innovation playground Idris Mootee

Transmedia Story Telling - The Next Brand Building Super Engine?

Every individual in this world shares one commonality which is we all have stories to tell. Some have very interesting ones and some are sad. It is like we all have a photo albums or a 60 minutes documentary that talks about our life. The older we get, the more repetitive these stories become. The true role of story and storytelling is much greater, older, and elemental than Hollywood. The human animal is a narrative animal and we are made of stories. We tell them, understand them, remember them, and live them. In the canonical image of village people sitting around a fire at night, everybody is listening to the storyteller tell the tales of the day, the season or of the people themselves. The tales were about life itself – living it, surviving it and ending it; whether historically or metaphorically. And since stories are such an important part of our very nature, we have no choice but to apply this natural and powerful tool to entertainment as well as to the other parts of our lives, like business. MIT’s Jenkins describes transmedia story telling as “Transmedia storytelling represents a process where integral elements of a fiction get dispersed systematically across multiple delivery channels for the purpose of creating a unified and coordinated entertainment experience. Ideally, each medium makes it own unique contribution to the unfolding of the story.”

For many who are eager to share their stories. There is always a challenge of not finding the right audiences or enough audiences. Then came YouTube, almost like the answer to their prayers. It is more than just silly videos. The idea of finding new ways to tell them and actually taking the time out to "listen" can bring happiness and inspire people by recognizing relationships and likenesses on a human level, across every corner of the world. These stories capture our emotions, experiences and events. Advertising has always been telling story via a 30sec TV commercials and every scene is carefully designed to tell a brand story and to elicit emotive responses. In the interactivity world, creative folks use categorization, visual cues, and layered interactivity to tell stories within stories within stories --a digital/emotional experience that can live on the web forever. In an era of convergence, consumers are becoming explorers and gatherers pulling together information from multiple sources to form a new synthesis. Advertisers began to learn to embrace this powerful concept as a branding tool as they seek to leverage them across medium.

The democratization and bottom-up programming are slowing down anytime. It is a tough one for traditional media companies to  repsond to because younger companies can take a lot of risk that more established companies cannot. Think about the risk YouTube took and it paid off. The problem with large companies is they're not doing strategic product development, which involves launch, listen and learn. Instead they're wasting six months doing strategic planning, Any planning can only be agile in this world. You need to act fast. Companies who put user needs and emerging behavior above all else will be better able to adjust to media's ever-changing environment.

Let me throw you a million dollar idea here, if these self-produced mini-clips can be used as powerful medium to carry a brand message, then opportunity exist for a company to broker marketers and ad agencies to sponsor them. With the continuous rise of YouTube as a distribution channel for consumer-generated videos, it makes sense even for consumer electronics manufacturers (cell phones, camers etc) to incorporate YouTube functionality into their digital video cameras. By cutting down a few conversion steps, camera makers have eliminated a key hurdle between users’ footage and their computers. Just upload directly from your video camera. There is no questions that the number of video content creators is likely to grow, (both amateur and professional and pro-amateur) and this is further validated by a Penn, Schoen & Berland Associates study commissioned by Hill & Knowlton. PSB found that 41% of adult consumers would like to use a personal computer for creating or editing video or audio. Below: Photo of SamSung YouTube phones.

So the question is, if I am an advertiser, I would find the top 100 consumer generated video clip that can increase my brand relevance to the market and offer to buy the rights for a product placement. If a company comes to me and tell me I can have my brand message appears in these 100 video clips for six months I will cut them a check. I will even consider signing them up to sponsor their next episode whatever. I think there’s money to be made here. I can write this business plan for this in a few hours. If you can come up with another idea, ping me. I will write the plan for you if it is a good one.

Innovation and Design Thinking - Is It A Mindset, Process or Profession?

Continuing on this topic. Let's start with some key findings from a recent McKinsey survey.  According to the survey, a company’s main challenge with innovation today is finding enough talented people. In the survey, top managers agree that identifying the right people and aligning them for innovation is their single-greatest struggle and that the most important drivers of innovation are the organization’s culture and people. The survey further suggests, however, that companies discourage talented staff from pursuing innovation by offering limited incentives, being risk averse, and having no plan for dealing with failure.

The findings shows that executives have very different perceptions of the struggles related to finding and aligning their people. In short, it is still a lack of common understanding despite its importance. Innovation is not in the core curriculum of MBA schools. Another interesting point is 40% of top managers say that they do not have enough of the right kind of employees. Among respondents who do say enough people are available, however, nearly 50% say the right employees are in place, motivated, and protected by senior leadership, and only 22% say the organization’s culture inhibits them from making progress. The question that immediately comes to my mind when they say they do not have enough of the right kind of employees, I wonder if they have a definition of what are the "right" kind of employees. That would be an interesting question to add to the survey. I don’t think you will get answers such as “we need designers in the executive suites or we need more senior executives with design thinking”.

People who are trained in various disciplines of design are particularly good at using their instincts more than other individuals. Any innovation strategist must develop a keen interest in what works in marketplaces and what are the desirability factor as well as usability factor. Designers have an advantage and a key role to play in this innovation movement and that’s why I was saying MFA is the new MBA. The innovation field per se needs to use many different forms of design, crossover, jammed and integrated, to get beyond some threshold level of activity--enough to get commercially produced and, to be strategic. The great news for designers about the rise of a corporate interest in innovation is that it recognizes, more than ever before, the strategic contribution of "design thinking" to product, service, information, and corporate level bsuiness strategy. I think this as a long term trend that will likely to persist for at least another decade. I am not saying any designer should be given the decision making power for important business projects. I think we are talking about new capability. I don’t think we can simply put designers together with spreadsheet crawlers and expect innovation will follow. Design thinking is not only about design. It is about applying their mental models, languages and tools to complex business decision making. I'd like to see practitioners, design schools, business schools and engineering schools coming together to create broad new capabilities and professionalism that will actually meet the underlying need for objects, places, human-centered concepts, and distinctive experiences that human beings crave--and enterprises must increasingly learn to deliver to thrive and prosper.

Photo: Stanford Design School - Masters Project

My friend Bob Jacobson (A planner and technologist, science writer, consultant, a Fulbright scholar and he edited Information Design with MIT Press and is now working on a book on the theory and practice of creating edifying, transformative experiences www.corante.com) believes that my notion of "engineering desire" is a bridge too far.  According to Bob," Knowing as little as we do about desire, presuming to be able to engineer it may lead marketers in pursuit of a Holy Grail -- or possibly, a wild goose chase."

I think this point is somewhat valid. But we need to look at markeitng today which is at its mid-life crisis and in the middle of a complete transformation. Many consumers now experience consumption as part of the journey towards personal development, achievement and self-creation. Marketing is evolving away from a top-down supply-chain-centric approach towards one that provides or facilitates innovations for new ideas and consumer meanings. The co-creation of ‘desirable’ experiences with consumers has become the basis for value and is experiencial in nature. This, in fact, challenges the convention view of product-centric innovation.

Photo: Parson Sustainable Design Project

Let me post a few questions here. Is design-driven innovation a new profession, or is it a new level of collaboration between existing professions (design, engineering and business)? It's interesting for us to think a little ahead. Industrial design wasn't always a profession - it was packaging for engineering ideas. Then it slowly evolves into a specialist domain. Interface design was an application of psychology. Then there are Interactive design and Service design. Will innovation be part of the schools of business? Or schools of design? Or schools of anthropology? Or school of engineering? Can the discipline be formed without the support of the educational system or professional associations? Should innovation be implemented as a mind-set, a process, or a deliverable?  Tell me what you think.

Photo: Cup holder designed by Maya Goldberg (a recent graduate of the St Martin's College of Art and Design, London)

The 4Ps of Innovation and Design Thinking

This has been a crazy week. And worse we missed out flight by 5 min yesterday and ended up spending the afternoon in O’Hare eating really bad food. Here's a photo of us between meetings. I realized I have not posted anything since last week. It is not usual as I always try to do that at least every other day. Here we go, back to our topic of “design thinking” and “innovation”. Both topics are getting popular but least understood in the executive offices.

Diagram: BAH Innovaion Effectiveness Curve

Last year, the BCG innovation study reported that innovation remains a top strategic focus for many companies, with 72% of the 1,070 executives in 63 countries and all major industries ranking it a top-three strategic priority. It demonstrated that innovation does translate into superior long-term stock-market performance: the 25 most innovative companies (as defined by the survey respondents) had a median annualized return of 14.3% from 1996 through 2005, a full 300 basis points better than that of the S&P Global 1200 median. Furthermore, innovators increased median profit margins by an annualized 3.4%points per year over the ten year period, vs. 0.4 % points for the media S&P Global 1200 company. In addition, they maintained revenue growth on pace - 9% per annum - with the index median. They asked the executives why they thought the company was innovative, and summarized the results for the top five. These were the top three:

-          Innovative Culture

-          Deep Customer Understanding and Focus

-          Market Focused

According to the BCG/Business Week 2007 survey, the first 50 of the 1032 responses on the survey believe Apple is the most innovative company in the world. I believe the very first reason gets to the heart of Apple’s ability to innovation—using design thinking to create products/services that meet the unmet needs of consumers. It is not about building a product whether an iPod or iPhone, they were building an ecosystem of innovation. Their ability to “engineer” desire for products no one ever knew that they wanted. Marketing has always been communicating desire, but never about engineering desire. I would argue today’s marketing has to go beyond communications to innovation. Not all marketers are ready for this new job.  Adding emotional value is not something that is taught in MBA schools. While cost control resulting in competitive pricing of products can influence the customer’s motivation for choosing a product, truly successful products sell because they appeal to the emotions and values of the customer. They do not need to be competing objectives, though many companies consider them to be. Rather, a design thinking-driven strategy that couples the two can produce a product that fulfills the rational and emotional expectations of the customer.

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Design thinking is really a new metaphor for business and marketing strategy. It is the best way to develop and engineer desire and embed them into what we sell. Design thinking is being created at the intersection of experience design (product and interactions), business (including marketing and channel) and technology. The questions which institutions should take the lead in promoting it… B-school, D-School or Engineering School? I don’t have an answer for this one.

Many including Bill Buxton is skeptical about the notion that was popularized by Eric von Hippel that lead users can be co-designers of products. He agrees that a key weakness of paper prototypes is their inability to incorporate the actual data that animates our experiences of products and services. One of his examples: MP3 players think in terms of songs, not movements, so if you load one with classical music you’ll find a bunch of duplicate songs called Adagio. In such a case, Bill admits, you’d like to have used a more fully-realized prototype that could have absorbed real data and flushed out these kinds of problems. His point isn’t that you should never deploy heavier design artillery, but rather that you should reserve it for when it’s absolutely necessary. I do not agree with him on this point. I strongly believe design thinking is about applying visualization as an inquiry process that deals with both verbal and non-verbal mediums. The more heavy design artillery we bring in early in the process, the more we can express these non-verbal attributes of design and draw out both users and business implications.

I am not going to make this a long one today as I am a week behind in terms of my day job due to traveling. There are questions about what  are the many elements of innovation and that includes the mix of people and skills. Also what kind of critical skills are needed, here I would tell you design skills are crucial to any innovation effort. What processes are required to support innovation? The answer is to bring design thinking inspired exploratory process early in the business strategy cycle. Many companies fail in their attempts to innovate because they do not have a structured-play apporach in bringing innovaiton to action. I will wrap this up by giving you a framework to think about applying design thinking in business strategy. I called this the “4Ps of Design Thinking for Strategy” and they are as follow:

-          Pattern Recognition

-          Participation

-          Prototyping

-          Possibilities

Enjoy the slides show and I will discuss each of the above in the coming days. I’d like to hear your views on each of those. Happy Thanksgiving!

Design Thinking And The New Model of Strategic Innovation

My friend Dr. Peter Coleman posted last week said he was interested in my thoughts on how traditional corporations are responding to the innovation agenda. He also asked if we are seeing design thinking etc. embedding itself within the mainstream corporations thus affecting their operating models and recruitment strategies. This is a great question. So here are my thoughts and there are more to come. I did plan to write on this one anyway.

We all agreed that ‘Innovation’ is overused, it is now catchall buzzword and in most cases, people are trying to say that "we're trying something new" or "we're thinking out of the box.”  Although this widespread spirit of experimentation is laudable, the meaning of innovation has, unfortunately, become diluted and, in most cases, meaningless, as a result. So how many corporations are truly responding to the innovation agenda. We will have a meaningful discussion here over the next few days.

What is ‘innnovation’? Advertising folks think it is about creativity or the next brand extensions. Creative folks and IAs think it is all about the next interface. Strategists think it is about a new economic model. Board members immediately think large R&D budgets where team of engineers and scientists work day and night to solve the next big problems. It means different thing to different people. Over the last couple of years I have been working to develop a more refreshing approach to help companies think ‘innovation’, I finally come to the conclusion that the best way to do this is to start thinking like a ‘designer’. In the experience economy, our competitive advantage lies in our knowledge of customer experiences. It includes insights into emotions, interactions, social connections, meanings from objects and interfaces which lie behind any experiences are crucial--what creates meanings, memories and deep empathies?

'Design thinking' is the 'catalyst' to create new ideas, or to recombine old ideas in new ways, or to allow the crossovers of different concepts. Many organizations have most of the right elements to be successful or create new value, they just may not necessarily know how to make that ideas transform their thinking or put them together just designers are trained to do. There’s always some tension between old management thinking and the new kind of management needed for tomorrow’s organizations and these are contextual.  Go back 50 years organizations were working to develop some organizational principles that would bring predictability and stability. And as a result we get improved productivity.  The world has changed since Ferderick Taylor invented scientific management, b-schools were teaching out-dated ideas and a generation of managers was trained with the wrong tools and ended up spending two years in manager-producing (MBA) factories. One exception is Roger Martin (Dean of Rotman School of Management) was first to introduce the idea of ‘integrative-thinking’ that is long needed. Arthur Little was a pioneer and the first to see the need for the convergence between business skills and engineer skills. Roger Martin is another pioneer and was the first to see the need for convergence of design skills and business skills.

Everybody talks about the ‘best practices’ but we really should be talking about ‘next practices’. ‘design thinking’ is the ‘next practice’. Everybody says that the organization needs to be customer-led. Yes, the customer is the king. But we need to be innovation-driven as well as customer-led. ‘design thinking’ is the glue to make the two connects together.

(These slides were taken from a 50 slides Idea Couture's deck that talks about how our company incorporate design thinking in up-stream strategy development. BTW, I took the picture below at a restaurant called Alinea in Chicago which is a true experience itself. This is comparable to the Jean-Paul Gautier bakery exhibition in Paris, I was there for the grand opening party. I was truly impressed with Alinea and I will let Scott Friedman write about it this weekend.)

Visionary managers innovate by operating in the intersection of business strategy + experience design + emerging technologies. Innovation is at the core of organization’s ability to create new value at the intersection of business, design and technology. To do that we have to have new insights, we have to do things differently and cannot rely just on invention or pure technology R&D for success. That’s where ‘design thinking’ is needed and here I mean more than just deep understand of user needs, I am talking about applying 'design thinking' that create user value as well as economic value; conceptualizing and prototyping opportunities early enough to create touchable and tangibles of different strategic futures (which was traditionally done on a spreadsheet). It is a process to understand strategy in a tangible manner. It will prompt discussions and debates on all interconnected elements and in a human-centered way. I need to stop here otherwise I will write another 2000 words. More later.

                                     

Enterprise 2.0 And The Concept of Vituality

While we we’re on the topic of Enterprise 2.0, I remember when Peter Drucker coined the term "knowledge worker" some 15 years ago he was referring to a new class of employee whose basic means of production was no longer making widgets (I don’t mean the software widgets, I mean object), but, rather, the effective use of knowledge and creativity. Knowledge worker includes not only the traditional professionals (architects and engineers), but also the creative class and the ‘misfits’. Today, these ‘misfits’, who preferred to be called ‘knowledge worker’ represent a large and growing percentage of the workforce of Fortune 500,. In industries such as financial services, health care, high tech, and media and entertainment, they now account for more than 25% or more of the workforce. These talents are the innovators or collaborators of innovation. They make it possible for companies to come up with new business model that help them to survive today's rapidly changing and disruptive business environment. They are the people who produce and manage the intangible assets that are the primary way companies in create economic value. Unfortunately the educational system of the world is to provide a uniform level of competence based on the faulty metaphor of education as a factory ( It's worth recalling that Steve Jobs' brief college career included an utterly impractical interest in calligraphy. Can you calculate the value of what would have been lost if Jobs hadn't been able to follow his interests? ). This is another problem on its own.

Think about it. The inefficiency of these workers has increased along with their prominence. Consider the act of collaboration in an Enterprise 2.0 world. Each upsurge in the number of workers who work in a company (global virtual and on-site) leads to an almost exponential—not linear—increase in the number of potential collaborators. Many leading companies now employ 20,000 or more knowledge workers from India to Finland to Shanghai and Colorado; imagine the interactions taking place at any particular moment of time. Big corporations must rethink their organizational structures, retaining the best of the traditional hierarchy while acknowledging the heightened value of the people who hatch ideas, innovate, and collaborate to generate revenues and create new value through intangible assets. The idea of “virtuality” is the recognition that the parts of an organization aren't always doing the same thing at the same time and place. These decentralized organizations are similar to fire departments, which operate in cell-like units yet are expected to behave as one organization.

Management Philosopher Charles Handy suggests that these new concepts are leading to a set of circumstances where “distributed leadership” occurs. That, in and of itself, is a real challenge to traditionally organized units like fire departments. His contention is that what holds an organization together today is NOT a chain of command, but rather a sense of common identity, a set of common purposes, and a sense of urgency and energy.

We all admit it is tough to run an organization in that environment(may be less of a people in our business as my team are all over the place and it is rarely a issue). In order for the Fortune 500 of the world to do so successfully, leaders have to deal with mutually exclusive attributes, or paradoxes, Handy believes that people who are leading in this environment must:

- Have a strong belief in themselves yet have the ability to possess doubt.

- Have a passion for the job but be able to respect and learn from other worlds.

- Have a love of people yet be very capable of being alone.

Companies not only need to find people which can lead in this virtual environment, they also need to redesign their vertical structures to let different groups of workers collaborating on an Enterprise 2.0 platform. There is a lot of money to be made here if one can design an effective innovation collaboration platform. I remember a casual conversation that I had with Gary Hamel in London a ten years back; he was asking me if I could up with ideas of a platform that allows employees of larger organizing to co-create and co-innovate, that is another billion dollar idea. I didn’t think it was possible then, but I think this is very doable today. A knowledge worker co-innovation platform…hmmm let’s work on that.

Photo from www.prasena.com

How Will Enterprise 2.0 Transform The Workplace

A question that I often come across during my conversations with senior executives is “what is the impact of web 2.0 strategies and tools from an enterprise perspective?’  Many have difficulties providing a quick answer while they were quick to provide examples of how Web 2.0 innovation has been creating new applications for consumer uses. I believe these innovations are finding their way into the enterprises. Enterprise 2.0 doesn’t really exist today other than a few software companies (content management) renaming themselves. The question is why? There are many answers to that.

I think the term was first introduced by Prof Andrew McAfee of Harvard Business School and being defined as “the use of emergent social software platforms within companies, or between companies and their partners or customers”, the broader global community has attempt to expand, reinvent, and co-opt Enterprise 2.0 with varying degrees of success. But the essential, core meaning has largely stayed the same: Social applications that are optional to use, free of unnecessary structure, highly egalitarian, and support many forms of data. IT folks have serious concerns about Enterprise 2.0 disruptions and the implications (distraction) of bringing this sort of content into their enterprises. Some think that it is about blogs and wikis and many only see chaos.

Many platforms that failed to make the cut as Enterprise 2.0 because they simply didn’t have the qualities that were believed to be important for business outcomes? Enterprise 2.0 takes most of the potent ideas of Web 2.0 peer participation and production and moves them into the workplace. I think we can expect Enterprise 2.0 trend will accelerate slowly over the next 2-3 years. Many big solution vendors are struggling to define what it actually means, not to mention figuring the business value and enterprise wide implications.

So why Enterprise 2.0 initiates gets stuck? Because they fail to answer many of the following questions: How does it help the organization to improve business performance? What does it mean for the knowledge workers? How does it contribute it support human capital development? What are the incentives to share? What are the core issues and does the business and IT teams see the same issues? Who owns the issues and is that a plan to resolve them? Are there agreements on the key risks and is there a plan to mitigate them?

There are also cultural, compliances and legal issues. And if free comment is allowed in a corporate blog or wiki, the company has to be alert to the dangers of libel or infringement of employee rights laws. There must be reasonable measure to ensure the content adheres to certain standard to balance the rights of individual opinion and respect for others. And from a technology standpoint, there's realistic concern about how 2.0 technologies interact with legacy systems and what it will cost to ensure that the IT project is appropriately staffed and resourced.

But the biggest idea is the “transformation of the workplace”. This new generation of social networking and collaborative software is transforming the workplace and starting to take on the very human characteristics of interaction and collaboration that will fuel a burst of productivity to rival the advent of e-mail. It will take 2-5 years and that’s what a typical corporation usage adoption curve will look like.

Talking about workplace transformation, here's a photo of what's the mobile workplace is like. Scott has been performing these dangerous act lately, I was actively ensuring cab drivers saw him crossing the street.

Innovation And The Art Of Managing Customer Adoption

Finally back home from Chicago after a busy week sitting in cafe reading the Journal. I was meeting with some MaRS people today and I was really excited be able to talk to people who really understand innovation and the art-of-start-up. I think they are offering is highly valuable for start-ups as they provide market intelligence and counselling from a team of experienced, multidisciplinary professionals. They primarily provide services to technology companies at early stages of business development.

I remember the days when I was the “Strategist in Residence” for many start-ups in California and Ontario (which I helped them to raise from $250K seed money to millions), the most difficult challenge for many of them was to show how to get customer to use their innovative products.  Early adopters of innovative products are often required to significantly modify their behavior. Consider, for example, the behavioral changes required in adopting an innovative product like an iPhone of the Nintendo Wii, both were super successful in their unique ways.  There were many that never made it to the market; the most notable one was the Palm Foleo. They announced to launch a new mini PC Foleo for people to carry in additional to their notebook earlier this year. My business partner Cheesan was quick to point out after she read the news that it was a stupid idea and won’t fly. She was right. When analysts asked the question, "Who’s going to buy the Palm Foleo?" Well, the answer was: no one. Using a mini-sized PC is a big behavior change, the device was generally considered to be an intriguing "tweener" entry between a smartphone and a laptop. Palm finally decided to cancel the product and recorded a one-time charge of about $10 million. If they’d called Cheesan (photo below) , they would have saved that money for a small fees.

Customers are seldom voluntary participants in things that signify major changes for them. Usually significant benefits entice them into adopting a new product. Current practices or routines are reluctantly changed. Habits constitute a psychological equilibrium between time-tested beliefs and devices used. Change requires a cognitive effort that the innovative products must justify.  Habits are hard to overcome and sometimes go beyond simple utility. Take biodiesel car for example, Enterprise Rent-A-Car started to offer biodiesel rentals in Portland, a move that may help boost demand for the alternative fuel. This is a pilot program to introduce five biodiesel vehicles into its Portland fleet to test customer demand for the environmentally friendly rentals. I think this is a great idea and these rental should be subsidized to encourage trial and drive adoption.

These broad symbolic needs are actually not easy to identify and certainly difficult to change. The complaints I often hear about the conservatism of consumers is mainly a reflection of their ignorance of cognitive psychology. Human beings are physiologically and psychologically limited and often have difficulty handling complexity.  They resist change. Rather than pushing against the human grain, it is better to assess such resistance and adapt a product and its marketing accordingly.

Another reason for slow adoption is many technology-based products require the meeting of some preconditions that before mass adoption really occurs. One such precondition results from the fact that products become valuable when other people own and use them if compatibility is required. Economists called this “network externalities”. For many technological products, this applies. Hence, adoption is slow until a product takes off.  Momentum accelerates the pace of adoption. The rate depends on whether there are common standards being adopted or mandated by regulatory authorities.  This creates enormous pressure on first movers to disseminate hardware in order to facilitate acceptance.

Innovative technology-based products must be correctly positioned and differentiated. The newer the technology, the better the chance to achieve first mover advantages and a higher level of differentiation. Yet this also increases the chance of having a retarded market adoption. In fact the newer the idea or the more “discontinuous” the technology, the more likely for such scenario to happen.

I am posting the second part of the Innovation Playbook deck here which deals with several innovation myths and IP issues. Hope you enjoy it and have a great weekend.

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What Is The Role of Mid-level Manager In Innovation?

I’ve spent all week in Chicago and this is a photo taken from my 46th floor suite at the Four Seasons. This is a wonderful view of the city. My friend said this is the kind of view that helps people like Barry Diller makes some of his big decisions. I think the view helps.

I want to come back to the topic that why innovation is so hard. Innovation often means fundamental change. The decision to act may be triggered by various circumstances: a disruptive competitor, a shift in market structure (caused by market forces or regulation) stagnant in growth and share price, accelerated intensity of competition. Whatever the motive, senior executive seldom meet greater demands on their skills than they do when they embark on a major change effort.

Innovation doesn’t stop after the big ideas are developed. In fact, that’s just the beginning. Innovation goes hand-in-hand with transformation. A true transformation is often characterized by aspirations, the integration of technology, organizations, operations, and an extended effort of change. There’s a myth that innovation can only be driven from the top and the mid-level managers are to follow up on execution. This doesn’t have to be the casen, mid-level manages can play a key role in making innovation happen. This may be contrary to popular belief. Change heroes don’t sit in the executive suite and they’re not on the margins, either. They’re consummate insiders who get things done by working through other people. They are the people who will make or break your organization’s innovation initiatives. Senior executives and their innovation consultants can come up with the most brilliant game-changing strategy , but if the people who develop products, manage channels, talk to customers, and oversee operations don’t foster innovation in their own realms, none of that things will make any difference. It is also common to see that many mid-level managers resist to participate in innovation projects because their job security are threatened and this is the start of a chain reaction of negative feelings towards the managers.

Interestingly enough, my experience on large scale innovation projects that involved many mid-level managers showed me that they these are the key characteristics that make them good innovation partners:  1/ comfortable with change, 2) thoroughness, 3) participative management style and 4) persuasiveness, persistence and discretion.  Here’s what I look for: 1/ a strong sense of how to look at a current job and come up with innovative ways in which to complete the them. 2/ understand that one of his/her strongest assets is the ability to use creativity to bring performance to the next level (André Galhardo nailed it “… creative people need them to implement and turn ideas into revolutions”.) There is another factor that is highly regarded in the implementation of ideas by the mid-level manager is reward and recognition of their ideas.  Senior executives must be able to share the reward and recognition with their mid-level managers. 

The CEO/CMO may be the center of the idea, but his/her directors and managers are a significant part of the final outcome.  Mid-level managers who fostered innovative accomplishments shared a very similar set of personal qualities: persistence, persuasiveness, and comfort with change. Most important, they have the ability to work through existing networks to break down barriers, build coalitions, and make change happen.

An interesting point from Rory MacDonald's post, “I agree with Bart: innovation has as much of an internal role to play in HR and in making people's job more interesting and more fulfilling. It is very closely connected to the Japanese management theory which I think is called Kaizo, whereby all employees are constantly encouraged to refine what they do to innovate.

Here's a picture of our creative minds in action.

Will Social Media Spend Surpase Traditional Media?

If you think yes, media comanies are in big trouble. By 2013, advertisers and marketers will be expect edto spend more money on so-called conversational media (Social Media)--or online media that encompasses things like blogs and podcasts--than on advertising through traditional media (Print and radio etc) , according to a recent study from the Society for New Communications Research (SCCR). A ealier study on Social Media spending by Prospero reported that 88% of businesses expected to increase Social Media Spending in 2008 and further more when asked about social media return on investment (ROI), 35% reported positive ROI and 41% said that ROI was “unknown.” Responses to questions about how web marketers measure ROI reveal that direct sales revenue is not a top measure for determining social media success. Respondents said that total number of site visitors (17%) was the most important criterion for assessing social media performance. Total number of page views and number of subscribes / community members (15%respectively) were next, followed closely by length of visit on the site (14%)."

According to the Prospero study traffic to social media site is the most important determiner of ROI (which suggests investment in Social Media is advertising driven, perhaps more than it should be). On the other hand, brand "engagement" is the main measure of success for Social Media spend. Although there are no common defintintion of what "engagement" is. We do have one that we use with clients at Idea Couture and we have clear definition of each stage of the Customer Engagement Lifecycle as. well measurment framework. Will share more here later.

The SNCR study asked about 260 agencies about their plans to advertise and market in conversational media. Today, a majority of these agencies said that they spend about 2.5% of their total budgets on conversational media, but by 2012, they plan to tip that percentage to MORE than they spend on traditional media as according to the SNCR's study.

Today we are ooking at the about 110 million blogs, with about 120,000 new blogs created every day and about 1.5 million new daily posts, according to Technorati. Of those, a third are English, a third Japanese, and the rest are a mix of all. Although the growth of blogs is slowing, their importance and visibility among traditional media, companies, and entrepreneurs are actually increasing. I don’t even think social media has come close to reaching its true potential yet. Expect to see more innovaiton in this space.

Innovation Playbook - Is There An Innovation Glass Ceiling?

I wanted to post the second part of slides today but I am in Chicago this week and have no access to my other Thinkpad. So I will just write about it and follow up with the slides next week.

There are no doubts many barriers to innovation. Or you can say there is a glass ceiling and you hit that ceiling pretty easily. Organizational structure and capital resource allocation process can be considered as hard structural barriers to innovation. Less obvious challenges include the attitudes of people towards risks and accommodating the “misfits” (The best innovators I’ve known are the “misfits”). What stop company from innovating?

Organization Inertia. Discontinuous innovation costs a lot of brain cells for a potentially exciting but uncertain reward. Instead of taking leaps into the unknown it is often easier and more predictable to squeeze a little bit more performance or creating extensions or simply cut cost through consolidation.

Short-termism. The all-pervasive factor is that of short-termism. This is the innovation paradox in which companies do not innovate purposefully or ambitiously, even though they recognize its importance, because of quarterly reporting.

Corpporate Culture and DNA. Companies have not invested in their innovation framework or processes. Innovation framework and best practices are not commonly known and applied.

Open Innovation. An open innovation model opens up the funnel that needs to be adapted to encompass flows of ideas outside an organization. Managers outside the tech world are not trained to exploit external innovations. It can be difficult for a business steeped in the principles of competition to embrace co-opetition. How do you co-innovating with your competitors? The way companies generate ideas and bring them to market has been undergoing a fundamental change. In the old model of closed innovation, enterprises adhered to the following philosophy: Successful innovation requires full control, from generating ideas, product development, manufacturing, marketing, to distribution. For the last 50 years, that model worked well, but not anymore.

Look at what Facebook is doing today. It is the first social networking site to open its operating system to outside developers. At its first public event at the SF Design Center this May, Facebook announced that it will give access to third-party developers like Amazon, Digg, Photobucket and Twitter - to build applications that will be integrated into the new Facebook Platform. Zuckerberg admited that with just some 85 engineers, they can't possibly compete with thousands of developers creating social applications. He also said Facebook will be competing with those guys on a level playing field.

So Google is now trying to beat Facebook at its own game. Be even more open than Facebook ever was. Google announced a new set of APIs enabling developers to build on Google’s socialgraph data. Initially centering around Orkut and iGoogle, the plan could expand on to the other Google Apps including Gmail and Google Talk. I think Google Docs and Gadgets will be a major part of this.

Innovation Playbook - Why Is Innovation So Hard?

Innovation is being used by business leaders as a miracle cure, allowing companies to stay competitive in fast changing markets. The word is now commonly used in ads, annual reports and corporate mission statement. For all of the talk about the importance of innovation, innovation management and strategic innovation are hardly generally understood. Forward-looking executives are all looking at confronting the challenge of innovation when decades or management practices and system were designed to improve efficiency and building scale and scope as well as maintainng control. Innovation management was relatively not part of most B-school curriculum and there were few management tools and frameworks out there to help managers to do this job.

Innovation management is the economic implementation and exploitation of new ideas and discoveries, and the implementation of an innovation culture in an organization, to promote and make possible the development of new ideas and business opportunities. It consists of innovation strategy, culture, idea management and commercialization risk management. The last one is least understood and most people just simply associate innovation with creative ideas. Now against the backdrop of the continuous disruption bring about by digital technologies, the rise of the knowledge worker and the creative class, accelerating globalization, and the declining predictability of business in general, only new approaches to management of talent will provide companies with a sustainable competitive advantage. Emerging technology, globalization and social computing were creating new opportunities that didn’t exist before.

This is no question it will be painful for companies contemplate to put away decades of management orthodoxy; they will have to balance revolutionary thinking with rapid experimentation to feel their way to new management models. Time is the essence. For more than 20 years I’ve been trying to help clients to innovate. Although the definition of innovation was very different when I started and the focus was primarily towards new technology or manufacturing process. It was sort of R&D and my mission was to figure out how to commercialize them.

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Today, innovation takes on a whole new meaning. Looking back at the history of management for the last 50 years you’ll quickly realize that “management” was designed to solve a very specific problem from today—how to perform certain things in a repetitive fashion and controlled manager as they increase the scale both locally and internationally. It is about building a giant ship with is bigger and more efficient than others. It also carries a lot of sailors and passengers and everyone need to be on board and stay there throughout the journey.

Here are our big challenges: How do you build organizations that are agile and as nimble as change itself? How do you mobilize the imagination of every employee, partners and customers? How do you create a new reward system that encourage smart and calculated risk taking? How can get these done when we have to report performance as a public company on a quarterly basis?

Three CMOs asked me over the last four weeks why my company is focused on digital innovation and not innovation in general. My answer was that digital technologies and connectivity is making it possible to amplify and aggregate human imaginations and capabilities in ways never before possible. But most CEOs don’t yet understand how dramatically these developments will change the way companies compete, organize, and manage resources. In another words, - Web 2.0 will change the way we are organized and how decisions are made – Management 2.0.

Marketing – Is It's Job To "Serve" Or To "Create"?

The idea of “customer orientation” comes up almost all the time during my meetings with clients. It is generally define as an organization culture in which all executives and employees are committed to the continuous creation of customer value of delivering on their needs. Being the organization's culture, a customer orientation is necessarily cross-functional and thus radically different from a marketing (single-function) orientation. Many organizations are very familiar with this concept but acting on it is a different story.

The whole idea of ‘marketing’ has always been closely associated with discovering what customer wants and needs and then delivering in them in the most economic fashion. The “how” (meaning the product, service or experience itself) is secondary and considered outside the domain of marketing. They are under the domain of product development or distribution or operations etc. Under this definition, marketing’s function is to serve customer. This is true today and will always be so.

But is that enough? That point of view is changing and is somewhat outdated. The new view is marketing is about “creating” customers and markets through innovation-the creation of innovative new product or service concepts. That is a very different approach. When I was taking with the Apple marketing folks a few months back we (Jeff Faulkner and I) were asking them the question about what they were trying to do, “Is it the thing or the thing about the thing?” For Apple, it is always about the “thing”. Innovative products and services have the potential to engage customers’ heart, minds and imagination. Apple is no question the master of product innovation.

Innovator has its set of challenges. From 1993-1998, part of Apple's strategy was create a market for portable handheld pen computers. Unfortunately, they spent most of that time working on a problem that didn't really exist for consumers (that market was ultimately stolen by PalmPilot). Apple's team focused to tackle the biggest challenge in pen computing: high-level handwriting recognition. Newton would be the first hand held computer people could write on directly just like they use pen and paper. From anyone's scrawl, the computer would extract the standard ASCII characters computers need to work with. This posed a massive challenge in pattern recognition (with computer power available at that time). Since every user's handwriting is different, the Newton would need to learn the particular way its user wrote each letter and number. This was a big task. If it got all the letters in, say, the word "works" right, Newton would compare that string of letters to words in its 10,000 word native memory. If the word "works" was stored there, Newton would find a match and "know" the word. When the Newton Message Pad was launched in 1993, it was disappointing. I was one of first customer and I still have one on my desk today.

Then came Jeff Hawkins (Pailm Pilots) with his Grafitti language, he redesigned the alphabet, turning centuries-old letters and numbers into single-stroke symbols that mostly kept the look of the original characters. Suddenly the computer had only one master rule to follow. The rest is history.

12 years later, Apple stikres back. This time with the the advantage of multi-touch screens that allow users to "glean much more information about a user's actions" than from conventional keyboards. This new utility of offering a multi-touch capable display which can process multiple figures and gestures to provide additional information. iPhone's multi-touch screen will be part of a platform for a series of new devices that will come to the market in the next 24 months.

The conclusion is that “customer orientation” is not enough, innovation is necessary to deliver better value for customer. Innovation requires not only imagining market, but also managing three types of risk associated with it:

1/ Technology risk (Will it work?)

2/ Customer risk (Will they buy and can they use it?)

3/ Organization risk (Are we tackling the right problems or do we know what jobs we're trying to help users to do?)

There is more to this, the shift means moving from short-term thinking to long-term thinking, or from marketing tactics to business strategies. So here is the interesting one. How many marketing executives are ready to take on these new tasks?

- From VP Marketing Communications to VP Customer Engagement

- From Marketing Campaigns to Product/Service Innovation

- From Awareness (Mass Media) to Advocacy (Social Media)

We need to move from “Customer Orientation” to “Innovation Orientation”. The rationale for an innovation orientation partly because of social technology and social networks now has the power to create markets and customers. A client (she is a very sophisticated CMO of a large organization) asked me last week over a Mexican dinner why my company’s focus is on digital innovation and not just innovation in a broader sense. That was a good question. My answer to her was that emerging technologies have far reaching effects on both consumer behavior and marketing economics. Many of today's innovation are powered by emerging technologies and social networks. Expect more to come.