innovation playground Idris Mootee

Media Disruption Continues As Attackers Fail And Defenders Wonder What's Coming Next?

I am just counting how many industries today are getting near their industry breakpoints, accelerated by the current crisis and changes in consumer attitude towards anything.  With macro forces pushing a collision between previously unrelated industries and the smart ones know a reset is necessary. Media is on top of the list.

We are not only talking about company reconfiguration, but also industry reconfigure itself as value chains are breaking up and co-creation is happening up and down the value chain. Social Technologies are the key enablers for openness and cross-participation. I am certain that the faces of media and publishing, personal banking, music, healthcare, auto, telecom will be very different in just a few short years.

I was meeting with a number of clients while in London and we talked about how Twitter and whatever future versions of that are becoming a part of our life.  Almost any content is available now at our finger tips and it takes me literally a few seconds to call up from YouTube a video of anything. 
And I remember as a kid, I was watching everything they tried to put on TV until 1 am and then the Queen showed up and that’s bedtime. I wish it were the same for the Internet, imagine if the Queen shows up on my sons’ computer after 2am and shut down their network. Young adults have a problem with consuming unlimited amount of junk from the Internet. I need the Queen back.

Has TV and the Intent converged it? Mobile TV hasn’t really happened or do we really need it? iPhone is kind of doing that. Where’s interactive TV? That’s old. How about social TV? How can we make watching TV social?  I have almost forgotten that TV is so boring here in the UK and thank God there’s the Internet.  Will the future of Apple TV give us more? So far it is quite disappointing and Apple doesn’t want to talk about it. I’ve thrown out all my TV recording devices (PVRs) because I really don’t need them although they were pricey when I bought them.

I want to see faster and better convergence. I don’t want my TV to work like my computer and I don’t want my computer to work like a TV too. So what kind of convergence am I looking for? I am not sure.  Let me try to imagine for a second how convergence makes sense for me. For me, my choices need to follow me.  I don’t want to flip stations (and I have too many remote controllers) and I want to decide what to watch now and what to watch later, or what to watch with someone. I don’t just mean watching physically with someone in one place, it can be remote.  I want to be able to know how each episode is related and if possible go back to the last one for a refresh. I’d like to see and rank each Episode of Flashpoint based on its popularity or how people like the ending etc.

Joost, the provider of interactive TV experience on the web just announced that it would shift from a consumer strategy to licensing its technology to cable and satellite broadcasters. This is a shift in business model signifying the failure of their disruptive strategy. They were the first third-party web company to sign online-distribution deals with media companies such as CBS and Viacom, which also made equity investments in the company.  Even the disruptors struggle to make that work.

Fragmentation and experimentation are creating chaos in the media business and a complete rethink of the economic underpinnings of the $300+ billion TV industry. To rethink the viewer proposition based on when, what, where, and how? The complex redesign of the distribution will be characterized by organizing complex channel carriage agreements to something that enables global distribution in an organic and network-based distribution model leveraging search and social media.

The media folks need to make these disruptions and uncertainties their friend. To do that they need to step back and have context of things to see how things make sense. I don’t think an “all-media-in-one” idea is the answer. Media will never be the same again.

GE CEO Jeff Immelt Talked About How Companies Need To Prepare For A "Reset" Speaking At The London Business School Global Summit.

It is the first time I’ve listened to Jeff Immelt (Immelt is the 9th chairman/CEO of GE, a job he has held since 2001) speaking live. He was talking 10ft away from me and I have a closed up view of how the confident CEO of this big and one of the most prestige firm talked about strategy and leadership in times of global crisis. He said candidly that he had only taken 5 days off (including weekends) the last 3 years.

He was speaking at the London Business School's sixth annual Global Leadership Summit this morning, a private event featuring the most prestigious group of business leaders to debate and reflect on the global downturn and how to emerge stronger once the recession is over, which there are plenty of signs that are already happening.

It is not easy taking over a job from Jack Welch, one of the most celebrated CEOs. Those were big shoes and he is filling them nicely. Talking how things could be difficult, he shared a story when he just graduated from B-School, interest rate was at almost 20% and at the end all things worked out ok. His advice to other CEOs, here are four most important things to do in order to lead a company out of a crisis likes this:

1. How to manage business cycles?
2. What is a point of view (about the reset)?
3. How do you think about renewal?
4. What does it mean for business leadership in the 21st century?

The first one is how to manage in a crisis. His answer was simple, first one is preserving cash and making sure absolute balance sheet strength.  Second is moving with speed and quickly taking advantage of the opportunities that exist – where does the opportunities exist and how do we access that. GE took more orders in the latest air show that the past by selling to new customers. Third, keep executing on a long term strategy. And fourth, communicate constantly inside and outside the company. This is the best way to get through the crisis.

The second thing is having a point of view.  What does that mean? According to Immelt,” It is more than managing your way through. Every few years, you need a reset.” This is an interesting one. Most company lacks perspectives, or different perspectives of how different future might unfold before they develop a point of view. Without that, the company lacks direction. It is truly important fro every board to have a point of view of the future, not just senior managers.  His example was US Consumer the last 25 years consumed 6% of what they earned. Now we’re moving from debtors to savers.

He used the word “ big sized themes” to refer to what form a point of view. It is more than just managing your way through. Every few years, you need a “reset.”  GE faces the cycle, they’ve made the choices, 2008 earnings was the third highest in the history of GE.  In his words< “Look for the simple truths in these point of views, use them to help your organization to lead in a reset world.” For GE, the two big themes are 1/ clean energy and 2/affordable healthcare.

The next one is renewal. What does it mean for renewal? It means understanding what opportunities will emerge; what levers we want to pull and what technology will drive the next wave of innovation?

The last one is on business leadership in the 21st century.  I have some thoughts to add so that will be another post. Will catch up with him during coffee as I have a few questions for him.

Michael Jackson's Death Is Tragic. It Reminds Us Of How Fragile We Are, Both As Human Beings And The Things We Created - The Internet.

The web today is filled with Tweets on the tragic death of Michael Jackson. The first company that benefited from this tragic event was Apple. The iTunes Music Store and 9 out of the 10 top albums are all Michael Jackson’s.  And top 5 selling DVDs in Amazon all Jackson’s too. Michael is iconic across generations. Music fans around the world have a deep-rooted connection with this iconic star and his music. And people are quick to try to make money from this. This Neverland Ranch domain name is selling for $20mm on eBay. Why? The seller is suggesting that there is talk of that the Neverland Ranch will be be tnred in a money making thinng bigger than Graceland as an amusement park.

Music is like air we breathe and iPod is the first electronic gadget that every kid grows up with.  Does music helps us to become more ‘us’ as ‘individual’ or it is causing more conformity? Does Michael Jackson’s music scream loud the language of individuality? What causes the cultural conflict with the problems of identity and identification. Our society possesses culture of our own; varying with diverse ethnic and education etc. and at the same time conditioned by popular cultures such as music and TV, and now social media.

The notion of identification and identity, two concepts which frequently appear in connection with the individual's personality development and they are now reflected in our images or avartars on Facebook and other social networks.  The terms identity and identification and implies some key differences; namely that a person's image or identity of himself/herself is obtained early in life as the result of selecting desired traits from various models and that an individual must have a concise concept of himself in order to survive as a productive human being.  Sometimes these two create conflicts.

Michael’ story of his fall was so profound, from a superstar into a financial, physical and psychological. People wonder how that could happened to a talented person and why?  Many belief that Jackson had body dysmorphic disorder, where the sufferer has a distorted self-image and identify crisis. It is very sad. But it is not that uncommon, I see people in the workplace who are unable to obtain meaningful, purposeful identities; and therefore a real "identity crisis" occurs. There are some indications that the younger generation will rely less and less on TV for cultural refinement of an individual. The emergence of social networks and media hopefully will become a medium for them to shape their own identities and prevent crisis.

What’s an identity crisis? The identity of an individual incorporates culture and cultural values. If the culture and the cultural values are unclear to the individual ("culture conflict"), then the result will be faulty identity formation or "identity crisis". Constantly confused and trying to be someone else.

This tragic event shows us again how fragile we are, both as human beings and the things we created-the Internet. Twitter was even temporarily jammed into inaccessibility, and story-breaker TMZ went down as fans around the world tried to find out what was happening.

According to data from Akamai worldwide Internet traffic was 11% higher than normal during the peak hours between 3 p.m. PDT and 4 p.m., when news of Jackson's death was breaking. That traffic forced even Google to its knees for a brief period of time Thursday afternoon. That won’t happen with radio or TV when the world tuned in to see a man landed on the moon. Networking problems will only get worse as traffic grows and our demand for real-time and more new Twitter-like apps.

May he rest in peace.

HP Was Founded In A Garage That Started The Wave Two Of Transformation Of The Modern Enterprise. Watch Out For The Next Wave Which Will Be Driven By Social Technologies.

This is the garage where David Packard and William Hewlett started their new company in 1938 as fresh Stanford University engineering graduates. This is probably one of the key places in California that can be called the birthplace of Silicon Valley. If you visit this tiny garage, you will find In front of the house a plaque officially declaring the location the "birthplace of Silicon Valley” some 70 years ago. The Valley not only transform businesses, it also transform societies and politics.

This once tiny garage workshop was once rented by William Hewlett and David Packard, Stanford engineering grads after stints at MIT and GE came back to Palo Alto to start a HP. This company transformed many of the modern corporations. I am sure in 40 years my grandchildren will be visiting Steve Jobs’ garage with a plaque declaring “birthplace of Apple computers”.

The modern corporation has experienced (survived and prospered) several transformations. Sometime between 1690 and 1790, political innovations triggered the financial innovations that gave birth to modern-day capitalism. Then, democratic governments gave birth to the modern-day financial markets that continue to transform organizations and allow different forms of capital structures. This was Wave One.

Information technology has been transforming organizations from the early days of the mainframe to the BlackBerry of today. Most of the benefits were realized through employee productivity gains from increased access to information about customers, inventory, logistics, finance etc. Consider this Wave Two.

What about Wave Three? It's happening. The new wealth will not come from innovations that hope to perfect the old world. The old world is so broken after all. Rather, new wealth will be derived from innovations will that create new worlds - connecting different worlds. This has been the constant theme of progress, and there is no reason to believe otherwise. The next wave of transformation will be powered by the new, namely social technologies. This change will impact the shapes and forms of today’s organizations, and will widen the gap between the leaders and the laggards of tomorrow’s organizations

Social Technologies is not just about software – it is the new business logic. Enterprise software vendors will be quick to jump into this space and declare they have the solutions. But how can they have a solution when we have yet to fully understand the problems and the opportunities? ERP systems will likely be first to offer social modules (if they know what it means), and CRM companies will want to create plug-ins into social networks and integrate this data into their dashboards. There are already tens of dozens of social intelligence companies out there with solutions, but this is not the right starting point.

This unprecedented degree of collaboration among employees, customers and partners around the world is now possible, and increased interaction will bring unprecedented opportunity and a tool to “level the playing field” globally, with significant ramifications for business model innovation and organizational design. Who will become the HP equivalent in the next wave?

Even Before Any Iranian Revolution, We’re Seeing A Twitter Revolution. This One Is Not Ending Anytime Soon.

This week we see how Twitter becomes CNN newsgathering and distribution tool when everything else gone dark. Twitter is probably mentioned every two minutes on CNN. Because the world relies on Twitter to report what was going on in Iran, Twitter had decided to push off its scheduled maintenance Tuesday morning as the conflict continued. As it happened, Twitter was a major if not sole source of information coming out of Iran. In order to keep the flow of communication to the outside world flowing, Twitter said it would not turn off its service until Iran calmed down. We under estimate how powerful this micro blogging tool can be.

On the flip side, there’s no control over how people use Twitter. There’s always a danger when totalitarian government or organization can abuse it with maliciously intent to deliberately spread misinformation and cause widespread panic. How can we prevent that form happening? There will be more and more situations that we can only reply on Twitter for information, and we'd better figure out ways in which we can authenticate information. Twitter's 140-character-only environment makes it even easier to mislead people, as it's very hard to make a decent argument in 140 characters. There is a very high risk of information being misinterpreted. Then there is confusion over authorship and questions around where the original sources are from. How do we deal with reposting is another challenge.

In additional to causing a revolution with citizen journalism, Twitter can potentially revolutionalize gaming. Soon someone will develop the first ever Twitter-based game. The gaming experience will be very different from motion and graphic games, it will be text-based and may involve secret codes and broadcasting messages to a larger crowd to mobilize the underground forces in Iran or maintain an intelligent dialogue with a mainframe computer controlling missiles in North Korea etc. Not sure how to categorize games like this. Or if they already exist?

What's Your Strategy For Strategic Innovation?

As the pace of innovation accelerates and beyond the speed limit, executives are experiencing two other kinds of hot water, declining bottom line results caused by the “credit crisis” and declining consumer attention as they are becoming immune to “marketing.” Everyone is therefore looking for ways to improve their innovation capability and process; both within the organization as well as with outside help through consultants and even consumers that can help them detect early trends.

Theie mission is to find ways to both drastically widen (and deepen) the funnel of ideation and then more effectively manage the process from concept to pilot and roll-out. Some are seeking to update their obsolescent innovation process and many don’t even have one. They just struggle to get started and many are simply borrowing from product development process which isn’t design for innovation. Everything company has different needs and once a decision is made that your company must innovate to remain or to become competitive, you should start planning a logical yet adaptable process to guide the team during the entire course of action.

Where to start? First pick a type of innovation process that works for your company. Declare your intent and objective. Are you responding to a disruption or simply want to find want to grow your business? The result of this process could include a new product, a new service, a new business model? Look at what tools you have and what are your ingredients that you have to work with. How many cycles of innovation is needed on a 12 month basis?

Second: Once you have decided on your strategic intent, you should look at your organization to see where and how this process should be initiated. How much collaboration is required both inside and outside the organization?  Do we have the right support from outside consultants? Does your organizational structure support the innovation process you have selected?  Will the culture within the company support the innovation development procedures?  The important point here is that the level of acceptance of “transformative” ideas as well as the level of risk tolerance must be compatible with the overall management philosophy of the company, or the dissonance could doom the project.

Third: What is the time scale for such innovation process? This will depend on a couple of factors. Among these are the drivers of the project and the size and complexity of the project. If the development project is an extension or minor modification of an existing product or service, the time scale could well be a few months versus a disruptive move that takes up to a few years.

Fourth: Decide on how you want to finance it? Do you have an innovation budget? Or if you plan to finance it though your marketing, product development, research or other budget? Or you need to create the business case before you get started? Or it is a corporate mandate and you have access to some corporate strategy dollars which the CEO put away for special use.

Even Google has finally realized they just can’t let continue using a laissez faire approach to innovation and product development. In a recent interview with a WSJ they admitted that Google can no longer afford to let promising ideas fall by the wayside. The Internet search giant’s once-torrid growth has slowed. At the same time, it faces fresh competition from Microsoft’s new search engine, Bing, and start-ups such as Twitter Inc., which was founded by ex- Googlers.

The response? Google has recently started doing internal “innovation reviews,” they are formal meetings where executives present product ideas bubbling up through their divisions to Schmidt, Google founders Page and Brin, and other senior folks. The processes are designed to “force management to focus” on promising ideas at an early stage, according to Schmidt. Even innovation needs a process.

Have a great weekend.

What’s The Last Innovation We’ve Seen Coming Out From The Banks? Scenarios For Banks In 2020?

By 2020, today's 39 year old will turn 50 and today 9 year old will be 18 and both represent a whole new generation of customers for the financial services. The 18 will be in the market for financial services and having gone through the banking and credit crisis they will be very skeptical of financial institutions. The newly turned 50 will be joining a powerful group of boomers that have very different idea of what they want for the second part of their life as well as their financial goals. 

By 2020, there will be way fewer banks. Market consolidation will result in making the mega banks even bigger. But they will face non-bank specialists and non-bank banks that specialize in providing highly differentiated product offerings. Partner/Channel relationships will be more important than ever as channel owners continue to gain market power.

In 11 years time, there will be massive innovation on the payment side. I cannot imagine how retail banking will change and even the very nature of currencies. So what services will be wanted and how they will be delivered is likely to radically change by technologies. And even the assumption that customer financial needs will all be met by traditional banks will become a big question as financial services’ potential convergence with another industry. 

There is a five-year project between MIT and Bank of America is bringing together bankers as well as academics to think about the future of banking. The objective is to help provide a unique opportunity to grow banking in innovative ways that respond to the evolving marketplace as well as customer behavior, preferences, and trends.

Some of the ideas they’re working on:

• 
How can every customer be empowered with the knowledge and tools to take better control of their financial futures?
• How will banking interactions evolve as a customer’s physical and virtual worlds become completely intertwined?
• How will social networks and mobile platforms transform customers’ banking experiences, making it easier, more convenient, and better integrated with their daily lives?

It is hard for banks to innovate. And when they do generate some radical ideas, these innovations cannot make it beyond a small pilot?  Often this is the result of dogmas and bureaucracy, and the dynamics of inertia among these large institutions. It is not often that banks get disrupted by a radical technological discontinuity (ATM and online banking were the biggest ones), these large financial institutions are bureaucratic but there are no significant external forces to present any urgency to innovate. There’s also a lack of process and so it is difficult for their management to put their teams, assets and even culture together.

Let me paint three scenarios for Banking 2020:

• Ubiquitous Financial Services - in a world where trust is still mediated physically financial services become ubiquitous. Credit is available from your utility company, insurance company, supermarkets and even employers. These credits will be transferable and they all compete and you can switch you loan among those depending that provides the lowest interest rate.
• Social Money STM – finally money will no longer need to be tangible. Mobile money?  It is happening in Japan and finally coming to the US.  We are 6-8 years behind Asia in mobile (thanks to the larger carriers). Virtual currency/digital wallet are embedded in your digital device and you can use from parking meters to shopping mall. Biometric solves all the security company even if we lose our cell phone. Your IPhone becomes you iWallet. Need cash? Walk up to gas station/convenient store and wave your iPhone to their system, you get your cash. We all hate ATM fees. Competition and free market pricing have created an explosion of new ATMs. Since the advent of access fees in 1996, the number of ATMs has nearly tripled, creating new terminals in more convenient locations.  With Social-Money, you can walk up to your friends and withdraw cash from him/her, the transaction happens in the back. Your money debited and his/her credited. He/She makes $3.
• Quantitative Analytic Risks Management – Technology will progress enough to provide instant calculation of risk / rewards of every monetary instruments. Customer can simply pick and chose products based on their risk profile. Quantitative analytics and smart infographics allow each customer to manage their risk as easy as picking what they want to eat for dinner.  Customer can play with different scenarios where quantitative assessment is accurate to the last cent. System will prompt and alert you when they think you are taking more risks that you should and trigger a review of your credit ratings. Every customer from the bank perspective is a SI number and a risk rating.

What's The Last Innovation You've Seen Coming From The Insurance Industry?

Last week I’ve received this email from one reader of my blog. Here’s his question:

Hi Idris,

I am an Insurance Professional with more than 12 years of experience. I have a good presence and active in a number Social Networks with good number of connections. I am thinking of using them to market more products. I would like to hear your expert views on Social Networks in marketing of Insurance Products. I know you are busy but appreciate any advice you can provide.

Hope to hear from all of you soon.

Regards,
Name Withheld.

The question is how social networks and virtual social connections can have any impact on the sales and distribution of products such as insurance as well as other financial services? I don’t have an answer but we take a quick 15 minute analysis of the issues.

Let’s take a step back and look at the challenges around marketing and distribution of life insurance products (health insurance is a different story). Will the traditional model of “advisor-based” distribution will come under some disruption? 

With the average age of agents rising steadily; sales is stagnant and margins getting thinner, insurance company needs to rethink “marketing and distribution”. Steady of influx of new investment products from banks that are also competing for insurance dollars. The biggest disruption will most likely remain on the distribution side. The importance of asset accumulation products is particularly noteworthy because this is the market where insurers face the most intense competition from all the banks, mutual fund cos, and investment advisory firms. Because these non-traditional competitors have much lower distribution costs than insurers, insurers face intense pressure to operate more efficiently. Distribution costs are one of the largest expense items associated with life and annuity policies.

Industry consolidation in insurance is different from banking. We’ve seen small banks going away but there are not many changes among insurance players, because it has less restriction and many are successful in operating in nationally. But the restructuring of the life insurance industry primarily tends to involve such strategic objectives as an increased emphasis on core competencies or the expansion into new markets rather than the consolidation of geographically concentrated firms as in banking. Expect competitive intensity to remain the same.

Back to the question posted to me. I think there are two ways the insurance industry can take advantage of social technologies. First is to empowering agents to take advantage of social media as their CRM systems. It is the best way to reach people with common interests, while the other is connecting with people engaged in a similar occupation. Provide them with tools to make content a lot more engaging and tons of training. It is as important as knowing how to use a phone.

Second is the extreme widgetization of the products an services. Innovative thinking needs to be built in the existing products around their “socialabiity” and “connectivity”. Life insurance is a high involvement product, it helps us to prepare for two risks—dying too young or living too long. I think living too long is more of a problem.  A recent study done by The Boston College Center for Retirement Research found that 43% of American households are at risk of being unable to maintain their pre-retirement income.  And if you take away some optimistic assumptions such as using a reverse mortgage, over 60% are not prepared.

You can put a lot of innovative thinking into making the product (and experiences) more engaging. Here are a few of the ideas I have from the back pocket and each one of them can be big:

• A socially-enabled annuity product – designed to be marketed through online word-of-mouth?
• A mass produced, multi-component prepackaged one-click solutions – there is a gap in the market place for this?
• A hyper-efficient direct distribution model – a super low cost solution that makes ING looks expensive?
• A  direct selling mid-market lifetime income solution – income is now the most practical consideration?
• Plan conversion exchange – allow people to convert defined contribution assets into income for life through annuitization?

Building On The 140 Platform. What's Will Twitter Do Next? Twitter TV Or Twitter Dating?

Twitter is touching more people than NYT or WSJ (ok it may not be a fair comparison) Add to the fact that a lot of Twitter users rarely hit the hyper-text-transferred-to-the-browser page, but rather use through a desktop and/or mobile app, and the figure gets even more impressive. Twitter is continuing its unstoppable move forward. And what about those Twitter traffic "machines" and “buy your follower” programs? Twitter needs to figure this out as soon as possible. Twitter litter? Perhaps a payment/filter model will eventually work, weeds out the hackers that wont pay $5/month for access to Twitter that has real people and conversations happening. We are also seeing Twitter viruses starting to happening. Anti-virus for Tweeter?

The 140 number is doing magic, at least for them.  How did they get this magic number?  I was reading Patrick Glinski’s paper on Twitter Strategy (part of a series of Social Media Knowledge white paper that we are publishing), it is a very good piece. There’s so much hype abut Tweeter and you can’t imagine how many times Twitter is mentioned when I'm watching CNN news, the news anchor are actively promoting their tweets. TV is not enough?

I’ve had probably more than a hundred requests for Tweeters but I still have not jumped into the bandwagon. Sorry I must have disappointed many.  I just struggle to write in less than 140 characters. I need at least 486 characters in order to say something meaningful.  So I have a problem. Think about it this way, most people who twit are men (no formal statistic, just my guess) because most men are comfortable in communicating in less than 140 characters or less. We have fewer words in our vocabulary and usually say things short and sweet. On the other had, women's verbal capacity is far bigger than men. Women are better in communication in general and don’t usually get to the point fast. So the next big idea may be 300 words Twitter for women?

Can we milk this 140 idea? I just wonder what happen if we limit our everyday conversation to 140 characters per message? What about a social network that only allows 140 connections and your friends need to compete or stay active to remain in your network?  What about your wireless carrier sending you your month statement in 140 characters? I hate reading these monthly statements as they can’t even design one that people can understand. Go hire a usability person!  How about Twitter TV? These 140 seconds show? What about Twitter music? This one is cool.. Twitter Dating! 140 persons you can meet in 140 days?

Twitter TV is real, they have teamed with Reveille productions and Brillstein Entertainment Partners to develop an unscripted series based on the site, which invites 140-character postings from members around the world. The show would harness Twitter to put players on the trail of celebrities in an interactive, competitive format. The producers call their proposed series the first to bring the immediacy of Twitter to the TV screen.

Teaching Ethics In B-Schools? Is That Enough? How About Starting With Rethinking How We Select Candidates?

There were a small group of people at HBS a year ago wanted to crate an MBA oath. During their two years study, they have been challenged to reflect even more deeply because of two events that coincided with the timing of their studies - Harvard Business School’s 100th anniversary and the global financial crisis (both have no direct connections). The school has been rethinking hard about its role in the future of business and societies and how the MBA would continue to be relevant a century from now. Stories like Enron bring shame to all of us who holds an MBA degree, how could that have happen? Are organizations becoming too complex and unmanageable or some of us are so incompetent?

The second event that inspired was global financial crisis of this past year and it poses the question whether business schools are successfully executing their missions of educating responsibility leaders for society. How did we get into this mess? Have we been producing generations of MBAs only concerned with getting rich at the expense of  society and sustainability? After meeting with Professor David Garvin to ask what he thought of the idea of an “integrity pledge” for graduating students and eventually created a “Hippocratic Oath for Managers” which would serve as a professional credo for MBA graduates, like what they have for doctors and lawyers (not sure the one for lawyer makes any sense). 

I learned that only less than 25% of the graduating class of 09 signed the oath.  I find that a little ridiculous that majority of students who have spent over $100,000 on two years of study in an effort to make big money suddenly so keen on social values. With school fees continue on the rise, it is not easy not to take on the maximization strategy. Such naivety will not last when they started climbing the corporate ladder when they graduate. Even if these 25% of MBAs seriously embrace the “values agenda”, it will be a long time before they can have any influence on how key important decisions are made.  I don’ think the Oath makes any difference at all, just look at the legal practices in general.  Does it mean we need to have designers signing oath promising that they will serve the greater good by bringing designs that fulfills needs and sustainable? Here’s the oath if you are interested:

THE MBA OATH

As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for others and me.

Therefore I promise:

I will act with utmost integrity and pursue my work in an ethical manner.
I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.                  
I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well being of society.
I will strive to create sustainable economic, social, and environmental prosperity worldwide.
I will be accountable to my peers and they will be accountable to me for living by this oath.

This oath I make freely, and upon my honor.

I am not sure how B-schools will evolve and change is needed for sure, while everyone is trying to innovate and update their curriculum in a  response to today’s need and a new focus on ethical management and socially and environmentally responsible business practices, one Bay Area school has been quietly making progress for its Sustainable MBA program. I’ve met a couple of fresh graduate in California last week, they are definitely a very different breed. Since 2003, SF-based Presidio School of Management has offered an MBA in Sustainable Management that integrates environmental, ethical and socially responsible concerns into every course.  I pan to visit the school next time I am the city. I should talk to the Dean and find out more.

It’s a big mistake to think if only there were more business ethics and social responsibility classes in B-schools; we would have fewer business scandals. That’s definitely not the case. The exercise of judgment and discretion is the defining feature of a profession (or a person), and this is not developed in B-schools, it started way earlier in life. Ethical values need to be built into students right from their early schooldays. Family and friends already also shaped the student’s character. I don’t think ethic courses or signing an oath can force a bad manager to act good. Do you?  For B-schools, how about a character test in addition to GMAT?

Strategy Is About Focus. But Focus Causes Blind Spots. That's The Paradox of Strategy And Innovation.

 Last week I’ve met with an innovation team from a large financial institution, very impressed with the team as well as their know now and I am say it is rare as focus are often placed only on operational side rather than innovation. We shared views on how innovation work and emerging practices in large complex organizations. The funny thing there is slide that I showed them it is almost identical to one of theirs.

Where does good ideas come from? How do you find them? This is more art than science, the best ideas often grow out of the unintended intersection of various elements.. For example, at the point where a brand, category, experience, product or industry ends and another begins, the space between them becomes a platform for launching something new. That’s never been more true than today, ass brands, channels, experiences, products and services get drawn deeper into the social space of community, collaboration and customization. Today, creative collision is the zeitgeist of innovation.

Every intersection across domains as diverse as business, non-profit, science, art, and entertainment is a nexus for innovation. We need to learn to break down associative barriers and view problems in new ways, be ready to walk away from familiar territories and venture into the unknown. The unknown is where large organization feels uneasy. Innovators have a restless curiosity to explore intersections. They see social technologies as an enabler of innovation and new business models, rather than as a way of making the current model more efficient.

We are all over-focused. The economic climate further pushes us to their direction and beyond a point we lose sight of the big opportunities ahead. Focus limits awareness, and important information outside the range of focus can be missed.  The paradox of organizational focus is that it often blinds us to new opportunities. Focus is the core reasons for blind spots. Through constant scanning and reading weak signals, we can then recognize and seize upon that moment when luck aligns the forces of the universe to unite need and opportunity in such a way that the connections between unconnected dots can be seen.  Strategic Innovation is not about creativity or design, it is about organization agility and constant organization realignment.

Is Recycling The Solution? Or Will Bioplastics Be The Answer? Let's Look At The Economics Of Recycling.

Recycling is probably the number one thing consumer relates directly to "Green." People are trying to figure out what incentives are required fo rthe mass to adapt recycling. A company called GreenOps has developed a tracking system that can trace products going from the consumer stream to the recycling stream.

Companies that create consumer packaging can participate and put the GreenOps logo on their materials. Consumers buying goods can choose products identified with that logo. When finished, they take it to a GreenOps Tracking Station where they get a receipt showing the number of items they recycled and a code for redeemable cash at a retailer such as Wholefood etc. A 5 cents per bottle.

The concept is to have these tracking stations placed in high traffic areas like shopping malls, sports stadiums and other places where a whole lot of packaged products are tossed in large quantities. When an item is deposited into the machine, it gets scanned and the materials are tracked so companies can see how much of which products are being recycled. There are three questions: 1/I am not sure how often it needs to be cleared particularly high travel area given the size of the box 2/Is the 5 cents an effective motivation for consumers? 3/ The cost of deployment and I am not sure how the economics work.

Not sure we understand the economics of recycling. The bottle needs to be washed, usually in the kitchen sink with running tap water, so water is consumed. The plastic bottle is then taken to a recycle machine that crushes the bottle. Electricity is consumed to power these recycle machines. A special recycle truck picks up your blue (or green) box and then it delivers the recyclable material to a sorting factory. The factories and machines are built to sort the various recyclable materials from each other, paper, plastics, glass etc. These recycled plastic bottles are not made into new ones, they're used for lower grade plastics such s those used to build playgrounds.  So we will still need to keep manufacture more new plastic bottles. This is a hardly a solution.

Recycling is great idea at first thought, but we often consume more energy in reprocessing our recyclables than we are gaining. There are simply no cost-effective means of recycling food containers into new food containers. Can Bioplastics be the answer?  It's still an open question on whether it is more energy efficient to use biodegradable plastic or just recycle petroleum-based plastic. There are no straight answers. In the meantime, please bring your own bottle.

"Sustainability" Has More Than It Means. There Are No "Sustainability" Without "Social Innovation". Many Of The Solutions We Have Are Simply Too Tactical, Not Dealing With The Systemic Issues.

Here’s a picture of the Better-World-Team and IC team at the Brand Sustainability conference in Monterey, California. Talking to many at the conference, I can see  how people are very passionate about this subject and wanted to make change happen. The question is always the “how” and the debate is over whether it should be top down or bottom up, whether it should be led by policy makers or corporate should take a leading role or consumers should be leading this “revolution”?  There was a heated debate in the discussions groups that I moderated.

The first problem I have with is the narrow definition of sustainability. I don’t it is a just about recycling and green. Definitions of sustainability presumes that there must be justice if we are to survive or even prosper in the long run. It is about future survival of humanity. Thus, as it is said sustainable development requires the alleviation of extreme poverty and a better (honestly I don’t know what I means when I say better) distribution of wealth among the world's population, there is absolutely nothing wrong with more rich people, just not acceptable to see increasing poverty.. And no sustainability would make any sense without addressing “intergenerational and transnational equity” that is not selling our future short at the expenses of our children. And it only means children in the west but also in the developing world.

World-renowned architect William McDonough has translated the sustainability challenge into a provocative question he poses whenever he speaks about the fundamental goals of design. He asks, in our lives and in our work, how do we love all the children of all species for all time? Clearly, McDonough believes that sustainability involves a shift in attitude and values and an expansion of our sphere of moral concern. It is an attitude.

If all of this sounds not confusing enough, there’s more. It is basically a humanity issue more than an environmental issue. We are not seeing the whole if we only see environment. How do we provide a decent life on this planet is a problem facing all humanity? Well I am making the problem too difficult to solve. This is a wicked problem; it is both systemic and maybe the ultimate challenge.

As I see the term sustainability will continue to be misused. There are companies that were doing a great job day one. It is great to hear people from Starbcucks, Ben and Jerry and HP talk about sustainability and how they are doing it. Ben and Jerry is probably one of those very few companies that started thinking business social responsibility and sustainability many decades ago. Rob Michalak, Ben & Jerry's Director of Sustainability was explaining the company’s approach to sustainability. I really like the word they use at Ben and Jerry –“Linked prosperity”.

Ben and Jerry is now an Unilever company, but that doesn’t change their way of doing things. There was an agreement as part the acquisition terms that there would be an independent board to oversea and ensure Ben and Jerry will continue to deliver on its social mission.

There’s no sustainable without social innovation. It means sustainable development. According to Unilever CEO Patrick Cescau , Social innovation by business is a big part of what’s needed to get to sustainable development in general. Cescau's definition of social innovation, at least in Western markets is: "finding new products and services that meet not only the functional needs of consumers for tasty food or clean clothes but also their wider aspirations as citizens."

Social change occurs in waves. We are still many waves away and hope it keeps coming.

Forget The 4Ps Of Marketing. Let's Talk About The 4Ps of Sustainable Business Strategy: People, Planet, Purpose and Profit. Now That's Business Transformation.

Whether we are talking about innovation,, technology or public policy, we often come up with solutions that creating more problems than they are supposed to  solve. Given the enormous complexity and almost un =manageable challenges ahead, what do we need to do? What seems to make sense doesn’t do it anymore.

How do we make the 4Ps of working in harmony? People, Planet, Purpose and Profit is rapidly becoming the new mantra of a new generation of managers, they are now challenged as never before to deal with a myriad of issues that go far beyond creating shareholder value. What good is shareholder value when we are selling our future short? What good is shareholder value when there are no jobs? Some argue that outsourcing to some lower cost countries can help a company to make money. When there are no jobs, there won’t be any pension funds to provide capital for these corporations? When we run out of natural resources there won’t be any customer or markets?

The 4Ps are the framework to a more sustainable world, corporations are beginning to understand the importance of adapting this new “sustainability” business paradigm—one that focuses on creating a better balance between social, environmental and economic factors for short- and long-term performance.  Innovation is not creating more products that no one wants or brand extensions that only the brand managers know what it means. Innovation needs to be about new business model; new partnerships and new social behavior.

Our economic system is not designed that way unfortunately.  How can a "sustainable" business climate ever be possible in a quick return capital driven economic system? Do we continue to reward those who design and manufacture products that only serve the purpose of making money at any costs or laughing at those who design “green” products that no more than a quick green wash?

We need to start at the shareholders level.  Here’s a story. When Jeff Bezos was addressing shareholders in Amazon’s annual shareholder meeting this week, the sustainability issue was raised. They questioned some of Amazon's business seem very un-eco: It's an online retail company that sell products with lots of extra packaging to prevent breakage and it relies on delivery trucks to deliver to people's homes. But Bezos was well prepared and he was quick to show the company's greener sides:

First, he said, consumers will drive a 2,000-pound car to buy a 5-pound item from a brick-and-mortar store. "It's much more efficient to use a full truck to drop off packages than when everyone does point to point delivery," he said, noting that delivery trucks use an optimized route.

Second, Amazon's investment in the Kindle – and it is indeed still in investment phase, he confirmed – is one that could lead to less paper printed later on.

Third, Amazon unveiled "frustration-free" packaging last fall that eliminates the need for dozens of wire ties and hard plastic encasements.

And finally, Amazon has dubbed hundreds of employees as "Earth Kaizens" who identify waste and look for more energy-efficient practices. As a result of the Kazien recommendations, Bezos said, the company eliminated light bulb in its food vending machines company-wide, saving $20,000 per year on energy costs.

Bezos was giving a lot of funny one-liners during the meeting, I’ve seen him doing that in the past. When he was telling about his company's philosophy… "Advertising is the price you pay for having an unremarkable product or service…” That was a good one. He made the comment during final part of addressing a question about Kindle's competitors.

Sustainability is a wicked problem, with high energy and food prices, the debate about biofuels, water stress, agricultural subsidies, deforestation, and environmental degradation is proving too difficult for anyone to handle. The short-sightedness of some some government and big institutions money continue to push us down the wrong path.

And for businesses, we need to stop thinking more products. Let’s think better products. Better means products that are socially responsible. It starts with planning, not with marketing. Decisions such as what to make, where and when to make it and where to locate inventory are focused on profit or revenue maximization,, it needs to extend to include carbon emissions and exploring options to education customer to participate-even means doing more work. I think consumers are happy to do that provided we can put a compelling case together. This is the future of business. As least I hope it is the case. Have a great weekend.

The Six Most Common Approaches To Innovation. Tell Me Which One Works For Best For You?

Here's a picture of my notes which is part of my presentation next week on innovation and organizational change. I was on my way from the airport to the hotel. I was thinking about many of the challenges my clients face internally due to the lack of a burning desire to make the change. Does companies need to have near-death experiences in order for them to act?

I just came back from innovation sessions and they were very fruitful. The participants were very energized seeing into the future and its possibilities, they also have a very pragmatic view of how to make innovation happens.

Innovation is not only hard but also requires a set of new skills.  You need to see "change" as an opportunity but not a "problem."  Some people welcome bigger problems otherwise they get bored. And most innovation dialogue takes two paths 1/ a visually stimulating sense-making dialogue to create a deeper understanding of the problem space 2/unstructured, playful and open-minded dialogue about the problem face

People often ask me the question “What’s the best approach to innovation?” There is not best way. But there are many toolkits, practices and metaphor to making innovation more productive.  Innovation doesn’t have to be unproductive, spending days or brainstorming doesn’t necessarily get you’re the big ideas. There are many secret weapons to make innovation smart and productive. I’ve shared many of those here in previous posts.

So here are the 6 most common approaches to innovation:

Find-New-Ideas-To-Power-Up-Growth-Strategy approaches to innovation – An approach to innovation in which organization make the most strategic use of innovation. Linking innovation to a growth strategy is wise for organizations. Every organization should institutionalize innovation and use it drive growth and this include an integrated processes linking their innovation group with marketing and corporate strategy.  The innovation plan should be given the mandate to explore and provide as many ideas as possible to form key pillars of growth.

Find-Customer Needs-First approach to innovation – An approach to innovation in which companies relentlessly uncover customer’s unmet needs through a “Jobs-to-the-done” lens.  Then devise solutions to address those unmet needs and often unarticulated needs (things that traditional market research often fails to uncover). There are situations this approach can be less effective when dealing with very new technology or products that yet exist, as customer cannot articulate what don’t know. There are ways to get around that by showing consumers mock-ups of future products and services.

Find-A-Killer-Idea-First approach to innovation – This works well particularly in an entrepreneurial way. Sometimes people just want to look for the next big idea (VCs for example) and don’t care about the industry or scope and scale of these big ideas. The best example is the famous story that Jeff Bezos was driving across the country and came up with the ideas of Amazon.com.

Throw-Plenty-Of-Ideas-Around approach to innovation. This usually doesn’t work well due to a lack of focus and strategic intent. Often ideas are left there without any follow-up action or ideas are not attached to business. Funny enough this is the most common way companies are trying to get new ideas.

Define-The-Problem-First approach to innovation. This is another good way to start. Spend more time on framing the issues and understand the problem context before you start innovating. This way the outcome is usually very relevant to the problem and at the minimum you will get a comprehensive views of the problems even if you can’t get to the right solution.

Hide-In-The-Dark approach to innovation. This is when people want to innovate under the radar-screen for reasons such as there's a lack of support from senior executives or not ready to expose the idea until they’re ready. This is often a pretty effective way, people come up with creative ways to do skunk projects and these projects will ultimately benefit the organization. The challenge is getting the resources you need since you’re don’t have proper resource allocated to it.

It is inherently flawed approach to innovation is when you start with the creative generation of ideas and is followed by different evaluation and filtering methods that determine which ideas customers like best or best fit the business without ever explicitly understanding the two most important factors: 1/ customer unmet needs 2/ future scenarios 3/technological foresight. Stage-gate is the most popular but it is a product development process and not an innovation process. Many get confused.

Although this approach is popular, the chances of coming up with an idea that precisely addresses all the unmet needs of a target customer are near zero. This approach is kind of like a sharpshooter trying to hit a target without knowing what the target is or a doctor prescribing a treatment without seeing patient symptoms. Innovaiton is not guesswork.

Intuition Is Important To Innovation. So You Ask Yourself Are You "Intuition" Gifted? If Not, Here's A Few Practices To Help You Improve It.

We all understand why intuition is important for innovation, and it is least understood. I was trained to apply intuition but follow up by fact-based analysis to back up the hypothesis. Intuition is generally define by 1/ immediate apprehension by the mind without reasoning. 2/ immediate apprehension by a sense. 3/ immediate insight that points to the direction of a solution.

Intuition is actually a basic psychological function, much like thinking, sensing and feeling. It is not associated with psychic abilities. It is probably not correct to say that intuition is a single narrow function of the human psyche. it is more of a full integration of several faculties. And when you're using all your senses (known and unknown) all together functioning at an optimal level, that's when your intuition at work in its most powerful state.

Philosophically speaking, intuition exerts a paranormal or magical influence on everything new. In Educating Intuition Robin Hogarth describes various ways that intuition might be improved or educated. The two most notable impediments to the education of intuition are:

1/the presence of confusing or “wicked” environments where feedback is unreliable and there are no factual information to support decision-making;
2/the limited scope or “domain specific” nature of intuition and intuition can therefore inhibit innovation because such obstacles exist. Intuition is an idea we often take for granted without considering what we mean by it.

Innovation requires intuition not to help create more ideas, but to make sense of them. It is most needed when evaluating ideas and in particularly transformative ones. Big ideas often seem stupid at a first glance, the tiny little voice from your intuition is the one who is telling you “wait a minute, there’s something here..”

Is there something called “strategic intuition” and “tactical intuition”. I don't think so. All breakthrough ideas happen in all realms of human endeavor. Can you lean to improve your intuition or you are simply bored with or without it?  I don’t have the answers. I think only to some degree. Intuition is closely link to the ability to sense-making. The act of sense-making is to discover new terrain as you are inventing it. In the very process of mapping out the new terrain, you are actually creating it. Here are three tips for sense-making:

1. Seek many types and sources of data (including raw data)
2. Do not just apply your current frameworks, try to overlay them on the problem space
3. Try to use different or as many metaphors, pictures or stories to try to capture an communicate critical elements of your map.

Applied intuition, there are three things you can do to make it work better for you (Puzzles designed by George W. Hart):

1. The search process – you need to abandon your preconceived notions of what solution might be. Open-mindedness is an invitation for intuition to kick-in.
2. The flash of insight – it is about making the most of stimuli, whether they are music, visual, a personal story, a physical environment or smell etc. Shower works best for most people.
3. Seeing the forests – looking at a problem narrowly doesn’t help with intuition, sometimes distancing yourself allows you to see the whole forest and allow your intuition to kick in.

It is not difficult to see the connections between optimum intuitive and innovative conditions. Are the skills associated with intuition also likely to prompt innovation? Are you “intuitively” gifted? I think most people have a sense if their intuition has been working for them or not. What are the best practices? Hogarth identifies the following skills or practices demonstrated by the intuitively gifted. If you do all of those things, the chances are you’re probably “intuition” gifted:

1. The capacity for visualization
2. The ability to acknowledge emotions and learn from them
3. The willingness to speculate and consider alternatives
4. The habit of testing perceptions, emotions and speculations

The Myth Of "Experience" Towards The Success Of Innovative Start-ups. Forget About Serial Entrepreneur.

It is a good week for Better-The-World as they are gaining more traction and gearing up to launch a number of new features over the coming months. These people work so hard and try to move as fast as they can. The team is not only growing in size but also in learning about user behaviors and partnerships. It is one of the most original idea and make senses for all parties - user, non-profit and advertisers. Called it "Free-raising". 

Start-up is never easy and sometimes you wonder what is more important - passion or experience? For any innovative start-up, you can only have so much experience otherwise it is not an innovative start-up. VCs like to back people with prior experiences, is that a smart practice?

We’ve talked so much how failing is part of building a foundation for future success (that is if you will stop failing one day). Why is it often bankers and VCs are more willing to back those who back those who succeeded the first time than those who failed a few times? The gurus are all saying let’s fail more and fail often. Who is right? I personally don’t like failing, unless it is planned for as part of the strategic learning in an uncertain technology or market environment. Otherwise failure is failure. But pushing failure up-front and making them small is smart. Fail big and fail late is tragedy,

Paul A. Gompers et la.(Prof at HBS) has just finished an interesting working paper on the subject titled : Performance Persistence in Entrepreneurship:

All else equal, a VC-backed entrepreneur who starts a company that goes public has a 30% chance of succeeding in his or her next venture.

On the other hand, first-time entrepreneurs, have only an 18% chance of succeeding, and entrepreneurs who previously failed have a 20% chance of succeeding. But why do these contrasts exist?

Such performance persistence, as in the first example, is usually taken as evidence of skill. However, in the context of entrepreneurship, the belief that successful entrepreneurs are more skilled than unsuccessful ones can induce real performance persistence. In this way, success breeds success even if successful entrepreneurs were just lucky. Success breeds even more success if entrepreneurs have some skill.

The key idea is that there is evidence for the role of skill as well as the perception of skill in inducing performance persistence. This is consistent with the view that if suppliers and customers perceive the entrepreneur to have market timing skill, and is therefore more likely to succeed, they will be more willing to commit resources to the firm. In this way, success breeds success and strengthens performance persistence.

What does it tells us? One interesting observation from the authors is that the very best and the very worst entrepreneurs do not become serial entrepreneurs. That makes sense. The very best entrepreneurs are either too wealthy or too deeply involved in their business or too lazy to start new ones. The successful one either become partner of VC firms or decided to pursue social ventures to contribute back to societies, both are good. And there aren’t too many serial entrepreneurs anyway. Any who failed decided to just to back to work for a large company.

So what are we left with, smart first timers or someone who failed recently, you still get roughly the same 1/5 of a chance for succeeding.

What's The Future Like For Wieden + Kennedy? Where Walking In Stupid Will Take Them Next? Dan Wieden Is No Ordinary Ad Exec, He's A Very Different Breed.

My people told me we had a problem. There was an error on the printing side and our 60-minute Brand Strategist Book (Limited Edition) was now changed to 80-minute (no one was telling us). I thought may be Morgan decided to further enrich the content, hmm he definitely too busy to do that. Probably not him. I jumped off the roof (actually the plane), went to the office and opened those boxes, fortunately it was only limited to the boxes. They did not add 20 min of content to my book. Who knows, someone just decided to add 20 pages of reading - sort of bonus chapter. So many things can go wrong.

I want to write about W+K. I think it is a very special company both work and culture.  Wieden+Kennedy is no question one of the world's creative advertising agencies if not the most, has a very unique culture and cool office spaces, you don’t hear me saying that often, there are usually more criticism coming from me. The question for them is where it should go the next 20 years. Are they on a selective building mode or packaging for sale mode? Or they are going to play in the social media sandbox and reinvent advertising once again?

When Dan Wieden founded the agency 20 years ago with David Kennedy, their motto was just one of many slogans found in this strangest of workplaces. "Fail harder" and "Welcome to Optimism" are two examples. I remembered I’d like their print ad so much that I put it up in my office in my LA office.  It is more than an ad. It meant something more to me.  It reminds me of what do I need to stay competitive. It has an emotional connection to me even though I am hardly a sportsman. They are no question one of the finest creative ad agency founded during the last two decades. There are lots of creative shops out there, but not one that institutionalize creativity like W+K did.

I love their offices, there’s a little weirdness but still quite traditional looking (unlike Mother) and there’s a padded cell for creative thinking on the top floor and a giant polystyrene statue called Nicola (crafted by the artist Wilfrid Wood). So what’s W+K’s future? In an interview with The Independent, Dan says the agency thrives on a culture "built around a friendly relationship with chaos", a concept represented by Blender Man.

"I think it's important that if you're going to be innovative, that there's not a process for everything. Sometimes it seems that if you're never lost you're never going to wind up any place new. It's only if you're willing to be completely fucked-up that you're going to do anything important.” That’s a spirit of innovation not commonly found in advertising agency.

The funny story about the Nike slogan “Just Do It’, he said it was no more than something to link a few commercials and never meant to take off like that. They just typed it out on typewriters, then blew it up, and put it on a board. It surprised everybody involved because it apparently spoke some truth that was larger than sport or advertising. It is a big idea even though they didn’t really expect it.

W+K is late in the digital game and I can’t speak to their current digital capabilities. Sure they are playing with it and have the same challenges as other larger agencies. The digital or now known as “social media’ challenges is a different game and probably clashes a bit with the way things are done there. They reckon that the most exciting creativity will happen in the mobile and social media space.

The good news is they are a little ahead than the JWTs of the world which are at least 3 years behind. I think the future of W+K will be very different from Ogilvys. David Ogilvy’s  goal was to professionalize the advertising business and create an enduring and respectable institution. David is more of manager in a traditional sense. On the advice of his banker grandfather, he adopted J.P. Morgan’s phrases — “Only first-class business, and that in a first-class way” and “gentlemen with brains” — as guiding principles for his agency. He is more of a system and structure person and understand the importance of growing leaders.

Dan is a very different breed. He strongly believes that the advertising discipline is not about money and business – it’s about creating a place for people in a compound way. It’s got to do with art and most importantly, building culture. He takes risk and willing to accept failure. In his words, “The secret of my success is failure and uncertainty”. That’s the perfect motto for innovation.

I look forward to seeing how they overcome the social media challenges, developing talents in the development world (India and China) and finding the people to power W+K forward into the next 20 years as the advertising elephants will continue struggle to learn to dance. Can you teach an elephant to learn to dance?

Dan believes that his job is to “walk in stupid every day” - to keep challenging the organization and himself, to seek out unexpected ideas, outside influences, and new perspectives on old problems. “…..but it’s the most important thing. Whatever day it is, something in the world changed overnight, and you better figure out what it is and what it means. You have to forget what you just did and what you just learned. You have to walk in stupid every day.”

Great Advice From AG Lafley: What Only The CEO Can Do? The Four Most Important Things To Stay Focus On.

I’ve not been reading much for a few months, hardly any magazines of even blogs or my investment statement. Just don’t have the time. But I did decide to pick up one of the 50 magazines sitting in a corner unopened; it is the latest copy of HBR. So I took it with me yesterday for my Sunday brunch reading. 

Skipped over pages and found a really good piece. “What only the CEO can do?” by A.G. Lafley.  So I read that one. It is one of he most practical piece I’ve read in many years and is written in plain English, not consultant buzz words. Lafley has offer good advice that are not only narrowly written for the CPG world, but for executives at large. He gets to the heart of issues in a laser sharp way (most important quality of a strategy consultant), the article addresses the most important roles a CEO should play in an organization.

Lafley states that the “CEO has a very specific job that only he/she can do. that is to link the external world with the internal organization. According to Lafley, “The CEO can see opportunities that others don’t see. You should find a copy if you don’t have one sitting somewhere. Here’s am excerpt:

Task 1: “Defining the Meaningful Outside” - This means that if you take a look at all the outside influences that impact your company, which ones matter the most? It is easy to all of them are important, capital markets, regulators and suppliers etc. But the simple answer should be the “consumer”.  Everything should revolve around the interest of the consumer. Often people get confused.

Task 2: “Deciding What Business You Are In (and NOT in).” - The question of where should you play to win and where should you not play at all. This is the most important strategy question but never an easy one. There is not magical framework to help with this important decision.  How far a company should expand beyond the core and how much they should stick to it? There’s no simple answer and depends in the business context and where the company is at from an industry lifecycle perspective.

Task 3: “Balancing Present and Future” - It means striking the right balance the short and the long-term goals and it should comes from judgment and experience and not from facts. This is a tough one as there is always a conflict between the two and the art of balancing the two requires commitment.

Task 4: “Shaping Values and Standards” - Values establish a company’s identity and they are about their behavior. If a company is to win, these values must be connected to the meaningful outside and relevant to the present and the future. The two most important questions to answers are: Are we winning with those who matter most? Are we winning against the very best?

Task 2 is the most basic function of business strategy, a business needs to grow and generally through economies of scale, it is about the benefits gained by the production of large volume of a product. Economies of scale were the main drivers of corporate gigantism in the past century. At the same time the growing its product or service offerings, termed economies of scope is linked to benefits gained by producing a wide variety of products by efficiently utilizing existing capabilities.

If a company expands itself both in scale and scope, it is strengthening its market power and positioning but also increasing its vulnerability.  Economic of scope is becoming more important (and more and more least understood) than scale in some instances because there are so much abundant capacity in manufacturing, This refer to the potential advantages of integration between product lines or even categories.  Social technologies and connectivity changes many of fundamentals and provide plenty of innovation/disruption opportunities for companies to leverage economic of scope in new ways.

Three Secret Weapons Of Innovation: Sensemaking, Weak Signals Reading And Futuretyping. Which One Of Them Do You Currently Practice?

Welcome to the 24hr Innovation Marathon! That’s right! This post is part of “My Half Time Pep Talk for 2009,” a collection of posts about innovation on a variety of blogs, as part of the Board of Innovation’s 24 Hours of Innovation event started 3am May15 (Central time) to 3am May16. 

2009 marks the 27th (correction not 25th) anniversary of the publication of In Search of Excellence (1982) by Tom Peters and Bob Waterman. Their ideas shaped new management thinking for more than two decades and inspired many young managers. The thing I like about Peters is that he is not a philosopher and he doesn’t have any all-embracing theories of the world of organizations or any formulas for change. I’ve heard so too many management thinker/academics talking bullshit about what companies should do and be organized around. They have no clues of what is needed to make innovation happen in complicated large organizational settings. There are only a handful of people truly understand what innovation means and why it is so hard. Peter is one of them. Peters once wrote: “…Perhaps the biggest implication of the Internet is that it has caused the half-life of old, giant companies to go way down.” He didn’t tell you it is happening that fast.

Peters’ advice to companies is “Strive for Strangeness”: Creating a portfolio of the weird and encouraging "freaks" to flourish in the company will help ensure the steady stream of innovative ideas necessary to survive in a hyper-competitive international business environment.  How do you encourage people experiment with Lego-like products and services to create innovative business models. Prototyping  can help organizations evolve as rapidly as the opportunities that arise and disappear around them. Executives have many resources at their disposal – capital, technology, channel, and brand – but none are as valuable as their ability to use their own imagination and will to innovate, and empower their managers to do so.  Organizations that want to develop a capacity for continuous, game-changing innovation need to equip themselves with a new toolkit.

When the Economist called innovation the “industrial religion of the 21st century.” So what exactly is the new thinking about innovation and why is it so important? Why does it need to be taken so seriously by business and government? Very simply, innovation is the engine of economic progress. Without it many of our firms will go out of business, and those that remain will become second-rate, subservient to international leaders in decision-making and profit taking. Without innovation there won't be new businesses and jobs that are necessary to support economic growth. There are many ways to go at it, basically there are five schools of innovation:
1.    Foresight-powered vision-driven innovation
2.    Modification and sustaining innovation
3.    Open collaborative (industry) innovation
4.    Jobs-to-be-done or user-driven innovation
5.    Exploration and experimentation-based innovation

Does it matter which innovation schools you organization decides to follow, there is no one best way to do it. It depends on industry competitive context, leadership styles and organizational design and dynamics. The same way that there are many ways to compose a piece of great music.

Innovation has a bigger mission than finding the next great product extension. It is an institutional capability.  It is more than just one successful new product. We have many problems to solve and so many opportunities for innovation. Look around us. The world’s population is exploding and this population growth drives deforestation, the expansion of agricultural land, the pollution of air, water and soil, and suburban sprawl etc. Human activity, such as urbanization and development, spoils wildlife habitats and makes many species extinct. Changes in our landscape are occurring faster and on a larger scale than ever before. Our population could pass 13 billion in fifty years.

Never before in the history of earth have so many people shared the planet earth. At the same time, we are persisting in developing “labor saving” technologies to automate everything. Technology is dragging us into unknown and dangerous territories by accelerating social change. Business, societies, nature and policies are struggling to keep up and probably 4-5 years behind. My point here is that all innovations have unforeseen consequences - even when they are done for the very best reasons. It is not just more products. Do we really need more products?

The next Innovation is about solving bigger problems and innovation that are transformative in nature. How do we make sense of all these complexities? The three most important toolkits that help create transformative innovation in Idea Couture’s toolbox are 1/ sense-making 2/ weak signals reading 3/futuretyping. I will explain more here.

What’s Sensemaking? Sensemaking involves the ongoing retrospective development of plausible visuals that rationalize what people are doing. Using a visual language to help unfold as a sequence in which people concerned with identity in the social context of other actors engage ongoing circumstances from which they extract cues and make plausible sense retrospectively. We are not limited to one identity when we do this. In a human complex system, an agent is anything that has identity, and we constantly flex our identities (both individually and collectively) and behave differently depending on the context.

Sensemaking is a metacognitive strategy, it is clear that people recognize patterns in the data in ways that they can’t talk about. That kind of inarticulate recognition (meaning that you can’t express it easily) is what we perceive as intuition. We’ve all got it, and good sensemakers have good intuitions about how things go together. Boundaries are possibly the most important elements, in sensemaking, because they represent differences among or transitions between the patterns we create in the world that we perceive. The exercise can effectively serve as the springboard to action.

What’s Weak Signals Reading? This is about the strategic management of surprising and potentially impactful (not necessarily bad) events, or call it card management system. Wild cards refer to sudden and unique incidents that can constitute turning points in the evolution of a certain trend. As the first of the two components of such a wild card system, a weak signal methodology to take into account those wild cards that can be anticipated by scanning the decision environment. The second component, the nurture of improvisation capabilities, is designed to deal with unanticipated ongoing crises as part of a broader agenda on how to manage in conditions of continuous but unpredictable change. Seeing the unseeable and thinking the unthinkable.

What’s Futuretyping? It is about prototyping different strategic futures.  It is a far more effective method than scenario planning. It allows the key stakeholders to be able to touch a tangible future and create excitement so they can channel their energy and imagination. Prototyping the future business model is not a spreadsheet exercise. It borrows heavily from system-dynamics.

Continue onwards to the 24 Hours of Innovation marathon event. Happy reading.