
interest) techniques that will enhance their creativity and improve
the
innovation process, and give them time and resources to discover other
techniques and try them out. Invest adequate, patient capital and
resources for innovation. Give ideas sufficient time to find their
market but don't throw good money after
bad, no matter how well-intentioned. Understand sunk costs and learn
from failures. Consider letting those involved in the innovation
'invest' personally in return for a share of the ultimate revenues or
profits: Having some 'skin in the game'
can be very motivating and empowering. Inputs: time, training, tools, space, sponsorship,
leadership and resources. Outputs: people who are inspired, capable and
encouraged to contribute productively to the innovation effort.
12. Create
lots of alternative solutions:
Don't put everything at risk on one option. Use scenario planning and
other techniques to identify and assess alternatives. Don't reject the
really far-out alternatives prematurely -- cost/risk/benefit decisions
usually can't be properly made until the customers have had the chance
to say their piece again in step 15 below. Outputs: alternative solutions.
Experiment
13.
Experiment: Try many things, learn fast from failures, tinker,
iterate, combine, transfer:
Try several alternatives simultaneously in different markets to speed
up the assessment process. Use rapid prototyping and other iteration
techniques to expose as many alternatives to the market as possible.
Outputs: test results.
Listen Again
14. Listen to
potential customers and help them imagine:
Use prototypes and stories to make the innovative product, service,
channel or technology as concrete as possible. Beware customers'
propensity to say 'yes' at this stage when there's no required
commitment. Go back to what you learned from customers in steps 1-7
and
recite what you heard back to the customers for confirmation,
explaining how the innovation addresses the need articulated by the
customers. Listen objectively for confirmation or dissonance. Outputs: customer evaluations
15. Listen to
acceptance criteria -- the ‘if’s:
If the product appears to meet the need, the next task is to assess
the
customers' buying criteria: price and affordability, convenience,
options, delivery time, upgradability etc. Some of these criteria may
be show-stoppers that will require re-invention or other creative
brainstorming, while others may be able to be addressed in the design
stage below. Outputs:
customer buying criteria
16. Listen to
‘what could go wrong’:
Here's where you let the 'black hats' say their piece: What
competitive
threats exist or could arise? Is the innovation vulnerable to
disruptive innovation from unexpected sources? Are there unforeseen
production, quality control, political, regulatory, financial,
marketing, or servicing landmines? What's the shelf-life? Could it
become a commodity prematurely? Will it be prohibitively expensive to
produce or to buy? Will it cannibalize existing product sales? Is it a
strategic fit for the organization? Some of these 'what could go
wrongs' may require re-invention or other creative resolution by the
project team, while others may be able to be addressed in the design
stage below. Outputs: list of
threats and risks, and resolution plan.
Design
17. Design:
consider customer-valued attributes, cost, intuitive ease of use, ease
of change, ease of enhancement:
The greatest idea in the world can still be torpedoed by bad design.
The designer has to be told, in no uncertain terms, what attributes
are
important to the customer, how much at most the solution can cost, and
the trade-off between ease-of-use and power. Technology products
especially are often over-engineered because additional functions and
features are easy and inexpensive to add, but they add complexity
disproportionate to the benefits of the additional functionality,
often
to the point of turning off potential customers. And in this age of
constant upgrades and inter-operability requirements, the solution
must
be easy to change, redesign and enhance. Inputs: specifications based on Outputs from steps
12-16 above. Outputs:
completed designs.
Implement
18. Make the
final go/no-go decision, then implement:
If there are still several alternatives on the drawing board, whittle
them down to a manageable number. If necessary, send the idea back for
reinvention (step 11), re-testing (step 13) or redesign (step 17). If
the previous steps have been done properly, this step should be the
easiest. Once the decision has been made to go, the set-up,
production,
viral marketing, sales, distribution, employee and user training,
partnering, after-sales service, success measurement and continuous
improvement should be problem-free, since the 'what could go wrong'
possibilities have already been considered and addressed, and people
from all functional areas of the organization should have been
involved
and consulted during the Create and Design stages.
Seven:
Applying the Prescription: Some Examples
To
give you a flavour for how this prescription could work in practice,
here
are eight fundamental business problems from different industries, and
some innovations that have recently been (or are currently being)
successfully commercialized to solve them. In each case, the solution
shown could reasonably have been derived using the principles and
process in the prescription above:
Customer Problem
/ Need
Innovation /
Technology Solution
Car and computer buyers
can't get exactly what they want, and hate haggling with dealers.
Web sites let you design
your own car or computer, find the closest model to your design, find
the best price for that model, accept payment and deliver it to your
door. Some will even take a completely custom order.
Television watchers find
most fare awful, TV guides complicated, and VCRs even more
complicated.
The new TiVo technology
asks for and monitors your preferences, pulls e-schedules off the net
& satellites, and automatically records and indexes your preferred
shows, commercial-free, onto a hard drive.
Although newspapers are a
terrible waste of paper, and hard to read on the commuter train,
reading from a computer screen doesn't work either due to poor
legibility and awkwardness.
Two innovations are
converging on a solution to this: Erasable paper, which allows you to
print out each day's newspaper onto the same recycled pages; and
ultrathin large screens with memory, that allow you to read one page
at
a time on a crisp viewing device smaller than a paperback.
Clothing that gets torn
or stained is cheaper and easier to replace than repair.
A new organic clothing
technology has been developed, modelled after human skin, that heals
and itself. There is even a 'spray-on' version that can help burn
victims to heal without scarring.
Banks are facing 'spread'
squeezes, forcing them to generate new revenues from user service
charges instead of interest charges, but consumers hate service
charges
and see little value for money in them.
Progressive banks are
offering customers a 'menu' of alternative ways of 'subscribing' to
bank services, including variable rate (pay-per-use), fixed rate,
'frequent-flyer' rate (lower or no service charges for users who use
many of the bank's services), and free-if-you-handle-it-yourself
rates.
They are also offering a variety of new services that use the Internet
to ignore geography (offering mortgages and business loans on-line
worldwide) and exploit existing infrastructure and knowledge (e.g.
accounting and tax services, insurance, financial planning, credit
management).
Retailers are caught in a
squeeze between low-cost Power Centers and consumers' dissatisfaction
with (and cost of) the 'retail experience'.
Car companies have
invented the concept of 'try on' centers, where competitors share a
low-cost, do-it-yourself space where consumers can try out competing
models, and then place orders electronically that are delivered, to
their specs, from a low-cost warehouse to the consumer's home. Where
the 'retail experience' requires more than just try-outs, companies
like Home Depot have created value-add services like education (how-to
sessions) and adventure (rock climbing walls at some sporting goods
stores) that now draw customers more powerfully than their
products.
Audit firms have found
their 'product' commoditized and vilified by regulators for not
measuring what is now important to stakeholders.
A US University is
exploring whether 'fraud insurance' would be cheaper than audits and
just as satisfactory to stakeholders and regulators. Meanwhile, some
firms have invented a variety of new ways to measure the value of a
company, including EVA, Balanced Scorecards, and Social Responsibility
Reporting.
Many people are intrigued
with, and want, the benefits of computer and Internet technologies,
but
don't have the time or comfort with the technologies to use them.
High tech companies are
inventing computer and Internet 'appliances' that perform a single
task
automatically, simply and transparently e.g. refrigerator that sends a
message when items are out-of-stock, past their 'use before' date, or
too cold or too warm.
Conclusion
This presentation was itself the
result of addressing an unmet need: After reading
dozens of books on innovation, I was unable to find one source that
explained in clear terms what innovation is, in a business
context, conveyed the urgent need for businesses to become more
innovative, and provided an actionable prescription for doing so. This
paper was initially developed to provide the Core Innovation Team of
Ernst & Young with background on the history, current state and
leading practices in business innovation, and I am now using it to
develop part of a core curriculum on entrepreneurship, of which
innovation is a critical element.
I hope this analysis has
given you a better understanding of the subject and its importance,
and
some useful tools and ideas that you can use to make your organization
more innovative as well. I would welcome the opportunity to continue
the discussion on this subject, by e-mail or through the
comments thread below. You can find more of my writings on business
innovation in this index.
While I'm optimistic that this prescription will work within business
and other organizations, large and small, I am less convinced that it
will work to solve some of the more deep-seated human needs and
inexorable problems that plague us today, such as global warming,
pollution, the energy crisis, biodegradation, endemic war, violence,
mental illness and disease, animal cruelty, urban sprawl and decay,
crime, unemployment, and the inequitable distribution of resources,
income, wealth and power. While the process should work in principle,
it is unlikely that this process can be followed with sufficient
rigour
or resources without (a) a willingness by governments to spend much
more money (paid for by taxes) to solve these problems, (b) a
political
will to solve such problems creatively and by consensus, rather than
leaving it to private interests to address them or dealing with them
by
brute force, and (c) a much greater awareness, commitment and sense of
responsibility by the body politic of the urgency and opportunity to
solve these problems. But just as business will be driven once again
to
invest in innovation in the search to sustain profitability, it is
likely that private citizens and public institutions will ultimately
be
driven to invest together in innovation in the search for a liveable,
sustainable world. The process they then use will probably look a lot
like this prescription.
Bibliography
Boston Consulting Group -- Innovation to Cash (annual survey of executive
priorities), 2003
Cap Gemini -- The
Adaptive Imperative, in Perspectives on Business Innovation,
2002
Chen, Eric and Ho, Kathryn Kai-ling -- Demystifying Innovation,
2002
Chesbrough, Henry -- Sometimes Success Begins at Failure, in HBR Working
Knowledge, 2003
Chomsky, Noam -- Manufacturing Dissent, 1995
Christensen, Clay
-- The Innovator's Dilemma,
2000
Christensen, Clay -- The Innovator's Solution, 2003
Credit Suisse
First Boston -- New Economy Forum,
synthesis report, 1999
De Bono, Edward -- Serious Creativity, 1992
Dertouzos, Michael -- What Will Be, 1999: Although the idea of 'find a need
and fill it' is hardly new in
business, an article by MIT's Michael Dertouzos in the December
1999 Technology Review on the
pillars of innovation reinforces the
connection between need and innovation. Building on ideas in his book
What Will Be , he
says: Perhaps
the most important ingredient of successful innovation is the
creative technological idea that serves a pressing human need. This
kind of creativity, in turn, requires a schizophrenic combination of
rationality and insanity that's outside our ordinary experience.
Imagine that all current inventions in the world and all their
possible
logical extensions and uses are inside a huge balloon. People are
pretty good at extending these ideas further, using logic and common
sense. But their results, being logical extensions of what's already
there, stay within the balloon. To escape these old ideas and come up
with something that is radically new, the balloon must be punctured
with something that defies reason -- an [innovation] has been born.
Successful innovators apply their drive and flexibility toward looking
for and blending these two forces [market and technology] wherever
they
crop up, always striving to zero in on the key ingredient -- a creative
idea that serves a pressing human need.
Dixon,
Nancy -- The Organizational Learning
Cycle, 1994
Drucker, Peter -- Innovation & Entrepreneurship,
1993
Drucker, Peter -- Management Challenges for the 21st Century,
1999
Fast Company
magazine -- various online and hard-copy articles on Innovation,
1999-2004, notably the Business at its
Best series
Gehl, John and Douglas, Suzanne -- Innovation (weekly
e-magazine)
Gladwell, Malcolm -- The Tipping Point, 2003
Hamel, Gary -- Leading the Revolution,
2000
Handy, Charles -- Age
of Unreason, 1998 and Age of
Paradox, 1995
Ichimura, Elliott -- Virtuous Cycle of Innovation, 2001 (unpublished
)
Imperato, Nicholas & Harari, Oren -- Jumping the Curve,
1996
Kelley, The Art of
Innovation, 2001
Leifer, Richard et al -- Radical Innovation, 2000
Leonard-Barton,
Dorothy -- Wellspring of
Knowledge, 1995
Meadows, Donella -- Places to Intervene in a System, in
Whole Earth magazine, 1997
O'Mara, Kevin -- Five Innovation Best Practices, in
ZDNet, 2003
Payne, Cyndy -- WL Gore & Associates, Case Study in Innovation, in
Foundation for Enterprise Development online magazine, 1998
Peters, Tom -- The
Circle of Innovation, 1999
Robert, Michel -- Product Innovation
Strategy, 1995 suggests
looking for innovative ideas where there are: unexpected successes,
failures or events; process weaknesses; changes in market structure,
demographics, and perceptions; high growth areas and convergences; new
knowledge or technology; changes in economic, political, regulatory,
legal or social environment; changes in markets, customers, resources
or delivery channels.
Schrage, Michael -- Serious Play, 1999
Senge, Peter -- The
Fifth Discipline, 1990
Tucker, Robert -- Five Steps to Business Innovation, Business + Strategy
Magazine, February 2003
Those
of you with HR backgrounds are probably wondering why I have not
spoken
about non-individual, community aspects of civilization and why and
how
these arose if the innovative individual is perfectly able to do it
all
him- or herself. These issues are relevant because of the role of
teams, organizations and other social constructs in the process of
innovation.
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