In the digital age, we are all consumers of design. Every screen we look at, every device we interact with, every message or notification has all at some point been considered, tested and designed. And yet, even as we become more data driven, great design resists automation. We can tell the difference between an object or an image rendered by algorithm and one created by an artist. But will that always be the case?
CATEGORY: Innovation
Why do some companies survive and others simply crumple? And stranger still - for star-crossed giants such as Yahoo, RIM and HP - why did major investments in innovation not save them from being blindsided by the future? In my view - it is all a problem of scale. Big leaders favour big solutions for big problems. But just the like the Higgs Boson, sometimes in order to understand how dramatic transformations happen, you have to start by looking for things that are very small.
Top down strategy is sexy. Wall Street gets it, your board gets it, your employees get it - and most importantly if you happen to be the top dog at work - your ego gets it. But here's the catch. You can spend a weekend retreat thinking about blue oceans, innovator's dilemmas, and tipping points - but come Monday, you will be faced with a real challenge. How do you get the rest of the organisation to change their thinking and behaviour along with you?
Resist the temptation to simply create an innovation department. Creating a new department where all the fun stuff is going to happen is like announcing to the rest of your team that their contributions are soon to become irrelevant. Trust me - politics and bureacracy will ensue. I call this the ‘Mirror Effect’. The bigger your innovation department, the more likely it will become a microcosm for all the things you are trying to change in the first place!
Successful companies think small. They focus on the most basic particle of change in the enterprise - the project. Money people like projects. They value them by analysing their cash flows over time. But as a change agent in your business - you should learn to love them too. They are the building blocks of how interesting ideas gain mass, and become real. More importantly, the diversity and quality of projects in a business is the best litmus test for your company's chances of surviving the future.
Here's a thought experiment for you. Think of it as your own personal innovation Hadron Collider. Grab a piece of paper and rule a line down the middle. Write a list of all the projects you are managing or involved in at the moment. Now place the ones that are focused on protecting your existing business practices and fighting fires on the left. And now, add any of the remaining projects that involve new ways of making money, new markets or challenges to the status quo on the right. Review your results. How much of your time is spent on defending the past as opposed to building for the future?
Of course, it is not enough just to get excited about your particles of change without thinking about what makes for a great project. From our research at Tomorrow, we have observed that great projects are defined by five important characteristics. They are:
For me - the real question at the heart of the business transformation debate is not how much money or resources you spend on coming up with new products or ideas - but how quickly can you innovate around your innovation process.
Business leaders today are under incredible pressure to perform against the backdrop of uncertain markets, changing patterns of customer behaviour as well as disruptive technologies. Frankly that calls for an entirely new type of enterprise - one that is flexible, adaptable, and natural born for the 21st century.
So, are you ready to re-imagine the way you do business?
CATEGORY: Innovation
I don't like boats. I get sea sick easily and my worst nightmare is being caught out in the middle of the ocean in a storm. When that happens my original plans - however grand - go straight out the porthole. Business leaders face a similar dilemma. You can spend a weekend retreat discussing the far future, but on Monday the only scenario that counts is the immediate future of cash flow, customers and competitors. So how do you reconcile two distinct timelines which require radically different strategies for attainment? I call this paradox the 'Dual Horizon Problem'.
In the Dual Horizon Problem, there are two timelines to consider. The first horizon is what you can see from your present vantage point. It might be the next quarter or the next year - but the important factor is that the measures for survival are based on growth in your current business model. In a crisis, you may realise instinctively that you are heading in the wrong direction - but in fact, you are likely to be so consumed with trying to salvage your position using your traditional strategies, to worry about re-orientating to a new business model.
To see beyond the waves to the next horizon, you need to exercise a little imagination. Try this quick exercise. Start with a clean sheet of paper with two columns. Write a list of your major products and services (what you sell), business models (how you sell) and customer channels (where you sell) on the left. Now take your best guess at what direction consumer behaviour and disruptive technology might take in the next few years, and then push your ideas a bit further. Use this to write a list of items in the right hand column that should neatly oppose your current business. Congratulations! You have just sighted your second horizon.
Without a plan to reach your second horizon, you may survive the present only to fall short of the future. It is like escaping a storm, only to discover that don't have a final destination. Are you heading to an island paradise or the rocks of death? Not something you want to leave to chance! But before you get too excited, keep in mind that focusing on your second horizon alone is just as bad as ignoring the future altogether.
Consider HP. The company recently made headlines when they announced an intention to exit the consumer PC business. HP's management recognised that in the future, margins in the consumer hardware business were shrinking, competition intensifying and product commoditising. They imagined shifting to a second horizon business based on the Cloud - a platform that seemed to offer much more attractive growth prospects. The only catch - as HP's senior leaders discovered when their stock price plummeted - was that shutting down divisions that contribute large chunks of your present day operating revenue without a clearly defined vision for the future, is unlikely to win much support from investors.
Arguably, IBM handled their horizon transition much more effectively in 2004 when they made a similar shift to technology services away from PC hardware. A key difference between the two companies is that when IBM sold their PC business to Lenovo, they retained both a significant shareholding and strong management influence in the old business. They were also clever to structure the deal to increase the market awareness of the IBM brand throughout Asia. Only when Lenovo achieved a profitable market position did IBM gradually reduce their shareholding. In doing so, IBM not only gracefully segued from their first to second horizon business model, they were able to neatly re-organise their cost structures in the process.
Sometimes companies can have the right dual horizon strategy, and yet slip up on their customer communications. A good example is Netflix. Netflix were very astute in building a horizon one entertainment aggregation business using mailed distributed DVDs at a time when broadband speeds and Hollywood licensing arrangements were not sophisticated enough to handle a streaming model. Using their revenue and customer base from horizon one, they then started to ramp up an online model that enhanced their primary proposition - all of which came dramatically undone when the company announced sudden hikes in pricing and a decision to split the two businesses. Netflix lost a devastating chunk of customers and their CEO was forced to publicly apologise.
Navigating a path to the future is not easy. And worse yet, the pace of both technological and consumer change today means that you no longer have the luxury of waiting until the market catches up before you make your move. That's why I believe that as a leader today you have to cultivate 'Dual Horizon' thinking, which although somewhat schizophrenic, will give you the perspective to lead your company through a transformation process without sinking it in the process.
When working with many of my clients at Tomorrow on this problem, I have advised them not to destroy their horizon one business, in their question for new growth. If you turn everything upside down overnight, you run the risk of either becoming overwhelmed by the reality of corporate inertia, or worse, irrevocably destabilising your current profit engine. Better instead to spin out a new unit - empowered to make a clean start, to trial emerging technologies, break business rules and most of all, to think big.
The best way to get things moving is to round up all your trouble-makers, dreamers and hackers and give them the space and protection to try new things. Watch closely. At the right moment you can either bring them back into your business, or fold your business into the new venture. And be assured that you won't be the first to have sailed that route. To paraphrase the late great Steve Jobs - if you have ride out the storm of the present into an uncertain future - its better to be a pirate than join the navy.
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Need some help with leveraging technology in your present business? Find out more about our innovation lab at Tomorrow. I'd be happy to schedule a free advisory session with you to talk about your business goals.
CATEGORY: Innovation
As a coffee aficionado, I never thought the day would arrive that I would love an automatic coffee machine. But it’s true. I love my Nespresso machine. I bought my first in Hong Kong when I struggled to find a decent coffee anywhere on the island. And I’m embarassed to say, I sometimes even choose hotels based on whether there is a similar machine in my room. But if Nespresso, owned by Nestle, represents the past triumph of applying the Gillette ‘razor and blade’ business model to beverage consumables - it also points to the present failure of appliance brands to capitalising on their captured consumer base.
When you buy a Nespresso machine they ask you to provide your details to join their coffee club - ostensibly so that they can keep track of your consumption and prompt you to service your machine at the right time. Not a bad premise, and certainly a smarter engagement tool than the standard warranty database coupon. But what if there was a Nespresso app store that sold apps that let you customise your brew strengths or program automatic functions? How would that change the economics of the business? White goods manufacturers would certainly stand to benefit from similar thinking. You may buy a new washing machine only once every 5-10 years, but what if you could get consumers to upgrade their software applications that controlled energy usage, spin cycle programs and other features once every quarter? Turning durables into consumables was a neat magic trick for many appliance brands in the last ten years. But for the next stage in the game, they need to be thinking about the broader information ecosystem that surrounds their physical products.
CATEGORY: Innovation, Culture
There was a game I used to like to play when I first started traveling. When I arrived in a new city, I'd set out with a map, a notebook and a coin. Rather than follow a plan, I'd delegate all choices to a coin toss. Heads, turn left. Tails, walk into that book store. Heads, walk three blocks and then take the first left. A flick of the wrist, sunlight catching shiny metal on a downward arc - a decision made. As I recorded my random adventures on my map - a new world would gradually render into being, like one of Calvino's Invisible Cities. I thought about those maps the other day when one of my clients asked me how they should embed innovation into their culture. Chance has always been a willing mistress to creativity - but could it also play midwife to innovation?
Sadly, companies often talk about innovation like it is a form of calisthenics. We have all read those over enthusiastic internal memos encouraging staff to be more innovative - as if, like sit ups or star jumps, it was just a matter of exercising a previously unused muscle in your brain. Some years ago, the Singaporean government was so worried that its citizens were hard working but not innovative, that they instituted a series of creative programs at schools. During the appointed creativity hour, kids were strongly encouraged to all be as innovative as possible, naturally in a quiet and diligent way. It was not, as you might expect, a stellar success. The problem is, whether you are a kid or a corporate VP - being innovative is not something you can just switch on. Inevitably we face a ‘white paper problem’.
One of my favorite artists is Max Ernst. Despite his prolific output of surrealist landscapes and images rich in personal mythology - he sometimes complained of the paralysing effect of a blank white sheet of paper. With an infinite number of possible things you can create, how do you simply get started? To get around this problem, he would begin some of his works by rubbing black lead over a piece of wood or a section of floorboard. From the randomness of the resulting images, he would be inspired to then create a masterpiece.
You will often hear people talk about Google's 20% program - the policy that their engineers can spend a fifth of their time working on their own pet projects. Interestingly though, this is not the really smart part of how Google builds a culture of innovation. Simply telling people they can spend time working on their own stuff is to invite a 'white paper problem'. When I recently interviewed Justin Baird, an 'innovationist' (yes, that is his real title) at Google he told me that they have an internal online forum that allowed people to list projects and ideas that interested them. When you were looking for a project to innovate around, you didn't have to just stare at the ceiling and think up something entirely new - you could browse a database of ideas, people and initiatives to look for areas where you could contribute and collaborate. Sure - its great to stand on the shoulders of giants, but sometimes lots of very small people stacked on top of each other is just as useful.
I think we can learn an interesting lesson from Google’s innovation forum. Despite the persistent hype about the information revolution, we are still at the very early days of how we leverage the information, ideas and intellectual capital that is hidden in the substratum of businesses. Knowledge management was the hot buzzword in the nineties - but most projects, which required people to create masses of useless documentation - failed to engender either participation or inspiration. But what if we could introduce a little more randomness into the process.
A colleague of mine, who visited the CEO of Best Buy told me that he saw three screens in his office - that constantly updated with what consumers were saying on Twitter, blogs and other social networks. This is just the beginning of a new way of visualising innovation triggers in real time. In coming years, the business analytics space will need to be overhauled with a bit more creative flair. Rather than relying on just formal reporting and planning processes, we should be presented with attractive infographics that randomly display customer comments, unusual transactional patterns, cross referenced data, and even random images and videos sourced from the Web. The true starting point of innovation is pattern recognition - seeing possibilities in changing consumer behavior or deeper truths in everyday business processes.
So, if you could put your business on shuffle what might that look like? Are there opportunities you are missing because you are not exposing yourself to a wide enough set of new possibilities? If you look closely you will probably discover that the best ideas are not waiting for a brillant demiurge to invent - but are already lurking in the minds of your staff and customers, ready for the right opportunity to spring into being.
Flip a coin and find out.
CATEGORY: Innovation
